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[TELEDYNE TECHNOLOGIES LOGO]
March 18, 2002
Dear Stockholder:
We are pleased to invite you to attend the 2002 Annual Meeting of
Stockholders of Teledyne Technologies Incorporated. The meeting will be held on
Wednesday, April 24, 2002, at the Company's offices at 12333 West Olympic
Boulevard, Los Angeles, California 90064.
This booklet includes the notice of meeting as well as the Company's Proxy
Statement.
Enclosed with this booklet are the following:
- Proxy or voting instruction card (including instructions for telephone
and Internet voting).
- Proxy or voting instruction card return envelope (postage paid if mailed
in the U.S.).
The Company's 2001 Summary Annual Report and 2001 Form 10-K are also
included.
Please read the Proxy Statement and vote your shares as soon as possible.
We encourage you to take advantage of voting by telephone or Internet as
explained on the enclosed proxy or voting instruction card. Or, you may vote by
completing, signing and returning your proxy or voting instruction card in the
enclosed postage-paid envelope. It is important that you vote, whether you own a
few or many shares and whether or not you plan to attend the meeting.
If you are a stockholder of record and plan to attend the meeting, please
mark the "WILL ATTEND" box on your proxy card so that you will be included on
our admittance list for the meeting.
Thank you for your investment in our Company. We look forward to seeing you
at the 2002 Annual Meeting.
Sincerely,
/s/ Robert Mehrabian
Robert Mehrabian
Chairman, President and
Chief Executive Officer
Teledyne Technologies Incorporated
12333 West Olympic Boulevard
Los Angeles, CA 90064
[TELEDYNE TECHNOLOGIES LOGO]
TELEDYNE TECHNOLOGIES INCORPORATED
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MEETING DATE: April 24, 2002
TIME: 9:00 a.m. Pacific Time
PLACE: Teledyne Technologies Incorporated
12333 West Olympic Boulevard
Los Angeles, California 90064
RECORD DATE: March 11, 2002
AGENDA
1) Election of a class of three directors for a three-year term;
2) Approval of the Teledyne Technologies Incorporated 2002 Stock Incentive
Plan;
3) Ratification of the selection of Ernst & Young LLP as the Company's
independent auditors for 2002; and
4) Transaction of any other business properly brought before the meeting.
STOCKHOLDER LIST
A list of stockholders entitled to vote will be available during business
hours for 10 days prior to the meeting at the Company's executive offices, 12333
West Olympic Boulevard, Los Angeles, California 90064, for examination by any
stockholder for any legally valid purpose.
ADMISSION TO THE MEETING
Teledyne Technologies' stockholders or their authorized representatives by
proxy may attend the meeting. If you are a stockholder of record and you plan to
attend the meeting, please mark the "WILL ATTEND" box on your proxy card so that
you will be included on our admittance list for the meeting. If your shares are
held through an intermediary, such as a broker or a bank, you should present
proof of your ownership at the meeting. Proof of ownership could include a proxy
from your bank or broker or a copy of your account statement.
By Order of the Board of Directors,
/s/ John T. Kuelbs
John T. Kuelbs
Senior Vice President, General Counsel
and Secretary
March 18, 2002
PROXY STATEMENT
TABLE OF CONTENTS
------------------------
PAGE
----
Voting Procedures........................................... 1
Board Composition and Practices............................. 2
Item 1 on Proxy Card -- Election of Directors............... 3
Committees of our Board of Directors........................ 7
Director Compensation....................................... 9
Item 2 on Proxy Card -- Approval of 2002 Stock Incentive
Plan...................................................... 10
2002 Incentive Plan....................................... 11
1999 Incentive Plan -- As Amended by the 2002 Incentive
Plan................................................... 16
Item 3 on Proxy Card -- Ratification of Selection of
Independent Auditors...................................... 21
Audit Fees................................................ 21
Financial Information Systems Design and Implementation
Fees................................................... 21
All Other Fees............................................ 21
Audit Committee Report.................................... 22
Other Business.............................................. 23
Stock Ownership Information................................. 23
Section 16(a) Beneficial Ownership Reporting Compliance... 23
Five Percent Owners of Common Stock....................... 23
Stock Ownership of Management............................. 25
2001 Report on Executive Compensation....................... 26
Compensation Committee Interlocks and Insider
Participation............................................. 32
Executive Compensation...................................... 33
Summary Compensation Table................................ 33
Option Grants in Last Fiscal Year......................... 35
Aggregate Option Exercises in Last Fiscal Year and Fiscal
Year End
Option Values.......................................... 36
ATI Performance Share Program Awards...................... 37
TDY Performance Share Plan Awards......................... 38
TDY Restricted Stock Awards............................... 38
Pension Plan.............................................. 39
Employment/Change in Control Agreements................... 40
Certain Transactions........................................ 41
Cumulative Total Stockholder Return......................... 43
Other Information........................................... 44
Annual Report on Form 10-K................................ 44
2003 Annual Meeting and Stockholder Proposals............. 44
Proxy Solicitation........................................ 45
ANNEX A -- Amended and Restated Charter of Audit
Committee................................................. A-1
ANNEX B -- 2002 Stock Incentive Plan........................ B-1
YOUR VOTE IS IMPORTANT
Please vote as soon as possible. You can help Teledyne Technologies reduce
expenses by voting your shares by telephone or Internet. Your proxy card
contains the instructions. Alternatively, complete, sign and date your proxy
card and return it as soon as possible in the enclosed postage-paid envelope.
DEFINED TERMS
In this Proxy Statement, Teledyne Technologies Incorporated is sometimes
referred to as the "Company", "Teledyne Technologies" or "TDY". References to
"ATI" mean Allegheny Technologies Incorporated, formerly known as Allegheny
Teledyne Incorporated, the company from which we were spun off on November 29,
1999.
PROXY STATEMENT
FOR 2002 ANNUAL MEETING OF STOCKHOLDERS
VOTING PROCEDURES
WHO MAY VOTE
If you were a stockholder on the books of the Company at the close of
business on March 11, 2002 you may vote at the Annual Meeting. On that day,
there were 31,970,695 shares of our Common Stock outstanding.
Each share is entitled to one vote. In order to vote, you must either
designate a proxy to vote on your behalf or attend the meeting and vote your
shares in person. The Board of Directors requests your proxy so that your shares
will count toward determination of the presence of a quorum and be voted at the
meeting.
METHODS OF VOTING
All stockholders may vote by transmitting their proxy cards by mail.
Stockholders of record can also vote by telephone or Internet. Stockholders who
hold their shares through a bank or broker can vote by telephone or Internet if
their bank or broker offers those options.
- By Mail. Stockholders of record may complete, sign, date and return their
proxy cards in the postage-paid envelope provided. If you sign, date and
return your proxy card without indicating how you want to vote, your
proxy will be voted as recommended by the Board of Directors.
- By Telephone or Internet. Stockholders of record may vote by using the
toll-free number or Internet website address listed on the proxy card.
Your proxy card contains a Control Number that will identify you as a
stockholder when you vote by telephone or Internet. You may use the
telephone and Internet procedures to vote your shares and to confirm that
your votes were properly recorded. Please see your proxy card for
specific instructions.
REVOKING YOUR PROXY
You may change your mind and revoke your proxy at any time before it is
voted at the meeting by:
- sending a written notice to revoke your proxy to the Secretary of the
Company;
- transmitting a proxy dated later than your prior proxy either by mail,
telephone or Internet;
- attending the Annual Meeting and voting in person or by proxy (except for
shares held in the employee plans described below).
VOTING BY EMPLOYEE BENEFIT PLAN PARTICIPANTS
Participants who hold Common Stock in the Company's defined contribution
savings plan may tell the plan trustee how to vote the shares of Common Stock
allocated to their accounts. You may either (1) sign and return the voting
instruction card provided by the
1
plan or (2) transmit your instructions by telephone or Internet. If you do not
transmit instructions, your shares will not be voted by the plan trustee, except
as otherwise required by law.
VOTING SHARES HELD BY BROKERS, BANKS AND OTHER NOMINEES
If you hold your shares in a broker, bank or other nominee account, you are
a "beneficial owner" of TDY Common Stock. In order to vote your shares, you must
give voting instructions to your bank, broker or other intermediary who is the
"nominee holder" of your shares. The Company asks brokers, banks and other
nominee holders to obtain voting instructions from the beneficial owners of
shares that are registered in the nominee's name. Proxies that are transmitted
by nominee holders on behalf of beneficial owners will count toward a quorum
and, except as otherwise provided below, will be voted as instructed by the
nominee holder.
CONFIDENTIAL VOTING POLICY
The Company maintains a policy of keeping stockholder votes confidential.
BOARD COMPOSITION AND PRACTICES
INFORMATION AND MEETINGS
The Board of Directors directs the management of the business and affairs
of the Company as provided in the Amended and Restated Bylaws of the Company and
by the laws of the State of Delaware. Except for Robert Mehrabian, our Chairman,
President and Chief Executive Officer, the Board is not involved in day-to-day
operations. Members of the Board keep informed about the Company's business
through discussions with the senior management and other officers and managers
of the Company and its subsidiaries, by reviewing analyses and reports sent to
them, and by participating in Board and committee meetings.
In 2001, the Board of Directors held six meetings. During 2001, all
directors attended at least 75% of the aggregate number of meetings of the Board
and the Board committees of which they were a member.
NUMBER OF DIRECTORS
The Board of Directors determines the number of directors. The Board
currently consists of 10 members.
DIRECTOR TERMS
The directors are divided into three classes and the directors in each
class serve for a three-year term. The term of one class of directors expires
each year at the Annual Meeting of Stockholders. The Board may fill a vacancy by
electing a new director to the same class as the director being replaced. The
Board may also create a new director position in any class and elect a director
to hold the newly created position until the term of the class expires.
2
SPIN-OFF REQUIREMENTS
In connection with our spin-off from ATI, we agreed (and our Amended and
Restated Bylaws provide) that until our Annual Meeting of Stockholders in 2002,
at least a majority of our Board of Directors must also be directors of ATI. Six
of our 10 directors are directors of ATI. While this composition requirement
expires at this 2002 Annual Meeting, all three nominees are members of ATI's
board.
DIRECTORS' RETIREMENT POLICY
On June 1, 2000, the Company adopted a retirement policy for directors.
This policy generally requires directors to retire at the Annual Meeting
following their 72nd birthday, with certain directors being subject to a
"grandfather" provision. As a result of this policy, Messrs. Paul S. Brentlinger
(Class II director) and C. Fred Fetterolf (Class I director) will step down at
the 2002 Annual Meeting. Effective at the 2002 Annual Meeting, the size of the
Board of Directors will be reduced from 10 to eight members in lieu of filling
the vacancies created by the retirement of Messrs. Brentlinger and Fetterolf.
ITEM 1 ON PROXY CARD -- ELECTION OF DIRECTORS
The Board of Directors has nominated for election this year the class of
three incumbent directors whose terms expire at the 2002 Annual Meeting.
The three-year term of the class of directors nominated and elected this
year will expire at the 2005 Annual Meeting. However, as a result of our
retirement policy for directors, Mr. Queenan, if re-elected, will step down at
the 2003 Annual Meeting.
The three individuals who receive the highest number of votes cast will be
elected. Broker non-votes are not counted as votes cast.
If you sign and return your proxy card, the individuals named as proxies in
the card will vote your shares for the election of the three named nominees,
unless you provide other instructions. You may withhold authority for the
proxies to vote your shares on any or all of the nominees by following the
instructions on your proxy card. If a nominee becomes unable to serve, the
proxies will vote for a Board-designated substitute or the Board may reduce the
number of directors. The Board of Directors has no reason to believe that any
nominee will be unable to serve.
Background information about the nominees, the continuing directors and the
retiring directors follows.
3
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE THREE NOMINEES.
NOMINEES -- TERMS EXPIRE AT 2005 ANNUAL MEETING (CLASS III)
Robert P. Bozzone Robert P. Bozzone is Chairman of ATI. From
Chairman of Allegheny Technologies December 6, 2000 to June 26, 2001, he was
Incorporated Chairman, President and Chief Executive
Director since 1999 Officer of ATI. Mr. Bozzone had been Vice
Age: 68 Chairman of the Board of ATI since August
1996. He had served as Vice Chairman of
Allegheny Ludlum Corporation, a subsidiary
of ATI, since August 1994 and previously
was President and Chief Executive Officer
of Allegheny Ludlum. He is also a director
of ATI, Water Pik Technologies, Inc. and
DQE, Inc., whose principal subsidiary is
Duquesne Light Company. Mr. Bozzone is a
member of our Audit Committee.
Frank V. Cahouet Frank V. Cahouet served as the Chairman,
Retired Chairman and Chief Executive President and Chief Executive Officer of
Officer of Mellon Financial Corporation Mellon Financial Corporation, a bank
Director since 1999 holding company, and Mellon Bank, N.A.,
Age: 69 prior to his retirement on December 31,
1998. He is also a director of ATI, Avery
Dennison Corporation, Korn Ferry
International and Saint-Gobain
Corporation. Mr. Cahouet is Chair of our
Audit Committee and a member of our
Governance Committee.
Charles J. Queenan, Jr. Charles J. Queenan, Jr. is Senior Counsel
Senior Counsel, Kirkpatrick & Lockhart LLP to Kirkpatrick & Lockhart LLP,
Director since 1999 attorneys-at-law. Prior to January 1996,
Age: 71 he was a partner of that firm. He is also
a director of ATI, Water Pik Technologies,
Inc. and Crane Co. Mr. Queenan is Chair of
our Personnel and Compensation Committee
and a member of our Audit Committee.
CONTINUING DIRECTORS -- TERMS EXPIRE AT 2003 ANNUAL MEETING (CLASS I)
Diane C. Creel Diane C. Creel is Chief Executive Officer
President and Chief Executive Officer and President of Earth Tech, an
of Earth Tech international consulting engineering firm
Director since 1999 and subsidiary of Tyco International Ltd.
Age: 53 Ms. Creel is also a director of ATI and
Goodrich Corporation and a member of the
Boards of the Corporations and Trusts that
comprise the Fixed Income funds of the
American Funds Group. Ms. Creel is a
member of our Personnel and Compensation
Committee and our Governance Committee.
4
Paul D. Miller Paul D. Miller is Chairman and Chief
Chairman and Chief Executive Officer of ATK Executive Officer of ATK (Alliant
Director since 2001 Techsystems Inc.), an aerospace and
Age: 60 defense company. Prior to joining ATK in
January 1999, Admiral Miller served as
Vice President of Litton Marine Systems
and as President of Sperry Marine, Inc.
from November 1994 through December 1998,
following a distinguished 30-year career
with the U.S. Navy. Prior to his
retirement from the U.S. Navy, Admiral
Miller served as Commander-in-Chief, U.S.
Atlantic Command and NATO Supreme Allied
Commander-Atlantic. Admiral Miller became
a director of TDY on July 25, 2001. He
also serves on the Boards of SunTrust Bank
(Eastern Region) and Donaldson Company.
Admiral Miller is a member of our Audit
Committee.
CONTINUING DIRECTORS -- TERMS EXPIRE AT THE 2004 ANNUAL MEETING (CLASS II)
Charles Crocker Charles Crocker has been Chairman and
Chairman and Chief Executive Officer of BEI Chief Executive Officer of BEI
Technologies, Inc. Technologies, Inc., a diversified
Director since 2001 technology company, since March 2000. Mr.
Age: 63 Crocker served as Chairman, President and
Chief Executive Officer of BEI Electronics
from October 1995 to September 1997, at
which time he became Chairman, President
and Chief Executive Officer of BEI
Technologies, Inc. He has also been a
principal in Crocker Capital since 1971.
Mr. Crocker serves as a director of BEI
Medical Systems, Inc., Fiduciary Trust
International and Pope & Talbot, Inc. Mr.
Crocker became a director of TDY on
October 24, 2001. Mr. Crocker is a member
of our Personnel and Compensation
Committee.
5
Robert Mehrabian Robert Mehrabian is the Chairman,
Chairman, President and President and Chief Executive Officer of
Chief Executive Officer TDY. He has been the President and Chief
of the Company Executive Officer of TDY since its
Director since 1999 formation. He became Chairman of the Board
Age: 60 on December 14, 2000. Prior to the
spin-off of the Company by ATI, Dr.
Mehrabian was the President and Chief
Executive Officer of ATI's Aerospace and
Electronics segment since July 1999 and
had served ATI in various senior executive
capacities since July 1997. Before joining
ATI, Dr. Mehrabian served as President of
Carnegie Mellon University. He is also a
director of Mellon Financial Corporation
and PPG Industries, Inc.
Michael T. Smith Michael T. Smith is the retired Chairman
Retired Chairman of the Board and Chief of the Board and Chief Executive Officer
Executive Officer of of Hughes Electronics Corporation. He had
Hughes Electronics been elected to those positions in October
Director since 2001 1997. Mr. Smith has been a director of TDY
Age: 58 since January 1, 2001. He is also a
director of Alliant Techsystems Inc.,
Ingram Micro Corporation and NeTune
Communications. Mr. Smith is a member of
our Personnel and Compensation Committee
and our Governance Committee.
RETIRING DIRECTORS -- TERMS EXPIRE AT 2002 ANNUAL MEETING
Paul S. Brentlinger Paul S. Brentlinger is a Partner of
Partner, Morgenthaler Ventures Morgenthaler Ventures, a venture capital
Director since 1999 group located in Cleveland, Ohio and Menlo
Age: 74 Park, California. He led Morgenthaler's
investment in such companies as Microchip
Technology, Inc. and Dispatch
Communications (now part of Nextel
Communications, Inc.). Prior to joining
Morgenthaler, he was Senior Vice
President - Finance of Harris Corporation,
a manufacturer of communications
equipment. Mr. Brentlinger is also a
director of ATI. Mr. Brentlinger is a
member of our Audit Committee.
C. Fred Fetterolf C. Fred Fetterolf was President and Chief
Retired President and Operating Officer of Alcoa, Inc. prior to
Chief Operating Officer of his retirement in 1991. He is also a
Alcoa, Inc. director of ATI, Commonwealth Industries
Director since 1999 and Dentsply International Inc. Mr.
Age: 73 Fetterolf is Chair of our Governance
Committee and a member of our Personnel
and Compensation Committee.
6
COMMITTEES OF OUR BOARD OF DIRECTORS
Our Board of Directors has established an Audit Committee, a Governance
Committee and a Personnel and Compensation Committee. From time to time, our
Board of Directors may establish other committees.
AUDIT COMMITTEE
The members of the Audit Committee are:
Frank V. Cahouet, Chair
Robert P. Bozzone
Paul S. Brentlinger
Paul D. Miller
Charles J. Queenan, Jr.
The Audit Committee held six meetings in 2001.
The primary responsibility of the Audit Committee is to assist the Board in
monitoring the integrity of our financial statements and the independence of our
external auditors. In carrying out its responsibility, the Audit Committee
undertakes to do many things, including:
- Making recommendations to the Board of Directors regarding the
appointment of the independent auditor to audit the books, records and
accounts of the Company.
- Evaluating the performance of the independent auditor.
- Receiving written periodic reports from the independent auditor
delineating all relationships between the independent auditor and the
Company.
- Reviewing with the independent auditor any problems or difficulties the
auditor may have encountered and any management letter provided by the
auditor and the Company's response to that letter.
- Reviewing the Company's annual audited financial statements and the
report thereon with the independent auditor and management prior to
publication of such statements.
- Reviewing with management and the independent auditor the Company's
quarterly financial statements prior to the release of quarterly
earnings.
- Reviewing major changes to the Company's auditing and accounting
principles and practices as suggested by the independent auditor,
internal auditors or management.
- Meeting periodically with management to review the Company's financial
risk exposures and the steps management has taken to monitor and control
such exposures.
- Reviewing with the Company's General Counsel legal matters that may have
a material impact on the financial statements, the Company's compliance
policies and any material reports or inquiries received from regulators
or governmental agencies.
The Audit Committee recently revised its charter to provide that TDY's
senior internal auditing executive reports directly and separately to the Chair
of the Audit
7
Committee and the Chief Executive Officer of TDY. A copy of the Amended and
Restated Charter is attached as Annex A.
The Audit Committee meets the size, independence and experience
requirements of the New York Stock Exchange, except as follows. Since Mr.
Bozzone within the last three years has been an executive officer of ATI, the
Board of Directors specially determined, in accordance with its business
judgment and New York Stock Exchange requirements, that Mr. Bozzone's membership
on the Audit Committee is required by the best interests of the Company and its
stockholders. The Board believes that, among other things, Mr. Bozzone's
membership on the Audit Committee will facilitate and assist in assuring TDY's
compliance with various continuing obligations under our Separation and
Distribution Agreement with ATI and related spin-off documents.
The report of the Audit Committee is included under "Item 3 on Proxy
Card -- Ratification of Selection of Independent Auditors."
GOVERNANCE COMMITTEE
The members of the Governance Committee are:
C. Fred Fetterolf, Chair
Frank V. Cahouet
Diane C. Creel
Michael T. Smith
The Governance Committee had four meetings in 2001.
The Governance Committee undertakes to:
- Make recommendations to the Board of Directors with respect to candidates
for nomination as new Board members and with respect to incumbent
directors for nomination as continuing board members.
- Make recommendations to the Board of Directors concerning the memberships
of committees of the Board and the Chairpersons of the respective
committees.
- Make recommendations to the Board of Directors with respect to the
remuneration paid and benefits provided to members of the Board in
connection with their service on the Board and its committees.
- Administer our formal compensation programs for directors, including the
Teledyne Technologies Incorporated 1999 Non-Employee Director Stock
Compensation Plan.
- Make recommendations to the Board of Directors concerning the
composition, organization and operations of the Board of Directors,
including the orientation of new members and the flow of information.
- Evaluate Board tenure policies as well as policies covering the
retirement or resignation of incumbent directors.
The Governance Committee will consider stockholder recommendations for
nominees for director. Any stockholders interested in suggesting a nominee
should follow the procedures outlined in "Other Information -- 2003 Annual
Meeting and Stockholder Proposals."
8
PERSONNEL AND COMPENSATION COMMITTEE
The members of the Personnel and Compensation Committee are:
Charles J. Queenan, Jr., Chair
Diane C. Creel
Charles Crocker
C. Fred Fetterolf
Michael T. Smith
The Personnel and Compensation Committee held three meetings in 2001 and
acted by unanimous written consent on one occasion.
The Personnel and Compensation Committee's principal responsibilities
include:
- Making recommendations to the Board of Directors concerning general
executive management organizational matters.
- Making recommendations to the Board of Directors concerning compensation
and benefits for employees who are also our directors, consulting with
our Chief Executive Officer on compensation and benefit matters relating
to other executive officers who are required to file reports under
Section 16 of the Securities Exchange Act of 1934, as amended, and making
recommendations to the Board of Directors concerning compensation
policies and procedures relating to our executive officers.
- Making recommendations to the Board of Directors concerning policy
matters relating to employee benefits and employee benefit plans.
- Administering our formal incentive compensation plans.
