Tender-Offer Solicitation/Recommendation Statement — Schedule 14D-9
Filing Table of Contents
Document/Exhibit Description Pages Size
1: SC 14D9 Tender-Offer Solicitation/Recommendation Statement 50 271K
2: EX-99.1 Pgs 10 Through 13 of Loral Corp's Proxy Statement 4 23K
11: EX-99.10 Rights Agreement Dtd 1/10/96 Loral Corp & the Bony 69 204K
12: EX-99.11 Amendment No. 1 to Rights Agreement Dtd 1/10/96 5 19K
13: EX-99.12 Form of Stockholders Agreement 39 100K
14: EX-99.13 Confidentiality and Standstill Agrmnt Dtd 12/4/95 5 22K
15: EX-99.14 Opinion of Lazard Freres & Co. LLC Dtd 1/7/96 3 16K
16: EX-99.15 Form of Letter to Shareholder of Loral Corp-1/7/96 1 9K
17: EX-99.16 Press Release Dated 1/8/96 5 19K
3: EX-99.2 Loral Supplemental Executive Retirement Plan 30 69K
4: EX-99.3 Loral Corporation Supplemental Bonus Program 2 10K
5: EX-99.4 Loral Corporation Supplemental Severance Program 9 27K
6: EX-99.5 Form of Employment Protection Plan 15 52K
7: EX-99.6 Loral Corporation Employment Protection Plan 9 31K
8: EX-99.7 Agreement and Plan of Merger Dtd 1/7/96 48 212K
9: EX-99.8 Restructioning, Financing and Distribution 104 283K
Agreement
10: EX-99.9 Form of Tax Sharing Agreement 19 50K
EX-99.1 — Pgs 10 Through 13 of Loral Corp’s Proxy Statement
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Exhibit 99.1
FISCAL YEAR 1995
SUMMARY COMPENSATION TABLE
[Enlarge/Download Table]
LONG TERM COMPENSATION AWARDS
ANNUAL ------------------------------------
NAME AND PRINCIPAL COMPENSATION SECURITIES
-------------------- RESTRICTED UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS STOCK AWARD(A)(B) STOCK OPTIONS(C) COMPENSATION(D)
------------------------ ---- -------- ---------- ------------------ ---------------- ---------------
Bernard L. Schwartz 1995 $908,300 $5,335,891 -- -- $88,252
Chairman of the Board 1994 $884,000 $3,604,237 -- 600,000 $97,399
of Directors and Chief 1993 $859,000 $3,525,669 -- 400,000 $86,266
Executive Officer
Frank C. Lanza 1995 $635,964 $2,611,215 -- -- $31,965
President and 1994 $618,925 $1,751,404 -- 150,000 $25,000
Chief Operating 1993 $600,924 $1,200,000 $1,623,019 -- $25,000
Officer
Michael P. DeBlasio 1995 $427,527 $ 527,106 -- -- $ 8,813
Senior Vice 1994 $402,973 $ 355,584 -- 70,000 $ 5,385
President - 1993 $402,973 $ 330,556 $ 682,500 -- $ 5,284
Finance
Robert V. LaPenta 1995 $357,753 $ 526,226 -- -- $ 7,246
Senior Vice President 1994 $337,723 $ 311,069 -- 70,000 $ 8,620
and Controller 1993 $337,723 $ 290,917 $ 682,500 -- $ 7,881
Michael B. Targoff 1995 $347,715 $ 526,712 -- -- $ 9,117
Senior Vice President 1994 $327,684 $ 311,495 -- 70,000 $10,758
and Secretary 1993 $327,684 $ 291,301 $ 682,500 -- $ 9,692
__________
(a) Value of shares awarded under the Restricted Stock Purchase Plan in 1993.
Shares awarded under the plan vest and become freely transferable in
accordance with a formula based upon Loral earnings. The total number of
shares vesting under the plan each year is equal to 3% of the Company's
pre-tax profit divided by the grant value (currently $105 per share) of
restricted shares outstanding. Any shares not earned at the earlier of
completion of the seventh year or termination of employment, will be
forfeited. Dividends are paid on the restricted shares awarded. As of March
31, 1995, the number and value of restricted stock holdings, respectively,
were 4,681 shares and $198,357 for Mr. Lanza, 1,968 shares and $83,394 for
each of Messrs. DeBlasio, LaPenta, and Targoff.
