Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 (Amendment No. )
Filed by the Registrant
[X] |
Filed by a Party other than
the Registrant [ ] |
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Check the appropriate
box: |
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Preliminary Proxy
Statement |
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Confidential, for Use of the
Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy
Statement |
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Definitive Additional
Materials |
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Soliciting Material Pursuant to §240.14a-12 |
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COMPUTER SCIENCES CORPORATION |
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(Name of Registrant as
Specified In Its Charter) |
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(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant) |
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Payment of Filing Fee (Check
the appropriate box): |
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No fee required. |
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Fee computed on
table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for
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Table of Contents
Table of Contents
Computer
Sciences Corporation
Dear Fellow CSC Stockholder:
You are cordially invited to join CSCs
Board of Directors and senior leadership at our 2015 Annual Meeting of
Stockholders to be held on August 14, 2015. The accompanying Notice of Annual
Meeting of Stockholders and Proxy Statement provide important information about
the meeting and will serve as your guide to the business to be conducted at the
meeting.
As stewards of your Company, the Board
is focused on achieving long-term performance and creating value for our
stockholders through prudent execution of business strategies, risk management,
strong corporate governance, and top quality talent and succession planning.
Fiscal 2015 saw the continuation of a multi-year effort to re-align the Company
to capitalize on historic changes in the marketplace, return the Company to a
path of sustained profitability, and to become a global leader of next
generation information technology services and solutions. In Fiscal 2015, the
Company realized strong growth in our Commercial next-generation offerings,
produced earnings growth and healthy cash flow, and returned significant capital
to shareholders in the form of share repurchases and dividends. These actions
among others contributed to a solid foundation for the Companys current and
long-term success.
In this regard, on May 19, 2015 CSC
announced that our Board of Directors has unanimously approved a plan to
transform CSC into two market-leading, publicly traded pure-play companies. One
will serve commercial and government clients globally, and one will serve public
sector clients in the United States. Concurrent with this separation, CSC
intends to pay a special cash dividend to shareholders of $10.50 per share at
closing, which we expect to occur this October, subject to regulatory approvals.
The separation is intended to qualify as a tax-free transaction to CSC
shareholders, and immediately following the transaction shareholders will own
shares of both CSC Global Commercial and CSC US Public Sector. We believe both
companies will be well-positioned to grow and to lead in their segments, and
will create a compelling value proposition for CSC customers, employees,
partners, and investors.
The Companys compensation program
provides an appropriate mix of elements to incentivize our executives to turn
the business around and to foster a performance-based culture. We made
significant changes to our executive compensation program to better align the
mix of compensation with profitability and stockholder value. We revised the
2015 compensation program to reward achievement of annual, long-term and
strategic goals, such as growing revenues, operating income and cash flow and
improving client satisfaction. More information about these changes is contained
in the Compensation Discussion and Analysis section of this Proxy
Statement.
Stockholders are key participants in
the governance of the Company. For this reason, we continually seek to
communicate with our stockholders and seek your perspective. Since joining the
Company in March 2012, Mike Lawrie has regularly met with investors representing
a substantial portion of our investor base to understand their
perspectives.
COMPUTER SCIENCES
CORPORATION |
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2015 Proxy
Statement |
Table of Contents
I am pleased to announce two new
nominees for election to the Board at the Annual Meeting. Sachin Lawande and
Mark Foster have the qualifications and experience that will enhance the skill
set and quality of the Board. More information about our new nominees is
provided in Proposal 1.
I would like to thank our CSC employees
for their hard work and dedication to the Companys transformation. Finally, I
would like to thank you for being a stockholder and for the trust you have
placed in CSC. We value your support. We encourage you to share your opinions,
interests and concerns, and invite you to write to us with your reactions and
suggestions to the Corporate Secretary, CSC, 3170 Fairview Park Drive, Falls
Church, VA 22042.
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Sincerely, |
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Rodney F. Chase |
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Chairman of the Board of Directors |
COMPUTER SCIENCES CORPORATION
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2015 Proxy
Statement |
Table of Contents
Computer
Sciences Corporation
Notice of 2015 Annual Meeting of
Stockholders
Friday, August
14, 2015
10:00 a.m., Eastern
Time
Executive Briefing Center, 3170
Fairview Park Drive, Falls Church, Virginia 22042
The 2015 Annual Meeting of
Stockholders will be held on Friday, August 14, 2015, at 10:00 a.m., Eastern
Time, at the headquarters of the Company, 3170 Fairview Park Drive, Falls
Church, Virginia 22042. The purpose of the meeting is to vote on:
1. |
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the election of the ten director-nominees named in the
attached proxy statement as directors of CSC; |
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the approval, by non-binding vote, of the Companys
executive compensation; |
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3. |
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the ratification of the appointment of independent
auditors for fiscal 2016; and |
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4. |
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such other business as may properly come before the
meeting. |
Only stockholders of record at the
close of business on June 15, 2015, will be entitled to vote at the meeting and
any postponements or adjournments thereof.
Your vote is important. Whether or not
you plan to attend the meeting, we encourage you to read this proxy statement
and vote as soon as possible. Information on how to vote is contained in this
proxy statement. In addition, voting instructions are provided in the Notice of
Internet Availability of Proxy Materials, or, if you requested printed
materials, the instructions are printed on your proxy card and included in the
accompanying proxy statement. You can revoke a proxy at any time prior to its
exercise at the Annual Meeting by following the instructions in the proxy
statement.
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By Order of the Board of Directors, |
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William L. Deckelman, Jr. |
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Executive Vice President, General Counsel
& Secretary |
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Falls Church, Virginia |
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June 26, 2015 |
COMPUTER SCIENCES
CORPORATION |
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2015 Proxy
Statement |
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Table of Contents
Proxy Summary
This summary highlights information
contained elsewhere in this Proxy Statement. This summary does not contain all
of the information you should consider, and you should read the entire Proxy
Statement carefully before voting.
Annual
Meeting of Stockholders |
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Meeting
Agenda |
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Meeting Date: |
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August 14, 2015 |
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●Election of ten directors
●Advisory vote to approve executive
compensation
●Ratification of Deloitte & Touche LLP as our
independent auditor for fiscal year 2016
●Such other business that may properly come before
the meeting
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Meeting Time: |
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10:00 a.m., Eastern
Time |
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Admission
to Meeting: |
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Proof of share ownership will be
required to enter the CSC Annual Meeting. |
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Record Date: |
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June 15, 2015 |
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Voting: |
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Stockholders as of the record date
are entitled to vote. Each share of common stock is entitled to one vote
for each director nominee and one vote for each of the proposals to be
voted on. |
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Voting matters and vote
recommendation
Matter |
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Vote
Recommendation |
Management Proposals |
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1. |
Election of
directors |
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FOR each
nominee |
2. |
Advisory vote
to approve executive compensation |
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FOR |
3. |
Ratification of Deloitte & Touche LLP as our independent
auditor for fiscal year 2016 |
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FOR |
COMPUTER SCIENCES
CORPORATION |
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2015 Proxy
Statement |
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Table of
Contents
Our Director Nominees
The following table provides summary
information about each director nominee. Each director is elected annually by a
majority of votes cast.
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Director |
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Other Public |
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Committee
Memberships |
Name |
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Age |
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Since |
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Independent |
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Boards |
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AC |
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CC |
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NCG |
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EC |
David J. Barram |
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71 |
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2004 |
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0 |
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M |
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C |
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M |
Erik
Brynjolfsson |
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53 |
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2010 |
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0 |
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M |
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M |
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Rodney F. Chase |
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72 |
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2001 |
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3 |
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EO |
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EO |
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EO |
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Bruce B.
Churchill |
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57 |
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2014 |
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0 |
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M |
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M |
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Mark Foster |
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55 |
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Nominee |
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1 |
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Nancy Killefer |
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61 |
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2013 |
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2 |
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C |
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Sachin Lawande |
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48 |
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2015 |
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0 |
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M |
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J. Michael
Lawrie |
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62 |
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2012 |
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0 |
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C |
Brian P. MacDonald |
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49 |
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2013 |
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1 |
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C |
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M |
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Sean OKeefe |
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59 |
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2014 |
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0 |
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M |
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AC |
Audit
Committee |
C |
Chair |
CC |
Compensation
Committee |
M |
Member |
NCG |
Nominating
Corporate Governance Committee |
EO |
Ex-Officio
Member |
EC |
Executive
Committee |
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Attendance
Each director nominee who is a current
director attended at least 75% of the aggregate of all meetings of the Board
held during the fiscal year ended April 3, 2015 (Fiscal Year 2015 or Fiscal
2015).
COMPUTER SCIENCES CORPORATION
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2015 Proxy
Statement |
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Table of
Contents
STOCKHOLDER RETURN AND FISCAL 2015
COMPENSATION |
CSCs Total Shareholder Return (TSR)
was 10% in Fiscal 2015. Our three-year TSR (overlapping with Mr. Lawries tenure
as CEO) is 130%. Compensation to our executive officers reflects this
performance, as well as other achievements in the Companys ongoing
transformation.
The table below shows our cumulative
total shareholder return from the start of Fiscal 2013 to the last day of each
of the fiscal years shown below:
We are asking stockholders to approve,
on a non-binding, advisory basis, the compensation of our named executive
officers. In evaluating this Say-on-Pay proposal, we recommend you review our
Compensation Discussion and Analysis, which discusses the compensation policies
and practices underlying our executive compensation program and how pay is
aligned with our performance, along with the tables that follow.
The Companys executive compensation
programs for Fiscal 2015 were designed to support the continuation of the
Companys transformation. The success of these actions can be seen in the
Companys 130% three-year TSR (Fiscal 2013-Fiscal 2015) which overlaps with Mr.
Lawries tenure as CEO. Our three-year TSR of 130% led both the S&P 500
(56%) and the S&P North American Technology Services Index (74%) for the
same period. We believe our compensation design contributes directly to the
Companys success by motivating and rewarding an exceptional management team and
continuing to successfully accomplish the following:
●Encourage a performance-based culture driven by our CLEAR
(Client-focused, Leadership, Execution excellence, Aspiration and Results)
values;
●Base short-term and long-term incentive compensation on company-wide
achievement and individual performance goals; and
●Align the interests of the executives with those of our
stockholders.
COMPUTER SCIENCES CORPORATION
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2015 Proxy
Statement |
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Table of
Contents
Ratification of Independent
Auditors |
At the 2015 Annual Meeting of
Stockholders, stockholders will be asked to consider and to vote upon the
ratification of the appointment of Deloitte & Touche LLP as CSCs
independent auditors for Fiscal 2016. In order to assure continuing auditor
independence, the Audit Committee periodically considers whether there should be
a regular rotation of the independent registered public accounting firm. The
members of the Audit Committee and the Board believe that the continued
retention of Deloitte & Touche to serve as the Companys independent
registered public accounting firm is in the best interests of the Company and
its stockholders.
COMPUTER SCIENCES CORPORATION
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2015 Proxy
Statement |
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Table of Contents
TABLE OF CONTENTS
COMPUTER SCIENCES CORPORATION
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2015 Proxy
Statement |
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Table of Contents
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COMPUTER SCIENCES CORPORATION
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2015 Proxy
Statement |
Table of Contents
Computer Sciences Corporation
3170 Fairview Park Drive
Falls
Church, Virginia 22042
June 26, 2015
PROXY STATEMENT
We are providing these proxy materials
in connection with the 2015 Annual Meeting of Stockholders (the Annual
Meeting) of Computer Sciences Corporation (CSC or the Company and sometimes
referred to with the pronouns we, us and our). The Notice of Internet
Availability of Proxy Materials (the Notice), this proxy statement, any
accompanying proxy card or voting instruction card and our 2015 Annual Report to
Stockholders (2015 Annual Report), which includes our 2015 Annual Report on
Form 10-K, were first made available to stockholders on or about June 26, 2015.
This proxy statement contains important information for you to consider when
deciding how to vote on the matters brought before the Annual Meeting. Please
read it carefully.
We are delivering proxy materials for
the Annual Meeting under the United States Securities and Exchange Commissions
Notice and Access rules. These rules permit us to furnish proxy materials,
including this proxy statement and our 2015 Annual Report, to our stockholders
by providing access to such documents on the Internet instead of mailing printed
copies. Most stockholders received the Notice, which provides instructions on
how you may access and review all of the proxy materials on the Internet. The
Notice also instructs you as to how you may submit your proxy on the Internet.
More information about Notice and Access is set forth in Questions and Answers
about the Annual Meeting and Voting.
COMPUTER SCIENCES CORPORATION
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2015 Proxy
Statement |
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1 |
Table of Contents
QUESTIONS AND ANSWERS ABOUT THE
ANNUAL MEETING AND VOTING
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1. |
Who is soliciting my
vote? |
The Board of Directors of CSC
(sometimes referred to herein as the Board) is soliciting your vote at the 2015
Annual Meeting.
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2. |
When will the meeting take
place? |
The Annual Meeting will be held on
Friday, August 14, 2015 at 10:00 a.m., Eastern Time, at the headquarters of the
Company, 3170 Fairview Park Drive, Falls Church, Virginia 22042.
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3. |
What is the purpose of the Annual
Meeting? |
You will be voting on:
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the election of each of the ten director-nominees as directors of
CSC; |
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the approval, by non-binding
vote, of the Companys executive compensation; |
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the ratification of the selection
of Deloitte & Touche LLP as our auditors for the fiscal year ending
April 1, 2016 (Fiscal 2016); and |
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any other business that may properly come before the
meeting. |
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4. |
What are the Board of Directors
recommendations? |
The Board recommends a vote:
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1. |
for the election of each of the ten nominees for
director; |
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2. |
for the approval, on an advisory basis, of the Companys
executive compensation; and |
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3. |
for the ratification of the selection of Deloitte &
Touche LLP as our auditors for Fiscal
2016. |
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5. |
Who is entitled to vote at the Annual
Meeting? |
The Board of Directors set June 15,
2015 as the record date for the Annual Meeting (the Record Date). All
stockholders who owned CSC common stock at the close of business on June 15,
2015 may attend and vote at the Annual Meeting and any postponements or
adjournments thereof.
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COMPUTER SCIENCES CORPORATION
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2015 Proxy
Statement |
Table of Contents
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6. |
Why did I receive a notice in the mail regarding
the Internet availability of proxy materials this year instead of a paper
copy of proxy materials? |
Under the Notice and Access rules of
the United States Securities and Exchange Commission (the SEC), we are
permitted to furnish proxy materials, including this proxy statement and our
2015 Annual Report, to our stockholders by providing access to such documents on
the Internet instead of mailing printed copies. Most stockholders will not
receive printed copies of the proxy materials unless they request them. Instead,
the Notice, which was mailed to most of our stockholders, will instruct you as
to how you may access and review all of the proxy materials on the Internet. The
Notice also instructs you as to how you may vote your shares on the Internet. If
you would like to receive a paper or electronic copy of our proxy materials,
follow the instructions for requesting such materials in the Notice. Any request
to receive proxy materials by mail or electronically will remain in effect until
you revoke it.
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7. |
Can I vote my shares by filling out and
returning the Notice? |
No. The Notice identifies the items to
be voted on at the Annual Meeting, but you cannot vote by marking the Notice and
returning it. The Notice provides instructions on how to vote by (i) Internet,
(ii) telephone, (iii) requesting and returning a paper proxy card or voting
instruction card, or (iv) submitting a ballot in person at the
meeting.
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8. |
Why didnt I receive a Notice in the mail regarding the
Internet availability of proxy materials? |
If you previously elected to access
proxy materials over the Internet, you will not receive a Notice in the mail.
You should have received an email with links to the proxy materials and online
proxy voting. Additionally, if you previously requested paper copies of the
proxy materials or if applicable regulations require delivery of the proxy
materials, you will not receive the Notice.
If you received a paper copy of the
proxy materials or the Notice by mail, you can eliminate all such paper mailings
in the future by electing to receive an email that will provide Internet links
to these documents. Opting to receive all future proxy materials online will
save us the cost of producing and mailing documents to your home or business and
help us conserve natural resources. See http://www.icsdelivery.com/csc to
request complete electronic delivery. Enrollment for electronic delivery is
effective until cancelled.
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9. |
How many votes do I have? |
You will have one vote for each share
of our common stock you owned at the close of business on the Record Date,
provided those shares are either held directly in your name as the stockholder
of record or were held for you as the beneficial owner through a broker, bank or
other nominee.
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10. |
What is the difference between holding shares as a
stockholder of record and as a beneficial
owner? |
Most of our stockholders hold their
shares through a broker, bank or other nominee rather than directly in their own
name. As summarized below, there are some differences between shares held of
record and those owned beneficially.
COMPUTER SCIENCES CORPORATION
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2015 Proxy
Statement |
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3 |
Table of Contents
Stockholder of
Record. If your shares are registered
directly in your name with our transfer agent, Computershare, you are considered
the stockholder of record with respect to those shares, and the Notice or these
proxy materials are being sent directly to you. As the stockholder of record,
you have the right to grant your voting proxy directly to us, to submit proxies
electronically or by telephone or to vote in person at the Annual Meeting. If
you have requested printed proxy materials, we have enclosed a proxy card for
you to use.
Beneficial Owner. If your shares are held in a stock brokerage account or by a
bank or other nominee, you are considered the beneficial owner of shares held in
street name, and the Notice or these proxy materials are being forwarded to
you by your broker, bank or nominee who is considered the stockholder of record
with respect to those shares. As the beneficial owner, you have the right to
direct your broker, bank or nominee on how to vote your shares and you are also
invited to attend the Annual Meeting. However, since you are not the stockholder
of record, you may not vote these shares in person at the Annual Meeting, unless
you request, complete and deliver a legal proxy from your broker, bank or
nominee. If you requested printed proxy materials, your broker, bank or nominee
has enclosed a voting instruction card for you to use in directing the broker,
bank or nominee regarding how to vote your shares.
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11. |
How many votes must be present to hold the
Annual Meeting? |
A majority of our issued and
outstanding shares entitled to vote at the Annual Meeting as of the Record Date
must be present at the Annual Meeting in order to hold the Annual Meeting and
conduct business. This is called a quorum. Shares are counted as present at
the Annual Meeting if you are present and vote in person at the Annual Meeting
or by telephone or on the Internet or a proxy card has been properly submitted
by you or on your behalf. Both abstentions and broker non-votes are counted as
present for the purpose of determining the presence of a quorum.
As of the Record Date there were
137,851,290 shares of CSC common stock outstanding.
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12. |
How many votes are required to elect directors
and adopt the other proposals? |
Proposal 1 Election of
Directors. Directors are elected by a
majority vote in uncontested elections. Therefore, each director nominee must
receive a majority of the votes cast with respect to such nominee at the Annual
Meeting (the number of FOR votes must exceed the number of AGAINST votes).
Abstentions and, if applicable, broker non-votes are not counted as votes FOR
or AGAINST any nominee; therefore, they will have no effect on the outcome of
the vote on this proposal. In accordance with the Companys Corporate Governance
Guidelines, if an incumbent director nominee fails to receive the requisite
number of votes, such director nominee shall promptly tender his or her
resignation for consideration by the Nominating/Corporate Governance Committee.
Within 30 days following the certification of the stockholder vote, the
Nominating/Corporate Governance Committee will make a recommendation to the
Board of Directors as to the treatment of any director who did not receive a
majority vote, including whether to accept or reject any tendered resignation.
The Board of Directors will make a final determination within 90 days following
the certification of the election results, and publicly disclose its decision
and rationale.
Proposal 2 Advisory Vote on
Executive Compensation. This proposal, which
is non-binding, requires an affirmative FOR vote of a majority of the votes
cast (i.e.,
of the votes FOR or AGAINST) to be approved. Abstentions and, if applicable,
broker non-votes are not counted as votes FOR or AGAINST this proposal;
therefore, they will have no effect on the outcome of the vote on this
proposal.
Proposal 3 Ratification of
Independent Auditors. This proposal requires
an affirmative FOR vote of a majority of the votes cast (i.e., of the votes
FOR or AGAINST) to be approved. Abstentions are not counted as votes FOR
or AGAINST this proposal; therefore, they will have no effect on the outcome
of the vote on this proposal.
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COMPUTER SCIENCES CORPORATION
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2015 Proxy
Statement |
Table of Contents
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13. |
What if I dont give specific voting
instructions? |
Stockholders of
Record. If you are a stockholder of record
and you:
● |
Indicate when voting by Internet or by telephone that you wish to
vote as recommended by our Board of Directors;
or |
● |
Return a signed proxy card but do not indicate how you wish to
vote, |
then your shares will be voted in
accordance with the recommendations of the Board of Directors on all matters
presented in this proxy statement and as the proxy holders may determine in
their discretion regarding any other matters properly presented for a vote at
the meeting. If you indicate a choice with respect to any matter to be acted
upon on your proxy card or voting instruction card, the shares will be voted in
accordance with your instructions.
Beneficial Owners. If you hold shares beneficially in street name and do not
provide your broker with voting instructions, your shares may constitute broker
non-votes on certain proposals. Generally, broker non-votes occur on a
non-routine proposal where a broker is not permitted to vote on that proposal
without instructions from the beneficial owner, and instructions are not given.
Broker non-votes are considered present at the Annual Meeting, but not as voting
on a matter. Thus, broker non-votes are counted as present for purposes of
determining the existence of a quorum, but are not counted for purposes of
determining whether a matter has been approved. Thus, broker non-votes will not
affect the outcome of the election of directors, and the approval of the
Companys executive compensation, both of which are non-routine
proposals.
If you provide instructions, your
broker will vote your street name shares at the Annual Meeting with respect to
(i) the election of directors and (ii) approval of the Companys executive
compensation. Therefore, you should instruct your broker how to vote. If you do
not provide your broker with instructions, under the rules of the New York Stock
Exchange, your broker will not be authorized to vote your street name shares
with respect to any proposal other than the ratification of the independent
registered public accounting firm.
Participants in the Matched Asset
Plan (MAP). If you participate in the MAP,
you will receive a voting instruction form for all shares you may vote under the
plan. Under the terms of the MAP, the MAP trustee votes all shares held in the
CSC Stock Fund, but each participant in the MAP may direct the trustee how to
vote the shares of Company common stock allocated to his or her account. The MAP
trustee will vote all unallocated shares of common stock held by the MAP and all
allocated shares for which no timely voting instructions are received in the
same proportion as shares for which it has received valid voting instructions.
The deadline for returning your voting
instructions to the MAP trustee is 11:59 p.m., Eastern Time, on August 11,
2015.
Confidentiality of voting
instructions. Your voting instructions to the
MAP Trustee will be completely confidential. In no event will your voting
instructions be reported to CSC.
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14. |
Can I change my vote after I
voted? |
Yes. Even if you voted by telephone or
on the Internet or if you requested paper proxy materials and signed the proxy
card or voting instruction card in the form accompanying this proxy statement,
you retain the power to revoke your proxy or change your vote. You can revoke
your proxy or change your vote at any time before it is exercised by giving
written notice to the Corporate Secretary of CSC, specifying such revocation.
You may change your vote by a later-dated vote by telephone or on the Internet
or timely delivery of a valid, later-dated proxy or by voting by ballot in
person at the Annual Meeting. However, please note that if you would like to
vote at the Annual Meeting and you are not the stockholder of record, you must
request, complete and deliver a legal proxy from your broker, bank or
nominee.
COMPUTER SCIENCES CORPORATION
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Table of Contents
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15. |
What does it mean if I receive more than one
Notice, proxy or voting instruction
card? |
It generally means your shares are
registered differently or are in more than one account. Please provide voting
instructions for all Notices, proxy cards and voting instruction cards you
receive.
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16. |
Are there other matters to be acted upon at the
meeting? |
The Company does not know of any matter
to be presented at the Annual Meeting other than those described in this proxy
statement. If, however, other matters are properly presented for action at the
Annual Meeting, the proxy holders named in the proxy will have the discretion to
vote on such matters in accordance with their best judgment.
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17. |
Who is paying for the solicitation of
proxies? |
CSC is making this solicitation and
will pay the entire cost of preparing, assembling, printing, mailing and
distributing these proxy materials and soliciting votes. Our officers and
employees may, without any compensation other than the compensation they receive
in their capacities as officers and employees, solicit proxies personally or by
telephone, facsimile, e-mail or further mailings. We will, upon request,
reimburse brokerage firms and others for their reasonable expense in forwarding
proxy materials to beneficial owners of CSC stock. We have engaged the services
of Morrow & Co., LLC, 470 West Avenue, Stamford, CT 06902, with respect to
proxy soliciting matters at an expected cost of approximately $10,000 not
including incidental expenses.
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18. |
What if I have any questions about voting, electronic
delivery or Internet voting? |
Questions regarding voting, electronic
delivery or Internet voting should be directed to Investor Relations at
800.542.3070 or e-mail address, investorrelations@csc.com.
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COMPUTER SCIENCES CORPORATION
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2015 Proxy
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Table of Contents
HOW DO I
VOTE?
Your vote is
important. You may vote on the Internet, by
telephone, by mail or by attending the Annual Meeting and voting by ballot, all
as described below. The Internet and telephone voting procedures are designed to
authenticate stockholders by use of a control number and to allow you to confirm
that your instructions have been properly recorded. If you vote by telephone or
on the Internet, you do not need to return your Notice, proxy card or voting
instruction card. Telephone and Internet voting facilities are available now and
will be available 24 hours a day until 11:59 p.m., Eastern Time, on August 13,
2015.
Vote on the Internet
If you have Internet access, you may
submit your proxy by following the instructions provided in the Notice, or if
you requested printed proxy materials, by following the instructions provided
with your proxy materials and on your proxy card or voting instruction card. On
the Internet voting site, you can confirm that your instructions have been
properly recorded. If you vote on the Internet, you can also request electronic
delivery of future proxy materials.
Vote by Telephone
You can also vote by telephone by
following the instructions provided on the Internet voting site, or if you
requested printed proxy materials, by following the instructions provided with
your proxy materials and on your proxy card or voting instruction
card.
Vote by Mail
If you elected to receive printed proxy
materials by mail, you may choose to vote by mail by marking your proxy card or
voting instruction card, dating and signing it, and returning it to Broadridge
Financial Solutions, Inc. in the postage-paid envelope provided. If the envelope
is missing, please mail your completed proxy card or voting instruction card to
CSC, c/o Broadridge Financial Solutions, Inc., 51 Mercedes Way, Edgewood, New
York 11717. Please allow sufficient time for mailing if you decide to vote by
mail.
Voting at the Annual
Meeting
The method or timing of your vote will
not limit your right to vote at the Annual Meeting if you attend the Annual
Meeting and vote in person. However, if your shares are held in the name of a
bank, broker or other nominee, you must obtain a legal proxy, executed in your
favor, from the holder of record to be able to vote at the Annual Meeting. You
should allow yourself enough time prior to the Annual Meeting to obtain this
proxy from the holder of record.
The shares voted electronically, by
telephone or represented by the proxy cards received, properly marked, dated,
signed and not revoked, will be voted at the Annual Meeting.
