SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
inTEST Corporation
- -----------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- -----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1. Title of each class of securities to which transaction applies:
-------------------------------------------------------------------
2. Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------
4. Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------
5. Total fee paid:
-------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
-------------------------------------------------------------------
2. Form, Schedule of Registration Statement No.:
-------------------------------------------------------------------
3. Filing Party:
------------------------------------------------------------------
4. Date Filed:
------------------------------------------------------------------
inTEST CORPORATION
2 Pin Oak Lane
Cherry Hill, New Jersey 08003
------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 20, 1999
------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of inTEST
Corporation (the "Company") for the year ended December 31, 1998, will be
held at the Radisson Hotel Mount Laurel, Route 73, Mount Laurel, New Jersey,
on Thursday, May 20, 1999, at 10:00 A.M. Eastern Daylight Time, to consider
and vote on the following matters described in the accompanying Proxy
Statement:
1. Election of the members of the Board of Directors to serve until the
next annual meeting of stockholders and until their successors are
duly elected and qualified;
2. Ratification of the appointment by the Board of Directors of KPMG
LLP as the independent public accountants for the Company for the
year ending December 31, 1999; and
3. Such other business as may properly be brought before the Meeting or
any adjournment thereof.
The Board of Directors has fixed April 2, 1999, at the close of business,
as the record date for the determination of stockholders entitled to notice of
and to vote at the Meeting.
By Order of the Board of Directors,
/s/ Hugh T. Regan, Sr.
-------------------------------
Hugh T. Regan, Sr.
Secretary
Cherry Hill, New Jersey
April 20, 1999
- ------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
Whether or not you plan to attend the Meeting, please complete, date, sign and
mail your proxy card promptly in order that the necessary quorum may be
represented at the Meeting. The enclosed envelope requires no postage if
mailed in the United States.
- ------------------------------------------------------------------------------
inTEST CORPORATION
2 Pin Oak Lane
Cherry Hill, New Jersey 08003
------------------------------
PROXY STATEMENT
------------------------------
ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 20, 1999
This Proxy Statement and the enclosed form of proxy card are intended to
be sent or given to stockholders of inTEST Corporation (the "Company") on or
about April 20, 1999, in connection with the solicitation of proxies by the
management of the Company ("Management") on behalf of the Board of Directors
of the Company for use at the Annual Meeting of Stockholders for the year
ended December 31, 1998 (the "Meeting"), which will be held on Thursday, May
20, 1999, at 10:00 A.M. Eastern Daylight Time, at the Radisson Hotel Mount
Laurel, Route 73, Mount Laurel, New Jersey.
If the enclosed proxy card is properly signed and returned, the shares
represented by the proxy card will be voted and, if the stockholder indicates
a voting choice on the proxy card, the shares will be voted in accordance with
such choice. If the proxy card is signed but no choice is indicated, the
shares represented by the proxy card will be voted "FOR" the election of the
nominees for director listed in this Proxy Statement and "FOR" the
ratification of the appointment of KPMG LLP as the independent public
accountants for the Company for the year ending December 31, 1999. Management
knows of no business that will be presented at the Meeting other than that
which is set forth in this Proxy Statement. If any other matter properly
comes before the Meeting, the persons named in the accompanying proxy card
intend to vote on such matters in accordance with their best judgment, subject
to contrary instructions a stockholder indicates on his proxy card.
Any stockholder granting a proxy by the execution and delivery of the
enclosed proxy card may revoke it at any time prior to its being voted by
filing with the Secretary of the Company an instrument of revocation or a duly
executed proxy card bearing a later date. Attendance at the Meeting will not
have the effect of revoking a proxy unless the stockholder attending the
Meeting notifies the Secretary of the Company, in writing, of the revocation
of the proxy at any time prior to the voting of the proxy.
RECORD DATE AND VOTING SECURITIES
The Board of Directors has fixed the close of business on April 2, 1999
as the record date (the "Record Date") for the determination of the
stockholders of the Company entitled to notice of, and to vote at, the
Meeting. At that date, there were 6,536,034 shares of the Company's common
stock, $0.01 par value (the "Common Stock"). The stockholders of record on
the Record Date will be entitled to one vote per share of Common Stock on each
matter submitted to the stockholders at the Meeting. No other voting
securities of the Company are outstanding. The presence at the Meeting, in
person or by proxy, of the holders of a majority of the Common Stock entitled
to vote at the Meeting shall constitute a quorum for the transaction of
business at the Meeting. Assuming a quorum is present, (i) a plurality of the
votes cast at the Meeting will be required for the election of directors, and
(ii) the affirmative vote of the holders of a majority in voting power of the
shares of stock which are present or represented at the Meeting and entitled
to vote will be required for the ratification of the appointment of KPMG LLP
as the independent public accountants for the year ending December 31, 1999,
as well as for approval of such other matters as may properly come before the
Meeting or any adjournment of the Meeting.
If a broker that is a record holder of Common Stock does not return a
signed proxy, the shares of Common Stock represented by such proxy will not be
considered present at the Meeting and, therefore, will not be counted towards
a quorum. If a broker that is a record holder of Common Stock does return a
signed proxy, but is not authorized by the beneficial owner to vote on one or
more matters and does not have discretionary voting power with respect to such
matter or matters, the shares of Common Stock represented by such proxy will
be considered present at the Meeting for purposes of determining the presence
of a quorum but will not be voted for such matter or matters or considered
present for purposes of determining the outcome of the vote on such matter or
matters. Abstentions will have no effect on the outcome of the election of
directors and, with respect to the ratification of the Company's independent
public accountants, abstentions will have the same effect as a "no" vote.
