UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
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Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
CYBEROPTICS CORPORATION
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CYBEROPTICS CORPORATION
5900 Golden Hills Drive
Minneapolis, MN 55416
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 17, 2002
To the Shareholders of
CYBEROPTICS CORPORATION:
The Annual Meeting of Shareholders of CyberOptics Corporation (the
"Company") will be held on Friday, May 17, 2002, at Dorsey & Whitney, 50 South
Sixth Street, Suite 1500, Minneapolis, Minnesota at 3:30 p.m. for the following
purposes:
1) To elect seven directors;
2) To approve an amendment to the Company's Stock Option
Plan increasing the number of shares of common stock
reserved for issuance thereunder by 375,000 shares;
and
3) To consider such other matters as may properly come
before the meeting or any adjournments thereof.
Only holders of record of Common Stock at the close of business on
April 1, 2002, will be entitled to receive notice of and to vote at the meeting.
Shareholders who do not expect to attend the meeting in person are urged to fill
in, date, sign and promptly return the proxy in the enclosed envelope, or, for
registered shareholders, promptly return your proxy online at
http://www.eproxy.com/cybe, as described more completely on the enclosed proxy
card. If you later desire to revoke your proxy, you may do so at any time before
it is exercised.
By Order of the Board of Directors
Thomas Martin
SECRETARY
Minneapolis, Minnesota
April 10, 2002
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IMPORTANT - PLEASE MAIL YOUR PROXY PROMPTLY
In order that there may be a proper representation at the meeting,
you are urged, whether you own one share or many,
to promptly complete, sign and mail your proxy, or to return it
electronically at the website set up for this purpose.
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CYBEROPTICS CORPORATION
5900 Golden Hills Drive
Minneapolis, MN 55416
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
ON MAY 17, 2002
The accompanying proxy is solicited on behalf of the Board of Directors
of CyberOptics Corporation (the "Company") for use at the Annual Meeting of
Shareholders to be held May 17, 2002, at 3:30 p.m. at the offices of Dorsey &
Whitney, 50 South Sixth Street, Suite 1500, Minneapolis, Minnesota 55402, and at
any adjournments thereof. The cost of solicitation, including the cost of
preparing and mailing the Notice of Annual Meeting of Shareholders and this
Proxy Statement, will be paid by the Company. Representatives of the Company
may, without cost to the Company, solicit proxies for the management of the
Company by means of mail, telephone or personal calls.
The only matters the Board of Directors knows will be presented are
those stated in Proposals 1 and 2 of this Proxy Statement. THE BOARD OF
DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE IN FAVOR OF PROPOSALS 1 AND 2.
Should any other matter properly come before the meeting, it is intended that
the persons named in the enclosed proxy will have authority to vote such proxy
in accordance with their judgment on such matter.
VOTING RIGHTS AND PROCEDURES
Shares of the Company's common stock, no par value (the "Common
Stock"), represented by proxies in the form solicited will be voted in the
manner directed by a shareholder. If no direction is made, the proxy will be
voted for the election of the nominees for director named in this Proxy
Statement and in the discretion of the proxies with respect to any other matters
properly brought before the meeting. Shares voted as a "withhold vote for" one
or more directors will be counted as shares that are present and entitled to
vote for purposes of determining the presence of a quorum at the meeting and as
unvoted, although present and entitled to vote, for purposes of the election of
the directors with respect to which the shareholder has abstained. If a broker
submits a proxy that indicates the broker does not have discretionary authority
to vote certain shares, those shares will be counted as shares that are present
and entitled to vote for purposes of determining the presence of a quorum at the
meeting, but will not be considered as present and entitled to vote with respect
to the matters voted on at the meeting.
Proxies may be revoked at any time before being exercised by delivery
to the Secretary of the Company of a written notice of termination of the
proxies' authority or a duly executed proxy bearing a later date. Only holders
of record of Common Stock at the close of business on April 1, 2002, will be
entitled to receive notice of and to vote at the meeting. On April 1, 2002, the
Company had 8,134,826 shares of Common Stock outstanding. Each outstanding share
is entitled to one vote on all matters presented at the meeting.
A copy of the Company's Annual Report to Shareholders for the year
ended December 31, 2001, is being furnished to each shareholder with this Proxy
Statement. This Proxy Statement is being mailed to shareholders on or about
April 10, 2002.
PROPOSAL I--ELECTION OF DIRECTORS
NOMINEES
Seven persons have been nominated for election at the Annual Meeting:
Steven K. Case, Alex B. Cimochowski, Kathleen P. Iverson, Erwin A. Kelen, Irene
M. Qualters, Steven M. Quist and Michael M. Selzer, Jr. Each nominee is
currently a director of the Company. All nominees elected at the Annual Meeting
will serve until the next annual meeting or until their earlier death,
resignation, removal or disqualification. The persons named in the accompanying
Proxy intend to vote the Proxies held by them in favor of the nominees named
below as directors, unless otherwise directed. The affirmative vote of a
majority of the voting shares represented at the
1
meeting is required for the election of each director. Should any nominee for
director become unavailable for any reason, the Proxies will be voted in
accordance with the best judgment of the persons named therein. The Board of
Directors has no reason to believe that any candidate will be unavailable.
The following information is furnished with respect to each nominee as
of March 31, 2002:
PRINCIPAL OCCUPATION AND DIRECTOR
NAME AND AGE BUSINESS EXPERIENCE FOR PAST FIVE YEARS SINCE
------------ --------------------------------------- -----
Steven K. Case Chairman of the Company since September 1995 and Chairman and Chief January 1984
Age 53 Executive Officer of Avanti Optics Corporation since June 2000;
President of the Company from 1984 until February 1998; adjunct
Professor of Electrical Engineering at the University of Minnesota
since 1978 and member of University Industry Advisory Board.
