UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
Perceptron, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
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PERSONS WHO POTENTIALLY ARE TO RESPOND TO THE COLLECTION OF INFORMATION
CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A
CURRENTLY VALID OMB CONTROL NUMBER.
SEC 1913 (02-02)
(PERCEPTRON LOGO)
the focus on process
47827 Halyard Drive
Plymouth, Michigan 48170-2461
(734) 414-6100 Facsimile: (734) 414-4700
October 6, 2006
Dear Perceptron Shareholder:
You are cordially invited to attend the 2006 Annual Meeting of Shareholders of
Perceptron, Inc. ("Company") to be held on Monday, November 13, 2006, at 9:00
a.m., local time, at 47827 Halyard Drive, Plymouth, Michigan 48170.
The attached notice of the meeting and Proxy Statement describe the items of
business to be transacted:
(a) The election of eight directors, and
(b) Such other business as may properly come before the meeting or any
adjournment thereof.
After the formal business session, there will be a report to the shareholders on
the progress of the Company along with a discussion period. I look forward to
seeing you at the Annual Meeting and hope you will make plans to attend. Whether
or not you plan to attend the meeting, I urge you to sign, date and return your
proxy in the addressed envelope enclosed for your convenience so that as many
shares as possible may be represented at the meeting. No postage is required if
the envelope is mailed in the United States.
Sincerely,
/s/ A. A. Pease
-------------------------------------
Alfred A. Pease
Chairman of the Board of Directors,
President and Chief Executive Officer
(PERCEPTRON LOGO)
the focus on process
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PERCEPTRON, INC.
NOTICE OF THE 2006 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 13, 2006
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The Annual Meeting of Shareholders of Perceptron, Inc., a Michigan
corporation, will be held on Monday, November 13, 2006, at 9:00 a.m., local
time, at 47827 Halyard Drive, Plymouth, Michigan 48170 for the following
purposes:
1. To elect eight directors to serve until the 2007 Annual Meeting
of Shareholders and until their successors are elected and
qualified.
2. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on September 22,
2006, as the record date for the determination of shareholders entitled to
notice of and to vote at the meeting. A certified list of shareholders entitled
to vote at the meeting will be available for examination by any shareholder
during the meeting at the corporate offices at 47827 Halyard Drive, Plymouth,
Michigan 48170.
A copy of the 2006 Annual Report for the fiscal year ended June 30, 2006
and Proxy Statement accompanies this notice.
By the Order of the Board of Directors
/s/ David W. Geiss
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David W. Geiss, Secretary
47827 Halyard Drive
Plymouth, Michigan 48170
October 6, 2006
THE VOTE OF EVERY SHAREHOLDER IS IMPORTANT, AND YOUR COOPERATION IN
PROMPTLY RETURNING YOUR MARKED, DATED AND SIGNED PROXY WILL BE APPRECIATED. THE
PROXY IS REVOCABLE AND WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU
ATTEND THE MEETING. YOUR PROXY WILL, HOWEVER, HELP TO ASSURE A QUORUM AND TO
AVOID ADDED PROXY SOLICITATION COSTS.
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PROXY STATEMENT
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PERCEPTRON, INC.
2006 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AT 9:00 A.M. ON NOVEMBER 13, 2006
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INTRODUCTION
This Proxy Statement and the accompanying Notice of the 2006 Annual Meeting
of Shareholders, 2006 Annual Report and proxy card are furnished in connection
with the solicitation of proxies by the Board of Directors ("Board") of
Perceptron, Inc., a Michigan corporation ("Company"). The proxies are being
solicited for use at the 2006 Annual Meeting of Shareholders ("Annual Meeting")
of the Company to be held at the corporate offices of the Company on Monday,
November 13, 2006, at 9:00 a.m., local time, and at any adjournment of that
meeting. The corporate offices of the Company are located at 47827 Halyard
Drive, Plymouth, Michigan 48170, and the Company's telephone number is (734)
414-6100. The Company expects that this Proxy Statement and the accompanying
materials will be first sent or given to shareholders on or about October 9,
2006.
Only shareholders of record of the Company's Common Stock, $0.01 par value
("Common Stock") at the close of business on September 22, 2006 ("Record Date")
will be entitled to notice of and to vote at the Annual Meeting or any
adjournments thereof. Shareholders of record on the Record Date are entitled to
one vote per share on any matter that may properly come before the Annual
Meeting. As of the Record Date, there were 8,308,323 shares of Common Stock
outstanding and entitled to vote. The Company has no other class of stock
outstanding. The presence, either in person or by properly executed proxy, of
the holders of a majority of the outstanding shares of Common Stock is necessary
to constitute a quorum at the Annual Meeting. See "Further Information - Share
Ownership of Management and Certain Shareholders" for a description of the
beneficial ownership of the Common Stock.
Directors, officers and other employees of the Company may solicit, without
additional compensation, proxies by any appropriate means, including personal
interview, mail, telephone, courier service and facsimile transmissions.
Arrangements will also be made with brokerage houses and other custodians,
nominees and fiduciaries which are record holders of the Company's Common Stock
to forward proxy soliciting material to the beneficial owners of such shares and
the Company will reimburse such record holders for their reasonable expenses
incurred in connection therewith. The cost of soliciting proxies, including the
preparation, assembling and mailing of the Notice of the 2006 Annual Meeting of
Shareholders, the Proxy Statement, the 2006 Annual Report and the accompanying
proxy card, as well as the cost of forwarding such material to the beneficial
owners of Common Stock, will be borne by the Company. Only one Proxy Statement
and Annual Report will be delivered to multiple shareholders sharing an address
unless the Company has received contrary instructions from one or more of the
shareholders. Upon written or oral request from a shareholder who shares an
address with another shareholder, the Company shall deliver a separate copy of
the Proxy Statement and Annual Report. In the future, shareholders can call or
write the Company for a separate annual report or proxy statement at (734)
414-6100 or 47827 Halyard Drive, Plymouth, MI 48170-2461. Similarly, those
shareholders who share an address and wish to receive only one copy of the
annual report or proxy statement when they are receiving multiple copies can
also call or write the Company at the number and address given above.
Shares represented by a duly executed proxy, unless previously revoked,
will be voted at the Annual Meeting in accordance with the instructions of the
shareholder thereon if the proxy is received by the Company before the close of
business on November 10, 2006. Shares represented by a proxy received after
November 10, 2006 will be voted if the proxy is received by the Company in
sufficient time to permit the necessary examination and tabulation of the proxy
before the vote of shareholders is taken. IF NO INSTRUCTIONS ARE MADE, SUCH
SHARES WILL BE VOTED FOR THE ELECTION OF DIRECTORS NAMED IN THIS PROXY
STATEMENT. A proxy also gives Messrs. Pease, Garber and Geiss discretionary
authority, to the extent permitted by law, to vote all shares of Common Stock
represented by the proxy on any other matter that is properly presented for
action at the meeting;
however, the Board does not intend to present any other matters at the Annual
Meeting. Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before it is voted. Proxies may be revoked by (i)
filing with the Secretary of the Company, at or before the Annual Meeting, a
written notice of revocation bearing a later date than the proxy, (ii) duly
executing a subsequent proxy relating to the same shares and delivering it to
the Secretary of the Company at the Company's corporate offices at or before the
Annual Meeting, or (iii) attending the Annual Meeting and voting in person, if
the shareholder is a shareholder of record (although attendance at the Annual
Meeting will not in and of itself constitute a revocation of a proxy).
Abstentions, and withheld votes with respect to the election of directors,
are counted only for purposes of determining whether a quorum is present at the
2006 Annual Meeting. Withheld votes will be excluded entirely from the vote on
the election of directors and will therefore have no effect on the election. If
a shareholder owns shares through a bank or broker in street name, the
shareholder may instruct his or her bank or broker how to vote such shares.
"Broker non-votes" occur when a bank, broker or other nominee holder has not
received voting instructions with respect to a particular matter and the nominee
holder does not have discretionary power to vote on that matter. The election of
directors is considered a routine matter, so a bank or broker will have
discretionary authority to vote such shares held in street name on that
proposal. A broker non-vote may also occur if a broker fails to vote shares for
any reason. Directors are elected by a plurality of the votes cast, so that only
votes cast "for" directors are counted in determining which directors are
elected.
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MATTERS TO COME BEFORE THE MEETING
PROPOSAL 1 -- ELECTION OF DIRECTORS
At the Annual Meeting, Shareholders will be asked to elect a Board of eight
directors to hold office, in accordance with the Bylaws of the Company, until
the 2007 annual meeting and until the election and qualification of their
successors, or until their resignation or removal. The following table sets
forth information regarding the nominees for election to the Company's Board.
The Board recommends a vote FOR each of the nominees for election. The shares
represented by properly executed proxies will be voted in accordance with the
specifications made therein. PROXIES WILL BE VOTED "FOR" THE ELECTION OF SUCH
NOMINEES UNLESS THE SPECIFICATION IS MARKED ON THE PROXY INDICATING THAT
AUTHORITY TO DO SO IS WITHHELD. If a nominee is unable to serve or, for good
cause, will not serve, the proxy confers discretionary authority to vote with
respect to the election of any person to the Board. The nominees receiving a
plurality of votes cast at the Annual Meeting will be elected to the Board.
Shares may not be voted cumulatively for the election of directors.
The nominees named below have been selected by the Board of the Company.
Each of the nominees is currently a director of the Company. The following
information with regard to business experience has been furnished by the
respective nominees for director.
