SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
EMCORE CORPORATION
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
EMCORE CORPORATION
145 BELMONT DRIVE
SOMERSET, NEW JERSEY 08873
-----------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 27, 2003
-----------------------------------------------------
To the Shareholders of
EMCORE Corporation:
NOTICE IS HEREBY GIVEN that the 2003 Annual Meeting of Shareholders
(the "Annual Meeting") of EMCORE Corporation (the "Company"), will be held at
10:00 A.M. local time, on Thursday, February 27, 2003, at the Holiday Inn, 195
Davidson Avenue, Somerset, New Jersey 08873, for the following purposes:
(1) To elect one member to the Company's Board of Directors;
(2) To ratify the selection of Deloitte & Touche LLP as independent
auditors of the Company for the fiscal year ending September 30,
2003; and
(3) To transact such other business as may properly come before the
Annual Meeting and any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on January 15,
2003 as the record date for determining those shareholders entitled to notice
of, and to vote at, the Annual Meeting and any adjournments or postponements
thereof. Whether or not you expect to be present, please sign, date and return
the enclosed proxy card in the enclosed pre-addressed envelope as promptly as
possible. No postage is required if mailed in the United States.
By Order of the Board of Directors,
/s/ Howard W. Brodie
HOWARD W. BRODIE
SECRETARY
Somerset, New Jersey
January 28, 2003
THIS IS AN IMPORTANT MEETING AND ALL SHAREHOLDERS ARE INVITED TO ATTEND THE
MEETING IN PERSON. ALL SHAREHOLDERS ARE RESPECTFULLY URGED TO EXECUTE AND RETURN
THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE. SHAREHOLDERS WHO EXECUTE A
PROXY CARD MAY NEVERTHELESS ATTEND THE MEETING, REVOKE THEIR PROXY AND VOTE
THEIR SHARES IN PERSON.
EMCORE CORPORATION
145 BELMONT DRIVE
SOMERSET, NEW JERSEY 08873
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
THURSDAY, FEBRUARY 27, 2003
This Proxy Statement is being furnished to shareholders of record of
EMCORE Corporation ("EMCORE", "Company", "we" or "us") as of January 15, 2003,
in connection with the solicitation on behalf of the Board of Directors of
EMCORE of proxies for use at the Annual Meeting of Shareholders to be held on
Thursday, February 27, 2003 at 10 o'clock a.m. (E.S.T.), at the Holiday Inn, 195
Davidson Avenue, Somerset, New Jersey 08873, or at any adjournments thereof, for
the purposes set forth in the accompanying Notice of Annual Meeting of
Shareholders. The approximate date that this Proxy Statement and the enclosed
proxy are first being sent to shareholders is January 28, 2003. Shareholders
should review the information provided herein in conjunction with the Company's
2002 Annual Report to Shareholders which accompanies this Proxy Statement. The
Company's principal executive offices are located at 145 Belmont Drive,
Somerset, New Jersey 08873, and its telephone number is (732) 271-9090.
INFORMATION CONCERNING PROXY
The enclosed proxy is solicited on behalf of the Company's Board of
Directors. The giving of a proxy does not preclude the right to vote in person
should any shareholder giving the proxy so desire. Shareholders have an
unconditional right to revoke their proxy at any time prior to the exercise
thereof, either in person at the Annual Meeting or by filing with the Company's
Secretary at the Company's headquarters a written revocation or duly executed
proxy bearing a later date; however, no such revocation will be effective until
written notice of the revocation is received by the Company at or prior to the
Annual Meeting.
The cost of preparing, assembling and mailing this Proxy Statement, the
Notice of Annual Meeting of Shareholders and the enclosed proxy is borne by the
Company. In addition to the use of mail, employees of the Company may solicit
proxies personally and by telephone. The Company's employees will receive no
compensation for soliciting proxies other than their regular salaries. The
Company may request banks, brokers and other custodians, nominees and
fiduciaries to forward copies of the proxy material to their principals and to
request authority for the execution of proxies. The Company may reimburse such
persons for their expenses in so doing.
PURPOSES OF THE MEETING
At the Annual Meeting, the Company's shareholders will consider and
vote upon the following matters:
(1) To elect one member to the Company's Board of Directors;
(2) To ratify the selection of Deloitte & Touche LLP as independent
auditors of the Company for the fiscal year ending September 30,
2003; and
(3) To transact such other business as may properly come before the
Annual Meeting and any adjournments or postponements thereof.
Unless contrary instructions are indicated on the enclosed proxy, all
shares represented by valid proxies received pursuant to this solicitation (and
which have not been revoked in accordance with the procedures set forth above)
will be voted (1) FOR the election of the nominee for director named below, (2)
FOR ratification of the independent auditors named above, and (3) by the proxies
in their discretion upon any other proposals as may properly come before the
Annual Meeting. In the event a shareholder
specifies a different choice by means of the enclosed proxy, such shareholder's
shares will be voted in accordance with the specification so made.
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
As of the close of business on January 15, 2003 (the "Record Date"),
the Company had 36,941,205 shares of no par value common stock ("Common Stock")
outstanding. Each share of Common Stock is entitled to one vote on all matters
presented at the Annual Meeting. The presence, either in person or by properly
executed proxy, of the holders of the majority of the shares of Common Stock
entitled to vote at the Annual Meeting is necessary to constitute a quorum at
the Annual Meeting. Attendance at the Annual Meeting will be limited to
shareholders as of the Record Date, their authorized representatives and guests
of the Company.
If the enclosed proxy is signed and returned, it may nevertheless be
revoked at any time prior to the voting thereof at the pleasure of the
shareholder signing it, either by a written notice of revocation received by the
person or persons named therein or by voting the shares covered thereby in
person or by another proxy dated subsequent to the date thereof.
