<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
[ ] 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
COMPTEK RESEARCH, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
COMPTEK RESEARCH, INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(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: ...........................................................
================================================================================
<PAGE> 2
LOGO
June 26, 1997
Dear Fellow Shareowner:
The Annual Meeting of Comptek Research, Inc., to be held July 25, 1997, at
Comptek Research, Inc., 2732 Transit Road, Buffalo, New York, will present an
opportunity for you to meet Comptek's management team and to become more
acquainted with the business activities of your company. Your attendance will,
as well, give us an opportunity to meet with you, and to hear your views and
concerns. We hope that you will be able to attend.
The Annual Meeting will begin promptly at 10:30 a.m. So that we can make
appropriate arrangements, please let us know that you are coming by checking the
appropriate box at the top of your proxy vote card, or calling 716-677-4070,
Ext. 517.
I look forward to seeing you.
Sincerely,
/s/ John J. Sciuto
John J. Sciuto
Chairman, President, and
Chief Executive Officer
<PAGE> 3
LOGO
NOTICE
OF
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 25, 1997
To the Shareholders:
PLEASE TAKE NOTICE that the Annual Meeting of Shareholders of Comptek
Research, Inc. (the "Company") will be held at the offices of the Company, 2732
Transit Road, Buffalo, New York, on Friday, July 25, 1997, at 10:30 a.m., local
time, for the following purposes:
1. To elect three Class I directors for a term of two years and until their
successors shall have been elected and qualified.
2. To ratify the selection by the Board of Directors of KPMG Peat Marwick
as the Company's independent auditors for the current fiscal year.
3. To transact such other business as may properly come before the meeting.
The close of business on June 6, 1997, has been fixed as the record date
for determining the shareholders entitled to notice of, and to vote at, the
Annual Meeting.
By order of the Board of Directors,
/s/ Christopher A. Head
CHRISTOPHER A. HEAD, Secretary
June 26, 1997
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE,
DATE, AND SIGN THE ENCLOSED PROXY AND PROMPTLY RETURN IT IN THE ENCLOSED
ENVELOPE IN ORDER TO ASSURE REPRESENTATION OF YOUR SHARES.
<PAGE> 4
LOGO
2732 TRANSIT ROAD
BUFFALO, NEW YORK 14224
(716) 677-4070
-------------------------------
PROXY STATEMENT
-------------------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
JULY 25, 1997
-------------------------------
GENERAL
This Proxy Statement and accompanying form of proxy have been mailed on or
about June 26, 1997, to the shareholders of record on June 6, 1997, of COMPTEK
RESEARCH, INC., a New York corporation (the "Company"), in connection with the
solicitation of proxies by the Board of Directors of the Company for use at the
Annual Meeting of Shareholders to be held on Friday, July 25, 1997 (the "Annual
Meeting"), and at any adjournment or adjournments thereof.
Shares represented by an effective proxy in the accompanying form, unless
contrary instructions are specified in the proxy, will be voted FOR each of the
proposals set forth in the accompanying Notice of Annual Meeting of
Shareholders. Any proxy may be revoked at any time before it is voted. A
shareholder may revoke his proxy by executing another proxy at a later date, by
notifying the Secretary of the Company in writing of his revocation, or by
attending and voting at the Annual Meeting. Revocation is effective only upon
receipt of notice by the Secretary.
The Company will bear the cost of soliciting proxies by the Board of
Directors. The Board of Directors may use the services of the Company's
executive officers and certain directors to solicit proxies from shareholders in
person and by mail, telegram and telephone, and the Company may reimburse them
for reasonable out-of-pocket expenses incurred by them in so doing. In addition,
the Company will request brokers, nominees and others to forward proxy materials
to their principals and to obtain authority to execute proxies. The Company will
reimburse such brokers, nominees and others for their reasonable out-of-pocket
and clerical expenses incurred by them in so doing.
The securities entitled to vote at the Annual Meeting are shares of common
stock, par value $.02 per share, of the Company. Each share is entitled to one
vote. The close of business on June 6, 1997, has been fixed as the record date
for the determination of shareholders entitled to notice of and to vote at the
Annual Meeting and any adjournment or adjournments thereof. At that date,
5,258,106 shares of common stock were outstanding.
3
<PAGE> 5
With respect to the election of each director, a shareholder may either
vote "for" a nominee named herein, or "withhold authority" to vote for such
nominee. The affirmative vote of a plurality of the shares present in person or
represented by proxy at the Annual Meeting and entitled to vote is required for
the election of a nominee. Broker non-votes will be counted as being present or
represented at the meeting, but will not have an effect on the outcome of the
vote for the election of directors. Accordingly, withholding an affirmative vote
from a particular nominee will not prevent that person from being elected to the
Board of Directors.
PRINCIPAL SHAREHOLDERS
CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information as of June 6, 1997, with
respect to the beneficial ownership of the Company's common stock by all persons
or groups (as such terms are used in Section 13(d)(3) of the Securities Exchange
Act of 1934) known by the Company to be the beneficial owners of more than 5% of
its outstanding common stock (the only class of stock outstanding).
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(1) PERCENT
--------------------------------------------------------- ------------ -------
<S> <C> <C>
James D. Morgan.......................................... 324,030(2) 6.15%
2732 Transit Road
Buffalo, NY 14224
Nichan Tchorbajian....................................... 305,718 5.81%
96-10 23rd Avenue
East Elmhurst, NY 11369
</TABLE>
- ---------------
(1) The beneficial ownership information presented is based upon information
furnished by each person or contained in filings with the Securities and
Exchange Commission. Pursuant to Rule 13d-3 under the Securities Exchange
Act of 1934, as amended, beneficial ownership of a security consists of sole
or shared voting power (including the power to vote or direct the vote)
and/or sole or shared investment power (including the power to dispose or to
direct the disposition) with respect to a security whether through any
contract, arrangement, understanding, relationship or otherwise. Except as
otherwise indicated, the named person has sole voting and investment power
with respect to the common shares set forth opposite his name. Percentages
have been calculated on the basis of 5,258,106 shares outstanding, plus, as
appropriate, shares subject to options and deemed outstanding pursuant to
Rule 13d-3(d)(1).
(2) Amount indicated includes 1,500 shares held in the names of Mr. Morgan's
children and options to purchase 2,300 shares which are exercisable within
60 days of June 6, 1997. Mr. Morgan disclaims any beneficial ownership of
shares held by his children.