VOTING SECURITIES AND PRINCPAL STOCKHOLDERS
The following table sets forth, as of April 2, 1999, the number and
percentage of shares of the Company's Common Stock (the Company's only
outstanding class of capital stock) which, according to information supplied
to the Company or filed with the Securities and Exchange Commission ("SEC"),
are beneficially owned by: (i) each person who beneficially owns more that 5%
of the Common Stock; (ii) each director and nominee for directorship of the
Company individually; (iii) each of the Named Executive Officers (as that
phrase is defined in the section of this Proxy Statement entitled "Executive
Compensation"); and (iv) all directors and executive officers of the Company
as a group. Unless otherwise indicated, the persons named in the table below
have sole voting and investment power with respect to all Common Stock shown
as beneficially owned by them.
Shares of
Common Stock
Beneficially Percent of
Owned As of Class
Name of Beneficial Owner April 2, 1999 (Approx.)(1)
- ------------------------ ------------- -----------
FMR Corp. (2) 653,000 10.0%
Wellington Management Company, LLP (3) 545,100 8.3%
Brinson Partners (4) 473,600 7.2%
Wellington Trust Company NA(5) 335,000 5.1%
Alyn R. Holt (6)(7) 1,726,683 26.4%
Douglas W. Smith (6) 593,750 9.1%
Daniel J. Graham (6)(8) 348,360 5.3%
Richard O. Endres (9) 158,697 2.4%
Robert E. Matthiessen (10) 128,037 2.0%
Gregory W. Slayton 31,600 *
Stuart F. Daniels (11) 13,282 *
Jerome R. Bortnem (12) 15,536 *
Hugh T. Regan, Jr. (13) 11,100 *
All directors and executive officers as a group (11 individuals) 3,149,065 48.2%
- --------------------
* Denotes less that one percent of class.
(1) The percent of class for any person or group who, as of April 2, 1999,
beneficially owned any shares pursuant to options, warrants or other
rights to purchase shares of the Company's Common Stock ("Rights")
which are exercisable within 60 days of April 2, 1999 ("Option
Shares"), is calculated assuming all such Rights beneficially owned
by such person or group have been exercised in full and adding the
number of shares subject to such Rights to the total number of shares
issued and outstanding on April 2, 1999.
(2) According to a Schedule 13G filed with the SEC on February 1, 1999,
Fidelity Management & Research Company ("FMRC"), a wholly-owned
Subsidiary of FMR Corp. ("FMR") is the beneficial owner of 653,000
shares (the "Fidelity Shares") of the Common Stock as a result of
acting as investment adviser to various investment companies registered
under Section 8 of the Investment Company Act of 1940, including
Fidelity Low-Priced Stock Fund ("FLPSF"), owner of 465,000 of the
Fidelity Shares. The address or principal business office of each of
FMRC, FMR and FLPSF is 82 Devonshire Street, Boston, MA 02109. Edward
C. Johnson 3d, Chairman of FMR ("ECJohnson"), and Abigail P. Johnson,
Director of FMR, and other members of the Edward C. Johnson 3d family
and trusts for their benefit, through their ownership of voting common
stock of FMR and the execution of a shareholders' voting agreement, may
be deemed, under the Investment Company Act of 1940, to form a
controlling group with respect to FMR. ECJohnson, FMR, FLPSF and other
investment companies owning Fidelity Shares each has sole power to
dispose of such Fidelity Shares. Neither FMR nor ECJohnson has the
sole power to vote or direct the voting of the shares owned by FLPSF,
which power resides with, and is directed by, FLPSF's Board of
Trustees.
2
(3) According to a Schedule 13G filed with the SEC on December 31, 1998,
Wellington Management Company, LLP ("WMC") is an investment adviser
registered under Section 203 of the Investment Advisers Act of 1940 and
a parent holding company. WMC as investment adviser may be deemed to
beneficially own 545,100 shares (the "Wellington Management Shares")
of the Common Stock which are held of record by clients of WMC. WMC's
principal business office is located at 75 State Street, Boston, MA
02109. (See Note 5 below for additional information relating to a
subsidiary of WMC.)
(4) According to a Schedule 13G filed with the SEC on February 3, 1999,
Brinson Partners, Inc. ("BPI"), an investment adviser registered
under Section 203 of the Investment Advisers Act of 1940, and UBS AG
("UBSAG"), a Bank as defined in Section 3(a)(6) of the Act, report
beneficial ownership of the 473,600 shares (the "Brinson Shares").
BPI is an indirect wholly-owned subsidiary of UBSAG. BPI's principal
business office is located at 209 South LaSalle, Chicago, IL 60604-
1295; UBSAG's principal business office is located at Bahnhofstrasse 45
8021, Zurich, Switzerland.
(5) According to a Schedule 13G filed with the SEC on December 31, 1998,
Wellington Trust Company NA ("WTC"), a Bank as defined in Section
3(a)(6) of the Act, as investment adviser is deemed to beneficially own
335,000 shares (the "Wellington Trust Shares") of the Common Stock
which are held of record by clients of WTC. WTC's principal business
office is located at 75 State Street, Boston, MA 02109. WTC is a
wholly-owned subsidiary of WMC (see Note 3 above).
