<PAGE>
LORAL CORPORATION
600 THIRD AVENUE
36TH FLOOR
NEW YORK, NEW YORK 10016
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14f-1 THEREUNDER
----------------
This Information Statement ("Information Statement") is being mailed on or
about January 12, 1996, as a part of the Company's Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9") to the holders of record of
Common Stock at the close of business on or about January 12, 1996. You are
receiving this Information Statement in connection with the possible election
of persons designated by Parent to a majority of the seats on the Board of
Directors of the Company.
The Merger Agreement provides that in the event the Purchaser acquires at
least a majority of the Shares on a fully diluted basis pursuant to the Offer,
Parent shall be entitled to designate for appointment or election to the Board
upon written notice to the Company, such number of persons so that the
designees of the Parent (the "Parent Designees") constitute the same
percentage (but in no event less than a majority) of the Company's Board of
Directors (rounded up to the next whole number) as the percentage of Shares
acquired in connection with the Offer. Prior to consummation of the Offer, the
Board of Directors of the Company will obtain the resignation of such number
of directors as is necessary to enable such number of Parent Designees to be
so elected. Notwithstanding the foregoing, the parties have agreed to use
their respective best efforts to ensure that at least three of the members of
the Company's Board of Directors shall, at all times prior to the Effective
Time (as defined in Section 2.2 of the Merger Agreement) be, Continuing
Directors (as defined in Section 8.4 of the Merger Agreement).
The following information is based on the Company's Proxy Statement dated as
of June 26, 1995, and, except as indicated, such information is given as of
such date.
You are urged to read this Information Statement carefully. You are not,
however, required to take any action. Capitalized terms used herein and not
otherwise defined herein shall have the meaning set forth in the Schedule 14D-
9.
The information contained in this Information Statement concerning Parent
has been furnished to the Company by Parent, and the Company assumes no
responsibility for the accuracy or completeness of such information.
INFORMATION WITH RESPECT TO THE COMPANY
OUTSTANDING VOTING STOCK
There were 173,068,379 shares of common stock, par value $.25 per share
("Common Stock"), of the Company outstanding on December 31, 1995 and each
share is entitled to one vote on each matter and provides the holder with
certain preferred stock purchase rights.
As of December 31, 1995, the only officer or Director owning 1% or more of
the Company's Common Stock was Bernard L. Schwartz, Chairman of the Board of
Directors and Chief Executive Officer of the Company, who owned beneficially
3,574,402 shares constituting approximately 2.0% of the Company's outstanding
voting securities. All Directors and current executive officers as a group (27
persons) owned beneficially 5,864,853 shares constituting approximately 3.3%
of outstanding voting securities.
1
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Based upon filings made with the Company, the only reported 5% Stockholder
as of [June 16, 1995] is Fidelity Investments, FMR Corp. ("FMR") on behalf of
advisory accounts and/or investment companies. FMR reported ownership of
10,710,508 (6.3%) shares of the Company's Common Stock, as adjusted to reflect
the two-for-one stock split distributed on September 29, 1995. FMR represented
that the shares were acquired for investment purposes for managed accounts,
trusts or employee benefit plans.
BOARD OF DIRECTORS
The Company has three classes of Directors serving staggered three-year
terms. Class I currently consists of three Directors and Classes II and III
consist of four Directors. The terms of the Class I, Class II and Class III
Directors expire on the date of the Annual Meeting in 1998, 1996 and 1997,
respectively.
