DEF 14A 1 w85001def14a.htm DEFINITIVE PROXY STATEMENT def14a
 

SCHEDULE 14A

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934

Filed by the Registrant x

Filed by a Party other than the Registrant o

Check the appropriate box:

     
o  Preliminary Proxy Statement
o  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
x  Definitive Proxy Statement
o  Definitive Additional Materials
o  Soliciting Material Under Rule 14a-12

AMERICAN MANAGEMENT SYSTEMS, INCORPORATED


(Name of Registrant as Specified In Its Charter)

N/A


(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

x No fee required

o     Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

          (1) Title of each class of securities to which transaction applies:


          (2) Aggregate number of securities to which transaction applies:


          (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):


          (4) Proposed maximum aggregate value of transaction:


          (5) Total fee paid:


o Fee paid previously with preliminary materials.
 
o Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

          (1) Amount Previously Paid:


          (2) Form, Schedule or Registration Statement No.:


          (3) Filing Party:


          (4) Date Filed:



 

LOGO

April 9, 2003

Dear Stockholders:

      On behalf of the Board of Directors, it is my pleasure to invite you to attend the Annual Meeting of Stockholders of American Management Systems, Incorporated on Friday, May 9, 2003, at 12601 Fair Lakes Parkway, Fairfax, Virginia, 22033, at 10:00 a.m., local time.

      Details of the business to be conducted at the Annual Meeting are set forth in the attached Notice of Annual Meeting of Stockholders and Proxy Statement.

      Your vote is very important. We encourage you to read the Proxy Statement and vote your shares as soon as possible. A return envelope for your proxy card is enclosed for convenience. Stockholders of record also have the option of voting by using a toll-free telephone number or via the Internet. Instructions for using these services are included on the proxy card.

      We thank you for your continued support and look forward to seeing you at the Annual Meeting.

  Sincerely,
 
  (ALFRED T. MOCKETT)
 
  Alfred T. Mockett
  Chairman of the Board


 

AMERICAN MANAGEMENT SYSTEMS, INCORPORATED

4050 Legato Road
Fairfax, Virginia 22033

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

       NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of AMERICAN MANAGEMENT SYSTEMS, INCORPORATED will be held at 12601 Fair Lakes Parkway, Fairfax, Virginia 22033 on Friday, May 9, 2003, at 10:00 a.m. local time, for the following purposes:

        To elect six (6) directors to hold office until the next Annual Meeting of Stockholders of American Management Systems, Incorporated and until their successors are elected and qualified;
 
        To approve the American Management Systems, Incorporated 2003 Stock Incentive Plan; and
 
        To transact such other business as may properly come before the meeting or any adjournment(s) or postponement(s) thereof.

      Only stockholders of record at the close of business on March 24, 2003, will be entitled to notice of, and to vote at, the meeting or any adjournment(s) or postponement(s) thereof.

      Stockholders are cordially invited to attend the meeting in person. IF YOU WILL NOT BE ABLE TO ATTEND THE MEETING IN PERSON, PLEASE INDICATE YOUR CHOICE ON THE MATTERS TO BE VOTED UPON, DATE AND SIGN THE ENCLOSED PROXY, AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. ALTERNATIVELY, YOU MAY VOTE BY TELEPHONE AT 1-800-435-6710 OR VIA THE INTERNET AT HTTP:// WWW.ePROXY.COM/ AMSY. Instructions regarding telephone and Internet voting are included on the Proxy.

  BY ORDER OF THE BOARD OF DIRECTORS,
 
  David Fontaine Signature
 
  David R. Fontaine
  Secretary

April 9, 2003


 

