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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
Perceptron
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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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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PERSONS WHO POTENTIALLY ARE TO RESPOND TO THE COLLECTION OF INFORMATION
CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A
CURRENTLY VALID OMB CONTROL NUMBER.
SEC 1913 (02-02)
(PERCEPTRON LOGO)
the focus on process
47827 Halyard Drive
Plymouth, Michigan 48170-2461
(734) 414-6100 Facsimile: (734) 414-4700
October 24, 2005
Dear Perceptron Shareholder:
You are cordially invited to attend the 2005 Annual Meeting of Shareholders of
Perceptron, Inc. ("Company") to be held on Monday, December 5, 2005, at 9:00
a.m., local time, at 47827 Halyard Drive, Plymouth, Michigan 48170.
The attached notice of the meeting and Proxy Statement describe the items of
business to be transacted:
(a) The election of eight directors, and
(b) Such other business as may properly come before the meeting or any
adjournment thereof.
After the formal business session, there will be a report to the shareholders on
the progress of the Company along with a discussion period. I look forward to
seeing you at the Annual Meeting and hope you will make plans to attend. Whether
or not you plan to attend the meeting, I urge you to sign, date and return your
proxy in the addressed envelope enclosed for your convenience so that as many
shares as possible may be represented at the meeting. No postage is required if
the envelope is mailed in the United States.
Sincerely,
/s/ A. A. Pease
-------------------------------------
Alfred A. Pease
Chairman of the Board of Directors,
President and Chief Executive Officer
(PERCEPTRON LOGO)
the focus on process
----------
PERCEPTRON, INC.
NOTICE OF THE 2005 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 5, 2005
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The Annual Meeting of Shareholders of Perceptron, Inc., a Michigan
corporation, will be held on Monday, December 5, 2005, at 9:00 a.m., local time,
at 47827 Halyard Drive, Plymouth, Michigan 48170 for the following purposes:
1. To elect eight directors to serve until the 2006 Annual Meeting of
Shareholders and until their successors are elected and qualified.
2. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on October 14, 2005,
as the record date for the determination of shareholders entitled to notice of
and to vote at the meeting. A certified list of shareholders entitled to vote at
the meeting will be available for examination by any shareholder during the
meeting at the corporate offices at 47827 Halyard Drive, Plymouth, Michigan
48170.
A copy of the 2005 Annual Report for the fiscal year ended June 30, 2005
and Proxy Statement accompanies this notice.
By the Order of the Board of Directors
/s/ David W. Geiss
----------------------------------------
David W. Geiss, Secretary
47827 Halyard Drive
Plymouth, Michigan 48170
October 24, 2005
THE VOTE OF EVERY SHAREHOLDER IS IMPORTANT, AND YOUR COOPERATION IN
PROMPTLY RETURNING YOUR MARKED, DATED AND SIGNED PROXY WILL BE APPRECIATED. THE
PROXY IS REVOCABLE AND WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU
ATTEND THE MEETING. YOUR PROXY WILL, HOWEVER, HELP TO ASSURE A QUORUM AND TO
AVOID ADDED PROXY SOLICITATION COSTS.
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PROXY STATEMENT
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PERCEPTRON, INC.
2005 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AT 9:00 A.M. ON DECEMBER 5, 2005
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INTRODUCTION
This Proxy Statement and the accompanying Notice of the 2005 Annual Meeting
of Shareholders, 2005 Annual Report and proxy card are furnished in connection
with the solicitation of proxies by the Board of Directors ("Board") of
Perceptron, Inc., a Michigan corporation ("Company"). The proxies are being
solicited for use at the 2005 Annual Meeting of Shareholders ("Annual Meeting")
of the Company to be held at the corporate offices of the Company on Monday,
December 5, 2005, at 9:00 a.m., local time, and at any adjournment of that
meeting. The corporate offices of the Company are located at 47827 Halyard
Drive, Plymouth, Michigan 48170, and the Company's telephone number is (734)
414-6100. The Company expects that this Proxy Statement and the accompanying
materials will be first sent or given to shareholders on or about October 27,
2005.
Only shareholders of record of the Company's Common Stock, $0.01 par value
("Common Stock") at the close of business on October 14, 2005 ("Record Date")
will be entitled to notice of and to vote at the Annual Meeting or any
adjournments thereof. Shareholders of record on the Record Date are entitled to
one vote per share on any matter that may properly come before the Annual
Meeting. As of the Record Date, there were 8,810,047 shares of Common Stock
outstanding and entitled to vote. The Company has no other class of stock
outstanding. The presence, either in person or by properly executed proxy, of
the holders of a majority of the outstanding shares of Common Stock is necessary
to constitute a quorum at the Annual Meeting. See "Further Information - Share
Ownership of Management and Certain Shareholders" for a description of the
beneficial ownership of the Common Stock.
Directors, officers and other employees of the Company may solicit, without
additional compensation, proxies by any appropriate means, including personal
interview, mail, telephone, courier service and facsimile transmissions.
Arrangements will also be made with brokerage houses and other custodians,
nominees and fiduciaries which are record holders of the Company's Common Stock
to forward proxy soliciting material to the beneficial owners of such shares and
the Company will reimburse such record holders for their reasonable expenses
incurred in connection therewith. The cost of soliciting proxies, including the
preparation, assembling and mailing of the Notice of the 2005 Annual Meeting of
Shareholders, the Proxy Statement, the 2005 Annual Report and the accompanying
proxy card, as well as the cost of forwarding such material to the beneficial
owners of Common Stock, will be borne by the Company. Only one Proxy Statement
and Annual Report will be delivered to multiple shareholders sharing an address
unless the Company has received contrary instructions from one or more of the
shareholders. Upon written or oral request from a shareholder who shares an
address with another shareholder, the Company shall deliver a separate copy of
the Proxy Statement and Annual Report. In the future, shareholders can call or
write the Company for a separate annual report or proxy statement at (734)
414-6100 or 47827 Halyard Drive, Plymouth, MI 48170-2461. Similarly, those
shareholders who share an address and wish to receive only one copy of the
annual report or proxy statement when they are receiving multiple copies can
also call or write the Company at the number and address given above.
Shares represented by a duly executed proxy, unless previously revoked,
will be voted at the Annual Meeting in accordance with the instructions of the
shareholder thereon if the proxy is received by the Company before the close of
business on December 2, 2005. Shares represented by a proxy received after
December 2, 2005 will be voted if the proxy is received by the Company in
sufficient time to permit the necessary examination and tabulation of the proxy
before the vote of shareholders is taken. IF NO INSTRUCTIONS ARE MADE, SUCH
SHARES WILL BE VOTED FOR THE ELECTION OF DIRECTORS NAMED IN THIS PROXY
STATEMENT. A proxy also gives Messrs. Pease, Garber and Geiss discretionary
authority, to the extent permitted by law, to vote all shares of Common Stock
represented by the proxy on any other matter that is properly presented for
action at the meeting;
however, the Board does not intend to present any other matters at the Annual
Meeting. Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before it is voted. Proxies may be revoked by (i)
filing with the Secretary of the Company, at or before the Annual Meeting, a
written notice of revocation bearing a later date than the proxy, (ii) duly
executing a subsequent proxy relating to the same shares and delivering it to
the Secretary of the Company at the Company's corporate offices at or before the
Annual Meeting, or (iii) attending the Annual Meeting and voting in person, if
the shareholder is a shareholder of record (although attendance at the Annual
Meeting will not in and of itself constitute a revocation of a proxy).
Abstentions, and withheld votes with respect to the election of directors,
are counted only for purposes of determining whether a quorum is present at the
2005 Annual Meeting. Withheld votes will be excluded entirely from the vote on
the election of directors and will therefore have no effect on the election. If
a shareholder owns shares through a bank or broker in street name, the
shareholder may instruct his or her bank or broker how to vote such shares.
"Broker non-votes" occur when a bank, broker or other nominee holder has not
received voting instructions with respect to a particular matter and the nominee
holder does not have discretionary power to vote on that matter. The election of
directors is considered a routine matter, so a bank or broker will have
discretionary authority to vote such shares held in street name on that
proposal. A broker non-vote may also occur if a broker fails to vote shares for
any reason. Directors are elected by a plurality of the votes cast, so that only
votes cast "for" directors are counted in determining which directors are
elected.
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MATTERS TO COME BEFORE THE MEETING
PROPOSAL 1 -- ELECTION OF DIRECTORS
At the Annual Meeting, Shareholders will be asked to elect a Board of eight
directors to hold office, in accordance with the Bylaws of the Company, until
the 2006 annual meeting and until the election and qualification of their
successors, or until their resignation or removal. The following table sets
forth information regarding the nominees for election to the Company's Board.
The Board recommends a vote FOR each of the nominees for election. The shares
represented by properly executed proxies will be voted in accordance with the
specifications made therein. PROXIES WILL BE VOTED "FOR" THE ELECTION OF SUCH
NOMINEES UNLESS THE SPECIFICATION IS MARKED ON THE PROXY INDICATING THAT
AUTHORITY TO DO SO IS WITHHELD. If a nominee is unable to serve or, for good
cause, will not serve, the proxy confers discretionary authority to vote with
respect to the election of any person to the Board. The nominees receiving a
plurality of votes cast at the Annual Meeting will be elected to the Board.
Shares may not be voted cumulatively for the election of directors.
The nominees named below have been selected by the Board of the Company.
Each of the nominees is currently a director of the Company. The following
information with regard to business experience has been furnished by the
respective nominees for director.
POSITION, PRINCIPAL OCCUPATIONS
NAME AND AGE AND OTHER DIRECTORSHIPS
------------ -------------------------------
David J. Beattie, 63....... Director since 1997. Mr. Beattie was President of
McNaughton - McKay Electric Company ("MME") from
February 2001 to December 2004, and prior to that
time, from September 2000 to February 2001, was
Chief Operating Officer of MME. MME is a
distributor of industrial automation products and
services.