The Company has a standing Audit and Government Compliance Committee (the
"Audit Committee"), Nominating Committee, and Compensation and Stock Option
Committee (the "Compensation Committee"). The Audit Committee, which met three
times during fiscal 1995, is comprised of four members: Messrs. Hodes,
Ruderman, Shapiro and Stanton. The Audit Committee reviews and acts or reports
to the Board with respect to government procurement compliance matters as well
as various auditing and accounting matters, including the selection of the
Company's independent auditors, the accounting and financial practices and
controls of the Company, audit procedures and findings, and the nature of
services performed for the Company by, and the fees paid to, the independent
auditors. The Nominating Committee, which met once in fiscal 1995, is
comprised of Messrs. Kekst, Shapiro and Stanton. The Nominating Committee is
chartered to establish criteria for recommendations for director nominees and
in connection therewith, to consider the participation and contribution of
current Directors. The Nominating Committee does not generally accept nominees
randomly received from third parties, including Stockholders. The Compensation
Committee, which met twice during fiscal 1995, is comprised of four members:
Messrs. Gittis, Hodes, Kekst and Shapiro. The Compensation Committee reviews
and provides recommendations to the Board of Directors regarding executive
compensation matters. The Compensation Committee is also responsible for the
administration of the Company's Stock Option and Incentive Stock Purchase
Plans, Restricted Stock Purchase Plan and the Incentive Compensation Plan for
Senior Executives.
The Board of Directors held seven meetings during fiscal 1995. No Director
attended fewer than 75% of the meetings of the Board of Directors and of its
committees. Directors are paid a fixed fee of $25,000 per year. Non-employee
Directors are also paid $6,000 for personal attendance at each meeting. Audit
Committee members are paid $2,000 per year and $1,000 per meeting.
Compensation Committee members are paid $500 per year. The Company provides
certain life insurance and medical benefits to certain non-employee Directors.
For fiscal 1995 the value of these benefits was $13,565 for Mr. Gittis,
$15,515 for Mr. Hodes, $14,553 for Mr. Kekst, $14,223 for Mr. Ruderman,
$12,928 for Mr. Shapiro and $14,170 for Mr. Yankelovich. In addition, Mr.
Shapiro received compensation in the amount of $35,570 with respect to early
cancellation of a prior life insurance policy.
The Company has purchased insurance from the Reliance Insurance Company
insuring the Company against obligations it might incur as a result of its
indemnification of its officers and Directors for certain liabilities they
might incur, and insuring such officers and Directors for additional
liabilities against which they might not be indemnified by the Company. The
insurance expires on April 1, 1996, and costs $321,300. Pursuant to the New
York Business Corporation Law, the Company has entered into Indemnity
Agreements with its Directors and executive officers. The Indemnity Agreements
are intended to provide the full indemnity protection authorized by New York
law.
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The following table provides certain relevant information as of June 26,
1995 concerning the Directors and their principal occupations:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND SERVED AS DIRECTOR
NAME AGE DIRECTORSHIPS CONTINUOUSLY SINCE
---- --- ------------------------ ------------------
<C> <C> <S> <C>
Bernard L. Schwartz(1).. 70 Chairman of the Board of 1972
(Class III) Directors and Chief
Executive Officer
Chairman of the Board of
Directors and Chief
Executive Officer of K&F
Industries, Inc.
Director of Globalstar
Telecommunications Limited,
Reliance Group Holdings,
Inc., and certain
subsidiaries, Sorema
International Holding N.V.,
First Data Corporation, and
Trustee of N.Y. University
Medical Center
Frank C. Lanza.......... 63 President and Chief 1981
Operating Officer
(Class II) Director of Globalstar
Telecommunications Limited
Howard Gittis........... 61 Director, Vice Chairman and 1990
(Class I) Chief Administrative
Officer of MacAndrews &
Forbes Holdings Inc.
Director of Andrews Group
Incorporated, Consolidated
Cigar Corporation, First
Nationwide Holdings, Inc.,
First Nationwide Bank,
Jones Apparel Group, Inc.,
Mafco Worldwide
Corporation, National
Health Laboratories
Holdings, Inc., NWCG
Holdings Corporation, New
World Communications Group
Incorporated, New World
Television Incorporated,
Revlon Consumer Products
Corporation, and Revlon
Worldwide Corporation.
Robert B. Hodes (1)(2).. 70 Of Counsel to Willkie Farr & 1959
(Class II) Gallagher, law firm, New
York, N.Y.
