SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. __)
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Tektronix, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
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<PAGE>
August 20, 1998
Dear Shareholder:
You are cordially invited to attend the annual meeting of shareholders of
Tektronix, Inc., which will be held on Thursday, September 24, 1998, at 10:00
a.m., at the Portland Art Museum, 1219 S.W. Park Avenue, Portland, Oregon.
The attached notice of meeting and proxy statement describe the matters to be
acted upon at the meeting.
It is important that your shares be represented and voted at the meeting whether
or not you plan to attend. Therefore, we urge you to complete the enclosed proxy
and return it in the envelope provided.
We look forward to greeting as many of our shareholders as possible.
Sincerely,
Jerome J. Meyer
Chairman, Chief Executive Officer
and President
<PAGE>
Notice of Annual Meeting of Shareholders
on September 24, 1998
To the Shareholders of Tektronix, Inc.:
The annual meeting of the shareholders of Tektronix, Inc., an Oregon
corporation, will be held in accordance with the bylaws on Thursday, September
24, 1998, at 10:00 a.m., local time, at the Portland Art Museum, 1219 S.W. Park
Avenue, Portland, Oregon, for the following purposes:
1. To elect three directors;
2. To approve the Company's 1998 Stock Option Plan;
3. To amend the restated Articles of Incorporation to increase the number
of authorized shares of common stock of the Company from 80,000,000 to
200,000,000;
4. To transact such other business as may properly come before the
meeting.
Only shareholders of record at the close of business on Monday, August 3, 1998,
will be entitled to notice of, and to vote at, the annual meeting.
BY ORDER OF THE BOARD OF DIRECTORS
James F. Dalton, Secretary
Wilsonville, Oregon
August 20, 1998
<PAGE>
TEKTRONIX, INC.
PROXY STATEMENT
The annual meeting of shareholders of Tektronix, Inc. (the "Company" or
"Tektronix") will be held Thursday, September 24, 1998, at 10:00 a.m., at the
Portland Art Museum, 1219 S.W. Park Avenue, Portland, Oregon. The board of
directors of Tektronix has directed that this background material be supplied to
help you decide how to vote on the matters to come before the meeting. The
enclosed proxy is being solicited by the board. You are invited to use that
proxy to vote. The shares represented by the enclosed proxy will be voted if the
proxy is properly signed and received before the meeting begins. Solicitation of
proxies on behalf of the board of directors may be made by mail, personal
interviews, telephone or facsimile by Tektronix officers and employees.
Tektronix has also retained Morrow & Co., Inc. to assist in the solicitation of
proxies from shareholders (primarily brokers, banks and other institutional
shareholders) for a fee estimated at approximately $5,000 plus certain expenses.
The costs of such solicitation will be paid by the Company. The approximate date
this proxy statement and the accompanying proxy form are first being sent to
shareholders is August 20, 1998.
Any person giving a proxy in the form accompanying this proxy statement has
the power to revoke it at any time before its exercise. The proxy may be revoked
by filing with the Secretary of the Company an instrument of revocation or a
duly executed proxy bearing a later date. The proxy may also be revoked by
affirmatively electing to vote in person while in attendance at the meeting.
However, a shareholder who attends the meeting need not revoke the proxy and
vote in person unless he or she wishes to do so.
There were 49,638,025 Common Shares of the Company outstanding at the close
of business on August 3, 1998, the record date for the annual meeting. Each
Common Share is entitled to one vote.
Participants in the Tektronix 401(k) Plan ("401(k) Plan") have the right to
instruct the fiduciary of the plan (or a proxy) how to vote shares allocated to
their accounts. Participants in the plan will receive a separate voting
direction form on which they may indicate their voting instructions.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table shows ownership of the Common Shares of the Company on
June 30, 1998 by each person who, to the knowledge of the board of directors,
owned beneficially more than 5% of the Common Shares:
<TABLE>
<CAPTION>
Name and address Amount and nature of Percent of
of Beneficial Owner beneficial ownership Class
------------------- -------------------- ----------
<S> <C> <C>
VANGUARD/PRIMECAP FUND INC. 3,285,000 (1) 6.49%
225 South Lake Avenue
Pasadena, CA 91101-3005
Bankers Trust New York Corporation 3,227,328 (2) 6.39%
and its wholly owned subsidiary,
Bankers Trust Company, and its
indirectly wholly owned subsidiary,
BT Australia Limited
280 Park Avenue
New York, NY 10017
- --------------
(1) Based on information set forth in Form 13G dated February 2, 1998, filed
with the Securities and Exchange Commission ("SEC") and other information
provided by VANGUARD/PRIMECAP FUND INC. These shares are held with sole
investment and voting power.
(2) Based on information set forth in Form 13G/A dated December 31, 1997, filed
with the SEC. These shares are held as follows: Bankers Trust Company has
sole voting power as to 497,528 shares and sole dispositive power as to
682,678 shares. BT Australia Limited has sole voting and dispositive power
as to 2,544,650 shares.
</TABLE>
<PAGE>
BOARD OF DIRECTORS
The board of directors currently consists of nine members. The board is
divided pursuant to the bylaws into three classes. One class is elected each
year for a three-year term. The term of office of Class III directors expires at
the 1998 annual meeting; the term of office of Class I directors expires in
1999; and that of Class II directors expires in 2000 (and in all cases, the
terms of the directors will continue until their respective successors are duly
elected and have been qualified).
The board of directors met seven times during the last fiscal year. Each
director attended at least 75% of the aggregate number of the meetings of the
board and committees on which he or she served.
Some important functions of the board are performed by committees of
directors. Committees are constituted by the board upon the recommendation of
the Chairman. The board has the power to change the responsibilities assigned to
any committee and to change the membership of any committee. A brief description
of the current board committees follows:
The Executive Committee carries out, with certain exceptions, the functions
of the board of directors in the intervals between board meetings. The Executive
Committee met one time during the last fiscal year.
The Audit Committee recommends independent public accountants to be
appointed by the board of directors as auditors; reviews the Company's annual
consolidated financial statements; and consults from time to time with
management, the internal auditors and the Company's independent public
accountants to consider financial and accounting matters. The Audit Committee
met eight times during the last fiscal year.
The Committee on Directors seeks qualified candidates to serve on the
Company's board of directors and recommends them for the board's consideration.
This committee assesses the board's capacity to fulfill requirements of the
board's policy with respect to director qualifications, resources and
experience, and evaluates the performance of the board as a whole. The Committee
also reviews the board's policy with respect to director qualifications, board
membership requirements, and directors' compensation and advises the board on
any recommendations for change. The Committee on Directors will consider the
names and qualifications of candidates for the board of directors submitted by
shareholders in accordance with the procedures described on page 22 of this
proxy statement. The Committee on Directors met three times during the last
fiscal year.
The Organization and Compensation Committee approves salaries and other
compensation of corporate executive officers and administers the Company's stock
incentive plans and executive compensation plans. This includes the granting of
stock options, stock bonuses, cash bonuses and incentive awards under these
plans. The Committee also reviews the organization plan and structure for its
effectiveness in meeting the present and future leadership needs of the Company.
The Committee reviews the Company's programs for attracting, retaining and
promoting executives, and for developing future senior management. This
committee met six times during the last fiscal year.
ITEM 1. ELECTION OF DIRECTORS
Action will be taken at the 1998 annual meeting to elect three Class III
directors to serve until the Year 2001 annual meeting of shareholders. Those
nominees, as well as the Class I and Class II directors who are continuing to
serve, are listed below, together with certain information about each of them.
The nominees for election at the 1998 annual meeting are A.M. Gleason, Merrill
A. McPeak and David N. Campbell. Messrs. Gleason and McPeak have served as
directors since 1988 and 1995, respectively. Mr. Campbell was elected to the
board by action of the board effective July 16, 1998.
Directors are elected by a plurality of the votes cast by the shares
entitled to vote if a quorum is present at the annual meeting. Abstentions and
broker non-votes are counted for purposes of determining
2
<PAGE>
whether a quorum exists at the annual meeting but are not counted and have no
effect on the determination of whether a plurality exists with respect to a
given nominee.
Class III (Term Ending 1998)
*David N. Campbell, 56, has served as President of BBN Technologies, a
business unit of GTE Corporation, since July 1995. From March 1984 until
September 1994 he served as Chairman of the Board and Chief Executive Officer of
Computer Task Group, Incorporated. Mr. Campbell is also a director of Gibraltar
Steel Corporation and an advisory director of First Empire State Corporation.
*A.M. Gleason, 68, is President of the Port of Portland Commission, a
position he has held since 1995. Mr. Gleason was Vice Chairman of PacifiCorp
from February 1994 until his retirement in May 1995. Mr. Gleason became
President of PacifiCorp in 1985, and he was President and Chief Executive
Officer of PacifiCorp from January 1989 until February 1994. He has served as a
director since 1988 and is chairman of the Executive Committee and the
Organization and Compensation Committee. He is a director of Fred Meyer, Inc.
and Comdial Corporation.
*Merrill A. McPeak, 62, was Chief of Staff, United States Air Force, from
October 1990 to October 1994 when he retired. General McPeak has served as a
director since March 1995 and he is Chairman of the Audit Committee and a member
of the Organization and Compensation Committee. He is Chairman of the Board of
ECC International Corp. He is also a director of Thrustmaster, Inc., Trans World
Airlines, Inc., Praegitzer Industries, Inc., Western Power and Equipment, Inc.,
and E.com, Inc.
Class I (Term Ending 1999)
Pauline Lo Alker, 55, is Chairman of the Board, C.E.O. and President of
Amplify.net, Inc., formerly Aponet, Inc. (internet/intranet amplifying software
solutions) a position she has held since June 1998. From January 1991 until June
1998, she was President and Chief Executive Officer of Network Peripherals Inc.
(high performance networking solutions). Mrs. Alker has served as a director
since January 1996 and is a member of the Audit Committee, the Organization and
Compensation Committee, and the Committee on Directors. She is a director of
Integrated Silicon Solutions, Inc.
A. Gary Ames, 53, is President and Chief Executive Officer of MediaOne
International, formerly U S WEST International (communications), a position he
has held since July 1995. Mr. Ames was President and Chief Executive Officer of
U S WEST Communications from January 1990 to July 1995. From April 1987 to
January 1990, Mr. Ames was President and Chief Executive Officer of Mountain
Bell. Mr. Ames has served as a director since 1994 and is a member of the Audit
Committee and the Committee on Directors. He is a director of Albertson's, Inc.,
Telewest PLC., and Flextech PLC.
Paul C. Ely, Jr., 66, a retired corporate executive, owns and operates
Santa Cruz Yachts, a builder and developer of high performance sailing yachts.
He was a General Partner of Alpha Partners (a venture capital firm) from July
1989 to approximately September 1998. Mr. Ely was Chairman and Chief Executive
Officer of Convergent Technologies (a computer manufacturer) from 1985 to 1989,
and in 1989 he also served as Executive Vice President of Unisys Corporation (a
computer manufacturer). Mr. Ely has been a director since 1992 and he is
Vice-Chairman of the Organization and Compensation Committee and a member of the
Executive Committee. He served as Chairman of the Board of The Ask Group, Inc.
(a software database company) from February 1994 to March 1995, and was Chairman
of the Board of Network Peripherals Inc. from May 1990 to December 1995. He was
an Executive Vice President and director of Hewlett-Packard from February 1980
to January 1985. He is a director of Parker-Hannifin Corporation and The Sabre
Group.
- --------------
* Nominee for election at 1998 annual meeting.