Kenneth R. Dabrowski, 62... Director since 1999. Mr. Dabrowski has been
President of the Durant Group, L.L.C., a
management consulting firm, since December 2000,
and has been a member of the faculty at
Massachusetts Institute of Technology since June
1999. Mr. Dabrowski was Vice President, Quality
and Process Leadership, Ford Automotive
Operations of Ford Motor Company from September
1996 to January 1999 where he had global
responsibility for information technology,
process reengineering, corporate and supplier
quality and customer satisfaction.
Philip J. DeCocco, 67...... Director since 1996. Mr. DeCocco has been
President of Sturges House, Inc., a company
founded by Mr. DeCocco, since 1983. Sturges
House, Inc. offers executive recruiting and
management consulting services in human
resources, strategic planning, executive
development and organization design and
development to various companies.
W. Richard Marz, 62........ Director since 2000. Mr. Marz has been a
Technical Consultant to LSI Logic Corporation
("LSI") since August 2005, and prior to that time
he was Executive Vice President, Worldwide
Strategic Marketing (December 2003 to August
2005), Executive Vice President, Communications
and ASIC Technology (February 2002 to December
2003), Executive Vice President, ASIC Technology
(July 2001 to February 2002), and Executive Vice
President, Geographic Markets (May 1996 to July
2001), of LSI. LSI is a semiconductor
manufacturer.
Robert S. Oswald, 64....... Director since 1996. Mr. Oswald has been
Chairman, Bendix Commercial Vehicle Systems, LLC,
a manufacturer of air brakes and other safety
systems, since October 2003 and served as
Chairman and Chief Executive Officer from March
2002 to September 2003. Mr. Oswald was Chairman,
President and Chief Executive Officer of Robert
Bosch Corporation, a manufacturer of automotive
components and systems, and a member of the Board
of Management of Robert Bosch, GmbH from July
1996 to December 2000.
Alfred A. Pease, 59........ Director since 1996 and Chairman of the Board
since July 1996. Since February 1996, Mr. Pease
has been President and Chief Executive Officer of
the Company.
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James A. Ratigan, 57....... Director since 2003. Since August 2003, Mr.
Ratigan has been an independent consultant
providing consultative services to several
specialty pharmaceutical and biotechnology
companies. From June 1997 to August 2003, Mr.
Ratigan was Executive Vice President, Chief
Financial Officer and Secretary of Orapharma,
Inc., a specialty pharmaceutical company that was
acquired by Johnson and Johnson, Inc. Mr. Ratigan
was a director of the Company from 1989 to 1996
and served as the Company's Chief Operating
Officer from May 1994 to April 1996 and Chief
Financial Officer from December 1993 to June
1996.
Terryll R. Smith, 55....... Director since 1996. Mr. Smith has been President
and Chief Executive Officer of Novation
Environmental Technologies Inc., a water
purification company, since January 2000.
BOARD OF DIRECTORS AND COMMITTEES
The Board is responsible for direction of the overall affairs of the
Company. Directors of the Company are elected to serve until their successors
are elected. The Board and each committee thereof meet formally from time to
time and also take action by consent resolutions. During the fiscal year ended
June 30, 2005, the Board met a total of ten times. All of the current directors
who are standing for re-election, except for Mr. Beattie, attended at least 75%
of the total meetings of the Board, and of any committee on which they served,
held during the period in fiscal 2005 in which they served as directors or
members of any such committees. The Company's policy is that each director is
strongly encouraged to attend the Annual Meeting of Shareholders if reasonably
possible. All of the directors, except one, attended the 2004 Annual Meeting of
Shareholders.
The Board has delegated certain authority to an Audit Committee, a
Management Development, Compensation and Stock Option Committee and a Nominating
and Corporate Governance Committee to assist it in executing its duties. The
Board has adopted charters for each of these Committees. The charters are
available on the Company's website at www.perceptron.com. The Board determined
that all of the directors, other than Mr. Pease, are "independent directors" as
defined in Marketplace Rule 4200(a)(15) of The Nasdaq Stock Market, Inc.
("Nasdaq"). The composition and principal functions of each Committee are as
follows:
Audit Committee. The Audit Committee is currently comprised of three
outside members of the Board: Messrs. Oswald, Ratigan and Smith. The Board
determined that all of the members of the Audit Committee are independent as
required by the rules of the Securities and Exchange Commission ("SEC") and
Nasdaq listing standards for audit committee members. In addition, the Board
determined that Mr. Ratigan qualified as an "audit committee financial expert"
as defined by applicable SEC rules and that each of the Audit Committee members
satisfies all other qualifications for Audit Committee members set forth in the
applicable Nasdaq rules. The Audit Committee held five meetings in fiscal 2005.
The Board approved and adopted the Audit Committee's revised charter on
February 9, 2004. The charter in its current form was last provided to
shareholders as an appendix to the Company's Proxy Statement dated October 25,
2004 and is also available on the Company's website at www.perceptron.com. The
Audit Committee's primary responsibilities include the following: (i) oversee
the Company's financial reporting process on behalf of the Board; (ii) review,
appoint, compensate, retain and oversee the accounting firm to be appointed as
the Company's independent registered public accounting firm; (iii) review in
advance the nature and extent of all services provided to the Company by its
independent registered public accounting firm; (iv) review of the independence
of the Company's independent registered public accounting firm; (v) review the
scope, purpose and procedures of the audit; (vi) review the Company's annual
earnings press release, the audited financial statements and the proposed
footnotes to be included in the Company's Annual Report on Form 10-K with
management and the auditors and report annually to the Board whether the Audit
Committee recommends to the Board that the audited financial statements be
included in the Company's Annual Report on Form 10-K for filing with the SEC;
(vii) review with such auditors its experience, findings and recommendations
upon completion of the audit and receive from the auditors their required
communications under generally accepted auditing standards; (viii) review of the
Company's quarterly earnings releases and financial statements with management
and the auditors; (ix) review of the Company's Quarterly Reports on Form 10-Q
for filing with the SEC; (x) review of proxy statement when authority is
delegated by the Board; (xi) review the adequacy of the Company's internal
accounting procedures and financial controls and management's report on internal
control over financial reporting required by applicable SEC rules; (xii)
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oversee compliance by the Company with legal and regulatory requirements; (xiii)
establish procedures for receipt, retention and handling of complaints and
concerns regarding financial matters; (xiv) act as the Qualified Legal
Compliance Committee; (xv) review and approve any related party transactions;
(xvi) monitor the Company's risk management activities; (xvii) review
performance of finance and account department; and (xviii) review and reassess
annually the adequacy of the Audit Committee's charter and performance.
Management Development, Compensation and Stock Option Committee. The
Management Development, Compensation and Stock Option Committee ("Management
Development Committee") is currently comprised of three outside members of the
Board: Messrs. Beattie, DeCocco and Marz. The Management Development Committee's
primary responsibilities include the following: (i) review the Company's
compensation programs; (ii) establish and administer the compensation programs
for the Company's officers; (iii) administer the Company's stock-based
compensation plans; (iv) review and recommend compensation for service on the
Board; (v) provide a committee report for inclusion in the Company's proxy
statement; (vi) monitor the Company's succession planning; and (vii) review and
reassess annually the adequacy of the Management Development Committee's charter
and performance. The Management Development Committee held nine meetings in
fiscal 2005.
Nominating and Corporate Governance Committee. The Nominating and Corporate
Governance Committee ("Nominating Committee") is currently comprised of three
outside members of the Board: Messrs. DeCocco, Dabrowski and Marz. The Board
determined that all members of the Nominating Committee are independent as
required by the Nasdaq listing standards for nominating committee members.
The Nominating Committee's primary responsibilities include the following:
(i) establish criteria for the selection of new Board members; (ii) conduct
searches and interviews for individuals qualified to become Board members; (iii)
make recommendations to the Board regarding director nominees to stand for
election as directors at each annual meeting of shareholders or to fill
vacancies on the Board; (iv) recommend to the Board the directors to serve on
the standing committees of the Board and the structure and functions of such
committees; (v) develop policies and procedures for Board consideration of
shareholder recommendations of Board nominees and handling of shareholder
proposals; (vi) develop a process for shareholders to communicate with the
Board; (vii) advise Board on corporate governance matters, including
development, review and assessment of corporate governance principles; (viii)
oversee the Board and committee self evaluation process; (ix) evaluate
independence of each Board member and (x) review and reassess annually the
adequacy of the Nominating Committee's charter and performance.
The Nominating Committee may use various methods to identify director
candidates, including recommendations from existing Board members, management,
shareholders, professionals and other sources outside the Company, which could
include third party search firms. The Nominating Committee will evaluate and
screen the list of potential nominees and narrow the list to individuals they
believe best satisfy the needs of the Company, with a strong preference given to
the continuation of the current Board members. The Nominating Committee will
conduct interviews and gather additional information concerning the individuals.
Based on the foregoing, the Nominating Committee will recommend to the Board the
number of members of the Board to be elected at the next annual meeting of
shareholders of the Company and the persons to be nominated for election to the
Board. Director candidates need not possess any specific minimum qualifications.
Rather, a candidate's suitability for nomination and election to the Board will
be evaluated in light of the portfolio of skills, experience, perspective and
background required for the effective functioning of the Board. Among the
desired qualities that the Nominating Committee will consider are: (i) high
ethical character; (ii) practical intelligence and judgment, an inquiring mind
and a good range of problem solving skills; (iii) independence; (iv) ability to
work in a collaborative culture; (v) high-level leadership experience and
personal achievement; (vi) prior Board experience or experience advising or
reporting to Boards preferably of a publicly traded company; (vii) sufficient
personal commitment and time to devote to responsibilities as a director; and
(viii) capacity and desire to represent the balanced best interests of the
shareholders as a whole.
