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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as
permitted by sec. 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 14a-11(c) or sec. 14a-12
ORBITAL SCIENCES CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
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[ORBITAL LOGO]
April 16, 2001
Dear Stockholder:
It is my pleasure to invite you to the Annual Meeting of Stockholders of
Orbital Sciences Corporation to be held on Friday, May 18, 2001 at 9:00 a.m. at
our headquarters located at 21700 Atlantic Boulevard, Dulles, Virginia 20166.
Whether or not you plan to attend, and regardless of the number of shares
you own, it is important that your shares be represented at the meeting. You are
urged to sign, date and return your proxy promptly in the enclosed envelope,
which requires no postage if mailed in the United States. Even if you return a
proxy, you may still attend the meeting and vote in person.
I hope that you will be able to attend the meeting. Orbital's officers and
directors look forward to seeing you at that time.
Sincerely,
/s/ DAVID W. THOMPSON
DAVID W. THOMPSON
Chairman of the Board and
Chief Executive Officer
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ORBITAL SCIENCES CORPORATION
21700 ATLANTIC BOULEVARD
DULLES, VIRGINIA 20166
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 18, 2001
------------------------
The Annual Meeting of Stockholders of Orbital Sciences Corporation (the
"Company"), a Delaware corporation, will be held at our headquarters located at
21700 Atlantic Boulevard, Dulles, Virginia 20166, on Friday, May 18, 2001 at
9:00 a.m. for the following purposes:
1. To elect five directors for three-year terms ending in 2004.
2. To transact such other business as may properly come before the
meeting or any adjournments thereof.
The Board of Directors has set March 20, 2001 as the record date for the
meeting. This means that owners of the Company's common stock at the close of
business on that date are entitled to receive notice and to vote at the meeting
and any adjournments or postponements thereof.
YOU ARE URGED TO VOTE PROMPTLY BY SIGNING AND RETURNING THE ENCLOSED PROXY CARD.
IF YOU DECIDE TO ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE YOUR
SHARES IN PERSON.
By Order of the Board of Directors,
/s/ LESLIE C. SEEMAN
LESLIE C. SEEMAN
Executive Vice President, General Counsel
and Secretary
April 16, 2001
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ORBITAL SCIENCES CORPORATION
21700 ATLANTIC BOULEVARD
DULLES, VIRGINIA 20166
------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
------------------------
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Orbital Sciences Corporation (the "Company" or "Orbital") for use
at the Annual Meeting of Stockholders to be held at our headquarters located at
21700 Atlantic Boulevard, Dulles, Virginia 20166, on Friday, May 18, 2001 at
9:00 a.m. and any adjournments thereof.
The Board of Directors has fixed the close of business on March 20, 2001
(the "Record Date") for determining stockholders who are entitled to vote at the
Annual Meeting of Stockholders. On the Record Date, there were 37,732,134 shares
of common stock, par value $0.01 per share (the "Common Stock"), outstanding,
the holders of which are entitled to one vote per share on each matter to come
before the meeting. Proxies properly executed and returned will be voted at the
meeting in accordance with any directions noted. Any proxy on which no
directions are indicated will be voted FOR the election of the nominees for
director set forth below. Proxies will be voted in the discretion of the holder
of the proxy with respect to any other business that may properly come before
the meeting and as to which a stockholder has not provided timely notice, and
all matters incidental to the conduct of the meeting. Even if you have signed
and delivered a proxy, you may revoke it at any time before it is voted by
delivering to the Secretary of the Company a written revocation or a duly
executed proxy bearing a date later than the date of the proxy being revoked. If
you attend the meeting in person, you may revoke your proxy and vote your shares
in person.
This Proxy Statement, the accompanying form of proxy, and our Annual Report
on Form 10-K will be first mailed to stockholders on or about April 18, 2001.
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PROPOSAL 1
ELECTION OF DIRECTORS
Five directors are to be elected at the 2001 Annual Meeting for three-year
terms that expire in 2004. Nine other directors have been elected to terms that
end in either 2002 or 2003, as indicated below. The term of office of each
nominated director will be for three years expiring at the 2004 Annual Meeting
of Stockholders and until a successor is elected and qualified or until such
director's death, removal or resignation. If any nominees for directors should
become unavailable, the Human Resources and Nominating Committee of the Board of
Directors would designate substitute nominees and proxies would be voted for
such substitutes. Management does not anticipate that any of the nominees will
become unavailable.
In order to be elected, a nominee must receive the vote of a plurality of
the outstanding shares of Common Stock represented at the meeting and entitled
to vote. The five nominees for election as directors at the Annual Meeting who
receive the greatest number of votes properly cast for the election of directors
will be elected directors. Shares that are withheld will have no effect on the
outcome of the election.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF EACH OF
THE NOMINEES NAMED. Unless instructions are given to the contrary, it is the
intention of the persons named as proxies to vote the shares to which the proxy
is related FOR the election of each of the nominees listed below.
Set forth below is certain information, as of March 1, 2001, concerning
each of the nominees and each person whose term of office as a director will
continue after the Annual Meeting.
DIRECTORS WHOSE TERMS EXPIRE IN 2001
FRED C. ALCORN, 70
Member of Human Resources and Nominating Committee
Fred C. Alcorn has been a director of the Company since 1983. Since 1975, Mr.
Alcorn has been President of Alcorn Oil & Gas Company and Alcorn Development
Company.
LENNARD A. FISK, 57
Member of Strategy and Technology Committee
Lennard A. Fisk has been a director of the Company since 1993. Since 1993, Dr.
Fisk has been Professor and Chairman of the Department of Atmospheric, Oceanic,
and Space Sciences at the University of Michigan. From 1987 until 1993, he was
Associate Administrator for Space Science and Applications at the National
Aeronautics and Space Administration ("NASA"). From 1977 until 1987, he held
various positions at the University of New Hampshire, including Vice President
for Research and Financial Affairs.
JACK L. KERREBROCK, 73
Member of Strategy and Technology Committee
Jack L. Kerrebrock has been a director of the Company since 1993. From 1984
until 1993, he was a director of Orbital's then wholly owned subsidiary, Orbital
Research Corporation. Since 1965, Dr. Kerrebrock has been a Professor of
Aeronautics and Astronautics at the Massachusetts Institute of Technology. He
also served as Associate Administrator for Aeronautics and Space Technology at
NASA from 1981 to 1983.
GARRETT E. PIERCE, 56
Garrett E. Pierce has been a director of the Company since August 2000, when he
also joined Orbital as Executive Vice President and Chief Financial Officer.
From 1996 until August 2000, he was Executive Vice President and Chief Financial
Officer of Sensormatic Electronics Corp., where he was also named Chief
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Administrative Officer in July 1998. From 1993 until 1996, Mr. Pierce was the
Executive Vice President and Chief Financial Officer of California Microwave,
Inc., a leading supplier of microwave, radio frequency, and satellite systems
and products for communications and wireless networks. From 1980 to 1993, Mr.
Pierce was employed by Materials Research Corporation, a leading provider of
thin film equipment and high purity materials to the semiconductor,
telecommunications and media storage industries, where he progressed from Chief
Financial Officer to President and Chief Executive Officer. Materials Research
Corporation was acquired by Sony Corporation as a wholly owned subsidiary in
1989. From 1972 to 1980, Mr. Pierce held various management positions with
Allied Signal.
