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The following is an excerpt from a DEF 14A SEC Filing, filed by SM&A on 4/29/2004.
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SM&A - DEF 14A - 20040429 - COMMITTEE_INTERLOCKS

Compensation Committee Interlocks and Insider Participation

     During the fiscal year ended December 31, 2003, the members of the Compensation Committee were J. Christopher Lewis, Wade R. Olson and John R. Woodhull, two of whom were independent directors of the Company. Mr. Olson received professional services income from the Company. (See “Information Regarding Director Not Standing for Re-Election and Certain Relationships and Related Transactions”.) None of the members of the Compensation Committee was, at any time during fiscal year 2003 or at any other time, an officer or employee of the Company. There are no Compensation Committee interlocks between the Company and other entities involving the Company’s executive officers and Board members who serve as executive officers or Board members of such other entities.

     
The Compensation Committee:
   
  Wade R. Olson, Chairman
  J. Christopher Lewis
  John R. Woodhull

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Named Executive Officers of the Company

     Set forth below is certain information with respect to the Company’s current Named Executive Officers.

      Steven S. Myers , age 57, has served as the Company’s Chief Executive Officer and Chairman of the Board for most of the Company’s existence. Before taking the Company public in January 1998, Mr. Myers managed some of the largest proposals created by the aerospace industry supporting the nations most crucial space and defense programs of the time. Under his leadership the Company has become the world’s leading provider of competition management services. Prior to forming the Company, Mr. Myers was Vice President of Marketing for Loral Data Systems and held several other key management and technical positions with Ball Aerospace Systems Division, Fairchild Space and Electronics Company, and Watkins-Johnson Company. Mr. Myers holds a Bachelor of Science degree in Mathematics from Stanford University in California.

      Cathy L. Wood , age 56, currently serves as Executive Vice President, Chief Financial Officer and Corporate Secretary. Ms. Wood became an officer of the Company in November 2001. Ms. Wood is also the President of Financial Management Partners, a consulting firm that specializes in financial consulting. Prior to entering into her Employment Agreement with the Company in 2001, Ms. Wood provided services to the Company in her capacity as the President of Financial Management Partners. From August, 1997 to December, 1999, Ms. Wood served as Executive Vice President, Chief Financial Officer and Secretary for PIA Merchandising, Inc. Ms. Wood served as Vice President and Chief Financial Officer of Giant Group, Ltd., a NYSE listed company specializing in acquisitions, from 1995 to 1997. Ms. Wood has also served in various capacities at Wherehouse Entertainment, Inc., and served as a Vice President at Mellon Bank, N.A. Ms. Wood currently serves on the Board of Directors of Goodwill Industries, the Orange County Advisory Board of City National Bank, and the Advisory Board of the National Women’s Health Organization.

      Bennett C. Beaudry , age 47, has served as the Company’s President since June 2003 and as Chief Operating Officer since October 2002. Mr. Beaudry became a full-time employee of the Company in July 2000 as Vice President, Corporate Strategy and Business Development. Prior to joining the Company, Mr. Beaudry was a director with Motorola, leading a business unit. Mr. Beaudry was with Motorola for 15 years. Mr. Beaudry was on active duty with the U.S. Army until 1985. Mr. Beaudry is also Founder, President and Chief Executive Officer of B & C Beaudry, Inc., a privately-held Arizona company providing engineering consulting services. Mr. Beaudry holds a Master of Business Administration from Arizona State University. Mr. Beaudry also maintains a Bachelor of Sciences (concentration in Mechanical Engineering), from the United States Military Academy at West Point.

