SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
- -------------------------------------------------------------------------------
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)
Vicor 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)(1) 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:
[VICOR CORPORATE LOGO]
April 27, 1999
Dear Stockholder:
You are cordially invited to attend the 1999 Annual Meeting of Stockholders
(the "Annual Meeting"). The Annual Meeting will be held:
DATE: June 24, 1999
TIME: 5:00 P.M. Local Time
PLACE: Andover Country Club
60 Canterbury Street
Andover, Massachusetts
The attached Notice of Annual Meeting and Proxy Statement cover the formal
business of the Annual Meeting. The accompanying Proxy Statement contains a
discussion of the matters to be voted upon at the Annual Meeting. At the Annual
Meeting your management will report on the operations of the Corporation, and
directors and officers of the Corporation will respond to questions that
stockholders may have.
The Board of Directors encourages you to promptly complete, date, sign, and
return your Proxy Card. Return of the Proxy Card indicates your interest in the
Corporation's affairs. If you attend the Annual Meeting and wish to vote your
shares in person you may revoke your proxy at that time.
Sincerely Yours,
/s/ PATRIZIO VINCIARELLI
------------------------
President and Chairman of the Board
VICOR CORPORATION
--------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, JUNE 24, 1999
--------------------------
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Stockholders (the
"Annual Meeting") of Vicor Corporation (the "Corporation") will be held on
Thursday, June 24, 1999 at 5:00 p.m., local time, at the Andover Country Club,
60 Canterbury Street, Andover, Massachusetts, for the following purposes:
1. To fix the number of Directors at six and to elect six Directors to hold
office until the 2000 Annual Meeting of Stockholders and until their respective
successors are duly elected and qualified; and
2. To consider and act upon any other matters which may be properly brought
before the Annual Meeting, or any adjournments or postponements thereof.
Any action may be taken on the foregoing proposals at the Annual Meeting on
the date specified above, or on any date or dates to which, by original or later
adjournment, the Annual Meeting may be adjourned, or to which the Annual Meeting
may be postponed.
The Board of Directors has fixed the close of business on April 30, 1999 as
the record date for determining the stockholders entitled to notice of and to
vote at the Annual Meeting and any adjournments or postponements thereof. Only
stockholders of record at the close of business on that date will be entitled to
notice of and to vote at the Annual Meeting and any adjournments or
postponements thereof.
You are requested to fill in and sign the enclosed Proxy Card which is
being solicited by the Board of Directors and to mail it promptly in the
enclosed envelope. Any proxy may be revoked by a writing delivered to the
Corporation stating that the proxy is revoked or by delivery of a later dated
proxy. Stockholders of record who attend the Annual Meeting may vote in person
by notifying the Secretary, even if they have previously delivered a signed
proxy.
By Order of the Board of Directors
MARK A. GLAZER
Secretary
Andover, Massachusetts
April 27, 1999
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE
AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED. IF YOU ATTEND
THE ANNUAL MEETING, YOU MAY VOTE YOUR SHARES IN PERSON IF YOU WISH, EVEN IF YOU
HAVE PREVIOUSLY RETURNED YOUR PROXY CARD.
VICOR CORPORATION
25 FRONTAGE ROAD
ANDOVER, MASSACHUSETTS 01810
TELEPHONE (978)470-2900
PROXY STATEMENT
FOR THE 1999 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, JUNE 24, 1999
April 27, 1999
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Vicor Corporation (the "Corporation") from
holders of the outstanding shares of capital stock of the Corporation for use at
the 1999 Annual Meeting of Stockholders of the Corporation to be held on
Thursday, June 24, 1999 at 5:00 p.m., at the Andover Country Club, 60 Canterbury
Street, Andover, Massachusetts, and at any adjournments or postponements thereof
(the "Annual Meeting"). At the Annual Meeting, stockholders will consider the
matters set forth in the accompanying Notice of Annual Meeting.
This Proxy Statement and the accompanying Notice of Annual Meeting and
proxy card are first being sent to stockholders on or about May 14, 1999. The
Board of Directors has fixed the close of business on April 30, 1999 as the
record date for the determination of stockholders entitled to notice of and to
vote at the Annual Meeting (the "Record Date"). Only stockholders of record at
the close of business on the Record Date will be entitled to notice of and to
vote at the Annual Meeting. As of March 31, 1999, there were outstanding and
entitled to vote 29,282,073 shares of Common Stock and 12,042,409 shares of
Class B Common Stock of the Corporation. Each share of Common Stock entitles the
holder thereof to one vote per share and each share of Class B Common Stock
entitles the holder thereof to ten votes per share. Shares of Common Stock and
Class B Common Stock will vote together as a single class on the proposals set
forth in this Proxy Statement.
Stockholders of the Corporation are requested to complete, date, sign and
return the accompanying Proxy Card in the enclosed envelope. Shares represented
by a properly executed proxy received prior to the vote at the Annual Meeting
and not revoked will be voted at the Annual Meeting as directed in the proxy. If
a properly executed proxy is submitted and no instructions are given, the proxy
will be voted FOR the fixing of the Board of Directors at six and the election
of the six nominees for Directors of the Corporation named in this Proxy
Statement. It is not anticipated that any matters other than those set forth in
this Proxy Statement will be presented at the Annual Meeting. If other matters
are presented, proxies will be voted in accordance with the discretion of the
proxy holders.