The Nominating Committee will consider candidates recommended by
shareholders using the same procedures and standards utilized for evaluating
candidates recommended by other sources except that the Nominating Committee
will not consider a director nominee proposed by a shareholder if (i) the
shareholder does not submit the required information timely (see "Shareholder
Proposals and Nominees for 2006 Annual Meeting - Shareholder Nominees"); (ii)
the shareholder or group of shareholders proposing the director nominee do not
beneficially own, in
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the aggregate, more than 5% of the Company's Common Stock, with the Common Stock
used to satisfy this requirement owned for at least one year prior to the date
of the recommendation, or (iii) the shareholder proposes as the nominee himself
or herself, or an affiliate or affiliated party. See "Shareholder Proposals and
Nominees for 2006 Annual Meeting - Shareholder Nominees" for a description of
the procedures to be used by shareholders to submit recommendations of possible
director nominees to the Nominating Committee. The Nominating Committee held
three meetings in fiscal 2005.
SHAREHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
Shareholders desiring to communicate with the Board or any individual
director may send communications to the Board in writing by mail addressed to
the Board of Directors or an individual director, c/o General Counsel,
Perceptron, Inc., 47827 Halyard Drive, Plymouth, MI 48170 or by e-mail addressed
to boardofdirectors@perceptron.com.
CODE OF ETHICS
The Company has adopted a Code of Business Conduct and Ethics ("Code of
Ethics") that applies to the Company's directors, executive officers and other
employees. The Code of Ethics is available on the Company's website at
www.perceptron.com. Shareholders may also obtain a written copy of the Code of
Ethics, without charge, by sending a written request to the Investor Relations
Department, Perceptron, Inc., 47827 Halyard Drive, Plymouth, Michigan 48170. The
Company will disclose any amendments to, or waivers from, the provisions of the
Code of Ethics applicable to the directors or executive officers on the
Company's website.
Certain information relating to corporate governance matters can be viewed
at www.perceptron.com. There the Company makes available, free of charge, its
(i) charters for the Audit Committee, Management Development, Compensation and
Stock Option Committee and Nominating and Corporate Governance Committee and
(ii) Code of Ethics. The Company intends to post additional information on this
website from time to time as the Board adopts or revises policies and
procedures. The information found on the Company's website is not part of this
or any report the Company files with, or furnishes to, the SEC.
AUDIT COMMITTEE REPORT
In accordance with its revised charter, which was approved and adopted by
the Board on February 9, 2004, the Audit Committee provides assistance to the
Board in fulfilling its responsibility to the shareholders, potential
shareholders and investment community relating to corporate accounting,
reporting practices of the Company and the quality and integrity of the
financial reports of the Company. In doing so, it is the responsibility of the
Audit Committee to maintain free and open communication between the Board, the
Company's independent registered public accounting firm and the financial
management of the Company.
The Audit Committee received from the independent registered public
accounting firm and reviewed a formal written statement describing all
relationships between the firm and the Company that might bear on the firm's
independence consistent with Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), as may be modified or
supplemented, discussed with the auditors any relationships that may impact
their objectivity and independence and satisfied itself as to the auditors'
independence.
The Audit Committee discussed with the independent registered public
accounting firm the matters required to be discussed by Statement on Auditing
Standards No. 61 (Codification of Statements on Auditing Standards, AU Section
380), as may be amended or supplemented, and, with and without management
present, discussed and reviewed the results of the independent registered public
accounting firm's examination of the financial statements.
The Audit Committee reviewed and discussed with management and the
independent registered public accounting firm the audited financial statements
of the Company as of and for the fiscal year ended June 30, 2005, including the
quality of accounting principles and significant judgments affecting the
financial statements.
Based on the above-mentioned reviews and discussions with management and
the independent registered public accounting firm, the Audit Committee
recommended to the Board that the Company's audited financial statements be
included in its Annual Report on Form 10-K for the year ended June 30, 2005 for
filing with the Securities and
6
Exchange Commission. Further, the Audit Committee approved the engagement of
Grant Thornton LLP as the Company's independent registered public accounting
firm for the fiscal year ended June 30, 2006.
AUDIT COMMITTEE: James A. Ratigan, Chairman
Robert S. Oswald
Terryll R. Smith
FURTHER INFORMATION
EXECUTIVE OFFICERS
The officers listed below were appointed by the Board and serve in the
capacities indicated. Executive officers are normally appointed annually by the
Board and serve at the pleasure of the Board.
NAME AND AGE POSITION AND PRINCIPAL OCCUPATIONS
------------ -------------------------------------------------
Alfred A. Pease, 59......... President and Chief Executive Officer since
February 1996. Mr. Pease's business experience is
described under "Proposal 1 -- Election of
Directors."
Wilfred J. Corriveau, 52 ... Mr. Corriveau has been Senior Vice President -
Global Automotive Business of the Company since
September 2000.
John J. Garber, 63.......... Mr. Garber has been Vice President - Finance and
Chief Financial Officer of the Company since
February 1999.
Harry T. Rittenour, 59...... Mr. Rittenour has been Senior Vice President -
Product Production and Quality since May 2001.
Prior to that, he was Senior Vice President -
Industrial Businesses Segment from May 2000 until
May 2001.
SHARE OWNERSHIP OF MANAGEMENT AND CERTAIN SHAREHOLDERS
PRINCIPAL SHAREHOLDERS
The following table sets forth information with respect to beneficial
ownership of the Common Stock by each person known by management of the Company
to be the beneficial owner of more than five percent of its outstanding Common
Stock. The number of shares reported is as of the dates indicated in the
footnotes below. The percentage of class is based on 8,810,047 shares of Common
Stock outstanding on October 14, 2005. The information as to each person has
been furnished by such person and, except as where otherwise indicated, each
person has sole voting power and sole investment power with respect to all
shares beneficially owned by such person.
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
------------------- -------------------- --------
Dimensional Fund Advisors Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401 ................. 669,418(1) 7.60
FMR Corp., Fidelity Management & Research
Company, Fidelity Low Priced Stock Fund,
Edward C. Johnson 3d and Abigail P. Johnson
82 Devonshire Street
Boston, Massachusetts 02109 .................... 743,434(2) 8.44
Nicusa Capital Partners, L.P.
20 Exchange Place, 38th Floor
New York, New York 10005 ....................... 447,398(3) 5.08
Alfred A. Pease
47827 Halyard Drive
Plymouth, Michigan 48170 ....................... 665,053(4) 7.09
Royce & Associates, Inc.,
1414 Avenue of the Americas
New York, New York 10019 ....................... 546,000(5) 6.20
7
Richard L. Scott
700 11th Street S, Suite 101
Naples, Florida 34102 .......................... 446,880(6) 5.07
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(1) Based upon its statement on Schedule 13G dated and filed with the SEC on
February 9, 2005, Dimensional Fund Advisors Inc. has sole power to vote and
dispose of 669,418 shares of Common Stock. Further, based upon its
statement on Schedule 13G, the shares of Common Stock are beneficially
owned by investment companies, trusts and accounts which are advised by
Dimensional Fund Advisors Inc. and none of which own more than 5% of the
shares of Common Stock. Dimensional Fund Advisors Inc. disclaims beneficial
ownership of such shares of Common Stock.
(2) Based upon its Form N-CSR dated and filed with the SEC on September 28,
2005, Fidelity Low-Priced Stock Fund ("Fund") is the owner of 743,434
shares of Common Stock as of July 31, 2005. Further, based upon its
statement on Schedule 13G dated February 16, 2004 and filed with the SEC on
February 17, 2004, Fidelity Management & Research Company ("Fidelity"), a
wholly-owned subsidiary of FMR Corp. and an investment adviser, is the
beneficial owner of the shares of Common Stock as a result of acting as an
investment adviser to various investment companies including the Fund.
Edward C. Johnson 3d, FMR Corp., through its control of Fidelity, and the
Fund each has sole power to dispose of the shares of Common Stock. Neither
FMR Corp. nor Edward C. Johnson 3d, Chairman of FMR Corp., has the sole
power to vote or direct the voting of the shares owned directly by the
Fund, which power resides with the Fund's Board of Trustees. Fidelity
carries out the voting of the shares of Common Stock under written
guidelines established by the Fund's Board of Trustees. Edward C. Johnson
3d and Abigail P. Johnson each own in excess of 10% of the aggregate
outstanding voting stock of FMR Corp.
(3) Based upon its statement on Schedule 13G dated October 14, 2005 and filed
with the SEC on October 17, 2005, Nicusa Capital Partners, L.P. has sole
power to vote and dispose of 447,398 shares of Common Stock.
(4) Includes options to purchase 572,534 shares of Common Stock, which are
presently exercisable or which are exercisable within 60 days of October
14, 2005.
(5) Based upon its statement on Schedule 13G dated and filed with the SEC on
February 2, 2005, Royce & Associates, Inc. ("Royce") has sole power to vote
and dispose of 546,000 shares of Common Stock.
(6) Based upon his statement on Schedule 13D dated and filed with the SEC on
October 20, 2005, Richard L. Scott has sole power to vote and dispose of
446,880 shares of Common Stock. Further, based upon his statement on
Schedule 13D, Mr. Scott indicates that the shares of Common Stock were
purchased by three different entities controlled by him.
BENEFICIAL OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information with respect to beneficial
ownership of the Common Stock by each of the directors and director nominees,
the persons named in the Summary Compensation Table and by all directors and
executive officers as a group as of October 14, 2005, unless otherwise
indicated. The information as to each person has been furnished by such person
and, except as where otherwise indicated, each person has sole voting power and
sole investment power with respect to all shares beneficially owned by such
person.
