KVH INDUSTRIES, INC.
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
to be held on May 29, 2002
and
PROXY STATEMENT
IMPORTANT
Please mark, sign and date your proxy
and promptly return it in the enclosed envelope or vote your
proxy over the Internet or by telephone.
KVH Industries, Inc.
50 Enterprise Center
Middletown, RI 02842
April 29, 2002
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of KVH
Industries, Inc. Our meeting will be held at the offices of Foley, Hoag & Eliot
LLP, World Trade Center West, 155 Seaport Boulevard, 16th Floor, Boston,
Massachusetts, 02210, on Wednesday, May 29, 2002, beginning at 11:00 a.m. local
time.
At this year's Annual Meeting, stockholders will be asked to elect three
directors and vote upon any other matters appropriate to the meeting. Additional
information about the Annual Meeting is given in the attached Notice of Annual
Meeting and Proxy Statement.
Whether or not you plan to attend the Annual Meeting, we hope you will vote as
soon as possible. You may vote over the Internet, by telephone or by mailing a
completed proxy card. Voting your proxy will ensure your representation at the
Annual Meeting.
I urge you to carefully review the proxy materials and to vote for the proposals
as described in the proxy statement.
Thank you for your cooperation, continued support, and interest in KVH
Industries, Inc. I hope to see you at the Annual Meeting.
Sincerely,
/s/ Martin Kits van Heyningen
Martin Kits van Heyningen
President & Chief Executive Officer
KVH Industries, Inc.
Notice of Annual Meeting of Stockholders
to be held May 29, 2002
The 2002 Annual Meeting of Stockholders of KVH Industries, Inc. will be held on
Wednesday, May 29, 2002 at 11:00 a.m. at the offices of Foley, Hoag & Eliot LLP,
World Trade Center West, 155 Seaport Boulevard, 16th Floor, Boston,
Massachusetts, 02210, to conduct the following items of business:
1. To elect three directors to serve for a three-year term or until their
successors have been elected.
2. To transact any other business appropriate to the meeting.
Stockholders, who owned shares of our stock at the close of business on Tuesday,
April 2, 2002, are entitled to attend and vote at the meeting. A list of
stockholders entitled to vote at the annual meeting will be available at our
headquarters in Middletown, Rhode Island, during normal business hours for 10
days prior to the annual meeting. A stockholder may examine the list for any
legally valid purpose related to the meeting.
Whether or not you plan to attend the meeting, please complete, date, sign and
return the enclosed proxy card in the accompanying reply envelope as promptly as
possible. To make your voting experience easier, KVH has made arrangements with
its transfer agent to allow you to vote your proxy over the Internet or by
telephone. Should you choose to vote either by the Internet or by telephone, you
are not required to complete and mail the enclosed proxy card. For specific
instructions, please refer to the information provided with your proxy card.
By Order of the Board of Directors,
/s/ Robert W.B.Kits van Heyningen
Robert W.B. Kits van Heyningen
Secretary
Middletown, Rhode Island
April 29, 2002
PROXY STATEMENT
Table of Contents
Page
General Information
Notice of Meeting 4
Record Date 4
Attendance at Meeting 4
Voting 4
Solicitation 5
Proposal I
Election of Directors 6
Director Nominees 6
Other Matters 6
Board of Directors
Directors and Executive Officers 7
Committees and Meetings of the Board of Directors 10
Audit and Related Fees 10
Stock Ownership Information
Compliance with 16(a) Reporting 11
Beneficial Ownership of Common Stock 12
Ten-year Option/SAR Repricing 13
Directors' and Officers' Compensation
Directors' Compensation 13
Summary Compensation Table 14
Option Grants During Last Fiscal Year 15
Options Exercised During Last Fiscal Year 15
Cumulative Total Return Graph 16
Other Information
Stockholder Proposals 17
Available Information 17
Exhibit A - Proxy Card 18
PROXY STATEMENT
General Information
The enclosed proxy is solicited on behalf of the Board of Directors of KVH
Industries, Inc., a Delaware corporation, with its principal executive offices
at 50 Enterprise Center, Middletown, Rhode Island 02842. This proxy is for use
at KVH's 2002 Annual Meeting of Stockholders to be held at 11:00 a.m. on
Wednesday, May 29, 2002, at the offices of Foley, Hoag & Eliot LLP, World Trade
Center West, 155 Seaport Boulevard, 16th Floor, Boston, Massachusetts, 02210.
Our proxy statement contains important information regarding the KVH Industries,
Inc.'s 2002 Annual Meeting of Stockholders, the proposals on which you are being
asked to vote, information you may find useful in determining how to vote and
voting procedures.
A number of abbreviations are used in this proxy statement. We refer to KVH
Industries, Inc. as "KVH." The term "proxy materials" includes this proxy
statement, the enclosed proxy card and our 2001 Annual Report on Form 10-K.
KVH's 2002 Annual Meeting of Stockholders is referred to as "the meeting."
The Board of Directors of KVH is mailing this proxy statement on or about April
29, 2002, to all KVH stockholders as of the record date, April 2, 2002.
Stockholders who owned KVH's common stock at the close of business on April 2,
2002, are entitled to attend and vote at the meeting. On the record date, there
were 10,997,598 shares of KVH's common stock issued and outstanding, and
entitled to the same number of votes.
Voting Procedures
As a stockholder of KVH, you have a right to vote on certain business matters
affecting KVH. The proposals that will be presented at the meeting and upon
which you are being asked to vote are discussed in the following sections
entitled "Proposals." Each share of KVH's common stock you own entitles you to
one vote. You may vote by mail, by telephone, over the Internet, or in person at
the meeting.
Methods of Voting
Your shares will be voted in accordance with the instructions you indicate. If
you return a proxy card but do not indicate your voting instructions, your
shares will be voted for the proposals as presented in the proxy statement and
at the discretion of the proxies (as defined below) as to all other matters that
may properly come before the meeting.
