SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]/X/
Filed by a Partyparty 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)/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X]/X/ Definitive Proxy Statement
[_]/ / Definitive Additional Materials
[_]/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
WATERS CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X]/X/ No fee required
[_]/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)(1)
and 0-11.0-11
(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(set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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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.
(1) Amount Previously Paid:
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(4) Date Filed:
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Notes:------------------------------------------------------------------------
WATERS[LOGO]
April 1, 19981999
Dear Stockholder:
On behalf of the Board of Directors, I cordially invite you to attend the
Annual Meeting of Stockholders of Waters Corporation (the("Waters" or the "Company")
on May 12,
19984, 1999 at 11:00 o'clock a.m., eastern standard time. The meeting will be
held at Waters Corporation, 34 Maple Street, Milford, Massachusetts 01757.
The matters scheduled to be considered at the meeting are (i) the election
of directors of the Company, (ii) the ratification of auditors for the Company,
and
(iii) the reservation of an additional two million sharesamendment of the Company's Certificate of Incorporation to increase
the number of shares of common stock for issuance uponwhich the exerciseCompany is authorized to issue
from 50,000,000 to 100,000,000 shares, and (iv) the approval of stock options granted underthe material
terms of the Company's Long-Term PerformanceManagement Incentive Plan for senior executives of the
Company.Plan. These matters are more fully
explained in the attached Proxy Statement which you are encouraged to read.
The Board of Directors values and encourages stockholder participation. It
is important that your shares be represented, whether or not you plan to attend
the meeting. Please take a moment to sign, date and return your Proxy in the
envelope provided even if you plan to attend the meeting.
We hope you will be able to attend the meeting.
Sincerely,
/s/[LOGO]
Douglas A. Berthiaume
Douglas A. Berthiaume
Chairman, President and
Chief Executive OfficerCHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
WATERS[LOGO]
WATERS CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the Annual Meeting of Stockholders of Waters
Corporation (the("Waters" or the "Company") will be held at Waters Corporation, 34
Maple Street, Milford, Massachusetts 01757 on May 12, 1998,4, 1999 at 11:00 o'clock a.m.,
eastern standard time, for the following purposes:
1. To elect directors to serve for the ensuing year and until their
successors are elected;
2. To ratify the selection of the firm of Coopers & Lybrand L.L.P.,PricewaterhouseCoopers LLP,
the present auditors, as auditors for the fiscal year of 1998;ending December 31,
1999;
3. To ratifyapprove an amendment to the reservationCompany's Certificate of
an additional two millionIncorporation to increase the number of shares of common stock, $.01 par
value per share, which the Company is authorized to issue from 50,000,000 to
100,000,000 shares;
4. To approve the material terms of the Company's common stock for issuance upon the exercise of stock options
granted under the Company's Long-Term PerformanceManagement Incentive
Plan for senior
executives of the Company; and
4.5. To consider and act upon any other matters which may properly come
before the meeting or any adjournment thereof.
In accordance with the provisions of the Company's bylaws, the Board of
Directors has fixed the close of business on March 23, 199825, 1999 as the record date
for the determination of the holders of Common Stock entitled to notice of and
to vote at the Annual Meeting.
By order of the Board of Directors
/S/[LOGO]
Douglas A. Berthiaume
Douglas A. Berthiaume
Chairman, President and
Chief Executive OfficerCHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
Milford, Massachusetts
April 1, 19981999
WATERS CORPORATION
34 MAPLE STREET
MILFORD, MASSACHUSETTS 01757
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 12, 1998,4, 1999, 11:00 O'CLOCK A.M.
The Proxy is solicited by the Board of Directors of Waters Corporation
(the("Waters" or the "Company") for use at the 19981999 Annual Meeting of Stockholders
to be held on May 12, 19984, 1999 at 11:00 o'clock a.m. at the Company's headquarters
located at 34 Maple Street, Milford, Massachusetts, 01757. Solicitation of the
Proxy may be made through officers and regular employees of the Company by
telephone or by oral communications with some stockholders following the
original solicitation period. No additional compensation will be paid to such
officers and regular employees for Proxy solicitation. Corporate Investor
Communications, Inc. has been hired by the Company to do a broker solicitation
for a fee of $4,500.00$4,000 plus reasonable out-of-pocket expenses. Expenses incurred in
the solicitation of Proxies will be borne by the Company.
VOTING MATTERS
The representation in person or by proxy of a majority of the outstanding
shares of common stock of the Company, par value $.01 per share (the "Common
Stock"), entitled to a vote at the meeting is necessary to provide a quorum for
the transaction of business at the meeting. Shares can only be voted if the
stockholder is present in person or is represented by a properly signed proxy (a
"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. All signed and
returned Proxies will be counted towards establishing a quorum for the meeting,
regardless of how the shares are voted.
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 in favor of the proposals made by the Board
of Directors, and as the individuals named as Proxy holders on the Proxy deem
advisable on all other matters as may properly come before the meeting.
For all matters to be voted upon at the meeting, the affirmative vote of a
majority of shares present in person or represented by Proxy, and entitled to
vote on the matter, is necessary for approval. Withholding authority to vote
or an instruction to abstain from voting on a proposal will be treated as
shares present and entitled to vote and, for purposes of determining the
outcome of the vote, will have the same effect as a vote against the proposal.
A broker "non-vote" occurs when a nominee holding shares for a beneficial
holder does not have discretionary voting power and does not receive voting
instructions from the beneficial owner. Broker "non-votes" will not be treated
as shares present and entitled to vote on a voting matter and will have no
effect on the outcome of the vote.
Any stockholder giving the enclosed Proxy has the power to revoke such Proxy
prior to its exercise either by voting by ballot at the meeting, by executing a
later-dated Proxy or by delivering a signed written notice of the revocation to
the office of the Secretary of the Company before the meeting begins. The Proxy
will be voted at the meeting if the signer of the Proxy was a stockholder of
record on March 23, 199825, 1999 (the "Record Date").
On the Record Date, there were 29,790,22730,592,284 shares of Common Stock outstanding
and entitled to vote at the meeting. Each outstanding share of Common Stock is
entitled to one vote. This Proxy Statement is first being sent to the
stockholders on or about April 1, 1998.1999. A list of the stockholders entitled to
vote at the meeting will be available for inspection at the meeting for purposes
relating to the meeting.
1
MATTERS TO BE ACTED UPON
1. ELECTION OF DIRECTORS
The Board of Directors recommends that the stockholders vote FOR each
nominee for director set forth below. Eight directors are to be elected at the
meeting, each to hold office until his successor is elected and qualified or
until his earlier resignation, death or removal. Each nominee listed below is
currently a director of the Company. It is intended that the Proxies in the form
enclosed with this Proxy Statement will be voted for the nominees set forth
below unless stockholders specify to the contrary in their Proxies or
specifically abstain from voting on this matter.
The following information pertains to the nominees, their principal
occupations for the preceding five-year period, certain directorships and their
ages as of April 1, 1998:1999:
Douglas A. Berthiaume, 49,50, has served as Chairman of the Board of Directors
of the Company since February 1996 and has served as President, Chief Executive
Officer and a Director of the Company since August 1994. From 1990 to 1994, Mr.
Berthiaume served as President of the Waters Chromatography Division of
Millipore (the "Predecessor").Corporation, the predecessor business of the Company which was
purchased in 1994. Mr. Berthiaume is a Director of the Genzyme Corporation and the Chairman of the Analytical and Life Science
Systems Association.Corporation.
Joshua Bekenstein, 39,40, has served as a Director of the Company since August
1994. He has been a Managing Director of Bain Capital, Inc. ("Bain") since
January 1993 and a General Partner of Bain Venture Capital since its inception
in 1987. Mr. Bekenstein is a Director of Stage Stores Inc.,Sealy Corporation, Totes Inc., Small
Fry Snack Foods, Inc. and
Bright Horizons Children's Center,Family Solutions, Inc.
Michael J. Berendt, Ph.D., 49,50, has served as a Director of the Company since
March 1998 pending election by the stockholders at an annual meeting.1998. Since November 1996, Dr. Berendt has served as Senior Vice
President, Pharmaceutical Research of Bayer Corporation, Pharmaceutical
Division. From January 1996 to November 1996, Dr. Berendt served as Vice
President, Institute for Bone & Joint Disorders and Cancer, Bayer Corporation,
Pharmaceutical Division. From October 1993 to January 1996, Dr. Berendt served
as Director, Institute for Bone & Joint Disorders and Cancer, Bayer Corporation,
Pharmaceutical Division. Prior to joining Bayer, Dr. Berendt served as Group
Director of Drug Discovery at Pfizer, Inc., and was responsible for immunology
and infectious diseases research. Dr. Berendt is a member of the Board of
Directors of Onyx Pharmaceuticals, Inc., Myriad Genetics, Inc., and
Connecticut's Regional Growth Partnership.
