defa14a
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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Preliminary Proxy Statement |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 |
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Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
Unisys Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Aggregate number of securities to which transaction applies: |
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was
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Proposed maximum aggregate value of transaction: |
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Total fee paid: |
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Fee paid previously with preliminary materials: |
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and
identify the filing for which the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule and the date of its filing. |
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Amount Previously Paid: |
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Form, Schedule or Registration Statement No.: |
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Filing Party: |
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Date Filed: |
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Commencing April 12, 2011, Unisys Corporation sent the following communication to certain
stockholders.
Unisys Corporation
Annual Meeting of Stockholders
April 27, 2011
Supplemental Information Regarding Item 4
Advisory Vote on Executive Compensation
We are writing in connection with the upcoming annual meeting of Unisys Corporation and in
particular to urge you to vote FOR Item 4, the advisory vote on executive compensation or
say-on-pay.
The leading proxy advisory firms have reached opposing conclusions on our say-on-pay proposal.
Although ISS Proxy Advisory Services has recommended that stockholders vote against the proposal on
the basis of an asserted pay-for-performance disconnect, Glass Lewis & Co. has recommended that
stockholders vote for the proposal, stating that the Company has properly linked executive
compensation to Company performance and citing the Companys track record of good
pay-for-performance in its report. For the reasons set forth below, Unisys believes there is no
pay-for-performance disconnect and that a FOR vote on say-on-pay is warranted.
The time period for assessing corporate performance should coincide with the tenure of the
companys current CEO. After the companys current CEO, J. Edward Coleman, joined the company in
October 2008, the company announced an aggressive turnaround program intended to enhance the
companys financial results and strengthen its balance sheet. Reflecting this program, the company
reported net income of $236.1 million in 2010 and $189.3 million in 2009, compared with net losses
in each of 2008, 2007, 2006 and 2005. As shown in the table below, in each of 2010 and 2009, the
company also increased earnings per share, grew operating profit, increased operating profit
margins, improved cash flow and reduced debt.
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Metric |
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Year |
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2010 |
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2009 |
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2008 |
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($ in millions except per share data) |
Net Income (Loss) |
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$ |
236.1 |
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$ |
189.3 |
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(130.1 |
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Diluted Earnings (Loss) Per Share |
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$ |
5.45 |
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$ |
4.75 |
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(3.62 |
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Operating Profit |
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375.7 |
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$ |
330.0 |
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2.1 |
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Operating Profit Margin |
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9.3 |
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7.5 |
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Cash at December 31 |
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$ |
828.3 |
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$ |
647.6 |
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$ |
544.0 |
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Long-Term Debt at December 31 |
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$ |
823.2 |
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$ |
845.9 |
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$ |
1,059.1 |
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Notwithstanding this performance, ISS has asserted a pay-for-performance disconnect because
the one-, three- and five-year annualized total shareholder return (TSR) for Unisys was below the
median for the companys peer group used by ISS (GICS Group 4510Software & Services) and because
total CEO compensation, particularly the value of stock options, increased in 2010. Although
Unisys believes that the companys financial performance during Mr. Colemans tenure is a more
appropriate metric for assessing corporate performance, if TSR is the criterion to be used, we
believe the appropriate measurement period should be the time period during which Mr. Coleman has
been in office. As set forth above, Mr. Coleman joined Unisys in October 2008. When TSR is
assessed over the two-year period beginning in 2009, the Unisys
TSR is well above the median TSR, as published by ISS, for the GICS Group, as well as the TSRs for
each of the S&P 500, the S&P 500 IT Services Index and the Russell 3000 Index.
Please see the following graph, which assumes $100 was invested on December 31, 2008 and assumes
reinvestment of dividends.
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2008 |
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2009 |
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2010 |
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Unisys Corporation |
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100 |
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454 |
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305 |
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GICS Group 4510 |
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100 |
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149 |
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189 |
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S&P 500 |
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100 |
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126 |
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145 |
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S&P 500 IT Services |
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100 |
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143 |
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157 |
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Russell 3000 |
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100 |
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128 |
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150 |
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In light of the companys improved financial performance in 2009 and 2010, as well as its TSR
for those years, the company believes that there is no misalignment between CEO pay and company
performance.
Executive compensation in 2010 was in line with both the companys performance and the companys
compensation philosophy. The companys executive compensation program is strongly focused on
pay-for-performance principles. Approximately 80% of Mr. Colemans total compensation for 2010 was
at risk and dependent upon the companys financial performance and/or an increase in the companys
stock price. These at-risk components of his compensation consisted of performance-based annual
cash bonus (24% of total compensation in 2010), performance-based restricted stock units (RSUs)
(18%), and stock options (38%).
As discussed in the CD&A, for 2010, the company took the following compensation actions with
respect to Mr. Coleman:
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Base salary remained at 2009 and 2008 levels given general economic conditions and
the companys cost reduction program. |
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Annual performance-based cash bonus decreased from 2009 because the companys
overachievement of its pre-established performance goals in 2010 was not as great as in
2009. |
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Granted 30,000 performance-based RSUs as compared to 90,000 performance-based RSUs
granted in 2009. Granted 120,000 stock options, which was the same number granted in
2009. |
In its report, ISS finds a pay-for-performance disconnect which primarily resulted from stock
options granted to the CEO in FY 2010. We note, however, that the number of stock options granted
to Mr. Coleman in 2010 was the same as in 2009 and that the increase in value of the award
reflected the more than five-fold increase in the companys common stock price from February 2009
to February 2010 ($6.40 on the date of the February 2009 grant and $34.92 on the date of the
February 2010 grant). The Company believes that the improved stock price in February 2010 was a
result of its improved financial results in 2009, the first full year that Mr. Coleman was CEO.
Despite this increase in value, equity-based awards to Mr. Coleman remain well below the companys
stated goal that each element of executive compensation be consistent with the median for the
companies against which Unisys benchmarks the compensation it pays to its executives (and ISS
recognizes this in its report). This is primarily because of the companys desire to achieve an
appropriate balance between the goals of its long-term incentive program and managing its
compensation expense. In 2009, largely as a result of the companys depressed stock price, Mr.
Colemans equity-based compensation was significantly below market at approximately 18% of the
median for the benchmark companies. In 2010, because of the increase in its stock price from
February 2009 to February 2010, the value of Mr. Colemans equity-based compensation rose to
approximately 61% of the median. Although improved from 2009, this value was still well below
market, reflecting the companys continued focus on managing compensation expense in a turnaround
situation.
* * *
Given the improved financial performance of Unisys in 2009 and 2010, the companys TSR of 205% for
that two-year period and the high percentage of total compensation that is at risk, all as
described above, we respectfully request that you vote FOR the companys say on pay proposal (Item
4) at our 2011 annual meeting.
Your vote is important. Our Board of Directors also recommends that you vote FOR all of the
nominees for director in Item 1, FOR Items 2 (approval of independent accountants) and 3
(increasing our authorized shares of common stock) and 1 YEAR on Item 5 (frequency of say-on-pay
vote).
Thank you for your ongoing support of, and continued interest in, Unisys Corporation.
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