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UNISYS CORPORATION
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PRELIMINARY COPY
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Unisys Corporation
Township Line and Union Meeting Roads
Unisys Way
Blue Bell, PA19424-0001
[UNISYS LOGO]
March 12, 1998
April , 2009
Dear Fellow Stockholder:
It is my pleasure to invite you to the Unisys 19982009 Annual Meeting of Stockholders. This year'syear’s meeting will be held on Thursday, April 23, 1998May 28, 2009, at the Park Hyatt Philadelphia at the Bellevue,[ • ], which is located at Broad and
Walnut Streets[ • ] in Philadelphia,[ • ], Pennsylvania. The meeting will begin at 9:30 a.m.
As you will note
These are unprecedented times in our annual report to stockholders,the global economy and financial markets. While the economic slowdown and other factors impacted the company’s results in 2008, we have much to
celebrate this year. In 1997 our net income before one-time charges more than
tripled over 1996. We continued to grow our services business, made great
strides in reducing debt, and -- most important -- sharply increased shareholder
value. And we're not slowing down. We are taking aggressive actions to accelerateenhance our profitability, cash flow, and competitiveness. Our plan involves focusing our resources and investments, clearly differentiating Unisys in our chosen markets, enhancing our services labor delivery model, and reducing overhead expense by simplifying our business structure. We are moving quickly to implement this plan, and we are firmly committed to showing clear, demonstrable progress in 1998 by focusingour results in 2009.
You may have noticed changes in the way we are providing proxy materials to our stockholders for this year’s annual meeting. This is because we have elected to provide access to our proxy materials over the Internet under the “notice and access” rules of the Securities and Exchange Commission. We believe these rules allow us to provide our stockholders with the information they need, while reducing our printing and mailing costs and helping to conserve natural resources. The Notice of Internet Availability of Proxy Materials that you received in the mail contains instructions on high-potential markets where wehow to access this proxy statement and the 2008 annual report and vote online. The Notice also includes instructions on how you can grow profitably and help our customers be more successful.request a paper copy of the annual meeting materials.
Your vote is important. Whether or not you plan to attend the annual meeting, or not, I urge you to take a moment to vote on the items in this year'syear’s proxy statement. Please sign, date,
and return the enclosed proxy card as soon as possible. ItVoting takes only takes a few minutes, and it will ensure that your shares are represented at the meeting.
I look forward to seeing you at the annual meeting, where you will hear about our results for 2008 and sharing my plans and
visionour priorities for the "new Unisys."
2009.
Sincerely,
Lawrence A. Weinbach
J. Edward Coleman
Chairman President and Chief Executive Officer 3
PRELIMINARY COPY
[UNISYS LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 23, 1998
May 28, 2009
Unisys Corporation will hold its 19982009 Annual Meeting of Stockholders at The
Park Hyatt Philadelphia at the Bellevue, Broad and Walnut Streets, Philadelphia,
Pennsylvania,[ • ], on Thursday, April 23, 1998May 28, 2009, at 9:30 a.m. to:
1. elect threetwo directors;
2. ratify the selection of the Company’s independent auditorsregistered public accounting firm for 1998;
2009;
3. consider and vote upon a proposalapprove an amendment to amend the Company’s Restated Certificate of Incorporation to increase(a) effect a reverse stock split of the Company’s common stock at a reverse split ratio of between1-for-5 and1-for-20, which ratio will be selected by the Board of Directors and (b) decrease the number of authorized shares of Common
Stock;
4. consider and vote upon the stockholder proposal set forth inCompany’s common stock on a basis proportional to the attached Proxy Statement;reverse split ratio approved by the Board of Directors; and
5.
4. transact any other business properly brought before the meeting.
Only record holders of Unisys Common Stock of recordcommon stock at the close of business on February 23, 1998March 31, 2009 will be entitled to vote at the Annual Meeting.
annual meeting.
By Order of the Board of Directors,
/s/ Harold S. Barron
Harold S. Barron
Nancy Straus Sundheim
Senior Vice President, General Counsel
and Secretary
Blue Bell, Pennsylvania
March 12, 1998
IMPORTANT
PLEASE COMPLETE AND MAIL THE ENCLOSED PROXY CARD PROMPTLY WHETHER OR NOT YOU
PLAN TO ATTEND THE ANNUAL MEETING. THE ENCLOSED RETURN ENVELOPE REQUIRES NO
POSTAGE IF MAILED IN THE U.S.A.
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PRELIMINARY COPY
April , 2009
Important Notice Regarding the Availability of Proxy Materials for the Stockholder
Meeting to be Held on May 28, 2009:
Meeting to be Held on May 28, 2009:
The Company’s proxy statement and annual report are available on our
website atwww.unisys.com/go/proxy andwww.unisys.com/go/annual.
website atwww.unisys.com/go/proxy andwww.unisys.com/go/annual.
Your vote is important. Whether or not you plan to attend the annual meeting, please promptly submit your proxy or voting instructions by Internet, telephone, or mail. For specific instructions on how to vote your shares, please refer to the instructions found on the Notice of Internet Availability of Proxy Materials you received in the mail or, if you received a paper copy of the proxy materials, the enclosed proxy/voting instruction card.
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UNISYS CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
APRIL 23, 1998
May 28, 2009
The Board of Directors of Unisys Corporation ("Unisys" or the "Company")
solicits your proxy for use at the 19982009 Annual Meeting of Stockholders to be held on April 23, 1998May 28, 2009 and at any adjournment(s) thereof (the "Annual Meeting").adjournments. At the Annual Meeting,annual meeting, stockholders will be asked to elect two directors, to ratify the selection of the Company’s independent auditors,registered public accounting firm, to approve an amendment to the Company'sCompany’s Restated Certificate of Incorporation to increaseeffect a reverse stock split of the Company’s common stock and to decrease the number of authorized shares of Common Stockcommon stock and consider and vote upon a stockholder proposal.
to transact any other business properly brought before the meeting.
The record date for the Annual Meetingannual meeting is February 23, 1998.March 31, 2009. Only holders of record of Unisys Common Stockcommon stock as of the close of business on the record date are entitled to vote at the meeting. On the record date, [ • ] shares of Common Stockcommon stock were outstanding. The presence, in person or by proxy, of a majority of those shares will constitute a quorum at the meeting.
This Proxy Statement,proxy statement, the accompanying form of proxy/voting instruction card and the annual report of Unisys, including 1997the financial statements for 2008, are being mailedsent or given to stockholders on or about March 12, 1998.
VOTING
April , 2009.
Required Vote
Each record holdershare of Unisys Common Stock as ofcommon stock outstanding on the record date is entitled to cast one vote per share on each matter to be voted upon. Directors will be elected by a plurality of the votes cast. The amendment to the Certificate of
Incorporation will be approved if it receives the affirmative vote of a majority of the outstanding sharesvotes cast at the meeting. This means that a nominee will be elected if the number of Common Stock. Eachvotes cast “For” his or her election exceeds 50% of the other matters scheduledtotal number of votes cast with respect to come beforethat nominee’s election. Votes cast with respect to the Annual Meetingelection of directors include votes to “Withhold” authority but do not include abstentions and broker non-votes.
The proposal to ratify the selection of the Company’s independent registered public accounting firm will be approved if it receives the affirmative vote of a majority of shares present, in person or by proxy, and entitled to vote on the matter. Abstentions and broker non-votes will have the
same effect as negative votes on the proposal to amend the Company's Certificate
of Incorporation. For purposes of the matters requiring a majority vote of
shares present and entitled to vote, abstentions will be included in the vote totals,total for this matter and therefore will have the same effect as a negative vote. Brokervote; broker non-votes will not be included in the vote totals for these matterstotal and therefore will have no effect on the vote.
The proposal to amend the Company’s Restated Certificate of Incorporation to effect the reverse stock split and decrease the number of authorized shares of common stock requires the affirmative vote of a majority of the outstanding shares of common stock entitled to vote. Any shares not voted (whether by abstention, broker non-vote or otherwise) will have the same effect as a vote “Against” the proposal.
Internet Availability of Proxy Materials
Pursuant to the “notice and access” rules adopted by the Securities and Exchange Commission (the “SEC”), the Company has elected to provide stockholders access to its proxy materials over the Internet. Accordingly, the Company sent a Notice of Internet Availability of Proxy Materials (the “Notice”) to most stockholders (other than those who previously requested electronic or paper delivery of proxy materials). The Notice includes instructions on how to access the proxy materials over the Internet and how to request a printed copy of these materials. In addition, by
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following the instructions in the Notice, stockholders may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis.
Choosing to receive your future proxy materials by email will save the Company the cost of printing and mailing documents to you and will reduce the impact of the Company’s annual meetings on the environment. If you choose to receive future proxy materials by email, you will receive an email next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials by email will remain in effect until you terminate it.
Voting Procedures and Revocability of Proxies
Your vote is important. Shares may be voted at the annual meeting only if you are present in person or represented by proxy. You can vote by proxy over the Internet by following the instructions provided in the Notice, or, if you request printed copies of the proxy materials by mail, you can also vote by mail or by telephone by following the instructions provided on the proxy/voting instruction card. If you have previously elected to receive proxy materials over the Internet, you should have already receivede-mail instructions on how to vote electronically.
You may revoke your proxy at any time before it is exercised by writing to the Corporate Secretary of Unisys, by timely delivery of a properly executed later-dated proxy (including an Internet or telephone vote) or by voting in person at the meeting.
The method by which you vote will in no way limit your right to vote at the meeting if you later decide to attend in person. If your shares are held in the name of a bank, broker or other holder of record, you must obtain a proxy, executed in your favor, from the holder of record to be able to vote at the meeting.
If you properly executecomplete and return the enclosed proxy/voting instruction
card,your proxy, and do not revoke it, the proxy holders will vote theyour shares represented
by the proxy in accordance with your instructions. If ayour properly executedcompleted proxy gives no instructions, the proxy holders will vote theyour shares represented
thereby FOR the election of directors, FOR the selection of independent auditors,registered public accountants, FOR the amendmentproposal to amend the Company’s Restated Certificate of Incorporation AGAINSTto effect the adoptionreverse stock split and decrease the number of the stockholder proposalauthorized shares of common stock and in their discretion on any other matters that properly come before the Annual Meeting. You may revoke an executed
proxy at any time prior to its exercise by giving notice in writing to the
Secretary of Unisys or by voting in person at theannual meeting.
If you are a participant in the Unisys Savings Plan, (the "Savings Plan"),
the enclosed proxy/voting instruction card will serve as voting instructions to the Savings Planplan trustee for any whole shares of Unisys Common Stockcommon stock credited to your account as of February 23, 1998.March 31, 2009. The 5 trustee will vote those shares in accordance with your instructions if it receives your signed proxy/voting instruction cardcompleted proxy by April , 1998.May 26, 2009. If you dothe proxy is not sign and return the proxy/voting instruction card in a timely manner,received, or if you give no instructions with respect toon a matter to be voted upon, the trustee will vote the shares credited to your account in the same proportion as it votes those shares for which it received propertimely instructions from other participants.
ELECTION OF DIRECTORS
The Board of Directors currently consists of 1113 members, divided into three classes. One class of directors is elected each year to hold office for a three-year term. ThreeTwo of the four directors whose terms expire in 1998, Henry
C. Duques, Theodore E. Martin2009, J. Edward Coleman and Lawrence A. Weinbach,Leslie F. Kenne, have been nominated for reelection. Under the Company's Bylaws, no person may be elected a director
after having attained the age of 70. Alan E. SchwartzCraig A. Conway has decided not to stand for reelection, and Edwin A. Huston will therefore retire from the Board of Directors at the Annual Meeting, andannual meeting because he has attained the Board will then consistmandatory retirement age of ten members.70. The remaining sevennine directors will continue to serve as set forth below.below, and the Board will then consist of 11 members. Each of the nominees has agreed to serve as a director if elected, and Unisys believes that each nominee will be available to serve. However, the proxy holders have discretionary authority to cast votes for the election of a substitute should any nominee not be available to serve as a director.
INFORMATION REGARDING NOMINEES AND DIRECTORS
The Board of Directors recommends a vote “FOR” all nominees.
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Information Regarding Nominees and Directors
The names and ages of the nominees and directors, their principal occupations orand employment during the past five years, and other datainformation regarding them are set forth below.
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
as follows.
Nominees for Election to the Board of Directors
 | J. EDWARD COLEMAN Mr. Coleman, 57, is Chairman and Chief Executive Officer of Unisys. He has been with Unisys since October 2008. Mr. Coleman has been in the information technology industry for more than 30 years, serving as CEO of Gateway, Inc. from 2006 to 2008; as senior vice president and president of enterprise computing solutions at Arrow Electronics from 2005 to 2006 and as chief executive officer of CompuCom from 1999 to 2004. He also served as chairman of CompuCom from 2001 to 2004. Prior to that, he held various leadership and executive positions at Computer Sciences Corporation and IBM Corporation. He has served as a Director of Unisys since October 2008. | |
 | LESLIE F. KENNE Ms. Kenne, 61, is a retired Lieutenant General of the United States Air Force. Prior to retiring from the Air Force in 2003 as Deputy Chief of Staff, Warfighting Integration, Pentagon, she had a32-year military career including technical training, command experience and responsibility for large aircraft test, evaluation and acquisition programs. She is currently an independent consultant for various defense companies and/or agencies. She is a Director of Harris Corporation. She has served as a Director of Unisys since 2006 and is a member of the Audit Committee. |
Members of the Board Continuing in Office
Term Expiring in 2010
Term Expiring in 2010
 | HENRY C. DUQUES Mr. Duques, |
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 | CLAYTON M. JONES Mr. Jones, 59, is a Director and Chairman, President and Chief Executive Officer of Rockwell Collins, Inc., a global aviation electronics and communications company. He has also held the positions of Executive Vice President of that company and Senior Vice President of its former parent company, Rockwell International Corporation. He is a Director of Deere & Company. He has served as a Director of Unisys since 2004 and is a member of the | |
 | THEODORE E. MARTIN Mr. Martin, | |
 | CHARLES B. MCQUADE Mr. McQuade, 67, retired in 2002 from the |
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Members of the Board Continuing in Office
Term Expiring in 2011
Term Expiring in 2011
 | J. P. BOLDUC Mr. Bolduc, | |
 | JAMES J. DUDERSTADT Dr. Duderstadt, | |
 | MATTHEW J. ESPE Mr. Espe, 50, is a Director and Chairman and Chief Executive Officer of IKON Office Solutions, Inc., a provider of integrated document management systems and services. Prior to joining IKON in 2002, Mr. Espe had been with General Electric Company since 1980, most recently serving as President and Chief Executive Officer of GE Lighting. He has served as a Director of Unisys since 2004 and is a member of the Audit Committee and the Finance Committee. |
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 | DENISE K. FLETCHER Ms. Fletcher, 60, is a former Executive Vice President, Finance of Vulcan Inc., an investment and project company, a position she held from 2005 to 2008. From 2004 to 2005, she served as Chief Financial Officer of DaVita, Inc., an independent provider of dialysis services in the United States. From 2000 to 2003, she was Executive Vice President and Chief Financial Officer of MasterCard International, an international payment solutions company. She has served as a Director of Unisys since 2001 and is a member of the Audit Committee and the Nominating | |
 | CLAY B. LIFFLANDER Mr. Lifflander, 46, has been President of Millbrook Capital Management, Inc. since 1995 and of MMI Investments, L.P. since 1996. Previously, he served as President of the |
Board Meetings; Attendance at Annual Meetings
The Board of Directors held 1514 meetings in 1997.2008. During 1997,2008, all directors other than Mr. Espe attended at least 75 percent75% of the meetings of the Board of Directors and standing Committeescommittees on which they served.
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COMMITTEES
It is the Company’s policy that all directors should attend the annual meeting of stockholders. All of the Company’s directors at the time of the 2008 annual meeting attended that meeting except Mr. Espe.
Independence of Directors
All of the Company’s directors other than Mr. Coleman meet the independence requirements prescribed by the New York Stock Exchange (“NYSE”) and, in the case of members of the Audit Committee, also meet the audit committee independence requirements prescribed by the SEC. In assessing whether a director has a material relationship with Unisys (either directly or as a partner, stockholder or officer of an organization that has a relationship with Unisys), the Board uses the criteria outlined below in paragraph 2 of “Corporate Governance Guidelines”. All non-employee directors met these criteria in 2008. In particular, two of the Company’s non-employee directors, Mr. Espe and Mr. Jones, served as chief executive officer of a company that does business with Unisys in the ordinary course. In each instance, combined Unisys sales to and purchases from the director’s company in 2008 represented less than one percent of that company’s annual revenue. In addition, two of the Company’s non-employee directors, Mr. Bolduc and Mr. Espe, served as
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directors of organizations to which the Company made charitable contributions in 2008. In each instance, the amounts contributed by Unisys to the charitable organization represented less than one percent of the organization’s annual charitable receipts.
Committees
The Board of Directors has a standing Audit Committee, Compensation and
OrganizationCommittee, Finance Committee and Nominating and Corporate Governance Committee. The specific functions and responsibilities of each committee are set forth in its charter, which is available on the Company’s Internet web site at www.unisys.com in the Investors section under Corporate Governance and Board of Directors and is also available in print to any stockholder who requests it.
Audit Committee
The Audit Committee as well as certain other
committees.assists the Board in its oversight of the integrity of the Company’s financial statements and its financial reporting and disclosure practices, the soundness of its systems of internal financial and accounting controls, the independence and qualifications of its independent registered public accounting firm, the performance of its internal auditors and independent registered public accounting firm, the Company’s compliance with legal and regulatory requirements and the soundness of its ethical and environmental compliance programs. The Audit Committee held four10 meetings in 1997.2008. Its principal functionsmembers are Mr. Espe, Ms. Fletcher, Mr. Huston (chair) and Ms. Kenne. For 2008, the Board determined that each of Mr. Espe, Ms. Fletcher and Mr. Huston was an audit committee financial expert as defined by the SEC. Mr. Huston will be retiring from the Board at the 2009 annual meeting, and the Board has determined that the audit committee financial experts will then be Mr. Espe and Ms. Fletcher.
Compensation Committee
The Compensation Committee oversees the compensation of the Company’s executives, the Company’s executive management structure, the compensation-related policies and programs involving the Company’s executive management and the level of benefits of officers and key employees. In this capacity, the committee regularly reviews and approves the Company’s executive compensation strategy and principles to review complianceensure that they are aligned with Company policies, review internal control procedures,
recommendthe Company’s business strategy and objectives and with stockholder interests. Under its charter, the Compensation Committee annually reviews and approves goals and objectives relevant to the compensation of the chief executive officer, evaluates the performance of the chief executive officer in light of those goals and makes recommendations to the independent members of the Board concerning the compensation level of the chief executive officer. The committee also annually reviews and approves compensation levels of the other elected officers. In this regard, the committee solicits input from the Company’s chief executive officer regarding the compensation of those executives who report directly to him. The Compensation Committee also reviews and recommends to the Board the adoption of Directorsdirector compensation programs. The Company’s guidelines regarding the firmcompensation of independent auditorsdirectors are described more fully in paragraph 11 of “Corporate Governance Guidelines” below. As is discussed more fully below in “Compensation Discussion and Analysis”, the Compensation Committee regularly receives reports and recommendations from management and from the committee’s outside compensation consultant to serveassist it in carrying out its responsibilities. Under its charter, the Company, reviewcommittee also may consult with legal, accounting or other advisors, as appropriate, and may form and delegate authority to subcommittees when appropriate. The Compensation Committee held seven meetings in 2008. Its members are Dr. Duderstadt, Mr. Jones, Mr. Martin (chair) and Mr. McQuade.
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Finance Committee
The Finance Committee oversees the scope, feesCompany’s financial affairs, including its capital structure, financial arrangements, capital spending and resultsacquisition and disposition plans. It also oversees the management and investment of funds in the auditpension, savings and welfare benefit plans sponsored by the independent
auditors and review the internal audit organization and annual audit plan.Company. The members of the Audit Committee are Messrs. Duderstadt, Martin and McClements.
The Compensation and OrganizationFinance Committee held six meetings in 1997.2008. Its principal functionsmembers are to reviewMr. Bolduc (chair), Mr. Espe, Mr. Lifflander, Mr. Jones and approve remuneration of the Company's
elected officers, evaluate performance, reviewMr. McQuade.
Nominating and approve senior executive
compensation programs, administer remuneration plans, including the Company's
variable compensation plan and the 1990 Unisys Long-Term Incentive Plan (the
"1990 Plan"), and review management succession and related matters. The members
of the Compensation and OrganizationCorporate Governance Committee are Messrs. Goodes, Huston and
Macke.
The Nominating and Corporate Governance Committee held three meetings in 1997. All directors other
than Mr. Weinbach are members of the Nominating Committee. The principal
functions of the Nominating Committee are to identifyidentifies and reviewreviews candidates and recommendrecommends to the Board of Directors nominees for membership on the Board of Directors. In fulfilling this responsibility,It also oversees the Company’s corporate governance. The Nominating and Corporate Governance Committee held five meetings in 2008. Its members are Mr. Conway, Dr. Duderstadt (chair), Ms. Fletcher and Mr. Lifflander.
Director Nomination Process
As part of the nomination process, the Nominating and Corporate Governance Committee will
consideris responsible for determining the appropriate skills and characteristics required of new Board members in the context of the currentmake-up of the Board and for identifying qualified candidates for Board membership. In so doing, the Nominating and Corporate Governance Committee considers a number of factors including independence, experience, strength of character, mature judgment, technical skills, diversity, age and the extent to which the individual would fill a present need on the Board.
The Nominating and Corporate Governance Committee also reviews recommendations for Board membership received from stockholders and other qualified sources. Stockholder recommendationsRecommendations on director candidates must be in writing and addressed to the Chairman of the Nominating and Corporate Governance Committee,c/o Corporate Secretary, Unisys Corporation, Township
LineUnisys Way, Blue Bell, Pennsylvania 19424.
See “Related Party Transactions” below for a description of the agreement, dated May 20, 2008, between the Company, MMI Investments, L.P., MCM Capital Management, LLC, Clay B. Lifflander and Union Meeting Roads,Charles B. McQuade pursuant to which Mr. Lifflander and Mr. McQuade were appointed to the Board of Directors.
Communications with Directors
Stockholders and other interested parties may send communications to the Board of Directors or to the non-management directors as a group by writing to themc/o Corporate Secretary, Unisys Corporation, Unisys Way, Blue Bell, Pennsylvania 19424. IfAll communications directed to Board members will be delivered to them.