4
<PAGE> 6
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the beneficial ownership of common shares of
the Company as of June 6, 1997, by each director and nominee, each executive
officer who is named in the Summary Compensation Table, and by all directors and
executive officers as a group:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL
NAME OF BENEFICIAL OWNER OWNERSHIP(1) PERCENT
------------------------------------------------------- -------------- -------
<S> <C> <C>
Joseph A. Alutto....................................... 17,900(2) *
John R. Cummings....................................... 234,000(3) 4.44%
G. Wayne Hawk.......................................... 210,138(4) 3.98%
Christopher A. Head.................................... 59,400(5) 1.11%
Patrick J. Martin...................................... 13,000(2) *
James D. Morgan........................................ 324,030(6) 6.15%
John J. Sciuto......................................... 100,463(7) 1.89%
Henry P. Semmelhack.................................... 241,072(8) 4.57%
All executive officers and directors as a group (9
persons)............................................. 1,200,003(9) 22.17%
</TABLE>
- ---------------
* less than 1%
(1) The beneficial ownership information presented is based upon information
furnished by each person or contained in filings with the Securities and
Exchange Commission. Pursuant to Rule 13d-3 under the Securities Exchange
Act of 1934, as amended, beneficial ownership of a security consists of sole
or shared voting power (including the power to vote or direct the vote)
and/or sole or shared investment power (including the power to dispose or to
direct the disposition) with respect to a security whether through any
contract, arrangement, understanding, relationship or otherwise. Except as
otherwise indicated, the named person has sole voting and investment power
with respect to the common shares set forth opposite his name. Percentages
have been calculated on the basis of 5,258,106 shares outstanding, plus, as
appropriate, shares subject to options and deemed outstanding pursuant to
Rule 13d-3(d)(1).
(2) Amount indicated includes options to purchase 13,000 shares which are
exercisable within 60 days of June 6, 1997.
(3) Amount indicated includes 40,000 shares held by Dr. Cummings's wife, Barbara
Cummings. Also included are options to purchase 11,000 shares which are
exercisable within 60 days of June 6, 1997.
(4) Amount indicated includes options to purchase 13,000 shares which are
exercisable within 60 days of June 6, 1997. Also included are 500 shares
owned by Mr. Hawk's wife, Charline Hawk. Mr. Hawk disclaims any beneficial
ownership of the shares held by his wife.
(5) Amount indicated includes options to purchase 48,263 shares which are
exercisable within 60 days of June 6, 1997.
(6) Amount indicated includes 1,500 shares held in the names of Mr. Morgan's
children and options to purchase 2,300 shares which are exercisable within
60 days of June 6, 1997. Mr. Morgan disclaims any beneficial ownership of
shares held by his children.
(7) Amount indicated includes options to purchase 49,619 shares which are
exercisable within 60 days of June 6, 1997.
(8) Amount indicated includes options to purchase 13,000 shares which are
exercisable within 60 days of June 6, 1997. Also included are 6,686 shares
held in trust by Mr. Semmelhack's wife, Tricia T. Semmelhack, for the
benefit of their daughter Elizabeth, and 4,600 shares held in a trust by
Tricia T. Semmelhack for the benefit of their son, Erik Henry Semmelhack.
Mr. Semmelhack disclaims any beneficial ownership of such shares held by
Mrs. Semmelhack as trustee.
(9) Amount indicated includes options to purchase 153,802 shares which are
exercisable within 60 days of June 6, 1997.
5
<PAGE> 7
PROPOSAL NO. 1
ELECTION OF DIRECTORS
TERM OF OFFICE
The Company's current Board is divided into two classes serving staggered
two-year terms. Three directorships are designated Class I and four
directorships are designated Class II. Nominees for Class I directors are for a
two-year term expiring at the 1999 Annual Meeting.
NOMINEES FOR DIRECTOR
Each nominee has consented to be named as a nominee and to serve if
elected. No circumstances are presently known which would render any of the
nominees named herein unavailable for election. In the event, however, that a
nominee becomes unavailable for election, it is expected that the proxies will
be voted for a substitute nominee recommended by the Board of Directors, unless
the Board reduces the number of directors to be elected.
The Class I nominees (Messrs. Morgan, Sciuto, and Semmelhack) are currently
serving as directors of the Company. Each of the nominees was previously elected
by the shareholders.
The principal occupation for the last five years of each nominee for
election as director and each of the continuing directors is listed below.
Unless otherwise indicated, the information with respect to the nominees and
continuing directors is as of June 1, 1997. None of the nominees nor any
continuing director is related to an executive officer or to any other director.
NOMINEE FOR ELECTION AS CLASS I DIRECTORS
TERM EXPIRING IN 1999
<TABLE>
<S> <C>
John J. Sciuto Mr. Sciuto was appointed President and Chief Executive Officer
Age 54 of Comptek Research, Inc. on April 1, 1996. Effective April 1,
Director since 1996 1997 he was elected to the additional position of Chairman of
the Board. Mr. Sciuto has been President and Chief Executive
Officer of Comptek Federal Systems, Inc., the Company's
principal operating subsidiary, since its incorporation in
1992. Prior to that, Mr. Sciuto was President of the Federal
Systems Division of Comptek Research, Inc.
James D. Morgan Mr. Morgan is Vice President and Chief Scientist and also a
Age 60 founder of the Company. He was a Vice President for Barrister
Director since 1968 Information Systems Corporation from April 1982 to April 1990
and is currently serving on Barrister's Board of Directors.
Henry P. Semmelhack Mr. Semmelhack has been President, Chief Executive Officer and
Age 60 Chairman of the Board of Barrister Information Systems
Director since 1968 Corporation (law office automation products and services) since
1982. A founder of the Company, he served as its Chief
Executive Officer until May 1983. Mr. Semmelhack is a director
of Merchants Group, Inc. (insurance company).
</TABLE>
CONTINUING CLASS II DIRECTORS
TERM EXPIRING IN 1998
<TABLE>
<S> <C>
Joseph A. Alutto Dr. Alutto was appointed Dean of the Fisher College of Business
Age 55 at The Ohio State University in March 1991. Dr. Alutto served
Director since 1987 as Dean of the School of Management at the State University of
New York at Buffalo from 1977 to 1990. He also serves on the
Board of Directors of United Retail Group, Inc. (specialty
retailer of women's apparel).
</TABLE>
6
<PAGE> 8
<TABLE>
<S> <C>
John R. Cummings Dr. Cummings is retired. He was Chairman of the Board from
Age 64 September 1990 until March 31, 1997. He served as President and
Director since 1968 CEO from October 1991 until March 31, 1996. He previously was a
Vice President and Chief Scientist of the Company since its
formation, and is a founder of the Company.
