<PAGE>
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
WHITTAKER CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] 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:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(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):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] 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:
-------------------------------------------------------------------------
(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:
<PAGE>
[LOGO OF WHITTAKER]
Whittaker Corporation . 1955 N. Surveyor Avenue . Simi Valley . California
93063
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 4, 1997
The Annual Meeting of Stockholders of Whittaker Corporation will be held at
the Radisson Simi Valley Hotel, 999 Enchanted Way, Simi Valley, California on
Friday, April 4, 1997 at 10:00 A.M., for the following purposes:
1) To elect (a) Jack L. Hancock and Edward R. Muller as directors to
serve for a term of three years and (b) Malcolm T. Stamper as a director to
serve for a term of two years;
2) To consider and act upon a proposal to ratify amendments to the 1992
Stock Option Plan for Non-Employee Directors modifying the method of
issuing stock options in accordance with a formula based upon a market
valuation of Common Stock and increasing the number of shares of Common
Stock that may be issued thereunder from 50,000 shares to 150,000 shares in
lieu of cash payments upon retirement.
3) To consider and act upon a proposal to ratify the appointment of Ernst
& Young LLP as the Company's independent auditor for the fiscal year ending
October 31, 1997; and
4) To consider and act upon such other business as properly may come
before the meeting.
The Board of Directors has fixed the close of business on February 7, 1997
as the record date for the purpose of determining stockholders entitled to
notice of, and to vote at, said meeting.
All stockholders are cordially invited to attend the meeting in person. TO
INSURE YOUR REPRESENTATION AT THE MEETING, PLEASE COMPLETE AND PROMPTLY MAIL
YOUR PROXY IN THE RETURN ENVELOPE PROVIDED. This will not prevent you from
voting in person, should you so desire, but will help to secure a quorum and
will avoid added solicitation costs.
By Order of the Board of Directors
/s/ Lynne M. O. Brickner
----------------------------------
Secretary
Simi Valley, California
February 24, 1997
<PAGE>
[LOGO OF WHITTAKER]
Whittaker Corporation . 1955 N. Surveyor Avenue . Simi Valley . California
93063
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS, APRIL 4, 1997
SOLICITATION OF PROXIES AND VOTING
The accompanying proxy is solicited on behalf of the Board of Directors of
Whittaker Corporation (the "Company") for use at the Annual Meeting of
Stockholders to be held on April 4, 1997, and at any and all adjournments
thereof. It is anticipated that such proxy, together with this Proxy
Statement, will be first transmitted to the Company's stockholders on or about
February 24, 1997.
All shares represented by each properly executed, unrevoked proxy received
in time for the meeting will be voted as specified therein, and if no
specification is made, the shares will be voted in accordance with the
recommendations of the Board of Directors. Any proxy given may be revoked at
any time prior to its exercise by filing with the Secretary of the Company an
instrument revoking it or a duly executed proxy bearing a later date or by
attending the meeting and voting in person.
Provided that a quorum is present, the affirmative vote of not less than a
majority of the total voting power of the Company's Common Stock, present in
person or by proxy at the meeting and entitled to vote on the subject matter,
is required for approval of each of the matters submitted for stockholder
approval in the accompanying proxy.
Votes cast in person or by proxy at the meeting will be tabulated by the
inspector of elections appointed for the meeting. In accordance with Delaware
law, abstentions and "broker non-votes" (i.e. proxies from brokers or nominees
indicating that such persons have not received instructions from the
beneficial owner or other persons entitled to vote shares as to a matter with
respect to which the brokers or nominees do not have discretionary power to
vote) will be treated as present for purposes of determining the presence of a
quorum. For purposes of determining approval of a matter presented at the
meeting, abstentions will be deemed present and entitled to vote and will,
therefore, have the same legal effect as a vote "against" a matter presented
at the meeting. Broker non-votes will be deemed not entitled to vote on the
subject matter as to which the non-vote is indicated and will, therefore, have
no legal effect on the vote on that particular matter.
In addition to use of the mails, proxies may be solicited, in person and by
telephone, by regular employees of the Company, who will not receive any
additional compensation for such solicitation. The Company has also engaged
Georgeson & Company Inc. to assist in the solicitation of proxies. This firm
will be paid a fee of $4,500 and will be reimbursed for expenses incurred in
connection with such engagement. The cost of solicitation of proxies will be
borne by the Company.
February 24, 1997
<PAGE>
EQUITY SECURITIES AND PRINCIPAL HOLDERS THEREOF
Stockholders of record at the close of business on February 7, 1997 (the
"Record Date") will be entitled to vote at the Annual Meeting of Stockholders
to be held on April 4, 1997. As of the Record Date, there were outstanding
11,149,473 shares of Common Stock. Each share of Common Stock is entitled to
one vote on all matters expected to be presented at the Annual Meeting of
Stockholders. Cumulative voting will not be in effect.
Based on information available to it, the Company believes that the
following persons held beneficial ownership of more than 5% of the outstanding
shares of Common Stock as of the Record Date:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE PERCENT OF
NAME AND ADDRESS OF OWNERSHIP CLASS
---------------- ------------ ----------
<S> <C> <C>
Raytheon Company 1,974,333(1) 17.71%
141 Spring Street
Lexington, MA 02173
Pioneering Management Corporation 1,102,000(2) 9.88%
60 State Street
Boston, MA 02114
Dimensional Fund Advisors Inc. 691,500(3) 6.20%
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
</TABLE>
- --------
(1) The holder discloses that it holds sole voting power and sole dispositive
power as to the shares reported.
(2) The holder discloses that it holds sole voting power as to the shares
reported, sole dispositive power as to 25,000 shares, and shared
dispositive power as to 1,077,000 shares.
(3) The holder discloses that it and its officers have sole voting power and
sole dispositive power as to the shares reported. The holder has advised
the Company that it disclaims beneficial ownership of such shares.
2
<PAGE>
The following table sets forth, as of the Record Date except where another
date is indicated below, certain information with respect to the beneficial
ownership of the Company's equity securities for each of the Company's
directors, executive officers, and directors and executive officers as a
group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT
NAME OF BENEFICIAL OF BENEFICIAL OF
TITLE OF CLASS OWNER OWNERSHIP CLASS(1)
-------------- ----------------------- ------------------- --------
<S> <C> <C> <C>
COMMON STOCK DIRECTORS
Joseph F. Alibrandi 539,383(2) 4.83%
George H. Benter, Jr. 9,000(3) (4)
George Deukmejian -- --
Jack L. Hancock 5,000(5) (4)
Edward R. Muller 136,385(6) 1.22%
Gregory T. Parkos 11,000(7) (4)
Malcolm T. Stamper 3,000(8) (4)
EXECUTIVE OFFICERS
Joseph F. Alibrandi (set forth above)
Lynne M. O. Brickner 3,437(9) (4)
Joseph F. Fernandes 11,000(10) (4)
Richard Levin 74,498(11) (4)
John K. Otto 29,406(12) (4)
All Directors and
Executive Officers
as a Group (13 persons) 822,109(13) 7.37%
SERIES D PARTICIPATING
CONVERTIBLE PREFERRED
STOCK (14)
Joseph F. Alibrandi 577.18 100%
All Directors and
Executive Officers
as a Group (13 persons) 577.18 100%
</TABLE>
- --------
(1) The number of outstanding stock options exercisable within 60 days of the
Record Date held by any indicated person or group of persons are added to
the shares of Common Stock actually outstanding as of the Record Date for
the purpose of computing the percentage of outstanding shares owned by
such person or such group of persons but not any other stockholder.
(2) Includes 1,000 shares issuable upon exercise of outstanding stock options
exercisable within 60 days of the Record Date.
(3) Includes 5,000 shares issuable upon exercise of outstanding stock options
exercisable within 60 days of the Record Date.
(4) The number of shares shown as beneficially owned represents less than 1%
of the outstanding shares.
3
<PAGE>
(5) Includes 3,000 shares issuable upon exercise of outstanding stock options
exercisable within 60 days of the Record Date.
(6) Includes 3,000 shares issuable upon exercise of outstanding stock options
exercisable within 60 days of the Record Date. Mr. Muller shares voting
power and investment power with respect to 133,385 shares of Common
Stock.
(7) Includes 1,000 shares issuable upon exercise of outstanding stock options
exercisable within 60 days of the Record Date.
(8) Represents 3,000 shares issuable upon exercise of outstanding stock
options exercisable within 60 days of the Record Date.
(9) Includes 3,334 shares issuable upon exercise of outstanding stock options
exercisable within 60 days of the Record Date. Also includes 103 shares
allocated to Ms. Brickner's account under the Company's Partnership Plan.