Code of Ethics and Business Conduct
Unisys has a code of ethics, the Unisys Code of Ethics and Business Conduct, that applies to all employees, officers (including the chief executive officer, chief financial officer and principal accounting officer or controller) and directors. The code is posted on the Company’s Internet web site atwww.unisys.com in the Investors section under Corporate Governance and Board of Directors and is also available in print to any stockholder who requests it. The Company intends to make a nominationpost amendments to or waivers from the code (to the extent applicable to the
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Company’s chief executive officer, chief financial officer or principal accounting officer or controller) at an Annual Meeting,this location on its web site.
Corporate Governance Guidelines
The Board of Directors has adopted Guidelines on Significant Corporate Governance Issues. The full text of these guidelines is available on the Company's Bylaws requireCompany’s Internet web site atwww.unisys.com in the Investors section under Corporate Governance and Board of Directors and is also available in print to any stockholder who requests it. Among other matters, the guidelines cover the following:
1. A majority of the Board of Directors shall qualify as independent under the listing standards of the New York Stock Exchange.
2. The Nominating and Corporate Governance Committee reviews annually with the Board the independence of outside directors. Following this review, only those directors who meet the independence qualifications prescribed by the New York Stock Exchange and who the Board affirmatively determines have no material relationship with the Company will be considered independent. The Board has determined that the stockholder deliverfollowing commercial or charitable relationships will not be considered to be material relationships that would impair independence: (a) if a noticedirector is an executive officer or partner of, or owns more than a ten percent equity interest in, a company that does business with Unisys, and sales to or purchases from Unisys are less than one percent of the annual revenues of that company and (b) if a director is an officer, director or trustee of a charitable organization, and Unisys contributions to that organization are less than one percent of its annual charitable receipts.
3. The Nominating and Corporate Governance Committee is responsible for determining the appropriate skills and characteristics required of Board members in the context of its currentmake-up, and will consider factors such as independence, experience, strength of character, mature judgment, technical skills, diversity and age in its assessment of the needs of the Board.
4. If the Chairman of the Board is not an employee of the Company, the Chairman should qualify as independent under the listing standards of the New York Stock Exchange. Members of the Audit, Compensation, and Nominating and Corporate Governance Committees must also so qualify.
5. It is the sense of the Board that the Company’s by-law provision that no person shall be elected a director after attaining age 70 is appropriate, and accordingly, no director should serve beyond the annual stockholders’ meeting following the attainment of age 70.
6. Directors should volunteer to resign from the Board upon a change in primary job responsibility. The Nominating and Corporate Governance Committee will review the appropriateness of continued Board membership under the circumstances and will recommend, and the Board will determine, whether or not less than 90 days prior
to such meeting setting forth (i)accept the name, age, business and residence
addresses of each nominee, (ii)director’s resignation. In addition, if the principal occupation or employment of each
nominee, (iii)Company’s chief executive officer resigns from that position, he is expected to offer his resignation from the Board at the same time.
7. Non-management directors are encouraged to limit the number of sharespublic company boards on which they serve to no more than four in addition to the Company’s and should advise the Chairman of the Board and the general counsel of the Company before accepting an invitation to serve on another board.
8. The non-management directors will meet in executive session at all regularly scheduled Board meetings. They may also meet in executive session at any time upon
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request. If the Chairman of the Board is an employee of the Company, the Board will elect from the independent directors a lead director who will preside at executive sessions. If the Chairman is not an employee, the Chairman will preside at executive sessions.
9. Board members have complete access to Unisys capital stock beneficially owned
by each nominee, (iv)management. Members of senior management who are not Board members regularly attend Board meetings, and the Board encourages senior management, from time to time, to bring into Board meetings other managers who can provide additional insights into the matters under discussion.
10. The Board and its committees have the right at any time to retain independent outside financial, legal or other advisors.
11. It is appropriate for the Company’s staff to report once a statement thatyear to the nominee is willingCompensation Committee on the status of Board compensation in relation to be nominatedother large U.S. companies. Changes in Board compensation, if any, should come at the suggestion of the Compensation Committee, but with full discussion and (v) such other information concerning each nominee as would be requiredconcurrence by the Securities and Exchange CommissionBoard. Particular attention will be paid to structuring Board compensation in a proxy statement soliciting proxiesmanner aligned with stockholder interests. In this regard, a meaningful portion of a director’s compensation should be provided and held in stock optionsand/or stock units. Directors should not, except in rare circumstances approved by the Board, draw any consulting, legal or other fees from the Company. In no event shall any member of the Audit Committee receive any compensation from the Company other than directors’ fees.
12. The Company will provide an orientation program for new directors. The Company will also provide directors with presentations from time to time on topics designed by the Company or third-party experts to assist directors in carrying out their responsibilities. Directors may also attend appropriate continuing education programs at the Company’s expense.
13. The Board will conduct an annual self-evaluation to determine whether it and its committees are functioning effectively.
14. The non-management directors will evaluate the performance of the chief executive officer annually and will meet in executive session, led by the chairperson of the Compensation Committee, to review this performance. The evaluation is based on objective criteria, including performance of the business, accomplishment of long-term strategic objectives and development of management. Based on this evaluation, the Compensation Committee will recommend, and the members of the Board who meet the independence criteria of the New York Stock Exchange will determine and approve, the compensation of the chief executive officer.
15. To assist the Board in its planning for the electionsuccession to the position of chief executive officer, the chief executive officer is expected to provide an annual report on succession planning to the Compensation Committee.
16. The Company’s stockholder rights plan expired on March 17, 2006, and it has no present intention to adopt a new one. Subject to its continuing fiduciary duties, which may dictate otherwise depending on the circumstances, the Board shall submit the adoption of any future stockholder rights plan to a vote of the stockholders. Any stockholder rights plan adopted or extended without stockholder approval shall be approved by a majority of the independent members of the Board and shall be in response to specific, articulable circumstances that are deemed to warrant such nominee.
action without the delay that might result from seeking prior stockholder approval. If the Board adopts or extends a rights plan without
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prior stockholder approval, the Board shall, within one year, either submit the plan to a vote of the stockholders or redeem the plan or cause it to expire.
Related Party Transactions
The Company is required to disclose any transactions since the beginning of 2008 (or any currently proposed transaction) in which the Company was a participant, the amount involved exceeds $120,000 and a director or executive officer, any immediate family member of a director or executive officer or any person or group beneficially owning more than 5% of the Company’s common stock had a direct or indirect material interest.
On May 20, 2008, the Company entered into an agreement with MMI Investments, L.P. (“MMI”), MCM Capital Management, LLC, Clay B. Lifflander and Charles B. McQuade (collectively, the “MMI Group”) pursuant to which Mr. Lifflander and Mr. McQuade were appointed to the Board has also designated a standingof Directors, to serve in the respective class of directors set forth above. Pursuant to the agreement, Mr. McQuade was appointed to the Compensation Committee and the Finance Committee, and Mr. Lifflander was appointed to the Nominating and Corporate Governance Committee and the Finance Committee, in each case, immediately following the 2008 annual meeting of stockholders. Under the terms of the agreement, the Company agreed to reimburse the MMI Group’s reasonable, documented out-of-pocket fees and expenses incurred in connection with the negotiation and execution of the agreement and other matters related to the 2008 annual meeting in an amount up to $125,000. The Company was informed that this amount included a $50,000 payment made by MMI to Mr. McQuade for agreeing to serve on the Board as MMI’s nominee. See “Security Ownership by Certain Beneficial Owners and Management” below for the beneficial ownership of Unisys common stock reported by MMI Investments, L.P., MCM Capital Management, LLC and Mr. Lifflander.
During 2008, the law firm Pepper Hamilton LLP, which has represented Unisys on a variety of matters for more than 20 years, provided legal services to Unisys for fees of approximately $800,000. The husband of Nancy Straus Sundheim is a partner in that firm. Ms. Sundheim has been Senior Vice President, General Counsel and Secretary of Unisys since 2001. Since that date, at the request of Mr. Sundheim, Pepper Hamilton has excluded from Mr. Sundheim’s annual compensation any income attributable to Unisys matters. Also, since 2001, it has been the Company’s practice that any decision to retain Pepper Hamilton is made by the chief executive officer, in consultation with the Unisys attorney responsible for the matter. Ms. Sundheim has no input in the decision to retain the firm.
Currently the Company has not adopted a policy specifically directed at the review, approval or ratification of related party transactions required to be disclosed. However, under the Unisys Code of Ethics and Business Conduct, all employees, officers and directors are required to avoid conflicts of interest. Employees (including officers) must review with, and obtain the approval of, their immediate supervisor and the Company’s Corporate Ethics Office, any situation (without regard to dollar amount) that may establishinvolve a conflict of interest. Directors should raise possible conflicts of interest with the chief executive officer or the general counsel. The code of ethics defines a conflict of interest as any relationship, arrangement, investment or situation in which loyalties are divided between Unisys interests and personal interests and specifically notes involvement (either personally or through a family member) in a business that is a competitor, supplier or customer of the Company as a particularly sensitive area that requires careful review.
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Audit Committee Report
In performing its oversight responsibilities as defined in its charter, the Audit Committee has reviewed and discussed the audited financial statements and reporting process, including the system of internal controls, with management and withKPMG LLP, the Company’s independent registered public accounting firm for the year ended December 31, 2008. The committee has also discussed with KPMG LLP the matters required to be discussed by the statement on Auditing Standards No. 61, as amended, (AICPA, Professional Standards, Vol. 1, AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T. In addition, the committee has received from KPMG LLP the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding KPMG LLP’s communications with the committee concerning independence and has discussed with KPMG LLP their independence. The committee has also considered the compatibility of audit-related services, tax services and other committeesnon-audit services with the firm’s independence.
Based on these reviews and discussions, the committee recommended to the Board of Directors that the audited financial statements be included in the Annual Report onForm 10-K for the year ended December 31, 2008 for filing with the SEC.
Audit Committee
Matthew J. Espe
Denise K. Fletcher
Edwin A. Huston
Leslie F. Kenne
Denise K. Fletcher
Edwin A. Huston
Leslie F. Kenne
Independent Registered Public Accounting Firm Fees and Services
KPMG LLP was the Company’s independent registered public accounting firm for the year ended December 31, 2008, and Ernst & Young LLP was the Company’s independent registered public accounting firm for the year ended December 31, 2007. Fees for KPMG LLP and Ernst & Young LLP for professional services rendered in respect of 2008 and 2007 (in millions of dollars), respectively, are as follows:
| 2008 | 2007 | |||||||
| Audit Fees | $ | 9.0 | $ | 8.8 | ||||
| Audit-Related Fees | 0.8 | 2.1 | ||||||
| Tax Fees | 1.1 | 0.1 | ||||||
| All Other Fees | — | — | ||||||
Audit fees consist of fees for the audit and review of the Company’s financial statements, statutory audits, comfort letters, consents, assistance with and review of documents filed with the SEC and Section 404 attestation procedures. Audit-related fees consist of fees for employee benefit plan audits, accounting advice regarding specific transactions and various attestation engagements. Tax fees principally represent fees for tax compliance services.
The Audit Committee annually reviews and pre-approves the services that may be provided by the independent registered public accounting firm. The committee has also adopted an Audit and Non-Audit Services Pre-Approval Policy that contains a list of pre-approved services, which the committee may revise from time to time. In addition, the Audit Committee has delegated pre-approval authority, up to a fee limitation of $150,000 per service, to the chairman of the committee.
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The chairman of the committee reports any such pre-approval decision to the Audit Committee at its next scheduled meeting.
Relationship with Independent Registered Public Accounting Firms
As stated above, Ernst & Young LLP was the Company’s independent registered public accounting firm for the year ended December 31, 2007. On March 14, 2008, the Audit Committee dismissed Ernst & Young LLP, and on March 19, 2008, the Audit Committee engaged KPMG LLP as the independent registered public accounting firm to audit the Company’s financial statements for the year ended December 31, 2008.
The audit report of Ernst & Young LLP on the consolidated financial statements of the Company for the year ended December 31, 2007 did not contain an adverse opinion or disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles. During the year ended December 31, 2007 and from January 1, 2008 through March 14, 2008, there were no disagreements with Ernst & Young LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to Ernst & Young LLP’s satisfaction, would have caused Ernst & Young LLP to make reference to the subject matter of such disagreements in connection with its report on the financial statements for such period.
During the year ended December 31, 2007 and from January 1, 2008 through March 14, 2008, there were no reportable events (as defined inRegulation S-K Item 304 (a)(1)(v)), except that as of December 31, 2007, the Company’s internal control over financial reporting was not effective due to the existence of a material weakness as more fully described in Item 9A of the Company’s Annual Report onForm 10-K for the year ended December 31, 2007. The Company concluded that a material weakness in internal control over financial reporting existed related to its control environment because the Company did not have a sufficient number of personnel with an appropriate level of U.S. GAAP knowledge and experience commensurate with its financial reporting requirements. The Company authorized Ernst & Young LLP to respond fully to inquiries of KPMG LLP concerning the material weakness. The Company remediated the material weakness during the fourth quarter of 2008.
During the year ended December 31, 2007 and in the subsequent interim period prior to the Company’s engagement of KPMG LLP, neither the Company nor anyone on its behalf consulted KPMG LLP regarding the application of accounting principles to a specified transaction (completed or proposed), the type of audit opinion that might be rendered on the Company’s financial statements, any matter being the subject of disagreement or “reportable event” or any other matter as defined inRegulation S-K, Item 304 (a)(1)(iv) or (a)(1)(v).
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
REGISTERED PUBLIC
ACCOUNTING FIRM
ACCOUNTING FIRM
The Board of Directors, upon the recommendation of its Audit Committee has selectedengaged the firm of Ernst & YoungKPMG LLP as the independent auditorsregistered public accounting firm to audit the Company's books and accountsCompany’s financial statements for the year ending December 31, 1998 and
recommends ratification2009. As stated above, KPMG LLP was the Company’s independent registered public accounting firm for the year ended December 31, 2008. The Company expects that representatives of such selection by the stockholders. Ernst & YoungKPMG LLP
has served as independent auditors for Unisys since the merger of Burroughs
Corporation and Sperry Corporation in 1986, having previously served in that
capacity for Sperry Corporation. Its representatives will be present at the Annual Meetingannual meeting and will have the opportunity to make a statement if they desire to do so and to respond to appropriate questions asked by stockholders. 5
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The Board of
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Directors considers Ernst & YoungKPMG LLP to be well qualified to serve as the independent auditorsregistered public accounting firm for Unisys. If, however, stockholders do notUnisys and recommends a vote for the proposal to ratify their selection.
The Board of Directors recommends a vote “FOR” the proposal to ratify the selection of Ernst & YoungKPMG LLP as the Board will reconsider the
appointment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO RATIFY THE
SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS FOR 1998. PROXIES
SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS STOCKHOLDERS
OTHERWISE SPECIFY IN THEIR PROXIES.
PROPOSED Company’s independent registered public accounting firm for 2009.
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AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION TO
EFFECT A REVERSE STOCK SPLIT
EFFECT A REVERSE STOCK SPLIT
The Company’s Board of Directors has unanimously approved,adopted and recommends that
stockholders consider and approve,is submitting for stockholder approval an amendment to the Company'sCompany’s Restated Certificate of Incorporation to increase(1) effect a reverse stock split at a reverse split ratio of between1-for-5 and1-for-20, which ratio will be selected by the aggregateBoard of Directors following stockholder approval and prior to the time of filing of a Certificate of Amendment with the Delaware Secretary of State, and (2) decrease the total number of authorized shares of Common
Stock from 360,000,000the Company’s common stock on a basis proportional to 720,000,000. The amendment would not change the authorized amount of the Company's preferred stock.
If the amendment isreverse split ratio approved by the stockholders,Board of Directors. Pursuant to the first sentencelaw of Section 1Delaware, the Company’s state of Article IVincorporation, the Board of Directors must adopt any amendment to the Company’s Restated Certificate of Incorporation would be amendedand submit the amendment to readstockholders for their approval. The form of the proposed amendment to the Company’s Restated Certificate of Incorporation to effect the reverse stock split is attached to this Proxy Statement as follows:
Section 1. Annex A.
The total numberBoard, in its discretion, may elect, at any time prior to next year’s annual meeting of sharesstockholders, to effect any reverse split ratio within the range set forth above upon receipt of all classesstockholder approval, or none of them if the Board determines in its discretion not to proceed with the reverse stock whichsplit. The Company believes that the Corporation shall have authorityavailability of a range of reverse split ratios will provide it with the flexibility to issue is 760,000,000, divided into two
classes consisting of 720,000,000 shares of Common Stock, par value $.01 per
share ("Common Stock"), and 40,000,000 shares of Preferred Stock, par value
$1 per share ("Preferred Stock").
As of March 1, 1998,implement the reverse stock split in a manner designed to maximize the anticipated benefits for the Company had approximately 250,000,000 sharesand its stockholders. In determining which reverse stock split ratio to implement, if any, following the receipt of Commonstockholder approval, the Board of Directors may consider, among other things, factors such as:
| • | the historical trading price and trading volume of the common stock; | |
| • | the then prevailing trading price and trading volume of the common stock and the anticipated impact of the reverse stock split on the trading market for the common stock; | |
| • | the Company’s ability to continue its listing on the NYSE; | |
| • | which reverse split ratio would result in the greatest overall reduction in the Company’s administrative costs; and | |
| • | prevailing general market and economic conditions. |
Reasons for the Reverse Stock issued and outstanding and had reserved approximately 77,000,000
shares for issuance upon the conversion of shares of preferred stock and other
convertible securities and in connection with the Company's various employee
benefit and compensation plans. This leaves approximately 33,000,000 authorized
but unissued shares of Common Stock available for future use.
Split
The Board of Directors believes that stockholders should authorize the reverse split for the following reasons:
| • | Compliance with NYSE Listing Standards. The Company’s common stock is listed on the NYSE under the symbol “UIS”. The Company was notified in writing by the NYSE on December 4, 2008 that it was below the criteria of the NYSE for continued listing because the average per share closing price of the common stock over a consecutive 30-trading-day period was less than $1.00. On December 12, 2008, the Company provided written notice to the NYSE of its intent to take actions to cure the deficiency, including a plan to pursue a reverse stock split. The Board of Directors believes that the increase in the stock price that it expects to result from the reverse stock split will reduce the risk that the Company’s common stock will be delisted by the NYSE. | |
| • | Increase in Eligible Investors. A reverse stock split would allow a broader range of institutions and other investors in the Company’s common stock, such as funds that are |
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| prohibited from buying stocks whose price is below a certain threshold, potentially increasing trading volume and liquidity. |
| • | Increased Broker Interest. A reverse stock split would help increase broker interest in the Company’s common stock as their policies can discourage them from recommending companies with lower stock prices. Because of the trading volatility often associated with lower-priced stocks, many brokerage houses and institutional investors have adopted internal policies and practices that either prohibit or discourage them from investing in such stocks or recommending them to their customers. Some of those policies and practices may also function to make the processing of trades in lower-priced stocks economically unattractive to brokers. Additionally, because brokers’ commissions on transactions in lower-priced stocks generally represent a higher percentage of the stock price than commissions on higher-priced stocks, the current average price per share of the Company’s common stock can result in individual stockholders paying transaction costs representing a higher percentage of their total share value than would be the case if the stock price were substantially higher. | |
| • | Decreased Stock Price Volatility. The Board of Directors believes that the increase in the stock price that it expects to result from the reverse stock split could decrease price volatility, as small changes in the price of the Company’s common stock currently result in relatively large percentage changes in the stock price. | |
| • | Decrease the Company’sCosts. The Board of Directors believes that the reverse stock split would also reduce certain of the Company’s costs, such as NYSE listing fees. |
Possible Disadvantages of the Reverse Stock Split
The Board of Directors believes that the potential advantages of a reverse stock split significantly outweigh any disadvantages that may result. The following are possible disadvantages of a reverse stock split:
The reverse stock split may not increase the price of the Company’s common stock. Although the Board of Directors expects that a reverse stock split will result in an increase in the price of the Company’s common stock, the effect of a reverse stock split cannot be predicted with certainty. Other factors, such as the Company’s financial results, market conditions and the market perception of the Company’s business may adversely affect the stock price. As a result, there can be no assurance that the reverse stock split, if completed, will result in the intended benefits described above, that the stock price will increase following the reverse stock split or that the stock price will not decrease in the future.
The reverse stock split may decrease the trading market for the Company’s common stock. Because the reverse stock split will reduce the number of shares of common stock available in the public market, the trading market for the Company’s common stock may be harmed, particularly if the stock price does not increase as a result of the reverse stock split.
The reverse stock split may leave certain stockholders with “odd lots”. The reverse stock split may result in some stockholders owning “odd lots” of fewer than 100 shares of the common stock. Odd lot shares may be more difficult to sell, and brokerage commissions and other costs of transactions in odd lots are generally somewhat higher than the costs of transactions in “round lots” of even multiples of 100 shares.
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Effects of the Reverse Stock Split
General
If the reverse stock split is approved and implemented, the principal effects will be to decrease the number of outstanding shares of the Company’s common stock based on the reverse stock split ratio selected by the Board of Directors and to proportionately decrease the number of authorized shares of Common Stock is necessary to providethe common stock. As of December 31, 2008, approximately 370 million shares of common stock were issued and outstanding. Based on this number of shares issued and outstanding and, for illustrative purposes only, assuming a reverse split ratio of1-for-10, the Company would have approximately 37 million shares outstanding immediately following the completion of the reverse stock split (without giving effect to the treatment of fractional shares discussed below).
The reverse stock split will not affect the registration of the common stock under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or the listing of the common stock on the NYSE. Following the reverse stock split, the common stock will continue to be listed on the NYSE under the symbol “UIS”, although it will be considered a new listing with additional flexibilitya new CUSIP number.
Proportionate voting rights and other rights of the holders of the common stock will not be affected by the reverse stock split, other than as a result of the treatment of fractional shares as described below. Except for stockholders who are cashed out as a result of holding fractional shares and the adjustments that may result from the treatment of fractional shares discussed below, the number of stockholders of record will not be affected by the reverse stock split and each stockholder will hold the same percentage of common stock immediately following the reverse stock split as such stockholder held immediately prior to meetthe reverse stock split.
Effectiveness of Reverse Stock Split
The reverse stock split, if approved by stockholders, would become effective upon the filing and effectiveness (the “Effective Time”) of a Certificate of Amendment to the Company’s Restated Certificate of Incorporation with the Secretary of State of the State of Delaware. It is expected that this filing will take place promptly following the annual meeting, assuming the stockholders approve the amendment. However, the exact timing of the filing of the amendment will be determined by the Board of Directors based on its future business needs.evaluation as to when such action will be the most advantageous to the Company and its stockholders. If the proposed
amendment is approvedBoard fails to implement the reverse stock split by next year’s annual meeting, stockholder approval would be required again prior to implementing any reverse stock split. In addition, the Board reserves the right, notwithstanding stockholder approval and without further action by the stockholders, to elect not to proceed with the Company will havereverse stock split if, at any time prior to filing the Certificate of Amendment, the Board, in its sole discretion, determines that it is no longer in the Company’s best interests and the best interests of its stockholders to proceed with the reverse stock split.