A stockholder of record may revoke a proxy at any time before it has been
exercised by (i) filing a written revocation with the Secretary of the
Corporation at the address of the Corporation set forth above; (ii) filing a
duly executed proxy bearing a later date; or (iii) appearing in person,
notifying the Secretary and voting by ballot at the Annual Meeting. Any
stockholder of record as of the Record Date attending the Annual Meeting may
vote in person whether or not a proxy has been previously given, but the
presence (without further action) of a stockholder at the Annual Meeting will
not constitute revocation of a previously given proxy.
Shares with respect to which votes have been withheld from any Director are
counted for purposes of determining the presence or absence of a quorum for the
transaction of business, but such withheld votes have no legal effect under
Delaware law. Shares that reflect abstentions or "broker non-votes" (i.e.,
shares held by brokers that are represented at the Annual Meeting but as to
which such brokers have not received instructions from the beneficial owners
and, with respect to one or more but not all issues, such brokers do not have
discretionary voting power to vote such shares) will be counted for purposes of
determining whether a quorum is present for the transaction of business at the
Annual Meeting. For purposes of determining whether a particular proposal has
passed, abstentions will be treated as votes cast against the proposal and
broker non-votes will have no effect on the outcome of the vote.
The cost of solicitation of proxies in the form enclosed herewith will be
borne by the Corporation. In addition to the solicitation of proxies by mail,
the Directors, officers and employees of the Corporation may also solicit
proxies personally or by telephone without special compensation for such
activities. The Corporation will also request persons, firms and corporations
holding shares in their names or in the names of their nominees, which are
beneficially owned by others, to send proxy materials to and obtain proxies from
such beneficial owners. The Corporation will reimburse such holders for their
reasonable expenses in connection therewith.
The Corporation's 1998 Annual Report, including financial statements for
the fiscal year ended December 31, 1998, is being mailed to stockholders
concurrently with this Proxy Statement.
PROPOSAL I
ELECTION OF DIRECTORS
The Board of Directors of the Corporation has nominated the six individuals
named below for election as Directors. Each of the nominees is presently serving
as a Director of the Corporation. If elected, the nominees will serve until the
2000 Annual Meeting of Stockholders and until their respective successors shall
have been duly elected and qualified. Proxies will be voted for the nominees
named below unless otherwise specified in the proxy. The Board of Directors
anticipates that each of the nominees, if elected, will serve as a Director.
However, if any person nominated by the Board of Directors fails to stand for
election or is unable to accept election, proxies solicited hereby will be voted
either for the election of another person designated by the Board of Directors
or to fix the number of Directors at a lesser number and elect the nominees able
and willing to serve. Directors will be elected by a plurality of the votes cast
by the holders of Common Stock and Class B Common Stock voting on the election
of Directors. Holders of voting rights sufficient to elect each of the nominees
named below have indicated an intention to vote in favor of such nominees.
The Board of Directors unanimously recommends a vote "FOR" all of the
nominees.
2
INFORMATION REGARDING NOMINEES
The following table sets forth certain information as of March 31, 1999
with respect to the six nominees for election to the Board of Directors.
Information regarding the beneficial ownership of shares of the capital stock of
the Corporation by such persons is set forth under the section of this Proxy
Statement entitled "Principal and Management Stockholders."
NAME AGE DIRECTOR SINCE PRINCIPAL OCCUPATION FOR PAST FIVE YEARS
---- --- -------------- ----------------------------------------
Patrizio Vinciarelli..... 52 1981 Chairman of the Board, President and Chief Executive
Officer of the Corporation.
Estia J. Eichten......... 52 1981 Senior Scientist with the Fermi National Accelerator
Laboratory in Batavia, Illinois; President of VLT Corporation,
a wholly-owned subsidiary of the Corporation, since 1987.
Jay M. Prager............ 52 1993 Senior Vice President, Technology of the Corporation.
Barry Kelleher........... 50 1999 Senior Vice President, Global Operations of the Corporation.
Mr. Kelleher was appointed Director on March 12, 1999.
David T. Riddiford....... 63 1984 General Partner of P.R. Venture Partners, L.P., a venture
capital affiliate of Pell, Rudman & Co., Inc., an investment
advisory firm, since 1987; general partner of the general
partner of Venture Founders Capital, a venture capital
partnership, since 1984. Mr. Riddiford is currently a
Director of Datawatch Corporation.
M. Michael Ansour........ 45 1993 Managing partner of Langdon Street Capital, L.P., an
investment limited partnership in New York City, since 1992;
Vice President of Kellner DiLeo & Co., an investment firm
in New York City, from 1989 to 1991.
The Corporation's Board of Directors held three meetings during the fiscal
year ended December 31, 1998. Each of the Directors attended more than 75% of
the total number of meetings of the Board of Directors and meetings of the
committees of the Board of Directors on which he served. The Board of Directors
has established an Audit Committee and an Executive Compensation Committee. The
Audit Committee held four meetings in 1998. The Audit Committee is composed of
Messrs. Ansour, Eichten and Riddiford. The functions of the Audit Committee
generally include recommending the appointment of independent auditors,
reviewing with the independent auditors the scope and results of the audit
engagement, and monitoring the Corporation's internal financial and accounting
controls. The Executive Compensation Committee met once in 1998. The Executive
Compensation Committee is composed of Messrs. Eichten, Riddiford, and Ansour.
The Executive Compensation Committee is responsible for establishing salaries,
bonuses and other compensation for the officers of the Corporation and
administering the Corporation's stock option and bonus plans pursuant to
authority delegated to it by the Board of Directors. The Board of Directors does
not have a standing nominating committee. The full Board of Directors performs
the function of such a committee.