(10) Represents 11,000 shares issuable upon exercise of outstanding stock
options exercisable within 60 days of the Record Date.
(11) Includes 74,000 shares issuable upon exercise of outstanding stock
options exercisable within 60 days of the Record Date. Also includes 498
shares allocated to Mr. Levin's account under the Company's Partnership
Plan.
(12) Includes 24,247 shares issuable upon exercise of outstanding stock
options exercisable within 60 days of the Record Date. Also includes
2,159 shares allocated to Mr. Otto's account under the Company's
Partnership Plan.
(13) Includes an aggregate of 149,581 shares issuable upon exercise of
outstanding stock options exercisable within 60 days of the Record Date.
Also includes an aggregate of 2,804 shares allocated to the accounts of
executive officers who participate in the Company's Partnership Plan.
Directors of the Company do not participate in such plan.
(14) Each share of Series D Preferred Stock, in connection with a qualifying
transfer, will be automatically converted into 326.531 shares of Common
Stock. A qualifying transfer occurs upon, among other things, any
transfer of Series D Preferred Stock to any third party who is not an
affiliate or employee of the Company (both before and immediately after
giving effect to such transfer) or pursuant to a transaction available to
all holders of Common Stock, including any tender or exchange offer to
purchase shares of Common Stock or open market transaction.
The Company has no reason to believe that the officers and directors of the
Company did not have sole voting power and sole investment power with respect
to the foregoing securities, except (i) with respect to shares of Common Stock
beneficially owned under the Company's Partnership Plan, pursuant to which the
trustee has the power to vote shares but seeks each participant's direction on
voting; and (ii) as to which beneficial ownership, voting power or investment
power is disclaimed or shared as described in the footnotes set forth above.
4
<PAGE>
ELECTION OF DIRECTORS
The Company's Board of Directors is a classified board presently consisting
of seven directors. Directors are divided into three classes, each consisting,
as nearly as possible, of one-third of the total number of directors. Class I,
Class II and Class III directors hold office for "staggered" terms which
expire, respectively, in 1999, 1997 and 1998, in each case until their
respective successors are elected at the annual meeting of stockholders to be
held in each such year. Persons elected as directors are elected for a term of
three years.
Shares represented by the enclosed proxy are intended to be voted, unless
authority is withheld, for (i) the election of Jack L. Hancock and Edward R.
Muller, who currently serve as Class II directors and who must therefore stand
for election at the Annual Meeting of Stockholders to be held on April 4,
1997, and for (ii) the election of Malcolm T. Stamper, who currently serves as
a Class I director but who was not eligible for election last year, for the
balance of the term as a Class I Director. To the best of the Company's
knowledge, Messrs. Hancock, Muller and Stamper are available to serve, and the
other members of the Board of Directors named below who are not currently
standing for election continue to be available to serve.
DIRECTORS
<TABLE>
<CAPTION>
CLASS
NAME AND RECENT DIRECTOR OF
BUSINESS EXPERIENCE AGE SINCE DIRECTOR
------------------- --- -------- --------
<S> <C> <C> <C>
Joseph F. Alibrandi 68 1970 I
Mr. Alibrandi was elected Chairman of the Board in 1985
and was Chief Executive Officer from 1974 until Decem-
ber 31, 1994. From 1970 until his election as Chairman
of the Board of Whittaker, he served as President of
the Company. He was elected President again in 1991 and
served in such capacity until 1993. He became Chief Ex-
ecutive Officer and President of the Company again in
September 1996. Since 1991, he also has been Chairman
of the Board of BioWhittaker, Inc. He was
BioWhittaker's Chief Executive Officer from 1991 to
1992.
George H. Benter, Jr. 55 1989 III
Since 1992, Mr. Benter has been President and Chief Op-
erating Officer of City National Bank. From 1991 until
1992, he was Vice Chairman and Chief Credit Officer of
Security Pacific Corporation (which merged in 1992 with
BankAmerica Corporation). From 1987 until 1991, he was
Vice Chairman of Security Pacific National Bank (which
merged in 1992 with Bank of America N.T.&S.A.), and
held numerous other positions with Security Pacific
prior to 1987. . +
George Deukmejian 68 1996 III
Since 1991, Mr. Deukmejian has been a partner of Sidley
& Austin, Los Angeles, California. From 1983 to 1991 he
served as the Governor of the State of California.*
Jack L. Hancock 66 1993 II
Mr. Hancock retired from Pacific Bell as Executive Vice
President, Marketing and Sales in 1993. He joined Pa-
cific Bell in 1988 as Vice President for Systems Tech-
nology, was promoted in 1990 to Executive Vice Presi-
dent of the Product and Technology Support Group, a po-
sition he held until 1993. Mr. Hancock is a retired Ma-
jor General of the United States Army. . +
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
CLASS
NAME AND RECENT DIRECTOR OF
BUSINESS EXPERIENCE AGE SINCE DIRECTOR
------------------- --- -------- --------
<S> <C> <C> <C>
Edward R. Muller 44 1993 II
Since 1993, Mr. Muller has been President and Chief Ex-
ecutive Officer of Edison Mission Energy. From 1992 un-
til 1993, he was the Company's Chief Financial Officer.
He served as the Company's Chief Administrative Officer
from 1988 until 1992. Mr. Muller was appointed General
Counsel and elected Vice President and Secretary of the
Company in 1985, and served in such capacities until
1993. From 1991 until 1993, Mr. Muller was also Vice
President, General Counsel and Secretary of
BioWhittaker, Inc..*
Gregory T. Parkos 66 1984 III
Mr. Parkos joined the Company in 1979 and was elected a
Vice President in 1980. He was named an Executive Vice
President and elected to the Board of Directors in
1984. He was President and Chief Operating Officer of
the Company from 1985 until his retirement as an offi-
cer in 1991.*
Malcolm T. Stamper 71 1993 I
Since 1990, Mr. Stamper has been Chairman of the Board,
Chief Executive Officer and Publisher of Storytellers
Ink Publishing Co. From 1985 until his retirement in
1990, he was Vice Chairman of The Boeing Company. He
was Boeing's President from 1972 until 1985.+
</TABLE>
- -------
. Member of the Audit Committee of the Board of Directors.
+ Member of the Compensation and Stock Option Committee of the Board of
Directors.
* Member of the Nominating and Governance Committee of the Board of
Directors.
The directors serve on the boards of directors of other publicly held
companies as follows: Mr. Alibrandi--BankAmerica Corporation, BioWhittaker,
Inc., Burlington Northern Santa Fe Corporation, Catellus Development
Corporation and Jacobs Engineering Group Inc.; Mr. Benter--City National Bank
and The Wet Seal, Inc.; Mr. Deukmejian--Burlington Northern Santa Fe
Corporation and Health Systems International; Mr. Hancock--Union Bank of
California; Mr. Muller--Global Marine, Inc. and Oasis Residential, Inc.; Mr.
Parkos--Cookson PLC; and Mr. Stamper--Chrysler Corporation and Esterline
Corporation.
The Board of Directors held 11 meetings during fiscal 1996. Attendance of
the Company's directors at all Board and committee meetings during the year
was 100%, with each director attending all of the meetings of the Board and
committees on which he served. Directors are reimbursed for travel and other
expenses related to attendance at Board and committee meetings.
Directors who are executive officers receive no compensation for Board and
committee services. Other directors (excluding Mr. Alibrandi) receive annual
fees of $20,000 for serving on the Board of Directors, annual fees of $2,500
per committee for serving on various committees, and an additional fee of $750
per day for participation in meetings of the Board and its committees, except
for telephonic meetings having a duration of less than 30 minutes. Prior to
October 1, 1996, Mr. Alibrandi received an annual fee of $30,000 for serving
as Chairman of the Board, no annual fee for service on committees, and an
additional fee of $1,500 per day for participation in meetings of the Board
and its committees, except for telephonic meetings having a duration of less
than 30 minutes. For his service as Chairman of the Board, Mr. Alibrandi was
paid $1,500 for each day that he devoted a substantial portion of his time to
the business and affairs of the Company. Effective October 1, 1996 and
following Mr. Alibrandi's election as an executive officer of the Company,
none of these fees was accrued or paid to Mr. Alibrandi. Mr. Alibrandi's
aggregate fees and other compensation during fiscal 1996 (which could not
exceed $200,000) were $186,000. Mr. Alibrandi also was entitled as Chairman to
reimbursement for certain expenses.
6
<PAGE>
The Audit Committee, which met five times during fiscal 1996, reviews and
acts or reports to the Board with respect to various auditing and accounting
matters, including the selection of the Company's independent auditor, the
scope of audit procedures, the nature of services to be performed for the
Company by, and the fees to be paid to, the independent auditor, the
performance of the Company's independent and internal auditors, and the
accounting practices of the Company.