Philip Caldwell, 78,79, has served as a Director of the Company since August
1994. Mr. Caldwell spent 32 years at Ford Motor Company where he served as
Chairman of the Board of Directors and Chief Executive Officer from 1980 to 1985
and as a Director from 1973 to 1990. He served as a Director and Senior Managing
Director of Lehman Brothers Inc. and its predecessor, Shearson Lehman Brothers
Holdings, Inc. from 1985 to February 1998. Mr. Caldwell is Chairman
of Mettler-Toledo International Inc. and a Director of Zurich Holding Company
of America, Inc.,
American Guarantee & Liability Insurance Company, Mettler-Toledo International
Inc., The Mexico Fund, and Russell Reynolds Associates, Inc. and Zurich Holding
Company of America, Inc. Mr. Caldwell has also served as a Director of The Chase
Manhattan Corporation, The Chase Manhattan Bank, N.A., Digital Equipment
Corporation, Federated Department Stores, Inc., Kellogg Company, CasTech
Aluminum Group, Inc., Specialty Coatings International, Inc., and Zurich
Reinsurance Centre, Inc.,
Edward Conard, 41,42, has served as a Director of the Company since August
1994. Mr. Conard has been a Managing Director of Bain since March 1993. Mr.
Conard was previously a Managing Director of Wasserstein Perella and Company, an
investment banking firm that specializes in mergers and acquisitions, and a Vice
President of Bain & Company heading up the firm's operations practice area. Mr.
Conard is a Director of Medical Specialties Group, Inc., Details, Inc., Alliance
Laundry, Inc., and US Synthetics, Inc.
Laurie H. Glimcher, M.D., 46,47, has served as a Director of the Company since
January 1998 pending election by the stockholders at an annual meeting.1998. Dr. Glimcher has been a Professor of Immunology and Medicine at
the Harvard School of Public Health and Harvard Medical School since 1990. Dr.
Glimcher is a Director of Bristol-Myers Squibb Company.
2
William J. Miller, 51,52, has served as a Director of the Company since January
1998 pending election by the stockholders at an annual meeting.1998. Since April 1996, Mr. Miller has served as Chief Executive Officer and
Chairman of the Board of Avid Corporation and since September 1996, he has
served as President. From March 1992 to September 1995, Mr. Miller served as
Chief Executive Officer of Quantum Corporation. From May 1992, Mr. Miller served
as a member of the Board of Directors of Quantum Corporation and from September
1993 to August 1995, he served as Chairman of the Board of Directors. From 1981
to March 1992, he served in various positions at Control Data Corporation, most
recently as Executive Vice President and President, Information Services. Mr.
Miller is a Director of NVidia Corporation and Innovex, Inc.
Thomas P. Salice, 38,39, has served as a Director of the Company since July
1994. Mr. Salice is President and a Managing Director of AEA Investors Inc. ("AEA") and
has served with AEA since MayJune 1989. Mr. Salice is a Director of Mettler-Toledo
International, Inc. and Manchester Tank & Equipment Company.
REQUIRED VOTE; RECOMMENDATION OF THE BOARD OF DIRECTORS
With respect to the election of directors of the Company, the affirmative
vote of a plurality of shares present in person or represented by Proxy, and
entitled to vote on the matter, is necessary for the election of each of the
nominees for director listed above. Withholding authority to vote or an
instruction to abstain from voting for the election of a nominee will be treated
as shares present and entitled to vote and, for purposes of determining the
outcome of the vote, will have the same effect as a vote against election of
such nominee. A broker "non-vote" occurs when a broker, dealer, voting trustee,
bank, association or other entity that exercises fiduciary powers holding shares
for a beneficial owner does not have discretionary voting power and does not
receive voting instructions from the beneficial owner. Broker "non-votes" will
not be treated as shares present and entitled to vote on the election of
directors of the Company and will have no effect on the outcome of the vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH NOMINEE FOR DIRECTOR SET
FORTH ABOVE.
2. RATIFICATION OF AUDITORS
The Board of Directors recommends that the stockholders vote FOR the
ratification of the firm of Coopers & Lybrand L.L.P.PricewaterhouseCoopers LLP, the present auditors of
the Company, as the auditors to audit the financial statements of the Company
and certain of its subsidiaries for the fiscal year ending December 31, 1998.1999. It
is intended that the Proxies in the form enclosed with this Proxy Statement will
be voted for such firm unless stockholders specify to the contrary in their
Proxies or specifically abstain from voting on this matter.
Representatives of Coopers & Lybrand L.L.P.PricewaterhouseCoopers LLP are expected to be present at
the Annual Meeting of Stockholders. They will have the opportunity to make
statements if they desire to do so and will be available to respond to
appropriate questions.
3. RESERVATIONREQUIRED VOTE; RECOMMENDATION OF SHARES
The Board of Directors recommends that the stockholders vote FORTHE BOARD OF DIRECTORS
With respect to the ratification of the reservationselection of PricewaterhouseCoopers
as auditors for the Company, the affirmative vote of a majority of shares
present in person or represented by Proxy, and entitled to vote on the matter,
is necessary for approval. Withholding authority to vote or an instruction to
abstain from voting on the proposal will be treated as shares present and
entitled to vote and, for purposes of determining the outcome of the vote, will
have the same effect as a vote against the proposal. Broker "non-votes" will not
be treated as shares present and entitled to vote on the proposal and will have
no effect on the outcome of the vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE FIRM
OF PRICEWATERHOUSECOOPERS LLP AS THE AUDITORS FOR THE FISCAL YEAR ENDING
DECEMBER 31, 1999.
3
3. APPROVAL OF THE AMENDMENT TO THE CERTIFICATE OF INCORPORATION
GENERAL
The Company's Second Amended and Restated Certificate of Incorporation, as
currently in effect (the "Reservation""Certificate"), provides that the Company's authorized
capital stock shall consist of an additional two
million50,000,000 shares of the Common Stock, $.01 par value
per share (the "Common Stock"), and 5,000,000 shares of Preferred Stock. On
February 25, 1999, the Company's Board of Directors approved an amendment to the
Certificate (the "Amendment") in order to increase the number of shares of
Common Stock authorized for issuance under the Certificate by 50,000,000 shares
to a total of 100,000,000 shares. The text of the Amendment is set forth as
Exhibit A to this Proxy Statement. On February 25, 1999, the Board of Directors
also approved, contingent upon stockholder approval of the Amendment, a
two-for-one stock split (to be effected in the form of a stock dividend), to be
paid on June 10, 1999 to stockholders of record on May 27, 1999 (the "Stock
Split"). If the Amendment is adopted, it will become effective upon the exercisefiling
of stockthe Amendment with the Delaware Secretary of State.
STOCK SPLIT
In connection with the Stock Split, each holder of the Company's Common
Stock as of May 27, 1999 would receive one additional share for each share held.
In addition, the number of shares of Common Stock reserved for issuance or
subject to outstanding options granted under the Company's 1994 Amended and Restated
Stock Option Plan, 1996 Long-Term Performance Incentive Plan, (the
"Plan"1996 Employee
Stock Purchase Plan, 1996 Non-Employee Director Deferred Compensation Plan and
1996 Non-Employee Directors Stock Option Plan (collectively, the "Employee Stock
Plans") for senior executiveswould increase by 100% (and the exercise prices of outstanding options
would correspondingly decrease by 50%). Stockholders are not being asked to vote
on the Company.
The Plan provides forStock Split, but the granting to employees and other key individuals
who perform services forStock Split will not take place unless the
Company and its subsidiaries ("Participants") the
following typesauthorized number of incentive awards: stock options, stock appreciation rights,
restricted stock, performance units, performance grants and other types of
awards that the Compensation Committee of the Board of Directors deems to be
consistent with the purposes of the Plan. In 1996, the Plan was approved, and
an aggregate of 1,000,000 shares of Common Stock wasis increased as described in this
proposal. If the authorized number of shares of Common Stock is not increased,
the Company will not have enough authorized but unissued shares of Common Stock
to effect the Stock Split.