AMERICAN MANAGEMENT SYSTEMS, INCORPORATED

4050 Legato Road
Fairfax, Virginia 22033

PROXY STATEMENT

Annual Meeting of Stockholders

May 9, 2003

Table of Contents

     
General
  1
Proxy Solicitation Costs
  1
Voting Procedure
  1
Householding
  2
Proposal 1: Election of Directors
  2
Information Concerning Nominees for Director
  3
Information Concerning Executive Officers
  6
Principal Stockholders
  9
Section 16(a) Beneficial Ownership Reporting Compliance
  11
Executive Compensation
  12
Equity Compensation Plan Information
  17
Compensation Committee Report of Executive Compensation
  18
Audit Committee Report
  21
Stockholder Return Performance Graph
  22
Committees and Compensation of the Board of Directors
  23
Compensation Committee Interlocks and Insider Participation
  24
Certain Relationships and Related Transactions
  24
Proposal 2: Approval of the 2003 Stock Incentive Plan
  25
Independent Public Accountants
  30
Other Matters
  31
Proposals for 2004 Annual Meeting of Stockholders
  31
Annual Report
  32
American Management Systems, Incorporated 2003 Stock Incentive Plan
  Annex A
American Management Systems, Incorporated Annual Report on Form 10-K
  Appendix 1


 

GENERAL

      The enclosed Proxy is being solicited by the Board of Directors (the “Board of Directors” or the “Board”) of AMERICAN MANAGEMENT SYSTEMS, INCORPORATED (the “Corporation” or “AMS”) in connection with the annual meeting of stockholders of the Corporation (the “Annual Meeting”) to be held at 10:00 a.m., local time, on May 9, 2003 at 12601 Fair Lakes Parkway, Fairfax, Virginia 22033, or at any adjournment(s) or postponement(s) thereof.

PROXY SOLICITATION COSTS

      The entire expense of solicitation of proxies will be borne by the Corporation, except that certain expenses for Internet access will be incurred by stockholders who choose to vote over the Internet. Solicitation will be primarily by mail. However, directors, executive officers, and employees of the Corporation may also solicit by telephone, personal contact or electronic communication. They will receive no additional compensation for their services. We also have retained Georgeson Shareholder Communications, Inc. to assist with the proxy solicitation process for a fee of $7,500, plus reimbursement of reasonable out-of-pocket expenses. The Corporation will reimburse brokers and other persons holding shares in their names, or in the names of nominees, for their expenses of sending proxy materials to beneficial owners and obtaining their proxies. It is anticipated that the Proxy Statement and Proxy first will be mailed to stockholders on or about April 9, 2003.

VOTING PROCEDURE

      As of March 24, 2003, there were outstanding 42,379,461 shares of the Corporation’s Common Stock, $0.01 par value per share (the “Common Stock”). Each share of Common Stock is entitled to one vote at the Annual Meeting. Only stockholders of record at the close of business on March 24, 2003 will be entitled to vote at the Annual Meeting.

      Votes cast in person or by Proxy at the Annual Meeting, abstentions and Broker Non-votes (as defined below) will be tabulated by the election inspectors appointed for such Annual Meeting and will be counted for purposes of determining whether a quorum is present. Directors will be elected by the affirmative vote of the holders of a plurality of the shares present (in person or represented by Proxy) and voted for the election of directors at the Annual Meeting. The proposal to approve the American Management Systems, Incorporated 2003 Stock Incentive Plan (the “Incentive Plan”) and any other matter submitted to a vote at the Annual Meeting will be approved by the affirmative vote of the holders of a majority of the shares present (in person or represented by Proxy) and entitled to vote on each such matter. The election inspectors will treat abstentions on a particular matter as shares that are present and entitled to vote for purposes of determining the approval of such matter. Abstentions, therefore, will have the same effect as a vote against a particular matter. If a broker submits a Proxy indicating that it does not have discretionary authority as to certain shares to vote on a particular matter (a “Broker Non-vote”), those shares will not be treated as present and entitled to vote for purposes of determining the approval of such matter.

      Any stockholder giving a Proxy by mail, via telephone or via the Internet has the power to revoke it at any time before it is voted by giving written notice of revocation to the Secretary of the Corporation or by delivering a proxy in accordance with applicable law bearing a later date to the Secretary of the Corporation. If you attend the Annual Meeting, you may, if you wish, revoke your Proxy by voting in person. Proxies solicited herein will be voted, and if the person solicited specifies in the Proxy a choice with respect to matters to be acted upon, the shares will be voted in accordance with such specification. If no choice is indicated, the Proxy will be voted “FOR” the election of the nominees listed on pages 2 to 4 under the caption “Information Concerning Nominees for Director”; and “FOR” the approval of the Incentive Plan.


