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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Newport News Shipbuilding, Inc.
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(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number 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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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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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 Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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[Logo appears here]
ANNUAL MEETING OF STOCKHOLDERS
2000
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[LOGO OF NEWPORT NEWS SHIPBUILDING]
4101 Washington Avenue
Newport News, Virginia 23607-2770
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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April 12, 2000
To the Stockholders of Newport News Shipbuilding Inc.:
We are pleased to invite you to attend the Annual Meeting of Stockholders of
Newport News Shipbuilding. The meeting will be held at the Richmond Marriott
Hotel, 500 East Broad Street, Richmond, Virginia, 23219, on Thursday, May 18,
2000, beginning at 10:00 A.M., local time, for the following purposes:
(1) To elect three Class I directors to serve until the Annual Meeting of
Stockholders in the year 2003;
(2) To increase by 200,000 the number of shares authorized for issuance
under the Newport News Shipbuilding Employee Stock Purchase and
Accumulation Plan;
(3) To increase by 125,000 the number of shares authorized for issuance
under the 1997 Stock Plan for Directors of Newport News Shipbuilding
Inc.;
(4) To ratify the appointment by the Board of Directors of Arthur Andersen
LLP as the Company's independent accountants for 2000; and
(5) To transact such other business as may properly come before the
meeting.
Only stockholders of record at the close of business on March 31, 2000 are
entitled to notice of, to vote at, and to participate in the meeting.
Please note that you will be able to vote your shares by telephone or via
the Internet. We believe you will find these "vote-by-phone" and "vote-by-
Internet" options to be convenient and easy to use. The toll-free telephone
number and Internet address, as well as instructions on how to use these
convenient voting options, are included on the enclosed proxy card. Of course,
if you prefer to vote your shares by written proxy, rather than by telephone
or Internet, you may do so by marking, dating and signing the enclosed proxy
card, and returning it in the enclosed envelope.
Participants in the Newport News Shipbuilding 401(k) Investment Plan may not
use the vote-by-telephone or vote-by-Internet options to direct the voting of
shares attributable to their accounts and must execute and return the enclosed
proxy card.
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Because your vote is important, you are requested to grant your proxy by
telephone or Internet, or mark, date, sign and return the enclosed proxy card
in the enclosed envelope, whether or not you expect to attend the meeting in
person. Granting your proxy by telephone or Internet, or signing and returning
the enclosed proxy card, will not affect your right to attend, or vote your
shares in person at, the meeting, should you choose to do so.
In order to facilitate check-in at the meeting, an admission ticket will be
required from each stockholder who wishes to attend. An admission ticket is
included with these proxy materials.
By order of the Board of Directors:
/s/ Stephen B. Clarkson
Stephen B. Clarkson
Vice President, General Counsel and
Secretary
<PAGE>
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
[LOGO OF NEWPORT NEWS SHIPBUILDING]
4101 Washington Avenue
Newport News, Virginia 23607-2770
GENERAL INFORMATION
The enclosed proxy is solicited by and on behalf of Newport News
Shipbuilding Inc. (the "Company") for use at the Annual Meeting of
Stockholders to be held at the Richmond Marriott Hotel, 500 East Broad Street,
Richmond, Virginia, 23219, on Thursday, May 18, 2000, beginning at 10:00 A.M.,
local time, and at any adjournments of such meeting. A copy of the Company's
Annual Report, including financial statements for the year ended December 31,
1999, is enclosed with this proxy statement.
The expense of this solicitation will be paid by the Company. Officers,
directors and employees of the Company may solicit proxies by telephone, mail
or personal visits. The firm of Georgeson & Company has been retained to
assist in the solicitation of proxies for a fee estimated at $25,000, plus
out-of-pocket expenses. Brokerage houses, nominees and fiduciaries have been
requested to forward proxy soliciting material to the beneficial owners of the
stock held of record by them, and the Company will reimburse them for their
charges and expenses.
Only holders of record of the outstanding common stock, par value $.01 per
share (the "Company Common Stock"), of the Company at the close of business on
the record date for the meeting, March 31, 2000, are entitled to notice of, to
vote at, and to participate in the meeting. On the record date, 31,226,889
shares of Company Common Stock were outstanding and entitled to vote at the
Annual Meeting. Holders of Company Common Stock will vote as a single class at
the Annual Meeting. Each outstanding share will entitle the holder to one
vote. All shares represented by properly executed and delivered proxies will
be voted at the meeting and any adjournments.
A majority of shares entitled to vote that are present at the meeting in
person or are represented at the meeting by proxy, will constitute a quorum
for the conduct of business at the Annual Meeting. Abstentions and shares held
of record by a broker or its nominee ("Broker Shares") that are present or
represented at the meeting, are included in the number of shares considered
present or represented at the meeting for purposes of determining whether a
quorum is present. Directors are elected by the affirmative vote of a majority
of the quorum. Abstentions and Broker Shares that are not voted have the same
effect as negative votes for purposes of electing directors.
Approval of the increase to the number of shares authorized for issuance
under the Newport News Shipbuilding Employee Stock Purchase and Accumulation
Plan (the "Stock Purchase Plan") requires the affirmative vote of a majority
of the quorum. Abstentions and Broker Shares that are not voted have the same
effect as negative votes for purposes of approving this proposal.
Approval of the increase to the number of shares authorized for issuance
under the 1997 Stock Plan for Directors of Newport News Shipbuilding Inc. (the
"Director Stock Plan") requires the affirmative vote of a majority of the
quorum. Abstentions and Broker Shares that are not voted have the same effect
as negative votes for purposes of approving this proposal.
This proxy statement and the enclosed form of proxy were first mailed to
stockholders on April 12, 2000.
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ELECTION OF DIRECTORS
(PROPOSAL 1)
The Company's Board of Directors is divided into three classes. At the
Annual Meeting, three directors are expected to be re-elected to Class I to
hold office for a term of three years and until their respective successors
are duly elected and qualified. All nominees are current members of the
Company's Board of Directors.
Information Concerning Nominees
Class I (to serve until the 2003 Annual Meeting of Stockholders)
WILLIAM P. FRICKS has served as Chairman and Chief Executive Officer of the
Company since January 1997. Prior to that he was Chief Executive Officer from
November 1995 and President and Chief Operating Officer from September 1994.
Mr. Fricks first joined Newport News in 1966. He was appointed Senior Vice
President in 1988 and Executive Vice President in 1992. Mr. Fricks is a member
of the Propeller Club of the United States and serves on the Board of the
Naval Submarine League. He is a Life Member of the Navy League of the United
States and of the Surface Navy Association, a member of the Council of the
American Bureau of Shipping, and is past Chairman of the Board of Directors of
the American Shipbuilding Association. Mr. Fricks is on the Board of Directors
of the Hampton Roads Partnership, the WHRO Foundation and serves on the Board
of Trustees of The Mariners' Museum. He is a member of the Virginia Business
Council and the Virginia Business Higher Education Council. On July 1, 1996,
Mr. Fricks was appointed to the Board of Visitors of The College of William
and Mary. Mr. Fricks is 55 years old and has been a director of the Company
since October 1996.
DR. WILLIAM R. HARVEY has been President of Hampton University, in Hampton,
Virginia, since July 1978. He is also the owner of the Pepsi-Cola Bottling
Company of Houghton, Michigan. Dr. Harvey currently serves as a director of
the First Union National Bank--Mid-Atlantic Region and Trigon Blue Cross Blue
Shield of Virginia. Previously he served on the President's National Advisory
Council on Elementary and Secondary Education, the Defense Advisory Committee
on Women in the Service, the Fund for the Improvement of Postsecondary
Education, the Commission on Presidential Scholars, the President's Advisory
Board on Historically Black Colleges and the U.S. Department of Commerce
Minority Economic Development Advisory Board. Dr. Harvey previously held the
positions of Administrative Vice President of Tuskegee University,
Administrative Assistant to the President of Fisk University and as Assistant
for Governmental Affairs to the Dean at Harvard University's Graduate School
of Education. Dr. Harvey is 59 years old and has served as a director of the
Company since January 1997.
STEPHEN R. WILSON has served as Executive Vice President and Chief Financial
Officer of Bridge Information Systems in New York, New York since January
2000. From February 1998 until October 1999 he served as the Group Finance
Director of Reckitt & Colman plc. Before that, he served as the Executive Vice
President and Chief Financial Officer of Readers' Digest Association, Inc.
from April 1995 to September 1997. From March 1993 to April 1995 he served as
the Executive Vice President and Chief Financial Officer of RJR Nabisco, Inc.
From October 1990 until March 1993 Mr. Wilson served as Senior Vice President,
Corporate Development of RJR Nabisco. Mr. Wilson is 53 years old and has been
a director of the Company since January 1997.
Unless authority to do so is withheld, shares represented by properly
executed proxies in the enclosed form will be voted for the election of the
three persons named above. If any nominee should become unable or unavailable
to serve, the Board of Directors may designate a substitute nominee, for whom
the proxies will be voted. Alternatively, the Board may reduce the size of the
Class to the remaining nominees or nominee, for whom the proxies will be
voted.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF THE
RE-ELECTION OF MESSRS. FRICKS, WILSON AND DR. HARVEY TO THE BOARD OF DIRECTORS
TO SERVE UNTIL THE ANNUAL MEETING OF STOCKHOLDERS IN THE YEAR 2003.