Steven M. Quist Chief Executive Officer since March 2000; President of the Company June 1991
Age 56 from February 1998 to January 2002; President of Rosemount Inc.,
("Rosemount") a subsidiary of Emerson Electric Co., and an employee
of Rosemount from 1970 until joining the Company. Director of Rimage
Corporation and Data I/O Corporation.
Kathleen P. Iverson President and Chief Operating Officer of the Company since January May 1998
Age 45 2002; Vice President/General Manager, Complete Point Solutions,
of Rosemount from December 2000 to January 2002; Vice
President/General Manager, Worldwide Temperature, of Rosemount from
January 1996 to December 2000; Vice President-Finance of Rosemount
from 1992 to January 1996.
Alex B. Cimochowski+ President and owner of Four Peaks Technologies, Inc., a printing May 1984
Age 62 company, since November 1996; independent business consultant from
September 1995 to November 1996; Chief Executive Officer of Delphax
Systems from November 1988 to September 1995; President of Edgecore
Technology, Inc. from September 1983 to April 1988 and consultant
thereto from April 1988 to November 1988.
Erwin A. Kelen ^ President of Kelen Ventures since 1990; President of Datamyte February 1995
Age 66 Corporation, a subsidiary of Allen Bradley Co., from 1984 until
1990. Director of Printronix, Inc., Insignia Systems, Inc. and
Computer Network Technologies, Inc.
Irene M. Qualters + Vice President, Research Information Services, Merck & Company, Inc. June 1999
Age 52 since 1999; President of Cray Research, a subsidiary of Silicon
Graphics, Inc., and Senior Vice President of Silicon Graphics, Inc.
from 1997 to 1998; Vice President of Silicon Graphics, Inc. from
1996 to 1997; Senior Vice President of Cray Research from 1995 until
its acquisition by Silicon Graphics, Inc. in 1996; Vice
President-Software Division of Cray Research from 1992 to 1995.
Michael M. Selzer, Jr.^+ President, Chief Executive Officer and Director of Urologix, Inc, a June 1999
Age 49 medical device manufacturer, since January 1999; Vice President and
General Manager-Neurostimulation Business of Medtronic, Inc., a
medical device manufacturer, from 1994 until December 1998; Vice
President-Components and Research Group of Medtronic, Inc. from 1992
to 1994; Vice President and General Manager-Micro-Rel Division of
Medtronic, Inc. from 1987 to 1992. Director of MedAmicus, Inc.
+ Member of Audit Committee
^ Member of Compensation Committee
2
COMPENSATION OF DIRECTORS
Directors who are not also employees receive directors' fees of $1,000
per meeting attended, and $500 per meeting held by conference call. Until 1999,
directors who were not also employees also received an option to purchase 18,000
shares vesting over a period of four years upon their initial election to the
Board of Directors, or upon shareholder approval of the Stock Option Plan for
Nonemployee Directors in 1993 and 1997, if they were directors on the dates of
approval. Mr. Cimochowski and Mr. Quist received options in 1993 and 1997, Mr.
Kelen received options in 1995 and 1997, and Ms. Iverson received options in
1998 under this arrangement.
In 1999, the Stock Option Plan for Nonemployee Directors was amended to
provide for the grant to each nonemployee director of an option to purchase
4,500 shares, which are exercisable from the date of grant, at each annual
meeting at which they are elected or reelected, commencing with the annual
meeting at which previous options are fully vested. Ms. Qualters and Mr. Selzer
received an option to purchase 4,500 shares under the amended plan in each of
1999, 2000 and 2001.
COMMITTEES/MEETINGS
Except for its Compensation Committee and Audit Committee, the Company
does not have any standing committees, including any nominating committee, of
the Board of Directors. The Audit Committee, which consists of Ms. Qualters, Mr.
Cimochowski and Mr. Selzer, assists the Board of Directors in monitoring the
financial statements of the Company, the Company's internal controls and the
Company's independent accountants. The Compensation Committee, which consists of
Mr. Kelen and Mr. Selzer, administers the Company's stock benefit plans and
determines compensation policy and levels for the Company's executive officers.
During the fiscal year ended December 31, 2001, the Board of Directors of the
Company met seven times and acted twice by writing in lieu of meeting, the
Compensation Committee met four times, and the Audit Committee met five times
and acted once by writing in lieu of meeting. Every nominee for director
attended at least 75 percent of the meetings of the Board and the Board
Committees for which such nominee was a member.
THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE COMMON STOCK
REPRESENTED AT THE MEETING IS REQUIRED FOR THE ELECTION OF EACH DIRECTOR. THE
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH NOMINEE.
EXECUTIVE OFFICERS
In addition to Dr. Case, Mr. Quist and Ms. Iverson, the current
executive officers of the Company include:
Scott G. Larson, 41, who started as Controller with the Company in
October 1995, was promoted to Director of Financial Reporting in February 2000,
and was promoted to Vice President--Finance and Chief Financial Officer in
August 2000. Mr. Larson was Controller of Medisys, Inc., a publicly traded
medical device company, from 1991 until joining the Company.
PROPOSAL II--APPROVAL OF THE AMENDMENT TO THE
COMPANY'S STOCK OPTION PLAN
INTRODUCTION
On February 15, 2000, the Company's Board of Directors approved,
subject to shareholder approval, an amendment to the Company's 1998 Stock
Incentive Plan (the "1998 Plan") that will increase the number of shares
reserved for issuance under awards granted thereunder by 375,000 shares. The
1998 Plan is intended to assist in attracting, retaining and providing an
incentive to employees, management personnel and other personnel capable of
assuring the future success of the Company.
