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SCHEDULE 14A
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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material under sec.240.14a-12
TELEDYNE TECHNOLOGIES INCORPORATED
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] $125 per Exchange Act Rules O-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2)of Schedule 14A.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule O-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
O-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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[TELEDYNE TECHNOLOGIES LOGO]
Teledyne Technologies Incorporated
12333 West Olympic Boulevard
Los Angeles, CA 90064-1021
March 12, 2004
Dear Stockholder:
We are pleased to invite you to attend the 2004 Annual Meeting of
Stockholders of Teledyne Technologies Incorporated. The meeting will be held on
Wednesday, April 28, 2004, beginning at 9:00 a.m. (Pacific Time), at the
Company's offices at 12333 West Olympic Boulevard, Los Angeles, California
90064-1021.
This booklet includes the notice of meeting as well as the Company's Proxy
Statement.
Enclosed with this booklet are the following:
- Proxy or voting instruction card (including instructions for telephone
and Internet voting).
- Proxy or voting instruction card return envelope (postage paid if mailed
in the U.S.).
A copy of the Company's 2003 Annual Report (which contains our Form 10-K)
is also included.
Please read the Proxy Statement and vote your shares as soon as possible.
We encourage you to take advantage of voting by telephone or Internet as
explained on the enclosed proxy or voting instruction card. Or, you may vote by
completing, signing and returning your proxy or voting instruction card in the
enclosed postage-paid envelope. It is important that you vote, whether you own a
few or many shares and whether or not you plan to attend the meeting.
If you are a stockholder of record and plan to attend the meeting, please
mark the "WILL ATTEND" box on your proxy card so that you will be included on
our admittance list for the meeting.
Thank you for your investment in our Company. We look forward to seeing you
at the 2004 Annual Meeting.
Sincerely,
/s/ Robert Mehrabian
Robert Mehrabian
Chairman, President and
Chief Executive Officer
[TELEDYNE TECHNOLOGIES LOGO]
TELEDYNE TECHNOLOGIES INCORPORATED
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MEETING DATE: April 28, 2004
TIME: 9:00 a.m. Pacific Time
PLACE: Teledyne Technologies Incorporated
12333 West Olympic Boulevard
Los Angeles, California 90064-1021
RECORD DATE: March 8, 2004
AGENDA
1) Election of a class of three directors for a three-year term;
2) Ratification of the appointment of Ernst & Young LLP as the Company's
independent auditors for fiscal 2004; and
3) Transaction of any other business properly brought before the meeting.
STOCKHOLDER LIST
A list of stockholders entitled to vote will be available during business
hours for 10 days prior to the meeting at the Company's executive offices, 12333
West Olympic Boulevard, Los Angeles, California 90064-1021, for examination by
any stockholder for any legally valid purpose.
ADMISSION TO THE MEETING
Teledyne Technologies' stockholders or their authorized representatives by
proxy may attend the meeting. If you are a stockholder of record and you plan to
attend the meeting, please mark the "WILL ATTEND" box on your proxy card so that
you will be included on our admittance list for the meeting. If your shares are
held through an intermediary, such as a broker or a bank, you should present
proof of your ownership at the meeting. Proof of ownership could include a proxy
from your bank or broker or a copy of your account statement.
By Order of the Board of Directors,
/s/ John T. Kuelbs
John T. Kuelbs
Senior Vice President, General Counsel
and Secretary
March 12, 2004
PROXY STATEMENT
TABLE OF CONTENTS
------------------------
PAGE
----
Voting Procedures........................................... 1
Board Composition and Practices............................. 2
Corporate Governance........................................ 3
Item 1 on Proxy Card -- Election of Directors............... 5
Committees of our Board of Directors........................ 8
Director Compensation....................................... 12
Item 2 on Proxy Card -- Ratification of Appointment of
Independent Auditor....................................... 13
Fees Billed by Independent Auditor........................ 13
Audit Committee Pre-Approval Policy....................... 14
Audit Committee Report.................................... 15
Other Business.............................................. 16
Stock Ownership Information................................. 17
Section 16(a) Beneficial Ownership Reporting Compliance... 17
Five Percent Owners of Common Stock....................... 17
Stock Ownership of Management............................. 18
2003 Report on Executive Compensation..................... 19
Executive Compensation...................................... 28
Summary Compensation Table................................ 28
Option Grants in Last Fiscal Year......................... 31
Aggregate Option Exercises in Last Fiscal Year and Fiscal
Year End Option Values................................. 32
TDY Performance Share Plan Awards......................... 33
TDY Restricted Stock Awards............................... 35
Equity Compensation Plans Information..................... 38
Pension Plan.............................................. 39
Employment/Change in Control Agreements................... 40
Certain Transactions........................................ 41
Cumulative Total Stockholder Return......................... 43
Other Information........................................... 44
Annual Report on Form 10-K................................ 44
2005 Annual Meeting and Stockholder Proposals............. 44
Proxy Solicitation........................................ 44
Electronic Access to Proxy Materials and Annual Report.... 44
Annex A -- Audit Committee Charter.......................... A-1
DEFINED TERMS
In this Proxy Statement, Teledyne Technologies Incorporated is sometimes
referred to as the "Company", "Teledyne Technologies" or "TDY". References to
"ATI" mean Allegheny Technologies Incorporated, formerly known as Allegheny
Teledyne Incorporated, the company from which we were spun off on November 29,
1999.
PROXY STATEMENT
FOR 2004 ANNUAL MEETING OF STOCKHOLDERS
VOTING PROCEDURES
WHO MAY VOTE
If you were a stockholder on the books of the Company at the close of
business on March 8, 2004, you may vote at the Annual Meeting. On that day,
there were 32,450,566 shares of our Common Stock outstanding.
Each share is entitled to one vote. In order to vote, you must either
designate a proxy to vote on your behalf or attend the meeting and vote your
shares in person. The Board of Directors requests your proxy so that your shares
will count toward determination of the presence of a quorum and your shares can
be voted at the meeting.
METHODS OF VOTING
All stockholders of record may vote by transmitting their proxy cards by
mail. Stockholders of record can also vote by telephone or Internet.
Stockholders who hold their shares through a bank or broker can vote by
telephone or Internet if their bank or broker offers those options.
- By Mail. Stockholders of record may complete, sign, date and return their
proxy cards in the postage-paid envelope provided. If you sign, date and
return your proxy card without indicating how you want to vote, your
proxy will be voted as recommended by the Board of Directors.
- By Telephone or Internet. Stockholders of record may vote by using the
toll-free number or Internet website address listed on the proxy card.
Please see your proxy card for specific instructions.
REVOKING YOUR PROXY
You may change your mind and revoke your proxy at any time before it is
voted at the meeting by:
- sending a written notice to the Secretary of the Company that you revoke
your proxy;
- transmitting a proxy dated later than your prior proxy either by mail,
telephone or Internet;
- attending the Annual Meeting and voting in person or by proxy (except for
shares held in the employee plan).
VOTING BY EMPLOYEE BENEFIT PLAN PARTICIPANTS
Participants who hold Common Stock in the Teledyne Technologies
Incorporated 401(k) Plan may tell the plan trustee how to vote the shares of
Common Stock allocated to their accounts. You may either (1) sign and return the
voting instruction card provided by the plan or (2) transmit your instructions
by telephone or the Internet. If you do not
1
transmit instructions by 11:59 p.m. (Eastern Time), on April 23, 2004, your
shares will not be voted by the plan trustee, except as otherwise required by
law.
VOTING SHARES HELD BY BROKERS, BANKS AND OTHER NOMINEES
If you hold your shares in a broker, bank or other nominee account, you are
a "beneficial owner" of TDY Common Stock. In order to vote your shares, you must
give voting instructions to your bank, broker or other intermediary who is the
"nominee holder" of your shares. The Company asks brokers, banks and other
nominee holders to obtain voting instructions from the beneficial owners of
shares that are registered in the nominee's name. Proxies that are transmitted
by nominee holders on behalf of beneficial owners will count toward a quorum
and, except as otherwise provided below, will be voted as instructed by the
nominee holder.
CONFIDENTIAL VOTING POLICY
The Company maintains a policy of keeping stockholder votes confidential.
BOARD COMPOSITION AND PRACTICES
INFORMATION AND MEETINGS
The Board of Directors directs the management of the business and affairs
of the Company as provided in the Amended and Restated Bylaws of the Company and
by the laws of the State of Delaware. Except for Dr. Robert Mehrabian, our
Chairman, President and Chief Executive Officer, the Board is not involved in
day-to-day operations. Members of the Board keep informed about the Company's
business through discussions with the senior management and other officers and
managers of the Company and its subsidiaries, by reviewing analyses and reports
sent to them, and by participating in Board and committee meetings.
In 2003, the Board of Directors held six meetings and acted twice by
unanimous written consent. During 2003, all directors attended at least 75% of
the aggregate number of meetings of the Board and the Board committees of which
they were members. Directors are encouraged to attend our Annual Meeting of
Stockholders. Eight of our then nine directors attended the 2003 Annual Meeting
of Stockholders.
NUMBER OF DIRECTORS
The Board of Directors determines the number of directors, which under our
Amended and Restated By-laws must consist of not less than four members and not
more than 10 members. The Board has currently fixed the number at eight members,
which number was so fixed after the following resignation occurred. Charles H.
Noski resigned as a director effective February 27, 2004, due to the demands of
his position as Corporate Vice President and Chief Financial Officer of Northrop
Grumman Corporation, a position that he assumed in December 2003.
2
DIRECTOR TERMS
The directors are divided into three classes and the directors in each
class serve for a three-year term. The term of one class of directors expires
each year at the Annual Meeting of Stockholders. The Board may fill a vacancy by
electing a new director to the same class as the director being replaced. The
Board may also create a new director position in any class and elect a director
to hold the newly created position until the term of the class expires.
DIRECTORS' RETIREMENT POLICY
On June 1, 2000, the Company adopted a retirement policy for directors.
This policy generally requires directors to retire at the Annual Meeting
following their 72nd birthday. This policy also requires a director to offer to
tender his or her resignation if such director has a change in professional
status. In January 2004, the Board of Directors adopted an exception to such
policy to extend the term of Charles J. Queenan, Jr., age 73, by another one
year to the 2005 Annual Meeting of Stockholders. Mr. Queenan's term had
previously been extended by one year. In granting such extension, the Board
considered the Company's need to maintain active and experienced directors as
the Company continues to strive to maintain compliance with the Sarbanes-Oxley
Act of 2002 in regard to corporate governance and other issues. The Board also
recognized that the Company could benefit from and utilize Mr. Queenan's
experience and insight as it pursues acquisitions more aggressively.
EXECUTIVE SESSIONS
The non-management directors of the Company meet in executive session
without management on a regularly scheduled basis. The Board has not formally
designated a lead director. Committee chairs rotate as presiding director in
such sessions.
CORPORATE GOVERNANCE
DIRECTOR INDEPENDENCE
In April 2003, our Nominating and Governance Committee assessed, and our
Board of Directors determined, the independence of each director in accordance
with the then existing rules of the New York Stock Exchange and in accordance
with then proposed rules of the New York Stock Exchange (which have since been
finally adopted). After considering such items, including various relationship
categories and individual circumstances, the Committee, followed by the Board,
determined that each member of our Board of Directors did not have any material
relationships with the Company and was thus independent, with the exception of
Dr. Mehrabian, our Chairman, President and Chief Executive Officer. The
relationships considered included: whether the director is a TDY employee,
amount of TDY stock ownership and commercial, industrial, banking, consulting,
legal, accounting or auditing, charitable and familial relationships. The
Committee and the Board also considered the Company's relationship and the
relationship of the director to Allegheny Technologies Incorporated, from which
we were spun off in November 1999. See "Certain Transactions" at page 41. The
Board also subsequently considered the additional final NYSE standards set forth
in Section 303A.02(b) of the NYSE Listed Company Manual. In conclusion, after
due consideration, our Board has
3
determined that seven of our eight current directors are independent directors.
The independent directors by name are: Robert P. Bozzone, Frank V. Cahouet,
Diane C. Creel, Charles Crocker, Paul D. Miller, Charles J. Queenan, Jr., and
Michael T. Smith.
The Committee, followed by the Board, also determined that each member of
our Personnel and Compensation Committee is an "outside director" within the
meaning of Rule 162(m) of the Internal Revenue Code.
All of the Board's standing committees consist only of independent
directors.
CORPORATE GOVERNANCE AND ETHICS GUIDELINES
At the time we first became a public company in 1999, the Company's Board
of Directors adopted many "best practices" in the area of corporate governance,
including separate standing committees of the Board for each of audit,
nominating and governance and executive compensation matters, charters for each
of the committees, and corporate ethics and compliance guidelines. Our ethics
and compliance guidelines are published as the Corporate Objectives and
Guidelines for Employee Conduct (the "Employee Guidelines"). This code of ethics
applies to all our employees, including our principal executive, financial and
accounting officers. Our employees receive periodic ethics training and
follow-up questionnaires are distributed annually to various personnel in an
effort to assure compliance with the guidelines. It is the Company's policy not
to waive compliance with these guidelines. The Company also has a specialized
code of ethics for financial executives that supplements the Employee Guidelines
(the "Financial Executives Code"). In addition, we have ethics and compliance
guidelines for our service providers.
In July 2003, our Board of Directors formally adopted the Corporate
Governance Guidelines of Teledyne Technologies Incorporated (the "Governance
Guidelines"), which were developed by our Nominating and Governance Committee.
These Governance Guidelines incorporate practices and policies under which our
Board has operated since its inception, in addition to many of the concepts
required by the Sarbanes-Oxley Act of 2002 and the New York Stock Exchange. Some
of the principal subjects covered by the Governance Guidelines include:
- Director qualification standards.
- Director responsibilities.
- Director access to management and independent advisors.
- Director compensation.
- Director orientation and continuing education.
- Management succession.
- Annual performance evaluation of the Board and Committees.
Copies of our Governance Guidelines, our Employee Guidelines, our Finance
Executives Code and our committee charters are available on our website at
www.teledyne.com. If at any time you would like to receive a paper copy,
free-of-charge, please write to John T. Kuelbs, Senior Vice President, General
Counsel and Secretary, Teledyne Technologies Incorporated, 12333 West Olympic
Boulevard, Los Angeles, California 90064-1021.
4
SARBANES-OXLEY DISCLOSURE COMMITTEE
In September 2002, the Company formally constituted the Sarbanes-Oxley
Disclosure Committee. Members include: John T. Kuelbs, Senior Vice President,
General Counsel and Secretary; Dale A. Schnittjer, Vice President and Chief
Financial Officer; Ivars R. Blukis, Chief Business Risk Assurance Officer; Robyn
E. Choi, Vice President, Administration and Human Resources and Assistant
Secretary; Melanie S. Cibik, Vice President, Associate General Counsel and
Assistant Secretary, Shelley D. Green, Treasurer; Brian A. Levan, Assistant
Controller; and Jason VanWees, Director of Corporate Development and Investor
Relations. Among its tasks, the Disclosure Committee will discuss and review
disclosure issues to help the Company fulfill its disclosure obligations on a
timely basis in accordance with SEC rules and regulations and is intended to be
used as a resource for employees to raise questions regarding accounting,
auditing, internal controls and disclosure matters.
Since we became a public company in 1999, the Company has had a Corporate
Ethics/Help Line, where questions or concerns about the Company can be raised
confidentially and anonymously. The Ethics/Help line is available to all of our
employees, as well as concerned individuals outside the Company. The toll-free
help line number is 1-877-666-6968.
The receipt of concerns about the Company's accounting, internal controls
and auditing matters will be reported to the Audit Committee.
COMMUNICATIONS WITH THE BOARD
Our Governance Guidelines provide that any interested parties desiring to
communicate with our non-management directors may directly contact such
directors through the Company's Secretary, John T. Kuelbs, whose address is:
Teledyne Technologies Incorporated, 12333 West Olympic Boulevard, Los Angeles,
California 90064-1021.
ITEM 1 ON PROXY CARD -- ELECTION OF DIRECTORS
The Board of Directors has nominated for election this year the class of
three incumbent directors whose terms expire at the 2004 Annual Meeting.
The three-year term of the class of directors nominated and elected this
year will expire at the 2007 Annual Meeting.
The three individuals who receive the highest number of votes cast will be
elected. Broker non-votes are not counted as votes cast.
If you sign and return your proxy card, the individuals named as proxies on
the card will vote your shares for the election of the three named nominees,
unless you provide other instructions. You may withhold authority for the
proxies to vote your shares on any or all of the nominees by following the
instructions on your proxy card. If a nominee becomes unable to serve, the
proxies will vote for a Board-designated substitute or the Board may reduce the
number of directors. The Board of Directors has no reason to believe that any
nominee will be unable to serve.
