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Orbital Sciences DEF 14A 2007
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934 Filed by the Registrant þ
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)) þ Definitive Proxy Statement o Definitive Additional Materials o Soliciting Material Pursuant to §240.14a-12 ORBITAL SCIENCES CORPORATION
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
March 13, 2007
Dear Stockholder:
It is my pleasure to invite you to the annual meeting of
stockholders of Orbital Sciences Corporation to be held on
Thursday, April 26, 2007, at 9:00 a.m., at our
headquarters located at 21839 Atlantic Boulevard, Dulles,
Virginia 20166.
Your vote is important. Whether or not you plan to attend, and
regardless of the number of shares you own, I urge you to vote
in accordance with the instructions provided with this proxy
statement. Even if you return a proxy card or vote via the
Internet or by telephone, you may still attend the meeting and
vote in person.
I hope that you will be able to attend the meeting.
Orbital’s officers and directors look forward to seeing you
at that time.
Sincerely,
David W. Thompson
Chairman of the Board and Chief Executive Officer
ORBITAL
SCIENCES CORPORATION
21839 Atlantic Boulevard Dulles, Virginia 20166 (703) 406-5000 www.orbital.com
The annual meeting of stockholders of Orbital Sciences
Corporation (“Orbital” or the “company”)
will be held at our headquarters located at 21839 Atlantic
Boulevard, Dulles, Virginia 20166, on Thursday, April 26,
2007, at 9:00 a.m.
Stockholders, as of the close of business on March 8, 2007,
are entitled to vote at the annual meeting. The following items
are on the agenda:
1. To elect five directors for three-year terms ending in
2010.
A proxy for the annual meeting is enclosed. Even though you
may plan to attend the meeting in person, please promptly vote
by completing the enclosed proxy card and returning it in the
enclosed postage-paid envelope. Stockholders may also vote by
Internet or telephone. Internet and telephone proxy voting
instructions are provided on the enclosed proxy card. If you are
present at the meeting and desire to vote in person, your vote
by proxy will not be used.
This proxy statement, the accompanying form of proxy and our
Annual Report on
Form 10-K
will be mailed to stockholders on or about March 20, 2007.
By Order of the Board of Directors,
Susan Herlick
Senior Vice President, General Counsel and Corporate Secretary
March 13, 2007
ORBITAL
SCIENCES CORPORATION
PROXY STATEMENT
FOR THE 2007 ANNUAL MEETING OF STOCKHOLDERS
QUESTIONS
AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
The Board of Directors is soliciting your proxy to vote at our
annual meeting of stockholders because you own shares of Orbital
common stock. This proxy statement contains information about
the matters to be voted on at the meeting and the voting
process, as well as information about our directors and
executive officers and other information about Orbital. The
meeting will be held at our headquarters located at 21839
Atlantic Boulevard, Dulles, Virginia 20166, on Thursday,
April 26, 2007, at 9:00 a.m.
Holders of Orbital common stock at the close of business on
March 8, 2007, the record date, are entitled to vote at the
meeting. Each share of Orbital common stock is entitled to one
vote on each matter to be voted on. On March 8, 2007, there
were 59,222,651 shares of common stock issued and
outstanding and entitled to vote.
You are voting on two items of business at the annual
meeting — (1) the election of five directors to
serve until the 2010 annual meeting and until their respective
successors are elected and qualified and (2) the
ratification of the appointment of PricewaterhouseCoopers LLP as
the company’s independent registered public accounting firm
for the fiscal year ending December 31, 2007. For more
information, turn to “Proposal 1 — Election
of Directors” beginning on page 3 and
“Proposal 2 — Ratification of the
Appointment of Independent Registered Public Accounting
Firm” on page 32 of this proxy statement.
If you are a holder of Orbital common stock as of the record
date, there are four ways to vote:
Votes by Internet or telephone must be received by
11:59 p.m. Eastern Time on Wednesday, April 25, 2007.
If you do not indicate your voting preference, the appointed
proxies will vote your shares FOR each of the nominees to
Orbital’s Board of Directors and FOR ratification of
the appointment of PricewaterhouseCoopers LLP as the
company’s independent registered public accounting firm for
the fiscal year ending December 31, 2007.
If your shares are held in a brokerage account or in your
broker’s name (i.e., in “street name”), you
should follow the voting directions provided by your broker or
nominee. You may complete and mail a voting instruction card to
your broker or nominee or, in most cases, submit voting
instructions by the Internet or by telephone to your broker or
nominee. If you provide specific instructions, your broker or
nominee should vote your shares as directed. If, however, your
brokerage firm has not received your instructions in a timely
manner, the firm may vote your
shares on any matter which the New York Stock Exchange
(“NYSE”) determines to be routine. The matters on the
agenda for the annual meeting are “routine” according
to the NYSE rules. For your general information, if the
brokerage firm cannot vote on a particular matter because it is
not routine, there is a “broker non-vote” on that
matter. The effect that a broker non-vote has on each matter to
be considered at the annual meeting is discussed below.
We will pass out written ballots to anyone who wants to vote in
person at the annual meeting. If you hold your shares in street
name through a brokerage account, you will need a legal proxy
from your broker in order to vote at the annual meeting.
You may revoke your proxy and change your vote at any time
before it is voted at the meeting by (1) sending a written
notice of revocation to the company’s Corporate Secretary
at the company’s address set forth in this proxy statement;
(2) submitting a new written proxy, bearing a date later
than the date of the proxy being revoked; (3) voting again
on the Internet or by telephone prior to 11:59 p.m. Eastern
Time on Wednesday, April 25, 2007; or (4) attending
the annual meeting and voting in person. Attendance at the
meeting will not, in itself, constitute revocation of a
previously granted proxy.
If you hold your shares in street name, then you may submit new
voting instructions by contacting your broker or nominee. You
may also vote in person at the annual meeting if you obtain a
legal proxy as described above.
As of the record date, 59,222,651 shares of Orbital’s
common stock were issued and outstanding and entitled to vote at
the annual meeting. A majority of the outstanding shares
entitled to vote at the annual meeting, represented in person or
by proxy, constitute a quorum. Shares that are represented by a
proxy that directs that the shares abstain from voting or that a
vote be withheld are still deemed to be represented at the
annual meeting for purposes of constituting a quorum. Similarly,
broker non-votes will be treated as shares present for purposes
of determining a quorum at the annual meeting.
We will announce preliminary voting results at the annual
meeting. We will publish the final results in our Quarterly
Report on
Form 10-Q
for the second quarter of 2007, to be filed with the
U.S. Securities and Exchange Commission (the
“SEC”). A copy of our
Form 10-Q
will be available on our website (www.orbital.com) and on
the SEC’s website (www.sec.gov). You may also
receive a copy by contacting our Investor Relations Department,
either by mail at our corporate headquarters, by
e-mail at
investor.relations@orbital.com, by telephone at
(703) 406-5543
or by calling the SEC at
1-800-SEC-0330
for the location of the nearest SEC public reference room.
We will pay the costs of this proxy solicitation, including the
reasonable expenses of brokerage firms and other custodians or
nominees for forwarding proxy materials to beneficial owners.
Our directors, officers and employees may solicit proxies
without additional compensation.
As of the date of this proxy statement, our management knows of
no other matters that will be presented for consideration at the
annual meeting other than that discussed in this proxy
statement. If any other matters properly come before the annual
meeting and call for a stockholder vote, valid proxies will be
voted by the holders of the proxies in accordance with the
recommendation of the Board of Directors or, if no
recommendation is given, in their own discretion.
Five directors are to be elected at the 2007 annual meeting for
three-year terms expiring at the 2010 annual meeting of
stockholders and until their respective successors are elected
and qualified or until the director’s death, removal or
resignation. Nine other directors have been previously elected
to terms that end in either 2008 or 2009, as indicated below.
If any nominees for director should become unavailable, the
Board of Directors, upon the recommendation of the Corporate
Governance and Nominating Committee, would designate substitute
nominees and proxies would be voted for such substitutes.
Management does not anticipate that any of the nominees will
become unavailable.
In order to be elected, a nominee must receive the vote of a
plurality of the outstanding shares of common stock represented
at the meeting and entitled to vote. The five nominees for
election as directors at the annual meeting who receive the
greatest number of votes properly cast for the election of
directors will be elected directors. For purposes of the
election of directors, abstentions, broker non-votes and other
shares not voted will have no effect on the outcome of the
election other than for purposes of determining a quorum.
Stockholders are not allowed to cumulate their votes for the
election of directors.
The Board of Directors recommends that you vote FOR the
election of each of the nominees listed below. Unless
instructions are given to the contrary, it is the intention of
the persons named as proxies to vote the shares to which the
proxy is related FOR the election of each of the nominees listed
below.
Set forth below is certain information as of March 1, 2007
concerning each of the nominees and each person whose term of
office as a director will continue after the annual meeting.
Directors
to be Elected at the 2007 Meeting
Director since 2003
Dr. Crawley has been a professor of Aeronautics and
Astronautics at the Massachusetts Institute of Technology
(“M.I.T.”) since 1980, and served as head of
M.I.T.’s Aeronautics and Astronautics Department from 1996
until 2003. From 2003 to 2006, he served as Executive Director
of the Cambridge University – M.I.T. Institute. In
1993, he was a member of the Presidential Advisory Committee on
the Space Station Redesign. He is a Fellow of the American
Institute of Aeronautics and Astronautics, the Royal
Aeronautical Society, the Royal Swedish Academy of Engineering
Science, and the Royal Academy of Engineering (U.K.), and is a
member of the U.S. National Academy of Engineering.
