<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
TELEDYNE, INC.
- --------------------------------------------------------------------------------
(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):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/X/ $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 the 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.
/X/ 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 number, or the
Form or Schedule and the date of its filing.
1) Amount Previously Paid:
$500
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
Soliciting material pursuant to Rule 14a-11(c).
------------------------------------------------------------------------
3) Filing Party:
Teledyne, Inc.
------------------------------------------------------------------------
4) Date Filed:
March 1, 1996
------------------------------------------------------------------------
<PAGE>
WILLIAM P. RUTLEDGE [LOGO] TELEDYNE, INC.
Chairman and Chief Executive Officer 2049 CENTURY PARK EAST
LOS ANGELES, CALIFORNIA 90067-3101
March , 1996
Dear Shareholder:
You are cordially invited to attend the annual meeting of shareholders of
Teledyne, Inc., to be held at 11:00 a.m. on Wednesday, April 24, 1996, at the
Century Plaza Hotel, 2025 Avenue of the Stars, Los Angeles, California
90067-4696.
At the meeting, we will vote on the proposals described in the accompanying
Notice and Proxy Statement. We will also report to you on the operations of the
Company. You will have the opportunity to ask questions about the Company that
may be of general interest to shareholders.
Your vote is important regardless of how many shares you own. Please take a
few minutes to review the proxy statement and to sign and date your GREEN proxy
card and return it in the envelope provided.
I look forward to seeing you at the meeting.
Sincerely,
[SIGNATURE]
William P. Rutledge
Chairman of the Board and
Chief Executive
Officer
<PAGE>
[LOGO]
2049 CENTURY PARK EAST
LOS ANGELES, CALIFORNIA 90067-3101
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 24, 1996
The Annual Meeting of Shareholders of Teledyne, Inc. will be held on
Wednesday, April 24, 1996, at 11:00 a.m. at the Century Plaza Hotel, 2025 Avenue
of the Stars, Los Angeles, California 90067-4696.
The meeting is called for the following purposes:
1. To elect a Board of Directors.
2. To consider and act upon a proposal to approve the adoption of the
Teledyne, Inc. 1996 Senior Executive Performance Plan.
3. To consider and act upon such other business as may properly come
before the meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on February 28, 1996,
as the record date for determining those shareholders who will be entitled to
vote at the meeting. A list of such shareholders will be open to examination by
any shareholder at the meeting and for a period of ten days prior to the date of
the meeting during ordinary business hours at the Teledyne, Inc. corporate
offices, 2049 Century Park East, Los Angeles, California 90067-3101.
By Order of the Board of Directors
Judith R. Nelson
SECRETARY
March , 1996
REGARDLESS OF WHETHER YOU NOW EXPECT TO BE PRESENT PERSONALLY AT THE
MEETING, YOU ARE REQUESTED TO SIGN THE ENCLOSED GREEN PROXY CARD AND RETURN IT
PROMPTLY IN THE ENCLOSED SELF-ADDRESSED, POSTAGE PRE-PAID ENVELOPE.
<PAGE>
[LOGO]
CORPORATE OFFICES: 2049 CENTURY PARK EAST, LOS ANGELES, CALIFORNIA 90067-3101
PROXY STATEMENT
THIS PROXY STATEMENT IS FURNISHED IN CONNECTION WITH THE SOLICITATION OF THE
ENCLOSED PROXY BY AND ON BEHALF OF THE ISSUER, TELEDYNE, INC. ("COMPANY"), FOR
USE AT THE ANNUAL MEETING OF SHAREHOLDERS OF THE COMPANY AND AT ANY ADJOURNMENTS
THEREOF. THE MEETING WILL BE HELD ON WEDNESDAY, APRIL 24, 1996, AT 11:00 A.M. AT
THE CENTURY PLAZA HOTEL, 2025 AVENUE OF THE STARS, LOS ANGELES, CALIFORNIA
90067-4696. THIS PROXY STATEMENT AND THE ACCOMPANYING FORM OF PROXY ARE BEING
MAILED TO SHAREHOLDERS ON OR ABOUT MARCH , 1996.
Proxies which are properly executed and received by the Company before the
meeting will be voted at the meeting. Any shareholder giving a proxy has the
power to revoke it at any time before it is voted by filing with the Secretary
of the Company either an instrument revoking the proxy or a duly executed proxy
bearing a later date. Proxies also may be revoked by any shareholder present at
the meeting who expresses a desire to vote in person. Each shareholder of record
is entitled to one vote per share of Common Stock owned on all matters submitted
to a vote of shareholders other than for the election of directors. With respect
to the election of directors, a shareholder may cumulate his or her votes. That
is, a shareholder may cast a number of votes equal to the product of the number
of directors to be elected multiplied by the number of shares of Common Stock
the shareholder owns of record. All of these votes may be cast for any
combination of one or more directors. Where no vote is specified or where a vote
FOR all nominees is marked, the cumulative votes represented by a proxy will be
cast, unless contrary instructions are given, at the discretion of the proxies
named therein in order to elect as many nominees as believed possible under the
then prevailing circumstances. If a shareholder desires to cumulate his or her
votes, the accompanying proxy card should be marked to indicate clearly that the
shareholder desires to exercise the right to cumulate votes and should specify
how the votes are to be allocated among the nominees for directors. For example,
a shareholder may write next to the name of the nominee or nominees for whom the
shareholder desires to cast votes the number of votes to be cast for such
nominee or nominees. Alternatively, without exercising his or her right to vote
cumulatively, a shareholder may instruct the proxies not to vote for one or more
nominees by writing the name(s) of such nominee or nominees on the space
provided on the proxy card. Unless indicated to the contrary in the space
provided on the proxy card, if a shareholder withholds authority to vote for one
or more nominees, all cumulative votes of such shareholder will be distributed
among the remaining nominees at the discretion of the proxies. Where no vote is
specified, the proxy will be voted FOR Proposal 2 described herein and in the
discretion of such proxies with respect to any other proposal that properly
comes before the meeting.
Abstentions will be treated as shares that are present for purposes of
determining the presence of a quorum. Abstentions will have the effect of a vote
against proposals brought before the meeting, but will not have an effect on the
election of the directors. If a broker indicates on the proxy that it does not
have discretionary authority as to certain shares to vote on a particular matter
(a broker non-vote), those shares will be considered as present for quorum
purposes on all matters. Broker non-votes will have no effect on any matter to
be brought before the meeting, including the election of directors.
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED GREEN PROXY CARD AND RETURN IT
PROMPTLY IN THE ENVELOPE PROVIDED. IF YOUR SHARES ARE HELD IN "STREET NAME,"
ONLY YOUR BANK OR BROKER CAN VOTE YOUR SHARES AND ONLY UPON YOUR SPECIFIC
INSTRUCTIONS. PLEASE CONTACT THE PERSON RESPONSIBLE FOR YOUR ACCOUNT AND
INSTRUCT HIM OR HER TO VOTE THE GREEN PROXY CARD AS SOON AS POSSIBLE.
THE BOARD OF DIRECTORS URGES YOU NOT TO SIGN ANY PROXY CARD SENT TO YOU BY
WHX CORPORATION. IF YOU HAVE ALREADY DONE SO, YOU MAY REVOKE YOUR PREVIOUSLY
SIGNED PROXY BY DELIVERING A WRITTEN NOTICE OF REVOCATION OR A LATER DATED PROXY
CARD IN THE ENCLOSED ENVELOPE.
IF YOU HAVE ANY QUESTIONS OR NEED FURTHER ASSISTANCE IN VOTING YOUR SHARES,
PLEASE CALL TELEDYNE, INC.'S PROXY SOLICITOR, MORROW & CO., INC. TOLL FREE AT
(800) [ ] OR COLLECT AT (212) [ ].
1
<PAGE>
COST AND METHOD OF SOLICITATION
In addition to the solicitation of proxies by use of the mails, proxies may
also be solicited by the Company and its directors, officers and
management-level employees (who will receive no compensation therefor in
addition to their regular salaries and fees) by telephone, telegram, facsimile
transmission and other electronic communication methods or personal interview.
The Company will reimburse banks and brokers who hold shares of the Company's
stock in their name or custody, or in the name of nominees for others, for their
out-of-pocket expenses incurred in forwarding copies of the proxy materials to
those persons for whom they hold such shares.
The Company has retained Morrow & Co., Inc. ("Morrow") to assist in the
solicitation of proxies. Pursuant to the Company's agreement with Morrow, it
will provide various proxy advisory and solicitation services for the Company at
a cost of approximately $210,000, plus reasonable out-of-pocket expenses and
indemnification against certain liabilities. It is expected that Morrow will use
up to approximately persons in such solicitation.
Although no precise estimate can be made at this time, the Company
anticipates that the aggregate amount to be spent by the Company in connection
with the solicitation of proxies by the Company will be approximately
$2,000,000, of which approximately $ has been incurred to date. This amount
includes the fees payable to Morrow but excludes (i) the salaries and fees of
officers, directors, and employees of the Company, and (ii) the normal expenses
of an uncontested election. The aggregate amount to be spent will vary depending
on, among other things, any developments that may occur in the proxy contest
discussed below.
WHX'S UNSOLICITED PROPOSALS AND PROXY CONTESTS
In November 1994, WHX Corporation ("WHX"), the parent company of
Wheeling-Pittsburgh Capital Corporation ("WPCC"), made an unsolicited proposal
to acquire the Company in a merger at a price stated to be $22 per share, to be
paid partly in cash and partly in WHX securities. The Board of Directors
unanimously rejected this proposal. Subsequently, in February 1995, WPCC
notified the Company that it intended to nominate eight individuals for election
to the Company's Board of Directors, all of whom were directors and/or officers
of WHX. Ultimately, in its 1995 proxy solicitation, WHX nominated two
individuals for election to the Company's Board of Directors, one of whom
(Ronald LaBow, the Chairman of WHX) was elected. In February 1996, WHX made an
unsolicited proposal to acquire the Company in a merger at a price of $32 per
share, $10 of which would be payable in WHX common stock and $22 in cash (the
"1996 Unsolicited Proposal"). Also in February 1996, WPCC notified the Company
that it intended to nominate nine individuals for election to the Company's
Board of Directors at the 1996 annual meeting of shareholders, all of whom are
directors of WHX or its subsidiaries. According to its notice, WPCC beneficially
owns 175,000 shares of Company Common Stock. After the Board of Directors (other
than Mr. LaBow, who did not participate in the discussion or the vote) carefully
evaluated all of the factors and circumstances that it considered relevant, the
Board of Directors unanimously rejected the 1996 Unsolicited Proposal.