COMPUTER SCIENCES CORPORATION
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Table of Contents
CORPORATE GOVERNANCE
CSC is committed to maintaining the
highest standards of corporate governance, which we believe is essential for
sustained success and long-term stockholder value. In light of this goal, the
Board oversees, counsels and directs management in the long-term interests of
the Company and our stockholders. The Boards responsibilities include, but are
not limited to:
● |
overseeing the management of our business and the assessment of our
business risks; |
● |
overseeing the processes for maintaining integrity with regard to
our financial statements and other public disclosures, and compliance with
law and ethics; |
● |
reviewing and approving our major
financial objectives and strategic and operating plans, and other
significant actions; and |
● |
overseeing our talent management and succession
planning. |
The Board discharges its
responsibilities through regularly scheduled meetings as well as telephonic
meetings, action by written consent and other communications with management as
appropriate. CSC expects directors to attend all meetings of the Board and the
Board committees upon which they serve, and all annual meetings of the Companys
stockholders at which they are standing for election or re-election as
directors. During Fiscal 2015, the Board held 11 meetings of the full Board.
During Fiscal 2015, the Audit Committee held 9 meetings, the Compensation
Committee held 8 meetings, the Nominating/Corporate Governance Committee held 6
meetings and the Executive Committee did not hold any meetings. No director
attended fewer than 75% of the aggregate of (1) the total number of meetings of
the Board, and (2) the total number of meetings held by all committees of the
Board on which he or she served during Fiscal 2015. Each of the directors then
serving attended the 2014 Annual Meeting of Stockholders other than Sean
OKeefe.
Governance is a continuing focus at
CSC, starting with the Board and extending to all employees. We solicit feedback
from our stockholders on governance and executive compensation practices and
engage in discussions with various groups and individuals on governance issues
and improvements. In this section, we describe some of our key governance
policies and practices.
Corporate Governance Guidelines |
The Board has long adhered to
governance principles designed to assure excellence in the execution of its
duties and regularly reviews the Companys governance policies and practices.
These principles are outlined in CSCs Corporate Governance Guidelines (the
Guidelines), which, in conjunction with our Amended and Restated Articles of
Incorporation (Articles of Incorporation), Amended and Restated Bylaws
(Bylaws), Code of Business Conduct (Code of Conduct), Board committee
charters and related policies, form the framework for the effective governance
of CSC.
The full text of the Guidelines, the
charters for each of the Board committees, the Code of Conduct, the Equity Grant
Policy, the Related Party Transactions Policy and Clawback Policy are available
on CSCs Website, www.csc.com, under Corporate Governance. These materials are
also available in print to any person, without charge, upon request, by calling
800.542.3070 or writing to:
Investor
Relations
CSC
3170 Fairview Park
Drive
Falls Church, Virginia 22042
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COMPUTER SCIENCES CORPORATION
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2015 Proxy
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Board Leadership Structure |
Mr. Rodney F. Chase serves as the
Chairman of our Board of Directors. Our independent directors determined that it
is in the best interests of the stockholders of the Company to separate the
roles of Chairman and CEO after thoughtful and rigorous consideration of its
governance structure. Separating the roles of Chairman and CEO creates clear and
unambiguous lines of authority. This strong counter balancing structure allows
the Board to focus on corporate governance and oversight and the CEO to focus on
the Companys business.
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Board Leadership
Structure |
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● |
Separation of Chairman and CEO
roles |
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● |
Non-executive Chairman of the
Board, Rodney F. Chase |
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● |
Strong committee
Chairs |
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● |
Active engagement by all nine
directors serving prior to the annual meeting, including 8 independent
directors |
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The Board believes that this
structure provides effective oversight of management. |
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CSCs governance processes include
executive sessions of the independent directors before and after every Board
meeting, annual evaluations by the independent directors of the CEOs
performance, succession planning, annual Board and committee self assessments
and the various governance processes contained in the Guidelines and the Board
committee charters.
Independent
Directors. The Board assesses the
independence of our directors and examines the nature and extent of any
relations between the Company and our directors, their families and their
affiliates. The Guidelines provide that a director is independent if he or she
satisfies the New York Stock Exchange (NYSE) requirements for director
independence (as set forth in Appendix A to this proxy statement) and the Board
of Directors affirmatively determines that the director has no material
relationship with CSC (either directly, or as a partner, stockholder or officer
of an organization that has a relationship with CSC). In Fiscal 2015, the Board
determined that, with the exception of our CEO, each of the remaining seven
directors David J. Barram, Erik Brynjolfsson, Rodney F. Chase, Bruce B.
Churchill, Nancy Killefer, Brian MacDonald and Sean OKeefe is independent. In
addition, Sachin Lawande and Mark Foster are independent.
Independent Director Meetings.
The non-management directors regularly meet
in executive session prior to the commencement and/or after the conclusion of
each regularly scheduled Board meeting, and meet at such additional times as
they may determine.
Committee Independence Requirements.
All members serving on the Audit Committee,
Compensation Committee and Nominating/Corporate Governance Committee must be
independent as defined by the Guidelines. In addition, Audit Committee members
must meet heightened independence criteria under the rules and regulations of
the NYSE and the SEC relating to audit committees, and each Compensation
Committee member must meet heightened independence criteria under the rules and
regulations of the NYSE and the SEC relating to compensation committees, be a
non-employee director pursuant to the Securities Exchange Act of 1934, as
amended (the Exchange Act) and an outside director for purposes of Section
162(m) of the Internal Revenue Code of 1986, as amended (the Internal Revenue
Code).
COMPUTER SCIENCES CORPORATION
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Table of Contents
Oversight of Risk
Management |
We believe our Board leadership
structure supports a risk-management process in which senior management is
responsible for our day-to-day risk-management processes and the Board provides
oversight of our risk management. As part of its oversight responsibility, the
Board oversees and maintains the Companys governance and compliance processes
and procedures to promote high standards of responsibility, ethics and
integrity.
Management Role. In order for the Company to identify and mitigate the
Companys risk exposures, the Company has established an Enterprise Risk
Management (ERM) function to (i) identify risks in the strategic, operational,
financial reporting and compliance domains, for the Company as a whole, as well
as for each operating unit, and (ii) evaluate the effectiveness of existing
mitigation strategies. The ERM function reports to the Chief Financial Officer
(CFO), and coordinates and reviews assessments of internal processes and
controls for ongoing compliance with internal policies and legal regulatory
requirements. The ERM function periodically reports potential areas of risk to
the Board and its committees.
During Fiscal 2014, CSC centralized
ownership of our enterprise risk, issue, and opportunity management framework
under a single executive owner. In Fiscal 2015, we deployed consistent
processes, definitions, and tools to proactively address operational, financial,
compliance and strategic risks, issues, and opportunities.
Board Role. The Board has overall responsibility for oversight of risk
and assesses our strategic and operational risks throughout the year on an
ongoing basis. Members of senior management regularly report on the
opportunities and risks faced by the Company in the markets in which the Company
conducts business.
Committee Role. In fulfilling its oversight role, the Board delegates certain
risk management oversight responsibility to the Boards committees. The
committees meet regularly and report any significant issues and recommendations
discussed during the committee meetings to the Board. Specifically, each
committee fulfills the following oversight roles:
● |
The Audit Committee oversees
risks related to accounting, financial reporting processes and internal
controls of the Company as well as reviews the Companys policies and
practices with respect to risk assessment and risk management. During the
Audit Committee review, the Committee discusses the Companys major risk
exposures and the steps that have been taken to monitor and control such
exposures with management and meets separately with management, internal
auditors and independent auditors. The Audit Committee reports the results
of its review to the Board. |
● |
The Compensation Committee
monitors the risks associated with succession planning and leadership
development as well as compensation plans, including evaluating the effect
that the Companys executive and sales compensation plans may have on
decision making. |
● |
The Nominating/Corporate
Governance Committee monitors the risks related to the Companys
governance structure and process. The Nominating/Corporate Governance
Committee is responsible for developing and implementing a director
evaluation program to measure the individual and collective performance of
directors and the fulfillment of their responsibilities to our
stockholders, including an assessment of the Boards compliance with
applicable corporate governance requirements and identification of areas
in which the Board might improve its performance. The Nominating/Corporate
Governance Committee also is responsible for developing and implementing
an annual self-evaluation process for the Board designed to assure that
directors contribute to our corporate governance and to our performance.
These tasks are accomplished in part through our annual Board
evaluation. |
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COMPUTER SCIENCES CORPORATION
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2015 Proxy
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Table of Contents
During Fiscal 2015, CSC management
reviewed its executive and non-executive compensation programs and determined
that none of its compensation programs encourages or creates unnecessary risk
taking, and none is reasonably likely to have a material adverse effect on the
Company. In conducting this assessment, CSC inventoried its executive and
non-executive plans and programs and analyzed the components and design features
of these programs in the context of risk mitigation. A summary of the findings
of the assessment was provided to the Compensation Committee and the Board.
Overall, CSC concluded that (1) CSCs executive compensation programs provide a
mix of awards with performance criteria and design features that mitigate
excessive risk taking; (2) non-executive employee (non-sales) arrangements are
primarily fixed compensation (salary and benefits) with limited incentive
opportunity and do not encourage excessive risk taking; and (3) sales force
incentive compensation plans moderate risk by using metrics that focus on
driving sales growth, but not at the expense of profitability. CSC also
considered its robust executive stock ownership guidelines, clawback policy and
anti-hedging policy as risk mitigating features of its executive compensation
program. In particular, during Fiscal 2015 CSC revised its executive stock
ownership guidelines to encourage faster compliance by changing from a static to
a scaled retention requirement for shares acquired through equity incentive
awards, as further discussed in the Compensation Discussion and Analysis
below.
Equity Ownership
Guidelines |
Under stock ownership guidelines
adopted by the Board, Board members, other than the CEO, have an equity
ownership requirement of five times their annual retainer to be achieved over a
three-year period. Restricted stock units, as well as directly held shares, are
taken into account for purposes of determining whether requirements have been
met. Stock ownership guidelines for the executive officers, including the CEO,
are described under Compensation Discussion and Analysis Additional
Compensation Policies Equity Ownership Guidelines.
Talent Management and Succession
Planning |
The Companys Compensation Committee
and Board are actively engaged and involved in succession planning and talent
management and they engage annually in a review of succession plans in August.
The annual review focuses on emerging talent and key positions at the executive
officer and operating unit leadership level that are important to the execution
of the Companys strategic priorities and are critical to achieving the
Companys business goals. The Compensation Committee is also updated on issues
relating to the overall workforce such as diversity, health and welfare
benefits, performance management, turnover, attrition and engagement.
The Board recognizes the importance of
its members keeping current on Company and industry issues and their
responsibilities as directors. All new directors attend orientation training
soon after being elected to the Board. Also, the Board encourages attendance at
continuing education programs for Board members, which may include internal
strategy or topical meetings, third-party presentations, and externally-offered
programs.
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Table of Contents
Oversight of Related Party
Transactions |
The Company has adopted a written
policy requiring the approval of the Nominating/Corporate Governance Committee
of all transactions in excess of $120,000 between the Company and any related
person (Interested Transactions). For the purposes of this policy, a related
person is any person who was in any of the following categories at any time
during Fiscal 2015:
● |
A director or executive officer
of the Company; |
● |
Any nominee for
director; |
● |
Any immediate family member of a
director or executive officer, or of any nominee for director. Immediate
family members are any child, stepchild, parent, stepparent, spouse,
sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law of such director, executive officer or
nominee for director, and any person (other than a tenant or employee)
sharing the household of such director, executive officer or nominee for
director; and |
● |
Any person who was in any of the
following categories when a transaction in which such person had a direct
or indirect material interest occurred or
existed: |
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○ |
Any beneficial owner of more than
5% of the Companys common stock; or |
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○ |
Any immediate family member of
any such beneficial owner, which means any child, stepchild, parent,
stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law of such security holder,
and any person (other than a tenant or employee) sharing the household of
such security holder. |
A transaction includes, but is not
limited to, any financial transaction, arrangement or relationship (including
any indebtedness or guarantee of indebtedness) or any series of similar
transactions, arrangements or relationships.
In determining whether to approve an
interested transaction, the Nominating/Corporate Governance Committee will take
into account, among other factors it deems appropriate, whether the interested
transaction is on terms no less favorable than terms generally available to an
unaffiliated third party under the same or similar circumstances and the extent
of the related partys interest in the transaction. No director will participate
in any discussion or approval of an interested transaction for which he or she
(or an immediate family member) is a related party, except that the director
will provide all material information concerning the interested transaction to
the Nominating/Corporate Governance Committee.
There have been no transactions since
March 29, 2014 (i.e., the first day of Fiscal 2015), nor are there any currently
proposed transactions, in which the Company was or is to be a participant and
the amount involved exceeds $120,000, which required the approval of the
Nominating/Corporate Governance Committee under the Companys interested
transaction policy or in which any related person had, has or will have a direct
or indirect material interest and which is required to be disclosed under
applicable SEC rules.
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COMPUTER SCIENCES CORPORATION
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Code of Ethics and Standards of
Conduct |
CSC is committed to high standards of
ethical conduct and professionalism, and our Code of Conduct confirms our
commitment to ethical behavior in the conduct of all CSC activities and reflects
our CLEAR values. The Code of Conduct applies to all directors, all officers
(including our CEO, CFO and Principal Accounting Officer (PAO)) and employees
of CSC and it sets forth our policies and expectations on a number of topics
including avoiding conflicts of interest, confidentiality, insider trading,
protection of CSC and customer property and providing a proper and professional
work environment. We maintain a worldwide toll-free and internet-based helpline,
the CSC OpenLine, which employees can use to communicate any ethics-related
concerns, and we provide training on ethics and compliance topics for all
employees. The CSC OpenLine is administered by a third-party provider. The
ethics and compliance function resides in the Ethics and Compliance Office and
is managed by CSCs Chief Ethics and Compliance Officer.
In Fiscal 2015, there were no waivers
of any provisions of the Code of Conduct for the CEO, CFO or PAO. In the event
the Company amends or waives any provision of the Code of Conduct applicable to
our CEO, CFO and PAO that relates to any element of the definition of code of
ethics enumerated in Item 406(b) of Regulation S-K promulgated under the
Exchange Act, the Company intends to disclose these actions on the Company
website.
The Companys policy on Board diversity
is set forth in the Guidelines, which provide that Board membership should
reflect diversity in many respects, by including, for example, persons diverse
in geography, gender and ethnicity. In addition, the Nominating/Corporate
Governance Committee seeks to maintain a mix of individuals who possess
experience in the sectors in which the Company operates, such as international
business, technology, health care, government service and public policy, as well
as those having backgrounds as executives in operations, finance, accounting,
marketing and sales. The Nominating/Corporate Governance Committee deems this
policy to be effective.
Mandatory Retirement of
Directors |
Under our Bylaws, directors must retire
by the close of the first annual meeting of stockholders held after they reach
age 72, unless the Board determines that it is in the best interests of CSC and
its stockholders for the director to continue to serve until the close of a
subsequent annual meeting. The Board determined upon recommendation of the
Nominating/Corporate Governance Committee that it is in the best interests of
the Company for Mr. Chase to continue to serve until the 2016 Annual
Meeting.
Resignation of Employee
Directors |
Under the Guidelines, the CEO must
offer to resign from the Board when he or she ceases to be a CSC
employee.
Communicating with the Board or the
Chairman |
Stockholders and other interested
parties may communicate with the Board, individual directors, the non-management
directors as a group, or with the non-executive Chairman, by writing in care of
the Corporate Secretary, Computer Sciences Corporation, 3170 Fairview Park
Drive, Falls Church, Virginia 22042. The Corporate Secretary reviews all
submissions and forwards to members of the Board all appropriate communications
that in his judgment are not offensive or otherwise objectionable and do not
constitute commercial solicitations.
COMPUTER SCIENCES CORPORATION
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Table of Contents
BOARD STRUCTURE AND
COMMITTEE COMPOSITION
As of the date of this proxy statement,
the Board has nine directors and four standing committees: the Audit Committee,
the Compensation Committee, the Nominating/Corporate Governance Committee and
the Executive Committee.
Each director serving on the Audit
Committee, Compensation Committee or Nominating/Corporate Governance Committee
must be independent. A majority of the members of the Executive Committee must
be independent. In addition:
● |
Each Audit Committee member must
meet heightened independence criteria under the rules and regulations of
the NYSE and the SEC relating to audit committees, and must be financially
literate. No member of the Audit Committee may simultaneously serve on the
audit committees of more than three other public companies unless the
Board determines that such simultaneous service would not impair the
members ability to effectively serve on the Audit Committee. Three
members of the Audit Committee serve on no other public company audit
committee and one ex-officio member serves on two other public company
audit committees. The Board has determined that such simultaneous service
does not impair the ability of the ex-officio member of the Audit
Committee who serves on the other public company audit committees to
effectively serve in his CSC Audit Committee
role. |
● |
Messrs. Barram, MacDonald and
Churchill each qualifies as an audit committee financial expert, for
purposes of the rules of the SEC, and all members of the Committee are
financially literate. |
● |
Each Compensation Committee
member must meet heightened independence criteria under the rules and
regulations of the NYSE and SEC relating to compensation committees, be a
non-employee director for purposes of Rule 16b-3 promulgated under the
Exchange Act and an outside director for purposes of Section 162(m) of
the Internal Revenue Code. The Board has determined that each committee
member satisfies all applicable requirements for membership on that
committee. |
● |
The current committee membership,
the number of meetings during the last fiscal year and the function of
each of the standing committees are described
below. |
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COMPUTER SCIENCES CORPORATION
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2015 Proxy
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Table of Contents
Audit Committee
Committee |
Current
Members |
Primary
Responsibilities |
Number of
Fiscal 2015
Meetings |
Audit |
Brian P.
MacDonald (Chairman) David J. Barram Rodney F.
Chase, ex-officio Bruce B. Churchill |
➢ Oversees financial
reporting, accounting, control and compliance matters.
➢ Appoints and
evaluates the independent auditor.
➢ Reviews with the
internal and independent auditors the scope, results and adequacy of their
audits and effectiveness of internal controls.
➢ Reviews material
financial disclosures.
➢ Pre-approves all
audit and permitted non-audit services.
➢ Annually reviews the
Companys compliance programs and receives regular updates about
compliance matters.
➢ Annually reviews the
Companys disclosure controls and procedures.
➢ Reviews, and makes
recommendations to the Board about related person
transactions. |
9 |
Anyone with questions or complaints
regarding accounting, internal accounting controls or auditing matters may
communicate them to the Audit Committee by calling CSCs Open Line available at
http://www.cscopenline.ethicspoint.com. Calls may be confidential or anonymous.
All such questions and complaints will be forwarded to the Audit Committee for
its review and will be simultaneously reviewed and addressed under the direction
of the Head of Internal Audit. The Audit Committee may direct special treatment,
including the retention of outside advisors, for any concern communicated to it.
The Code of Conduct prohibits retaliation against CSC employees for any report
or communication made in good faith through the Open Line.
Compensation
Committee
Committee |
Current
Members |
Primary
Responsibilities |
Number of
Fiscal 2015
meetings |
Compensation |
Nancy
Killefer (Chairman) Erik Brynjolfsson Rodney F.
Chase, ex-officio Sachin Lawande Sean
OKeefe |
➢ Approves and
recommends full Board approval of the CEOs compensation based upon an
evaluation of his performance by the independent directors.
➢ Reviews and approves
senior managements compensation.
➢ Administers incentive
and equity compensation plans and, in consultation with senior management,
approves compensation policies.
➢ Reviews executive
compensation disclosures and the annual compensation risk
assessment. |
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COMPUTER SCIENCES CORPORATION
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Table of Contents
Compensation Committee
Interlocks and Insider Participation. None of
the members of the Compensation Committee was at any time during Fiscal 2015, or
at any other time, one of our officers or employees. No executive officer of the
Company served or serves on the compensation committee or board of any company
that employed or employs any member of the Compensation Committee or
Board.
Nominating/Corporate Governance
Committee
Committee |
Current
Members |
Primary
Responsibilities |
Number of
Fiscal 2015 meetings |
Nominating/ Corporate Governance |
David J.
Barram (Chairman) Erik Brynjolfsson Rodney F.
Chase, ex-officio Brian MacDonald |
➢Monitors the Boards structure and operations.
➢Sets criteria for Board membership.
➢Searches for and screens candidates to fill Board vacancies and
recommends candidates for election.
➢Evaluates director and Board performance and assesses Board
composition and size.
➢Evaluates the Companys corporate governance process.
➢Recommends to the Board whether to accept the resignation of
incumbent directors that fail to be re-elected in uncontested
elections. |
6 |
Executive Committee
Committee |
Current
Members |
Primary
Responsibilities |
Number of
Fiscal 2015 meetings |
Executive |
J.Michael
Lawrie (Chairman) David J. Barram Rodney F. Chase |
➢Assists the CEO in making decisions on how best to progress the
strategy set by the Board between Board meetings.
➢Assists in time sensitive decision-making to achieve strategic
objectives.
➢Assists in implementation of strategy set by the
Board. |
0 |
16 |
|
COMPUTER SCIENCES CORPORATION
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|
|
|
2015 Proxy
Statement |
Table of Contents
DIRECTOR COMPENSATION
Mr. Lawrie, as CEO and an employee
director, does not receive any separate compensation for his Board activities.
The following table sets forth the annual retainer and attendance fees paid to
our non-employee directors.
Fiscal 2015 Director Retainers and
Fees |
Annual
Retainer1 |
|
$90,000 |
Annual Equity Award (Non-Executive
Chairman)2 |
|
$350,000 |
Annual Equity Award (all
other non-employee directors)2 |
|
$160,000 |
Non-Executive Chairman
Retainer1 |
|
$150,000 |
Audit Committee Chairman
Retainer1 |
|
$20,000 |
Compensation Committee Chairman
Retainer1 |
|
$15,000 |
Nominating/Corporate
Governance Committee Chairman Retainer1 |
|
$10,000 |
Committee Member
Retainer1 |
|
$10,000 |
Additional Meeting
Attendance Fee1,3 |
|
$2,500 per
meeting |
1. |
|
Amounts payable in cash may be deferred pursuant to the Companys
Deferred Compensation Plan, which is described further below in this proxy
statement. |
|
2. |
|
Restricted stock unit (RSU) awards vest in full at the earlier of
(i) the first anniversary of the grant date or (ii) the next Annual
Meeting date, and are automatically redeemed for CSC stock and dividend
equivalents either at that time or, if an RSU deferral election form is
submitted, upon the date or event elected by the director. Directors may
elect to receive deferred RSUs at either a fixed in-service distribution
date, which may be in August of any year after the year in which the RSUs
vest within 15 years of the grant date, or upon their separation from the
Board. Distributions made upon a directors separation from the Board may
occur in either a lump sum or in annual installments over periods of 5, 10
or 15 years, per the directors election. In addition, RSUs vest in full
upon a change in control of the Company. |
|
3. |
|
For meetings, special projects and assignments involving travel,
once a director has exceeded (i) an aggregate of 8 Board meetings,
projects and assignments or (ii) an aggregate of committee meetings,
projects and assignments equal to 6 times the number of committees on
which the director serves. |
COMPUTER SCIENCES CORPORATION
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2015 Proxy
Statement |
|
17 |
Table of Contents
The following table sets forth for each
of the non-management directors certain information with respect to compensation
earned in Fiscal 2015.
Name (a) |
|
Fees Earned1 or Paid in
Cash (b) |
|
Stock
Awards2 (c) |
|
Total (d) |
David J. Barram |
|
$ |
122,500 |
|
$ |
161,001 |
|
$ |
283,501 |
Erik Brynjolfsson |
|
|
110,000 |
|
|
161,001 |
|
|
271,001 |
Rodney F. Chase |
|
|
150,000 |
|
|
351,817 |
|
|
501,817 |
Bruce B. Churchill4 |
|
|
63,315 |
|
|
161,001 |
|
|
224,316 |
Judith R.
Haberkorn3 |
|
|
46,196 |
|
|
|
|
|
46,196 |
Nancy Killefer |
|
|
111,997 |
|
|
161,001 |
|
|
272,998 |
Brian MacDonald |
|
|
123,982 |
|
|
161,001 |
|
|
284,983 |
Sean OKeefe4 |
|
|
63,315 |
|
|
161,001 |
|
|
224,316 |
Chong Sup
Park3 |
|
|
36,957 |
|
|
|
|
|
36,957 |
Lawrence A. Zimmerman3 |
|
|
44,348 |
|
|
|
|
|
44,348 |
____________________
1. |
|
Column (b) reflects all cash compensation earned during Fiscal
2015, whether or not payment was deferred pursuant to the Deferred
Compensation Plan. |
|
2. |
|
Each non-employee director as of the close of our 2014 Annual
Meeting of Stockholders on August 13, 2014, other than Mr. Chase, received
2,700 RSUs determined by (i) dividing $160,000 by the closing price of our
Common Stock on the New York Stock Exchange Composite Tape on the grant
date of August 18, 2014 ($59.63) and (ii) rounding the result to the
nearest multiple of 100. Mr. Chase received 5,900 RSUs, determined by
dividing $350,000 by the closing price of our Common Stock on the grant
date ($59.63) and rounding to the nearest multiple of 100. Column (c)
reflects the grant date fair value computed in accordance with Financial
Accounting Standards Board Accounting Standards Codification Topic 718 -
Compensation - Stock Compensation (FASB ASC Topic 718) in connection
with the RSUs granted on August 18, 2014 to the directors then serving.
For a discussion of the assumptions made in the valuation of restricted
stock and RSUs, reference is made to the section of Note 1 of the
Consolidated Financial Statements in the Companys 2015 Annual Report
filed on Form 10-K providing details of the Companys accounting under
FASB ASC Topic 718. The RSUs will vest in full on August 14, 2015 and are
automatically redeemed for shares of our Common Stock and dividend
equivalents. The aggregate number of stock awards outstanding for each
director at fiscal year-end are as follows: |
Name |
|
Aggregate Stock Awards
Outstanding as of April 3, 2015 |
David J. Barram |
|
27,400 |
Erik Brynjolfsson |
|
12,900 |
Rodney F. Chase |
|
45,440 |
Bruce B. Churchill |
|
2,700 |
Nancy Killefer |
|
2,700 |
Brian MacDonald |
|
2,700 |
Sean OKeefe |
|
2,700 |
3. |
|
Served on the Board until the 2014 Annual Meeting of Stockholders
held on August 13, 2014. |
|
4. |
|
Elected to the Board at the 2014 Annual Meeting of Stockholders
held on August 13, 2014. |
18 |
|
COMPUTER SCIENCES CORPORATION
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|
|
|
2015 Proxy
Statement |
Table of Contents
PROPOSAL 1 - ELECTION OF DIRECTORS
Our Board of Directors has nominated
ten persons for election as directors at the 2015 Annual Meeting to hold office
until the 2016 Annual Meeting or until their successors have been elected and
qualified. Under our Bylaws, directors must retire by the close of the first
annual meeting of stockholders held after they reach age 72, unless the Board
determines that it is in the best interests of CSC and its stockholders for the
director to continue to serve until the close of a subsequent annual meeting.
The Board determined upon recommendation of the Nominating/Corporate Governance
Committee that it is in the best interests of the Company for Mr. Chase to
continue to serve until the 2016 Annual Meeting.
Directors are elected by a majority
vote in uncontested elections; therefore, each director nominee must receive a
majority of the votes cast with respect to such nominee at the Annual Meeting
(the number of FOR votes must exceed the number of AGAINST votes). In
accordance with the Guidelines, if an incumbent director nominee fails to
receive the requisite number of votes, such director nominee shall promptly
tender his or her resignation for consideration by the Nominating/Corporate
Governance Committee.
It is intended that the accompanying
proxy, if executed and returned with no voting instructions indicated, will be
voted for the election to the Board of the ten director nominees in this proxy
statement.