Director since 1993
Dr. Fisk has been a professor of Space Sciences at the
University of Michigan since 1993, and also served as Chairman
of the Department of Atmospheric, Oceanic and Space Sciences
from 1993 to 2003. From 1987 until 1993, he was Associate
Administrator for Space Sciences and Applications at the
National Aeronautics and Space Administration
(“NASA”). From 1977 until 1987, he held various
positions at the University of New Hampshire, including Vice
President for Research and Financial Affairs. He is a Fellow of
the American Geophysical Union and a member of the
U.S. National Academy of Sciences, where he serves as
Chairman of its Space Studies Board. He is also a member of the
NASA Advisory Council.
Director since 2005
General Kadish has been Vice President and Partner of Booz Allen
Hamilton, Inc., a global strategy and technology consulting
firm, since February 2005. In September 2004, General Kadish
retired as Lieutenant General from the U.S. Air Force after
serving for 34 years. From 1999 until his retirement,
General Kadish served as
Director of the U.S. Missile Defense Agency (formerly
Ballistic Missile Defense Organization). From August 1996 to
June 1999, General Kadish served as the Commander of the
Electronic Systems Center at Hanscom Air Force Base. Prior to
that time, General Kadish served in numerous assignments with
the Air Force, including Program Director for several military
aircraft platforms. During his career with the Air Force,
General Kadish received a number of awards and decorations,
including the Defense Distinguished Service Medal with oak leaf
cluster, the Distinguished Service Medal, and the Legion of
Merit. General Kadish is a director of Spirit AeroSystems
Holdings, Inc.
Director since 2000
Mr. Pierce has been Vice Chairman and Chief Financial
Officer since April 2002, and was Executive Vice President and
Chief Financial Officer since August 2000. From 1996 until
August 2000, he was Executive Vice President and Chief
Financial Officer of Sensormatic Electronics Corp., a supplier
of electronic security systems, where he was also named Chief
Administrative Officer in July 1998. Prior to joining
Sensormatic, Mr. Pierce was the Executive Vice President
and Chief Financial Officer of California Microwave, Inc., a
supplier of microwave, radio frequency, and satellite systems
and products for communications and wireless networks. From 1980
to 1993, Mr. Pierce was employed by Materials Research
Corporation, a provider of thin film equipment and high purity
materials to the semiconductor, telecommunications and media
storage industries, where he progressed from Chief Financial
Officer to President and Chief Executive Officer. Materials
Research Corporation was acquired by Sony Corporation as a
wholly-owned subsidiary in 1989. From 1972 to 1980,
Mr. Pierce held various management positions with The
Signal Companies. Mr. Pierce is a director of Kulicke and
Soffa Industries, Inc.
Director since 1982
Mr. Thompson is a co-founder of Orbital and has been
Chairman of the Board and Chief Executive Officer of Orbital
since 1982. From 1982 until October 1999, he also served as
President. Prior to founding Orbital, Mr. Thompson was
employed by Hughes Electronics Corporation as special assistant
to the President of its Missile Systems Group and by NASA at the
Marshall Space Flight Center as a project manager and engineer,
and also worked on the Space Shuttle’s autopilot design at
the Charles Stark Draper Laboratory. Mr. Thompson is a
Fellow of the American Institute of Aeronautics and
Astronautics, the American Astronautical Society and the Royal
Aeronautical Society, and is a member of the U.S. National
Academy of Engineering.
Directors
Whose Terms Expire in 2008
Director since 1983
Mr. Fink has been President of D.J. Fink Associates, Inc.,
a management consulting firm, since 1982. From 1967 until 1982,
Mr. Fink held a variety of positions at General Electric
Company, including the positions of Senior Vice President,
Corporate Planning and Development and Vice President and Group
Executive, Aerospace Group. Mr. Fink is a former member of
the Defense Science Board and a former Chairman of the NASA
Advisory Council. He is a member of the U.S. National
Academy of Engineering.
Director since 2002
Dr. Hermann has been a Senior Partner of Global Technology
Partners, an aerospace, defense, and technology investment firm,
since 1998. From 1982 to 1998, Dr. Hermann held a variety
of positions at United Technologies Corporation, including the
position of Senior Vice President, Science and Technology from
1987 to 1998. Prior to that time, Dr. Hermann served as
Director of the National Reconnaissance Office, Assistant
Secretary of the Air Force for Research and Development and
Logistics, and Principal Deputy Assistant Secretary of Defense
for Communications, Command, Control and Intelligence. He also
spent 20 years with the National Security Agency. He is
Chairman of the Technical Advisory Group for the National
Reconnaissance Office, a member of the Defense Science Board,
and a member of the Commission to Assess the Threat to the
United States from Electromagnetic
Pulse Attack. He was Chairman of the Charles Stark Draper
Laboratory from 1995 to 2001 and was a member of the
President’s Foreign Intelligence Advisory Board from 1993
to 2001. Dr. Hermann is a member of the U.S. National
Academy of Engineering.
Director since 1996
Ms. Obuchowski has been President of Freedom Technologies,
Incorporated, a telecommunications research and consulting firm,
since 1992. In 2003, Ms. Obuchowski also served as
Ambassador and U.S. Representative to the World
Radiocommunication Conference 2003. From 1989 to 1992, she
served as Assistant Secretary for Communications and Information
at the U.S. Department of Commerce and Administrator of the
National Telecommunications and Information Agency. From 1980 to
1987, Ms. Obuchowski served in a variety of positions at
the U.S. Federal Communications Commission, including
Senior Adviser to the Chairman. Ms. Obuchowski is a
director of CSG Systems International, Inc. and Stratos Global
Corporation.
Director since 1996
Mr. Salizzoni was President and Chief Executive Officer of
H&R Block, Inc. from 1996 until 2000, and served as Chairman
of the Board until his retirement in 2002. From 1994 until 1996,
Mr. Salizzoni was President and Chief Operating Officer of
USAir, Inc. and USAir Group, Inc. He joined USAir as Executive
Vice President-Finance and Chief Financial Officer in 1990. From
1987 to 1989, Mr. Salizzoni was Chairman and Chief
Executive Officer of TW Services, a food services company. From
1967 to 1987, Mr. Salizzoni held several senior financial
management positions with Trans World Airlines and its parent
company, Transworld Corporation. Mr. Salizzoni is a
director of Stratos Global Corporation.
Directors
Whose Terms Expire in 2009
Director since 2002
From 1990 until his retirement at the end of 2003,
Mr. Hanisee held a series of positions with Trust Company
of the West, an investment management services company. He
served as Managing Director and Chief Investment Officer for
Asset Allocation in the Private Client Services Group from 1998
to 2003, managed the Convertible Securities Group from 1992 to
1998, and was Portfolio Manager for the Global Telecom Trust
from September 1996 to October 1998. Mr. Hanisee was a
founding partner of Amdec Securities, and later was President of
Seidler Amdec Securities. He is a member of the NASA Advisory
Council. Mr. Hanisee is a director of EDO Corporation.
Director since 2005
Dr. Roche served as the Secretary of the U.S. Air
Force from 2001 to 2005. From 1984 to 2001, Dr. Roche held
several executive positions with Northrop Grumman Corporation, a
global defense company, including Corporate Vice President and
President of its Electronic Sensors and Systems Sector. From
1983 to 1984, Dr. Roche was Democratic Staff Director of
the U.S. Senate Committee on Armed Services. Dr. Roche
served in the U.S. Navy for 23 years and retired with
the rank of captain in 1983. As a naval officer, his assignments
included Principal Deputy Director of the U.S. State
Department’s Policy Planning Staff and Senior Professional
Staff Member of the U.S. Senate Select Committee on
Intelligence. He commanded the USS Buchanan, a guided missile
destroyer, and was awarded the Arleigh Burke Fleet Trophy in
1974 for the most improved combat unit in the Pacific Theater.
Dr. Roche is a director of TechTeam Global, Inc.
Director since 1983
Dr. Schmitt has served in various capacities as a business
and technical consultant since 1982. From 1977 through 1982,
Dr. Schmitt was a U.S. Senator from New Mexico, during
which time he chaired the Senate Science, Technology and Space
Subcommittee, which oversees all non-military space-related
research and development
programs of the U.S. Government. From 1974 to 1975, he was
Assistant Administrator for Energy Programs for NASA. From 1965
to 1973, he was a NASA astronaut. As Lunar Module Pilot on
Apollo 17 in 1972, he explored the Moon’s surface.
Dr. Schmitt currently chairs the NASA Advisory Council.
Director since 1992
Mr. Thompson, who is not related to David W. Thompson, has
been Vice Chairman, President and Chief Operating Officer of
Orbital since April 2002, and was President and Chief Operating
Officer since October 1999. He was Acting General Manager of
Orbital’s Transportation Management Systems Group from 2001
until August 2003. From 1993 until October 1999,
Mr. Thompson served as Executive Vice President and General
Manager of Orbital’s Launch Systems Group.
Mr. Thompson was Executive Vice President and Chief
Technical Officer of Orbital from 1991 to 1993. He was Deputy
Administrator of NASA from 1989 to 1991. From 1986 until 1989,
Mr. Thompson was Director of the Marshall Space Flight
Center at NASA. Mr. Thompson was Deputy Director for
Technical Operations at Princeton University’s Plasma
Physics Laboratory from 1983 through 1986. Before that, he had a
20-year
career with NASA at the Marshall Space Flight Center.
