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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]
March 12, 2003
Dear Stockholder:
We are pleased to invite you to attend the 2003 Annual Meeting of
Stockholders of Teledyne Technologies Incorporated. The meeting will be held on
Wednesday, April 23, 2003, 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 2002 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 2003 Annual Meeting.
Sincerely,
/s/ Robert Mehrabian
Robert Mehrabian
Chairman, President and
Chief Executive Officer
Teledyne Technologies Incorporated
12333 West Olympic Boulevard
Los Angeles, CA 90064-1021
[TELEDYNE TECHNOLOGIES LOGO]
TELEDYNE TECHNOLOGIES INCORPORATED
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MEETING DATE: April 23, 2003
TIME: 9:00 a.m. Pacific Time
PLACE: Teledyne Technologies Incorporated
12333 West Olympic Boulevard
Los Angeles, California 90064-1021
RECORD DATE: March 10, 2003
AGENDA
1) Election of a class of three directors for a three-year term;
2) Amendment to the Company's 1999 Non-Employee Director Stock Compensation
Plan;
3) Ratification of the selection of Ernst & Young LLP as the Company's
independent auditors for 2003; and
4) 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, 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, 2003
PROXY STATEMENT
TABLE OF CONTENTS
------------------------
PAGE
----
Voting Procedures........................................... 1
Board Composition and Practices............................. 2
Item 1 on Proxy Card -- Election of Directors............... 3
Committees of our Board of Directors........................ 7
Director Compensation....................................... 10
Item 2 on Proxy Card -- Amendment to the 1999 Non-Employee
Director Stock Compensation Plan.......................... 11
Directors Stock Plan...................................... 12
Text of Amendment......................................... 14
Non-Employee Directors Stock Plan Information Table....... 15
Item 3 on Proxy Card -- Ratification of Selection of
Independent Auditors...................................... 16
Audit Fees................................................ 16
Financial Information Systems Design and Implementation
Fees................................................... 16
All Other Fees............................................ 16
Audit Committee Report.................................... 17
Report of Audit Committee................................... 17
Other Business.............................................. 18
Stock Ownership Information................................. 18
Section 16(a) Beneficial Ownership Reporting Compliance... 18
Five Percent Owners of Common Stock....................... 19
Stock Ownership of Management............................. 20
2002 Report on Executive Compensation....................... 21
Executive Compensation Policy............................. 22
2002 Compensation......................................... 24
Change in Control Severance Agreements.................... 25
Compensation of Chief Executive Officer................... 26
Deductibility of Executive Compensation................... 28
Compensation Committee Interlocks and Insider
Participation.......................................... 28
Executive Compensation...................................... 29
Summary Compensation Table................................ 29
Option Grants in Last Fiscal Year......................... 31
Aggregate Option Exercises in Last Fiscal Year and Fiscal
Year End Option Values................................. 32
ATI Performance Share Program Awards...................... 32
TDY Performance Share Plan Awards......................... 33
TDY Restricted Stock Awards Program....................... 35
Equity Compensation Plans Information..................... 37
Pension Plan.............................................. 37
Employment/Change in Control Agreements................... 38
Certain Transactions........................................ 40
Spin-Off Agreements....................................... 40
Other Relationships....................................... 40
Cumulative Total Stockholder Return......................... 42
Other Information........................................... 43
Annual Report on Form 10-K................................ 43
2004 Annual Meeting and Stockholder Proposals............. 43
Proxy Solicitation........................................ 44
Electronic Access to Proxy Materials and Annual Report.... 44
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 2003 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 10, 2003 you may vote at the Annual Meeting. On that day,
there were 32,172,634 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 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.
Your proxy card contains a Control Number that will identify you as a
stockholder when you vote by telephone or Internet. You may use the
telephone or Internet procedures to vote your shares and to confirm that
your votes were properly recorded. 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 revoke your proxy to the Secretary of the
Company;
- 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 described below).
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
1
by the plan or (2) transmit your instructions by telephone or Internet. If you
do not transmit instructions, 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 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 2002, the Board of Directors held six meetings and acted twice by
unanimous written consent. During 2002, all directors attended at least 75% of
the aggregate number of meetings of the Board and the Board committees of which
they were members.
NUMBER OF DIRECTORS
The Board of Directors determines the number of directors. The Board
currently consists of nine members.
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.
2
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. In December 2002, the Board of Directors adopted
a singular exception to such policy to extend the term of Charles J. Queenan,
Jr., age 72, by one year to the 2004 Annual Meeting of Stockholders. In granting
such extension, the Board considered the Company's need to maintain experienced
directors and the uncertainties created by the Sarbanes-Oxley Act in regard to
corporate governance and other issues.
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 2003 Annual Meeting.
The three-year term of the class of directors nominated and elected this
year will expire at the 2006 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 in
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.
3
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE THREE NOMINEES.
NOMINEES -- TERMS EXPIRE AT 2006 ANNUAL MEETING (CLASS I)
Diane C. Creel Diane C. Creel is Chief Executive Officer
President and Chief Executive Officer and President of Earth Tech, an
of Earth Tech international consulting engineering firm
Director since 1999 and subsidiary of Tyco International Ltd.
Age: 54 Ms. Creel is also a director of ATI and
The B.F. Goodrich Company 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 and Chief
Chairman and Chief Executive Officer Executive Officer of ATK (Alliant
of ATK Techsystems Inc.), an aerospace and
Director since 2001 defense company. Prior to joining ATK in
Age: 61 January 1999, 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 his
retirement from the U.S. Navy, Admiral
Miller served as Commander-in-Chief, U.S.
Atlantic Command and NATO Supreme Allied
Commander-Atlantic. Admiral Miller became
a director of TDY on July 25, 2001. He
also serves on the Boards of SunTrust Bank
(Eastern Region) and Donaldson Company.
Admiral Miller is a member of our Audit
Committee and our Nominating and
Governance Committee.
4
Charles H. Noski Charles H. Noski is the retired Vice
Retired Vice Chairman Chairman of AT&T Corporation, a voice,
AT&T Corporation data and video communications service
Director since 2002 company. Mr. Noski joined AT&T in December
Age: 50 1999 as its Senior Executive Vice
President and Chief Financial Officer and
was named Vice Chairman of AT&T's Board of
Directors in March 2002. Mr. Noski
relinquished his position of Chief
Financial Officer in June 2002 and retired
from AT&T in November 2002 upon the
successful completion of AT&T's
restructuring with the merger of AT&T
Broadband and Comcast Corp. Prior to
joining AT&T, Mr. Noski was President,
Chief Operating Officer and a member of
the board of directors of Hughes
Electronics, a publicly traded subsidiary
of General Motors in the satellite and
wireless communications business, having
joined Hughes in 1990 as its corporate
vice president and controller. In 1992, he
was appointed corporate senior vice
president and chief financial officer of
Hughes and in 1996 was elected Vice
Chairman. For a brief period in 1997, Mr.
Noski was executive vice president and
chief financial officer of United
Technologies Corp. Prior to joining
Hughes, Mr. Noski was a partner at
Deloitte & Touche. Mr. Noski is also a
director of Air Products and Chemicals
Inc. and Northrop Grumman Corporation. He
is a member of our Audit Committee and our
Nominating and Governance Committee.
CONTINUING DIRECTORS -- TERMS EXPIRE AT THE 2004 ANNUAL MEETING (CLASS II)
Charles Crocker Charles Crocker has been Chairman and
Chairman and Chief Executive Officer Chief Executive Officer of BEI
of BEI Technologies, Inc. Technologies, Inc., a diversified
Age: 64 technology company, since March 2000. Mr.
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 and Talbot, Inc.
Mr. Crocker became a director of TDY on
October 24, 2001. Mr. Crocker is a member
of our Personnel and Compensation
Committee and our Nominating and
Governance Committee.
5
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: 61 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 been elected to those positions in October
Director since 2001 1997. Mr. Smith has been a director of TDY
Age: 59 since January 1, 2001. He is also a
director of 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.
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 to June 26, 2001, he was
Incorporated Chairman, President and Chief Executive
Director since 1999 Officer of ATI. Mr. Bozzone had been Vice
Age: 69 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
DQE, Inc., whose principal subsidiary is
Duquesne Light Company. Mr. Bozzone is a
member of our Audit Committee and our
Personnel and Compensation Committee.
6
Frank V. Cahouet Frank V. Cahouet served as the Chairman,
Retired Chairman and Chief Executive President and Chief Executive Officer of
Officer of Mellon Financial Mellon Financial Corporation, a bank
Corporation holding company, and Mellon Bank, N.A.,
Director since 1999 prior to his retirement on December 31,
Age: 70 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 January 1996,
Director since 1999 he was a partner of that firm. He is also
Age: 72 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.
