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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 (S)240.14a-11 or (S) 240.14a-12
Thermo Electron Corporation
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(Name of Registrant as Specified In Its Charter)
Thermo Electron Corporation
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(Name of Person(s) filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11 (a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
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<PAGE>
[THERMO ELECTRON LOGO APPEARS HERE]
81 Wyman Street
P.O. Box 9046
Waltham, MA 02454-9046
April 8, 1999
Dear Stockholder:
You are cordially invited to attend the 1999 Annual Meeting of the
Stockholders of Thermo Electron Corporation. Your board of directors and
management look forward to greeting personally those Stockholders able to
attend. Our Annual Report for the year ended January 2, 1999, is enclosed. We
hope you will read it carefully. Please feel free to forward any questions you
may have if you are unable to attend the meeting.
At the meeting, you will be asked to elect four directors, to approve an
amended and restated certificate of incorporation, and to vote on two
stockholder proposals if they are presented at the meeting. These proposals
are more fully discussed in the accompanying proxy statement, which you are
urged to read carefully. Your board of directors recommends a vote FOR
proposals 1 and 2 and AGAINST the stockholder proposals, if presented.
Enclosed with this letter is a proxy authorizing three officers of the
Corporation to vote your shares for you if you do not attend the meeting. It
is important that your shares are represented and voted at the meeting whether
or not you plan to attend. Accordingly, you are requested to sign, date and
mail the enclosed proxy in the envelope provided at your earliest convenience.
On behalf of the board of directors, thank you for your cooperation and
continued support.
Yours very truly,
/s/ George N. Hatsopoulos
George N. Hatsopoulos
Chairman and Chief Executive Officer
/s/ Arvin H. Smith
Arvin H. Smith
President
YOUR VOTE IS IMPORTANT.
PLEASE SIGN, DATE AND RETURN YOUR PROXY CARD.
<PAGE>
[THERMO ELECTRON LOGO APPEARS HERE]
81 Wyman Street
P.O. Box 9046
Waltham, MA 02454-9046
April 8, 1999
To the Holders of the Common Stock of
THERMO ELECTRON CORPORATION
NOTICE OF ANNUAL MEETING
The 1999 Annual Meeting of the Stockholders of Thermo Electron Corporation
("Thermo Electron" or the "Corporation") will be held on Thursday, May 27,
1999 at 3:00 p.m. at The Westin Hotel, 70 Third Avenue, Waltham,
Massachusetts. The purpose of the meeting is to consider and take action upon
the following matters:
1. Election of four directors, comprising the class of directors to be
elected for a three-year term expiring in the year 2002.
2. A proposal recommended by the board of directors to amend and restate
the Corporation's certificate of incorporation.
3. Stockholder proposals, if presented by their proponents at the
meeting.
4. Such other business as may properly be brought before the meeting and
any adjournment thereof.
The transfer books of the Corporation will not be closed prior to the
meeting, but, pursuant to appropriate action by the board of directors, the
record date for the determination of the Stockholders entitled to notice of
and to vote at the meeting is April 7, 1999.
The By-laws require that the holders of a majority of the stock issued and
outstanding and entitled to vote be present or represented by proxy at the
meeting in order to constitute a quorum for the transaction of business. It is
important that your stock be represented at the meeting regardless of the
number of shares you may hold. Enclosed is a proxy authorizing three officers
of the Corporation to vote your shares as you instruct. Whether or not you are
able to be present in person, please sign the enclosed proxy and return it
promptly to our transfer agent in the accompanying envelope, which requires no
postage if mailed in the United States.
This Notice, the proxy and proxy statement enclosed herewith are sent to you
by order of the board of directors.
SANDRA L. LAMBERT
Vice President, Secretary
<PAGE>
PROXY STATEMENT
The enclosed proxy is solicited by the board of directors of Thermo Electron
Corporation ("Thermo Electron" or the "Corporation") for use at the 1999
Annual Meeting of the Stockholders to be held on Thursday, May 27, 1999 at
3:00 p.m. at The Westin Hotel, 70 Third Avenue, Waltham, Massachusetts and any
adjournment thereof. The mailing address of the executive office of the
Corporation is 81 Wyman Street, P.O. Box 9046, Waltham, Massachusetts 02454-
9046. This proxy statement and the enclosed proxy were first furnished to
Stockholders of the Corporation on or about April 12, 1999.
VOTING PROCEDURES
The board of directors intends to present to the meeting the election of
four directors, comprising the class of directors to be elected for a three-
year term expiring in 2002, as well as one other matter: a proposal to amend
and restate the Corporation's certificate of incorporation.
The representation in person or by proxy of a majority of the outstanding
shares of common stock, $1.00 par value, of the Corporation ("Common Stock")
entitled to vote at the meeting is necessary to provide a quorum for the
transaction of business at the meeting. Shares can be voted only if the
Stockholder is present in person or is represented by returning a properly
signed proxy. Each Stockholder's vote is very important. Whether or not you
plan to attend the meeting in person, please sign and promptly return the
enclosed proxy card, which requires no postage if mailed in the United States.
Votes of Stockholders of record who are present at the meeting in person or by
proxy, abstentions, and broker non-votes (as defined below) are counted as
present or represented at the meeting for purposes of determining whether a
quorum exists.
Shares represented by proxy will be voted in accordance with your
instructions. You may specify your choice by marking the appropriate box on
the proxy card. If your proxy card is signed and returned without specifying
choices, your shares will be voted FOR the management nominees for directors,
FOR the management proposal, AGAINST the stockholder proposals, and as the
individuals named as proxy holders on the proxy deem advisable on all other
matters as may properly come before the meeting.
Nominees for election as directors at the meeting will be elected by a
plurality of the votes of the shares present in person or represented by proxy
at the meeting. For the proposal to amend and restate the Corporation's
certificate of incorporation, the affirmative vote of two-thirds of the
Corporation's outstanding Common Stock is necessary for approval. For the
stockholder proposals, the affirmative vote of a majority of the Corporation's
outstanding Common Stock present or represented by proxy and entitled to vote
on the matter is necessary for approval. Because abstentions are treated as
shares present or represented and entitled to vote, abstentions with respect
to the proposal to amend and restate the Corporation's certificate of
incorporation and the stockholder proposals have the same effect as negative
votes. If you hold your shares of Common Stock through a broker, bank or other
nominee, generally the nominee may only vote the Common Stock that it holds
for you in accordance with your instructions. However, if it has not timely
received your instructions, the nominee may vote on certain matters for which
it has discretionary voting authority. If a nominee cannot vote on a
particular matter because it does not have discretionary voting authority,
this is a "broker non-vote" on that matter. As to the election of directors,
broker non-votes and withholdings of authority to vote will have no effect on
the outcome of the vote. As to the proposal to amend and restate the
Corporation's certificate of incorporation, which requires the affirmative
vote of two-thirds of the Corporation's outstanding Common Stock, broker non-
votes have the same effect as negative votes. As to the stockholder proposals,
broker non-votes are not deemed to be present and represented and are not
entitled to vote for the purpose of determining whether stockholder approval
of that matter has been obtained, and therefore will have no effect on the
outcome of the vote.
A Stockholder who returns a proxy may revoke it at any time before the
Stockholder's shares are voted at the meeting by written notice to the
Secretary of the Corporation received prior to the meeting, by executing and
returning a later dated proxy or by voting by ballot at the meeting.
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The outstanding stock of the Corporation entitled to vote (excluding shares
held in treasury by the Corporation) as of April 7, 1999, consisted of
157,920,041 shares of Common Stock. Only Stockholders of record at the close
of business on April 7, 1999 are entitled to vote at the meeting. Each share
is entitled to one vote.
PROPOSAL 1
ELECTION OF DIRECTORS
Four directors are to be elected at the meeting, John N. Hatsopoulos, Robert
A. McCabe, Hutham S. Olayan and Richard F. Syron are listed below as nominees
for the three-year term expiring at the Annual Meeting of the Stockholders to
be held in the year 2002. For purposes of this meeting, the board of directors
has fixed the number of directors at twelve, divided into three classes of
four directors each. Each class is elected for a three-year term at successive
Annual Meetings of the Stockholders. In all cases, directors hold office until
their successors have been elected and qualified, or until their earlier
resignation, death or removal.
Nominees and Incumbent Directors
Set forth below are the names of the persons nominated as directors and
directors whose terms do not expire this year, their ages, their offices in
the Corporation, if any, their principal occupations or employment for the
past five years, the length of their tenure as directors and the names of
other public companies in which such persons hold directorships. Information
regarding their beneficial ownership of the Corporation's Common Stock and of
the common stock of certain subsidiaries of the Corporation is reported under
the caption "Stock Ownership." All of the nominees are currently directors of
the Corporation.
Nominees for Directors Whose Term of Office Will Expire in 2002
John N. Hatsopoulos Mr. Hatsopoulos, 64, has been a director of the
Corporation since September 1997 and vice chairman of the board of directors
since September 1998. He was the president of the Corporation from January
1997 until September 1998, chief financial officer from 1988 until his
retirement in December 1998, and executive vice president from 1986 until
1997. Mr. Hatsopoulos is also a director of LOIS/USA Inc., Thermedics Inc.,
Thermo Ecotek Corporation, Thermo Fibertek Inc., Thermo Instrument Systems
Inc., Thermo Power Corporation, Thermo TerraTech Inc. and US Liquids Inc. Mr.
Hatsopoulos is the brother of Dr. George N. Hatsopoulos, a director, chairman
of the board and chief executive officer of the Corporation.
Robert A. McCabe Mr. McCabe, 64, has been a director of the Corporation
since 1962. He has been the chairman of Pilot Capital Corporation, which is
engaged in private investments, since 1998. Mr. McCabe was the president of
Pilot Capital Corporation from 1987 to 1998. Prior to that time, Mr. McCabe
was a managing director of Lehman Brothers Inc., an investment banking firm.
Mr. McCabe is also a director of Atlantic Bank & Trust Company, Borg-Warner
Security Corporation, Church & Dwight Company and Thermo Optek Corporation.
Hutham S. Olayan Ms. Olayan, 45, has been a director of the Corporation
since 1987. She has served since 1995 as president and a director of Olayan
America Corporation, a member of the Olayan Group, and as president and a
director of Competrol Real Estate Limited, another member of the Olayan Group,
from 1986 until its merger into Olayan America Corporation in 1997. The
surviving company is engaged in private investments, including real estate,
and advisory services. In addition, from 1985 to 1994, Ms. Olayan served as
president and a director of Crescent Diversified Limited, another member of
the Olayan Group engaged in private investments. Ms. Olayan is also a director
of Trex Medical Corporation.
Richard F. Syron Dr. Syron, 55, has been a director of the Corporation since
September 1997. In March 1999, Dr. Syron was appointed president and chief
executive officer of the Corporation, effective June 1, 1999. Since April
1994, Dr. Syron has been the chairman and chief executive officer of the
American Stock Exchange
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Inc. From January 1989 through April 1994, he was the president and chief
executive officer of the Federal Reserve Bank of Boston. Prior to that time,
he held a variety of senior positions with the Federal Home Loan Bank of
Boston, the Federal Reserve Bank of Boston, the Board of Governors of the
Federal Reserve System, and the U.S. Department of Treasury. Dr. Syron is also
a director of Dreyfus Corporation and The John Hancock Corporation.
Incumbent Directors Whose Term of Office Will Expire in 2000
John M. Albertine Dr. Albertine, 54, has been a director of the Corporation
since 1986. Dr. Albertine serves as chairman of the board and chief executive
officer of Albertine Enterprises, Inc., an economic- and public-policy
consulting and full-service mergers and acquisitions firm he founded in 1990.
Dr. Albertine is also a director of American Precision Industries, Inc.,
Intermagnetics General Corp. and U.S. Cast Products Inc.
Peter O. Crisp Mr. Crisp, 66, has been a director of the Corporation since
1974. Mr. Crisp was a general partner of Venrock Associates, a venture capital
investment firm, for more than five years until his retirement in September
1997. He has been the vice chairman of Rockefeller Financial Services, Inc.
since December 1997. Mr. Crisp is also a director of American Superconductor
Corporation, Evans & Sutherland Computer Corporation, NovaCare Inc.,
Thermedics Inc., Thermo Power Corporation, ThermoTrex Corporation and United
States Trust Corporation.
George N. Hatsopoulos Dr. Hatsopoulos, 72, has been a director, the chairman
of the board and chief executive officer of the Corporation since he founded
the Corporation in 1956. Until January 1997, he was also the president of the
Corporation. Effective June 1, 1999, Dr. Hatsopoulos will step down as the
chief executive officer of the Corporation and remain as non-executive
chairman of the board. Dr. Hatsopoulos is also a director of Photoelectron
Corporation, Thermedics Inc., Thermo Ecotek Corporation, Thermo Fibertek Inc.,
Thermo Instrument Systems Inc., Thermo Optek Corporation, ThermoQuest
Corporation and ThermoTrex Corporation. Dr. Hatsopoulos is the brother of Mr.
John N. Hatsopoulos, a director of the Corporation.
Roger D. Wellington Mr. Wellington, 72, has been a director of the
Corporation since 1986. Mr. Wellington serves as the president and chief
executive officer of Wellington Consultants, Inc. and of Wellington Associates
Inc., international business consulting firms he founded in 1994 and 1989,
respectively. Prior to 1989, Mr. Wellington served as chairman of the board of
Augat Inc., a manufacturer of electromechanical components and systems, for
more than five years. Prior to 1988, Mr. Wellington also served as the chief
executive officer and president of Augat Inc. for more than ten years. Mr.
Wellington is also a director of Photoelectron Corporation and Thermo Fibergen
Inc.
Incumbent Directors Whose Term of Office Will Expire in 2001
Elias P. Gyftopoulos Dr. Gyftopoulos, 71, has been a director of the
Corporation since 1976. Dr. Gyftopoulos is Professor Emeritus of the
Massachusetts Institute of Technology, where he was the Ford Professor of
Mechanical Engineering and of Nuclear Engineering for more than 20 years until
his retirement in 1996. Dr. Gyftopoulos is also a director of Thermo
BioAnalysis Corporation, Thermo Cardiosystems Inc., ThermoLase Corporation,
ThermoRetec Corporation, ThermoSpectra Corporation, Thermo Vision Corporation
and Trex Medical Corporation.
Frank Jungers Mr. Jungers, 72, has been a director of the Corporation since
1978. Mr. Jungers has been a consultant on business and energy matters since
1977. Mr. Jungers was employed by the Arabian American Oil Company from 1974
through 1977 as chairman and chief executive officer. Mr. Jungers is also a
director of The AES Corporation, Donaldson, Lufkin & Jenrette, Inc., Georgia-
Pacific Corporation, ONIX Systems Inc., Statia Terminals Group N.V., Thermo
Ecotek Corporation and ThermoQuest Corporation.
Robert W. O'Leary Mr. O'Leary, 55, has been a director of the Corporation
since June 1998. He has been the president and chairman of Premier Inc., a
strategic alliance of not-for-profit health care and hospital
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systems, since 1995. From 1990 to 1995, Mr. O'Leary was the chairman of
American Medical International, Inc., one of the three predecessor entities of
Premier Inc.
Donald E. Noble Mr. Noble, 84, has been a director of the Corporation since
1983. Mr. Noble has announced his intention to retire from the board of
directors in September 1999. For more than 20 years, from 1959 to 1980, Mr.
Noble served as the chief executive officer of Rubbermaid, Incorporated, first
with the title of president and then as chairman of the board. Mr. Noble is
also a director of Thermo Fibertek Inc., Thermo Power Corporation, Thermo
Sentron Inc. and Thermo TerraTech Inc.
Committees of the Board of Directors and Meetings
The board of directors has established an executive committee, an audit
committee and a human resources committee. The present members of the
executive committee are Dr. G. Hatsopoulos (Chairman), Mr. Jungers, Mr. Noble
and Dr. Syron. The executive committee is empowered to act when it is
impractical to call a meeting of the entire board of directors and, with
certain exceptions, has the powers of the board of directors. The audit
committee consists solely of directors who are not employees of the
Corporation or of any companies affiliated with Thermo Electron ("outside
directors"), and its present members are Dr. Albertine (Chairman), Mr.
Jungers, Dr. Syron and Mr. Wellington. The audit committee reviews the scope
of the audit with the Corporation's independent public accountants and meets
with them for the purpose of reviewing the results of the audit subsequent to
its completion. The human resources committee consists solely of outside
directors and its present members are Mr. Noble (Chairman), Dr. Gyftopoulos,
Mr. Jungers, Mr. McCabe and Ms. Olayan. The human resources committee reviews
corporate organization, reviews the performance of senior members of
management, approves executive compensation and administers the Corporation's
stock option and other stock-based compensation plans. The Corporation does
not have a nominating committee of the board of directors. The board of
directors met 18 times, the audit committee met twice and the human resources
committee met 14 times during fiscal 1998. Each director attended at least 75%
of all meetings of the board of directors and committees on which he or she
served that were held during fiscal 1998.
Compensation of Directors
Cash Compensation
Outside directors receive an annual retainer of $20,000 and a fee of $1,000
per meeting for attending regular meetings of the board of directors or its
committees and for each day of consulting for the board of directors, and $500
per meeting for participating in meetings of the board of directors or such
committees held by means of conference telephone. Payment of directors' fees
is made quarterly. Dr. G. Hatsopoulos, who is a full-time employee of the
Corporation, does not receive any cash compensation from the Corporation for
his service as a director. Mr. J. Hatsopoulos, who is a consultant to the
Corporation, does not receive any cash compensation from the Corporation for
his services as a director during the term of his consulting agreement. See
"Executive Compensation--Consulting Agreement with Mr. John N. Hatsopoulos."
Directors are also reimbursed for out-of-pocket expenses and in some instances
for travel time incurred in attending such meetings.
Deferred Compensation Plan for Directors
Under the Corporation's deferred compensation plan for directors (the
"Deferred Compensation Plan"), a director has the right to defer receipt of
his cash fees until he ceases to serve as a director, dies or retires from his
principal occupation. In the event of a change in control or proposed change
in control of the Corporation that is not approved by the board of directors,
deferred amounts become payable immediately. Either of the following is deemed
to be a change in control: (a) the acquisition, without the prior approval of
the board of directors, directly or indirectly, by any person of 50% or more
of the outstanding Common Stock; or (b) the failure of the persons serving on
the board of directors immediately prior to any contested election of
directors or any exchange offer or tender offer for the Common Stock to
constitute a majority of the board of directors at any time within two years
following any such event. Amounts deferred pursuant to the Deferred
Compensation
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Plan are valued at the end of each quarter as units of Common Stock. When
payable, amounts deferred may be disbursed solely in shares of Common Stock
accumulated under the Deferred Compensation Plan. A total of 613,360 shares of
Common Stock has been reserved for issuance under the Deferred Compensation
Plan. As of January 31, 1999, deferred units equal to approximately 321,757
shares of Common Stock were accumulated under the Deferred Compensation Plan.
Stock-Based Compensation
Directors Stock Option Plan. The Corporation's directors stock option plan
(the "Directors Plan"), provides for two types of grants of stock options to
purchase shares of Common Stock of the Corporation and the common stock of
certain of its majority-owned subsidiaries to outside directors (other than
Mr. J. Hatsopoulos) as additional compensation for their service as directors.
Under the Directors Plan, outside directors are automatically granted options
to purchase 1,000 shares of Common Stock annually. In addition, the Directors
Plan provides for the automatic grant of options to purchase up to 1,500
shares of the common stock of certain of the Corporation's publicly traded,
majority-owned subsidiaries and of each majority-owned subsidiary of the
Corporation that is subsequently "spun out" to outside investors, both upon
the initial spinout and at five-year intervals thereafter.
Under the first type of grant pursuant to the Directors Plan, outside
directors receive an annual grant of options to purchase 1,000 shares of
Common Stock at the close of business on the date of each Annual Meeting of
the Stockholders of the Corporation. Options evidencing annual grants may be
exercised at any time from and after the six-month anniversary of the grant
date of the option and prior to the expiration of the option on the third
anniversary of the grant date.
Under the second type of grant pursuant to the Directors Plan, outside
directors automatically receive a grant of options to purchase shares of
common stock of certain of the Corporation's publicly traded, majority-owned
subsidiaries as described in the Directors Plan and of each majority-owned
subsidiary of the Corporation that is subsequently "spun out" to outside
investors, both upon the initial spinout and at five-year intervals
thereafter. Outside directors receive options to purchase 1,500 shares of
common stock in majority-owned subsidiaries that are directly owned by the
Corporation and 1,000 shares of common stock in majority-owned subsidiaries
that are indirectly owned by the Corporation through one or more of its other
majority-owned subsidiaries. The grant of options with respect to the common
stock of subsidiaries that are spun out occurs at the close of business on the
date of the first Annual Meeting of the Stockholders next following the
subsidiary's spinout, which is the first to occur of either an initial public
offering of the subsidiary's common stock or a sale of such stock to third
parties in an arms-length transaction. The options may be exercised at any
time from and after the six-month anniversary of the grant date and prior to
the expiration of the option on the fifth anniversary of the grant date. At
the 1999 Annual Meeting of the Stockholders, each outside director will be
granted options to purchase 1,000 shares of the common stock of ThermoRetec
Corporation, a majority-owned subsidiary of Thermo TerraTech Inc. that was
spun out in December 1993. Also at the 1999 Annual Meeting of the
Stockholders, each outside director will be granted options to purchase 1,500
shares of the common stock of each of Thermo Power Corporation and Thermedics
Inc., majority-owned subsidiaries of the Corporation.
The exercise price for options granted under the Directors Plan is the
average of the closing prices of the common stock as reported on the New York
or American Stock Exchange (or other principal market on which the common
stock is then traded) for the five trading days immediately preceding and
including the date of grant, or, if the shares are not then traded, at the
last price per share paid by third parties in an arms-length transaction prior
to the option grant. As of January 31, 1999, options to purchase 84,125 shares
of Common Stock were outstanding under the Directors Plan, no options had
lapsed, options to purchase 20,250 shares had been exercised, and options to
purchase 570,625 shares of Common Stock were available for future grant.
Other Stock-Based Compensation. In 1998, options to purchase 10,000 shares
of the Common Stock at an exercise price of $34.21 per share were granted to
Mr. O'Leary in connection with his appointment as a director. These options
may be exercised at any time from and after the six-month anniversary of the
grant date and prior
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to the expiration of the options on the twelfth anniversary of the grant date.
Shares acquired upon exercise of the options are subject to restrictions on
transfer and the right of the Corporation to repurchase such shares at the
exercise price if Mr. O'Leary ceases to serve as a director of the Corporation
or any other Thermo Electron company. The restrictions and repurchase rights
lapse or are deemed to have lapsed 10% per year, starting with the first
anniversary of the grant date, provided Mr. O'Leary has continuously served as
a director of the Corporation or any other Thermo Electron company since the
grant date.
Stock Ownership Policies for Directors
The human resources committee of the board of directors (the "Committee")
has established a stock holding policy for directors. The stock holding policy
requires each director to hold a minimum of 1,000 shares of Common Stock. The
chief executive officer of the Corporation is required to comply with a
separate stock holding policy established by the Committee, which is described
in "Committee Report on Executive Compensation--Stock Ownership and Retention
Policies."
In addition, the Committee has a policy requiring directors to hold shares
of the Corporation's Common Stock equal to one-half of their net option
exercises over a period of five years. The net option exercise is determined
by calculating the number of shares acquired upon exercise of a stock option,
after deducting the number of shares that could have been traded to exercise
the option and the number of shares that could have been surrendered to
satisfy tax withholding obligations attributable to the exercise of the
option. This policy is also applicable to executive officers and is described
in "Committee Report on Executive Compensation--Stock Ownership and Retention
Policies."
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STOCK OWNERSHIP
The following table sets forth, as of January 31, 1999, the beneficial
ownership of the Corporation's Common Stock, by (a) each director, (b) each of
the Corporation's executive officers named in the summary compensation table
set forth below under the heading "Executive Compensation" (the "named
executive officers"), and (c) all directors and current executive officers as
a group, as well as their beneficial ownership of each of the Corporation's
majority-owned subsidiaries as follows: (i) Thermo Coleman Corporation and
Thermo Information Solutions Inc., a majority-owned subsidiary of Thermo
Coleman Corporation, (ii) Thermo Ecotek Corporation and Thermo Trilogy
Corporation, a majority-owned subsidiary of Thermo Ecotek Corporation, (iii)
Thermo Fibertek Inc. and Thermo Fibergen Inc., a majority-owned subsidiary of
Thermo Fibertek Inc., (iv) Thermo Power Corporation and ThermoLyte
Corporation, a majority-owned subsidiary of Thermo Power Corporation, (v)
Thermo TerraTech Inc. and The Randers Killam Group Inc., Thermo EuroTech N.V.
and ThermoRetec Corporation, each a majority-owned subsidiary of Thermo
TerraTech Inc., (vi) Thermedics Inc. and Thermedics Detection Inc., Thermo
Cardiosystems Inc., Thermo Sentron Inc. and Thermo Voltek Corp., each a
majority-owned subsidiary of Thermedics Inc., (vii) ThermoTrex Corporation and
ThermoLase Corporation, Trex Medical Corporation and Trex Communications
Corporation, each a majority-owned subsidiary of ThermoTrex Corporation, and
(viii) Thermo Instrument Systems Inc. and Metrika Systems Corporation, ONIX
Systems Inc., Thermo BioAnalysis Corporation, Thermo Optek Corporation,
ThermoQuest Corporation, ThermoSpectra Corporation and Thermo Vision
Corporation, each a majority-owned subsidiary of Thermo Instrument Systems
Inc. The common stock of each of the majority-owned subsidiaries is publicly
traded except for the common stock of Thermo Coleman Corporation, Thermo
Information Solutions Inc., ThermoLyte Corporation, Thermo EuroTech N.V.,
Thermo Trilogy Corporation, and Trex Communications Corporation, which are
privately held, and Thermo Voltek Corp., which has, subsequent to January 31,
1999, been taken private and merged with a wholly-owned subsidiary of
Thermedics Inc. In addition, the following table sets forth the beneficial
ownership of Common Stock, as of January 31, 1999, with respect to each person
who was known by the Corporation to own beneficially more than 5% of the
outstanding shares of Common Stock.