G. Wayne Hawk Mr. Hawk is retired. He was Chairman and Chief Executive
Age 69 Officer of Acme Electric Corporation from August 1992 until his
Director since 1977 retirement in October 1993. He was President and Chief
Executive Officer from August 1991 to August 1992. Prior
thereto, he served as President and Chief Operating Officer
since April 1991, and President and Chief Executive Officer
from January 1987 to April 1991. Mr. Hawk continues to serve as
a director of Acme Electric Corporation (electrical power
conversion equipment).
Patrick J. Martin Dr. Martin has been President, Americas Customer Operations for
Age 56 Xerox Corporation since 1996. Dr. Martin was President of the
Director since 1993 Office Products Division of Xerox Corporation from 1993 to
1996. From 1991 to 1993, Dr. Martin was President and General
Manager of Xerox Corporation's Americas Customer Operations. In
1992, Dr. Martin was elected to the additional post of
Corporate Vice President. Dr. Martin is a director of Central
Vermont Public Service Corporation (electric utility).
</TABLE>
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of five meetings
(including both regular and special meetings) during the fiscal year ended March
31, 1997. During fiscal year 1997, the Company had two committees: the Finance
and Audit Committee and the Compensation Committee.
The Finance and Audit Committee currently consists of directors Alutto,
Hawk, and Semmelhack. The Finance and Audit Committee met twice during the
fiscal year ended March 31, 1997. The Finance and Audit Committee's functions
include recommending to the Board of Directors the engagement of the Company's
independent certified public accountants, and reviewing with such accountants
the plan for and results of their auditing engagement.
The Compensation Committee currently consists of directors Alutto, Martin,
and Semmelhack. The Compensation Committee met two times during the fiscal year
ended March 31, 1997. The Compensation Committee approves compensation
arrangements for senior management and directors, and administers the Company's
Equity Incentive Plan.
The Company does not currently have a Nominating Committee. Nominees for
directors of the Company are selected by the full Board of Directors. The Board
of Directors will consider nominees recommended by shareholders of the Company.
The names and information supporting any such nominee should be sent to
Christopher A. Head, Esq., Secretary, Comptek Research, Inc., 2732 Transit Road,
Buffalo, NY 14224, who will submit them to the Board of Directors.
COMPENSATION AND RELATED MATTER
COMPENSATION OF DIRECTORS
Employee directors receive no additional compensation for service on the
Board of Directors or its Committees. For fiscal year 1997, directors who are
not employees received an annual fee of $10,000, payable in quarterly
installments of $2,500. In addition, each non-employee director receives a fee
of: (i) $1,000 per Board of Directors meeting attended up to an annual maximum
of $6,000; and (ii) $1,000 per committee meeting attended (on other than a Board
meeting date) up to an annual maximum of $4,000. A director may irrevocably
defer all or part of his compensation to selected later years, to be paid with
interest, at a rate equal to that of M & T Bank's one-year certificate of
deposit rate, as updated each April.
7
<PAGE> 9
Each non-employee director is automatically granted a non-statutory option
to purchase 10,000 shares of the Company's common stock at 100% of fair market
value as of the date of the director's election, appointment, or designation as
a non-employee director. In addition, each nonemployee director, effective five
business days after each Annual Meeting, is automatically granted a
non-statutory option to purchase 1,000 shares of the Company's common stock at
100% of fair market value as of the date of grant.
John R. Cummings, a founder of the Company who retired as the Company's
president and chief executive officer effective at the end of fiscal 1996,
served as the non-executive Chairman of the Board of Directors for fiscal year
1997. As a result, Dr. Cummings's employment agreement dated April 1, 1994, and
continuing through March 31, 1999, was amended to provide for his retirement
from executive management and termination of employment. The amendment further
provides for his continued service to the Board of Directors and his agreement
not to compete with the Company. Dr. Cummings was paid a salary of $135,000 for
his services to the Board of Directors for fiscal year 1997 in addition to
director's fees.
Effective April 1, 1997, Dr. Cummings retired from the position of Chairman
of the Board and is no longer paid a salary by the Company. In addition to such
salary, in consideration for his non-competition with the Company through March
31, 1998, the Company has paid or will pay to Dr. Cummings $50,000 in 1996,
$190,000 in 1997 and $104,000 in 1998.
EXECUTIVE COMPENSATION
The following table contains information for the fiscal years ended March
31, 1997, 1996, and 1995, concerning the compensation received by the Company's
Chief Executive Officer and the other most highly compensated executive officers
of the Company whose salary and bonus exceeded $100,000 for the fiscal year
ended March 31, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
- --------------------------------------------------------------------------------------------------------------------------
ALL
SECURITIES OTHER
OTHER ANNUAL UNDERLYING LTIP COMPEN-
FISCAL SALARY BONUS COMPENSATION OPTIONS PAYOUTS SATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($) ($)(1)
- ---------------------------- ------ -------- -------- -------------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
JOHN J. SCIUTO 1997 190,000 100,000 33,997(2)(4) 133,074(11) 17,500(3) 3,762
President and CEO 1996 162,586 62,720 (3) 1,048(4) 23,074(5) -- 2,136
1995 156,304 53,030 (3) -- -- -- 2,165
CHRISTOPHER A. HEAD 1997 125,008 25,000 (6) -- 27,040(11) 27,500(3) 4,081
Executive Vice President, 1996 125,008 19,250 (7) 4,237(8) 16,700(5) -- 13,636(10)
General counsel and 1995 121,050 47,000 (6) 900(9) -- -- 2,792
Secretary
JAMES D. MORGAN 1997 103,210 20,000 -- 6,900(11) -- 2,271
Vice President and Chief 1996 103,210 -- -- 6,900(5) -- 2,271
Scientist 1995 106,782 -- -- -- -- 2,349
</TABLE>
8
<PAGE> 10
- ---------------
<TABLE>
<C> <S>
(1) Amounts contributed by the Company under the Retirement Savings Plan as matching and
annual contributions based upon the individual's level of participation in the Plan as
described below under "Retirement Savings Plan."
(2) In connection with the purchase of 43,683 shares of the Company's common stock, Comptek
Federal Systems, Inc., a subsidiary of the Company, provided John J. Sciuto a low
interest loan in the amount of $218,415. The listed amount represents a gross-up of
$25,000 representing anticipated federal and state tax liability associated with the
portion of Mr. Sciuto's incentive compensation applied to the repayment of the loan.
Such gross-up is provided by the Company in consideration of Mr. Sciuto's commitment to
apply at least fifty percent of any bonus earned to the repayment of the loan. Also
included is $7,242 representing the difference between the interest paid and the amount
which would have been paid had the loan carried a market interest rate.