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DIRECTORS CONTINUING IN OFFICE
There are four directors whose present term of office will continue until
2001 or 2002, as indicated below, and until their respective successors are
duly elected and qualified.
Class II (to serve until the 2001 Annual Meeting of Stockholders)
LEON A. EDNEY, ADMIRAL (RET.) served in the United States Navy for 39 years,
last serving as Supreme Allied Commander Atlantic (NATO) and Commander-in-
Chief, U.S. Atlantic Command from May 1990 to August 1992. From August 1988 to
May 1990 he served as the Vice Chief of Naval Operations. Admiral Edney
retired from the Navy in August 1992. From September 1992 to April 1994
Admiral Edney served as a defense consultant to the U.S. Navy and from May
1994 to July 1995 he served as Vice President of Loral Company. He currently
serves as a director of Armed Forces Benefit Services Inc., the Retired
Officers Association, the Armed Services YMCA, San Diego, and as Chairman of
the Board of the Naval Aviation Museum Foundation, as Capstone Senior Fellow,
as Senior Fellow at the Center for Naval Analysis, and as a trustee of the
Naval Academy Foundation. He was previously the Distinguished Leadership
Chair-United States Naval Academy. Admiral Edney is 65 years old and has been
a director of the Company since January 1997.
DR. JOSEPH J. SISCO has been a partner of Sisco Associates, a management
consulting firm, since January 1980. Previously he served as President and
Chancellor of The American University and was employed by the United States
Department of State for 25 years, last serving as Under Secretary of State for
Political Affairs. He is also a director of Braun AG. Dr. Sisco served as a
director of Tenneco Inc. from 1977 until his retirement from the Tenneco Board
in May 1996. He was also a director of The Interpublic Group of Companies,
Inc. and Raytheon Company until 1997. Previously he was a director of The
Gillette Company and Geico Corporation. Dr. Sisco is 80 years old and has been
a director of the Company since October 1996.
Class III (to serve until the 2002 Annual Meeting of Stockholders)
HON. GERALD L. BALILES has been a partner with the law firm of Hunton &
Williams since February 1990. From 1986 until January 1990 he served as
Governor of the Commonwealth of Virginia. While Governor, he served as
Chairman of the National Governors' Association from 1988 to 1989. He
currently serves as Chairman of the Richmond Regional Transportation Advocacy
Board, a member of the Council on Foreign Relations, a director of Norfolk
Southern Corporation, on the United States Council for International Business
and on The Greater Richmond World Affairs Council. He has served as Chairman
of the Public Broadcasting Service (PBS) and as a member of The Atlantic
Council of the United States and the Washington Airports Task Force. Governor
Baliles is 59 years old and has been a director of the Company since January
1997.
HON. CHARLES A. BOWSHER served as the Comptroller General of the United
States from 1981 to 1996. Prior to his appointment as Comptroller General, Mr.
Bowsher served as Assistant Secretary of the Navy for Financial Management and
was a partner in the accounting and auditing firm of Arthur Andersen LLP.
Currently he serves on the boards of National Steel Corporation, American
Express Bank, DeVry Inc., the Hitachi Foundation, the Concord Coalition and
the Committee for a Responsible Federal Budget. Mr. Bowsher is 68 years old
and has been a director of the Company since August 1999.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has four standing committees, which have the
following responsibilities and authority:
Audit Committee. The Audit Committee has the responsibility, among other
things, to (i) recommend the selection of the Company's independent public
accountants, (ii) review and approve the scope of the independent public
accountants' audit activity and extent of non-audit services, (iii) review
with management and such independent public accountants the adequacy of the
Company's basic accounting systems and the effectiveness of the Company's
internal audit plan and activities, (iv) review with management and the
independent public
3
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accountants the Company's certified financial statements and exercise general
oversight of the Company's financial reporting process, (v) review with
management litigation and other legal matters that may affect the Company's
financial condition and (vi) monitor compliance with the Company's business
ethics and other policies. The Members of the Audit Committee are Messrs.
Wilson, Edney, Bowsher and Sisco. Mr. Wilson is the Chairman of the Audit
Committee.
Compensation and Benefits Committee. The Compensation and Benefits Committee
has the responsibility, among other things, to (i) establish the salary rates
of officers and certain other employees of the Company, (ii) examine
periodically the compensation structure of the Company and (iii) supervise the
welfare, pension and compensation plans of the Company. The Members of the
Compensation and Benefits Committee are Messrs. Sisco, Bowsher, Harvey and
Wilson. Dr. Sisco is the Chairman of the Compensation and Benefits Committee.
Nominating and Management Development Committee. The Nominating and
Management Development Committee has the responsibility, among other things,
to (i) review possible candidates for election to the Board of Directors and
recommend a slate of nominees for election as directors at the Company's
Annual Meeting of Stockholders, (ii) review the function and composition of
the other committees of the Board of Directors and recommend membership on
such committees and (iii) review the qualifications and recommend candidates
for election as officers of the Company. The Members of the Nominating and
Management Development Committee are Messrs. Baliles, Harvey, Edney and Sisco.
Governor Baliles is the Chairman of the Nominating and Management Development
Committee.
Stockholders entitled to vote for the election of directors may nominate
candidates for consideration by the Nominating and Management Development
Committee in accordance with the procedures set forth below under the heading
"Stockholder Proposals and Director Nominations for the 2001 Annual Meeting of
Stockholders."
Executive Committee. Other than certain matters assigned to the Compensation
and Benefits Committee, the Executive Committee has, during the intervals
between meetings of the Board of Directors, the authority to exercise all the
powers of the Board that may be delegated legally to it by the Board in the
management and direction of the business and affairs of the Company. The
Members of the Executive Committee are Messrs. Fricks, Baliles and Wilson. Mr.
Fricks is the Chairman of the Executive Committee.
During 1999, there were twelve meetings of the Board of Directors, five
meetings of the Audit Committee, five meetings of the Compensation and
Benefits Committee, seven meetings of the Nominating and Management
Development Committee and no meetings of the Executive Committee. During 1999,
or the portion of 1999 during which each director served, each director
attended at least 75% of the aggregate number of meetings of the Board of
Directors and meetings of committees of the Board on which he served.
COMPENSATION OF DIRECTORS
All directors who are not also employees of the Company are paid a
director's fee of $28,000 per annum, $12,500 in cash and the remainder in
restricted shares of Company Common Stock, and an attendance fee of $1,250,
plus expenses, for each meeting of the Board of Directors and an attendance
fee of $1,000, plus expenses, for each committee meeting attended. Each
director who serves as chairman of a committee of the Board is paid an
additional fee of $3,000 per annum per chairmanship.
Directors who are not also employees of the Company each receive an initial
grant of 2,000 stock options upon joining the Board of Directors and an
additional 2,000 stock options annually. Directors who are not also employees
of the Company each receive a one-time grant of 1,000 shares of restricted
stock upon joining the Board.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Set forth below is the ownership, as of March 1, 2000 (except as otherwise
stated), of the number of shares and percentage of Company Common Stock
beneficially owned by (i) each director of the Company, (ii) each of the
executive officers of the Company whose names are set forth on the Summary
Compensation Table, (iii) all executive officers and directors of the Company
as a group and (iv) all persons beneficially owning more than 5% of the
outstanding Company Common Stock.
<TABLE>
<CAPTION>
Shares of the Aggregate
Company Common Stock Percentage
Owned(a) Owned(b)
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<S> <C> <C> <C>
William P. Fricks........................ 502,732(c)(d) 1.61%
Hon. Gerald L. Baliles................... 6,548(c) *
Hon. Charles A. Bowsher.................. 372 *
Leon A. Edney, Admiral (Ret.)............ 6,448(c) *
Dr. William R. Harvey.................... 6,448(c) *
Dr. Joseph J. Sisco...................... 7,563(c) *
Stephen R. Wilson........................ 6,448(c) *
Thomas C. Schievelbein................... 232,615(c)(d) *
C. Michael Petters....................... 59,033(c)(d) *
Stephen B. Clarkson...................... 116,130(c)(d) *
Alfred Little, Jr. ...................... 72,374(c)(d) *
All directors and executive officers as a
group (14 persons)...................... 1,184,130(c)(d) 3.79%
First Manhattan Co.
437 Madison Avenue
New York, New York 10022................ 2,600,575(e) 8.33%
Cascade Investment LLC & William H. Gates
III
2365 Carillion Point
Kirkland, WA 98033 & One Microsoft Way
Redmond, WA 98052....................... 2,562,900(f) 8.21%
Boston Partners Asset Management, L. P.,
Boston Partners, Inc. & Desmond John
Heathwood
28 State Street, 20th Floor
Boston, MA 02109........................ 2,494,750(g) 7.99%
Mellon Financial Corporation
One Mellon Center
Pittsburgh, PA 15258.................... 1,936,587(h) 6.20%
</TABLE>
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(a) Except as described in the notes below, each director, executive officer
and 5% holder has sole voting and dispositive power over the shares
beneficially owned, as set forth in this column.