Although the 1998 Plan reserves a total of 750,000 shares for issuance
under awards (including options) granted under the 1998 Plan, at March 31, 2002,
there remained only 129,208 shares available under the 1998 Plan and Restated
Stock Option Plan for future grant. Stock options have increasingly become an
essential ingredient in the compensation packages for executive, technical and
other personnel. Without the ability to grant additional options, the Board of
Directors of the Company does not believe that it would have the appropriate
tools to attract and retain these personnel. The Board of Directors is
recommending the amendment to the 1998 Plan to provide enough authorization to
cover anticipated option grants for the next few years.
3
SUMMARY OF THE 1998 PLAN
The 1998 Plan is administered by the Compensation Committee of the
Board (the "Committee"). The Committee has the authority to select the
individuals to whom awards are granted, to determine the types of awards to be
granted and the number of shares of Common Stock covered by such awards, to set
the terms and conditions of such awards, to determine whether the payment of any
amounts received under any award shall or may be deferred, and to establish
rules for the administration of the 1998 Plan.
Although the 1998 Plan permits the granting of a variety of different
types of awards, including stock appreciation rights (SARs), restricted stock
and restricted stock units, performance awards, and dividend equivalents, all of
the awards granted under the 1998 Plan have been stock options. The Committee
may grant incentive stock options meeting the requirements of Section 422 of the
Code, and stock options that do not meet such requirements (non-qualified stock
options). Awards may be granted for no cash consideration or for such minimal
cash consideration as may be required by applicable law. Awards may provide that
upon the grant or exercise thereof the holder will receive cash, shares of
Common Stock or other securities, awards or property, or any combination
thereof, as the Committee shall determine.
The exercise price per share under any stock option, and the grant
price of other awards under the 1998 Plan, may not be less than 100% of the fair
market value of the Common Stock on the date of the grant of such option or
other award. Determinations of fair market value under the 1998 Plan are made in
accordance with methods and procedures established by the Committee.
Any employee, officer, consultant or independent contractor of the
Company and its affiliates selected by the Committee is eligible to receive an
award under the 1998 Plan. During the past two years, the Company has granted
options to virtually all full-time employees. No person who is an employee of
the Company at the time of grant may be granted any award or awards under the
1998 Plan, the value of which awards are based solely on an increase in the
value of the shares after the date of grant of such awards, of more than 100,000
shares in the aggregate in any calendar year. The foregoing annual limitation
specifically includes the grant of any "performance-based awards" within the
meaning of Section 162(m) of the Code.
No award granted under the 1998 Plan may be assigned, transferred,
pledged or otherwise encumbered by the individual to whom it is granted,
otherwise than by will or the laws of descent and distribution, except that the
Committee may permit the designation of a beneficiary. Each award is
exercisable, during such individual's lifetime, only by such individual or, if
permissible under applicable law, by such individual's guardian or legal
representative.
The Board of Directors may amend, alter or discontinue the 1998 Plan at
any time, provided that shareholder approval must be obtained for any such
action that would (1) cause Rule 16b-3 under the Exchange Act to become
unavailable with respect to the 1998 Plan; (2) violate the rules or regulations
of the Nasdaq National Market, any other securities exchange or the National
Association of Securities Dealers, Inc. applicable to the Company; or (3) cause
the Company to be unable, under the Code, to grant incentive stock options under
the 1998 Plan. The Committee may correct any defect, supply any omission, or
reconcile any inconsistency in the 1998 Plan or any award agreement in the
manner and to the extent it shall deem desirable to carry the 1998 Plan into
effect. The Committee may waive any condition of, or rights of the Company under
any outstanding award, prospectively or retroactively, but the Committee may not
amend or terminate any outstanding award, prospectively or retroactively,
without the consent of the holder or beneficiary of the award.
The grant of an option or SAR is not expected to result in any taxable
income to the recipient. The holder of an incentive stock option generally will
have no taxable income upon exercising the incentive stock option (except that a
liability may arise pursuant to the alternative minimum tax), and the Company
will not be entitled to a tax deduction when an incentive stock option is
exercised. Upon exercising a non-qualified stock option, the optionee must
recognize ordinary income equal to the excess of the fair market value of the
shares of Common Stock acquired on the date of exercise over the exercise price,
and the Company will be entitled at that time to a tax deduction in the same
amount. Upon exercising a SAR, the amount of any cash received and the fair
market value on the exercise date of any shares of Company Common Stock received
are taxable to the recipient as ordinary income and deductible by the Company.
The tax consequence to an optionee upon a disposition of shares acquired through
the exercise of an option or SAR will depend on how long the shares have been
held and upon whether such
4
shares were acquired by exercising an incentive stock option or by exercising a
non-qualified stock option or SAR. Generally, there will be no tax consequence
to the Company in connection with disposition of shares acquired under an
option, except that the Company may be entitled to a tax deduction in the case
of a disposition of shares acquired under an incentive stock option before the
applicable incentive stock option holding periods set forth in the Code have
been satisfied.
Under the 1998 Plan, the Committee may permit participants (other than
Non-Employee Directors) receiving or exercising awards, subject to the
discretion of the Committee and upon such terms and conditions as it may impose,
to surrender shares of the Company's Common Stock (either shares received upon
the receipt or exercise of the award or shares previously owned by the optionee)
or other property to the Company to satisfy federal and state tax obligations.
