SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
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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 toss. 240.14a-11(c) orss. 240.14a-12
Trimble Navigation Limited
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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 Registrant)
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[X] No fee required.
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(1) Title of each class of securities to which transaction applies: N/A
(2) Aggregate number of securities to which transaction applies: N/A
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pursuant to Exchange Act Rule 0-11: N/A
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
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number, or the Form or Schedule and the date of its filing.
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TRIMBLE NAVIGATION LIMITED
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 19, 2004
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Trimble Navigation Limited (the "Company") will be held at the Four Points
Sheraton Hotel in Sunnyvale, located at 1250 Lakeside Drive, Sunnyvale,
California 94085 in the Ballroom, on Wednesday, May 19, 2004, at 6:00 p.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 approve an increase of 1,500,000 shares of the Company's common stock
available for issuance and sale under the Company's 2002 Stock Plan.
3. To approve an increase of 300,000 shares in the number of shares of the
Company's common stock available for purchase by eligible employees under
the Company's 1988 Employee Stock Purchase Plan.
4. To ratify the appointment of Ernst & Young LLP as the independent auditors
of the Company for the current fiscal year ending December 31, 2004.
5. To transact such other business as may properly come before the meeting or
any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. Only shareholders of record at the close of
business on March 23, 2004, will be entitled to notice of and to vote at the
Annual Meeting or any adjournment thereof.
All shareholders are cordially invited to attend the Annual Meeting in
person. However, to ensure your representation at the meeting, you are urged to
mark, sign, date, and return the enclosed Proxy card as promptly as possible in
the postage-prepaid envelope enclosed for that purpose. Alternatively, you may
also vote via the Internet or by telephone in accordance with the detailed
instructions on your Proxy card. Any shareholder attending the meeting may vote
in person even if such shareholder previously returned a Proxy.
For the Board of Directors
TRIMBLE NAVIGATION LIMITED
ROBERT S. COOPER
Chairman of the Board
Sunnyvale, California
April 8, 2004
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IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE
REQUESTED TO COMPLETE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE
POSTAGE-PREPAID ENVELOPE PROVIDED OR VOTE VIA THE INTERNET OR BY TELEPHONE TO
ENSURE THAT YOUR SHARES ARE REPRESENTED AT THE MEETING.
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TRIMBLE NAVIGATION LIMITED
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PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
May 19, 2004
The enclosed Proxy is solicited on behalf of the Board of Directors of
Trimble Navigation Limited, a California corporation (the "Company"), for use at
the Company's Annual Meeting of Shareholders ("Annual Meeting") to be held at
the Four Points Sheraton Hotel located at 1250 Lakeside Drive, Sunnyvale,
California 94085 in the Ballroom, on Wednesday, May 19, 2004, at 6:00 p.m. local
time, and at any adjournment(s) or postponement(s) thereof, for the purposes set
forth herein and in the accompanying Notice of Annual Meeting of Shareholders.
The Company's principal executive offices are located at 749 North Mary
Avenue, Sunnyvale, California 94085. The telephone number at that address is
(408) 481-8000.
These proxy solicitation materials are to be mailed on or about April
8, 2004, to all shareholders entitled to vote at the Annual Meeting. A copy of
the Company's Annual Report for the last fiscal year ended January 2, 2004,
accompanies this Proxy Statement but does not form any part of the proxy
solicitation materials. A full copy of the Company's annual report on Form 10-K,
(including all exhibits thereto) as filed with the Securities and Exchange
Commission ("SEC") for the fiscal year ended January 2, 2004, is available via
the Internet at the SEC's EDGAR web site at http://www.sec.gov. In addition, a
copy of the Company's annual report on Form 10-K is also available via the
Internet at the Company's web site at http://www.trimble.com.
INFORMATION CONCERNING SOLICITATION AND VOTING
Record Date and Shares Outstanding
Shareholders of record at the close of business on March 23, 2004 (the
"Record Date") are entitled to notice of, and to vote at, the Annual Meeting. At
the Record Date, the Company had issued and outstanding 50,587,146 shares of
common stock, without par value ("Common Stock").
Revocability of Proxies
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use by delivering to the Company
(Attention: Secretary) a written notice of revocation or a duly executed proxy
bearing a later date (including a proxy by telephone or over the Internet) or by
attending the meeting and voting in person. Attendance at the meeting will not,
by itself, revoke a proxy.
Voting
Each share of Common Stock outstanding on the Record Date is entitled
to one vote on all matters. An automated system administered by the Company's
agent tabulates the votes. Abstentions and broker non-votes are each included in
the determination of the number of shares present and voting at the Annual
Meeting and the presence or absence of a quorum. The required quorum is a
majority of the shares outstanding on the Record Date. Abstentions are counted
as votes against proposals presented to the shareholders in tabulations of the
votes cast on proposals presented to shareholders, whereas broker non-votes are
not counted for purposes of determining whether a proposal has been approved.
Voting via the Internet or by Telephone
In addition to completing the enclosed proxy card and submitting it by
mail, shareholders may also vote by submitting proxies electronically either via
the Internet or by telephone. Please note that there are separate arrangements
for using the Internet and telephone depending on whether shares are registered
in the Company's stock records directly in a shareholder's name or whether
shares are held in the name of a brokerage firm or bank. Detailed electronic
voting instructions can be found on the individual Proxy card mailed to each
shareholder.
In order to allow individual shareholders to vote their shares and to
confirm that their instructions have been properly recorded, the Internet and
telephone voting procedures have been designed to authenticate each
shareholder's identity. Shareholders voting via the Internet should be aware
that there may be costs associated with electronic access, such as usage charges
from Internet access providers and telephone companies, that will be borne
solely by the individual shareholder.
Solicitation of Proxies
The entire cost of this proxy solicitation will be borne by the
Company. The Company has retained the services of Morrow & Co., Inc. to solicit
proxies, for which services the Company has agreed to pay approximately $8,000.
In addition, the Company will also reimburse certain out-of-pocket expenses in
connection with such proxy solicitation. The Company may reimburse brokerage
firms and other persons representing beneficial owners of shares for their
expenses in forwarding soliciting materials to such beneficial owners. Proxies
may also be solicited by certain of the Company's directors, officers, and
regular employees, without additional compensation, personally or by telephone,
telegram or facsimile.
Deadline for Receipt of Shareholder Proposals for 2005 Annual Meeting
Shareholders are entitled to present proposals for actions at
forthcoming shareholder meetings of the Company if they comply with the
requirements of the appropriate proxy rules and regulations promulgated by the
Securities and Exchange Commission. Proposals of shareholders which are intended
to be considered for inclusion in the Company's proxy statement and form of
proxy related to the Company's 2005 Annual Meeting of Shareholders must be
received by the Company at its principal executive offices (Attn: Corporate
Secretary - Shareholder Proposals, Trimble Navigation Limited at 749 North Mary
Avenue, Sunnyvale, California 94085) no later than December 16, 2004.
Shareholders interested in submitting such a proposal are advised to retain
knowledgeable legal counsel with regard to the detailed requirements of the
applicable securities laws. The timely submission of a shareholder proposal to
the Company does not guarantee that it will be included in the Company's
applicable proxy statement.
The Proxy card attached hereto, to be used in connection with the
Company's current 2004 Annual Meeting, grants the proxy holders discretionary
authority to vote on any matter otherwise properly raised at such Annual
Meeting. The Company presently intends to use a similar form of proxy card for
next year's 2005 Annual Meeting of Shareholders. If the Company is not notified
at its principal executive offices of a shareholder proposal at least 45 days
prior to the one year anniversary of the mailing of this Proxy Statement, then
the proxy holders for the Company's 2005 Annual Meeting of Shareholders will
have the discretionary authority to vote against any such shareholder proposal
if it is properly raised at such annual meeting, even though such shareholder
proposal is not discussed in the Company's proxy statement related to that
shareholder meeting.
ITEM I
ELECTION OF DIRECTORS
Nominees
A board of seven directors is to be elected at the Annual Meeting. The
Board of Directors of the Company has authorized the nomination at the Annual
Meeting of the persons named below as candidates. All nominees currently serve
on the Board of Directors. The Board has determined that a majority of the
Directors are independent directors as defined by Rule 4200(a)(15) of the
National Association of Securities Dealers ("NASD") listing standards.
The names of the nominees and certain information about them, are set
forth below:
Director
Name of Nominee Age Principal Occupation Since
Steven W. Berglund 52 President and Chief Executive Officer of the Company 1999
Robert S. Cooper (1)(3) 72 President, Aerospace Electronics Division, Titan 1989
Corporation; Chairman of the Board of Directors of
the Company
John B. Goodrich (1)(3)(4) 62 Business Consultant; Secretary of the Company 1981
William Hart (1)(2)(4) 63 Venture Capital Investor and Business Consultant 1984
Ulf J. Johansson (2)(4) 58 Chairman and Founder of Europolitan Vodafone AB 1999
Bradford W. Parkinson (2) 69 Professor (Emeritus), Stanford University 1984
Nickolas W. Vande Steeg 61 Executive Vice President & Chief Operating Officer, 2003
Parker Hannifin Corporation
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(1) Member of the Compensation Committee
(2) Member of the Audit Committee
(3) Member of the Nominating Committee
(4) Member of the Finance Committee
Steven W. Berglund joined Trimble as president and chief executive
officer in March 1999. Prior to joining Trimble, Mr. Berglund was president of
Spectra Precision, a group within Spectra Physics AB, and a pioneer in the
development of laser systems. He spent 14 years at Spectra Physics in a variety
of senior leadership positions. In the early 1980s, Mr. Berglund spent a number
of years at Varian Associates in Palo Alto, where he held a variety of planning
and manufacturing roles. Mr. Berglund began his career as a process engineer at
Eastman Kodak in Rochester, New York. He attended the University of Oslo and the
University of Minnesota where he received a B.S. in chemical engineering in
1974. He later received his M.B.A. from the University of Rochester in New York
in 1977.
Robert S. Cooper was appointed Chairman of the Company's Board of
Directors in September 1998. Dr. Cooper has served as a Director of the Company
since December 1989. Since 2000, Dr. Cooper has been the President of the
Aerospace Electronics Division of Titan Corporation. From 1985 to 2000, Dr.
Cooper was president, chief executive officer, and chairman of the board of
directors of Atlantic Aerospace Electronics Corporation, an aerospace company,
until the company was acquired by Titan Corporation. Dr. Cooper also serves on
the board of directors of BAE Systems North America. From 1981 to 1985, he was
Assistant Secretary of Defense for Research and Technology and simultaneously
held the position of Director for the Defense Advanced Research Projects Agency
(DARPA). Dr. Cooper received a B.S. degree in Electrical Engineering from State
University of Iowa in 1954, a M.S. degree in Electrical Engineering from Ohio
State University in 1958, and a Doctor of Science degree in Electrical
Engineering from the Massachusetts Institute of Technology in 1963.
John B. Goodrich has served as a Director of the Company since January
1981. Mr. Goodrich retired from the law firm of Wilson Sonsini Goodrich &
Rosati, where he practiced from 1970 until February 2002. Mr. Goodrich,
currently a business consultant, serves on the board of directors of Tessera
Technology, Inc., a developer of semiconductor packaging technology and on the
boards of several privately held corporations in high technology businesses. Mr.
Goodrich received a B.A. degree from Stanford University in 1963, a J.D. from
the University of Southern California in 1966, and a L.L.M. in Taxation from New
York University in 1970.
William Hart has served as a Director of the Company since December
1984. Mr. Hart is an advisor to early-stage technology and financial services
companies. Mr. Hart retired from Technology Partners, a Silicon Valley venture
capital firm, in March 2001. As the founder and Managing Partner of Technology
Partners, he led the firm for 21 years. Mr. Hart was previously a senior officer
and director of Cresap, McCormick and Paget, management consultants, and held
positions in field marketing and manufacturing planning with IBM Corporation.
