<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [_]
Filed by a Party other than the Registrant [X]
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 (S)240.14a-11(c) or (S)240.14a-12
UNC INCORPORATED
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
RICHARD H. LANGE, Secretary
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $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.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------
Notes:
<PAGE>
[LOGO OF UNC APPEARS HERE] UNC INCORPORATED
175 Admiral
Cochrane Drive
Annapolis, Maryland
21401-7394
(410) 266-7333
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The 1996 Annual Meeting of Stockholders of UNC Incorporated (the "Company")
will be held at 10:00, A.M., local time, on June 28, 1996, at the Park Hyatt
Hotel, 24th at M Street, N.W., Washington, D.C. 20037, for the following
purposes:
1. To elect eight directors of the Company to hold office until their
successors are elected and qualify;
2. To vote upon a proposal to ratify the appointment of Coopers & Lybrand
as independent auditors of the Company for the year ending December 31,
1996; and
3. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on May 3, 1996, as
the record date (the "Record Date") for the meeting and only holders of record
of Common Stock of the Company at that time are entitled to notice of and to
vote at such meeting or any adjournment or adjournments thereof.
By Order of the Board of Directors
Richard H. Lange
Secretary
May 15, 1996
IT IS IMPORTANT TO YOU AND THE COMPANY THAT YOUR SHARES BE REPRESENTED AT
THE MEETING. YOU ARE INVITED TO ATTEND THE MEETING IN PERSON; HOWEVER IF YOU
CANNOT DO SO, PLEASE EXERCISE YOUR RIGHT TO VOTE BY COMPLETING, DATING,
SIGNING AND RETURNING THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
<PAGE>
UNC INCORPORATED
175 ADMIRAL COCHRANE DRIVE
ANNAPOLIS, MARYLAND 21401-7394
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 28, 1996
This Proxy Statement, the Notice of Annual Meeting of Stockholders, and the
enclosed Proxy are being furnished to stockholders of UNC Incorporated (the
"Company") in connection with the solicitation, on behalf of the Board of
Directors of the Company, of proxies to be used at the Annual Meeting of
Stockholders of the Company to be held on June 28, 1996. The approximate date
on which the Notice of Annual Meeting, Proxy Statement and form of proxy are
being first sent to stockholders is May 28, 1996. Proxies in the form enclosed
which are properly executed by stockholders, returned to the Company and not
revoked, will be voted at the meeting and, where a specification is made on
the ballot, will be voted in accordance with such specification. Stockholders
may revoke their proxy at any time before it is voted at the meeting by
submitting written notice of revocation to the Secretary of the Company, or by
submitting a duly executed proxy bearing a later date. A proxy will not be
voted if the stockholder who executed it is present at the meeting and elects
to vote the shares represented thereby in person.
QUORUM AND VOTING RIGHTS
The presence, in person or by proxy, of the holders of a majority of the
issued and outstanding shares of Common Stock of the Company ("Common Stock")
entitled to vote (exclusive of shares held by or for the account of the
Company or any subsidiary of the Company) is necessary to constitute a quorum
at the Annual Meeting of Stockholders. The affirmative vote of the holders of
a majority of the shares of Common Stock present in person or by proxy at the
meeting is required for the approval of each of the matters to be presented to
the meeting except for the election of directors for which a plurality is
required. Because all matters other than the election of directors require an
affirmative vote of a majority of the shares present, an abstention will have
the same affect as a vote against the proposal. Only holders of record of
Common Stock at the close of business on May 3, 1996 are entitled to notice of
and to vote at the Annual Meeting of Stockholders.
As of the record date, the Company had issued and outstanding 17,808,981
shares of Common Stock (exclusive of shares held by or for the account of the
Company or any subsidiary of the Company). Each share of Common Stock entitles
the holder to one vote upon each matter to be voted upon. The Company has
designated and authorized 250,000 shares of each of a Series B Senior
Cumulative Preferred Stock ("Series B Preferred Stock") and a Series C Senior
Cumulative Preferred Stock. No shares of Preferred Stock are outstanding
currently but the Company intends to issue 250,000 shares of the Series B
Preferred Stock in connection with its acquisition of Garrett Aviation
Services, which is anticipated to take place in late May.
OWNERSHIP OF COMMON STOCK BY CERTAIN PERSONS
The following table sets forth information, as of May 10, 1996, concerning
those persons known to the Company to be the beneficial owners of more than 5%
of the issued and outstanding Common Stock of the Company.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF SHARES
BENEFICIAL OWNER (1) BENEFICIALLY OWNED PERCENTAGE OF CLASS
- -------------------- ------------------ -------------------
<S> <C> <C>
Heartland Advisors, Inc. (2) ......... 1,991,100(3) 10.8%(4)
790 North Milwaukee Street
Milwaukee, Wisconsin 53202
Heartland Group, Inc. (5)............. 1,100,000(6) 6.8%
790 North Milwaukee Street
Milwaukee, Wisconsin 53202
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF SHARES
BENEFICIAL OWNER (1) BENEFICIALLY OWNED PERCENTAGE OF CLASS
- -------------------- ------------------ -------------------
<S> <C> <C>
The Prudential Insurance Company of 1,065,487(8) 5.8%
America (7).........................
751 Broad Street
Newark, New Jersey 07102
J O Hambro & Company Limited (9)..... 943,400(10) 5.3%(11)
10 Park Place
London SW1A 1LP England
J O Hambro Asset Management Limit- 943,400(10) 5.3%(11)
ed (9)..............................
10 Park Place
London SW1A 1LP England
J O Hambro & Partners Limited (12)... 943,400(10) 5.3%(11)
10 Park Place
London SW1A 1LP England
Christopher Harwood Bernard 589,400(10) 3.3%(11)
Mills (12)..........................
10 Park Place
London SW1A 1LP England
Growth Financial Services 339,400(10) 1.9%(11)
Limited (13) .......................
77 Middle Street
Brockham, Surrey
RH3 7HL England
North Atlantic Smaller Companies 339,400(10) 1.9%(11)
Investment Trust plc (14) ..........
77 Middle Street
Brockham, Surrey
RH3 7HL England
American Opportunity Trust plc (14) . 250,000(10) 1.4%(11)
77 Middle Street
Brockham, Surrey
RH3 7HL England
Oryx International Growth Fund 250,000(10) 1.4%(11)
Limited (14) .......................
Bermuda House
St. Julian's Avenue
St. Peter Port, Guernsey
Consulta (Channel Islands) 250,000(10) 1.4%(11)
Limited (12) .......................