(6) The address of the stockholders is: c/o the Company, 2 Pin Oak Lane,
Cherry Hill, New Jersey 08003.
(7) Includes 150,427 shares owned by Mr. Holt's spouse. Mr. Holt disclaims
beneficial ownership of the shares owned by his spouse.
(8) Includes 25,000 shares owned by Mr. Graham's wife and 3,700 shares
owned by Mr. Graham's child. Mr. Graham disclaims beneficial ownership
of the shares owned by his spouse and child.
(9) Includes 500 shares held by a corporation of which Mr. Endres is a
shareholders and over which Mr. Endres shares investment control.
(10) Includes 63,618 shares owned by Mr. Matthiessen's wife and 1,000 shares
owned by Mr. Matthiessen's child. Mr. Matthiessen disclaims beneficial
ownership of the shares owned by his spouse and child.
(11) Includes 2,000 Option Shares owned by Dr. Daniels.
(12) Includes 2,000 Option Shares owned by Mr. Bortnem.
(13) Includes 6,000 Option Shares owned by Mr. Regan.
ELECTION OF DIRECTORS
The By-laws of the Company provide that the Company's Board of Directors
shall consist of not less than five (5) directors, as determined by the
Company's Board of Directors, and that each director shall hold office until
the next Annual Meeting of Stockholders and until a successor shall be duly
elected and qualified. The present number of directors constituting the
entire Board is seven.
At the Meeting, seven directors are to be elected to serve until the 2000
Annual Meeting of Stockholders and until their respective successors have been
elected and qualified. Listed below are the seven nominees for director. The
persons designated as proxies in the accompanying proxy card intend to vote
"FOR" each such nominee, unless a contrary instruction is indicated on the
proxy card. If for any reason any such nominee should become unavailable for
election, the persons designated as proxies in the proxy card may vote the
proxy for the election of a substitute designated by Management, unless a
contrary instruction is given on the proxy card. Management has no reason to
believe that any of the nominees will be unable or unwilling to serve if
elected, and all nominees have expressed their intention to serve the entire
term for which election is sought.
3
The names of the persons presently serving as directors of the Company,
each of whom has been nominated for reelection, are listed below, together
with their ages and certain other information as of April 2, 1999:
Name Age Director Since Position
- --------------------- --- -------------- ----------------------------------------------
Alyn R. Holt................. 61 09/17/81 Chairman
Robert E. Matthiessen........ 54 02/01/97 President, Chief Executive Office and Director
Douglas W. Smith............. 49 08/03/98 Executive Vice President, Chief Operating
Officer and Director
Daniel J. Graham............. 53 06/01/88 Vice Chairman, Senior Vice President and
Director
Richard O. Endres............ 73 04/01/82 Director
Stuart F. Daniels............ 58 04/01/97 Director
Gregory W. Slayton........... 40 08/03/98 Director
Certain Biographical and Other Information Regarding the Company's Directors
- ----------------------------------------------------------------------------
Alyn R. Holt is a co-founder of the Company and has served as Chairman
since the Company's inception in September 1981. Mr. Holt served as Chief
Executive Officer of the Company from September 1981 to August 1998. Mr. Holt
has over 35 years experience in the ATE industry, including various positions
in general management, marketing management and engineering.
Robert E. Matthiessen was elected Chief Executive Officer of the Company
in August 1998. He was elected President and a Director of the Company in
December 1997. Mr. Matthiessen served as Chief Operating Officer of the
Company from December 1997 until August 1998. Prior to that, Mr. Matthiessen
served as Executive Vice President since joining the Company in October 1984.
He has over 25 years experience in the ATE industry, including various
positions in general management, marketing management and engineering
management.
Douglas W. Smith was elected Executive Vice President, Chief Operating
Officer and a Director of the Company in August 1998. Prior to that, Mr.
Smith served as President of TestDesign Corporation, a California corporation
engaged in the manufacture of tester interfaces, which was acquired by the
Company in August 1998. Mr. Smith founded TestDesign Corporation in February
1985. Mr. Smith has over 19 years of experience in the ATE industry,
including various positions in engineering management, sales management and
general management.
Daniel J. Graham is a co-founder of the Company and has served as Senior
Vice President and a Director of the Company since June 1988. Mr. Graham was
elected Vice Chairman of the Company in October 1998. Mr. Graham has over 25
years industrial experience involving the development of software and hardware
systems for ATE.
Richard O. Endres has served as a Director of the Company since April
1982. Since 1976, he has served as President of VRA, Inc., which provides
business planning and financial services for technology based companies. Mr.
Endres has over 40 years of experience in the ATE industry and was engaged in
early transistor circuit development and computer memory research at RCA's
David Sarnoff Research Center.
Stuart F. Daniels, Ph.D. is a co-founder of the Company and served as
Vice President and a Director in 1982 and was reappointed as a Director in
April 1997. In 1996, Dr. Daniels founded The Daniels Group, which is engaged
in technology transfer and license consulting. From 1980 to 1995, Dr. Daniels
held several management positions with Siemens Corporation.