CURRENT USE OF SHARES
As of the Record Date, the Company had approximately 30,592,284 shares of
Common Stock outstanding and approximately 7,013,228 shares of Common Stock
reserved for issuance under the Plan.Company's Employee Stock Plans, of which,
approximately 4,994,754 shares are covered by outstanding options and
approximately 2,018,474 shares are available for grant or purchase. Therefore,
the Company's total share requirement prior to the Stock Split is 37,605,512
shares (the "Share Requirement"). In the event stockholder approval of the
proposed Amendment is obtained, following the Stock Split, the Share Requirement
would increase to 75,211,024 shares, and, accordingly, the Company would have a
total of 100,000,000 authorized and 24,788,976 unissued shares of Common Stock
remaining available pursuant to its amended Certificate.
PURPOSE OF THE PROPOSED AMENDMENT
The Board of Directors believes that it is in the Company's best interest to
declare the Stock Split in order to lower the per share market price of the
Company's Common Stock, increase its trading activity and broaden its
marketability. The proposed Amendment would provide the Company with a
sufficient number of authorized but unissued shares of Common Stock to effect
the Stock Split and accomplish other proper corporate purposes that may be
authorized in the future. Such future activities may include, without
limitation, raising equity capital, adopting additional employee stock plans or
reserving additional shares of Common Stock for issuance under its existing
Employee Stock Plans, and making acquisitions through the issuance of Common
Stock. Other than with respect to the Stock Split, the Board of Directors has no
4
immediate plans, understanding, agreements, or commitments to issue additional
shares of Common Stock for any purpose.
The Board of Directors believes that the proposed increase in the authorized
Common Stock will make a sufficient number of shares available, taking into
account the Stock Split, should the Company decide to use its shares for one or
more of such previously mentioned purposes or otherwise. The Company reserves
the right to seek a further increase in authorized shares from time to time in
the future as considered appropriate by the Board of Directors.
POSSIBLE EFFECTS OF THE PROPOSED AMENDMENT
If the Reservationstockholders approve the proposed Amendment, the Board of Directors
may cause the issuance of additional shares of Common Stock without further vote
of the stockholders except as provided under Delaware corporate law or under the
rules of any national securities exchange on which shares of Common Stock of the
Company are then listed. Under the Company's Certificate, the Company's
stockholders do not have preemptive rights to subscribe to additional securities
which may be issued by the Company, which means that current stockholders do not
have a prior right to purchase any new issue of capital stock of the Company in
order to maintain their proportionate ownership of the Company's Common Stock.
In addition, if the Board of Directors elects to issue additional shares of
Common Stock, such issuance could have a dilutive effect on the earnings per
share, voting power and shareholdings of current stockholders.
In addition to the corporate purposes discussed above, the proposed
Amendment could, under certain circumstances, have an anti-takeover effect,
although this is ratified, annot the intent of the Board of Directors. For example, it may
be possible for the Board of Directors to delay or impede a takeover or transfer
of control of the Company by causing such additional 2,000,000authorized shares of Common
Stock to be issued to holders who might side with the Board in opposing a
takeover bid that the Board of Directors determines is not in the best interests
of the Company and its stockholders. The Amendment therefore may have the effect
of discouraging unsolicited takeover attempts. By potentially discouraging
initiation of any such unsolicited takeover attempt, the proposed Amendment may
limit the opportunity for the Company's stockholders to dispose of their shares
of Common Stock at the higher price generally available in takeover attempts or
that may be available under a merger proposal. The proposed Amendment may have
the effect of permitting the Company's current management, including the current
Board of Directors, to retain its position, and place it in a better position to
resist changes that stockholders may wish to make if they are dissatisfied with
the conduct of the Company's business. However, the Board of Directors is not
aware of any attempt to take control of the Company and the Board of Directors
has not presented this proposal with the intent that it be utilized as a type of
anti-takeover device.
EFFECT OF THE STOCK SPLIT
In the event that the proposed Amendment is approved by the stockholders, no
change in total stockholders equity will result from the Stock Split. The amount
of capital represented by the outstanding shares of Common Stock will be
reservedincreased by $.01 for issuanceeach share issued to effect the Stock Split and the
Company's Additional Paid-In Capital will be reduced by the same amount. After
the Stock Split, purchases and sales of Common Stock by an individual
stockholder may be subject to higher brokerage charges and applicable stock
transfer taxes than on a pre-split transaction of equivalent market value, due
to the greater number of shares of Common Stock involved after the Stock Split.
In addition, the Company will incur certain expenses in connection with the
Stock Split, such as the cost of preparing and delivering to stockholders new
certificates representing additional shares. The Company will receive no
additional consideration in connection with the Stock Split.
5
CERTAIN FEDERAL TAX CONSEQUENCES OF THE STOCK SPLIT
The following is a brief summary of certain federal tax consequences of the
Stock Split. It is not a complete discussion of the possible federal income tax
consequences and does not address any state, local or foreign tax consequences.
Stockholders are urged to consult their tax advisers. The Company has been
advised that, based on current federal tax law, in the event that the Stock
Split is approved and consummated, the Stock Split should not result in any gain
or loss to the Company or the stockholders for federal income tax purposes. The
tax basis of every share of Common Stock held before the Stock Split will be
allocated between the two shares of Common Stock held as a result of the Stock
Split, and the holding period of the new shares of Common Stock will include the
holding period of the shares with respect to which they were issued.
REQUIRED VOTE; RECOMMENDATION OF THE BOARD OF DIRECTORS
With respect to the amendment of the Company's Certificate, the affirmative
vote of a majority of shares outstanding as of the Record Date, and entitled to
vote on the matter, is necessary for approval. Withholding authority to vote or
an instruction to abstain from voting on the proposal will be treated as shares
present and entitled to vote and, for purposes of determining the outcome of the
vote, will have the same effect as a vote against the proposal. Broker
"non-votes" will not be treated as shares present and entitled to vote on a
voting matter, but will have the same effect as a vote against the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE AMENDMENT TO THE
COMPANY'S SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION.
4. APPROVAL OF THE MANAGEMENT INCENTIVE PLAN
GENERAL
Section 162(m) of the Internal Revenue Code ("Section 162(m)") generally
limits the tax deduction available to public companies for annual compensation
paid to senior executives in excess of $1 million unless the compensation
qualifies as "performance-based compensation." In order for compensation to
qualify as "performance-based compensation", it must meet the following
criteria: (i) such compensation must be payable solely on account of the
attainment of one or more pre-established, objective performance goals; (ii) the
performance goals under which such compensation is paid must be established by a
compensation committee composed solely of two or more "outside directors"; (iii)
the material terms of the performance goals under which such compensation is
paid must be disclosed to and approved by the stockholders before payment; and
(iv) the compensation committee must certify that the performance goals have
been satisfied before payment. The Company's Management Incentive Plan (the
"Plan") satisfies by its terms the requirement set forth in clause (i) above,
and the Compensation Committee intends to satisfy the requirements set forth in
clauses (ii) and (iv) above. Accordingly, in order to ensure compliance with
Section 162(m), the Company's stockholders are asked to approve the material
terms of the Plan described below as such terms apply to the senior executives
of the Company. Failure of the stockholders to approve the material terms of the
Plan will not prevent the Company from making incentive payments under the Plan.Plan
in the event that the Company achieves the Performance Objectives. However, the
tax deduction for such incentive payments will not be available to the Company
to the extent that the annual compensation paid to each senior executive exceeds
$1 million.
PURPOSE
The Participantspurpose of the Plan is to promote the interests of the Company and its
stockholders by providing certain key employees of the Company with an incentive
to (i) join and/or remain in the service of the Company and (ii) maintain and
enhance the long-term performance and profitability of the Company.
6
ADMINISTRATION
With respect to the Company's senior executives, the Plan is administered by
the Compensation Committee. The stockholders are chosenbeing asked to approve the
material terms of the Plan only as such terms pertain to such senior executives
(each, a "Participant"). Within the first ninety days of each fiscal year (each
a "Plan Year"), the Compensation Committee establishes the performance
objectives on which each Participant's incentive payment is based (the
"Performance Objectives"). At the conclusion of each Plan Year, the Compensation
Committee reviews the audited results of the Company's performance against each
Participant's Performance Objectives and determines the incentive payment earned
by each Participant.