Background information about the nominees and continuing directors follows.
5
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE THREE NOMINEES.
NOMINEES -- TERMS EXPIRE AT 2007 ANNUAL MEETING (CLASS II)
Charles Crocker Charles Crocker has been Chairman and
Chairman and Chief Executive Chief Executive Officer of BEI
Officer of BEI Technologies, Inc. Technologies, Inc., a diversified
Director since 2001 technology company, since March 2000. Mr.
Age: 65 Crocker served as Chairman, President and
Chief Executive Officer of BEI Electronics
from October 1995 to September 1997, at
which time he became Chairman, President
and Chief Executive Officer of BEI
Technologies, Inc. Mr. Crocker serves as a
director of Franklin Resources, Inc. and
its subsidiary Fiduciary Trust
International and Pope & Talbot, Inc. Mr.
Crocker is a member of our Personnel and
Compensation Committee and our Nominating
and Governance Committee.
Robert Mehrabian Robert Mehrabian is the Chairman,
Chairman, President and Chief President and Chief Executive Officer of
Executive Officer of the Company TDY. He has been the President and Chief
Director since 1999 Executive Officer of TDY since its
Age: 62 formation. He became Chairman of the Board
on December 14, 2000. Prior to the
spin-off of TDY by ATI in November 1999,
Dr. Mehrabian was the President and Chief
Executive Officer of ATI's Aerospace and
Electronics segment since July 1999 and
had served ATI in various senior executive
capacities since July 1997. Before joining
ATI, Dr. Mehrabian served as President of
Carnegie Mellon University. He is also a
director of Mellon Financial Corporation
and PPG Industries, Inc.
Michael T. Smith Michael T. Smith is the retired Chairman
Retired Chairman of the Board and of the Board and Chief Executive Officer
Chief Executive Officer of Hughes of Hughes Electronics Corporation. He had
Electronics Corporation been elected to those positions in October
Director since 2001 1997. Mr. Smith is also a director of
Age: 60 Alliant Techsystems Inc., Ingram Micro
Corporation and FLIR Systems, Inc. Mr.
Smith is a member of our Personnel and
Compensation Committee and our Nominating
and Governance Committee.
6
CONTINUING DIRECTORS -- TERMS EXPIRE AT 2005 ANNUAL MEETING (CLASS III)
Robert P. Bozzone Robert P. Bozzone is Chairman of ATI. From
Chairman of Allegheny Technologies December 6, 2000 through June 2001, he was
Incorporated Chairman, President and Chief Executive
Director since 1999 Officer of ATI. Mr. Bozzone had been Vice
Age: 70 Chairman of the Board of ATI since August
1996. He had served as Vice Chairman of
Allegheny Ludlum Corporation, a subsidiary
of ATI, since August 1994 and previously
was President and Chief Executive Officer
of Allegheny Ludlum. He is also a director
of ATI, Water Pik Technologies, Inc., and
of DQE, Inc., whose principal subsidiary
is Duquesne Light Company. Mr. Bozzone is
a member of our Audit Committee and our
Personnel and Compensation Committee.
Frank V. Cahouet Frank V. Cahouet served as the Chairman,
Retired Chairman and Chief President and Chief Executive Officer of
Executive Officer of Mellon Mellon Financial Corporation, a bank
Financial Corporation holding company, and Mellon Bank, N.A.,
Director since 1999 prior to his retirement on December 31,
Age: 71 1998. He is also a director of ATI, Avery
Dennison Corporation, Korn Ferry
International, and Saint-Gobain
Corporation. Mr. Cahouet is Chair of our
Audit Committee and a member of our
Nominating and Governance Committee.
Charles J. Queenan, Jr. Charles J. Queenan, Jr. is Senior Counsel
Senior Counsel, Kirkpatrick & to Kirkpatrick & Lockhart LLP,
Lockhart LLP attorneys-at-law. Prior to his retirement
Director since 1999 on December 31, 1995, he was a partner of
Age: 73 that firm. He is also a director of ATI,
Water Pik Technologies, Inc., and Crane
Co. Mr. Queenan is Chair of our Personnel
and Compensation Committee and a member of
our Audit Committee.
7
CONTINUING DIRECTORS -- TERMS EXPIRE AT 2006 ANNUAL MEETING (CLASS I)
Diane C. Creel Diane C. Creel is the Chairwoman,
President and Chief Executive President and Chief Executive Officer of
Officer of Ecovation Inc. Ecovation Inc. (formerly AnAerobics,
Director since 1999 Inc.), a waste treatment company. Prior to
Age: 55 joining Ecovation Inc. in May 2003, Ms.
Creel served as Chief Executive Officer
and President of EarthTech. Ms. Creel is
also a director of ATI, Goodrich
Corporation and a member of the Boards of
the Corporations and Trusts that comprise
the Fixed Income Funds of the American
Funds Group of Capital Management Corp.
Ms. Creel is Chair of our Nominating and
Governance Committee and a member of our
Personnel and Compensation Committee.
Paul D. Miller Paul D. Miller is Chairman of the Board of
Chairman of the Board ATK (Alliant Techsystems, Inc.), an
of ATK aerospace and defense company. From
Director since 2001 January 1999 until October 2003, he had
Age: 62 also been Chief Executive Officer of ATK.
Prior to joining ATK, Admiral Miller
served as Vice President of Litton Marine
Systems and as President of Sperry Marine,
Inc. from November 1994 through December
1998, following a distinguished 30-year
career with the U.S. Navy. Prior to
retirement from the U. S. Navy, Admiral
Miller served as Commander-in-Chief, U.S.
Atlantic Command and NATO Supreme Allied
Commander -- Atlantic. He also serves on
the Boards of SunTrust Bank (Eastern
Region) and Donaldson Company. Mr. Miller
is a member of our Audit Committee and our
Nominating and Governance Committee.
COMMITTEES OF OUR BOARD OF DIRECTORS
Our Board of Directors has established an Audit Committee, a Nominating and
Governance Committee and a Personnel and Compensation Committee. From time to
time, our Board of Directors may establish other committees.
AUDIT COMMITTEE
The members of the Audit Committee are:
Frank V. Cahouet, Chair
Robert P. Bozzone
Paul D. Miller
Charles J. Queenan, Jr.
The Audit Committee held six meetings in 2003.
8
The primary purpose of the Audit Committee is to assist the Board's
oversight of the integrity of our financial statements, our compliance with
legal and regulatory requirements, the qualification and the independence of our
independent auditor, and the performance of our internal audit function and
independent auditor. As provided in its charter, the Audit Committee is directly
responsible for the appointment, retention, compensation, oversight, evaluation
and termination of the Company's independent auditor (including resolving
disagreements between management and the independent auditor regarding financial
reporting). In carrying out its responsibilities, the Audit Committee undertakes
to do many things, including:
- Retain and approve the terms of the engagement and fees to be paid to the
independent auditor.
- Evaluate the performance of the independent auditor.
- Receive written periodic reports from the independent auditor delineating
all relationships between the independent auditor and the Company.
- Review with the independent auditor any problems or difficulties the
auditor may have encountered and any management letter provided by the
auditor and the Company's response to that letter.
- Review the Company's annual audited financial statements and the report
thereon and quarterly unaudited financial statements with the independent
auditor and management prior to publication of such statements.
- Discuss with management the earnings press releases (including the type
of information and presentation of information).
- Review major issues regarding accounting principles and financial
statement presentations and judgments made in connection with the
preparation of the Company's financial statements.
- Meet periodically with management to review the Company's financial risk
exposures and the steps management has taken to monitor and control such
exposures.
- Review with the Company's General Counsel legal matters that may have a
material impact on the financial statements, the Company's compliance
policies and any material reports or inquiries received from regulators
or governmental agencies.
The Audit Committee charter provides that TDY's senior internal auditing
executive reports directly and separately to the Chair of the Audit Committee
and the Chief Executive Officer of TDY. As required by the charter, our Audit
Committee also has established procedures for the receipt, retention and
treatment of complaints regarding accounting, internal controls and auditing
matters. See "Corporate Governance -- Sarbanes-Oxley Disclosure Committee" at
page 5. In accordance with its charter, the Audit Committee also discussed with
management and Ernst & Young the replacement of the Ernst & Young coordinating
partner, who with the conclusion of the 2003 audit had serviced the Company's
account for five years. Beginning with 2004, there is a new coordinating partner
servicing TDY. A copy of the amended and restated Charter of the Audit Committee
is attached to this Proxy Statement as Annex A.
9
The Audit Committee meets the size, independence and experience
requirements of the New York Stock Exchange. The Board of Directors has
determined that Frank V. Cahouet is an "audit committee financial expert" within
the meaning of the SEC regulations and is "independent" under the New York Stock
Exchange listing standards. The Board does not limit the number of audit
committees on which members of our Audit Committee may serve. Besides our Audit
Committee, each of Mr. Cahouet and Mr. Queenan simultaneously serves on the
audit committee of two other public companies.
The report of the Audit Committee is included under "Item 2 on Proxy
Card -- Ratification of Appointment of Independent Auditors" at page 15.
NOMINATING AND GOVERNANCE COMMITTEE
The members of the Nominating and Governance Committee are:
Diane C. Creel, Chair
Frank V. Cahouet
Charles Crocker
Paul D. Miller
Michael T. Smith
The Nominating and Governance Committee had three meetings in 2003.
The Nominating and Governance Committee undertakes to:
- Identify individuals qualified to become members of the Board of
Directors and to make recommendations to the Board of Directors with
respect to candidates for nomination for election at the next annual
meeting of stockholders or at such other times when candidates surface
and, in connection therewith, consider suggestions submitted by
stockholders of the Corporation.
- Develop and recommend to the Board of Directors corporate governance
guidelines applicable to the Corporation.
- Determine and make recommendations to the Board of Directors with respect
to the criteria to be used for selecting new members of the Board of
Directors.
- Oversee the annual process of evaluation of the performance of the
Corporation's Board of Directors and committees.
- Make recommendations to the Board of Directors concerning the membership
of committees of the Board and the chairpersons of the respective
committees.
- Make recommendations to the Board of Directors with respect to the
remuneration paid and benefits provided to members of the Board in
connection with their service on the Board or on its committees.
- Administer the Corporation's formal compensation programs for directors,
including the Non-Employee Director Stock Compensation Plan.
- Make recommendations to the Board of Directors concerning the
composition, organization and operations of the Board of Directors and
its committees, including the orientation of new members and the flow of
information.
10
- Evaluate Board and committee tenure policies as well as policies covering
the retirement or resignation of incumbent directors.
The Nominating and Governance Committee will consider stockholder
recommendations for nominees for director. Any stockholders interested in
suggesting a nominee should follow the procedures outlined in "Other
Information -- 2005 Annual Meeting and Stockholder Proposals" at page 44.
The Nominating and Governance Committee utilizes a variety of methods for
identifying and evaluating nominees for directors. The Committee periodically
assesses the appropriate size of the Board and whether vacancies on the Board
are expected due to retirement, change in professional status or otherwise.
Candidates may come to the attention of the Committee through current Board
members, members of TDY management, stockholders and other persons. The
Committee to date has not engaged a professional search firm. These candidates
are evaluated at meetings of the Committee and may be considered at any point
during the year. As stated in the Governance Guidelines, nominees for director
are to be selected on the basis of, among other criteria, experience, knowledge,
skills, expertise, integrity, diversity, ability to make analytical inquiries,
understanding of or familiarity with the Company's business products or markets
or similar business products or markets, and willingness to devote adequate time
and effort to Board responsibilities. The Committee may establish additional
criteria and is responsible for assessing the appropriate balance of criteria
required of Board members.
PERSONNEL AND COMPENSATION COMMITTEE
The members of the Personnel and Compensation Committee are:
Charles J. Queenan, Jr., Chair
Robert P. Bozzone
Diane C. Creel
Charles Crocker
Michael T. Smith
The Personnel and Compensation Committee held three meetings and acted once
by unanimous written consent in 2003.
The Personnel and Compensation Committee's principal responsibilities
include:
- Making recommendations to the Board of Directors concerning executive
management organization matters generally.
- In the area of compensation and benefits, making recommendations to the
Board of Directors concerning employees who are also directors of the
Company, consulting with the Chief Executive Officer on matters relating
to other executive officers, and making recommendations to the Board of
Directors concerning policies and procedures relating to executive
officers; provided, however, that the Committee shall have full
decision-making powers with respect to compensation for executive
officers to the extent such compensation is intended to be
performance-based compensation within the meaning of Section 162(m) of
the Internal Revenue Code.
- Making recommendations to the Board of Directors regarding all contracts
of the Company with any officer for remuneration and benefits (whether in
the form of a
11
pension, deferred compensation or otherwise) after termination of regular
employment of such officer.
- Making recommendations to the Board of Directors concerning policy
matters relating to employee benefits and employee benefit plans,
including incentive compensation plans and equity based plans.
- Administering the Company's formal incentive compensation programs,
including equity based plans.
- Serving as "Named Fiduciary" under the Employee Retirement Income
Security Act of 1974, as amended, ("ERISA") of all "employee benefit
plans," as defined in Section 3(3) of ERISA, maintained by the Company
with respect to both plan administration and control and management of
plan assets.
The Committee shall also perform such additional duties and have such
additional responsibilities and functions as the Board of Directors may from
time to time determine.
DIRECTOR COMPENSATION
Directors who are not our employees are paid an annual retainer fee of
$24,000. Directors are also paid $1,200 for each Board meeting, Audit Committee
meeting, Personnel and Compensation Committee meeting and $1,000 for each
Nominating and Governance Committee meeting attended. Each non-employee chair of
the Audit Committee and the Personnel and Compensation Committee is paid an
annual fee of $3,500. The non-employee chair of the Nominating and Governance
Committee is paid an annual fee of $2,500. Directors who are our employees do
not receive any compensation for their services on our Board or its committees.
The non-employee directors also participate in the Teledyne Technologies
Incorporated 1999 Non-Employee Director Stock Compensation Plan, as amended. In
lieu of cash annual retainer fees, cash Committee chair fees and cash meeting
fees, this plan permits non-employee directors to elect to receive shares of our
Common Stock and/or stock options or to defer compensation under the Teledyne
Technologies Incorporated Executive Deferred Compensation Plan (including a
phantom share fund); provided, however, that at least 25% of the annual retainer
fee must be paid in the form of our Common Stock and/or options to acquire our
Common Stock. It also provides for certain automatic stock option grants for
4,000 shares of our Common Stock at the end of each Annual Meeting of
Stockholders. If a non-employee director is first elected other than at an
annual meeting, such non-employee director would receive an automatic option
grant for 2,000 shares of our Common Stock.
12
ITEM 2 ON PROXY CARD --
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR
The Audit Committee has appointed Ernst & Young LLP ("Ernst & Young") as
the Company's independent auditor for fiscal 2004. Ernst & Young has served as
independent auditor for the Company since the November 29, 1999 spin-off. The
firm had also served as independent auditors for ATI and predecessors since
1980. The Audit Committee believes that Ernst & Young is knowledgeable about the
Company's operations and accounting practices and is well qualified to act in
the capacity of independent auditor.
Although the appointment of independent auditor is not required to be
approved by the stockholders, the Audit Committee and the Board of Directors
believe that stockholders should participate in such selection through
ratification. The proposal to ratify the Audit Committee's appointment of Ernst
& Young will be approved by the stockholders if it receives the affirmative vote
of a majority of the shares present in person or represented by proxy at the
meeting and entitled to vote on the proposal. If you sign and return your proxy
card, your shares will be voted (unless you indicate to the contrary) to ratify
the selection of Ernst & Young as independent auditors for fiscal 2004. If you
specifically abstain from voting on the proposal, your shares will, in effect,
be voted against the proposal. Broker non-votes will not be counted as being
entitled to vote on the proposal and will not affect the outcome of the vote. If
the stockholders do not ratify the appointment of Ernst & Young, the Audit
Committee will reconsider the appointment of an independent auditor. It is
expected that representatives of Ernst & Young will be present at the meeting
and will have an opportunity to make a statement and respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR RATIFICATION OF THE APPOINTMENT
OF THE INDEPENDENT AUDITOR.
FEES BILLED BY INDEPENDENT AUDITOR
The following table sets forth fees billed to the Company by Ernst & Young
for professional services rendered for 2003 and 2002 (in thousands).