POSITION, PRINCIPAL OCCUPATIONS
NAME AND AGE AND OTHER DIRECTORSHIPS
------------ -------------------------------
David J. Beattie, 64.......... Director since 1997. Mr. Beattie was President
of McNaughton - McKay Electric Company ("MME")
from February 2001 to December 2004. MME is a
distributor of industrial automation products
and services.
Kenneth R. Dabrowski, 63...... Director since 1999. Mr. Dabrowski has been
President of the Durant Group, L.L.C., a
management consulting firm, since December
2000, and has been a member of the faculty at
Massachusetts Institute of Technology since
June 1999. Mr. Dabrowski was Vice President,
Quality and Process Leadership, Ford Automotive
Operations of Ford Motor Company from September
1996 to January 1999.
Philip J. DeCocco, 68......... Director since 1996. Mr. DeCocco has been
President of Sturges House, Inc., a company
founded by Mr. DeCocco, since 1983. Sturges
House, Inc. offers executive recruiting and
management consulting services in human
resources, strategic planning, executive
development and organization design and
development to various companies.
W. Richard Marz, 63........... Director since 2000. Mr. Marz has been a
Technical Consultant to LSI Logic Corporation
("LSI") since August 2005, and prior to that
time he was Executive Vice President, Worldwide
Strategic Marketing (December 2003 to August
2005), Executive Vice President, Communications
and ASIC Technology (February 2002 to December
2003), and Executive Vice President, ASIC
Technology (July 2001 to February 2002), of
LSI. LSI is a semiconductor manufacturer.
Robert S. Oswald, 65.......... Director since 1996. Mr. Oswald has been
Chairman, Bendix Commercial Vehicle Systems,
LLC, a manufacturer of air brakes and other
safety systems, since October 2003 and served
as Chairman and Chief Executive Officer from
March 2002 to September 2003. Mr. Oswald was
Chairman, President and Chief Executive Officer
of Robert Bosch Corporation, a manufacturer of
automotive components and systems, and a member
of the Board of Management of Robert Bosch,
GmbH from July 1996 to December 2000.
Alfred A. Pease, 60........... Director since 1996 and Chairman of the Board
since July 1996. Since February 1996, Mr. Pease
has been President and Chief Executive Officer
of the Company.
James A. Ratigan, 58.......... Director since 2003. Since May 2006, Mr.
Ratigan has served as Vice President and Chief
Financial Officer of Nitric BioTherapeutics,
Inc., a privately held specialty
pharmaceutical, drug delivery systems and
biotechnology company. From August 2003 to
April 2006, Mr. Ratigan was an independent
consultant providing consultative services to
two specialty pharmaceutical companies, a
biotechnology company and a private equity
firm. From June 1997 to August 2003, Mr.
Ratigan was Executive Vice President, Chief
Financial Officer and Secretary of Orapharma,
Inc., a specialty pharmaceutical company that
was acquired by Johnson and Johnson, Inc. Mr.
Ratigan was a director of the Company from 1989
to 1996 and served as the Company's Chief
Operating Officer from May 1994 to April 1996
and Chief Financial Officer from December 1993
to June 1996.
Terryll R. Smith, 56.......... Director since 1996. Mr. Smith has been
President and Chief Executive Officer of
Novation Environmental Technologies Inc., a
water purification company, since January 2000.
3
BOARD OF DIRECTORS AND COMMITTEES
The Board is responsible for direction of the overall affairs of the
Company. Directors of the Company are elected to serve until their successors
are elected. The Board and each committee thereof meet formally from time to
time and also take action by consent resolutions. During the fiscal year ended
June 30, 2006, the Board met a total of seven times. All of the current
directors who are standing for re-election attended at least 75% of the total
meetings of the Board, and of any committee on which they served, held during
the period in fiscal 2006 in which they served as directors or members of any
such committees. The Company's policy is that each director is strongly
encouraged to attend the Annual Meeting of Shareholders if reasonably possible.
All of the directors, except one, attended the 2005 Annual Meeting of
Shareholders.
The Board has delegated certain authority to an Audit Committee, a
Management Development, Compensation and Stock Option Committee and a Nominating
and Corporate Governance Committee to assist it in executing its duties. The
Board has adopted charters for each of these Committees. The charters are
available on the Company's website at www.perceptron.com. The Board determined
that all of the directors, other than Mr. Pease, are "independent directors" as
defined in Marketplace Rule 4200(a)(15) of The Nasdaq Stock Market, Inc.
("Nasdaq"). The composition and principal functions of each Committee are as
follows:
Audit Committee. The Audit Committee is currently comprised of three
outside members of the Board: Messrs. Oswald, Ratigan and Smith. The Board
determined that all of the members of the Audit Committee are independent as
required by the rules of the Securities and Exchange Commission ("SEC") and
Nasdaq listing standards for audit committee members. In addition, the Board
determined that Mr. Ratigan qualified as an "audit committee financial expert"
as defined by applicable SEC rules and that each of the Audit Committee members
satisfies all other qualifications for Audit Committee members set forth in the
applicable Nasdaq rules. The Audit Committee held seven meetings in fiscal 2006.
The Board approved and adopted the Audit Committee's revised charter on
February 9, 2004. The charter in its current form was last provided to
shareholders as an appendix to the Company's Proxy Statement dated October 25,
2004 and is also available on the Company's website at www.perceptron.com. The
Audit Committee's primary responsibilities include the following: (i) oversee
the Company's financial reporting process on behalf of the Board; (ii) review,
appoint, compensate, retain and oversee the accounting firm to be appointed as
the Company's independent registered public accounting firm; (iii) review in
advance the nature and extent of all services provided to the Company by its
independent registered public accounting firm; (iv) review of the independence
of the Company's independent registered public accounting firm; (v) review the
scope, purpose and procedures of the audit; (vi) review the Company's annual
earnings press release, the audited financial statements and the proposed
footnotes to be included in the Company's Annual Report on Form 10-K with
management and the auditors and report annually to the Board whether the Audit
Committee recommends to the Board that the audited financial statements be
included in the Company's Annual Report on Form 10-K for filing with the SEC;
(vii) review with such auditors its experience, findings and recommendations
upon completion of the audit and receive from the auditors their required
communications under generally accepted auditing standards; (viii) review of the
Company's quarterly earnings releases and financial statements with management
and the auditors; (ix) review of the Company's Quarterly Reports on Form 10-Q
for filing with the SEC; (x) review of proxy statement when authority is
delegated by the Board; (xi) review the adequacy of the Company's internal
accounting procedures and financial controls and management's report on internal
control over financial reporting required by applicable SEC rules; (xii) oversee
compliance by the Company with legal and regulatory requirements; (xiii)
establish procedures for receipt,
4
retention and handling of complaints and concerns regarding financial matters;
(xiv) act as the Qualified Legal Compliance Committee; (xv) review and approve
any related party transactions; (xvi) monitor the Company's risk management
activities; (xvii) review performance of finance and account department; and
(xviii) review and reassess annually the adequacy of the Audit Committee's
charter and performance.
Management Development, Compensation and Stock Option Committee. The
Management Development, Compensation and Stock Option Committee ("Management
Development Committee") is currently comprised of three outside members of the
Board: Messrs. Beattie, DeCocco and Marz. The Management Development Committee's
primary responsibilities include the following: (i) review the Company's
compensation programs; (ii) establish and administer the compensation programs
for the Company's officers; (iii) administer the Company's stock-based
compensation plans; (iv) review and recommend compensation for service on the
Board; (v) provide a committee report for inclusion in the Company's proxy
statement; (vi) monitor the Company's succession planning; and (vii) review and
reassess annually the adequacy of the Management Development Committee's charter
and performance. The Management Development Committee held six meetings in
fiscal 2006.
Nominating and Corporate Governance Committee. The Nominating and Corporate
Governance Committee ("Nominating Committee") is currently comprised of three
outside members of the Board: Messrs. DeCocco, Dabrowski and Marz. The Board
determined that all members of the Nominating Committee are independent as
required by the Nasdaq listing standards for nominating committee members.
The Nominating Committee's primary responsibilities include the following:
(i) establish criteria for the selection of new Board members; (ii) conduct
searches and interviews for individuals qualified to become Board members; (iii)
make recommendations to the Board regarding director nominees to stand for
election as directors at each annual meeting of shareholders or to fill
vacancies on the Board; (iv) recommend to the Board the directors to serve on
the standing committees of the Board and the structure and functions of such
committees; (v) develop policies and procedures for Board consideration of
shareholder recommendations of Board nominees and handling of shareholder
proposals; (vi) develop a process for shareholders to communicate with the
Board; (vii) advise Board on corporate governance matters, including
development, review and assessment of corporate governance principles; (viii)
oversee the Board and committee self evaluation process; (ix) evaluate
independence of each Board member and (x) review and reassess annually the
adequacy of the Nominating Committee's charter and performance.
The Nominating Committee may use various methods to identify director
candidates, including recommendations from existing Board members, management,
shareholders, professionals and other sources outside the Company, which could
include third party search firms. The Nominating Committee will evaluate and
screen the list of potential nominees and narrow the list to individuals they
believe best satisfy the needs of the Company, with a strong preference given to
the continuation of the current Board members. The Nominating Committee will
conduct interviews and gather additional information concerning the individuals.
Based on the foregoing, the Nominating Committee will recommend to the Board the
number of members of the Board to be elected at the next annual meeting of
shareholders of the Company and the persons to be nominated for election to the
Board. Director candidates need not possess any specific minimum qualifications.