 

HOUSEHOLDING

      The Corporation is sending only one annual report and proxy statement to eligible stockholders who share a single address, unless such stockholders have notified the Corporation to the contrary. This practice, known as “householding,” is designed to reduce the Corporation’s printing and postage costs. Stockholders who participate in householding will continue to receive separate proxy cards. If you own shares through a bank, broker or other nominee, you should contact the nominee concerning householding procedures.

      The Corporation will promptly deliver a separate copy of the proxy statement and annual report to any stockholder residing at an address to which only one copy was delivered upon oral or written request to our Shareholder Services Administrator who may be reached by phone at (800) 255-8888 or by mail at 4000 Legato Road, Fairfax, Virginia 22033, Attn: Shareholder Services Administrator. In addition, if a stockholder residing at an address with other stockholders of record wishes to receive a separate annual report or proxy statement in the future, he or she should direct this request to the Corporation’s Shareholder Services Administrator. Similarly, stockholders residing at the same address who are currently receiving multiple copies of the proxy statement and annual report and who wish to begin householding should contact our Shareholder Services Administrator at the telephone number and address listed above.

PROPOSAL 1: ELECTION OF DIRECTORS

      Six directors are to be elected at the Annual Meeting, each to hold office until the next annual meeting of stockholders of the Corporation and until his or her successor is elected and qualified. The directors will be elected by the affirmative vote of the holders of a plurality of the shares present (in person or represented by Proxy) and voted on the election of directors. Unless otherwise directed, it is the intention of the persons named in the Proxy to vote such Proxy for the election of the nominees listed under the caption “Information Concerning Nominees for Director” set forth below. In the event that any nominee should be unable to accept the office of director, which is not anticipated, it is intended that the persons named in the Proxy will vote for the election of such other person in the place of such nominee for the office of director as the Board of Directors may recommend. Descriptive information as to each nominee is set forth below under the caption “Information Concerning Nominees for Director.”

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” ALL OF THE

NOMINEES LISTED BELOW FOR ELECTION AS DIRECTORS.

2


 

INFORMATION CONCERNING NOMINEES FOR DIRECTOR

                         
Year
First
Elected
Name Age Position Director Background





Daniel J. Altobello
    62     Director     1993     Mr. Altobello served as Chairman of ONEX Food Services, Inc. from September 1995 until his retirement in October 2000. Mr. Altobello has been President of Caterair International Corporation since December 1989. He served as Chairman of the Board and Chief Executive Officer of Caterair International Corporation from December 1989 through September 1995. From April 1988 through December 1989, Mr. Altobello was Executive Vice President of Marriott Corporation and President of Marriott Airport Operations. He presently serves as a director of MESA Air Group, Inc., World Airways, Inc., First Union Realty Trust, and Friedman, Billings & Ramsey Group, all of which are public companies. He also currently serves as a director and non-executive chairman of CareFirst, Inc. and CareFirst of Maryland, Inc., and as a member of the Advisory Board of Thayer Capital Partners, a merchant bank.
 
James J. Forese
    67     Director     1989     Mr. Forese is the former Chairman, President, Chief Executive Officer and Director of IKON Office Solutions, having served as Chairman of the Board and Director from May 2000 to February 2003 and as President and Chief Executive Officer from July 1998 to September 2002. From January 1997 to July 1998, he served as Executive Vice President and President, International Operations of IKON Office Solutions. From 1995 to 1996, he served as Executive Vice President, Chief Operating Officer, and Director of ALCO Standard Corporation. From 1993 to 1995, he served as General Manager of IBM Customer Financing and Chairman of IBM Credit Corporation. He served as IBM Vice President, Finance from 1990 to 1993 and IBM Vice President and Group Executive, IBM World Americas Group from 1988 to 1990. He also serves as a director of NUI Corporation and Spherion Corporation and, effective April 23, 2003, will serve on the Board of Directors of Anheuser-Busch Companies, Inc.

3


 

                         
Year
First
Elected
Name Age Position Director Background





Dorothy Leonard
    61     Director     1991     Dr. Leonard has been a Professor at the Harvard University Graduate School of Business Administration since 1993. Prior to this, she served as an Associate Professor from 1989 to 1993, and as an Assistant Professor from 1983 to 1989, at the Harvard University Graduate School of Business Administration. Dr. Leonard serves as an independent industrial consultant to numerous Fortune 100 companies and to startups. She has also served on a number of advisory boards, including Daimler Chrysler Corporation.
 
