-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, O8MGKgL3yq1AHCZTqN6PC/VgeleYdUeF4sKRBmQ2NSQaAh+aHxqRPJq8GOFDFXkm s4bDsi0jyoDhqnWlacOcFA== 0001017062-99-000616.txt : 19990409 0001017062-99-000616.hdr.sgml : 19990409 ACCESSION NUMBER: 0001017062-99-000616 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990520 FILED AS OF DATE: 19990408 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEWPORT CORP CENTRAL INDEX KEY: 0000225263 STANDARD INDUSTRIAL CLASSIFICATION: LABORATORY APPARATUS & FURNITURE [3821] IRS NUMBER: 940849175 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 000-01649 FILM NUMBER: 99589705 BUSINESS ADDRESS: STREET 1: 1791 DEERE AVE CITY: IRVINE STATE: CA ZIP: 92714 BUSINESS PHONE: 7148633144 FORMER COMPANY: FORMER CONFORMED NAME: DOLE JAMES CORP DATE OF NAME CHANGE: 19910905 DEF 14A 1 DEFINITIVE PROXY STATEMENT UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant [X] Filed by a Party other than the Registrant [_] Check the appropriate box: [_] Preliminary Proxy Statement [_] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) [X] Definitive Proxy Statement [_] Definitive Additional Materials [_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12 NEWPORT CORPORATION - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] No fee required [_] 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: ------------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: ------------------------------------------------------------------------- (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 filing fee is calculated and state how it was determined): ------------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: ------------------------------------------------------------------------- (5) Total fee paid: ------------------------------------------------------------------------- [_] 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. (1) Amount Previously Paid: ------------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: ------------------------------------------------------------------------- (3) Filing Party: ------------------------------------------------------------------------- (4) Date Filed: ------------------------------------------------------------------------- Notes: NEWPORT CORPORATION 1791 Deere Avenue Irvine, California 92606 ---------------------------- NOTICE OF ANNUAL MEETING OF STOCKHOLDERS May 20, 1999 ---------------------------- To the Stockholders of Newport Corporation: NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Newport Corporation will be held at the Corporate Headquarters, 1791 Deere Avenue, Irvine, California, on May 20, 1999, at 10:00 a.m., for the purpose of considering and acting upon the following: 1. To elect two Class III Directors to serve for four years. 2. To ratify the appointment of Ernst & Young LLP as the Company's independent auditors for the year ending December 31, 1999. 3. To transact such other business as may properly come before the meeting or any adjournment thereof. The foregoing items of business are more fully described in the Proxy Statement accompanying this Notice. Only stockholders of record at the close of business April 2, 1999, will be entitled to notice of and to vote at the meeting. All stockholders are cordially invited to attend the meeting. However, to assure your representation at the meeting, you are urged to mark, sign, date and return the enclosed proxy as promptly as possible in the enclosed envelope. Any stockholder attending the meeting may vote in person even if he or she has returned a proxy. By order of the Board of Directors /s/ Robert C. Hewitt Robert C. Hewitt Secretary Irvine, California April 16, 1999 Please sign and return the enclosed Proxy promptly. NEWPORT CORPORATION 1791 Deere Avenue Irvine, California 92606 ----------------------------- PROXY STATEMENT ----------------------------- Solicitation and Revocation of Proxies The enclosed Proxy is solicited by the Board of Directors of Newport Corporation (the "Company" or "Newport") for use in connection with the Annual Meeting of Stockholders to be held at the Corporate Headquarters, 1791 Deere Avenue, Irvine, California on Thursday, May 20, 1999, at 10:00 a.m., and at any and all adjournments thereof for the purposes set forth herein and in the accompanying Notice of Annual Meeting of Stockholders. The persons named as proxies were designated by the Board of Directors (the "Board") and are officers or directors of the Company. Any Proxy may be revoked or superseded by executing a later Proxy or by giving notice of revocation in writing prior to, or at, the Annual Meeting, or by attending the Annual Meeting and voting in person. Attendance at the meeting will not in and of itself constitute revocation of the Proxy. All Proxies that are properly completed, signed and returned to the Company prior to the meeting, and not revoked, will be voted in accordance with the instructions given in the Proxy. If a choice is not specified in the Proxy, the Proxy will be voted FOR election of the director nominees listed below (Proposal 1) and FOR ratification of the Company's appointment of Ernst & Young LLP as independent auditors for the year ending December 31, 1999 (Proposal 2). An automated system administered by the Company's transfer agent will tabulate votes cast for the Annual Meeting. A majority of shares entitled to vote, represented in person or by proxy, will constitute a quorum at the Annual Meeting. Abstentions and broker non-votes are each included in the determination of the number of shares present and voting for the purpose of determining whether a quorum is present, and each is tabulated separately. In determining whether a proposal has been approved, abstentions are counted as votes against a proposal and broker non-votes are not counted. If any other matters are properly presented at the Annual Meeting for action, the persons named in the enclosed form of proxy will have discretion to vote on such matters in accordance with their best judgment. The Company does not know of any matters other than those set forth above that will be presented at the Annual Meeting. This Proxy Statement and the accompanying Proxy are being mailed to stockholders on or about April 16, 1999. The entire cost of the solicitation of Proxies will be borne by the Company. It is contemplated that this solicitation will be primarily by mail. In addition, some of the officers, directors and employees of the Company may solicit Proxies personally or by telephone, fax, telegraph or cable. The Company has retained D. F. King & Co. to assist in the solicitation of Proxies for a fee estimated to be $4,500, plus out-of-pocket expenses. In addition, the Company has agreed to indemnify D.F. King & Co. against any losses or liabilities arising out of D.F. King & Co.'s fulfillment of the contract, except