Mr. Hart has served on the boards of directors of numerous public and privately
held technology companies. Mr. Hart received a Bachelor of Management
Engineering degree from Rensselaer Polytechnic Institute in 1965 and an M.B.A.
from the Amos Tuck School of Business at Dartmouth College in 1967.
Ulf J. Johansson has served as a Director of the Company since December
1999. Dr. Johansson is a Swedish national with a distinguished career in
communications technology. He is a founder and has been chairman of Europolitan
Vodafone AB, a GSM mobile telephone operator in Sweden since February 1990. Dr.
Johansson currently serves as chairman of Frontec AB, an eBusiness consulting
company, Zodiak Venture AB, a venture fund focused on information technology.
Dr. Johansson also currently serves on the board of directors of Novo Nordisk
A/S, a Danish pharmaceutical/life science company as well as several privately
held companies. During 1998-2003 Dr. Johansson served as chairman of the
University Board of Royal Institute of Technology in Stockholm and formerly also
served as president and chief executive officer of Spectra-Physics, and
executive vice president at Ericsson Radio Systems AB. Dr. Johansson received a
Master of Science in Electrical Engineering, and a Doctor of Technology
(Communication Theory) from the Royal Institute of Technology in Sweden.
Bradford W. Parkinson has served as a Director of the Company since
1984. Currently, Dr. Parkinson is the Edward C. Wells Endowed Chair professor
(emeritus) at Stanford University and has been a Professor of Aeronautics and
Astronautics at Stanford University since 1984. Dr. Parkinson has also directed
the Gravity Probe-B spacecraft development project at Stanford University,
sponsored by NASA, and has been program manager for several Federal Aviation
Administration sponsored research projects on the use of Global Positioning
Systems for navigation. While on a leave of absence from Stanford University,
Dr. Parkinson served as the Company's President and Chief Executive Officer from
August 1998 through March 1999, while the Company searched for a Chief Executive
Officer. From 1980 to 1984 he was group vice president and general manager for
Intermetrics, Inc. where he directed five divisions. In 1979, Dr. Parkinson
served as group vice president for Rockwell International directing business
development and advanced engineering. In 2003, he was awarded the Draper Prize
by the National Academy of Engineering for the development of GPS. Dr. Parkinson
received a B.S. degree from the U.S. Naval Academy in 1957, an M.S. degree in
Aeronautics/Astronautics Engineering from Massachusetts Institute of Technology
in 1961 and a Ph.D. in Astronautics Engineering from Stanford University in
1966.
Nickolas W. Vande Steeg joined the Company's Board of Directors in July
2003. Mr. Vande Steeg is an executive vice president and chief operating officer
with Parker Hannifin Corporation and has been with the company since 1971.
Parker Hannifin is a diversified manufacturer of motion and control technologies
and systems solutions for a wide variety of commercial, mobile, industrial and
aerospace markets. Currently, he is overseeing three industrial groups,
Hydraulics, Fluid Connectors and Automation as well as the "lean organization"
element of Parker Hannifin's WIN Strategy, which is focused on premier customer
service, financial performance and profitable growth. Mr. Vande Steeg began his
career at John Deere Corporation serving as an Industrial Engineer and
Industrial Relations Manager from 1965 to 1970. Mr. Vande Steeg received his
B.S. in Industrial Engineering from the University of California, Irvine in 1968
and an M.B.A. from Pepperdine University in Malibu, California in 1985.
Vote Required
The seven nominees receiving the highest number of affirmative votes of
the shares entitled to be voted shall be elected as directors. Every shareholder
voting for the election of directors may cumulate such shareholder's votes and
give one candidate a number of votes equal to the number of directors to be
elected multiplied by the number of shares held by the shareholder as of the
Record Date, or distribute such shareholder's votes on the same principle among
as many candidates as the shareholder may select, provided that votes cannot be
cast for more than the number of directors to be elected. However, no
shareholder shall be entitled to cumulate votes unless the candidate's name has
been placed in nomination prior to the voting and the shareholder, or any other
shareholder, has given notice at the meeting prior to the voting of the
intention to cumulate the shareholder's votes.
Votes withheld from any director are counted for purposes of
determining the presence or absence of a quorum, but have no other legal effect
under California law. While there is no definitive statutory or case law
authority in California as to the proper treatment of abstentions and broker
non-votes in the election of directors, the Company believes that both
abstentions and broker non-votes should be counted solely for purposes of
determining whether a quorum is present at the Annual Meeting. In the absence of
controlling precedent to the contrary, the Company intends to treat abstentions
and broker non-votes with respect to the election of directors in this manner.
Unless otherwise directed, the proxy holders will vote the proxies
received by them for the seven nominees named above. In the event that any such
nominee is unable or declines to serve as a director at the time of the Annual
Meeting, the proxies will be voted for any nominee who shall be designated by
the present Board of Directors to fill the vacancy. In the event that additional
persons are nominated for election as directors, the proxy holders intend to
vote all proxies received by them in such a manner as will ensure the election
of as many of the nominees listed above as possible. In such event, the specific
nominees to be voted for will be determined by the proxy holders. As of the date
of this Proxy Statement, the Board of Directors has no reason to believe that
any nominee will be unable or will decline to serve as a director. The directors
elected will hold office until the next annual meeting of shareholders and until
their successors are duly elected and qualified.
Recommendation of the Board of Directors
The Board of Directors recommends that shareholders vote FOR the
election of the above-named persons to the Board of Directors of the Company.
Board Meetings and Committees
The Board of Directors held 10 meetings during the fiscal year ended
January 2, 2004. With the exception of Mr. Vande Steeg, who joined the Board of
Directors in July 2003, no director attended fewer than 75% of the aggregate of
all the meetings of the Board of Directors and the meetings of the committees,
if any, upon which such director also served during the fiscal year ended
January 2, 2004. It is the Company's policy to encourage directors to attend the
Company's Annual Meeting of Shareholders. Five out of six members of the board
of directors attended the 2003 Annual Meeting.
Shareholder Communications with Directors
The Board of Directors has established a process to receive
communications from shareholders. Shareholders of the Company may communicate
with one or more of the Company's Directors (including any board committee or
group of directors) by mail in care of Board of Directors, Trimble Navigation
Limited, 749 North Mary Avenue, Sunnyvale, California 94085. Such communications
should specify the intended recipient or recipients.
Audit Committee
The Board of Directors has a standing Audit Committee. The current
members of the Audit Committee are directors Hart, Johansson and Parkinson, and
director Johansson currently serves as the committee chairman. The Audit
Committee held eight meetings during the 2003 fiscal year. The purpose of the
Audit Committee is to make such examinations as are necessary to monitor the
corporate financial reporting and the internal and external audits of the
Company, to provide to the Board of Directors the results of its examinations
and recommendations derived therefrom, to outline to the Board of Directors
improvements made, or to be made, in internal accounting controls, to nominate
independent auditors, and to provide such additional information as the
committee may deem necessary to make the Board of Directors aware of significant
financial matters which require the Board's attention.
Mr. Hart and Mr. Johansson are independent directors as defined by
applicable Nasdaq National Market Rules and listing standards. Director
Parkinson is not independent under Rule 4200(a)(15) of the Nasdaq National
Marketplace Rules due to his receiving $72,000 of consulting fees in the 2001
fiscal year. See "Compensation of Directors, Other Arrangements." The Board of
Directors has determined, pursuant to Rule 4350(d)(2)(B) of the Nasdaq National
Marketplace Rules, that it is in the best interests of the Company and its
shareholders to maintain Dr. Parkinson's participation on the Audit Committee
due to his having served on the Board of Directors since 1984 and having been a
long-standing member of the Audit Committee. Dr. Parkinson served as Interim
President & CEO of the Company from August 1998 to March 1999, which the Board
of Directors believes gives him a unique perspective and the ability to make a
valuable contribution to the Audit Committee.
All current members of the Audit Committee are financially
sophisticated and are able to read and understand fundamental financial
statements, including a balance sheet, income statement and cash flow statement.
The Board of Directors has determined that Director Hart is a "financial expert"
as that term is defined in the rules promulgated by the Securities and Exchange
Commission, serving on the Audit Committee. In addition to serving as CEO and
CFO of a venture capital firm, Director Hart has reviewed and analyzed numerous
companies' financial statements in managing venture capital investment funds for
more than 20 years. During his career he has served on the board of directors of
numerous public and privately held companies.
Compensation Committee
The Board of Directors has a standing Compensation Committee. The
current members of the Compensation Committee are directors Cooper, Goodrich and
Hart, and director Goodrich currently serves as the committee chairman. The
Compensation Committee held one meeting during the 2003 fiscal year. The purpose
of the Compensation Committee is to review and make recommendations to the full
Board of Directors with respect to all forms of compensation to be paid or
provided to the Company's executive officers.
Nominating and Corporate Governance Committee
The Company has a Nominating and Corporate Governance Committee (the
"Nominating/Governance Committee"). The functions of the Nominating/Governance
Committee include the following:
o identifying and recommending to the Board individuals qualified to
serve as directors of the Company;
o recommending to the Board directors to serve on committees of the
Board;
o advising the Board with respect to matters of Board composition and
procedures;
o developing and periodically reviewing the corporate governance
principles adopted by the Board; and
o overseeing the evaluation of the Board and the Company's management.
The Nominating/Governance Committee is governed by a charter, a current
copy of which is available on our corporate website at www.trimble.com. The
current members of the Nominating/Governance Committee are director Cooper, who
serves as the chairman, and director Goodrich, each of whom is an independent
director under the Nasdaq listing standards. The Nominating/Governance Committee
met two times during the fiscal year 2003.
The Nominating/Governance Committee will consider director candidates
recommended by shareholders. In considering candidates submitted by
shareholders, the Nominating/Governance Committee will take into consideration
the needs of the Board and the qualifications of the candidate. To have a
candidate considered by the Nominating/Governance Committee, a shareholder must
submit the recommendation in writing and must include the following information:
o The name of the shareholder and evidence of the person's ownership of
Company stock, including the number of shares owned and the length of
time of ownership; and
o The name of the candidate, the candidate's resume or a listing of his
or her qualifications to be a director of the Company and the person's
consent to be named as a director if selected by the
Nominating/Governance Committee and nominated by the Board.
The shareholder recommendation and information described above must be
sent to the Committee Chairman in care of Corporate Secretary at Trimble
Navigation Limited, 749 North Mary Avenue, Sunnyvale, California 94085 and must
be received by the Corporate Secretary not less than 120 days prior to the
anniversary date of the Company's most recent annual meeting of shareholders.
The Nominating/Governance Committee believes that the minimum
qualifications for serving as a director of the Company are that a nominee
demonstrate, by significant accomplishment in his or her field, an ability to
make a meaningful contribution to the Board's oversight of the business and
affairs of the Company and have an impeccable record and reputation for honest
and ethical conduct in both his or her professional and personal activities. In
addition, the Nominating/Governance Committee will examine a candidate's
specific experiences and skills, time availability in light of other
commitments, potential conflicts of interest and independence from management
and the Company.
The Nominating/Governance Committee identifies potential nominees by
asking current directors and executive officers to notify the Committee if they
become aware of persons, meeting the criteria described above, who have had a
change in circumstances that might make them available to serve on the Board.
The Nominating/Governance Committee also, from time to time, may engage firms
that specialize in identifying director candidates. As described above, the
Committee will also consider candidates recommended by shareholders.
Once a person has been identified by the Nominating/Governance
Committee as a potential candidate, the Committee may collect and review
publicly available information regarding the person to assess whether the person
should be considered further. If the Nominating/Governance Committee determines
that the candidate warrants further consideration, the Chairman or another
member of the Committee contacts the person. Generally, if the person expresses
a willingness to be considered and to serve on the Board, the
Nominating/Governance Committee requests information from the candidate, reviews
the person's accomplishments and qualifications, including in light of any other
candidates that the Committee might be considering, and conducts one or more
interviews with the candidate. In certain instances, Committee members may
contact one or more references provided by the candidate or may contact other
members of the business community or other persons that may have greater
first-hand knowledge of the candidate's accomplishments. The Committee's
evaluation process does not vary based on whether or not a candidate is
recommended by a shareholder.