PARTICIPANTS IN THE SOLICITATION
Under applicable regulations of the Securities and Exchange Commission, each
of the directors and nominees of the Company is deemed to be a "participant" in
the Company's solicitation of proxies. Appendix A to this Proxy Statement
provides certain additional information with respect to such individuals.
Because WHX is engaged in an election contest with the Company and its Chairman,
Mr. LaBow, is not a nominee of the Company for re-election, Mr. LaBow is not
deemed a "participant" in the Company's proxy solicitation. Consequently, no
information is provided in Appendix A with respect to Mr. LaBow.
2
<PAGE>
VOTING AND OTHER SECURITIES
February 28, 1996, has been fixed as the record date for the determination
of shareholders entitled to notice of and to vote at the meeting or any
adjournments thereof. On that date, there were 55,896,923 shares of Common Stock
issued and outstanding and entitled to vote. The Company has no other securities
outstanding with voting rights at the meeting.
SECURITIES OWNED BY DIRECTORS, NOMINEES, EXECUTIVE OFFICERS AND PRINCIPAL
SHAREHOLDERS
The following table sets forth information as of February 29, 1996 with
respect to the direct or indirect beneficial ownership of the Company's equity
securities by all directors and nominees, by each of the executive officers
named in the Summary Compensation Table beginning on page and by all
directors and executive officers as a group. Unless otherwise indicated, the
beneficial owner, to the Company's knowledge, has both sole voting and sole
dispositive powers with respect to the securities listed opposite his or her
name in the table set forth below.
<TABLE>
<CAPTION>
AMOUNT AND AMOUNT AND
NATURE OF NATURE OF
NAME OF TITLE OF BENEFICIAL PERCENT TITLE OF BENEFICIAL PERCENT
BENEFICIAL OWNER CLASS (1) OWNERSHIP OF CLASS CLASS (2) OWNERSHIP OF CLASS
- ----------------------------------- --------- -------------- -------- --------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Frank V. Cahouet Common 7,154(3) * Series E 4 *
Diane C. Creel " " 3,668(4) * Preferred 3 *
Hudson B. Drake " " 174,805(5) * " " 109 *
Douglas J. Grant " " 134,500(6) * " " 80 *
Ronald LaBow " " 0 * " " 0 *
William G. Ouchi " " 500 * " " 0 *
Donald B. Rice " " 281,000(7) * " " 2,390 *
Gary L. Riley " " 149,300(8) * " " 72 *
George A. Roberts " " 428,415(9) * " " 17,132 *
William P. Rutledge " " 419,000(10) * " " 360 *
Fayez Sarofim " " 1,316,250(11) 2.4 " " 53,646 2.4
Henry E. Singleton " " 7,272,260 13.0 " " 290,888 13.2
All directors and executive
officers as a group (12 persons) " " 10,324,497(12) 18.1 " " 364,908 16.5
</TABLE>
- ------------------------
* Less than one percent (1%)
(1) On January 4, 1995, the Company's Board of Directors declared a dividend
distribution of one share purchase right ("Right") for each outstanding
share of Common Stock to shareholders of record on January 27, 1995, and
with respect to shares of Common Stock issued thereafter until certain
events occur. Consequently, each share of Common Stock shown in this table
and the tables set forth below includes an attendant Right.
(2) On March 8, May 24, September 15, and November 21, 1995, each holder of one
hundred shares of Common Stock as of the applicable record date received one
share of Series E Cumulative Preferred Stock, $15.00 stated value ("Series E
Preferred"), with cash being paid in lieu of fractional shares distributed
on Common Stock accounts not evenly divisible by 100. Because these shares
were issued pursuant to dividends and no shares were purchased or sold since
such distributions, shares of Series E Preferred shown in this table are
owned in the same manner and subject to the same disclaimers as the
Company's Common Stock. Shares of Series E Preferred do not have any voting
rights at the meeting. As of February 29, 1996 there were 2,209,122 shares
of Series E Preferred issued and outstanding.
3
<PAGE>
(3) Includes 7,054 shares which Mr. Cahouet has the right to acquire through the
exercise of stock options within 60 days of February 29, 1996.
(4) Includes 3,568 shares which Ms. Creel has the right to acquire through the
exercise of stock options within 60 days of February 29, 1996.
(5) Includes 171,800 shares which Mr. Drake has the right to acquire through the
exercise of stock options within 60 days of February 29, 1996. Mr. Drake
shares with his spouse voting and investment power with respect to 3,005
shares, which shares are held in the Drake Family Trust.
(6) Includes 132,500 shares which Mr. Grant has the right to acquire through the
exercise of stock options within 60 days of February 29, 1996.
(7) Includes 180,000 shares which Dr. Rice has the right to acquire through the
exercise of stock options within 60 days of February 29, 1996.
(8) Includes 147,500 shares which Mr. Riley has the right to acquire through the
exercise of stock options within 60 days of February 29, 1996. Mr. Riley
shares with his spouse voting and investment power with respect to 1,800
shares, which shares are held in the Gary and Georgine Riley Trust.
(9) Includes 8,593 shares owned by Dr. Roberts' spouse and with respect to which
Dr. Roberts disclaims beneficial ownership.
(10) Includes 410,000 shares which Mr. Rutledge has the right to acquire through
the exercise of stock options within 60 days of February 29, 1996.
(11) Mr. Sarofim may be deemed to be the beneficial owner of 1,316,250 shares of
Common Stock and 53,646 shares of Series E Preferred. Of such shares, Mr.
Sarofim has sole voting and dispositive power as to 927,335 shares of Common
Stock and 38,090 shares of Series E Preferred and shared voting and
dispositive power as to 388,915 shares of Common Stock and 15,556 shares of
Series E Preferred. All of the securities which are not subject to sole
voting and dispositive powers are owned by Sarofim International Management
Company (a wholly-owned subsidiary of Fayez Sarofim & Co.) or by the Pension
and Profit Sharing Trusts of Fayez Sarofim & Co. (of which Mr. Sarofim is
the trustee).
(12) Includes all executive officers named in the table and Judith R. Nelson.
Includes an aggregate of 1,184,922 shares of Common Stock which certain of
the directors and executive officers have the right to acquire through the
exercise of stock options within 60 days of February 29, 1996, 8,593 shares
of Common Stock as to which beneficial ownership is disclaimed and 393,720
shares of Common Stock with respect to which voting and investment powers
may be shared.
4
<PAGE>
The following are the only persons known by the Company to have been
beneficial owners of more than five percent (5%) of the Company's outstanding
Common Stock as December 31, 1995.
<TABLE>
<CAPTION>
AMOUNT AND
NAME AND PRINCIPAL NATURE OF
BUSINESS ADDRESS BENEFICIAL
OF BENEFICIAL OWNER OWNERSHIP PERCENT
- -------------------------------------------- --------------- -----------
<S> <C> <C>
Henry E. Singleton 7,272,260 13.0%
335 North Maple Drive
Beverly Hills, CA 90210
George Kozmetsky 2,903,230(1) 5.2
2815 San Gabriel Street
Austin, TX 78705
</TABLE>
- ------------------------
(1) As reported in his Schedule 13G filed with the Securities and Exchange
Commission on February 25, 1995, Dr. Kozmetsky may be deemed to be the
beneficial owner of 2,903,230 shares as of December 31, 1994. Of such
shares, Dr. Kozmetsky has sole voting and dispositive power as to 2,029,721
shares. All of the securities which may be deemed to be subject to shared
voting and dispositive powers are owned by the RGK Foundation, Inc., a
non-profit corporation exempt from taxation under Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended. Dr. Kozmetsky disclaims
beneficial ownership of the shares held by the RGK Foundation, Inc., of
which Dr. Kozmetsky is one of seven trustees, and disclaims beneficial
ownership of 79,000 shares owned by Dr. Kozmetsky's wife.
PROPOSAL 1
ELECTION OF DIRECTORS
Eight directors are to be elected at the meeting to serve for a term of one
year or until the election and qualification of their successors. It is the
intention of the persons named in the proxy to vote the proxies in favor of
electing the persons named below as directors. If any of the persons named
refuses or is unable to serve as a director (which is not anticipated), the
persons named as proxies reserve full discretion to vote for any or all other
persons as may be nominated. The eight nominees receiving the greatest number of
votes will be elected directors.
The Board of Directors is pleased to introduce the nomination of William G.
Ouchi to serve as a director of the Company. Dr. Ouchi is a professor of
management in the Anderson Graduate School of Management at the University of
California at Los Angeles. In addition to being the author of three books and of
scholarly articles on organization and management, Dr. Ouchi serves on the board
of directors of Williams College, KCET public television, FirstFed Financial
Corp., the California Community Foundation and the Commission on Presidential
Debates. Dr. Ouchi is a member of the Consumer Advisory Committee of the
Securities and Exchange Commission and the Real Estate Advisory Committee of the
Trust Company of the West.
5
<PAGE>
The following table identifies the Company's nominees for election to the
Board of Directors and sets forth certain information concerning them.
<TABLE>
<CAPTION>
POSITIONS AND OFFICES DIRECTOR
NAME WITH THE COMPANY (1) SINCE AGE
- -------------------- ----------------------------------------------------------------- -------- ---
<S> <C> <C> <C>
Frank V. Cahouet Director(2)(3) 1994 63
Diane C. Creel Director(3) 1995 47
William G. Ouchi Nominee -- 52
Donald B. Rice President, Chief Operating Officer and Director(4) 1993 56
George A. Roberts Director(3)(4) 1966 77
William P. Rutledge Chief Executive Officer and Chairman of the Board of Directors(4) 1990 54
Fayez Sarofim Director(2)(3) 1986 67
Henry E. Singleton Director(3)(4) 1960 79
</TABLE>
- ------------------------
(1) Dr. Kozmetsky, who retired from the Board of Directors in April 1995, was a
member of the Audit and Compensation and Stock Option Committees during the
First Quarter of 1995.
(2) Member of the Audit Committee. Mr. Cahouet chairs the Audit Committee.
(3) Member of the Compensation and Stock Option Committee. Ms. Creel chairs the
Compensation and Stock Option Committee.
(4) Member of the Executive Committee.
BUSINESS EXPERIENCE OF NOMINEES
Frank V. Cahouet has been Chairman and Chief Executive Officer of Mellon
Bank Corporation, a bank holding corporation, and Mellon Bank, N.A., a banking
corporation, One Mellon Bank Center, Pittsburgh, Pennsylvania 15258, since 1987,
and was also named President of both of those companies in 1990. He is a
director of Avery Dennison Corporation.
