<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
THE TITAN 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):
[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:
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Notes:
<PAGE>
Titan Corporation Logo
April 10, 1995
Dear Stockholder:
This letter accompanies the Proxy Statement for our Annual Meeting on
Thursday, May 18, 1995, at the offices of the Company at 3033 Science Park
Road, San Diego, California 92121, at 9:00 a.m. We hope that it will be
possible for you to attend in person.
At the meeting, the stockholders will be asked to elect seven directors and
to ratify the Board's selection of auditors. In addition, we will present a
report on the operations and activities of the Company. Following the meeting,
management will be pleased to answer your questions about the Company.
The Notice of Meeting and Proxy Statement accompanying this letter describe
the matters upon which stockholders will vote at the upcoming meeting, and we
urge you to read these materials carefully. We also urge you to sign and return
your proxy cards so we can be sure of a quorum to vote on these proposals for
stockholder action.
Sincerely,
(J.S. Webb Signature)
J. S. Webb
Chairman of the Board
(Gene W. Ray Signature)
Gene W. Ray
President and Chief
Executive Officer
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ 3033 SCIENCE PARK ROAD . SAN DIEGO, CALIFORNIA 92121 . (619) 552-9500 +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
<PAGE>
THE TITAN CORPORATION
3033 SCIENCE PARK ROAD
SAN DIEGO, CALIFORNIA 92121
(619) 552-9500
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 18, 1995
To the Stockholders of The Titan Corporation:
The Annual Meeting of Stockholders of The Titan Corporation will be held at
the offices of the Company at 3033 Science Park Road, San Diego, California
92121, on Thursday, May 18, 1995, at 9:00 a.m., for the following purposes:
1. To elect a Board of seven directors;
2. To consider and act upon a proposal to ratify the selection of Arthur
Andersen LLP as the Company's auditors for the fiscal year ending December
31, 1995; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Stockholders of record at the close of business on March 23, 1995, will be
entitled to vote at the meeting.
By order of the Board of Directors,
(D. Marshall Nelson signature)
D. Marshall Nelson
Secretary
San Diego, California
April 10, 1995
TO ASSURE THAT YOUR SHARES WILL BE VOTED AT THE MEETING, YOU ARE REQUESTED TO
SIGN THE ATTACHED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE PAID,
ADDRESSED ENVELOPE. NO ADDITIONAL POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES. IF YOU ATTEND THE MEETING YOU MAY VOTE IN PERSON EVEN THOUGH YOU HAVE
SENT IN YOUR PROXY.
<PAGE>
THE TITAN CORPORATION
3033 SCIENCE PARK ROAD
SAN DIEGO, CALIFORNIA 92121
April 10, 1995
----------------
PROXY STATEMENT
SOLICITATION OF PROXIES
The accompanying proxy is solicited by the Board of Directors of The Titan
Corporation ("Titan" or the "Company") for use at the Annual Meeting of
Stockholders to be held at the offices of the Company at 3033 Science Park
Road, San Diego, California 92121, on May 18, 1995 at 9:00 a.m. and at any
adjournments thereof. The shares represented by the proxy will be voted at the
meeting if the proxy is properly executed and returned. Any stockholder giving
a proxy has the right to revoke it by giving written notice to the Secretary of
the Company at any time prior to the voting or by executing and delivering a
later dated proxy. A stockholder of record at the close of business on March
23, 1995, if present at the meeting, may vote in person whether or not he has
previously given a proxy. This Proxy Statement and its enclosures are being
mailed to the Company's stockholders on or about April 12, 1995.
The cost of the solicitation will be paid by the Company. In addition to
solicitation of proxies by use of the mails, directors, officers or employees
of the Company may solicit proxies personally, or by other appropriate means.
The Company will request banks, brokerage houses and other custodians, nominees
or fiduciaries holding stock in their names for others to send proxy materials
to and to obtain proxies from their principals, and the Company will reimburse
them for their reasonable expenses in doing so. The Company has retained the
services of William F. Doring & Co. to assist in the solicitation of proxies at
an estimated cost of $5,000 plus certain out-of-pocket expenses.
VOTING
The securities of the Company entitled to vote at the meeting consist, as of
March 23, 1995, of 694,872 shares of $1.00 Cumulative Convertible Preferred
Stock (the "Preferred Stock") and 13,174,351 shares of common stock, par value
$.01 per share (the "Common Stock"). Only stockholders of record on the books
of the Company at the close of business on that date will be entitled to vote
at the meeting. Each Preferred Stock stockholder is entitled to one-third (
1/3) vote for each of said shares. Holders of Preferred and Common Stock will
vote as a single class, and not separately.