Rather, a candidate's suitability for nomination and election to the Board will
be evaluated in light of the portfolio of skills, experience, perspective and
background required for the effective functioning of the Board. Among the
desired qualities that the Nominating Committee will consider are: (i) high
ethical character; (ii) practical intelligence and judgment, an inquiring mind
and a good range of problem solving skills; (iii) independence; (iv) ability to
work in a collaborative culture; (v) high-level leadership experience and
personal achievement; (vi) prior Board experience or experience advising or
reporting to Boards preferably of a publicly traded company; (vii) sufficient
personal commitment and time to devote to responsibilities as a director; and
(viii) capacity and desire to represent the balanced best interests of the
shareholders as a whole.
The Nominating Committee will consider candidates recommended by
shareholders using the same procedures and standards utilized for evaluating
candidates recommended by other sources except that the Nominating Committee
will not consider a director nominee proposed by a shareholder if (i) the
shareholder does not submit the required information timely (see "Shareholder
Proposals and Nominees for 2007 Annual Meeting - Shareholder Nominees"); (ii)
the shareholder or group of shareholders proposing the director nominee do not
beneficially own, in the aggregate, more than 5% of the Company's Common Stock,
with the Common Stock used to satisfy this
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requirement owned for at least one year prior to the date of the recommendation,
or (iii) the shareholder proposes as the nominee himself or herself, or an
affiliate or affiliated party. See "Shareholder Proposals and Nominees for 2007
Annual Meeting - Shareholder Nominees" for a description of the procedures to be
used by shareholders to submit recommendations of possible director nominees to
the Nominating Committee. The Nominating Committee held two meetings in fiscal
2006.
SHAREHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
Shareholders desiring to communicate with the Board or any individual
director may send communications to the Board in writing by mail addressed to
the Board of Directors or an individual director, c/o General Counsel,
Perceptron, Inc., 47827 Halyard Drive, Plymouth, MI 48170 or by e-mail addressed
to boardofdirectors@perceptron.com.
CODE OF ETHICS
The Company has adopted a Code of Business Conduct and Ethics ("Code of
Ethics") that applies to the Company's directors, executive officers and other
employees. The Code of Ethics is available on the Company's website at
www.perceptron.com. Shareholders may also obtain a written copy of the Code of
Ethics, without charge, by sending a written request to the Investor Relations
Department, Perceptron, Inc., 47827 Halyard Drive, Plymouth, Michigan 48170. The
Company will disclose any amendments to, or waivers from, the provisions of the
Code of Ethics applicable to the directors or executive officers on the
Company's website.
Certain information relating to corporate governance matters can be viewed
at www.perceptron.com. There the Company makes available, free of charge, its
(i) charters for the Audit Committee, Management Development, Compensation and
Stock Option Committee and Nominating and Corporate Governance Committee and
(ii) Code of Ethics. The Company intends to post additional information on this
website from time to time as the Board adopts or revises policies and
procedures. The information found on the Company's website is not part of this
or any report the Company files with, or furnishes to, the SEC.
AUDIT COMMITTEE REPORT
In accordance with its revised charter, which was approved and adopted by
the Board on February 9, 2004, the Audit Committee provides assistance to the
Board in fulfilling its responsibility to the shareholders, potential
shareholders and investment community relating to corporate accounting,
reporting practices of the Company and the quality and integrity of the
financial reports of the Company. In doing so, it is the responsibility of the
Audit Committee to maintain free and open communication between the Board, the
Company's independent registered public accounting firm and the financial
management of the Company.
The Audit Committee received from the independent registered public
accounting firm and reviewed a formal written statement describing all
relationships between the firm and the Company that might bear on the firm's
independence consistent with Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), as may be modified or
supplemented, discussed with the auditors any relationships that may impact
their objectivity and independence and satisfied itself as to the auditors'
independence.
The Audit Committee discussed with the independent registered public
accounting firm the matters required to be discussed by Statement on Auditing
Standards No. 61 (Codification of Statements on Auditing Standards, AU Section
380), as may be amended or supplemented, and, with and without management
present, discussed and reviewed the results of the independent registered public
accounting firm's examination of the financial statements.
The Audit Committee reviewed and discussed with management and the
independent registered public accounting firm the audited financial statements
of the Company as of and for the fiscal year ended June 30, 2006, including the
quality of accounting principles and significant judgments affecting the
financial statements.
Based on the above-mentioned reviews and discussions with management and
the independent registered public accounting firm, the Audit Committee
recommended to the Board that the Company's audited financial statements be
included in its Annual Report on Form 10-K for the year ended June 30, 2006 for
filing with the Securities and Exchange Commission. Further, the Audit Committee
approved the engagement of Grant Thornton LLP as the Company's independent
registered public accounting firm for the fiscal year ended June 30, 2007.
AUDIT COMMITTEE: James A. Ratigan, Chairman
Robert S. Oswald
Terryll R. Smith
6
FURTHER INFORMATION
EXECUTIVE OFFICERS
The officers listed below were appointed by the Board and serve in the
capacities indicated. Executive officers are normally appointed annually by the
Board and serve at the pleasure of the Board.
NAME AND AGE POSITION AND PRINCIPAL OCCUPATIONS
------------ ----------------------------------
Alfred A. Pease, 60........... President and Chief Executive Officer since
February 1996. Mr. Pease's business experience
is described under "Proposal 1 -- Election of
Directors."
Wilfred J. Corriveau, 53...... Senior Vice President - Global Automotive
Business of the Company since September 2000.
John J. Garber, 64............ Vice President - Finance and Chief Financial
Officer of the Company since February 1999.
Harry T. Rittenour, 60........ Senior Vice President - Product Production and
Quality since May 2001.
SHARE OWNERSHIP OF MANAGEMENT AND CERTAIN SHAREHOLDERS
PRINCIPAL SHAREHOLDERS
The following table sets forth information with respect to beneficial
ownership of the Common Stock by each person known by management of the Company
to be the beneficial owner of more than five percent of its outstanding Common
Stock. The number of shares reported is as of the dates indicated in the
footnotes below. The percentage of class is based on 8,308,323 shares of Common
Stock outstanding on September 22, 2006. The information as to each person has
been furnished by such person and, except as where otherwise indicated, each
person has sole voting power and sole investment power with respect to all
shares beneficially owned by such person.
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
------------------- -------------------- --------
Royce & Associates, Inc.,
1414 Avenue of the Americas
New York, New York 10019........ 764,200(1) 9.20
Dimensional Fund Advisors Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401.. 744,804(2) 8.96
Alfred A. Pease
47827 Halyard Drive
Plymouth, Michigan 48170........ 545,053(3) 6.22
Richard L. Scott
700 11th Street S, Suite 101
Naples, Florida 34102........... 446,880(4) 5.38
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(1) Based upon its statement on Schedule 13G dated and filed with the SEC on
January 31, 2006, Royce & Associates, Inc. ("Royce") has sole power to vote
and dispose of 764,200 shares of Common Stock.
(2) Based upon its statement on Schedule 13G dated February 1, 2006 and filed
with the SEC on February 6, 2006, Dimensional Fund Advisors Inc. has sole
power to vote and dispose of 744,804 shares of Common Stock. Further, based
upon its statement on Schedule 13G, the shares of Common Stock are
beneficially owned by investment companies, trusts and accounts which are
advised by Dimensional Fund Advisors Inc. and none of which own more than
5% of the shares of Common Stock. Dimensional Fund Advisors Inc. disclaims
beneficial ownership of such shares of Common Stock.
(3) Includes options to purchase 452,534 shares of Common Stock, which are
presently exercisable or which are exercisable within 60 days of September
22, 2006.
(4) Based upon his statement on Schedule 13D dated and filed with the SEC on
October 20, 2005, Richard L. Scott has sole power to vote and dispose of
446,880 shares of Common Stock. Further, based upon his statement on
Schedule 13D, Mr. Scott indicates that the shares of Common Stock were
purchased by three different entities controlled by him.
7
BENEFICIAL OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information with respect to beneficial
ownership of the Common Stock by each of the directors and director nominees,
the persons named in the Summary Compensation Table and by all directors and
executive officers as a group as of September 22, 2006, unless otherwise
indicated. The information as to each person has been furnished by such person
and, except as where otherwise indicated, each person has sole voting power and
sole investment power with respect to all shares beneficially owned by such
person.
AMOUNT AND NATURE
NAME OF BENEFICIAL OWNER (1) OF BENEFICIAL OWNERSHIP PERCENT OF CLASS
---------------------------- ----------------------- ----------------
David J. Beattie (2)(3)......... 11,600 *
Kenneth R. Dabrowski (2)(4)..... 77,608 *
Philip J. DeCocco (2)(5)........ 57,337 *
W. Richard Marz (2)(6).......... 53,133 *
Robert S. Oswald (2)(7)......... 72,083 *
Alfred A. Pease (2)(8).......... 545,053 6.22%
James A. Ratigan (2)(9)......... 16,000 *
Terryll R. Smith (2)(10)........ 7,500 *
Wilfred J. Corriveau (11)....... 166,109 1.98%
John J. Garber (12)............. 120,417 1.43%
Harry T. Rittenour (13)......... 138,700 1.64%
Directors and executive officers
as a group (11 persons)(14).. 1,265,540 13.74%
----------
* Less than 1% of class
(1) To the best of the Company's knowledge, based on information reported by
such directors and officers or contained in the Company's shareholder
records.
(2) Serves as a member of the Board of the Company.