(b) Except as indicated, each person or group beneficially owns less than 1%
of the outstanding Company Common Stock. Percentages are based on 31,226,889
shares of Company Common Stock outstanding and entitled to vote at the Annual
Meeting as of March 31, 2000.
(c) Includes options held by Messrs. Fricks, Baliles, Edney, Harvey, Sisco,
Wilson, Schievelbein, Petters, Clarkson and Little, which may be exercised on
or before June 11, 2000, to acquire 338,209, 3,332, 3,332, 3,332, 3,332,
3,332, 159,456, 38,699, 76,170 and 42,056 shares of Company Common Stock,
respectively. All directors and executive officers as a group have options,
which may be exercised on or before June 11, 2000, for 761,216 shares of
Company Common Stock.
5
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EXECUTIVE COMPENSATION
Newport News Shipbuilding Inc. Compensation and Benefits Committee
Report on Executive Compensation
The Compensation and Benefits Committee (the "Compensation Committee") of
the Board of Directors, which consists entirely of non-employee directors,
provides the following report on executive compensation. Under the
Compensation Committee's supervision, the Company has developed and
implemented the executive compensation philosophy, policies, plans and
programs described below.
Compensation Philosophy
The Company has established a basic philosophy for executive compensation to
reward executives primarily based upon their ability to improve the financial
performance of the Company and increase shareholder value. The Compensation
Committee believes this pay-for-performance philosophy will appropriately link
the interests of executives with those of stockholders.
Accordingly, the Company's executive compensation program has been
structured to:
. Align the total compensation paid to the Company's executives with the
Company's business goals, including (but not limited to) operating
income, cash flow, earnings per share, stock price growth, business
development, quality of earnings, equal employment opportunity,
leadership development and health, safety and environmental.
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Footnotes continued from page 5
(d) Includes shares held under the Company's 401(k) plan. Shares in the
Company's 401(k) plan held by Messrs. Fricks, Schievelbein, Petters, Clarkson
and Little were 16,798, 2,161, 1,371, 3,590, and 1,347, respectively. All
directors and executive officers as a group held 35,737 shares in the 401(k)
plan.
(e) The number of shares owned is as reported in Schedule 13G/A filed by
First Manhattan Co. with the Securities and Exchange Commission on February 9,
2000. First Manhattan Co. reported sole voting and dispositive power for
50,000, shared voting power for 2,482,450 and shared dispositive power for
2,550,575 of the shares beneficially owned.
(f) The number of shares owned is as reported in Schedule 13G filed by
Cascade Investment LLC and William H. Gates III with the Securities and
Exchange Commission on February 18, 2000. All shares may be deemed
beneficially owned by William H. Gates III as the sole member of Cascade
Investment LLC. Cascade Investment LLC & William H. Gates III reported shared
voting and dispositive power for all shares beneficially owned.
(g) The number of shares owned is as reported in Schedule 13G filed by
Boston Partners Asset Management, L.P., Boston Partners, Inc., and Desmond
John Heathwood with the Securities and Exchange Commission on February 14,
2000. Boston Partners Asset Management, L.P., Boston Partners, Inc. and
Desmond John Heathwood reported shared voting and dispositive power for all
shares beneficially owned.
(h) The number of shares owned is as reported in Schedule 13G filed by
Mellon Financial Corporation with the Securities and Exchange Commission on
January 27, 2000. Mellon Financial Corporation reported sole voting power for
1,330,334, shared voting power for 379,513, sole dispositive power for
1,499,150 and shared dispositive power for 415,437 of the shares beneficially
owned.
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. Reinforce a pay-for-performance culture through significant short- and
long-term incentives. Performance-based pay constitutes the significant
majority of compensation opportunities available to all of the Company's
senior executives. For performance above target, executives have
significantly higher award opportunities. For performance below target,
award opportunities are significantly reduced and below certain levels,
no award may be earned. Greater emphasis is placed on incentives which
reward executives for sustained long-term performance.
. Strengthen the linkage between stockholders' and executives' interests
through stock-based incentives and stock ownership requirements. A
significant portion of each executive's on-going compensation will be
derived from stock-based compensation, including stock options and
performance shares, which require stock price growth and/or achievement
of earnings per share growth before any value is received by executives.
These stock-based incentives also contain vesting requirements, which aid
in the retention of key executive talent. Additionally, each executive is
required to achieve and maintain certain stock ownership levels, which
vary with executive level.
. Attract and retain high quality executive talent by providing competitive
total compensation. The on-going compensation program provides total
compensation levels at market medians (50th percentile) when the Company
achieves targeted performance objectives. However, Company performance
above established performance objectives can result in a total
compensation package that is above market medians. Conversely, Company
performance below established performance objectives can result in a
total compensation package significantly below market medians.
Under this structure, the Company's executive compensation program has been
designed to provide total compensation at competitive levels from three
primary sources--base salary, annual cash incentive awards and long-term,
stock-based incentive awards, such as stock options and performance shares.
The following is a description of each of the components of the program.
Base Salary
The Compensation Committee reviews annually base salaries for senior
executives. The Company's annual salary plan is based on a review of (i) the
executive's sustained level of performance, (ii) demonstrated leadership
competencies, (iii) judgments as to the executive's past and expected future
contributions to the Company and (iv) market survey data for comparable
positions. Salary recommendations for senior executives are developed under
the direction of the Chief Executive Officer and approved by the Compensation
Committee. However, the base salary of the Chief Executive Officer is set by
the Compensation Committee alone.
The information on competitive market salaries is provided to the
Compensation Committee with the assistance of an independent executive
compensation consultant. Survey data is derived from a sample of similarly
sized organizations within the same or highly related industries (the
"Comparator Group"). The Comparator Group consists of organizations within the
shipbuilding, defense and heavy manufacturing industries. The companies
comprising the Comparator Group are not necessarily the same companies in the
peer group indices in the performance graph included in this proxy statement.
Such indices are intended to provide a relative comparison of the Company's
total return to stockholders and are not necessarily indicative of the
Company's market for executive talent.
In keeping with the Company's performance-based compensation philosophy,
including more emphasis on variable than fixed pay, salaries for the Company's
senior executives, including the named executives, are at or below market
medians (50th percentile) for similar positions at companies of similar size
in the Comparator Group.
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Annual Incentives
Annual incentive plan opportunities (targets) are also established using
market survey data. The Company's Annual Incentive Plan provides that Company
executives will receive cash payments from the plan if the Company meets
specified performance goals. These goals will typically consist of (but not be
limited to) one or more of the following financial measures: operating income,
operating cash flow, earnings per share, return on equity, return on
investment and net income. Larger payouts may be earned if plan goals are
exceeded. Conversely, smaller payouts (or no payout) may be earned if plan
goals are not met.
In addition, the level of awards indicated by achievement of financial goals
can be adjusted, upward or downward, based on the Company's performance
related to other important business objectives including health and safety,
equal employment opportunity, environmental, leadership development, business
development and quality of earnings.
The Compensation Committee is responsible for establishing performance
measures and performance targets at the beginning of each year, for evaluating
performance against these targets, and for determining awards earned under the
plan, as well as specific award levels for senior executives. Individual
incentive awards are based on Company performance against targets, both
financial and non-financial, and evaluations of individual performance.
For 1999, the principal financial measures were operating income (weighted
60%) and operating cash flow (weighted 40%). Actual performance substantially
exceeded budgeted performance for 1999 resulting in awards to executives,
including all named executives, averaging 39% above targeted levels. In
determining final awards, the Committee took into consideration the efforts on
the part of several executives that resulted in additional extraordinary
income in 1999. This income was associated with the Company's efforts
regarding insurance claims and merger and acquisition activity.
Long-term Incentives
The Company's long-term, stock-based incentive plan is designed to align a
significant portion of the executive's total compensation with stockholder
interests. The Newport News Shipbuilding Inc. Stock Ownership Plan and the
Newport News Shipbuilding Inc. 1998 Stock Incentive Plan provide the
flexibility to grant long-term incentives in a variety of forms, including
stock options, performance shares, restricted stock, stock appreciation rights
and other stock-based incentive vehicles. Periodically the Compensation
Committee establishes the types and levels of long-term incentives it believes
are most likely to support the achievement of the Company's performance and
total compensation objectives. At increasing levels of executive
responsibility, it is the Compensation Committee's intent that executives
derive a larger percentage of total compensation from long-term, stock-based
incentive vehicles.
Long-term incentives granted in 1999 were a combination of stock options and
performance shares. Incentive opportunities were graduated by executive level.
The number of options and performance shares granted in 1999 to each executive
was based on a review of the grant levels and practices for a Comparator Group
of publicly traded organizations of comparable size operating in similar
industries. Based on the Company's pay philosophy, the opportunities for the
Company's executive officers are targeted somewhat above the median of the
market.
Earnings per share ("EPS") is the performance measure for determining the
actual number of performance shares earned under the annual plan. Payout
levels are based upon performance against EPS goals over a three-year period.
