DEF 14A 1 compsciences_def14a.htm DEFINITIVE PROXY STATEMENT compsciences_def14a.htm
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  Computer Sciences Corporation
   
Notice of 2011 Annual Meeting of Stockholders
 
     The 2011 Annual Meeting of Stockholders will be held on Monday, August 8, 2011, at 10:00 a.m. Eastern Time, at the headquarters of the Company, 3170 Fairview Park Drive, Falls Church, Virginia 22042. The purpose of the meeting is to vote on:
  • the election of the ten director-nominees named in the attached proxy statement;
     
  • the approval, by non-binding vote, of the Company’s executive compensation;
     
  • the recommendation, by non-binding vote, of the frequency of holding future votes on executive compensation;
     
  • the approval of the 2011 Omnibus Incentive Plan;
     
  • the ratification of the appointment of independent auditors; and 
     
  • such other business as may properly come before the meeting.
     Only stockholders of record at the close of business on June 13, 2011, will be entitled to vote at the meeting and any postponements or adjournments thereof.
 
     Your vote is important. Whether or not you plan to attend the meeting, we encourage you to read this proxy statement and vote as soon as possible. Information on how to vote is contained in this proxy statement. In addition, voting instructions are provided in the Notice of Internet Availability of Proxy Materials, or, if you requested printed materials, the instructions are printed on your proxy card and included in the accompanying proxy statement. You can revoke a proxy at any time prior to its exercise at the Annual Meeting by following the instructions in the proxy statement.
   
  By Order of the Board of Directors,
   
 
   
  William L. Deckelman, Jr.
Vice President, General Counsel and Secretary
   
 
Falls Church, Virginia
June 24, 2011
 

 

TABLE OF CONTENTS
 
ABOUT THE ANNUAL MEETING 1
HOW DO I VOTE? 6
   
CORPORATE GOVERNANCE 7
       Corporate Governance Guidelines 7
       Board Leadership Structure 8
       Director Independence 8
       Oversight of Risk Management 9
       Compensation and Risk 9
       Equity Ownership Guidelines 10
       Talent Management and Succession Planning 10
       Oversight of Related Party Transactions 10
       Code of Ethics and Standards of Conduct 11
       Board Diversity 11
       Mandatory Retirement of Directors 11
       Resignation of Employee Directors 11
       Communicating with the Board or the Lead Director 11
   
BOARD STRUCTURE AND COMMITTEE COMPOSITION 12
   
DIRECTOR COMPENSATION 14
   
PROPOSAL 1. ELECTION OF DIRECTORS 16
       Director Nomination Process 16
       2011 Director Nominees 16
       Summary of Director Qualifications and Experience 21
       Certain Litigation 21
   
STOCK OWNERSHIP 24
   
AUDIT COMMITTEE REPORT 26
   
EXECUTIVE COMPENSATION 26
       Compensation Committee Report 26
       Compensation Discussion and Analysis 26
       Executive Summary 27
       Elements of Compensation 29
       Fiscal 2011 Direct Compensation 29
       Other Executive Compensation 35
       Compensation Framework 37
       Additional Compensation Policies 39
       Summary Compensation Table 41
       Summary of CEO Compensation Realized in Fiscal 2011 43
       Grants of Plan-Based Awards 45
       Outstanding Equity Awards at Fiscal Year-End 46
       Option Exercises and Stock Vested 48
       Pension Benefits 49
       Fiscal Year 2011 Nonqualified Deferred Compensation 51
       Potential Payments Upon Change in Control and Termination of Employment 51
   
PROPOSAL 2. ADVISORY VOTE APPROVING EXECUTIVE COMPENSATION 57
       Vote Required and Recommendation of the Board of Directors 58
   
PROPOSAL 3. ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON  
       EXECUTIVE COMPENSATION 59

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PROPOSAL 4. APPROVAL OF 2011 OMNIBUS INCENTIVE PLAN 59
       Summary of the 2011 Plan 59
       Material Federal Income Tax Consequences of Awards Under the 2011 Incentive Plan 62
       Benefits Granted Under the 2011 Incentive Plan 64
       Other Information 65
       Vote Required 65
   
PROPOSAL 5. RATIFICATION OF INDEPENDENT AUDITORS 66
       Fees 66
       Pre-Approval Policy 66
       Vote Required 66
   
ADDITIONAL INFORMATION 67
       Section 16(a) Beneficial Ownership Reporting Compliance 67
       Business for 2012 Annual Meeting 67
       Householding; Availability of 2011 Annual Report and Proxy Statement 68
   
APPENDIX A. INDEPENDENCE STANDARDS A-1
   
APPENDIX B. 2011 OMNIBUS INCENTIVE PLAN B-1

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Computer Sciences Corporation
3170 Fairview Park Drive
Falls Church, Virginia 22042
(703) 876-1000
 
June 24, 2011
__________________
 
PROXY STATEMENT
__________________
 
     We are providing these proxy materials in connection with the 2011 Annual Meeting of Stockholders (the “Annual Meeting”) of Computer Sciences Corporation (“CSC” or the “Company” and sometimes referred to with the pronouns “we”, “us” and “our”). The Notice of Internet Availability of Proxy Materials, this proxy statement, any accompanying proxy card or voting instruction card and our 2011 Annual Report to Stockholders, which includes our 2011 Annual Report on Form 10-K, were first made available to stockholders on or about June 24, 2011. This proxy statement contains important information for you to consider when deciding how to vote on the matters brought before the Annual Meeting. Please read it carefully.
 
     We are delivering proxy materials for the Annual Meeting under the United States Securities and Exchange Commission’s “Notice and Access” rules. These rules permit us to furnish proxy materials, including this proxy statement and our 2011 Annual Report, to our stockholders by providing access to such documents on the Internet instead of mailing printed copies. Most stockholders received a Notice of Internet Availability of Proxy Materials (the “Notice”), which provides instructions on how you may access and review all of the proxy materials on the Internet. The Notice also instructs you as to how you may submit your proxy on the Internet. More information about Notice and Access is set forth below.
 
ABOUT THE ANNUAL MEETING
 
Who is soliciting my vote?
 
     The Board of Directors of CSC (sometimes referred to herein as the “Board”) is soliciting your vote at the 2011 Annual Meeting.
 
When will the meeting take place?
 
     The Annual Meeting will be held on Monday, August 8, 2011 at 10:00 a.m., Eastern Time, at the headquarters of the Company, 3170 Fairview Park Drive, Falls Church, Virginia 22042.
 
What is the purpose of the Annual Meeting?
 
     You will be voting on:
  • the election of each of the ten nominees as directors of CSC;
     
  • the approval, by non-binding vote, of the Company’s executive compensation;
     
  • the recommendation, by non-binding vote, of the frequency of future executive compensation votes;
     
  • the approval of the 2011 Omnibus Incentive Plan;

 

  • the ratification of the selection of Deloitte & Touche LLP as our auditors for the fiscal year ending March 30, 2012 (“Fiscal 2012”); and
     
  • any other business that may properly come before the meeting.
What are the Board of Directors’ recommendations?
 
     The Board recommends a vote:
  • for the election of each of the ten nominees for director;
     
  • for the approval of the Company’s executive compensation;
     
  • for the recommendation of an annual advisory vote on the Company’s executive compensation;
     
  • for the approval of the 2011 Omnibus Incentive Plan;
     
  • for the ratification of the selection of Deloitte & Touche LLP as our auditors for Fiscal 2012; and
     
  • for or against other matters that come before the Annual Meeting, as the proxy holders deem advisable.
Who is entitled to vote at the Annual Meeting?
 
     The Board of Directors set June 13, 2011 as the record date for the Annual Meeting (the “record date”). All stockholders who owned CSC common stock at the close of business on June 13, 2011 may attend and vote at the Annual Meeting and any postponements or adjournments thereof.
 
Why did I receive a notice in the mail regarding the Internet availability of proxy materials this year instead of a paper copy of proxy materials?
 
     Under the “Notice and Access” rules of the United States Securities and Exchange Commission (the “SEC”), we are permitted to furnish proxy materials, including this proxy statement and our 2011 Annual Report, to our stockholders by providing access to such documents on the Internet instead of mailing printed copies. Most stockholders will not receive printed copies of the proxy materials unless they request them. Instead, the Notice, which was mailed to most of our stockholders, will instruct you as to how you may access and review all of the proxy materials on the Internet. The Notice also instructs you as to how you may submit your proxy on the Internet. If you would like to receive a paper or electronic copy of our proxy materials, you should follow the instructions for requesting such materials in the Notice. Any request to receive proxy materials by mail or electronically will remain in effect until you revoke it.
 
Can I vote my shares by filling out and returning the Notice?
 
     No. The Notice identifies the items to be voted on at the Annual Meeting, but you cannot vote by marking the Notice and returning it. The Notice provides instructions on how to vote by (i) Internet, (ii) telephone, (iii) requesting and returning a paper proxy card or voting instruction card, or (iv) submitting a ballot in person at the meeting.
 
Why didn’t I receive a Notice in the mail regarding the Internet availability of proxy materials?
 
     If you previously elected to access proxy materials over the Internet, you will not receive a Notice in the mail. You should have received an email with links to the proxy materials and online proxy voting. Additionally, if you previously requested paper copies of the proxy materials or if applicable regulations require delivery of the proxy materials, you will not receive the Notice.
 
     If you received a paper copy of the proxy materials or the Notice by mail, you can eliminate all such paper mailings in the future by electing to receive an email that will provide Internet links to these documents. Opting to receive all future proxy materials online will save us the cost of producing and mailing documents to your home or business and help us conserve natural resources. See http://www.icsdelivery.com/csc to request complete electronic delivery. Enrollment for electronic delivery is effective until cancelled.
 
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How many votes do I have?
 
     You will have one vote for each share of our common stock you owned at the close of business on the record date, provided those shares are either held directly in your name as the stockholder of record or were held for you as the beneficial owner through a broker, bank or other nominee.
 
What is the difference between holding shares as a stockholder of record and as a beneficial owner?
 
     Most of our stockholders hold their shares through a broker, bank or other nominee rather than directly in their own name. As summarized below, there are some differences between shares held of record and those owned beneficially.
 
     Stockholder of Record. If your shares are registered directly in your name with our transfer agent, BNY Mellon Shareowner Services, you are considered the stockholder of record with respect to those shares, and the Notice or these proxy materials are being sent directly to you. As the stockholder of record, you have the right to grant your voting proxy directly to us, to submit proxies electronically or by telephone or to vote in person at the Annual Meeting. If you have requested printed proxy materials, we have enclosed a proxy card for you to use.
 
     Beneficial Owner. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in “street name,” and the Notice or these proxy materials are being forwarded to you by your broker, bank or nominee who is considered the stockholder of record with respect to those shares. As the beneficial owner, you have the right to direct your broker, bank or nominee on how to vote and are also invited to attend the Annual Meeting. However, since you are not the stockholder of record, you may not vote these shares in person at the Annual Meeting, unless you request, complete and deliver a legal proxy from your broker, bank or nominee. If you requested printed proxy materials, your broker, bank or nominee has enclosed a voting instruction card for you to use in directing the broker, bank or nominee regarding how to vote your shares.
 
How many votes must be present to hold the Annual Meeting?
 
     A majority of our issued and outstanding shares entitled to vote at the Annual Meeting as of the record date must be present at the Annual Meeting in order to hold the Annual Meeting and conduct business. This is called a “quorum.” Shares are counted as present at the Annual Meeting if you are present and vote in person at the Annual Meeting or by telephone or on the Internet or a proxy card has been properly submitted by you or on your behalf. Both abstentions and broker non-votes are counted as present for the purpose of determining the presence of a quorum.
 
     As of the record date there were 154,954,273 shares of CSC common stock outstanding.
 
How many votes are required to elect directors and adopt the other proposals?
 
     Proposal 1 – Election of Directors. Directors are elected by a majority vote in uncontested elections. Therefore, each director nominee must receive a majority of the votes cast with respect to such nominee at the Annual Meeting (the number of “FOR” votes must exceed the number of “AGAINST” votes). Abstentions and, if applicable, broker non-votes are not counted as votes “FOR” or “AGAINST” any nominee; therefore, they will have no effect on the outcome of the vote on this proposal. In accordance with the Company’s Corporate Governance Guidelines, if an incumbent director nominee fails to receive the requisite number of votes, such director nominee shall promptly tender his or her resignation for consideration by the Nominating/Corporate Governance Committee. Within 30 days following the certification of the stockholder vote, the Nominating/Corporate Governance Committee will make a recommendation to the Board of Directors as to the treatment of any director that did not receive a majority vote, including whether to accept or reject any tendered resignation. The Board of Directors will make a final determination within 90 days following the certification of the election results, and publicly disclose its decision and rationale.
 
     Proposal 2 – Advisory Vote on Executive Compensation. This proposal, which is non-binding, requires an affirmative “FOR” vote of a majority of the votes cast (i.e., of the votes “FOR or “AGAINST”) to be approved. Abstentions and, if applicable, broker non-votes are not counted as votes “FOR” or “AGAINST” this proposal; therefore, they will have no effect on the outcome of the vote on this proposal.
 
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     Proposal 3 – Advisory Vote on the Frequency of Future Advisory Votes on Executive Compensation. For this proposal, which is non-binding, you may choose to express a preference for holding future advisory votes on executive compensation every year, every two years or every three years. Abstentions and, if applicable, broker non-votes will not be counted as expressing any preference. The frequency option that receives the most affirmative votes of all the votes cast on Proposal 3 is the option that will be deemed the recommendation of the stockholders.
 
     Proposal 4 – Approval of 2011 Omnibus Incentive Plan. This proposal requires an affirmative “FOR” vote of a majority of the votes cast (i.e., of the votes “FOR or “AGAINST”) to be approved. Abstentions and, if applicable, broker non-votes are not counted as votes “FOR” or “AGAINST” this proposal; therefore, they will have no effect on the outcome of the vote on this proposal.
 
     Proposal 5 – Ratification of Independent Auditors. This proposal requires an affirmative “FOR” vote of a majority of the votes cast (i.e., of the votes “FOR or “AGAINST”) to be approved. Abstentions are not counted as votes “FOR” or “AGAINST” this proposal; therefore, they will have no effect on the outcome of the vote on this proposal.
 
What if I don’t give specific voting instructions?
 
     Stockholders of Record. If you are a stockholder of record and you:
  • Indicate when voting by Internet or by telephone that you wish to vote as recommended by our Board of Directors; or
     
  • Return a signed proxy card but do not indicate how you wish to vote,
then your shares will be voted in accordance with the recommendations of the Board of Directors on all matters presented in this proxy statement and as the proxy holders may determine in their discretion regarding any other matters properly presented for a vote at the meeting. If you indicate a choice with respect to any matter to be acted upon on your proxy card or voting instruction card, the shares will be voted in accordance with your instructions.
 
