<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
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:
/ / 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 Rule 14a-11(c) or Rule 14a-12
ORBITAL SCIENCES CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
Orbital
Sciences [LOGO]
Corporation
March 25, 1996
Dear Stockholder:
It is my pleasure to invite you to the Annual Meeting of Stockholders of
Orbital Sciences Corporation to be held on Thursday, April 25, 1996 at 9:00 A.M.
at the Company's headquarters located at 21700 Atlantic Boulevard, Dulles,
Virginia 20166.
Whether or not you plan to attend, and regardless of the number of shares
you own, it is important that your shares be represented at the meeting. You are
accordingly urged to sign, date and return your proxy promptly in the enclosed
envelope, which requires no postage if mailed in the United States. Your return
of a proxy in advance will not affect your right to vote in person at the
meeting.
I hope that you will be able to attend the meeting. The officers and
directors of the Company look forward to seeing you at that time.
Sincerely,
/s/ DAVID W. THOMPSON
- --------------------------------
DAVID W. THOMPSON
Chairman of the Board, President
and Chief Executive Officer
<PAGE> 3
ORBITAL SCIENCES CORPORATION
21700 ATLANTIC BOULEVARD
DULLES, VIRGINIA 20166
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 25, 1996
------------------------
The Annual Meeting of Stockholders of Orbital Sciences Corporation (the
"Company") will be held at the Company's headquarters located at 21700 Atlantic
Boulevard, Dulles, Virginia 20166, on Thursday, April 25, 1996 at 9:00 A.M. for
the following purposes:
1. To elect five directors for a three-year term ending in 1999.
2. To ratify the appointment of KPMG Peat Marwick LLP as independent
auditors for the Company.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 20, 1996 as
the record date for determination of stockholders entitled to notice of and to
vote at the meeting and any adjournments thereof.
IF YOU ARE UNABLE TO BE PRESENT PERSONALLY, PLEASE SIGN AND DATE THE ENCLOSED
PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors,
/s/LESLIE C. SEEMAN
- --------------------------------------
LESLIE C. SEEMAN
Senior Vice President, General Counsel
and Secretary
March 25, 1996
<PAGE> 4
ORBITAL SCIENCES CORPORATION
21700 ATLANTIC BOULEVARD
DULLES, VIRGINIA 20166
------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
------------------------
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Orbital Sciences Corporation (the "Company" or "Orbital") for use
at the Annual Meeting of Stockholders to be held at the Company's headquarters
located at 21700 Atlantic Boulevard, Dulles, Virginia 20166, on Thursday, April
25, 1996 at 9:00 A.M. and any adjournments thereof.
There are two outstanding classes of securities that entitle holders
thereof to vote generally at meetings of Orbital stockholders: (a) common stock
of Orbital, par value $0.01 per share (the "Common Stock") and (b) Series A
Preferred Stock (the "Special Voting Stock"). A single share of Special Voting
Stock was issued to State Street Bank and Trust Company (the "Trustee"), as
trustee under a voting trust agreement for the benefit of holders of
exchangeable shares of the Company's wholly owned subsidiary, MacDonald,
Dettwiler Holdings Inc. (the "Exchangeable Shares") that were issued in
connection with Orbital's November 1995 acquisition of MacDonald, Dettwiler and
Associates Ltd. ("MDA"). The Common Stock and Special Voting Stock vote together
as a single class on all matters except as otherwise required by Delaware law.
The Common Stock is entitled to one vote per share. The Trustee, as holder of
the Special Voting Stock, is entitled to one vote for each outstanding
Exchangeable Share for which instructions with respect to such voting are
received in proper form from respective Exchangeable Shareholders. Unless
otherwise indicated, references herein to "stockholders" means holders of
Orbital Common Stock and the Special Voting Stock. Rights and procedures with
respect to the voting of Exchangeable Shares are set forth in the "Information
Statement for Holders of Exchangeable Shares of MacDonald, Dettwiler Holdings
Inc." included in the proxy materials sent to Exchangeable Shareholders.
Common Stockholders of record at the close of business on March 20, 1996
(the "Record Date"), and the Trustee on behalf of the Exchangeable Shareholders
of record on the Record Date will be entitled to vote at the Annual Meeting of
Stockholders. On the Record Date, there were 25,935,630 shares of Common Stock
outstanding, the holders of which are entitled to one vote per share on each
matter to come before the meeting. On the Record Date, there were 1,177,879
Exchangeable Shares outstanding, entitling the Trustee to one vote per
Exchangeable Share on each matter to come before the meeting to the extent and
in the manner instructed by the respective Exchangeable Shareholders. Proxies
properly executed and returned will be voted at the meeting in accordance with
any directions noted thereon or, if no direction is indicated, proxies will be
voted FOR the election of the nominees for director set forth below and FOR the
other proposal described in this Proxy Statement. Proxies will be voted in the
discretion of the holders of the proxy with respect to any other business that
may properly come before the meeting and all matters incidental to the conduct
of the meeting. Any stockholder signing and delivering a proxy may revoke it at
any time before it is voted by delivering to the Secretary of the Company a
written revocation or a duly executed proxy bearing a date later than the date
of the proxy being revoked. Any stockholder attending the meeting in person may
revoke his or her proxy and vote his or her shares.
This Proxy Statement and accompanying form of proxy will be first mailed to
Common Stockholders, the Trustee and the Exchangeable Shareholders on or about
March 29, 1996.