Director since 1982
Mr. Webster is a co-founder of Orbital. Mr. Webster
served as Senior Vice President, Special Projects of Orbital
from May 2001 until his retirement in July 2002. From 1998 until
April 2001, Mr. Webster was Chairman of the Board and Chief
Executive Officer of ORBCOMM Global, L.P., a satellite services
company formerly affiliated with Orbital. From 1993 to 1997,
Mr. Webster served in various consulting capacities with
Orbital. He served as President of Orbital’s Space Data
Division from 1990 until 1993, and Executive Vice President of
that Division from 1989 to 1990. Mr. Webster was
Orbital’s Senior Vice President of Marketing and Vice
President of Marketing from Orbital’s inception in 1982
until 1989. Previously, he held technical and management
positions at Advanced Technology Laboratories and Litton
Industries, Inc.
CORPORATE
GOVERNANCE
The Board of Directors has adopted Corporate Governance
Guidelines to assist the Board in exercising its
responsibilities and in furtherance of its continuing efforts to
enhance its corporate governance. The Corporate Governance
Guidelines reflect the Board’s commitment to monitoring the
effectiveness of policy and decision-making at the Board and
management level and ensuring adherence to good corporate
governance principles, with the goal of enhancing stockholder
value over the long term.
A copy of the Corporate Governance Guidelines is posted on the
“Investor Relations/Corporate Governance” page of our
website at www.orbital.com and printed copies are
available free of charge by request to our Investor Relations
Department either by mail at our corporate headquarters, by
telephone at
(703) 406-5543
or by e-mail
at investor.relations@orbital.com.
The Board of Directors has adopted a Code of Business Conduct
and Ethics that applies to our directors, officers, employees
and independent contractors. In compliance with the applicable
rules of the SEC, special ethics obligations of our Chief
Executive Officer, Chief Financial Officer, Principal Accounting
Officer and Controller and other employees who perform financial
or accounting functions are set forth in the section of the Code
of Business Conduct and Ethics entitled Special Ethics
Obligations of Employees with Financial Reporting
Obligations. We intend to satisfy the disclosure
requirements under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), regarding an amendment
to, or a waiver from, our Code of Business Conduct and Ethics by
posting such information on our website at
www.orbital.com. There have not been any
waivers of the Code of Business Conduct and Ethics relating to
any of our directors or officers in the past year.
A copy of the Code of Business Conduct and Ethics is posted on
the “Investor Relations/Corporate Governance” page of
our website at www.orbital.com and printed copies are
available free of charge by request to our Investor Relations
Department either by mail at our corporate headquarters, by
telephone at
(703) 406-5543
or by e-mail
at investor.relations@orbital.com.
INFORMATION
CONCERNING THE BOARD AND ITS COMMITTEES
The NYSE rules require that a majority of our Board of Directors
shall be independent, and define independence based on criteria
relating to the current or historical relationship between
Orbital and each individual director. The Corporate Governance
Guidelines, which are available on our website at
www.orbital.com, provide that no director will qualify as
“independent” unless the Board affirmatively
determines that the director (1) has no material
relationship with Orbital (either directly or indirectly, such
as a partner, stockholder or officer of an organization that has
a relationship with Orbital) and (2) otherwise meets the
criteria for independence required by the NYSE. In making its
determination, the Board considered all relevant facts and
circumstances and applied the following standards:
The director will not be considered “independent” if:
The Board of Directors has affirmatively determined that
Ms. Obuchowski and Messrs. Crawley, Fink, Fisk,
Hanisee, Hermann, Kadish, Roche, Salizzoni, Schmitt and Webster
are “independent,” and that none of these directors
has a material relationship with us. This determination was
based on the fact that none of these individuals, their
immediate family members or any organizations with which these
individuals or any of their immediate family
members has been affiliated with us during at least the last
four years, has had any formal or informal relationship with us
whereby the individual or any of their immediate family members
or the affiliated organization has been entitled to or received
directly or indirectly any form of economic benefit from us
(other than their individual compensation as a director), or
otherwise has a relationship with us described in any of the
categories listed above.
Our Corporate Governance Guidelines provide that directors are
generally ineligible to stand for election if they will have
attained age 75 by the date of our annual meeting of
stockholders at which such election will be held. Directors who
were 75 or older on the date the policy was adopted are not
affected. Accordingly, this policy does not apply to Daniel J.
Fink.
We have a lead independent director (“Lead Independent
Director”) who is nominated by the Corporate Governance and
Nominating Committee and approved by the non-management members
of the Board for a two-year term. In January 2007, Robert J.
Hermann was reappointed as the Lead Independent Director for a
two-year term.
Consistent with the NYSE rules, our non-management directors,
who are also independent directors, meet in regularly scheduled
executive sessions, at least once a year, without management.
The Lead Independent Director presides over all executive
sessions of non-management directors or independent directors.
Stockholders or other interested parties may communicate
directly with the Lead Independent Director, the full Board, the
non-management directors as a group or the independent directors
as a group, by writing to “Lead Independent Director,
Orbital Sciences Corporation, 21839 Atlantic Boulevard, Dulles,
Virginia 20166, Attn: General Counsel.” The Lead
Independent Director will review all communications and report
on all of them to the full Board, the non-management directors
or the independent directors, as applicable. Complaints or
concerns regarding our accounting, internal accounting controls
or auditing matters will be referred directly to the Audit and
Finance Committee and will be investigated in the ordinary
course by the committee or its designee.
Our Board of Directors has adopted a written Policy and
Procedures for Related Person Transactions (“Related Person
Transactions Policy”) in order to ensure that all related
person transactions are properly reviewed and fully disclosed in
accordance with SEC and NYSE rules.
The Related Person Transactions Policy covers any transaction,
arrangement or relationship, or any series of similar
transactions, arrangements or relationships, in which
(1) the aggregate amount involved will or may be expected
to exceed $120,000 in any calendar year, (2) the company is
a participant, and (3) any “related person,” as
such term is defined by the regulations promulgated under the
Exchange Act, has or will have a direct or indirect interest (a
“Related Person Transaction”).
Under the Related Person Transactions Policy, all material
information regarding a Related Person Transaction must be
presented by management to the Corporate Governance and
Nominating Committee for its review. All Related Person
Transactions are also required to be disclosed to the full
Board. The Corporate Governance and Nominating Committee, in its
discretion, either approves, ratifies or rejects the transaction
or refers the transaction to the full Board or other appropriate
Board committee consisting of independent directors. Waivers or
exceptions to the Related Person Transactions Policy may be
granted by the Corporate Governance and Nominating Committee or
the full Board. During 2006, we did not engage in any Related
Person Transaction.
Nothing in the Related Person Transactions Policy prohibits the
approval or ratification of any transaction that is approved in
accordance with the provisions of the Delaware General
Corporation Law.
Our
Committees
Our Board has four standing committees: the Audit and Finance
Committee; the Corporate Governance and Nominating Committee;
the Human Resources and Compensation Committee; and the Markets
and Technology Committee. Each committee operates pursuant to a
written charter, copies of which are posted on the
“Investor Relations/Corporate Governance” page of our
website at www.orbital.com and printed copies are
available free of charge by request to our Investor Relations
Department either by mail at our corporate headquarters, by
telephone at
(703) 406-5543
or by e-mail
at investor.relations@orbital.com.
Board membership on the committees is as follows:
Our Audit and Finance Committee (the “Audit
Committee”) held 14 meetings during 2006. In accordance
with the applicable NYSE and SEC rules, all of its members are
independent. The Board has determined that Messrs. Hanisee
and Salizzoni are each an “audit committee financial
expert,” as such term is defined by the regulations
promulgated under the Exchange Act, and that they have the
accounting and related financial expertise within the meaning of
the listing standards of the NYSE. In accordance with the terms
of our Audit Committee’s charter, none of the members of
the Audit Committee serves on the audit committees of more than
three public companies, including our company.
The Audit Committee’s responsibilities and duties are
detailed in its charter, and include:
Our Corporate Governance and Nominating Committee (the
“Governance Committee”) held three meetings during
2006. In accordance with the applicable NYSE rules, all of its
members are independent.
The Governance Committee’s responsibilities and duties are
detailed in its charter, and include:
The Governance Committee will seek to identify director nominees
based on input provided by a number of sources, including
(1) Governance Committee members, (2) other directors
of the company and (3) our stockholders. The Governance
Committee also has the authority to consult with or retain
advisers or search firms to assist in the identification of
qualified director nominees. We do not currently, and did not
during 2006, employ a search firm or pay a fee to any other
third party to locate qualified director nominees.
Once a director nominee has been identified, the Governance
Committee will then evaluate such nominee in light of his or her
qualifications and credentials and any additional factors that
it deems necessary or appropriate. At a minimum, director
nominees must possess such competencies, expertise and knowledge
to enable the Board as a whole to possess the expertise
necessary to perform its responsibilities in an efficient and
effective manner. In evaluating the suitability of individual
director nominees, the Board takes into account various factors,
including professional experience, understanding of our business
environment and the industry sector(s) in which we compete,
educational background, integrity, ability to make analytical
inquiries and willingness to devote adequate time and resources
to diligently perform Board duties.
It is the Governance Committee’s policy to consider any
suggestions for director nominees received from a stockholder.
We have established the following procedures for stockholders to
submit director nominees for consideration at our annual
meeting. The proposal must be delivered to us and contain the
information required to be included in accordance with the
requirements set forth in Section 1.6 of our Amended and
Restated Bylaws and any applicable rules or regulations. The
proposal should be addressed to “General Counsel and
Corporate Secretary, Orbital Sciences Corporation, 21839
Atlantic Boulevard, Dulles, Virginia 20166.” The Governance
Committee will evaluate director nominees submitted by
stockholders in the same manner it evaluates nominees
recommended by other sources, as set forth above.