DAVID W. THOMPSON, 46
Chairman of the Board
David W. Thompson is a co-founder of Orbital and has been Chairman of the Board
and Chief Executive Officer of the Company since 1982. From 1982 until October
1999, he also served as the Company's President. Prior to founding Orbital, Mr.
Thompson was employed by Hughes Electronics Corporation as special assistant to
the President of its Missile Systems Group and by NASA at the Marshall Space
Flight Center as a project manager and engineer, and also worked on the Space
Shuttle's autopilot design at the Charles Stark Draper Laboratory. Mr. Thompson
is a Fellow of the American Institute of Aeronautics and Astronautics, the
American Astronautical Society and the Royal Aeronautical Society.
DIRECTORS WHOSE TERMS EXPIRE IN 2002
KELLY H. BURKE, 71
Chairman of Human Resources and Nominating Committee
Kelly H. Burke has been a director of the Company since 1984. Lt. General Burke
served in the U.S. Air Force for 30 years, holding a variety of command and
staff positions, culminating in that of Deputy Chief of Staff for Research,
Development and Acquisition at the Pentagon. Since retiring from the U.S. Air
Force in 1982, Lt. General Burke has been Chairman of Stafford, Burke and
Hecker, Inc., an aerospace consulting firm. Additionally, Lt. General Burke has
served as an advisor to the White House Science Office, the National Academy of
Sciences, the Defense Science Board and the U.S. Air Force Scientific Advisory
Board.
BRUCE W. FERGUSON, 46
Member of Human Resources and Nominating Committee
Bruce W. Ferguson is a co-founder of Orbital and has been a director of the
Company since 1982. Mr. Ferguson is Chairman, President and Chief Executive
Officer of Edenspace Systems Corporation, an environmental services company he
co-founded in 1998. Mr. Ferguson was Senior Vice President, Special Projects of
Orbital from 1997 to 1999, Executive Vice President and General
Manager/Communications and Information Services Group from 1993 until 1997, and
Executive Vice President and Chief Operating Officer of Orbital from 1989 to
1993. From 1985 to 1989, he was Senior Vice President/Finance and Administration
and General Counsel of Orbital.
DANIEL J. FINK, 74
Chairman of Audit and Finance Committee and Member of Strategy and Technology
Committee
Daniel J. Fink has been a director of the Company since 1983. Since 1982, Mr.
Fink has been President of D.J. Fink Associates, Inc., a management consulting
firm. From 1967 until 1982, Mr. Fink held a variety of positions at General
Electric Company, including the position of Senior Vice President from 1979 to
1982. Mr. Fink is a director of Titan Corporation, a former member of the
Defense Science Board and a former Chairman of the NASA Advisory Council.
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JANICE I. OBUCHOWSKI, 49
Member of Strategy and Technology Committee
Janice I. Obuchowski has been a director of the Company since 1996. Since 1992,
Ms. Obuchowski has been President of Freedom Technologies, Incorporated, a
telecommunications research and consulting firm. From 1995 until June 1998, Ms.
Obuchowski was an Executive Vice President of NextWave Telecom, Inc. From 1989
to 1992, she served as the Assistant Secretary for Communications and
Information at the U.S. Department of Commerce and Administrator of the National
Telecommunications and Information Agency. From 1980 to 1987, Ms. Obuchowski
served in a variety of positions at the U.S. Federal Communications Commission,
including Chief of the Common Carrier Bureau's International Policy Division and
Senior Advisor to the Chairman. Ms. Obuchowski is a director of CSG Systems,
Inc.
FRANK L. SALIZZONI, 62
Member of Audit and Finance Committee
Frank L. Salizzoni has been a director of the Company since 1996. Mr. Salizzoni
was President and Chief Executive Officer of H&R Block, Inc. from 1996 until
2000, and currently serves as Chairman of the Board. From 1994 until 1996, Mr.
Salizzoni was President and Chief Operating Officer of USAir, Inc. and USAir
Group, Inc. He joined USAir as Executive Vice President-Finance and Chief
Financial Officer in 1990. From 1987 to 1989, Mr. Salizzoni was Chairman and
Chief Executive Officer of TW Services, one of the largest food services
companies in the United States. From 1967 to 1987, Mr. Salizzoni held several
senior financial management positions with Trans World Airlines and its parent
company, Transworld Corporation. Mr. Salizzoni is a director of H&R Block, Inc.
DIRECTORS TO BE ELECTED AT THE 2003 ANNUAL MEETING
DOUGLAS S. LUKE, 59
Member of Audit and Finance Committee and Human Resources and Nominating
Committee
Douglas S. Luke has been a director of the Company since 1983. Since 1999, Mr.
Luke has been President and Chief Executive Officer of HL Capital, Inc., a
private investment firm. From 1991 until 1998, Mr. Luke was President and Chief
Executive Officer of WLD Enterprises, Inc., a private investment firm. From 1979
until 1990, he held various positions with Rothschild, Inc., including the
position of Managing Director from 1987 until 1990. Mr. Luke is currently a
director of Regency Realty Corporation and Westvaco Corporation.
HARRISON H. SCHMITT, 65
Chairman of Strategy and Technology Committee and Member of Audit and Finance
Committee
Harrison H. Schmitt has been a director of the Company since 1983. From 1982
until the present, Dr. Schmitt has served in various capacities as a business
and technical consultant. From 1976 to 1982, Dr. Schmitt was a United States
Senator from New Mexico, during which time he chaired the Senate Science,
Technology and Space Subcommittee, which oversees all non-military space-related
research and development programs of the U.S. Government. From 1974 to 1975, he
was Assistant Administrator for Energy Programs for NASA. From 1965 to 1973, he
was a NASA astronaut. As Lunar Module Pilot on Apollo 17 in 1972, he explored
the Moon's surface.
JAMES R. THOMPSON, 64
James R. Thompson, who is not related to David W. Thompson, has been President
and Chief Operating Officer of the Company since October 1999 and a director of
the Company since 1992. He also is currently serving as acting General
Manager/Space Systems Group. From 1993 until October 1999, Mr. Thompson served
as Executive Vice President and General Manager/Launch Systems Group. Mr.
Thompson was Executive Vice President and Chief Technical Officer of Orbital
from 1991 to 1993. He was Deputy Administrator of NASA from 1989 to 1991. From
1986 until 1989, Mr. Thompson was Director of NASA's
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Marshall Space Flight Center. Mr. Thompson was Deputy Director for Technical
Operations at Princeton University's Plasma Physics Laboratory from 1983 through
1986. Before that, he had a 20-year career with NASA at the Marshall Space
Flight Center. He is a director of Nichols Research Corp. and SPACEHAB
Incorporated.
SCOTT L. WEBSTER, 48
Scott L. Webster is a co-founder of Orbital and has been a director of the
Company since 1982. In early 1998, Mr. Webster became Chairman of the Board and
Chief Executive Officer of ORBCOMM Global, L.P. ("ORBCOMM"). From 1993 to 1997,
Mr. Webster served in various consulting capacities with the Company. He served
as President of Orbital's Space Data Division from 1990 until 1993, and
Executive Vice President of that Division from 1989 to 1990. Mr. Webster served
as Orbital's Senior Vice President/ Marketing and Vice President of Marketing
from Orbital's inception in 1982 until 1989. Previously, he held technical and
management positions at Advanced Technology Laboratories and Litton Industries,
Inc.