4
Gregory W. Slayton has served as a Director of the Company since August
1998. Since December 1997, Mr. Slayton has been the President, Chief
Executive Officer and a Director of MySoftware Company, a publicly traded
company that develops small business software. From March 1996 to July 1997,
Mr. Slayton was President, Chief Operating Officer and a Director of ParaGraph
International, a privately held internet tools company. From December 1995 to
March 1996, Mr. Slayton also served as President and Chief Executive Officer
of Velocity, Inc., a privately held CD-gaming company. Mr. Slayton co-
founded Worlds, Inc., an internet technology company, in August 1994 and
served as Senior Vice President and Chief Financial Officer from its inception
to November 1995.
Committees of the Board of Directors
- ------------------------------------
The Board of Directors has three standing Committees: an Executive
Committee, an Audit Committee and a Compensation Committee. During the year
ended December 31, 1998, the Board of Directors held a total of five meetings.
The Executive Committee is responsible for those duties delegated to it
by the Board of Directors. The current members of the Executive Committee are
Alyn R. Holt, Robert E. Matthiessen and Daniel J. Graham. The Executive
Committee did not meet during the year ended December 31, 1998.
The Audit Committee reviews the results and scope of the audit and other
services provided by the Company's independent auditors. The current members
of the Audit Committee are Stuart F. Daniels, Ph.D., Richard O. Endres and
Gregory W. Slayton. The Audit Committee held two meetings during the year
ended December 31, 1998.
The Compensation Committee makes recommendations concerning salaries and
incentive compensation for employees of the Company and administers the
Company's stock option plan and the awarding of bonuses. The membership of
the Compensation Committee through August 3, 1998 was Stuart F. Daniels,
Ph.D., Richard O. Endres and Robert E. Matthiessen. The current members of
the Compensation Committee are Stuart F. Daniels, Ph.D., Richard O. Endres,
Alyn R. Holt and Gregory W. Slayton. The Compensation Committee held one
meeting during the year ended December 31, 1998.
Each of the directors attended at least 75% of the aggregate number of
meetings of the Board and meetings of any committee of which he is a member
which were held during the time in which he was a director or a committee
member, as applicable.
Director Compensation
- ---------------------
Non-employee directors are paid a quarterly retainer of $2,500, a fee of
$2,000 per board meeting and a fee of $1,000 per committee meeting that falls
on a day other than a board meeting. In addition, non-employee directors are
reimbursed travel expenses and other costs associated with attending board or
committee meetings. The Company does not pay additional cash compensation to
officers of the Company for their service as directors of the Company.
However, officers who serve as directors of the Company's foreign subsidiaries
receive compensation as approved each year by such subsidiary's Board of
Directors.
Family Relationships
- --------------------
Hugh T. Regan, Jr., the Chief Financial Officer, is the son of Hugh T.
Regan, Sr., the Company's Secretary. There are no other family relationships
between any of the directors or executive officers of the Company.
Recommendation
- --------------
The Board of Directors recommends a vote "FOR" the reelection of each
of the nominees to the Board of Directors named above.
5
EXECUTIVE OFFICERS OF THE COMPANY
Name Age Position
- ---------------------- --- --------------------------------------------------
Alyn R. Holt...................... 61 Chairman
Robert E. Matthiessen............. 54 President, Chief Executive Officer and Director
Douglas W. Smith.................. 49 Executive Vice President, Chief Operating Officer and
Director
Hugh T. Regan, Jr................. 39 Treasurer and Chief Financial Officer
Daniel J. Graham.................. 53 Senior Vice President, Vice Chairman and Director
Hugh T. Regan, Sr................. 64 Secretary
Jack R. Edmunds................... 59 Vice President of Operations
Jerome R. Bortnem................. 46 Vice President of Sales and Marketing
Certain Biographical and Other Information Regarding the Executive Officers of
the Company
- ------------------------------------------------------------------------------
Executive officers are appointed by the Board of Directors of the
Company. Each executive officer is appointed to serve until the first meeting
of the Board of Directors after the annual meeting of stockholders next
succeeding his election and until his successor is elected and qualified.
Alyn R. Holt. See "Election of Directors."
Robert E. Matthiessen. See "Election of Directors."
Douglas W. Smith. See "Election of Directors."
Hugh T. Regan, Jr. has served as the Company's Treasurer and Chief
Financial Officer since joining the Company in April 1996. From 1989 to 1995,
Mr. Regan was the Vice President of Finance for Value Property Trust, a
publicly traded real estate investment trust (the "Trust"). From 1995 until
he joined the Company, Mr. Regan was the Chief Financial Officer of the Trust.
Mr. Regan has over 13 years of financial management experience.
Daniel J. Graham. See "Election of Directors."
Hugh T. Regan, Sr. has served as the Company's Secretary since 1982. Mr.
Regan was Chief Financial Officer of the Company from 1982 to 1996. Mr. Regan
has over 35 years of financial and general management experience in the
computer, ATE and other industries.
Jack R. Edmunds has served as the Company's Vice President of Operations
since October 1998. Prior to that, Mr. Edmunds served as Director of
Operations since joining the Company in September 1987. He has over 20 years
of experience in the ATE industry, including various positions in operations
management, marketing management, engineering and sales.
Jerome R. Bortnem has served as the Company's Vice President of Sales and
Marketing since August 1998. Prior to that, Mr. Bortnem served as Western
Regional Sales Manager since joining the Company in August 1993. Mr. Bortnem
has over 15 years experience in the ATE industry, including various positions
in engineering, marketing and sales.