AMOUNT AND NATURE OF PERCENT
NAME OF BENEFICIAL OWNER (1) BENEFICIAL OWNERSHIP OF CLASS
---------------------------- -------------------- --------
David J. Beattie (2)(3) ....................... 11,600 *
Kenneth R. Dabrowski (2)(4) ................... 74,151 *
Philip J. DeCocco (2)(5) ...................... 54,042 *
W. Richard Marz (2)(6) ........................ 49,583 *
Robert S. Oswald (2)(7) ....................... 68,689 *
Alfred A. Pease (2)(8) ........................ 665,053 7.09%
James A. Ratigan (2)(9) ....................... 16,000 *
Terryll R. Smith (2)(10) ...................... 7,500 *
Wilfred J. Corriveau (11) ..................... 138,827 1.56%
John J. Garber (12) ........................... 101,867 1.15%
Harry T. Rittenour (13) ....................... 126,200 1.41%
Peter J. Chatel (14) .......................... -- *
Directors and executive officers as a group
(11 persons)(15) ........................... 1,313,512 13.43%
8
----------
* Less than 1% of class
(1) To the best of the Company's knowledge, based on information reported by
such directors and officers or contained in the Company's shareholder
records.
(2) Serves as a member of the Board of the Company.
(3) Includes options to purchase 10,500 shares of Common Stock, which are
presently exercisable or which are exercisable within 60 days of October
14, 2005.
(4) Includes options to purchase 27,000 shares of Common Stock, which are
presently exercisable or which are exercisable within 60 days of October
14, 2005.
(5) Includes options to purchase 23,500 shares of Common Stock, which are
presently exercisable or which are exercisable within 60 days of October
14, 2005.
(6) Includes options to purchase 24,000 shares of Common Stock, which are
presently exercisable or which are exercisable within 60 days of October
14, 2005.
(7) Includes options to purchase 13,500 shares of Common Stock, which are
presently exercisable or which are exercisable within 60 days of October
14, 2005.
(8) Includes options to purchase 572,534 shares of Common Stock, which are
presently exercisable or which are exercisable within 60 days of October
14, 2005.
(9) Represents options to purchase 16,000 shares of Common Stock, which are
presently exercisable or which are exercisable within 60 days of October
14, 2005.
(10) Represents options to purchase 7,500 shares of Common Stock, which are
presently exercisable or which are exercisable within 60 days of October
14, 2005.
(11) Includes options to purchase 71,250 shares of Common Stock, which are
presently exercisable or which are exercisable within 60 days of October
14, 2005.
(12) Includes options to purchase 75,500 shares of Common Stock, which are
presently exercisable or which are exercisable within 60 days of October
14, 2005.
(13) Includes options to purchase 126,000 shares of Common Stock, which are
presently exercisable or which are exercisable within 60 days of October
14, 2005.
(14) Peter J. Chatel resigned as Senior Vice President - New Market Business in
September 2005.
(15) Includes options to purchase 967,284 shares of Common Stock, which are
presently exercisable or which are exercisable within 60 days of October
14, 2005.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's directors,
its executive (and certain other) officers, and any persons holding more than
ten percent of the Common Stock are required to report their ownership of the
Common Stock and any changes in that ownership to the SEC. Directors, officers
and greater than ten percent shareholders are required by the SEC to furnish the
Company with copies of all Section 16(a) reports they file. Specific due dates
for these reports have been established and the Company is required to report in
this proxy statement any failure to file by these dates during the Company's
last fiscal year. To the Company's knowledge, all of these filing requirements
were satisfied during the Company's last fiscal year by the Company's officers,
directors and ten percent shareholders, except to the extent previously reported
in a Company proxy statement. In making this statement, the Company has relied
solely on the written representations of its directors, officers and ten percent
shareholders and copies of the reports that have been filed with the SEC.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS
All of the members of the Board who are not employed by the Company (the
"Eligible Directors") will receive an annual retainer of $20,000, paid quarterly
in the amount of $5,000. All Eligible Directors receive $1,250 for each Board
meeting attended. In addition, directors are reimbursed for their out-of-pocket
expenses incurred in attending Board and committee meetings.
Eligible Directors are also eligible to participate in the Company's 2004
Stock Incentive Plan (the "2004 Plan"), which replaced the Directors Stock
Option Plan (the "Directors Plan"). The Management Development Committee or, if
there is no such committee or similar committee, the Board, administers the 2004
Plan. Unless otherwise specified in the 2004 Plan, the Management Development
Committee has the power to select the recipients of
9
awards under the 2004 Plan, including Eligible Directors, and has broad power to
determine the terms of awards and to change such terms in various ways
subsequent to grant. The 2004 Plan permits grants to Eligible Directors of
nonqualified stock options, indexed options, restricted stock, restricted stock
units, stock appreciation rights, performance share awards, including cash, and
deferred stock units at any time prior to October 22, 2014. The exercise price
for a nonqualified stock option, other than an indexed option, will be not less
than 100% of the fair market value of Common Stock on the date of grant. Fair
market value means for purposes of determining the value of Common Stock on the
grant date the average of the closing sales prices of the Common Stock on Nasdaq
(or, if there have been no sales on Nasdaq on any such day, the average of the
closing high bid and low asked prices on Nasdaq at the end of such day) for the
five (5) consecutive trading days on Nasdaq immediately preceding the grant
date. No stock grants were made to Eligible Directors in the fiscal year ended
June 30, 2005 under the 2004 Plan.
The 2004 Plan also permits Eligible Directors to purchase shares of Common
Stock through the 2004 Plan in exchange for all or a portion of the cash fees
payable to them for serving as a director of the Company ("Directors Stock
Purchase Rights Option"). By December 31 of each year, a director must make his
or her election to purchase shares of Common Stock in exchange for all or a
portion of a director's fees payable from December 1 of that year to December 1
of the next year.
Directors fees are payable in cash on March 1, June 1, September 1 and
December 1 of each year. On each of these dates, the Company will determine the
number of shares of Common Stock each Director who has elected to participate in
the Directors Stock Purchase Rights Option has earned on that date. This
determination will be made by dividing all director's fees payable on each of
those dates which the Director has elected to exchange for Common Stock, by the
fair market value of the Common Stock on that date. Any portion of the
director's fees payable on each of those dates which the Director has not
elected to receive in Common Stock will be paid to the Director in cash. The
fair market value of the Common Stock will be determined by using the average of
the closing sales price of the Common Stock on the Nasdaq for the five
consecutive trading days immediately preceding the date of determination. The
Company will issue share certificates for all shares of Common Stock purchased
in a calendar year by December 15th of such year unless a director requests by
written notice to the Company to receive his or her share certificate at any
time during the year.
The Directors Plan was cancelled as to future grants beginning on the day
following the 2004 Annual Meeting of Shareholders. Prior to such cancellation,
all Eligible Directors who were first elected or appointed after February 9,
1995 received an Option to purchase 15,000 shares of Common Stock on the date of
his election or appointment ("Initial Option"). In addition, each Eligible
Director who was a director for six months before the date of each Annual
Meeting of Shareholders held during the term of the Directors Plan automatically
was granted, as of the date of such Annual Meeting, including the 2004 Annual
Meeting, an option to purchase an additional 3,000 shares of Common Stock (an
"Annual Option"). The exercise price of options granted under the Directors Plan
was determined by using the average of the closing sales price of the Common
Stock on the Nasdaq for the last five (5) consecutive trading days on the Nasdaq
immediately preceding the date of grant. Each option granted under the Directors
Plan as an Initial Option became exercisable in full on the first anniversary of
the date of grant. Options granted as Annual Options became exercisable in three
annual increments of 33 1/2% of the shares subject to the option. The
exercisability of such options is accelerated in the event of the occurrence of
certain changes in control of the Company. All options granted under the Plan
are exercisable for a period of ten years from the date of grant, unless earlier
terminated due to the termination of the Eligible Director's service as a
director of the Company. In addition, prior to the approval of the 2004 Plan,
Eligible Directors could purchase shares of Common Stock through the Directors
Plan in exchange for all or a portion of the cash fees payable to them for
serving as a director of the Company, on terms similar to the Directors Stock
Purchase Rights Option.
EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table sets forth certain information as to compensation paid
by the Company for services rendered in all capacities to the Company and its
subsidiaries during the fiscal years ended June 30, 2005, June 30, 2004 and June
30, 2003 to (i) the Company's Chief Executive Officer and (ii) the Company's
executive officers at June 30, 2005 (other than the Chief Executive Officer)
whose aggregate annual salary and bonus exceeded $100,000.
10
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
----------------------------------------------- ------------------------
NAME AND OTHER ANNUAL SECURITIES UNDER- ALL OTHER
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION $)(1) LYING OPTIONS (#)(2) COMPENSATION ($)
------------------ ---- ---------- --------- ------------------ ------------------------ ----------------
Alfred A. Pease, President, Chief 2005 306,250 21,804 0 100,000 (50,000 of which 15,867(3)
Executive Officer and Chairman of were cancelled on
the Board.......................... 11/5/04(2)
2004 292,250 182,493 0 100,000 14,752(4)
2003 277,500 178,463 0 50,000 13,142(5)
Wilfred J. Corriveau, 2005 217,500 14,276 0 50,000(25,000 of which 11,718(3)
Senior Vice President Global were cancelled on
Automotive Business (6)............ 11/5/04(2)
2004 208,500 118,294 0 30,000 9,718(4)
2003 195,750 133,255(6) 0 25,000 8,720(5)
John J. Garber, Vice President 2005 186,917 12,509 0 30,000(15,000 of which 10,693(3)
Finance and Chief Financial were cancelled on
Officer............................ 11/5/04(2)
2004 179,500 104,553 0 20,000 9,693(4)
2003 173,875 104,446 0 15,000 8,693(5)
Harry T. Rittenour, 2005 167,833 11,013 0 50,000(25,000 of 6,883(3)
Senior Vice President Product which were cancelled on
Production and Quality............. 11/5/04(2)
2004 161,000 92,007 0 30,000 2,833(4)
2003 152,250 88,087 0 25,000 2,383(5)
Peter J. Chatel, 2005 119,000 20,027(7) 0 50,000 27,837(3)
Former Senior Vice President New
Market Business (7)................