Our Human Resources and Compensation Committee (the
“Compensation Committee”) held eight meetings during
2006. In accordance with the applicable NYSE rules, all of its
members are independent.
The Compensation Committee’s responsibilities and duties
are detailed in its charter, and include:
David W. Thompson, our Chairman and Chief Executive Officer,
makes recommendations to the Compensation Committee regarding
salary, equity award grants and annual cash incentive awards to
be paid to our executive officers. With respect to our
Management Incentive Plan, or “MIP” (which is
described in detail in “Executive Compensation —
Compensation Discussion and Analysis” on page 14), in
addition to input from Mr. Thompson, managers of our
business units, our Chief Financial Officer and our President
and Chief Operating Officer make recommendations with respect to
appropriate performance metrics and targets. Based in part on
these recommendations, the Compensation Committee deliberates
on, approves and then establishes levels of compensation and the
MIP performance targets for the upcoming fiscal year (with the
exception of base salary, which the full Board approves upon the
recommendation of the Compensation Committee).
With respect to the MIP, in the first quarter of each fiscal
year, the Compensation Committee meets to discuss, with input
from Mr. Thompson, whether and to what extent the targets
established in the previous year were attained. If the targets
were attained, the Compensation Committee approves the annual
cash incentive award to be paid to the applicable executive
officer.
Our Markets and Technology Committee held four meetings during
2006. The Markets and Technology Committee’s
responsibilities and duties are detailed in its charter, and
include:
In 2006, the Board created a special committee chaired by James
G. Roche and including Lennard A. Fisk and Harrison H. Schmitt
to conduct a review of our stock option and restricted stock
unit grants and related procedures (the “Special
Committee”). The Special Committee held seven meetings
during 2006. Upon final Board consideration of the matters
covered by the Special Committee review, the Special
Committee’s work has been concluded.
During 2006, the Board held 13 meetings. Each incumbent director
attended at least 75% of all meetings of the Board and
committees of which he or she was a member.
It is the Board’s policy that all directors should attend
our annual meeting. Thirteen of our 14 directors then in
office attended the 2006 annual meeting held on April 27,
2006.
Director
Compensation
The following table sets forth compensation earned, awarded or
paid to our non-employee directors in connection with their
Board service during 2006.
The Governance Committee, pursuant to its charter, periodically
assesses the appropriateness of the form and amount of director
compensation and makes recommendations to the full Board
concerning such compensation. The Governance Committee may
delegate this authority under its charter to subcommittees as it
deems appropriate and in the best interest of the company and
its stockholders, provided that, to the extent required by
applicable rules and regulations, such subcommittees are
composed entirely of independent directors and have published
committee charters.
As part of its assessment of director compensation, the
Governance Committee conducts a review of director compensation
programs of certain peer companies, including the combination of
cash and equity-based
compensation. The Governance Committee also discusses
non-employee director compensation with the Chairman and Chief
Executive Officer and takes into account his recommendations.
After evaluating the benchmarking data and recommendations of
the Chairman and Chief Executive Officer, the Governance
Committee recommended to the Board a modest increase in the
annual retainer to be paid to non-employee directors in 2006.
The Compensation Committee has not engaged compensation
consultants, including in 2006, to provide advice with respect
to the amount or form of director compensation. The full Board
approves all director compensation.
The following is a description of the compensation arrangements
with our non-employee directors for 2006:
During 2006, non-employee directors had the option to elect to
receive all or part of their retainers and fees in the form of
restricted common stock issued under Orbital’s 1997 Stock
Option and Incentive Plan (the “1997 Option Plan”).
The number of shares of stock issued in lieu of cash was
calculated based on the closing price of our common stock on the
date of the award, which is the first Board meeting of the year
in the case of retainers and the date of the relevant meeting in
the case of meeting fees. During 2006, Messrs. Fink, Fisk,
Hanisee, Hermann and Salizzoni elected to receive all or part of
their annual retainer(s) in the form of restricted common stock
in the amounts of $16,000, $32,000, $18,000, $47,000 and
$32,000, respectively. Messrs. Fisk, Hanisee and Hermann
also elected to receive their meeting fees in the form of
restricted common stock in the amounts of $16,750, $13,250 and
$17,500, respectively. The awards of restricted stock vest in
their entirety on January 25, 2008.
On January 3, 2006, each non-employee director was granted
5,000 common stock options with an exercise price of
$12.98 per share. All of these option grants vested in
their entirety on January 3, 2007. This grant was pursuant
to the 1997 Option Plan which previously provided that on the
first business day in January, each non-employee director
receives an automatic annual grant of 5,000 options to purchase
common stock at an exercise price equal to the fair market value
on that date and that fully vest one year from the date of
grant. In 2006, the Board decided, effective in 2007, to
eliminate this automatic option grant and replace it with an
automatic grant of restricted stock units worth $40,000 on the
second business day of each calendar year based on the closing
price of our common stock on such grant date.
During 2006, we also matched non-employee directors’
purchases of up to $10,000 worth of common stock in the open
market during the calendar year with a grant of restricted
common stock under the 1997 Option Plan. The number of shares of
restricted common stock granted is equal to the dollar value of
the non-employee director’s stock purchase in any given
calendar quarter divided by the average closing price of our
common stock during that calendar quarter. The grant vests in
its entirety two years from the date of grant. In 2006, we
granted an aggregate of 2,811 shares of restricted common
stock under this program to Ms. Obuchowski (706) and
Messrs. Crawley (702), Hermann (703) and Roche (700).
In 2006, the Board decided, effective in 2007, to eliminate this
stock purchase matching program.
All directors also are reimbursed for
out-of-pocket
expenses in connection with Board service and for
out-of-pocket
expenses incurred by their respective spouses when traveling
with the director in connection with Board service for up to one
trip per year.
The following Compensation Discussion and Analysis provides
information regarding the compensation program in place for our
Chief Executive Officer (“CEO”), Chief Financial
Officer (“CFO”) and our three other most
highly-compensated executive officers during 2006. We refer to
these five individuals in this proxy statement as the
“Named Executive Officers.” This section includes
information regarding, among other things, the objectives of our
compensation program, the achievements that our compensation
program is designed to reward, the elements of our compensation
program (including the reasons why we pay each element and how
we determine the amounts for each element that we pay) and how
each element fits into our overall compensation objectives. The
Compensation Committee has responsibility for overseeing the
compensation paid to all of our executive officers, including
the Named Executive Officers.
Our overall compensation objectives are premised on the
following three fundamental principals, each of which are
discussed below: (1) a significant portion of executive
compensation should be performance-based, tied to the
achievement of certain financial and operational objectives;
(2) the financial interests of our senior management and
our stockholders should be linked; and (3) executive
compensation should be structured so that we can compete to
hire, motivate and retain top level executives in our industry.
A major thrust of our compensation program is our belief that a
significant amount of executive compensation should be
performance-based. In other words, our compensation program is
designed to reward superior performance, and we believe that our
executive officers should feel accountable for the performance
of our business and their individual performance. In order to
effect this objective, we have structured our compensation
program so that incentive compensation is tied, in large part,
directly to company-wide and individual performance. For
example, as discussed specifically below, annual cash incentive
awards are based on, among other things, pre-determined
corporate financial performance metrics and operational targets.
Furthermore, we have a policy of rewarding special cash bonuses
to individuals in recognition of exceptional achievement or
effort. The specific performance metrics used for determining
annual cash incentive awards are discussed on page 15 under
the caption “Elements of Our Compensation
Program — Annual Cash Incentive Awards and Special
Cash Bonuses.”
We believe that executive compensation and stockholder interests
should be linked, and our compensation program is designed so
that the financial interests of our executive officers are
aligned with the interests of our stockholders. We accomplish
this objective in a couple of ways. First, as noted above,
payments of annual cash incentive awards are based on, among
other things, pre-determined financial performance metrics and
operational targets that, if achieved, we believe enhance the
value of our common stock.
Second, a significant portion of total compensation paid to our
executive officers is paid in the form of equity to further
align the interests of our executive officers and our
stockholders. In this regard, our executive officers are subject
to the downside risk of a decrease in the value of their
compensation in the event that the price of our common stock
declines. For example, as discussed specifically below, in 2006,
a portion of the compensation paid to the Named Executive
Officers was in the form of restricted stock units, or
“RSUs,” which represent the right to receive shares of
our common stock subject to a vesting schedule. We believe that
RSUs, which vest with the passage of time, provide meaningful
long-term incentives that are directly related to the
enhancement of stockholder value. RSU awards are intended to
incentivize executive officers to work towards achieving
operational
and financial goals that management believes ultimately will be
reflected in the value of our common stock. In addition, the
time-vesting schedule of RSU awards further the goal of employee
retention.
We develop and manufacture small rockets and space systems for
commercial, military and civil government customers. We believe
that our industry is highly specialized. Stockholders are best
served when we can attract and retain talented executives with
compensation packages that are competitive but fair. Therefore,
we strive to create a compensation package for executive
officers that delivers compensation that is comparable to the
total compensation delivered by certain peer companies with
which we compete for executive talent.
The elements of our compensation program are the following: base
salary, annual cash incentive awards and special cash bonuses,
equity-based compensation, severance and termination payments,
and certain other benefits. We discuss in detail below each
element, including why we choose to pay each element and how we
determine the amount to pay for each element.