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      Steve D. Handy , age 36, currently serves as Vice President, Corporate Controller. Mr. Handy became a full-time employee of the Company in December 2001 as Assistant Corporate Controller. Prior to joining the Company, Mr. Handy was Director of Finance for Transnational Computer Technology, Inc., where, among other functions, he implemented worldwide controls, policies and procedures. From 2000 to 2001, Mr. Handy was Corporate Controller of Futurelink Corporation where he directed all facets of the monthly internal financial reporting, including quarterly and annual SEC reporting. Previous to this Mr. Handy served as Senior Auditor, Business Advisory and Audit Services for Deloitte & Touche LLP. Mr. Handy planned and executed financial statement audits and reviews with emphasis on the high technology and healthcare markets. Mr. Handy is licensed through the State of California as a Certified Public Accountant. Mr. Handy holds a Bachelor of Science degree in Administration with an emphasis in accounting, from California State University, San Marcos in California.

      Robert E. Bunnett , age 44, currently serves as Senior Vice President, Operations and Recruiting. Mr. Bunnett became a full-time employee of the Company in February 1995 as an Associate responsible for delivering high value consulting, proposal, and program services to the Company’s clients, including introducing SM&A QuickStart SM . Mr. Bunnett was subsequently promoted to vice president where he was responsible for key client accounts, including elements of Lockheed Martin, Northrop Grumman, Raytheon, General Dynamics, CSC, Motorola, and ITT. Prior to joining the Company, Mr. Bunnett was employed by McDonnell Douglas (now part of Boeing) from 1983 to 1995. He held such positions as Senior Manager of Advanced Product Development, Manager of Avionics Systems, and Manager of Advanced C3I Systems. Mr. Bunnett holds a Bachelor of Science degree in Electrical Engineering from Valparaiso University.

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Table 1: Summary Named Executive Officer Compensation Table

     The following table sets forth information concerning compensation paid to the Company’s Chief Executive Officer and each of the four other executive officers of the Company who earned, or would have earned, salary and bonus in excess of $100,000 for services rendered to the Company for each of the fiscal years in the three-year period ended December 31, 2003 (the “Named Executive Officers”). Annual Compensation excludes perquisites and other personal benefits that, in the aggregate, do not exceed the lesser of either $50,000 or 10% of the total annual salary and bonus reported for the Named Executive Officer.

                                                 
                            Long Term            
                            Compensation            
    Annual Compensation
  Awards
           
                            Securities            
Name and Principal                           Underlying   All Other        
Position
  Year
  Salary
  Bonus
  Stock Options
  Compensation
       
Steven S. Myers (1)
    2003     $ 600,000     $ 400,000           $          
 
    2002     $ 600,000     $ 398,535 (2)         $          
 
    2001     $ 398,058     $ 472,500 (3)         $          
 
                                               
Cathy L. Wood (4)
    2003     $ 365,000     $ 300,068 (5)     50,000     $          
 
    2002     $ 405,711 (6)   $ 151,350 (7)     50,000     $          
 
    2001     $ 311,715 (8)   $ 412,500 (9)         $          
 
                                               
Bennett C. Beaudry (10)
    2003     $ 256,730     $ 300,067 (11)     50,000     $ 18,300 (12)        
 
    2002     $ 274,117     $ 138,450 (13)     130,000     $          
 
    2001     $ 234,803     $ 36,000 (14)     30,000     $          
 
                                               
Steve D. Handy (15)
    2003     $ 104,230     $ 42,000 (16)     25,000     $          
 
    2002     $ 91,191     $ 28,700 (17)     25,000     $          
 
    2001     $ 3,269 (18)   $ 3,000 (19)         $          
 
                                               
Robert E. Bunnett (20)
    2003     $ 201,461     $ 41,000 (21)         $          
 
    2002     $ 201,000     $ 42,191 (22)         $          
 
    2001     $ 201,000     $ 58,140 (23)     50,000     $          

 


Footnotes to Table 1:

(1)   Chairman of the Board and Chief Executive Officer.
 
(2)   This includes a $97,435 bonus earned by Mr. Myers in fourth quarter ending December 31, 2002 and paid in 2003. In addition, this includes a 50,000 bonus earned by Mr. Myers in fourth quarter ending December 31, 2001 and paid in 2002.
 