Effect on the Company’s Stock Plans
As shown on the table on page 22, as of December 31, 2008, approximately 42 million shares were issuable upon the exercise of outstanding stock options and upon the vesting of outstanding restricted stock units, and approximately 24.5 million additional shares available for acquisitions, equity financings, equity compensation plans,
stock dividends or stock splitswere reserved and other corporate purposes. The additional
shares would be available for issuance without further stockholder approval,
exceptpursuant to future awards under the Company’s stock incentive plans. Under these plans, the number of shares reserved and available for issuance and the number, exercise price, grant price or purchase price of shares subject to outstanding awards will be proportionately adjusted based on the reverse split ratio selected by the Board of Directors if the reverse stock split
17
is effected. As a result, using the above data as mayof December 31, 2008 and assuming for illustrative purposes only that a1-for-10 reverse stock split is effected, the number of shares issuable upon exercise or vesting of outstanding awards would be required by applicable lawadjusted from 42 million to 4.2 million, and the 24.5 million shares that were available for future issuance under the stock plans would be adjusted to 2.45 million shares (subject to increase as and when awards made under the stock plans expire or are forfeited and are returned in accordance with the rulesterms of the New York Stock
Exchange. Althoughplans). For individual holders, the number of shares subject to outstanding awards would be reduced by a factor of 10 and, in the case of outstanding stock options, the exercise price per share would be increased by a multiple of 10, such that upon an exercise, the aggregate exercise price payable by the optionee to the Company does not have any commitment or understanding at
this timewould remain the same. For example, an outstanding stock option for the issuance of additional5,000 shares of common stock, exercisable at $1.00 per share, would be adjusted as a result of a1-for-10 split ratio into an option exercisable for 500 shares of common stock at an exercise price of $10.00 per share.
Effect on Authorized but Unissued Shares of Common Stock (other than as
permitted or required under the Company's employee benefit plans), the proposed
amendment should enable
Currently, the Company is authorized to take timely advantageissue up to a total of favorable
opportunities and market conditions when they arise.
Holders of Unisys Common Stock have no preemptive rights with respect to
any additional760,000,000 shares, comprising 720,000,000 shares of Common Stock. The issuance of such additional shares
could have a dilutive effect on earnings per share of the Common Stockcommon stock and on
the equity and voting power of those holding Common Stock at the time of
issuance. In addition, the proposed amendment could have an anti-takeover
effect, as additional40,000,000 shares of Common Stock could be issuedpreferred stock. Concurrently with the reverse stock split, the Company intends to dilutedecrease its authorized shares of common stock by the same ratio as the reverse stock ownership and voting power of, or increasesplit (rounded to the cost to,nearest whole number). For example, assuming for illustrative purposes only a person seeking to
obtain control of the Company. However, the amendment is not being proposed in
response to any known effort to accumulate Common Stock or obtain control of the
Company.
6
10
Although the proposed increase in1-for-10 reverse stock split, the number of authorized shares of Common
Stockcommon stock would be decreased to 72 million. The number of authorized shares of preferred stock will not change.
Fractional Shares
The Company does not currently intend to issue fractional shares in connection with the reverse stock split. Stockholders who would otherwise hold fractional shares because the number of shares of common stock they hold before the reverse stock split is not intended for anti-takeover purposes,evenly divisible by the rules ofsplit ratio ultimately selected by the Securities
and Exchange Commission require disclosure of charter, bylaw and other
provisions that could have an anti-takeover effect. These include: (i) a
classified Board of Directors (ii)will receive cash (without interest) in lieu of such fractional shares in an amount equal to the requirementproceeds attributable to the sale of such fractional shares following the aggregation and sale by the Company’s transfer agent of all fractional shares otherwise issuable. Stockholders who own their shares in certificate form will receive such cash payment in lieu of fractional shares following the surrender of their pre-split certificates for post-split shares. The ownership of a supermajority votefractional share interest will not give the holder any voting, dividend or other rights, except to receive the above-described cash payment. Unisys will be responsible for any brokerage fees or commissions related to the removaltransfer agent’s selling in the open market shares that would otherwise be fractional shares.
Stockholders should be aware that, under the escheat laws of directors, (iii) a fair price provision requiring a supermajority
votevarious jurisdictions, sums due for certain business transactions involving a significant stockholder, (iv)
a prohibitionfractional interests that are not timely claimed after the Effective Time may be required to be paid to the designated agent for each such jurisdiction, unless correspondence has been received by the Company or the transfer agent concerning ownership of such funds within the time permitted in such jurisdiction. Thereafter, if applicable, stockholders otherwise entitled to receive such funds, but who do not receive them, will have to seek to obtain such funds directly from the state to which they were paid.
Effect on stockholder actions by written consent and on stockholder callsPar Value
The proposed amendments to the Company’s Restated Certificate of special meetings, (v) an advance notice provision for director nominations
and (vi) a stockholder rights plan.
The affirmative voteIncorporation will not affect the par value of the holderscommon stock, which will remain at $.01 per share.
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Reduction In Stated Capital
As a result of a majoritythe reverse stock split, upon the Effective Time, the stated capital on the Company’s balance sheet attributable to the common stock, which consists of the par value per share of the common stock multiplied by the aggregate number of shares of the common stock issued and outstanding, will be reduced in proportion to the size of the reverse stock split. Correspondingly, the Company’s additional paid-in capital account, which consists of the difference between the Company’s stated capital and the aggregate amount paid to the Company upon issuance of all currently outstanding shares of Commonthe common stock, will be credited with the amount by which the stated capital is reduced. The Company’s stockholders’ equity, in the aggregate, will remain unchanged.
No Going Private Transaction
Notwithstanding the decrease in the number of outstanding shares following the proposed reverse stock split, the Board of Directors does not intend for this transaction to be the first step in a “going private transaction” within the meaning ofRule 13e-3 of the Exchange Act.
Effect on Registered and Beneficial Holders
If the reverse stock split is effected, the Company intends to treat beneficial holders (i.e., stockholders who hold their shares in “street name” through a bank, broker or other nominee) in the same manner as registered stockholders whose shares are registered in their names. Banks, brokers or other nominees will be instructed to effect the reverse stock split for their beneficial holders holding shares in “street name”. However, these banks, brokers or other nominees may have their own procedures for processing the reverse stock split. Stockholders who hold shares with a bank, broker or other nominee and have questions in this regard are encouraged to contact their bank, broker or other nominee.
Effect on Registered Book-Entry Holders
The Company’s registered stockholders may hold some or all of their shares electronically in book-entry form under the direct registration system for securities. These stockholders will not have stock certificates evidencing their ownership of the Company’s common stock. They are, however, provided with a statement reflecting the number of shares registered in their accounts.
| • | If you hold shares in a book-entry form, you do not need to take any action to receive your post-split shares or your cash payment in lieu of any fractional share interest, if applicable. If you are entitled to post-split shares, a transaction statement will automatically be sent to your address of record indicating the number of shares you hold. | |
| • | If you are entitled to a payment in lieu of any fractional share interest, a check will be mailed to you at your registered address as soon as practicable after the Company’s transfer agent completes the aggregation and sale described above in “Fractional Shares”. By signing and cashing this check, you will warrant that you owned the shares for which you received a cash payment. |
Effect on holders of Registered Certificated Shares
Some registered stockholders hold their shares of Unisys common stock in certificate form or a combination of certificate and book-entry form. If any of your shares are held in certificate form, you will receive a transmittal letter from the Company’s transfer agent as soon as practicable after the effective date of the reverse stock split. The transmittal letter will contain instructions on how to
19
surrender your certificate(s) representing your pre-split shares to the transfer agent. Upon receipt of your properly completed and executed letter of transmittal and your stock certificate(s), you will be issued the appropriate number of shares electronically in book-entry form under the direct registration system. This means that, instead of receiving a new stock certificate, you will receive a direct registration statement that indicates the number of post-split shares you own in book-entry form. At any time after receipt of your direct registration statement, you may request a stock certificate representing your post-split ownership interest. If you are entitled to a payment in lieu of any fractional share interest, payment will be made as described above under “Fractional Shares”.
No new shares in book-entry form will be issued and no payment in lieu of any fractional share interest will be made to you until you surrender your outstanding certificate(s), together with the properly completed and executed letter of transmittal, to the transfer agent.
YOU SHOULD NOT SEND YOUR CERTIFICATES NOW. YOU SHOULD SEND THEM ONLY AFTER YOU RECEIVE THE LETTER OF TRANSMITTAL FROM THE TRANSFER AGENT.
No Appraisal Rights
Under the Delaware General Corporation Law, the Company’s stockholders are not entitled to dissenter’s rights or appraisal rights with respect to the reverse stock split described in this proposal.
Certain Federal Income Tax Consequences of the Reverse Stock Split
The following is a general summary of certain U.S. federal income tax consequences of the reverse stock split that may be relevant to stockholders. This summary is based upon the provisions of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), Treasury regulations promulgated thereunder, published administrative rulings and judicial decisions as of the date hereof, all of which may change, possibly with retroactive effect, resulting in U.S. federal income tax consequences that may differ from those discussed below. This summary does not purport to be complete and does not address all aspects of federal income taxation that may be relevant to stockholders in light of their particular circumstances or to stockholders that may be subject to special tax rules, including, without limitation: (i) stockholders subject to the alternative minimum tax; (ii) banks, insurance companies, or other financial institutions; (iii) tax-exempt organizations; (iv) dealers in securities or commodities; (v) regulated investment companies or real estate investment trusts; (vi) partnerships (or other flow-through entities for U.S. federal income tax purposes and their partners or members); (vii) traders in securities that elect to use a mark-to-market method of accounting for their securities holdings; (viii) foreign stockholders or U.S. stockholders whose “functional currency” is not the U.S. dollar; (ix) persons holding the common stock as a position in a hedging transaction, “straddle,” “conversion transaction” or other risk reduction transaction; (x) persons who acquire shares of the common stock in connection with employment or other performance of services; (xi) dealers and other stockholders that do not own their shares of common stock as capital assets; or (xii) U.S. expatriates. In addition, this summary does not address the tax consequences arising under the laws of any foreign, state or local jurisdiction and U.S. federal tax consequences other than federal income taxation. If a partnership (including any entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds shares of the common stock, the tax treatment of a partner in the partnership generally will depend upon the status of the partner and the activities of the partnership.
The Company has not sought, and will not seek, an opinion of counsel or a ruling from the Internal Revenue Service (“IRS”) regarding the United States federal income tax consequences of
20
the reverse stock split and there can be no assurance the IRS will not challenge the statements and conclusions set forth below or that a court would not sustain any such challenge. EACH STOCKHOLDER SHOULD CONSULT SUCH HOLDER’S TAX ADVISOR WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT TO SUCH STOCKHOLDER.
The reverse stock split should constitute a “recapitalization” for U.S. federal income tax purposes. As a result, a stockholder generally should not recognize gain or loss upon the reverse stock split, except with respect to cash received in lieu of a fractional share of the common stock, as discussed below. A stockholder’s aggregate tax basis in the shares of the common stock received pursuant to the reverse stock split should equal the aggregate tax basis of the shares of the common stock surrendered (excluding any portion of such basis that is allocated to any fractional share of the common stock), and such stockholder’s holding period (i.e., acquired date) in the shares of the common stock received should include the holding period in the shares of the common stock surrendered. Treasury regulations promulgated under the Internal Revenue Code provide detailed rules for allocating the tax basis and holding period of the shares of the common stock surrendered to the shares of the common stock received pursuant to the reverse stock split. Stockholders who acquired their shares of common stock on different dates and at different prices should consult their tax advisors regarding the allocation of the tax basis and holding period of such shares.
A stockholder who receives cash in lieu of a fractional share of the common stock pursuant to the reverse stock split generally should recognize capital gain or loss in an amount equal to the difference between the amount of cash received and the holder’s tax basis in the shares of the common stock surrendered that is allocated to such fractional share of the common stock. Such capital gain or loss should be long term capital gain or loss if the holder’s holding period for the common stock surrendered exceeded one year at the Effective Time.
Information Reporting and Backup Withholding. Information returns generally will be required to enactbe filed with the proposed amendment.
IRS with respect to the receipt of cash in lieu of a fractional share of the common stock pursuant to the reverse stock split. In addition, stockholders may be subject to a backup withholding tax (at the current applicable rate of 28%) on the payment of such cash if they do not provide their taxpayer identification numbers in the manner required or otherwise fail to comply with applicable backup withholding tax rules. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be refunded or allowed as a credit against the stockholder’s federal income tax liability, if any, provided the required information is timely furnished to the IRS.
THE BOARD OF DIRECTORS RECOMMENDS ATHAT YOU VOTE "FOR" THE“FOR” THIS PROPOSAL TO AMEND THE COMPANY’S RESTATED CERTIFICATE OF INCORPORATION. PROXIES SOLICITEDINCORPORATION TO (1) EFFECT A REVERSE STOCK SPLIT AT A REVERSE SPLIT RATIO OF BETWEEN1-FOR-5 AND1-FOR-20, WHICH RATIO WILL BE SELECTED BY THE BOARD OF DIRECTORS WILL
BE SO VOTED UNLESS STOCKHOLDERS OTHERWISE SPECIFY IN THEIR PROXIES.
STOCKHOLDER PROPOSAL
PRIOR TO THE TIME OF FILING OF A CERTIFICATE OF AMENDMENT WITH THE DELAWARE SECRETARY OF STATE, AND (2) DECREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK.
21
EQUITY COMPENSATION PLAN INFORMATION
The New York City Teachers' Retirement System, c/o The Cityfollowing table sets forth information as of New York
Office of the Comptroller, 1 Centre Street, New York, NY 10007-2341, beneficial
owner of 226,400 shares ofDecember 31, 2008 with respect to compensation plans under which Unisys Common Stock, has proposed the adoption of the
following resolution:
BE IT RESOLVED, that the shareholders of Unisys Corporation request that the
Board of Directors amend the certificate of incorporation to reinstate the
rights of the shareholders to take action by written consent and to call
special meetings.
SUPPORTING STATEMENT OF THE PROPONENT
The rights of the shareholders to take action by written consent and to
call special meetings should not be abridged.
The Company's elimination of these rights, in our opinion, effectively
removes important processes by which shareholders can act expeditiously to
protect their investment interests.
For example, the right of shareholders to act to remove incumbent directors
for egregious conduct should not be limited to the annual meeting. Also,
shareholders should not be prevented from giving timely consideration to a
bidder's proposal to acquire control of the company, or a dissident
shareholders' slate of nominees for election to the Board of Directors, because
such proposals are required to be presented only at the annual meeting.
STATEMENT OF UNISYS IN OPPOSITION TO STOCKHOLDER PROPOSAL
The Company's Certificate of Incorporation and/or Bylaws (collectively, the
"Corporate Documents") (i) require the Company to hold an annual meeting of
stockholders each year, (ii) prohibit stockholder action by written consent and
(iii) allow special meetings to be called only by a majority of the Board of
Directors. The proposed amendments would allow stockholders to call special
meetings and to act by written consent without a meeting for any reason and at
any time. The Board believes that adoption of these amendments would undermine,
rather than foster, stockholder democracy, would be disruptive and would impose
significant administrative and financial burdens.
The Board believes that permitting stockholders to solicit written consents
on any matter at any time would be both confusing and disruptive in a publicly
held corporation with almost
7
11
250,000,000 shares outstanding and more than 37,000 stockholders of record. In
addition, amending the Corporate Documents to permit written consents could
disenfranchise many stockholders. Under the current provisions in the Corporate
Documents, which prohibit stockholder action by written consent, all the
stockholders of the Company have the opportunity to participate in meetings
called to determine proposed actions. These provisions thus allow the
opportunity for discussion and increase the ability of all stockholders to have
their views considered. The proposed amendments, on the other hand, would make
it possible for the holders of a simple majority of voting shares to use the
consent procedure to take action without a meeting and before all arguments can
be heard. The Board believes that this does not further stockholder democracy.
At the annual meeting of stockholders, which is already required by the
Corporate Documents, stockholders have an opportunity to raise any appropriate
matter. Allowing stockholders to call an unlimited number of special meetings
for any reason and at any time would be disruptive to the conduct of business
and would impose significant administrative and financial burdens on the
Company. Special meetings are costly in terms of both time and money. Each of
the thousands of holders of the Company's common stock must receive proxy
materialsis authorized for every special meeting. This involves legal, printing and postage
expense, in addition to those costs normally associated with the Company's
annual meeting. In addition, preparing for a stockholder meeting requires
significant attention from corporate officers and employees, diverting them from
running the business. The current provisions in the Corporate Documents, which
allow only the Board of Directors to call special meetings, ensure the orderly
conduct of corporate affairs. They also prevent a minority of the shares from
imposing upon the Company the burden and expense of a stockholder meeting that
may not be desired by the majority.
For the reasons stated above, the Board of Directors believes that the
proposed amendments are not in the best interests of the Company or its
stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THE ADOPTION OF THE
FOREGOING STOCKHOLDER PROPOSAL. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL
BE SO VOTED UNLESS STOCKHOLDERS OTHERWISE SPECIFY IN THEIR PROXIES.
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12
issuance.
| Number of securities | |||||||||||
| Number of securities | remaining available for | ||||||||||
| to be issued | Weighted-average | future issuance under | |||||||||
| upon exercise of | exercise price of | equity compensation plans | |||||||||
| outstanding options, | outstanding options, | (excluding securities | |||||||||
| warrants and rights | warrants and rights | reflected in column (a)) | |||||||||
Plan category | (a) | (b) | (c) | ||||||||
| Equity compensation plans approved by | 29.073 million | (1) | $ | 17 | .33 | ||||||
| security holders | 7.762 million | (2) | $ | 0 | 24.505 million(3) | ||||||
| Equity compensation plans not approved | 5.067 million | (5) | $ | 10 | .70 | ||||||
| by security holders(4) | 0.133 million | (6) | $ | 0 | 0 | ||||||
| Total | 42.035 million | $ | 16 | .35 | 24.505 million | ||||||
| (1) | Represents stock options. | |
| (2) | Represents restricted share units and stock units. Assumes that performance-based restricted stock units will vest at target. | |
| (3) | 6.317 million shares are issuable under the Unisys Corporation 2003 Long-Term Incentive and Equity Compensation Plan (the “2003 Plan”) and 18.188 million shares are issuable under the Unisys Corporation 2007 Long-Term Incentive and Equity Compensation Plan (the “2007 Plan”). Assumes that outstanding performance-based restricted stock units will vest at target. | |
| (4) | Comprises the Unisys Corporation Director Stock Unit Plan (the “Stock Unit Plan”) and the 2002 Stock Option Plan (the “2002 Plan”). Under the Stock Unit Plan, directors received a portion of their annual retainers and attendance fees in common stock equivalent units. The Stock Unit Plan was terminated in 2004, and stock units are now granted to directors under either the 2003 Plan or the 2007 Plan, both of which were approved by stockholders. Under the 2002 Plan, stock options could be granted to key employees other than elected officers to purchase the Company’s common stock at no less than 100% of fair market value at the date of grant. Options generally had a maximum duration of ten years and were exercisable in four equal annual installments beginning one year after the date of grant. The 2002 Plan was replaced by the 2003 Plan in 2003. No further awards will be made under either the Stock Unit Plan or the 2002 Plan, and no shares (other than shares subject to outstanding options and other awards previously made) are available for future issuance under either plan. | |
| (5) | Represents options granted under the 2002 Plan. | |
| (6) | Represents stock units granted under the Stock Unit Plan. |
22
SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
FMR Corp., Edward C. Johnson 3d, Abigail P. Johnson and Fidelity Management
& Research Company, 82 Devonshire Street, Boston, Massachusetts 02109, have
jointly filed a Schedule 13G
Shown below is information with the Securities and Exchange Commission dated
February 14, 1998 reporting beneficial ownership of 29,585,516 shares (or
11.72%)respect to persons or groups that beneficially own more than 5% of Unisys Common Stock. Ofcommon stock. This information is derived from Schedules 13D and 13G filed by such shares, 3,406,141 represent shares
issuable upon conversion of the Company's convertible debt securities and
preferred stock. Sole dispositive power has been reported for 29,585,516 shares.