Director Nomination
Process |
The Nominating/Corporate Governance
Committee is responsible for reviewing and assessing with the Board the
appropriate skills, experience, and background sought for Board members in the
context of our business and then-current membership on the Board. This
assessment of Board skills, experience, and background includes numerous diverse
factors including independence, experience, age and gender and ethnic diversity.
In addition, the Board believes that current and potential directors
collectively should possess the following mix of skills and
attributes:
● |
Professional and personal ethics and
values |
● |
Senior level management or operations
experience |
● |
Government and public policy
experience |
● |
Experience in major academic
institution |
● |
Public company governance
experience |
● |
International business
experience |
● |
Financial literacy and
expertise |
● |
Experience in areas of CSCs
business |
● |
Independence |
In evaluating potential director
nominees, the Nominating/Corporate Governance Committee considers each of these
attributes. The Committee then considers the contribution they would make to the
quality of the Boards decision making and effectiveness.
The Nominating/Corporate Governance
Committee will also consider potential director candidates recommended by
stockholders as described under Business for 2016 Annual Meeting at the end of
this Proxy Statement. The Committee has retained from time to time third-party
search firms to identify qualified director candidates and to assist the
Committee in evaluating candidates that have been identified by
others.
COMPUTER SCIENCES CORPORATION
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|
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|
2015 Proxy
Statement |
|
19 |
Table of Contents
Each of the nominees has a strong
reputation and experience in areas relevant to the strategy and operations of
the Companys businesses, particularly industries and growth segments that the
Company serves, such as technology, financial services, international business
and government, as well as key geographic markets where it operates. Each of the
nominees holds or has held senior executive positions in large, complex
organizations or has relevant operating experience or experience in a major
academic institution. In these positions, they have also gained experience in
core management skills, such as strategic and financial planning, public company
financial reporting, corporate governance, risk management, thought leadership,
executive management and leadership development. Many of our directors also have
experience serving on boards of directors and board committees of other public
companies.
The Board also believes that each of
the nominees has other key attributes that are important to an effective board:
integrity and demonstrated high ethical standards, sound judgment, analytical
skills, the ability to engage management and each other in a constructive and
collaborative fashion, diversity of origin, background, experience and thought,
and the commitment to devote significant time and energy to service on the Board
and its committees.
The biographies of each of the nominees
below contains information as of the date of this proxy statement regarding the
persons service as a director, director positions held currently or at any time
during the last five years and skills, experience and qualifications that led to
the conclusion that such person should serve as one of our directors.
|
|
|
David J.
Barram Age: 71 Director Since: 2004 |
|
CSC Committees:
●Audit
●Nominating/Corporate Governance (Chair)
●Executive |
|
Private
Directorships:
●Quisk, Inc. |
|
|
|
|
|
|
|
Mr. Barram is director of Quisk,
Inc. (formerly Mobibucks Corporation), a provider of mobile payments and
digital currency solutions, worldwide. Prior to his service as director,
Mr. Barram served as Chief Executive Officer of Mobibucks from 2006 to
2007 and Administrator of the U.S. General Services Administration,
retired as of 2000. Mr. Barram also served as a director of Pope &
Talbot, Inc., from 2001 to 2008, and NetIQ Corporation, from 2002 to 2006.
He was also chairman of Mobibucks from 2007 to
2012. |
Skills and
Qualifications: |
● |
Senior Level
Management Experience: Former Chief Financial
Officer of Silicon Graphics and Apple Computer |
● |
Government and Public
Policy Experience: Former Administrator of the U.S.
General Services Administration |
● |
Experience in CSCs
Business Areas: Extensive executive experience in
the technology sector |
|
|
20 |
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COMPUTER SCIENCES CORPORATION
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|
|
|
2015 Proxy
Statement |
Table of Contents
|
|
|
Erik
Brynjolfsson Age: 53 Director Since: 2010 |
|
CSC Committees:
●Compensation
●Nominating/Corporate
●Governance |
|
|
|
|
|
|
|
|
|
Dr. Brynjolfsson is the Schussel
Family Professor at the MIT Sloan School. Dr. Brynjolfsson also serves as
the director of the MIT Center for Digital Business, since 2002, a
research associate at the National Bureau of Economic Research, since
2006, and the Chairman of the MIT Sloan Management Review, since 2007. Dr.
Brynjolfsson lectures worldwide on technology strategy, productivity and
intangible assets. Dr. Brynjolfsson served as a director of CSK
Corporation from 2006 to 2008. |
Skills and
Qualifications: |
● |
Public Company
Governance Experience: Experience as a director of a
public company in addition to
CSC |
● |
Major Academic
Institution Experience: Professor at the MIT Sloan
School; director of the MIT Center for Digital Business |
● |
Experience in CSCs
Business Areas: Internationally recognized expert in
technology strategy, productivity
and intangible assets and director of the MIT Center for Digital
Business |
|
|
|
Rodney F.
Chase, Non-executive
Chair Age: 72 Director Since: 2001 |
|
CSC Committees:
●Audit (ex officio)
●Nominating/Corporate Governance (ex officio)
●Compensation (ex officio)
●Executive |
|
Public
Directorships:
●Tesoro Corporation
●Genel Energy plc
●Hess Corporation |
|
|
|
|
|
|
|
Mr. Chase assumed the role of
non-executive Chairman of the Board of CSC on March 19, 2012. He served as
non-executive chairman of Petrofac Ltd., a provider of facilities
solutions to the oil and gas industry, from 2005 to 2011. He is also the
former Deputy Group Chief Executive and Managing Director of BP p.l.c., an
oil and gas company, serving from 1992 to 2003. Mr. Chase served as Deputy
Chairman of Tesco p.l.c., from 2002 to 2010, a director of Nalco Company
from 2005 to 2011 and a director of Tesoro Corporation since 2005. He has
served as non-executive Chairman of Genel Energy plc since 2011. He has
also served as a director of Hess Corporation since
2013. |
Skills and
Qualifications: |
● |
Senior Level
Management Experience: Former Deputy Chief Executive
and Managing Director of a major
worldwide public company |
● |
Public Company
Governance Experience: Experience as a director in
three other public companies in
addition to CSC |
● |
International Business
Experience: Extensive chief executive and
operational experience in a major international energy company |
● |
Experience in CSCs
Business Areas: Extensive experience in the energy
industry |
|
|
COMPUTER SCIENCES CORPORATION
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|
2015 Proxy
Statement |
|
21 |
Table of Contents
|
|
|
Bruce
Churchill Age: 57 Director Since: 2014 |
|
CSC Committees:
●Audit
●Nominating/Corporate
●Governance |
|
|
|
|
|
|
|
|
|
Mr. Churchill has served as the
Executive Vice President of DIRECTV, President of DIRECTV Latin America
LLC and as President-New Enterprises since January 2004. He served as
Chief Financial Officer of DIRECTV from January 2004 to March 2005. Prior
to joining DIRECTV, Mr. Churchill served as President and Chief Operating
Officer of STAR, a position he held beginning in May 2000. Previously, he
served as the Deputy Chief Executive Officer of STAR since 1996. Prior to
joining STAR, Mr. Churchill served as Senior Vice President, Finance at
Fox Television. |
Skills and
Qualifications: |
● |
Senior Level
Management Experience: Executive Vice President of
DIRECTV, a provider of digital television entertainment in the United States, Latin America and
Asia |
● |
International Business
Experience: Extensive experience as an operating
executive in Latin America and
Asia |
● |
Experience in CSCs
Business Areas: Extensive experience as an executive
vice president and chief financial
officer in an international digital entertainment company |
● |
Financial Literacy:
Extensive experience in corporation finance and
accounting, including as former Chief Financial Officer of publicly traded international digital
entertainment companies |
|
|
|
Mark
Foster Age: 55 Director Nominee |
|
Public
Directorships:
●Heidrick & Struggles International, Inc. |
|
|
|
|
|
|
|
|
|
Mr. Foster served as Group Chief
Executive-Management Consulting of Accenture plc (Accenture), a global
management consulting, technology services and outsourcing company, from
September 2006 until his retirement from Accenture in March 2011. In
addition, Mr. Foster was the head of Accentures Global Markets area from
September 2009 until March 2011 with oversight of the firms thought
leadership, industry initiatives, investment priorities and client account
leadership. Prior to that, Mr. Foster served as Accentures Group Chief
Executive-Products Operating Group from March 2002 to September 2006 with
responsibility for the firms global business in the retail, consumer
goods, industrial and health and life sciences sectors. Prior to that, Mr.
Foster worked in a variety of positions of increasing responsibility in
his 26-year career at Accenture straddling management consulting,
technology and outsourcing.
Mr. Foster has been a
non-executive director of Heidrick & Struggles, the Nasdaq-quoted
global executive search company since 2011. He also served as a
non-executive director of Fidessa PLC, a FTSE 250 software company
headquartered in the United Kingdom from 2012 to
2014. |
Skills and
Qualifications: |
● |
Senior Level
Management Experience: Group Chief
Executive-Management Consulting of Accenture |
● |
International Business
Experience: Extensive experience as an executive
with a global management consulting,
technology services and outsourcing company |
● |
Public Company
Governance Experience: Experience as a director in
two other public companies |
● |
Experience in CSCs
Business Areas: Extensive global experience in
professional services, technology and outsourcing |
|
|
22 |
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COMPUTER SCIENCES CORPORATION
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|
2015 Proxy
Statement |
Table of Contents
|
|
|
Nancy
Killefer Age: 61 Director Since: 2013 |
|
CSC Committees:
●Compensation (Chair) |
|
Public
Directorships:
●Advisory Board Company
●Avon Products Inc. |
|
|
|
|
|
|
|
Ms. Killefer is Director Emeritus
at McKinsey & Company, Inc., a global management consulting firm. She
joined McKinsey in 1979. From 1997 to 1999, Ms. Killefer served as
Assistant Secretary for Management and Chief Financial Officer to the U.S.
Department of Treasury. She rejoined McKinsey in 1999, led the Public
Sector Practice from 2006, and served as Director from December 1999 to
August 2013. Ms.Killefer serves as a Director of the Advisory Board
Company and Avon Products Inc. She also serves as Vice Chair on the
Business Defense Board and is a member of the MyVA Advisory
Committee. |
Skills and
Qualifications: |
● |
Senior Level
Management Experience: Partner at global consulting
firm |
● |
Public Company
Governance Experience: Experience as a director in
two other public companies in addition to CSC |
● |
Experience in CSCs
Business Areas: Extensive experience as a partner in
a global consulting firm and as a
chief financial officer of a government agency |
● |
Government and Public
Policy Experience: Former chief financial officer of
the U.S. Department of
Treasury |
|
|
|
Sachin
Lawande Age: 48 Director Since: 2015 |
|
CSC Committees:
●Compensation |
|
|
|
|
|
|
|
|
|
Mr. Lawande became a member of
the Board of Directors on June 10, 2015. He was appointed President and
Chief Executive Officer of Visteon Corporation in June 2015. From 2013 to
2015, Mr. Lawande served as Executive Vice President and President of
Harman International Industries, Inc.s Infotainment Division. From 2011
to 2013, Mr. Lawande served the dual role as the Co-President of Harmans
Lifestyle and Infotainment Divisions. Prior to that he served as Chief
Innovation Officer, Chief Technology Officer, and Co-President of Harmans
Automotive Division, responsible for guiding software strategy,
development partnerships, and key customer relationships. He was
instrumental in launching an offshore development center in India as part
of Harmans strategy for optimizing its global engineering footprint. Mr.
Lawande joined Harman International in 2006, following senior roles at QNX
Software Systems and 3Com Corporation. |
Skills and
Qualifications: |
● |
Senior Level
Management Experience: President and Chief Executive
Officer of Visteon Corporation, a
global automotive parts supply company and as an executive vice president
and chief technology officer in an
international digital audio company |
● |
International Business
Experience: Extensive international experience as a
President of a division of an
international digital audio company |
● |
Experience in CSCs
Business Areas: Extensive experience as the Chief
Executive Officer of a global automotive parts supply company and as an executive vice president
and chief technology officer in an international digital audio company |
|
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COMPUTER SCIENCES CORPORATION
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|
2015 Proxy
Statement |
|
23 |
Table of Contents
|
|
|
J. Michael
Lawrie Age: 62 Director Since: 2012 |
|
CSC Committees:
●Executive (Chair) |
|
Private
Directorships:
●Drexel University |
|
|
|
|
|
|
|
Mr. Lawrie became a member of the
Board of Directors on February 7, 2012 and President and Chief Executive
Officer of CSC on March 19, 2012. Prior to joining CSC, he served as Chief
Executive Officer of UK-based Misys plc, a leading global IT solutions
provider to the financial services industry, from November 2006 to March
2012. From 2008 to 2010, Mr. Lawrie also served as the Executive Chairman
of Allscripts-Misys Healthcare Solutions, Inc., an industry leader in
electronic health record solutions. Prior to that, Mr. Lawrie was a
general partner with ValueAct Capital, a San Francisco-based private
investment firm, from 2005 to 2006. He served as Chief Executive Officer
of Siebel Systems, Inc., an international software and solutions company,
from 2004 to 2005. Previously, Mr. Lawrie spent 27 years with IBM where he
held various leadership positions, including Senior Vice President and
Group Executive, responsible for sales and distribution of all IBM
products and services worldwide; General Manager for operations in Europe,
the Middle East and Africa; and General Manager of Industries for the Asia
Pacific. Mr. Lawrie is the former lead independent, non-executive Director
of Juniper Networks, Inc., and is also a Trustee of Drexel University,
Philadelphia. |
Skills and
Qualifications: |
● |
Senior Level
Management Experience: Former Chief Executive
Officer of Misys plc and Siebel Systems, Inc. Former Executive Chairman of Allscripts-Misys
Healthcare Solutions, Inc. |
● |
Public Company
Governance Experience: Experience as a former
director of Allscripts-Misys Healthcare Solutions, Inc. and a former director of Juniper
Networks, Inc. |
● |
International Business
Experience: Extensive international experience as
chief executive of a leading global
IT solutions provider to the financial services industry |
● |
Experience in CSCs
Business area: Extensive experience in the IT
sector |
|
|
24 |
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COMPUTER SCIENCES CORPORATION
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|
2015 Proxy
Statement |
Table of Contents
|
|
|
Brian Patrick
MacDonald Age: 49 Director Since: 2013 |
|
CSC Committees:
●Audit (Chair)
●Nominating/Corporate Governance |
|
Public
Directorships:
●CDK Global, Inc. |
|
|
|
|
|
|
|
Brian MacDonald is the former
Chief Executive Officer of Hertz Equipment Rental Corporation (HERC). He
served in this role from June 2014 to June 2015. Prior to HERC, he served
as President and Chief Executive Officer of ETP Holdco Corporation from
October 2012 to June 2013. Prior to Energy Transfer Partners acquisition
of Sunoco, Inc., in October 2012, Mr. MacDonald served as Chairman,
President and Chief Executive Officer of Sunoco, Inc., a leading logistics
and retail company based in Philadelphia, PA. He joined Sunoco in August
2009 as Senior Vice President and Chief Financial Officer. Prior to
joining Sunoco, he was Chief Financial Officer for Dells commercial
business unit. Before becoming the commercial business units CFO in 2008,
he served as Corporate Vice President and Treasurer and led Dells mergers
and acquisitions organization and global treasury group. Prior to joining
Dell, Mr. MacDonald worked at General Motors Corporation and held a
variety of positions in financial management, including Deputy CFO for
Isuzu Motors Limited. From 1998 to 2000, he served as Treasurer of GM
Canada. |
Skills and
Qualifications: |
● |
Senior Level Management
Experience: Chief Executive Officer of
a major energy and equipment rental company |
● |
International Business
Experience: Extensive chief executive
and operational experience in major international public companies
|
● |
Experience in CSCs Business
Areas: Extensive experience in the
energy, manufacturing and IT industries |
● |
Financial
Literacy: Extensive experience in
corporation finance and accounting, including as former Chief Financial
Officer of a publicly traded worldwide energy company |
|
|
COMPUTER SCIENCES CORPORATION
|
|
|
|
2015 Proxy
Statement |
|
25 |
Table of Contents
|
|
|
Sean
OKeefe Age: 59 Director Since: 2014 |
|
CSC Committees:
●Compensation |
|
Public
Directorships:
●Battelle Memorial Institute |
|
|
|
|
|
|
|
Mr. OKeefe is a professor at the
Maxwell School of Citizenship and Public Affairs at Syracuse University.
Mr. OKeefe served as Chairman and CEO of Airbus Group, Inc., a global
corporate, aerospace, defense and space enterprise, from 2009 to 2014.
Prior to that, from 2008 to 2009, Mr. OKeefe served as Vice President of
Washington Operations of General Electric. Mr. OKeefe served as a
director of DuPont, from 2005 to 2008. He also serves as a director and
Chairman of the Audit Committee of Battelle Memorial Institute, a
non-profit research and development organization. He is also Chancellor
Emeritus of Louisiana State University.
|
Skills and
Qualifications: |
● |
Senior Level Management
Experience: Former Chairman and Chief
Executive Officer of Airbus Group, Inc., a global corporate, aerospace,
defense and space enterprise and Vice President of Washington Operations
of General Electric |
● |
Major Academic Institution
Experience: Professor at the Maxwell
School of Citizenship and Public Affairs at Syracuse University and Former
Chancellor of Louisiana State University and A&M College
|
● |
Government and Public Policy
Experience: Former Presidential
appointee - 10th Administrator of the National Aeronautics and Space
Administration; Deputy Assistant to President George W. Bush and Deputy
Director of the Office of Management and Budget; Secretary of the Navy;
Comptroller and Chief Financial Officer of the Department of Defense
|
● |
Experience in CSCs Business
Areas: Extensive executive experience
in the government and general public sector |
● |
Financial
Literacy: Former Chief Financial
Officer of the Department of Defense; Deputy Director of the Office of
Management and Budget; Chairman of the Audit Committee of Battelle
Memorial Institute; and former audit committee member of various public
companies |
|
|
26 |
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COMPUTER SCIENCES CORPORATION
|
|
|
|
2015 Proxy
Statement |
Table of Contents
Set forth below is a chart of the
specific qualifications, attributes, skills and experience of the Board as a
whole. While we look to each director or nominee to be knowledgeable in these
areas, and ● indicates that an item is a specific qualification, attribute,
skill or experience that the director brings to the Board, the lack of a ● for
a particular item does not mean that the director or nominee does not possess
that qualification, attribute, skill or experience:
Summary of Director Qualifications and
Experience |
|
|
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|
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Professional and Personal
Ethics and Values is important given
the critical role that ethics plays in the success of our
business |
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Senior Level Management or
Operations Experience signifies strong
leadership qualities and an understanding of operating plans and
strategies |
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Government and Public Policy
Experience is relevant to the Companys
role as a major government contractor |
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Major Academic Institution
Experience brings perspective regarding
organizational management and academic research relevant to the Companys
business |
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Public Company Governance
Experience supports our goals of strong
accountability, transparency and protection of stockholder
interests |
|
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International Business
Experience is important in
understanding and reviewing our global business and strategy |
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Experience in CSCs Business
Areas is relevant to an understanding
of the industries served by the Company |
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Financial Literacy and
Expertise is important in understanding
and overseeing our financial reporting and internal controls |
|
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Independence is important to insure the effective oversight of
management of the Company |
|
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The Board of Directors recommends a
vote FOR each of its ten director nominees.
COMPUTER SCIENCES CORPORATION
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|
|
|
2015 Proxy
Statement |
|
27 |
Table of Contents
CERTAIN LITIGATION
As previously disclosed, on January 28,
2011, the Company was notified by the Division of Enforcement of the SEC that it
had commenced a formal civil investigation. That investigation covered a range
of matters as previously disclosed by the Company, including certain of the
Companys prior disclosures and accounting determinations. During the first
quarter of fiscal 2016, the Companys previously agreed upon settlement with the
SEC was formally approved by the SEC and became effective on June 5,
2015.
28 |
|
COMPUTER SCIENCES CORPORATION
|
|
|
|
2015 Proxy
Statement |
Table of Contents
STOCK
OWNERSHIP
The following table provides
information on Common Stock beneficially owned as of June 15, 2015,
by:
● |
each person or group believed by the Company to own beneficially
more than 5% of the outstanding Common Stock; |
● |
each of the six executive officers named in the Summary
Compensation Table under Executive Compensation, appearing further below
in this proxy statement (the Named Executive Officers or the NEOs);
|
● |
each of the current directors of the Company; and |
● |
all executive officers and directors, as a
group. |
Unless otherwise indicated, each person
or group has sole voting and investment power with respect to all shares
beneficially owned. Percent of Class in the table below is calculated based on
the 137,851,290 shares of CSC common stock outstanding as of the Record
Date.
Name and Address of Beneficial Owner1 |
|
Number of Shares Beneficially
Owned |
|
Percent of Class |
The Vanguard Group,
Inc. |
|
12,766,690 |
2 |
|
9.26% |
2 |
100 Vanguard
Blvd. |
|
|
|
|
|
|
Malvern, PA
19355 |
|
|
|
|
|
|
BlackRock, Inc. |
|
10,650,176 |
3 |
|
7.73% |
3 |
40
East 52nd Street |
|
|
|
|
|
|
New York, NY
10022 |
|
|
|
|
|
|
JANA Partners
LLC |
|
8,371,757 |
4 |
|
6.07% |
4 |
767 Fifth
Avenue, 8th Floor |
|
|
|
|
|
|
New York, NY
10153 |
|
|
|
|
|
|
|
J. Michael Lawrie |
|
872,285 |
5 |
|
|
6 |
Paul Saleh |
|
315,368 |
5 |
|
|
6 |
Romil Bahl |
|
12,063 |
5 |
|
|
6 |
Ashish Mahadwar |
|
1,824 |
5 |
|
|
6 |
James Smith |
|
36,045 |
5 |
|
|
6 |
Gary M.
Budzinski |
|
|
5 |
|
|
6 |
David J. Barram |
|
30,000 |
7 |
|
|
6 |
Eric
Brynjolfsson |
|
15,500 |
7 |
|
|
6 |
Rodney F. Chase |
|
52,240 |
7 |
|
|
6 |
Bruce B.
Churchill |
|
2,700 |
7 |
|
|
6 |
Nancy Killefer |
|
5,300 |
7 |
|
|
6 |
Sachin Lawande |
|
|
7 |
|
|
6 |
Brian P. MacDonald |
|
8,300 |
7 |
|
|
6 |
Sean OKeefe |
|
2,700 |
7 |
|
|
6 |
All executive officers and directors of the
Company, |
|
|
|
|
|
|
as
a group (19 persons) |
|
1,588,690 |
5,7,8 |
|
1.15% |
|
____________________
1. |
|
Unless otherwise indicated, the
address of each person or group is c/o Computer Sciences Corporation, 3170
Fairview Park Drive, Falls Church, Virginia
22042. |
COMPUTER SCIENCES CORPORATION
|
|
|
|
2015 Proxy
Statement |
|
29 |
Table of Contents
2. |
|
This information, which is not
within the direct knowledge of the Company, has been derived from a Form
13F filed with the SEC on May 15, 2015. Based upon information contained
in the filing, The Vanguard Group, Inc. has sole voting power with respect
to 258,459 of these shares, sole dispositive power with respect to
12,537,315 shares and shared dispositive power with respect to 229,375
shares. |
|
3. |
|
This information, which is not
within the direct knowledge of the Company, is based upon a Schedule 13G/A
filed with the SEC on January 26, 2015 by BlackRock, Inc., which reports
sole voting power with respect to 8,742,248 of these shares and sole
dispositive power with respect to 10,650,176 shares as a result of being a
parent company or control person of the following subsidiaries, each of
which holds less than 5% of the outstanding shares: BlackRock (Luxembourg)
S.A., BlackRock (Netherlands) B.V., BlackRock (Singapore) Limited,
BlackRock Advisors (UK) Limited, BlackRock Advisors, LLC, BlackRock Asset
Management Canada Limited, BlackRock Asset Management Ireland Limited,
BlackRock Asset Management North Asia Limited, BlackRock Financial
Management, lnc., BlackRock Fund Advisors, BlackRock Fund Managers Ltd.,
BlackRock Institutional Trust Company, N.A., BlackRock International
Limited, BlackRock Investment Management (Australia) Limited, BlackRock
Investment Management (UK) Ltd., BlackRock Investment Management, LLC,
BlackRock Japan Co Ltd. and BlackRock Life Limited. |
|
4. |
|
This information, which is not
within the direct knowledge of the Company, has been derived from a Form
13D filed with the SEC on February 23, 2015. Based upon information
contained in the filing, JANA Partners LLC has sole voting and dispositive
power with respect to 8,371,757 (including options to purchase 3,785,600
shares) of these shares. |
|
5. |
|
With respect to Messrs. Lawrie,
Saleh, Bahl, Mahadwar, Smith, Budzinski, and all executive officers and
directors of the Company as a group, includes 636,844; 213,685; 9,617; 0;
28,039; 0; and 1,069,327 shares of common stock, respectively, subject to
employee options which were outstanding on June 15, 2015, and currently
are exercisable or which are anticipated to become exercisable within 60
days thereafter. These shares have been deemed to be outstanding in
computing the Percent of Class. |
|
|
|
With respect to Messrs. Lawrie,
Saleh, Bahl, Mahadwar, Smith, Budzinski, and all executive officers and
directors of the Company as a group, includes 0; 232; 78; 61; 0; 0; and
402 shares of common stock, respectively, which are held for the accounts
of such persons under the Companys Matched Asset Plan and with respect to
which such persons had the right, as of June 15, 2015, to give voting
instructions to the Committee administering the Plan. |
|
6. |
|
Less than 1%. |
|
7. |
|
With respect to, Mr. Barram, Dr.
Brynjolfsson, Mr. Chase, Mr. Churchill, Ms. Killefer, Mr. Lawande, Mr.
MacDonald, Mr. OKeefe, and all directors of the Company as a group,
includes (i) 24,700; 10,200; 39,540; 0; 0; 0, 0; 0; and 74,440 shares of
Common Stock, respectively, which shares are subject to RSUs that were
outstanding on June 15, 2015, and which shares would, pursuant to such
RSUs, be distributed to such directors if their directorships were to
terminate on August 14, 2015 (ii) 2,600, 2,600, 6,800, 0, 2,600, 0, 5,600,
0; and 20,200, respectively, shares of Common Stock held outright as of
June 15, 2015; and (iii) 2,700; 2,700; 5,900; 2,700; 2,700; 0; 2,700;
2,700 and 22,100 unvested RSUs which vest in full at the 2015 Annual
Meeting and are automatically redeemed for CSC stock and dividend
equivalents. These shares have been deemed to be outstanding in computing
the Percent of Class. |
|
8. |
|
The executive officers and
directors, as a group, have sole voting and investment power with respect
to 1,492,150 shares. |
30 |
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COMPUTER SCIENCES CORPORATION
|
|
|
|
2015 Proxy
Statement |
Table of Contents
AUDIT
COMMITTEE REPORT
The Audit Committee reviewed and
discussed with management and Deloitte & Touche LLP, the Companys
independent auditors, the Companys audited financial statements for the Fiscal
Year ended April 3, 2015, managements assessment of the effectiveness of the
Companys internal control over financial reporting and Deloitte & Touche
LLPs evaluation of the Companys internal control over financial reporting. The
Audit Committee also discussed with the independent auditors the materials
required to be discussed by Statement on Auditing Standards No. 16,
Communications with Audit Committees, as adopted by the Public Company
Accounting Oversight Board (PCAOB). In addition, the Audit Committee received
from Deloitte & Touche LLP the written disclosures and the letter required
by the applicable requirements of the PCAOB, and discussed with them their
independence.