Director Vande Steeg, who joined the Board of Directors in July 2003,
was recommended for consideration by the Nominating/Governance Committee by a
third-party search firm. Such third-party search firm was paid a fee to assist
in identifying and evaluating suitable candidates for potential nominees to the
Company's Board of Directors. The firm also conducted reference checks and
interviewed selected candidates.
Finance Committee
The Board of Directors formed a Finance Committee in October 2001 for
the purpose of assisting the Board of Directors and the management of the
Company with certain matters involving the financing of the Company's business
but not with respect to matters relating to budgeting or to financial or
managerial accounting decisions for the Company. The current members of the
Finance Committee are directors Goodrich, Hart and Johansson, and director Hart
currently serves as the committee chairman. The Finance Committee held two
meetings during fiscal year 2003. Since being established, the Finance Committee
has assisted the Company with assessing the adequacy of the Company's financial
resources to meet current and anticipated strategic and operating needs,
understanding the economic and financial issues and risks facing the Company as
well as the overall financial soundness of the Company, finding programs for
obtaining additional financial resources, determining the appropriateness and
risks of proposed financing arrangements and participating in the discussions
and negotiations related to proposed financing arrangements.
Compensation Committee Report
The Compensation Committee of the Board of Directors (the "Compensation
Committee") establishes the general compensation policies of the Company and the
compensation plans and specific compensation levels for executive officers of
the Company. The Compensation Committee believes that the compensation of the
Chief Executive Officer should be primarily influenced by the overall financial
performance of the Company.
The Compensation Committee also believes that the compensation of the
Chief Executive Officer should be established within a range of compensation for
similarly situated chief executive officers of comparable companies in the high
technology and related industries in the Standard & Poor's High Technology
Composite Index ("peer companies") and their performance according to data
obtained by the Compensation Committee from independent outside consultants and
publicly available data, such as proxy data from peer companies as adjusted by
the Compensation Committee's consideration of the particular factors influencing
the Company's performance and current situation. The Standard & Poor's High
Technology Composite Index is not the same index used for purposes of the
Company performance graph. A portion of the Chief Executive Officer's
compensation package is established as base salary and the balance is variable
and consists of an annual cash bonus and/or stock option grants.
Within these established ranges and guidelines, and taking into account
the Company's historical performance compared to peer companies, the
Compensation Committee and Board of Directors also carefully considered the
current risks and challenges facing the Company as well as the individual
qualifications, skills and past performance of Mr. Berglund. Based on these
considerations, the Compensation Committee and Board of Directors approved a
base annual salary of $453,200 for Mr. Berglund beginning July 16, 2003. See
also "Employment Contracts and Termination of Employment and Change-in-Control
Arrangements."
The Compensation Committee carefully reviewed and considered its cash
bonus program for fiscal year 2003 for senior executives of the Company. Such
program provided for an annual cash bonus, based upon a maximum eligible
percentage of each executive's base salary within a range of target incentives
as reported by professional compensation surveys. The percentage for each
executive was then adjusted by factoring in an evaluation of such individual's
performance as related to the Company's financial performance. The Board of
Directors and the Committee have approved a similar cash bonus program for
fiscal year 2004, which will provide interim payments to be made on a quarterly
basis and a single cash bonus to be paid at the end of the year. The total size
of the Company's bonus pool for all employees, including executives, was
determined with respect to the Company's performance in meeting certain goals
for both revenue and income for fiscal year 2003. The total bonus pool for all
employees, including all executives, was approximately $4,600,000 for fiscal
year 2003. Mr. Berglund earned a bonus of $464,667 out of the total bonus pool.
Based on the Board of Directors' and the Compensation Committee's
evaluation of the Chief Executive Officer's ability to influence the long-term
growth and profitability of the Company, and in connection with his performance
review during the 2003 fiscal year, the Compensation Committee and the Board of
Directors approved a new option grant for Mr. Berglund to purchase an additional
150,000 shares of the Company's Common Stock at the then current fair market
value of $17.00 per share (as adjusted for the 3-for-2 stock split on March 4,
2004). Such options vest 40% after the second year and monthly thereafter such
that the option is vested entirely after five years. Upon a change of control of
the Company, Mr. Berglund would receive an additional 12 months of vesting.
The Compensation Committee also adopted similar policies with respect
to the overall compensation of other senior executive officers of the Company. A
portion of each compensation package was established as base salary, and the
balance is variable and consists of an annual cash bonus and stock option
grants. Using salary survey data supplied by outside consultants and other
publicly available data, such as proxy data from peer companies, the
Compensation Committee established base salaries for each senior executive
within a range of salaries of similarly situated executive officers at
comparable companies. In addition, these base salaries of senior executive
officers were then adjusted by the Compensation Committee taking into
consideration factors such as the relative performance of the Company, the
performance of the business unit for which the senior executive is responsible
and the individual's past performance and future potential.
The size of option grants, if any, to other senior executive officers
was determined by the Compensation Committee's evaluation of each executive's
ability to influence the Company's long-term growth and profitability. The
Company also has a metric measurement system in place with respect to option
grants made to all new employees under the Company's option plans in order to
ensure consistency among grants and competitiveness in the marketplace.
Generally, these options are granted at the then current market price, and
because the value of an option bears a direct relationship to the Company's
stock price, it is an incentive for managers to create value for shareholders.
The Compensation Committee therefore views stock options as an important
component of its long-term, performance-based compensation philosophy.
In general, the Company reviews all employees and executive officers of
the Company, other than the Chief Executive Officer, as part of a single
worldwide program (exclusive of geographic sites where work collectives or
unions govern this activity). This single review plan was adopted to provide a
common, annual review date for all employees and executive officers. Under the
single review plan, the total compensation of all employees of the Company,
including executive officers, will be reviewed annually in accordance with the
same common criteria. Base salary guidelines have been established and will be
revised periodically based upon market conditions, the economic climate and the
Company's financial position. Merit increases, if any, for all employees and
executive officers of the Company will be based upon the following criteria: the
individual employee's performance for the year as judged against his/her job
goals and responsibilities, the individual employee's salary, individual skill
set and performance as compared to other employees in the same or similar
department, the individual employee's position in the salary grade, the
employee's salary relative to market data for the position and the Company's
fiscal budget and any associated restrictions. The annual review for fiscal year
2003 is set for April 2004.
Submitted by the Compensation Committee of the Company's Board of Directors,
Robert S. Cooper, Member John B Goodrich, Chairman William Hart, Member
Compensation Committee Compensation Committee Compensation Committee
Internal Revenue Code Section 162(m) Implications for Executive Compensation
Section 162(m) of the Internal Revenue Code generally limits the
deductibility by the Company of compensation in excess of $1,000,000 paid to
certain executive officers to the extent the compensation is not considered
performance-based for purposes of Section 162(m). All compensation paid by the
Company during 2003 was fully deductible for federal income tax purposes.
However, certain options previously granted by the Company would not be
considered performance-based for purposes of Section 162(m). Consequently, to
the extent that non-performance based compensation received by certain executive
officers in a future year would exceed $1,000,000, the amount in excess of
$1,000,000 would not be deductible by the Company.
Compensation Committee Interlocks and Insider Participation
Robert S. Cooper, John B. Goodrich and William Hart served as the
members of the Company's Compensation Committee during the 2003 fiscal year. In
August 1998, Dr. Cooper was appointed to serve as the Company's Chairman of the
Board of Directors and became an employee of the Company through August 1999
pursuant to an agreement approved by a majority of the disinterested members of
the Board of Directors. Since 1998, Mr. Goodrich has served as the Company's
corporate secretary; however, he is not, and has never been an employee of the
Company. In addition, Mr. Goodrich retired in February 2002 as a member of the
law firm of Wilson Sonsini Goodrich & Rosati, P.C. where he practiced from 1970.
The law firm was retained by the Company during the previous fiscal years as
outside counsel to provide certain legal services to the Company. See
"Compensation of Directors" and "Certain Relationships and Related
Transactions."
Compensation of Directors
Cash Compensation. In order to help attract additional new outside
candidates to serve on the Company's Board of Directors, the Board of Directors
carefully considered and adopted a cash compensation policy effective January 1,
2004. Under this cash compensation plan, all non-employee directors receive an
annual cash retainer of $20,000 to be paid quarterly in addition to a fee of
$2,000 for each board meeting attended in person and $500 for each board or
committee meeting attended via telephone conference. Members of designated
committees of the Board of Directors receive $1,000 per meeting which is not
held on the same day as a meeting of the full Board of Directors. Non-employee
directors are also reimbursed for local travel expenses or paid a fixed travel
allowance based on the distance to the meeting, and reimbursed for other
necessary business expenses incurred in the performance of their services as
directors of the Company.
1990 Director Stock Option Plan. The Company's 1990 Director Stock
Option Plan (the "Director Plan") was adopted by the Board of Directors on
December 19, 1990 and approved by the shareholders on April 24, 1991. An
aggregate of 570,000 shares (as adjusted for the 3-for-2 stock split on March 4,
2004) of the Company's Common Stock has been previously reserved for grants
issuable pursuant to the Director Plan ("Director Options"). The Director Plan
provides for the annual granting of nonstatutory stock options to each
non-employee director of the Company (the "Outside Directors"). Pursuant to the
terms of the Director Plan, Outside Directors were granted a one-time option to
purchase 22,500 shares (as adjusted for the 3-for-2 stock split on March 4,
2004) of the Company's Common Stock upon initially joining the Board of
Directors. Thereafter, each year, each Outside Director receives an additional
option grant to purchase 7,500 shares (as adjusted for the 3-for-2 stock split
on March 4, 2004) if re-elected at the annual meeting of shareholders. All such
Director Options have an exercise price equal to the fair market value of the
Company's Common Stock on the date of grant, vest monthly over a period of three
years, and have a ten year term of exercise. The Director Plan expired on
December 19, 2003 and the Board of Directors has adopted a policy to continue to
grant options to Outside Directors from the Company's 2002 Stock Plan.
As of the Record Date, options to purchase an aggregate of 287,501
shares, having an average exercise price of $13.27 per share and expiring from
April 2004 to May 2013 were outstanding. During the last fiscal year ended
January 2, 2004, directors Cooper, Goodrich, Hart, Johansson and Parkinson were
each granted Director Options to purchase 7,500 shares of the Company's Common
Stock at an exercise price of $15.71 per share (as adjusted for the 3-for-2
stock split on March 4, 2004). Director Vande Steeg was granted an option to
purchase 22,500 shares of the Company's Common Stock at an exercise price of
$17.00 per share (as adjusted for the 3-for-2 stock split on March 4, 2004) from
the 2002 Stock Plan.
Other Arrangements. In connection with agreeing to serve as the
Company's Chairman of the Board of Directors beginning in August 1998, Dr.
Cooper entered into a standby consulting agreement with the Company for which he
would have been paid on an hourly basis for consulting services on an as needed
basis as determined by the Company's Chief Executive Officer. This Agreement
expired on September 1, 2003 and no compensation was paid under this Agreement
during the 2003 fiscal year. Dr. Cooper continues to serve as the Company's
Chairman of the Board of Directors, but has not received any additional
compensation for such services.
In connection with agreeing to serve as the Company's interim President
and Chief Executive Officer beginning in August 1998, Dr. Parkinson entered into
a consulting agreement with the Company which expired June 1, 2002. In addition,
Dr. Parkinson also entered into a standby consulting agreement with the Company
for which he would have been paid on an hourly basis for consulting services on
an as needed basis as determined by the Company's Chief Executive Officer. Dr.
Parkinson and the Company terminated this agreement as of December 31, 2003. No
compensation was paid to Dr. Parkinson under this Agreement during the 2003
fiscal year. Dr. Parkinson was paid $72,000 and $54,000 for consulting services
for fiscal years 2001 and 2002, respectively.