The Compensation and Stock Option Committee, which met eight times during
fiscal 1996, has been delegated the functions of the Board with respect to the
compensation of executive officers and the administration of the Company's
stock-based plans, including the granting of stock options and restricted
stock.
The Nominating and Governance Committee, which met twice during fiscal 1996,
recommends nominees for election as directors at annual meetings of
stockholders and to fill vacancies which may occur between annual meetings.
The Committee considers as potential nominees persons recommended by
stockholders. Recommendations should be submitted to the Committee in care of
the Secretary of the Company. The Committee also considers various other
matters pertaining to corporate responsibility.
EXECUTIVE COMPENSATION
The following report of the Compensation and Stock Option Committee and the
performance graph included elsewhere in this proxy statement shall not be
deemed soliciting material or otherwise deemed filed and shall not be deemed
to be incorporated by reference by any general statement incorporating by
reference this proxy statement into any other filing under the Securities Act
of 1933 of the Securities Exchange Act of 1934, except to the extent the
Company specifically incorporates this report or the performance graph by
reference therein.
Board Compensation Committee Report on Executive Compensation. The
Compensation and Stock Option Committee (the "Committee") is composed entirely
of outside directors. The Committee is responsible, among other things, for
setting the compensation of executive officers, including any stock-based
awards to executive officers under the Company's Long-Term Stock Incentive
Plan (1989). The current members of the Committee are Messrs. Benter, Hancock
and Stamper.
The Committee seeks to compensate executive officers to achieve the primary
goal of the Company's stockholders: increased share value. Thus, a substantial
portion of the cash compensation of each executive officer is contingent upon
the Company's performance. Bonuses may, therefore, be substantial, may vary
significantly for an individual from year to year, and may vary significantly
among the executive officers. Another significant form of the compensation of
executive officers is the granting of stock options to purchase the Company's
Common Stock, which become exercisable upon the earlier to occur of (i) the
attainment of designated average closing prices of the Company's Common Stock
over five consecutive trading days, (ii) the expiration of five years
following the date of grant, or (iii) certain changes in control of the
Company. For those executive officers who are division managers, stock options
become exercisable upon (i) the attainment of preestablished performance
targets, (ii) the expiration of five years following the date of grant or
(iii) certain changes in control of the Company. In the past, restricted stock
grants also were a significant part of the compensation of some of the
executive officers. However, restricted stock grants are no longer issued to
executive officers.
For fiscal 1996, the Committee set salaries in December 1995. In recognition
of Mr. Brancati's promotion to Chief Executive Officer of the Company and his
performance during fiscal 1995, the Committee increased Mr. Brancati's base
annual salary effective January 1, 1996. The salaries of the other executive
officers were individually evaluated by the Committee, with the advice of Mr.
Alibrandi and Mr. Brancati (except as to himself), in light of each
individual's responsibilities for fiscal 1996 and performance during fiscal
1995.
7
<PAGE>
In December 1995, the Committee, with advice from Messrs. Alibrandi and
Brancati, also established targets and operating goals, the achievement of
which would be considered in determining payments of bonuses to executive
officers with respect to the Company's fiscal 1996 performance. Such targets
and goals included the achievement of both financial results and operating
objectives for the Company. For fiscal 1996, the Committee concluded that the
targets and goals had not been achieved and, accordingly, no cash bonuses were
awarded to executive officers.
In September 1996, Mr. Brancati resigned and Mr. Alibrandi was elected Chief
Executive Officer and President. At that time, the Committee set Mr.
Alibrandi's salary for the remainder of fiscal 1996.
The Committee made grants of stock options to all executive officers of the
Company during fiscal 1996 except Mr. Alibrandi, who had retired as Chief
Executive Officer at the time the grants were made in December 1995 and Ms.
Brickner, who was elected an executive officer in October 1996. The Committee
made the grants, with the advice of Mr. Brancati (except as to himself), on
the basis of each individual's performance and impact on the Company's
results.
Deductibility of Compensation. Section 162(m) of the Internal Revenue Code
limits the tax deductibility by a company of compensation in excess of
$1,000,000 paid to any of its most highly compensated executive officers.
However, performance-based compensation that has been approved by stockholders
is excluded from the $1,000,000 limit if, among other requirements, the
compensation is payable only upon attainment of preestablished objective
performance goals and the board committee that establishes such goals consists
only of "outside directors" (as defined for purposes of 162(m)). All of the
members of the Committee qualify as "outside directors".
The Committee has considered these requirements and the regulations under
162(m). Although the tax impact of any compensation arrangement is one factor
to be considered, such impact is evaluated by the Committee in light of the
Company's overall compensation philosophy and objectives. The Committee has
established executive officer compensation programs such as stock option
grants that will maximize the Company's federal income tax deductions for
compensation expense. The Committee believes that the Company's current
compensation arrangements, which are primarily based on performance measures
which are expected to be reflected in increased stockholder value, are
appropriate and in the best interests of the Company and its stockholders. The
Committee also believes there are circumstances in which the Company's and
stockholders' interests may be best served by providing compensation that may
not be fully deductible for federal tax purposes, and that under such
circumstances (which include changes in tax laws) the Committee would not
anticipate making significant changes in the practices and philosophy
underlying its executive compensation program.
GEORGE H. BENTER, JR. JACK L. HANCOCK MALCOLM T. STAMPER
Compensation Committee Interlocks and Insider Participation. Messrs. Benter,
Hancock and Stamper comprise the Compensation and Stock Option Committee. None
of these directors is or has been an officer or employee of the Company.
During fiscal 1996, no executive officer of the Company served as a member of
a compensation committee or as a director of another entity of which any
executive officer served as a member of the Company's Compensation and Stock
Option Committee or Board of Directors.
8
<PAGE>
Compensation. The following table sets forth certain information concerning
the annual and long-term compensation for services rendered in all capacities
to the Company by each of the named executive officers for the fiscal years
ended October 31, 1996, 1995 and 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
--------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------------------- --------------------- -------
OTHER
NAME ANNUAL RESTRICTED SECURITIES ALL OTHER
AND COMPEN- STOCK UNDERLYING LTIP COMPEN-
PRINCIPAL SATION AWARD(S) OPTIONS PAYOUTS SATION
POSITION YEAR SALARY($)(1) BONUS($)(2) ($) ($) (#) ($) ($)(3)
--------- ---- ------------ ----------- ------- ---------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Joseph F. Alibrandi 1996 40,192 -- -- -- 1,000(5) -- 1,154(6)
Chairman, Chief 1995 84,654 -- -- -- -- -- 673
Executive Officer 1994 359,347 450,000 -- -- -- -- 5,775
and President(4)
Lynne M. O. Brickner 1996 152,895 -- -- -- -- -- 166
Vice President 1995 17,307 10,000 -- -- 5,000 -- --
and Secretary(7)
Joseph F. Fernandes 1996 181,170 454,200 -- -- 12,000 -- 2,365
President, Whittaker 1995 158,283 374,250 -- -- 12,000 -- 2,797
Aerospace(8) 1994 150,010 466,000 -- -- 3,000 -- 2,596
Richard Levin 1996 229,284 -- -- -- 12,000 -- 6,235
Vice President and 1995 212,005 200,000 -- -- 12,000 -- 2,595
Chief Administrative 1994 93,771 75,000 -- -- 50,000 -- --
Officer(9)
John K. Otto 1996 117,462 -- -- -- 6,000 -- 4,509
Vice President 1995 110,926 45,000 -- -- 4,000 -- 4,254
and Treasurer 1994 102,236 45,000 -- -- 2,000 -- 2,488
Thomas A. Brancati 1996 418,718 -- -- -- 25,000(11) -- 3,028
President, Chief Execu- 1995 349,761 425,000 -- -- 100,000(11) -- 2,399
tive Officer and Chief 1994 255,750 350,000 -- -- 50,000 -- 4,620
Operating Officer(10)
Jack C. Cannady 1996 187,161 -- -- -- 12,000 -- 4,550
Vice President(12) 1995 185,386 155,000 -- -- 12,000 -- 3,708
1994 161,648 130,000 -- -- 3,000 -- 3,356
</TABLE>
- --------
(1) Amounts represent cash compensation earned and received by executive
officers.
(2) Amounts represent cash bonuses which were accrued during the fiscal year
shown but paid subsequent to the end of such fiscal year.
(3) Unless otherwise noted, the amounts shown in this column constitute
contributions by the Company under the Company's Partnership Plan, a
defined contribution plan, for the benefit of the named executive
officers.
(4) Mr. Alibrandi became Chief Executive Officer and President of the Company
in September 1996.