6
EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to the
compensation paid by the Company for services rendered during the years ended
December 31, 1998, 1997 and 1996, to its Chairman and Chief Executive Officer
and other executive officers of the Company whose total annual salary and
bonus exceeded $100,000 during the year ended December 31, 1998 (each, a
"Named Executive Officer"):
Summary Compensation Table
Annual Compensation
------------------------------------
Other Annual All Other
Name and Principal Position Year Salary Bonus Compensation Compensation
- ----------------------------------- ---- -------- ------- ------------ -------------
Alyn R. Holt........................ 1998 $226,238 $ - $53,264 (1) $ 65,661 (2)
Chairman 1997 198,010 - 53,675 (1) 137,117 (2)
1996 155,545 55,234 47,693 (1) 145,851 (2)
Robert E. Matthiessen............... 1998 $171,576 $ - $ 5,320 (3) $ 53,778 (4)
President, Chief Executive 1997 135,914 - 8,577 (3) 6,240 (4)
Officer and Director 1996 97,020 6,750 13,578 (3) 5,720 (4)
Daniel J. Graham.................... 1998 $126,704 $ - $12,862 (5) $ 7,132 (6)
Vice Chairman, Senior Vice 1997 112,040 - 19,088 (5) 32,077 (6)
President and Director 1996 105,200 - 18,943 (5) 35,539 (6)
Jerome R. Bortnem................... 1998 $149,546 $ - $ 2,533 (7) $ 6,351 (8)
Vice President of Sales and 1997 131,067 - 2,348 (7) 6,351 (8)
Marketing 1996 95,094 - 2,120 (7) 6,271 (8)
Hugh T. Regan, Jr................... 1998 $118,974 $ - $ 2,533 (10) $ 6,240 (11)
Treasurer and Chief Financial 1997 95,400 - 2,348 (10) 6,240 (11)
Officer 1996 45,900 (9) - 1,041 (10) 524 (11)
- ---------------------
(1) Includes $22,688 for the annual lease value of an automobile for Alyn R.
Holt in 1998 and $30,896 and $39,500 for the lease of automobiles for
Alyn R. and Connie E. Holt in 1997 and 1996, respectively; $5,320,
$4,931 and $6,793 for group health insurance in 1998, 1997 and 1996,
respectively; $24,059 and $9,728 for Company paid personal travel in
1998 and 1997, respectively; and $1,197 and $6,720 for use of Company
staff time for personal matters in 1998 and 1997, respectively.
(2) Includes $4,847, $4,847 and $3,046 for premiums paid on life insurance
for Mr. Holt in 1998, 1997 and 1996, respectively; $4,750, $4,750 and
$4,486 for matching contributions to Mr. Holt's 401(k) Plan account in
1998, 1997 and 1996, respectively; and $56,064, $127,520 and $138,319
for serving as a director of inTEST LTD and inTEST KK in 1998, 1997 and
1996, respectively.
(3) Includes $3,646 and $8,750 for the annual lease value of an automobile
for Mr. Matthiessen in 1997 and 1996, respectively; and $5,320, $4,931
and $4,828 for group health insurance in 1998, 1997 and 1996,
respectively.
(4) Includes $1,490, $1,490 and $1,184 for premiums paid on life insurance
for Mr. Matthiessen in 1998, 1997 and 1996, respectively; $4,750, $4,750
and $4,536 for matching contributions to Mr. Matthiessen's 401(k) Plan
account in 1998, 1997 and 1996, respectively; and $47,538 for serving as
a director of inTEST LTD and inTEST KK in 1998.
(5) Includes $5,375, $10,750 and $10,750 for the annual lease value of an
automobile for Mr. Graham in 1998, 1997 and 1996, respectively; and
$7,487, $6,938 and $6,793 for group health insurance in 1998, 1997 and
1996, respectively.
7
(6) Includes $2,382, $2,382 and $2,107 for premiums paid on life insurance
for Mr. Graham in 1998, 1997 and 1996 respectively; $4,750, $4,750 and
$4,750 for matching contributions to Mr. Graham's 401(k) Plan account in
1998, 1997 and 1996, respectively; and $24,945 and $28,682 for serving
as a director of inTEST LTD in 1997 and inTEST LTD and inTEST KK in
1996.
(7) Includes $2,533, $2,348 and $2,120 for group health insurance for Mr.
Bortnem in 1998, 1997 and 1996, respectively.
(8) Includes $1,601, $1,601 and $1,521 for premiums paid on life insurance
for Mr. Bortnem in 1998, 1997 and 1996, respectively; and $4,750, $4,750
and $4,750 for matching contributions to Mr. Bortnem's 401(k) Plan
account in 1998, 1997 and 1996, respectively.
(9) Represents salary paid from 4/29/96, the date Mr. Regan was hired.
(10) Includes $2,533, $2,348 and $1,041 for group health insurance for Mr.
Regan in 1998, 1997 and 1996, respectively.
(11) Includes $1,490, $1,490 and $524 for premiums paid on life insurance for
Mr. Regan in 1998, 1997 and 1996, respectively; and $4,750 and $4,750
for matching contributions to Mr. Regan's 401(k) Plan account in 1998
and 1997, respectively.