DIRECTOR COMPENSATION
Directors who are not our employees are paid an annual retainer fee of
$24,000. Directors are also paid $1,200 for each Board meeting and $1,000 for
each committee meeting attended. Each non-employee chair of a committee is paid
an annual fee of $2,500. Directors who are our employees do not receive any
compensation for their services on our Board or its committees.
The non-employee directors also participate in the Teledyne Technologies
Incorporated 1999 Non-Employee Director Stock Compensation Plan, as amended (the
"Director Stock Plan"). The purpose of the Director Stock Plan is to provide
non-employee directors with an increased personal interest in our performance.
Under the Director Stock Plan, options to purchase 2,000 shares of our
Common Stock were granted to then non-employee directors both on the date of our
spin-off from ATI and at the conclusion of our 2000 Annual Meeting. Under the
Director Stock Plan, from and after the 2001 Annual Meeting, options to purchase
4,000 shares of our Common Stock are granted at the conclusion of each Annual
Meeting of Stockholders. If a non-employee director first becomes a director on
a date other than an Annual Meeting date, an option covering 2,000 shares of our
Common Stock is granted to such non-employee director on his or her first date
of Board service. The purchase price of our Common Stock covered by these
options is the fair market value of our Common Stock on the date the option is
granted. Options granted under the Director Stock Plan terminate 10 years from
the date of grant.
9
The Director Stock Plan provides that each non-employee director will
receive at least 25% of the annual retainer fee in the form of our Common Stock
and/or options to acquire our Common Stock. Each director may elect a greater
percentage (in 25% increments). A director may also elect to defer 25%, 50% or
75% of the annual retainer under our Executive Deferred Compensation Plan.
Options granted under this part of the Director Stock Plan are intended to
provide each electing director with options having an exercise value on the date
of grant equal to the foregone fees; that is, the difference between the
exercise price and the market price of the underlying shares of Common Stock on
the date of grant is intended to be equal to the foregone fees. Effective in
2001, under the Director Stock Plan, directors may elect to have all of their
meeting fees paid in all cash, all stock or all options.
Of the 200,000 shares of Common Stock authorized for issuance under the
Director Stock Plan, at February 28, 2002, 13,526 shares have been issued and
options in respect of 93,490 shares have been granted. The outstanding options
have exercise prices ranging from $6.31 to $22.47 and expiration dates ranging
from November 29, 2009 to February 26, 2012. At February 28, 2002, there were
92,984 shares available for issuance under the Director Stock Plan.
ITEM 2 ON PROXY CARD --
APPROVAL OF 2002 STOCK INCENTIVE PLAN
Our Board of Directors has adopted and approved a compensation plan
sponsored and maintained by the Company, namely the Teledyne Technologies
Incorporated 2002 Stock Incentive Plan (the "2002 Incentive Plan"). The
continued effectiveness of the 2002 Incentive Plan after the date of the Annual
Meeting is subject to the approval of the 2002 Incentive Plan by our
stockholders. Stockholder approval of the 2002 Incentive Plan is desired, among
other reasons, to ensure the tax deductibility by the Company of awards under
the 2002 Incentive Plan under Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"). Approval of the 2002 Incentive Plan by the
stockholders requires the affirmative vote of at least a majority of the shares
present in person or by proxy at the meeting and entitled to vote on the
proposal. If you sign and return your proxy card, your shares will be voted
(unless you indicate to the contrary) to approve the 2002 Incentive Plan. If you
abstain from voting on the proposal, your shares will, in effect, be voted
against the proposal. Broker non-votes will not be counted as having been voted
on the proposal and will not affect the outcome of the vote. Brokers will not
have any discretionary voting privilege with respect to this proposal.
The following summary of the 2002 Incentive Plan is qualified in its
entirety by reference to the complete text of such plan, which appears as Annex
B to this Proxy Statement.
No awards have been made under the 2002 Incentive Plan. For information
regarding awards made under the Teledyne Technologies Incorporated 1999
Incentive Plan, as amended (the "1999 Incentive Plan"), see "1999 Incentive
Plan -- As Amended by the 2002 Incentive Plan" below. If our stockholders
approve the 2002 Incentive Plan, the 1999 Incentive Plan will be amended to the
extent provided under the "1999 Incentive Plan -- As Amended by the 2002
Incentive Plan."
10
2002 INCENTIVE PLAN
ADMINISTRATION. The 2002 Incentive Plan is administered by the Personnel
and Compensation Committee of the Board of Directors of the Company (the
"Committee"). The Committee has sole discretion to interpret the 2002 Incentive
Plan, establish and modify administrative rules, impose conditions and
restrictions on awards, to issue new options in substitution for
previously-granted options, and to take such other actions as it deems necessary
or advisable. However, the actions of the Committee shall be subject to
stockholder approval where approval is required by the Code or under any
applicable law or rule of any stock exchange on which Common Stock or other
voting securities of TDY are listed. Further, the Committee cannot cause or
otherwise provide for repricing of any award unless such repricing is subject to
stockholder approval. With respect to participants who are not subject to
Section 16 of the Securities Exchange Act of 1934, as amended, the Committee may
delegate its authority under the 2002 Incentive Plan to one or more officers or
employees of the Company.
AMOUNT OF STOCK. The 2002 Incentive Plan provides for awards of up to
2,400,000 shares of TDY Common Stock, 1,000,000 of which may be allocated to
awards of incentive stock options as defined in Section 422 of the Code
("incentive stock options"). No more than 360,000 shares of Common Stock may be
issued under the 2002 Incentive Plan as "full value" award shares (which
includes restricted stock). The number of shares available for issuance under
the 2002 Incentive Plan is subject to anti-dilution adjustments upon the
occurrence of significant corporate events. The shares of Common Stock offered
under the 2002 Incentive Plan will be either authorized and unissued shares or
issued shares that have been reacquired by the Company. Shares underlying awards
that are terminated, canceled or forfeited may be subject to new awards under
the 2002 Incentive Plan.
ELIGIBILITY AND PARTICIPATION. All officers and key employees of the
Company or any of its subsidiaries will be eligible to participate, including
officers who are also directors of the Company or its subsidiaries. The
Committee may also grant awards to non-employees who, in the judgment of the
Committee, render significant service to the Company or any of its subsidiaries.
No participant can receive awards under the 2002 Incentive Plan in any calendar
year in respect of more than 360,000 shares of our Common Stock and $1,000,000
in cash.
AMENDMENT OR TERMINATION. The 2002 Incentive Plan expires by its terms on
February 26, 2012, but the Committee has the power to terminate it earlier. The
Committee establishes expiration and exercise dates on an award-by-award basis.
However, options and stock appreciation rights issued under the 2002 Incentive
Plan must terminate 10 years from the date of grant. The Board of Directors of
the Company has the power to amend the 2002 Incentive Plan at any time;
provided, however, that the actions of the Committee shall be subject to
stockholder approval where approval is required by the Code or under any
applicable law or rule of any stock exchange on which Common Stock or other
voting securities of TDY are listed. Further, the Committee cannot cause or
otherwise provide for repricing of any award unless such repricing is subject to
stockholder approval. No amendment or termination of the 2002 Incentive Plan
will, without the applicable participant's consent, adversely affect an award
under the 2002 Incentive Plan.
STOCK OPTIONS. The Committee may grant to a participant incentive stock
options, options which do not qualify as incentive stock options ("non-qualified
stock options") or a combination of incentive and non-qualified stock options.
The terms and conditions of
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stock option grants, including the quantity, price, waiting periods, and other
conditions on exercise, are determined by the Committee. Incentive stock option
grants are to be made in accordance with Section 422 of the Code.
The exercise price for stock options is determined by the Committee at its
discretion, provided that the exercise price per share of any option cannot be
less than 85% of the fair market value of one share of Common Stock on the date
when the stock option is granted. The exercise price per share of each incentive
stock option, however, must be at least equal to 100% of the fair market value
of one share of Common Stock on the date on which the stock option is granted.
Restoration options may be granted in connection with the exercise of
non-qualified stock options which a participant exercises by delivering shares
of Common Stock or by having withheld shares from those otherwise issuable upon
the exercise of non-qualified stock option, or with respect to which the
participant's tax withholding liability is met by delivering shares or having
shares withheld. In general, a restoration option entitles the holder to
purchase a number of shares of Common Stock equal to the number of shares so
delivered or withheld upon exercise of the original option. A restoration option
will have a per share exercise price of not less than the fair market value of
the underlying shares of Common Stock on the date of grant of the restoration
option and have a term equal to the remaining term of the original option at the
time that the original option is exercised.
Generally, the Committee has discretion to establish in each award
agreement under the 2002 Incentive Plan the circumstances in which a
participant's termination of employment with the Company or one of its
subsidiaries will affect the participant's options. Unless the Committee
determines otherwise in a particular award agreement, the following rules will
apply to the treatment of options upon a termination of employment.
Except as described below, if an option holder's employment ends, any
options that are not then vested will terminate immediately. Any options that
are then vested will terminate on the earlier of:
- The scheduled expiration date set forth in the award agreement under
which the options were granted; or
- Whichever of the following dates is applicable to the option holder:
- Death -- options vest in full and are exercisable by the option holder's
beneficiary for one year after the date of death.
- Retirement or Disability -- options will continue to vest and become
exercisable in accordance with the stock option agreement for the
remaining term of the option.
- Any Reason Other than Death, Disability or Retirement -- vested options
will continue to be exercisable for 30 days after the date the option
holder's employment ends.
Subject to the Committee's discretion, payment for Common Stock on the
exercise of stock options may be made in cash, Common Stock, a combination of
cash and Common Stock or in any other form of consideration acceptable to the
Committee (including one or more "cashless" exercise forms).
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STOCK APPRECIATION RIGHTS. Stock appreciation rights ("SARs") may be
granted by the Committee to a participant either separate from or in tandem with
non-qualified stock options or incentive stock options. SARs may be granted at
the time of the stock option grant or, with respect to non-qualified stock
options, at any time prior to the exercise of the stock option. SARs entitle a
participant to receive, upon exercise of the SAR, a payment equal to (i) the
excess of the fair market value of a share of Common Stock on the exercise date
over the SAR exercise price, multiplied by (ii) the number of shares of Common
Stock with respect to which the SAR is exercised. Upon exercise of SARs issued
in tandem with stock options, the number of shares of Common Stock covered by
the SAR's related stock option, if any, are correspondingly reduced.
SARs granted in tandem with options are generally governed by the same
terms and conditions as govern the related stock option and may only be
exercised to the extent the related stock option is exercisable.
The exercise prices of SARs are determined by the Committee, but they
cannot be less than 85% of the fair market value of a share of Common Stock on
the date of grant. However, in the case of SARs granted in tandem with stock
options, the exercise price may not be less than the exercise price of the
related stock option. Upon exercise of SARs, payment is made in cash or in
shares of Common Stock, or a combination of cash and shares of Common Stock, as
determined at the discretion of the Committee.
RESTRICTED SHARES. The Committee may award to a participant shares of
Common Stock subject to specified restrictions ("Restricted Shares"). The
Restricted Shares are subject to forfeiture if the participant does not meet
certain conditions such as continued employment over a specified forfeiture
period (the "Forfeiture Period") and/or the attainment of specified performance
targets over the Forfeiture Period. The terms and conditions of Restricted Share
awards are determined by the Committee, but the Forfeiture Period cannot be less
than three years unless forfeiture of the applicable Restricted Shares is based
on failure to meet certain performance targets or is otherwise determined to be
performance-based. For participants who are subject to Section 162(m) of the
Code, the performance targets would be established by the Committee, in its
discretion, based on one or more specific measures. These measures include
operating income, operating profit, earnings per share, return on investment or
working capital, return on stockholders' equity, economic value added,
reductions in inventory, inventory turns and on-time delivery performance. They
may be measured with respect to the Company or any or more of its subsidiaries
or divisions. They may be in absolute terms or compared to another company or
companies. Such performance targets may also include quantifiable, objective
measures of individual performance relevant to the participant's job
responsibilities.
Participants who have been awarded Restricted Shares will have all of the
rights of a holder of outstanding Common Stock, including the right to vote such
shares and to receive dividends. During the Forfeiture Period, the Restricted
Shares are nontransferable and may be held in custody by the Company or its
designated agent, or if the certificate contains a proper restrictive legend, by
the participant. Upon the lapse or release of all restrictions, an unrestricted
certificate will be provided to the participant.
The Committee, in its sole discretion, may waive all restrictions with
respect to a Restricted Share award under certain circumstances (including the
death, disability, or retirement of a participant, or a material change in
circumstances arising after the date of grant) subject to such terms and
conditions as it deems appropriate.
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PERFORMANCE AWARDS. The Committee may grant performance awards to
participants under such terms and conditions as the Committee deems appropriate.
A performance award entitles a participant to receive a payment from the
Company, the amount of which is based upon the attainment of predetermined
performance targets over a specified award period. Performance awards may be
paid in cash, Common Stock or a combination thereof, as determined by the
Committee.
Award periods will be established at the discretion of the Committee. The
performance targets will also be determined by the Committee and may, but need
not, include specified levels of earnings per share, return on investment,
return on stockholders' equity and/or such other goals related to the Company's
or the individual's performance as are deemed appropriate by the Committee. With
respect to participants subject to Section 162(m) of the Code, the applicable
performance targets would be established by the Committee, in its discretion,
based on one or more of the specific measures described above under "Restricted
Shares." To the extent not inconsistent with Section 162(m) or if a participant
is not subject to Section 162(m), when circumstances occur which cause
predetermined performance targets to be an inappropriate measure of achievement,
the Committee, in its discretion, may adjust the performance targets.
If a participant terminates employment prior to the end of an award period,
the participant generally will forfeit all rights to any performance award,
unless otherwise provided by the Committee. The Committee, in its discretion,
may determine to pay all or any portion of a performance award to a participant
who has terminated employment prior to the end of an award period under certain
circumstances (including death, disability, retirement or a material change in
circumstances arising after the date of grant).
OTHER AWARDS. The Committee is authorized to grant any stock purchase
rights (with or without loans to participants by the Company) or any other cash
awards, Common Stock awards or other types of awards which are valued in whole
or in part by reference to the value of Common Stock. The Committee at its
discretion will determine the terms and conditions of such awards and the
participants eligible for such awards.
SHORT-TERM CASH AWARDS. The 2002 Incentive Plan authorizes
performance-based annual cash incentive compensation to be paid to covered
employees subject to Section 162(m) of the Code. The material terms of the
annual incentive compensation feature of the 2002 Incentive Plan are as follows:
- The class of persons covered consists of those senior executives of the
Company who are from time to time determined by the Committee to be
subject to Section 162(m) of the Code.
- The targets for annual incentive payments to "covered employees" (as
defined in Section 162(m) of the Code), will consist only of the specific
performance targets discussed under the section titled "Restricted
Shares" above. Use of any other target will require ratification by the
stockholders if failure to obtain such approval would jeopardize tax
deductibility of future incentive payments. Such performance targets will
be established by the Committee on a timely basis to ensure that the
targets are considered "preestablished" for purposes of Section 162(m) of
the Code.
- In administering the incentive program and determining incentive awards,
the Committee will not have the flexibility to pay a covered executive
more than the incentive amount indicated by his or her attainment of the
performance target
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under the applicable payment schedule. The Committee will have the
flexibility, based on its business judgment, to reduce this amount.
CHANGE IN CONTROL. In the event of a change in control, to the extent
provided in an award agreement, stock options and SARs immediately become
exercisable, the restrictions on all Restricted Shares lapse and all performance
awards immediately become payable. In general, events which constitute a change
in control include: (i) acquisition by a person, other than the Company, one of
its subsidiaries or a Company benefit plan, of 25% or more of the outstanding
Common Stock; (ii) individuals who constitute the Board as of the effective date
of the 2002 Incentive Plan (the "Incumbent Board") no longer constituting at
least two-thirds of the Board without prior approval by a majority vote of the
Incumbent Board; (iii) approval by the stockholders of the Company of a
reorganization, merger or consolidation; or (iv) approval by the stockholders of
the Company of a complete liquidation or dissolution of the Company or sale or
other disposition of substantially all of the assets of the Company.
TAX CONSEQUENCES. The following is a summary of the principal federal
income tax consequences of 2002 Incentive Plan benefits under present tax law.
The summary is not intended to be exhaustive. It does not describe state, local
or foreign tax consequences.
Stock Options. No tax is incurred by the participant, and no amount is
deductible by the Company, upon the grant of a stock option. At the time of
exercise of a non-qualified stock option, the difference between the exercise
price and the fair market value of Common Stock will constitute ordinary income
to the participant. The Company will be allowed a deduction equal to the amount
of ordinary income recognized by the participant as a result of the exercise of
the option.
In the case of incentive stock options, although no income is recognized
upon exercise and the Company is not entitled to a deduction, the excess of the
fair market value of Common Stock on the date of exercise over the exercise
price is counted in determining the participant's alternative minimum taxable
income. If the participant does not dispose of the shares acquired on the
exercise of an incentive stock option within one year after their receipt and
within two years after the grant of the incentive stock option, gain or loss
recognized on the disposition of the shares will be treated as long-term capital
gain or loss.
In the event of an earlier disposition of shares acquired upon the exercise
of an incentive stock option, the participant may recognize ordinary income to
the extent of the excess of the fair market value of Common Stock on the date of
exercise over the exercise price, and capital gain to the extent of the excess
of the amount realized on the sale of the Common Stock over the optionee's basis
in the Common Stock (generally, the exercise price plus any ordinary income paid
with respect to such earlier disposition), and the Company will be entitled to a
deduction equal to the amount of ordinary income recognized by the participant,
when recognized by the participant. Whether the capital gain recognized is
long-term or short-term will depend upon whether the one-year capital gain
holding period has been met.
SARs. A participant will not recognize any income at the time of grant of
SARs. Upon the exercise of SARs, the cash and the value of any Common Stock
received will constitute ordinary income to the participant. The Company will be
entitled to a deduction in the amount of such income at the time of exercise.
Restricted Shares. A participant will normally not recognize taxable
income upon an award of Restricted Shares, and the Company will not be entitled
to a deduction, until the
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lapse of the applicable restrictions. Upon the lapse of the restrictions, the
participant will recognize ordinary taxable income in an amount equal to the
fair market value of Common Stock as to which the restrictions have lapsed, and
the Company will be entitled to a deduction in the same amount. However, a
participant may elect under Section 83(b) of the Code to recognize taxable
ordinary income in the year the Restricted Shares are awarded in an amount equal
to the fair market value of the shares at that time, determined without regard
to the restrictions. In that event, the Company will then be entitled to a
deduction in the same amount. Any gain or loss subsequently recognized by the
participant will be a capital gain or loss. If, after making a Section 83(b)
election, any Restricted Shares are forfeited, or if the fair market value at
vesting is lower than the amount on which the participant was taxed, the
participant cannot then claim a tax deduction for the loss.
Performance Awards and Other Awards. Normally, a participant will not
recognize taxable income upon the award of such grants. Subsequently, when the
conditions and requirements for the grants have been satisfied and the payment
determined, any cash received and the fair market value of any Common Stock
received will constitute ordinary income to the participant. The Company will
also then be entitled to a deduction in the same amount.
Discretionary Gross-Up for Taxes. The Committee has discretion as to any
award under the 2002 Incentive Plan to grant a participant a separate cash
amount at exercise, vesting or lapse of restrictions to meet mandatory tax
withholding obligations or reimburse a participant for any individual taxes
paid.
Section 162(m). The 2002 Incentive Plan is intended to meet the
deductibility requirements of the regulations promulgated under Section 162(m)
of the Code. This section imposes limits on tax deductions for annual
compensation paid to the chief executive officer and other highly compensated
officers unless the compensation qualifies as "performance-based" or is
otherwise exempt under law. The Committee, however, may determine in any year
that it would be in the best interests of the Company for awards to be paid
under the 2002 Incentive Plan that would not satisfy the requirements of Section
162(m).
1999 INCENTIVE PLAN -- AS AMENDED BY THE 2002 INCENTIVE PLAN
Teledyne Technologies has a 1999 Incentive Plan. The 1999 Incentive Plan
was approved by the Company's stockholders on June 1, 2000. The 1999 Incentive
Plan provides that the Company may issue a maximum of 4,000,000 shares of Common
Stock, and if the number of issued and outstanding shares of Common Stock is
increased after January 26, 2000, the total number of shares available for
issuance under 1999 Incentive Plan will be increased by 10% of that increase.
However, if the 2002 Incentive Plan is approved by the Company's stockholders,
the number of shares available under the 10% evergreen provision described in
the preceding sentence will be limited to an additional 2,500,000 shares. As a
result of the Company's public offering completed in the third quarter of 2000,
460,500 additional shares were made available for issuance under the 1999
Incentive Plan. The 2002 Incentive Plan does not replace the 1999 Incentive
Plan, which will continue to exist on its own terms, but subject to the
amendments described below.
The 2002 Incentive Plan by its own terms amends the 1999 Incentive Plan in
four areas. First, it amends the 10% evergreen provision contained in the 1999
Incentive Plan, by providing that no more than 2,500,000 shares may be issued
under the 1999 Incentive
16
Plan by virtue of such provision. Second, it provides that no more than 550,000
shares of Common Stock may be issued under the 1999 Incentive Plan as "full
value" awards (which would include restricted shares). Third, it amends the 1999
Incentive Plan to provide that the exercise price per share of any non-qualified
stock option cannot be less than 85% of the fair market value of one share of
Common Stock on the date when the stock option is granted. Fourth, it amends the
1999 Incentive Plan to provide that options and stock appreciation rights issued
under the 1999 Incentive Plan must terminate 10 years from the date of grant.
These amendments to the 1999 Incentive Plan do not affect or alter awards
heretofore granted under the 1999 Incentive Plan.
Of the 4,460,500 shares registered and approved for listing on the New York
Stock Exchange with respect to the 1999 Incentive Plan, there were 133,208
shares available for issuance as of February 28, 2002. This amount takes into
account 266,672 shares reserved for potential issuance under the Performance
Share Plan if the performance goals for the 2000-2002 award period are achieved
at target. Additional shares could eventually be issued under the 1999 Incentive
Plan as a result of the previously approved 10% evergreen provision contained in
such plan, but such amount would be capped by the 2002 Incentive Plan. If the
2002 Incentive Plan is approved, up to 2,039,500 additional shares could become
available for potential issuance under the 1999 Incentive Plan depending on the
Company's issued and outstanding shares of Common Stock after January 26, 2000
(after considering that, as a result of our 2000 public offering, 460,500 shares
have already been registered and listed with respect to the 1999 Incentive Plan
under this 10% evergreen provision). The 1999 Incentive Plan has no fixed
expiration date.
If the 2002 Incentive Plan is not approved, the 1999 Incentive Plan will
not be amended and would continue in the form previously approved by the
Company's stockholders.
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1999 INCENTIVE PLAN OPTIONS. The following table describes options to
purchase our Common Stock issued and outstanding under the 1999 Incentive Plan
at February 28, 2002. This table includes options to purchase ATI common stock
that were held by our employees at the time of our November 29, 1999 spin-off,
which were converted into options to purchase our Common Stock in accordance
with the terms of the spin-off documents, principally the Employee Benefits
Agreement dated as of November 29, 1999.