Proxies in the accompanying form will be voted in accordance with the
instructions indicated thereon, and, if no such instructions are indicated, will
be voted in favor of the nominees for election as directors named below and for
the other proposals herein.
The vote required for approval of each of the proposals before the
shareholders at the Annual Meeting is specified in the description of such
proposal below. For the purpose of determining whether a proposal has received
the required vote, abstentions and broker non-votes will be included in the vote
total, with the result that an abstention or broker non-vote, as the case may be
will have the same effect as if no instructions were indicated.
PROPOSAL I: ELECTION OF DIRECTORS
Pursuant to EMCORE's Restated Certificate of Incorporation, the Board
of Directors of EMCORE is divided into three classes as set forth in the
following table. The directors in each class hold office for staggered terms of
three years. The Class C director, Mr. Thomas G. Werthan, whose present term
expires in 2003, is being proposed for a new three year term (expiring in 2006)
at this Annual Meeting. During Fiscal 2002, the other two Class C directors left
the Board. Mr. Hugh Fenwick resigned for health reasons, and Mr. Shigeo Takayama
retired. Their replacements have not yet been named. Accordingly Mr. Werthan is
the only Class C director being proposed for re-election at this Annual Meeting,
and proxies may not be voted for any additional directors.
The shares represented by proxies returned executed will be voted,
unless otherwise specified, in favor of the nominee for the Board of Directors
named below. If, as a result of circumstances not known or unforeseen, any of
such nominee shall be unavailable to serve as director, proxies will be voted
for the election of such other person or persons as the Board of Directors may
select. Each nominee for director will be elected by a plurality of votes cast
at the Annual Meeting of Shareholders. Proxies will be voted FOR the election of
the nominee unless instructions to "withhold" votes are set forth on the proxy
card. Withholding votes will not influence voting results. Abstentions may not
be specified as to the election of directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" THE NOMINEE FOR THE BOARD OF DIRECTORS NAMED BELOW.
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The following tables set forth certain information regarding the
members of and nominee for the Board of Directors:
Class and
Year in
Name and Other Which Term Principal Served as
Information Age Will Expire Occupation Director Since
-------------------------------- ---------- ------------------- ------------------------ ----------------
NOMINEES FOR ELECTION AT THE 2002 ANNUAL MEETING
------------------------------------------------
Thomas G. Werthan 46 Class C Chief Financial 1992
2003 Officer, EMCORE
Corporation
DIRECTORS WHOSE TERMS CONTINUE
------------------------------
Charles Scott (1)(3) 53 Class B Chairman, Cordiant 1998
2004 Communications Group
plc
Richard A. Stall(2) 46 Class B Vice President - 1996
2004 Technology, EMCORE
Corporation
Robert Louis-Dreyfus 55 Class B President and Chief 1997
2004 Executive Officer of
Louis Dreyfus
Communications
Thomas J. Russell(2)(3) 71 Class A Chairman of the Board, 1995
2005 EMCORE Corporation
Reuben F. Richards, Jr.(2) 47 Class A President and Chief 1995
2005 Executive Officer,
EMCORE Corporation
Robert Bogomolny(1)(4) 64 Class A President - University 2002
2005 of Baltimore
------------------------
(1) Member of Audit Committee
(2) Member of Nominating Committee
(3) Member of Compensation Committee
(4) Mr. Bogomolny was elected by the Board of Directors to replace Mr. John
Hogan, who resigned from the Board for personal reasons during Fiscal 2002.
In addition, during Fiscal 2002, there were two additional departures from
the Board, both of whom were Class C directors: Mr. Hugh Fenwick resigned
for health reasons and Mr. Shigeo Takayama retired.
3
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is certain information with respect to each of the
nominees for the office of director and other directors and executive officers
of EMCORE.
THOMAS J. RUSSELL, PH.D. Dr. Russell has been a director of the Company
since May 1995 and was elected Chairman of the Board on December 6, 1996. Dr.
Russell founded Bio/Dynamics, Inc. in 1961 and managed the company until its
acquisition by IMS International in 1973, following which he served as President
of that company's Life Sciences Division. From 1984 until 1988, he served as
Director, then as Chairman of IMS International until its acquisition by Dun &
Bradstreet in 1988. From 1988 to 1992, he served as Chairman of Applied
Biosciences, Inc. Since 1992, he has been an investor and director of several
companies. Dr. Russell currently serves as a director of LD COM Networks.
REUBEN F. RICHARDS, JR. Mr. Richards joined the Company in October 1995
as its President and Chief Operating Officer and became Chief Executive Officer
in December 1996. Mr. Richards has been a director of the Company since May
1995. From September 1994 to December 1996, Mr. Richards was a Senior Managing
Director of Jesup & Lamont Capital Markets Inc. ("Jesup & Lamont" (an affiliate
of a registered broker-dealer)). From December 1994 to 1997, he was a member and
President of Jesup & Lamont Merchant Partners, L.L.C. From 1992 through 1994,
Mr. Richards was a principal with Hauser, Richards & Co., a firm engaged in
corporate restructuring and management turnarounds. From 1986 until 1992, Mr.
Richards was a Director at Prudential-Bache Capital Funding in its Investment
Banking Division. Mr. Richards also serves on the board of the Company's GELcore
LLC joint venture.
THOMAS G. WERTHAN Mr. Werthan joined the Company in 1992 as its Chief
Financial Officer and a director. Mr. Werthan has over eighteen years experience
in assisting high technology, venture capital financed growth companies. Prior
to joining the Company in 1992, he was associated with The Russell Group, a
venture capital partnership, as Chief Financial Officer for several portfolio
companies. The Russell Group was affiliated with Thomas J. Russell, Chairman of
the Board of Directors of the Company. From 1985 to 1989, Mr. Werthan served as
Chief Operating Officer and Chief Financial Officer for Audio Visual Labs, Inc.,
a manufacturer of multimedia and computer graphics equipment.
