SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
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Check the appropriate box:
[ ] Preliminary Proxy Statement
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[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
MKS Instruments, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
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or the Form or Schedule and the date of its filing.
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(MKS LOGO)
MKS INSTRUMENTS, INC.
SIX SHATTUCK ROAD
ANDOVER, MASSACHUSETTS 01810
---------------------
April 14, 2003
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
MKS Instruments, Inc. (the "Company") to be held on Wednesday, May 14, 2003, at
10:00 a.m. at the Andover Country Club, 60 Canterbury Street, Andover,
Massachusetts 01810.
At the Annual Meeting you will be asked to: (i) elect two (2) Class I
Directors for a three (3) year term; and (ii) ratify the selection of
PricewaterhouseCoopers LLP as the Company's independent auditors for fiscal
2003. Details of the matters to be considered at the Annual Meeting are
contained in the Proxy Statement, which we urge you to review carefully.
Whether or not you plan to attend the Annual Meeting, please complete,
date, sign and return your Proxy Card promptly in the enclosed envelope, which
requires no postage if mailed in the United States. If you attend the Annual
Meeting, you may vote in person if you wish, even if you have previously
returned your Proxy Card.
On behalf of the Board of Directors, I would like to express our
appreciation for your continued interest in the affairs of the Company.
Sincerely,
/s/ John R. Bertucci
JOHN R. BERTUCCI
Chairman, Chief Executive Officer and
President
(MKS LOGO)
MKS INSTRUMENTS, INC.
SIX SHATTUCK ROAD
ANDOVER, MASSACHUSETTS 01810
---------------------
NOTICE OF 2003 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 14, 2003
---------------------
To the Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of MKS
INSTRUMENTS, INC. (the "Company"), a Massachusetts corporation, will be held on
Wednesday, May 14, 2003 at 10:00 a.m. at the Andover Country Club, 60 Canterbury
Street, Andover, Massachusetts 01810, for the following purposes:
1. To elect two (2) Class I Directors for a three (3) year term; and
2. To ratify the selection of PricewaterhouseCoopers LLP as the
Company's independent auditors for the year ending December 31, 2003.
The Board of Directors has fixed the close of business on March 27, 2003 as
the record date for the determination of stockholders entitled to notice of and
to vote at the Annual Meeting and any adjournment or adjournments thereof. The
stock transfer books of the Company will remain open for the purchase and sale
of the Company's Common Stock.
A copy of the Company's Annual Report to Stockholders for the year ended
December 31, 2002, which contains consolidated financial statements and other
information of interest to stockholders, accompanies this Notice and the
enclosed Proxy Statement.
If you would like to attend the Annual Meeting and your shares are held by
a broker, bank or other nominee, you must bring to the Annual Meeting a letter
from the nominee confirming your beneficial ownership of such shares. You must
also bring a form of personal identification. In order to vote your shares at
the Annual Meeting, you must obtain from the nominee a proxy issued in your
name.
By Order of the Board of Directors
/s/ Richard S. Chute
RICHARD S. CHUTE
Clerk
Andover, Massachusetts
April 14, 2003
IMPORTANT
WHETHER OR NOT YOU EXPECT TO ATTEND IN PERSON, PLEASE PROMPTLY SIGN, DATE, AND
RETURN THE ENCLOSED PROXY. PROMPTLY SIGNING, DATING, AND RETURNING THE PROXY
WILL SAVE THE COMPANY THE EXPENSE AND EXTRA WORK OF ADDITIONAL SOLICITATION. AN
ADDRESSED ENVELOPE FOR WHICH NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES IS ENCLOSED FOR THAT PURPOSE. SENDING IN YOUR PROXY WILL NOT PREVENT YOU
FROM VOTING YOUR STOCK AT THE ANNUAL MEETING IF YOU DESIRE TO DO SO, AS YOUR
PROXY IS REVOCABLE AT YOUR OPTION.
MKS INSTRUMENTS, INC.
SIX SHATTUCK ROAD
ANDOVER, MASSACHUSETTS 01810
---------------------
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of MKS Instruments, Inc. (the "Company" or
"MKS"), a Massachusetts corporation, for use at the Annual Meeting of
Stockholders to be held on May 14, 2003, at 10:00 a.m. at the Andover Country
Club, 60 Canterbury Street, Andover, Massachusetts 01810, and at any adjournment
or postponement thereof (the "Annual Meeting").
All proxies will be voted in accordance with the stockholders'
instructions. If no choice is specified, the shares will be voted in favor of
the matters set forth in the accompanying Notice of 2003 Annual Meeting of
Stockholders. Any proxy may be revoked by a stockholder at any time before its
exercise by delivery of written revocation to the Clerk of the Company.
Attendance at the Annual Meeting will not in itself be deemed to revoke a Proxy
unless the stockholder gives affirmative notice at the Annual Meeting that the
stockholder intends to revoke the proxy and vote in person.
VOTING SECURITIES AND VOTES REQUIRED
At the close of business on March 27, 2003, the record date for the
determination of stockholders entitled to notice of and to vote at the Annual
Meeting, there were issued and outstanding and entitled to vote 51,383,573
shares of Common Stock, no par value per share, of the Company (the "Common
Stock"). Each share entitles the record holder to one vote on each matter.
Under the Company's Amended and Restated By-Laws (the "By-Laws"), the
holders of a majority of the shares of Common Stock issued and outstanding and
entitled to vote at the Annual Meeting shall constitute a quorum for the
transaction of business at the Annual Meeting. Shares of Common Stock present in
person or represented by proxy (including shares which abstain or do not vote
with respect to one or more of the matters presented for stockholder approval)
will be counted for purposes of determining whether a quorum exists at the
Annual Meeting.
The affirmative vote of the holders of a plurality of the shares of Common
Stock voting on the matter is required for the election of Directors. The
ratification of PricewaterhouseCoopers LLP requires the approval of the holders
of a majority of the shares of Common Stock present or represented by proxy at
the Annual Meeting and voting on the matter.
Shares held by stockholders who abstain from voting as to a particular
matter, and shares held in "street name" by brokers or nominees, who indicate on
their proxies that they do not have discretionary authority to vote such shares
as to a particular matter, will not be counted as votes in favor of such matter,
and also will not be counted as shares voting on such matter. Accordingly,
abstentions and "broker non-votes" will have no effect on the voting on a matter
that requires the affirmative vote of a certain percentage of the shares voting
on the matter.