While certain directors and executive officers of the Corporation are also
directors or executive officers of majority-owned subsidiaries of the
Corporation, all such persons disclaim beneficial ownership of the shares of
common stock of other Thermo Electron companies owned by the Corporation or
such majority-owned subsidiaries.
7
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<TABLE>
<CAPTION>
Thermo Thermo Thermo Thermo
Electron Information Ecotek Trilogy Thermo Thermo
Name(1) Corporation(2) Solutions Inc.(3) Corporation(4) Corporation(5) Fibertek Inc.(6) Fibergen Inc.(7)
------- -------------- ----------------- -------------- -------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Putnam
Investments,
Inc.(32)....... 8,559,064 N/A N/A N/A N/A N/A
FMR
Corporation(33).. 14,131,886 N/A N/A N/A N/A N/A
John M.
Albertine...... 43,363 -- 2,250 -- 8,250 1,000
Peter O. Crisp.. 103,077 -- 5,191 -- 8,250 1,000
Elias P.
Gyftopoulos.... 71,855 -- 2,250 -- 8,250 1,000
George N.
Hatsopoulos.... 3,600,811 -- 25,579 -- 170,494 20,000
John N.
Hatsopoulos.... 873,854 -- 15,569 -- 127,220 20,000
Frank Jungers... 175,754 2,000 11,712 3,000 9,375 4,000
John T. Keiser.. 296,608 -- -- -- -- --
Earl R. Lewis... 204,878 -- -- -- -- 2,000
Robert A.
McCabe......... 48,009 12,000 2,250 18,000 8,250 1,000
Donald E.
Noble.......... 59,751 3,000 2,250 2,500 120,737 7,500
Hutham S.
Olayan......... 28,748 -- 2,250 6,060 8,250 2,000
Robert W.
O'Leary........ 25,226 -- -- -- 1,500 --
William A.
Rainville...... 359,409 -- 4,467 -- 690,077 43,000
Arvin H. Smith.. 931,378 -- 6,000 -- 63,000 10,000
Richard F.
Syron.......... 12,849 -- -- -- -- --
Roger D.
Wellington..... 38,050 -- 2,250 8,000 17,250 11,748
All directors
and current
executive
officers as a
group (21
persons)....... 8,425,740 17,000 341,164 37,560 1,412,271 145,248
<CAPTION>
Thermo Thermo
Power ThermoLyte TerraTech
Name(1) Corporation(8) Corporation(9) Inc.(10)
------- -------------- -------------- ---------
<S> <C> <C> <C>
Putnam
Investments,
Inc.(32)....... N/A N/A N/A
FMR
Corporation(33).. N/A N/A N/A
John M.
Albertine...... 3,000 -- 1,500
Peter O. Crisp.. 37,566 -- 1,500
Elias P.
Gyftopoulos.... 6,925 -- 3,040
George N.
Hatsopoulos.... 54,282 -- 55,471
John N.
Hatsopoulos.... 46,753 -- 60,357
Frank Jungers... 3,000 -- 1,500
John T. Keiser.. -- -- --
Earl R. Lewis... 12,500 -- --
Robert A.
McCabe......... 11,209 -- 3,660
Donald E.
Noble.......... 24,332 -- 53,340
Hutham S.
Olayan......... 3,000 -- 1,500
Robert W.
O'Leary........ -- -- --
William A.
Rainville...... -- -- 60,000
Arvin H. Smith.. 7,969 -- 36,997
Richard F.
Syron.......... -- -- --
Roger D.
Wellington..... 6,425 -- 2,500
All directors
and current
executive
officers as a
group (21
persons)....... 253,818 -- 325,506
</TABLE>
<TABLE>
<CAPTION>
The Randers Thermo Thermo Thermo Thermo
Killam Group EuroTech ThermoRetec Thermedics Thermedics Cardiosystems Sentron Voltek
Name(1) Inc.(11) N.V.(12) Corporation(13) Inc.(14) Detection Inc.(15) Inc.(16) Inc.(17) Corp.(18)
------- ------------ -------- --------------- ---------- ------------------ ------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Putnam
Investments,
Inc.(32)....... N/A N/A N/A N/A N/A 3,354,271 N/A N/A
FMR
Corporation(33).. N/A N/A N/A N/A N/A N/A N/A N/A
John M.
Albertine...... -- -- 4,500 4,500 1,000 1,000 1,000 1,500
Peter O. Crisp.. -- -- 4,500 35,418 1,500 2,250 1,500 2,250
Elias P.
Gyftopoulos.... -- -- 30,730 10,048 1,600 16,023 1,000 5,250
George N.
Hatsopoulos.... 48,000 -- 9,000 63,681 21,197 11,584 17,000 --
John N.
Hatsopoulos.... 48,000 -- 61,282 64,630 21,262 432 37,800 --
Frank Jungers... -- -- 15,000 9,050 1,000 13,250 1,000 1,500
John T. Keiser.. 4,000 -- -- 193,993 17,000 56,773 51,000 --
Earl R. Lewis... 4,000 -- -- -- 2,000 -- 2,000 --
Robert A.
McCabe......... -- -- 4,500 6,998 10,000 12,250 3,000 3,300
Donald E.
Noble.......... 300 -- 10,500 14,173 1,968 12,250 18,284 1,500
Hutham S.
Olayan......... -- -- 4,500 4,500 1,000 12,250 1,000 1,500
Robert W.
O'Leary........ -- -- -- -- -- -- -- --
William A.
Rainville...... 24,000 -- 24,000 -- 10,000 -- 7,000 --
Arvin H. Smith.. 24,000 -- 2,400 91,290 10,000 30,000 7,000 --
Richard F.
Syron.......... -- -- -- -- -- -- -- --
Roger D.
Wellington..... -- -- 4,500 4,500 1,000 4,750 1,000 1,500
All directors
and current
executive
officers as a
group (21
persons)....... 196,300 -- 240,912 733,962 149,678 227,314 195,584 130,852
<CAPTION>
ThermoTrex ThermoLase
Name(1) Corporation(19) Corporation(20)
------- --------------- ---------------
<S> <C> <C>
Putnam
Investments,
Inc.(32)....... N/A N/A
FMR
Corporation(33).. N/A N/A
John M.
Albertine...... 6,000 2,000
Peter O. Crisp.. 40,282 22,508
Elias P.
Gyftopoulos.... 6,000 62,455
George N.
Hatsopoulos.... 44,889 31,125
John N.
Hatsopoulos.... 23,844 71,089
Frank Jungers... 12,500 3,300
John T. Keiser.. -- --
Earl R. Lewis... -- 5,000
Robert A.
McCabe......... 11,500 3,976
Donald E.
Noble.......... 6,000 6,000
Hutham S.
Olayan......... 6,000 2,000
Robert W.
O'Leary........ 1,500 --
William A.
Rainville...... 1,797 10,000
Arvin H. Smith.. 1,967 10,000
Richard F.
Syron.......... -- --
Roger D.
Wellington..... 6,000 2,000
All directors
and current
executive
officers as a
group (21
persons)....... 182,835 356,370
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Trex Trex Thermo Metrika ONIX Thermo Thermo
Medical Communications Instrument Systems Systems BioAnalysis Optek
Name(1) Corporation(21) Corporation(22) Systems Inc.(23) Corporation(24) Inc.(25) Corporation(26) Corporation(27)
------- --------------- --------------- ---------------- --------------- -------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Putnam
Investments,
Inc.(32)........ N/A N/A N/A N/A N/A N/A N/A
FMR
Corporation(33).. N/A N/A N/A N/A N/A N/A N/A
John M.
Albertine....... 1,000 -- 2,343 1,000 1,000 1,000 1,000
Peter O. Crisp.. 4,500 -- 2,343 1,000 1,000 1,000 1,000
Elias P.
Gyftopoulos..... 41,031 -- 57,743 1,000 1,000 16,019 1,000
George N.
Hatsopoulos..... 41,188 -- 179,141 30,000 20,000 37,300 113,100
John N.
Hatsopoulos..... 32,263 -- 94,226 25,000 20,000 62,200 132,800
Frank Jungers... 3,850 5,000 19,993 1,000 40,000 4,100 1,000
John T. Keiser.. 20,000 -- 154,212 12,000 2,000 -- --
Earl R. Lewis... 32,000 -- 338,250 20,000 35,666 72,500 253,000
Robert A.
McCabe.......... 7,050 12,500 56,818 6,000 8,333 3,000 70,961
Donald E.
Noble........... 1,000 6,250 68,357 2,500 1,000 6,300 1,000
Hutham S.
Olayan.......... 46,746 -- 2,343 1,000 1,000 1,000 1,000
Robert W.
O'Leary......... -- -- -- -- 1,000 -- --
William A.
Rainville....... 20,000 -- -- 10,000 10,000 6,000 15,000
Arvin H. Smith.. 20,000 -- 539,583 10,000 24,000 39,000 98,000
Richard F.
Syron........... -- -- -- -- -- -- --
Roger D.
Wellington...... 1,300 -- 6,093 1,000 1,000 1,000 1,000
All directors
and current
executive
officers as a
group (21
persons)........ 313,265 23,750 1,659,736 138,000 184,332 270,419 740,361
<CAPTION>
Thermo
ThermoQuest ThermoSpectra Vision Thermo Coleman
Name(1) Corporation(28) Corporation(29) Corporation(30) Corporation(31)
------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Putnam
Investments,
Inc.(32)........ N/A N/A N/A N/A
FMR
Corporation(33).. N/A N/A N/A N/A
John M.
Albertine....... 1,000 1,000 1,000 --
Peter O. Crisp.. 1,000 1,000 1,000 --
Elias P.
Gyftopoulos..... 1,000 21,022 16,089 --
George N.
Hatsopoulos..... 92,600 24,750 23,800 --
John N.
Hatsopoulos..... 109,500 24,400 36,100 --
Frank Jungers... 47,852 1,500 3,725 --
John T. Keiser.. -- 1,500 1,500 --
Earl R. Lewis... 135,000 55,000 42,720 --
Robert A.
McCabe.......... 1,000 1,500 2,120 --
Donald E.
Noble........... 2,300 4,000 1,000 --
Hutham S.
Olayan.......... 1,000 1,000 1,000 --
Robert W.
O'Leary......... -- -- 1,000 --
William A.
Rainville....... 15,000 10,000 7,500 --
Arvin H. Smith.. 90,000 20,000 16,120 --
Richard F.
Syron........... -- -- -- --
Roger D.
Wellington...... 1,000 1,000 1,000 --
All directors
and current
executive
officers as a
group (21
persons)........ 541,252 235,572 173,124 --
</TABLE>
- ----
(1) Except as reflected in the footnotes to this table, shares of the Common
Stock of the Corporation and of the common stock of each of the
Corporation's subsidiaries beneficially owned consist of shares owned by
the indicated person or by that person for the benefit of minor children,
and all share ownership includes sole voting and investment power.
(2) Shares of the Common Stock of the Corporation beneficially owned by Dr.
Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Jungers, Mr. Keiser, Mr. Lewis, Mr. McCabe, Mr. Noble,
Ms. Olayan, Mr. O'Leary, Mr. Rainville, Mr. Smith, Dr. Syron, Mr.
Wellington and all directors and current executive officers as a group
include 9,125, 9,125, 9,125, 1,899,500, 812,735, 9,125, 251,622, 202,350,
9,125, 9,125, 9,125, 11,000, 293,287, 622,249, 11,000, 9,125 and 5,331,224
shares, respectively, that such person or members of the group have the
right to acquire within 60 days of January 31, 1999, through the exercise
of stock options. Shares beneficially owned by Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Smith and all directors and current executive officers as
a group include 2,266, 2,036, 1,717 and 11,166 shares, respectively,
allocated to their respective accounts maintained pursuant to the
Corporation's employee stock ownership plan (the "ESOP"), of which the
trustees, who have investment power over its assets, are executive
officers of the Corporation. Shares beneficially owned by Dr. Albertine,
Mr. Crisp, Dr. Gyftopoulos, Mr. Jungers, Mr. McCabe, Mr. Noble, Ms.
Olayan, Mr. O'Leary, Dr. Syron, Mr. Wellington and all directors and
current executive officers as a group include 31,988, 47,058, 151, 80,427,
34,725, 44,961, 17,373, 1,226, 1,849, 24,145 and 283,903 shares,
respectively, allocated to accounts maintained pursuant to the Deferred
Compensation Plan. Shares beneficially owned by Dr. G. Hatsopoulos include
158,351 shares held by his spouse, 408,664 shares held by a family trust
of which his spouse is the trustee, 500,000 shares held by a trust of
which Dr. G. Hatsopoulos is
9
<PAGE>
the trustee and 153 shares allocated to his spouse's account maintained
pursuant to the ESOP. Shares beneficially owned by Dr. G. Hatsopoulos also
include 50,000 shares that a family trust, of which Dr. G. Hatsopoulos'
spouse is the trustee, has the right to acquire within 60 days of January
31, 1999, through the exercise of stock options. Shares beneficially owned
by Mr. Jungers include 4,500 shares held by Mr. Jungers' spouse. Shares
beneficially owned by Ms. Olayan do not include 6,050,000 shares owned by
Crescent Holding GmbH, a member of the Olayan Group. Crescent Holding GmbH
is indirectly controlled by Suliman S. Olayan, Ms. Olayan's father. Ms.
Olayan disclaims beneficial ownership of the shares owned by Crescent
Holding GmbH. Except for Dr. G. Hatsopoulos, who beneficially owned 2.25%
of the Common Stock outstanding as of January 31, 1999, no director or
named executive officer beneficially owned more than 1% of the Common
Stock outstanding as of such date; all directors and current executive
officers as a group beneficially owned 5.29% of the Common Stock
outstanding as of January 31, 1999.
(3) Shares of the common stock of Thermo Information Solutions Inc.
beneficially owned by Mr. McCabe include 12,000 shares held by a trust of
which he and members of his family are trustees. The directors, named
executive officers, and current executive officers did not individually
or as a group beneficially own more than 1% of the Thermo Information
Solutions Inc. common stock outstanding as of January 31, 1999.
(4) Shares of the common stock of Thermo Ecotek Corporation beneficially
owned by Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos,
Mr. J. Hatsopoulos, Mr. Jungers, Mr. McCabe, Mr. Noble, Ms. Olayan, Mr.
Wellington and all directors and current executive officers as a group
include 2,250, 2,250, 2,250, 15,000, 13,257, 5,500, 2,250, 2,250, 2,250,
2,250 and 297,507 shares, respectively, that such person or members of
the group have the right to acquire within 60 days of January 31, 1999,
through the exercise of stock options. Shares beneficially owned by Mr.
Jungers and all directors and current executive officers as a group
include 1,662 shares allocated to Mr. Jungers' account maintained
pursuant to Thermo Ecotek's deferred compensation plan for directors.
Shares beneficially owned by Mr. Jungers include 500 shares held by Mr.
Jungers' spouse. The directors, named executive officers and current
executive officers did not individually or as a group beneficially own
more than 1% of the Thermo Ecotek Corporation common stock outstanding as
of January 31, 1999.
(5) Shares of the common stock of Thermo Trilogy Corporation beneficially
owned by Mr. McCabe include 18,000 shares held by a trust of which he and
members of his family are trustees. Shares beneficially owned by Ms.
Olayan do not include 60,000 shares owned by Crescent International
Holdings Ltd., a member of the Olayan Group which is indirectly
controlled by Suliman S. Olayan, Ms. Olayan's father. Ms. Olayan
disclaims beneficial ownership of the shares owned by Crescent
International Holdings Ltd. The directors, named executive officers and
current executive officers did not individually or as a group
beneficially own more than 1% of the Thermo Trilogy Corporation common
stock outstanding as of January 31, 1999.
(6) Shares of the common stock of Thermo Fibertek Inc. beneficially owned by
Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Jungers, Mr. McCabe, Mr. Noble, Ms. Olayan, Mr. O'Leary,
Mr. Rainville, Mr. Smith, Mr. Wellington and all directors and current
executive officers as a group include 8,250, 8,250, 8,250, 139,910,
57,600, 8,250, 8,250, 8,850, 8,250, 1,500, 550,000, 63,000, 8,250 and
1,021,110 shares, respectively, that such person or members of the group
have the right to acquire within 60 days of January 31, 1999, through the
exercise of stock options. Shares beneficially owned by Mr. Noble and all
directors and current executive officers as a group include 9,202 shares
allocated to Mr. Noble's account maintained pursuant to Thermo Fibertek
Inc.'s deferred compensation plan for directors. Shares beneficially
owned by Mr. J. Hatsopoulos include 2,900 shares held by his spouse.
Shares beneficially owned by Mr. Jungers include 1,125 shares held by his
spouse. Except for Mr. Rainville, who beneficially owned 1.12% of the
common stock of Thermo Fibertek Inc. outstanding as of January 31, 1999,
no director or named executive officer beneficially owned more than 1% of
the Thermo Fibertek Inc. common stock outstanding as of January 31, 1999;
all directors and current executive officers as a group beneficially
owned 2.29% of the Thermo Fibertek Inc. common stock outstanding as of
January 31, 1999.
10
<PAGE>
(7) Shares of the common stock of Thermo Fibergen Inc. beneficially owned by
Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Jungers, Mr. Lewis, Mr. McCabe, Mr. Noble, Ms. Olayan,
Mr. Rainville, Mr. Smith, Mr. Wellington, and all directors and current
executive officers as a group include 1,000, 1,000, 1,000, 20,000,
20,000, 1,000, 2,000, 1,000, 1,500, 1,000, 40,000, 10,000, 11,000 and
131,500 shares, respectively, that such person or members of the group
have the right to acquire within 60 days of January 31, 1999, through the
exercise of stock options. Shares beneficially owned by Mr. Wellington
and all directors and current executive officers as a group include 748
shares allocated to Mr. Wellington's account maintained pursuant to
Thermo Fibergen Inc.'s deferred compensation plan for directors. The
directors, named executive officers and current executive officers did
not individually or as a group beneficially own more than 1% of the
Thermo Fibergen Inc. common stock outstanding as of January 31, 1999. In
addition, Mr. Jungers, Mr. Noble, Mr. Rainville and all directors and
current executive officers as a group beneficially owned 1,500, 3,000,
1,500 and 6,000 redemption rights, respectively, issued by Thermo
Fibergen Inc. Each of these rights, issued in a public offering in
September 1996, permits the holder to sell one share of the Thermo
Fibergen common stock back to Thermo Fibergen Inc. at certain times in
the future at a price of $12.75 per share.
(8) Shares of the common stock of Thermo Power Corporation beneficially owned
by Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Jungers, Mr. Lewis, Mr. McCabe, Mr. Noble, Ms. Olayan,
Mr. Wellington and all directors and current executive officers as a
group include 3,000, 6,600, 3,000, 40,000, 40,000, 3,000, 10,000, 3,000,
7,200, 3,000, 3,000 and 141,800 shares, respectively, that such person or
members of the group have the right to acquire within 60 days of January
31, 1999, through the exercise of stock options. Shares beneficially
owned by Mr. Crisp, Mr. Noble and all directors and current executive
officers as a group include 11,873, 8,307, and 20,180 shares,
respectively, allocated to their respective accounts maintained pursuant
to Thermo Power Corporation's deferred compensation plan for directors.
Shares beneficially owned by Dr. G. Hatsopoulos include 114 shares held
by Dr. G. Hatsopoulos' spouse. Shares beneficially owned by Mr. J.
Hatsopoulos include 1,000 shares held by Mr. J. Hatsopoulos' spouse.
Shares beneficially owned by Mr. Lewis include 500 shares held by Mr.
Lewis' son. No director or named executive officer beneficially owned
more than 1% of the Thermo Power Corporation common stock outstanding as
of January 31, 1999; all directors and current executive officers as a
group beneficially owned 2.14% of the Thermo Power Corporation common
stock outstanding as of January 31, 1999.
(9) The directors, named executive officers and current executive officers
did not individually or as a group beneficially own any of the ThermoLyte
Corporation common stock outstanding as of January 31, 1999.
(10) Shares of the common stock of Thermo TerraTech Inc. beneficially owned by
Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Jungers, Mr. McCabe, Mr. Noble, Ms. Olayan, Mr.
Rainville, Mr. Smith, Mr. Wellington and all directors and current
executive officers as a group include 1,500, 1,500, 1,500, 40,000,
40,000, 1,500, 1,500, 8,900, 1,500, 60,000, 35,000, 1,500 and 211,400
shares, respectively, that such person or members of the group have the
right to acquire within 60 days of January 31, 1999, through the exercise
of stock options. Shares beneficially owned by Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Smith and all directors and current executive officers
as a group include 309, 315, 265 and 1,817 shares, respectively,
allocated to their respective accounts maintained pursuant to the
Corporation's ESOP. Shares beneficially owned by Mr. Noble and all
directors and current executive officers as a group include 21,400 shares
allocated to Mr. Noble's account maintained pursuant to Thermo TerraTech
Inc.'s deferred compensation plan for directors. Shares beneficially
owned by Mr. J. Hatsopoulos and all directors and current executive
officers as a group include 12,500 shares that Mr. J. Hatsopoulos has the
right to acquire within 60 days of January 31, 1999, through the exercise
of stock purchase warrants acquired in connection with private placements
of securities by Thermo TerraTech Inc. and one or more of that
corporation's subsidiaries on terms identical to terms granted to outside
investors. Shares beneficially owned by Dr. G. Hatsopoulos include 93
shares held by his spouse and three shares allocated to his spouse's
account maintained pursuant to the Corporation's ESOP. No director or
named
11
<PAGE>
executive officer beneficially owned more than 1% of the Thermo TerraTech
Inc. common stock outstanding as of January 31, 1999; all directors and
current executive officers as a group beneficially owned 1.69% of the
Thermo TerraTech Inc. common stock outstanding as of January 31, 1999.
(11) Shares of the common stock of The Randers Killam Group Inc. beneficially
owned by Dr. G. Hatsopoulos, Mr. J. Hatsopoulos, Mr. Keiser, Mr. Lewis,
Mr. Noble, Mr. Rainville, Mr. Smith and all directors and current
executive officers as group include 48,000, 48,000, 4,000, 4,000, 300,
24,000, 24,000 and 196,300 shares, respectively, that such person or
members of the group have the right to acquire within 60 days of January
31, 1999, through the exercise of stock options. The directors, named
executive officers and current executive officers did not individually or
as a group beneficially own more than 1% of The Randers Killam Group Inc.
common stock outstanding as of January 31, 1999.
(12) The directors, named executive officers and current executive officers
did not individually or as a group beneficially own any of the Thermo
EuroTech N.V. common stock outstanding as of January 31, 1999.
(13) Shares of the common stock of ThermoRetec Corporation beneficially owned
by Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Jungers, Mr. McCabe, Mr. Noble, Ms. Olayan, Mr.
Rainville, Mr. Smith, Mr. Wellington and all directors and current
executive officers as a group include 4,500, 4,500, 29,600, 7,500,
22,500, 4,500, 4,500, 6,000, 4,500, 22,500, 2,400, 4,500 and 157,400
shares, respectively, that such person or members of the group have the
right to acquire within 60 days of January 31, 1999, through the exercise
of stock options. Shares beneficially owned by Dr. Gyftopoulos and all
directors and current executive officers as a group include 130 shares
allocated to Dr. Gyftopoulos' account maintained pursuant to ThermoRetec
Corporation's deferred compensation plan for directors. No director or
named executive officer beneficially owned more than 1% of the
ThermoRetec Corporation common stock outstanding as of January 31, 1999;
all directors and current executive officers as a group beneficially
owned 1.83% of the ThermoRetec Corporation common stock outstanding as of
January 31, 1999.
(14) Shares of the common stock of Thermedics Inc. beneficially owned by Dr.
Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Jungers, Mr. Keiser, Mr. McCabe, Mr. Noble, Ms. Olayan,
Mr. Smith, Mr. Wellington and all directors and current executive
officers as a group include 4,500, 8,850, 4,500, 50,000, 50,000, 4,500,
187,200, 4,500, 4,500, 4,500, 82,500, 4,500 and 562,950 shares,
respectively, that such person or members of the group have the right to
acquire within 60 days of January 31, 1999, through the exercise of stock
options. Shares beneficially owned by Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Smith and all directors and current executive officers
as a group include 1,635, 1,737, 1,445 and 9,182 shares, respectively,
allocated to their respective accounts maintained pursuant to the
Corporation's ESOP. Shares beneficially owned by Mr. Crisp and all
directors and current executive officers as a group include 8,463 shares
allocated to Mr. Crisp's account maintained pursuant to Thermedics Inc.'s
deferred compensation plan for directors. Shares beneficially owned by
Dr. G. Hatsopoulos include 562 shares held by his spouse and 92 shares
allocated to the account of his spouse maintained pursuant to the
Corporation's ESOP. Shares beneficially owned by Mr. Jungers include
1,550 shares held by his spouse. No director or named executive officer
beneficially owned more than 1% of the common stock of Thermedics Inc.
outstanding as of January 31, 1999; all directors and current executive
officers as a group beneficially owned 1.99% of the Thermedics Inc.
common stock outstanding as of January 31, 1999.
(15) Shares of the common stock of Thermedics Detection Inc. beneficially
owned by Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos,
Mr. J. Hatsopoulos, Mr. Jungers, Mr. Keiser, Mr. Lewis, Mr. McCabe, Mr.
Noble, Ms. Olayan, Mr. Rainville, Mr. Smith, Mr. Wellington and all
directors and current executive officers as a group include 1,000, 1,500,
1,000, 20,000, 20,000, 1,000, 17,000, 2,000, 1,000, 1,000, 1,000, 10,000,
10,000, 1,000 and 119,300 shares, respectively, that such person or
members of the group have the right to acquire within 60 days of January
31, 1999, through the exercise of stock options. Shares beneficially
owned by Dr. G. Hatsopoulos include 57 shares held by his spouse. Shares
beneficially owned by Mr. McCabe include 9,000 shares held in a trust of
which he and members of his family are trustees. The directors, named
executive officers and current executive officers did not
12
<PAGE>
individually or as a group beneficially own more than 1% of the Thermedics
Detection Inc. common stock outstanding as of January 31, 1999.
(16) Shares of the common stock of Thermo Cardiosystems Inc. beneficially
owned by Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Mr. Jungers, Mr.
Keiser, Mr. McCabe, Mr. Noble, Ms. Olayan, Mr. Smith, Mr. Wellington and
all directors and current executive officers as a group include 1,000,
2,250, 15,000, 12,250, 49,500, 12,250, 12,250, 12,250, 30,000, 4,750 and
178,850 shares, respectively, that such person or members of the group
have the right to acquire within 60 days of January 31, 1999, through the
exercise of stock options. Shares beneficially owned by Dr. Gyftopoulos
and all directors and current executive officers as a group include 23
shares allocated to Dr. Gyftopoulos' account maintained pursuant to
Thermo Cardiosystems Inc.'s deferred compensation plan for directors. The
directors, named executive officers and current executive officers did
not individually or as a group beneficially own more than 1% of the
Thermo Cardiosystems Inc. common stock outstanding as of January 31,
1999.
(17) Shares of the common stock of Thermo Sentron Inc. beneficially owned by
Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Jungers, Mr. Keiser, Mr. Lewis, Mr. McCabe, Mr. Noble,
Ms. Olayan, Mr. Rainville, Mr. Smith, Mr. Wellington and all directors
and current executive officers as a group include 1,000, 1,500, 1,000,
15,000, 15,000, 1,000, 19,500, 2,000, 1,000, 15,000, 1,000, 7,000, 7,000,
1,000 and 130,000 shares, respectively, that such person or members of
the group have the right to acquire within 60 days of January 31, 1999,
through the exercise of stock options. Shares beneficially owned by Mr.
Noble and all directors and current executive officers as a group include
1,984 shares allocated to Mr. Noble's account maintained pursuant to
Thermo Sentron Inc.'s deferred compensation plan for directors. No
director or named executive officer beneficially owned more than 1% of
the Thermo Sentron Inc. common stock outstanding as of January 31, 1999;
all directors and current executive officers as a group beneficially
owned 2.07% of the Thermo Sentron Inc. common stock outstanding as of
January 31, 1999.
(18) Shares of the common stock of Thermo Voltek Corp. beneficially owned by
Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Mr. Jungers, Mr. McCabe, Mr.
Noble, Ms. Olayan, Mr. Wellington and all directors and current executive
officers as a group include 1,500, 2,250, 4,250, 1,500, 1,500, 1,500,
1,500, 1,500 and 97,850 shares, respectively, that such persons or
members of the group have the right to acquire within 60 days of January
31, 1999, through the exercise of stock options. No director or named
executive officer beneficially owned more than 1% of the Thermo Voltek
Corp. common stock outstanding as of January 31, 1999; all directors and
current executive officers beneficially owned 1.49% of the Thermo Voltek
Corp. common stock outstanding as of January 31, 1999. Subsequent to
January 31, 1999, Thermo Voltek was taken private and merged with a
wholly owned subsidiary of Thermedics Inc.
(19) Shares of the common stock of ThermoTrex Corporation beneficially owned
by Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Jungers, Mr. McCabe, Mr. Noble, Ms. Olayan, Mr. O'Leary,
Mr. Wellington and all directors and current executive officers as a
group include 6,000, 7,600, 6,000, 30,000, 21,000, 6,000, 6,000, 6,000,
6,000, 1,500, 6,000 and 112,100 shares, respectively, that such person or
members of the group have the right to acquire within 60 days of January
31, 1999, through the exercise of stock options. Shares beneficially
owned by Mr. Crisp and all directors and current executive officers as a
group include 3,558 shares allocated to Mr. Crisp's account maintained
pursuant to ThermoTrex Corporation's deferred compensation plan for
directors. Shares beneficially owned by Dr. G. Hatsopoulos include 160
shares held by his spouse. The directors, named executive officers and
current executive officers did not individually or as a group
beneficially own more than 1% of the ThermoTrex Corporation common stock
outstanding as of January 31, 1999.
(20) Shares of the common stock of ThermoLase Corporation beneficially owned
by Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Jungers, Mr. Lewis, Mr. McCabe, Mr. Noble, Ms. Olayan,
Mr. Rainville, Mr. Smith, Mr. Wellington and all directors and current
executive officers as a group include 2,000, 22,508, 61,400, 28,800,
39,400, 2,000, 5,000, 2,000, 2,000, 2,000, 10,000, 10,000 2,000 and
307,508 shares, respectively, that such person or members of the group
have the
13
<PAGE>
right to acquire within 60 days of January 31, 1999, through the exercise
of stock options. Shares beneficially owned by Dr. Gyftopoulos and all
directors and current executive officers as a group include 55 shares
allocated to Dr. Gyftopoulos' account maintained pursuant to ThermoLase
Corporation's deferred compensation plan for directors. Shares
beneficially owned by Dr. G. Hatsopoulos include 32 shares held by his
spouse. Shares benefically owned by Mr. J. Hatsopoulos include 28,760
shares issuable upon conversion of $500,000 in principal amount of 4 3/8%
convertible subordinated debentures due 2004 issued by ThermoLase
Corporation. In addition, Mr. McCabe and all directors and current
executive officers as a group beneficially owned 831 redemption rights
issued by ThermoLase Corporation. Each of these rights permits the holder
to sell one share of the ThermoLase common stock back to ThermoLase
Corporation at certain times in the future at a price of $20.25 per share.
The directors, named executive officers and current executive officers did
not individually or as a group beneficially own more than 1% of the
ThermoLase Corporation common stock outstanding as of January 31, 1999.
(21) Shares of the common stock of Trex Medical Corporation beneficially owned
by Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Jungers, Mr. Keiser, Mr. Lewis, Mr. McCabe, Mr. Noble,
Ms. Olayan, Mr. Rainville, Mr. Smith, Mr. Wellington and all directors
and current executive officers as a group include 1,000, 1,500, 40,000,
40,000, 32,000, 1,000, 20,000, 32,000, 1,000, 1,000, 40,000, 20,000,
20,000, 1,000 and 288,500 shares, respectively, that such person or
members of the group have the right to acquire within 60 days of January
31, 1999, through the exercise of stock options. Shares beneficially
owned by Dr. Gyftopoulos, Ms. Olayan and all directors and current
executive officers as a group include 31, 1,746 and 1,777 shares
allocated to accounts maintained pursuant to Trex Medical Corporation's
deferred compensation plan for directors. Shares beneficially owned by
Dr. G. Hatsopoulos include 16 shares held by his spouse. Shares
beneficially owned by Ms. Olayan do not include 350,000 shares owned by
Crescent International Holdings Ltd., a member of the Olayan Group which
is indirectly controlled by Suliman S. Olayan, Ms. Olayan's father. Ms.
Olayan disclaims beneficial ownership of the shares owned by Crescent
International Holdings Ltd. The directors, named executive officers and
current executive officers did not individually or as a group
beneficially own more than 1% of the Trex Medical Corporation common
stock outstanding as of January 31, 1999.
(22) Shares of the common stock of Trex Communications Corporation
beneficially owned by Mr. McCabe include 12,500 shares held by a trust of
which he and members of his family are trustees. Shares set forth in the
table do not include 50,000 shares owned by Crescent International
Holdings Ltd., a member of the Olayan Group which is indirectly
controlled by Suliman S. Olayan, Ms. Olayan's father. Ms. Olayan
disclaims beneficial ownership of the shares owned by Crescent
International Holdings Ltd. The directors, named executive officers and
current executive officers did not individually or as a group
beneficially own more than 1% of the Trex Communications Corporation
common stock outstanding as of January 31, 1999.
(23) Shares of the common stock of Thermo Instrument Systems Inc. beneficially
owned by Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos,
Mr. J. Hatsopoulos, Mr. Jungers, Mr. Keiser, Mr. Lewis, Mr. McCabe, Mr.
Noble, Ms. Olayan, Mr. Smith, Mr. Wellington and all directors and
current executive officers as a group include 2,343, 2,343, 12,648,
117,187, 70,312, 13,587, 70,312, 322,085, 10,771, 4,451, 2,343, 292,968,
2,343 and 1,004,627 shares, respectively, that such person or members of
the group have the right to acquire within 60 days of January 31, 1999,
through the exercise of stock options. Shares beneficially owned by Dr.
G. Hatsopoulos, Mr. J. Hatsopoulos, Mr. Smith and all directors and
current executive officers as a group include 598, 661, 663 and 3,648
shares, respectively, allocated to accounts maintained pursuant to the
Corporation's ESOP. Shares beneficially owned by Dr. G. Hatsopoulos
include 26,710 shares held by his spouse and 63 shares allocated to his
spouse's account maintained pursuant to the Corporation's ESOP. Shares
beneficially owned by Mr. Lewis include 2,987 shares held by his spouse.
No director or named executive officer beneficially owned more than 1% of
the Thermo Instrument Systems Inc. common stock outstanding as of January
31, 1999; all directors and current executive officers as a group
beneficially owned 1.39% of the Thermo Instrument Systems Inc. common
stock outstanding as of January 31, 1999.
14
<PAGE>
(24) Shares of the common stock of Metrika Systems Corporation beneficially
owned by Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos,
Mr. J. Hatsopoulos, Mr. Jungers, Mr. Keiser, Mr. Lewis, Mr. McCabe, Mr.
Noble, Ms. Olayan, Mr. Rainville, Mr. Smith, Mr. Wellington and all
directors and current executive officers as group include 1,000, 1,000,
1,000, 30,000, 10,000, 1,000, 12,000, 20,000, 1,000, 1,000, 1,000,
10,000, 10,000, 1,000 and 116,500 shares, respectively, that such person
or members of the group have the right to acquire within 60 days of
January 31, 1999, through the exercise of stock options. Shares
beneficially owned by Mr. McCabe include 5,000 shares held in a trust of
which he and members of his family are trustees. No director or named
executive officer beneficially owned more than 1% of the common stock of
Metrika Systems Corporation outstanding as of January 31, 1999; all
directors and current executive officers as a group beneficially owned
1.79% of the Metrika Systems Corporation common stock outstanding as of
January 31, 1999.
(25) Shares of the common stock of ONIX Systems Inc. beneficially owned by Dr.
Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Jungers, Mr. Keiser, Mr. Lewis, Mr. McCabe, Mr. Noble,
Ms. Olayan, Mr. O'Leary, Mr. Rainville, Mr. Smith, Mr. Wellington and all
directors and current executive officers as a group include 1,000, 1,000,
1,000, 20,000, 20,000, 30,000, 2,000, 33,333, 1,000, 1,000, 1,000, 1,000,
10,000, 20,000, 1,000 and 160,666 shares, respectively, that such person
or members of the group have the right to acquire within 60 days of
January 31, 1999, through the exercise of stock options. Shares
beneficially owned by Mr. McCabe include 7,333 shares held by a trust of
which he and members of his family are trustees. Shares of ONIX Systems
Inc. beneficially owned by Ms. Olayan do not include 16,666 shares owned
by Crescent International Holdings Ltd., a member of the Olayan Group
which is indirectly controlled by Suliman S. Olayan, Ms. Olayan's father.
Ms. Olayan disclaims beneficial ownership of the shares owned by Crescent
International Holdings Ltd. Shares beneficially owned by Mr. Lewis
include 333 shares held by his son. Shares beneficially owned by Mr.
Smith include 4,000 shares held by his spouse. No director or named
executive officer beneficially owned more than 1% of the ONIX Systems
Inc. common stock outstanding as of January 31, 1999; all directors and
current executive officers as a group beneficially owned 1.28% of the
ONIX Systems Inc. common stock outstanding as of January 31, 1999.
(26) Shares of the common stock of Thermo BioAnalysis Corporation beneficially
owned by Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos,
Mr. J. Hatsopoulos, Mr. Jungers, Mr. Lewis, Mr. McCabe, Mr. Noble, Ms.
Olayan, Mr. Rainville, Mr. Smith, Mr. Wellington and all directors and
current executive officers as a group include 1,000, 1,000, 15,000,
17,300, 17,200, 1,500, 50,000, 1,500, 1,000, 1,000, 6,000, 20,000, 1,000
and 150,500 shares, respectively, that such person or members of the
group have the right to acquire within 60 days of January 31, 1999,
through the exercise of stock options. Shares beneficially owned by Dr.
Gyftopoulos and all directors and current executive officers as a group
include 19 shares allocated to Dr. Gyftopoulos' account maintained
pursuant to Thermo BioAnalysis Corporation's deferred compensation plan
for directors. Shares beneficially owned by Mr. Jungers include 600
shares held by his spouse. Shares beneficially owned by Mr. Lewis include
1,000 shares held by his spouse. No director or named executive officer
beneficially owned more than 1% of the Thermo BioAnalysis Corporation
common stock outstanding as of January 31, 1999; all directors and
current executive officers as a group beneficially owned 1.54% of the
Thermo BioAnalysis Corporation common stock outstanding as of January 31,
1999.
(27) Shares of the common stock of Thermo Optek Corporation beneficially owned
by Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Jungers, Mr. Lewis, Mr. McCabe, Mr. Noble, Ms. Olayan,
Mr. Rainville, Mr. Smith, Mr. Wellington and all directors and current
executive officers as a group include 1,000, 1,000, 1,000, 93,100,
92,800, 1,000, 225,000, 45,000, 1,000, 1,000, 15,000, 90,000, 1,000 and
615,900 shares, respectively, that such person or members of the group
have the right to acquire within 60 days of January 31, 1999, through the
exercise of stock options. Shares beneficially owned by Mr. Lewis include
2,500 shares held by his spouse and 1,000 shares held by his son. Shares
beneficially owned by Mr. McCabe include 5,000 shares held by a trust of
which he and members of his family are trustees, 7,171 shares issuable
upon conversion of $100,000 in principal amount
15
<PAGE>
of the 5% convertible subordinated debentures due 2000 issued by Thermo
Optek Corporation and 790 shares allocated to Mr. McCabe's account
maintained pursuant to Thermo Optek Corporation's deferred compensation
plan for directors. No director or named executive officer beneficially
owned more than 1% of the Thermo Optek Corporation common stock
outstanding as of January 31, 1999; all directors and current executive
officers as a group beneficially owned 1.44% of the Thermo Optek
Corporation common stock outstanding as of January 31, 1999.
(28) Shares of the common stock of ThermoQuest Corporation beneficially owned
by Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos, Mr. J.
Hatsopoulos, Mr. Jungers, Mr. Lewis, Mr. McCabe, Mr. Noble, Ms. Olayan,
Mr. Rainville, Mr. Smith, Mr. Wellington and all directors and current
executive officers as a group include 1,000, 1,000, 1,000, 92,600,
92,400, 45,000, 125,000, 1,000, 1,000, 1,000, 15,000, 90,000, 1,000 and
510,000 shares, respectively, that such person or members of the group
have the right to acquire within 60 days of January 31, 1999, through the
exercise of stock options. Shares beneficially owned by Mr. Jungers and
all directors and current executive officers as a group include 1,852
shares allocated to Mr. Jungers' account maintained pursuant to
ThermoQuest Corporation's deferred compensation plan for directors. No
director or named executive officer beneficially owned more than 1% of
the ThermoQuest Corporation common stock outstanding as of January 31,
1999; all directors and current executive officers as a group
beneficially owned 1.06% of the ThermoQuest Corporation common stock
outstanding as of January 31, 1999.
(29) Shares of the common stock of ThermoSpectra Corporation beneficially
owned by Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos,
Mr. J. Hatsopoulos, Mr. Jungers, Mr. Keiser, Mr. Lewis, Mr. McCabe, Mr.
Noble, Ms. Olayan, Mr. Rainville, Mr. Smith, Mr. Wellington and all
directors and current executive officers as a group include 1,000, 1,000,
20,000, 24,750, 24,400, 1,500, 1,500, 50,000, 1,500, 1,000, 1,000,
10,000, 20,000, 1,000 and 233,350 shares, respectively, that such person
or members of the group have the right to acquire within 60 days of
January 31, 1999, through the exercise of stock options. Shares
beneficially owned by Dr. Gyftopoulos and all directors and current
executive officers as a group include 22 shares allocated to Dr.
Gyftopoulos' account maintained pursuant to ThermoSpectra Corporation's
deferred compensation plan for directors. No director or named executive
officer beneficially owned more than 1% of the common stock of
ThermoSpectra Corporation outstanding as of January 31, 1999; all
directors and current executive officers as a group beneficially owned
1.69% of the ThermoSpectra Corporation common stock outstanding as of
January 31, 1999.
(30) Shares of the common stock of Thermo Vision Corporation beneficially
owned by Dr. Albertine, Mr. Crisp, Dr. Gyftopoulos, Dr. G. Hatsopoulos,
Mr. J. Hatsopoulos, Mr. Jungers, Mr. Keiser, Mr. Lewis, Mr. McCabe, Mr.
Noble, Ms. Olayan, Mr. O'Leary, Mr. Rainville, Mr. Smith, Mr. Wellington
and all directors and current executive officers as group include 1,000,
1,000, 15,000, 15,000, 15,000, 1,000, 1,500, 25,000, 1,000, 1,000, 1,000,
1,000, 7,500, 15,000, 1,000 and 114,500 shares, respectively, that such
person or members of the group have the right to acquire within 60 days
of January 31, 1999, through the exercise of stock options. Shares of the
common stock of Thermo Vision Corporation beneficially owned by Mr. J.
Hatsopoulos include 3,000 shares held by his spouse. Shares beneficially
owned by Mr. Lewis include 350 shares held by his spouse and 1,140 shares
held by his son. Shares beneficially owned by Mr. McCabe include 700
shares held by a trust of which members of his family are trustees.
Shares beneficially owned by Dr. Gyftopoulos and all directors and
current executive officers as a group include 89 shares allocated to Dr.
Gyftopoulos' account maintained pursuant to Thermo Vision Corporation's
deferred compensation plan for directors. No director or named executive
officer beneficially owned more than 1% of the common stock of Thermo
Vision Corporation outstanding as of January 31, 1999; all directors and
current executive officers as a group beneficially owned 2.15% of the
Thermo Vision Corporation common stock outstanding as of January 31,
1999.
(31) The directors, named executive officers and current executive officers
did not individually or as a group beneficially own any of the Thermo
Coleman Corporation Common Stock outstanding as of January 31, 1999.
16
<PAGE>
(32) Information regarding the number of shares of Common Stock and the shares
of the common stock of Thermo Cardiosystems Inc. beneficially owned by
Putnam Investments, Inc. is based on the most recent Schedule 13G of
Putnam Investments, Inc. received by the Corporation, which reported such
ownership as of December 31, 1998. The address of Putnam Investments,
Inc. is One Post Office Square, Boston, Massachusetts 02109. Shares
reported as beneficially owned by Putnam Investments, Inc. consist of
shares beneficially owned by subsidiaries of Putnam Investments, Inc.
that are registered investment advisers, which in turn include shares
beneficially owned by clients of such investment advisers. As of December
31, 1998, Putnam Investments, Inc. beneficially owned approximately 5.5%
of the outstanding Common Stock and approximately 9.0% of the outstanding
common stock of Thermo Cardiosystems Inc.
(33) Information regarding the number of shares of Common Stock beneficially
owned by FMR Corp. is based on the most recent Schedule 13G of FMR Corp.
received by the Corporation, which reported such ownership as of December
31, 1998. The address of FMR Corp. is 82 Devonshire Street, Boston,
Massachusetts 02109. Shares beneficially owned by FMR Corp. include
343,675 shares issuable upon conversion of $12,991,000 in principal
amount of the Corporation's 4 1/4% Convertible Subordinated Debentures
due 2003. As of December 31, 1998, FMR Corp. beneficially owned
approximately 8.9% of the outstanding Common Stock.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Corporation's directors and executive officers,
and beneficial owners of more than 10% of the Common Stock, to file with the
Securities and Exchange Commission initial reports of ownership and periodic
reports of changes in ownership of the Corporation's securities. Based upon a
review of such filings, all Section 16(a) filing requirements applicable to
such persons were complied with during 1998 except in the following instances:
Mr. John N. Hatsopoulos, a director of the Corporation, reported three
transactions late, relating to three gifts of Common Stock. Dr. Elias P.
Gyftopoulos, a director of the Corporation, reported one transaction late,
consisting of an exempt grant of stock options.
17
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table summarizes compensation for services to the Corporation
received during the last three fiscal years by the Corporation's chief
executive officer and four other most highly compensated executive officers
who were employed by the Corporation as of the end of fiscal 1998. The table
also includes one more executive who would have been among the four most
highly compensated executive officers except for the fact that he was not
serving as an executive officer of the Corporation as of the end of fiscal
1998. These executive officers are collectively referred to herein as the
"named executive officers."