Diane C. Creel is Chief Executive Officer of Earth Tech, 100 West Broadway,
Suite 500, Long Beach, California 90802. She also serves as a director of
Glendale Federal Bank, Compensation Resources Group, Inc. and the Boards of the
Corporations and Trusts which comprise the Fixed Income Funds of the American
Funds Group. Ms. Creel served as the Chief Operating Officer of Earth Tech from
December 1987 until January 1993 and became its President in September 1988 and
Chief Executive Officer in January 1993.
Donald B. Rice has been President and Chief Operating Officer of the Company
since March 1993 and a director since April 1993. He was Secretary of the Air
Force, U.S. Department of Defense, from 1989 to January 1993. From 1972 to 1989,
Dr. Rice served as President, Chief Executive Officer and a Trustee of The RAND
Corporation. He is a director of Wells Fargo & Company, Wells Fargo Bank N.A.,
and Vulcan Materials Company. Dr. Rice's principal business address is in care
of the Company, 2049 Century Park East, Los Angeles, California 90067.
William G. Ouchi has, since 1979, been a professor of management at the
Anderson Graduate School of Management at UCLA, University of California at Los
Angeles, Box 951481, Los Angeles California 90095. He is a director of FirstFed
Financial Corp.
6
<PAGE>
George A. Roberts is a private investor. He was Chairman of the Board of
Directors of the Company from January 1991 through March 1993. Dr. Roberts was
President of the Company from 1966 to 1990 and Chief Executive Officer from
April 1986 to January 1991. He is a director of Argonaut Group, Inc. and
Unitrin, Inc. Dr. Roberts' principal business address is in care of the Company,
2049 Century Park East, Los Angeles, California 90067.
William P. Rutledge has been employed by the Company since 1986. He has
served as a director since 1990, as Chief Executive Officer since January 1991
and as Chairman of the Board of Directors since March 1993. From 1990 to March
1993, Mr. Rutledge was President of the Company. From 1986 to 1987, Mr. Rutledge
was a Group Executive, from 1987 to 1988, a Vice President and from 1988 to
1989, a Senior Vice President of the Company. During 1989 and part of 1990, he
served as the Executive Vice President of the Company. Mr. Rutledge is a
director of FirstFed Financial Corp. Mr. Rutledge's principal business address
is in care of the Company, 2049 Century Park East, Los Angeles, California
90067.
Fayez Sarofim is the Chairman of the Board and President of Fayez Sarofim &
Co., a registered investment adviser, Two Houston Center, Suite 2907, Houston,
Texas 77010. Mr. Sarofim has held these positions for more than five years. He
is a director of Argonaut Group, Inc., Imperial Holly Corp., Mesa, Inc. and
Unitrin, Inc.
Henry E. Singleton, the Company's co-founder, is a rancher and investor. He
was Chairman of the Board of Directors of the Company from 1960 to January 1991.
From 1960 to 1986, he served as Chief Executive Officer of the Company. Dr.
Singleton is a director of Argonaut Group, Inc. and Unitrin, Inc. Dr.
Singleton's principal business address is 335 North Maple Drive, Beverly Hills,
California 90210.
The other companies listed above for which the nominees serve as directors
each have a class of securities registered pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended, are subject to the requirements of
Section 15(d) of the Securities Exchange Act of 1934, as amended, or are
registered as investment companies under the Investment Company Act of 1940, as
amended.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ELECTION OF THE NOMINEES LISTED
ABOVE AS DIRECTORS.
Mr. Ronald LaBow, age 61, has served as a director of the Company since
1995. Mr. LaBow has not been nominated by the Board of Directors for election at
the 1996 Annual Meeting of Shareholders. Mr. LaBow has been Chairman of the
Board of Directors of WHX Corporation since July 1994, Chairman of the Board of
Directors of Wheeling-Pittsburgh Corporation since 1991, and President of
Stonehill Investment Corp. since February 1990. Mr. LaBow also is a director of
Regency Equities Corp. Since he has been a director of the Company, Mr. LaBow
has served on the Audit Committee.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The standing committees of the Board of Directors are the Executive
Committee, the Audit Committee and the Compensation and Stock Option Committee.
Except for certain powers which, under Delaware law, may be exercised only by
the full Board of Directors, the Executive Committee may exercise all powers and
authority of the Board of Directors in the management of the business of the
Company. The Compensation and Stock Option Committee is discussed below under
the caption "Compensation and Stock Option Committee Report on Executive
Compensation." The Audit Committee reviews the scope of the Company's audits and
the related fees, the accounting principles applied by the Company in financial
reporting, the scope of internal auditing procedures and the adequacy of
internal controls.
In 1994, the full Board of Directors assumed the function and activities of
the Nominating Committee, which was then dissolved. Subject to the terms and
conditions set forth in the Company's By-laws, the Board of Directors will
consider nominations received from shareholders. Under the Company's By-laws,
shareholders may not present proposals for action, or nominate directors, at the
7
<PAGE>
Annual Meeting of Shareholders unless written notice thereof was delivered to
the Secretary of the Company not less than 60 nor more than 90 days prior to the
first anniversary of the preceding year's annual meeting, which notice must
contain information specified in the Company By-laws. Further information can be
obtained by writing to the Secretary of the Company, 2049 Century Park East, Los
Angeles, California 90067-3101.
During 1995, the Board of Directors held four regular meetings and eight
special meetings. The Executive Committee held three meetings, the Audit
Committee held four meetings and the Compensation and Stock Option Committee
held three meetings. Each then incumbent director attended 75% or more of the
aggregate of (i) the total number of meetings of the Board of Directors, and
(ii) the total number of meetings held by the committees on which he or she
served.
Non-employee directors of the Company earn an annual retainer of $28,000, a
fee of $1,500 per Board meeting attended, $1,000 per committee meeting attended,
and a $5,000 additional retainer for serving as chair of the Audit or
Compensation and Stock Option Committee. Pursuant to the terms of the 1995
Non-Employee Director Stock Option Plan, non-employee directors who first become
directors after January 1, 1994 may elect to receive stock options in lieu of
retainer and/or meeting fees. In addition, such directors receive annual stock
options awards of 1,000 shares.
EXECUTIVE OFFICERS
The following table lists the Company's executive officers as of the date of
this Proxy Statement and certain information concerning them.
<TABLE>
<CAPTION>
YEAR FIRST BECAME
NAME POSITIONS WITH COMPANY EXECUTIVE OFFICER AGE
- ------------------------- ------------------------------------------------------------ ----------------- ---
<S> <C> <C> <C>
Hudson B. Drake Senior Vice President 1987 61
Douglas J. Grant Treasurer 1990 45
Judith R. Nelson Secretary and General Counsel 1987 55
Donald B. Rice President and Chief Operating Officer 1993 56
Gary L. Riley Vice President 1990 58
William P. Rutledge Chairman of the Board of Directors and Chief Executive
Officer 1987 54
</TABLE>
Hudson B. Drake joined the Company in 1972. He became a Group Executive in
1985, was elected Vice President in 1987 and Senior Vice President in 1988.
Douglas J. Grant joined the Company in 1977. He was appointed Assistant
Controller in 1985, Controller in 1987 and elected Treasurer in 1990.
Judith R. Nelson joined the Company as Counsel in 1968. She was elected
Secretary in 1987 and General Counsel in 1990.
Donald B. Rice joined the Company as President and Chief Operating Officer
in 1993 and was elected a director in 1993. He was Secretary of the Air Force,
U.S. Department of Defense, from 1989 to January 1993. From 1972 to 1989, Dr.
Rice served as President, Chief Executive Officer and a Trustee of The RAND
Corporation.
Gary L. Riley joined the Company in 1986 as a Group Executive and was
elected a Vice President in 1990.
William P. Rutledge has been employed by the Company since 1986. He has
served as a director since 1990, as Chief Executive Officer since 1991 and as
Chairman of the Board of Directors since March 1993. From 1990 to March 1993,
Mr. Rutledge was President of the Company. From 1986 to
8
<PAGE>
1987, Mr. Rutledge was a Group Executive, from 1987 to 1988, a Vice President
and from 1988 to 1989, a Senior Vice President of the Company. During 1989 and
part of 1990, he served as the Executive Vice President of the Company.
The executive officers of the Company hold office at the pleasure of the
Board of Directors.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth certain information concerning the annual and
long-term compensation of Mr. Rutledge and the other four most highly
compensated executive officers of the Company (determined as of the end of the
last fiscal year) for fiscal years 1995, 1994, and 1993.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
---------------
NO. OF
ANNUAL COMPENSATION SECURITIES
--------------------------------------------- UNDERLYING
NAME AND OTHER ANNUAL OPTIONS/SAR'S ALL OTHER
PRINCIPAL POSITION YEAR SALARY (1) BONUS (2) COMPENSATION (3) (IN SHARES) (4) COMPENSATION (5)
- -------------------------------- ---- ---------- --------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
William P. Rutledge 1995 $ 710,000 $ 715,385 $ -- -- $ 300
Chairman of the Board of 1994 630,000 424,778 329,268(6) 300,000 1,452
Directors and Chief Executive 1993 600,000 150,000 -- 150,000 1,452
Officer
Hudson B. Drake 1995 400,000 277,287 -- -- 765
Senior Vice President 1994 400,000 219,400 -- 100,000 876
1993 400,000 100,000 203,150(7) 30,000 876
Douglas J. Grant 1995 252,455 181,529 -- 20,000 1,079
Treasurer 1994 222,500 106,950 -- 100,000 300
1993 193,750 80,000 -- 30,000 300
Donald B. Rice 1995 587,500 604,550 -- -- 2,848
President and Chief Operating 1994 520,290 361,305 -- 250,000 --
Officer 1993 407,693 350,000 542,444(8) 200,000 --
Gary L. Riley 1995 325,709 171,447 -- -- 1,120
Vice President 1994 310,000 47,740 -- 100,000 225
1993 271,667 95,000 192,206(9) 30,000 75
</TABLE>
- ------------------------
(1) Includes amounts deferred under the Company's 401(k) Plan and under the
Teledyne, Inc. Executive Deferred Compensation Plan.