In addition, the Committee may grant, subject to its discretion and such rules
as it may adopt, a bonus to a participant in order to provide funds to pay all
or a portion of federal and state taxes due as a result of the receipt or
exercise of (or lapse of restrictions relating to) an award. The amount of any
such bonus will be taxable to the participant as ordinary income, and the
Company will have a corresponding deduction equal to such amount (subject to the
usual rules concerning reasonable compensation).
THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE SHARES OF THE COMMON
STOCK REPRESENTED AT THE ANNUAL MEETING AND ENTITLED TO VOTE IS NECESSARY FOR
APPROVAL OF THE AMENDMENT TO THE OPTION PLAN DESCRIBED ABOVE. PROXIES WILL BE
VOTED IN FAVOR OF SUCH PROPOSAL UNLESS OTHERWISE INDICATED. THE BOARD RECOMMENDS
THAT THE COMPANY'S SHAREHOLDERS VOTE FOR THE PROPOSAL TO AMEND THE STOCK OPTION
PLAN AS DESCRIBED ABOVE.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT OF THE BOARD OF DIRECTORS
The Company's executive compensation policies are recommended and
administered by the Compensation Committee of the Board of Directors. The
Compensation Committee is currently composed of two independent, outside
directors.
The principal objective of the Company's compensation policy is to
increase shareholder value by providing an incentive to officers and employees
to maximize the Company's performance. The Committee annually reviews
compensation surveys for officer positions in the electronics industry to
provide a basis for comparison of the compensation levels of the Company's
management. Although the Committee has discretion to set executive compensation
at levels warranted by external, internal and individual circumstances, it has
traditionally set the salaries of executive officers at or slightly below
industry averages and provided for significant variable compensation through
stock options and cash bonuses. The form of compensation provided to members of
management varies based on their position and their ability to influence
performance.
The Company's executive officer compensation program can be separated
into several elements: base salary, annual cash incentive compensation,
long-term incentive compensation in the form of stock options, and various
benefits, including medical and retirement savings plans generally available to
employees.
Base Salary
The Company's policy is to set the base salaries of its executives at
or slightly below industry average. Mr. Quist's base salary during 2001 was set
by the Committee at the beginning of the fiscal year at $230,000, which the
Committee believes continues to place his salary slightly below the median of
salaries for chief executive officers in the electronics industry at similarly
sized companies. Such salary represented a $15,000, or 7%, increase over Mr.
Quist's base salary for 2000. Nevertheless, as part of efforts to reduce
expense, all executive officers of the Company agreed to a 10% decrease in
salary commencing in May 2001. The net effect was a reduction in Mr. Quist's
salary from the 2000 to 2001 years.
Cash Incentive Compensation
The Compensation Committee establishes an executive bonus plan
annually. The bonus plan assigns to each executive, based upon the Committee's
determination of the size of bonus appropriate for the position held by the
executive, a target dollar amount bonus objective and the proportions of the
bonus objective that may be
5
received by achievement of company financial goals and individual performance
goals. The Committee creates a matrix of multipliers for the portion of the
bonus based on Company financial performance as a function of increase in net
income before interest and income taxes ("NIBIT") and revenue. For any given
increase in NIBIT and revenue, the matrix will dictate a multiplier (which is
equal to 1 at 25% growth in revenue and 16% NIBIT) that is applied to the
Company financial performance portion of base dollar amount bonus objective to
determine the bonus awarded. No bonus based on financial performance is payable
for less than a combined 5% revenue increase and less than a 6% NIBIT. For
executives, the Committee, with input from the executive, also assigns specific
individual performance goals that will result in payment of a bonus if achieved.
Seventy percent of Mr. Quist's bonus was based on achievement of the
financial performance objectives and thirty percent upon individual performance
objectives, with a targeted bonus of $100,000. Because the Company's revenues
declined and it recorded a loss during 2001, no bonuses were paid to Mr. Quist,
or other executives, based on financial performance and the executives,
including Mr. Quist, agreed to forgo any bonuses based on individual performance
goals.
Stock Incentive Compensation
The Company provides long-term incentive to its executive officers
primarily through its Restated Stock Option Plan and its 1998 Stock Incentive
Plan (collectively, the "Option Plans"). Under the Option Plans, the
Compensation Committee may make discretionary awards of stock options to
executive officers based on the number of options and shares currently held by
the executive and also on performance factors similar to those used to determine
salaries and annual cash incentives. The Compensation Committee has not fixed,
or predetermined, the amount of shares to be available for option grants in any
year. The Committee has, however, reviewed industry statistics regarding the
appropriate size of the Option Plan in terms of outstanding shares and the
appropriate size of grants to executive officers and to employees as a whole.
The Company's options generally vest over a period of four years and expire five
to ten years after the date of grant. All options are granted with an exercise
price equal to fair market value on the date of grant.
Mr. Quist received options to purchase 13,500 shares of common stock in
2001. These options were granted for retention purposes and to provide
additional incentive during periods when officers were receiving reduced cash
compensation and while the market price for the Company's common stock was
depressed.
Benefits
The Company provides medical and retirement savings benefits to
executive officers on terms generally available to employees. No executive
officer received perquisites in excess of 10% of salary during 2001.
SUMMARY
The Compensation Committee believes that the compensation program for
executive officers during the 2001 year achieved the principal objectives for
which it was designed.
Erwin A. Kelen
Michael M. Selzer, Jr.
6
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and noncash compensation for
the last three fiscal years awarded to or earned by the President and Chief
Executive Officer of the Company and each of the four most highly compensated
executive officers of the Company who received cash compensation from the
Company during the year ended December 31, 2001 exceeding $100,000.