Based on such review and discussions,
the Audit Committee recommended to the Board of Directors, and the Board
approved, the inclusion of the audited financial statements in the Companys
Annual Report on Form 10-K for the Fiscal Year ended April 3, 2015 for filing
with the SEC.
The Audit Committee also appointed
Deloitte & Touche LLP as the Companys independent auditors for the Fiscal
Year ending April 1, 2016, and recommended to the Board of Directors that such
appointment be submitted to the Companys stockholders for
ratification.
Brian P. MacDonald, Chair
David J.
Barram
Rodney F. Chase, ex-officio
Bruce B. Churchill
COMPUTER SCIENCES CORPORATION
|
|
|
|
2015 Proxy
Statement |
|
31 |
Table of Contents
EXECUTIVE COMPENSATION
Compensation Committee
Report |
The Compensation Discussion and
Analysis set forth below discusses the Companys executive compensation programs
and policies. The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis with management. Based on this review and
discussion, the Committee recommended to the Board that the Compensation
Discussion and Analysis be included in this proxy statement.
Nancy Killefer, Chair
Rodney F. Chase,
ex-officio
Erik Brynjolfsson
Sean OKeefe
Compensation Discussion and
Analysis |
The Compensation Committee (the
Committee) and our Board of Directors are responsible for our executive
compensation philosophy and program, which are described in this Compensation
Discussion and Analysis (the CD&A). The CD&A also describes our Fiscal
2015 compensation decisions and the factors we considered in making those
decisions. The CD&A focuses on the compensation of our Fiscal 2015 Named
Executive Officers (NEOs):
● |
J.
Michael Lawrie, President and Chief Executive
Officer |
● |
Paul N. Saleh, Executive Vice President and Chief Financial
Officer |
● |
Romil Bahl, Executive Vice President and General Manager, Global
Industries |
● |
Ashish Mahadwar, Executive Vice President and General Manager,
Strategic Business |
● |
James R. Smith, Executive Vice President, Global Business
Services |
● |
Gary M. Budzinski*, former Executive Vice President and General
Manager, Infrastructure
Services |
____________________
* |
|
Mr. Budzinskis employment with
the Company terminated on March 10, 2015. |
Approval of the
Companys Fiscal 2014 Executive Compensation on an Advisory Basis
At our most recent annual meeting of
stockholders, held on August 13, 2014, approximately 94.3% of the votes cast
(excluding abstentions and broker non-votes) voted on an advisory basis to
approve our executive compensation program for the fiscal year ended March 28,
2014 (Fiscal 2014). The Committee took into account the results of this
advisory vote in making the changes to the Fiscal 2015 executive compensation
program described below.
Fiscal 2015 Executive
Compensation Programs
Our executive compensation programs are
designed to reflect our pay for performance philosophy and provide our
executives with appropriate incentives to manage the Company in the
stockholders interests. The Committee reviews our compensation policies and
practices each year to ensure that the programs provide our executives with an
appropriate mix of market-competitive compensation opportunities.
32 |
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COMPUTER SCIENCES CORPORATION
|
|
|
|
2015 Proxy
Statement |
Table of Contents
As explained in more detail below, the
Committee considered a number of factors in setting Fiscal 2015 compensation
opportunities for our NEOs, with an emphasis on continuation of the
transformation that was begun by Mr. Lawrie and his senior management team in
Fiscal 2013. Consistent with that strategy, the Committee generally maintained
the focus on increasing profitability and stockholder value and retained the
same basic structure of the executive compensation program as it used in Fiscal
2014. In addition:
● |
Two new NEOs joined the Company
during Fiscal 2015. Romil Bahl joined the Company as Executive Vice
President and General Manager, Global Industries, on April 21, 2014, and
Ashish Mahadwar joined the Company as Executive Vice President and General
Manager, Strategic Business, on July 7, 2014. As an inducement to join the
Company, Messrs. Bahl and Mahadwar each received a one-time RSU grant in
connection with their hiring, as described below under Inducement
Awards. |
● |
In recognition of Mr. Lawries
successful leadership in executing the Companys transformation strategy
and as a further incentive to continue that process, on July 15, 2014, Mr.
Lawrie received a special performance-based RSU award of 40,368 RSUs. Up
to 100% of the award will vest and be converted into shares of our common
stock on the first anniversary of the grant date if certain financial,
governance and organizational performance goals are met, as described
below under Special CEO Performance Award. |
● |
To encourage newer officers to
meet their share ownership guidelines more quickly, we made a change to
the retention ratio in Fiscal 2015 to make it a scaled approach instead of
a static metric, applying more stringent retention requirements for
officers who are farther away from meeting their guidelines. See Equity
Ownership Guidelines below. |
The Committee also reviewed a
company-wide risk assessment of compensation programs, which revealed no
material risks that may adversely affect the Company. See Corporate Governance
Compensation and Risk above for details.
Pearl Meyer & Partners (PM&P)
continued to serve as the Committees independent compensation consultant in
Fiscal 2015. In addition to advising the Committee on general executive
compensation pay practices, PM&P was instrumental in reviewing the peer
group of companies used by the Committee to assess the competitiveness of our
executive pay levels and practices. Our peer group consists of 18 companies,
including 14 within a comparable size range of CSC and with median revenues for
these 14 size-relevant peer companies of approximately $14.1 billion, compared
to our revenues of approximately $12.2 billion for Fiscal 2015. Although we feel
it is important to include substantially larger companies by revenue such as
International Business Machines Corp. and Hewlett Packard Co. in our peer group
because we compete with those companies for executive talent, the Committee
ensures that for compensation assessment purposes, pay data for corporate
officers at these companies is adjusted via revenue regression to negate the
impact of their larger size.
Fiscal 2015 Executive
Compensation and Pay for Performance
The Companys strong performance in
Fiscal 2015 reflects the continuing success of the transformation implemented by
Mr. Lawrie and his senior leadership team, which has successfully positioned the
Company for the separation of the Company into two businesses, CSC Global
Commercial and CSC US Public Sector, as announced in May 2015. Significant
achievements include:
● |
TSR was 10% for Fiscal 2015 which
ranks tenth among the 18 companies in our peer group for the same period.
Our three-year TSR (Fiscal 2013 through Fiscal 2015), which closely
overlaps with Mr. Lawries tenure as CEO, was 130%, which ranks third
among our 18 peers for the same period. |
COMPUTER SCIENCES CORPORATION
|
|
|
|
2015 Proxy
Statement |
|
33 |
Table of Contents
● |
We realized strong growth in our Commercial next-generation
offerings. |
● |
We produced healthy free cash flow of over $700
million. |
● |
We returned $867 million to stockholders in Fiscal 2015,
including $131 million in declared dividends and $736 million in share
repurchases. |
● |
Client satisfaction, as measured by a survey conducted by an
independent third party, increased substantially over Fiscal 2014
scores. |
● |
Mr. Lawrie and his leadership
team have established a global set of CLEAR values to drive a strong
performance culture. Through these values, we have emphasized a return to
profitability by demonstrating fiscal responsibility and aligning the
executive team to this one overriding goal. |
By design, compensation paid to our
NEOs reflects the performance of the Company, including the above
accomplishments for the fiscal year. Highlights of the strong tie between pay
and performance include the following:
● |
Annual Cash Incentive Payments under the Employee Incentive
Compensation Plan (EICP): Each of our NEOs, with the exception of
Mr. Budzinski, received an annual incentive payout reflecting their
performance against stated financial, strategic and customer satisfaction
objectives, as well as segment and individual performance. Mr. Budzinskis
employment with the Company terminated on March 10, 2015 and therefore he
was not eligible to receive an EICP award. The incentive payments to our
NEOs were at or below their 2015 EICP targets reflecting the challenging
nature of our incentive goals for the year and our strong pay for
performance culture. See Annual Incentive Compensation - Fiscal 2015
Results below for details. |
● |
2013 Performance Share
Units Fully Vested and 2014 and 2015 Performance Share Units Partially
Vested: Based on the Fiscal 2015 diluted Earnings Per Share from
continuing operations of $4.64* (compared to $4.01 for Fiscal 2014), 150%
of the Fiscal 2013 target Performance Share Units (i.e., the maximum 200%
less the 50% of such units that had previously partially vested in prior
years), 25% of the Fiscal 2015 target Performance Share Units and an
additional 25% of the Fiscal 2014 target Performance Share Units vested
after the end of Fiscal 2015. See Long-Term Incentive Compensation
Performance Share Units below for details. |
____________________ |
* |
Represents Earnings Per Share
from continuing operations for Fiscal 2015 determined in accordance with
GAAP of $0.15, plus $3.70 from non-cash pension-related charges, plus
$1.35 from SEC-related and other charges, plus $1.26 from a fourth quarter
fiscal 2015 special restructuring charge, minus $1.81 benefit from a tax
valuation allowance. |
34 |
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COMPUTER SCIENCES CORPORATION
|
|
|
|
2015 Proxy
Statement |
Table of Contents
Fiscal 2015 Direct
Compensation |
Total Direct
Compensation
The following chart summarizes the
characteristics and primary purpose of each element of our executive
compensation program. The first three of these elements comprise Total Direct
Compensation.
Compensation Element |
|
Characteristics |
|
Primary Purpose |
Base Salary |
|
Annual fixed cash compensation. |
|
Provide a fixed amount of cash compensation
based on individual performance, experience, skills, responsibilities and
competitive pay levels. |
Annual Cash
Incentives |
|
Annual variable cash
compensation determined by Company financial performance, attainment of
strategic objectives, and individual performance. |
|
Motivate and
reward the achievement of annual financial and other operating objectives
and individual performance that drive stockholder value over time. |
Long-Term Incentives |
|
Long-term equity awards generally granted annually as a combination
of stock options and Performance Share Units. |
|
Motivate and reward profitable growth and
increase in share price over time and align with
stockholders.
Align pay with CSCs performance over
multi-year overlapping performance cycles. |
Post-Employment
Benefits |
|
Retirement and
deferred compensation plans and career equity awards. |
|
Offer competitive retirement compensation designed to
attract and retain mid- and late-career senior executives. |
Severance/Change-in-Control |
|
Contingent short-term compensation. |
|
Provide assurance of short-term compensation continuity
to allow executives to remain focused on stockholder interests in a
dynamic environment. |
Perquisites and Benefits |
|
Limited perquisites and health and welfare benefits. |
|
Provide business-related benefits
consistent with competitive practice to enhance executive work
efficiency. |
The Committee makes decisions regarding
each element of Total Direct Compensation. Because our focus is on performance,
the Committee does not consider aggregate amounts earned or benefits accumulated
by an executive from prior service with the Company as a significant factor in
making compensation decisions. To assess the competitiveness of the Total Direct
Compensation opportunity and each of its components (base salary, annual cash
incentives, and long-term incentives) for our CEO and other NEOs, these
components are compared to the market median for similarly situated executives
in companies against which we compete for executive talent. Please see
Compensation Framework Review of Market Compensation Data below for a
discussion of our peer group and other data used to assess the competitive
market.
COMPUTER SCIENCES CORPORATION
|
|
|
|
2015 Proxy
Statement |
|
35 |
Table of Contents
The market competitiveness of our pay
opportunities is just one factor that the Committee reviews in evaluating our
executive compensation programs. Additional factors may include the Companys
performance (including its turnaround strategy and management performance in
executing that strategy) and individual factors such as an employees level of
responsibility, experience, succession prospects and individual
performance.
Mr. Lawries
Employment Agreement. Mr. Lawrie
joined CSC in March 2012, and his annual compensation opportunity is governed by
his employment agreement. Pursuant to the employment agreement, we agreed to
employ Mr. Lawrie as our President and Chief Executive Officer through March 31,
2017 at a minimum annual base salary of $1,250,000 and an annual bonus with a
target opportunity of 150% of base salary and a maximum amount of 300% of base
salary. In respect of each fiscal year which commences during the term of his
employment agreement, Mr. Lawrie also will receive time-vesting stock options
with an aggregate value equal to 280% of base salary and performance share units
with an aggregate value of 420% of base salary, in each case on terms and
conditions that are generally consistent with those applicable to awards granted
to other senior executive officers of the Company. The employment agreement also
provides for severance benefits described below. Finally, Mr. Lawrie generally
is eligible to participate in the Companys employee benefits plans on the same
basis as all other executives. Mr. Lawrie reports directly to the Board of
Directors, and his salary and target incentive are subject to annual review and
increase by the Board.
Base
Salary
General. Base salary is
the only fixed component of our NEOs compensation and constitutes a small
percentage of Total Direct Compensation. Base salary is determined by the level
of responsibility assumed by an executive, experience, performance and
competitive pay practices. Base salary adjustment decisions also consider
promotions, changes in responsibilities, performance, succession prospects,
Company merit pay budgets and market trends. At the beginning of each fiscal
year, the Committee reviews the base salary for each NEO and determines base
salary adjustments, if any. The Committee considers how base salary adjustments
affect annual cash incentive opportunities and long-term incentive grant values,
as both are defined as a percentage of base salary.
Fiscal 2015
Compensation. For Fiscal 2015, the
Committee maintained the same base salaries as in effect during Fiscal 2014 for
the NEOs (Messrs. Lawrie, Saleh, Smith and Budzinski) who were employed by us
during Fiscal 2014. At the time of their hiring, Messrs. Bahl and Mahadwars
respective base salaries were set at levels commensurate with their duties and
position within the Company based on the factors discussed above.
The following table presents the Fiscal
2015 annualized and actual base salaries for each of our NEOs and the percentage
the actual base salary represents in Target Total Direct Compensation. The
actual Fiscal 2015 base salaries for Messrs. Bahl, Mahadwar and Budzinski differ
from their respective annualized base salaries because Messrs. Bahl and Mahadwar
were each hired mid-year (April 2014 for Mr. Bahl and July 2014 for Mr.
Mahadwar) and Mr. Budzinskis employment terminated mid-year (March
2015).
Named Executive Officer |
|
Annualized Fiscal 2015 Base Salary
($) |
|
Actual Fiscal 2015 Base Salary ($) |
|
Percentage of Target Total
Direct Compensation |
J. Michael Lawrie |
|
1,250,000 |
|
1,250,000 |
|
11% |
Paul N. Saleh |
|
700,000 |
|
700,000 |
|
17% |
Romil Bahl |
|
644,000 |
|
606,846 |
|
24% |
Ashish Mahadwar |
|
644,000 |
|
470,615 |
|
21% |
James R. Smith |
|
650,000 |
|
650,000 |
|
20% |
Gary M. Budzinski |
|
650,000 |
|
617,500 |
|
17% |
36 |
|
COMPUTER SCIENCES CORPORATION
|
|
|
|
2015 Proxy
Statement |
Table of Contents
Annual Incentive
Compensation Plan
The EICP is an annual cash bonus plan,
which is designed to take into account a variety of factors, including Company
financial performance, the performance of an NEOs business unit, the NEOs
contribution to the achievement of the Companys strategic objectives, the NEOs
individual performance and client satisfaction. Awards under the EICP therefore
are directly linked to Company and individual performance.
Target EICP
Awards. The Committee establishes a
target award percentage for each NEO, representing a percentage of base salary,
and an associated target award value. Each NEOs target award value is
established in consideration of market practices, individual scope of
responsibility and expected contribution. The table below reflects the Fiscal
2015 target award percentage, the corresponding target award value, and the
target award value as a percentage of target Total Direct Compensation. For
Fiscal 2015, the Committee maintained the same target award opportunities as in
Fiscal 2014 for the NEOs (Messrs. Lawrie, Saleh, Smith and Budzinski) who were
employed by us during Fiscal 2014. The target bonus opportunities for Messrs.
Bahl and Mahadwar reflect pro-ration based on each of their respective mid-year
hire dates.
Named Executive Officer |
|
Target EICP Percentage |
|
Target EICP Value ($) |
|
Percentage of Target Total
Direct Compensation |
J. Michael Lawrie |
|
150% |
|
1,875,000 |
|
16% |
Paul N. Saleh |
|
100% |
|
700,000 |
|
17% |
Romil Bahl |
|
100% |
|
604,072 |
|
23% |
Ashish Mahadwar |
|
100% |
|
470,442 |
|
21% |
James R. Smith |
|
100% |
|
650,000 |
|
20% |
Gary M. Budzinski |
|
100% |
|
650,000 |
|
17% |
How the EICP
Works. EICP awards are earned based on
performance relative to targeted financial (Operating Income, Cash Flow and
Revenue) goals, weighted 60%; strategic objectives, weighted 20%; and customer
satisfaction objectives, weighted 20%, and are subject to further discretionary
modification for individual performance. The Committee has given prominent
weight to client satisfaction as a performance measure to help foster a
client-focused, metric-driven culture within the Company.
In order to emphasize profitability,
the Company must achieve at least 80% of its Operating Income goal before any
EICP payments are made. In addition, assuming this threshold level is achieved,
the percentage achievement of the Operating Income (OI) goal also serves as a
multiplier or funding factor which is applied to the percentage achievement of
the EICP financial metrics as a whole to determine the overall score for the
financial metrics portion of the EICP, up to a maximum of 200%.
Weighted financial metric performance
(as adjusted by the OI funding factor), plus weighted strategic metric
performance, plus weighted customer satisfaction metric performance determine
the initial payout score, which is then adjusted for individual performance and
multiplied by an NEOs target award to reach the final EICP payout
amount.
Special rules apply for executives who
are subject to Section 162(m) of the Internal Revenue Code (Section 162(m)).
If the Company achieves 80% of its OI goal for the year, each executive subject
to Section 162(m) becomes eligible to receive the maximum possible EICP payout.
However, to ensure the EICP operates the same way for all executives, the
Committee then exercises negative discretion to reduce the executives EICP
payment based on actual performance with respect to the financial and other
metrics described in this section.
COMPUTER SCIENCES CORPORATION
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Table of Contents
Fiscal 2015
Financial Metrics. All NEOs are
measured against corporate financial performance. Management recommends specific
targets for financial measures, which are reviewed by the Committee. The Board
provides final approval (subject to certain adjustments). The table below
describes the corporate financial measures, weightings and goals used in
determining the Fiscal 2015 EICP awards for the NEOs, as adjusted for certain
items, including certain restructuring and settlement costs during the year. For
each of the financial measures, the Fiscal 2015 goals represented an increase
over Fiscal 2014 actual results as shown in the table.
Financial Measures (Weightings) |
|
Purpose |
|
Fiscal
2015 Financial Targets (millions) |
|
Fiscal
2014 Results (millions)** |
Revenue (30%) |
|
Primary measure of growth which requires expansion of
current business, capture of new business and conversion into a revenue
stream. |
|
|
$ |
13,180 |
|
|
$ |
13,079 |
|
Operating
Income* (40%) |
|
Key component of profitability that
reflects revenue growth, investments, cost takeout and operational
efficiencies. |
|
|
$ |
1,390 |
|
|
$ |
1,315 |
|
Free Cash Flow (30%) |
|
Key
component of Company valuation reflecting liquidity, profitability,
improved working capital management and capital efficiency. |
|
|
$ |
700 |
|
|
$ |
689 |
____________________
* |
Operating Income must be at least 80% of target for any
NEO to receive any EICP payment. |
** |
Fiscal 2014 revenue represents
Fiscal 2014 revenue calculated in accordance with GAAP as reported in our
Fiscal 2014 Annual Report on Form 10-K of $12,998 million, plus an
adjustment of $81 million to remove the effect of differences in currency
exchange rates used to calculate the results. Fiscal 2014 Operating Income
is defined as revenue less cost of services, depreciation and amortization
expense and segment general and administrative (G&A) expense,
excluding corporate G&A, adjusted to reflect restructuring and
investments made in the business during the fiscal year. Fiscal 2014 Free
Cash Flow is defined as the sum of operating cash flow, investing cash
flow (excluding business acquisitions, dispositions and investments
(including short-term investments and purchase or sale of available for
sale securities)) and payments on capital leases and other long term asset
financings. |
Financial Metric
Performance Scale. For Fiscal 2015,
the Committee established the following scale of payout percentages to assess
performance against the financial goals described above, including for purposes
of determining the OI funding factor applicable to the financial metrics. This
scale applies to all NEOs, with a threshold 50% payout level for achievement at
80% of target extending to a maximum 200% payout level for achievement at or
above 135% of target.
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Fiscal 2015
Strategic and Customer Satisfaction Metrics. Management also recommends a set of strategic objectives for review by
the Committee and approval by the Board. These objectives are intended to
emphasize critical components of the Companys transformation strategy,
including a cost takeout program, rationalizing the business around certain core
segments, improving operating margins, improving cash flow, improving
profitability, advancing the Companys strategy to provide next gen services
through leveraging CSCs capabilities with strategic partners, completing
strategic acquisitions, enhancing the skill sets of employees through new
leadership and training, returning cash to stockholders and improving client
satisfaction.
For the customer satisfaction metric,
the Committee generally establishes the customer responses to its prior year
survey as a baseline, and sets improvement goals over that baseline for the
Company as a whole and for specific business units and regions. We use the Net
Promoter Score (NetPS) system to evaluate customer satisfaction. No payouts of
the customer satisfaction component are made unless at least 50% of our
solicited customers respond to the survey.
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Annual Incentive
Compensation Plan: Fiscal 2015 Results
Company
Financial Performance. At the end of
Fiscal 2015, the Committee reviewed the Companys financial performance against
the applicable performance measures. The targets shown below were adjusted
pursuant to the terms of the EICP for special items, including proposed SEC
settlement costs, a fourth quarter valuation allowance release, a fourth quarter
special restructuring expense, and mark-to-market year-end
revaluations.
Fiscal 2015 Financial Results |
Corporate Financial Performance Measures |
|
Target (millions) |
|
Results (millions) |
|
Percentage of Target Achieved |
Revenue* |
|
$13,180 |
|
$12,330 |
|
94% |
Operating Income** |
|
$1,390 |
|
$1,351 |
|
97% |
Free Cash
Flow*** |
|
$700 |
|
$717 |
|
102% |
____________________
* |
Corporate Revenue
results represent Fiscal 2015 revenue calculated in accordance with GAAP
as reported in our Annual Report on Form 10-K and have been adjusted for
differences in currency exchange rates used to calculate the
target. |
|
** |
Operating Income is
defined as revenue less cost of services, depreciation and amortization
expense and segment G&A expense, excluding corporate G&A, adjusted
for special items as described above and differences in currency exchange
rates used to calculate the target. |
|
***
|
Free Cash Flow is
defined as the sum of operating cash flow, investing cash flow (excluding
business acquisitions, dispositions and investments (including short-term
investments and purchase or sale of available for sale securities)) and
payments on capital leases and other long term asset
financings. |
Based on the payout scale above, this
resulted in an overall score (after application of the OI funding factor) of 52%
for the financial metrics portion of the EICP.
Customer
Satisfaction Performance. Client
satisfaction was measured and verified by an independent consultant retained by
the Company specifically for this purpose. A pool of client accounts was
identified and surveyed. Feedback was received from 59% of the Companys
corporate clients. The Companys Fiscal 2015 NetPS score of 18.83 exceeded its
goal of 10.7, resulting in the maximum score of 20% for the customer
satisfaction portion of the EICP.
Strategic
Objectives and Overall Funding. Following the end of Fiscal 2015, Mr. Lawrie reviewed with the Committee
each NEOs performance against the specific strategic goals assigned to the NEO,
as well as the overall individual performance of each NEO (other than himself)
as measured against the Companys CLEAR values. Based on this assessment, Mr.
Lawrie recommended payout amounts for the other NEOs, which were reviewed and
approved by the Committee. The Committee followed a similar process in
determining Mr. Lawries payout amount.
These payouts reflected the Companys
achievements on stated financial and customer satisfaction goals discussed
previously, as well as the Companys performance against strategic objectives.
It was determined that the Companys Fiscal 2015 strategic objectives had not
been achieved, due to lower than targeted growth in new offerings and returns
from restructuring activities, slower progress in repositioning
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certain business assets and resources
to lower-cost markets, and underutilization of key strategic partnerships,
resulting in a 0% score for the strategic objective component of the EICP.
Further, Mr. Lawrie recommended, and the Compensation Committee approved, a
downward adjustment to the overall funding of the EICP for 2015 from 72% to 67%
reflecting his holistic assessment of performance for 2015.
Individual
Performance Adjustments. The following
individual performance adjustment factors were then applied:
● |
Messrs. Lawrie and Saleh each received an individual adjustment
factor of 149% to bring their respective EICP payouts to 100% of target,
reflecting each executives exemplary performance in the Companys
transformation and the successful positioning of the Company for the
business separation announced in May 2015. Mr. Lawries and Mr. Salehs
Fiscal 2015 EICP payouts were lower than their respective Fiscal 2014 EICP
payouts, reflecting the more aggressive goals and challenges in the
business in Fiscal 2015. |
● |
Messrs. Mahadwar, Bahl, and
Smith received individual adjustment factors of 80%, 50% and 50%,
respectively, reflecting their individual performance accomplishments,
including the performance of their respective business
segments. |
The resulting payouts were deemed to be
appropriate in light of Company, business segment, and individual performance,
as well as the desire to maintain a strong pay for performance philosophy and
culture of differentiation. As a group, the average actual EICP payouts to the
NEOs for Fiscal 2015 (after individual performance adjustments) were 96% of the
funded amount. Mr. Budzinski was ineligible for an EICP payout due to his
termination of employment effective March 10, 2015.
Fiscal 2015 EICP
Payouts. The results of the
Committees final determinations, including the actual incentive paid to each
executive for Fiscal 2015, are listed below.
Fiscal 2015 EICP Payouts |
Named Executive Officer |
|
Target EICP Value ($) |
|
Target EICP Percentage |
|
Actual Award Paid ($)* |
|
Award Paid (as % of Target) |
J. Michael Lawrie |
|
1,875,000 |
|
150% |
|
1,875,000 |
|
100% |
Paul N. Saleh |
|
700,000 |
|
100% |
|
700,000 |
|
100% |
Romil Bahl |
|
604,072 |
|
100% |
|
202,360 |
|
33.5% |
Ashish Mahadwar |
|
470,442 |
|
100% |
|
252,160 |
|
54% |
James R. Smith |
|
650,000 |
|
100% |
|
217,750 |
|
33.5% |
Gary M. Budzinski |
|
650,000 |
|
100% |
|
0 |
|
% |
____________________
*
|
Mr. Budzinski did not receive a
Fiscal 2015 EICP payout due to his termination of employment effective
March 10, 2015. |
Long-Term
Incentive Compensation
General. Long-term
incentive (LTI) compensation is the largest component of executive
compensation for our NEOs. For Fiscal 2015, our regular cycle LTI awards
continued to consist of grants of service-vested stock options (Stock
Options), weighted 40%, and performance-vested restricted stock units
(Performance Share Units or PSUs) with a three-year performance cycle,
weighted 60%.
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At the beginning of each fiscal year,
the Committee establishes a target LTI grant value for each NEO, expressed as a
percentage of base salary, and the relative mix of award types. Individual
target LTI grant values are determined in light of market practices, and actual
award levels reflect individual performance and succession considerations. The
Committee follows a similar process for new executives who join the Company
during the fiscal year.
