SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
WATERS CORPORATION
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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)(1) 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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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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[LOGO] Waters
April 2, 2002
Dear Stockholder:
On behalf of the Board of Directors, I cordially invite you to attend the
Annual Meeting of Stockholders of Waters Corporation ("Waters" or the
"Company") on May 7, 2002 at 11:00 a.m., local time. The meeting will be held
at Waters Corporation, 34 Maple Street, Milford, Massachusetts 01757.
The matters scheduled to be considered at the meeting are (i) the election
of directors of the Company and (ii) the ratification of the actions of the
directors in amending the Second Amended and Restated 1996 Long-Term
Performance Incentive Plan to increase the number of common shares reserved for
issuance thereunder from 12,000,000 to 19,000,000 shares. These matters are
more fully explained in the attached Proxy Statement which you are encouraged
to read.
The Board of Directors values and encourages stockholder participation. It
is important that your shares be represented, whether or not you plan to attend
the meeting. Please take a moment to sign, date and return your Proxy in the
envelope provided even if you plan to attend the meeting.
We hope you will be able to attend the meeting.
Sincerely,
/s/ Douglas Berthiaume
Douglas A. Berthiaume
Chairman, and
Chief Executive Officer
[LOGO] Waters
WATERS CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the Annual Meeting of Stockholders of Waters
Corporation ("Waters" or the "Company") will be held at Waters Corporation, 34
Maple Street, Milford, Massachusetts 01757 on May 7, 2002 at 11:00 a.m., local
time, for the following purposes:
1. To elect directors to serve for the ensuing year and until their
successors are elected,
2. To ratify the actions of the directors in amending the Second Amended
and Restated 1996 Long-Term Performance Incentive Plan to increase the
number of shares of common stock, $.01 par value per share, reserved for
issuance thereunder from 12,000,000 to 19,000,000 shares.
3. To consider and act upon any other matters which may properly come
before the meeting or any adjournment thereof.
In accordance with the provisions of the Company's bylaws, the Board of
Directors has fixed the close of business on March 19, 2002 as the record date
for the determination of the holders of Common Stock entitled to notice of and
to vote at the Annual Meeting.
By order of the Board of Directors
/s/ Douglas Berthiaume
Douglas A. Berthiaume
Chairman, and
Chief Executive Officer
Milford, Massachusetts
April 2, 2002
WATERS CORPORATION
34 Maple Street
Milford, Massachusetts 01757
PROXY STATEMENT
Annual Meeting of Stockholders
May 7, 2002, 11:00 a.m.
The Proxy is solicited by the Board of Directors of Waters Corporation
("Waters" or the "Company") for use at the 2002 Annual Meeting of Stockholders
to be held on May 7, 2002 at 11:00 a.m. at the Company's headquarters located
at 34 Maple Street, Milford, Massachusetts, 01757. Solicitation of the Proxy
may be made through officers and regular employees of the Company by telephone
or by oral communications with some stockholders following the original
solicitation period. No additional compensation will be paid to such officers
and regular employees for Proxy solicitation. Georgeson Shareholders
Communications Inc. has been hired by the Company to do a broker solicitation
for a fee of $5,500 plus reasonable out-of-pocket expenses. Expenses incurred
in the solicitation of Proxies will be borne by the Company.
VOTING MATTERS
The representation in person or by proxy of a majority of the outstanding
shares of common stock of the Company, par value $.01 per share (the "Common
Stock"), entitled to a vote at the meeting is necessary to provide a quorum for
the transaction of business at the meeting. Shares can only be voted if the
stockholder is present in person or is represented by a properly signed proxy
(a "Proxy"). Each stockholder's vote is very important. Whether or not you plan
to attend the meeting in person, please sign and promptly return the enclosed
Proxy card, which requires no postage if mailed in the United States. All
signed and returned Proxies will be counted towards establishing a quorum for
the meeting, regardless of how the shares are voted.
Shares represented by Proxy will be voted in accordance with your
instructions. You may specify your choice by marking the appropriate box on the
Proxy card. If your Proxy card is signed and returned without specifying
choices, your shares will be voted in favor of the proposals made by the Board
of Directors, and as the individuals named as Proxy holders on the Proxy deem
advisable on all other matters as may properly come before the meeting.
Any stockholder giving the enclosed Proxy has the power to revoke such Proxy
prior to its exercise either by voting by ballot at the meeting, by executing a
later-dated Proxy or by delivering a signed written notice of the revocation to
the office of the Secretary of the Company before the meeting begins. The Proxy
will be voted at the meeting if the signer of the Proxy was a stockholder of
record on March 19, 2002 (the "Record Date").
Representatives of the Company's independent accountants (or independent
auditors), PricewaterhouseCoopers LLP, are expected to be present at the Annual
Meeting of Stockholders. They will have the opportunity to make statements if
they desire to do so and will be available to respond to appropriate questions.
On the Record Date, there were 130,937,141 shares of Common Stock
outstanding and entitled to vote at the meeting. Each outstanding share of
Common Stock is entitled to one vote. This Proxy Statement is first being sent
to the stockholders on or about April 2, 2002. A list of the stockholders
entitled to vote at the meeting will be available for inspection at the meeting
for purposes relating to the meeting.
MATTERS TO BE ACTED UPON
1. Election of Directors
The Board of Directors recommends that the stockholders vote FOR each
nominee for director set forth below. Eight directors are to be elected at the
meeting, each to hold office until his successor is elected and
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qualified or until his earlier resignation, death or removal. Each nominee
listed below is currently a director of the Company. It is intended that the
Proxies in the form enclosed with this Proxy Statement will be voted for the
nominees set forth below unless stockholders specify to the contrary in their
Proxies or specifically abstain from voting on this matter.
The following information pertains to the nominees, their principal
occupations for the preceding five-year period, certain directorships and their
ages as of April 2, 2002:
Douglas A. Berthiaume, 53, has served as Chairman of the Board of Directors
of the Company since February 1996 and has served as President, Chief Executive
Officer and a Director of the Company since August 1994. From 1990 to 1994, Mr.
Berthiaume served as President of the Waters Chromatography Division of
Millipore Corporation, the predecessor business of the Company, which was
purchased in 1994. Mr. Berthiaume is a Director of the Children's Hospital
Trust, the Analytical & Life Science Systems Association and Genzyme
Corporation.
Joshua Bekenstein, 43, has served as a Director of the Company since August
1994. He has been a Managing Director of Bain Capital, Inc. since January 1993
and a General Partner of Bain Venture Capital since its inception in 1987. Mr.
Bekenstein is a Director of Sealy Corporation, Shoppers Drug Mart, and Bright
Horizons Family Solutions, Inc.
Michael J. Berendt, Ph.D., 53, has served as a Director of the Company since
March 1998. Since November 2000, Dr. Berendt has served as Managing Director,
Life Sciences Group, of AEA Investors Inc. ("AEA"). Prior to joining AEA, Dr.