We pay base salary because we feel it is important to provide
our executive officers with a level of assured cash
compensation. Base salary is designed to recognize particularly
the experience, skills, knowledge and responsibilities required
of the executive officers in their roles and our overall
operating and financial performance for the prior fiscal year.
In early 2006, the Compensation Committee reviewed and discussed
with David W. Thompson, our Chairman and Chief Executive
Officer, proposed 2006 salary levels for executive officers,
including the Named Executive Officers (other than Carl A.
Marchetto, who joined the company in September 2006). Proposed
increases were based on individual achievements and performance
during 2005, as well as our overall growth and profitability.
The Compensation Committee also compared the salary levels of
our CEO, President and Chief Operating Officer (“COO”)
and CFO with the most current publicly available salaries for
similarly situated executives at a group of companies in the
aerospace, defense and government information technology
industries. This “peer group” included
20 companies with annual revenues ranging from
$60 million to $52 billion. Companies included in the
group with revenues that are roughly comparable to ours included
EDO Corporation, Trimble Navigation, XM Satellite, ManTech
International and SRA International.
Based on the recommendation of the Compensation Committee, the
full Board (other than management directors) approved executive
salaries for 2006. Our Named Executive Officers’ base
salary increased by an average of 4.5% over 2005 base salary
levels. The base salary paid to each of our Named Executive
Officers for 2006 is set forth in the Summary Compensation Table
on page 18.
In September 2006, Carl A. Marchetto joined Orbital as Executive
Vice President and General Manager, Space Systems Group. His
base salary was approved by the Compensation Committee and was
determined based on the salary of his predecessor at Orbital as
well as his salary at his prior employment, and was part of an
employment offer that was intended to be competitive and
attractive.
Consistent with our overall compensation objectives of linking
compensation to performance, aligning executive compensation
with stockholder interests and attracting and retaining top
level executive officers in our industry, we pay annual cash
incentive awards pursuant to our MIP. MIP award opportunities
are established as a percentage of base salary. For 2006, our
CEO had a target bonus of 90% of base salary, and the COO and
CFO each had target bonuses of 80% of base salary. The other
Named Executive Officers had target bonuses of 50% of base
salary. The MIP objectives and performance assessments are
presented by the CEO to the Compensation Committee for approval.
Annual cash incentive awards are intended to reward individual
and company-wide performance during the year, while also
emphasizing individual accountability. They can, therefore, be
highly variable depending on the individual and over time. The
MIP award may be adjusted upward or downward based on various
factors, as discussed below, with the cap being 125% of the
target bonus amount.
The MIP objectives are intended to be challenging but
achievable. They are based on actual performance compared to
pre-determined financial and operational performance targets,
which are weighted depending upon whether the employee is a
member of a business unit or the corporate staff. For the CEO,
CFO and COO, the MIP award calculation places more emphasis on
the company’s annual consolidated financial results
(weighted 75%) than on operational performance (weighted 25%),
which is consistent with the executives’ responsibilities
with respect to managing the company’s overall performance.
For business unit leaders, including Ronald J. Grabe and Carl A.
Marchetto, the MIP award calculation places more emphasis on the
business unit’s performance (financial 45%; operational
25%) while also taking into account the company’s annual
consolidated financial results (weighted 30%).
The financial objectives are set at the beginning of each fiscal
year, including 2006, on a consolidated basis and for each
business unit. The financial objectives are based on the
year’s internally-developed financial plan. In 2006, the
company’s financial performance was measured based on
established targets for each of free cash flow (weighted 25%),
pre-tax net income (weighted 30%), revenues (weighted 25%) and
firm backlog (weighted 20%). Each business unit’s financial
performance was measured based on established targets for each
of free cash flow (weighted 25%), operating income (weighted
30%), revenues (weighted 25%) and firm backlog (weighted 20%).
If any particular financial objective is not met, then the award
component of the MIP that is tied to financial performance is
adjusted downward proportionately. For 2006, the average of the
full-year financial performance score across all business units
was 112% of the pre-established financial targets.
The operational objectives for the first part of 2006 were
established at the beginning of that year, and the operational
objectives for the second part of the year were established in
the middle of 2006. The CEO takes into consideration input from
operating business group leaders, the COO and the CFO to develop
the objectives and to also evaluate achievement of the
operational goals which are then reviewed with and discussed by
the Compensation Committee. Corporate operational performance is
measured based on the level of achievement of corporate-level
goals relating to areas such as company-wide technical and
business operations. Each business unit’s operational
performance is measured based on the level of achievement of
specific business-oriented goals, such as successful mission
performance, keeping programs on schedule and within budget and
winning new business. Any mission failure results in a
“0” score with respect to the mission performance
operational metric, while scores related to other metrics (e.g.,
winning new business, maintaining program schedules and budgets)
may be proportionally reduced for less than full achievement. In
2006, the average score for first-half and second-half
operational performance across all business units was 89% and
94%, respectively.
As noted in the “Non-Equity Incentive Plan
Compensation” column of the Summary Compensation Table on
page 18, based on the metrics described above, the Named
Executive Officers received the following MIP awards with
respect to 2006 performance: David W. Thompson, $520,982;
Garrett E. Pierce, $441,011; James R. Thompson, $420,050; Ronald
J. Grabe, $180,014; and Carl A. Marchetto, $91,875. In 2006,
Mr. Marchetto’s annual target bonus of 50% of his base
salary was prorated at 50% due to the fact that he joined the
company in September.
In addition, we have a policy of periodically awarding special
cash bonuses on a discretionary basis to an individual,
generally in recognition of exceptional achievement or effort
during the year. During 2006, we paid to Ronald J. Grabe a
$20,000 special cash bonus. Mr. Grabe has relocated to
Chandler, Arizona on a long-term assignment at Orbital’s
request. See “Additional Information with Respect to the
Summary Compensation Table and Grants of Plan-Based Awards
Table” on page 21 for more information on
Mr. Grabe’s executive relocation agreement.
Prior to 2005, our equity-based compensation was generally
awarded in the form of stock options. In 2005, the Compensation
Committee reviewed our equity-based award practices in light of
recent market trends and our
anticipated adoption of the Financial Accounting Standards Board
Statement of Financial Accounting Standards No. 123R,
Share-Based Payment (“FAS 123R”) in January 2006.
Based on its review, the Compensation Committee determined that
periodic RSU awards would replace stock option awards as our
primary form of equity-based compensation.
Our equity-based compensation program is intended to align the
interests of our executive officers with those of our
stockholders, and to focus our executives on the achievement of
long-term performance objectives that are aligned with our
corporate strategy, thereby establishing a direct relationship
between compensation and our operating performance. In this
regard, our executive officers are subject to the downside risk
of a decrease in the value of their compensation in the event
that the price of our common stock declines. The long-term
vesting provisions of our RSU awards also further the goal of
executive retention.
RSU awards to eligible employees, including the Named Executive
Officers, are generally made on an annual basis. RSU awards must
be approved by the Compensation Committee or the Board. In
general, the number of RSUs awarded to each executive officer is
determined subjectively based on a number of factors, including
the officer’s degree of responsibility, general level of
performance, ability to affect future company performance,
salary level and recent noteworthy achievements, as well as the
previous year’s award. In 2006, the Compensation Committee
considered the fact that Orbital’s stock price was higher
than it had been at the time of the 2005 grant and, accordingly,
the aggregate RSU award in 2006, including to the Named
Executive Officers (other than Carl A. Marchetto), was less than
the aggregate award in 2005. Mr. Marchetto’s award,
which is higher than our typical executive RSU award and also
vests in a shorter period of time, was intended to be an
inducement for him to accept our offer of employment.
Based on the considerations described above, the Named Executive
Officers received RSU awards in 2006 as follows: David W.
Thompson, 30,000 units; Garrett E. Pierce, 15,000 units; James
R. Thompson, 15,000 units; Ronald J. Grabe, 10,000 units; and
Carl A. Marchetto, 50,000 units. For a description of the
material terms of the awards, please see footnotes 3 and 5
of the Grants of Plan-Based Awards table on
pages 20-21.
In connection with the company’s review during 2006 of its
historic stock option and RSU grants and related procedures,
David W. Thompson has informed the Compensation Committee that
he will forego his annual 2007 RSU grant, if any.
We have entered into change of control agreements with each
Named Executive Officer, and have entered into an Executive
Employment Agreement with Garrett E. Pierce, our Vice Chairman
and Chief Financial Officer, pursuant to which he is entitled to
certain severance benefits. For a description of the material
terms and conditions of these agreements, see the discussion in
“Potential Payments Upon Termination or Change of
Control” on page 26.
We believe that our change of control and severance agreements
are consistent with our overall compensation objective of
attracting, motivating and retaining talented top level
executives, and offering a compensation package that is fair.
These agreements are intended to retain the executives and
provide continuity of management in the event of an actual or
threatened change of the control of our company and ensure that
the executive’s compensation and benefits expectations
would be satisfied in such event.
Our change of control agreements have a “double
trigger,” meaning that the executive officer’s right
to receive severance payments and benefits arises only if there
is both a change of control and termination of employment within
a specified time period. A double trigger for severance was
selected because unless the Named Executive Officer’s
employment is terminated in connection with the change of
control, a Named Executive Officer’s salary and bonus would
continue to be paid from the acquiring entity, which is what the
severance payment is based on and intended to replace. For a
description and quantification of the estimated amounts that the
Named Executive Officers would receive upon a change of control
and under certain other termination scenarios, see the
discussion under “Potential Payments Upon Termination or
Change of Control” on page 26.