P.O. Box 208
Bermuda House
St. Julian's Avenue
St. Peter Port, Guernsey
Dan A. Colussy....................... 977,780(15) 5.3%
c/o UNC Incorporated
175 Admiral Cochrane Dr.
Annapolis, MD 21401
</TABLE>
- --------
(1) The information set forth above with respect to Heartland Advisors and
Heartland Group was provided to the Company in the beneficial owner's
Schedule 13G dated December 8, 1995. The information set forth above with
respect to The Prudential Insurance Company of America was provided to
the Company in the beneficial owner's Schedule 13G dated February 14,
1996. The information set forth above with respect to J O Hambro &
Partners Limited, J O Hambro Asset Management Limited, J O Hambro &
Company Limited, Growth Financial Services Limited, Christopher Harwood
Bernard Mills, North Atlantic Smaller
2
<PAGE>
Companies Investment Trust plc, American Opportunity Trust plc, Oryx
International Growth Fund Limited and Consulta (Channel Islands) Limited
was provided to the Company in the beneficial owner's Schedule 13D dated
May 9, 1996.
(2) Reporting as an investment advisor in accordance with Rule 13d-
1(b)(1)(ii)(E) in respect of shares beneficially owned by its clients.
(3) Sole investment power in respect of all shares and sole voting power in
respect of 151,000 shares.
(4) Of which 6.8% is also held by Heartland Group.
(5) Reporting as an investment company in accordance with Rule 13d-
1(b)(1)(ii)(D) in respect of shares beneficially owned by its clients.
(6) Sole voting power only in respect of all shares.
(7) Reporting as a broker or dealer, an investment company and an investment
advisor in accordance with Rule 13(d)-1(b)(1)(ii)(A), (D) and (E) in
respect of shares beneficially owned by its clients.
(8) Sole voting and investment power in respect of 724,800 shares.
(9) Reporting as a holding company in accordance with Rule 13d-1(b)(1)(ii)(G)
in respect of shares beneficially owned by its clients.
(10) Shared investment power and shared dispositive power in respect of all
shares.
(11) Filing as part of a group which beneficially owns an aggregate of 943,400
shares.
(12) Reporting as an investment advisor in accordance with Rule 13d-
1(b)(1)(ii)(E) in respect of shares beneficially owned by its clients.
(13) Reporting as an investment advisor pursuant to a contract with
Christopher Mills in accordance with Rule 13d-1(b)(1)(ii)(E) in respect
of shares beneficially owned by its clients.
(14) Reporting as an investment company in accordance with Rule 13d-
1(b)(1)(ii)(D) in respect of shares beneficially owned by its clients.
(15) Includes 522,000 shares with respect to which Mr. Colussy, as of July 1,
1996, has the right to acquire ownership upon exercise of outstanding
stock options within 60 days, 274,034 shares of restricted stock, 50,000
shares of unrestricted stock, 128,500 shares owned by Mr. Colussy's
spouse and 3,246 shares that Mr. Colussy has the right to acquire within
60 days upon exercise of conversion rights relating to the Company's
Convertible Debentures.
OWNERSHIP OF COMMON STOCK BY MANAGEMENT
The following table sets forth the beneficial ownership, as of May 1, 1996,
of Common Stock by each of the directors and nominees for director, each of
the executive officers named in the Summary Compensation Table, and all
directors and executive officers as a group, as reported by such persons.
Unless otherwise indicated in a footnote to the table, the director, nominee
or executive officer held sole voting and investment power over the shares.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE
NAME BENEFICIALLY OWNED OF CLASS
---- ------------------ ----------
<S> <C> <C>
Berl Bernhard.................................... 8,000 *
Beverly B. Byron................................. 5,000 *
John K. Castle................................... 30,000 *
Dan A. Colussy (1)(2)............................ 977,780 5.3%
Gerald M. Czarnecki (1).......................... 200 *
Ronald W. Frederick (1).......................... 12,800 *
William C. Hittinger............................. 4,100 *
James L. Holloway, III........................... 2,000 *
Richard H. Lange (1)............................. 101,256 *
George V. McGowan................................ 2,000 *
John H. Moellering (1)........................... 71,300 *
Jack Moseley..................................... 10,000 *
Robert L. Pevenstein (1)(3)...................... 204,550 *
Lawrence A. Skantze (4).......................... 20,000 *
All directors and executive officers as a group
(19 persons) (1)................................ 1,643,957 8.9%
</TABLE>
3
<PAGE>
- --------
* Less than 1%
(1) The number of shares stated as "beneficially owned" by executive officers
includes shares with respect to which such executive officers, as of May
1, 1996, have the right to acquire beneficial ownership within 60 days (a)
upon the exercise of outstanding options, if such options are exercised,
as follows: Mr. Colussy, 522,000; Mr. Moellering, 45,000; Mr. Frederick,
14,000; Mr. Pevenstein, 150,000; Mr. Lange, 66,500; and all directors and
executive officers as a group, exclusive of the foregoing, 314,112; and
(b) upon exercise of conversion rights relating to the Company's
Convertible Debentures, as follows: Mr. Colussy, 3,246; and Mr.
Pevenstein, 4,550.
(2) The number of shares shown as beneficially owned by Mr. Colussy includes
128,500 shares owned by his spouse, 274,034 shares of restricted stock and
50,000 shares of unrestricted stock.
(3) The number of shares shown as beneficially owned by Mr. Pevenstein
includes 28,798 shares owned jointly with his spouse, and 1,558 shares
held as custodian for his minor children.
(4) The number of shares shown as beneficially owned by Mr. Skantze includes
16,000 shares owned jointly with his spouse.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
The Board of Directors has responsibility for establishing broad corporate
policies and for the overall performance of the Company, although it is not
involved in day-to-day operating details. Members of the Board are kept
informed of the Company's business by various reports and documents given to
them on a regular basis, as well as by operating, financial and other reports
made at meetings of the Board of Directors and its committees.
The Board of Directors has five standing committees: Executive Committee,
Audit Committee, Nominating Committee, Management Development and Compensation
Committee and Public Responsibility Committee.
Subject to certain limitations set forth in the Bylaws and applicable law,
the Executive Committee may exercise all of the powers of the Board of
Directors in the management and direction of the business and affairs of the
Company. The present members of the Executive Committee are Mr. Colussy
(Chairman), Mr. Castle, Mr. Hittinger, Mr. Holloway and Mr. Moseley. The
Executive Committee did not hold a meeting during 1995.
The Audit Committee recommends to the Board of Directors the engagement of
the Company's independent auditors and reviews with the auditors the plan and
scope of their audit for each year, the results of the audit when completed
and their fees for services performed. The Audit Committee also reviews
internal control procedures and meets periodically with the Company's internal
auditors to review the results of such procedures. The Audit Committee is
composed exclusively of directors who are not officers or employees of the
Company. The present members of the Audit Committee are Mr. McGowan (Chairman)
Mr. Holloway, Mr. Hittinger, Mr. McGowan and Mr. Skantze. The Audit Committee
held three meetings during 1995.