Director of
Aerointernational, Inc.,
W.R. Berkley Corporation,
Crystal Oil Company,
Globalstar
Telecommunications Limited,
R.V.I. Guaranty, Ltd., LCH
Investments N.V., Mueller
Industries, Inc. and
Restructured Capital
Holdings, Ltd.
Gershon Kekst (1)....... 60 President of Kekst and 1972
(Class I) Company Incorporated,
corporate and financial
communications consultants,
New York, N.Y.
Charles Lazarus......... 71 Chairman of Toys "R" Us, 1994
(Class II) Inc.
Director of Automatic Data
Processing, Inc.
Malvin A. Ruderman...... 68 Professor of Physics, 1975
(Class III) Columbia University, New
York, N.Y.
E. Donald Shapiro....... 63 The Joseph Solomon 1973
(Class III) Distinguished Professor of
Law since 1983 and
Dean/Professor of Law
(1973-1983), New York Law
School
Director of Bank Leumi Trust
Co., Eyecare Products PLC,
Vasomedical, Inc., Kranzco
Realty Trust, MacroChem
Corporation and Premier
Laser Systems
Vice Admiral Allen M. 87 Independent Consultant 1973
Shinn, U.S.N. (Ret.).... Director Emeritus of
(Class II) Pennzoil Company
</TABLE>
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<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND SERVED AS DIRECTOR
NAME AGE DIRECTORSHIPS CONTINUOUSLY SINCE
---- --- ------------------------ ------------------
<C> <C> <S> <C>
Arthur L. Simon......... 63 Independent Consultant 1995
(Class I) Partner, Coopers & Lybrand
L.L.P., Certified Public
Accountants, from 1968 to
1994
Thomas J. Stanton, Jr. 67 Chairman Emeritus of 1988
(2)..................... National Westminster
(Class III) Bancorp NJ
Director of Reliance Group
Holdings, Inc., and
Reliance Insurance Co.
Daniel Yankelovich (2).. 70 Chairman of DYG, Inc., 1982
(Class I) market, consumer and
opinion research, New
York, N.Y.
Director of U.S. West Inc.,
Meredith Corporations and
Arkla, Inc.
</TABLE>
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(1) Member of Executive Committee.
(2) Member of Pension Advisory Committee.
4
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SECURITIES OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
The following table presents the number of shares of Common Stock
beneficially owned by the Directors, the named executive officers in the
Summary Compensation Table ("NEOs"), and all Directors and officers as a group
on December 31, 1995. Individuals have sole voting and investment power over
the stock unless otherwise indicated in the footnotes.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME OF INDIVIDUAL BENEFICIAL OWNERSHIP(1)(2) OF CLASS
------------------ -------------------------- --------
<S> <C> <C>
Bernard L. Schwartz........................ 3,574,402(3) 2.0%
Michael P. DeBlasio........................ 180,926(4) *
Howard Gittis.............................. 6,000 *
Robert B. Hodes............................ 28,800(5) *
Gershon Kekst.............................. 26,400 *
Frank C. Lanza............................. 1,231,618(6) *
Robert V. LaPenta.......................... 206,350(7) *
Charles Lazarus............................ 14,000(8) *
Malvin A. Ruderman......................... 32,000(9) *
E. Donald Shapiro.......................... 28,000(10) *
Allen M. Shinn............................. 22,341 *
Arthur L. Simon............................ 2,000 *
Thomas J. Stanton, Jr...................... 24,000 *
Michael B. Targoff......................... 93,264(11) *
Daniel Yankelovich......................... 33,000 *
All Directors and Executive Officers as a
Group (27 persons)........................ 5,864,853(12) 3.3%
</TABLE>
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* Represents holdings of less than one percent.
(1) Includes shares which, as of December 31, 1995, may be acquired within
sixty days pursuant to the exercise of options (which shares are treated
as outstanding for the purposes of determining beneficial ownership and
computing the percentage set forth); shares held by trusts of which
Directors and their wives are trustees; shares held by a trust in which
an officer and Director is a trustee; and shares held for the benefit of
officers as of March 31, 1995 in the Loral Master Savings Plan (the
"Savings Plan").