3
<PAGE>
Class II (Term Ending Year 2000)
Gerry B. Cameron, 60, is Chairman of U.S. Bancorp, a position he has held
since 1994. He was Chief Executive Officer of U.S. Bancorp from January 1994
until its merger with First Bank System on August 1, 1997. Mr. Cameron's banking
career began in 1956 with U.S. National Bank of Oregon. He managed the
Commercial Banking Group and the Northwest Group before being appointed chairman
and chief executive officer of Old National Bank in Spokane, WA in 1987. In
1988, Mr. Cameron was named president and chief operating officer of U.S. Bank
of Washington, which was formed when U.S. Bancorp acquired Old National Bank and
Peoples Bank. He is a director of The American Banker's Association, Regence
Blue Cross Blue Shield of Oregon, The Regence Group, and the Oregon Business
Council. He is a member of the Company's Audit Committee, Organization and
Compensation Committee, and the Committee on Directors.
Jerome J. Meyer, 60, is Chairman of the Board of Directors, Chief Executive
Officer and President of the Company. Mr. Meyer has been a director since 1990,
and became President and Chief Executive Officer of the Company in November
1990. Mr. Meyer was Corporate Vice President of Honeywell Inc. (an electronics
manufacturer) from August 1986 until April 1987, and President and Chief
Executive Officer of Honeywell Bull Inc., now known as Bull HN Information
Systems, Inc., from April 1987 until July 1988. He returned to Honeywell Inc. in
July 1988 and served as President of their industrial business until joining
Tektronix in November 1990. Mr. Meyer serves on the Executive Committee and
Committee on Directors. He is a director of AMP Incorporated, Esterline
Technologies, Inc., and Enron Corporation.
William D. Walker, 67, is Vice Chairman of the Company, a position he has
held since 1991. He has been Chairman of the Board of Planar Systems, Inc. (a
flat-panel display manufacturer) since 1988, and has served as a director of the
Company since 1984. Mr. Walker served as President and Chief Operating Officer
of the Company from April 1990 until November 1990. From 1984 to 1987, Mr.
Walker was Chairman of the Board and Chief Executive Officer of Electro
Scientific Industries, Inc. (a laser systems manufacturer). Mr. Walker was
Executive Vice President of the Company from 1979 to 1984 and has served as a
director since 1980. He is Chairman of the Committee on Directors, and is a
member of the Audit Committee and the Executive Committee.
The following table sets forth the beneficial ownership of Common Shares of
the Company by the directors, nominees for director, certain executive officers
named in the Summary Compensation Table, and by all executive officers and
directors as a group as of June 30, 1998:
<TABLE>
<CAPTION>
Number
Name of Shares (1)(2)(3) Percent
---- ------------------- -------
<S> <C> <C>
Pauline Lo Alker ................. 2,296 *
A. Gary Ames ..................... 3,665 *
David N. Campbell ................ 0 *
Gerry B. Cameron ................. 5,852 *
Paul C. Ely, Jr. ................. 8,831 (4) *
A. M. Gleason .................... 6,170 *
Merrill A. McPeak ................ 3,545 *
Jerome J. Meyer .................. 408,045 (5) *
William D. Walker ................ 87,998 (6) *
Carl W. Neun ..................... 142,988 (7) *
Gerald K. Perkel ................. 104,706 (8) *
Daniel Terpack ................... 99,667 (9) *
Timothy E. Thorsteinson .......... 66,532 (10) *
All directors and executive
officers as a group
(17 individuals) ................ 1,529,131 (11) 3.04%
- --------------
* Less than one percent.
4
<PAGE>
(1) Unless otherwise indicated, each individual has sole voting and investment
power with respect to these shares.
(2) Includes shares issued under the Company's Stock Compensation Plan for
Non-Employee Directors, including unvested shares issued as follows: Mrs.
Alker, 1,462 shares; Mr. Ames, 997 shares; Mr. Ely, 2,083 shares; and Mr.
Gleason, 1,166 shares. Individuals have sole voting power with respect to
these shares.
(3) Includes shares issued under the Company's Stock Compensation Plan for
Non-Employee Directors and deferred pursuant to the Non-Employee Directors'
Deferred Compensation Plan as follows: Mr. Cameron, 3,352 shares; General
McPeak, 3,545 shares; and Mr. Walker, 3,609 shares. Shares are held in
trust, and individuals have no voting or investment power with respect to
these shares.
(4) Includes 4,498 shares held in trust for Mr. Ely.
(5) Includes (i) stock options for 129,750 shares that are currently
exercisable or become exercisable before August 28, 1998 under the
Company's Stock Incentive Plan; (ii) 69,500 performance shares and bonus
shares that are subject to forfeiture to the Company under certain
conditions; (iii) 11,973 shares held in a family limited partnership; and
(iv) 2,521 shares held under the 401(k) Plan with respect to which Mr.
Meyer has voting but no investment power.
(6) Includes 16,229 shares held by Mr. Walker's wife, with respect to which Mr.
Walker disclaims beneficial ownership.
(7) Includes (i) stock options for 66,750 shares that are currently exercisable
or become exercisable before August 28, 1998 under the Company's Stock
Incentive Plan; (ii) 34,000 performance shares and bonus shares that are
subject to forfeiture to the Company under certain conditions; (iii) 40,352
shares held in a family trust; and (iv) 1,886 shares held under the 401(k)
Plan with respect to which Mr. Neun has voting but no investment power.
(8) Includes (i) stock options for 64,500 shares that are currently exercisable
or become exercisable before August 28, 1998 under the Company's Stock
Incentive Plan; (ii) 24,500 performance shares and bonus shares that are
subject to forfeiture to the Company under certain conditions; and (iii)
2,029 shares held under the 401(k) Plan with respect to which Mr. Perkel
has voting but no investment power.
(9) Includes (i) stock options for 48,750 shares that are currently exercisable
or become exercisable before August 28, 1998 under the Company's Stock
Incentive Plan; (ii) 24,500 performance shares and bonus shares that are
subject to forfeiture to the Company under certain conditions; and (iii)
1,885 shares held under the 401(k) Plan with respect to which Mr. Terpack
has voting but no investment power.
(10) Includes (i) stock options for 21,375 shares that are currently exercisable
or become exercisable before August 28, 1998 under the Company's Stock
Incentive Plan; (ii) 29,000 performance shares and bonus shares that are
subject to forfeiture to the Company under certain conditions; and (iii)
2,249 shares held under the 401(k) Plan with respect to which Mr.
Thorsteinson has voting but no investment power.
(11) Includes (i) 16,214 unvested or deferred shares held by the Company for the
account of non-employee directors pursuant to the Stock Compensation Plan
for Non-Employee Directors; (ii) stock options for 428,637 shares that are
currently exercisable or become exercisable before August 28, 1998 under
the Company's stock option plans (including the Stock Incentive Plan);
(iii) 230,200 shares that have been granted subject to forfeiture under
certain conditions pursuant to the Company's Stock Incentive Plan; (iv)
15,819 shares held under the 401(k) Plan with respect to which officers and
directors have voting but no investment power; and (v) 16,979 shares owned
by, or in trust for, members of the families of officers and directors, of
which such officers and directors disclaim beneficial ownership.
</TABLE>
5
<PAGE>
Directors' Compensation. Directors who are not employees of the Company
receive an annual retainer of $30,000 (plus an additional $3,000 for a committee
chairman, except for the chairman of the Executive Committee, and $8,000 for
members of the Executive Committee). Half of the annual retainer is paid
currently in cash. Non-employee directors receive the remaining one-half of the
annual retainer in the form of Common Shares of the Company pursuant to the
Non-Employee Directors' Stock Compensation Plan. Under this plan, every five
years a non-employee director receives Common Shares valued at five times the
stock portion of the annual retainer, and these shares vest over five years
based on continued service as a director. Non-employee directors also receive
$1,200 for each meeting of the board of directors attended and $900 for each
committee meeting attended, with the exception of committee meetings held during
the time normally scheduled for a board meeting. Directors who are employees of
the Company receive no separate compensation as directors.
Under the Non-Employee Directors' Deferred Compensation Plan, directors who
are not employees may elect to have all or part of their annual cash retainers
and meeting fees credited to a deferred compensation cash account. Amounts
credited to the account will accrue interest based on the 10-year U.S. Treasury
Notes rate adjusted at the end of each calendar quarter. Such deferred amounts
will be paid in a single lump-sum payment or in up to five equal annual
installments to commence in January after the director ceases to serve on the
board or becomes age 65 or older, as specified. Non-employee directors may also
elect to defer receipt of stock under the Non-Employee Directors' Deferred
Compensation Plan.
6
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain compensation information for the
Chief Executive Officer and each of the next four most highly compensated
executive officers of the Company during the last fiscal year ("Named Officers")
for services rendered in all capacities for the last three fiscal years.
<TABLE>
<CAPTION>
Long-Term Compensation
-----------------------------------------
Annual Compensation Awards Payouts
-------------------------------------- ----------------------- --------------
Other Restricted Securities
Name and Annual Stock Underlying LTIP All Other
Principal Salary Bonus Compensation Awards Options Payouts Compensation
Position Year ($) ($)(1) ($)(2) ($)(3) (#)(4) ($) ($)(5)
- --------- ---- --------- ----------- ------------ --------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jerome J. Meyer ......... 1998 $ 705,577 $ 1,067,207 $ 29,670 $ 0 52,500 $ 578,972 (6) $ 332,524 (7)
Chairman, Chief 1997 684,423 738,192 16,200 0 32,000 0 330,924
Executive Officer 1996 625,769 511,971 88,330 0 25,000 3,501,363 (6) 331,435
and President
Carl W. Neun ............ 1998 $ 413,269 $ 429,391 $ 16,560 $ 0 30,000 $ 385,981 (6) $ 301,877 (7)
Sr. Vice President, 1997 396,827 415,968 9,600 0 16,500 0 298,683
and Chief 1996 368,269 209,311 59,869 0 18,000 2,134,086 (6) 298,321
Financial Officer
Daniel Terpack .......... 1998 $ 327,961 $ 349,490 $ 10,350 $ 0 24,000 $ 192,991 (6) $ 103,218 (8)
Vice President 1997 318,193 152,983 9,000 0 12,500 369,063 (6) 74,779
and President, 1996 300,000 235,222 9,600 0 12,000 320,086 (6) 8,750
Measurement
Business Division
Gerald K. Perkel ........ 1998 $ 307,885 $ 326,410 $ 11,955 $ 0 24,000 $ 192,991 (6) $ 99,905 (8)
Vice President 1997 264,424 335,527 (9) 10,500 146,500 (10) 12,500 258,333 (6) 66,639
and President, 1996 220,000 156,984 4,500 0 12,000 0 8,477
Color Printing and
Imaging Division
Timothy E. Thorsteinson.. 1998 $ 272,885 $ 263,719 $ 103,334 $ 329,375 (11) 24,000 $ 241,256 (6) $ 90,418 (8)
Vice President and 1997 238,847 170,566 6,600 0 12,500 0 55,225
President, Video 1996 219,999 254,288 75,216 0 15,000 1,580,358 (6) 9,769
and Networking
Division
- --------------
(1) Includes (i) amounts paid or deferred under the Annual Performance
Improvement Plan; (ii) amounts paid under the Company's Results Sharing
Plan; and (iii) for 1998 and 1997, special cash bonus amounts.
(2) Includes dividends paid on performance shares.
(3) Long-Term Incentive Plan stock awards are reported at time of grant in the
LTIP table below and in this table under the LTIP Payout column at the time
of vesting.
(4) Options were granted in the year indicated. Additional information
regarding the options during fiscal year 1998 is set forth in the table on
page 9.
(5) Except as otherwise indicated, represents amounts contributed by the
Company under the Company's 401(k) Plan.