Fiscal 2015 LTI
Target Percentage. The following table
presents the Fiscal 2015 target LTI grant values, the target LTI percentage and
long-term incentives as a percentage of target total direct compensation. The
LTI target opportunities for all of our NEOs who were employed by us during
Fiscal 2014 (Messrs. Lawrie, Saleh, Smith and Budzinski) were the same in Fiscal
2015 as in Fiscal 2014.
Named Executive Officer |
|
Annualized Base Salary ($) |
|
Target LTI Percentage |
|
Target LTI Value ($) |
|
Percentage of Target
Total Direct Compensation |
J. Michael Lawrie |
|
1,250,000 |
|
700% |
|
8,750,000 |
|
74% |
Paul N. Saleh |
|
700,000 |
|
400% |
|
2,800,000 |
|
67% |
Romil Bahl |
|
644,000 |
|
225% |
|
1,449,000 |
|
54% |
Ashish Mahadwar |
|
644,000 |
|
275% |
|
1,180,667* |
|
51% |
James R. Smith |
|
650,000 |
|
300% |
|
1,950,000 |
|
60% |
Gary M. Budzinski |
|
650,000 |
|
375% |
|
2,437,500 |
|
65% |
____________________
* |
Mr. Mahadwars target
LTI value was pro-rated to reflect his mid-year hire
date. |
Stock
Options. Stock Options (comprising 40%
of each NEOs target LTI award) provide value to executives only if the market
value of our common stock appreciates over time. The exercise price for each
Stock Option is the closing price of our common stock on the grant date.
One-third of the Stock Options vest and become exercisable on each of the first
three anniversaries of the grant date.
Performance
Share Units. Performance Share Units
(comprising 60% of each NEOs target LTI award) provide an opportunity for our
executives to earn common stock if targeted performance goals are met over a
three-year performance period. Performance is measured based on the Companys
diluted Earnings Per Share from continuing operations (EPS). The Committee
believes that EPS, aside from being a key measure of stockholder value, serves
as the best measure of performance and profitability in light of the Companys
multi-year transformation strategy.
Performance Share Unit awards are
designed with overlapping performance periods. The end of Fiscal 2015 marks the
completion of:
● |
the three-year performance period for Performance Share Units
awarded in Fiscal 2013 (Fiscal 2013 PSUs), |
● |
the second year of a three-year performance period for
Performance Share Units awarded in Fiscal 2014 (Fiscal 2014 PSUs),
and |
● |
the first year of a three-year
performance period for Performance Share Units awarded in Fiscal 2015
(Fiscal 2015 PSUs). |
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Messrs. Lawrie and Saleh have received
Fiscal 2013, Fiscal 2014 and Fiscal 2015 PSUs; Mr. Smith (hired in Fiscal 2014)
has received Fiscal 2014 and Fiscal 2015 PSUs; and Messrs. Bahl and Mahadwar
(hired in Fiscal 2015) have received Fiscal 2015 PSUs. Mr. Budzinski forfeited
all awards upon his termination of employment effective March 10,
2015.
For each award, EPS performance is
measured over the last year in the three-year performance period. The Committee
establishes threshold, target and maximum EPS goals, at which 50%, 100% and
200%, respectively, of the target PSUs may vest. Vesting is interpolated for EPS
performance between these goals. No PSUs vest if EPS performance is below the
threshold goal.
In addition, each award also provides
an opportunity for accelerated vesting based on EPS performance in the first and
second years of the performance period, in order to recruit, retain and motivate
progress toward multiyear transformation goals. 25% of the target PSUs may vest
at the end of the first year of the performance period if our EPS for that year
equals or exceeds the threshold EPS goal for the award. In addition, 25% of the
target PSUs may vest at the end of the second year of the performance period if
our EPS for that year equals or exceeds the threshold EPS goal (if not achieved
after year one) or if our EPS performance for the second year equals or exceeds
the EPS goal at which 75% of the target PSUs vest (if partial vesting occurred
after year one). Up to 200% of the target PSUs, less any PSUs which vested in
years one or two, may vest at the end of the third year of the performance
period, subject to our EPS performance for that year.
Fiscal 2015 PSUs. Each NEO was granted a target number of Fiscal 2015 PSUs as
set forth in the Fiscal 2015 Long Term Incentive Awards table below. Between
0% and 200% of the target Fiscal 2015 PSUs will vest at the end of Fiscal 2017
based on our EPS performance for Fiscal 2017. The threshold EPS goal (at which
50%, and below which 0%, of the target Fiscal 2015 PSUs will vest) has been set
by the Committee at $4.44, subject to adjustment to omit the effects of
extraordinary items, gain or loss on the disposal of a business segment, and
unusual or infrequently occurring events or transactions.
The Fiscal 2015 PSUs also provide an
opportunity for partial vesting in years one and two of the performance period,
as described above. One quarter of the target PSUs vested at the end of Fiscal
2015 because our Fiscal 2015 EPS of $4.64* exceeded the EPS goal of $4.44. If
our EPS in Fiscal 2016 equals or exceeds the EPS goal at which 75% of the target
PSUs may vest, an additional 25% of the target PSUs will vest at the end of
Fiscal 2016. Up to 200% of the target PSUs, less any PSUs which received
accelerated vesting for Fiscal 2015 or Fiscal 2016, will vest at the end of
Fiscal 2017, subject to EPS performance for Fiscal 2017.
Fiscal 2014 PSUs. Between 0% and 200% of the target Fiscal 2014 PSUs will vest
at the end of Fiscal 2016 based on our EPS performance for Fiscal 2016. These
PSUs also carry the potential for accelerated vesting of 25% of the target award
in years one and two based on our EPS performance for those years. As disclosed
in our 2014 Proxy, one quarter of the Fiscal 2014 PSUs vested at the end of
Fiscal 2014 due to the fact that our EPS for Fiscal 2014 of $4.01 exceeded the
threshold EPS goal of $3.03. An additional 25% of the Fiscal 2014 PSUs vested at
the end of Fiscal 2015 because our EPS for Fiscal 2015 of $4.64* exceeded the
EPS goal at which 75% of the target Fiscal 2014 PSUs may vest of
$3.41.
Fiscal 2013 PSUs. The threshold (50% vesting), target (100% vesting) and
maximum (200% vesting) EPS goals for the Fiscal 2013 PSUs were $2.07, $2.50 and
$2.79, respectively. 150% of the Fiscal 2013 PSUs vested at the end of their
three-year performance cycle on the last day of Fiscal 2015, based on our Fiscal
2015 EPS of $4.64*. This amount is equal to the maximum 200%, reduced by the
50% of the Fiscal 2013 PSUs that had previously vested (25% after Fiscal 2013
and an additional 25% after Fiscal 2014, based on our EPS performance for those
years exceeding the threshold and 75% vesting levels, respectively) for a net
vested amount of 150%.
____________________
* |
Represents Earning Per Share from
continuing operations for Fiscal 2015 determined in accordance with GAAP
of $0.15, plus $3.70 from non-cash pension-related charges, plus $1.35
from SEC-related and other charges, plus $1.26 from a fourth quarter
fiscal 2015 special restructuring charge, minus $1.81 benefit from a tax
valuation allowance. |
COMPUTER SCIENCES CORPORATION
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Table of Contents
Fiscal 2013-Fiscal 2015 PSU Cycle
Performance. The table below illustrates the
three-year overlapping performance cycle for the Fiscal 2013, Fiscal 2014 and
Fiscal 2015 PSU awards:
Award |
|
Performance Period |
|
Fiscal 2013 |
|
Fiscal 2014 |
|
Fiscal 2015 |
|
Fiscal 2016 |
|
Fiscal 2017 |
Fiscal 2013 |
|
4/2012-3/2015 |
|
25% |
|
25% |
|
150% (200% |
|
|
|
|
PSUs |
|
|
|
vested |
|
vested |
|
less Fiscal 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
and Fiscal 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
vested amounts) |
|
|
|
|
|
Fiscal 2014 |
|
4/2013-3/2016 |
|
|
|
25% |
|
25% vested |
|
Up to 200%, |
|
|
PSUs |
|
|
|
|
|
vested |
|
|
|
less Fiscal 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
and Fiscal 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
vested amounts |
|
|
|
Fiscal 2015 |
|
4/2014-3/2017 |
|
|
|
|
|
25% vested |
|
Up to 25% |
|
Up to 200%, |
PSUs |
|
|
|
|
|
|
|
|
|
|
|
less Fiscal 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
and Fiscal 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
vested amounts |
Fiscal 2015 Long-Term Incentive
Awards. The target award value and the number
of shares granted for each element of our LTI compensation for Fiscal 2015 is
set forth in the table below.
Fiscal 2015 Long-Term Incentive
Awards
|
|
|
|
|
|
|
|
Performance |
|
|
|
|
Stock Options |
|
Share Units |
|
|
Target Long- |
|
Target |
|
Stock |
|
Target |
|
Target Share |
|
|
Term |
|
Award |
|
Options |
|
Award |
|
Units |
Named Executive Officer |
|
Incentives ($) |
|
Value ($) |
|
(#) |
|
Value ($) |
|
(#) |
J. Michael
Lawrie |
|
8,750,000 |
|
3,500,000 |
|
174,216 |
|
5,250,000 |
|
85,854 |
Paul N. Saleh |
|
2,800,000 |
|
1,120,000 |
|
55,749 |
|
1,680,000 |
|
27,473 |
Romil Bahl |
|
1,449,000 |
|
579,600 |
|
28,850 |
|
869,400 |
|
14,217 |
Ashish Mahadwar |
|
1,180,667 |
|
472,267 |
|
24,108 |
|
708,400 |
|
11,300 |
James Smith |
|
1,950,000 |
|
780,000 |
|
38,825 |
|
1,170,000 |
|
19,133 |
Gary M. Budzinski* |
|
2,437,500 |
|
975,000 |
|
48,532 |
|
1,462,500 |
|
23,917 |
____________________
* |
Mr. Budzinski forfeited all stock
options and PSUs shown above upon his termination of employment effective
March 10, 2015. |
In accordance with CSCs Equity Grant
Policy, the target award values listed in the table above generally differ from
the award values listed in the Summary Compensation Table. In order to determine
the number of stock options to award, the target grant value for options is
divided by the fair market value of an option determined by using the average
closing price of CSC stock for the three-month period ending on the grant date
and the Black Scholes option pricing model. The number of shares underlying our
Performance Share Units is also calculated by dividing the target grant value by
the average closing price of CSC stock for the three-month period ending on the
grant date. This method is employed to reduce the impact of stock
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price spikes, either positive or
negative, when determining the number of shares underlying these awards. In
contrast, the grant values in the Summary Compensation Table are determined
using the grant date closing price, and the grant values for the Performance
Share Units in the Summary Compensation Table are based on the probable
achievement of the performance goals at the time of grant, instead of
target.
Fiscal 2015 Target Total Direct
Compensation
The chart below displays the value of
each element of target Total Direct Compensation described above for our NEOs.
As noted above in the discussion of each element of compensation, the value of
compensation actually realized will vary from the Committees targets based on
our financial results and our stock price performance.
Named Executive Officer |
|
Base Salary ($) |
|
Target Annual Cash
Incentives ($) |
|
Target Long-Term Incentive Grant Value
($) |
|
Target Total Direct Compensation ($) |
J. Michael Lawrie |
|
1,250,000 |
|
1,875,000 |
|
8,750,000 |
|
11,875,000 |
Paul N. Saleh |
|
700,000 |
|
700,000 |
|
2,800,000 |
|
4,200,000 |
Romil Bahl |
|
606,846 |
|
604,072 |
|
1,449,000 |
|
2,659,918 |
Ashish Mahadwar |
|
470,615 |
|
470,442 |
|
1,180,667 |
|
2,121,724 |
James R. Smith |
|
650,000 |
|
650,000 |
|
1,950,000 |
|
3,250,000 |
Gary M. Budzinski |
|
650,000 |
|
650,000 |
|
2,437,500 |
|
3,737,500 |
Other Incentive
Awards
Special CEO Performance
Award. In recognition of Mr. Lawries
successful leadership in executing the Companys transformation strategy and as
a further incentive to continue that process, on July 15, 2014, Mr. Lawrie,
received a special PSU award with an intended grant-date value of $2,500,000.
Based on our Equity Grant Policy, this translated into an award of 40,368 PSUs.
Up to 100% of the award will vest and be converted into shares of our common
stock on the first anniversary of the grant date if certain financial,
governance and organizational performance goals are met, subject to Mr. Lawries
continued employment.
The financial goal is achievement of at
least 80% of our corporate OI goal for Fiscal 2015. As discussed above under
Annual Incentive Compensation Plan: Fiscal 2015 Results, this goal has been
met. The governance and organizational goals require demonstrated progress in
achieving best-in-class board governance and engagement, leadership preparedness
and stability objectives. The Compensation Committee will evaluate achievement
of the governance and organizational goals in July 2015.
Inducement Awards. As an inducement to join the Company, Messrs. Bahl and
Mahadwar each received a one-time restricted stock unit (RSU) grant in
connection with their hiring, in the amount of 50,000 RSUs for Mr. Bahl and
40,000 RSUs for Mr. Mahadwar. Each inducement grant vests over a three-year
period following the grant date, subject to the executives continued
employment. Mr. Mahadwar also received a cash signing bonus in the amount of
$200,000, payable in two equal installments after 6 and 12 months of employment.
A pro-rata portion of the signing bonus is subject to repayment if Mr. Mahadwar
resigns or his employment is terminated for cause within 12 months after the
date on which each installment is paid.
In connection with his hiring in May
2013, Mr. Smith also received a sign-on bonus which was paid in May 2014 and is
reflected in the Summary Compensation Table below.
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45 |
Table of Contents
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Other Executive
Compensation |
Post-Employment
Benefits
Retirement Plans. The Committee views retirement benefits as an important
component of our executive compensation program. As such, we offer our
employees, including the NEOs, a retirement program that provides the
opportunity to accumulate retirement income. We periodically review our benefits
program against our peer group and aim for the program to be competitive. None
of our NEOs is eligible to participate in our frozen defined-benefit pension
plan.
Retirement
Plans |
CSC Matched Asset Plan
(MAP) |
|
Broad-based, qualified, defined
contribution 401(k) plan with company match on a portion of employee
contributions and directed investment alternatives. |
Deferred
Compensation Plan |
|
CSC maintains the CSC Deferred
Compensation Plan, which is offered to approximately 2,000 U.S. executives
annually. This unfunded plan allows participants to defer receipt of
incentive compensation and salary. Additional details can be found under
Fiscal Year 2014 Nonqualified Deferred Compensation
below. |
Career Shares. CSC grants Career Shares in the form of RSUs to a select,
limited number of key executives. The Committee believes that the Career Share
program has been a valuable compensation tool for attracting and retaining
mid-career executive talent. Once vested, delivery of shares commences at
retirement and is spread ratably in 10 annual installments following retirement,
thereby continuing to tie a portion of the executives post-retirement income to
share value and promoting long-term alignment with stockholder interests. The
Career Share program replaces the Companys Supplemental Executive Retirement
Plan which was frozen in 2009.
At the beginning of Fiscal Year 2015,
each of the NEOs other than Messrs. Bahl and Mahadwar (who joined the Company
mid-year) received Career Share grants in an amount equal to 25% of their Fiscal
2014 base salary and EICP payout for Fiscal 2014. Mr. Lawries and Mr. Salehs
Career Shares fully vest at age 62 (subject to continued employment), or at or
after age 55 with at least five years of continued employment. Since he entered
the program after June 2012, Mr. Smiths Career Shares provide for 50% vesting
upon him reaching age 55 with five years of service, and additional vesting in
10% increments for each additional year of service beyond five years, with full
vesting at age 62. Mr. Budzinski forfeited his Career Shares upon his
termination of employment effective March 10, 2015.
Severance and Change in Control
Compensation
In order to offer competitive total
compensation packages to our executive officers, as well as to ensure the
ongoing retention of these individuals, we offer certain post-employment
benefits to a select group of executive officers, including our NEOs. The
Severance Plan for Senior Management and Key Employees (the Severance Plan)
provides double trigger income and benefits continuity protection to the
executive for the limited case in which the employment of the executive officer
is terminated by the Company without cause or by the executive for good reason
during a specified window of time following a change in control. The Severance
Plan is intended to preserve executive productivity and encourage retention
during an actual or potential change in control of the Company. We believe the
importance of these benefits increases with the position and level of
responsibility of the executive.
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We also maintain an Executive Officer
Severance Policy (the Severance Policy) to provide severance benefits in the
discretion of the Compensation Committee and the CEO to certain executives whose
employment with the Company is terminated by the Company without cause in
situations not involving a change in control. The Severance Policy covers those
executives reporting directly to the CEO who are Section 16 officers. An
executive who resigns from the Company is not entitled to benefits under the
Severance Policy.
Mr. Lawrie does not participate in the
Severance Plan, nor is he covered under the Severance Policy. Instead, the
Company has entered into an employment agreement with Mr. Lawrie that provides
for certain severance payments. Additional details regarding the Severance Plan,
the Severance Policy and Mr. Lawries severance benefits under his employment
agreement are provided under Potential Payments Upon Change in Control and
Termination of Employment below.
The Company has entered into
non-compete agreements with each of our executive officers other than the CEO.
These agreements generally prohibit our executives from competing with CSC for
12 months following any termination of employment, prohibit our executives from
soliciting our employees or clients for 24 months following any termination of
employment, and contain a non-disclosure provision. We entered into these
agreements in an effort to protect vital Company interests. Mr. Lawrie is
subject to separate non-compete requirements under the terms of his employment
agreement.
Perquisites and Other
Benefits
Health Care
Benefits. We provide health care benefits to
eligible employees, including medical, dental, life, disability and accident
insurance. These benefits are available to all U.S. employees generally,
including the NEOs. These programs are designed to provide certain basic quality
of life benefits and protections.
Perquisites. CSC provides certain limited perquisites to senior
executives, including the NEOs, in order to enhance their security and
productivity. The Committee reviews the perquisites provided to the NEOs
annually as part of its overall review of executive compensation. The Committee
has determined that it is reasonable and competitive to provide relocation
benefits to newly hired or relocated executives.
In addition, the CEO may use Company
owned or leased aircraft for personal purposes and, at times, is advised to use
such aircraft for security reasons even if for personal travel. The CEO is taxed
on the value of this usage according to IRS rules and no tax gross-up is
provided for personal usage of corporate aircraft. See the notes to the Summary
Compensation Table for more information regarding the perquisites provided to
the NEOs.
Role of Management
The CEO, with the assistance of the
Chief Human Resources Officer (CHRO), conducts an annual review of the total
compensation of each executive officer, including the NEOs. The CEOs review
includes an assessment of each executive officers performance, the performance
of the individuals respective business or function, executive retention
considerations, succession potential and the competitive market. Following such
review, the CEO recommends base salaries and target annual and LTI opportunities
for the executive officers to the Committee.
Role of the Compensation
Committee
The Committee, which is comprised
entirely of independent directors, is responsible for overseeing the Companys
compensation policies and programs. In fulfilling its responsibilities, the
Committee annually reviews general trends in executive compensation,
compensation design, and the total value and mix of
COMPUTER SCIENCES CORPORATION
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Table of Contents
compensation for our executive
officers. This process includes the review and approval of the target and actual
Total Direct Compensation of each executive officer, taking into consideration
internal pay equity, tenure and performance of various executive officers,
potential future contributions, succession, and competitive market information.
Pursuant to its charter, the Committee may delegate any of its responsibilities
to a subcommittee or to Company employees or others. The Committee has not
delegated its authority for compensation for executive officers. However, the
Committee has delegated authority under CSCs equity incentive plans to the CEO
to grant equity awards to employees who are not senior executives, subject to
certain limits.
CEO Compensation. The Committee works directly with its compensation consultant
to provide a decision-making framework for setting the CEOs target Total Direct
Compensation. The Committee establishes the goals and objectives relevant to the
CEOs compensation and makes a recommendation to the Board for the CEOs
compensation. The independent directors of the Board review the Committees
recommendations and determine the CEOs total compensation, within the framework
provided by Mr. Lawries employment agreement.
Role of Compensation
Consultant
To assist the Committee in discharging
its responsibilities, the Committee has directly retained PM&P as its
independent compensation consultant.
PM&P consults with the Committee on
executive compensation matters generally, including advising on trends and best
practices in the design, composition and policies of executive compensation
programs and providing commentary and advice on management proposals to the
Committee. Specifically, during Fiscal 2015, PM&P advised the Committee
on:
● |
Pay practice trends |
● |
Proxy trends |
● |
CEO compensation |
● |
Non-employee director compensation |
● |
Pay for
performance |
● |
Selection of peer group
companies; and |
● |
Peer group pay
comparisons |
PM&P also attended most Committee
meetings at the request of the Committee Chair. Other than the work performed in
Fiscal 2015 for the Committee, PM&P did not provide any other services to
CSC or its executive officers. Based on this and other factors reviewed by the
Committee, the Committee has determined that the work performed by PM&P does
not raise any conflict of interest.
Review of Market Compensation
Data
CSC reviews market pay levels and
practices for NEOs using a combination of survey data and proxy disclosures on
pay for our peer group. The Committee reviews the peer group periodically and
identified the following companies as CSCs peer group for the purposes of
reviewing the competitiveness of compensation opportunities for the NEOs for
Fiscal 2015: Accenture, plc; Northrop Grumman Corp.; Raytheon Co.; Xerox Corp.;
EMC Corporation; L-3 Communications Holdings, Inc.; Texas Instruments, Inc.;
Western Digital Corp.; Textron, Inc.; Automatic Data Processing, Inc.; Motorola
Solutions, Inc.; Cognizant Technology Solutions Corp.; Hewlett-Packard Co.;
International Business Machines; Microsoft Corp.; Seagate Technology Plc;
Fidelity National Information Services and Teradata Corp. (the Peer
Group).
The Committee considered several
factors in its choice of peers, including the market in which the Company
competes for executive talent, certain strategic aspects of the Companys
turnaround strategy, and stockholder concerns. The Committee determined that
including significantly larger companies by revenue in the Peer Group was
appropriate given that we compete with these companies for executive talent, but
ensured that PM&P regressed the compensation data for these larger companies
to enhance its comparability.
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In October 2014, the Committee reviewed
the Peer Group but did not make any changes from the peer group that was used in
Fiscal 2014. The Peer Group of 18 is reflected in the following table. CSC
Fiscal 2015 revenue of $12.2 billion ranked near the median revenue of $14.1
billion for the 14 revenue-size relevant peer
|
Peer
Group |
|
|
|
|
|
|
|
Revenue |
|
|
|
|
Company Name |
|
($ in billions)* |
|
|
|
|
Hewlett-Packard Company |
|
108.3 |
|
|
|
|
|
|
Microsoft Corporation |
|
94.8 |
|
|
|
|
|
|
International Business Machines |
|
89.9 |
|
|
|
|
|
|
Accenture plc |
|
32.8 |
|
|
|
|
|
|
EMC Corporation |
|
24.6 |
|
|
|
|
|
|
Northrop Grumman Corporation |
|
24.1 |
|
|
|
|
|
|
Raytheon Company |
|
22.6 |
|
|
|
|
|
|
Xerox Corporation |
|
18.9 |
|
|
|
|
Size Relevant Peer Companies |
|
|
Western Digital Corporation |
|
15.0 |
|
|
|
|
|
Seagate Technology Public Limited
Company |
|
14.1 |
|
|
|
Textron, Inc. |
|
14.1 |
|
|
|
|
Texas Instruments Incorporated |
|
13.2 |
|
|
|
|
|
L-3 Communications Corporation |
|
11.9 |
|
|
|
|
|
|
Automatic Data Processing, Inc. |
|
11.3 |
|
|
|
|
|
|
Cognizant Technology Solutions
Corporation |
|
10.8 |
|
|
|
|
|
|
Fidelity National Information Services,
Inc. |
|
6.4 |
|
|
|
|
|
|
Motorola Solutions, Inc. |
|
5.3 |
|
|
|
|
|
|
Teradata Corporation |
|
2.7 |
|
|
|
|
|
____________________
|
* |
Represents 12 months of revenue through March 2015 except
for: |
(1) |
Hewlett-Packard Company
revenue: 12 months ending April 30, 2015 |
(2) |
Accenture plc revenue: 12
months ending February 28, 2015 |
(3) |
Western Digital Corporation:
12 months ending April 3, 2015 |
(4) |
Seagate Technology Public
Limited Company: 12 months ending April 3, 2015 |
(5) |
Textron Inc.: 12 months ending
April 4, 2015 |
(6) |
Motorola Solutions, Inc.: 12
months ending April 4, 2015 |
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Additional Compensation
Policies |
In addition to the components of our
executive compensation program, we maintain the compensation policies described
below.
Policy on Transactions in Company
Securities and Related Derivatives
The Board of Directors has adopted a
policy prohibiting directors, corporate officers and each employee of CSC or its
subsidiaries who are financial insiders, and members of their immediate
families, from entering into any transactions in CSCs securities except during
announced trading periods, or pursuant to a trading plan under Rule 10b5-1 of
the Exchange Act. Such transactions are subject to pre-approval by the Companys
CEO, CFO, CHRO and General Counsel prior to entering any such transaction. In
addition, CSC prohibits directors, officers and financial insiders, and members
of their immediate families, from derivative security transactions with respect
to equity securities of CSC. CSC also discourages persons subject to such policy
from margining or pledging CSC stock to secure a loan or purchase shares of CSC
stock on margin. None of the NEOs has margined or pledged any CSC
stock.
Equity Ownership
Guidelines
The Committee has adopted equity
ownership guidelines for senior level executives to encourage them to build
their ownership positions in our common stock over time and retain shares they
earn through our equity incentive plans. The Committee believes that stock
ownership by our executive officers further aligns their interests with those of
long-term stockholders. Under the equity ownership guidelines, each senior level
executive who has not yet achieved the equity ownership levels must retain a
certain percentage of the net shares (after withholding for taxes and exercise
price) resulting from stock option exercises, Performance Share Unit payments or
other Long-Term Incentives until the levels are achieved. During Fiscal 2015, in
order to encourage executives to meet the guidelines more quickly, the Committee
modified the retention requirement from a static to a scaled model, with higher
retention requirements the farther an executive is from meeting the guidelines.
Under this new retention requirement, executives who have satisfied 50% or less
of their ownership guideline must retain 100% of their net shares, executives
who have satisfied between 51% and 75% of their ownership guideline must retain
75% of their net shares, and executives who have satisfied more than 75% of
their ownership guidelines must retain 50% of their net shares.
The ownership guidelines for our NEOs
are as follows:
Position |
Stock Value as a Percentage of Base
Salary |
Chief Executive Officer |
700% |
Other Named Executive Officers |
300% |
The Committee reviews compliance with
the guidelines on an annual basis and considers the amount of common stock held
directly or through the Companys MAP, Career Shares and RSUs (but not
Performance Share Units) in determining whether an executive has achieved his
designated equity ownership level.
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Tax Deductibility of
Compensation
Section 162(m) limits a companys
annual tax deduction for compensation to its CEO and its three other
highest-paid executive officers employed at year-end (other than the CFO) to $1
million per person, unless, among other things, the compensation is
performance-based, as defined in Section 162(m), and provided under a plan
that has been approved by the stockholders. It is our policy to design and
administer our compensation program in a tax efficient manner and the Committee
considers the impact of the deduction limitations imposed by Section 162(m) on
the Company. As noted above, compensation decisions are made, among other
things, to ensure market competitiveness, to reward outstanding performance, and
to attract proven talent. Sometimes this results in compensation amounts being
non-deductible under Section 162(m). For example, since the CEOs salary is
above the $1 million threshold, a portion of his salary and his perquisites are
not deductible by the Company.