In June 2000, the Company entered into an agreement for professional
services with Bjursund Invest AB, a company which is wholly-owned by Ulf J.
Johansson. Pursuant to the terms of this agreement, Dr. Johansson provided
certain consulting and advisory services to the Company in Sweden and Europe in
addition to his serving on the Company's Board of Directors. The Company paid
$4,000 per day for such services with an annual guaranteed minimum payment of
$24,000 together with expenses invoiced at cost. The agreement was terminated as
of December 31, 2003. The Company paid a total of $24,000 under this agreement
for services rendered during the fiscal year 2003. Dr. Johansson was paid
$24,000 and $29,508 under this agreement for services rendered during fiscal
years 2001 and 2002, respectively.
Audit Committee Report
The information contained in this report shall not be deemed to be
"soliciting material" or "filed" or incorporated by reference in future filings
with the SEC, or subject to the liabilities of Section 18 of the Securities
Exchange Act of 1934, except to the extent that it is specifically incorporated
by reference into a document filed under the Securities Act of 1933 or the
Securities Exchange Act of 1934.
The Audit Committee is a standing committee of the Board of Directors
and operates under a written charter adopted by the Board of Directors. Among
its other functions, the Audit Committee recommends to the Board of Directors,
subject to shareholder ratification, the selection of the Company's independent
auditor.
The Audit Committee has reviewed and discussed the Company's
consolidated financial statements and financial reporting process with the
Company's management, which has the primary responsibility for the Company's
consolidated financial statements and financial reporting processes, including
its system of internal controls. Ernst & Young LLP ("Ernst & Young"), the
Company's current independent auditor, is responsible for performing an
independent audit of the consolidated financial statements of the Company and
for expressing an opinion on the conformity of those financial statements with
generally accept accounting principles. The Audit Committee has reviewed and
candidly discussed with Ernst & Young the overall scope and plans of its audits,
its evaluation of the Company's internal controls, the overall quality of the
Company's financial reporting processes and accounting principles and judgment,
and the clarity of disclosures in the Company's consolidated financial
statements.
The Audit Committee has discussed with Ernst & Young those matters
required to be discussed by Statement of Auditing Standards No. 61
("Communication With Audit Committees"). Ernst & Young has provided the Audit
Committee with the written disclosures and the letter required by the
Independence Standards Board Standard No. 1 ("Independence Discussions with
Audit Committee"), and has also discussed with Ernst & Young that firm's
independence from management and the Company. The Audit Committee has also
determined that Ernst & Young's provision of non-audit services (such as
tax-related services) to the Company and its affiliates is compatible with
maintaining the independence of Ernst & Young with respect to the Company and
its management.
Based on the Audit Committee's discussion with management and the
independent auditors, and the Audit Committee's review of the representation of
management and the report of the independent auditor to the Audit Committee, the
Audit Committee recommended that the Board of Directors include the audited
consolidated financial statements in the Company's Annual Report on Form 10-K
for the fiscal year ended January 2, 2004 for filing with the Securities and
Exchange Commission.
Submitted by the Audit Committee of the Company's Board of Directors,
William Hart, Member Ulf J. Johansson, Chairman Bradford W. Parkinson, Member
Audit Committee Audit Committee Audit Committee
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
The following table sets forth the shares of the Company's Common Stock
beneficially owned as of the Record Date (unless otherwise noted below) by: (i)
all persons known to the Company to be the beneficial owners of more than 5% of
the Company's outstanding Common Stock, (ii) each director of the Company
(including nominees), (iii) the executive officers of the Company named in the
Summary Compensation Table presented in this Proxy Statement, and (iv) all
directors and executive officers of the Company, as a group:
Shares
Beneficially Owned (2)
----------------------
5% Shareholders, Directors and Nominees, and Executive Officers (1) Number Percent (%)
------------------------------------------------------------------- ------ -----------
PRIMECAP Management Company 3,140,422 6.21%
225 South Lake Avenue #400, Pasadena, CA 91101 (3)
Steven W. Berglund (4)................................................... 608,140 1.19%
Robert S. Cooper (5)..................................................... 133,500 *
John B. Goodrich (6)..................................................... 61,418 *
William Hart (7)......................................................... 115,113 *
Ulf J. Johansson (8)..................................................... 37,500 *
Bradford W. Parkinson (9)................................................ 98,778 *
Nickolas W. Vande Steeg (10)............................................. 6,250 *
Mary Ellen Genovese (11)................................................. 248,288 *
Dennis L. Workman (12)................................................... 106,675 *
Irwin L. Kwatek (13).................................................... 52,701 *
Joseph F. Denniston (14)................................................ 70,260 *
All Directors and Executive Officers, as a group
(18 persons) (4)-(14)............................................... 2,198,592 4.20%
----------
* Indicates less than 1%
(1) Except as otherwise noted in the table, the business address of each of the
persons named in this table is: c/o Trimble Navigation Limited, 749 North
Mary Avenue, Sunnyvale, California 94085.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission (the "SEC"). In computing the number of
shares beneficially owned by a person and the percentage ownership of that
person, shares of Common Stock subject to options or warrants held by that
person that are exercisable within 60 days of the Record Date are deemed
outstanding. Such shares, however, are not deemed outstanding for purposes
of computing the ownership of any other person. To our knowledge, except as
indicated in the footnotes to this table and pursuant to applicable
community property laws, the stockholder named in the table has sole voting
and investment power with respect to the shares set forth opposite such
stockholder's name.
(3) The information is based upon Schedule 13F as filed with the SEC on
February 13, 2004.
(4) Includes 570,625 shares subject to stock options.
(5) Includes 60,000 shares subject to stock options.
(6) Includes 25,000 shares subject to stock options.
(7) Includes 60,000 shares subject to stock options.
(8) Includes 37,500 shares subject to stock options.
(9) Includes 4 shares held by Dr. Parkinson's spouse, 3,772 shares held in a
charitable remainder trust and 90,000 shares subject to stock options.
(10) Includes 6,250 shares subject to stock options.
(11) Includes 233,576 shares subject to stock options.
(12) Includes 101,377 shares subject to stock options.
(13) Includes 52,701 shares subject to stock options.
(14) Includes 68,877 shares subject to stock options.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires that the Company's executive officers and directors and persons who own
more than 10% of a registered class of the Company's equity securities during
the fiscal year ended January 2, 2004 file reports of initial ownership on Form
3 and changes in ownership on Form 4 or 5 with the SEC. Such officers, directors
and 10% shareholders are also required by SEC rules to furnish the Company with
copies of all Section 16(a) reports they file.
To the Company's knowledge, based solely on its review of the copies of
such forms received by it, the Company believes that, during the last fiscal
year ended January 2, 2004, all Section 16(a) filing requirements applicable to
its officers, directors and 10% shareholders were complied with on a timely
basis, except that Dr. Cooper filed a Form 4 in June 2003 to report an
acquisition of 1,000 shares of Company common stock in October 1995.
EXECUTIVE COMPENSATION
The following table sets forth the compensation, including bonuses,
earned during each of the Company's last three fiscal years ending January 2,
2004 by (i) all persons who served as the Company's Chief Executive Officer
during the last completed fiscal year, and (ii) the four other most highly
compensated executive officers of the Company serving at the end of the last
completed fiscal year:
Summary Compensation Table
Long-term
Annual Compensation(1) Compensation (2)
---------------------- ----------------
Securities
Other Annual All Other Underlying
Name and Principal Position Year Salary($) Bonus($) Compensation($) Compensation (3)($) Options(#)
--------------------------- ---- --------- -------- --------------- ------------------- ----------
Steven W. Berglund 2003 445,990 464,667 88,640 (4) 150,000
President and Chief Executive 2002 440,000 34,086 91,160 (4) 45,000
Officer 2001 440,000 0 95,840 (4) 37,500
Mary Ellen Genovese 2003 252,996 131,910 2,500 18,000
Chief Financial Officer and 2002 247,568 34,086 2,500 30,000
Vice President Finance 2001 243,202 0 1,100 60,000
Dennis L. Workman 2003 204,456 165,403 2,500 37,500
Vice President and General Manager 2002 200,070 131,803 2,500 37,500
Component Technologies Division 2001 200,070 26,903 2,072 37,500
Irwin L. Kwatek 2003 212,021 138,054 3,595 2,500 18,000
Vice President and General Counsel 2002 206,000 7,485 6,335 2,500 15,000
2001 206,539 0 14,520 (5) 18,000
Joseph F. Denniston (6) 2003 229,932 119,887 2,500 12,000
Vice President, Operations 2002 225,000 34,086 2,500 22,500
2001 150,575 50,000 300 105,000
----------
(1) Compensation deferred at the election of an executive is included in the
applicable category and in the year earned.
(2) The Company has not issued stock appreciation rights or restricted stock
awards. The Company has no "long-term incentive plan" as the term is
defined in the applicable rules.
(3) Represents Company matching contributions pursuant to Section 401(k) of the
Internal Revenue Code of 1986, as amended, unless otherwise noted, for the
periods in which they accrued. All full-time employees are eligible to
participate in the Company's 401(k) plan.
(4) Represents only the portion of a loan, including related accrued interest
that was forgiven by the Company during the year. The loan was originally
made in connection with hiring Mr. Berglund for the purpose of assisting
him with relocating to California and obtaining a primary residence. See
"Certain Relationships and Related Transactions."
(5) Includes $13,320 paid to Mr. Kwatek for assistance with relocation to
Northern California, and $1,200 in Company matching contributions pursuant
to Section 401(k) of the Internal Revenue Code of 1986, as amended.
(6) Mr. Denniston has served as the Company's Vice President of Operations
since April of 2001.
Option Grants in Last Fiscal Year
The following table sets forth the number and terms of options granted
to the persons named in the Summary Compensation Table during the last fiscal
year ended January 2, 2004:
Individual Grants (1)
--------------------- Potential Realizable
Number of % of Total Value at Assumed
Securities Options Annual Rates of Stock
Underlying Granted to Exercise Price Appreciation
Options Employees in Price Expiration for Option Term (5)
Name Granted(#) Fiscal Year(2) ($/Share) (3) Date (4) 5% ($) 10% ($)
---- ---------- -------------- ------------- -------- ------ -------
Steven W. Berglund........... 150,000 11.56% $17.00 7/16/2013 $1,603,950 $4,064,700
Mary Ellen Genovese.......... 18,000 1.39% $17.00 7/16/2013 $ 192,747 $ 487,764
Dennis L. Workman............ 37,500 2.9% $17.00 7/16/2013 $ 400,987 $1,016,175
Irwin L. Kwatek.............. 18,000 1.39% $17.00 7/16/2013 $ 192,747 $ 487,764
Joseph F. Denniston.......... 12,000 .92% $17.00 7/16/2013 $ 128,316 $ 325,176
----------
(1) All share amounts and realized values shown in the table above have been
adjusted for the 3-for-2 stock split on March 4, 2004).
(2) The Company granted options to purchase an aggregate of 1,296,472 shares
(as adjusted for the three-for-two stock split on March 4, 2004) of the
Company's Common Stock to employees, consultants and non-employee directors
during fiscal year 2003 pursuant to the Company's 2002 Stock Plan and the
1990 Director Stock Option Plan.
(3) All options presented in this table were granted at an exercise price equal
to the fair market value of a share of the Company's Common Stock on the
date of grant, as quoted on the Nasdaq National Market System.
4) All options presented in this table may terminate before the stated
expiration following the termination of the optionee's status as an
employee, consultant or director, including upon the optionee's death or
disability.