9
<PAGE>
(5) Mr. Alibrandi retired as Chief Executive Officer of the Company in
December 1994. On December 29, 1995, Mr. Alibrandi was granted options to
purchase 1,000 shares under the 1992 Stock Option Plan for Non Employee
Directors.
(6) In addition, Mr. Alibrandi continues to receive retirement benefits under
the Whittaker Corporation Employee Pension Plan, the Supplemental Benefit
Plan and the Excess Benefit Plan.
(7) Ms. Brickner became an executive officer of the Company in October 1996
and joined the Company in September 1995.
(8) Mr. Fernandes became President of Whittaker Aerospace in November 1995
and was President of Whittaker Controls, Inc. since 1992.
(9) Mr. Levin joined the Company in May 1994, at which time he was appointed
an executive officer.
(10) Mr. Brancati resigned as an executive officer of the Company in September
1996.
(11) Cancelled in October 1996.
(12) Mr. Cannady resigned as an executive officer of the Company in October
1996.
Option Grants. The following table sets forth certain information concerning
grants of options to purchase shares of Common Stock made by the Company to
the named executive officers during fiscal 1996:
INDIVIDUAL GRANTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES PERCENT OF TOTAL
UNDERLYING OPTIONS GRANTED EXERCISE GRANT DATE
OPTIONS GRANTED TO EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME (#)(1) FISCAL YEAR ($/SHARE)(2) DATE VALUE(4)
---- --------------- ---------------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
Joseph F. Alibrandi..... 1,000 (3) $21.750 12/29/2005 $ 8,890
Lynne M. O. Brickner.... -- -- -- -- --
Joseph F. Fernandes..... 12,000(5) (3) $18.094 12/11/2005 $ 88,680
Richard Levin........... 12,000(6) (3) $18.094 12/11/2005 $ 88,680
John K. Otto............ 6,000(6) (3) $18.094 12/11/2005 $ 44,340
Thomas A. Brancati...... 25,000(7) (3) $18.094 12/11/2005 $184,750
Jack C. Cannady......... 12,000(6) (3) $18.094 12/11/2005 $ 88,680
</TABLE>
- --------
(1) The option price of each stock option which has been granted is not less
than 100% of the market value of the Common Stock on the date of grant,
and the term of each such option is 10 years, subject to earlier
termination in certain events related to death, retirement or other
termination of employment. Options become exercisable upon the earliest to
occur of (i) the attainment of designated average closing prices of the
Company's Common Stock over five consecutive trading days; (ii) the
expiration of five years following the date of grant; or (iii) certain
changes in control of the Company. Options granted to executive officers
who are also division managers, such as Mr. Thurk and Mr. Fernandes,
become exercisable upon the earliest to occur of (i) the attainment of
certain operating profit and return on asset goals; (ii) the expiration of
five years following the date of grant; or (iii) certain changes in
control of the Company.
(2) The exercise price and tax withholding obligations related to exercise may
be paid by delivery of already owned shares and/or by offset of the
underlying shares, subject to certain conditions.
(3) The number of options granted to such holder is less than 1% of the total
options granted to all employees during fiscal 1996.
10
<PAGE>
(4) Based upon the Black-Scholes option valuation model. The actual value, if
any, an executive officer may realize is based on the difference between
the market price of the Company's Common Stock on the date of exercise and
the exercise price. There is no assurance that the actual realized value
will be at or near the value estimated by the Black-Scholes model.
Assumptions under the Black-Scholes model are: expected volatility of
33.5%; risk-free rate of return of 6.51%; dividend yield of 0%; and time
of exercise at 5 years. No adjustments have been made for non-
transferability or risk of forfeiture.
(5) At October 31, 1996, such option was not currently exercisable.
(6) At October 31, 1996, all of such option was currently exercisable.
(7) At October 31, 1996, all of such option was cancelled.
Option Exercises and Fiscal Year-End Values. The following table sets forth
certain information concerning (i) the exercise of options to purchase shares
of Common Stock during fiscal 1996, and (ii) the aggregate number of shares of
Common Stock subject to options outstanding as of October 31, 1996, with
respect to options granted to the named executive officers under the Company's
stock option plans.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR ENDED OCTOBER 31, 1996 AND OCTOBER
31, 1996 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED IN-
UNEXERCISED THE-MONEY
OPTIONS AT OPTIONS AT
OCTOBER 31, OCTOBER 31,
1996 (#) 1996 (1)
------------- ----------------
SHARES ACQUIRED VALUED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED UNEXERCISABLE UNEXERCISABLE
---- --------------- ---------- ------------- ----------------
<S> <C> <C> <C> <C>
Joseph F. Alibrandi.. 651,934(2) $1,790,978 1,000/ 0 0/ 0
Lynne M. O. Brickner. -- -- 3,334/ 1,666 0/ 0
Joseph F. Fernandes.. -- -- 11,000/26,000 0/$34,325
Richard Levin........ -- -- 74,000/ 0 0/ 0
John K. Otto......... -- -- 24,247/ 0 $ 87,773/ 0
Thomas A. Brancati... -- -- 89,752/ 0 $725,038/ 0
Jack C. Cannady...... -- -- 54,494/ 0 $133,758/ 0
</TABLE>
- --------
(1) Based on the difference between the average of the high and low market
price of the Company's Common Stock on October 31, 1996 and the exercise
price.
(2) Mr. Alibrandi used 104,003 previously owned shares to pay the exercise
price, and he requested that the Company withhold 194,427 shares resulting
from the exercise to satisfy tax withholding obligations. Accordingly, Mr.
Alibrandi's net increase in share ownership resulting from the exercise
was 457,507 shares.
11
<PAGE>
Company Performance. The following graph shows a five-year comparison of
cumulative total returns for the Company, the S&P 500 Composite Index, the Dow
Jones Aerospace and Defense Technology Sector Index, and the Dow Jones
Communications Technology Index.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG WHITTAKER CORP., S&P 500 INDEX,
D J AEROSPACE & DEFENSE AND D J COMM TECHNOLOGY EXCL AT&T
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
D J D J COMM
Measurement Period WHITTAKER S&P AEROSPACE TECHNOLOGY
(Fiscal Year Covered) CORP 500 INDEX & DEFENSE EXCL AT&T
- ------------------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Measurement Pt-10/31/91 $100.00 $100.00 $100.00 $100.00
FYE 10/31/92 $102.22 $109.95 $ 93.37 $152.61
FYE 10/31/93 $116.67 $126.39 $124.64 $317.49
FYE 10/31/94 $164.44 $131.27 $149.50 $333.24
FYE 10/31/95 $176.67 $165.98 $228.03 $434.27
FYE 10/31/96 $125.56 $205.98 $323.97 $436.11
</TABLE>
* Assumes that the value of the investment in the Company's Common Stock and
each index was $100 on October 31, 1991 and that all dividends, other than
the extraordinary distribution described below, were reinvested. The
Company has made an extraordinary distribution to stockholders of one share
of BioWhittaker, Inc. Common Stock for each share of the Company's Common
Stock in connection with the Company's 1991 spin off of its biotechnology
business. Such distribution is calculated in the Company's cumulative total
return consistently with the methodology employed by Standard and Poor's
Corporation and Dow Jones & Company, Inc. in calculating cumulative total
return when a similar distribution is made by companies included in the S&P
500 Composite Index and Dow Jones indices.
The Company has historically used the Dow Jones Aerospace and Defense
Technology Sector Index for performance comparison purposes. With the
Company's recent expansion into the data networking and communications
markets, however, the Company believes that the Dow Jones Communications
Technology Index, which includes a broad range of communications and data
networking companies, is more closely aligned with the Company's present
businesses than just the Dow Jones Aerospace and Defense Technology Sector
Index. Accordingly, the Company intends, for future performance comparison
purposes, to include the Dow Jones Communications Technology Index together
with the Dow Jones Aerospace and Defense Technology Sector Index.
12
<PAGE>
Employees' Pension Plan. The Company maintains the Employees' Pension Plan
for the benefit of all eligible employees, including executive officers.
Directors of the Company who are not also employees do not participate in the
Employees' Pension Plan. The Employees' Pension Plan is a tax-qualified,
Company funded plan subject to the provisions of the Employee Retirement
Income Security Act of 1974. Company contributions to the Employees' Pension
Plan are actuarially determined, and benefits are computed based upon years of
service and remuneration. As a result of an amendment to the Employee's
Pension Plan, effective October 31, 1994 benefits were "frozen" for all
participants in the plan: adjustments for changes in credited years of service
ceased on October 31, 1994, and adjustments for changes in remuneration ceased
on December 31, 1994.