Under the Company's bylaws and Delaware law, shares represented by proxies
that reflect abstentions or "broker non-votes" (i.e., shares held by a broker
or nominee which are represented at the meeting, but with respect to which such
broker or nominee is not empowered to vote on a particular proposal) will be
counted as shares that are present and entitled to vote for purposes of
determining the presence of a quorum. Directors will be elected by a favorable
vote of a plurality of the shares of voting stock present and entitled to vote,
in person or by proxy, at the Annual Meeting. Accordingly, abstentions or
broker non-votes as to the election of directors will not affect the election
of the candidates receiving the plurality of votes. All other proposals to come
before the Annual Meeting require the approval of a majority of the shares of
stock having voting power present. Abstentions as to a particular proposal will
have the same effect as votes against such proposal. Broker non-votes, however,
will be treated as unvoted for purposes of determining approval of such
proposal and will not be counted as votes for or against such proposal.
At the Company's Annual Meeting in 1994, approximately 90% of the outstanding
voting power was represented and participated in the election of directors.
<PAGE>
OWNERSHIP OF TITAN'S SECURITIES
The following table sets forth certain information as to the number of
shares beneficially owned as of March 23, 1995 (a) by each person who is known
to the Company to own beneficially 5% or more of the outstanding shares of any
class of its voting stock, (b) by each present Titan director, each nominee to
become a director and each of the Named Executive Officers (as defined on page
9), and (c) by all Titan officers and directors as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
IDENTITY OF OWNER BENEFICIAL OF
OR GROUP(1) TITLE OF CLASS OWNERSHIP CLASS
----------------- -------------- ---------- -------
<S> <C> <C> <C>
C. R. Allen........................ Common Stock 4,750(2) *
J. F. Caligiuri.................... Common Stock 14,750(2) *
D. J. Fink......................... Common Stock 11,100(2) *
D. M. Holland...................... Common Stock 7,050(2) *
A. E. Knauf, Jr.................... Common Stock 293,757(2)(5) 2.23%
J. E. Koehler...................... Common Stock -- *
T. G. Pownall...................... Common Stock 8,750 *
G. W. Ray.......................... Common Stock 324,667(2) 2.46%
J. S. Webb......................... Common Stock 79,589(2) *
F. L. Judge........................ Common Stock 12,667(2) *
R. B. Gorda........................ Common Stock 14,478(2) *
S. P. Meyer........................ Common Stock 68,246(2) *
BKP Capital Management............. Common Stock 940,500(3) 7.14%
Dimensional Fund Advisors Inc...... Common Stock 676,000(4) 5.13%
All Directors and Officers as a
Group (16 Persons)................ Common Stock 927,196(2)(5) 7.04%
</TABLE>
- --------
* Less than 1%.
(1) The address of each owner, other than BKP Capital Management, Inc. and
Dimensional Fund Advisors Inc., is c/o The Titan Corporation, 3033 Science
Park Road, San Diego, California 92121. The address of BKP Capital
Management, Inc. is One Sansome Street, Suite 3900, San Francisco,
California 94104. The address of Dimensional Fund Advisors Inc. is 1299
Ocean Avenue, Suite 650, Santa Monica, California 90401.
(2) Including (A) 3,750; 3,750; 3,750; 3,750; 71,250; 72,500; 30,000; 12,500;
11,250; 50,000; and 294,000 shares subject to outstanding options held by
Messrs. Allen, Caligiuri, Fink, Holland, Knauf, Ray, Webb, Judge, Gorda,
Meyer, and all directors and officers as a group, respectively, which are
currently exercisable or may become exercisable within 60 days after March
23, 1995 and (B) 90,654; 73,473; 28,186; 167; 3,228; 13,246; and 242,966
shares held by the trustees of the Company's 401(k) Retirement Plan and
Employee Stock Ownership Plan for the accounts of Messrs. Knauf, Ray,
Webb, Judge, Gorda, Meyer and all directors and officers as a group,
respectively.
(3) All shares are beneficially owned by BKP Capital Management ("BKP") and
Bob K. Pryt, its President and sole shareholder. BKP and Mr. Pryt have
shared voting and dispositive power with respect to all 940,500 shares.
901,500 of such shares are held directly by BKP Partners, L.P., a
partnership of which BKP and Mr. Pryt are the general partners. The
remaining shares are held directly by BKP. All information concerning BKP,
Mr. Pryt and BKP Partners, L.P. is based upon information provided to the
Company by BKP.