(2) Except as noted, all shares are owned directly with sole investment and
voting power. All Directors other than Messrs. Schwartz, Lanza, Gittis,
Lazarus, Shinn and Simon have the right to exercise Loral stock options
for 20,000 shares at $8.86 per share; such exercisable shares are
included in the table.
(3) Includes 160,000 shares held by Mr. Schwartz's wife, 2,400,000 shares
exercisable under Company Stock Option Plans, and 12,224 shares in the
Savings Plan.
(4) Includes 63,428 shares exercisable under Company Stock Option Plans,
7,310 shares in the Savings Plan, and 3,936 shares restricted under the
Company's Restricted Stock Purchase Plan.
(5) Includes 800 shares as to which Mr. Hodes disclaims beneficial ownership
held by Mr. Hodes' minor child.
(6) Includes 525,700 shares exercisable under Company Stock Option Plans,
4,254 shares in the Savings Plan, and 9,362 shares restricted under the
Company's Restricted Stock Purchase Plan.
(7) Includes 6,222 shares in the Savings Plan, and 3,936 shares restricted
under the Company's Restricted Stock Purchase Plan.
(8) Includes 4,000 shares held by Mr. Lazarus' wife.
(9) Includes 12,000 shares owned jointly with Mr. Ruderman's wife.
(10) Includes 8,000 shares as to which Mr. Shapiro disclaims beneficial
ownership held by Mr. Shapiro's wife.
(11) Includes 44 shares in the Savings Plan, and 3,936 shares restricted under
the Company's Restricted Stock Purchase Plan.
(12) Includes 3,242,728 shares exercisable under Company Stock Option Plans,
52,614 shares in the Savings Plan, and 28,550 shares restricted under the
Company's Restricted Stock Purchase Plan.
5
<PAGE>
FISCAL YEAR 1995
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS
------------------- --------------------------------------
RESTRICTED SECURITIES ALL OTHER
NAME AND STOCK UNDERLYING COMPEN-
PRINCIPAL POSITION YEAR SALARY BONUS AWARD(a)(b) STOCK OPTIONS(d) SATION(d)
------------------ ---- -------- ---------- ----------- ---------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Bernard L. Schwartz..... 1995 $908,300 $5,335,891 -- -- $88,252
Chairman of the Board of
Directors 1994 $884,000 $3,604,237 -- 1,200,000 $97,399
and Chief Executive
Officer 1993 $859,000 $3,525,669 -- 800,000 $86,266
Frank C. Lanza.......... 1995 $635,964 $2,611,215 -- -- $31,965
President and Chief
Operating Officer 1994 $618,925 $1,751,404 -- 300,000 $25,000
1993 $600,924 $1,200,000 $1,623,019 -- $25,000
Michael P. DeBlasio..... 1995 $427,527 $ 527,106 -- -- $ 8,813
Senior Vice President--
Finance 1994 $402,973 $ 355,584 -- 140,000 $ 5,385
1993 $402,973 $ 330,556 $ 682,500 -- $ 5,284
Robert V. LaPenta....... 1995 $357,753 $ 526,226 -- -- $ 7,246
Senior Vice President
and Controller 1994 $337,723 $ 311,069 -- 140,000 $ 8,620
1993 $337,723 $ 290,917 $ 682,500 -- $ 7,881
Michael B. Targoff...... 1995 $347,715 $ 526,712 -- -- $ 9,117
Senior Vice President
and Secretary 1994 $327,684 $ 311,495 -- 140,000 $10,758
1993 $327,684 $ 291,301 $ 682,500 -- $ 9,692
</TABLE>
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(a) Value of shares awarded under the Restricted Stock Purchase Plan in 1993.