RICHARD A. STALL, PH.D. Dr. Stall became a director of the Company in
December 1996. Dr. Stall helped found the Company in 1984 and has been Vice
President--Technology at the Company since October 1984, except for a sabbatical
year in 1993 during which Dr. Stall acted as a consultant to the Company and his
position was left unfilled. Prior to 1984, Dr. Stall was a member of the
technical staff of AT&T Bell Laboratories and was responsible for the
development of MBE technologies. He has co-authored more than 75 papers and
holds seven patents on MBE and MOCVD technology and the characterization of
compound semiconductor materials.
ROBERT LOUIS-DREYFUS Mr. Louis-Dreyfus has been a director of the
Company since March 1997. Mr. Louis-Dreyfus has been the President and CEO of
Louis Dreyfus Communications since May 2000. From 1993 through 2001, he was
Chairman of the Board of Directors and Chief Executive Officer of adidas-Salomon
AG. Prior to that time, he had been from 1990 until 1993 the Chief Executive
Officer of Saatchi & Saatchi plc (now Cordiant plc) and a director of Saatchi &
Saatchi plc from January 1990 until December 1994. Since 1992, he has been an
investor and a director of several other companies, including director of
Heidrick & Struggles since September 1999, advisory board member of The
Parthenon Group since October 1998 and President of Salomon S.A. since August
1998. From 1982 until 1988, he served as Chief Operating Officer (1982 to 1983)
and then as Chief Executive Officer (from 1984 to 1988) of IMS International
until its acquisition by Dun & Bradstreet in 1988.
ROBERT BOGOMOLNY Mr. Bogomolny was appointed to the Board of Directors
in April 2002 after the resignation of John Hogan. Since August 2002, Mr.
Bogomolny has served as President of the University of Baltimore. Prior to that,
he served as Corporate Senior Vice President and General Counsel of G.D. Searle
& Company from 1987 to 2001. At G.D. Searle, Mr. Bogomolny was responsible for
all of its legal, regulatory, quality control and public affairs activities. He
also led its government affairs department in Washington, D.C., and served on
the Searle Executive Management Committee.
4
CHARLES SCOTT Mr. Scott has served as a director of the Company since
February 1998. Mr. Scott is presently Chairman of Cordiant Communications Group
plc, the successor corporation of the Saatchi & Saatchi Advertising Group. He
joined Saatchi & Saatchi Company in 1990 and served as Chief Financial Officer
until 1992 when he was appointed Chief Operating Officer. In 1993, be became
Chief Executive Officer and held that position until 1995 when he assumed the
title of Chairman.
EXECUTIVE OFFICERS:
HOWARD W. BRODIE, ESQ. 35, joined the Company in August 1999 and serves
as Vice President, General Counsel and Secretary of the Company. From September
1995 to August 1999, Mr. Brodie was an Associate at the law firm of White & Case
LLP, a New York law firm that has served as outside counsel to the Company since
1997. While at White & Case LLP, Mr. Brodie practiced securities law and mergers
and acquisitions. Mr. Brodie has worked on EMCORE matters since 1998, helping to
negotiate and structure several EMCORE acquisitions and joint ventures,
including the acquisitions of Tecstar, Ortel and Alvesta, and the GELore LLC
joint venture with General Electric Lighting. In addition, Mr. Brodie
represented the Company in its June 1999 and March 2000 public offerings and its
2001 convertible note offering. From August 1994 to August 1995, Mr. Brodie
served as a judicial law clerk to Chief Judge Gilbert S. Merritt on the Sixth
Circuit Court of Appeals. Mr. Brodie received his J.D. degree from Yale Law
School.
THOMAS GMITTER, 55, joined the Company in April 2002 as Chief
Information Officer. Previously, Mr. Gmitter had been Vice President and Chief
Information Officer of Cone Mills in Greensboro, NC, having held such position
from March 1999 through April 2002. Before this, Mr. Gmitter was Chief
Information Officer of Universal Leaf Tobacco of Richmond, VA from 1996 to 1999.
SCOTT MASSIE, 41, joined the Company in September 2002 as General
Manager - Albuquerque and California. From 1997 to 2000, Mr. Massie was Chief
Operating Officer of IQE plc and its predecessor, QED. In 2000, Mr. Massie
became President of IQE, Inc., the U.S. subsidiary of IQE plc, and he held this
position until 2002. Mr. Massie holds a B.S. in mathematics, a B.S. in physics
and an M.S. in physics, all from Virginia Tech University, and he is also a
Commonwealth Fellow of the Commonwealth of Virginia..
BRUCE NONNEMAKER, 55, joined the Company in September 2002 as General
Manager, New Jersey. From 1997 through 2002, Mr. Nonnemaker served as Vice
President of Operations and Corporate Officer for Alpha Industries, a compound
semiconductor manufacturer located in Woburn, MA. Mr. Nonnemaker holds a
B.S.E.E. from The Pennsylvania State University, an M.S.E.E. from Lehigh
University and an M.B.A. from Boston University.
5
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth as of January 15, 2003 certain
information regarding the beneficial ownership of voting Common Stock by (i)
each person or "group" (as that term is defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) known by the
Company to be the beneficial owner of more than 5% of the voting Common Stock,
(ii) each named executive officer of the Company, (iii) each director and
nominee and (iv) all directors and executive officers as a group (11 persons).
