SCHEDULE 14A
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INFORMATION REQUIRED IN PROXY STATEMENT
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UNISYS CORPORATION
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Unisys Corporation
Unisys Way
Blue Bell, PA 19424-0001
[UNISYS LOGO]
March 18, 2004
Dear Fellow Stockholder:
It is my pleasure to invite you to the Unisys 2004 Annual Meeting of
Stockholders. This year's meeting will be held on Thursday, April 22, 2004, at
The Hilton Inn at Penn, which is located at 3600 Sansom Street in Philadelphia,
Pennsylvania. The meeting will begin at 9:30 a.m.
Unisys delivered strong results in 2003. We achieved double-digit growth in
our earnings and generated substantial cash flow from operations. We have now
steadily grown our earnings and operational cash flow for three consecutive
years in the midst of a highly volatile period for the information technology
industry. We are proud of this record of financial consistency and the focus and
execution that Unisys people are showing in the marketplace.
Whether or not you plan to attend the annual meeting, I urge you to take a
moment to vote on the items in this year's proxy statement. Most stockholders
have a choice of voting their shares over the Internet, by telephone, or by
completing, signing, and returning a proxy card. Voting by any of these means
takes only a few minutes, and it will ensure that your shares are represented at
the meeting. If you vote over the Internet, you will also be given the
opportunity to access future proxy statements and annual reports over the
Internet instead of receiving paper copies in the mail. Electronic access saves
the company the cost of producing and mailing these documents. I encourage you
to take advantage of it.
I look forward to seeing you at the annual meeting and to reporting on our
accomplishments in 2003 and our priorities for 2004.
Sincerely,
/s/ Larry A. Weinbach
Lawrence A. Weinbach
Chairman, President and
Chief Executive Officer
[UNISYS LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 22, 2004
Unisys Corporation will hold its 2004 Annual Meeting of Stockholders at The
Hilton Inn at Penn, 3600 Sansom Street, Philadelphia, Pennsylvania, on Thursday,
April 22, 2004, at 9:30 a.m. to:
1. elect four directors and
2. transact any other business properly brought before the meeting.
Only record holders of Unisys common stock at the close of business on
February 27, 2004 will be entitled to vote at the annual meeting.
By Order of the Board of Directors,
/s/ Nancy Straus Sundheim
Nancy Straus Sundheim
Senior Vice President, General Counsel
and Secretary
Blue Bell, Pennsylvania
March 18, 2004
IMPORTANT
YOUR VOTE IS IMPORTANT. MOST STOCKHOLDERS WILL HAVE A CHOICE OF VOTING OVER THE
INTERNET, BY TELEPHONE, OR BY USING A TRADITIONAL PROXY CARD. PLEASE CHECK THE
INFORMATION YOU HAVE RECEIVED TO SEE WHICH OPTIONS ARE AVAILABLE TO YOU.
TABLE OF CONTENTS
PROXY STATEMENT............................................. 1
Required Vote............................................. 1
Voting Procedures and Revocability of Proxies............. 1
ELECTION OF DIRECTORS....................................... 2
Information Regarding Nominees and Directors.............. 2
Board Meetings; Attendance at Annual Meetings............. 6
Independence of Directors................................. 6
Committees................................................ 6
Code of Ethics and Business Conduct....................... 7
Corporate Governance Guidelines........................... 7
Stock Ownership Guidelines................................ 9
Communications with Directors............................. 9
Audit Committee Report.................................... 9
Relationship with Independent Auditors.................... 10
EQUITY COMPENSATION PLAN INFORMATION........................ 11
SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT................................................ 12
EXECUTIVE COMPENSATION...................................... 14
Summary Compensation Table................................ 14
Option Grants in Last Fiscal Year......................... 15
Option Exercises and Fiscal Year-End Values............... 15
Pension Plans............................................. 15
Employment Agreements..................................... 16
Change in Control Employment Agreements................... 17
Transactions with Management.............................. 18
Compensation of Directors................................. 18
REPORT OF THE COMPENSATION COMMITTEE........................ 19
Compensation Program and Policies......................... 19
Base Salary............................................... 19
Variable Incentive Compensation........................... 19
Long-Term Incentive Awards................................ 20
Compensation of the Chief Executive Officer............... 20
Deductibility of Executive Compensation................... 20
STOCK PERFORMANCE GRAPH..................................... 22
GENERAL MATTERS............................................. 23
Section 16(a) Beneficial Ownership Reporting Compliance... 23
Policy on Confidential Voting............................. 23
Stockholder Proposals and Nominations..................... 23
Electronic Access to Proxy Materials and Annual Report.... 23
Householding of Proxy Statement and Annual Report......... 24
Other Matters............................................. 24
APPENDIX A.................................................. A-1
Audit Committee Charter..................................... A-1
APPENDIX B.................................................. B-1
Audit and Non-Audit Services Pre-Approval Policy............ B-1
UNISYS CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
APRIL 22, 2004
The Board of Directors of Unisys Corporation solicits your proxy for use at
the 2004 Annual Meeting of Stockholders to be held on April 22, 2004 and at any
adjournments. At the annual meeting, stockholders will be asked to elect four
directors and transact any other business properly brought before the meeting.
The record date for the annual meeting is February 27, 2004. Only holders
of record of Unisys common stock as of the close of business on the record date
are entitled to vote at the meeting. On the record date, 332,913,312 shares of
common stock were outstanding. The presence, in person or by proxy, of a
majority of those shares will constitute a quorum at the meeting.
This proxy statement, the proxy/voting instruction card and the annual
report of Unisys, including the financial statements for 2003, are being mailed
and made available on the Internet on or about March 18, 2004.
REQUIRED VOTE
Each share of Unisys common stock outstanding on the record date is
entitled to one vote on each matter to be voted upon. Directors will be elected
by a plurality of the votes cast (i.e., the nominees receiving the greatest
number of votes will be elected). Abstentions and broker non-votes are not
counted for purposes of the election of directors.
VOTING PROCEDURES AND REVOCABILITY OF PROXIES
Your vote is important. Shares may be voted at the annual meeting only if
you are present in person or represented by proxy. Most stockholders have a
choice of voting (a) by completing a proxy/voting instruction card and mailing
it in the postage-paid envelope provided, (b) over the Internet or (c) by
telephone using a toll-free telephone number. Check the materials you have
received to see which options are available to you and to obtain the applicable
web site or telephone number. If you elected to receive proxy materials over the
Internet, you should have already received e-mail instructions on how to vote
electronically. Please be aware that if you vote over the Internet, you may
incur costs associated with your electronic access, such as usage charges from
Internet access providers and telephone companies, for which you will be
responsible.
The telephone and Internet voting procedures are designed to authenticate
stockholders' identities by use of a control number, to allow stockholders to
give their voting instructions and to confirm that stockholders' instructions
have been recorded properly. The Company has been advised by counsel that the
telephone and Internet voting procedures are consistent with the requirements of
applicable law.
You may revoke your proxy at any time before it is exercised by writing to
the Corporate Secretary of Unisys, by timely delivery of a properly executed
later-dated proxy (including an Internet or telephone vote) or by voting in
person at the meeting.
The method by which you vote will in no way limit your right to vote at the
meeting if you later decide to attend in person. If your shares are held in the
name of a bank, broker or other holder of record, you must obtain a proxy,
executed in your favor, from the holder of record to be able to vote at the
meeting.
If you properly complete and return your proxy, and do not revoke it, the
proxy holders will vote your shares in accordance with your instructions. If
your properly completed proxy gives no instructions, the proxy holders will vote
your shares FOR the election of directors and in their discretion on any other
matters that properly come before the annual meeting.
If you are a participant in the Unisys Savings Plan, the proxy/voting
instruction card will serve as voting instructions to the plan trustee for any
whole shares of Unisys common stock credited to your account as of February 27,
2004. The trustee will vote those shares in accordance with your instructions if
it receives your completed proxy by April 16, 2004. If the proxy is not timely
received, or if you give no instructions on a matter to be voted upon, the
trustee will vote the shares credited to your account in the same proportion as
it votes those shares for which it received proper instructions from other
participants.
ELECTION OF DIRECTORS
The Board of Directors currently consists of ten members, divided into
three classes. One class of directors is elected each year to hold office for a
three-year term. The four directors whose terms expire in 2004, Henry C. Duques,
Clayton M. Jones, Theodore E. Martin and Lawrence A. Weinbach, have been
nominated for reelection. The remaining six directors will continue to serve as
set forth below. Each of the nominees has agreed to serve as a director if
elected, and Unisys believes that each nominee will be available to serve.
However, the proxy holders have discretionary authority to cast votes for the
election of a substitute should any nominee not be available to serve as a
director.
INFORMATION REGARDING NOMINEES AND DIRECTORS
The names and ages of the nominees and directors, their principal
occupations and employment during the past five years, and other information
regarding them are as follows.
2
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
[DUQUES PHOTO]
HENRY C. DUQUES
Mr. Duques, 60, is a retired Chairman and Chief Executive
Officer of First Data Corporation, an electronic commerce and
payment services company. He is a Director of First Data
Corporation, CheckFree Corporation and SunGard Data Systems,
Inc. He has served as a Director of Unisys since 1998 and is a
member of the Compensation Committee.
[JONES PHOTO]
CLAYTON M. JONES
Mr. Jones, 54, is a Director and Chairman, President and Chief
Executive Officer of Rockwell Collins, Inc., a global aviation
electronics and communications company. He has also held the
positions of Executive Vice President of that company and
Senior Vice President of its former parent company, Rockwell
International Corporation. He has served as a Director of
Unisys since February 2004 and is a member of the Compensation
Committee.
[MARTIN PHOTO]
THEODORE E. MARTIN
Mr. Martin, 64, is a retired President and Chief Executive
Officer of Barnes Group Inc., a manufacturer and distributor
of automotive and aircraft components and maintenance
products. He has also held the position of Executive Vice
President-Operations of that company. He is a Director of
Ingersoll-Rand Company, Applera Corporation and C.R. Bard,
Inc. He has served as a Director of Unisys since 1995 and is a
member of the Audit Committee and the Compensation Committee.
