SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. __)
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[ X ] Definitive Proxy Statement
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[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Tektronix, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
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<PAGE>
[Tektronix logo]
August 20, 1999
Dear Shareholder:
You are cordially invited to attend the annual meeting of shareholders of
Tektronix, Inc., which will be held on Thursday, September 23, 1999 at 10:00
a.m., at Tektronix, Inc., Building 60 Auditorium, 26600 S.W. Parkway,
Wilsonville, 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
Jerome J. Meyer
Chairman, Chief Executive Officer
and President
<PAGE>
[Tektronix logo]
Notice of Annual Meeting of Shareholders
to be held on September 23, 1999
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
23, 1999 at 10:00 a.m., local time, at Tektronix, Inc., Building 60 Auditorium,
26600 S.W. Parkway, Wilsonville, Oregon, for the following purposes:
1. To elect five directors;
2. To transact such other business as may properly come before the
meeting.
Only shareholders of record at the close of business on Monday, August 2, 1999,
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, 1999
<PAGE>
TEKTRONIX, INC.
PROXY STATEMENT
The annual meeting of shareholders of Tektronix, Inc. (the "Company" or
"Tektronix") will be held Thursday, September 23, 1999, at 10:00 a.m., at
Tektronix, Inc., Building 60 Auditorium, 26600 S.W. Parkway, Wilsonville,
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, 1999.
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 47,077,115 Common Shares of the Company outstanding at the close
of business on August 2, 1999, 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, 1999 by each person who, to the knowledge of the board of directors,
owned beneficially more than 5% of the Common Shares:
<TABLE>
<CAPTION>
Amount and nature of Percent
Name and address of Beneficial Owner beneficial ownership of Class
- ------------------------------------ -------------------- --------
<S> <C> <C>
Relational Investors, LLC, ................................ 4,674,000 (1) 9.96%
as sole general partner of Relational Investors,
L.P., Relational Fund Partners, L.P., Relational
Coast Partners, L.P., and Relational Partners, L.P.
4330 La Jolla Village Drive, Suite 220
San Diego, CA 92122
VANGUARD/PRIMECAP FUND INC. ............................... 3,400,000 (2) 7.19%
P.O. Box 2600, VM #V34
Valley Forge, PA 19482-2600
Merrill Lynch & Co., Inc. ................................. 2,928,544 (3) 6.2%
World Financial Center, North Tower
250 Vesey Street
New York, NY 10381
1
<PAGE>
Merrill Lynch Basic Value Fund, Inc. ...................... 2,400,000 (4) 5.1%
800 Scudders Mill Road
Plainsboro, New Jersey 08536
Morgan Stanley Dean Witter & Co. .......................... 2,798,962 (5) 5.92%
1585 Broadway
New York, NY 10036
Miller Anderson & Sherrerd, LLP ........................... 2,481,910 (6) 5.25%
1 Tower Bridge Suite 1100
West Conshohocken, PA 19428
- --------------
(1) Based on information set forth in Form 13D dated July 6, 1999 filed jointly
with the Securities and Exchange Commission ("SEC") by Relational
Investors, LLC ("RILLC"), Relational Investors, L.P. ("RILP"), Relational
Fund Partners, L.P. ("RFP"), Relational Coast Partners, L.P. ("RCP"),
Relational Partners, L.P. ("RP"), and Ralph V. Whitworth, David H.
Batchelder and Joel L. Reed, managing members of RILLC. These shares are
held as follows: RILLC has sole voting and dispositive power as to
4,674,000 shares; RILP has sole voting and dispositive power as to
3,640,702 shares; RFP has sole voting and dispositive power as to 83,551
shares; RCP has sole voting and dispositive power as to 124,227 shares; and
RP has sole voting and dispositive power as to 395,636 shares. Mr.
Whitworth, Mr. Batchelder and Mr. Reed are the Managing Members of RILLC,
in which capacity they share voting control and dispositive power over the
securities listed.
(2) Based on information set forth in Form 13G/A dated February 10, 1999, filed
with the SEC by VANGUARD/PRIMECAP FUND INC. These shares are held with sole
voting and shared dispositive power.
(3) Based on information set forth in Form 13G dated February 5, 1999, filed
with the SEC by Merrill Lynch & Co., Inc. on behalf of Merrill Lynch Asset
Management Group ("AMB"). These shares are held with shared voting and
dispositive power.
(4) Based on information set forth in Form 13G dated February 5, 1999 filed
with the SEC by Merrill Lynch Basic Value Fund, Inc. These shares are held
with shared voting and dispositive power.