LONG-TERM COMPENSATION
-----------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------- ------------------------ ---------
RESTRICTED SECURITIES
NAME AND PRINCIPAL OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION AWARDS OPTIONS(#) PAYOUTS COMPENSATION(1)
------------------------ -------- ---------- --------- -------------- ---------- ------------ --------- ---------------
Steven M. Quist 2001 212,011 13,500 15,224
Chief Executive Officer, 2000 214,134 143,225 4,922
President & Director 1999 208,462 32,000 37,500 2,180
William J. Farmer 2001 145,282 3,200 4,506
Senior Vice President 2000 134,189 68,800 22,500 6,837
1999 123,446 11,900 9,633
Michael D. Wetle 2001 201,862 69,341(2) 4,000 2,943
Senior Vice President 2000 194,423 203,400 89,364(2) 2,119
1999 159,701 34,609 59,741(2) 22,500 2,348
Bruce E. Batten 2001 138,231 6,200 4,566
Vice President 2000 139,134 48,612 4,820
1999 130,577 24,375 7,500 4,200
Scott G. Larson 2001 117,838 3,000 5,268
Vice President-Finance 2000 94,366 26,886 10,000 2,865
& CFO 1999 80,520 2,743 6,000 2,710
-------------------
(1) Includes Company contributions for such officers to a 401K plan, travel
bonus reimbursement and Company contributions for some officers of
commuting expenses.
(2) Includes (i) in 2001 and 2000, forgiveness of a loan for relocation costs,
(ii) in 2000, payout of accrued and unused vacation time, and (iii) in
1999, reimbursement of cost of relocation to Minnesota and California.
LONG-TERM INCENTIVE PLAN AWARDS/EMPLOYMENT AGREEMENTS
Other than its Restated Stock Option Plan and the 1998 Stock Incentive
Plan, the Company does not maintain any long-term incentive plans, nor does it
have any employment agreements with any of the executive officers named in the
Summary Compensation Table.
7
STOCK OPTIONS
The Company maintains a Restated Stock Option Plan, a 1998 Stock
Incentive Plan and a Stock Option Plan for Nonemployee Directors. The Company
may grant stock options to executive officers and other employees and
consultants of the Company under the Restated Stock Option Plan and the 1998
Stock Incentive Plan. The following table sets forth information with respect to
options granted to the named executive officers in 2001:
OPTION GRANTS IN 2001
POTENTIAL REALIZABLE VALUE AT
% OF TOTAL ASSUMED ANNUAL RATES OF STOCK
OPTIONS PRICE APPRECIATION FOR OPTION
OPTIONS GRANTED TO TERM(1)
GRANTED EMPLOYEES IN EXERCISE EXPIRATION -------------------------------
NAME (#) 2001 PRICE($/SH) DATE 5%($) 10%($)
--------------------- --------- -------------- ------------- ----------- -------------------------------
Mr. Quist 1,500 0.46% 10.01 4/26/2006 $4,149 $9,443
12,000(2) 3.49% 11.00 8/10/2011 36,472 83,014
Mr. Farmer 1,200 0.37% 10.01 4/26/2006 3,319 7,554
2,000 0.58% 11.24 5/18/2006 6,211 14,138
Mr. Wetle 1,500 0.46% 10.01 4/26/2006 4,149 9,443
2,500 0.73% 11.24 5/18/2006 7,764 17,672
Dr. Batten 1,200 0.37% 10.01 4/26/2006 3,319 7,554
5,000 1.45% 11.24 5/18/2006 15,528 35,344
Mr. Larson 1,000 0.29% 10.01 4/26/2006 2,766 6,295
2,000 0.58% 11.24 5/18/2006 6,211 1,438
-------------------
(1) These amounts represent the realizable value of the subject options
from the date of grant until termination, without discounting to
present value, assuming appreciation in the market value of the Common
Stock from the market price on the date of grant at the rates
indicated. Actual gains, if any, on stock option exercises are
dependent on the future performance of the Common Stock, and overall
stock market conditions. The amounts reflected in this table may not
necessarily be achieved.
(2) Options granted in 2001 to Mr. Quist were granted independent of any
option plan.
The following table sets forth information with respect to options
exercised during 2001 and held by the officers named in the Summary Compensation
Table as of December 31, 2001:
AGGREGATED OPTION EXERCISES IN 2001 AND OPTION VALUES AS OF DECEMBER 31, 2001
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-
SHARES UNEXERCISED OPTIONS AT MONEY OPTIONS AT
ACQUIRED DECEMBER 31, 2001(2) DECEMBER 31, 2001(1)
ON VALUE ------------------------------- ----------------------------
NAME EXERCISE REALIZED(3) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------------- ---------- ------------ ------------- ------------- ------------- -------------
Mr. Quist 118,435 69,000 169,227 140,368
Mr. Farmer 7,032 25,939 24,975 2,600 99,290 5,964
Mr. Wetle 17,625 25,750 41,100 56,670
Dr. Batten 1,500 3,070 10,350 24,350 40,850 88,400
Mr. Larson 2,000 5,500 6,682 15,764
-------------------
(1) All of such options are exercisable at a price equal to the fair market
value of the Common Stock on the date of grant.
(2) Represents the difference between the closing price of the Common Stock
as reported on the Nasdaq National Market ("Nasdaq") on December 31,
2001, and the exercise price of the options.
(3) Represents the difference between the option exercise price and the
closing price of the Company's Common Stock as reported by Nasdaq on
the date of exercise.