[WEINBACH PHOTO]
LAWRENCE A. WEINBACH
Mr. Weinbach, 64, is Chairman of the Board, President and
Chief Executive Officer of Unisys. He previously served in the
position of Managing Partner-Chief Executive of Andersen
Worldwide, a global professional services organization. He is
a Director of Avon Products, Inc. and UBS AG. He has served as
a Director of Unisys since 1997 and is a member of the Finance
Committee.
3
MEMBERS OF THE BOARD CONTINUING IN OFFICE
TERM EXPIRING IN 2005
[BOLDUC PHOTO]
J. P. BOLDUC
Mr. Bolduc, 64, is Chairman and Chief Executive Officer of JPB
Enterprises, Inc., a merchant banking, venture capital and
real estate investment holding company. He previously served
in the positions of President and Chief Executive Officer,
Vice Chairman, and Chief Operating Officer of W. R. Grace &
Co., a specialty chemicals and health care company. Since
April 2003 he has also served as Chief Executive Officer of J.
A. Jones, a group of private companies involved in
construction and related services. He is a Director of
Proudfoot PLC and EnPro Industries, Inc. He has served as a
Director of Unisys since 1992 and is a member of the Finance
Committee.
In February 2003, the SEC and Mr. Bolduc settled public
administrative and cease-and-desist proceedings. Without
admitting or denying the SEC's findings, Mr. Bolduc consented
to the entry of a cease-and-desist order in which the SEC
found that, between 1991 and 1995, while Mr. Bolduc was
president and either chief operating officer or chief
executive officer of W. R. Grace & Co. and a member of its
board of directors, Grace fraudulently used reserves to defer
income earned by a subsidiary, primarily to smooth earnings of
its health care segment, in violation of the antifraud
provisions of the federal securities laws, as well as the
provisions that require public companies to keep accurate
books and records, maintain appropriate internal accounting
controls and file accurate annual and quarterly reports. The
order generally finds that Mr. Bolduc, through his actions or
omissions, was a cause of these violations. The order also
notes that, during the period in question, Mr. Bolduc did not
sell any of the substantial number of Grace shares that he
owned. The SEC ordered Mr. Bolduc to cease and desist from
committing or causing any violation or future violation of the
antifraud and reporting requirements of the federal securities
laws. It did not impose any fines, penalties or bars on Mr.
Bolduc.
[DUDERSTADT PHOTO]
JAMES J. DUDERSTADT
Dr. Duderstadt, 61, is President Emeritus and University
Professor of Science and Engineering at the University of
Michigan. He is a Director of CMS Energy Corporation. He has
served as a Director of Unisys since 1990 and is a member of
the Nominating and Corporate Governance Committee.
4
[FLETCHER PHOTO]
DENISE K. FLETCHER
Ms. Fletcher, 55, is a former Executive Vice President and
Chief Financial Officer of MasterCard International, an
international payment solutions company. Before joining
MasterCard, she served as Chief Financial Officer of Bowne
Inc., a global document management and information services
provider. She has served as a Director of Unisys since 2001
and is a member of the Audit Committee and the Nominating and
Corporate Governance Committee.
MEMBERS OF THE BOARD CONTINUING IN OFFICE
TERM EXPIRING IN 2006
[FOSLER PHOTO]
GAIL D. FOSLER
Ms. Fosler, 56, is Executive Vice President and Chief
Economist of The Conference Board, a business-sponsored,
nonprofit research organization. She is a Director of Baxter
International Inc., Caterpillar, Inc. and DBS Holdings
(Singapore). She has served as a Director of Unisys since 1993
and is a member of the Audit Committee and the Finance
Committee.
[HOGAN PHOTO]
RANDALL J. HOGAN
Mr. Hogan, 48, is a Director and Chairman and Chief Executive
Officer of Pentair, Inc., a diversified manufacturer of power
tool products, water and wastewater transport, storage and
treatment products and enclosures for the protection of
controls and components. He has also held the positions of
President and Chief Operating Officer and Executive Vice
President of that company and President of its Electronic
Enclosures Group. He has served as a Director of Unisys since
March 2004 and is a member of the Nominating and Corporate
Governance Committee.
[HUSTON PHOTO]
EDWIN A. HUSTON
Mr. Huston, 65, is a retired Vice Chairman of Ryder System,
Inc., an international logistics and transportation solutions
company. He has also served as Senior Executive Vice
President-Finance and Chief Financial Officer of that company.
He is a Director of Answerthink, Inc., Enterasys Networks,
Inc. and Kaman Corporation. He has served as a Director of
Unisys since 1993 and is a member of the Audit Committee.
5
BOARD MEETINGS; ATTENDANCE AT ANNUAL MEETINGS
The Board of Directors held six meetings in 2003. During 2003, all
directors attended at least 75 percent of the meetings of the Board of Directors
and standing Committees on which they served.
It is the Company's policy that all directors should attend the annual
meeting of stockholders. All of the Company's directors attended the 2003 annual
meeting.
INDEPENDENCE OF DIRECTORS
All of the Company's directors other than Mr. Weinbach meet the
independence requirements prescribed by the New York Stock Exchange and, in the
case of members of the Audit Committee, also meet the audit committee
independence requirements prescribed by the SEC. In assessing whether a director
has a material relationship with Unisys (either directly or as a partner,
stockholder or officer of an organization that has a relationship with Unisys),
the Board uses the criteria outlined below in paragraph 2 of "Corporate
Governance Guidelines." All non-management directors other than Mr. Bolduc met
these criteria in 2003. During 2003, Mr. Bolduc owned 43% of a company that
provides marketing services. In 2003, that company provided services to Unisys
for fees of $193,800, an amount which exceeded 1% of that company's 2003
revenue. Mr. Bolduc has informed the Board that he has terminated all
relationships with that company. In light of this, the Board has concluded that
Mr. Bolduc does not have a material relationship with Unisys and is independent.
COMMITTEES
The Board of Directors has a standing Audit Committee, Compensation
Committee, Finance Committee and Nominating and Corporate Governance Committee.
The specific functions and responsibilities of each committee are set forth in
its charter, which is available on the Company's Internet web site at
www.unisys.com in the Investors section under Corporate Governance and Board of
Directors. The Audit Committee charter is also attached as Appendix A to this
Proxy Statement.
The Audit Committee assists the Board in its oversight of the integrity of
the Company's financial statements and its financial reporting and disclosure
practices, the soundness of its systems of internal financial and accounting
controls, the independence and qualifications of its independent auditors, the
performance of its internal and independent auditors, the Company's compliance
with legal and regulatory requirements and the soundness of its ethical and
environmental compliance programs. The Audit Committee held nine meetings in
2003. As of March 2, 2004, its members are Ms. Fletcher, Ms. Fosler, Mr. Huston
(chair) and Mr. Martin. The Board has determined that each of Ms. Fletcher, Mr.
Huston and Mr. Martin is an audit committee financial expert as defined by the
SEC.
The Compensation Committee oversees the compensation of the Company's
executives, the Company's executive management structure, the
compensation-related policies and programs involving the Company's executive
management and the level of benefits of officers and key employees. It also
oversees the Company's diversity programs. The Compensation Committee held six
meetings in 2003. As of March 2, 2004, its members are Mr. Duques (chair), Mr.
Jones and Mr. Martin.
The Finance Committee oversees the Company's financial affairs, including
its capital structure, financial arrangements, capital spending and acquisition
and disposition plans. It also
6
oversees the management and investment of funds in the pension, savings and
welfare plans sponsored by the Company. The Finance Committee held six meetings
in 2003. As of March 2, 2004, its members are Mr. Bolduc (chair), Ms. Fosler and
Mr. Weinbach.
The Nominating and Corporate Governance Committee identifies and reviews
candidates and recommends to the Board of Directors nominees for membership on
the Board of Directors. It also oversees the Company's corporate governance. In
identifying candidates for Board membership, the Nominating and Corporate
Governance Committee considers a number of factors including independence,
experience, strength of character, mature judgment, technical skills, diversity,
age and the extent to which the individual would fill a present need on the
Board. In early 2004, the committee recommended, and the Board elected, two new
directors to fill vacancies created by retiring directors. As part of the
selection process, the committee also looked for candidates who were in a senior
management position in a public company and who had a background in engineering,
technology or consulting. The committee retained a third-party search firm to
assist in identifying qualified candidates. The committee will consider
recommendations on director candidates received from stockholders and other
qualified sources. Stockholder recommendations must be in writing and addressed
to the Chairman of the Nominating and Corporate Governance Committee, c/o
Corporate Secretary, Unisys Corporation, Unisys Way, Blue Bell, Pennsylvania
19424. The Nominating and Corporate Governance Committee held four meetings in
2003. As of March 2, 2004, its members are Dr. Duderstadt (chair), Ms. Fletcher
and Mr. Hogan.
CODE OF ETHICS AND BUSINESS CONDUCT
Unisys has a code of ethics, the Unisys Code of Ethics and Business
Conduct, that applies to all employees, officers (including the chief executive
officer, chief financial officer and controller) and directors. The code is
posted on the Company's Internet web site at www.unisys.com in the Investors
section under Corporate Governance and Board of Directors. The Company intends
to post amendments to or waivers from the code (to the extent applicable to the
Company's chief executive officer, chief financial officer or controller) at
this location on its web site.
CORPORATE GOVERNANCE GUIDELINES
The Board of Directors has adopted Guidelines on Significant Corporate
Governance Issues. The full text of these guidelines is available on the
Company's Internet web site at www.unisys.com in the Investors section under
Corporate Governance and Board of Directors. Among other matters, the guidelines
cover the following:
1. A majority of the Board of Directors shall qualify as independent
under the listing standards of the New York Stock Exchange.
2. The Nominating and Corporate Governance Committee reviews annually
with the Board the independence of outside directors. Following this
review, only those directors who meet the independence qualifications
prescribed by the New York Stock Exchange and who the Board affirmatively
determines have no material relationship with the Company will be
considered independent. The guidelines provide that the following
commercial or charitable relationships will not be considered to be
material relationships that would impair independence: (a) if a director is
an executive officer or partner of, or owns more than a ten percent equity
interest in, a company that does business with Unisys, and sales to or
purchases from Unisys are less than one percent of the annual revenues of
that company
7
and (b) if a director is an officer, director or trustee of a charitable
organization, and Unisys donates less than one percent of that
organization's charitable receipts.