(3) The amount indicated reflects a one-time termination payout under a discontinued
long-term incentive plan as described below under Compensation Committee Report on
Executive Compensation.
(4) In connection with the exercise of an incentive stock option to acquire 5,405 shares of
common stock, the Company provided John J. Sciuto an interest free loan in the amounts
of $21,278 to reimburse him for alternative minimum tax incurred in the transaction in
exchange for his agreement not to sell the shares acquired prior to July 19, 1997. The
loan was provided pursuant to the terms of the Company's 1992 Equity Incentive Plan.
The listed amount represents imputed interest of $1,755 for fiscal 1997 and $1,048 for
fiscal 1996 which would have been paid had the loan carried a market interest rate.
(5) Stock options granted under the Company's Equity Incentive Plan in June 1995 and
subsequently canceled in exchange for new options issued in July 1996 and included in
the fiscal year 1997 listed amounts.
(6) Twenty-five percent of such annual bonus was paid by the Company in stock of the
Company at fair market value in lieu of cash.
(7) Fifty percent of such annual bonus was paid by the Company in stock of the Company at
fair market value in lieu of cash.
(8) Tax gross-up paid by the Company with respect to bonus paid in stock pursuant to
compensation arrangement under the Company's 1992 Equity Incentive Plan whereby the
Company provides a gross-up equal to anticipated federal and state tax liability on the
share of stock paid, provided that the participant irrevocably elects, at least six (6)
months prior to the end of the fiscal year, to receive fifty percent or more of such
annual bonus in share of the Company's stock.
(9) In connection with the exercise of an incentive stock option to acquire 2,500 shares of
common stock, the Company provided Christopher A. Head an interest-free loan in the
amount of $10,000 to reimburse him for alternative minimum tax incurred in the
transaction in exchange for his agreement not to sell the shares acquired prior to May
7, 1995. The loan was provided pursuant to the terms of the Company's 1992 Equity
Incentive Plan and was extinguished by the Company as of May 1995. The listed amount
represents the amount of interest which would have been paid had the loan carried a
market interest rate.
(10) Includes $10,000 representing cancellation of the loan referred to in note (9).
(11) Includes options which were issued as replacement options at a new lower price in
exchange for the surrender of older higher priced options ("repriced options") as
discussed below under "Compensation Committee Report on Executive Compensation." Mr.
Sciuto received 33,074 repriced options in fiscal 1997; all of the options reported for
Mr. Head and Mr. Morgan for fiscal 1997 were repriced options (See also "10-year
Option/SAR Repricing" below).
</TABLE>
INCENTIVE COMPENSATION PLAN
Company officers and certain other key personnel participate in an
incentive compensation arrangement based on predetermined corporate and
individual goals, including revenue, profit, project completion and contract
award levels established at the beginning of each fiscal year.
9
<PAGE> 11
The base amount of an individual's incentive compensation potential is
established annually. Officers' incentive compensation levels are established by
the Compensation Committee of the Board of Directors and are approved by the
Board of Directors. Directors, as such, are not eligible to participate in the
Plan. Amounts paid to the named Executive Officers are set forth in the Summary
Compensation Table.
STOCK OPTIONS/STOCK APPRECIATION RIGHTS (SARS) GRANTS IN FISCAL YEAR 1997
OPTION/SAR GRANTS IN THE LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE OF ASSUMED
ANNUAL RATES
OF STOCK
INDIVIDUAL GRANTS PRICE APPRECIATION
FOR OPTION TERM
------------------------------------------------------------------------------------
PERCENT OF
TOTAL OPTIONS/
OPTIONS SAR GRANTED TO EXERCISE OR
GRANTED(1) EMPLOYEES IN BASE PRICE EXPIRATION
NAME (#) FISCAL YEAR ($/SHARE) DATE 5%(4) 10%(4)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
John J. Sciuto 50,000(2) 43.9% $ 5.50 04/02/2006 152,000 374,500
50,000(2) $ 5.50 06/20/2006 152,000 374,500
33,074(3) $ 5.625 07/26/2006 102,576 252,639
- ------------------------------------------------------------------------------------------------------------------
Christopher A. Head 27,040(3) 8.9% $ 5.625 07/26/2006 83,862 206,548
- ------------------------------------------------------------------------------------------------------------------
James D. Morgan 6,900(3) 2.3% $ 5.625 07/26/2006 21,400 52,706
</TABLE>
- ---------------
(1) Options to purchase shares of common stock granted under the Company's 1992
Equity Incentive Plan. No SAR's were granted during the last fiscal year.
(2) Options are exercisable starting one year after grant date, with 1/5 of the
options becoming exercisable on each successive anniversary date, with full
exercisability occurring on the fifth anniversary date. Such options were
granted for a term of 10 years, subject to earlier termination in certain
events related to termination of employment.
(3) Options issued at market price of common shares on date of grant in exchange
for the surrender of a like number of higher priced options. Options are
exercisable starting one year after grant date, with 1/3 of the options
becoming exercisable on each successive anniversary date, with full
exercisability occurring on the third anniversary date. Such options were
granted for a term of 10 years, subject to earlier termination in certain
events related to termination of employment.
(4) The dollar amounts in these columns were 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. The closing price of the Common Stock on
the American Stock Exchange on March 31, 1997, was $5.75.
STOCK OPTIONS/SARS EXERCISED IN FISCAL 1997 AND YEAR-END VALUES
The following table reflects the number of stock options and SARs exercised
by the named executive officers in 1997, the total gain realized upon exercise,
the number of stock options held at the end of the year, and the realizable gain
of the stock options that are "in-the-money." In-the-money stock options and
SARs are stock options or SARs with exercise prices that are below the year-end
stock price because the stock value grew since the date of the grant.
10
<PAGE> 12
AGGREGATED OPTION/SAR EXERCISES IN THE LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
# OF SECURITIES
UNDERLYING VALUE OF
UNEXERCISED UNEXERCISED,
OPTIONS/SARS AT IN-THE-MONEY OPTIONS
FISCAL AT FISCAL YEAR
YEAR-END END(2)
SHARES -------------------- --------------------
ACQUIRED ON VALUE EXERCIS- UNEXER- EXERCIS- UNEXER-
EXERCISE REALIZED(1) ABLE CISABLE ABLE CISABLE
NAME (#) ($) (#) (#) ($) ($)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
John J. Sciuto -- -- 18,595 133,074 30,217 29,134
- -----------------------------------------------------------------------------------------------------------
Christopher A. Head -- -- 39,250 27,040 77,125 3,380
- -----------------------------------------------------------------------------------------------------------
James D. Morgan -- -- -- 6,900 -- 863
</TABLE>
- ---------------
(1) Based upon the difference between the closing price of the Common Stock on
the American Stock Exchange on the date or dates of exercise and the
exercise price or prices for the stock options.