2003 2002
-------- --------
Audit Fees (1)......................................... $ 726.3 $ 722.4
Audit-Related Fees
Statutory audits (Bermuda and United Kingdom
Subsidiaries)..................................... 60.3 39.2
Employee Benefit Plan Financial Statement Audits..... 66.5 72.3
Environmental Financial Assurances................... 5.9 5.9
SEC registration -- Form S-8......................... 8.0 --
Sarbanes-Oxley Act Section 404 Assistance............ 15.2 --
-------- --------
Total Audit-Related Fees............................... 155.9 117.4
-------- --------
Tax Fees (2)........................................... 24.8 24.1
All Other Fees (3)..................................... 195.4 458.2
-------- --------
Total.................................................. $1,102.4 $1,322.1
======== ========
Total Audit and Audit-Related Fees..................... $ 882.2 $ 839.8
======== ========
13
---------------
(1) Aggregate fees billed for professional services rendered for the audit of
the Company's annual financial statements and for the reviews of financial
statements included in the Company's quarterly reports on Form 10-Q and
accounting consultations on matters reflected in the financial statements.
(2) In 2003, fees related to advice rendered on the extraterritorial income
exclusion and general tax compliance and planning advice. In 2002, fees
related to tax advice on a potential foreign subsidiary, the filing of a net
operating loss carry back refund claim and general tax compliance and
planning advice.
(3) Services in 2003 related to financial due diligence assistance in connection
with the Company's acquisitions. Services in 2002 included assistance
related to a legal matter and acquisition due diligence.
AUDIT COMMITTEE PRE-APPROVAL POLICIES
In October 2002, the Company's Audit Committee adopted guidelines relating
to the rendering of services by external auditors. The guidelines require the
approval of the Audit Committee prior to retaining any firm to perform any Audit
Services. "Audit Services" include the services necessary to audit the
consolidated financial statements of the Corporation and its subsidiaries for a
specified fiscal year and the following audit and audit-related services: (a)
Statement on Auditing Standards No. 71 quarterly review services; (b) regulatory
and employee benefit plan financial statement audits; and (c) compliance and
statutory attestation services for the Corporation's subsidiaries. Subject to
limited exceptions, the guidelines further provide that the Audit Committee must
pre-approve the engagement of Ernst & Young to provide any services other than
Audit Services. The Chair of the Audit Committee may, however, pre-approve the
engagement of Ernst & Young for such non-audit services to the extent the fee is
reasonably expected to be less than $150,000. If the fee for any non-audit
services is reasonably expected to be $250,000 or more, the Company must seek at
least one competing bid from another firm prior to engaging Ernst & Young,
unless there are exceptional circumstances or if it relates to the public
offering of the Company's securities. The guidelines prohibit the Company from
engaging Ernst & Young to perform any of the following non-audit services or
other services that the Public Company Oversight Board determines by regulation
to be prohibited: bookkeeping or other services related to accounting records or
financial statements of the Corporation; financial information systems design
and implementation; appraisal or valuation services, fairness opinions, or
contribution-in-kind reports; actuarial services; internal auditing outsourcing
services; management functions or human resources; broker or dealer, investment
advisor, or investment banking services; or legal services and expert services
unrelated to the audit.
For 2003, all audit and non-audit services rendered by Ernst & Young were
pre-approved in accordance with the Company's guidelines.
In making its recommendation to ratify the appointment of Ernst & Young as
the Company's independent accountants for the fiscal year ending January 2,
2005, the Audit Committee considered whether the provision of non-audit services
by Ernst & Young is compatible with maintaining Ernst & Young's independence.
14
AUDIT COMMITTEE REPORT
The following report of the Audit Committee is included in accordance with
the rules and regulations of the Securities and Exchange Commission. It is not
incorporated by reference into any of the Company's registration statements
under the Securities Act of 1933.
REPORT OF AUDIT COMMITTEE
The following is the report of the Audit Committee with respect to the
audited financial statements for the fiscal year ended December 28, 2003 (the
"Financial Statements") of Teledyne Technologies Incorporated (the "Company").
The responsibilities of the Audit Committee are set forth in the Audit
Committee Charter, as amended and restated as of December 17, 2003, which has
been adopted by the Board of Directors. A copy of the charter is attached to the
Proxy Statement as Annex A. The Audit Committee is comprised of five directors.
The Company's Board of Directors has determined that the members of the Audit
Committee are independent in accordance with the applicable rules of the New
York Stock Exchange.
Management is responsible for the preparation, presentation and integrity
of the Company's financial statements, the Company's internal controls and
financial reporting process and the procedures designed to assure compliance
with accounting standards and applicable laws and regulations. Ernst & Young LLP
("Ernst & Young"), the Company's independent accountants, are responsible for
performing an independent audit of the Company's Financial Statements and
expressing an opinion as to their conformity with generally accepted accounting
principles. The Audit Committee reviewed and discussed the Company's Financial
Statements with management and Ernst & Young, and discussed with Ernst & Young
the matters required to be discussed by Statement of Auditing Standards No. 61
(Codification of Statements on Auditing Standards, AU Section 380), as amended.
The Audit Committee has received written disclosures and the letter from Ernst &
Young required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees) and has discussed with Ernst & Young the
independent accountants' independence.
The members of the Audit Committee are not professionally engaged in the
practice of auditing or accounting and are not, and do not represent themselves
to be, performing the functions of auditors or accountants. Members of the Audit
Committee may rely without independent verification on the information provided
to them and on the representations made by management and Ernst & Young.
Accordingly, the Audit Committee's oversight does not provide an independent
basis to determine that management has maintained appropriate accounting and
financial reporting principles or appropriate internal control and procedures
designed to assure compliance with accounting standards and applicable laws and
regulations. Furthermore, the Audit Committee's considerations and discussions
referred to above do not assure that the audit of the Company's financial
statements has been carried out in accordance with generally accepted auditing
standards, that the financial statements are presented in accordance with
generally accepted accounting principles or that the Company's auditors are in
fact "independent".
15
Based on these reviews and discussions, the Audit Committee recommended to
the Board of Directors that the Financial Statements be included in the
Company's Annual Report on Form 10-K for the year ended December 28, 2003 for
filing with the Securities and Exchange Commission.
Submitted by the Audit Committee of the Board of Directors:*
Frank V. Cahouet, Chair
Robert P. Bozzone
Paul D. Miller
Charles J. Queenan, Jr.
February 24, 2004
---------------
* At the time the report was issued, Charles H. Noski was a member of the Audit
Committee. Effective February 27, 2004, he resigned as a director due to the
demands of his position as Corporate Vice President and Chief Financial Officer
of Northop Grumman Corporation, a position that he assumed in December 2003.
Since Mr. Noski did not attend the Committee meeting on February 24, 2004, and
resigned shortly thereafter, he did not sign the report.
OTHER BUSINESS
The Company knows of no business that may be presented for consideration at
the meeting other than the two action items indicated in the Notice of Annual
Meeting. If other matters are properly presented at the meeting, the persons
designated as proxies in your proxy card may vote at their discretion.
Following adjournment of the formal business meeting, Dr. Robert Mehrabian,
Chairman, President and Chief Executive Officer of TDY, will address the meeting
and will hold a general discussion period during which the stockholders will
have an opportunity to ask questions about the Company and its business.
16
STOCK OWNERSHIP INFORMATION
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The rules of the Securities and Exchange Commission require that Teledyne
Technologies disclose late filings of reports of stock ownership (and changes in
stock ownership) by its directors and statutory insiders. To the best of the
Company's knowledge, all of the filings for the Company's directors and
statutory insiders were made on a timely basis in 2003.
FIVE PERCENT OWNERS OF COMMON STOCK
The following table sets forth the number of shares of our Common Stock
owned beneficially by each person known to us to own beneficially more than five
percent of our outstanding Common Stock. As of February 27, 2004, the Company
had received notice that the individuals and entities listed in the following
table are beneficial owners of five percent or more of TDY Common Stock. In
general, "beneficial ownership" includes those shares that a person has the
power to vote or transfer, and options to acquire Common Stock that are
exercisable currently or within 60 days.
NUMBER OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES OF CLASS
------------------------------------ --------- --------
Barclays Global Investors, N.A. et al (1).......... 2,639,917 8.1%
45 Fremont Street
San Francisco, CA 94105
Putnam, LLC d/b/a Putnam Investments (2)........... 1,612,785 5.0%
One Post Office Square
Boston, MA 02109
Singleton Group LLC (3)............................ 1,999,990 6.2%
335 North Maple Drive, Suite 177
Beverly Hills, CA 90210
---------------
1. Barclays Global Investors, NA, Barclay Global Fund Advisors and Barclays Bank
plc, together with affiliated entities, filed a Schedule 13G on February 13,
2004. Barclays Global Investors, NA reported sole voting and dispositive
power with respect to 1,679,643 shares, Barclays Global Fund Advisors
reported sole voting and dispositive power with respect to 533,881 shares,
and Barclays Bank plc reported sole voting and dispositive power with respect
to 19,800 shares.
2. Putnam, LLC d/b/a Putnam Investments filed a Schedule 13G on February 13,
2004, on behalf of itself and its parent company, Marsh & McLennan Companies,
Inc., and its two registered-investment-adviser subsidiaries, Putnam
Investment Management, LLC. and The Putnam Advisory Company, LLC. The report
states that both registered investment advisers have dispositive power over
the shares as investment managers, but each of Putnam Investment Management,
LLC's mutual fund trustees have voting power over the shares held by each
fund, and The Putnam Investment Advisory Company, LLC. has shared voting
power over the shares held by institutional clients. Putnam Investment
Management LLC reported shared voting power as to 120,114 shares and shared
dispositive power as to 1,067,839 shares. Putnam Advisory Company, LLC.
reported shared voting power as to 468,375 shares and shared dispositive
power as to 544,946 shares.
17
3. Singleton Group LLC, jointly with William W. Singleton, Carolyn W. Singleton
and Donald E. Rugg, filed a Schedule 13G on April 19, 2000. Mr. Singleton,
Mrs. Singleton and Mr. Rugg reported that they share voting and dispositive
power with respect to 1,999,990 shares in their capacities as managers of
Singleton Group LLC. Mr. Rugg reported that he owned an additional 45 shares
of TDY Common Stock directly, with respect to which he has sole voting and
dispositive power.
STOCK OWNERSHIP OF MANAGEMENT
The following table shows the number of shares of Common Stock reported to
the Company as beneficially owned by (i) each of our directors and named
executives and (ii) all of our directors and named executives as a group, in
each case based upon the beneficial ownership of such persons of Common Stock as
reported to us as of February 27, 2004, including shares as to which a right to
acquire ownership exists (for example, through the exercise of stock options)
within the meaning of Rule 13d-3(d)(1) under the Securities Exchange Act of
1934.
NUMBER OF PERCENT OF
BENEFICIAL OWNER SHARES CLASS
---------------- --------- ----------
Robert Mehrabian........................................ 704,156(1) 2.2%
John T. Kuelbs.......................................... 251,397(2) *
Dale A. Schnittjer...................................... 98,159(3) *
James M. Link........................................... 41,802(4) *
Aldo Pichelli........................................... 71,015(5) *
Robert P. Bozzone....................................... 779,451(6) 2.4%
Frank V. Cahouet........................................ 61,159(7) *
Diane C. Creel.......................................... 18,168(8) *
Charles Crocker......................................... 16,553(9) *
Paul D. Miller.......................................... 24,604(10) *
Charles H. Noski (11)................................... 8,193(11) *
Charles J. Queenan, Jr. ................................ 121,955(12) *
Michael T. Smith........................................ 21,490(13) *
All directors and executives
as a group (13 persons)............................... 2,218,102(14) 6.8%
---------------
* Less than one percent.
1. The amount includes 76,380 shares held by The Mehrabian Family Trust, of
which Dr. Mehrabian and his wife are trustees. The amount also includes
550,292 shares of our Common Stock underlying stock options.
2. The amount includes 40,970 shares held jointly by Mr. Kuelbs and his wife
and 148,500 shares of our Common Stock underlying stock options. The amount
also includes 2,525 shares owned by his wife, beneficial ownership of which
is disclaimed.
3. The amount includes 70,995 shares of our Common Stock underlying stock
options.
4. The amount includes 23,776 shares of our Common Stock underlying stock
options.
5. The amount includes 57,087 shares of our Common Stock underlying stock
options.
6. The amount includes 342,125 shares held by the Robert P. Bozzone Grantor
Retained Annuity Trust I and 16,000 shares of our Common Stock underlying
stock options.
18
The amount also includes 34,285 shares held by Mr. Bozzone's wife,
beneficial ownership of which is disclaimed.
7. This amount includes 15,527 shares held by a revocable trust, of which
Mellon Bank, N.A. is trustee. The amount also includes 45,632 shares of our
Common Stock underlying stock options.
8. The amount includes 16,000 shares of our Common Stock underlying stock
options.
9. The amount includes 14,584 shares of our Common Stock underlying stock
options.
10. The amount includes 24,604 shares of our Common Stock underlying stock
options.
11. Mr. Noski resigned as a director effective February 27, 2004, the date for
which the information in the table is provided. The amount includes 2,193
shares held by a revocable trust, of which Mr. Noski and his wife are
trustees. This amount also includes 6,000 shares of our Common Stock
underlying stock options.
12. The amount includes 94,320 shares held jointly by Mr. Queenan and his wife
and 16,000 shares of our Common Stock underlying stock options. The amount
also includes 10,028 shares owned by Mr. Queenan's wife, beneficial
ownership of which is disclaimed.
13. The amount includes 18,503 shares of our Common Stock underlying stock
options. The amount also includes 200 shares owned by Mr. Smith's wife,
beneficial ownership of which is disclaimed.
14. This amount includes an aggregate of 1,007,973 shares of our Common Stock
underlying stock options. The amount shown include shares to which
beneficial ownership is disclaimed as follows: 2,525 shares owned by Mr.
Kuelbs' wife; 34,285 shares owned by Mr. Bozzone's wife; 10,028 shares owned
by Mr. Queenan's wife; and 200 shares owned by Mr. Smith's wife. See also
footnotes 1, 2, 6, 7, 11 and 12 for the number of shares held jointly and in
trusts.
PHANTOM SHARES. Under the Teledyne Technologies Incorporated Non-Employee
Director Stock Compensation Plan, non-employee directors may elect to defer
payment of up to 75% of their annual retainer fees and Committee chair fees and
100% of their meeting fees under the Teledyne Technologies Incorporated
Executive Deferred Compensation Plan (the "Deferred Compensation Plan"). Under
the Deferred Compensation Plan, non-employee directors may elect to have their
deferred monies treated as though they are invested in TDY Common Stock (called
the "TDY Common Stock Phantom Fund"). Deferrals to the TDY Common Stock Phantom
Fund mirror actual purchases of stock, but no actual stock is issued. There are
no voting or other stockholder rights associated with the Fund. As of February
27, 2004, the following directors had the following number of phantom shares of
TDY Common Stock under the Deferred Compensation Plan: Charles H.
Noski -- 592.636 phantom shares; and Paul D. Miller -- 773.8386 phantom shares.
2003 REPORT ON EXECUTIVE COMPENSATION
The following report of the Personnel and Compensation Committee is
included in accordance with the rules and regulations of the Securities and
Exchange Commission. It is not incorporated by reference into any of the
Company's registration statements under the Securities Act of 1933. The report
intentionally makes no reference to Robert J. Naglieri, who resigned as the
Company's Senior Vice President and Chief Financial Officer, effective July 7,
2003.
19
2003 REPORT ON EXECUTIVE COMPENSATION
This report on executive compensation is furnished by the Personnel and
Compensation Committee of the Board of Directors of Teledyne Technologies
Incorporated ("TDY" or the "Company"). This report is not incorporated by
reference into any of TDY's registration statements filed under the Securities
Act of 1933.
Effective November 29, 1999, the Company was spun-off from Allegheny
Teledyne Incorporated, now known as Allegheny Technologies Incorporated ("ATI").
In connection with the spin-off, TDY's executive compensation program was
established, which had its genesis in the program established by ATI. Pursuant
to the Employee Benefits Agreement dated November 29, 1999, between TDY and ATI
executed in connection with the spin-off (the "Employee Benefits Agreement"),
the Company was contractually required to take various actions with respect to
certain executive benefit plans and programs. Since the spin-off, the Committee
has approved various modifications to the Company's executive compensation
program to enable the Company to be more competitive and aligned with high
technology businesses and, thus, better assure attraction and retention of
quality management. The Committee did not engage any outside executive
compensation consultant with respect to TDY's original adoption of its executive
compensation program, although Hewitt Associates LLC had provided advice and
data to ATI about executive compensation in connection with the spin-off.
Subsequently, Hewitt Associates LLC has reviewed TDY's current executive
compensation program from a competitive marketplace perspective. In addition,
Hewitt Associates LLC and Watson Wyatt & Company each have from time to time
provided TDY with compensation and benefits advice and data. The Committee also
has considered publicly available market and other data on executive
compensation matters.