OUTSTANDING OPTIONS UNDER THE 1999 INCENTIVE PLAN
NUMBER OF SHARES
UNDERLYING OPTIONS EXERCISE PRICE
NAME GRANTED ($/SHARE) EXPIRATION DATE
---- ------------------ -------------- --------------------
Robert Mehrabian............... 1,527 $13.59 August 16, 2006
1,487 $ 9.41 December 12, 2006
7,031 $ 9.96 January 2, 2007
1,527 $17.60 May 1, 2007
1,652 $11.50 January 2, 2008
30,534 $16.95 February 11, 2008
30,534 $13.35 December 17, 2008
300,000 $ 8.94 November 30, 2009
60,000 $ 9.67 January 25, 2010
60,000 $19.56 February 20, 2011
60,000 $14.48 January 22, 2012
Robert J. Naglieri............. 20,000 $24.88 October 3, 2010
20,000 $19.56 February 20, 2011
30,000 $14.48 January 22, 2012
John T. Kuelbs................. 70,000 $ 8.94 November 30, 2009
20,000 $ 9.67 January 25, 2010
30,000 $19.56 February 20, 2011
30,000 $14.48 January 22, 2012
Dale A. Schnittjer............. 14,695 $ 8.42 June 29, 2005
11,450 $16.95 February 11, 2008
11,450 $13.35 December 17, 2008
10,000 $ 9.67 January 25, 2010
12,000 $19.56 February 20, 2011
12,000 $14.48 January 22, 2012
James M. Link.................. 15,000 $13.00 July 23, 2011
14,500 $14.48 January 22, 2012
Executive Group (5 persons).... 875,387 (a) (b)(e)
Non-Executive Group (334
persons)..................... 2,488,827 (c) (d)(e)
---------------
(a) Exercise prices range from $8.42 per share to $24.88 per share.
(b) Expiration dates range from June 29, 2005 to January 22, 2012.
(c) Exercise prices range from $5.57 per share to $28.69 per share.
(d) Expiration dates range from March 9, 2004 to February 15, 2012.
(e) Options granted since the spin-off have a maximum term of 10 years from the
date of grant, as provided in the various option award agreements.
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ATI PERFORMANCE SHARE PROGRAM. As a result of the spin-off and in
accordance with the Employee Benefits Agreement, the three-year award period
under the ATI Performance Share Program (the "ATI PSP") established in 1998 was
terminated and the award period shortened to cover the two-year period of
January 1, 1998 through December 31, 1999. The table on page 37 sets forth
information in regard to shares and cash amounts issued to Dr. Mehrabian and Mr.
Schnittjer, the only two named executives who participated in the ATI PSP, and
the non-executive group. No more amounts remain to be issued or paid under the
ATI PSP.
ATI STOCK ACQUISITION AND RETENTION PROGRAM. As a result of the spin-off,
in accordance with the Employee Benefits Agreement and the ATI Stock Acquisition
and Retention Program, 24,921 restricted shares were issued under the 1999
Incentive Plan to Dr. Mehrabian and aggregate of 71,167 shares to six other TDY
employees who had been participants in the ATI Stock Acquisition and Retention
Program. Teledyne Technologies established a Restricted Stock Award Program
under the 1999 Incentive Plan to replace the ATI Stock Acquisition and Retention
Program.
2000-2002 PERFORMANCE SHARE PROGRAM. In January 2000, the Committee
established under the 1999 Incentive Plan a three-year award performance cycle
commencing January 1, 2000. There are 25 participants in the Performance Share
Program for this cycle. The table on page 38 sets forth information for the
2000-2002 award period with respect to the named executives, the named
executives as a group and the non-executive group. The amounts included in the
Estimated Future Payout columns represent the potential payments of Common Stock
and of cash to the named executives depending on the level of achievement (i.e.,
threshold, target or maximum) of the performance goals for the three-year period
award period. Participants will not receive any payment of Common Stock or cash
under the program if TDY and/or the designated business unit do not achieve the
threshold level of performance objectives during the award period.
RESTRICTED STOCK AWARD PROGRAM. Under the 1999 Incentive Plan, in July
2000, the Company established a Restricted Stock Award Program (the "RSAP") to
replace the ATI Stock Acquisition and Retention Program. An award in respect of
an aggregate of 54,314 Restricted Shares was granted to 14 selected officers and
key executives on July 25, 2000 and an award in respect of an aggregate of
62,411 Restricted Shares was granted to 15 selected officers and key executives
on January 22, 2002. With respect to the July 2000 award, a total of 6,854
shares was forfeited upon the termination of employment of two recipients. In
each case, the award of Restricted Shares made to the recipient had an aggregate
fair market value equal to 30% of the recipient's annual base salary as of the
date of grant. For the purpose of this calculation, fair market value was based
on the average of the high and low closing prices of a share of Common Stock as
reported on the New York Stock Exchange for the 20 trading days preceding the
date of the award. For the July 2000 grant, the fair market value was determined
to be $17.62 per share and for the January 2002 grant, the fair market value was
determined to be $16.41 per share. The restrictions are subject to both a
time-based and performance based component. In general, with exceptions for
retirement, disability and a change in control, each recipient must continue in
the employment of the Company for three years from the date of grant or the
shares are forfeited. For the July 2000 award, the performance-based component
is based on achievement of specified levels of operating profit, revenue and
return to shareholders during the three-year period ending December 31, 2002.
For the January 2002 award, the performance-based component is based on return
to shareholders at the end of the three-year period ending December 31, 2004.
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The following tables set forth the awards of Restricted Shares made to the
named executives, the named executives as a group and the non-executive group in
July 2000 and January 2002, respectively.
RESTRICTED SHARES ISSUED UNDER 1999 INCENTIVE PLAN -- JULY 2000 AWARD
Performance Period -- January 1, 2000 through December 31, 2002
Restrictive Period -- Ends July 25, 2003
Restricted Share Issuance Price -- $17.62
NUMBER OF
NAME RESTRICTED SHARES
---- -----------------
Robert Mehrabian........................................... 9,619
Robert J. Naglieri......................................... (a)
John T. Kuelbs............................................. 5,306
Dale A. Schnittjer......................................... 2,980
James M. Link.............................................. (a)
Executive Group (3 persons)................................ 17,905
Non-Executive Group (9 persons)............................ 29,555(b)
---------------
(a) Messrs. Naglieri and Link were not employed by the Company on July 25, 2000,
and accordingly did not receive any Restricted Shares.
(b) Excludes awards in respect of an aggregate of 6,854 Restricted Shares to two
employees whose employment has terminated and whose shares were forfeited.
RESTRICTED SHARES ISSUED UNDER 1999 INCENTIVE PLAN -- JANUARY 2002 AWARD
Performance Period -- January 1, 2002 through December 31, 2004
Restrictive Period -- Ends January 22, 2005
Restricted Share Issuance Price -- $16.41
NUMBER OF
NAME RESTRICTED SHARES
---- -----------------
Robert Mehrabian........................................... 10,330
Robert J. Naglieri......................................... 5,485
John T. Kuelbs............................................. 5,866
Dale A. Schnittjer......................................... 3,518
James M. Link.............................................. 4,205
Executive Group (5 persons)................................ 29,404
Non-Executive Group (10 persons)........................... 33,007
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE 2002 INCENTIVE
PLAN.
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ITEM 3 ON PROXY CARD -- RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
Ernst & Young LLP ("Ernst & Young") has served as independent auditors for
the Company since the November 29, 1999 spin-off. Ernst & Young had served as
independent auditors for ATI and predecessors since 1980. The Board of Directors
believes that Ernst & Young is knowledgeable about the Company's operations and
accounting practices and is well qualified to act in the capacity of independent
auditors.
The proposal to ratify the selection of Ernst & Young will be approved by
the stockholders if it receives the affirmative vote of a majority of the shares
present in person or represented by proxy at the meeting and entitled to vote on
the proposal. If you sign and return your proxy card, your shares will be voted
(unless you indicate to the contrary) to ratify the selection of Ernst & Young
as independent auditors for 2002. If you specifically abstain from voting on the
proposal, your shares will, in effect, be voted against the proposal. Broker
non-votes will not be counted as being entitled to vote on the proposal and will
not affect the outcome of the vote. If the stockholders do not ratify the
selection of Ernst & Young, the Board will reconsider the appointment of
independent auditors. It is expected that representatives of Ernst & Young will
be present at the meeting and will have an opportunity to make a statement and
respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR RATIFICATION OF THE SELECTION
OF THE INDEPENDENT AUDITORS.
AUDIT FEES
Ernst & Young has billed the Company $566,000, in the aggregate, for
professional services rendered by them for the audit of the Company's annual
financial statements for the Company's 2001 fiscal year and the reviews of the
interim financial statements included in the Company's Quarterly Reports on Form
10-Q for the Company's 2001 fiscal year.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
Ernst & Young did not provide the Company with any professional services
related to financial information systems design and implementation as described
in Rule 2-01 of Regulation S-X.
ALL OTHER FEES
Ernst & Young has billed the Company $282,000, in the aggregate, for
professional services rendered by Ernst & Young for all other services,
principally audit-related services in connection with the Company's employee
benefit plans and our acquisition of Advanced Pollution Instrumentation, Inc.
In making its recommendation to ratify the appointment of Ernst & Young as
the Company's independent auditors for the fiscal year ending December 29, 2002,
the Audit Committee considered whether the provision of non-audit services by
Ernst & Young is compatible with maintaining Ernst & Young's independence.
21
AUDIT COMMITTEE REPORT
The following report of the Audit Committee is included in accordance with
the rules and regulations of the Securities and Exchange Commission. It is not
incorporated by reference into any of the Company's registration statements
under the Securities Act of 1933.
REPORT OF AUDIT COMMITTEE
The following is the report of the Audit Committee with respect to the
audited financial statements for the fiscal year ended December 30, 2001 (the
"Financial Statements") of Teledyne Technologies Incorporated (the "Company").
The responsibilities of the Audit Committee are set forth in the Audit
Committee Charter, as amended and restated as of January 22, 2002, which has
been adopted by the Board of Directors. A copy of the Amended and Restated
Charter is attached to the Proxy Statement as Annex A. The Audit Committee is
comprised of five directors. Except for Robert P. Bozzone, the members meet the
independence requirements under applicable provisions of the New York Stock
Exchange listing standards. Since within the last three years Mr. Bozzone had
been an executive officer of ATI, the Board of Directors specially reviewed his
membership, and following discussion, determined in accordance with its business
judgment and New York Stock Exchange requirements, that his membership was
required by the best interests of the Corporation and its stockholders.
Management is responsible for the Company's internal controls and financial
reporting process. Ernst & Young LLP ("Ernst & Young"), the Company's
independent accountants, are responsible for performing an independent audit of
the Company's Financial Statements. The Audit Committee reviewed and discussed
the Company's Financial Statements with management and Ernst & Young, and
discussed with Ernst & Young the matters required to be discussed by Statement
of Auditing Standards No. 61 (Communication with Audit Committees). The Audit
Committee has received written disclosures and the letter from Ernst & Young
required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees) and has considered the compatibility of
non-audit services with Ernst & Young's independence. Based on these reviews and
discussions, the Audit Committee recommended to the Board of Directors that the
Financial Statements be included in the Company's Annual Report on Form 10-K for
the year ended December 30, 2001 for filing with the Securities and Exchange
Commission.
Submitted by the Audit Committee of the Board of Directors:
Frank V. Cahouet, Chair
Robert P. Bozzone
Paul S. Brentlinger
Paul D. Miller
Charles J. Queenan, Jr.
February 26, 2002
22
OTHER BUSINESS
The Company knows of no business that may be presented for consideration at
the meeting other than the three action items indicated in the Notice of Annual
Meeting. If other matters are properly presented at the meeting, the persons
designated as proxies in your proxy card may vote at their discretion.
Following adjournment of the formal business meeting, Dr. Robert Mehrabian,
Chairman, President and Chief Executive Officer of TDY, will address the meeting
and will hold a general discussion period during which the stockholders will
have an opportunity to ask questions about the Company and its business.
STOCK OWNERSHIP INFORMATION
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The rules of the Securities and Exchange Commission require that Teledyne
Technologies disclose late filings of reports of stock ownership (and changes in
stock ownership) by its directors and statutory insiders. To the best of the
Company's knowledge, all of the filings for the Company's directors and
statutory insiders were made on a timely basis in 2001.
FIVE PERCENT OWNERS OF COMMON STOCK
The following table sets forth the number of shares of our Common Stock
owned beneficially by each person known to us who owns beneficially more than
five percent of our outstanding Common Stock. As of February 28, 2002, the
Company had received notice that the individuals and entities listed in the
following table are beneficial owners of five percent or more of TDY Common
Stock.
23
In general, "beneficial ownership" includes those shares that a person has
the power to vote or transfer, and options to acquire Common Stock that are
exercisable currently or within 60 days.
NUMBER OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES OF CLASS
------------------------------------ --------- --------
David J. Greene & Co. LLC (1)..................... 1,803,399 5.6%
599 Lexington Avenue
New York, NY 10022
Mellon Financial Corporation (2).................. 1,664,273 5.2%
One Mellon Center
Pittsburgh, PA 15258
Richard P. Simmons (3)............................ 2,092,287 6.5%
Birchmere
Quaker Hollow Road
Sewickley, PA 15143
Singleton Group LLC (4)........................... 1,999,990 6.3%
335 North Maple Drive, Suite 177
Beverly Hills, CA 90210
The TCW Group, Inc. (5)........................... 2,274,488 7.1%
865 South Figueroa Street
Los Angeles, CA 90017
---------------
1. David J. Greene & Co. LLC, a registered investment adviser, filed a Schedule
13G on February 14, 2002. It reported shared voting power with respect to
1,374,360 shares and shared dispositive power with respect to all 1,803,399
shares.
2. Mellon Financial Corporation filed a Schedule 13G on January 22, 2002 for
itself and direct and indirect subsidiaries, including Mellon Bank, N.A., in
their fiduciary capacities. It reported sole voting power with respect to
1,385,904 shares, shared voting power with respect to 201,800 shares, sole
dispositive power with respect to 1,660,694 shares and shared dispositive
power with respect to 3,579 shares.
3. Mr. Simmons filed an amendment to his Schedule 13G on February 6, 2002. Mr.
Simmons reported that as of December 31, 2001 he had the sole power to direct
the voting and the disposition of all 2,092,287 shares.
4. Singleton Group LLC, jointly with William W. Singleton, Carolyn W. Singleton
and Donald E. Rugg, filed a Schedule 13G on April 19, 2000. Mr. Singleton,
Mrs. Singleton and Mr. Rugg reported that they share voting and dispositive
power with respect to 1,999,990 shares in their capacities as managers of
Singleton Group LLC. Mr. Rugg reported that he owned an additional 45 shares
of TDY Common Stock directly, with respect to which he has sole voting and
dispositive power.
5. The TCW Group, Inc. filed a Schedule 13G on February 13, 2002 and an
amendment thereto on March 7, 2002, on behalf of itself and direct and
indirect subsidiaries primarily engaged in the provision of investment
management services. It reported shared voting power with respect to all
2,274,488 shares and shared dispositive power with respect to all 2,274,488
shares. It reported that as of July 6, 2001, the ultimate parent of The TCW
Group, Inc. is Societe Generale, S.A., a corporation formed under the laws of
France and whose principal business is acting as a holding company for a
global financial services group. It also reported that, in accordance with
Securities and Exchange Commission Release No. 34-39538 dated January 12,
1998 and due to the separate management and independent operation of its
business units, Societe Generale, S.A. disclaims beneficial ownership of
these shares.
24
STOCK OWNERSHIP OF MANAGEMENT
The following table shows the number of shares of Common Stock reported to
the Company as beneficially owned by (i) each of our directors and named
executives and (ii) all of our directors and named executives as a group, in
each case based upon the beneficial ownership of such persons of Common Stock as
reported to us as of February 28, 2002, including shares as to which a right to
acquire ownership exists (for example, through the exercise of stock options)
within the meaning of Rule 13d-3(d)(1) under the Securities Exchange Act of
1934.
NUMBER OF PERCENT OF
BENEFICIAL OWNER SHARES CLASS
---------------- --------- ----------
Robert Mehrabian.................................. 451,994 *
Robert L. Naglieri................................ 21,319 *
John T. Kuelbs.................................... 113,326(1) *
James M. Link..................................... 4,205 *
Dale A. Schnittjer................................ 61,052 *
Robert P. Bozzone................................. 769,263(1) 2.4%
Paul S. Brentlinger............................... 17,295(1) *
Frank V. Cahouet.................................. 34,856 *
Diane C. Creel.................................... 9,341 *
Charles Crocker................................... 511 *
C. Fred Fetterolf................................. 14,910(1) *
Paul D. Miller.................................... -0- *
Michael T. Smith.................................. 8,527(1) *
Charles J. Queenan, Jr. .......................... 113,109(1) *
All directors and executives
as a group (14 persons)......................... 1,619,708(1) 5.0%
---------------
* Less than one percent.
1. The amounts shown include shares to which beneficial ownership is disclaimed
as follows: 2,525 shares owned by Mr. Kuelbs's wife; 34,285 shares owned by
Mr. Bozzone's wife; 28 shares held by Mr. Brentlinger's wife; 371 shares
owned by the Fetterolf Family Foundation; 200 shares owned by Mr. Smith's
wife; and 10,028 shares owned by Mr. Queenan's wife.
25
2001 REPORT ON EXECUTIVE COMPENSATION
The following report of the Personnel and Compensation Committee is
included in accordance with the rules and regulations of the Securities and
Exchange Commission. It is not incorporated by reference into any of the
Company's registration statements under the Securities Act of 1933.
2001 REPORT ON EXECUTIVE COMPENSATION
This report on executive compensation is furnished by the Personnel and
Compensation Committee (the "Committee") of the Board of Directors of Teledyne
Technologies Incorporated ("TDY" or the "Company"). This report acknowledges the
resignation of Nickolas L. Blauwiekel as Vice President, Human Resources of TDY,
effective February 6, 2001. This report is not incorporated by reference into
any of the Company's registration statements filed under the Securities Act of
1933.
Effective November 29, 1999, the Company was spun-off from Allegheny
Teledyne Incorporated, now known as Allegheny Technologies Incorporated ("ATI").
In connection with the spin-off, TDY's executive compensation program was
established, having its genesis in the program established by ATI. Pursuant to
the Employee Benefits Agreement dated November 29, 1999, between the Company and
ATI executed in connection with the spin-off (the "Employee Benefits
Agreement"), the Company was contractually required to take various actions with
respect to certain executive benefit plans and programs. Since the spin-off, the
Committee has approved various modifications to the Company's executive
compensation program to enable the Company to be more competitive and aligned
with high technology businesses and, thus, better assure attraction and
retention of quality management. The Committee did not engage any outside
executive compensation consultant with respect to TDY's original adoption of its
executive compensation program. However, Hewitt Associates LLC recently reviewed
TDY's current executive compensation program from a competitive marketplace
perspective. In addition, Watson Wyatt & Company and Hewitt Associates LLC each
have from time to time provided TDY with compensation and benefits advice and
data. The Committee also has considered publicly available market and other data
on executive compensation matters.
EXECUTIVE COMPENSATION POLICY
The Committee has determined that total compensation for TDY executives
would be comprised of three general characteristics:
- It will be competitive in the aggregate, using a set of business and
labor market competitors (by industry segment, as appropriate) to gauge
the competitive market place.
- It will be performance oriented, with a substantial portion of the total
compensation tied to internal and external measures of Company
performance.
- It will promote long-term careers at TDY.
Consistent with these characteristics, the Committee adopted the following
policy for base salaries, short-term incentives and long-term incentives.
26
BASE SALARY. Base salary for all management positions will be at the
unit's industry/market median for comparable positions unless there are sound
reasons, such as competitive factors, for varying significantly from industry
medians. "Judgment" will always be the guiding factor in base salary
determinations, as well as any other compensation issue. No system should be so
rigid that it prevents the use of judgment.
SHORT-TERM INCENTIVES. Annual Incentive Plan ("AIP") awards will allow for
competitive cash compensation, based on the achievement of predefined
performance measures, with up to 200 percent of the target award paid in the
case of significant over-achievement. The majority of the award will be based on
financial performance achievement, with a smaller portion tied to the
achievement of pre-established individual goals. For 2001, 40 percent of the AIP
award was tied to the achievement of predetermined levels of operating profit,
25 percent to the achievement of predetermined levels of revenue, 15 percent to
the achievement of predetermined levels of accounts receivable and inventory
management and 20 percent to the achievement of specific individual performance
objectives. A discretionary adjustment of plus or minus 20 percent is allowed,
though aggregate upward adjustments will not exceed 5 percent. All AIP awards
historically have been paid from a pool equal to 7.5 percent of operating
profit. For 2002, to be more aligned with the aggregate amount of historical
bonus pools, such pool has been increased to 11 percent of operating profit,
subject to modification by the Committee. No AIP bonus will be earned unless
operating profit is positive, after accruing for bonus payments, and operating
profit is at least 75 percent of the operating plan, subject in each case to
modification by the Committee.
LONG-TERM INCENTIVES. Long-term incentives consist of three components:
Stock options are to be awarded annually to all key employees who are
nominated by management to receive an award and whose award is approved by the
Committee. In practice, the amount of the award generally depends on the
executive's salary grade and position.
A three-year Performance Share Program ("PSP") opportunity, with a new
"cycle" beginning every three years, is available to selected officers and key
executives. The PSP provides grants of performance share units, which key
Company officers and executives may earn if specified performance objectives are
met over a three-year period. Forty percent of the PSP award is based on the
achievement of specified levels of operating profit, 30 percent on the
achievement of specified levels of revenue and 30 percent on the achievement of
specified levels of return to shareholders. Under the current 2000 through 2002
cycle, for the three-year aggregate return to shareholders performance measure,
the S&P SmallCap 600 Index (in which TDY is included) is the benchmark. For
future cycles, the Russell 2000 Index will be the benchmark. No awards are made
if the three-year aggregate operating profit is less than 75 percent of target.
A maximum of 200 percent for each component can be earned if 120 percent of the
target is achieved. Awards are generally paid to the participants in three
annual installments after the conclusion of the performance cycle so long as
they remain employed by TDY (with exceptions for retirement, disability and
death). If the units are earned under the current cycle, two-thirds will be paid
in TDY Common Stock and one-third will be paid in cash. For future cycles,
one-half will be paid in TDY Common Stock and one-half will be paid in cash.
A Restricted Stock Award Program ("RSAP") opportunity has also been
established for selected officers and key executives, which was approved and
adopted by the
27
Committee in 2000. The RSAP provides grants of "restricted stock", generally
each calendar year, to selected officers and key executives at an aggregate fair
market value equal to 30 percent of each recipient's annual base salary as of
the date of the grant, unless otherwise determined by the Committee. The
restrictions are subject to both a time-based and performance-based component.
In general, the "restricted period" for each grant of restricted stock extends
from the date of the grant to the third anniversary of such date, with the
restrictions lapsing on the third anniversary. However, if the Company fails to
meet certain minimum performance goals for a multi-year performance cycle
(typically three years) established by the Committee as applicable to a
restricted stock award, then all of the restricted stock is forfeited. If the
Company achieves the minimum established performance goals, but fails to attain
an aggregate level of 100 percent of the targeted performance goals, then a
portion of the restricted stock would be forfeited.