Larger payouts are earned if EPS goals are exceeded. Conversely, smaller
payouts (or no payout) may be earned if EPS goals are not met.
8
<PAGE>
Performance shares granted in 1997 were to be earned based on the Company's
EPS for the years 1997--1999. Based on the Company's actual EPS performance
for this period, awards were earned at levels slightly above target.
In consideration of its need to retain and provide incentive to key
executives and to strengthen the link between executive and stockholder
interests, in 1999 the Company also modified a previous performance share
grant to certain key executives, including the CEO, by granting additional
performance shares. The modified grant has a minimum vesting period of four
years. Beyond that minimum, vesting is linked to stock price performance, and
no vesting occurs unless specific stock price targets are achieved.
Executive Stock Ownership
The Compensation Committee believes that stockholder interests are enhanced
through executive stock ownership. Accordingly, the Compensation Committee has
established stock ownership requirements for its key executives. The share
requirements are defined as a multiple of each executive's base salary. The
multiple varies with level of executive responsibility from four times base
salary at the highest executive level ("CEO") to one times base salary at the
lowest executive level. As of December 31, 1999, all of the named executive
officers included in the Summary Compensation Table have exceeded established
requirements.
CEO Compensation
The Compensation Committee established the compensation level for Mr. Fricks
using data for CEOs in the Comparator Group as a benchmark. Mr. Fricks' cash
compensation target opportunity (salary plus annual incentive) is below the
market median while long-term, stock-based compensation target opportunities
are above the market median. This approach corresponds to the Company's stated
philosophy of substantially emphasizing performance-based pay over fixed pay.
Total compensation opportunities approximate the market median. Annually, Mr.
Fricks is eligible to receive compensation under the Annual Incentive Plan and
stock-based incentive grants consistent with the provisions of the Stock
Ownership Plan based on performance against pre-established targets.
For 1999, the Committee increased Mr. Fricks' salary to $560,000, which was
a 3.7% increase from his $540,000 salary in 1998. Effective January 1, 2000,
Mr. Fricks' base salary was increased by the Committee from $560,000 to
$610,000 (8.9%). The Compensation Committee considered this salary adjustment
appropriate in view of Mr. Fricks' sustained level of performance and
effectiveness in providing strategic leadership to the Company. Mr. Fricks'
base salary remains below the average for his peers in the Comparator Group
and his total compensation approximates the market median.
In recognition of the exceptional Company performance achieved in 1999 under
Mr. Fricks' leadership, the Compensation Committee granted Mr. Fricks an
annual incentive award of $850,000. Also, annual stock awards (options and
performance shares) were made to Mr. Fricks on the same basis as those made to
other executives as described above. Mr. Fricks and the other eligible
executives also received a payout for performance shares based upon the three-
year performance cycle that ended December 31, 1999. As noted elsewhere in
this report, the payout based on EPS performance was slightly above target.
$1 Million Tax Limitation
The Internal Revenue Code of 1986, as amended, provides that a publicly-
owned corporation may not deduct compensation in excess of $1 million per year
paid to a corporation's Chief Executive Officer or other named executives,
subject to certain exceptions. One exception is for performance-based
compensation that satisfies certain conditions of section 162 (m) of the Code.
9
<PAGE>
The Company, desiring both to compensate its executives competitively and to
protect its tax deduction for compensation, has elected to use certain stock-
based incentives (i.e., stock options and performance shares) that qualify as
"performance-based compensation." These incentives qualify as "performance-
based compensation" because their value to the executive is determined by
either increases in the Company's stock price alone or in combination with the
achievement of objective performance goals. The Company does not expect any
compensation to be non-deductible for federal income tax purposes.
The Compensation Committee believes the overall design of the compensation
program appropriately links executive and stockholder interests. The
Compensation Committee will regularly evaluate the program to ensure continued
future alignment.
Compensation and Benefits Committee
Dr. Joseph J. Sisco -
Chairman
Hon. Charles A. Bowsher
Dr. William R. Harvey
Stephen R. Wilson
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers, directors and persons owning more than 10%
of the Company's Common Stock to file reports of ownership and changes in
ownership of Company Common Stock and derivative securities of the Company
with the Securities and Exchange Commission and the New York Stock Exchange.
All directors and executive officers filed on a timely basis all reports
required to be filed in 1999.
Compensation of Executive Officers
The following Summary Compensation Table sets forth the remuneration paid by
the Company (i) to the Chairman and Chief Executive Officer of the Company and
(ii) to each of the four other most highly compensated executive officers of
the Company during the three fiscal years ended December 31, 1999.
Summary Compensation Table
<TABLE>
<CAPTION>
Securities Long-Term All Other
Name and Underlying Incentive Compensation
Principal Position Year Salary($)(a) Bonus($)(a) Options(#) Payouts($) ($)(b)
- ------------------------ ---- ------------ ----------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
William P. Fricks 1999 $560,000 $850,000 61,040 $1,017,500 $310,915
Chairman and 1998 $540,000 $685,000 68,515 -- $109,850
Chief Executive Officer 1997 $525,000 $ 0 272,187(c) -- $ 68,836
Thomas C. Schievelbein 1999 $381,000 $430,000 28,820 $ 543,290 $150,071
Executive Vice President 1998 $365,000 $358,000 35,870 -- $ 84,860
and Chief Operating
Officer 1997 $345,000 $ 83,000 125,934(c) -- $ 43,169
Stephen B. Clarkson 1999 $241,500 $185,000 13,600 $ 244,475 $ 49,817
Vice President, General 1998 $231,500 $156,000 16,685 -- $ 37,063
Counsel and Secretary 1997 $222,000 $ 56,000 60,514(c) -- $ 30,491
Alfred Little, Jr. 1999 $241,500 $194,000 13,600 $ 244,475 $ 61,023
Vice President - Human 1998 $231,500 $165,000 16,685 -- $ 42,452
Resources and EH&S 1997 $218,000 $ 55,000 26,400 -- $ 22,693
C. Michael Petters 1999 $215,000 $148,000 13,600 $ 142,615 $ 65,521
Vice President and
General 1998 $185,000 $120,000 12,250 -- $ 22,406
Manager - Aircraft
Carriers 1997 $150,000 $ 73,000 15,400 -- $ 13,102
</TABLE>
- -------
(a) Includes amounts contributed by the named executives to the Company's
401(k) and deferred compensation plans in the case of salary, and deferred
compensation plan in the case of bonus.
10
<PAGE>
Option Grants in 1999
The following table sets forth the number of stock options to acquire
Company Common Stock that were granted in 1999 to the following persons named
in the Summary Compensation Table. The Company has not granted any stock
appreciation rights.
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
of Stock Price
Appreciation for Option
Individual Grants(a) Term
----------------------------------------------------- ---------------------------
Number of % of Total
Securities Options
Underlying Granted to Exercise or
Options Employees in Base Price
Name Granted(#) Fiscal Year(b) Per Share Expiration Date 5% 10%
---- ---------- -------------- ----------- --------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
William P. Fricks 61,040 12.16% $32.438 1/3/09 $ 1,245,203 $ 3,155,585
Thomas C. Schievelbein 28,820 5.74% $32.438 1/3/09 $ 587,922 $ 1,489,908
Stephen B. Clarkson 13.600 2.71% $32.438 1/3/09 $ 277,437 $ 703,079
Alfred Little, Jr. 13,600 2.71% $32.438 1/3/09 $ 277,437 $ 703,079
C. Michael Petters 13,600 2.71% $32.438 1/3/09 $ 277,437 $ 703,079
</TABLE>
- -------
(a) All options vest ratably over three years beginning with the first
anniversary of the original grant date.
(b) Based on 501,930 options granted to all employees in 1999.
- -------
Footnotes continued from page 10
(b) The amounts shown in this column for 1999 include the following: amounts
contributed by the Company to the Company's 401(k) and deferred compensation
plans on behalf of Messrs. Fricks, Schievelbein, Clarkson, Little and Petters
were $266,149, $129,235, $33,365, $51,945 and $57,500, respectively, although
all amounts contributed are not vested; amounts imputed as income for federal
income tax purposes under the Company's group life insurance plan for Messrs.
Fricks, Schievelbein, Clarkson, Little and Petters were $9,937, $3,374,
$8,700, $1,326 and $2,076, respectively; $3,803 for use of Company property
for Mr. Fricks; and dividend equivalents accrued or paid on performance shares
held by Messrs. Fricks, Schievelbein, Clarkson, Little and Petters were
$31,026, $17,462, $7,752, $7,752 and $5,945, respectively.
(c) Includes options exchanged for previously held parent company options
granted prior to December 11, 1996, when the Company's shares first began
trading publicly.