8
CERTAIN TRANSACTIONS
AVANTI OPTICS CORPORATION. On August 7, 2000, the Company entered into
an organization agreement with Avanti Optics Corporation ("Avanti"), a newly
formed entity for which Steven K. Case, the Chairman of the Company, serves as
Chairman and Chief Executive Officer and for which Erwin A. Kelen, a director of
the Company, serves as a director. Avanti was formed to pursue the development
of products for the photonics markets. Steven K. Case and his family members
acquired 13,500,000 shares, or approximately 65% of the outstanding shares, of
Avanti for $1,350,000 cash. Since July 2000, Dr. Case has devoted approximately
half his work time to the affairs of Avanti and half to the Company, and his
compensation from the Company has been reduced to half his compensation prior to
the formation of Avanti.
Pursuant to the organization agreement, the Company received 3,800,000
shares of the common stock of Avanti in exchange for $190,000 of cash, the right
to hire certain Company employees, title to equipment the Company had used in
photonics research, a potential business agreement with a telecommunications
company for a photonics inspection system, and a license to use certain
intellectual property the Company had developed for the electronics markets. The
Company also agreed to partially fund development of a photonics inspection
system that Avanti was pursuing in return for rights to the technology that was
developed. The Company provided Avanti with a total of $224,516 of funding under
this arrangement in 2000, but terminated funding when the development effort was
terminated. The Company also entered into a facilities agreement under which
Avanti occupied office space at the Company's facilities in Minneapolis,
Minnesota until February 2001 and paid the Company a total of $17,500 for use of
those facilities. Pursuant to a related Stockholders' Agreement, the Company has
rights of first refusal and co-sale rights with respect to shares of Avanti held
by Dr. Case, Mr. Kelen, and another Avanti shareholder.
The Organization Agreement provides the Company with a right of first
refusal to purchase its pro rata portion of any private sale of Avanti
securities and registration rights relating to the Avanti common stock that the
Company holds. The Company exercised its right of first refusal with respect to
the sale of an additional 200,000 shares by Avanti in September 2000, purchasing
an additional 33,250 shares. In March 2001, Avanti raised additional equity
capital, but the Company declined to participate and accordingly its ownership
interest in Avanti declined to 14%. In December 2001, the Company declined a
proposal from Avanti whereby the Company would provide a loan to Avanti with
repayment terms and/or conversion rights based on certain future events. In
February 2002, Avanti raised a third round of equity capital in which
CyberOptics again declined to participate and accordingly its ownership interest
in Avanti was further diluted to 13%. Avanti continues to provide the Company
with funding proposals, and while there is no commitment to provide funding, the
Company considers each proposal based upon its merits.
The Company believes that the agreements with Avanti are in the best
interest of the Company and its shareholders and are on terms at least as
favorable as could have been obtained from unaffiliated parties.
LOAN. In 1999, the Company advanced a total of $150,000 to Michael D.
Wetle, an officer of the Company, in connection with his relocation from
Minneapolis to San Francisco. So long as Mr. Wetle remains an employee, $30,000
of the loan is forgiven in each calendar year as compensation to Mr. Wetle for
relocation costs, interest payable on the loan, and taxes associated with
forgiveness of the loan
9
SHAREHOLDER RETURN
The graph set forth below compares the cumulative total shareholder
return on the common stock of the Company from January 1, 1996 through December
31, 2001 with the cumulative total return on a broad market index (the Nasdaq
NMS Index) and a peer group index (the Nasdaq Computer and Data Processing
Index). In each case, the cumulative return is calculated assuming an investment
of $100 on January 1, 1996, and reinvestment of all dividends.
[PLOT POINTS CHART]
Nasdaq Computer and CyberOptics
Date Nasdaq NMS Data Processing Corporation
---- ---------- --------------- -----------
12/31/96 100 100 100
3/31/97 94.569600 92.82870929 126.0221799
6/30/97 111.899394 118.9773213 117.6207012
9/30/97 130.824222 130.1386834 252.0443598
12/31/97 122.476686 122.8739891 169.9003025
3/31/98 143.342353 162.3403277 201.6354878
6/30/98 147.283037 179.8171572 107.3484933
9/30/98 132.887069 168.7037358 75.61330794
12/31/98 172.680385 219.1959096 104.5480004
3/31/99 193.654659 264.3738776 97.0874874
6/30/99 211.792197 274.9685692 120.4211941
9/30/99 217.064622 286.3541217 119.9507113
12/31/99 320.832285 481.8131086 205.3657444
3/31/00 360.182236 475.839044 316.926179
6/30/00 313.181768 388.4156819 518.091184
9/29/00 288.191348 359.2763208 205.1417049
12/29/00 192.976917 221.8550595 189.7389941
3/30/01 144.049950 161.8559644 117.6207012
6/29/01 169.778294 210.7516572 136.6640529
9/28/01 117.789380 128.902997 98.57734961
12/31/01 153.120600 178.6597919 148.426123
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under federal securities laws, the Company's directors and officers,
and any beneficial owner of more than 10% of a class of equity securities of the
Company, are required to report their ownership of the Company's equity
securities and any changes in such ownership to the Securities and Exchange
Commission (the "Commission") and the securities exchange on which the equity
securities are registered. Specific due dates for these reports have been
established by the Commission, and the Company is required to disclose in this
Proxy Statement any delinquent filing of such reports and any failure to file
such reports during the fiscal year ended December 31, 2001. During 2001, Mr.
Quist reported late a resale of shares in connection with a cashless broker
option exercise in the summer of 2000, and Mr. Batten filed late one report with
respect to an option exercise in 2001. Based upon information provided by
officers and directors of the Company, all other officers, directors and 10%
shareholders otherwise filed all reports on a timely basis in the 2001 fiscal
year.