A participant cannot transfer the restricted stock during the restricted
period. In addition, during the restricted period, restricted stock will be
forfeited upon a participant's termination of employment for any reason.
However, if the participant dies, becomes disabled or retires prior to the
expiration of the applicable performance cycle, the amount of the participant's
restricted stock that is not subject to forfeiture at the end of the performance
cycle will be pro-rated for the portion of the performance cycle completed by
the participant prior to his death, disability or retirement and that amount
will become vested at the end of the performance cycle. Upon expiration of the
restricted period without a forfeiture, the Company will deliver to the
recipient of restricted stock one or more stock certificates for the appropriate
number of shares of Company common stock, as determined by the Committee based
on achievement of the specified performance objectives. The RSAP replaces, and
is the successor to, the Stock Acquisition and Retention Program established by
ATI (the "ATI SARP"), which the Company assumed in part in connection with the
spin-off.
2001 COMPENSATION
SHORT-TERM INCENTIVES
ANNUAL INCENTIVE PLAN. In 2001, no AIP awards were earned since, in
accordance with terms of the AIP, TDY's operating profit was less than 75% of
the operating plan. However, since certain business units did perform well in
2001 as compared to their respective business unit plans and as compared to TDY
as a whole, and to recognize the hard work and contributions of certain
employees during a difficult year, the Committee established a special
discretionary bonus pool out of the AIP pool that had been accrued on TDY's
books and approved special discretionary bonus awards to select performing
employees. The bonus column of the Summary Compensation Table contains any
special discretionary award for 2001 to the named executives.
LONG-TERM INCENTIVES
STOCK OPTIONS. The Company made one annual award of stock options at the
beginning of 2001 under the Teledyne Technologies Incorporated 1999 Incentive
Plan, as amended (the "1999 Incentive Plan"). In addition, during 2001, stock
options were granted to James M. Link (15,000 shares) when he first joined
Teledyne Brown Engineering, Inc. and to select other key employees, primarily as
part of recruitment and retention initiatives.
28
PERFORMANCE SHARE PROGRAM. The Company's first three-year "cycle" under
the PSP commenced January 1, 2000. As described above, the PSP award is based on
achievement of specified levels of operating profit, revenue, and return to
shareholders during the three-year period. All of the named executive officers
in the Summary Compensation Table participate in the PSP, although any PSP award
to Messrs. Naglieri and Link will be proportionately reduced since they joined
the Company after the cycle commenced.
In 2001, the Company made the second installment payment of awards under
the shortened ATI Performance Share Program assumed in the spin-off by the
Company under the Employee Benefits Agreement. An aggregate of 35,207 shares was
issued to 17 participants. Of the named executive officers in the Summary
Compensation Table, only Dr. Mehrabian (7,646 shares) and Mr. Schnittjer (1,806
shares) participated in this program.
RESTRICTED STOCK AWARD PROGRAM. No shares of restricted stock were awarded
under the RSAP in 2001 principally due to the large reduction in force that TDY
underwent.
ATI SARP. As a result of the spin-off, under the Employee Benefits
Agreement, seven TDY executives (including three now retired executives) who had
purchased or designated shares of ATI stock under the ATI SARP received
distributions of common stock of TDY and Water Pik Technologies, Inc. ("Water
Pik") on the purchased or designated ATI shares. The shares that they received
in the spin-off as well as the original shares continue to be held as collateral
for loans for purchased shares, all of which were retained by ATI, until the
loans are fully paid. Restricted shares issued under the ATI SARP were converted
into shares of TDY Common Stock and, except as provided below, continue to bear
the restrictions set forth in the original ATI SARP. In 2000, the Committee took
action to permit TDY executives who participated in the ATI SARP to use ATI and
Water Pik shares that they had purchased under the ATI SARP to pay down loans
for purchased shares, whether or not such shares had been held for five years as
otherwise required by the ATI SARP. The Committee also released the transfer
restrictions on ATI and Water Pik shares that TDY participants held as
designated stock under the ATI SARP. Shares of TDY Common Stock that were
purchased or designated under the ATI SARP continue to be held in accordance
with the ATI SARP. In accordance with the terms of the ATI SARP, upon their
retirement in 2001, three former TDY executives paid off their ATI loans and the
restrictions on their shares of TDY Common Stock were removed.
CHANGE IN CONTROL SEVERANCE AGREEMENTS
After the spin-off, the Committee recommended and the Board of Directors
approved Change in Control Severance Agreements for the named officers (other
than Messrs. Naglieri and Link) and selected other key executives. The
Agreements for Messrs. Naglieri and Link were approved when they joined the
Company. In entering into the Agreements, the Committee desired to assure that
TDY will have the continued dedication of certain executives and the
availability of their advice and counsel, notwithstanding the possibility of a
change in control, and to induce such executives to remain in the employ of the
Company. The Committee believes that, should the possibility of a change in
control arise, it is imperative that TDY be able to receive and rely upon its
executives' advice, if requested, as to the best interests of the Company and
its stockholders without the concern that he or she might be distracted by the
personal uncertainties and risks created by the possibility of a change in
control. The Committee
29
also considered arrangements offered to similarly situated executives of
comparable companies. The Agreements have a three-year, automatically renewing
term. The executive is entitled to severance benefits if (1) there is a change
in control of the Company and (2) within three months before or 24 months after
the change in control, either the Company terminates the executive's employment
for reasons other than cause or the executive terminates the employment for good
reason. "Severance benefits" consist of:
- A cash payment equal to three times (in the case of Dr. Mehrabian and
Messrs. Naglieri, Kuelbs, and Link and one other executive) or two times
(in the case of Mr. Schnittjer and seven other executives) the sum of (i)
the executive's highest annual base salary within the year preceding the
change in control and (ii) the AIP bonus target for the year in which the
change in control occurs or the year immediately preceding the change in
control, whichever is higher.
- A cash payment for the current AIP bonus based on the fraction of the
year worked times the AIP target objectives at 120 percent (with payment
of the prior year bonus if not yet paid).
- Payment in cash for unpaid PSP awards, assuming applicable goals are met
at 120 percent of performance.
- Continued equivalent health and welfare (e.g., medical, dental, vision,
life insurance and disability) benefits at TDY's expense for a period of
36 months after termination (with the executive bearing any portion of
the cost the executive bore prior to the change in control); provided,
however, such benefits would be discontinued to the extent the executive
receives similar benefits from a subsequent employer.
- Immediate vesting of all stock options, with options being exercisable
for the full remaining term.
- Removal of restrictions on restricted stock issued by the Company under
any Stock Acquisition and Retention Program or any replacement plans
(i.e. the Restricted Stock Award Program).
- Full vesting under the Company's pension plans (within legal parameters).
- Up to $25,000 reimbursement for actual professional outplacement
services.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
EMPLOYMENT AGREEMENT. The Company and Robert Mehrabian, Chairman,
President and Chief Executive Officer, are parties to an Amended and Restated
Employment Agreement dated as of April 25, 2001 (the "Employment Agreement"),
which amended and restated the Employment Agreement dated as of December 21,
1999 that had been recommended and approved by the Committee. The Employment
Agreement provides that the Company shall employ him as the Chairman, President
and Chief Executive Officer and supplements his Change in Control Severance
Agreement dated as of December 21, 1999. The Employment Agreement terminates on
December 31, 2002, but will automatically be extended annually unless either
party gives the other written notice prior to October 31 of such term that it
will not be extended.
BASE SALARY AND BONUS. The Committee determined the 2001 compensation of
Dr. Mehrabian in accordance with the general compensation philosophy described
above.
30
In maintaining Dr. Mehrabian's base salary at $565,000 for fiscal year 2001, the
Committee considered base salaries of comparably situated executives, finding
that Dr. Mehrabian's base salary was within the median range.
Like other participants, Dr. Mehrabian did not receive any award under the
Annual Incentive Plan for 2001 because TDY did not achieve the required minimum
level of operating profit. However, while recognizing that Dr. Mehrabian
expressly asked that no bonus be awarded to him, the Committee determined to
award Dr. Mehrabian a special discretionary bonus of $300,000. In determining
this special bonus award to Dr. Mehrabian, the Committee acknowledged Dr.
Mehrabian's leadership, perseverance and foresight in completing extensive cost
reduction initiatives, initiating a significant change in strategy in the
optoelectronics area, and preparing the Company for a market turnaround. In
arriving at the amount, the Committee considered the AIP awards paid to Dr.
Mehrabian for 1999 and 2000.
STOCK OPTIONS. On February 20, 2001, the Committee awarded Dr. Mehrabian
options to purchase 60,000 shares of the Company's common stock. As with other
grants under the 1999 Incentive Plan on that date, Dr. Mehrabian's options have
a per share exercise price of $19.56, are exercisable in one-third increments
commencing on February 20, 2002, and have a 10-year term. The Committee
authorized this grant to Dr. Mehrabian as a means of appropriately rewarding his
leadership and perseverance.
PERFORMANCE SHARE PROGRAM. As described above, Dr. Mehrabian participates
in the PSP. Compensation to be awarded under this plan will be determined based
on Company performance through December 31, 2002, which is the end of the
three-year performance period established under the PSP.
RESTRICTED STOCK AWARD PROGRAM. As described above with respect to other
executives, Dr. Mehrabian received no restricted stock award under the RSAP
during fiscal year 2001. On July 25, 2000, the Company granted Dr. Mehrabian
9,619 shares of restricted common stock, which was equivalent to 30 percent of
his annual base salary as of the date of the grant. The number of shares of
common stock that Dr. Mehrabian will ultimately receive under this 2000 grant
will be determined based on Company performance through December 31, 2002, which
is the end of the three-year performance period for his 2000 restricted stock
award established by the Committee.
PENSION ARRANGEMENTS. The Employment Agreement provides Dr. Mehrabian with
a non-qualified pension arrangement, continuing his agreement with ATI. The
Company has agreed to pay Dr. Mehrabian following his retirement, as payments
supplemental to any accrued pension under the Company's qualified pension plan,
an annual amount equal to 50 percent of his base compensation as in effect at
retirement. The number of years for which such annual amount shall be paid will
be equal to the number of years of his service to TDY (including service to
ATI), but not more than 10 years.
31
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Section 162(m) of the Internal Revenue Code imposes limits on tax
deductions for annual compensation paid to a chief executive officer and other
highly compensated officers unless the compensation qualifies as
"performance-based" or is otherwise exempt under the law. The 1999 Incentive
Plan is intended to meet the deductibility requirements of the regulations
promulgated under Section 162(m). However, the Committee may determine in any
year that it would be in the best interests of the Company for awards to be paid
under the 1999 Incentive Plan that would not satisfy the requirements of Section
162(m).
Submitted by the Personnel and Compensation Committee:
Charles J. Queenan, Jr., Chair
Diane C. Creel
Charles Crocker
C. Fred Fetterolf
Michael T. Smith
February 26, 2002
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Personnel and Compensation Committee of our Board of
Directors is an officer or employee of the Company. Mr. Queenan serves as senior
counsel to a law firm that provided services to the Company during 2001 and
currently provides services to the Company. Mr. Queenan does not participate in
the firm's earnings or profits. No other member of the Committee has a current
or prior relationship, and no officer who is a statutory insider of the Company
has a relationship to any other company, that is required to be described under
the Securities and Exchange Commission rules relating to disclosure of executive
compensation.
32
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table sets forth information about the
compensation paid by TDY and, pre-spin-off, by ATI to our Chairman, President
and Chief Executive Officer for fiscal 2001, 2000, and 1999. It also sets forth
information about compensation paid to each of our officers who was required to
file reports under Section 16 of the Securities Exchange Act of 1934 and another
officer of a significant subsidiary (the "named executives") for fiscal 2001.
Dr. Mehrabian, our Chairman, President and Chief Executive Officer, is the
only executive officer who was employed as an executive officer by ATI during
fiscal 1999. Mr. Schnittjer became an executive officer of TDY in connection
with the spin-off and has principally served as our Controller. Mr. Kuelbs
joined ATI in October 1999 in anticipation of the spin-off, while Mr. Naglieri
joined TDY in October 2000 and Mr. Link joined Teledyne Brown Engineering, Inc.
as its President in July 2001.
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------ ------------------------------------
OTHER ANNUAL RESTRICTED
NAME AND FISCAL COMPENSATION STOCK OPTIONS LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(1) AWARDS($) (SHARES) PAYOUTS($) COMPENSATION($)
------------------ ------------- --------- -------- ------------- ---------- -------- ------------ ---------------
Robert Mehrabian..... 2001 565,000 300,000 -- 0 60,000 $181,858(3) 308,164(4)
Chairman, President 2000 565,000 465,127 -- 169,505(2) 60,000 $109,843(3) 300,742(5)
and Chief Executive 1999 408,334 450,000 359,508(6) 166,566(7) 300,000 0 740,424(8)
Officer
Robert J. Naglieri... 2001 300,000 83,480 317,974(9) 0 20,000 0 0
Senior Vice President 2000 75,000 29,589 -- 0 20,000 0 0
and Chief Financial (3 months)
Officer
John T. Kuelbs....... 2001 318,138 94,683 -- 0 30,000 0 2,447(11)
Senior Vice
President, 2000 299,417 116,613 212,389(10) 93,502(2) 20,000 0 1,477(12)
General Counsel 1999 92,467 34,498 -- 0 70,000 0 0
(2 1/2
and Secretary months)
James M. Link........ 2001 97,703 47,300 15,533(13) 0 15,000 0 856(14)
(5 1/2
President, Teledyne months)
Brown Engineering,
Inc.
Dale A. Schnittjer... 2001 190,550 55,974 -- 0 12,000 42,957(3) 2,839(15)
Vice President and 2000 175,667 69,148 -- 52,513(2) 10,000 25,956(3) 3,046(16)
Controller 1999 144,655 65,113 -- 0 0 0 13,337(17)
---------------
1. In accordance with applicable regulations, the amounts do not include
perquisites and other personal benefits received by the named executive
because the aggregate value of such benefits did not exceed the lesser of
$50,000 or 10 percent of the total salary and bonus for the named executive.
2. Represents the formula price ($17.621875) of TDY Common Stock on the award
date of restricted stock under the Restricted Stock Award Program. On July
25, 2000, under the Restricted Stock Award Program, Dr. Mehrabian and
Messrs. Kuelbs and Schnittjer received 9,619 shares, 5,306 shares and 2,980
shares, respectively. On December 31, 2001, based on the closing price of a
share ($16.29), the restricted shares held by Dr. Mehrabian and Messrs.
Kuelbs and Schnittjer were valued at $156,694, $86,435 and $48,544,
respectively.
3. Represents an installment payment of awards under the shortened ATI
Performance Share Program. In 2001, Dr. Mehrabian received $36,966 and 7,645
shares of Common Stock, and in 2000, he received $36,967 and 7,646 shares of
Common Stock. In 2001, Mr. Schnittjer received $8,733 and 1,806 shares of
Common Stock,
33
and in 2000, he received $8,733 and 1,807 shares of Common Stock. On
December 31, 2001, based on the closing price of such shares, such shares
issued in 2001 and 2000 to Dr. Mehrabian were valued at $124,538 and
$124,553, respectively. On December 31, 2001, based on the closing price of
a share, such shares issued in 2001 and 2000 to Mr. Schnittjer were valued
at $29,420 and $29,436, respectively.
4. Includes annual accruals for possible future payments to Dr. Mehrabian under
his supplemental pension arrangement in the amount of $288,250 and the
dollar value of the benefit to Dr. Mehrabian of company-paid premiums of
split-dollar life insurance in the amount of $19,914.
5. Includes annual accruals for possible future payments to Dr. Mehrabian under
his supplemental pension arrangement in the amount of $288,250 and the
dollar value of the benefit to Dr. Mehrabian of company-paid premiums of
split-dollar life insurance in the amount of $12,492.
6. Includes one-time tax reimbursement of $353,658 relating to ATI Stock
Acquisition and Retention Program.
7. Represents the closing market price on the award date of ATI restricted
stock awarded to Dr. Mehrabian under the ATI Stock Acquisition and Retention
Program. Such shares were converted into shares of TDY Common Stock in
connection with the spin-off. On December 31, 2001, the number of shares
(and value based on the closing price of such shares, if unrestricted,) held
by Dr. Mehrabian under the Program were: 24,921 shares ($405,963).
8. Includes annual accruals for possible future payments to Dr. Mehrabian under
the ATI Supplemental Pension Plan in the amount of $314,846, company
contributions pursuant to the retirement portion of the ATI Retirement
Savings Plan in the amount of $10,400, company contributions to the ATI
Benefit Restoration Plan in the amount of $46,006, the dollar value of the
benefits to Dr. Mehrabian of company paid premiums of split dollar life
insurance in the amount of $11,960 and one-time non-cash imputed income of
$357,212 arising in connection with the ATI Stock Acquisition and Retention
Program.
9. Includes one-time relocation expenses of $284,424, a one-time new hire bonus
of $25,000 and $8,550 allowance with respect to his car.
10. Includes one-time relocation expenses of $206,487 (which includes tax
reimbursement of $62,089) and $5,902 in respect of a leased company car.
11. Includes $1,000 in company contributions pursuant to the Teledyne
Technologies Incorporated 401(k) Plan and $1,447 in respect of a death
benefit under the Teledyne Technologies Incorporated Executive Deferred
Compensation Plan.
12. Includes $1,000 in company contributions pursuant to the Teledyne
Technologies Incorporated 401(k) Plan and $477 in respect of a death benefit
under the Teledyne Technologies Incorporated Executive Deferred Compensation
Plan.
13. Includes $11,010 in respect of country club dues and $4,523 in respect of a
leased company car.
14. Represents $856 paid in respect of life insurance.
15. Includes $1,000 in company contributions pursuant to the Teledyne
Technologies Incorporated 401(k) Plan, $1,200 in respect of the employer
matching contribution under The Stock Advantage Plan (Employer Stock
Purchase Plan) and $639 in
34
respect of a death benefit under the Teledyne Technologies Incorporated
Executive Deferred Compensation Plan.
16. Includes $1,000 in company contributions pursuant to the Teledyne
Technologies Incorporated 401(k) Plan, $1,200 in respect of the employer
matching contribution under The Stock Advantage Plan (Employer Stock
Purchase Plan) and $846 in respect of a death benefit under the Teledyne
Technologies Incorporated Executive Deferred Compensation Plan.
17. Includes company contributions pursuant to the retirement portion of the ATI
Retirement Savings Plan of $10,400 and company contributions to the ATI
Benefit Restoration Plan in the amount of $2,937.
OPTION GRANTS IN LAST FISCAL YEAR
Shown below is information on grants to the named executives of options to
purchase TDY Common Stock pursuant to the 1999 Incentive Plan during the year
ended December 31, 2001. These grants are reflected in the Summary Compensation
Table.
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
--------------------------------------------------------- RATES OF STOCK PRICE
% OF TOTAL APPRECIATION FOR
NUMBER OF OPTIONS OPTION TERM(1)
SECURITIES GRANTED TO EXERCISE OR ---------------------
UNDERLYING EMPLOYEES IN BASE PRICE EXPIRATION 5% 10%
NAME OPTIONS GRANTED FISCAL YEAR ($/SHARE) DATE $ $
---- --------------- ------------ ----------- ---------- --------- ---------
Robert Mehrabian............ 60,000 8.3 $19.56 2/20/2011 1,331,471 2,463,816
Robert J. Naglieri.......... 20,000 2.8 $19.56 2/20/2011 443,824 821,272
John T. Kuelbs.............. 30,000 4.2 $19.56 2/20/2011 665,735 1,231,908
James M. Link............... 15,000 2.1 $13.00 7/23/2011 172,584 360,730
Dale A. Schnittjer.......... 12,000 1.7 $19.56 2/20/2011 266,294 492,763
-------------------------
1. No gain to the optionee is possible without stock price appreciation, which
will benefit all stockholders commensurately. The assumed "potential
realizable values" are mathematically derived from certain prescribed rates
of stock price appreciation. The actual value of these option grants depends
on the future performance of TDY Common Stock and overall stock market
condition. The values reflected in this table may not be realized.
35
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
As shown in the table below, no options were exercised by the named
executives during 2001.
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED ON VALUE FISCAL YEAR END(#) FISCAL YEAR END($)(2)
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- ----------- ------------------------- -------------------------
Robert Mehrabian(1)....... 0 0 294,292/200,000 1,795,655/1,019,400
Robert L. Naglieri........ 0 0 6,667/33,333 0/0
John T. Kuelbs............ 0 0 27,667/92,333 202,357/457,143
James M. Link............. 0 0 0/15,000 0/51,540
Dale A. Schnittjer(1)..... 0 0 40,929/18,666 175,506/45,067
-------------------------
1. Includes options to purchase shares of TDY Common Stock converted from
options to purchase ATI common stock in connection with the spin-off under
the Employee Benefits Agreement, which included options granted to Dr.
Mehrabian under ATI's Non-Employee Director Stock Compensation Plan with
respect to his service as a non-employee director of ATI.
2. The "value of unexercised in-the-money options" is calculated by subtracting
the exercise price per share from $16.43, which was the average of the high
and low sale prices of a share of TDY Common Stock on the New York Stock
Exchange on December 31, 2001. The "*" denotes that the relevant options were
"out-of-the-money" at December 31, 2001, meaning the exercise price per share
was greater than $16.43.
36
ATI PERFORMANCE SHARE PROGRAM AWARDS
The following table sets forth information about awards for the three-year
award period made in 1998 under the ATI Performance Share Program, which, as a
result of the spin-off, and in accordance with the Employee Benefits Agreement,
was terminated and the award period shortened to cover the two-year period of
January 1, 1998 through December 31, 1999. The amounts included in the Payouts
columns represent the payment of TDY Common Stock and cash to the applicable
named executives, the executive group and the non-executive group in 2000, 2001
and 2002. No more amounts remain to be issued or paid under the ATI PSP.
PAYOUTS UNDER
NUMBER OF NON-STOCK PRICE-BASED PLANS
SHARES, PERFORMANCE --------------------------------------------
UNITS OR OR OTHER PERIOD 2000 2001 2002
OTHER UNTIL MATURATION PAYOUT PAYOUT PAYOUT
NAME RIGHTS(#) OR PAYOUT ($ OR #) ($ OR #) ($ OR #)
---- --------- --------------------------- ------------ ------------ ------------
Robert Mehrabian..... * 1998 - 1999 award period 7,646 shs. 7,646 shs. 7,645 shs.
(2000 - 2002 payout period) $ 36,967 $ 36,966 $ 36,966
Dale A. Schnittjer... * 1998 - 1999 award period 1,807 shs. 1,806 shs. 1,806 shs.
(2000 - 2002 payout period) $ 8,733 $ 8,733 $ 8,732
Executive Group...... * 1998 - 1999 award period 9,453 shs. 9,452 shs. 9,451 shs.