(3) Includes options to purchase 10,500 shares of Common Stock, which are
presently exercisable or which are exercisable within 60 days of September
22, 2006.
(4) Includes options to purchase 27,000 shares of Common Stock, which are
presently exercisable or which are exercisable within 60 days of September
22, 2006.
(5) Includes options to purchase 23,500 shares of Common Stock, which are
presently exercisable or which are exercisable within 60 days of September
22, 2006.
(6) Includes options to purchase 24,000 shares of Common Stock, which are
presently exercisable or which are exercisable within 60 days of September
22, 2006.
(7) Includes options to purchase 10,500 shares of Common Stock, which are
presently exercisable or which are exercisable within 60 days of September
22, 2006.
(8) Includes options to purchase 452,534 shares of Common Stock, which are
presently exercisable or which are exercisable within 60 days of September
22, 2006.
(9) Represents options to purchase 16,000 shares of Common Stock, which are
presently exercisable or which are exercisable within 60 days of September
22, 2006.
(10) Represents options to purchase 7,500 shares of Common Stock, which are
presently exercisable or which are exercisable within 60 days of September
22, 2006.
(11) Includes options to purchase 97,500 shares of Common Stock, which are
presently exercisable or which are exercisable within 60 days of September
22, 2006.
(12) Includes options to purchase 91,750 shares of Common Stock, which are
presently exercisable or which are exercisable within 60 days of September
22, 2006.
(13) Includes options to purchase 138,500 shares of Common Stock, which are
presently exercisable or which are exercisable within 60 days of September
22, 2006.
(14) Includes options to purchase 899,284 shares of Common Stock, which are
presently exercisable or which are exercisable within 60 days of September
22, 2006.
8
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's directors,
its executive (and certain other) officers, and any persons holding more than
ten percent of the Common Stock are required to report their ownership of the
Common Stock and any changes in that ownership to the SEC. Directors, officers
and greater than ten percent shareholders are required by the SEC to furnish the
Company with copies of all Section 16(a) reports they file. Specific due dates
for these reports have been established and the Company is required to report in
this proxy statement any failure to file by these dates during the Company's
last fiscal year. To the Company's knowledge, all of these filing requirements
were satisfied during the Company's last fiscal year by the Company's officers,
directors and ten percent shareholders, except to the extent previously reported
in a Company proxy statement. In making this statement, the Company has relied
solely on the written representations of its directors, officers and ten percent
shareholders and copies of the reports that have been filed with the SEC.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS
Effective September 1, 2006, all of the members of the Board who are not
employed by the Company (the "Eligible Directors") will receive (i) an annual
cash retainer of $20,000 for serving on the Board, paid quarterly in the amount
of $5,000, (ii) an annual committee retainer of $3,000 for serving on each
committee, paid quarterly in the amount of $750, (iii) an annual committee chair
retainer (other than Audit Committee) of $5,000, paid in quarterly installments
of $1,250 and in lieu of the annual committee retainer, (iv) an annual Audit
Committee chair retainer of $8,000, paid quarterly in the amount of $2,000 and
in lieu of the annual committee retainer and (v) an annual lead director
retainer of $5,000, paid quarterly in the amount of $1,250 and in addition to
any other retainer. All Eligible Directors receive $1,250 for each Board meeting
attended. In addition, directors are reimbursed for their out-of-pocket expenses
incurred in attending Board and committee meetings.
Eligible Directors are also eligible to participate in the Company's 2004
Stock Incentive Plan (the "2004 Plan"), which replaced the Directors Stock
Option Plan (the "Directors Plan"). The Management Development Committee or, if
there is no such committee or similar committee, the Board, administers the 2004
Plan. Unless otherwise specified in the 2004 Plan, the Management Development
Committee has the power to select the recipients of awards under the 2004 Plan,
including Eligible Directors, and has broad power to determine the terms of
awards and to change such terms in various ways subsequent to grant. The 2004
Plan permits grants to Eligible Directors of nonqualified stock options, indexed
options, restricted stock, restricted stock units, stock appreciation rights,
performance share awards, including cash, and deferred stock units at any time
prior to October 22, 2014. The exercise price for a nonqualified stock option,
other than an indexed option, will be not less than 100% of the fair market
value of Common Stock on the date of grant. Fair market value means for purposes
of determining the value of Common Stock on the grant date the average of the
closing sales prices of the Common Stock on Nasdaq (or, if there have been no
sales on Nasdaq on any such day, the average of the closing high bid and low
asked prices on Nasdaq at the end of such day) for the five (5) consecutive
trading days on Nasdaq immediately preceding the grant date. No stock grants
were made to Eligible Directors in the fiscal year ended June 30, 2006 under the
2004 Plan. On September 1, 2006, each Eligible Director received nonqualified
stock options to purchase 8,000 shares, vesting one-fourth on each of the first
four anniversaries of the date of grant. The exercisability of such options is
accelerated in the event of the occurrence of certain changes in control of the
Company. See "Further Information - Compensation of Directors and Executive
Officers - Executive Officers - Employment Agreements, Termination of Employment
and Change in Control Arrangements". In addition, such options become
immediately exercisable in the event that the Eligible Director's service on the
Board is terminated by the Company, he is not re-nominated by the Company to
serve on the Board or, if re-nominated, is not re-elected, or voluntarily
resigns from the Board at the request of the Company. All options granted under
the 2004 Plan are exercisable for a period of ten years from the date of grant,
unless earlier terminated due to the termination of the Eligible Director's
service as a director of the Company.
9
The 2004 Plan also permits Eligible Directors to purchase shares of Common
Stock through the 2004 Plan in exchange for all or a portion of the cash fees
payable to them for serving as a director of the Company ("Directors Stock
Purchase Rights Option"). By December 31 of each year, a director must make his
or her election to purchase shares of Common Stock in exchange for all or a
portion of a director's fees payable from December 1 of that year to December 1
of the next year.
Directors fees are payable in cash on March 1, June 1, September 1 and
December 1 of each year. On each of these dates, the Company will determine the
number of shares of Common Stock each Director who has elected to participate in
the Directors Stock Purchase Rights Option has earned on that date. This
determination will be made by dividing all director's fees payable on each of
those dates which the Director has elected to exchange for Common Stock, by the
fair market value of the Common Stock on that date. Any portion of the
director's fees payable on each of those dates which the Director has not
elected to receive in Common Stock will be paid to the Director in cash. The
fair market value of the Common Stock will be determined by using the average of
the closing sales price of the Common Stock on the Nasdaq for the five
consecutive trading days immediately preceding the date of determination. The
Company will issue share certificates for all shares of Common Stock purchased
in a calendar year by December 15th of such year unless a director requests by
written notice to the Company to receive his or her share certificate at any
time during the year.
The Directors Plan was cancelled as to future grants beginning on the day
following the 2004 Annual Meeting of Shareholders. Prior to such cancellation,
all Eligible Directors who were first elected or appointed after February 9,
1995 received an Option to purchase 15,000 shares of Common Stock on the date of
his election or appointment ("Initial Option"). In addition, each Eligible
Director who was a director for six months before the date of each Annual
Meeting of Shareholders held during the term of the Directors Plan automatically
was granted, as of the date of such Annual Meeting, including the 2004 Annual
Meeting, an option to purchase an additional 3,000 shares of Common Stock (an
"Annual Option"). The exercise price of options granted under the Directors Plan
was determined by using the average of the closing sales price of the Common
Stock on the Nasdaq for the last five (5) consecutive trading days on the Nasdaq
immediately preceding the date of grant. Each option granted under the Directors
Plan as an Initial Option became exercisable in full on the first anniversary of
the date of grant. Options granted as Annual Options became exercisable in three
annual increments of 33 1/3% of the shares subject to the option. The
exercisability of such options is accelerated in the event of the occurrence of
certain changes in control of the Company and certain terminations of the
Eligible Director's services as a member of the Board. All options granted under
the Directors Plan are exercisable for a period of ten years from the date of
grant, unless earlier terminated due to the termination of the Eligible
Director's service as a director of the Company. In addition, prior to the
approval of the 2004 Plan, Eligible Directors could purchase shares of Common
Stock through the Directors Plan in exchange for all or a portion of the cash
fees payable to them for serving as a director of the Company, on terms similar
to the Directors Stock Purchase Rights Option.
EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table sets forth certain information as to compensation paid
by the Company for services rendered in all capacities to the Company and its
subsidiaries during the fiscal years ended June 30, 2006, June 30, 2005 and June
30, 2004 to (i) the Company's Chief Executive Officer and (ii) the Company's
executive officers at June 30, 2006 (other than the Chief Executive Officer)
whose aggregate annual salary and bonus exceeded $100,000.