Summary Compensation Table
<TABLE>
- ---------------------------------------------------------------------------------------------------
<CAPTION>
Long Term
Annual Compensation Compensation
------------------------- ----------------------
Securities Underlying
Name and Fiscal Options (No. of Shares All Other
Principal Position Year Salary Bonus(1) Other and Company)(2)(3) Compensation(4)
------------------ ------ -------- -------- ------- ---------------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
George N. Hatsopoulos... 1998 $585,000 $300,000 200,000 (TMO) $7,200
Chief Executive Officer 20,000 (MKA)
20,000 (ONX)
48,000 (RGI)
2,300 (TBA)
10,000 (TISI)
3,100 (TOC)
2,600 (TMQ)
4,750 (THS)
20,000 (TRIL)
15,000 (VIZ)
20,000 (TRCC)
1997 $560,000 $630,000 200,000 (TMO) $7,125
10,000 (MKA)
20,000 (TDX)
1996 $520,000 $575,000 100,000 (TMO) $6,750
15,000 (TBA)
20,000 (TFG)
15,000 (TLT)
90,000 (TOC)
90,000 (TMQ)
15,000 (TSR)
40,000 (TXM)
- ---------------------------------------------------------------------------------------------------
Arvin H. Smith.......... 1998 $300,000 $150,000 116,000 (TMO) $7,200
President 20,000 (ONX)
24,000 (RGI)
10,000 (TDX)
5,000 (TISI)
10,000 (TRIL)
10,000 (TRCC)
1997 $285,000 $300,000 $57,947(5) 6,000 (TMO) $7,125
10,000 (MKA)
15,000 (VIZ)
1996 $270,000 $260,000 $55,089(5) 9,000 (TMO) $6,750
20,000 (TBA)
10,000 (TFG)
90,000 (TOC)
90,000 (TMQ)
7,000 (TSR)
20,000 (TXM)
- ---------------------------------------------------------------------------------------------------
</TABLE>
18
<PAGE>
Summary Compensation Table (Continued)
<TABLE>
- ----------------------------------------------------------------------------------------------
<CAPTION>
Long Term
Annual Compensation Compensation
----------------------- ----------------------
Securities Underlying
Name and Fiscal Options (No. of Shares All Other
Principal Position Year Salary Bonus(1) Other and Company)(2)(3) Compensation(4)
------------------ ------ -------- -------- ----- ---------------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Earl R. Lewis........... 1998 $280,000 $200,000 120,000 (TMO) $15,939(6)
Chief Operating 33,333 (ONX)
Officer, 4,000 (RGI)
Measurement & Detection 2,000 (TDX)
10,000 (THP)
1,000 (TISI)
2,000 (TRIL)
2,000 (TRCC)
1997 $220,000 $250,000 20,000 (MKA) $16,710(6)
62,500 (THI)
75,000 (TMQ)
25,000 (VIZ)
1996 $180,000 $160,000 42,500 (TBA) $11,550(6)
2,000 (TFG)
2,000 (TLT)
225,000 (TOC)
2,000 (TSR)
50,000 (TMQ)
40,000 (TXM)
- ----------------------------------------------------------------------------------------------
William A. Rainville.... 1998 $260,000 $140,000 123,800 (TMO) $28,922(7)
Chief Operating 10,000 (MKA)
Officer, Recycling & 10,000 (ONX)
Resource Recovery 24,000 (RGI)
10,000 (TDX)
5,000 (TISI)
7,500 (VIZ)
10,000 (TRCC)
1997 $220,000 $200,000 3,400 (TMO) $28,340(7)
240,000 (TFT)
1996 $205,000 $191,000 6,450 (TMO) $17,558(7)
40,000 (TFG)
15,000 (TOC)
15,000 (TMQ)
7,000 (TSR)
20,000 (TXM)
- ----------------------------------------------------------------------------------------------
John T. Keiser.......... 1998 $240,000 $160,000 128,100 (TMO) $ 7,200
Chief Operating 2,000 (MKA)
Officer, Biomedical 2,000 (ONX)
& Emerging 4,000 (RGI)
Technologies(8) 60,700 (TMD)
17,000 (TDX)
25,000 (TCA)
30,000 (TCOL)
1,000 (TISI)
12,000 (TSR)
2,000 (TRIL)
1,500 (VIZ)
2,000 (TRCC)
1997 $155,000 $160,000 53,100 (TMO) $ 7,125
10,000 (MKA)
20,000 (TCA)
800 (TMD)
1996 $145,000 $130,000 3,750 (TMO)
800 (TMD)
7,500 (TSR)
20,000 (TXM)
- ----------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
Summary Compensation Table (Continued)
<TABLE>
- ----------------------------------------------------------------------------------------------
<CAPTION>
Long Term
Annual Compensation Compensation
----------------------- ----------------------
Securities Underlying
Name and Fiscal Options (No. of Shares All Other
Principal Position Year Salary Bonus(1) Other and Company)(2)(3) Compensation(4)
------------------ ------ -------- -------- ----- ---------------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
John N. Hatsopoulos..... 1998 $425,000 $205,000 205,100 (TMO) $7,200
Former President 20,000 (ONX)
and Chief Financial 2,200 (TBA)
Officer(9) 4,400 (THS)
2,800 (TOC)
2,400 (TMQ)
1997 $400,000 $600,000 206,000 (TMO) $7,125
10,000 (MKA)
48,000 (RGI)
20,000 (TDX)
10,000 (TISI)
15,000 (VIZ)
20,000 (TRCC)
1996 $325,000 $550,000 107,200 (TMO) $6,750
15,000 (TBA)
20,000 (TFG)
15,000 (TLT)
90,000 (TOC)
90,000 (TMQ)
15,000 (TSR)
40,000 (TXM)
- ----------------------------------------------------------------------------------------------
</TABLE>
(1) Represents performance-based cash incentive compensation paid with respect
to performance for the fiscal year. For fiscal 1998, performance-based
cash incentive compensation for the named executive officers, other than
the chief executive officer, was comprised of two components: (a) 80% was
determined by formulae using measures of financial performance and (b) 20%
was determined subjectively and is intended to evaluate the executive's
contribution to the achievement of the Corporation's long-term objectives.
See "Committee Report on Executive Compensation--Components of Executive
Compensation."
(2) In addition to grants of options to purchase Common Stock of the
Corporation (designated in the table as TMO), the named executive officers
have been granted options to purchase common stock of subsidiaries of the
Corporation, as compensation for their services either to the Corporation
or to its subsidiaries. Options were granted during the last three fiscal
years to the chief executive officer and the other named executive
officers in their capacities as executive officers of the Corporation or
directors or executive officers of the following subsidiaries of the
Corporation: Metrika Systems Corporation (designated in the table as MKA),
ONIX Systems Inc. (designated in the table as ONX), The Randers Killam
Group Inc. (designated in the table as RGI), Thermedics Inc. (designated
in the table as TMD), Thermedics Detection Inc. (designated in the table
as TDX), Thermo BioAnalysis Corporation (designated in the table as TBA),
Thermo Cardiosystems Inc. (designated in the table as TCA), Thermo Coleman
Corporation (designated in the table as TCOL), Thermo Fibergen Inc.
(designated in the table as TFG), Thermo Instrument Systems Inc.
(designated in the table as THI), Thermo Fibertek Inc. (designated in the
table as TFT), Thermo Information Solutions Inc. (designated in the table
as TISI), ThermoLyte Corporation (designated in the table as TLT), Thermo
Optek Corporation (designated in the table as TOC), Thermo Power
Corporation (designated in the table as THP), ThermoQuest Corporation
(designated in the table as TMQ), Thermo Sentron Inc. (designated in the
table as TSR), ThermoSpectra Corporation (designated in the table as THS),
Thermo Trilogy Corporation (designated in the table as TRIL), Thermo
Vision Corporation (designated in the table as VIZ), Trex Communications
Corporation (designated in the table as TRCC) and Trex Medical Corporation
(designated in the table as TXM).
(3) No awards of restricted stock of the Corporation were made to the chief
executive officer or other named executive officers during the last three
fiscal years. As of January 2, 1999, the amount and value of each
executive officer's restricted stock holdings were as follows: Dr. G.
Hatsopoulos--20,250 shares valued at $342,984; Mr. Smith--10,125 shares
valued at $171,492.
(4) For all the named executive officers except Mr. Rainville, this amount
represents matching contributions made on behalf of the executive officer
by the Corporation pursuant to the Corporation's 401(k) plan. As to
20
<PAGE>
Mr. Rainville, this amount represents employer contributions to his account
under the profit sharing plan of Thermo Web Systems Inc., a subsidiary of
Thermo Fibertek Inc.
(5) This amount includes a special bonus in 1997 and 1996 of $40,447 and
$37,589, respectively, paid pursuant to a stock retention program.
(6) In addition to the matching contribution referred to in footnote (3), such
amounts include $8,739, $9,585 and $4,800, which represent the amounts of
compensation attributable in fiscal 1998, 1997 and 1996, respectively, to
an interest-free loan provided to Mr. Lewis pursuant to the stock holding
assistance plan of Thermo Optek Corporation, a subsidiary of Thermo
Instrument Systems Inc. See "Relationship with Affiliates--Stock Holding
Assistance Plans."
(7) In addition to the matching contribution referred to in footnote (3), such
amounts include $5,319, $5,471 and $1,313, which represent the amounts of
compensation attributable in fiscal 1998, 1997 and 1996, respectively, to
an interest-free loan provided to Mr. Rainville pursuant to the stock
holding assistance plan of Thermo Fibertek Inc., a subsidiary of the
Corporation. See "Relationship with Affiliates--Stock Holding Assistance
Plans."
(8) Mr. Keiser's primary managerial assignment in fiscal 1998 was as president
of the Thermo biomedical group, which is comprised of the Corporation's
wholly owned biomedical businesses, and as president of Thermedics Inc., a
position he assumed in March 1998. In September 1998, he was promoted to
chief operating officer, biomedical and emerging technologies, of the
Corporation.
(9) Mr. J. Hatsopoulos ceased to be an executive officer of the Corporation
upon his resignation as chief financial officer effective as of December
31, 1998.
21
<PAGE>
Stock Options Granted During Fiscal 1998
The following table sets forth information concerning individual grants of
stock options made during fiscal 1998 to the Corporation's named executive
officers. It has not been the Corporation's policy in the past to grant stock
appreciation rights, and no such rights were granted during fiscal 1998.
Option Grants in Fiscal 1998
<TABLE>
- --------------------------------------------------------------------------------------------------------
<CAPTION>
Potential Realizable
Value at Assumed
Percent of Annual Rates of Stock
Number of Securities Total Options Price Appreciation for
Underlying Options Granted to Exercise Option Term(2)
Granted and Employees in Price Per Expiration -----------------------
Name Company(1) Fiscal Year Share Date 5% 10%
---- -------------------- ------------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
George N. Hatsopoulos... 50,000 (TMO) 1.50% $40.91 04/03/10 $ 1,628,000 $ 4,374,000
50,000 (TMO) 1.50% $34.65 07/03/10 $ 1,379,000 $ 3,705,000
50,000 (TMO) 1.50% $15.26 10/02/10 $ 607,000 $ 1,631,500
50,000 (TMO) 1.50% $16.59 12/31/10 $ 660,000 $ 1,774,000
20,000 (MKA) 7.0% $14.23 01/21/05 $ 115,800 $ 270,000
20,000 (ONX) 2.0% $14.25 01/21/08 $ 179,200 $ 454,200
48,000 (RGI) 9.0% $ 4.00 01/21/05 $ 78,240 $ 181,920
2,300 (TBA) 0.6% $19.00 01/21/05 $ 17,779 $ 41,469
10,000 (TISI) 16.7% $10.00 01/21/08 $ 62,900 $ 159,400
3,100 (TOC) 0.3% $14.09 01/21/05 $ 17,794 $ 41,447
2,600 (TMQ) 0.3% $15.79 01/21/05 $ 16,718 $ 38,948
4,750 (THS) 1.3% $ 9.30 01/21/05 $ 18,003 $ 41,895
20,000 (TRIL) 11.1% $ 8.25 01/21/08 $ 103,800 $ 263,000
15,000 (VIZ) 3.7% $ 7.25 01/21/05 $ 44,250 $ 103,200
20,000 (TRCC) 1.6% $ 4.00 01/21/08 $ 50,400 $ 127,400
- --------------------------------------------------------------------------------------------------------
Arvin H. Smith.......... 100,000 (TMO) 3.00% $17.56 10/27/05 $ 715,000 $ 1,666,000
10,000 (TMO) 0.30% $22.46 08/11/03 $ 62,100 $ 137,100
6,000 (TMO) 0.2% $34.50 06/02/03 $ 57,180 $ 126,360
20,000 (ONX) 2.0% $14.25 01/21/05 $ 116,000 $ 270,400
24,000 (RGI) 4.5% $ 4.00 01/21/05 $ 39,120 $ 90,960
10,000 (TDX) 1.1% $ 9.56 01/21/05 $ 38,900 $ 90,700
5,000 (TISI) 8.4% $10.00 01/21/08 $ 31,450 $ 79,700
10,000 (TRIL) 5.6% $ 8.25 01/21/08 $ 51,900 $ 131,500
10,000 (TRCC) 0.8% $ 4.00 01/21/08 $ 25,200 $ 63,700
- --------------------------------------------------------------------------------------------------------
Earl R. Lewis........... 100,000 (TMO) 3.00% $17.56 10/27/05 $ 715,000 $ 1,666,000
20,000 (TMO) 0.60% $22.46 08/11/03 $ 124,200 $ 274,200
33,333 (ONX) 3.4% $14.25 01/21/05 $ 193,331 $ 450,662
4,000 (RGI) 0.8% $ 4.00 01/21/05 $ 6,520 $ 15,160
2,000 (TDX) 0.2% $ 9.56 01/21/05 $ 7,780 $ 18,140
1,000 (TISI) 1.7% $10.00 01/21/08 $ 6,290 $ 15,940
10,000 (THP) 1.5% $11.33 05/27/05 $ 46,100 $ 107,500
2,000 (TRIL) 1.1% $ 8.25 01/21/08 $ 10,380 $ 26,300
2,000 (TRCC) 0.2% $ 4.00 01/21/08 $ 5,040 $ 12,740
- --------------------------------------------------------------------------------------------------------
William A. Rainville.... 100,000 (TMO) 3.00% $17.56 10/27/05 $ 715,000 $ 1,666,000
20,000 (TMO) 0.60% $22.46 08/11/03 $ 124,200 $ 274,200
3,800 (TMO) 0.1% $34.50 06/02/03 $ 36,214 $ 80,028
10,000 (MKA) 3.5% $14.23 01/21/05 $ 57,900 $ 135,000
10,000 (ONX) 1.0% $14.25 01/21/08 $ 89,600 $ 227,100
24,000 (RGI) 4.5% $ 4.00 01/21/05 $ 39,120 $ 90,960
10,000 (TDX) 1.1% $ 9.56 01/21/05 $ 38,900 $ 90,700
5,000 (TISI) 8.4% $10.00 01/21/08 $ 31,450 $ 79,700
7,500 (VIZ) 1.8% $ 7.25 01/21/05 $ 22,125 $ 51,600
10,000 (TRCC) 0.8% $ 4.00 01/21/08 $ 25,200 $ 63,700
- --------------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE>
Option Grants in Fiscal 1998 (Continued)
<TABLE>
- ----------------------------------------------------------------------------------------------------
<CAPTION>
Potential Realizable
Value at Assumed
Percent of Annual Rates of Stock
Number of Securities Total Options Price Appreciation for
Underlying Options Granted to Exercise Option Term(2)
Granted and Employees in Price Per Expiration -----------------------
Name Company(1) Fiscal Year Share Date 5% 10%
---- -------------------- ------------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
John T. Keiser 100,000 (TMO) 3.00% $17.56 10/27/05 $ 715,000 $ 1,666,000
20,000 (TMO) 0.60% $22.46 08/11/03 $ 124,200 $ 274,200
5,000 (TMO) 0.2% $39.36 03/11/03 $ 54,350 $ 120,150
3,100 (TMO) 0.1% $34.50 06/02/03 $ 29,543 $ 65,286
2,000 (MKA) 0.70% $14.23 01/21/05 $ 11,580 $ 27,000
2,000 (ONX) 0.20% $14.25 01/21/08 $ 17,920 $ 45,420
4,000 (RGI) 0.8% $ 4.00 01/21/05 $ 6,520 $ 15,160
700 (TMD) 0.2% $16.05 03/05/01 $ 1,771 $ 3,717
60,000 (TMD) 13.3% $17.11 04/13/05 $ 418,200 $ 973,800
2,000 (TDX) 0.2% $ 9.56 01/21/05 $ 7,780 $ 18,140
15,000 (TDX) 1.6% $11.04 04/13/05 $ 67,350 $ 157,050
25,000 (TCA) 3.2% $26.30 04/13/05 $ 267,750 $ 623,750
30,000 (TCOL) 4.6% $10.00 12/21/08 $ 188,700 $ 478,200
1,000 (TISI) 1.7% $10.00 01/21/08 $ 6,290 $ 15,940
12,000 (TSR) 3.7% $12.08 04/13/05 $ 59,040 $ 137,520
2,000 (TRIL) 1.1% $ 8.25 01/21/08 $ 10,380 $ 26,300
1,500 (VIZ) 0.4% $ 7.25 01/21/05 $ 4,425 $ 10,320
2,000 (TRCC) 0.2% $ 4.00 01/21/08 $ 5,040 $ 12,740
- ----------------------------------------------------------------------------------------------------
John N. Hatsopoulos 50,000 (TMO) 1.50% $40.91 04/03/10 $ 1,628,000 $ 4,374,000
50,000 (TMO) 1.50% $34.65 07/03/10 $ 1,379,000 $ 3,705,000
50,000 (TMO) 1.50% $15.26 10/02/10 $ 607,000 $ 1,631,500
50,000 (TMO) 1.50% $16.59 12/31/10 $ 660,000 $ 1,774,000
5,100 (TMO) 0.2% $34.50 06/02/03 $ 48,603 $ 107,406
20,000 (ONX) 2.0% $14.25 01/21/05 $ 116,000 $ 270,400
2,200 (TBA) 0.6% $19.00 01/21/05 $ 17,006 $ 39,666
2,800 (TOC) 0.3% $14.09 01/21/05 $ 16,072 $ 37,436
2,400 (TMQ) 0.2% $15.79 01/21/05 $ 15,432 $ 35,952
4,400 (THS) 1.2% $ 9.30 01/21/05 $ 16,676 $ 38,808
</TABLE>
- -------------------------------------------------------------------------------
(1) All of the options reported are immediately exercisable as of the end of
the fiscal year, except options to purchase shares of the common stock of
Thermo Coleman Corporation, Thermo Information Solutions Inc., Thermo
Trilogy Corporation and Trex Communications Corporation, which are not
exercisable until the earlier of (i) 90 days after the effective date of
the registration of that company's common stock under Section 12 of the
Exchange Act or (ii) nine years after the grant date. In all cases, the
shares acquired upon exercise are subject to repurchase by the granting
company at the exercise price if the optionee ceases to be employed by, or
ceases to serve as a director of, the granting company or another Thermo
Electron company. The granting company may exercise its repurchase rights
within six months after the termination of the optionee's employment or
the cessation of directorship, as the case may be. For publicly traded
companies, the repurchase rights lapse ratably over a one- to ten-year
period, depending on the option term, which may vary from five to twelve
years, provided that the optionee continues to be employed by or serve as
a director of the granting company or another Thermo Electron company. For
companies whose shares are not publicly traded, the repurchase rights
generally lapse in their entirety on the ninth anniversary of the grant
date. Certain options have three-year terms and the repurchase rights
lapse in their entirety on the second anniversary of the grant date. The
granting company may permit the holders of options to exercise options and
to satisfy tax withholding obligations by surrendering shares equal in
fair market value to the exercise price or withholding obligation. Please
see footnote (2) on page 20 for the company abbreviations used in this
table.
(2) The amounts shown on this table represent hypothetical gains that could be
achieved for the respective options if exercised at the end of the option
term. These gains are based on assumed rates of stock appreciation of 5%
and 10% compounded annually from the date the respective options were
granted to their expiration date. The gains shown are net of the option
exercise price, but do not include deductions for taxes or other expenses
associated with the exercise. Actual gains, if any, on stock option
exercises will depend on the future performance of the common stock of the
granting company, the optionee's continued employment or service as a
director through the option period and the date on which the options are
exercised.
23
<PAGE>
Stock Options Exercised During Fiscal 1998 and Fiscal Year-End Option Values
The following table reports certain information regarding stock option
exercises during fiscal 1998 and outstanding stock options held at the end of
fiscal 1998 by the Corporation's named executive officers. No stock
appreciation rights were exercised or were outstanding during fiscal 1998.
Aggregated Option Exercises In Fiscal 1998 And Fiscal 1998 Year-End Option
Values
<TABLE>
- -----------------------------------------------------------------------------------------
<CAPTION>
Number of Value of
Securities Unexercised
Underlying In-the-Money
Unexercised Options
Shares Options at Fiscal at Fiscal
Acquired Year-End Year-End
on Value (Exercisable/ (Exercisable/
Name Company Exercise Realized(1) Unexercisable)(2) Unexercisable)
---- ------- -------- ----------- ----------------- --------------
<S> <C> <C> <C> <C> <C>
Dr. George N.
Hatsopoulos............. (TMO) -- -- 1,899,500/0 $2,067,767/ --
(MKA) -- -- 30,000/0 $ 0/ --
(ONX) -- -- 20,000/0 $ 0/ --
(RGI) -- -- 48,000/0 $ 0/ --
(TMD) -- -- 50,000/0 $ 0/ --
(TDX) -- -- 20,000/0 $ 0/ --
(TBA) -- -- 17,300/0 $ 40,320/ --
(TCK) -- -- 15,000/0 $ 76,875/ --
(TFG) -- -- 20,000/0 $ 0/ --
(TFT) -- -- 157,910/0 $ 499,839/ --
(TISI) -- -- 0/10,000 --/$ 0(3)
(THI) -- -- 117,187/0 $ 187,264/ --
(TLZ) -- -- 28,800/0 $ 81,014/ --
(TLT) -- -- 0/15,000 --/$ 0(3)
(TOC) -- -- 93,100/0 $ 0/ --
(THP) -- -- 40,000/0 $ 0/ --
(TMQ) -- -- 92,600/0 $ 28,170/ --
(THN) -- -- 7,500/0 $ 0/ --
(TSR) -- -- 15,000/0 $ 0/ --
(THS) -- -- 24,750/0 $ 37,356/ --
(TTT) -- -- 40,000/0 $ 0/ --
(TKN) 6,600 $93,146 30,000/0 $ 0/ --
(TRIL) -- -- 0/20,000 --/$ 0(3)
(VIZ) -- -- 15,000/0 $ 0/ --
(TRCC) -- -- 0/20,000 --/$ 0(3)
(TXM) -- -- 40,000/0 $ 0/ --
- -----------------------------------------------------------------------------------------
Arvin H. Smith.......... (TMO) 22,162 $403,441 322,249/0 $ 505,667/ --
(MKA) -- -- 10,000/0 $ 0/ --
(ONX) -- -- 20,000/0 $ 0/ --
(RGI) -- -- 24,000/0 $ 0/ --
(TMD) -- -- 82,500/0 $ 321,563/ --
(TDX) -- -- 10,000/0 $ 0/ --
(TBA) -- -- 20,000/0 $ 53,760/ --
(TCA) -- -- 30,000/0 $ 113,850/ --
(TFG) -- -- 10,000/0 $ 0/ --
(TFT) -- -- 90,000/0 $ 365,670/ --
(TISI) -- -- 0/5,000 --/$ 0(3)
(THI) -- -- 292,968/0 $ 468,163/ --
(TLZ) -- -- 10,000/0 $ 0/ --
(TLT) -- -- 0/6,000 --/$ 0(3)
(TOC) -- -- 90,000/0 $ 0/ --
(TMQ) -- -- 90,000/0 $ 28,170/ --
(THN) -- -- 2,400/0 $ 0/ --
(TSR) -- -- 7,000/0 $ 0/ --
(THS) -- -- 20,000/0 $ 27,500/ --
(TTT) -- -- 35,000/0 $ 0/ --
(TKN) 2,700 $ 38,273 0/0 --/ --
(TRIL) -- -- 0/10,000 --/$ 0(3)
(VIZ) -- -- 15,000/0 $ 0/ --
(TRCC) -- -- 0/10,000 --/$ 0(3)
(TXM) -- -- 20,000/0 $ 0/ --
- -----------------------------------------------------------------------------------------
</TABLE>
24
<PAGE>
Aggregated Option Exercises In Fiscal 1998 And Fiscal 1998 Year-End Option
Values (Continued)
<TABLE>
- -----------------------------------------------------------------------------------------
<CAPTION>
Number of Value of
Securities Unexercised
Underlying In-the-Money
Unexercised Options
Shares Options at Fiscal at Fiscal
Acquired Year-End Year-End
on Value (Exercisable/ (Exercisable/
Name Company Exercise Realized(1) Unexercisable)(2) Unexercisable)
---- ------- -------- ----------- ----------------- --------------
<S> <C> <C> <C> <C> <C>
Earl R. Lewis........... (TMO) 17,024 $ 400,156 202,350/0 51,463/ --
(MKA) -- -- 20,000/0 $ 0/ --
(ONX) -- -- 33,333/0 $ 0/ --
(RGI) -- -- 4,000/0 $ 0/ --
(TDX) -- -- 2,000/0 $ 0/ --
(TBA) -- -- 50,000/0 $ 49,400/ --
(TFG) -- -- 2,000/0 $ 0/ --
(TISI) -- -- 0/1,000 --/$ 0(3)
(THI) 31,040 $ 614,126 172,085/0(4) $ 175,117/ --
(TLZ) -- -- 5,000/0 $ 0/ --
(TLT) -- -- 0/2,000 /$ 0(3)
(TOC) -- -- 225,000/0(5) $ 0/ --
(THP) -- -- 10,000/0 $ 0/ --
(TMQ) -- -- 125,000/0 $ 15,650/ --
(TSR) -- -- 2,000/0 $ 0/ --
(THS) -- -- 50,000/0 $ 68,750/ --
(TRIL) -- -- 0/2,000 /$ 0(3)
(VIZ) -- -- 25,000/0 $ 0/ --
(TRCC) -- -- 0/2,000 /$ 0(3)
(TXM) 8,000 $ 60,000 32,000/0 $ 0/ --
- -----------------------------------------------------------------------------------------
William A. Rainville.... (TMO) 15,937 $ 368,947 293,287/0(6) $ 103,377/ --
(MKA) -- -- 10,000/0 $ 0/ --
(ONX) -- -- 10,000/0 $ 0/ --
(RGI) -- -- 24,000/0 $ 0/ --
(TDX) -- -- 10,000/0 $ 0/ --
(TBA) -- -- 6,000/0 $ 16,128/ --
(TFG) -- -- 40,000/0(7) $ 0/ --
(TFT) 70,000 $ 529,410 665,000/0 $1,443,275/ --
(TISI) -- -- 0/5,000 -- /$ 0(3)
(TLZ) -- -- 10,000/0 $ 0/ --
(TLT) -- -- 0/6,000 -- /$ 0(3)
(TOC) -- -- 15,000/0 $ 0/ --
(TMQ) -- -- 15,000/0 $ 4,695/ --
(THN) -- -- 22,500/0 $ 0/ --
(TSR) -- -- 7,000/0 $ 0/ --
(THS) -- -- 10,000/0 $ 13,750/ --
(TTT) -- -- 60,000/0 $ 0/ --
(TKN) 2,700 $ 49,073 0/0 -- / --
(VIZ) -- -- 7,500/0 $ 0/ --
(TRCC) -- -- 0/10,000 -- /$ 0(3)
(TXM) -- -- 20,000/0 $ 0/ --
- -----------------------------------------------------------------------------------------
John T. Keiser.......... (TMO) 10,875 $ 234,031 251,622/0 $ 66,725/ --
(MKA) -- -- 12,000/0 $ 0/ --
(ONX) -- -- 2,000/0 $ 0/ --
(RGI) -- -- 4,000/0 $ 0/ --
(TMD) -- -- 77,200/0 $ 0/ --
(TDX) -- -- 17,000/0 $ 0/ --
(TCA) 11,250 $ 175,500 49,500/0 $ 0/ --
(TCOL) -- -- 0/30,000 -- /$ 0(3)
(TFT) -- -- 6,750/0 $ 27,425/ --
(TISI) -- -- 0/1,000 -- /$ 0(3)
(THI) -- -- 70,312/0 $ 112,359/ --
(TSR) -- -- 19,500/0 $ 0/ --
(THS) -- -- 1,500/0 $ 2,063/ --
(TKN) 1,800 $ 25,965 0/0 -- / --
(TRIL) -- -- 0/2,000 -- /$ 0(3)
(VIZ) -- -- 1,500/0 $ 0/ --
(TRCC) -- -- 0/2,000 -- /$ 0(3)
(TXM) -- -- 20,000/0 $ 0/ --
- -----------------------------------------------------------------------------------------
</TABLE>
25
<PAGE>
Aggregated Option Exercises In Fiscal 1998 And Fiscal 1998 Year-End Option
Values (Continued)
<TABLE>
- -----------------------------------------------------------------------------------------
<CAPTION>
Number of Value of
Securities Unexercised
Underlying In-the-Money
Unexercised Options
Shares Options at Fiscal at Fiscal
Acquired Year-End Year-End
on Value (Exercisable/ (Exercisable/
Name Company Exercise Realized(1) Unexercisable)(2) Unexercisable)
---- ------- -------- ----------- ----------------- --------------
<S> <C> <C> <C> <C> <C>
John N. Hatsopoulos..... (TMO) 7,800 $ 88,436 812,735/0(6) $ 151,023/ --
(MKA) -- -- 10,000/0 $ 0/ --
(ONX) -- -- 20,000/0 $ 0/ --
(RGI) -- -- 48,000/0 $ 0/ --
(TMD) -- -- 50,000/0 $ 0/ --
(TDX) -- -- 20,000/0 $ 0/ --
(TBA) -- -- 17,200/0 $ 40,320/ --
(TCK) -- -- 13,257/0 $ 67,943/ --
(TFG) -- -- 20,000/0 $ 0/ --
(TFT) -- -- 57,600/0 $ 120,629/ --
(TISI) -- -- 0/10,000 --/$ 0(3)
(THI) 11,719 $237,720 70,312/0 $ 112,359/ --
(TLZ) -- -- 39,400/0 $ 40,507/ --
(TLT) -- -- 0/15,000 --/$ 0(3)
(TOC) -- -- 92,800/0 $ 0/ --
(THP) -- -- 40,000/0 $ 0/ --
(TMQ) -- -- 92,400/0 $ 28,170/ --
(THN) -- -- 22,500/0 $ 0/ --
(TSR) -- -- 15,000/0 $ 0/ --
(THS) -- -- 24,400/0 $ 36,630/ --
(TTT) -- -- 40,000/0 $ 0/ --
(TKN) -- -- 21,000/0 $ 0/ --
(VIZ) -- -- 15,000/0 $ 0/ --
(TRCC) -- -- 0/20,000 --/$ 0(3)
(TXM) 8,000 $ 30,000 32,000/0 $ 0/ --
</TABLE>
- -------------------------------------------------------------------------------
(1) Amounts shown in this column do not necessarily represent actual value
realized from the sale of the shares acquired upon exercise of the option
because in many cases the shares are not sold on exercise but continue to
be held by the executive officer exercising the option. The amounts shown
represent the difference between the option exercise price and the market
price on the date of exercise, which is the amount that would have been
realized if the shares had been sold immediately upon exercise. Please see
footnote (2) on page 20 for the company abbreviations used in this table.