for such losses or liabilities arising out of D.F. King & Co.'s own negligence or willful misconduct. Voting at the Meeting As of April 2, 1999, the record date of the meeting, the Company had outstanding 9,174,773 shares of Common Stock. Each share of Common Stock is entitled to one vote. A majority of the shares of the Company's Common Stock present or represented and entitled to vote at the meeting is required to approve each proposal presented at the meeting. PROPOSAL ONE ELECTION OF DIRECTORS The Articles of Incorporation (the "Articles") of the Company provide that the members of the Company's Board be divided into four classes serving staggered four-year terms. The Articles also provide that there shall be not less than five and not more than nine directors, the exact number to be fixed from time to time by the Board of Directors. The current authorized number is seven. One class of directors is elected each year for a term extending to the fourth succeeding Annual Meeting after such election. At the 1999 Annual Meeting, two directors, constituting the Class III directors, will be elected to hold office for a term expiring at the Annual Meeting in 2003. It is the intention of the persons named in the enclosed Proxy to vote to elect C. Kumar N. Patel and Kenneth F. Potashner as the Class III directors to serve for a term expiring at the Annual Meeting in 2003. Dr. Patel is currently a Class IV director, serving for a term extending until the 2000 Annual Meeting. Upon his election as a Class III director, there will be one vacancy in Class IV and the Board is seeking candidates to fill such vacancy. Such vacancy is not eligible to be filled at the 1999 Annual Meeting. The five remaining directors will continue in office, in accordance with their previous elections, until the expirations of the terms of the classes at the 2000, 2001 or 2002 Annual Meetings, as the case may be. The holders of a plurality of the shares of the Company's Common Stock present or represented and entitled to vote at the meeting shall have the right to elect the directors. The Proxies may not be voted for a greater number of persons than the number of nominees named. The nominees have indicated that they are willing and able to serve as directors if elected. If the nominees should become unable or unwilling to serve, it is the intention of the persons designated as proxies to vote instead, in their discretion, for such other persons as may be designated as nominees by the Board. The Board of Directors recommends a vote "FOR" the nominees listed below. Class III (Directors nominated for office with terms expiring in 2003)
Name Principal Occupation Age Director Since - ---------------------------- ------------------------------------------------ -------- ------------------------------ C. Kumar N. Patel Vice Chancellor - Research, University of 60 1986 California at Los Angeles Kenneth F. Potashner President, Chief Executive Officer and 41 1998 Chairman, S3 Incorporated
Dr. Patel was elected to the Board in January 1986. Dr. Patel has been in his current position since 1993. From 1961 to 1993, Dr. Patel was employed by AT&T Bell Laboratories, a telecommunications corporation, in various positions, including Executive Director - Research, Materials Science, Engineering and Academic Affairs Division from 1987 to 1993 and Executive Director, Physics and Academic Affairs Division from 1981 to 1987. Mr. Potashner was appointed to the Board in October 1998 to fill a vacancy in class III. He has held his current position with S3 Incorporated, a supplier of multimedia acceleration hardware and associated software, since November 1998. Mr. Potashner is also Chairman of the Board of Directors of Maxwell Technologies, Inc., a manufacturer of pulsed power based systems and components. From 1996 to October 1998 he was also President and Chief Executive Officer of Maxwell Technologies. Mr. Potashner was Executive Vice President and General Manager of Disk Drive Operations for Conner Peripherals, a storage system corporation, from 1994 to 1996. From 1991 to 1994, he was Vice President, Worldwide Product Engineering for Quantum Corporation, a disk drive corporation. From 1981 to 1991, he held various engineering management positions with Digital Equipment Corporation, a computer corporation, culminating in the position as Vice President of Worldwide Product Engineering in 1991. 2 Biographical Information for Directors Continuing in Office Biographical information follows for each of the other directors of the Company whose present terms will continue after the 1999 Annual Meeting. Class I (Directors continuing in office with terms expiring in 2001)
Name Principal Occupation Age Director Since - ---------------------------- ------------------------------------------------ ---------- ------------------------------ Robert G. Deuster Chairman, President and Chief Executive Officer 48 1996 John T. Subak Counsel, Dechert Price & Rhoads 70 1992
Mr. Deuster joined the Company as President and Chief Executive Officer in May 1996 and, in June 1997, became Chairman of the Board. From 1985 to 1996 Mr. Deuster served in various senior management positions at Applied Power, Inc., an international manufacturer of electrical and hydraulic products, serving as Senior Vice President of the Distributed Products Group from 1994 to 1996, President of the Barry Controls Division from 1989 to 1994, President of the APITECH Division from 1986 to 1989 and Vice President of Sales and Marketing of the Enerpac Division from 1985 to 1986. From 1975 to 1985, he held engineering and marketing management positions at General Electric Company's Medical Systems Group. Mr. Subak has served as Counsel for Dechert Price & Rhoads, a national law firm, since January 1994. From 1976 to 1994 Mr. Subak was Director, Group Vice President and General Counsel for Rohm and Haas Company, an international chemical products company. Class II (Directors continuing in office with terms expiring in 2002)
Name Principal Occupation Age Director Since - ---------------------------- ------------------------------------------------ -------- ------------------------------ R. Jack Aplin Independent Investor 67 1989 Robert L. Guyett President and Chief Executive Officer, Crescent 62 1990 Management Enterprises
From 1989 to the present Mr. Aplin has been an independent investor. Mr. Aplin was Chairman of the Board, President and Chief Executive Officer of Spectramed, Inc., an international medical products company, from 1986 to 1989. Since April 1996, Mr. Guyett has been President and Chief Executive Officer of Crescent Management Enterprises, LLC, a financial management and investment advisory services firm. From May 1995 to December 1996, he was a consultant to Engelhard Corporation, an international specialty chemical and precious metals company. Between September 1991 and May 1995, Mr. Guyett served as Senior Vice President and Chief Financial Officer and a member of the Board of Directors of Engelhard Corporation. From January 1987 to September 1991 he was the Senior Vice President and Chief Financial Officer and a member of the Board of Directors of Fluor Corporation, an international engineering and construction firm. Class IV (Director continuing in office with term expiring in 2000)