DIRECTORS' COMPENSATION
Directors of the Corporation do not currently receive cash compensation for
their service on the Board of Directors. In 1998, each employee Director, other
than any Director who held in excess of 10% of the total number of shares of the
capital stock of the Corporation (i.e., Mr. Vinciarelli), and each non-employee
Director automatically received non-qualified stock options upon election as a
Director under the Corporation's 1993 Stock Option Plan (the "1993 Plan"). Such
employee Directors and non-employee Directors automatically receive
non-qualified stock options to purchase up to 2,000 shares of the Corporation's
Common Stock, which become exercisable in five equal annual installments of 400
shares on each anniversary of the date of grant and expire 10 years from the
date of grant. Non-employee Directors also receive additional non-qualified
stock options to purchase up to 2,000 shares of the Corporation's Common Stock
that become exercisable in their entirety one year from the date of grant and
expire 15 months from the date of grant. All such options are exercisable at a
price equal to the fair market value of the Common Stock at the date of grant.
At the 1998 Annual Meeting of Stockholders, the Stockholders approved the
Corporation's 1998 Stock Option and Incentive Plan (the "1998 Plan"). To the
extent practicable, the Corporation will continue to grant options under the
1993 Plan to non-employee Directors and employees of the Corporation until all
of such options have been granted and, thereafter, the Corporation will grant
options under the 1998 Plan.
3
EXECUTIVE OFFICERS
Executive officers are elected annually and serve at the discretion of the
Board of Directors. The following persons are the executive officers of the
Corporation.
Patrizio Vinciarelli, 52, Chairman of the Board, President and Chief
Executive Officer. Dr. Vinciarelli founded Vicor in 1981 and has served as
President since that time.
Jay M. Prager, 52, Senior Vice President, Technology since 1991. Mr. Prager
held the position of Vice President, Systems Engineering from 1987 to 1991.
Prior to joining the Corporation in 1987, Mr. Prager was Director, New Product
Development, at the Modicon Division of Gould, Inc., a manufacturer of
industrial control equipment, where he spent a total of nine years in various
engineering and engineering management roles.
Barry Kelleher, 50, Senior Vice President, Global Operations since March
1999. Mr. Kelleher held the position of Senior Vice President, International
Operations from 1993 to 1999. Prior to joining the Corporation in 1993, Mr.
Kelleher was employed at Computer Products Inc., a manufacturer of power
conversion products, since 1981, where he held the position of Corporate Vice
President and President of the Power Conversion Group.
David W.Nesbitt, 53, Senior Vice President, North and South American Sales
since 1995. Mr. Nesbitt held the position of Vice President, Sales from 1989 to
1992 and Vice President, North American Sales from 1992 to 1995. Prior to
joining the Corporation in 1989, Mr. Nesbitt was employed at Siliconix, Inc., a
manufacturer of integrated circuits, from 1981 to 1989. He held the position of
Central Area Manager from 1981 to 1986, at which time he was promoted to
Director, North American Sales.
Mark A. Glazer, 46, Chief Financial Officer, Treasurer, and Secretary since
1997. From April 1998 to March 1999, Mr. Glazer was Acting Vice President,
Operations. Mr. Glazer held the position of Vice President, Finance from 1993 to
1997 and Controller of the Corporation from 1988 to 1993. Prior to joining the
Corporation in 1988, Mr. Glazer was employed by Analog and Digital Systems,
Inc., a manufacturer of home and automotive stereo equipment, from 1983 to 1988,
where he held the position of Controller from 1983 to 1986 and the position of
Treasurer from 1986 to 1987, at which time he was promoted to Vice President,
Finance.
N. Douglas Powers, 52, Vice President, Chief Information Officer since
1993. Mr. Powers held the position of Director, Management Information Systems
of the Corporation from 1989 to 1991 and Senior Director, Management Information
Systems from 1991 to 1993. Prior to joining the Corporation in 1989, Mr. Powers
was Director, Research and Technical Support at Stratus Computer, Inc., a
manufacturer of fault tolerant computer systems, from 1981 to 1989.
Larry C. Gretzinger, 51, Vice President, Quality since 1997. Prior to
joining the Corporation in 1997, Mr. Gretzinger was employed at Racal-Datacom,
Inc., a designer, manufacturer and service provider of data communications
equipment, where he held the position of Vice President, Corporate Quality from
1994 to 1997. Previous positions during his eight year tenure at Racal-Datacom,
Inc. included Director, Quality; Manager, Quality Systems; and Manager, Master
Scheduling.
Thomas A. St. Germain, 61, Vice President, Financial Services since 1998.
Prior to joining the Corporation in 1998, Mr. St. Germain was employed at Summa
Four, Inc., a manufacturer of specialized digital switches, since 1993, where he
held the position of Senior Vice President, Chief Financial Officer and
Treasurer.
H. Allen Henderson, 51, Vice President, Vicor Corporation; President,
Westcor Division since March 1999. Mr. Henderson held the position of General
Manager of the Westcor division from 1987 to 1999 and Sales Manager from 1985 to
1987. Prior to joining the Corporation in 1985, Mr. Henderson was employed at
Boschert, Inc., a manufacturer of power supplies, since 1984, where he held the
position of Director of Marketing.