(2 persons) (2000 - 2002 payout period) $ 45,700 $ 45,699 $ 45,698
Non-Executive Group.. * 1998 - 1999 award period 32,258 shs. 25,755 shs. 24,094 shs.
(17, 15 and 14 (2000 - 2002 payout period) $ 166,469 $ 148,389 $ 140,751
persons in 2000, 2001
and 2002,
respectively)
-------------------------
* The amount of the award was based on base salary at the beginning of the award
period. Two-thirds of the award was paid in TDY Common Stock, with the number
of shares based on a price of $9.67. One-third of the award was paid in cash.
37
TDY PERFORMANCE SHARE PLAN AWARDS
The following table sets forth estimated future payouts in the 2003 to 2005
payout period of TDY Common Stock and cash to the named executive under the
Performance Share Plan. The amounts included in the Estimated Future Payout
columns represent the potential payments of Common Stock and cash depending on
the level of achievement (i.e., threshold, target or maximum) of the performance
goals for the three-year (2000 - 2002) award period. The participants will not
receive any payment of Common Stock or cash if TDY and/or the designated
business unit do not achieve the threshold level of performance objectives
during the award period.
NUMBER OF ESTIMATED FUTURE PAYOUTS UNDER
SHARES, PERFORMANCE NON-STOCK PRICE-BASED PLANS
UNITS OR OR OTHER PERIOD ----------------------------------------------
OTHER UNTIL MATURATION THRESHOLD TARGET MAXIMUM
NAME RIGHTS(#) OR PAYOUT ($ OR #) ($ OR #) ($ OR #)
---- --------- --------------------------- ------------ ------------- -------------
Robert Mehrabian..... * 2000 - 2002 award period 12,940 shs. 51,760 shs. 103,520 shs.
(2003 - 2005 payout period) $ 62,500 $ 250,000 $ 500,000
Robert J. Naglieri... * 2000 - 2002 award period 4,852 shs. 19,410 shs. 38,820 shs.
(2003 - 2005 payout period) $ 23,438 $ 93,750 $ 187,500
John T. Kuelbs....... * 2000 - 2002 award period 5,931 shs. 23,723 shs. 47,447 shs.
(2003 - 2005 payout period) $ 28,646 $ 114,583 $ 229,167
James M. Link........ * 2000 - 2002 award period 1,928 shs. 7,713 shs. 15,425 shs.
(2003 - 2005 payout period) $ 9,313 $ 37,252 $ 74,504
Dale A. Schnittjer... * 2000 - 2002 award period 2,847 shs. 11,387 shs. 22,774 shs.
(2003 - 2005 payout period) $ 13,750 $ 55,000 $ 110,000
Executive Group...... * 2000 - 2002 award period 28,498 shs. 113,993 shs. 227,986 shs.
(5 persons) (2003 - 2005 payout period) $ 137,647 $ 550,585 $ 1,101,171
Non-Executive
Group.............. * 2000 - 2002 award period 38,170 shs. 152,679 shs. 305,359 shs.
(21 persons) (2003 - 2005 payout period) $ 184,360 $ 737,441 $ 1,474,883
-------------------------
* The amount of the award is based on the base salary at the beginning of the
award period. Two-thirds award is to be paid in TDY Common Stock, with the
number of shares based on the average of the high and low sale prices of a
share of Common Stock on the New York Stock Exchange on the date the award was
approved (July 25, 2000). One-third of the award is paid in cash. The amounts
of Messrs. Naglieri and Link have been adjusted to reflect their respective
joining the Company in October 2000 and July 2001, partway into the award
period.
TDY RESTRICTED STOCK AWARDS
There were no shares of restricted stock awarded under our Restricted Stock
Award Program in 2001. For information with respect to awards made in July 2000
and January 2002, see "1999 Incentive Plan -- As Amended by 2002 Incentive
Plan -- Restricted Stock Award Program" under "Item 2 on Proxy Card -- Approval
of 2002 Stock Incentive Plan."
38
PENSION PLAN
In connection with the spin-off, we adopted the Teledyne Technologies
Incorporated Pension Plan on terms substantially similar to the parts of the ATI
Pension Plan applicable to all of our employees, both active and inactive at our
operations which perform government contract work, and for our active employees
at our operations which do not perform government contract work. The annual
benefits payable under these parts of the pension plan to participating salaried
employees retiring at or after age 65 is calculated under a formula which takes
into account the participant's compensation and years of service. The Internal
Revenue Code limits the amounts payable to participants under a qualified
pension plan. We have also adopted a Benefit Restoration Plan, which is designed
to restore benefits which would be payable under the pension plan provisions but
for the limits imposed by the Internal Revenue Code, to the levels calculated
pursuant to the formulas contained in the pension plan provisions.
The following table illustrates the approximate annual pension that may
become payable to a Teledyne Technologies employee in the higher salary
classifications under our regular and supplemental pension plans.
ESTIMATED ANNUAL PENSIONS(1)
AVERAGE ANNUAL PAY IN HIGHEST YEARS OF SERVICE
60 MONTHS OF LAST 120 --------------------------------------------------------
MONTHS OF EMPLOYMENT(2) 5 10 15 20 30(3)
----------------------------- -------- -------- -------- -------- --------
$ 200,000....... 15,291 30,581 45,872 61,162 91,744
300,000....... 23,541 47,081 70,622 94,162 141,244
400,000....... 31,791 63,581 95,372 127,162 190,744
500,000....... 40,041 80,081 120,122 160,162 240,244
600,000....... 48,291 96,581 144,872 193,162 289,744
700,000....... 56,541 113,081 169,622 226,162 339,244
800,000....... 64,791 129,581 194,372 259,162 388,744
1,000,000....... 81,291 162,581 243,872 325,162 487,744
1,200,000....... 97,791 195,581 293,372 391,162 586,744
1,400,000....... 114,291 228,581 342,872 457,162 685,744
1,600,000....... 130,791 261,581 392,372 523,162 784,744
1,800,000....... 147,291 294,581 441,872 589,162 883,744
-------------------------
1. The estimated amounts assume retirement at age 65 (normal retirement age)
with a straight-life annuity without reduction for a survivor annuity or for
optional benefits. They are not subject to reduction for Social Security
benefits.
2. For the period through December 31, 1994, for TDY employees who are in the
higher salary classifications, compensation for the purposes of the plan was
limited to an individual's base salary. Thereafter, plan compensation for
those employees includes base salary and up to five most recent annual
incentive payments received on and after January 1, 1995.
3. The maximum amount of service credited under the pension provisions
applicable to our employees is 30 years of credited service, with some
exceptions.
39
EMPLOYMENT/CHANGE IN CONTROL AGREEMENTS
The Company has entered into an Amended and Restated Employment Agreement
with Dr. Mehrabian, which provides that the Company shall employ him as the
Chairman, President and Chief Executive Officer. The agreement will terminate on
December 31 of each year, but will be extended annually unless either party
gives the other written notice prior to October 31 that it will not be extended.
Dr. Mehrabian has a base salary of $565,000 for 2002. The agreement provides
that Dr. Mehrabian is entitled to participate in Teledyne Technologies' annual
incentive bonus plan and other executive compensation and benefit programs. The
agreement provides Dr. Mehrabian with a non-qualified pension arrangement, under
which the Company will pay Dr. Mehrabian following his retirement, as payments
supplemental to any accrued pension under our qualified pension plan, an amount
equal to 50 percent of his base compensation as in effect at retirement. The
number of years for which such annual amount shall be paid will be equal to the
number of years of his service to TDY (including service to ATI), but not more
than 10 years.
The Company has Change in Control Severance Agreements with Dr. Mehrabian,
Messrs. Naglieri, Kuelbs, Link and Schnittjer and eight other current key
employees. The agreements have a three-year, automatically renewing term. Under
the agreements, the executive is entitled to severance benefits if (1) there is
a change in control of the Company and (2) within three months before or 24
months after the change in control, either the Company terminates the
executive's employment for reasons other than for cause or the executive
terminates the employment for good reason. "Severance benefits" consist of:
- A cash payment equal to three times (in the case of Dr. Mehrabian,
Messrs. Naglieri, Kuelbs and Link and one other executive) or two times
(in the case of Mr. Schnittjer and seven other executives) the sum of (i)
the executive's highest annual base salary within the year preceding the
change in control and (ii) the Annual Incentive Plan ("AIP") bonus target
for the year in which the change in control occurs or the year
immediately preceding the change in control, whichever is higher.
- A cash payment for the current AIP bonus based on the fraction of the
year worked times the AIP target objectives at 120 percent (with payment
of the prior year bonus if not yet paid).
- Payment in cash for unpaid Performance Share Plan awards, assuming
applicable goals are met at 120 percent of performance.
- Continued equivalent health and welfare (e.g., medical, dental, vision,
life insurance and disability) benefits for a period of 36 months after
termination (with the executive bearing any portion of the cost the
executive bore prior to the change in control); provided, however, such
benefits would be discontinued to the extent the executive receives
similar benefits from a subsequent employer.
- Immediate vesting of all stock options, with options being exercisable
for the full remaining term.
- Removal of restrictions on restricted stock issued by the Company under
any Stock Acquisition and Retention Program or any replacement plans
(i.e. the Restricted Stock Award Program).
- Full vesting under the Company's pension plans (within legal parameters).
- Up to $25,000 reimbursement for actual professional outplacement
services.
40
CERTAIN TRANSACTIONS
SPIN-OFF AGREEMENTS
We entered into several agreements with ATI in connection with the spin-off
under which we have continuing obligations, some of which are described below
and elsewhere in this Proxy Statement. These agreements are being described
because six of our 10 directors are also directors of ATI.
SEPARATION AND DISTRIBUTION AGREEMENT. The Separation and Distribution
Agreement provided for the principal corporate transactions required to effect
the separation of our businesses from ATI, the spin-off and certain other
matters governing the relationship among us following the spin-off. The
agreement required that we initiate a public offering of our Common Stock within
eight months following the spin-off and complete the public offering within one
year following the spin-off. While we successfully and timely completed our
required public offering in the third quarter of 2000, we must continue to
satisfy certain requirements. For example, until the second anniversary of the
public offering, we would need ATI's consent to make stock repurchases. The
requirement that at least a majority of our directors be members of the Board of
Directors of ATI expires at this 2002 Annual Meeting.
EMPLOYEE BENEFITS AGREEMENT. The Employee Benefit Agreement contains
various agreements between ATI and us concerning employees, pension and employee
benefit plans and other compensation arrangements for current and former
employees of our businesses.
Under the terms of the ATI Stock Acquisition and Retention Program, Dr.
Robert Mehrabian had delivered promissory notes, payable to ATI, as payment for
the purchase price of ATI common stock purchased under the program. Under the
Employee Benefits Agreement, notwithstanding the conversion of the restricted
ATI shares into restricted TDY Common Stock, the loans evidenced by the
promissory notes remain payable to ATI. As of December 30, 2001, Dr. Mehrabian
was indebted to ATI under this program in the amount of $164,501.80.
TAX SHARING AND INDEMNIFICATION AGREEMENT. The Tax Sharing and
Indemnification Agreement allocates certain federal, state, local and foreign
tax responsibilities and liabilities between ATI and us. This agreement provides
that we will indemnify ATI and its directors, officers, employees, agents and
representatives for any taxes imposed on, or other amounts paid by, them, or
ATI's stockholders, if we take actions or fail to take actions that result in
the spin-off not qualifying as a tax-free distribution.
TRADEMARK LICENSE AGREEMENT. Pursuant to the Trademark License Agreement,
an affiliate of ATI granted us an exclusive license to use the "Teledyne" name
and related logos, symbols and marks in connection with our operations. The
annual fee is $100,000 for this license and on November 24, 2004, we have an
option to purchase all rights and interests in the Teledyne marks for $412,000.
OTHER RELATIONSHIPS
KIRKPATRICK & LOCKHART LLP. We retained the law firm of Kirkpatrick &
Lockhart LLP to perform services for the Company during 2001, and expect
additional services to continue in 2002. Charles J. Queenan, Jr., a member of
the Company's Board of Directors,
41
is Senior Counsel to that law firm. See "Compensation Committee Interlocks and
Insider Participation."
MELLON BANK. Dr. Mehrabian is a director of Mellon Financial Corporation.
Mr. Cahouet had served as Chairman, President and Chief Executive Officer of
Mellon Financial Corporation and its subsidiary Mellon Bank, N.A., having
retired on December 31, 1998. Mr. Cahouet ceased being a director of Mellon
Financial Corporation on April 18, 2000. We maintain various arms-length
relationships with Mellon Bank, N.A. and its affiliate Mellon Investor Services
LLC. Mellon Bank, N.A. is one of nine lenders under our $200 million credit
facility, having committed to lend up to $33,750,000 under the facility. It also
provides cash management services and an uncommitted $10 million line of credit.
Mellon Bank, N.A. also serves as trustee under the Teledyne Technologies
Incorporated Pension Plan. Mellon Investor Services LLC serves as our transfer
agent and registrar, as well as the agent under TDY's stockholders rights plan.
Notwithstanding these relationships, our Board of Directors has determined that
Mr. Cahouet is "independent," within the meaning of the rules of the New York
Stock Exchange, and able to serve on the Audit Committee of the Board of
Directors.
See also "Stock Ownership Information -- Five Percent Owners of Common
Stock" for information in regard to a Schedule 13G filed by Mellon Financial
Corporation on January 22, 2002.
KORN/FERRY INTERNATIONAL. Korn/Ferry International provided executive and
management recruitment services for TDY and its subsidiaries in 2001 and
currently provides such services. Mr. Cahouet is a director of Korn/Ferry
International, and his son is member of its management.
42
CUMULATIVE TOTAL STOCKHOLDER RETURN
The graph set forth below shows the cumulative total stockholder return
(i.e., price change plus reinvestment of dividends) on the Common Stock from
November 30, 1999, the first day of "regular way" trading in the Common Stock
following the spin-off through December 31, 2001, as compared to the Standard &
Poor's 500 Composite Index, the Standard & Poor's SmallCap 600 Index and the Dow
Jones Aerospace & Defense Index. The graph assumes that $100 was invested on
November 30, 1999.
In accordance with the rules of the Securities and Exchange Commission,
this presentation is not incorporated by reference into any of the Company's
registration statements under the Securities Act of 1933.
[PERFORMANCE GRAPH]
DOW JONES AEROSPACE
TELEDYNE TECHNOLOGIES S&P 500 S&P SMALL CAP 600 & DEFENSE
--------------------- ------- ----------------- -------------------
11/30/99 100 100 100 100
12/31/99 102 104 108 103
12/31/00 255 95 120 143
12/31/01 176 84 128 117
43
OTHER INFORMATION
ANNUAL REPORT ON FORM 10-K
Copies of the Company's Annual Report on Form 10-K, without exhibits, can
be obtained without charge from the Senior Vice President, General Counsel and
Secretary, at Teledyne Technologies Incorporated, 12333 West Olympic Boulevard,
Los Angeles, CA 90064, or telephone (310) 893-1602.
2003 ANNUAL MEETING AND STOCKHOLDER PROPOSALS
Under Rule 14a-8 of the Securities and Exchange Commission, proposals of
stockholders intended to be presented at the 2003 Annual Meeting of Stockholders
must be received no later than November 12, 2002 for inclusion in the proxy
statement and proxy card for that meeting. In addition, the Company's Restated
Certificate of Incorporation provides that in order for nominations or other
business to be properly brought before an Annual Meeting by a stockholder, the
stockholder must give timely notice thereof in writing to the Corporate
Secretary. To be timely, a stockholder's notice must be delivered to the
Secretary not less than 75 days and not more than 90 days prior to the first
anniversary of the preceding year's Annual Meeting which, in the case of the
2003 Annual Meeting of Stockholders, would be no earlier than January 24, 2003
and no later than February 8, 2003. If, however, the date of the Annual Meeting
is advanced by more than 30 days or delayed by more than 60 days from such
anniversary date, to be timely, notice by the stockholder must be so delivered
not earlier than the 90th day prior to such Annual Meeting and not later than
the later of the 60th day prior to such Annual Meeting or the 10th day following
the day on which public announcement of the date of such meeting is first made.
The Company's Restated Certificate of Incorporation also requires that such
notice contain certain additional information. Copies of the Restated
Certificate of Incorporation can be obtained without charge from the Senior Vice
President, General Counsel and Secretary.
44
PROXY SOLICITATION
The Company pays the cost of preparing, assembling and mailing this
proxy-soliciting material. We will reimburse banks, brokers and other nominee
holders for reasonable expenses they incur in sending these proxy materials to
our beneficial stockholders whose stock is registered in the nominee's name.
The Company has engaged Mellon Investor Services LLC to help solicit
proxies from brokers, banks and other nominee holders of the Common Stock at a
cost of $10,000, plus expenses. Our employees may also solicit proxies for no
additional compensation.
By Order of the Board of Directors,
/s/ JOHN T. KUELBS
John T. Kuelbs
Senior Vice President, General Counsel
and Secretary
March 18, 2002
45
ANNEX A
AUDIT COMMITTEE CHARTER
(AS AMENDED AND RESTATED ON JANUARY 22, 2002)
The Board of Directors (the "Board") of Teledyne Technologies Incorporated
(the "Corporation") shall appoint the Audit Committee (the "Audit Committee")
which should be constituted and have the responsibility and authority as
described herein.
Composition
The Audit Committee shall meet the size, independence and experience
requirements of the New York Stock Exchange, as may be in effect from time to
time.
Responsibility
The Audit Committee's primary responsibility shall be to assist the Board
in monitoring the integrity of the financial statements of the Corporation and
the independence of the Corporation's external auditors.
In carrying out its responsibility, the Audit Committee shall undertake the
following activities:
1. Recommend to the Board, in advance of the annual meeting of the
stockholders, the appointment of the independent auditor to audit the
books, records and accounts of the Corporation. Such independent auditor is
ultimately accountable to the Board and the Audit Committee, as
representatives of the stockholders.
2. Evaluate the performance of the independent auditor and, if so
determined by the Audit Committee, recommend that the Board replace the
independent auditor.
3. Approve the fees to be paid to the independent auditor.
4. Receive written periodic reports from the independent auditor
delineating all relationships between the independent auditor and the
Corporation. This report shall be consistent with Independence Standards
Board Standard No. 1 regarding the auditor's independence. The Audit
Committee shall actively engage in dialogue with the independent auditor
with respect to any disclosed relationships or services that may impact the
objectivity and independence of the auditor, and if determined by the Audit
Committee, recommend that the Board take appropriate action to insure the
independence of the auditor.
5. Meet with the independent auditor prior to the audit to review the
planning of the audit.
6. Review with the independent auditor any problems or difficulties
the auditor may have encountered and any management letter provided by the
auditor and the Corporation's response to that letter. Such review should
include:
(a) Any difficulties encountered in the course of the audit work,
including any restrictions on the scope of activities or access to
required information.
(b) Any changes required in the planned scope of the internal
audit.
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(c) The internal audit department responsibilities, budget and
staffing related to the preparation of the financial statements.
7. Discuss with the independent auditor the matters required to be
discussed by Statement on Auditing Standards No. 61 relating to the conduct
of the audit.
8. Obtain from the independent auditor assurance that Section 10A of
the Securities Exchange Act of 1934 has been adhered to.
9. Review the Corporation's annual audited financial statements and
the report thereon with the independent auditor and management prior to the
publication of such statements.
10. Review with management and the independent auditor the
Corporation's quarterly financial statements prior to the release of
quarterly earnings.
11. Review an analysis prepared by management and the independent
auditor of significant financial reporting issues and judgments made in
connection with the preparation of the Corporation's financial statements.
12. Review major changes to the Corporation's auditing and accounting
principles and practices as suggested by the independent auditor, internal
auditors or management.
13. Meet periodically with management to review the Corporation's
major financial risk exposures and the steps that management has taken to
monitor and control such exposures.
14. Review the significant reports to management prepared by the
internal auditing department and management's responses.
15. Meet at least annually with the Chief Financial Officer, the
senior internal auditing executive and the independent auditor in separate
executive sessions.
16. Meet at least quarterly with the senior internal auditing
executive to discuss internal audits and findings. The senior internal
auditing executive shall directly (and separately) report to each of the
Chair of the Committee and the Chief Executive Officer of the Corporation.
The primary purpose of this dual reporting structure is to assure that
Chair of the Audit Committee has direct access to internal audit-related
information concerning the Corporation. It reflects the directive that the
Corporation's internal auditing department, through the senior internal
auditing executive, has responsibility to assure that important
audit-related issues are brought to the attention of the Chair of the Audit
Committee and ultimately the Audit Committee.
17. Review with the Corporation's General Counsel legal matters that
may have a material impact on the financial statements, the Corporation's
compliance policies and any material reports or inquiries received from
regulators or governmental agencies.
18. Prepare the report required by the rules of the Securities and
Exchange Commission to be included in the Corporation's annual proxy
statement.
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19. Prepare the required written confirmation to the New York Stock
Exchange at least once a year or upon any changes to the composition of the
Audit Committee.
20. Review and reassess the adequacy of this Charter annually and
submit it to the Board for approval.
The Audit Committee shall meet at least four times a year and make a report
to the Board following each meeting. The Audit Committee shall have the
authority to retain special legal, accounting or other advisors as it deems
necessary.
While the Audit Committee has the responsibility and authority set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Corporation's financial statements are complete
and accurate and are in accordance with generally accepted accounting
principles. This is the responsibility of management and the independent
auditor. Nor is it the duty of the Audit Committee to conduct investigations, to
resolve disagreements, if any, between management and the independent auditor or
to assure compliance with laws and regulations.
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ANNEX B
TELEDYNE TECHNOLOGIES INCORPORATED
2002 STOCK INCENTIVE PLAN
ARTICLE I
PURPOSE AND ADOPTION OF THE PLAN
1.01. PURPOSE. The purpose of the Teledyne Technologies Incorporated 2002
Stock Incentive Plan (hereinafter referred to as the "Plan") is to assist in
attracting and retaining highly competent employees, to act as an incentive in
motivating selected officers and other key employees of Teledyne Technologies
Incorporated and its Subsidiaries to achieve long-term corporate objectives and
to enable cash incentive awards to qualify as performance-based for purposes of
the tax deduction limitations under Section 162(m) of the Code.
1.02. ADOPTION AND TERM. The Plan has been approved by the Board of
Directors of Teledyne Technologies Incorporated, to be effective as of February
26, 2002 (the "Effective Date"), but is subject to the approval of the
stockholders of the Company. The Plan shall remain in effect until terminated by
action of the Board; provided, however, that no Incentive Stock Option may be
granted hereunder after the tenth anniversary of the Effective Date and the
provisions of Articles VII, VIII, IX and X with respect to performance-based
awards to "covered employees" under Section 162(m) of the Code shall expire as
of the fifth anniversary of the Effective Date.
ARTICLE II
DEFINITIONS
For the purpose of this Plan, capitalized terms shall have the following
meanings:
2.01. AWARD means any one or a combination of Non-Qualified Stock Options
or Incentive Stock Options described in Article VI, Stock Appreciation Rights
described in Article VI, Restricted Shares described in Article VII, Performance
Awards described in Article VIII, Awards of cash or any other Award made under
the terms of the Plan.
