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UNITED STATES |
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SECURITIES AND EXCHANGE COMMISSION |
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Washington, D.C. 20549 |
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SCHEDULE 14A INFORMATION |
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Proxy
Statement Pursuant to Section 14(a) of |
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Filed by the Registrant ý |
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Filed by a Party other than the Registrant o |
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Check the appropriate box: |
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
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Electro Scientific Industries, Inc. |
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(Name of Registrant as Specified In Its Charter) |
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N/A |
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant) |
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Payment of Filing Fee (Check the appropriate box): |
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. |
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Title of each class of securities to which transaction applies: |
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
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Fee paid previously with preliminary materials. |
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
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Amount Previously Paid: |
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Form, Schedule or Registration Statement No.: |
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Persons who 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. |
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October 12, 2004
Mr. Ed Corrao
Fidelity Investments
Legal Dept. - Proxy Group
82 Devonshire Street - F7C
Boston, MA 02109
Re: Electro Scientific Industries, Inc. (the “Company”)
Dear Mr. Corrao:
Thank you for your October 6, 2004 email expressing Fidelity’s concerns with respect to the provisions of the Company’s 2004 Stock Incentive Plan (the “2004 Plan”) and Amended and Restated 2000 Stock Option Incentive Plan (the “2000 Plan”) being submitted for shareholder approval at the Company’s 2004 Annual Meeting. As you know, if both plans are approved, the 2004 Plan will supersede the 2000 Plan.
Management believes the Company can adequately address Fidelity’s concerns as follows:
1. Management agrees to recommend to the Compensation Committee of the Company’s Board of Directors at its next regularly scheduled meeting following the 2004 Annual Meeting an amendment to the appropriate plan prohibiting option grants with an exercise price less than fair market value on the date of grant.
2. Management agrees to recommend to the Compensation Committee that the appropriate plan be amended to require that time-based awards have a minimum vesting period of three years, with the subject shares vesting no more quickly than one-third annually over the three-year period.
3. We understand your concern about the plans not providing for automatic grants to independent directors. Those provisions were intentionally omitted. The Company believes, given the unsettled accounting environment with respect to equity compensation, that it is in the interest of shareholders to be able to change the type of awards made to independent directors without first obtaining shareholder approval. This flexibility will allow the Company to switch from one type of award to another if doing so is prudent from an accounting or tax standpoint. The Company has corporate governance policies in place that it believes will prevent compensation abuses. Independent director compensation must be approved by the
Compensation Committee of the Board of Directors, which is advised by a nationally recognized compensation consultant with respect to the types and levels of compensation paid to independent directors of peer companies. Management agrees to recommend to the Compensation Committee that the committee agree to determine compensation for independent directors consistent with the compensation levels of the Company’s peer group.
4. Section 5.3 of each plan expressly prohibits the repricing or exchange of underwater options. Management agrees to recommend to the Compensation Committee an amendment to the appropriate plan prohibiting the reservation of additional shares without shareholder approval.
Sincerely,
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/s/ J. Michael Dodson |
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J. Michael Dodson, |
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Senior Vice President of Administration, |
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Chief Financial Officer and Secretary |
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