11
<PAGE>
Aggregate Option Exercises in 1999 and 1999 Year-end Option Values
The following table provides information as to options exercised by each of
the named executive officers of the Company during 1999 and the number of
securities underlying unexercised options and the value of unexercised, in-
the-money options at fiscal year-end. No options were exercised during 1999 by
the individuals named in the Summary Compensation Table. The Company has not
granted any stock appreciation rights.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised In-
Options At Fiscal The-Money Options at
Year-End(#) Fiscal Year-End($)(a)
------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
William P. Fricks 258,391 143,351 $3,100,583 $580,705
Thomas C. Schievelbein 118,324 72,300 $1,391,444 $308,863
Stephen B. Clarkson 57,276 33,523 $ 675,168 $139,900
Alfred Little, Jr. 23,162 33,523 $ 234,950 $139,900
C. Michael Petters 24,949 26,900 $ 277,263 $ 86,119
</TABLE>
- --------
(a) The values shown equal the difference between the exercise price of
unexercised in-the-money options and the average of the high and low trading
prices of Company Common Stock on December 31, 1999. Options are in the money
if the fair market value of the underlying Company Common Stock exceeds the
exercise price of the option.
Long-Term Incentive Plan
Performance Share Awards in 1999
The following table shows the value of performance shares granted during
1999 under the Company's Stock Ownership or Stock Incentive Plans that are
earned pro rata, based on the achievement of aggressive share price targets
over a four-to-seven year performance period. The shares were granted to help
retain key executives and strengthen the link between executive and
stockholder interests.
<TABLE>
<CAPTION>
Performance or
Number of Other Period Until
Shares, Units or Maturation or
Name Other Rights(#) Payout Threshold Target(#) Maximum Target(#)(a)
---- ---------------- ------------------ ------------------- --------------------
<S> <C> <C> <C> <C>
William P. Fricks 41,250 4 to 7 years 10,313 41,250
Thomas C. Schievelbein 26,565 4 to 7 years 6,641 26,565
Stephen B. Clarkson 15,315 4 to 7 years 3,829 15,315
Alfred Little, Jr. 15,315 4 to 7 years 3,829 15,315
C. Michael Petters 15,315 4 to 7 years 3,829 15,315
</TABLE>
- --------
(a) Earned shares will be paid in stock, cash or a combination of cash and
stock, at the discretion of the Company. Shares are earned only if the average
closing price of Company Common Stock reaches specified share price targets
for twenty consecutive trading days. To aid in retention, no shares earned
will vest before the expiration of four years from the grant date (August 25,
1999). During this period, the awards are subject to forfeiture, should the
named executive officer cease to be employed by the Company, or one of its
subsidiaries, other than as a result of death, disability or retirement. The
performance period during which the awards may be earned ends on August 25,
2006, whether or not stock price objectives were achieved (any unearned shares
are forfeited). Dividend equivalent payments made on unvested awards during
1999 are included in the named executive officers' other compensation for
1999. Awards do not entail voting rights.
12
<PAGE>
The following table shows the threshold, target and maximum number of shares
of Company Common Stock which can be earned based on performance shares
granted during 1999. The number of shares earned depends upon the achievement
of earnings per share objectives.
<TABLE>
<CAPTION>
Estimated Future Payouts
---------------------------------
Performance or
Number of Other Period Until
Shares, Units or Maturation or
Name Other Rights(#) Payout(a) Threshold(#) Target(#) Maximum(#)
---- ---------------- ------------------ ------------ --------- ----------
<S> <C> <C> <C> <C> <C>
William P. Fricks 17,950 3 years 5,385 17,950 35,900
Thomas C. Schievelbein 8,480 3 years 2,544 8,480 16,960
Stephen B. Clarkson 4,000 3 years 1,200 4,000 8,000
Alfred Little, Jr. 4,000 3 years 1,200 4,000 8,000
C. Michael Petters 4,000 3 years 1,200 4,000 8,000
</TABLE>
- --------
(a) January 4, 1999 through December 31, 2001.
Performance Graph
The following graph presents a comparison of the cumulative total
stockholder return for calendar years ended December 31, 1997, 1998 and 1999
as compared to the Standard & Poors 400 (Midcap) Stock Index and the Standard
& Poors Aerospace/Defense 500 Stock Index. The Company is a component of both
indices. These figures assume that all dividends paid over the performance
period were reinvested, and that the starting value of each index and the
investment in Company Common Stock was $100 on December 31, 1996. The graph is
not, and is not intended to be, indicative of future performance of Company
Common Stock. Performance for years prior to 1997 is not shown, because until
December 11, 1996, the Company's shares did not trade publicly.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG NEWPORT NEWS SHIPBUILDING INC.,
S&P 400 (MIDCAP) INDEX AND S&P AEROSPACE/DEFENSE 500 INDEX (a)
13
<PAGE>
Pension Plan Table
The following table sets forth the aggregate estimated annual benefits
payable upon normal retirement pursuant to the Company's qualified retirement
plan (the "Retirement Plan") and non-qualified benefit restoration plan, based
on remuneration that is covered under the plans and years of service with the
Company and its subsidiaries.
<TABLE>
<CAPTION>
Years of Credited Participation
--------------------------------------------------------------
Remuneration 5 10 15 20 25 30 35
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 200,000 $ 15,700 $ 31,400 $ 47,100 $ 62,900 $ 78,600 $ 94,300 $110,000
300,000 23,600 47,100 70,700 94,300 117,900 141,400 165,000
400,000 31,400 62,900 94,300 125,700 157,100 188,600 220,000
500,000 39,300 78,600 117,900 157,100 196,400 235,700 275,000
600,000 47,100 94,300 141,400 188,600 235,700 282,900 330,000
700,000 55,000 110,000 165,000 220,000 275,000 330,000 385,000
800,000 62,900 125,700 188,600 251,400 314,300 377,100 440,000
900,000 70,700 141,400 212,100 282,900 353,600 424,300 495,000
1,000,000 78,600 157,100 235,700 314,300 392,900 471,400 550,000
1,100,000 86,400 172,900 259,300 345,700 432,100 518,600 605,000
1,200,000 94,300 188,600 282,900 377,100 471,400 565,700 660,000
1,300,000 102,100 204,300 306,400 408,600 510,700 612,900 715,000
1,400,000 110,000 220,000 330,000 440,000 550,000 660,000 770,000
1,500,000 117,900 235,700 353,600 471,400 589,300 707,100 825,000
1,600,000 125,700 251,400 377,100 502,900 628,600 754,300 880,000
1,700,000 133,600 267,100 400,700 534,300 667,900 801,400 935,000
</TABLE>
The benefits set forth above are computed as a straight life annuity and are
based on years of participation in the Retirement Plan and the employee's
five-year average base salary plus five-year average short-term incentive
compensation (using zero for years prior to 1998).
The Company sponsors a supplemental plan and other arrangements (such as
employment agreements) that provide minimum pension benefits for certain
employees, including the CEO, on or after age 55 with certain minimum service
requirements. Plan compensation is a three-year average of base pay, plus a
three-year average of short-term incentive compensation (generally using zero
for years prior to 1998).
Benefits are subject to an offset for benefits accrued under the Company's
former parent's retirement plan but are not subject to any reduction for
Social Security.
The number of credited years of participation for Messrs. Fricks,
Schievelbein, Clarkson, Little and Petters are 37, 11, 8, 12 and 12,
respectively.
14
<PAGE>
Employment Agreements and Change-in-Control Arrangements
The Company has an employment agreement with Mr. Fricks for a term ending
December 12, 2000. Effective January 1, 2000, Mr. Fricks will be paid a base
salary of $610,000. Mr. Fricks' base salary is subject to such adjustments as
may, from time to time, be approved by the Compensation Committee of the Board
of Directors. Mr. Fricks also receives annual financial planning services and
retirement and other benefits. The agreement provides that, upon Mr. Fricks'
separation from the Company, he will receive career transition assistance of
up to $75,000. Upon involuntary termination, or if the term of the agreement
is not extended, the Company will pay Mr. Fricks a severance benefit in an
amount equal to three times the sum of his then-current base salary and the
greater of (a) his target bonus for the calendar year in which termination
occurs or (b) his most recent awarded bonus.
Subject to approval of the Board of Directors, Mr. Fricks' outstanding
restricted stock, stock option and performance share awards will vest and/or
become exercisable in the event of his involuntary termination or if the term
of the agreement is not extended. The agreement includes a supplemental
executive retirement plan (SERP) that provides for certain retirement
benefits.
The Company also has an employment agreement with Mr. Schievelbein for a
three-year term commencing June 1, 1998. Effective January 1, 2000, Mr.
Schievelbein will be paid a base salary of $410,000. Mr. Schievelbein's base
salary is subject to such adjustments as may, from time to time, be approved
by the Compensation Committee of the Board of Directors. Mr. Schievelbein also
receives annual financial planning services and retirement and other benefits.
The agreement provides that, upon Mr. Schievelbein's separation from the
Company, he will receive career transition assistance of up to $50,000. Upon
involuntary termination, or if the term of the agreement is not extended, the
Company will pay Mr. Schievelbein a severance benefit in an amount equal to
two times his total cash compensation (base salary plus targeted bonus) in
effect on the date of termination.
In addition, subject to the approval of the Compensation Committee of the
Board of Directors, outstanding restricted stock, stock option and performance
share awards held by Mr. Schievelbein will vest and/or become exercisable in
the event of his involuntary termination or if the term of his agreement is
not extended. The agreement also includes a supplemental executive retirement
plan (SERP) that provides for certain retirement benefits.