<PAGE> 5
ELECTION OF DIRECTORS (PROPOSAL 1)
Five directors are to be elected at the 1996 Annual Meeting for three-year
terms that expire in 1999. Nine other directors have been elected to terms that
end in either 1997 or 1998, as indicated below. Unless instructions are given to
the contrary, it is the intention of the persons named as proxies to vote the
shares to which the proxy is related FOR the election of each of the nominees
listed below for a term of three years expiring at the 1999 Annual Meeting of
Stockholders and until his successor is elected and qualified or until his
earlier death, removal or resignation. If any nominee should become unavailable,
such proxy will be voted for a substitute nominee designated by the Human
Resources and Nominating Committee. Management does not anticipate that any of
the nominees will become unavailable. The five nominees for election as
directors at the Annual Meeting who receive the greatest number of votes
properly cast for the election of directors shall be elected directors.
Set forth below is certain information concerning each of the nominees and
the other incumbent directors:
DIRECTORS TO BE ELECTED AT THE 1996 ANNUAL MEETING
KELLY H. BURKE, 66
Chairman of Human Resources and Nominating Committee
Kelly H. Burke has been a Director of the Company since 1984. In 1982, General
Burke retired from the U.S. Air Force. Since that time, General Burke has been
Chairman of Stafford, Burke and Hecker, Inc., an aerospace consulting firm.
During 30 years of U.S. Air Force service, General Burke held a wide variety of
command and staff positions, culminating with that of Deputy Chief of Staff for
Research, Development and Acquisition at the Pentagon. Additionally, he has
served as an advisor to the White House Science Office, the National Academy of
Sciences, the Defense Science Board and the U.S. Air Force Scientific Advisory
Board.
BRUCE W. FERGUSON, 41
Bruce W. Ferguson is a founder of Orbital and has been Executive Vice President
and General Manager/Communications and Information Services Group since October
1993 and a Director of the Company since 1982. Mr. Ferguson was Executive Vice
President and Chief Operating Officer of Orbital from 1989 to October 1993 and
Senior Vice President/Finance and Administration and General Counsel from 1985
to 1989.
DANIEL J. FINK, 69
Chairman of Strategy and Technology Committee and Member of Audit and Finance
Committee
Daniel J. Fink has been a Director of the Company since 1983. Since 1982, Mr.
Fink has been President of D.J. Fink Associates, Inc., a management consulting
firm. From 1967 until 1982, Mr. Fink held a variety of positions at General
Electric Company, including the position of Senior Vice President from 1979 to
1982. He is a director of Titan Corporation, a former member of the Defense
Science Board and a former Chairman of the National Aeronautics and Space
Administration ("NASA") Advisory Council.
JACK A. FROHBIETER, 59
Jack A. Frohbieter has been a Director of the Company since August 1994 and
Executive Vice President and General Manager/Space and Electronics Systems Group
since September 1994. From 1990 until August 1994, Mr. Frohbieter was President
and Chief Operating Officer of Fairchild Space and Defense Corporation
("Fairchild"). From 1988 to 1990, he was Vice President and General Manager of
General Electric Company's Government Electronics Systems Division, and from
1966 to 1987, he held a variety of positions at RCA's Astro Space Division,
including Vice President and General Manager from 1986 to 1987.
2
<PAGE> 6
J. PAUL KINLOCH, 51
Member of Audit and Finance Committee
J. Paul Kinloch has been a Director of the Company since 1984. Since 1984, Mr.
Kinloch has been a Managing Director in the Investment Banking Division of
Lehman Brothers Inc. Since 1968, Mr. Kinloch has held a variety of positions at
Lehman Brothers Inc. and its predecessor companies.
DIRECTORS WHOSE TERMS EXPIRE IN 1997
DOUGLAS S. LUKE, 54
Chairman of Audit and Finance Committee and Member of Human Resources and
Nominating Committee
Douglas S. Luke has been a Director of the Company since 1983. Since 1991, Mr.
Luke has been President and Chief Executive Officer of WLD Enterprises, Inc., a
private investment firm. From 1979 until 1990, he held various positions with
Rothschild, Inc., including the position of Managing Director from 1987 until
1990. Mr. Luke is currently a director of DNA Plant Technology Corporation and
Regency Realty Corporation.
JOHN L. MCLUCAS, 75
Member of Human Resources and Nominating and Strategy and Technology Committees
John L. McLucas has been a Director of the Company since 1993. From 1987 until
1993, he was a director of the Company's then wholly owned subsidiary Orbital
Research Corporation ("ORC"). He was formerly Chairman of the International
Space University and currently serves on its Board of Advisors. From 1988 to
1991, he was Chairman of the NASA Advisory Council and Chairman of the U.S. Air
Force Studies Board. From 1985 to 1988, he was Chairman of QuesTech, Inc. From
1977 to 1985, Dr. McLucas was Executive Vice President of The Communications
Satellite Corporation. Prior to 1977, Dr. McLucas held a variety of positions,
including Administrator of the Federal Aviation Administration, Secretary of the
U.S. Air Force and President of MITRE Corporation.
HARRISON H. SCHMITT, 60
Member of Audit and Finance and Strategy and Technology Committees
Harrison H. Schmitt has been a Director of the Company since 1983. From 1982
until the present, Dr. Schmitt has served in various capacities as a consultant.
From 1976 to 1982, Dr. Schmitt was a United States Senator from New Mexico,
during which time he chaired the Senate Science, Technology and Space
Subcommittee, which approves and oversees all non-military space-related
research and development projects of the U.S. Government. From 1974 to 1975, he
was NASA Assistant Administrator for Energy Programs. From 1965 to 1973, he was
a NASA astronaut. As Lunar Module Pilot on Apollo 17 in 1972, he explored the
Moon's surface.