The companies used by Hewitt Associates LLC and Watson Wyatt & Company for
comparative purposes are based for the most part on size and industries in which
the Company operates. Such peer group is not used for the purposes of the
Company's performance graph included in this Proxy Statement under the caption
"Cumulative Total Stockholder Return". The Company's performance graph does
compare the Company's performance to the Russell 2000 Index, which is a
performance measure under the Company's long-term incentive compensation
programs described below.
COMMITTEE CHARTER
The Committee has a written charter that delineates its responsibilities
relating to TDY's compensation and benefits programs. The Committee's principal
responsibilities are summarized elsewhere in this Proxy Statement under the
caption "Committees of the Board of Directors - Personnel and Compensation
Committee." A full copy of the charter is also posted on the Company's website
at www.teledyne.com.
EXECUTIVE COMPENSATION POLICY
The Committee has determined that total compensation for TDY executives
would be comprised of three general characteristics:
- It will be competitive in the aggregate, using a set of business and
labor market competitors (by industry segment, as appropriate) to gauge
the competitive marketplace.
20
- It will be performance oriented, with a substantial portion of the total
compensation tied to internal and external measures of Company
performance.
- It will promote long-term careers at TDY.
Consistent with these characteristics, the Committee adopted the following
policies for base salaries, short-term incentives and long-term incentives.
BASE SALARY. Base salary for all management positions will be at the unit's
industry/market median for comparable positions unless there are sound reasons,
such as competitive factors, for varying significantly from industry medians.
The Committee's judgment will always be the guiding factor in base salary
determinations, as well as any other compensation issue. The Committee believes
that no system should be so rigid that it prevents the use of judgment.
SHORT-TERM INCENTIVES. Annual Incentive Plan ("AIP") awards will allow for
competitive cash compensation, based on the achievement of pre-defined
performance measures, with up to 200% of the target award paid in the case of
significant over-achievement. The majority of the award will be based on TDY's
achievement of certain financial performance goals, with a smaller portion tied
to the achievement of pre-established individual goals. For 2003, 40% of the
awards were tied to the achievement of predetermined levels of operating profit,
25% to the achievement of predetermined levels of revenue, 15% to the
achievement of predetermined levels of accounts receivable and inventory as a
percentage of revenue and 20% to the achievement of specified individual
performance objectives. A discretionary adjustment of plus or minus 20% is
allowed, though aggregate upward adjustments will not exceed 5%. For 2003, AIP
awards were paid from a pool equal to 11% of operating profit (which percentage
was unchanged from 2002). For 2004, the pool will also be 11% of operating
profit, subject to modification by the Committee. No AIP bonus will be earned in
any year unless operating profit is positive, after accruing for bonus payments,
and operating profit is at least 75% of the operating plan, subject in each case
to modification by the Committee.
LONG-TERM INCENTIVES. TDY has two long-term incentive plans that have been
approved by its stockholders: (1) the Teledyne Technologies Incorporated 1999
Incentive Plan, as amended (the "1999 Incentive Plan"), and (2) the Teledyne
Technologies Incorporated 2002 Stock Incentive Plan ("2002 Stock Incentive
Plan"). Starting in 2003, any stock options grants, any performance share awards
for cycles ending after December 31, 2002 and any new restricted stock awards
are generally made under the 2002 Stock Incentive Plan.
Long-term incentives consist of three components:
Stock options are to be awarded annually to a broader group of key
employees who are nominated by management to receive awards and whose awards the
Committee approves. In practice, the amount of the award generally depends on
the employee's salary grade and position. In 2003, stock options awards were
reduced by approximately 15%, because of the potential of having to expense
stock options. A similar reduction has already been made for 2004 awards.
A three-year Performance Share Program ("PSP") opportunity, with a new
"cycle" beginning every three years, is available to selected officers and key
executives. The PSP provides grants of performance share units, which key
Company officers and executives may earn if TDY meets specified performance
objectives over a three-year period. Forty
21
percent of the PSP award is based on the achievement of specified levels of
operating profit, 30% on the achievement of specified levels of revenue and 30%
on the achievement of specified levels of return to shareholders. No awards are
made if the three-year aggregate operating profit is less than 75% of target,
unless the Committee determines otherwise. A maximum of 200% for each component
can be earned if 120% of the target is achieved. Under the 2000 through 2002
cycle, for the three-year aggregate return to shareholders performance measure,
the S&P SmallCap 600 Index (in which TDY is included) had been the benchmark.
For the 2003-2005 cycle, the Russell 2000 Index is the benchmark. Awards are
generally paid to the participants in three annual installments after the end of
the performance cycle so long as they remain employed by TDY (with exceptions
for retirement, disability and death). As to the 2000-2002 cycle, two-thirds of
the award will be paid in TDY Common Stock and one-third will be paid in cash.
For 2003-2005 and future cycles, one-half will be paid in TDY Common Stock and
one-half will be paid in cash.
A Restricted Stock Award Program ("RSAP") opportunity has also been
established for selected officers and key executives, which was first approved
and adopted by the Committee in 2000. The RSAP provides grants of "restricted
stock", generally each calendar year, to selected officers and key executives at
an aggregate fair market value equal to 30% of each recipient's annual base
salary as of the date of the grant, unless otherwise determined by the
Committee. The restrictions are subject to both a time-based and
performance-based component. In general, the "restricted period" for each grant
of restricted stock extends from the date of the grant to the third anniversary
of such date, with the restrictions lapsing on the third anniversary. However,
unless the Committee determines otherwise, if TDY fails to meet certain minimum
performance goals for a multi-year performance cycle (typically three years)
established by the Committee as applicable to a restricted stock award, then all
of the restricted stock is forfeited. If TDY achieves the minimum established
performance goals, but fails to attain an aggregate level of 100% of the
targeted performance goals, then a portion of the restricted stock would be
forfeited.
A participant cannot transfer the restricted stock during the restricted
period. In addition, during the restricted period, restricted stock will be
forfeited upon a participant's termination of employment for any reason.
However, if the participant dies, becomes disabled or retires prior to the
expiration of the applicable performance cycle, the amount of the participant's
restricted stock that is not subject to forfeiture at the end of the performance
cycle will be pro-rated for the portion of the performance cycle completed by
the participant prior to his death, disability or retirement and that amount
will become vested at the end of the performance cycle. Upon expiration of the
restricted period, absent any forfeiture, the Company will deliver to the
recipient of restricted stock one or more stock certificates for the appropriate
number of shares of TDY Common Stock, as determined by the Committee based on
achievement of the specified performance objectives. The RSAP replaces, and is
the successor to, the Stock Acquisition and Retention Program established by ATI
(the "ATI SARP"), which the Company assumed in part as described below in
connection with the spin-off.
2003 COMPENSATION
SHORT-TERM INCENTIVES
ANNUAL INCENTIVE PLAN. For 2003, AIP awards ranged from 28% to 162% of the
target incentives because the targets and levels of achievement varied by
business unit. For 2003,
22
AIP awards were determined as follows: 40% of the award was tied to the
achievement of predetermined levels of operating profit, 25% to the achievement
of predetermined levels of revenue, 15% to the achievement of predetermined
levels of accounts receivable and inventory as a percentage of revenue and 20%
to the achievement of specific individual performance objectives. For 2003, AIP
awards were paid from a pool equal to 11% of operating profit. The bonus column
of the Summary Compensation Table contains any AIP award for 2003 to the named
executives.
LONG-TERM INCENTIVES
STOCK OPTIONS. At the beginning of 2003, under the 2002 Stock Incentive
Plan, TDY made one annual award of stock options for an aggregate of 525,625
shares of Common Stock to a total of 259 employees.
PERFORMANCE SHARE PROGRAM. TDY's first three-year "cycle" under the PSP
commenced January 1, 2000 and ended December 31, 2002. As described above, the
PSP award is based on achievement of specified levels of operating profit,
revenue and return to shareholders during the three-year period. With respect to
the 2000-2002 cycle, the Committee waived the requirement that TDY meet 75% of
operating profit target, and determined that 80% of target performance was met.
In making this determination, the Committee recognized management's hard work
and perseverance in adverse market conditions as well as a change in TDY's
strategic direction. All of the named executives in the Summary Compensation
Table participate in the 2000-2002 PSP, although the PSP award to Mr. Link has
been proportionately reduced since he joined TDY after the cycle commenced. The
first installment payment of awards was paid in 2003. An aggregate of 55,717
shares was issued in 2003 under 2000-2002 PSP to 26 participants. Of the named
executives in the Summary Compensation Table, Dr. Mehrabian was issued 10,161
shares, Mr. Kuelbs-6,327 shares, Mr. Schnittjer-2,565 shares and Mr. Link-2,058
shares. Mr. Pichelli did not participate in the 2000-2002 PSP.
In December 2002, under the 2002 Stock Incentive Plan, the Committee
established a performance cycle for the three-year period ending December 31,
2005, with the same performance goals as for the prior cycle (but using the
Russell 2000 Index as the performance index for the return to shareholders
goal). All of the named executives in the Summary Compensation Table participate
in the 2003-2005 PSP, with payments, if any, to be made in 2006, 2007 and 2008.
RESTRICTED STOCK AWARD PROGRAM. The three-year performance cycle for the
restricted stock awards made on July 25, 2000 ended on December 31, 2002, and
restrictions lapsed on July 25, 2003. As with the PSP and for the same reasons,
the Committee waived the requirement that TDY meet 75% of operating profit
target, and determined that 80% of target performance was met. Consequently, 20%
of the awarded restricted shares were forfeited at year-end 2003. On July 25,
2003, restrictions were removed from shares of TDY Common Stock issued to the
named executives in the Summary Compensation Table (taking into account the 20%
forfeiture): Dr. Mehrabian (7,695 shares); Mr. Kuelbs (4,244 shares); and Mr.
Schnittjer (2,384 shares).
On February 25, 2003, TDY granted restricted stock under the RSAP to
selected officers and key executives. Each participant received a grant of
restricted stock equal to 30% of his or her annual base salary as of the date of
grant. The performance period for such restricted stock grant ends December 31,
2005, and restrictions on any shares not otherwise forfeited lapse on February
25, 2006. In order for the recipients of grants to
23
retain all the restricted stock granted, the Company three-year aggregate return
to shareholders (as measured by its stock price) must equal or exceed the
Russell 2000 Index. If TDY's aggregate return to shareholders (as measured by
its stock price) does not equal at least 35% of the performance of the Russell
2000 Index for the cycle, the award will be forfeited in full. If the Company's
return is between 35% and 100% of the Russell 2000 Index for the cycle, a
portion of the shares will be forfeited. An aggregate of 65,526 shares of
restricted stock are currently issued and outstanding (excluding 7,032 shares to
a participant whose employment terminated). Of the named executives in the
Summary Compensation Table, Dr. Mehrabian (13,298 shares), Mr. Kuelbs (7,484
shares), Mr. Schnittjer (4,510 shares), Mr. Link (5,635 shares) and Mr. Pichelli
(3,831 shares) were granted restricted stock.
The terms of the February 25, 2003 award were identical to a grant of
restricted stock made on January 22, 2002 under the RSAP to selected officers
and key executives. The performance period for the 2002 restricted stock grant
ends December 31, 2004, and restrictions on any shares not otherwise forfeited
lapse on January 22, 2005. An aggregate of 53,305 shares of restricted stock are
currently issued and outstanding (excluding 9,106 shares to two participants
whose employment terminated). Of the named executives in the Summary
Compensation Table, Dr. Mehrabian (10,330 shares), Mr. Kuelbs (5,866 shares),
Mr. Schnittjer (3,518 shares), Mr. Link (4,205 shares) and Mr. Pichelli (2,832
shares) were granted restricted stock.
ATI SARP. As a result of the spin-off, under the Employee Benefits
Agreement, seven TDY executives (including three now retired executives) who had
purchased or designated shares of ATI stock under the ATI SARP received
distributions of common stock of TDY and Water Pik Technologies, Inc. ("Water
Pik") on the purchased or designated ATI shares. The shares that they received
in the spin-off as well as the original shares continue to be held as collateral
for loans for purchased shares, all of which are retained by ATI, until the
loans are fully paid. Restricted shares issued under the ATI SARP were converted
into shares of TDY Common Stock and, except as provided below, continue to bear
the restrictions set forth in the original ATI SARP. In 2000, the Committee took
action to permit TDY executives who participated in the ATI SARP to use ATI and
Water Pik shares that they had purchased under the ATI SARP to pay down loans
for purchased shares, whether or not such shares had been held for five years as
otherwise required by the ATI SARP. The Committee also released the transfer
restrictions on ATI and Water Pik shares that TDY participants held as
designated stock under the ATI SARP. Shares of TDY Common Stock that were
purchased or designated under the ATI SARP continue to be held in accordance
with the ATI SARP, except as provided below. In accordance with the terms of the
ATI SARP, upon their retirement in 2001, three former TDY executives paid off
their ATI loans and the restrictions on their shares of TDY Common Stock were
removed. In 2003, restrictions lapsed on an aggregate of 27,393 shares of TDY
Common Stock held by three executives, including Dr. Mehrabian (10,537 shares).
CHANGE IN CONTROL SEVERANCE AGREEMENTS
After the spin-off, the Committee recommended and the Board of Directors
approved Change in Control Severance Agreements for the named executives (other
than Messrs. Link and Pichelli) and selected other key executives. The Agreement
for Mr. Link was approved when he joined the Company and the Agreement for Mr.
Pichelli was approved in 2002. In entering into the Agreements, the Committee
desired to assure that
24
TDY would have the continued dedication of certain executives and the
availability of their advice and counsel, notwithstanding the possibility of a
change in control, and to induce such executives to remain in the employ of the
Company. The Committee believes that, should the possibility of a change in
control arise, it is imperative that TDY be able to receive and rely upon its
executives' advice, if requested, as to the best interests of the Company and
its stockholders without the concern that he or she might be distracted by the
personal uncertainties and risks created by the possibility of a change in
control. The Committee also considered arrangements offered to similarly
situated executives of comparable companies. The Agreements have a three-year,
automatically renewing term. The executive is entitled to severance benefits if
(1) there is a change in control of the Company and (2) within three months
before or 24 months after the change in control, either the Company terminates
the executive's employment for reasons other than cause or the executive
terminates the employment for good reason. "Severance benefits" consist of:
- A cash payment equal to three times (in the case of Dr. Mehrabian,
Messrs. Kuelbs, Schnittjer and Link and one other executive) or two times
(in the case of Mr. Pichelli and eight other executives) the sum of (i)
the executive's highest annual base salary within the year preceding the
change in control and (ii) the AIP bonus target for the year in which the
change in control occurs or the year immediately preceding the change in
control, whichever is higher.
- A cash payment for the current AIP bonus based on the fraction of the
year worked times the AIP target objectives at 120% (with payment of the
prior year bonus if not yet paid).
- Payment in cash for unpaid PSP awards, assuming applicable goals are met
at 120% of performance.
- Continued equivalent health and welfare (e.g., medical, dental, vision,
life insurance and disability) benefits at TDY's expense for a period of
up to 36 months (24 months in some agreements) after termination (with
the executive bearing any portion of the cost the executive bore prior to
the change in control); provided, however, such benefits would be
discontinued to the extent the executive receives similar benefits from a
subsequent employer.
- Immediate vesting of all stock options, with options being exercisable
for the full remaining term.
- Removal of restrictions on restricted stock issued by the Company under
the ATI Stock Acquisition and Retention Program or our Restricted Stock
Award Programs.
- Full vesting under the Company's pension plans (within legal parameters).
- Up to $25,000 ($15,000 in some agreements) reimbursement for actual
professional outplacement services.
- A "gross-up payment" to cover any excise taxes imposed on the executive
by Section 4999 of the Internal Revenue Code, as well as income taxes on
the gross-up payment, and any interest and penalties.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
EMPLOYMENT AGREEMENT. The Company and Robert Mehrabian, Chairman, President
and Chief Executive Officer, are parties to an Amended and Restated Employment
Agreement dated as of April 25, 2001 (the "Employment Agreement"), which amended
and restated the Employment Agreement dated as of December 21, 1999 that had
been recommended and approved by the Committee. The Employment Agreement
provides that
25
the Company shall employ him as the Chairman, President and Chief Executive
Officer and supplements his Change in Control Severance Agreement dated as of
December 21, 1999. It provides that Dr. Mehrabian is entitled to participate in
TDY's AIP and other executive compensation programs and provides him a
nonqualified pension arrangement as described below. The employment agreement
terminated on December 31, 2003, but was and will automatically be extended
annually unless either party gives the other written notice prior to October 31
that it will not be extended for the next year.