Frederic V. Malek
    66     Director     1985     Mr. Malek has been Chairman of Thayer Capital Partners, a merchant bank, since March 1993. He was Co-Chairman, CB Commercial Real Estate Group (a real estate brokerage and management firm) from April 1989 to October 1996. Mr. Malek was Campaign Manager for the re-election campaign of President Bush and Vice President Quayle from December 1991 to November 1992. He was Vice Chairman of Northwest Airlines from 1990 to December 1991, and was President of Northwest Airlines from 1989 to 1990. From 1988 to 1989 he was Senior Advisor to The Carlyle Group (investment bank), and from 1981 to 1988 he was President of Marriott Hotels and Resorts. Mr. Malek also serves as a director of Automatic Data Processing, Inc.; the Federal National Mortgage Association (Fannie Mae); UBS Brinson mutual funds complex; FPL Group; Northwest Airlines; CB Richard Ellis Services, Inc.; Aegis Communications Group, Inc.; and Manor Care, Inc.

4


 

                         
Year
First
Elected
Name Age Position Director Background





Alfred T. Mockett
    53     Chairman of the Board, Chief Executive Officer and Director     2002     Mr. Mockett has been the Chairman of the Board and Chief Executive Officer of AMS since December 2001. Prior to joining AMS, Mr. Mocket was with British Telecommunications plc (“BT”). He served as the Chief Executive Officer of BT’s international broadband, data and applications company from 2000 to 2001; President and Chief Executive Officer of BT Worldwide, which is a business unit of BT, from 1994 to 2000; Managing Director of BT’s business communications division from 1992 to 1994; and Managing Director of BT’s special business division from 1991 to 1992.
 
Joseph M. Velli
    44     Director     2003     Mr. Velli is a Senior Executive Vice President of The Bank of New York (the “Bank”), a position he has held since September 1998. He serves as the Chief Executive Officer of BNY Securities Group, a sector of the Bank and one of the three largest global agency brokerage firms in the world. Mr. Velli joined the Bank in 1984 as an Assistant Vice President when he established its depositary receipt business, and has served in various positions since then, including as Executive Vice President from May 1992 to September 1998, Sector Head from 1990 to May 1992, Senior Vice President from 1988 to 1990, and Vice President from 1985 to 1988. Mr. Velli serves as a director of various subsidiaries of the Bank and on several Bank committees.

5


 

INFORMATION CONCERNING EXECUTIVE OFFICERS

      Information concerning Alfred T. Mockett, the Corporation’s Chairman of the Board and Chief Executive Officer, is set forth under the caption “Information Concerning Nominees for Director.”

                 
Name Age Position Background




John S. Brittain, Jr
    44     Executive
Vice President,
Chief Financial Officer,
and Treasurer
  Mr. Brittain has been Executive Vice President and Chief Financial Officer of AMS since March 2002, and has been the Treasurer since April 2002. Prior to joining AMS, he was with Nextel Communications, Inc., where he acted as the Chief Financial Officer during 2000 and 2001 and served as Vice President and Treasurer from 1999 to 2002. From 1994 through 1998, he served as Senior Vice President and Treasurer of Sotheby’s Holdings, Inc. Mr. Brittain commenced his career in banking as an officer of JP Morgan Chase.
 
David R. Fontaine
    39     Executive
Vice President,
General Counsel,
Chief Risk Officer
and Secretary
  Mr. Fontaine joined AMS as Executive Vice President, General Counsel, Chief Risk Officer and Corporate Secretary in July 2002. From June 2001 to June 2002, he served as Executive Vice President and General Counsel of Dimension Data, NA. From 1999 to June 2001 he served in various positions at Proxicom, Inc., prior to its acquisition by Dimension Data Holdings, plc in June 2001. At Proxicom, Inc., he served as Senior Vice President and General Counsel in 2001, Vice President and General Counsel in 2000 and Deputy General Counsel from 1999 to 2000. Prior to joining Proxicom, Inc., Mr. Fontaine was a Partner of the law firm, Miller Cassidy, Larroca & Lewin, LLP in Washington, D.C.
 