THE NOTICE OF ANNUAL MEETING, THIS PROXY STATEMENT AND THE COMPANY'S ANNUAL
REPORT TO STOCKHOLDERS FOR THE YEAR ENDED DECEMBER 31, 2002 ARE BEING MAILED TO
STOCKHOLDERS ON OR ABOUT APRIL 14, 2003. A COPY OF THE COMPANY'S ANNUAL REPORT
ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2002 AS FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION (THE "COMMISSION"), EXCLUDING EXHIBITS, WILL BE
FURNISHED WITHOUT CHARGE TO ANY STOCKHOLDER UPON WRITTEN REQUEST TO: INVESTOR
RELATIONS DEPARTMENT, MKS INSTRUMENTS, INC., SIX SHATTUCK ROAD, ANDOVER, MA
01810. EXHIBITS WILL BE PROVIDED UPON WRITTEN REQUEST AND PAYMENT OF AN
APPROPRIATE PROCESSING FEE.
2
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of Common Stock by (i) each stockholder known to the
Company to be the beneficial owner of more than 5% of the outstanding shares of
Common Stock; (ii) each current director of the Company; (iii) the executive
officers named in the Summary Compensation Table below; and (iv) all directors
and executive officers of the Company as a group. Unless otherwise indicated in
the footnotes to the table, (i) all information set forth in the table is as of
January 31, 2003; and (ii) the address for each director and executive officer
of the Company is: c/o MKS Instruments, Inc., Six Shattuck Road, Andover,
Massachusetts 01810.
NUMBER OF SHARES PERCENTAGE OF
NAME OF BENEFICIAL OWNERS BENEFICIALLY OWNED(1) CLASS OUTSTANDING
------------------------- --------------------- -----------------
John R. Bertucci........................................... 11,643,022(2) 22.7%
Ronald C. Weigner.......................................... 338,580(3) *
Leo Berlinghieri........................................... 300,044(4) *
William D. Stewart......................................... 311,583(5) *
John A. Smith.............................................. 50,120(6) *
Robert R. Anderson......................................... 68,421(7) *
James G. Berges............................................ --
Richard S. Chute........................................... 37,092(4) *
Hans-Jochen Kahl........................................... 30,122(8) *
Owen W. Robbins............................................ 37,092(4) *
Louis P. Valente........................................... 39,992(9) *
All directors and officers as a group (13 persons)......... 13,181,118(10) 25.7%
Other 5% shareholder Emerson Electric Co. ................. 12,000,000 23.4%
800 West Florissant Avenue
St. Louis, MO 63136
---------------
* Represents less than 1% of the outstanding Common Stock.
(1) The Company believes that each stockholder has sole voting and investment
power with respect to the shares listed, except as otherwise noted. The
number of shares beneficially owned by each stockholder is determined under
rules of the Commission, and the information is not necessarily indicative
of ownership for any other purpose. Under such rules, beneficial ownership
includes any shares as to which the person has sole or shared voting power
or investment power and also any shares which the individual has the right
to acquire within 60 days after January 31, 2003 through the exercise of any
stock option or other right. The inclusion herein of any shares of Common
Stock deemed beneficially owned does not constitute an admission by such
stockholder of beneficial ownership of those shares of Common Stock. Shares
of Common Stock which an individual or entity has a right to acquire within
the 60-day period following January 31, 2003 pursuant to the exercise of
options or warrants are deemed to be outstanding for the purpose of
computing the percentage ownership of such individual or entity, but are not
deemed to be outstanding for the purpose of computing the percentage
ownership of any other person or entity shown in the table.
(2) Includes 5,155,353 shares held directly by Mr. Bertucci, 5,453,927 shares
held directly by Mr. Bertucci's wife, 500,000 shares held by certain trusts
for which Mr. Bertucci serves as a co-trustee and 500,000 shares held by a
limited partnership. In addition, includes 33,742 shares subject to options
exercisable within 60 days of January 31, 2003.
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(3) Consists of 1,163 shares held directly by Mr. Weigner and 337,417 shares
subject to options exercisable within 60 days of January 31, 2003.
(4) Consists solely of options exercisable within 60 days of January 31, 2003.
(5) Consists of 1,112 shares held directly by Mr. Stewart and 310,471 shares
subject to options exercisable within 60 days of January 31, 2003.
(6) Consists of 2,058 shares held directly by Mr. Smith and 48,062 shares
subject to options exercisable within 60 days of January 31, 2003.
(7) Consists of 40,000 shares held directly by Mr. Anderson, 12,103 shares held
in trust and other accounts, and 16,318 shares subject to options
exercisable within 60 days of January 31, 2003.
(8) Consists of 18,491 shares held directly by Mr. Kahl, and 11,631 shares
subject to options exercisable within 60 days of January 31, 2003.
(9) Consists of 3,682 shares held directly by Mr. Valente and 36,310 shares
subject to options exercisable within 60 days of January 31, 2003.
(10) Includes 1,306,554 shares subject to options exercisable within 60 days of
January 31, 2003.
To the knowledge of the Company, there are no agreements among any of the
foregoing persons or entities with respect to the voting of shares of Common
Stock of the Company.
PROPOSAL ONE
ELECTION OF DIRECTORS
The By-Laws of the Company provide for a Board of Directors which is
divided into three classes. The term of the Class I Directors expires at the
2003 Annual Meeting. The term of the Class II Directors expires at the 2004
Annual Meeting, and the term of the Class III Directors expires at the 2005
Annual Meeting. Mr. Hans-Jochen Kahl and Mr. Louis P. Valente are currently
proposed for election to serve as Class I Directors.
Shares represented by all proxies received by the Board of Directors and
not so marked as to withhold authority to vote for an individual director will
be voted (unless one or both nominees are unable or unwilling to serve) for the
election of the nominees named below. The Board of Directors expects that each
of the nominees named below will be available for election, but if either of
them is not a candidate at the time the election occurs, it is intended that
such proxies will be voted for the election of a substitute nominee to be
designated by the Board of Directors.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS BELIEVES THAT APPROVAL OF THE ELECTION OF MR.
HANS-JOCHEN KAHL AND MR. LOUIS P. VALENTE TO SERVE AS CLASS I DIRECTORS IS IN
THE BEST INTERESTS OF MKS AND ITS STOCKHOLDERS AND THEREFORE RECOMMENDS A VOTE
"FOR" THIS PROPOSAL.
4
DIRECTORS
Set forth below are the names and ages of each member of the Board of
Directors (including those who are nominees for election as Class I Directors)
and the positions and offices held, principal occupation and business experience
during the past five years, the names of other publicly held companies of which
the individual serves as a director and the year of the commencement of the term
as director of MKS. Information with respect to the number of shares of Common
Stock beneficially owned by each director, directly or indirectly, as of January
31, 2003, appears under the heading "Security Ownership of Certain Beneficial
Owners and Management."