Berendt was Senior Vice President of Research for the Pharmaceutical Division
of Bayer Corporation from November 1996 to November 2000. From January 1996 to
November 1996, Dr. Berendt served as Vice President, Institute for Bone & Joint
Disorders and Cancer, Bayer Corporation, Pharmaceutical Division. From October
1993 to January 1996, Dr. Berendt served as Director, Institute for Bone &
Joint Disorders and Cancer, Bayer Corporation, Pharmaceutical Division. Prior
to joining Bayer, Dr. Berendt served as Group Director of Drug Discovery at
Pfizer, Inc., and was responsible for immunology pulmonary, inflammation and
antibiotic research. Dr. Berendt has served as a member of the Board of
Directors of Onyx Pharmaceuticals, Inc. and Myriad Genetics, Inc.
Philip Caldwell, 82, has served as a Director of the Company since August
1994. Mr. Caldwell spent 32 years at Ford Motor Company where he served as
Chairman of the Board of Directors and Chief Executive Officer from 1980 to
1985 and as a Director from 1973 to 1990. He served as a Director and Senior
Managing Director of Lehman Brothers Inc. and its predecessor, Shearson Lehman
Brothers Holdings, Inc. from 1985 to February 1998. Mr. Caldwell is also a
Director of Mettler-Toledo International Inc., the Mexico Fund and Russell
Reynolds Associates, Inc. Mr. Caldwell has also served as a Director of the
Chase Manhattan Bank, N.A., the Chase Manhattan Corporation, Digital Equipment
Corporation, Federated Department Stores, Inc., Kellogg Company, CasTech
Aluminum Group, Inc., Specialty Coatings International, Inc., American
Guarantee & Liability Insurance Company, Zurich Holding Company of America,
Inc. and Zurich Reinsurance Centre Holdings, Inc.
Edward Conard, 45, has served as a Director of the Company since August
1994. Mr. Conard has been a Managing Director of Bain Capital, Inc. since March
1993. Mr. Conard was previously a Director of Wasserstein Perella and Company,
an investment banking firm that specializes in mergers and acquisitions, and a
Vice President of Bain & Company heading up the firm's operations practice
area. Mr. Conard is a Director of Dynamic Details, Inc., ChipPAC, Inc., Medical
Specialties Group, Inc., Alliance Laundry, Inc., US Synthetic, Inc., and Broder
Brothers.
Laurie H. Glimcher, M.D., 50, has served as a Director of the Company since
January 1998. Dr. Glimcher has been a Professor of Immunology and Medicine at
the Harvard School of Public Health and Harvard Medical School since 1990. Dr.
Glimcher is a Director of Bristol-Myers Squibb Company.
William J. Miller, 56, has served as a Director of the Company since January
1998. Mr. Miller is an independent investor and consultant. From April 1996 to
November 1999, Mr. Miller served as Chief Executive
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Officer and Chairman of the Board of Avid Corporation and from September 1996
to January 1999, he served as President. From March 1992 to September 1995, Mr.
Miller served as Chief Executive Officer of Quantum Corporation. From May 1992,
Mr. Miller served as a member of the Board of Directors of Quantum Corporation
and from September 1993 to August 1995, he served as Chairman of the Board of
Directors. From 1981 to March 1992, he served in various positions at Control
Data Corporation, most recently as Executive Vice President and President,
Information Services. Mr. Miller is a Director of NVidia Corporation and ESPS,
Inc.
Thomas P. Salice, 42, has served as a Director of the Company since July
1994. Mr. Salice is President, Chief Executive Officer and a Director of AEA
Investors Inc. ("AEA") and has served with AEA since June 1989. Prior to his
association with AEA, Mr. Salice held positions in the investment banking
divisions of First Boston Corp. and Lehman Brothers. Mr. Salice served on the
Board of Directors of CasTech Aluminum Group and Manchester Tank & Equipment,
and is currently a director of Mettler-Toledo International, Inc. and Sovereign
Specialty Chemicals, Inc.
Required Vote; Recommendation of the Board of Directors
With respect to the election of directors of the Company, the affirmative
vote of a plurality of shares present in person or represented by Proxy, and
entitled to vote on the matter, is necessary for the election of each of the
nominees for director listed above (i.e. the nominees receiving the greatest
number of votes cast will be elected). Withholding authority to vote for the
election of a nominee will be treated as shares present and entitled to vote
and, for purposes of determining the outcome of the vote, will not be treated
as votes cast for such nominee. A broker "non-vote" occurs when a broker,
dealer, voting trustee, bank, association or other entity that exercises
fiduciary powers holding shares for a beneficial owner does not have
discretionary voting power and does not receive voting instructions from the
beneficial owner. Broker "non-votes" will not be treated as shares present and
entitled to vote on the election of directors of the Company and will have no
effect on the outcome of the vote. Broker "non-votes" will be counted as
present for the purpose of determining whether a quorum is present.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH NOMINEE FOR DIRECTOR SET
FORTH ABOVE.
2. Amendment of the Company's Second Amended and Restated 1996 Long-Term
Performance Incentive Plan
The Board of Directors has authorized, subject to stockholder ratification,
an increase in the number of Common Shares (defined below) available under the
Second Amended and Restated 1996 Long-Term Performance Incentive Plan (the
"Plan") from 12,000,000 to 19,000,000. As of December 31, 2001, 10,688,755
Common Shares were issued or issuable upon exercise of options granted pursuant
to the Plan.
Purpose. The purpose of the Plan is to advance the interests of the Company
and its stockholders by providing incentives to certain key employees of the
Company and its subsidiaries who contribute significantly to the strategic and
long-term performance objectives and growth of the Company.
Administration. The Plan is administered by the Compensation Committee of
the Board of Directors (the "Committee"). Subject to the provisions of the
Plan, the Committee has discretion to determine when awards are made, which
individuals are granted awards, the type and number of shares subject to each
award and all other relevant terms of the awards. The Committee also has broad
discretion to modify the terms of any award, to determine the time when awards
will be granted, to establish performance objectives, to make any adjustments
necessary or desirable as a result of the granting of awards to eligible
individuals located outside the United States and to prescribe the form of the
instruments embodying awards. The Committee has broad authority to construe and
interpret the Plan and awards granted under the Plan, to establish, amend and
rescind any rules and regulations relating to the Plan, and to make any other
determinations which it deems necessary or desirable for the administration of
the Plan.
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Eligibility. Awards may be granted to key employees of the Company and its
subsidiaries. Eligible individuals may be selected individually or by groups or
categories, as determined by the Committee in its discretion. No non-employee
director of the Company is eligible to receive an award under the Plan. The
maximum number of shares issuable pursuant to stock options and stock
appreciation rights under the Plan may not exceed 400,000 Common Shares in any
one year to any employee of the Company.
Shares Subject to the Plan. The shares issued or to be issued under the Plan
are shares of the Company's Common Stock, $0.01 par value, and stock of any
other class into which such shares may thereafter be changed (the "Common
Shares"), which may be authorized but unissued shares, treasury shares,
reacquired shares, or any combination thereof. A maximum of 12,000,000 Common
Shares have been reserved for issuance pursuant to the Plan prior to approval
of the proposed amendment.