Sole voting power has been reported for 1,327,133persons or groups.
| Name and Address of | Number of Shares | Percent | ||||||
Beneficial Owner | of Common Stock | of Class | ||||||
| Brandes Investment Partners, L.P. | 28,814,519 | (1) | 7.95 | |||||
| Brandes Investment Partners, Inc. | ||||||||
| Brandes Worldwide Holdings, L.P. | ||||||||
| Charles H. Brandes | ||||||||
| Glenn R. Carlson | ||||||||
| Jeffrey A. Busby | ||||||||
| 11988 El Camino Real, | ||||||||
| Suite 500 | ||||||||
| San Diego, CA 92130 | ||||||||
| Joseph L. Harrosh | 22,456,789 | (2) | 6.199 | |||||
| P.O. Box 6009 | ||||||||
| Fremont, CA 94538 | ||||||||
| MMI Investments, L.P. | 26,322,000 | (2,3) | 7.3 | |||||
| MCM Capital Management, LLC | ||||||||
| Clay B. Lifflander | ||||||||
| 1370 Avenue of the Americas New York, NY 10019 | ||||||||
| Steel Partners II, L.P. | 33,029,847 | (2) | 9.1 | |||||
| Steel Partners LLC | ||||||||
| WebFinancial L.P. | ||||||||
| Warren G. Lichtenstein | ||||||||
| 500 Madison Avenue New York, NY 10022 | ||||||||
| Steel Partners II Master Fund L.P. | ||||||||
c/o Morgan Stanley Fund Services (Cayman) Ltd. | ||||||||
| Cricket Square, 2d Floor, Boundary Hall Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands | ||||||||
| (1) | Shared dispositive power has been reported for 28,814,519 shares. Shared voting power has been reported for 22,637,034 shares. | |
| (2) | Sole dispositive and sole voting power have been reported for all shares. | |
| (3) | According to an amendment to Schedule 13D filed with the SEC on November 10, 2008, neither MCM Capital Management, LLC (“MCM”) nor Mr. Lifflander directly owns any shares of Unisys common stock. However, by virtue of being the general partner of MMI Investments, L.P. (“MMI”), MCM may be deemed to be the beneficial owner of the shares owned by MMI and to have sole power over the voting and disposition of such shares as a result of its having the sole power to make voting and disposition decisions on behalf of MMI with respect to the shares held by MMI. Furthermore, as a member of a “group” for purposes ofRule 13d-5(b)(1) of the Securities Exchange Act of 1934, as amended, Mr. Lifflander may be deemed to beneficially own the shares owned by MMI. Mr. Lifflander has disclaimed beneficial ownership of such shares. |
23
Shown below are the number of shares of Unisys Common Stockcommon stock (or Stock
Units)stock units) beneficially owned as of March 1, 1998,February 28, 2009 by all directors and nominees, each of the executive officers named on page ,33, and all current directors and executivecurrent officers of Unisys as a group. No director or named executive officer
beneficially owns more than one percent of the outstanding shares of Unisys
Common Stock. All current directors and executive officers as a group
beneficially own 1. % of the shares of Unisys Common Stock deemed outstanding.
| Additional Shares of | ||||||||||||
| Number of Shares | Common Stock Deemed | |||||||||||
Beneficial Owner | of Common Stock (1)(2)(3) | Beneficially Owned(1)(4) | Percent of Class(2) | |||||||||
| J.P. Bolduc | 63,164 | 68,000 | * | |||||||||
| J. Edward Coleman | 141,000 | — | * | |||||||||
| Craig A. Conway | 36,205 | — | * | |||||||||
| Anthony P. Doye | 132,006 | — | * | |||||||||
| James J. Duderstadt | 60,527 | 68,000 | * | |||||||||
| Henry C. Duques | 114,692 | 68,000 | * | |||||||||
| Matthew J. Espe | 39,458 | 24,000 | * | |||||||||
| Denise K. Fletcher | 47,078 | 48,000 | * | |||||||||
| Janet B. Haugen | 59,137 | 725,000 | * | |||||||||
| Edwin A. Huston | 64,213 | 68,000 | * | |||||||||
| Clayton M. Jones | 40,433 | 24,000 | * | |||||||||
| Leslie F. Kenne | 33,135 | — | * | |||||||||
| Clay B. Lifflander | 24,572,000 | — | 6.6 | |||||||||
| Richard C. Marcello | 28,726 | 16,667 | * | |||||||||
| Theodore E. Martin | 140,863 | 68,000 | * | |||||||||
| Joseph W. McGrath | 142,203 | 1,755,000 | * | |||||||||
| Charles B. McQuade | 110,819 | — | * | |||||||||
| Nancy S. Sundheim | 40,883 | 499,000 | * | |||||||||
| All directors and current officers as a group | 25,829,876 | 2,590,667 | 7.0 | |||||||||
| * | Less than 1% | |
| (1) | Includes shares reported by directors and | |
| (2) | According to a Form 4 filed with the SEC on November 21, 2008, all 24,572,000 shares shown for Mr. Lifflander are owned directly by MMI Investments, L.P., the general partner of which, MCM Capital Management, LLC (“MCM”), owns, indirectly as such general partner, its proportionate interest of these shares. Mr. Lifflander is a Voting Member and President of MCM. Mr. Lifflander and MCM have disclaimed beneficial ownership of such shares except to the extent of their respective pecuniary interests therein. Mr. Lifflander has informed the Company that the shares owned by MMI Investments, L.P. are held in marginable accounts. If the shares with respect to which Mr. Lifflander has disclaimed beneficial ownership were excluded, the amounts shown in the table for all directors and current officers as a | |
| (3) | Includes: |
| (a) | Shares held under the Unisys Savings Plan, a qualified plan under Sections 401(a) and 401(k) of the Internal Revenue Code, as follows: Ms. Haugen, 15,385; Mr. McGrath, 4,590; Ms. Sundheim, 7,169; current officers as a group, 41,904. With respect to such shares, plan participants have authority to direct voting. | |
| (b) | Stock units, as described on page 46, for directors as follows: Mr. Bolduc, 27,029; Dr. Duderstadt, 26,342; Mr. Duques, 76,557; Mr. Espe, 6,323; Ms. Fletcher, 13,943; Mr. Huston, 30,078; Mr. Jones, 7,298; Mr. Martin, 87,728 and Mr. McQuade, 10,819. They may not be voted. |
| (4) | Shares shown are shares subject to options exercisable within 60 days following March 31, 2009. |
24
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Compensation Philosophy
The Company’s executive compensation program is based upon the following objectives:
| • | attract, retain and motivate executives responsible for the Company’s long-term success; | |
| • | reward executives for achieving both financial and strategic Company goals; | |
| • | align executive and stockholder interests through long-term, equity-based plans; and | |
| • | provide a compensation package that recognizes individual contributions as well as overall business results. |
Given these objectives, the Company’s executive compensation program is designed to provide a mix of fixed compensation and at-risk compensation that is heavily weighted towards variable compensation tied to the achievement of specific business objectives and corporate financial goals (both short-term and long-term), as well as to the attainment of the executive’s individual performance objectives. To that end, the principal components of executive officer compensation are:
| • | base salary; | |
| • | annual cash incentives tied to annual corporate and individual performance; and | |
| • | long-term incentives in the form of restricted stock units, stock optionsand/or other stock-based awards. |
In addition, executive officers receive other benefits that the Company believes are reasonable and consistent with its overall compensation program. These include supplemental retirement programs and executive perquisites.
Each of the three principal elements of the Company’s executive compensation program is essential to meeting the program’s overall objectives, and most of the compensation components simultaneously fulfill one or more of these objectives. Base salaries, which are the only fixed component of compensation, are used primarily to attract and retain executives responsible for the Company’s long-term success. Annual cash incentive compensation is “at-risk” compensation designed both to reward executives for the achievement of short-term corporate and individual goals and to attract and retain executives. Long-term incentive compensation is intended to align executive and stockholder interests, to motivate and reward executives for long-term business success and to attract and retain executives responsible for this long-term success.
The Company has not adopted a formula to allocate total compensation among its various components. As a general matter, total target compensation, as well as each element of total target compensation, is intended to be consistent with the median for the companies against which Unisys benchmarks the compensation it pays to its executive officers. However, the Company incorporates flexibility into its compensation programs and into the assessment process to respond to and adjust for the changing business environment and to emphasize, as needed, one or more of its compensation objectives.
25
Benchmarking
The Company’s executive compensation program takes into account the compensation practices of companies with which Unisys competes or could compete for executive talent. In its general review of the Company’s executive compensation program in 2008, the Compensation Committee compared the Company’s overall compensation practices (types of compensation paid, mix of variable and fixed compensation, mix of cash and equity-based compensation and the like) with the compensation practices of the 36 High Technology companies in the Towers Perrin TriComp survey that are principally in the businesses of systems integration and consulting, information technology outsourcing, infrastructure services and hardware technology.
The committee then, in setting compensation levels for the Company’s executive officers, reviewed the officers’ total annual compensation, as well as each component of their total compensation, against the median compensation levels for persons holding comparable positions at a subset of the High Technology companies in the Towers Perrin TriComp survey. The companies included in this subset, which have revenue levels more similar to the Company’s, were:
| Advanced Micro Devices Agilent Technologies Applied Materials EMC KLA-Tencor Lenovo | Lexmark International NCR National Semiconductor Nortel Networks Qualcomm | Seagate Technology Sun Microsystems Symantec Texas Instruments Yahoo |
As a general proposition, total target compensation, as well as each element of total target compensation, for the Company’s executive officers is intended to be consistent with the median for this smaller group of benchmark companies. However, because the Compensation Committee also takes into consideration both individual and corporate performance, as well as a subjective assessment of the relative complexity and strategic importance of any particular position held, any given executive can be compensated at, above or below the median benchmark levels. For 2008, base salaries and annual incentive targets were generally in line with the benchmark companies. For the reasons set forth below, long-term incentive targets were below the benchmark levels, and, as a result, total target compensation was below competitive levels.
Role of Compensation Consultants and Management
To assist in carrying out its responsibilities, the Compensation Committee regularly consults with the committee’s outside compensation consultant. Under its charter, the Compensation Committee has sole authority to retain and terminate outside compensation consultants, including sole authority to approve the consultant’s fees and other retention terms. In December 2007, the Compensation Committee engaged Watson Wyatt to act as its outside compensation consultant. As the committee’s outside compensation consultant, Watson Wyatt performed such duties as were requested by the committee. Those duties consisted primarily of providing market data and advice to the committee that were used to determine executive and director compensation, particularly analyses of the Company’s executive and director compensation in comparison to the benchmark companies. Watson Wyatt spoke with the chairman of the Compensation Committee, as well as with management, in preparing for committee meetings, regularly attended committee meetings and frequently met in executive session with the Compensation Committee without the presence of management.
26
The Compensation Committee also receives reports and recommendations from management. In particular, the committee solicits input from the chief executive officer regarding the compensation of those executives reporting directly to him. In connection with these recommendations, the chief executive officer consults with the Company’s head of human resources and senior executive compensation staff and meets periodically with the Compensation Committee’s outside compensation consultant to review the benchmark data. In addition, the chief executive officer provides recommendations, based on the Company’s operating and strategic plans, to the Compensation Committee related to the corporate performance measures used in the Company’s annual and long-term incentive plans, as well as the recommended threshold, target and maximum performance levels. In connection with these recommendations, the chief executive officer consults with the Company’s chief financial officer. Although the chief executive officer regularly attends Compensation Committee meetings, his compensation package is considered by the committee in an executive session without him present, using data, analysis and advice provided by the outside compensation consultant. The Compensation Committee also meets from time to time in executive session with the outside compensation consultant, but without the presence of the chief executive officer or any other members of management, to consider, among other things, the compensation recommendations proposed by the chief executive officer.
Chairman and Chief Executive Officer
Effective October 7, 2008, the Board of Directors elected J. Edward Coleman as the Company’s Chairman of the Board and Chief Executive Officer. In connection with his election, the Company and Mr. Coleman entered into an employment agreement dated October 6, 2008 (and amended on December 22, 2008 to comply with Section 409A of the Internal Revenue Code. With respect to such shares,
plan participants have authority to direct voting. Also includes restricted
shares and restricted share units, as follows: Mr. Barron, 66,695; Mr.
Gagliardi, 80,000; Mr. Gazerwitz, 65,000; Mr. Russell, 108,339; Mr. Unruh,
269,474; Mr. Weinbach, 169,762; current executive officers as a group,
787,872. Also includes Stock Units, as described on page , for directors as
follows: Mr. Bolduc, 7,655; Dr. Duderstadt, 7,957, Ms. Fosler, 6,560; Mr.
Goodes, 8,362; Mr. Huston, 9,016; Mr. Macke, 33,485; Mr. Martin, 15,629; Mr.
McClements, 14,815 and Mr. Schwartz, 15,782.
(3) Shares shown are shares subject to options exercisable within 60 days
following March 1, 1998.
(4) Mr. Unruh resigned as a director and executive officer in September 1997.
9
13
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the annual and
long-term compensation paid to (i) the current chief executive officer and the
former chief executive officer and (ii) the other four most highly compensated
executive officers of Unisys in 1997 (the "Named Officers"), for services
rendered in all capacities to Unisys for 1997, 1996 and 1995.
- ---------------
(1) Amounts shown include compensation deferred under the Savings Plan or the
Deferred Compensation Plan for Executives of Unisys Corporation.
(2) Amount shown for Mr. Weinbach includes the one-time bonus described at page
.
(3) Amounts shown for Mr. Weinbach are tax reimbursements and personal benefits,
including $102,072 for relocation. All amounts shown for the other Named
Officers for 1997 are tax reimbursements. No amounts are shown in respect of
personal benefits for the other Named Officers for 1997 because the
aggregate amount of such personal benefits did not exceed the lesser of
$50,000 or 10% of the total annual salary and bonus of such officer as
reported in the above table.
(4) Amounts shown are the dollar value of restricted stock awards based on the
closing market price of Unisys Common Stock on the date of grant. At
December 31, 1997, the number and value of restricted share holdings for
each of the Named Officers were as follows: Mr. Weinbach - 169,762 shares,
$2,355,448; Mr. Unruh - 269,474 shares, $3,738,952; Mr. Gagliardi - 80,000
shares, $1,110,000; Mr. Gazerwitz - 23,316 shares, 41,684 restricted share
units, $901,875; Mr. Russell - 108,339 shares, $1,503,204; Mr.
Barron - 66,695 shares, $925,393. The grant to Mr. Weinbach is more fully
described at page .
(5) Although the 1990 Plan permits grants of free-standing stock appreciation
rights and the payment of performance awards, no such grants or payments
were made to any of the Named Officers during the years presented.
10
14
(6) Amounts shown for 1997 include the full amount of premiums paid by Unisys
for life insurance under split-dollar arrangements and premiums reimbursed
to the Named Officers for indemnity insurance as follows: Mr. Unruh -
$15,999, $351,000; Mr. Gagliardi - $30,810, $56,500; Mr.
Gazerwitz - $15,616, $69,500; Mr. Barron - $49,940, $63,500. Amount shown
for Mr. Russell consists of $53,900 for split dollar life insurance, $7,000
for indemnity insurance and $200,000 in respect of the incentive forfeiture
payments referred to on page .
(7) Mr. Weinbach joined Unisys on September 23, 1997.
(8) Mr. Unruh served as Chairman and Chief Executive Officer until September
1997.
(9) Mr. Russell joined Unisys in November 1995.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth further information on grants of stock
options during 1997 to the Named Officers pursuant to the 1990 Plan. No stock
appreciation rights were granted during 1997.
- ---------------
(1) Illustrates value that might be realized upon exercise of options
immediately prior to the expiration of their term, assuming specified
compounded rates of appreciation on Unisys Common Stock over the term of the
options. Assumed rates of appreciation are not necessarily indicative of
future stock performance.
(2) Options granted to Mr. Weinbach were granted on September 23, 1997. Options
granted to the other Named Officers were granted on April 23, 1997. Options
become exercisable in four equal annual installments, beginning one year
after the date of grant. Options become immediately exercisable in the event
of a change in control (as defined in the 1990 Plan).
(3) The exercise price per share is the fair market value (calculated as the
average of the high and low sales prices reported on the Composite Tape for
New York Stock Exchange Listed Companies) of a share of Unisys Common Stock
on the date of grant. Options may be exercised with cash and/or with other
shares of Unisys Common Stock or with any other form of consideration
permitted by the Compensation and Organization Committee.
(4) The options were granted for a term of ten years, subject to earlier
termination in certain events related to termination of employment.
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15
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth information with respect to option exercises
during 1997 and unexercised stock options held by the Named Officers at December
31, 1997.
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(1) Difference between the closing price reported on the Composite Tape for New
York Stock Exchange Listed Companies for Unisys Common Stock at December 31,
1997 and the exercise price.
LONG-TERM INCENTIVE PLAN AWARDS
On September 23, 1997, Lawrence A. Weinbach received an award of 169,762
restricted shares of Unisys Common Stock under the 1990 Plan. The grant vested
25% on September 23, 1997. The remaining restricted shares will vest in
installments over the three-year period ending September 23, 2000, provided Mr.
Weinbach remains in the employ of Unisys. Restricted shares may be voted and
will receive dividends if and to the extent that dividends are paid on
unrestricted shares of Unisys common stock. They may not be sold or pledged
until the award vests.
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PENSION PLANS
The table below shows the aggregate annual amounts at age 65 that would be
received from the Unisys Pension Plan (the "Pension Plan"), the Supplemental
Executive Retirement Plan (the "Supplemental Plan") and the Elected Officer
Pension Plan (the "Officer Plan").
The Pension Plan and Supplemental Plan generally are available to all
employees located in the United States. The Officer Plan is available to
officers, including the Named Officers, who satisfy certain minimum service
requirements. The aggregate pension amount payable under the Officer Plan is
offset by benefits paid under the Pension Plan, the Supplemental Plan and any
applicable subsidiary plan. The amounts shown in the table are computed on a
single life annuity basis and are subject to a reduction equal to 50% of the
participant's primary social security benefit.
Final Average Compensation generally corresponds to the amounts shown in
the Summary Compensation Table under the headings Salary and Bonus. However,
Final Average Compensation is calculated using the individual's highest 60
consecutive months of compensation out of the final 120 months of employment and
thus will differ somewhat from the amounts shown in the Summary Compensation
Table. Final Average Compensation for the eligible Named Officers as of March 1,
1998 is as follows: J. A. Unruh - $ ; G. A. Gagliardi - $ ;
G. R. Gazerwitz - $ ; L. C. Russell - $ ; H. S. Barron -
$ . Full years of credited service under the pension plans for the
eligible Named Officers as of March 1, 1998 are as follows: J. A. Unruh - 16
years; G. A. Gagliardi - 26 years; G. R. Gazerwitz - years; L. C.
Russell - 2 years; H. S. Barron - 7 years.
Pursuant to the employment agreement described below, Lawrence A. Weinbach
is vested in an annual pension benefit as follows: 0-3 years of
service - $350,000; 4 years - $570,000; 5 years - $710,000; 6 years - $860,000;
7 or more years - $1,000,000.
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EMPLOYMENT AGREEMENTS
On September 23, 1997, the Company entered into a five-year employment
agreement with Lawrence A. Weinbach,Code) covering the terms and conditions of Mr. Weinbach's employment as Chairman of the Board, President and Chief Executive
Officer.Coleman’s employment. The agreement provides for a minimum base salary of $1,200,000$972,000 per year, subject to annualperiodic review by the Board of Directors after receiving a recommendation from the Compensation and Organization Committee,
and eligibility forCommittee. He is eligible to receive an annual bonus award at a target bonus level of not less than 100%125% of base salary. TheExcept with respect to the first six months of his employment, the actual bonus payable, if any, is towill be determined by the Compensation and Organization CommitteeBoard in its sole discretion except
that, forafter receiving a recommendation from the 1997, 1998Compensation Committee and 1999 award years,will be based on Mr. WeinbachColeman’s attainment of performance criteria to be determined annually by the Board and the Compensation Committee. For the first six months of his employment, Mr. Coleman is guaranteed a minimum bonus equalof $607,500 if he remains employed by the Company on the applicable bonus payment date. Pursuant to 100% of the base salary paid to him in that year. Under the agreement, on October 8, 2008 Mr. Weinbach alsoColeman received a one-time bonus in the amount of
$1,500,000 at the time his employment commenced. Mr. Weinbach is eligible to
participate in the benefit programs generally made available to executive
officers, is entitled to the pension benefits discussed above and is eligible to
receive stock option and other long-term incentive awards under the 1990 Plan.
Effective as of his first day of employment, Mr. Weinbach received the stock option grant disclosedfor 1,200,000 shares of Unisys common stock and a grant of 300,000 time-based restricted stock units. The stock options are scheduled to vest one-third per year beginning on page and the restricted share award described on page
. He also purchased Unisys Common Stock having a fair market valuefirst anniversary of
$1,000,000 from the Company. If Mr. Weinbach's employment is terminated under
certain circumstances, the agreement provides for him to receive continued
payment of his base salary for the remainder of the term (but in no event less
than one year's base salary) and, for the one-year period following the date of termination, a bonus in an amount equal to his target bonus percentage times the
base salary paid during such period. He will also be entitled to continued
medicalgrant and dental coverage through the remaining term of the agreement, full
vesting in outstanding awards under the 1990 Plan and one additional year of
service for pension purposes. Salary continuation amounts paid to Mr. Weinbach
after twoexpire five years from the date of employment termination will be reduced bygrant. The restricted stock units are scheduled to vest one-third per year beginning on the amount of any cash compensation he receives for services rendered to any entity
other than Unisys. Mr. Weinbach is also party to a change in control agreement
with the Company, as described on page . He is not entitled to receive
duplicate payments under the change in control agreement and his employment
agreement.
Effective November 1995, the Company entered into a three-year employment
agreement with Lawrence C. Russell, covering the terms and conditions of his
employment as Executive Vice President of Unisys and Presidentfirst anniversary of the Information Services Group. Thedate of grant. Pursuant to the agreement, providesMr. Coleman also received, on February 12, 2009, a grant of 900,000 performance-based restricted stock units. These restricted stock units will vest one-third per year beginning on the first anniversary of the date of grant if and to the extent that the performance criteria that are established for an annual base salary of
$450,000, subject to annual review, and eligibilitymaking funding available for an annual bonus under
the UnisysCompany’s Executive Variable Compensation Plan at a target(the “EVC Plan”) for each of not less than 60%
of base salary.2009, 2010 and 2011, respectively, are met. For 2009, the EVC Plan performance criteria are based 50% on pre-tax profit and 50% on cash flow. The agreement provides that the actual bonus amount can vary
from zero to 150% of target.EVC Plan is discussed below under “Variable Annual Incentive Compensation”. Mr. RussellColeman is eligible to participate in the benefit programs generally made available to executive officers and is eligible to receive stock option and other long-term incentive awards under the 1990
Plan. The agreement provides that, ifcompany’s long-term incentive plans. For so long as Mr. Russell remains employed withColeman’s primary residence is not in the Company on the applicable payment date, the Company will make periodic payments,
totaling $700,000, through the year 2000, to compensate Mr. Russell for the
value of incentives forfeited from his previous employment. If the Company
terminates Mr. Russell's employment other than for cause,Philadelphia
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metropolitan area, he will be entitled to
receive continued paymentprovided with the use of his basea company-paid apartment in the Philadelphia metropolitan area for business purposes, the annual expense of which will be approved annually by the Compensation Committee.
In setting the compensation provided for in Mr. Coleman’s agreement, the Board, in consultation with Watson Wyatt, considered both competitive market practices and the challenges facing the Company. Accordingly, salary and target bonus were set near the median for the remainderbenchmark companies. The stock options, time-based restricted stock units and performance-based restricted stock units were intended to align Mr. Coleman’s interests with those of stockholders and to provide incentives for him to lead the Company to achieve its performance objectives.
Principal Components of Executive Officer Compensation
As set forth above, the principal elements of the term of the agreement (with a minimum of one year's salary plus bonus). He will
also be entitled to immediate vesting of all outstanding awards under the 1990
Plan, a lump-sum payment of any remaining incentive forfeiture installments and
continued medical and dental coverage through the remaining agreement term. Mr.
Russell is
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also party to a change in control agreement. He is not entitled to receive
duplicate payments under the change in control agreement and his employment
agreement.
The Company and James A. Unruh, former Chairman and Chief Executive
Officer, are parties to an agreement dated July 2, 1997. The agreement provides
for Mr. Unruh to receive, during the period beginning July 2, 1997 and ending
April 30, 1998 (the "Term"), a base salary at the annual rate of $836,000. Under
the agreement, Mr. Unruh was also entitled to receive a bonus award for 1997 at
the discretion of the Compensation and Organization Committee of the Board of
Directors. For a period of two years following the completion of the Term, Mr.