(2) Based upon the closing price of the Common Stock on the American Stock
Exchange on March 31, 1997, of $5.75 per share.
10-YEAR OPTION/SAR REPRICING
The following table sets forth information on stock options previously
awarded during the last ten fiscal years to executive officers (including
previous executive officers no longer employed by the Company), where the
exercise price was reduced by the Company through the cancellation of such
options and the grant of new replacement options for an identical number of
shares. The replacement options received in fiscal 1997 are also listed in the
previous table captioned "Option/SAR Grants in the Last Fiscal Year".
11
<PAGE> 13
STOCK OPTION REPRICING(1)
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF ORIGINAL
SECURITIES MARKET PRICE OPTION TERM
UNDERLYING OF STOCK AT EXERCISE PRICE REMAINING AT
OPTIONS/SARS TIME OF AT TIME OF DATE OF
REPRICED OR REPRICING OR REPRICING OR NEW EXERCISE REPRICING OR
NAME DATE AMENDED AMENDMENT AMENDMENT PRICE AMENDMENT
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
John J. Sciuto 04/14/89 20,000 3.25 4.00 3.25 88 mos.
8,000 3.25 5.938 3.25 101 mos.
07/26/96 10,000 5.625 15.375 5.625 81 mos.
21,800 5.625 16.00 5.625 106 mos.
1,274 5.625 17.75 5.625 109 mos.
- ------------------------------------------------------------------------------------------------------------------------------
Christopher A. Head 04/14/89 2,500 3.25 4.875 3.25 65 mos.
5,000 3.25 5.375 3.25 72 mos.
5,000 3.25 3.375 3.25 84 mos.
10,000 3.25 4.875 3.25 108 mos.
7/26/96 10,000 5.625 15.375 5.625 81 mos.
340 5.625 14.00 5.625 83 mos.
16,700 5.625 16.00 5.625 106 mos.
- ------------------------------------------------------------------------------------------------------------------------------
Laura L. Benedetti 7/26/96 6,000 5.625 15.375 5.625 81 mos.
4,600 5.625 15.375 5.625 106 mos.
- ------------------------------------------------------------------------------------------------------------------------------
James D. Morgan 7/26/96 6,900 5.625 16.00 5.625 106 mos.
- ------------------------------------------------------------------------------------------------------------------------------
TERMINATED OFFICERS
- ------------------------------------------------------------------------------------------------------------------------------
Jack E. Wagner 04/14/89 5,000 3.25 4.50 3.25 60 mos.
10,000 3.25 5.375 3.25 72 mos.
20,000 3.25 3.375 3.25 84 mos.
15,000 3.25 5.938 3.25 101 mos.
50,000 3.25 4.875 3.25 108 mos.
- ------------------------------------------------------------------------------------------------------------------------------
Kenneth E. Lanham 04/14/89 6,000 3.25 7.75 3.25 89 mos.
30,000 3.25 4.875 3.25 108 mos.
- ------------------------------------------------------------------------------------------------------------------------------
Thomas C. Kingston 04/14/89 3,000 3.25 4.875 3.25 65 mos.
</TABLE>
- ---------------
(1) The Company has twice engaged in a repricing exchange: in July 1996 and in
April 1989. The number of options and the prices listed below for the April
1989 repricing exchange have been adjusted to reflect a two-for-one stock
split which was effective May 15, 1992.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
ROLE OF THE COMPENSATION COMMITTEE
Each year the Compensation Committee, which is comprised entirely of
outside directors, evaluates and establishes the compensation arrangements for
executive officers, including a review and approval of annual salaries, annual
and long-term incentive plan awards, standards of performance for new awards,
payouts from past awards, and program participation and design. The Compensation
Committee also administers the Company's Equity Incentive Plan for all
participants. In evaluating compensation for executive officers, the Committee
has from time to time retained the services of independent compensation experts,
reviewed industry available data and surveys, and received recommendations from
management and the Company's Human Resources Department regarding overall
compensation plans and structures.
12
<PAGE> 14
EXECUTIVE COMPENSATION PHILOSOPHY
The fundamental objective of the Company's Executive Compensation Program
is two-fold: namely, to attract and retain highly competent and motivated
individuals by providing a compensation package which is industry competitive
and to emphasize a reward system which is based upon the individual's
contribution to the overall success and performance of the Company. The
Committee applies the following guiding principles in establishing compensation
levels for executives: (1) Incentives should represent a strong portion of the
Company's Executive Compensation Program; (2) Salary should be reasonable in
reference to position responsibilities and industry norms; (3) Fixed costs
should be controlled while encouraging performance-based variable costs which
link to the financial results of the Company; and (4) The Executive Officers
should have significant equity ownership opportunities. It is the Committee's
belief that this approach will allow for a linking of compensation with
shareholder value and serve to attract and retain qualified individuals capable
of producing superior results. With reference to these principles, the
Compensation Committee for fiscal year 1997 (April 1, 1996 through March 31,
1997), conducted a review and evaluation of the overall executive compensation
program applicable to the executive officers named in the Executive Compensation
Table and other senior managers.
Base Compensation. The Committee's approach to base compensation is to
offer competitive salaries in comparison with market averages. The Committee
makes base compensation decisions in an annual review with input from the CEO,
market pay statistics, and nationwide trends of executives in similar positions
in companies with similar sales volumes. This information is used as a frame of
reference for annual salary adjustments and starting salaries. The Committee
considers both the Company's performance (e.g., stock price, return on assets
and sales growth v. budget) as well as individual decision-making
responsibilities and work performance of each position incumbent. With respect
to the CEO, as discussed below, the primary factor is profitability.
Individual target amount for incentive compensation are based upon
compensation survey averages and range between 20% and 50% of the individual's
base salary.
Annual Incentive Compensation Plan. The Company uses the Annual Incentive
Compensation Plan to serve as an incentive for executive officers and other key
employees to accomplish annual Company performance objectives. The performance
objectives for the Plan are established at the beginning of the fiscal year
subject to modification in the event of a significant operating change. For
fiscal year 1997, each incentive compensation plan participant, except the CEO
as discussed below, received 25% of his or her incentive compensation payment
over $4,000 in shares of the Company's common stock. This resulted in the
distribution of approximately 20,000 shares of stock to plan participants.
Plan performance objectives include overall corporate profitability and
performance results of the specific business unit of the Company under a
participant's direct control.