Voting by Mail
By signing and returning the proxy card in the enclosed prepaid and addressed
envelope, you are enabling the individuals named on the proxy card (known as
"proxies") to vote your shares at the meeting in the manner you indicate. We
encourage you to sign and return the proxy card even if you plan to attend the
meeting. In this way, your shares will be voted even if you are unable to attend
the meeting. If you received more than one proxy card, it is an indication that
your shares are held in multiple accounts. Please sign and return all proxy
cards to ensure that all of your shares are voted.
Voting by Telephone
To vote by telephone, please follow the instructions included on your proxy
card. If you vote by telephone, you do not need to complete and mail your proxy
card.
Voting on the Internet
To vote on the Internet, please follow the instructions included on your proxy
card. If you vote on the Internet, you do not need to complete and mail your
proxy card.
Voting in Person at the Meeting
If you plan to attend the meeting and vote in person, we will provide you with a
ballot at the meeting. If your shares are registered directly in your name, you
are considered the stockholder of record and you have the right to vote in
person at the meeting.
If your shares are held in the name of your broker or other nominee, you are
considered the beneficial owner of shares held in street name. If you wish to
vote at the meeting, you will need to bring with you to the meeting a legal
proxy from your broker or other nominee authorizing you to vote your shares.
If you own shares under the Employees' Stock Purchase Plan and do not vote, your
shares will be voted in accordance with normal brokerage industry practices, as
described in this proxy statement under the section "Broker Non-Votes."
Revoking Your Proxy
You may revoke your proxy at any time before it is voted at the meeting. In
order to do this, you must either: sign and return another proxy at a later
date; provide written notice of the revocation of your proxy to KVH's Secretary;
or attend the meeting and vote in person.
Quorum Requirement
A quorum, which is a majority of the outstanding shares entitled to vote as of
the record date, April 2, 2002, must be present in order to hold the meeting and
to conduct business. Shares are counted as being present at the meeting if you
appear in person at the meeting or if you vote your shares on the Internet, by
telephone, or by submitting a properly executed proxy card. If any broker
non-votes (as described below) are present at the meeting, they will be counted
as present for the purpose of determining a quorum.
Votes Required to Pass the Proposals
The vote required and the method of calculation for the proposal to be
considered at the meeting is as follows.
Proposal I - Election of Directors: The three nominees receiving the
highest number of votes, in person or by proxy, will be elected as
directors.
You may vote "for" the proposals, you may vote "against" the proposals, or you
may "withhold" your vote with respect to one or more of the proposals. If you
return a proxy card that withholds your vote from the proposals, your shares
will be counted as present for the purpose of determining a quorum but will not
be counted in the vote on the proposals.
Broker Non-Votes
If your shares are held in the name of a broker and you do not return a proxy
card, brokerage firms have authority to vote your non-voted shares (known as
"broker non-votes") on certain routine matters. The proposal to elect three
directors and other matters should be treated as routine. Consequently, if you
do not provide a proxy to vote your shares, your brokerage firm may elect to
vote or not vote your shares for you. To the extent your brokerage firm votes
shares on your behalf, your shares will be counted as present for the purpose of
determining a quorum.
Voting Confidentiality
Proxies, ballots and voting tabulations are handled on a confidential basis to
protect your voting privacy. Information will not be disclosed except as
required by law.
Voting Results
Final voting results will be announced at the meeting and will be published in
KVH's Quarterly Report on Form 10-Q for the second quarter of fiscal 2002, which
will be filed with the Securities and Exchange Commission on or before August
14, 2002. After the report is filed, you may obtain a copy by: visiting our web
site at www.kvh.com, contacting our investor relations department at
401-847-3327, or viewing our Quarterly Report on Form 10-Q for the second
quarter on the SEC's web site at www.sec.gov.
Solicitation
The cost of soliciting proxies, including expenses in connection with preparing
and mailing this Proxy Statement, will be borne by the Company. Copies of
solicitation materials will be furnished to brokerage houses, nominees,
fiduciaries, and custodians to forward to beneficial owners of Common Stock held
in their names. In addition, the Company will reimburse brokerage firms and
other persons representing beneficial owners of stock for their reasonable
expenses in forwarding solicitation materials to such beneficial owners. In
addition to original solicitation of proxies by mail, the Company's directors,
officers, and other employees may, without additional compensation, solicit
proxies by telephone, facsimile, electronic communication and personal
interviews.
Proposal I: Election of Directors. The Board has nominated Martin A. Kits van
Heyningen, Robert W.B. Kits van Heyningen, and Werner Trattner, who currently
serve as Class III Directors, for reelection as Class III Directors at the
meeting, each to serve until our annual meeting of stockholders in 2005 or
special meeting in lieu thereof, and until a successor is duly elected and
qualified.
Our Board of Directors consists of seven members, four non-employee directors
and three employee directors. The Board is divided into three classes, with two
directors in Class I, two in Class II and three in Class III. Directors serve
three-year terms, or until a qualified successor is elected. Each year at the
Company's annual meeting the terms of directors in one of the three classes
expire. Our By-laws provide that the number of directors may vary from two to
seven with increases or decreases determined by the stockholders or directors.
Martin A. Kits van Heyningen, Robert W.B. Kits van Heyningen and Werner Trattner
have agreed to serve as Class III Directors if elected, and we have no reason to
believe that they will be unable to serve. In the event that any is unable or
declines to serve as a director at the time of the annual meeting, proxies will
be voted for such other nominee as is then designated by the Board.