----------
(1) Perquisites and other personal benefits were provided to all of the persons
named in the Summary Compensation Table. In accordance with SEC rules,
disclosure of such amounts is not required because such amounts were less
than 10% of the total annual salary and bonuses reported for each of the
respective individuals for each period presented.
(2) Included in the table are 50,000, 25,000, 15,000 and 25,000 options shares
granted to Messrs. Pease, Corriveau, Garber and Rittenour, respectively, in
fiscal 2005 that, because of a technical issue, they voluntarily cancelled
in fiscal 2005 and for which replacement options for 50,000, 25,000, 15,000
and 25,000 were issued to them, respectively, in fiscal 2005 on the same
terms.
(3) "All Other Compensation" is comprised of (i) contributions made by the
Company to the accounts of the named executive officers under the Company's
401(k) Plan with respect to the fiscal year ended June 30, 2005 as follows:
Mr. Pease $9,000; Mr. Corriveau $9,000; Mr. Garber $8,500; and Mr.
Rittenour $5,700; (ii) the dollar value of any life insurance premiums paid
by the Company in the fiscal year ended June 30, 2005 with respect to term
life insurance for the benefit of the named executives as follows: Mr.
Pease $6,867; Mr. Corriveau $2,718; Mr. Garber $2,193; Mr. Rittenour
$1,183; and Mr. Chatel $650; and (iii) temporary housing, moving, travel
and other expenses related to Mr. Chatel's relocation to Michigan totaling
$15,336 and reimbursements for closing costs in the amount of $11,851
related to Mr. Chatel's purchase of a new residence in fiscal 2005
following his relocation to Michigan.
(4) "All Other Compensation" is comprised of (i) contributions made by the
Company to the accounts of the named executive officers under the Company's
401(k) Plan with respect to the fiscal year ended June 30, 2004 as follows:
Mr. Pease $8,000; Mr. Corriveau $7,000; Mr. Garber $7,500; and Mr.
Rittenour $1,650; (ii) the dollar value of any life insurance premiums paid
by the Company in the fiscal year ended June 30, 2004 with respect to term
life insurance for the benefit of the named executives as follows: Mr.
Pease $6,752; Mr. Corriveau $2,718; Mr. Garber $2,193; and Mr. Rittenour
$1,183.
(5) "All Other Compensation" is comprised of (i) contributions made by the
Company to the accounts of the named executive officers under the Company's
401(k) Plan with respect to the fiscal year ended June 30, 2003 as follows:
Mr. Pease $7,500; Mr. Corriveau $6,002; Mr. Garber $6,500; and Mr.
Rittenour $1,200; (ii) the dollar value of any life insurance premiums paid
by the Company in the fiscal year ended June 30, 2003 with respect
11
to term life insurance for the benefit of the named executives as follows:
Mr. Pease $5,642; Mr. Corriveau $2,718; Mr. Garber $2,193; and Mr.
Rittenour $1,183.
(6) Mr. Corriveau's bonus amount includes $20,000 that represents the last
installment on a $60,000 signing bonus that was payable $20,000 at hire
date and $20,000 at each of the next two employment anniversary dates when
he became Senior Vice President - Global Automotive Business in August
2000.
(7) Mr. Chatel's bonus amount includes $12,000 that represents two installments
on a $30,000 signing bonus that was payable in five installments of $6,000
on the first, sixth, twelfth, eighteenth, and twenty-fourth months of
employment when he became Senior Vice President New Market Business in
November 2004. Mr. Chatel resigned as Senior Vice President New Market
Business in September 2005.
GRANTS OF OPTIONS
The following tables set forth certain information concerning individual
grants of stock options to each of the persons named in the Summary Compensation
Table made during the fiscal year ended June 30, 2005. All grants described in
the following tables were made under the Company's 1992 Stock Option Plan and
contain the Option Acceleration Provision (as defined under "Further Information
-- Compensation of Directors and Officers -- Executive Officers -- Termination
of Employment and Change of Control Arrangements").
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
------------------------------------- ANNUAL RATES OF STOCK
NUMBER OF PERCENT OF TOTAL PRICE APPRECIATION FOR
SECURITIES OPTIONS GRANTED TO EXERCISE OR OPTION TERM (3)
UNDERLYING OPTION EMPLOYEES IN BASE PRICE EXPIRATION ----------------------
NAME GRANTED (#) FISCAL YEAR (1) ($/SH) DATE (2) 5%($) 10%($)
---- ----------------- ------------------ ----------- ---------- ------- -------
Alfred A. Pease........ 50,000 13.15% 6.71 Cancelled -- --
11/5/2004
50,000(4) 13.15% 6.71 9/30/2014 208,371 526,559
Wilfred J. Corriveau... 25,000 6.57% 6.71 Cancelled -- --
11/5/2004
25,000(5) 6.57% 6.71 9/30/2014 104,185 263,279
John J. Garber......... 15,000 3.94% 6.71 Cancelled -- --
11/5/2004
15,000(6) 3.94% 6.71 9/30/2014 62,511 157,968
Harry T. Rittenour..... 25,000 6.57% 6.71 Cancelled -- --
11/5/2004
25,000(7) 6.57% 6.71 9/30/2014 104,185 263,279
Peter J. Chatel........ 50,000(8) 13.15% 6.87 Cancelled -- --
9/9/2005
----------
(1) Options to purchase a total of 380,350 shares of Common Stock were granted
to team members in the fiscal year ended June 30, 2005.
(2) Options expire on the date indicated, or, if earlier, one year after the
optionee's death or permanent disability or three months after the
optionee's termination of employment. Because of a technical issue, certain
options issued effective October 1, 2004, that originally expired on
September 30, 2014, were voluntarily cancelled by Messrs. Pease, Corriveau,
Garber and Rittenour on November 5, 2004. Thereafter, new options were
issued to these persons on identical terms as reported in the next reported
grant contained in this table.
(3) Represents the value of such options at the end of its ten year term
(without discounting to present value) assuming the market prices of the
Common Stock appreciates from the grant date at an annually compounded rate
of 5% or 10%. These amounts represent rates of appreciation only. Actual
gains, if any, will be dependent on overall market conditions and on the
future performance of the Common Stock. There can be no assurance that the
amounts reflected in this table will be achieved.
(4) Consists of 37,500 nonqualified options and 12,500 incentive stock options.
Nonqualified options become exercisable in three annual installments of
12,500 shares of Common Stock beginning on October 1, 2005. The incentive
stock options become exercisable in one installment of 12,500 shares of
Common Stock on October 1, 2008.
12
(5) Consists of 2,180 nonqualified options and 22,820 incentive stock options.
Nonqualified options become exercisable in two annual installments of 1,090
shares of Common Stock beginning on October 1, 2005. The incentive stock
options become exercisable in two annual installments of 5,160 shares of
Common Stock beginning October 1, 2005 and two annual installments of 6,250
beginning October 1, 2007.
(6) Consists of 15,000 incentive stock options. The incentive stock options
become exercisable in four annual installments of 3,750 shares of Common
Stock beginning October 1, 2005.
(7) Consists of 2,959 nonqualified options and 22,041 incentive stock options.
Nonqualified options become exercisable in one installment of 2,192 shares
of Common Stock on October 1, 2005 and one installment of 767 shares of
Common Stock on October 1, 2006. The incentive stock options become
exercisable in one installment of 4,058 shares of Common Stock on October
1, 2005, one installment of 5,483 shares of Common Stock on October 1,
2006, and two annual installments of 6,250 shares of Common Stock beginning
October 1, 2007.
(8) Consists of 50,000 incentive stock options, which would have become
exercisable in four annual installments of 12,500 shares of Common Stock
beginning December 1, 2005 and were to expire on November 30, 2014. Mr.
Chatel resigned as Senior Vice President New Market Business in September
2005 and therefore none of the options vested prior to his resignation.
EXERCISE AND VALUE OF OPTIONS
The following tables set forth certain information concerning exercises of
stock options during the fiscal year ended June 30, 2005 by each of the persons
named in the Summary Compensation Table and the number of and the value of
unexercised stock options held by such persons as of June 30, 2005 on an
aggregated basis.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES FISCAL YEAR-END (#) FISCAL YEAR-END ($)(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE (#) REALIZED ($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ --------------- ----------- ------------- ----------- -------------
Alfred A. Pease ........ 0 0 522,534 180,000 1,265,079 326,500
Wilfred J. Corriveau ... 6,250 32,188 51,250 66,250 172,988 110,338
John J. Garber ......... 2,000 9,980 63,000 41,250 167,380 66,638
Harry T. Rittenour ..... 0 0 106,000 64,500 282,615 100,625
Peter J. Chatel ........ 0 0 0 50,000 0 0
----------
(1) Represents the total gain which would have been realized if all such
options had been exercised on June 30, 2005.
(2) Represents the fair market value of the shares of Common Stock relating to
exercised options, as of the date of exercise, less the exercise price of
such options.
EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
ARRANGEMENTS
Mr. Pease serves in his present capacity pursuant to the terms of an
employment agreement. Mr. Pease's agreement provides for an annual base salary,
subject to increase at the discretion of the Management Development Committee,
reimbursement of reasonable monthly club dues, benefits comparable to the
Company's other executive officers, including life, disability and health
insurance and the use of a Company leased automobile and an annual performance
bonus target level of 60% of his base salary.
The Company has also entered into severance agreements with Messrs. Pease,
Corriveau, Garber and Rittenour. The severance agreement between the Company and
Mr. Pease provides for, among other things, the payment of an amount of cash
severance equal to one times his current annual base salary, as in effect
immediately prior to his termination, a prorated portion of any bonus he would
have earned for the year of termination had Mr. Pease been employed by the
Company at the end of the applicable bonus period, and continuation of
Company-provided health, welfare and car benefits for one year. The severance
agreements between the Company and Messrs. Corriveau, Garber and Rittenour
provide for, among other things, the payment of an amount of severance equal to
six months of their current annual base salary, as in effect immediately prior
to their termination, a prorated portion of any bonus
13
they would have earned for the year of termination had they been employed by the
Company at the end of the applicable bonus period, and continuation of
Company-provided health, welfare and car benefits for six months. Severance is
payable to Messrs. Pease, Corriveau, Garber and Rittenour only if they are
terminated by the Company for any reason other than death, disability, or cause
(as defined in the severance agreements).