CLASS TO WHICH
NAME AGE POSITION DIRECTOR BELONGS
---- --- -------- ----------------
John R. Bertucci................... 62 Director; Chairman, Chief Executive III
Officer and President
Robert R. Anderson(2).............. 65 Director III
James Berges(1).................... 55 Director II
Richard S. Chute................... 64 Director; Clerk II
*Hans-Jochen Kahl(1)............... 63 Director I
Owen W. Robbins(2)................. 73 Director II
*Louis P. Valente(1)(2)............ 72 Director I
---------------
(1) Member of Compensation Committee
(2) Member of Audit Committee
* Nominee for election at this meeting
Mr. Bertucci has served as a director of MKS since 1974 and has been
Chairman of the Board of Directors and Chief Executive Officer since November
1995. Mr. Bertucci served as President of MKS from 1974 to May 1999 and again
from November 2001 to the present. From 1970 to 1974, he was Vice President and
General Manager. Mr. Bertucci has an M.S. in Industrial Administration and a
B.A. in Metallurgical Engineering from Carnegie-Mellon University. Mr. Bertucci
is a member of the Board of Trustees of Carnegie-Mellon University and a member
of the Executive Board of The Massachusetts High Technology Council.
Mr. Anderson has served as a director of MKS since January 2001. Mr.
Anderson is a private investor. From October 1998 to October 2000, Mr. Anderson
served as Chairman of Yield Dynamics, Inc., a private semiconductor control
software company and presently serves as a director. He also served as CEO of
Yield Dynamics from October 1998 to April 2000. Mr. Anderson also served as CEO
of Silicon Valley Research, Inc., a semiconductor design automation software
company from December 1996 to August 1998 and as Chairman from January 1994 to
January 2001. Mr. Anderson currently serves as a director of Metron Technology
N.V., a distributor of parts and equipment for the semiconductor industry,
Trikon Technologies, Inc., a manufacturer of semiconductor process equipment,
and Aehr Test Systems, Inc., a manufacturer of semiconductor test and burn-in
equipment. He also serves as a director to three other private development stage
companies, and as a trustee of Bentley College.
Mr. Berges has served as a Director of MKS since February 2002. Mr. Berges
is currently President and a director of Emerson Electric Co., and is also a
director of PPG Industries, Inc.
Mr. Chute has served as a director of MKS since 1974. Mr. Chute was a
member of the law firm of Hill & Barlow, a Professional Corporation, from 1971
to January 2003, and is currently in private practice.
5
Mr. Kahl has served as a director of MKS since January 2001. From June 1994
through September 1996, Mr. Kahl served as a consultant to Ebara, a Japanese
manufacturer of industrial water pumps and vacuum process equipment for the
semiconductor industry. Mr. Kahl was employed by Leybold AG, formerly
Leybold-Heraeus GmbH, a leading international manufacturer of vacuum pumps and
other vacuum process equipment for the semiconductor industry, from July 1983 to
March 1992, where he served as a managing director and was primarily responsible
for sales, marketing and strategic planning. From September 1995 to November
2000, he was a director of Applied Science and Technology, Inc. (ASTeX) which
was acquired by MKS. Since November 1996, he has served as a director of Solid
State Management, a privately held manufacturer of high precision measurement
tools.
Mr. Robbins has served as a director of MKS since February 1996. Mr.
Robbins was Executive Vice President of Teradyne, Inc., a manufacturer of
electronic test systems and backplane connection systems used in the electronics
and telecommunications industries, from March 1992 to May 1997, and its Chief
Financial Officer from February 1980 to May 1997.
Mr. Valente has served as a director of MKS since February 1996. Mr.
Valente is Chairman of Palomar Medical Technologies, Inc., a company which
designs, manufactures and markets cosmetic lasers, since September 1997. He has
been a director of Palomar Medical Technologies, Inc. since February 1997 and
was its President and Chief Executive Officer from May 1997 to May 2002. Mr.
Valente is also a director of Surgilight, Inc., Medical Information Technology,
Inc. and a privately held medical company.
DIRECTOR COMPENSATION
Directors of MKS are reimbursed for expenses incurred in connection with
their attendance at Board of Directors and committee meetings. Directors who are
not employees of MKS are paid an annual fee of $10,000 and $1,000 for each Board
of Directors meeting they attend and $500 for each committee meeting they attend
which is not held on the same day as a Board of Directors meeting. Messrs.
Chute, Robbins and Valente have each been granted options, under MKS's 1996
Director Stock Option Plan (under which no further grants will be made), to
purchase 8,592 shares of Common Stock at a weighted average exercise price of
$4.81 per share. Each has also been granted options to purchase 34,500 shares of
Common Stock at a weighted average exercise price of $26.27 per share under the
1997 Director Stock Option Plan (the "1997 Director Plan"). Mr. Anderson and Mr.
Kahl have each been granted options to purchase 17,250 shares of Common Stock at
a weighted average exercise price of $26.45 per share under the 1997 Director
Plan. Mr. Berges has elected not to receive compensation for serving as a
Director of MKS.
1997 DIRECTOR STOCK OPTION PLAN
MKS's 1997 Director Plan authorizes the issuance of up to an aggregate of
300,000 shares of Common Stock. The 1997 Director Plan is administered by MKS's
Board of Directors. Options are granted under the 1997 Director Plan only to
directors of MKS who are not employees of MKS. Under the 1997 Director Plan,
non-employee directors receive an option to purchase 11,250 shares of Common
Stock upon their initial election to the Board of Directors. Each initial option
vests over a three-year period in twelve (12) equal quarterly installments
following the date of grant. On the date of each annual meeting of the
stockholders, options are automatically granted to each eligible director who
has been in office for at least six (6) months prior to the date of the annual
meeting of the stockholders. Each annual option entitles the holder to purchase
6,000 shares of Common Stock. Each annual option will generally become
exercisable on the day prior to the first annual meeting of stockholders
following the date of grant, or if no such meeting is held within thirteen (13)
months after the date of grant, on the thirteen (13) month anniversary of the
date of grant. The exercise price of all options granted under the 1997 Director
Plan is equal to the fair market value of the Common Stock on the date of grant.
Options granted under the 1997 Director Plan terminate upon the earlier of three
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(3) months after the optionee ceases to be a director of MKS or ten (10) years
after the grant date. In the event of a change in control of MKS, the vesting of
all options then outstanding would be accelerated in full and any restrictions
on exercising outstanding options would terminate.
The Company's 1996 Director Stock Option Plan, under which options have
been granted to, and may still be exercised by, four non-employee directors of
MKS, has been terminated. See "Director Compensation."
COMMITTEES OF THE BOARD OF DIRECTORS
The Compensation Committee for the year 2002 consisted of Messrs. Berges,
Kahl and Valente. Mr. Berges joined the committee in February 2002 upon the
resignation of Mr. Robert Therrien as a Director of the Company. The
Compensation Committee reviews and evaluates the salaries, supplemental
compensation and benefits of all officers of MKS, reviews general policy matters
relating to compensation and benefits of employees of MKS and makes
recommendations concerning these matters to the Board of Directors. The
Compensation Committee also administers MKS's stock option and stock purchase
plans, and sets grants to executive officers, under the Company's Stock Plans.