Martin A. Kits van Heyningen, a founder of the Company, has been President and a
director of the Company since 1982 and has served as the Company's Chief
Executive Officer since 1990. From 1980 to 1982, the New England Consulting
Group, a marketing consulting firm, employed Mr. Kits van Heyningen as a
marketing consultant. Mr. Kits van Heyningen received a BA cum laude from Yale
University.
Robert W.B. Kits van Heyningen, a founder of the Company, has been a director
since 1982 and the Company's Vice President of Research and Development since
1998. Previously he served as the Company's Vice President of Engineering from
1982 until 1998. Mr. Kits van Heyningen was an associate engineer at the
Submarine Signal Division of Raytheon Company and was also a consultant to
various companies and universities from 1980 to 1985. Mr. Kits van Heyningen
received a BS in physics from McGill University.
Werner Trattner has been a director of the Company since 1994 and is a member of
the Compensation and Audit committees. Mr. Trattner has been Chief Financial
Officer/Vice President of Sales of Swarovski Optik KG, an Austrian manufacturer
of optical equipment, since 1989. Mr. Trattner received a degree in business
administration from the Studiengemeinschaft in Darmstadt, Germany and received a
diploma from the Controller Akademie in Munich/Gauting, Germany. Mr. Trattner
completed the Program for Executive Development at the International Institute
for Management Development in Lausanne, Switzerland.
The Board recommends that you vote FOR the election of Messrs. Martin A.
Kits van Heyningen, Robert W.B. Kits van Heyningen, and Werner Trattner as
Class III directors.
Other Matters
Other than the proposals as discussed in the proxy statement, KVH's Board of
Directors does not intend to bring any other matters to be voted on at the
meeting. KVH's Board is not currently aware of any other matters that will be
presented by others for action at the meeting. However, if other matters are
properly presented at the meeting and you have signed and returned your proxy
card, or voted on the Internet, or by telephone, the proxies will have
discretion to vote your shares on such matters to the extent authorized in
applicable regulations under the Securities Exchange Act of 1934.
Board of Directors
Directors and Executive Officers
The following table sets forth certain information with respect to the directors
and executive officers of KVH:
Name Age Position
_______________________________ _____ _____________________________________________________
Arent H. Kits van Heyningen (1) 86 Chairman, Board of Directors
Martin A. Kits van Heyningen (1) 43 President, Chief Executive Officer and Director
S. Joseph Bookataub 53 Chief Operating Officer
Richard C. Forsyth 55 Chief Financial Officer
Josina de Smit (2) 65 Treasurer
Sid Bennett 63 Vice President, FOG Business Development
Christopher T. Burnett 47 Vice President of Business Development
James S. Dodez 43 Vice President of Marketing
Robert W.B. Kits van Heyningen (1) 45 Vice President of R&D and Director
Mads E. Bjerre-Petersen 58 Managing Director, KVH Europe
Ian C. Palmer 36 Vice President of Satellite Sales
Mark S. Ain (3) (4) 59 Director
Stanley K. Honey (3) 47 Director
Werner Trattner (3) (4) 49 Director
Charles R. Trimble (3) (4) 60 Director
_______________________________
(1) Arent Kits van Heyningen is the spouse of Josina de Smit and the father of Martin Kits van Heyningen and Robert Kits van
Heyningen
(2) Josina de Smit is the spouse of Arent Kits van Heyningen and the mother of Martin Kits van Heyningen and Robert Kits van
Heyningen
(3) Member of the Audit Committee
(4) Member of the Compensation Committee
Arent H. Kits van Heyningen, a founder of the Company, has been Chairman of the
Company's Board of Directors since 1982. He also has served as the Company's
Chief Scientist since that time. From 1963 to 1986, Mr. Kits van Heyningen was
Principal Engineer at the Submarine Signal Division of Raytheon Company. Mr.
Kits van Heyningen received a BS and an MS in electrical engineering from Delft
Technical University, The Netherlands.
Martin A. Kits van Heyningen, a founder of the Company, has been President and a
director of the Company since 1982 and has served as the Company's Chief
Executive Officer since 1990. From 1980 to 1982, Mr. Kits van Heyningen was
employed by the New England Consulting Group, a marketing consulting firm, as a
marketing consultant. Mr. Kits van Heyningen received a BA cum laude from Yale
University.
S. Joseph Bookataub joined KVH Industries as the Chief Operating Officer in
2001. Previously, Mr. Bookataub was vice president of manufacturing for Mayan
Networks, a San Jose, California, optical networking firm. He has also served as
the vice president of operations for Logistix Corporation, a supply chain
management company, and as both the vice president of operations and quality and
vice president of manufacturing for Pyramid Technology Corporation, a mainframe
UNIX client/server system manufacturer. Mr. Bookataub holds a BSEE from the
University of Rhode Island, an MBA from James Madison University, and
successfully completed the Stanford Executive MBA program.
Richard C. Forsyth has been Chief Financial Officer of KVH since joining the
Company in 1988. Prior to joining the Company, Mr. Forsyth consulted for
Technology Transition, Inc., a venture capital firm, from 1986 until 1988 and
served as the Chief Financial Officer for two of Technology Transition's
portfolio companies. Between 1981 and 1985, Mr. Forsyth was Divisional
Controller at Wang Laboratories, a computer manufacturer. Mr. Forsyth is a
Certified Public Accountant and received BS and AB degrees from Boston College.
Josina de Smit, a founder of the Company, has been Treasurer of KVH since 1986.
Previously Ms. de Smit held a variety of financial, administrative and human
resources positions at the Company, including Financial Manager and Human
Resources Manager.
Sid Bennett joined the Company as Vice President of the Fiber Optic Group in
November 1997 after the group was acquired from Andrew Corporation. Mr. Bennett
was employed by the Andrew Corporation from 1985 to 1997. His most recent
positions with the Andrew Corporation were Director, Sensor Products, and
President, Andrew-Thompson Broadcasting, Inc. Previously Mr. Bennett was with
Sanders Associates where he managed military electronic systems development. Mr.