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 H. Noski
Charles J. Queenan, Jr.
The Audit Committee held 10 meetings in 2002.
The primary responsibility of the Audit Committee is to assist the Board in
monitoring the integrity of our financial statements and the independence of our
external auditors. In carrying out its responsibility, the Audit Committee
undertakes to do many things, including:
- Selecting the independent auditor to audit the books, records and
accounts of the Company.
- Evaluating the performance of the independent auditor.
- Receiving written periodic reports from the independent auditor
delineating all relationships between the independent auditor and the
Company.
7
- Reviewing 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.
- Reviewing the Company's annual audited financial statements and the
report thereon with the independent auditor and management prior to
publication of such statements.
- Reviewing with management and the independent auditor the Company's
quarterly financial statements prior to the release of quarterly
earnings.
- Reviewing major changes to the Company's accounting principles and
practices as suggested by the independent auditor, internal auditors or
management.
- Meeting periodically with management to review the Company's financial
risk exposures and the steps management has taken to monitor and control
such exposures.
- Reviewing 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.
The Audit Committee meets the size, independence and experience
requirements of the New York Stock Exchange, except as follows with respect to
Mr. Bozzone. Since Mr. Bozzone had been an executive officer of ATI within the
three-year period ended November 29, 2002, the Board of Directors specially
determined, in accordance with its business judgment and New York Stock Exchange
requirements, that Mr. Bozzone's membership on the Audit Committee was required
by the best interests of the Company and its stockholders. The Board believes
that, among other things, Mr. Bozzone's membership on the Audit Committee will
facilitate and assist in assuring TDY's compliance with various continuing
obligations under our Separation and Distribution Agreement with ATI and related
spin-off documents.
The report of the Audit Committee is included under "Item 3 on Proxy
Card -- Ratification of Selection of Independent Auditors" at page 17.
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
Charles H. Noski
Michael T. Smith
The Nominating and Governance Committee had five meetings in 2002.
8
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 Company.
- Develop and recommend to the Board of Directors corporate governance
guidelines applicable to the Company.
- 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
Company'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 Company'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.
- 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 -- 2004 Annual Meeting and Stockholder Proposals" at page 43.
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 four meetings in 2002.
The Personnel and Compensation Committee's principal responsibilities
include:
- Making recommendations to the Board of Directors concerning executive
management organization matters generally.
9
- In the area of compensation and benefits, making recommendations to the
Board of Directors concerning employees who are also directors of the
Company, consult with the Chief Executive Officer on matters relating to
other executive officers, and make 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 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, ("Benefit Plans") 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, as
described below under "Item 2 on Proxy Card -- Amendment to the 1999
Non-Employee Director Stock Compensation Plan." This plan provides 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 at the end of each Annual Meeting of Stockholders.
10
ITEM 2 ON PROXY CARD --
AMENDMENT TO
THE 1999 NON-EMPLOYEE DIRECTOR STOCK COMPENSATION PLAN
Our directors who are not employees of the Company participate in the
Teledyne Technologies Incorporated 1999 Non-Employee Director Stock Compensation
Plan, as amended (the "Directors Stock Plan"). The Directors Stock Plan was
adopted by TDY's Board of Directors on November 12, 1999 and ratified by our
sole stockholder prior to the date of our spin-off. The purpose of the Directors
Stock Plan is to promote the interests of TDY and its stockholders in
attracting, retaining and providing an incentive to non-employee directors
through the acquisition of a proprietary interest in the Company and an
increased personal interest in its performance. The Directors Stock Plan permits
non-employee directors to elect to receive stock options and/or shares of TDY
Common Stock in lieu of cash annual retainer fees, cash committee chair fees and
cash meeting fees. It also provides for certain automatic stock option grants at
the end of each Annual Meeting of Stockholders. Eight of our nine directors
participate in the plan. As a TDY employee, Dr. Mehrabian is not eligible to
participate in the plan.
In accordance with New York Stock Exchange listing requirements, we are
asking our stockholders to approve an amendment to the Directors Stock Plan to
increase the number of shares of Common Stock available for issuance under the
plan by 200,000 shares to 400,000 shares in total. Approval of this amendment by
the stockholders requires the affirmative vote of at least a majority of the
shares present in person or 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 approve the amendment to the Directors
Stock Plan. If you abstain from voting on the proposal, your shares will, in
effect, be voted against the proposal. Broker non-votes will not be counted as
having been voted on the proposal and will not affect the outcome of the vote.
Brokers do have a discretionary voting privilege with respect to this proposal,
because the number of shares authorized for issuance under the plan does not
exceed 5% of our shares outstanding.
Of the 200,000 shares originally authorized for issuance under the
Directors Stock Plan, at February 28, 2003, there were 35,840 shares available
for issuance under the plan. At such date, 18,290 shares have been issued and
options in respect of 145,870 shares have been granted. The outstanding options
have per share exercise prices ranging from $6.31 to $22.47 and expiration dates
ranging from November 29, 2009 to February 25, 2013. At February 28, 2003, the
fair market value of a share Common Stock (the average of the high and low
trading prices of a share on the New York Stock Exchange on that date) was
$12.935. At the 2003 Annual Meeting, each director (other than Dr. Mehrabian)
will automatically be granted options for 4,000 shares of our Common Stock under
the plan, with the exercise price being the fair market value of a share on
April 23, 2003.
A lower per share TDY stock price has the effect of increasing the number
of shares of our Common Stock and shares underlying options payable under the
Directors Stock Plan in lieu of cash retainer and meeting fees. Consequently,
more stock or options, as the case may be, must be issued under the Directors
Stock Plan to make up the foregone cash fees.
If the amendment is not approved, we will have enough available shares to
issue the annual stock option grant to each non-employee director at the end of
the 2003 Annual Meeting, but, depending on our stock price, we may need to pay
applicable fees for attending Board and committee meetings in cash. Without
available shares, the Directors
11
Stock Plan will terminate in accordance with its terms. Outstanding options will
continue in accordance with their terms. Future annual retainer fees, committee
chair fees and meeting fees will need to be paid in cash.
DIRECTORS STOCK PLAN
ADMINISTRATION. The Nominating and Governance Committee of the Board of
Directors administers the Directors Stock Plan. Subject to the provisions of the
plan and the Board of Directors, the Committee interprets the plan, promulgates,
amends and rescinds rules and regulations relating to the Directors Stock Plan
and makes all other determinations necessary or advisable for its
administration. However, neither the Board of Directors nor the Committee has
any discretion with respect to the selection of persons eligible to participate
in the Directors Stock Plan, the determination of the number of shares of TDY
Common Stock or the number of stock options issuable to any person or any other
aspect of the plan administration with respect to which such discretion is not
permitted in order for grants of shares or options to be exempt under Rule 16b-3
of the Securities Exchange Act of 1934.
AMOUNT OF STOCK. The Directors Stock Plan currently authorizes up to
200,000 shares of Common Stock to be issued. With the amendment, the Directors
Stock Plan would authorize up to an additional 200,000 shares to be issued, for
a total of 400,000 shares. The shares offered under the plan will either be
authorized and unissued shares or shares that have been reacquired by TDY
(treasury shares). The number of shares available for issuance under the plan is
subject to anti-dilution adjustments upon the occurrence of significant
corporate events.
ELIGIBILITY AND PARTICIPATION. Only directors who are not employees of TDY
or an affiliate may participate in the Directors Stock Plan.
AMENDMENT OR TERMINATION. The Directors Stock Plan expires by its terms on
the earlier of November 12, 2009, and the date upon which no shares of TDY
Common Stock remain available for issuance under the plan. Options issued under
the plan must terminate 10 years from the date of grant. TDY's Board of
Directors can amend or terminate the Directors Stock Plan, but the Board cannot
amend the plan without stockholder approval if any applicable law or regulation
the New York Stock Exchange requires stockholder approval. No amendment or
termination of the Directors Stock Plan will, without the applicable director's
consent, adversely affect an outstanding option.
PAYMENT IN LIEU OF RETAINER AND MEETING FEES. The Directors Stock Plan
provides that each non-employee director will receive at least 25% of the annual
retainer fee in the form of our Common Stock and/or options to acquire our
Common Stock. Each director may elect a greater percentage (in 25% increments).
A director may also elect to defer 25%, 50% or 75% of the annual retainer under
our Executive Deferred Compensation Plan. Effective in 2001, under the Directors
Stock Plan, directors may elect to have their meeting fees paid in all cash, all
stock or all options.