SCOTT L. WEBSTER, 43
Scott L. Webster is a founder of Orbital and has been a Director of the Company
since 1982. From January 1995 until the present, Mr. Webster has served in
various capacities as a consultant. Mr. Webster was Senior Vice President of
Orbital from October 1993 until January 1995, was President/Space Data Division
of Orbital from 1991 until October 1993, was Executive Vice President/Space Data
Division from 1989 to 1990, was Senior Vice President/Marketing and Business
Development from 1985 to 1989 and was Vice President/ Marketing from 1982 to
1985. From 1974 to 1978, he was a Senior Engineer at Litton Industries, Inc.
3
<PAGE> 7
DIRECTORS WHOSE TERMS EXPIRE IN 1998
FRED C. ALCORN, 65
Member of Human Resources and Nominating Committee
Fred C. Alcorn has been a Director of the Company since 1983. Since 1975, Mr.
Alcorn has been President of Alcorn Oil & Gas Company and Alcorn Development
Company.
LENNARD A. FISK, 52
Member of Strategy and Technology Committee
Lennard A. Fisk has been a Director of the Company since October 1993. Since
July 1993, Dr. Fisk has been Professor and Chairman of the Department of
Atmospheric, Oceanic, and Space Sciences at the University of Michigan. From
1987 until 1993, he was Associate Administrator for Space Science and
Applications at NASA. From 1977 until 1987, he held various positions at the
University of New Hampshire, including Vice President for Research and Financial
Affairs.
JACK L. KERREBROCK, 68
Member of Strategy and Technology Committee
Jack L. Kerrebrock has been a Director of the Company since January 1993. From
1984 until 1993, he was a director of ORC. Since 1965, Dr. Kerrebrock has been a
Professor of Aeronautics and Astronautics at the Massachusetts Institute of
Technology ("MIT"). From 1990 to 1991, he was Acting Dean of Engineering at MIT,
and from 1985 to 1989, he was Associate Dean of Engineering. He was NASA
Associate Administrator for Aeronautics and Space Technology from 1981 to 1983.
From 1985 to 1986, Dr. Kerrebrock served as a member of the National Commission
on Space.
DAVID W. THOMPSON, 41
Chairman of the Board
David W. Thompson is a founder of Orbital and has been Chairman of the Board,
President and Chief Executive Officer of the Company since 1982. From 1981 to
1982, Mr. Thompson was Special Assistant to the President at Hughes Aircraft
Company's Missile Systems Group. From 1977 to 1979, Mr. Thompson was employed by
NASA at the Marshall Space Flight Center as a project manager and engineer. From
1975 to 1976, he worked on the Space Shuttle's autopilot design at the Charles
Stark Draper Laboratory.
JAMES R. THOMPSON, 59
James R. Thompson (who is not related to David W. Thompson) has been Executive
Vice President and General Manager/Launch Systems Group since October 1993 and a
Director of the Company since 1992. Mr. Thompson was Executive Vice President
and Chief Technical Officer of Orbital from 1991 to October 1993. He was Deputy
Administrator of NASA from 1989 to 1991. From 1986 until 1989, Mr. Thompson was
Director of the Marshall Space Flight Center. Mr. Thompson was Deputy Director
for Technical Operations at Princeton University's Plasma Physics Laboratory
from 1983 through 1986. Before that, he had a 20-year career with NASA at the
Marshall Space Flight Center. He is a director of Nichols Research Corp., an
engineering analysis and services company, and SPACEHAB Incorporated, a space
module supplier.
4
<PAGE> 8
INFORMATION CONCERNING THE BOARD AND ITS COMMITTEES
The Board has three standing committees: the Audit and Finance Committee;
the Human Resources and Nominating Committee; and the Strategy and Technology
Committee. The biographical information in the immediately preceding section
identifies the Committee memberships held by each director.
The Audit and Finance Committee, which held four meetings during 1995,
reviews corporate financial planning; recommends annually the persons or firm to
be employed by the Company as its independent auditors; consults with the
independent auditors with regard to the plan of audit; reviews, in consultation
with the independent auditors, the audit report and the accompanying management
letter, if any, of such independent auditors; and consults with the independent
auditors with regard to the adequacy of internal controls of the Company.
The Human Resources and Nominating Committee, which held two meetings and
took action by unanimous written consent twice during 1995, administers the
Company's 1990 Stock Option Plan (the "Orbital Option Plan") and the Company's
1990 Stock Option Plan for Non-Employee Directors (the "Non-Employee Director
Plan"); approves compensation arrangements for directors, executive officers and
other members of management; evaluates compensation plans and policies and makes
appropriate recommendations to the Board with respect thereto; considers issues
of management development and evaluation; nominates candidates for positions on
the Board; and will consider nominees recommended by stockholders if such
recommendations are in writing, are filed with the Secretary of the Company, and
set forth the information and are filed by the time specified in the Company's
By-Laws.
The Strategy and Technology Committee, which held four meetings during
1995, is responsible for giving initial Board-level consideration to certain
technology and business strategy issues, which may include significant
proposals, competitive assessments, technical and market risks associated with
new product development, internal capabilities and potential acquisition and
joint venture evaluations.
