PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS
Herbert S. Winokur, Jr., 51 Director and Chairman of the Board since 1988,
term expires 1996. President, Winokur Holdings, Inc.
(investment company). Formerly Senior Executive Vice
President, Member, Office of the President, and
Director, Penn Central Corporation. Director of ENRON
Corporation; NacRe Corp.; NHP, Inc.; and Marine
Drilling Companies, Inc.
Dan R. Bannister, 64* Nominee; Director since 1985, term expires 1995.
Chief Executive Officer since 1985; President since
1984. Director of Industrial Training Corporation.
T. Eugene Blanchard, 64* Director since 1988, term expires 1997. Senior
Vice President and Chief Financial Officer since 1979.
Russell E. Dougherty, 74 Director since 1989, term expires 1996.
Attorney, McGuire, Woods, Battle & Boothe (law firm).
Retired General, United States Air Force; served as
Commander-in-Chief, Strategic Air Command and Chief of
Staff, Allied Command, Europe. From 1980 to 1986
served as Executive Director of the Air Force
Association and Publisher of Air Force Magazine.
Former member of the Defense Science Board. Trustee
of the Institute for Defense Analysis. Director of
The Aerospace Corp.
James H. Duggan, 59* Director since 1988, term expires 1996. Executive
Vice President since 1987; President of Advanced
Technology Services Sector since July, 1994; President
of Applied Sciences Group from 1991 to 1994.
Paul V. Lombardi, 53* Director since July, 1994, term expires 1997.
Executive Vice President since 1994; President,
Government Services Sector since July 1994; Vice
President 1992 to 1994; President of Government
Services Group 1992 to 1994. Senior Vice President
and Group General Manager, Planning Research Corpora-
tion from 1990 to 1992. Senior Vice President and
Group General Manager, Advanced Technology Inc. from
1988 to 1990.
Michael T. Masin, 50 Nominee; Director since November, 1994, term expires,
1995. Vice Chairman of GTE Corporation since 1993.
Partner, O Melveny & Meyers, Washington, DC 1976
through 1993. Director of GTE Corporation, Trust
Company of the West, and Contel Cellular, Inc. Member
of the Board of Trustees of American University;
Member of Council on Foreign Relations and a Member of
Business Committee for Board of Trustees of Museum of
Modern Art.
Dudley C. Mecum II, 60 Director since 1988, term expires 1997. Partner, G.L.
Ohrstrom & Co. (investment company). Formerly
Chairman of Mecum Associates, Inc. Served as Group
Vice President and Director, Combustion Engineering,
Inc. Director of The Travelers Inc., Lyondell
Petrochemical Company, Vicorp Restaurants Inc.,
Fingerhut Companies, Inc., and Roper Industries Inc.
David L. Reichardt, 52* Nominee; Director since 1988, term expires 1995.
Senior Vice President and General Counsel since 1986.
President of Dynalectric Company, a subsidiary of
DynCorp, from 1984 to 1986. Vice President and
General Counsel of DynCorp from 1977 to 1984.
OTHER EXECUTIVE OFFICERS
Patrick G. Deasy, 56* Vice President since 1993; President of DynAir
Services Inc. since 1985.
Gerald A. Dunn, 61* Vice President since 1973; Controller since 1967.
Edward B. Fernstrom, 46 Vice President, Chief Information Officer since July,
1994, Director, Management Information Systems from
June 1990 to 1994.
Mark Filteau, 44* President of the Federal Sector Information and
Engineering Technology Strategic Business Unit ("SBU")
since December 1, 1994. President of PRC Public
Sector, March 1992 to 1994. Vice President and Senior
Vice President of BDM International from 1986 to 1992.
H. Montgomery Hougen, 59 Vice President since July, 1994; Corporate
Secretary and Deputy General Counsel since 1984.
Richard A. Hutchinson, 50 Treasurer since 1978.
Marshal J. Hyman, 49 Vice President since 1993; Director of Taxes since
1986.
Marshall S. Mandell, 52 Vice President, Business Development, Government
Sector since July, 1994; Vice President Business
Development Applied Science Group from February 1992
to 1994.
Carl H. McNair, Jr., 61* Vice President since July, 1994; President,
Federal Sector Enterprise Management SBU since July,
1994; President, Support Services Division from 1990
to 1994.
Ruth Morrel, 40 Vice President, Law & Compliance since July, 1994;
Group General Counsel from 1984 to 1994.
John H. Saunders, 38* Vice President, Finance since 1993; Director of
Corporate Finance since 1990; Vice President, Finance,
Government Services Group from 1987 to 1990.
Holton B. Shipman, Jr., 48* Vice President since July, 1994; President,
Federal Sector Environmental, Energy & National
Security Programs SBU since July, 1994.