BASE SALARY AND BONUS. The Committee determined Dr. Mehrabian's 2003
compensation in accordance with the general compensation philosophy described
above. Effective September 1, 2003, Dr. Mehrabian's annual base salary was
increased to $610,000 from $590,000. In making such increase, the Committee
reviewed information as to comparably situated executives previously provided by
Hewitt Associates. The Committee also considered Dr. Mehrabian's leadership, his
strategic growth initiatives, including the acquisitions that closed during the
second quarter of 2003, his continuing manufacturing excellence initiatives and
his continuing cost reduction pursuits. The Committee noted that this 3.4%
increase was in line with increases to be given to Dr. Mehrabian's direct
reports and other corporate officers.
Dr. Mehrabian received an award of $502,065 under the Annual Incentive Plan
for 2003, which was principally tied to achievement of the target levels
described above. In determining Dr. Mehrabian's award, the Committee considered
TDY's strong 2003 performance, Dr. Mehrabian's continuing effective leadership
and perseverance to achieve results and the acquisitions made during 2003 to
further TDY's growth strategy. The Committee also considered the AIP awards paid
to Dr. Mehrabian for 2000, 2001 and 2002. The Committee did not want to approve
an amount that would cause aggregate bonuses for 2003 to exceed the bonus pool
of 11% of 2003 operating profit.
STOCK OPTIONS. On February 4, 2003, the Committee awarded Dr. Mehrabian
options to purchase 48,000 shares of the Company's common stock, a reduction of
20% because of the potential of having to expense stock options. As with other
grants made under the 2002 Stock Incentive Plan on that date, Dr. Mehrabian's
options have a per share exercise price of $13.45, are exercisable in one-third
increments commencing on February 4, 2004, and have a 10-year term. The
Committee authorized this grant to Dr. Mehrabian as a means of appropriately
rewarding his leadership and perseverance.
PERFORMANCE SHARE PROGRAM. As described above, Dr. Mehrabian participates
in the PSP. A three-year performance cycle under the PSP ended on December 31,
2002, and payments are to be made in three annual installments, with the first
installment having been made in 2003. As with other participants, Dr.
Mehrabian's award for this cycle is based on 80% of target performance. In 2003,
10,161 shares were issued to Dr. Mehrabian as part of his first installment
payment. Dr. Mehrabian participates in the PSP for the three-year performance
cycle ending on December 31, 2005, with payments, if any, to be made in 2006,
2007 and 2008.
RESTRICTED STOCK AWARD PROGRAM. On July 25, 2000, the Company granted Dr.
Mehrabian 9,619 shares of restricted TDY Common Stock, which was equivalent to
30% of his annual base salary as of the date of the grant. As described above,
the three-year performance cycle for this grant ended on December 31, 2002, and
Dr. Mehrabian forfeited 20% of such grant (1,924 shares). Restrictions lapsed
with respect to the remaining 7,695 shares on July 25, 2003.
26
On February 25, 2003, under the RSAP, Dr. Mehrabian received a restricted
stock award of 13,298 shares of TDY Common Stock, which was equivalent to 30% of
his annual base salary as of the date of grant. The number of shares of TDY
Common Stock that he will ultimately receive under this 2003 grant will be, as
described above, based on TDY's return to shareholders as compared to the
Russell 2000 Index through December 31, 2005. On January 22, 2002, under the
RSAP, Dr. Mehrabian had also received a restricted stock award of 10,330 shares
of TDY Common Stock, under similar terms as the 2003 grant, but with the
three-year performance period ending December 31, 2004, and with the
restrictions on any shares not otherwise forfeited lapsing on January 22, 2005.
PENSION ARRANGEMENTS. Under Dr. Mehrabian's employment agreement, TDY has
agreed to pay following his retirement, as payments supplemental to any accrued
pension under the Company's qualified pension plan, an annual amount equal to
50% of his base compensation as in effect at retirement. The number of years for
which such annual amount shall be paid will be equal to the number of years of
his service to TDY (including service to ATI), but not more than 10 years.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Section 162(m) of the Internal Revenue Code imposes limits on tax
deductions for annual compensation paid to a chief executive officer and certain
other highly compensated officers in excess of $1 million unless the
compensation qualifies as "performance-based" or is otherwise exempt under the
law. Both the 1999 Incentive Plan and the 2002 Stock Incentive Plan are intended
to meet the deductibility requirements of the regulations promulgated under
Section 162(m). However, the Committee may determine in any year that it would
be in the best interests of TDY for awards to be paid under the 1999 Incentive
Plan or the 2002 Stock Incentive Plan that would not satisfy the requirements of
Section 162(m).
Submitted by the Personnel and Compensation Committee:
Charles J. Queenan, Jr., Chair
Robert P. Bozzone
Diane C. Creel
Charles Crocker
Michael T. Smith
As of February 24, 2004
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Personnel and Compensation Committee of our Board of
Directors is an officer or employee of the Company. Mr. Queenan is often
referred to honorifically as "senior counsel" to a law firm that provided
services to the Company during 2003 and currently provides services to the
Company. Mr. Queenan retired as a partner of such firm on December 31, 1995 and
does not participate in the firm's earnings or profits. No other member of the
Committee has a current or prior relationship and no officer who is a statutory
insider of the Company has a relationship to any other company, in each case
that must be described under the Securities and Exchange Commission rules
relating to disclosure of executive compensation.
27
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table sets forth information about the
compensation paid by TDY for fiscal years 2003, 2002 and 2001. It sets forth
information about compensation paid to each of our current executives who was
required to file reports under Section 16 of the Securities Exchange Act of 1934
(the "named executives") for fiscal 2003. With respect to the named executives,
Mr. Link joined Teledyne Brown Engineering, Inc. as its President in July 2001,
and Mr. Pichelli was named Senior Vice President and Chief Operating Officer of
the Electronics and Communications segment on July 22, 2003. Information is also
being reported for Robert J. Naglieri, who resigned as the Company's Senior Vice
President and Chief Financial Officer, effective July 7, 2003. Mr. Naglieri was
not provided any severance package in connection with his employment
termination. On his termination date, unvested stock options and shares of
restricted stock held by him were forfeited, and any entitlement to any further
awards under the Performance Share Plan and Annual Incentive Plan ceased.
ANNUAL COMPENSATION LONG-TERM
----------------------------------- COMPENSATION
OTHER ---------------------------------- ALL
ANNUAL RESTRICTED OTHER
NAME AND FISCAL COMPEN- STOCK OPTIONS LTIP COMPEN-
PRINCIPAL POSITION YEAR SALARY($) BONUS($) SATION($)(1) AWARDS($) (SHARES) PAYOUTS($) SATION($)
------------------ ------ --------- -------- ------------ ---------- -------- ---------- ---------
Named Executives
Robert Mehrabian............ 2003 596,667 502,065 -- 176,996(2) 48,000 253,422(3) 236,984(4)
Chairman, President and 2002 573,337 400,000 -- 169,500(5) 60,000 156,840(6) 333,808(7)
Chief Executive Officer 2001 565,000 300,000 -- 0 60,000 181,858(6) 308,164(8)
John T. Kuelbs.............. 2003 335,400 215,635 -- 99,612(2) 25,500 116,160(3) 3,777(9)
Senior Vice President, 2002 324,593 158,840 -- 96,255(5) 30,000 0 3,697(10)
General Counsel 2001 318,138 94,683 -- 0 30,000 0 2,447(11)
and Secretary
Dale A. Schnittjer.......... 2003 216,771 118,719 -- 60,028(2) 10,200 55,758(3) 2,836(12)
Vice President and 2002 194,965 71,602 -- 57,720(5) 12,000 37,050(6) 2,829(13)
Chief Financial Officer 2001 190,550 55,974 -- 0 12,000 42,957(6) 2,839(14)
James M. Link............... 2003 255,899 177,202 -- 75,002(2) 12,325 37,781(3) 2,196(15)
President, Teledyne 2002 236,163 137,755 -- 69,000(5) 14,500 0 1,506(16)
Brown Engineering, Inc. 2001 97,703 47,300 15,533(17) 0 15,000 0 856(18)
(5 1/2 months)
Aldo Pichelli............... 2003 174,348 53,542 -- 50,991(2) 6,375 -- 2,602(19)
Senior Vice President and
Chief Operating Officer,
Electronic and
Communications Segment
Former Executive
Robert J. Naglieri.......... 2003 172,649 -- -- 93,596(2) 25,500(20) 95,031(3) 0
Senior Vice President 2002 304,000 138,003 -- 90,000(5) 30,000(21) 0 0
and Chief Financial Officer 2001 300,000 83,480 317,974(22) 0 20,000(21) 0 0
---------------
1. In accordance with applicable regulations, the amounts do not include
perquisites and other personal benefits received by the named executives
because the aggregate value of such benefits did not exceed the lesser of
$50,000 or 10 percent of the total salary and bonus for the named executives
or former executive.
2. Represents the formula price ($13.31) of TDY Common Stock on the award date
of restricted stock under the Restricted Stock Award Program. On February
25, 2003, under the Restricted Stock Award Program, Dr. Mehrabian and
Messrs. Kuelbs, Schnittjer, Link and Pichelli received 13,298 shares, 7,484
shares, 4,510 shares, 5,635 and 3,831 shares, respectively. Mr. Naglieri
also received 7,032 shares, but he forfeited them on his termination date in
accordance with the terms of the program. On
28
December 31, 2003, based on the closing price of a share ($18.85), the
restricted shares held by Dr. Mehrabian and Messrs. Kuelbs, Schnittjer, Link
and Pichelli were valued at $250,667, $141,073, $85,014, $106,220 and
$72,214, respectively. The restrictions lapse on February 25, 2006, subject
to achievement of performance objectives for the three-year period ending
December 31, 2005.
3. Represents the first installment payment of awards under the Performance
Share Program for the 2000-2002 performance cycle, which was paid as of
February 10, 2003. Dr. Mehrabian was awarded $66,667 in cash and 13,803
shares of Common Stock, which share amount was reduced prior to issuance in
accordance with the plan to pay taxes not covered by the cash portion and
hence, 10,161 shares were issued to Dr. Mehrabian. Mr. Kuelbs received
$30,556 and 6,327 shares of Common Stock, electing to pay taxes not covered
by the cash portion through personal funds. Mr. Schnittjer was awarded
$14,667 and 3,037 shares of Common Stock, which share amount was reduced
prior to issuance in accordance with the plan to pay taxes not covered by
the cash portion and hence, 2,565 shares were issued to Mr. Schnittjer. Mr.
Link received $9,936 and 2,058 shares of Common Stock, electing to pay taxes
not covered by the cash portion through personal funds. Mr. Naglieri was
awarded $25,000 in cash and 5,176 shares of Common Stock, which share amount
was reduced prior to issuance in accordance with the plan to pay taxes not
covered by the cash portion and hence, 4,372 shares were issued to Mr.
Naglieri. On December 31, 2003, based on the closing price of such shares
($18.85), such issued shares to Dr. Mehrabian and Messrs. Kuelbs,
Schnittjer, Link and Naglieri were valued at $191,535, $119,264, $48,350,
$38,793, and $82,412, respectively.
4. Represents annual accruals for possible future payments to Dr. Mehrabian
under his supplemental pension arrangement of $236,984.
5. Represents the formula price ($16.41) of TDY Common Stock on the award date
of restricted stock under the Restricted Stock Award Program. On January 22,
2002, under the Restricted Stock Award Program, Dr. Mehrabian and Messrs.
Kuelbs, Schnittjer and Link received 10,330 shares, 5,866 shares, 3,518
shares and 4,205 shares, respectively. Mr. Naglieri also received 5,485
shares, but he forfeited them on his termination date in accordance with the
terms of the program. On December 31, 2003, based on the closing price of a
share ($18.85), the restricted shares held by Dr. Mehrabian and Messrs.
Kuelbs, Schnittjer and Link were valued at $194,721, $110,574, $66,314 and
$79.264, respectively. The restrictions lapse on January 22, 2005, subject
to achievement of performance objectives for the three-year period ending
December 31, 2004.
6. Represents an installment payment of awards under the shortened ATI
Performance Share Program. In 2002, Dr. Mehrabian received $36,966 and 7,645
shares of Common Stock, and in 2001, he received $36,966 and 7,646 shares of
Common Stock. In 2002, Mr. Schnittjer received $8,732 and 1,806 shares of
Common Stock and in 2001, he received $8,733 and 1,806 shares of Common
Stock. On December 31, 2003, based on the closing price of a share ($18.85),
such shares issued in 2002 and 2001 to Dr. Mehrabian were valued at $144,108
and $144,127, respectively. On December 31, 2003, based on the closing price
of a share, such shares issued in 2002 and 2001 to Mr. Schnittjer were
valued at $34,043 and $34,043, respectively.
7. Includes annual accruals for possible future payments to Dr. Mehrabian under
his supplemental pension arrangement of $320,188 and the dollar value of the
benefit to Dr. Mehrabian of company-paid premiums of split-dollar life
insurance in the amount
29
of $13,620. At Dr. Mehrabian's request, his split-dollar life insurance was
discontinued and surrendered on January 13, 2003. The Company received
$68,066 as a result.
8. Includes annual accruals for possible future payments to Dr. Mehrabian under
his supplemental pension arrangement in the amount of $288,250 and the
dollar value of the benefit to Dr. Mehrabian of company-paid premiums of
split-dollar life insurance in the amount of $19,914.
9. Includes $1,000 in company contributions pursuant to the Teledyne
Technologies Incorporated 401(k) Plan, $1,577 in respect of a death benefit
under the Teledyne Technologies Incorporated Executive Deferred Compensation
Plan and $1,200 in respect of an employer matching contribution under the
Employee Stock Purchase Plan.
10. Includes $1,000 in company contributions pursuant to the Teledyne
Technologies Incorporated 401(k) Plan, $1,497 in respect of a death benefit
under the Teledyne Technologies Incorporated Executive Deferred Compensation
Plan and $1,200 in respect of an employer matching contribution under the
Employee Stock Purchase Plan.
11. Includes $1,000 in company contributions pursuant to the Teledyne
Technologies Incorporated 401(k) Plan and $1,447 in respect of a death
benefit under the Teledyne Technologies Incorporated Executive Deferred
Compensation Plan.
12. Includes $1,000 in company contributions pursuant to the Teledyne
Technologies Incorporated 401(k) Plan, $1,200 in employer matching
contribution under the Employee Stock Purchase Plan and $636 in respect of a
death benefit under the Teledyne Technologies Incorporated Executive
Deferred Compensation Plan.
13. Includes $1,000 in company contributions pursuant to the Teledyne
Technologies Incorporated 401(k) Plan, $1,200 in employer matching
contribution under the Employee Stock Purchase Plan and $629 in respect of a
death benefit under the Teledyne Technologies Incorporated Executive
Deferred Compensation Plan.
14. Includes $1,000 in company contributions pursuant to the Teledyne
Technologies Incorporated 401(k) Plan, $1,200 in employer matching
contribution under the Employee Stock Purchase Plan and $639 in respect of a
death benefit under the Teledyne Technologies Incorporated Executive
Deferred Compensation Plan.
15. Includes $1,000 in company contributions pursuant to the Teledyne
Technologies Incorporated 410(k) Plan and $1,196 in respect of employer
matching contribution under the Employee Stock Purchase Plan.
16. Includes $1,000 in company contributions pursuant to the Teledyne
Technologies Incorporated 401(k) Plan and $506 in respect of employer
matching contribution under the Employee Stock Purchase Plan.
17. Includes $11,010 in respect of country club dues and $4,523 in respect of a
leased company car.
18. Represents $856 paid in respect of life insurance.
19. Includes $1,000 in company contributions pursuant to the Teledyne
Technologies Incorporated 401(k) Plan, $1,236 in employer matching
contribution under the Employee Stock Purchase Plan and $366 in respect of a
death benefit under the Teledyne Technologies Incorporated Executive
Deferred Compensation Plan.
20. The options were not vested and thus forfeited by Mr. Naglieri on his
termination date.
30
21. On Mr. Naglieri's termination date, with respect to his 2002 grant, options
in respect of 10,000 shares were vested and with respect to his 2001 grant,
options in respect of 13,333 shares were vested. Unless exercised, vested
options terminate within 30 days after the termination date.
22. Includes one-time relocation expenses of $284,424, a one-time new hire bonus
of $25,000 and $8,550 allowance with respect to a car.
OPTION GRANTS IN LAST FISCAL YEAR
Shown below is information on grants to the named executives and a former
executive of options to purchase TDY Common Stock pursuant to the 2002 Stock
Incentive Plan during 2003. These grants are reflected in the Summary
Compensation Table.