Types of Awards. Awards under the Plan include Incentive Stock Options,
Nonqualified Stock Options, Stock Appreciation Rights and Restricted Stock.
Nonqualified Stock Options and Incentive Stock Options (which are intended
to meet the requirements of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code") (together, "Stock Options") are rights to purchase
Common Shares of the Company. Each Stock Option shall be evidenced by an
instrument in such form as the Committee shall prescribe and shall specify (i)
the option price which shall be at least the fair market value of the Common
Shares subject to the Stock Option at the time the Stock Option is granted,
(ii) the number of Common Shares to be subject to the Stock Option and (iii)
such other terms and conditions, including, but not limited to, restrictions
upon the Stock Option or the Common Shares issuable upon exercise thereof, as
the Committee, in its discretion, shall establish.
A Stock Option may be exercised during its term, at such time or times and
in such installments as the Committee may establish in its grant thereof, by
payment in full made in such form (including, but not limited to, cash, Common
Shares held for at least six months, or a combination thereof) as the Committee
may determine in its discretion. The term of a Stock Option expires (a) no
later than one year following an optionee's termination of employment by reason
of his or her death, disability or early, normal or deferred retirement under
an approved retirement program of the Company (or such other plan or
arrangement as may be approved by the Committee, in its discretion, for this
purpose), (b) in the case of a Nonqualified Stock Option, no later than one
year following an optionee's termination of employment for any other reason or
(c) in the case of an Incentive Stock Option, three months following an
optionee's termination of employment for any other reason. Notwithstanding the
foregoing, no Stock Option shall be exercisable after the tenth anniversary of
the date it is granted.
Incentive Stock Options may be granted only to eligible employees of the
Company or any parent or subsidiary corporation, must have an exercise price of
not less than 100% of the fair market value of the Company's Common Shares on
the date of grant (110% for Incentive Stock Options granted to any 10%
stockholder of the Company) and must have a term of not more than ten years
(five years in the case of an Incentive Stock Option granted to any 10%
stockholder of the Company). In the case of an Incentive Stock Option, the
amount of the aggregate fair market value of Common Shares (determined at the
time of grant) with respect to which Incentive Stock Options are exercisable
for the first time by an employee during any calendar year (under all such
plans of his employer corporation and its parent and subsidiary corporations)
shall not exceed $100,000.
Stock Appreciation Rights are rights to receive (without payment to the
Company) cash, Common Shares, other Company securities or property, or other
forms of payment, or any combination thereof, as determined by the Committee,
based on the increase in the value of the number of Common Shares specified in
the Stock Appreciation Right. Each award of a Stock Appreciation Right shall be
evidenced by an instrument in such form as the Committee shall prescribe, which
instrument will specify (i) a "hurdle" price equal to at least the fair market
value of the underlying Common Shares on the date of grant, (ii) the number of
Common Shares subject to such award, and (iii) such other terms and conditions
as the Committee, in its discretion, shall establish.
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A Stock Appreciation Right may be exercised in accordance with such written
instrument and at such time or times and in such installments as the Committee
may establish. A Stock Appreciation Right expires (a) three years following a
participant's termination of employment by reason of his or her disability or
early, normal or deferred retirement under an approved retirement program of
the Company (or such other plan or arrangement as may be approved by the
Committee, in its discretion, for this purpose), or (b) one year following a
participant's termination of employment by reason of his or her death.
Notwithstanding the foregoing, no Stock Appreciation Right shall be exercisable
after the tenth anniversary of the date it is granted or, in the case of a
Stock Appreciation Right attached to an Option, unless such Option is at the
time exercisable.
Awards of Restricted Stock are Common Shares which are issued subject to
certain restrictions. Each award of Restricted Stock shall be evidenced by an
instrument in such form as the Committee shall prescribe, which instrument will
specify (i) the number of Common Shares to be issued to a participant pursuant
to the award and the extent, if any, to which they shall be issued in exchange
for cash, other consideration, or both, and (ii) such other terms and
conditions as the Committee, in its discretion, shall establish. Except as may
be recommended by the Committee and approved by the Board, no award of
Restricted Stock shall have a Restricted Period of less than 3 years. However,
the Committee may, in its discretion under specified circumstances, cancel any
and all restrictions on any or all of the Common Shares subject to an award of
Restricted Stock if a participant who has been in continuous employment with
the Company since the date on which a Restricted Stock award was granted to him
or her shall, while in such employment, die, or terminate such employment by
reason of disability or by reason of early, normal or deferred retirement under
an approved retirement program of the Company (or such other plan or
arrangement as may be approved by the Committee in its discretion, for this
purpose).
Transferability. No Stock Option may be sold, assigned, transferred,
pledged, hypothecated or otherwise disposed of, except by will or the laws of
descent and distribution, and shall be exercisable during the grantee's
lifetime only by him or her; provided, however, that the Committee, in its sole
discretion, may establish, as permitted by applicable law, rules and conditions
under which a grantee may transfer a Nonqualified Stock Option to such
individuals or types of trusts that the Committee may determine to be eligible
for transfer. An award of Stock Appreciation Rights may not be sold, assigned,
transferred, pledged, hypothecated or otherwise disposed of, except by will or
the laws of descent and distribution, and shall be exercisable during the
grantee's lifetime only by him or her.
Effect of Significant Corporate Event. In the event any change in the
outstanding Common Shares of the Company by reason of any stock split,
dividend, split-up, split-off, spin-off, recapitalization, merger,
consolidation, rights offering, reorganization, combination or exchange of
Common Shares, a sale by the Company of all of its assets, any distribution to
stockholders other than a normal cash dividend, or other extraordinary or
unusual event, in each such case occurring after June 10, 1999, if the
Committee shall determine, in its discretion, that such change equitably
requires an adjustment in the terms of any award or the number of Common Shares
available for awards, such adjustment may be made by the Committee and shall be
final, conclusive and binding for all purposes of the Plan. In the event of the
proposed dissolution or liquidation of the Company, all outstanding awards
shall terminate immediately prior to the consummation of such proposed action,
unless otherwise provided by the Committee. In the event of a proposed sale of
all or substantially all of the assets of the Company, or the merger of the
Company with or into another corporation, all restrictions on any outstanding
awards shall lapse and participants shall be entitled to the full benefit of
all such awards immediately prior to the closing date of such sale or merger,
unless otherwise provided by the Committee.
Amendments to the Plan. The Board of Directors may amend or modify the Plan
at any time subject to the rights of holders of outstanding awards on the date
of amendment or modification, except where stockholder approval is required
under the Plan. No award of options may be amended to allow the exchange or
repricing of such options without stockholder approval.
Summary of Tax Consequences. The following is a brief and general discussion
of the Federal income tax rules applicable to awards granted under the Plan.