(6) Represents the fair market value of long-term performance awards of shares
and, in years other than 1998, related cash payments under the Company's
Stock Incentive Plan. The shares became vested, and cash payments were
made, based on the Company's performance during the three fiscal years
ending in the year indicated in the Summary Compensation table. Amounts for
Mr. Meyer, Mr. Neun, and for Mr. Thorsteinson in 1996 also include the fair
market value of performance-based stock grants under Key Executive
Retention Agreements which vested in February 1996 and upon a determination
that certain goals had been achieved with respect to repositioning the
Company and improving shareholder value.
(7) Includes nonrefundable costs incurred by the Company in connection with a
split dollar life insurance arrangement which provides certain retirement
and death benefits to the Named Officer. For 1998, the amount included was
$322,924 for Mr. Meyer and $290,456 for Mr. Neun. See "Employment
Arrangements."
(8) Includes credits to the Supplemental Executive Retirement Plan (see
"Retirement Plans"). For 1998, the amount credited was $79,167 for Mr.
Terpack, $75,219 for Mr. Perkel, and $85,836 for Mr. Thorsteinson.
7
<PAGE>
(9) Includes a stock bonus of 1,500 Common Shares awarded to Mr. Perkel, with a
fair market value of $89,100 at the time it was awarded.
(10) Represents the fair market value, as of the grant date, of 6,000 bonus
shares granted in fiscal year 1997. The shares were subject to two year
vesting from the date of the grant. As of the end of fiscal year 1998, Mr.
Perkel held no shares of restricted stock, other than LTIP awards.
Dividends were paid on restricted stock.
(11) Represents the fair market value, as of the grant date, of 7,500 stock
bonus shares granted to Mr. Thorsteinson in fiscal year 1998. The shares
are subject to vesting based on division performance goals for each of
fiscal years 1998 and 1999. Mr. Thorsteinson held 4,500 shares of
restricted stock at the end of fiscal year 1998, with a total value of
$172,125. Dividends and accrued interest are paid upon release of shares.
</TABLE>
Stock Option Grants in Last Fiscal Year
The following table provides information on stock options awarded to Named
Officers under the Company's Stock Incentive Plan during the last fiscal year.
<TABLE>
<CAPTION>
Individual Grants
-----------------------------------------------------------
Number of Percent of
Securities Total Options Exercise
Underlying Granted to or Base Grant Date
Options Employees in Price Expiration Present Value
Name Granted(#)(1) Fiscal Year ($/Sh) Date ($)(2)
- ---- ------------- ------------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Jerome J. Meyer .......... 52,500 4.6% $39.9167 6/26/02 $639,450
Carl W. Neun ............. 30,000 2.6% $39.9167 6/26/02 $365,400
Daniel Terpack ........... 24,000 2.1% $39.9167 6/26/02 $292,320
Gerald K. Perkel ......... 24,000 2.1% $39.9167 6/26/02 $292,320
Timothy E. Thorsteinson .. 24,000 2.1% $39.9167 6/26/02 $292,320
- --------------
(1) Each of the options was granted at 100% of the fair market value on the
date of grant pursuant to the Company's Executive Long-Term Incentive
Compensation Program. Each option becomes exercisable to the extent of 25%
of the shares in six month increments, and the optionee may exercise the
option provided that the optionee has been continuously employed by the
Company or one of its subsidiaries. Under the terms of the Company's Stock
Incentive Plan, each of the options is subject to accelerated vesting in
the event of a future change in control of the Company or the occurrence of
certain events indicating an imminent change in control of the Company.
Upon such acceleration, the optionee has the right to cause the Company to
repurchase the option for a cash amount generally equal to the excess of
the highest purchase price paid in connection with the transactions
indicating a change in control or potential change and the option price.
Under the Stock Incentive Plan vesting is also accelerated upon the death
or disability of the optionee.
(2) Although the Company believes that it is not possible to place a value on
an option, in accordance with the rules of the Securities and Exchange
Commission, the Company has used a modified Black-Scholes model of option
valuation to estimate grant date present value. The actual value realized,
if any, may vary significantly from the values estimated by this model. Any
future values realized will ultimately depend upon the excess of the stock
price over the exercise price on the date the option is exercised. The
assumptions used to estimate the grant date present value of this option
were volatility (38.79%), risk-free rate of return (6.17%), dividend yield
(1.20%), and time to exercise (3 years).
</TABLE>
8
<PAGE>
Aggregated Stock Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table indicates (i) stock options exercised by the Named
Officers during the last fiscal year; (ii) the number of shares subject to
exercisable (vested) and unexercisable (unvested) stock options as of May 30,
1998; and (iii) the fiscal year-end value of "in-the-money" unexercised options.
<TABLE>
<CAPTION>
Number of
Securities Underlying Value of Unexercised
Number Unexercised Options In-the-Money Options
Of Shares at Fiscal Year-End at Fiscal Year-End(1)(2)
Acquired Value --------------------------- ---------------------------
Name On Exercise Realized (1) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jerome J. Meyer .......... 132,000 $ 3,795,837 92,625 63,375 $ 800,084 $ 273,408
Carl W. Neun ............. 60,000 $ 1,564,831 46,875 34,875 $ 262,927 $ 140,976
Daniel Terpack ........... 27,000 $ 632,131 33,375 27,375 $ 188,101 $ 106,800
Gerald K. Perkel ......... 9,000 $ 242,010 49,125 27,375 $ 473,363 $ 106,800
Timothy E. Thorsteinson .. 31,875 $ 458,942 6,000 27,375 0 $ 106,800
- --------------
(1) The value realized or the unrealized value of in-the-money options at
year-end represents the aggregate difference between the market value on
the date of exercise, or at May 30, 1998 in the case of the unrealized
values, and the applicable exercise prices. The closing price of the
Company's common shares on the last trading day of the fiscal year was
$38.25.
(2) "In-the-money" options are options whose exercise price was less than the
market price of Common Shares at May 30, 1998.
</TABLE>
Long-Term Incentive Plans - Awards in Last Fiscal Year
The following table provides information on long-term performance awards
granted to Named Officers under the Company's Stock Incentive Plan during the
last fiscal year.
<TABLE>
<CAPTION>
Number of Performance Estimated Future Payouts Under
Shares, Units or Other Non-Stock Price-Based Plans
or Other Period Until ---------------------------------------------
Name Rights (#) (1) Maturation or Payout Threshold (#) Target (#) Maximum (#)
- ---- -------------- -------------------- ------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Jerome J. Meyer .......... 24,000 6/97 - 5/2000 4,800 24,000 42,000
Carl W. Neun ............. 12,000 6/97 - 5/2000 2,400 12,000 21,000
Daniel Terpack ........... 7,500 6/97 - 5/2000 1,500 7,500 13,125
Gerald K. Perkel ......... 7,500 6/97 - 5/2000 1,500 7,500 13,125
Timothy E. Thorsteinson .. 7,500 6/97 - 5/2000 1,500 7,500 13,125
- --------------
(1) Awards are Performance Share awards under the Company's Executive Long-Term
Incentive Compensation Program as described below under "Organization and
Compensation Committee Report on Executive Compensation." At the time of
the award, the target levels of shares were issued as restricted shares
upon which dividends are paid currently.
</TABLE>
Cash Balance Plan
The Tektronix Cash Balance Plan is an integrated, account-based, defined
benefit plan funded entirely by the Company. Employees who are officers or
directors of the Company participate in the Cash Balance Plan on the same basis
as other employees. Employees outside the U.S. are covered under different
retirement plans varying from country to country.
The Retirement Equalization Plan is a supplemental plan to the Tektronix
Cash Balance Plan to provide covered officers and other covered executives with
the total amount of retirement income that they
9
<PAGE>
would otherwise receive under the Cash Balance Plan but for legislated ceilings
in compliance with certain sections of the Internal Revenue Code which limit
retirement benefits payable from qualified plans.
Under the provisions of the Cash Balance Plan, a cash balance account is
established for each participant at plan entry and increased over time with pay
and interest credits. Pay credits are equal to 3.5% of eligible pay and are
credited to each participant's cash balance account as of each payroll. The plan
is integrated with Social Security and pay credits increase to 7.0% of pay once
a participant's earnings exceed the Social Security wage base for that year.
Interest credits are based on one-year Treasury Bill rates and are credited to a
participant's cash balance account as of each month end. At termination of
employment, a participant (if vested) becomes entitled to receive his or her
cash balance account in a single payment or have it converted to a monthly
annuity payable for life (or over a joint lifetime with his or her beneficiary).
Payment can be delayed until the participant reaches age 65.
Certain special provisions apply for employees who were active participants
under the Tektronix Pension Plan as of December 31, 1997. Effective January 1,
1998, (the date the Tektronix Pension Plan was amended to become the Tektronix
Cash Balance Plan), an initial cash balance account based on the benefit levels
provided under the Tektronix Pension Plan was established for each eligible
employee employed on or before December 31, 1997. In addition, pay credits for
these employees are 4.5% instead of 3.5%. Lastly, a special transition benefit
applies for employees age 40 and vested as of December 31, 1997 who qualify for
early retirement at termination.
Estimated annual benefits payable upon retirement at normal retirement age
to each of the Named Officers under the Tektronix Cash Balance Plan and the
Retirement Equalization Plan are as follows: Mr. Meyer - $39,800; Mr. Neun -
$10,646; Mr. Terpack - $10,320; Mr. Perkel - $8,859; and Mr. Thorsteinson -
$3,183.
Severance and Change of Control Arrangements
Each of the Named Officers has an Executive Severance Agreement or similar
agreement with the Company pursuant to which the officer would receive severance
pay in the event that his employment is terminated by the Company other than for
cause, death or disability. Upon such termination, the officer would receive a
severance payment generally equal to his or her annual base salary (except that
Mr. Meyer would receive twice his annual base salary), benefits under certain of
the Company's incentive plans prorated for the portion of the year during which
the officer was a participant and certain outplacement and insurance benefits.
No benefits are payable under the Executive Severance Agreement if the officer
receives severance payments under any other agreement with the Company. Mr.
Meyer's Executive Severance Agreement has been amended to obligate the Company
to continue to make payments required under Mr. Meyer's split dollar insurance
arrangement until Mr. Meyer reaches age 64 notwithstanding any prior termination
of employment. See "Employment Arrangements."
Each of the Named Officers has an employment agreement with the Company
pursuant to which, in the event of a tender or exchange offer for more than 25%
of the Company's outstanding stock, the officer has agreed to remain with the
Company until such offer has been terminated or abandoned or a change in control
of the Company has occurred.
Except for this agreement by the officer to remain so employed by the
Company, either the Company or the officer may terminate the employment at any
time, subject to the Company's obligation to provide benefits specified in the
agreement following a change in control. The agreements continue in effect until
December 31, 1998, and are generally automatically renewed on an annual basis.
Prior to a change in control, the Company may terminate any of the agreements
(other than the agreement with Mr. Meyer) if there is a change in the officer's
position other than as a result of a promotion. In the event the officer is
terminated within 24 months following a change in control, the officer is
entitled to a cash severance payment equal to three times his or her annual base
salary based on the salary in effect prior to termination and certain relocation
and insurance benefits. However, such amounts will not be payable if
10
<PAGE>
termination is due to death, normal retirement or voluntary action of the
officer other than for good reason, or by the Company for cause or permanent
disability.
Employment Arrangements
In connection with his employment as Chairman, Chief Executive Officer and
President, which began in November 1990, the Company agreed to provide Jerome J.
Meyer with supplemental retirement benefits which, together with retirement
benefits from his previous employer and amounts payable under the Company's
Pension Plan and Retirement Equalization Plan, would result in an annual
retirement benefit upon retirement at age 62 equal to 50% of his final average
pay, which for this purpose is the average of the three highest year's annual
cash compensation received by him for his final five years. Total annual
retirement benefits at reduced levels, but not less than $225,000 per year, are
payable upon earlier retirement. In 1993 the Company entered into a split dollar
life insurance arrangement designed to fund a substantial portion of this
supplemental retirement obligation. Amounts paid by the Company under this split
dollar arrangement are included in the Summary Compensation Table.