Compensation Recoupment
Policy
CSC maintains a compensation recoupment
or clawback policy that permits the Company to recover performance-based
compensation from participants whose fraud or intentional illegal conduct
materially contributed to a financial restatement. The policy allows for the
recovery of the difference between compensation awarded or paid and the amount
which would have been paid had it been calculated based on the restated
financial statements, excluding any tax payments. In addition, under the
Companys equity grant agreements, employees may be required to forfeit awards
or gains if a recipient breaches the non-competition, non-solicitation of
employees, or non-disclosure provisions of such agreements.
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Summary Compensation Table |
The following table provides
information on the compensation of the Named Executive Officers in the Fiscal
Years indicated.
Name & Principal
Position1 (a) |
|
Fiscal Year (b) |
|
Salary2 ($) (c) |
|
Bonus3 ($) (d) |
|
Stock
Awards4 ($) (e) |
|
Option
Awards5 ($) (f) |
|
Non-Equity Incentive Plan
Compensation6 ($) (g) |
|
Change in Pension Value and
Nonqualified
Deferred Compensation Earnings7 ($) (h) |
|
All Other
Compensation8 ($) (i) |
|
Total ($) (j) |
J. Michael
Lawrie |
|
2015 |
|
1,250,000 |
|
|
|
8,614,596 |
|
3,262,979 |
|
1,875,000 |
|
|
|
451,305 |
|
15,453,880 |
President and
Chief |
|
2014 |
|
1,250,000 |
|
|
|
5,929,207 |
|
3,582,098 |
|
2,182,500 |
|
|
|
323,390 |
|
13,267,195 |
Executive
Officer |
|
2013 |
|
1,250,000 |
|
|
|
13,656,687 |
|
2,936,580 |
|
3,002,000 |
|
|
|
442,921 |
|
21,288,188 |
Paul N. Saleh |
|
2015 |
|
700,000 |
|
|
|
2,041,916 |
|
1,044,151 |
|
700,000 |
|
|
|
6,325 |
|
4,492,392 |
Executive Vice |
|
2014 |
|
700,000 |
|
|
|
1,895,080 |
|
1,146,270 |
|
781,200 |
|
|
|
4,299 |
|
4,526,849 |
President and Chief |
|
2013 |
|
600,385 |
|
|
|
2,365,686 |
|
924,616 |
|
750,512 |
|
|
|
5,326 |
|
4,646,525 |
Financial Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Romil Bahl |
|
2015 |
|
606,846 |
|
|
|
3,927,315 |
|
540,346 |
|
202,360 |
|
|
|
27,605 |
|
5,304,472 |
Executive Vice
President |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and General
Manager, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global
Industries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ashish Mahadwar |
|
2015 |
|
470,615 |
|
100,000 |
|
3,017,466 |
|
438,691 |
|
252,160 |
|
|
|
4,664 |
|
4,283,596 |
Executive Vice President |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and
General Manager, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Strategic Business |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James R. Smith |
|
2015 |
|
650,000 |
|
50,000 |
|
1,375,609 |
|
727,173 |
|
217,750 |
|
|
|
27,321 |
|
3,047,853 |
Executive Vice |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President,
Global |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business
Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gary M. Budzinski |
|
2015 |
|
617,500 |
|
|
|
1,693,446 |
|
908,980 |
|
|
|
|
|
149,588 |
|
3,369,514 |
Former
Executive Vice |
|
2014 |
|
650,000 |
|
|
|
1,618,295 |
|
997,863 |
|
301,600 |
|
|
|
58,249 |
|
3,626,007 |
President and General |
|
2013 |
|
537,500 |
|
|
|
1,320,431 |
|
912,630 |
|
504,533 |
|
|
|
56,620 |
|
3,331,714 |
Manager, Global |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Infrastructure Services |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
____________________
1. |
Mr. Lawrie joined the Company as
President and Chief Executive Officer on March 19, 2012. |
|
|
|
Mr. Saleh joined the Company as
Executive Vice President and CFO on May 23, 2012. |
|
|
Mr. Bahl joined the Company as
Executive Vice President and General Manager, Global Industries on April
21, 2014. |
|
|
Mr. Mahadwar joined the Company
as Executive Vice President and General Manager, Strategic Business, on
July 7, 2014. |
|
|
Mr. Smith joined the Company as a
Vice President on May 13, 2013 and was promoted to Executive Vice
President, Global Business Services, on August 17, 2013. |
|
|
Mr. Budzinski joined CSC as an
Executive Vice President and General Manager, Global Infrastructure
Services on June 4, 2012. Mr. Budzinskis employment with the Company
terminated effective March 10, 2015. |
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Table of Contents
2. |
The amounts shown in Column (c)
reflect all salary earned during the fiscal year, whether or not payment
was deferred pursuant to the Deferred Compensation Plan or any other plan.
All NEOs are paid in U.S. dollars. Salary earned reflects pro-rated
salaries for partial-year new hires such as Mr. Bahl and Mr.
Mahadwar. |
|
|
3. |
The amounts shown in Column (d)
reflect new-hire sign-on bonuses that were paid to Mr. Mahadwar on January
15, 2015 and to Mr. Smith on May 16, 2014. |
|
4. |
The amounts shown in Column (e)
reflect the aggregate grant date fair values computed in accordance with
FASB ASC Topic 718 for performance-vesting and service-vesting RSUs
granted during the fiscal year, including Career Shares where applicable.
Career Shares are subject to the CEOs nomination and Committee
approval. |
|
|
Pursuant to SEC rules, we present
the amounts excluding the impact of estimated forfeitures. For a
discussion of the assumptions made in the valuation of RSUs, reference is
made to the section of Note 1 to the Companys consolidated financial
statements set forth in the Companys 2015 Annual Report filed on Form
10-K providing details of the Companys accounting under FASB ASC Topic
718. Performance Share Units and RSUs canceled or forfeited during Fiscal
Year 2015 are as follows: |
|
|
|
Fiscal 2015 Total Stock
Award |
Name |
|
Cancellation/Forfeitures |
Gary M.
Budzinski |
|
84,659 |
|
|
|
These cancellations/forfeitures
represent PSUs and Career Shares that were forfeited upon Mr. Budzinskis
termination of employment effective March 10, 2015. |
|
|
|
A substantial portion of the
stock awards granted consisted of PSUs. For all PSUs, the amounts included
in Column (e) reflect the value at the grant date based upon the estimated
performance during the performance period at 100% of target. The maximum
grant date values of the Fiscal 2015 stock awards (including
service-vesting RSUs and Career Shares and assuming that PSUs pay out at
the maximum of 200% of target) are as
follows: |
|
|
Fiscal 2015
Stock |
|
|
Awards
at |
Name |
|
Maximum Value ($) |
J. Michael
Lawrie |
|
13,843,104 |
Paul N. Saleh |
|
3,715,022 |
Romil Bahl |
|
4,793,131 |
Ashish Mahadwar |
|
3,682,132 |
James R. Smith |
|
2,540,809 |
Gary M. Budzinski |
|
3,149,992 |
5. |
The amounts shown in Column (f)
reflect the aggregate grant date fair value computed in accordance with
FASB ASC Topic 718 for stock options granted during the fiscal
year. |
|
|
COMPUTER SCIENCES CORPORATION
|
|
|
|
2015 Proxy
Statement |
|
53 |
Table of Contents
|
Pursuant to SEC rules, we present
the amounts excluding the impact of estimated forfeitures. For a
discussion of the assumptions made in the valuation of stock options,
reference is made to the section of Note 1 to the Companys consolidated
financial statements set forth in the Companys 2015 Annual Report on Form
10-K providing details of the Companys accounting under FASB ASC Topic
718. Stock options canceled or forfeited during Fiscal Year 2015 are as
follows: |
|
|
|
|
Fiscal 2015 Total
Option |
|
|
Award
Cancellation/ |
Name |
|
Forfeitures |
Gary M.
Budzinski |
|
144,019 |
|
These cancellations/forfeitures
represent stock options that were forfeited upon Mr. Budzinskis
termination of employment effective March 10, 2015. |
|
|
6. |
The amounts shown in Column (g) reflect amounts earned
during the fiscal year under the EICP, whether or not payment was deferred
pursuant to the Deferred Compensation Plan. |
|
|
7. |
No NEO participated in the Companys pension plan or
received above-market or preferential earnings from the Deferred
Compensation Plan for any year presented in the table. |
|
8. |
Column (i) includes the total dollar amount of all other
compensation, perquisites and other property paid to the NEOs. During
Fiscal 2015, the Company provided the following perquisites and other
personal benefits, or property, to NEOs, except as otherwise indicated:
personal use of Company aircraft (Mr. Lawrie), housing expense (Mr.
Lawrie), commuting expense (Messrs. Lawrie, Bahl, Smith and Budzinski),
annual medical screening (Mr. Lawrie), financial counseling (Mr.
Budzinski) and vacation encashment (Messrs. Smith and Budzinski). In
addition, the Company makes matching contributions to the Companys
broad-based 401(k) defined contribution plan on behalf of the NEOs. The
Company also pays premiums for life insurance policies for the benefit of
the NEOs, none of whom has or will receive, or has been allocated, an
interest in any cash surrender value under these policies. The Company
also made a severance payment to Mr. Budzinski in connection with his
termination of employment. The amount in the table below represents the
first installment (paid during Fiscal 2015) of the total severance benefit
of $325,000 and $20,000, paid during Fiscal 2015 to cover healthcare
costs, payable to Mr. Budzinski. |
|
|
|
The incremental cost of each perquisite representing
more than 10% of the value of all of an executives perquisites or, if
greater, more than $25,000, and the amount of matching contributions to
the defined contribution plan, life insurance premiums and severance
benefits paid for each NEO in Fiscal Year 2015 are set forth
below: |
|
|
|
|
|
|
|
|
401(k)
Plan |
|
Basic Life |
|
|
|
Named Executive
Officer |
|
Personal Use
of |
|
Commuting |
|
Matching |
|
Insurance |
|
Severance |
|
(NEO) |
|
Company Aircraft |
|
Expenses |
|
Contributions |
|
Premiums |
|
Benefits |
|
J. Michael
Lawrie |
|
361,778 |
|
54,131 |
|
7,548 |
|
1,605 |
|
|
|
Paul N. Saleh |
|
|
|
|
|
5,200 |
|
1,125 |
|
|
|
Romil Bahl |
|
|
|
|
|
4,952 |
|
972 |
|
|
|
Ashish Mahadwar |
|
|
|
|
|
3,900 |
|
764 |
|
|
|
James R. Smith |
|
|
|
|
|
7,800 |
|
1,043 |
|
|
|
Gary M. Budzinski |
|
|
|
44,029 |
|
7,800 |
|
984 |
|
74,167 |
54 |
|
COMPUTER SCIENCES CORPORATION
|
|
|
|
2015 Proxy
Statement |
Table of Contents
|
The incremental cost of Mr.
Lawries use of Company aircraft is based on the variable costs to the
Company, including fuel costs, on-board catering, landing/ramp fees and
other miscellaneous variable costs. This calculation does not include
fixed costs which do not change based on usage, such as depreciation,
leasing costs, and flight crew salaries. |
|
|
|
All employees (including the
NEOs) with at least one year of service are vested in the matching
contributions credited to their 401(k) accounts. |
|
|
Summary of CEO Compensation Realized in Fiscal
2015 |
The table below provides a different
perspective on compensation that is supplemental to the information contained in
the Summary Compensation Table. This table details the pre-tax income realized
by Mr. Lawrie during Fiscal 2015 from base salary, annual incentive
compensation, and annual cycle and inducement long term equity incentive
compensation from which Mr. Lawrie has received cash or vested shares (including
dividend equivalents paid on RSUs). It does not include non-qualified deferred
compensation or other compensation included in column h of the Summary
Compensation Table or vested, unexercised stock options.
In Fiscal 2015, the majority of Mr.
Lawries realized compensation resulted from performance-based awards. The
Companys success enabled 25% of target Fiscal 2013 annual cycle PSU grants and
25% of target Fiscal 2014 annual cycle PSU grants to experience accelerated
vesting after certification of Fiscal 2014 EPS.
|
|
|
|
Annual |
|
Pre-Tax |
|
|
|
|
Applicable |
|
Rate/Target |
|
Realized |
|
|
Cash
Compensation |
|
Period |
|
($) |
|
Amount
($) |
|
Explanation |
Salary |
|
Fiscal 2015 |
|
$1,250,000 |
|
|
$ |
1,250,000 |
|
|
Represents base salary for full
FY2015 |
|
|
|
|
|
|
|
|
|
|
|
|
Annual Cash Incentive |
|
Fiscal 2015 |
|
$1,875,000 |
|
|
$ |
1,875,000 |
|
|
Target EICP was set at 150% of
base salary. Actual EICP paid at 150% of base salary (i.e., at 100% of
Target) because of CSCs and Mr. Lawries performance vs. pre-specified
FY2015 EICP goals, as described in the CD&A. |
|
Total Cash Compensation |
|
|
|
$3,125,000 |
|
|
$ |
3,125,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Award |
|
Pre-Tax |
|
|
|
|
Applicable |
|
Date
Value |
|
Realized |
|
|
Equity
Compensation |
|
Period |
|
($) |
|
Amount ($) |
|
|
Time-Vesting Inducement RSUs |
|
Fiscal 2015 |
|
$1,368,000 |
|
$3,395,000 |
|
A total of 50,000 Time-Vesting
Inducement RSUs (representing 25% of the 200,000 RSU grant with a 4-year
graded vesting schedule) vested on April 3, 2015 (i.e., the final day of
FY2015). The Pre-Tax Realized Income includes the 139% CSC stock price
increase from grant date through vesting date plus $126,000 of dividend
equivalents, equal to CSC TSR of 139% during that
period. |
COMPUTER SCIENCES CORPORATION
|
|
|
|
2015 Proxy
Statement |
|
55 |
Table of Contents
|
|
|
|
Award |
|
Pre-Tax |
|
|
|
|
Applicable |
|
Date
Value |
|
Realized |
|
|
Equity
Compensation |
|
Period |
|
($) |
|
Amount ($) |
|
|
FY2013
Performance-Vesting Annual Cycle RSUs |
|
Fiscal 2014 |
|
$1,200,417 |
|
$2,822,127 |
|
On May 22, 2014, 45,010 PSUs
(representing 25% of the FY2013 Annual Cycle PSU grant) had experienced
accelerated vesting because FY2014 EPS had exceeded the pre-specified EPS
goal for such accelerated vesting. The Pre-Tax Realized Income includes
the 129.1% CSC stock price increase from grant date through vesting date
plus $72,016 of dividend equivalents, equal to CSC TSR of 129.1% during
that period. |
|
|
|
|
|
|
|
|
|
FY2014
Performance-Vesting Annual Cycle RSUs |
|
Fiscal
2014 |
|
$1,232,697 |
|
$1,708,935 |
|
On May 22, 2014, 27,608 PSUs (representing 25% of the
FY2014 Annual Cycle PSU grant) had experienced accelerated vesting because
FY2014 EPS had exceeded the pre-specified FY2014 EPS threshold for such
accelerated vesting. The Pre-Tax Realized Income includes the 36.8% CSC
stock price increase from grant date through vesting date plus $22,086 of
dividend equivalents, equal to CSC TSR of 36.8% during that
period. |
|
|
|
|
|
|
|
|
|
Total Equity
Compensation |
|
|
|
$3,801,114 |
|
$7,926,062 |
|
|
Total Realized
Compensation |
|
|
|
$6,926,114 |
|
$11,051,062 |
|
|
56 |
|
COMPUTER SCIENCES CORPORATION
|
|
|
|
2015 Proxy
Statement |
Table of Contents
Grants of Plan-Based
Awards |
The following table provides
information on EICP awards, RSUs and stock options granted to the NEOs in the
Fiscal Year ended April 3, 2015.
|
|
|
|
|
|
Estimated
Possible Payouts Under Non-Equity Incentive Plan Awards1 |
|
Estimated Future
Payouts Under Equity Incentive Plan Awards2 |
|
All
Other Stock Awards:
Number of Shares of
Stock or Units3 (#) (j) |
|
All
Other Option Awards: Number of Securities Underlying Options (#) (k) |
|
Exercise or
Base Price
of Option Awards ($/Sh) (l) |
|
Grant Date
Fair Value
of Stock and Option Awards ($) (m) |
Name (a) |
|
Grant Date (b) |
|
Approval Date (c) |
|
Threshold ($) (d) |
|
Target ($) (e) |
|
Maximum ($) (f) |
|
Threshold (#) (g) |
|
Target (#) (h) |
|
Maximum (#) (i) |
J. Michael Lawrie |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EICP |
|
|
|
|
|
937,500 |
|
1,875,000 |
|
3,750,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSUs
Performance |
|
5/16/2014 |
|
5/14/2014 |
|
|
|
|
|
|
|
21,464 |
|
85,854 |
|
171,708 |
|
|
|
|
|
|
|
5,228,509 |
Special PSU
Award |
|
7/15/2014 |
|
6/24/2014 |
|
|
|
|
|
|
|
|
|
40,368 |
|
|
|
|
|
|
|
|
|
2,531,477 |
RSUs Career
Shares |
|
5/16/2014 |
|
5/14/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
14,033 |
|
|
|
|
|
854,610 |
Stock Options |
|
5/16/2014 |
|
5/14/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
174,216 |
|
60.90 |
|
3,262,979 |
Paul N.
Saleh |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EICP |
|
|
|
|
|
350,000 |
|
700,000 |
|
1,400,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSUs Performance |
|
5/16/2014 |
|
5/13/2014 |
|
|
|
|
|
|
|
6,868 |
|
27,473 |
|
54,946 |
|
|
|
|
|
|
|
1,673,106 |
RSUs Career Shares |
|
5/16/2014 |
|
5/13/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
6,056 |
|
|
|
|
|
368,810 |
Stock Options |
|
5/16/2014 |
|
5/13/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55,749 |
|
60.90 |
|
1,044,151 |
Romil Bahl |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EICP |
|
|
|
|
|
302,036 |
|
604,072 |
|
1,208,144 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSUs
Performance |
|
5/16/2014 |
|
5/13/2014 |
|
|
|
|
|
|
|
3,554 |
|
14,217 |
|
28,434 |
|
|
|
|
|
|
|
865,815 |
RSUs
Inducement |
|
5/15/2014 |
|
4/9/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
|
|
|
|
|
3,061,500 |
Stock Options |
|
5/16/2014 |
|
5/13/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,850 |
|
60.90 |
|
540,346 |
Ashish
Mahadwar |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EICP |
|
|
|
|
|
235,221 |
|
470,442 |
|
940,884 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSUs Performance |
|
8/15/2014 |
|
5/14/2014 |
|
|
|
|
|
|
|
2,825 |
|
11,300 |
|
22,600 |
|
|
|
|
|
|
|
664,666 |
RSUs Inducement |
|
8/15/2014 |
|
6/12/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000 |
|
|
|
|
|
2,352,800 |
Stock Options |
|
8/15/2014 |
|
5/14/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24,108 |
|
58.82 |
|
438,691 |
James R. Smith |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EICP |
|
|
|
|
|
325,000 |
|
650,000 |
|
1,300,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSUs
Performance |
|
5/16/2014 |
|
5/13/2014 |
|
|
|
|
|
|
|
4,783 |
|
19,133 |
|
38,266 |
|
|
|
|
|
|
|
1,165,200 |
RSUs Career
Shares |
|
5/16/2014 |
|
5/13/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
3,455 |
|
|
|
|
|
210,410 |
Stock Options |
|
5/16/2014 |
|
5/13/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38,825 |
|
60.90 |
|
727,173 |
Gary M.
Budzinski |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EICP |
|
|
|
|
|
325,000 |
|
650,000 |
|
1,300,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RSUs Performance |
|
5/16/2014 |
|
5/13/2014 |
|
|
|
|
|
|
|
5,979 |
|
23,917 |
|
47,834 |
|
|
|
|
|
|
|
1,456,545 |
RSUs Inducement |
|
5/16/2014 |
|
5/13/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
3,890 |
|
|
|
|
|
236,901 |
Stock Options |
|
5/16/2014 |
|
5/13/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48,532 |
|
60.90 |
|
908,980 |
____________________
1. |
The amounts shown in Columns (d),
(e) and (f) reflect the threshold, target and maximum amounts which could
be earned under the EICP for Fiscal 2015. Actual amounts earned for Fiscal
2015 under the EICP are set forth in column (g) of the Summary
Compensation Table. |
|
|
2. |
For the annual cycle PSUs, the
number of shares which may vest ranges from 25% of the target shares if
Fiscal 2015 or Fiscal 2016 EPS threshold is met, to a maximum of 200% of
the target shares if Fiscal 2017 EPS maximum is achieved. The threshold
number contained in Column (g) represents achievement of 25% of target,
but the actual payment could range to zero. In May 2015, the Committee
determined that |
COMPUTER SCIENCES CORPORATION
|
|
|
|
2015 Proxy
Statement |
|
57 |
Table of Contents
|
the threshold EPS was achieved
for Fiscal 2015. Thus, for all NEOs other than Mr. Budzinski, 25% of the
target units were earned and paid during the first quarter of Fiscal Year
2016. Mr. Budzinskis Fiscal 2015 PSUs were forfeited upon his termination
of employment effective March 10, 2015. |
|
|
For the special PSU award for Mr.
Lawrie, up to 100% of the target shares may vest on the first anniversary
of the grant date if the applicable performance goals have been achieved.
There is no threshold or maximum payout associated with this award. See
CD&A, Other Incentive AwardsSpecial CEO Performance Award for
additional details. |
|
|
3. |
Career Shares granted in Fiscal
2015 were RSUs that vest upon the executive reaching a certain age and/or
a certain number of years of service. See CD&A, Other Executive
Compensation Career Shares for additional details. Career Shares are
settled in shares of CSC stock at the rate of 10% of the shares granted on
each of the first ten anniversaries of the executives retirement
date. |
|
|
Messrs. Bahl and Mahadwar each
received a service-vesting inducement RSU grant at the time of hire. Each
of the grants vests over a 3-year period from the grant date, with Mr.
Bahls award vesting in two equal tranches on the second and third
anniversaries of the grant date and Mr. Mahadwars award vesting in three
equal tranches on the first, second and third anniversaries of the grant
date. The vesting of half of Mr. Bahls award accelerates if his
employment is terminated without cause prior to the second anniversary of
the grant date. If Mr. Mahadwars employment is terminated without cause,
his award vests as follows: 27,000 RSUs receive accelerated vesting if the
termination occurs prior to the first anniversary of the grant date;
13,334 if the termination occurs between the first and second
anniversaries of the grant date; and 6,667 if the termination occurs after
the second anniversary of the grant date. See CD&A, Other Incentive
AwardsInducement Awards for additional
information. |
58 |
|
COMPUTER SCIENCES CORPORATION
|
|
|
|
2015 Proxy
Statement |
Table of Contents
Outstanding Equity Awards at
Fiscal Year-End |
The following table provides
information on unexercised stock options and unvested RSUs held by the NEOs on
April 3, 2015.
|
|
|
|
Option Awards |
|
Stock
Awards |
Name (a) |
|
Grant Date |
|
Number of Securities Underlying Unexercised Options (#) Exercisable (b) |
|
Number of Securities Underlying Unexercised Options (#)
Unexercisable (c) |
|
Option Exercise Price ($) (d) |
|
Option Expiration Date (e) |
|
Number of Shares or Units of Stock That
Have Not
Vested (#) (f) |
|
Market Value of Shares or Units of Stock That
Have Not
Vested1 ($) (g) |
|
Equity Incentive Plan Awards:
Number of Unearned Shares, Units or
Other Rights That Have Not Vested2 (#) (h) |
|
Equity Incentive Plan Awards: Market or Payout Value
of Unearned
Shares, Units or Other
Rights That Have
Not Vested1, 2 ($) (i) |
J. Michael
Lawrie |
|
7/15/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
40,368 |
3 |
2,639,260 |
|
|
5/16/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
85,854 |
4 |
5,613,135 |
|
|
5/16/2014 |
|
|
|
|
|
|
|
|
|
14,033 |
5 |
917,478 |
|
|
|
|
|
|
5/16/2014 |
|
|
|
174,216 |
6 |
60.90 |
|
5/16/2024 |
|
|
|
|
|
|
|
|
|
|
5/20/2013 |
|
87,457 |
|
174,912 |
7 |
44.65 |
|
5/20/2023 |
|
|
|
|
|
|
|
|
|
|
5/20/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
193,258 |
8 |
12,635,208 |
|
|
5/20/2013 |
|
|
|
|
|
|
|
|
|
22,360 |
5 |
1,461,897 |
|
|
|
|
|
|
5/22/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
270,062 |
9 |
17,656,654 |
|
|
4/16/2012 |
|
403,859 |
|
|
|
27.36 |
|
4/16/2022 |
|
|
|
|
|
|
|
|
|
|
4/16/2012 |
|
|
|
|
|
|
|
|
|
50,000 |
10 |
3,269,000 |
|
|
|
|
Paul N. Saleh |
|
5/16/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
27,473 |
4 |
1,796,185 |
|
|
5/16/2014 |
|
|
|
|
|
|
|
|
|
6,056 |
11 |
395,941 |
|
|
|
|
|
|
5/16/2014 |
|
|
|
55,749 |
6 |
60.90 |
|
5/16/2024 |
|
|
|
|
|
|
|
|
|
|
5/20/2013 |
|
27,986 |
|
55,972 |
7 |
44.65 |
|
5/20/2023 |
|
|
|
|
|
|
|
|
|
|
5/20/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
61,843 |
8 |
4,043,295 |
|
|
5/20/2013 |
|
|
|
|
|
|
|
|
|
7,104 |
11 |
464,460 |
|
|
|
|
|
|
6/15/2012 |
|
92,754 |
|
46,376 |
12 |
24.71 |
|
6/15/2022 |
|
|
|
|
|
|
|
|
|
|
6/15/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
91,107 |
9 |
5,956,576 |
|
|
6/15/2012 |
|
|
|
|
|
|
|
|
|
35,000 |
13 |
2,288,300 |
|
|
|
|
Romil Bahl |
|
5/16/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
14,217 |
4 |
929,507 |
|
|
5/16/2014 |
|
|
|
28,850 |
6 |
60.90 |
|
5/16/2024 |
|
|
|
|
|
|
|
|
|
|
5/15/2014 |
|
|
|
|
|
|
|
|
|
50,000 |
14 |
3,269,000 |
|
|
|
|
Ashish Mahadwar |
|
8/15/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
11,300 |
4 |
738,794 |
|
|
8/15/2014 |
|
|
|
|
|
|
|
|
|
40,000 |
15 |
2,615,200 |
|
|
|
|
|
|
8/15/2014 |
|
|
|
24,108 |
6 |
58.82 |
|
8/15/2024 |
|
|
|
|
|
|
|
|
James R. Smith |
|
5/16/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
19,133 |
4 |
1,250,916 |
|
|
5/16/2014 |
|
|
|
|
|
|
|
|
|
3,455 |
16 |
225,888 |
|
|
|
|
|
|
5/16/2014 |
|
|
|
38,825 |
6 |
60.90 |
|
5/16/2024 |
|
|
|
|
|
|
|
|
|
|
9/16/2013 |
|
5,873 |
|
11,744 |
17 |
52.65 |
|
9/16/2023 |
|
|
|
|
|
|
|
|
|
|
9/16/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
14,813 |
8 |
968,474 |
|
|
6/17/2013 |
|
4,612 |
|
9,224 |
18 |
45.20 |
|
6/17/2023 |
|
|
|
|
|
|
|
|
|
|
6/17/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
10,195 |
8 |
666,549 |
|
|
6/17/2013 |
|
|
|
|
|
|
|
|
|
8,632 |
19 |
564,360 |
|
|
|
|
COMPUTER SCIENCES CORPORATION
|
|
|
|
2015 Proxy
Statement |
|
59 |
Table of Contents
|
|
|
|
Option Awards |
|
Stock
Awards |
Name (a) |
|
Grant Date |
|
Number of Securities Underlying Unexercised Options (#) Exercisable (b) |
|
Number of Securities Underlying Unexercised Options (#)
Unexercisable (c) |
|
Option Exercise Price ($) (d) |
|
Option Expiration Date (e) |
|
Number of Shares or Units of Stock That
Have Not
Vested (#) (f) |
|
Market Value of Shares or Units of Stock That
Have Not
Vested1 ($) (g) |
|
Equity Incentive Plan Awards:
Number of Unearned Shares, Units or
Other Rights That Have Not Vested2 (#) (h) |
|
Equity Incentive Plan Awards: Market or Payout Value
of Unearned
Shares, Units or Other
Rights That Have
Not Vested1, 2 ($) (i) |
Gary M.