Bennett has received a BEE from Cornell University and an MEE from New York
University. He is Chair of the IEEE Gyro and Accelerometer Panel, a member of
the Board of Governors of the IEEE Aerospace and Electronic Systems Society and
the IEEE Standards Board.
Christopher T. Burnett has been KVH's Vice President of Business Development
since 1994. Mr. Burnett joined the Company in 1988 as its Director of Business
Development and held that position until 1994. From 1985 until 1988, Mr. Burnett
was Program Manager for Sippican Inc., an engineering and manufacturing company.
From 1983 until 1985, Mr. Burnett was a Senior Consultant in the Aerospace
Defense Consulting Group of Peat Marwick and Mitchell. Mr. Burnett received a BS
from the U.S. Naval Academy and an MBA from Golden Gate University.
James S. Dodez was named KVH's Vice President of Marketing in October 1998 after
serving as the Vice President of Marketing and Reseller Sales since 1995. Mr.
Dodez joined KVH in 1986 as Marketing Director, a position he held until 1995.
From 1985 until 1986, Mr. Dodez was Marketing Director at Magratten Wooley,
Inc., an advertising agency. Mr. Dodez received a BS from Miami University
(Ohio).
Robert W.B. Kits van Heyningen, a founder of the Company, has been a director
since 1982 and the Company's Vice President of Research and Development since
1998. Previously he served as the Company's Vice President of Engineering from
1982 until 1998. Mr. Kits van Heyningen was an associate engineer at the
Submarine Signal Division of Raytheon Company and was also a consultant to
various companies and universities from 1980 to 1985. Mr. Kits van Heyningen
received a BS in physics from McGill University.
Mads E. Bjerre-Petersen has been Managing Director of the company's Danish
subsidiary, KVH Europe A/S, since 1992, when it was founded on the basis of his
former activities. From 1974 to 1992, Mr. Bjerre-Petersen served as Managing
Director of his own marine electronic distribution and manufacturing companies
MBP Trading and Danaplus A/S. Mr. Bjerre-Petersen received a M.Sc. in mechanical
engineering from the Technical University of Denmark.
Ian C. Palmer has been KVH's vice president of satellite sales since 2000. He
joined KVH in 1993 and served as Director of Satellite Sales from 1998 until
2000. Previously, Mr. Palmer was sales manager for Euro Marine Trading. He
earned a BA in International Relations and Business from Boston University.
Mark S. Ain has been a director of the Company since 1997 and is a member of the
Compensation and Audit Committees. He is the founder, Chief Executive Officer,
and Chairman of the Board of Directors of Kronos Incorporated since its
organization in 1977. Mr. Ain is also on the board of directors for the Park
Electrochemical Corporation, LTX Corporation, Zydacron, Inc., and the Walker
School. He received a BS from the Massachusetts Institute of Technology and an
MBA from the University of Rochester.
Stanley K. Honey has been a director of the Company since 1997 and is a member
of the Audit Committee. He is the President of Sportvision Systems, LLC. Since
November 1997, when Mr. Honey joined Sportvision Systems, he has also held the
positions of Executive Vice President and Chief Technology Officer. From 1993 to
1997, Mr. Honey was Executive Vice President, Technology, for the New Technology
Group of News Corporation. From 1989 to 1993 Mr. Honey was President and Chief
Executive Officer of ETAK, Inc., a wholly owned subsidiary of News Corporation.
Mr. Honey founded ETAK in 1983 and was its Executive Vice President,
Engineering, until it was acquired by News Corporation in 1989. Mr. Honey
received a BS from Yale University and an MS from Stanford University.
Werner Trattner has been a director of the Company since 1994 and is a member of
the Compensation and Audit Committees. Mr. Trattner has been Chief Financial
Officer/Vice President of Sales of Swarovski Optik KG, an Austrian manufacturer
of optical equipment, since 1989. Mr. Trattner received a degree in business
administration from the Studiengemeinschaft in Darmstadt, Germany and received a
diploma from the Controller Akademie in Munich/Gauting, Germany. Mr. Trattner
completed the Program for Executive Development at the International Institute
for Management Development in Lausanne, Switzerland.
Charles R. Trimble was appointed a director of the Company in 1999 and is a
member of the Compensation and Audit Committees. He is the founder, and until
1998 was President and Chief Executive Officer, of Trimble Navigation Limited.
Mr. Trimble is an elected member of the National Academy of Engineering and he
has been chairman of the United States GPS Industry Council since 1996.
Previously, he was manager of Integrated Circuit Research and Development at
Hewlett-Packard's Santa Clara Division. He received a BS in engineering physics,
with honors, and an MS in electrical engineering from the California Institute
of Technology.
Committees and Meetings of the Board
During the fiscal year ended December 31, 2001, our Board met five times. No
incumbent director attended fewer than 80% of the total number of meetings held
by our Board and our committees on which they served. We currently have two
committees: the Audit Committee and the Compensation Committee.
Compensation Committee
Our Compensation Committee is composed of three independent, non-employee
directors, Messrs. Mark S. Ain, Werner Trattner, and Charles R. Trimble. The
Committee makes general policy decisions relating to compensation and benefits
for our employees, including executive officers. It administers the Company's
1996 Incentive and Nonqualified Stock Option Plan, the 1995 Incentive Stock
Option Plan, and the 1996 Employee Stock Purchase Plan. The Compensation
Committee met twice during 2001.
Compensation Committee Report
The compensation package for KVH executive officers in fiscal 2001 had three
principal components: (1) base salary; (2) bonus; and (3) stock options. The
Company's executive officers were also eligible to participate in benefit plans
on substantially the same terms as other employees.