Options granted under this part of the Directors Stock Plan (as opposed to
automatic option grants as described below) are intended to provide each
electing director with options having an exercise value on the date of grant
equal to the foregone fees; that is, the difference between the exercise price
and the market price of the underlying shares of Common Stock on the date of
grant is intended to be equal to the foregone fees. Shares
12
issued in lieu of any cash retainer or meeting fees are issued at the fair
market value of our Common Stock on the issuance date.
AUTOMATIC OPTION GRANTS. Under the Directors Stock Plan, from and after
the 2001 Annual Meeting, options to purchase 4,000 shares of our Common Stock
are automatically granted to each non-employee director at the end of each
Annual Meeting of Stockholders. If a non-employee director first becomes a
director on a date other than an Annual Meeting date, an option covering 2,000
shares of our Common Stock is automatically granted to such non-employee
director on his or her first date of Board service. Under the Directors Stock
Plan, options to purchase 2,000 shares of our Common Stock were granted to then
non-employee directors both on the date of our spin-off from ATI and at the
conclusion of our 2000 Annual Meeting. The purchase price of our Common Stock
covered by these automatic options is the fair market value of our Common Stock
on the date the option is granted.
STANDARD OPTION TERMS. Options issued under the Directors Stock Plan
become exercisable on the first anniversary of the date on which they are
granted and terminate 10 years from the date of grant. However, if a
non-employee director dies, all unvested options automatically become
exercisable and such director's estate or beneficiary may exercise all
unexercised options for 12 months from the date of death (but not beyond its
natural termination if earlier). If a non-employee director is removed by the
Board of Directors or stockholders, any vested options must be exercised within
30 days of removal and unvested options terminate on the date of removal.
Options under this plan do not qualify as "incentive stock options" under
Section 422 of the Internal Revenue Code. The exercise price may be paid in cash
or in already owned shares of Common Stock. A "cashless exercise" through a
director's personal broker is also permissible.
TAX CONSEQUENCES. The following is a summary of principal federal income
tax consequences of Directors Stock Plan benefits under present law. It does not
describe state, local or foreign tax consequences.
The cash portion of a director's fee is taxable income in the year of
receipt. If any portion of the annual retainer fee is deferred under the TDY
Executive Deferred Compensation Plan, it will be taxable income in the year the
director receives the deferred amount.
If a director receives our Common Stock in payment of all or a portion of
the director's fee, the director will recognize taxable compensation income in
the year in which the director is deemed to have received the stock. The amount
of such income will be the fair market value of such Common Stock on the date of
receipt.
Since the options are intended to be nonstatutory stock options, a director
will not recognize any taxable income upon the grant of a stock option. Upon
exercise of the stock option, however, the director will recognize ordinary
income equal to the amount by which the fair market value of the Common Stock
acquired at the time of exercise exceeds the exercise price of the Common Stock.
If a director later sells the Common Stock, the difference between the amount
realized on the sale and the tax basis with respect to the Common Stock the
director sells will be taxed as short- or long-term capital gain or loss,
depending on whether the applicable long-term capital gain holding period is
met. The tax basis generally will equal the sum of the exercise price the
director pays and any ordinary income recognized when the director acquired the
shares.
13
If a director pays the exercise price of a stock option by delivering to
TDY shares of Common Stock, in general, the federal income tax consequences on
the exercise of an option are not altered by the use of previously acquired
shares of Common Stock to pay the exercise price. If a director exercises a
stock option in this manner, the director will not recognize capital gain with
respect to the shares of Common Stock such director delivered in payment of the
exercise price.
TDY will be entitled to a deduction for federal income tax purposes in the
year in which a director recognizes ordinary income with respect to the receipt
of cash or our Common Stock or the exercise of a stock option. The Company's
deduction will equal the amount the director recognizes as ordinary income.
TEXT OF AMENDMENT
If the proposal is approved, Section 1.4 of the Directors Stock Plan will
be amended to read in its entirety as follows. The sole change is substituting
400,000 for 200,000.
1.4. Shares Subject to the Plan. The shares to be offered under the
Plan shall consist of the Company's authorized but unissued Common Stock or
treasury shares and, subject to adjustment as provided in Section 5.1
hereof, the aggregate amount of such stock which may be issued or subject
to Stock Options issued hereunder shall not exceed 400,000 shares. If any
Stock Option granted under the Plan shall expire or terminate for any
reason, without having been exercised or vested in full, as the case may
be, the unpurchased shares subject thereto shall again be available for
issuance under the Plan. Stock Options granted under the Plan will not be
qualified as "incentive stock options" under Section 422 of the Code.
14
NON-EMPLOYEE DIRECTORS STOCK PLAN INFORMATION TABLE
The following table sets forth information regarding the number of shares
of our Common Stock and stock options issued to our current non-employee
directors under the Directors Stock Plan as of February 28, 2003. It also
provides information regarding payment elections made by our non-employee
directors for 2003. Elections are made prior to the beginning of an applicable
calendar year.
NUMBER OF SHARES OF NUMBER OF SHARES
COMMON STOCK UNDERLYING OPTIONS
ISSUED PURSUANT TO ISSUED PURSUANT TO RANGE OF
DIRECTORS STOCK PLAN DIRECTORS STOCK PLAN RANGE OF OPTION EXPIRATION 2003 RETAINER FEE
(2002 Issuance)(1) (2002 Issuance)(2) EXERCISE PRICES DATES ELECTION
-------------------- -------------------- --------------- ------------- -----------------
Robert P. Bozzone 3,175 12,000 $9.94 11/29/2009 75% Stock
(1,011) (4,000) to $16.99 to 4/24/2012 25% Cash
Frank V. Cahouet 0 40,906 $6.31 to 11/29/2009 100% Options
(0) (13,089) $16.99 to 2/25/2013
Diane C. Creel 1,576 12,000 $9.94 to 11/29/2009 25% Stock
(362) (4,000) $16.99 to 4/24/2012 75% Cash
Charles Crocker 1,204 10,331 $8.37 to 10/24/2011 50% Stock
(674) (6,885) $16.99 to 2/25/2013 50% Cash
Paul D. Miller 0 19,878 $8.37 to 7/25/2011 50% Options
(0) (11,856) $16.99 to 2/25/2013 50% Cash Deferred
Charles H. Noski 1,174 2,000 $18.13 10/1/2012 25% Stock
(725) (2,000) 75% Cash Deferred
Charles J. Queenan 1,649 12,000 $9.94 to 11/29/2009 25% Stock
(389) (4,000) $16.99 to 4/24/2012 75% Cash
Michael T. Smith 2,516 14,035 $8.37 to 1/1/2011 50% Options
(1,418) (5,011) $16.99 to 2/25/2013 50% Cash Deferred
Robert Mehrabian (3) 0 0 -- -- --
Robert J. Naglieri 0 0 -- -- --
(3)
John T. Kuelbs (3) 0 0 -- -- --
James M. Link (3) 0 0 -- -- --
Dale A. Schnittjer 0 0 -- -- --
(3)
Executive Group (3) 0 0 -- --
Non-Executive 11,294 123,150 $6.31 to 11/29/2009 Various
Director Group (9 (4,579) (50,841) $18.13 to 2/25/2013
persons)
Non-Executive Officer 0 0 -- -- --
Employee Group (3)
2003 MEETING FEES
ELECTION
-----------------
Robert P. Bozzone Cash
Frank V. Cahouet Options
Diane C. Creel Cash
Charles Crocker Options
Paul D. Miller Options
Charles H. Noski Stock
Charles J. Queenan Cash
Michael T. Smith Options
Robert Mehrabian (3) --
Robert J. Naglieri --
(3)
John T. Kuelbs (3) --
James M. Link (3) --
Dale A. Schnittjer --
(3)
Executive Group (3) --
Non-Executive Various
Director Group (9
persons)
Non-Executive Officer --
Employee Group (3)
---------------
1. The number in italics represents the number of shares of our Common Stock
issued in 2002 to the non-employee director under the plan, and such shares
are included in the non-italicized number directly above.
2. The number in italics represents the number of shares of our Common Stock
underlying stock options issued in 2002 to the non-employee director under
the plan, and such shares are included in the non-italicized number directly
above.
3. TDY employees are not eligible to participate in the Directors Stock Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO THE
DIRECTORS STOCK PLAN.
15
ITEM 3 ON PROXY CARD -- RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
Ernst & Young LLP ("Ernst & Young") has served as independent auditors for
the Company since the November 29, 1999 spin-off. Ernst & Young had served as
independent auditors for ATI and predecessors since 1980. The Board of Directors
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
auditors.