Budzinski |
|
5/20/2013 |
|
24,363 |
|
|
|
44.65 |
|
6/10/2015 |
|
|
|
|
|
|
|
|
|
|
7/16/2012 |
|
46,763 |
|
|
|
23.33 |
|
6/10/2015 |
|
|
|
|
|
|
|
|
____________________
1. |
As required by SEC rules, the market value of
service-vesting RSUs shown in column (f) and Performance Share Units shown
in Column (h) is based on the $65.38 closing market price of CSC common
stock on April 2, 2015. |
|
|
2. |
As required by SEC rules, the number of unearned
Performance Share Units and the market value of unearned Performance Share
Units shown in Columns (h) and (i) are based on achieving target
performance goals for the Fiscal 2015 PSUs awards and maximum performance
goals for the Fiscal 2014 and Fiscal 2013 PSU awards. |
|
3. |
Represents the target number of Performance Share Units
that vest on July 15, 2015 subject to the Companys OI performance for
Fiscal 2015 and Mr. Lawries achievement of certain governance and
organizational goals. |
|
4. |
Represents 100% of the target number of Performance
Share Units that vest subject to the Companys EPS performance for the
three-year period ending on the last day of Fiscal 2017. Partial
accelerated vesting may occur if the Companys EPS performance is at or
above certain levels during Fiscal 2015 or Fiscal 2016. In May 2015, the
Committee determined that the threshold performance goal had been achieved
during Fiscal 2015, resulting in accelerated vesting and payout of 25% of
the target units during the first quarter of Fiscal 2016. |
|
5. |
Represents Career Shares that vested on June 5,
2015. |
|
6. |
Vests in equal tranches on the first three anniversaries
of the grant date. |
|
7. |
Half vested on May 20, 2015 and the remaining half will
vest on May 20, 2016. |
|
8. |
Represents 175% of the target number of Performance
Share Units that vest subject to the Companys EPS performance for the
three-year period ending on the last day of Fiscal 2016, i.e., the maximum
payout of 200% less the 25% of the target units that previously vested
following the end of Fiscal 2014. Partial accelerated vesting may occur if
the Companys EPS performance is at or above certain levels during Fiscal
2014 or Fiscal 2015. On May 13, 2014, the Committee determined that the
metrics for Fiscal 2014 had been achieved, resulting in a payout of 25% of
the target units during the first quarter of Fiscal 2015. In May 2015, the
Committee determined that the 75% EPS performance goal had been achieved
during Fiscal 2015, resulting in accelerated vesting and payout of an
additional 25% of the target units during the first quarter of Fiscal
2016. |
60 |
|
COMPUTER SCIENCES CORPORATION
|
|
|
|
2015 Proxy
Statement |
Table of Contents
9. |
|
Represents 150% of the target
number of Performance Share Units that vest subject to the Companys EPS
performance for the three-year period ending on the last day of Fiscal
2015, i.e., the maximum payout of 200% less the aggregate 50% of the target
units that previously vested following the end of Fiscal 2013 and Fiscal
2014. In May 2015, the Compensation Committee determined that the maximum
EPS performance goal had been achieved during Fiscal 2015, resulting in
vesting and payout of 150% of the target units during the first quarter of
Fiscal 2016. |
|
10. |
|
Represents Mr. Lawries
Inducement Service RSUs. One-fourth vests on the final day of each of the
four Fiscal Years following the grant date. The remaining vesting date is
April 1, 2016, the last day of Fiscal 2016. |
|
11. |
|
Represents Career Shares that
will vest on May 23, 2017. |
|
12. |
|
Vested on June 15,
2015. |
|
13. |
|
Represents a one-time inducement
award of service-vesting RSUs that will vest on the third anniversary of
the grant date. |
|
14. |
|
Represents a one-time inducement
award of service-vesting RSUs. Half will vest on May 15, 2016 and the
remaining half will vest on May 15, 2017. |
|
15. |
|
Represents a one-time inducement
award of service-vesting RSUs that will vest in equal tranches on the
first three anniversaries of the grant date. |
|
16. |
|
Represents Career Shares that
will begin to vest on January 28, 2022. 80% of the Career Shares will vest
on that date, 10% will vest on May 13, 2022 and the remaining 10% will
vest on May 13, 2023. |
|
17. |
|
Half will vest on September 16,
2015 and the remaining half on September 16, 2016. |
|
18. |
|
Half vested on June 17, 2015 and
the remaining half will vest on June 17, 2016. |
|
19. |
|
Will vest on June 17,
2016. |
|
COMPUTER SCIENCES CORPORATION
|
|
|
|
2015 Proxy
Statement |
|
61 |
Table of Contents
Option Exercises and Stock
Vested |
The following table provides
information on stock options held by the NEOs that were exercised and RSUs held
by the NEOs that vested during the Fiscal Year ended April 3, 2015.
|
|
Option Awards |
|
Stock Awards |
Name (a) |
|
Number of Shares Acquired
on Exercise1 (#) (b) |
|
Value Realized on
Exercise ($) (c) |
|
Number of Shares Acquired on
Vesting2 (#) (d) |
|
Value Realized on Vesting ($) (e) |
J. Michael
Lawrie |
|
|
|
|
|
122,618 |
|
7,705,960 |
Paul N. Saleh |
|
|
|
|
|
24,020 |
|
1,467,622 |
Romil Bahl |
|
|
|
|
|
|
|
|
Ashish Mahadwar |
|
|
|
|
|
|
|
|
James R. Smith |
|
|
|
|
|
3,584 |
|
218,982 |
Gary M. Budzinski |
|
|
|
|
|
21,841 |
|
1,334,485 |
____________________
1. |
|
None of the NEOs exercised any
options during Fiscal 2015. |
|
2. |
|
Reflects the gross number of
underlying shares for restricted stock units on the vest date. For Mr.
Lawrie, these shares represent the partial vesting of his Fiscal 2013 and
Fiscal 2014 PSUs and Time-Vesting Inducement RSUs. For Messrs. Saleh and
Budzinski, these shares represent the partial vesting of their Fiscal 2013
and Fiscal 2014 PSUs. For Mr. Smith, these shares represent the partial
vesting of his Fiscal 2014 PSUs. Messrs. Bahl and Mahadwar did not vest in
any restricted stock units during Fiscal 2015. The total number of shares
acquired and the value realized net of shares withheld for tax payment to
each of the NEOs are as follows: |
|
Name |
|
# of Shares Issued
on Vesting |
|
Value Realized on Vesting
($) |
J. Michael
Lawrie |
|
68,687 |
|
4,322,312 |
Paul N. Saleh |
|
14,951 |
|
913,506 |
Romil Bahl |
|
|
|
|
Ashish Mahadwar |
|
|
|
|
James Smith |
|
2,410 |
|
147,251 |
Gary M. Budzinski |
|
14,027 |
|
857,050 |
62 |
|
COMPUTER SCIENCES CORPORATION
|
|
|
|
2015 Proxy
Statement |
Table of Contents
None of the NEOs participated in the
Companys tax-qualified pension plan during Fiscal 2015.
Fiscal Year 2015 Nonqualified
Deferred Compensation |
The Deferred Compensation Plan is an
unfunded, nonqualified plan that permits participants to defer U.S. federal and
most state income tax on up to 100% of their annual cash incentive award, up to
80% of their annual base salary, and up to 100% of amounts payable in cash to
non-employee directors for board services.
Each participant is required to select
from among four notional investment options, and deferred amounts are credited
with earnings (or losses) based on the participants investment choices. The
notional investment options mirror actual investment options offered under the
Companys broad-based 401(k) defined contribution plan. The annual returns of
the notional investment options for the twelve-month period ending March 31,
2015 were as follows: SSgA Money Market Fund, 0.07%; BlackRock Core Bond, 5.89%;
Mellon S&P 500 Index Fund, 12.73%; and SSgA Target Retirement Income,
3.50%.
Participants elect when they wish to
receive distributions of their Deferred Compensation Plan account balances upon
termination of employment, death, disability, change in control or a date
certain. There is a potential six-month delay in payments under the Deferred
Compensation Plan to certain specified employees (as determined under Section
409A of the Internal Revenue Code) for amounts deferred on or after January 1,
2005 (as determined under Section 409A). The Deferred Compensation Plan provides
for the crediting of earnings during any such payment delay period.
The following table summarizes, for
each NEO, the contributions and earnings under the Deferred Compensation Plan in
Fiscal Year 2015 and the aggregate account balance as of April 3, 2015. Messrs.
Lawrie and Budzinski are the only NEOs who participated in the Deferred
Compensation Plan during Fiscal 2015.
Name (a) |
|
Executive Contributions in Last FY
($) (b) |
|
Aggregate Earnings in Last FY
($) (c) |
|
Aggregate Withdrawals/ Distribution
($) (d) |
|
Aggregate Balance at Last FYE
($) (e) |
J. Michael
Lawrie |
|
2,182,500 |
|
325,246 |
|
|
|
5,836,210 |
Paul N. Saleh |
|
|
|
|
|
|
|
|
Romil Bahl |
|
|
|
|
|
|
|
|
Ashish Mahadwar |
|
|
|
|
|
|
|
|
James R. Smith |
|
|
|
|
|
|
|
|
Gary M. Budzinski |
|
|
|
72 |
|
|
|
101,039 |
The Executive Contributions set forth
on Column (b) of this table are reported as compensation in the applicable
column of the Summary Compensation Table (i.e., FY2015 Salary and/or FY2014
Non-Equity Incentive Plan Compensation). Earnings are not reported in the
Summary Compensation Table. There were no Company contributions to the Deferred
Compensation Plan on behalf of any NEOs for Fiscal 2015.
COMPUTER SCIENCES CORPORATION
|
|
|
|
2015 Proxy
Statement |
|
63 |
Table of Contents
Potential Payments Upon Change in
Control and Termination of Employment |
We offer certain post-employment
benefits to a select group of executive officers, including our NEOs. With the
exception of the CEO, these post-employment benefits are limited to the payments
and benefits provided under the Severance Plan and the Severance Policy. Mr.
Lawrie does not participate in the Severance Plan or the Severance Policy;
however, he is entitled to certain post-employment benefits under his employment
agreement. The post-employment benefits for our NEOs are described
below.
Change in
Control Termination Benefits
The table below reflects the value of
compensation and benefits that would become payable to each of the NEOs under
plans and arrangements existing as of April 3, 2015 (the final day of Fiscal
Year 2015), if a change in control had occurred on that date and, in
circumstances explained below, the executives employment had terminated. These
amounts are reported based upon the executives compensation and service levels
as of such date and, if applicable, and in accordance with SEC regulations,
based on the Companys closing stock price of $65.38 on April 2, 2015, the last
trading day before our Fiscal 2015 year end. These benefits are in addition to
benefits available prior to the occurrence of any termination of employment,
including under then-exercisable stock options, retirement plans and deferred
compensation plans, and benefits available generally to salaried employees, such
as distributions under the Companys broad-based 401(k) plan.
The actual amounts that would be paid
upon a NEOs termination of employment in connection with a change in control
can be determined only at the time of any such event. Due to the number of
factors that affect the nature and amount of any benefits provided upon such an
event, any actual amounts paid or distributed may be higher or lower than
reported below. Factors that could affect these amounts include the timing
during the year of any such event, the Companys stock price and the executives
age and service.
The benefits payable as a result of a
change in control as reported in the columns of this table are as
follows:
● |
Cash Severance Benefit: Under the Severance Plan and Mr.
Lawries employment agreement, upon an involuntary termination or a
voluntary termination for good reason following a change in control (and,
in the case of executives other than Mr. Lawrie, within a specified number
of years following a change in control), executives are paid a multiple of
base salary plus average annual earned/paid EICP during the three fiscal
years prior to which employment termination had occurred; |
● |
Pro-Rata Bonus: Mr. Lawries employment agreement
provides that, in the event of an involuntary termination or termination
for good reason following a change in control, Mr. Lawrie also will
receive a pro-rata annual bonus (EICP) for the year in which the
termination occurs based on his target bonus for the fiscal year in which
the termination occurs; |
● |
Benefits Continuation: The Severance Plan and Mr.
Lawries employment agreement provide that upon an involuntary termination
for good reason following a change in control (and, in the case of
executives other than Mr. Lawrie, within a specified number of years
following a change in control), executives also receive the continuation
of certain health and welfare benefits for a specified period following
the termination of employment; |
● |
Equity Awards: The
amounts reported in the table below are the intrinsic value of stock
options and RSU awards (including Performance Share Units and Career
Shares) that vest upon a change in control regardless of whether the
executive officers employment terminates;
and |
64 |
|
COMPUTER SCIENCES CORPORATION
|
|
|
|
2015 Proxy
Statement |
Table of Contents
● |
Reduction to Avoid Excise
Tax: None of the NEOs is entitled to an excise tax gross up. To the
extent that any payments or benefits provided to Severance Plan
participants or to Mr. Lawrie (under his employment agreement) constitute
excess parachute payments under Section 280G of the Internal Revenue
Code, these payments will be reduced to the maximum amount that the
executive may receive without becoming subject to the excise tax imposed
under Section 4999 of the Code if it is determined that the executive
would retain more, on an after-tax basis, having such payments so
reduced. |
Additional information regarding the
conditions under which these benefits are payable and the definitions used under
the arrangements for determining whether an event triggering the benefit has
occurred are discussed further following the table.
|
|
|
|
|
|
Early Vesting of: |
|
|
|
|
|
|
Name |
|
Cash Severance Benefit1 ($) |
|
Misc. Benefits Continuation ($) |
|
Stock Options2 ($) |
|
Time Vesting RSUs2 ($) |
|
PSUs2 ($) |
|
Total Payments ($) |
|
Excise Tax Paid By
NEO3 ($) |
|
Net Payments3 ($) |
J. Michael
Lawrie |
|
9,559,500 |
|
38,388 |
|
4,406,415 |
|
5,648,374 |
|
19,553,066 |
|
39,205,743 |
|
6,467,415 |
|
32,738,328 |
Paul N. Saleh |
|
2,931,712 |
|
35,222 |
|
3,296,168 |
|
3,148,701 |
|
5,514,541 |
|
14,926,344 |
|
2,560,497 |
|
12,365,847 |
Romil Bahl |
|
2,576,000 |
|
42,866 |
|
129,248 |
|
3,269,000 |
|
929,507 |
|
6,946,621 |
|
1,267,946 |
|
5,678,675 |
Ashish Mahadwar |
|
2,576,000 |
|
46,123 |
|
158,148 |
|
2,615,200 |
|
738,794 |
|
6,134,265 |
|
1,084,305 |
|
5,049,960 |
James R. Smith |
|
1,958,400 |
|
36,549 |
|
509,578 |
|
790,248 |
|
1,951,266 |
|
5,246,041 |
|
917,830 |
|
4,328,211 |
Gary M. Budzinski* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals |
|
19,601,612 |
|
199,148 |
|
8,499,557 |
|
15,471,523 |
|
28,687,174 |
|
72,459,014 |
|
12,297,993 |
|
60,161,021 |
____________________
* |
Mr. Budzinski was not eligible for
any benefits under the Severance Plan due to his termination of employment
effective March 10, 2015. |
|
1. |
Cash severance was calculated by
adding Fiscal 2015 base salary, prior three-year average EICP payout
(i.e., for Fiscal Years 2012-2014 performance), and for purposes of
calculating Mr. Lawries pro-rata EICP, Target Fiscal 2015 EICP. For
Messrs. Bahl and Mahadwar, in lieu of prior three-year average EICP, cash
severance was calculated using Target Fiscal 2015 EICP. |
|
2. |
The intrinsic value of RSUs and PSUs,
per share, is equal to the closing market price of CSC common stock on
April 2, 2015 ($65.38), the final trading day of Fiscal Year 2015. The
intrinsic value of a stock option, per share, is equal to the excess of
(a) the closing market price of CSC common stock on April 2, 2015, over
(b) the options exercise price per share. All outstanding PSUs were
assumed to vest at target upon a change in control. All outstanding
service-vesting RSUs and unvested stock options were assumed to vest upon
a change in control. |
|
3. |
Reducing the full payment to each NEO
such that the executive would not be subject to the excise tax imposed
under Section 4999 of the Code would result in a smaller overall payment
than if the executive was subject to the excise tax on the full payment.
Therefore, the full payment, net of excise taxes, is shown above in the
Net Payments column. |
COMPUTER SCIENCES CORPORATION
|
|
|
|
2015 Proxy
Statement |
|
65 |
Table of Contents
Severance Plan
for Senior Management and Key Employees. Each of the NEOs other than Mr. Lawrie participates in the Severance
Plan, which provides certain benefits to participants in the event of a Change
of Control (as defined below) of the Company. If there were a Change of Control
and any of them either:
● |
had a voluntary termination of employment for Good Reason (as
defined below) within two years afterward, or |
● |
had an involuntary termination
of employment, other than for death, disability or Cause (as defined
below), within three years afterward, |
then he would receive a one-time
payment and certain health and welfare benefits during a specified period after
termination. The amount of the one-time payment is equal to two times the sum of
the participants then-current annual base salary plus the average of the three
most recent annual EICP awards paid or determined. The number of years after
termination of employment during which a participant would receive health and
welfare benefits is equal to the same applicable multiple.
There is a potential six-month delay in
payments and benefits provided under the Severance Plan to certain specified
employees (as determined under Section 409A). The Severance Plan provides for
the crediting of earnings during any such payment or benefits delay
period.
For purposes of the Severance Plan, the
following definitions apply:
● |
Change of Control means the consummation of a change in the
ownership of the Company, a change in effective control of the Company
or a change in the ownership of a substantial portion of the assets of
the Company, in each case, as defined under Section 409A of the Internal
Revenue Code. |
● |
A participants termination of
employment with the Company is deemed for Good Reason if it occurs
within six months of any of the following without the participants
express written consent: |
|
1. |
A substantial change in the
nature, or diminution in the status, of the participants duties or
position from those in effect immediately prior to the Change of
Control; |
|
|
|
2. |
A reduction by the Company in the
participants annual base salary as in effect on the date of a Change of
Control or as in effect thereafter if such compensation has been increased
and such increase was approved prior to the Change of
Control; |
|
|
|
3. |
A reduction by the Company in the
overall value of benefits provided to the participant, as in effect on the
date of a Change of Control or as in effect thereafter if such benefits
have been increased and the increase was approved prior to the Change of
Control; |
|
|
|
4. |
A failure to continue in effect
any stock option or other equity-based or non-equity based incentive
compensation plan in effect immediately prior to the Change of Control, or
a reduction in the participants participation in any such plan, unless
the participant is afforded the opportunity to participate in an
alternative incentive compensation plan of reasonably equivalent
value; |
|
|
|
5. |
A failure to provide the
participant the same number of paid vacation days per year available to
him or her prior to the Change of Control, or any material reduction or
the elimination of any material benefit or perquisite enjoyed by the
participant immediately prior to the Change of Control; |
|
|
|
6. |
Relocation of the participants
principal place of employment to any place more than 35 miles from the
participants previous principal place of employment; |
|
|
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7. |
Any material breach by CSC of any
provision of the Severance Plan or of any agreement entered into pursuant
to the Severance Plan or any stock option or restricted stock
agreement; |
|
|
|
8. |
Conduct by the Company, against
the participants volition, that would cause the participant to commit
fraudulent acts or would expose the participant to criminal liability;
or |
|
|
|
9. |
Any failure by the Company to
obtain the assumption of the Severance Plan or any agreement entered into
pursuant to the Severance Plan by any successor or assign of
CSC; |
|
|
|
|
|
provided that for purposes of bullets 2 through 5
above, Good Reason will not exist (i) if the aggregate value of all
salary, benefits, incentive compensation arrangements, perquisites and
other compensation is reasonably equivalent to the aggregate value of
salary, benefits, incentive compensation arrangements, perquisites and
other compensation as in effect immediately prior to the Change of
Control, or as in effect thereafter if the aggregate value of such items
has been increased and such increase was approved prior to the Change of
Control, or (ii) if the reduction in aggregate value is due to reduced
performance by the Company, the operating unit of the Company for which
the participant is responsible, or the participant, in each case applying
standards reasonably equivalent to those utilized by the Company prior to
the Change of Control. |
|
○ |
fraud, misappropriation, embezzlement or other act of material
misconduct against the Company or any of its affiliates; |
|
○ |
conviction of a felony involving a crime of moral
turpitude; |
|
○ |
willful and knowing violation of any rules or regulations of
any governmental or regulatory body material to the business of the
Company; or |
|
○ |
substantial and willful
failure to render services in accordance with the terms of the Severance
Plan (other than as a result of illness, accident or other physical or
mental incapacity), provided that (i) a demand for performance of services
has been delivered to the participant in writing by or on behalf of CSCs
Board of Directors at least 60 days prior to termination identifying the
manner in which the Board believes that the participant has failed to
perform and (ii) the participant has thereafter failed to remedy such
failure to perform. |
Vesting of
Equity Awards Upon Change in Control.
Stock options and RSUs, including Performance Share Units and Career Shares,
provide for accelerated vesting upon a Change in Control, defined as a change in
ownership of the Company, a change in effective control of the Company or a
change in the ownership of a substantial portion of the assets of the Company,
in each case as defined in Section 409A of the Internal Revenue Code.
Performance Share Units vest at target upon a Change in Control occurring on or
before the end of the final fiscal year in the performance period.
Termination
Benefits Unrelated to Change in Control
The table below reflects the value of
compensation and benefits that would become payable to each of the NEOs (other
than Mr. Budzinski) under plans and arrangements existing as of April 3, 2015,
if their employment had been terminated on that date in the circumstances
explained below. These amounts are reported based upon each such executives
compensation and service levels as of such date and, if applicable, in
accordance with SEC regulations, based on the Companys closing stock price of
$65.38 on April 2, 2015, the final trading day during Fiscal 2015. For Mr.
Budzinski, these amounts reflect the actual amounts payable to Mr. Budzinski in
connection with his termination of employment effective March 10, 2015. These
benefits are
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in addition to benefits available prior
to the occurrence of any termination of employment, including under
then-exercisable stock options, retirement plans and deferred compensation
plans, and benefits available generally to salaried employees, such as
distributions under the Companys broad-based 401(k) plan.
The actual amounts that would be paid
upon an NEOs termination of employment absent a change in control can be
determined only at the time of any such event. Due to the number of factors that
affect the nature and amount of any benefits provided upon such an event, any
actual amounts paid or distributed may be higher or lower than reported below.
Factors that could affect these amounts include the timing during the year of
any such event, the Companys stock price and the executives age and
service.
The benefits payable as a result of a
termination of employment as reported in the columns of this table are as
follows:
● |
Cash Severance Benefit: Under the Severance Policy and
Mr. Lawries employment agreement, upon an involuntary termination without
cause (or, in Mr. Lawries case, a voluntary termination for good reason),
executives are paid a multiple of base salary (plus, in Mr. Lawries case,
his target annual bonus under the EICP); |
● |
Pro-Rata Bonus: The Severance Policy and Mr. Lawries
employment agreement provide that, in the event of an involuntary
termination without cause (or, in Mr. Lawries case, termination for good
reason), executives also will receive a pro-rata annual bonus (EICP) for
the year in which the termination occurs based on actual
performance; |
● |
Benefits Continuation: The Severance Policy and Mr.
Lawries employment agreement provide that upon an involuntary termination
without cause, executives also receive the continuation of certain health
and welfare benefits for a specified period following the termination of
employment; and |
● |
Equity Awards: The
amounts reported in the table below are the intrinsic value of inducement
service-vesting RSU awards and Mr. Lawries July 2014 Performance Share
Unit award that would vest upon a termination of the executive officers
employment without cause (or, in Mr. Lawries case, for good
reason). |
Additional information regarding the
conditions under which these benefits are payable and the definitions used under
the arrangements for determining whether an event triggering the benefit has
occurred are discussed further following the table.
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Name |
|
Cash Severance Benefit
($)1 |
|
Benefits Continuation ($)2 |
|
RSUs ($)3 |
|
Aggregate Payments ($) |
J. Michael
Lawrie |
|
8,125,000 |
|
28,791 |
|
5,908,260 |
|
14,062,051 |
Paul N. Saleh |
|
1,400,000 |
|
17,611 |
|
2,288,300 |
|
3,705,911 |
Romil Bahl |
|
846,360 |
|
21,433 |
|
1,634,500 |
|
2,502,293 |
Ashish Mahadwar |
|
896,160 |
|
23,062 |
|
1,765,260 |
|
2,684,482 |
James Smith |
|
867,750 |
|
18,274 |
|
|
|
886,024 |
Gary M. Budzinski |
|
325,000 |
|
20,000 |
|
|
|
345,000 |
Totals |
|
12,460,270 |
|
129,171 |
|
11,596,320 |
|
24,185,761 |
____________________
1. |
|
Mr. Lawrie is entitled to two times base salary plus
target bonus, plus a pro-rata bonus (EICP) for the year of employment
termination. Every other NEO (other than Mr. Budzinski) is entitled to 12
months of base salary continuation plus a pro-rata bonus (EICP) for the
year of employment termination. For purposes of this disclosure, actual
Fiscal 2015 EICP is used as the pro-rata bonus described above. In
connection with his termination of employment on March 10, 2015, Mr.