4
PRINCIPAL AND MANAGEMENT STOCKHOLDERS
The following table sets forth the beneficial ownership of the
Corporation's Common Stock and Class B Common Stock held by (i) each person or
entity that is known to the Corporation to be the beneficial owner of more than
five percent of the outstanding shares of either class of the Corporation's
common stock, (ii) each Director of the Corporation, (iii) each of the executive
officers of the Corporation named in the Summary Compensation Table, and (iv)
all Directors and executive officers as a group, based on representations of the
Directors and executive officers of the Corporation as of March 31, 1999, a
review of filings on Schedules 13D, 13F and 13G under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and holdings reported by the
National Association of Securities Dealers Automated Quotation System ("NASDAQ")
with respect to December 31, 1998. Except as otherwise specified, the named
beneficial owner has sole voting and investment power over the shares. The
information in the table reflects shares outstanding of each class of common
stock on March 31, 1999, and does not, except as otherwise indicated below, take
into account conversions after such date of shares of Class B Common Stock into
Common Stock. Subsequent conversions of Class B Common Stock into Common Stock
will increase the voting control of persons who retain shares of Class B Common
Stock. The percentages have been determined in accordance with Rule 13d-3 under
the Exchange Act. As of March 31, 1999, a total of 41,324,482 shares of common
stock were outstanding, of which 29,282,073 were shares of Common Stock entitled
to one vote per share and 12,042,409 were shares of Class B Common Stock
entitled to ten votes per share. Each share of Class B Common Stock is
convertible into one share of Common Stock.
Percent of Percent of Class B
Total Common Stock Common Stock Percent
Name of Number Beneficially Beneficially of Voting
Beneficial Owner (1) of Shares (2)(3) Owned Owned Power
-------------------- ---------------- ----------- ------------ ----------
Patrizio Vinciarelli ............................... 20,986,650 34.0% 91.5% 80.3%
Estia J. Eichten ................................... 1,247,964(4) 1.9% 5.7% 5.0%
M. Michael Ansour .................................. 29,000 * * *
David T. Riddiford ................................. 208,736(5) * * *
Richard E. Beede ................................... 114,102(6) * * *
Jay M. Prager ...................................... 144,868 * * *
David W. Nesbitt ................................... 85,653 * * *
Barry Kelleher ..................................... 56,982 * * *
All Directors and executive officers as a group
(12 persons) .................................. 22,848,227 37.7% 98.0% 85.6%
Nevis Capital Management, Inc ...................... 3,148,444 10.8% * 2.1%
119 St. Paul Street, Baltimore, MD 21202
- -----------------
* Less than 1%
(1) The address of Mr. Eichten is: c/o Fermi National Accelerator Laboratory,
Kirk Road and Pine Street, Batavia, IL 60510. The address of each other
person named in the table, but not specified therein, is: c/o Vicor
Corporation, 25 Frontage Road, Andover, MA 01810.
(2) Includes shares issuable upon the exercise of stock options that are
exercisable or will become exercisable on or before May 30, 1999 in the
following amounts: Mr. Vinciarelli, 6,014 shares of Common Stock; Mr.
Eichten, 6,000 shares of Common Stock; Mr. Ansour, 6,000 shares of Common
Stock; Mr. Riddiford, 6,000 shares of Common Stock; Mr. Prager, 90,072
shares of Common Stock and 54,500 shares of Class B Common Stock; Mr.
Nesbitt, 85,653 shares of Common Stock; Mr. Kelleher, 56,982 shares of
Common Stock; and all Directors and executive officers as a group,
11,046,379 shares of Common Stock and 11,801,848 shares of Class B Common
Stock.
(3) The calculation of the number of shares includes the following: for Mr.
Vinciarelli, 9,963,002 shares of Common Stock representing 34.0% of such
class and 11,023,648 shares of Class B Common Stock representing 91.5% of
such class; and for Mr. Eichten, 557,264 shares of Common Stock representing
1.9% of such class and 690,700 shares of Class B Common Stock representing
5.7% of such class.
5
(4) Includes 8,500 shares of Common Stock beneficially owned by Mr. Eichten's
spouse as to which Mr. Eichten disclaims beneficial ownership.
(5) Includes 101,236 shares of Common Stock held by Venture Founders Partners
Limited Partnership. Mr. Riddiford, a Director of the Corporation, is a
general partner of the general partner of Venture Founders Partners Limited
Partnership. Also includes 4,500 shares of Common Stock beneficially owned
by Mr. Riddiford's spouse as to which Mr. Riddiford disclaims beneficial
ownership.
(6) Includes 600 shares of Common Stock beneficially owned by Mr. Beede's spouse
and 1,200 shares of Common Stock beneficially owned by two relatives as to
which Mr. Beede disclaims beneficial ownership.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table shows for the fiscal years ended December 31, 1996,
1997 and 1998 the compensation paid by the Corporation to the Chief Executive
Officer and the other four most highly compensated executive officers who earned
more than $100,000 during 1998.
ANNUAL COMPENSATION LONG TERM
--------------------------------------- COMPENSATION AWARDS
OTHER ANNUAL -------------------
NAME AND COMPENSATION SHARES UNDERLYING
PRINCIPAL POSITION YEAR SALARY($) BONUS ($) ($)(1) OPTIONS (#)
- ------------------ ---- --------- --------- ------------ -----------------
P. Vinciarelli....................... 1998 198,846 -- 9,515 7,389
President & Chief 1997 190,615 -- 8,820 10,574
Executive Officer 1996 170,615 -- 6,680 5,369
R. Beede (2)......................... 1998 199,278 23,232 9,685 5,612
Former Sr. Vice President 1997 163,857 21,884 9,124 7,601
Marketing 1996 151,846 14,207 7,965 6,126
J. Prager............................ 1998 173,154 -- 5,290 7,038
Sr. Vice President 1997 168,115 -- 9,119 9,620
Tehnology 1996 151,846 -- 10,558 8,236
B. Kelleher.......................... 1998 154,230 14,540 14,172 6,805
Sr. Vice President 1997 145,914 13,667 9,465 2,626
Global Operations 1996 137,077 13,500 9,989 3,516
D. Nesbitt........................... 1998 154,230 21,744 9,039 2,683
Sr. Vice President 1997 147,712 17,967 9,040 3,866
North & South American Sales 1996 137,077 16,301 9,752 3,516
- ----------
(1) This column sets forth the cost of providing certain perquisites and
benefits to the named executive officers. The amounts shown relate primarily
to automobile allowances, which were as follows: for Mr. Vinciarelli, $9,242
in 1998, $8,610 in 1997, and $6,005 in 1996; Mr. Beede, $7,746 in 1998,
$6,650 in 1997, and $6,813 in 1996; Mr. Prager, $5,017 in 1998, $8,909 in
1997, and $9,206 in 1996; Mr. Kelleher, $8,007 in 1998, $7,760 in 1997, and
$7,889 in 1996; and Mr. Nesbitt, $8,044 in 1998, $7,916 in 1997, and $8,165
in 1996.