10
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
-------------------------------------------- LONG-TERM
OTHER ANNUAL COMPENSATION AWARDS
COMPENSATION SECURITIES UNDER- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($)(1) LYING OPTIONS (#)(2) COMPENSATION ($)
--------------------------- ---- ---------- --------- ------------ -------------------- ----------------
Alfred A. Pease, President, 2006 308,700 38,535 0 25,000 15,640(3)
Chief Executive Officer and 2005 306,250 21,804 0 100,000 (50,000 of 15,867(4)
Chairman of the Board ....... which were cancelled
on 11/5/04(2)
2004 292,250 182,493 0 100,000 14,752(5)
Wilfred J. Corriveau, 2006 219,000 25,059 0 12,500 12,218(3)
Senior Vice President 2005 217,500 14,276 0 50,000(25,000 of 11,718(4)
Global Automotive Business .. which were cancelled
on 11/5/04(2)
2004 208,500 118,294 0 30,000 9,718(5)
John J. Garber, 2006 191,000 21,855 0 0 16,693(3)
Vice President Finance and 2005 186,917 12,509 0 30,000(15,000 of 10,693(4)
Chief Financial Officer ..... which were cancelled
on 11/5/04(2)
2004 179,500 104,553 0 20,000 9,693(5)
Harry T. Rittenour, 2006 169,000 19,338 0 12,500 9,883(3)
Senior Vice President Product 2005 167,833 11,013 0 50,000(25,000 of 6,883(4)
Production and Quality ...... which were cancelled
on 11/5/04(2)
2004 161,000 92,007 0 30,000 2,833(5)
----------
(1) Perquisites and other personal benefits were provided to all of the persons
named in the Summary Compensation Table. In accordance with SEC rules,
disclosure of such amounts is not required because such amounts were less
than 10% of the total annual salary and bonuses reported for each of the
respective individuals for each period presented.
(2) Included in the table are 50,000, 25,000, 15,000 and 25,000 options shares
granted to Messrs. Pease, Corriveau, Garber and Rittenour, respectively, in
fiscal 2005 that, because of a technical issue, they voluntarily cancelled
in fiscal 2005 and for which replacement options for 50,000, 25,000, 15,000
and 25,000 were issued to them, respectively, in fiscal 2005 on the same
terms.
(3) "All Other Compensation" is comprised of (i) contributions made by the
Company to the accounts of the named executive officers under the Company's
401(k) Plan with respect to the fiscal year ended June 30, 2006 as follows:
Mr. Pease $10,000; Mr. Corriveau $9,500; Mr. Garber $14,500; and Mr.
Rittenour $8,700; and (ii) the dollar value of any life insurance premiums
paid by the Company in the fiscal year ended June 30, 2006 with respect to
term life insurance for the benefit of the named executives as follows: Mr.
Pease $5,640; Mr. Corriveau $2,718; Mr. Garber $2,193; and Mr. Rittenour
$1,183.
(4) "All Other Compensation" is comprised of (i) contributions made by the
Company to the accounts of the named executive officers under the Company's
401(k) Plan with respect to the fiscal year ended June 30, 2005 as follows:
Mr. Pease $9,000; Mr. Corriveau $9,000; Mr. Garber $8,500; and Mr.
Rittenour $5,700; (ii) the dollar value of any life insurance premiums paid
by the Company in the fiscal year ended June 30, 2005 with respect to term
life insurance for the benefit of the named executives as follows: Mr.
Pease $6,867; Mr. Corriveau $2,718; Mr. Garber $2,193; and Mr. Rittenour
$1,183.
(5) "All Other Compensation" is comprised of (i) contributions made by the
Company to the accounts of the named executive officers under the Company's
401(k) Plan with respect to the fiscal year ended June 30, 2004 as follows:
Mr. Pease $8,000; Mr. Corriveau $7,000; Mr. Garber $7,500; and Mr.
Rittenour $1,650; (ii) the dollar value of any life insurance premiums paid
by the Company in the fiscal year ended June 30, 2004 with respect to term
life insurance for the benefit of the named executives as follows: Mr.
Pease $6,752; Mr. Corriveau $2,718; Mr. Garber $2,193; and Mr. Rittenour
$1,183.
11
GRANTS OF OPTIONS
The following tables set forth certain information concerning individual
grants of stock options to each of the persons named in the Summary Compensation
Table made during the fiscal year ended June 30, 2006. All grants described in
the following tables were made under the Company's 2004 Plan and become
immediately exercisable in the event of a Change in Control. See "Further
Information -- Compensation of Directors and Officers -- Executive Officers --
Termination of Employment and Change in Control Arrangements".
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------ VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF STOCK
SECURITIES PERCENT OF TOTAL PRICE APPRECIATION FOR
UNDERLYING OPTIONS GRANTED EXERCISE OR OPTION TERM (3)
OPTION TO EMPLOYEES IN BASE PRICE EXPIRATION ----------------------
NAME GRANTED (#) FISCAL YEAR (1) ($/SH) DATE (2) 5%($) 10%($)
---- ----------- ---------------- ----------- ---------- ------- -------
Alfred A. Pease ....... 25,000(4) 10.26% 6.98 1/1/2016 109,704 277,990
Wilfred J. Corriveau .. 12,500(5) 5.13% 6.98 1/1/2016 54,852 138,995
John J. Garber ........ 0 -- -- -- -- --
Harry T. Rittenour .... 12,500(5) 5.13% 6.98 1/1/2016 54,852 138,995
----------
(1) Options to purchase a total of 243,675 shares of Common Stock were granted
to team members in the fiscal year ended June 30, 2006.
(2) Options expire on the date indicated, or, if earlier, one year after the
optionee's death or permanent disability or three months after the
optionee's termination of employment.
(3) Represents the value of such options at the end of its ten year term
(without discounting to present value) assuming the market prices of the
Common Stock appreciates from the grant date at an annually compounded rate
of 5% or 10%. These amounts represent rates of appreciation only. Actual
gains, if any, will be dependent on overall market conditions and on the
future performance of the Common Stock. There can be no assurance that the
amounts reflected in this table will be achieved.
(4) Consists of 25,000 nonqualified stock options that become exercisable in
four annual installments of 6,250 shares of Common Stock beginning on
January 2, 2007.
(5) Consists of 12,500 nonqualified stock options that become exercisable in
four annual installments of 3,125 shares of Common Stock beginning on
January 2, 2007.
EXERCISE AND VALUE OF OPTIONS
The following tables set forth certain information concerning exercises of
stock options during the fiscal year ended June 30, 2006 by each of the persons
named in the Summary Compensation Table and the number of and the value of
unexercised stock options held by such persons as of June 30, 2006 on an
aggregated basis.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES VALUE FISCAL YEAR-END (#) FISCAL YEAR-END ($)(1)
ACQUIRED ON REALIZED --------------------------- ---------------------------
NAME EXERCISE (#) ($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ -------- ----------- ------------- ----------- -------------
Alfred A. Pease ....... 0 0 402,534 125,000 1,983,797 239,875
Wilfred J. Corriveau .. 0 0 77,500 52,500 343,113 104,238
John J. Garber ........ 0 0 79,250 25,000 311,520 55,938
Harry T. Rittenour .... 6,000 8,280 124,500 52,500 471,008 104,238
----------
(1) Represents the total gain which would have been realized if all such
options had been exercised on June 30, 2006.
(2) Represents the fair market value of the shares of Common Stock relating to
exercised options, as of the date of exercise, less the exercise price of
such options.
12
EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
Mr. Pease serves in his present capacity pursuant to the terms of an
employment agreement. Mr. Pease's agreement provides for an annual base salary,
subject to increase at the discretion of the Management Development Committee,
reimbursement of reasonable monthly club dues, benefits comparable to the
Company's other executive officers, including life, disability and health
insurance and the use of a Company leased automobile, and an annual performance
bonus target level of 60% of his base salary.
The Company has also entered into severance agreements with Messrs. Pease,
Corriveau, Garber and Rittenour. The severance agreement between the Company and
Mr. Pease provides for, among other things, the payment of an amount of cash
severance equal to one times his current annual base salary, as in effect
immediately prior to his termination, a prorated portion of any bonus he would
have earned for the year of termination had Mr. Pease been employed by the
Company at the end of the applicable bonus period, and continuation of
Company-provided health, welfare and automobile benefits for one year. The
severance agreements between the Company and Messrs. Corriveau, Garber and
Rittenour provide for, among other things, the payment of an amount of severance
equal to six months of their current annual base salary, as in effect
immediately prior to their termination, a prorated portion of any bonus they
would have earned for the year of termination had they been employed by the
Company at the end of the applicable bonus period, and continuation of
Company-provided health, welfare and automobile benefits for six months.
Severance is payable to Messrs. Pease, Corriveau, Garber and Rittenour only if
they are terminated by the Company for any reason other than death, disability,
or cause (as defined in the severance agreements).