(5) The assumed 5% and 10% compound rates of annual stock appreciation are
mandated by the rules of the Securities and Exchange Commission and do not
represent the Company's estimate or projection of future Common Stock
prices. All grants listed in the table vest 20% after the first year and
monthly thereafter such that full vesting occurs five years from the date
of the grant. All options listed have a ten-year term of exercise which,
assuming the specified rates of annual compounding, results in total
appreciation of 62.9% (at 5% per year) and 159.4% (at 10% per year) for the
ten-year option term. All options listed would accelerate upon a change of
control of the Company, if not assumed by the successor to the Company. In
any event, upon change of control Mr. Berglund and Ms. Genovese would
receive an additional 12 months of vesting.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table provides information on option exercises by the
persons named in the Summary Compensation Table during the last fiscal year
ended January 2, 2004:
Number of Securities Underlying Value of Unexercised
Shares Unexercised Options at Fiscal In-the-Money Options at Fiscal
Acquired on Value Year-End (#)(1) Year-End ($) (2)
Exercise (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
------------ ----------- ----------- ------------- ----------- -------------
Name
----
Steven W. Berglund 61,500 $785,301 533,750 237,500 $10,085,567 $2,520,577
Mary Ellen Genovese - - 211,450 109,550 $ 1,851,449 $ 876,545
Dennis L. Workman - - 91,625 92,125 $ 1,142,569 $ 501,810
Irwin L. Kwatek - - 45,576 67,925 $ 515,090 $ 614,559
Joseph F. Denniston 4,500 $ 25,500 58,252 76,750 $ 824,448 $1,007,102
(1) All share amounts and realized values shown in the table above have been
adjusted for the 3-for-2 stock split on March 4, 2004).
(2) Represents the market value of the Common Stock underlying the options at
fiscal year end, less the exercise price of "in-the-money" options. The
closing price of the Company's Common Stock on January 2, 2004 as quoted on
the Nasdaq National Market System was $24.48 per share (as adjusted for the
3-for-2 stock split on March 4, 2004).
Changes to Compensation Plans
As described further in this Proxy Statement, the Company has proposed
resolutions to increase the number of shares reserved under the 2002 Stock Plan
(see Item II below) and to increase the number of shares of Common Stock
reserved under the 1988 Employee Stock Purchase Plan (see Item III below).
Because all grants under the 2002 Stock Plan are to be made at the discretion of
the Board of Directors, future grants under the 2002 Stock Plan are not yet
determinable. Similarly, because each employee's participation in the Company's
1988 Employee Stock Purchase Plan is purely voluntary, the future benefits under
the plan are also not yet determinable. Accordingly, the tables shown in Item II
and Item III summarize the number of stock options granted under the Company's
2002 Stock Plan and the number of shares purchased under the 1988 Employee Stock
Purchase Plan, respectively, during the fiscal year ended January 2, 2004 to (i)
the persons named in the Summary Compensation Table, (ii) all current executive
officers as a group, (iii) all current directors who are not executive officers
as a group, and (iv) all employees (excluding executive officers) as a group.
Please see "Item II - Amendment of 2002 Stock Plan" and "Item III - Amendment of
1988 Employee Stock Purchase Plan."
Employment Contracts and Termination of Employment and Change-in-Control
Arrangements
Steven W. Berglund
------------------
On March 17, 1999, Mr. Berglund entered into an employment agreement
with the Company to serve as the Company's Chief Executive Officer. This
agreement provides that, among other things, in the event of Mr. Berglund's
involuntary termination or termination for other than defined cause, he will
receive severance equal to his then current annual base salary plus one half of
any accrued bonus to date.
In addition, upon joining the Company, Mr. Berglund was granted options
to purchase an aggregate of 600,000 shares of the Company's Common Stock with an
exercise price of $5.33 per share (as adjusted for the 3-for-2 stock split on
March 4, 2004) which was the fair market value on the date of grant in
accordance with the terms of such agreement. Such options vest 20% at the first
anniversary and monthly thereafter for five years from the original date of
grant and have a ten year term of exercise. Under the terms of his employment
agreement, in the event of a change of control of the Company, Mr. Berglund will
receive an additional 12 months of vesting with respect to his stock options.
In connection with hiring Mr. Berglund and his original relocation to
California and pursuant to the terms of his employment agreement, the Company
provided him with interim housing and reimbursed him for certain moving costs
and expenses. The Company also provided him with a loan of $400,000 to assist in
the purchase of a new primary residence. Such loan is secured by a second deed
of trust on the residence and was made at the lending rate at which the Company
is able to borrow, as adjusted from time to time. Such loan is to be forgiven by
the Company ratably over five years contingent upon Mr. Berglund continuing to
be employed by the Company; provided, however, that any remaining unpaid
obligation would be due and payable to the Company upon the anniversary of any
separation, if Mr. Berglund's employment relationship with the Company ends
during such time period.
Mary Ellen Genovese
-------------------
Pursuant to a letter dated September 5, 2000, in connection with Ms.
Genovese's election as the Company's Chief Financial Officer, in the event of a
change in control of the Company, Ms. Genovese will receive an additional 12
months of vesting with regard to all shares subject to her stock options.
Irwin L. Kwatek
---------------
In an offer letter dated October 31, 2000, the Company agreed to grant
Mr. Kwatek a special annual bonus equivalent to the gross amount of the annual
interest on a loan to be made to Mr. Kwatek for the purpose of acquiring a
primary residence in Northern California. See "Certain Relationships and Related
Transactions."
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following table sets forth information with regard to loans made to
executive officers of the Company who had outstanding amounts of more than
$60,000 at any time since the beginning of the Company's last fiscal year. Each
of these loans was made by the Company for the purpose of assisting such
executive officer in the acquisition of his primary residence in an exceptional
housing market in a location for the benefit of the Company in accordance with
the Company's bylaws. Each of these loans is secured by a second deed of trust
on such residence, has a term of five years and requires that the interest on
such principal amounts be paid currently each year. The principal balance is due
in full at the end of such five year term, but such executive officers may
pre-pay all or any portion of such balance without a prepayment penalty. The
interest rate for each of these loans was set with reference to the then
applicable mid-term annual federal rate.
Principal Amount Largest Amount
Annual Outstanding at the Outstanding During
Name and Position Date of Loan Interest Rate Record Date ($) Fiscal Year 2003 ($)
----------------- ------------ ------------- --------------- --------------------
Steven W. Berglund 6/25/99 5.40% 46,667 126,667
President and Chief Executive Officer
Irwin L. Kwatek 8/15/01 4.99% 150,000 150,000
Vice President and General Counsel
Company Performance
The following graph shows a five year comparison of the cumulative total
return for the Company's Common Stock, the Nasdaq Composite Total Return Index
(U.S.), and the Standard & Poor's Technology Sector Index: (1)
[The performance graph has been omitted. Performance Graph. The performance
graph required by Item 402(1) of Regulation S-K is set forth in the paper copy
of the Proxy Statement immediately following the caption "COMPARISON OF FIVE
YEAR CUMULATIVE TOTAL RETURNS."
The peformance graph plots the data points listed below the graph for the
data sets (i) Trimble Navigation Limited, (ii) Nasdaq Composite Total Return
Index (US) and (iii) the Standard & Poor's Information Technology Sector Index.
The graph has a horizontal axis at its bottom which lists from left to right the
dates 12/98, 12/99, 12/00, 12/01, 12/02 and 12/03. The graph has a vertical axis
at its left which lists from bottom to top numbers 0, 100, 200, 300, 400, 500
and 600. The data points for each data set are plotted on the graph and are
connected by line. The line connecting the data points in the Trimble Navigation
Limited data set is bold with square to mark the points, while the lines
connecting the data points in the Nasdaq Composite Total Return Index (US) data
set and the S&P Technology Sector Index data set are dashed with triangle to
mark data points and small square dashes with circle to mark data points,
respectively.]
DATA POINTS FOR PERFORMANCE GRAPH
TRIMBLE NAVIGATION LIMITED
Cumulative Total Return
12/98 12/99 12/00 12/01 12/02 12/03
----- ----- ----- ----- ----- -----
TRIMBLE NAVIGATION LIMITED 100.00 298.28 331.03 223.59 172.28 513.66
NASDAQ STOCK MARKET (U.S.) 100.00 192.96 128.98 67.61 62.17 87.61
S & P INFORMATION TECHNOLOGY 100.00 178.74 105.63 78.31 49.01 72.16
(1) The data in the above graph is presented on a calendar year basis through
December 31, 2003 which is the most currently available data from the
indicated sources. The Company adopted a 52-53 week fiscal year effective
upon the end of fiscal year 1997 and the actual date of the Company's 2002
fiscal year end was January 2, 2004. Any variations due to any differences
between the actual date of a particular fiscal year end and the calendar
year end for such year are not expected to be material.
* Assumes an investment of $100 on December 31, 1998 in the Company's Common
Stock, the Nasdaq Composite Total Return Index (U.S.), and the Standard &
Poor's Information Technology Sector Index. Total returns assume the
reinvestment of dividends for the indexes. The Company has never paid
dividends on its Common Stock and has no present plans to do so.
Copyright 2003, Standard & Poor's, a division of The McGraw-Hill Companies, Inc.
All rights reserved.
ITEM II
AMENDMENT OF THE 2002 STOCK PLAN
The Company's 2002 Stock Plan was originally adopted by the Company's
Board of Directors in March 2002 and approved by the shareholders in May 2002.
The initial number of shares reserved for issuance under the 2002 Stock Plan was
3,000,000 shares of the Company's Common Stock, (as adjusted for the 3-for-2
stock split on March 4, 2004) plus any shares reserved but unissued under the
Company's 1993 Stock Option Plan (the "1993 Plan") together with any shares
subsequently returned to the 1993 Plan as the result of the termination of any
options originally granted under the 1993 Plan. As of the Record Date, options
to purchase an aggregate of 2,412,148 shares, having an average exercise price
of $14.22 per share and expiring from June 21, 2012 to March 9, 2014, were
outstanding and 1,508,347 shares remained available for future grant under the
2002 Stock Plan.
Given the number of shares currently remaining for grant in the 2002
Stock Plan and the Company's present anticipated executive, managerial and
technical hiring needs and expectations, the Board of Directors believes that
the increase in the number of shares under the 2002 Stock Plan is necessary in
order for the Company to be competitive in the marketplace. Over the years, the
Silicon Valley, where the Company is headquartered, has become more intensely
competitive and attracting and recruiting highly skilled employees continues to
be difficult for the Company. Another challenge in the Company's current
employment market is to ensure that its experienced and qualified employees, the
Company's most significant asset, are appropriately recognized, rewarded, and
are encouraged to stay with the Company and help it grow, thereby increasing
shareholder value.
The use of stock options as equity incentives in hiring, retaining and
motivating the most talented people within the available human resource pool has
been critical to the Company's past overall growth and success by encouraging
and motivating high levels of performance from its employees and consultants.
The proposed amendment to the 2002 Stock Plan, which is subject to shareholder
approval, reflects the Company's philosophy that stock incentives are an
important and meaningful component of employee compensation, which enables the
Company to attract the best available candidates and to retain a talented
employee base. The Board of Directors believes that the proposed amendment is in
the best interests of the Company, its shareholders, and its employees and at
the Annual Meeting, the shareholders are being asked to approve the proposed
amendment to increase by 1,500,000 the number of shares of Common Stock
available for issuance under the 2002 Stock Plan.
The essential features of the 2002 Stock Plan are outlined below:
General
The purpose of the 2002 Stock Plan is to help the Company attract and
retain the best available personnel for positions of substantial responsibility,
to provide additional incentive to the Company's employees, directors and
consultants and the employees and consultants of the Company's parent and
subsidiary companies and to promote the success of the Company's business.
Options granted under the 2002 Stock Plan may be either "incentive stock
options" or nonstatutory stock options.
Administration
The 2002 Stock Plan may generally be administered by the Company's
Board of Directors or a committee appointed by the Board of Directors, referred
to as the administrator. The administrator may make any determinations deemed
necessary or advisable for the 2002 Stock Plan.
Eligibility
Nonstatutory stock options may be granted to the Company's employees,
directors and consultants and to employees and consultants of any of the
Company's parent or subsidiary companies. Incentive stock options may be granted
only to the Company's employees and to employees of any of the Company's parent
or subsidiary companies. The administrator, in its discretion, selects which of
the Company's employees, directors and consultants to whom options may be
granted, the time or times at which such options shall be granted, and the
exercise price and number of shares subject to each such grant.