The Nominating Committee recommends to the Board of Directors possible
candidates for election as directors. The present members of the Nominating
Committee are Mr. Moseley (Chairman), Mr. Bernhard, Mr. Colussy and Mr.
Skantze. The Nominating Committee held two meetings during 1995. The
Nominating Committee will consider nominees for directors recommended by
stockholders. See "Stockholder Proposals and Directors' Nominations for 1997
Annual Meeting" for the procedures to be followed by stockholders in
submitting recommendations.
The Management Development and Compensation Committee fixes and changes
salaries and other compensation of the officers of the Company, of any other
employee reporting directly to the President and of the heads of the Company's
subsidiaries and divisions. Any action taken by the committee in fixing or
changing the compensation of officers who are also directors is subject to
ratification by the Board of Directors. The committee also administers the
Company's employee stock option plans and its Incentive Compensation Plan
4
<PAGE>
and assists in management development. The committee is composed exclusively
of directors who are not officers or employees of the Company. The present
members of the Management Development and Compensation Committee are Mr.
Castle (Chairman), Mr. McGowan and Mr. Moseley. The Management Development and
Compensation Committee held two meetings during 1995. Reference is made to the
"Statement of Management Development and Compensation Committee on Executive
Compensation" appearing on pages 12 through 14 of this Proxy Statement.
The Public Responsibility Committee reviews the Company's policies, plans,
programs, positions and accomplishments in areas of significant public
interest, such as safety, environmental concerns and minority employment and
advancement. The present members of the Public Responsibility Committee are
Mr. Skantze (Chairman), Mr. Holloway and Ms. Byron. The Public Responsibility
Committee held four meetings during 1995.
During the fiscal year ended December 31, 1995, the Board of Directors held
eight meetings. Each incumbent director, during the last fiscal year or, if
shorter, during the period for which he or she has been a director, attended
at least 75% of the aggregate of (a) the total number of meetings of the Board
of Directors and (b) the total number of meetings of all committees of the
Board on which he or she served. For the Board as a whole, attendance at
meetings in 1995 of the full Board of Directors and committees of the Board of
Directors was approximately 93%.
COMPENSATION OF DIRECTORS
Directors who are employees of the Company receive no additional
compensation for their services as directors or as members of committees of
the Board. Cash compensation payable to other directors for services in that
capacity under the Outside Directors Compensation Plan currently consists of a
retainer of $15,000 per year and a fee of $1,000, plus travel expenses, for
each day of each meeting of the Board of Directors attended in person and a
fee of $500 for participation in a meeting by telephone. Additional annual
retainers of $3,000 and $2,000 are paid to the Chairman of each committee and
to each member of a committee, respectively. Members of the committees are
also paid a fee of $800 for each committee meeting attended in person and a
fee of $400 for participation in a committee meeting by telephone. In addition
to any retainer or meeting fees for serving on the Board of Directors or any
committee, a director who renders services on behalf of the Company outside of
formal meetings is compensated for such services at the rate of $1,000 per
day.
Effective as of July 31, 1987, the Company adopted the Outside Directors
Separation from Service Plan (the "Outside Directors Service Plan"). All
directors who are not employed by the Company automatically become
participants under the Outside Directors Service Plan, but must have served on
the Board of Directors for three years before their benefits become vested.
Benefits are payable as an annuity, paid in monthly installments, equal to the
director's final basic retainer fee, multiplied by a ratio equal to one-tenth
of the director's years of service, provided, however, that no director shall
receive more than 10 years of service and such ratio shall equal zero until a
director completes three years of service. Benefits become payable upon a
director's ceasing to serve on the Board of Directors, or upon a director's
death in which event benefits are paid to the surviving spouse, if any. Upon a
change in control of the Company, as defined, the Company must purchase and
distribute to each participating director an annuity sufficient to provide the
director's accrued and vested benefit as of the date of such change. All
directors not otherwise employed by the Company are participants under the
Outside Directors Service Plan.
Directors are eligible to participate in the Company's group life insurance
program.
5
<PAGE>
ELECTION OF DIRECTORS
Eight directors will be elected at the Annual Meeting of Stockholders. All
directors are elected for a term of one year to serve until the next Annual
Meeting of Stockholders and until their successors are elected and qualified.
All of the shares represented at the Annual Meeting of Stockholders by
properly executed proxies will be voted in accordance with the instructions
thereon, if any, and if no instructions are given, the proxy will be voted FOR
the election of the eight nominees for director named below. Abstentions and
broker non-votes shall not be voted and shall have no effect in respect of the
election of directors. All of the nominees for director are presently serving
as directors of the Company, have agreed to continue to serve if elected and
except for Mr. Hrabowski, who was elected to the Board in April 1996, were
elected at the 1995 Annual Meeting. If any nominee shall become unavailable to
serve as a director prior to the election, the accompanying proxy will be
voted for a substitute nominee selected by the Board of Directors of the
Company and for the other nominees named below, unless the Board of Directors
takes action to reduce the number of directors. The management of the Company
has no reason to believe that any nominee will be unable to serve.
The Company wishes to acknowledge the contribution of two directors who
retired from the Board this year, namely James L. Holloway III and William C.
Hittinger. Mr. Holloway served as a director since 1987 and brought
substantial experience in the area of defense programs to the Board. Mr.
Hittinger served as a director since 1986 and brought to the Board strong
management and financial skills. The Company thanks both directors for their
time, effort and support over the years.
In respect of the election of directors, the eight nominees receiving the
highest number of votes shall be deemed elected. The names of all nominees for
the office of director and information about them, as furnished by the
nominees themselves, are set forth below. THE BOARD OF DIRECTORS RECOMMENDS
THAT THE STOCKHOLDERS VOTE FOR THE FOLLOWING NOMINEES:
<TABLE>
<CAPTION>
SERVED AS BUSINESS EXPERIENCE
DIRECTOR DURING PAST FIVE YEARS
NAME AGE SINCE AND OTHER DIRECTORSHIPS
---- --- --------- -----------------------
<S> <C> <C> <C>
Dan A. Colussy... 64 1981 Chairman, Chief Executive Officer and Pres-
ident of the Company since December 1989,
except for September 1994 through October
1995 when serving as Chairman and Chief Ex-
ecutive Officer of the Company; previously
President and Chief Executive Officer of
the Company since December 1984; Chairman,
President and Chief Executive Officer of
Canadian Pacific Air Lines, Limited from
November 1982 until December 1984; Chairman
of Columbia Air (airline) from June 1981 to
November 1982; prior to that, Mr. Colussy
served in senior management positions with
Pan American World Airways for more than
five years, including that of President and
Chief Operating Officer from April 1978 to
December 1980; Director of Baltimore Gas
and Electric Company (public utility) and
Blue Cross Blue Shield of Maryland, Inc.
(health insurance).