If the Company's executive officers are terminated by the Company for any
reason other than death, disability or cause, or they resign for "Good Reason",
six months prior to or within two years after a "Change in Control" of the
Company, in lieu of the severance described in the prior paragraph, Mr. Pease
will be entitled to an amount of severance equal to two times his current annual
base salary, as in effect immediately prior to his termination, a prorated
portion of his target bonus for the year of termination, based on the number of
days worked in the year of termination, continuation of Company-provided health
benefits until Mr. Pease becomes eligible for Medicare benefits and welfare and
car benefits for two years and continued coverage under director and officer
liability insurance policies, and Messrs. Corriveau, Garber and Rittenour will
be entitled to an amount of severance equal to one times their current annual
base salary, as in effect immediately prior to their termination, a prorated
portion of their target bonus for the year of termination, based on the number
of days worked in the year of termination, continuation of Company-provided
health, welfare and car benefits for one year and continued coverage under
director and officer liability insurance policies. The special severance expires
three years from the date of the severance agreement, except that such
expiration date shall be extended for consecutive one year periods, unless, at
least 180 days prior to the expiration date, the Company notifies the executive
in writing that it is not extending the term of these provisions. "Good Reason"
is generally defined as the occurrence of any of the following events without
the executive's written consent, if the executive terminates employment within
one year following the occurrence of such event: (i) any reassignment of the
executive to substantial duties materially inconsistent with the executive's
position, duties, responsibilities and status with the Company immediately prior
to the Change in Control or a substantial diminution in the executive's
position, duties, responsibilities or status with the Company from his position,
duties, responsibilities or status with the Company immediately prior to the
Change in Control; provided that the fact that the Company is no longer a
publicly traded company or the executive no longer has duties and
responsibilities associated exclusively with a publicly traded company, such as
SEC or stock exchange reporting responsibilities or investor or analyst
relations responsibilities, shall not be deemed to be a reassignment of the
executive to substantial duties materially inconsistent with the executive's
position, duties, responsibilities and status with the Company immediately prior
to the Change in Control or a substantial diminution in the executive's
position, duties, responsibilities or status with the Company from his position,
duties, responsibilities or status with the Company immediately prior to the
Change in Control; (ii) any reduction in the executive's base salary or targeted
incentive bonus or commissions in effect immediately prior to the Change in
Control, or failure by the Company to continue any bonus, stock or other
incentive plans in effect immediately prior to the Change in Control (without
the implementation of comparable successor plans that provide comparable award
opportunities/benefits), or any removal of the executive from participation in
such aforementioned plans; (iii) the discontinuance or reduction in benefits to
the executive under any qualified or nonqualified retirement or welfare plan
maintained by the Company immediately prior to the Change in Control (without
the implementation of comparable successor plans that provide comparable
benefits), or the discontinuance of any fringe benefits or other perquisites
that the Executive received immediately prior to the Change in Control (without
the implementation of comparable successor plans that provide comparable
benefits); (iv) required relocation of the executive's principal place of
employment more than 50 miles from the executive's place of employment prior to
the Change in Control; or (v) the Company's breach of any provision in the
severance agreements, provided that the Company has not cured such breach within
10 days following written notice by the executive to the Company of such breach.
Payments under the severance agreements, when aggregated with any other
"golden parachute" amounts (defined under Section 280G of the Internal Revenue
Code as compensation that becomes payable or accelerated due to a Change in
Control) payable under this Agreement or any other plans, agreements or policies
of the Company, shall not exceed the golden parachute cap under Sections 280G
and 4999 of the Internal Revenue Code.
Agreements relating to stock options granted under the 1992 Plan to each of
the executive officers named in the Summary Compensation Table, as well as
certain other officers of the Company, also provide that such options become
immediately exercisable in the event that the optionee's employment is
terminated without cause, or there is a diminishment of the optionee's
responsibilities, following a Change of Control of the Company or, if, in the
event of a Change of Control, such options are not assumed by the person
surviving the Change of Control or purchasing the assets in the Change of
Control ("Option Acceleration Provision").
14
A "Change of Control" for purposes of the severance agreements and the 1992
Plan is generally defined as a merger of the Company in which the Company is not
the survivor, certain share exchange transactions, the sale or transfer of all
or substantially all of the assets of the Company, or any person or group of
persons (as defined by Section 13(d) of the Exchange Act) acquires more than 50%
of the Common Stock.
MANAGEMENT DEVELOPMENT, COMPENSATION AND STOCK OPTION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
The Management Development, Compensation and Stock Option Committee of the
Board ("Management Development Committee") currently consists of Messrs.
Beattie, DeCocco and Marz. Mr. Ratigan served on the Management Development
Committee from December 2003 to October 2004. During fiscal 2005, no member of
the Management Development Committee served as an officer or employee of the
Company or any of its subsidiaries nor had any member of the Management
Development Committee formerly served as an officer of the Company or any of its
subsidiaries, other than Mr. Ratigan, who served as an officer of the Company
from December 1993 to June 1996. See "Proposal 1 - Election of Directors".
During fiscal 2005, none of the executive officers of the Company served on the
board of directors or on the compensation committee of any other entity, any of
whose executive officers served either on the Board or on the Management
Development Committee of the Company.
REPORT OF THE MANAGEMENT DEVELOPMENT,
COMPENSATION AND STOCK OPTION COMMITTEE
The Management Development Committee is responsible for the planning,
review and administration of the Company's executive compensation program and
the Company's stock-based executive compensation programs. During the fiscal
year ended June 30, 2005, all members of this Committee were non-employee
directors of the Company.
The Company's objective is to provide a superior return to its
shareholders. To support this objective, the Company believes it must attract,
retain and motivate top quality executive talent. The Company's executive
compensation program is a critical tool in this process.
The Company's executive compensation program has been designed to link
executive compensation to Company performance through at-risk compensation
opportunities, providing significant reward to executives who contribute to the
Company's success. The Company's executive compensation program consists of base
salary, annual cash profit sharing incentive opportunities and long-term
incentives represented by stock-based incentives. Further the Company believes
that stock-based incentives for team members, in addition to providing an
incentive for their continued employment, more closely align their interests
with those of the Company and its shareholders.
The base salary, annual cash profit sharing incentive opportunity,
stock-based incentives and other compensation terms for new executive officers
are established based upon each executive's qualifications, position and level
of responsibility as compared with the Company's other executives.
BASE SALARY
The Management Development Committee recognizes the importance of a
competitive compensation structure in retaining and attracting valuable senior
executives. Executive salary levels are reviewed and established annually. The
salaries received by the Company's executives generally reflect their levels of
responsibility, the profitability of the Company and other factors, such as
assessments of individual performance.
The Management Development Committee increased the base salary of Alfred A.
Pease, Chairman of the Board, President and Chief Executive Officer of the
Company, by $14,700, or 4.8% on an annualized basis, in the first quarter of
fiscal 2005. The Management Development Committee believed that this increase in
base salary was appropriate due to the Company sustaining and slightly improving
its financial performance in fiscal 2004, as compared to fiscal 2003. These
improvements were particularly noteworthy in light of the difficult economic
environment in the global automotive industry, the Company's principal market.
In addition, the Board had not expected the Company to achieve levels of
profitability in fiscal 2004 similar to those achieved in fiscal 2003 because
revenues and profitability in fiscal 2003 had been positively impacted by an
unusually large new vehicle
15
tooling program at a single European customer. The Committee attributed the
Company's performance in fiscal 2004 in part to Mr. Pease's continued strong
leadership of the Company.
In fiscal 2005, the Management Development Committee approved annualized
increases in the base salaries of the Company's other executive officers of
between 3.5% and 4.1%. The increases took affect at various times in fiscal
2005. The Management Development Committee approved these increases in
recognition of the executive team's contributions in fiscal 2004 that resulted
in the Company's performance exceeding the Board's expectations. However, the
Management Development Committee generally approved smaller increases then in
prior years since the Company's performance in fiscal 2004 only slightly
improved from fiscal 2003. The size of the percentage increases were determined
based on the Committee's evaluation of the contributions made by each of the
executive officers to improving the Company's operating performance.
Mr. Chatel was hired by the Company in fiscal 2005 to serve as Senior Vice
President New Market Business. His base salary and signing bonus were
established based upon his extensive experience and the level of his executive
responsibilities in comparison to the other executive officers of the Company.
ANNUAL PROFIT SHARING
The Company's executive officers are eligible for annual cash profit
sharing incentive opportunities. Generally, at the beginning of each year, the
Management Development Committee develops a profit sharing plan applicable to
all executives of the Company, including the Chief Executive Officer of the
Company.
For fiscal 2005, the Management Development Committee adopted the Fiscal
Year 2005 Profit Sharing Plan, which applied to all team members of the Company,
including Mr. Pease and the other executive officers.
The Fiscal Year 2005 Profit Sharing Plan provided that the Company would
make a profit sharing payout only if the Company achieved earnings per share
("EPS") in excess of the Fiscal Year 2005 Profit Plan established by the Board.
For performance in excess of that level, an increasing portion of each dollar of
Company pre-tax earnings above progressive earnings share targets would be added
to the profit sharing pool.
The actual profit sharing pool earned under the Fiscal Year 2005 Profit
Sharing Plan was divided among team members in relation to their profit sharing
potential for the year. Each team member's profit sharing potential for the year
was stated as a percentage of their base salary. The level was 60% for Mr. Pease
and 55% for the other executive officers.