The Compensation Committee held two meetings in 2002.
The Audit Committee, for the year 2002, consisted of Messrs. Anderson,
Robbins and Valente. The Audit Committee reviews with MKS's independent auditor
the scope and timing of its audit services, the auditor's report on MKS's
financial statements following completion of its audit and MKS's policies and
procedures with respect to internal accounting and financial controls. In
addition, the Audit Committee makes annual recommendations to the Board of
Directors for the appointment of independent auditors for the ensuing year. The
Audit Committee held six meetings in 2002.
The Board of Directors held four meetings during 2002. Each director
attended at least 75% of the total number of meetings of the Board of Directors
and all committees of the Board on which he served.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors. In 2002, the Compensation
Committee (the "Committee") was initially comprised of three non-employee
directors, Messrs. Therrien, Valente and Kahl. Mr. Therrien resigned as a
director and from the Committee in February 2002 and was replaced by Mr. Berges.
The Committee is responsible for determining the salaries of, establishing bonus
programs for, and granting stock options to, the Company's executive officers.
The Committee believes that the primary objectives of the Company's
compensation policies are to attract, retain, motivate, and reward a management
team that can effectively implement and execute the Company's strategic business
plan and lead the Company in achieving its long-term growth and earnings goals.
These compensation policies include an overall management compensation program
that: (i) is competitive with management compensation programs at companies of
similar size; (ii) recognizes individual initiative, leadership and achievement;
(iii) provides short-term bonus incentives for management to meet the Company's
net income performance goals; and (iv) provides long-term incentive compensation
in the form of stock options to encourage management to continue to focus on
shareholder return.
The Committee's goal is to use compensation policies to closely align the
interests of the Company's management with the interests of shareholders so that
the Company's management have incentives to achieve short-term performance goals
while building long-term value for the Company's shareholders. In establishing
base salaries for executive officers, the Committee considers numerous factors
such as the executive's
7
responsibilities, the executive's importance to the Company, the executive's
performance, historical salary levels of the executive, and the salaries of
executives at certain other companies whose business is similar to that of the
Company. The Committee will review its compensation policies from time to time
in order to determine the reasonableness of the Company's compensation programs
and to take into account factors which are unique to the Company.
The Company has entered into employment agreements with certain senior
officers of the Company. The Committee believes that the salaries and benefits
provided to these senior officers reflect appropriate base salaries and benefits
as compared to senior officers of other companies of similar size. These
agreements provide for termination for cause as well as termination without
cause and for certain severance benefits and restrict the officers' ability to
compete with the Company.
BONUS PLAN
To further provide incentives for management to continue to improve
operating results, the Committee oversees the administration of the Management
Incentive Plan ("Bonus Plan"). The amounts to be distributed pursuant to the
Bonus Plan are determined by the financial results of the Company. The Committee
believes that the Bonus Plan provides significant incentive to the executive
officers of the Company to exceed the Company's financial goals.
LONG-TERM INCENTIVE COMPENSATION
Long-term incentive compensation, in the form of stock options, allows the
executive officers to share in any appreciation in the value of the Company's
Common Stock. The Committee believes that stock option participation aligns
executive officers' interests with those of the stockholders. In addition, the
Committee believes that awarding options to executive officers helps to balance
the short-term focus of annual incentive compensation with a longer term view
and may help to retain key executive officers. Moreover, because options granted
to executive officers generally become exercisable over a four year period and
terminate upon or shortly after the termination of the executive's employment
with the Company, stock options serve as a means of retaining these executives.
When establishing stock option grant levels, the Committee considers
general corporate performance, the Chief Executive Officer's recommendations,
level of seniority and experience, the dilutive impact of the options, previous
grants of stock options, vesting schedules of outstanding options and the
current stock price.
It is the policy of the Company to make an initial stock option grant to
all executive officers at the time they commence employment consistent with the
number of options granted to executive officers in the industry at similar
levels of seniority. In addition, the Committee may also make grants throughout
the year. In making such grants, the Committee considers individual
contributions to the Company's financial, operational and strategic objectives.
Senior management also participates in Company-wide employee benefit plans,
including the Company's 401(k) Plan. Benefits under these plans are not
dependent upon individual performance.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
Mr. Bertucci's compensation was based upon a careful analysis of other
comparable companies' Chief Executive Officers' compensation and Mr. Bertucci's
efforts and success in improving the Company's operating results, establishing
strategic goals and objectives for long-term growth of the Company, and
advancing the Company in obtaining its strategic goals.
8
SECTION 162(M)
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to public companies for certain compensation in excess of $1.0 million
paid to the company's chief executive officer and the four other most highly
compensated executive officers. Certain compensation, including qualified
performance-based compensation, will not be subject to the deduction limit if
certain requirements are met.
The Committee reviews the potential effect of Section 162(m) periodically
and generally seeks to structure the long-term incentive compensation granted to
its executive officers through option issuances under the Second Restated 1995
Stock Incentive Plan in a manner that is intended to avoid disallowance of
deductions under Section 162(m). Nevertheless, there can be no assurances that
compensation attributable to awards granted under the Second Restated 1995 Stock
Incentive Plan will be treated as qualified performance-based compensation under
Section 162(m). Because the Company's Bonus Plan is not operated in a manner
designed to qualify as performance-based compensation under Section 162(m), it
is possible that a portion of any bonus payable to Mr. Bertucci and certain
other executives under the Bonus Plan will not be deductible for federal income
tax purposes. The Committee reserves the right to use its judgment to authorize
compensation payments which may be in excess of the Section 162(m) limit when
the Committee believes such payments are appropriate, after taking into
consideration changing business conditions or the officer's performance, and are
in the best interests of the stockholders.
Hans-Jochen Kahl, Chairman
James G. Berges
Louis P. Valente
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In 2002, the Compensation Committee comprised Messrs. Kahl, Berges and
Valente. Messrs. Kahl, Berges and Valente were not, at any time, officers or
employees of MKS or any subsidiary of MKS. None of them had any relationship
with MKS requiring disclosure under Item 404 of Regulation S-K under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), with the
exception of Mr. Berges, which is described below. No executive officer of MKS
serves or has served as a member of the Board of Directors or Compensation
Committee (or other committee serving an equivalent function) of any other
entity which has one or more executive officers serving as a member of MKS's
Board of Directors or Compensation Committee.