(2) Mr. Beede resigned from the Corporation effective December 31, 1998.
6
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth each grant of stock options during the
fiscal year ended December 31, 1998 to the Chief Executive Officer and each
other executive officer named in the Summary Compensation Table. All stock
options granted in 1998 relate to shares of the Corporation's Common Stock. No
stock appreciation rights ("SARs") have been granted by the Corporation. The
table also shows the value of the options granted at the end of the option terms
if the price of the Corporation's Common Stock were to appreciate annually by 5%
and 10%, respectively. There is no assurance that the price of the Common Stock
will appreciate at the rates shown in the table. If the price of the Common
Stock appreciates, the value of the Common Stock held by all stockholders will
increase.
INDIVIDUAL GRANTS
--------------------------------------------------------
POTENTIAL REALIZABLE VALUE AT
SHARES ASSUMED ANNUAL RATES OF
UNDERLYING STOCK PRICE APPRECIATION FOR
OPTIONS %OF TOTAL OPTIONS EXERCISE OR OPTION TERM
GRANTED GRANTED TO EMPLOYEES BASE PRICE EXPIRATION -----------------------------
NAME (#) IN FISCAL YEAR ($/Sh) DATE 5%($) 10%($)
----- ------ ------------------- ---------- ---------- ------ ------
P. Vinciarelli....... 1,416(1) 0.17% $28.25 3/02/2000 $ 4,100 $ 8,400
3,540(2) 0.42 28.25 3/02/2008 62,893 159,382
427(3) 0.05 23.13 1/27/2008 6,211 15,741
241(4) 0.03 31.13 1/02/2008 3,686 10,313
32(4) 0.00 31.13 1/02/2008 489 1,369
120(5) 0.01 28.00 1/07/2008 2,113 5,355
192(6) 0.02 26.00 1/09/2008 3,139 7,956
186(6) 0.02 26.88 1/09/2008 2,878 7,544
130(9) 0.02 25.75 12/23/2008 (1,641) (630)
572(9) 0.07 8.75 12/23/2008 2,505 6,953
533(3) 0.06 23.13 1/27/2008 7,753 19,648
R. Beede............ 779(2) 0.09 28.25 3/02/2008 13,840 35,073
2,833(2) 0.34 28.25 3/02/2008 50,332 127,551
2,000(7) 0.24 13.88 6/25/2008 17,458 44,242
J. Prager............ 1,232(1) 0.15 28.25 3/02/2000 3,567 7,309
779(2) 0.09 28.25 3/02/2008 13,840 35,073
2,464(2) 0.29 28.25 3/02/2008 43,776 110,937
47(3) 0.01 23.13 1/27/2008 684 1,733
457(3) 0.05 23.13 1/27/2008 6,648 16,847
59(3) 0.01 23.13 1/27/2008 858 2,175
2,000(7) 0.24 13.88 6/25/2008 17,458 44,242
B. Kelleher.......... 708(2) 0.08 28.25 3/02/2008 12,579 31,876
1,097(2) 0.13 28.25 3/02/2008 19,490 49,390
5,000(8) 0.59 20.00 5/07/2008 54,745 146,406
D. Nesbitt........... 708(2) 0.08 28.25 3/02/2008 12,579 31,876
1,975(2) 0.24 28.25 3/02/2008 35,088 88,921
- -----------
(1) These options were granted on March 2, 1998 and became exercisable on
October 26, 1998.
(2) These options were granted on March 2, 1998 and become exercisable in five
equal annual installments on each anniversary of the date of grant.
(3) These options were granted on January 27, 1998 and become exercisable in
five equal annual installments on each anniversary of the date of grant.
(4) These options were granted on January 2, 1998 and become exercisable in five
equal annual installments on each anniversary of the date of grant.
(5) These options were granted on January 7, 1998 and become exercisable in five
equal annual installments on each anniversary of the date of grant.
7
(6) These options were granted on June 9, 1998 and become exercisable in five
equal annual installments on each anniversary of the date of grant.
(7) These options were granted on June 25, 1998 and become exercisable in five
equal annual installments on each anniversary of the date of grant.
(8) These options were granted on May 7, 1998 and become exercisable in five
equal annual installments on each anniversary of the date of grant.
(9) These options were granted on December 23, 1998 and become exercisable in
five equal annual installments on each anniversary of the date of grant.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END VALUES
The following table sets forth the shares acquired and the value realized
upon exercise of stock options during the fiscal year ended December 31, 1998 by
the Chief Executive Officer and each other executive officer named in the
Summary Compensation Table and certain information concerning the number and
value of unexercised options.