In connection with his employment as an executive officer, which began in
March 1993, the Company agreed to provide Carl W. Neun with supplemental
retirement benefits which, together with amounts payable under the Company's
Cash Balance Plan and Retirement Equalization Plan, would result in an annual
retirement benefit equal to a percentage of his final average pay, which for
this purpose is the average of the annual cash compensation received by him
during each of his final five years. The percentage of final average pay payable
as a total annual retirement benefit ranges from 35% upon retirement at age 55
to 55% upon retirement at age 62. The Company funds a portion of Mr. Neun's
supplemental retirement benefits through a split dollar life insurance
arrangement similar to the arrangement entered into for Mr. Meyer. Amounts paid
by the Company under this split dollar arrangement are included in the Summary
Compensation Table. The supplemental retirement benefits have been amended to
provide that in the event Mr. Neun's employment is terminated following a change
in control of the Company, benefits under the Plan shall be paid upon his
attaining age 55 even if he is not then employed by the Company, and the Company
will continue to make payments required under the split dollar insurance
arrangement.
ORGANIZATION AND COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
Organization and Compensation Committee
The Organization and Compensation Committee of the board of directors (the
"Committee") consists of five outside directors. Pursuant to authority delegated
by the board of directors, the Committee approves compensation of executive
officers, including the chief executive officer. The Committee is responsible
for assisting in the development of and approving executive compensation
programs and administering the Company's stock incentive and executive
compensation plans. The Committee reviews and assists in the development of an
organizational structure and programs that will attract, retain and promote
executives to meet the present and future leadership needs of the Company.
Overall Policy
The board of directors and the Committee believe that the Company's total
executive compensation programs should be related to corporate performance and
improvement in shareholder value. The Company has developed a total compensation
strategy that ties a significant portion of executive compensation to
achievement of pre-established financial results and appreciation of the
Company's common stock price. The primary objectives of these executive
compensation programs are to:
* Attract and retain talented executives;
11
<PAGE>
* Motivate executives to achieve long-term business strategies while
achieving near-term financial targets;
* Align executive performance with Tektronix' goals for delivering
shareholder value; and
* Provide incentive for consistently achieving Tektronix' goal for
return on equity or assets.
The Company has base pay, annual incentive and long-term incentive
compensation programs for its executives, as well as retirement and 401(k)
plans. These programs are designed both to support the Company's stated
compensation policy and to offer compensation that is competitive with
compensation offered by companies of similar size and complexity within high
technology electronics and similar industries. The Committee uses comparative
information from a group of companies in the high technology industry for
establishing executive compensation and Company performance goals. The Committee
also relies on advice from outside compensation and benefits consultants.
Base Salaries
Base salaries for executive officers are initially determined by evaluating
the responsibilities of the position and the experience of the individual, and
by reference to the competitive marketplace for corporate executives, including
a comparison to base salaries for comparable positions at other similarly sized
high technology companies. Median levels of base pay provided by comparator
companies form the primary reference in determining the salaries of executive
officers.
Annual salary adjustments are determined by evaluating the performance of
the Company and each executive officer, and also take into account any new
responsibilities as well as salaries for comparable positions at peer companies.
In the case of an executive officer with responsibility for a particular
business unit, such unit's financial results are also considered. The Committee,
when appropriate, also considers non-financial performance measures that focus
attention on improvement in management processes such as inventory turns, timely
new product introductions and development of key contributors.
Annual Performance Improvement Plan
Tektronix' executive officers are eligible to participate in the Company's
Annual Performance Improvement Plan, an annual cash incentive compensation plan.
For the last fiscal year, Company and, where appropriate, business unit
performance objectives were established at the beginning of the fiscal year.
Participants' performance measurements had established thresholds, targets and
maximums that determined the amount of cash payments under the plan. The
Company's performance objectives for the last fiscal year were specified levels
of net sales and of economic value added (excluding nonrecurring items at the
discretion of the Committee). Individual performance objectives for an executive
officer with responsibility for a particular business unit included financial
objectives for the unit. Incentive target performance is based on the Company's
annual operating plan approved by the board of directors. For the last fiscal
year, financial measures represented 100% of the basis for any incentive award
to an executive officer provided by the plan. To ensure that executive officers
would not receive incentive payments under the plan if employees generally did
not receive Results Sharing Plan payments under the plan described below, it was
a condition to payments being made under the plan that the annual threshold for
Results Sharing must be met. The Committee establishes target incentive
opportunities based on the responsibilities of the position, the ability of the
position to impact financial and corporate goals and a comparison of incentives
provided to comparable positions at other similarly sized electronics companies,
with incentives targeted to provide total annual cash compensation at the median
level provided by comparable companies.
12
<PAGE>
Results Sharing Plan
Most regular employees of Tektronix participate in the Results Sharing
Plan. In general, benefits from the Results Sharing Plan are based on
consolidated operating income, to the extent that operating income before
results sharing and other incentives (excluding nonrecurring items at the
discretion of the chief financial officer) exceeds a threshold amount that is
determined in advance for each year. Accordingly, the Results Sharing Plan
requires employees to produce a predetermined threshold of operating income for
the shareholders before receiving any benefits. For the last fiscal year, the
threshold established was $26.25 million of operating income for each fiscal
quarter. Payments under this plan are calculated as a percent of base pay, range
upward from zero at the threshold and are made quarterly.
Executive Long-Term Incentive Compensation Program
In December 1992 the Committee adopted the Executive Long-Term Incentive
Compensation Program to provide an incentive and reward key, selected executives
for improving total shareholder value. The Committee expects that awards will be
made annually to selected executives under this program. This program was
adopted to align executive long-term interests with the interests of
shareholders and the performance of Company operations. The Executive Long-Term
Incentive Compensation Program is currently comprised of two elements: stock
options issued with employment vesting and stock grants issued with three-year
performance vesting (performance shares). The options and performance shares are
issued pursuant to the Company's Stock Incentive Plan. Participant awards
(including awards to the chief executive officer) reflect job responsibilities
and estimated long-term incentive values based in part on compensation data from
a comparative group of electronics companies. Awards under this program are
designed to provide compensation opportunities at target at the median of awards
for similar positions in the high technology electronics industry for slightly
higher performance levels, with the opportunity at above target performance in
the high range of values for similar positions based on high levels of
performance to achieve these values. Of the total estimated award value, one
half is awarded in stock options and the remaining half in performance shares.
The June 1997 stock options were awarded at fair market value. These
options have a five-year term and fully vest two years from the grant date (25%
in six-month increments). The Company continues to grant stock options at fair
market value to new executive officers as a further inducement to join the
Company. The Company grants stock options at fair market value to key employees
who are not executive officers.
Performance shares are granted contingent upon the Company's performance
over a three-fiscal-year period and upon the executive officer remaining in the
same position with the Company during this period (except in the case of death
or disability or a change in position approved by the Committee). The
performance shares granted during the last fiscal year relate to Company
performance during the fiscal years ending in 1998, 1999 and 2000. The
performance measurements are average return on assets and relative total
shareholder return. In general, average return on assets is defined as the
three-year average consolidated net income divided by the three-year average
consolidated total assets. Relative total shareholder return is defined as total
stock price appreciation plus dividends paid during the three-year performance
period divided by the initial stock price. Tektronix compares its total
shareholder return to a group of electronics companies selected by the
Committee. The shares will be earned based on the Company's performance during
the three-year period. Any performance shares that are not earned will be
forfeited to the Company. If the Company's average return on assets and total
shareholder return exceed certain levels, the executive would earn performance
shares up to 1.75 multiplied by the number of original performance shares (or an
equivalent amount in cash at the election of the Company). The Company also
grants stock bonuses contingent on continued employment with the Company or
performance objectives to new executive officers as a further inducement to join
the Company. From time to time the Company also grants stock bonuses to
executive officers contingent on specific performance objectives relating to
that executive officer's position.
13
<PAGE>
Retirement Plans
The Company makes contributions for eligible employees (including executive
officers) under its Cash Balance Plan (see "Cash Balance Plan") and its 401(k)
Plan. Under the 401(k) Plan, eligible employees may elect to have up to 15% of
their pay contributed to the plan, subject to certain tax limitations. The
Company makes matching contributions up to 4% of the participant's compensation,
subject to tax limitations. The Company also makes fixed contributions equal to
2% of the participant's compensation. All fixed contributions by the Company are
invested entirely in Common Shares of the Company. All matching contributions
are in cash.
Executive officers and other senior executives who are recommended by the
Chief Executive Officer and approved by the Committee participate in the
Company's Supplemental Executive Retirement Plan ("SERP"). The SERP is intended
to provide selected senior executives with a performance based supplemental
retirement plan in recognition of their contributions to the long-term success
of the Company. Upon initial eligibility, the Company may credit the
participant's account an amount equal to 50% of the participant's combined
annual base salary and target award amount under the Tektronix Annual
Performance Improvement Plan ("APIP") at the rate in effect at the close of the
first fiscal year in which the executive became a participant. Taking into
account retirement type benefits from prior employers and upon the
recommendation of the Chief Executive Officer, the Committee may specify that a
percentage other than 50% will be applied in determining the start-up credit.
This start-up credit is credited to the participant's account as of July 1 next
following the date the executive becomes a participant. For each year thereafter
that a participant is recommended by the Chief Executive Officer and approved by
the Committee, the Company will add a performance based credit to the account of
the participant equal to 10% of the participant's combined annual base salary
and target APIP award amount at the rate in effect at the close of the
applicable fiscal year. This is credited to the participant's account as of July
1 next following the close of the fiscal year. Subject to earlier vesting upon
death or disability, the accounts fully vest the later of the participant's
reaching age 55 while employed by the Company, or completing five years of
employment with the Company. Forfeiture occurs if employment is terminated for
cause, or if the participant does not enter into a non-competition agreement
upon retirement or other termination of employment with the Company. Payments
are made under the plan after the participant attains age 62 and is no longer
employed by the Company.
Deductibility of Compensation
Section 162(m) of the Internal Revenue Code of 1986, as adopted in 1993,
limits to $1,000,000 per person the amount that the Company may deduct for
compensation paid to any of its most highly compensated officers in any year
after fiscal 1994. The $1,000,000 cap on deductibility will not apply to
compensation that qualifies as "performance-based compensation". Under the
regulations, performance-based compensation includes compensation received
through the exercise of a non-statutory stock option that meets certain
requirements. This option exercise compensation is equal to the excess of the
market price at the time of exercise over the option price and, unless limited
by Section 162(m), is generally deductible by the Company. It is the Company's
current policy generally to grant options that meet the requirements of the
proposed regulations. The Stock Incentive Plan was amended in 1994 to permit
compensation received on vesting of awards similar to the performance share
awards that have been made under the Company's Executive Long-Term Incentive
Compensation Program to qualify as "performance-based compensation" under the
proposed regulations. Qualifying compensation for deductibility under Section
162(m) is one of many factors the Committee considers in determining executive
compensation arrangements. Deductibility will be maintained when it does not
conflict with compensation objectives.
Compensation of Chief Executive Officer
In June 1998, the Committee set Jerome J. Meyer's salary at $745,000. With
respect to Mr. Meyer's salary increase, the Committee took into account a
comparison of base salaries, perquisites and incentives
14
<PAGE>
for chief executive officers of peer companies, the Company's success in meeting
its performance objectives and increasing shareholder value and the assessment
by the Committee of Mr. Meyer's individual performance and contributions. The
Committee believes that Mr. Meyer's annual base salary falls within the
competitive range of salaries for similar positions at similar companies. Mr.