     Beneficial Owners. If you hold shares beneficially in street name and do not provide your broker with voting instructions, your shares may constitute “broker non-votes” on certain proposals. Generally, broker non-votes occur on a non-routine proposal where a broker is not permitted to vote on that proposal without instructions from the beneficial owner, and instructions are not given. Broker non-votes are considered present at the Annual Meeting, but not as voting on a matter. Thus, broker non-votes are counted as present for purposes of determining the existence of a quorum, but are not counted for purposes of determining whether a matter has been approved. Thus, broker non-votes will not affect the outcome of the election of directors, approval of the Company’s executive compensation, recommendation of frequency of executive compensation votes, the approval of the 2011 Omnibus Incentive Plan or the ratification of the appointment of independent auditors.
 
     Your broker will vote your street name shares at the Annual Meeting with respect to (i) the election of directors, (ii) approval of the Company’s executive compensation, (iii) recommendation of frequency of executive compensation votes, and (iv) the approval of the 2011 Omnibus Incentive Plan, only if you instruct your broker how to vote. You should instruct your broker how to vote. If you do not provide your broker with instructions, under the rules of the New York Stock Exchange, your broker will not be authorized to vote your street name shares with respect to Proposal 1, Proposal 2, Proposal 3 and Proposal 4.
 
     Your broker, at his or her discretion, may vote your street name shares on the ratification of the independent auditors if you do not provide voting instructions.
 
Can I change my vote after I voted?
 
     Yes. Even if you voted by telephone or on the Internet or if you requested paper proxy materials and signed the proxy card or voting instruction card in the form accompanying this proxy statement, you retain the power to revoke your proxy or change your vote. You can revoke your proxy or change your vote at any time before it is exercised by giving written notice to the Corporate Secretary of CSC, specifying such revocation. You may change your vote by a later-dated vote by telephone or on the Internet or timely delivery of a valid, later-dated proxy or by voting by ballot at the Annual Meeting. However, please note that if you would like to vote at the Annual Meeting and you are not the stockholder of record, you must request, complete and deliver a legal proxy from your broker, bank or nominee.
 
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What does it mean if I receive more than one Notice, proxy or voting instruction card?
 
     It generally means your shares are registered differently or are in more than one account. Please provide voting instructions for all Notices, proxy cards and voting instruction cards you receive.
 
Are there other matters to be acted upon at the meeting?
 
     The Company does not know of any matter to be presented at the Annual Meeting other than those described in this proxy statement. If, however, other matters are properly presented for action at the Annual Meeting, the proxy holders named in the proxy will have the discretion to vote on such matters in accordance with their best judgment.
 
Who is paying for the solicitation of proxies?
 
     CSC is making this solicitation and will pay the entire cost of preparing, assembling, printing, mailing and distributing these proxy materials and soliciting votes. Our officers and employees may, without any compensation other than the compensation they receive in their capacities as officers and employees, solicit proxies personally or by telephone, facsimile, e-mail or further mailings. We will, upon request, reimburse brokerage firms and others for their reasonable expense in forwarding proxy materials to beneficial owners of CSC stock. We have engaged the services of Morrow & Co., LLC, 470 West Avenue, Stamford, CT 06902, with respect to proxy soliciting matters at an expected cost of approximately $10,000, not including incidental expenses.
 
What if I have any questions about voting, electronic delivery or Internet voting?
 
     Questions regarding voting, electronic delivery or Internet voting should be directed to Investor Relations at 800.542.3070 or e-mail address, investorrelations@csc.com.
 
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HOW DO I VOTE?
 
     Your vote is important. You may vote on the Internet, by telephone, by mail or by attending the Annual Meeting and voting by ballot, all as described below. The Internet and telephone voting procedures are designed to authenticate stockholders by use of a control number and to allow you to confirm that your instructions have been properly recorded. If you vote by telephone or on the Internet, you do not need to return your Notice, proxy card or voting instruction card. Telephone and Internet voting facilities are available now and will be available 24 hours a day until 11:59 p.m., Eastern Time, on August 7, 2011.
 
Vote on the Internet
 
     If you have Internet access, you may submit your proxy by following the instructions provided in the Notice, or if you requested printed proxy materials, by following the instructions provided with your proxy materials and on your proxy card or voting instruction card. On the Internet voting site, you can confirm that your instructions have been properly recorded. If you vote on the Internet, you can also request electronic delivery of future proxy materials.
 
Vote by Telephone
 
     You can also vote by telephone by following the instructions provided on the Internet voting site, or if you requested printed proxy materials, by following the instructions provided with your proxy materials and on your proxy card or voting instruction card.
 
Vote by Mail
 
     If you elected to receive printed proxy materials by mail, you may choose to vote by mail by marking your proxy card or voting instruction card, dating and signing it, and returning it to Broadridge Financial Solutions, Inc. in the postage-paid envelope provided. If the envelope is missing, please mail your completed proxy card or voting instruction card to CSC, c/o Broadridge Financial Solutions, Inc., 51 Mercedes Way, Edgewood, New York 11717. Please allow sufficient time for mailing if you decide to vote by mail.
 
Voting at the Annual Meeting
 
     The method or timing of your vote will not limit your right to vote at the Annual Meeting if you attend the Annual Meeting and vote in person. However, if your shares are held in the name of a bank, broker or other nominee, you must obtain a legal proxy, executed in your favor, from the holder of record to be able to vote at the Annual Meeting. You should allow yourself enough time prior to the Annual Meeting to obtain this proxy from the holder of record.
 
     The shares voted electronically, by telephone or represented by the proxy cards received, properly marked, dated, signed and not revoked, will be voted at the Annual Meeting.
 
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CORPORATE GOVERNANCE
 
     CSC is committed to maintaining the highest standards of corporate governance, which we believe is essential for sustained success and long-term shareholder value. In light of this goal, the Board oversees, counsels and directs management in the long-term interests of the Company and our stockholders. The Board’s responsibilities include, but are not limited to:
  • overseeing the management of our business and the assessment of our business risks;
      
  • overseeing the processes for maintaining our integrity with regard to our financial statements and other public disclosures, and compliance with law and ethics;
     
  • reviewing and approving our major financial objectives and strategic and operating plans, and other significant actions; and
     
  • overseeing our talent management and succession planning.
     The Board discharges its responsibilities through regularly scheduled meetings as well as through telephonic meetings, action by written consent and other communications with management as appropriate. CSC expects directors to attend all meetings of the Board and the Board committees upon which they serve, and all annual meetings of the Company’s stockholders at which they are standing for election or re-election as directors. During the fiscal year ended April 1, 2011 (“Fiscal Year 2011” or “Fiscal 2011”), the Board held 14 meetings and the independent directors held five additional meetings. Overall attendance at Board, independent director and committee meetings was over 97%. Individually, each director attended at least 88% of the aggregate number of Board, independent director and committee meetings of which he or she was a member. Each of the directors then serving attended the 2010 Annual Meeting of Stockholders.
 
     Governance is a continuing focus at CSC, starting with the Board and extending to all employees. In this section, we describe some of our key governance policies and practices. In addition, we solicit feedback from our shareholders on governance and executive compensation practices and engage in discussions with various groups and individuals on governance issues and improvements.
 
Corporate Governance Guidelines
 
     The Board has long adhered to governance principles designed to assure excellence in the execution of its duties and regularly reviews the Company’s governance policies and practices. These principles are outlined in CSC’s Corporate Governance Guidelines (the “Guidelines”), which, in conjunction with our Amended and Restated Articles of Incorporation (“Articles of Incorporation”), Amended and Restated Bylaws (“Bylaws”), Board committee charters and related policies, form the framework for the effective governance of CSC.
 
     The full text of the Guidelines, the charters for each of the Board committees, the Code of Ethics and Standards of Conduct, the Code of Ethics for the Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”) and Chief Accounting Officer (“CAO”), the Equity Grant Policy, the Related Party Transactions Policy and Clawback Policy are available on CSC’s Website, www.csc.com, under “Corporate Governance.” These materials are also available in print to any person, without charge, upon request, by calling 800.542.3070 or writing to:
 
              Investor Relations
             
CSC
              3170 Fairview Park Drive
             
Falls Church, Virginia 22042
 
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Board Leadership Structure
 
     The Board’s leadership structure consists of a Chairman and CEO, a lead independent director (the “Lead Director”) and strong committee chairs. The Board regularly reviews its leadership structure and has determined that combining the offices of CEO and Chairman, coupled with a Lead Director with broad authority and responsibility, is the most effective leadership model for the Company. The Board also believes this structure provides independent Board leadership and engagement while providing the benefit of having our CEO, who manages the Company’s day-to-day operations, chair regular Board meetings as we discuss key business and strategic issues. Our current Chairman and CEO, Michael W. Laphen, has more than 30 years of experience with the Company and familiarity with the global aspects of the Company’s business and operations. In accordance with the Guidelines, the independent directors have designated Irving W. Bailey, II, the former chairman and chief executive officer of Providian Corporation, to serve as Lead Director through the 2011 Annual Meeting of Stockholders. As a general matter, the Lead Director serves for a term of two years, and may not serve for more than two consecutive terms.
 
     As Lead Director, Mr. Bailey has the following duties and responsibilities:
  • presiding over executive sessions;
     
  • chairing meetings of the Board of Directors in the absence of the Chairman of the Board;
     
  • acting as a liaison between the independent directors and the Chairman of the Board;
     
  • coordinating with the Chairman of the Board regarding meeting agendas and schedules;
     
  • coordinating with the Chairman of the Board regarding information flow to the Board;
     
  • being available for consultation and communication with stockholders, as appropriate; and
     
  • calling meetings of the independent directors (executive sessions) as appropriate.
     While the Board acknowledges that in some instances combining the role of Chairman and CEO may foster dominance of a board by management, the Board believes that the governance processes in place at CSC are a sufficient counterbalance to any such tendency and are designed to ensure independent oversight and protect against the possibility of undue influence by management. CSC’s governance processes include executive sessions of the independent directors before and/or after board meetings, annual evaluations by the independent directors of the Chairman and CEO’s performance, succession planning, annual Board and committee self assessments and the various governance processes contained in the Guidelines and the Board committee charters.
 
Director Independence
 
     Independent Directors. The Board assesses the independence of our directors and examines the nature and extent of any relations between the Company and our directors, their families and their affiliates. The Guidelines provide that a director is “independent” if he or she satisfies the New York Stock Exchange (“NYSE”) requirements for director independence (as set forth in Appendix A) and the Board of Directors affirmatively determines that the director has no material relationship with CSC (either directly, or as a partner, stockholder or officer of an organization that has a relationship with CSC). In Fiscal 2011, the Board determined that, with the exception of our CEO, who serves as Chairman of the Board, each of the remaining nine directors – Irving W. Bailey, II, David J. Barram, Stephen L. Baum, Erik Brynjolfsson, Rodney F. Chase, Judith R. Haberkorn, F. Warren McFarlan, Chong Sup Park and Thomas H. Patrick – is independent.
 
     Independent Director Meetings. The non-management directors regularly meet in executive session prior to the commencement and/or after the conclusion of each regularly scheduled Board meeting, and meet at such additional times as they may determine. During Fiscal Year 2011, they held seven executive sessions in connection with regularly scheduled Board meetings and held five additional meetings.
 
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     Committee Independence Requirements. All members serving on the Audit Committee, Compensation Committee and Nominating/Corporate Governance Committee must be independent as defined by the Guidelines. In addition, Audit Committee members must meet heightened independence criteria under the rules and regulations of the NYSE and the SEC relating to audit committees; and each Compensation Committee member must be a “non-employee director” pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and an “outside director” for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”).
 
Oversight of Risk Management
 
     We believe our Board leadership structure supports a risk-management process in which senior management is responsible for our day-to-day risk-management processes and the Board provides oversight of our risk management. As part of its oversight responsibility, the Board oversees and maintains the Company’s governance and compliance processes and procedures to promote the highest standards of responsibility, ethics and integrity.
 
     Management Role. In order for the Company to identify and mitigate the Company’s risk exposures, the Company maintains an Enterprise Risk Management Committee (the “ERM Committee”) that (i) identifies risks in the strategic, operational, financial reporting and compliance domains for the Company as a whole, as well as for each operating unit, and (ii) evaluates the effectiveness of existing mitigation strategies. The ERM Committee is composed of the direct reports to the Chairman and CEO, and regularly reviews and assesses internal processes and controls for ongoing compliance with internal policies and legal regulatory requirements, as well as for potential weaknesses that could result in a failure of an internal control process. The ERM Committee meets periodically and reports potential areas of risk to the Board and its committees.
 
     Board Role. The Board has overall responsibility for oversight of risk and assesses our strategic and operational risks throughout the year, with particular focus on these risks at their May Board meeting. At this meeting, senior management reports on the opportunities and risks faced by the Company in the markets in which the Company conducts business.
 
     Committee Role. In fulfilling its oversight role, the Board delegates certain risk management oversight responsibility to the Board’s committees. The committees meet regularly and report any significant issues and recommendations discussed during the committee meetings to the Board. Specifically, each committee fulfills the following oversight roles:
  • The Audit Committee oversees risks related to accounting, financial reporting processes and internal controls of the Company as well as reviews the Company’s policies and practices with respect to risk assessment and risk management. During the Audit Committee review, the Committee discusses the Company’s major risk exposures and the steps that have been taken to monitor and control such exposures with management and meets separately with management, internal auditors and independent auditors. The Audit Committee reports the results of its review to the Board.
     
  • The Compensation Committee monitors the risks associated with succession planning and leadership development as well as compensation plans, including evaluating the effect of the Company’s compensation plans may have on decision making.
     
  • The Nominating/Corporate Governance Committee monitors the risks related to the Company’s governance structure and process.
Compensation and Risk
 
     During Fiscal 2011, CSC management reviewed its executive and non-executive (non-sales) compensation programs and also undertook a comprehensive global review of its sales force compensation programs and determined that none of its compensation programs encourage or create unnecessary risk taking, and none are reasonably likely to have a material adverse effect on the Company. In conducting this assessment, CSC inventoried its executive, non-executive and sales plans and programs and analyzed the components and design features of these programs in the context of risk mitigation. A summary of the findings of the assessment was provided to the Compensation Committee and the Board. Overall, CSC concluded that (1) CSC’s executive compensation programs provide a mix of awards
 
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with performance criteria and design features that mitigate excessive risk taking; (2) non-executive (non-sales) arrangements are primarily fixed compensation (salary and benefits) with limited bonus opportunity and do not encourage excessive risk taking; and (3) sales force compensation, based on multiple local or operating unit plans did not demonstrate any excessive risk.
 