The executive officers of the Company, including Mr. Pease, were eligible
to earn 95% of the profit sharing payout based upon the level of EPS achieved by
the Company. The other 5% of their profit sharing payout was earned based upon
the growth in the Company's market capitalization during fiscal 2005 (the
"Market Cap Growth Component"). The percentage of the Market Cap Growth
Component earned was determined by multiplying 5% by the percentage increase in
the Company's market capitalization from fiscal 2004 to fiscal 2005, measured on
the third day following the public release of the Company's annual earnings for
each of fiscal 2004 and fiscal 2005. Market capitalization is equal to the
closing price of the Company's Common Stock on the measurement date, multiplied
by the weighted average number of outstanding shares of Common Stock outstanding
during the fiscal year.
During fiscal 2005, the profit sharing pool earned under the Fiscal Year
2005 Profit Sharing Plan was 13.01% of the team members' aggregate potential
payout. The Company's market capitalization did not increase from fiscal 2004 to
fiscal 2005 and therefore each of the executive officers' including Mr. Pease'
profit sharing potential level was reduced by 5% so that Mr. Pease's level was
57% and the other executive officers' level was 52.3%. Mr. Pease received a
profit sharing payment of 7.4% of his base salary level as of June 30, 2004 and
the other executive officers received profit sharing payments of 6.8% of their
base salary level as of June 30, 2004, except for Mr. Chatel who received a
profit sharing payment of 4.1% of his base salary level as of the date he was
hired, reflecting his employment by the Company only for a portion of fiscal
2005. The "Annual Compensation - Bonus" column of the Summary Compensation Table
contained under "Compensation of Directors and Executive
16
Officers - Executive Officers - Summary Compensation Table" sets forth the
payments to the executive officers under the Company's annual profit sharing
plans.
No discretionary bonuses were paid to Mr. Pease or the other executive
officers in fiscal 2005.
STOCK-BASED INCENTIVES
Stock option grants have historically been utilized by the Company as part
of its compensation program for all levels of team members, including the
Company's executives. The Company's stock option program permits team members to
buy a specific number of shares of Common Stock in the future, at the fair
market value of such shares on the date the option is granted. Since stock
options gain value only if the price of the Common Stock increases above the
option exercise price, this use of stock option grants reflects the Company's
philosophy of linking compensation to performance. In addition, the Committee
believes that stock option grants to team members help to provide an incentive
for their continued employment and otherwise more closely align their interests
with those of the Company and its shareholders. The Company also utilizes stock
options as part of its standard compensation package developed to attract highly
qualified candidates to the Company. At the 2004 Annual Meeting of Shareholders,
shareholders of the Company approved the 2004 Stock Incentive Plan ("2004 Plan")
which permits the Management Development Committee to grant indexed options,
stock appreciation rights, restricted stock, restricted stock units, performance
share awards and deferred stock units, in addition to incentive and
non-qualified stock options. The Management Development Committee intends to
review the various stock-based incentive alternatives now available to the
Company and develop a program which will provide appropriate long-term
incentives to the executive team and more closely align their interests with the
Company and its shareholders.
In fiscal 2005, Mr. Pease was granted options under the 1992 Stock Option
Plan to purchase 50,000 shares of Common Stock. The grant reflected the
Management Development Committee's evaluation of Mr. Pease's performance in
fiscal 2004. The Management Development Committee noted in particular Mr.
Pease's continued strong leadership of the Company and the Company's achieving
profitability in fiscal 2004 at levels significantly above those originally
anticipated by the Board. The grants to Mr. Pease in fiscal 2005 were lower than
in fiscal 2004, principally due to the limited growth in profitability in fiscal
2004 as compared to fiscal 2003. The Committee also believed that an additional
option grant to Mr. Pease was appropriate to more closely align the interests of
Mr. Pease with those of the Company and its shareholders.
In fiscal 2005, the Management Development Committee also granted options
to purchase shares of Common Stock under the 1992 Stock Option Plan to the other
executive officers of the Company. The Company's executive officers each
received grants of options to purchase between 15,000 and 25,000 shares of
Common Stock. These option grants were made in recognition of the Company's
sustained financial performance in fiscal 2004, although grant levels were lower
than in fiscal 2004 due to the limited increase in profitability in fiscal 2004.
The grants were also intended to provide additional incentives for these
executives to remain with the Company on a long-term basis. The size of the
grants was made based on the Committee's evaluation of the contributions made by
each of the executive officers to improving the Company's operating performance.
In addition, Mr. Chatel received a grant of options to purchase 50,000 shares of
Common Stock under the 1992 Stock Option Plan in fiscal 2005 as part of the
compensation package offered to attract him to join the Company.
The option grants to Messrs. Pease and the other executive officers in
fiscal 2005, other than those granted to Mr. Chatel, were originally granted
effective October 1, 2004, but because of a technical issue, were cancelled on
November 5, 2004 and reissued on identical terms effective November 5, 2004.
Options granted to Mr. Pease and the other executive officers in fiscal
2005 become exercisable in four equal annual installments, beginning one year
from their date of initial grant, at an exercise price equal to the fair market
value of the Common Stock on the date of their initial grant.
SEVERANCE AGREEMENTS
The Board, upon recommendation of the Management Development Committee,
authorized the implementation of formal Severance Agreements for the Company's
executive officers. The terms of the Severance
17
Agreements are described under "Compensation of Directors and Executive Officers
- Executive Officers - Employment Agreements, Termination of Employment and
Change of Control Arrangements". The Board determined it appropriate to
formalize the Company's general severance policies and practices for its
executive team and at the same time institute enhanced severance arrangements
payable in the event of a termination of the executive's employment following a
change in control of the Company. The Board and Management Development Committee
believe that the enhanced severance arrangements are necessary in order to
provide executives with the appropriate incentives to act in the best interests
of the Company and its shareholders, without concern for their own personal
interests. The Management Development Committee, in developing its
recommendations to the Board, consulted with an outside compensation consultant
hired by the Committee and the Company's outside legal counsel. Based upon the
foregoing, the Management Development Committee believes that the Severance
Agreements contain terms and conditions which are comparable to those used by
other companies that are similar in size to the Company.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The Management Development Committee has reviewed the provisions of the
Internal Revenue Code and related regulations of the Internal Revenue Service
which restrict deductibility of executive compensation paid to the chief
executive officer and any of the four most highly compensated executive officers
at the end of the fiscal year to the extent such compensation exceeds $1,000,000
in any year.
The Board of the Company established certain restrictions on the granting
of options under the Company's 1992 Stock Option Plan and the 2004 Plan, which
replaces the 1992 Stock Option Plan, so that compensation realized in connection
with the stock-based grants under both plans would be exempt from the
restrictions on deductibility described above. The 1992 Stock Option Plan
restricted to 200,000 the number of shares of Common Stock that could be subject
to options granted to any salaried employee in any fiscal year. The 2004 Plan
restricts stock grants to any participant any fiscal year as follows; (i) up to
200,000 shares of Common Stock may be subject to stock option grants, (ii) up to
200,000 shares of Common Stock may be subject to stock appreciation right
grants, (iii) up to 200,000 shares of Common Stock may be subject to restricted
stock awards, and (iv) up to 200,000 shares of Common Stock may be subject to
performance share awards. It is important to note that while these restrictions
allow the Management Development Committee continuing discretion in establishing
executive officer compensation, it does limit such discretion by restricting the
size of stock awards which the Management Development Committee may grant to any
single individual. The permitted size of the stock awards to a single individual
was established based on the Committee's determination of the maximum number of
shares which would be required to be granted in any fiscal year to retain or
attract a chief executive officer of the Company.
The Board does not believe that other components of the Company's
compensation program are likely to result in payments to any executive officer
in any year which would be subject to the restriction on deductibility, and
therefore, concluded that no further action with respect to qualifying such
compensation for deductibility was necessary at this time. The Board will
continue to evaluate the advisability of qualifying future executive
compensation programs for deductibility under the Internal Revenue Code.
MANAGEMENT DEVELOPMENT, Philip J. DeCocco, Chairman
COMPENSATION AND STOCK David J. Beattie
OPTION COMMITTEE W. Richard Marz
18
STOCK PRICE PERFORMANCE GRAPH
Set forth below is a graph comparing the cumulative total shareholder
return on the Common Stock from June 30, 2000 through June 30, 2005 with an
index consisting of returns from a peer group of companies, consisting of Cognex
Corp., Cyberoptics Corporation, Integral Vision, Inc. (formerly Medar, Inc.),
PPT Vision, Inc. (formerly Pattern Processing Technology) and Robotic Vision
Systems Inc. (the "Peer Group Index") and The Nasdaq Stock Market (U.S.) Index
(the "Nasdaq Composite Index"). The returns of each company in the Peer Group
Index have been weighted according to their respective stock market
capitalization. The graph assumes that the value of the investment in the
Company's Common Stock, the Peer Group Index and the Nasdaq Composite Index was
$100 on June 30, 2000 and that all dividends were reinvested.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG PERCEPTION INC., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND A PEER GROUP
(PERFORMANCE GRAPH)
* $100 invested on 6/3/00 in stock or index including reinvestment of
dividends. Fiscal year ending June 30,
CUMULATIVE TOTAL RETURN
---------------------------------------------------------
6/30/00 6/30/01 6/30/02 6/30/03 6/30/04 6/30/05
------- ------- ------- ------- ------- -------
Perceptron, Inc. 100 40 46 176 209 199
Nasdaq Stock Market (US) 100 56 39 43 54 55
Peer Group 100 50 30 32 59 39
The graph displayed above is presented in accordance with applicable legal
requirements. Shareholders are cautioned against drawing any conclusions from
the data contained in the graph, as past results are not necessarily indicative
of future performance. The graph in no way reflects the Company's forecast of
future financial performance.
19
INDEPENDENT ACCOUNTANTS
GENERAL
The accounting firm of Grant Thornton LLP ("Grant Thornton") has been
appointed by the Audit Committee to audit the consolidated financial statements
for the Company for the fiscal year ended June 30, 2006. Grant Thornton has
served as the Company's independent accountants since March 8, 2002.