DURATION
The Plan may be modified or terminated at any time at the discretion of the
Board of Directors. To qualify under Section 162(m) of the Internal Revenue
Code, any material modifications of the Plan would require stockholder approval.
DETERMINATION OF INCENTIVE PAYMENT
Within the first ninety days of each Plan Year, the Compensation Committee
establishes a schedule of potential incentive payments for each Participant
which are tied to the Company's achievement of certain Performance Objectives.
Each Participant becomes eligible to receive an incentive payment if the Company
achieves 90% of such Participant's Performance Objectives. The amount of the
incentive payment increases as the Company achieves a greater percentage of such
Participant's Performance Objectives. The maximum incentive payment under the
Plan may not exceed 300% of the Participant's base salary.
BUSINESS CRITERIA ON WHICH THE PERFORMANCE OBJECTIVES ARE BASED
The business criteria on which each Participant's Performance Objectives are
based are determined by the Compensation Committee each Plan Year. Such business
criteria may in the future include, but are not limited to, objectively
verifiable growth in the Company's financial performance, or objectively
verifiable improvement in the Company's income statement or balance sheet
position determined based on the Company's audited financial statements and currently
number approximately 150.
4.its
financial records at the end of each Plan Year.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES UNDER THE PLAN
The following is a brief summary of certain federal income tax consequences
of the payment and receipt of an incentive payment under the Plan. It is not a
complete discussion of the possible federal income tax consequences and does not
address any state, local or foreign tax consequences. In the tax year during
which each Participant receives an incentive payment under the Plan, such
Participant recognizes ordinary income in the amount of such incentive payment.
The Company generally will have a deduction in the same amount as the ordinary
income recognized by each Participant in the Company's tax year in which such
incentive payment is accrued by the Company.
REQUIRED VOTE; RECOMMENDATION OF THE BOARD OF DIRECTORS
With respect to the approval of the material terms of the Plan, the
affirmative vote of a majority of shares present in person or represented by
Proxy, and entitled to vote on the matter, is necessary for approval.
Withholding authority to vote or an instruction to abstain from voting on the
proposal will be treated as shares present and entitled to vote and, for
purposes of determining the outcome of the vote, will have the same effect as a
vote against the proposal. Broker "non-votes" will not be treated as shares
present and entitled to vote on the proposal and will have no effect on the
outcome of the vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE MATERIAL
TERMS OF THE COMPANY'S MANAGEMENT INCENTIVE PLAN.
7
5. OTHER BUSINESS
The Board of Directors does not know of any other business to be presented
at the Annual Meeting of Stockholders. If any other matters properly come before
the meeting, however, it is intended that the persons named in the enclosed
form of Proxy will vote said Proxy in accordance with their best judgment.
3
DIRECTORS MEETINGS AND COMPENSATION
DIRECTORS MEETINGS
The Board of Directors held five meetings during the year ended December 31,
1997.1998. The Audit Committee, which currently consists of Messrs. Bekenstein,
Caldwell and Salice, oversees the activities of the Company's independent
auditors and recommends the engagement of auditors. The Compensation Committee,
which currently consists of Messrs. Conard, Salice and Salice,Miller, approves the
compensation of executives of the Company, makes recommendations to the Board of
Directors with respect to standards for setting compensation levels and
administers the Company's incentive plans. There is no standing nominating
committee. During fiscal year 1997, all1998, each of the Company's directors participated
in excess of 75% of the aggregate of the meetings of the Board of Directors and
the meetings of committees of the Board of Directors of which such director was
a member. During fiscal year 1997,1998, the Compensation Committee met four times and
the Audit Committee each met two times.
Marc Wolpow resigned on December 19, 1997 as a Director of the Company.
Pursuant to the provisions of the Company's Bylaws, the Board of Directors
resolved to fix the number of members of the Board of Directors at eight and
elected Michael J. Berendt, Ph.D, Laurie H. Glimcher, M.D. and William J.
Miller to fill the vacant director positions until such time as they or their
successors are elected by the stockholders at an annual meeting.
COMPENSATION OF DIRECTORS
Directors who are full-time employees of the Company receive no additional
compensation for serving on the Board of Directors or its committees. OutsideIn 1998,
outside Directors each received a retainer of $17,500 for the year, $1,000 for
each Board meeting attended, $750 for each committee meeting attended and an
annual grant of 1,000 options under the Company's 1996 Non-Employee Director
Stock Option Plan. In 1999, outside Directors each will receive a retainer of
$17,500 per$20,000 for the year (other than the Chairman who, if an Outsideoutside Director, will
receive an annual fee of $30,000), $1,000 for each Board meeting attended, $750
for each committee meeting that they attendattended and an annual grant of 1,000 stock options
under the Company's 1996 Non-Employee Director Stock Option Plan. All directors are
reimbursed for expenses incurred in connection with their attendance at
meetings.
48
MANAGEMENT COMPENSATION
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table discloses, for the fiscal years
indicated, individual compensation information on Mr. Berthiaume and the four
other most highly compensated executive officers (collectively, the "named
executives") who were serving as executive officers at the end of fiscal year
1997.1998.
ANNUAL COMPENSATION
ANNUAL COMPENSATION
---------------------------
SECURITIES
UNDERLYING OPTIONS ALL OTHER
SALARY BONUS OPTIONS COMPENSATION
NAME AND PRINCIPAL SALARY BONUS (#) OF COMPENSATION POSITION FISCAL YEAR ($) ($) SHARES(#) ($)
- --------------------------------------------------------------- ------------- --------- --------- ----------- ------- ------- ---------- -------------------------
Douglas A. Berthiaume... 1997 400,000 490,000(1) 45,000 29,484(2)Berthiaume........................ 1998 450,008 645,750(1) 50,000 36,179(2)(3)(4)
Chairman, President and Chief 1997 400,000 490,000(5) 45,000 29,484(7)
Executive Officer 1996 299,990 352,200(5)352,200(6) 38,500 22,696
Chief Executive Officer 1995 275,002 548,414(6)(7) -- 26,91422,696(7)
Arthur G. Caputo........ 1997 184,990 200,836(1) 27,000 12,967(2)Caputo............................. 1998 210,002 272,160(1) 30,000 15,902(2)(3)(4)
Senior Vice President, 1996 160,004 164,480(5) 22,000 11,4461997 184,990 200,836(5) 27,000 12,967(7)
Sales and Marketing 1995 149,994 345,714(6)(7) -- 15,6851996 160,004 164,480(6) 22,000 11,446(7)
Thomas W. Feller........ 1997 184,990 200,836(1) 27,000 15,310(2)Feller............................. 1998 199,992 259,200(1) 30,000 17,511(2)(3)(4)
Senior Vice President, Operations 1997 184,990 200,836(5) 27,000 15,310(7)
1996 160,004 164,480(5)164,480(6) 22,000 13,655
1995 155,012 352,714(6)(7) -- 16,23613,655(7)
John R. Nelson.......... 1997 190,008 206,264(1) 27,000 12,712(2)Nelson............................... 1998 220,012 285,120(1) 30,000 16,441(2)(3)(4)
Senior Vice President, Operations 1997 190,008 206,264(5) 27,000 12,712(7)
Research and Development 1996 164,996 169,620(5)169,620(6) 22,000 11,053
Research and Develop-
ment 1995 160,004 359,714(6)(7) -- 18,08611,053(7)
Philip S. Taymor........ 1997 184,990 200,836(1) 27,000 12,289(2)Taymor............................. 1998 210,002 272,160(1) 30,000 15,307(2)(3)(4)
Senior Vice President, Finance and 1996 160,004 164,480(5) 22,000 10,5821997 184,990 200,836(5) 27,000 12,289(7)
Administration and Chief Financial 1995 149,994 395,714(6)(7) -- 16,7991996 160,004 164,480(6) 22,000 10,582(7)
Officer
- --------------------------------
(1) Reflects bonus earned under the Company's Pay for PerformanceManagement Incentive Plan in 19971998
which was paid in 1998.1999.
(2) Includes amounts contributed for the benefit of the named executive under
the Waters 401(k) Restoration Plan in 19971998 as follows: Mr. Berthiaume
$22,131,$28,304, Mr. Caputo $6,890,$9,803, Mr. Feller $6,844,$9,045, Mr. Nelson $7,227$10,492 and Mr.
Taymor $6,890.$9,803.