Name Principal Occupation Age Director Since - ---------------------------- ------------------------------------------------ -------- ------------------------------ Richard E. Schmidt Independent Investor 67 1991
Mr. Schmidt has been an independent investor since June 1997. He joined the Company as Chairman and Chief Executive Officer in September 1991, and held such positions until his retirement therefrom in June 1997 and May 1996, respectively. From August 1993 until February 1995 and from November 1995 until May 1996, he held the additional position of President of the Company. From September 1984 to December 1990, Mr. Schmidt was President and Chief Executive Officer of Milton Roy Company, an international manufacturer of measuring instruments and systems, and served as its Chairman from 1986 to 1990. From December 1990 to September 1991, he served as a consultant to Sundstrand Corporation, an aerospace and power transmission corporation. 3 The following directors presently serve as directors of the following public corporations: Kenneth F. Potashner S3 Incorporated, a supplier of multimedia acceleration hardware and associated software; and Maxwell Technologies, Inc., a manufacturer of pulsed power based systems and components Richard E. Schmidt Hycor Biomedical Inc., a manufacturer of medical diagnostic products
Committees and Meetings of the Board The Board held four meetings during 1998. Each of the directors attended at least 75% of the meetings of the Board and committees of the Board during 1998. During 1998 the Audit Committee met two times. The committee, comprised of Messrs. Guyett (Chairman), Patel and Subak, has the responsibility to review and approve the scope and results of the annual audit; to recommend to the Board the appointment of the independent auditors; to review with the independent auditors the Company's financial staff and the adequacy and effectiveness of the Company's systems and internal financial controls; to discuss with management and the independent auditors the content of financial statements presented to stockholders; to review significant changes in accounting policies; to investigate reports of illegal acts involving the Company; and to provide sufficient opportunity for the independent auditors to meet with the committee without management present. The Compensation Committee, comprised of Messrs. Aplin (Chairman) and Subak, held one meeting during 1998 and has the responsibility for oversight of the Company's stock option plans, reviewing and evaluating the Company's compensation programs and plans, and making recommendations concerning compensation for key personnel and amendments to the stock option and certain compensation plans. Stockholders may recommend nominees for election as directors by writing to the Chief Executive Officer of the Company. 4 EXECUTIVE OFFICERS As of April 2, 1999, the Company has six executive officers elected on an annual basis to serve at the pleasure of the Board: Robert G. Deuster President and Chief Executive Officer Jeffrey L. Cannon Vice President and General Manager, Precision Motion and Metrology Systems Division Alain Danielo Vice President, Europe Operations Robert C. Hewitt Vice President, Chief Financial Officer and Secretary Robert J. Phillippy Vice President and General Manager, Science and Laboratory Products Division Gary J. Spiegel Vice President, Sales
A biographical summary regarding Mr. Deuster has been presented earlier. Biographical information on other executive officers follows:
Names and Principal Occupation Age ------------------------------ --- Jeffrey L. Cannon 40 Mr. Cannon joined the Company in April 1995 as Director, Klinger Systems Group. In January 1996 Mr. Cannon was promoted to the position of General Manager, Precision Motion Systems Division. In November 1996 Mr. Cannon was elected Vice President and General Manager with additional responsibility for MikroPrecision Instruments, Inc., the Company's subsidiary acquired in 1996. In January 1998, he was also assigned responsibility for RAM Optical Instruments, Inc., a wholly-owned subsidiary, at which time the division was renamed the Precision Motion and Metrology Division. Prior to joining the Company, from 1990 to 1995, Mr. Cannon was Senior Marketing Manager at Coherent, Incorporated, a laser systems manufacturer, which he joined in 1979. Alain Danielo 53 Mr. Danielo joined the Company in January 1995 as President and General Manager of the Company's French subsidiary Micro-Controle S.A. In November 1995 he was elected Vice President with responsibility for the Company's Europe Operations. Prior to joining the Company, Mr. Danielo was Managing Director of the Electronics Division of Valeo S.A., an automobile parts company, from 1989 to 1995. From 1985 to 1989 he was General Manager of Molex France S.A.R.L., a manufacturer of electronic components. Robert C. Hewitt 53 Mr. Hewitt joined the Company in January 1987 as Vice President with responsibility for finance. In February 1987, he was elected to the additional positions of Secretary and Treasurer and in January 1989 he was elected Senior Vice President. In February 1995 he was elected to the position of Vice President and Chief Financial Officer. From February 1987 to November 1991 and from February 1994 to November 1995 he served as Treasurer. Prior to joining the Company, Mr. Hewitt held various financial management positions with General Electric Company, an international industrial and consumer products company. Robert J. Phillippy 38 Mr. Phillippy joined the Company in April 1996 as Vice President and General Manager of the Company's Science and Laboratory Products Division. Prior to joining the Company, Mr. Phillippy was Vice President at Square D Company, an electrical equipment manufacturer, from 1994 to 1996. He joined Square D Company in 1984 as a sales engineer and held various sales and marketing management positions with that company prior to his election as Vice President in 1994. Gary J. Spiegel 48 Mr. Spiegel was elected Vice President with responsibility for domestic sales in June 1992. During 1997 he was assigned additional responsibility for export sales as well as for sales of MikroPrecision Instruments, Inc. Previously, Mr. Spiegel was Vice President, with responsibility for sales and marketing, of Klinger Scientific Corporation, a subsidiary of the Company acquired in June 1991.