5
Nonqualified Stock Options. There are no Federal income tax consequences to
the Company or the participants upon grant of Nonqualified Stock Options. Upon
the exercise of such an option, (i) the participant will recognize ordinary
income in an amount equal to the amount by which the fair market value of the
Common Shares acquired upon the exercise of such option exceeds the exercise
price, if any, and (ii) the Company will receive a corresponding deduction. A
sale of Common Shares so acquired will give rise to a capital gain or loss
equal to the difference between the fair market value of the Common Shares on
the exercise and sale dates.
Incentive Stock Options. Except as noted at the end of this paragraph, there
are no Federal income tax consequences to the Company or the participant upon
grant or exercise of an Incentive Stock Option. If the participant holds shares
of Common Shares purchased pursuant to the exercise of an Incentive Stock
Option for at least two years after the date the option was granted and at
least one year after the exercise of the option, the subsequent sale of Common
Shares will give rise to a long-term capital gain or loss to the participant
and no deduction will be available to the Company. If the participant sells the
shares of Common Shares within two years after the date an Incentive Stock
Option is granted or within one year after the exercise of an option, the
participant will recognize ordinary income in an amount equal to the difference
between the fair market value at the exercise date and the option exercise
price, and the Company will be entitled to an equivalent deduction, and any
additional gain or loss will be a capital gain or loss. Some participants may
have to pay alternative minimum tax in connection with exercise of an Incentive
Stock Option.
Stock Appreciation Rights. A participant will generally recognize ordinary
income on receipt of cash, Common Shares or other property pursuant to an award
of Stock Appreciation Rights.
Restricted Stock. A participant will generally recognize ordinary income on
receipt of an award of Restricted Stock when his or her rights in that award
become substantially vested, in an amount equal to the amount by which the then
fair market value of the Common Shares acquired exceeds the price he or she has
paid for it, if any. Recipients of Restricted Stock may, however, within 30
days of receiving an award of Restricted Stock, choose to have any applicable
risk of forfeiture disregarded for tax purposes by making an "83(b) election."
If the participant makes an 83(b) election, he or she will have to report
compensation income equal to the difference between the value of the shares and
the price paid for the shares, if any, at the time of the transfer of the
Restricted Stock.
Although the foregoing summarizes the essential features of the Plan, it is
qualified in its entirety by reference to the full text of the Plan as approved.
The benefits or amounts received by or allocated to each of (i) the officers
listed in the Summary Compensation Table, (ii) each of the nominees for
election as a director, (iii) all directors of the Company who are not
executive officers of the Company as a group, (iv) all present executive
officers of the Company as a group, and (v) all employees of the Company,
including all other current officers, as a group are not determinable.
Required Vote; Recommendation of the Board of Directors
The proposal to approve the adoption of the Second Amended and Restated 1996
Long-Term Performance Incentive Plan (the "Plan") will require approval by a
majority of the votes cast by the holders of the shares of Common Stock voting
in person or by proxy at the meeting. Withholding authority to vote for the
adoption of the Plan will be treated as shares present and entitled to vote
and, for purposes of determining the outcome of the vote, will not be treated
as votes cast for the adoption of the Plan. Broker "non-votes" will not be
treated as shares present and entitled to vote on the adoption of the Plan and
will have no effect on the outcome of the vote. Broker "non-votes" will be
counted as present for the purpose of determining whether a quorum is present.
6
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL.
3. Other Business
The Board of Directors does not know of any other business to be presented
at the Annual Meeting of Stockholders. If any other matters properly come
before the meeting, however, it is intended that the persons named in the
enclosed form of Proxy will vote said Proxy in accordance with their best
judgment.
DIRECTORS MEETINGS AND COMPENSATION
Directors Meetings
The Board of Directors held six meetings during the year ended December 31,
2001. The Nominating Committee, which was formed as of July 10, 2001, currently
consists of Mr. Philip Caldwell, Dr. Laurie H. Glimcher and Mr. Michael J.
Berendt, and recommends candidates for membership on the Board of Directors
(the "Board") and recruits such candidates for membership on the Board. The
responsibilities of the Nominating Committee are to supervise the nominations
and elections of members of the Board. The Nominating Committee may, as it
deems appropriate, give consideration to any candidates suggested by the
stockholders of the Company. The Audit Committee, which currently consists of
Messrs. Bekenstein, Caldwell and Salice, oversees the activities of the
Company's independent auditors, recommends the engagement of independent
auditors, and performs certain other functions pursuant to its charter, a copy
of which is attached to this Proxy Statement as exhibit A. The Compensation
Committee, which currently consists of Messrs. Conard, Miller, and Salice,
approves the compensation of executives of the Company, makes recommendations
to the Board of Directors with respect to standards for setting compensation
levels and administers the Company's incentive plans. During fiscal year 2001,
each of the Company's directors participated in excess of 75% of the aggregate
of the meetings of the Board of Directors and the meetings of committees of the
Board of Directors of which such director was a member. During fiscal year
2001, the Compensation Committee and the Audit Committee each met two times,
while the Nominating Committee met once.
Report of the Audit Committee of the Board of Directors
The Company has a qualified Audit Committee of the Board of Directors. The
Audit Committee, in conjunction with management and the independent
accountants, focuses on the following items:
1. The adequacy of Company internal controls,
2. The appropriateness of Company financial reporting and accounting
processes,
3. The independence and performance of the Company's independent auditors
and
4. Company compliance with laws and regulations.
The Board of Directors has adopted a written charter setting out more
specifically the functions that the Committee is to perform. A copy of the
charter is attached to this Proxy as Exhibit A. The Committee held two meetings
during the fiscal year ended December 31, 2001. The Chairman of the Committee
reviewed on a quarterly basis, with members of the management team, the
Company's quarterly financial results prior to the release of earnings and the
filing of the Company's quarterly financial statements. The Directors who serve
on the Committee are all "independent" as defined under the listing standards
of the New York Stock Exchange. Company management has primary responsibility
for the financial statements and reporting processes. The Company's independent
auditors, PricewaterhouseCoopers LLP (PricewaterhouseCoopers), audit the annual
financial statements and are responsible for expressing an opinion on their
conformity with generally accepted accounting principles. The Committee hereby
reports for the period ended December 31, 2001 that:
1. It has reviewed and discussed the Company's audited financial statements
for the period ended December 31, 2001 with management,
2. It has discussed with PricewaterhouseCoopers those matters required to
be discussed by Statement on Auditing Standards No. 61, Communication
with Audit Committees,
7
3. It has received from and discussed with PricewaterhouseCoopers their
written disclosures and letter required by Independence Standards Board
Standard No. 1, Independence Discussions with the Audit Committee and
4. It has considered whether and determined that the provision of non-audit
services to the Company by PricewaterhouseCoopers was compatible with
maintaining auditor independence.
Based on the items reported above, the Audit Committee recommended to the
Board of Directors that the Company's audited financial statements be included
in the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 2001 for filing with the Securities and Exchange Commission.