The Company has established a severance plan for the benefit of certain
employees and officers whose positions are terminated under certain
circumstances following a change in control of the Company. Under the
severance plan, key executives of the rank of Senior Vice President and above,
as well as certain other officers, would receive three times the sum of their
annual salary and the greater of their average bonus awards, together with any
special awards, over the last three years or their targeted bonus in effect at
the time of the change in control, if they are terminated within three years
of a change in control. Certain other key employees would receive two times
the sum of their annual salary and the greater of their average bonus awards,
together with any special awards, over the last three years or their targeted
bonus in effect at the time of the change in control, if they are terminated
within three years of a change in control.
Certain Transactions
Governor Baliles, a director of the Company, is a partner in the law firm of
Hunton & Williams. Hunton & Williams provided legal services to the Company
during the last fiscal year.
15
<PAGE>
PROPOSAL TO APPROVE INCREASE IN SHARE AUTHORIZATION FOR THE EMPLOYEE
STOCK PURCHASE AND ACCUMULATION PLAN BY 200,000 SHARES
(PROPOSAL 2)
The Company proposes that the stockholders approve an increase in the share
authorization for the Employee Stock Purchase and Accumulation Plan ("Stock
Purchase Plan"). On February 1, 2000, subject to stockholder approval, the
Board of Directors approved a resolution to increase the number of shares
available for issuance under the Stock Purchase Plan by an additional 200,000
shares of Company Common Stock, subject to future adjustment as provided in
the Stock Purchase Plan. The Board believes this increase is necessary in
order to make shares available for future purchases by the Company's employees
under the Stock Purchase Plan. It is anticipated that, at the current rate of
usage, all of the shares presently available for issuance under the Stock
Purchase Plan will be exhausted by October 2000.
The increase in shares for the Stock Purchase Plan is being presented to the
stockholders of the Company for approval to enable such plan to qualify under
Section 423 of the Tax Code. A discussion of the tax consequences under the
Stock Purchase Plan is set forth below.
Summary of the Stock Purchase Plan
The following paragraphs summarize the principal features of the Stock
Purchase Plan. This summary is subject to the terms of the Stock Purchase
Plan. The Company will provide, upon request and without charge, a copy of the
full text of the Stock Purchase Plan to each person to whom a copy of this
proxy statement is delivered. Requests should be directed to: Stephen B.
Clarkson, Secretary, Newport News Shipbuilding Inc., 4101 Washington Avenue,
Newport News, Virginia 23607.
Purpose. The purpose of the Stock Purchase Plan is to permit employees of
the Company to purchase and accumulate stock in the Company over a period of
time at a discount in order to continue to attract and retain for the long
term a group of dedicated and reliable employees. In the opinion of the Board
of Directors, the Stock Purchase Plan provides an attractive incentive to
employees and promotes greater interest by such employees in the future growth
and success of the Company.
Term. The Stock Purchase Plan was adopted effective April 1, 1997 and was
amended and restated effective January 1, 1998. The Initial Offering Period
(as defined by the plan) commenced on April 1, 1997 and ended December 31,
1997. Subsequent to the Initial Offering Period, the plan provides for four
consecutive, one-year Offering Periods (as defined by the plan), commencing on
January 1 of each calendar year and ending on December 31 of the same calendar
year.
Administration. The Stock Purchase Plan is administered by the Compensation
Committee. The Compensation Committee has authority to establish rules and
regulations for the administration of the Stock Purchase Plan, and its
interpretations and decisions with regard to the plan are final.
Participation. Participation in the Stock Purchase Plan is open to all
active employees of the Company and its Subsidiaries (as defined by the plan).
At March 1, 2000, approximately 17,300 persons were eligible to participate in
the Stock Purchase Plan; however, no employee is eligible who would own, after
purchasing Company Common Stock under the plan, shares of capital stock of the
Company equaling 5% or more of the total combined voting stock of the Company.
Shares Available For Issuance. The proposed amendment would increase the
total number of shares of Company Common Stock authorized for issuance under
the Stock Purchase Plan by 200,000, to 1,650,000 shares. Such shares will
consist of treasury shares or authorized and unissued shares of Company Common
Stock. Currently, approximately 195,000 shares of Company Common Stock remain
available for issuance under the Stock Purchase Plan. Upon approval of the
proposed increase, approximately 395,000 shares will be available for issuance
under the Stock Purchase Plan.
16
<PAGE>
Purchase Of Company Common Stock. As of each Grant Date (as defined by the
plan), eligible employees are entitled to allocate payroll deductions ranging
from a minimum of $10 per month up to an overall annual maximum amount of
$21,250. Participants' payroll deductions are invested in shares of Company
Common Stock on the last business day of each calendar quarter (the "Exercise
Date"). Shares are purchased from the Company at 85% of the lower of the Fair
Market Value (as defined by the plan) of Company Common Stock on (i) the Grant
Date for the particular quarter or (ii) the Exercise Date for the quarter.
Shares purchased under the Stock Purchase Plan on an Exercise Date must be
held in the employee's account until two years from the Exercise Date.
Termination Of Participation. Participation in the Stock Purchase Plan is
canceled (i) at any time upon the election of the employee or (ii) on the date
that such person ceases to be an employee of the Company or any of its
Subsidiaries. Any funds deposited by the employee prior to such cancellation
are used to purchase stock on the next Exercise Date. An employee who elects
to cancel participation may not rejoin the Stock Purchase Plan until the next
Offering Period.
Transferability. The rights of employees participating in the Stock Purchase
Plan are not transferable other than by will or the laws of descent and
distribution, and are exercisable during the employee's lifetime only by the
employee or by the employee's guardian or legal representative. No rights or
payroll deductions of a participating employee are subject to execution,
attachment, levy, garnishment or similar process.
Amendment. The Board of Directors of the Company may amend, suspend or
terminate the Stock Purchase Plan at any time; provided, however, that no
amendment may increase or decrease the number of shares authorized for
issuance under the plan, except as provided by its terms. In addition, except
to conform the plan to the requirements of the Tax Code, no amendment may (i)
change the formula for determining the Exercise Price per share, (ii) withdraw
the administration of the plan from the Committee, (iii) affect the rights of
participating employees to purchase stock on an Exercise Date with funds
previously credited to Plan Accounts (as defined by the plan) or (iv) cause
the Stock Purchase Plan not to meet the requirements of Section 423(b) of the
Tax Code.
Tax Aspects of the Stock Purchase Plan
The following discussion of certain federal income tax consequences of the
Stock Purchase Plan is based on the Tax Code provisions in effect on the date
of this proxy statement, current regulations thereunder and existing
administrative rulings of the Internal Revenue Service. The discussion is
limited to United States tax consequences. Tax consequences may vary depending
on the personal circumstances of individual employees.
If the amendment to the Stock Purchase Plan is approved by the stockholders
at the Annual Meeting, the additional shares available under the Stock
Purchase Plan will qualify under Section 423 of the Tax Code. As such, the
amount of the discount will not be taxed until the employee disposes of the
stock, and the determination of the ordinary and capital portion of the
resulting gain or loss will depend on the length of time the employee held the
stock. The Company will be entitled to a deduction equal to the amount of the
employee's ordinary income if the disposition occurs within two years of the
applicable Grant Date; otherwise the Company will have no tax consequences.
Current Participation
The 2000 enrollment period for the Stock Purchase Plan ended on November 30,
1999, and 3,498 employees elected to participate in the plan. The Company is
unable to determine prospective benefits that may be received by participants
in the Stock Purchase Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL 2 TO
INCREASE THE NUMBER OF SHARES AVAILABLE FOR ISSUANCE UNDER THE STOCK PURCHASE
PLAN BY 200,000 SHARES.
17
<PAGE>
PROPOSAL TO APPROVE INCREASE IN SHARE AUTHORIZATION FOR THE 1997 STOCK PLAN
FOR DIRECTORS BY 125,000 SHARES
(PROPOSAL 3)
The Company proposes that the stockholders approve an increase in the share
authorization for the 1997 Stock Plan for Directors of Newport News
Shipbuilding Inc. ("Director Stock Plan"). On March 23, 2000, subject to
stockholder approval, the Board of Directors approved a resolution to increase
the number of shares available for issuance under the Director Stock Plan by
an additional 125,000 shares of Company Common Stock, subject to future
adjustment as provided in the Director Stock Plan. The Board believes this
increase is necessary in order to make shares available for future grants to
the Company's directors under the Director Stock Plan. It is anticipated that,
at the current rate of usage, all of the shares presently available for
issuance under the Director Stock Plan will be exhausted by January 2001.
Summary of the Director Stock Plan
The following paragraphs summarize the principal features of the Director
Stock Plan. This summary is subject to the terms of the Director Stock Plan.
The Company will provide, upon request and without charge, a copy of the full
text of the Director Stock Plan to each person to whom a copy of this proxy
statement is delivered. Requests should be directed to: Stephen B. Clarkson,
Secretary, Newport News Shipbuilding Inc., 4101 Washington Avenue, Newport
News, Virginia 23607.