Mr. Berges, a director of MKS, is the president and director of Emerson
Electric Co. ("Emerson"). On January 31, 2002, MKS completed its acquisition of
the business of Emerson and its subsidiaries operating as the "ENI Division"
pursuant to an Agreement and Plan of Merger with respect to the Acquisition of
the ENI business dated October 30, 2001 between MKS and Emerson. At the
effective time of the acquisition, MKS issued an aggregate of 12 million shares
of its Common Stock to Emerson, in exchange for the businesses and assets of
ENI. The purchase price was approximately $265,000,000. During 2002, MKS
purchased materials and services from Emerson and its subsidiaries totaling
approximately $1,156,000.
9
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee of the Company's Board of Directors is currently
composed of three members and acts under a written charter first adopted and
approved in 2000. The members of the Audit Committee are independent directors,
as defined by its charter and the rules of the Nasdaq Stock Market, and possess
the financial sophistication required by such charter and rules. The Audit
Committee held six meetings during the fiscal year ended December 31, 2002.
Management is responsible for the Company's internal controls and the
financial reporting process. The Company's independent accountants,
PricewaterhouseCoopers LLP ("PwC"), are responsible for performing an
independent audit of the Company's financial statements in accordance with
accounting principles generally accepted in the United States, and issue a
report on those financial statements. The Audit Committee is responsible for
monitoring and overseeing these processes. As appropriate, the Audit Committee
reviews and evaluates, and discusses with the Company's management, internal
accounting, financial and auditing personnel and the independent auditors, the
following:
- the plan for, and the independent auditors' report on, each audit of the
Company's financial statements;
- the Company's financial disclosure documents, including all financial
statements and reports filed with the Securities and Exchange Commission
("SEC") or sent to shareholders;
- management's selection, application and disclosure of critical accounting
policies;
- major changes in the Company's significant: accounting practices,
principles, controls or methodologies;
- significant developments or changes in accounting rules applicable to the
Company; and
- the adequacy of the Company's internal controls and accounting, financial
and auditing personnel.
The Audit Committee reviewed the Company's audited financial statements for
the fiscal year ended December 31, 2002, and discussed these financial
statements with the Company's management. Management represented to the Audit
Committee that the Company's financial statements had been prepared in
accordance with accounting principles generally accepted in the United States.
The Audit Committee also reviewed and discussed the audited financial statements
and the matters required by Statement on Auditing Standards No. 61
"Communication with Audit Committees" (SAS 61) with PwC, the Company's
independent auditors. SAS 61 requires the Company's independent auditors to
discuss with the Company's Audit Committee, among other things, the following:
- methods to account for significant unusual transactions;
- the effect of significant accounting policies in controversial or
emerging areas for which there is a lack of authoritative guidance
or consensus;
- the process used by management in formulating particularly sensitive
accounting estimates and the basis for the auditors' conclusions
regarding the reasonableness of those estimates; and
- disagreements with management over the application of accounting
principles, the basis for management's accounting estimates and the
disclosures in the financial statements.
The Company's independent auditors also provided the Audit Committee with
the written disclosures and the letter required by Independence Standards Board
Standard No. 1 "Independence Discussions with Audit Committees". Independence
Standards Board Standard No. 1 requires auditors annually to disclose in writing
all relationships that in the auditor's professional opinion may reasonably be
thought to bear on independence, confirm their perceived independence and engage
in a discussion of independence. In addition,
10
the Audit Committee discussed with the independent auditors their independence
from the Company. The Audit Committee also considered whether the independent
auditors' provision of the other, non-audit related services to the Company
which are referred to below is compatible with maintaining such auditors'
independence.
Based on its discussions with management and the independent auditors, and
its review of the representations and information provided by management and the
independent auditors, the Audit Committee recommended to the Company's Board of
Directors that the audited financial statements be included in the Company's
Annual Report on Form 10-K for the year ended December 31, 2002.
Management has advised the Audit Committee that for the year ended December
31, 2002, the Company was billed by its independent auditors, PwC, for services
in the following categories:
2002 2001
---------- ----------
Audit....................................................... $ 654,000 $ 381,000
Audit Related............................................... 273,000 380,000
Tax......................................................... 839,000 874,000
All Other................................................... 167,000 --
---------- ----------
Total....................................................... $1,933,000 $1,635,000
========== ==========
Audit Fees for the years ended December 31, 2002 and 2001, respectively,
were for professional services rendered for the audits of our consolidated
financial statements and statutory and subsidiary audits, consents, income tax
provision procedures, and assistance with review of documents filed with the
SEC.
Audit-Related Fees as of the years ended December 31, 2002 and 2001,
respectively, were for assurance and related services related to employee
benefit plan audits and due diligence related to mergers and acquisitions.
Tax Fees as of the years ended December 31, 2002 and 2001, respectively,
were for services related to tax compliance, including the preparation of tax
returns and claims for refund; and tax planning and tax advice, including
assistance with acquisitions, foreign sales and foreign subsidiaries.
All Other Fees for the year ended December 31, 2002 were for other
acquisition related services.
The Audit Committee has not yet enacted pre-approval policies and
procedures for audit and non-audit services. Therefore, the proxy disclosure
does not include pre-approval policies and procedures and related information.
The Company is early-adopting components of the proxy fee disclosure
requirements; the requirement does not become effective until periodic annual
filings for the first fiscal year ending after December 15, 2003.
We have considered and determined that the provision of the non-audit
services noted in the foregoing table is compatible with maintaining PwC's
independence.
By the Audit Committee of the Board of Directors of MKS Instruments, Inc.
Robert R. Anderson, Chairman
Owen W. Robbins
Louis P. Valente
11
EXECUTIVE OFFICERS
The following is a brief summary of the background of each executive
officer of MKS, other than Mr. Bertucci, whose background is described under the
heading "Directors" above:
Ronald C. Weigner, Vice President and Chief Financial Officer, Age 57.
Mr. Weigner has served as Vice President and Chief Financial Officer of MKS
since November 1995. From September 1993 until November 1995, he was Vice
President and Corporate Controller and from 1980 to 1993 he was Corporate
Controller. Mr. Weigner is a certified public accountant and has a B.S. in
Business Administration from Boston University.
Leo Berlinghieri, Vice President, Global Sales and Service, Age 49.
Mr. Berlinghieri has served as Vice President, Global Sales and Service of
MKS since November 1995. From 1980 to November 1995, he served in various
management positions of MKS, including Manufacturing Manager, Production and
Inventory Control Manager, and Director of Customer Support Operations. Mr.
Berlinghieri is Director at Large of the TQM-BASE Council, Inc., a non-profit
quality management consortium comprised of Boston area semiconductor capital
equipment manufacturers.
William D. Stewart, Vice President and General Manager, Vacuum Products, Age 58.