Except as otherwise indicated, the Company believes, based on information
furnished by such persons, that each person listed below has the sole voting and
investment power over the shares of Common Stock shown as beneficially owned,
subject to common property laws, where applicable. Shares beneficially owned
include shares and underlying warrants and options exercisable within 60 days of
January 15, 2003. Unless otherwise indicated, the address of each of the
beneficial owners is c/o the Company, 145 Belmont Drive, Somerset, New Jersey
08873.
Shares Percent of
Beneficially Common
Name Owned Stock
---------------------------------------------------------------------------- ------------------- ---------------
Thomas J. Russell(1) 5,471,048 12.9%
Reuben F. Richards, Jr.(2) 1,131,156 3.0%
Thomas G. Werthan(3) 306,004 *
Richard A. Stall(4) 390,165 1.1%
Robert Louis-Dreyfus(5) 3,301,916 8.2%
Robert Bogomolny 2,753 *
Howard W. Brodie, Esq. (6) 68,750 *
Charles Scott(7) 19,269 *
Thomas Gmitter 0 0%
All directors and executive officers as a group (11 persons) (8) 10,691,061 22.4%
State of Wisconsin Investment Board(9) 4,831,500 11.6%
Capital Guardian Trust Co. (10) 4,727,530 11.4%
Wellington Management Company, LLP(11) 3,874,700 9.5%
Gallium Enterprises, Inc.(12) 3,301,916 8.2%
Franklin Advisors, Inc.(13) 2,329,052 5.9%
The AER 1997 Trust(14) 2,280,035 5.8%
Pioneer Funds (15) 1,938,974 5.0%
-----------------------
* Less than 1.0%
1) Includes 2,280,035 shares are held by The AER 1997 Trust and warrants to
purchase 455,494 shares.
2) Includes options to purchase 293,824 shares.
3) Includes options to purchase 264,120 shares.
4) Includes options to purchase 279,768 shares.
5) All 3,301,916 shares held by Gallium Enterprises Inc.
6) Includes options to purchase 68,750 shares
7) Includes 7,269 shares owned by Kircal, Ltd.
8) Includes options to purchase 1,361,956 shares.
9) The address of State of Wisconsin Investment Board is 121 East Wilson
Street, 2nd Floor, Madison, WI, 53703-3474.
10) The address of Capital Guardian Trust Co. is 222 South Hope Street, 54th
Floor, Los Angeles, CA 90071-1447.
11) The address of Wellington Management Company, LLP is 75 State Street,
19th Floor, Boston, MA, 02109-1809.
6
12) Gallium Enterprises, Inc. is controlled by Robert Louis-Dreyfus, a
member of the Board of Directors of the Company. The address of
Gallium Enterprises, Inc. is 152 West 57th Street, 21st Floor, NYC, NY
10019.
13) The address of Franklin Advisors, Inc. is 1 Franklin Parkway, San Mateo,
CA 94403.
14) Avery E. Russell, the daughter of Thomas J. Russell, Chairman of the
Board of Directors of the Company, is he primary beneficiary of the
AER 1997 Trust. The address of the trust is 117 Leabrook Lane,
Princeton, NJ 08541.
15) Various Pioneer funds (the "Noteholders") together hold a total of
$94,550,000 aggregate principal amount of the Company's 5% Convertible
Subordinated Notes due 2006. These notes are convertible into common
stock of the company at a price of $48.7629 per share. The share
amount set forth above assumes all such notes held by the Noteholders
were converted. The address of the Noteholders is 60 State Street,
Boston, MA 02109-1820.
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth, as of September 30, 2002, the number of
securities outstanding under each of EMCORE's stock option plans, the weighted
average exercise price of such options, and the number of options available for
grant under such plans.
---------------------------- -------------------------- -------------------------- --------------------------
PLAN CATEGORY NUMBER OF SECURITIES
NUMBER OF SECURITIES TO WEIGHTED AVERAGE REMAINING AVAILABLE FOR
BE ISSUED UPON EXERCISE EXERCISE PRICE OF FUTURE ISSUANCE UNDER
OF OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, EQUITY COMPENSATION
WARRANTS AND RIGHTS WARRANTS AND RIGHTS PLANS (EXCLUDING
SECURITIES REFLECTED IN
COLUMN (A))
---------------------------- -------------------------- -------------------------- --------------------------
(a) (b) (c)
---------------------------- -------------------------- -------------------------- --------------------------
Equity compensation plans
approved by security 5,004,668 $11.79 1,477,026
holders
---------------------------- -------------------------- -------------------------- --------------------------
Equity compensation plans
not approved by security 1,920 $0.23 0
holders
---------------------------- -------------------------- -------------------------- --------------------------
Totals 5,006,588 $11.79 1,477,026
---------------------------- -------------------------- -------------------------- --------------------------
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The President of Hakuto, the Company's Asian distributor, was a member
of the Company's Board of Directors in Fiscal 2002, and Hakuto is a minority
shareholder of the Company. During the year ended September 30, 2002, sales made
through Hakuto approximated $2.5 million.
In August 2001, the Company made a $5.0 million aggregate principal
amount bridge loan (the "Bridge Loan") to Uniroyal Technologies Corporation
("UTCI"), the proceeds of which were to be used by UTCI for working capital and
other corporate purposes. The Bridge Loan had an interest rate equal to the
prime rate and had a maturity date of the earlier of the second anniversary of
the date of the Bridge Loan and the closing of the sale of the adhesives and
sealants business of Uniroyal Engineered Products L.L.C., a subsidiary of UTCI.
The Bridge Loan was guaranteed by Uniroyal Optoelectronics, LLC ("UOE") and
several other subsidiaries of UTCI, and it was fully secured by a lien on, among
other things, UOE's cash, accounts receivable and a portion of UOE's equipment.
The Bridge Loan was also convertible under certain circumstances into UTCI
common stock at the Company's option. In November 2001, UTCI repaid the loan and
accrued interest in cash.