Berl Bernhard.... 66 1992 Chairman of the law firm of Verner,
Liipfert, Bernhard, McPherson and Hand
since 1982; partner in the firm since 1962
(diversified law firm including comprehen-
sive domestic and international aviation
practice); Director of Uniroyal Chemical
Company, Inc. (manufacturer of specialty
chemicals).
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
SERVED AS BUSINESS EXPERIENCE
DIRECTOR DURING PAST FIVE YEARS
NAME AGE SINCE AND OTHER DIRECTORSHIPS
---- --- --------- -----------------------
<S> <C> <C> <C>
Beverly B. Byron........ 63 1993 Independent Consultant since November 1993;
Presidential Appointee to Commission on
Base Closure & Realignment, January-
November 1993; previously Representative,
United States Congress from January 1979 to
January 1993; Director of Baltimore Gas &
Electric Company (public utility), McDon-
nell Douglas Corporation (aerospace), Farm-
ers & Mechanics National Bank--Frederick
(banking) and Blue Cross Blue Shield of
Maryland, Inc. (health insurance).
John K. Castle.......... 55 1986 Chief Executive Officer and Director of
Branford Castle, Inc. (investments) since
September 1986; Chairman, Chief Executive
Officer and Director of Castle Harlan, Inc.
(merchant bankers) since June 1987; previ-
ously President and Chief Executive Officer
of Donaldson, Lufkin & Jenrette, Inc. (in-
vestment bankers); Director of Sealed Air
Corporation (manufacturer of protective
packaging materials), Morton's Restaurant
Group, Inc. (restaurant holding company)
and Homestead National Corporation (insur-
ance holding company).
Freeman A. Hrabowski,
III.................... 45 1996 President, University of Maryland Baltimore
County ("UMBC") 1993; Interim President,
UMBC 1992-1993; Executive Vice President,
UMBC 1990-1993; and Professor of Education,
UMBC 1993; Director of Baltimore Gas &
Electric Company (public utility), Joint
Center for Political & Economic Studies
(policy), Loyola College of Maryland (edu-
cation), Maryland Academy of Sciences
(Maryland Science Center), The Robert G. &
Anne M. Merrick Foundation, Inc./The Jacob
& Anita France Foundation, Inc. (private
grant-making), Citizens Bank of
Maryland/Citizens Bankcorp of Maryland
(banking), Greater Baltimore Committee
(business development), Baltimore Equitable
Society (insurance), CollegeBound (educa-
tion), University of Maryland Medical Sys-
tem (health), and Baltimore Community Foun-
dation (community grant-making).
George V. McGowan....... 68 1989 Retired; Chairman of the Executive Commit-
tee, Baltimore Gas & Electric Company (pub-
lic utility); previously Chairman and Chief
Executive Officer, Baltimore Gas & Electric
Company from 1988 until his retirement in
1992; Director of Baltimore Gas & Electric
Company (public utility), NationsBank,
(banking) and McCormick and Company, Inc.
(specialty foods).
Jack Moseley............ 64 1987 Retired; previously Chairman, President and
Chief Executive Officer, USF&G Corporation
(insurance and financial services) for more
than five years prior to his retirement.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Served as Business Experience
Director During Past Five Years
Name Age Since and Other Directorships
---- --- --------- -----------------------
<S> <C> <C> <C>
Lawrence A. Skantze..... 67 1989 Independent industrial consultant since Au-
gust 1987; General, U.S. Air Force (Re-
tired) and former Commander, U.S. Air Force
Systems Command, July 1984 to August 1987.
</TABLE>
The Company intends to issue Preferred Stock in connection with its
acquisition of Garrett Aviation Services, which is expected to take place in
late May. Pursuant to the terms of the Agreement between the Company and the
purchasers of the Series B Preferred Stock, the Company is obligated to cause
one person nominated by the purchasers holding a majority of the Series B
Preferred Stock to be nominated for election to the Board of Directors of the
Company. The Company anticipates that the purchasers' designee will be John W.
Gildea. Upon the issuance of the Series B Preferred Stock, the Company will
increase the size of the Board to nine members and will elect the purchasers'
nominee to the Board of Directors.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table summarizes certain information regarding the Company's
compensation of certain executive officers for the last three fiscal years.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
--------------------------- ------------------------
Other Restricted All
Annual Stock Stock Other
Compensation Awards Option Comp-
Year Salary Bonus ($) ($) (1) ($) (2) Awards (#) ensation ($)
---- -------- --------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dan A. Colussy.......... 1995 $610,000 $171,000(3) $ 44,887(4) $ 436,526 -0- $ 24,923(5)
Chairman, President and
Chief 1994 592,019 150,000(6) 42,278 702,000 -0- 24,923(5)
Executive Officer 1993 566,294 -- 31,422 303,000 -0- 29,634(7)
John H. Moellering (8).. 1995 265,000 138,496(9) 29,798(4) 45,450 30,000 9,000(10)
Executive Vice
President, 1994 260,344 -- 88,852(11) 48,750 60,000 9,000(10)
Aviation Services
Division 1993 64,808 22,683 -- -- 20,000 --
Robert L. Pevenstein.... 1995 216,000 82,500(3) 28,741(4) 64,687 -0- 9,000(10)
Senior Vice President
and Chief 1994 211,587 57,764(6) 20,365 48,750 -0- 9,000(10)
Financial Officer 1993 206,301 -- 10,479 30,300 -0- 12,378(10)
Richard H. Lange........ 1995 200,000 82,000(3) 29,017(4) 45,450 -0- 9,000(10)
Senior Vice President, 1994 195,750 47,104(6) 22,411 48,750 -0- 9,000(10)
General Counsel and
Secretary 1993 188,414 -- 2,493 30,300 -0- 11,305(10)
Ronald W. Freder- 1995 179,502 56,543 19,778(4) -- 40,000
ick (12)............... 9,000(10)
Vice President,
Manufacturing 1994 156,538 49,309 5,000 -- -0- 9,000(10)
1993 49,042 88,000 -- -- 10,000 --
Gerald M. 1995 329,621 -- 428,518(14) -- -0-
Czarnecki (13)......... 997,408(15)
President & Chief 1994 93,750(16) -- 13,214 -- 300,000 --
Operating Officer 1993 -- -- -- -- -- --
</TABLE>
- --------
(1) The Company also provides certain perquisites and other personal
benefits. Except as noted, the aggregate dollar cost to the Company of
the perquisites and other personal benefits in each of the represented
years did not exceed the lesser of $50,000 or 10% of the amount reflected
in the Salary and Bonus columns for any of the named executive officers.