(3) Includes amounts contributed for the benefit of the named executive under
the Waters Employee Investment Plan in 19971998 as follows: Mr. Berthiaume
$4,569, Mr. Caputo $4,685,$4,662, Mr. Feller $4,731, Mr. Nelson $4,662 and Mr.
Taymor $4,685.$4,662.
(4) Includes amounts contributed for the benefit of the named executive under
Group Term Life Insurancegroup term life insurance coverage in 19971998 as follows: Mr. Berthiaume
$2,784,$3,306, Mr. Caputo $1,392,$1,437, Mr. Feller $3,735, Mr. Nelson $824$1,287 and Mr.
Taymor $714.$842.
(5) Reflects bonus earned under the Company's Pay for PerformanceManagement Incentive Plan in 1997
which was paid in 1998.
(6) Reflects bonus earned under the Company's Management Incentive Plan in 1996
which was paid in 1997.
(6)(7) Reflects bonus earnedamounts contributed for the benefit of the named executive in 1997
and 1996, respectively, under the Company's PayWaters 401(k) Restoration Plan, the Waters
Employee Investment Plan and for Performance Plan in 1995
which was paid in 1996 as follows: Mr. Berthiaume $412,700, Mr. Caputo
$210,000, Mr. Feller $217,000, Mr. Nelson $224,000 and Mr. Taymor $210,000.
(7) Reflects one-time cash bonus earned in 1995 and paid in 1996 in connection
with certain productivity programs implemented by senior management as
follows: Mr. Berthiaume $135,714, Mr. Caputo $135,714, Mr. Feller $135,714,
Mr. Nelson $135,714 and Mr. Taymor $185,714.
5group term life insurance coverage.
9
OPTION GRANTS IN FISCAL YEAR 19971998
The following table shows information regarding stock option grants to the
named executives in fiscal year 1997:1998:
INDIVIDUAL GRANTS
------------------------------------------- POTENTIAL REALIZABLE VALUE AT
PERCENT OF ASSUMED ANNUAL RATES OF STOCK
SECURITIES TOTAL PRICE APPRECIATION FOR
INDIVIDUAL GRANTSUNDERLYING OPTIONS 10-YEAR OPTION TERM
----------------------------------- --------------------------------
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED EXERCISE OPTIONS---------------------------------------
GRANTED TO EMPLOYEES PRICE EXPIRATION
NAME GRANTED (#)(1) IN FISCAL YEAR ($/SH)(PER SHARE) DATE 5% ($) 10%
($)
----- ------------------------------ ------------- --------------- ----------- -------------- -------- ---------- ---------- --------------------- ------------ ------------
Douglas A. Berthiaume... 45,000 9.01% $42.75Berthiaume......... 50,000 9.48% $ 78.75 12/02/07 $1,209,829 $3,065,95710/08 $ 2,476,273 $ 6,275,361
Arthur G. Caputo........ 27,000 5.41% $42.75Caputo.............. 30,000 5.69% $ 78.75 12/02/0710/08 $ 725,897 $1,839,5741,485,764 $ 3,765,217
Thomas W. Feller........ 27,000 5.41% $42.75Feller.............. 30,000 5.69% $ 78.75 12/02/0710/08 $ 725,897 $1,839,5741,485,764 $ 3,765,217
John R. Nelson.......... 27,000 5.41% $42.75Nelson................ 30,000 5.69% $ 78.75 12/02/0710/08 $ 725,897 $1,839,5741,485,764 $ 3,765,217
Philip S. Taymor........ 27,000 5.41% $42.75Taymor.............. 30,000 5.69% $ 78.75 12/02/0710/08 $ 725,897 $1,839,5741,485,764 $ 3,765,217
- ------------------------
(1) Each option becomes exercisable with respect to 20% of the shares subject to
the option on each of December 10, 1999, December 10, 2000, December 10,
2001, December 10, 2002 and December 10, 2003.
AGGREGATED OPTION EXERCISES, HOLDINGS AND YEAR END VALUES FOR FISCAL YEAR 19971998
The following table shows information regarding (i) the number of shares of
Common Stock acquired upon exercise by the named executives of stock options in
19971998 and the value realized thereby and (ii) the number and value of any
unexercised stock options held by such executives as of December 31, 1997:1998:
VALUE OF UNEXERCISED
SHARES NUMBER OF SECURITIES IN-THE MONEYIN-THE-MONEY OPTIONS AT
ACQUIRED ON VALUESHARES UNDERLYING UNEXERCISED FY-END ($)
EXERCISE REALIZEDCLOSING PRICE OF
ACQUIRED ON VALUE OPTIONS AT FY-END (#) $87.25
NAME EXERCISE (#) REALIZED EXERCISABLE/UNEXERCISABLE NAME (#) ($) EXERCISABLE/UNEXERCISABLE
(1)
---- ----------- ---------- ------------------------- -------------------------- ------------------------------- ------------ ------------ ----------------------- ---------------------------
Douglas A. Berthiaume... 0 0 915,868/492,872 $23,859,471/Berthiaume.......... 50,000 $10,613,793 3,766,500 1,091,103/317,637 $ 80,986,557/$18,742,119
Arthur G. Caputo........ 0 0 343,472/196,938Caputo............... 126,340 $ 8,985,626/7,306,579 303,100/140,970 $ 3,937,58821,703,055/$7,592,125
Thomas W. Feller........ 25,700 $1,100,217 317,772/196,938Feller............... 170,567 $ 8,110,284/9,168,068 233,173/140,970 $ 3,937,58816,281,180/$7,592,125
John R. Nelson.......... 28,950 $1,229,999 314,522/196,938Nelson................. 111,050 $ 7,999,589/5,811,578 289,440/140,970 $ 3,937,58820,659,740/$7,592,125
Philip S. Taymor........ 38,700 $1,654,581 304,772/196,938Taymor............... 100,000 $ 7,667,504/4,884,935 290,740/140,970 $ 3,937,58820,862,139/$7,592,125
- --------
(1) ValueWATERS CORPORATION RETIREMENT PLANS
Substantially all full-time United States employees of Waters participate in
the Waters Corporation Retirement Plan (the "Retirement Plan"), a defined
benefit pension plan intended to qualify under Section 401(a) of the Internal
Revenue Code (the "Code"). The Retirement Plan is a cash balance plan whereby
each participant's benefit is determined based on annual pay credits and
interest credits made to each participant's notional account. In general, a
participant becomes vested under the Retirement Plan upon completion of five
years of service. The normal retirement age under the plan is age 65.
Pay credits range from 4.0% to 9.5% of compensation, depending on the
participant's amount of compensation and length of service with the Company.
Compensation refers to pension eligible earnings of the participant (limited to
$160,000 for 1998), which includes base pay, overtime, certain incentive
bonuses, commissions and pre-tax deferrals, but excludes special items such as
stock awards, moving expense reimbursements and employer contributions to
retirement plans. Interest credits are based on the closing priceone year constant maturity
Treasury bill rate on the last day of the Common Stockpreceding plan year plus 0.5%, subject
to a 5% minimum and a 10% maximum rate.
10
The Company also maintains a non-qualified, supplemental plan which provides
benefits that would be paid by the Retirement Plan except for limitations on
pensionable pay and benefit amounts currently imposed by the Code.
The aggregate estimated annual benefit payable from the Retirement Plan and
supplemental plan combined to Messrs. Berthiaume, Caputo, Feller, Nelson and
Taymor upon normal retirement is $151,000, $90,000, $33,000, $57,000 and
$117,000, respectively. As of December 31, 19971998, Messrs. Berthiaume, Caputo,
Feller, Nelson and Taymor had approximately 18, 21, 22, 22 and 18 years of
$38.125.
AMENDMENT OF 1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
In 1997, the Compensation Committee adopted, and the Board of Directors
approved, an amendment of the Company's 1996 Non-Employee Director Stock
Option Plan (the "Plan"). The amendment effected the following changes to the
Plan:
(i) the annual automatic grant of optionscredited service, respectively, under the Plan willRetirement Plan.
The aggregate estimated annual normal retirement benefits are based on
actual 1998 eligible compensation, including bonus paid in 1998. Future eligible
compensation is assumed to equal January, 1999 rate of pay and future interest
credits are assumed to be made on
December 1 (rather than July 1) of each year; (ii) the exercise price of
options granted under the Plan will be the fair market value of shares of
Common Stock on the date of grant (rather than 115% of fair market value)
and (iii) certain vesting and exercise provisions affecting options granted
under the Plan will be subject to the discretion of the Board of Directors.5.0%.