The Internal Revenue Code (the "Code") limits the annual benefits which may
be paid from a tax-qualified retirement plan. The Company has adopted various
supplemental plans for the benefit of executive officers which authorize the
payment of benefits in excess of the limits imposed by the Code. Under such
plans, aggregate pension benefits for executive officers are equal to the
excess of (i) the annual benefits which would be payable pursuant to the
Employees' Pension Plan without regard to the limitations under the Code or to
a formula change under the Employees' Pension Plan which took effect on
January 1, 1989; over (ii) the amounts actually payable under the Employees'
Pension Plan. These supplemental plans were "frozen" as described in the
preceding paragraph, and are hereinafter referred to as the frozen
supplemental plans.
The Company adopted a separate supplemental plan in 1996 which provides a
targeted level of replacement income at retirement for selected executive
officers of the Company. The target is 60% of compensation. The targeted
benefit is offset by 50% of the Social Security benefit and all company
provided qualified retirement plan benefits. The benefit is payable at age 65
in the form of a life annuity, and is reduced for less than 15 years of
credited service. To the extent that the offsets exceed the targeted
retirement income, the fixed components (Social Security and the company
provided qualified retirement plan benefits) are still payable.
The following table shows, for Messrs. Levin, Fernandes, Otto and Ms.
Brickner, the estimated annual benefits payable under the supplemental plan,
the Employees' Pension Plan, employer provided benefits under all other
qualified retirement plans, and 50% of the Social Security retirement benefit.
Mr. Cannady resigned as an employee of the Company in October 1996 and is not
eligible for a benefit from the supplemental plan. These amounts are payable
at age 65, including the effect of the freeze in benefits described above.
<TABLE>
<CAPTION>
YEARS OF SERVICE
FINAL AVERAGE -------------------------------
COMPENSATION 5 10 15 20
------------- ----- ------- -------- --------
<S> <C> <C> <C> <C>
$ 50,000............................... $ 0 $10,000 $ 30,000 $ 30,000
75,000............................... 0 15,000 45,000 45,000
100,000............................... 0 20,000 60,000 60,000
125,000............................... 0 25,000 75,000 75,000
150,000............................... 0 30,000 90,000 90,000
175,000............................... 0 35,000 105,000 105,000
200,000............................... 0 40,000 120,000 120,000
225,000............................... 0 45,000 135,000 135,000
250,000............................... 0 50,000 150,000 150,000
300,000............................... 0 60,000 180,000 180,000
350,000............................... 0 70,000 210,000 210,000
400,000............................... 0 80,000 240,000 240,000
</TABLE>
The compensation upon which annual benefits is based for active participants
in the supplemental plan is the average of the highest annual compensation
paid during any three consecutive years of employment with the
13
<PAGE>
Company. For this purpose, compensation includes base compensation plus up to
$100,000 annual bonus for division managers, and base compensation plus annual
bonus for participants other than division managers.
Compensation for determining benefits under the frozen supplemental plans
was based on the provisions of the plans at the time the plans were frozen.
The compensation upon which annual benefits is based for all participants in
the Employees' Pension Plan is the average of the highest annual cash
compensation paid during five consecutive years within the final ten years of
employment. For this purpose cash compensation includes salary and bonus but
does not include the auto allowance component of salary or any compensation
earned after December 31, 1994.
Messrs. Levin, Fernandes, Otto and Ms. Brickner have approximately 2, 3, 13,
and 1 years of service with the Company, respectively. Mr. Fernandes is a
division manager. Retirement benefits are computed on a straight-life annuity
basis. The benefits listed in the tables set forth above include retirement
income from the supplemental retirement plan, the frozen Employees' Pension
Plan, employer provided benefits under all other qualified retirement plans,
and 50% of the Social Security retirement benefit. Messrs. Levin, Fernandes,
Otto and Ms. Brickner have annual accrued frozen benefits in the Employees'
Pension Plan of $0, $10,880, $24,176 and $0 payable at age 65.
Mr. Cannady resigned as an employee of the Company in October 1996 with
approximately 3 credited years of service under the Employees' Pension Plan,
and will be eligible to receive at age 65 a retirement benefit from the
Employees' Pension Plan of $12,900 per year.
Mr. Brancati resigned as an executive officer of the Company in September
1996 with approximately 8 credited years of service under the Employees'
Pension Plan, and will be eligible to receive at age 65 a retirement benefit
under the Employees' Pension Plan and the supplemental plan equal to $20,488
per month. Mr. Brancati will continue as an employee of the Company until
November 1997.
Mr. Alibrandi retired from the Company on December 31, 1994 with
approximately 25 years of service under the Employees' Pension Plan, and
receives a retirement benefit under the Employees' Pension Plan and the frozen
supplemental plans equal to $27,897 per month. Mr. Alibrandi returned to
active service with the Company in September 1996. His retirement benefits are
not affected by his return.
Directors' Retirement Plan. Each director who is not an employee of the
Company is paid upon the director's retirement from the Board of Directors,
for the number of years equaling the director's years of service as a
director, an annual payment in quarterly installments in an amount equal to
the lesser of (i) one and one-half times the basic annual fee (currently
$20,000) payable during the last year of the director's service, or (ii) the
total fees actually paid during the last twelve months of the director's
service. No payments are paid after the death of a director except to a
director's surviving spouse. Death while serving as a director is treated as
retirement for purposes of the Directors' Retirement Plan.
Whittaker Corporation 1992 Stock Option Plan for Non-Employee Directors. The
purposes of the Whittaker Corporation 1992 Stock Option Plan for Non-Employee
Directors (the "Directors Plan") are to attract and retain highly qualified
individuals to serve as directors of the Company, to encourage such directors
to acquire an equity interest in the Company in order to align more closely
the interests of such directors with those of the Company's stockholders, and
to compensate such directors for their contributions to the Company's growth
and profitability.
Each director of the Company who is not an employee of the Company or any of
the Company's affiliates is an eligible director under the Directors Plan.
There are currently six eligible directors: Messrs. Benter, Deukmejian,
Hancock, Muller, Parkos and Stamper.
14
<PAGE>
On December 31, 1996, each director who was then an eligible director was
granted an option under the Directors Plan to purchase 1,000 shares of the
Company's Common Stock at a purchase price of $13.25 per share, the fair
market value on the date of grant. Recipients of such options were Messrs.
Benter, Deukmejian, Hancock, Muller, Parkos and Stamper. On the last business
day of December of each year occurring on or before the earlier to occur of
(i) the first business day in January in the year 2001 and (ii) the date the
shares of the Company's Common Stock are delisted from the New York Stock
Exchange, each eligible director, as of each such date, shall be granted an
option to acquire 1,000 shares of the Company's Common Stock. In each case the
purchase price per share under an option shall be the per share fair market
value on the date of grant. Options become exercisable six months from the
date of grant, and each option expires on the earlier to occur of (x) 10 years
from its date of grant, and (y) one year from the date of termination of
service as an eligible director.
A total of 50,000 shares of the Company's Common Stock may be subject to
options granted under the Directors Plan.
In January 1997, the Board of Directors approved amendments to the Directors
Plan and to the Directors' Retirement Plan which are designed to align the
interests of the directors more directly with those of the Company's
stockholders by the issuance of stock options to directors and the termination
of the Directors' Retirement Plan. Such amendments are subject to ratification
by stockholders and are discussed more fully below in the description of the
Amended and Restated 1992 Stock Option Plan for Non-Employee Directors.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) Beneficial Ownership Reporting Compliance. Section 16(a) of
the Securities Exchange Act requires the Company's officers and directors, and
persons who own more than 10 percent of the Company's Common Stock, to file
reports of ownership and changes in ownership on Forms 3, 4 and 5 with the
Securities and Exchange Commission and the New York Stock Exchange. Officers,
directors and greater than 10 percent beneficial owners are required to
furnish the Company with copies of all Forms 3, 4 and 5 which they file.
Based solely on the Company's review of copies of such forms it has
received, the Company believes that all of its officers, directors and greater
than 10 percent beneficial owners have complied with all filing requirements
applicable to them except as follows. Two former executive officers of the
Company, Mr. Brancati and Mr. Cannady, were required under regulations that
became effective August 15, 1996 to report on Form 4 any transactions in the
Company's shares during the six-month period following the date of such
officer's resignation. Mr. Brancati and Mr. Cannady each inadvertently failed
to file a Form 4 by the required dates and, when such errors were discovered,
corrected the omissions on a Form 4 filed in January 1997 for sales of shares,
and exercise of stock options and subsequent sales of shares during the months
of October and December 1996, respectively, by Mr. Brancati and on a Form 4
filed in January 1997 for exercise of stock options and subsequent sales of
shares during the month of November 1996 by Mr. Cannady.