Long-Term Incentive Compensation. The Company traditionally has used stock
options under its Equity Incentive Plan to serve as an incentive to executive
officers and other key employees based on the Company's stock market value. The
grant of stock options under the Plan is subjective, based on perception of the
individual's performance, functional responsibility, and position within the
Company. Awards are typically considered at the time of the individual's annual
performance review or change in responsibilities or position. Effective for
fiscal 1996, the Company adopted a three-year stock performance component for
long-term incentive compensation. As a result, between 25% to 75% of the
participant's annual incentive compensation was assigned to the three-year stock
performance feature in lieu of such amount being included in annual incentive
compensation. In fiscal 1997, the Compensation Committee revisited the
advisability of this approach and determined that the three-year plan should be
terminated and funds accrued in the plan from the prior year should be paid out.
This change in approach was primarily due to (i) the appointment of a new chief
executive officer with direction to focus on improved financial performance in
the defense electronics industry and (ii) limitations on allowability and
allocability of multi-year plans to annual compensation cost recoverable on
government contracts.
13
<PAGE> 15
Stock Option Repricing. As a result of the Company's total writedown of
its investment in wireless data communications and a renewed focus on the
defense electronics industry, the Compensation Committee determined in July 1996
that the exercise price of many stock options previously granted, primarily in
1994 and 1995, were at such high prices compared with then market value that the
incentive value of the options had been negated.
During fiscal 1997 in lieu of granting any additional options to plan
participants as part of the annual review process, the Compensation Committee
elected to offer to each holder of stock options issued at a strike price of
greater than $5.625 the opportunity to exchange such options for new options
having a price of $5.625. Such new options are subject to a new three-year
vesting schedule. This resulted in the effective repricing of 202,814 options
previously granted at prices ranging from $13.125 to $17.75. Except for options
issued to John J. Sciuto in connection with his promotion to president and chief
executive officer and the repricing discussed above, no other options were
granted in fiscal 1997. Also for fiscal 1997, the total cash compensation
(salary and annual incentive compensation) of certain individuals who received
repriced options was reduced. The grant of repriced options provides an
opportunity for such individuals to receive long-term financial benefits in
place of current-year cash compensation.
Stock Ownership Requirements. The Compensation Committee has established
minimum stock ownership requirements for its executive officers and certain
other senior managers. Specific requirements applicable to the chief executive
officer are discussed below under "Fiscal 1997 Chief Executive's Pay." In order
for an executive officer and certain other senior managers to be eligible for
additional incentive compensation or option grants in future years minimum
ownership levels must be achieved and maintained.
FISCAL 1997 CHIEF EXECUTIVE'S PAY
The Compensation Committee reviews the compensation of the CEO within the
context of published survey data issued by The American Electronics Association,
Wyatt Associates, and Towers Perrin providing compensation information for a
group of companies similar to the Company in size and business focus. Based upon
that analysis, the Committee established a base salary and incentive award
targets for John J. Sciuto who was named Chief Executive Officer effective April
1, 1996.
Effective as of his appointment as president and chief executive officer,
the Compensation Committee fixed Mr. Sciuto's base salary at $190,000. The
Committee believed that such amount was an appropriate base salary given Mr.
Sciuto's background in the defense industry and the renewed focus of the Company
in that industry. It is the Committee's belief that the base salary paid Mr.
Sciuto is below the industry average for the chief executive officer position
for a similar size company. Consistent with the Committee's philosophy of
emphasizing incentive compensation, the Committee for fiscal 1997 established a
target amount of incentive compensation which would be paid to the chief
executive officer and other officers if predetermined earnings were achieved.
Based upon earnings of $2,173,000, or $.42 per share, Mr. Sciuto received 100%
of his targeted incentive compensation for fiscal 1997. Such earnings are the
highest in the Company's history. For fiscal year 1998, the Committee increased
Mr. Sciuto's base salary to $228,000, but continued his target bonus at $100,000
and increased his earnings target. Accordingly, notwithstanding the record
earnings level achieved in fiscal 1997, no bonus will be paid Mr. Sciuto for
fiscal 1998 unless earnings increase over 1997 by an amount established by the
Committee. The specific amount of the target bonus and annual increase in
earnings target is a subjective determination by the Committee predicated on
industry growth rates and bonus levels.
In connection with Mr. Sciuto's appointment as president and chief
executive officer, the Committee granted Mr. Sciuto option on 100,000 shares of
stock vesting ratable over a period of five years, 50,000 of which are also
subject to the attainment of certain performance objectives. In addition, the
Committee required, Mr. Sciuto to acquire and retain a minimum of 50,400 shares
of stock of Comptek. In order to facilitate Mr. Sciuto's purchase of 43,683
shares from the Company, the Company's subsidiary loaned to Mr. Sciuto $218,415.
This loan, which bears interest at the annual rate of 3.7%, is due and payable
on the earlier of July 8, 2001 or ninety days after Mr. Sciuto ceases to be
employed by the Company. The loan agreement further provides that a minimum of
twenty-five percent of the gross amount of any incentive compensation paid to
Mr. Sciuto will be used to pay down the outstanding balance of the loan. If Mr.
Sciuto elects to apply at least fifty-percent of such incentive compensation to
loan repayment, then the amount
14
<PAGE> 16
applied will be grossed-up to satisfy Mr. Sciuto's anticipated tax liability
related to the portion of his incentive compensation applied to re-payment. For
fiscal year 1997, Mr. Sciuto applied $50,000 of his incentive compensation award
to loan repayment and as a result received an additional $25,000 payment to
satisfy anticipated tax liability. Mr. Sciuto's stock purchase and loan
arrangement is in lieu of the Company's policy of paying a portion incentive
compensation in the form of shares of stock.
EMPLOYMENT AND SEVERANCE AGREEMENTS
Each of the executive officers, named in the Summary Compensation Table has
entered into an employment agreement with the Company. Under each agreement, in
the event of either voluntary or involuntary termination of employment, the
Company is obligated to make a termination payment in twelve monthly
installments, equal to one year's salary as of the termination date in
consideration of the officer's agreement not to compete with the Company during
the one-year period.