Budzinski became entitled to an aggregate cash severance benefit, payable
in six monthly installments, of $325,000. |
|
2. |
|
Mr. Lawrie is entitled to 18 months of
Company-subsidized COBRA continuation coverage, while the other NEOs are
entitled to 12 months of Company-subsidized COBRA continuation
coverage. |
|
3. |
|
The intrinsic value of each inducement service-vesting
RSU and each of Mr. Lawries July 2014 PSUs is equal to the closing CSC
stock price on April 2, 2015 ($65.38), the last trading day prior to CSCs
fiscal year end date. For Mr. Lawrie, this amount consists of 50,000
inducement service-vesting RSUs and 40,368 July 2014 PSUs that had not
vested as of April 3, 2015. For Mr. Saleh, the amount consists of 35,000
inducement service-vesting RSUs. For Mr. Bahl, this amount consists of
25,000 inducement service-vesting RSUs. For Mr. Mahadwar, this amounts
consists of 27,000 inducement service-vesting
RSUs. |
Executive
Officer Severance Policy. The Company
also maintains the Severance Policy to provide severance benefits to certain
executives whose employment with the Company is terminated in situations not
involving a change in control. The Severance Policy covers only those executive
officers reporting directly to the CEO who are subject to Section 16 of the 1934
Act, and provides for benefits similar to those offered under the Severance
Plan.
Upon termination of employment by the
Company without cause (as defined in the Severance Policy), each covered
executive may receive, in the discretion of the Company and the Committee, up to
12 months of base salary continuation, paid in installments, and 12 months of
Company-provided healthcare coverage continuation. Terminated executives also
are eligible to receive a pro-rata portion of the EICP award earned for the year
of employment termination, subject to approval by the Committee.
Vesting of
Equity Awards Upon Terminations of Employment. All annual equity awards provide for accelerated vesting (unless the
Compensation Committee determines otherwise) upon retirement, other than for
Cause (as defined below), at age 62 or older with at least ten years of service
(and, in the case of performance share units, provided the executives
retirement date is more than one year after the grant date). None of the NEOs
was eligible to retire under this definition as of April 3, 2015, the last day
of our 2015 Fiscal Year, or in Mr. Budzinskis case as of the date of his
termination on March 10, 2015. In addition, all annual equity awards, along with
Career Shares and service-based inducement awards, provide for accelerated
vesting upon an executives termination of employment due to death or permanent
disability, with vesting of annual-cycle Performance Share Units occurring with
respect to only a pro-rata fraction of the target amount (based
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on the executives service during the
applicable performance period) as opposed to the full target amount. If the NEOs
(other than Mr. Budzinski) had terminated employment due to death or permanent
disability on April 3, 2015, they would have each received the amounts shown
next to their names for early vesting of stock options, service-vesting RSUs and
PSUs on the Change in Control Termination Benefits table above, except that
amounts for annual-cycle PSU grants would be pro-rated.
Stock options granted prior to May 2013
that are vested but unexercised at the time of employment termination remain
exercisable until the earlier of (a) the option expiration date or (b) the fifth
anniversary of employment termination (for terminations due to death or
permanent disability and all terminations at age 62 or older other than for
Cause), or three months after employment termination (for all other
terminations). Stock options granted since May 2013 that are vested but
unexercised at the time of employment termination remain exercisable until the
earlier of (a) the option expiration date or (b) the third anniversary of
employment termination (for terminations due to death or permanent disability
and all terminations at age 62 or older other than for Cause), or three months
after employment termination (for all other terminations). Cause
means:
○ |
fraud, misappropriation,
embezzlement or other act of material misconduct against the Company or
any of its affiliates; |
|
|
○ |
conviction of a felony
involving a crime of moral turpitude; |
|
|
○ |
willful and knowing violation
of any rules or regulations of any governmental or regulatory body
material to the business of the Company; or |
|
|
○ |
substantial and willful
failure to render services in accordance with the terms of his or her
employment (other than as a result of illness, accident or other physical
or mental incapacity), provided that (i) a demand for performance of
services has been delivered to the employee in writing by the employees
supervisor at least 60 days prior to termination identifying the manner in
which such supervisor believes that the employee has failed to perform and
(ii) the employee has thereafter failed to remedy such failure to
perform. |
Annual stock option awards granted to
Mr. Lawrie contain special exercise provisions and the onetime inducement equity
award he received in Fiscal 2014 contains additional vesting provisions. These
special provisions are described below in connection with his employment
agreement.
The one-time inducement equity awards
granted to Messrs. Saleh, Bahl and Mahadwar also contain modified vesting
provisions. In addition to vesting upon death or disability, these awards vest
in whole or in part upon the executives termination of employment without
cause. Mr. Salehs inducement equity award of 35,000 RSUs will vest if the
Company terminates his employment without cause. The vesting of Mr. Bahls and
Mr. Mahadwars RSUs is discussed in footnote 3 to the Grants of Plan-Based
Awards table, above.
There are provisions in the award
agreements for all stock options and RSUs (including Performance Share Units and
Career Shares) which require the holder of such securities to deliver to the
Company an amount in cash equal to the intrinsic value of the securities on the
date (the Realization Date) they had vested (in the case of RSUs or restricted
stock) or were exercised (in the case of stock options) if the
holder:
● |
competes with the Company
after voluntary termination of employment and prior to six months after
the Realization Date, or |
|
|
● |
solicits the Companys
customers or solicits for hire or hires the Companys employees, or
discloses the Companys confidential information, after voluntary or
involuntary termination of employment and prior to one year after a
Realization Date. |
These forfeiture provisions do not
apply if there has been a Change in Control within three years prior to the
employment termination date. In addition, the Company has entered into
Non-Competition Agreements with all members of senior management.
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Employment
Agreement with Mr. Lawrie.
The Company and Mr. Lawrie entered into an employment
agreement that is described above under Mr. Lawries Employment Agreement. In
the event that Mr. Lawrie is terminated by the Company without cause or if he
resigns from the Company for good reason (as each such term is defined in the
employment agreement and collectively referred to as a Qualifying
Termination), he will receive the following payments under the terms of the
agreement:
● |
a pro-rata annual bonus (EICP)
for the year in which the termination occurs, based on the Companys
actual performance for the entire fiscal year, payable at the time annual
bonuses are generally paid (the Pro-Rata Bonus); |
|
|
● |
a severance payment equal to
two times the sum of Mr. Lawries (A) base salary and (B) target annual
bonus (EICP), payable in twenty-four equal monthly installments following
Mr. Lawries termination; |
|
|
● |
COBRA premiums for a period of
eighteen months following termination. |
In the event of a Qualifying
Termination prior to April 1, 2017, any then-vested stock options will remain
exercisable for the lesser of two years following the date of termination or the
expiration of their original terms. The employment agreement also provides that
upon the termination of Mr. Lawries employment due to death or disability, he
will be eligible to receive a Pro-Rata Bonus, which would have equaled the same
amount as his actual Fiscal 2015 EICP payment as shown on the Summary
Compensation Table had Mr. Lawrie terminated employment due to death or
disability on April 3, 2015.
Special vesting provisions apply to the
one-time service-vesting inducement equity award granted to Mr. Lawrie in Fiscal
2013. This award consists of 200,000 RSUs (50,000 of which remained outstanding
as of April 3, 2015). In the event of a Qualifying Termination before the last
day of Fiscal 2016, all 50,000 of the remaining unvested RSUs will immediately
vest.
The severance benefits described above
are subject to Mr. Lawries continued compliance with certain restrictive
covenants as set forth in the employment agreement and the non-competition
agreement described above and, in the event of a Qualifying Termination that is
not in connection with a Change in Control, the execution and non-revocation of
a release of claims against the Company and certain related parties.
There will be a six-month delay in
payments and benefits provided under the employment agreement following certain
terminations of Mr. Lawries employment if such payments and benefits are
determined to be subject to the provisions of Section 409A of the Internal
Revenue Code at the time of termination. The employment agreement provides for
the crediting of earnings during any such payment or benefits delay
period.
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PROPOSAL 2 - ADVISORY VOTE APPROVING
EXECUTIVE COMPENSATION
In accordance with Section 14A of the
Exchange Act, we are providing our stockholders the opportunity to approve, on a
nonbinding, advisory basis, the compensation of our named executive officers as
disclosed in this proxy statement. We urge the stockholders to read the CD&A
appearing elsewhere in this proxy statement, as well as the 2015 Summary
Compensation Table and related compensation tables and narrative, which provide
detailed information on our compensation policies and practices and our named
executive officers compensation. As disclosed in the CD&A, the Companys
compensation programs focus on aligning pay to performance.
We believe that the information
provided in this proxy statement demonstrates that our compensation policies and
practices are aligned with our stockholders interests and reward our named
executive officers for performance. We are therefore asking our stockholders to
approve the following advisory resolution at the 2015 Annual Meeting of
Stockholders:
RESOLVED, that the stockholders of
Computer Sciences Corporation approve, on an advisory basis, the compensation of
the named executive officers, as disclosed in the Computer Sciences Corporation
2015 definitive proxy statement pursuant to Item 402 of Regulation S-K,
including the Compensation Discussion and Analysis, compensation tables and the
accompanying footnotes and narratives.
The vote on the compensation of our
named executive officers as disclosed in this proxy statement is advisory, and
therefore not binding on the company, the Compensation Committee or our Board.
Our Board and our Compensation Committee value the opinions of our stockholders
and, to the extent there is any significant vote against the NEO compensation as
disclosed in this proxy statement, we will consider our stockholders concerns
and the Compensation Committee will evaluate whether any actions are necessary
to address those concerns. We have determined that our stockholders should cast
an advisory vote on the compensation of our named executive officers on an
annual basis. Unless this policy changes, the next advisory vote on the
compensation of our named executive officers will be at the 2016 Annual Meeting
of Stockholders. The affirmative vote of a majority of votes cast is required to
approve, on an advisory basis, the compensation of the named executive officers,
as disclosed in the Companys proxy statement pursuant to the compensation
disclosure rules of the SEC, including the Compensation Discussion and Analysis,
the Summary Compensation Table and the other related tables and
disclosure.
The Board of Directors recommends a
vote FOR the approval of the advisory resolution on
executive
compensation.
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PROPOSAL 3 - RATIFICATION OF INDEPENDENT AUDITORS
The Audit Committee of the Board of
Directors is directly responsible for the appointment, compensation, retention
and oversight of the independent registered public accounting firm retained to
audit the Companys financial statements. The Audit Committee has appointed
Deloitte & Touche LLP as the Companys independent registered public
accounting firm for Fiscal 2016. Deloitte & Touche, or one of its
predecessor firms, have been retained as the Companys independent registered
public accounting firm continuously since 1962.
The Audit Committee is responsible for
approving the audit fee of the independent registered public accounting firm. In
order to assure continuing auditor independence, the Audit Committee
periodically considers whether there should be a regular rotation of the
independent registered public accounting firm. Further, in conjunction with the
mandated rotation of the independent registered public accounting firms lead
engagement partner, the Audit Committee and its Chair will continue to be
directly involved in the selection of the new lead engagement partner. The
members of the Audit Committee and the Board believe that the continued
retention of Deloitte & Touche LLP to serve as the Companys independent
registered public accounting firm is in the best interests of the Company and
its stockholders.
The Audit Committee has recommended
that the stockholders ratify the selection of Deloitte & Touche LLP as the
Companys independent registered public accounting firm for Fiscal
2016.
We expect that a representative of
Deloitte & Touche LLP will attend the Annual Meeting. He will have an
opportunity to make a statement, if desired, and will be available to respond to
appropriate questions.
Fees
The following table summarizes the
aggregate fees billed by the Companys principal accounting firm, Deloitte &
Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their respective
affiliates, which include Deloitte Consulting, for services provided during the
last two fiscal years:
|
FY2015 |
|
FY2014 |
Audit
Services1 |
$ |
14,531,000 |
|
$ |
16,028,000 |
Audit-Related Services2 |
|
3,535,000 |
|
|
677,000 |
Tax
Services3 |
|
1,076,000 |
|
|
1,768,000 |
Other Services4 |
|
|
|
|
84,000 |
|
$ |
19,142,000 |
|
$ |
18,577,000 |
____________________
1. |
|
Includes fees associated with the
audit of our consolidated annual financial statements, review of our
consolidated interim financial statements, statutory audits of
international subsidiaries and the audit of our internal control over
financial reporting. |
|
2. |
|
Consists primarily of fees for
third party data center reviews, accounting research, employee benefit
plan audits and a carve-out audit for a divestiture. |
|
3. |
|
Consists of fees for tax
compliance and consultation, and expatriate tax services. |
|
4. |
|
Consists primarily of technical
training services. |
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Pre-Approval Policy
The Audit Committee pre-approves all
audit, audit-related and tax and all other services to be provided by the
independent auditors. The Committee has delegated to its Chairman the authority
to pre-approve services to be provided by the independent auditors. The Chairman
reports each such pre-approval decision to the full Audit Committee at its next
scheduled meeting.
Vote Required
A majority of the votes cast at the
Annual Meeting is necessary for the approval of this proposal.
The Board of Directors recommends a
vote FOR the ratification of the appointment of Deloitte &
Touche LLP as
independent auditors for Fiscal Year 2016.
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ADDITIONAL INFORMATION
Section 16(a) Beneficial Ownership
Reporting Compliance
Section 16(a) of the Exchange Act
requires CSC directors and executive officers, and persons who own more than 10%
of the CSC stock, to file with the SEC initial reports of ownership and reports
of changes in ownership of CSC stock and other equity securities of the Company.
Executive officers, directors and greater than 10% stockholders are required by
SEC regulations to furnish us with copies of all Section 16(a) forms they
file.
To our knowledge, based solely on a
review of information furnished to us, reports filed through us and
representations that no other reports were required, all of our executive
officers, directors and greater than 10% beneficial owners filed the reports
required under Section 16(a) on a timely basis, except that Messrs. Prior and
Zolet each reported one transaction late.
Business for 2016 Annual
Meeting
Stockholder
Proposals. For a stockholder proposal to be considered for inclusion in CSCs proxy
statement for the 2016 Annual Meeting of Stockholders, the written proposal must
be received by CSCs Corporate Secretary at our principal executive offices not
later than February 26, 2016. If the date of next years annual meeting is moved
more than 30 days before or after the anniversary date of this years annual
meeting, then the deadline for inclusion of a stockholder proposal in CSCs
proxy statement is instead a reasonable time before CSC begins to print and mail
its proxy materials. The proposal must comply with the requirements of SEC Rule
14a-8 regarding the inclusion of stockholder proposals in company-sponsored
proxy materials. Proposals should be addressed to:
Corporate
Secretary
CSC
3170 Fairview Park
Drive
Falls Church, Virginia 22042
Facsimile: (703) 849-1004
Stockholders seeking to nominate
directors at the 2016 Annual Meeting or who wish to bring a proposal before the
meeting that is not intended to be included in CSCs proxy statement for the
2015 Annual Meeting must comply with the advance notice deadlines contained in
CSCs Bylaws. The Bylaws provide that any such notice must be given not later
than the close of business on the 90th day and not earlier than the close of
business on the 120th day prior to the anniversary date of the preceding years
annual meeting. In addition, the Bylaws specify that in the event that the date
of the upcoming annual meeting is more than 30 days before or more than 60 days
after the anniversary date of the previous years annual meeting, notice by the
stockholder to be timely must be received not earlier than the close of business
on the 120th day prior to the upcoming annual meeting and not later than the
close of business on the later of (x) the 90th day prior to the upcoming annual
meeting and (y) the 10th day following the date on which public announcement of
the date of such upcoming meeting is first made. The term public announcement
means disclosure in a press release reported by the Dow Jones News Service,
Associated Press or a comparable national news service, in a document publicly
filed by CSC with the SEC, or in a notice pursuant to the applicable rules of an
exchange on which the securities of CSC are listed. For the 2016 Annual Meeting
of Stockholders, a stockholders notice, to be timely, must be delivered to, or
mailed and received at our principal executive offices:
● |
not earlier than the close of
business on April 15, 2016; and |
|
|
● |
not later than the close of
business on May 16, 2016. |
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Householding; Availability of 2015
Annual Report and Proxy Statement
The SEC permits the Company to deliver
a single proxy statement and annual report to an address shared by two or more
stockholders. This delivery method, referred to as householding, can result in
significant cost savings for the Company. In order to take advantage of this
opportunity, the Company, and banks and brokerage firms that hold your shares,
have delivered only one proxy statement and annual report to multiple
stockholders who share an address unless one or more of the stockholders has
provided contrary instructions. The Company will deliver promptly, upon written
or oral request, a separate copy of the proxy statement and annual report to a
stockholder at a shared address to which a single copy of the documents was
delivered.
If you would like an additional copy of
the 2015 Annual Report or this proxy statement, these documents are available on
the Companys Website, www.csc.com, under Investor Relations/SEC Filings. They
are also available without charge to any stockholder, upon request, by calling
800.542.3070 or writing to:
Investor
Relations
CSC
3170 Fairview Park
Drive
Falls Church, VA 22042
If you share the same address with
other CSC stockholders and would like to start or stop householding for your
account, you can call 800.542.1061 or write to: Householding Department, 51
Mercedes Way, Edgewood, NY 11717, including your name, the name of your broker
or other holder of record and your account number(s).
If you consent to householding, your
election will remain in effect until you revoke it. If you revoke your consent,
you will be sent separate copies of documents mailed at least 30 days after
receipt of your revocation.
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COMPUTER SCIENCES CORPORATION
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2015 Proxy
Statement |
Table
of Contents
APPENDIX A - INDEPENDENCE STANDARDS
A director is independent if the
Board of Directors has determined that he or she has no material relationship
with Computer Sciences Corporation or any of its consolidated subsidiaries
(collectively, the Company), either directly, or as a partner, stockholder or
officer of an organization that has a relationship with the Company. For
purposes of this definition, the Board has determined that a director is not
independent if:
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The director is, or has been
within the last three years, an employee of the Company, or an immediate
family member of the director is, or has been within the last three years,
an executive officer of the Company; |
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The director has received, or has
an immediate family member who has received, during any 12-month period
during the last three years, more than $120,000 in direct compensation
from the Company (other than Board and committee fees, and pension or
other forms of deferred compensation for prior service). Compensation
received by an immediate family member for service as an employee (other
than an executive officer) of the Company is not considered for purposes
of this standard; |
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(a) The director, or an immediate
family member of the director, is a current partner of the Companys
internal or external auditor; (b) the director is a current employee of
the Companys internal or external auditor; (c) an immediate family member
of the director is a current employee of the Companys internal or
external auditor who participates in the firms audit, assurance or tax
compliance (but not tax planning) practice; or (d) the director, or an
immediate family member of the director, was within the last three years
(but is no longer) a partner or employee of the Companys internal or
external auditor and personally worked on the Companys audit within that
time; |
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The director, or an immediate
family member of the director, is, or has been within the last three
years, employed as an executive officer of another company where any of
the Companys present executive officers serves or served at the same time
on that companys compensation committee; or |
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The director is a current
employee, or an immediate family member of the director is a current
executive officer, of a company that has made payments to, or received
payments from, the Company for property or services in an amount that, in
any of the last three fiscal years, exceeds the greater of $1 million or
2% of the other companys consolidated gross
revenues. |
An immediate family member includes a
directors spouse, parents, children, siblings, mother and father-in-law, sons
and daughters-in-law, brothers and sisters-in-law, and anyone (other than a
domestic employee) who shares the directors home.
COMPUTER SCIENCES
CORPORATION |
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2015 Proxy
Statement |
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A-1 |
Table of
Contents
Regional CSC
Headquarters The
Americas 3170 Fairview Park
Drive Falls Church, Virginia
22042 United States +1.703.876.1000 Asia, Middle East, Africa Level 9, UE BizHub East 6 Changi
Business Park Avenue 1 Singapore
468017 Republic of
Singapore +65.6809.9000 Australia 26 Talavera
Road Macquarie Park, NSW
2113 Australia +61(2)9034.3000 Central and Eastern Europe Abraham-Lincoln-Park 1 65189
Wiesbaden Germany +49.611.1420 Nordic and Baltic Region Retortvej 8 DK-2500
Valby Denmark +45.36.14.4000 South
and West Europe Immeuble
Balzac 10 place des
Vosges 92072 Paris la Défense
Cedex France +33.1.55.707070
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UK, Ireland and
Netherlands |
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Floor 4 |
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About CSC |
One Pancras Square |
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CSC is a global leader in
next-generation IT services |
London |
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and solutions. The companys mission
is to enable superior |
N1C 4AG |
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returns on our clients technology
investments through |
United Kingdom |
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best-in-class industry solutions,
domain expertise and |
+44.020.3696.3000 |
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global scale. For more information,
visit us at www.csc.com. |
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© 2015 Computer
Sciences Corporation. All rights reserved. Printed in USA MD_8150a-16
06-15 |
Table of Contents
CSC INVESTOR RELATIONS
3170
FAIRVIEW PARK DRIVE
FALLS CHURCH, VIRGINIA 22042
VOTE BY INTERNET -
www.proxyvote.com
Use the Internet
up until 11:59 p.m. Eastern Daylight Time on August 13, 2015 to transmit your
voting instructions and to enroll for electronic delivery of subsequent
stockholder communications. Have your proxy card in hand when you access the web
site and follow the instructions to obtain your records and to create an
electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE
STOCKHOLDER COMMUNICATIONS
If you would
like to reduce the costs incurred by Computer Sciences Corporation in mailing
proxy materials, you can consent to receiving all future proxy statements, proxy
cards and annual reports electronically via e-mail or the Internet. To sign up
for electronic delivery, please follow the instructions above to vote using the
Internet and, when prompted, indicate that you agree to receive or access
stockholder communications electronically in future years.
VOTE BY PHONE -
1.800.690.6903
To transmit your voting
instructions, use any touch-tone telephone up until 11:59 p.m. Eastern Daylight
Time on August 13, 2015. Have your proxy card in hand when you call and then
follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the
postage-paid envelope provided or return to Computer Sciences Corporation, c/o
Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
Note: Proxy voting instructions for
shares held in the Company's Matched Asset Plan must be given by 11:59 p.m.
Eastern Daylight Time on August 11, 2015.
TO VOTE, MARK BLOCKS BELOW
IN BLUE OR BLACK INK AS FOLLOWS: |
M94318-P67959 |
KEEP THIS PORTION FOR YOUR RECORDS |
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DETACH
AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID
ONLY WHEN SIGNED AND DATED. |
COMPUTER SCIENCES
CORPORATION |
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The Board of Directors
recommends a vote "FOR" each of the nominees in Proposal 1, "FOR" Proposal
2 and Proposal 3 Vote
On Directors |
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1. |
To
elect ten nominees to the CSC Board of Directors |
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For |
Against |
Abstain |
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Nominees: |
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1a. |
David J. Barram |
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1b. |
Erik Brynjolfsson |
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☐ |
☐ |
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For |
Against |
Abstain |
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1c. |
Rodney F. Chase |
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☐ |
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1j. Sean O'Keefe |
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1d. |
Bruce B. Churchill |
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Vote On Proposals |
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1e. |
Mark Foster |
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2. |
Approval, by
non-binding vote, of executive compensation |
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1f. |
Nancy Killefer |
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3. |
Ratification
of the appointment of independent auditors |
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1g. |
Sachin Lawande |
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☐ |
☐ |
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1h. |
J. Michael Lawrie |
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☐ |
☐ |
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1i. |
Brian P. MacDonald |
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☐ |
☐ |
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To provide comments, please check
this box and write them on the back where
indicated. |
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Please indicate if you plan to
attend this meeting. |
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☐ |
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Yes |
No |
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Please sign, date and return this
Proxy promptly whether or not you plan to attend the meeting. If signing
for a corporation or partnership, or as an agent, attorney or fiduciary,
indicate the capacity in which you are signing. If you do attend the
meeting and elect to vote by ballot, such vote will supersede this
Proxy. |
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Signature [PLEASE SIGN WITHIN BOX] |
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Signature (Joint Owners) |
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Table of Contents
IMPORTANT NOTICE TO
STOCKHOLDERS
VOTING PREVENTS
ESCHEATMENT
Most states have escheatment laws which
require CSC to transfer stockholder accounts when they meet that state's
criteria for abandoned property. These laws require CSC to issue a replacement
stock certificate to the applicable state and the certificate in the
stockholder's possession is cancelled on the records of CSC's transfer agent.
While the specified number of years varies by state, escheatment generally
occurs if you have not voted during a three-year period and you have not
contacted CSC's transfer agent during that time. After delivery to the state,
the stock often is sold and claimants are given only the proceeds of the sale,
which may or may not be to your benefit, depending on the subsequent trend of
the stock price. In addition, it can take many months to retrieve custody of the
stock or the proceeds of its sale.
Therefore, it is very important that
you vote and that CSC has your current address. If you have moved, please
provide your new address to CSC's transfer agent: Computershare Inc., P.O. Box
30170, College Station, TX 77842; telephone 800.676.0654; and Internet address:
www-us.computershare.com/investor/contact. Please inform Computershare if there
are multiple accounts or stock is held under more than one name.
For additional information, the CSC
Shareholder Services and automated literature request line is available at
telephone 800.542.3070.
Note: CSC employees are requested to
notify the CSC Service Center (telephone 877.612.2211) of any address change or
their local Human Resources representative if not supported by the CSC Service
Center.
Important Notice Regarding the
Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available
at www.proxyvote.com.
COMPUTER SCIENCES
CORPORATION
ANNUAL MEETING OF STOCKHOLDERS,
AUGUST 14, 2015
The undersigned hereby appoints J.
MICHAEL LAWRIE, PAUL N. SALEH and WILLIAM L. DECKELMAN, JR., and each of them,
with full power of substitution and discretion in each of them, as the proxy or
proxies of the undersigned to represent the undersigned and to vote all shares
of Common Stock of Computer Sciences Corporation which the undersigned would be
entitled to vote if personally present at the Annual Meeting of Stockholders to
be held at Computer Sciences Corporation, 3170 Fairview Park Drive, Falls
Church, Virginia 22042, at 10:00 a.m., Eastern Daylight Time, on August 14,
2015, and at any adjournments or postponements thereof, and to consider and to
vote on any other matter properly coming before the meeting.
If more than one of such proxies or
substitutes shall be present and vote, a majority thereof shall have the powers
hereby granted, and if only one of them shall be present and vote, he shall have
the powers hereby granted.
This card also provides voting
instructions for shares, if any, held in the Company's Matched Asset
Plan.
THIS PROXY WILL BE VOTED AS DIRECTED
HEREIN, OR IF NO DIRECTION IS INDICATED, WILL BE VOTED FOR 1) THE ELECTION OF
DIRECTORS, 2) APPROVAL OF THE COMPANY'S EXECUTIVE COMPENSATION AND 3)
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS. SHARES ALLOCATED TO
THIS ACCOUNT AND HELD IN THE COMPANY'S MATCHED ASSET PLAN WILL BE VOTED BY THE
BANK OF NEW YORK (THE TRUSTEE FOR THOSE SHARES). IF THE TRUSTEE DOES NOT RECEIVE
VOTING INSTRUCTIONS FOR SHARES HELD IN THE MATCHED ASSET PLAN BY AUGUST 11,
2015, THOSE SHARES WILL BE VOTED IN THE SAME PROPORTION AS THE SHARES FOR WHICH
VOTING INSTRUCTIONS HAVE BEEN RECEIVED.
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF THE COMPANY.
THIS PROXY MAY BE REVOKED AT ANY TIME
PRIOR TO THE VOTING THEREOF.
NOTE: THIS PROXY MUST BE SIGNED AND
DATED ON THE REVERSE SIDE.
(If you noted any Comments above,
please mark corresponding box on the reverse side.)
PROXY
If you do not timely vote by
Internet, telephone or mailing your completed proxy card, or by attending the
meeting and voting by ballot, these shares cannot be voted except for non-voted
shares allocated to this MAP account, which will be voted as set forth on the
reverse side.
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