5 PRINCIPAL STOCKHOLDERS AND MANAGEMENT The following table sets forth certain information as of April 2, 1999, with respect to all those known by the Company to be the beneficial owners of more than 5% of its outstanding common stock, each director, each executive officer named on the Summary Compensation Table and other current executive officers who own shares of common stock, and all directors and current executive officers of the Company as a group:
Amount and nature of Percent Name and address of beneficial owners beneficial ownership(1) of Class ------------------------------------- --------------------------- -------- Prudential Insurance Company of America.............................................. 699,900(2) 7.63 751 Broad Street, Newark, NJ 07102-3777 Franklin Resources, Inc.............................................................. 530,430(2) 5.78 777 Mariners Island Boulevard, San Mateo, CA 94403-7777 Royce & Associates, Inc.............................................................. 486,400(2)(3) 5.30 1414 Avenue of the Americas, New York, NY 10019 R. Jack Aplin........................................................................ 9,000(4) * Jeffrey L. Cannon.................................................................... 20,072(5) * Alain Danielo........................................................................ 53,769(6) * Robert G. Deuster.................................................................... 147,450(7) 1.59 Robert L. Guyett..................................................................... 45,000(8) * Robert C. Hewitt..................................................................... 134,223(9) 1.45 C. Kumar N. Patel.................................................................... 39,000(10) * Robert J. Phillippy.................................................................. 31,905(11) * Kenneth F. Potashner................................................................. 5,000 * Richard E. Schmidt................................................................... 259,241(12) 2.76 Gary J. Spiegel...................................................................... 39,922(13) * John T. Subak........................................................................ 43,000(14) * All 12 directors and current executive officers of the Company as a group............ 827,582(15) 8.46
- ---------------------- * Less than one percent. (1) This column lists voting securities, including restricted stock held by executive officers over which the officers have voting power but no investment power. Otherwise, each beneficial owner has sole voting and investment power with respect to the shares shown as beneficially owned by him, subject to community property laws where applicable, the information contained in the footnotes to this table or otherwise as noted herein. (2) The information is based upon data provided to the Company including filings made with the Securities and Exchange Commission on Schedules 13D or 13G. (3) Royce & Associates, Inc. ("Royce"), Royce Management Company ("RMC"), and Charles M. Royce. Mr. Royce may be deemed to be a controlling person of Royce and RMC, and as such may be deemed to beneficially own the shares of Common Stock of Newport Corporation beneficially owned by Royce and RMC. Mr. Royce does not own any shares outside of Royce and RMC, and disclaims beneficial ownership of the shares held by Royce and RMC. (4) Consists of 9,000 shares for options exercisable within 60 days. (5) Includes 8,000 shares for options exercisable within 60 days. (6) Includes 42,125 shares for options exercisable within 60 days. (7) Includes 107,500 shares for options exercisable within 60 days. (8) Includes 39,000 shares for options exercisable within 60 days. (9) Includes 82,250 shares for options exercisable within 60 days. (10)Consists of 39,000 shares for options exercisable within 60 days. (11)Includes 16,250 shares for options exercisable within 60 days. (12)Includes 203,000 shares for options exercisable within 60 days. (13)Includes 18,000 shares for options exercisable within 60 days. (14)Includes 40,000 shares for options exercisable within 60 days. (15)Includes 604,125 shares for options exercisable within 60 days. 6 EXECUTIVE COMPENSATION AND OTHER TRANSACTIONS WITH MANAGEMENT AND OTHERS Remuneration of Officers and Others The following table and narrative text discusses compensation paid in the years ended December 31, 1998, 1997 and 1996 to the Company's Chief Executive Officer and the five other executive officers whose salary and bonus exceeded $100,000 for the year ended December 31, 1998 (collectively, the "Named Executive Officers"). SUMMARY COMPENSATION TABLE
Long-Term Annual Compensation Compensation Awards ----------------------------------------------------------------------- Other Annual Securities All Other Compen- Restricted Underlying Compen- Name and Salary Bonus sation Stock Awards Options sation Principal Position Year ($) ($) ($)(1) ($)(2) (#) ($)(3) - -------------------------------------------------------------------------------------------------------------------------- Robert G. Deuster (4) 1998 281,904 160,000 28,402 0 100,000 9,600 - --------------------- 1997 265,000 335,000 21,520 87,500 15,000 9,550 Chairman, President and Chief Executive 1996 162,404 125,876 7,050 192,500 100,000 142,497 Officer Jeffrey L. Cannon 1998 158,173 17,050 12,877 133,750 25,000 9,600 - ----------------- 1997 130,000 44,563 7,200 0 5,000 9,550 Vice President and General Manager, 1996 119,643 36,860 1,200 0 4,000 15,274 Precision Motion and Metrology Systems Division Alain Danielo (5) 1998 161,883 13,500 11,862 0 30,000 0 - ----------------- 1997 169,508 30,000 6,002 22,125 8,000 0 Vice President, Europe Operations 1996 183,766 40,566 17,615 60,000 7,500 0 Robert C. Hewitt 1998 176,826 51,691 18,225 0 30,000 9,600 - ---------------- 1997 169,208 102,201 15,213 17,500 4,000 9,550 Vice President, Chief Financial Officer 1996 163,546 44,840 15,213 40,000 5,000 9,000 and Secretary Robert J. Phillippy 1998 156,904 69,115 14,601 133,750 25,000 9,600 - ------------------- 1997 140,000 73,478 9,313 26,250 5,000 9,550 Vice President and General Manager, 1996 103,077 45,771 4,800 0 10,000 98,782 Science and Laboratory Products Division Gary J. Spiegel(6) 1998 151,269 35,000 8,332 0 30,000 9,600 - ----------------- 1997 142,692 78,071 2,495 26,250 4,000 9,015 Vice President, Sales 1996 132,828 57,602 0 24,000 3,000 9,000