(2) As of December 31, 1995, Messrs. Colussy, Moellering, Pevenstein and
Lange held 274,034, 12,500, 22,500 and 22,500 shares of restricted stock
having a value of $1,644,204, $75,000, $135,000 and $135,000,
respectively, based upon a $6.00 per share closing price of the Company's
Common Stock as reported on the New York Stock Exchange as of December
29, 1995, the last trading day of the fiscal year. Dividends are paid on
all restricted shares to the same extent as any other shares of the
Company's Common Stock. In
8
<PAGE>
connection with the awards of restricted stock in 1995 and 1994, each of
the named executive officers canceled an equal number of stock options
without compensation.
(3) In December 1995, the Compensation Committee authorized payment of
special awards to certain executive officers and key employees of the
Company in recognition of their exceptional performance during 1995
related to the sale of the Company's Naval Products property in
Connecticut for the total amount of $28.4 million (which was $3.4 million
over the originally negotiated amount). These awards, which included
$150,000 payable to Mr. Colussy and $75,000 to each of Messrs. Pevenstein
and Lange, were not part of the Incentive Compensation Plan of the
Company.
(4) Includes contributions paid directly to the employee that would have been
included in the Company's contributions in 1994 and 1995 to the Company's
401(k) Retirement Income Savings Plan, but for limitations imposed
pursuant to the 1993 Tax Act.
(5) Includes Company contributions under the Company's 401(k) Retirement
Income Savings Plan of $9,000 and an insurance premium of $15,923 paid by
the Company in respect of life insurance coverage for the benefit of Mr.
Colussy.
(6) In July 1994, the Compensation Committee authorized payment of special
awards to certain executive officers and key employees of the Company in
recognition of their exceptional performance during 1993 on specific
projects that were of major benefit to the Company. These awards were not
part of the Incentive Compensation Plan of the Company, under which no
bonuses were earned in respect of 1993.
(7) Includes Company contributions under the Company's 401(k) Retirement
Income Savings Plan of $13,711 and an insurance premium of $15,923 paid
by the Company in respect of life insurance coverage for the benefit of
Mr. Colussy.
(8) Mr. Moellering joined the Company in 1993.
(9) Includes bonus paid in April 1995 in the amount of $85,000, which related
to his performance in 1994, but was paid subsequent to the filing of the
Proxy Statement in 1995.
(10) Company contribution under the Company's 401(k) Retirement Income Savings
Plan.
(11) Includes reimbursement of relocation costs of $38,767.
(12) Mr. Frederick joined the Company in 1993.
(13) Mr. Czarnecki joined the Company in 1994 and his employment with the
Company terminated effective October 27, 1995.
(14) Includes reimbursement for relocation cost of $408,993, which includes a
component of federal and state income tax gross-up.
(15) Includes Company contribution under the Company's 401(k) Retirement
Income Savings Plan of $9,000 and the following sums paid or payable in
connection with the termination of Mr. Czarnecki's employment: $743,408
paid in November 1995, $225,000 paid in January 1996 and $5,000 paid or
payable in January and July of 1996 and 1997.
(16) Does not include $45,000 paid to Mr. Czarnecki in 1994 as consulting fees
prior to his employment by the Company.
9
<PAGE>
STOCK OPTION GRANTS IN THE LAST FISCAL YEAR
The following table sets forth certain information with respect to grants
made by the Company of stock options to the named executive officers of the
Company pursuant to the Company's stock option plans during the last fiscal
year.
<TABLE>
<CAPTION>
POTENTIAL REALIZED VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM SHOWN BELOW
--------------------------- -------------------------------------
NUMBER OF
SECURITIES
UNDERLYING % OF TOTAL EXERCISE
OPTIONS OPTIONS GRANTED OR BASE
GRANTED TO EMPLOYEES IN PRICE EXPIRATION
NAME (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
---- ---------- --------------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Dan A. Colussy.......... -0- -- -- -- -- --
John H. Moellering...... 30,000(1) 20% $5.31 10/27/2005 $100,200 $253,800
Robert L. Pevenstein.... -0- -- -- -- -- --
Richard H. Lange........ -0- -- -- -- -- --
Ronald W. Frederick..... 40,000(1) 27% $5.31 10/27/2005 $133,600 $338,400
Gerald M. Czarnecki..... -0- -- -- -- -- --
</TABLE>
- --------
(1) Of each stock option grant, 20% becomes exercisable in five annual
installments on the first day of each year following the date of grant.
AGGREGATED STOCK OPTION EXERCISES IN LAST FISCAL YEAR, AND FISCAL YEAR-END
OPTION VALUE
The following table sets forth, on an aggregate basis, certain information
concerning each exercise of stock options during the last fiscal year by each
of the named executive officers, and the fiscal year-end value of unexercised
stock options.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
FY-END (#) FY-END ($)
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) VALUE REALIZED ($) UNEXERCISABLE UNEXERCISABLE
---- --------------- ------------------ ------------------- --------------------
<S> <C> <C> <C> <C>
Dan A. Colussy.......... * * 522,000/0 933,588/0
John H. Moellering...... * * 22,000/80,500 600/22,650
Robert L. Pevenstein.... * * 140,125/9,875 212,515/15,405
Richard H. Lange........ * * 66,500/0 103,096/0
Ronald L. Frederick..... * * 4,000/50,000 0/27,600
Gerald M. Czarnecki..... * * 60,000/0 0/0
</TABLE>
- --------
* None of the named executive officers exercised stock options during 1995.
10
<PAGE>
DEFINED BENEFIT PLANS--PENSION PLAN TABLE
The Company has a non-tax-qualified Supplemental Executive Retirement Plan
for Key Employees (the "Supplemental Retirement Plan"), adopted as of December
22, 1983 for the purpose of attracting experienced executives to the Company,
who typically must give up retirement benefits in leaving their employment to
join the Company. The following table sets forth examples of the annual
benefits payable under the Company's Supplemental Retirement Plan upon
retirement for certain specified levels of final average base compensation and
years of service:
<TABLE>
<CAPTION>
FINAL AVERAGE
BASE COMPENSATION YEARS OF SERVICE
----------------- -----------------------------------
4 6 8 10
-------- -------- -------- --------
<S> <C> <C> <C> <C>
$200,000................................ $ 48,000 $ 72,000 $ 96,000 $120,000
300,000................................ 72,000 108,000 144,000 180,000
400,000................................ 96,000 144,000 192,000 240,000
600,000................................ 144,000 216,000 288,000 360,000
800,000................................ 192,000 288,000 384,000 480,000
</TABLE>
Benefits under the Supplemental Retirement Plan are payable in monthly
installments, equal to 60% of the person's final average base compensation
multiplied by a ratio equal to one-tenth of the participant's years of
service, provided, however, that no participant shall receive more than 10
years of service and such ratio shall equal zero until a participant completes
two years of service. Final average base compensation is defined as the
average of the employee's annual base salary (as set forth in the salary
column of the Summary Compensation Table above) for the three calendar years
that produce the highest annual rate of base salary out of the ten calendar
years prior to termination of employment or retirement. Benefit payments are
not subject to any offset for Social Security benefits. Benefits become
payable upon a participant's attaining age 65, or upon a participant's death,
in which event benefits are paid to the surviving spouse, if any. However, at
a participant's election, a reduced level of benefits may become payable upon
a termination of employment for a reason other than cause after attaining age
55. Upon a change in control of the Company, as defined, the Company must
purchase and distribute to each participant an annuity sufficient to provide
the participant's accrued and vested benefit as of the date of such change.