Mr. Stewart has served as Vice President and General Manager, Vacuum
Products group since November 1997. From October 1986 to November 1997, he was
President of HPS Products group, which MKS acquired in 1986. Mr. Stewart
co-founded HPS in 1976. Mr Stewart has an M.B.A. from Northwestern University
and a B.S. in Business Administration from the University of Colorado. Mr.
Stewart also serves on the Board of Directors of the Janus Fund.
John A. Smith, Vice President and General Manager, Instruments and Control
Systems, Age 52.
Dr. John A. Smith has served as Vice President and General Manager of the
Instruments and Control Systems Product Group, which comprises Pressure
Measurement and Control, Materials Delivery, Gas Composition and Analysis, and
Control and Information Technology products since December 2002. Prior to this
position, Dr. Smith served as Vice President and General Manager of Materials
Delivery Products (MDP) and Advanced Process Control (APC), from February 2002
to December 2002. From July 1994 until February 2002, he was Managing Director
of MKS Instruments, U.K. Ltd. Dr. Smith has a Ph.D. in Electronic Engineering
from the University of Manchester, U.K.
Executive officers of MKS are elected by the Board of Directors on an
annual basis and serve until their successors are duly elected and qualified.
There are no family relationships among any of the executive officers or
directors of MKS.
12
EXECUTIVE COMPENSATION
The following table sets forth information with respect to the compensation
of MKS's Chief Executive Officer, each of the four other most highly compensated
executive officers (the "Named Executive Officers") for the years ended December
31, 2002, 2001 and 2000.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
AWARDS
OTHER ANNUAL COMPENSATION ------------
---------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS(#) COMPENSATION(1)
--------------------------- ---- -------- ------- ------------ ------------ ---------------
John R. Bertucci.............. 2002 $371,441 -- -- -- --
Chairman, Chief Executive 2001 400,437 -- -- -- --
Officer and President 2000 391,281 593,372 -- -- 8,500
Ronald C. Weigner............. 2002 196,475 -- -- 60,503 5,500
Vice President and Chief 2001 210,701 -- -- 155,950 5,100
Financial Officer 2000 196,743 160,871 -- 12,000 13,600
Leo Berlinghieri.............. 2002 186,351 -- -- 60,466 --
Vice President Global Sales 2001 196,410 -- -- 155,880 --
and Service 2000 179,783 145,528 -- 11,000 8,500
William D. Stewart............ 2002 190,721 -- -- 55,490 5,500
Vice President and General 2001 201,087 -- -- 155,926 5,100
Manager Vacuum Products 2000 206,135 170,449 -- 11,000 13,600
John A. Smith................. 2002 183,987 -- -- 30,461 1,750
Vice President and General 2001 124,494 -- -- 62,500 --
Manager Instruments and 2000 124,921 92,907 -- 7,500 --
Control Systems
---------------
(1) Represents amounts paid into a 401(k) plan. Other compensation in the form
of perquisites and other personal benefits has been omitted in those
instances where such perquisites and other personal benefits constituted
less than the lesser of $50,000 or 10 percent of the total salary and bonus
for each Named Executive Officer for such year.
13
STOCK OPTION GRANTS
OPTION GRANTS IN FISCAL YEAR 2002
INDIVIDUAL GRANTS
--------------------------- POTENTIAL REALIZABLE VALUE AT
NUMBER OF % OF TOTAL ASSUMED ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION FOR OPTION
UNDERLYING GRANTED TO EXERCISE OF TERM(5)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION -----------------------------
NAME GRANTED FISCAL YEAR(3) ($/SH) DATE(4) 5% 10%
---- ---------- -------------- ----------- ---------- ------------ --------------
John R. Bertucci..... --
Ronald C. Weigner.... 30,000(1) $23.50 1/30/2012 $443,370.71 $1,123,588.43
506(2) $18.44 6/24/2012 $ 5,867.99 $ 14,870.64
30,000(1) 1.59% $16.88 11/22/2012 $318,472.24 $ 807,071.18
Leo Berlinghieri..... 30,000(1) $23.50 1/30/2012 $443,370.71 $1,123,588.43
466(2) $18.44 6/24/2012 $ 5,404.12 $ 13,695.09
30,000(1) 1.58% $16.88 11/22/2012 $318,472.24 $ 807,071.18
William D. Stewart... 25,000(1) $23.50 1/30/2012 $369,475.59 $ 936,323.70
490(2) $18.44 6/24/2012 $ 5,682.44 $ 14,400.42
30,000(1) 1.45% $16.88 11/22/2012 $318,472.24 $ 807,071.18
John A. Smith........ 461(2) $18.44 6/24/2012 $ 5,346.13 $ 13,548.15
30,000(1) 0.80% $16.88 11/22/2012 $318,472.24 $ 807,071.18
---------------
(1) The Option will become exercisable as follows: 25% of the shares become
exercisable on the first anniversary of the date of issue. An additional
6.25% of the initial grant of options vests on each successive quarter.
(2) This option will become exercisable as follows: 33 1/3% after the first year
and each successive 12 month period thereafter.
(3) In the fiscal year ended December 31, 2002, options to purchase a total of
3,791,042 shares of Common Stock were granted to employees of MKS, including
officers.
(4) The options are subject to earlier termination upon certain events related
to termination of employment.
(5) The dollar gains under these columns result from calculations discussing
hypothetical growth rates as set by the Commission and are not intended to
forecast future price appreciation of the Common Stock.
14
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-THE-
UNDERLYING UNEXERCISED MONEY OPTIONS AT FISCAL YEAR
SHARES OPTIONS AT FISCAL YEAR END END(1)
ACQUIRED ON VALUE --------------------------- -----------------------------
NAME EXERCISE(#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ------------ --------------
John R. Bertucci......... -- -- 33,742 -- $ 106,312 --
Ronald C. Weigner........ -- -- 324,292 90,761 2,016,960 $87,840
Leo Berlinghieri......... -- -- 286,981 90,365 1,577,760 87,840
William D. Stewart....... -- -- 298,596 85,670 1,716,960 87,840
John A. Smith............ -- -- 43,687 85,774 52,245 18,225
---------------
(1) Total value of "in-the-money" unexercised options is based on the difference
between the last sales price of the Company's Common Stock on the Nasdaq
Stock Market on December 31, 2002 ($16.43 per share) and the exercise price
of "in-the-money" options, multiplied by the number of shares subject to
such options.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Chute, a director of MKS and MKS's clerk, and Thomas Belknap, were
co-trustees of certain Bertucci family trusts. Messrs. Chute and Belknap were
attorneys at the law firm of Hill & Barlow, a Professional Corporation. Hill &
Barlow provided legal services to MKS during the calendar year ended December
31, 2002 for which it was compensated by MKS in the aggregate amount of
$231,270. As of May 31, 2002, Mr. Chute and Mr. Belknap were no longer Trustees
of the Bertucci Family Trusts.