COMPENSATION COMMITTEE INTERLOCKS
The Compensation Committee currently consists of Mr. Edward Conard, Mr.
Thomas Salice and Mr. Thomas Salice.William Miller. Prior to the Company's initial public
offering, each of Mr. Conard and Mr. Salice also served as an officer of the
Company.
6
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors is responsible for
administering the compensation of senior executives of the Company and is
comprised of twothree independent non-employee directors.
The Committee's compensation philosophy is to focus management on achieving
financial and operating objectives which provide long-term stockholder value.
The Company's executive compensation programs are designed to align the interest
of senior management with those of the Company's stockholders. There are three
key components of executive compensation: base salary, pay for
performancesenior management
incentive bonus (annual incentive), and long-term performance incentive. It is
the intent of these programs to attract, motivate and retain senior executives.
It is the philosophy of the Compensation Committee to allocate a significant
portion of cash compensation to variable performance-based compensation in order
to reward executives for high achievement.
Base SalaryBASE SALARY
The salaries for senior executives are reviewed annually and are based upon
a combination of factors including past individual performance, competitive
salary levels and an individual's potential for making significant contributions
to future Company performance. Increases to senior executives' base salaries in
fiscal year 19971998 were determined by the Committee after subjective consideration
of the Company's financial performance in fiscal year 1996,1997, individual position
and responsibilities, and general and industry market surveys for comparable
positions.
AnnualANNUAL INCENTIVE
The Management Incentive The Pay for Performance Plan, anthe annual incentive award plan described
above, is the variable pay program for officers and other senior executives of
the Company. The purpose of the Pay for PerformanceManagement Incentive Plan is to provide added
motivation and direction to senior executives to achieve operating results based
on operating budgets established at the beginning of the year. The Compensation
Committee evaluates the audited results of the Company's performance against
previously established performance targets in order to determine the individual
bonuses under the Pay for PerformanceManagement Incentive Plan. The Company achieved a level of
performance required to pay bonuses for fiscal year 1997.
Long-Term Performance Incentive Plan1998 based upon overall
Company performance.
11
1996 LONG-TERM PERFORMANCE INCENTIVE PLAN
Stock options are an important component of senior executive compensation
and the 1996 Long-Term Performance Incentive Plan has been designed to motivate
senior executives and other key employees to contribute to the long-term growth
of stockholder value. Under the 1996 Long-Term Performance Incentive Plan and
the 1994 Amended and Restated Stock Option Plan, stock options were also granted to
the Company's senior executives and other key individuals. The Compensation
Committee authorizes awards under the plan based upon recommendations from the
Company's Chief Executive Officer.
Other CompensationOTHER COMPENSATION
The Company's senior executives are also eligible to participate in other
compensation plans that are generally offered to other employees, such as the
Company's investment and savings plan, retirement plan, the employee stock
purchase plan and the supplemental employee retirement plan.
Chief Executive CompensationCHIEF EXECUTIVE COMPENSATION
Mr. Berthiaume's 19971998 annual base salary was based on the Compensation
Committee's (the "Committee") evaluation of the Company's overall performance
and the salaries and compensation practices of peer companies of comparable
size. The Committee also considered the unusual circumstances surrounding the
Company which continued from its inception as a private concern in 1994, when
it acquired the predecessor business of its former parent, and its initial
public offering in 1995. Mr. Berthiaume elected to take a salary
7
reduction in 1994 and no base salary increase in 1995. After considering these factors, the Committee elected to increase Mr.
Berthiaume's annual base salary for fiscal year 19971998 to $400,000 from $300,000.$450,000. Under the
Pay for PerformanceManagement Incentive Plan, the Compensation Committee awarded Mr. Berthiaume a
bonus of $490,000$645,750 for fiscal year 19971998 based upon the Company's performance as
compared to pre-
establishedpre-established criteria and targets. Mr. Berthiaume received a
stock option grant of 45,00050,000 shares based on the considerationssubjective consideration
described under the Long Term1996 Long-Term Performance Incentive Plan.
Limit on Deductible CompensationLIMIT ON DEDUCTIBLE COMPENSATION
The Compensation Committee has considered the application of Section 162(m)
of the Internal Revenue Code to the Company's compensation practices. As stated
above, Section 162(m) generally limits the tax deduction available to public
companies for annual compensation paid to senior executives in excess of $1
million unless the compensation qualifies as performance-based. Theperformance-based compensation.
Other than $131,937 paid to Mr. Berthiaume under the Company's Management
Incentive Plan which the Committee does not consider material, the annual cash
compensation paid to individual executives doesduring fiscal year 1998 did not reach
the $1 million threshold, and itthreshold. It is believed that the stock incentive plans of the
Company qualify as performance-
based. Therefore,performance-based compensation. In order to ensure that cash
compensation paid to senior executives under the Company's Management Incentive
Plan qualifies as performance-based compensation in the future, the Board of
Directors has asked that the shareholders approve the material terms of the
Management Incentive Plan. The Committee does not believe any further action is
necessary in order to comply with Section 162(m). From time to time, the
Committee will reexamine the Company's compensation practices and the effect of
Section 162(m).
Mr. Edward Conard Mr. Thomas Salice 8Mr. William Miller
12
PERFORMANCE GRAPH
The following graph compares the cumulative total return on $100 invested on
November 17, 1995 (the first day of public trading of the Common Stock) through
December 31, 19971998 (the last day of public trading of the Common Stock in fiscal
year 1997)1998) in the Common Stock of the Company, the NYSE Market Index and the SIC
Code 3826 Index.Index-Laboratory Analytical Instruments. The return of the indices is
calculated assuming reinvestment of dividends during the period presented. The
Company has not paid any dividends since its initial public offering. The stock
price performance shown on the graph below is not necessarily indicative of
future price performance.
COMPARISON OF CUMULATIVE TOTAL RETURN SINCE
THE DATE OF THE COMPANY'S INITIAL PUBLIC OFFERING,
NOVEMBER 17, 1995, AMONG WATERS CORPORATION,
NYSE MARKET INDEX AND SIC CODE INDEX
- -------------------------------------------------------------------------------
NEW YORK STOCK LABORATORY3826 INDEX--LABORATORY ANALYTICAL EXCHANGE INSTRUMENTS
INDEX
DATE WATERS CORPORATION MARKET INDEX (SIC CODE 3826)
- -------------------------------------------------------------------------------
11/17/95 100.00 100.00 100.00
12/13/95 120.66 102.31 108.68
12/31/96 200.83 123.24 130.06
12/31/97 252.07 162.13 154.29
9EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
DOLLARS WATERS CORPORATION
11/17/95 100.00
12/29/95 120.66
12/31/96 200.83
12/31/97 252.07
12/31/98 576.86
ASSUMES $100 INVESTED ON NOV. 17, 1995
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DEC. 31, 1998
DOLLARS SIC CODE INDEX LABORATORY ANALYTICAL INSTRUMENTS NYSE MARKET INDEX
11/17/95 100.00 100.00
12/29/95 108.68 102.31
12/31/96 130.06 123.24
12/31/97 154.29 162.13
12/31/98 193.75 192.92
ASSUMES $100 INVESTED ON NOV. 17, 1995
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DEC. 31, 1998
13
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The table below sets forth certain information regarding beneficial
ownership of Common Stock as of March 23, 1998,25, 1999, by each person or entity known
to the Company who owns of record or beneficially five percent or more of the
Common Stock, by each named executive officer and director nominee and all
executive officers and director nominees as a group.