Equity Ownership Guidelines
 
     Under stock ownership guidelines adopted by the Board, Board members, other than the CEO, have an equity ownership requirement of five times their annual retainer to be achieved over a three year period. Restricted stock units, as well as directly held shares, are taken into account for purposes of determining whether requirements have been met. Stock ownership guidelines for the executive officers, including the CEO, are described under “Compensation Discussion and Analysis - Equity Ownership Guidelines.”
 
Talent Management and Succession Planning
 
     The Company’s Compensation Committee and Board are actively engaged and involved in succession planning and talent management and engage annually in a review of succession plans and talent development. The annual review focuses on emerging talent and key positions at the executive officer and operating unit leadership level that are important to the execution of the Company’s strategic priorities and are critical to achieving the Company’s business goals. The Compensation Committee is also updated on issues relating to the overall workforce such as diversity, health and welfare benefits, geographic differences in compensation practices, and recruitment and development programs.
 
Oversight of Related Party Transactions
 
     The Company has adopted a written policy requiring the approval of the Nominating/Corporate Governance Committee of all transactions in excess of $120,000 between the Company and any related person (“interested transactions”). For the purposes of this policy, a related person is any person who was in any of the following categories at any time during Fiscal Year 2011:
  • A director or executive officer of the Company;
     
  • Any nominee for director;
     
  • Any immediate family member of a director or executive officer, or of any nominee for director. Immediate family members are any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of such director, executive officer or nominee for director, and any person (other than a tenant or employee) sharing the household of such director, executive officer or nominee for director; and
     
  • Any person who was in any of the following categories when a transaction in which such person had a direct or indirect material interest occurred or existed:
     
    • Any beneficial owner of more than 5% of the Company’s common stock; or
       
    • Any immediate family member of any such beneficial owner, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of such security holder, and any person (other than a tenant or employee) sharing the household of such security holder.
     A transaction includes, but is not limited to, any financial transaction, arrangement or relationship (including any indebtedness or guarantee of indebtedness) or any series of similar transactions, arrangements or relationships.
 
     In determining whether to approve an interested transaction, the Nominating/Corporate Governance Committee will take into account, among other factors it deems appropriate, whether the interested transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related party’s interest in the transaction. No director will participate in any discussion or
 
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approval of an interested transaction for which he or she (or an immediate family member) is a related party, except that the director will provide all material information concerning the interested transaction to the Nominating/ Corporate Governance Committee.
 
     There have been no transactions since April 3, 2010, nor are there any currently proposed transactions, in which the Company was or is to be a participant and the amount involved exceeds $120,000, which required the approval of the Nominating/Corporate Governance Committee under the Company’s interested transaction policy or in which any related person had, has or will have a direct or indirect material interest and which is required to be disclosed under applicable SEC rules.
 
Code of Ethics and Standards of Conduct
 
     CSC is committed to the highest standards of ethical conduct and professionalism, and our Code of Ethics and Standards of Conduct (the “Code of Conduct”) confirms our commitment to ethical behavior in the conduct of all CSC activities. The Code of Conduct applies to all directors, officers and employees of CSC and it sets forth our policies and expectations on a number of topics including avoiding conflicts of interest, confidentiality, insider trading, protection of CSC and customer property and providing a proper and professional work environment. We maintain a worldwide toll-free open line which employees can call to communicate any business ethics-related concerns, and training on ethics and compliance topics for all employees.
 
     We have also adopted a supplemental Code of Ethics for the CEO, CFO and CAO which builds upon the Code of Conduct. This supplemental code reinforces the Company’s expectations of the CEO, CFO and CAO regarding honest and ethical conduct, disclosure, compliance and accountability.
 
     In Fiscal 2011, there were no waivers of any provisions of the Code of Conduct or the Code of Ethics for the CEO, CFO and CAO. It is CSC’s policy to promptly disclose (i) any waiver of a director or executive officer’s compliance with the Code of Conduct, and (ii) any amendment or waiver of the Code of Ethics for the CEO, CFO and CAO on our website.
 
Board Diversity
 
     The Company’s policy on Board diversity is set forth in the Guidelines, which provide that Board membership should reflect diversity in many respects, by including, for example, persons diverse in geography, gender and ethnicity. In addition, the Committee seeks to maintain a mix of individuals who possess experience in the sectors in which the Company operates, such as international business, technology, health care, government service and public policy, as well as those having backgrounds as executives in operations, finance, accounting, marketing and sales. The Committee deems this policy to be effective.
 
Mandatory Retirement of Directors
 
     Under our Bylaws, directors must retire by the close of the first annual meeting of stockholders held after they reach age 72, unless the Board determines that it is in the best interests of CSC and its stockholders for the director to continue to serve until the close of a subsequent annual meeting. The Board has determined upon recommendation of the Nominating/Corporate Governance Committee that it is in the best interests of the Company for Dr. Warren McFarlan, who is age 73, to continue to serve until the 2012 Annual Meeting.
 
Resignation of Employee Directors
 
     Under the Guidelines, the CEO must offer to resign from the Board when he or she ceases to be a CSC employee.
 
Communicating with the Board or the Lead Director
 
     Stockholders and other interested parties may communicate with the Board, individual directors, the non-management directors as a group, or with the Lead Director, by writing in care of the Corporate Secretary, Computer Sciences Corporation, 3170 Fairview Park Drive, Falls Church, Virginia 22042. The Corporate Secretary reviews all submissions and forwards to members of the Board all appropriate communications that in his judgment are not offensive or otherwise objectionable or do not constitute commercial solicitations.
 
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BOARD STRUCTURE AND COMMITTEE COMPOSITION
 
     As of the date of this proxy statement, the Board has ten directors and three standing committees: the Audit Committee, the Compensation Committee and the Nominating/Corporate Governance Committee. Each director serving on the Audit Committee, Compensation Committee or Nominating/Corporate Governance Committee must be independent. In addition:
  • Each Audit Committee member must meet heightened independence criteria under the rules and regulations of the NYSE and the SEC relating to audit committees, and must be financially literate. No member of the Audit Committee may simultaneously serve on the audit committees of more than three other public companies unless the Board determines that such simultaneous service would not impair the member’s ability to effectively serve on the Audit Committee. Three members of the Audit Committee serve on no other public company audit committees, one serves on one other public company audit committee and one serves on two other public company audit committees. The Board has determined that such simultaneous service does not impair the ability of the members of the Audit Committee who serve on the other public company audit committees to effectively serve in their CSC Audit Committee roles.
     
  • Each Compensation Committee member must be a “non-employee director” for purposes of Rule 16b-3 promulgated under the Exchange Act and an “outside director” for purposes of Section 162(m) of the Internal Revenue Code.
     The Board has determined that each committee member satisfies all applicable requirements for membership on that committee; and Messrs. Barram, Baum, Chase and Patrick each qualifies as an “audit committee financial expert” for purposes of the rules of the SEC. The current committee membership, the number of meetings during the last fiscal year and the function of each of the standing committees are described below.
 
            Nominating/
            Corporate
Independent   Audit   Compensation   Governance
Directors       Committee       Committee       Committee
Irving W. Bailey, II          
David J. Barram         Chair
Stephen L. Baum        
Erik Brynjolfsson          
Rodney F. Chase   Chair      
Judith R. Haberkorn          
F. Warren McFarlan        
Chong Sup Park       Chair    
Thomas H. Patrick          
Number of Meetings in Fiscal 2011   5   7   5

     Audit Committee
 
     The Audit Committee oversees the accounting and financial reporting processes and related internal control framework of the Company, and audits of the Company’s financial statements and internal controls over financial reporting. The Committee assists the Board in its oversight of the integrity of the Company’s financial statements, the Company’s compliance with legal and regulatory requirements, the independent auditors’ qualifications and independence, and the performance of the Company’s internal audit function and independent auditors. The Committee is directly responsible for the appointment, compensation, retention and oversight of the independent auditors. A report of the Committee is included on further below in this proxy statement.
 
     Anyone with questions or complaints regarding accounting, internal accounting controls or auditing matters may communicate them to the Audit Committee by calling CSC’s Open Line (800.822.5527). Calls may be confidential or anonymous. All such questions and complaints will be forwarded to the Audit Committee for its review and will be simultaneously reviewed and addressed under the direction of the Vice President, Internal Audit.
 
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The Audit Committee may direct special treatment, including the retention of outside advisors, for any concern communicated to it. The Code of Conduct prohibits retaliation against CSC employees for any report or communication made in good faith through the Open Line.
 
     Compensation Committee
 
     The Compensation Committee reviews and approves the corporate goals and objectives relevant to the CEO’s compensation, evaluates his performance in light of those goals and objectives and, together with the other independent directors who form the Board, determines his compensation based on that evaluation. The Committee also approves the compensation of all other senior executives, based on compensation recommendations of CSC management and benchmarking studies from outside consultants, and recommends to the Board the compensation of directors for service on the Board and its committees. The Committee is authorized to retain, at the Company’s expense, such independent compensation consultants, counsel and other advisors it deems necessary or advisable to carry out its duties. In addition, the Committee administers all stock incentive plans, and makes recommendations to the Board regarding incentive compensation plans and equity-based plans. The Committee also is responsible for reviewing management’s company-wide risk assessment of compensation programs. Except to the extent prohibited by law or the rules of the New York Stock Exchange, the Committee may delegate any of its responsibilities to a subcommittee of one of more members. A report of the Committee is included elsewhere in this proxy statement.
 
     Compensation Committee Interlocks and Insider Participation. None of the members of the Compensation Committee was at any time during Fiscal 2011, or at any other time, one of our officers or employees. No executive officer of the Company served or serves on the compensation committee or board of any company that employed or employs any member of the Compensation Committee or Board.
 
     Nominating/Corporate Governance Committee
 
     The Nominating/Corporate Governance Committee assists the Board of Directors in identifying and evaluating candidates for election or re-election as directors, and in shaping the corporate governance of the Company. The Committee recommends the membership and chairman of each Board committee, and monitors the continuing qualification of directors to serve as Board and committee members. Periodically, the Committee assesses Board size, structure and operations, and reviews the Company’s significant corporate governance documents. The Committee oversees the orientation and education of directors, and the Board’s annual self-evaluation of its performance. The director nomination process is discussed in “Election of Directors; Director Nomination Process.”
 
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DIRECTOR COMPENSATION
 
     Employee directors do not receive any separate compensation for their Board activities. The following table sets forth for the annual retainer and attendance fees paid to our non-management directors. There were no adjustments to the retainers and fees paid to our non-management directors in Fiscal 2011.
 
Fiscal 2011 Director Retainers and Fees
Annual Retainer1       $ 60,000
Annual Equity Award     3,0002
Attendance Fee1   $ 2,000 per day of meetings
Lead Director Retainer1   $ 35,000
Audit Committee Chairman Retainer1   $ 20,000
Compensation Committee Chairman Retainer1   $ 15,000
Nominating/Corporate Governance Committee Chairman Retainer1   $ 10,000
____________________
 
1. Amounts payable in cash may be deferred pursuant to the Company’s Deferred Compensation Plan, which is described further below in this proxy statement.
          
2. Represents an award of 3,000 restricted stock units. Dr. Erik Brynjolfsson, who became a CSC director on December 12, 2010, received a pro rata award of 1,700 restricted stock units on February 14, 2011. Restricted stock unit awards vest in full at the 2011 Annual Meeting and are automatically redeemed for CSC stock and dividend equivalents (plus interest) when a CSC director ceases to serve on the Board, either in a lump sum or in annual installments over periods of 5, 10 or 15 years, at the director’s election. In addition, restricted stock units vest in full upon a change in control of the Company.
 
     The following table sets forth for each of the non-management directors certain information with respect to compensation earned in Fiscal Year 2011.
 
                    Change in Pension    
                    Value and Nonqualified    
    Fees Earned or   Stock   Deferred Compensation    
Name   Paid in Cash1 ($)   Awards2 ($)   Earnings3 ($)   Total ($)
(a)       (b)       (c)       (d)       (e)
Irving W. Bailey, II     149,000       126,750       35,793     311,543
David J. Barram     118,000       126,750           244,750
Stephen L. Baum     108,000       126,750       23,646     258,396
Erik Brynjolfsson     42,261       81,022           123,283
Rodney F. Chase     126,000       126,750           252,750
Judith R. Haberkorn     114,000       126,750           240,750
F. Warren McFarlan     112,000       126,750       8,920     247,670
Chong Sup Park     129,000       126,750       5,361     261,111
Thomas H. Patrick     100,000       126,750           226,750
____________________
 
1. Column (b) reflects all cash compensation earned during Fiscal Year 2011, whether or not payment was deferred pursuant to the Deferred Compensation Plan.
          
2. Column (c) reflects the grant date fair value computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 – Compensation – Stock Compensation (“FASB ASC Topic 718”) in connection with the RSUs granted on August 16, 2010 to our directors then serving and February 14, 2011 to Dr. Brynjolfsson who became a CSC director on December 12, 2010. For a discussion of
 
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  the assumptions made in the valuation of restricted stock and RSUs, reference is made to the section of Note 1 of the Company’s 2011 Annual Report filed on Form 10-K providing details of the Company’s accounting under FASB ASC Topic 718. The aggregate number of stock awards outstanding for each director at fiscal year-end are as follows:
          
    Aggregate
    Stock Awards
    Outstanding
Name       as of April 1, 2011
Irving W. Bailey, II     26,852  
David J. Barram     16,200  
Stephen L. Baum     23,919  
Erik Brynjolfsson     1,700  
Rodney F. Chase     22,640  
Judith R. Haberkorn     10,100  
F. Warren McFarlan     28,210  
Chong Sup Park     10,800  
Thomas H. Patrick     17,600  

3. Column (d) reflects that portion of the interest credited to the director during Fiscal Year 2011 under the Deferred Compensation Plan which is considered to be at above-market rates pursuant to SEC rules. The non-management directors do not have a pension plan.
          
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PROPOSAL 1
 
ELECTION OF DIRECTORS
 
     Our Board of Directors has nominated all ten incumbent directors for election at the 2011 Annual Meeting to hold office until their successors have been elected and qualified. Directors are elected by a majority vote in uncontested elections; therefore, each director nominee must receive a majority of the votes cast with respect to such nominee at the Annual Meeting (the number of “FOR” votes must exceed the number of “AGAINST” votes). In accordance with the Guidelines, if an incumbent director nominee fails to receive the requisite number of votes, such director nominee shall promptly tender his or her resignation for consideration by the Nominating/Corporate Governance Committee.
 
     It is intended that the accompanying proxy, if executed and returned with no voting instructions indicated, will be voted for the election to the Board of the ten director nominees in this proxy statement.
 