Meyer's participation under the Annual Performance Improvement Plan (APIP) for
the last fiscal year was tied to the Company achieving specified levels of net
sales and of economic value added (excluding non-recurring items at the
discretion of the Committee). The Committee believes that Mr. Meyer's targeted
APIP level was within the competitive range of bonus opportunities for similar
positions at similar companies. Mr. Meyer's APIP payment for the last fiscal
year was $705,000. Mr. Meyer received payments under the Results Sharing Plan
equal to 7.5% of his base pay in accordance with the terms of the plan
applicable to all employees. In June 1997, Mr. Meyer was granted stock options
for 52,500 shares, and 24,000 Performance Shares, pursuant to the criteria
described above with respect to the Executive Long-Term Incentive Compensation
Plan. The Committee believes these awards are within the competitive range of
option grant and bonus share opportunities for similar positions at similar
companies.
Committee report submitted by:
A.M. Gleason, Chairman
Paul C. Ely, Vice Chairman
Pauline Lo Alker
Gerry B. Cameron
Merrill A. McPeak
15
<PAGE>
Comparison of Five-Year Cumulative Total Return
The graph below compares the cumulative total shareholder return on the
Company's Common Shares with the Standard & Poor's 500 Stock Index and the
Standard & Poor's High Technology Composite Index. The graph assumes $100
invested on May 31, 1993 in Tektronix Common Shares and $100 invested at that
time in each of the S&P indexes. The comparison assumes that all dividends are
reinvested.
TSR Comparison
[Line chart depicting performance omitted.
----------------------------------------------------------------
S&P Hi-Tech
Fiscal Year S&P 500 Composite Tektronix
----------------------------------------------------------------
1993 100.00 100.00 100.00
1994 114.28 112.46 126.35
1995 145.70 168.87 202.35
1996 202.04 214.76 167.02
1997 274.02 329.50 253.49
1998 356.78 407.09 170.15
----------------------------------------------------------------]
16
<PAGE>
ITEM 2. PROPOSAL TO APPROVE THE 1998 STOCK OPTION PLAN
Importance of Stock Options to the Company
The board of directors believes that the availability of stock options is
an important factor in the Company's ability to attract and retain experienced
and talented employees and to provide an incentive for them to exert their best
efforts on behalf of the Company. At June 17, 1998 there were only 1,442,706
Common Shares available for future awards under the Company's existing stock
incentive plan, and the board of directors has concluded that additional shares
are needed for stock options. Accordingly, the board of directors adopted,
subject to shareholder approval, the 1998 Stock Option Plan (the "Plan") and
reserved 4,000,000 Common Shares for purposes of the Plan.
During the last fiscal year the Company has utilized approximately
1,149,000 Common Shares for stock option grants under its existing plans. During
the last five years, all options granted by the Company have been non-statutory
options granted at exercise prices at or above the current market price. The
Company places heavy reliance on stock awards in order to motivate key
employees, to control costs, focus on growth and improve the Company's overall
performance. During fiscal year 1998 the Company's stock options outstanding as
a percentage of outstanding Common Shares was 7.0%, compared with an average of
11.1% and a median of 10.3% for a group of over 200 technology companies used by
Tektronix for comparative purposes in determining compensation for key
employees. During the same period the Company's annual option grants as a
percentage of outstanding Common Shares ("gross option utilization") was 2.3%,
compared with an average of 4.5% and a median of 3.3% for the comparative group
of companies. Also during this period the Company's option grants, after taking
into account options that terminated, as a percentage of outstanding Common
Shares ("net option utilization") was 1.5%, compared with an average of 2.7% and
a median of 2.2% for the comparative group of companies. Accordingly, the
Company believes that the dilution impact of its option grants has been in line
with the prevailing practices in its market.
Certain provisions of the Plan are summarized below. The complete text of
the Plan is attached to this proxy statement as Appendix A.
Description of Plan
Shares Reserved for Plan; Types of Options. The Plan reserves 4,000,000
Common Shares (subject to adjustment for changes in capitalization) for issuance
pursuant to stock options granted under the Plan. The Plan permits the grant of
incentive stock options and non-statutory stock options.
Eligibility. All employees of the Company and its subsidiaries, including
employees who are officers or directors, are eligible to be selected for option
grants under the Plan.
Administration. The Plan will be administered by the Organization and
Compensation Committee of the board of directors (the "Committee"), which
consists entirely of directors who are not employees of the Company. If the
Committee ceases to administer the Plan, the administrative action described
below will be taken by the board of directors. The Committee may promulgate
rules and regulations for the operation of the Plan, will interpret the Plan and
related agreements and will generally supervise the administration of the Plan.
The Committee will determine the employees to whom option grants will be made
under the Plan, the amount of the grants and the other terms and conditions of
the grants. Among other actions, the Committee may accelerate any exercise date,
extend the exercise period and amend any provision with respect to an option
grant. The board of directors may designate a committee of officers of the
Company to make option grants to employees who are not officers.
Term of Plan. The Plan will continue until all shares available for
issuance under the Plan have been issued. The board of directors has the power
to suspend or terminate the Plan at any time. The board of directors may also
modify or amend the Plan at any time.
17
<PAGE>
Option Terms. The Committee will determine the employees to whom options
will be granted, the option price, the number of shares to be covered by each
option, the period of each option and the times at which options may be
exercised and whether the option is an incentive stock option (intended to meet
all of the requirements of an incentive stock option as defined in Section 422
of the Internal Revenue Code of 1986, as amended) or a non-statutory option. If
the option is an incentive stock option, the option price cannot be less than
100% of the fair market value of the Common Shares on the date of grant. If an
optionee of an incentive stock option at the time of grant owns stock possessing
more than 10% of the combined voting power of the Company, the option price may
not be less than 110% of the fair market value of the Common Shares on the date
of grant and the option term may not be more than five years from the date of
grant. If the option is a non-statutory stock option, the option price cannot be
less than 100% of the fair market value of the Common Shares on the valuation
date selected by the Committee. The Committee may select the valuation date from
(1) the date of commitment by the Company to grant the option, (2) the date of
approval of the grant by the Committee, or (3) the effective date of the option.
The fair market value of shares covered by a non-statutory option is deemed to
be the closing price of the Common Shares as reported in the NYSE Composite
Transactions in The Wall Street Journal on the date preceding the valuation
date, or such other reported value of the Common Shares, as shall be specified
by the Committee. The fair market value of non-statutory options can also be
established based on average closing prices for a period of not more than 10
trading days preceding the valuation date, as specified by the Committee. No
employee may be granted options under the Plan for more than an aggregate of
600,000 shares in connection with hiring of the employee or 200,000 shares in
any fiscal year otherwise. The Plan limits the amount of incentive stock options
that may vest under the Plan in any year to $100,000 per employee, based on the
fair market value on the grant date of shares covered by such options. No
monetary consideration is paid to the Company upon the granting of options. On
August 3, 1998, the closing price of the Common Shares as reported in the NYSE
Composite Transactions in The Wall Street Journal was $27.3125 per share.
Options may be granted for varying periods established at the time of grant
(not to exceed ten years from the date of the grant and are generally
nontransferable except on death of the holder. Options are exercisable in
accordance with the terms of an option agreement entered into at the time of the
grant. Options may be exercised only while an optionee is in the employ of the
Company or one of its subsidiaries or within one year following termination
because of disability or within one year after the death of the optionee or
within three months following other termination of employment. If the
termination of employment is as a result of death or disability, the option will
become fully exercisable. If the employment of the optionee terminates when the
optionee is eligible for retirement under the Tektronix Pension Plan (the
optionee is age 55 or older), other than as a result of death or disability, the
outstanding options held by the optionee may be exercised by the optionee at any
time prior to the expiration date of the option, the expiration of one year
after the date of such termination, or the expiration of three months after the
optionee's death following termination, whichever is the shortest period, but
only if and to the extent the optionee was entitled to exercise the option at
the date of termination of employment. The Committee may cancel such options of
the retiree at any time prior to exercise unless certain conditions are
satisfied concerning rendering services for a competitor, nondisclosure of
confidential information and assignment of inventions.
The Plan provides that upon a termination of employment the Committee may
extend the exercise period for any period up to the expiration date of the
option and may increase the portion of the option that is exercisable. The
purchase price for shares purchased pursuant to the exercise of options must be
paid in cash, including cash that may be the proceeds of a loan from the Company
or, with the consent of the Committee, in whole or in part in Common Shares.
With the consent of the Committee, an optionee may request the Company to apply
the shares to be received on exercise of a portion of an option to satisfy the
option price for additional portions of the option until the entire option is
exercised. Upon the exercise of an option, the number of shares subject to the
option and the number of shares available for issuance under the Plan are
reduced by the number of shares with respect to which the option is exercised.
Option
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shares which are not purchased prior to the expiration, termination or
cancellation of the options are again available for future awards under the
Plan.
Subject to certain limitations in the Plan, the Plan provides for
accelerated vesting of options granted under the Plan in the event of a future
change in control of the Company or the occurrence of certain events indicating
an imminent change in control of the Company as specified in the Plan. The
special acceleration provision may, in certain circumstances, tend to discourage
attempts to take over the Company.
Options may be granted under the Plan to employees who are residing in
foreign jurisdictions, and the Committee may adopt such supplements to the Plan
as may be necessary to comply with local laws and to afford participants
favorable treatment under such laws, provided that no award may be granted under
any such supplement with terms which are significantly more beneficial to the
participants than are permitted by the Plan.
The Committee may grant options under the Plan that have terms and
conditions that vary from those specified in the Plan when such awards are
granted in substitution for, or in connection with the assumption of, existing
options made by another corporation and assumed or otherwise agreed to be
provided for by the Company in connection with a corporate merger or other
similar transaction to which the Company or a subsidiary is a party.
Tax Consequences
Certain options authorized to be granted under the Plan are intended to
qualify as "incentive stock options" for federal income tax purposes. Under
federal income tax law currently in effect, the optionee will recognize no
income upon grant or exercise of the incentive stock option. If an employee
exercises an incentive stock option and does not dispose of any of the option
shares within two years following the date of grant and within one year
following the date of exercise, then the gain will be realized only upon
subsequent disposition of the shares. If an employee disposes of shares acquired
upon exercise of an incentive stock option before the expiration of either the
one-year holding period or the two-year waiting period, any amount realized will
be taxable for federal income tax purposes in the year of such disqualifying
disposition to the extent that the lesser of the fair market value of the shares
on the exercise date or the fair market value of the shares on the date of
disposition exceeds the option price. The Company will not be allowed any
deduction for federal income tax purposes at either the time of the grant or
exercise of an incentive stock option. Upon any disqualifying disposition by an
employee, the Company will be entitled to a deduction to the extent the employee
realizes income.
Certain options authorized to be granted under the Plan will be treated as
non-statutory stock options for federal income tax purposes. Under federal
income tax law presently in effect, no income is realized by the grantee of a
non-statutory option pursuant to the Plan until the option is exercised. At the
time of exercise of a non-statutory option, the optionee will realize income,
and the Company will generally be entitled to a deduction, in the amount by
which the market value of the shares subject to the option at the time of
exercise exceeds the exercise price. The Company's deduction is conditioned upon
timely reporting of the amount to be included in income by the optionee. Upon
the sale of shares acquired upon exercise of a non-statutory option, the excess
of the amount realized from the sale over the market value of the shares on the
date of exercise will be taxable.
Section 162(m) of the Internal Revenue Code of 1986 limits to $1,000,000
per person the amount that the Company may deduct for compensation paid to any
of its most highly compensated officers in any year after fiscal 1994. Under
applicable regulations, compensation received through the exercise of an option
will not be subject to the $1,000,000 limit if the option and the Plan meet
certain requirements. One such requirement for options is that shareholders
approve per-employee limits on the number of shares as to which options may be
granted. Another requirement for options is that the exercise price be not less
than fair market value of the Common Shares on the date of grant. A final
requirement is that the options be
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granted by a committee of at least two outside directors. The Company believes
that compensation received on exercise of options granted under the Plan in
compliance with all of the above requirements will not be subject to the
$1,000,000 deduction limit.