The proposal to ratify the selection 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 2003. 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
selection of Ernst & Young, the Audit Committee will reconsider the appointment
of independent auditors. 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 SELECTION
OF THE INDEPENDENT AUDITORS.
AUDIT FEES
Ernst & Young has billed the Company $659,000, in the aggregate, for
professional services rendered by them for the audit of the Company's annual
financial statements for the Company's 2002 fiscal year and the reviews of the
interim financial statements included in the Company's Quarterly Reports on Form
10-Q for the Company's 2002 fiscal year.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
Ernst & Young did not provide the Company with any professional services
related to financial information systems design and implementation as described
in Rule 2-01 of Regulation S-X.
ALL OTHER FEES
Ernst & Young has billed the Company $560,500, in the aggregate, for
professional services rendered by Ernst & Young for all other services. Such
services principally included audit-related services in connection with the
Company's employee benefit plans, acquisition due diligence assistance
(including the acquisition of Monitor Labs Incorporated) and a special limited
review of our 2001 restructuring charge and other matters.
In making its recommendation to ratify the appointment of Ernst & Young as
the Company's independent accountants for the fiscal year ending December 28,
2003, the
16
Audit Committee considered whether the provision of non-audit services by Ernst
& Young is compatible with maintaining Ernst & Young's independence.
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 29, 2002 (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 January 22, 2002, which has
been adopted by the Board of Directors. The Audit Committee is comprised of five
directors. Except for Robert P. Bozzone, the members meet the independence
requirements under applicable provisions of the New York Stock Exchange listing
standards. Since within the three-year period after the Company's spin-off, Mr.
Bozzone had been an executive officer of Allegheny Technologies Incorporated,
the Board of Directors specially reviewed his membership, and following
discussion, determined in accordance with its business judgment and New York
Stock Exchange requirements, that his membership was required by the best
interests of the Corporation and its stockholders.
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
(Communications with Audit Committees). 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
considered the compatibility of non-audit services with Ernst & Young's
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
17
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".
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 29, 2002 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 H. Noski
Charles J. Queenan, Jr.
February 25, 2003
OTHER BUSINESS
The Company knows of no business that may be presented for consideration at
the meeting other than the three 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, 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.
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 2002.
18
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 28, 2003, 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 Private Bank and Trust Limited (1)....... 1,927,756 6.0%
(Sussie)
45 Fremont Street, 17th Floor
San Francisco, CA 94105
Richard P. Simmons (2)............................ 1,697,605 5.3%
Birchmere
Quaker Hollow Road
Sewickley, PA 15143
Singleton Group LLC (3)........................... 1,999,990 6.3%
335 North Maple Drive, Suite 177
Beverly Hills, CA 90210
The TCW Group, Inc. (4)........................... 1,851,538 5.8%
865 South Figueroa Street
Los Angeles, CA 90017
---------------
1. Barclays Private Bank and Trust Limited (Sussie), Barclays Global Investors,
NA and Barclay Global Fund Advisors filed a Schedule 13G on February 12,
2003. Barclays Private Bank and Trust Limited (Sussie) reported sole voting
and dispositive power with respect to all 1,927,756 shares. As a subset,
Barclays Global Investors, NA reported sole voting and dispositive power with
respect to 1,484,826 shares and Barclays Global Fund Advisors reported sole
voting and dispositive power with respect to 442,930 shares.
2. Mr. Simmons filed an amendment to his Schedule 13G on February 4, 2003. Mr.
Simmons reported that as of December 31, 2002, he had the sole power to
direct the voting and the disposition of all 1,697,605 shares.
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.
4. The TCW Group, Inc. filed an amendment to its Schedule 13G on February 4,
2003 on behalf of itself and direct and indirect subsidiaries primarily
engaged in the provision of investment management services. It reported
shared voting and dispositive power with respect to all 1,851,538 shares. It
reported that as of July 6, 2001, the ultimate parent of The TCW Group, Inc.
is Societe General, S.A., a corporation formed under the laws of France and
whose principal business is acting as a holding company for a global
financial services group. It also reported that, in accordance with
Securities and Exchange Commission Release No. 34-39538 dated January 12,
1998 and due to the separate management and independent operation of its
business units, Societe General, S.A. disclaims beneficial ownership of these
shares.
19
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
executive officers and (ii) all of our directors and executive officers as a
group, in each case based upon the beneficial ownership of Common Stock by such
persons as reported to us as of February 28, 2003, 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................................ 633,529(1) 2.0
Robert L. Naglieri.............................. 62,722(2) *
John T. Kuelbs.................................. 209,110(3) *
James M. Link................................... 14,039(4) *
Dale A. Schnittjer.............................. 79,260(5) *
Robert P. Bozzone............................... 774,303(6) 2.4%
Frank V. Cahouet................................ 48,229(7) *
Diane C. Creel.................................. 13,753(8) *
Charles Crocker................................. 8,661(9) *
Paul D. Miller.................................. 13,494(10) *
Charles H. Noski................................ 1,174(11) *
Charles J. Queenan, Jr.......................... 117,526(12) *
Michael T. Smith................................ 14,554(13) *
All directors and executives.................... 1,987,829(14) 6.2%
as a group (13 persons)
---------------
* Less than one percent.
1. The amount includes 51,098 shares held by The Mehrabian Living Trust, of
which Dr. Mehrabian and his wife are trustees. The amount also includes
494,292 shares of our Common Stock underlying stock options.
2. The amount includes 43,333 shares of our Common Stock underlying stock
options.
3. The amount includes 37,970 shares held jointly by Mr. Kuelbs and his wife
and 120,000 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.
4. The amount includes 9,834 shares of our Common Stock underlying stock
options.
5. The amount includes 59,595 shares of our Common Stock underlying stock
options.
6. The amount includes 500,000 shares held by the Robert P. Bozzone Grantor
Retained Annuity Trust I and 12,000 shares of our Common Stock underlying
stock options. The amount also includes 34,285 shares held by Mr. Bozzone's
wife, beneficial ownership of which is disclaimed.
7. The amount includes 15,000 shares held by a revocable trust, of which Mellon
Bank, N.A. is trustee. The amount also includes 32,702 shares of our Common
Stock underlying stock options.
8. The amount includes 12,000 shares of our Common Stock underlying stock
options.
20
9. The amount includes 7,457 shares of our Common Stock underlying stock
options.
10. The amount includes 13,494 shares of our Common Stock underlying stock
options.
11. The amount includes 916 shares held by a revocable trust, of which Mr. Noski
and his wife are trustees.
12. The amount includes 94,320 shares held jointly by Mr. Queenan and his wife
and 12,000 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 11,567 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 828,274 shares of our Common Stock
underlying stock options. The amount shown includes 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, 3, 6, 7, 11 and 12 for the number of shares held jointly and in
trusts.
2002 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.
2002 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. However, Hewitt Associates LLC has reviewed TDY's current
executive compensation program from a competitive marketplace perspective. In
addition, Watson Wyatt & Company and Hewitt Associates LLC each have from time
to time provided TDY with
21
compensation and benefits advice and data. The Committee also has considered
publicly available market and other data on executive compensation matters.
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.
- 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. "Judgment" will always be the guiding factor in base salary
determinations, as well as any other compensation issue. 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 predefined
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 2002, 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
management 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 2002, AIP awards were paid
from a pool equal to 11% of operating profit, which reflected a percentage
increase so that the pool would be aligned with the aggregate amount of
historical bonus pools. For 2003, the pool will 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
will generally be made under the 2002 Stock Incentive Plan.
22
Long-term incentives consist of three components:
Stock options are to be awarded annually to key employees who are nominated
by management to receive an award and whose award is approved by the Committee.
In practice, the amount of the award generally depends on the employee's salary
grade and position. In 2003, stock options awards will be reduced by
approximately 15%, because of the potential of having to expense stock options.
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 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) is 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
23
stock certificates for the appropriate number of shares of Company 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 in connection with the spin-off.
2002 COMPENSATION
SHORT-TERM INCENTIVES
ANNUAL INCENTIVE PLAN. In 2002, AIP awards ranged from zero to 148% of the
target incentives because the targets and levels of achievement varied by
business unit. For 2002, 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 management and 20% to
the achievement of specific individual performance objectives. For 2002, 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 2002 to the named
executives.
LONG-TERM INCENTIVES
STOCK OPTIONS. TDY made one annual award of stock options at the beginning
of 2002 under the 1999 Incentive Plan. In addition, during 2002, stock options
totaling 4,000 shares were granted to select employees, primarily as part of
recruitment and retention initiatives.
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.