Limitations
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code") places limits on the deductibility for federal income tax purposes of
compensation paid to certain of the Company's executive officers. In order to
preserve the Company's ability to deduct the compensation income associated with
options granted to such persons, the 2002 Stock Plan provides that no service
provider may be granted, in any Company fiscal year, options to purchase more
than 300,000 shares of the Company's Common Stock. Notwithstanding this limit,
however, in connection with such individual's initial service with the Company,
he or she may be granted options to purchase up to an additional 450,000 shares
of the Company's Common Stock. These limits are subject to appropriate
adjustments in the case of stock splits, reverse stock splits and the like.
Terms of Options
Each option under the 2002 Stock Plan is evidenced by a stock option
agreement between the Company and the optionee, and is subject to the following
terms and conditions, but other specific terms may vary:
(a) Exercise Price. The administrator determines the exercise price of
options at the time the options are granted. The exercise price of options may
not be less than 100% of the fair market value of the Company's Common Stock on
the date such option is granted; provided, however, that the exercise price of
an incentive stock option granted to a 10% shareholder may not be less than 110%
of the fair market value on the date such option is granted. The fair market
value of the Company's Common Stock is generally determined with reference to
the closing sale price for the Company's Common Stock (or the closing bid if no
sales were reported) on the date the option is granted.
(b) Exercise of Option; Form of Consideration. The administrator determines
when options become exercisable, and may, in its discretion, accelerate the
vesting of any outstanding option. The means of payment for shares issued upon
exercise of an option is specified in each option agreement. The 2002 Stock Plan
permits payment to be made by cash, check, promissory note, other shares of the
Company's Common Stock (with some restrictions), cashless exercises, reduction
in any Company liability the Company may owe to an optionee, any other form of
consideration permitted by applicable law, or any combination thereof.
(c) Term of Option. The term of an option under the 2002 Stock Plan may be
no more than ten (10) years from the date of grant; provided, however, that in
the case of an incentive stock option granted to a 10% shareholder, the term of
the option may be no more than five (5) years from the date of grant. No option
may be exercised after the expiration of its term.
(d) Termination of Service. If an optionee's service relationship with the
Company terminates for any reason (excluding death or disability), then, unless
the administrator provides otherwise, the optionee may generally exercise the
option within three (3) months of such termination to the extent that the option
is vested on the date of termination, (but in no event later than the expiration
of the term of such option as set forth in the option agreement). If an
optionee's service relationship with the Company terminates due to the
optionee's death or disability, then, unless the administrator provides
otherwise, the optionee or the optionee's personal representative, estate, or
the person who acquires the right to exercise the option by bequest or
inheritance, as the case may be, generally may exercise the option, to the
extent the option was vested on the date of termination, within twelve (12)
months from the date of such termination.
(e) Non-transferability of Options. Unless otherwise determined by the
administrator, options granted under the 2002 Stock Plan are not transferable
other than by will or the laws of descent and distribution, and may be exercised
during the optionee's lifetime only by the optionee.
(f) Other Provisions. The stock option agreement may contain other terms,
provisions and conditions not inconsistent with the 2002 Stock Plan as may be
determined by the administrator.
Adjustment Upon Changes in Capitalization
In the event that any dividend or other distribution (whether in the
form of cash, common stock, other securities, or other property),
recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase, or exchange of
Common Stock or other of the Company's securities, or other change in the
Company's corporate structure affecting the Company's Common Stock occurs, the
administrator, in order to prevent diminution or enlargement of the benefits or
potential benefits intended to be made available under the 2002 Stock Plan, may
(in its sole discretion) adjust the number and class of shares that may be
delivered under the 2002 Stock Plan and/or the number, class, and price of
shares covered by each outstanding option.
In the event of a liquidation or dissolution, any unexercised options
will terminate. The administrator may, in its sole discretion, provide that each
optionee shall have the right to exercise all or any part of the option,
including shares as to which the option would not otherwise be exercisable.
In connection with the merger of the Company with or into another
corporation or the Company's "change of control", as defined in the 2002 Stock
Plan, each outstanding option shall be assumed or an equivalent option
substituted by the successor corporation. If the successor corporation refuses
to assume the options or to substitute substantially equivalent options, the
optionee shall have the right to exercise the option as to all the optioned
stock, including shares not otherwise vested or exercisable. In such event, the
administrator shall notify the optionee that the option is fully exercisable for
fifteen (15) days from the date of such notice and that the option terminates
upon expiration of such period. If, in such a merger or Change in Control, the
option is assumed or an equivalent option is substituted by such successor
corporation, and if during a one-year period after the effective date of such
merger or Change in Control, the optionee's status as a service provider is
terminated for any reason other than the optionee's voluntary termination of
such relationship, then the optionee shall have the right within three (3)
months thereafter to exercise the option as to all of the optioned stock,
including shares as to which the option would not be otherwise exercisable,
effective as of the date of such termination.
Amendment and Termination of the 2002 Stock Plan
The Company's Board of Directors may amend, alter, suspend or terminate
the 2002 Stock Plan, or any part thereof, at any time and for any reason.
However, the Company will obtain shareholder approval for any amendment to the
2002 Stock Plan to the extent necessary and desirable to comply with applicable
laws. Additionally, unless the Company obtains prior shareholder approval, the
administrator will not amend any option to reduce its exercise price or agree to
grant options in exchange for optionees agreeing to cancel outstanding options
where the economic effect would be the same as reducing the exercise price of
the cancelled option. No such action by the Board of Directors or shareholders
may alter or impair any option previously granted under the 2002 Plan without
the written consent of the optionee. Unless terminated earlier, the 2002 Stock
Plan shall terminate by its terms ten (10) years from the date that the 2002
Stock Plan was adopted by the Board of Directors.
Certain Federal Income Tax Information
Incentive Stock Options. An optionee who is granted an incentive stock
option does not recognize taxable income at the time the option is granted or
upon its exercise, although the exercise is an adjustment item for alternative
minimum tax purposes and may subject the optionee to the alternative minimum
tax. Upon a disposition of the shares more than two (2) years after grant of the
option and one (1) year after exercise of the option, any gain or loss is
treated as long-term capital gain or loss. Currently, net capital gains on
shares held more than twelve (12) months may be taxed at a maximum federal rate
of 15% and capital losses are allowed in full against capital gains and up to
$3,000 against other income. If these holding periods are not satisfied, the
optionee recognizes ordinary income at the time of disposition equal to the
difference between the exercise price and the lower of (i) the fair market value
of the shares at the date of the option exercise, or (ii) the sale price of the
shares. Any gain or loss recognized on such a premature disposition of the
shares in excess of the amount treated as ordinary income is treated as
long-term or short-term capital gain or loss, depending on the holding period. A
different rule for measuring ordinary income upon such a premature disposition
may apply if the optionee is also an officer, director, or 10% shareholder of
the Company. Unless limited by Section 162(m) of the Code, the Company is
entitled to a deduction in the same amount as the ordinary income recognized by
the optionee.
Nonstatutory Stock Options. An optionee does not recognize any taxable
income at the time he or she is granted a nonstatutory stock option. Upon
exercise, the optionee recognizes taxable income generally measured by the
excess of the then fair market value of the shares over the exercise price. Any
taxable income recognized in connection with an option exercise by the Company's
employee is subject to tax withholding by the Company. Unless limited by Section
162(m) of the Code, the Company is entitled to a deduction in the same amount as
the ordinary income recognized by the optionee. Upon a disposition of such
shares by the optionee, any difference between the sale price and the optionee's
exercise price, to the extent not recognized as taxable income as provided
above, is treated as long-term or short-term capital gain or loss, depending on
the holding period. Currently, net capital gains on shares held more than 12
months may be taxed at a maximum federal rate of 15% and capital losses are
allowed in full against capital gains and up to $3,000 against other income.
The foregoing is only a summary of the effect of federal income
taxation upon the Company and optionees with respect to the grant and exercise
of options under the 2002 Stock Plan. It does not purport to be complete, and
does not discuss the tax consequences of the employee's, director's or
consultant's death or the provisions of the income tax laws of any municipality,
state or foreign country in which the employee, director or consultant may
reside.
New Plan Benefits
The table shown below summarizes the number of stock options granted
under the Company's 2002 Stock Plan during the fiscal year ended January 2, 2004
to (i) the persons named in the Summary Compensation Table, (ii) all current
executive officers as a group, (iii) all current directors who are not executive
officers as a group and (iv) all employees (excluding executive officers) as a
group.
2002 Stock Plan (1)
-------------------
Exercise Price Number of
Name and Position ($ per Share) (2) Options Granted
----------------- ---------------------------------
Steven W. Berglund
President and Chief Executive Officer..... $17.00 150,000
Mary Ellen Genovese
Chief Financial Officer and
Vice President Finance.................... $17.00 18,000
Dennis L. Workman
Vice President and General Manager,
Component Technologies Division........ $17.00 37,500
Irwin L. Kwatek
Vice President and General Counsel $17.00 18,000
Joseph F. Denniston
Vice President, Operations $17.00 12,000
Current Executive Officers, as a group......... $17.00 235,500
Non-Executive Officer Directors, as a group.... $16.35 60,000
Non-Executive Officer Employees, as a group.... $13.57 963,472
(1) Only employees and consultants (including officers and directors) of the
Company are eligible for option grants under the 2002 Stock Plan as
approved by the Company's Board of Directors.
(2) Exercise prices for the options granted during the 2003 fiscal year under
the 2002 Stock Plan are shown on a weighted-average basis for the groups
presented. Future benefits under the Company's option plans are not
determinable, as grants of options are at the discretion of the Company's
Board of Directors and are dependent upon the price of the Company's
common stock in the future. The closing price of the Company's common
stock on January 2, 2004 as quoted on the Nasdaq National Market System
was $24.48 per share (as adjusted for the 3-for-2 stock split on March 4,
2004).
Vote Required
The approval of the proposed amendment to the 2002 Stock Plan to
increase by 1,500,000 the number of additional shares of the Company's Common
Stock available for issuance and sale under such plan, requires the affirmative
vote of the holders of a majority of the shares present at the Annual Meeting in
person or by proxy and entitled to vote as of the Record Date.
Recommendation of the Board of Directors
The Company's Board of Directors recommends a vote FOR the proposed
amendment of the 2002 Stock Plan to increase by 1,500,000 the number of
additional shares of the Company's Common Stock available for issuance and sale
under the plan.
ITEM III
AMENDMENT OF THE 1988 EMPLOYEE STOCK PURCHASE PLAN
The Company's 1988 Employee Stock Purchase Plan (the "Purchase Plan"),
was adopted by the Board of Directors in September 1988 and approved by the
shareholders in April 1989, initially reserving 600,000 shares for purchase
thereunder by eligible employees. Since then, the Board of Directors and the
shareholders of the Company have approved amendments to the Purchase Plan
increasing the shares available for purchase thereunder to an aggregate of
5,025,000 shares of the Company's Common Stock. As of the Record Date, eligible
employees have purchased an aggregate of 327,791 shares of the Company's Common
Stock under the Purchase Plan and 431,181 shares remained available for future
sales under the Purchase Plan. During the 2003 fiscal year, eligible employees
of the Company purchased an aggregate of 327,791 shares at an average price of
9.5193 per share under the Purchase Plan and, during the prior fiscal year 2002,
eligible employees purchased an aggregate of 241,608 shares at an average price
of 11.1804 per share under the Purchase Plan.