In addition, ThermoLase Corporation is designated in the table as TLZ.
(2) All of the options reported outstanding at the end of the fiscal year were
immediately exercisable as of fiscal year-end, except options to purchase
the common stock of Thermo Coleman Corporation, Thermo Information
Solutions Inc., ThermoLyte Corporation, Thermo Trilogy Corporation, and
Trex Communications Corporation, which are not exercisable until the
earlier of (i) 90 days after the effective date of the registration of the
company's common stock under Section 12 of the Exchange Act or (ii) nine
years after the grant date. In all cases, the shares acquired upon
exercise of the options are subject to repurchase by the granting company
at the exercise price if the optionee ceases to be employed by, or ceases
to serve as a director of, such company or another Thermo Electron
company. The granting company may exercise its repurchase rights within
six months after the termination of the optionee's employment or the
cessation of directorship, as the case may be. For publicly traded
companies, the repurchase rights generally lapse ratably over a one- to
ten-year period, depending on the option term, which may vary from five to
twelve years, provided that the optionee continues to be employed by or
serve as a director of the granting company or another Thermo Electron
company. For companies whose shares are not publicly traded, the
repurchase rights lapse in their entirety on the ninth anniversary of the
grant date. Certain options have three-year terms and the repurchase
rights lapse in their entirety on the second anniversary of the grant
date. The granting company may permit the holders of options to exercise
options and to satisfy tax withholding obligations by surrendering shares
equal in fair market value to the exercise price or withholding
obligation.
(3) No public market for the shares underlying these options existed at fiscal
year-end. Accordingly, no value in excess of the exercise price has been
attributed to these options.
(4) Options to purchase 62,500 shares of the common stock of Thermo Instrument
Systems Inc. granted to Mr. Lewis are subject to the same terms as
described in footnote (2), except that the repurchase rights of the
granting company generally do not lapse until the tenth anniversary of the
grant date. In the event of the employee's death or involuntary
termination prior to the tenth anniversary of the grant date, the
repurchase rights of the granting company shall be deemed to have lapsed
ratably over a five-year period commencing with the fifth anniversary of
the grant date.
26
<PAGE>
(5) Options to purchase 100,000 shares of the common stock of Thermo Optek
Corporation granted to Mr. Lewis are subject to the same terms as
described in footnote (2), except that the repurchase rights are deemed to
lapse 20% per year commencing on the sixth anniversary of the grant date.
(6) Options to purchase 90,000 and 135,000 shares of the Common Stock granted
to Messrs. Rainville and J. Hatsopoulos, respectively, are subject to the
same terms as described in footnote (2), except that the repurchase rights
of the granting company generally do not lapse until the tenth anniversary
of the grant date. In the event of the employee's death or involuntary
termination prior to the tenth anniversary of the grant date, the
repurchase rights of the granting company shall be deemed to have lapsed
ratably over a five-year period commencing with the fifth anniversary of
the grant date.
(7) Options to purchase 20,000 shares of the common stock of Thermo Fibergen
Inc. granted to Mr. Rainville are subject to the same terms as described
in footnote (2), except that the repurchase rights are deemed to lapse 20%
per year commencing on the sixth anniversary of the grant date.
Defined Benefit Retirement Plan
Thermo Web Systems Inc., a wholly owned subsidiary of Thermo Fibertek Inc.,
maintains a defined benefit retirement plan (the "Retirement Plan") for
eligible U.S. employees. Mr. Rainville is the chief executive officer of
Thermo Fibertek Inc. and the only executive officer of the Corporation who
participates in the Retirement Plan. The following table sets forth the
estimated annual benefits payable under the Retirement Plan upon retirement to
employees of the subsidiary in specified compensation and years-of-service
classifications. The estimated benefits at certain compensation levels reflect
the statutory limits on compensation that can be recognized for plan purposes.
This limit is currently $160,000 per year.
<TABLE>
<CAPTION>
Annual Compensation Years of Service
------------------- ---------------------------------------------------------
15 20 25 30 35
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$100,000 $25,250 $35,000 $43,750 $48,125 $48,125
$125,000 $32,813 $43,750 $54,688 $60,156 $60,156
$150,000 $39,375 $52,500 $65,625 $72,188 $72,188
$160,000 $42,000 $56,000 $70,000 $84,000 $84,000
</TABLE>
Each eligible employee receives a monthly retirement benefit, beginning at
normal retirement age (65), based on a percentage (1.75%) of the average
monthly compensation of such employee before retirement, multiplied by his
years of service (up to a maximum of 30 years). Full credit is given for the
first 25 years of service, and half credit is given for years over 25 and less
than 30. Benefits are reduced for retirement before normal retirement age.
Average monthly compensation is generally defined as average monthly base
salary over the five years of highest compensation in the ten-year period
preceding retirement. For 1998, the annual compensation of Mr. Rainville
recognized for plan purposes was $160,000. The estimated credited years of
service recognized under the Retirement Plan for Mr. Rainville is 30, assuming
retirement at age 65. No benefits under the Retirement Plan vest for an
employee until after five years of participation, at which time they become
fully vested. The benefits shown in the above table are subject to reduction
for Social Security benefits. The plan benefits shown are payable during the
employee's lifetime unless the employee elects another form of benefit that
provides death benefit protection.
Executive Retention Agreements
Thermo Electron has entered into agreements with certain executive officers
and key employees of the Corporation that provide severance benefits if there
is a change in control of Thermo Electron and their employment is terminated
by the Corporation without cause or by the individual for good reason, as
those terms are defined therein, within 18 months thereafter. For purposes of
these agreements, a change in control exists upon (i) the acquisition by any
person of 40% or more of the outstanding Common Stock or voting securities of
Thermo Electron; (ii) the failure of the Thermo Electron board of directors to
include a majority of directors who are "continuing directors," which term is
defined to include directors who were members of Thermo Electron's board on
the date of the agreement or who subsequent to the date of the agreement were
nominated
27
<PAGE>
or elected by a majority of directors who were "continuing directors" at the
time of such nomination or election; (iii) the consummation of a merger,
consolidation, reorganization, recapitalization or statutory share exchange
involving Thermo Electron or the sale or other disposition of all or
substantially all of the assets of Thermo Electron unless immediately after
such transaction (a) all holders of Thermo Electron Common Stock immediately
prior to such transaction own more than 60% of the outstanding voting
securities of the resulting or acquiring corporation in substantially the same
proportions as their ownership immediately prior to such transaction and (b)
no person after the transaction owns 40% or more of the outstanding voting
securities of the resulting or acquiring corporation; or (iv) approval by
stockholders of a complete liquidation or dissolution of Thermo Electron.
In 1998, Thermo Electron authorized an executive retention agreement with
each of Dr. George N. Hatsopoulos, Mr. John T. Keiser, Mr. Earl R. Lewis, Mr.
William A. Rainville and Mr. Arvin H. Smith. These agreements provide that in
the event the individual's employment is terminated under circumstances
described above, the individual would be entitled to a lump sum payment equal
to the sum of (a) in the case of Dr. Hatsopoulos, three times, and in the case
of Messrs. Keiser, Lewis, Rainville and Smith, two times, the individual's
highest annual base salary in any 12 month period during the prior five-year
period, plus (b) in the case of Dr. Hatsopoulos, three times, and in the case
of Messrs. Keiser, Lewis, Rainville and Smith, two times, the individual's
highest annual bonus in any 12 month period during the prior five-year period.
In addition, the individual would be provided benefits for a period of, in the
case of Dr. Hatsopoulos, three years, and in the case of Messrs. Keiser,
Lewis, Rainville and Smith, two years, after such termination substantially
equivalent to the benefits package the individual would have been otherwise
entitled to receive if the individual was not terminated. Further, all
repurchase rights of the Corporation and its subsidiaries shall lapse in their
entirety with respect to all options to purchase Common Stock of Thermo
Electron and the common stock of its subsidiaries that the individual holds as
of the date of the change in control. Finally, the individual would be
entitled to a cash payment equal to, in the case of Dr. Hatsopoulos, $25,000,
and in the case of Messrs. Keiser, Lewis, Rainville and Smith, $20,000, to be
used toward outplacement services. These executive retention agreements
supersede and replace any and all prior severance arrangements which these
individuals had with Thermo Electron.
Assuming that the severance benefits would have been payable as of January
1, 1999, the lump sum salary and bonus payment under such agreement to Dr.
Hatsopoulos, Mr. Keiser, Mr. Lewis, Mr. Rainville and Mr. Smith would have
been approximately $3,645,000, $920,000, $1,140,000, $960,000 and $1,300,000,
respectively. In the event that payments under these agreements are deemed to
be so-called "excess parachute payments" under the applicable provisions of
the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"),
the individuals would be entitled to receive a gross-up payment equal to the
amount of any excise tax payable by such individual with respect to such
payment plus the amount of all other additional taxes imposed on such
individual attributable to the receipt of such gross-up payment.
Consulting Agreement with Mr. John N. Hatsopoulos
On September 15, 1998, the Corporation entered into an agreement with Mr.
John N. Hatsopoulos regarding his retirement as chief financial officer of the
Corporation and his consulting arrangement with the Corporation. Pursuant to
the agreement, Mr. Hatsopoulos' employment with the Corporation was terminated
effective as of December 31, 1998 (the "Employment Termination Date"). The
agreement provides that in addition to receiving his regular salary through
the Employment Termination Date, Mr. Hatsopoulos would be paid a bonus for the
1998 calendar year in an amount to be determined on the same basis as
similarly situated Corporation executives. The agreement also provides for an
ongoing consulting relationship between Mr. Hatsopoulos and the Corporation
for the five-year period from January 1, 1999 to December 31, 2003. For his
consulting services, Mr. Hatsopoulos will be paid a fee at a rate of $500,000
per year, payable monthly in arrears. The board of directors also agreed to
nominate Mr. Hatsopoulos as a director of the Corporation for the three-year
term expiring in 2002, and agreed to renominate him for a second three-year
term in 2002. Assuming Mr. Hatsopoulos is reelected a director, and subject to
the board of directors' fiduciary duties, the Corporation also agreed to use
its best efforts to cause Mr. Hatsopoulos to remain non-executive vice
chairman for the term of his consulting agreement.
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<PAGE>
Employment Agreement with Dr. Richard F. Syron
On March 12, 1999, Dr. Richard F. Syron, a director of the Corporation,
agreed to become president and chief executive officer of the Corporation
effective June 1, 1999. In connection therewith, Dr. Syron entered into an
employment agreement with the Corporation that provides for an annual base
salary of $800,000 and for an annual incentive bonus in an amount to be
determined by the Corporation's board of directors, provided that Dr. Syron
will be entitled to a guaranteed minimum bonus in calendar 1999, 2000 and 2001
of $145,833, $250,000 and $104,167, respectively. Also, on each of June 1,
1999, June 1, 2000 and June 1, 2001, Dr. Syron will be granted an award of
shares of Common Stock ("Restricted Stock") having a market value at the time
of grant of $200,000 based on the average closing price of the Common Stock as
reported on the New York Stock Exchange ("NYSE") for the five business days
preceding and including the corresponding grant date. Vesting of these shares
of Restricted Stock shall occur on the third anniversary of each corresponding
grant date. In addition, on June 1, 1999, Dr. Syron will be granted a stock
option ("Stock Option") to acquire one million shares of Common Stock at an
exercise price equal to the average of the closing price of the Common Stock
as reported on the NYSE for the five business days preceding and including the
grant date. The transfer restrictions with respect to the Stock Option shall
lapse ratably over the first three anniversaries of the grant date. The
Corporation will also purchase Dr. Syron's current home in the New York area
for a purchase price of $1.5 million and will reimburse him for his reasonable
out-of-pocket moving expenses. The Corporation intends to resell the house
and, to the extent that the sale price exceeds $1.5 million, the Corporation
will pay the excess to Dr. Syron. Conversely, Dr. Syron will reimburse the
Corporation for any amount by which the sale price is less than $1.5 million.
Further, if Dr. Syron's employment is terminated without cause or as a result
of a constructive termination, as those terms are defined in the agreement, he
will be entitled to continue to receive salary payments based on his then
current annual base salary for a period of the greater of (i) 12 months or
(ii) the remaining term of his employment agreement (the "Salary Continuation
Period"). Dr. Syron will also be entitled to a pro rata annual bonus payment
for the year in which the termination occurs and, if applicable, for the
Salary Continuation Period. Further, he will also be entitled to retain his
Restricted Stock and his Stock Option, all transfer restrictions relating
thereto shall lapse in their entirety, and his Stock Option shall continue to
be exercisable until the later of June 1, 2002 or two years from the
employment termination date (but in no event beyond the option expiration date
of June 1, 2006). In addition, the Corporation authorized entering into an
executive retention agreement with Dr. Syron relating to a change in control
of the Corporation on terms comparable to those of Dr. Hatsopoulos' executive
retention agreement. The board of directors also agreed to nominate Dr. Syron
as a director of the Corporation for the three-year term expiring in 2002. In
order to comply with this obligation, the board of directors has caused Dr.
Syron to be a member of the class of directors to be elected this year.
Additionally, because this action caused an imbalance in the number of
directors in each class, the board of directors has caused Dr. Hatsopoulos to
be a member of the class of directors to be elected at the 2000 Annual Meeting
of Stockholders. Dr. Syron's employment agreement has a three-year term, with
automatic one-year extensions thereafter, unless either party elects not to
extend the agreement by providing 12 months' prior written notice.
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation Philosophy
Decisions on compensation for the Corporation's executive officers are made
by the human resources committee of the board of directors (the "Committee").
The Committee has developed compensation policies that are designed to reward
and motivate executives in achieving long-term value for Stockholders and
other business objectives, to attract and retain dedicated, talented
individuals to accomplish the Corporation's objectives, to recognize
individual contributions as well as the performance of the Corporation and its
subsidiaries, and to encourage stock ownership by executives through stock-
based compensation and stock retention programs in order to link executive and
Stockholder interests.
The Committee evaluates the competitiveness of its compensation practices
through the use of market surveys and competitive analyses prepared by its
outside compensation consultants and by participating in annual compensation
surveys, primarily "Project 777", an executive compensation survey prepared by
Management Compensation Services, a division of Hewitt Associates. The
majority of firms represented in the Project 777
29
<PAGE>
survey are included in the Standard & Poor's 500 Index but do not necessarily
correspond to the companies included in the Corporation's peer group. Internal
fairness of compensation within the organization is also an important element
of the Committee's compensation philosophy. Compensation of executives is
evaluated by comparing it to the compensation of other executives within the
Thermo Electron organization who have responsibility to manage businesses of
comparable size and complexity.
The compensation program of the Corporation consists of annual cash
compensation and long-term incentive compensation. Annual cash compensation is
composed of base salary and performance-based incentive compensation, which is
reviewed and determined annually. Long-term incentive compensation is in the
form of stock-based compensation such as stock options and restricted stock
awards. The process for determining the components of executive compensation
for the named executive officers is described below. For its review of the
compensation of other officers of the Corporation, the Committee follows a
substantially similar process.
Components of Executive Compensation
Annual Cash Compensation
Annual cash compensation consists of base salary and performance-based
incentive compensation. The cash incentive compensation paid to an executive
varies from year to year based on the performance of the Corporation and the
executive.
The Committee assesses the competitiveness of total annual cash compensation
by establishing for each executive position at the beginning of each fiscal
year a salary and reference incentive compensation for the position that
together are intended to approximate the mid-point of competitive total annual
cash compensation for organizations that are of comparable size and complexity
as the Corporation.
Base Salary. Generally, executive salaries are adjusted gradually over time
to reflect competitive salary levels or other considerations, such as
geographic or regional market data, industry trends or internal fairness
within the Corporation. The Committee may also adjust individual salaries to
reflect the assumption of increased responsibilities. At the beginning of
fiscal 1998, several of the named executive officers were promoted or assumed
more significant responsibilities within the organization as a whole,
resulting in salary increases that were larger than in previous years.
Performance-based Incentive Compensation. The amount of incentive
compensation actually earned by an executive from year to year varies with the
performance of the Corporation and the executive. The Committee evaluates
performance (1) by using financial measures of profitability and contribution
to Stockholder value and (2) by subjectively evaluating the executive's
contribution to the achievement of the Corporation's long-term objectives. In
fiscal 1998, the financial measures used by the Committee were return on net
assets, return on sales, earnings improvement over a three-year period and
three-year growth in earnings per share for the Corporation and certain
subsidiaries for which the named executive officers are responsible. The
financial measures are not financial targets that are met, not met or
exceeded, but assess the financial performance relative to the financial
performance of comparable companies and are designed to penalize below-average
performance and reward above-average performance. The relative weighting of
the financial measures and subjective evaluation varies depending on the
executive's role and responsibilities within the organization.
For each of the named executive officers in fiscal 1998 other than Dr.
Hatsopoulos, the financial measures of incentive compensation were weighted
80%, and the subjective evaluation 20%, in determining the actual incentive
compensation to be paid. The incentive compensation awarded to each named
executive officer for fiscal 1998 was substantially lower in each case than
the incentive compensation awarded the previous year and reflected the
Corporation's financial performance in fiscal 1998, except for Mr. Keiser. In
the case of Mr. Keiser, the incentive compensation paid to him for fiscal 1998
was the same as in fiscal 1997 and reflected the strong financial performance
of the wholly owned biomedical companies of the Corporation for which he was
managerially responsible in fiscal 1998.
30
<PAGE>
Long-Term Incentive Compensation
The primary goal of the Corporation is to excel in the creation of long-term
value for the Stockholders. The principal incentive tool used to achieve this
goal is the periodic award to key employees of stock-based compensation in
shares of Common Stock of the Corporation and the common stock of its
majority-owned subsidiaries.
The Committee and management believe that awards of stock-based compensation
of both the Corporation and other companies within the Thermo Electron group
of companies accomplish many objectives. The grant of options to key employees
encourages equity ownership in the Corporation, closely aligns management's
interests to the interests of all the Stockholders, and results in
management's compensation being closely linked to stock performance. In
addition, because the employee's rights in the stock-based compensation vest
over periods of varying durations and are subject to forfeiture if the
employee leaves the Corporation prematurely, stock-based compensation is an
incentive for key employees to remain with the Corporation long-term. The
Committee believes that stock-based compensation awards in the Corporation and
its majority-owned subsidiaries are also an important tool in providing
incentives for performance within the entire organization.
In determining awards, the Committee considers for each executive officer
the annual value of stock-based compensation in the Corporation and other
companies within the Thermo Electron organization that vest in the next year
and compares the individual's total compensation using this value to
competitive data. The Committee uses a modified Black-Scholes option pricing
model to determine the value of an award. In addition, the Committee considers
the aggregate amount of outstanding awards of stock-based compensation granted
to all employees to monitor the number of outstanding awards under the
Corporation's stock-based compensation program. In determining the appropriate
number of outstanding awards, the Committee considers such factors as the size
of the company, its stage of development, and its growth strategy, as well as
the aggregate awards and compensation practices of comparable companies.
The Committee periodically awards stock-based compensation in the form of
stock options or restricted stock based on an assessment of the total
compensation of the executive, the actual and anticipated contributions of the
executive (which includes a subjective assessment by the Committee of the
executive's future potential within the organization), as well as the value of
previously awarded stock-based compensation as described above.
Stock Ownership and Retention Policies
The Corporation's compensation program is also designed to encourage
executives to own shares of the Corporation's Common Stock. The Committee
believes that encouraging executives to retain stock acquired through its
stock-based compensation program or otherwise provides additional incentive
for executive officers to follow strategies designed to maximize long-term
value to Stockholders.
There are several elements to the Corporation's stock retention program. For
example, the Committee annually awards stock options based upon an executive's
average ownership of the Corporation's Common Stock over the prior year. These
option awards are independent of the award of stock options as an incentive
for management performance. In addition, the Committee has approved several
forms of stock option awards that contain different vesting provisions and
restrictions upon resale, which are intended to encourage executives to follow
an exercise and hold strategy. The Committee has also authorized from time to
time the payment of cash bonuses based on an executive's ownership of Common
Stock. Currently, officers of the Corporation are paid a bonus of 10% of their
base salary if they have not sold any shares of Common Stock for the prior
three years.
The Committee has established a stock holding policy for the chief executive
officer of the Corporation that requires him to own a multiple of his
compensation in shares of the Corporation's Common Stock. The multiple is one
times his annual base salary and reference incentive compensation for the
fiscal year.
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<PAGE>
The Corporation's publicly traded, majority-owned subsidiaries have adopted
similar stock holding policies for their chief executive officers, along with
stock holding assistance plans. The stock holding assistance plans are
intended to assist chief executive officers in complying with the stock
holding policies, and provide for interest-free loans to enable those officers
to purchase shares of common stock in the open market. Certain of the named
executive officers of the Corporation are also the chief executive officers of
those subsidiaries and are required to comply with the subsidiary's stock
holding policies. See "Relationship with Affiliates--Stock Holding Assistance
Plans." In 1996, Mr. Rainville received a loan in the principal amount of
$118,104 under the Thermo Fibertek Inc. stock holding assistance plan to
purchase 10,000 shares of the common stock of Thermo Fibertek Inc. of which
$94,483.20 was outstanding as of January 31, 1999. In 1996, Mr. Lewis received
a loan in the principal amount of $194,029.30 under the Thermo Optek
Corporation stock holding assistance plan to purchase 15,000 shares of the
common stock of Thermo Optek Corporation of which $155,223.60 was outstanding
as of January 31, 1999.