In 1995, directors who were not employees of the Company were paid an
annual retainer of $7,500 for service on the Board and fees of $1,000 for each
Board or Committee meeting they attended. In addition, pursuant to the terms of
the Non-Employee Director Plan, each year non-employee directors are
automatically granted options for 3,000 shares of Common Stock at an exercise
price equal to the fair market value on the date of grant.
During 1995, the Board held six meetings and took action by unanimous
written consent two times. Each incumbent director attended at least 75 percent
of all meetings of the Board and Committees of which he was a member.
5
<PAGE> 9
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the annual salary and
bonus earned for services in all capacities to the Company during, and long-term
compensation and other compensation awarded or paid in, the fiscal years ended
December 31, 1995, 1994 and 1993, as applicable, to those persons who were, at
December 31, 1995, (a) the Chief Executive Officer and (b) the other four most
highly compensated executive officers of the Company (with the Chief Executive
Officer, the "Named Officers").
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
----------------------
ANNUAL COMPENSATION SECURITIES
-------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(#) COMPENSATION(1)
- ------------------------------- ---- -------- -------- ---------------------- ---------------
<S> <C> <C> <C> <C> <C>
David W. Thompson.............. 1995 $300,000 $121,500 25,000 $14,248
Chairman of the Board, 1994 250,000 27,500 10,000 12,949
President and Chief Executive 1993 240,000 43,600 4,000 12,154
Officer
Jack A. Frohbieter............. 1995 260,000 87,700 25,000 15,015
Executive Vice President and 1994(2) 89,500 100,000 -- 1,744
General Manager/Space and
Electronics Systems Group
James R. Thompson.............. 1995 235,000 79,300 15,000 13,997
Executive Vice President and 1994 220,000 27,000 10,000 9,871
General Manager/Launch 1993 220,000 30,800 4,000 8,452
Systems Group 5,000(3)
Carlton B. Crenshaw............ 1995 215,000 147,500 15,000 12,721
Executive Vice President and 1994 190,000 50,000 10,000 11,659
Chief Financial Officer 3,000(3)
1993 170,000 59,500 10,000 8,802
Bruce W. Ferguson.............. 1995 210,000 75,900 10,000 10,403
Executive Vice President and 1994 195,000 24,500 10,000 10,850
General Manager/ 2,500(3)
Communications and 1993 185,000 25,900 4,000 10,101
Information Services Group
</TABLE>
- ---------------
(1) Company matching and profit-sharing contributions earned under the Company's
401(k) Plan.
(2) Reports compensation earned by Mr. Frohbieter after he joined the Company in
August 1994 following the Company's acquisition of Fairchild.
(3) Shares of common stock of the Company's majority owned subsidiary, Orbital
Communications Corporation ("ORBCOMM"), subject to options granted under the
ORBCOMM 1992 Stock Option Plan (the "ORBCOMM Option Plan").
6
<PAGE> 10
OPTION GRANTS IN LAST FISCAL YEAR
Shown below is information on grants of stock options to the Named Officers
pursuant to the Orbital Option Plan during the fiscal year ended December 31,
1995, which options are reflected in the Summary Compensation Table.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZED
------------------------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF RATES OF STOCK
SECURITIES % OF TOTAL PRICE ON PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE DATE OF FOR OPTION TERM
OPTIONS EMPLOYEES IN PRICE GRANT EXPIRATION -------------------------
NAME GRANTED(#)(1) FISCAL YEAR ($/SHARE) ($/SHARE) DATE 5% 10%
- ----------------------- ------------- ------------ --------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
David W. Thompson...... 25,000 4.7% $ 16.75 $ 16.75 1/25/2005 $ 263,350 $ 667,380
Jack A. Frohbieter..... 25,000 4.7% 16.75 16.75 1/25/2005 263,350 667,380
James R. Thompson...... 10,000 1.9% 16.75 16.75 1/25/2005 105,340 266,952
5,000 1.0% 17.25 17.25 4/26/2005 54,242 137,460
Carlton B. Crenshaw.... 15,000 2.8% 16.75 16.75 1/25/2005 158,010 400,428
Bruce W. Ferguson...... 10,000 1.9% 16.75 16.75 1/25/2005 105,340 266,952
</TABLE>
- ---------------
(1) Options vest in one-third increments over a three-year period.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
Shown below is information with respect to the exercise of stock options
granted under the Orbital Option Plan during fiscal year 1995 and the 1995
year-end value of unexercised stock options granted under the Orbital Option
Plan and the ORBCOMM Option Plan. In 1995, none of the Named Officers exercised
any options granted under the ORBCOMM Option Plan.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTION SHARES IN-THE-MONEY OPTIONS
SHARES AT DECEMBER 31, 1995(#) AT DECEMBER 31, 1995
ACQUIRED ON VALUE ----------------------------- -----------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David W. Thompson...... -- -- 22,999 33,001 $ 3,333 $ 1,668
18,000(1) -- 264,000 --
Jack A. Frohbieter..... -- -- -- 25,000 -- --
James R. Thompson...... -- -- 58,999 23,001 89,283 1,668
7,000(1) 2,500(1) 77,250 11,250
Carlton B. Crenshaw.... 6,833 $54,775 8,433 25,001 -- 4,168
15,750(1) 2,250(1) 223,000 9,000
Bruce W. Ferguson...... -- -- 27,999 18,001 55,833 1,668
30,625(1) 1,875(1) 442,500 7,500
</TABLE>
- ---------------
(1) Options to acquire ORBCOMM common stock granted pursuant to the ORBCOMM
Option Plan.