Purpose. The purpose of the Director Stock Plan is to competitively
compensate the Company's directors for their service on the Board of Directors
in order to continue to attract and retain qualified, capable and experienced
directors. In addition, the Board of Directors believes that director
ownership of shares of Company Common Stock granted under the Director Stock
Plan will align the interests of individual directors with the interests of
the Company's stockholders and enable the directors to participate in the
future growth and success of the Company.
Term. The Director Stock Plan was adopted effective December 11, 1996, and
was amended on March 27, 1997, October 20, 1997, and December 18, 1998.
Administration. The Director Stock Plan is administered by the Compensation
Committee. The Compensation Committee has authority to establish
administrative guidelines and practices for the administration of the Director
Stock Plan, and its interpretations and decisions with regard to the plan are
final.
Participation. Awards under the Director Stock Plan are made only to non-
employee directors. Employee directors are not eligible to receive awards
under the Director Stock Plan. Six current directors are eligible to receive
awards and have received awards under the Director Stock Plan.
Awards. The Director Stock Plan permits grants of the following types of
Awards: (i) options, including non-qualified stock options, and (ii)
restricted stock. Under the plan, directors receive 2,000 options upon
election to the Board and thereafter 2,000 options annually. The plan also
provides that newly-elected directors receive a one-time grant of 1,000 shares
of restricted stock on the date of the Annual Meeting. Directors also receive
50% of the first $25,000 of their annual retainer in shares of restricted
stock. Retainer amounts in excess of $25,000 may also be paid in restricted
stock, at the discretion of the Committee. All Awards are evidenced by an
Award Agreement which sets out the details, terms, conditions and limitations
applicable to such Award.
Stock Options. The Director Stock Plan provides that the option price
pursuant to which Company Common Stock may be purchased will be not less than
100% of the fair market value of the Company Common Stock on the date the
stock option is awarded. The term of each stock option is fixed by the plan
and evidenced in an Award Agreement. Payment of the option price may be made
in (i) cash, (ii) through the delivery of shares of Company Common Stock
having a fair market value on the exercise date equal to the option price,
(iii) a
18
<PAGE>
combination of cash and shares or (iv) through simultaneously exercising stock
options and selling a portion of the shares of Company Common Stock acquired
thereby and applying the proceeds to the option price.
Restricted Stock. The Director Stock Plan provides that the initial grant of
1,000 shares of restricted stock vests upon the director's death, disability
or retirement from the Board after reaching the mandatory retirement age
established under the Company's bylaws. The plan further provides that the
restricted stock granted as part of the annual retainer shall vest at a rate
of one-third annually, on each anniversary of the grant date. Further terms
and conditions regarding the restricted stock awards are set forth in an Award
Agreement, and may include the manner in which the restricted stock is held,
the extent to which the holder of shares has the rights of a stockholder, and
the circumstances under which such shares will be forfeited. None of the
shares subject to a restricted stock award may be assigned, transferred,
pledged or sold by the participant until the termination or earlier lapse of
restrictions relating thereto.
Plan Benefits. Only six non-employee directors, Messrs. Baliles, Edney,
Harvey, Bowsher, Sisco and Wilson, are eligible to participate, and do
participate, in the Director Stock Plan. The current annual retainer for the
Company's non-employee directors is $28,000, of which $15,500 is currently
paid in restricted stock, having an aggregate dollar value of $93,000, under
the Director Stock Plan. The actual number of shares of restricted stock
issued under the Director Stock Plan to each non-employee director as part of
his annual retainer is calculated based on the closing price of the Company's
Common Stock on the date of the Annual Meeting. For example, under the
Director Stock Plan, assuming a closing price of $28.00 for the Company's
Common Stock on the date of the Annual Meeting, each non-employee director
will receive approximately 554 shares of restricted stock. All non-employee
directors as a group would receive a total of 3,324 shares. Under the Director
Stock Plan, each non-employee director also receives an annual 2000 share
option grant. Thus the aggregate grant, to all non-employee directors as a
group, totals options to purchase 12,000 shares of Company Common Stock.
Tax Aspects of the Director Stock Plan
Federal Income Tax Consequences. The rules governing the tax treatment of
stock options and restricted stock are quite technical. Therefore, the
description of the federal income tax consequences set forth below is
necessarily general in nature and does not purport to be complete. The
discussion is based on the Tax Code provisions in effect on the date of this
proxy statement, current regulations thereunder and existing administrative
rulings of the Internal Revenue Service. The discussion is limited to United
States tax consequences. Tax consequences may vary depending on the personal
circumstances of individual participants.
Non-Qualified Stock Options. With respect to non-qualified stock options,
generally, the participant will recognize no taxable income at the time of
grant. Upon exercise of a non-qualified stock option, the participant will
recognize ordinary income equal to the difference between the exercise price
and the fair market value of
19
<PAGE>
the shares on the date of exercise. The participant will recognize as a
capital gain or loss any profit or loss realized on the sale or exchange of
any shares disposed of or sold. The Company will be entitled to deduct an
amount equal to the difference between the exercise price and the fair market
value of the shares on the date of exercise.
Restricted Stock. A participant granted shares of restricted stock is not
required to include the value of such shares in income until the first time
such participant's rights in the shares are transferable or are not subject to
a substantial risk of forfeiture, whichever occurs earlier, unless such
participant timely files an election under Tax Code Section 83(b) to be taxed
on the receipt of the shares. In either case, the amount of such income will
be equal to the excess of the fair market value of the stock at the time the
income is recognized over the amount (if any) paid for the stock. The Company
will generally be entitled to a deduction, in the amount of the ordinary
income recognized by the participant, for the Company's taxable year in which
the participant recognizes such income.
Shares Available For Issuance. The proposed amendment would increase the
total number of shares of Company Common Stock authorized for issuance under
the Director Stock Plan by 125,000, to 200,000 shares. Such shares will
consist of treasury shares or authorized and unissued shares of Company Common
Stock. Currently, approximately 12,000 shares of Company Common Stock remain
available for issuance under the Director Stock Plan. Upon approval of the
proposed increase, approximately 137,000 shares will be available for issuance
under the Director Stock Plan.
Amendment. The Board of Directors of the Company may amend, suspend or
terminate the Director Stock Plan at any time; provided, however, that no
amendment requiring stockholder approval shall have an effective date that
precedes such approval.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL 3 TO
INCREASE THE NUMBER OF SHARES AVAILABLE FOR ISSUANCE UNDER THE DIRECTOR STOCK
PLAN BY 125,000 SHARES.
20
<PAGE>
SELECTION OF AUDITORS
(PROPOSAL 4)
The Board of Directors has appointed Arthur Andersen LLP to serve as the
independent certified public accountants of the Company and its subsidiaries
for 2000. Although the appointment of Arthur Andersen LLP is not required to
be submitted to the stockholders for approval, the Board of Directors has
elected to solicit the stockholders' views on the matter. Stockholders are
requested to ratify this appointment. In the event of a negative vote by the
stockholders, the Board of Directors intends to reconsider its decision.
Representatives of Arthur Andersen LLP are expected to be present at the
meeting and will be given an opportunity to make a statement and to respond to
appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL 4 TO
RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE COMPANY'S INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS FOR 2000.
STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS FOR THE
2001 ANNUAL MEETING OF STOCKHOLDERS
Any proposal submitted by a stockholder for inclusion in the proxy materials
for the Annual Meeting of Stockholders in 2001 must be delivered to the
Secretary of the Company at its principal executive offices at 4101 Washington
Avenue, Newport News, Virginia 23607, not later than March 9, 2001.
The Company's bylaws establish advance notice procedures for stockholders to
make nominations for candidates for election as directors or to bring other
business before an Annual Meeting of Stockholders (the "Advance Notice
Procedure"). The Advance Notice Procedure provides that only persons who are
nominated by, or at the direction of, the Board of Directors or by a person
who has given timely written notice to the Secretary of the Company prior to
the meeting at which directors are to be elected will be eligible for election
as directors of the Company. The Advance Notice Procedure also provides that
at an Annual Meeting only such business may be conducted as has been brought
before the meeting by, or at the direction of, the Board of Directors or by a
stockholder who has given timely written notice to the Secretary of the
Company of such stockholder's intention to bring such business before such
meeting. For a stockholder notice to be timely it must be received by the
Secretary of the Company at the Company's principal executive offices not
later than the close of business on the 70th day nor earlier than the close of
business on the 90th day prior to the anniversary of the preceding year's
Annual Meeting. In the event that the date of an Annual Meeting is more than
20 days before or more than 70 days after the anniversary date of the prior
year's Annual Meeting, to be considered timely, notice by a stockholder must
be delivered to the Corporate Secretary not sooner than the close of business
on the 90th day prior to the upcoming Annual Meeting and not later than the
close of business on the later of either the 70th day prior to the upcoming
Annual Meeting or the 10th day following the day on which the Company first
publicly announces the date of the upcoming Annual Meeting in a press release
that is reported by the Dow Jones News Service, the Associated Press or any
comparable national news service or in a document such as a proxy statement,
registration statement, annual report on Form 10-K, quarterly report on Form
10-Q or current report on Form 8-K publicly filed by the Company with the
Securities and Exchange Commission under the Securities Exchange Act of 1934
(the "Exchange Act").