Director Nomination Process
 
     The Nominating/Corporate Governance Committee is responsible for reviewing and assessing with the Board the appropriate skills, experience, and background sought of Board members in the context of our business and then-current membership on the Board. This assessment of Board skills, experience, and background includes numerous diverse factors including independence, experience, age and gender and ethnic diversity. In addition, the Board believes that current and potential directors collectively should possess the following mix of skills and attributes:
 
  • Professional and personal ethics and values
  • Senior level management or operations experience
  • Government and public policy experience
  • Experience in major academic institution
  • Public company governance experience
  • International business experience
  • Financial literacy and expertise
  • Experience in areas of CSC’s business
  • Independence
 
     In evaluating potential director nominees, the Nominating/Corporate Governance Committee considers each of these attributes. The Committee then considers the contribution they would make to the quality of the Board’s decision making and effectiveness. The Nominating/Corporate Governance Committee will also consider potential director candidates recommended by stockholders. See “About the Annual Meeting; Business for 2012 Annual Meeting”. The Committee has retained from time to time third-party search firms to identify qualified director candidates and to assist the Committee in evaluating candidates that have been identified by others.
 
2011 Director Nominees
 
     The biographies of each of the nominees below contains information as of the date of this proxy statement regarding the person’s service as a director, business experience, director positions held currently or at any time during the last five years and skills.
 
     Each of the nominees has a strong reputation and experience in areas relevant to the strategy and operations of the Company’s businesses, particularly industries and growth segments that the Company serves, such as technology, financial services, international business and government, as well as key geographic markets where it operates. Each of the nominees holds or has held senior executive positions in large, complex organizations or has relevant operating experience or experience in a major academic institution. In these positions, they have also gained experience in core management skills, such as strategic and financial planning, public company financial reporting, corporate governance, risk management, thought leadership, executive management and leadership development. Many of our directors also have experience serving on boards of directors and board committees of other public companies.
 
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     The Board also believes that each of the nominees has other key attributes that are important to an effective board: integrity and demonstrated high ethical standards, sound judgment, analytical skills, the ability to engage management and each other in a constructive and collaborative fashion, diversity of origin, background, experience and thought, and the commitment to devote significant time and energy to service on the Board and its Committees. A chart summarizing the attributes and skills of the Board as a whole is set forth further below.
 
             
    
Irving W. Bailey, II
Age: 70
Director Since: 1992
    
CSC Committees:
 
  • Compensation
    
Public Directorships:
 
  • AEGON N.V.
  • Hospira, Inc.
             
Mr. Bailey is senior advisor to Chrysalis Ventures, Inc., a private equity fund. Prior to his service as senior advisor, Mr. Bailey served as managing director of Chrysalis from 2001 to 2005 and Chairman and Chief Executive Officer of Providian Corporation, an insurance and diversified financial services company from 1988 to 1997. Since 2004, Mr. Bailey has served as a director of Hospira, Inc. and AEGON N.V. and currently serves as AEGON’s vice chairman.
 
Skills and Qualifications:
Senior Level Management Experience: Former Chief Executive Officer of Providian
Public Company Governance Experience: Directorships at two public companies other than CSC
Experience in CSC’s Business Areas: Extensive executive experience in the financial services industry
             
             
    
David J. Barram
Age: 67
Director Since: 2004
    
CSC Committees:
 
  • Audit
  • Nominating/Corporate Governance (Chair)
    
Private Directorships:
 
  • Mobibucks Corporation
             
Mr. Barram is chairman of Mobibucks Corporation, a provider of an alternate payment system and electronic loyalty card and coupon system. Prior to his service as chairman, Mr. Barram served as Chief Executive Officer of Mobibucks from 2006 to 2007 and Administrator of the U.S. General Services Administration, retired as of 2000. Mr. Barram also served as a director of Pope & Talbot, Inc. from 2001 to 2008 and NetIQ Corporation from 2002 to 2006.
 
Skills and Qualifications:
Senior Level Management Experience: Former Chief Financial Officer of Silicon Graphics and Apple Computer
Government and Public Policy Experience: Former Administrator of the U.S. General Services Administration
Experience in CSC’s Business Areas: Extensive executive experience in the technology sector
Financial Literacy: Former Chief Financial Officer of two public companies
             
 
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Stephen L. Baum
Age: 70
Director Since: 1999
    
CSC Committees:
 
  • Audit
  • Nominating/Corporate Governance
    
Public Directorships:
 
  • TransAlta Corporation
             
Mr. Baum is the former chairman and chief executive officer of Sempra Energy, a publicly held energy-services company, retired as of 2006. Mr. Baum served as Sempra’s chairman from 2005 to 2006, chairman and chief executive officer from 2000 to 2005, and president from 2000 to 2004. Mr. Baum has been a director of TransAlta Corporation since 2008 and formerly served as a director of Enterprise Products Partners in 2006 and senior advisor to Sky Fuel, Inc., a solar energy company, from 2007 to 2009.
 
Skills and Qualifications:
Senior Level Management Experience: Former Chief Executive Officer and President of Sempra Energy
Public Company Governance Experience: Experience as a director of a public company in addition to CSC
Experience in CSC’s Business Areas: Extensive public company executive officer experience in the energy and technology sectors
             
             
     Erik Brynjolfsson
Age: 49
Director Since: 2010
    
CSC Committees:
 
  • Audit
      
             
Dr. Brynjolfsson became a director of CSC in December 2010 and is the Schussel Family Professor at the MIT Sloan School. Dr. Brynjolfsson also serves as the director of the MIT Center for Digital Business, since 2002, a research associate at the National Bureau of Economic Research, since 2006, and as the Chairman of the MIT Sloan Management Review, since 2007. Dr. Brynjolfsson lectures worldwide on technology strategy, productivity and intangible assets. Dr. Brynjolfsson served as a director of CSK Corporation from 2006 to 2008.
 
Skills and Qualifications:
Major Academic Institution Experience: Professor at the MIT Sloan School; director of the MIT Center for Digital Business
Experience in CSC’s Business Areas: Internationally recognized expert in technology strategy, productivity and intangible assets and director of the MIT Center for Digital Business
             
             
     Rodney F. Chase
Age: 68
Director Since: 2001
    
CSC Committees:
 
  • Audit (Chair)
  • Nominating/Corporate Governance
    
Public Directorships:
 
  • Petrofac Ltd.
  • Tesco p.l.c.
  • Nalco Company
  • Tesoro Corporation
             
Mr. Chase is a non-executive chairman of Petrofac Ltd., a provider of facilities solutions to the oil and gas industry. He is also the former Deputy Group Chief Executive and Managing Director of BP p.l.c., an oil and gas company, from 1992 to 2003. Mr. Chase has served as Deputy Chairman of Tesco p.l.c., since 2002 and as director of Nalco Company and Tesoro Corporation, since 2005.
 
Skills and Qualifications:
Senior Level Management Experience: Former Deputy Chief Executive and Managing Director of major worldwide public company
Public Company Governance Experience: Experience as a director in four other public companies in addition to CSC
International Business Experience: Extensive chief executive and operational experience in a major international energy company
Experience in CSC’s Business Areas: Extensive experience in the energy industry
             

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Judith R. Haberkorn
Age: 64
Director Since: 2007
    
CSC Committees:
 
  • Compensation
      
             
Ms. Haberkorn was the President of Consumer Sales and Service of Verizon Communications (formerly Bell Atlantic), a provider of broadband, wireline and wireless communications for business, government and consumers, from 1998 to 2000. Ms. Haberkorn also served as a director of Express Jet Holdings, Inc. from 2006 to 2010, Armstrong World Industries from 1997 to 2010, Enesco Group, Inc. from 1993 to 2007 and MCI from 2003 to 2006.
 
Skills and Qualifications:
Senior Level Management Experience: Former President of Consumer Sales and Service, Verizon Communications
Public Company Governance Experience: Experience as a director of four public companies in addition to CSC
Experience in CSC’s Business Areas: Extensive branding, sales and marketing experience at Verizon, a major U.S. technology company
             
             
    
Michael W. Laphen
Age: 60
Director Since: 2007
             
             
Mr. Laphen has served as the Chairman, CEO and President of the Company since 2007. He previously served the Company in roles including President and Chief Operating Officer from 2003 to May 2007, Corporate Vice President from 2001 to 2003, and President of the European Group from 2000 to 2003.
 
Skills and Qualifications:
Senior Level Management Experience: Held a variety of executive positions at CSC
International Business Experience: Experience as President of CSC’s European Group
Experience in CSC’s Business Areas: More than 30 years of experience with the Company including executive and senior management positions that have provided a comprehensive mix of technical, financial and general management experiences in diverse commercial, public sector, and international markets.
             
             
     F. Warren McFarlan
Age: 73
Director Since: 1989
    
CSC Committees:
 
  • Compensation
  • Nominating/Corporate Governance
    
Public Directorships:
 
  • Li & Fung Limited
    (Hong Kong)
             
Dr. McFarlan has been a Professor at Harvard University, Graduate School of Business Administration since 1973 and currently, he is a Baker Foundation Professor and the Albert H. Gordon Professor of Business Administration, Emeritus. He was the T. J. Dermot Dunphy Baker Foundation Professor from 2004 to 2009, and Senior Associate Dean and Director of Harvard’s Asia-Pacific Initiative from 2000 to 2004. Since 2000, Dr. McFarlan has served as a director of Li & Fung Limited and from 2005 to 2009 as a director of thinkorswim Group Inc., formerly known as INVESTools Inc.
 
Skills and Qualifications:
Major Academic Institution Experience: Baker Foundation Professor and Professor Emeritus at Harvard University Graduate School of Business Administration
Public Company Governance Experience: Experience as a director in five public companies other than CSC
International Business Experience: Extensive work in business trends and opportunities in Asia-Pacific countries, especially China
Experience in CSC’s Business Areas: Internationally recognized as a thought leader in the fields of change management, globalization and information technology
             

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Chong Sup Park
Age: 63
Director Since: 2007
    
CSC Committees:
 
  • Compensation (Chair)
    
Public Directorships:
 
  • Brooks Automation, Inc.
  • Ballard Power Systems Inc.
  • Seagate Technology
             
Dr. Park is the former Chairman and CEO of Maxtor Corporation, from 2004 to 2006, prior to its acquisition by Seagate Technology, a manufacturer and designer of hard disk drives. He also served as a director of Maxtor Corporation from 1994 to 2006 and has served as a director of Seagate Technology since 2006. Since 2008, Dr. Park has served as a director of Brooks Automation, Inc. Since 2007, he has served as a director of Ballard Power Systems Inc and formerly served as a director for Stats ChipPAC Ltd. from 2004 to 2007 and Smart Modular Technologies, Inc. from 2008 to 2010.
 
Skills and Qualifications:
Senior Level Management Experience: Former Chief Executive Officer of a worldwide computer products and components company
Public Company Governance Experience: Experience as a director in five public companies other than CSC
International Business Experience: Experience as a chief executive in a worldwide technology company
Experience in CSC’s Business Areas: Extensive experience in the technology industry at major corporations
             
             
 
Thomas H. Patrick
Age: 67
Director Since: 2004
 
CSC Committees:
 
  • Audit
 
Public Directorships:
 
  • Deere & Company
  • Baldwin & Lyons, Inc.
 
Private Directorships:
 
  • New Vernon Capital LLC
             
Mr. Patrick has been the Chairman, since 2004, of New Vernon Capital LLC, a private equity fund. He served as Executive Vice Chairman, Finance and Administration, from 2002 to 2003, and Executive Vice President and Chief Financial Officer, from 2000 to 2002, of Merrill Lynch & Co., Inc., an investment banking and securities brokerage. Since 2000, Mr. Patrick has served as a director of Deere & Company. Since 1982, he has served as a director of Baldwin & Lyons, Inc., and formerly served as a director of Options Express from 2005 to 2006.
 
Skills and Qualifications:
Senior Level Management Experience: Former Chief Financial Officer of a major investment banking and securities brokerage company
Public Company Governance Experience: Experience as a director of three public companies other than CSC
Experience in CSC’s Business Areas: Extensive experience in the financial services industry
Financial Literacy: Extensive experience in corporation finance and accounting, including as former Chief Financial Officer of a major investment banking and securities brokerage company
             

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     Set forth below is a chart of the specific qualifications, attributes, skills and experience of the Board as a whole. While we look to each director to be knowledgeable in these areas, and “” indicates that an item is a specific qualification, attribute, skill or experience that the director brings to the Board, the lack of a “” for a particular item does not mean that the director does not possess that qualification, attribute, skill or experience:
 
Summary of Director Qualifications and Experience
 
                                                   
Professional and Personal Ethics and Values is important given the critical role that ethics plays in the success of our business                    
Senior Level Management or Operations Experience signifies strong leadership qualities and an understanding of operating plans and strategies
                       
Government and Public Policy Experience is relevant to the Company’s role as a major government contractor
                                     
Major Academic Institution Experience brings perspective regarding organizational management and academic research relevant to the Company’s business
                                   
Public Company Governance Experience supports our goals of strong accountability, transparency and protection of shareholder interests.
                   
International Business Experience is important in understanding and reviewing our global business and strategy
                               
Experience in CSC’s Business Areas is relevant to an understanding of the industries served by the Company
                   
Financial Literacy and Expertise is important in understanding and overseeing our financial reporting and internal controls.
                   
Independence is important to insure the effective oversight of management of the Company
                     

The Board of Directors recommends a vote FOR each of its ten director nominees.
 
Certain Litigation
 
     Several shareholders of the Company have made demands on the Board of Directors of the Company or filed purported class or derivative actions against both the Company, as nominal defendant, as well as certain of CSC’s executive officers and directors. These actions, which are described below, generally allege that certain of the individual defendants breached their fiduciary duty to the Company by purportedly “backdating” stock options granted to CSC executives, improperly recording and accounting for allegedly backdated stock options, producing and disseminating disclosures that improperly recorded and accounted for the allegedly backdated options, engaging in acts of corporate waste, and committing violations of insider trading laws. They alleged that certain of the individual defendants were unjustly enriched and seek to require them to disgorge their profits.
 
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     On August 15, 2006, a federal ERISA class action alleging stock options backdating at the Company and miscellaneous violations of ERISA fiduciary duties with respect to CSC’s 401(k) plan was filed in the U.S. District Court in the Eastern District of New York entitled Quan, et al. v. CSC, et al., CV 06-3927. On September 21, 2006, a related ERISA class action was filed in the same court entitled Gray et al. v. CSC, et al., CV 06-5100. The complaints named as defendants the Company, the Company Retirement and Employee Benefits Plans Committee and various directors and officers. The ERISA actions were consolidated and, on February 28, 2007, plaintiffs filed an amended ERISA class action complaint. On January 8, 2008, the District Court granted a motion to transfer the consolidated cases to the United States District Court in Los Angeles, California, where the cases were consolidated before the District Court judge in Case No. CV 08-2398-SJO. Class certification was granted on December 29, 2008. Defendants and plaintiffs each filed motions for summary judgment on May 4, 2009, and supplemental briefs thereafter. On July 13, 2009, the District Court entered an Order granting summary judgment in favor of the Company and the other defendants. On September 30, 2010, the Ninth Circuit Court of Appeals (the “Ninth Circuit”) affirmed the decision of the District Court in favor of the Company and the other defendants. On October 21, 2010, plaintiffs petitioned the Ninth Circuit to rehear en banc the September 30, 2010 decision. Rehearing was denied by the Ninth Circuit on December 2, 2010. On January 26, 2011, an order terminating the case was issued by the District Court.
 