2.02. AWARD AGREEMENT means a written agreement between the Company and a
Participant or a written acknowledgment from the Company to a Participant
specifically setting forth the terms and conditions of an Award granted under
the Plan.
2.03. AWARD PERIOD means, with respect to an Award, the period of time set
forth in the Award Agreement during which specified target performance goals
must be achieved or other conditions set forth in the Award Agreement must be
satisfied.
2.04. BENEFICIARY means an individual, trust or estate who or which, by a
written designation of the Participant filed with the Company or by operation of
law, succeeds to the rights and obligations of the Participant under the Plan
and the Award Agreement upon the Participant's death.
2.05. BOARD means the Board of Directors of the Company.
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2.06. CHANGE IN CONTROL means, and shall be deemed to have occurred upon
the occurrence of, any one of the following events:
(a) The acquisition in one or more transactions, other than from the
Company, by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act) of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of a number
of Company Voting Securities in excess of 25% of the Company Voting
Securities unless such acquisition has been approved by the Board;
(b) Any election has occurred of persons to the Board that causes
two-thirds of the Board to consist of persons other than (i) persons who
were members of the Board on the Effective Date and (ii) persons who were
nominated for elections as members of the Board at a time when two-thirds
of the Board consisted of persons who were members of the Board on the
Effective Date, provided, however, that any person nominated for election
by a Board at least two-thirds of whom constituted persons described in
clauses (i) and/or (ii) or by persons who were themselves nominated by such
Board shall, for this purpose, be deemed to have been nominated by a Board
composed of persons described in clause (i);
(c) Approval by the stockholders of the Company of a reorganization,
merger or consolidation, unless, following such reorganization, merger or
consolidation, all or substantially all of the individuals and entities who
were the respective beneficial owners of the Outstanding Common Stock and
Company Voting Securities immediately prior to such reorganization, merger
or consolidation, following such reorganization, merger or consolidation
beneficially own, directly or indirectly, more than seventy five (75%) of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors or trustees, as the case may be, of
the entity resulting from such reorganization, merger or consolidation in
substantially the same proportion as their ownership of the Outstanding
Common Stock and Company Voting Securities immediately prior to such
reorganization, merger or consolidation, as the case may be; or
(d) Approval by the stockholders of the Company of (i) a complete
liquidation or dissolution of the Company or (ii) a sale or other
disposition of all or substantially all the assets of the Company.
2.07. CODE means the Internal Revenue Code of 1986, as amended. References
to a section of the Code shall include that section and any comparable section
or sections of any future legislation that amends, supplements or supersedes
said section.
2.08. COMMITTEE means the Committee defined in Section 3.01.
2.09. COMPANY means Teledyne Technologies Incorporated, a Delaware
corporation, and its successors.
2.10. COMMON STOCK means Common Stock of the Company, par value $0.01 per
share.
2.11. COMPANY VOTING SECURITIES means the combined voting power of all
outstanding voting securities of the Company entitled to vote generally in the
election of directors to the Board.
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2.12. DATE OF GRANT means the date designated by the Committee as the date
as of which it grants an Award, which shall not be earlier than the date on
which the Committee approves the granting of such Award.
2.13. EXCHANGE ACT means the Securities Exchange Act of 1934, as amended.
2.14. EXERCISE PRICE means, with respect to a Stock Appreciation Right, the
amount established by the Committee in the Award Agreement which is to be
subtracted from the Fair Market Value on the date of exercise in order to
determine the amount of the payment to be made to the Participant, as further
described in Section 6.02(b).
2.15. FAIR MARKET VALUE means, on any date, the average of the high and low
quoted sales prices of a share of Common Stock, as reported on the Composite
Tape for New York Stock Exchange Listed Companies on such date or, if there were
no sales on such date, on the last date preceding such date on which a sale was
reported.
2.16. INCENTIVE STOCK OPTION means a stock option within the meaning of
Section 422 of the Code.
2.17. MERGER means any merger, reorganization, consolidation, exchange,
transfer of assets or other transaction having similar effect involving the
Company.
2.18. NON-QUALIFIED STOCK OPTION means a stock option which is not an
Incentive Stock Option.
2.19. OPTIONS means all Non-Qualified Stock Options and Incentive Stock
Options granted at any time under the Plan.
2.20. OUTSTANDING COMMON STOCK means, at any time, the issued and
outstanding shares of Common Stock.
2.21. PARTICIPANT means a person designated to receive an Award under the
Plan in accordance with Section 5.01.
2.22. PERFORMANCE AWARDS means Awards granted in accordance with Article
VIII.
2.23. PERFORMANCE GOALS means operating income, operating profit (earnings
from continuing operations before interest and taxes), earnings per share,
return on investment or working capital, return on stockholders' equity,
economic value added (the amount, if any, by which net operating profit after
tax exceeds a reference cost of capital), reductions in inventory, inventory
turns and on-time delivery performance, any one of which may be measured with
respect to the Company or any one or more of its Subsidiaries and divisions and
either in absolute terms or as compared to another company or companies, and
quantifiable, objective measures of individual performance relevant to the
particular individual's job responsibilities.
2.24. PLAN means the Teledyne Technologies Incorporated 2002 Stock
Incentive Plan as described herein, as the same may be amended from time to
time.
2.25. PURCHASE PRICE, with respect to Options, shall have the meaning set
forth in Section 6.01(b).
2.26. RESTORATION OPTION means a Non-Qualified Stock Option granted
pursuant to Section 6.01(f).
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2.27. RESTRICTED SHARES means Common Stock subject to restrictions imposed
in connection with Awards granted under Article VII.
2.28. RETIREMENT means early or normal retirement under a pension plan or
arrangement of the Company or one of its Subsidiaries in which the Participant
participates.
2.29. RULE 16B-3 means Rule 16b-3 promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act, as the same may be
amended from time to time, and any successor rule.
2.30. STOCK APPRECIATION RIGHTS means Awards granted in accordance with
Article VI.
2.31. SUBSIDIARY means a subsidiary of the Company within the meaning of
Section 424(f) of the Code.
2.32. TERMINATION OF EMPLOYMENT means the voluntary or involuntary
termination of a Participant's employment with the Company or a Subsidiary for
any reason, including death, disability, retirement or as the result of the
divestiture of the Participant's employer or any similar transaction in which
the Participant's employer ceases to be the Company or one of its Subsidiaries.
Whether entering military or other government service shall constitute
Termination of Employment, or whether a Termination of Employment shall occur as
a result of disability, shall be determined in each case by the Committee in its
sole discretion.
ARTICLE III
ADMINISTRATION
3.01. COMMITTEE. The Plan shall be administered by a committee of the Board
("Committee") comprised of at least two persons. The Committee shall have
exclusive and final authority in each determination, interpretation or other
action affecting the Plan and its Participants. The Committee shall have the
sole discretionary authority to interpret the Plan, to establish and modify
administrative rules for the Plan, to impose such conditions and restrictions on
Awards as it determines appropriate, to cancel Awards (including those made
pursuant to other plans of the Company) and to substitute new Options for
previously awarded Options which, at the time of such substitution, have an
exercise price in excess of the Fair Market Value of the underlying Common Stock
(including options granted under other incentive compensation programs of the
Company) with the consent of the recipient, and to take such steps in connection
with the Plan and Awards granted hereunder as it may deem necessary or
advisable; provided, however, that actions of the Committee shall be subject to
stockholder approval where such approval is required under the Code or under any
applicable law or rule of any stock exchange which lists Common Stock or Company
Voting Securities; provided, further, that the Committee shall not cause or
otherwise provide for the repricing of any Award unless such repricing is
subject to stockholder approval. In addition, the Committee shall not have or
exercise any discretion that would disqualify amounts payable under Article X as
performance-based compensation for purposes of Section 162(m) of the Code. The
Committee may delegate such of its powers and authority under the Plan as it
deems appropriate to a subcommittee of the Committee and/or designated officers
or employees of the Company. In addition, the full Board may exercise any of the
powers and authority of the Committee under the
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Plan. In the event of such delegation of authority or exercise of authority by
the Board, references in the Plan to the Committee shall be deemed to refer, as
appropriate, to the delegate of the Committee or the Board. Actions taken by the
Committee or any subcommittee thereof, and any delegation by the Committee to
designated officers or employees, under this Section 3.01 shall comply with
Section 16(b) of the Exchange Act, the performance-based provisions of Section
162(m) of the Code, and the regulations promulgated under each of such statutory
provisions, or the respective successors to such statutory provisions or
regulations, as in effect from time to time, to the extent applicable.
ARTICLE IV
SHARES
4.01. NUMBER OF SHARES ISSUABLE. The total number of shares authorized to
be issued under the Plan shall be 2,400,000 shares of Common Stock. No more than
1,000,000 shares of Common Stock may be issued under the Plan as Incentive Stock
Options. No more than 360,000 shares of Common Stock may be issued under the
Plan as full value Awards (including, but not limited to, Awards of Restricted
Shares under Article VII). The number of shares available for issuance under the
Plan shall be further subject to adjustment in accordance with Section 11.07.
The shares to be offered under the Plan shall be authorized and unissued Common
Stock or issued Common Stock that has been reacquired by the Company.
4.02. SHARES SUBJECT TO TERMINATED AWARDS. Common Stock covered by any
unexercised portions of terminated Options (including canceled Options) granted
under Article VI, Common Stock forfeited as provided in Section 7.02(a) and
Common Stock subject to any Awards which are otherwise surrendered by the
Participant may again be subject to new Awards under the Plan. Common Stock
subject to Options, or portions thereof, which have been surrendered in
connection with the exercise of Stock Appreciation Rights shall not be available
for subsequent Awards under the Plan, but Common Stock issued in payment of such
Stock Appreciation Rights shall not be charged against the number of shares of
Common Stock available for the grant of Awards hereunder.
ARTICLE V
PARTICIPATION
5.01. ELIGIBLE PARTICIPANTS. Participants in the Plan shall be such
officers and other key employees of the Company and its Subsidiaries, whether or
not members of the Board, as the Committee, in its sole discretion, may
designate from time to time. The Committee's designation of a Participant in any
year shall not require the Committee to designate such person to receive Awards
or grants in any other year. The designation of a Participant to receive awards
or grants under one portion of the Plan does not require the Committee to
include such Participant under other portions of the Plan. The Committee shall
consider such factors as it deems pertinent in selecting Participants and in
determining the type and amount of their respective Awards. Notwithstanding any
provision herein to the contrary, the Committee may grant Awards under the Plan,
other than Incentive Stock Options, to non-employees who, in the judgment of the
Committee, render significant services to the Company or any of its
Subsidiaries, on such terms and
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conditions as the Committee deems appropriate and consistent with the intent of
the Plan. Subject to adjustment in accordance with Section 11.07, in any
calendar year, no Participant shall be granted Awards in respect of more than
360,000 shares of Common Stock (whether through grants of Options or Stock
Appreciation Rights or other grants of Common Stock or rights with respect
thereto) and $1,000,000 in cash.
ARTICLE VI
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
6.01. OPTION AWARDS.
(a) GRANT OF OPTIONS. The Committee may grant, to such Participants as
the Committee may select, Options entitling the Participant to purchase
shares of Common Stock from the Company in such number, at such price, and
on such terms and subject to such conditions, not inconsistent with the
terms of this Plan, as may be established by the Committee. The terms of
any Option granted under this Plan shall be set forth in an Award
Agreement.
(b) PURCHASE PRICE OF OPTIONS. The Purchase Price of each share of
Common Stock which may be purchased upon exercise of any Option granted
under the Plan shall be determined by the Committee and shall not be less
than 85% of the Fair Market Value on the Date of Grant; provided, however,
that the Purchase Price of the Common Stock purchased pursuant to Options
designated by the Committee as Incentive Stock Options shall be equal to or
greater than the Fair Market Value on the Date of Grant as required under
Section 422 of the Code.
(c) DESIGNATION OF OPTIONS. Except as otherwise expressly provided in
the Plan, the Committee may designate, at the time of the grant of each
Option, the Option as an Incentive Stock Option or a Non-Qualified Stock
Option.
(d) INCENTIVE STOCK OPTION SHARE LIMITATION. No Participant may be
granted Incentive Stock Options under the Plan (or any other plans of the
Company and its Subsidiaries) which would result in shares with an
aggregate Fair Market Value (measured on the Date of Grant) of more than
$100,000 first becoming exercisable in any one calendar year.
(e) RIGHTS AS A STOCKHOLDER. A Participant or a transferee of an
Option pursuant to Section 11.04 shall have no rights as a stockholder with
respect to Common Stock covered by an Option until the Participant or
transferee shall have become the holder of record of any such shares, and
no adjustment shall be made for dividends in cash or other property or
distributions or other rights with respect to any such Common Stock for
which the record date is prior to the date on which the Participant or a
transferee of the Option shall have become the holder of record of any such
shares covered by the Option; provided, however, that Participants are
entitled to share adjustments to reflect capital changes under Section
11.07.
(f) RESTORATION OPTIONS UPON THE EXERCISE OF A NON-QUALIFIED STOCK
OPTION. An Award Agreement may, but is not required to, provide that, in
the event that any Participant delivers to the Company, or has withheld
from the shares otherwise issuable upon the exercise of a Non-Qualified
Stock Option, shares of Common Stock in payment of the Purchase Price of
any
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Non-Qualified Stock Option granted hereunder in accordance with Section
6.04, the Committee shall grant a Restoration Option to such Participant.
The grant of a Restoration Option shall be subject to the satisfaction of
such conditions or criteria as the Committee in its sole discretion shall
establish from time to time and set forth in an Award Agreement. A
Restoration Option shall entitle the holder thereof to purchase a number of
shares of Common Stock equal to the number of such shares so delivered or
withheld upon exercise of the original Option and, in the discretion of the
Committee, the number of shares, if any, delivered or withheld to the
Corporation to satisfy any withholding tax liability arising in connection
with the exercise of the original Option. A Restoration Option shall have a
per share Purchase Price of not less than 100% of the per share Fair Market
Value of the Common Stock on the date of grant of such Restoration Option,
a term not longer than the remaining term of the original Option at the
time of exercise thereof, and such other terms and conditions, not
inconsistent with the terms of this Plan, as the Committee in its sole
discretion shall determine.
6.02. STOCK APPRECIATION RIGHTS.
(a) STOCK APPRECIATION RIGHT AWARDS. The Committee is authorized to
grant to any Participant one or more Stock Appreciation Rights. Such Stock
Appreciation Rights may be granted either independent of or in tandem with
Options granted to the same Participant. Stock Appreciation Rights granted
in tandem with Options may be granted simultaneously with, or, in the case
of Non-Qualified Stock Options, subsequent to, the grant to such
Participant of the related Option; provided however, that: (i) any Option
covering any share of Common Stock shall expire and not be exercisable upon
the exercise of any Stock Appreciation Right with respect to the same
share, (ii) any Stock Appreciation Right covering any share of Common Stock
shall expire and not be exercisable upon the exercise of any related Option
with respect to the same share, and (iii) an Option and Stock Appreciation
Right covering the same share of Common Stock may not be exercised
simultaneously. Upon exercise of a Stock Appreciation Right with respect to
a share of Common Stock, the Participant shall be entitled to receive an
amount equal to the excess, if any, of (A) the Fair Market Value of a share
of Common Stock on the date of exercise over (B) the Exercise Price of such
Stock Appreciation Right established in the Award Agreement, which amount
shall be payable as provided in Section 6.02(c).
(b) EXERCISE PRICE. The Exercise Price established under any Stock
Appreciation Right granted under this Plan shall be determined by the
Committee and shall not be less than 85% of the Fair Market Value on the
Date of Grant; provided, further, in the case of Stock Appreciation Rights
granted in tandem with Options, the Exercise Price shall not be less than
the Purchase Price of the related Option. Upon exercise of Stock
Appreciation Rights granted in tandem with options, the number of shares
subject to exercise under any related Option shall automatically be reduced
by the number of shares of Common Stock represented by the Option or
portion thereof which are surrendered as a result of the exercise of such
Stock Appreciation Rights.
(c) PAYMENT OF INCREMENTAL VALUE. Any payment which may become due
from the Company by reason of a Participant's exercise of a Stock
Appreciation Right may be paid to the Participant as determined by the
Committee (i) all in cash, (ii) all in Common Stock, or (iii) in any
combination of cash and Common Stock. In the event that all or a portion of
the payment is made in Common
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Stock, the number of shares of Common Stock delivered in satisfaction of
such payment shall be determined by dividing the amount of such payment or
portion thereof by the Fair Market Value on the Exercise Date. No
fractional share of Common Stock shall be issued to make any payment in
respect of Stock Appreciation Rights; if any fractional share would be
issuable, the combination of cash and Common Stock payable to the
Participant shall be adjusted as directed by the Committee to avoid the
issuance of any fractional share.
6.03. TERMS OF STOCK OPTIONS AND STOCK APPRECIATION RIGHTS.
(a) CONDITIONS ON EXERCISE. An Award Agreement with respect to Options
and/or Stock Appreciation Rights may contain such waiting periods, exercise
dates and restrictions on exercise (including, but not limited to, periodic
installments), not inconsistent with this Plan, as may be determined by the
Committee at the time of grant.
(b) DURATION OF OPTIONS AND STOCK APPRECIATION RIGHTS. Options and
Stock Appreciation Rights shall terminate upon the first to occur of the
following events:
(i) Expiration of the Option or Stock Appreciation Right as
provided in the Award Agreement; or
(ii) Termination of the Award in the event of a Participant's
disability, Retirement, death or other Termination of Employment as
provided in the Award Agreement; or
(iii) Ten years from the Date of Grant; or
(iv) Solely in the case of a Stock Appreciation Right granted in
tandem with an Option, upon the expiration of the related Option.
(c) EXERCISE FOLLOWING A TERMINATION OF EMPLOYMENT. An Award Agreement
shall set forth the extent to which the Participant shall have the right to
exercise an Option following a Termination of Employment. Such provisions
shall be determined in the sole discretion of the Committee, shall be
included in the Award Agreement entered into with each Participant, need
not be uniform among all Options issued pursuant to this Article VI and may
reflect distinctions based on the reasons for termination. Unless otherwise
provided in an Award Agreement, an Option shall terminate and shall no
longer be exercisable pursuant to the following rules:
(i) In the event of a Termination of Employment for any reason
other than the Participant's death, permanent disability (as determined
by the Committee) or Retirement, any vested Options which are not
exercised prior to the date of such termination shall terminate on the
earlier of (A) thirty (30) days after the date of such termination, and
(B) the date that the Option expires under the terms of the applicable
Award Agreement or in accordance with Section 6.03(b);
(ii) In the event of a Termination of Employment by reason of the
Participant's death, the Option shall vest in full (and to the extent it
was not previously exercised) shall terminate on the earlier of (A)
twelve months from the date of the Participant's death, and (B) the date
that the Option expires
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under the terms of the applicable Award Agreement or in accordance with
Section 6.03(b);
(iii) In the event of a Termination of Employment by reason of a
Participant's permanent disability (as determined by the Committee) or
Retirement, an Option that is not vested prior to the date of the
Participant's Termination of Employment shall continue to vest in
accordance with the schedule set forth in the applicable Award Agreement
and the Participant may exercise such unvested Option, upon vesting, and
any vested Option (to the extent it was not previously exercised)
through the date the Option expires under the terms of the applicable
Award Agreement or in accordance with Section 6.03(b).
(iv) To the extent that an Option is not vested prior to the date
of the Participant's Termination of Employment, other than by reason of
the Participant's death, permanent disability (as determined by the
Committee) or Retirement, such unvested Option shall terminate as of the
date of such termination and shall not be exercisable at any time
thereafter.
6.04. EXERCISE PROCEDURES. Each Option and Stock Appreciation Right granted
under the Plan shall be exercised by written notice to the Company which must be
received by the officer or employee of the Company designated in the Award
Agreement on or before the close of business on the expiration date of the
Award. The Purchase Price of shares purchased upon exercise of an Option granted
under the Plan shall be paid in full in cash by the Participant pursuant to the
Award Agreement; provided however, that the Award Agreement may (but shall not
be required to) permit payment to be made by delivery to the Company of either
(a) Common Stock (which may include Restricted Shares or shares otherwise
issuable in connection with the exercise of the Option, subject to such rules as
the Committee deems appropriate) or (b) any combination of cash and Common
Stock, or (c) such other consideration as the Committee deems appropriate and in
compliance with applicable law (including payment in accordance with a cashless
exercise program under which, if so instructed by the Participant, Common Stock
may be issued directly to the Participant's broker or dealer upon receipt of an
irrevocable written notice of exercise from the Participant). In the event that
any Common Stock shall be transferred to the Company to satisfy all or any part
of the Purchase Price, the part of the Purchase Price deemed to have been
satisfied by such transfer of Common Stock shall be equal to the product derived
by multiplying the Fair Market Value as of the date of exercise times the number
of shares of Common Stock transferred to the Company. The Participant may not
transfer to the Company in satisfaction of the Purchase Price any fractional
share of Common Stock. Any part of the Purchase Price paid in cash upon the
exercise of any Option shall be added to the general funds of the Company and
may be used for any proper corporate purpose. Unless the Committee shall
otherwise determine, any Common Stock transferred to the Company as payment of
all or part of the Purchase Price upon the exercise of any Option shall be held
as treasury shares.
6.05. CHANGE IN CONTROL. An Award Agreement may, but is not required to,
provide that, in the event of a Change in Control, all Options outstanding on
the date of such Change in Control, and all Stock Appreciation Rights shall
become immediately and fully exercisable. The provisions of this Section 6.05
shall not be applicable to any Options or Stock Appreciation Rights granted to a
Participant if any Change in Control results from such Participant's beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act) of Common
Stock or Company Voting Securities.
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ARTICLE VII
RESTRICTED SHARES
7.01. RESTRICTED SHARE AWARDS. The Committee may grant to any Participant
an Award of Common Stock in such number of shares, and on such terms, conditions
and restrictions, not inconsistent with the terms of this Plan, and whether
based on performance standards, periods of service, retention by the Participant
of ownership of purchased or designated shares of Common Stock or other
criteria, as the Committee shall establish. With respect to performance-based
Awards of Restricted Shares to "covered employees" (as defined in Section 162(m)
of the Code), performance targets will be limited to specified levels of one or
more of the Performance Goals. The terms of any Restricted Share Award granted
under this Plan shall be set forth in an Award Agreement which shall contain
provisions determined by the Committee and not inconsistent with this Plan.
(a) ISSUANCE OF RESTRICTED SHARES. As soon as practicable after the
Date of Grant of a Restricted Share Award by the Committee, the Company
shall cause to be transferred on the books of the Company, or its agent,
Common Stock, registered on behalf of the Participant, evidencing the
Restricted Shares covered by the Award, but subject to forfeiture to the
Company as of the Date of Grant if an Award Agreement with respect to the
Restricted Shares covered by the Award is not duly executed by the
Participant and timely returned to the Company. All Common Stock covered by
Awards under this Article VII shall be subject to the restrictions, terms
and conditions contained in the Plan and the Award Agreement entered into
by the Participant. Until the lapse or release of all restrictions
applicable to an Award of Restricted Shares, the share certificates
representing such Restricted Shares may be held in custody by the Company,
its designee, or, if the certificates bear a restrictive legend, by the
Participant. Upon the lapse or release of all restrictions with respect to
an Award as described in Section 7.01(d), one or more share certificates,
registered in the name of the Participant, for an appropriate number of
shares as provided in Section 7.01(d), free of any restrictions set forth
in the Plan and the Award Agreement shall be delivered to the Participant.