(2) Bonuses relating to service in a fiscal year generally have been paid during
the immediately following fiscal year. Therefore, amounts shown for fiscal
years 1995, 1994, and 1993 were actually paid in 1996, 1995, and 1994,
respectively. Includes amounts deferred under the Teledyne, Inc. Executive
Deferred Compensation Plan. Does not include contingent bonuses awarded but
not paid ("banked") with respect to 1995 service that the Compensation and
Stock Option Committee has required the executive officers to carry over and
put at risk against 1996 and 1997 performance. See the discussion of Mr.
Rutledge's 1995 compensation in the COMPENSATION AND STOCK OPTION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION at page for a discussion of "banking"
with respect to contingent bonuses.
(3) In accordance with Securities and Exchange Commission regulations, this
table does not include perquisites and other personal benefits received by a
named executive officer during a fiscal year
unless the aggregate value of such perquisites and other benefits exceed the
lesser of $50,000 or 10% of the total Salary and Bonus reported for the
named executive officer.
9
<PAGE>
(4) In 1994 options were granted under the Teledyne, Inc. 1994 Long-Term
Incentive Plan. Options were granted in 1995 and 1993 under the Teledyne,
Inc. 1990 Stock Option Plan. No stock appreciation rights have been granted
under either plan.
(5) Amounts included under All Other Compensation were contributed or accrued
for the applicable executive officer by the Company under the Company's
401(k) Plan and/or paid on behalf of the applicable executive officer for
additional group term life insurance premiums not generally paid on behalf
of all salaried employees under the Company's life insurance plans.
(6) In connection with the refinancing of his mortgage obligations, in 1994 the
Company made a special payment to Mr. Rutledge of $300,000, the after-tax
proceeds of which were used to reduce substantially the Company-guaranteed
loan balance.
(7) In 1993, Mr. Drake received a special payment of $200,000, the after-tax
proceeds of which were used to reduce the Company-guaranteed loan balance
for a residence in Los Angeles.
(8) The Company required Dr. Rice to relocate his residence from the Washington,
D.C. area to Los Angeles, California. In connection with this relocation,
the Company compensated Dr. Rice $511,009 for the loss on the sale of his
residence and paid $16,611 for the costs of this relocation.
(9) The Company required Mr. Riley to relocate his residence from the
Pittsburgh, Pennsylvania area to Los Angeles, California. The Company paid
$87,681 for the costs of Mr. Riley's relocation and made to Mr. Riley a
one-time special payment of $100,000 to compensate him for moving at the
Company's request.
OPTION GRANTS, EXERCISES AND YEAR-END VALUES
Shown below is further information with respect to stock options granted
during fiscal year 1995 under the Company's 1990 Stock Option Plan to
individuals listed in the Summary Compensation Tables at page , above. No
options or stock appreciation rights were granted in 1995 under the Company's
1994 Long-Term Incentive Plan to such named executive officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT ASSUMED ANNUAL
RATES OF STOCK PRICE APPRECIATION FOR 11-YEAR
OPTION TERM (2)
---------------------------------------------
INDIVIDUAL GRANTS 0% ($) 5% ($) 10% ($)
- ------------------------------------------------------------------------------ ------------- ------------- -------------
% OF TOTAL ASSUMED ASSUMED ASSUMED
NUMBER OF OPTIONS COMMON COMMON COMMON
SECURITIES GRANTED TO STOCK STOCK STOCK
UNDERLYING EMPLOYEES EXERCISE PRICE ON PRICE ON PRICE ON
OPTIONS IN FISCAL OR BASE EXPIRATION JUNE 29, 2006 JUNE 29, 2006 JUNE 29, 2006
NAME GRANTED (1) YEAR PRICE DATE $24.75 $42.33 $70.61
- ------------------------------ ----------- ---------- -------- ---------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Douglas J. Grant.............. 20,000 3.7 $ 24.75 06/29/06 0 $351,618 $917,293
Total Shareholder Benefit
(3).......................... 0 Approx. Approx.
$1 billion $2.5 billion
Benefit to Named Officer as a
Percent of Total............. 0 .036% .036%
</TABLE>
- ------------------------
(1) Options are exercisable at a rate of 25% per year, commencing on the first
anniversary of their grant. Options are nonqualified under the Internal
Revenue Code of 1986, as amended, and were granted at an exercise price
equal to the fair market value on the date of grant. Vesting of options
10
<PAGE>
may be accelerated upon a change in control of the Company. No stock
appreciation rights have been granted under the Company's 1990 Stock Option
Plan or the Company's 1994 Long-Term Incentive Plan.
(2) Except with respect to the first column, the amounts shown are not the
values of the options on the date they were granted. Instead, these are
hypothetical future values based on the difference between the option
exercise price and an assumed future Common Stock price at the end of the 11
year term of the options using hypothetical rates of growth at 0%, 5% and
10%, respectively. There can be no assurance that the growth rates specified
in this table will be achieved.
(3) Represents the increase in market value of Common Stock for all shareholders
at assumed rates of stock appreciation over the eleven-year period.
The following table provides further information with respect to the shares
acquired on exercise of stock options in the last fiscal year and the number and
value of unexercised options at fiscal year-end.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NAME
- ------------------------------
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES ACQUIRED VALUE OPTIONS (IN SHARES) OPTIONS
ON EXERCISE REALIZED (1) AT FY-END (2) AT FY-END (3)
--------------- ----------- ------------------------- -------------------------
EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
------------------------- -------------------------
<S> <C> <C> <C> <C>
William P. Rutledge........... 2,500 $ 8,125 285,000 / 312,500 $1,700,625 / $2,490,625
Hudson B. Drake............... 700 6,300 133,050 / 96,250 764,775 / 777,500
Douglas J. Grant.............. -- -- 95,000 / 115,000 559,375 / 794,375
Donald B. Rice................ 95,000 527,187 67,500 / 287,500 362,812 / 2,271,875
Gary L. Riley................. -- -- 108,750 / 96,250 621,250 / 777,500
</TABLE>
- ------------------------
(1) Deemed gain calculated by determining the difference between the fair market
value of the Common Stock underlying the option on the date of the exercise
and the exercise price. None of the officers has sold any of the shares of
Common Stock issued pursuant to such exercises.
(2) Options have been granted under the Company's 1990 Stock Option Plan and
1994 Long-Term Incentive Plans. No stock appreciation rights have been
granted under either plan and no stock options have been granted with
respect to these individuals since the end of the last fiscal year. Vesting
of options may be accelerated by a change in control of the Company.
(3) Calculated by determining the difference between the fair market value of
the Common Stock underlying the options on December 29, 1995 ($25.625, the
closing price on the New York Stock Exchange-Composite Transactions) and the
exercise price of the options on that date.
11
<PAGE>
DEFINED BENEFIT PLANS
The following table presents the estimated annual retirement benefits
payable on a straight-life annuity basis, assuming retirement at age 65 or older
in 1996, to participating employees, including executive officers, under
Teledyne's Retirement Plan for Salaried Employees ("Plan") and the Pension
Equalization Plan.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE
--------------------------------------------------
REMUNERATION (1) 15 20 25 30 (2)
- ---------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
$ 125,000 $ 28,249 $ 37,665 $ 47,081 $ 56,498
150,000 34,436 45,915 57,394 68,873
175,000 40,624 54,165 67,706 81,248
200,000 46,811 62,415 78,019 93,623
225,000 52,999 70,665 88,331 105,998
250,000 59,186 78,915 98,664 118,373
300,000 71,561 95,415 119,269 143,123
400,000 96,311 128,415 160,519 192,623
450,000 108,686 144,915 181,144 217,373
500,000 121,061 161,415 201,769 242,123
600,000 145,811 194,415 243,019 291,623
700,000 170,561 227,415 284,269 341,123
800,000 195,311 260,415 325,519 390,623
</TABLE>
- ------------------------
(1) The benefits shown are calculated as if remuneration is the annual average
Plan compensation under the terms of the Plan. For periods through December
31, 1994, Plan compensation was limited to an individual's basic salary.
Effective January 1, 1995, plan compensation includes basic salary and
incentive compensation received on and after January 1, 1995. Basic Salary
for the past three years for the named executive officers is shown under the
heading "Salary" and incentive compensation is shown under the heading
"Bonus" in the Summary Compensation Table at page , above.
(2) Maximum benefits payable under the Plan are reached after 30 years of
credited service.
The Plan is a defined benefit retirement plan qualified under the Internal
Revenue Code of 1986, as amended ("Code"), and covers employees, except
nonsupervisory production or maintenance employees, with at least one year of
service to the Company or those of its divisions or subsidiaries that have
adopted the Plan. Benefits under the Plan depend upon an individual's average
compensation (as described above) over the 60 highest consecutive months during
the 120 months preceding termination of employment and the number of years such
individual has participated in the Plan. Participants vest in their accrued
benefits under the Plan after five years of service to the Company or its
divisions or subsidiaries. Benefits payable under the Plan are not subject to
any deduction for Social Security or other offset amounts.
Section 415 of the Code imposes limitations on the amount of benefits
payable under tax-qualified plans. Accordingly, the maximum annual benefit
provided by the Plan for 1996 is $120,000. In addition, the Code imposes an
annual limit upon the amount of compensation which may be included in the
calculation of a benefit from a tax-qualified plan; in 1996, the maximum
includable compensation is $150,000. This amount is adjusted periodically for
increases in the cost of living. The Company has adopted a Pension Equalization
Plan to restore retirement benefits, which would be payable under the Plan but
for the limits imposed by the Code, to the level set forth in the preceding
table, calculated pursuant to the Plan formula.
12
<PAGE>
The number of years of credited service and the average basic salary covered
by the Plan and the Pension Equalization Plan as of December 31, 1995, for each
named executive officer is: Hudson B. Drake, 22.2 years and $435,880; Douglas J.
Grant 17.1 years and $222,629; Donald B. Rice, 1.8 years and $662,396; Gary L.
Riley, 8.9 years and $286,023; and William P. Rutledge, 8.9 years and $692,956.
SEVERANCE ARRANGEMENTS
In 1995, the Company entered into individual severance agreements (as
amended, the "Agreements") with each of the Company's executive officers. Among
other things, the Agreements were intended to encourage the Company's executive
officers to remain with the Company during a period of uncertainty with respect
to the Company's ownership and governance. On February 29, 1996, the Board of
Directors approved amendments to the Agreements extending their terms for one
year.