INFORMATION CONCERNING THE BOARD AND ITS COMMITTEES
Meetings and Committees
During 2000, the Board of Directors held seven meetings. The Board has
three standing committees: the Audit and Finance Committee; the Human Resources
and Nominating Committee; and the Strategy and Technology Committee. The
biographical information in the immediately preceding section identifies the
committee memberships held by each director.
The Audit and Finance Committee, which held 13 meetings in 2000, reviews
the Company's financial reports and other information relating to corporate
financial performance and planning, including major issues regarding accounting
and auditing practices; oversees the Company's internal accounting controls that
could significantly affect the Company's financial statements; evaluates Company
financings and financial aspects of potential acquisitions, divestitures and
strategic investments; recommends the engagement of the Company's independent
auditors and reviews such auditors' compensation and performance; consults with
the independent auditors with regard to the plan of audit; and consults with the
independent auditors with regard to the Company's financial results, significant
accounting policies and issues, and the adequacy of internal accounting controls
of the Company.
The Human Resources and Nominating Committee, which held five meetings in
2000, administers the Company's stock option and stock purchase plans; approves
compensation and, where applicable, severance arrangements for directors,
executive officers and other members of management; evaluates compensation plans
and policies and makes recommendations to the Board with respect thereto;
oversees the Company's defined contribution and deferred compensation plans;
considers issues of corporate governance, management development, evaluation and
succession; reviews corporate human resources matters, including issues relating
to work force recruiting and retention; and nominates candidates for positions
on the Board. In addition, the Committee will consider nominees recommended by
stockholders for election as directors if such recommendations are in writing,
are filed with the Secretary of the Company by the time specified in the
Company's By-Laws and include the information specified in the Company's
By-Laws.
The Strategy and Technology Committee, which held four meetings in 2000,
gives initial Board-level consideration to advanced technology and business
strategy issues, including competitive assessments; reviews and assesses major
programs and research and development activities; evaluates potential
acquisitions, divestitures and joint ventures; and evaluates technical and
market risks associated with new product development.
Director Compensation
During 2000, three directors were salaried employees of the Company and one
director was a salaried employee of ORBCOMM. Such directors receive no
additional compensation for serving on the Board. Board
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members who are not salaried employees receive separate compensation for Board
service. That compensation includes:
(1) an annual retainer in the form of cash or restricted stock or a
combination of the two,
(2) attendance fees,
(3) stock options, and
(4) in some instances, restricted stock awards.
All directors also are reimbursed for out-of-pocket expenses in connection with
Board and committee service.
Retainer and Fees. Nonemployee directors receive an annual retainer of
$7,500, along with $1,000 for each Board or committee meeting attended. As
described below, nonemployee directors may elect to receive their annual
retainer in restricted common stock.
Options and Restricted Stock. Under the 1997 Stock Option and Incentive
Plan (the "1997 Option Plan"), nonemployee directors receive an annual grant on
the first business day in January of options to purchase 3,000 shares of common
stock at an exercise price equal to the fair market value on that date. On
January 3, 2000, the option exercise price was $18.50 per share. The option
grant vests in its entirety one year from the grant date.
The Board has adopted two nonemployee director compensation programs that
are intended to incentivize nonemployee directors to increase their equity
ownership in the Company and to directly align their financial interests with
those of Orbital's stockholders. The first is a compensation program that allows
nonemployee directors to elect to receive shares of restricted common stock
under the 1997 Option Plan in lieu of all or a portion of their annual cash
retainer. Nonemployee directors making this election receive an additional
matching award of an equal number of shares of restricted common stock. The
grant, including the matching award of restricted common stock, vests in its
entirety two years from the date of grant. During 2000, the Company issued a
total of 9,295 shares of restricted common stock to all eleven eligible
directors in lieu of their annual cash retainer.
The second compensation program allows the Company to match a nonemployee
director's purchase of up to $10,000 worth of common stock in the open market in
a calendar year with a grant of restricted common stock under the 1997 Option
Plan. The number of shares of restricted common stock granted is equal to the
dollar value of the nonemployee director's stock purchase in any given calendar
quarter divided by the average closing sales price of the common stock during
that calendar quarter. The grant vests in its entirety two years from the date
of grant. In 2000, Orbital issued a total of 2,390 shares of restricted common
stock to three nonemployee directors who participated in the program.
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SUMMARY COMPENSATION TABLE
The following table sets forth a summary of all compensation earned,
awarded or paid in the fiscal years ended December 31, 2000, 1999 and 1998, as
applicable, to the Chief Executive Officer, the four most highly compensated
executive officers who were serving as executive officers at December 31, 2000,
and to two individuals who would have been two of the most highly compensated
officers but for the fact that they were not serving as executive officers at
December 31, 2000 (collectively, the "Named Officers").
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(#) COMPENSATION
--------------------------- ---- -------- -------- ------------ ------------
David W. Thompson (a)................ 2000 $430,000 $ -- 75,000 $40,336
Chairman of the Board and 48,000(b)
Chief Executive Officer 10,000(c)
1999 415,000 166,000 250,000 17,942
60,000(c)
1998 390,000 207,800 90,000 16,036
50,000(c)
250,000(d)
James R. Thompson (e)................ 2000 383,000 -- 60,000 37,325
President and Chief Operating Officer 48,000(d)
1999 312,000 110,625 50,000 17,942
1998 270,000 137,800 40,000 14,311
Robert D. Strain (f)................. 2000 255,000 654,500 25,000 8,446
Executive Vice President and 2,500(b)
General Manager/Electronics and 1999 240,000 73,100 40,000 11,192
Sensor Systems Group 1998 225,000 53,400 30,000 8,000
Leslie C. Seeman (g)................. 2000 250,000 50,000 25,000 6,800
Executive Vice President, Secretary 25,000(b)
and General Counsel 1999 230,000 69,900 40,000 12,070
1998 215,000 75,200 30,000 11,439
140,000(d)
Michael D. Griffin (h)............... 2000 280,000 -- -- 5,600
Executive Vice President and Chief
Technical Officer 1999 280,000 70,000 30,000 9,329
1998 265,000 86,100 30,000 13,741
100,000(d)
Robert R. Lovell (i)................. 2000(f) 340,000 -- 25,000 56,316
Former Executive Vice President and 2,500(c)
General Manager/Space Systems Group 1999 325,000 313,250(f) 30,000 28,399
1998 310,000 413,300(f) 40,000 37,594
75,000(c)
Jeffrey V. Pirone (j)................ 2000(h) 172,000 115,000 40,000 869,365
Former Executive Vice President and 40,000(b)
Chief Financial Officer 1999 280,000 84,000 150,000 12,893
15,000(c)
1998 250,000 91,200 75,000 13,514
140,000(d)
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(a) All other compensation for Mr. D.W. Thompson includes Company contributions
under Orbital's 401(k) plan of $6,400, $8,000 and $8,000 for 2000, 1999 and
1998, respectively, and under Orbital's
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deferred compensation plan of $4,031, $9,942 and $8,036 for 2000, 1999 and
1998, respectively. It also includes partial forgiveness in 2000 of an
outstanding loan and accrued interest in the amount of $29,905.