(b) STOCKHOLDER RIGHTS. Beginning on the Date of Grant of the
Restricted Share Award and subject to execution of the Award Agreement as
provided in Section 7.01(a), the Participant shall become a stockholder of
the Company with respect to all shares subject to the Award Agreement and
shall have all of the rights of a stockholder, including, but not limited
to, the right to vote such shares and the right to receive dividends;
provided, however, that any Common Stock distributed as a dividend or
otherwise with respect to any Restricted Shares as to which the
restrictions have not yet lapsed, shall be subject to the same restrictions
as such Restricted Shares and held or restricted as provided in Section
7.01(a).
(c) RESTRICTION ON TRANSFERABILITY. None of the Restricted Shares may
be assigned or transferred (other than by will or the laws of descent and
distribution, or to an inter vivos trust with respect to which the
Participant is treated as the owner under Sections 671 through 677 of the
Code, except to the extent that Section 16 of the Exchange Act limits a
participant's right to make such transfers), pledged or sold prior to lapse
of the restrictions applicable thereto.
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(d) DELIVERY OF SHARES UPON VESTING. Upon expiration or earlier
termination of the forfeiture period without a forfeiture and the
satisfaction of or release from any other conditions prescribed by the
Committee, or at such earlier time as provided under the provisions of
Section 7.03, the restrictions applicable to the Restricted Shares shall
lapse. As promptly as administratively feasible thereafter, subject to the
requirements of Section 11.05, the Company shall deliver to the Participant
or, in case of the Participant's death, to the Participant's Beneficiary,
one or more share certificates for the appropriate number of shares of
Common Stock, free of all such restrictions, except for any restrictions
that may be imposed by law.
7.02. TERMS OF RESTRICTED SHARES. Subject to Section 7.03, all Restricted
Shares shall be forfeited and returned to the Company and all rights of the
Participant with respect to such Restricted Shares shall terminate unless the
Participant continues in the service of the Company or a Subsidiary as an
employee until the expiration of the forfeiture period for such Restricted
Shares and satisfies any and all other conditions set forth in the Award
Agreement. The Committee shall determine and shall set forth in the applicable
Award Agreement the forfeiture period (which may, but need not, lapse in
installments) and any other terms and conditions applicable with respect to any
Restricted Share Award; provided, however, that the forfeiture period shall not
be less than three (3) years unless forfeiture of the applicable Restricted
Shares is based on failure to meet certain specified Performance Goals or is
otherwise determined to be performance-based.
7.03. CHANGE IN CONTROL. An Award Agreement may, but is not required to,
provide that, in the event of a Change in Control, all restrictions applicable
to the Restricted Share Award shall terminate fully and the Participant shall
immediately have the right to the delivery of share certificate or certificates
for such shares in accordance with Section 7.01(d).
ARTICLE VIII
PERFORMANCE AWARDS
8.01. PERFORMANCE AWARDS.
(a) AWARD PERIODS AND CALCULATIONS OF POTENTIAL INCENTIVE AMOUNTS. The
Committee may grant Performance Awards to Participants. A Performance Award
shall consist of the right to receive a payment (measured by the Fair
Market Value of a specified number of shares of Common Stock, increases in
such Fair Market Value during the Award Period and/or a fixed cash amount)
contingent upon the extent to which certain predetermined performance
targets have been met during an Award Period. Performance Awards may be
made in conjunction with, or in addition to, Restricted Share Awards made
under Article VII. The Award Period shall be two or more fiscal or calendar
years as determined by the Committee. The Committee, in its discretion and
under such terms as it deems appropriate, may permit newly eligible
employees, such as those who are promoted or newly hired, to receive
Performance Awards after an Award Period has commenced.
(b) PERFORMANCE TARGETS. The performance targets may include such
goals related to the performance of the Company or, where relevant, any one
or more of its Subsidiaries or divisions and/or the performance of a
Participant as may be established by the Committee in its discretion. In
the case of Performance Awards to
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"covered employees" (as defined in Section 162(m) of the Code), the targets
will be limited to specified levels of one or more of the Performance
Goals. The performance targets established by the Committee may vary for
different Award Periods and need not be the same for each Participant
receiving a Performance Award in an Award Period. Except to the extent
inconsistent with the performance-based compensation exception under
Section 162(m) of the Code, in the case of Performance Awards granted to
employees to whom such section is applicable, the Committee, in its
discretion, but only under extraordinary circumstances as determined by the
Committee, may change any prior determination of performance targets for
any Award Period at any time prior to the final determination of the Award
when events or transactions occur to cause the performance targets to be an
inappropriate measure of achievement.
(c) EARNING PERFORMANCE AWARDS. The Committee, at or as soon as
practicable after the Date of Grant, shall prescribe a formula to determine
the percentage of the Performance Award to be earned based upon the degree
of attainment of performance targets.
(d) PAYMENT OF EARNED PERFORMANCE AWARDS. Subject to the requirements
of Section 11.05, payments of earned Performance Awards shall be made in
cash or Common Stock, or a combination of cash and Common Stock, in the
discretion of the Committee. The Committee, in its sole discretion, may
define such terms and conditions with respect to the payment of earned
Performance Awards as it may deem desirable.
8.02. TERMINATION OF EMPLOYMENT. Unless otherwise provided under the terms
of an Award Agreement or in Section 8.03, in the case of a Participant's
Termination of Employment prior to the end of an Award Period, the Participant
will not have earned any Performance Awards.
(d) PRO-RATA PAYMENT. The amount of any payment made to a Participant
whose employment is terminated by Retirement, death or disability (under
circumstances described in Subsections (b) and (c)) will be the amount
determined by multiplying the amount of the Performance Award which would
have been earned, determined at the end of the Award Period, had such
employment not been terminated, by a fraction, the numerator of which is
the number of whole months such Participant was employed during the Award
Period, and the denominator of which is the total number of months of the
Award Period. Any such payment made to a Participant whose employment is
terminated prior to the end of an Award Period under this Section 8.02
shall be made at the end of the respective Award Period, unless otherwise
determined by the Committee in its sole discretion. Any partial payment
previously made or credited to a deferred account for the benefit of a
Participant as provided under Section 8.01(d) of the Plan shall be
subtracted from the amount otherwise determined as payable as provided in
this Section.
8.03. CHANGE IN CONTROL. An Award Agreement may, but is not required to,
provide that, in the event of a Change in Control, all Performance Awards for
all Award Periods shall immediately become fully payable to all Participants and
shall be paid to Participants on a pro-rated basis in accordance with the terms
of the applicable Award Agreement.
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ARTICLE IX
OTHER STOCK-BASED AWARDS
9.01. GRANT OF OTHER STOCK-BASED AWARDS. Other stock-based awards,
consisting of stock purchase rights (with or without loans to Participants by
the Company containing such terms as the Committee shall determine), Awards of
cash, Awards of Common Stock, or Awards valued in whole or in part by reference
to, or otherwise based on, Common Stock, may be granted either alone or in
addition to or in conjunction with other Awards under the Plan. Subject to the
provisions of the Plan, the Committee shall have sole and complete authority to
determine the persons to whom and the time or times at which such Awards shall
be made, the number of shares of Common Stock to be granted pursuant to such
Awards, and all other conditions of the Awards. Any such Award shall be
confirmed by an Award Agreement executed by the Committee and the Participant,
which Award Agreement shall contain such provisions as the Committee determines
to be necessary or appropriate to carry out the intent of this Plan with respect
to such Award.
9.02. TERMS OF OTHER STOCK-BASED AWARDS. In addition to the terms and
conditions specified in the Award Agreement, Awards made pursuant to this
Article IX shall be subject to the following:
(a) Any Common Stock subject to Awards made under this Article IX may
not be sold, assigned, transferred, pledged or otherwise encumbered prior
to the date on which the shares are issued, or, if later, the date on which
any applicable restriction, performance or deferral period lapses; and
(b) If specified by the Committee in the Award Agreement, the
recipient of an Award under this Article IX shall be entitled to receive,
currently or on a deferred basis, interest or dividends or dividend
equivalents with respect to the Common Stock or other securities covered by
the Award; and
(c) The Award Agreement with respect to any Award shall contain
provisions dealing with the disposition of such Award in the event of a
Termination of Employment prior to the exercise, realization or payment of
such Award, whether such termination occurs because of Retirement,
disability, death or other reason, with such provisions to take account of
the specific nature and purpose of the Award.
9.03. FOREIGN QUALIFIED AWARDS. Awards under the Plan may be granted to
such employees of the Company and its Subsidiaries who are residing in foreign
jurisdictions as the Committee in its sole discretion may determine from time to
time. The Committee may adopt such supplements to the Plan as may be necessary
or appropriate to comply with the applicable laws of such foreign jurisdictions
and to afford Participants favorable treatment under such laws; provided,
however, that no Award shall be granted under any such supplement with terms or
conditions inconsistent with the provision set forth in the Plan.
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ARTICLE X
SHORT-TERM CASH INCENTIVE AWARDS
10.01. ELIGIBILITY. Executive officers of the Company who are from time to
time determined by the Committee to be "covered employees" for purposes of
Section 162(m) of the Code will be eligible to receive short-term cash incentive
awards under this Article X.
10.02. AWARDS.
(a) PERFORMANCE TARGETS. For each fiscal year of the Company after
fiscal year 1999, the Committee shall establish objective performance
targets based on specified levels of one or more of the Performance Goals.
Such performance targets shall be established by the Committee on a timely
basis to ensure that the targets are considered "preestablished" for
purposes of Section 162(m) of the Code.
(b) AMOUNTS OF AWARDS. In conjunction with the establishment of
performance targets for a fiscal year, the Committee shall adopt an
objective formula (on the basis of percentages of Participants' salaries,
shares in a bonus pool or otherwise) for computing the respective amounts
payable under the Plan to Participants if and to the extent that the
performance targets are attained. Such formula shall comply with the
requirements applicable to performance-based compensation plans under
Section 162(m) of the Code and, to the extent based on percentages of a
bonus pool, such percentages shall not exceed 100% in the aggregate.
(c) PAYMENT OF AWARDS. Awards will be payable to Participants in cash
each year upon prior written certification by the Committee of attainment
of the specified performance targets for the preceding fiscal year.
(d) NEGATIVE DISCRETION. Notwithstanding the attainment by the Company
of the specified performance targets, the Committee shall have the
discretion, which need not be exercised uniformly among the Participants,
to reduce or eliminate the award that would be otherwise paid.
(e) GUIDELINES. The Committee shall adopt from time to time written
policies for its implementation of this Article X. Such guidelines shall
reflect the intention of the Company that all payments hereunder qualify as
performance-based compensation under Section 162(m) of the Code.
(f) NON-EXCLUSIVE ARRANGEMENT. The adoption and operation of this
Article X shall not preclude the Board or the Committee from approving
other short-term incentive compensation arrangements for the benefit of
individuals who are Participants hereunder as the Board or Committee, as
the case may be, deems appropriate and in the best of the Company.
ARTICLE XI
TERMS APPLICABLE GENERALLY TO AWARDS GRANTED UNDER THE PLAN
11.01. PLAN PROVISIONS CONTROL AWARD TERMS. Except as provided in Section
11.16, the terms of the Plan shall govern all Awards granted under the Plan, and
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in no event shall the Committee have the power to grant any Award under the Plan
which is contrary to any of the provisions of the Plan. In the event any
provision of any Award granted under the Plan shall conflict with any term in
the Plan as constituted on the Date of Grant of such Award, the term in the Plan
as constituted on the Date of Grant of such Award shall control. Except as
provided in Section 11.03 and Section 11.07, the terms of any Award granted
under the Plan may not be changed after the Date of Grant of such Award so as to
materially decrease the value of the Award without the express written approval
of the holder.
11.02. AWARD AGREEMENT. No person shall have any rights under any Award
granted under the Plan unless and until the Company and the Participant to whom
such Award shall have been granted shall have executed and delivered an Award
Agreement or received any other Award acknowledgment authorized by the Committee
expressly granting the Award to such person and containing provisions setting
forth the terms of the Award.
11.03. MODIFICATION OF AWARD AFTER GRANT. No Award granted under the Plan
to a Participant may be modified (unless such modification does not materially
decrease the value of the Award) after the Date of Grant except by express
written agreement between the Company and the Participant, provided that any
such change (a) shall not be inconsistent with the terms of the Plan, and (b)
shall be approved by the Committee.
11.04. LIMITATION ON TRANSFER. Except as provided in Section 7.01(c) in the
case of Restricted Shares, a Participant's rights and interest under the Plan
may not be assigned or transferred other than by will or the laws of descent and
distribution, and during the lifetime of a Participant, only the Participant
personally (or the Participant's personal representative) may exercise rights
under the Plan. The Participant's Beneficiary may exercise the Participant's
rights to the extent they are exercisable under the Plan following the death of
the Participant. Notwithstanding the foregoing, to the extent permitted under
Section 16(b) of the Exchange Act with respect to Participants subject to such
Section, the Committee may grant Non-Qualified Stock Options that are
transferable, without payment of consideration, to immediate family members of
the Participant or to trusts or partnerships for such family members, and the
Committee may also amend outstanding Non-Qualified Stock Options to provide for
such transferability.
11.05. TAXES. The Company shall be entitled, if the Committee deems it
necessary or desirable, to withhold (or secure payment from the Participant in
lieu of withholding) the amount of any withholding or other tax required by law
to be withheld or paid by the Company with respect to any amount payable and/or
shares issuable under such Participant's Award, or with respect to any income
recognized upon a disqualifying disposition of shares received pursuant to the
exercise of an Incentive Stock Option, and the Company may defer payment or
issuance of the cash or shares upon exercise or vesting of an Award unless
indemnified to its satisfaction against any liability for any such tax. The
amount of such withholding or tax payment shall be determined by the Committee
in accordance with the terms of the applicable Award Agreement and shall be
payable by the Participant at such time as the Committee determines in
accordance with the following rules:
(a) The Participant shall have the right to elect to meet his or her
withholding requirement (i) by having withheld from such Award at the
appropriate time that number of shares of Common Stock, rounded up to the
next whole share, whose Fair
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Market Value is equal to the amount of withholding taxes due, provided,
that shares of Common Stock may only be withheld up to the value of the
Company's minimum statutory withholding amount (based on the minimum
statutory withholding rates for federal and state tax purposes, including
payroll taxes, as applicable), (ii) by direct payment to the Company in
cash of the amount of any taxes required to be withheld with respect to
such Award or (iii) by a combination of shares and cash.
(b) In the case of Participants who are subject to Section 16 of the
Exchange Act, the Committee may impose such limitations and restrictions as
it deems necessary or appropriate with respect to the delivery or
withholding of shares of Common Stock to meet tax withholding obligations.
11.06. SURRENDER OF AWARDS. Any Award granted under the Plan may be
surrendered to the Company for cancellation on such terms as the Committee and
the holder approve.
11.07. ADJUSTMENTS TO REFLECT CAPITAL CHANGES.
(a) RECAPITALIZATION. The number and kind of shares subject to
outstanding Awards, the Purchase Price or Exercise Price for such shares,
the number and kind of shares available for Awards subsequently granted
under the Plan and the maximum number of shares in respect of which Awards
can be made to any Participant in any calendar year shall be appropriately
adjusted to reflect any stock dividend, stock split, combination or
exchange of shares, merger, consolidation or other change in capitalization
with a similar substantive effect upon the Plan or the Awards granted under
the Plan. The Committee shall have the power and sole discretion to
determine the amount of the adjustment to be made in each case.
(b) MERGER. After any Merger in which the Company is the surviving
corporation, each Participant shall, at no additional cost, be entitled
upon any exercise of all Options or receipt of other Award to receive
(subject to any required action by shareholders), in lieu of the number of
shares of Common Stock receivable or exercisable pursuant to such Award,
the number and class of shares or other securities to which such
Participant would have been entitled pursuant to the terms of the Merger
if, at the time of the Merger, such Participant had been the holder of
record of a number of shares equal to the number of shares receivable or
exercisable pursuant to such Award. Comparable rights shall accrue to each
Participant in the event of successive Mergers of the character described
above. In the event of a Merger in which the Company is not the surviving
corporation, the surviving, continuing, successor, or purchasing
corporation, as the case may be (the "Acquiring Corporation"), shall either
assume the Company's rights and obligations under outstanding Award
Agreements or substitute awards in respect of the Acquiring Corporation's
stock for such outstanding Awards. In the event the Acquiring Corporation
fails to assume or substitute for such outstanding Awards, the Board shall
provide that any unexercisable and/or unvested portion of the outstanding
Awards shall be immediately exercisable and vested as of a date prior to
such Merger, as the Board so determines. The exercise and/or vesting of any
Award that was permissible solely by reason of this Section 11.07(b) shall
be conditioned upon the consummation of the Merger. Any Options which are
neither assumed by the Acquiring Corporation nor exercised as of the date
of the Merger shall terminate effective as of the effective date of the
Merger.
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(c) OPTIONS TO PURCHASE SHARES OR STOCK OF ACQUIRED COMPANIES. After
any Merger in which the Company or a Subsidiary shall be a surviving
corporation, the Committee may grant substituted options under the
provisions of the Plan, pursuant to Section 424 of the Code, replacing old
options granted under a plan of another party to the Merger whose shares or
stock subject to the old options may no longer be issued following the
Merger. The foregoing adjustments and manner of application of the
foregoing provisions shall be determined by the Committee in its sole
discretion. Any such adjustments may provide for the elimination of any
fractional shares which might otherwise become subject to any Options.
11.08. NO RIGHT TO EMPLOYMENT. No employee or other person shall have any
claim of right to be granted an Award under this Plan. Neither the Plan nor any
action taken hereunder shall be construed as giving any employee any right to be
retained in the employ of the Company or any of its Subsidiaries.
11.09. AWARDS NOT INCLUDABLE FOR BENEFIT PURPOSES. Payments received by a
Participant pursuant to the provisions of the Plan shall not be included in the
determination of benefits under any pension, group insurance or other benefit
plan applicable to the Participant which is maintained by the Company or any of
its Subsidiaries, except as may be provided under the terms of such plans or
determined by the Board.
11.10. GOVERNING LAW. All determinations made and actions taken pursuant to
the Plan shall be governed by the laws of the State of Delaware and construed in
accordance therewith.
11.11. NO STRICT CONSTRUCTION. No rule of strict construction shall be
implied against the Company, the Committee, or any other person in the
interpretation of any of the terms of the Plan, any Award granted under the Plan
or any rule or procedure established by the Committee.
11.12. COMPLIANCE WITH RULE 16b-3. It is intended that, unless the
Committee determines otherwise, Awards under the Plan be eligible for exemption
under Rule 16b-3. The Board is authorized to amend the Plan and to make any such
modifications to Award Agreements to comply with Rule 16b-3, as it may be
amended from time to time, and to make any other such amendments or
modifications as it deems necessary or appropriate to better accomplish the
purposes of the Plan in light of any amendments made to Rule 16b-3.
11.13. CAPTIONS. The captions (i.e., all Section headings) used in the Plan
are for convenience only, do not constitute a part of the Plan, and shall not be
deemed to limit, characterize or affect in any way any provisions of the Plan,
and all provisions of the Plan shall be construed as if no captions have been
used in the Plan.
11.14. SEVERABILITY. Whenever possible, each provision in the Plan and
every Award at any time granted under the Plan shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of the Plan or any Award at any time granted under the Plan shall be held to be
prohibited by or invalid under applicable law, then (a) such provision shall be
deemed amended to accomplish the objectives of the provision as originally
written to the fullest extent permitted by law and (b) all other provisions of
the Plan and every other Award at any time granted under the Plan shall remain
in full force and effect.
B-17
11.15. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT. The Board shall have complete power and authority to
amend the Plan at any time; provided, however, that the Board shall not,
without the requisite affirmative approval of stockholders of the Company,
make any amendment (i) increasing the total number of shares which may be
issued or delivered under the Plan, (ii) increasing the total number of
shares which may be covered by Awards to any one Participant, (iii)
changing the minimum option price, (iv) extending the period set forth in
the Plan during which Awards may be granted, or (v) which requires
stockholder approval under the Code or under any other applicable law or
rule of any stock exchange which lists Common Stock or Company Voting
Securities. No termination or amendment of the Plan may, without the
consent of the Participant to whom any Award shall theretofore have been
granted under the Plan, adversely affect the right of such individual under
such Award.
(b) TERMINATION. The Board shall have the right and the power to
terminate the Plan at any time, but in any event, the Plan shall terminate
on February 26, 2012. No Award shall be granted under the Plan after the
termination of the Plan, but the termination of the Plan shall not have any
other effect and any Award outstanding at the time of the termination of
the Plan may be exercised after termination of the Plan at any time prior
to the expiration date of such Award to the same extent such Award would
have been exercisable had the Plan not terminated.
11.16. AMENDMENT OF THE 1999 INCENTIVE PLAN. The Teledyne Technologies
Incorporated 1999 Incentive Plan, as amended through January 26, 2000 (the "1999
Plan"), is hereby amended as provided in this Section 11.16. The amendment of
the 1999 Plan as provided under this Section 11.16 shall be effective as of the
date that this 2002 Stock Incentive Plan is approved by the Company's
stockholders.
(a) EVERGREEN LIMIT. Section 4.01 of the 1999 Plan is amended by
adding the following phrase immediately following the end of the second
sentence of that Section, reading as follows:
provided, however, that in no event shall the aggregate increase in the
number of shares available under the Plan as a result of all increases
due to the preceding sentence exceed 2,500,000 shares of Common Stock.
(b) FULL VALUE AWARD LIMIT. Section 4.01 of the 1999 Plan is amended
by adding a sentence at the end of that Section, reading as follows:
No more than 550,000 shares of Common Stock may be issued under the Plan
as full value Awards (including, but not limited to, Awards of Restricted
Shares under Article VII).
(c) EXERCISE PRICE LIMIT. Section 6.01(b) of the 1999 Plan is amended
in its entirety to read as follows:
(b) PURCHASE PRICE OF OPTIONS. The Purchase Price of each share of
Common Stock which may be purchased upon exercise of any Option granted
under the Plan shall be determined by the Committee and shall not be
less than 85% of the Fair Market Value on the Date of Grant; provided,
however, that the Purchase Price of the Common Stock purchased pursuant
to Options designated by the Committee as Incentive Stock Options shall
be equal to or
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greater than the Fair Market Value on the Date of Grant as required
under Section 422 of the Code.
(d) DURATION OF OPTIONS AND STOCK APPRECIATION RIGHTS. Section
6.03(b)(iii) of the 1999 Plan is amended in its entirety to read as
follows:
(iii) Ten years from the Date of Grant; or
(e) NO OTHER AMENDMENTS. Except as otherwise expressly provided in
this Section 11.16, the provisions of the 1999 Plan shall remain in full
force and effect. Notwithstanding anything in the Plan to the contrary,
this Section 11.16 does not affect, alter or amend Awards heretofore
granted under the 1999 Plan.