In determining executive compensation, the Compensation Committee believes
packages need to offer: fair and competitive compensation that attracts and
retains superior executive talent; links to performance and stockholder
interests with rewards for both short-term and long-term results; incentive
compensation programs that recognize both individual and team performance; and
features that encourage long-term career commitments to the Company and its
stockholders.
Salaries are reviewed annually, and any adjustments are based on individual
performance, changes in responsibilities and market-based comparisons with
similar companies. Bonuses, which are included in the compensation table,
generally are based on a percentage of operating income and dependent upon KVH
achieving the year's financial plan. In addition to salaries and incentive
bonuses, the Compensation Committee also grants stock options to executive
officers and other key employees of the Company and its subsidiary in order to
focus the efforts of these employees on the long-term enhancement of
profitability and stockholder value.
Martin Kits van Heyningen, the Company's Chief Executive Officer, was paid a
base salary of $216,000 per annum in 2001. During 2001, Mr. Kits van Heyningen
was granted options to purchase 40,000 shares of common stock at $6.88 per
share. In setting Mr. Kits van Heyningen's compensation for 2001, the
Compensation Committee considered the compensation payable to chief executive
officers of other similarly situated companies in the Company's industry.
As submitted by the Compensation Committee:
Mark S. Ain
Werner Trattner
Charles R. Trimble
Audit Committee
The Audit Committee of the Board of Directors is composed of four independent
directors, as defined by the National Association of Securities Dealers' listing
standards, and operates under a written charter adopted by the Board of
Directors. A copy of the written charter was filed as Appendix A to the proxy
statement for the Company's 2001 Annual Meeting. The members of the Audit
Committee are Messrs. Mark S. Ain, Stanley K. Honey, Werner Trattner, and
Charles R. Trimble. The Audit Committee met three times during 2001.
Audit Committee Report
In the section below, we describe our financial and accounting management
policies and practices.
Responsibilities
The responsibilities of the Audit Committee include recommending to the Board of
Directors an accounting firm to be engaged as KVH's independent accountants.
Management is responsible for KVH's internal controls and financial reporting
process. The independent accountants are responsible for performing an
independent audit of KVH's consolidated financial statements in accordance with
generally accepted auditing standards and for issuing a report thereon. The
Audit Committee's responsibility is to oversee these processes and the
activities of KVH's internal accounting controls.
Review with Management and Independent Accountants
In this context, the Audit Committee met and discussed the Company's audited
financial statements with management and the independent accountants, KPMG LLP.
Management represented to the Audit Committee that KVH's consolidated financial
statements were prepared in accordance with generally accepted accounting
principles, and the Audit Committee has reviewed and discussed the consolidated
financial statements with management and the independent accountants. The Audit
Committee discussed with the independent accountants matters required to be
discussed by Statement on Auditing Standards No. 61, "Communication with Audit
Committees."
KVH's independent accountants also provided to the Audit Committee the written
disclosures and a letter required by Independent Standards Board Standard No. 1,
"Independence Discussions with Audit Committees," and the Audit Committee
discussed with the independent accountants the firm's independence.
Independent Auditors' Fees
In addition to retaining KPMG LLP to audit our consolidated financial
statements, we also engaged KPMG LLP to provide other professional services in
fiscal 2001, and expect to continue to do so in the future. The aggregate fees
billed for professional services by KPMG LLP in fiscal 2001 were:
Audit fees (1) $98,065
Financial information systems design and implementation --
All other fees:
Tax compliance services $61,033
Audit of 401(k) savings and retirement plan $10,000
Registration statement procedures $33,643
(1) Includes fees for services rendered for the annual audit of the Company's
consolidated financial statements for fiscal 2001 and the quarterly reviews of
the financial statements included in the Company's quarterly reports on Form
10-Q.
The Audit Committee has determined that the services rendered by KPMG LLP, as
described above, were compatible with maintaining KPMG LLP's independence. The
Audit Committee of the Board of Directors has selected KPMG LLP as independent
public accountants to audit our financial statements for 2002. KPMG has been our
auditors since 1986.
Summary
Based upon the Audit Committee's discussions with management and the independent
accountants and the Audit Committee's review of the representations of
management and the report of the independent accountants to the Audit Committee,
the Audit Committee recommended that the Board of Directors include the audited
consolidated financial statements in KVH's Annual Report on Form 10-K for the
year ended December 31, 2001, as filed with the Securities and Exchange
Commission.
As submitted by the Audit Committee:
Mark S. Ain
Stanley K. Honey
Werner Trattner
Charles R. Trimble
Stock Ownership Information
Compliance with Section 16(a) Reporting
Section 16(a) of the Securities Exchange Act of 1934 requires our officers and
directors, and persons who own more than 10% of a registered class of our equity
securities, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission (the "SEC"). Officers, directors and
greater-than-10% stockholders are required by SEC regulations to furnish us with
copies of all Section 16(a) forms they file. Based upon submissions of Forms 3,
4, and 5, and amendments, or written notices that Form 5 was not required, we
believe that all Section 16(a) filing requirements were fulfilled in a timely
manner.
Security Ownership of Beneficial Owners and Management
The following sets forth certain information regarding the beneficial ownership
of our Common Stock as of March 31, 2002, by (i) each stockholder known to us to
beneficially own five percent or more of our Common Stock; (ii) each of our
current directors; and (iii) each of our named executive officers. Except as
otherwise noted, each beneficial owner has sole voting and investment power with
respect to the shares shown.
Shares Beneficially Owned (2)
__________________________________
Name Number (8) Percent
_______________________________________ _____________ ________
State of Wisconsin Investment Board 1,702,690 15.50%
P.O. Box 7842
Madison, WI 53707
Special Situations Funds
153 East 53rd Street 1,307,693 11.90%
New York, NY 10022
Massachusetts Mutual Life Insurance Co.
David L. Babson & Company, Inc.