(4) All shares are held in investment vehicles for qualified employee benefit
plans for which Dimensional Fund Advisors Inc. ("Dimensional") serves as
investment manager. Officers of Dimensional also serve as officers of DFA
Investment Dimensions Group Inc. (the "Fund") and The Investment Trust
Company (the "Trust"). In their capacity as officers of the Fund and the
Trust, they vote 410,400 of the 676,000 shares of Common Stock shown as
beneficially owned by Dimensional. All information concerning Dimensional
is based upon information provided to the Company by Dimensional.
(5) Does not include 4,324 shares owned by Mr. Knauf's children, as to which
shares Mr. Knauf disclaims beneficial ownership.
Except as otherwise indicated in the above notes, shares shown as
beneficially owned are those as to which the named person possesses sole
voting and investment power. However, under California law, personal property
owned by a married person may be community property which either spouse may
manage and control, and Titan has no information as to whether any shares
shown in this table are subject to California community property law.
2
<PAGE>
ELECTION OF DIRECTORS
Seven directors are to be elected at the meeting, each to serve for a term of
one year and until his successor shall be elected. The proxies solicited hereby
are intended to be voted for the nominees whose names are listed below. Except
for Mr. Koehler, all of the nominees are presently directors and all were
elected by the stockholders. The Company has no reason to believe that the
nominees will not be available for election to serve their prescribed terms.
However, the persons named in the proxy will have discretionary authority to
vote for others if any nominee is unable or unwilling to serve.
INFORMATION CONCERNING NOMINEES
<TABLE>
<CAPTION>
YEAR
FIRST
BECAME
NAME AGE PRINCIPAL OCCUPATION DIRECTOR OTHER CORPORATE DIRECTORSHIPS
---- --- -------------------- -------- -----------------------------
<S> <C> <C> <C> <C>
J. S. Webb 75 Chairman of the Board of 1984 Amdahl Corporation; EIP
Directors of Titan Microwave; Plantronics, Inc.
Charles R. Allen 69 Advisor, New Court Partners, 1989 --
a venture capital unit of
Rothschild, Inc.
Joseph F. Caligiuri 67 Retired Executive Vice 1984 Alton Group, Inc.; Avnet,
President of Litton Inc.; Scriptel Holding, Inc.
Industries, Inc.,
diversified manufacturing
Daniel J. Fink 68 President of D. J. Fink 1985 M/A-COM, Inc.; Orbital
Associates, Inc., management Sciences Corporation
consulting
John E. Koehler 53 Executive Vice President 1995 --
and Chief Operating Officer
of Titan (effective April
1995)
Thomas G. Pownall 73 Retired Chairman and Chief 1992 Sunstrand Corporation
Executive Officer of Martin
Marietta Corporation
Dr. Gene W. Ray 56 President and Chief 1985 Wave Systems Corp.
Executive Officer of Titan
</TABLE>
Mr. Webb served as Vice Chairman of the Board of TRW, Inc., a diversified
manufacturing company, from June 1978 until December 1981 and President of TRW-
Fujitsu Company, a joint venture formed to market Fujitsu's computer projects
in the United States, from May 1980 until his retirement in December 1981.
Mr. Allen was employed by TRW, Inc., a diversified manufacturing company,
from 1955 to 1986, where he held a number of executive management positions,
including director from 1972 to 1986 and Executive Vice President and Chief
Financial Officer from 1977 to 1986.
Mr. Caligiuri was employed by Litton Industries, Inc., a diversified
manufacturing and services company, from 1969 to 1993, where he held a number
of executive management positions, including Executive Vice President from
September 1981 to April 1993.
Mr. Fink was employed by General Electric Co. from 1967 to 1982, where he
held a number of executive management positions, including Senior Vice
President of Corporate Planning and Development, after which he founded and has
been the President of D. J. Fink Associates, Inc., a management consulting
firm.
3
<PAGE>
Dr. Koehler was employed by Hughes Aircraft Company, a diversified
manufacturing and services company, from 1987 to 1995, where he held a number
of executive management positions, including Corporate Vice President of Hughes
Aircraft Company from 1987 to 1995. Dr. Koehler will become Executive Vice
President and Chief Operating Officer of the Company in April 1995.
Mr. Pownall was employed by Martin Marietta Corporation, a diversified
manufacturing and services company, from 1963 to 1992 where he held a number of
executive management positions, including director from September 1971 to April
1992, Chief Executive Officer from April 1982 to December 1987, and Chairman of
the Board of Directors and Chief Executive Officer from January 1983 to April
1988.