(1) Other annual compensation for 1998 consists of the following:
Insurance Automobile Premiums Allowance Total --------- ---------- ------- Robert G. Deuster $20,002 $ 8,400 $28,402 Jeffrey L. Cannon 5,677 7,200 12,877 Alain Danielo 0 11,862 11,862 Robert C. Hewitt 11,025 7,200 18,225 Robert J. Phillippy 7,401 7,200 14,601 Gary J. Spiegel 6,275 2,057 8,332
7 (2) Restricted stock was granted on January 2, 1998, January 2, 1997 and January 2, 1996 and vests at 25% per year beginning two years after the grant. Amounts represent fair market value on grant dates. Dividends totaling $0.04 per share were paid on the restricted stock during 1998, the same rate as on the Common Stock. The number of shares and value of restricted stock holdings at December 31, 1998, based on fair market value of $16.875 per share, are as shown below:
Number of Share Value at Shares Outstanding December 31, 1998 ------------------ ----------------- Robert G. Deuster 25,000 $421,875 Jeffrey L. Cannon 10,000 168,750 Alain Danielo 8,125 137,109 Robert C. Hewitt 10,500 177,188 Robert J. Phillippy 13,000 219,375 Gary J. Spiegel 7,500 126,563
(3) All other compensation for 1998 consists of contribution by the Company to the 401(k) plan for each Executive Officer except Mr. Danielo, who is not eligible to participate. (4) Mr. Deuster joined the Company on May 1, 1996, as President and Chief Executive Officer upon the retirement of Mr. Schmidt from those positions. He became Chairman in June 1997. (5) Mr. Danielo is paid in French francs. The U.S. dollar amounts have been calculated using the average rates for the respective years. (6) Mr. Spiegel became an Executive Officer in November 1997. OPTION GRANTS IN LAST FISCAL YEAR The following table sets forth certain information concerning grants of options to each of the Named Executive Officers during the year ended December 31, 1998. The amounts shown as potential realizable values on these options are based on arbitrarily assumed annualized rates of appreciation in the price of Newport Common Stock of five percent and ten percent over the term of the options, as set forth in Securities and Exchange Commission ("SEC") rules. The Named Executive Officers will realize no gain on these options without an increase in the price of Newport Common Stock that will benefit all stockholders proportionately. Stock Option Grants in Last Fiscal Year
Potential Realizable Value at Assumed Number of Annual Rates Securities of Stock Price Appreciation for Underlying % oF Total Exercise Ten-Year Option Term(2) Options Options Granted Price Per Expiration ------------------------- Name Granted(1) to Employees Share Date 5% 10% - ------------------------------------------------------------------------------------------------------------------------ Robert G. Deuster 100,000 23.50 13.375 01/02/08 841,000 2,132,000 Jeffrey L. Cannon 25,000 5.87 13.375 01/02/08 210,000 533,000 Alain Danielo 30,000 7.05 13.375 01/02/08 252,000 639,000 Robert C. Hewitt 30,000 7.05 13.375 01/02/08 252,000 639,000 Robert J. Phillippy 25,000 5.87 13.375 01/02/08 210,000 533,000 Gary J. Spiegel 30,000 7.05 13.375 01/02/08 252,000 639,000 - ------------------------------------------------------------------------------------------------------------------------- Increase in market value of Newport Common Stock for all stockholders at assumed 5% 10% rates of stock price appreciation (as used in the table above) from $13.375 per (to $21.79/share) (to $34.69/share) share, over the ten-year period, based on 9,119,000 shares outstanding at ---------------- ---------------- December 31, 1998(2). $76,736,000 $194,371,000 - --------------------------------------------------------------------------------------------------------------------------
(1) Twenty-five percent of the option shares granted in 1998 are exercisable 12 months after the grant date, with an additional 25% of the option shares becoming exercisable on each successive anniversary date, with full vesting occurring on the fourth anniversary date. All options become exercisable on a change-in-control as defined in the optionees' Employment Agreements (described below). The options were granted for a term of 10 years, subject to earlier termination in certain events related to termination of employment. (2) The dollar amounts in these columns are the result of calculations at the five percent and ten percent rates set by the SEC and are not intended to forecast future appreciation of Newport Common Stock, which will depend on market conditions and the Company's future performance and prospects. 8 AGGREGATED OPTIONS EXERCISED IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUE The following table sets forth certain information concerning the exercise of options by each of the Named Executive Officers during the year ended December 31, 1998, including the aggregate value of gains on the date of exercise. In addition, the table includes the number of shares covered by both exercisable and unexercisable stock options as of December 31, 1998. Also reported are the values for "in-the-money" options that represent the positive spread between the exercise price of existing stock options and the closing price of the Company's Common Stock as of December 31, 1998.