7
<PAGE> 11
COMPENSATION COMMITTEE REPORT
The Human Resources and Nominating Committee of the Board of Directors (the
"Committee") is composed entirely of independent outside directors. The
Committee is responsible for determining executive compensation, including
salaries, bonus awards and stock option awards.
Under the supervision of the Committee, Orbital has developed and
implemented compensation policies and plans that seek to enhance the sales
growth, profitability and financial strength of the Company and, accordingly,
stockholder value by linking the financial interests of Orbital's senior
management to those of the Company's stockholders. To implement these goals,
Orbital's compensation structure has three components: base salary, annual (and
occasional "special") cash bonuses and stock options.
Generally, in the early part of each fiscal year, the Committee reviews
with the Chief Executive Officer and approves, with any modifications it deems
appropriate, salary levels for the Company's executive officers, including the
Named Officers, and certain other senior managers. Generally, the salary amounts
are determined subjectively, based on perceptions of industry and peer group
salary levels and judgments as to the past and expected future contributions of
the individual senior executives, as well as the Company's overall growth and
profitability.
In late 1994, the Company engaged KPMG Peat Marwick LLP's Performance and
Compensation Management Consulting Group (the "Compensation Consultant") to
review and compare Orbital's total executive compensation package to the
executive compensation packages of companies with comparable revenues and in
comparable industries to the Company. Many of the companies included in the
Company's peer group index in the Comparison of Cumulative Total Returns graph
below are much larger in terms of revenues and capitalization than Orbital and
pay significantly higher executive compensation (in terms of salaries and
incentive packages). Accordingly, the Compensation Committee believed that the
compensation peer group used by the Compensation Consultant included a more
appropriate mix of companies with corporate management styles and goals that
parallel Orbital's. The Compensation Consultant's review indicated that for
1994, base salaries of certain executive officers (but not the Chief Executive
Officer) were slightly above market levels. It also found that actual bonus
amounts paid were well below the market median. The review also found that
long-term incentive compensation, in the form of stock options, was considerably
below the market median in terms of the value of actual grants. As a result, the
Compensation Consultant's overall recommendation was that base salary should be
increased for positions that were below market, that bonus payments should be
increased by adopting performance goals for bonuses that were more realistic and
by increasing maximum bonus opportunities, and that long-term executive
compensation in the form of stock option grants should be significantly
increased to be more consistent with prevailing market levels.
In January 1995, the Committee increased the Chief Executive Officer's base
salary to $300,000, increased the amount of his potential annual bonus from 40
percent to 60 percent of his base salary, and authorized a grant of 25,000
options. This change in compensation was spurred in part due to the conclusion
in the Compensation Consultant's review that the Chief Executive Officer's base
salary, bonus opportunity and option grants were below the market median. In
addition, the Committee considered the Chief Executive Officer's experience, his
value to the Company, the Company's increased size, two successful acquisitions
in 1994, and the Committee's perceptions as to the salary he could command in
similar positions at other companies.
Under the Company's incentive bonus plan for 1995, the Chief Executive
Officer was eligible to receive semi-annual bonuses of up to 30 percent of
annual base salary, executive officers of the Company were eligible to receive
semi-annual bonuses of up to 20 percent or 25 percent of annual base salary, and
certain senior managers of the Company and its subsidiaries were eligible to
receive semi-annual bonuses of up to 10 percent of annual base salary. At the
beginning of each semi-annual period, the Committee reviewed semi-annual Company
and group performance goals recommended by management for purposes of bonus
determination. These goals included both financial goals, such as revenues,
backlog, earnings and cash flow, and non-financial operational goals, such as
mission reliability, mission timeliness and new product initiatives. At the end
of each semi-annual period, management evaluated the Company's and the groups'
performance against the established goals, and presented this evaluation,
together with its reasoning and recommended bonus
8
<PAGE> 12
percentages, to the Committee. The Committee then determined, based on the
recommendations of management and any other factors the Committee considered
relevant, the percentage of base salary to be awarded as a bonus to each
executive officer and senior manager and established a bonus pool for all other
eligible employees. The nature of the goals meant that management's
recommendations and the Committee's determinations as to bonus percentages were
necessarily subjective. For 1995, the total bonus percentage awarded to the
Chief Executive Officer was approximately 40 percent of his annual base salary,
as compared to an opportunity of 60 percent. The total bonus percentages awarded
to each of the other Named Officers was approximately 34 percent of annual base
salary, as compared to a bonus opportunity of 50 percent. The 1995 bonus amounts
reflected a number of factors, including the Company's mixed success in meeting
self-imposed program schedules and certain financial and operating goals,
coupled with certain marketing successes and a successful acquisition in late
1995.
The Company also has a policy of awarding "special" one-time occasional
bonuses to an individual or on a group basis in recognition of exceptional
achievement or effort. This policy is intended to complement the incentive bonus
plan. Generally, special bonuses are awarded when the performance of an
individual, program or department is perceived to merit extraordinary
recognition or compensation in excess of that which is awarded under the
incentive bonus plan. The amounts of special bonuses are determined
subjectively, based on such factors as the perceived value to the Company of the
achievement, the amount of effort involved and the salary level of the
individual. For the 1995 fiscal year, the Company awarded special bonuses to two
Named Officers; one in recognition of Mr. Ferguson's efforts and success in
connection with the Company's December 1994 acquisition of Magellan Corporation,
and the other in recognition of Mr. Crenshaw's efforts and success in connection
with the Company's November 1995 acquisition of MDA.