COMPANY POSITION ON LIMITATION OF DEDUCTIBILITY OF EXECUTIVE PAY
Effective as of January 1, 1994, Section 162(m) of the Internal Revenue
Code of 1986 (the "Internal Revenue Code") generally denies a deduction to any
publicly-held corporation for compensation paid to its chief executive officer
and its four highest-paid executive officers to the extent that any such
individual's compensation exceeds $1 million, subject to certain exceptions,
including one for "performance-based compensation." Compensation paid to such
executive officers of the Company for fiscal year 1997 is expected to be
tax-deductible since no such amount exceeds the $1 million limit. Under Section
162(m) of the Internal Revenue Code and the regulations and transition rules
issued by the Internal Revenue Service, it is highly unlikely that any one of
the Company's executive officers will receive compensation in the current fiscal
year that is nondeductible under Section 162(m). With respect to future years,
the Company intends to study the application of Section 162(m) of the Internal
Revenue Code to its compensation plans and practices, and will consider possible
changes thereto that may be necessary to qualify future compensation paid to its
executive officers for deductibility under Section 162(m) of the Internal
Revenue Code.
The Compensation Committee of the
Board of Directors
Joseph A. Alutto
Patrick J. Martin
Henry P. Semmelhack
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the past fiscal year, Messrs. Alutto, Martin, and Semmelhack served
as members of the Compensation Committee.
Henry P. Semmelhack was President and Chief Executive Officer of the
Company from 1968 to 1983. From 1983 to 1992 he served as a consultant to the
Company. Mr. Semmelhack's wife Tricia T. Semmelhack is a partner in the Buffalo,
New York, law firm Hodgson, Russ, Andrews, Woods & Goodyear, which firm has in
the past and is anticipated may in the future provide legal services to the
Company.
James D. Morgan, an executive officer and director of the Company, is a
director and member of the Compensation Committee of Barrister Information
Systems Corporation ("Barrister") and as such reviews and approves the
compensation paid by Barrister to Henry P. Semmelhack as an executive officer of
Barrister.
15
<PAGE> 17
PERFORMANCE GRAPH
The Company has elected to substitute a Peer Group in lieu of the American
Stock Exchange High Technology Index. This change is being made primarily for
two reasons, namely: (i) the Company's stated objective of focusing on the
defense industry and (ii) the American Stock Exchange's discontinuation of the
American Stock Exchange High Technology Index.
The graph below compares the cumulative total shareholder return on the
common shares of the Company for the last five fiscal years with the cumulative
total return on the Standard & Poors 500 Index, and the Peer Group Index over
the same period (assuming the investment of $100 in the Company's common shares,
the Standard & Poors 500 Index, the Peer Group Index, and the reinvestment of
all dividends.)
The Peer Group consists of Analysis & Technology, Inc., VSE Corporation,
Diagnostic/Retrieval Systems, Inc., The Titan Corporation, GRC International,
Inc., BTG, Inc., TechSym Corporation.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
AMONG COMPTEK RESEARCH, INC., THE S & P 500 INDEX
AND A PEER GROUP
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) COMPTEK RESCH, INC. PEER GROUP S & P 500
<S> <C> <C> <C>
3/92 100 100 100
3/93 87 134 115
3/94 101 192 117
3/95 70 227 135
3/96 27 361 179
3/97 30 234 214
</TABLE>
* $100 INVESTED ON 03/31/92 IN STOCK OR INDEX--
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING MARCH 31.
EMPLOYMENT CONTRACTS
The Company currently has employment contracts with certain of its
executive officers and other key employees. Messrs. Sciuto, Head, and Morgan
have entered into five-year employment agreements with the Company, terminating
in 1997, 1997, and 1999, respectively. Annual salaries payable under such
contracts as of June 1, 1997, are as follows: John J. Sciuto, $228,000;
Christopher A. Head, $130,000; and James D. Morgan, $110,000. Under each
agreement, in the event of either voluntary or involuntary termination of
employment, the Company is obligated to make a termination payment in twelve
monthly installments, equal to one year's salary as of the termination date in
consideration of the officer's agreement not to compete with the Company during
the one-year period.
16
<PAGE> 18
RETIREMENT SAVINGS PLAN
The Company established a defined contribution plan known as the Comptek
Research Retirement Savings Plan effective June 1, 1985. This Plan is intended
to meet the requirements of Section 401(k) of the Code.
Each full-time regular employee is eligible to join the Plan on his or her
date of hire. Each other employee is eligible upon completion of one year of
service in which such employee has been credited with at least 1,000 hours of
service on or upon a change in status to full-time, regular employee. At April
1, 1997, there were 599 Participants.
Currently under the Plan, the Company will make an automatic contribution
equal to 1% of gross pay at the end of each fiscal year to the individual
account of each eligible employee. To be eligible for the automatic
contribution, an employee must have been continuously employed on a full-time
basis for the entire fiscal year. In addition, the Plan provides for a Company
match of $.30 on the first 4% of pay contributed to the Plan by a participant.
A Participant at all times is 100% vested in his contributions and
contributions made by the Company. Distributions are made under the Plan only
upon retirement, death, disability, separation from service or in the case of
certain hardships. There is also a loan provision in the Plan.
All contributions under the Plan are placed into individual accounts for
each Participant. For the year ended March 31, 1997, the Company contributed a
total of $545,236 for all employees, including Executive Officers. The Company's
contributions for the last fiscal year for the named Executive Officers is
included in the "Summary Compensation Table."
DIRECTORS' AND OFFICERS' LIABILITY INSURANCE
The Company, pursuant to its by-laws, indemnifies its directors, officers,
benefit plan trustees, other fiduciaries and employees as permitted by law in
connection with proceedings which might be instituted against them by reason of
their service for or on behalf of the Company. The Company has purchased
directors' and officers' liability insurance which provides indemnification for
the Company and its directors and officers. The current policy, issued by the
Chubb Group, is effective for the period of April 1, 1997, through March 31,
1999, at an annual premium of $55,000.
CERTAIN TRANSACTIONS
In connection with the Company's acquisition of Advanced Systems
Development, Inc. ("ASDI") in March 1996, the Company entered into a three-year
lease agreement covering approximately 23,000 square feet of operating and
office facilities in East Elmhurst, New York at an annual net rent of $140,000.
The facilities are owned by Advanced Systems Realty Company, a New York
partnership owned by Michael Gross and Nichan Tchorbajian, former principal
shareholders of ASDI. Messrs. Gross and Tchorbajian are employees and officers
of the Company's subsidiary, Comptek Federal Systems, Inc., and as of June 7,
1997, own 3.92% and 5.81% of the Company's common stock, respectively. The
Company believes that the terms of this lease reflect current market conditions
in that location.
On July 9, 1996, Comptek Federal Systems, Inc., a subsidiary of the
Company, loaned to John J. Sciuto, the Company's president and chief executive
officer, $218,415. This loan was provided to Mr. Sciuto to facilitate his
purchase of 43,683 shares of the Company. The loan carries an annual interest
rate of 3.7% and provides for repayment by July 8, 2001, or within ninety days
after he leaves the Company's employ. The loan agreement provides that Mr.