     On May 29, 2009, a class action lawsuit entitled Shirley Morefield vs. Computer Sciences Corporation, et al., Case # A-09-591338-C, was brought in state court in Clark County, Nevada, against the Company and certain current and former officers and directors asserting claims for declarative and injunctive relief related to stock option backdating. The alleged factual basis for the claims is the same as that which was alleged in a prior derivative case, In re CSC Shareholder Derivative Litigation, CV 06-5288, filed in U.S. District Court in Los Angeles, which was dismissed on August 9, 2007, by such court. This dismissal was affirmed on appeal by the Ninth Circuit, which judgment is final. The defendants in the Morefield case deny the allegations in the complaint. On June 30, 2009, the Company removed the case to the United States District Court for the District of Nevada, Case No. 2:09-cv-1176-KJD-GWF. On motion made by the plaintiffs, the District Court remanded the case to state court on February 18, 2010. Defendants filed a motion to dismiss on April 30, 2010, and plaintiffs filed their opposition on June 14, 2010. A hearing took place on August 18, 2010. A decision is pending. It is not possible to make a reliable estimate of the amount or range of loss, if any, that could result from this matter at this time.
 
     On September 24, 2007, a stockholder made a demand to the Board of Directors to cause the Company to pursue claims against certain individuals, including current and former officers and directors of CSC, with respect to alleged stock option backdating. Action on this demand was deferred until the decision of the Ninth Circuit in the federal derivative case referred to above became final. On March 2, 2009, the stockholder made a renewed demand to the Board. On May 20, 2009, the Board formed a special committee comprised solely of independent directors not named in the stockholder demand to investigate and review the demand and recommend to the Board how to respond thereto. On February 8, 2010, the special committee recommended that the Board decline to pursue the claims asserted in the stockholder demand, and the Board adopted that recommendation. The stockholder has been notified of the Board’s decision.
 
     As previously disclosed, in Fiscal 2011, the Company initiated an investigation into certain accounting errors in our Managed Service Sector (“MSS”) segment, primarily involving accounting irregularities in the Nordic region. Initially, the investigation was conducted by Company personnel, but outside Company counsel and forensic accountants retained by such counsel later assisted in the Company’s investigation. On January 28, 2011, the Company was notified by the Division of Enforcement of the SEC that it had commenced a formal civil investigation relating to these matters and other matters subsequently identified by the SEC, with which the Company is cooperating. On May 2, 2011, the Audit Committee of the Board of Directors commenced an independent investigation into matters relating to MSS and the Nordic region, matters identified by subpoenas issued by the SEC’s Division of Enforcement and certain other accounting matters identified by the Audit Committee and retained independent counsel to represent CSC on behalf of, and under the exclusive direction of, the Audit Committee in connection with such independent investigation. Independent counsel has retained forensic accountants to assist their work. Independent counsel also represents CSC on behalf of, and under the exclusive direction of, the Audit Committee in connection with the investigation by the SEC’s Division of Enforcement.
 
     In addition, the SEC’s Division of Corporation Finance has issued comment letters to the Company requesting additional information regarding its previously disclosed adjustments in connection with the above-referenced accounting errors, the Company’s conclusions regarding the materiality of such adjustments and the Company’s
 
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analysis of the effectiveness of its disclosure controls and procedures and its internal control over financial reporting. The Division of Corporation Finance’s comment letter process is ongoing, and the Company is continuing to cooperate with that process.
 
     The investigations being conducted by the Division of Enforcement and the Audit Committee as well as the review of our financial disclosures by the Division of Corporation Finance are continuing and could identify other accounting errors. As a result, we have incurred and will continue to incur significant legal and accounting expenditures, and a significant amount of time of our senior management has been focused on these matters. We are unable to predict how long the Division of Enforcement’s and Audit Committee’s investigations will continue or whether, at the conclusion of its investigation, the SEC will seek to impose fines or take other actions against us. In addition, we are unable to predict the timing of the completion of the Division of Corporation Finance’s review of our financial disclosures or the outcome of such review. Publicity surrounding the foregoing or any enforcement action as a result of the SEC’s investigation, even if ultimately resolved favorably for us, could have an adverse impact on our reputation, business, financial condition or results of operations.
 
     On June 3, 2011, a putative federal class action complaint was filed in the United States District Court for the Eastern District of Virginia by the City of Roseville Employees’ Retirement System, entitled City of Roseville Employees’ Retirement System v Computer Sciences Corporation, et al. (Civil Docket for Case #: 1:11-cv-00610-TSE-IDD). A similar putative federal class action complaint, entitled Murphy v Computer Sciences, et al. (Civil Docket for Case #: 1:11-cv-00636-TSE-IDD) was filed on June 13, 2011, in the same court. Each complaint alleges violations of the federal securities laws in connection with alleged misrepresentations and omissions regarding the business and operations of the Company. Each complaint names as defendants Computer Sciences Corporation, Michael W. Laphen and Michael J. Mancuso. The defendants deny the allegations made in the complaints and intend to defend their position vigorously.
 
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STOCK OWNERSHIP
 
     The following table provides information on Common Stock beneficially owned as of June 13, 2011, by:
  • each person or group believed by the Company to own beneficially more than 5% of the outstanding Common Stock;
     
  • each of the five executive officers named in the Summary Compensation Table under “Executive Compensation,” appearing further below in this proxy statement (the “Named Executive Officers” or the “NEOs”);
     
  • each of the current directors of the Company; and
     
  • all executive officers and directors, as a group.
     Unless otherwise indicated, each person or group has sole voting and investment power with respect to all shares beneficially owned.
 
Name and Address   Number of Shares    
of Beneficial Owner1      Beneficially Owned      Percent of Class
Dodge & Cox           12,966,393 2         8.37% 2
       555 California Street, 40th Floor                  
       San Francisco, California 94104            
BlackRock, Inc.   11,867,556 3   7.66% 3
       40 East 52nd Street            
       New York, New York 10022            
T. Rowe Price Associates, Inc.   10,817,063 4   6.98% 4
       100 East Pratt Street            
       Baltimore, Maryland 21202            
The Vanguard Group   7,811,834 5   5.04% 4
       100 Vanguard Blvd.            
       Malvern, Pennsylvania 19355            
Michael W. Laphen   862,059 6,7     8
Michael J. Mancuso   71,784 6     8
James D. Cook   230,269 6     8
Russell H. Owen   231,357 6     8
James W. Sheaffer   192,762 6     8
Irving W. Bailey, II   33,852 9     8
David J. Barram   16,200 9     8
Stephen L. Baum   25,919 9     8
Erik Brynjolfsson   1,700 9     8
Rodney F. Chase   22,640 9     8
Judith R. Haberkorn   10,100 9     8
F. Warren McFarlan   33,010 9     8
Chong Sup Park   10,800 9     8
Thomas H. Patrick   17,600 9     8
All executive officers and directors of the Company,            
       as a group (20 persons)   2,273,480 6,9,10   1.47%  
____________________
 
1.        Unless otherwise indicated, the address of each person or group is c/o Computer Sciences Corporation, 3170 Fairview Park Drive, Falls Church, Virginia 22042.
 
2.   This information, which is not within the direct knowledge of the Company, has been derived from a Form 13F filed with the SEC on May 12, 2011. Based upon information contained in the filing, Dodge & Cox has sole voting power with respect to 12,215,493 of these shares and sole investment power with respect to 12,966,393 of these shares.
 
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3.        This information, which is not within the direct knowledge of the Company, has been derived from Form 13Fs filed with the SEC on April 21, 2011 by BlackRock, Inc. and certain of its affiliates. Based upon information contained in the filing, BlackRock, Inc. has sole voting and investment power with respect to these shares.
 
4.   This information, which is not within the direct knowledge of the Company, has been derived from a Form 13F filed with the SEC on May 13, 2011. Based upon information contained in the filing, T. Rowe Price Associates, Inc. has sole voting power with respect to 2,824,392 of these shares and sole investment power with respect to 10,817,063 of these shares.
 
5.   This information, which is not within the direct knowledge of the Company, has been derived from a Form 13F filed with the SEC on May 9, 2011. Based upon information contained in the filing, The Vanguard Group has sole voting power with respect to 192,308 of these shares, sole investment power with respect to 7,619,526 of these shares and shared investment power with respect to 192,308 of these shares.
 
6.   With respect to Messrs. Laphen, Mancuso, Cook, Owen, Sheaffer, and all executive officers and directors of the Company as a group, includes 703,445; 61,519; 193,358; 211,618; 167,194 and 1,801,859 shares of common stock, respectively, subject to employee options which were outstanding on June 13, 2011, and currently are exercisable or which are anticipated to become exercisable within 60 days thereafter. These shares have been deemed to be outstanding in computing the Percent of Class.
 
    With respect to Messrs. Laphen, Mancuso, Cook, Owen, Sheaffer and all executive officers and directors of the Company as a group, includes 15,152; 0; 2,424; 3,637; 3,637; and 30,609 shares of unvested restricted stock outstanding on June 13, 2011 which are anticipated to vest within 60 days thereafter. Holders of unvested restricted stock have sole voting power, but no investment power, with respect thereto. With respect to Messrs. Laphen, Mancuso, Cook, Owen, Sheaffer and all executive officers and directors of the Company, as a group, includes 2,315; 265; 835; 1,143; 603; and 8,219 shares of common stock, respectively, which are held for the accounts of such persons under the Company’s Matched Asset Plan and with respect to which such persons had the right, as of June 13, 2011, to give voting instructions to the Committee administering the Plan.
 
7.   Mr. Laphen and his wife share voting and investment power with respect to 6,916 of these shares.
 
8.   Less than 1%.
 
9.   With respect to Mr. Bailey, Mr. Barram, Mr. Baum, Dr. Brynjolfsson, Mr. Chase, Ms. Haberkorn, Mr. McFarlan, Dr. Park, Mr. Patrick and all executive officers and directors of the Company, as a group, includes 26,852; 16,200; 23,919; 1,700; 22,640; 10,100; 28,210; 10,800; 17,600; and 158,021 shares of Common Stock, respectively, which shares are subject to director RSUs that were outstanding on June 14, 2010, and which shares would, pursuant to such RSUs, be distributed to such directors if their directorships were to terminate on August 9, 2011. These shares have been deemed to be outstanding in computing the Percent of Class.
 
10.   The executive officers and directors, as a group, have sole voting and investment power with respect to 2,266,224 of these shares, shared voting and/or investment power with respect to 6,916 of these shares, and no voting or investment power with respect to 340 of these shares.
 
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AUDIT COMMITTEE REPORT
 
     The Audit Committee reviewed and discussed with management and Deloitte & Touche LLP, the Company’s independent auditors, the Company’s audited financial statements for the Fiscal Year ended April 1, 2011, management’s assessment of the effectiveness of the Company’s internal control over financial reporting and Deloitte & Touche LLP’s evaluation of the Company’s internal control over financial reporting. The Audit Committee also discussed with the independent auditors the materials required to be discussed by Statement on Auditing Standards No. 61, Communication with Audit Committees, as amended and adopted by the Public Company Accounting Oversight Board (“PCAOB”) in Rule 3200T. In addition, the Audit Committee received from Deloitte & Touche LLP the written disclosures and the letter required by the applicable requirements of the PCAOB, and discussed with them their independence.
 
     Based on such review and discussions, the Audit Committee recommended to the Board of Directors, and the Board approved, the inclusion of the audited financial statements in the Company’s Annual Report on Form 10-K for the Fiscal Year ended April 1, 2011 for filing with the SEC.
 
     The Audit Committee also appointed Deloitte & Touche LLP as the Company’s independent auditors for the Fiscal Year ending March 30, 2012, and recommended to the Board of Directors that such appointment be submitted to the Company’s stockholders for ratification.
 
Rodney F. Chase, Chair
Stephen L. Baum
David J. Barram
Erik Brynjolfsson
Thomas H. Patrick
 
EXECUTIVE COMPENSATION
 
Compensation Committee Report
 
     The Compensation Discussion and Analysis set forth below discusses the Company’s executive compensation programs and policies. The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based on this review and discussion, the Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.
 
       Chong Sup Park, Chair
       Irving W. Bailey, II
       Judith R. Haberkorn
       F. Warren McFarlan
 
Compensation Discussion and Analysis
 
     The Compensation Committee (the “Committee”) and our Board of Directors are responsible for our executive compensation philosophy and program which are described in this Compensation Discussion and Analysis (the “CD&A”). The CD&A also describes our Fiscal 2011 compensation decisions and the factors we considered in making those decisions. The CD&A focuses on the compensation of our Fiscal 2011 Named Executive Officers (“NEOs”):
  • Michael W. Laphen, Chairman of the Board, President and Chief Executive Officer
     
  • Michael J. Mancuso, Vice President and Chief Financial Officer
     
  • James D. Cook, President, Business Solutions and Services Sector
     
  • Russell H. Owen, President, Managed Services Sector
     
  • James W. Sheaffer, President, North American Public Sector
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Executive Summary
 
     Fiscal 2011 Company Performance
 
     At the outset of Fiscal 2011, CSC established strategic and financial goals designed to expand our leadership role in the rapidly-evolving marketplace of technology-driven business services and solutions. Our strategic goals focused on establishing a leadership position in the emerging high-growth, high-margin services of cloud computing, healthcare and cyber security. The Company’s financial goals, and therefore key business drivers, focused largely on growth in Revenue, Operating Income (“OI”), Free Cash Flow (“FCF”), Earnings per Share (“EPS”) and Return on Invested Capital (“ROIC”).
 
     While we achieved certain strategic goals in Fiscal 2011 that are important to our continued growth, our financial performance fell short of expectations. The Company’s financial performance in Fiscal 2011 can be attributed to a combination of factors, including a slowdown in the U.S. federal procurement environment, driven primarily by delayed contract awards and a higher rate of federal government contract award protests; lower than anticipated revenue, and the inception-to-date profit adjustment taken, on the U.K.’s National Health Service contract; accounting adjustments in the MSS segment, primarily in the Nordic region; and slower-than-expected growth in new contracts and successful contract renewals in certain segments of our business.
 