The Company believes that stock options provide meaningful long-term
incentives because they reward the enhancement of stockholder value. The number
of stock options granted to each individual is determined subjectively based on
a number of factors, including the individual's degree of responsibility,
general level of performance, ability to affect future Company performance,
salary level, option holdings and recent noteworthy achievements. Rather than
being tied to the Company's historical corporate performance, stock option
grants are intended to incentivize employees to work towards achieving
operational and financial goals that management believes will ultimately be
reflected in stock value. The Committee's grant of 25,000 options to the Chief
Executive Officer in 1995 was based on the foregoing factors as well as the
conclusion from the Compensation Consultant's review of management compensation
that long-term incentive compensation, in the form of stock options, was below
the market median in terms of the value of actual grants.
The levels of salary and bonuses at the Company are such that the $1
million limit on the Federal tax deductibility of individual executive
compensation is not generally relevant to compensation determinations. However,
because significant stock price appreciation over a number of years could result
in the limit being applicable to option exercises, the Orbital Option Plan
contains certain limitations so that options granted thereunder are expected to
be exempt from the $1 million limitation under Internal Revenue Service
guidelines.
No member of the Committee is a former or current officer or employee of
the Company or any of its subsidiaries.
The foregoing report has been furnished by the Committee members:
<TABLE>
<S> <C>
Lt. Gen. Kelly H. Burke (Chairman) Mr. Douglas S. Luke
Dr. John L. McLucas Mr. Fred C. Alcorn
</TABLE>
9
<PAGE> 13
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the yearly cumulative total
return on the Company's Common Stock against the cumulative total return on the
Nasdaq Stock Market Index of U.S. Companies and the Dow Jones Aerospace/Defense
Index for the five-year period commencing on December 31, 1990 and ending on
December 29, 1995.
COMPARISON OF CUMULATIVE TOTAL RETURNS*
<TABLE>
<CAPTION>
DOW JONES
AERO- ORBITAL SCI-
MEASUREMENT PERIOD NASDAQ US SPACE/DEFENSE ENCES C
(FISCAL YEAR COVERED) COMPANY INDEX INDEX ORPORATION
<S> <C> <C> <C>
DEC-90 100.00 100.00 100.00
DEC-91 160.66 120.98 104.67
DEC-92 186.95 122.41 89.72
DEC-93 213.31 154.12 153.27
DEC-94 213.56 169.45 143.92
DEC-95 301.78 289.29 95.33
</TABLE>
* Assumes that the value of the investment in Orbital Common Stock, the Nasdaq
Stock Market Index of U.S. Companies and the Dow Jones Aerospace/Defense Index
was $100 on December 31, 1990 and that all dividends were reinvested.
INDEMNIFICATION AGREEMENTS
The Company has entered into substantially identical indemnification
agreements with each of its directors, the Named Officers and with certain other
officers and senior managers. The agreements provide that the Company shall, to
the full extent permitted by the Delaware General Corporation Law, as amended
from time to time, indemnify each indemnitee against all loss and expense
incurred by the indemnitee because he or she was, is or is threatened to be made
a party to any completed, pending or threatened action, suit or proceeding by
reason of the fact that he or she was a director, officer, employee or agent of
the Company or any of its affiliates, or because the Company has a right to
judgment in its favor because of his or her position with the Company or any of
its affiliates. The indemnitee will be indemnified so long as he or she acted in
good faith and in a manner reasonably believed by him or her to be in or not
opposed to the Company's best interest. The agreements further provide that the
indemnification thereunder is not exclusive of any other rights the indemnitee
may have under the Company's Restated Certificate of Incorporation, By-Laws or
any agreement or vote of stockholders and that the Restated Certificate of
Incorporation or By-Laws may not be amended to affect adversely the rights of
the indemnitee.
EXECUTIVE EMPLOYMENT AGREEMENTS AND ARRANGEMENTS
The Company has entered into executive employment agreements with certain
officers including Messrs. D.W. Thompson, J.R. Thompson, Crenshaw and Ferguson.
These agreements become effective in the
10
<PAGE> 14
event of a "change of control" (as defined in the agreements) of the Company,
and no officer currently receives compensation under these agreements. Upon a
"change of control," each officer (other than Mr. Frohbieter) whose employment
is terminated by the Company other than for disability or "cause" (as defined in
the agreements), or whose employment is terminated by the executive for "good
reason" (as defined in the agreements), within 24 months following such "change
of control," would receive his or her full base salary through the termination
date, plus the lesser of (i) $500,000, or (ii) two times the sum of 12 times his
then-current monthly salary plus an amount equal to any bonus paid in the
previous year. In addition, all retirement benefits would vest, all insurance
benefits would continue for 30 months and all Company stock options would be
repurchased by the Company at the difference between the highest price paid in
the "change of control" transaction for shares of stock of the same class or
series and the exercise price.
Mr. Frohbieter has an employment agreement with Fairchild, which has
continued in force following the Company's 1994 acquisition of Fairchild. Under
this agreement, if Mr. Frohbieter is terminated before his 65th birthday for any
reason other than for "cause" (as defined in the agreement), Mr. Frohbieter
would receive (i) an amount equal to twice his then-current annual base salary
and (ii) an amount equal to the sum of his short-term incentive compensation
awards for the two years immediately prior to the termination. Also, to the
extent permitted, Mr. Frohbieter would be entitled to continue his participation
for a period of up to two years in the Company's medical and insurance benefit
plans.