The Agreements provide various severance benefits to such executive officers
in the event their employment is terminated involuntarily (other than for cause,
disability or death) or voluntarily, in either case within one year of the
occurrence of a Change of Control (defined below). In general, a Change of
Control will occur if (i) on or prior to July 31, 1997, any person acquires a
majority of the voting power of the Company's stock, (ii) the individuals who
comprised the Company's Board of Directors on March 5, 1995 cease to comprise a
majority of the Board at or before the conclusion of the 1996 Annual Meeting of
Shareholders, or (iii) on or prior to July 31, 1997, a merger, consolidation,
reorganization or sale of all or substantially all of the Company's assets
occurs and the Company's shareholders do not own, in substantially the same
proportion as before such transaction, at least 70% of the voting securities of
the entity resulting from such merger, consolidation or reorganization or which
acquires such assets.
The Agreements provide for the following severance benefits to each
executive officer: (i) a lump sum payment based on a multiple of his or her
annualized compensation, including performance bonuses, (ii) continuation for up
to two years of the life and health insurance benefits that were being provided
by the Company to such officer and his or her family immediately prior to
termination, (iii) personal financial and estate planning services, and (iv)
outplacement services for up to 52 weeks at the Company's expense (up to a
maximum of $15,000). Each of the Agreements contains identical terms and
conditions, except that the severance compensation multiple for Mr. Rutledge and
Dr. Rice is 2.5 and the multiple for the other executive officers is 2.25. All
severance benefits payable under the Agreements would be reduced to the extent
necessary to prevent any executive officer from being subject to the excise tax
provisions of Section 4999 of the Code applicable to any "excess parachute
payment" (as defined in Section 280G of the Code) and to preserve the ability of
the Company to deduct the severance benefits paid; PROVIDED, that the severance
benefits payable to an executive officer may not exceed the highest amount
payable to the Company's Chairman and Chief Executive Officer. The Agreements
are not employment contracts.
Severance arrangements also are in effect for certain other employees of the
Company and its subsidiaries, conditional on a change of control with respect to
the Company and involuntary termination or voluntary termination upon
significant negative changes in the terms of employment for such employees. In
total, approximately 235 employees are covered by such arrangements. If all such
employees and all of the executive officers subject to the Agreements were
terminated upon a change of control, at current salary and target bonus levels,
the maximum aggregate value of benefits to be received by all such individuals
as a group would be approximately $28 million.
13
<PAGE>
COMPENSATION AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT
OF 1934 THAT MIGHT INCORPORATE FUTURE FILINGS, INCLUDING THIS PROXY STATEMENT,
IN WHOLE OR IN PART, THIS COMPENSATION AND STOCK OPTION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION AND THE CUMULATIVE SHAREHOLDER RETURN GRAPH ON PAGE
SHALL NOT BE INCORPORATED BY REFERENCE INTO ANY SUCH FILINGS.
This report on executive compensation is furnished by the Compensation and
Stock Option Committee of the Board of Directors ("Committee") with respect to
the compensation of the Company's executive officers for fiscal year 1995. The
Committee administers the Company's policies with respect to the compensation of
the Company's executive officers. The Committee includes among its duties
reviewing and evaluating compensation levels of the executive officers and
assessing the performance of these officers.
COMPENSATION POLICY
It is the policy of the Company to align the interests of its executive
officers with the long-term interests of its shareholders to the extent possible
through its compensation plans. In furtherance of these purposes, the Company
compensates its executive officers in a manner which simultaneously encourages
and rewards annual and long-term corporate and individual performance and allows
the Company to attract and retain qualified executive officers. It is also the
Company's policy to provide executive officers with long-term performance
incentives and to encourage share ownership through the grant of stock option
awards.
COMPENSATION PACKAGE
For 1995, the compensation package of the Company's executive officers
consisted principally of base annual salary and performance-based bonuses. In
addition, the executive officers were eligible to participate in certain of the
Company's employee benefit plans.
COMPENSATION LEVELS
In addition to the specific factors described below, in setting 1995
compensation levels the Committee considered how the total annual compensation
levels of the Company's executive officers (including the value and amount of
options held by such officers) compared to the compensation levels of executive
officers at other publicly-traded companies. Specifically, the Committee
Chairman made recommendations to the Committee based on a review of compensation
levels of executive officers from a variety of sources, including various 1994
Proxy Statements, publications such as The Conference Board Report on Top
Executive Compensation, and compensation surveys reported in business journals
such as FORBES and FORTUNE. The review was not limited to compensation levels at
other diversified technology companies included in the S & P Conglomerates Index
(see page of this Proxy Statement for a list of the companies included in this
index), but also included compensation levels at such other companies as FMC
Corporation, Sunstrand Corporation, Gencorp Inc., E-Systems, Inc.,
Parker-Hannifan Corp., Avery Dennison Corp., Ingersoll-Rand Co. and Loral Corp.
This review was shared and discussed with the full Committee. The Committee
believes that, in the aggregate, the salary and bonus of the Company's executive
officers do not exceed what the Committee believes to be the median salary and
bonus levels of comparable executives of such other companies.
BASE SALARY
In setting the executive officers' base salaries for 1995, the Committee
considered market comparability factors and the performance of the executive
officers' respective business units, as well as the executive officers'
individual performance, during the several preceding fiscal years. As in prior
years, the Committee considered such performance measures as Company-wide sales,
net profits, cash
14
<PAGE>
flow and return on investment during the preceding years, as well as such
personal measures as additional effort and years of service. The Committee did
not assign specific weights to any of the factors it considered in setting base
salaries.
1995 BONUS
Bonuses for 1995 service by the executive officers were based principally on
the economic value added ("EVA") of the executive officers' respective business
units: that is, the net operating profit after tax for the applicable business
unit reduced by a charge for the cost of capital employed in that unit. For
these purposes, the assumed cost of capital was 10.5%. If an executive officer
achieved his or her EVA target for the year, he or she received his or her
targeted bonus level. Bonuses increased or decreased proportionately in relation
to the success (or failure) of the executive officer in achieving his or her EVA
target.
For purposes of EVA, the total Company was the business unit of each
executive officer other than the Segment Presidents. The EVA-based portion of
the bonuses for Messrs. Drake and Riley were based 50% on the Company's EVA and
50% on the EVA for the respective groups of companies for which each was
responsible ("Segments"). In determining target levels for 1995 EVA, the
Committee primarily considered the Company's and the applicable Segment's
projected 1995 EVA and the 1995 business plans prepared by the operating
companies, and reviewed by the Segment Presidents and other executive officers,
as well as the Company's final EVA for 1994. The Company's final EVA results for
1995 are discussed below under the heading "MR. RUTLEDGE'S 1995 COMPENSATION."
For Mr. Rutledge and Dr. Rice, the Committee set target levels for the
EVA-based portion of their bonus at 60% of base salary, in keeping with the
comparability reviews described above. The actual bonus was ratioed up or down
depending on actual Company performance compared to the target set by the
Committee. For the other executive officers, the target for their EVA-based
portion was set at 40% of salary, to be similarly adjusted for actual
performance.
In addition to the amounts awarded with respect to EVA targets, the
Committee provided for bonuses for success in achieving 1995 personal goals.
These goals were established at the beginning of 1995, after review by the
officer's immediate superior and the Committee. Generally, these goals relate to
achieving specific objectives, such as achieving levels of profits or net cash
flow, or the efficient running of the executive officer's department, as well as
to matters such as employee training, recruitment and ethics education. These
bonuses were calculated as fractions of base salary with a target level of 10%
and actual levels (between 0 and 15%) approved by the Committee based on
achievement by the executive officers of specific personal goals. The assigned
actual percentages were subject to the same proportional adjustments applicable
to the executive officers' EVA-based payments. On average, the bonuses relating
to personal goals made up approximately 20% of the total bonuses awarded for
1995.
STOCK OPTIONS
In order to provide additional incentives for individual and Company
performance and to foster stock ownership by the Company's executive officers,
from time to time the Committee makes awards under the Company's 1994 Long-Term
Incentive plan ("LTIP") and/or 1990 Stock Option Plan. Under the LTIP and the
1990 Stock Option Plan, the Company may grant incentive stock options meeting
the requirements of Section 422 of the Internal Revenue Code of 1986, as
amended, and nonqualified options. The Committee may, at its discretion, couple
stock options with stock appreciation rights. In addition, the Committee may
issue restricted shares. By the terms of the LTIP and the 1990 Stock Option
Plan, incentive stock options cannot be granted at an exercise price less than
the fair market value of a share at the date of grant. Nonqualified options may
be granted at any price determined by the Committee.
In determining the amount of stock options to be granted to executive
officers in 1995, the Committee made a subjective determination based, among
other things, on the executive officer's shareholdings and option holdings in
the Company, overall compensation levels (including options)
15
<PAGE>
compared to certain other public companies and the factors described under "BASE
SALARY" and "COMPENSATION LEVELS," above. The Committee did not assign specific
weights to any of the factors it considered in awarding stock options in 1995,
nor has the Committee set specific long-term target levels of share ownership
for the executive officers. Based on its subjective analysis, the Committee
awarded a relatively small number of stock options to the executive officers in
1995.
MR. RUTLEDGE'S 1995 COMPENSATION.
Mr. Rutledge's base salary for 1995 was $710,000. That salary was set
considering all of the factors set forth above under "COMPENSATION LEVELS" and
"BASE SALARY." Mr. Rutledge's bonus for 1995 service was based primarily on the
EVA bonus program described under "1995 BONUS" above. For 1995, the Company's
EVA target was an adjusted net operating profit level after tax of approximately
$8 million in excess of the cost of capital used by the Company, assuming a cost
of capital equal to 10.5%. If that target was reached, Mr. Rutledge's EVA-based
bonus would have been 60% of his 1995 base salary. That bonus was subject to a
proportionate increase for EVA in excess of $8 million and a proportionate
decrease for EVA below $8 million. If the actual EVA achieved had been
approximately $41 million below the target (i.e., minus $33 million), the bonus
earned would have been zero. Likewise, if actual EVA had exceeded the target by
approximately $41 million, the bonus earned would have been double the target
level. Because the Company achieved actual EVA of approximately $33 million, $25
million in excess of the target, Mr. Rutledge earned a bonus level equal to 1.6
times 73.6% of his base salary (13.6% of which was attributable to Mr. Rutledge
achieving his 1995 personal goals). However, the Committee will require Mr.
Rutledge to "bank" a portion of that bonus: that is, a portion of that bonus
will be carried over to 1996 and 1997 and put at risk against any 1996 or 1997
"negative bonus" or added to any 1996 or 1997 "positive bonus." Consequently,
Mr. Rutledge was paid $715,385 as bonus and approximately $124,369 was banked
toward 1996 and 1997 service.