(b) Shares of common stock of Orbital's Canadian subsidiary, MacDonald,
Dettwiler and Associates Ltd. ("MDA"), underlying options granted under the
1999 MDA Stock Option and Incentive Plan. MDA options were granted with an
exercise price of C$10.65 per share and vest in equal increments annually
over a three-year period.
(c) Shares of common stock of Orbital Imaging Corporation ("ORBIMAGE")
underlying options granted under the ORBIMAGE 1996 Stock Option Plan.
ORBIMAGE options were granted with an exercise price of $7.25 per share in
2000, $6.25 per share in 1999 and $4.17 per share in 1998 and vest in equal
increments annually over a three-year period.
(d) Shares of common stock of Orbital's majority owned subsidiary, Magellan
Corporation ("Magellan"), underlying options granted under the 1998
Magellan Stock Option and Incentive Plan. Magellan options were granted
with an exercise price of $0.40 per share and generally vest in equal
increments annually over a three-year period.
(e) All other compensation for Mr. J.R. Thompson includes Company contributions
under Orbital's 401(k) plan of $6,400, $8,000 and $8,000 for 2000, 1999 and
1998, respectively, and under Orbital's deferred compensation plan of
$1,020, $9,942 and $6,311 for 2000, 1999 and 1998, respectively. It also
includes partial forgiveness in 2000 of an outstanding loan and accrued
interest in the amount of $29,905.
(f) All other compensation for Mr. Strain includes Company contributions under
Orbital's 401(k) plan of $6,400, $8,000 and $8,000 for 2000, 1999 and 1998,
respectively, and under Orbital's deferred compensation plan of $2,046,
$3,192 and $0 for 2000, 1999 and 1998, respectively.
(g) All other compensation for Ms. Seeman includes Company contributions under
Orbital's 401(k) plan of $6,400, $7,378 and $8,000 for 2000, 1999 and 1998,
respectively, and under Orbital's deferred compensation plan of $400,
$4,692 and $3,439 for 2000, 1999 and 1998, respectively.
(h) All other compensation for Dr. Griffin includes Company contributions under
Orbital's 401(k) plan of $5,600, $7,188 and $8,000 for 2000, 1999 and 1998,
respectively, and under Orbital's deferred compensation plan of $0, $2,141
and $5,741 for 2000, 1999 and 1998, respectively.
(i) Mr. Lovell resigned from his position in November 2000. All other
compensation for Mr. Lovell includes Company contributions under Orbital's
401(k) plan of $3,116, $4,321 and $6,960 for 2000, 1999 and 1998,
respectively, and under Orbital's deferred compensation plan of $0, $78 and
$6,634 for 2000, 1999 and 1998, respectively. It also includes $2,000 per
month housing allowance for each of the years reported, and partial
forgiveness in 2000 of an outstanding loan and accrued interest in the
amount of $29,200.
(j) Mr. Pirone resigned from his position in July 2000. All other compensation
for Mr. Pirone includes Company contributions under Orbital's 401(k) plan
of $6,400, $8,000 and $8,000 for 2000, 1999 and 1998, respectively, and
under Orbital's deferred compensation plan of $565, $4,893 and $5,514 for
2000, 1999 and 1998, respectively. It also includes forgiveness in 2000 of
an outstanding loan and accrued interest in the amount of $56,400, and
other payments described in "Executive Employment Agreements" below.
OPTION GRANTS IN LAST FISCAL YEAR
The table below shows information on grants of stock options during the
fiscal year ended December 31, 2000 to the Named Officers under Orbital's 1997
Option Plan, which options are reflected in the Summary
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Compensation Table. Except as otherwise described, one-third of the options
granted in 2000 vested immediately, with the remaining two-thirds vesting in
equal increments annually over a two-year period.
POTENTIAL REALIZED
VALUE AT ASSUMED
RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
-------------------------------------------------- ---------------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED(#) FISCAL YEAR ($/SHARE) DATE 5% 10%
---- ---------- ------------ --------- ---------- -------- ----------
David W. Thompson.......... 75,000 4.3% $12.25 4/26/2010 $577,797 $1,464,251
James R. Thompson.......... 60,000 3.5% 12.25 4/26/2010 462,238 1,171,401
Robert D. Strain........... 25,000 1.4% 12.25 4/26/2010 192,599 488,084
Leslie C. Seeman........... 25,000 1.4% 12.25 4/26/2010 192,599 488,084
Michael D. Griffin......... -- -- -- -- -- --
Robert R. Lovell........... 25,000 1.4% 12.25 7/20/2001 18,987 38,186
Jeffrey V. Pirone (a)...... 40,000 2.3% 12.25 7/21/2002 -- 141,465
- ---------------
(a) In connection with his resignation, Mr. Pirone's options became immediately
vested in their entirety as of July 21, 2000 and expire July 21, 2002.
AGGREGATED OPTION EXERCISES DURING 2000 AND DECEMBER 31, 2000 OPTION VALUES
None of the Named Officers exercised any stock options during the year
ended December 31, 2000, nor were any of their options in-the-money at December
31, 2000. The table below shows information with respect to the number of
unexercised stock options granted under the 1997 Option Plan and its
predecessor, the Company's 1990 Stock Option Plan.
NUMBER OF UNEXERCISED
OPTION SHARES
AT DECEMBER 31, 2000
---------------------------
NAME EXERCISABLE UNEXERCISABLE
---- ----------- -------------
David W. Thompson........................................... 307,500 267,500
James R. Thompson........................................... 182,754 86,666
Robert D. Strain............................................ 95,001 53,332
Leslie C. Seeman............................................ 115,668 53,332
Michael D. Griffin.......................................... 58,336 30,000
Robert R. Lovell............................................ 97,334 36,666
Jeffrey V. Pirone........................................... 189,000 --
HUMAN RESOURCES AND NOMINATING COMMITTEE REPORT
Overview and Philosophy. The Human Resources and Nominating Committee (the
"Committee") is composed entirely of independent directors and is responsible
for evaluating and determining the compensation of the Company's senior
executives. The Committee strives to ensure that compensation serves to motivate
and retain senior executives while also being in the best interests of the
Company and its stockholders. The Committee's philosophy relating to executive
compensation is to attract and retain highly qualified people at industry
competitive salaries, and to link the financial interests of Orbital's senior
management to those of the Company's stockholders. The Committee endeavors to
attain these goals by tying compensation to the achievement of certain
operational and financial objectives adopted semi-annually by the
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Committee. To implement these objectives, the Company's compensation structure
has five general components:
(1) base salary,
(2) annual cash bonuses and, under certain circumstances, special cash
bonuses,
(3) stock options,
(4) stock ownership incentives, and
(5) under certain circumstances, stock appreciation rights.
Base Salary. In the early part of each fiscal year, the Committee reviews
with Mr. D.W. Thompson, Orbital's Chief Executive Officer, and approves, with
any modifications it deems appropriate, salary levels for the Company's
executive officers, including the Named Officers, and certain other members of
senior management. Generally, the salaries are determined subjectively,
intending to reflect the value of the job in the marketplace and the past and
expected future performance and contributions of the individual senior
executive, as well as the Company's overall growth and profitability. In 2000,
base salaries generally increased between 4% and 6% for senior management.