A stockholder's notice proposing to nominate a person for election as a
director must set forth (a) all information relating to the nominee that is
required to be disclosed in a solicitation of proxies for election of
directors in an election contest, or is otherwise required under Regulation
14A under the Exchange Act (and the nominee's written consent to being named
in the proxy statement as a nominee and to serve as a director if elected),
(b) as to the stockholder giving the notice and the beneficial owner, if any,
on whose behalf the nomination is made (i) the name and record address of the
stockholder proposing the nomination, as they appear
21
<PAGE>
in the Company's books, and such beneficial owner, if any, (ii) the class and
number of shares of the Company's stock that are beneficially owned by the
stockholder, and such beneficial owner, if any, (iii) a representation that
the stockholder is a holder of record of stock of the Company entitled to vote
at the Annual Meeting and intends to appear in person or by proxy at the
meeting to propose the nomination and (iv) a representation whether or not the
stockholder or such beneficial owner, if any, intends or is part of a group
that intends to (a) deliver a proxy statement and form of proxy to holders of
at least the percentage of the Company's outstanding stock required to elect
the nominee and/or (b) otherwise solicit proxies from stockholders in support
of the nomination. In addition, the Company may require any proposed nominee
to furnish other information that is reasonably necessary in order for the
Company to determine the eligibility of the proposed nominee to serve as a
director of the Company.
A stockholder's notice relating to the conduct of business other than the
nomination of directors must contain certain information about such business
and about the proposing stockholder, including, without limitation, (a) a
reasonably complete and specific description of the business desired to be
brought before the Annual Meeting and the reasons for conducting that business
at the Annual Meeting, and in the event that such business includes a proposal
to amend the bylaws of the Company, the language of the proposed amendment,
(b) the name and record address of the stockholder proposing the business, as
they appear in the Company's books, and of the beneficial owner, if any, on
whose behalf the proposal is being made, (c) the class and number of shares of
the Company that are beneficially owned by the stockholder, and by such
beneficial owner, if any, (d) a description of any important interest of the
stockholder and such beneficial owner, if any, in the business being proposed,
(e) a representation that the stockholder is a holder of record of stock of
the Company entitled to vote at the meeting and intends to appear in person or
by proxy at the meeting to propose such business and (f) a representation
whether or not the stockholder or such beneficial owner, if any, intends or is
part of a group that intends to deliver a proxy statement and form of proxy to
holders of at least the percentage of the Company's outstanding stock that is
required to approve or adopt the proposal and/or otherwise solicit proxies
from stockholders in support of the proposal.
If the chairman of the meeting determines that a person was not nominated,
or other business was not brought before the meeting, in accordance with these
Advance Notice Procedures, the chairman may declare the nomination or other
business out of order and it will not be considered further.
22
<PAGE>
OTHER MATTERS
As of the date of this proxy statement, management knows of no business that
will be presented for consideration at the Annual Meeting of Stockholders
other than that stated herein. As to other business, if any, and matters
incident to the conduct of the meeting that may properly come before the
meeting, it is intended that proxies in the accompanying form will be voted in
accordance with the best judgment of the person voting the proxies.
Whether or not you expect to attend the Annual Meeting in person, you are
requested to mark, date and sign the enclosed proxy card and return it to the
Company in the enclosed envelope, or grant your proxy by telephone or
Internet, as explained on the proxy card.
If you choose to mail in your proxy card, please sign it exactly as your
name appears on the card.
You may revoke your proxy by delivering a written notice of revocation or a
later dated proxy to Stephen B. Clarkson, the Secretary of the Company, at its
principal executive offices at 4101 Washington Avenue, Newport News, Virginia
23607, at any time before the proxy is exercised, or by attending the Annual
Meeting and voting in person.
/s/ Stephen B. Clarkson
Stephen B. Clarkson
Vice President, General Counsel and
Secretary
April 12, 2000
23
<PAGE>
[Logo appears here]
<PAGE>
NEWPORT NEWS SHIPBUILDING INC.
Proxy Solicited by the Board of Directors
for the Annual Meeting May 18, 2000
P The undersigned hereby appoints William P. Fricks, Stephen B. Clarkson,
James J. Gildea and Dean C. Berry, severally and not jointly, proxies,
R with full power of substitution in each, to vote, as designated below, all
shares of Common Stock of NEWPORT NEWS SHIPBUILDING INC. owned of record by
O the undersigned, and which the undersigned is entitled to vote, on all
matters which may come before the Annual Meeting of Stockholders to be
X held on May 18, 2000, at the Richmond Marriott Hotel, 500 East Broad
Street, Richmond, Virginia 23219, at 10:00 a.m., local time, and any
Y adjournments or postponements thereof, unless otherwise specified herein.
Change of Address:
------------------------------------
------------------------------------
------------------------------------
------------------------------------
(If you have written a change of
address in the above space, please
mark the corresponding box on the
reverse side of this card.)
Your vote is very important. You are encouraged to specify your choices by
marking the appropriate box, SEE REVERSE SIDE, but you need not mark any box, if
you wish to vote in accordance with the Board of Directors' recommendation. The
proxies cannot vote your shares unless you sign and return this card or submit
your proxy via telephone or the Internet, as instructed below.
-------------
|SEE REVERSE|
| SIDE |
-------------
FOLD AND DETACH HERE
[NEWPORT NEWS SHIPBUILDING LOGO]
ADMISSION TICKET
ANNUAL MEETING OF STOCKHOLDERS
If you plan to attend the 2000 Annual Meeting of Stockholders, please mark the
appropriate box on the reverse of the attached proxy card. The meeting will be
held on Thursday, May 18, 2000, at the Richmond Marriott Hotel, 500 East Broad
Street, Richmond, Virginia, 23219. The meeting will begin promptly at 10:00 a.m.
local time.
TO AVOID DELAY AT THE ENTRANCE, PLEASE PRESENT THIS TICKET
AGENDA
1. Re-elect three Class I directors to the Company's Board of Directors.
2. Amend the Company's Employee Stock Purchase & Accumulation Plan to increase
shares available by 200,000.
3. Amend the Company's 1997 Stock Plan for Directors to increase shares
available by 125,000.
4. Ratify Arthur Andersen LLP as the Company's Independent Accountants for
2000.
5. TRANSACT SUCH OTHER BUSINESS AS SHALL BE PROPERLY BROUGHT BEFORE THE
MEETING.
It is important that your shares be represented at the meeting. Whether or not
you intend to attend the meeting in person, to make sure your shares are
represented, we urge you to complete, sign and mail the proxy card or vote your
shares via telephone or the Internet.
<PAGE>
[X] Please mark your
votes as in this example.
- --------------------------------------------------------------------------------
The Board of Directors of Newport News Shipbuilding Inc. recommends that you
vote FOR the following proposals.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
FOR WITHHELD Nominees for Class I: FOR AGAINST ABSTAIN
1. Election of 01. William P. Fricks 2. To increase by 200,000 the number of [ ] [ ] [ ]
Directors [ ] [ ] 02. William R. Harvey shares authorized for issuance under
03. Stephen R. Wilson the Newport News Employee Stock
Purchase and Accumulation Plan.
For, except vote withheld from the following 3. To increase by 125,000 the number of [ ] [ ] [ ]
nominee(s): shares authorized for issuance under
_____________________________ the 1997 Stock Plan for Directors of
Newport News Shipbuilding Inc.
4. To ratify the appointment by the Board [ ] [ ] [ ]
of Directors of Arthur Andersen LLP as
Newport News' independent
accountants for 2000.
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned stockholder. If no directions are
given, this proxy will be voted FOR Proposals Nos. 1 through 4. The
proxy holders named above will vote in their discretion on any other
matter that may properly come before the meeting.
Change of address on [ ]
reverse side
I plan to attend the [ ]
Annual Meeting
SIGNATURE(S)__________________________________________DATE_____________________________________________
NOTE: Please sign exactly as name appears hereon. If more than one owner, each must sign. When signing
as attorney, executor, administrator, trustee or guardian, please give full title as such.
FOLD AND DETACH HERE
</TABLE>
Dear Share Owner:
Newport News Shipbuilding Inc. encourages you to take advantage of new and
convenient ways by which you can vote your shares. You can submit a proxy
electronically through the Internet or by telephone. This eliminates the need to
return the proxy card.
To submit a proxy electronically you must use the voter control number. The
voter control number is the series of numbers printed in the box above, just
below the perforation. This voter control number must be used to access the
system.
1. To submit a proxy over the Internet:
o Log on to the Internet and go to the web site
http://www.eproxyvote.com/nns
2. To submit a proxy over the telephone:
o On a touch-tone telephone call 1-877-PRX-VOTE (1-877-779-8683)
24 hours a day, 7 days a week.
Your electronic proxy authorizes the named proxies in the same manner as if you
marked, signed, dated and returned the proxy card.
If you choose to submit a proxy electronically, there is no need for you to mail
back your proxy card.
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING.