Number of Unexercised Value of Unexercised Value Options at In-the-Money Options at Shares Acquired Realized December 31, 1998 December 31, 1998 ($)(1) Name on Exercise(#) ($) Exercisable Unexercisable Exercisable Unexercisable - ----------------------- --------------- --------- ----------- -------------- ----------- ------------- Robert G. Deuster - 0 - - 0 - 53,750 161,250 392,969 803,906 Jeffrey L. Cannon - 0 - - 0 - 8,500 32,500 72,531 150,594 Alain Danielo - 0 - - 0 - 24,500 46,000 225,312 245,626 Robert C. Hewitt - 0 - - 0 - 70,750 37,250 611,031 167,969 Robert J. Phillippy - 0 - - 0 - 6,250 33,750 45,781 153,594 Gary J. Spiegel - 0 - - 0 - 9,500 35,250 96,203 149,719
(1) Market value of underlying securities at exercise date or year end, as the case may be, minus the exercise or base price on "in-the-money" options. The closing sale price for the Company's Common Stock as of December 31, 1998, on the Nasdaq National Market was $16.875. PERFORMANCE GRAPH FOR FIVE YEARS ENDED DECEMBER 31, 1998 Comparison of Five Year Cumulative Total Return of Newport Corporation with the Nasdaq National Market Index and the Scientific Instruments Index published by Media General Financial Services, Inc. [GRAPH GOES HERE]
1993 1994 1995 1996 1997 1998 ------ ------ ------ ------ ------ ------ Newport Corporation 100.00 148.55 156.51 171.69 272.85 328.19 Scientific Instruments Group Index 100.00 114.00 156.58 182.81 226.27 227.51 Nasdaq National Market Index 100.00 104.99 136.18 169.23 207.00 291.96 - ---------------------------------------------------------------------------------------------------------
9 The graph compares the cumulative total shareholder return on a $100 investment in the Company's Common Stock for the five years ended December 31, 1998, with the cumulative total return on $100 invested in each of (i) the Nasdaq National Market Index and (ii) the Scientific Instruments Group Index published by Media General Financial Services, Inc. (A listing of the companies comprising this index is available from the Company.). The graph assumes all investments were made at market value on December 31, 1993 and the reinvestment of all dividends. Compensation of Directors Each outside director is paid an annual fee of $12,000 and is reimbursed for expenses incurred in connection with attending Board meetings. In addition, each outside director is paid $1,000 for each Board meeting attended and $400 for each committee meeting attended, or $600 for the Committee Chairman. Also, each outside director receives annually, on January 1st, options for 4,000 shares of common stock which vest on the anniversary of the grant. Each new outside director receives options on 16,000 shares upon commencement of service as a director, which vest at the rate of 25% per year on each anniversary of the grant. Each director also receives $50,000 life insurance coverage. Employment Agreements The Company has entered into employment agreements with Messrs. Deuster, Cannon, Danielo, Hewitt, Phillippy and Spiegel providing for certain payments and benefits in the event their employment with the Company is terminated within two years of a change of control of the Company, unless such termination is as a result of death, disability or retirement of such officer or is a termination for cause. In such event, each of these officers may be entitled to a severance payment equal to twelve months of such officer's highest salary during the one- year period preceding termination plus a bonus payment equal to such officer's incentive compensation bonus paid under the Company's Incentive Plan, or other bonus plans, assuming 100% satisfaction of all performance goals. In addition, the officer would be entitled to the continuation of benefits under the Company's medical, dental and vision plans, and long-term disability insurance for two years, the removal of all restrictions on restricted stock held by the officer, the acceleration of vesting of all stock options, the payment of an amount equal to the difference between the exercise price and fair market price of stock options held by the officer and certain other benefits, including payment of an amount sufficient to offset any "excess parachute payment" excise tax payable by the officer pursuant to the provisions of the Internal Revenue Code or any comparable provision of state or foreign law. Retirement Agreement Effective January 1, 1997, the Company entered into a twelve-month consulting agreement with Mr. Schmidt pursuant to which Mr. Schmidt shall provide advice and consultation regarding strategic planning, management, financial analysis, product planning or other corporate matters. The agreement provides for the payment of $100,000 for the twelve-month term, payable quarterly, which agreement is renewable annually at the option of the Board of Directors for a period not to exceed five years. The Board has renewed such agreement for 1998 and 1999. In the event of a change in control of the Company (as defined in the agreement) while the agreement is in force, the term of the agreement shall automatically be extended to December 31, 2001. The Board renewed the agreement effective January 1, 1999 for a twelve-month period. In addition, the Company has agreed to pay for supplemental health care insurance for Mr. Schmidt for life. The Board also accelerated the vesting of a total of 33,750 unvested options held by Mr. Schmidt effective January 1, 1997. Indemnification of Officers and Directors The Company has entered into agreements (the "Indemnification Agreements") with each officer and director of the Company providing for contractual protection of certain rights of indemnification by the Company. The Indemnification Agreements provide for indemnification of officers and directors to the fullest extent permitted by its Articles of Incorporation, By- Laws and applicable law. They cover all fees, expenses, liabilities and losses (including attorney's fees, judgments, fines, and amounts paid in any settlement approved by the Company) actually and reasonably incurred in connection with any investigation, claim, action, suit or proceeding to which the officer or director is a party by reason of any action or inaction in the officer's or director's capacity as an officer or director of the Company or by reason of the fact that the officer or director is or was serving as a director, officer, employee, agent or fiduciary of the Company, or of any subsidiary or division, or is or was serving at the request of the Company as the Company's representative with respect to 10 another entity. Indemnification would not be available, however, for expenses and the payment of profits arising from the purchase and sale by the officer or director of securities in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended. COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934 Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors and executive officers and persons who own more than ten percent of a registered class of the Company's equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of Common Stock and other equity securities of the Company. Officers, directors and greater than ten percent stockholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. To the Company's knowledge, based solely on the review of copies of such reports furnished to the Company and written representations that no other reports were required, during the years ended December 31, 1998 and 1997, all Section 16(a) filing requirements applicable to the Company's officers, directors and greater than ten percent stockholders were complied with. REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION Committee The Compensation Committee of the Board of Directors is comprised entirely of non-employee, independent directors, none of whom have served as an executive officer of any entity for which any executive officer of the Company serves as a director or a member of its compensation committee. The Committee is responsible for reviewing, recommending and approving changes to the Company's compensation policies and programs, as applicable to the Company's officers and senior personnel. Compensation Policy and Objectives Our primary goal as members of the Compensation Committee is to assure that the compensation provided to executives is linked to the Company's business strategies and objectives, thereby aligning the financial interest of senior management with that of the stockholders. Beyond that, our priorities are to assure that the executive compensation programs enable the Company to attract, retain and motivate the high caliber executives required for the success of the business. These objectives are achieved through a variety of compensation programs, summarized below, which support the current and long-term performance of the business. The Company has not paid, and does not expect to pay, any qualifying compensation under Section 162(m) of the Internal Revenue Code. Base Salary Base salaries for executive officers are determined by evaluating the responsibilities of the position and comparing it with similar executive positions in other companies in the Company's industry. The Committee reviews compensation surveys of similar companies and surveys of national scope encompassing electronics and other high technology organizations. The Company's compensation levels are set at approximately the 50th percentile, or market average. Individual salaries vary based upon the individual's performance and contributions to Company success, time on the job and internal equity. Annual salary adjustments are determined by individual performance within an annual budget approved by the Committee. During February 1998, the Committee approved increases averaging 7.8% and ranging from 0% to 19.2% effective December 1, 1997. In February 1999, the Committee reviewed executive salaries and approved increases averaging 4.9% and ranging from 3.0% to 6.0% effective January 1, 1999. The CEO's salary increase is separately determined and approved by the Committee. Annual Incentives Officers have an opportunity to earn annual incentives ("Incentive Plan") based on performance targets. The Compensation Committee may also award bonuses in cases where such performance targets are not met if it determines that the circumstances warrant such action. During 1997, the Committee adopted a combined management measure (CMM) that 11 included operating income as the primary measure and also included a second measure related to working capital. The intent of the CMM is to provide an incentive for officers to control working capital. Two executive officers had earnings per share as an additional measure for their annual incentive. Additionally, each officer has a discretionary portion of the annual incentive linked to achievement of individual non-financial goals. The target incentives for each officer range from 40% to 100% of annual salary. For over-achievement of goals, officers can earn up to 200% of the target incentive. For 1998, the Compensation Committee awarded incentive payments based upon performance to specific goals established at the beginning of the year. Specifically, based upon the fact that the Company reached 96% of the target for earnings per share, did not meet the minimum target for certain CMM goals and reached 150% - 200% of other CMM goals, the Compensation Committee awarded incentive payments ranging from 13.5% to 111.5% of the target incentive to executive officers. Long-Term Incentives To further align the interests of stockholders and managers, the Company grants stock options and restricted stock to its employees, including officers and executive officers. Stock options for a total of 425,600 shares were granted to approximately 108 employees, including officers and executive officers, during 1998. The number of shares awarded is established based upon a recommendation by the employee's supervisor and approved by the Compensation Committee. The exercise price for stock options is the fair market value of the stock on the date of the grant. Options generally vest at a rate of 25% per year starting on the first anniversary date of the option grant. In November 1997, the Committee determined that it was desirable to establish greater management equity interest in the Company and decided that the grants to the executive officers for 1998 would be larger than normal with the intent that no additional options would be granted for a two-year period. Therefore, the Committee granted options for a total of 240,000 shares to six executive officers and 20,000 shares of restricted stock to two of such executive officers as of January 2, 1998. Restricted stock grants generally vest at a rate of 25% per year starting on the second anniversary of the restricted stock grant. No additional options have been granted to Executive Officers in 1999. Compensation of the Chief Executive Officer The Chief Executive Officer participates in the compensation program discussed above. His base salary is set, in the same way as other executive officers, as determined by comparable positions in companies of similar size and profitability to the Company in the marketplace. In February 1998, the Committee approved a 5.7% increase effective December 1, 1997. At its February 1999 meeting, the Compensation Committee approved a 5.4% increase effective January 1, 1999. Each year the Compensation Committee approves a performance based bonus plan for the Chief Executive Officer. For 1998, the incentive for Mr. Deuster was based on CMM and earnings per share targets and over-achievement incentives established prior to the beginning of the year. He also had