Because of the Company's liquidity situation, base salaries were not raised in
2001 for members of senior management including the Named Officers. Furthermore,
in 2001, Messrs. D.W. Thompson and J.R. Thompson have volunteered to receive 50%
and 20%, respectively, of their base salary in shares of restricted common
stock.
Annual Cash Incentive and Special Bonuses. Under the Company's incentive
bonus plan for 2000, the Chief Executive Officer was eligible to receive a bonus
of up to 80% of base salary, and the Company's President and Chief Operating
Officer was eligible to receive a bonus of up to 60% of base salary, based on
individual achievements and overall Company financial and operational
performance. For 2000, the Company's new Executive Vice President and Chief
Financial Officer was guaranteed a bonus in an amount equal to 50% of base
compensation on a pro-rated basis from August 2000, his starting date. The
Company's other executive officers, including the other Named Officers, were
eligible to receive annual bonuses of up to 50% of base salary, based primarily
on individual achievements and operating groups' financial and operational
performance or applicable business unit goals. In January 2000 and July 2000,
the Committee reviewed and adopted operational and financial goals recommended
by management for purposes of 2000 bonus opportunities. Financial goals included
achievement of target levels with respect to revenues, backlog, earnings and
cash flow. Operational goals included space mission reliability and timeliness,
new orders and contracts, new product initiatives, adherence to schedules and
budgets, and the completion of certain corporate transactions. In January 2001,
the Committee determined, in consultation with the Chief Executive Officer, that
given the Company's financial performance in 2000 and current liquidity
constraints, no annual cash incentive bonuses (except for the guaranteed bonus
paid to the Executive Vice President and Chief Financial Officer) would be paid
to members of senior management, including the Chief Executive Officer and Named
Officers.
In addition to its annual incentive bonus plan, the Company also has a
policy of awarding special cash bonuses to an individual or a group in
recognition of exceptional achievement or effort. Mr. Strain received a special
cash bonus in 2000 based on his successful execution of the Company's sale of
its Fairchild Defense division. Ms. Seeman received a special cash bonus in
recognition of her leadership in representing the Company in certain litigation
matters. Mr. Pirone's special cash bonus related to the completion of certain
MDA financing activities.
Stock Options. The Committee believes that the award of stock options
provides meaningful long-term incentives that are directly related to the
enhancement of stockholder value. Stock option awards are intended to
incentivize employees to work towards achieving operational and financial goals
that management believes will ultimately be reflected in stock value. Under the
1997 Option Plan, stock options generally are granted at an exercise price equal
to the closing price of the Company's common stock on the date of the grant.
Therefore, the value of the grant to the recipient is directly related to an
increase in the price of the common stock. Historically, option grants have
vested in equal increments annually over a three-year period. In 2000, however,
in a desire to structure the options to better serve as a retention incentive,
one-third of the annual
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grant was immediately vested, with the remainder vesting in one-third increments
over two years. The Committee generally approves an annual grant to senior
executives, including the Named Officers. In addition, stock option grants
occasionally may be awarded throughout the year to individuals, including the
Named Officers. The number of stock options granted to each individual is
determined subjectively based on a number of factors, including the individual's
degree of responsibility, general level of performance, ability to affect future
Company performance, salary level, option holdings and recent noteworthy
achievements.
In addition to the options granted under the 1997 Option Plan, in 2000
certain senior managers, including certain of the Named Officers, were granted
MDA common stock options under the MDA 1999 Stock Option Plan. The MDA 1999
Stock Option Plan is administered by MDA's Board of Directors. Mr. D.W. Thompson
was also granted options in 2000 under the ORBIMAGE 1996 Stock Option Plan
administered by ORBIMAGE's Board of Directors.
Stock Ownership Incentives. Intending to incentivize senior management to
increase their equity ownership in the Company and thus to further motivate
performance, the Committee has instituted an executive officer loan program that
authorizes the Company to make a loan of up to $50,000 to each executive officer
solely for the purpose of purchasing common stock in the open market. Each loan
is for a term of four years with interest deferred. The Company has agreed to
forgive one-half of the principal amount and any accrued interest on the third
anniversary of the loan and the other one-half of the principal amount and any
accrued interest on the fourth anniversary of the loan if the executive officer
continues to hold all the shares of stock acquired with the loan proceeds on the
third anniversary of the loan and at least one-half of all such shares on the
fourth anniversary of the loan. Since 1997, nine executive officers, including
six Named Officers, have participated in this program. During 2000, the
Committee also authorized a loan under this program to Scott L. Webster, who is
Chairman and Chief Executive Officer of ORBCOMM and also a director of the
Company, but does not otherwise participate in the nonemployee director
compensation programs.
Stock Appreciation Rights
During 1999, the Committee awarded Performance Share Agreements to the
Company's Chief Executive Officer (discussed below), and to Mr. J.R. Thompson,
the Company's President and Chief Operating Officer. A similar agreement was
awarded to Mr. Pierce when he joined the Company as Executive Vice President and
Chief Financial Officer in August 2000. These agreements are intended to provide
certain executive officers with further incentive to enhance the financial and
operational strength of the Company by directly linking a significant component
of their compensation to the amount of appreciation in the Company's common
stock. Under these agreements, 50,000 performance shares each were granted to
Mr. J.R. Thompson in 1999 and to Mr. Pierce in 2000. Bonuses are generally
calculated based on the year-to-year increase of the average closing sales price
of the Company's common stock for a specified month and are paid into the
officer's account under Orbital's deferred compensation plan, with 50% of the
amount vesting immediately and the remainder vesting one year later. For 2000,
Mr. J.R. Thompson's bonus was based on the amount, if any, by which the average
closing sales price of the Company's common stock for the month of March 2000
exceeded $30. Based on the stock price at the measuring date in 2000, Mr. J.R.
Thompson was not entitled to receive any bonus in 2000 under his Performance
Share Agreement.
Chief Executive Compensation. Based on the Committee's review of the Chief
Executive Officer's performance, the overall performance of the Company and
compensation levels for comparable positions in the industry, the Committee
authorized a merit increase of $15,000 in Mr. David W. Thompson's annual base
salary from $415,000 in 1999 to $430,000 effective January 1, 2000. The
Committee maintained the Chief Executive Officer's target bonus percentage at
80% of base salary for 2000. As discussed above, based on the Company's
financial and operational performance in 2000 and current liquidity constraints,
Mr. Thompson did not receive a bonus for 2000 or an increase in salary for 2001.
The Committee approved a grant of 75,000 options to Mr. Thompson in 2000 with an
exercise price of $12.25 per share, which options vest as described above.
In 1999, Mr. Thompson was awarded 100,000 performance shares under a
Performance Share Agreement as described above. Under this agreement, Mr.
Thompson's bonus for 2000 was based on the
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amount, if any, by which the average closing sales price of the Company's common
stock for the month of March 2000 exceeded $30. Based on the stock price at the
measuring date in 2000, Mr. D.W. Thompson was not entitled to receive any bonus
in 2000 under his Performance Share Agreement, in accordance with its terms.
Bonuses earned pursuant to this agreement will be paid into the Chief Executive
Officer's account under Orbital's deferred compensation plan, with 50% of the
amount vesting immediately and the remainder vesting one year later.