Upon retirement, Mr. Frohbieter may be entitled to receive approximately
$250,000 in a lump sum (with certain actuarial adjustments based on his age) or
monthly annuity payments of approximately $3,200, which reflects the amount
accrued and vested as of December 31, 1995 under a Fairchild supplemental
executive retirement plan that was terminated shortly after Orbital's
acquisition of Fairchild. Under the plan, benefits accrued and vested based upon
years of service. The value of the benefit is calculated at 60 percent of the
average base salary for five consecutive calendar years prior to termination of
the plan, and is reduced by social security benefits and benefits accrued under
Fairchild's defined benefit plan. In addition, upon retirement Mr. Frohbieter
may be entitled to receive up to $36,000 (with certain actuarial adjustments
based on his age), which reflects the amount accrued and vested pursuant to
Fairchild's defined benefit plan, which was frozen shortly after Orbital's
acquisition of Fairchild.
RATIFICATION OF THE SELECTION
OF INDEPENDENT AUDITORS (PROPOSAL 2)
The Board of Directors recommends the ratification by the stockholders of
the appointment by the Board of Directors of KPMG Peat Marwick LLP ("KPMG") as
the Company's independent auditors for the fiscal year ending December 31, 1996.
KPMG has served as the Company's independent auditors since 1989. Unless
instructions are given to the contrary, it is the intention of the persons named
as proxies to vote the shares to which the proxy is related FOR the ratification
of the appointment of KPMG. The affirmative vote of the holders of a majority of
shares properly cast on the proposal, in person or by proxy, will be required to
approve Proposal 2. In the event that the stockholders do not ratify the
selection of KPMG, the Board of Directors will consider the selection of another
firm of independent auditors. A representative of KPMG is expected to be present
at the Annual Meeting and will be available to respond to appropriate questions
and make such statements as he may desire.
11
<PAGE> 15
OWNERSHIP OF COMMON STOCK
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of March 14, 1996 by (i) each person
known by the Company to own beneficially more than five percent of the Common
Stock, (ii) each director of the Company and each Named Officer and (iii) all
officers and directors as a group. Unless otherwise indicated, each of the
persons or entities listed below exercises sole voting and investment power over
the shares that each of them beneficially owns. Because the Exchangeable Shares
are exchangeable into Common Stock at the holder's option at any time on a one
for one basis, the percentage calculation assumes the conversion of all
outstanding Exchangeable Shares into Common Stock.
<TABLE>
<CAPTION>
NUMBER
NAME AND ADDRESS OF SHARES PERCENT
- -------------------------------------------------------------------------- --------- -------
<S> <C> <C>
LGT Asset Management, Inc.(1)............................................. 2,381,800 8.9%
50 California Street, 27th Floor
San Francisco, CA 94111
Fred C. Alcorn(2)......................................................... 64,590 *
Kelly H. Burke(2)......................................................... 25,100 *
Carlton B. Crenshaw(2).................................................... 20,099 *
Bruce W. Ferguson(2)(3)................................................... 197,285 *
Daniel J. Fink(2)(4)...................................................... 21,800 *
Lennard A. Fisk(2)........................................................ 4,000 *
Jack A. Frohbieter(2)..................................................... 8,936 *
Jack L. Kerrebrock(2)..................................................... 24,500 *
J. Paul Kinloch(2)........................................................ 24,032 *
Douglas S. Luke(2)........................................................ 18,000 *
John L. McLucas(2)........................................................ 23,500 *
Harrison H. Schmitt(2)(4) ................................................ 15,850 *
David W. Thompson(2)(3)................................................... 84,757 *
James R. Thompson(2)(3)................................................... 68,665 *
Scott L. Webster(2)....................................................... 170,233 *
Officers and Directors as a Group
(21 persons)(2)(5)...................................................... 1,006,899 3.7%
</TABLE>
- ---------------
* Represents less than one percent of the outstanding shares of stock.
(1) LGT Asset Management, Inc.'s beneficial ownership is as of December 31,
1995, not March 14, 1996 and is based on a Schedule 13G filed with the
Securities and Exchange Commission ("SEC").
(2) Includes shares issuable upon exercise of currently vested stock options or
options that will vest within sixty days of March 14, 1996, in the following
amounts: Fred C. Alcorn, 18,000 shares; Kelly H. Burke, 18,000 shares;
Carlton B. Crenshaw, 20,099 shares; Bruce W. Ferguson, 35,999 shares; Daniel
J. Fink, 18,000 shares; Lennard A. Fisk, 4,000 shares; Jack A. Frohbieter,
8,332; Jack L. Kerrebrock, 18,000 shares; J. Paul Kinloch, 18,000 shares;
Douglas S. Luke, 18,000 shares; John L. McLucas, 18,000 shares; Harrison H.
Schmitt, 14,000 shares; David W. Thompson, 35,998 shares; James R. Thompson,
68,665 shares; Scott L. Webster, 27,333 shares; and all officers and
directors as a group, 563,737 shares.
(3) Excludes 17,700 shares of Common Stock owned by Mr. Ferguson's wife, 23,000
shares of Common Stock owned by Mr. D.W. Thompson's wife, 1,385 shares of
Common Stock owned by Mr. J.R. Thompson's wife and 450 shares of Common
Stock owned by Mr. J.R. Thompson's dependent children. Messrs. Ferguson,
D.W. Thompson and J.R. Thompson disclaim beneficial ownership of such
shares.
(4) Includes 300 shares of Common Stock with respect to which Mr. Fink shares
voting and investment power with his wife, and 1,850 shares of Common Stock
with respect to which Dr. Schmitt shares voting and investment power with
his wife.