(5) Based on information set forth in Form 13G dated February 5, 1999 filed
with the SEC by Morgan Stanley Dean Witter & Co. These shares are held with
shared voting power as to 2,413,102 shares and shared dispositive power as
to 2,798,962 shares.
(6) Based on information set forth in Form 13G dated February 5, 1999 filed
with the SEC by Miller Anderson & Sherrerd, LLP. These shares are held with
shared voting power as to 2,150,200 and shared dispositive power as to
2,481,910 shares.
</TABLE>
2
<PAGE>
BOARD OF DIRECTORS
The board of directors currently consists of eleven 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 I directors expires at
the 1999 annual meeting; the term of office of Class II directors expires in
2000; and that of Class III directors expires in 2001. 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.
BOARD COMMITTEES AND MEETINGS
The Company currently has standing Executive, Audit, Directors, and
Organization and Compensation Committees of the board of directors. Each
committee operates pursuant to a written charter. All directors are invited to
attend the committee meetings regardless of their membership. The members of the
committees are identified in the following table.
<TABLE>
<CAPTION>
Organization &
Director Executive Audit* Directors* Compensation*
- -------- --------- ------ ---------- --------------
<S> <C> <C> <C> <C>
P. Alker................................... X X X
A. Ames.................................... X X
G. Cameron................................. X Chair X
D. Campbell................................ X X
P. Ely..................................... X Chair
F. Gill.................................... X
A. Gleason................................. Chair X
M. McPeak.................................. Chair X
J. Meyer................................... X
W. Walker.................................. X X
R. Whitworth**.............................
- --------------
* These committees currently consist entirely of independent directors.
** Elected to the board July 6, 1999. Committee assignment to occur following
annual meeting of shareholders.
</TABLE>
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 once during the last fiscal year.
Audit Committee members have no relationship to the Company that may
interfere with the exercise of their independence from management and the
Company. The Audit Committee recommends for approval by the board of directors
an independent firm of certified public accountants whose duty it is to audit
the financial statements of the Company for the fiscal year in which they are
appointed. The Audit Committee monitors the activities of internal and external
auditors, including the audit scope, fees and the auditor's independence. The
Audit Committee also reviews with the independent accountant and the internal
auditor the results of the internal and external audit work to assess the
adequacy and appropriateness of the Company's financial and accounting controls.
The Committee reviews changes in accounting standards that affect the financial
statements and obtains an explanation from management of all major events that
may have significant financial impact. In addition, the Audit Committee oversees
the Company's internal compliance programs. The Audit Committee held seven
meetings during the last fiscal year. The Audit Committee consists entirely of
independent directors.
The Committee on Directors, consisting entirely of independent directors,
establishes procedures for the board membership nomination process, recommends
candidates for election to the board of directors, nominates officers for
election, and recommends committee membership. The Committee assesses the
3
<PAGE>
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 reviews the board's policy with respect
to director qualifications and director compensation, and recommends changes to
the board. The Committee also reviews and reports to the board on a periodic
basis with regard to matters of corporate governance. The Committee on Directors
held four meetings during the last fiscal year. Any stockholder who wishes to
recommend a prospective nominee for the board of directors for the Committee on
Director's consideration may do so by following the procedures described in this
proxy under Shareholder Nominations for Directors, under the main heading Other
Matters.
The Organization and Compensation Committee, which is described in the
Organization and Compensation Committee Report on Executive Compensation, held
four meetings during the last fiscal year.
CORPORATE GOVERNANCE GUIDELINES AND POLICIES
The board of directors has adopted Corporate Governance Guidelines, which
are reviewed periodically by the Committee on Directors to determine if changes
should be recommended to the board of directors. Among other matters, the
Corporate Governance Guidelines and Company practices and policies include the
following:
o A majority of the members of the board of directors shall be
independent directors, as defined in the applicable rules of the New
York Stock Exchange. Currently, ten of the eleven directors are
independent. Generally, independence means that the director must be
independent of management and free from any relationship that, in the
opinion of the board, would interfere with the exercise of independent
judgment as a director. Directors who are employees of the Company or
one of its subsidiaries are not independent.
o Board membership consists of three classes. Each class of directors
serves a three-year term. Directors can stand for re-election at the
end of a term. Directors must resign from the board at the board
meeting next following their 70th birthday. Employee directors must
resign upon retirement from the Company.
o Members of board committees are appointed by the board, upon
recommendation by the Committee on Directors.
o The Audit Committee and the Organization and Compensation Committee
consist entirely of independent directors.
o The board has initiated a process whereby the board and its members
are subject to periodic evaluation and assessment.
o The board annually reviews the Company's strategic long-range plan,
business unit initiatives, capital projects and budget matters.
o The Chairman of the Executive Committee is an independent director. If
and when the need might arise, the Chairman of the Executive Committee
could act as a lead director responsible for setting the agenda and
running meetings.
o Succession planning and management development are reported
periodically by the Chief Executive Officer to the board.
o The board evaluates the performance of the Chief Executive Officer and
other senior management personnel at least annually.
o Incentive compensation plans link pay directly and objectively to
measured financial goals set in advance by the Compensation Committee.