All of the named executives in the Summary Compensation Table participate in the
2000-2002 PSP, although the PSP award to each of Messrs. Naglieri and Link has
been proportionately reduced since they joined TDY after the cycle commenced.
The first installment payment of awards is payable in 2003.
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.
In 2002, TDY also made the third and final installment payment of awards
under the shortened ATI Performance Share Program assumed in the spin-off by TDY
under the Employee Benefits Agreement. An aggregate of 33,545 shares was issued
to 16 participants. Of the named executives in the Summary Compensation Table,
only Dr. Mehrabian (7,645 shares) and Mr. Schnittjer (1,806 shares) participated
in this program.
24
RESTRICTED STOCK AWARD PROGRAM. On January 22, 2002, 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, 2004, and restrictions on any shares
not otherwise forfeited lapse on January 22, 2005. In order for the recipients
of grants to retain all the restricted stock granted, the Company's 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 58,790 shares
of restricted stock are currently issued and outstanding (excluding 3,621 shares
to a participant whose employment has been terminated). Of the named executives
in the Summary Compensation Table, Dr. Mehrabian (10,330 shares), Mr. Naglieri
(5,485 shares), Mr. Kuelbs (5,866 shares), Mr. Schnittjer (3,518 shares) and Mr.
Link (4,205 shares) were granted restricted stock.
The three-year performance cycle for the restricted stock awards made on
July 25, 2000 ended on December 31, 2002. As with the PSP, 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 have been forfeited. The outstanding restricted shares held by
the named executives in the Summary Compensation Table, taking into account the
20% forfeiture, are as follows: Dr. Mehrabian (7,695 shares), Mr. Kuelbs (4,244
shares) and Mr. Schnittjer (2,384 shares). Restrictions lapse on July 25, 2003.
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. 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.
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 officers (other
than Messrs. Naglieri and Link) and selected other key executives. The
Agreements for
25
Messrs. Naglieri and Link were approved when they joined the Company. In
entering into the Agreements, the Committee desired to assure that 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 and
Messrs. Naglieri, Kuelbs, and Link and one other executive) or two times
(in the case of Mr. Schnittjer 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 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 reimbursement for actual professional outplacement
services.
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
26
recommended and approved by the Committee. The Employment Agreement provides
that 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. The employment agreement terminated on December 31, 2002, 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 2002
compensation in accordance with the general compensation philosophy described
above. Effective September 1, 2002, Dr. Mehrabian's annual base salary was
increased to $590,000 from $565,000. In making such increase, the Committee
considered the fact that Dr. Mehrabian's base salary had not been increased
since June 2000. The Committee also acknowledged Dr. Mehrabian's leadership,
initiative and perseverance during a difficult year, as well as his strategic
thinking in preparing for a market turnaround and the future. Hewitt Associates
has advised the Committee that Dr. Mehrabian's base salary is within the median
range of comparably situated executives.
Dr. Mehrabian received an award of $400,000 under the Annual Incentive Plan
for 2002. In determining Dr. Mehrabian's award, the Committee considered TDY's
2002 financial performance, its successful cost reduction initiatives and Dr.
Mehrabian's leadership, initiatives and perseverance in obtaining such results.
The Committee also considered the AIP awards paid to Dr. Mehrabian for 2000 and
2001.
STOCK OPTIONS. On January 22, 2002, the Committee awarded Dr. Mehrabian
options to purchase 60,000 shares of the Company's Common Stock. As with other
grants made under the 1999 Incentive Plan on that date, Dr. Mehrabian's options
have a per share exercise price of $14.48, are exercisable in one-third
increments commencing on January 22, 2003, 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, starting in
2003. As with other participants, Dr. Mehrabian's award for this cycle is based
on 80% of target performance. 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 January 22, 2002, under the RSAP, Dr.
Mehrabian received a restricted stock award of 10,330 shares of common stock,
which was equivalent to 30% of his annual base salary as of the date of the
grant. The number of shares of common stock that Dr. Mehrabian will ultimately
receive under this 2002 grant will be, as described above, based on TDY's return
to shareholders as compared to the Russell 2000 Index through December 31, 2004.
The restrictions on any shares not otherwise forfeited lapses on January 22,
2005. On July 25, 2000, the Company granted Dr. Mehrabian 9,619 shares of
restricted 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 lapse with respect to the remaining
7,695 shares on July 25, 2003.
PENSION ARRANGEMENTS. Under Dr. Mehrabian's employment agreement, TDY has
agreed to pay following his retirement, as payments supplemental to any accrued
pension
27
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 25, 2003
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 honorifically to as "senior counsel" to a law firm that provided
services to the Company during 2002 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 is required to be described under the Securities and Exchange Commission
rules relating to disclosure of executive compensation.
28
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table sets forth information about the
compensation paid by TDY for fiscal years 2002, 2001, and 2000. It also sets
forth information about compensation paid to each of our officers who was
required to file reports under Section 16 of the Securities Exchange Act of 1934
and another officer of a significant subsidiary (the "named executives") for
fiscal 2002. Mr. Naglieri joined TDY as its Senior Vice President and Chief
Financial Officer in October 2000 and Mr. Link joined Teledyne Brown
Engineering, Inc. as its President in July 2001.
LONG-TERM COMPENSATION
ANNUAL COMPENSATION ------------------------------------
----------------------------------------- RESTRICTED
NAME AND OTHER ANNUAL STOCK OPTIONS LTIP
PRINCIPAL POSITION FISCAL YEAR SALARY($) BONUS($) COMPENSATION($)(1) AWARDS($) (SHARES) PAYOUTS($)
------------------ ------------- --------- -------- ------------------ ---------- -------- ------------
Robert Mehrabian........... 2002 573,337 400,000 -- 169,500(2) 60,000 $156,840(3)
Chairman, President and 2001 565,000 300,000 -- 0 60,000 $181,858(3)
Chief Executive Officer 2000 565,000 465,127 -- 169,505(6) 60,000 $109,843(3)
Robert J. Naglieri......... 2002 304,000 138,003 -- 90,000(2) 30,000 0
Senior Vice President 2001 300,000 83,480 317,974(8) 0 20,000 0
and Chief Financial 2000 75,000 29,589 -- 0 20,000 0
Officer (3 months)
John T. Kuelbs............. 2002 324,593 158,840 -- 96,255(2) 30,000 0
Senior Vice President, 2001 318,138 94,683 -- 0 30,000 0
General Counsel 2000 299,417 116,613 212,389(11) 93,502(6) 20,000 0
and Secretary
James M. Link.............. 2002 236,163 137,755 -- 69,000(2) 14,500 0
President, Teledyne 2001 97,703 47,300 15,333(14) 0 15,000 0
(5 1/2
Brown Engineering, Inc. months)
Dale A. Schnittjer......... 2002 194,965 71,602 -- 57,720(2) 12,000 37,050(3)
Vice President and 2001 190,550 55,974 -- 0 12,000 42,957(3)
Controller 2000 175,667 69,148 -- 52,513(6) 10,000 25,956(3)
NAME AND ALL OTHER
PRINCIPAL POSITION COMPENSATION($)
------------------ ---------------
Robert Mehrabian........... 333,808(4)
Chairman, President and 308,164(5)
Chief Executive Officer 300,742(7)
Robert J. Naglieri......... 0
Senior Vice President 0
and Chief Financial 0
Officer
John T. Kuelbs............. 3,697(9)
Senior Vice President, 2,447(10)
General Counsel 1,477(12)
and Secretary
James M. Link.............. 1,506(13)
President, Teledyne 856(15)
Brown Engineering, Inc.
Dale A. Schnittjer......... 2,829(16)
Vice President and 2,839(17)
Controller 3,046(18)
---------------
1. In accordance with applicable regulations, the amounts do not include
perquisites and other personal benefits received by the named executive
officers 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.
2. 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.
Naglieri, Kuelbs, Link and Schnittjer received 10,330 shares, 5,485 shares,
5,866 shares, 4,205 shares and 3,518 shares, respectively. On December 31,
2002, based on the closing price of a share ($15.68), the restricted shares
held by Dr. Mehrabian and Messrs. Naglieri, Kuelbs, Link and Schnittjer were
valued at $161,974, $86,005, $91,979, $65,934 and $55,162, respectively. The
restrictions lapse on January 22, 2005, subject to achievement of
performance objectives for the three-year period ending December 31, 2004.
3. 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, in 2001, he received $36,966 and 7,646 shares of
Common Stock, and in 2000, he received $36,967 and 7,646 shares of Common
Stock. In 2002, Mr. Schnittjer received $8,732 and 1,806 shares of Common
Stock, in 2001, he received $8,733 and 1,806 shares of Common Stock, and in
2000, he received $8,733 and 1,807 shares of Common Stock. On December 31,
2002, based on the closing price of such shares ($15.68), such shares issued
in 2002, 2001 and 2000 to
29
Dr. Mehrabian were valued at $119,874, $119,889 and $119,889, respectively.