Mr. Joshua Bekenstein Mr. Philip Caldwell Mr. Thomas P. Salice
Audit Fees
The aggregate fees for the fiscal year ended December 31, 2001 by the
Company's principal accounting firm, PricewaterhouseCoopers LLP, were as
follows:
Audit Fees $567,000
Financial Information Systems/Design and Implementation Fees None
All Other Fees:
Statutory Audit Fees $243,000
Benefit Plan Aufits and Other $ 55,000
Tax Compliance/Tax Projects $235,000
All Other Fees $533,000
Compensation of Directors
Directors who are full-time employees of the Company receive no additional
compensation for serving on the Board of Directors or its committees. In 2001,
outside Directors each received a retainer of $20,000 for the year, $1,000 for
each Board meeting attended, $750 for each committee meeting attended; and, on
January 2, 2002, outside directors each received, with respect to services
performed in 2001, an annual grant of 4,000 stock options under the Company's
1996 Non-Employee Director Stock Option Plan. For services performed in the
year 2002, outside Directors each will receive a retainer of $22,000 for the
year (other than the Chairman who, if an outside Director, will receive an
annual fee of $30,000), $1,000 for each Board meeting attended, $750 for each
committee meeting attended and an annual grant of 4,000 stock options under the
1996 Non-Employee Director Stock Option Plan. All directors are reimbursed for
expenses incurred in connection with their attendance at meetings.
8
MANAGEMENT COMPENSATION
Summary Compensation Table
The following Summary Compensation Table discloses, for the fiscal years
indicated, individual compensation information on Mr. Berthiaume and the four
other most highly compensated executive officers (collectively, the "named
executives") who were serving as executive officers at the end of fiscal year
2001.
Long Term
Annual Compensation Compensation
---------------------- ------------
Securities
Underlying All Other
Fiscal Salary Bonus Options Compensation
Name and Principal Position Year ($) ($) (#) ($)
--------------------------- ------ ------- ------- ------------ ------------
Douglas A. Berthiaume.................... 2001 560,000 295,551(1) 150,000 15,515(2)
Chairman, President and Chief 2000 530,000 927,500(3) 100,000 21,188(2)
Executive Officer (5) 1999 500,006 635,250(4) 140,000 38,105(2)
Arthur G. Caputo......................... 2001 280,000 108,889(1) 75,000 6,938(2)
Senior Vice President, 2000 265,000 320,650(3) 50,000 12,640(2)
Worldwide Sales and Marketing (5) 1999 240,006 244,560(4) 80,000 16,159(2)
John R. Nelson........................... 2001 290,000 112,778(1) 100,000 13,957(2)
Senior Vice President, 2000 275,000 332,750(3) 50,000 19,910(2)
Research, Development and Engineering (5) 1999 249,990 254,750(4) 80,000 17,125(2)
Devette W. Russo......................... 2001 205,000 63,778(1) 30,000 3,865(2)
Senior Vice President, Chromatography 2000 195,000 193,050(3) 40,000 5,259(2)
Consumables Division (5) 1999 180,000 150,347(4) 60,000 5,490(2)
Philip S. Taymor......................... 2001 217,534 108,889(1) 10,000 11,324(2)
Senior Vice President (5) 2000 265,000 320,650(3) 50,000 18,455(2)
1999 240,006 244,560(4) 80,000 15,628(2)
--------
(1) Reflects bonus earned under the Company's Management Incentive Plan in 2001
which was paid in 2002.
(2) Reflects amounts contributed for the benefit of the named executive in
2001, 2000 and 1999, respectively, under the Waters 401(k) Restoration
Plan, the Waters Employee Investment Plan and for Group Term Life Insurance
coverage in excess of $100,000.
(3) Reflects bonus earned under the Company's Management Incentive Plan in 2000
which was paid in 2001.
(4) Reflects bonus earned under the Company's Management Incentive Plan in 1999
which was paid in 2000.
(5) As of January 4, 2002, Mr. Berthiaume relinquished the title of President;
Mr. Nelson was promoted to President & Chief Operating Officer, Waters
Corporation; Mr. Caputo was promoted to President, Waters Division; Ms.
Russo was appointed Senior Vice President, New Business Development. As of
January 1, 2002, Mr. Taymor was no longer an officer of the company.
9
Option Grants In Fiscal Year 2001
The following table shows information regarding stock option grants to the
named executives in fiscal year 2001:
Potential Realizable Value at Assumed
Annual Rates of Stock Price Appreciation
Individual Grants For 10-year Option Term
--------------------------------------- ----------------------------------------
Number Of Percent Of
Securities Total Options
Underlying Granted To Exercise
Options Employees Price ($/ Expiration
Name Granted (#)(1) In Fiscal Year SH) Date 5% ($) 10% ($)
---- -------------- -------------- --------- ---------- ---------- ----------
Douglas A. Berthiaume 150,000 6.66% $36.2500 12/12/11 $3,419,615 $8,665,975
Arthur G. Caputo..... 75,000 3.33% $36.2500 12/12/11 $1,709,807 $4,332,987
John R. Nelson....... 100,000 4.44% $36.2500 12/12/11 $2,279,743 $5,777,316
Devette W. Russo..... 30,000 1.33% $36.2500 12/12/11 $ 683,923 $1,733,195
Philip S. Taymor..... 10,000 .44% $36.2500 12/12/11 $ 227,974 $ 577,732
--------
(1) Each option becomes exercisable with respect to 20% of the shares subject
to the option on each of December 12, 2002, December 12, 2003, December 12,
2004, December 12, 2005 and December 12, 2006.
Aggregated Option Exercises, Holdings and Year End Values for Fiscal Year 2001
The following table shows information regarding (i) the number of shares of
Common Stock acquired upon exercise by the named executives of stock options in
2001 and the value realized thereby and (ii) the number and value of any
unexercised stock options held by such executives as of December 31, 2001:
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the Money Options at
Acquired on Value Options at FY-End (#) FY-End closing price of $38.75
Name Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
---- ------------ ------------ ------------------------- ------------------------------
Douglas A. Berthiaume -- -- 4,544,960/430,000 $154,658,060/$4,228,000
Arthur G. Caputo..... 100,000 $ 7,098,300 960,224/232,600 $ 30,255,336/$2,461,650
John R. Nelson....... 75,000 $ 4,817,401 934,504/257,600 $ 29,363,367/$2,524,150
Devette W. Russo..... -- -- 811,264/144,400 $ 25,974,723/$1,653,850
Philip S. Taymor..... 200,000 $13,132,640 549,240/167,600 $ 16,002,411/$2,299,150
Waters Corporation Retirement Plans
Substantially all full-time United States employees of Waters participate in
the Waters Corporation Retirement Plan (the "Retirement Plan"), a defined
benefit pension plan intended to qualify under Section 401(a) of the Internal
Revenue Code (the "Code"). The Retirement Plan is a cash balance plan whereby
each participant's benefit is determined based on annual pay credits and
interest credits made to each participant's notional account. In general, a
participant becomes vested under the Retirement Plan upon completion of five
years of service. The normal retirement age under the lan is age 65.
Pay credits range from 4% to 9.5% of compensation, depending on the
participant's amount of compensation and length of service with the Company.