See "Organization and Compensation Committee Report on Executive
Compensation" for additional information.
o In 1999, the board adopted the policy that directors are expected to
annually make significant progress toward accumulating, within three
years of becoming a director, common stock of the Company with a value
equal to three times the director's annual retainer.
4
<PAGE>
ITEM 1. ELECTION OF DIRECTORS
Action will be taken at the 1999 annual meeting to elect four Class I
directors to serve until 2002 and one Class II director to serve until the 2000
annual meeting of shareholders. Those nominees, as well as the Class II and
Class III directors who are continuing to serve, are listed below, together with
certain information about each of them. The nominees for election at the 1999
annual meeting are Pauline Lo Alker, A. Gary Ames, Paul C. Ely, Jr., Frank C.
Gill, and Ralph V. Whitworth. Mrs. Alker and Messrs. Ames and Ely have served as
directors since 1996, 1994 and 1992, respectively. Mr. Gill was elected to the
board by action of the board effective March 17, 1999 and Mr. Whitworth was
elected to the board by action of the board effective July 6, 1999, pursuant to
an agreement with Mr. Whitworth as the managing member of Relational Investors,
LLC, a shareholder of the Company. The agreement is more fully described below.
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 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 I (Term Ending 1999)
*Pauline Lo Alker, 56, is Chairman of the Board, Chief Executive Officer
and President of Amplify.net, Inc. (end-to-end IP service management solutions
for internet service providers, carriers, and CLECs), 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, 54, 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 Communications PLC., and Flextech PLC.
*Paul C. Ely, Jr., 67, 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
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.
*Frank C. Gill, 55, is a retired Intel Corporation executive. At the time
of his retirement from Intel, he was Executive Vice President and had held a
variety of positions in sales, marketing, product development and manufacturing
operations during his 23 year career. Mr. Gill holds a BS degree in electrical
engineering from the University of California at Davis. Mr. Gill was elected to
the board of Tektronix, Inc. in March 1999 and is a member of the Committee on
Directors. He is currently a private investor and a
- --------------
* Nominee for election at 1999 annual meeting.
5
<PAGE>
director of Sequent Computer Systems, Inc., Inktomi, Inc., TelCom Semiconductor,
Inc., and other private technology companies.
Class II (Term Ending 2000)
Gerry B. Cameron, 61, a retired corporate executive, was Chairman of U.S.
Bancorp from 1994 to December 1998. 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 Regence Blue
Cross Blue Shield of Oregon, and The Regence Group. Mr. Cameron has served as a
director since 1997. He is Chairman of the Committee on Directors, and is a
member of the Audit Committee and the Organization and Compensation Committee.
Jerome J. Meyer, 61, 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. He is a
director of Standard Insurance Company and Enron Corporation.
*Ralph V. Whitworth, 43, has been a principal and managing member of
Relational Investors, LLC, a private investment company, since March 1996. He
has also been a partner in Batchelder & Partners, Inc., a financial advisory and
investment-banking firm, since January 1997. Since June 1988, Mr. Whitworth has
been president of Whitworth and Associates, a corporate advisory firm. Mr.
Whitworth was elected a director of Tektronix, Inc. on July 6, 1999, to fill a
newly created seat. He has served as Chairman of the Board of Directors of Apria
Healthcare Group Inc. since April 1998 and as a director of Apria Healthcare
Group Inc. since January 1998. He is also a director of Waste Management, Inc.,
CD Radio, Inc. and Wilshire Technologies, Inc.
William D. Walker, 68, is Vice Chairman of the Company, a position he has
held since 1991. Since May 13, 1999, he has been Chief Executive Officer of
Planar Systems, Inc. (a flat-panel display manufacturer), and he has been
Chairman of the Board of Planar since 1988. He 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 a member of the Audit Committee and the Executive
Committee.
Class III (Term Ending 2001)
David N. Campbell, 57, has served as President of the GTE Technology
Organization, comprised of GTE-Labs, BBN Technologies, Cybertrust, and other
technology planning, since January 1999. Prior to that he 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 has served
as a director since 1998 and is a member of the Audit Committee and the
Organization and Compensation Committee. Mr. Campbell is also a director of
Gibraltar Steel Corporation and an advisory director of First Empire State
Corporation.