Stock Options
- -------------
The following table sets forth grants of stock options made by the
Company during the year ended December 31, 1998, to each of the Named
Executive Officers who were awarded options during 1998:
Option Grants in 1998
Potential Realizable Value
At Assumed Annual Rates
% of Total Of Stock Price Appreciation
Number Options Price on For Options Term (1)
Of Options Granted to Exercise Date of Expiration ---------------------------
Name Granted Employees Price Grant Date 5% 10%
- ------------------ ---------- ---------- -------- -------- ---------- ----------- -------------
Hugh T. Regan, Jr. 20,000 13.3% $4.25 $4.25 8/12/08 $53,456 $135,468
Jerome R. Bortnem 20,000 13.3% $4.25 $4.25 8/12/08 $53,456 $135,468
- -----------------
(1) Assumes the price of the Company's Common Stock appreciates at a rate of
5% and 10%, respectively, compounded annually for the ten year term of
the options.
Exercise of Options
- -------------------
The following table sets forth information regarding the exercise of
stock options and the value of any unexercised stock options of each of the
Named Executive Officers of the Company, who exercised or held options, during
the fiscal year ended December 31, 1998:
8
Aggregated Option Exercises in 1998 and December 31, 1998 Option Values
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options at
Acquired Options at 12/31/98 12/31/98 (1)
on Value ------------------------- -------------------------
Name Exercise Realized Vested Unvested Vested Unvested
- ------------------ -------- -------- ---------- ------------ ---------- ------------
Hugh T. Regan, Jr. 0 $0 6,000 44,000 $13,500 $134,000
Jerome R. Bortnem 0 0 2,000 28,000 $ 4,500 $ 98,000
(1) Based upon the closing price for the Common Stock as reported on the
NASDAQ National Market System on December 31, 1998 of $8.25 less the
exercise price.
Report on Repricing of Options
- ------------------------------
On June 30, 1998, the Company's Compensation Committee (the
"Committee") approved the amendment of all stock options ("Repriced
Options") issued on June 30, 1997 and October 30, 1997 to reduce the exercise
price of such options. In particular, the Company amended 131,000 options
originally exercisable at $7.50 per share and 10,000 options originally
exercisable at $11.00 per share to reduce the exercise price of such options
to $6.00 per share, the current market price on the date of such action.
The Committee approved the repricing of options after consideration of
many factors and determination that the benefits to the Company attributable
to the Repriced Options had diminished and that the amendment of such options
would be in the best interests of the Company. The Repriced Options had been
awarded primarily to key employees in recognition of length of service and
contribution to the Company's performance. Because the market price of the
Common Stock had dropped after the issuance of the Repriced Options, the
exercise prices of such options were in excess of the current market price.
Consequently, the Repriced Options had little or no value to the Option
Holders and the Repriced Options no longer offered as great an incentive to
the Option Holders as intended at the time such options were issued.
One Director of the Company and two of the Named Executive Officers own
Repriced Options. Dr. Daniels and Messrs. Bortnem and Regan owned 10,000,
10,000 and 30,000 of such options, respectively.
Stuart F. Daniels, Ph.D.
Richard O. Endres
Alyn R. Holt
Gregory W. Slayton
The following table sets forth certain information concerning the
repricing of options held by any executive officer during the last ten
completed fiscal years:
9
Ten-Year Option Repricing Table
Length of
Original
Number of Exercise Option Term
Securities Market Price Price at Remaining at
Underlying of Stock at Time of New Date of
Repriced Time of Repricing Exercise Repricing
Name Date Options Repricing (per share) Price (months)
- -------------------- ------- ---------- ------------ --------- -------- ------------
Hugh T. Regan, Jr. 6/30/98 30,000 $6.00 $7.50 $6.00 9 years
Jerome R. Bortnem 6/30/98 10,000 $6.00 $7.50 $6.00 9 years
Stock Performance Graph
- -----------------------
The following graph shows a comparison of cumulative total returns during
the period commencing on June 17, 1997, the date of the Company's initial
public offering, and ending on December 31, 1998, for the Company, the NASDAQ
Market Composite Index and a composite index (the "Peer Group Index") of
public Companies engaged in back-end ATE manufacturing. The companies
included in the Peer Group Index consist of Aehr Test Systems, Aetrium, Inc.,
Aseco Corporation, Cerprobe Corporation, Cohu, Inc., Credence Systems Corp.,
Electroglas, Inc., Integrated Measurement Systems, LTX Corporation, Micro
Component Technologies, Inc., and Teradyne, Inc. The comparison assumes $100
was invested on June 17, 1997, in the Company's Common Stock and in each of
the foregoing indices and assumes the reinvestment of all dividends, if any.
Although the Common Stock was offered at $7.50 per share in the initial public
offering, the performance graph must begin with the closing price of the
Common Stock on the date of the initial public offering, which was $7.625.
[Graph omitted]
6/17/97 12/31/97 12/31/98
------- -------- --------
inTEST Corporation $100 $ 93.33 $110.00
NASDAQ Market Composite Index $100 $112.98 $158.82
Peer Group Index $100 $ 80.77 $ 84.17
The historical stock price performance of the Company's Common Stock
shown above is not necessarily indicative of future performance.
Compensation Committee Report on Executive Compensation
- -------------------------------------------------------
The Committee approves the compensation for all executive officers of the
Company and acts on such other matters relating to their compensation as it
deems appropriate. The Committee consists of at least two non-employee
directors and meets at least once per year. The members of the Committee were
Dr. Daniels and Messrs. Endres and Matthiessen through August 3, 1998 and Dr.
Daniels and Messrs. Endres, Holt and Slayton during the balance of the year.