The foregoing report has been furnished by the Human Resources and
Nominating Committee members:
Lt. Gen. Kelly H. Burke, Chairman Mr. Fred C. Alcorn
Mr. Bruce W. Ferguson Mr. Douglas S. Luke
AUDIT AND FINANCE COMMITTEE REPORT
The Audit and Finance Committee (the "Audit Committee") is responsible for
providing independent, objective oversight of the Company's accounting functions
and internal controls. The Audit Committee is comprised of four directors, each
of whom meets the independence and experience requirements of the New York Stock
Exchange listing rules. The Audit Committee operates under a written charter
approved by the Board of Directors, a copy of which is attached to this Proxy
Statement as Appendix A.
Management is responsible for the Company's internal controls and financial
reporting process. The independent auditors are responsible for performing an
independent audit of the Company's consolidated financial statements in
accordance with generally accepted auditing standards and to issue a report
thereon. The Audit Committee's responsibility is to monitor and oversee these
processes.
The Audit Committee has reviewed and discussed the audited consolidated
financial statements of the Company for fiscal year ended December 31, 2000 with
the Company's management, and also has discussed with PricewaterhouseCoopers LLP
("PricewaterhouseCoopers"), the Company's independent auditors, the matters
required to be discussed by Statement on Auditing Standards No. 61. The Audit
Committee has received both the written disclosures and the letter from
PricewaterhouseCoopers required by Independence Standards Board Standard No. 1,
and has discussed with PricewaterhouseCoopers that firm's independence.
Based on the Audit Committee's discussions with management and the
independent auditors, the Audit Committee recommended to the Board of Directors
of the Company that the audited consolidated financial statements of the Company
for year ended December 31, 2000 be included in the Company's Annual Report on
Form 10-K filed with the Securities and Exchange Commission ("SEC") on April 16,
2001.
The foregoing report has been furnished by the Audit and Finance Committee
members:
Mr. Daniel J. Fink, Chairman Mr. Frank L. Salizonni
Mr. Douglas S. Luke Dr. Harrison H. Schmitt
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
The following graph compares the yearly cumulative total return on the
Company's common stock against the cumulative total return on the Nasdaq Stock
Market Index of U.S. Companies and the Dow Jones
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Aerospace/Defense Index for the five-year period commencing on December 31, 1995
and ending on December 31, 2000.
NASDAQ US COMPANY DOW JONES ORBITAL SCIENCES
INDEX AEROSPACE/DEFENSE INDEX CORPORATION
----------------- ----------------------- ----------------
December 1996 $123.03 $125.35 $135.29
December 1997 $150.68 $131.33 $233.33
December 1998 $212.46 $122.14 $345.10
December 1999 $394.82 $105.84 $145.59
December 2000 $237.37 $142.73 $ 32.35
* Assumes that the value of the investment in Orbital common stock, the Nasdaq
Stock Market Index of U.S. Companies and the Dow Jones Aerospace/Defense Index
was $100 on December 31, 1995. It should be noted that the Company has not
declared any dividends on its common stock.
INDEMNIFICATION AGREEMENTS
The Company has entered into substantially identical indemnification
agreements with each of its directors, the Named Officers and with certain other
officers and senior managers. The agreements provide that the Company shall, to
the full extent permitted by the Delaware General Corporation Law, as amended
from time to time, indemnify each indemnitee against all loss and expense
incurred by the indemnitee because he or she was, is or is threatened to be made
a party to any completed, pending or threatened action, suit or proceeding by
reason of the fact that he or she was a director, officer, employee or agent of
the Company or any of its affiliates, or because the Company has a right to
judgment in its favor because of his or her position with the Company or any of
its affiliates. The indemnitee will be indemnified so long as he or she acted in
good faith and in a manner reasonably believed by him or her to be in or not
opposed to the Company's best interest. The agreements further provide that the
indemnification thereunder is not exclusive of any other rights the indemnitee
may have under the Company's Restated Certificate of Incorporation, By-Laws or
any agreement or vote of stockholders and that the Restated Certificate of
Incorporation or By-Laws may not be amended to affect adversely the rights of
the indemnitee.
The Company also has insurance to indemnify its directors and officers
against certain liabilities, for which the Company paid approximately $734,000
in premiums in 2000.
EXECUTIVE EMPLOYMENT AGREEMENTS
The Company has entered into executive employment agreements with the
Company's executive officers, including each of the Named Officers who are
currently employed by the Company. These agreements become effective in the
event of a "change of control," as defined in the agreements, of the Company,
and no officer currently receives compensation under these agreements. Upon a
"change of control," each officer whose employment is terminated by the Company
other than for disability or "cause," as defined in the
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agreements, or who terminates his or her employment for "good reason," as
defined in the agreements, within 24 months following such "change of control,"
would receive a lump sum equal to two times the sum of his or her annual base
salary plus an amount equal to any bonus paid in the previous year. In addition,
all retirement benefits would vest, all insurance benefits would continue for 24
months and all Company stock options would be repurchased by the Company at the
difference between the highest price paid in the "change of control" transaction
for shares of stock of the same class or series and the exercise price of the
stock option.
Mr. Strain also has an agreement with the Company pursuant to which he is
guaranteed a $344,250 bonus in 2001, to be paid (a) upon the earlier of the
closing of certain transactions or December 31, 2001, or (b) in the event his
employment is terminated prior to January 9, 2002 other than for "cause," as
defined in the agreement, or if he terminates his employment for "good reason,"
as defined in the agreement, other than in connection with a "change of
control," in which case, his severance is governed by his "change of control"
agreement as described above.
In connection with Mr. Pirone's resignation in July 2000 as Executive Vice
President and Chief Financial Officer, Mr. Pirone received a lump sump payment
of $731,000 in August 2000, and a $75,000 bonus in connection with the sale of
Orbital's Fairchild Defense division in October 2000. In addition, his loan
under the executive stock purchase plan described above was forgiven, and
certain of Mr. Pirone's stock options were cancelled, with the remaining options
becoming vested immediately and remaining exercisable until July 2002.
RELATED TRANSACTIONS
Halprin, Temple, Goodman & Maher, a law firm in which the spouse of one of
the Company's directors, Ms. Obuchowski, is a partner, has, since 1989, provided
the Company, ORBIMAGE and ORBCOMM with legal services in connection with
licensing and regulatory matters involving the Federal Communications
Commission. Ms. Obuchowski also is employed as counsel by the firm.
In September 1999, Mr. Ferguson, a director of the Company, exercised his
right under the Orbital Communications Corporation ("OCC") 1992 Stock Option
Plan (the "OCC Option Plan"), to cause OCC to repurchase 7,500 shares of the
32,500 shares of OCC common stock that Mr. Ferguson had acquired upon exercise
of options. OCC is a majority owned subsidiary of Orbital and was a limited
partner in ORBCOMM in 2000. At that time, OCC tendered to Mr. Ferguson
$163,762.50 in cash and a promissory note for $163,762.50 for the repurchase of
Mr. Ferguson's OCC shares. The note bears an annual interest rate of 5.35% and
was due in September 2000. OCC has not repaid the loan.
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OWNERSHIP OF COMMON STOCK
The table below sets forth certain information regarding Orbital's
stock-based holdings as of March 1, 2001 by (1) each person known by the Company
to own beneficially more than 5% of the Company's Common Stock, (2) each
director of the Company and each Named Officer, and (3) all executive officers
and directors as a group. Unless otherwise indicated, each of the persons or
entities listed below exercises sole voting and investment power over the shares
that each of them beneficially owns. Each of the individuals listed below owns
less than 1% of the outstanding shares and voting power of Common Stock.