PERCENTAGE OF
NUMBER OF SHARES OUTSTANDING
NAME OF COMMON STOCK(1) COMMON STOCK(1)
---- ------------------ ---------------- -------------------------------------------------------------------------- ------------------- -------------------
5% STOCKHOLDERS
FMR Corp................................................................ 3,910,700 12.78%
82 Devonshire Street
Boston, Massachusetts 02109
Putnam Investments, Inc................................................. 3,130,049 10.23%
One P.O. Box Square
Boston, Massachusetts 02109
Pilgrim Baxter & Associates, Ltd........... 3,137,900 10.53%Ltd........................................ 1,699,000 5.55%
825 Duportail Road
Wayne, Pennsylvania 19087
FMR Corp................................... 3,734,000 12.53%
82 Devonshire Street
Boston, Massachusetts 02109
Directors and Executive OfficersDIRECTORS AND EXECUTIVE OFFICERS
Douglas A. Berthiaume (2)(3)............... 1,569,798 5.27%............................................ 1,753,821 5.53%
Arthur G. Caputo (2)....................... 415,433 1.39%(12)................................................ 441,565 1.43%
Thomas W. Feller (2)(4).................... 377,579 1.27%................................................. 264,336 *
John R. Nelson (2)......................... 342,797 1.15%...................................................... 325,665 1.06%
Philip S. Taymor (2)(5)(6)................. 408,691 1.37%.............................................. 363,000 1.18%
Joshua Bekenstein (2)(7)(8) ............... 1,350............................................. 1,935 *
Michael J. Berendt, Ph.D................... --Ph.D. (2)........................................... 1,000 *
Philip Caldwell (2)(7)(8)(9)............... 33,740............................................ 34,324 *
Edward Conard (2)(7)(10)................... 1,790................................................ 2,386 *
Dr. Laurie H. Glimcher..................... --Glimcher (2).............................................. 1,000 *
William J. Miller.......................... --Miller (2)(7)(10)............................................ 1,289 *
Thomas P. Salice (2)(7)(8)(10)(11)......... 31,346...................................... 11,946 *
All Directors and Executive Officers as a group (14 persons)........................ 3,894,905............ 3,911,238
- --------------------------------
* represents less than 1% of the total.
1. Figures are based upon 29,790,22730,592,284 shares of Common Stock outstanding as of
March 23, 1998.25, 1999. The figures assume exercise by only the stockholder or group
named in each row of all options for the purchase of Common Stock held by
such stockholder or group which are exercisable within 60 days of March 24, 1997.25,
1999.
2. Includes share amounts which the named individuals have the right to acquire
through the ownershipexercise of options which are exercisable within 60 days of
March 23, 199825, 1999 as follows: Mr. Berthiaume 915,868,1,098,803, Mr. Caputo 293,472,307,500, Mr.
Feller 277,772,177,573, Mr. Nelson 283,472,266,340, Mr. Taymor 264,772,220,140, Mr. Bekenstein
1,200, Dr. Berendt 1,000, Mr. Caldwell 1,200, Mr. Conard 1,200, Dr. Glimcher
1,000, Mr. ConardMiller 1,000 and Mr. Salice 1,000.1,200.
3. Includes 17,250 shares held by Mr. Berthiaume's wife, Diana M.
Berthiaume, 6,313 shares held in a
family trust, 4,5936,941 shares held in Mr. Berthiaume's 401K Plan and 1,0591,381
shares held in the GST Trust account, for which shares heaccount. Mr. Berthiaume disclaims beneficial
ownership.ownership for the shares held by his wife and the shares held in the GST
Trust account. The trustees of the GST Trust are his spouse and another
reporting person of the Company.
Mr. Berthiaume gifted 100 shares to each of 5 nieces and
nephews.
4. Includes 19,917 shares held by Mr. Feller's wife, for which shares he
disclaims beneficial ownership.
14
5. Includes 19,355 shares held by Mr. Taymor's wife, for which shares he
disclaims beneficial ownership.
6. Reporting person was named a trustee of a trust established by another
reporting person of the Company.
The trust holds 1,059 shares of Company
stock, for which shares he disclaims beneficial ownership.
7. Reporting person elected to receivedreceive deferred compensation in the form of
phantom stock: Mr. Bekenstein 350.15734.8 shares, Mr. Caldwell 957.821,342.5 shares, Mr.
Conard 790.221,186.4 shares, Mr. Miller 289.2 shares and Mr. Salice 202.47602.1 shares.
8. Member of the Audit Committee.
9. Includes 31,782 shares held in trust for Mr. Caldwell's wife, for which
shares he disclaims beneficial ownership.
10. Member of the Compensation Committee.
11. Transferred shares to an account held in joint custody with his spouse.
10
12. Includes 13,704 shares held in Mr. Caputo's 401K Plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
EMPLOYMENT AGREEMENTS
None of the executive officers have employment agreements with the Company
or any of its affiliates. None of them have any agreements entitling them to
termination or severance payments upon a change in control of the Company nor a
change in the named executive's responsibilities following a change of control.
However, each of the named executive officers is party to a Management
Subscription Agreement with the Company pursuant to which each named executive
officer has purchased shares of Common Stock in the Company. Each executive
officer is also the grantee of certain stock options from the Company under one
or more Stock Option Agreements. Pursuant to the terms of such agreements, the
stock purchased under such agreements or available upon exercise of the options
may be subject to repurchase by the Company at the end of such executive's
employment with the Company. The Management Subscription Agreements and the
Stock Option Agreements also impose certain additional restrictions upon the
executive, including confidentiality obligations, assignment of the benefit of
inventions and patents to the Company, a requirement that the executive devote
his or her exclusive business time to the Company, and noncompete restrictions
which extend in certain cases, depending on the basis on which his or her
employment is terminated, for a period of up to 24 months following his or her
termination date.
LOANS TO EXECUTIVE OFFICERS
The Company has made loans, in an aggregate principal amount of $2,342,332
million, to certain executive officers of the Company. These loans are full recourse
loans and are secured by a pledge of certain of the shares of Common Stock owned
by such executive officers. Thomas W. Feller, Senior Vice President, Operations,
repaid loans amounting to $280,442 during 1998 which reduced the aggregate
principal amount outstanding to $2,061,890. The following executive officers'
loans are as of December 1, 1995, bear interest at 5.83% and have a maturity
date of December 1, 2000: Douglas A. Berthiaume, Chairman, President and Chief
Executive Officer, $650,919; Arthur G. Caputo, Senior Vice President, Sales and
Marketing, $245,825; Thomas W. Feller, Senior Vice President, Operations, $245,825; Brian K. Mazar, Vice President, Human Resources and
Investor Relations, $247,843; John R. Nelson, Senior Vice President, Research
and Development, $204,854; Devette Russo, Vice President, Chromatography
Chemistry Division, $211,190; and Philip S. Taymor, Senior Vice President,
Finance and Administration and Chief Financial Officer, $245,825. The following
executive officers' loans are as of January 8, 1996, bear interest at 5.65% and
have a maturity date of January 8, 2001: Mr. Berthiaume $92,939, Mr. Caputo
$34,629, Mr. Feller $34,617, Mr. Mazar $34,629, Mr. Nelson $28,858, Ms. Russo $29,750 and Mr. Taymor
$34,629.
15
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company has entered into agreements to provide indemnification for its
directors and executive officers in addition to the indemnification provided for
in the Company's Second Amended and Restated Certificate of Incorporation and
Amended and Restated Bylaws.
DIRECTOR AND OFFICER AND TEN PERCENT
STOCKHOLDER SECURITIES REPORTSSECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The federal securities laws require the Company's directors and officers,
and persons who own more than ten percent of the Company's Common Stock, to file
with the Securities and Exchange Commission, the New York Stock Exchange and the
Secretary of the Company initial reports of ownership and reports of changes in
ownership of the Common Stock of the Company. FourOne of the Company's directors, Messrs. Conard, Salice, Caldwell and Bekenstein,Officers,
Brian K. Mazar, filed certain
reportsone report with respect to two transactions late during
the fiscal year ended December 31, 1997.1998.
Except for the foregoing, to the Company's knowledge, based solely on review
of the copies of such reports furnished to the Company and written
representations that no other reports were required, during the fiscal year
ended December 31, 19971998 all of the Company's officers, directors and
greater-
than-ten-percentgreater-than-ten-percent beneficial owners made all required filings.
11
MATERIAL INCORPORATED BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1997 as filed with the Securities and Exchange Commission is hereby
incorporated by reference.filings under
Section 16(a).
STOCKHOLDER PROPOSALS
Proposals of stockholders to be presented at the 19992000 Annual Meeting of
Stockholders must be received by the Secretary of the Company by November 4,
19981999 to be considered for inclusion in the Company's Proxy Statement and form of
proxy relating to that meeting. It is anticipated that the 19992000 Annual Meeting
will be scheduled on or about May 12,4, 2000.
16
EXHIBIT A
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
* * * *
WATERS CORPORATION, a Delaware corporation (the "Corporation"), does hereby
certify pursuant to Section 242 of the General Corporation Law of the State of
Delaware, that:
FIRST: By vote of the Board of Directors of the Corporation, at a duly
called Regular Meeting of the Board, a resolution was duly adopted setting forth
the following proposed amendment to the Certificate of Incorporation of the
Corporation and directing the holders of Common Stock of the Corporation to
consider said amendment at the Annual Meeting of Stockholders.