COMPENSATION CONSULTANTS
For 1996, the Committee has retained the services of Compensation Resource
Group, Inc. ("CRG"), a nationally recognized executive compensation and benefits
consulting firm. CRG will assist the Committee in analyzing the Company's
current executive compensation program in light of executive compensation
packages offered at comparable companies as well as the Company's long-term
strategic goals.
SENIOR EXECUTIVE PERFORMANCE PLAN; DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Changes in the federal tax law include new limitations on the deductibility
of compensation in excess of $1 million payable to the Chief Executive Officer
and certain executive officers of the Company. The Senior Executive Performance
Plan described at pages through of this Proxy Statement, if approved by the
Company's shareholders, is intended to preserve the deductibility of
compensation paid to the Company's executive officers. Under that plan,
executive bonuses will be awarded from a pool which is funded from a percentage
of the Company's EVA for a given year. It is the Committee's intention for 1996
to make individual awards from that bonus pool, if any, based principally on the
EVA factors described under "1995 BONUS" above.
MEMBERS OF THE COMPENSATION AND STOCK OPTION COMMITTEE
Diane C. Creel, Chairperson
Frank V. Cahouet
George A. Roberts
Fayez Sarofim
Henry E. Singleton
16
<PAGE>
COMPENSATION AND STOCK OPTION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
During 1995, Frank V. Cahouet, Diane C. Creel, George A. Roberts, Fayez
Sarofim, and Henry E. Singleton served on the Committee. George Kozmetsky also
served on the Committee until April 1995. Henry E. Singleton, a founder of the
Company, served as Chief Executive Officer of the Company from 1960 to 1986 and
as Chairman of the Board of the Company from 1960 to 1991, and George Kozmetsky,
who co-founded the Company, served as Executive Vice President and Secretary of
the Company from 1960 to 1966. George A. Roberts was President of the Company
from 1966 to 1990 and Chief Executive Officer from April 1986 to January 1991
and was Chairman of the Board from January 1991 until March 1993. All of these
former executive officers are significant shareholders of the Company (see table
at page above).
ARGONAUT GROUP, INC.
Three of the Company's directors, George A. Roberts, Fayez Sarofim and Henry
E. Singleton, also are directors of Argonaut Group, Inc. ("Argonaut Group"), a
former subsidiary of the Company. In addition, as of January 31, 1996, directors
and executive officers of the Company beneficially owned in the aggregate more
than 20% of the outstanding stock of Argonaut Group.
The Company provides Argonaut Group with certain investment trade execution
services. During 1995, Argonaut Group paid the Company approximately $100,000
for these services. During 1995, the Company paid Argonaut Insurance Company
("Argonaut Insurance"), a subsidiary of Argonaut Group, paid the Company
approximately $125,000 pursuant to certain retrospective rating provisions of
insurance policies previously written by Argonaut Group for the Company. Future
payments to or from Argonaut Insurance may be required under the retrospective
rating provisions and reinsurance provisions of such policies. In 1995, the
Company also paid approximately $1.3 million to AGI Properties, Inc. ("AGI"), a
non-insurance subsidiary of Argonaut Insurance, pursuant to a real property
lease in Los Angeles, California, which expires in October 1996. The Company
believes that the transactions described above have been entered into on terms
no less favorable than could have been negotiated with non-affiliated third
parties.
UNITRIN, INC.
Three of the Company's directors, George A. Roberts, Fayez Sarofim and Henry
E. Singleton, are also directors of Unitrin, Inc. ("Unitrin"), a former
subsidiary of the Company. In addition, as of January 31, 1996, directors and
executive officers of the Company beneficially owned in the aggregate over 25%
of the outstanding stock of Unitrin.
The Company provides Unitrin with certain investment trade execution and
other professional services, as well as the use of Company aircraft. During
1995, Unitrin paid the Company approximately $600,000 for these services.
Unitrin provided data processing services to the Company for which the Company
paid approximately $1 million in 1995. In addition, during 1995, Unitrin earned
premiums of approximately $6 million for group life insurance coverages on
Company employees and their dependents. In prior years, pursuant to certain
contractual arrangements with the Company, Unitrin insured the Company and its
subsidiaries for certain coverages, including workers' compensation, general
liability and automobile liability. These insurance arrangements contained
retrospective rating and reinsurance provisions which reduce Unitrin's financial
exposure by giving it recourse against the Company and its subsidiaries. The
Company paid approximately $180,000 in 1995, pursuant to retrospective rating
provisions of previously written policies. The Company believes that the
transactions described above have been entered into on terms no less favorable
than could have been negotiated with non-affiliated third parties. In addition,
the Company and Unitrin have certain mutual indemnities with respect to certain
tax matters and the operation of the Company prior to the 1990 distribution of
Unitrin stock to the Company's shareholders.
MELLON BANK, N.A.
Frank V. Cahouet, a director of the Company, serves as Chairman, Chief
Executive Officer and President of Mellon Bank, N.A. During 1995, the Company
paid approximately $355,000 to Mellon
17
<PAGE>
Bank, N.A. for banking services and anticipates using such banking services in
the future. The Company believes that these transactions have been entered into
on terms no less favorable than could have been negotiated with non-affiliated
third parties.
EARTH TECH
Diane C. Creel, a director of the Company serves as Chief Executive Officer
of Earth Tech. During 1995, the Company paid approximately $475,000 to Earth
Tech and its affiliates for environmental consulting services and anticipates
using such services in the future. The Company believes that these transactions
have been entered into on terms no less favorable than could have been
negotiated with non-affiliated third parties.
CERTAIN LOAN GUARANTEE
The Company has guaranteed repayment to an unaffiliated banking institution
of $464,000 of Mr. Rutledge's loan obligations with respect to his residence in
Los Angeles, California. As of February 29, 1996, Mr. Rutledge was current in
his obligations.
CUMULATIVE SHAREHOLDER RETURN
Set forth below is a line graph comparing, on an annual basis, the
percentage change in the cumulative total shareholder return on the Company's
Common Stock against the total return on the S&P Composite 500 Stock Index and
the total return on the S&P Conglomerates Index from December 31, 1990 through
December 31, 1995. This graph assumes that the value of the investment in the
Company's Common Stock and in each index was $100 on December 31, 1990 and that
all dividends were reinvested. The stock price performance shown below is not
necessarily indicative of future price performance.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
TELEDYNE, INC., S&P 500 INDEX AND S&P CONGLOMERATES INDEX*
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
TELEDYNE,
INC. S&P 500 S&P CONGLOMERATES
<S> <C> <C> <C>
12/31/90 100.0000 100.0000 100.0000
12/31/91 138.4793 130.4670 108.5320
12/31/92 149.3798 140.4140 133.6850
12/31/93 197.6176 154.5880 177.1720
12/31/94 152.9636 156.5910 168.1190
12/31/95 203.0195 215.4380 218.3360
</TABLE>
* The S&P Conglomerates Index includes Teledyne, Inc., Tenneco Inc. and
Textron Inc. Until 1994, Litton Industries, Inc. also was included in this
index and, until 1995, ITT Corporation was included in this index.
18
<PAGE>
PROPOSAL 2
APPROVAL OF THE 1996 TELEDYNE, INC.
SENIOR EXECUTIVE PERFORMANCE PLAN
In February 1996, the Board of Directors adopted the Teledyne, Inc. Senior
Executive Performance Plan ("SEP Plan" or "Plan") subject to shareholder
approval. A copy of the SEP Plan is attached hereto as Exhibit A. The following
summary does not purport to be fully descriptive and reference is made to
Exhibit A for more detailed information.
GENERAL
The purpose of the SEP Plan is to provide incentives and rewards to key
senior executives who create economic value and to ensure that income paid
pursuant to the SEP Plan is deductible by the Company for federal income tax
purposes. The SEP Plan is not a guarantee of any bonus or continued employment
to any participant.
ADMINISTRATION
The SEP Plan will be administered by the Compensation and Stock Option
Committee, or a subcommittee thereof ("Committee") that satisfies the
requirements of Section 162(m) ("Section 162(m)") of the Internal Revenue Code
of 1986, as amended. Each Committee member serves in such capacity until such
time as he or she ceases to meet the requirements of Section 162(m) and Rule
16b-3 under the Securities Exchange Act of 1934, as amended ("Rule 16b-3"), or
until the Board of Directors decides to replace such member. The Committee will
have full authority to administer the SEP Plan, including authority to interpret
and construe any relevant provision of the SEP Plan and to adopt any rules and
regulations it may deem necessary. Decisions of the Committee are final and
binding on all persons who have an interest in the SEP Plan.
ELIGIBILITY
The executive officers eligible to participate in the SEP Plan for any
fiscal year are the Chief Executive Officer and each other executive officer of
the Company within the meaning of Section 3b-7 of the Securities Exchange Act of
1934, as amended, or other executive officers that are deemed "covered"
employees under Section 162(m). Participants are approved for each fiscal SEP
Plan year by the Committee. The Committee has sole discretion to reduce or
withhold a participant's award for the year in which such participant's
employment is terminated (voluntarily or involuntarily).
BONUS POOL
Bonuses under the SEP Plan are awarded out of a pool based on the Company's
economic value added ("EVA") for the year ("SEP Pool"). For these purposes, EVA
means the amount, if any, by which the Company's net operating profit after tax
exceeds a reference cost of capital of no less than 7% ("Measurement Factors").
No later than ninety days after the commencement of a Plan year ("Establishment
Date"), the Committee must determine the percentage of EVA that will fund the
pool, not to exceed 5% of EVA, and must determine the reference cost of capital,
not less than 7%, to be used in calculating EVA. The Committee must determine
the constituent parts of net operating profit after tax for a given year by the
Establishment Date. Generally, it is the intention of the Committee to adjust
net income to reflect net operating profits after taxes, but before non-cash
bookkeeping entries. Adjustments may include material unusual or infrequent
items like restructuring charges, sales of businesses or investments, litigation
and other losses. In any event, net operating profit after tax for a given year
will not exceed the Company's reported net income excluding reported financing
costs such as interest expense, unusual losses and the negative effect of
accounting changes. Similarly, the Committee must establish the constituent
parts of capital by the Establishment Date. Although the Committee intends to
adjust capital to reflect the cash invested in the Company over time, in no
event will capital be lower than the Company's reported shareholders' equity
attributable to the Company's common and preferred stock plus long-term debt,
determined in accordance with generally accepted accounting principles.
19
<PAGE>
BONUS AWARDS
No later than the Establishment Date, the Committee must determine the share
of the SEP Pool to be available to each participant for that year. No
participant's share of the SEP Pool may exceed thirty percent.