15
<PAGE>
RATIFICATION OF THE AMENDED AND RESTATED 1992 STOCK OPTION PLAN FOR NON-
EMPLOYEE DIRECTORS
On January 24, 1997, the Company's Board of Directors adopted the Amended
and Restated 1992 Stock Option Plan for Non-Employee Directors of Whittaker
Corporation (the "Directors Plan").
The principal purposes of the Directors Plan are to attract and retain
highly qualified individuals to serve as directors of the Company, to
encourage non-employee directors to acquire an equity interest in the Company
in order to align more closely the interests of directors with those of the
Company's stockholders and to compensate non-employee directors for their
contributions to the Company's growth and profitability. As discussed below,
the Directors Plan, as amended, is also intended to replace compensation which
will no longer be accrued for the benefit of the Company's non-employee
directors under the Company's Directors' Retirement Plan, which will be
terminated upon stockholder approval of the amendments to the Directors Plan.
The principal features of the Directors Plan are summarized below, but the
summary is qualified in its entirety by reference to the Directors Plan
itself. A copy of the Directors Plan, as amended and restated, is attached at
Annex I.
SHARES AUTHORIZED UNDER DIRECTORS PLAN
Under the Directors Plan as amended, not more than 150,000 shares of the
Company's Common Stock ("Common Stock") are authorized for issuance upon
exercise of options. On February 7, 1997, the closing price of a share of
Common Stock on the New York Stock Exchange was $10.625.
The shares of Common Stock available under the Directors Plan upon exercise
of stock options may be either previously unissued shares or treasury shares.
Subject to certain limitations, the Directors Plan provides for appropriate
adjustments in the number and kind of shares issuable under the Directors Plan
and outstanding option grants under the Directors Plan in the event that the
Board of Directors determines that certain transactions with respect to the
Company or the Common Stock affect the Common Stock such that an adjustment is
appropriate in order to prevent dilution or enlargement of the benefits
intended to be made available under the Directors Plan. If any portion of a
stock option terminates or lapses unexercised, the shares which were subject
to the unexercised portion of such option will continue to be available for
issuance under the Directors Plan.
ELIGIBILITY
Each director of the Company who is not an employee of the Company or any of
its affiliates is an eligible director under the Directors Plan. There are
currently six eligible directors under the Directors Plan: Messrs. Benter,
Deukmejian, Hancock, Muller, Parkos and Stamper.
OPTION GRANTS
Under the Directors Plan, as amended, on the date of each annual meeting of
the Company's stockholders, each eligible director who is a member of the
Board of Directors on such date is granted an option (the "Fixed Option") to
acquire 1,000 shares of Common Stock and an option (the "Formula Option") to
acquire a number of shares of Common Stock based upon the following formula:
150% of the director's base compensation as a member of the Board of Directors
during the prior 12 month period, divided by the product of the fair market
value of the Common Stock and a percentage based on the Black-Scholes option
pricing model as applied to the Common Stock. The provisions of the Directors
Plan relating to Formula Options were added to the Directors Plan by the 1997
Amendment and Restatement to replace future accruals of retirement benefits by
the eligible
16
<PAGE>
directors under the Company's Directors' Retirement Plan, which will be
terminated and all accruals for retirement benefits will be "frozen" effective
as of the date of approval by the stockholders of the amendments to the
Directors Plan. For example, if the Directors Plan, as amended, was in effect
on December 31, 1996, and the annual stockholders meeting was held on that
date, a director would have received a Fixed Option of 1,000 shares and a
Formula Option of 4,000 shares, all exercisable at the fair market value of
$12.63 per share in lieu of an annual payment of $30,000 (if 1996 was his last
year of service) for the number of years he has served as a director under the
Directors' Retirement Plan.
TERMS OF OPTIONS
The per share exercise price for each option granted under the Directors
Plan is equal to the fair market value of a share of Common Stock on the date
of grant and each option has a ten-year term, subject to earlier expiration
one year after the date upon which a Director's status as an eligible director
under the Directors Plan terminates for any reason, including death. Fixed
Options granted under the Directors Plan are not exercisable until six months
after the date of grant and Formula Options are not exercisable until one year
after the date of grant, except that in the event of a director's death, all
of the director's outstanding options are then immediately exercisable.
Options granted under the Directors Plan may be exercised by payment in cash,
cash equivalents or in shares of Common Stock, based upon the fair market
value of any such non-cash consideration on the date of exercise.
FEDERAL INCOME TAX CONSEQUENCES
For Federal income tax purposes, directors who are granted options under the
Directors Plan will not have taxable income upon the grant of the option, nor
will the Company then be entitled to any deduction. Generally, upon exercise
of an option a director will realize ordinary income, and the Company will be
entitled to a deduction, in an amount equal to the difference between the
option exercise price and the fair market value of the Common Stock at the
date of exercise. A director's basis for the Common Stock for purposes of
determining his gain or loss on his subsequent disposition of the shares
generally will be the fair market value of the Common Stock on the date of
exercise of the options.
REASONS FOR ADOPTION OF DIRECTORS PLAN AMENDMENT
The Board of Directors has determined that it is advisable to provide
additional stock-based incentive compensation to the Company's non-employee
directors, thereby further aligning the interests of such directors directly
with those of the stockholders, and that awards under the Directors Plan, as
amended, are an effective means of providing such compensation. In addition,
the Board of Directors has determined that it is advisable for the Company to
terminate the Company's Directors' Retirement Plan, which will occur as of the
date of approval by the stockholders of the amendments to the Directors Plan,
and to replace the cash compensation payable under said plan with options
under the Directors Plan. In order to accomplish the foregoing objectives, the
Board of Directors has determined that it would be advisable to amend the
Directors Plan to provide for grants of Formula Options and to increase the
number of shares of Common Stock subject to options under the Directors Plan
from 50,000 shares to 150,000 shares. Therefore, the Board of Directors
recommends that the Directors Plan, as amended, be approved, and that 150,000
shares of Common Stock be reserved for issuance on exercise of options
thereunder.
REQUIRED VOTE FOR APPROVAL
The affirmative vote of a majority of the shares present or represented and
entitled to vote at the Annual Meeting is required to approve the Directors
Plan, as amended and restated.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
RATIFICATION OF THE DIRECTORS PLAN AS SO AMENDED AND RESTATED.
17
<PAGE>
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR
In recognition of the important role of the independent auditor, the Board
of Directors has determined that its selection of the independent auditor for
the Company should be submitted to the Company's stockholders for ratification
on an annual basis. The Board of Directors, upon the recommendation of its
Audit Committee, has appointed Ernst & Young LLP to serve as the Company's
independent auditor for the fiscal year ending October 31, 1997, subject to
ratification by the Company's stockholders. Ernst & Young conducted the audit
of the Company's financial statements for the fiscal year ended October 31,
1996. If the appointment is not ratified, the Board of Directors will appoint
another firm as the Company's independent auditor for the fiscal year ending
October 31, 1997. The Board of Directors also retains the power to appoint
another independent auditor for the Company to replace an auditor ratified by
the stockholders in the event the Board of Directors determines that the
interests of the Company require such a change.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting of Stockholders. Such representatives will have the opportunity
to make a statement if they so desire and will be available to respond to
appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITOR OF
THE COMPANY FOR THE FISCAL YEAR ENDING OCTOBER 31, 1997.
STOCKHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING OF STOCKHOLDERS
Stockholder proposals to be presented at the 1998 Annual Meeting of
Stockholders must be received at the Company's executive offices at 1955 North
Surveyor Avenue, Simi Valley, California 93063 by October 31, 1997 in order to
be included in the Company's proxy statement and form of proxy relating to
that meeting.
OTHER MATTERS THAT MAY COME BEFORE THE MEETING
As of the date of this Proxy Statement, the Company knows of no business
other than that described herein that will be presented for consideration at
the meeting. If, however, any other business properly shall come before the
meeting, the proxy holders intend to vote the proxies in accordance with their
best judgment.
By Order of the Board of Directors
/s/ Lynne M.O. Brickner
----------------------------------
Secretary
February 24, 1997
18
<PAGE>
ANNEX I
WHITTAKER CORPORATION
AMENDED AND RESTATED 1992 STOCK OPTION PLAN FOR
NON-EMPLOYEE DIRECTORS
SECTION 1. Purpose. The purposes of the Plan are to attract and retain
highly qualified individuals to serve as directors of the Company, to
encourage non-employee directors to acquire an equity interest in the Company
in order to align more closely the interests of directors with those of the
Company's stockholders, and to compensate non-employee directors for their
contributions to the Company's growth and profitability.
SECTION 2. Definitions. As used in the Plan, the following terms shall have
the meanings set forth below:
"Board" shall mean the Board of Directors of the Company.