Garry Griffiths
    58     Executive
Vice President
and Chief Human Resources Officer
  Mr. Griffiths has served as Executive Vice President and Chief Human Resources Officer since May 2002. Prior to joining AMS, he had a 37-year career in human resources management at British Telecommunications plc (“BT”), most recently serving as Senior Vice President for Human Resources and Security at BT Ignite from 2000 to 2002. From 1998 to 2000, Mr. Griffiths was Vice President of Human Resources for BT Asia Pacific, based in Singapore.

6


 

                 
Name Age Position Background




Walt Howell
    52     Executive
Vice President,
Financial Services Group
  Mr. Howell joined AMS as Executive Vice President, Financial Services Group in July 2002. Prior to joining AMS, Mr. Howell held various positions at IBM Global Services (“IBM”) since 1993. From January 2001 to July 2002, he served as Managing Director of IBM, responsible for the company’s relationship with Morgan Stanley. From June 1993 to December 2001, Mr. Howell served as Vice President, IBM Global Services. Mr. Howell serves as a director of the Greater Washington Board of Trade.
 
Vernon Irvin
    41     Executive
Vice President, Communications, Media and Entertainment and Europe
  Mr. Irvin has been an Executive Vice President of AMS since February 2002. He is currently the head of AMS’s Communications, Media and Entertainment Group and Europe. From March 2000 until February 2002, Mr. Irvin served as a founding manager and President of BT Ignite, the broadband and Internet services business of British Telecommunications plc. From 1999 to February 2000, Mr. Irvin served as Senior Vice President, Marketing and Internet, of B.T. Worldwide. Prior to joining BT in 1999, he served as an Executive Vice President for corporate development and strategy for e.spire Communications.
 
Rick Lottie
    55     Executive
Vice President,
Corporate Managed
Services
  Mr. Lottie joined AMS in July 2002 as Executive Vice President, Corporate Managed Services. From January 2001 to October 2001, Mr. Lottie served as a “Customer Partner” of Trilogy, an Austin, Texas software company, where he focused on improving customer relations in major accounts. From June 2000 to January 2001, Mr. Lottie served as President and Chief Executive Officer of Digital Information and Virtual Access, Inc. (“DIVA”). From January 2000 until March 2000, Mr. Lottie was a consultant for Edata.com. From October 1993 to December 1999, he was with MCI Systemhouse Corporation/EDS, serving as Group Executive and Vice President, responsible for the global delivery of outsourcing and technology deployment services. In April 2001, subsequent to Mr. Lottie’s departure, DIVA filed for bankruptcy in the U.S. Bankruptcy Court in Dallas, Texas.

7


 

                 
Name Age Position Background




Donna S. Morea
    48     Executive
Vice President,
Public Sector Group
  Ms. Morea has been an Executive Vice President of AMS since May 2000. In March 2002, she was appointed to head the Corporation’s public sector practice, which brings together into one organization the Corporation’s resources for federal agencies and state and local governments. She served as the General Manager of the Corporation’s State and Local Solutions Group from 2000 to 2002. Prior to taking on this role, Ms. Morea established the Human Services Group, which she led for six years. She joined AMS in 1980. Ms. Morea serves on the Board of Directors of the Crossway Community, a nationally recognized social services innovator, and on the Board of Directors and the Executive Committee of the Northern Virginia Technology Council.
 
James C. Reagan
    44     Senior Vice President and Controller   Mr. Reagan has served as the Corporation’s Senior Vice President and Controller since May 2002. Prior to joining AMS, he was with Nextel Communications, Inc., where he served as Vice President, Operations Finance from February 1999 to April 2002. From February 1997 to February 1999, Mr. Reagan served as Executive Director, Financial Operations of MCI Worldcom.
 
Larry R. Seidel
    53     Executive
Vice President
and Corporate Development Officer
  Mr. Seidel, who became an Executive Vice President of the Corporation in May 2000, has been the Corporate Development Officer since March 2002. He previously was responsible for AMS’s Financial Services Industry Group and the Management Systems and Technology Group, overseeing AMS’s business with financial services companies, including insurance, federal civilian agencies, and environmental and health care organizations. He joined the Corporation in 1973.
 