a discretionary portion of the annual incentive linked to achievement of non-financial goals also determined prior to the beginning of the year. The Compensation Committee awarded an incentive payment totaling $160,000 based upon the fact that the Company reached 96% of the target for earnings per share and did not achieve the minimum target for his CMM measure and that Mr. Deuster had achieved the non- financial goals in the discretionary portion of the incentive. The Committee also awarded him options for 100,000 shares on January 2, 1998. In order to establish greater management equity interest in the Company, the Committee decided that option grants for 1998 for the Chief Executive Officer would be larger than normal with the intent of issuing no additional options for a two- year period. No additional options have been granted to him in 1999. Respectfully submitted, R. Jack Aplin, Chairman John T. Subak Notwithstanding anything to the contrary set forth in any of the Company's previous or future filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, that might incorporate by reference previous or future filings, including the Proxy Statement, in whole or in part, the preceding report and the Performance Graph on page 9 shall not be incorporated by reference into any such filings. 12 PROPOSAL TWO APPOINTMENT OF INDEPENDENT AUDITORS Ernst & Young LLP was selected to audit the financial statements of the Company as of December 31, 1998, and for the year then ended, and has been selected by the Board of Directors to audit the financial statements of the Company for 1999. Nevada General Corporation Law does not require the approval of the selection of the independent auditors by the Company's stockholders, but in view of the importance of the financial statements to stockholders, the Board of Directors deems it desirable that stockholders pass upon the selection of auditors. The Board of Directors recommends a vote "FOR" this proposal. Proxies received in response to this solicitation will be voted in favor of the approval of such firm unless otherwise specified in the Proxy. A representative of Ernst & Young LLP will be present at the Annual Meeting and will be given the opportunity to make a statement if he so desires and will be available to respond to appropriate questions. If this proposal is not approved the Audit Committee shall reconsider the proposal and submit its recommendation to the Board of Directors. STOCKHOLDER PROPOSALS Any stockholder desiring to submit a proposal for action at the 2000 Annual Meeting of Stockholders and presentation in the Company's proxy statement with respect to such meeting should arrange for such proposal to be delivered to the Company's offices, 1791 Deere Avenue, Irvine, California 92606, addressed to Robert C. Hewitt, no later than December 18, 1999 in order to be considered for inclusion in the Company's proxy statement relating to the meeting. Matters pertaining to such proposals, including the number and length thereof, eligibility of persons entitled to have such proposals included and other aspects are regulated by the Securities Exchange Act of 1934, Rules and Regulations of the Securities and Exchange Commission and other laws and regulations to which interested persons should refer. The Company anticipates that its next annual meeting will be held in May 2000. On May 21, 1998, the Securities and Exchange Commission adopted an amendment to Rule 14a-4, as promulgated under the Securities and Exchange Act of 1934, as amended. The amendment to Rule 14a-4(c)(1) governs the Company's use of its discretionary proxy voting authority with respect to a stockholder proposal which is not addressed in the Company's proxy statement. The new amendment provides that if a proponent of a proposal fails to notify the Company at least 45 days prior to the month and day of mailing of the prior year's proxy statement, then the Company will be allowed to use its discretionary voting authority when the proposal is raised at the meeting, without any discussion of the matter in the proxy statement. With respect to the Company's 2000 Annual Meeting of Stockholders, if the Company is not provided notice of a stockholder proposal, which the stockholder has not previously sought to include in the Company's proxy statement, by March 2, 2000, the Company will be allowed to use its voting authority as described above. OTHER MATTERS The Company has enclosed with this Proxy Statement a copy of the Annual Report to Stockholders for the year ended December 31, 1998. Management knows of no other matters to come before the meeting. If, however, any other matter properly comes before the meeting, the persons named in the enclosed Proxy form will vote in accordance with their judgment upon such matter. Stockholders who do not expect to attend in person are urged to promptly execute and return the enclosed Proxy. By order of the Board of Directors /s/ Robert C. Hewitt Robert C. Hewitt Secretary Irvine, California April 16, 1999 13 PROXY NEWPORT CORPORATION 1791 Deere Avenue, Irvine, California 92606 Proxy for Annual Meeting of Stockholders - May 20, 1999 (THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS) The undersigned hereby appoint ROBERT G. DEUSTER and ROBERT C. HEWITT, and each of them, as proxy or proxies for the undersigned, with full power of substitution, who may act by unanimous vote of said proxies or their substitutes as shall be present at the meeting, or, if only one be present, then the one shall have all the powers hereunder, to represent and to vote, as designated on the other side (If no direction is made, this Proxy will be voted FOR Proposals 1 and 2), all of the shares of Newport Corporation (the "Company") standing in the name of the undersigned on April 2, 1999, at the Annual Meeting of Stockholders of the Company to be held on Thursday, May 20, 1999, at 10:00 a.m. at the Company's Corporate Headquarters, 1791 Deere Avenue, Irvine, California 92606, and any adjournment thereof. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting. (Continued, and to be marked, dated and signed, on the other side) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Please mark your votes as indicated in this example The Board of Directors recommends a vote FOR Items 1 and 2. WITHHELD FOR FOR ALL FOR AGAINST ABSTAIN ITEM 1.- ELECTION OF DIRECTORS ITEM 2 - APPOINTMENT NOMINEES: OF INDEPENDENT CLASS III: KENNETH F. POTASHNER AUDITORS C. KUMAR PATEL WITHHELD FOR: (Write that nominee's name in the space provided below). _________________________________________
Signature(s) ________________________________________ Date _____________ NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized person. - -------------------------------------------------------------------------------- 2 -----END PRIVACY-ENHANCED MESSAGE-----