Unruh will be entitled to receive termination payments consistingCompany’s executive compensation program consist of base salary, continuation atannual variable cash incentives and long-term incentive compensation.
Base Salary
Base salaries for elected officers are initially determined by evaluating the annual rate of $836,000 and an annual bonus equal to 50% of
that amount. Amounts payable by the Company during the second year following
completionresponsibilities of the Term will be reduced byposition held and the amount earned by Mr. Unruh for
services rendered to any entity other than Unisys. Under the agreement, Mr.
Unruh is entitled to full vesting on April 30, 1998 of all outstanding awards
under the 1990 Plan and an extensionexperience of the repayment periodindividual and comparing such salaries to the benchmark compensation data. Thereafter, increases in salary can be based on his home
mortgage loan.
CHANGE IN CONTROL EMPLOYMENT AGREEMENTS
The Company has entered into change in control employment agreements with
its executive officersthe Compensation Committee’s evaluation of any number of factors, including the Named Officers. The agreements are intended
to retainindividual’s level of responsibility, individual performance, pay levels of both the services of theseexecutive in question and other similarly situated executives and provide for continuitythe benchmark compensation data. In February 2008, when it conducted its review of management inexecutive compensation, the eventCompensation Committee considered primarily the relationship of any actual or threatened change in control. A change
in control is generally defined as (i) the acquisition of 20% or more of Unisys
Common Stock, (ii) a change in the majority of the Board of Directors unless
approved by the incumbent directors (other than as a result of a contested
election) and (iii) certain reorganizations, mergers, consolidations,
liquidations or dissolutions. Each agreement has a term ending on the third
anniversary of the date of the change in control. These agreements, which are
the same in substance for each executive provide that in the event of a change
in control each executive will have specific rights and receive certain
benefits. Those benefits include the right to continue in the Company's employ
during the term, performing comparable duties to those being performed
immediately prior to the change in control andcompensation at compensation and benefit
levels that are at least equal to the compensation and benefit levels in effect
immediately prior to the change in control. Upon a termination of employment
under certain circumstances following a change in control, the terminated
executive will be entitled to receive special termination benefits, including a
lump sum payment equal to three years base salary and bonus and the actuarial
value of the pension benefit the executive would have accrued had the executive
remained employed for three years following the termination date. The special
termination benefits are payable if the Company terminates the executive without
cause, the executive terminates employment for certain enumerated reasons
(including a reduction in the executive's compensation or responsibilities or a
change in the executive's job location), or the executive voluntarily terminates
employment for any reason during the 30-day period following the first
anniversary of the date of the change in control. If any payment or distribution
by the Company to the executive is determined to be subjectbenchmark compensation data. The committee noted that there had been no salary increases for the Company’s elected officers for two years (except for increases related to the excise tax
imposeddiscontinuation of certain executive perquisites) and that inflation had increased by Section 4999more than 6% during that period. The committee approved a 3.8% salary increase for elected officers, other than Mr. McGrath. The amount of the Internal Revenue Code,increase and the executive is entitled
to receive a paymentresultant new base salaries for Named Officers listed in the Summary Compensation Table on an after-tax basis equal topage 33 were as follows:
Name | Previous Base Salary | Amount of Increase | New Base Salary | |||||||||
| Joseph W. McGrath | $ | 972,313 | $ | 0 | $ | 972,313 | ||||||
| Janet B. Haugen | $ | 537,985 | $ | 20,443 | $ | 558,428 | ||||||
| Anthony P. Doye | $ | 500,004 | $ | 19,000 | $ | 519,004 | ||||||
| Richard C. Marcello | $ | 457,200 | $ | 17,374 | $ | 474,574 | ||||||
| Nancy S. Sundheim | $ | 488,208 | $ | 18,552 | $ | 506,760 | ||||||
Following these increases, base salaries for the excise tax imposed. The
executive is under no obligation to mitigate amounts payable under these
agreements, and to the extent the executive has a separate employment agreementelected officers remain in line with the Company with conflicting rights, the executive is allowed the greater
entitlement.
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INDEBTEDNESS OF MANAGEMENT
The Company has made no-interest loans to certain of its executive
officers. The loans, which were made in connection with the officer's purchase
of a principal residence upon relocation, are generally for a 20-year term
(assuming continued employment with the Company), are evidenced by promissory
notes and are secured by second mortgages. Mr. Russell has a four-year,
interest-free loan secured by a first mortgage. The maximum amounts outstanding
during the period between January 1, 1997 and March 1, 1998 for each of the
following were: J. F. McHale, $122,500; L. C. Russell, $283,000; J. A. Unruh,
$245,000. Mr. McHale's loan is no longer outstanding. The principal amounts of
Mr. Unruh's and Mr. Russell's loans as of March 1, 1998 were $130,000 and
$211,000, respectively.
COMPENSATION OF DIRECTORS
The Company's non-employee directors receive an annual retainer of $35,000,
an annual attendance fee of $10,000 for regularly scheduled Board and Committee
meetings and a meeting fee of $1,000 for attendance at each Board and Committee
meeting held on other than a regularly scheduled meeting day. The annual
retainer and annual meeting fee are paid in monthly installments, with 50% of
each installment paid in cash and 50% in the form of common stock equivalent
units ("Stock Units"). The value of each Stock Unit at any point in time is
equal to the value of one share of Unisys Common Stock. Stock Units are recorded
in a memorandum account maintained for each director. A director's Stock Unit
account is payable upon termination of service, or at any date at least five
years after the Stock Units are awarded, in either cash or common stock at the
election of the director. Directors do not have the right to vote with respect
to any Stock Units. Directors also have the opportunity to defer until
termination of service, or until any date at least five years after the
deferral, all or a portion of their cash fees. Any deferred cash amounts, and
earnings or losses thereon, are recorded in a memorandum account maintained for
each director. The right to receive future payments of Stock Unit accounts and
deferred cash accounts is an unsecured claim against the Company's general
assets. Directors who are employees of the Company do not receive any cash or
Stock Units for their services as directors.
REPORT OF THE COMPENSATION AND ORGANIZATION COMMITTEE
COMPENSATION PROGRAM AND POLICIES
The Company's executive compensation program is administered by the
Compensation and Organization Committee (the "Compensation Committee"). The
Compensation Committee reviews compensation levels of elected officers,
evaluates performance, considers management succession and related matters and
administers the Company's incentive plans, including the Executive Variable
Compensation Plan (the "EVC Plan") and the 1990 Plan.
The Company's executive compensation program is designed to attract and
retain executives responsiblemedian for the Company's long-term success, to reward
executives for achieving both financial and strategic company goals, to align
executive and stockholder interests through long-term, equity-based plans and to
provide a compensation package that recognizes individual contributions as well
as overall business results. As a result, a substantial portion of each
executive's total compensation is intended to be variable and to be tied closely
to the performance of Unisys and the executive's business unit, as well as the
attainment of the executive's individual goals. The Company's executive
compensation program also takes into
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account the compensation practices of companies with whom Unisys competes for
executive talent. These companies (the "peer companies") include the principal
companies included in the peer group indices in the Performance Graph on page
of this Proxy Statement and additional companies in various industries.
The three key components of the Company's executive compensation program
for 1997 were base salary, short-term incentive payments and long-term incentive
awards in the form of stock options. Overall compensation is intended to be
competitive for comparable positions at the peerbenchmark companies.
The Company's policies with respect to each of the elements of its
executive compensation program, as well as the basis for the compensation
awarded to the current and former chief executive officer, are discussed below.
BASE SALARY
Each executive's base salary is initially determined with reference to
competitive pay practices and is dependent upon the executive's level of
responsibility and experience. The
Variable Annual Incentive Compensation Committee uses its discretion,
rather than a formal weighting system, to evaluate these factors and to
determine individual base salary levels. Thereafter, base salaries are reviewed
periodically, and increases are made based on the Compensation Committee's
subjective assessment of individual performance, as well as the factors
discussed above.
SHORT-TERM INCENTIVE PAYMENTS
For 1997,
During 2008, all of the Company's executiveCompany’s elected officers participated inwere eligible to receive annual cash incentive compensation through the EVC Plan. This plan's stated purposeCompensation under the EVC Plan is “at-risk” compensation intended to motivate and reward elected officers and
other key executives for the attainment of corporateand/orindividual and/or corporate
performance goals.goals for the year. Under the plan, the Compensation Committee has the discretion to determine the conditions (including performance objectives) applicable to annual award payments and the amounts of such awards. With respect to current
executives other than Mr. Weinbach,The amount of incentive compensation awards payable under the plan depends upon (1) a participant’s target annual incentive, (2) the amount of
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funding the Company makes available for 1997 were
generally determined as follows.
Earlythe plan and (3) individual performance. Individual targets for elected officers are approved by the committee and are intended to be competitive in 1997, executives were assignedthe market for which the Company competes for talent. They are therefore set at or around the median for comparable positions at the benchmark companies. For 2008, target award amounts, for the year,
which wereare typically stated as a percentage of base salary, (ranging,were as follows for the following Named Officers: Joseph W. McGrath — 125%; Janet B. Haugen — 90%; Anthony P. Doye — 95%; Richard C. Marcello — 95%; Nancy S. Sundheim — 75%.
The extent to which the Company makes funding available for the EVC Plan depends upon the degree to which the Company achieves performance targets approved by the Compensation Committee at the beginning of each year. For 2008, the committee determined that awards under the plan would be funded if the Company met certain revenue growth and pre-tax profit (exclusive of gain or loss from divestitures, restructuring charges and retirement-related expense) performance targets. Each target was weighted 50%. Both the revenue growth and the pre-tax profit targets were based on the Company’s Board-approved operating plan, which outlooks the Company’s anticipated results for the year. Target levels (those that would result in funding at 100% if achieved) were the same as the forecasted amounts in the caseoperating plan. The committee also set threshold and maximum performance levels for each criterion, which would result in funding at 50% and 150% of elected officers other thantarget, respectively, if achieved. No funding would be provided by the Company in respect of a criterion if performance was below the threshold level. In addition, the committee determined that if pre-tax profit at the target level was not achieved, all funding for the year would be reduced by 50%. Both the pre-tax profit and the revenue growth goals were subject to adjustment by the chief executive officer from 45% to 60%).
Performance goals were also established based upon the financial performance of
both Unisys and the executive's business unit (generally, achievementCompensation Committee for one-time and extraordinary items. Assuming available funding, the amount of pre-established profit, cash flow and revenue objectives) andawards granted to individual executives would then depend upon individual performance objectives. Actual award amountsand could range from zero0% to 150% of target, depending upon the Compensation Committee's evaluationindividual’s proportionate share of individualthe amount funded.
For 2008, both revenue growth and corporate/business unitpre-tax profit were below threshold levels. Therefore, no funds were made available in respect of corporate performance. As a result, only those Named Officers who had received a bonus guarantee as part of their new hire compensation package received a payout under the EVC Plan for 2008.
As set forth above, pursuant to his employment agreement, Mr. Coleman was guaranteed a bonus of $607,500 for the first six months of his employment. Accordingly, he was paid a bonus of $303,750 in respect of the period from October 7 through December 31, 2008. In 1997,connection with their employment by the Company substantially met the
performance goals establishedin 2007, Mr. Doye and Mr. Marcello were each guaranteed a bonus for the year. Awards paid for 1997 reflected these
results plus individual accomplishments.
LONG-TERM INCENTIVE AWARDS
Under the 1990 Plan, stock options may be granted to the Company's
executive officers and other key employees. The size of stock option awards is
based primarily on the individual's responsibilities and position with Unisys.
The Compensation Committee does not determine the size of such awards by
reference to2008 in the amount or value of stock options currently held by an executive
officer.
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Stock options$425,000 and $163,832, respectively.
Long-Term Incentive Awards
Long-term incentives in the form of equity-based compensation are designedintended to ensure that the Company’s executives have a continuing stake in the long-term success of the Company and to align thetheir interests of executives with those of stockholders. They are also used as a vehicle to attract, retain and motivate executives responsible for the Company’s long-term success. The Company makes an annual long-term incentive grant to its executives during the first quarter of the year and also may make grants to newly hired employees in connection with their employment. In 2008, long-term incentives generally took the form of restricted stock unit (“RSU”) awards that vest into shares of Unisys stock after certain restrictions lapse or performance goals are met. In 2008, the Company granted stock options only to certain newly hired employees as part of their new hire compensation package. RSUs and stock options granted to Mr. Coleman in 2008 were granted in connection with his entering into the employment agreement discussed above. The other Named Officers received
29
RSUs as part of the 2008 annual grant. The total number of RSUs granted to each Named Officer in 2008 is set forth in the Grants of Plan-Based Awards Table, under the heading “Estimated Future Payouts Under Equity-Incentive Plan Awards”.
In 2008, the annual RSU grant to executives was below the median at the benchmark companies. Even though the Company intends for each element of executive compensation to be generally consistent with the median, in 2008, the Company did not want to incur the additional compensation expense that would have been required to be recorded if RSU grants had been made at that level. As a result, the value of the 2008 annual equity-based grant for elected officers was at approximately 73% of the market median for the benchmark companies.
For the 2008 annual grant, in keeping with the Company’s emphasis on tying compensation to the achievement of corporate financial goals, 87.5% of the RSUs awarded were performance-based (50% based on 2008 performance and 37.5% based on a2008-2010 performance period) and 12.5% were time-based.
The time-based RSUs vest into shares of Unisys common stock in three equal annual installments beginning with the first anniversary of the date of the grant and require that the executive remain with the Company over this time period to receive the shares unless the executive has met certain age and service requirements. The performance-based RSUs granted in 2008 will be earned and vest into shares of Unisys common stock based on the achievement of performance targets approved by the Compensation Committee for the 2008 and2008-2010 performance periods. The performance-based RSUs also require that the executive be employed by the Company on the date of vesting to receive the shares. The performance targets consist of revenue growth rate and pre-tax profit (exclusive of retirement expense, gain or loss from divestitures and restructuring charges) goals for the relevant performance period, and each is weighted 50%. The targets for the 2008 performance period were based on the Company’s operating plan, which outlooked the Company’s anticipated results for 2008, and the targets for the2008-2010 performance period were based on the operating plan as well as the Company’s strategic plan, which outlooked anticipated results for periods subsequent to 2008. The committee established threshold, target and maximum performance levels for each of these two performance measures. The RSUs will be converted into shares at rates ranging from 0.5 shares per unit if the threshold level is met to 1.0 share per unit if the target level is met, to 1.5 shares per unit if the maximum level is met. No shares will be issued in respect of a performance measure if the threshold level for that measure is not achieved. Target revenue growth and pre-tax profit levels are the same as those that were forecasted in the operating and strategic plans. For the 2008 performance period, threshold and maximum revenue growth were approximately 98% and 102% of target revenue growth, respectively; threshold and maximum profitability amounts were approximately 66% and 120% of target profitability, respectively. For the2008-2010 three-year performance period, threshold and maximum revenue growth are approximately 98% and 102% of target revenue growth, respectively; threshold and maximum profitability amounts are approximately 73% and 120% of target profitability, respectively. To the extent the targets for the 2008 performance period were met, RSUs for the 2008 performance period were scheduled to vest one-third per year beginning on February 7, 2009. To the extent targets for the2008-2010 performance period are met, RSUs for that performance period are scheduled to vest on February 7, 2011.
For 2008, both the Company’s pre-tax profit and its revenue growth performance were below forecasted levels for the year. As a result, with respect to performance-based RSUs granted in 2008 for the 2008 performance period, the Company did not meet the threshold levels for either criterion. Therefore, none of the performance-based RSUs granted in respect of the 2008 performance period will vest into shares of Unisys common stock. Given its performance for 2008, the Company
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will need to over perform against the strategic plan in the remaining two years of the2008-2010 performance period in order to achieve the cumulative revenue growthand/or profit targets set for the RSU grants made in respect of that performance period.
Stock Ownership Guidelines
Since 1998, the Company has had stock ownership guidelines in place for elected officers in order to more closely link their interests with those of stockholders. Under the guidelines, as revised in 2005, elected officers are expected to own a specified number of shares of Unisys common stock as follows: chief executive officer — 200,000 shares; executive vice presidents — 75,000 shares; senior vice presidents — 45,000 shares; vice presidents — 25,000 shares. Stock options, including vested stock options, and restricted stock units do not count toward fulfillment of the ownership guidelines. Officers are expected to meet the ownership guidelines by 2010, or within five years of election for officers elected after 2005. The Compensation Committee reviews compliance with the guidelines on an annual basis. The number of shares owned by each of the Named Officers is set forth in the stock ownership table on page 24.
Stock Option/RSU Granting Practices
As set forth above, in 2008 long-term incentives generally took the form of RSUs, rather than stock options, and stock options were granted withonly to certain newly hired employees as part of their compensation package. Prior to 2006, the Company had primarily granted long-term incentives in the form of stock options. The most prevalent form of stock option grant was the annual grant made to executives. The annual grants were approved at a specified, regularly scheduled meeting of the Compensation Committee early each year. Since 2000, annual stock option grants had been approved at the February meeting; prior to 2000, annual grants were approved at the April meeting. For grants in the United States, the grant date was always the date of the meeting, and the exercise price was at least 100% of the fair market value of Unisys common stock on the date of grant. The dates of regularly scheduled board and committee meetings are generally determined many months in advance as part of the normal board calendaring process.
Stock options granted as part of the hiring process have a grant date no earlier than the date of approval, have an exercise price at least equal to thefair market price of Unisys Common Stockvalue on the date of grant and, current grants
vest over four years. This approach is designed to encourage the creation of
stockholder value over the long term since no benefit is realized unless the
price of the Common Stock rises over a number of years.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Lawrence A. Weinbach became the Company's Chairman, President and Chief
Executive Officer on September 23, 1997. In connection with his employment, the
Company entered into the employment agreement described at page . The terms
and conditions of the employment agreement wereexcept as noted below, are approved by the Compensation Committee after considerationor the Board of Mr. Weinbach's qualificationsDirectors. New hire stock option grants are typically reviewed and experience,
his previous compensation levels andapproved by the competitive marketplace for executive
talent.
UnderCompensation Committee at its regularly scheduled meetings. For these grants, the employment agreement, Mr. Weinbachdate of grant is entitled to a base salary
at the rate of $1,200,000 per year and, for 1997, 1998 and 1999, is guaranteed a
minimum annual bonus equal to 100%date of the base salary paidmeeting, if the individual receiving the grant has already commenced employment at Unisys. If the individual has not yet commenced employment, the date of grant is the business day following the individual’s first day of employment. The Compensation Committee has also delegated to him in that year.
In 1997, Mr. Weinbach also received a one-time bonus in the amount of $1,500,000
and was granted the stock options and restricted share awards described on pages
and .
For 1997, James A. Unruh, the Company's formerCompany’s chief executive officer receivedthe authority to grant a base salarylimited number of $836,000.stock options during the year to eligible individuals (other than the chief executive officer, his direct reports and their direct reports). The committee’s delegation of authority specifies that for these stock options the grant date will be either (1) the first business day of the month following the date of the chief executive officer’s approval, if the individual has commenced employment at Unisys, or (2) if the individual has not yet commenced employment, the first business day of the month following the individual’s date of hire. The chief executive officer has no discretion with respect to choosing the grant date, and in all cases, the date of grant occurs after the date the grantee commences employment with Unisys.
From 2006 through 2008, long-term incentive awards primarily took the form of RSUs. As with stock options, the principal award was the annual grant to executives. This had been Mr. Unruh's salary since 1996.
Pursuantgrant was made during the first quarter of the year, at the time the Compensation Committee determined the number of
31
units to be granted and finalized the performance criteria for performance-based awards. As with stock options, RSUs may also be granted as part of the hiring process. The same procedures regarding the chief executive officer’s authority with respect to, and the timing of, stock option grants to new employees also apply to RSUs granted to new hires.
Other Benefits
Elected officers participate in the retirement programs discussed below under “Pension Benefits” and “Non-Qualified Deferred Compensation”. In addition, the Company provides death benefits to the agreement described at page , Mr. Unruh was also entitledbeneficiaries of executive officers. Perquisites provided to receive a bonus award for 1997 at the discretionexecutive officers include financial counseling/tax preparation services and an annual physical.
Deductibility of theExecutive Compensation
Committee. [Disclosure of amount of bonus and factors considered]. In April
1997, as in the past several years, Mr. Unruh received options to purchase
180,000 shares of Unisys Common Stock.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Section 162(m) of the Internal Revenue Code imposes a $1 million annual limit on the amount of compensation that may be deducted by the Company with respect to each Named Officer employed as of the last day of the applicable year. The limitation does not apply to compensation based on the attainment of objective performance goals.
Both the Company’s 2003 Long-Term Incentive and Equity Compensation Plan and its 2007 Long-Term Incentive and Equity Compensation Plan permit the Compensation Committee to design compensation awards to Named Officers that will meet the requirements of Section 162(m) of the Internal Revenue Code. The Compensation Committeecommittee may grant awards under the plans that meet the requirements of Section 162(m) of the Internal Revenue Code at such times as the committee believes that such awards are in the best interests of the Company. The committee has considered the impact of the deduction limitation and has determined that it is not in the best interests of the Company or its stockholders to base compensation solely on objective performance criteria. Rather, the Compensation Committeecommittee believes that it should retain the flexibility to base compensation on its subjective evaluation of performance as well as on the attainment of objective goals.
18
22
STOCK PERFORMANCE GRAPH
Compensation Committee Report
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis set forth above with management. Based on such review and discussion, the committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.