10
SHARES OUTSTANDING
The following table sets forth information pertaining to the ownership
of the Company's Common Stock by each person known by the Company to
beneficially own 5% or more of the Company's Common Stock, by each director, by
each officer named in the Summary Compensation Table, and by all officers and
directors as a group as of March 1, 2002:
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OF CLASS
------------------- ------------------------ --------
Leroy C. Kopp and
Kopp Investment Advisors, Inc.
7701 France Avenue South, Ste 500
Edina, MN 55435(2) 1,705,512 21.0%
J.P. Morgan Chase & Co.
270 Park Avenue
New York, NY 10017(3) 960,376 11.9%
EQSF Advisers, Inc.
M.J. Whitman Advisers, Inc.
Mark J. Whitman
767 Third Avenue
New York, NY 10017(4) 791,150 9.7%
Steven K. Case
5900 Golden Hills Drive
Minneapolis, MN 55416(5) 527,357 6.4%
Michael A. Bowes 9,000 *
Alex B. Cimochowski(6) 39,556 *
Kathleen P. Iverson 9,605 *
Erwin A. Kelen 102,000 1.3%
Irene M. Qualters 13,500 *
Steven M. Quist(7) 197,506 2.4%
Michael M. Selzer, Jr. 13,950 *
Bruce E. Batten 11,850 *
William J. Farmer 49,383 *
Michael D. Wetle 17,625 *
Scott Larson 8,863
All executive officers and
directors as a group (12 persons) 1,000,195 11.5%
-------------------
*Less than 1%
(1) Includes 165,500 shares for Dr. Case, 9,000 shares for Mr. Bowes,
36,000 shares for Mr. Cimochowski, 9,000 shares for Ms. Iverson, 81,000
shares for Mr. Kelen, 13,500 shares for Ms. Qualters, 165,310 shares
for Mr. Quist, 13,500 shares for Mr. Selzer, 10,350 shares for Dr.
Batten, 30,600 shares for Mr. Farmer, 17,625 shares for Mr. Wetle,
6,000 shares for Mr. Larson, and 557,385 shares for all officers and
directors as a group, purchasable upon exercise of options exercisable
within 60 days of March 1, 2001.
(2) Based on Schedule 13D/A filed August 22, 2000. Includes 129,000 held by
Leroy Kopp or family foundations or trusts he controls, 489,250 shares
over which Kopp Investment Advisers, Inc. ("KIA") has sole voting
power, 270,000 shares over which KIA has sole power of disposition and
1,290,212 shares over which KIA has shared power of disposition.
11
(3) Based on Schedule 13G/A filed February 12, 2002. Includes 847,885
shares over which the holder has sole voting power.
(4) Based on Schedule 13G/A filed January 15, 2002. Includes 779,400 shares
held by EQSF Advisers, Inc., and 11,750 shares held by M.J. Whitman
Advisers, Inc.
(5) Includes 15,000 shares in trust for family members for which the holder
is a trustee.
(6) Includes 2,475 shares owned by Mr. Cimochowski's spouse, the beneficial
ownership of which Mr. Cimochowski disclaims.
(7) Includes 2,000 shares subject to a restricted stock agreement.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee of the Company's Board of Directors is composed of
the following nonemployee directors: Irene M. Qualters, Michael M. Selzer, Jr.,
and Alex B. Cimochowski. All of the members of the Audit Committee are
independent for purposes of the Nasdaq listing requirements. The Audit Committee
operates under a written charter adopted by the Board of Directors. The Audit
Committee recommends to the Board of Directors the appointment of the Company's
independent accountants.
Management is responsible for the Company's internal controls and the
financial reporting process. The Company's independent accountants are
responsible for performing an independent audit of the Company's consolidated
financial statements in accordance with generally accepted auditing standards
and to issue a report on the Company's financial statements. The Audit
Committee's responsibility is to monitor and oversee these processes.
In this context, the Audit Committee has met and held discussions with
management and the independent accountants. Management represented to the Audit
Committee that the Company's consolidated financial statements were prepared in
accordance with generally accepted accounting principles, and the Audit
Committee has reviewed and discussed the consolidated financial statements with
management and the independent accountants. The Audit Committee discussed with
the independent accountants matters required to be discussed by Statement on
Auditing Standards No. 61 (Communications with Audit Committees).
The Company's independent accountants also provided to the Audit
Committee the written disclosure required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees), and the Audit
Committee discussed with the independent accountants the accounting firm's
independence. The Committee also considered whether non-audit services provided
by the independent accountants during the last fiscal year were compatible with
maintaining the independent accountants' independence.
Based upon the Audit Committee's discussion with management and the
independent accountants and the Audit Committee's review of the representation
of management and the report of the independent accountants to the Audit
Committee, the Audit Committee recommended to the Board of Directors that the
audited consolidated financial statements be included in the Company's Annual
report on Form 10-K for the fiscal year ended December 31, 2001 filed with the
Securities and Exchange Commission.
Members of the Audit Committee
Michael M. Selzer, Jr.
Irene M. Qualters
Alex B. Cimochowski
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The Company has selected PricewaterhouseCoopers LLP as its independent
accountants for its fiscal year ending December 31, 2002. Representatives of
PricewaterhouseCoopers LLP which has served as the Company's independent
accountants since July 1994, are expected to be present at the Annual Meeting,
will have an opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions from shareholders.