(b) Under the 1994 Incentive Stock Purchase Plan, the Compensation Committee
may permit participants to defer up to 100% of their annual bonus into a
Restricted Stock Purchase Account (the "Restricted Account"). The
Restricted Account will be used to purchase Loral Common Stock equal to
150% of the deferred bonus, subject to limits the Committee may establish
from time to time. The shares in the Restricted Account earn dividends and
generally vest 25% per year commencing upon the second anniversary of the
grant date. The Committee may establish specified performance conditions
that, if attained, will result in accelerated vesting. All non-vested
shares are forfeited upon termination of employment and the remaining
balance of the Restricted Account equal to the lesser of the original cost
or the market value of the shares is returned to the participant. No shares
have been issued under this plan.
(c) Stock options, which have been adjusted to reflect a two-for-one stock
split distributed on October 7, 1993, generally vest over a four and one-
half to six year period.
(d) Includes annual Board of Directors fee in 1995, 1994 and 1993 of $25,000
for Messrs. Schwartz and Lanza, company matching contributions of $3,100 in
1995, $3,598 in 1994 and $3,722 in 1993 to the Savings Plan for Messrs.
DeBlasio, LaPenta and Targoff and the value of supplemental life insurance
programs attributable to 1995, 1994 and 1993 in the amounts of $63,252,
$72,399 and $61,266 for Mr. Schwartz, $5,713, $1,787 and $1,562 for Mr.
DeBlasio, $4,146, $5,022 and $4,159 for Mr. LaPenta, and $6,017, $7,160 and
$5,970 for Mr. Targoff, respectively, and $6,965 attributable to 1995 for
Mr. Lanza.
FISCAL YEAR 1995
OPTION EXERCISES AND YEAR-END VALUE TABLE
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
YEAR-END OPTION VALUES
[Enlarge/Download Table]
VALUE OF
UNEXERCISED
SECURITIES UNDERLYING IN-THE-MONEY
NUMBER OF UNEXERCISED OPTIONS OPTIONS AT
SHARES AT YEAR-END YEAR-END(A)
ACQUIRED ON VALUE -------------------------- --------------------------
NAME EXERCISE REALIZED(A) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
--------------------- ----------- ------------- ----------- ------------- ----------- -------------
Bernard L. Schwartz -- -- 1,000,000 -- $23,500,000 --
Frank C. Lanza 56,000 $1,802,500 214,280 195,720 $ 6,672,850 $5,511,525
Michael P. DeBlasio -- -- 28,428 95,144 $ 937,785 $2,694,305
Robert V. LaPenta 13,998 $ 398,745 4,000 103,724 $ 130,000 $2,986,025
Michael B. Targoff -- -- 24,714 109,144 $ 845,205 $3,191,305
----------
(a) Market value of underlying securities at exercise date or year-end, as the
case may be, minus the exercise price.
EMPLOYMENT AGREEMENTS AND OTHER ARRANGEMENTS
The Company has an employment agreement with Mr. Schwartz, which expires on
March 31, 2000. Pursuant to the agreement, Mr. Schwartz' annual base salary was
$908,300 for fiscal 1995, to be increased annually by the percentage change in a
specified consumer price index. Under the agreement, Mr. Schwartz is entitled to
annual incentive compensation equal to 3% of the increase over 9 1/4% in the
Company's shareholders' equity as adjusted for stock issuances, other non-
operating charges or credits and before dividends. In accordance with the
incentive bonus provisions, Mr. Schwartz received fiscal 1995 incentive
compensation of $5,214,426. The agreement also includes a cap on maximum annual
incentive compensation of $9 million, as adjusted for inflation.
Pursuant to the agreement, if Mr. Schwartz is removed as Chairman of the Board
of Directors or as Chief Executive Officer other than for cause, or if his
duties, authorities or responsibilities are diminished, or if there is a change
of control (as defined to encompass the Company becoming a subsidiary of another
company, the acquisition of 35% or more of the voting securities of the Company
by a particular stockholder or group, or a change in 35% of the Company's
directors at the insistence of the shareholder group), Mr. Schwartz may elect to
terminate the contract. In any such event, or upon his death or disability, Mr.
Schwartz will be entitled to receive a lump sum payment discounted at 9% per
annum, in an amount equal to his base salary as adjusted for defined consumer
price index changes for the remainder of the term,
an amount of incentive compensation equal to the highest received by Mr.
Schwartz in any of the prior three years, times the number of years (including
partial fiscal years) remaining during the term, and an amount calculated to
approximate the annual compensation element reflected in the difference between
fair market value and exercise price of stock options granted to Mr. Schwartz.
All such sums are further increased to offset any tax due by Mr. Schwartz under
the excise tax and related provisions of Section 4999 of the Internal Revenue
Code but subject to a cap equal to 200% of any such tax.