On December 31, 2002, based on the closing price of a share, such shares
issued in 2002, 2001 and 2000 to Mr. Schnittjer were valued at $28,318,
$28,318 and $28,334, respectively.
4. 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 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.
5. 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.
6. Represents the formula price ($17.621875) of TDY Common Stock on the award
date of restricted stock under the Restricted Stock Award Program. On July
25, 2000, under the Restricted Stock Award Program, Dr. Mehrabian and
Messrs. Kuelbs and Schnittjer received 9,619 shares, 5,306 shares and 2,980
shares, respectively. On December 31, 2002, based on the closing price of a
TDY share ($15.68), the restricted shares held by Dr. Mehrabian and Messrs.
Kuelbs and Schnittjer were valued at $150,826, $83,198 and $46,726,
respectively. The applicable three-year performance period ended December
31, 2002, and after earlier waiving an operating profit threshold, in
January 2003, the named executives forfeited 20% of their stock as further
described on page 36. The restrictions lapse on July 25, 2003, subject to
continued employment through that date (with exceptions for retirement,
disability and death).
7. 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 $12,492.
8. Includes one-time relocation expenses of $284,424, a one-time new hire bonus
of $25,000 and $8,550 allowance with respect to his car.
9. 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.
10. 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.
11. Includes one-time relocation expenses of $206,487 (which includes tax
reimbursement of $62,089) and $5,902 in respect of a leased company car.
12. Includes $1,000 in company contributions pursuant to the Teledyne
Technologies Incorporated 401(k) Plan and $477 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 and $506 in respect of employer
matching contribution under the Employee Stock Purchase Plan.
30
14. Includes $11,010 in respect of country club dues and $4,523 in respect of a
leased company car.
15. Represents $856 paid in respect of life insurance.
16. 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.
17. 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.
18. 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 $846 in respect of a
death benefit under the Teledyne Technologies Incorporated Executive
Deferred Compensation Plan.
OPTION GRANTS IN LAST FISCAL YEAR
Shown below is information on grants to the named executives of options to
purchase TDY Common Stock pursuant to the 1999 Incentive Plan during the year
ended December 31, 2002. These grants are reflected in the Summary Compensation
Table.
POTENTIAL REALIZABLE
VALUE AT ASSUMED
INDIVIDUAL GRANTS RATES OF STOCK
--------------------------------------------------------- PRICE
% OF TOTAL APPRECIATION FOR
NUMBER OF OPTIONS OPTION TERM(1)
SECURITIES GRANTED TO EXERCISE OR ---------------------
UNDERLYING EMPLOYEES IN BASE PRICE EXPIRATION 5% 10%
NAME OPTIONS GRANTED FISCAL YEAR ($/SHARE) DATE $ $
---- --------------- ------------ ----------- ---------- -------- ----------
Robert Mehrabian.............. 60,000 9.3 $14.48 1/22/2012 546,384 1,384,643
Robert J. Naglieri............ 30,000 4.7 $14.48 1/22/2012 273,192 692,322
John T. Kuelbs................ 30,000 4.7 $14.48 1/22/2012 273,192 692,322
James M. Link................. 14,000 2.2 $14.48 1/22/2012 127,490 323,083
Dale A. Schnittjer............ 12,000 1.9 $14.48 1/22/2012 109,277 276,929
-------------------------
1. No gain to the optionee is possible without stock price appreciation, which
will benefit all stockholders commensurately. The assumed "potential
realizable values" are mathematically derived from certain prescribed rates
of stock price appreciation. The actual value of these option grants depends
on the future performance of TDY Common Stock and overall stock market
condition. The values reflected in this table may not be realized.
31
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
As shown in the table below, no options were exercised by the named
executives during 2002.
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED ON VALUE FISCAL YEAR END(#) FISCAL YEAR END($)(2)
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- ----------- ------------------------- -------------------------
Robert Mehrabian(1)....... 0 0 434,292/120,000 2,251,756/162,600
Robert L. Naglieri........ 0 0 20,000/50,000 */24,900
John T. Kuelbs............ 0 0 93,333/56,667 521,100/62,500
James M. Link............. 0 0 5,000/24,000 11,550/23,100
Dale A. Schnittjer........ 0 0 51,595/20,000 180,091/9,960
-------------------------
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. The "value of unexercised in-the-money options" is calculated by subtracting
the exercise price per share from $15.31, 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, 2002. The "*" denotes that the relevant options were
"out-of-the-money" at December 31, 2002, meaning the exercise price per share
was greater than $15.31.
ATI PERFORMANCE SHARE PROGRAM AWARDS
1998-1999 PERFORMANCE CYCLE. The following table sets forth information
about awards for the three-year award period made in 1998 under the ATI
Performance Share Program, which, as a result of the spin-off, and in accordance
with the Employee Benefits Agreement, was terminated and the award period
shortened to cover the two-year period of January 1, 1998 through December 31,
1999. The amounts included in the Payouts columns represent the payment of TDY
Common Stock and cash to the applicable named executives in 2000, 2001 and 2002.
No more amounts remain to be issued or paid under the ATI PSP.
PAYOUTS UNDER
NUMBER OF NON-STOCK PRICE-BASED PLANS
SHARES, PERFORMANCE -----------------------------------------
UNITS OR OR OTHER PERIOD 2000 2001 2002
OTHER UNTIL MATURATION PAYOUT PAYOUT PAYOUT
NAME RIGHTS(#) OR PAYOUT ($ OR #) ($ OR #) ($ OR #)
---- --------- --------------------------- ----------- ----------- -----------
Robert Mehrabian....... * 1998 - 1999 award period 7,646 shs. 7,646 shs. 7,645 shs.
(2000 - 2002 payout period) $ 36,967 $ 36,966 $ 36,966
Dale A. Schnittjer..... * 1998 - 1999 award period 1,807 shs. 1,806 shs. 1,806 shs.
(2000 - 2002 payout period) $ 8,733 $ 8,733 $ 8,732
-------------------------
* The amount of the award was based on base salary at the beginning of the award
period. Two-thirds of the award was paid in TDY Common Stock, with the number
of shares based on a price of $9.66. One-third of the award was paid in cash.
32
TDY PERFORMANCE SHARE PLAN ("PSP") AWARDS
2000-2002 PERFORMANCE CYCLE. The following table sets forth information
about PSP awards for the three-year performance period ended December 31, 2002.
The amounts included in the Estimated Future Payout columns represent the
potential payment of TDY Common Stock and cash to the named executives depending
on whether they remain employed by TDY (with exceptions for retirement,
disability and death). The 2003 payout has been made.
ESTIMATED FUTURE PAYOUTS UNDER
NUMBER OF NON-STOCK PRICE-BASED PLANS
SHARES, PERFORMANCE --------------------------------------------
UNITS OR OR OTHER PERIOD 2003 2004 2005
OTHER UNTIL MATURATION PAYOUT PAYOUT PAYOUT
NAME RIGHTS(#) OR PAYOUT ($ OR #) ($ OR #) ($ OR #)
---- --------- --------------------------- ------------ ------------ ------------
Robert Mehrabian..... * 2000 - 2002 award period 13,803 shs. 13,803 shs. 13,802 shs.
(2003 - 2005 payout period) $ 66,667 $ 66,667 $ 66,666
Robert J. Naglieri... * 2000 - 2002 award period 5,176 shs. 5,176 shs. 5,176 shs.
(2003 - 2005 payout period) $ 25,000 $ 25,000 $ 25,000
John T. Kuelbs....... * 2000 - 2002 award period 6,327 shs. 6,326 shs. 6,326 shs.
(2003 - 2005 payout period) $ 30,556 $ 30,556 $ 30,555
James M. Link........ * 2000 - 2002 award period 2,058 shs. 2,057 shs. 2,057 shs.
(2003 - 2005 payout period) $ 9,936 $ 9,936 $ 9,936
Dale A. Schnittjer... * 2000 - 2002 award period 3.037 shs. 3,037 shs. 3,036 shs.
(2003 - 2005 payout period) $ 14,667 $ 14,667 $ 14,666
-------------------------
* The amount of the award was based on base salary at the beginning of the award
period. The amounts of Messrs. Naglieri and Link were adjusted to reflect
their respective joining of the Company in October 2000 and July 2001, partway
into the award period. Two-thirds of the award is paid in TDY Common Stock,
with the number of shares based on a price of $9.66. One-third of the award is
paid in cash.