The Supplemental Retirement Plan is financed through life insurance, with the
intent of realizing recovery by the Company of plan payments and related
costs. Messrs. Colussy, Pevenstein, Lange and Moellering are each participants
under the Supplemental Retirement Plan. As of March 1, 1996, Mr. Colussy was
fully vested under the plan and Messrs. Pevenstein, Lange and Moellering were
credited with 8.4, 8.6 and .75 years of service, respectively.
EMPLOYMENT CONTRACTS AND OTHER TRANSACTIONS
Dan A. Colussy, Chairman, President and Chief Executive Officer of the
Company, is serving under an employment agreement the term of which was
automatically extended for two successive one-year terms. In the event of his
disability, Mr. Colussy will be entitled to an annual disability benefit of
$150,000 until age 65. The Company is required to provide Mr. Colussy life
insurance coverage of $1,000,000 at the Company's expense.
Mr. Colussy's employment agreement provides for varying severance benefits,
including base salary, additional service credit, coverage under employee
benefit plans for a minimum of three years, vesting of stock options and
restricted stock awards, and some relocation expenses, upon certain events of
termination of employment, such as termination after a change in control or
election by the Company not to renew Mr. Colussy's employment agreement at a
renewal date prior to Mr. Colussy's 65th birthday.
The Company has also entered into agreements with certain key employees,
including Messrs. Pevenstein, Lange and Moellering providing benefits for a
period of three years following a change in control of the Company as defined
in the agreements, including continued employment for a specified period and
vesting of stock options and restricted stock awards. In addition, these
agreements provide the employee an election to
11
<PAGE>
terminate his employment up to one year after a change in control, which will
result in a continuation of salary and benefits for two years following the
date of such termination.
In connection with the termination of Mr. Czarnecki's employment in October
1995, the Company and Mr. Czarnecki entered into a severance agreement
pursuant to which the Company made a lump sum payment of $743,408 (equal to
base salary through September 1997) in November 1995 and a payment of $225,000
(representing a bonus amount) in February 1996 to Mr. Czarnecki.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Knapp, an executive officer of the Company, is indebted to the Company
in the amount of $124,000, as of May 1, 1996, pursuant to a loan which bears
interest at the annual rate of 10%. The proceeds of the loan were used to
facilitate the purchase of a home in connection with his relocation to the
Annapolis area.
COMPLIANCE WITH SECTION 16(A)
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10% of a registered
class of the Company's equity securities, to file reports of ownership and
changes in ownership. Except as otherwise noted, based solely on its review of
copies of the forms received by it, or written representations from certain
reporting persons that they were not required to file Form 5s, the Company
believes that during 1995, all filing requirements were complied with on a
timely basis, except that Mr. Bernhard, a director of the Company, filed a
Form 5 in 1996 to report two purchases of stock in 1994 and the sale of stock
in 1995 and Mr. Skantze, a director of the Company, also filed a Form 5 in
1996 to report the purchase of stock in 1994.
STATEMENT OF MANAGEMENT DEVELOPMENT AND
COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Company has required that a substantial portion of the compensation of
its executives and other key employees shall be at risk, based on the
financial performance of the Company against specific goals established by the
Board of Directors.
Under the Company's Incentive Compensation Plan, the Management Development
and Compensation Committee ("Compensation Committee") establishes early each
year the business attainment goals to be achieved by the Company and each of
its operating divisions during the year. Incentive compensation awards for
attaining each of these goals can amount to 50% or more of the base salary (or
33% or more of total compensation) of the Company's executives, and 30% or
more (or 25% or more of total compensation) for participating key employees of
its operating divisions.
The performance of both the Company (or, as applicable, each operating
division) and the individual executive or key employee are further considered
in connection with discretionary awards under the Plan, which can amount to
20% or more of the award for business goal attainment. As a result, 37.5% or
more of the total compensation of the Company's executives is at risk related
to the financial performance of the Company and, more generally, to their
individual performance.
In keeping with this performance concept, however, the Committee has the
authority to recognize exceptional performance on an individual basis even
when the Plan's numerical criteria are not met. Accordingly, the Committee
authorized separate payments to a small number of executives who made a
particularly meaningful contribution to the Company in 1995.
12
<PAGE>
Company performance, as related to the market price of its stock, is also
the only element in the Company's long term incentive compensation policy for
executives and key employees since the Company has no incentive plan providing
long term cash compensation. Under the Company's stock plans, approved by its
stockholders and administered by the Compensation Committee, executives and
participating key employees receive incentives in the form of stock options,
valued at the market price of the Company's stock at time of grant, and, on a
more limited basis, in the form of restricted stock. These incentives are
potentially substantial, based entirely on increases in the price of the
Company's stock over a period of years in the future. Such options and
restricted stock vest over a period of five years and, in the case of options,
can be exercised, as vested, over a ten year period, providing longer term
performance based incentives.
The Company's stock option program has a feature which the Compensation
Committee believes to be a feature of a relatively small number of option
plans: the requirement that a participant purchase with his or her own funds,
on the open market, a number of shares equal to 25% of his or her award, and
hold that stock in order to be eligible to exercise any portion of the option.
Thus, each executive and key employee of the Company who is a participant in
the option program personally has a substantial economic stake in the
performance of the Company as reflected in the price of its stock, thus
further aligning the interests of executives and key employees with those of
the Company's stockholders.
This performance orientation is also considered by the Compensation
Committee in establishing base salary compensation for the executives of the
Company and the heads of its operating divisions. The degree to which the
performance of the Company as a whole may be a consideration in determining
salary level necessarily increases with the level of responsibility of the
executive or key employee.
THE COMPANY'S CHIEF EXECUTIVE OFFICER
The compensation of the Company's Chief Executive Officer is established by
the Compensation Committee, and in accordance with Company policy, must be
ratified by the entire Board of Directors. The Chief Executive Officer is
responsible to the Board for both the current performance and the future
strategic directions and prospects of the Company as a whole. It is on this
basis, and in the light of his performance of that responsibility, that his
base salary, the discretionary portion of his incentive awards, if any, and
his stock option and restricted stock awards are established.
The current performance of the Company extends in many directions beyond its
day to day operations; it includes the relationship between the Company and
its several key constituencies, including investors, media, financial sources
and federal and state governments and regulatory agencies, as well as the
Company's relationships with its customers and within each of the industries
in which it is engaged. The current performance of the Company also entails an
ongoing deep involvement in developments affecting each of those industries.