Mr. Stewart, Vice President and General Manager of the Vacuum Products
group, is the general partner of Aspen Industrial Park Partnership ("Aspen").
MKS leases from Aspen certain facilities occupied by MKS's Vacuum Products group
in Boulder, Colorado. MKS paid Aspen $866,181 in 2002 to lease such facilities.
Mr. Berges, a director of MKS, is the president and director of Emerson
Electric Co. ("Emerson"). On January 31, 2002, MKS completed its acquisition of
the business of Emerson and its subsidiaries operating as the "ENI Division"
pursuant to an Agreement and Plan of Merger with respect to the Acquisition of
the ENI business dated October 30, 2001 between MKS and Emerson. At the
effective time of the acquisition, MKS issued an aggregate of 12 million shares
of its Common Stock to Emerson, in exchange for the businesses and assets of
ENI. The purchase price was approximately $265,000,000. During 2002, MKS
purchased materials and services from Emerson and its subsidiaries totalling
approximately $1,156,000.
15
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information about the securities authorized
for issuance under our equity compensation plans as of December 31, 2002:
NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
NUMBER OF SECURITIES TO WEIGHTED-AVERAGE FUTURE ISSUANCE UNDER
BE ISSUED UPON EXERCISE EXERCISE PRICE OF EQUITY COMPENSATION PLANS
OF OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, (EXCLUDING SECURITIES
PLAN CATEGORY WARRANTS AND RIGHT(1) WARRANTS AND RIGHTS REFLECTED IN COLUMN (A))
------------- ----------------------- -------------------- -------------------------
(A) (B) (C)
Equity compensation plans
approved by security
holders................ 7,906,595 19.15 865,004(2)(3)
Equity compensation plans
not approved by
security holders....... -- -- --
Total.................... 7,906,595 19.15 865,004(2)(3)
---------------
(1) Excludes an aggregate of 378,098 shares issuable upon the exercise of
outstanding options assumed by the Company in connection with an
acquisition. The weighted average exercise price of the excluded options is
$23.11.
(2) Securities available for future issuance under the Second Restated 1995
Stock Option plan increase on January 1 of each year by 5% of the issued and
outstanding shares as of December 31 of the prior year up to the amount
authorized by the shareholders.
(3) Includes 357,581 shares issuable under the Company's Second Restated
Employee Stock Purchase Plan and 35,984 shares issuable under the Company's
Restated International Employee Stock Purchase Plan as of December 31, 2002.
EMPLOYMENT AGREEMENTS
MKS entered into employment agreements with each of Messrs. Weigner,
Berlinghieri, Stewart and Smith. The terms of such employment agreement are
included in the summary below.
Each agreement sets the base salary for each employee which is reviewed
annually. In addition to a base salary, each employee is entitled, under MKS's
Management Incentive Program, to a bonus equal to a percentage of his base
salary if MKS attains specified financial goals during the year. Each employee
is also entitled to standard benefits including:
- participation in a profit sharing and retirement savings plan
- vacation days
- life insurance
- medical/dental insurance
The remaining provisions of each agreement are also substantially the same.
The term of employment for each is month to month with termination:
- upon the death of the employee
16
- at the election of MKS if the employee fails or refuses to perform
- at the election of MKS if the employee commits any acts not in MKS's best
interest
Payment by MKS upon termination depends on how employment is terminated:
- if employment is terminated by death, MKS must pay the employee's estate
the compensation owed to him at the end of the month of his death
- if employment is terminated at the election of MKS because the employee
fails or refuses to perform, MKS must pay the employee through the last
day of actual employment
Each of the agreements contains non-competition provisions during the term
of employment and for the period of one year after termination of employment.
Under these provisions, Messrs. Weigner, Berlinghieri, Stewart and Smith may
not:
- engage in any competitive business or activity
- for the 12 months subsequent to termination, work for, employ, become a
partner with, or cause to be employed, any employee, officer or agent of
MKS
- for the 12 months subsequent to termination, give, sell or lease any
competitive services or goods to any customer of MKS
- have any financial interest in or be a director, officer, stockholder,
partner, employee or consultant to any competitor of MKS
SECTION 16(A) BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act ("Section 16(a)") requires executive
officers, directors, and persons who beneficially own more than ten percent
(10%) of the Company's stock to file initial reports of ownership on Form 3 and
reports of changes in ownership on Form 4 with the Commission and any national
securities exchange on which the Company's securities are registered. Executive
officers, directors and greater than ten percent (10%) beneficial owners are
required by the Commission's regulations to furnish the Company with copies of
all Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to the
Company and written representations from the executive officers and directors
pursuant to Item 405 of Regulation S-K, the Company believes that all filing
requirements applicable to its officers, directors and greater than ten percent
(10%) stockholders were complied with, except that Mrs. Claire Bertucci did not
timely file a Form 4 for a transaction occurring in January 2001, but such
transaction was subsequently reported on a Form 5. The Company believes that all
other of its executive officers, directors and greater than ten percent (10%)
beneficial owners complied with all applicable Section 16(a) filing
requirements.
17
COMPARATIVE STOCK PERFORMANCE
The following graph compares the cumulative total stockholder return
(assuming reinvestment of dividends) from investing $100 on March 30, 1999 (the
Company's first trading day), and plotted at the last trading day of each of the
fiscal years ended December 31, 1999, 2000, 2001 and 2002, in each of (i) the
Company's Common Stock; (ii) a Peer Group Index of semiconductor
equipment/material manufacturers (the "MG Group Index"), compiled by Media
General Financial Services, Inc. ("Media General"); and (iii) the Nasdaq Market
Index of companies (the "Nasdaq Market Index"). The graph was compiled by Media
General. The stock price performance on the graph below is not necessarily
indicative of future price performance. The Company's Common Stock is listed on
the Nasdaq National Market under the ticker symbol "MKSI".
PERFORMANCE GRAPH
COMPARISON OF CUMULATIVE TOTAL RETURN
OF ONE OR MORE COMPANIES, PEER GROUPS,
INDUSTRY INDEXES AND/OR BROAD MARKETS
[PERFORMANCE GRAPH]
ASSUMES $100 INVESTED ON MAR. 30, 1999
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DEC. 31, 2002
3/30/99 12/31/99 12/31/00 12/31/01 12/31/02
------- -------- -------- -------- --------
MKS Instruments, Inc. ........................ 100.00 256.89 110.22 192.21 116.84
MG Group Index................................ 100.00 219.29 134.68 147.45 88.21
NASDAQ Market Index........................... 100.00 163.32 102.65 81.83 87.08
18
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
On February 6, 2003, the Board of Directors, on the recommendation of its
Audit Committee, appointed the firm of PricewaterhouseCoopers LLP ("PwC") as the
Company's independent accountants for the fiscal year of the Company ending
December 31, 2003. PwC was the Company's independent accountants for the fiscal
year ended December 31, 2002.