If the Company's executive officers are terminated by the Company for any
reason other than death, disability or cause, or they resign for "Good Reason",
six months prior to or within two years after a "Change in Control" of the
Company, in lieu of the severance described in the prior paragraph, Mr. Pease
will be entitled to an amount of severance equal to two times his current annual
base salary, as in effect immediately prior to his termination, a prorated
portion of his target bonus for the year of termination, based on the number of
days worked in the year of termination, continuation of Company-provided health
benefits until Mr. Pease becomes eligible for Medicare benefits and welfare and
automobile benefits for two years and continued coverage under director and
officer liability insurance policies, and Messrs. Corriveau, Garber and
Rittenour will be entitled to an amount of severance equal to one times their
current annual base salary, as in effect immediately prior to their termination,
a prorated portion of their target bonus for the year of termination, based on
the number of days worked in the year of termination, continuation of
Company-provided health, welfare and automobile benefits for one year and
continued coverage under director and officer liability insurance policies. The
special severance expires three years from the date of the severance agreement,
except that such expiration date shall be extended for consecutive one year
periods, unless, at least 180 days prior to the expiration date, the Company
notifies the executive in writing that it is not extending the term of these
provisions. "Good Reason" is generally defined as the occurrence of any of the
following events without the executive's written consent, if the executive
terminates employment within one year following the occurrence of such event:
(i) any reassignment of the executive to substantial duties materially
inconsistent with the executive's position, duties, responsibilities and status
with the Company immediately prior to the Change in Control or a substantial
diminution in the executive's position, duties, responsibilities or status with
the Company from his position, duties, responsibilities or status with the
Company immediately prior to the Change in Control; provided that the fact that
the Company is no longer a publicly traded company or the executive no longer
has duties and responsibilities associated exclusively with a publicly traded
company, such as SEC or stock exchange reporting responsibilities or investor or
analyst relations responsibilities, shall not be deemed to be a reassignment of
the executive to substantial duties materially inconsistent with the executive's
position, duties, responsibilities and status with the Company immediately prior
to the Change in Control or a substantial diminution in the executive's
position, duties, responsibilities or status with the Company from his position,
duties, responsibilities or status with the Company immediately prior to the
Change in Control; (ii) any reduction in the executive's base salary or targeted
incentive bonus or commissions in effect immediately prior to the Change in
Control, or failure by the Company to continue any bonus, stock or other
incentive plans in effect immediately prior to the Change in Control (without
the implementation of comparable successor plans that provide comparable award
opportunities/benefits), or any removal of the executive from participation in
such aforementioned plans; (iii) the discontinuance or reduction in benefits to
the executive under any qualified or nonqualified retirement or welfare plan
maintained by the Company immediately prior to the Change in Control (without
the implementation of comparable successor plans that provide comparable
benefits), or the discontinuance of any fringe benefits or other perquisites
that the Executive received immediately prior to the Change in Control (without
the implementation of
13
comparable successor plans that provide comparable benefits); (iv) required
relocation of the executive's principal place of employment more than 50 miles
from the executive's place of employment prior to the Change in Control; or (v)
the Company's breach of any provision in the severance agreements, provided that
the Company has not cured such breach within 10 days following written notice by
the executive to the Company of such breach.
Payments under the severance agreements, when aggregated with any other
"golden parachute" amounts (defined under Section 280G of the Internal Revenue
Code as compensation that becomes payable or accelerated due to a Change in
Control) payable under this Agreement or any other plans, agreements or policies
of the Company, shall not exceed the golden parachute cap under Sections 280G
and 4999 of the Internal Revenue Code.
Agreements relating to stock options granted under the 2004 Plan to each of
the executive officers named in the Summary Compensation Table, as well as stock
options granted under the 2004 Plan to other officers of the Company beginning
in fiscal 2006, provide that such options become immediately exercisable in the
event of a Change in Control.
Agreements relating to stock options granted under the 1992 Plan to each of
the executive officers named in the Summary Compensation Table, as well as stock
options granted under the 1992 Plan and stock options granted under the 2004
Plan prior to fiscal 2006 to other officers of the Company, also provide that
such options become immediately exercisable in the event that the optionee's
employment is terminated without cause, or there is a diminishment of the
optionee's responsibilities, following a Change in Control of the Company or,
if, in the event of a Change in Control, such options are not assumed by the
person surviving the Change in Control or purchasing the assets in the Change in
Control.
A "Change in Control" for purposes of the severance agreements, the 2004
Plan and the 1992 Plan is generally defined as a merger of the Company in which
the Company is not the survivor, certain share exchange transactions, the sale
or transfer of all or substantially all of the assets of the Company, or any
person or group of persons (as defined by Section 13(d) of the Exchange Act)
acquires more than 50% of the Common Stock.
MANAGEMENT DEVELOPMENT, COMPENSATION AND STOCK OPTION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
The Management Development, Compensation and Stock Option Committee of the
Board ("Management Development Committee") currently consists of Messrs.
Beattie, DeCocco and Marz. During fiscal 2006, no member of the Management
Development Committee served as an officer or employee of the Company or any of
its subsidiaries nor had any member of the Management Development Committee
formerly served as an officer of the Company or any of its subsidiaries. See
"Proposal 1 - Election of Directors". During fiscal 2006, none of the executive
officers of the Company served on the board of directors or on the compensation
committee of any other entity, any of whose executive officers served either on
the Board or on the Management Development Committee of the Company.
14
REPORT OF THE MANAGEMENT DEVELOPMENT,
COMPENSATION AND STOCK OPTION COMMITTEE
The Management Development Committee is responsible for the planning,
review and administration of the Company's executive compensation program and
the Company's stock-based executive compensation programs. During the fiscal
year ended June 30, 2006, all members of this Committee were non-employee
directors of the Company.
The Company's objective is to provide a superior return to its
shareholders. To support this objective, the Company believes it must attract,
retain and motivate top quality executive talent. The Company's executive
compensation program is a critical tool in this process.
The Company's executive compensation program has been designed to link
executive compensation to Company performance through at-risk compensation
opportunities, providing significant reward to executives who contribute to the
Company's success. The Company's executive compensation program consists of base
salary, annual cash profit sharing incentive opportunities and long-term
incentives represented by stock-based incentives. Further the Company believes
that stock-based incentives for team members, in addition to providing an
incentive for their continued employment, more closely align their interests
with those of the Company and its shareholders.
The base salary, annual cash profit sharing incentive opportunity,
stock-based incentives and other compensation terms for new executive officers
are established based upon each executive's qualifications, position and level
of responsibility as compared with the Company's other executives.
BASE SALARY
The Management Development Committee recognizes the importance of a
competitive compensation structure in retaining and attracting valuable senior
executives. Executive salary levels are reviewed and established annually. The
salaries received by the Company's executives generally reflect their levels of
responsibility, the profitability of the Company and other factors, such as
assessments of individual performance.
In fiscal 2006, the Management Development Committee did not increase the
base salary of Alfred A. Pease, Chairman of the Board, President and Chief
Executive Officer of the Company, or the Company's other executive officers. The
Management Development Committee deferred consideration of increases in base
salary until it had an opportunity to better evaluate the Company's progress in
implementing its long-term business strategy approved earlier in the year.
ANNUAL PROFIT SHARING
The Company's executive officers are eligible for annual cash profit
sharing incentive opportunities. Generally, at the beginning of each fiscal
year, the Management Development Committee develops a profit sharing plan
applicable to all executives of the Company, including the Chief Executive
Officer of the Company.
For fiscal 2006, the Management Development Committee adopted the Fiscal
Year 2006 Profit Sharing Plan, which applied to all team members of the Company,
including Mr. Pease and the other executive officers.
The Fiscal Year 2006 Profit Sharing Plan provided that the Company would
make a profit sharing payout only if the Company achieved earnings per share
("EPS") in excess of the Fiscal Year 2006 Profit Plan established by the Board
(the "EPS Bonus Component"). For performance in excess of that level, subject to
a cap, an increasing portion of each dollar of Company pre-tax earnings above
progressive earnings share targets would be added to the profit sharing pool.
The actual profit sharing pool earned under the Fiscal Year 2006 Profit
Sharing Plan was divided among team members in relation to their profit sharing
potential for the year. Each team member's profit sharing potential for the year
was stated as a percentage of their base salary. The level was 60% for Mr. Pease
and 55% for the other executive officers.
15
The executive officers of the Company, including Mr. Pease, were eligible
to earn 90% of the profit sharing payout based upon the level of EPS achieved by
the Company. The other 10% of their profit sharing payout was earned based upon
the percentage increase in the stock price of the Common Stock over a $7.50
stock price threshold, with the entire Stock Price Bonus earned at a $2.50
increase (the "Stock Price Bonus Component"). The Stock Price Bonus is
calculated using the average closing price of the Common Stock for the first
three trading days of fiscal 2007.
During fiscal 2006, the profit sharing pool earned under the EPS Bonus
Component was 20.7% of the team members' aggregate potential payout. The Common
Stock price increased over the threshold during fiscal 2006. Therefore, each of
the executive officer's, including Mr. Pease's, profit sharing potential level
increased to 20.8% of their aggregate potential payout as a result of the Stock
Price Bonus Component of the plan. Mr. Pease received a profit sharing payment
of 12.5% of his base salary level as of June 30, 2006 and the other executive
officers received a profit sharing payment of 11.4% of their base salary level
as of June 30, 2006. The "Annual Compensation - Bonus" column of the Summary
Compensation Table contained under "Compensation of Directors and Executive
Officers - Executive Officers - Summary Compensation Table" sets forth the
payments to the executive officers under the Company's annual profit sharing
plans.
No discretionary bonuses were paid to Mr. Pease or the other executive
officers in fiscal 2006.
STOCK-BASED INCENTIVES
The 2004 Stock Incentive Plan ("2004 Plan") permits the Management
Development Committee to grant indexed options, stock appreciation rights,
restricted stock, restricted stock units, performance share awards and deferred
stock units, in addition to incentive and non-qualified stock options. In fiscal
2006, the Management Development Committee reviewed the various stock-based
incentive alternatives available to the Company under the 2004 Plan as part of
its development of a program to provide appropriate long-term incentives to the
executive team and more closely align their interests with the Company and its
shareholders.
Based upon that review, the Management Development Committee determined to
use grants of non-qualified stock options as the Company's long-term stock
incentive program for the executive team. The Management Development Committee
also determined to continue its past practice of using non-qualified stock
options to motivate team members at other levels within the Company. In reaching
its decision, the Management Development Committee considered the tax impact of
each alternative form of stock grant on the Company and the team members, the
accounting treatment of each alternative, particularly under SFAS No. 123R,
"Share-Based Payment", the cash impact on the Company of each alternative and
the relevant level of incentive each alternative provides team members. The
decision to use non-qualified stock options was principally based upon the
Committee's determination that options provide greater incentive to team members
because of the beneficial tax treatment for team members as compared to other
alternatives and because team members are more familiar with this form of stock
incentive. The use of non-qualified stock options also will provide the Company
with a tax deduction upon exercise of the options not generally available with
incentive stock options. The Management Development Committee also believes that
the use of non-qualified stock options will allow them to develop an attractive
stock incentive program, while minimizing related accounting expense and
maximizing the positive impact on the Company's cash.