The current performance of the Company also includes its day to day
operations, including substantial investment and policy decisions, the
monitoring of the results of operations, the development of opportunities, the
remedy of problems and the resolution of issues.
Of particular importance to the Compensation Committee in determining the
total compensation of the Chief Executive Officer for 1995 were his direction
and leadership of the Company in what proved to be a successful transition
year. The Company built on the benefits of the 1994 restructuring and emerged
as a stronger and more efficient company positioned to take advantage of the
aviation industry recovery. Specifically in 1995, it became apparent that the
strategic leadership provided the Company by the Chief Executive Officer in
continuing to grow the Company during one of the longest downcycles in
aviation industry history by acquisitions and internal growth has positioned
the Company to take full advantage of the industry upcycle. In addition in
1995, the Chief Executive Officer directed the sale of the Company's Naval
Products property in Connecticut and the establishment of a new revolving
credit facility for the Company. Both events had a significant positive impact
on the Company's financial position, allowing it to continue to pursue its
growth strategy. The Chief Executive Officer has also taken actions during
1995 which promote the simplification of the Company's operating and staff
organizations, the solidification of its borrowing arrangements and the
selective improvement of executive staff.
13
<PAGE>
The Chief Executive Officer's base compensation was not increased in 1995
for the following year due to the Company's below plan financial results for
1994, which took into account the effects of the restructuring.
The non-discretionary portion of the Chief Executive Officer's incentive
award for 1995 was based on specific business attainment goals to be achieved
by the Company. These were the Company's earnings per share and return on
invested capital.
COMPANY EXECUTIVE OFFICERS
The Compensation Committee has followed generally similar criteria in
establishing the compensation of the executive officers of the Company
reporting to the Chief Executive Officer, including those named above in this
proxy statement. In a real sense, the performance of each of these officers
directly affects the performance of the Company, even though their
responsibilities and areas of action are relatively defined and, in most
cases, somewhat specialized.
With regard to the executive officers of the Company as a group for purposes
of this statement, the Compensation Committee establishes their base salary
within salary ranges derived from publicly available survey data that is
principally industry and occupationally specific. The individual executive's
performance of his responsibilities is used to establish his salary level
within that range. The Compensation Committee relies on appropriate corporate
staff input, primarily as to salary ranges, and the recommendations of the
Company's Chief Executive Officer regarding individual performance and salary
level for each of the executive officers of the Company. As was the case for
the Chief Executive Officer, the base salary for the majority of the executive
officers was not increased in 1995 for the following year due to the Company's
below plan operating results in 1994.
As with the Chief Executive Officer of the Company, the incentive
compensation of each of the executive officers for 1995 was contingent on
business goal attainment and represented a substantial at risk proportion of
his total compensation that was dependent on the financial performance of the
Company against specific goals that were established by the Compensation
Committee for the year. As with the Chief Executive Officer, the Company
performance measures for non-discretionary incentive awards in respect of 1995
were based on earnings per share and return on invested capital. In addition,
also representing at risk compensation, the discretionary award to each
executive officer was dependent on Company performance within his area of
responsibility and his individual performance both generally and with regard
to the attainment of specific goals established with each executive.
Also at risk, and dependent on the performance of the Company as reflected
in the market price of its stock, is the long term stock based compensation
potentially available to executives. The Compensation Committee determines the
stock option and restricted stock awarded to those executives based
principally on the individual performance of their responsibilities and the
importance of that performance with respect to the future prospects of the
Company.
Regulations of the Internal Revenue Service are now final regarding
performance based compensation for purposes of the Company's deduction of
compensation for the Chief Executive Officer of the Company, or other
executive officers, in excess of $1 million in any one fiscal year. Such limit
has not yet been approached with respect to the Chief Executive Officer or
other executive officers of the Company. For these reasons, the Compensation
Committee has not yet developed a policy with regard to preserving such
deductibility. The Compensation Committee intends to implement such a policy
in 1996 after review of the final regulations issued by the Internal Revenue
Service.
Management Development and
Compensation Committee
John K. Castle, Chairman
George V. McGowan
Jack Moseley
14
<PAGE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG
UNC INCORPORATED, NYSE MARKET VALUE INDEX AND PEER GROUP INDEX
<TABLE>
<CAPTION>
UNC PEER GROUP NYSE MARKET
YEAR INCORPORATED INDEX INDEX
---- ------------ ---------- -----------
<S> <C> <C> <C>
1990 100 100 100
1991 178 96 129
1992 163 79 136
1993 278 88 154
1994 178 86 151
1995 178 110 196
</TABLE>
The foregoing chart shows the value of $100 invested on January 1, 1991 in
Company Common Stock, in the New York Stock Exchange ("NYSE") Market Value
Index and in a peer group comprised of companies that participate in the same
industries in which the Company now participates. The chart is compiled on a
"total return" basis, including not only year to year appreciation, or
depreciation, in the price of the stocks represented on the chart, but also
assuming the reinvestment of dividends paid during each year. The Company does
not pay any dividends.
The companies comprising the NYSE index represent a diverse cross section of
industries in the United States. The index is generally used to portray the
price levels of stocks listed on the NYSE, and does not purport to afford a
direct comparison of such companies with the Company. Companies in the peer
group are AAR Corp., Barnes Group, Inc., Ducommun Incorporated and Sequa, Inc.
The Company has been engaged in a restructuring during much of this period,
which has included the sale or discontinuation of its environmental businesses
and continuing the shut down of its Naval Products nuclear propulsion
facilities. The year 1991 was the first full year of the Company's operation
as solely an aviation related business.
Also, it should be noted that the chart shows information relating only to
stock prices. It does not purport to show information directly relating to the
business or economic performance of any of the companies, including the
Company, as to which stock price information is shown.
15
<PAGE>
RATIFICATION OF INDEPENDENT AUDITORS
KPMG Peat Marwick were previously the principal certifying accountants for
the Company. Following discussions between KPMG Peat Marwick and
representatives of the Company, the parties determined that KPMG Marwick would
cease to serve as the Company's auditors effective February 22, 1994. The
Company's Audit Committee was advised of these discussions and approved of
this action.
In connection with the audits of the Company's consolidated financial
statements for each of the fiscal years ended December 31, 1993 and 1992, and
in the subsequent interim period through February 22, 1994, there were no
disagreements between the Company and KPMG Peat Marwick on any matter of
accounting principles or practices, financial statement disclosures or
auditing scope or procedures, which disagreements, if not resolved to KPMG
Peat Marwick's satisfaction, would have caused them to make reference in
connection with their opinion to the subject matter of the disagreement.