NEW PLAN BENEFITS
The Plan is intended to supersede the EVA-based bonus system for executive
officers described in the COMPENSATION AND STOCK OPTION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION at pages
through , above. For 1996, the bonus pool for participating executive
officers will be funded by no more than 5% of the Company's 1996 SEP EVA. If
such level had been in effect for 1995, when the Company's maximum SEP EVA was
$65,394,000 (making certain assumptions as to the constituent parts of capital
and net operating profit after tax), the bonus pool would have been funded with
$3,269,700, leaving approximately $62,124,300 outside the bonus pool. No
participating executive officer could have received more than 30% of such pool,
and, in any event, the Committee would have had discretion to decrease, but not
to increase, the amount to be awarded to any participant. As set forth in the
Summary Compensation Table and the footnotes thereto at pages through ,
the Company's five most highly-paid executive officers were paid aggregate
bonuses of approximately $2,000,000 for 1995 service. Because the amount of 1996
SEP EVA is unknowable at this time and because the amount payable to any
participating executive officer under the Plan is subject to Committee
determination both as to the share of the pool initially allocated and as to
whether the amount resulting from such share will actually be paid, neither the
amount that will be paid in the future to any eligible executive officer, nor
the amount that would have been paid last year had the SEP Plan been in effect,
is presently determinable.
SECTION 162(M)
Section 162(m) provides that a publicly traded company may not deduct
compensation in excess of $1 million per year paid to each of such company's
chief executive officer and four other most highly compensated executive
officers. However, Section 162(m) does not include in the calculation of the $1
million any income produced under a performance-based plan within the meaning of
Section 162(m). The SEP Plan is intended to meet the criteria of that section
and, therefore, is intended to preserve the deductibility of income received by
the covered executive officers in excess of $1 million per year.
DURATION, AMENDMENT AND TERMINATION
The Company may, at any time, amend, discontinue or terminate the Plan in
whole or in part, provided that (i) amounts which have been credited to a
deferred bonus account must be paid out in accordance with the applicable
deferral election or, if the Committee so determines upon termination of the
Plan, distributed to such participant as soon as practicable after termination
of the Plan, and (ii) absent any required shareholder approval, amendments
cannot be made which alter the Measurement Factors or increase the maximum
amounts payable hereunder. In no event will any award be made under the SEP Plan
for any year after fiscal year 2000. The SEP Plan, awards under the SEP Plan,
and any amendment to the SEP Plan which would change the class of executives who
are eligible to receive awards under the SEP Plan or the permissible amount of
such awards will be subject to approval of the Company's shareholders in such
manner and with such frequency as required under Section 162(m).
20
<PAGE>
VOTE REQUIRED AND RECOMMENDATION OF THE BOARD OF DIRECTORS
The affirmative vote of a majority of the shares of Common Stock that are
present or represented at the meeting and entitled to vote is required for
approval of the proposed SEP Plan. FOR ALL OF THE FOREGOING REASONS, THE BOARD
OF DIRECTORS BELIEVES THAT THE APPROVAL OF THE 1996 TELEDYNE, INC. SENIOR
EXECUTIVE PERFORMANCE PLAN IS IN THE BEST INTERESTS OF THE COMPANY AND ITS
SHAREHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL OF PROPOSAL 2. EACH PROXY WILL
BE VOTED FOR THIS PROPOSAL UNLESS A SHAREHOLDER HAS SPECIFIED OTHERWISE ON THE
PROXY.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP has been selected as the Company's independent public
accountants for the year 1996. It is expected that a representative of Arthur
Andersen LLP will be present at the meeting. Such representative may make a
statement if he or she desires to do so and will be available to respond to
appropriate questions.
OTHER MATTERS THAT MAY COME BEFORE THE MEETING
The management of the Company knows of no other matters that may come before
the meeting. However, if any matters other than Proposals 1 and 2 should
properly come before the meeting, it is the intention of the persons named in
the enclosed proxy to vote all proxies in accordance with their best judgment.
SHAREHOLDER PROPOSALS AT THE NEXT
ANNUAL MEETING OF SHAREHOLDERS
Under the Company's By-laws, shareholders who wish to present proposals for
action, or to nominate directors, at the next annual meeting of shareholders of
the Company (that is, the next annual meeting following the annual meeting that
is scheduled to be held on April 24, 1996) must give written notice thereof to
the Secretary of the Company at the address set forth on the cover page of this
Proxy Statement no less than 60 days nor more than 90 days prior to April 24,
1997, unless the 1996 annual meeting is advanced by more than 30 days or delayed
by more than 60 days from April 24, 1997, in which case notice must be delivered
not earlier than 90 days prior to such annual meeting and not later than the
later of 60 days prior to such annual meeting or the tenth day following the
first public announcement of the date of such meeting. Such written notice must
contain the information required by Section 14(b) of Article II of the Company's
By-laws. In addition, in order to be eligible for inclusion in the Company's
Proxy Statement and Proxy Card for the next annual meeting pursuant to Rule
14a-8 under the Exchange Act ("Rule 14a-8"), shareholder proposals must be
received by the Secretary of the Company no later than November , 1996.
Shareholder nominations of directors are not shareholder proposals within the
meaning of Rule 14a-8 and are not eligible for inclusion in the Company's Proxy
Statement.
21
<PAGE>
FORM 10-K
SHAREHOLDERS ENTITLED TO VOTE AT THE ANNUAL MEETING MAY OBTAIN, WITHOUT
CHARGE, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1995 UPON WRITTEN REQUEST TO JUDITH R. NELSON, SECRETARY, TELEDYNE,
INC., 2049 CENTURY PARK EAST, LOS ANGELES, CALIFORNIA 90067-3101.
By Order of the Board of Directors
Judith R. Nelson
Secretary
March , 1996
22
<PAGE>
EXHIBIT A
TELEDYNE, INC.
SENIOR EXECUTIVE PERFORMANCE PLAN
This Senior Executive Performance Plan ("Plan" or "SEP Plan") is established
by Teledyne, Inc. ("Company") effective beginning on or after January 1, 1996
for any fiscal year beginning on or after January 1, 1996 with respect to those
executives who are selected for participation in the Plan for such year.
1. PURPOSE
The purposes of the Plan are to:
(A) Promote the interests of the Company.
(B) Provide incentives and rewards to key senior executives, as a group and
individually, who are largely responsible for the management, growth and
profitability of the Company.
(C) Qualify compensation under the Plan as performance-based compensation
within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as
amended, or successor provision, and regulations promulgated thereunder
("Section 162(m)").
2. ADMINISTRATION
The Plan will be administered by a committee satisfying the outside director
requirements of Section 162(m) (including the transition rules) and, if
applicable, the "Disinterested Administration" requirements of Rule 16b-3 under
the Securities Exchange Act of 1934, as amended ("Rule 16b-3"), which committee
shall be the Compensation and Stock Option Committee, or a subcommittee thereof
("Committee"). Each Committee member serves in such capacity until the earlier
of such time as he or she ceases to meet the applicable director administration
requirements of Section 162(m) (including the transition rules) and Rule 16b-3
or until the Board of Directors decides to replace such member. The Committee
will have full authority to administer the Plan, including authority to
interpret and construe any relevant provision of the Plan and to adopt such
rules and regulations as it may deem necessary. The Plan is intended to comply
with the provisions of Section 162(m). The Committee may adopt rules and
regulations consistent with such intention. Decisions of the Committee are final
and binding on all persons who have an interest in the Plan.
3. ELIGIBILITY AND PARTICIPATION
(A) ELIGIBLE OFFICERS. The executive officers eligible to participate in
the Plan for any fiscal year shall be the Chief Executive Officer and each other
executive officer of the Company within the meaning of Section 3b-7 of the
Securities Exchange Act of 1934, as amended, or such other executive officers
that are deemed, from time-to-time, to be "covered" employees under Section
162(m).
(B) PARTICIPATION. Eligible executives shall only participate in the Plan
for a fiscal year if approved for participation by the Committee and will not be
eligible for an award for any year unless explicitly approved for such year.
Participants may, at the discretion of the Committee, be approved for
participation for part of a fiscal year.
(C) TERMINATION OF EMPLOYMENT. The Committee has the right, in its sole
and absolute discretion, to withhold an award under the Plan for any fiscal year
if a participant's employment is terminated (involuntarily or voluntarily) for
any reason.
4. SEP POOL; BONUSES
(A) DETERMINATION OF SEP POOL. The total amount of bonuses available for
payout ("SEP Pool") for any fiscal year (or other performance period) to the
group of participating executive officers shall be a specified percentage, not
to exceed 5%, of that portion, if any, of the Company's net operating profit
after tax in excess of a reference cost of capital of no less than 7% for the
performance period ("EVA"). The specified percentage of EVA, the reference cost
of capital, the constituent parts of net
23
<PAGE>
operating profit after tax and capital and the formula for determining the cost
of capital (collectively, "Measurement Factors") shall be determined and
specified in writing by the Committee no later than 90 days after the
commencement of the applicable performance period; provided, however, the
Measurement Factors must be established prior to the elapse of 25% of the
applicable performance period (the "Establishment Date"). The Committee must
determine affirmatively on or prior to the Establishment Date that achieving
positive EVA for the performance period is "substantially uncertain" within the
meaning of Section 162(m).
(B) BONUSES. The Committee shall determine, in its sole discretion, no
later than the Establishment Date, the share of the SEP Pool available to each
participant. In no event shall any participant's share of the SEP Pool exceed
30%. Nor shall the sum of individual percentages of the SEP Pool available to
participating executive officers exceed 100%. The Committee reserves the right
to reduce or cancel any bonus payment from the applicable officer's percentage
of the SEP Pool if, in its sole discretion, the Committee deems such action
warranted based on the performance of the Company, the applicable participant or
that participant's business unit; provided that any such reduction does not
increase the bonus to any other participant.
(C) FORM OF PAYMENT. Bonuses may be paid in any combination of cash or
shares of Company Common Stock, as determined in the discretion of the Committee
prior to the end of the performance period. Payments shall be made no later than
75 days after the conclusion of the performance period. Shares of Company Common
Stock to be awarded in connection with such bonuses shall be issued under the
terms of the Teledyne, Inc. 1994 Long-Term Incentive Plan ("LTI Plan"), so long
as such issuance complies with the terms of that plan and such issuance is
coordinated with the administrative committee of the LTI Plan. The number of
shares to be granted in connection with such bonus to correspond with the cash
value of the bonus shall be determined by reference to the closing price of
Company Common Stock reported in THE WALL STREET JOURNAL for the business day on
which the cash payment otherwise would be made.