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
-------------------------------------------------- RATES OF STOCK PRICE
NUMBER OF % OF TOTAL APPRECIATION FOR
SECURITIES OPTIONS EXERCISE OPTION TERM(1)
UNDERLYING GRANTED TO OR BASE ---------------------
OPTIONS EMPLOYEES IN PRICE EXPIRATION 5% 10%
NAME GRANTED FISCAL YEAR ($/SHARE) DATE $ $
---- ---------- ------------ --------- ---------- -------- ----------
Named Executives
Robert Mehrabian........ 48,000 9.1 $13.45 2/4/2013 406,014 1,028,920
John T. Kuelbs.......... 25,500 4.8 $13.45 2/4/2013 215,695 546,614
Dale A. Schnittjer...... 10,200 1.9 $13.45 2/4/2013 86,278 218,646
James M. Link........... 12,325 2.3 $13.45 2/4/2013 104,253 264,197
Aldo Pichelli........... 6,375 1.2 $13.45 2/4/2013 53,932 136,675
Former Executive
Robert J. Naglieri
(2)................... 25,500 4.8 $13.45 7/7/2003 0 0
---------------
1. No gain to the optionee is possible without stock price appreciation, which
will benefit all stockholders commensurately. The assumed "potential
realizable values" are mathematically derived from certain prescribed rates
of stock price appreciation. The actual value of these option grants depends
on the future performance of TDY Common Stock and overall stock market
condition. The values reflected in this table may not be realized.
2. In connection with his employment termination, Mr. Naglieri's options were
forfeited and such underlying shares became available for issuance under the
2002 Stock Incentive Plan.
31
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
As shown in the table below, other than Mr. Pichelli, no options were
exercised by the named executives during 2003. Within 30 days of his employment
termination, Mr. Naglieri exercised options as described below. Other vested
options held by Mr. Naglieri terminated in accordance with the underlying plans
on the 30th day after his termination date. All non-vested options were
forfeited on his termination date.
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE FISCAL YEAR END(#) AT FISCAL YEAR END($)(3)
NAME EXERCISE(#) REALIZED($)(2) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- -------------- ------------------------- -------------------------
Named Executives
Robert Mehrabian (1)... 0 0 494,292/108,000 4,076,608/461,280
John T. Kuelbs......... 0 0 120,000/55,500 952,000/239,205
Dale A. Schnittjer..... 0 0 59,595/22,200 363,273/95,682
James M. Link.......... 0 0 14,833/26,992 84,220/146,416
Aldo Pichelli.......... 6,756 73,776 50,795/13,042 458,568/59,801
Former Executive
Robert J. Naglieri..... 10,000 7,000 0 0
---------------
1. Includes options to purchase shares of TDY Common Stock converted from
options to purchase ATI common stock in connection with the spin-off under
the Employee Benefits Agreement, which included options granted to Dr.
Mehrabian under ATI's Non-Employee Director Stock Compensation Plan with
respect to his service as a non-employee director of ATI.
2. For Mr. Pichelli, the "value realized" is calculated by subtracting the
exercise price of $5.57 per share from $16.49, which was the closing price of
a share of TDY Common Stock on the New York Stock Exchange on his date of
exercise. For Mr. Naglieri, the "value realized" is calculated by subtracting
the exercise price of $14.48 per share from $15.18, which was the closing
price of a share of TDY Common Stock on the New York Stock Exchange on the
date of his exercise.
3. The "value of unexercised in-the-money options" is calculated by subtracting
the exercise price per share from $19.16, which was the average of the high
and low sale prices of a share of TDY Common Stock on the New York Stock
Exchange on December 31, 2003.
32
TDY PERFORMANCE SHARE PLAN ("PSP") AWARDS
2000-2002 PERFORMANCE CYCLE. The following table sets forth information at
year-end 2003 about PSP awards for the three-year performance period ended
December 31, 2002. The amounts included in the Estimated Future Payout columns
represent the potential payment of TDY Common Stock and cash to the named
executives depending on whether they remain employed by TDY (with exceptions for
retirement, disability and death). Since Mr. Naglieri's employment terminated in
July 2003, he is not entitled to any payout in 2004 or 2005. Mr. Pichelli did
not participate in the PSP for this performance cycle. The 2003 payment was made
in February 2003.
ESTIMATED FUTURE PAYOUTS
NUMBER OF UNDER NON-STOCK
SHARES, PERFORMANCE PRICE-BASED PLANS
UNITS OR OR OTHER PERIOD ACTUAL -------------------------
OTHER UNTIL MATURATION 2003 PAYOUT 2004 PAYOUT 2005 PAYOUT
NAME RIGHTS(#) OR PAYOUT ($ OR #)(1) ($ OR #) ($ OR #)
---- --------- ------------------------ ----------- ----------- -----------
Named Executives
Robert Mehrabian..... * 2000-2002 award period 10,161shs. 13,803shs. 13,802shs.
(2003-2005 payout period) $115,943 $66,667 $66,666
John T. Kuelbs....... * 2000-2002 award period 6,327shs. 6,326shs. 6,326shs.
(2003-2005 payout period) $ 30,556 $30,556 $30,555
Dale A. Schnittjer... * 2000-2002 award period 2,565shs. 3,037shs. 3,036shs.
(2003-2005 payout period) $ 21,053 $14,667 $14,666
James M. Link........ * 2000-2002 award period 2,058shs. 2,057shs. 2,057shs.
(2003-2005 payout period) $ 9,936 $ 9,936 $ 9,936
Former Executive
Robert J. Naglieri... * 2000-2002 award period 4,372shs. 0shs. 0shs.
(2003-2005 payout period) $ 35,878 $ 0 $ 0
---------------
* The amount of the award was based on base salary at the beginning of the
award period. Two-thirds of the award is payable in TDY Common Stock, with
the number of shares based on a price of $9.66. One-third of the award is
payable in cash. Each payout is subject to payment of applicable taxes.
1. Participants may elect to pay taxes due with respect to an installment
payment with awarded shares, awarded cash or a combination thereof. Dr.
Mehrabian and Messrs. Schnittjer and Naglieri each chose to pay taxes not
covered by the cash portion of the award by reducing the number of shares to
which they were entitled. Dr. Mehrabian and Messrs. Schnittjer and Naglieri
were entitled to 13,803 shares, 3,037 and 5,176 shares, respectively. As a
result of their elections, shares issuable to Dr. Mehrabian and Messrs.
Schnittjer and Naglieri were reduced by 3,642, 472 and 804 shares,
respectively, and the cash portion of their awards increased by $49,276,
$6,386 and $10,878 to pay applicable taxes. The Company used the average of
the high and low sale prices of a share of Common Stock on the New York Stock
Exchange on February 10, 2003 (the payment date) to determine the taxes due
and the value of the shares for reduction purposes.
33
2003-2005 PERFORMANCE CYCLE. The following table sets forth estimated
future payments in the 2006 to 2008 payout period of TDY Common Stock and cash
to the named executives under the Performance Share Plan. The amounts included
in Estimated Future Payout columns represent the potential payments of Common
Stock and cash depending on the level of achievement (i.e., threshold, target or
maximum) of the performance goals for the three-year (2003-2005) award period.
The participants will not receive any payment of Common Stock or cash if TDY
and/or the designated business unit do not achieve the threshold level of
performance objectives during the award period. Since Mr. Naglieri's employment
terminated during the applicable performance cycle, he is not entitled to any
future payout.
NUMBER OF ESTIMATED FUTURE PAYOUTS UNDER
SHARES, PERFORMANCE NON-STOCK PRICE-BASED PLANS
UNITS OR OR OTHER PERIOD -----------------------------------
OTHER UNTIL MATURATION THRESHOLD TARGET MAXIMUM
NAME RIGHTS(#) OR PAYOUT ($ OR #) ($ OR #) ($ OR #)
---- --------- ------------------------ --------- -------- --------
Robert Mehrabian..... * 2003-2005 award period 7,387shs. 29,549shs. 59,098shs.
(2006-2008 payout period) $110,625 $442,500 $885,000
John T. Kuelbs....... * 2003-2005 award period 3,465shs. 13,860shs. 27,720shs.
(2006-2008 payout period) $51,888 $207,550 $415,100
Dale A. Schnittjer... * 2003-2005 award period 1,949shs. 7,795shs. 15,591shs.
(2006-2008 payout period) $29,183 $116,731 $233,462
James M. Link........ * 2003-2005 award period 2,087shs. 8,348shs. 16,696shs.
(2006-2008 payout period) $31,252 $125,009 $250,017
Aldo Pichelli........ * 2003-2005 award period 1,300shs. 5,204shs. 10,407shs.
(2006-2008 payout period) $19,481 $ 77,924 $155,848
---------------
* The amount of the award is based on the base salary at the beginning of the
award period. One-half of the award is payable in TDY Common Stock, with the
number of shares based on the average of the high and low sale prices of a
share of Common Stock on the New York Stock Exchange on the date the award was
approved (December 18, 2002), which was $14.975. One-half of the award is
payable in cash.
34
TDY RESTRICTED STOCK AWARD PROGRAM ("RSAP")
FEBRUARY 25, 2003 AWARD. The following table sets forth information about
awards of restricted shares under the 2002 Stock Incentive Plan -- RSAP made to
the named executives on February 25, 2003. Each named executive received a grant
of restricted stock equal to 30% of the executive's annual base salary as of the
date of grant. The issuance price was $13.31. The restrictions lapse on February
25, 2006, subject to achievement of performance objectives for the three-year
period ending December 31, 2005. In order for a participant to retain the
restricted shares, the Company's three-year aggregate return to shareholders (as
measured by its stock price) must be at least 35% of the performance of the
Russell 2000 Index for the three-year period. If the TDY stock performance is
less than 35% of the Russell 2000 Index performance, all restricted shares would
be forfeited. If it ranges from 35% to 100%, a portion of the restricted shares
will be forfeited. If it is more than 100%, the participant does not receive
additional shares. Restricted shares are forfeited in their entirety if a
participant's employment is terminated on or prior to February 25, 2006 (with
exceptions for retirement, death and disability). Since Mr. Naglieri's
employment terminated prior to such date, his restricted shares were forfeited.
NUMBER OF
SHARES, PERFORMANCE
UNITS OR OR OTHER PERIOD TARGET/
OTHER UNTIL MATURATION THRESHOLD MAXIMUM
NAME RIGHTS(#) OR PAYOUT # ($) (1) # ($) (2)
---- ----------- ---------------------------- -------------- ----------------
Robert Mehrabian..... 13,298 shs. 2003-2005 performance period 4,654 ($87,728) 13,298 ($250,667)
February 25, 2006
John T. Kuelbs....... 7,484 shs. 2003-2005 performance period 2,619 ($49,368) 7,484 ($141,073)
February 25, 2006
Dale A. Schnittjer... 4,510 shs. 2003-2005 performance period 1,578 ($29,745) 4,510 ($85,014)
February 25, 2006
James M. Link........ 5,635 shs. 2003-2005 performance period 1,972 ($37,172) 5,635 ($106,220)
February 25, 2006
Aldo Pichelli........ 3,831 shs. 2003-2005 performance period 1,340 ($25,259) 3,831 ($72,214)
February 25, 2006
---------------
1. This column represents the minimum number of shares that the named executive
could retain (not forfeit) if the Company's three-year aggregate return to
shareholders (as measured by its stock price) equals 35% of the performance
of the Russell 2000 Index for the three-year performance period. The dollar
value is based on the closing price of a share of our Common Stock at
December 31, 2003 ($18.85 per share).
2. This column represents the maximum number of shares that the named executive
could retain if the Company's three-year aggregate return to shareholders (as
measured by its stock price) equals 100% or more of the performance of the
Russell 2000 Index for the three-year performance period. The dollar value is
based on the closing price of a share of our Common Stock at December 31,
2003 ($18.85 per share).
35
JANUARY 22, 2002 AWARD. The following table sets forth information about
awards of restricted shares under the 1999 Incentive Plan -- RSAP made to the
named executives on January 22, 2002. Each named executive received a grant of
restricted stock equal to 30% of the executive's annual base salary as of the
date of grant. The issuance price was $16.41. The restrictions lapse on January
22, 2005, subject to achievement of performance objectives for the three-year
period ending December 31, 2004. In order for a participant to retain the
restricted shares, the Company's three-year aggregate return to shareholders (as
measured by its stock price) must be at least 35% of the performance of the
Russell 2000 Index for the three-year period. If the TDY stock performance is
less than 35% of the Russell 2000 Index performance, all restricted shares would
be forfeited. If it ranges from 35% to 100%, a portion of the restricted shares
will be forfeited. If it is more than 100%, the participant does not receive
additional shares. Restricted shares are forfeited in their entirety if a
participant's employment is terminated on or prior to January 22, 2005 (with
exceptions for retirement, death and disability). Since Mr. Naglieri's
employment terminated prior to such date, his 5,485 restricted shares were
forfeited.
NUMBER OF
SHARES,
UNITS OR TARGET/
OTHER PERFORMANCE OR OTHER PERIOD THRESHOLD MAXIMUM
NAME RIGHTS(#) UNTIL MATURATION OR PAYOUT # ($) (1) # ($) (2)
---- ----------- ---------------------------- -------------- ----------------
Robert Mehrabian...... 10,330 shs. 2002-2004 performance period 3,615 ($68,143) 10,330 ($194,721)
January 22, 2005
John T. Kuelbs........ 5,866 shs. 2002-2004 performance period 2,053 ($38,699) 5,866 ($110,574)
January 22, 2005
Dale A. Schnittjer.... 3,518 shs. 2002-2004 performance period 1,231 ($23,204) 3,518 ($66,314)
January 22, 2005
James M. Link......... 4,205 shs. 2002-2004 performance period 1,471 ($27,728) 4,205 ($79,264)
January 22, 2005
Aldo Pichelli......... 2,832 shs. 2002-2004 performance period 991 ($18,680) 2,832 ($53,383)
January 22, 2005
---------------
1. This column represents the minimum number of shares that the named executive
could retain (not forfeit) if the Company's three-year aggregate return to
shareholders (as measured by its stock price) equals 35% of the performance
of the Russell 2000 Index for the three-year performance period. The dollar
value is based on the closing price of a share of our Common Stock at
December 31, 2003 ($18.85 per share).
2. This column represents the maximum number of shares that the named executive
could retain if the Company's three-year aggregate return to shareholders (as
measured by its stock price) equals 100% or more of the performance of the
Russell 2000 Index for the three-year performance period. The dollar value is
based on the closing price of a share of our Common Stock at December 31,
2003 ($18.85 per share).
36
JULY 25, 2000 AWARD. The following table set forth information about
awards of restricted shares under the 1999 Incentive Plan -- RSAP made to the
named executives on July 25, 2000. Each named executive (other than Messrs. Link
and Pichelli) received a grant of restricted stock equal to 30% of his annual
base salary as of the date of grant. The issuance price was $17.62. On December
31, 2002, the three-year performance cycle for such restricted stock awards
ended. The Personnel and Compensation Committee determined that 80% of target
performance was met, having waived the requirement that the Company meet a 75%
of operating profit target. Consequently, 20% of the awarded restricted shares
were forfeited in accordance with the RSAP. Restrictions lapsed on July 25,
2003, and the following named executives received the number of shares set forth
in the last column of the following table, which reflects the 20% reduction.
Messrs. Link, Pichelli and Naglieri were not executives of the Company on July
25, 2000, and accordingly did not receive any restricted shares.
NUMBER OF
SHARES,
UNITS OR
OTHER PERFORMANCE OR OTHER PERIOD ACTUAL
NAME RIGHTS(#) UNTIL MATURATION OR PAYOUT # ($) (1)
---- ---------- ---------------------------- ---------------
Robert Mehrabian.......... 9,619 shs. 2000-2002 performance period 7,695 ($145,051)
July 25, 2003
John T. Kuelbs............ 5,306 shs. 2000-2002 performance period 4,244 ($79,999)
July 25, 2003
Dale A. Schnittjer........ 2,980 shs. 2000-2002 performance period 2,384 ($44,938)
July 25, 2003
---------------
1. This column represents the actual number of shares that the named executive
received on July 25, 2003. The dollar value is based on the closing price of
a share of our Common Stock at December 31, 2003 ($18.85 per share).
37
EQUITY COMPENSATION PLANS INFORMATION
The following table summarizes information with respect to equity
compensation plans as of December 31, 2003:
NUMBER OF
SECURITIES
NUMBER OF REMAINING AVAILABLE
SECURITIES TO BE FOR FUTURE ISSUANCE
ISSUED UPON UNDER EQUITY
EXERCISE OF WEIGHTED-AVERAGE COMPENSATION
OUTSTANDING EXERCISE PRICE OF PLANS (EXCLUDING
OPTIONS, WARRANTS OPTIONS, WARRANTS SECURITIES REFLECTED
AND RIGHTS OR RIGHTS IN COLUMN (A))
PLAN CATEGORY (A) (B) (C)
------------- ----------------- ----------------- --------------------
Equity compensation plans approved by
security holders:
1999 Incentive Plan................ 2,785,670(1) $14.24 657,249(2)
2002 Stock Incentive Plan.......... 491,550(3) $13.45 1,842,924
Non-Employee Director Stock
Compensation Plan............... 189,348 $13.11 183,092
Employee Stock Purchase Plan (4)... -- -- 1,000,000
Equity compensation plans not
approved by security holders....... -- -- --
--------- ------ ---------
Total................................ 3,466,568 $14.06 3,683,265
========= ====== =========
---------------
1. The amount does not include 42,713 shares issued in February 2004 in
connection with the second installment and up to 63,822 shares of our Common
Stock potentially issuable with respect to the third installment under our
Performance Share Plan for the 2000-2002 performance cycle.