Dr. Ray was a co-founder of Titan Systems, Inc., the parent of which merged
into the Company in 1985. He served as a Director, Chief Executive Officer and
President of Titan Systems from its inception in 1981 until the merger. He has
been President and Chief Executive Officer of the Company since the merger.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS AND DIRECTORS' FEES
The Company's Board of Directors has an audit committee, a nominating
committee and a compensation, stock option and pension committee. The members
of the audit committee are Mr. Allen, Chairman, and Messrs. Caligiuri, Fink and
Pownall. This committee, which monitors the Company's basic accounting
policies, reviews audit and management reports and makes recommendations
regarding the appointment of the independent auditors, held two meetings during
fiscal 1994. The members of the nominating committee are Mr. Caligiuri,
Chairman, and Messrs. Allen, Fink and Pownall. This committee, which seeks out,
evaluates and recommends to the Board of Directors qualified nominees for
election as directors of the Company, did not formally meet during fiscal 1994.
The members of the compensation, stock option and pension committee are Mr.
Pownall, Chairman, and Messrs. Allen, Caligiuri and Fink. This committee, which
deals with the hiring and election of corporate officers, salary and incentive
compensation policies for officers and executives, and the granting of stock
options and stock appreciation rights to employees, held five meetings during
fiscal 1994.
During fiscal 1994, the Board of Directors held seven meetings and took
action by unanimous written consent on one occasion. Each of the incumbent
directors attended more than 75% of the meetings of the Board and its
committees on which he served during 1994.
Directors who are not officers receive directors' fees at an annual rate of
$16,000, paid quarterly, and $1,000 per meeting day. In addition, under the
existing Directors' Stock Option Plans, options to purchase 15,000 shares of
the Common Stock of the Company are granted to each director of the Company who
is not an employee of the Company or any of its subsidiaries.
RELATIONSHIPS WITH DIRECTORS' BUSINESSES
Mr. Caligiuri and Mr. Fink provided management consulting services to the
Company during 1994 for $3,000 and $6,000, respectively.
4
<PAGE>
TITAN MANAGEMENT
The executive officers of Titan and their respective positions with Titan and
ages are set forth in the following table. Biographical information on each of
the executive officers who is not a director is set forth following the table.
There are no family relationships between any director or executive officer and
other director or executive officer of Titan. Executive officers serve at the
discretion of the Board of Directors.
EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
YEAR IN WHICH
NAME POSITION AGE HE/SHE BECAME OFFICER
---- -------- --- ---------------------
<S> <C> <C> <C>
J. S. Webb Chairman of the Board of Directors 75 1984
Gene W. Ray President and Chief Executive Officer 56 1985
John E. Koehler Executive Vice President and Chief 53 1995
Operating Officer (effective April
1995)
Louis L. Fowler Vice President 56 1989
Ronald B. Gorda Vice President 39 1994
Roger Hay Senior Vice President and Chief 45 1994
Financial Officer
Cornelius L. Hensel Senior Vice President 58 1995
Jane E. Judd Vice President and Controller 48 1987
Frederick L. Judge Senior Vice President 61 1994
Albert E. Knauf, Jr. Executive Vice President 51 1985
Stephen P. Meyer Senior Vice President 45 1988
D. Marshall Nelson Senior Vice President, General Counsel 50 1986
and Secretary
</TABLE>
The term of office of each executive officer is until his or her respective
successor is elected and has been qualified, or until his or her death,
resignation or removal. Officers are elected by the Board of Directors annually
at its first meeting following the Annual Meeting of Stockholders.
Mr. Fowler has been Vice President since September 1989. From March 1987 to
September 1989 he served as Vice President of Titan Systems, Inc. Prior
thereto, Mr. Fowler was Director of Contracts of Titan Systems, Inc. from March
1985 to March 1987.
Mr. Gorda has been Vice President since May 1994 and President of the
Linkabit division of the Company since June 1993. From August 1991 to June 1993
he served as Senior Vice President of the SATCOM Systems business unit of the
Linkabit division. Prior thereto, he was Senior Program Manager of the SATCOM
Command and Control division of Rockwell International from April 1986 to July
1991.
Mr. Hay has been Senior Vice President and Chief Financial Officer since
March 1994. From October 1989 to September 1993 he was Executive Vice
President--Finance and Chief Financial Officer of International Rectifier
Corporation.
Mr. Hensel joined the Company in January 1995 and has been Senior Vice
President since February 1995. From July 1988 to January 1995 he was Senior
Vice President and General Manager of Atlantic Research Corporation.
Ms. Judd has been Vice President and Controller since May 1991 and has served
as Controller since August 1987. From April 1986 to August 1987 Ms. Judd was
Director of Financial Analysis for the Company.