3. Directors should not, except in rare circumstances approved by the
Board, draw any consulting, legal or other fees from the Company. In no
event shall any member of the Audit Committee receive any compensation from
the Company other than directors' fees.
4. Membership on the Audit, Compensation and Nominating and Corporate
Governance Committees is limited to directors who meet the independence
criteria of the New York Stock Exchange.
5. Directors may not stand for election after age 70 or continue to
serve beyond the annual stockholders' meeting following the attainment of
age 70.
6. Directors should volunteer to resign from the Board upon a change
in position, including retirement, from the position they held when they
were elected to the Board. The Board, through the Nominating and Corporate
Governance Committee, will then make a determination whether continued
Board membership is appropriate under the circumstances. In addition, if
the Company's chief executive officer resigns from that position, he is
expected to offer his resignation from the Board at the same time.
7. The Nominating and Corporate Governance Committee is responsible
for determining the appropriate skills and characteristics required of
Board members in the context of its current make-up, and will consider
factors such as independence, experience, strength of character, mature
judgment, technical skills, diversity and age in its assessment of the
needs of the Board.
8. The Company should maintain an orientation program for new
directors and continuing education programs for all directors.
9. The Board will conduct an annual self-evaluation to determine
whether it and its committees are functioning effectively.
10. The non-management directors should meet in executive session,
without the chief executive officer and other members of management, on a
regularly scheduled basis. They may also meet in executive session at any
time upon request. The position of presiding director for these meetings
will rotate, meeting by meeting, among the chairpersons of the Audit
Committee, the Compensation Committee and the Finance Committee.
11. The non-management directors will evaluate the performance of the
chief executive officer annually and will meet in executive session, led by
the chairperson of the Compensation Committee, to review this performance.
The evaluation is based on objective criteria, including performance of the
business, accomplishment of long-term strategic objectives and development
of management. Based on this evaluation, the Compensation Committee will
recommend, and the members of the Board who meet the independence criteria
of the New York Stock Exchange will determine and approve, the compensation
of the chief executive officer.
12. To assist the Board in its planning for the succession to the
position of chief executive officer, the chief executive officer is
expected to provide an annual report on succession planning to the
Compensation Committee.
8
13. Board members have complete access to Unisys management. Members
of senior management who are not Board members regularly attend Board
meetings, and the Board encourages senior management, from time to time, to
bring into Board meetings other managers who can provide additional
insights into the matters under discussion.
14. The Board and its committees have the right at any time to retain
independent outside financial, legal or other advisors.
STOCK OWNERSHIP GUIDELINES
In 1998, the Board established stock ownership guidelines for both
directors and elected officers in order to more closely link their interests
with those of stockholders. Under the guidelines, directors and elected officers
are expected to own, within specified time periods, Unisys stock or stock units
having a value equal to a multiple of their annual retainer, in the case of
directors, or their base salary, in the case of elected officers. Stock options,
including vested stock options, do not count toward fulfillment of the ownership
guidelines.
COMMUNICATIONS WITH DIRECTORS
Stockholders may send communications to the Board of Directors or to the
non-management directors as a group by writing to them c/o Corporate Secretary,
Unisys Corporation, Unisys Way, Blue Bell, Pennsylvania 19424. All
communications directed to Board members will be delivered to them.
AUDIT COMMITTEE REPORT
In performing its oversight responsibilities and in accordance with its
responsibilities under its charter, the Audit Committee has reviewed and
discussed the audited financial statements with management and with Ernst &
Young LLP, the Company's independent auditors. The Committee has also discussed
with Ernst & Young LLP the matters required to be discussed by Statement on
Auditing Standards No. 61 (Communication with Audit Committees). In addition,
the Committee has discussed with Ernst & Young LLP their independence and has
received from them the written disclosures required by the Independence
Standards Board. The Committee has also considered the compatibility of
audit-related services, tax services and other non-audit services with the
auditors' independence.
Based on these reviews and discussions, the Committee recommended to the
Board of Directors that the audited financial statements be included in the
Annual Report on Form 10-K for the year ended December 31, 2003 for filing with
the SEC.
Audit Committee (2003)
James J. Duderstadt*
Denise K. Fletcher
Gail D. Fosler
Edwin A. Huston
Theodore E. Martin
---------------
* Effective March 2, 2004, Dr. Duderstadt moved from the Audit Committee to the
Nominating and Corporate Governance Committee.
9
RELATIONSHIP WITH INDEPENDENT AUDITORS
Ernst & Young LLP has served as the Company's independent auditors since
1986. Under the Sarbanes-Oxley Act, Ernst & Young was required to rotate the
partner responsible for the Unisys engagement after the completion of the 2003
audit. The 2004 audit plan will be considered by the Audit Committee at the
committee's regularly scheduled meeting in late April 2004. The Audit Committee
anticipates engaging independent auditors for 2004 after it has an opportunity
to review and approve the plan in accordance with its responsibilities as
outlined in the Audit Committee Charter. Representatives of Ernst & Young will
be present at the annual meeting and will have the opportunity to make a
statement if they desire to do so and to respond to appropriate questions asked
by stockholders.
Ernst & Young LLP has billed the Company the following fees for
professional services rendered in respect of the years ended December 31, 2003
and 2002 (in millions of dollars):
2003 2002
---- ----
Audit Fees..................................... $4.4 $3.5*
Audit-Related Fees............................. 1.3 1.6
Tax Fees....................................... 2.0 2.0
All Other Fees................................. -- .2
---------------
* This amount includes an additional $0.2 million in expenses that were not
shown in last year's proxy statement.
Audit fees consist of fees for the audit and review of the Company's
financial statements, statutory audits, comfort letters, consents and assistance
with and review of documents filed with the SEC. Audit fees in 2003 increased
primarily because the Company reduced the amount of internal audit assistance it
provided to Ernst & Young in order to use those resources to meet the
requirements of the Sarbanes-Oxley Act. Audit-related fees consist of fees for
employee benefit plan audits, accounting advice regarding specific transactions,
internal control reviews (2002 only) and various attestation engagements. Tax
fees generally represent fees for tax compliance and advisory services.
The Audit Committee annually reviews and pre-approves the services that may
be provided by the independent auditors. The committee has also adopted an Audit
and Non-Audit Services Pre-Approval Policy that contains a list of pre-approved
services, which the committee may revise from time to time. The pre-approval
policy is attached as Appendix B to this Proxy Statement. The Audit Committee
has delegated pre-approval authority, up to a fee limitation of $150,000 per
service, to the chairman of the committee. The chairman of the committee will
report any such pre-approval decision to the Audit Committee at its next
scheduled meeting.
10
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information as of December 31, 2003 with
respect to compensation plans under which Unisys common stock is authorized for
issuance.
NUMBER OF SECURITIES
NUMBER OF SECURITIES REMAINING AVAILABLE FOR
TO BE ISSUED WEIGHTED-AVERAGE FUTURE ISSUANCE UNDER
UPON EXERCISE OF EXERCISE PRICE OF EQUITY COMPENSATION PLANS
OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, (EXCLUDING SECURITIES
WARRANTS AND RIGHTS WARRANTS AND RIGHTS REFLECTED IN COLUMN (A))
PLAN CATEGORY (A) (B) (C)
------------- ------------------------- -------------------- -------------------------
Equity compensation
plans approved by 33.441 million(1) $ 20.69(3) 29.031 million(4)
security holders................. .247 million(2) $ 0
Equity compensation
plans not approved by 8.057 million(6) $ 10.45 .044 million(8)
security holders(5).............. .231 million(7) $ 0
Total............................ 41.976 million $ 18.70 29.075 million
---------------
(1) Represents stock options, including options for approximately 3,500 shares
granted under compensation plans assumed in connection with acquisitions.
(2) Represents restricted share units.
(3) Weighted-average exercise price of outstanding options under compensation
plans assumed in connection with acquisitions is $28.25.
(4) Comprises 19.560 million shares under the Unisys Corporation 2003 Long-Term
Incentive and Equity Compensation Plan (the "2003 Plan") and 9.471 million
shares under the Unisys Corporation Employee Stock Purchase Plan.
(5) Comprises the Unisys Corporation Director Stock Unit Plan (the "Stock Unit
Plan") described at page 18 and the 2002 Stock Option Plan (the "2002
Plan"). Under the 2002 Plan, stock options could be granted to key employees
other than officers to purchase the Company's common stock at no less than
100% of fair market value at the date of grant. Options generally have a
maximum duration of ten years and become exercisable in four equal annual
installments beginning one year after the date of grant. The 2002 Plan was
replaced by the 2003 Plan, approved by stockholders in 2003. No further
awards will be made under the 2002 Plan, and no shares (other than shares
subject to outstanding options and other awards previously made) are
available for future issuance under the 2002 Plan.
(6) Represents options granted under the 2002 Plan.
(7) Represents stock units granted under the Stock Unit Plan.
(8) Stock Unit Plan only.
11
SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Shown below is information with respect to persons or groups that
beneficially own more than five percent of Unisys common stock. This information
is derived from Schedules 13G filed by such persons or groups in 2004.
NAME AND ADDRESS OF NUMBER OF SHARES PERCENT
BENEFICIAL OWNER OF COMMON STOCK OF CLASS
------------------- ---------------- --------
Brandes Investment Partners, LLC............................ 27,793,626(1) 8.4
Brandes Investment Partners, Inc.
Brandes Worldwide Holdings, LP
Charles H. Brandes
Glenn R. Carlson
Jeffrey A. Busby
11988 El Camino Real, Suite 500
San Diego, CA 92130
Citigroup Inc. ............................................. 18,245,765(2)(3) 5.5(3)
399 Park Avenue
New York, NY 10043
Merrill Lynch & Co. Inc. ................................... 21,705,831(2) 6.57
(on behalf of Merrill Lynch Investment
Managers)
World Financial Center, North Tower
250 Vesey Street
New York, NY 10381
---------------
(1) Shared dispositive power has been reported for 27,793,626 shares. Shared
voting power has been reported for 20,661,373 shares.