Emcore owns approximately 2.0 million shares of UTCI (approximately
7.1% of the total outstanding as reported in UTCI's most recent annual report),
which it received from UTCI in August 2001 as payment for its interest in the
UOE joint venture. In addition, Dr. Russell, Chairman of the Company's Board of
Directors, owns approximately 3.6 million shares of UTCI (approximately 12.8% of
the total outstanding). On August 25, 2002, UTCI and its subsidiaries filed
petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The
Company sits on the creditors committee in UTCI's bankruptcy reorganization, and
believes it is unlikely to receive any distribution in respect of its equity
7
holdings. As a result, the Company has written off the approximately 2.0 million
shares of UTCI common stock it holds as worthless. The Company is continuing to
pursue its claims against UTCI and its affiliates in respect of approximately
$1.2 million in outstanding accounts receivable as well as an unliquidated claim
for breach of contract.
During Fiscal 2002, the Company purchased $0.4 million in convertible
secured notes issued by Qusion Technologies, Inc. ("Qusion") pursuant to a Note
Purchase Agreement that provided for total investments of up to $5.0 million, of
which the Company's total potential obligation was $0.5 million. Qusion was a
start-up company specializing in monolithic integration of optical components.
During the latter part of Fiscal 2002, the Company, together with the other
investors under the Note Purchase Agreement (all of which were unaffiliated with
the Company), ceased funding Qusion after determining that Qusion's capital
requirements would be significantly in excess of the $5.0 million provided for
under the Note Purchase Agreement. As a result, Qusion has ceased operations and
is in the process of liquidating. The Company expects to receive little if any
payment in respect of its obligations from Qusion. The Company has purchased
Qusion's portfolio of patents and patent applications for $4,500 in cash. Mr.
Richards, Chief Executive Officer and a director of the Company, sat on Qusion's
Board of Directors and held options to purchase 50,000 shares of Qusion common
stock.
From time to time prior to July 2002, the Company has lent money to
certain of its executive officers and directors. Pursuant to due authorization
of the Company's Board of Directors, the Company in 1995 lent $85,000 to Thomas
G. Werthan, Chief Financial Officer and a director of the Company. The
promissory note executed by Mr. Werthan does not bear interest and provides for
forgiveness of the loan via bonuses payable to Mr. Werthan over a period of up
to 25 years. The balance outstanding on the loan is currently $82,000, and no
larger amount has been outstanding since the beginning of Fiscal 2002. In
February 2001 pursuant to due authorization from the Board of Directors, the
Company lent $3.0 million to Reuben F. Richards, Jr., President and CEO of the
Company. The promissory note evidencing this loan matures on February 22, 2006
and bears interest (compounded annually) at a rate of (a) 5.18% per annum
through May 23, 2002 and (b) 4.99% from May 24, 2002 through maturity. All
interest is payable at maturity. The note is partially secured by a pledge of
shares of the Company's common stock. Accrued interest at September 30, 2002
totaled approximately $250,000. In addition, the Mr. Richards repaid a loan in
the principal amount of $215,000 in December 2001. This loan did not bear
interest and was repaid through payment of a bonus by the Company to Mr.
Richards, in accordance with the terms of the loan. During Fiscal 2002, the
highest amount of Mr. Richards' indebtedness to the Company was $3.3 million.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on the Company's review of copies of all disclosure reports filed
by Directors and executive officers of the Company pursuant to Section 16(a) of
the Exchange Act, as amended, the Company believes that there was compliance
with all filing requirements of Section 16(a) applicable to Directors and
executive officers of the Company during the fiscal year, except for late
filings of three Form 4s by Mr. Stall as a result of an administrative
oversight, and one Form 3 by each of Messrs. Gmitter, Nonnemaker, Massie and
Bogomolny as a result of delays in receiving EDGAR codes.
COMPENSATION OF DIRECTORS
The Board of Directors held four meetings during Fiscal 2002 and took
certain actions by telephonic meeting and unanimous written consent. Pursuant to
its Directors' Stock Award Plan, the Company pays non-employee directors a fee
in the amount of $3,000 per Board meeting attended and $500 for each committee
meeting attended ($600 for the Chairman of the committee), including in each
case reimbursement of reasonable out-of-pocket expenses incurred in connection
with such Board or committee meeting. Payment of all fees will be made in common
stock of the Company at the average of the last reported bid and ask prices as
of the close of trading the previous day on the Nasdaq National Market. No
director who is an employee of the Company will receive compensation for
services rendered as a director. From time to time, Board members are invited to
attend meetings of Board committees of which they are
8
not members; in such cases, such Board members receive a committee meeting fee
of $500. During Fiscal 2002, all directors of the Company, except for Mr.
Louis-Dreyfus, attended at least 75% of the aggregate meetings of the Board and
committees on which they served, during their tenure on the Board. Mr.
Louis-Dreyfus attended two of the four meetings.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee currently consists of Messrs.
Russell and Scott. The Compensation Committee reviews and recommends to the
Board of Directors the compensation and benefits of all executive officers of
the Company, reviews general policy matters relating to compensation and
benefits of executive officers and employees of the Company and administers the
issuance of stock options and stock appreciation rights and awards of restricted
stock to the Company's officers and key salaried employees. No member of the
Compensation Committee is now or ever was an officer or an employee of the
Company. No executive officer of the Company serves as a member of the
Compensation Committee of the Board of Directors of any entity one or more of
whose executive officers serves as a member of the Company's Board of Directors
or Compensation Committee. The Compensation Committee meets once annually.
NOMINATING COMMITTEE
The Company's Nominating Committee currently consists of Messrs.
Russell, Richards and Stall. The Nominating Committee recommends new members to
the Company's Board of Director's. The Nominating Committee meets once annually.