Stock option grants have historically been utilized by the Company as part
of its compensation program for all levels of team members, including the
Company's executives. The Company's stock option program permits team members to
buy a specific number of shares of Common Stock in the future, at the fair
market value of such shares on the date the option is granted. Since stock
options gain value only if the price of the Common Stock increases above the
option exercise price, this use of stock option grants reflects the Company's
philosophy of linking compensation to performance. In addition, the Committee
believes that stock option grants to team members help to provide an incentive
for their continued employment and otherwise more closely align their interests
with those of the Company and its shareholders. The Company also utilizes stock
options as part of its standard compensation package developed to attract highly
qualified candidates to the Company.
16
In fiscal 2006, Mr. Pease was granted options under the 2004 Plan to
purchase 25,000 shares of Common Stock. The grant reflected the Management
Development Committee's evaluation of Mr. Pease's performance since the
beginning of fiscal 2005, including his continued strong leadership of the
Company. The Committee also believed that an additional option grant to Mr.
Pease was appropriate to continue to more closely align his interests with those
of the Company and its shareholders.
In light of the changes in accounting for stock options, the Management
Development Committee determined to reduce the size of individual stock option
grants and to limit the team members to whom they are granted. With that in
mind, in fiscal 2006, the Management Development Committee generally reduced the
number of shares covered by each stock option grant to the executive team,
including Mr. Pease, to one half the number of shares covered by options granted
to them in fiscal 2005.
In fiscal 2006, the Management Development Committee also granted options
to purchase shares of Common Stock under the 2004 Plan to the other executive
officers of the Company, except for Mr. Garber. These executive officers
received grants of options to purchase 12,500 shares of Common Stock. These
option grants were made in recognition of the continued contributions these
executives were making to the execution of the Company's business strategy
implemented earlier in the year and to provide them continued incentive to
execute that strategy and remain with the Company on a long-term basis. The size
of the grants was made based on the Committee's desire to limit the number of
shares granted under the stock incentive program and its evaluation of the
contributions made by each of the executive officers.
Options granted to Mr. Pease and the other executive officers in fiscal
2006 become exercisable in four equal annual installments, beginning one year
from their date of initial grant, at an exercise price equal to the fair market
value of the Common Stock on the date of their initial grant.
SEVERANCE AGREEMENTS
In fiscal 2005, the Board, upon recommendation of the Management
Development Committee, authorized the implementation of formal Severance
Agreements for the Company's executive officers. The terms of the Severance
Agreements are described under "Compensation of Directors and Executive Officers
- Executive Officers - Employment Agreements, Termination of Employment and
Change in Control Arrangements". The Board determined it appropriate to
formalize the Company's general severance policies and practices for its
executive team and at the same time institute enhanced severance arrangements
payable in the event of a termination of the executive's employment following a
Change in Control of the Company. The Board and Management Development Committee
believe that the enhanced severance arrangements are necessary in order to
provide executives with the appropriate incentives to act in the best interests
of the Company and its shareholders, without concern for their own personal
interests. The Management Development Committee, in developing its
recommendations to the Board, consulted with an outside compensation consultant
hired by the Committee and the Company's outside legal counsel. Based upon the
foregoing, the Management Development Committee believes that the Severance
Agreements contain terms and conditions which are comparable to those used by
other companies that are similar in size to the Company.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The Management Development Committee has reviewed the provisions of the
Internal Revenue Code and related regulations of the Internal Revenue Service
which restrict deductibility of executive compensation paid to the chief
executive officer and any of the four most highly compensated executive officers
at the end of the fiscal year to the extent such compensation exceeds $1,000,000
in any year.
The Board of the Company established certain restrictions on the granting
of options under the Company's 1992 Stock Option Plan and the 2004 Plan, which
replaces the 1992 Stock Option Plan, so that compensation realized in connection
with the stock-based grants under both plans would be exempt from the
restrictions on deductibility described above. The 1992 Stock Option Plan
restricted to 200,000 the number of shares of Common Stock that could be subject
to options granted to any salaried employee in any fiscal year. The 2004 Plan
restricts stock grants to any participant any fiscal year as follows: (i) up to
200,000 shares of Common Stock may be subject to stock option grants, (ii) up to
200,000 shares of Common Stock may be subject to stock appreciation right
grants, (iii) up to 200,000 shares of Common Stock may be subject to restricted
stock awards, and (iv) up to 200,000 shares of Common Stock may be subject to
performance share awards. It is important to note that while these restrictions
17
allow the Management Development Committee continuing discretion in establishing
executive officer compensation, they do limit such discretion by restricting the
size of stock awards which the Management Development Committee may grant to any
single individual. The permitted size of the stock awards to a single individual
was established based on the Committee's determination of the maximum number of
shares which would be required to be granted in any fiscal year to retain or
attract a chief executive officer of the Company.
The Board does not believe that other components of the Company's
compensation program are likely to result in payments to any executive officer
in any year which would be subject to the restriction on deductibility, and
therefore, concluded that no further action with respect to qualifying such
compensation for deductibility was necessary at this time. The Board will
continue to evaluate the advisability of qualifying future executive
compensation programs for deductibility under the Internal Revenue Code.
MANAGEMENT DEVELOPMENT, Philip J. DeCocco, Chairman
COMPENSATION AND STOCK David J. Beattie
OPTION COMMITTEE W. Richard Marz
18
STOCK PRICE PERFORMANCE GRAPH
Set forth below is a graph comparing the cumulative total shareholder
return on the Common Stock from June 30, 2001 through June 30, 2006 with an
index consisting of returns from a peer group of companies, consisting of Cognex
Corp., Cyberoptics Corporation, Integral Vision, Inc., and PPT Vision, Inc. (the
"Peer Group Index") and The Nasdaq Stock Market (U.S.) Index (the "Nasdaq
Composite Index"). Accuity Cimatrix, Inc. (formerly Robotic Vision Systems Inc.)
has filed for liquidation under the U.S. bankruptcy code and therefore has been
removed from the Peer Group Index. The returns of each company in the Peer Group
Index have been weighted according to their respective stock market
capitalization. The graph assumes that the value of the investment in the
Company's Common Stock, the Peer Group Index and the Nasdaq Composite Index was
$100 on June 30, 2001 and that all dividends were reinvested.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG PERCEPTRON INC., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND A PEER GROUP
(PERFORMANCE GRAPH)
* $100 invested on 6/30/01 in stock or index-including reinvestment of
dividends.
Fiscal year ending June 30.
CUMULATIVE TOTAL RETURN
---------------------------------------------------------
6/30/01 6/30/02 6/30/03 6/30/04 6/30/05 6/30/06
------- ------- ------- ------- ------- -------
Perceptron, Inc. 100 115 444 527 503 598
Nasdaq Stock Market (US) 100 70 78 99 99 106
Peer Group 100 60 63 116 76 75
The graph displayed above is presented in accordance with applicable legal
requirements. Shareholders are cautioned against drawing any conclusions from
the data contained in the graph, as past results are not necessarily indicative
of future performance. The graph in no way reflects the Company's forecast of
future financial performance.
19
INDEPENDENT ACCOUNTANTS
GENERAL
The accounting firm of Grant Thornton LLP ("Grant Thornton") has been
appointed by the Audit Committee to audit the consolidated financial statements
for the Company for the fiscal year ended June 30, 2007. Grant Thornton has
served as the Company's independent accountants since March 8, 2002.
Representatives of Grant Thornton are expected to be at the Annual Meeting and
to be available to respond to appropriate questions. Such representatives will
have the opportunity to make a statement at such meeting if they desire to do
so.
POLICY FOR PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES
The Audit Committee has adopted a policy regarding audit and non-audit
services that may be provided by the Company's independent accountants. The
policy sets forth the procedures and conditions pursuant to which services
proposed to be performed by the independent accountants may be pre-approved. The
policy provides that the Audit Committee will consider whether services to be
performed by the independent accountant are consistent with the SEC's rules on
auditor independence. In particular, the policy expressly names all services the
independent accountant may not perform and, in the case of other services,
requires the Audit Committee to consider whether the independent auditor is the
best positioned to provide the most effective and efficient service.
The policy provides that the Audit Committee will review and pre-approve
annually, and periodically thereafter as required, the services proposed to be
provided by the independent accountant in the categories of audit services,
audit related services, tax services and all other services. In addition, the
Audit Committee is to determine the appropriate ratio of audit, audit related
and tax services to all other services. The Audit Committee has delegated to the
chairman of the Audit Committee and, if he or she is unavailable, another member
of the Audit Committee, authority to pre-approve audit and non-audit services
proposed to be performed by the independent registered public accounting firm
not previously approved by the Audit Committee. Under the policy, the Audit
Committee is to be informed on a timely basis of services actually rendered by
the independent accountant, including those pre-approved by a member of the
Audit Committee. The chief financial officer of the Company is to immediately
report to the Chairman of the Audit Committee any breach of the policy.