Representatives of PwC are expected to be present at the Annual Meeting and
will have the opportunity to make a statement if they so desire and will be
available to respond to appropriate questions from stockholders. In the event
that the ratification of the appointment of PwC as the independent accountants
for the Company is not obtained at the Annual Meeting, the Board of Directors
will reconsider its appointment.
THE BOARD OF DIRECTORS BELIEVES THAT THE PROPOSAL TO RATIFY THE APPOINTMENT
OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT ACCOUNTANTS OF THE COMPANY FOR THE
FISCAL YEAR ENDING DECEMBER 31, 2003 IS IN THE BEST INTERESTS OF MKS AND ITS
STOCKHOLDERS AND THEREFORE RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
OTHER MATTERS
The Board of Directors does not know of any other matters which may come
before the meeting. However, if any other matters are properly presented to the
meeting, it is the intention of the persons named in the accompanying proxy to
vote, or otherwise act, in accordance with their judgment on such matters.
All costs of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's directors, officers and regular
employees, without additional remuneration, may solicit proxies by telephone,
telegraph and personal interviews and the Company reserves the right to retain
outside agencies for the purpose of soliciting proxies. Brokers, custodians and
fiduciaries will be requested to forward proxy soliciting material to the owners
of stock held in their names, and the Company will reimburse them for their
reasonable out-of-pocket expenses incurred in connection with the distribution
of proxy materials.
DEADLINE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
FOR THE 2004 ANNUAL MEETING
Proposals of stockholders intended to be presented at the 2004 Annual
Meeting of Stockholders must be received by the Company at its principal office
in Andover, Massachusetts not later than December 15, 2003, for inclusion in the
proxy statement for that meeting.
In addition, MKS' By-laws require that MKS be given advance notice of
matters that stockholders wish to present for action at an Annual Meeting of
stockholders (other than matters included in MKS' proxy statement in accordance
with Rule 14a-8 of the Exchange Act). The required written notice must be
delivered to the Clerk of MKS at the principal offices of MKS at least sixty
(60) days prior to the Annual Meeting, but no more than ninety (90) days prior
to such meeting. However, if less than forty (40) days notice of the Annual
Meeting is provided to the stockholders, the written notice of the stockholder
must be sent to the Clerk of MKS no later than ten (10) days after the notice of
the Annual Meeting was received. The advance notice provisions of MKS's By-Laws
contain the requirements of the written notice of stockholders and supersede the
notice requirement contained in Rule 14a-4(c)(1) under the Exchange Act.
19
IMPORTANT NOTICE REGARDING DELIVERY OF SECURITY HOLDER DOCUMENTS
Some banks, brokers and other nominee record holders are already
"householding" proxy statements and annual reports. This means that only one
copy of our proxy statement or annual report may have been sent to multiple
stockholders in your household. We will promptly deliver a separate copy of
either document to you if you call or write us at the following address or phone
number: MKS Instruments, Inc., Six Shattuck Road, Andover, Massachusetts 01810,
(978) 975-2350, Attn: Investor Relations. If you want to receive separate copies
of the annual report and proxy statement in the future, or if you are receiving
multiple copies and would like to receive only one copy for your household, you
should contact your bank, broker, or other nominee record holder, or you may
contact us at the above address and phone number.
By Order of the Board of Directors
/s/ Richard S. Chute
Richard S. Chute
Clerk
April 14, 2003
THE BOARD OF DIRECTORS ENCOURAGES STOCKHOLDERS TO ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. A PROMPT RESPONSE WILL
GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION WILL BE
APPRECIATED. STOCKHOLDERS WHO ATTEND THIS MEETING MAY VOTE THEIR STOCK
PERSONALLY EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.
20
APPENDIX A
MKS INSTRUMENTS, INC.
2003 ANNUAL MEETING OF STOCKHOLDERS
MAY 14, 2003
THE PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of MKS Instruments, Inc., a Massachusetts
corporation (the "Company"), hereby acknowledges receipt of the Notice of Annual
Meeting of Stockholders and Proxy Statement, each dated April 14, 2003, and
hereby appoints Richard S. Chute and Ronald C. Weigner, and each of them acting
singly, proxies and attorneys-in-fact, with full power to each of substitution,
on behalf and in the name of the undersigned, to represent the undersigned at
the 2003 Annual Meeting of Stockholders of the Company to be held on May 14,
2003, at 10:00 a.m. at the Andover Country Club, 60 Canterbury Street, Andover,
Massachusetts 01810, and at any adjournment(s) thereof, and to vote all shares
of Common Stock which the undersigned would be entitled to vote if then and
there personally present, on the matters set forth on the reverse side, and, in
their discretion, upon any other matters which may properly come before the
meeting.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
ANNUAL MEETING OF STOCKHOLDERS OF
MKS INSTRUMENTS, INC.
MAY 14, 2003
PLEASE DATE, SIGN AND MAIL
YOUR PROXY CARD IN THE
ENVELOPE PROVIDED AS SOON
AS POSSIBLE.
Please detach and mail in the envelope provided.
------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF
DIRECTORS AND "FOR" PROPOSAL 2. PLEASE SIGN, DATE AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE
OR BLACK INK AS SHOWN HERE [X]
1. To elect two (2) members of the Board of Directors for a term of three (3)
years.
[ ] FOR ALL NOMINEES Nominees:
[ ] WITHHOLD AUTHORITY FOR ALL NOMINEES o Hans-Jochen Kahl
[ ] FOR ALL EXCEPT o Louis P. Valente
(See instructions below)
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:
2. To ratify the appointment of PricewaterhouseCoopers LLP as independent
accountants for the Company for the fiscal year ending December 31, 2003.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
This proxy, when properly executed, will be voted as directed below, or, if no
contrary direction is indicated, will be voted FOR the election of the two (2)
nominees listed below as Directors of the Company, FOR proposal 2 and as said
proxies deem advisable on such other matters as may properly come before the
meeting.
TO ENSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, PLEASE MARK, SIGN AND DATE
THIS PROXY AND RETURN IT AS PROMPTLY AS POSSIBLE.
MARK HERE FOR ADDRESS [ ]
CHANGE AND NOTE ABOVE
MARK HERE IF YOU PLAN TO [ ]
ATTEND
Signature of Stockholder: Date:
----------------------------- --------------
Signature of Stockholder: Date:
----------------------------- --------------
NOTE: This proxy should be marked, dated and signed by the stockholder(s)
exactly as his or her name appears hereon, and returned promptly in the enclosed
envelope. When shares are held by joint tenants, both 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 president or other authorized officer. If signer is a partnership, please
sign in partnership name by authorized person, who should state his or her
title.