Compensation Committee
James J. Duderstadt
Clayton M. Jones
Theodore E. Martin
Charles B. McQuade
32
Summary Compensation Table
The following graph comparestable sets forth information concerning the yearlytotal compensation paid to or earned by each individual who served as chief executive officer during 2008, the chief financial officer and the other three most highly compensated executive officers who were serving as such as of December 31, 2008 (the “Named Officers”) for services rendered in all capacities to Unisys.
| Change in | ||||||||||||||||||||||||||||||||||||
| Pension | ||||||||||||||||||||||||||||||||||||
| Non- | Value and | |||||||||||||||||||||||||||||||||||
| Equity | Non-qualified | |||||||||||||||||||||||||||||||||||
| Incentive | Deferred | |||||||||||||||||||||||||||||||||||
| Plan | Compen- | All Other | ||||||||||||||||||||||||||||||||||
| Stock | Option | Compen- | sation | Compen- | ||||||||||||||||||||||||||||||||
| Name and | Salary (1) | Bonus (1) | Awards (2) | Awards (2) | sation (3) | Earnings (4) | sation (5) | Total | ||||||||||||||||||||||||||||
Principal Position | Year | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||||||||
| J. Edward Coleman | 2008 | 233,031 | 303,750 | 81,641 | 65,083 | — | — | 37,030 | 720,535 | |||||||||||||||||||||||||||
| Chairman of the Board and Chief Executive Officer (6) | ||||||||||||||||||||||||||||||||||||
| Joseph W. McGrath | 2008 | 972,313 | — | (449,484 | ) | — | — | 17,686 | 2,111,358 | 2,651,873 | ||||||||||||||||||||||||||
| President and Chief | 2007 | 959,297 | — | 634,503 | — | — | 161,371 | 142,282 | 1,897,453 | |||||||||||||||||||||||||||
| Executive Officer (7) | 2006 | 941,667 | — | 714,624 | — | 810,000 | 316,906 | 104,302 | 2,887,499 | |||||||||||||||||||||||||||
| Janet B. Haugen | 2008 | 549,910 | — | (148,818 | ) | — | — | — | 76,423 | 477,515 | ||||||||||||||||||||||||||
| Senior Vice President and | 2007 | 530,410 | — | 222,919 | — | — | 9,766 | 95,016 | 858,111 | |||||||||||||||||||||||||||
| Chief Financial Officer | 2006 | 520,833 | — | 199,416 | — | 300,000 | 78,528 | 24,578 | 1,123,355 | |||||||||||||||||||||||||||
| Anthony P. Doye | 2008 | 511,087 | 425,000 | 344,205 | — | — | — | 95,219 | 1,375,511 | |||||||||||||||||||||||||||
| Senior Vice President; President Global Outsourcing and Infrastructure Services | ||||||||||||||||||||||||||||||||||||
| Richard C. Marcello | 2008 | 471,437 | 163,832 | 382,741 | 48,809 | — | — | 83,161 | 1,149,980 | |||||||||||||||||||||||||||
| Senior Vice President; President Systems and Technology | ||||||||||||||||||||||||||||||||||||
| Nancy S. Sundheim | 2008 | 499,030 | — | 146,419 | — | — | 31,152 | 78,079 | 754,680 | |||||||||||||||||||||||||||
| Senior Vice President, General Counsel and Secretary | ||||||||||||||||||||||||||||||||||||
| (1) | Amounts shown include compensation deferred under the Unisys Savings Plan or a Unisys deferred compensation plan. | |
| (2) | Amounts shown are the amounts recognized for financial statement reporting purposes for each year shown in accordance with FAS 123R except that no estimates for forfeitures in respect of service-based vesting have been taken into account. For a discussion of the assumptions made in such valuation, see note 17 to the Company’s 2008 financial statements. For individuals who were not Named Officers in prior years, the amount shown does not reflect the reversal of previously recorded compensation expense related to performance-based restricted stock units for which it was determined that the performance goals would not be achieved. For more details on grants in 2008, see the Grants of Plan-Based Awards Table below. | |
| (3) | Amounts shown are payouts under the Company’s 2006 turnaround incentive program. | |
| (4) | Amounts shown are the increase in pension value only. For Ms. Haugen, there was a decrease in pension value of $15,656 that is not reflected in the table. | |
| (5) | Amounts shown are tax reimbursements, premiums paid for company-owned life insurance policies, company matching contributions under the Unisys Savings Plan (including amounts credited by the Company to the individual’s account under the Company’s deferred compensation plan as described in “Unisys Savings Plan” on page 41) and perquisites (unless the aggregate amount of perquisites for an individual is less than $10,000). Amounts shown for Mr. McGrath also include the amount accrued in respect of the termination of employment arrangement described on page 42. For 2008, amounts consist of the following: Mr. Coleman — tax reimbursements of $9,250, company matching contributions under the Unisys Savings Plan of $9,902 and perquisites of $17,878, which consist of use of a company-paid apartment, personal use of company aircraft and commuting expense; Mr. McGrath — accrued termination payments of $1,944,626, tax reimbursements of $555, life insurance premiums of $91,492, company matching contributions under the Unisys Savings Plan of $58,339, and perquisites of $16,346, which consist of financial counseling reimbursement, country club dues, commuting expenses and executive physical; Ms. Haugen — life insurance premiums of $43,428 and company matching contributions under the Unisys Savings Plan of $32,995; Mr. Doye — tax reimbursements of $2,214, life insurance premiums of $59,825 and company matching contributions under the Unisys Savings Plan of $33,180; Mr. Marcello — tax reimbursements of $547, life insurance premiums of |
33
| $39,507 and company matching contributions under the Unisys Savings Plan of $43,107; Ms. Sundheim — life insurance premiums of $48,137 and company matching contributions under the Unisys Savings Plan of $29,942. | ||
| (6) | Mr. Coleman became Chairman of the Board and Chief Executive Officer on October 7, 2008. | |
| (7) | Mr. McGrath resigned as an officer and director of the Company effective October 7, 2008. He remained with the Company through December 31, 2008. |
Grants of Plan-Based Awards
The following table sets forth information on grants of plan-based awards during 2008 to the Named Officers.
| All Other | All Other | |||||||||||||||||||||||||||||||||||||||||||
| Stock | Option | Grant Date | ||||||||||||||||||||||||||||||||||||||||||
| Awards: | Awards: | Exercise | Fair Value | |||||||||||||||||||||||||||||||||||||||||
| Estimated Future Payouts | Estimated Future Payouts | Number of | Number of | or Base | of Stock | |||||||||||||||||||||||||||||||||||||||
| Under Non-Equity Incentive | Under Equity Incentive Plan | Shares of | Securities | Price of | and | |||||||||||||||||||||||||||||||||||||||
| Plan Awards | Awards | Stock or | Underlying | Option | Option | |||||||||||||||||||||||||||||||||||||||
| Grant | Threshold | Target | Maximum | Threshold | Target | Maximum | Units | Options | Awards | Awards | ||||||||||||||||||||||||||||||||||
Name | Date | ($) | ($) | ($) | (#) | (#) | (#) | (#) | (#) | ($/sh) | ($) | |||||||||||||||||||||||||||||||||
| J. Edward Coleman | 10/8/08 | — | — | — | 300,000 | 1,200,000 | 1.87 | 1,428,956 | ||||||||||||||||||||||||||||||||||||
| Joseph W. McGrath | 2/7/08 | 274,948 | 549,896 | 824,844 | 137,474 | 4,531,139 | ||||||||||||||||||||||||||||||||||||||
| 206,211 | 412,422 | 618,633 | ||||||||||||||||||||||||||||||||||||||||||
| Janet B. Haugen | 2/7/08 | 69,782 | 139,563 | 209,345 | 34,891 | 1,149,999 | ||||||||||||||||||||||||||||||||||||||
| 52,336 | 104,672 | 157,008 | ||||||||||||||||||||||||||||||||||||||||||
| Anthony P. Doye | 2/7/08 | 77,822 | 155,643 | 233,465 | 38,911 | 1,282,498 | ||||||||||||||||||||||||||||||||||||||
| 58,366 | 116,732 | 175,098 | ||||||||||||||||||||||||||||||||||||||||||
| Richard C. Marcello | 2/7/08 | 69,782 | 139,563 | 209,345 | 34,891 | 1,149,999 | ||||||||||||||||||||||||||||||||||||||
| 52,336 | 104,672 | 157,008 | ||||||||||||||||||||||||||||||||||||||||||
| Nancy S. Sundheim | 2/7/08 | 42,476 | 84,951 | 127,427 | 21,238 | 699,996 | ||||||||||||||||||||||||||||||||||||||
| 31,857 | 63,713 | 95,570 | ||||||||||||||||||||||||||||||||||||||||||
All awards shown above for Mr. Coleman were granted in accordance with his employment agreement described above in “Compensation Discussion and Analysis”. All such awards were approved by the Board on October 6, 2008. Awards shown for Mr. Coleman under “All Other Stock Awards” are time-based restricted stock units granted under the Unisys Corporation 2003 Long-Term Incentive and Equity Compensation Plan. These awards will vest at a rate of one-third each year beginning on the first anniversary of the date of grant if Mr. Coleman is then employed by the Company. Awards shown for Mr. Coleman under “All Other Option Awards” are non-qualified stock options granted under the Unisys Corporation 2007 Long-Term Incentive and Equity Compensation Plan (the “2007 Plan”). These options will vest one-third each year beginning on the first anniversary of the date of grant if Mr. Coleman is then employed by the Company.
All awards shown above for the other Named Officers were granted under the 2007 Plan. Awards shown under “Estimated Future Payouts Under Equity Incentive Plan Awards” are performance-based restricted stock units that will vest into shares of Unisys common stock if pre-tax profitand/or revenue growth goals are achieved in the 2008 performance period (in the case of the first set of numbers in each row) or in the2008-2010 performance period (in the case of the second set of numbers in each row). Performance-based units will be converted into shares at a rate of 0 to 1.5 shares per unit depending on the degree to which the performance goals are met. If performance goals had been met, performance-based units granted in respect of the 2008 performance period were scheduled to vest one-third each year beginning on the first anniversary of the date of grant. Because the performance goals for 2008 were not met, none of these units will vest. If performance goals are met and if the individual is then employed by the Company, performance-based units granted in respect of the2008-2010 performance period will vest on the third anniversary of the date of grant. Awards shown under “All Other Stock Awards” are time-based restricted stock units that will vest at a rate of one-third each year beginning on the first anniversary of the date of grant if the individual is then employed by the Company or has met certain age and service criteria. See “Compensation Discussion and Analysis” above.
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Outstanding Equity Awards at Fiscal Year-End
The following table shows equity awards to the Named Officers that were outstanding as of December 31, 2008.
| Stock Awards | ||||||||||||||||||||||||||||||||||||
| Equity | ||||||||||||||||||||||||||||||||||||
| Equity | Incentive | |||||||||||||||||||||||||||||||||||
| Incentive | Plan | |||||||||||||||||||||||||||||||||||
| Plan | Awards: | |||||||||||||||||||||||||||||||||||
| Awards: | Market or | |||||||||||||||||||||||||||||||||||
| Number | Payout | |||||||||||||||||||||||||||||||||||
| Option Awards | of | Value of | ||||||||||||||||||||||||||||||||||
| Equity | Unearned | Unearned | ||||||||||||||||||||||||||||||||||
| Incentive | Market | Shares, | Shares, | |||||||||||||||||||||||||||||||||
| Number of | Plan | Number of | Value of | Units or | Units or | |||||||||||||||||||||||||||||||
| Number of | Securities | Awards: | Shares or | Shares or | Other | Other | ||||||||||||||||||||||||||||||
| Securities | Underlying | Number of | Units of | Units of | Rights | Rights | ||||||||||||||||||||||||||||||
| Underlying | Unexercised | Securities | Stock That | Stock That | That | That | ||||||||||||||||||||||||||||||
| Unexercised | Options | Underlying | Option | Have Not | Have Not | Have Not | Have Not | |||||||||||||||||||||||||||||
| Options | (#) | Unexercised | Exercise | Option | Vested | Vested | Vested | Vested | ||||||||||||||||||||||||||||
| (#) | Unexercisable | Options | Price | Expiration | (#) | ($) | (#) | ($) | ||||||||||||||||||||||||||||
Name | Exercisable | (1) | (#) | ($) | Date | (2) | (3) | (4) | (3) | |||||||||||||||||||||||||||
| J. Edward Coleman | 1,200,000 | 1.87 | 10/8/2013 | 300,000 | 255,000 | |||||||||||||||||||||||||||||||
| Joseph W. McGrath | 60,000 | 34.5938 | 1/6/2009 | 154,140 | 131,019 | 1,462,317 | 1,242,969 | |||||||||||||||||||||||||||||
| 20,000 | 30.1875 | 4/22/2009 | ||||||||||||||||||||||||||||||||||
| 75,000 | 34.1250 | 2/17/2010 | ||||||||||||||||||||||||||||||||||
| 75,000 | 18.5700 | 2/15/2011 | ||||||||||||||||||||||||||||||||||
| 200,000 | 12.1050 | 2/14/2012 | ||||||||||||||||||||||||||||||||||
| 200,000 | 24.2100 | 2/14/2012 | ||||||||||||||||||||||||||||||||||
| 100,000 | 8.4150 | 2/13/2013 | ||||||||||||||||||||||||||||||||||
| 85,000 | 14.2700 | 2/11/2014 | ||||||||||||||||||||||||||||||||||
| 250,000 | 9.9750 | 12/22/2014 | ||||||||||||||||||||||||||||||||||
| 150,000 | 7.6200 | 2/9/2010 | ||||||||||||||||||||||||||||||||||
| 600,000 | 6.0500 | 12/19/2010 | ||||||||||||||||||||||||||||||||||
| Janet B. Haugen | 30,000 | 30.1875 | 4/22/2009 | 39,891 | 33,907 | 409,235 | 347,850 | |||||||||||||||||||||||||||||
| 40,000 | 34.1250 | 2/17/2010 | ||||||||||||||||||||||||||||||||||
| 25,000 | 9.4063 | 7/27/2010 | ||||||||||||||||||||||||||||||||||
| 50,000 | 18.5700 | 2/15/2011 | ||||||||||||||||||||||||||||||||||
| 125,000 | 12.1050 | 2/14/2012 | ||||||||||||||||||||||||||||||||||
| 125,000 | 24.2100 | 2/14/2012 | ||||||||||||||||||||||||||||||||||
| 80,000 | 8.4150 | 2/13/2013 | ||||||||||||||||||||||||||||||||||
| 75,000 | 14.2700 | 2/11/2014 | ||||||||||||||||||||||||||||||||||
| 75,000 | 7.6200 | 2/9/2010 | ||||||||||||||||||||||||||||||||||
| 100,000 | 6.0500 | 12/19/2010 | ||||||||||||||||||||||||||||||||||
| Anthony P. Doye | 252,244 | 214,407 | 272,375 | 231,519 | ||||||||||||||||||||||||||||||||
| Richard C. Marcello | 16,667 | 33,333 | 9.00 | 7/18/2012 | 68,224 | 57,990 | 244,235 | 207,600 | ||||||||||||||||||||||||||||
| Nancy S. Sundheim | 12,000 | 30.1875 | 4/22/2009 | 23,738 | 20,177 | 216,164 | 183,739 | |||||||||||||||||||||||||||||
| 12,000 | 42.3438 | 9/24/2009 | ||||||||||||||||||||||||||||||||||
| 60,000 | 7.62 | 2/9/2010 | ||||||||||||||||||||||||||||||||||
| 25,000 | 34.125 | 2/17/2010 | ||||||||||||||||||||||||||||||||||
| 100,000 | 6.05 | 12/19/2010 | ||||||||||||||||||||||||||||||||||
| 40,000 | 18.57 | 2/15/2011 | ||||||||||||||||||||||||||||||||||
| 75,000 | 12.105 | 2/14/2012 | ||||||||||||||||||||||||||||||||||
| 75,000 | 24.21 | 2/14/2012 | ||||||||||||||||||||||||||||||||||
| 50,000 | 8.415 | 2/13/2013 | ||||||||||||||||||||||||||||||||||
| 50,000 | 14.27 | 2/11/2014 | ||||||||||||||||||||||||||||||||||
| (1) | Awards shown are non-qualified stock options scheduled to vest as follows if the individual is then employed by the Company or has met certain age and service criteria: Mr. Coleman — 400,000 shares on each of October 8, 2009, October 8, 2010 and October 8, 2011; Mr. Marcello — 16,667 shares on July 18, 2009, 16,666 shares on July 18, 2010. |
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| (2) | Awards shown are time-based restricted stock units that vest on specified dates if the individual is then employed by the Company or has met certain age and service criteria. Awards shown are scheduled to vest as follows: |
Name | Vesting Date | Number of Shares | ||||||
| J. Edward Coleman | 10/8/2009 | 100,000 | ||||||
| 10/8/2010 | 100,000 | |||||||
| 10/8/2011 | 100,000 | |||||||
| Joseph W. McGrath | 2/7/2009 | 45,825 | ||||||
| 3/8/2009 | 16,666 | |||||||
| 2/7/2010 | 45,825 | |||||||
| 2/7/2011 | 45,824 | |||||||
| Janet B. Haugen | 2/7/2009 | 11,631 | ||||||
| 3/8/2009 | 5,000 | |||||||
| 2/7/2010 | 11,630 | |||||||
| 2/7/2011 | 11,630 | |||||||
| Anthony P. Doye | 2/7/2009 | 12,971 | ||||||
| 12/6/2009 | 16,667 | |||||||
| 2/7/2010 | 12,970 | |||||||
| 12/6/2010 | 196,666 | |||||||
| 2/7/2011 | 12,970 | |||||||
| Richard C. Marcello | 2/7/2009 | 11,631 | ||||||
| 7/18/2009 | 16,667 | |||||||
| 2/7/2010 | 11,630 | |||||||
| 7/18/2010 | 16,666 | |||||||
| 2/7/2011 | 11,630 | |||||||
| Nancy S. Sundheim | 2/7/2009 | 7,080 | ||||||
| 3/8/2009 | 2,500 | |||||||
| 2/7/2010 | 7,079 | |||||||
| 2/7/2011 | 7,079 | |||||||
| (3) | Market value reflects the $0.85 closing price of Unisys common stock on December 31, 2008. | |
| (4) | Awards shown are performance-based restricted stock units that vest if performance goals for the relevant performance period are met and the individual is then employed by the Company. The number of shares shown in this column is based on achieving threshold performance goals in the relevant performance period. Awards shown for Mr. McGrath were cancelled on December 31, 2008. Assuming threshold performance goals are met, the restricted stock units for the other Named Officers are scheduled to vest as follows: |
Name | Vesting Date | Number of Shares | ||||||
| Janet B. Haugen | 2/7/2009 | 46,521 | ||||||
| 3/8/2009 | 15,000 | |||||||
| 2/7/2010 | 46,521 | |||||||
| 3/7/2010 | 150,000 | |||||||
| 2/7/2011 | 151,193 | |||||||
| Anthony P. Doye | 2/7/2009 | 51,881 | ||||||
| 2/7/2010 | 51,881 | |||||||
| 2/7/2011 | 168,613 | |||||||
| Richard C. Marcello | 2/7/2009 | 46,521 | ||||||
| 2/7/2010 | 46,521 | |||||||
| 2/7/2011 | 151,193 | |||||||
| Nancy S. Sundheim | 2/7/2009 | 28,317 | ||||||
| 3/8/2009 | 7,500 | |||||||
| 2/7/2010 | 28,317 | |||||||
| 3/7/2010 | 60,000 | |||||||
| 2/7/2011 | 92,030 | |||||||
36
No performance-based restricted stock units scheduled to vest on February 7, 2009 or on March 8, 2009 vested into any shares of Unisys common stock.
Option Exercises and Stock Vested
The following table gives information on stock option exercises and the vesting of stock awards during 2008 for each of the Named Officers.
| Option Awards | Stock Awards | |||||||||||||||
| Number of Shares | Number of Shares | |||||||||||||||
| Acquired | Value Realized | Acquired | Value Realized | |||||||||||||
| on Exercise | on Exercise | on Vesting | on Vesting | |||||||||||||
Name | (#) | ($) | (#) | ($) | ||||||||||||
| J. Edward Coleman | — | — | — | — | ||||||||||||
| Joseph W. McGrath | — | — | 16,667 | 66,835 | ||||||||||||
| Janet B. Haugen | — | — | 5,000 | 20,050 | ||||||||||||
| Anthony P. Doye | — | — | 16,667 | 9,334 | ||||||||||||
| Richard C. Marcello | — | — | 16,667 | 67,085 | ||||||||||||
| Nancy S. Sundheim | — | — | 2,500 | 10,025 | ||||||||||||
Pension Benefits
The Company’s officers participate in three pension plans sponsored by Unisys in the United States:
| • | Unisys Pension Plan (“UPP”) — a qualified defined benefit pension plan available to all U.S. employees who met eligibility requirements by December 31, 2006. | |
| • | Unisys Corporation Supplemental Executive Retirement Income Plan (“SERIP”) — a nonqualified excess defined benefit plan available to all U.S. employees who met eligibility requirements by December 31, 2006 and whose qualified plan benefits are limited by the Internal Revenue Code or limited because they have deferred compensation under non-qualified plans. The plan is designed to make up for the benefit shortfall created by the Internal Revenue Code limits and the non-qualified deferrals of compensation. | |
| • | Unisys Corporation Elected Officer Pension Plan (“EOPP”) — a nonqualified defined benefit plan available to all elected officers who met eligibility requirements by December 31, 2006. The plan is designed to provide a minimum target of retirement income for executives. |
Effective December 31, 2006, each of these plans was frozen and benefits thereunder ceased to accrue. No new participants are now allowed.
37
The table below presents pension plan information as of December 31, 2008 for certain of the Named Officers. Mr. Coleman, Mr. Marcello and Mr. Doye are not participants in any of the three pension plans as they did not meet the eligibility requirements for any of the plans prior to December 31, 2006.
| Number of Years | Present Value of | Payments | ||||||||||||||
| of Credited | Accumulated | During Last | ||||||||||||||
Name | Plan Name | Service (#) | Benefit ($) | Fiscal Year ($) | ||||||||||||
| Joseph W. McGrath | UPP | 8.000 | 224,019 | — | ||||||||||||
| SERIP | 8.000 | 224,255 | — | |||||||||||||
| EOPP | 8.000 | 1,552,977 | — | |||||||||||||
| Janet B. Haugen | UPP | 10.667 | 228,468 | — | ||||||||||||
| SERIP | 10.667 | 101,896 | — | |||||||||||||
| EOPP | 10.667 | 805,941 | — | |||||||||||||
| Nancy S. Sundheim | UPP | 19.333 | 533,116 | — | ||||||||||||
| SERIP | 19.333 | 132,247 | — | |||||||||||||
| EOPP | 19.333 | 1,333,253 | — | |||||||||||||
The present value of the accumulated benefit has been determined assuming benefits commence as of the earliest date at which each executive is entitled to unreduced benefits. This is generally the later of age 62 and achievement of vesting requirements. However, for executives who are not eligible for unreduced benefits prior to age 65, benefits are assumed to commence at age 65. The calculations use the same actuarial assumptions used for financial disclosure requirements for the pension plans, except that the calculations assume that each of the above individuals will remain with the Company until such retirement date and therefore do not apply any decrements in respect of termination, disability and the like. Assumptions as to life expectancy are based on the RP2000 Mortality Table projected to 2010 for healthy males and females. The discount rate used is 6.75%. Where benefits are payable as a 50% contingent annuity without actuarial reduction, which is the case for EOPP participants who are married, benefits have been valued using actuarial factors assuming 80% of plan participants are married and assuming wives are three years younger than husbands.
The following summarizes the benefits under the specific plans:
Unisys Pension Plan
Prior to December 31, 2006, all employees of Unisys were eligible to participate in the UPP on the January 1 or July 1 first following attainment of both age 21 and one year of service with Unisys.