Compensation refers to pension eligible earnings of the participant (limited to
$170,000 for 2001), which includes base pay, overtime, certain incentive
bonuses, commissions and pre-tax deferrals, but excludes special items such as
stock awards, moving expense reimbursements and employer contributions to
retirement plans. Interest credits are based on the one year constant maturity
Treasury bill rate on the last day in November of the preceding plan year plus
0.5%, subject to a 5% minimum and a 10% maximum rate.
The Company also maintains a non-qualified, supplemental plan which provides
benefits that would be paid by the Retirement Plan except for limitations on
pensionable pay and benefit amounts currently imposed by the Code.
10
The aggregate estimated annual benefit payable from the Retirement Plan and
supplemental plan combined to Messrs. Berthiaume, Caputo, Nelson, Taymor and
Ms. Russo upon normal retirement is $208,000, $121,000, $80,000, $94,000 and
$75,000, respectively. As of December 31, 2001, Messrs. Berthiaume, Caputo,
Nelson, Taymor and Ms. Russo had approximately 21, 24, 25, 21 and 29 years of
credited service, respectively, under the Retirement Plan.
The aggregate estimated annual normal retirement benefits are based on
actual 2001 eligible compensation, including bonus paid in 2001. Future
eligible compensation is assumed to equal January 2002 rate of pay and future
interest credits are assumed to be 5%.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee currently consists of Mr. Edward Conard, Mr.
Thomas Salice and Mr. William Miller. Prior to the Company's initial public
offering in 1995, each of Mr. Conard and Mr. Salice also served as an officer
of the Company.
Compensation Committee Report
The Compensation Committee of the Board of Directors is responsible for
administering the compensation of senior executives of the Company and is
comprised of three independent non-employee directors.
The Compensation Committee's compensation philosophy is to focus management
on achieving financial and operating objectives which provide long-term
stockholder value. The Company's executive compensation programs are designed
to align the interest of senior management with those of the Company's
stockholders. There are three key components of executive compensation: base
salary, senior management incentive bonus (annual incentive), and long-term
performance incentive. It is the intent of these programs to attract, motivate
and retain senior executives. It is the philosophy of the Compensation
Committee to allocate a significant portion of cash compensation to variable
performance-based compensation in order to reward executives for high
achievement.
Base Salary
The base salaries for senior executives are reviewed annually by the
Compensation Committee. Salaries are based upon a combination of factors
including past individual performance, competitive salary levels and an
individual's potential for making significant contributions to future Company
performance. Increases to senior executives' base salaries in fiscal year 2001
were determined by the Compensation Committee after subjective consideration of
the Company's financial performance in fiscal year 2000, individual position
and responsibilities, and general and industry market surveys for comparable
positions.
Annual Incentive
The Management Incentive Plan is the variable pay program for officers and
other senior executives of the Company. The purpose of the Management Incentive
Plan is to provide added motivation and incentive to senior executives to
achieve operating results based on operating budgets established at the
beginning of the fiscal year. The Compensation Committee evaluates the audited
results of the Company's performance against previously established performance
targets in order to determine the individual bonuses under the Management
Incentive Plan. The Company achieved a level of performance required to pay
bonuses for fiscal year 2001 based upon overall Company performance.
1996 Long-Term Performance Incentive Plan
Stock options are an important component of senior executive compensation
and the 1996 Long-Term Performance Incentive Plan has been designed to motivate
senior executives and other key employees to
11
contribute to the long-term growth of stockholder value. Under the 1996
Long-Term Performance Incentive Plan and the 1994 Amended and Restated Stock
Option Plan, stock options were granted to the Company's senior executives and
other key individuals. The Compensation Committee authorizes awards under the
plan based upon recommendations from the Company's Chief Executive Officer.
Other Compensation
The Company's senior executives are also eligible to participate in other
compensation plans that are generally offered to other employees, such as the
Company's investment and savings plan, retirement plan, the employee stock
purchase plan and the supplemental employee retirement plan.
Chief Executive Compensation
Mr. Berthiaume's 2001 annual base salary was based on the Compensation
Committee's evaluation of the Company's overall performance and the salaries
and compensation practices of peer companies of comparable size. After
considering these factors, the Compensation Committee elected to increase Mr.
Berthiaume's annual base salary for fiscal year 2001 to $560,000. Under the
Management Incentive Plan, the Compensation Committee awarded Mr. Berthiaume a
bonus of $295,551 for fiscal year 2001 based upon the Company's performance as
compared to pre-established criteria and targets. Mr. Berthiaume received a
stock option grant of 150,000 shares based on the subjective consideration
described under the 1996 Long Term Performance Incentive Plan.
Limit on Deductible Compensation
The Compensation Committee has considered the application of Section 162(m)
of the Internal Revenue Code to the Company's compensation practices. Section
162(m) generally limits the tax deduction available to public companies for
annual compensation paid to senior executives in excess of $1 million unless
the compensation qualifies as performance-based compensation. The annual cash
compensation paid to individual executives during fiscal year 2001 (excluding
exempt performance-based compensation) did not reach the $1 million threshold.
It is believed that payments under the Management Incentive Plan and the stock
incentive plans of the Company qualify as performance-based compensation. The
Compensation Committee does not believe any further action is necessary in
order to comply with Section 162(m). From time to time, the Compensation
Committee will reexamine the Company's compensation practices and the effect of
Section 162(m).
Mr. Edward Conard Mr. William Miller Mr. Thomas Salice
12
Performance Graph
The following graph compares the cumulative total return on $100 invested as
of December 31, 1996 (the last day of public trading of the Common Stock in
fiscal year 1996) through December 31, 2001 (the last day of public trading of
the Common Stock in fiscal year 2001) in the Common Stock of the Company, the
NYSE Market Index and the SIC Code 3826 Index. The return of the indices is
calculated assuming reinvestment of dividends during the period presented. The
Company has not paid any dividends since its initial public offering. The stock
price performance shown on the graph below is not necessarily indicative of
future price performance.
COMPARISON OF CUMULATIVE TOTAL RETURN SINCE
DECEMBER 31, 1996 AMONG WATERS CORPORATION,
NYSE MARKET INDEX AND SIC CODE 3826--LABORATORY ANALYTICAL INSTRUMENTS
[CHART]
Waters SIC NYSE
Corporation Code Index Market Index
----------- ---------- ------------
12/31/1996 100.00 100.00 100.00
12/31/1997 125.51 116.82 131.56
12/31/1998 287.24 124.35 156.55
12/31/1999 348.97 123.59 171.42
12/31/2000 1099.58 153.05 175.51
12/31/2001 510.28 118.75 159.87
13
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The table below sets forth certain information regarding beneficial
ownership of Common Stock as of March 19, 2002 by each person or entity known
to the Company who owns of record or beneficially five percent or more of the
Common Stock, by each named executive officer and director nominee and all
executive officers and director nominees as a group.