(2) Shared dispositive and shared voting power has been reported for all shares.
(3) Includes 17,081,907 shares held by Citigroup Global Markets Holdings Inc.,
388 Greenwich Street, New York, NY 10013.
12
Shown below are the number of shares of Unisys common stock (or stock
units) beneficially owned as of March 1, 2004, by all directors and nominees,
each of the executive officers named on page 14, and all directors and officers
of Unisys as a group. No individual named below beneficially owns more than one
percent of the outstanding shares of Unisys common stock. All directors and
officers as a group beneficially own 2.1% of the shares of Unisys common stock
deemed outstanding.
ADDITIONAL SHARES OF
BENEFICIAL NUMBER OF SHARES COMMON STOCK DEEMED
OWNER OF COMMON STOCK(1)(2) BENEFICIALLY OWNED(1)(3)
---------- ---------------------- -------------------------
J. P. Bolduc................................... 32,632 26,500
James J. Duderstadt............................ 19,760 26,500
Henry C. Duques................................ 26,794 26,500
Denise K. Fletcher............................. 6,890 9,000
Gail D. Fosler................................. 33,430 26,500
George R. Gazerwitz............................ 15,989 625,000
Janet B. Haugen................................ 22,828 327,250
Randall J. Hogan............................... 0 0
Edwin A. Huston................................ 22,055 26,500
Clayton M. Jones............................... 173 0
Theodore E. Martin............................. 58,746 26,500
Joseph W. McGrath.............................. 48,851 436,250
Janet B. Wallace............................... 11,357 263,750
Lawrence A. Weinbach........................... 255,707 3,163,000
All directors and officers as a group.......... 759,626 6,699,050
---------------
(1) Includes shares reported by directors and officers as held directly or in
the names of spouses, children or trusts as to which beneficial ownership
may have been disclaimed.
(2) Includes:
(a) Shares held under the Unisys Savings Plan, a qualified plan under
Sections 401(a) and 401(k) of the Internal Revenue Code, as follows:
Mr. Gazerwitz, 2,989; Ms. Haugen, 1,292; Mr. McGrath, 1,118; Ms.
Wallace, 1,108; Mr. Weinbach, 1,064; officers as a group, 24,315. With
respect to such shares, plan participants have authority to direct
voting.
(b) Stock units deferred under the Unisys Corporation Deferred Compensation
Plan as follows: Mr. Gazerwitz, 13,000; Mr. McGrath, 34,894; officers
as a group, 83,186. Deferred stock units are payable in shares of
Unisys common stock upon termination of employment or any date at least
five years (two years for stock units deferred after January 1, 2001)
after the deferral. They may not be voted.
(c) 60,000 restricted share units for officers as a group. Restricted share
units are payable in shares of Unisys common stock upon vesting. They
may not be voted.
(d) Stock units, as described on page 18, for directors as follows: Mr.
Bolduc, 19,382; Dr. Duderstadt, 18,710; Mr. Duques, 21,794; Ms.
Fletcher, 6,890; Ms. Fosler, 17,280; Mr. Huston, 21,055; Mr. Jones,
173; and Mr. Martin, 38,746. They may not be voted.
(3) Shares shown are shares subject to options exercisable within 60 days
following March 1, 2004
13
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the annual and
long-term compensation paid to the chief executive officer and the other four
most highly compensated executive officers of Unisys in 2003 (the "Named
Officers") for services rendered in all capacities to Unisys for 2003, 2002 and
2001.
LONG-TERM COMPENSATION
---------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------------------------------------------- ----------------------- -------
OTHER SECURITIES
ANNUAL RESTRICTED UNDERLYING LTIP ALL OTHER
COMPEN- STOCK OPTIONS/ PAYOUTS COMPEN-
NAME AND SALARY(1) BONUS(1) SATION(2) AWARD(S) SARS(3) (3) SATION(4)
PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($) ($)
------------------ ---- ---------- --------- ------------ ---------- ---------- ------- ----------
Lawrence A. Weinbach....... 2003 1,400,000 770,000 190,776 -- 300,000 -- 4,000
Chairman, President and 2002 1,380,000 1,050,000 249,689 -- 1,500,000 -- 332,813
Chief Executive Officer 2001 1,320,000 -- 155,115 -- 500,000 -- 332,213
George R. Gazerwitz........ 2003 541,669 220,000 176 -- 100,000 -- 4,000
Executive Vice 2002 500,012 275,000 -- -- 400,000 -- 115,494
President 2001 491,679 -- -- -- 100,000 -- 114,894
Joseph W. McGrath.......... 2003 550,000 220,000 1,710 -- 100,000 -- 4,000
Executive Vice 2002 533,340 310,000 9,725 -- 400,000 -- 74,461
President 2001 450,000 -- -- -- 75,000 -- 73,861
Janet B. Wallace........... 2003 450,000 130,000 -- -- 75,000 -- 4,000
Executive Vice 2002 435,000 200,000 -- -- 250,000 -- 48,441
President(5) 2001 360,000 -- -- -- 60,000 -- 46,991
Janet B. Haugen............ 2003 450,000 135,000 -- -- 80,000 -- 4,000
Senior Vice President 2002 433,333 210,000 11,041 -- 250,000 -- 25,800
and Chief Financial 2001 350,000 -- 1,252 -- 50,000 -- 24,350
Officer
---------------
(1) Amounts shown include compensation deferred under the Unisys Savings Plan or
the Unisys Corporation Deferred Compensation Plan.
(2) Amounts shown for 2003 for Mr. Weinbach are tax reimbursements and personal
benefits, including $47,000 for personal use of a corporate apartment.
Amounts shown for Mr. McGrath and Mr. Gazerwitz for 2003 are tax
reimbursements.
(3) Although the Company's long-term incentive plan permits grants of
free-standing stock appreciation rights and the payment of performance
awards, no such grants or payments were made to any of the Named Officers
during the years presented.
(4) Amounts shown for 2003 for each Named Officer are Company matching
contributions under the Unisys Savings Plan.
(5) Ms. Wallace was elected an Executive Vice President in February 2004. She
had been a Senior Vice President.
14
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information on grants of stock options
during 2003 to the Named Officers. No stock appreciation rights were granted
during 2003.
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS(1) FOR OPTION TERMS(2)
--------------------------------------------------------------------------- ---------------------------
NUMBER
OF % OF
SECURITIES TOTAL
UNDERLYING OPTIONS EXERCISE
OPTIONS GRANTED TO OR BASE
GRANTED EMPLOYEES PRICE(3) EXPIRATION
NAME (#) IN 2003 ($/SH) DATE(4) 5%($) 10%($)
---- ---------- ---------- -------- ---------- ------------ ------------
Lawrence A. Weinbach...... 300,000 5.6 8.4150 2/13/13 1,587,630 4,023,390
George R. Gazerwitz....... 100,000 1.9 8.4150 2/13/13 529,210 1,341,130
Joseph W. McGrath......... 100,000 1.9 8.4150 2/13/13 529,210 1,341,130
Janet B. Wallace.......... 75,000 1.4 8.4150 2/13/13 396,908 1,005,848
Janet B. Haugen........... 80,000 1.5 8.4150 2/13/13 423,368 1,072,904
---------------
(1) Options were granted on February 13, 2003 and become exercisable in four
equal annual installments, beginning one year after the date of grant.
Options become immediately exercisable in the event of a change in control
(as defined in the long-term incentive plan).
(2) Illustrates value that might be realized upon exercise of options
immediately prior to the expiration of their term, assuming specified annual
rates of appreciation on Unisys common stock over the term of the options.
Assumed rates of appreciation are not necessarily indicative of future stock
performance.
(3) The exercise price is the fair market value (calculated as the average of
the high and low quoted sales prices through the official close of the New
York Stock Exchange at 4:00 p.m.) of a share of Unisys common stock on
February 13, 2003, the date of grant.
(4) The options were granted for a term of ten years, subject to earlier
termination in certain events related to termination of employment.
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth information with respect to option exercises
during 2003 and unexercised stock options held by the Named Officers at December
31, 2003.
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 2003 DECEMBER 31, 2003(1)
ACQUIRED VALUE (#) ($)
ON EXERCISE REALIZED --------------------------- ---------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
Lawrence A. Weinbach..... -- -- 2,513,000 1,800,000 3,411,825 2,959,875
George R. Gazerwitz...... 81,250 696,094 450,000 475,000 137,250 1,055,250
Joseph W. McGrath........ -- -- 273,750 456,250 137,250 1,055,250
Janet B. Wallace......... -- -- 155,000 305,000 85,781 739,969
Janet B. Haugen.......... -- -- 222,250 308,750 454,450 806,167
---------------
(1) Difference between the closing price for Unisys common stock on December 31,
2003 and the exercise price.
PENSION PLANS
The table below shows the aggregate annual amounts at age 62 that would be
received from the Unisys Pension Plan (the "Pension Plan"), the Supplemental
Executive Retirement Plan (the "Supplemental Plan") and the Elected Officer
Pension Plan (the "Officer Plan").
15
The Pension Plan and Supplemental Plan generally are available to all
employees located in the United States. The Officer Plan is available to
officers, including the Named Officers, who satisfy certain minimum service
requirements. The aggregate pension amount payable under the Officer Plan is
offset by benefits paid under the Pension Plan, the Supplemental Plan and any
applicable subsidiary plan. The amounts shown in the table are computed on a
single life annuity basis and are subject to a reduction equal to 50% of the
participant's primary social security benefit.