12
AUDIT FEES
Audit fees billed or expected to be billed to the Company by
PricewaterhouseCoopers LLP for the audit of the Company's financial statements
for the fiscal year ended December 31, 2001 and for reviews of the Company's
financial statements included in the Company's quarterly reports on Form 10-Q
for the last fiscal year totaled approximately $110,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
PricewaterhouseCoopers LLP did not provide services to the Company
during the last fiscal year for the design and implementation of financial
information systems and the Company paid no fees for such services.
ALL OTHER FEES
Fees billed or expected to be billed to the Company by
PricewaterhouseCoopers LLP for all other non-audit services, including
tax-related services, provided during the last fiscal year totaled approximately
$372,000.
SHAREHOLDER PROPOSALS AND NOMINATIONS FOR THE NEXT ANNUAL MEETING
Any shareholder wishing to include a proposal in the Company's proxy
solicitation materials for its next annual meeting of shareholders must submit
such proposal for consideration in writing to the Secretary of the Company at
its principal executive offices, 5900 Golden Hills Drive, Minneapolis, MN 55416,
no later than December 6, 2002.
Pursuant to the Company's Bylaws, in order for business to be properly
brought before the next annual meeting by a shareholder, or in order for a
nominee for director to be considered at such annual meeting, the shareholder
must give written notice of such shareholder's intent to bring a matter before
the annual meeting, or nominate the director, no later than December 6, 2002.
Each such notice must set forth certain information with respect to the
shareholder who intends to bring such matter before the meeting and the business
desired to be conducted, as set forth in greater detail in the Company's Bylaws.
Management will use discretionary authority to vote against any
shareholder proposal, or director nominee not made by management, presented at
the next annual meeting if: (i) such proposal or nominee has been properly
omitted from the Company's proxy materials under federal securities laws; (ii)
notice of such proposal or nominee was not submitted to the Secretary of the
Company at the address listed above by December 6, 2002; or (iii) the proponent
has not solicited proxies in compliance with federal securities laws from the
holders of at least the percentage of the Company's voting shares required to
carry the proposal or elect the nominee.
GENERAL
The Board of Directors of the Company does not know of any matters
other than those described in this Proxy Statement that will be acted upon at
the Annual Meeting. In the event that any other matters properly come before the
meeting calling for a vote of shareholders, the persons named as proxies in the
enclosed form of proxy will vote in accordance with their best judgment.
BY ORDER OF THE BOARD OF
DIRECTORS
Thomas Martin
SECRETARY
Dated: April 10, 2002
13
[LOGO] CYBEROPTICS(R)
M A K I N G L I G H T W O R K
CYBEROPTICS CORPORATION
2002 ANNUAL SHAREHOLDERS MEETING
MAY 17, 2002
--------------------------------------------------------------------------------
[LOGO] CYBEROPTICS(R) PROXY
--------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Steven K. Case and Steven M. Quist, and each of
them, with power to appoint a substitute, to vote all shares the undersigned is
entitled to vote at the Annual Meeting of Shareholders of CyberOptics
Corporation, to be held on May 17, 2002, and any adjournments thereof, as
specified on the reverse side on the matters referred to, and, in their
discretion, upon any other matters which may be brought before the meeting.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY BY MAIL OR
ELECTRONICALLY AS DESCRIBED ON THE REVERSE SIDE.
SEE REVERSE FOR VOTING INSTRUCTIONS.
COMPANY #
CONTROL #
THERE ARE THREE WAYS TO VOTE YOUR PROXY
YOUR TELEPHONE OR INTERNET VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR SHARES
IN THE SAME MANNER AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY CARD.
VOTE BY PHONE -- TOLL FREE -- 1-800-240-6326 -- QUICK *** EASY *** IMMEDIATE
o Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a
week, until 11:00 a.m. (CT) on May 16, 2002.
o You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above.
o Follow the simple instructions the voice provides you.
VOTE BY INTERNET -- http://www.eproxy.com/cybe/ -- QUICK *** EASY *** IMMEDIATE
o Use the Internet to vote your proxy 24 hours a day, 7 days a week, until
12:00 p.m. (CT) on May 16, 2002.
o You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above to obtain your records and create an
electronic ballot.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
we've provided or return it to CyberOptics Corporation, c/o Shareowner
Services(SM), P.O. Box 64873, St. Paul, MN 55164-0873.
IF YOU VOTE BY PHONE OR INTERNET, PLEASE DO NOT MAIL YOUR PROXY CARD
[PLEASE DETACH HERE]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1.
1. Election of 01 Steven K. Case 04 Kathleen P. Iverson 07 Michael M. Selzer, Jr. [ ] Vote FOR [ ] WITHHOLD
directors: 02 Steven M. Quist 05 Erwin A. Kelen all nominees AUTHORITY
03 Alex B. Cimochowski 06 Irene M. Qualters (except as to vote for
marked) all nominees
________________________________________________
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR A SPECIFIC NOMINEE, WRITE | |
THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.) | |
|________________________________________________|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 2.
2. To approve amendment to 1998 Stock Incentive Plan. [ ] For [ ] Against [ ] Abstain
3. To vote with discretionary authority on any other matter that may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR ALL OF THE DIRECTORS NAMED IN PROPOSAL 1 AND FOR PROPOSAL 2.
Address Change? Mark Box [ ] Indicate changes below: Date__________________________
________________________________________________
| |
| |
|________________________________________________|
Signature(s) in Box
When shares are held by joint tenants, both should
sign. When signing as attorney, executor,
administrator, trustee or guardian, please give
full title as such. If a corporation please sign
in full corporate name by President or other
authorized officer. If a partnership, please sign
in partnership name by authorized person.