Percentage of
Number of Shares Outstanding
Name Of Common Stock(1) Common Stock(1)
---- ------------------ ---------------
5% Stockholders
Directors and Executive Officers
Douglas A. Berthiaume (2)(3)................................ 6,999,908 5.17%
Arthur G. Caputo (2)(11).................................... 1,541,329 1.17%
John R. Nelson (2).......................................... 1,009,804 *
Devette W. Russo (2)(4)..................................... 1,114,462 *
Philip S. Taymor (2)(5)(6).................................. 795,320 *
Joshua Bekenstein (2)(7)(8)................................. 21,057 *
Michael J. Berendt, Ph.D. (2)(12)........................... 4,800 *
Philip Caldwell (2)(7)(8)(9)(12)............................ 126,720 *
Edward Conard (2)(7)(10).................................... 18,914 *
Dr. Laurie H. Glimcher (2)(12).............................. 8,500 *
William J. Miller (2)(7)(10)................................ 12,143 *
Thomas P. Salice (2)(7)(8)(10).............................. 18,328 *
All Directors and Executive Officers as a group (16 persons) 12,938,854 9.27%
* represents less than 1% of the total.
1. Figures are based upon 130,937,141 shares of Common Stock outstanding as of
March 19, 2002. The figures assume exercise by only the stockholder or group
named in each row of all options for the purchase of Common Stock held by
such stockholder or group which are exercisable within 60 days of March 19,
2002.
2. Includes share amounts which the named individuals have the right to acquire
through the exercise of options which are exercisable within 60 days of
March 19, 2002 as follows: Mr. Berthiaume 4,544,960, Mr. Caputo 960,224, Mr.
Nelson 934,504, Ms. Russo 811,264, Mr. Taymor 549,240, Mr. Bekenstein
12,000, Mr. Berendt 4,800, Mr. Caldwell 12,000, Mr. Conard 12,000, Dr.
Glimcher 8,500, Mr. Miller 8,800 and Mr. Salice 5,600.
3. Includes 69,000 shares held by Mr. Berthiaume's wife, 876,314 shares held in
a family trust, 34,835 shares held in Mr. Berthiaume's 401K Plan and 5,524
shares held in the GST Trust account. Mr. Berthiaume disclaims beneficial
ownership for the shares held by his wife and the shares held in the GST
Trust account. The trustees of the GST Trust are his spouse and another
reporting person of the Company.
4. Includes 67,068 shares held by Ms. Russo's son and 30,262 shares held in Ms.
Russo's 401k plan.
5. Includes 77,420 shares held by Mr. Taymor's wife, for which shares he
disclaims beneficial ownership.
6. Reporting person was named a trustee of a trust established by another
reporting person of the Company.
7. Reporting person elected to receive deferred compensation in the form of
phantom stock: Mr. Bekenstein 4,868 shares, Mr. Caldwell 7,404 shares, Mr.
Conard 6,725 shares, Mr. Miller 3,154 shares and Mr. Salice 4,520 shares.
14
8. Member of the Audit Committee.
9. Includes 107,128 shares held in trust for Mr. Caldwell's wife, for which
shares he disclaims beneficial ownership.
10. Member of the Compensation Committee.
11. Includes 99,661 shares held in Mr. Caputo's 401K Plan account and 1,840
shares held by his daughters, for which shares he disclaims beneficial
ownership.
12. Member of the Nominating Committee.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Employment Agreements
None of the executive officers have employment agreements with the Company
or any of its affiliates. None of them have any agreements entitling them to
termination or severance payments upon a change in control of the Company, nor
a change in the named executive's responsibilities following a change of
control. However, each of the named executive officers is party to a Management
Subscription Agreement with the Company, pursuant to which each named executive
officer has purchased shares of Common Stock. Each executive officer is also
the grantee of certain stock options from the Company under one or more Stock
Option Agreements. Pursuant to the terms of such agreements, the stock
purchased under such agreements or available upon exercise of the options may
be subject to repurchase by the Company at the end of such executive's
employment with the Company. The Management Subscription Agreements and the
Stock Option Agreements also impose certain additional restrictions upon the
executive, including confidentiality obligations, assignment of the benefit of
inventions and patents to the Company, a requirement that the executive devote
his or her exclusive business time to the Company, and noncompete restrictions
which extend in certain cases, depending on the basis on which his or her
employment is terminated, for a period of up to 24 months following his or her
termination date.
Loans to Executive Officers
The Company has made loans, in an aggregate principal amount of $1,781,436
to certain executive officers of the Company. These loans were full recourse
loans and were secured by a pledge of certain of the shares of Common Stock
owned by such executive officers. In 1999, Douglas A. Berthiaume, Chairman,
President and Chief Executive Officer repaid loans amounting to $743,858 and
John R. Nelson, Senior Vice President, Research, Development and Engineering
repaid loans amounting to $233,712. In 2000, Brian K. Mazar, Senior Vice
President, Human Resources and Investor Relations repaid loans amounting to
$282,472 and Devette Russo, Senior Vice President, Chromatography Consumables
Division, repaid loans amounting to $240,940. In 2001, Philip S. Taymor, Senior
Vice President and Arthur Caputo, Senior Vice President, Worldwide Sales and
Marketing, each repaid loans amounting to $280,454. The payments by these
executive officers repaid in full the outstanding principal amounts and accrued
interest. At December 31, 2001 there were no loans outstanding due from
executive officers.
Indemnification of Directors and Officers
The Company has entered into agreements to provide indemnification for its
directors and executive officers in addition to the indemnification provided
for in the Certificate and Amended and Restated Bylaws.
15
SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
The Federal securities laws require the Company's directors and officers,
and persons who own more than five percent of the Common Stock, to file with
the Securities and Exchange Commission, the New York Stock Exchange and the
Secretary of the Company initial reports of ownership and reports of changes in
ownership of the Common Stock.
To the Company's knowledge, based solely on review of the copies of such
reports and written representations furnished to the Company that no other
reports were required, all of the Company's officers, directors and
greater-than-five-percent beneficial owners made all required filings during
the fiscal year ended December 31, 2001.
STOCKHOLDER PROPOSALS
Proposals of stockholders to be presented at the 2003 Annual Meeting of
Stockholders must be received by the Secretary of the Company by December 2,
2002 to be considered for inclusion in the Company's Proxy Statement and form
of proxy relating to that meeting. It is anticipated that the 2003 Annual
Meeting will be scheduled on or about May 7, 2003.
16
EXHIBIT A
AUDIT COMMITTEE CHARTER
OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
Purpose
The purpose of the Audit Committee is to assist the Board of Directors in
ensuring that management is maintaining internal controls adequate to provide
reasonable assurance that assets are safe-guarded, transactions are properly
executed and recorded, generally accepted accounting principles are
consistently applied, and that there is compliance with corporate policies for
conducting business. The Committee shall perform such functions, exercise
such powers, and consult with such persons as may be required to fulfill the
responsibilities of the Committee or additional responsibilities, which may be
delegated to it from time to time by the Board of Directors.