The Committee also administers, with respect to key employees, the Company's
stock option plan and determines the participants in such plan and the amount,
timing and other terms and conditions of awards under such plan.
COMPENSATION PHILOSOPHY AND OBJECTIVES. The Committee is committed to
the general principle that overall executive compensation should be
commensurate with the performance by the Company and the individual executive
10
officers, and that long-term incentives awarded to such officers should be
aligned with the interest of the Company's stockholders. The primary
objectives of the Company's executive compensation program are to attract and
retain executive officers who will contribute to the Company's long-term
success, to reward the achievement of desired Company goals, and to provide
compensation opportunities that are linked to the performance of the Company
and that directly link the interests of executives with the interest of
stockholders.
The Company's executive compensation program provides a level of
compensation opportunity that is competitive for companies in comparable
industries and of comparable development, complexity and size and consists of
three components: salary, bonus and long-term incentive compensation in the
form of stock options. In determining compensation levels, the Committee
considers a number of factors, including Company performance, both separately
and in relation to other companies within the semiconductor equipment
industry, the individual performance of each executive officer, comparative
compensation surveys concerning compensation levels and stock grants at other
companies, historical compensation levels and stock awards at the Company, and
the overall competitive environment for executives and the level of
compensation necessary to attract and retain key executives. Compensation
levels may be greater or less than competitive levels in other companies
within the semiconductor equipment industry based upon factors such as annual
and long-term Company performance and individual performance.
SALARY. Base salaries of all executive officers, including the Chief
Executive Officer, are determined by the potential impact of the individual on
the Company and its performance, the skills and experience required by the
position, the individual performance and potential of the executive and the
Company's overall performance. The Company's Chief Executive Officer proposes
to the Committee the salaries of all executive officers based upon a formula
related to Company's revenue and operating profit. The Committee considers
these recommendations in connection with the other aforementioned factors in
making its final determination of each executive's base salary. Base salaries
for executives are evaluated and adjusted annually.
BONUS. The Company also may, from time to time, pay bonuses to executive
officers as part of its executive compensation program.
LONG-TERM INCENTIVE COMPENSATION. The Committee periodically considers
whether to grant awards under the Company's stock option plan to specific
executives based on factors including: the executive officer's position in the
Company; his or her performance and responsibilities; the extent to which he
or she already holds an equity stake in the Company; equity participation
levels of comparable executives and key employees at other similar companies;
and the executive officer's individual contribution to the Company's overall
performance. The plan does not provide any formula for weighing these
factors, and a decision to grant an award is primarily based upon a subjective
evaluation of the past as well as the future anticipated performance and
responsibilities of the executive officer in question.
In summary, it is the opinion of the Committee that the executive
compensation program provides the necessary total remuneration package to
align properly the Company's performance and the interests of the Company's
stockholders with competitive and equitable executive compensation in a
balanced and reasonable manner, for both the short and long-term.
Compensation Committee:
Stuart F. Daniels, Ph.D.
Richard O. Endres
Alyn R. Holt
Gregory W. Slayton
Employment Agreements
- ---------------------
There were no employment agreements in effect for executive officers
during the year ended December 31, 1998.
11
Compensation Committee Interlocks and Insider Participation
- -----------------------------------------------------------
Through August 3, 1998, the Compensation Committee consisted of Dr.
Daniels and Messrs. Endres and Matthiessen. Mr. Matthiessen serves as an
executive officer of the Company. Subsequent to August 3, 1998, the Committee
consisted of Dr. Daniels and Messrs. Endres, Holt and Slayton. Mr. Holt
serves as an executive officer of the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
There were no related party transactions or indebtedness involving
amounts in excess of $60,000 during the year ended December 31, 1998.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
---------------------------------------------------
KPMG LLP has been the independent public accountant for the Company since
its incorporation in 1981. KPMG LLP has been selected by the Company's Board
of Directors as the Company's independent certified public accountant for the
current year. This appointment will be submitted to the stockholders for
ratification at the Meeting.
A representative of KPMG LLP is expected to be present at the Meeting.
He will be given the opportunity to make a statement if he desires and will be
available to respond to questions by stockholders. If the stockholders do not
ratify the selection of this firm, the selection of another firm of
independent certified public accountants will be considered by the Board of
Directors.
The Board of Directors may, in its discretion, direct appointment of a
new accounting firm at any time during the year if the Board believes that
such a change would be in the best interest of the Company and its
stockholders. No such change is anticipated.
Recommendation
- --------------
The Board of Directors recommends a vote FOR the proposal to ratify the
selection of KPMG LLP.
EXPECTED VOTE OF DIRECTORS AND OFFICERS
---------------------------------------
The Company expects that the directors and officers of the Company, who
are the beneficial owners of approximately 48.2% of the outstanding Common
Stock of the Company, will vote, or direct that their shares be voted, in
favor of the election of the directors nominated herein, and the ratification
of the appointment of the Company's independent public accountants.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
-------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors, and persons
who own more than ten percent of a registered class of the Company's equity
securities, to file reports of the ownership and changes in ownership of such
securities with the Securities and Exchange Commission ("SEC") and the
American Stock Exchange. Officers, directors and beneficial owners of more
than ten percent of the Company's stock are required by SEC regulation to
furnish the Company with copies of all such forms which they file.