Mr. Judge has been Senior Vice President since February 1994. From January
1991 to January 1994, Mr. Judge was Senior Vice President and Chief Operating
Officer of Hughes Communications, Inc., a unit of GM Hughes Electronics Corp.
From January 1988 to January 1991, he served as Senior Vice President of Hughes
Communications, Inc.
Mr. Knauf was a co-founder of Titan Systems, Inc., the parent of which merged
into the Company in 1985. He has been Executive Vice President of the Company
since May 1989.
Mr. Meyer has been Vice President since December 1988 and Senior Vice
President since May 1990. Mr. Meyer joined the Company in 1987 and served as
Senior Vice President--Finance and Administration of Titan Systems, Inc. from
March 1987 to December 1988 and Chief Financial Officer from December 1988
until becoming President and General Manager of the Applied Technologies Group
in March 1994.
Mr. Nelson has been Vice President, General Counsel and Secretary of the
Company since June 1986 and Senior Vice President since May 1988.
5
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
The Company's Compensation, Stock Option and Pension Committee has the duty
to administer the Company's cash and equity based executive compensation
programs and to evaluate the overall performance of the executive officers.
Compensation Philosophy
The Company believes that there should be a direct relationship between
executive compensation and value delivered to the stockholders. The Company
implements this philosophy with a set of supporting principles:
. Compensation must be fair.
The Company strives to evaluate the relative contribution of its
executive officers and to compensate them fairly in relationship to their
individual contributions, to each other, and to their relative value in
comparable companies.
. Compensation must be competitive.
The Company is committed to providing base salary programs that enable it
to attract and retain the best available people. It maintains these
programs by monitoring the competitive pay practices of other companies
in similar businesses.
. Compensation must be related to Company goals.
Executive officers are rewarded based on overall Company performance and
on individual performance. Company performance is evaluated by measuring
the achievement of Company goals and business plans. Individual
performance is measured by reviewing progress against specific personal
objectives. Individual performance goals are established for each
executive officer based upon his or her ability to effect overall company
objectives. Such individual performance goals typically include business
unit profitability, asset management, cost control, contract performance
objectives and success in diversifying into commercial and international
businesses as appropriate.
. Compensation must motivate.
The compensation program is designed to provide a direct link between
performance and compensation. Realistic individual and Company
performance targets provide the motivation to strive to meet or exceed
performance goals.
Compensation Measurement
The Company has a formalized process to assist in the evaluation of
performance and in the determination of compensation amounts for each of the
executive officers. It is as follows:
1. Early in the year, the Board of Directors approves the overall Company
goals including earnings per share ("EPS") and return on equity ("ROE").
Individual performance goals are established for the executive officers by
the President and CEO, and approved by the Committee. The President and
CEO's goals are established by the Committee. The Company measurement goals
of EPS and ROE represent approximately two thirds of the incentive
opportunity for the President and CEO and other executive officers on the
Corporate staff. The remaining one-third is tied to individual performance
measures. In the case of executive officers with business unit
responsibility, approximately half of the incentive compensation
measurement is based upon individual business unit profitability and return
on revenues, with the remainder equally split between overall Company goals
and individual performance measures. A supplemental incentive compensation
bonus of an additional fifteen percent is available to reward growth above
Plan in Company EPS or unit profitability.
6
<PAGE>
2. Each executive officer is given feedback periodically during the year
against these objectives.
3. Upon review and recommendation of the Compensation, Stock Option and
Pension Committee, and approval by the Board of Directors, each executive
officer is rewarded according to the overall performance of the Company and
according to the achievement of individual objectives.
Total Compensation
The Company has a program of cash compensation and equity based compensation.
These programs apply equally to the President and Chief Executive Officer and
all other executive officers.
Cash Compensation
Base Salary Compensation
Base salary is set to allow the Company to attract and retain the people
necessary for the successful operation and growth of the Company. Base salary
is reviewed annually and is examined to determine compatibility with the pay
practices of companies in similar businesses. Variable pay opportunity is
established in keeping with the competitive environment.
Dr. Ray's base salary for 1994 was not increased, nor were the base salaries
of two of the other four highest paid executive officers in 1993. In March
1995, Dr. Ray's base salary was increased in recognition of his performance
during the prior fiscal year as were the base salaries of three of the other
four highest paid executive officers in 1994.
Incentive Compensation
The Committee believes that a substantial portion of the total compensation
should be related to the overall performance of the Company as well as the
individual contribution of each executive officer. As a result, much of the
total compensation is "at risk".