     Although we did not achieve all of our Fiscal 2011 financial goals, we successfully completed a number of strategic goals that are vital to the Company’s future sustainability and long-term shareholder value. These accomplishments include:
  • Acquiring several companies that will enable us to continue market penetration in high-growth industry segments, such as healthcare, cyber security and cloud computing;
     
  • Expanding CSC’s talent base in support of our identified strategic growth areas;
     
  • Implementing a $1 billion share repurchase program; and
     
  • Implementing a quarterly dividend program and declaring cash dividends of $0.70 per share totaling $108 million, of which $77 million was paid in Fiscal 2011 and $31 million was paid on April 15, 2011.
     Fiscal 2011 Executive Compensation and Pay for Performance
 
     CSC’s executive compensation program is designed to align pay with annual and long-term operating performance and increases in shareholder value. As illustrated below, a small percentage of our executives’ total target direct compensation is fixed, with 90% of target compensation for our CEO and 80% of target compensation for the other NEOs linked to annual and long-term incentives.
 
 
Chief Executive Officer                          Other Named Executive Officers
 
 
*       at target annual incentive and target long-term incentive grant values.
 
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     The actual incentive compensation paid to our NEOs in Fiscal 2011 was significantly below target due to our performance relative to our goals:
  • Fiscal 2011 Revenue, OI, FCF, and EPS – the financial measures used in our Annual Management Incentive Plan (“AMIP”) – resulted in payment at 58.4% of target. See “Annual Incentive Compensation – Fiscal 2011 Financial Results and AMIP Payout” below for details.
     
  • Revenue growth relative to our competitors and average ROIC for fiscal years 2010 and 2011 resulted in no vesting of the performance-vested RSUs (“Performance Share Units”) for that period. See “Long-Term Equity Incentive Compensation – Performance Share Units” below for details.
     In addition, stock options granted in May 2010 with an exercise price of $48.22 have no current intrinsic value and restricted stock units granted at that time have declined in potential value.
 
     Key Fiscal 2011 Compensation Actions
 
     The Committee reviews our compensation policies and practices each year. Our Fiscal 2011 compensation actions were as follows:
  • Following a freeze of NEO base salaries for the prior fiscal year, in May 2010, increased NEO base salaries for Fiscal 2011 to align base salary levels to responsibilities, performance, and salaries at comparable positions in our primary peer group and competitive market;
     
  • In May 2010, increased the target annual and long-term incentive awards for our three sector unit NEOs to reflect an increase in responsibilities and focus on individual operating unit performance;
     
  • Redefined and strengthened the process by which the Board and Committee assess the CEO’s performance to inform and support the Board’s pay decisions for the CEO; and
     
  • Refined and strengthened the process by which the CEO assesses performance of each of his direct reports including the NEOs to inform and support his pay recommendations to the Committee for each of the NEOs other than the CEO.
     During Fiscal 2011, the Committee also reviewed a company-wide risk assessment of compensation programs, which revealed no material risks that may adversely affect the Company.
 
     The Committee made several decisions that will affect the operation of our executive compensation program beginning in Fiscal 2012:
  • Revised the AMIP to provide for Committee discretion to (i) decrease AMIP payments on account of individual performance by up to 10% for executives subject to Section 162(m) of the Internal Revenue Code, and (ii) increase or decrease AMIP payments on account of individual performance by up to 10% for all other executives;
     
  • Increased required threshold performance for all financial measures, other than EPS, from 75% to 80% under the AMIP;
     
  • Instituted an annual formal review process for all executives who are Vice Presidents and above; and
     
  • Provided for the use of discretion to increase or decrease long-term incentive grants by 10% - 20% from target levels based on individual performance, successor viability and/or change in scope of responsibility for each of the NEOs, other than the CEO.
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Elements of Compensation
 
     The following chart summarizes the characteristics and primary purpose of each element in our compensation program.
 
Compensation Element      Characteristics      Primary Purpose
Base Salary
 
Annual fixed cash compensation.
 
Provide a minimum, competitive fixed amount of cash compensation based on individual performance, experience, skills, responsibilities and competitive pay levels.
Annual Cash Incentives
 
Annual variable cash compensation determined by overall Company financial performance.
 
Motivate and reward the achievement of annual financial objectives and, beginning for Fiscal 2012, individual performance.
Long-Term
      
Equity Incentives
 
Long-term variable equity awards generally granted annually as a combination of stock options, Performance Share Units and service-based RSUs (“Service RSUs”).
 
Motivate and reward profitable growth and increases in share price over time.
 
Align pay with CSC’s performance over multiple year performance cycles.
Post-Employment Benefits
 
Retirement and deferred compensation plans and “career” equity awards.  
 
Offer competitive plans designed to attract and retain mid- and late-career senior executives.
Severance/
      
Change-in-Control
 
Contingent short-term compensation.
 
Provide assurance of short term compensation continuity to allow executives to remain focused on shareholder interests in a dynamic environment.
Perquisites and Benefits
 
Limited perquisites and health and welfare benefits.
 
Provide business-related benefits consistent with competitive practice to maximize executive efficiency and attract and retain key executives.

Fiscal 2011 Direct Compensation
 
     Total Direct Compensation
 
     The Committee makes decisions on the level of each element of total direct compensation (i.e., base salary, annual cash incentives, and long-term equity incentives) in the context of the total target direct compensation package to be awarded to each NEO and the relationship of that element to other elements of compensation. Because our focus is on performance, the Committee does not view aggregate amounts earned or benefits accumulated by an executive from prior service with the Company as a significant factor in making compensation decisions. In Fiscal 2011, the Committee generally targeted total direct compensation opportunities, as well as each element of direct compensation, for our CEO and, on average for the other NEOs, to approximate the market median, which is defined as the 50th percentile paid for comparable executive positions by a primary peer group that competes with CSC for executive talent. Please see “Benchmarking” below for a discussion of our primary peer group.
 
     Base Salary
 
     General. Base salary is the only fixed component of our NEOs’ total direct compensation and constitutes a small percentage of total direct compensation. Base salary is determined by the level of responsibility assumed by an executive, experience, performance during the prior fiscal year and competitive pay practices for comparable positions in our primary peer group. At the beginning of each fiscal year, the Committee reviews the base salary for each NEO and determines base salary adjustments, if any. The Committee considers how base salary adjustments
 
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affect annual cash incentives and long-term equity incentive grant values, as both are defined as a percentage of base salary. Base salary adjustments are typically made to reflect promotions, changes in responsibilities, performance, succession prospects and market trends.
 
     Fiscal 2011 Compensation. Following a freeze of our NEO base salaries for Fiscal 2010, in May 2010, for Fiscal 2011 the Committee increased the base salary for each of our NEOs to reflect strong individual and Company performance during the period ending April 2, 2010 (“Fiscal 2010”) as well as to address the gap between the NEO’s base salary and the median base salary in our primary peer group. Prior to the increases base salaries for our NEOs other than the CEO were below market median primarily due to a salary freeze from the prior year. The following table presents our NEOs’ Fiscal 2011 base salaries, the percentage increases over Fiscal 2010 and the percentage such base salary represents in total target direct compensation. In Fiscal 2011, Mr. Laphen’s base salary was at the market median. The other NEOs’ base salaries ranged from 10% below to three percent below the market median.
 
                Percentage of
          Increase   Total Target
    Fiscal 2011   Over Fiscal   Direct
Named Executive Officer      Base Salary ($)      2010      Compensation
Michael W. Laphen        1,125,000               7 %                10 %      
Michael J. Mancuso   632,000     8 %   20 %
James D. Cook   580,000     5 %   20 %
Russell H. Owen   583,000     10 %   20 %
James W. Sheaffer   542,000     12 %   20 %

     Annual Incentive Compensation
 
     General. Annual cash incentives under the AMIP reward executive officers for performance relative to key financial measures that drive value for shareholders. Awards under the AMIP are directly linked to performance and are calculated using the following formula:
 
Base Salary x Target AMIP Percentage x Performance Payout Percentage
 
     At the beginning of each fiscal year, the Committee establishes each NEO’s Target AMIP Percentage, a percentage of his base salary, and the Performance Payout Percentages, which provide a range of payouts based on the Company’s performance over several key financial measures. The Performance Payout Percentages range from 150%, if performance greatly exceeds the Company’s targets, to 0%, if performance fails to reach minimum threshold levels.
 
     Target AMIP Percentage. Each NEO’s target AMIP value was established relative to market position and individual scope of responsibility and reflects the Committee’s ongoing strategy of moving our operating unit leaders to more performance-based variable pay. The table below reflects the target AMIP value, the Target AMIP Percentage and the percentage the AMIP award represents of total target direct compensation. In Fiscal 2011, Mr. Laphen’s target annual incentive compensation was seven percent above the market median. The other NEOs’ target annual incentive compensation ranged from five percent above to 13% above market median.
 
                Percentage of
                Total Target
    Target AMIP   Target AMIP   Direct
Named Executive Officer      Value ($)      Percentage      Compensation
Michael W. Laphen        2,250,000               200 %                19 %      
Michael J. Mancuso   632,000     100 %   20 %
James D. Cook   638,000     110 %   22 %
Russell H. Owen   641,300     110 %   22 %
James W. Sheaffer   596,200     110 %   22 %

     Fiscal 2011 AMIP Financial Measures and Performance Goals. An executive officer’s actual earned and paid AMIP award is determined by the Company’s performance relative to the target performance levels of the four key financial measures described below. In Fiscal 2011, the Committee retained the Fiscal 2010 financial measures and
 
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weight of each measure to provide consistency, but increased the target for each financial measure. The Committee believed that these measures and corresponding performance goals provide a balanced scorecard of the Company’s annual operating performance and are consistent with the Company’s key business drivers designed to increase revenue and incent sustainable profitability. The Committee further believed that the breadth of financial performance measures for 2011 AMIP awards mitigates excessive risk taking. The table below describes each financial measure, its relative weight in determining Fiscal 2011 AMIP awards and the Company’s Fiscal 2011 goals.
 
            FY 2011 Goals*
            (millions, except
Financial Measures       Purpose       Weight       per share data)
Revenue   Primary measure of growth which requires expansion of current business and capture of new business.   30%         $ 16,953      
                   
Operating Income   Key component of profitability that reflects growth and profit margins.   30%     $ 1,524  
                   
Earnings Per Share   Primary measure of company-wide performance that reflects operating synergies and collaboration across lines of business.   20%     $ 5.30  
                   
Free Cash Flow   Key component of Company valuation reflecting liquidity and profitability.   20%     $ 759  

*       All measures adjusted for divestiture of Mission Solutions LLC.
 
     Performance Payout Percentage. For Fiscal 2011, the Committee established two schedules that determine payouts at various performance levels, one for EPS and another for Revenue, OI and FCF. These schedules provide for reduced payouts if results fall below target performance levels, down to a threshold level, below which no payouts are earned. Similarly, increased payouts are provided, up to a cap (150%), if results exceed target performance levels. In order to assure profitable revenue, the Company must achieve the OI target before the payout for Revenue results can exceed 100%. Further, in Fiscal 2011, in order to achieve any Revenue payout under the AMIP, the Company must achieve 75% of the OI target.
 
     Threshold, on-target and maximum payout percentages for AMIP performance measures are indicated below. Actual payouts are determined by extrapolating between multiple achievement/payout points interspersed between the points listed in the table below.
 
    REVENUE, OI and FCF   EARNINGS PER SHARE
        Achievement1       Payout2       Achievement1       Payout2
Maximum   ≥120 %          150 %        ≥108.5 %        150 %  
On-Target   100 %   100 %   100 %   100 %
Threshold   75 %   50 %   87.5 %   50 %
Below Threshold   <75 %   0 %   <87.5 %   0 %
____________________
 
1.   Percentage of target performance level.
 
2.       Percentage of target payout.
 
     At the end of the fiscal year, the Committee determines the individual payout percentages for each financial measure which establishes the Performance Payout Percentage by calculating the combined weighted average of all of the individual payout percentages for each financial measure.
 
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     Fiscal 2011 Financial Results and AMIP Payout. At the end of Fiscal 2011, the Committee reviewed the Company’s performance against each financial measure and established the Payout Percentage for Fiscal 2011 by calculating the combined weighted average of all of the payout percentages for each financial measure. The results are as follows:
 
Fiscal Year 2011 AMIP Goals and Performance Results
                Target1   Results                
Financial Measures       Weight       (millions except EPS)       (millions except EPS)       Achievement       Payout
Revenue2        30 %               $ 16,953                     $ 16,119                  95.1 %         90.2 %
Operating Income3       30 %       $ 1,524       $ 1,233       80.9 %     61.8 %
Earnings Per Share       20 %       $ 5.30       $ 4.55       85.9 %     0.0 %
Free Cash Flow4       20 %       $ 759       $ 623       82.1 %     64.2 %
Total     100 %       Weighted Average Payout     58.4 %
____________________
 
1.   All measures adjusted for divestiture of Mission Solutions LLC.
 
2.   Excludes revenue from acquisitions.
 
3.   Consists of revenue less cost of services, depreciation and amortization expense and segment general and administrative (G&A) expense, excluding corporate G&A.
  
4.       Consists of operating cash flow, investing cash flow, excluding business acquisitions, dispositions and purchase or sale of available for sale securities and payments on capital leases and other long term asset financings.
 
     The following annual incentive compensation awards were approved by the Board for Mr. Laphen and by the Committee for the other NEOS:
 
Fiscal Year 2011 AMIP Awards
    Base Salary   Target   Target   Actual Award   Paid Award
Named Executive Officer       ($)       Percentage       Award ($)       Paid ($)       (% of Target)
Michael W. Laphen   1,125,000      200 %      2,250,000      1,314,000           58.4 %    
Michael J. Mancuso   632,000     100 %     632,000   369,100       58.4 %  
James D. Cook   580,000     110 %     638,000   372,600       58.4 %  
Russell H. Owen   583,000     110 %     641,300   374,500       58.4 %  
James W. Sheaffer   542,000     110 %     596,200   348,200       58.4 %  

     Long-Term Incentive Compensation
 
     General. Long-term incentive (“LTI”) compensation is the largest component of our executive compensation program and is comprised of annual grants of stock options (“Stock Options”), Performance Share Units and Service RSUs. At the beginning of each fiscal year, the Committee establishes the target long-term incentive grant value for each NEO and the mix of grant values for each component of long-term incentive compensation. The target long-term incentive grant values were determined relative to market median, individual performance during the previous fiscal year and succession considerations; and are expressed as a multiple of base salary.
 