In January 2004, the Board of Directors approved, subject to
shareholder approval, an additional amendment to the Purchase Plan to increase
the number of shares of Common Stock available for future purchase by Company's
eligible employees by 300,000 shares to an aggregate of 5,325,000 shares. The
Company believes that maintaining a competitive employee stock purchase program
is an important element in both recruiting and retaining employees in its
current employment environment. The Company's Purchase Plan is designed to more
closely align the interests of the Company's employees and shareholders by
encouraging employees to invest their own money in the Company's equity
securities. By allowing eligible employees to purchase shares of the Company's
Common Stock at a discount, as described below under "Purchase Price," the
Company's Purchase Plan encourages employees to become shareholders of the
Company, thereby providing them with a direct incentive in the long-term growth
and overall success of the Company.
The Company is also requesting the authorization of additional shares
under the Purchase Plan in order to preserve the current benefits of the
Purchase Plan for employees and favorable accounting treatment for the Company.
The Purchase Plan currently provides for six month enrollment periods, as
described below under "Offering Periods." Under current accounting rules, if at
the start of an enrollment period, the shares reserved for issuance under an
employee stock purchase plan are insufficient to cover all shares issuable
throughout that period, and (i) any shares sold during an enrollment period are
authorized after the commencement of the enrollment period, and (ii) on such
subsequent authorization date, the fair market value ("FMV") of the shares is
higher than the FMV of the shares at the beginning of the enrollment period,
then the Company would be required to record a charge to earnings for each
subsequent quarter in which the FMV of shares on a semi-annual purchase date was
higher than the FMV of the shares on the enrollment date, to reflect the
perceived compensatory element of the difference in FMV. Such an accounting
charge could be significant to the Company depending upon the size of the
shortfall in the number of shares and the change in FMV in such shares.
The Company believes that the amendment increasing the number of shares
under the Purchase Plan will enable the Company to continue its policy of
encouraging widespread employee stock ownership as a means of motivating high
levels of employee performance and encouraging employees to stay with the
Company and help it grow, thereby increasing shareholder value. The Board of
Directors believes that the proposed amendment is in the best interests of the
Company, its shareholders, and its employees and at the Annual Meeting, the
shareholders are being asked to approve an increase of 300,000 shares of Common
Stock available for future purchase by eligible employees under the Purchase
Plan.
The essential features of the Purchase Plan are outlined below:
Purpose
The purpose of the Purchase Plan is to provide employees with an
opportunity to purchase Common Stock of the Company through payroll deductions
in a manner that qualifies under Section 423 of the Internal Revenue Code.
Administration
The Purchase Plan is administered by the Board of Directors or a
designated committee of the Board of Directors, referred to as the
administrator.
Eligibility
Only employees employed by the Company or its designated subsidiaries
on the first day of an offering period may participate in the Purchase Plan. For
this purpose, an "employee" is any person who has been continually employed for
at least two consecutive months and is regularly employed at least twenty hours
per week and at least five months per calendar year by the Company or any of its
designated subsidiaries. No employee may be granted an option under the Purchase
Plan if: (i) immediately after the grant of the option, the employee would own
five percent or more of the total combined voting power or value of the stock of
the Company or any of its subsidiaries; or (ii) an employee's right to purchase
stock under all employee stock purchase plans of the Company and its
subsidiaries accrues at a rate which exceeds $25,000 worth of stock (determined
with reference to the FMV of the Common Stock at the time of grant) in a
calendar year. Subject to these eligibility criteria, the Purchase Plan permits
eligible employees to purchase Common Stock through payroll deductions subject
to certain limitations described below. See "Payment of Purchase Price; Payroll
Deductions."
Offering Periods
The Purchase Plan is implemented by offering periods lasting six months
with a new offering period commencing every six months, on or about January 1st
and July 1st of each year. Normally, a participant's payroll deductions are
accumulated throughout an offering period and, at the end of the offering
period, shares of the Company's Common Stock are purchased with the accumulated
payroll deductions.
Purchase Price
The purchase price per share at which shares will be sold in an
offering under the Purchase Plan is the lower of (i) 85% of the FMV of a share
of Common Stock on the first day of an offering period or (ii) 85% of the FMV of
a share of Common Stock on the last day of each offering period. The FMV of the
Common Stock on a given date is generally the closing sale price of the Common
Stock as reported on the Nasdaq National Market for such date.
Payment of Purchase Price; Payroll Deductions
The purchase price of the shares is accumulated by payroll deductions
over the offering period. The Purchase Plan provides that the aggregate of such
payroll deductions during the offering period shall not exceed 10% of the
participant's compensation during any offering period, nor $21,250 for all
offering periods which end in the same calendar year. During an offering period,
a participant may discontinue his or her participation in the Purchase Plan, and
may decrease, but not increase, the rate of payroll deductions in an offering
period within limits set by the administrator.
All payroll deductions made for a participant are credited to the
participant's account under the Purchase Plan, are withheld in whole percentages
only and are included with the general funds of the Company. Funds received by
the Company pursuant to exercises under the Purchase Plan are used for general
corporate and working capital purposes. A participant may not make any
additional payments into his or her account.
Withdrawal
A participant may terminate his or her participation in the Purchase
Plan at any time by giving the Company a written notice of withdrawal. In such
event, all of the payroll deductions credited to the participant's account will
be returned, without interest, to such participant. Payroll deductions will not
resume unless a new subscription agreement is delivered in connection with a
subsequent offering period.
Termination of Employment
Termination of a participant's employment for any reason, including
retirement or death, cancels his or her participation in the Purchase Plan
immediately. In such event, the payroll deductions credited to the participant's
account but not used to purchase shares will be returned without interest to
such participant, his or her designated beneficiaries or the executors or
administrators of his or her estate.
Adjustments Upon Changes in Capitalization
In the event of any changes in the capitalization of the Company
effected without receipt of consideration by the Company, such as a stock split,
stock dividend, combination or reclassification of the Common Stock, resulting
in an increase or decrease in the number of shares of Common Stock,
proportionate adjustments will be made by the Board of Directors in the shares
subject to purchase and in the price per share under the Purchase Plan. In the
event of liquidation or dissolution of the Company, the offering periods then in
progress will terminate immediately prior to the consummation of such event
unless otherwise provided by the Board of Directors. In the event of a sale of
all or substantially all of the assets of the Company, or the merger of the
Company with or into another corporation, any offering periods then in progress
shall be shortened by the setting of a new exercise date to be held before the
Company's proposed sale or merger. At least ten days before the new exercise
date, the Board of Directors will notify each participant that the exercise date
has been changed and that the participant's option will be automatically
exercised on the new exercise date, unless the participant withdraws from the
Purchase Plan.
Amendment and Termination
The Board of Directors may at any time and for any reason amend or
terminate the Purchase Plan, except that (i) no such termination shall affect
options previously granted unless the Board of Directors determines that
terminating an Offering Period is in the best interests of the Company and (ii)
no amendment shall make any change in an option granted prior thereto which
adversely affects the rights of any participant.
Certain Federal Income Tax Information
The Purchase Plan, and the right of participants to make purchases
thereunder, is intended to qualify under the provisions of Sections 421 and 423
of the Code. Under these provisions, no income will be taxable to a participant
until the shares purchased under the Purchase Plan are sold or otherwise
disposed. Upon sale or other disposition of the shares, the participant will
generally be subject to tax in an amount that depends upon the holding period.
If the shares are sold or otherwise disposed of more than two years from the
beginning of the offering period in which they are purchased and one year from
the date of the applicable purchase, the participant will recognize ordinary
income measured as the lesser of (a) the excess of the fair market value of the
shares at the time of such sale or disposition over the purchase price, or (b)
an amount equal to 15% of the fair market value of the shares as of the
beginning of the offering period in which they are purchased. Any additional
gain will be treated as long-term capital gain. If the shares are sold or
otherwise disposed of before the expiration of these holding periods, the
participant will recognize ordinary income generally measured as the excess of
the fair market value of the shares on the date the shares are purchased over
the purchase price. Any additional gain or loss on such sale or disposition will
be long-term or short-term capital gain or loss, depending on the holding
period. The Company generally is not entitled to a deduction for amounts taxed
as ordinary income or capital gain to a participant except to the extent of
ordinary income recognized by participants upon a sale or disposition of shares
prior to the expiration of the holding periods described above.
The foregoing is only a summary of the effect of federal income
taxation upon the Company and participant with respect to shares purchased under
the Purchase Plan. It does not purport to be complete, and does not discuss the
tax consequences of the participant's death or the provisions of the income tax
laws of any municipality, state or foreign country in which the participant may
reside.
New Plan Benefits
The table shown below summarizes the number of stock options granted
under the Company's 1988 Employee Stock Purchase Plan during the fiscal year
ended January 2, 2004 to (i) the persons named in the Summary Compensation
Table, (ii) all current executive officers as a group, (iii) all current
directors who are not executive officers as a group, and (iv) all employees
(excluding executive officers) as a group.
1988 Employee
Stock Purchase Plan (1)
-----------------------
Purchase Price Number of
Name and Position ($ per Share) (2) Shares Purchased
----------------- ----------------- ----------------
Steven W. Berglund
President and Chief Executive Officer..... 0 0
Mary Ellen Genovese
Chief Financial Officer and
Vice President Finance.................... $10.165 1,655
Joseph F. Denniston
Vice President, Operations 0 0
Irwin L. Kwatek
Vice President and General Counsel 0 0
Dennis L. Workman
Vice President and General Manager,
Component Technologies Division........ $10.165 483
Current Executive Officers, as a group.......... $10.165 13,885
Non-Executive Officer Directors, as a group..... 0 0
Non-Executive Officer Employees, as a group..... $10.165 313,906
(1) Only Company employees (including officers) whose customary employment
with the Company is at least 20 hours per week and more than five months
in any calendar year are eligible to participate in the 1988 Employee
Stock Purchase Plan.
(2) Under the terms of the 1988 Employee Stock Purchase Plan, eligible
employees may purchase shares of the Company's Common Stock through
payroll deductions at a purchase price not less than 85% of the fair
market value of the Company's Common Stock on the first or last day of
each applicable six-month offering period. All purchase prices for shares
acquired during the 2003 fiscal year under the 1988 Employee Stock
Purchase Plan are shown on a weighted-average basis. There were two open
offering periods during the 2003 fiscal year and the applicable per share
purchase prices were $7.42 and $12.91, respectively, each adjusted for
the 3-for-2 stock split on March 4, 2004.
Vote Required
Approval of the proposed amendment to the Purchase Plan to increase by
300,000 the number of shares of Common Stock available for purchase by eligible
employees under the Purchase Plan requires the affirmative vote of the holders
of a majority of the shares present at the Annual Meeting in person or by proxy
and entitled to vote as of the Record Date.
Recommendation of the Board of Directors
The Company's Board of Directors recommends a vote FOR the proposed
amendment to increase by 300,000 shares the number of shares of Common Stock
available for purchase by eligible employees under the 1988 Employee Stock
Purchase Plan.
PROPOSAL IV
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Ernst & Young LLP ("Ernst &
Young") as the Company's independent auditors, to audit the financial statements
of the Company for the current fiscal year ending December 31, 2004. Ernst &
Young has been the Company's independent auditor since 1986. The Company expects
that a representative of Ernst & Young will be present at the Annual Meeting,
will have the opportunity to make a statement if he or she desires to do so, and
will be available to answer any appropriate questions.
Fees Paid to Ernst & Young LLP
Audit Fees and Non-Audit Fees:
The following table presents fees for professional audit services rendered
by Ernst & Young LLP for the audit of the Company's annual financial statements
for the years ended January 3, 2003 and January 2, 2004, and fees for other
services rendered by Ernst & Young during those periods.
Year Ended Year Ended
Category January 3, 2003 January 2, 2004
-------- --------------- ---------------
Audit Fees $ 947,000 $ 883,000
Audit-Related Fees (1) $ 35,000 $ 0
Tax Fees (2) $1,546,000 $1,348,000
All Other Fees None None
(1) Audit-related fees consist of assurance and related services that are
reasonably related to the performance of the audit or review of the
Company's financial statements.
(2) Tax fees consist of tax compliance, tax planning, and tax advice, both
domestic and international.