The Committee also has a policy requiring executive officers of the
Corporation to hold shares of the Common Stock equal to one-half of their net
option exercises over a period of five years. The net option exercise is
determined by calculating the number of shares acquired upon exercise of a
stock option, after deducting the number of shares that could have been traded
to exercise the option and the number of shares that could have been
surrendered to satisfy tax withholding obligations attributable to the
exercise of the options.
Policy on Deductibility of Compensation
The Committee has also considered the application of Section 162(m) of the
Internal Revenue Code to the Corporation's compensation practices. Section
162(m) limits the tax deduction available to public companies for annual
compensation that is paid to named executive officers in excess of $1 million,
unless the compensation qualified as "performance-based" or is otherwise
exempt from Section 162(m).
The Committee considers the potential effect of Section 162(m) in designing
its compensation program, but reserves the right to use its independent
judgment to approve nondeductible compensation, while taking into account the
financial effects such action may have on the Corporation. The Corporation has
modified certain of its stock-based compensation plans in which its named
executive officers participate in order to qualify for the deduction. However,
the Committee has not adopted modifications to its cash compensation program
or certain subsidiary stock-based compensation plans that would avail the
Corporation of the deduction. In fiscal 1998, none of the named executive
officers received cash compensation in excess of $1 million. Although the
newly appointed chief executive officer of the Corporation may receive cash
compensation in excess of $1 million in future periods, the Committee does not
believe that the modifications necessary to preserve the deductibility of cash
compensation in excess of that amount are warranted at this time. The
Committee will continue to monitor the potential effect of Section 162(m) on
the Corporation.
1998 CEO Compensation
The Committee determines the total compensation for Dr. George N.
Hatsopoulos, the Corporation's chief executive officer and founder. The
determinations of the Committee as to the compensation of the chief executive
officer are subject to review by the entire board of directors. In 1998, the
board of directors concurred in the decisions of the Committee.
In determining the base salary of the chief executive officer, the Committee
uses the same principles as used for the named executive officers and officers
of the Corporation (described above under the caption "Annual Cash
Compensation--Base Salary"). The increase in base salary for the chief
executive officer approved for fiscal 1998 by the Committee reflected its
policy of gradual adjustment.
The Committee determined the annual performance-based incentive compensation
component of Dr. Hatsopoulos' annual cash compensation by comparing the
proportion of the performance-based incentive compensation earned by the
executive officers reporting to him to their base salaries for fiscal 1998.
The award
32
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of performance-based incentive compensation to Dr. Hatsopoulos in fiscal 1998
was intended to reflect the performance on average of the senior executive
team in fiscal 1998. The Committee also considered the Corporation's
performance over the last ten years as highlighted in the 10-year Performance
Graph appearing on page 35 of this proxy statement, as well as its performance
in the last year, in determining Dr. Hatsopoulos' performance-based incentive
compensation reported as bonus in the Summary Compensation Table. For the 10-
year period ended January 2, 1999, the Corporation achieved a ten-year
compounded rate of return to Stockholders of 10.93 percent per year.
The awards of stock options to Dr. Hatsopoulos during fiscal 1998 were made
under a program approved by the Committee in 1996. Under this program, the
Committee awarded options to purchase a total of 500,000 shares of the Common
Stock, to be granted in 10 quarterly installments of 50,000 shares each at the
end of each fiscal quarter beginning in September 1996 and ending in December
1998. The program was adopted pursuant to a Committee policy to award to Dr.
Hatsopoulos options to purchase shares of the Corporation's Common Stock from
time to time in amounts such that his ownership of the Corporation approached
five percent of the outstanding Common Stock. Such awards had been made at
times the Corporation achieved a ten-year rate of return to Stockholders in
excess of the returns achieved by the Standard & Poor's 500 Index and its peer
performance group. For the year in which the program was approved, the ten-
year compounded rate of return to Stockholders was 24 percent per year for the
period 1985-1995, which exceeded the compounded rate of return of 15 percent
per year for the Standard & Poor's 500 Index over the same period.
Due to Dr. Hatsopoulos' position as a director of the Corporation's
majority-owned subsidiaries or as chief executive officer of the Corporation,
he may be granted options to purchase the common stock of majority-owned
subsidiaries of the Corporation as part of the Corporation's stock option
program. The stock option awards to Dr. Hatsopoulos in 1998 with respect to
the shares of Metrika Systems Corporation, ONIX Systems Inc., The Randers
Killam Group Inc., Thermo BioAnalysis Corporation, Thermo Information
Solutions Inc., Thermo Optek Corporation, ThermoQuest Corporation,
ThermoSpectra Corporation, Thermo Trilogy Corporation, Thermo Vision
Corporation and Trex Communications Corporation, were awarded under this
program, using the methodology described above for all executive officers
under "Long-Term Incentive Compensation."
Mr. Donald E. Noble (Chairman)
Dr. Elias P. Gyftopoulos
Mr. Frank Jungers
Mr. Robert A. McCabe
Ms. Hutham S. Olayan
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COMPARATIVE PERFORMANCE GRAPHS
Five-Year Performance Graph: 1993-1998
The Securities and Exchange Commission requires that the Corporation include
in this proxy statement a line-graph presentation comparing cumulative, five-
year shareholder returns for the Corporation's Common Stock with a broad-based
market index and either a nationally recognized industry standard or an index
of peer companies selected by the Corporation. Due in part to the addition of
the Corporation in 1996 to the companies comprising the Dow Jones diversified
technology industry index, and in part to the changing mix of the
Corporation's businesses, management has concluded that the Dow Jones
diversified technology industry index, excluding the Corporation (the "Peer
Group") is the most appropriate peer group to which to compare the
Corporation's shareholder returns. The Corporation has compared its
performance with the Standard & Poor's 500 Index (the "S&P 500 Index") and the
Peer Group. The Peer Group is composed of the following companies: Corning
Inc., Eaton Corp., Minnesota Mining and Manufacturing Co., The Perkin-Elmer
Corp., Rockwell International Corp., TRW Inc., Tektronix, Inc., Texas
Instruments Incorporated, United Technologies Corp. and Varian Associates,
Inc.
Comparison of 1993-1998 Cumulative Total Return Among Thermo Electron
Corporation (TMO),
the Standard & Poor's 500 Index (S&P 500), and the Peer Group
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
12/93 12/94 12/95 12/96 12/97 12/98
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
TMO................................. 100 107 186 202 231 91
S&P 500............................. 100 101 139 175 230 294
Peer Group.......................... 100 104 138 186 206 242
</TABLE>
The total return for the Corporation's Common Stock, the S&P 500 Index and
the Peer Group assumes the reinvestment of dividends, although dividends have
not been declared on the Corporation's Common Stock. The Corporation's Common
Stock is traded on the New York Stock Exchange under the ticker symbol "TMO".
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<PAGE>
Ten-Year Performance Graph: 1988-1998
The Corporation has also elected to compare its cumulative shareholder
return to the S&P 500 Index and the Corporation's Peer Group for the last ten
years, as of the final trading day of each fiscal year. The Corporation's
human resources committee uses this information as a measure of performance in
determining annual cash compensation for the Corporation's chief executive
officer.
Comparison of 1988-1998 Cumulative Total Return Among Thermo Electron
Corporation (TMO),
the S&P 500 Index (S&P 500), and the Peer Group
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
12/88 12/89 12/90 12/91 12/92 12/93 12/94 12/95 12/96 12/97 12/98
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TMO.......... 100 151 142 227 233 311 332 578 629 720 282
S&P 500...... 100 132 128 166 179 197 200 275 345 453 579
Peer Group... 100 122 129 148 169 195 201 268 361 400 471
</TABLE>
RELATIONSHIP WITH AFFILIATES
Thermo Electron has, from time to time, caused certain subsidiaries to sell
minority interests to investors, resulting in several majority-owned private
and publicly-held subsidiaries (hereinafter referred to as the "Thermo
Subsidiaries").
Thermo Electron and each of the Thermo Subsidiaries recognize that the
benefits and support that derive from their affiliation are essential elements
of their individual performance. Accordingly, Thermo Electron and each of the
Thermo Subsidiaries have adopted the Thermo Electron Corporate Charter (the
"Charter") to define the relationships and delineate the nature of such
cooperation among themselves. The purpose of the Charter is to ensure that (1)
all of the companies and their stockholders are treated consistently and
fairly, (2) the scope and nature of the cooperation among the companies, and
each company's responsibilities, are adequately defined, (3) each company has
access to the combined resources and financial, managerial and technological
strengths of the others, and (4) Thermo Electron and the Thermo Subsidiaries,
in the aggregate, are able to obtain the most favorable terms from outside
parties.
To achieve these ends, the Charter identifies the general principles to be
followed by the companies, addresses the role and responsibilities of the
management of each company, provides for the sharing of group resources by the
companies and provides for centralized administrative, banking and credit
services to be
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performed by Thermo Electron. The services provided by Thermo Electron include
collecting and managing cash generated by members, coordinating the access of
Thermo Electron and the Thermo Subsidiaries (the "Thermo Group") to external
financing sources, ensuring compliance with external financial covenants and
internal financial policies, assisting in the formulation of long-range
planning and providing other banking and credit services. Pursuant to the
Charter, Thermo Electron may also provide guarantees of debt or other
obligations of the Thermo Subsidiaries or may obtain external financing at the
parent level for the benefit of the Thermo Subsidiaries. In certain instances,
the Thermo Subsidiaries may provide credit support to, or on behalf of, the
consolidated entity or may obtain financing directly from external financing
sources. Under the Charter, Thermo Electron is responsible for determining
that the Thermo Group remains in compliance with all covenants imposed by
external financing sources, including covenants related to borrowings of
Thermo Electron or other members of the Thermo Group, and for apportioning
such constraints within the Thermo Group. In addition, Thermo Electron
establishes certain internal policies and procedures applicable to members of
the Thermo Group. The cost of the services provided by Thermo Electron to the
Thermo Subsidiaries is covered under existing corporate services agreements
between Thermo Electron and the Thermo Subsidiaries.
The Charter currently provides that it shall continue in effect so long as
Thermo Electron and at least one Thermo Subsidiary participate. The Charter
may be amended at any time by agreement of the participants. Any Thermo
Subsidiary can withdraw from participation in the Charter upon 30 days' prior
notice. In addition, Thermo Electron may terminate a subsidiary's
participation in the Charter in the event the subsidiary ceases to be
controlled by Thermo Electron or ceases to comply with the Charter or the
policies and procedures applicable to the Thermo Group. A withdrawal from the
Charter automatically terminates the corporate services agreement and tax
allocation agreement (if any) in effect between the withdrawing company and
Thermo Electron. The withdrawal from participation does not terminate
outstanding commitments to third parties made by the withdrawing company, or
by Thermo Electron or other members of the Thermo Group, prior to the
withdrawal. In addition, a withdrawing company is required to continue to
comply with all policies and procedures applicable to the Thermo Group and to
provide certain administrative functions mandated by Thermo Electron so long
as the withdrawing company is controlled by or affiliated with Thermo
Electron.
In general, under the corporate services agreements between Thermo Electron
and the Thermo Subsidiaries, Thermo Electron's corporate staff provides the
Thermo Subsidiaries with certain administrative services, including certain
legal advice and services, risk management, employee benefit administration,
tax advice and preparation of tax returns, centralized cash management and
financial and other services. For the fiscal year ended January 2, 1999, the
Corporation assessed each Thermo Subsidiary that is a party to a corporate
services agreement an annual fee equal to 0.8% of such subsidiary's revenues
for these services. The annual fee will remain at 0.8% of the total revenues
of each Thermo Subsidiary for fiscal 1999. The fee for each subsidiary is
reviewed annually and may be changed by mutual agreement of each respective
Thermo Subsidiary and Thermo Electron. Each corporate services agreement
automatically renews for successive one-year terms, unless canceled by the
subsidiary upon 30 days' prior notice. In addition, each corporate services
agreement terminates automatically in the event the subsidiary ceases to be a
member of the Thermo Group or ceases to be a participant in the Charter. In
the event of a termination of a corporate services agreement, the subsidiary
will be required to pay a termination fee equal to the fee that was paid by
such subsidiary for services under the corporate services agreement for the
nine-month period prior to termination. Following termination, Thermo Electron
may provide certain administrative services on an as-requested basis by the
subsidiary or as required in order to meet such subsidiary's obligations under
Thermo Electron's policies and procedures. Thermo Electron will charge a
subsidiary a fee equal to the market rate for comparable services if such
services are provided to such subsidiary following termination.
Pursuant to an international distributorship agreement, Thermedics Detection
Inc. ("Thermedics Detection"), a majority-owned subsidiary of Thermedics Inc.,
which in turn is a majority-owned subsidiary of the Corporation, appointed
Arabian Business Machines Co. ("ABM") as its exclusive distributor of
Thermedics Detection's security instruments in certain Middle Eastern
countries. ABM is a member of The Olayan Group. Ms. Hutham S. Olayan, a
director of the Corporation, is the president and a director of Olayan America
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Corporation, a member of The Olayan Group, which is indirectly controlled by
Suliman S. Olayan, Ms. Olayan's father. Revenues recorded under this agreement
totaled $248,000 in fiscal 1998.
In March 1995, ThermoLyte Corporation ("ThermoLyte") sold 1,845,000 units,
each unit consisting of one share of ThermoLyte common stock and one
redemption right, at $10.00 per unit. Holders of the common stock issued in
the offering have the option to require ThermoLyte to redeem any or all of
their shares at $10.00 per share in December 1998 or December 1999. In
December 1998, 1,707,000 shares of ThermoLyte common stock were redeemed for a
total redemption value of $17.1 million. In connection therewith, ThermoLyte
redeemed 25,000 shares held by Crescent International Holdings Ltd. at a
redemption price of $10.00 per share, the same redemption price received by
unaffiliated holders. Crescent International Holdings Ltd, a member of the
Olayan Group, is indirectly controlled by Suliman S. Olayan, Ms. Olayan's
father. Ms. Olayan has disclaimed beneficial ownership of the ThermoLyte
shares owned by Crescent International Holdings Ltd. that were redeemed by
ThermoLyte.
In December 1997 and March 1998, Thermo Trilogy Corporation ("Trilogy"), a
subsidiary of Thermo Ecotek Corporation, which in turn is a majority-owned
subsidiary of the Corporation, completed private placements of an aggregate of
1,942,821 shares primarily to outside investors of minority investments in its
common stock. In connection with Trilogy's private placement of its shares of
common stock in March 1998, Trilogy and the Corporation entered into a
placement agreement with KSH Investment Group, Inc. ("KSH") to act as
placement agent on behalf of Trilogy. KSH received a placement agent fee of
approximately $387,050, representing 6% of the gross proceeds from the sale of
shares of Trilogy common stock in the March 1998 private placement to
investors introduced to Trilogy by KSH. KSH is a privately held investment
banking firm of which John C. Hatsopoulos is a shareholder and a managing
director. John C. Hatsopoulos is the son of John N. Hatsopoulos, a director
and former president and chief financial officer of the Corporation. John C.
Hatsopoulos will receive a portion of the placement agent fee equal to
$16,750.
A company controlled by Dr. John M. Albertine, a director of the
Corporation, is in negotiations with the Corporation for the possible purchase
of a business from the Corporation in a transaction valued at approximately
$23 million. No definitive agreement has been reached with respect to this
proposed transaction. A special committee of the Corporation's board of
directors, comprising Ms. Olayan and Messrs. Jungers and McCabe, has been
formed to evaluate the fairness to the Corporation of the proposed
transaction. Any definitive agreement would be subject to the approval of this
committee and the Corporation's board of directors, excluding Dr. Albertine.
Stock Holding Assistance Plans
The Committee has established a stock holding policy for the chief executive
officer of the Corporation that requires him to own a multiple of his
compensation in shares of the Common Stock. The multiple is one times his
annual base salary and reference incentive compensation for the fiscal year.
The Corporation's publicly traded, majority-owned subsidiaries have adopted
similar stock holding policies for their chief executive officers, along with
stock holding assistance plans. The stock holding assistance plans are
intended to assist chief executive officers in complying with the stock
holding policies, and provide for interest-free loans to enable those officers
to purchase shares of common stock in the open market. Certain of the named
executive officers of the Corporation are the chief executive officers of
these subsidiaries and are required to comply with the subsidiary's stock
holding policies. Mr. William A. Rainville, a chief operating officer of the
Corporation, is also the chief executive officer of Thermo Fibertek Inc. Mr.
Earl R. Lewis, a chief operating officer of the Corporation, is also the
chairman of Thermo Optek Corporation. In 1996, Mr. Rainville received a loan
in the principal amount of $118,104 under the Thermo Fibertek Inc. stock
holding assistance plan to purchase 10,000 shares of the common stock of
Thermo Fibertek Inc. of which amount $94,483.20 was outstanding as of January
31, 1999. In 1996, Mr. Lewis received a loan in the principal amount of
$194,029.50
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under the Thermo Optek Corporation stock holding assistance plan to purchase
15,000 shares of the common stock of Thermo Optek Corporation of which amount
$155,223.60 was outstanding as of January 31, 1999. Both of Mr. Rainville's
and Mr. Lewis' loans are payable on the earlier of demand or the fifth
anniversary of the date of the loan, unless otherwise determined by the human
resources committee of the board of directors of Thermo Fibertek Inc. or
Thermo Optek Corporation, respectively. None of the other named executive
officers have loans currently outstanding under any subsidiary stock holding
assistance plan.
-PROPOSAL 2-
PROPOSAL TO AMEND AND RESTATE THE CORPORATION'S CERTIFICATE OF INCORPORATION
From time to time, the Corporation undertakes a review of its corporate
documents, including its Amended and Restated Certificate of Incorporation
(the "Current Charter"). As a result of the latest review of the Current
Charter, the Corporation has concluded that certain provisions of the Current
Charter have become obsolete, unnecessary or are duplicative under the current
General Corporation Law of the State of Delaware (the "Delaware Law"), which
governs the Corporation's activities as a Delaware corporation. In addition,
the Corporation believes that certain provisions which were intended to apply
to transactions involving a potential change in control without the board of
directors' approval, have, in practice, had the unintended effect of making
transactions, including matters that do not involve a change in control and
that have been approved by the board of directors, more difficult to
accomplish. Consequently, the Corporation believes that such provisions are no
longer justifiable and serve no continuing purpose. For example, the provision
in the Current Charter requiring a two-thirds vote (as opposed to a simple
majority) for any amendment to the certificate of incorporation, in the
Corporation's view, creates unnecessary uncertainty regarding whether the
Corporation would be able to obtain the requisite vote to implement plans
approved by the board, such as an amendment to the certificate of
incorporation to increase the number of authorized shares in order to cover
the shares issuable upon a stock split.
Since 1960, when the Corporation was first incorporated in the State of
Delaware, both the Delaware Law and Delaware corporate practice have undergone
many changes. The proposed changes to the Amended and Restated Certificate of
Incorporation (the "Proposed Restatement") ensure that the document is
consistent with the current Delaware Law and reflects current corporate
practice, in a simple and straightforward format. The board of directors
believes that the proposed changes will result in a document that will better
serve the Corporation and its Stockholders in the years ahead. Accordingly, on
March 18, 1999, the board of directors unanimously approved, subject to the
approval of Stockholders at the meeting, a proposal to amend and restate the
Current Charter.
The proposed changes to the Current Charter and the reasons for such changes
are summarized below.
Eliminate Superfluous Provisions Relating to Changes in Control
The Current Charter contains certain provisions, adopted at the
Corporation's 1978 Annual Meeting of Stockholders, relating to transactions
that could result in a change in control of the Corporation. These provisions
contain (1) super-majority voting requirements in the event of certain
significant corporate actions and (2) a redemption right for shareholders who
continue to hold shares of the Corporation following a tender offer not
approved by the board of directors. Since the adoption of these provisions,
Delaware law and practice relating to a corporation's response to proposed
transactions involving a change in control have developed significantly. The
board of directors believes that, since 1978, these developments, together
with the adoption by the Corporation of other measures applicable to a
proposal that could result in a change in control (see "Current Measures
Relating to Change in Control"), have made the Current Charter's provisions
obsolete, unnecessary and, in some cases, extremely cumbersome. The board of
directors proposes to remove both the super-majority voting requirements and
the redemption provision contained in the Current Charter.
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Eliminate Super-majority Voting Requirements
Article Eleventh of the Current Charter requires that a larger percentage of
votes than a simple majority must be obtained in order to approve corporate
actions under certain circumstances.
--Part A of Article Eleventh requires a vote of the holders of two-thirds of
the outstanding Common Stock in order to approve certain corporate actions,
including the amendment of the Corporation's certificate of incorporation,
merger of the Corporation into another entity and other significant corporate
actions; and
--Part B of Article Eleventh requires that, if any business entity owns more
than 25% of the Corporation's Common Stock, the vote of the holders of 85% of
the outstanding Common Stock (other than shares held by the 25% holder) is
required to approve certain corporate transactions, including a merger,
involving the 25% holder.
Article Eleventh was adopted in 1978 (1) to make it more difficult for the
holder of a large block of Common Stock to exert undue influence in
implementing significant corporate transactions and (2) to ensure that
significant corporate actions, including those that could result in a change
in control, would be approved by a greater percentage of stockholders.
However, the board of directors has found that the presence of these super-
majority voting requirements has, in practice, created unnecessary uncertainty
surrounding the ability of the Corporation to implement decisions of the board
of directors which require the approval of the Corporation's Stockholders in
circumstances not involving a potential change in control, such as an
amendment to the certificate of incorporation to increase the number of
authorized shares. Because a super-majority vote applied to such transactions,
this provision has had the effect of making more difficult even transactions
approved by the board of directors. The board of directors believes that it is
to the Corporation's and the Stockholders' advantage to reduce this
uncertainty, in that it could impede such matters as charter amendments and
transactions initiated or agreed to by the board of directors. In addition,
the board of directors believes that the purposes of Article Eleventh are
better served by the provisions of Section 203 of the Delaware Law (adopted in
1988) and the Corporation's shareholder rights plan (also adopted in 1988).
See "Current Measures Relating to Change in Control."
Eliminate Redemption Provision
Section 9 of Article Ninth of the Current Charter ("Section 9") states that,
in the event of a tender offer that is not recommended by the board of
directors, the Stockholders remaining after the completion of the tender offer
have the right to require the Corporation to redeem their shares of Common
Stock at a price equal to the greater of the highest price paid by the
acquiring party in the tender offer and the book value per share of Common
Stock. This provision, which was adopted in 1978, was intended to address a
takeover tactic of the time in which the acquiring party would gain control of
a corporation by acquiring just over 50% of the outstanding shares at one
price, and would subsequently acquire the remaining shares at a lower price.
The board of directors believes that the change in control measures
described below, specifically the Corporation's shareholder rights plan (the
"Rights Plan") and Section 203 of the Delaware Law, (1) better address the
concerns which led to the adoption of Section 9 and (2) reflect current
Delaware corporate practice regarding how best to address a proposed
transaction that could involve a change in control. Section 203 and the Rights
Plan are designed to encourage parties seeking to implement such a transaction
to negotiate with the board of directors rather than proceeding on a
unilateral basis. In addition, because charter provisions such as Section 9
are no longer customary for public Delaware corporations, the validity and
effect of such provisions in the context of a potential change in control may
be subject to differing interpretations and result in uncertainty as to their
application.
Current Measures Relating to Change in Control
Since 1978, when the provisions set forth in Article Eleventh and Section 9
of Article Ninth were implemented, other strategies for addressing
transactions involving a potential change in control have become available to
or been developed by Delaware corporations as a result of revisions in the
Delaware Law and the experiences of other companies in actual situations
involving potential changes in control.
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In 1988, the Delaware Law was revised to include Section 203, the Delaware
Business Combinations Statute ("Section 203"). Section 203 provides that a
corporation and an "interested" stockholder (one who beneficially owns 15% or
more of the outstanding shares) may not enter into a proposed business
combination for a period of three years following the interested stockholder's
acquisition of its 15% or greater interest unless the proposed combination is
approved by the holders of two-thirds of the disinterested shares or unless
other specified conditions are satisfied. These conditions include approval by
the board of directors of the acquisition by the interested stockholder of its
15% interest or of the proposed business combination prior to the interested
stockholder acquiring its 15% interest, or acquisition by the interested
stockholder of 85% of the outstanding shares of the corporation in the same
transaction in which it became an interested stockholder, among others.
The Corporation also has adopted a shareholder rights plan (the "Rights
Plan"). The Corporation first adopted a Rights Plan in 1988, and approved the
current version of the Rights Plan in 1996. Under the Rights Plan, when an
entity becomes the beneficial owner of 15% or more of the outstanding shares
of the Corporation's Common Stock (except pursuant to an offer for all
outstanding shares of Common Stock that the board of directors determines to
be fair to, and otherwise in the best interests of, the Stockholders), the
other shareholders would have the right to purchase from the Corporation
additional shares of Common Stock at one-half of the then current market price
for those shares.
In addition, the Corporation's board of directors is classified into three
classes, which means that the terms of office of only one-third of the
Directors expire each year. This feature is intended to ensure continuity and
stability in the Corporation's leadership by virtue of the fact that, at any
time, at least two-thirds of the board of directors has had prior experience
on the board. The classified structure also would moderate the pace of any
change in control of the Corporation because all directors' terms do not
expire at the same time, which extends the time required to elect a majority
of the board of directors.