Sciuto will apply at least twenty-five percent of any incentive compensation to
the repayment of the loan. The loan agreement further provides that if Mr.
Sciuto applies at least fifty percent of such incentive compensation to loan
repayment, then the amount applied will be grossed-up to satisfy Mr. Sciuto's
anticipated tax liability related to the portion of his incentive compensation
applied to repayment. For fiscal year 1997, Mr. Sciuto applied $50,000 of his
incentive compensation award to loan repayment and as a result received an
additional $25,000 payment to satisfy anticipated tax liability.
17
<PAGE> 19
During the fiscal year ended March 31, 1997, the Company retained, and in
the future anticipates retaining, the Buffalo, New York, law firm of Hodgson,
Russ, Andrews, Woods and Goodyear to perform certain legal services. Director
Henry P. Semmelhack's wife, Tricia T. Semmelhack, is a partner in such law firm.
Joseph F. Sciuto, Vice President of Business Development for Comptek
Federal Systems, Inc., is the brother of John J. Sciuto, Chief Executive Officer
of the Company. Joseph F. Sciuto, who holds a Ph.D. in computer information
systems, has held similar positions with Contel and GTE during his 27 years of
involvement within the defense establishment. Dr. Sciuto is responsible for the
development and implementation of Comptek Federal Systems' marketing and
business development plans. For the fiscal year ended March 31, 1997, he was
paid a salary and bonus of $116,097.
COMPLIANCE WITH SECTION 16 FILING REQUIREMENTS
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons, the Company believes
that, during April 1, 1996, through March 31, 1997, all filing requirements
applicable to its officers, directors, and greater-than-ten-percent beneficial
owners were met.
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon the recommendation of the Finance and Audit
Committee, has selected KPMG Peat Marwick ("Peat Marwick"), independent public
accountants, to audit the financial statements of the Company for the fiscal
year ending March 31, 1997. Peat Marwick has audited the Company's financial
statements for each of the Company's fiscal years since the Company's formation
in 1968. One or more representatives of Peat Marwick will be present at the
Annual Meeting and will have the opportunity to make a statement and/or respond
to appropriate questions that may be raised by shareholders.
OTHER INFORMATION
SHAREHOLDERS' PROPOSALS FOR FISCAL 1998 ANNUAL MEETING
Shareholders may submit proposals appropriate for shareholder action at the
Company's Annual Meetings consistent with regulations adopted by the Securities
and Exchange Commission. For such proposals to be considered for inclusion in
the proxy statement and formal proxy for the 1998 Annual Meeting, they must be
received by the Company no later than February 25, 1998. Proposals should be
directed to Christopher A. Head, Esq., Secretary, Comptek Research, Inc., 2732
Transit Road, Buffalo, New York 14224.
18
<PAGE> 20
OTHER BUSINESS
As of the date of this Proxy Statement, the only business which the Board
of Directors intends to present or knows that others will present at the Annual
Meeting is that hereinabove set forth. If any other matter or matters are
properly brought before the Annual Meeting, or any adjournment or adjournments
thereof, it is the intention of the persons named in the accompanying form of
proxy, based upon the discretionary authority granted in such proxy, to vote the
proxy on such matters in accordance with their judgment.
A COPY OF THE COMPANY'S FISCAL 1997 ANNUAL REPORT TO THE SECURITIES AND
EXCHANGE COMMISSION ON FORM 10-K WILL BE AVAILABLE AFTER JUNE 30, 1997, AND
PROVIDED WITHOUT CHARGE TO SHAREHOLDERS UPON WRITTEN REQUEST DIRECTED TO THE
SECRETARY, COMPTEK RESEARCH, INC., 2732 TRANSIT ROAD, BUFFALO, NEW YORK 14224.
By the Order of the Board of Directors,
CHRISTOPHER A. HEAD
Secretary
Dated: June 26, 1997
19
<PAGE> 21
[COMPTEK RESEARCH INC. LOGO]
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS, JULY 25, 1997
The undersigned hereby appoints CHRISTOPHER A. HEAD and LAURA L. BENEDETTI as
Proxies, each with the power to appoint his/her substitute, and hereby
authorizes them to represent and to vote, as designated on the reverse side, all
the shares of common stock of Comptek Research, Inc., held of record by the
undersigned on June 6, 1997, at the Annual Meeting of Shareholders to be held on
July 25, 1997, or any adjournments thereof, upon the matters set forth in the
Proxy Statement and, in their judgment and discretion, upon such other business
as may properly come before the meeting.
THE PROXY WILL BE VOTED FOR ELECTION OF THE DIRECTORS AND FOR ALL OTHER ITEMS
LISTED ON THE REVERSE SIDE UNLESS A CONTRARY INSTRUCTION IS GIVEN.
PLEASE FILL IN, DATE, AND SIGN AND RETURN THIS PROXY IN THE ACCOMPANYING
ENVELOPE.
<PAGE> 22
I plan to attend
the meeting.
[ ]
- -------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE NOMINEES
IN ITEM 1 AND FOR ITEM 2.
- --------------------------------------------------------------------------------
ITEM 1--ELECTION OF THREE CLASS I DIRECTORS for a two-year term expiring
at the 1999 Annual Meeting: JAMES D. MORGAN, JOHN J. SCIUTO, HENRY P.
SEMMELHACK.
<TABLE>
<S> <C> <C>
FOR all nominees listed WITHHOLD AUTHORITY __________________________
above (except as marked to vote for all nominees
to the contrary at right). listed above. __________________________
__________________________
[ ] [ ]
__________________________
</TABLE>
- --------------------------------------------------------------------------------
ITEM 2---RATIFICATION OF SELECTION OF KPMG PEAT MARWICK, independent
accountants, as auditors for the Company for the Fiscal Year ending March 31,
1998.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
- --------------------------------------------------------------------------------
COMMENTS/ADDRESS CHANGE [ ]
Please mark this box if you have
an address change and mark change
on mailing label.
RECEIPT IS HEREBY ACKNOWLEDGED OF THE
COMPTEK RESEARCH, INC. NOTICE OF
MEETING AND PROXY STATEMENT.
Signature(s) ____________________________
____________________________
____________________________
Date: ____________________________
- -------------------------------------------------------------------------------
------------------------------------------------------
"PLEASE MARK INSIDE BLUE BOXES SO THAT DATA PROCESSING
EQUIPMENT WILL RECORD YOUR VOTES"
------------------------------------------------------
NOTE: Please sign as name appears hereon. Joint
owners should each sign. When signing as
attorney, executor, administrator, trustee or
guardian, please give full title as such.