1295 State Street 615,384 5.60%
Springfield, MA 01111
Arent H. Kits van Heyningen (1) (3) 594,310 5.41%
Josina de Smit (1) (4) 594,310 5.41%
Gerhard Swarovski (1) (5) 517,710 4.71%
Martin A. Kits van Heyningen (6) 366,477 3.34%
Robert W.B. Kits van Heyningen 356,075 3.24%
Christopher T. Burnett (7) 107,485 *
James S. Dodez 82,704 *
Werner Trattner 52,680 *
Mark S. Ain 36,800 *
Stanley K. Honey 28,000 *
Charles R. Trimble 23,000 *
All current directors and executive officers as a group (15 1,814,243 16.51%
persons) (9)
* Less than 1% ownership
_______________________________________
(1) The address of all KVH directors and executive officers is c/o KVH Industries, Inc., 50 Enterprise Center,
Middletown, RI 02842. The address of Gerhard Swarovski and Erika Swarovski is c/o Swarovski 18A, Wattens, Austria.
(2) The persons named in this table have sole voting and investment power
with respect to the shares listed, except as otherwise indicated. The
inclusion of shares listed as beneficially owned does not constitute an
admission of beneficial ownership.
(3) Includes indirect beneficial ownership of 241,752 shares of Common Stock held by Arent H. Kits van Heyningen's
spouse, Josina de Smit. Arent Kits van Heyningen is the father of Martin A. Kits van Heyningen and Robert W.B.
Kits van Heyningen and disclaims beneficial ownership of his sons' shares.
(4) Includes indirect beneficial ownership of 321,933 shares of Common Stock held by Josina de Smit's spouse, Arent
H. Kits van Heyningen. Josina de Smit is the mother of Martin A. Kits van Heyningen and Robert W.B. Kits van
Heyningen and disclaims beneficial ownership of her sons' shares.
(5) Includes indirect beneficial ownership of 65,141 shares of Common Stock held by Mr. Swarovski's spouse.
(6) Includes indirect beneficial ownership of 4,741 shares of Common Stock owned by Mr. Kits van Heyningen's spouse.
(7) Includes indirect beneficial ownership of 16,357 shares of Common Stock owned by Mr. Burnett's spouse and child.
(8) The number of beneficially owned shares listed in the table above includes shares that are issuable upon the
exercise of options exercisable within 60 days following March 31, 2002. Shares
issuable upon the exercise of options exercisable within 60 days
following March 31, 2002 are as follows: Arent H. Kits van Heyningen
30,000, Josina de Smit 625, Martin A. Kits van Heyningen 70,000, Robert
W.B. Kits van Heyningen 32,500, James S. Dodez 25,000, Christopher T.
Burnett 34,750, Mark S. Ain 20,000, Stanley K. Honey 28,000, Charles R.
Trimble 20,000 and Werner Trattner 5,000.
(9) Includes shares listed in note 8. Also includes 56,212 shares held by four executive officers and 110,500
shares that are issuable upon the exercise of options exercisable within 60 days following March 31, 2002.
Ten-year Option/SAR Repricing
The following table provides stock option repricing information for beneficial
owners of Common Stock as of March 31, 2002, for each current director and
executive officer that participated in the option exchange.
Original Length of
Number of Market Exercise Option Term
Securities Price Of at Remaining at
Underlying Stock at Time of New Date of
Options/SARs Time of Repricing or Exercise Repricing or
Repriced or Repricing Amendment Price Amendment
Amended or Amendment
Name Date (#) ($) ($) ($) (Years)
_____________________________ _______ __________ ___________ ________ _________ ___________
Mark Ain
Director 3/2/98 8,000 4.125 6.750 4.125 3.93
Mads Bjerre-Petersen
Managing Director,
KVH Europe 3/2/98 20,000 4.125 7.375 4.125 4.00
Christopher Burnett
Vice President, Business
Development 3/2/98 4,000 4.125 7.375 4.125 4.00
Josina de Smit
Treasurer 3/2/98 20,000 4.125 8.390 4.538 3.64
James Dodez
Vice President, Marketing 3/2/98 40,000 4.125 8.000 4.125 3.19
Richard Forsyth
Chief Financial Officer 3/2/98 40,000 4.125 8.000 4.125 3.19
Stanley Honey
Director 3/2/98 8,000 4.125 5.500 4.125 4.18
Martin Kits van Heyningen 3/2/98 24,000 4.125 8.750 4.125 3.36
President and 3/2/98 12,966 4.125 7.250 4.125 3.13
Chief Executive Officer 3/2/98 11,034 4.125 7.980 4.538 3.13
Ian Palmer, Vice President
Satellite Sales 3/2/98 4,000 4.125 7.625 4.125 3.19
Werner Trattner 3/2/98 8,000 4.125 6.500 4.125 3.09
Director 3/2/98 4,000 4.125 8.250 4.125 4.40
_____________________________
Directors' and Executive Officers' Compensation
Directors' Compensation
The principal components of non-employee director compensation are: o A $1,500
fee for each board meeting attended. o Reimbursement for meeting-related
expenses.
Upon election to the Board, five-year options to purchase 10,000 shares of
our common stock at an exercise price equal to the fair market value of the
common stock on the date granted. Each option vests in four equal quarterly
installments, commencing from the date of appointment to the board of
directors.
Following each annual stockholders meeting, serving directors are granted
options to purchase an additional 5,000 shares of common stock that vest on
the grant date.
Summary Compensation Table
The following table lists compensation for our chief executive officer and our
other four most highly compensated executive officers in 2001.