All of the services described below under audit fees, audit-related fees,
tax fees and all other fees arising in the fiscal year ended June 30, 2005 and
2006 were approved by the Audit Committee pursuant to its pre-approval policies
and procedures prior to the service being provided. None of the audit-related
fees or tax fees described below arising in the fiscal years ended June 30, 2005
and 2006 were approved by the Audit Committee after the initiation of such
services pursuant to an exemption from the SEC's requirements relating to
approval of these types of services by the Audit Committee prior to the
provision of the service under Section 2.01(c)(7)(i)(C) of SEC Regulation S-X.
FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
AUDIT FEES. The aggregate fees billed by Grant Thornton for professional
services rendered for the audit of the Company's annual consolidated financial
statements, reviews of the consolidated financial statements included in the
Company's Forms 10-Q and other regulatory filings and preparation for a review
of the Company's internal controls over financial reporting design effectiveness
and procedures were $219,848 during fiscal 2006 and $194,520 during fiscal 2005.
AUDIT RELATED FEES. The aggregate fees billed by Grant Thornton for
professional services rendered for audit-related fees in fiscal 2005 were
$20,036 and related to the audits of the Company's 401(k) Plan and NIST grant
and review of a SEC comment letter. Grant Thornton did not render any such
services in fiscal year 2006. The Company has engaged another accounting firm to
audit the Company's 401(k) Plan for fiscal year 2006.
TAX FEES. The aggregate fees billed by Grant Thornton for preparation of
federal and state tax returns and miscellaneous tax-related services and advice
were $77,009 in fiscal 2006 and $46,070 in fiscal 2005.
ALL OTHER FEES. Grant Thornton did not render any such services in fiscal
years 2006 and 2005.
20
The Audit Committee of the Board does not consider the provision of the
services described above by Grant Thornton to be incompatible with the
maintenance of Grant Thornton's independence.
SHAREHOLDER PROPOSALS AND NOMINEES FOR 2007 ANNUAL MEETING
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the 2007 annual meeting
which are eligible for inclusion in the Company's proxy statement for that
meeting under Rule 14a-8 promulgated under the Exchange Act, must be received by
the Secretary of the Company at 47827 Halyard Drive, Plymouth, MI 48170, no
later than June 11, 2007 in order to be considered for inclusion in the
Company's Proxy Statement relating to that meeting. In order to curtail
controversy as to the date on which a proposal was received by the Company, it
is suggested that proposals be submitted by certified mail, return receipt
requested.
Shareholder proposals intended to be presented at the 2007 annual meeting
which are not eligible for inclusion in the Company's proxy statement for that
meeting under Rule 14a-8 are considered untimely under Rule 14a-5 promulgated
under the Exchange Act unless received by the Secretary of the Company at the
Company's offices no later than August 24, 2007 and the Company expects the
persons named as proxies for the 2007 annual meeting to use their discretionary
voting authority, to the extent permitted by law, with respect to any proposal
considered untimely at the 2007 annual meeting.
SHAREHOLDER NOMINEES
Shareholders desiring to recommend candidates for consideration and
evaluation by the Nominating and Corporate Governance Committee for the 2006
Annual Meeting should submit such recommendations in writing to the Nominating
and Corporate Governance Committee, c/o General Counsel, Perceptron, Inc., 47827
Halyard Drive, Plymouth, MI 48170 no later than May 11, 2007.
The recommendation should be accompanied by the following: (i) the name,
address, e-mail address (if any), and telephone number of the shareholder, the
number of shares of the Company's Common Stock beneficially owned by the
shareholder and proof of the shareholder's beneficial ownership of the Company's
Common Stock by one of the means set forth in Item 7(d)(2)(ii)(L) of SEC
Schedule 14A; (ii) the name, address, e-mail address (if any) and telephone
number of the proposed nominee and the number of shares of the Company's Common
Stock beneficially owned by the nominee; (iii) a detailed description of the
proposed nominee's business, professional, public, academic, scientific or
technological experience and other qualifications for Board membership,
including the name and address of other businesses for which the proposed
nominee has provided services, or for which he or she has served as a director,
in the last five years, a description of the proposed nominee's specific
experience in such position and the proposed nominee's academic achievements;
(iv) a description of any potential conflicts between the interests of the
Company and its shareholders and the proposed nominee; (v) a written agreement
by the proposed nominee to serve as a member of the Company's Board if nominated
and elected; and (vi) a written representation by the shareholder and the
proposed nominee that the proposed nominee is not an affiliate or affiliated
party with respect to the shareholder. The General Counsel will forward any
recommendations to the Nominating and Corporate Governance Committee. The
nominating shareholder and proposed nominee may be requested to provide
additional information regarding the shareholder or the proposed nominee and to
attend one or more interviews, in each case, as requested by the Board or
Nominating and Corporate Governance Committee.
See "Proposal 1 - Election of Directors - Board of Directors and
Committees" for a description of the standards used by the Nominating and
Corporate Governance Committee to evaluate candidates recommended by
shareholders of the Company.
OTHER MATTERS
At the date of this Proxy Statement, the Board is not aware of any matters
to be presented for action at the Annual Meeting other than those described
above. However, if any other matters requiring a shareholder vote properly come
before the meeting, it is the intention of the persons named in the accompanying
proxy to vote such proxy in accordance with their best judgment, to the extent
permitted by law, on such matters.
21
ANNUAL MEETING OF SHAREHOLDERS OF
PERCEPTRON, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF PERCEPTRON, INC.
The undersigned shareholder hereby appoints ALFRED A. PEASE, JOHN J. GARBER and
DAVID W. GEISS, or any one of them, the attorney and proxies of the undersigned,
with power of substitution, to vote all shares of common stock of Perceptron,
Inc. standing in the name of the undersigned at the close of business on
September 22, 2006 at the Annual Meeting of Shareholders of the Company to be
held on Monday, November 13, 2006 at 9:00 a.m., local time, and at any and all
adjournments thereof, with all the powers the undersigned would possess if then
and there present.
The shareholder instructs the proxies to vote as specified on this proxy on the
matters described in the Proxy Statement dated October 6, 2006. Proxies will be
voted as instructed.
IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
COMPANY'S NOMINEES AS DIRECTORS (INCLUDING THE ELECTION OF ANY PERSON FOR THE
BOARD OF DIRECTORS WHERE A NOMINEE NAMED IN THE PROXY STATEMENT IS UNABLE OR,
FOR GOOD CAUSE, WILL NOT SERVE).
DISCRETIONARY AUTHORITY IS HEREBY CONFERRED AS TO ANY OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE ANNUAL MEETING. THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF
THE 2006 ANNUAL REPORT, AND THE PROXY STATEMENT AND NOTICE OF SAID MEETING BOTH
DATED OCTOBER 6, 2006.
ADDRESS CHANGES: _______________________________________________________________
________________________________________________________________________________
(If you noted any Address Changes above, please mark SEE REVERSE
corresponding box on the reverse side.) SIDE
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting
instructions and for electronic delivery
of information up until 11:59 P.M.
Eastern Time the day before the cut-off
date or meeting date. Have your proxy
card in hand when you access the web
site and follow the instructions to
obtain your records and to create an
electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE
SHAREHOLDER COMMUNICATIONS
If you would like to reduce the costs
incurred by Perceptron, Inc. in mailing
PERCEPTRON, INC. proxy materials, you can consent to
47827 HALYARD DRIVE receiving all future proxy statements,
PLYMOUTH, MI 48170 proxy cards and annual reports
electronically via e-mail or the
Internet. To sign up for electronic
delivery, please follow the instructions
above to vote using the
Internet and, when prompted, indicate
that you agree to receive or access
shareholder communications
electronically in future years.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit
your voting instructions up until 11:59
P.M. Eastern Time the day before the
cut-off date or meeting date. Have your
proxy card in hand when you call and
then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and
return it in the postage-paid envelope
we have provided or return it to
Perceptron, Inc., c/o ADP, 51 Mercedes
Way, Edgewood, NY 11717.
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
PAGE 2 OF 2
TO VOTE, MARK BLOCKS BELOW IN
BLUE OR BLACK INK AS FOLLOWS: [X] PERCP1 KEEP THIS PORTION FOR YOUR RECORDS
----------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
02
VOTE ON DIRECTORS
1. ELECTION OF DIRECTORS FOR WITHHOLD FOR ALL To withhold authority to
Directors recommend a vote ALL ALL EXCEPT vote for any individual
for the following nominees nominee, mark "For All
to hold office until the Except" and write the
Annual Meeting of Shareholders nominee's name on the
in 2007. line below.
[ ] [ ] [ ] ________________________
NOMINEES:
01. David J. Beattie
02. Kenneth R. Dabrowski
03. Philip J. DeCocco
04. W. Richard Marz
05. Robert S. Oswald
06. Alfred A. Pease
07. James A. Ratigan
08. Terryll R. Smith
BROKERS EXECUTING PROXIES SHOULD INDICATE THE NUMBER OF SHARES WITH RESPECT TO WHICH AUTHORITY IS
CONFERRED BY THIS PROXY IF LESS THAN ALL SHARES HELD AS NOMINEES ARE TO BE VOTED.
PLEASE EXECUTE AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE PROMPTLY.
NOTE: Please sign exactly as your name or names appear(s) on this Proxy. When shares are held
jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or
guardian, please give full title as such. If the signer is a corporation, please sign full corporate
name by duly authorized officer, giving full title as such. If signer is a partnership, please sign
in partnership name by authorized person.
For address changes, please check this box
and write them on the back where indicated. [ ]
-------------------- -------- -------------- -------
Signature [PLEASE DATE Signature DATE
SIGN WITHIN BOX] (Joint Owners)