CUB » Topics » Analysis

This excerpt taken from the CUB DEF 14A filed Jan 14, 2009.

Analysis

            In order to attract, retain and motivate senior executives, most of our compensation evaluation focus is on the salary and bonus practices of organizations of similar size, in comparable industries, and concerning individuals with relevant responsibilities and experience. We do this to be fair within the organization and to our stockholders, and to remain competitive. We have occasionally used formula-based bonus arrangements, but in the last few years most executive bonus payments have been subjective. We may periodically return to formula bonus provisions.

            The specific amounts to be awarded are annually tested against market data provided by three independent consulting firms having both a regional and national focus. These surveys include data from approximately 370 companies. We do not instruct the providers of this data to significantly vary their reports from a standard format. Our objective is to obtain data from a broad spectrum of technology and defense companies and also from public companies of similar size in sales. Historical compensation for the individual is also considered. Most annual executive salary adjustments are modest and in line with cost of living considerations. Annual bonus payments usually comprise less than 30% of total compensation for principal officers.

            Our Transition Protection Plan assists in the retention and attraction of senior individuals by reducing their concern for financial security in the event of a job loss following a change of control. Awards to date, which result in plan participation, are for payment of five-year average compensation,

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and certain fringe benefits, for up to 24 months following a change of control. The 24-month period was selected to remain comfortably below the range at which onerous taxation would occur.

/s/ Dr. Robert S. Sullivan, Chairman   /s/ Bruce G. Blakley   /s/ Raymond E. Peet
This excerpt taken from the CUB DEF 14A filed Jan 11, 2008.

Analysis

            In order to attract, retain and motivate senior executives, most of our compensation evaluation focus is on the salary and bonus practices of organizations of similar size, in comparable industries, and concerning individuals with relevant responsibilities and experience. We do this to be fair within the organization and to our stockholders, and to remain competitive. While historically we have occasionally used formula-based bonus arrangements, in the last few years most executive bonus payments have been subjective. We believe this enables us to concentrate on individual efforts, contributions and results and avoids the award of windfall compensation.

            The specific amounts to be awarded are annually tested against market data provided by three independent consulting firms having both a regional and national focus. These surveys include data from approximately 371 companies. We do not instruct the providers of this data to significantly vary

6



their reports from a standard format. Our objective is to obtain data from a broad spectrum of technology and defense companies and also from public companies of similar size in sales. Historical compensation for the individual is also considered. Most annual executive salary adjustments are modest and in line with cost of living considerations. Annual bonus payments usually comprise less than 30% of total compensation for executive officers.

            Our Transition Protection Plan assists in the retention and attraction of senior individuals by reducing their concern for financial security in the event of a job loss following a change of control. Awards to date have been for payment of five-year average compensation, and certain fringe benefits, for 24 months following a change of control. The 24-month period was selected to remain comfortably below the range at which onerous taxation would occur.

            The compensation for independent directors is recommended by the CEO and approved by the whole board. The annual retainer ($22,000) and fees for attendance at board meetings ($2,000 per meeting) and committee meetings ($1,000 per meeting) are modest by any standard. Such directors have also received a one-time grant of an option, under our stock option plan, to purchase 4,500 shares of common stock at the closing market price the day after the grant. Employee-directors receive no additional compensation and no options.

/s/ Dr. Robert S. Sullivan, Chairman   /s/ Robert T. Monagan /s/ Raymond E. Peet

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