(D) CERTIFICATION. Before any bonus is paid to an executive officer under
the Plan, the Committee shall certify in writing that the performance goals have
been met which permit the payment of such bonus.
5. DEFERRAL ELECTION
Each participant in the Plan may elect to defer part or all of the cash
bonus awarded to him or her under the Plan in accordance with, and subject to,
the terms of the Teledyne, Inc. Executive Deferred Compensation Plan.
6. AMENDMENT, TERMINATION
The Company hereby reserves the right, exercisable by the Committee, to
amend the Plan at any time and in any respect or to discontinue and terminate
the Plan in whole or in part at any time, subject to Section 7. Any amendment or
termination of the Plan may be effective with respect to any amount which has
not yet been paid out, except that (i) amounts which have been credited to a
deferred bonus account shall be paid out in accordance with the applicable
deferral election or, if the Committee so determines upon termination of the
Plan, distributed to such participant as soon as practicable after termination
of the Plan, and (ii) absent any required shareholder approval, amendments
cannot be made which alter the Measurement Factors or increase the maximum
amounts payable hereunder.
No provision of the Plan shall be deemed to constitute a commitment of the
Company to pay, or to confer any contractual or other rights upon a participant
to receive a bonus award for any one or more fiscal years or to confer upon any
participant any right to continue in the employ of the Company or to constitute
any contract or agreement of employment or to interfere in any way with the
right of the Company to terminate a participant's employment at any time, with
or without cause, but nothing contained herein shall affect any contractual
right of a participant pursuant to a written employment agreement.
24
<PAGE>
7. AWARDS AND SHAREHOLDER APPROVAL
Neither the Plan, nor any award made hereunder, shall be effective unless
the Plan is approved by the Company Shareholders. In no event shall any award be
made under the Plan for any year after calendar year 2000. The Plan, awards
under the Plan, and any amendment to the Plan which would change the class of
executives who are eligible to receive awards under the Plan or the permissible
amount of such awards shall be subject to approval of the Company's shareholders
in such manner and with such frequency as shall be required under Section
162(m).
25
<PAGE>
APPENDIX A
CERTAIN INFORMATION CONCERNING THE COMPANY'S DIRECTORS
This Appendix A sets forth certain additional information regarding the
Company's nominees and directors (other than Mr. LaBow), each of whom is deemed
to be a participant in the solicitation of proxies hereunder.
TRANSACTIONS IN COMPANY SECURITIES WITHIN THE PAST TWO YEARS
Listed below are the only purchases and sales of Company securities within
the past two years by the Company's directors and certain information concerning
such transactions.
A. Purchases and Sales of Common Stock
<TABLE>
<CAPTION>
NUMBER OF SHARES DATE OF
NAME PURCHASED (SOLD) TRANSACTION
- ------------------------- ---------------- ----------
<S> <C> <C>
Frank V. Cahouet 100 1/27/95
Diane C. Creel 100 2/16/95
William G. Ouchi 500 2/23/96
Donald B. Rice 5,000 4/28/94
1,500(1) 5/9/94
20,000(2) 1/25/95
10,000(2) 2/15/95
15,000(2) 5/5/95
50,000(2)(3) 8/30/95
William P. Rutledge 5,000 4/28/94
2,500(2) 1/25/95
</TABLE>
B. Purchases and Sales of the Company's 10% Subordinated Debentures due
2004, Series C
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT DATE OF
NAME PURCHASED (SOLD) TRANSACTION
- -------------------------- ----------------- ------------------
<S> <C> <C>
George A. Roberts(4) $ (367,000) 1/27/95
(46,000) 1/30/95
(4,000) 2/1/95
(165,000) 2/3/95
</TABLE>
- ------------------------
(1) Shares disposed of by gift immediately after purchase.
(2) Shares purchased through the exercise of stock options.
(3) The acquisition of these shares was financed through a line of credit with a
banking institution. Dr. Rice has an outstanding balance on the financing
for such acquisition of approximately $485,000.
(4) Includes debentures purchased or sold by Dr. Roberts individually or jointly
with his spouse.
BENEFICIAL OWNERSHIP OF OTHER
COMPANY SECURITIES BY THE COMPANY'S DIRECTORS
As of February 29, 1996, Dr. Roberts may be deemed to be the beneficial
owner of $852,000 principal amount of the Company's 10% Subordinated Debentures
due 2004, Series C ("Series C Debentures") $39,000 of which is held in the name
of Dr. Roberts' spouse and $314,000 of which is held by Dr. Roberts jointly with
his spouse.
As of February 29, 1996, Dr. Singleton was the beneficial owner of $28,000
principal amount of the Company's 10% Subordinated Debentures due 2004, Series A
("Series A Debentures").
26
<PAGE>
BENEFICIAL OWNERSHIP OF COMPANY SECURITIES
BY ASSOCIATES OF THE COMPANY'S DIRECTORS
As of February 29, 1996, Mellon Bank Corporation, a bank holding company of
which Mr. Cahouet is Chairman and Chief Executive Officer, or its subsidiaries
(collectively, "Mellon Entities"), may be deemed to be beneficial owners of
707,000 shares of Common Stock, including shares which were held by Mellon
Entities for their respective accounts and by trusts and other accounts over
which either the Mellon Entities exercise investment discretion. In addition,
Mellon Entities may from time to time beneficially own debt securities and
shares of Series E Preferred of the Company for their own account and the
account of trusts on behalf of which they exercise investment discretion.
Because of the considerable number of these accounts, and the total assets held
in such accounts, it is not practical to determine the amount of debt securities
so owned.
As of February 27, 1996, Fayez Sarofim & Co., of which Fayez Sarofim is the
Chairman of the Board and President, or its affiliates, owned the following
Company debt securities in certain investment advisory accounts for numerous
clients over which it may exercise investment discretion: Series C Debentures,
principal amount $1,478,264; Series A Debentures, principal amount $604,700; 7%
Subordinated Debentures due 1999, principal amount $247,500.
CERTAIN OTHER INFORMATION
Except as disclosed in this Appendix A or elsewhere in this Proxy Statement,
to the knowledge of the Company none of the Company's directors: (i) owns of
record any securities of the Company that are not also beneficially owned by
them; (ii) is, or was within the past year, a party to any contract,
arrangements or understandings with any person with respect to the securities of
the Company, including, but not limited to, joint ventures, loan or option
arrangements, puts or calls, guarantees against loss or guarantees of profit,
division of losses or profits, or the giving or withholding of proxies; (iii)
has any substantial interest, direct or indirect, by security holdings or
otherwise, in any matter to be acted upon at the annual meeting; or (iv)
beneficially owns any securities of any parent or subsidiary of the Company.
Except as disclosed in this Appendix A or elsewhere in this Proxy Statement, to
the knowledge of the Company none of the Company's directors nor any of their
associates has any arrangement or understanding with any person with respect to
future employment by the Company or its affiliates or with respect to any future
transactions to which the Company or any of its affiliates will or may be a
party, nor any material interest, direct or indirect, in any transaction which
has occurred since January 1, 1995 or any currently proposed transaction, or
series of similar transactions, to which the Company or any of its affiliates
was or is to be a party and in which the amount involved exceeds $60,000.
27
<PAGE>
[LOGO] TELEDYNE, INC. ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS
The shareholder designated on the reverse of this card appoints William
P. Rutledge, Donald B. Rice and Henry E. Singleton, and each of them, the
shareholder's attorney and proxy, each with full power of substitution, to
vote upon the propositions set forth herein all shares of Teledyne, Inc.
Common Stock held of record as of February 28, 1996, at the Annual Meeting of
Shareholders of Teledyne, Inc. and at all adjournments thereof. Such Annual
Meeting will be held at the Century Plaza Hotel, 2025 Avenue of the Stars,
Los Angeles, California 90067-4696, at 11:00 a.m. on April 24, 1996. (THIS
PROXY REVOKES ALL PRIOR PROXIES GIVEN BY THE UNDERSIGNED.)
This Proxy, when properly executed, will be voted in the manner directed
herein. With respect to the election of directors (Proposal 1), where no vote
is specified, or where the box for all nominees is marked, the cumulative
votes represented by a proxy will be cast at the discretion of the proxies
named herein in order to elect as many nominees as believed possible under
the then prevailing circumstances. If you withhold your vote for an
individual nominee, all of your cumulative votes will be distributed among
the remaining nominees at the discretion of the proxies. With respect to
Proposal 2, where no vote is specified, this proxy will be voted for such
proposal. The individuals named above are authorized to vote in their
discretion on any other matters that properly come before the meeting.
(Continued and to be signed on the other side.)
30
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE PROPOSALS.
<TABLE>
<S> <C> <C> <C> <C> <C>
FOR ALL nominees listed WITHHOLD AUTHORITY Frank V. Cahouet, Diane C. Creel, William G. Ouchi,
at right (except as marked to vote for ALL nominees Donald B. Rice, George A. Roberts, William P.
to the contrary at right). listed at right. Rutledge, Fayez Sarofim, Henry E. Singleton
Item 1 ELECTION OF / / / / (INSTRUCTION: To withhold authority to vote
- ------ DIRECTORS for any individual nominee, write that
nominee's name on the space below.)
------------------------------------------
FOR AGAINST ABSTAIN
/ / / / / /
Item 2 Approval of the adoption
- ------ of the 1996 Teledyne, Inc. Item 3 The Proxies are authorized in their discretion
Senior Executive Performance Plan ------ to vote for the election of such substitute
nominee(s) for director(s) as such Proxies
shall select if any nominee(s) named above
become(s) unable to serve and upon such other
business as may properly come before the
meeting or any adjournments thereof.
Please DATE this proxy and SIGN EXACTLY AS
YOUR NAME(S) APPEAR(S) HEREON. When
signing as attorney, executor,
administrator, trustee, guardian or other
representative, give your full title as
such. If a corporation, sign the full
corporate name by an authorized officer,
stating his/her title. If a partnership,
sign in partnership name by an authorized
person.
Dated: , 1996
---------------------------------
Signature:
----------------------------------
Signature if held jointly:
------------------
Name of Corp. or Part.
----------------------
Authorized officer:
-------------------------
Title or authority:
-------------------------
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY AS PROMPTLY AS POSSIBLE IN THE POSTPAID ENVELOPE PROVIDED.
</TABLE>
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