Paul A. Turner
    63     Executive
Vice President
and Chief Technology Officer
  Mr. Turner became an Executive Vice President of AMS in May 2000 and the Chief Technology Officer of the Corporation in January 2000. He has the overall responsibility for identifying and introducing new technology into AMS’s system design and development activities. Before joining AMS, Mr. Turner was the founder and managing partner of the PricewaterhouseCoopers (“PwC”) Global Technology Center. Mr. Turner worked at PwC for 13 years.

8


 

PRINCIPAL STOCKHOLDERS

      The following table sets forth the number and percentage of outstanding shares of Common Stock beneficially owned as of March 24, 2003 by (i) each director of the Corporation, (ii) each named executive officer of the Corporation, (iii) each executive officer of the Corporation, (iv) all executive officers and directors as a group, and (v) all persons or entities known by the Corporation to beneficially own more than 5% of the Common Stock. Unless otherwise noted below, each person and entity named in the table has sole voting and sole investment power with respect to each of the shares beneficially owned by such person or entity.

                   
Amount of Percent of
Beneficial Outstanding
Name and Address of Beneficial Owner Ownership(1) Shares(2)



Daniel J. Altobello(3)
    36,458       *  
 
6550 Rock Spring Drive
               
 
Bethesda, MD 20817
               
 
John S. Brittain, Jr.(5)
    21,250       *  
 
4050 Legato Road
               
 
Fairfax, VA 22033
               
 
David R. Fontaine(5)
    5,000       *  
 
4050 Legato Road
               
 
Fairfax, VA 22033
               
 
James J. Forese(3)
    104,208       *  
 
70 Valley Stream Parkway
               
 
Malvern, PA 19355
               
 
Garry Griffiths(5)
    15,000       *  
 
4050 Legato Road
               
 
Fairfax, VA 22033
               
 
Walt Howell(5)
    6,418 (6)     *  
 
4050 Legato Road
               
 
Fairfax, VA 22033
               
 
Vernon Irvin(5)
    28,744 (6)     *  
 
4050 Legato Road
               
 
Fairfax, VA 22033
               
 
Dorothy Leonard(3)
    21,630       *  
 
Harvard University Graduate School of Business
               
 
522 Soldiers Field Road
               
 
Morgan Hall T93
               
 
Boston, MA 02163
               
 
Rick Lottie(5)
    5,000       *  
 
4050 Legato Road
               
 
Fairfax, VA 22033
               
 
Frederic V. Malek(3)
    39,593       *  
 
901 15th Street, N.W., Suite 350
               
 
Washington, D.C. 20004
               
 
Alfred T. Mockett(3)(5)
    307,000       *  
 
4050 Legato Road
               
 
Fairfax, VA 22033
               
 
Donna S. Morea(5)
    81,034       *  
 
4050 Legato Road
               
 
Fairfax, VA 22033
               

9


 

                   
Amount of Percent of
Beneficial Outstanding
Name and Address of Beneficial Owner Ownership(1) Shares(2)



William M. Purdy(7)
    167,563       *  
 
4050 Legato Road
               
 
Fairfax, VA 22033
               
 
James C. Reagan(5)
    6,250       *  
 
4050 Legato Road
               
 
Fairfax, VA 22033
               
 
Ronald L. Schillereff
    13,867       *  
 
4050 Legato Road
               
 
Fairfax, VA 22033
               
 
Larry R. Seidel(5)
    146,580 (8)     *  
 
4050 Legato Road
               
 
Fairfax, VA 22033
               
 
Paul A. Turner(5)
    12,143       *  
 
4050 Legato Road
               
 
Fairfax, VA 22033
               
 
Joseph M. Velli(4)
          *  
 
16 Meadow Lane
               
 
Allendale, NJ 07401
               
 
Westport Asset Management, Inc.(9)
    3,178,600       7.5 %
 
253 Riverside Avenue
               
 
Westport, CT 06880
               
 
All executive officers and directors as a group (16 persons)
    1,017,738       2.4 %


  * Designates less than 1%.