PERCENT OF
SHARES TOTAL SHARES SHARES
BENEFICIALLY AND OPTIONS BENEFICIALLY
NAME AND ADDRESS OWNED(a) OWNED(b) OWNED
---------------- ------------ ------------ ------------
Wallace R. Weitz & Company.................................. 4,556,500 4,556,500 12.1%
1125 S. 103rd Street, Suite 600
Omaha, NE 68124(c)
FMR Corporation............................................. 3,650,000 3,650,000 9.7%
82 Devonshire Street
Boston, MA 02109(c)
Lord, Abbett & Co........................................... 3,220,025 3,220,025 8.5%
90 Hudson Street
New Jersey City, NY 07302(c)
Schneider Capital Management Corporation.................... 1,988,400 1,988,400 5.3%
460 E. Swedesford Road, Suite 1080
Wayne, PA 19087(c)
Fred C. Alcorn.............................................. 58,755 61,755 *
Kelly H. Burke.............................................. 53,712 56,712 *
Bruce W. Ferguson(d)........................................ 110,412 113,412 *
Daniel J. Fink(e)........................................... 43,458 46,458 *
Lennard A. Fisk............................................. 27,132 30,132 *
Michael D. Griffin.......................................... 73,936 93,936 *
Jack L. Kerrebrock.......................................... 39,012 42,012 *
Robert R. Lovell............................................ 110,767 110,767 *
Douglas S. Luke............................................. 28,573 31,573 *
Janice I. Obuchowski........................................ 18,629 21,629 *
Garrett E. Pierce........................................... 2,100 352,100 *
Jeffrey V. Pirone........................................... 190,500 190,500 *
Frank L. Salizzoni.......................................... 18,442 21,442 *
Harrison H. Schmitt......................................... 24,652 27,652 *
Leslie C. Seeman............................................ 134,601 169,600 *
Robert D. Strain............................................ 119,334 154,333 *
David W. Thompson(d)........................................ 419,959 632,459 *
James R. Thompson(d)(e)..................................... 247,388 300,721 *
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PERCENT OF
SHARES TOTAL SHARES SHARES
BENEFICIALLY AND OPTIONS BENEFICIALLY
NAME AND ADDRESS OWNED(a) OWNED(b) OWNED
---------------- ------------ ------------ ------------
Scott L. Webster............................................ 266,850 266,850 *
Officers and Directors as a Group (20 persons).............. 2,108,954 2,944,784 5.6%
- ---------------
* Less than 1%.
(a) Includes shares issuable upon exercise of currently vested stock options or
options that will vest within 60 days of March 1, 2001, in the following
amounts: Fred C. Alcorn, 23,000 shares; Kelly H. Burke, 19,000 shares; Bruce
W. Ferguson, 58,000 shares; Daniel J. Fink, 23,000 shares; Lennard A. Fisk,
19,000 shares; Michael D. Griffin, 68,336 shares; Jack L. Kerrebrock, 23,000
shares; Robert R. Lovell, 105,667 shares; Douglas S. Luke, 23,000 shares;
Janice I. Obuchowski, 12,000 shares; Jeffrey V. Pirone, 189,000 shares;
Frank L. Salizzoni, 12,000 shares; Harrison H. Schmitt, 16,000 shares;
Leslie C. Seeman, 134,001 shares; Robert D. Strain, 113,334 shares; David W.
Thompson, 362,500 shares; James R. Thompson, 216,087 shares; Scott L.
Webster, 158,000 shares; and all officers and directors as a group,
1,963,657 shares.
(b) Total Orbital stock-based holdings, including shares beneficially owned and
reported on this table and stock options that will not become exercisable
within 60 days of March 1, 2001.
(c) Beneficial ownership of Wallace R. Weitz & Company ("Weitz & Co."), FMR
Corporation and Schneider Capital Management Corporation is as of December
31, 2000; beneficial ownership of Lord, Abbett & Co. is as of January 12,
2001, in each case as based on a Schedule 13G filed by each of them with the
SEC. Weitz & Co. has shared voting and dispositive power with Wallace R.
Weitz.
(d) Excludes 12,580 shares of Common Stock owned by Mr. Ferguson's wife, 23,000
shares of Common Stock owned by Mr. D.W. Thompson's wife, and 1,385 shares
of common stock owned by Mr. J.R. Thompson's wife. Messrs. Ferguson, D.W.
Thompson and J.R. Thompson disclaim beneficial ownership of such shares.
(e) Includes 2,000 shares of common stock with respect to which Mr. Fink shares
voting and investment power with his wife, 200 shares of common stock with
respect to which Mr. Pirone exercises voting and investment power on behalf
of his dependent children, and 16,374 shares of common stock with respect to
which Mr. J.R. Thompson exercises voting and investment power on behalf of a
trust.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act requires Orbital's
executive officers and directors, and persons who beneficially own more than 10%
of the Company's common stock, to file reports of ownership and changes in
ownership on Forms 3, 4 and 5 with the SEC. Executive officers, directors and
greater than 10% stockholders are required by SEC regulation to furnish to the
Company copies of all Forms 3, 4 and 5 they file. Based solely on the Company's
review of the copies of such forms it has received and written representations
from certain reporting persons, the Company believes that, except as specified
below, all its executive officers and directors complied with the filing
requirements applicable to them with respect to transactions during fiscal year
2000. Mr. Strain's August 2000 purchase of common stock was reported late on a
Form 4 in October 2000. The awards of performance shares to Messrs. D.W.
Thompson, J.R. Thompson and Pirone in 1999 were reported late on amended Form 4,
in February 2001.
RELATIONSHIP WITH INDEPENDENT AUDITORS
The Board of Directors has selected the firm of PricewaterhouseCoopers as
the Company's independent auditors for the fiscal year ending December 31, 2001.
PricewaterhouseCoopers has served as the Company's independent auditors since
1999. Representatives of PricewaterhouseCoopers are expected to be present at
the Annual Meeting and will be available to respond to appropriate questions and
make a statement if they so desire.
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For services rendered during or in connection with the Company's fiscal
year ending December 31, 2000, the Company has received, or expects to receive,
invoices from PricewaterhouseCoopers for the following fees:
Audit Fees $850,000
All Other Fees $659,000*
-------------------------
* Includes $412,000 billed by PricewaterhouseCoopers directly to
Orbital's Canadian subsidiary, MDA, pursuant to their stand-alone
engagement arrangement.
The Audit and Finance Committee takes into consideration all other fees
charged by the independent auditors (other than those fees relating to MDA's
direct engagement with such auditors) in its assessment of
PricewaterhouseCoopers' independence.
STOCKHOLDER PROPOSALS FOR 2002 PROXY STATEMENT
Stockholder proposals that are intended to be included in the proxy
statement and related proxy materials for the Company's 2002 Annual Meeting of
Stockholders must be received by the Company no later than December 19, 2001 at
its principal office, 21700 Atlantic Boulevard, Dulles, Virginia 20166,
Attention: Corporate Secretary.
In addition, the proxy solicited by the Board of Directors for the 2002
Annual Meeting of Stockholders will confer discretionary authority to vote on
any stockholder proposal presented at that meeting, unless the Company is
provided with notice of such proposal by March 4, 2002.