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES ACQUIRED VALUE OPTIONS AT FISCAL YEAR-END(#) OPTIONS AT FISCAL YEAR-END($)(1)
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------------- ----------- ------------ ------------- ----------- -------------
P. Vinciarelli.................. 0 $ 0.00 0 572 $ 0 $ 143
R. Beede........................ 0 0.00 9,312 0 10,697 0
J. Prager....................... 0 0.00 125,530 0 925,340 0
B. Kelleher..................... 0 0.00 0 0 0 0
D. Nesbitt...................... 0 0.00 70,290 0 361,799 0
- ----------
(1) Equal to the market value of shares covered by in-the-money options on
December 31, 1998, less the aggregate option exercise price. Options are
in-the-money if the market value of the shares covered thereby is greater
than the option exercise price. All values assume conversion of any shares
of Class B Common Stock to Common Stock.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
The Executive Compensation Committee of the Board of Directors of the
Corporation (the "Committee") consists of David T. Riddiford, Estia J. Eichten,
and M. Michael Ansour, all of whom are non-employee directors. Mr. Ansour was
elected to the Committee in June 1998. The Committee establishes the terms of
and grants awards under the Corporation's 1993 Plan, the 1998 Plan and other
benefit plans. The Committee also approves compensation policies for executive
officers.
Compensation Policies for Executive Officers
The Corporation's compensation program for executive officers currently
consists primarily of a base salary and awards of stock options. In addition to
base salary, the Corporation provides certain benefits to executive officers,
such as the use of automobiles or automobile allowances, and enhanced health
insurance coverage, that are not available to employees generally.
Salary levels for executive officers are proposed by management and
approved by the Committee. In connection with salary adjustments made in the
beginning of 1998, the Committee reviewed compensation information from a
national survey of the high tech industry. This survey contained data from over
four hundred companies, including the Corporation. The survey included
information from certain of the companies contained in the peer group used in
formulating the Stock Performance Graph appearing on page 10, but was not
limited to those companies. The Committee believes that most salary levels for
executive officers of the Corporation are comparable to the median salary levels
of the companies surveyed.
8
The primary element of the Corporation's incentive compensation program has
been the granting of options to purchase shares of the Corporation's Common
Stock under the Corporation's 1993 Plan. Substantially all of the Corporation's
employees, including its executive officers, participate in the Corporation's
1993 Plan and are expected to participate in the 1998 Plan. The 1993 Plan and
the 1998 Plan are designed to give each participating employee an ownership
interest in the Corporation and to align the interests of the employees with
those of the Corporation's stockholders.
Stock options are granted to employees and executive officers based upon
guidelines established by the Board of Directors and the Committee. The number
of continuation option awards ("Continuation Awards") granted to executive
officers in 1998 was based on a formula, which calculates the product of two
times the executive officer's merit salary increase (based on the executive
officer's performance review) divided by the market value per share of the
Corporation's Common Stock on the date of grant. The number of shares to be
granted was approved by the Committee, and was not based on any corporate or
business unit performance measures. All Continuation Awards were made with a
5-year vesting schedule.
In addition to Continuation Awards under the 1993 Plan, the Corporation has
in the past granted short-term "bonus" stock options to all eligible employees
and officers (except those who participate in the Corporation's sales incentive
plan), that are exercisable for approximately two years. These grants were
designed to provide a short-term incentive under the 1993 Plan. In 1998, the
Corporation granted "bonus" options at a rate of twenty percent of base salary
divided by the market value per share of the Corporation's Common Stock on the
date of grant to all participating executive officers and employees of the
Corporation. Management recommends the grant of these options and the Committee
does not use specific or weighted criteria relating to performance of the
Corporation in determining whether to grant these awards. Although options of
this type have typically been granted over the past few years at the rate of
twenty percent of base salary divided by the market value per share of the
Corporation's Common Stock on the date of grant to all eligible employees, this
program is discretionary and may be changed in the future.
Also in 1998, the Corporation granted "long-term" stock options to all
eligible employees and officers. The long-term option awards are based upon the
employee's length of service. They are granted at a rate of twenty percent of
base salary for up to five years of service, divided by the market value per
share of the Corporation's Common Stock on the date of grant, and become
exercisable over a five year period. The rate increases to thirty percent at
five years of service, then increases an additional two percent for each year of
service up to a maximum of fifty percent at fifteen years of service.
Finally, to the extent applicable to the Corporation, the Committee intends
to review and to take any necessary and appropriate steps to ensure that the
Corporation complies with certain income tax regulations, which if not satisfied
would limit the deductibility of executive compensation above specified amounts.
Compensation of Chief Executive Officer
The Committee approves the annual salary for Mr. Vinciarelli, the
Corporation's Chief Executive Officer. The Committee does not have specific
criteria, either in terms of individual or corporate performance, in evaluating
the base salary of the Chief Executive Officer. In light of the relatively low
cash compensation paid to the Chief Executive Officer, the Committee has not
attempted to relate compensation of the Chief Executive Officer to the
performance of the Corporation. Based on salary data from the survey discussed
above, and other sources, the Committee believes that the Chief Executive
Officer's salary is at the lower end of the range of salaries for CEOs of
comparable companies.
In 1998, the Committee determined to include Mr. Vinciarelli in the
granting of stock options described above as "bonus" and "long-term" options.
However, as in prior years, the Corporation continued to exclude Mr. Vinciarelli
from the granting of Continuation Awards because of Mr. Vinciarelli's
significant stock holdings in the Corporation and the practice of basing such
awards on performance reviews that were typically prepared by Mr. Vinciarelli.