- --------------
* Nominee for election at 1999 annual meeting.
6
<PAGE>
A.M. Gleason, 69, a retired corporate executive, was President of the Port
of Portland Commission from 1995 until June 1999. He was Vice Chairman of
PacifiCorp from February 1994 until his retirement in May 1995. He became
President of PacifiCorp in 1985, and was President and Chief Executive Officer
of PacifiCorp from January 1989 until February 1994. He has served as a director
of the Company since 1988 and is Chairman of the Executive Committee and a
member of the Organization and Compensation Committee. He is a director of
Comdial Corporation.
Merrill A. McPeak, 63, 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., and Western Power and Equipment,
Inc.
Mr. Whitworth was elected to the board on July 6, 1999 and nominated for
election for a term expiring at the September 2000 annual meeting pursuant to an
agreement, dated July 6, 1999, among the Company, Mr. Whitworth, Relational
Investors, LLC and parties related to Relational Investors (collectively,
"Relational"). The Company has agreed that, at the request of Mr. Whitworth at
any time prior to March 1, 2000, it will cause an additional candidate
designated by him to be elected to the board for a term expiring at the 2000
annual meeting. If Mr. Whitworth is not elected by shareholders at the 1999
annual meeting, the board is required to elect him for a term expiring at the
2000 annual meeting. Relational has agreed that prior to the 2000 annual meeting
it will not (i) acquire Tektronix common shares that would cause it to own 10%
or more of the outstanding shares or form a group to acquire common shares; (ii)
solicit proxies from shareholders; (iii) call a special meeting of shareholders;
(iv) make shareholder proposals for shareholder action at a shareholder meeting;
(v) establish a voting trust or agreement related to Tektronix shares; (vi) make
proposals related to an acquisition, change of control, restructuring,
recapitalization, or other extraordinary transaction involving Tektronix; or
(vii) seek additional representation on the board.
Security Ownership of Management
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, 1999:
<TABLE>
<CAPTION>
Number of
Name Shares (1)(2)(3) Percent
- ---- ---------------- -------
<S> <C> <C>
Pauline Lo Alker.......................................................... 2,296 *
A. Gary Ames.............................................................. 7,915 *
Gerry B. Cameron.......................................................... 7,352 *
David N. Campbell......................................................... 11,716 *
Paul C. Ely, Jr........................................................... 8,831 (4) *
Frank C. Gill............................................................. 10,896 *
A. M. Gleason............................................................. 61,870 (5) *
Merrill A. McPeak......................................................... 4,545 *
Jerome J. Meyer........................................................... 449,959 (6) .96%
William D. Walker......................................................... 85,358 (7) *
Ralph V. Whitworth........................................................ 4,674,000 (8) 9.96%
Carl W. Neun.............................................................. 163,644 (9) *
Gerald K. Perkel.......................................................... 130,749 (10) *
Daniel Terpack............................................................ 109,065 (11) *
Timothy E. Thorsteinson................................................... 79,020 (12) *
All directors and executive officers as a group (17 individuals).......... 5,908,080 (13) 12.59%
- --------------
* Less than one percent.
7
<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, 974 shares; Mr. Ames, 498 shares; Mr. Gill, 5,896 shares; and Mr.
Gleason, 778 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; Mr.
Campbell, 9,716 shares; Mr. Ely, 1,666 shares; Mr. 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 4,915 shares held in trust for Mr. Ely.
(5) Includes 9,400 shares held by Mr. Gleason's wife, with respect to which Mr.
Gleason disclaims beneficial ownership.
(6) Includes (i) stock options for 194,000 shares that are currently
exercisable or become exercisable before August 27, 1999 under the
Company's Stock Incentive Plan; (ii) 47,000 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) 2,685 shares held under the 401(k) Plan with respect to which Mr.
Meyer has voting but no investment power.
(7) Includes 14,909 shares held by Mr. Walker's wife, with respect to which Mr.
Walker disclaims beneficial ownership.
(8) For certain purposes, Mr. Whitworth, who became a director of Tektronix on
July 6, 1999, is deemed to be the beneficial owner of shares held by
Relational Investors, LLC (RILLC) and its related partnerships, as
disclosed in the section "Security Ownership of Certain Beneficial Owners."
Mr. Whitworth is a Managing Member of RILLC, and in such capacity shares
voting and dispositive power over the listed number of shares.
(9) Includes (i) stock options for 104,250 shares that are currently
exercisable or become exercisable before August 27, 1999 under the
Company's Stock Incentive Plan; (ii) 22,000 performance shares and bonus
shares that are subject to forfeiture to the Company under certain
conditions; (iii) 35,352 shares held in a family trust; and (iv) 2,042
shares held under the 401(k) Plan with respect to which Mr. Neun has voting
but no investment power.