2. The 1999 Incentive Plan, as amended, contains a "capped" evergreen provision.
It provides that if the number of issued and outstanding shares of our Common
Stock is increased after January 26, 2000, the total number of shares
available for issuance under this plan will be increased by 10%, up to an
additional 2,500,000 shares. As a result of TDY's public offering completed
in the third quarter of 2000, 460,500 additional shares were made available
for issuance under the 1999 Incentive Plan. Hence, an additional 2,039,500
shares could become available for issuance under this Plan depending on TDY's
issued and outstanding shares of Common Stock after January 26, 2000 (after
considering that, as a result of our 2000 public offering, 460,500 shares
have already been registered and listed with respect to the Plan under this
evergreen provision).
3. The amount does not include up to 289,848 shares of our Common Stock
potentially issuable (at maximum payout) under our Performance Share Plan for
the 2003-2005 performance cycle.
4. TDY maintains an Employee Stock Purchase Plan (commonly known as The Stock
Advantage Plan) for eligible employees. It enables employees to invest in our
Common Stock through automatic, after-tax payroll deductions, within
specified limits. TDY adds a 25% matching company contribution up to $1,200
annually. The Company's contribution is currently paid in cash and the Plan
Administrator purchases shares in the open market.
38
PENSION PLAN
In connection with the spin-off, we adopted the Teledyne Technologies
Incorporated Pension Plan on terms substantially similar to the parts of the ATI
Pension Plan applicable to all of our employees, both active and inactive at our
operations that perform government contract work and for our active employees at
our commercial operations. The annual benefits payable under these parts of the
pension plan to participating salaried employees retiring at or after age 65 is
calculated under a formula which takes into account the participant's
compensation and years of service. The Internal Revenue Code limits the amounts
payable to participants under a qualified pension plan. We have also adopted a
Benefit Restoration/Pension Equalization Plan, which is designed to restore
benefits which would be payable under the pension plan provisions but for the
limits imposed by the Internal Revenue Code, to the levels calculated pursuant
to the formulas contained in the pension plan provisions or for any monies
deferred under the Teledyne Technologies Incorporated Executive Deferred
Compensation Plan.
Effective January 1, 2004, new non-union employee hires or rehires do not
participate in the Pension Plan, but participate in our Teledyne Technologies
Incorporated 401(k) Plan.
The following table illustrates the approximate annual pension that may
become payable to a participating TDY employee in the higher salary
classifications under our regular and supplemental pension plans.
ESTIMATED ANNUAL PENSIONS(1)
YEARS OF SERVICE
FINAL AVERAGE ---------------------------------------------------
ANNUAL PAY(2) 5 10 15 20 30(3)
------------- ------- ------- ------- ------- -------
....................... 15,218
200,000 30,346 45,654 60,872 91,308
....................... 23,468
300,000 46,936 70,404 93,872 140,808
....................... 31,718
400,000 63,436 95,154 126,872 190,308
....................... 39,968
500,000 79,936 119,904 159,872 239,808
....................... 48,218
600,000 96,436 144,654 192,872 289,309
....................... 56,468
700,000 112,936 169,404 225,872 338,808
....................... 64,718
800,000 129,436 194,154 258,872 388,308
....................... 81,218
1,000,000 162,436 243,654 324,872 487,308
....................... 97,718
1,200,000 195,436 293,154 390,872 586,308
...................... 114,218
1,400,000 228,436 342,654 456,872 685,308
...................... 130,718
1,600,000 261,436 392,154 522,872 784,308
...................... 147,218
1,800,000 294,436 441,654 588,872 883,308
---------------
1. The estimated amounts assume retirement at age 65 (normal retirement age)
with a straight-life annuity without reduction for a survivor annuity or for
optional benefits. They are not subject to reduction for Social Security
benefits.
2. For the period through December 31, 1994, for TDY employees who are in the
higher salary classifications, compensation for the purposes of the plan was
limited to an individual's base salary. Thereafter, plan compensation for
those employees includes base salary and up to five paid annual incentive
payments.
39
3. The maximum amount of service credited under the pension provisions
applicable to our employees is 30 years of credited service, with some
exceptions.
At December 31, 2003, the named executives had the following full years of
credited service for determining benefits: Dr. Mehrabian, 4 years; Mr. Kuelbs, 4
years; Mr. Schnittjer, 31 years; Mr. Link, 2 years; and Mr Pichelli, 23 years.
EMPLOYMENT/CHANGE IN CONTROL AGREEMENTS
The Company has entered into an Amended and Restated Employment Agreement
with Dr. Mehrabian, which provides that TDY shall employ him as the Chairman,
President and Chief Executive Officer. The agreement will terminate on December
31 of each year, but will be extended annually unless either party gives the
other written notice prior to October 31 that it will not be extended. Effective
September 1, 2003, Dr. Mehrabian has an annual base salary of $610,000. The
agreement provides that Dr. Mehrabian is entitled to participate in Teledyne
Technologies' annual incentive bonus plan and other executive compensation and
benefit programs. The agreement provides Dr. Mehrabian with a non-qualified
pension arrangement, under which the Company will pay Dr. Mehrabian following
his retirement, as payments supplemental to any accrued pension under our
qualified pension plan, an amount equal to 50 percent of his base compensation
as in effect at retirement. The number of years for which such annual amount
shall be paid will be equal to the number of years of his service to TDY
(including service to ATI), but not more than 10 years.
The Company has Change in Control Severance Agreements with Dr. Mehrabian,
Messrs. Kuelbs, Schnittjer, Link and Pichelli and nine other current key
employees. The agreements have a three-year, automatically renewing term. Under
the agreements, the executive is entitled to severance benefits if (1) there is
a change in control of the Company and (2) within three months before or 24
months after the change in control, either the Company terminates the
executive's employment for reasons other than for cause or the executive
terminates the employment for good reason. "Severance benefits" consist of:
- A cash payment equal to three times (in the case of Dr. Mehrabian,
Messrs. Kuelbs, Schnittjer and Link and one other executive) or two times
(in the case of Mr. Pichelli and eight other executives) the sum of (i)
the executive's highest annual base salary within the year preceding the
change in control and (ii) the Annual Incentive Plan ('AIP') bonus target
for the year in which the change in control occurs or the year
immediately preceding the change in control, whichever is higher.
- A cash payment for the current AIP bonus based on the fraction of the
year worked times the AIP target objectives at 120 percent (with payment
of the prior year bonus if not yet paid).
- Payment in cash for unpaid Performance Share Plan awards, assuming
applicable goals are met at 120 percent of performance.
- Continued equivalent health and welfare (e.g., medical, dental, vision,
life insurance and disability) benefits at TDY's expense for a period of
up to 36 months (24 months under some agreements) after termination (with
the executive bearing any portion of the cost the executive bore prior to
the change in control); provided,
40
however, such benefits would be discontinued to the extent the executive
receives similar benefits from a subsequent employer.
- Immediate vesting of all stock options, with options being exercisable
for the full remaining term.
- Removal of restrictions on restricted stock issued by the Company under
the ATI Stock Acquisition and Retention Program or our Restricted Stock
Award Programs.
- Full vesting under the Company's pension plans (within legal parameters).
- Up to $25,000 ($15,000 in some agreements) reimbursement for actual
professional outplacement services.
- A "gross-up payment" to cover any excise taxes imposed on the executive
by Section 4999 of the Internal Revenue Code, as well as income taxes on
the gross-up payment, and any interest and penalties.
CERTAIN TRANSACTIONS
SPIN-OFF AGREEMENTS
We entered into several agreements with ATI in connection with the spin-off
under which we have continuing obligations, some of which are described below
and elsewhere in this Proxy Statement. These agreements are being described
because four of our eight directors are also directors of ATI. Our Board of
Directors considered these relationships as one of the factors when it made its
determination that such directors are independent under the New York Stock
Exchange rules.
SEPARATION AND DISTRIBUTION AGREEMENT. The Separation and Distribution
Agreement provided for the principal corporate transactions required to effect
the separation of our businesses from ATI, the spin-off and certain other
matters governing the relationship among us following the spin-off. We believe
that we have satisfied all of our principal requirements under this agreement.
We successfully and timely completed our required public offering in the third
quarter of 2000, and used the proceeds of the offering in the required manner.
Since August 2002, we no longer need ATI's consent to make stock repurchases.
The requirement that at least a majority of our directors be members of the
Board of Directors of ATI expired at the 2002 Annual Meeting.
EMPLOYEE BENEFITS AGREEMENT. The Employee Benefit Agreement contains
various agreements between ATI and us concerning employees, pension and employee
benefit plans and other compensation arrangements for current and former
employees of our businesses. Under a related agreement, the earliest that TDY
will be able to bill pension costs to the U.S. Government under its various
government contracts will be November 29, 2004.
Under the terms of the ATI Stock Acquisition and Retention Program, Dr.
Robert Mehrabian had delivered promissory notes, payable to ATI, as payment for
the purchase price of ATI common stock purchased under the program. Under the
Employee Benefits Agreement, notwithstanding the conversion of the restricted
ATI shares into restricted TDY Common Stock, the loans evidenced by the
promissory notes remain payable to ATI.
41
As of December 31, 2003, Dr. Mehrabian was indebted to ATI under this program in
the amount of $184,006.65.
TAX SHARING AND INDEMNIFICATION AGREEMENT. The Tax Sharing and
Indemnification Agreement allocates certain federal, state, local and foreign
tax responsibilities and liabilities between ATI and us. This agreement provides
that we will indemnify ATI and its directors, officers, employees, agents and
representatives for any taxes imposed on, or other amounts paid by, them, or
ATI's stockholders, if we take actions or fail to take actions that result in
the spin-off not qualifying as a tax-free distribution.
TRADEMARK LICENSE AGREEMENT. Pursuant to the Trademark License Agreement,
an affiliate of ATI granted us an exclusive license to use the "Teledyne" name
and related logos, symbols and marks in connection with our operations. The
annual fee is $100,000 for this license and on November 24, 2004, we have an
option to purchase all rights and interests in the Teledyne marks for $412,000.
OTHER RELATIONSHIPS
KIRKPATRICK & LOCKHART LLP. We retained the law firm of Kirkpatrick &
Lockhart LLP to perform services for the Company during 2003, and expect
additional services to continue in 2004. While Charles J. Queenan, Jr., a member
of our Board of Directors, is often referred to honorifically as "senior
counsel" to this law firm, he retired as a partner on December 31, 1995, and
does not share in the firm's earnings or profits. See "Compensation Committee
Interlocks and Insider Participation."
MELLON BANK. Dr. Mehrabian is a director of Mellon Financial Corporation.
Mr. Cahouet had served as Chairman, President and Chief Executive Officer of
Mellon Financial Corporation and Mellon Bank, N.A., having retired on December
31, 1998. Mr. Cahouet ceased being a director of Mellon Financial Corporation on
April 18, 2000. We maintain various arms-length banking relationships with
Mellon Bank, N.A. Mellon Bank, N.A. is one of nine lenders under our $200
million credit facility, having committed to lend up to $33,750,000 under the
facility. It also provides cash management services and an uncommitted $5
million line of credit. Mellon Bank, N.A. also serves as trustee for the
Teledyne Technologies Incorporated Pension Plan and provides asset management
services for the Pension Plan. Mellon Investor Services LLC serves as our
transfer agent and registrar, as well as the agent under TDY's stockholders
rights plan. Notwithstanding these relationships, our Board of Directors has
determined that Mr. Cahouet is "independent," within the meaning of the rules of
the New York Stock Exchange, and able to serve on the Audit Committee of the
Board of Directors.
KORN/FERRY INTERNATIONAL. Korn/Ferry International did not provide
recruiting services for TDY and its subsidiaries in 2003, although in 2004 it
has started providing recruiting services to TDY. Mr. Cahouet is a director of
Korn/Ferry International, and his son is a member of its management, but not an
executive officer.
42
CUMULATIVE TOTAL STOCKHOLDER RETURN
The graph set forth below shows the cumulative total stockholder return
(i.e., price change plus reinvestment of dividends) on our Common Stock from
November 30, 1999, the first day of "regular way" trading in the Common Stock
following the spin-off through December 31, 2003, as compared to the Standard &
Poor's 500 Composite Index, the Russell 2000 Index and the Dow Jones Aerospace &
Defense Index.
The graph assumes that $100 was invested on November 30, 1999.
In accordance with the rules of the Securities and Exchange Commission,
this presentation is not incorporated by reference into any of the Company's
registration statements under the Securities Act of 1933.
[PERFORMANCE GRAPH]
DOW JONES WORLD
TELEDYNE TECHNOLOGIES S&P 500 COMPOSITE AEROSPACE & DEFENSE RUSSELL 2000
--------------------- ----------------- ------------------- ------------
11/30/99 100.00 100.00 100.00 100.00
12/31/99 102.00 104.00 103.00 111.00
12/31/00 255.00 95.00 143.00 107.00
12/31/01 176.00 84.00 117.00 110.00
12/31/02 170.00 65.00 103.00 87.00
12/31/03 204.00 84.00 133.00 129.00
43
OTHER INFORMATION
ANNUAL REPORT ON FORM 10-K
Copies of the Company's Annual Report on Form 10-K, without exhibits, can
be obtained without charge from the Senior Vice President, General Counsel and
Secretary, at Teledyne Technologies Incorporated, 12333 West Olympic Boulevard,
Los Angeles, CA 90064-1021, or telephone (310) 893-1602. You also may view a
copy of the Form 10-K electronically by accessing our website at
www.teledyne.com.
2005 ANNUAL MEETING AND STOCKHOLDER PROPOSALS
Under Rule 14a-8 of the Securities and Exchange Commission, proposals of
stockholders intended to be presented at the 2005 Annual Meeting of Stockholders
must be received no later than November 12, 2004 for inclusion in the proxy
statement and proxy card for that meeting. In addition, the Company's Restated
Certificate of Incorporation provides that in order for nominations or other
business to be properly brought before an Annual Meeting by a stockholder, the
stockholder must give timely notice thereof in writing to the Corporate
Secretary. To be timely, a stockholder's notice must be delivered to the
Secretary not less than 75 days and not more than 90 days prior to the first
anniversary of the preceding year's Annual Meeting which, in the case of the
2005 Annual Meeting of Stockholders, would be no earlier than January 28, 2005
and no later than February 12, 2005. If, however, the date of the Annual Meeting
is advanced by more than 30 days or delayed by more than 60 days from such
anniversary date, to be timely, notice by the stockholder must be so delivered
not earlier than the 90th day prior to such Annual Meeting and not later than
the later of the 60th day prior to such Annual Meeting or the 10th day following
the day on which public announcement of the date of such meeting is first made.
The Company's Restated Certificate of Incorporation also requires that such
notice contain certain additional information. Copies of the Restated
Certificate of Incorporation can be obtained without charge from the Senior Vice
President, General Counsel and Secretary.
PROXY SOLICITATION
The Company pays the cost of preparing, assembling and mailing this
proxy-soliciting material. We will reimburse banks, brokers and other nominee
holders for reasonable expenses they incur in sending these proxy materials to
our beneficial stockholders whose stock is registered in the nominee's name.
Our employees may solicit proxies for no additional compensation.
ELECTRONIC ACCESS TO PROXY MATERIALS AND ANNUAL REPORT
Stockholders can elect to view future Company proxy statements and annual
reports over the Internet instead of receiving paper copies in the mail and thus
can save the Company the cost of producing and mailing these documents. You will
be responsible for any costs normally associated with electronic access, such as
usage and telephonic charges.
If you are a registered stockholder, you can choose to receive future
annual reports and proxy statements electronically by following the prompt if
you choose to vote over the Internet. If you hold your TDY Common Stock in
nominee name (such as through a
44
broker), check the information provided by your nominee for instructions on how
to elect to view future proxy statements and annual reports over the Internet.
Stockholders who choose to view future proxy statements and annual reports over
the Internet will receive instructions containing the Internet address of those
materials, as well as voting instructions, approximately four weeks before
future meetings.