Audit Committee Pre-Approval of Policies and Procedures
The Audit Committee is responsible for appointing, setting
compensations, and overseeing the work of the independent auditor. The Audit
Committee has established a pre-approval procedure for all audit and permissible
non-audit services to be performed by Ernst & Young. The pre-approval policy
requires that requests for services by the independent auditor be submitted to
the Company's Chief Financial Officer (CFO) for review and approval. Any
requests that are approved by the CFO are then aggregated and submitted to the
Audit Committee for approval of services at a meeting of the Audit Committee.
Requests may be made with respect to either specific services or a type of
service for predictable or recurring services.
The Audit Committee has concluded that the provision of the non-audit
services listed above is compatible with maintaining Ernst & Young's
independence.
Vote Required
Ratification of the appointment of Ernst & Young as the Company's
independent auditors for the current fiscal year ending December 31, 2004, will
require the affirmative vote of the holders of a majority of the shares present
and voting at the Annual Meeting either in person or by proxy. In the event that
such ratification by the shareholders is not obtained, the Audit Committee and
the Board of Directors will reconsider such selection.
Recommendation of the Board of Directors
The Company's Board of Directors recommends a vote FOR the ratification
of the appointment of Ernst & Young LLP as the independent auditors for the
Company for the current fiscal year ending December 31, 2004.
HOUSEHOLDING
As permitted by the Exchange Act, we may deliver only one copy of this
Proxy Statement to shareholders residing at the same address, unless such
shareholders have notified the Company of their desire to receive multiple
copies of the Proxy Statement. Shareholders residing at the same address may
request delivery of only one copy of the Proxy Statement by directing a notice
to the Company's Investor Relations department at the address below.
The Company will promptly deliver, upon oral or written request, a
separate copy of this Proxy Statement to any shareholder residing at an address
to which only one copy was mailed. Requests for additional copies should be
directed to the Company at its principal executive offices, Attention: Investor
Relations, at 749 North Mary Avenue, Sunnyvale, California 94086, (408)
481-8000.
OTHER MATTERS
The Company knows of no other matters to be submitted for consideration
at the Annual Meeting. If any other matters properly come before the Annual
Meeting, it is the intention of the persons named in the enclosed Proxy to vote
the shares they represent as the Board of Directors may recommend. Discretionary
authority with respect to such other matters is granted by the execution of the
enclosed Proxy.
It is important that your shares be represented at the meeting,
regardless of the number of shares which you hold. You are, therefore, urged to
mark, sign, date, and return the accompanying Proxy as promptly as possible in
the postage-prepaid envelope which has been enclosed for your convenience or
vote electronically via the Internet or by telephone in accordance with the
detailed instructions on your individual Proxy card.
For the Board of Directors
TRIMBLE NAVIGATION LIMITED
ROBERT S. COOPER
Chairman of the Board
Dated: April 8, 2004
Appendix A
Trimble Navigation Limited
Charter for the Audit Committee of The Board of Directors
PURPOSE:
The purpose of the Audit Committee established by this charter will be
to make such examinations as are necessary to monitor the corporate financial
reporting and the internal and external audits of the corporation, to provide to
the Board of Directors the results of its examinations and recommendations
derived therefrom, to outline to the Board improvements made, or to be made, in
internal accounting controls, to nominate independent auditors, and to provide
to the Board such additional information and materials as it may deem necessary
to make the Board aware of significant financial matters which require Board
attention.
In addition, the Audit Committee will undertake those specific duties
and responsibilities listed below and other duties as the Board of Directors
prescribes from time to time.
MEMBERSHIP:
The Audit Committee will consist of at least three members of the
Board. The members of the Audit Committee will be appointed by and will serve at
the discretion of the Board of Directors.
The members of the Audit Committee will be outside directors,
financially literate, and considered independent. The Board of Directors may
chose to appoint one non-independent member to the Audit Committee. The Board
will disclose the reasons for the appointment of a non-independent member in the
Company's annual proxy. The Audit Committee will have at least one member who is
considered a financial expert, or will disclose the reasons a financial expert
is not on the committee.
RESPONSIBILITIES:
The responsibilities of the Audit Committee shall include:
1. Nominating, hiring, and approving the compensation of the independent
auditors.
2. Reviewing the plan for the audit and related services.
3. Approving non-audit related services.
4. Reviewing audit results and financial statements; all critical
accounting policies and alternative treatments of financial
information within GAAP including ramifications and methods preferred
by the auditors.
5. Reviewing all material communication between the auditor and
management, including management letters and schedules of unadjusted
differences.
6. Reviewing and approving the Company's quarterly earnings press release
to verify the absence of misleading information.
7. Reviewing the Company's 10Qs and 10K to ensure the information
presented in the MD&A is consistent with the financial statements and
related footnote disclosures.
8. Reviewing any outstanding Director or Officer loans and determine
whether these loans qualify as acceptable transactions.
9. Overseeing the adequacy of the corporation's system of internal
accounting controls, including obtaining from the independent
auditor's management letters or summaries on such internal accounting
controls.
10. Overseeing the effectiveness of the internal audit function.
11. Reviewing with management their assessment of the effectiveness of
internal controls.
12. Assessing the adequacy of the CEO and CFO certification process.
13. Engaging independent counsel, consultants, accountants, and other
advisors as the audit committee deems necessary to comply with the
responsibilities of this charter.
14. Reviewing annually the Company's insurance practices to ensure
adequate coverage for identified risks.
15. Overseeing compliance with the Foreign Corrupt Practices Act.
16. Reviewing and responding to all complaints received from employees on
accounting and auditing matters.
17. Overseeing compliance with SEC requirements for disclosure of
auditor's services and Audit Committee members and activities.
18. Reviewing accounting and corporate governance developments with an
objective perspective of their impact to the Company and the
Committee.
19. Obtaining a formal written statement of independence from the
independent auditors, as well as a statement that the auditors are in
compliance with the rules of and are in good standing with the Public
Company Accounting Oversight Board; and
20. Engaging in a dialog with the auditors with respect to any
relationships that may impact the objectivity or independence of the
auditors, as well as ensuring the rotation of the signing audit
partner every five years.
In addition to the above responsibilities, the Audit Committee shall
review and assess the adequacy of its charter on at least an annual basis,
especially in light of the then currently applicable rules for continued listing
on the Nasdaq national market and undertake any other duties as the Board of
Directors delegates to it, and will report, at least annually, to the Board
regarding the Committee's examinations and recommendations.
MEETINGS:
The Audit Committee will meet at least four times each year. The Audit
Committee may establish its own schedule, which it will provide in advance to
the Board of Directors.
The Audit Committee will meet separately with the president and
separately with the chief financial officer of the corporation at least annually
to review the financial affairs of the corporation. The Audit Committee will
meet with the independent auditors of the corporation, at such times as it deems
appropriate, to review the independent auditor's examination and management
report.
REPORTS:
The Audit Committee will record its summaries of recommendations in
writing to the Board, which will be incorporated as a part of the minutes of the
Board of Directors meeting.
MINUTES:
The Audit Committee will maintain written minutes of its meetings and
the minutes will be filed in the corporate minute book.
Appendix B
Form of Proxy
PROXY TRIMBLE NAVIGATION LIMITED PROXY
PROXY FOR 2004 ANNUAL MEETING OF SHAREHOLDERS
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned shareholder of TRIMBLE NAVIGATION LIMITED, a California
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement, each dated April 8, 2004, and hereby appoints
Steven W. Berglund, and Mary Ellen Genovese and each of them, proxies and
attorneys-in-fact, with full power to each of substitution, on behalf and in the
name of the undersigned, to represent the undersigned at the 2004 Annual Meeting
of Shareholders of TRIMBLE NAVIGATION LIMITED, to be held on Wednesday, May 19,
2004, at 6:00 p.m. local time, at the Four Points Sheraton Hotel in Sunnyvale,
located at 1250 Lakeside Drive, Sunnyvale, California 94085 in the Ballroom, and
at any adjournment(s) thereof, and to vote all shares of Common Stock which the
undersigned would be entitled to vote if then and there personally present, on
the matters set forth below.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS INDICATED, IT WILL
BE VOTED FOR THE LISTED NOMINEES IN THE ELECTION OF DIRECTORS, TO APPROVE AN
INCREASE OF 1,500,000 SHARES IN THE NUMBER OF SHARES OF THE COMPANY'S COMMON
STOCK AVAILABLE FOR ISSUANCE UNDER THE 2002 STOCK PLAN, TO APPROVE AN INCREASE
OF 300,000 SHARES IN THE NUMBER OF SHARES OF THE COMPANY'S COMMON STOCK
AVAILABLE FOR PURCHASE UNDER THE 1988 EMPLOYEE STOCK PURCHASE PLAN, AND FOR THE
RATIFICATION OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS OF THE COMPANY FOR THE
CURRENT FISCAL YEAR ENDING DECEMBER 31, 2004, AND AS SAID PROXIES DEEM ADVISABLE
ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENT(S) THEREOF.
Both of such attorneys or substitutes (if both are present and acting at said
meeting or any adjournment(s) thereof, or, if only one shall be present and
acting, then that one) shall have and may exercise all of the powers of said
attorneys-in-fact hereunder.
(Continued, and to be signed on the other side)
FOLD AND DETACH HERE
YOU MAY VOTE IN ANY OF THE FOLLOWING THREE WAYS:
1. Vote via the Internet at http://www.proxyvote.com. You will
need the Control Number that appears in the box in the lower right
corner of this card.
2. Vote by telephone by calling 1-800-690-6903 from a
touch-tone telephone in the U.S. There is no charge for this call. You
will need the Control Number that appears in the box in the lower right
corner of this card.
3. Mark, sign and date this proxy form and return it in the
enclosed envelope.
[Company logo appears here]
Trimble Navigation Limited
745 N. Mary Ave.
Sunnyvale, CA 94085
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 of meeting date.
Have your proxy card in hand
when you access the web site.
You will be prompted to enter
your 12-digit Control Number
which is located below to
obtain your records and to
create an electronic voting
instruction form.
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 date before
the cut-off date or meeting
date. Have your proxy card in
hand when you call. You will be
prompted to enter your 12-digit
Control Number which is located
below and then follow the
simple instructions the Vote
Voices provides you.
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
Trimble Navigation Limited, c/o
ADP, 51 Mercedes Way, Edgewood,
NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
TRIMBLE KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
Trimble Navigation Limited
Vote on Directors
1. Elections of Directors to serve for the FOR WITHHOLD FOR To withhold authority to vote,
ensuing year and until their FOR ALL ALL mark "For All Except" and write
successors are elected. EXCEPT the nominee's number on the line
[ ] [ ] [ ] below.
______________________________
Nominees:
01 Steven W. Berglund, 02 Robert S. Cooper, 03 John B. Goodrich,
04 William Hart, 05 Ulf J. Johansson, 06 Bradford W. Parkinson, and
07 Nickolas W. VandeSteeg.
Vote on Proposals
FOR AGAINST ABSTAIN
2. To approve an increase of 1,500,000 shares [ ] [ ] [ ]
in the number of shares of the Company's
common stock available for issuance under the
2002 Stock Plan.
3. To approve an increase of 300,000 shares in FOR AGAINST ABSTAIN
the number of shares of the Company's common [ ] [ ] [ ]
stock available for purchase under the 1998
Employee Stock Purchase Plan.
4. To ratify the appointment of Ernst & Young LLP FOR AGAINST ABSTAIN
as independent auditors of the Company [ ] [ ] [ ]
for the current fiscal year ending
December 31, 2004.
5. To transact suchh other business as may
properly come before the meeting or any
adjournment thereof.
Check here to keep your vote confidential Yes No
according to the current policy [ ] [ ]
Signature(s)______________________________________________ Dated _______, 2004
(This Proxy should be marked, dated, signed by the shareholder(s) exactly
as his or her name appears hereon, and returned promptly in the enclosed
envelope. If signing for estates, trusts, corporations, or partnerships' title
or capacity should be stated. If shares are held jointly each holder should
sign.)