Submitted by the Executive Compensation Committee:
M. Michael Ansour
Estia J. Eichten
David T. Riddiford
9
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Eichten, Mr. Riddiford, and Mr. Ansour serve on the Committee. Mr.
Eichten serves as President of VLT Corporation, the Corporation's licensing
subsidiary, but receives no compensation for such service. Messrs. Riddiford and
Ansour do not serve as officers of the Corporation. The Corporation is not aware
of any compensation committee interlocks.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In April 1999, the Corporation made a personal loan to Mr. Vinciarelli, the
President and Chief Executive Officer of the Corporation in the amount of
$50,000. During 1997, the Corporation made five personal loans to Mr.
Vinciarelli in the aggregate amount of $246,511. The loans are for terms of five
years, are unsecured and bear interest at the higher of the prime rate less one
percent or the applicable federal rate under the Internal Revenue Code of 1986,
as amended. Including prior borrowings, the largest aggregate amount of all
indebtedness outstanding at anytime since January 1, 1998 was $1,809,997,
including accrued interest. The aggregate amount of all such loans outstanding
as of April 19, 1999 was approximately $1,809,997, including accrued interest.
In November 1995, the Corporation made a personal loan to Mr. Nesbitt, the
Senior Vice President of North and South American Sales of the Corporation in
the amount of $66,000. The loan is for a term of five years, is unsecured and
bears interest at the prime rate less one percent. The largest aggregate amount
of this indebtedness outstanding at anytime since January 1, 1998 was $41,881.
The aggregate amount outstanding as of April 19, 1999 was approximately $23,800,
including accrued interest.
During 1997, the Corporation made two personal loans to Mr. Gretzinger,
Vice President, Quality of the Corporation in the aggregate amount of $45,000.
One note in the amount of $35,000 was repaid in 1998. A note in the amount of
$10,000 is for a term of five years and is unsecured. The note bears interest at
the prime rate less one percent. The largest aggregate amount of all
indebtedness outstanding at anytime since January 1, 1998 was $45,649. The
aggregate amount outstanding as of April 19, 1999 was approximately $11,055,
including accrued interest.
STOCKHOLDER RETURN PERFORMANCE GRAPH
The graph set forth below presents the cumulative, five-year stockholder
return for each of the Corporation's Common Stock, the Standard & Poor's 500
Index and an index of peer group companies selected by the Corporation (the
"Peer Group"). The Peer Group consists of ten publicly-traded companies in the
specialty electronic component industry: AMP Incorporated; Analog Devices
Incorporated; Burr-Brown Corporation; Cypress Semiconductor Corporation; Dallas
Semiconductor Corporation; Integrated Device Technology Incorporated; Intel
Corporation; Linear Technology Corporation; LSI Logic Corporation and Xilinx
Incorporated. The Corporation's Common Stock began trading publicly on April 3,
1990. The graph assumes an investment of $100 on December 31, 1993 in each of
the Corporation's Common Stock, the Standard & Poor's 500 Index, and the Peer
Group and assumes reinvestment of all dividends. The graph is market
capitalization-weighted.
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG VICOR CORPORATION, S&P 500 INDEX
AND AN INDEX OF PEER GROUP COMPANIES
Measurement Period Vicor S&P Peer Group
(Fiscal Year Covered) Corporation 500 Index Companies
- --------------------- ----------- --------- -----------
Measurement Pt-12/31/93 $ 100.00 $ 100.00 $ 100.00
12/31/94 $ 111.96 $ 101.32 $ 113.81
12/31/95 $ 173.91 $ 139.40 $ 180.39
12/31/96 $ 145.10 $ 171.40 $ 342.60
12/31/97 $ 235.87 $ 228.59 $ 366.91
12/31/98 $ 78.26 $ 293.91 $ 590.54
10
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Corporation's executive
officers and Directors, and persons who own more than 10% of a registered class
of the Corporation's equity securities (collectively, "Insiders"), to file
reports of ownership and changes in ownership with the SEC and NASDAQ. Insiders
are required by SEC regulation to furnish the Corporation with copies of all
Section 16(a) forms they file. To the Corporation's knowledge, based solely on a
review of copies of such reports and written representations that no other
reports were required during the fiscal year ended December 31, 1998, all
transactions in the Corporation's securities that were engaged in by Insiders,
and therefore required to be disclosed pursuant to Section 16(a) of the Exchange
Act, were timely reported.
INDEPENDENT AUDITORS
The Corporation has selected Ernst & Young LLP as the independent auditors
for the Corporation for the fiscal year ending December 31, 1999. A
representative of Ernst & Young LLP is expected to be present at the Annual
Meeting and will be given the opportunity to make a statement. The
representative is expected to be available to respond to appropriate questions.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 2000 Annual Meeting
of Stockholders must be received by the Corporation on or before December 29,
1999 in order to be considered for inclusion in the Corporation's proxy
statement. These proposals must also comply with the rules of the SEC governing
the form and content of proposals in order to be included in the Corporation's
proxy statement and form of proxy and should be directed to: Vicor Corporation,
25 Frontage Road, Andover, Massachusetts 01810, Attention: Secretary. It is
suggested that any stockholder proposal be transmitted by certified mail, return
receipt requested.
Proxies solicited by the Board of Directors will confer discretionary
voting authority with respect to stockholder proposals, other than proposals to
be considered for inclusion in the Corporation's proxy statement described
above, that the Corporation receives at the above address after March 30, 2000.
These proxies will also confer discretionary voting authority with respect to
stockholder proposals, other than proposals to be considered for inclusion in
the Corporation's proxy statement described above, that the Corporation receives
on or before March 30, 2000, subject to SEC rules governing the exercise of this
authority.