The total number of shares of all classes which the Corporation shall have
the authority to issue is One Hundred Five Million (105,000,000) shares, all
with a par value of One Cent ($.01) per share, of which Five Million
(5,000,000) shares shall be designated as Preferred Stock, and One Hundred
Million (100,000,000) shares shall be designated as Common Stock.
SECOND: Thereafter at the Annual Meeting of Stockholders, pursuant to said
resolution of the Board of Directors, by vote of the holders of record of at
least a majority of the issued and outstanding shares of Common Stock, par value
$.01 per share, of the Corporation, representing not less than the minimum
number of votes necessary to authorize and take the actions set forth therein,
said amendment was duly adopted.
THIRD: Said amendment was duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, Waters Corporation has caused this certificate to be
signed by Douglas A. Berthiaume, its Chairman, President and Chief Executive
Officer, and attested by Victor J. Paci, its Secretary, as of this day of
May, 1999.
12
WATERS CORPORATION
By:
---------------------------------------
Chairman, President and
Chief Executive Officer
ATTEST:
By:
---------------------------------------
Secretary
1444-PS-971444-PS-99
WATERS[WATERS LOGO]
The Officers and Directors of Waters Corporation
cordially invite you to attend
the Annual Meeting of Stockholders
to be held at Waters Corporation, 34 Maple Street,
Milford, Massachusetts on Tuesday, May 12, 19984, 1999 at 11:00 a.m.
Douglas A. Berthiaume
/s/ Douglas A. Berthiaume
Chairman, President and Chief Executive Officer
Please sign, date and return your proxy in the envelope provided even if you
plan to attend the meeting.(FOR RECORDED DIRECTIONS TO WATERS, CALL 508 482-3314)
[1444--WATERS CORPORATION][FILE NAME: WTR02B.ELX][VERSION-3][3/24/99]
DETACH HERE
[X] Please mark votes in this example
1. To elect a Board of Directors for the ensuing year. Nominees: Joshua
Bekenstein, Michael J. Berendt, Ph.D., Douglas A. Berthiaume, Philip
Caldwell, Edward Conard, Thomas P. Salice, Laurie H. Glimcher, M.D., and
William J. Miller.
2. To ratify the selection of the firm of Coopers & Lybrand L.L.P. as auditors
for the fiscal year ended December 31, 1998.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. To ratify the reservation of an additional two million shares of the
Company's common stock for issuance upon the exercise of stock options
granted under the Company's Long-Term Performance Incentive Plan.
FOR AGAINST ABSTAIN
[_] [_] [_]
4. To transact such other business as may properly come before the meeting.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [_]
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [_]
(If signing as attorney, executor, trustee or guardian, please give your full
title as such. If shares are held jointly, each holder should sign.)
Directions to
Waters Corporation
Annual Meeting
Date: May 12, 1998
Meeting Location: Waters Corporation
34 Maple Street
Milford, MA 01757
Tel (508) 478-2000
from Boston - Mass Turnpike West to Route 495, take Route 495 South to exit 19,
(Milford/Medway, Rt. 109), turn right at end of exit onto Route 109 West,
continue approximately 1/2 mile, turn left onto Birch St. (at Richards'
Restaurant). Take right at end of Birch St. and follow the signs to Waters.
from the West - Mass Turnpike East to Route 495, take Route 495 South to exit
19, (Milford/Medway, Rt. 109), turn right at end of exit onto Route 109 West,
continue approximately 1/2 mile, turn left onto Birch St. (at Richards'
Restaurant). Take right at end of Birch St. and follow the signs to Waters.
from the North or South -take Route 495 to exit 19, (Milford/Medway, Rt. 109),
turn at end of exit onto Route 109 West, continue approximately 1/2 mile, turn
left onto Birch St. (at Richards' Restaurant). Take right at end of Birch St.
and follow the signs to Waters.
PLEASE NOTE: THESE DIRECTIONS CAN BE REPEATED BY CALLING A RECORDING AT (508)
482-3314.
DETACH HERE------------------------------------------------------------------------------
PROXY
WATERS CORPORATION
FOR ANNUAL MEETING OF STOCKHOLDERS - MAY 12, 19984, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
theThe undersigned hereby appoints Douglas A. Berthiaume and Philip S.
Taymor, and each or either of them, as the true and lawful attorneys of the
undersigned, with full power of substitution and revocation, and authorizes
them, and each of them, to vote all the shares of capital stock of the
Corporation which the undersigned is entitled to vote at said meeting and any
adjournment thereof upon the matters specified below and upon such other
matters as may be properly brought before the meeting or any adjournmentsadjournment
thereof, conferring authority upon such true and lawful attorneys to vote in
their discretion on such other matters as may properly come before the meeting
and revoking any proxy heretofore given.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN, SHARES WILL BE VOTED FOR THE ELECTION OF THE DIRECTORS
AND FOR THE PROPOSALS IN ITEMS 2, 3 AND 3;4; AUTHORITY WILL BE DEEMED GRANTED
UNDER PROPOSAL 4.ITEM 5.
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE [SEESEE REVERSE SIDE]SIDE
SIDE SIDE
[WATERS LOGO]
VOTE BY TELEPHONE
It's fast, convenient, and immediate!
Call Toll-Free on a Touch-Tone Phone
1-877-PRX-VOTE (1-877-779-8683)
Follow these four easy steps.
1. Read the accompanying Proxy Statement/Prospectus and Proxy Card.
2. Call the toll-free number
1-877-PRX-VOTE (1-877-779-8683) For shareholders residing outside the
United States call collect on a touch-tone phone 1-201-536-8073.
3. Enter your 14-digit Voter Control Number located on your Proxy Card
above your name.
4. Follow the recorded instructions.
YOUR VOTE IS IMPORTANT!
Call 1-877-PRX-VOTE anytime!
VOTE BY INTERNET
It's fast, convenient, and your vote is immediately confirmed and posted.
Follow these four easy steps.
1. Read the accompanying Proxy Statement/Prospectus and Proxy Card.
2. Go to the Website HTTP://WWW.EPROXYVOTE.COM/WAT
3. Enter your 14-digit Voter Control Number located on your Proxy Card above
your name.
4. Follow the instructions provided.
YOUR VOTE IS IMPORTANT!
Go to http://www.eproxyvote.com/wat anytime!
DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR INTERNET
DETACH HERE
- ------------------------------------------------------------------------------
[144-WATERS CORPORATION][FILE NAME: WTR02A.ELX][VERSION-4][3/25/99]
/X/ Please mark votes as in this example.
PLEASE SIGN, DATE AND RETURN YOUR PROXY IN THE ENVELOPE PROVIDED EVEN IF YOU
PLAN TO ATTEND THE MEETING.
1. To elect a Board of Directors for the ensuing year and until their
successors are elected.
NOMINEES: (01) Joshua Bekenstein, (02) Michael J. Berendt, Ph.D., (03)
Douglas A. Berthiaume, (04) Philip Caldwell, (05) Edward Conard, (06) Laurie
H. Glimcher, M.D., (07) William J. Miller and (08) Thomas P. Salice
FOR ALL NOMINEES / /
/ / WITHHELD FROM ALL NOMINEES
/ /
--------------------------------------
FOR ALL NOMINEES EXCEPT AS NOTED ABOVE
MARK HERE IF YOU PLAN TO ATTEND THE MEETING / /
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW / /
2. To ratify the selection of the firm of PricewaterhouseCoopers LLP as
auditors for the fiscal year ending December 31, 1999.
/ / FOR / / AGAINST / / ABSTAIN
3. To approve an amendment to the Company's Certificate of Incorporation to
increase the number of shares of common stock, $.01 par value per share,
which the Company is authorized to issue from 50,000,000 to 100,000,000
shares.
/ / FOR / / AGAINST / / ABSTAIN
4. To approve the material terms of the Company's Management Incentive Plan.
/ / FOR / / AGAINST / / ABSTAIN
5. To consider and act upon any other matters which may properly come before
the meeting or any adjournment thereof.
(If signing as attorney, executor, trustee or guardian, please give your
full title as such. If shares are held jointly, each holder should sign.)
Signature: Date: Signature: Date:
---------------- -------- ---------------- -------