Richard E. Stephenson, 59 Vice President, Technology & Government
Relations since July, 1994; Vice President Strategic
Planning, Government Services Group from 1991 to 1994.
John L. Sullivan, 59 Vice President of Human Resources, Quality &
Administration since January, 1995; Vice President of
Human Resources, Paramax Systems Corporation from 1986
to 1994.
Richard L. Webb, 62* Vice President since 1988; President of DynAir
Technical Services Group since 1993, President of
Aviation Services Group from 1985 to 1993.
Harold J. M. Williams, 58* Vice President since July, 1994;
President, Federal Sector Aerospace Technology SBU
since July, 1994; President, Aerospace Operations
Division from 1993 to 1994; Vice President Business
Development Government Services Group from 1990 to
1993.
Robert G. Wilson, 53 Vice President and General Auditor since 1985.
* Officers designated by an asterisk are deemed to be officers for
purposes of Rule 16a-1(f), as promulgated in Release No. 34-28869.
Stockholders Agreement
Under the terms of the New Stockholders Agreement which expires on March
10, 1999, which has been adopted by substantially all management stockholders,
including the officers named above, the management stockholders and outside
investors who control approximately 56% of the voting stock on a fully diluted
basis have agreed to the following procedure for election of directors.
Capricorn Investors, discussed below, on behalf of itself and certain outside
investors nominates four of the total number of directors; Company management
nominates four directors; and the two groups agree on a ninth director, for
whom all of the parties have agreed to vote. All of the current directors and
nominees have been selected by this process.
ITEM 11. EXECUTIVE COMPENSATION
Compensation
The following table sets forth information regarding annual and long-
term compensation for the chief executive officer and the other four most
highly compensated executive officers of the Company. The table does not
include information for any fiscal year during which a named executive officer
did not hold such a position with the Company.
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (f) (g) (h) (i)
Restricted Securities All Other
Dan R. Bannister 1994 350,000 165,000 27,159
President & Chief 1993 339,896 155,000 17,465
Executive Officer 1992 317,800 140,000 16,634
James H. Duggan 1994 243,147 95,000 19,875
Executive Vice President & 1993 248,736 90,000 12,813
Sector President 1992 234,688 80,000 13,767
Paul V. Lombardi 1994 240,405 95,000 19,394
Executive Vice President & 1993 219,663 100,000 105,000 11,960
Sector President 1992 47,859 60,000 105,000 2,338
T. Eugene Blanchard 1994 196,915 95,000 19,876
Senior Vice President & 1993 200,591 90,000 17,018
Chief Financial Officer 1992 189,131 75,000 16,634
David L. Reichardt 1994 190,547 95,000 17,906
Senior Vice President & 1993 193,371 90,000 11,793
General Counsel 1992 181,934 75,000 10,360
(1) Column (d) reflects bonuses earned and expensed during year, whether
paid during or after such year.
(2) Value of restricted stock units determined in accordance with Restricted
Stock Plan. There is no provision to pay dividends on restricted stock
units. The following table reflects the number of restricted stock
units in the respective accounts of the named individuals, whether
vested or unvested, and the aggregate valuation as of December 31, 1994.
Name No. of Units Value ($)
Dan R. Bannister 54,661 994,830
James H. Duggan 58,212 1,059,458
Paul V. Lombardi 12,000 218,400
T. Eugene Blanchard 47,467 863,899
David L. Reichardt 32,030 582,946
(3) Column (i) includes individual's pro rata share of the Company's
contribution to the ESOP Trust, estimated for 1994, and the Company-paid
portion of group term-life insurance and split-premium life insurance
premiums covering the individual, as reflected in the following table.
ESOP Contributions ($) Insurance Premiums ($)
Name 1994 1993 1992 1994 1993 1992
Dan R. Bannister 6,832 8,912 8,912 20,327 8,553 7,722
James H. Duggan 6,832 8,912 8,912 13,043 3,901 4,855
Paul V. Lombardi 6,832 8,912 1,810 12,562 3,048 528
T. Eugene Blanchard 6,832 8,912 8,912 13,044 8,106 7,722
David L. Reichardt 6,832 8,912 8,912 11,074 2,881 1,448
Compensation of Directors
Non-employee directors of the Company receive an annual retainer fee of
$16,500 as directors and $2,750 for each committee on which they serve. The
Company also pays non-employee directors a meeting fee of $1,000 for
attendance at each Board meeting and $500 for attendance at committee
meetings. Directors are reimbursed for expenses incurred in connection with
attendance at meetings and other Company functions.
Directors and Officers Liability Insurance
The Company has purchased and paid the premium for insurance in respect
of claims against its directors and officers and in respect of losses for
which the Company may be required or permitted by law to indemnify such
directors and officers. The directors insured are the directors named herein
and all directors of the Company's subsidiaries. The officers insured are all
officers and assistant officers of the Company and its subsidiaries. There is
no allocation or segregation of the premium as regards specific subsidiaries
or individual directors and officers.