Rights plans, together with classified boards of directors, were developed
in order to encourage potential acquirors of large percentages of shares of
publicly traded corporations to initiate negotiations with the boards of
directors of those corporations, and not to act unilaterally. As a general
matter, most Delaware companies that have adopted rights plans and have
classified boards of directors believe that those measures are sufficient to
ensure that their boards will be given the time and the opportunity to
consider appropriate alternatives, including negotiation of the terms of any
possible transaction.
Eliminate Provisions Repeating, or Not Required by, the Delaware Law
The Proposed Restatement will simplify and modernize the Current Charter by
eliminating provisions that repeat, are not required by, or reflect superseded
versions of the Delaware Law. These provisions contain information that was
once required by now-revised sections of the Delaware Law to be included in
certificates of incorporation but which the statute no longer requires (such
as a list of the specific powers that were granted to the Corporation),
information that was required by the Delaware Law to be included in the
Corporation's certificate of incorporation at the time of its first
organization, but is not required for a corporation that has been in existence
for some time (such as a statement of the minimum capital with which the
Corporation could start its business and a listing of the original
incorporators of the Corporation), matters that are not required by the
Delaware Law to be addressed in certificates of incorporation, or matters that
simply repeat the Delaware Law.
The board of directors believes that these provisions should be eliminated
because their presence in the Current Charter adds no useful, pertinent or
necessary features to the Charter and serves no continuing purpose.
Integrate Amendments since 1994 into One Document
The Corporation most recently amended and restated the Current Charter in
1994. Since then, there have been three amendments to the Current Charter,
each of which is now represented by a separate document. The Proposed
Restatement integrates all of the amendments that have been made by the
Corporation to the Current Charter since 1994 into one unified document, which
eliminates the need to refer to a number of separate documents in order to
find the complete text of the Current Charter.
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Other Changes
In addition to the proposed changes set forth above, the Corporation has
made certain wording changes in some of the sections of the Current Charter,
none of which has any substantive effect.
Filing and Text of Proposed Restatement
The Proposed Restatement will be effective upon filing with the Secretary of
State of the State of Delaware, if it is approved by Stockholders at the
meeting. This summary of the proposed changes to the Current Charter is not
intended to be complete and is qualified in its entirety by reference to the
copy of the Proposed Restatement that is attached to this proxy statement as
Appendix A. Please review the copy of the Proposed Restatement attached to
this proxy statement, which has been marked to show the proposed changes to
the Current Charter.
Recommendation
The board of directors believes that the proposed amendment and restatement
of the Corporation's Current Charter is in the best interests of the
Corporation and its Stockholders and recommends that the Stockholders vote FOR
the approval of the Proposed Restatement. The affirmative vote of the holders
of two-thirds of the outstanding Common Stock is required to approve the
Proposed Restatement. Abstentions and broker non-votes will have the same
effect as votes against the proposal.
STOCKHOLDER PROPOSALS
-PROPOSAL 3-
Certain Stockholders have submitted the proposal set forth below. The
Corporation will furnish, orally or in writing as requested, the names,
addresses and claimed share ownership positions of the proponents of the
Stockholder Proposal promptly upon written or oral request directed to the
Secretary of the Corporation. The board of directors has carefully considered
the Stockholder Proposal and concluded that its adoption would not be in the
best interests of the Corporation or its Stockholders. For the reasons stated
after the proposal and its supporting statement, the board of directors
recommends a vote AGAINST the proposal.
Stockholders have submitted the following proposal, which will be voted upon
at the meeting if presented by its proponents.
WHEREAS WE BELIEVE:
Responsible implementation of a sound, credible environmental policy
increases long-term shareholder value by raising efficiency, decreasing clean-
up costs, reducing litigation, and enhancing public image and product
attractiveness;
Adherence to public standards for environmental performance gives a company
greater public credibility than standards created by industry alone. For
maximum credibility and usefulness, such standards should specifically meet
the concerns of investors and other stakeholders;
Companies are increasingly being expected by investors to do meaningful,
regular, comprehensive and impartial environmental reports. Standardized
environmental reports enable investors to compare performance over time. They
also attract investment from investors seeking companies which are
environmentally responsible and which minimize risk of environmental
liability.
WHEREAS:
The Coalition for Environmentally Responsible Economies (CERES) -- which
includes shareholders of this company, public interest representatives, and
environmental experts--consulted with corporations to produce the CERES
Principles as comprehensive public standards for both environmental
performance and reporting. Fifty-four companies, including Sun [Sunoco],
General Motors, H.B. Fuller, Polaroid, and Bethlehem Steel, have
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endorsed these principles to demonstrate their commitment to public
environmental accountability and standardized reporting. Fortune-500 endorsers
say that the benefits of working with CERES are public credibility; and
"value-added" for the company's environmental initiatives;
In endorsing the CERES Principles, a company commits to work toward:
<TABLE>
<S> <C> <C>
1. Protection of the biosphere 4. Energy conservation 8. Informing the
2. Sustainable natural resource 5. Risk reduction public
use 6. Safe products/services 9. Management
3. Waste reduction and disposal 7. Environmental restoration commitment
10. Audits and reports
</TABLE>
[Full text of the CERES Principles and accompanying CERES Report Form
obtainable from CERES, 711 Atlantic Avenue, Boston MA 02110, tel: 617-451-
0927].
CERES is distinguished from other initiatives for corporate environmental
responsibility, in being (1) a successful model of shareholder relations; (2)
a leader in public accountability through standardized environmental
reporting; and (3) a catalyst for significant and measurable environmental
improvement within firms.
RESOLVED: Shareholders request the Corporation to endorse the CERES
Principles as a part of its commitment to be publicly accountable
for its environmental impact.
Supporting Statement for Stockholder Proposal (Proposal 3)
Many investors support this resolution. Those sponsoring similar resolutions
at various companies have portfolios totaling $75 billion. The number of
public pension funds and foundations supporting this resolution increases
every year. The objectives are: standards for environmental performance and
disclosure; methods for measuring progress toward these goals; and a format
for public reporting of progress. We believe this is comparable to the
European Community regulation for voluntary participation in verified and
publicly-reported eco-management and auditing, and fully compatible with ISO
14000 certification.
Your vote FOR this resolution will encourage both scrutiny of our Company's
environmental policies and reports and adherence to standards upheld by
management and stakeholders alike.
Statement in Opposition to Stockholder Proposal (Proposal 3)
Thermo Electron is proud of its commitment to the environment through its
business practices and its products and services. Many of its businesses
provide environmentally responsible products or offer services to aid other
companies in meeting their environmental commitments and responsibilities. The
Corporation believes that its environmental policy and business practices are
already consistent with the basic tenets of the CERES Principles.
The Corporation's environmental policy has evolved over several years. It
was designed and is intended to reflect and recognize the diverse businesses
in which the Corporation engages and the specific and varied environmental
issues and responsibilities which affect the Corporation's businesses. The
policy states the Corporation's objectives with respect to environmental
issues, sets forth the Corporation's environmental expectations of its
employees and explains the environmental responsibilities of each business
unit and its managers. The board of directors believes that this environmental
policy, as adapted to the structure and specific circumstances of the
Corporation, is better suited to the Corporation and more adaptable to
changing responsibilities and concerns, than the statement recommended by the
Stockholder proponents.
The Corporation operates businesses throughout the world and is already
subject to extensive environmental regulation and disclosure requirements in
the jurisdictions in which it conducts its businesses. The Corporation
believes that its environmental practices and policies already comply with the
laws of these jurisdictions.
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Furthermore, the Corporation is concerned that the proliferation of
independent practices for environmental disclosure, such as that represented
by the CERES Principles in the United States, the European Community
regulations referred to in the Supporting Statement, ISO 14000 for European
operations, and others, present confusing and conflicting disclosures that are
not applied uniformly to all companies. Finally, the Corporation believes that
adoption of the CERES Principles would not further the Corporation's
environmental objectives but merely create an additional administrative
reporting obligation that would burden the Corporation with additional
expenses and divert resources better employed to creating better environmental
products and services.
The board of directors recommends a vote AGAINST this Stockholder Proposal.
Proxies solicited by the board of directors will be voted AGAINST the proposal
unless Stockholders otherwise specify to the contrary on their proxy.
Substantially identical proposals were submitted to, and rejected by, the
Stockholders at the 1997 and 1998 Annual Meetings of the Stockholders, with
approximately 92.9% and 91.7% of the shares voting on the proposal at the 1997
and 1998 meetings, respectively, voted against the proposal.
-PROPOSAL 4-
Mr. John Jennings Craypo, P.O. Box 400151, Cambridge, Massachusetts 02140-
0002, the owner of 711 shares of Common Stock, has notified the Corporation
that he intends to introduce the following proposal for action at the meeting:
"Effect appropriate changes to the Certificate of Incorporation whereby
commencing January First, the year Two Thousand the Chief Executive Officer of
the Corporation shall always be a direct lineal descendant of the Founder of
the Corporation.
In the event the Board does not wish a direct lineal descendant of the
Founder as Chief Executive Officer, the Board shall provide that a lineal
descendant direct of one of the Brothers or Sisters who have the same parents
as that of the Founder shall serve as Chief Executive Officer of the
Corporation.
In the event the Board does not wish a direct lineal descendant of one of
the brothers or sisters who have the same parents as that of the Founder of
the Corporation as Chief Executive Officer, the Board shall provide for the
Chief Operating Officer of the Corporation being a direct lineal descendant of
the Founder.
In the event the Board does not want a direct lineal descendant of the
Founder as Chief Operating Officer of the Corporation, the Board shall provide
for direct lineal descendant of one of the brothers or sisters of the Founder
with the same parents as that of the Founder to serve as Secretary or Clerk of
the Corporation.
This process shall be effectuated each time a Chief Executive Officer, a
Chief Operating Officer, and Clerk/Secretary of the Corporation is appointed.
In the event the Founder has no Brothers or Sisters with the same parents as
the Founder the designations reference Sisters and/or Brothers of said Founder
will be disregarded but the rest of this enactment shall apply."
Supporting Statement for Stockholder Proposal (Proposal 4)
"Many Corporations have a history of providing for hereditary privilege for
qualified persons.
One Corporation for example has the procedure whereby its current Chief
Executive Officer is the son of one of it's ancestor corporations.
And another major corporation has its Board Chairperson a direct lineal
descendant of its Founder.
Nationally, here in the United States of America, Mr. John Quincy Adams, its
sixth President, was the son of its second President, and prior to Mr. Adam's
election as sixth President, Mr. Adams served as United States Secretary of
State."
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Statement in Opposition to Stockholder Proposal (Proposal 4)
The board of directors opposes this Stockholder Proposal in the belief it is
inconsistent with the corporate governance principles guiding public
companies. In addition, the board of directors has recently concluded a search
for a successor to the Corporation's founder, Dr. George N. Hatsopoulos, and
has named Dr. Richard F. Syron as president and chief executive officer of the
Corporation, effective June 1, 1999.
The board of directors believes that limiting the potential choices for
senior executive positions within the Corporation to descendants of the
founder or his relatives is not in the best interests of the Corporation. The
executives of the Corporation and its subsidiaries reflect a substantial
diversity of experience and background that has contributed to the
entrepreneurial environment and culture of the Corporation. The board of
directors is committed to maintaining and increasing the diversity of the
executive team throughout the organization and believes that tapping
executives within and outside the organization is essential to the future
success of the Corporation.
The board of directors recommends a vote AGAINST this Stockholder Proposal.
Proxies solicited by the board of directors will be voted AGAINST the proposal
unless Stockholders otherwise specify to the contrary on their proxy.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The board of directors has appointed Arthur Andersen LLP as independent
public accountants for fiscal 1999. Representatives of that firm are expected
to be present at the meeting, will have the opportunity to make a statement if
they desire to do so and will be available to respond to questions. Arthur
Andersen LLP has acted as independent public accountants for the Corporation
since 1960.
OTHER ACTION
Management is not aware at this time of any other matters that will be
presented for action at the meeting. Should any such matters be presented, the
proxies grant power to the proxy holders to vote shares represented by the
proxies in the discretion of such proxy holders.
STOCKHOLDER PROPOSALS
Proposals of Stockholders intended to be included in the proxy statement and
form of proxy relating to the 2000 Annual Meeting of the Stockholders of the
Corporation and to be presented at such meeting must be received by the
Corporation for inclusion in the proxy statement and form of proxy no later
than December 9, 1999. Notices of Stockholder proposals submitted outside the
processes of Rule 14a-8 of the Exchange Act (relating to proposals to be
presented at the meeting but not included in the Corporation's proxy statement
and form of proxy), will be considered untimely, and thus the Corporation's
proxy may confer discretionary voting authority on the persons named in the
proxy with regard to such proposals, if received after February 26, 2000.
SOLICITATION STATEMENT
The cost of this solicitation of proxies will be borne by the Corporation.
Solicitation will be made primarily by mail, but regular employees of the
Corporation may solicit proxies personally or by telephone, facsimile
transmission or telegram. In addition, the Corporation has engaged D.F. King &
Co., Inc. for a fee not to exceed $10,000 plus out-of-pocket expenses in order
to assist in the solicitation of proxies. Brokers, nominees, custodians and
fiduciaries are requested to forward solicitation materials to obtain voting
instructions from beneficial owners of stock registered in their names, and
the Corporation will reimburse such parties for their reasonable charges and
expenses in connection therewith.
Waltham, Massachusetts
April 8, 1999
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APPENDIX A
(Note: Material between asterisks (*) has been added; bracketed ([ ])
material has been removed.)
*SECOND* AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
THERMO ELECTRON CORPORATION
FIRST: The name of the Corporation is
THERMO ELECTRON CORPORATION
SECOND: The registered office of the Corporation in the State of Delaware is
to be located in the City of Wilmington, in the County of New Castle, in the
State of Delaware. The name of its registered agent is The Corporation Trust
Company whose address is No. 1209 Orange Street, in said city.
[THIRD: The nature of the business of the Corporation and the objects or
purposes proposed to be transacted, promoted or carried on by it are:
(1) To design, manufacture, buy, sell, trade, import, export, or otherwise
deal in heat engines or other power and energy sources and in materials and
items in any way related thereto;
(2) To invent and foster the invention of and carry on research and
development programs with respect to heat engines and other power and energy
sources and materials and items in any way related thereto;
(3) To publish or cause to be published or to assist in the publication of
books, pamphlets, magazines, articles, papers and other publications in the
furtherance of or related to or connected with any of the purposes of the
Corporation;
(4) To apply for, register, introduce, develop, acquire, hold, use,
exercise, operate, lease, deal in, dispose of, take or grant licenses or other
rights with respect to, and in any and all ways exploit or turn to account
inventions, improvements, processes, privileges, copyrights, patents, trade-
marks, formulae, trade names and distinctive marks and similar rights of any
and all kinds in relation to any of the purposes herein stated, and whether
granted, registered or established by or under the laws of the United States
of America or of any state, foreign country, authority or place;
(5) To acquire, by purchase, subscription or otherwise, hold and dispose of
all forms of securities, including stocks, bonds, debentures, notes, evidences
of indebtedness, certificates of interest and other rights, choses in action,
interests and obligations, whether issued or created by corporations, domestic
or foreign, associations, partnerships, joint ventures, individuals,
governments, states, municipalities or other political divisions or
subdivisions; and to issue in exchange therefor shares of its own capital
stock, bonds and other securities or obligations; and while the holder of any
such securities, to possess and exercise in respect thereof any and all of the
rights, powers and privileges of individual ownership or interest therein,
including the right to vote thereon for any and all purposes and to consent or
otherwise act with respect thereto;
(6) To purchase, lease or otherwise acquire, hold, operate or develop, lease
to others, sell or otherwise dispose of real and personal property of every
class and description, or any interest therein, and to any amount, in the
State of Delaware or in any state or territory of the United States of America
or in any foreign country, subject to the laws of any such state, territory or
foreign country;
(7) To borrow money and contract debts for any of the purposes of the
Corporation, and to issue bonds, debentures, notes or other securities or
obligations of any nature for moneys so borrowed or in payment for
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material has been removed.)
property acquired, and to secure the payment thereof, or of any debt
contracted for such purposes, by mortgage upon or pledge or conveyance
assignment in trust of the whole or any part of the property and franchises of
the Corporation, real and personal, including securities and contract rights,
whether at the time owned or thereafter acquired; to confer on the holder of
any debt or obligation of the Corporation, secured or unsecured, the right to
convert the principal thereof into stock of the Corporation; to loan money
with or without collateral, in furtherance of any of the purposes of the
Corporation; and to guarantee any obligation for the payment of money or the
performance of any contract by any corporation, association, partnership,
joint venture or individual; but all only to such extent as a corporation
organized under the General Corporation Law of the State of Delaware may at
the time lawfully do;
(8) To purchase or otherwise acquire shares of its own capital stock, to
hold any stock acquired by the Corporation, and, to such extent and in such
manner and upon such terms as the directors shall determine, subject to the
By-Laws of the Corporation, to reissue, sell or otherwise dispose of any such
stock; provided it shall not use its funds or property for the purchase of its
own shares of capital stock when such use would cause any impairment of its
capital, nor shall any shares of its own capital stock belonging to it be
voted upon directly or indirectly;
(9) To transact its business and conduct its affairs, so far as permitted by
law, in the State of Delaware, in other states of the Untied States of
America, in the District of Columbia, in any of the territories, districts,
protectorates, dependencies or insular or other possessions of the United
States of America, or in any foreign countries;
(10) To acquire all or any part of the goodwill, rights, property,
privileges, franchises and business of any other person, entity, partnership,
joint venture, association or corporation heretofore or hereafter engaged in
any business similar to any business which the Corporation has power to
conduct; to pay for the same in cash or in stocks, bonds, debentures, notes or
other securities or obligations of the Corporation or otherwise; to hold,
utilize and in any manner dispose of the whole or any part of the rights and
property so acquired; and to assume, in connection therewith, any liability of
any such person, entity, partnership, joint venture, association or
corporation; and to conduct in any lawful manner the whole or any part of the
business thus acquired;
(11) To carry out all or any part of the foregoing purposes and objects as
principal, factor, agent, contractor, or otherwise, either alone or in
conjunction with any person, firm, joint venture, association or corporation;
and in carrying on its business and for the purpose of attaining or furthering
any of its objects, to make and perform contracts of any kind and description,
to aid in any manner any person, corporation, association, partnership, joint
venture or individual in the welfare of which the Corporation shall have any
interest, and to do anything and everything necessary, suitable, convenient or
proper for the accomplishment of any of the purposes, or the attainment of any
one or more of the objects herein enumerated or incidental to the powers
herein specified, or which shall at any time appear conducive to or expedient
for the accomplishment of any of the purposes or for the attainment of any of
the objects hereinbefore enumerated, so far as, and to the extent and subject
to compliance with such conditions and requirements, that the same may
lawfully be done and performed by a corporation organized under the General
Corporation Law of the State of Delaware, but not otherwise.
The foregoing clauses of this Article THIRD shall be construed as stating
powers as well as objects and purposes, in furtherance and not in limitation
of the general powers conferred upon the Corporation by the laws of the State
of Delaware or of the United States, whether expressly or impliedly by
reasonable construction of such laws, and whether the same be now or hereafter
in effect. It is the intention that the objects, purposes and powers specified
in each of said clauses shall be in no wise limited or restricted by reference
to or inference from the terms of any other clause, but that the objects,
purposes and powers specified in each of the clauses of this Article shall be
regarded as independent objects, purposes and powers.]
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(Note: Material between asterisks (*) has been added; bracketed ([ ])
material has been removed.)
*THIRD: The nature of the business or purposes to be conducted or promoted
by the Corporation is as follows:
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.*
FOURTH: The total number of shares of stock which the Corporation shall have
authority to issue is: (a) Three Hundred Fifty Million (350,000,000) shares of
Common Stock of the par value of $1.00 per share, the holders of which shall
have one vote for each share so held, *and* (b) [Ten] *Fifty* Thousand
([1]*5*0,000) shares of Preferred Stock of the par value of $100 per share, to
be issued in such classes, including one or more series within such class, and
to possess such specific terms including dividend rates, conversion prices,
voting rights, redemption prices, maturity dates and other special rights,
preferences, qualifications, limitations, and restrictions thereof, as shall
be determined in the resolution or resolutions providing for the issue of such
Preferred Stock adopted by the Board of Directors from time to time[;]*.* [and
(c)] *Pursuant to a Certificate of Designation filed on January 31, 1996,*
Forty Thousand (40,000) shares of *Preferred Stock has been designated as*
Series B Junior Participating Preferred Stock of the par value of $100 per
share, the relative rights, preferences and limitations of which are as
follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series B Junior Participating Preferred Stock" (the "Series B
Preferred Stock") and the number of shares constituting the Series B Preferred
Stock shall be 40,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Series B Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Corporation
convertible into Series B Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series of
Preferred Stock (or any similar stock) ranking prior and superior to the
Series B Preferred Stock with respect to dividends, the holders of shares of
Series B Preferred Stock, in preference to the holders of Common Stock, par
value $1.00 per share (the "Common Stock"), of the Corporation, and of any
other junior stock, shall be entitled to receive, when, as and if declared by
the Board of Directors out of funds of the Corporation legally available for
the payment of dividends, quarterly dividends payable in cash on March 31,
June 30, September 30 and December 31 in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series B Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $100 or (b) subject
to the provision for adjustment hereinafter set forth, 10,000 times the
aggregate per share amount of all cash dividends, and 10,000 times the
aggregate per share amount (payable in kind) of all non-cash dividends or
other distributions, other than a dividend payable in shares of Common Stock
or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share
or fraction of a share of Series B Preferred Stock. In the event the
Corporation shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision, combination or
consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount to which holders of shares of Series B Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding sentence
shall be adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event. In the event the
Corporation shall at
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(Note: Material between asterisks (*) has been added; bracketed ([ ])
material has been removed.)
any time declare or pay any dividend on the Series B Preferred Stock payable
in shares of Series B Preferred Stock, or effect a subdivision, combination or
consolidation of the outstanding shares of Series B Preferred Stock (by
reclassification or otherwise than by payment of a dividend in shares of
Series B Preferred Stock) into a greater or lesser number of shares of Series
B Preferred Stock, then in each such case the amount to which holders of
shares of Series B Preferred Stock were entitled immediately prior to such
event under clause (b) of the first sentence of this Section 2(A) shall be
adjusted by multiplying such amount by a fraction, the numerator of which is
the number of shares of Series B Preferred Stock that were outstanding
immediately prior to such event and the denominator of which is the number of
shares of Series B Preferred Stock outstanding immediately after such event.
(B) The Corporation shall declare a dividend or distribution on the Series B
Preferred Stock as provided in paragraph (A) of this Section immediately after
it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock) and the Corporation shall pay such
dividend or distribution on the Series B Preferred Stock before the dividend
or distribution declared on the Common Stock is paid or set apart; provided
that, in the event no dividend or distribution shall have been declared on the
Common Stock during the period between any Quarterly Dividend Payment Date and
the next subsequent Quarterly Dividend Payment Date, a dividend of $100 per
share on the Series B Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding shares
of Series B Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares, unless the date of issue of such
shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the
date of issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the determination
of holders of shares of Series B Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in either
of which events such dividends shall begin to accrue and be cumulative from
such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not
bear interest. Dividends paid on the shares of Series B Preferred Stock in an
amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix
a record date for the determination of holders of shares of Series B Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 60 days prior to the date
fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series B Preferred Stock
shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Series B Preferred Stock shall entitle the holder thereof to 10,000
votes on all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision, combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the number of votes per share to which holders
of shares of Series B Preferred Stock were entitled immediately prior to such
event shall be adjusted by multiplying such number by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
In the event the Corporation shall at any time declare or pay any dividend on
the Series B Preferred Stock payable in shares of Series B Preferred Stock, or
effect a subdivision, combination or consolidation of the outstanding shares
of Series B Preferred Stock (by reclassification or otherwise than by payment
of a dividend in shares of Series B Preferred Stock) into a greater or lesser
number of shares of Series B Preferred Stock, then in each such case the
number of votes per share to which holders of shares of Series B Preferred
Stock were entitled immediately prior to such event shall
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(Note: Material between asterisks (*) has been added; bracketed ([ ])
material has been removed.)
be adjusted by multiplying such amount by a fraction, the numerator of which
is the number of shares of Series B Preferred Stock that were outstanding
immediately prior to such event and the denominator of which is the number of
shares of Series B Preferred Stock outstanding immediately after such event.
(B) Except as otherwise provided herein or by law, the holders of shares of
Series B Preferred Stock and the holders of shares of Common Stock and any
other capital stock of the Corporation having general voting rights shall vote
together as one class on all matters submitted to a vote of stockholders of
the Corporation.
(C) (i) If at any time dividends on any Series B Preferred Stock shall be in
arrears in an amount equal to six quarterly dividends thereon, the holders of
the Series B Preferred Stock, voting as a separate series from all other
series of Preferred Stock and classes of capital stock, shall be entitled to
elect two members of the Board of Directors in addition to any Directors
elected by any other series, class or classes of securities and the authorized
number of Directors will automatically be increased by two. Promptly
thereafter, the Board of Directors of this Corporation shall, as soon as may
be practicable, call a special meeting of holders of Series B Preferred Stock
for the purpose of electing such members of the Board of Directors. Said
special meeting shall in any event be held within 45 days of the occurrence of
such arrearage.