AUDIT COMMITTEE
The Company's Audit Committee currently consists of Messrs. Scott and
Bogomolny. The Audit Committee recommends the engagement of the Company's
independent accountants, approves the auditing services performed, and reviews
and evaluates the Company's accounting policies and systems of internal
controls. Each member of the Audit Committee is independent within the meaning
of NASD Rule 4200(a)(15). The Audit Committee meets at least four times per
year. The Audit Committee's responsibilities are set forth in a written charter.
The Audit Committee has reviewed and discussed the Company's audited
financial statements for Fiscal 2002 with management of the Company. The Audit
Committee has discussed with the Company's independent auditors the matters
required to be discussed by SAS 61. The Audit Committee has received the written
disclosures and letter from the Company's independent accountants required by
independence Standards Board Standard No. 1, and has discussed with such
accountants the independence of such accountants. Based on the foregoing review
and discussions, the Audit Committee recommended to the Board of Directors that
the Company's audited financial statements be included in the Company's Annual
Report on Form 10-K for Fiscal 2002.
Audit Fees
The aggregate fees billed by the Company's independent accountants for
professional services rendered in connection with the audit of the Company's
financial statements included in the Company's Annual Report on Form 10-K for
Fiscal 2002, as well as for the review of the Company's financial statements
included in the Company's Quarterly Reports on Form 10-Q during Fiscal 2002
totaled $274,000.
9
Financial Information Systems Design and Implementation Fees
The Company's independent accountants billed $18,000 in Fiscal 2002 for
fees relating to their review of the implementation of the Company's information
management system.
All Other Fees
The only fees billed to the Company by its principal accountant for
Fiscal 2002 other than those described above related to services provided with
regard to due diligence services with regard to the Company's acquisition of the
Applied Solar Division of Tecstar, Inc., tax advisory services, and various
miscellaneous matters, and such fees totaled $396,000. The Audit Committee
believes that the foregoing expenditures are compatible with maintaining the
independence of the Company's principal accountant.
Audit Committee:
Charles Thomas Scott
Robert Bogomolny
LIMITATION OF OFFICERS' AND DIRECTORS' LIABILITY AND INDEMNIFICATION
MATTERS
The Company's Restated Certificate of Incorporation and By-Laws include
provisions (i) to reduce the personal liability of the Company's directors for
monetary damage resulting from breaches of their fiduciary duty and (ii) to
permit the Company to indemnify its directors and officers to the fullest extent
permitted by New Jersey law. The Company has obtained directors' and officers'
liability insurance that insures such persons against the costs of defense,
settlement or payment of a judgment under certain circumstances. There is no
pending litigation or proceeding involving any director, officer, employee or
agent of the Company as to which indemnification is being sought. The Company is
not aware of any pending or threatened litigation that might result in claims
for indemnification by any director or executive officer.
10
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the
annual and long-term compensation for services in all capacities to the Company
for fiscal years ended September 30, 2002, 2001 and 2000 of those persons who
during such fiscal year (i) served as the Company's chief executive officer and
(ii) were the four most highly-compensated officers (other than the chief
executive officer) (collectively, the "Named Executive Officers"):
Annual Compensation
------------------------------------------------
Long-term
Compensation
Other Securities
Name and Fiscal (1) Annual Underlying All Other
Principal Position Year Salary Bonus Compensation Options Compensation
------------------------- -------- ------------- ------------- ------------- -------------- --------------
Reuben F. Richards, Jr. 2002 $315,000 $335,000 -- 120,000 --
President and 2001 $298,750 $215,000 -- -- --
Chief Executive 2000 $250,000 $162,500 -- 25,000 --
Officer
Richard A. Stall 2002 $185,000 -- -- 100,000 --
Vice President - 2001 $182,500 $340,000 -- -- --
Chief Technology 2000 $175,000 $278,500 -- 75,000 --
Officer
Thomas G. Werthan 2002 $175,000 -- -- 42,500 --
Chief Financial 2001 $171,250 $80,000 -- -- --
Officer 2000 $156,250 $86,250 -- 105,000 --
Howard Brodie, Esq. 2002 $150,800 -- -- 42,500 --
Vice President and 2001 $142,800 $65,000 -- -- --
General Counsel 2000 $142,000 $80,000 -- 12,500 --
Thomas Gmitter 2002 $71,900 $15,000 -- 50,000
Chief Information 2001 -- -- -- -- --
Officer 2000 -- -- -- -- --
----------------------
(1) The Company's bonus compensation is based on a calendar year schedule.
Accordingly, bonus amounts are included with respect to the fiscal year
in which they were actually paid.
11
The following table sets forth the number of options granted to the
Named Executive Officers in Fiscal 2002, both in absolute terms and as a
percentage of the total number of options granted to all employees of the
Company in the same period, as well as the exercise price, expiration date and
potential realizable value of such options over the term thereof.
OPTION GRANTS IN FISCAL 2002
Individual Grants
-----------------------------------------------------------------
% of Total
Number of Options Potential Realizable Value
Securities Granted to Exercise at Assumed Annual Rates of
Underlying Employees in or Base Stock Price Appreciation
Options Fiscal Price Expiration over Stock Option
Name Grants 2002 ($/Share) Date Term (1)
----------------------------- -------------- -------------- ------------ ------------- ------------------------------
Reuben F. Richards, Jr. 120,000 3.8% $7.90 10/4/11 $596,192 $1,510,868
Richard A. Stall 100,000 3.2% $7.90 10/4/11 $496,827 $1,259,057
Thomas G. Werthan 42,500 1.4% $7.90 10/4/11 $211,151 $535,099
Howard W. Brodie 42,500 1.4% $7.90 10/4/11 $211,151 $535,099
Thomas Gmitter 50,000 1.6% $8.02 4/29/12 $252,187 $639,091
----------------------------
(1) In accordance with the Commission's rules, these columns show gains that
might exist for the respective options, assuming the market price of the
Company's Common Stock appreciates from the date of grant over a period
of ten years at the annualized rates of five and ten percent
respectively. If the stock price does not increase above the exercise
price at the time of exercise, realized value to the named executives
from these options would be zero.