(5) Includes 27,788 shares of Common Stock that are immediately issuable upon
conversion of an equal number of Exchangeable Shares owned by an executive
officer of the Company.
12
<PAGE> 16
QUORUM REQUIREMENT AND METHOD OF TABULATION
Consistent with Delaware state corporate law and under the Company's
By-Laws, a majority of the shares entitled to be cast on a particular matter,
present in person or represented by proxy, constitutes a quorum as to such
matter. Votes cast by proxy or in person at the Annual Meeting will be counted
by persons appointed by the Company to act as inspectors of election for the
meeting. The inspectors of election will count shares represented by proxies
that withhold authority to vote for a nominee for election as a director or that
reflect abstentions and "broker non-votes" (i.e., shares represented at the
meeting held by brokers or nominees as to which (i) instructions have not been
received from the beneficial owners or persons entitled to vote and (ii) the
broker or nominee does not have the discretionary voting power on a particular
matter) only as shares that are present and entitled to vote on the matter for
purposes of determining the presence of a quorum, but neither abstentions nor
broker non-votes have any effect on the outcome of voting on the matter.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires Orbital's executive officers and
directors, and persons who beneficially own more than ten percent of the
Company's Common Stock, to file reports of ownership and changes in ownership on
Forms 3, 4 and 5 with the SEC. Executive officers, directors and greater than
ten percent stockholders are required by SEC regulation to furnish to the
Company copies of all Forms 3, 4 and 5 they file. Based solely on the Company's
review of the copies of such forms it has received and written representations
from certain reporting persons, the Company believes that, except as specified
below, all its executive officers, directors and greater than ten percent
beneficial owners (if any) complied with all such filing requirements applicable
to them with respect to transactions during fiscal 1995.
Mr. D.W. Thompson's Form 4 that reported a sale of 5,000 shares of Common
Stock in March 1995, and Mr. Frohbieter's Form 5 reflecting the acquisition of
24 shares of Common Stock through the Company's 401(k) plan, were filed late
with the SEC.
STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 promulgated by the SEC, stockholder proposals
intended to be included in the Company's proxy materials for the Company's 1997
annual meeting of stockholders must be received by the Company on or before
November 30, 1996 at its principal office, 21700 Atlantic Boulevard, Dulles,
Virginia 20166, Attention: Corporate Secretary.
OTHER MATTERS
Management has no knowledge of any other matter that may come before the
Annual Meeting and does not, itself, currently intend to present any such other
matter. However, if any such other matters properly come before the meeting or
any adjournment thereof, the persons named as proxies will have discretionary
authority to vote the shares represented by the accompanying proxy in accordance
with their own judgment.
PROXY SOLICITATION
The cost of soliciting proxies will be paid by the Company. Proxies may be
solicited without extra compensation by certain directors, officers and regular
employees of the Company by mail, telegram or personally. In addition, the
Company has retained D.F. King & Co. ("D.F. King") to solicit proxies by
personal interview, mail, telephone and telegram and to request brokerage houses
and other custodians, nominees and fiduciaries to forward proxy materials to the
beneficial owners of Common Stock. The Company will pay D.F. King a fee not to
exceed $3,500 covering its services and, in addition, will reimburse D.F. King
for expenses and payments made for the Company's account to brokers and other
nominees for their expenses in forwarding soliciting material.
Stockholders are urged to send their proxies without delay. Your
cooperation is appreciated.
13
<PAGE> 17
ORBITAL SCIENCES CORPORATION
P
R PROXY FOR ANNUAL MEETING OF STOCKHOLDERS -- APRIL 25, 1996.
O
X THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Y
The undersigned appoints David W. Thompson and Leslie C. Seeman and each
of them as proxies, with power of substitution and re-substitution to
each, to vote at the annual meeting of stockholders of Orbital Sciences
Corporation (the "Company"), to be held at the Company's headquarters,
21700 Atlantic Boulevard, Dulles, Virginia 20166 on April 25, 1996 at 9:00
a.m. and at any adjournments thereof, all shares of stock of the Company
that the undersigned would be entitled to vote if personally present. A
majority of said proxies or their substitutes or re-substitutes or any one
if only one is present and acting, shall have all the powers of all said
proxies. The undersigned instructs said proxies, or their substitutes or
re-substitutes, to vote in such manner as they may determine on any
matters that may properly come before the meeting as indicated in the
Notice of Annual Meeting and Proxy Statement, receipt of which is hereby
acknowledged, and to vote as specified by the undersigned on the reverse
side.
(IMPORTANT -- TO BE SIGNED AND DATED ON REVERSE SIDE.)
SEE REVERSE SIDE
<PAGE> 18
/ X / PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL ITEMS.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED, OR IF NO
DIRECTION IS MADE, FOR THE ELECTION OF THE NAMED NOMINEES AND FOR PROPOSAL 2.
WITHHELD
FOR ALL NOMINEES FROM ALL NOMINEES
1. Election of / / / /
Directors
For, except vote withheld from the following nominee(s):
Nominees: Kelly H. Burke, Bruce W. Ferguson, and
Daniel J. Fink, Jack A. Frohbieter
J. Paul Kinloch
FOR AGAINST ABSTAIN
2. Ratifying the selection of KPMG / / / / / /
Peat Marwick LLP as auditors.
- ------------------------------------------
Signature(s) ___________________________________________ DATE _______________
NOTE: Please sign exactly as name appears on this card and return this card in
the enclosed envelope. When signing as executor, administrator, attorney,
trustee, guardian, or custodian, or for a corporation, please give full
title as such.