Shares awarded under the plan vest and become freely transferable in
accordance with a formula based upon Loral earnings. The total number of
shares vesting under the plan each year is equal to 3% of the Company's
pre-tax profit divided by the grant value (currently $52.50 per share) of
restricted shares outstanding. Any shares not earned at the earlier of
completion of the seventh year or termination of employment, will be
forfeited. Dividends are paid on the restricted shares awarded. As of
March 31, 1995, the number, as adjusted to reflect the two-for-one stock
split distributed on September 29, 1995, and value of restricted stock
holdings, respectively, were 9,362 shares and $198,357 for Mr. Lanza,
3,936 shares and $83,394 for each of Messrs. DeBlasio, LaPenta, and
Targoff.
(b) Under the 1994 Incentive Stock Purchase Plan, the Compensation Committee
may permit participants to defer up to 100% of their annual bonus into a
Restricted Stock Purchase Account (the "Restricted Account"). The
Restricted Account will be used to purchase Loral Common Stock equal to
150% of the deferred bonus, subject to limits the Committee may establish
from time to time. The shares in the Restricted Account earn dividends and
generally vest 25% per year commencing upon the second anniversary of the
grant date. The Committee may establish specified performance conditions
that, if attained, will result in accelerated vesting. All non-vested
shares are forfeited upon termination of employment and the remaining
balance of the Restricted Account equal to the lesser of the original cost
or the market value of the shares is returned to the participant. No
shares have been issued under this plan.
(c) Stock options, which have been adjusted to reflect a two-for-one stock
split distributed on October 7, 1993 and a two-for-one stock split
distributed on September 29, 1995, generally vest over a four and one-half
to six year period.
(d) Includes annual Board of Directors fee in 1995, 1994 and 1993 of $25,000
for Messrs. Schwartz and Lanza, company matching contributions of $3,100
in 1995, $3,598 in 1994 and $3,722 in 1993 to the Savings Plan for Messrs.
DeBlasio, LaPenta and Targoff and the value of supplemental life insurance
programs attributable to 1995, 1994 and 1993 in the amounts of $63,252,
$72,399 and $61,266 for Mr. Schwartz, $5,713, $1,787 and $1,562 for Mr.
DeBlasio, $4,146, $5,022 and $4,159 for Mr. LaPenta, and $6,017, $7,160
and $5,970 for Mr. Targoff, respectively, and $6,965 attributable to 1995
for Mr. Lanza.
6
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FISCAL YEAR 1995
OPTION EXERCISES AND YEAR-END VALUE TABLE
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
NUMBER OF AT YEAR-END(a) AT YEAR-END(b)
SHARES ACQUIRED VALUE ------------------------- -------------------------
NAME ON EXERCISE(a) REALIZED(b) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Bernard L. Schwartz..... -- -- 2,000,000 -- $23,500,000 --
Frank C. Lanza.......... 112,000 $1,802,500 428,560 391,440 $ 6,672,850 $5,511,525
Michael P. DeBlasio..... -- -- 56,856 190,288 $ 937,785 $2,694,305
Robert V. LaPenta....... 27,996 $ 398,745 8,000 207,448 $ 130,000 $2,986,025
Michael B. Targoff...... -- -- 49,428 218,288 $ 845,205 $3,191,305
</TABLE>
- --------
(a) As adjusted to reflect the two-for-one stock split distributed on
September 29, 1995.
(b) Market value of underlying securities at exercise date or year-end, as the
case may be, minus the exercise price.
EMPLOYMENT AGREEMENTS AND OTHER ARRANGEMENTS
The Company has an employment agreement with Mr. Schwartz, which expires on
March 31, 2000. Pursuant to the agreement, Mr. Schwartz's annual base salary
was $908,300 for fiscal 1995, to be increased annually by the percentage
change in a specified consumer price index. Under the agreement, Mr. Schwartz
is entitled to annual incentive compensation equal to 3% of the increase over
9 1/4% in the Company's shareholders' equity as adjusted for stock issuances,
other non-operating charges or credits and before dividends. In accordance
with the incentive bonus provisions, Mr. Schwartz received fiscal 1995
incentive compensation of $5,214,426. The agreement also includes a cap on
maximum annual incentive compensation of $9 million, as adjusted for
inflation.