"Business Day" shall mean any day except a Saturday, Sunday or other day on
which the New York Stock Exchange is authorized by law to close.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company" shall mean Whittaker Corporation, and any successor thereto.
"Eligible Director" shall mean each director of the Company who is not an
employee of the Company or any of its affiliates.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Fair Market Value" shall mean, (i) with respect to the Shares, as of any
date, the last reported sales price regular way on the New York Stock Exchange
or, if not reported for the New York Stock Exchange, on the Composite Tape,
or, in case no such reported sale takes place on such day, the average of the
reported closing bid and asked quotations on the New York Stock Exchange and
(ii) with respect to any property other than the Shares, the fair market value
of such property determined by such methods or procedures as shall be
established from time to time by the Board.
"Option" shall mean either a "Fixed Option" or a "Formula Option" granted
under Section 5 of the Plan.
"Option Agreement" shall mean any written agreement, contract, or other
instrument or document evidencing any Option, which may, but need not, be
executed or acknowledged by a Participant.
"Participant" shall mean any Eligible Director granted an Option under the
Plan.
"Person" shall mean any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization, government or
political subdivision thereof or other entity.
"Plan" shall mean this Whittaker Corporation 1992 Stock Option Plan for Non-
Employee Directors, as amended and restated on January 24, 1997.
"SEC" shall mean the Securities and Exchange Commission, or any successor
thereto.
A-I-1
<PAGE>
"Shares" shall mean the common shares of the Company, $.01 par value.
"Termination Date" shall mean the earlier to occur of (i) the first business
day in January of the year 2007 and (ii) the date the Shares are de-listed
from the New York Stock Exchange.
SECTION 3. Administration. The Plan shall be administered by the Board.
Subject to the terms of the Plan, the Board shall have the power to interpret
the provisions and supervise the administration of the Plan.
SECTION 4. Shares Available for Options.
(a) Shares Available. Subject to adjustment as provided in Section 4(b):
(i) Calculation of Number of Shares Available. The number of Shares with
respect to which Options may be granted under the Plan shall be one hundred
and fifty thousand (150,000). If, after the effective date of the Plan, any
Shares covered by an Option granted under the Plan are forfeited, or if an
Option otherwise terminates or is canceled without the delivery of Shares
or of other consideration, then the Shares covered by such Option, or the
number of Shares otherwise counted against the aggregate number of Shares
with respect to which Options may be granted, to the extent of any such
forfeiture, termination or cancellation, shall again be, or shall become,
Shares with respect to which Options may be granted.
(ii) Sources of Shares Deliverable Under Options. Any Shares delivered
pursuant to an Option may consist, in whole or in part, of authorized and
unissued Shares or of treasury Shares.
(b) Adjustments. The number and type of Shares with respect to which Options
may be granted, the number and type of Shares subject to each Option to be
granted, the number and type of Shares subject to outstanding Options, and the
grant or exercise price with respect to any Option shall be appropriately
adjusted by the Board in order to prevent reduction or enlargement of the
benefits of Options that would otherwise result from any extraordinary
dividend or other distribution (whether in the form of cash, securities, or
other property), recapitalization, reorganization, merger, consolidation,
split-up, spin-off, combination, repurchase, or exchange of Shares, issuance
of warrants or other rights to purchase Shares, at a price below fair market
value or other similar corporate event.
SECTION 5. Options.
(a) Fixed Options. On the date of each annual meeting of the Company's
stockholders, each Eligible Director who is a member of the Board on such date
shall be granted an Option (the "Fixed Option") to acquire one thousand
(1,000) Shares.
(b) Formula Options. On the date of each annual meeting of the Company's
stockholders, each Eligible Director who is a member of the Board on such date
shall be granted an Option (the "Formula Option") to acquire a number of
Shares based upon the following formula: (x) one hundred fifty percent (150%)
of the Eligible Director's basic annual fee as a member of the Board for the
twelve (12) month period beginning upon the date of grant of such Option,
divided by (y) the product of the "Black-Scholes Percentage" (as defined
below) and the Fair Market Value of a Share on the date of grant of such
Option. For the purposes of the foregoing formula, the "Black-Scholes
Percentage" shall be the percentage obtained by dividing (x) the value of a
Formula Option, as determined by the Board, for one (1) Share under the Black-
Scholes option pricing model using the historical price volatility of the
Shares during the five (5) year period immediately preceding the date of the
grant of such Option, by (y) the Fair Market Value of one (1) Share on the
date of grant of such Option.
A-I-2
<PAGE>
(c) Exercise Prices. The exercise price per Share under an Option shall be
the per Share Fair Market Value on the date of grant of such Option.
(d) Time and Method of Exercise. Except in the case of the death of a
Participant, any Fixed Option granted pursuant to the Plan shall not be
exercisable until the date which is six months from the date of grant of such
Option. Except in case of the death of a Participant, any Formula Option
granted pursuant to the Plan shall not be exercisable until the date which is
one (1) year from the date of grant of such Option. In the case of the death
of a Participant, any Fixed Option or Formula Option held by such Participant
that is not then exercisable shall be immediately exercisable.
(e) General.
(i) Limits on Transfer of Options.
(A) Each Option and each right under any Option, shall be exercisable
only by the Participant during the Participant's lifetime, or, if
permissible under applicable law, by the Participant's guardian or
legal representative.
(B) No Option and no right under any such Option may be assigned,
alienated, pledged, attached, sold or otherwise transferred or
encumbered by a Participant otherwise than by will or by the laws of
descent and distribution and any such purported assignment, alienation,
pledge, attachment, sale, transfer or encumbrance shall be void and
unenforceable against the Company; provided that the designation of a
beneficiary shall not constitute an assignment, alienation, pledge,
attachment, sale transfer or encumbrance.
(ii) Term of Options. Subject to Section 5(c)(v), each Option shall
expire ten years from its date of grant.
(iii) Share Certificate. Certificates for Shares to which a Participant
is entitled pursuant to the exercise of any Option shall not be delivered
until the Board determines that such delivery will comply with all
applicable rules, regulations, and other requirements of the SEC, any stock
exchange upon which such Shares are then listed, and any applicable federal
or state laws. Upon delivery, all such certificates shall be subject to
such stop transfer orders and other restrictions as the Board may deem
advisable under the Plan or such rules, regulations, requirements and laws.
The Board may cause a legend or legends to be put on any such certificates
to make appropriate reference to such restrictions.
(iv) Delivery of Shares and Payment of Participant of Consideration. No
Shares shall be delivered pursuant to the exercise of any Option until
payment in full of any amount required to be paid pursuant to the Plan or
the applicable Option Agreement is received by the Company. The holder may
make such payment in cash, cash equivalents or, in whole or in part, in
Shares; provided that the combined value of any cash or cash equivalents
and the Fair Market Value of any Shares tendered to the Company, as of the
date of such tender, is at least equal to the full amount required to be
paid pursuant to the Plan and the applicable Option Agreement to the
Company.
(v) Termination of Service. If a Participant's service as an Eligible
Director is terminated for any reason, including death, any Option held by
such Participant shall remain exercisable for one (1) year after such
termination, but in no event beyond the expiration date of such Option.
Upon the expiration of such one (1) year period, any unexercised Options
held by such Participant shall be canceled.
A-I-3
<PAGE>
SECTION 6. Amendment and Termination. Except to the extent prohibited by
applicable law and unless otherwise expressly provided in an Option Agreement
or in the Plan:
(a) Amendments to the Plan. The Board may amend, alter, suspend,
discontinue, or terminate the Plan; provided that any such amendment,
alteration, suspension, discontinuation, or termination that would materially
impair the rights of any Participant or a beneficiary thereof as to any
outstanding Option shall not to that extent be effective without the approval
of the affected Participant or beneficiary; and provided further that
notwithstanding any other provision of the Plan or any Option Agreement,
without the approval of the stockholders of the Company no such amendment,
alteration, suspension, discontinuation, or termination shall be made that
would:
(i) increase the total number of Shares available for Options under the
Plan, except as provided in Section 4 of the Plan;
(ii) permit Options encompassing rights to purchase Shares to be granted
with per Share exercise or purchase prices of less than the Fair Market
Value of a Share on the date of grant thereof; or
(iii) otherwise cause the Plan to cease to comply with any tax or
regulatory requirement, including for these purposes any approval or other
requirement which is a prerequisite for exemptive relief from Section 16(b)
of the Exchange Act.