Representatives of Grant Thornton are expected to be at the Annual Meeting and
to be available to respond to appropriate questions. Such representatives will
have the opportunity to make a statement at such meeting if they desire to do
so.
POLICY FOR PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES
The Audit Committee has adopted a policy regarding audit and non-audit
services that may be provided by the Company's independent accountants. The
policy sets forth the procedures and conditions pursuant to which services
proposed to be performed by the independent accountants may be pre-approved. The
policy provides that the Audit Committee will consider whether services to be
performed by the independent accountant are consistent with the SEC's rules on
auditor independence. In particular, the policy expressly names all services the
independent accountant may not perform and, in the case of other services,
requires the Audit Committee to consider whether the independent auditor is the
best positioned to provide the most effective and efficient service.
The policy provides that the Audit Committee will review and pre-approve
annually, and periodically thereafter as required, the services proposed to be
provided by the independent accountant in the categories of audit services,
audit related services, tax services and all other services. In addition, the
Audit Committee is to determine the appropriate ratio of audit, audit related
and tax services to all other services. The Audit Committee has delegated to the
chairman of the Audit Committee and, if he or she is unavailable, another member
of the Audit Committee, authority to pre-approve audit and non-audit services
proposed to be performed by the independent registered public accounting firm
not previously approved by the Audit Committee. Under the policy, the Audit
Committee is to be informed on a timely basis of services actually rendered by
the independent accountant, including those pre-approved by a member of the
Audit Committee. The chief financial officer of the Company is to immediately
report to the Chairman of the Audit Committee any breach of the policy.
All of the services described below under audit fees, audit-related fees,
tax fees and all other fees arising in the fiscal year ended June 30, 2004 and
2005 were approved by the Audit Committee pursuant to its pre-approval policies
and procedures prior to the service being provided. None of the audit-related
fees or tax fees described below arising in the fiscal years ended June 30, 2004
and 2005 were approved by the Audit Committee after the initiation of such
services pursuant to an exemption from the SEC's requirements relating to
approval of these types of services by the Audit Committee prior to the
provision of the service under Section 2.01(c)(7)(i)(C) of SEC Regulation S-X.
FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
AUDIT FEES. The aggregate fees billed by Grant Thornton for professional
services rendered for the audit of the Company's annual consolidated financial
statements, reviews of the consolidated financial statements included in the
Company's Forms 10-Q and other regulatory filings and preparation for a review
of the Company's internal controls over financial reporting design effectiveness
and procedures were $194,520 during fiscal year ended June 30, 2005 and $103,250
during fiscal year ended June 30, 2004.
AUDIT RELATED FEES. The aggregate fees billed by Grant Thornton for
professional services rendered for audit-related fees in fiscal 2005 were
$20,036 and related to the audits of the Company's 401(k) Plan and NIST grant
and review of a SEC comment letter and in fiscal 2004 were $8,000 and related to
the audit of the Company's 401(k) Plan.
TAX FEES. The aggregate fees billed by Grant Thornton for preparation of
federal and state tax returns and miscellaneous tax-related services and advice
were $46,070 during fiscal 2005 and $53,686 during fiscal 2004.
ALL OTHER FEES. Grant Thornton did not render any such services in fiscal
years 2005 and 2004.
20
The Audit Committee of the Board does not consider the provision of the
services described above by Grant Thornton to be incompatible with the
maintenance of Grant Thornton's independence.
SHAREHOLDER PROPOSALS AND NOMINEES FOR 2006 ANNUAL MEETING
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the 2006 annual meeting
which are eligible for inclusion in the Company's proxy statement for that
meeting under Rule 14a-8 promulgated under the Exchange Act, must be received by
the Secretary of the Company at 47827 Halyard Drive, Plymouth, MI 48170, no
later than June 29, 2006 in order to be considered for inclusion in the
Company's Proxy Statement relating to that meeting. In order to curtail
controversy as to the date on which a proposal was received by the Company, it
is suggested that proposals be submitted by certified mail, return receipt
requested.
Shareholder proposals intended to be presented at the 2006 annual meeting
which are not eligible for inclusion in the Company's proxy statement for that
meeting under Rule 14a-8 are considered untimely under Rule 14a-5 promulgated
under the Exchange Act unless received by the Secretary of the Company at the
Company's offices no later than September 13, 2006 and the Company expects the
persons named as proxies for the 2006 annual meeting to use their discretionary
voting authority, to the extent permitted by law, with respect to any proposal
considered untimely at the 2006 annual meeting.
SHAREHOLDER NOMINEES
Shareholders desiring to recommend candidates for consideration and
evaluation by the Nominating and Corporate Governance Committee for the 2006
Annual Meeting should submit such recommendations in writing to the Nominating
and Corporate Governance Committee, c/o General Counsel, Perceptron, Inc., 47827
Halyard Drive, Plymouth, MI 48170 no later than May 30, 2006.
The recommendation should be accompanied by the following: (i) the name,
address, e-mail address (if any), and telephone number of the shareholder, the
number of shares of the Company's Common Stock beneficially owned by the
shareholder and proof of the shareholder's beneficial ownership of the Company's
Common Stock by one of the means set forth in Item 7(d)(2)(ii)(L) of SEC
Schedule 14A; (ii) the name, address, e-mail address (if any) and telephone
number of the proposed nominee and the number of shares of the Company's Common
Stock beneficially owned by the nominee; (iii) a detailed description of the
proposed nominee's business, professional, public, academic, scientific or
technological experience and other qualifications for Board membership,
including the name and address of other businesses for which the proposed
nominee has provided services, or for which he or she has served as a director,
in the last five years, a description of the proposed nominee's specific
experience in such position and the proposed nominee's academic achievements;
(iv) a description of any potential conflicts between the interests of the
Company and its shareholders and the proposed nominee; (v) a written agreement
by the proposed nominee to serve as a member of the Company's Board if nominated
and elected; and (vi) a written representation by the shareholder and the
proposed nominee that the proposed nominee is not an affiliate or affiliated
party with respect to the shareholder. The General Counsel will forward any
recommendations to the Nominating and Corporate Governance Committee. The
nominating shareholder and proposed nominee may be requested to provide
additional information regarding the shareholder or the proposed nominee and to
attend one or more interviews, in each case, as requested by the Board or
Nominating and Corporate Governance Committee.
See "Proposal 1 - Election of Directors - Board of Directors and
Committees" for a description of the standards used by the Nominating and
Corporate Governance Committee to evaluate candidates recommended by
shareholders of the Company.
OTHER MATTERS
At the date of this Proxy Statement, the Board is not aware of any matters
to be presented for action at the Annual Meeting other than those described
above. However, if any other matters requiring a shareholder vote properly come
before the meeting, it is the intention of the persons named in the accompanying
proxy to vote such proxy in accordance with their best judgment, to the extent
permitted by law, on such matters.
21
PERCEPTRON, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF PERCEPTRON, INC.
The undersigned shareholder hereby appoints ALFRED A. PEASE, JOHN J. GARBER and
DAVID W. GEISS, or any one of them, the attorney and proxies of the undersigned,
with power of substitution, to vote all shares of common stock of Perceptron,
Inc. standing in the name of the undersigned at the close of business on October
14, 2005 at the Annual Meeting of Shareholders of the Company to be held on
Monday, December 5, 2005 at 9:00 a.m., local time, and at any and all
adjournments thereof, with all the powers the undersigned would possess if then
and there present.
The shareholder instructs the proxies to vote as specified on this proxy on the
matters described in the Proxy Statement dated October 24, 2005. Proxies will be
voted as instructed.
IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
COMPANY'S NOMINEES AS DIRECTORS (INCLUDING THE ELECTION OF ANY PERSON FOR THE
BOARD OF DIRECTORS WHERE A NOMINEE NAMED IN THE PROXY STATEMENT IS UNABLE OR,
FOR GOOD CAUSE, WILL NOT SERVE).
DISCRETIONARY AUTHORITY IS HEREBY CONFERRED AS TO ANY OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE ANNUAL MEETING. THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF
THE 2005 ANNUAL REPORT, AND THE PROXY STATEMENT AND NOTICE OF SAID MEETING BOTH
DATED OCTOBER 24, 2005.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
SEE REVERSE
SIDE
ANNUAL MEETING OF SHAREHOLDERS OF
PERCEPTRON, INC.
DECEMBER 5, 2005
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
Please detach along perforated line and mail in the envelope provided.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
1. ELECTION OF DIRECTORS Directors recommend a vote for BROKERS EXECUTING PROXIES SHOULD INDICATE THE NUMBER OF
the following nominees to hold office until the Annual SHARES WITH RESPECT TO WHICH AUTHORITY IS CONFERRED BY THIS
Meeting of Shareholders in 2006. PROXY IF LESS THAN ALL SHARES HELD AS NOMINEES ARE TO BE
VOTED.
NOMINEES:
[ ] FOR ALL NOMINEES ( ) David J. Beattie PLEASE EXECUTE AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE
( ) Kenneth R. Dabrowski PROMPTLY.
[ ] WITHHOLD AUTHORITY ( ) Philip J. DeCocco
FOR ALL NOMINEES ( ) W. Richard Marz
( ) Robert S. Oswald
[ ] FOR ALL EXCEPT ( ) Alfred A. Pease
(See instructions below) ( ) James A. Ratigan
( ) Terryll R. Smith
INSTRUCTION: To withhold authority to vote for any
individual nominee(s), mark "FOR ALL EXCEPT"
and fill in the circle next to each nominee you
wish to withhold, as shown here: (X)
To change the address on your account, please check the
box at right and indicate your new address in the
address space above. Please note that changes to the
registered name(s) on the account may not be submitted
via this method. [ ]
Signature of Shareholder Date: Signature of Shareholder Date:
----------------- --------- ----------------- ---------
NOTE: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign.
When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer
is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is
a partnership, please sign in partnership name by authorized person.