(ii) During any period when the holders of Series B Preferred Stock, voting
as a separate series, shall be entitled and shall have exercised their right
to elect two Directors, then and during such time as such right continues (a)
the then authorized number of Directors shall be increased by two, and the
holders of Series B Preferred Stock, voting as a separate series, shall be
entitled to elect the additional Directors so provided for, and (b) each such
additional Director shall not be a member of any existing class of the Board
of Directors, but shall serve until the next annual meeting of stockholders
for the election of Directors, or until his or her successor shall be elected
and shall qualify, or until his or her right to hold such office terminates
pursuant to the provisions of this Section 3(C).
(iii) A Director elected pursuant to the terms hereof may be removed with or
without cause by the holders of Series B Preferred Stock entitled to vote in
an election of such Director.
(iv) If, during any interval between annual meetings of stockholders for the
election of Directors and while the holders of Series B Preferred Stock shall
be entitled to elect two Directors, there is no such Director in office by
reason of resignation, death or removal, then, promptly thereafter, the Board
of Directors shall call a special meeting of the holders of Series B Preferred
Stock for the purpose of filling such vacancy and such vacancy shall be filled
at such special meeting. Such special meeting shall in any event be held
within 45 days of the occurrence of such vacancy.
(v) At such time as the arrearage is fully cured, and all dividends
accumulated and unpaid on any shares of Series B Preferred Stock outstanding
are paid, and, in addition thereto, at least one regular dividend has been
paid subsequent to curing such arrearage, the term of office of any Director
elected pursuant to this Section 3(C), or his or her successor, shall
automatically terminate, and the authorized number of Directors shall
automatically decrease by two, the rights of the holders of the shares of the
Series B Preferred Stock to vote as provided in this Section 3(C) shall cease,
subject to renewal from time to time upon the same terms and conditions, and
the holders of shares of the Series B Preferred Stock shall have only the
limited voting rights elsewhere herein set forth.
(D) Except as set forth herein, or as otherwise provided by law, holders of
Series B Preferred Stock shall have no special voting rights and their consent
shall not be required (except to the extent they are entitled to vote with
holders of Common Stock as set forth herein) for taking any corporate action.
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material has been removed.)
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions payable
on the Series B Preferred Stock as provided in Section 2 *above* are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series B Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on any
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series B Preferred Stock;
(ii) declare or pay dividends, or make any other distributions, on any
shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series B Preferred Stock,
except dividends paid ratably on the Series B Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares of
any stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series B Preferred Stock, provided that
the Corporation may at any time redeem, purchase or otherwise acquire
shares of any such junior stock in exchange for shares of any stock of the
Corporation ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series B Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration any shares
of Series B Preferred Stock, or any shares of stock ranking on a parity
with the Series B Preferred Stock, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable treatment
among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section
4 purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series B Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All
such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock and may be reissued as part of a new series of
Preferred Stock subject to the conditions and restrictions on issuance set
forth herein, or in any other Certificate of Designation creating a series of
Preferred Stock or any similar stock or as otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (1) to the holders of shares of stock ranking
junior (either as to dividends or upon liquidation, dissolution or winding up)
to the Series B Preferred Stock unless, prior thereto, the holders of shares
of Series B Preferred Stock shall have received $100 per share, plus an amount
equal to accrued and unpaid dividends and distributions thereon, whether or
not declared, to the date of such payment, provided that the holders of shares
of Series B Preferred Stock shall be entitled to receive an aggregate amount
per share, subject to the provision for adjustment hereinafter set forth,
equal to 10,000 times the aggregate amount to be distributed per share to
holders of shares of Common Stock, or (2) to the holders of shares of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution
or winding up) with the Series B Preferred Stock, except distributions made
ratably on the Series B Preferred Stock and all such parity stock in
proportion to the total amounts to which the holders of all such shares are
entitled upon such liquidation, dissolution or winding up.
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material has been removed.)
(B) Neither the consolidation, merger or other business combination of the
Corporation with or into any other corporation nor the sale, lease, exchange
or conveyance of all or any part of the property, assets or business of the
Corporation shall be deemed to be a liquidation, dissolution or winding up of
the Corporation for purposes of this Section 6.
(C) In the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision, combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in
shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the aggregate amount to which holders of shares
of Series B Preferred Stock were entitled immediately prior to such event
under the proviso in clause (1) of paragraph (A) of this Section 6 shall be
adjusted by multiplying such amount by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event. In the event the Corporation
shall at any time declare or pay any dividend on the Series B Preferred Stock
payable in shares of Series B Preferred Stock, or effect a subdivision,
combination or consolidation of the outstanding shares of Series B Preferred
Stock (by reclassification or otherwise than by payment of a dividend in
shares of Series B Preferred Stock) into a greater or lesser number of shares
of Series B Preferred Stock, then in each such case the aggregate amount to
which holders of shares of Series B Preferred Stock were entitled immediately
prior to such event under the proviso in clause (1) of paragraph (A) of this
Section [4] *6* shall be adjusted by multiplying such amount by a fraction,
the numerator of which is the number of shares of Series B Preferred Stock
that were outstanding immediately prior to such event and the denominator of
which is the number of shares of Series B Preferred Stock outstanding
immediately after such event.
Section 7. Consolidation, Merger, etc. Notwithstanding anything to the
contrary contained herein, in case the Corporation shall enter into any
consolidation, merger, combination or other transaction in which the shares of
Common Stock are exchanged for or changed into other stock or securities, cash
and/or any other property, then in any such case each share of Series B
Preferred Stock shall at the same time be similarly exchanged or changed into
an amount per share, subject to the provision for adjustment hereinafter set
forth, equal to 10,000 times the aggregate amount of stock, securities, cash
and/or any other property (payable in kind), as the case may be, into which or
for which each share of Common Stock is changed or exchanged. In the event the
Corporation shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock or effect a subdivision, combination or
consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series B Preferred Stock shall be adjusted by multiplying
such amount by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event. In the event the Corporation shall at any
time declare or pay any dividend on the Series B Preferred Stock payable in
shares of Series B Preferred Stock, or effect a subdivision, combination or
consolidation of the outstanding shares of Series B Preferred Stock (by
reclassification or otherwise than by payment of a dividend in shares of
Series B Preferred Stock) into a greater or lesser number of shares of Series
B Preferred Stock, then in each such case the amount set forth in the first
sentence of this Section 7 with respect to the exchange or change of shares of
Series B Preferred Stock shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Series B Preferred
Stock that were outstanding immediately prior to such event and the
denominator of which is the number of shares of Series B Preferred Stock
outstanding immediately after such event.
Section 8. No Redemption. The shares of Series B Preferred Stock shall not
be redeemable.
Section 9. Rank. The Series B Preferred Stock shall rank, with respect to
the payment of dividends and the distribution of assets, junior to all series
of any other class of the Preferred Stock issued either before or after the
issuance of the Series B Preferred Stock, unless the terms of any such series
shall provide otherwise.
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material has been removed.)
Section 10. Amendment. The Certificate of Incorporation of the Corporation
shall not be amended in any manner which would materially alter or change the
powers, preferences or special rights of the Series B Preferred Stock so as to
affect them adversely without the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Series B Preferred Stock, voting
together as a single class.
Section 11. Fractional Shares. Series B Preferred Stock may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and have the benefit of all other rights of
holders of Series B Preferred Stock.
[FIFTH: The minimum amount of capital with which the Corporation will
commence business is one thousand dollars ($1,000.00).]
[SIXTH: The names and places of residence of each of the incorporators are
as follows:
<TABLE>
<CAPTION>
Name Residence
---- ---------
<S> <C>
David Simon................................ 310 East 71st Street
New York 21, N.Y.
Lawrence Nirenstein........................ 135-10 Grand Central Parkway,
Kew Gardens, N.Y.
David D. Brown, III........................ 1350 Madison Avenue
New York 28, N.Y.]
</TABLE>
[SEVENTH: The Corporation is to have perpetual existence.]
[EIGHTH: The private property of the stockholders shall not be subject to
the payment of corporate debts to any extent whatever.]
[NINTH] *FIFTH*: The following provisions are inserted for the management of
the business and for the conduct of the affairs of the Corporation, and for
further definition, limitation and regulation of the powers of the Corporation
and of its directors and stockholders:
(1) [Directors need not be stockholders.] Election of directors need not
be by ballot except only as the By-Laws may so provide. [Vacancies may be
filled by the Board of Directors or by the stockholders as shall be
provided in the By-Laws.]
[(2) The Board of Directors shall have power to make, alter, amend and
repeal the By-Laws of the Corporation, subject only to such limitations, if
any, as may from time to time be imposed by law or by the By-Laws.]
*(2) In furtherance of and not in limitation of powers conferred by
statute, it is further provided that the Board of Directors is expressly
authorized to adopt, amend or repeal the By-Laws of the Corporation.*
[(3) Subject to any provision of the By-Laws, the Board of Directors
shall have power from time to time to determine whether, to what extent, at
what times and places and under what conditions and regulations the
accounts, books and papers of the Corporation (other than the stock
ledger), or any of them, shall be open to the inspection of the
stockholders; and no stockholder shall have any right to inspect any
account, book or paper of the Corporation except as conferred by statute or
authorized by the By-Laws or by the Board of Directors.]
[(4) No contract or other transaction between the Corporation and any
other corporation shall be void or voidable because of the fact that any
director of the Corporation is a director, officer, stockholder or creditor
of such other corporation, if such contract or other transaction shall be
approved or ratified by the affirmative vote of a majority of the directors
present at a meeting of the Board of Directors or any committee of the
Corporation having authority in the premises, who are not so interested.
Any director,
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(Note: Material between asterisks (*) has been added; bracketed ([ ])
material has been removed.)
individually, or any firm of which any director is a partner may be a party
to or may be interested in any contract or other transaction of the
Corporation if such contract or other transaction shall be approved or
ratified by the affirmative vote of a majority of the directors present at
a meeting of the Board of Directors or any committee of the Corporation
having authority in the premises, who are not so interested. No director
shall be liable to account to the Corporation for any profit realized by
him from or through any such contract or other transaction of the
Corporation ratified or approved as aforesaid, by reason of his interest in
such contract or other transaction. Directors so interested may be counted
when present at meetings of the Board of Directors or of such committee for
the purpose of determining the existence of a quorum. Any director whose
interest in any such contract or other transaction arises solely by reason
of the fact that he is a director, officer, stockholder or creditor of such
other corporation, or solely by reason of the fact that he is a partner,
officer or creditor of such firm, when such contract or other transaction
is made or carried out by officers or employees of the Corporation in the
ordinary performance of their duties and without the actual participation
of such director, shall not be deemed interested in such contract or other
transaction under any of the provisions of this Paragraph (4), nor shall
any such contract or other transaction be void or voidable, nor shall any
such director be liable to account because of such interest, nor need any
such interest be disclosed.]
[(5) Any contract, transaction or act of the Corporation or the Board of
Directors or of any committee which shall be ratified by a majority of a
quorum of the stockholders entitled to vote at any annual meeting, or at
any special meeting called for the purpose, shall be as valid and binding
as though ratified by every stockholder of the Corporation; provided,
however that any failure of the stockholders to approve or ratify such
contract, transaction or act, when and if submitted, shall not of itself be
deemed in anyway to invalidate the same or to deprive the Corporation, its
directors or officers, of their right to proceed with such contract,
transaction or act.]
[(6) The Board of Directors shall have power from time to time to fix and
determine and to vary the amount to be reserved as working capital, and,
before the payment of any dividends or the making of any distribution of
profits, it may set aside out of the net profits of the Corporation such
sum or sums as it may, from time to time and in its absolute discretion
think proper as additional working capital, or to meet contingencies, or
for such corporate purpose as the Board shall think conducive to the
interests of the Corporation, subject only to such limitations, if any, as
the By-Laws of the Corporation may from time to time impose.]
[(7)]*(3)* (a) The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (except as otherwise provided herein), by
reason of the fact that he *or she* is or was a director or officer of the
Corporation, or is or was serving at the request of the Corporation as a
director or officer of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred by him *or her* in connection with such action, suit or proceeding
if he *or she* acted in good faith and in a manner he *or she* reasonably
believed to be in or not opposed to the best interests of the Corporation,
and with respect to any criminal action or proceeding, had no reasonable
cause to believe his *or her* conduct was unlawful.
(b) In the case of any action or suit by or in the right of the
Corporation to procure a judgment in its favor, no indemnification shall be
made (i) except for expenses (including attorneys' fees) or (ii) in respect
of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Corporation unless and only to the extent that
the Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the
Court of Chancery or such other court shall deem proper.
(c) To the extent that a director or officer of the Corporation has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in subsections (a) or (b), or in defense of
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(Note: Material between asterisks (*) has been added; bracketed ([ ])
material has been removed.)
any claim, issue or matter therein, he *or she* shall be indemnified
against expenses (including attorneys' fees) actually and reasonably
incurred by him *or her* in connection therewith.
(d) Any indemnification under subsections (a) or (b) (unless ordered by a
court) shall be made by the Corporation only as authorized in the specific
case upon a determination that indemnification of the director or officer
is proper in the circumstances because he *or she* has met the applicable
standard of conduct set forth in subsection (a) and (b). Such determination
shall be (i) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or
proceeding, (ii) if such a quorum is not obtainable, or, even if obtainable
a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, or (iii) by the stockholders.
(e) Expenses incurred in defending a civil or criminal action, suit or
proceeding may be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of the director or officer to repay such amount
if it shall ultimately be determined that he *or she* is not entitled to be
indemnified by the Corporation as authorized in this section.
(f) The indemnification and advancement of expenses provided by this
section shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under
any bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his *or her* official capacity and as to
action in another capacity while holding such office, and shall continue as
to a person who has ceased to be a director or officer and shall inure to
the benefit of the heirs, executors and administrators of such person.
[(8) The Board of Directors shall have the power to establish stock
option, bonus, profit-sharing, pension or other types in incentive,
compensation or benefit plans for the employees (including officers and
directors) of the Corporation and to fix the terms thereof and to determine
the persons to participate in any such plans and the amounts of their
respective participations, if any.]
[(9) (a) If any Person (an "Acquiring Person") (i) who acquired any
Common Stock pursuant to a Tender Offer becomes the beneficial owner,
directly or indirectly, of more than 50% of the outstanding Common Stock or
(ii) who is the beneficial owner, directly or indirectly, of more than 50%
of the outstanding Common Stock becomes the beneficial owner, directly or
indirectly, of any additional shares of Common Stock pursuant to a Tender
Offer, each person who is then a Holder of Common Stock, other than the
Acquiring Person or a transferee of the Acquiring Person shall have the
right to have the Common Stock held by him or her redeemed by the
Corporation unless the Corporation, acting through a majority of its Board
of Directors, shall have recommended that the Tender Offer be accepted, as
contemplated in clause (c).
(b) For the purposes of this Section 9:
(i) Person shall mean an individual, corporation, partnership, trust
or other entity. When two or more persons act as a partnership, limited
partnership, syndicate or other group for the purpose of acquiring
Common Stock, the partnership, syndicate or group shall be deemed a
"Person".
(ii) A person shall be deemed to own beneficially all Common Stock
with respect to which that person has the capability to control or
influence the voting power or which that person has the immediate or
future right to acquire, directly or indirectly, pursuant to
agreements, through the exercise of options, warrants or rights or
through the conversion of convertible securities or otherwise. All
Common Stock which that person has the right to acquire shall be deemed
to be outstanding, but Common Stock which any other person has the
right to acquire shall not be deemed to be outstanding.
(iii) A Holder on any date shall mean a person who is the record
owner of Common Stock on that date or who becomes the record owner of
Common Stock within 30 days after that date pursuant to the exercise of
an option, right or warrant outstanding on that date or the conversion
of convertible securities outstanding on that date.
(iv) Tender Offer shall mean an offer to acquire shares for cash,
securities or any other consideration or an acquisition pursuant to a
request or invitation for tender.
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(Note: Material between asterisks (*) has been added; bracketed ([ ])
material has been removed.)
(c) Within 10 days after any Person makes a Tender Offer, the
Corporation, acting through its Board of Directors, shall determine whether
to recommend to the Holders acceptance of the Tender Offer. If the
Corporation fails so to recommend acceptance, within 20 days after the
Corporation receives notice that any Person has become an Acquiring Person,
the Corporation shall advise each person who, on the date the person became
an Acquiring Person, was a Holder or a potential Holder (by first class
mail, postage prepaid, at the address shown on the records of the
Corporation) of the right to have his or her shares redeemed and the
procedures for such redemption. In the event that the Corporation fails to
give notice as required by this clause (c), any Holder may serve written
demand upon the Corporation to give such notice. If within 20 days after
the receipt of written demand the Corporation fails to give the required
notice, that Holder may at the expense and on behalf of the Corporation
take such reasonable action as may be appropriate to give notice or to
cause notice to be given pursuant to this clause (c). The Directors of the
Corporation shall designate a redemption agent (the "Redemption Agent"),
which shall be a corporation or association (i) organized and doing
business under the laws of the United States of America or any State, (ii)
subject to supervision or examination by Federal or State authority, (iii)
having combined capital and surplus of at least $5,000,000 and (iv) having
the power to exercise corporate trust powers. For a period of 30 days from
the date of the mailing of the notice to the Holders and potential Holders,
any Holder may, at his or her option, deposit with the Redemption Agent
certificates representing all or less than all shares of Common Stock held
of record by him or her and written notice that the Holder elects to have
those shares redeemed pursuant to this Section 9. Redemption shall be
deemed to have been effected at the close of business on the day such
certificates are deposited in proper form with the Redemption Agent. The
Corporation shall promptly deposit in trust with the Redemption Agent cash
in an amount equal to the Aggregate Redemption Price of all of the Common
Stock deposited with the Redemption Agent for purposes of redemption. As
soon as practicable after receipt by the Redemption Agent of the cash
deposited by the Corporation referred to in this clause (c), the Redemption
Agent shall issue its checks payable to the order of the Holders entitled
to receive the Redemption Price of the Common Stock in respect of which
such case deposit was made.
(d) The Redemption Price shall be the greater of the following amounts:
(i) The highest price per share, including any commission paid to
brokers or dealers, at which shares of Common Stock held by the
Acquiring Person were acquired pursuant to a Tender Offer within 18
months prior to the notice to Holders referred to in clause (c). If the
consideration paid in any such acquisition of Common Stock consisted,
in whole or part, of consideration other than cash, the Board of
Directors of the Corporation shall take such action, as in its judgment
it deems appropriate, to establish the cash value of such
consideration, but the value shall not be less than the cash value, if
any, ascribed to such consideration by the Acquiring Person.
(ii) The book value per share of Common Stock, as determined in
accordance with generally accepted accounting principles and as
reflected in any published report by the Corporation as at the fiscal-
year quarter ending immediately preceding the notice to Holders
referred to in clause (c).]
[TENTH: No stockholder of this Corporation shall have any preemptive right
to purchase or subscribe for any part of any new or additional issue of stock,
convertible securities, warrants or options, whether now or hereafter
authorized and whether to be issued for money, property, services or
otherwise.]
[ELEVENTH: A. Except as otherwise provided by Paragraph B of this Article
ELEVENTH, the votes of the holders of 66 2/3% of the shares of stock then
entitled to vote for the election of directors of the Corporation ("Voting
Stock") shall be required for any of the following actions:
(1) merge the Corporation into another corporation or other business
entity;
(2) merge another corporation or other business entity into the
Corporation;
(3) consolidate with another corporation or other business entity;
(4) sell, exchange, lease or otherwise transfer all or substantially all
of the Corporation's assets to any other person;
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(Note: Material between asterisks (*) has been added; bracketed ([ ])
material has been removed.)
(5) dissolve;
(6) amend the Corporation's Certificate of Incorporation; or
(7) amend the Corporation's By-laws or ratify the amendment thereof by
the Corporation's Board of Directors.
B. If any corporation or other business entity, together with all affiliates
thereof, owns beneficially, directly or indirectly, 25% or more of the
outstanding Common Stock (a "Related Entity"), the vote of the holders of 85%
of all shares of the Voting Stock exclusive of all shares the Voting Stock
held by Related Entities shall be required for any of the following actions:
(1) merge the Corporation into a Related Entity;
(2) merge a Related Entity into the Corporation;
(3) consolidate with a Related Entity;
(4) sell, exchange, lease or otherwise transfer all or substantially all
of the Corporation's assets to a Related Entity;
(5) acquire an interest in a Related Entity through the issuance of the
Corporation's stock, exchange of Corporation's assets or otherwise;
(6) enter into any agreement to take any of the actions contemplated by
the immediately preceding clauses 1 through 5;
(7) any further amendment of the Corporation's Certificate of
Incorporation relating to the actions contemplated by the immediately
preceding clauses 1 through 6 or amendment of the Corporation's By-laws or
ratify the amendment thereof by the Corporation's Board of Directors in
such regard.
For the purpose of this Article ELEVENTH, an "affiliate" of any entity shall
be any person which controls, is controlled by or is under common control with
that entity, and any officer or director of that entity or any other affiliate
thereof and any person which owns beneficially, directly or indirectly, 10% or
more of any class of equity securities of that entity or any other affiliate
thereof.]
[TWELFTH] *SIXTH*: The Corporation reserves the right to amend, alter,
change or repeal any provision contained in this Certificate of Incorporation
in the manner now or hereafter prescribed by law, and all rights conferred
herein on stockholders are subject to this reserved power.
[THIRTEENTH] *SEVENTH*: *Except to the extent that the General Corporation
Law of Delaware prohibits the elimination or limitation of liability of
directors for breaches of fiduciary duty, no* [No] director of the Corporation
shall be personally liable to the Corporation or its stockholders for monetary
damages for *any* breach of fiduciary duty as a director *notwithstanding any
provision of law imposing such liability.* [; provided, however, that this
provision shall not eliminate or limit the liability of a director to the
extent provided by applicable law (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under section 174 of the General Corporation Law of the State of
Delaware, or (iv) for any transaction from which the director derived an
improper personal benefit. The foregoing provisions of this Article shall not
eliminate the liability of a director for any act or omission occurring prior
to the date on which this Article becomes effective.] No amendment to or
repeal of this Article shall apply to or have any effect on the liability or
alleged liability of any director of the Corporation for or with respect to
any acts or omissions of such director occurring prior to such amendment or
repeal.
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SKU 0966-PS-99
<PAGE>
FORM OF PROXY
THERMO ELECTRON CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 27, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints George N. Hatsopoulos, Theo Melas-Kyriazi
and Arvin H. Smith, and each of them, proxies of the undersigned, each with
power to appoint his substitute, and hereby authorizes them to represent and to
vote, as designated below, all the shares of common stock of Thermo Electron
Corporation held of record by the undersigned on April 7, 1999, at the Annual
Meeting of the Stockholders to be held at The Westin Hotel, 70 Third Avenue,
Waltham, Massachusetts, on Thursday, May 27, 1999, at 3:00 p.m., and at any
postponement or adjournment thereof, as set forth on the reverse side hereof,
and in their discretion upon any other business that may properly come before
the meeting.
The Proxy will be voted as specified, or if no choice is specified, FOR the
election of the nominees for director, FOR Proposal 2 and AGAINST Proposals 3
and 4, if presented at the meeting, and as said proxies deem advisable on such
other matters as may properly come before the meeting.
(IMPORTANT - TO BE SIGNED AND DATED ON THE REVERSE SIDE.)
<PAGE>
Please mark your
[ x ] votes as in this
example.
The Board of Directors recommends a vote For Proposals 1 and 2.
1. ELECTION OF DIRECTORS OF THE COMPANY (see reverse).
Nominees: John N. Hatsopoulos, Robert A. McCabe, Hutham S. Olayan and
Richard F. Syron.
FOR ALL NOMINEES [ ]
WITHHELD FROM ALL NOMINEES [ ]
FOR, except vote withheld for the following nominee(s): ______________________
FOR AGAINST ABSTAIN
2. Approve an amendment and restatement
of the Corporation's certificate of [ ] [ ] [ ]
incorporation.
The Board of Directors recommends a vote AGAINST Proposals 3 and 4.
FOR AGAINST ABSTAIN
3. Approve a stockholder proposal to request [ ] [ ] [ ]
the Corporation to endorse the CERES Principles.
FOR AGAINST ABSTAIN
4. Approve a stockholder proposal to request
the Corporation to amend the Corporation's [ ] [ ] [ ]
certificate of incorporation such that the
chief executive officer of the Corporation
shall always be a direct lineal descendant
of the founder of the Corporation.
5. In their discretion on such other matters as may properly come before the
meeting.
(This proxy should be dated, signed by the shareholder(s) exactly as his or her
name appears hereon, and returned promptly in the enclosed envelope. Persons
signing in a fiduciary capacity should so indicate. If shares are held by joint
tenants or as community property, both should sign.)
Copies of the Notice of Meeting and of the Proxy Statement have been received by
the undersigned.
SIGNATURE(S)_______________________________________ DATE_________________