Pursuant to the agreement, if Mr. Schwartz is removed as Chairman of the
Board of Directors or as Chief Executive Officer other than for cause, or if
his duties, authorities or responsibilities are diminished, or if there is a
change of control (as defined to encompass the Company becoming a subsidiary
of another company, the acquisition of 35% or more of the voting securities of
the Company by a particular stockholder or group, or a change in 35% of the
Company's directors at the insistence of the shareholder group), Mr. Schwartz
may elect to terminate the contract. In any such event, or upon his death or
disability, Mr. Schwartz will be entitled to receive a lump sum payment
discounted at 9% per annum, in an amount equal to his base salary as adjusted
for defined consumer price index changes for the remainder of the term, an
amount of incentive compensation equal to the highest received by Mr. Schwartz
in any of the prior three years, times the number of years (including partial
fiscal years) remaining during the term, and an amount calculated to
approximate the annual compensation element reflected in the difference
between fair market value and exercise price of stock options granted to Mr.
Schwartz. All such sums are further increased to offset any tax due by Mr.
Schwartz under the excise tax and related provisions of Section 4999 of the
Internal Revenue Code but subject to a cap equal to 200% of any such tax.
The Company also has an employment agreement with Mr. Lanza for a five year
term expiring March 31, 1997. Pursuant to the agreement, Mr. Lanza's annual
base salary was $634,500 for fiscal 1995, to be increased annually by the
percentage change in a specified consumer price index. Under the agreement,
Mr. Lanza is entitled to annual incentive compensation under the growth in
shareholders' equity formula applicable under Mr. Schwartz's employment
agreement, but at 1 1/2% of the increase over the 9 1/4% threshold. As a
result, Mr. Lanza received fiscal 1995 incentive compensation of $2,607,213.
If Mr. Lanza becomes disabled, he will receive 50% of his salary for the
remainder of the term.
The Company has established Supplemental Life Insurance Programs for certain
key employees including the executives listed in the Summary Compensation
Table. For Messrs. Schwartz, Lanza, DeBlasio, LaPenta and
7
<PAGE>
Targoff, the Plans are funded with "Split-Dollar" insurance policies in the
face amounts of $20,500,000, $1,000,000, $1,060,000, $1,200,000 and $1,450,000
respectively. In the event of death, the Company will be entitled to receive
an amount not less than the Company's cumulative contributions. If any of such
officers terminates his employment prior to the time that the Company's
contributions equal the cash value of the insurance policy, he will be
responsible for repayment of the remainder of the Company's contribution to
the extent cash becomes available in the policy. Such officers contribute to
the payment for this program.
PENSION PLANS
The individuals named in the Summary Compensation Table participate in a
pension plan that generally provides an annual benefit for each year of
membership for the first 14 years of Loral service, of 1.2% of such
remuneration up to the Social Security Wage Base and 1.45% of such
remuneration in excess of that Base, and for 15 or more years of Loral
service, 1.5% of such remuneration up to the Social Security Wage Base and
1.75% of such remuneration in excess of that Base, all subject to certain
vesting and other requirements. These individuals also participate in a
supplemental plan which generally makes up for certain reductions in such
benefits caused by Internal Revenue Code limitations. Remuneration covered by
the plans primarily includes salary and bonus.
Estimated annual benefits upon retirement for Messrs. Schwartz, Lanza,
DeBlasio, LaPenta and Targoff under the pension and supplemental plans are
$1,117,000, $486,000, $249,000, $344,000 and $295,000, respectively. The
retirement benefits have been computed assuming that (i) employment will be
continued until normal retirement, or until the expiration of current
employment agreements, if later; and (ii) current levels of creditable
compensation and the Social Security Wage Base will continue without increases
or adjustments throughout the remainder of the computation period.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Schwartz is Chairman, Chief Executive Officer, 27% owner, and
controlling shareholder of K&F Industries, Inc. ("K&F"), which acquired the
Company's Aircraft Braking and Engineered Fabrics businesses in April 1989.