The UPP provides benefits under two benefit formulas:
1. For service beginning on or after January 1, 2003, benefits accrue each year under a cash balance formula under which a participant’s account is credited with an amount equal to 4% of plan compensation. In addition, the account balance is credited with interest on a monthly basis using the annual interest rates on5-Year Constant Maturity Treasury Notes, plus 0.25%. Generally, participants vest in the benefit after completion of three years of service with Unisys. The vested cash balance benefit is available for payment following termination of employment, and the normal form of payment is a life annuity for single participants (the participant receives the periodic amount during his or her lifetime, with no survivor benefit payable after his or her death), or an actuarially reduced 50% contingent annuity for married participants (the participant receives a reduced periodic benefit during his or her lifetime to reflect the survivor payments, and the participant’s surviving beneficiary receives 50% of the
38
periodic amount the participant received). Other annuity forms are also available on an actuarially equivalent basis. The benefit is also available in the form of a lump sum distribution. All Named Officers who met plan eligibility requirements are eligible for the cash balance benefit.
2. For employees hired prior to January 1, 2003, benefits are also based on a career pay formula. Each year, the annual accrued benefit payable to a participant at normal retirement date (age 65) is increased by 1% of plan compensation, plus 0.35% of plan compensation in excess of one-half of the average Social Security taxable wage base for the five preceding years. Participants ultimately are eligible for the larger of: (a) the career pay formula through the date of termination of employment or (b) the career pay formula accrued through December 31, 2002 plus the cash balance benefit described above. Generally, participants vest in the benefit after completion of three years of service with Unisys. The vested benefit is available for payment following termination of employment and attainment of early retirement eligibility (age 55). The benefit is reduced by 0.5% for each month that the benefit commences prior to age 65. Should the employee terminate employment after attainment of both age 55 and 20 years of service with Unisys, the benefit is reduced by 0.5% for each month that the benefit commences prior to age 62. The normal form of payment of the vested career pay benefit is a life annuity for single participants, or an actuarially reduced 50% contingent annuity for married participants. Other annuity forms are also available on an actuarially equivalent basis. All Named Officers who met plan eligibility requirements are eligible for the career pay benefit.
For both formulas, plan compensation is salary, commissions, overtime pay, paid bonus and paid accrued and unused vacation. Compensation includes amounts deferred on a before-tax basis under the Unisys Savings Plan. Excluded from compensation are severance payments, supplements, compensation deferred under a non-qualified plan and other forms of extraordinary compensation. Plan compensation is limited by Section 401(a)(17) of the Internal Revenue Code.
As of December 31, 2008, Mr. McGrath, Ms. Haugen and Ms. Sundheim were vested in their UPP benefit and would have been eligible to immediately receive the cash balance portion of their benefit upon termination of employment. Mr. McGrath and Ms. Sundheim are eligible to receive an early retirement benefit under the career pay formula.
Although benefits ceased to accrue under the UPP effective December 31, 2006, the cash balance accounts continue to grow with interest credits.
Unisys Corporation Supplemental Executive Retirement Income Plan
Prior to December 31, 2006, all employees of Unisys were eligible to participate in the SERIP on the January 1 or July 1 first following attainment of both age 21 and one year of service with Unisys.
The SERIP provides benefits under the same provisions as the UPP except as follows:
| • | Plan compensation includes compensation deferred under non-qualified plans and is not limited by Internal Revenue Code Section 401(a)(17). | |
| • | The benefit payable under the UPP is applied as an offset to the benefits available under the SERIP. | |
| • | Benefits accrued and vested prior to January 1, 2005 are payable at the same time and form as the UPP benefit. Benefits accrued or vested on or after January 1, 2005 are payable following the later of (a) termination of employment (or six months thereafter if the individual is |
39
| among the top 50 most highly compensated officers, as defined under Section 409A of the Internal Revenue Code (“Section 409A”)) or (b) attainment of age 55. Such benefit is payable in the form of a life annuity for single participants, or an actuarially reduced 50% contingent annuity for married participants. No optional forms of benefit are currently available for benefits accrued or vested on or after January 1, 2005 under the SERIP. |
As of December 31, 2008, Mr. McGrath, Ms. Haugen and Ms. Sundheim were vested in their SERIP benefit. Mr. McGrath, Ms. Haugen and Ms. Sundheim were vested as of December 31, 2004 and are eligible to immediately receive the pre-2005 cash balance portion of their benefit upon termination of employment. Mr. McGrath and Ms. Sundheim are also eligible to receive an early retirement benefit.
Although benefits ceased to accrue under the SERIP effective December 31, 2006, the cash balance accounts continue to grow with interest credits.
The Company has established a grantor trust relating to the SERIP. If a change in control of the Company occurs, the Company is required to fund the trust in an amount equal to the present value of the accrued pension benefits under the plan.
Unisys Corporation Elected Officer Pension Plan
Only elected officers of Unisys are eligible to participate in the EOPP.
The EOPP provides a gross annual accrued benefit equal to 4% of final average compensation for each of the first 10 years of credited service, plus 1% of final average compensation for each year of credited service in excess of 10 (but not in excess of 30), minus 50% of the participant’s Social Security benefit. This benefit is reduced by 0.5% for each month that the benefit commences prior to age 62. The gross benefit is offset by the benefits payable under both the UPP and the SERIP.
Final average compensation is the average of the highest consecutive 60 months of plan compensation out of the last 120 months of employment, but no compensation after December 31, 2006 is included. Plan compensation is identical to that used for the SERIP.
Benefits accrued and vested prior to January 1, 2005 are payable at the same time and form as the UPP benefit. Benefits accrued or vested on or after January 1, 2005 are payable following the later of (a) termination of employment (or six months thereafter if the individual is among the top 50 most highly compensated officers, as defined under Section 409A) or (b) attainment of age 55. Such benefit is payable in the form of a life annuity for single participants, or a 50% contingent annuity, which is not actuarially reduced, for married participants. No optional forms of benefit are currently available for benefits accrued or vested on or after January 1, 2005 under the EOPP.
Generally, benefits under the EOPP vest upon the earliest to occur of (a) attainment of age 55 and 10 years of service with Unisys, (b) for executives who were participants on or after January 1, 1997 and before July 19, 2001, attainment of age 50 and five years of service with Unisys or (c) a change in control of Unisys. As of December 31, 2008, Mr. McGrath, Ms. Haugen and Ms. Sundheim were vested in their EOPP benefit. Mr. McGrath and Ms. Sundheim were vested as of December 31, 2004 making that portion of their benefit payable at the same time and in the same form as the UPP benefit. Mr. McGrath and Ms. Sundheim are also eligible to receive an early retirement benefit.
The Company has established a grantor trust relating to the EOPP. If a change in control of the Company occurs, the Company is required to fund the trust in an amount equal to the present value of the accrued pension benefits under the plan.
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Unisys Savings Plan
In conjunction with freezing the UPP, SERIP and EOPP defined benefit plans, effective January 1, 2007, the Company increased its matching contributions under the Unisys Savings Plan, which is a tax-qualified defined contribution plan, to 100% of the first 6% of eligible pay contributed by participants on a before-tax basis. If a participant was not eligible to get the full amount of this Company matching contribution under the Savings Plan because his or her eligible pay exceeded the annual compensation limits for qualified plans under the Internal Revenue Code ($230,000 in 2008), or because the participant had deferred some compensation under the Company’s non-qualified 2005 Deferred Compensation Plan, the Company automatically credited the participant’s memorandum account under the 2005 Deferred Compensation Plan with an amount equal to 6% of such excess or deferred eligible pay to make up for the Company matching contributions that were not permitted under the Savings Plan.
Effective January 1, 2009, the Company suspended matching contributions under the Unisys Savings Plan and the credits to the 2005 Deferred Compensation Plan referred to above.
Non-Qualified Deferred Compensation
The table below shows unaudited information with respect to compensation of the Named Officers that has been deferred under a plan that is not tax-qualified. Under the Company’s non-qualified deferred compensation plans, eligible employees may defer until a future date payment of all or any portion of their annual salary or bonus, as well as any vested share unit award under one of the Company’s long-term incentive plans. Amounts deferred are recorded in a memorandum account for each participant and are credited or debited with earnings or losses as if such amounts had been invested in one or more of the approximately 70 professionally managed investment options available under the Unisys Savings Plan, as selected by the participant. Participants may change their investment options at any time. Account balances will be paid either in a single lump sum or in annual installments, as elected by the participant. The memorandum accounts are not funded, and the right to receive future payments of amounts recorded in these accounts is an unsecured claim against the Company’s general assets. However, the Company has established a grantor trust relating to its pre-2005 non-qualified deferred compensation plan. If a change in control of the Company occurs, the Company is required to fund the trust in an amount equal to the aggregate account balances under that plan.
| Aggregate | Aggregate | |||||||||||||||||||
| Executive | Company | Aggregate | Withdrawals/ | Balance at | ||||||||||||||||
| Contributions | Contributions | Earnings in | Distributions | December 31, | ||||||||||||||||
| in 2008 | in 2008 | 2008 | in 2008 | 2008 | ||||||||||||||||
Name | ($) | ($) (1) | ($) (2) | ($) | ($) (3) | |||||||||||||||
| J. Edward Coleman | — | 182 | — | — | 182 | |||||||||||||||
| Joseph W. McGrath | — | 44,539 | (485,695 | ) | — | 433,909 | ||||||||||||||
| Janet B. Haugen | — | 19,195 | (49,086 | ) | — | 94,354 | ||||||||||||||
| Anthony P. Doye | — | 19,380 | (2,744 | ) | — | 16,636 | ||||||||||||||
| Richard C. Marcello | — | 29,307 | (6,806 | ) | — | 26,333 | ||||||||||||||
| Nancy S. Sundheim | — | 16,142 | (6,686 | ) | — | 24,768 | ||||||||||||||
| (1) | All amounts shown are in respect of the 6% Company matching contribution on compensation in excess of the Internal Revenue Code limitations, as described above under “Unisys Savings Plan”. All such amounts are reported as compensation in the Summary Compensation Table. | |
| (2) | No amounts shown in this column are reported in the Summary Compensation Table. | |
| (3) | Amounts reported in this column reflect Company matching contributions and earnings (losses) for 2008, as well as for previous years. The Summary Compensation Table for 2007 included the following amounts in respect of Company matching contributions in 2007 for the following Named Officers: Mr. McGrath — $44,058; Ms. Haugen — $18,325. |
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Potential Payments upon Termination or Change in Control
Under the agreements and plans discussed below, the Named Officers would be entitled to the following payments and benefits upon termination of employmentand/or a change in control of the Company.
Termination Arrangements
The Company and Joseph W. McGrath are parties to an agreement, dated January 2, 2008 and amended on December 30, 2008 to comply with Section 409A of the Internal Revenue Code (“Section 409A”), which provides certain termination benefits to Mr. McGrath. Under the agreement, if Mr. McGrath’s employment is terminated by the Company without cause or by Mr. McGrath for good reason (defined generally as a reduction in aggregate compensation target, a reduction in duties or authority or removal as chief executive officer), Mr. McGrath will be entitled to receive an amount equal to two times (1) his base salary (at its then current rate) plus (2) his annual bonus under the EVC Plan (in an amount equal to the average percentage of target bonus paid to him for the three years preceding the employment termination date times the target bonus amount in effect on the termination date). Subject to a six-month delay under Section 409A if Mr. McGrath is among the top 50 most highly compensated officers, this termination payment is to be paid in a lump sum in cash within 30 days of the date of termination. Mr. McGrath and his eligible dependents will also be entitled to receive medical and dental coverage, at the same premium rates charged to active employees, for up to two years following termination of employment. To receive health coverage, Mr. McGrath will be required to pay the full premium charged for the coverage. The Company will then reimburse him the amount of the premium that exceeds the amount he would have paid as an employee, plus a taxgross-up on that amount. Mr. McGrath will cease to be entitled to these health coverage payments if he becomes employed with another employer during such two-year period. The agreement includes non-compete, non-solicitation and non-disparagement provisions effective for 12 months from the date of termination of employment. In the event Mr. McGrath breaches any of these provisions, the Company will have the right to terminate any termination payments due to him. Mr. McGrath’s employment terminated on December 31, 2008. As a result, he will be entitled to receive a termination payment under the agreement in the amount of $1,944,626. Total amounts payable to Mr. McGrath in respect of medical and dental coverage for two years would be approximately $42,570.
As described above in “Compensation Discussion and Analysis” the Company and J. Edward Coleman are parties to an employment agreement covering the terms and conditions of Mr. Coleman’s employment as Chairman of the Board and Chief Executive Officer. The employment agreement also provides certain termination benefits to Mr. Coleman. Under the agreement, if Mr. Coleman’s employment is terminated by the Company without cause or by Mr. Coleman for good reason (defined generally as a reduction in aggregate compensation target, a reduction in duties or authority or removal as chairman and chief executive officer), Mr. Coleman will be entitled to receive an amount equal to two times (1) his base salary (at its then current rate) plus (2) his annual bonus (in an amount equal to the average percentage of target bonus paid to him for the three years preceding the employment termination date times the target bonus amount in effect on the termination date). Subject to a six-month delay under Section 409A if Mr. Coleman is among the top 50 most highly compensated officers, this termination payment is to be paid in a lump sum in cash within 30 days of the date of termination. Mr. Coleman and his eligible dependents will also be entitled to receive medical and dental coverage, at the same premium rates charged to active employees, for up to two years following termination of employment. To receive health coverage, Mr. Coleman will be required to pay the full premium charged for the coverage. The Company will
42
then reimburse him the amount of the premium that exceeds the amount he would have paid as an employee, plus a taxgross-up on that amount. Mr. Coleman will cease to be entitled to these health coverage payments if he becomes employed with another employer during such two-year period. In the event Mr. Coleman’s employment is terminated by reason of disability or death, all compensation and benefits under the agreement will terminate, except that he or his estate will receive benefits under the retirement, welfare, incentive, fringe and perquisite programs generally available to executive officers upon disability or death. If Mr. Coleman’s employment is terminated for cause or by Mr. Coleman for other than good reason, he will be entitled only to the benefits provided to the company’s executive employees upon a similar termination of employment. The agreement includes non-compete, non-solicitation and non-disparagement provisions effective for 12 months from the date of termination of employment. In the event Mr. Coleman breaches any of these provisions, the Company will have the right to terminate any termination payments due to him, and Mr. Coleman must repay any termination payments made to him upon termination of his employment without cause or for good reason. If Mr. Coleman’s employment had terminated on the last business day of 2008 under circumstances entitling him to the payments described above, he would have been entitled to receive a termination payment of $4,374,000. Total amounts payable to Mr. Coleman in respect of medical and dental coverage for two years would be approximately $42,000. Mr. Coleman is also party to a change in control agreement with the Company, as described below. He is not entitled to receive duplicate payments under the change in control agreement and the above agreement. In the event of a conflict, Mr. Coleman will be entitled to benefits under the change in control agreement unless the change in control agreement provides for the payment of benefits under the employment agreement.
Under the terms of his November 2007 new-hire employment arrangement, Anthony P. Doye is entitled to receive continued payment of base salary plus continuation of medical and dental benefits for six months if his employment is terminated by the Company without cause within 24 months of his hire date. If Mr. Doye’s employment had been terminated at December 31, 2008 without cause, these would have had a value of $259,502 and $10,229, respectively.
Change in Control Agreements
The Company has entered into change in control employment agreements with its elected officers. The agreements are intended to retain the services of these executives and provide for continuity of management in the event of any actual or threatened change in control. A change in control is generally defined as (1) the acquisition of 20% or more of Unisys common stock, (2) a change in the cumulative
total stockholder returnmajority of the Board of Directors unless approved by the incumbent directors (other than as a result of a contested election) and (3) certain reorganizations, mergers, consolidations, liquidations or dissolutions. Each agreement has a term ending on Unisys Common Stockthe third anniversary of the date of the change in control and provides that in the event of a change in control each executive will have specific rights and receive certain benefits. Those benefits include the right to continue in the Company’s employ during the fiveterm, performing comparable duties to those being performed immediately prior to the change in control and at compensation and benefit levels that are at least equal to the compensation and benefit levels in effect immediately prior to the change in control. For purposes of determining compensation levels, base salary must be at least equal to the highest salary paid or payable to the executive during the 12 months preceding the change in control, and bonus must be at least equal to the highest bonus paid or payable to the executive under the EVC Plan (or any comparable bonus or retention amount under any predecessor or successor plan or retention agreement) for the three fiscal years endedpreceding the change in control (the “Recent Annual Bonus”).
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If, following a change in control, the Company terminates the executive without cause or the executive terminates employment for good reason (generally defined as a reduction in the executive’s compensation or responsibilities or a change in the executive’s job location), or if the executive voluntarily terminates employment for any reason during the30-day period following the first anniversary of the date of the change in control, the terminated executive will be entitled to receive special termination benefits. For officers other than Mr. Coleman, these benefits are as follows: (1) a pro-rated bonus for the year in which the termination occurs (based on the higher of (a) the Recent Annual Bonus and (b) the annual bonus paid or payable for the most recent fiscal year during the term of the agreement (such higher amount, the “Highest Annual Bonus”)), (2) a lump sum payment equal to three years base salary and bonus (based on the highest salary paid or payable during the term of the agreement and the Highest Annual Bonus), (3) a lump sum payment equal to the excess of the actuarial value of the pension benefit the executive would have accrued if the executive’s employment had continued for three years after the termination date over the actuarial value of the actual pension benefit payable as of the termination date, (4) a lump sum payment equal to the amount of premiums the Company would have paid to continue the executive in the Company’s welfare (other than health) plans for the three-year period, (5) for three years following the termination of employment, continued eligibility for coverage under the Company’s health plans at the same premium rates applicable to active employees and (6) outplacement services. To receive health coverage, the executive will be required to pay the full premium charged for the coverage. The Company will then reimburse the executive the amount of the premium that exceeds the amount the executive would have paid as an employee, plus a taxgross-up on that amount. Except as described below, if any payment or distribution by the Company to the executive is determined to be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code, the executive is entitled to receive a payment on an after-tax basis equal to the excise tax imposed. However, if thegross-up payment in respect of the excise tax would not result in a net after-tax benefit to the executive of at least $50,000, then nogross-up payment will be made, and the termination payments will be reduced (a “Cutback”) to an amount that will not give rise to the excise tax. The executive is under no obligation to mitigate amounts payable under these agreements.
Mr. Coleman is entitled to the same special termination benefits enumerated above, except that (a) the lump sum payment referred to in (2) above will be equal to two years salary and bonus, (b) the lump sum payment referred to in (4) above will be for two years of welfare plan premiums and (c) the continued eligibility for health coverage referred to in (5) above will be for two years. In addition, Mr. Coleman’s agreement does not provide for anygross-up for any excise tax imposed on any payment by the Company under Section 4999 of the Internal Revenue Code. The payments will be reduced to avoid the imposition of the excise tax if doing so would result in greater after-tax benefits to Mr. Coleman.
If the Named Officers had become entitled to the special termination benefits described above on the last business day of 2008, they would have received the following:
| Lump Sum | ||||||||||||||||||||||||||||||||
| Payment for | Value of | Welfare | Health | |||||||||||||||||||||||||||||
| Pro-Rata | Salary | Pension | Outplacement | Benefit Plan | Coverage | Excise Tax | ||||||||||||||||||||||||||
| Bonus | and Bonus | Accrual | Services | Premiums | Payments | Gross-Up | Total | |||||||||||||||||||||||||
Name | ($) (1) | ($) (1) (2) | ($) (1) (3) | ($) (4) | ($) | ($) | ($) (5) | ($) (1) (6) | ||||||||||||||||||||||||
| J. Edward Coleman | 303,750 | 4,374,000 | 411,885 | 50,000 | 19,878 | 42,138 | — | 5,201,651 | ||||||||||||||||||||||||
| Janet B. Haugen | — | 1,675,284 | 100,517 | 50,000 | 17,480 | 63,830 | 788,266 | 2,695,377 | ||||||||||||||||||||||||
| Anthony P. Doye | 425,000 | 2,832,012 | 195,421 | 50,000 | 16,261 | 65,685 | 1,658,599 | 5,242,978 | ||||||||||||||||||||||||
| Richard C. Marcello | 382,500 | 2,571,222 | 177,223 | 50,000 | 14,888 | 1,791 | 1,530,436 | 4,728,060 | ||||||||||||||||||||||||
| Nancy S. Sundheim | — | 1,478,495 | 91,217 | 50,000 | 15,883 | 2,870 | — | 1,638,465 | ||||||||||||||||||||||||
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| (1) | No bonuses under the EVC Plan were paid to Ms. Haugen and Ms. Sundheim for 2005, 2006 or 2007. Therefore, the numbers in the table for them do not include any amounts in respect of bonus. If amounts paid to Ms. Haugen and Ms. Sundheim for 2006 under the Company’s 2006 Turnaround Incentive Plan were deemed to be bonus, the amounts shown for pro-rata bonus would have been as follows: Ms. Haugen — $300,000; Ms. Sundheim — $403,750. The amounts for lump sum salary and bonus, pension accrual and excise taxgross-up shown in the table would have been adjusted accordingly, with the result that amounts shown in the “Total” column would have been as follows: Ms. Haugen — $4,611,754; Ms. Sundheim — $4,891,116. | |
| (2) | Amount shown for Ms. Sundheim reflects a $41,785 Cutback in order to avoid the imposition of the excise tax. | |
| (3) | As set forth above, the Company’s defined benefit plans were frozen as of December 31, 2006. Therefore, the amounts shown represent the Company matching contribution equivalent to 6% of eligible pay under the Unisys Savings Plan discussed above. | |
| (4) | The agreements provide for reasonable outplacement services directly related to the termination of the executive’s employment. The executive may select the provider of outplacement services, and therefore the costs actually incurred will vary by individual. The Company believes that the amounts shown in this column are a reasonable estimate of the potential costs of outplacement services. | |
| (5) | Change in control payments are assumed to consist of the amounts shown in the table, as well as the value of any accelerated vesting of equity awards pursuant to the terms of the Company’s long-term incentive plans. The calculations use a Federal excise tax rate of 20%, a Federal income tax rate of 35%, a Medicare tax rate of 1.45% and the current income tax rates for the states of residence of the Named Officers. | |
| (6) | Amounts shown in this column do not include the value of the vested awards shown in the table below under “Long-Term Incentive Plans”. |
Mr. McGrath resigned as an officer of the Company effective October 7, 2008 and was not a party to a change in control agreement at December 31, 1997 with2008. He was therefore not entitled to payments of the cumulative total returntype set forth in the table.