12
Based solely on the Company's review of such forms received by it, or
written representations from certain reporting persons that no Form 5 were
required for those persons, the Company believes that all filing requirements
applicable to its officers, directors and persons who own more than ten
percent of the Common Stock were complied with during the year ended December
31, 1998, except that Gregory Slayton's report of initial holdings was amended
after the due date for such report to disclose an additional 350 shares of the
Company's Common Stock owned by him at the time he became a director of the
Company.
STOCKHOLDER PROPOSALS
---------------------
Stockholders intending to submit proposals to be included in the
Company's next Proxy Statement must send their proposals to the Secretary of
the Company (at 2 Pin Oak Lane, Cherry Hill, New Jersey 08003) not later than
December 22, 1999. Such proposals must relate to matters appropriate for
stockholder action and be consistent with regulations of the SEC.
Stockholders intending to present proposals at the next annual meeting of
the Company and not intending to have such proposals included in the Company's
next Proxy Statement must send their proposals to the Secretary of the Company
(at 2 Pin Oak Lane, Cherry Hill, New Jersey 08003) not later than February 14,
2000. If notification of a stockholder proposal is not received by such date,
the Company may vote, in its discretion, any and all of the proxies received
in this solicitation against such proposal.
ANNUAL REPORT
-------------
The Company's Annual Report to Stockholders for the year ended December
31, 1998, accompanies this Proxy Statement. The Annual Report to Stockholders
does not constitute a part of the proxy solicitation materials.
ADDITIONAL INFORMATION
----------------------
THE COMPANY WILL PROVIDE TO EACH PERSON SOLICIATED, WITHOUT CHARGE EXCEPT
FOR EXHIBITS, UPON THE WRITTEN REQUEST OF SUCH PERSON, A COPY OF THE COMPANY'S
ANNUAL REPORT ON FORM 10-K, INCLUDING THE COMPANY'S FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES REQUIRED TO BE FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION FOR THE YEAR ENDED DECEMBER 31, 1998. REQUESTS SHOULD BE
DIRECTED TO MR. HUGH T. REGAN, JR., TREASURER AND CHIEF FINANCIAL OFFICER,
inTEST CORPORATION, 2 PIN OAK LANE, CHERRY HILL, NEW JERSEY 08003.
MISCELLANEOUS
-------------
This solicitation is made on behalf of the Board of Directors of the
Company, and its cost (including preparing and mailing of the notice, this
Proxy Statement and the form of proxy card) will be paid by the Company. The
Company will also make arrangements with brokerage houses and other
custodians, nominees and fiduciaries to send the proxy materials to their
principals and will reimburse them for their reasonable expenses in so doing.
To the extent necessary in order to assure sufficient representation at the
Meeting, officers and regular employees of the Company may solicit the return
of proxies by mail, telephone, telegram and personal interview. No
compensation in addition to regular salary and benefits will be paid to any
such officer or regular employee for such solicitation. The Company may
engage Corporation Investors Communications, Inc. ("CIC") to assist in the
solicitation of proxies from shareholders. The Company has not entered into
an agreement with CIC for such solicitation services.
13
Where information contained in this Proxy Statement rests peculiarly
within the knowledge of a person other than the Company, the Company has
relied upon information furnished by such person.
By Order of the Board of Directors
/s/ Hugh T. Regan, Sr.
------------------------------------
Hugh T. Regan, Sr.
Secretary
April 20, 1999
14
APPENDIX
PROXY
inTEST CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
MAY 20, 1999
THIS PROXY IS SOLICITED ON BEHALF OF
THE COMPANY'S BOARD OF DIRECTORS
The undersigned hereby appoints Alyn R. Holt and Robert E. Matthiessen,
and each of them jointly and severally, Proxies, with full power of
substitution, to vote, as designated on the reverse side of this proxy card,
all shares of Common Stock of inTEST Corporation held of record by the
undersigned on April 2, 1999, at the Annual Meeting of Stockholders to be
held on May 20, 1999, and any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF SEVEN
NOMINEES TO SERVE AS DIRECTORS AND "FOR" THE RATIFICATION OF THE APPOINTMENT
OF KPMG LLP AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS SPECIFIED ON THE
REVERSE SIDE OF THIS PROXY CARD, IF NO DIRECTION IS GIVEN WITH RESPECT TO A
PARTICULAR PROPOSAL, THIS PROXY WILL BE VOTED "FOR" SUCH PROPOSAL.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
1. Election of Directors. (Term to expire at 2000 Annual Meeting)
Nominees: Alyn R. Holt, Robert E. Matthiessen, Douglas W. Smith,
Daniel J. Graham, Richard O. Endres, Stuart F. Daniels,
Ph.D., Gregory W. Slayton
______ FOR ______ WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
______ ________________________________________
For all nominees except as noted above
2. PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG LLP as independent public
accountants of the Company for the year ending December 31, 1999.
______ FOR ______ AGAINST ______ ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment
thereof and matters incident to the conduct of the meeting.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT ______
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Please sign exactly as your name appears hereon. 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 and affix corporate seal. If a partnership, please sign
in partnership name by general partner.
- ------------------------------------ Date: ---------------------
Signature
Dear Stockholder:
Your vote counts, and we strongly encourage you to exercise your right to
vote your shares. To do so, please mark the boxes on the proxy card to
indicate how your shares will be voted. Then sign the card, detach it and
return it in the enclosed envelope. No postage is necessary if mailed in
the United States.
Thank you in advance for your prompt completion of these procedures.
Sincerely,
inTEST Corporation