(10) Includes (i) stock options for 91,750 shares that are currently exercisable
or become exercisable before August 27, 1999 under the Company's Stock
Incentive Plan; (ii) 15,500 performance shares and bonus shares that are
subject to forfeiture to the Company under certain conditions; and (iii)
6,950 shares held under the 401(k) Plan with respect to which Mr. Perkel
has voting but no investment power as to 2,179 shares, and no voting but
investment power as to 4,771 shares.
(11) Includes (i) stock options for 73,500 shares that are currently exercisable
or become exercisable before August 27, 1999 under the Company's Stock
Incentive Plan; and (ii) 2,033 shares held under the 401(k) Plan with
respect to which Mr. Terpack has voting but no investment power.
(12) Includes (i) stock options for 47,375 shares that are currently exercisable
or become exercisable before August 27, 1999 under the Company's Stock
Incentive Plan; (ii) 15,500 performance shares and bonus shares that are
subject to forfeiture to the Company under certain conditions; and (iii)
7,242 shares held under the 401(k) Plan with respect to which Mr.
Thorsteinson has voting but no investment power as to 2,411 shares, and no
voting but investment power as to 4,831 shares.
(13) Includes (i) 30,034 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 579,687 shares that are
currently exercisable or become exercisable before August 27, 1999 under
the Company's stock option plans (including the Stock Incentive Plan);
(iii) 116,000 shares that have been granted subject to forfeiture under
certain conditions pursuant to the
8
<PAGE>
Company's Stock Incentive Plan; (iv) 31,652 shares held under the 401(k)
Plan with respect to which officers and directors have voting but no
investment power as to 14,439 shares, and no voting but investment power as
to 17,213 shares; and (v) 24,309 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>
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, except that directors can elect to receive Common Shares of
the Company instead of cash. Non-employee directors receive the remaining
one-half of the annual retainer in the form of Common Shares of the Company. The
shares are issued 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. 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. Directors can elect to receive meeting and committee
chair fees in stock, rather than cash.
Effective September 24, 1999, the 1998 Stock Option Plan was amended to
permit distribution of options to directors. Directors will receive annually, on
the day following the shareholder's annual meeting, fully vested, transferable
options for 5,000 Common Shares, with an option price equal to the fair market
value of the stock as of the close of trading on the immediately preceding day.
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.
9
<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
--------------------------------------- ------------------------- -----------
Securities
Other Annual Restricted Underlying LTIP All Other
Salary Bonus Compensation Stock Awards Options Payouts Compensation
Name and Principal Position Year ($) ($)(1) ($)(2) ($)(3) (#)(4) ($) ($)(5)
- --------------------------- ---- --------- ----------- ------------ ------------ ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Jerome J. Meyer............ 1999 $ 732,307 $ 0 $ 33,360 $ 0 106,000 $ 0 $ 340,522 (7)
Chairman, Chief 1998 705,577 1,067,207 29,670 0 52,500 578,972 (6) 332,524
Executive Officer 1997 684,423 738,192 16,200 0 32,000 0 330,924
and President
Carl W. Neun............... 1999 $ 430,385 $ 0 $ 16,320 $ 0 70,000 $ 0 $ 303,826 (7)
Sr. Vice President 1998 413,269 429,391 16,560 0 30,000 385,981 (6) 301,877
and Chief 1997 396,827 415,968 9,600 0 16,500 0 298,683
Financial Officer
Daniel Terpack............. 1999 $ 332,000 $ 0 $ 11,760 $ 0 33,000 $ 0 $ 8,962
Vice President 1998 327,961 349,490 10,350 0 24,000 192,991 (6) 103,218 (8)
and President, 1997 318,193 152,983 9,000 0 12,500 369,063 (6) 74,779
Measurement
Business Division
Gerald K. Perkel........... 1999 $ 328,654 $ 0 $ 11,760 $ 0 43,000 $ 0 $ 9,847
Vice President 1998 307,885 326,410 11,955 0 24,000 192,991 (6) 99,905 (8)
and President, 1997 264,424 335,527 (9) 10,500 146,500 (10) 12,500 258,333 (6) 66,639
Color Printing and
Imaging Division
Timothy E. Thorsteinson.... 1999 $ 310,961 $0 $ 11,760 $ 0 38,000 $ 0 $ 10,090
Vice President and 1998 272,885 263,719 103,334 329,375 (11) 24,000 $ 241,256 (6) 90,418 (8)
President, Video 1997 238,847 170,566 6,600 0 12,500 0 55,225
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 1999 is set forth in the table on
page 11.