We periodically provide certain benefits to our executive
officers that we feel are important to attract and retain
talented executives. These benefits include the following:
reimbursement of relocation and living expenses, tax
gross-ups
related to long-term and supplemental disability premiums, tax
gross-ups
related to relocation allowances, and company contributions to
our 401(k) plan (such contributions are available to all
eligible employees). In addition, the company reimburses James
R. Thompson, who resides in Huntsville, Alabama, for travel
expenses (including airfare, lodging, car rental and meals)
associated with his travel between our Huntsville and Dulles
offices. Footnote 5 to the Summary Compensation Table on
page 19 describes certain perquisites that were provided to
our Named Executive Officers during 2006.
We do not offer defined benefit pension or supplemental
executive retirement plans to any of our employees.
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis required by
Item 402(b) of
Regulation S-K
with management and, based on such review and discussions, the
Compensation Committee recommended to the Board that the
Compensation Discussion and Analysis be included in this proxy
statement.
The foregoing report has been furnished by the Compensation
Committee members:
Notwithstanding anything to the contrary set forth in any of
our filings under the Securities Act of 1933 or the Exchange Act
that might incorporate SEC filings, in whole or in part, the
foregoing Human Resources and Compensation Committee Report will
not be incorporated by reference into any such filings.
Summary
Compensation Table
The following table sets forth a summary of all compensation
earned, awarded or paid in the fiscal year ended
December 31, 2006 to the Named Executive Officers.
Mr. Marchetto’s bonus is a signing bonus given in
connection with his commencement of employment with the company
in 2006. See “Additional Information with Respect to the
Summary Compensation Table and Grants of Plan-Based Awards
Table” on page 21 for more information.
All other compensation for Mr. Pierce includes $1,480 as
reimbursement for executive long-term disability premiums and
$1,081 tax
gross-up
payments related to such reimbursement, $2,940 as reimbursement
for supplemental disability premiums and $1,491 tax
gross-up
payments related to such reimbursement, $5,940 life insurance
premiums paid by the company, and aggregate company
contributions under our 401(k) and deferred compensation plans
of $17,357.
All other compensation for Mr. J.R. Thompson includes
$1,480 as reimbursement for executive long-term disability
premiums and $1,048 tax
gross-up
payments related to such reimbursement, $17,272 life insurance
premiums paid by the company, and aggregate company
contributions under our 401(k) and deferred compensation plans
of $16,632. Mr. J.R. Thompson resides in Huntsville,
Alabama. All other compensation for Mr. J.R. Thompson also
includes aggregate travel expenses (including airfare, lodging,
car rental and meals) associated with his travel between our
Huntsville and Dulles offices of $81,280.
All other compensation for Mr. Grabe includes $1,480 as
reimbursement for executive long-term disability premiums and
$1,048 tax
gross-up
payments related to such reimbursement, $5,294 life insurance
premiums paid by the company, aggregate company contributions
under our 401(k) and deferred compensation plans of $14,971,
$52,480 as reimbursement for relocation expenses and $37,214 tax
gross-up
payments related to such reimbursement, $43,200 tax
gross-up
payments related to Mr. Grabe’s special monthly cash
bonus, and $18,563 as reimbursement for excise tax liability
incurred as a result of Mr. Grabe’s exercise of
certain stock options.
All other compensation for Mr. Marchetto includes $324 as
reimbursement for executive long-term disability premiums and
$227 tax
gross-up
payments related to such reimbursement, $553 life insurance
premiums paid by the company, and $21,060 as reimbursement for
relocation expenses and $16,083 tax
gross-up
payments related to such reimbursement.
Grants of
Plan-Based Awards
The following table sets forth information concerning the grant
of plan-based awards made to each Named Executive Officer in the
fiscal year ended December 31, 2006.
Additional
Information With Respect to the Summary Compensation
Table and Grants of Plan-Based Awards Table
We have entered into an executive relocation agreement with
Ronald J. Grabe as discussed in more detail below. In addition,
we have entered into change of control agreements with each
Named Executive Officer and an agreement with Garrett E. Pierce,
pursuant to which each officer could receive certain severance
benefits. See “Potential Payments Upon Termination or
Change of Control” on page 26 for information
regarding these agreements.
In 2003, we entered into an executive relocation agreement with
Mr. Grabe in connection with his temporary relocation
assignment in Chandler, Arizona. Under the terms of the
agreement, Mr. Grabe receives a $5,000 special monthly cash
bonus and a related tax
gross-up
payment for each month Mr. Grabe is employed at
Orbital’s request in Chandler, Arizona. The agreement also
provides that we reimburse Mr. Grabe for certain relocation
expenses. The agreement terminates when Mr. Grabe’s
relocation assignment is over or Mr. Grabe is no longer
employed as one of our executive officers. In 2005, the
agreement was amended to provide for the payment of a $65,000
special cash bonus on June 1, 2006 and the reimbursement of
certain expenses associated with the disposition of
Mr. Grabe’s residence in Virginia.
In 2006, we made several commitments regarding compensation and
benefits to Carl A. Marchetto in connection with our offer of
employment to him. His compensation package provided for a 2006
annual base salary of $350,000 and participation in the MIP with
an annual target bonus equal to 50% of his base salary. It
further provided that Mr. Marchetto’s 2006 bonus under
the MIP would be prorated at 50% because he joined the company
later in the year. Mr. Marchetto also received a grant of
50,000 RSUs under our 1997 Stock Option and Incentive Plan that
vest equally on the first and second anniversaries of his
commencement of employment with us. In addition,
Mr. Marchetto received a $200,000 signing bonus payable in
2006. Mr. Marchetto is obligated to repay a portion or all
of this bonus if his employment with us terminates prior to the
second anniversary of his commencement of employment for any
reason other than disability, death or good reason, as those
terms are defined in his change of control agreement. We also
agreed to provide for the reimbursement of reasonable moving and
relocation expenses for a one-year period, which include
transportation expenses for Mr. Marchetto and his immediate
family and certain expenses associated with the disposition and
purchase of his residence.
As discussed in “Compensation Discussion and
Analysis — Elements of Our Compensation
Program — Base Salary” on page 15, our Named
Executive Officers’ base salaries increased by an average
of 4.5% over 2005 base salary levels. These salaries are
reflected in the “Salary” column of the Summary
Compensation Table on page 18.
In 2006, James R. Thompson elected to receive approximately 25%
of his 2006 base salary, net of taxes, in the form of common
stock that is not subject to any vesting restrictions. For the
first and second quarters of the fiscal year ended
December 31, 2006, the amount of shares issued was equal to
(1) the dollar value of his net salary for each calendar
quarter, divided by (2) the average closing price of our
common stock during such calendar quarter. For the third and
fourth quarters of the fiscal year ended December 31, 2006,
the amount of shares issued was equal
to (1) the dollar value of his net salary for each calendar
quarter, divided by (2) the closing price of our common
stock on the grant date, such grant date being the last trading
day of the applicable quarter. The value of the common stock
received by Mr. Thompson was approximately equal to the
amount of salary foregone at his election, subject to any
de minimus difference due to the rounding of fractional
shares.
In addition, during 2006, each Named Executive Officer earned a
performance-based annual cash incentive award under the MIP,
which is reflected in the “Non-Equity Incentive Plan
Compensation” column of the Summary Compensation Table on
page 18. See “Compensation Discussion and
Analysis — Elements of Our Compensation
Program — Annual Cash Incentive Awards and Special
Cash Bonuses” beginning on page 15 for a detailed
discussion of the MIP and how 2006 bonuses under the MIP were
determined. In addition to the bonuses payable to Mr. Grabe
discussed above, he received a discretionary $20,000 bonus in
recognition of his long-term relocation to Chandler, Arizona.
With respect to equity grants during 2006,
Messrs. Thompson, Pierce, J.R. Thompson and Grabe
received grants of RSUs under our 2005 Stock Incentive Plan, and
Mr. Marchetto received a grant of RSUs under our 1997 Stock
Option and Incentive Plan. See footnotes 3 and 5 to the
Grants of Plan-Based Awards table on pages 20-21 for the
amounts, vesting schedule, and material terms of these RSU
awards. See “Compensation Discussion and
Analysis — Elements of Our Compensation
Program — Equity-Based Compensation” beginning on
page 16 for a discussion of our practices with respect to
equity grants.
In December 2006, we amended the exercise prices of certain
stock options previously granted to Messrs. J.R. Thompson
and Grabe with exercise prices below the fair market value per
share of our common stock on the grant measurement dates for
such options for accounting and tax purposes. To avoid certain
tax consequences under Section 409A of the Internal Revenue
Code, Messrs. J.R. Thompson and Grabe entered into
amendments with us to increase the exercise prices of these
stock options to reflect the fair market value per share on the
applicable grant measurement dates, and thus, no incremental
fair value resulted from the amended stock options. No other
terms and conditions of these stock options were amended.
Outstanding
Equity Awards at Fiscal Year-End*
The following table sets forth the outstanding equity awards for
each Named Executive Officer as of December 31, 2006.
The following table sets forth information concerning each
exercise of stock options and each vesting of stock for each
Named Executive Officer during the fiscal year ended
December 31, 2006.
None of the Named Executive Officers receive benefits under any
company plan that provides for specified retirement payments and
benefits, or payments and benefits that will be provided
primarily following retirement, including but not limited to any
tax-qualified defined benefit plan and supplemental executive
retirement plan, but excluding any tax-qualified defined
contribution plans and nonqualified defined contribution plans.
Our Nonqualified Management Deferred Compensation Plan provides
the Named Executive Officers and other key management and highly
compensated employees with the ability to set aside compensation
on a tax-deferred basis. This compensation can consist of monies
a Named Executive Officer elects to defer
and/or
discretionary contributions by us.