Recommendation of Board of Directors
The board of directors recommends approval of the Plan. The proposal must
be approved by the holders of at least a majority of the votes cast on the
proposal, provided that the total vote cast on the proposal represents over 50%
of the Common Shares entitled to vote at the annual meeting. If an executed
proxy card is returned and the shareholder has explicitly abstained from voting
on the Plan, the shares represented by such proxy will be considered present at
the meeting for purposes of determining a quorum and will count as votes cast on
the matter but will not count as votes cast in favor of the Plan and, therefore,
will have the same effect as a vote against the Plan. Broker non-votes are
counted for purposes of determining whether a quorum exists at the annual
meeting but are not counted and have no effect on the results of the vote. The
enclosed proxy will be voted in accordance with the instructions specified in
the space provided on the proxy form. If no instructions are given, proxies will
be voted for approval of the Plan.
ITEM 3. PROPOSAL TO AMEND RESTATED ARTICLES OF INCORPORATION TO INCREASE
NUMBER OF AUTHORIZED COMMON SHARES
The board of directors of the Company has unanimously adopted resolutions
approving and recommending to the shareholders for their adoption an amendment
to Section 1 of Article III of the Restated Articles of Incorporation of the
Company (the "Amendment") which would (1) increase the aggregate number of
shares the Company shall have authority to issue from 81,000,000 to 201,000,000
shares and (2) increase the Company's authorized Common Shares, without par
value, from 80,000,000 to 200,000,000 Common Shares.
In October 1997 the Company effected a 3-for-2 stock split in the form of a
stock dividend which increased the Company's outstanding Common Shares by
16,879,383 shares. As of May 30, 1998, 50,344,897 Common Shares were issued and
outstanding and 1,442,706 Common Shares were reserved for issuance under the
Company's stock option plans, stock bonus plan and employee share purchase plan.
In addition, pursuant to Proposal Number 2 described on pages 17 to 20 of this
proxy statement another 4,000,000 Common Shares will be reserved for issuance
under the 1998 Stock Option Plan. Provided Proposal Number 2 is approved by
shareholders at the annual meeting, there will be approximately 24,674,048 of
the Company's presently authorized Common Shares available for future corporate
purposes. The current Restated Articles authorize issuance of up to 1,000,000
preferred shares, with certain preferences, limitations and relative rights, and
this authorization will remain in effect.
The Amendment is designed to enable the board of directors to issue
additional Common Shares when, in its judgment, such issuance would benefit the
Company, without further action by shareholders. Although the Company has no
specific plans, arrangements or understandings to make use of the increased
authorized shares, management believes that the ability to issue additional
shares without the delay and expense of obtaining shareholder approval can be an
advantage to the Company in pursuing acquisition opportunities, in financing and
in connection with possible stock splits or stock dividends. If approved, the
increased number of authorized Common Shares will be available for issuance from
time to time for such purposes as the board of directors may approve and no
further vote of shareholders of the Company will be required. Holders of the
Company's shares do not have preemptive rights.
The availability of the additional authorized Common Shares may have an
anti-takeover effect, since the board of directors would possess the ability to
dilute the position of a major shareholder by issuing additional shares of the
same class, which may make a takeover more difficult or less attractive. The
board
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of directors is not aware of any effort to obtain control of the Company, and
the proposed Amendment is not part of a plan by management to adopt a series of
anti-takeover measures.
Recommendation of Board of Directors
The board of directors recommends that the shareholders vote in favor of
the proposed Amendment to the Restated Articles of Incorporation of the Company.
The proposal will be adopted if a quorum is present at the meeting and more
shares are cast for the proposal than are cast against the proposal.
Accordingly, abstentions and broker non-votes will have no effect on the results
of the vote. The enclosed proxy will be voted in accordance with the
instructions specified in the space provided in the proxy form. If no
instructions are given, proxies will be voted for approval of the proposed
Amendment. The board of directors has no alternative plans if the proposed
Amendment is not adopted.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers, directors and persons who own more than 10% of the Common
Shares to file reports of ownership and changes in ownership with the Securities
and Exchange Commission ("SEC") and the New York Stock Exchange. Executive
officers, directors and beneficial owners of more than 10% of the Common Shares
are required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file. Based solely on a review of the copies of such forms
received by the Company and on written representations from certain reporting
persons, the Company believes that all filing requirements applicable to its
executive officers, directors, and ten-percent stockholders were complied with
during the last fiscal year, with the following exceptions: A.M. Gleason, a
director, filed one late report of one transaction involving a stock purchase;
Mr. Neun, an officer, filed one late report of one transaction involving
transfer of stock to a family trust; and Mr. Brophy, an officer, filed one late
report of one transaction involving a stock purchase.
AUDITORS
The board of directors has selected Deloitte & Touche LLP as the Company's
independent auditors for the current fiscal year. Representatives of Deloitte &
Touche LLP will be present at the annual meeting, will have the opportunity to
make a statement if they so desire and will be available to respond to
appropriate questions.
OTHER MATTERS
Shareholder Proposals in the Company's Proxy Statement. Shareholders
wishing to submit proposals for inclusion in the Company's proxy statement for
the 1999 annual meeting of shareholders must submit the proposals for receipt by
the Company not later than April 22, 1999.
Shareholder Proposals not in the Company's Proxy Statement. Shareholders
wishing to present proposals for action at this annual meeting or at another
shareholders' meeting must do so in accordance with the Company's bylaws. A
shareholder must give timely notice of the proposed business to the Secretary.
To be timely, a shareholder's notice must be in writing, delivered or mailed
(postage prepaid) to and received by the Secretary not less than 50 days nor
more than 75 days prior to the meeting, provided, however, that if less than 65
days' notice or prior public disclosure of the date of the meeting is given to
shareholders, notice by the shareholder, to be timely, must be received by the
Secretary not later than the close of business on the tenth day following the
earlier of the day on which such notice of the date of the meeting was mailed or
public disclosure was made. For each matter the shareholder proposes to bring
before the meeting, the notice to the Secretary must include: (a) a brief
description of the business desired to be brought before the meeting and the
reasons for conducting the business at the meeting, (b) the name and record
address of the shareholder proposing the business, (c) the number of Common
Shares of the
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Company which are beneficially owned by the shareholder and (d) any material
interest of the shareholder in the business to be brought before the meeting.
The chairman of the meeting may, if the facts warrant, determine and declare
that the business was not properly brought before the meeting in accordance with
the Company's bylaws. The Company's 1999 annual meeting of shareholders is
expected to be held on September 23, 1999. Any notice relating to a shareholder
proposal for the 1999 annual meeting, to be timely, must be received by the
Company between July 11, 1999 and August 5, 1999.
Shareholder Nominations for Directors. Shareholders wishing to directly
nominate candidates for the board of directors at an annual meeting must do so
in writing, in accordance with the Company's bylaws, delivered or mailed
(postage prepaid) to and received by the Secretary not less than 50 nor more
than 75 days prior to any meeting of shareholders called for the election of
directors, provided, however, that if less than 65 days' notice or prior public
disclosure of the date of the meeting is given to shareholders, the nomination
must be received by the Secretary not later than the close of business on the
tenth day following the earlier of the day on which the notice of the meeting
was mailed or such public disclosure was made. The notice shall set forth: (a)
the name and address of the shareholder who intends to make the nomination, (b)
the name, age, business address and, if known, residence address of each
nominee, (c) the principal occupation or employment of each nominee, (d) the
number of Common Shares of the Company which are beneficially owned by each
nominee and by the nominating shareholder, (e) any other information concerning
the nominee that must be disclosed of nominees in proxy solicitations pursuant
to Regulation 14A of the Securities Exchange Act of 1934, and (f) the executed
consent of each nominee to serve as a director of the Company if elected.
Shareholders wishing to make any director nominations at any special meeting of
shareholders held for the purpose of electing directors must do so, in
accordance with the bylaws, by delivering timely notice to the Secretary setting
forth the information described above for annual meeting nominations. To be
timely, the notice must be given (a) if given by any shareholder who made a
demand for the meeting, concurrently with the delivery of such demand, and (b)
otherwise, not later than the close of business on the 10th day following the
day on which the notice of the special meeting was mailed. Such notices of
nominations at annual or special meetings shall include a signed consent to
serve as a director of the Company if elected. The chairman of the meeting of
shareholders may, if the facts warrant, determine that a nomination was not made
in accordance with the proper procedures. If the chairman does so, the chairman
shall so declare to the meeting and the defective nomination shall be
disregarded.
While the Notice of Annual Meeting of Shareholders provides for the
transaction of such other business as may properly come before the meeting, the
board of directors has no knowledge of any matters to be presented at the
meeting other than those referred to herein. However, the enclosed proxy gives
discretionary authority in the event that any other matters should be presented.
INFORMATION AVAILABLE TO SHAREHOLDERS
The Company's 1998 Annual Report is being mailed to shareholders with this
proxy statement. Copies of the 1998 Annual Report and the Form 10-K, including
financial statements and financial schedules, filed with the Securities and
Exchange Commission may be obtained without charge from the Secretary, P.O. Box
1000, Wilsonville, Oregon 97070-1000.
BY ORDER OF THE BOARD OF DIRECTORS
James F. Dalton, Secretary
August 20, 1998
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APPENDIX A
PROPOSED
TEKTRONIX, INC.
1998 STOCK OPTION PLAN
1. Purpose. The purpose of this Stock Option Plan (the "Plan") is to enable
Tektronix, Inc. (the "Company") to attract and retain as employees people of
initiative and ability and to provide additional incentives to employees.
2. Shares Subject to the Plan. Subject to adjustment as provided below and
in paragraph 8, the shares to be offered under the Plan shall consist of Common
Shares of the Company, and the total number of Common Shares that may be issued
under the Plan shall not exceed 4,000,000 Common Shares. The shares issued under
the Plan may be authorized and unissued shares or reacquired shares. If an
option granted under the Plan expires, terminates or is cancelled, the unissued
shares subject to such option shall again be available under the Plan.
3. Effective Date and Duration of Plan.
(a) Effective Date. The Plan was adopted by the Board of Directors on
June 17, 1998. The Plan shall become effective when approved by the
shareholders of the Company.
(b) Duration. The Plan shall continue in effect until all shares
available for issuance under the Plan have been issued. The Board of
Directors may suspend or terminate the Plan at any time except with respect
to options then outstanding under the Plan. Termination shall not affect
any outstanding options issued under the Plan.
4. Administration.
(a) Board of Directors. The Plan shall be administered by the Board of
Directors of the Company, which shall determine and designate from time to
time the employees to whom options shall be granted, the amount of the
options and the other terms and conditions of the grants. Subject to the
provisions of the Plan, the Board of Directors may from time to time adopt
and amend rules and regulations relating to administration of the Plan,
accelerate any exercise date, extend any exercise period, amend any
provision applicable to options and make all other determinations in the
judgment of the Board of Directors as necessary or desirable for the
administration of the Plan. The interpretation and construction of the
provisions of the Plan and related agreements by the Board of Directors
shall be final and conclusive. The Board of Directors may correct any
defect or supply any omission or reconcile any inconsistency in the Plan or
in any related agreement in the manner and to the extent it shall deem
expedient to carry the Plan into effect, and it shall be the sole and final
judge of such expediency.