(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.
(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 1999, the amount included was
$322,925 for Mr. Meyer and $290,455 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.
(9) Includes a stock bonus of 1,500 Common Shares awarded to Mr. Perkel, with a
fair market value of $89,100 at the time it was awarded.
10
<PAGE>
(10) Represents the fair market value, as of the grant date, of 6,000 bonus
shares granted in fiscal year 1997. The shares were subject to two year
vesting from the date of the grant. As of the end of fiscal year 1999, Mr.
Perkel held no shares of restricted stock, other than LTIP awards.
Dividends were paid on restricted stock.
(11) Represents the fair market value, as of the grant date, of 7,500 stock
bonus shares granted to Mr. Thorsteinson in fiscal year 1998. The shares
were subject to vesting based on division performance goals for fiscal year
1998. Mr. Thorsteinson held no shares of restricted stock, other than LTIP,
at the end of fiscal year 1999. Dividends and accrued interest are paid
upon release of shares.
</TABLE>
Stock Option Grants in Last Fiscal Year
The following table provides information on stock options awarded to Named
Officers under the Company's 1998 Stock Option Plan and the Stock Incentive Plan
during the last fiscal year.
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------------------------
Percent of
Number of Total Options
Securities Granted to Exercise or Grant Date
Underlying Options Employees in Base Price Expiration Present Value
Name Granted(#)(1) Fiscal Year ($/Sh) Date ($)(2)
- ---- ------------------ --------------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Jerome J. Meyer............ 46,000 2.1% $ 34.4375 6/16/03 $ 479,780
60,000 2.7% $ 29.3750 1/13/04 $ 693,000
Carl W. Neun............... 20,000 0.9% $ 34.4375 6/16/03 $ 208,600
50,000 2.3% $ 29.3750 1/13/04 $ 577,500
Gerald K. Perkel........... 18,000 0.8% $ 34.4375 6/16/03 $ 187,740
25,000 1.1% $ 29.3750 1/13/04 $ 288,750
Daniel Terpack............. 18,000 0.8% $ 34.4375 6/16/03 $ 187,740
15,000 0.7% $ 29.3750 1/13/04 $ 173,250
Timothy E. Thorsteinson.... 18,000 0.8% $ 34.4375 6/16/03 $ 187,740
20,000 0.9% $ 29.3750 1/13/04 $ 231,000
- --------------
(1) Reflects grants made in June 1998 and January 1999. 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 1998 Stock Option Plan and
the 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, under the Stock Incentive Plan 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 1998 Stock Option Plan and
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 June 16, 1998 grant date present value
were volatility (39.95%), risk-free rate of return (5.49%), dividend yield
(1.39%), and time to exercise (3 years). The assumptions used to estimate
the January 13, 1999 grant date present value were volatility (58.16%),
risk-free rate of return (4.63%), dividend yield (1.63%), and time to
exercise (3 years).
</TABLE>
11
<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 29,
1999; and (iii) the fiscal year-end value of "in-the-money" unexercised options.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at Fiscal Options at Fiscal
Number Of Year-End Year-End(1)(2)
Shares Acquired Value --------------------------- ---------------------------
Name On Exercise Realized (1) Exercisable Unexercisable Exercisable Unexercisable
- ---- --------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jerome J. Meyer.............. 0 $0 154,375 107,625 $ 86,175 $0
Carl W. Neun................. 0 $0 79,250 72,500 $ 0 $0
Gerald K. Perkel............. 0 $0 75,000 44,500 $ 48,028 $0
Daniel Terpack............... 0 $0 59,250 34,500 $ 0 $0
Timothy E. Thorsteinson...... 0 $0 31,875 39,500 $ 0 $0
- --------------
(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 29, 1999 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
$23.1875.
(2) "In-the-money" options are options whose exercise price was less than the
market price of Common Shares at May 29, 1999.
</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>
Estimated Future Payouts Under
Number of Shares, Performance or Other Non-Stock Price-Based Plans
Units or Other Period Until -------------------------------------------
Name Rights(#)(1) Maturity or Payout Threshold(#) Target(#) Maximum(#)
- ---- ---------------- -------------------- ------------ ----------- ----------
<S> <C> <C> <C> <C> <C>
Jerome J. Meyer........... 23,000 6/98-5/2001 4,600 23,000 115,000
Carl W. Neun.............. 10,000 6/98-5/2001 2,000 10,000 50,000
Daniel Terpack............ 8,000 6/98-5/2001 1,600 8,000 40,000
Gerald K. Perkel.......... 8,000 6/98-5/2001 1,600 8,000 40,000
Timothy E. Thorsteinson... 8,000 6/98-5/2001 1,600 8,000 40,000
- --------------
(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 employees with
the total amount of retirement income that they 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.