YEARS OF SERVICE
ASSUMED FINAL -----------------------------------------------------------------
AVERAGE COMPENSATION 5 10 15 20 25 30 OR MORE
-------------------- -------- -------- -------- -------- -------- ----------
200,0$00........ $ 40,000 $ 80,000 $ 90,000 $100,000 $110,000 $120,000
300,000........ 60,000 120,000 135,000 150,000 165,000 180,000
400,000........ 80,000 160,000 180,000 200,000 220,000 240,000
500,000........ 100,000 200,000 225,000 250,000 275,000 300,000
600,000........ 120,000 240,000 270,000 300,000 330,000 360,000
700,000........ 140,000 280,000 315,000 350,000 385,000 420,000
800,000........ 160,000 320,000 360,000 400,000 440,000 480,000
900,000........ 180,000 360,000 405,000 450,000 495,000 540,000
1,000,000...... 200,000 400,000 450,000 500,000 550,000 600,000
Final Average Compensation generally corresponds to the amounts shown in
the Summary Compensation Table under the headings Salary and Bonus. However,
Final Average Compensation is calculated using the individual's highest 60
consecutive months of compensation out of the final 120 months of employment and
thus will differ somewhat from the amounts shown in the Summary Compensation
Table. Final Average Compensation for the Named Officers as of March 1, 2004 is
as follows: G. R. Gazerwitz -- $701,010; J. W. McGrath -- $578,071; J. B.
Wallace -- $481,200; J. B. Haugen -- $472,502. Full years of credited service
under the pension plans for the Named Officers as of March 1, 2004 are as
follows: G. R. Gazerwitz -- 22 years; J. W. McGrath -- five years; J. B.
Wallace -- four years; J. B. Haugen -- seven years.
Pursuant to the employment agreement described below, Lawrence A. Weinbach
is vested in an annual pension benefit as follows: 6 years of
service -- $860,000; 7 or more years -- $1,000,000. He is currently credited
with six full years of service.
EMPLOYMENT AGREEMENTS
On April 25, 2002, the Company entered into a new employment agreement with
Lawrence A. Weinbach, covering the terms and conditions of Mr. Weinbach's
employment as Chairman of the Board, President and Chief Executive Officer for
the period from April 1, 2002 through January 31, 2005. The agreement provides
for a minimum base salary of $1,400,000 per year, effective April 1, 2002,
subject to annual review by the Compensation Committee, and also provides for an
increase in Mr. Weinbach's salary to not less than $1,500,000 in 2003 if the
Company has met certain 2002 financial targets. He is eligible for an annual
bonus award at a target bonus level of not less than 100% of base salary. The
actual bonus payable, if any, is to be determined by the Compensation Committee
in its sole discretion but may not exceed 200% of target. Mr. Weinbach is
eligible to participate in the benefit programs generally made available to
executive officers, is entitled to the pension benefits discussed above, and is
eligible to receive stock option and other long-term incentive awards under the
Company's long-term incentive plan. Upon his termination of employment, the
Company will purchase and
16
transfer to Mr. Weinbach an annuity that, together with payments from the Unisys
Pension Plan, will pay 40% of his pension benefits described above. In addition,
the Company will make a gross-up payment to Mr. Weinbach to cover all taxes
incurred by him upon the transfer of the annuity. If Mr. Weinbach's employment
is terminated under certain circumstances, the agreement provides for him to
receive continued payment of his base salary for the remainder of the term (but
in no event less than one year's base salary) and, for the one-year period
following the date of termination, a bonus in an amount equal to his target
bonus percentage times the base salary paid during such period. He will also be
entitled to continued medical and dental coverage through the remaining term of
the agreement, full vesting in outstanding awards under the long-term incentive
plan, and one additional year of service for pension purposes. Salary
continuation amounts paid to Mr. Weinbach after two years from the date of
employment termination will be reduced by the amount of any cash compensation he
receives for services rendered to any entity other than Unisys. Mr. Weinbach is
also party to a change in control agreement with the Company, as described
below. He is not entitled to receive duplicate payments under the change in
control agreement and his employment agreement.
The Company and Joseph W. McGrath are parties to an agreement that
terminates on December 31, 2004. Under this agreement, if Mr. McGrath's
employment terminates under certain circumstances, he will be entitled to
receive continued payment of his base salary, annual bonuses under the Company's
executive variable compensation plan, continued benefit accrual under the
Elected Officer Pension Plan and continued medical and dental benefits for two
years from the date of termination. Payments made to Mr. McGrath under this
agreement will be reduced by the amount of any cash compensation he receives for
services rendered to any entity other than Unisys. Mr. McGrath is also party to
a change in control agreement. He is not entitled to receive duplicate payments
under the change in control agreement and this agreement.
CHANGE IN CONTROL EMPLOYMENT AGREEMENTS
The Company has entered into change in control employment agreements with
its executive officers including the Named Officers. The agreements are intended
to retain the services of these executives and provide for continuity of
management in the event of any actual or threatened change in control. A change
in control is generally defined as (i) the acquisition of 20% or more of Unisys
common stock, (ii) a change in the majority of the Board of Directors unless
approved by the incumbent directors (other than as a result of a contested
election) and (iii) certain reorganizations, mergers, consolidations,
liquidations or dissolutions. Each agreement has a term ending on the third
anniversary of the date of the change in control. These agreements, which are
the same in substance for each executive, provide that in the event of a change
in control each executive will have specific rights and receive certain
benefits. Those benefits include the right to continue in the Company's employ
during the term, performing comparable duties to those being performed
immediately prior to the change in control and at compensation and benefit
levels that are at least equal to the compensation and benefit levels in effect
immediately prior to the change in control. Upon a termination of employment
under certain circumstances following a change in control, the terminated
executive will be entitled to receive special termination benefits, including a
lump sum payment equal to three years base salary and bonus and the actuarial
value of the pension benefit the executive would have accrued had the executive
remained employed for three years following the termination date. The special
termination benefits are payable if the Company terminates the executive without
cause, the executive terminates employment for certain enumerated
17
reasons (including a reduction in the executive's compensation or
responsibilities or a change in the executive's job location), or the executive
voluntarily terminates employment for any reason during the 30-day period
following the first anniversary of the date of the change in control. If any
payment or distribution by the Company to the executive is determined to be
subject to the excise tax imposed by section 4999 of the Internal Revenue Code,
the executive is entitled to receive a payment on an after-tax basis equal to
the excise tax imposed. The executive is under no obligation to mitigate amounts
payable under these agreements, and to the extent the executive has a separate
employment agreement with the Company with conflicting rights, the executive is
allowed the greater entitlement.
TRANSACTIONS WITH MANAGEMENT
During 2003, the law firm Pepper Hamilton LLP provided legal services to
Unisys for fees of approximately $594,000. The husband of Nancy Straus Sundheim
is a partner in that firm. Ms. Sundheim is Senior Vice President, General
Counsel and Secretary of Unisys.
COMPENSATION OF DIRECTORS
The Company's non-employee directors receive an annual retainer of $50,000,
an annual attendance fee of $10,000 for regularly scheduled Board and committee
meetings and a meeting fee of $1,000 for attendance at certain additional Board
and committee meetings. Chairmen of committees other than the audit committee
also receive an annual $5,000 retainer. In February 2004, the annual retainer
for the chair of the audit committee was increased to $10,000. During 2003, each
non-employee director also received an option to purchase 12,000 shares of
Unisys common stock. Stock options vest in four equal annual installments
beginning one year after the date of grant. The annual retainers and annual
attendance fee are paid in monthly installments, with 50% of each installment
paid in cash and 50% in the form of common stock equivalent units. The value of
each stock unit at any point in time is equal to the value of one share of
Unisys common stock. Stock units are recorded in a memorandum account maintained
for each director. A director's stock unit account is payable in Unisys common
stock, either upon termination of service or on any date at least five years
(two years for stock units awarded after January 1, 2001) after the stock units
are awarded, at the director's option. Directors do not have the right to vote
with respect to any stock units. Directors also have the opportunity to defer
until termination of service, or until any date at least two years after the
deferral, all or a portion of their cash fees. Any deferred cash amounts, and
earnings or losses thereon, are recorded in a memorandum account maintained for
each director. The right to receive future payments of deferred cash accounts is
an unsecured claim against the Company's general assets. Directors who are
employees of the Company do not receive any cash, stock units or stock options
for their services as directors.
18
REPORT OF THE COMPENSATION COMMITTEE
COMPENSATION PROGRAM AND POLICIES
The Compensation Committee oversees the Company's executive compensation
program. In this capacity, the Committee reviews compensation levels of elected
officers, evaluates performance, considers management succession and related
matters and administers the Company's incentive plans, including its executive
variable compensation plan and its long-term incentive plans.
The Company's executive compensation program is designed to attract and
retain executives responsible for the Company's long-term success, to reward
executives for achieving both financial and strategic company goals, to align
executive and stockholder interests through long-term, equity-based plans and to
provide a compensation package that recognizes individual contributions as well
as overall business results. As a result, a substantial portion of each
executive's total compensation is intended to be variable and to be tied closely
to the achievement of specific business objectives and corporate financial
goals, as well as the attainment of the executive's individual performance
objectives. The Company's executive compensation program also takes into account
the compensation practices of companies with whom Unisys competes for executive
talent. These companies (the "peer companies") include the principal companies
included in the peer group indices in the Performance Graph on page 22 of this
proxy statement and additional companies in various industries.
The three key components of the Company's executive compensation program
are base salary, variable incentive compensation and long-term incentive awards
in the form of stock options. Overall compensation is intended to be competitive
for comparable positions at the peer companies.
BASE SALARY
Each executive's base salary is initially determined with reference to
competitive pay practices and is dependent upon the executive's level of
responsibility and experience. The Committee uses its discretion, rather than a
formal weighting system, to evaluate these factors and to determine individual
base salary levels. Thereafter, base salaries are reviewed periodically, and
increases are made based on the Committee's subjective assessment of individual
performance, as well as the factors discussed above.
VARIABLE INCENTIVE COMPENSATION
For 2003, all of the Company's executive officers participated in the
Company's executive variable compensation plan. This plan's stated purpose is to
motivate and reward elected officers and other key executives for the attainment
of corporate and/or individual performance goals. Under the plan, the Committee
has the discretion to determine the conditions (including performance
objectives) applicable to annual award payments and the amounts of such awards.
For 2003, the plan operated as follows.