(b) Committee. The Board of Directors may delegate to a committee of
the Board of Directors (the "Committee") any or all authority for
administration of the Plan. If authority is delegated to a Committee, all
references to the Board of Directors in the Plan shall mean and relate to
the Committee except that only the Board of Directors may amend or
terminate the Plan as provided in paragraphs 3 and 11. The Board of
Directors may designate a committee of officers of the Company that shall
have all authority of the Committee to grant and amend options under the
Plan to employees who are not officers.
5. Types of Options; Eligibility; Limitations on Certain Awards. The Board
of Directors may, from time to time, take the following action, under the Plan:
(i) grant Incentive Stock Options, as defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), as provided in paragraph 6(b);
(ii) grant options other than Incentive Stock Options ("Non-Statutory Stock
Options") as provided in paragraph 6(c); and (iii) grant foreign qualified
options as provided in paragraph 7. Any such
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awards may be made to employees, including employees who are officers or
directors, of the Company or its subsidiaries. The Board of Directors shall
select the employees to whom awards shall be made. The Board of Directors shall
specify the action taken with respect to each employee to whom an award is made
under the Plan. No employee may be granted options under the Plan for more than
an aggregate of 600,000 Common Shares in connection with the hiring of the
employee or 200,000 Common Shares in any fiscal year otherwise.
6. Option Grants.
(a) Grant. With respect to each option grant, the Board of Directors
shall determine the number of shares subject to the option, the option
price, the period of the option (which shall not exceed ten years from the
date of grant), the time or times at which the option may be exercised and
whether the option is an Incentive Stock Option or a Non-Statutory Stock
Option.
(b) Incentive Stock Options. Incentive Stock Options shall be subject
to the following terms and conditions:
(i) No employee may be granted Incentive Stock Options under the
Plan such that the aggregate fair market value, on the date of grant,
of the Common Shares with respect to which Incentive Stock Options are
exercisable for the first time by that employee during any calendar
year under the Plan and under any other incentive stock option plan
(within the meaning of Section 422 of the Code) of the Company or any
parent or subsidiary of the Company exceeds $100,000.
(ii) An Incentive Stock Option may be granted under the Plan to
an employee possessing more than 10 percent of the total combined
voting power of all classes of stock of the Company or of any parent
or subsidiary of the Company only if the option price is at least 110
percent of the fair market value of the Common Shares subject to the
option on the date it is granted, as described in paragraph 6(b)(iv)
and the option term does not exceed five years from the date of grant.
(iii) The option price per share shall be determined by the Board
of Directors at the date of grant. Except as provided in paragraph
6(b)(ii), the option price shall not be less than 100 percent of the
fair market value of the Common Shares covered by the Incentive Stock
Option at the time the option is granted. The fair market value shall
be deemed to be the closing price of the Common Shares as reported in
the NYSE Composite Transactions in The Wall Street Journal on the day
preceding the date the option is granted, or if there has been no sale
on that date, on the last preceding date on which a sale occurred, or
such other reported value of the Common Shares as shall be specified
by the Board of Directors.
(iv) No Incentive Stock Option shall be granted on or after June
17, 2008.
(v) The Board of Directors may at any time without the consent of
the optionee convert an Incentive Stock Option to a Non-Statutory
Stock Option.
(vi) Subject to adjustment as provided in paragraph 8, the total
number of Common Shares that may be issued under the Plan upon
exercise of Incentive Stock Options shall not exceed 4,000,000 shares.
(c) Non-Statutory Stock Options. The option price for Non-Statutory
Stock Options shall be determined by, or in the manner specified by, the
Board of Directors at the time of grant. The option price may not be less
than 100 percent of the fair market value of the shares on the valuation
date selected by the Board of Directors. The Board of Directors may select
the valuation date from among the following dates: (i) the date of
commitment by the Company to grant the option; (ii) the date of approval of
the option grant by the Board of Directors or (iii) the effective date of
the option. The fair market value of shares covered by a Non-Statutory
Stock Option shall be deemed to be the closing
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price of the Common Shares as reported in the NYSE Composite Transactions
in The Wall Street Journal on the date preceding the valuation date, or if
there has been no sale on that date, on the last preceding date on which a
sale occurred, or such other reported value of the Common Shares, or
average closing prices for a period of not more than 10 trading days
preceding the valuation date, as shall be specified by the Board of
Directors.
(d) Exercise of Options. Except as provided in paragraph 6(f), no
option granted under the Plan may be exercised unless at the time of such
exercise the optionee is employed by the Company or any subsidiary of the
Company and shall have been so employed continuously since the date such
option was granted. Absence on leave or on account of illness or disability
under rules established by the Board of Directors shall not, however, be
deemed an interruption of employment for this purpose. Except as provided
in paragraphs 6(f), 8 and 9, options granted under the Plan may be
exercised from time to time over the period stated in each option in such
amounts and at such times as shall be prescribed by the Board of Directors,
provided that options shall not be exercised for fractional shares. Unless
otherwise determined by the Board of Directors, if the optionee does not
exercise an option in any one year with respect to the full number of
shares to which the optionee is entitled in that year, the optionee's
rights shall be cumulative and the optionee may purchase those shares in
any subsequent year during the term of the option.
(e) Nontransferability. Each Incentive Stock Option and, unless
otherwise determined by the Board of Directors, each other option granted
under the Plan by its terms shall be nonassignable and nontransferable by
the optionee, either voluntarily or by operation of law, except by will or
by the laws of descent and distribution of the state or country of the
optionee's domicile at the time of death, and each option by its terms
shall be exercisable during the optionee's lifetime only by the optionee.
(f) Termination of Employment, Disability or Death.
(i) Unless otherwise determined by the Board of Directors, in the
event the employment of the optionee by the Company or a subsidiary
terminates for any reason other than because of death or disability or
when eligible for retirement as provided in paragraphs 6(f)(ii), (iii)
and (iv), the option may be exercised at any time prior to the
expiration date of the option or the expiration of three months after
the date of such termination of employment, whichever is the shorter
period, but only if and to the extent the optionee was entitled to
exercise the option at the date of such termination.
(ii) Unless otherwise determined by the Board of Directors, in
the event of the termination of an optionee's employment when eligible
for retirement on or after age 55 under the Tektronix Pension Plan
(other than because of death as provided in paragraph 6(f)(iv) or
because of disability as provided in paragraph 6(f)(iii)), the option
may be exercised at any time prior to the expiration date of the
option, the expiration of one year after the date of such termination,
or the expiration of three months after the optionee's death following
termination, whichever is the shortest period, but only if and to the
extent the optionee was entitled to exercise the option on the date of
termination. The Board of Directors may, in its sole discretion,
cancel any such options at any time prior to the exercise thereof
unless the following conditions are met:
(A) The optionee shall not render services for any
organization or engage directly or indirectly in any business
which, in the judgment of the Chief Executive Officer of the
Company, is or becomes competitive with the Company, or which is
or becomes otherwise prejudicial to or in conflict with the
interests of the Company. The judgment of the Chief Executive
Officer shall be based on the optionee's positions and
responsibilities while employed by the Company, the optionee's
post-employment responsibilities and position with the other
organization or business, the extent of past, current and
potential competition or conflict between the Company and the
other organization or business, the effect on the Company's
customers, suppliers and competitors of the optionee's assuming
the
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post-employment position, and such other considerations as are
deemed relevant given the applicable facts and circumstances. The
optionee shall be free, however, to purchase as an investment or
otherwise, stock or other securities of such organization or
business so long as they are listed upon a recognized securities
exchange or traded over-the-counter, and such investment does not
represent a substantial investment to the optionee or a greater
than 10 percent equity interest in the organization or business.
(B) The optionee shall not, without prior written
authorization from the Company, disclose to anyone outside the
Company, or use in other than the Company's business, any
confidential information or material, as defined in the Company's
employee confidentiality agreement, relating to the business of
the Company, acquired by the optionee either during or after
employment with the Company.
(C) The optionee, pursuant to the Company's employee
confidentiality agreement, shall disclose promptly and assign to
the Company all right, title, and interest in any invention or
idea, patentable or not, made or conceived by the optionee during
employment by the Company, relating in any manner to the actual
or anticipated business, research or development work of the
Company and shall do anything reasonably necessary as requested
by the Company to enable the Company to secure a patent where
appropriate in the United States and in foreign countries.
(iii) Unless otherwise determined by the Board of Directors, in
the event of the termination of employment because of disability as
defined in the applicable option agreement, the option shall become
exercisable in full and may be exercised by the optionee at any time
prior to the expiration date of the option or the expiration of one
year after the date of such termination, whichever is the shorter
period.
(iv) Unless otherwise determined by the Board of Directors, in
the event of the death of an optionee while in the employ of the
Company or a subsidiary, the option shall become exercisable in full
and may be exercised at any time prior to the expiration date of the
option or the expiration of one year after the date of such death,
whichever is the shorter period, but only by the person or persons to
whom such optionee's rights under the option shall pass by the
optionee's will or by the laws of descent and distribution of the
state or country of domicile at the time of death.
(v) The Board of Directors, at the time of grant or at any time
thereafter, may extend the three-month and one-year expiration periods
any length of time not later than the original expiration date of the
option, and may increase the portion of an option that is exercisable,
subject to such terms and conditions as the Board of Directors may
determine.
(vi) To the extent that the option of any deceased optionee or of
any optionee whose employment terminates is not exercised within the
applicable period, all further rights to purchase shares pursuant to
such option shall cease and terminate.
(g) Purchase of Shares. Unless the Board of Directors determines
otherwise, shares may be acquired pursuant to an option granted under the
Plan only upon receipt by the Company of notice in writing from the
optionee of the optionee's intention to exercise, specifying the number of
shares as to which the optionee desires to exercise the option and the date
on which the optionee desires to complete the transaction, and if required
in order to comply with the Securities Act of 1933, as amended, containing
a representation that it is the optionee's present intention to acquire the
shares for investment and not with a view to distribution. Unless the Board
of Directors determines otherwise, on or before the date specified for
completion of the purchase of shares pursuant to an option, the optionee
must have paid the Company the full purchase price of such shares in cash
(including, with the consent of the Board of Directors, cash that may be
the proceeds of a loan from
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the Company) or, with the consent of the Board of Directors, in whole or in
part, in Common Shares of the Company valued at fair market value. The fair
market value of Common Shares provided in payment of the purchase price
shall be the closing price of the Common Shares as reported in the NYSE
Composite Transactions in The Wall Street Journal, or such other reported
value of the Common Shares as shall be specified by the Board of Directors,
on the trading day preceding the date the option is exercised. No shares
shall be issued until full payment therefor has been made. With the consent
of the Board of Directors an optionee may request the Company to apply
automatically the shares to be received upon the exercise of a portion of a
stock option (even though stock certificates have not yet been issued) to
satisfy the purchase price for additional portions of the option. Each
optionee who has exercised an option shall immediately upon notification of
the amount due, if any, pay to the Company in cash amounts necessary to
satisfy any applicable federal, state and local tax withholding
requirements. If additional withholding is or becomes required beyond any
amount deposited before delivery of the certificates, the optionee shall
pay such amount to the Company on demand. If the optionee fails to pay the
amount demanded, the Company may withhold that amount from other amounts
payable by the Company to the optionee, including salary, subject to
applicable law. With the consent of the Board of Directors an optionee may
satisfy this obligation, in whole or in part, by having the Company
withhold from the shares to be issued upon the exercise that number of
shares that would satisfy the withholding amount due or by delivering to
the Company Common Shares to satisfy the withholding amount. Upon the
exercise of an option, the number of shares reserved for issuance under the
Plan shall be reduced by the number of shares issued upon exercise of the
option, less the number of shares surrendered in payment of the option
exercise or surrendered or withheld to satisfy withholding obligations.
7. Foreign Qualified Grants. Options may be granted under the Plan to such
officers and employees of the Company and its subsidiaries who are residing in
foreign jurisdictions as the Board of Directors may determine from time to time.