Composition
The Committee shall consist of no fewer than three members of the Board of
Directors independent of management and free from any relationship that, in the
opinion of the Board of Directors, would interfere with the members' exercise
of independent judgment, as prescribed by the applicable laws, regulations and
rules of the Securities and Exchange Commission (SEC) and New York Stock
Exchange (NYSE). All members of the Committee shall have a working familiarity
with basic finance and accounting practices and a least one member of the Audit
Committee shall have accounting or related financial management expertise, as
in conformity with the applicable SEC and NYSE laws, regulations and rules. The
chairperson and members shall be appointed by the Board of Directors and shall
serve an annual term.
Audit Committee Authority and Specific Duties
The Audit Committee will meet periodically (normally two times annually)
with representatives of management and the external auditors to review,
oversee, approve, or take other action, as appropriate, with respect to various
items detailed below. The external auditors for the Corporation are ultimately
accountable to the Board of Directors of the Corporation and the Committee.
A. External Audit
1. Consider corporate management's recommendations regarding the
appointment of external auditors (or independent accountants or
independent auditors). The Committee shall select and recommend to the
Board of Directors for approval of the engagement, on behalf of the
Corporation, the independent accountants to audit the books of account
and other records of the Corporation.
2. Review the proposed scope of the annual audit and significant
variations that arise in the course of the examination.
3. Review the external auditors' internal control observations and
responses by corporate management.
4. Approve fees related to the annual external audit and subsequent
variations.
5. Review the independence of the external auditors and ensure that the
auditors submit on a periodic basis to the Committee a formal
statement delineating all relationships between the auditors and the
Corporation. The Committee shall actively engage in discussion with
the auditors with respect to any relationships or services that may
impact their objectivity and independence.
6. Review the performance of the external auditors.
B. Financial Reporting
1. Review the accounting policies and practices and significant judgments
that may affect the financial statements of the Corporation, and the
selection made from among alternative accounting treatments.
2. Consider changes in accounting standards that may significantly affect
financial reporting practices.
3. Review, with financial management and the independent auditors, the
Corporation's quarterly financial results prior to the release of
earnings and/or the filing or distribution of the Corporation's
quarterly financial statements. Discuss any significant changes to the
Corporation's accounting principles and any items required to be
communicated by the independent auditors. The Chairman of the
Committee (or an alternate if necessary) may represent the entire
Audit Committee for purposes of this review.
4. Transmit to the Board of Directors, after the close of each fiscal
year, financial statements with the opinion of such independent
accountants.
C. Controls
1. Assess the effectiveness of the system of internal controls, including
the security of tangible and intangible corporate assets and the
security of computer systems and facilities.
2. Review any significant instances of employee defalcation and
violations of corporate policies and procedures, including compliance
with environmental requirements.
At regularly scheduled meetings, and at any other times when they believe it
necessary, the external auditors, and senior financial management, will meet
with the Committee privately and confidentially to notify or advise it
concerning any circumstances which they believe require the special attention
of the Committee.
Other Committee Activities
1. The Committee may, at its discretion, request management, the external
auditors, or other persons with specific competence, including outside
counsel, to undertake special projects or investigations which it
deems necessary to fulfill its responsibilities.
2. The Committee will be informed by senior financial management of the
rationale for securing audits or second opinions from accounting firms
other than the Corporation's independent public accountants.
3. The Committee will assess and review annually the adequacy of the
charter.
4. The Committee will provide its report required to be included in the
Corporation's annual Proxy Statement.
2
1444-PS-02
[LETTER HEAD]
Waters
c/o EquiServe
P.O. Box 9398
Boston, MA 02205-9398
------------------ -----------------
Vote by Telephone Vote by Internet
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1-877-PRX-VOTE (1-877-779-8683) confirmed and posted.
Follow these four easy steps: Follow these four easy steps:
1. Read the accompanying Proxy 1. Read the accompanying Proxy
Statement and Proxy Card. Statement and Proxy Card.
2. Call the toll-free number 2. Go to the Website
1-877 PRX-VOTE (1-877-779-8683) http://www.eproxyvote.com/wat
For shareholders residing outside
the United States call collect on
a touch-tone phone 1-201-536-8073.
3. Enter your 14-digit Voter Control 3. Enter your 14-digit Voter
Number located on your Proxy Card Control Number located on your
above your name. Proxy Card above your name.
4. Follow the recorded instructions. 4. Follow the instructions provided
Your vote is important! Your vote is important!
call 1-877-PRX-VOTE anytime! Go to http://www.eproxyvote.com/wat
anytime!
Do not return your Proxy Card if you are voting by Telephone or Internet
DETACH HERE
[X]Please mark
votes as in
this example.
Please sign, date and return your proxy in the envelope provided even if you
plan to attend the meeting.
1. To elect a Board of Directors for the ensuing year and until their successors
are elected.
Nominees: (01) Joshua Bekenstein, (02) Michael J. Berendt, Ph.D., (03) Douglas
A. Berthiaume, (04) Philip Caldwell, (05) Edward Conard, (06) Laurie H.
Glimcher, M.D., (07) William J. Miller and (08) Thomas P. Sallce
[ ] FOR ALL NOMINEES [ ] WITHELD FROM ALL NOMINEES
[_]____________________________________________
Note: If you do not wish your shares voted "for" a particular nominee, write
such nominee's name on the line above.
Waters
The Officers and Directors of Waters Corporation
cordially invite you to attend
the Annual meeting of Stockholders
to be held at Waters Corporation, 34 Maple Street,
Milford, Massachusetts on Tuesday, May 7, 2002 at 11:00 a.m.
Douglas A. Berthiaume
/s/ Douglas A. Berthiaume
Chairman and Chief Executive Officer
(FOR RECORDED DIRECTIONS TO WATERS, CALL 508 482-3314)
DETACH HERE
PROXY
WATERS CORPORATION
FOR ANNUAL MEETING OF STOCKHOLDERS - MAY 7, 2002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Douglas A. Berthiaume and John Ornell,
and each or either of them, as the true and lawful attorneys of the undersigned,
with full power of substitution and revocation, and authorizes them, and each of
them, to vote all the shares of capital stock of the Corporation which the
undersigned is entitled to vote at said meeting and any adjournment thereof upon
the matters specified below and upon such other matters as may be properly
brought before the meeting or any adjournment thereof, conferring authority upon
such true and lawful attorneys to vote in their discretion on such other matters
as may properly come before the meeting and revoking any proxy heretofore given.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN, SHARES WILL BE VOTED FOR THE ELECTION OF THE DIRECTORS AND
FOR THE PROPOSAL IN ITEM 2, AND AUTHORITY WILL BE DEEMED GRANTED UNDER ITEM 3.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
2. To ratify the actions of the directors in amending the Second Amended and
Restated 1996 Long-Term Performance Incentive Plan to increase the number of
Common Shares reserved for issuance thereunder from 12,000,000 to 19,000,000
FOR AGAINST ABSTAIN
[_] [_] [_]
3. To consider and act upon any other matters which may properly come before
the meeting or any adjournment thereof.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [_]
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [_]
(If signing as attorney, executor, trustee or guardian,
please give your full title as such. If shares are held
jointly, each holder should sign.)
Signature:_____________________________ Date:________________
Signature:_____________________________ Date:________________