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PLEASE MARK [X]
YOUR VOTES AS
INDICATED IN
THIS EXAMPLE
Where a vote is not specified, the proxies will vote the shares represented by
the proxy FOR the election of directors, FOR proposal 2 and FOR proposal 3 and
will vote in accordance with their discretion on such other matters as may
properly come before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS VOTES FOR (1), (2) AND (3).
WITHHOLD
FOR FOR ALL FOR AGAINST ABSTAIN
(1) The election of 3 Class III directors-Nominees:
(2) Approval of 2002 Stock [ ] [ ] [ ]
01 Robert P. Bozzone 02 Frank V. Cahouet [ ] [ ] Incentive Plan
03 Charles J. Queenan, Jr.
Instruction: To withhold for any particular nominee,
write such nominee's name on the line below.
----------------------------------------------------
FOR AGAINST ABSTAIN
(3) Ratification of
Selection of Auditors [ ] [ ] [ ]
WILL
ATTEND
If you plan to attend [ ]
the Annual Meeting,
please mark the
WILL ATTEND box.
YES NO
Comments/Address
Change on other [ ] [ ]
side.
Signature Signature if held jointly Date: , 2002
--------------------- ------------------------------------- --------------
In signing as attorney, executor, administrator, trustee or guardian, please
give full title as such, and, if signing for a corporation, please give your
title. When shares are in the name of more than one person, each should sign the
proxy. PLEASE SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
--------------------------------------------------------------------------------
FOLD AND DETACH HERE AND READ THE REVERSE SIDE
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE IN ONE OF THREE WAYS:
VOTE BY INTERNET: 24 HOURS A DAY, 7 DAYS A WEEK.
Follow the instructions at our Website Address: www.eproxy.com/tdy
OR
VOTE BY TELEPHONE OR PROXY CARD
QUICK *** EASY *** IMMEDIATE
VOTE BY PHONE: FOR U.S. STOCKHOLDERS ONLY, CALL TOLL-FREE 1-800-435-6710.
ON A TOUCH TONE TELEPHONE 24 HOURS A DAY, 7 DAYS A WEEK.
THERE IS NO CHARGE TO YOU FOR THIS CALL. HAVE YOUR PROXY CARD IN
HAND.
- You will be asked to enter a Control Number, which is located in the
box in the lower right hand corner of this form.
OPTION 1: TO VOTE AS THE BOARD OF DIRECTORS RECOMMENDS ON ALL
PROPOSALS: PRESS 1.
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1.
OPTION 2: IF YOU CHOOSE TO VOTE ON EACH PROPOSAL SEPARATELY, PRESS 2.
YOU WILL HEAR THESE INSTRUCTIONS:
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1
Proposal 1, Director Election Proposal: TO VOTE FOR ALL NOMINEES,
PRESS 1, TO WITHHOLD FOR
ALL NOMINEES, PRESS 2.
TO WITHHOLD FOR AN INDIVIDUAL
NOMINEE, PRESS 3 AND LISTEN
TO THE INSTRUCTIONS.
Proposal 2, Incentive Plan Proposal: TO VOTE FOR, PRESS 1; AGAINST,
PRESS 2; ABSTAIN, PRESS 3
Proposal 3, Auditor Proposal: To vote FOR, Press 1; AGAINST,
Press 2; ABSTAIN, Press 3
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1
PRESS 1 to consent to view future Annual Reports and Proxy Materials
for this account via the Internet.
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1
OR
VOTE BY PROXY CARD: Mark, sign and date your proxy card and return it promptly
in the enclosed envelope.
NOTE: If you voted by Internet or telephone, THERE IS NO NEED TO MAIL BACK your
proxy card.
THANK YOU FOR VOTING.
TO VIEW TELEDYNE
TECHNOLOGIES' ANNUAL REPORT AND PROXY MATERIALS ONLINE GO TO: www.eproxy.com/TDY
TELEDYNE TECHNOLOGIES INCORPORATED
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR
THE ANNUAL MEETING OF STOCKHOLDERS ON APRIL 24, 2002
The undersigned hereby appoints Robert J. Naglieri, John T. Kuelbs and
Melanie S. Cibik and each of them, proxies and attorneys-in fact, with power of
substitution in each of them, to vote for and on behalf of the undersigned at
the Annual Meeting of Stockholders of Teledyne Technologies Incorporated to be
held on April 24, 2002, and at any adjournments thereof, upon matters properly
coming before the meeting, as set forth in the Notice of Meeting and Proxy
Statement, both of which have been received by the undersigned, and upon all
such other matters that may properly be brought before the meeting, as to which
the undersigned hereby confers discretionary authority to vote upon said
proxies. Without otherwise limiting the general authorization given hereby, said
proxies and attorneys-in-fact are instructed to vote as follows:
Comments/Address Change:
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
(If applicable, please mark Comment/Address Box on the reverse side.)
(If you plan to attend the Annual Meeting, please mark the Will Attend Box on
the reverse side.)
(This Proxy continues and must be signed on the reverse side.)
FOLD AND DETACH HERE
PLEASE MARK [X]
YOUR VOTES AS
INDICATED IN
THIS EXAMPLE
Where a vote is not specified, the proxies will vote the shares represented by
the proxy FOR the election of directors, FOR proposal 2 and FOR proposal 3 and
will vote in accordance with their discretion on such other matters as may
properly come before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS VOTES FOR (1), (2) AND (3).
WITHHOLD
FOR FOR ALL FOR AGAINST ABSTAIN
(1) Election of 3 Class III Directors-Nominees:
(2) Approval of 2002 Stock [ ] [ ] [ ]
01 Robert P. Bozzone 02 Frank V. Cahouet [ ] [ ] Incentive Plan
03 Charles J. Queenan, Jr.
Instruction: To withhold for any particular nominee,
write such nominee's name on the line below.
----------------------------------------------------
FOR AGAINST ABSTAIN
(3) Ratification of
Selection of Auditors [ ] [ ] [ ]
WILL
ATTEND
If you plan to attend [ ]
the Annual Meeting,
please mark the
WILL ATTEND box.
Signature Signature if held jointly Date: , 2002
--------------------------------------------------------------------------------- --------------
Please sign exactly as your name appears above.
--------------------------------------------------------------------------------
FOLD AND DETACH HERE AND READ THE REVERSE SIDE
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE IN ONE OF THREE WAYS:
VOTE BY INTERNET: 24 HOURS A DAY, 7 DAYS A WEEK.
Follow the instructions at Teledyne Technologies Website
Address: www.eproxy.com/tdy
VOTE BY TELEPHONE OR PROXY CARD
QUICK *** EASY *** IMMEDIATE
VOTE BY PHONE: FOR U.S. STOCKHOLDERS ONLY, CALL TOLL-FREE 1-800-435-6710.
ON A TOUCH TONE TELEPHONE 24 HOURS A DAY, 7 DAYS A WEEK.
THERE IS NO CHARGE TO YOU FOR THIS CALL. HAVE YOUR PROXY CARD IN
HAND.
- You will be asked to enter a Control Number, which is located in the
box in the lower right hand corner of this form.
OPTION 1: TO VOTE AS THE BOARD OF DIRECTORS RECOMMENDS ON ALL
PROPOSALS: PRESS 1.
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1.
OPTION 2: IF YOU CHOOSE TO VOTE ON EACH PROPOSAL SEPARATELY, PRESS 2.
YOU WILL HEAR THESE INSTRUCTIONS:
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1
Proposal 1, Director Election Proposal: TO VOTE FOR ALL NOMINEES,
PRESS 1, TO WITHHOLD FOR
ALL NOMINEES, PRESS 2.
TO WITHHOLD FOR AN INDIVIDUAL
NOMINEE, PRESS 3 AND LISTEN
TO THE INSTRUCTIONS.
Proposal 2, Incentive Plan Proposal: TO VOTE FOR, PRESS 1; AGAINST,
PRESS 2; ABSTAIN, PRESS 3
Proposal 3, Auditor Proposal: To vote FOR, Press 1; AGAINST,
Press 2; ABSTAIN, Press 3
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1
PRESS 1 to consent to view future Annual Reports and Proxy Materials
for this account via the Internet.
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1
OR
VOTE BY PROXY CARD: Mark, sign and date your proxy card and return it promptly
in the enclosed envelope.
NOTE: If you voted by Internet or telephone, THERE IS NO NEED TO MAIL BACK your
proxy card.
THANK YOU FOR VOTING.
TO VIEW TELEDYNE TECHNOLOGIES' ANNUAL REPORT AND PROXY MATERIALS ONLINE GO TO:
www.eproxy.com/TDY
CONFIDENTIAL VOTING INSTRUCTION CARD FOR 2002 ANNUAL MEETING
REQUESTED BY MELLON BANK, N.A., IN CONJUNCTION WITH PROXY SOLICITATION
ON BEHALF OF THE BOARD OF DIRECTORS OF TELEDYNE TECHNOLOGIES INCORPORATED
ALLEGHENY LUDLUM PERSONAL RETIREMENT & 401(k) SAVINGS ACCOUNT PLAN
ALLEGHENY TECHNOLOGIES RETIREMENT SAVINGS PLAN SAVINGS & SECURITY
PLAN OF THE LOCKPORT & WATERBURY FACILITIES THE 401(k) SAVINGS ACCOUNT
PLAN OF ALLEGHENY LUDLUM CORPORATION (WASHINGTON PLANT)
THE 401(k) PLAN
The undersigned hereby directs Mellon Bank, N.A., as the Trustee of the
above Plans, to vote the full number of shares of Common Stock allocated to the
account of the undersigned under the Plans, at the Annual Meeting of
Stockholders of Teledyne Technologies Incorporated on April 24, 2002, and at any
adjournments thereof, upon the matters set forth on the reverse of this card,
and, in its discretion, upon such other matters as may properly come before the
meeting.
PLAN PARTICIPANTS MAY VOTE BY TOLL-FREE TELEPHONE OR INTERNET BY FOLLOWING THE
INSTRUCTIONS ON THE REVERSE SIDE. ALTERNATIVELY, PARTICIPANTS MAY VOTE BY
COMPLETING, DATING AND SIGNING THIS CARD AND RETURNING IT PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
IF YOU WISH TO USE THIS CARD TO VOTE YOUR SHARES, PLEASE COMPLETE, DATE AND SIGN
ON THE REVERSE SIDE.
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
ALLEGHENY LUDLUM PERSONAL RETIREMENT & 401(k) SAVINGS ACCOUNT PLAN
ALLEGHENY TECHNOLOGIES RETIREMENT SAVINGS PLAN
SAVINGS & SECURITY PLAN OF THE LOCKPORT & WATERBURY FACILITIES
THE 401(k) SAVINGS ACCOUNT PLAN OF ALLEGHENY LUDLUM CORPORATION
(WASHINGTON PLANT)
THE 401(k) PLAN
As a Plan participant, you have the right to direct Mellon Bank, N.A., as the
Plan Trustee, how to vote the shares of Teledyne Technologies Incorporated
Common Stock that are allocated to your Plan account and shown on the attached
voting instruction card. The Trustee will hold your instructions in complete
confidence except as may be necessary to meet legal requirements.
You may vote by telephone, by Internet or by completing, signing and returning
the voting instruction card (above). A postage-paid return envelope is enclosed.
The Trustee must receive your voting instructions by April 18, 2002. If the
Trustee does not receive your instructions by 5:00 p.m., EDT on April 18, 2002,
the plan administrator may instruct the Trustee to vote your shares as the
administrator directs.
You will receive a separate set of proxy solicitation materials for any shares
of Common Stock you own other than your Plan shares. Your non-plan shares must
be voted separately from your Plan shares.
Mellon Bank, N.A., makes no recommendation regarding any voting instruction.
PLEASE MARK [X]
YOUR VOTES AS
INDICATED IN
THIS EXAMPLE
Where a vote is not specified, the proxies will vote the shares represented by
the proxy FOR the election of directors, FOR proposal 2 and FOR proposal 3 and
will vote in accordance with their discretion on such other matters as may
properly come before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS VOTES FOR (1), (2) AND (3).
WITHHOLD
FOR FOR ALL FOR AGAINST ABSTAIN
(1) Election of 3 Class III Directors-Nominees:
(2) Approval of 2002 Stock [ ] [ ] [ ]
01 Robert P. Bozzone 02 Frank V. Cahouet [ ] [ ] Incentive Plan
03 Charles J. Queenan, Jr.
Instruction: To withhold for any particular nominee,
write such nominee's name on the line below.
----------------------------------------------------
FOR AGAINST ABSTAIN
(3) Ratification of
Selection of Auditors [ ] [ ] [ ]
WILL
ATTEND
If you plan to attend [ ]
the Annual Meeting,
please mark the
WILL ATTEND box.
Signature Signature if held jointly Date: , 2002
--------------------------------------------------------------------------------- --------------
Please sign exactly as your name appears above.
--------------------------------------------------------------------------------
FOLD AND DETACH HERE AND READ THE REVERSE SIDE
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE IN ONE OF THREE WAYS:
VOTE BY INTERNET: 24 HOURS A DAY, 7 DAYS A WEEK.
Follow the instructions at Teledyne Technologies Website Address:
www.eproxy.com/tdy
OR
VOTE BY TELEPHONE OR PROXY CARD
QUICK *** EASY *** IMMEDIATE
VOTE BY PHONE: FOR U.S. STOCKHOLDERS ONLY, CALL TOLL-FREE 1-800-435-6710.
ON A TOUCH TONE TELEPHONE 24 HOURS A DAY, 7 DAYS A WEEK.
THERE IS NO CHARGE TO YOU FOR THIS CALL. HAVE YOUR PROXY CARD IN
HAND.
- You will be asked to enter a Control Number, which is located in the
box in the lower right hand corner of this form.
OPTION 1: TO VOTE AS THE BOARD OF DIRECTORS RECOMMENDS ON ALL
PROPOSALS: PRESS 1.
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1.
OPTION 2: IF YOU CHOOSE TO VOTE ON EACH PROPOSAL SEPARATELY, PRESS 2.
YOU WILL HEAR THESE INSTRUCTIONS:
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1
Proposal 1, Director Election Proposal: TO VOTE FOR ALL NOMINEES,
PRESS 1, TO WITHHOLD FOR
ALL NOMINEES, PRESS 2.
TO WITHHOLD FOR AN INDIVIDUAL
NOMINEE, PRESS 3 AND LISTEN
TO THE INSTRUCTIONS.
Proposal 2, Incentive Plan Proposal: TO VOTE FOR, PRESS 1; AGAINST,
PRESS 2; ABSTAIN, PRESS 3
Proposal 3, Auditor Proposal: To vote FOR, Press 1; AGAINST,
Press 2; ABSTAIN, Press 3
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1
PRESS 1 to consent to view future Annual Reports and Proxy Materials
for this account via the Internet.
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1
OR
VOTE BY PROXY CARD: Mark, sign and date your proxy card and return it promptly
in the enclosed envelope.
NOTE: If you voted by Internet or telephone, THERE IS NO NEED TO MAIL BACK your
proxy card.
THANK YOU FOR VOTING.
TO VIEW TELEDYNE TECHNOLOGIES' ANNUAL REPORT AND PROXY MATERIALS ONLINE GO TO:
www.eproxy.com/TDY
TELEDYNE TECHNOLOGIES INCORPORATED
VOTING INSTRUCTION CARD FOR 2002 ANNUAL MEETING
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
TELEDYNE TECHNOLOGIES INCORPORATED
TELEDYNE TECHNOLOGIES INCORPORATED 401(k) PLAN
The undersigned hereby directs the Trustee of the above Plan to vote the
full number of shares of Common Stock allocated to the account of the
undersigned under the Plan, at the Annual Meeting of Stockholders of Teledyne
Technologies Incorporated on April 24, 2002, and at any adjournments thereof,
upon the matters set forth on the reverse of this card, and, in its discretion,
upon such other matters as may properly come before the meeting.
PLAN PARTICIPANTS MAY VOTE BY TOLL-FREE TELEPHONE OR INTERNET BY FOLLOWING THE
INSTRUCTIONS ON THE REVERSE SIDE. ALTERNATIVELY, PARTICIPANTS MAY VOTE BY
COMPLETING, DATING AND SIGNING THIS CARD AND RETURNING IT PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
IF YOU WISH TO USE THIS CARD TO VOTE YOUR SHARES, PLEASE COMPLETE, DATE AND SIGN
ON THE REVERSE SIDE.
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
[TELEDYNE LOGO] TELEDYNE
TECHNOLOGIES
12333 West Olympic Blvd.
Los Angeles, California 90064
TELEDYNE TECHNOLOGIES INCORPORATED 401(k) PLAN
As a Plan participant, you have the right to direct the Plan Trustee how to vote
the shares of Teledyne Technologies Incorporated Common Stock that are allocated
to your Plan account and shown on the attached voting instruction card. The
Trustee will hold your instructions in complete confidence except as may be
necessary to meet legal requirements.
You may vote by telephone, by Internet or by completing, signing and returning
the voting instruction card (above). A postage-paid return envelope is enclosed.
The Trustee must receive your voting instructions by April 18, 2002. If the
Trustee does not receive your instructions by April 18, 2002, your shares will
not be voted.
You will receive a separate set of proxy solicitation materials for any shares
of Common Stock you own other than your Plan shares. Your non-plan shares must
be voted separately from your Plan shares.
PLEASE MARK [X]
YOUR VOTES AS
INDICATED IN
THIS EXAMPLE
Where a vote is not specified, the proxies will vote the shares represented by
the proxy FOR the election of directors, FOR proposal 2 and FOR proposal 3 and
will vote in accordance with their discretion on such other matters as may
properly come before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS VOTES FOR (1), (2) AND (3).
WITHHOLD
FOR FOR ALL FOR AGAINST ABSTAIN
(1) Election of 3 Class III Directors-Nominees:
(2) Approval of 2002 Stock [ ] [ ] [ ]
01 Robert P. Bozzone 02 Frank V. Cahouet [ ] [ ] Incentive Plan
03 Charles J. Queenan, Jr.
Instruction: To withhold for any particular nominee,
write such nominee's name on the line below.
----------------------------------------------------
FOR AGAINST ABSTAIN
(3) Ratification of
Selection of Auditors [ ] [ ] [ ]
WILL
ATTEND
If you plan to attend [ ]
the Annual Meeting,
please mark the
WILL ATTEND box.
Signature Signature if held jointly Date: , 2002
--------------------------------------------------------------------------------- --------------
Please sign exactly as your name appears above.
--------------------------------------------------------------------------------
FOLD AND DETACH HERE AND READ THE REVERSE SIDE
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE IN ONE OF THREE WAYS:
VOTE BY INTERNET: 24 HOURS A DAY, 7 DAYS A WEEK.
Follow the instructions at Teledyne Technologies Website Address:
www.eproxy.com/tdy
OR
VOTE BY TELEPHONE OR PROXY CARD
QUICK *** EASY *** IMMEDIATE
VOTE BY PHONE: FOR U.S. STOCKHOLDERS ONLY, CALL TOLL-FREE 1-800-435-6710.
ON A TOUCH TONE TELEPHONE 24 HOURS A DAY, 7 DAYS A WEEK.
THERE IS NO CHARGE TO YOU FOR THIS CALL. HAVE YOUR PROXY CARD IN
HAND.
- You will be asked to enter a Control Number, which is located in the
box in the lower right hand corner of this form.
OPTION 1: TO VOTE AS THE BOARD OF DIRECTORS RECOMMENDS ON ALL
PROPOSALS: PRESS 1.
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1.
OPTION 2: IF YOU CHOOSE TO VOTE ON EACH PROPOSAL SEPARATELY, PRESS 2.
YOU WILL HEAR THESE INSTRUCTIONS:
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1
Proposal 1, Director Election Proposal: TO VOTE FOR ALL NOMINEES,
PRESS 1, TO WITHHOLD FOR
ALL NOMINEES, PRESS 2.
TO WITHHOLD FOR AN INDIVIDUAL
NOMINEE, PRESS 3 AND LISTEN
TO THE INSTRUCTIONS.
Proposal 2, Incentive Plan Proposal: TO VOTE FOR, PRESS 1; AGAINST,
PRESS 2; ABSTAIN, PRESS 3
Proposal 3, Auditor Proposal: To vote FOR, Press 1; AGAINST,
Press 2; ABSTAIN, Press 3
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1
PRESS 1 to consent to view future Annual Reports and Proxy Materials
for this account via the Internet.
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1
OR
VOTE BY PROXY CARD: Mark, sign and date your proxy card and return it promptly
in the enclosed envelope.
NOTE: If you voted by Internet or telephone, THERE IS NO NEED TO MAIL BACK your
proxy card.
THANK YOU FOR VOTING.
TO VIEW TELEDYNE TECHNOLOGIES' ANNUAL REPORT AND PROXY MATERIALS ONLINE GO TO:
www.eproxy.com/TDY
TELEDYNE TECHNOLOGIES INCORPORATED
VOTING INSTRUCTION CARD FOR 2002 ANNUAL MEETING
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
TELEDYNE TECHNOLOGIES INCORPORATED
WATER PIK TECHNOLOGIES RETIREMENT PLAN
The undersigned hereby directs the Trustee of the above Plan to vote the
full number of shares of Common Stock allocated to the account of the
undersigned under the Plan, at the Annual Meeting of Stockholders of Teledyne
Technologies Incorporated on April 24, 2002, and at any adjournments thereof,
upon the matters set forth on the reverse of this card, and, in its discretion,
upon such other matters as may properly come before the meeting.
PLAN PARTICIPANTS MAY VOTE BY TOLL-FREE TELEPHONE OR INTERNET BY FOLLOWING THE
INSTRUCTIONS ON THE REVERSE SIDE. ALTERNATIVELY, PARTICIPANTS MAY VOTE BY
COMPLETING, DATING AND SIGNING THIS CARD AND RETURNING IT PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
IF YOU WISH TO USE THIS CARD TO VOTE YOUR SHARES, PLEASE COMPLETE, DATE AND SIGN
ON THE REVERSE SIDE.
--------------------------------------------------------------------------------
FOLD AND DETACH HERE
[TELEDYNE LOGO] TELEDYNE
TECHNOLOGIES
12333 West Olympic Blvd.
Los Angeles, California 90064
WATER PIK TECHNOLOGIES RETIREMENT PLAN
As a Plan participant, you have the right to direct the Plan Trustee how to vote
the shares of Teledyne Technologies Incorporated Common Stock that are allocated
to your Plan account and shown on the attached voting instruction card. The
Trustee will hold your instructions in complete confidence except as may be
necessary to meet legal requirements.
You may vote by telephone, by Internet or by completing, signing and returning
the voting instruction card (above). A postage-paid return envelope is enclosed.
The Trustee must receive your voting instructions by April 18, 2002. If the
Trustee does not receive your instructions by April 18, 2002, your shares will
not be voted.
You will receive a separate set of proxy solicitation materials for any shares
of Common Stock you own other than your Plan shares. Your non-plan shares must
be voted separately from your Plan shares.