The Board of Directors may adopt such supplements to the Plan as may be
necessary to comply with the applicable laws of such foreign jurisdictions and
to afford participants favorable treatment under such laws; provided, however,
that no option be granted under any such supplement with terms which are
significantly more beneficial to the participants than the terms permitted by
the Plan.
8. Changes in Capital Structure. If the outstanding Common Shares of the
Company are hereafter increased or decreased or changed into or exchanged for a
different number or kind of shares or other securities of the Company or of
another corporation by reason of any reorganization, merger, consolidation, plan
of exchange, recapitalization, reclassification, stock split-up, combination of
shares or dividend payable in shares, appropriate adjustment shall be made by
the Board of Directors in the number and kind of shares available for awards
under the Plan. In addition, the Board of Directors shall make appropriate
adjustment in the number and kind of shares as to which outstanding options, or
portions thereof then unexercised, shall be exercisable, to the end that the
optionee's proportionate interest is maintained as before the occurrence of such
event. Notwithstanding the foregoing, the Board of Directors shall have no
obligation to effect any adjustment that would or might result in the issuance
of fractional shares, and any fractional shares resulting from any adjustment
may be disregarded or provided for in any manner determined by the Board of
Directors. Any such adjustments made by the Board of Directors shall be
conclusive. In the event of dissolution of the Company or a merger,
consolidation or plan of exchange affecting the Company in lieu of providing for
options as provided above in this paragraph 8, the Board of Directors may, in
its sole discretion, provide a 30-day period prior to such event during which
optionees shall have the right to exercise options in whole or in part without
any limitation on exercisability and upon the expiration of such 30-day period
all unexercised options shall immediately terminate.
A-5
<PAGE>
9. Special Acceleration in Certain Events.
(a) Special Acceleration. A special acceleration ("Special
Acceleration") of options outstanding under the Plan shall occur with the
effect set forth in paragraph 9(b) at any time when any one of the
following events has taken place:
(i) The shareholders of the Company approve one of the following
("Approved Transactions") and either (x) such Approved Transaction is
consummated or (y) the Board of Directors determines that consummation
of such Approved Transaction is likely and establishes an option
exercise period in connection with the consummation of the Approved
Transaction:
(1) Any consolidation, merger or plan of exchange involving
the Company ("Merger") in which the Company is not the continuing
or surviving corporation or pursuant to which Common Shares would
be converted into cash, securities or other property, other than
a Merger involving the Company in which the holders of Common
Shares immediately prior to the Merger have the same
proportionate ownership of Common Shares of the surviving
corporation after the Merger; or
(2) Any sale, lease, exchange, or other transfer (in one
transaction or a series of related transactions) of all or
substantially all of the assets of the Company or the adoption of
any plan or proposal for the liquidation or dissolution of the
Company; or
(ii) A tender or exchange offer, other than one made by the
Company, is made for Common Shares (or securities convertible into
Common Shares) and such offer results in a portion of those securities
being purchased and the offeror after the consummation of the offer is
the beneficial owner (as determined pursuant to Section 13(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")),
directly or indirectly, of at least 20 percent of the outstanding
Common Shares (an "Offer"); or
(iii) During any period of 12 months or less, individuals who at
the beginning of such period constituted a majority of the Board of
Directors cease for any reason to constitute a majority thereof unless
the nomination or election of such new directors was approved by a
vote of at least two-thirds of the directors then still in office who
were directors at the beginning of such period.
The terms used in this paragraph 9 and not defined elsewhere in the
Plan shall have the same meanings as such terms have in the Exchange Act
and the rules and regulations adopted thereunder.
(b) Effect on Outstanding Options. Upon a Special Acceleration
pursuant to paragraph 9(a), all options then outstanding under the Plan
shall immediately become exercisable in full for the remainder of their
terms or until earlier terminated pursuant to paragraph 8, except that a
Special Acceleration shall have no effect on outstanding options if the
Board of Directors determines, after consulting with its independent public
accountants, that such acceleration could adversely affect the Company's
eligibility to be a party to a transaction accounted for as a
pooling-of-interests.
10. Corporate Mergers, Acquisitions, etc. The Board of Directors may also
grant options under the Plan having terms, conditions and provisions that vary
from those specified in the Plan provided that any such options are granted in
substitution for, or in connection with the assumption of, existing options
granted by another corporation and assumed or otherwise agreed to be provided
for by the Company pursuant to or by reason of a transaction involving a
corporate merger, consolidation, acquisition of property or stock, separation,
reorganization or liquidation to which the Company or a subsidiary is a party.
11. Amendment of Plan. The Board of Directors may at any time, and from
time to time, modify or amend the Plan in such respects as it shall deem
advisable because of changes in the law while the Plan is in effect or for any
other reason. Except as provided in paragraphs 6(f), 8, and 9, however, no
change in an option already granted shall be made without the written consent of
the holder of such option.
A-6
<PAGE>
12. Approvals. The obligations of the Company under the Plan are subject to
the approval of state and federal authorities or agencies with jurisdiction in
the matter. The Company will use its best efforts to take steps required by
state or federal law or applicable regulations, including rules and regulations
of the Securities and Exchange Commission and any stock exchange on which the
Company's shares may then be listed, in connection with the grants under the
Plan. The foregoing notwithstanding, the Company shall not be obligated to issue
or deliver Common Shares under the Plan if such issuance or delivery would
violate applicable state or federal securities laws.
13. Employment Rights. Nothing in the Plan or any award pursuant to the
Plan shall confer upon (i) any employee any right to be continued in the
employment of the Company or any subsidiary or shall interfere in any way with
the right of the Company or any subsidiary by whom such employee is employed to
terminate such employee's employment at any time, for any reason, with or
without cause, or to increase or decrease such employee's compensation or
benefits, or (ii) any person engaged by the Company any right to be retained or
employed by the Company or to the continuation, extension, renewal, or
modification of any compensation, contract, or arrangement with or by the
Company.
14. Rights as a Shareholder. The recipient of any grant under the Plan
shall have no rights as a shareholder with respect to any Common Shares until
the date of issue to the recipient of a stock certificate upon the exercise of
an option. Except as otherwise expressly provided in the Plan, no adjustment
shall be made for dividends or other rights for which the record date is prior
to the date such stock certificate is issued.
A-7
<PAGE>
P TEKTRONIX, INC.
R Portland Art Museum, 1219 S.W. Park Avenue, Portland, Oregon 97204
O Annual Meeting of Shareholders, September 24, 1998
X
Y PROXY - SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of Tektronix, Inc. hereby appoints Jerome J. Meyer,
Carl W. Neun and James F. Dalton, and each of them, proxies with full power of
substitution, and authorize them to represent and to vote on behalf of the
undersigned shareholder all common shares of Tektronix, Inc. that the
undersigned is entitled to vote at the annual meeting of shareholders of
Tektronix, Inc. to be held on September 24, 1998, and any adjournment or
adjournments thereof. A majority of the proxies or substitutes present at the
meeting may exercise all granted powers in accordance with this proxy, with
respect to the matters indicated on the reverse.
THIS PROXY WILL BE VOTED AS DIRECTED BUT WHERE NO DIRECTION IS GIVEN IT WILL BE
VOTED FOR THE ELECTION OF ALL DIRECTORS, FOR THE PROPOSAL TO APPROVE THE 1998
STOCK OPTION PLAN, AND FOR THE PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED COMMON SHARES. THE PROXIES MAY VOTE IN
THEIR DISCRETION AS TO OTHER MATTERS THAT MAY COME BEFORE THIS MEETING.
(Continued, and to be marked, dated and signed on the other side)
FOLD AND DETACH HERE
<PAGE>
<TABLE>
<CAPTION>
Please mark your -----
votes as in this | x |
example. -----
<S> <C> <C> <C>
FOR all WITHHOLD
nominees listed AUTHORITY
(except as marked to vote for all
to the contrary) nominees listed
1. ELECTION OF DIRECTORS: [ ] [ ]
NOMINEES: David N. Campbell,
A.M. Gleason and Merrill A. McPeak
INSTRUCTIONS: To withhold authority
to vote for any individual nominee, strike
a line through the nominee's name in the
list above.
2. Approval of the Company's
1998 Stock Option Plan FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Approval of Amendment to Articles of
Incorporation to increase the number
of authorized common shares from
80,000,000 shares to 200,000,000
shares.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. DISCRETIONARY MATTERS
The proxies are authorized to vote in
their discretion upon any other
matters properly coming before the
meeting or any adjournment or
adjournments thereof.
Please sign exactly as your name(s) appears. When shares are held jointly, both
should sign. When signing as an attorney, executor, administrator, trustee or
guardian, please give full title as such. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
Signature(s) _________________________________________________ Date ____________
Signature(s) _________________________________________________
________________________________________________________________________________
FOLD AND DETACH HERE
Annual Meeting of Shareholders
TEKTRONIX, INC.
Portland Art Museum
1219 S.W. Park Avenue
Portland, OR 97204
September 24, 1998
10:00 A.M.
</TABLE>
<PAGE>
P TEKTRONIX, INC.
R Portland Art Museum, 1219 S.W. Park, Portland, Oregon 97204
O Annual Meeting of Shareholders, September 24, 1998
X
Y PROXY - SOLICITED ON BEHALF OF THE 401(k) PLAN TRUSTEE
The undersigned participant in the Tektronix, Inc. 401(k) Plan hereby appoints
Jerome J. Meyer, Carl W. Neun and James F. Dalton, and each of them, proxies
designated by the Plan Trustee with full power of substitution, and authorizes
them to represent and to vote all common shares of Tektronix, Inc. allocated to
the participants' account under the Plan at the annual meeting of shareholders
of Tektronix, Inc. to be held on September 24, 1998, and any adjournment or
adjournments thereof. A majority of the proxies or substitutes present at the
meeting may exercise all granted powers in accordance with this proxy, with
respect to the matters indicated on the reverse.
THIS PROXY WILL BE VOTED AS DIRECTED BUT WHERE NO DIRECTION IS GIVEN IT WILL BE
VOTED FOR THE ELECTION OF ALL DIRECTORS, FOR THE PROPOSAL TO APPROVE THE 1998
STOCK OPTION PLAN, AND FOR THE PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED COMMON SHARES. THE PROXIES MAY VOTE IN
THEIR DISCRETION AS TO OTHER MATTERS THAT MAY COME BEFORE THIS MEETING.
(Continued, and to be marked, dated and signed on the other side)
FOLD AND DETACH HERE
<PAGE>
<TABLE>
<CAPTION>
Please mark your -----
votes as in this | x |
example. -----
<S> <C> <C> <C>
FOR all WITHHOLD
nominees listed AUTHORITY
(except as marked to vote for all
to the contrary) nominees listed
1. ELECTION OF DIRECTORS: [ ] [ ]
NOMINEES: David N. Campbell,
A.M. Gleason and Merrill A. McPeak
INSTRUCTIONS: To withhold authority
to vote for any individual nominee, strike
a line through the nominee's name in the
list above.
2. Approval of the Company's
1998 Stock Option Plan FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Approval of Amendment to Articles of
Incorporation to increase the number
of authorized common shares from
80,000,000 shares to 200,000,000
shares.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. DISCRETIONARY MATTERS
The proxies are authorized to vote in
their discretion upon any other
matters properly coming before the
meeting or any adjournment or
adjournments thereof.
Please sign exactly as your name appears.
Signature(s) ______________________________________ Date _______________________
FOLD AND DETACH HERE
Annual Meeting of Shareholders
TEKTRONIX, INC.
Portland Art Museum
1219 S.W. Park Avenue
Portland, OR 97204
September 24, 1998
10:00 A.M.
</TABLE>