Long-Term Incentive Plans
Under the Company’s long-term incentive plans, if a change in control occurs, all time-based awards will become fully vested and, depending on the Standard &
Poor's 500 Stock Index,applicable plan, either a pro-rata portion (based on the Standard & Poor's Computers (Hardware) Indexcompleted portion of the related performance cycle) or the full amount of the target amount of performance-based awards will vest. In addition, all unvested stock options will become immediately exercisable. If a change in control had occurred on the last business day of 2008, the Named Officers would have become vested in the following number of restricted stock units, having the following values:
| Vested Units | Value of Vested Units | |||||||
Name | (#) | (1) ($) | ||||||
| J. Edward Coleman | 300,000 | 255,000 | ||||||
| Joseph W. McGrath | 1,466,457 | 1,246,488 | ||||||
| Janet B. Haugen | 399,126 | 339,257 | ||||||
| Anthony P. Doye | 524,619 | 445,926 | ||||||
| Richard C. Marcello | 312,459 | 265,590 | ||||||
| Nancy S. Sundheim | 219,902 | 186,917 | ||||||
| (1) | Based on the $.85 closing price of Unisys common stock on December 31, 2008. |
In addition, for the following Named Officers the following number of stock options would have become exercisable at the following exercise prices:
Name | Number of Stock Options | Exercise Price | ||||||
| J. Edward Coleman | 1,200,000 | $ | 1.87 | |||||
| Richard C. Marcello | 33,333 | $ | 9.00 | |||||
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A discussion of amounts payable to the Named Officers under the pension plans sponsored by the Company begins on page 37. As set forth in “Pension Benefits”, benefits under the Elected Officer Pension Plan become immediately vested upon a change in control of the Company.
Compensation of Directors
In 2008, the Company’s non-employee directors received an annual retainer/attendance fee for regularly scheduled meetings of $60,000 and a meeting fee of $1,500 per meeting for attendance at certain additional Board and committee meetings. In addition, for the portion of the year that he served in each capacity, Mr. Duques received a pro-rata portion of (a) a $100,000 annual retainer for serving as the non-executive Chairman of the Board and (b) a $25,000 annual retainer for serving as Lead Director; chairmen of committees other than the audit committee each received a $5,000 annual retainer; and the Standard & Poor's Computers (Software and Services) Index. The comparison
assumes $100 was investedchair of the audit committee received a $20,000 annual retainer. In February 2008, the Board also approved an annual grant to each non-employee director of restricted stock units having a value of $130,000 (based on December 31, 1992 inthe fair market value of Unisys Common Stock and incommon stock on the date of grant). Accordingly, on February 7, 2008 each of such indices and assumes reinvestment of dividends.
19
23
GENERAL AND OTHER MATTERS
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
During 1996, George R. Gazerwitznon-employee director received a grant of 31,554 restricted stock units. The restricted stock units while he wasvest in three annual installments beginning one year after the date of grant and will be settled in shares of Unisys common stock. In 2008, the Company also began making pro-rated restricted stock unit grants to directors who join the Board after the date of the annual grant. Accordingly, the following directors received the following grants: Craig A. Conway — 13,228 restricted stock units vesting in three annual installments beginning on assignment overseas. TheseAugust 15, 2008; each of Clay B. Lifflander and Charles B. McQuade — 23,876 restricted stock units were inadvertently omitted from
Mr. Gazerwitz's Formvesting in three annual installments beginning on July 24, 2009. On December 4, filings2008, the Board approved a grant of 21,277 shares of common stock (having a value as of that date of $10,000) to Craig A. Conway in recognition of his leadership in the search for 1996. the Company’s new chief executive officer.
The filingsannual retainers described above are paid in monthly installments in cash. However, directors may choose, on an annual basis, to receive these fees in the form of common stock equivalent units. The value of each stock unit at any point in time is equal to the value of one share of Unisys common stock. Stock units are recorded in a memorandum account maintained for each director. A director’s stock unit account is payable in Unisys common stock, either upon termination of service or on a date specified by the director, at the director’s option. Directors do not have been corrected.
POLICY ON CONFIDENTIAL VOTING
the right to vote with respect to any stock units. Directors also have the opportunity to defer until termination of service, or until a specified date, all or a portion of their cash fees under the Company’s deferred compensation plan for directors. Under this plan, any deferred cash amounts, and earnings or losses thereon (calculated by reference to the investment options available under the Unisys Savings Plan and selected by the director), are recorded in a memorandum account maintained for each director. The right to receive future payments of deferred cash accounts is an unsecured claim against the Company’s general assets. Directors who are employees of the
46
Company do not receive any cash, stock units, stock options or restricted stock units for their services as directors. The table below provides a summary of Director Compensation for 2008.
| Change in | ||||||||||||||||||||||||||||
| Pension Value | ||||||||||||||||||||||||||||
| and | ||||||||||||||||||||||||||||
| Fees | Non-Equity | Nonqualified | ||||||||||||||||||||||||||
| Earned or | Stock | Option | Incentive Plan | Deferred | All Other | |||||||||||||||||||||||
| Paid in Cash | Awards | Awards | Compensation | Compensation | Compensation | Total | ||||||||||||||||||||||
Name | ($) (1) | ($) (2),(3) | ($) (4) | ($) | Earnings | ($) (5) | ($) | |||||||||||||||||||||
| J.P. Bolduc | 69,500 | 130,002 | — | — | — | — | 199,502 | |||||||||||||||||||||
| Chairman, Finance Committee | ||||||||||||||||||||||||||||
| Craig A. Conway | 63,000 | 106,347 | — | 10,000 | 179,347 | |||||||||||||||||||||||
| James J. Duderstadt | 69,500 | 130,002 | — | — | — | — | 199,502 | |||||||||||||||||||||
| Chairman, Nominating and Corporate Governance Committee | ||||||||||||||||||||||||||||
| Henry C. Duques | 147,500 | 130,002 | — | — | — | — | 277,502 | |||||||||||||||||||||
| Non- Executive Chairman of the Board/Lead Director | ||||||||||||||||||||||||||||
| Matthew J. Espe | 72,000 | 146,224 | — | — | — | — | 218,224 | |||||||||||||||||||||
| Denise K. Fletcher | 72,000 | 130,002 | — | — | — | — | 202,002 | |||||||||||||||||||||
| Edwin A. Huston | 92,000 | 130,002 | — | — | — | — | 222,002 | |||||||||||||||||||||
| Chairman, Audit Committee | ||||||||||||||||||||||||||||
| Clayton M. Jones | 66,000 | 178,214 | — | — | — | — | 244,214 | |||||||||||||||||||||
| Leslie F. Kenne | 70,500 | 117,601 | — | — | — | — | 188,101 | |||||||||||||||||||||
| Clay B. Lifflander | 38,000 | 23,218 | 61,218 | |||||||||||||||||||||||||
| Theodore E. Martin | 68,000 | 130,002 | — | — | — | — | 198,002 | |||||||||||||||||||||
| Chairman, Compensation Committee | ||||||||||||||||||||||||||||
| Charles B. McQuade | 38,000 | 23,218 | — | — | — | — | 61,218 | |||||||||||||||||||||
| (1) | Amounts shown are the annual retainer/meeting fee, annual fees for chairmen of committees and non-executive Chairman of the Board/Lead Director and meeting fees for attendance at additional meetings. Includes amounts that have been deferred under the deferred compensation plan for directors. Also includes the value of stock units received in lieu of cash payments of retainers and fees, as described above. | |
| (2) | Amounts shown are the amounts recognized for financial statement reporting purposes with respect to 2008 in accordance with FAS 123R except that no estimates for forfeitures in respect of service-based vesting have been taken into account. For a discussion of the assumptions made in such valuation, see note 17 to the Company’s 2008 financial statements. The grant-date fair value of the 31,554 restricted stock units granted to directors on February 7, 2008 was $130,002. The grant date fair value of the 13,228 restricted stock units granted to Mr. Conway was $55,624. The grant date fair value of the 23,876 restricted stock units granted to each of Mr. Lifflander and Mr. McQuade was $86,670. | |
| (3) | At December 31, 2008, directors had outstanding restricted stock units as follows: Mr. Bolduc — 43,905; Mr. Conway — 40,372; Dr. Duderstadt — 43,905; Mr. Duques — 43,905; Mr. Espe — 43,905; Ms. Fletcher — 43,905; Mr. Huston — 43,905; Mr. Jones — 43,905; Ms. Kenne — 43,905; Mr. Lifflander — 23,876; Mr. Martin — 43,905; Mr. McQuade — 23,876. Directors also had outstanding stock units in respect of directors’ fees as follows: Mr. Bolduc — 27,029; Mr. Conway — 0; Dr. Duderstadt — 26,342; Mr. Duques — 60,826; Mr. Espe — 6,323; Ms. Fletcher — 13,943; Mr. Huston — 30,078; Mr. Jones — 7,298; Ms. Kenne — 0; Mr. Lifflander — 0; Mr. Martin — 73,826; Mr. McQuade — 10,819. | |
| (4) | At December 31, 2008, directors had outstanding stock options as follows: Mr. Bolduc — 68,000; Mr. Conway — 0; Dr. Duderstadt — 68,000; Mr. Duques — 68,000; Mr. Espe — 24,000; Ms. Fletcher — 48,000; Mr. Huston — 68,000; Mr. Jones — 24,000; Ms. Kenne — 0; Mr. Lifflander — 0; Mr. Martin — 68,000; Mr. McQuade — 0. | |
| (5) | Amount shown is the grant date fair value of the 21,277 shares granted to Mr. Conway on December 4, 2008. |
Under the Company’s stock ownership guidelines, as revised effective April 30, 2008, directors are expected to own 25,000 shares of the Company’s common stock within five years. This goal must be achieved by April 30, 2013 for directors in office on April 30, 2008 and within five years after election date for directors elected after April 30, 2008. Stock units received in respect of directors’
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fees count toward fulfillment of the ownership guidelines; stock options, including vested stock options, and restricted stock units do not count. The number of shares owned by each director is set forth in the stock ownership table on page 24.
GENERAL MATTERS
Policy on Confidential Voting
It is the Company'sCompany’s policy that all stockholder proxies, ballots and voting materials that identify the vote of a specific stockholder shall, if requested by that stockholder on such proxy, ballot or materials, be kept permanently confidential and shall not be disclosed to the Company, its affiliates, directors, officers and employees or to any third parties, except as may be required by law, to pursue or defend legal proceedings or to carry out the purpose of, or as permitted by, the policy. Under the policy, vote tabulators and inspectors of election are to be independent parties who are unaffiliated with and are not employees of the Company. The policy provides that it may, under certain circumstances, be suspended in the event of a proxy solicitation in opposition to a solicitation of management. The Company may at any time be informed whether or not a particular stockholder has voted. Comments written on proxies or ballots, together with the name and address of the commenting stockholder, will also be made available to the Company.
STOCKHOLDER PROPOSALS
Any stockholder who intends
Stockholder Proposals and Nominations
Stockholder proposals submitted to submit a proposalthe Company for inclusion in the proxy materials for the 1999 Annual Meeting2010 annual meeting of Stockholdersstockholders must submit suchbe received by the Company by December 17, 2009.
Any stockholder who intends to present a proposal so that it is received byat the 2010 annual meeting and has not sought to include the proposal in the Company’s proxy materials must deliver notice of the proposal to the Company no later than November 12, 1998.
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24
OTHER MATTERS
February 27, 2010.
Any stockholder who intends to make a nomination for the Board of Directors at the 2010 annual meeting must deliver to the Company no later than January 29, 2010 (a) a notice setting forth (i) the name, age, business and residence addresses of each nominee, (ii) the principal occupation or employment of each nominee, (iii) the number of shares of Unisys capital stock beneficially owned by each nominee, (iv) a statement that the nominee is willing to be nominated and (v) any other information concerning each nominee that would be required by the SEC in a proxy statement soliciting proxies for the election of the nominee and (b) the directors’ questionnaire, representation and agreement required by Article I, Section 8 of the Company’s Bylaws.
Householding of Proxy Materials
This year, a number of brokers with accountholders who are owners of Unisys common stock will be “householding” our proxy materials. This means that only one copy of the Noticeand/or this proxy statement and the 2008 annual report may have been sent to you and the other Unisys stockholders who share your address. Householding is designed to reduce the volume of duplicate information that stockholders receive and the Company’s printing and mailing expenses.
If your household has received only one copy of the proxy materials, and you would prefer to receive separate copies of these documents, either now or in the future, please call us at215-986-5777, or write us at Investor Relations, A2-17, Unisys Corporation, Unisys Way, Blue Bell, PA19424-0001. We will deliver separate copies promptly. If you are now receiving multiple copies of our proxy materials and would like to have only one copy of these documents delivered to your household in the future, please contact us in the same manner.
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Other Matters
At the date of this Proxy Statement,proxy statement, the Board of Directors knows of no matter other than the matters described herein that will be presented for consideration at the Annual Meeting. However, ifannual meeting other than those described in this proxy statement. If any other matter shall properly comecomes before the Annual Meeting,annual meeting, the shares represented bypersons appointed as proxies that are
signed and returned by stockholders will unless stockholders otherwise specify,
be votedvote thereon in the discretion of the persons voting such shares.
their discretion.
The Company will bear the cost of soliciting proxies. Such cost will include charges by brokers and other custodians, nominees and fiduciaries for forwarding proxies and proxy material to the beneficial owners of Unisys Common
Stock.common stock. Solicitation may also be made personally or by telephone or telegraph,
by the Company'sCompany’s directors, officers and regular employees without additional compensation. In addition, the Company has retained Georgeson & Company Inc.Innisfree M&A Incorporated to assist in the solicitation of proxies for a fee of approximately $12,000,$15,000, plus expenses.
By Order of the Board of Directors,
/s/ Harold S. Barron
Harold S. Barron
Nancy Straus Sundheim
Senior Vice President, General Counsel
and Secretary
Dated: March 12, 1998
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25
April , 2009
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ANNEX A
FORM OF CERTIFICATE OF AMENDMENT
OF THE
RESTATED CERTIFICATE OF INCORPORATION
OF
UNISYS CORPORATION
UNISYS CORPORATION, PROXY FOR ANNUAL MEETING TO BE HELD APRIL 23, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THE UNDERSIGNED HEREBY APPOINTS MELVIN R. GOODES, KENNETH A. MACKE AND LAWRENCE
A. WEINBACH, AND EACH OF THEM, PROXIES, WITH POWER OF SUBSTITUTION, TO VOTE ALL
SHARES OF COMMON STOCK WHICH THE UNDERSIGNED IS ENTITLED TO VOTE AT THE 1998
ANNUAL MEETING OF STOCKHOLDERS OF UNISYS CORPORATION, AND AT ANY ADJOURNMENT
THEREOF, AS DIRECTED ON THE REVERSE SIDE HEREOF WITH RESPECT TO THE ITEMS SET
FORTH IN THE ACCOMPANYING PROXY STATEMENT AND IN THEIR DISCRETION UPON SUCH
OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THIS CARD ALSO PROVIDES
VOTING INSTRUCTIONS (FOR SHARES CREDITED TO THE ACCOUNT OF THE UNDERSIGNED, IF
ANY) TO THE TRUSTEE FOR THE UNISYS SAVINGS PLAN (THE "SAVINGS PLAN"a corporation organized and existing under the General Corporation Law of the State of Delaware (the “Corporation”) AS MORE
FULLY DESCRIBED ON PAGE __ OF THE PROXY STATEMENT.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY/VOTING INSTRUCTION
CARD IN THE ENCLOSED ENVELOPE
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
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UNISYS CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [x]
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR ITEMS, does hereby certify as follows:
FIRST: The name of the corporation is Unisys Corporation.
SECOND: Section 1 2 AND 3.
FOR WITHHELD FORof Article FOURTH of the Corporation’s Restated Certificate of Incorporation is hereby amended to read in its entirety as set forth below:
“ARTICLE IV
Section 1. The total number of shares of all all from all except as noted
1. Electionclasses of stock which the Corporation shall have authority to issue is [ • ]1 shares, divided into two classes consisting of [ • ]2 shares of Common Stock, par value $.01 per share (“Common Stock”), and 40,000,000 shares of Preferred Stock, par value $1 per share (“Preferred Stock”). The Board of Directors shall have authority by resolution to issue the shares of Preferred Stock from time to time on such terms as it may determine and to divide the Preferred Stock into one or more series and, in connection with the creation of any such series, to determine and fix by the resolution or resolutions providing for the issuance of shares thereof:
A. the distinctive designation of such series, the number of shares which shall constitute such series, which number may be increased or decreased (but not below the number of shares then outstanding) from time to time by action of the Board of Directors, and the stated value thereof, if different from the par value thereof;
B. the dividend rate, the times of payment of dividends on the shares of such series, whether dividends shall be cumulative, and, if so, from what date or dates, and the preference or relation which such dividends will bear to the dividends payable on any shares of stock of any other class or any other series of this class;
C. the price or prices at which, and the terms and conditions on which, the shares of such series may be redeemed;
D. whether or not the shares of such series shall be entitled to the benefit of a retirement or sinking fund to be applied to the purchase or redemption of such shares and, if so entitled, the amount of such fund and the terms and provisions related to the operation thereof;
1 The number of authorized shares of all classes of stock following the Effective Time (as defined below) will be equal to the sum of the number of authorized shares of Common Stock following the Effective Time determined in accordance with Footnote 2 below plus 40,000,000.
2 The number of authorized shares of Common Stock following the Effective Time will be equal to the quotient, rounded to the nearest whole number, of 720,000,000 divided by the number of shares of Common Stock to be combined into one share in connection with the Reverse Stock Split determined in accordance with Footnote 3 below.
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E. whether or not the shares of such series shall be convertible into, or exchangeable for, any other shares of stock of the Corporation or any other securities and, if so convertible or exchangeable, the conversion price or prices, or the rates of exchange, and any adjustments thereof, at which such conversion or exchange may be made, and any other terms and conditions of such conversion or exchange;
F. the rights of the shares of such series in the event of voluntary or involuntary liquidation, dissolution or winding up or upon any distribution of the assets, of the Corporation;
G. whether or not the shares of such series shall have priority over or parity with or be junior to the shares of any other class or series in any respect, or shall be entitled to the benefit of limitations restricting (i) the creation of indebtedness of the Corporation, (ii) the issuance of shares of any other class or series having priority over or being on a parity with the shares of such series in any respect, or (iii) the payment of dividends on, the making of other distributions in respect of, or the purchase or redemption of shares of any other class or series on parity with or ranking junior to the shares of such series as to dividends or assets, and the terms of any such restrictions, or any other restriction with respect to shares of any other class or series on parity with or ranking junior to the shares of such series in any respect;
H. whether such series shall have the voting rights, in addition to any voting rights provided by law and, if so, the terms of such voting rights, which may be general or limited; and
I. any other powers, preferences, privileges, and relative participating, optional, or other special rights of such series, and the qualifications, limitations or restrictions thereof, to the full extent now or hereafter permitted by law.
The powers, preferences and relative participating, optional and other special rights of each series of Preferred Stock, and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series at any time outstanding. All shares of any one series of Preferred Stock shall be identical in all respects with all other shares of such series, except that shares of any one series issued at different times may differ as to the dates from which dividends thereon shall be cumulative.
Upon the filing and effectiveness (the “Effective Time”) of this amendment to the Restated Certificate of Incorporation of the Corporation pursuant to the General Corporation Law of the State of Delaware, each [ • ] [ ] [ ] _______________
Nominees: Henry C. _______________
Duques, Theodore E. (Except
Martin, Lawrence A. nominees written
Weinbach above)
FOR AGAINST ABSTAIN
2. Ratification3 shares of Selection [ ] [ ] [ ]the Corporation’s Common Stock, par value $.01 per share, issued and outstanding immediately prior to the Effective Time shall automatically be combined into one (1) validly issued, fully paid and non-assessable share of Independent Auditors
FOR AGAINST ABSTAIN
3.Common Stock without any further action by the Corporation or the holder thereof, subject to the treatment of fractional share interests as described below (such combination, the “Reverse Stock Split”). No fractional shares of Common Stock shall be issued in connection with the Reverse Stock Split. Stockholders who otherwise would be entitled to receive fractional shares of Common Stock shall be entitled to receive cash (without interest) from the Corporation’s transfer agent in lieu of such fractional shares in an amount equal to the proceeds attributable to the sale of such fractional shares following the aggregation and sale by the Corporation’s transfer agent of all fractional shares otherwise issuable.
3 By approving this Certificate of Amendment, stockholders are approving a combination of any number of shares of Common Stock, between and including five and twenty, into one share. The Certificate of Amendment that is filed with the Secretary of State of the State of Delaware will include only one ratio determined by the Board of Directors of the Corporation to be in the best interests of the Corporation and its stockholders following stockholder approval of this Certificate of Amendment and prior to the time of filing of this Certificate of Amendment.
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Stockholders who hold certificates that immediately prior to the Effective Time represented shares of Common Stock (“Old Certificates”) shall be entitled to receive such cash payment in lieu of fractional shares upon receipt by the Corporation’s transfer agent of the stockholder’s properly completed and duly executed transmittal letter and the surrender of the stockholder’s Old Certificates. After the Effective Time, each Old Certificate that has not been surrendered shall represent that number of shares of Common Stock into which the shares of Common Stock represented by the Old Certificate shall have been combined, subject to the elimination of fractional share interests as described above.”
THIRD: The foregoing amendment was duly adopted in accordance with Section 242 of the General Corporation Law of the State of Delaware.
FOURTH: The foregoing amendment shall be effective as of 11:59 p.m., Eastern time, on the date of filing with the Secretary of State of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to Certificate [ ] [ ] [ ]be duly executed as of Incorporation
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE AGAINST ITEM 4.
FOR AGAINST ABSTAIN
4. Stockholder Proposal To [ ] [ ] [ ]
Act By Written Consent/
Call Special Meetings
Mark Here To Have Your Vote Remain Confidential [ ]
_________________________________________
Signature
_________________________________________
Signature
Date:___________________________, 1998
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH SPECIFICATIONS MADE. IF NO CHOICES
ARE INDICATED, THIS PROXY WILL BE VOTED FOR ITEMS 1, 2 AND 3 AND AGAINST ITEM 4
AND THE TRUSTEE FOR THE SAVINGS PLAN WILL VOTE AS DESCRIBED ON PAGE __ OF THE
PROXY STATEMENT.
NOTE: Please sign exactly as name appears hereon. For joint accounts both
owners should sign. When signing as executor, administrator, attorney, trustee,
guardian, corporate officer, etc.the day of , please give your full title.
- --------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
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UNISYS YOUR VOTE IS VERY IMPORTANT
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY/VOTING CARD
IN THE ENCLOSED ENVELOPE.
CORPORATION
By:
Name:
| Title: |
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