Employment-Type Contracts
In September, 1987, the Company entered into change-in-control severance
agreements with Messrs. Bannister, Duggan, Blanchard, and Reichardt, and
certain other executive officers of DynCorp (the "Severance Agreements").
Each Severance Agreement provides that certain benefits, including a lump-sum
payment, will be triggered if such executive is terminated following a change
in control during the term of that executive's Severance Agreement, unless
such termination occurs under certain circumstances set forth in the Severance
Agreements. The Severance Agreements expire on December 31, 1995, but they
are automatically extended. The amount of such lump sum payment would be
equal to 2.99 times the sum of the executive's annual salary and the average
annual amount paid to the executive pursuant to certain applicable
compensation-type plans in the three years preceding the year in which the
termination occurs. Other benefits include payment of any incentive
compensation which has been allocated or awarded but not yet paid to the
executive for a fiscal year or other measuring period preceding termination
and a pro rata portion to the date of termination of the aggregate value of
incentive compensation awards for uncompleted periods under such plans. Each
Severance Agreement also provides that, if the aggregate of the lump sum
payment to the executive and any other payment or benefit included in the
calculation of "parachute payments" within the meaning of Section 280G of the
Internal Revenue Code exceeds the amount the Company is entitled to deduct on
its federal income tax return, the severance payments shall be reduced until
no portion of the aggregate termination payments to the executive is not so
deductible or the severance payment is reduced to zero. The Severance
Agreements also provide that the Company will reimburse the executive for
legal fees and expenses incurred by the executive as a result of termination
except to the extent that the payment of such fees and expenses would not be,
or would cause any other portion of the aggregate termination payments not to
be, deductible by reason of Section 280G of the Code.
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee of the Board of Directors
during 1994 were: Herbert S. Winokur, Jr., Chairman of the Board and
Director; and Russell E. Dougherty, Director, and, as of November, 1994,
Michael T. Masin, Director. None of the members are current or former
employees of the Company, and, except for Mr. Winokur, whose relationship to
Capricorn Investors, L.P. ("Capricorn") is described in Item 12, none have any
relationship with the Company of the nature contemplated by Rule 404 of
Regulation S-K.
On February 12, 1992, the Company loaned $5,500,000 to Cummings Point
Industries, Inc. ("CPI"), a Delaware corporation of which Capricorn owns more
than 10%. The indebtedness is represented by a promissory note (the "Note"),
bearing interest at the annual rate of 17%, which provides that interest is
payable quarterly but that interest payments may be added to the principal of
the Note rather than being paid in cash. The Note is subordinated to all
senior debt of CPI. The Note was due six months after issuance, but it has
been, and may continue to be, automatically extended for three-month periods
until no later than February 12, 1996. By separate agreement, Capricorn
agreed to purchase the Note from the Company upon three months' notice, for
the amount of outstanding principal plus accrued interest. The purchase
obligation is secured by certain common stock and warrants issued by the
Company and owned by Capricorn.
No executive officer of the Company serves on the board of directors or
compensation committee of any entity (other than subsidiaries of the Company)
whose directors or executive officers served on the Board of Directors or
Compensation Committee of the Company.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Voting Securities
As of March 1, 1995, the Company had 7,405,153 shares of Common Stock
and 123,711 shares of Class C Preferred Convertible Stock outstanding, which
constituted all the outstanding voting securities of the Company. If all the
shares issuable upon exercise of outstanding warrants, all the shares issuable
upon conversion of outstanding Class C Preferred Convertible Stock and
exercise of related warrants, and shares issuable as a result of immediate
vesting and expiration of deferrals under the Restricted Stock Planer were to
be issued, the outstanding voting securities following such dilution would
consist of 12,435,676 shares of Common Stock (and no shares of Class C Stock).
The following tables show beneficial ownership of issued voting shares as a
percentage of currently outstanding stock and beneficial ownership of issued
and issuable shares as a percentage of common stock on a fully diluted basis
assuming all such conversions, exercises, and issuances.
Security Ownership of Certain Beneficial Owners
The following table presents information as of March 1, 1995, concerning
the only known beneficial owners of five percent or more of the Company's
Common Stock and Class C Preferred Stock.