(3)   This includes a $375,000 bonus earned by Mr. Myers in 2001 in connection with the sale of a subsidiary and paid in 2002.

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Footnotes to Table 1: (continued)

(4)   Executive Vice President, Chief Financial Officer and Corporate Secretary.
 
(5)   This includes an $80,384 bonus earned in 2003 and paid in 2004.
 
(6)   This includes $49,134 in salary payments earned by Ms. Wood in 2001 and paid in 2002. Ms. Wood became a full-time employee of the Company on November 1, 2001 when she entered into a two-year Employment Agreement with the Company.
 
(7)   This includes a $32,900 bonus earned by Ms. Wood in fourth quarter ending December 31, 2001 and paid in 2002. In addition, this includes a $83,450 bonus earned in 2002 and paid in 2003.
 
(8)   This amount represents payments made to Ms. Wood pursuant to her consulting agreement with the Company for fiscal year 2001.
 
(9)   This includes a $365,000 bonus earned by Ms. Wood in 2001 in connection with the sale of a subsidiary and paid in 2002.
 
(10)   President and Chief Operating Officer. Mr. Beaudry was promoted to the position of President in June 2003.
 
(11)   This includes an $80,384 bonus earned in 2003 and paid in 2004.
 
(12)   Pursuant to the terms of Mr. Beaudry’s employment agreement, this represents monthly lease payments made directly to the landlord of the residence in Orange County, California occupied by Mr. Beaudry.
 
(13)   This includes a $45,000 bonus earned by Mr. Beaudry in fourth quarter ending December 31, 2002 and paid in 2003.
 
(14)   This includes a $19,000 bonus earned by Mr. Beaudry in fourth quarter ending December 31, 2001 and paid in 2002.
 
(15)   Vice President and Corporate Controller. Mr. Handy was promoted to Vice President in June 2003.
 
(16)   This includes a $10,000 bonus earned in 2003 and paid in 2004.
 
(17)   This includes a $3,000 bonus earned by Mr. Handy in the fourth quarter ending December 31, 2002 and paid in 2003.
 
(18)   Mr. Handy was hired as Assistant Controller in December 2001.
 
(19)   This amount represents a bonus earned by Mr. Handy in 2001 in connection with the sale of a subsidiary and paid in 2002.
 
(20)   Senior Vice President, Operations and Recruiting.

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Footnotes to Table 1: (continued)

(21)   Includes a $10,000 bonus earned in 2003 and paid in 2004.
 
(22)   Includes a $10,000 bonus earned in 2002 and paid in 2003.
 
(23)   Includes a $27,294 bonus earned in 2001 and paid in 2002.

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Table 2: Options Granted in Last Fiscal Year to Named Executive Officers

     The following table provides certain information concerning stock options granted to the Named Executive Officers during the fiscal year ended December 31, 2003. This information includes hypothetical potential gains from stock options granted in the 2003 fiscal year. These hypothetical gains are based solely on assumed annual growth rates of 5% and 10% in the value of the Company’s Common Stock price over the five-year life of the stock options granted in 2003. These assumed rates of growth were selected by the Securities and Exchange Commission for illustration purposes only, and are not intended to predict future stock prices, which will depend upon market conditions and the Company’s future performance and prospects.