Under the plan, the Named Executive Officers may defer up to
100% of their base salaries and up to 100% of their bonuses
under the MIP. The Named Executive Officers need to make their
deferral elections by December 15 of each year to defer amounts
for the following year.
The Named Executive Officers have the right to have the amounts
credited to their plan account invested in one or more funds
made available by the plan administrator. The Named Executive
Officers select the investment allocation among the available
funds and may change these allocations on a daily basis by
contacting the plan administrator by phone or accessing their
plan account online through the plan administrator’s
website. The table below shows the funds available under the
plan and the annual rate of return for such funds for the
calendar year ended December 31, 2006, as reported by the
plan administrator.
Benefits under the plan will be distributed under the terms
elected by the Named Executive Officer. For each deferral year
and type of deferral, the Named Executive Officer may elect
either a future in-service withdrawal date or a distribution
upon a voluntary or involuntary termination of employment. The
Named Executive Officer can elect to receive the distributions
either as a lump sum payment or in annual installments. In the
event a Named Executive Officer dies while employed by us,
benefits will be paid to his beneficiaries in the same manner as
elected by such Named Executive Officer. Additionally, upon a
showing of an unforeseen financial hardship and with appropriate
approval from the Compensation Committee, a Named Executive
Officer may be allowed to access funds in his plan account
earlier than the elected distribution date. All of the Named
Executive Officers with account balances as of December 31,
2006 are fully vested under the plan.
The following table sets forth contributions, earnings,
withdrawals, distributions, and year-end balances under our
Nonqualified Management Deferred Compensation Plan for each
Named Executive Officer during the fiscal year ended
December 31, 2006.
Potential
Payments Upon Termination or Change of Control
We have entered into change of control agreements with each
Named Executive Officer. Our change of control agreements have a
“double trigger,” meaning that the executive
officer’s right to receive severance payments and benefits
arises only if there is both a change of control and termination
of employment within a specified time period. Upon a change of
control, each officer whose employment is terminated by us other
than for disability or “cause,” as defined in the
agreements, or who terminates his or her employment for
“good reason,” as defined in the agreements, within
24 months following such change of control, would receive a
lump sum equal to two times the sum of his or her annual base
salary, plus an amount equal to any bonus paid in the previous
year. In addition, all unvested amounts under our deferred
compensation plan would vest, all insurance benefits would
continue for 24 months and all stock options would be
repurchased by us at the difference between the exercise price
of the stock option and the higher of (1) the highest price
paid in the change of control transaction or (2) the then
current fair market value.
Under these agreements, a “change of control” is
generally defined as (1) the acquisition by an individual
or group of 30% or more of our common stock or the combined
voting power of our then outstanding voting securities entitled
to vote for directors, (2) within any 24-month period, the
persons who were our directors immediately prior to the
transaction shall cease to constitute a majority of our Board or
its successor, or (3) the consummation by us of a merger,
consolidation or similar business combination transaction, the
result of which is either (a) the stockholders of the
company prior to the transaction own less than 60% of the
surviving entity, (b) a person owns more than 20% of our
outstanding common stock, or (c) at least a majority of the
board members of the entity resulting from the transaction were
not members of the Board at the time the transaction was agreed
to.
Termination
Events under Change of Control Agreements
Disability. If the Named Executive
Officer’s employment is terminated due to disability
(generally defined as incapacity due to physical or mental
illness), the Named Executive Officer’s disability benefits
would be determined in accordance with our insurance and benefit
programs then in effect. Assuming a December 31, 2006
termination event for disability, the Named Executive Officers
would receive the following monthly payments for a period of
time depending on their age: David W. Thompson, $25,000; Garrett
E. Pierce, $25,000; James R. Thompson, $20,000; Ronald J. Grabe,
$20,000; and Carl A. Marchetto, $20,000.
Cause. The Named Executive Officers are not
entitled to receive any payments after the date of termination
for cause. “Cause” is generally defined as:
Good Reason or Without Cause. If the Named
Executive Officer is terminated by us without “cause”
or by the officer for “good reason,” and assuming a
December 31, 2006 termination event for either of these
reasons, payments would be as follows:
The definition of “cause” is described above.
“Good Reason” is generally defined as:
In 2000, we entered into an agreement with Garrett E. Pierce
which sets forth the severance benefits that Mr. Pierce
would receive from us in the event his employment is terminated
other than in the event of a change of control. The agreement,
as amended, provides that if Mr. Pierce’s employment
is terminated by us for disability, then (1) his benefits
shall be determined in accordance with our insurance and
benefits programs then in effect and (2) his stock options
shall continue to vest as scheduled for a
24-month
period following such termination and remain exercisable for the
rest of the originally scheduled term. If Mr. Pierce’s
employment is terminated for any reason other than for
disability or “cause,” as defined in the agreement, or
by Mr. Pierce for “good reason,” as defined in
the agreement, then Mr. Pierce would receive a lump sum
payment equal to two times the sum of his annual base salary,
plus the higher of (1) the sum of any bonuses paid or
payable to him for the
12-month
period immediately preceding the month of such termination, or
(2) the target bonus for the year of termination based on
the then current management incentive bonus plan. He would also
be reimbursed for all reasonable legal fees and expenses
incurred by him as a result of such termination. Also,
Mr. Pierce’s stock options would continue to vest and
his insurance benefits would continue for a
24-month
period following such termination.
Disability. If Mr. Pierce’s
employment is terminated due to disability (generally defined as
incapacity due to physical or mental illness), then
Mr. Pierce’s benefits would be determined in
accordance with our insurance and benefit programs then in
effect. Assuming a December 31, 2006 termination event for
disability, Mr. Pierce would receive monthly payments of
$20,000 for up to 42 months and $5,000 for up to
36 months.
Cause. After the date of termination for
cause, Mr. Pierce would only be permitted to exercise
vested stock options for 60 days. “Cause” is
generally defined in the same manner as described above in the
change of control agreements. As of December 31, 2006, all
of Mr. Pierce’s outstanding stock options were fully
vested. See the Outstanding Equity Awards at Fiscal Year-End
table on page 23 for a list of these stock options.
Good Reason or Without Cause. If
Mr. Pierce’s employment is terminated by us without
“cause” or by him for “good reason,” and
assuming a December 31, 2006 termination event for either
of these reasons, payments would be as follows:
In addition to the payments described above, in connection with
our Nonqualified Management Deferred Compensation Plan, in the
event that a Named Executive Officer dies while employed by us,
benefits under the plan will be paid to his or her beneficiaries
in the same manner elected by such Named Executive Officer.
Assuming a December 31, 2006 termination event for death,
payments would be as follows: David W. Thompson, $3,430,792;
Garrett E. Pierce, $51,114; James R. Thompson, $43,809; Ronald
J. Grabe, $75,375; and Carl A. Marchetto, $0.
We have entered into substantially identical indemnification
agreements with each of our directors, the Named Executive
Officers and with certain other officers and senior managers.
The agreements provide that we will, to the full extent
permitted by the Delaware General Corporation Law, as amended
from time to time, indemnify each indemnitee against all loss
and expense incurred by the indemnitee because he or she was, is
or is threatened to be made a party to any completed, pending or
threatened action, suit or proceeding by reason of the fact that
he or she was a director, officer, employee or agent of the
company or any of our affiliates, or because the company has a
right to judgment in its favor because of his or her position
with us or any of our affiliates. The indemnitee will be
indemnified so long as he or she acted in good faith and in a
manner reasonably believed by him or her to be in or not opposed
to our best interest. The agreements further provide that the
indemnification thereunder is not exclusive of any other rights
the indemnitee may have under our Restated Certificate of
Incorporation or any agreement or vote of stockholders and that
the Restated Certificate of Incorporation may not be amended to
adversely affect the rights of the indemnitee.
The Compensation Committee was comprised of Edward F. Crawley,
Daniel J. Fink, Robert J. Hermann, Ronald T. Kadish and Janice
I. Obuchowski during 2006. No member of the Compensation
Committee was an officer or employee of the company during
fiscal year 2006, nor did any member have a business
relationship with the company that is required to be disclosed
pursuant to the applicable SEC rules. No interlocking
relationship, as described in the applicable SEC rules, existed
between any member of the Compensation Committee and any member
of any other company’s board of directors or compensation
committee during 2006.
The Audit Committee is responsible for providing independent,
objective oversight of the company’s accounting functions
and internal controls. The Audit Committee is comprised of five
directors, each of whom is “independent” as defined by
the existing NYSE listing rules and SEC rules. Members of the
Audit Committee must also satisfy the independence requirements
of Section 10A(m)(3) of the Exchange Act.
Management is responsible for the company’s internal
controls and financial reporting process. The company’s
independent registered public accounting firm is responsible for
performing an independent audit of the company’s
consolidated financial statements in accordance with generally
accepted auditing standards and to issue a report thereon. The
Audit Committee’s responsibility is to monitor and oversee
these processes.
The Audit Committee has reviewed and discussed the audited
consolidated financial statements of the company for the fiscal
year ended December 31, 2006, with the company’s
management, and also has discussed with PricewaterhouseCoopers
LLP (“PwC”), the company’s independent registered
public accounting firm, the matters required to be discussed by
Statement on Auditing Standards No. 61, as amended by
Statement on Auditing Standards No. 90. The Audit Committee
has received both the written disclosures and the letter from
PwC required by Independence Standards Board Standard
No. 1, and has discussed with PwC that firm’s
independence.