If you enroll to view the Company's future annual report and proxy
statement electronically and vote your proxy over the Internet, your enrollment
will remain in effect for all future stockholders' meetings unless you cancel
it. To cancel, registered stockholders should access www.melloninvestor.com and
follow the instructions to cancel your enrollment. If you hold your Company
stock in nominee name, check the information provided by your nominee holder for
instructions on how to cancel your enrollment.
If at any time you would like to receive a paper copy of the annual report
or proxy statement, please write to John T. Kuelbs, Senior Vice President,
General Counsel and Secretary, Teledyne Technologies Incorporated, 12333 West
Olympic Boulevard, Los Angeles, California 90064-1021.
By Order of the Board of Directors,
/s/ JOHN T. KUELBS
John T. Kuelbs
Senior Vice President, General Counsel
and Secretary
March 12, 2004
45
ANNEX A
AUDIT COMMITTEE CHARTER
(As amended and restated on December 17, 2003)
The Board of Directors (the "Board") of Teledyne Technologies Incorporated
(the "Corporation") shall appoint the Audit Committee (the "Audit Committee"),
which should be constituted and have the purposes, responsibilities and
authority as described herein.
COMPOSITION
The Audit Committee shall meet the size, independence and experience
requirements of the New York Stock Exchange and the Securities and Exchange
Commission, as may be in effect from time to time, and the Board shall make any
necessary determinations regarding compliance with those requirements. The
members of the Audit Committee shall be appointed by the Board on the
recommendation of the Nominating and Governance Committee, and may be replaced
by the Board. The Audit Committee shall designate one member as its Chair and
may form and delegate authority to subcommittees of one or more members of the
Audit Committee.
PURPOSE AND RESPONSIBILITIES
The Audit Committee's primary purpose shall be to (a) assist the Board's
oversight of (i) the integrity of the financial statements of the Corporation,
(ii) the Corporation's compliance with legal and regulatory requirements, (iii)
the qualifications and the independence of the Corporation's independent auditor
and (iv) the performance of the Corporation's internal audit function and
independent auditor; and (b) prepare the report required by the Securities and
Exchange Commission's proxy rules to be included in the Corporation's annual
proxy statement.
The Audit Committee is directly responsible for the appointment, retention,
compensation, oversight, evaluation and termination of the Corporation's
independent auditor (including resolving disagreements between management and
the independent auditor regarding financial reporting). The independent auditor
shall report directly to the Audit Committee. The independent auditor is
accountable to the Board and the Audit Committee, as representatives of the
Corporation's stockholders.
In carrying out its responsibility, the Audit Committee shall undertake the
following activities:
1. Retain and approve the terms of the engagement and fees to be paid to
the independent auditor.
2. Evaluate the performance of the independent auditor and, if so
determined by the Audit Committee, terminate and replace the
independent auditor.
3. Pre-approve, or adopt appropriate procedures to pre-approve, all
audit and non-audit services to be provided by the independent
auditor, and consider whether the outside auditor's provision of
non-audit services to the Corporation is compatible with maintaining
the independence of the outside auditor.
A-1
4. Access the auditor's independence by ensuring that the independent
auditor prepares and delivers periodic reports delineating all
relationships between the independent auditor and the Corporation. An
annual written report shall be consistent with Independence Standards
Board Standard No. 1 regarding the auditor's independence. The Audit
Committee shall actively engage in dialogue with the independent
auditor with respect to any disclosed relationships or services that
may impact the objectivity and independence of the auditor, and if
determined by the Audit Committee, take appropriate action to ensure
the independence of the auditor.
5. At least annually obtain and review a report by the independent
auditor describing the firm's internal quality-control procedures and
any material issues raised by the most recent internal
quality-control review, or peer review, of the firm, or by any
inquiry or investigation by governmental or professional authorities,
within the preceding five years, respecting one or more independent
audits carried out by the firm, and any steps taken to deal with such
issues.
6. Meet with the independent auditor prior to the audit to review the
planning and scope of the audit.
7. Discuss with management and the independent auditor the timing and
process for implementing the rotation of the lead audit partner, the
concurring partner and any other active audit engagement team
partner.
8. Establish hiring policies for employees or former employees of the
independent auditor.
9. Review with the independent auditor any problems or difficulties the
auditor may have encountered and management's response. Such review
should also include:
(a) Any restrictions on the scope of activities or access to
requested information.
(b) Any significant disagreements with management.
(c) Any changes required in the planned scope of the internal
audit.
(d) Responsibilities, budget and staffing of the Corporation's
internal audit function.
10. Obtain from the independent auditor in connection with any audit a
timely report relating to the Corporation's annual audited financial
statements describing all critical accounting policies and practices
used, all alternative treatments of financial information within
generally accepted accounting principles that have been discussed
with management, ramifications of the use of such alternative
disclosures and treatments, and the treatment preferred by the
independent auditor, and any material written communications between
the independent auditor and management, such as any management
letter or schedule of unadjusted differences.
11. Discuss with the independent auditor the matters required to be
discussed by Statement on Auditing Standards No. 61 relating to the
conduct of the audit.
A-2
12. Obtain from the independent auditor assurance that Section 10A of
the Securities Exchange Act of 1934 has been adhered to.
13. Discuss with management and the independent auditor the
Corporation's annual audited financial statements and the report
thereon and quarterly unaudited financial statements, including the
Corporation's disclosures under "Management's Discussion and
Analysis of Financial Condition and Results of Operations" prior to
the publication of such statements.
14. Discuss with management the earnings press releases (including the
type and presentation of information), as well as financial
information and earnings guidance provided to analysts and rating
agencies.
15. Review major issues regarding accounting principles and financial
statement presentations and judgments made in connection with the
preparation of the Corporation's financial statements, including any
significant changes to the Corporation's selection or application of
auditing or accounting principles and practices as suggested by the
independent auditor, internal auditors or management.
16. Review with management and the independent auditor the adequacy of
the Corporation's internal controls, any significant deficiencies in
the design or operation of internal controls that could adversely
affect the Corporation's ability to record, process, summarize and
report financial data, any material weaknesses in internal controls,
and any fraud, whether or not material, that involves management or
other employees who have a significant role in the Corporation's
internal controls, and any actions or special audit steps in light
thereof.
17. Meet at least quarterly with the senior internal auditing executive
to discuss internal audits and findings and management's response.
The senior internal auditing executive shall directly (and
separately) report to each of the Chair of the Committee and the
Chief Executive Officer of the Corporation. The primary purpose of
this dual reporting structure is to assure that Chair of the Audit
Committee has direct access to internal audit-related information
concerning the Corporation. It reflects the directive that the
Corporation's internal auditing department, through the senior
internal auditing executive, has responsibility to assure that
important audit-related issues are brought to the attention of the
Chair of the Audit Committee and ultimately the Audit Committee.
18. Meet periodically with management to discuss the Corporation's major
financial risk exposures and the steps, guidelines and policies
taken or implemented relating to risk assessment and risk
management.
19. Review with the Corporation's General Counsel legal matters that may
have a material impact on the financial statements, the
Corporation's compliance policies and any material notices to or
reports or inquiries received from regulators or governmental
agencies.
20. Prepare the report required by the rules of the Securities and
Exchange Commission to be included in the Corporation's annual proxy
statement.
A-3
21. Establish procedures for the receipt, retention and treatment of
complaints received by the Corporation regarding accounting,
internal accounting controls or auditing matters, and for the
confidential, anonymous submission by Corporation employees of
concerns regarding questionable accounting or auditing matters.
22. Prepare the required written confirmation to the New York Stock
Exchange at least once a year or upon any changes to the composition
of the Audit Committee.
23. Review and reassess the adequacy of this Charter annually and submit
any recommended changes to the Board for approval.
24. Perform an annual evaluation of the Audit Committee's performance in
the manner recommended by the Nominating and Governance Committee
and review such evaluation with the Board.
The Audit Committee shall meet as often as it deems necessary to carry out
its duties, but not less than quarterly, and shall make a report to the Board
following each meeting. The Audit Committee should meet separately periodically
with management, the internal auditors and the independent auditor to discuss
any matters that the Audit Committee or any of these persons or firms believe
should be discussed privately.
The Audit Committee shall have the authority to retain advice and
assistance from outside legal, accounting or other advisors as it deems
necessary to carry out it duties and responsibilities. The Audit Committee shall
determinate what appropriate funding shall be provided by the Corporation for
payment of compensation to the outside legal, accounting other advisors employed
by the Audit Committee, as well as for the payment of ordinary administrative
expenses of the Audit Committee that are necessary or appropriate to carry out
its duties. The Audit Committee may request such advisors and any officer or
employee of the Corporation, as well as the independent auditor, to attend a
meeting of the Audit Committee or to meet with any members of, or advisors to,
the Audit Committee.
While the Audit Committee has the responsibility and authority set forth in
this Charter, it is not the duty of the Audit Committee or its members to plan
or conduct "field work" or other types of auditing or accounting reviews or
procedures or to determine that the Corporation's financial statements are
complete and accurate and are in accordance with generally accepted accounting
principles. This is the responsibility of management and the independent
auditor. Management and the internal audit department are also responsible for
maintaining appropriate accounting and financial reporting principles and
policies and internal controls and procedures that provide for compliance with
accounting standards and applicable laws and regulations. In fulfilling their
responsibilities hereunder, it is recognized that members of the Audit Committee
are not full-time employees of the Corporation and are not, and do not represent
themselves to be, performing the function of auditors or accountants.
A-4
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE MARK HERE [ ]
VOTED "FOR" THE PROPOSALS. FOR ADDRESS
CHANGE OR
COMMENTS
FOR WITHHOLD FOR AGAINST ABSTAIN WILL
FOR ALL ATTEND
ITEM 1. ELECTION OF 3 ITEM 2. APPOINTMENT If you plan to attend the Annual
CLASS II DIRECTORS [ ] [ ] OF INDEPENDENT Meeting, please mark the
AUDITORS [ ] [ ] [ ] WILL ATTEND box. [ ]
Nominees:
01 Charles Crocker
02 Robert Mehrabian
03 Michael T. Smith
Withheld for the nominees you list below: (Write that Consenting to receive all future annual meeting materials and
nominee's name in the space below.) shareholder communications, electronically is simple and fast!
Enroll today at www.melloninvestor.com/ISD for secure online
------------------------------------------------------ access to your proxy materials, statements, tax documents and
other important shareholder correspondence
Signature_____________________________ Signature if held jointly ________________________________________ Date: __________________
NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee
or guardian, please give full title as such.
FOLD AND DETACH HERE
Vote by Internet or Telephone or Mail
24 hours a Day, 7 Days a Week
Internet and telephone voting is available through 11:59 PM Eastern Time
the day prior to annual meeting day.
Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner
as if you marked, signed and returned your proxy card.
Internet Telephone Mail
http://www.eproxy.com/tdy 1-800-435-6710
Use the Internet to vote your proxy. OR Use any touch-tone telephone to OR Mark, sign and date
Have your proxy card in hand when vote your proxy. Have your proxy your proxy card
you access the web site. card in hand when you call. and
return it in the
enclosed postage-paid envelope.
IF YOU VOTE YOUR PROXY BY INTERNET OR BY TELEPHONE,
YOU DO NOT NEED TO MAIL BACK YOUR PROXY CARD.
You can view the Annual Report and Proxy Statement
on the internet at: http://www.eproxy.com/tdy
TELEDYNE TECHNOLOGIES INCORPORATED
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR
THE ANNUAL MEETING OF STOCKHOLDERS on APRIL 28, 2004
The undersigned hereby appoints Dale A. Schnittjer, John T. Kuelbs and
Melanie S. Cibik and each of them, proxies and attorneys-in-fact, with power of
substitution in each of them, to vote for and on behalf of the undersigned at
the Annual Meeting of Stockholders of Teledyne Technologies Incorporated to be
held on April 28, 2004, and at any adjournments thereof, upon matters properly
coming before the meeting, as set forth in the Notice of Meeting and Proxy
Statement, both of which have been received by the undersigned, and upon all
such other matters that may properly be brought before the meeting, as to which
the undersigned hereby confers discretionary authority to vote upon said
proxies. Without otherwise limiting the general authorization given hereby, said
proxies and attorneys-in-fact are instructed to vote as follows:
(Continued and to be marked, dated and signed, on the other side)
Address Change/Comments (Mark the corresponding box on the reverse side)
FOLD AND DETACH HERE
You can now access your Teledyne account online.
Access your Teledyne stockholder account online via Investor ServiceDirect(R)
(ISD).
Mellon Investor Services LLC, Transfer Agent for Teledyne, now makes it easy and
convenient to get current information on your stockholder account.
- View account status - View book-entry information
- View certificate history - Make address changes
Visit us on the web at http://www.melloninvestor.com
Call 1-877-978-7778 between 9am-7pm
Monday-Friday Eastern Time
INVESTOR SERVICEDIRECT(R) IS A REGISTERED TRADEMARK
OF MELLON INVESTOR SERVICES LLC
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE MARK HERE [ ]
VOTED "FOR" THE PROPOSALS. FOR ADDRESS
CHANGE OR
COMMENTS
FOR WITHHOLD FOR AGAINST ABSTAIN WILL
FOR ALL ATTEND
ITEM 1. ELECTION OF 3 ITEM 2. APPOINTMENT If you plan to attend the Annual
CLASS II DIRECTORS [ ] [ ] OF INDEPENDENT Meeting, please mark the
AUDITORS [ ] [ ] [ ] WILL ATTEND box. [ ]
Nominees:
01 Charles Crocker
02 Robert Mehrabian
03 Michael T. Smith
Withheld for the nominees you list below: (Write that
nominee's name in the space below.)
-----------------------------------------------------
Signature_____________________________ Signature if held jointly ________________________________________ Date: ___________________
NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee
or guardian, please give full title as such.
FOLD AND DETACH HERE
Vote by Internet or Telephone or Mail
24 hours a Day, 7 Days a Week
For Plan shares, Internet and telephone voting is available through 11:59 PM Eastern Time
on April 23, 2004.
Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner
as if you marked, signed and returned your proxy card.
Internet Telephone Mail
http://www.eproxy.com/tdy 1-800-435-6710
Use the Internet to vote your proxy. OR Use any touch-tone telephone to OR Mark, sign and date
Have your proxy card in hand when vote your proxy. Have your proxy your proxy card
you access the web site. card in hand when you call. and
return it in the
enclosed postage-paid envelope.
IF YOU VOTE YOUR PROXY BY INTERNET OR BY TELEPHONE,
YOU DO NOT NEED TO MAIL BACK YOUR PROXY CARD.
You can view the Annual Report and Proxy Statement
on the internet at: http://www.eproxy.com/tdy
TELEDYNE TECHNOLOGIES INCORPORATED
VOTING INSTRUCTION CARD FOR 2004 ANNUAL MEETING
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
TELEDYNE TECHNOLOGIES INCORPORATED
TELEDYNE TECHNOLOGIES INCORPORATED 401(k) PLAN
The undersigned hereby directs the Trustee of the above Plan to vote the
full number of shares of Common Stock allocated to the account of the
undersigned under the Plan, at the Annual Meeting of Stockholders of Teledyne
Technologies Incorporated on April 28, 2004, and at any adjournments thereof,
upon the matters set forth on the reverse of this card, and, in its discretion,
upon such other matters as may properly come before the meeting.
PLAN PARTICIPANTS MAY VOTE BY TOLL-FREE TELEPHONE OR INTERNET BY FOLLOWING THE
INSTRUCTIONS ON THE REVERSE SIDE. ALTERNATIVELY, PARTICIPANTS MAY VOTE BY
COMPLETING, DATING AND SIGNING THIS CARD AND RETURNING IT PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
IF YOU WISH TO USE THIS CARD TO VOTE YOUR SHARES, PLEASE COMPLETE, DATE AND SIGN
ON THE REVERSE SIDE.
(Continued and to be marked, dated and signed, on the other side)
Address Change/Comments (Mark the corresponding box on the reverse side)
FOLD AND DETACH HERE
[TELEDYNE TECHNOLOGIES LOGO]
12333 West Olympic Blvd.
Los Angeles, California 90064
TELEDYNE TECHNOLOGIES INCORPORATED 401(k) PLAN
As a Plan participant, you have the right to direct the Plan Trustee how to vote
the shares of Teledyne Technologies Incorporated Common Stock that are allocated
to your Plan account and shown on the attached voting instruction card. The
Trustee will hold your instructions in complete confidence except as may be
necessary to meet legal requirements.
You may vote by telephone, by Internet or by completing, signing and returning
the voting instruction card (above). A postage-paid return envelope is enclosed.
The Trustee must receive your voting instructions by April 23, 2004. If the
Trustee does not receive your instructions by April 23, 2004, your shares will
not be voted.
You will receive a separate set of proxy solicitation materials for any shares
of Common Stock you own other than your Plan shares. Your non-plan shares must
be voted separately from your Plan shares.