12
<PAGE>
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%, and pay credits increase to 9.0% of
pay once a participant's earnings exceed the Social Security wage base for that
year. A special transition benefit applies for employees age 40 and vested as of
December 31, 1997 or employees with 15 or more years of service as of December
31, 1997, regardless of age, and 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: $47,738.64; Mr. Neun:
$15,231.36; Mr. Terpack: $13,311.36; Mr. Perkel: $10,883.28; and Mr.
Thorsteinson: $5,001.60.
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, 1999, 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 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.
13
<PAGE>
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 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 six independent 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:
o Attract and retain talented executives;
o Motivate executives to achieve long-term business strategies while
achieving near-term financial targets;
o Align executive performance with Tektronix' goals for delivering
shareholder value; and
o Provide incentive for consistently achieving Tektronix' goal for
return on equity or assets.
14
<PAGE>
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. For the last fiscal year there were no
payments to executive officers or other employees under the plan.
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
15
<PAGE>
$38.75 million of operating income before Results Share 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. For the last fiscal year
there were no payments to executive officers or other employees under the plan.
Executive Long-Term Incentive Compensation Program
The Executive Long-Term Incentive Compensation Program is intended 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. The program was adopted to align
executive long-term interests with the interests of shareholders and the
performance of Company operations. Key executives are encouraged to accumulate
stock ownership pursuant to guidelines. 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 performance shares are issued
pursuant to the Company's Stock Incentive Plan. The options are issued either
from the 1998 Stock Option Plan or the 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.
Options awarded during the last fiscal year 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 1999, 2000 and 2001. The
performance measurements are compound net sales growth and relative total
shareholder return. In general, compound net sales growth is defined as the
fixed, annually compounded rate of growth of sales for the three-year
performance period, excluding sales of divested businesses. 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. For performance shares granted during the
last fiscal year, the compared companies are those shown in Standard and Poor's
High-Technology Composite Index as constituted as of the last day of the
performance period. 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 five times 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.
16
<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"). Mr. Meyer and Mr.
Neun do not participate in the SERP (see "Employment Arrangements"). 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, disability, or the termination of employment following a change of
control of the Company, 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
before the account vests or 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. There were no performance based credits to participant accounts for the
last fiscal year.
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, and the Company believes that compensation paid under its
stock option plans qualifies as deductible under Section 162(m). 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.
17
<PAGE>
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, the Committee took into account a comparison of
base salaries, perquisites and incentives 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. For the last fiscal year, Mr. Meyer
received no salary increase, no payments under the Annual Performance
Improvement Plan (APIP) or the Results Sharing Plan, and he forfeited 22,500
performance shares. In June 1998, Mr. Meyer was granted stock options for 46,000
shares and 23,000 performance shares, and in January 1999 he was granted stock
options for 60,000 shares. These grants were made 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:
Paul C. Ely, Chairman
Pauline Lo Alker
Gerry B. Cameron
David N. Campbell
A.M. Gleason
Merrill A. McPeak
18
<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 27, 1994 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.
[Graphic line chart depicting TSR Comparison omitted.]
<TABLE>
<CAPTION>
S&P Hi-Tech
Fiscal Year S&P 500 Composite Tektronix
----------- ----------- ----------- -----------
<S> <C> <C> <C>
1994 100.00 100.00 100.00
1995 129.35 150.60 160.32
1996 181.15 191.90 132.43
1997 247.53 294.79 201.14
1998 325.10 373.75 203.83
1999 397.92 589.27 131.97
</TABLE>
19
<PAGE>
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. Gary Ames, a
director, filed one amended report of one transaction involving a stock
purchase; and Mr. Thorsteinson, 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 2000 annual meeting of shareholders must submit the proposals for receipt by
the Company not later than April 21, 2000.
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 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 2000 annual meeting of
shareholders is expected to be held on September 21, 2000. Any notice relating
to a shareholder proposal for the 2000 annual meeting, to be timely, must be
received by the Company between July 8, 2000 and August 2, 2000.
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
20
<PAGE>
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 for 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 1999 Annual Report is being mailed to shareholders with this
proxy statement. Copies of the 1999 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. The Company's annual report is also
available on its Website at www.tektronix.com.
BY ORDER OF THE BOARD OF DIRECTORS
James F. Dalton, Secretary
August 20, 1999
21
<PAGE>
- --------------------------------------------------------------------------------
TEKTRONIX, INC.
P
R Tektronix, Inc. Building 60 Auditorium, 26600 S.W. Parkway,
O Wilsonville, Oregon 97070
X
Y Annual Meeting of Shareholders,
to be held on September 23, 1999 at 10:00 a.m.