Based on the Audit Committee’s discussions with management
and the company’s independent registered public accounting
firm, the Audit Committee recommended to the Board of Directors
of the company that the audited consolidated financial
statements of the company for the fiscal year ended
December 31, 2006, be included in the company’s Annual
Report on
Form 10-K
as filed with the SEC in March 2007.
The foregoing report has been furnished by the Audit Committee
members:
Notwithstanding anything to the contrary set forth in any of
our filings under the Securities Act of 1933 or the Exchange Act
that might incorporate SEC filings, in whole or in part, the
foregoing Audit and Finance Committee Report will not be
incorporated by reference into any such filings.
OWNERSHIP
OF COMMON STOCK
The table below sets forth certain information regarding our
stock-based holdings as of March 5, 2007 unless otherwise
indicated, by (1) each person known by us to own
beneficially more than 5% of our common stock, (2) each of
our directors and Named Executive Officers and (3) all
executive officers and directors as a group. Unless otherwise
indicated, each of the persons or entities listed below
exercises sole voting and investment power over the shares that
each of them beneficially owns.
PROPOSAL 2
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors recommends the ratification by the
stockholders of the appointment by the Board of PwC as our
independent registered public accounting firm for the fiscal
year ending December 31, 2007. PwC has served as our
independent registered public accounting firm since 1999. A
representative of PwC is expected to be present at the annual
meeting and will be available to respond to appropriate
questions and make such statements as he or she may desire. In
the event that the stockholders do not ratify the appointment of
PwC, the Board will consider the appointment of another
independent registered public accounting firm. The affirmative
vote of the holders of a majority of shares present in person or
represented by proxy at the meeting and entitled to vote with
respect to the matter will be required to approve
Proposal 2. Abstentions will be considered shares present
at the meeting entitled to vote, but since they are not
affirmative votes on the proposal, will have the same effect as
votes against the proposal. Broker non-votes will be counted
towards a quorum, but are not counted for any purpose in
determining whether the proposal has been approved.
The Board of Directors recommends that you vote FOR the
ratification of such appointment. Unless instructions are given
to the contrary, it is the intention of the persons named as
proxies to vote the shares to which the proxy is related FOR the
ratification of the appointment of PwC.
Stockholder proposals that are intended to be included in the
proxy statement and related proxy materials pursuant to
Rule 14a-8
of the rules promulgated under the Exchange Act for our 2008
annual meeting of stockholders must be received by us no later
than November 23, 2007 at our principal office located at
21839 Atlantic Boulevard, Dulles, Virginia 20166,
Attention: Corporate Secretary.
In addition, any stockholder who wishes to propose a nominee to
the Board of Directors or submit any other matter to a vote at a
meeting of stockholders (other than a stockholder proposal
included in our proxy materials pursuant to
Rule 14a-8
of the rules promulgated under the Exchange Act) must comply
with the advance notice provisions and other requirements of
Section 1.6 of our Amended and Restated Bylaws, which are
on file with the SEC and available on our website, and may be
obtained from us upon request. These notice provisions require
that recommendations for director nominees for the 2008 annual
meeting and any requests to submit any other matter to a vote of
stockholders must be received no earlier than December 21,
2007 and no later than January 20, 2008. If a stockholder
nomination or proposal is received before or after the range of
dates specified in the advance notice provisions, our proxy
materials for the next annual meeting of stockholders may confer
discretionary authority to vote on such matter without any
discussion of the matter in the proxy materials.
OTHER
MATTERS
Section 16(a) of the Exchange Act requires our officers and
directors and persons who beneficially own more than 10% of our
common stock to file reports of ownership and changes in
ownership on Forms 3, 4 and 5 with the SEC. Executive
officers, directors and stockholders beneficially owning more
than 10% of our common stock are required by SEC regulation to
furnish to us copies of all Forms 3, 4 and 5 they file.
Based solely on our review of the copies of such forms we have
received and written representations from the reporting persons,
we believe that all of our executive officers and directors
complied with the filing requirements applicable to them with
respect to all such transactions during fiscal year 2006.
The Board has appointed PwC as our independent registered public
accounting firm for the fiscal year ending December 31,
2007, subject to ratification by our stockholders at the annual
meeting.
For services rendered during or in connection with our fiscal
years indicated in the table below, we have received, or expect
to receive, invoices from PwC for the following fees:
The Audit Committee takes into consideration all fees charged by
the independent registered public accounting firm in its
assessment of PwC’s independence.
The Audit Committee has adopted policies and procedures
regarding the pre-approval of audit and non-audit services to be
provided by our independent registered public accounting firm
(the “Pre-Approval Policy”). Our Audit Committee is
required to pre-approve all services performed by the
independent registered public accounting firm to assure that the
provision of such services do not impair the independent
registered public accounting firm’s independence.
The Audit Committee reviews and approves a list of pre-approved
services and the estimated costs of performance approved for
each, at least annually. The list is updated throughout the
year, as may be necessary. The Audit Committee has delegated to
its Chairman the authority to pre-approve the performance by the
independent registered public accounting firm of services with
estimated aggregate costs of performance up to $100,000. All of
the fees identified above under “Fees of Independent
Registered Public Accounting Firm” for 2006 were
pre-approved in accordance with the Pre-Approval Policy.
Any engagement agreement between the company and the independent
registered public accounting firm must be signed by an officer
of the company and at least one member of the Audit Committee.
The Audit Committee must be notified, at its next regularly
scheduled meeting, of any engagement that occurs which had been
pre-approved by the Committee or by the Audit Committee
delegate. If the proposed service has not been pre-approved,
then a representative of the independent registered public
accounting firm and the Chief Financial Officer, Controller or
other Senior Vice President must jointly submit to the Audit
Committee, prior to the commencement of any work, a request for
approval, including a reasonably detailed description of the
service proposed to be provided, an estimate of the costs of
performance of the service and a joint statement as to whether,
in their view, the request or application is consistent with the
SEC’s rules on auditor independence.
We have adopted a procedure called “householding,”
which has been approved by the SEC. Under this procedure, we are
delivering only one copy of the annual report and proxy
statement to multiple stockholders who share the same address
and have the same last name, unless we have received contrary
instructions from an affected stockholder. This procedure
reduces our printing costs, mailing costs and fees. Stockholders
who participate in householding will continue to receive
separate proxy cards.
We will deliver upon written or oral request a separate copy of
the annual report and the proxy statement to any stockholder at
a shared address to which a single copy of either of those
documents was delivered. To receive a
separate copy of the annual report or proxy statement, you may
contact our Investor Relations Department either by mail at
21839 Atlantic Boulevard, Dulles, Virginia 20166, by telephone
at
(703) 406-5543
or by e-mail
at investor.relations@orbital.com.
If you are a holder of our common stock as of the record date
and would like to revoke your householding consent and receive a
separate copy of the annual report or proxy statement in the
future, please contact Automatic Data Processing, Inc.
(“ADP”), either by calling toll free at
(800) 542-1061
or by writing to ADP, Householding Department, 51 Mercedes Way,
Edgewood, New York 11717. You will be removed from the
householding program within 30 days of receipt of the
revocation of your consent.
Any stockholders of record who share the same address and
currently receive multiple copies of our annual report and proxy
statement who wish to receive only one copy of these documents
per household in the future, may contact our Investor Relations
Department at the address, telephone number or
e-mail
listed above to participate in the householding program.
A number of brokerage firms have instituted householding. If you
hold your shares in “street name,” please contact your
bank, broker or other holder of record to request information
about householding.
ORBITAL SCIENCES CORPORATION
Proxy for Annual Meeting of Stockholders – April 26, 2007
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints David W. Thompson and Susan Herlick and each of them as proxies, with
power of substitution and re-substitution to each, to vote at the annual meeting of stockholders of
Orbital Sciences Corporation (the “company”) to be held at the company’s headquarters, 21839
Atlantic Boulevard, Dulles, Virginia 20166 on April 26, 2007 at 9:00 a.m. and at any adjournments
thereof, all shares of stock of the company that the undersigned would be entitled to vote if
personally present. A majority of said proxies or their substitutes or re-substitutes or any one
if only one is present and acting, shall have all the powers of all said proxies. The undersigned
instructs said proxies, or their substitutes or re-substitutes, to vote in such manner as they may
determine on any matters that may properly come before the meeting as indicated in the Notice of
Annual Meeting of Stockholders and Proxy Statement, receipt of which is hereby acknowledged, and to
vote as specified by the undersigned on the reverse side.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS MADE, FOR
THE ELECTION OF THE NAMED NOMINEES AS DIRECTORS AND FOR RATIFICATION OF THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE
FISCAL YEAR ENDING DECEMBER 31, 2007.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL DIRECTOR NOMINEES AND FOR RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2007.
Vote on Directors
Vote on Proposal
Please vote, date and promptly return this proxy in the enclosed return envelope, which is postage
prepaid if mailed in the United States.
Please sign exactly as your name appears hereon. If the stock is registered in the names of two or
more persons, each should sign. Executors, administrators, trustees, guardians and
attorneys-in-fact should add their titles. If signer is a corporation, please give full corporate
name and have an authorized officer sign, stating title. If signer is a partnership, please sign
in partnership name by authorized person.
VOTE BY
INTERNET – www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of
information up until 11:59 p.m. Eastern Time on Wednesday, April 25, 2007. Have your proxy card in
hand when you access the website 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 Orbital 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
Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time
on Wednesday, April 25, 2007. 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 we have provided or
return it to Orbital Sciences Corporation, c/o ADP, 51 Mercedes Way, Edgewood, NY 11717.
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