(1)  The amount of beneficial ownership includes stock options granted to directors and executive officers which have vested and are or will become exercisable within 60 days of March 24, 2003. Accordingly, Mr. Altobello has 17,333 options vested and exercisable; Mr. Brittain has 16,250 options vested and exercisable; Mr. Forese has 16,083 options vested and exercisable; Mr. Griffiths has 10,000 options vested and exercisable; Mr. Irvin has 17,500 options vested and exercisable; Dr. Leonard has 14,250 options vested and exercisable; Mr. Malek has 12,500 options vested and exercisable; Mr. Mockett has 100,000 options vested and exercisable; Ms. Morea has 32,130 options vested and exercisable; Mr. Purdy has 89,500 options vested and exercisable; Mr. Reagan has 6,250 options vested and exercisable; Dr. Schillereff has 13,867 options vested and exercisable; Mr. Seidel has 37,250 options vested and exercisable; Mr. Turner has 12,000 options vested and exercisable; and none of Mr. Fontaine, Mr. Howell or Mr. Lottie has options that are vested and exercisable. All executive officers and directors as a group (16 persons) have beneficial ownership of 394,913 options vested and exercisable within 60 days of March 24, 2003.
 
(2)  The percentages of Common Stock were calculated to include stock options vested and exercisable. The number of shares of Common Stock was calculated as of March 24, 2003.
 
(3)  Indicates a director of the Corporation.
 
(4)  Indicates a nominee for director of the Corporation.
 
(5)  Indicates an executive officer of the Corporation.
 
(6)  Beneficial ownership amounts include the following amounts of shares purchased by the individual under the Corporation’s Employee Stock Purchase Plan as of the record date: Walt Howell (418); Vernon Irvin (1,244).
 
(7)  Mr. Purdy is a former officer and director of the Corporation.

10


 

(8)  The amount includes 5,210 shares each owned by two trusts, totaling 10,420 shares, for the benefit of Mr. Seidel’s two daughters. Mr. Seidel does not have the power to vote or dispose of any such shares, and, accordingly, disclaims beneficial ownership with respect to them.
 
(9)  Based solely on the February 14, 2003 filing on Schedule 13G of Westport Asset Management, Inc. (“Westport”), it is the Corporation’s understanding that (i) Westport is a registered investment adviser and a parent holding company, (ii) Westport owns 50% of Westport Advisors LLC, which is also a registered investment advisor (“Westport LLC”), (iii) Westport has sole voting and sole dispositive power with respect to 1,051,500 of the reported shares, Westport and Westport LLC share voting power with respect to 1,773,900 of the reported shares, and Westport and Westport LLC share dispositive power with respect to 2,127,100 of the reported shares, and (iv) the reported shares do not include 10,600 shares owned in the personal securities accounts of employees of Westport and Westport LLC.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

      Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires that the Corporation’s directors, executive officers, and persons who own more than 10% of a registered class of the equity securities of the Corporation (“reporting persons”) file with the Securities and Exchange Commission (the “Commission”) initial reports of ownership, and reports of changes in ownership, of shares of stock, and options to purchase such shares, of the Corporation. Reporting persons are required by Commission rules to furnish the Corporation with copies of all Section 16(a) reports they file.

      Based solely upon a review of Section 16(a) reports furnished to the Corporation for the fiscal year ended December 31, 2002 (the “2002 fiscal year”), and representations by reporting persons that no other reports were required for the 2002 fiscal year, all Section 16(a) reporting requirements were met, except that during 2002, Larry Seidel filed two Forms 4 late and W. Walker Lewis, a former director of the Corporation, filed one Form 4 late.

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EXECUTIVE COMPENSATION

Summary Compensation Table

      The following table summarizes the compensation paid or accrued by the Corporation during the three fiscal years ended December 31, 2002, to the following executive officers of the Corporation (“named executive officers”).

                                                                       
Long-Term Compensation

Awards Payouts


Shares
Underlying
Annual Compensation Restricted Options
Name and
Stock (No. of LTIP All Other
Principal Position Year Salary Bonus Other Award(s) Shares) Payout Compensation(1)









    Alfred T. Mockett     2002     $ 800,000                 $ 330,000 (2)               $ 9,418 (3)
      Chairman of the     2001       66,667 (4)   $ 1,046,666 (5)           2,708,100 (6)     517,000 (7)            
      Board, Chief Executive Officer and Director                                                                
    William M. Purdy     2002     $ 600,000     $ 610,000 (8)   $ 2,274 (9)                     $ 1,258,444 (10)
      Former President,     2001