The audit report of KPMG Peat Marwick on the consolidated financial
statements of the Company and its subsidiaries as of and for the years ended
December 31, 1993 and 1992, did not contain any adverse opinion or disclaimer
of opinion, nor was it qualified or modified as to uncertainty, audit scope,
or accounting principles, except that, as required with respect to changes in
accounting principles, the 1993 audit report made reference to the Company's
adoption in 1993 of the provisions of the Financial Accounting Standards
Board's Statement on Financial Accounting Standards No. 109, Accounting for
Income Taxes.
Members of the management of the Company interviewed four of the "Big 6"
public accounting firms and requested that two of these firms present
proposals to the Audit Committee. On March 17, 1994, the two firms presented
their proposals to the Audit Committee, which, after due consideration,
recommended to the Company's Board of Directors that the firm of Coopers &
Lybrand be appointed as the Company's independent accountants for the year
ending December 31, 1994. The Board of Directors approved of the appointment
of the firm of Coopers & Lybrand on March 21, 1994, which approval was
ratified by the Company's shareholders at the annual meeting of shareholders
held on April 29, 1994.
The following resolution concerning appointment of independent auditors will
be offered at the 1996 Annual Meeting of Stockholders:
"RESOLVED, that the appointment by the Board of Directors of the
Company of Coopers & Lybrand to audit the accounts of the
Company and its subsidiaries for the year ended December 31,
1996, is hereby ratified."
The ratification of auditors is not required to be submitted to a vote of
the stockholders, but the Board of Directors has elected to seek ratification
of its selection by the stockholders. The enclosed proxy will be voted as
specified, but if no specification is made it will be voted in favor of
adopting the resolution of ratification. If the stockholders do not ratify
this appointment, other firms of certified public accountants will be
considered by the Board of Directors upon recommendation of the Audit
Committee.
One or more representatives of Coopers & Lybrand (a) are expected to be
present at the meeting; (b) will have an opportunity to make a statement if
they desire to do so; and (c) are expected to be available to respond to
appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THIS
PROPOSAL.
16
<PAGE>
STOCKHOLDER PROPOSALS AND DIRECTORS' NOMINATIONS
FOR 1996 ANNUAL MEETING
Under current rules of the Securities and Exchange Commission, stockholders
wishing to submit proposals for inclusion in the Company's proxy statement and
form of proxy for the 1997 Annual Meeting of Stockholders must submit such
proposals so as to be received by the Company at 175 Admiral Cochrane Drive,
Annapolis, Maryland 21401-7394, on or before February 14, 1997. In addition,
the Bylaws of the Company require notice of any stockholder proposal, whether
or not inclusion is sought in the Company's proxy statement, to be made in
writing to the Secretary of the Company and must be received at the executive
offices of the Company not less than 90 days in advance of the date of the
Company's proxy statement in connection with the previous year's Annual
Meeting of Stockholders. The Bylaws of the Company also require that
nominations of candidates for election as directors by stockholders must be
submitted in writing to the Secretary of the Company and must be received at
the executive offices of the Company not less than 90 days in advance of the
date of the Company's proxy statement in connection with the previous year's
Annual Meeting of Stockholders.
OTHER MATTERS
The cost of soliciting proxies for the Annual Meeting of Stockholders will
be borne by the Company. In addition to solicitation by mail, certain officers
and employees of the Company, without extra remuneration, may solicit proxies
personally or by telephone, telegraph or cable. The Company also will request
brokerage houses, nominees, custodians and fiduciaries to forward soliciting
materials to the beneficial owners of the Company's securities and will
reimburse those persons for forwarding the material. The Company has retained
the firm of Chemical Mellon Shareholder Services, L.L.C. to assist in
soliciting proxies from the Company's stockholders by written and oral
communications. Such firm will be paid customary compensation for these
services, anticipated to be approximately $6,000.
It is intended that as to any other matter or business which may be brought
before the meeting, a vote may be cast pursuant to the accompanying proxy in
accordance with the judgment of the person or persons voting the same. The
management does not know of any such other matter or business.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH BENEFICIAL OWNER OF ITS
SHARES, UPON SUCH STOCKHOLDER'S WRITTEN REQUEST, A COPY (WITHOUT EXHIBITS) OF
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1995,
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. REQUESTS FOR COPIES
SHOULD BE ADDRESSED TO RICHARD H. LANGE, UNC INCORPORATED, 175 ADMIRAL
COCHRANE DRIVE, ANNAPOLIS, MARYLAND 21401-7394. THE ANNUAL REPORT ON FORM 10-K
IS NOT PART OF THE PROXY SOLICITATION MATERIALS.
By Order of the Board of Directors
Richard H. Lange
Secretary
May 15, 1996
17
<PAGE>
- --------------------------------------------------------------------------------
PROXY
UNC INCORPORATED
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints DAN A. COLUSSY and
RICHARD H. LANGE, and either of them, his or her attorneys, agents and proxies
with full power of substitution, to vote all shares of the Common Stock of UNC
INCORPORATED (the "Company") which he or she is entitled to vote upon the
matters which properly may come before the 1996 Annual Meeting of Stockholders
of the Company to be held at 10:00 A.M., local time, on June 28, 1996, at the
Park Hyatt Hotel, 24th at M Street, N.W., Washington, D.C. 20037, and at any
adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF DIRECTORS, FOR ITEM 2, AND IN ACCORDANCE WITH THE
PROXIES' DISCRETION ON ANY OTHER MATTERS PROPERLY BROUGHT BEFORE THE MEETING.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
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<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION
OF DIRECTORS, FOR ITEM 2, AND IN ACCORDANCE WITH THE PROXIES'
DISCRETION ON ANY OTHER MATTERS PROPERLY BROUGHT BEFORE THE
MEETING.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION [X] Please mark
OF DIRECTORS AND FOR ITEM 2 your votes
as this
FOR AGAINST ABSTAIN
Item 1--Election of Item 2--Ratification [ ] [ ] [ ]
Directors FOR all of the appointment of
nominees named independent auditors.
(except as marked to
the contrary)
Names of Nominees: BERL BERNHARD, BEVERLY B. BYRON,
JOHN K. CASTLE, DAN A. COLUSSY, FREEMAN A.
HRABOWSKI, III, GEORGE V. McGOWAN, JACK MOSELEY,
LAWRENCE A. SKANTZE
(Instruction. To withhold your vote for any individual
nominee, write that nominee's name on the
following line):
FOR WITHHOLD
AUTHORITY
(except as to vote for
market to the [ ] [ ] all nominees
contrary) named
Signature(s)
-----------------------------------
Date , 1996
---------------------------------------
Please sign your name exactly as it appears
hereon. In the case of joint own-ers, each should
sign. If signing as executor, trustee, guardian or
in any other representative capacity or as an
officer of a corporation, please indi-cate your
full title as such.
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