Under the Company's Incentive Plan, bonuses are paid to the President and CEO
and each executive officer based on individual performance and the performance
of the Company, with maximum incentive compensation ranging from 30% to 60% of
base salary compensation. The maximum incentive compensation range is
established based upon the individual's goals as well as to be consistent with
maximum incentive compensation of similar businesses. A supplemental bonus is
available to reward growth above Plan in Company EPS or unit profitability.
The Incentive Compensation set forth in the accompanying table for the
President and Chief Executive Officer and the other four highest paid executive
officers was dependent on the achievement of the Company and individual
performance goals for the periods shown. The variation in incentive
compensation from year to year and from individual to individual reflects the
executive officer's relative achievement of his/her performance objectives, as
well as whether the Company goals were achieved. In March 1995, Dr. Ray and
each of the other four highest paid executive officers received a bonus as a
result of the Company's performance in 1994.
Equity Based Compensation
Stock Option Programs
The Company's Stock Option Program's purpose is to provide additional
incentives to the executive officers to encourage their commitment to the
maximization of shareholder value over the long-term.
Options are granted consistent with the responsibility and accountability of
the recipient and the compensation philosophy previously expressed. Stock
option grants afford a desirable long-term compensation method because they
closely ally the interests of management with shareholder value.
7
<PAGE>
The option programs utilize a four year vesting period to encourage executive
officers to continue in the employ of the Company. These options are at current
market value and are available to all executive officers. During 1994, the
President and CEO, along with two of the other four highest paid executive
officers, were awarded stock options as shown in the accompanying table.
The Compensation Committee has reviewed the total compensation of the five
highest paid executive officers in 1994 and has concluded that their
compensation is reasonable and is consistent with the Company's compensation
philosophy.
It is the Company's policy to qualify all compensation paid to its top
executives for deductibility under the Internal Revenue Code and regulations in
order to maximize the Company's income tax deductions.
No member of the Committee is a former or current officer or employee of the
Company or any of its subsidiaries.
COMPENSATION COMMITTEE
Thomas G. Pownall, Chairman
Charles R. Allen
Joseph F. Caligiuri
Daniel J. Fink
February 28, 1995
8
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the fiscal years ended December 31, 1994, 1993
and 1992, the cash compensation paid by the Company and its subsidiaries, as
well as certain other compensation paid or accrued for those years, to each of
the most highly compensated executive officers of the Company (the "Named
Executive Officers") in all capacities in which they served.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
------------------ ------------
AWARDS
------------ ALL OTHER
NAME AND PRINCIPAL SALARY($) BONUS($) OPTIONS/ COMPENSATION
POSITION YEAR (A) (B) SARS (#) ($) (C)
------------------ ---- --------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
G. W. Ray..................... 1994 290,500 169,800 50,000 41,798
President and Chief 1993 287,038 -- 95,000 39,221
Executive Officer 1992 269,616 119,300 15,000 42,604
F.L. Judge.................... 1994 198,186 150,875 50,000 20,625
Senior Vice President
R.B. Gorda.................... 1994 156,758 117,246 50,000 14,912
Vice President 1993 131,910 30,000 30,000 9,382
1992 101,525 31,192 -- 2,545
S. P. Meyer................... 1994 174,401 78,200 -- 28,271
Senior Vice President 1993 161,773 -- 55,000 27,508
1992 154,072 65,100 10,000 28,194
A. E. Knauf, Jr............... 1994 199,026 29,250 -- 29,714
Executive 1993 170,060 -- 70,000 28,771
Vice President 1992 185,603 97,400 15,000 33,880
</TABLE>
- --------
(A) Amounts shown include cash compensation earned and received by executive
officers as well as amounts earned but deferred at the election of those
officers.
(B) Amounts shown include bonus cash compensation earned by executive officers
for each fiscal year whether received in the fiscal year in which it was
earned or in the subsequent fiscal year.
(C) Amounts shown consist of (i) the Company's matching contribution to its
401(k) Retirement Plan; (ii) the Company's matching contribution to its
Supplemental Retirement Plan for Key Executives; (iii) the Company's
contribution to its Employee Stock Ownership Plan and (iv) interest earned
in the Company's Supplemental Plan for Key Executives which exceeded 120%
of the applicable federal long-term rate with compounding (as prescribed
under Section 1274(d) of the Internal Revenue Code). Amounts shown for
fiscal year 1994 for each Named Executive Officer consist of the following
elements of compensation: Dr. Ray: (i) $7,500; (ii) $28,300; (iii) $5,998;
and (iv) none; Mr. Judge: (i) none;(ii) $20,625; (iii) none; and (iv) none;
Mr. Gorda: (i) $7,500; (ii) $5,000; (iii) $2,412; and (iv) none;Mr. Meyer:
(i) $7,500; (ii) $15,700; (iii) $5,071; and (iv) none; Mr. Knauf: (i)
$7,500; (ii) $19,500;(iii) $2,714; and (iv) none.