Long-term
Compensation
Annual Compensation Awards
_______________________________ _______________
Securities
Name and Fiscal Salary (1) Bonus Underlying
Principal Position Year ($) ($) Options (#)
______________________________ _______ ______________ __________ _______________
Martin A. Kits van Heyningen 2001 216,000 -- 40,000
President and Chief 2000 206,000 -- 30,000
Executive Officer 1999 189,000 -- 20,000
Christopher T. Burnett 2001 167,015 (2) -- 9,000
Vice President of Business 2000 164,849 (2) -- 10,000
Development 1999 153,349 (2) -- 10,000
James S. Dodez 2001 162,779 (3) -- 10,000
Vice President of 2000 157,944 (3) -- 10,000
Marketing 1999 144,286 (3) -- 10,000
Robert W.B. Kits van Heyningen 2001 157,511 -- 10,000
Vice President of 2000 151,491 -- 10,000
Research and Development 1999 143,325 -- 10,000
Arent H. Kits van Heyningen 2001 146,861 -- 10,000
Chairman, Board of 2000 139,915 -- 10,000
Directors 1999 132,300 -- 10,000
_____________________________
(1) Includes amounts deferred by the named individuals pursuant to the Company's
401(k) Plan and Trust. Does not include amounts paid to plans, including
group disability, life and health that do not discriminate in favor of
officers and directors and are generally available to all full-time
employees.
(2) Includes commissions as follows: $17,320 in 2001, $20,767 in 2000 and $17,080 in 1999.
(3) Includes commissions as follows: $21,903 in 2001, $23,385 in 2000 and $17,086 in 1999.
Options Granted During the Last Fiscal Year Ended December 31, 2001
The following table lists information related to stock options granted to our
chief executive officer and other four most highly compensated executive
officers in 2001.
Individual Grants
_________________
Percent of Potential Realizable
Total Options Value at Assumed Annual
Number of Granted to Rates of
Shares Employees in Exercise Stock Price
Underlying Fiscal Year or Base Appreciation For
Name Options Price Expiration Option Term (1)
Granted (#) ($/Share) Date 5% ($) 10% ($)
________________________ ___________ _________ _________ __________ _______ __________
Martin A. Kits van
Heyningen 40,000 11.0 6.88 2/28/06 75,977 167,890
Christopher T. Burnett 9,000 2.5 6.88 2/28/06 17,095 37,775
James S. Dodez 10,000 2.7 6.88 2/28/06 18,994 41,973
Robert W.B. Kits van
Heyningen 10,000 2.7 6.88 2/28/06 18,994 41,973
Arent H. Kits van
Heyningen 10,000 2.7 6.88 2/28/06 18,994 41,973
________________________
(1) Amounts reported in this column represent hypothetical values that may be
realized upon exercise of the options immediately prior to the expiration
of their term, assuming the specified compounded rates of appreciation of
our Common Stock over the term of the options. These numbers are calculated
based on SEC rules and do not represent our estimate of future stock price
growth. Actual gains, if any, on stock option exercises and Common Stock
holdings depend on the exercise timing and the future performance of our
Common Stock. There can be no assurance that the rates of appreciation
assumed in this table can be achieved or that the amounts reflected will be
received by the individuals. This table does not take into account any
appreciation in the price of the Common Stock from the date of grant to the
current date. The values shown are net of the option exercise price, but do
not include deductions for taxes or other expenses associated with the
exercise.
Options Exercised in Last Fiscal Year Ended December 31, 2001
The following table provides certain information concerning options exercised by
our chief executive officer and other four most highly compensated executive
officers during the fiscal year ended December 31, 2001 and the number of
options exercisable and unexercisable as of December 31, 2001.
Shares Number of Shares of Value of Unexercised
Acquired Value Common Stock Underlying In-the-Money Options
On Realized Unexercised Options at 12/31/01 ($)(2)
at 12/31/01(#)
Name Exercise (#) ($) (1) Exercisable Unexercisable Exercisable Unexercisable
________________________ ____________ __________ ___________ _____________ ___________ _____________
Martin A. Kits van
Heyningen 48,000 167,283 40,000 40,000 86,555 79,325
Christopher T. Burnett -- -- 26,500 17,500 62,578 43,963
James S. Dodez 40,000 144,600 15,000 15,000 41,590 39,400
Robert W. B. Kits van
Heyningen 7,500 36,739 18,750 18,750 37,904 39,705
Arent H. Kits van
Heyningen -- -- 18,750 16,250 42,115 36,175
________________________
(1) Value is based on the last sale price of Common Stock on the exercise date,
as reported by the Nasdaq National Market, less the applicable option
exercise price.
(2) Value is based on $5.95, the last per-share sale price of the Common Stock
on December 31, 2001, as reported by the Nasdaq National Market, less the
applicable option exercise price.
Cumulative Total Return Graph Comparing KVH Industries, Inc., Nasdaq
Telecommunication Stocks and the Nasdaq National Market Composite December 31,
1996 - December 31, 2001
The following Performance Graph compares the
performance of the Company's cumulative stockholder return with that of two
broad market indexes, the Nasdaq National Market Composite Index and the Nasdaq
Telecommunications Stock Index. The cumulative stockholder returns for Company
shares and the indexes are calculated assuming $100 was invested on December 31,
1996. The performance of the market indexes is shown on a total return (dividend
reinvested) basis. We paid no cash dividends during the periods shown on the
graph.
31-Dec-96 31-Dec-97 31-Dec-98 31-Dec-99 31-Dec-00 31-Dec-01
_________ _________ _________ _________ _________ __________
Nasdaq Composite Index 100.00 121.61 169.87 315.18 191.40 151.05
Nasdaq Telecommunications Index 100.00 141.94 231.94 469.91 214.35 109.72
KVH Industries, Inc. 100.00 65.32 15.73 39.52 70.97 76.77
Other Information
Stockholder Proposals
In order to be eligible for inclusion in the Company's proxy statement and form
of proxy for the annual meeting scheduled to be held in May 2003, the Company
must receive stockholder proposals at its executive offices in Middletown, RI,
no later than December 31, 2002.