     Fiscal 2011 LTI Target Percentage. In Fiscal 2011, the Committee increased Mr. Mancuso’s target long-term incentive grant value from 250% to 300% of his base salary and Mr. Laphen’s long-term incentive grant value from 700% to 750% of his base salary to better align them with market median and to reward strong Fiscal 2010 performance. Messrs. Cook, Owen and Sheaffer’s target long-term incentive percentages remained unchanged at 300% of base salary. The following table presents the Fiscal 2011 target long-term incentive grant values, the Target LTI Percentage and long-term incentives as a percentage of total target direct compensation. In Fiscal 2011, Mr. Laphen’s target long-term incentive compensation was four percent above the market median. The other NEOs’ target long-term incentive compensation ranged from five percent below market median to five percent above market median.
 
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                Percentage of
                Total Target
    Base Salary   Target LTI   Target LTI   Direct
Named Executive Officer       ($)       Percentage       Value ($)       Compensation
Michael W. Laphen   1,125,000   750%   8,437,500   71%
Michael J. Mancuso   632,000   300%   1,896,000   60%
James D. Cook   580,000   300%   1,740,000   59%
Russell H. Owen   583,000   300%   1,749,000   59%
James W. Sheaffer   542,000   300%   1,626,000   59%

     Components of Long-Term Incentive Compensation. The graph below depicts the percentage of long-term incentive grant value delivered as Stock Options, Performance Share Units and Service RSUs for Fiscal 2011.
 
Fiscal 2011 Long-Term Incentive Mix
 
 
     Stock Options. The Committee determined that long-term incentives for Fiscal 2011 should be weighted most heavily toward Options, which provide value to executives only if the market value of our common stock appreciates over time. The exercise price for each Option is not less than the fair market value of our common stock on the grant date, and one-third of the Options become exercisable or “vest” on each of the first three anniversaries of the grant date. See “Fiscal 2011 Compensation” below for a discussion of how the number of shares underlying this and each other equity award was determined.
 
     Performance Share Units. Performance Share Units provide an opportunity for our executives to earn common stock if certain performance criteria are met over a specified performance period. The number of Fiscal 2011 Performance Share Units which vest and are settled in shares of our common stock will vary depending on our performance over a three-year performance period ending on March 29, 2013. Our Fiscal 2011 Performance Share Units, granted in May 2010, will vest based on our three-year growth in revenue relative to an index of companies1 with which we compete in the commercial and public sector markets (the “Peer Index”) and our three-year average ROIC. The Committee established the same financial measures for the Fiscal 2010 and Fiscal 2011 Performance Share Units.
____________________
 
1       The commercial sector companies are: Accenture Ltd., Automatic Data Processing, Inc., ATOS Origin, Cap Gemini S.A., CGI Group, Inc., Cognizant Technology Solutions Corp., Convergys Corporation, Deutsche TeleKom AG – Systems Solutions, HP – HP Enterprise Business-Services, IBM - Global Technology Services and Global Business Services, Siemens AG – IT Solutions and Services, Syntel, Inc., Tata Consultancy Services Limited, Unisys – Services and Wipro Ltd. The public sector companies are: Boeing – Global Services and Support, CACI International Inc., Dynamics Research Corp, General Dynamics Corp. – Information Systems and Technology, L-3 Communications Holdings Inc. – Government Services, Aircraft Modernization and Maintenance, Lockheed Martin – Information Systems & Global Services, ManTech International, MAXIMUS, Inc., NCI, Inc., Northrop Grumman – Information Systems, Technical Services, Raytheon – Intelligence and Information Systems, Technical Services, Network Centric Systems, SAIC, Inc. and SRA International Inc.
 
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Financial Measure       Purpose
Relative Revenue Performance  
Measures our market share performance, relative to our competitors, in the commercial and federal markets and requires both sustaining and growing current business and capturing new business.
     
ROIC  
Key component of profitability that challenges executives to achieve annual and long-term profitable growth.

     The Committee believes that our long-term revenue performance should be measured by CSC’s ability to increase market share relative to the companies with which CSC competes in all segments of our business. Therefore, the Committee evaluates the Company’s Relative Revenue Performance over the applicable performance period against the size-weighted revenue performance of our peer companies in the commercial and federal sectors, which are then combined into an overall Peer Index. The Committee believes this index represents an appropriate mix of companies to evaluate our effectiveness at both generating revenue and improving our market share.
 
     The methodology employed for the calculation of Relative Revenue Performance provides guidance for variables within the business environment that impact the comparability of CSC revenue growth and that of the Peer Index companies. Baseline revenue amounts are adjusted to reflect material acquisitions, divestitures and segment realignments. In addition, the Peer Index companies are disaggregated into either a federal or commercial index which allows the revenue growth results of each index to be weighted based on CSC’s relative activity within these sectors.
 
     The following Performance Share Unit Cycle Payout Matrix depicts the payout for achievement of various combinations of Relative Revenue and ROIC. The number of Performance Share Units that vest at the end of the performance period ranges from zero if revenue underperforms the Peer Index by 3% and ROIC drops to 8.5%, to 200% of the target number of shares if revenue exceeds the Peer Index by 3% and ROIC reaches 11.5% The Committee established similar performance measures for our Fiscal 2010 two-year Performance Share Units. Each vested Performance Share Unit is settled in one share of common stock.
 
     As noted on the chart below, at the end of the two-year performance period ended April 1, 2011, none of the Performance Share Units vested because Company revenue growth of -1.36% versus that of the Peer Index (2.07%) resulted in a Relative Revenue Performance of –3.43%. Relative Revenue Performance below -3.00 resulted in no payout, notwithstanding achievement of ROIC of 9.96%*.
 
    Return on Invested Capital (ROIC)
    Over Performance Period
% of Target Shares Earned                
      8.5% 9.0% 9.5% 10.0% 10.5% 11.0% 11.5%
    3.0% 60% 83% 107% 130% 153% 177% 200%
  Relative Revenue 2.0% 50% 73% 97% 115% 143% 167% 190%
  Performance over 1.0% 40% 63% 87% 100% 133% 157% 180%
  Performance Period 0.0% 30% 53% 77% 90% 123% 147% 170%
    -1.0% 20% 43% 67% 80% 113% 137% 160%
    -2.0% 10% 33% 57% 70% 103% 127% 150%
    -3.0% 0% 23% 47% 60% 93% 117% 140%
  Two-Year Performance              

*       adjusted through the second quarter of Fiscal 2011 to reflect $1 billion of the $1.5 billion drawdown under the Company’s revolving credit facility in Fiscal 2009 as a result of the then-existing liquidity crisis.
   
     Service RSUs. Service RSUs provide an opportunity for executives to earn CSC common stock if they remain with the Company for a specified period of time. Service RSUs vest 100% on the third anniversary of the grant date and are settled in shares of CSC common stock. The Committee believes that these awards are effective in enhancing retention of key executives and motivating efforts to increase Company share price over the long term.
 
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     Fiscal 2011 Compensation. The target award value and the number of underlying shares2 granted for each element of LTI compensation is as follows:
 
Fiscal 2011 Long-Term Incentive Awards
 
                      Performance              
            Stock Options   Share Units   Service RSUs
    Target Long-   Target   Stock   Target   Share   Target        
    Term Incentives   Award Value   Options   Award Value   Units   Award Value   Share Units
Named Executive Officer   ($)   ($)   (#)   ($)       (#)   ($)   (#)
Michael W. Laphen         8,437,500            3,375,000           189,179          2,531,250       47,723          2,531,250              47,723  
Michael J. Mancuso     1,896,000     758,400     42,511   568,800     10,724   568,800       10,724  
James D. Cook     1,740,000     696,000     39,013   522,000     9,842   522,000       9,842  
Russell H. Owen     1,749,000     699,600     39,215   524,700     9,893   524,700       9,893  
James W. Sheaffer     1,626,000     650,400     36,457   487,800     9,197   487,800       9,197  

     Fiscal 2011 Total Target Direct Compensation
 
     The chart below displays each element of target direct compensation described above and the resulting amounts. As noted above in the discussion of each element of compensation, an executive officer’s actual compensation will vary from the Committee’s targets based on our financial results and our stock price performance. In Fiscal 2011, Mr. Laphen’s total target direct compensation was four percent above the market median. The other NEOs’ total target direct compensation ranged from three percent below market median to five percent above market median.
 
                        Total Target
        Target Annual   Target Long-Term   Direct
    Base Salary       Cash Incentives   Equity Incentives   Compensation
Named Executive Officer       ($)   ($)   ($)       ($)
Michael W. Laphen   1,125,000     2,250,000           8,437,500        11,812,500    
Michael J. Mancuso   632,000     632,000       1,896,000     3,160,000  
James D. Cook   580,000     638,000       1,740,000     2,958,000  
Russell H. Owen   583,000     641,300       1,749,000     2,973,300  
James W. Sheaffer   542,000     596,200       1,626,000     2,764,200  

Other Executive Compensation
 
     Post-Employment Benefits
 
     Retirement Plans. Retirement and deferred compensation benefits encourage long-term service and the Committee views such benefits as a component of our executive compensation program. As such, we offer our employees, including the NEOs, a retirement program that provides the opportunity to accumulate retirement income. We periodically review our benefits program against our Peer Group and aim for the program to be at or near the market median.
____________________
 
2      
In accordance with CSC’s Equity Grant Policy, the target award values listed in this table generally differ from the award values listed in the Summary Compensation Table. In order to determine the number of stock options to award, the grant value for options is divided by the fair market value of an option determined by using the average closing price of CSC stock for the three-month period ending on the grant date and the Black Scholes option pricing model. In contrast, the grant values in the Summary Compensation Table are determined using the grant date closing price. The number of shares underlying our Performance Share Units and Service RSUs is calculated by dividing the target value for each component by the average closing price of CSC stock for the three-month period ending on the grant date. This method is employed to reduce the impact of stock price spikes, either positive or negative, when determining the number of shares underlying these awards.
 
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Retirement Plans
CSC Matched Asset Plan (“MAP”)       Broad-based, qualified, defined contribution 401(k) plan with company match on a portion of employee contributions and participant-directed investment alternatives.
Pension Plan   Prior to July 10, 2009, employees could participate in a broad-based, qualified pension plan which offered post retirement income based on a combination of employee and company contributions. Effective July 10, 2009, the plan was closed to new entrants and future accruals stopped for most participants, including the NEOs. Additional details can be found under “Pension Benefits” below.
Deferred Compensation Plan   CSC maintains the CSC Deferred Compensation Plan, which is offered to approximately 1,200 executives annually. This unfunded plan allows participants to defer receipt of annual incentive compensation and, in some cases, salary to a date certain to save for events such as college education or retirement. Additional details can be found under “Fiscal Year 2011 Nonqualified Deferred Compensation” below.
Supplemental Executive Retirement
       Plan (“SERP”) and Excess Plan
  Prior to October 28, 2007, selected executive officers could participate in these unfunded nonqualified defined benefit pension plans. The plans were closed to new participants as of October 28, 2007. Messrs. Laphen, Cook and Owen participate in the SERP and Excess Plan. Additional details can be found under “SERP and Excess Plan” below.

     Career Shares. CSC grants Career Shares to a limited number of key executives who are not participants in the SERP and the Excess Plan. Career Shares are delivered through RSUs which vest (but with a deferred delivery date) upon a recipient reaching age 65 or age 55 or older with 10 years or more of service, or as otherwise determined by the Compensation Committee. Delivery of shares is deferred until retirement and is spread ratably over the 10 years following retirement, thereby continuing to tie a portion of the executive’s post-retirement income to share value and promoting long-term alignment with shareholder interests. The Career Shares program is a valuable tool in attracting and retaining mid-to-late career senior executives. Messrs. Mancuso and Sheaffer each received a Career Shares grant in Fiscal 2011. The Fiscal 2011 grants were valued using the same formula approved in Fiscal 2010 (25% of base salary earned plus the AMIP payout (rather than target)).
 
     Severance and Change-in-Control Compensation
 
     In order to offer competitive total compensation packages to our executive officers, as well as to ensure the ongoing retention of these individuals, we offer certain post-employment benefits to a select group of executive officers, including our NEOs. With the exception of the CEO, these post-employment benefits are limited to the payments and benefits provided under Severance Plan for Senior Management and Key Employees (the “CIC Severance Plan”). The CIC Severance Plan provides reasonable income and benefits continuity protection to the executive for the limited case in which the employment of an NEO is terminated without cause or for good reason during a specified window of time following a change in control. The CIC Severance Plan is intended to preserve executive productivity and encourage retention in an actual or potential change in control of the Company. We believe the importance of these benefits increases with the position and level of responsibility of the executive. Additional details regarding the Severance Plan can be found under “Severance Plan for Senior Management and Key Employees” below.
 
     In addition to the Severance Plan, the Company has entered into an employment agreement with Mr. Laphen, which contains a severance arrangement. This severance feature only applies to terminations absent a change in control and does not apply if Mr. Laphen becomes eligible for payments under the CIC Severance Plan. Additional details are provided under “Employment and Other Agreements” below. The Company maintains no other severance arrangements for the benefit of our executive officers.
 
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     Perquisites and Other Benefits
 
     Health Care Benefits. CSC provides a comprehensive set of benefits to eligible employees, including medical, dental, life, disability and accident. These benefits are available to all U.S. employees generally, including the NEOs, and are comparable to those provided by our Peer Group. These programs are designed to provide certain basic quality of life benefits and protections.
 
     Perquisites. CSC provides certain limited perquisites to senior executives, including the NEOs, in order to enhance their security and productivity. The Compensation Committee reviews the perquisites provided to the NEOs annually as part of their overall review of executive compensation. As part of this review, the Compensation Committee eliminated tax gross-ups on financial counseling services effective for Fiscal 2011 and is phasing out CSC’s automobile program, which had been offered to the NEOs and other members of senior management, over the next year. The Compensation Committee has determined that it is reasonable and competitive to provide relocation benefits to newly hired or relocated executives.
 
     In addition, the CEO may use Company owned or leased aircraft for personal purposes and, at times, is advised to use such aircraft for security reasons even if for personal travel. The CEO is taxed on the value of this usage according to IRS rules and no tax gross-up is provided for personal usage of corporate aircraft. Security services are also provided to the CEO. See notes to the Summary Compensation Table.
 
Compensation Framework
 
     Role of the Management
 
     The CEO, with the assistance of the Vice President and Chief Human Resources Officer, conducts an annual review of the total compensation of each executive officer, including the NEOs. The CEO’s review includes an assessment of each executive officer’s performance, the performance of the individual’s respective business or function, employee retention considerations, succession potential and competitive market. Following such review, the CEO recommends the level of base salary increase (if any), target annual incentive award, and the target long-term incentive award for the executive officers to the Compensation Committee. Following the conclusion of Fiscal Year 2011, the CEO assessed the members of his senior leadership team, including the NEOs, on the basis of leadership, strategy and planning, operational excellence, customer relations and talent development. These assessments formed the basis of his recommendations for each element of Fiscal 2012 target compensation.
 