33
2003-2005 PERFORMANCE CYCLE. The following table sets forth estimated
future payments in the 2006 to 2008 payout period of TDY Common Stock and cash
to the named executives under the Performance Share Plan. The amounts included
in Estimated Future Payout columns represent the potential payments of Common
Stock and cash depending on the level of achievement (i.e, threshold, target or
maximum) of the performance goals for the three-year (2003-2005) award period.
The participants will not receive any payment of Common Stock or cash if TDY
and/or the designated business unit do not achieve the threshold level of
performance objectives during the award period.
NUMBER OF ESTIMATED FUTURE PAYOUTS UNDER
SHARES, PERFORMANCE NON-STOCK PRICE-BASED PLANS
UNITS OR OR OTHER PERIOD --------------------------------------------
OTHER UNTIL MATURATION THRESHOLD TARGET MAXIMUM
NAME RIGHTS(#) OR PAYOUT ($ OR #) ($ OR #) ($ OR #)
---- --------- --------------------------- ------------ ------------ ------------
Robert Mehrabian..... * 2003 - 2005 award period 9,850 shs. 39,399 shs. 78,798 shs.
(2006 - 2008 payout period) $ 73,750 $ 295,000 $ 590,000
Robert J. Naglieri... * 2003 - 2005 award period 4,341 shs. 17,362 shs. 34,725 shs.
(2006 - 2008 payout period) $ 32,500 $ 130,000 $ 260,000
John T. Kuelbs....... * 2003 - 2005 award period 4,620 shs. 18,480 shs. 36,959 shs.
(2006 - 2008 payout period) $ 34,592 $ 138,367 $ 276,733
James M. Link........ * 2003 - 2005 award period 2,783 shs. 11,130 shs. 22,261 shs.
(2006 - 2008 payout period) $ 20,835 $ 83,339 $ 166,678
Dale A. Schnittjer... * 2003 - 2005 award period 2,227 shs. 8,908 shs. 17,816 shs.
(2006 - 2008 payout period) $ 16,675 $ 66,699 $ 133,397
-------------------------
* The amount of the award is based on the base salary at the beginning of the
award period. One-half of the award is to be paid 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 paid
in cash.
34
TDY RESTRICTED STOCK AWARD PROGRAM ("RSAP")
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 $16.41. The restrictions lapse on January
22, 2005, subject to achievement of performance objectives for the three-year
period ending December 31, 2004. In order for a participant to retain the
restricted shares, the Company's three-year aggregate return to shareholders (as
measured by its stock price) must be at least 35% of the performance of the
Russell 2000 Index for the three-year period. If the TDY stock performance is
less than 35% of the Russell 2000 Index performance, all restricted shares would
be forfeited. If it ranges from 35% to 100%, a portion of the restricted shares
will be forfeited. If it is more than 100%, the participant does not receive
additional shares. Restricted shares are forfeited in their entirety if a
participant's employment is terminated on or prior to January 22, 2005 (with
exceptions for retirement, death and disability).
NUMBER OF
SHARES, PERFORMANCE
UNITS OR OR OTHER PERIOD
OTHER UNTIL MATURATION THRESHOLD TARGET/MAXIMUM
NAME RIGHTS(#) OR PAYOUT # ($) (1) # ($) (2)
---- ----------- -------------------------------- --------------- -----------------
Robert Mehrabian..... 10,330 shs. 2002 - 2004 performance period 3,615 ($56,683) 10,330 ($161,974)
January 22, 2005
Robert J. Naglieri... 5,485 shs. 2002 - 2004 performance period 1,919 ($30,090) 5,485 ($86,005)
January 22, 2005
John T. Kuelbs....... 5,866 shs. 2002 - 2004 performance period 2,053 ($32,191) 5,866 ($91,979)
January 22, 2005
James M. Link........ 4,205 shs. 2002 - 2004 performance period 1,471 ($23,065) 4,205 ($65,934)
January 22, 2005
Dale A. Schnittjer... 3,518 shs. 2002 - 2004 performance period 1,231 ($19,302) 3,518 ($55,162)
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, 2002 ($15.68 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,
2002 ($15.68 per share).
35
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.
Naglieri and Link) received a grant of restricted stock equal to 30% of his
annual base salary as of the date of grant. The issuance price was $17.62. On
December 31, 2002, the three-year performance cycle for such restricted stock
awards ended. The Personnel and Compensation Committee determined that 80% of
target performance was met, having waived the requirement that the Company meet
a 75% of operating profit target. Consequently, 20% of the awarded restricted
shares were forfeited in accordance with the RSAP. The following named
executives continue to hold the number of restricted shares set forth in the
following table. Restrictions lapse on July 25, 2003, subject to continued
employment through that date (with exceptions for retirement, disability and
death). Messrs. Naglieri and Link were not employed by the Company on July 25,
2000, and accordingly did not receive any restricted shares.
NUMBER OF
SHARES, PERFORMANCE
UNITS OR OR OTHER PERIOD
OTHER UNTIL MATURATION ACTUAL
NAME RIGHTS(#) OR PAYOUT # ($) (1)
---- ----------- -------------------------------- ----------------
Robert Mehrabian....................... 9,619 shs. 2000 - 2002 performance period 7,695($120,658)
July 25, 2003
John T. Kuelbs......................... 5,306 shs. 2000-2002 performance period 4,244($66,546)
July 25, 2003
Dale A. Schnittjer..................... 2,980 shs. 2000-2002 performance period 2,384($37,381)
July 23, 2003
-------------------------
1. This column represents the actual number of shares that the named executive
will retain if his employment continues through July 25, 2003. The dollar
value is based on the closing price of a share of our Common Stock at
December 31, 2002 ($15.68 per share).
36
EQUITY COMPENSATION PLANS INFORMATION
The following table summarizes information with respect to equity
compensation plans as of December 31, 2002:
NUMBER OF
SECURITIES
NUMBER OF REMAINING AVAILABLE
SECURITIES TO BE WEIGHTED- FOR FUTURE ISSUANCE
ISSUED UPON AVERAGE EXERCISE UNDER EQUITY
EXERCISE OF PRICE OF COMPENSATION
OUTSTANDING OPTIONS, PLANS (EXCLUDING
OPTIONS, WARRANTS WARRANTS OR SECURITIES REFLECTED
AND RIGHTS RIGHTS IN COLUMN (A))
PLAN CATEGORY (A) (B) (C)
------------- ----------------- ----------------- --------------------
Equity compensation plans approved by
security holders
1999 Incentive Plan................... 3,256,563(1) $14.28 429,733(2)
2002 Stock Incentive Plan............. -- -- 2,400,000
Non-Employee Director Stock
Compensation Plan................... 135,924 $13.24 47,880
Employee Stock Purchase Plan (3)...... -- -- 1,000,000
Equity compensation plans not approved
by security holders................. -- -- --
Total
-------------------------
1. The amount does not include up to 218,130 shares of our Common Stock
potentially issuable 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. 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.
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
37
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.
The following table illustrates the approximate annual pension that may
become payable to a TDY employee in the higher salary classifications under our
regular and supplemental pension plans.
ESTIMATED ANNUAL PENSIONS(1)
AVERAGE ANNUAL PAY IN HIGHEST YEARS OF SERVICE
60 MONTHS OF LAST 120 -----------------------------------------------
MONTHS OF EMPLOYMENT(2) 5 10 15 20 30(3)
----------------------------- ------- ------- ------- ------- -------
200,000............... 15,218 30,346 45,654 60,872 91,308
300,000............... 23,468 46,936 70,404 93,872 140,808
400,000............... 31,718 63,436 95,154 126,872 190,308
500,000............... 39,968 79,936 119,904 159,872 239,808
600,000............... 48,218 96,436 144,654 192,872 289,309
700,000............... 56,468 112,936 169,404 225,872 338,808
800,000............... 64,718 129,436 194,154 258,872 388,308
1,000,000.............. 81,218 162,436 243,654 324,872 487,308
1,200,000.............. 97,718 195,436 293,154 390,872 586,308
1,400,000.............. 114,218 228,436 342,654 456,872 685,308
1,600,000.............. 130,718 261,436 392,154 522,872 784,308
1,800,000.............. 147,218 294,436 441,654 588,872 883,308
-------------------------
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 the then most recently paid
five annual incentive payments.
3. The maximum amount of service credited under the pension provisions
applicable to our employees is 30 years of credited service, with some
exceptions.