                                                 
                                    Potential Realizable Value At
                                    Assumed Annual Rates of
                                    Stock Price Appreciation for
Individual Grants
  Option Term (2)
            Percent of                
    Number of   Total Options                
    Securities   Granted to                
    Underlying   Employees   Exercise or            
    Options   In Fiscal   Base Price(1)   Expiration   5%   10%
Name
  Granted
  Year 2003
  ($/Sh)
  Date
  ($)
  ($)
Bennett C. Beaudry
    36,636 (3)     13.21       3.65       01/15/2013       84,097       213,117  
 
    13,364 (3)     4.82       3.65       01/15/2013       30,677       77,741  
Steve D. Handy
    25,000       9.02       3.73       01/21/2013       58,644       148,616  
Steven S. Myers
                                   
Cathy L. Wood
    28,753 (3)     10.37       11.53       09/30/2013       208,492       528,361  
 
    21,247 (3)     7.66       11.53       09/30/2013       154,065       390,432  

 


Footnotes to Table 2:

(1)   The options were granted at an exercise price equal to the fair market value of the Company’s Common Stock on the date of grant. The exercise price may be paid by delivery of cash or with shares of SM&A Common Stock already owned, subject to certain conditions. As of April 22, 2004, the last sale price of the Company’s Common Stock as quoted on the Nasdaq National Stock Market was $8.73.
 
(2)   Pursuant to applicable regulations, these amounts represent certain assumed rates of appreciation only. Actual gain, if any, on stock option exercises are dependent on the future performance of the Common Stock and overall stock market conditions. The amounts reflected in this table may not necessarily be achieved.

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(3)   The indicated options shall become exercisable in sixteen equal quarterly installments, commencing on the three-month anniversary of the date of grant. Such stock options are in the form generally approved for grants to officers of the Company, provided, however, that such stock options shall vest in full upon the occurrence of a Change of Control as described in the respective employment agreements of Mr. Beaudry and Ms. Wood.

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Table 3: Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values by Named Executive Officers

     The following table provides certain information regarding stock options exercised by the Named Executive Officers during the fiscal year ended December 31, 2003, as well as the number of exercisable and unexercisable in-the-money stock options and their values at fiscal year-end. An option is in-the-money if the fair market value for the underlying securities exceeds the exercise price of the option.

                                                 
                                    Value of Unexercised
    Shares           Number of Unexercised   In-the-Money
    Acquired           Options at   Options at
    on   Value   December 31, 2003   December 31, 2003 (1)
Name
  Exercise
  Realized
  Exercisable/Unexercisable
  Exercisable/Unexercisable
Bennett C. Beaudry
    0     $ 0       75,000       140,000     $ 665,175     $ 1,196,650  
Robert E. Bunnett
    33,875     $ 274,518       27,250       21,875     $ 149,263     $ 230,562  
Steve D. Handy
    6,250     $ 32,625       0       43,750     $ 0     $ 370,812  
Steven S. Myers
    0     $ 0       0       0     $ 0     $ 0  
Cathy L. Wood
    60,000     $ 640,140       98,425       109,375     $ 946,059     $ 591,659  

 


Footnotes to Table 3:

(1)   Calculated on the basis of $11.70, the closing price of the Company’s Common Stock on December 31, 2003, minus the exercise price of the option, multiplied by the number of shares subject to the option

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Equity Compensation Plan Information

     The following table provides information about the Company’s Common Stock that may be issued upon the exercise of options, warrants and rights under all of the Company’s existing equity compensation plans and arrangements as of December 31, 2003. The material terms of these plans are described in the notes to consolidated financial statements on Form 10-K for period ending December 31, 2003.

                         
                    Number of
                    securities remaining
    Number of securities           available for future
    to be issued upon   Weighted-average   issuance under equity
    exercise of   exercise price of   compensation plans
    outstanding options,   outstanding options,   (excluding securities
    warrants and rights   warrants and rights   reflected in column (a))
Plan Category
  (a)
  (b)
  (c)
Equity Compensation Plans
                       
Approved by Shareholders
                       
                         
Amended & Restated
                       
Stock Option Plan
    1,891,142     $ 3.0961       1,205,744  
                         
Amended & Restated ESPP
    1,096,222 (1)     N/A (2)     203,778  
                         
Equity Compensation Plans
                       
Not Approved by
                       
Shareholders
                       
None
    N/A       N/A       N/A  

Footnotes to Equity Compensation Plan Information:

(1)   Includes 25,636 shares of the Company’s Common Stock distributed to plan participants on or about January 14, 2004, in connection with the December 31, 2003 Purchase Date under the Amended and Restated ESPP.
 