OTHER MATTERS
Management has no knowledge of any other matter that may come before the
Annual Meeting and does not, itself, currently intend to present any such other
matter. However, if any such other matter properly comes before the meeting or
any adjournments thereof, the persons named as proxies will have discretionary
authority to vote the shares represented by the accompanying proxy in accordance
with their own judgment.
PROXY SOLICITATION
The cost of soliciting proxies will be paid by the Company. Proxies may be
solicited without extra compensation by certain directors, officers and regular
employees of the Company by mail, telephone or personally. In addition, the
Company has retained D.F. King & Co. ("D.F. King") to solicit proxies by
personal interview, mail, telephone and telegram and to request brokerage houses
and other custodians, nominees and fiduciaries to forward proxy materials to the
beneficial owners of Common Stock. The Company will pay D.F. King a fee not to
exceed $3,500 covering its services and, in addition, will reimburse D.F. King
for expenses and payments made for the Company's account to brokers and other
nominees for their expenses in forwarding soliciting material.
Stockholders are urged to send their proxies without delay. Your
cooperation is appreciated.
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APPENDIX A
AUDIT AND FINANCE COMMITTEE
CHARTER
------------------------
I. PURPOSE
The primary purpose of the Audit and Finance Committee (the "Committee") is
to assist the Board of Directors in fulfilling its oversight responsibility by
reviewing the financial reports and other financial information of the Company,
the Company's systems of internal controls regarding finance, accounting and
compliance that management and the Board have established, and the Company's
auditing, accounting and financial reporting processes generally.
II. COMPOSITION
The Committee shall be comprised of three or more directors as determined
and appointed by the Board, each of whom shall meet the independence and
experience requirements of the New York Stock Exchange.
The Audit and Finance Committee shall make regular reports to the Board.
III. RESPONSIBILITIES AND DUTIES
In meeting its responsibilities, the Committee shall:
1. Review the annual audited financial statements with management,
including major issues regarding accounting and auditing principles and
practices as well as the adequacy of internal controls that could
significantly affect the Company's financial statements.
2. Discuss with management and the independent auditor significant
financial reporting issues and judgments made in connection with the
preparation of the Company's financial statements.
3. Review, by the Committee or by its chairman, with management and the
independent auditor the Company's quarterly financial statements prior
to the filing of the Company's quarterly reports on Form 10-Q.
4. Meet periodically with management to review the Company's major
financial risk exposures and the steps management has taken to monitor
and control such exposures.
5. Recommend to the Board the appointment of the independent auditor,
which firm is ultimately accountable to the Committee and the Board,
approve the compensation of the independent auditor, review the
performance of the independent auditor, and, if so determined by the
Committee, recommend that the Board replace the independent auditor.
6. Receive periodic reports from the independent auditor regarding the
auditor's independence, discuss such reports with the auditor, and if
so determined by the Committee, recommend that the Board take
appropriate action to satisfy itself of the independence of the
auditor.
7. Discuss with the independent auditor the matters relating to the
conduct of its audit as required by Statement on Auditing Standards No.
61.
8. Meet with the independent auditor to review the planning and staffing
of the annual audit.
9. Obtain from the independent auditor assurance that it will inform the
Company's management concerning any information coming to the auditor's
attention indicating that an illegal act has or may have occurred, and
assure that such information has been conveyed, as appropriate, to the
Committee.
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10. Following completion of the annual audit, review separately with each
of management, the independent auditor and the internal auditor any
problems or difficulties encountered during the course of the audit,
including any restriction on the scope of work or access to required
information.
11. Review any significant disagreements among management, the independent
auditor or the internal auditor in connection with the preparation of
the financial statements.
12. Review the appointment and replacement of the senior internal auditor.
13. Prepare the report required by the rules of the Securities and Exchange
Commission to be included in the Company's annual proxy statement.
14. In consultation with the independent auditor and the internal auditor,
review the integrity of the Company's financial reporting processes.
Consider and approve, if appropriate, major changes to the Company's
auditing and accounting principles and practices as suggested by the
independent auditor, internal auditor or management.
15. Maintain independent communication and exchange of information and
meet, as appropriate, with the chief financial officer, the internal
auditor and the independent auditor in separate sessions.
16. Review with the Company's counsel legal compliance matters and matters
that could have significant impact on the Company's financial
statements, and review with management compliance with the Company's
Standards of Conduct.
17. Investigate any matter brought to the Committee's attention within the
scope of its duties, with the power to retain outside counsel for this
purpose if, in its judgment, that is appropriate.
18. Review and reassess the adequacy of this Charter annually and recommend
any proposed changes to the Board for approval.
While the Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Committee to plan or conduct audits or to
determine that the Company's financial statements are complete and accurate and
are in accordance with generally accepted accounting principles. This is the
responsibility of management and the independent auditor. Nor is it the duty of
the Audit and Finance Committee to conduct investigations, to resolve
disagreements, if any, between management and the independent auditor or to
assure compliance with laws and regulations and the Company's Standards of
Conduct.
19
23
ORBITAL SCIENCES CORPORATION
Proxy for Annual Meeting of Stockholders - May 18, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints David W. Thompson and Leslie C. Seeman and
each of them as proxies, with power of substitution and re-substitution to each,
to vote at the annual meeting of stockholders of Orbital Sciences Corporation
(the "Company") to be held at the Company's headquarters, 21700 Atlantic
Boulevard, Dulles, Virginia 20166 on , 2001 at 9:00 a.m. and at any adjournments
thereof, all shares of stock of the Company that the undersigned would be
entitled to vote if personally present. A majority of said proxies or their
substitutes or re-substitutes or any one if only one is present and acting,
shall have all the powers of all said proxies. The undersigned instructs said
proxies, or their substitutes or re-substitutes, to vote in such manner as they
may determine on any matters that may properly come before the meeting as
indicated in the Notice of Annual Meeting and Proxy Statement, receipt of which
is hereby acknowledged, and to vote as specified by the undersigned on the
reverse side.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ITEM SET FORTH BELOW.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED, OR IF NO
DIRECTION IS MADE, FOR THE ELECTION OF THE NAMED NOMINEES AS DIRECTORS.
1. To elect five Directors, each to serve for a three-year term ending in 2004.
Nominees: Fred C. Alcorn, Lennard A. Fisk, Jack L. Kerrebrock, Garrett E. Pierce, David W. Thompson
[ ] FOR ALL [ ] WITHHOLD ALL
--------------------------------------------
[ ] FOR ALL NOMINEES EXCEPT AS NOTED ABOVE
(Instruction: To withhold authority to vote for any nominee(s), write the name(s) of such nominee(s) above.
....................................................................................................
Please vote, date and promptly return this proxy in the enclosed return envelope which is postage prepaid if mailed in the
United States.
Dated: _________________________, 2001
___________________________________ For Inspector of
Signature Elections' Use Only
- ----------------------------------- --------------------
Name (please print) Number of Shares
Please sign exactly as your name appears hereon. If the stock is registered in
the names of two or more persons, each should sign. Executors, administrators,
trustees, guardians and attorneys-in-fact should add their titles. If signer is
a corporation, please give full corporate name and have an authorized officer
sign, stating title. If signer is a partnership, please sign in partnership name
by authorized person.