Certain other individuals named in the Summary Compensation Table are
directors of K&F's operating subsidiaries. Mr. Schwartz and the other
individuals named in the Summary Compensation Table receive compensation from
K&F for rendering advisory services to K&F. Such compensation is not included
in the Summary Compensation Table but is considered by the Compensation
Committee regarding compensation from Loral. In September 1994, the Company
exchanged its $30 million 14.75% pay-in-kind subordinated convertible K&F
debenture due in 2004 for $11,514,000 in cash, net of expenses, and a 22.5%
voting equity interest in K&F. Pursuant to agreements between the Company and
K&F, the parties provide services to each other and share certain expenses
relating to a production program, real property occupancy, benefits
administration, treasury, accounting and legal services. The related charges
agreed upon by the parties were established to reimburse each party for the
actual cost incurred without profit or fee. The Company believes that the
arrangements with K&F are as favorable to the Company as could have been
obtained from unaffiliated parties. The Company's billings to and from K&F in
fiscal 1995 were $3,014,000 and $15,000, respectively. The Company's sales to
K&F in fiscal 1995 were $4,181,000.
Mr. Robert B. Hodes, a Director and a member of the Executive, Audit,
Pension Advisory, and Compensation Committees, is of counsel to the law firm
of Willkie Farr & Gallagher, which is general counsel to the Company.
For the fiscal year ended March 31, 1995, the Company paid fees and
disbursements in the amount of $182,000 for corporate communications
consultations to Kekst and Company Incorporated, of which company Mr. Gershon
Kekst, a Director and member of the Executive, Nominating, and Compensation
Committees, is President and the principal stockholder. Kekst and Company
Incorporated continues to render such services to the Company.
8
<PAGE>
INFORMATION WITH RESPECT TO PARENT
PARENT DESIGNEES
Set forth below are the names, ages, present principal occupations, five
year employment history and other directorships held in public companies of
the Parent Designees.
MARCUS C. BENNETT, 60, Director since 1995; Senior Vice President and Chief
Financial Officer of Parent since March 16, 1995; Vice President and Chief
Financial Officer of Martin Marietta Corporation since 1988; served as Vice
President of Finance of Martin Marietta Corporation from 1984 to 1988; serves
as Chairman of Martin Marietta Materials, Inc., a majority owned subsidiary of
Martin Marietta Corporation, and Orlando Central Park, Inc. and Chesapeake
Park, Inc., wholly owned subsidiaries of Martin Marietta Corporation; director
of Carpenter Technology, Inc.; member of the Financial Executives Institute,
MAPI Finance Council and The Economic Club of Washington; serves as a director
of the Private Sector Council and as a member of its CFO Task Force.
VANCE D. COFFMAN, (51), Director since 1996; Executive Vice President and
Chief Operating Officer since 1996; President and Chief Operating Officer,
Space and Strategic Missiles Sector from March 1995 to December 1995;
previously served in Lockheed Corporation as Executive Vice President, from
1992-1995; and President of Lockheed Space Systems Division from 1988-1992.
JOHN F. EGAN, 60, Vice President, Corporate Development, of Lockheed Martin
Corporation since March 1995, after having served in a similar position at
Lockheed Corporation and served as Vice President for planning and technology
for Lockheed Electronics Group from 1986 to 1993 following the acquisition of
Sanders Associates, Inc., by Lockheed Corporation. Joined Sanders Associates,
Inc. in 1973 as Director of Business Development for the Federal Systems
Group; became General Manager of two product divisions in 1975 and became Vice
President, Corporate Development in 1978. Dr. Egan is a member of the Chief of
Naval Operations Executive Panel and the Naval Studies Board, National
Research Council.