11
Form of Proxy
COMMON VICOR CORPORATION COMMON
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - JUNE 24, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND
MAY BE REVOKED PRIOR TO ITS EXERCISE.
The undersigned hereby constitutes and appoints Patrizio Vinciarelli and Mark A.
Glazer, and each of them, as Proxies of the undersigned, with full power to
appoint his substitute, and authorizes each of them to represent and to vote all
shares of Common Stock of Vicor Corporation (the "Corporation") held by the
undersigned at the close of business on April 30, 1999, at the Annual Meeting of
Stockholders to be held at the Andover Country Club, 60 Canterbury Street,
Andover, Massachusetts, on Thursday, June 24, 1999 at 5:00 p.m., local time, and
at any adjournments or postponements thereof.
When properly executed, this proxy will be voted in the manner directed herein
by the undersigned stockholder(s). IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF ALL THE NOMINEES FOR DIRECTOR AND, IN THEIR
DISCRETION, UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING. A
stockholder wishing to vote in accordance with the Board of Directors'
recommendation need only sign and date this proxy and return it in the envelope
provided.
The undersigned hereby acknowledges receipt of a copy of the accompanying Notice
of Annual Meeting of Stockholders, the Proxy Statement with respect thereto and
the Corporation's 1998 Annual Report to Stockholders and hereby revokes any
proxy or proxies heretofore given. This proxy may be revoked at any time before
it is exercised.
- --------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please sign exactly as your name(s) appear(s) on the books of the Corporation.
Joint owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- --------------------------- ----------------------------------
- --------------------------- ----------------------------------
- --------------------------- ----------------------------------
[ X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
- ------------------------------------ 1. Proposal to elect the following Directors: For All With- For All
VICOR CORPORATION Nominees hold Except
- ------------------------------------ M. Michael Ansour Jay M. Prager [ ] [ ] [ ]
COMMON STOCK Estia J. Eichten David T. Riddiford
Barry Kelleher Patrizio Vinciarelli
If you do not wish your shares voted "For" a particular nominee, mark
the "For All Except" box and strike a line through the name(s)of the
nominee(s). Your shares will be voted for the remaining nominee(s).
------- Mark box at right if an address change or comment has [ ]
Please be sure to sign and date this Proxy. Date been noted on the reverse side of this card.
- ----------------------------------------------------
- ---Stockholder sign here----------Co-owner sign here----------------
Detach Card Detach Card
VICOR CORPORATION
Dear Stockholder,
Please take note of the important information enclosed with this Proxy Card,
which includes issues related to the management and operation of your
Corporation that require your immediate attention and approval. These are
discussed in detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to vote
your shares.
Please mark the boxes on this proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope.
Your vote must be received prior to the Annual Meeting of Stockholders on June
24, 1999.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Vicor Corporation
Form of Proxy
CLASS B COMMON VICOR CORPORATION CLASS B COMMON
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - JUNE 24, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND
MAY BE REVOKED PRIOR TO ITS EXERCISE.
The undersigned hereby constitutes and appoints Patrizio Vinciarelli and Mark A.
Glazer, and each of them, as Proxies of the undersigned, with full power to
appoint his substitute, and authorizes each of them to represent and to vote all
shares of Class B Common Stock of Vicor Corporation (the "Corporation") held by
the undersigned at the close of business on April 30, 1999, at the Annual
Meeting of Stockholders to be held at the Andover Country Club, 60 Canterbury
Street, Andover, Massachusetts, on Thursday, June 24, 1999 at 5:00 p.m., local
time, and at any adjournments or postponements thereof.
When properly executed, this proxy will be voted in the manner directed herein
by the undersigned stockholder(s). IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF ALL THE NOMINEES FOR DIRECTOR AND, IN THEIR
DISCRETION, UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING. A
stockholder wishing to vote in accordance with the Board of Directors'
recommendation need only sign and date this proxy and return it in the envelope
provided.
The undersigned hereby acknowledges receipt of a copy of the accompanying Notice
of Annual Meeting of Stockholders, the Proxy Statement with respect thereto and
the Corporation's 1998 Annual Report to Stockholders and hereby revokes any
proxy or proxies heretofore given. This proxy may be revoked at any time before
it is exercised.
- --------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please sign exactly as your name(s) appear(s) on the books of the Corporation.
Joint owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- --------------------------- ----------------------------------
- --------------------------- ----------------------------------
- --------------------------- ----------------------------------
[ X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
- ------------------------------------ 1. Proposal to elect the following Directors: For All With- For All
VICOR CORPORATION Nominees hold Except
- ----------------------------------- M.Michael Ansour Jay M. Prager [ ] [ ] [ ]
CLASS B COMMON STOCK Estia J. Eichten David T. Riddiford
Barry Kelleher Patrizio Vinciarelli
If you do not wish your shares voted "For" a particular nominee,
mark the "For All Except" box and strike a line through the name(s)of the
nominee(s). Your shares will be voted for the remaining nominee(s).
-------
Please be sure to sign and date this Proxy. Date Mark box at right if an address change or comment has [ ]
- ---------------------------------------------------- been noted on the reverse side of this card.
- ---Stockholder sign here----------Co-owner sign here----------------
Detach Card Detach Card
VICOR CORPORATION
Dear Stockholder,
Please take note of the important information enclosed with this Proxy Card,
which includes issues related to the management and operation of your
Corporation that require your immediate attention and approval. These are
discussed in detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to vote
your shares.
Please mark the boxes on this proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope.
Your vote must be received prior to the Annual Meeting of Stockholders on June
24, 1999.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Vicor Corporation