Executives were assigned target award amounts for the year, which were
typically stated as a percentage of base salary (ranging, in the case of elected
officers other than the chief executive officer, from 45% to 75%). Performance
goals were also established based upon the financial performance of Unisys
(generally, achievement of pre-established objectives for revenue, orders,
operating profit, free cash flow and customer satisfaction). The amount
available to fund awards under the plan was dependent upon the degree to which
corporate
19
financial goals were met. In 2003, although the Company had a good year
financially, not all of the Company's stretch goals were achieved. The amount
available to fund awards for 2003 reflected this. Actual award amounts could
range from zero to 150% of target for all elected officers other than the chief
executive officer and from zero to 200% of target for the chief executive
officer, depending upon the Committee's assessment of the individual's
performance. Given the amount available to fund awards, none of the Company's
executive officers in 2003 received more than 55% of target.
LONG-TERM INCENTIVE AWARDS
Under the Company's long-term incentive plan, stock options may be granted
to the Company's executive officers and other key employees. The size of stock
option awards is based primarily on individual performance, level of
responsibilities with Unisys and the competitive marketplace. The Committee does
not determine the size of such awards by reference to the amount or value of
stock options currently held by an executive officer.
Stock options are designed to align the interests of executives with those
of stockholders. In 2003, executive officers received stock options with an
exercise price equal to the fair market value of Unisys common stock on the date
of grant. Current grants vest over four years. This approach is designed to
encourage the creation of stockholder value over the long term since no benefit
is realized unless the price of the common stock rises over a number of years.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
On April 25, 2002, Lawrence A. Weinbach, the Company's Chairman, President
and Chief Executive Officer and the Company entered into the new employment
agreement described at page 16. Under this employment agreement, Mr. Weinbach
was entitled to a base salary at the rate of $1,400,000 per year, effective
April 1, 2002, subject to annual review by the Committee. If the Company met
certain financial targets for 2002, the agreement also provided for his salary
to increase to at least $1,500,000 in 2003. Not all of the 2002 financial
targets were met. Therefore, Mr. Weinbach's salary remained at $1,400,000. Under
the agreement, Mr. Weinbach is also eligible for an annual bonus at a target of
100% of base salary, with the actual amount of bonus paid to be determined by
the Committee in its sole discretion, based upon such factors as the Committee
deems appropriate. As set forth above, not all of the Company's stretch goals
for 2003 were achieved. In light of this, the Committee awarded Mr. Weinbach a
bonus of $770,000, or 55% of target, for the year. In 2003, Mr. Weinbach was
granted the stock options described on page 15.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Section 162(m) of the Internal Revenue Code imposes a $1 million annual
limit on the amount of compensation that may be deducted by the Company with
respect to each Named Officer employed as of the last day of the applicable
year. The limitation does not apply to compensation based on the attainment of
objective performance goals.
The Company's 2003 Long-Term Incentive and Equity Compensation Plan,
approved by the Company's stockholders at the 2003 annual meeting, permits the
Committee to design compensation awards to Named Officers that will meet the
requirements of section 162(m) of the Internal Revenue Code. The Committee may
grant awards under the plan that meet the requirements of section 162(m) of the
Internal Revenue Code at such times as the Committee believes that such awards
are in the best interests of the Company. The Committee has
20
considered the impact of the deduction limitation and has determined that it is
not in the best interests of the Company or its stockholders to base
compensation solely on objective performance criteria. Rather, the Committee
believes that it should retain the flexibility to base compensation on its
subjective evaluation of performance as well as on the attainment of objective
goals.
Compensation Committee (2003)
Henry C. Duques
Melvin R. Goodes*
Kenneth A. Macke*
---------------
* Mr. Macke retired from the Company's Board of Directors in December 2003, and
Mr. Goodes retired at the end of February 2004.
21
STOCK PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the cumulative
total stockholder return on Unisys common stock during the five fiscal years
ended December 31, 2003 with the cumulative total return on the Standard &
Poor's 500 Stock Index, the Standard & Poor's Computers (Hardware) Index and the
Standard & Poor's 500 IT Services Index. The comparison assumes $100 was
invested on December 31, 1998 in Unisys common stock and in each of such indices
and assumes reinvestment of any dividends.
[Line Graph]
------------------------------------------------------------------------------------------------------------------
1998 1999 2000 2001 2002 2003
------------------------------------------------------------------------------------------------------------------
Unisys Corporation 100 93 42 36 29 43
S & P 500 100 121 110 97 76 97
S & P 500 IT Services 100 118 84 89 38 31
S & P 500 Computer Hardware 100 144 92 90 63 80
22
GENERAL MATTERS
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company's directors and officers are required to file reports with the
SEC relating to their ownership of Unisys equity securities. During 2003,
Kenneth A. Macke had one late report covering one transaction. Mr. Macke is a
former director who retired from the Board in December 2003.
POLICY ON CONFIDENTIAL VOTING
It is the Company's policy that all stockholder proxies, ballots and voting
materials that identify the vote of a specific stockholder shall, if requested
by that stockholder on such proxy, ballot or materials, be kept permanently
confidential and shall not be disclosed to the Company, its affiliates,
directors, officers and employees or to any third parties, except as may be
required by law, to pursue or defend legal proceedings or to carry out the
purpose of, or as permitted by, the policy. Under the policy, vote tabulators
and inspectors of election are to be independent parties who are unaffiliated
with and are not employees of the Company. The policy provides that it may,
under certain circumstances, be suspended in the event of a proxy solicitation
in opposition to a solicitation of management. The Company may at any time be
informed whether or not a particular stockholder has voted. Comments written on
proxies or ballots, together with the name and address of the commenting
stockholder, will also be made available to the Company.
STOCKHOLDER PROPOSALS AND NOMINATIONS
Stockholder proposals submitted to the Company for inclusion in the proxy
materials for the 2005 annual meeting of stockholders must be received by the
Company by November 18, 2004.
Any stockholder who intends to present a proposal at the 2005 annual
meeting and has not sought to include the proposal in the Company's proxy
materials must deliver notice of the proposal to the Company no later than
January 22, 2005.
Any stockholder who intends to make a nomination for the Board of Directors
at the 2005 annual meeting must deliver a notice to the Company no later than
January 21, 2005 setting forth (i) the name, age, business and residence
addresses of each nominee, (ii) the principal occupation or employment of each
nominee, (iii) the number of shares of Unisys capital stock beneficially owned
by each nominee, (iv) a statement that the nominee is willing to be nominated
and (v) any other information concerning each nominee that would be required by
the SEC in a proxy statement soliciting proxies for the election of the nominee.
ELECTRONIC ACCESS TO PROXY MATERIALS AND ANNUAL REPORT
This proxy statement and the 2003 annual report are available on the
Company's Internet site at www.unisys.com/go/proxy and www.unisys.com/go/annual.
Most stockholders can elect to view future 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. If you vote
your shares over the Internet this year, you will be given the opportunity to
choose electronic access at the time you vote. Most stockholders who choose
electronic access will receive an e-mail next year containing the Internet
address to access the
23
proxy statement and annual report. Your choice will remain in effect until you
cancel it. You do not have to elect Internet access each year.
HOUSEHOLDING OF PROXY STATEMENT AND ANNUAL REPORT
This year, a number of brokers with accountholders who are owners of Unisys
common stock will be "householding" our proxy materials. This means that only
one copy of this proxy statement and the 2003 annual report may have been sent
to you and the other Unisys stockholders who share your address. Householding is
designed to reduce the volume of duplicate information that stockholders receive
and the Company's printing and mailing expenses.
If your household has received only one copy of our proxy statement and
annual report, and you would prefer to receive separate copies of these
documents, either now or in the future, please call us at 215-986-5777, or write
us at Investor Relations, A2-15, Unisys Corporation, Unisys Way, Blue Bell, PA
19424-0001. We will deliver separate copies promptly. If you are now receiving
multiple copies of our proxy materials and would like to have only one copy of
these documents delivered to your household in the future, please contact us in
the same manner.
OTHER MATTERS
At the date of this proxy statement, the Board of Directors knows of no
matter that will be presented for consideration at the annual meeting other than
those described in this proxy statement. If any other matter properly comes
before the annual meeting, the persons appointed as proxies will vote thereon in
their discretion.
The Company will bear the cost of soliciting proxies. Such cost will
include charges by brokers and other custodians, nominees and fiduciaries for
forwarding proxies and proxy material to the beneficial owners of Unisys common
stock. Solicitation may also be made personally, or by telephone or telegraph,
by the Company's directors, officers and regular employees without additional
compensation. In addition, the Company has retained Morrow & Co., Inc. to assist
in the solicitation of proxies for a fee of approximately $9,500, plus expenses.
By Order of the Board of Directors,
/s/ Nancy Straus Sundheim
Nancy Straus Sundheim
Senior Vice President, General Counsel
and Secretary
Dated: March 18, 2004
24
APPENDIX A
UNISYS CORPORATION
AUDIT COMMITTEE CHARTER
(APPROVED FEBRUARY 12, 2004)
I. PURPOSE
The Audit Committee shall assist the Board of Directors in its oversight of
(1) the integrity of the Corporation's financial statements and its financial
reporting and disclosure practices, (2) the soundness of the Corporation's
systems of internal controls regarding finance and accounting compliance, (3)
the independence and qualifications of the Corporation's independent auditors,
(4) the performance of the Corporation's internal audit function and its
independent auditors, and (5) the Corporation's compliance with legal and
regulatory requirements and the soundness of the Corporation's ethical and
environmental compliance programs. The Audit Committee is also responsible for
preparing the report required by the Securities and Exchange Commission (SEC) to
be included in the Corporation's annual proxy statement.
II. MEMBERSHIP
The Audit Committee shall consist of at least three Directors. The members
of the Audit Committee shall meet the independence and expertise requirements of
the New York Stock Exchange and the SEC.
No member of the Audit Committee may serve on the audit committee of more
than three public companies, including the Corporation, unless the Board (1)
determines that such simultaneous service would not impair the ability of the
member to effectively serve on the Audit Committee and (2) discloses this
determination in the Corporation's proxy statement.
The Board shall appoint the members of the Audit Committee at least
annually, with one of the members appointed as Committee Chair. Audit Committee
members may be replaced by the Board.