(2)   Under the Amended and Restated ESPP, the purchase price per share of Common Stock is 85% of the fair market value as determined in accordance with the plan and Section 423 of the Internal Revenue Code and applicable regulations thereunder. The Company proposes to decrease the purchase price per share to 95% of the fair market value.

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Employment Agreements

      Steven S. Myers, Chief Executive Officer and Chairman of the Board.

     The Company and Mr. Myers have entered into an Employment Agreement, effective February 1, 2000, pursuant to which Mr. Myers is to serve as the Company’s Chief Executive Officer and Chairman of the Board. This agreement has been amended by an Amendment No. 1, dated December 29, 2000, an Amendment No. 2, dated April 12, 2002, an Amendment No. 3, dated January 30, 2003, and an Amendment No. 4, dated January 20, 2004. As amended, the agreement provides for a term ending June 30, 2006, an annual base salary of $600,000 and an annual incentive bonus in an amount equal to 3.25% of the Company’s earnings before interest, taxes, depreciation and amortization charges (“EBITDA”), calculated and paid quarterly, not to exceed $400,000 in any fiscal year. Mr. Myers and his dependents are entitled to receive reimbursement for documented medical expenses not otherwise covered by the Company’s medical plan and long-term care and disability insurance coverage. Mr. Myers may not compete with the Company during the term of the agreement, and may not solicit any employees to leave their employment with the Company for a period of two years following the expiration of the term of the agreement. Mr. Myers has an obligation to keep confidential and protect the trade secrets and other confidential information of the Company and its customers.

     The Company may terminate the agreement at any time for “Cause” (as defined therein), or without “Cause” on 30 days’ prior notice. Mr. Myers may resign at any time on 30 days’ prior notice. If Mr. Myers is terminated without “Cause,” or if he resigns for “Good Reason” (as defined in the agreement), he will receive his base salary, health and welfare benefits and a car allowance for the shorter of twelve months or until the expiration of the term of the agreement, and he will receive the pro rata portion of any incentive bonus which has been earned through the date of his termination. Upon the occurrence of a change of control of the Company, all of Mr. Myers’ outstanding stock options will, to the extent unvested, vest in full and be immediately exercisable, and shall remain exercisable for the shorter of two years or their expiration according to their terms.

      Cathy L. Wood, Executive Vice President, Chief Financial Officer and Corporate Secretary.

     The Company and Ms. Wood have entered into an Employment Agreement, effective November 1, 2001, pursuant to which Ms. Wood is to serve as the Company’s Executive Vice President, Chief Financial Officer and Corporate Secretary. This agreement has been amended by an Amendment No. 1, dated October 4, 2002, an Amendment No. 2, dated January 30, 2003, and an Amendment No. 3, dated January 20, 2004. As amended, the agreement provides for a term ending December 31, 2005, an annual base salary of $400,000 and an annual incentive bonus in an amount equal to 1.5% of the Company’s EBITDA, calculated and paid quarterly. Ms. Wood is entitled to a $150,000 bonus if the Company’s revenues for the fiscal year ended December 31, 2004 exceed $100 million. Ms. Wood also receives an annual stock option grant for the purchase of 100,000 shares of the Company’s common stock at an exercise price equal to the fair market value of the Company’s Common Stock on the date of grant. These options vest and become exercisable in 16 quarterly installments. Ms. Wood and her dependents are entitled to reimbursement for documented medical expenses not otherwise covered by the Company’s medical plan and long-term care and disability insurance coverage. Ms. Wood may not compete with the Company during the term of the agreement, and may not solicit any employees to leave their employment with the Company for a period of two years following the expiration of the term of the agreement. Ms. Wood has an obligation to keep confidential and protect the trade secrets and other confidential information of the Company and its customers.