Amount & Amount &
Nature of Nature of Percent
Ownership of Ownership of of
Name and Address of Title of Outstanding Percent Diluted Diluted
Beneficial Owner Class Shares of Class Shares (3) Shares (3)
Trustee of the DynCorp Common 5,027,628 67.7% 5,027,628 40.0%
Employee Stock Ownership Trust Direct(1) Direct(1)
c/o DynCorp
2000 Edmund Halley Dr.
Reston, VA 22091
Capricorn Investors, L.P.(2) Common 292,369 3.9% 4,117,127 32.8%
72 Cummings Point Road Direct Direct
Stamford, CT 06902
Capricorn Investors, L.P.(2) Class C 123,711 100% N/A -
72 Cummings Point Road Preferred Direct
Stamford, CT 06902
(1) Shares are held for the accounts of participants in the ESOP. When
allocated to individual participant accounts, shares are voted upon
instruction of the individual participants. Until so allocated, shares
are voted upon the instruction of the ESOP Administrative Committee,
2000 Edmund Halley Drive, Reston, Virginia 22091.
(2) Herbert S. Winokur, Jr., Chairman of the Board and a Director of the
Company, is the President of Winokur Holdings, Inc., which is the
managing partner of Capricorn Holdings, G.P., which in turn is the
general partner of Capricorn Investors, L.P.
(3) Assumes exercise of all outstanding warrants, conversion of Class C
Stock, exercise of warrants issuable upon such conversion, full vesting
of all remaining Restricted Stock Plan units, distribution of all
deferred units under Restricted Stock Plan, and sale and distribution of
Common Stock which is the subject of this registration statement.
Security Ownership of Management(1)
Beneficial ownership of the Company's equity securities by
directors and nominees for election to the Board, and all current officers and
directors as a group, are set forth below:
Amount & Nature Amount & Nature Percent
of Ownership Percent of Ownership of
Name and Title of Title of of Outstanding of of Diluted Diluted
Beneficial Owner Class Shares(2) Class(3) Shares(4) Shares(3)(4)
D. R. Bannister Common 300,337 Direct} 4.1% 354,998 Direct} 2.9%
President & Director 7,356 Indirect) 7,356 Indirect}
T. E. Blanchard Common 146,019 Direct} 2.2% 193,486 Direct} 1.7%
Senior Vice President 14,292 Indirect) 14,292 Indirect}
& Director
R. E. Dougherty Common -- -- -- 1,870 Direct *
Director
J. H. Duggan Common 121,610 Direct} 1.8% 179,882 Direct} 1.5%
Executive Vice 12,723 Indirect) 12,723 Indirect}
President & Director
P. V. Lombardi Common 5,275 Direct} * 17,275 Direct} *
Executive Vice 831 Indirect) 831 Indirect}
President & Director
Michael T. Masin -- -- -- -- -- --
Director
D. C. Mecum II Common -- -- -- 1,870 Direct *
Director
D. L. Reichardt Common 57,428 Direct} * 89,458 Direct} *
Senior Vice President 10,983 Indirect) 10,983 Indirect}
& Director
H. S. Winokur, Jr.(5) Common 292,369 Indirect 3.9% 4,117,127 Indirect 33.1%
Chairman of the
Board & Director Class C 123,711 Indirect 100% N/A --
Preferred
All officers and Common 823,006 Direct} 17.2% 1,170,584 Direct} 43.4%
directors as a group 456,077 Indirect 4,280,835 Indirect}
Class C 123,711 Indirect) 100% N/A -- --
Preferred Indirect
(1) As disclosed in filings under the Securities Exchange Act of 1934 or
otherwise known to the Company as of March 1, 1995. Shares held by the
ESOP trustee but within individual voting control are included in the
table, whether or not vested.
(2) Restricted stock units which have not been vested and converted into
shares of stock and distributed pursuant to the Company's Restricted
Stock Plan as of March 1, 1995 are not transferable by or within the
voting control of the participants. Such units are not included in
outstanding shares.
(3) An asterisk indicates that beneficial ownership is less than one percent
of the class.
(4) Assumes exercise of all outstanding warrants, conversion of Class C
Stock, exercise of warrants issuable upon such conversion, full vesting
of all remaining Restricted Stock Plan units, distribution of all
deferred units under Restricted Stock Plan, and sale and distribution of
Common Stock which is the subject of this registration statement.
(5) Includes securities owned by Capricorn. See preceding table for
relationship of Mr. Winokur thereto.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Dougherty is of counsel to the law firm of McGuire, Woods, Battle &
Boothe, which firm has provided legal services to the Company from time to
time.
Officers and directors who obtained securities through the Company's
Management Employees Stock Purchase Plan and Restricted Stock Plan are subject
to the New Stockholders Agreement described above. Under the terms of the New
Stockholders Agreement, the Company's securities can not be sold individually
to outside parties. Management employees of the Company whose employment is
terminated may elect to retain their securities indefinitely, or under certain
circumstances may be required to sell such securities, at the fair market
price established by the Board of Directors from time to time, to the other
stockholders or to the Company, and the Company is required to repurchase such
securities at such price, subject to restrictions imposed by its Certificate
of Incorporation and various financing agreements.