12
The following table sets forth the number of shares acquired by the
Named Executive Officers upon options exercised during Fiscal 2002 and the value
thereof, together with the number of exercisable and unexercisable options held
by the Named Executive Officers on September 30, 2002 and the aggregate gains
that would have been realized had these options been exercised on September 30,
2002, even though such options had not been exercised by the Named Executive
Officers.
AGGREGATED OPTION EXERCISES IN FISCAL 2002
AND YEAR-END OPTION VALUES(1)
Total Number of Value of Unexercised
Unexercised Options at In-the-Money Options
September 30, 2002(2) at September 30, 2002(3)
------------------------------------- ------------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
----------------------------- --------------- ----------------- --------------- ----------------
Reuben F. Richards, Jr. 258,824 95,000 $294 --
Richard A. Stall 249,768 80,000 $13 --
Thomas G. Werthan 242,495 42,875 $189 --
Howard W. Brodie, Esq. 58,125 76,875 -- --
Thomas Gmitter -- 50,000 -- --
--------------------
(1) No options were exercised by the Named Executive Officers in Fiscal
2002.
(2) This represents the total number of shares subject to stock options
held by the named executives at September 30, 2002. These options were
granted on various dates during the fiscal years 1995 through 2002.
(3) These amounts represent the difference between the exercise price of
the stock options and the closing price of the Common Stock on
September 30, 2002, for all the in-the-money options held by each named
executive. The in-the-money stock option exercise price is $1.515.
These stock options were granted at the fair market value of the Common
Stock on the grant date.
13
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee recommends compensation arrangements for the
Company's executive officers and administers the Company's 1995 Incentive and
Non-Statutory Stock Option Plan and the 2000 Stock Option Plan. The Compensation
Committee also administers the MicroOptical Devices, Inc. 1996 Stock Option
Plan. The Company's compensation program is designed, with the advice of
independent consultants, to be competitive with companies similar in structure
and business to the Company.
The Company's executive compensation program is structured to help the
Company achieve its business objectives by:
* setting levels of compensation designed to attract and retain
superior executives in a highly competitive environment;
* designing equity-related and other performance-based incentive
compensation programs to align the interests of management with
the ongoing interests of shareholders;
* providing incentive compensation that varies directly with both
Company financial performance and individual contributions to
that performance; and
* linking compensation to elements that affect short- and long-term
stock price performance.
The Company has used a combination of salary and incentive
compensation, including cash bonuses and equity-based incentives to achieve its
compensation goals.
COMPENSATION OF EXECUTIVE OFFICERS
SALARY
The salary levels of the Company's executive officers including the
Chief Executive Officer, are intended to reflect the duties and level of
responsibilities inherent in each position. Comparison of the salaries paid by
other companies in similar industries are considered in establishing the salary
level for each position. The particular qualifications of the individual holding
the position, relevant experience and the importance to the Company of the
individual's expected contribution are also considered in establishing salaries.
In general, compensation payments in excess of $1.0 million to any of
the executive officers are subject to a limitation on deductibility by the
Company under Section 162(m) of the Internal Revenue Code of 1986, as amended.
The deduction limit does not apply to performance based compensation that
satisfies certain requirements. The Compensation Committee has not yet
determined a policy with regard to Section 162(m); however, no officer of the
Company is expected to earn compensation in excess of $1.0 million in Fiscal
2003.
.
PERFORMANCE AND INCENTIVE COMPENSATION
Arrangements for bonus compensation for the Company's executive
officers are negotiated individually with each executive officer. Bonus
compensation arrangements take various forms, but generally are based on factors
such as the Company's financial performance, operating performance and
individual performance.
14
EQUITY-RELATED INCENTIVES
The Company's primary method of compensating senior executives has been
through the grant of stock options granted at the commencement of their
employment agreements. Stock options grants to executive officers are generally
long-term and usually vest over a three- to five-year period. The Company has
favored stock options as a way of aligning management's interests with the
long-term interests of the Company's shareholders and inducing executives to
remain with the Company on a long-term basis. Individual option grants have been
based on the performance and level of responsibility of the optionee.
Compensation Committee:
Thomas J. Russell
Charles Thomas Scott
STOCK PERFORMANCE GRAPH
The following graph and table compares the cumulative total
shareholders' return on the Company's Common Stock for the five-year period from
the October 1, 1997 through September 30, 2002 with the cumulative total return
on the Nasdaq Stock Market Index and the Nasdaq Electronic Components Stocks
Index (SIC Code 3674). The comparison assumes $100 was invested on October 1,
1997 in the Company's Common Stock. The Company did not declare, nor did it pay
any dividends during the comparison period. Notwithstanding any statement to the
contrary in any of the Company's previous or future filings with the Commission,
the graph and table shall not be incorporated by reference into any such
filings.