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     The Company may terminate the agreement at any time for “Cause” (as defined therein), or without “Cause” on 30 days’ prior notice. Ms Wood may resign at any time on 30 days’ prior notice. If Ms Wood is terminated without “Cause,” or if she resigns for “Good Reason” (as defined in the agreement), she will receive her base salary, and health and welfare benefits, for the shorter of twelve months or until the expiration of the term of the agreement, and she will receive the pro rata portion of any incentive bonus which has been earned through the date of her termination. If Ms. Wood is terminated without “Cause” or resigns for “Good Reason” within twelve months following a change of control of the Company, Ms. Wood will receive (i) a lump sum payment equal to her annual base salary for the shorter of the remainder of the term of the agreement or twelve months, and (ii) health and welfare benefits for the shorter of the remainder of the term of the agreement, the date which is 18 months from the date of the change of control, or the date which is 12 months from the date of termination. Upon the occurrence of a change of control, Ms. Wood will be entitled to a lump sum payment in an amount equal to her annual base salary, and all of her outstanding stock options will, to the extent unvested, vest in full and be immediately exercisable.

      Bennett C. Beaudry, President and Chief Operating Officer.

     The Company and Mr. Beaudry have entered into an Employment Agreement, effective June 1, 2002, pursuant to which Mr. Beaudry is to serve as the Company’s President and Chief Operating Officer. This agreement has been amended by an Amendment No. 1, dated January 30, 2003, and an Amendment No. 2, dated January 20, 2004. As amended, the agreement provides for a term ending December 31, 2006, an annual base salary of $300,000 for 2004, $330,000 for 2005 and $360,000 for 2006, and an annual incentive bonus in an amount equal to 1.5% of the Company’s EBITDA, calculated and paid quarterly. Mr. Beaudry is entitled to a $150,000 bonus if the Company’s revenues for the fiscal year ended December 31, 2004 exceed $100 million. Mr. Beaudry also receives an annual stock option grant for the purchase of 100,000 shares of the Company’s common stock at an exercise price equal to the fair market value of the Company’s common stock on the date of grant. These options vest and become exercisable in 16 quarterly installments. Mr. Beaudry and his dependents are entitled to reimbursement for documented medical expenses not otherwise covered by the Company’s medical plan and long term care and disability insurance coverage, and Mr. Beaudry receives a housing allowance of $1,850 per month. Mr. Beaudry may not compete with the Company during the term of the agreement, and may not solicit any employees to leave their employment with the Company for a period of two years following the expiration of the term of the agreement. Mr. Beaudry has an obligation to keep confidential and protect the trade secrets and other confidential information of the Company and its customers.

     The Company may terminate the agreement at any time for “Cause” (as defined therein), or without “Cause” on 30 days’ prior notice. Mr. Beaudry may resign at any time on 30 days’ prior notice. If Mr. Beaudry is terminated without “Cause,” or if he resigns for “Good Reason” (as defined in the agreement), he will receive his base salary, and health and welfare benefits, for the shorter of twelve months or until the expiration of the term of the agreement, and he will receive the pro rata portion of any incentive bonus which has been earned through the date of his termination. If Mr. Beaudry is terminated without “Cause” or resigns for “Good Reason” within twelve months following a change of control of the Company, Mr. Beaudry will receive (i) a lump sum payment equal to his annual base salary for the shorter of the remainder of the term of the agreement or twelve months, and (ii) health and welfare benefits for the shorter of the remainder of the term of the agreement, the date which is 18 months from the date of the change of control, or the date which is 12 months from the date of termination. Upon the occurrence of a change of control, Mr. Beaudry will be entitled to a lump sum payment in an amount equal to his annual base salary, and all of his outstanding stock options will, to the extent unvested, vest in full and be immediately exercisable.

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