III. RESPONSIBILITIES
In performing its oversight responsibilities, the Audit Committee shall:
1. Financial Statement and Disclosure Matters
a. Review and discuss the Corporation's quarterly financial statements,
including disclosures made in "Management's Discussion and Analysis of
Financial Condition and Results of Operations", with management and
the independent auditors prior to the filing of the Corporation's
quarterly report on Form 10-Q, including a discussion with the
independent auditors of the matters required to be discussed by
Statement of Auditing Standards No. 61 ("SAS No. 61"), as amended.
b. Review and discuss the Corporation's annual financial statements,
including disclosures made in "Management's Discussion and Analysis of
Financial Condition and Results of Operations", with management and
the independent auditors prior to the filing of the Corporation's
annual report on Form 10-K, including a discussion with the
independent auditors of the matters required to be discussed by SAS
No. 61, as amended.
A-1
c. Discuss with management the Corporation's earnings press releases
(paying particular attention to the use of any "pro forma" or
"adjusted" non-GAAP information), as well as the nature of financial
information and earnings guidance provided to securities analysts and
rating agencies. The Audit Committee's discussion in this regard may
be general in nature and need not take place in advance of each
instance in which the Corporation may provide financial information or
earnings guidance.
d. Discuss with management the Corporation's major financial risk
exposures and the steps management has taken to monitor and control
such exposures, including the Corporation's risk assessment and risk
management policies.
e. Review, with management, the internal auditors and the independent
auditors, major issues regarding accounting principles and financial
statement presentations, including any significant changes in the
Corporation's selection or application of accounting principles, and
major issues as to the adequacy of the Corporation's internal controls
and any special audit steps adopted in light of material control
deficiencies. In this regard, the Audit Committee should obtain and
discuss with management and the independent auditors reports and
analyses from management and the independent auditors concerning: (a)
all critical accounting policies and practices to be used by the
Corporation, (b) significant financial reporting issues and judgments
made in connection with the preparation of the financial statements,
including all alternative treatments of financial information within
generally accepted accounting principles ("GAAP") that have been
discussed with management, the ramifications of the use of the
alternative disclosures and treatments, and the treatment preferred by
the independent auditors and (c) any other material written
communications between the independent auditors and management.
f. Review periodically the effect of regulatory and accounting
initiatives, as well as off-balance sheet structures, on the financial
statements of the Corporation.
g. Review with the independent auditors (a) any audit problems or other
difficulties encountered during the course of the audit process,
including any restrictions on the scope of the independent auditors'
activities or access to required information and any significant
disagreements with management and (b) management's response to such
matters. The review should also include discussion of the
responsibilities, budget and staffing of Corporation's internal audit
function.
h. Resolve any disagreements between management and the independent
auditors regarding financial reporting.
2. Oversight of the Corporation's Relationship with its Independent
Auditors
a. Appoint or replace the Corporation's independent auditors (subject, if
applicable to stockholder ratification), and approve all fees payable
to the independent auditors. The independent auditors shall report
directly to the Audit Committee.
b. Approve, in advance, all audit services, and all non-audit services
provided by the Corporation's independent auditors that are not
specifically prohibited under the Sarbanes-Oxley Act. In fulfilling
this responsibility, the Audit Committee may adopt and amend
pre-approval policies with respect to such services.
A-2
c. Review, at least annually, the qualifications, performance and
independence of the independent auditors. In conducting its review and
evaluation, the Committee should:
a. Obtain and review a report by the Corporation's independent
auditors describing: (i) the auditing firm's internal
quality-control procedures; (ii) any material issues raised by the
most recent internal quality-control review, or peer review, of the
auditing firm, or by any inquiry or investigation by governmental
or professional authorities, within the preceding five years,
respecting one or more independent audits carried out by the
auditing firm, and any steps taken to deal with any such issues;
and (iii) all relationships between the independent auditors and
the Corporation;
b. Review and evaluate the lead audit partner;
c. Assure the rotation of the lead audit partner and the audit partner
responsible for reviewing the audit as required by law;
d. Discuss with the independent auditors any disclosed relationships
or services that may impact the objectivity and independence of the
independent auditors;
e. Consider whether, in order to assure continuing auditor
independence, there should be regular rotation of the audit firm
itself;
f. Take into account the opinions of management and the Corporation's
internal auditors;
g. Present its conclusions with respect to the independent auditors to
the Board and, if necessary, recommend that the Board take
appropriate action to satisfy itself of the qualifications,
performance and independence of the independent auditors;
h. Set clear hiring policies for employees or former employees of the
independent auditors. At a minimum, these policies should provide
that any registered public accounting firm may not provide audit
services to the Corporation if the CEO, controller, CFO, chief
accounting officer or any person serving in an equivalent capacity
for the Corporation was employed by such accounting firm and
participated in the audit of the Corporation within one year of the
initiation of the current audit.
3. Oversight of the Corporation's Internal Audit Function
a. Review the appointment and replacement of the Corporation's chief
audit executive.
b. Review the scope and effectiveness of the Corporation's internal audit
function including responsibilities, budget and staffing.
c. Review, with the chief audit executive, the proposed audit plan,
including explanations for deviations from the original plan and any
difficulties encountered in the course of the internal audit
function's work, any restrictions on the scope of work and access to
required information.
A-3
4. Compliance Oversight
a. Review, with the Corporation's general counsel, any legal matter that
could have a significant impact on the Corporation's financial
statements.
b. Annually review the Corporation's compliance program for its Code of
Ethics and Business Conduct and the results of internal audit's review
of the expense accounts of the Corporation's elected officers.
c. Annually review the status of the Corporation's environmental
compliance program.
d. Establish procedures for (a) the receipt, retention and treatment of
complaints received by the Corporation regarding accounting, internal
accounting controls or auditing matters and (b) the confidential,
anonymous submission by employees of the Corporation of concerns
regarding questionable accounting or auditing matters.
IV. MEETINGS; OPERATIONAL MATTERS AND REPORTS
The Audit Committee shall meet at least four times annually, or more
frequently as circumstances dictate.
The Audit Committee is to meet periodically in separate executive sessions
with each of management, the Corporation's independent auditors and its chief
audit executive.
The Audit Committee may form and delegate authority to subcommittees when
appropriate.
In connection with its duties and responsibilities, the Audit Committee
shall have the authority to retain outside legal, accounting or other advisors,
including the authority to approve the fees payable by the Corporation to such
advisors and other retention terms.
The Audit Committee shall annually review its performance. In addition, the
Audit Committee shall review and reassess the adequacy of this Charter annually
and recommend to the Board any changes it considers necessary or advisable.
The Audit Committee shall report regularly to the Board, including with
respect to any issues that arise with respect to the quality or integrity of the
Corporation's financial statements, the Corporation's compliance with legal or
regulatory requirements, the performance and independence of the Corporation's
independent auditors or the performance of the internal audit function.
V. LIMITATION OF AUDIT COMMITTEE'S ROLE
The Audit Committee's role is one of oversight. Management is responsible
for preparing the Corporation's financial statements, and the independent
auditors are responsible for auditing those financial statements. Management is
responsible for the fair presentation of the information set forth in the
financial statements in conformity with GAAP. The independent auditors'
responsibility is to provide their opinion, based on their audits, that the
financial statements fairly present, in all material respects, the financial
position, results of operations and cash flows of the Corporation in conformity
with GAAP. While the Audit Committee has the responsibilities and powers set
forth in this Charter, it is not the duty of the Audit Committee to plan or
conduct audits or to determine that the Corporation's financial statements and
disclosures are complete and accurate and are in conformity with GAAP. Further,
it is not the duty of the Audit Committee to assure compliance with applicable
laws and regulations, the Corporation's Code of Ethics and Business Conduct or
its environmental compliance program.
A-4
APPENDIX B
UNISYS CORPORATION
Audit Committee of the Board of Directors
Approved: February 12, 2004
AUDIT AND NON-AUDIT SERVICES PRE-APPROVAL POLICY
I. PURPOSE
This Policy sets forth the procedures by which the Audit Committee fulfills
its responsibilities with respect to the pre-approval of services performed by
the Company's independent auditor.
II. STATEMENT OF PRINCIPLES
The appendices to this Policy describe the Audit, Audit-related, Tax and
All Other services that have the pre-approval of the Audit Committee. The term
of any pre-approval is 12 months from the date of pre-approval, unless the Audit
Committee considers a different period and states otherwise.
The Audit Committee will annually review and pre-approve the services and
related fees, including the scope and effectiveness of such services, that may
be provided by the independent auditor. The Audit Committee may add or subtract
to the list of pre-approved services from time to time, based on subsequent
determinations.
The Company's independent auditor has reviewed this Policy and believes
that implementation of the policy will not adversely affect the auditor's
independence.
III. DELEGATION
The Audit Committee may delegate pre-approval authority to one or more of
its members. By this Policy, the Audit Committee delegates specific pre-approval
authority to its Chair, provided that the estimated fee for any such proposed
pre-approved service does not exceed $150,000. The member(s) to whom such
authority is delegated shall report, for informational purposes only, any such
pre-approval decision to the Audit Committee at its next scheduled meeting. The
Audit Committee does not delegate its responsibilities to pre-approve services
performed by the independent auditor to management.
IV. AUDIT SERVICES
The annual Audit services engagement terms and fees will be specifically
pre-approved by the Audit Committee. Audit services include the annual financial
statement audit (including required quarterly reviews), subsidiary audits,
equity investment audits and other procedures required to be performed by the
independent auditor to be able to form an opinion on the Company's consolidated
financial statements. These other procedures include information systems and
procedural reviews and testing performed in order to understand and place
reliance on the systems of internal control, and consultations relating to the
audit or quarterly review. Audit services also include the attestation
engagement for the independent auditor's report on management's report on
internal controls for financial reporting. The Audit Committee will monitor the
Audit services engagement as necessary and will also approve, if necessary,
B-1
any changes in terms, conditions and fees resulting from changes in audit scope,
Company structure or other items.
In addition to the annual Audit services engagement approved by the Audit
Committee, the Audit Committee may grant pre-approval to other Audit services,
which are those services that only the independent auditor reasonably can
provide. These other Audit services may include statutory audits or financial
audits for subsidiaries or affiliates of the Company and services associated
with SEC registration statements, periodic reports and other documents filed
with the SEC or other documents issued in connection with securities offerings.
The Audit Committee has pre-approved the Audit services and related fees
listed in Appendix A. All other Audit services not listed in Appendix A must be
separately pre-approved by the Audit Committee.