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, 2002,
38
Dr. Mehrabian has an annual base salary of $590,000. 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. Naglieri, Kuelbs, Link and Schnittjer 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. Naglieri, Kuelbs and Link and one other executive) or two times
(in the case of Mr. Schnittjer 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 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
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 reimbursement for actual professional outplacement
services.
39
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 nine directors are also directors of ATI.
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. As of December 31, 2002, Dr. Mehrabian
was indebted to ATI under this program in the amount of $174,756.
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 2002, and expect
additional services to continue in 2003. While Charles J. Queenan, Jr., a member
of our Board of Directors, is
40
often referred honorifically to 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 $10
million line of credit. Mellon Bank, N.A. serves as trustee for the Teledyne
Technologies Incorporated Pension Plan and provides investment 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 provided some
recruiting services for TDY and its subsidiaries in 2002. Mr. Cahouet is a
director of Korn/Ferry International, and his son is a member of its management,
but not an executive officer.
41
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, 2002, as compared to the Standard &
Poor's 500 Composite Index, the Russell 2000 Index and the Dow Jones World
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]
DJ AEROSPACE &
TELEDYNE TECHNOLOGIES DEFENSE RUSSELL 2000 S&P 500
--------------------- -------------- ------------ -------
11/30/99 100 100 100 100
12/31/99 102 103 111 104
12/31/00 255 143 107 95
12/31/01 176 117 110 84
12/31/02 170 102 103 65
-------------------------
1. We are now using the Russell 2000 Index as a comparison instead of the
Standard & Poor's SmallCap 600 Index, because the Russell 2000 Index is a
performance measure under some of our long-term incentive compensation
programs. If $100 had been invested on November 29, 1999 in the Standard &
Poor's SmallCap 600 Index, such investment would have increased to $110 at
December 31, 2002. As shown in the graph, a similar $100 investment in the
Russell 2000 Index would have increased to $103 at December 31, 2002.
42
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 John T. Kuelbs, 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 Internet website
www.teledyne.com.
2004 ANNUAL MEETING AND STOCKHOLDER PROPOSALS
Under Rule 14a-8 of the Securities and Exchange Commission, proposals of
stockholders intended to be presented at the 2004 Annual Meeting of Stockholders
must be received no later than November 12, 2003 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
2004 Annual Meeting of Stockholders, would be no earlier than January 23, 2004
and no later than February 7, 2004. 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.
43
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.
The Company has engaged Mellon Investor Services LLC to help solicit
proxies from brokers, banks and other nominee holders of the Common Stock at a
cost of $7,500, plus expenses. 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. You will also be responsible for any costs
associated with the printing of such materials off the Internet.
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 Company stock in nominee
name (such as through a 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. You should retain your
control number appearing on your enclosed proxy card. 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, 2003
44
Mark Here
for address [ ]
change or
comments
PLEASE SEE REVERSE SIDE
Where a vote is not specified,the proxies will vote the shares represented by
the proxy FOR the election of directors and FOR proposals 2 and 3 and will vote
in accordance with their discretion on such other matters as may properly come
before the meeting.
The Board of Directors recommends votes FOR (1),(2) and (3).
WITHHOLD
(1) The election of 3 Class I directors-Nominees: FOR FOR ALL (2) Amendment to 1999 Non-Employee FOR AGAINST ABSTAIN
[ ] [ ] Director Stock Compensation Plan [ ] [ ] [ ]
01 Diane C. Creel 02 Paul D. Miller to Increase Available Shares
03 Charles H. Noski
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Instruction: To withhold for any particular nominee, write (3) Ratification of Selection of
such nominee's name on the line below. Auditors
------------------------------------------------------------
WILL
ATTEND
If you plan to attend the Annual Meeting, [ ]
please mark the WILL ATTEND box.
By checking the box to the right, you consent [ ]
to view the Company's Annual Reports and Proxy
Statements electronically via the Internet. You
understand that the Company may no longer distribute
printed materials to you for any future stockholders
meetings until your consent is revoked. You
understand that you may revoke your consent at any
time by giving written notice to the Company.
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.
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DETACH HERE FROM PROXY VOTING CARD
VOTE BY INTERNET OR TELEPHONE OR MAIL
24 hours a Day, 7 Days a Week
Internet and telephone voting is available through 11 PM Eastern Time
the day prior to annual meeting day.
Your telephone or Internet vote authorizes the named proxies to vote your shares in the same manner
as if 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 Use any touch-tone telephone to Mark, sign and date
proxy. Have your proxy card in vote your proxy. Have your proxy your proxy card
hand when you access the web OR card in hand when you call. You will OR and
site. You will be prompted to enter be prompted to enter your control return it in the
your control number, located in number, located in the box below, enclosed postage-paid
the box below, to create and and then follow the directions given. envelope.
submit an electronic ballot.
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 23, 2003
The undersigned hereby appoints Robert J. Naglieri, 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 23, 2003, 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, as transfer agent and registar for Teledyne, now
makes it easy and convenient to get current information on your stockholder
account. After a simple and secure process of establishing a Personal
Identification Number (PIN), you are ready to log in and access your account to:
o View account status o View certificate history
o View book-entry information o Make address changes
Visit us on the web at http://www.melloninvestor.com
and follow the instructions shown on this page.
Step 1: FIRST TIME USERS - ESTABLISH A PIN Step 2: Log in for Account Access Step 3: Account Status Screen
You must first establish a Personal Identification You are now ready to log in. To access You are now ready to access your
Number (PIN) online by following the directions your account please enter your: account information. Click on the
provided in the upper right portion of the web appropriate button to view or
screen as follows. You will also need your - SSN initiate transactions.
Social Security Number (SSN) available - PIN
to establish a PIN. - Then click on the [SUBMIT] Button - Certificate History
If you have more than one account, - Book-Entry Information
Investor ServiceDirect(R) is currently only you will now be asked to select the - Issue Certificate
available for domestic individual and appropriate account. - Address Change
joint accounts.
- SSN
- PIN
- Then click on the [ESTABLISH PIN] Button
Please be sure to remember your PIN,
or maintain it in a secure place for future
reference.
FOR TECHNICAL ASSISTANCE CALL 1-877-978-7778 BETWEEN
9AM-7PM MONDAY-FRIDAY EASTERN TIME
Mark Here
for address [ ]
change or
comments
PLEASE SEE REVERSE SIDE
Where a vote is not specified,the Plan Trustee will vote the shares represented
by the voting instruction card FOR the election of directors and FOR proposals 2
and 3 and will vote in accordance with their discretion on such other matters as
may properly come before the meeting.
The Board of Directors recommends votes FOR (1),(2) and (3).
WITHHOLD
(1) Election of 3 Class I Directors-Nominees: FOR FOR ALL (2) Amendment to 1999 Non-Employee FOR AGAINST ABSTAIN
[ ] [ ] Director Stock Compensation
01 Diane C. Creel 02 Paul D. Miller Plan to Increase Available Shares [ ] [ ] [ ]
03 Charles H. Noski
FOR AGAINST ABSTAIN
Instruction: To withhold for any particular nominee, write (3) Ratification of Selection of
such nominee's name on the line below. Auditors [ ] [ ] [ ]
___________________________________________________________
WILL
ATTEND
If you plan to attend the Annual Meeting, [ ]
please mark the WILL ATTEND box.
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.
-----------------------------------------------------------------------------------------------------------------------------------
DETACH HERE FROM VOTING INSTRUCTION CARD.
VOTE BY INTERNET OR TELEPHONE OR MAIL
24 hours a Day, 7 Days a Week
Internet and telephone voting is available through 11 PM Eastern Time
the day prior to annual meeting day.
Your telephone or Internet vote authorizes the Plan Trustee to vote
your shares in the same manner as if you marked, signed and
returned your voting instruction card.
Internet Telephone Mail
http://www.eproxy.com/tdy 1-800-435-6710
Use the Internet to vote. Have your Use any touch-tone telephone to Mark, sign and date
voting instruction card in hand when vote. Have your voting instruction your voting instruction
you access the web site. You will be OR card in hand when you call. You will OR card and
prompted to enter your control be prompted to enter your control return it in the
number, located in the box below, number, located in the box below, enclosed postage-paid
to create and submit an electronic and then follow the directions given. envelope.
ballot.
If you vote by Internet or by telephone, you do NOT need to
mail back your voting instruction 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 2003 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 23, 2003, 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)
------------------------------------------------------------------------------------------------
_________________________________________________________________________________________________
_________________________________________________________________________________________________
_________________________________________________________________________________________________
-------------------------------------------------------------------------------------------------
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FOLD AND DETACH HERE
[TELEDYNE 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 18, 2003. If the
Trustee does not receive your instructions by April 18, 2003, 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.