JOHN E. MONTAGUE, 41, Vice President, Financial Strategies, for Lockheed
Martin Corporation since March 1995, after having served as Vice President of
Corporate Development and Investor Relations for Martin Marietta Corporation
from 1991 to 1995; served as Director of Corporate Development prior to being
promoted to Vice President in 1991; served as Manager of Strategic Planning
for Martin Marietta Information & Communications Systems in Denver from 1984
to 1985; and joined Martin Marietta Corporation in 1977 as a member of the
Engineering staff of Martin Marietta Denver Aerospace. Mr. Montague is a
member of the Board of Directors of Martin Marietta Corporation and of
Rational Software Corporation.
FRANK H. MENAKER, JR., 55, Vice President and General Counsel for Lockheed
Martin Corporation since March 1995, after having served in the same capacity
for Martin Marietta Corporation since 1981. He joined Martin Marietta
Corporation in 1970 as an Assistant Division Counsel for aerospace operations
in Baltimore; became a Corporate Assistant General Counsel in 1973 and in 1977
was named General Counsel of that corporation's aerospace operations. Mr.
Menaker is Chair of the ABA Public Contract Law Section, a member of the Board
of Directors of the National Chamber Litigation Center, and a member of the
Steering Committee for the Lawyer's Committee for Human Rights.
LILLIAN M. TRIPPETT, 42, Corporate Secretary and Associate General Counsel
of Lockheed Martin Corporation since March 1995, after having served as
Corporate Secretary and Assistant General Counsel of Martin Marietta
Corporation since April 1993. Ms. Trippett joined Martin Marietta Corporation
in July 1989 as a Director of Washington Operations. Prior to joining Martin
Marietta Corporation, she served for fourteen years on the staff of the
Committee on Science, Space, and Technology in the House of Representatives.
From 1983-1989 she served as Counsel to the Subcommittee on Space, Science and
Applications, specializing in space commercialization. Ms. Trippett is a
member of the International Institute of Space Law of the International
Astronautical Federation, American Bar Association and the American Society of
Corporate Secretaries.
ROBERT B. CORLETT, 56, Vice President, Human Resources, of Lockheed Martin
Corporation since March 1995, after having served in the same capacity for
Lockheed Corporation since 1991; served as Vice President, Human Resources,
for the former Lockheed Aeronautical Systems, Company in 1987, after leaving
the Corporation in 1980 and rejoining the Corporation in 1987; served as
Director of Industrial Relations in 1979 and in 1971 transferred to the
Lockheed California Company, where he held a variety of Human Resources
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positions leading to his appointment as Manager of Union Relations in 1975.
Mr. Corlett serves on the Board of Directors and Executive Committee of the
Labor Policy Association, and is a member of the Personnel Roundtable, the
Aerospace Human Resources Council, and the Human Resource Roundtable of the
University of California at Los Angeles.
WALTER E. SKOWRONSKI, 47, Vice President and Treasurer of Lockheed Martin
Corporation since March 1995, after having served in the same capacity for
Lockheed Corporation since 1992, and as its staff Vice President--Investor
Relations since 1990. Prior to joining Lockheed Corporation in 1990, Mr.
Skowronski was Assistant Treasurer of Boston Edison Company and from 1987 to
1990 was an instructor of Corporate Finance and Investor Relations at
Northeastern University's Graduate School of Business Administration. Mr.
Skowronski is a former director of the National Investor Relations Institute
and served as its Chairman and Chief Executive Officer.
SECURITY OWNERSHIP OF NOMINATED DIRECTORS
No Parent Designee directly or beneficially owns shares of Common Stock of
the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There have been no transactions or series of transactions, since April 1,
1995, to which the Company or any of its subsidiaries was or is to be a party
in which the amount involved exceeds $60,000 and in which any of the Parent
Designees had or will have a direct or indirect material interest, nor has any
Parent Designee been indebted to the Company or its subsidiaries in an amount
in excess of $60,000 or been involved in a material business relationship with
the Company or its subsidiaries.
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