V. AUDIT-RELATED SERVICES
Audit-related services are assurance and related services that are
reasonably related to the performance of the audit or review of the Company's
financial statements and that are traditionally performed by the independent
auditor. Because the Audit Committee believes that the provision of
Audit-related services does not impair the independence of the auditor and is
consistent with the SEC'S rules on auditor independence, the Audit Committee may
grant pre-approval of Audit-related services. Audit-related services include,
among others, due diligence services pertaining to potential business
acquisitions/dispositions; accounting consultations related to accounting,
financial reporting or disclosure matters not classified as "Audit services";
assistance with understanding and implementing new accounting and financial
reporting guidance from rulemaking authorities; financial audits of employee
benefit plans; agreed-upon or expanded audit procedures related to accounting
and/or billing records required to respond to or comply with financial,
accounting or regulatory reporting matters; and assistance with internal control
reporting requirements.
The Audit Committee has pre-approved the Audit-related services and related
fees listed in Appendix B. All other Audit-related services not listed in
Appendix B must be separately pre-approved by the Audit Committee.
VI. TAX SERVICES
The Audit Committee believes that the independent auditor can provide Tax
services to the Company such as tax compliance, tax planning and tax advice
without impairing the auditor's independence, and the SEC has stated that the
independent auditor may provide such services. Hence, the Audit Committee
believes it may grant pre-approval to those Tax services that have historically
been provided by the auditor, that the Audit Committee has reviewed and believes
would not impair the independence of the auditor, and that are consistent with
the SEC's rules on auditor independence. The Audit Committee will not permit the
retention of the independent auditor in connection with a transaction
recommended by the independent auditor, the sole business purpose of which may
be tax avoidance and the tax treatment of which may be questionable in the
Internal Revenue Code and related regulation interpretations. The Audit
Committee may consult with the Company's Vice President Worldwide Tax Services
or outside counsel to determine that the tax planning and reporting positions
are consistent with this policy.
Pursuant to the preceding paragraph, the Audit Committee has pre-approved
the Tax services and related fees listed in Appendix C. All Tax services
involving large and complex
B-2
transactions not listed in Appendix C must be separately pre-approved by the
Audit Committee, including tax services proposed to be provided by the
independent auditor to any executive officer of the Company, in his or her
individual capacity, whether such services are paid for by the Company or by the
individual.
VII. ALL OTHER SERVICES
The Audit Committee believes, based on the SEC's rules prohibiting the
independent auditor from providing specific non-audit services, that other types
of non-audit services are permitted. Accordingly, the Audit Committee believes
it may grant pre-approval to those permissible non-audit services classified as
All Other services that it believes are routine and recurring services, would
not impair the independence of the auditor and are consistent with the SEC's
rules on auditor independence.
The Audit Committee has pre-approved the All Other services and related
fees listed in Appendix D. Permissible All Other services not listed in Appendix
D must be separately pre-approved by the Audit Committee.
The Audit Committee shall not pre-approve any service by the independent
auditor that is prohibited based upon SEC rules. A list of the SEC's prohibited
non-audit services is attached to this policy as Exhibit 1. The SEC's rules and
relevant guidance should be consulted to determine the precise definitions of
these services and the applicability of exceptions to certain of the
prohibitions.
VIII. PRE-APPROVAL FEE LEVELS OR BUDGETED AMOUNTS
The Audit Committee shall at least annually pre-approve fee levels or
budgeted amounts for all services to be provided by the independent auditor. Any
proposed services exceeding these levels or amounts will require specific
pre-approval by the Audit Committee. The Audit Committee is mindful of the
overall relationship of fees for audit and non-audit services in determining
whether to pre-approve any such services. For each fiscal year, the Audit
Committee may determine the appropriate ratio between the total amount of fees
for Audit, Audit-related and Tax services, and the total amount of fees for
services classified as All Other services.
IX. SUPPORTING DOCUMENTATION
With respect to each proposed pre-approved service, the independent auditor
will provide detailed back-up documentation, which will be provided to the Audit
Committee, regarding the specific services to be provided.
X. PROCEDURES
All requests or applications for services to be provided by the independent
auditor that do not require separate approval by the Audit Committee will be
submitted to the Company's Chief Audit Executive in advance of providing the
service and must include a detailed description of the services to be rendered.
The Chief Audit Executive will determine whether such services are included
within the list of services that have received the pre-approval of the Audit
Committee and will communicate to the independent auditor the result of that
determination. The Audit Committee will be informed on a timely basis of any
such services rendered by the independent auditor.
B-3
Requests or applications to provide services that require separate approval
by the Audit Committee will be submitted to the Audit Committee, along with the
proposed fees, by both the independent auditor and the Chief Audit Executive,
and must include a joint statement as to whether, in their view, the request or
application is consistent with the SEC's rules on auditor independence.
The Audit Committee has designated the Chief Audit Executive to monitor the
performance of all services provided by the independent auditor and to determine
whether such services are in compliance with this policy. The Chief Audit
Executive will report to the Audit Committee on a periodic basis on the results
of its monitoring. Both the Chief Audit Executive and management will
immediately report to the chairman of the Audit Committee any breach of this
policy that comes to the attention of the Chief Audit Executive or any member of
management.
The Audit Committee will also review the Chief Audit Executive's annual
internal audit plan to determine that the plan provides for the monitoring of
the independent auditor's services.
Engagement letters for services approved in accordance with the above
procedure must be:
- For tax services, signed by the Company's Vice President Worldwide Tax
Services.
- For all other services, signed by the Company's Chief Financial Officer.
- For all services, signed by a partner from the local office of the audit
firm and approved by a partner from the Corporate engagement team of the
audit firm.
XI. ADDITIONAL REQUIREMENTS
The Audit Committee has determined to take additional measures on an annual
basis to meet its responsibility to oversee the work of the independent auditor
and to assure the auditor's independence from the Company, such as reviewing a
formal written statement from the independent auditor delineating all
relationships between the independent auditor and the Company consistent with
Independence Standards Board Standard No. 1, and discussing with the independent
auditor its methods and procedures for ensuring independence.
B-4
EXHIBIT 1
PROHIBITED NON-AUDIT SERVICES
- Bookkeeping or other services related to the accounting records or
financial statements of the audit client
- Financial information systems design and implementation
- Appraisal or valuation services, fairness opinions or
contribution-in-kind reports
- Actuarial services
- Internal audit outsourcing services
- Management functions
- Human resources
- Broker-dealer, investment adviser or investment banking services
- Legal services
- Expert services unrelated to the audit
UNISYS CORPORATION
C/O EQUISERVE TRUST COMPANY N.A.
P.O. BOX 8652
EDISON, NJ 08818-8652
Unisys Corporation encourages you to take advantage of the convenient ways to
vote your shares on proposals covered in this year's proxy statement. You may
vote through the Internet, by telephone or by mail. Your Internet or telephone
vote authorizes the named proxies to vote your shares in the same manner as if
you marked, dated, signed and returned the proxy card.
VOTE THROUGH THE INTERNET OR BY TELEPHONE OR BY MAIL
1. VOTE THROUGH THE INTERNET
Log onto the Internet at http://www.eproxyvote.com/uis, 24 hours a day, 7
days a week. Have your proxy card in hand when you access the web site and
follow the instructions provided.
2. VOTE BY TELEPHONE
Using a touch-tone telephone, call toll-free 1-877-779-8683, 24 hours a
day, 7 days a week from the U.S. and Canada. Have your proxy card in hand
when you call and follow the instructions provided.
3. VOTE BY MAIL
Mark, date, sign and return your proxy card in the enclosed envelope.
If you vote through the Internet or by telephone, do not return the proxy card.
THANK YOU FOR VOTING
DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL
5351
[X]
Please mark your
vote as in
this example.
This proxy, when properly executed, will be voted in the manner directed herein.
If no direction is given, this proxy will be voted FOR the election of directors
and the trustee for the Savings Plan will vote as described on page 2 of the
proxy statement.
--------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR Item 1.
--------------------------------------------------------------------------------
1. Election of Directors.
FOR WITHHELD
ALL FROM ALL
[ ] [ ]
----------------------------------------
[ ] For all, except nominee(s) written above
Nominees:
01. Henry C. Duques
02. Clayton M. Jones
03. Theodore E. Martin
04. Lawrence A. Weinbach
MARK HERE IF AN ADDRESS CHANGE OR COMMENT HAS BEEN NOTED ON THE REVERSE SIDE OF
THIS CARD [ ]
MARK HERE TO HAVE YOUR VOTE REMAIN CONFIDENTIAL [ ]
Signature: Date: Signature: Date:
Please sign exactly as name appears hereon. If held in joint tenancy, all
persons must sign. When signing as executor, administrator, trustee, guardian,
corporate officer, etc., please give your full title.
UNISYS
Annual Meeting of Stockholders
April 22, 2004
9:30 a.m.
The Hilton Inn at Penn
3600 Sansom Street
Philadelphia, Pennsylvania
YOUR VOTE IS IMPORTANT
THANK YOU FOR VOTING
DETACH HERE
UNISYS CORPORATION
PROXY FOR ANNUAL MEETING TO BE HELD APRIL 22, 2004
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James J. Duderstadt, Edwin A. Huston and
Lawrence A. Weinbach, and each of them, proxies, with power of substitution, to
vote all shares of common stock which the undersigned is entitled to vote at the
2004 Annual Meeting of Stockholders of Unisys Corporation, and at any
adjournments thereof, as directed on the reverse side hereof with respect to the
items set forth in the accompanying proxy statement and in their discretion upon
such other matters as may properly come before the meeting. This card also
provides voting instructions (for shares credited to the account of the
undersigned, if any) to the trustee for the Unisys Savings Plan (the "Savings
Plan") as more fully described on page 2 of the proxy statement.
IF YOU ARE VOTING BY MAIL, PLEASE MARK, DATE, SIGN AND RETURN THIS
PROXY/VOTING INSTRUCTION CARD IN THE ENCLOSED ENVELOPE
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
Please note any change of address or comments below and mark box on the
reverse side of this card.
P
R
O
X
Y