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 23, 1999 at 10:00 a.m., 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. 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
Tektronix, Inc. The meeting will be held at the Tektronix,
Building 60 Auditorium Inc. Headquarters in Wilsonville in the
26600 S.W. Parkway Building 60 Auditorium commencing at
Wilsonville, OR 97070 10:00 a.m.
(503) 627-6924
LOCATION:
TEKTRONIX, INC. From Portland International Airport to
ANNUAL MEETING I-205 South (2.5 miles)
OF SHAREHOLDERS From I-205 South to I-5 South (24.8 miles)
From I-5 South to Wilsonville, Stafford
exit, Exit 286 (2.3 miles)
Turn left onto Elligsen Rd and cross I-5
overpass to Canyon Creek Road (0.7 mile)
Turn right onto Canyon Creek Road to
Wilsonville Campus
Turn right onto Tektronix Drive (2nd
Tektronix entrance on the right, 1 mile)
[Maps depicting Portland metropolitan area and
Tektronix Wilsonville Site omitted.]
<PAGE>
- --------------------------------------------------------------------------------
Please mark
your votes as -----
indicated in | X |
this example -----
1. ELECTION OF DIRECTORS: FOR WITHHOLD
NOMINEES: all nominees listed AUTHORITY
Pauline Lo Alker, (except as marked to vote for all
A. Gary Ames, to the contrary) nominees listed
Paul C. Ely, Jr.,
Frank C. Gill, and ----- -----
Ralph V. Whitworth | | | |
----- -----
INSTRUCTIONS: To withhold authority to vote for any individual
nominee, strike a line through the name in the list above.
2. 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.
Will you be attending the Annual Meeting in person? -----
Check here if yes: | |
-----
----- Please sign exactly as your
| name appears.
|
Signature(s) __________________________________________ Date ___________________
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
Admission Ticket
TEKTRONIX, INC.
1999 Annual Meeting of Shareholders
Thursday, September 23, 1999
10:00 A.M.
Tektronix, Inc.
Building 60 Auditorium
26600 S.W. Parkway
Wilsonville, OR 97070
PLEASE ADMIT NON-TRANSFERABLE
<PAGE>
- --------------------------------------------------------------------------------
TEKTRONIX, INC.
P
R Tektronix, Inc. Building 60 Auditorium, 26600 S.W. Parkway,
O Wilsonville, Oregon 97070
X
Y Annual Meeting of Shareholders,
to be held on September 23, 1999 at 10:00 a.m.
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 23, 1999 at 10:00 a.m., 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. 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
Tektronix, Inc. The meeting will be held at the Tektronix,
Building 60 Auditorium Inc. Headquarters in Wilsonville in the
26600 S.W. Parkway Building 60 Auditorium commencing at
Wilsonville, OR 97070 10:00 a.m.
(503) 627-6924
LOCATION:
TEKTRONIX, INC. From Portland International Airport to
ANNUAL MEETING I-205 South (2.5 miles)
OF SHAREHOLDERS From I-205 South to I-5 South (24.8 miles)
From I-5 South to Wilsonville, Stafford
exit, Exit 286 (2.3 miles)
Turn left onto Elligsen Rd and cross I-5
overpass to Canyon Creek Road (0.7 mile)
Turn right onto Canyon Creek Road to
Wilsonville Campus
Turn right onto Tektronix Drive (2nd
Tektronix entrance on the right, 1 mile)
[Maps depicting Portland metropolitan area and
Tektronix Wilsonville Site omitted.]
<PAGE>
- --------------------------------------------------------------------------------
Please mark
your votes as -----
indicated in | X |
this example -----
1. ELECTION OF DIRECTORS: FOR WITHHOLD
NOMINEES: all nominees listed AUTHORITY
Pauline Lo Alker, (except as marked to vote for all
A. Gary Ames, to the contrary) nominees listed
Paul C. Ely, Jr.,
Frank C. Gill, and ----- -----
Ralph V. Whitworth | | | |
----- -----
INSTRUCTIONS: To withhold authority to vote for any individual
nominee, strike a line through the name in the list above.
2. 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.
Will you be attending the Annual Meeting in person? -----
Check here if yes: | |
-----
----- Please sign exactly as your name(s)
| appear. 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 ___________________
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
Admission Ticket
TEKTRONIX, INC.
1999 Annual Meeting of Shareholders
Thursday, September 23, 1999
10:00 A.M.
Tektronix, Inc.
Building 60 Auditorium
26600 S.W. Parkway
Wilsonville, OR 97070
PLEASE ADMIT NON-TRANSFERABLE