15
COMPARISON OF 5 YEARS CUMULATIVE TOTAL RETURN*
AMONG EMCORE CORPORATION, THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE NASDAQ ELECTRONIC COMPONENTS INDEX
[GRAPHIC OMITTED]
9/97 12/97 3/98 6/98 9/98 12/98 3/99 6/99 9/99 12/99
EMCORE CORPORATION 100.00 104.00 83.33 53.33 41.67 93.33 75.00 107.33 74.00 181.33
NASDAQ STOCK MARKET (U.S.) 100.00 93.62 109.57 112.58 101.58 131.99 148.03 161.92 165.95 245.29
NASDAQ ELECTRONIC COMPONENTS 100.00 74.97 82.49 76.30 79.62 115.82 119.03 135.59 161.82 215.39
3/00 6/00 9/00 12/00 3/01 6/01 9/01 12/01 3/02 6/02 9/02
EMCORE CORPORATION 613.67 640.00 443.50 501.33 267.34 328.00 91.31 143.47 102.51 64.00 16.21
NASDAQ STOCK MARKET (U.S.) 275.37 239.44 220.33 147.54 110.13 129.80 90.05 117.07 110.86 88.38 70.90
NASDAQ ELECTRONIC COMPONENTS 345.14 338.12 284.59 177.01 107.99 124.45 80.21 120.61 114.33 75.32 53.51
------------------------------------------------------------------
-[ ]- EMCORE CORPORATION -x- NASDAQ STOCK MARKET (U.S.)
-O- NASDAQ ELECTRONIC COMPONENTS
------------------------------------------------------------------
*$100 invested on 9/30/97 in stock or index-
including reinvestment of dividends.
Fiscal year ending September 30.
16
PROPOSAL II: APPOINTMENT OF INDEPENDENT AUDITORS
APPOINTMENT OF AUDITORS
Deloitte & Touche LLP, independent certified public accountants,
audited the financial statements of EMCORE Corporation for the fiscal year
ending September 30, 2002. The Audit Committee and the Board of Directors have
selected Deloitte & Touche LLP as the independent auditors of the Company for
the fiscal year ending September 30, 2003. The ratification of the appointment
of Deloitte & Touche LLP will be determined by the vote of the holders of a
majority of the shares present in person or represented by proxy at the Annual
Meeting. If the foregoing appointment of Deloitte & Touche LLP is not ratified
by shareholders, the Board of Directors will appoint other independent
accountants whose appointment for any period subsequent to the 2003 Annual
Meeting of Shareholders will be subject to the approval of shareholders at that
meeting.
Representatives of Deloitte & Touche LLP are expected to attend the
Annual Meeting of Shareholders and will have the opportunity to make a statement
if they desire to do so and are expected to be available to answer appropriate
questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE INDEPENDENT
AUDITORS OF THE COMPANY.
GENERAL
OTHER MATTERS
The Board of Directors knows of no other business which will be
presented at the meeting. If, however, other matters are properly presented, the
persons named in the enclosed proxy will vote the shares represented thereby in
accordance with their judgment on such matters.
17
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the 2004 Annual
Meeting of Shareholders must be received by the Company no later than October
27, 2003. Proposals may be mailed to the Company, to the attention of Howard W.
Brodie, Secretary, 145 Belmont Drive, Somerset, New Jersey 08873.
By Order of the Board of Directors
/s/ Howard W. Brodie
-----------------------------------
Howard W. Brodie
Secretary
ANNUAL MEETING OF SHAREHOLDERS OF
EMCORE CORPORATION
FEBRUARY 27, 2003
--------------------------------
COMPANY NUMBER
--------------------------------
Please date, sign and mail your proxy
card in the envelope provided as soon ACCOUNT NUMBER
as possible.
--------------------------------
NUMBER OF SHARES
--------------------------------
| |
| Please detach and mail in the envelope provided. |
-----------------------------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE
IN BLUE OR BLACK INK AS SHOWN HERE [X]
-----------------------------------------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
1. Election of Director 2. RATIFICATION OF DELOITTE & TOUCHE, LLP [ ] [ ] [ ]
AS THE COMPANY'S INDEPENDENT AUDITORS
NOMINEE
[ ] FOR Thomas G. Werthan 3. Upon such other business as may properly come before the
Annual Meeting or any adjournment thereof.
[ ] WITHHOLD AUTHORITY
In their discretion, the proxies are authorized to vote
upon such other business as may properly come before the
Annual Meeting, and any adjournments or postponements thereof.
PLEASE MARK, SIGN AND DATE THIS PROXY CARD AND PROMPTLY
RETURN IT IN THE ENVELOPE PROVIDED. NO POSTAGE NECESSARY IF
MAILED WITHIN THE UNITED STATES.
The undersigned hereby acknowledges receipt of (i) the
Notice of Annual Meeting, (ii) the Proxy Statement, and (iii)
the Company's 2002 Annual Report to Shareholders.
--------------------------------------------------
--------------------------------------------------
To change the address on your account, please
check the box at right and indicate your new
address in the address space above. Please [ ]
note that changes to the registered name(s)
on the account may not be submitted via this
method.
--------------------------------------------------
Signature of Shareholder _________________ Date: ________ Signature of Shareholder_______________ Date: ________
NOTE: This proxy must be signed exactly as the name appears hereon. When shares are held jointly, each holder
should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full
title as such. If the signer is a corporation, please sign full corporate name by duly authorized
officer, giving full title as such. If signer is a partnership, please sign in partnership name by
authorized person.
PROXY O
EMCORE CORPORATION
145 BELMONT DRIVE
SOMERSET, NEW JERSEY 08873
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Reuben F. Richards and Thomas G.
Werthan, and each of them, as proxies for the undersigned, each with full power
of substitution, for and in the name of the undersigned to act for the
undersigned and to vote, as designated on the reverse side of this proxy card,
all of the shares of stock of the Company that the undersigned is entitled to
vote at the 2003 Annual Meeting of Shareholders of the Company, to be held on
February 27, 2003 or at any adjournments or postponements thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED "FOR" THE ELECTION OF ALL DIRECTOR NOMINEES LISTED IN
PROPOSAL (1) AND "FOR" THE RATIFICATION OF THE AUDITORS IN PROPOSAL (2).
-------------
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE) SEE REVERSE
SIDE
-------------