The Company also has an employment agreement with Mr. Lanza for a five year
term expiring March 31, 1997. Pursuant to the agreement, Mr. Lanza's annual base
salary was $634,500 for fiscal 1995, to be increased annually by the percentage
change in a specified consumer price index. Under the agreement, Mr. Lanza is
entitled to annual incentive compensation under the growth in shareholders'
equity formula applicable under Mr. Schwartz' employment agreement, but at
1 1/2% of the increase over the 9 1/4% threshold. As a result, Mr. Lanza
received fiscal 1995 incentive compensation of $2,607,213. If Mr. Lanza becomes
disabled, he will receive 50% of his salary for the remainder of the term.
The Company has established Supplemental Life Insurance Programs for certain
key employees including the executives listed in the Summary Compensation Table.
For Messrs. Schwartz, Lanza, DeBlasio, LaPenta and Targoff, the Plans are funded
with "Split-Dollar" insurance policies in the face amounts of $20,500,000,
$1,000,000, $1,060,000, $1,200,000 and $1,450,000 respectively. In the event of
death, the Company will be entitled to receive an amount not less than the
Company's cumulative contributions. If any of such officers terminates his
employment prior to the time that the Company's contributions equal the cash
value of the insurance policy, he will be responsible for repayment of the
remainder of the Company's contribution to the extent cash becomes available in
the policy. Such officers contribute to the payment for this program.
PENSION PLANS
The individuals named in the Summary Compensation Table participate in a
pension plan that generally provides an annual benefit for each year of
membership for the first 14 years of Loral service, of 1.2% of such remuneration
up to the Social Security Wage Base and 1.45% of such remuneration in excess of
that Base, and for 15 or more years of Loral service, 1.5% of such remuneration
up to the Social Security Wage Base and 1.75% of such remuneration in excess of
that Base, all subject to certain vesting and other requirements. These
individuals also participate in a supplemental plan which generally makes up for
certain reductions in such benefits caused by Internal Revenue Code limitations.
Remuneration covered by the plans primarily includes salary and bonus.
Estimated annual benefits upon retirement for Messrs. Schwartz, Lanza,
DeBlasio, LaPenta and Targoff under the pension and supplemental plans are
$1,117,000, $486,000, $249,000, $344,000 and $295,000, respectively. The
retirement benefits have been computed assuming that (i) employment will be
continued until normal retirement, or until the expiration of current employment
agreements, if later; and (ii) current levels of creditable compensation and the
Social Security Wage Base will continue without increases or adjustments
throughout the remainder of the computation period.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Schwartz is Chairman, Chief Executive Officer, 27% owner, and controlling
shareholder of K&F Industries, Inc. ("K&F"), which acquired the Company's
Aircraft Braking and Engineered Fabrics businesses in April 1989. Certain other
individuals named in the Summary Compensation Table are directors of K&F's
operating subsidiaries. Mr. Schwartz and the other individuals named in the
Summary Compensation Table receive compensation from K&F for rendering advisory
services to K&F. Such compensation is not included in the Summary Compensation
Table but is considered by the Compensation Committee regarding compensation
from Loral. In September 1994, the Company exchanged its $30 million 14.75% pay-
in-kind subordinated convertible K&F debenture due in 2004 for $11,514,000 in
cash, net of expenses, and a 22.5% voting equity interest in K&F. Pursuant to
agreements between the Company
and K&F, the parties provide services to each other and share certain expenses
relating to a production program, real property occupancy, benefits
administration, treasury, accounting and legal services. The related charges
agreed upon by the parties were established to reimburse each party for the
actual cost incurred without profit or fee. The Company believes that the
arrangements with K&F are as favorable to the Company as could have been
obtained from unaffiliated parties. The Company's billings to and from K&F in
fiscal 1995 were $3,014,000 and $15,000, respectively. The Company's sales to
K&F in fiscal 1995 were $4,181,000.
Mr. Robert B. Hodes, a Director and a member of the Executive, Audit, Pension
Advisory, and Compensation Committees, is a partner in the law firm of Willkie
Farr & Gallagher, which is general counsel to the Company.
For the fiscal year ended March 31, 1995, the Company paid fees and
disbursements in the amount of $182,000 for corporate communications
consultations to Kekst and Company Incorporated, of which company Mr. Gershon
Kekst, a Director and member of the Executive, Nominating, and Compensation
Committees, is President and the principal stockholder. Kekst and Company
Incorporated continues to render such services to the Company.
Dates Referenced Herein and Documents Incorporated by Reference
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