9
<PAGE>
STOCK OPTIONS
The following table contains information concerning the grant of stock
options made during fiscal 1994 under the Company's long-term incentive program
to the Named Executive Officers:
OPTION GRANTS IN LAST FISCAL YEAR (A)
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT
ASSUMED ANNUAL
RATES OF STOCK
PRICE
APPRECIATION
FOR OPTION TERM
INDIVIDUAL GRANTS (F)
------------------------------------------------- ---------------
% OF TOTAL OPTIONS
OPTIONS GRANTED TO EXERCISE
GRANTED EMPLOYEES IN FISCAL PRICE EXPIRATION
NAME (B) YEAR (C) ($/SH) (D) DATE (E) 5% ($) 10% ($)
- ---- ------- ------------------- ---------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
G. W. Ray............... 50,000 14.53% 4.75 8/18/04 149,388 378,575
F. L. Judge............. 50,000 14.53% 3.375 2/1/04 106,144 268,988
R. B. Gorda............. 50,000 14.53% 4.75 8/18/04 149,388 378,575
S. P. Meyer............. -- -- -- -- -- --
A. E. Knauf, Jr......... -- -- -- -- -- --
</TABLE>
- --------
(A) No SARs were granted to any of the Named Executive Officers during the last
fiscal year.
(B) Options granted in 1994 are exercisable starting 12 months after grant
date, with 25% of the shares covered directly becoming exercisable at that
time and with an additional 25% of the option shares becoming exercisable
on each successive anniversary date, with full vesting occurring on the
fourth anniversary date.
(C) In 1994 all employees of the Company received stock options covering a
total of 344,000 Shares.
(D) The exercise price and tax withholding obligations related to exercise may
be paid by delivery of already owned shares or by offset of the underlying
shares, subject to certain conditions.
(E) The options were granted for a term of 10 years, subject to earlier
termination in certain events related to termination of employment. All
options were "incentive" stock options under the Internal Revenue Code.
(F) Present value was calculated using an assumed annual compounded growth over
the term of the option of 5% and 10%, respectively. Use of this model
should not be viewed in any way as a forecast of the future performance of
the Company's stock, which will be determined by future events and unknown
factors.
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to the Named
Executive Officers concerning the exercise of options during the last fiscal
year and unexercised options held as of the end of the fiscal year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR,
AND FY-END OPTION VALUE (A)
<TABLE>
<CAPTION>
SHARES VALUE OF UNEXERCISED
ACQUIRED NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
ON VALUE OPTIONS AT FY-END (#) AT FY-END ($) (C)
EXERCISE REALIZED ------------------------- -------------------------
NAME (#) ($) (B) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
G. W. Ray............... 70,000 297,500 66,250 133,750 235,469 337,031
F. L. Judge............. -- -- -- 50,000 -- 150,000
R. B. Gorda............. 2,500 11,250 8,750 73,750 26,719 153,594
S. P. Meyer............. 50,000 171,288 46,250 48,750 175,156 149,219
A. E. Knauf, Jr......... 50,000 156,250 66,250 63,750 253,281 195,469
</TABLE>
- --------
(A) No SARs were owned or exercised by any of the Named Executive Officers
during the last fiscal year.
(B) Market value of underlying securities on date of exercise, minus the
exercise or base price.
(C) Market value of underlying securities at year-end, minus the exercise or
base price.
10
<PAGE>
PERFORMANCE GRAPH
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG THE TITAN CORPORATION,
NEW YORK STOCK EXCHANGE MARKET INDEX AND INDUSTRY GROUP INDEX
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
Measurement Period INDUSTRY BROAD
(Fiscal Year Covered) TITAN CP INDEX MARKET
- ------------------- ---------- --------- ----------
<S> <C> <C> <C>
Measurement Pt- 1989 $100 $100 $100
FYE 1990 $ 73.68 $ 97.26 $ 95.92
FYE 1991 $142.11 $121.17 $124.12
FYE 1992 $157.89 $160.54 $129.96
FYE 1993 $129.06 $231.31 $147.56
FYE 1994 $274.26 $256.74 $144.69
</TABLE>
- --------
(1) The above graph compares the performance of The Titan Corporation with that
of the New York Stock Exchange Market Index and the MG Industry Group 171-
Electronics Equipment Manufacturers Index, which is a published industry
group index.