(b) Correction of Defects, Omissions and Inconsistencies. Subject to Section
6(a), the Board may correct any defect, supply any omission, or reconcile any
inconsistency in the Plan or any Option or Option Agreement in the manner and
to the extent it shall deem necessary to carry the Plan into effect. In the
event of a conflict between any term or provision contained in an Option or an
Option Agreement and a term or provision contained in the Plan, the applicable
terms and conditions of the Plan shall govern and prevail.
SECTION 7. General Provisions.
(a) Withholding. The Company is hereby authorized to withhold from any
transfer of Shares pursuant to the exercise of an Option or from any
compensation or other amount owing to a Participant the amount (in cash,
Shares or other property) of any applicable withholding taxes in respect of
the exercise of an Option or any payment or transfer under an Option or under
the Plan and to take such other action as may be necessary in the opinion of
the Company to satisfy all obligations for the payment of such taxes. Without
limiting the foregoing, a Participant may elect to satisfy any tax withholding
obligations that may arise upon the exercise of an Option by directing the
Company to withhold a number of Shares otherwise deliverable upon such
exercise having a Fair Market Value equivalent to the amount of such
obligation.
(b) No Limit on Other Compensation Arrangements. Nothing contained in the
Plan shall prevent the Company from adopting or continuing in effect other
compensation arrangements (subject to stockholder approval if such approval is
required), and such arrangements may be either generally applicable or
applicable only in specific cases.
(c) Governing Law. The validity, construction, and effect of the Plan and
any rules and regulations relating to the Plan shall be determined in
accordance with the laws of the State of Delaware.
(d) Severability. If any provision of the Plan or any Option is or becomes
or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or
as to any Person or Option, or would disqualify the Plan or any Option under
any law deemed applicable by the Board, such provision shall be construed or
deemed amended to
A-I-4
<PAGE>
conform to applicable laws, or if it cannot be construed or deemed amended
without, in the determination of the Board, materially altering the intent of
the Plan or the Option, such provision shall be stricken as to such
jurisdiction, Person or Option and the remainder of the Plan and any such
Option shall remain in full force and effect.
(e) No Trust or Fund Created. Neither the Plan nor any Option shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company and a Participant or any other Person. To the
extent that any Person acquires a right to receive payments from the Company
pursuant to an Option, such right shall be no greater than the right of any
unsecured general creditor of the Company.
(f) No Fractional Shares. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Option, and the Board shall determine whether
cash, other securities, or other property shall be paid or transferred in lieu
of any fractional Shares or whether such fractional Shares or any rights
thereto shall be canceled, terminated, or otherwise eliminated.
(g) Headings. Headings are given to the Sections and subsections of the Plan
solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation
of the Plan or any provision thereof.
SECTION 8. Effective Date of Plan. The Plan was effective as of June 28,
1991, and was approved by the Company's stockholders at their annual meeting
on March 27, 1992. The Amended and Restated Plan shall be effective as of
January 1, 1997, subject to approval by the Company's stockholders at their
annual meeting on April 4, 1997. In the event the Company's stockholders do
not so approve the Amended and Restated Plan, the Plan, as approved by the
Company's stockholders at their annual meeting on March 27, 1992, shall remain
in full force and effect, and the Amended and Restated Plan shall be of no
further force or effect.
A-I-5
<PAGE>
- --------------------------------------------------------------------------------
Please mark
your votes as
indicated in
this example [X]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1. ELECTION OF DIRECTORS 2. Proposal to ratify 3. Proposal to ratify the appointment
FOR WITHHOLD The Board of amendments to the Company's of Ernst & Young LLP as the
the nominees AUTHORITY Directors recommends a 1992 Stock Option Plan Company's Independent Auditor for
listed to vote for the vote "FOR" the nominees for Nonemployee Directors. the fiscal year ending October 31,
below listed below listed below. The Board of Directors 1997.
[_] [_] recommends The Board of Directors recommends a
a vote "FOR" vote "FOR" the ratification of
Nominees: Jack L. Hancock, Edward R. Muller, the ratification Proposal 3.
Malcolm T. Stamper of Proposal 2.
Instruction: To withhold authority to vote for any FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
nominee, strike a line through that [_] [_] [_] [_] [_] [_]
nominee's name.
4. In their discretion, the
proxies are a authorized
to vote upon such other
business as properly may
come before the meeting.
</TABLE>
If properly executed, the shares represented
by this proxy will be voted in the manner
directed herein by the undersigned
stockholder. If or to the extend directions
are not given, such shares will be voted for
the election as directors of the nominees
named hereon, ratification of amendments to
the Company's 1992 Stock Option Plan for
Nonemployee Directors and for ratification
of the appointment of Ernst & Young LLP as
the Company's independent auditor for the
fiscal year ending October 31, 1997.
Please sign exactly as your name or names
appear. Persons acting in a fiduciary
capacity should so indicate. PLEASE NOTE
any change of address and supply any
missing Zip Code number.
--------------------------------------------
--------------------------------------------
Zip Code No.
Signature(s) _________________ Signature(s)___________________Dated ______, 1997
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
Admission Ticket
Annual Meeting
of
Whittaker Corporation Stockholders
Friday, April 4, 1997
10:00 a.m.
Radisson Simi Valley Hotel
999 Enchanted Way
Simi Valley, California
<PAGE>
- --------------------------------------------------------------------------------
WHITTAKER CORPORATION PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Joseph F. Alibrandi and Lynne M.O. Brickner,
or either of them, the proxy or proxies of the undersigned with power of
substitution, to vote all shares of stock of Common Stock of Whittaker
Corporation held of record by the undersigned as of February 7, 1997 at the
Annual Meeting of Stockholders of Whittaker Corporation to be held on Friday,
April 4, 1997 at 10:00 A.M., and at any adjournment or adjournments thereof, as
indicated on the reverse side hereof.
(Continued on reverse side)
PLEASE SIGN AND DATE ON REVERSE SIDE AND RETURN IN THE ACCOMPANYING ENVELOPE
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
Annual
Meeting of
WHITTAKER CORPORATION Stockholders
April 4, 1997, 10:00 a.m.
Radisson Simi Valley Hotel
999 Enchanted Way
Simi Valley, California
<PAGE>
- --------------------------------------------------------------------------------
Please mark
your votes as
indicated in
this example [X]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1. ELECTION OF DIRECTORS 2. Proposal to ratify 3. Proposal to ratify the appointment
FOR WITHHOLD The Board of amendments to the Company's of Ernst & Young LLP as the
the nominees AUTHORITY Directors recommends a 1992 Stock Option Plan Company's Independent Auditor for
listed to vote for the vote "FOR" the nominees for Nonemployee Directors. the fiscal year ending October 31,
below listed below listed below. The Board of Directors 1997.
[_] [_] recommends The Board of Directors recommends a
a vote "FOR" vote "FOR" the ratification of
Nominees: Jack L. Hancock, Edward R. Muller, the ratification Proposal 3.
Malcolm T. Stamper of Proposal 2.
Instruction: To withhold authority to vote for any FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
nominee, strike a line through that [_] [_] [_] [_] [_] [_]
nominee's name.
</TABLE>
I understand that in the absence of
instructions you will vote the shares
represented by this proxy on the listed
proposals and on other business which
properly may come before the meeting
proportionately in the same manner as those
shares for which instructions are received.
Please sign exactly as your name or names
appear. Persons acting in a fiduciary
capacity should so indicate. PLEASE NOTE
any change of address and supply any
missing Zip Code number.
--------------------------------------------
--------------------------------------------
Zip Code No.
Signature(s) _________________ Signature(s)___________________Dated ______, 1997
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
----------------
Admission Ticket
----------------
Annual Meeting
of
Whittaker Corporation Stockholders
Friday, April 4, 1997
10:00 a.m.
Radisson Simi Valley Hotel
999 Enchanted Way
Simi Valley, California
<PAGE>
- --------------------------------------------------------------------------------
WHITTAKER CORPORATION
PARTNERSHIP PLAN ("PLAN")
INSTRUCTION CARD
TO: THE CHARLES SCHWAB TRUST COMPANY ("SCHWAB"), TRUSTEE UNDER THE PLAN
Schwab is hereby instructed to vote the appropriate number of shares of
Whittaker Corporation Common Stock which represents my proportionate interest in
the Plan at the Annual Meeting of Stockholders of Whittaker Corporation to be
held on April 4, 1997 at 10:00 A.M., and at any adjournment or adjournments
thereof, with respect to the proposals listed on the reverse side hereof.
(Continued on reverse side)
PLEASE SIGN AND DATE ON REVERSE SIDE AND RETURN IN THE ACCOMPANYING ENVELOPE
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
Annual
Meeting of
WHITTAKER CORPORATION Stockholders
April 4, 1997, 10:00 a.m.
Radisson Simi Valley Hotel
999 Enchanted Way
Simi Valley, California