In addition, the By-Laws of the Company provide that in order for business to be
properly brought before any annual meeting of stockholders by any stockholder,
the stockholder must notify the Secretary of the Company at least 60 days before
the date of the annual meeting; provided, however, that if an annual meeting of
stockholders is to be held on a date prior to the date for the annual meeting
specified in the By-Laws, and if less than 70 days notice or prior public
disclosure of the date of such annual meeting is given or made, notice by the
stockholder to be timely must be delivered or received not later than the close
of business on the 10th day following the earlier of the date on which notice of
the date of such annual meeting was mailed or the day on which public disclosure
was made of the date of such annual meeting. If next year's annual meeting is
held on the date specified in the By-Laws, the deadline for submission of notice
will be March 2, 2003, and any proposal or nomination submitted after March 2,
2003 will be untimely.
Available Information
Stockholders of record on April 2, 2002, will receive a Proxy Statement and our
2001 Annual Report on Form 10-K, which contains detailed financial information.
For up-to-date information such as SEC filings, press releases, conference calls
and product information, please visit our web site, www.kvh.com.
To receive printed materials, be added to the Company's distribution list or
make specific inquiries, please direct calls, faxes, letters, and e-mail to:
Corporate Communications
KVH Industries, Inc.
50 Enterprise Center
Middletown, RI 02842
Phone: 401-847-3327
Fax: 401-849-0045
E-mail: ir@kvh.com
You may contact our transfer agent at:
EquiServe Trust Company
P.O. Box 9187
Canton, MA 02021
Stockholder Inquiries: 877-282-1169
Internet: http://www.equiserve.com
Our independent accountants are:
KPMG LLP
600 Fleet Center
Providence, RI 02903
Exhibit A - Proxy Card
KVH INDUSTRIES, INC.
Dear Stockholder,
Please take note of the important information enclosed with this proxy card.
Your vote counts, and you are strongly encouraged to exercise your right to vote
your shares. Please mark the boxes on this proxy card to indicate how your
shares will be voted. Then sign the card, detach it and return your proxy vote
in the enclosed postage paid envelope.
Your vote must be received prior to the Annual Meeting of Stockholders to be
held on May 29, 2002.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
KVH Industries, Inc.
KVH INDUSTRIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF KVH INDUSTRIES,
INC. A STOCKHOLDER WISHING TO VOTE IN ACCORDANCE WITH THE RECOMMENDATIONS OF
THE BOARD OF DIRECTORS NEED ONLY SIGN AND DATE THIS
PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE.
Proxy for Annual Meeting of Stockholders to be held on May 29, 2002
The undersigned hereby appoints Martin Kits van Heyningen, Robert Kits van
Heyningen, and Richard C. Forsyth or any of them acting singly, proxies and
attorneys-in-fact, with full power of substitution, to vote all shares of Common
Stock of KVH Industries, Inc. which the undersigned is entitled to vote at the
Annual Meeting of Stockholders to be held at the offices of Foley, Hoag & Eliot
LLP, World Trade Center West, 155 Seaport Boulevard, 16th Floor, Boston,
Massachusetts, 02210 on May 29, 2002 at 11:00 a.m. local time, and at any
adjournments thereof, upon matters set forth in the Notice of Annual Meeting and
Proxy Statement dated April 29, 2002, a copy of which has been received by the
undersigned, and in their discretion upon any business that may properly come
before the meeting or any adjournments thereof. Attendance of the undersigned at
the meeting or any adjourned session thereof will not be deemed to revoke this
proxy unless the undersigned shall affirmatively indicate the intention of the
undersigned to vote the shares represented hereby in person prior to the
exercise of this proxy.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE.
Please sign exactly as your name(s) appear(s) on the books of the Company.
Joint owners should each sign personally. Trustees and other fiduciaries
should indicate the capacity in which they sign, and where more than one
name appears, a majority must sign.
If a corporation, this signature should be that of an authorized
officer who should state his or her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
_________________________________________ _________________________________________
_________________________________________ _________________________________________
_________________________________________ _________________________________________
KVH INDUSTRIES, INC.
C/O EQUISERVE
P.O. BOX 43068
PROVIDENCE, RI 02940
Vote by Telephone Vote by Internet
It's fast, convenient, and immediate! It's fast, convenient, and your vote is immediately
Call toll-free on a touch-tone phone confirmed and posted.
1-877-PRX-VOTE (1-877-779-8683).
Follow these four easy steps: Follow these four easy steps:
1. Read the accompanying Proxy Statement and 1. Read the accompanying Proxy Statement and
Proxy Card. Proxy Card.
2. Call the toll-free number: 2. Go to the web site:
1-877-PRX-VOTE (1-877-779-8683) http://www.eproxyvote.com/kvhi
3. Enter your Voter Control Number located on 3. Enter your Voter Control Number located on
your Proxy Card above your name. your Proxy Card above your name.
4. Follow the recorded instructions. 4. Follow the instructions provided.
Your vote is important! Your vote is important!
Call 1-877-PRX-VOTE anytime! Go to http://www.eproxyvote.com/kvhi anytime!
Do not return your Proxy Card if you are voting by Telephone or Internet.
X Please mark votes as in this example.
KVH INDUSTRIES, INC.
1. To elect three directors to serve for a three-year term.
Nominees: (01) Martin A. Kits van Heyningen
(02) Robert W.B. Kits van Heyningen and (03) Werner
Trattner
FOR WITHHELD
For all nominees except as noted above
To transact any other business as may properly come before the meeting.
Mark box at right if an address change or comment has been noted on
the reverse side of this card.
Please be sure to sign and date this Proxy.
Signature: ____________________________ Date: __________ Signature: ____________________________ Date: __________