(2) The comparison of total return on investment (change in year-end stock
price plus reinvested dividends) for each of the periods assumed that $100
was invested on January 1, 1990 in each of The Titan Corporation, the New
York Stock Exchange Market Index and the MG Industry Group 171--Electronics
Equipment Manufacturers Index with investment weighted on the basis of
market capitalization. Titan's stock price was $6.375 per share on December
31, 1994.
11
<PAGE>
APPROVAL OF SELECTION OF AUDITORS
The Board is seeking stockholder ratification of its selection of Arthur
Andersen LLP to serve as the Company's auditors for the fiscal year ending
December 31, 1995. Arthur Andersen LLP is serving as the Company's auditors for
1994 and previously served as the Company's auditors since 1985 and as Titan
Systems' auditors since 1981. It is anticipated that representatives of Arthur
Andersen LLP will attend the Annual Meeting with the opportunity to make any
statement they may desire to make and will be available to respond to
appropriate questions from stockholders. Arthur Andersen LLP will be retained
as the Company's auditors for the fiscal year ending December 31, 1995 if this
proposal is approved by the holders of a majority of the voting power of the
shares represented and voting at the Annual Meeting.
The Board of Directors recommends a vote "FOR" this proposal.
OTHER BUSINESS
The Company knows of no other matters to be brought before the Annual Meeting
of Stockholders. If other matters should come before the meeting, it is the
intention of each person mentioned in the proxy to vote such proxy in
accordance with his judgment of such matters. Discretionary authority with
respect to such other matters is granted by the execution of the enclosed
proxy.
STOCKHOLDERS' PROPOSALS
Proposals by stockholders intended to be presented at the next annual meeting
in 1996 must be in writing and received by the Company by December 13, 1995 to
be considered for inclusion in the Company's proxy material under the rules of
the Securities and Exchange Commission.
FINANCIAL STATEMENTS
The Company's 1994 Annual Report, including financial statements for fiscal
year 1994, accompanies this proxy statement. STOCKHOLDERS MAY OBTAIN FREE OF
CHARGE A COPY OF THE COMPANY'S MOST RECENT ANNUAL REPORT ON FORM 10-K AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION BY WRITING TO THE SECRETARY, 3033
SCIENCE PARK ROAD, SAN DIEGO, CALIFORNIA 92121.
12
<PAGE>
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THE TITAN CORPORATION--PROXY
ANNUAL MEETING OF STOCKHOLDERS, MAY 18, 1995
Mr. J. S. Webb and Dr. Gene W. Ray, or either of them, each with power of
substitution, are hereby appointed proxies at the Annual Meeting of
Stockholders of THE TITAN CORPORATION to be held May 18, 1995, or any
adjournment or adjournments thereof, to represent and to vote all shares of
stock of said corporation (preferred and common) which the undersigned would be
entitled to vote if personally present, upon the matters specified below and
upon such other business as may properly come before the Meeting, and any prior
proxy to vote at such Meeting is hereby revoked. With respect to matters not
known to said corporation's Board of Directors at the time of the solicitation
hereof, said proxies are authorized to vote in their discretion.
1. ELECTION OF DIRECTORS
This proxy grants authority to vote for the Board of Directors' nominees for
election as directors listed below, except to the extent such authority is
specifically withheld. To withhold authority to vote for any individual, draw a
line through such individual's name in the list below:
J. S. Webb Charles R.Allen Joseph F. Caligiuri Daniel J. Fink
J. E. Koehler Thomas G. Pownall Dr. Gene W. Ray
2. RATIFICATION OF THE SELECTION OF ARTHUR ANDERSEN LLP AS THE COMPANY'S
AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1995.
[_] FOR [_] AGAINST [_] ABSTAIN
IMPORTANT--PLEASE SIGN ON OTHER SIDE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE TITAN
CORPORATION. UNLESS A CONTRARY DIRECTION IS INDICATED, IT WILL BE VOTED FOR THE
ELECTION OF ALL THE NOMINEES SET FORTH ABOVE AS DIRECTORS AND FOR RATIFICATION
OF THE SELECTION OF ARTHUR ANDERSEN LLP AS THE COMPANY'S AUDITORS.
DATE:_____________________, 1995
____________________________________
Signature of Stockholder
____________________________________
Signature of Stockholder
Please sign exactly as your name or
names appear hereon, and when
signing as attorney, executor,
administrator, trustee, or
guardian, give your full title as
such. If the signatory is a
corporation, sign the full
corporate name by a duly authorized
officer.
PLEASE SIGN, DATE AND RETURN YOUR
PROXY PROMPTLY IN THE POST-PAID
ENVELOPE PROVIDED
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