     Role of the Compensation Committee
 
     The Compensation Committee, which is comprised entirely of independent directors, is responsible for overseeing the Company’s compensation policies and programs. In fulfilling its responsibilities, the Committee undergoes an annual review of general trends in executive compensation, compensation design, and the total value and mix of compensation for our executive officers. This process includes a review of the total compensation of each executive officer, taking into consideration internal pay equity, tenure and performance of various executive officers, future contributions, succession, competitive market information and benchmark data.
 
     Chief Executive Officer Compensation. The Compensation Committee works directly with the Compensation Consultant to provide a decision-making framework for use in making a recommendation for the Chairman and CEO’s total target direct compensation. The Committee establishes the corporate goals and objectives relevant to the CEO’s compensation, evaluates the CEO’s performance in light of such goals and makes a recommendation to the Board for the CEO’s compensation. The independent directors of the Board review the Committee’s recommendations and determine the CEO’s total compensation. At the close of Fiscal 2011, the CEO completed and submitted to the Board for its consideration a Fiscal 2011 performance self-assessment, which the Board considered in setting Fiscal 2012 CEO compensation. As with the senior leadership team, the categories for assessment were leadership, strategy and planning, operational excellence, customer relations and talent development in addition to the overall financial and strategic performance of the Company.
 
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     Role of Compensation Consultant
 
     To assist the Compensation Committee in discharging its responsibilities, the Committee has retained an independent compensation consultant. See “Board Structure and Committee Composition” above for details regarding the Committee’s authority to retain independent advisors. In Fiscal 2011, the Committee completed its review of alternatives to Towers Watson in order to ensure the independence of the Committee’s Compensation Consultant and in September 2010 the Committee retained Pay Governance as its independent compensation consultant based on Pay Governance’s independence and reputation.
 
     In Fiscal 2011, Pay Governance reported directly to the Compensation Committee as an independent consultant. In this role, Pay Governance consulted with the Committee on executive compensation matters generally, including advising on trends and best practices in the design, composition and policies of executive compensation programs and providing commentary and advice on management proposals to the Committee. Specifically, during Fiscal 2011, the Compensation Consultant advised the Committee on:
  • Pay practice trends;
     
  • Proxy trends;
     
  • Say on Pay;
     
  • CEO performance evaluation;
     
  • Pay for performance; and
     
  • Executive retirement benefit trends.
     The Compensation Consultant also attended all Committee meetings at the request of the Committee Chair. For Fiscal 2011, fees paid to Pay Governance for advising the Compensation Committee on executive and director compensation were $147,211. Other than the work it performed in Fiscal 2011 for the Compensation Committee, Pay Governance did not provide any consulting services to CSC or its executive officers.
 
     Benchmarking
 
     CSC participates in several executive compensation surveys that provide general trend information and details on levels of salary, target annual and long-term incentives and the relative mix of each element in total compensation. As previously stated, the Compensation Committee targets approximately the median compensation of its primary peer companies. The Committee has identified the companies below as CSC’s primary peer group for the purposes of benchmarking pay levels as well as practices (the “primary peer group”). The Committee chose these companies as our primary peers because they had annual revenues approximately 50% to 200% of CSC’s annual revenues, compete with CSC in the commercial and/or public sector market, share a common core technology which includes information technology services or technical systems, and compete with CSC for executive talent.
 
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Company Name       Revenue ($ in billions)*
Northrop Grumman Corp.   34.8
Honeywell International Inc.   33.4
General Dynamics Corp.   32.5
Raytheon Co.   25.2
Accenture, plc   23.1
Xerox Corp.   21.7
Motorola Solutions, Inc.   19.3
EMC Corporation   17.0
L-3 Communications Holdings, Inc.   15.7
Texas Instruments, Inc.   14.0
SAIC, Inc.   11.1
Textron, Inc.   10.5
Automatic Data Processing, Inc.   8.9

*       Represents revenue reported on Form 10-K from April 1, 2010 through March 31, 2011
  
     
Although the Committee has selected the companies listed above as our primary peer group, the nature of CSC’s public sector and global commercial business requires the Committee to utilize market data of certain of the companies on a standalone basis, as well as specific operating units within others of these corporations. The Committee faces difficulty in benchmarking CSC’s compensation programs as it is required to benchmark CSC compensation levels against incongruent compensation and performance data. The individual operating units reviewed by the Committee include General Dynamics Corp. – Information Systems and Technology, L-3 Communications Holdings Inc. – Government Services, Lockheed Martin – Information Systems & Global Services, Northrop Grumman – Information Systems, Technical Services and Raytheon – Intelligence and Information Systems, Technical Services, Network Centric Systems.
 
     The Compensation Committee reviews the pay practices (not pay levels) of several other companies including Dell, Oracle Corporation, Unisys Corp., Hewlett-Packard Company, International Business Machines Corp., and Lockheed Martin Corporation to gain insights into market trends in executive compensation.
 
Additional Compensation Policies
 
     In addition to the components of our executive compensation program, we maintain the compensation policies described below.
 
     Derivatives Trading
 
     The Board of Directors has adopted a policy prohibiting directors, corporate officers and each employee of CSC or its subsidiaries who are financial insiders, and members of their immediate family, from entering into any transactions in CSC’s securities except during announced trading periods, pursuant to a trading plan under 10b5-1 of the Exchange Act or as otherwise permitted by the Company’s General Counsel prior to entering any such transaction. In addition, CSC prohibits directors, officers and financial insiders, and members of their immediate family, from derivative security transactions with respect to equity securities of CSC. CSC also discourages persons subject to such policy from margining or pledging of CSC stock to secure a loan or purchase shares of CSC stock on margin.
 
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     Equity Ownership Guidelines
 
     The Compensation Committee has adopted equity ownership guidelines for senior level executives to encourage them to build their ownership position in our Common Stock over time and retain shares they earn through our equity incentive plans. The Compensation Committee believes that stock ownership by our executive officers further aligns their interests with those of long-term stockholders. Under the equity ownership guidelines, each senior level executive has five years from the date they become subject to such guidelines to achieve the following equity ownership levels:
 
Position       Stock Value as a Percentage of Base Salary
Chief Executive Officer   750%
Other Named Executive Officers   300%

     The Compensation Committee reviews compliance with the guidelines on an annual basis and considers the amount of common stock held directly or through the Company’s 401(k) plan, Career Shares, Performance Share Units and other RSUs in determining whether an executive has achieved his or her designated equity ownership level. In Fiscal 2011, all NEOs were in compliance with the ownership guidelines.
 
     Tax Deductibility of Compensation
 
     Section 162(m) of the Internal Revenue Code limits a company’s annual tax deduction for compensation to its CEO and its three other highest-paid executive officers employed at year-end (other than the CFO) to $1 million per person, unless, among other things, the compensation is “performance-based,” as defined in Section 162(m), and provided under a plan that has been approved by the shareholders. It is our policy to design and administer our compensation program in a tax efficient manner and the Compensation Committee considers the Section 162(m) deduction limitation’s impact on the Company. As noted above, compensation decisions are made, among other things, to ensure market competitiveness and to reward outstanding performance. Sometimes this results in compensation amounts being non-deductible under Section 162(m). For example, since the CEO’s salary is above the $1,000,000 threshold, a portion of his salary and his perquisites are not deductible by the Company. In Fiscal 2011, substantially all such compensation was deductible and the effects of any loss of such deduction were insignificant.
 
     Compensation Recoupment Policy
 
     CSC maintains a compensation recoupment or “clawback” policy that permits the Company to recover performance based compensation from participants whose fraud or intentional illegal conduct materially contributed to a financial restatement. The policy allows for the recovery of the difference between compensation awarded or paid and the amount which would have been paid had it been calculated based on the restated financial statements, excluding any tax payments. In addition, under the Company’s equity grant agreements, employees may be required to forfeit awards or gains if a recipient breaches the non-competition or non-solicitation of employees or non-disclosure provisions of such agreements.
 
     Contracts and Agreements
 
     Currently, the Company is not a party to any employment agreement with any of the NEOs, other than Mr. Laphen. Additional details regarding Mr. Laphen’s employment agreement can be found under “Employment and Other Agreements” below.
 
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Summary Compensation Table
 
     The following table provides information on the compensation of the NEOs in the Fiscal Years indicated.
 
                      Change in        
                      Pension        
                      Value and        
                        Nonqualified        
                    Non-Equity   Deferred        
            Stock   Option   Incentive Plan   Compensation   All Other    
    Fiscal   Salary2   Awards3   Awards4   Compensation5   Earnings6   Compensation7   Total
Name & Principal Position1   Year   ($)   ($)   ($)   ($)   ($)   ($)   ($)
(a)    (b)    (c)    (d)    (e)    (f)   (g)   (h)   (i)
Michael W. Laphen   2011   1,107,692   4,602,406   2,703,160     1,314,000        2,606,789        212,301      12,546,348
       Chairman, President   2010   1,050,000   5,039,322   3,342,614     2,457,000       3,462,606       175,801     15,527,343
       and Chief Executive   2009   1,057,692   4,036,127   2,181,654     2,142,400             150,438     9,568,311
       Officer                                            
                                             
Michael J. Mancuso   2011   621,154   1,322,674   607,435     369,100             26,925     2,947,288
       Vice President and   2010   585,000   1,117,359   665,113     684,100             26,352     3,077,924
       Chief Financial Officer   2009   202,500   963,861   523,404     198,900             4,863     1,893,528
                                             
James D. Cook   2011   573,562   949,162   557,453     372,600       907,341       16,433     3,376,551
       President, Business Solutions &                                            
       Services Sector                                            
                                             
Russell H. Owen   2011   570,769   954,080   560,339     374,500       942,675       17,777     3,420,140
       President, Managed                                            
       Services Sector                                            
                                             
James W. Sheaffer   2011   528,569   1,138,377   520,930     348,200       51,442       9,034     2,596,552
       President, North American                                            
       Public Sector                                            
____________________
 
1.   Mr. Mancuso was elected Vice President and Chief Financial Officer effective December 1, 2008. Messrs. Cook, Owen, and Sheaffer were elected executive officers at the August 9, 2010 Annual Meeting.
 
2.   The amounts shown in Column (c) reflect all salary earned during the fiscal year, whether or not payment was deferred pursuant to the Deferred Compensation Plan.
 
3.   The amounts shown in Column (d) reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 for Performance Share Units, Service RSUs and Career Shares, where applicable, granted during the fiscal year.
 
    Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures. For a discussion of the assumptions made in the valuation of RSUs, reference is made to the section of Note 1 of the Company’s 2011 Annual Report filed on Form 10-K providing details of the Company’s accounting under FASB ASC Topic 718. None of the NEOs forfeited RSUs during Fiscal Year 2011.
 
        A portion of the stock awards granted consisted of Performance Share Units. The amounts shown in Column (d) for Fiscal Year 2009 include the One-Time Award granted in Fiscal Year 2010 which replaced the 2009 awards of Performance Share Units canceled in May 2009. For all Performance Share Units, the amounts in Column (d) reflect the value at the grant date based upon the probable outcome of their respective performance conditions. As noted in the Option Exercises and Stock Vested table below, the One-Time Award granted in Fiscal 2010 paid out at 0% of target based on the Company’s performance over the two-year performance period. The maximum grant date value of 2011 stock awards is as follows:
 
    2011 Stock Awards
Name       at Maximum Value
Michael W. Laphen   $6,903,609
Michael J. Mancuso   $1,839,785
James D. Cook   $1,423,743
Russell H. Owen   $1,431,120
James W. Sheaffer   $1,581,856

41
 

 

4.        The amounts shown in Column (e) reflect the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 for stock options granted during the fiscal year.
 
    Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures. For a discussion of the assumptions made in the valuation of stock options, reference is made to the section of Note 1 of the Company’s 2011 Annual Report filed on Form 10-K providing details of the Company’s accounting under FASB ASC Topic 718. None of the NEOs forfeited stock options during Fiscal Year 2011.
 
5.   The amounts shown in Column (f) reflect amounts earned during the fiscal year under the AMIP, whether or not payment was deferred pursuant to the Deferred Compensation Plan.
 
6.   The amounts shown in Column (g) for Fiscal Year 2011 reflect the sum of (i) the aggregate annual change in the actuarial present value of the NEOs’ accumulated benefit under the Pension Plan, SERP and the Excess Plan plus (ii) the NEOs’ above market or preferential earnings during the fiscal year under the Deferred Compensation Plan, if any. Messrs. Laphen, Cook and Owen are participants in the Pension Plan, SERP and Excess Plan. Messrs. Sheaffer and Cook participate in the Deferred Compensation Plan.
 
    Annual Increase in   Annual Increase in   Annual Increase in   Preferential Earnings    
    Accumulated Benefit   Accumulated Benefit   Accumulated Benefit   Under Deferred    
    Under Pension Plan   Under SERP   Under Excess Plan   Compensation Plan    
Name       at April 1, 2011       at April 1, 2011       at April 1, 2011       During Fiscal Year 2011       Total
Michael W. Laphen     $124,898       $2,417,849       $64,042           $2,606,789
Michael J. Mancuso                          
James D. Cook     $56,351       $769,198       $34,996       $46,826     $907,341
Russell H. Owen     $62,896       $867,631       $12,148           $942,675
James W. Sheaffer                       $51,442     $51,442

7.        The Company provided the following perquisites and other personal benefits, or property, to NEOs, except as indicated: personal use of Company aircraft (Mr. Laphen), financial planning assistance (Messrs. Laphen and Mancuso), security (Mr. Laphen), and automobile. In addition, the Company provides to the NEOs, matching contributions to the Company’s broad-based 401(k) defined contribution plan and premiums for life insurance policies for the benefit of the NEOs, none of whom has, or will receive or has been allocated, an interest in any cash surrender value under these policies. Column (h) includes the total dollar amount of all other compensation, perquisites and other property paid to the NEOs. The incremental cost of each perquisite representing more than 10% of the value of all of an executive’s perquisites or, if greater, more than $25,000 and the amount of matching contributions to the defined contribution plan and life insurance premiums paid for each NEO in Fiscal Year 2011 are set forth below. None of the NEOs received any tax reimbursements during Fiscal Year 2011.
 
   
Amounts reported in Column (h) which meet the threshold for incremental disclosure as described above, include the following for each of the NEOs:
 
Mr. Laphen: automobile, $34,125; personal use of aircraft, $134,970; matching contribution to the defined contribution plan, $6,490; and life insurance premiums, $2,400. The incremental cost of Mr. Laphen’s use of Company aircraft is based on the variable costs to the Company, including fuel costs, on-board catering, landing/ramp fees and other miscellaneous variable costs. This calculation does not include fixed costs which do not change based on usage, such as depreciation, leasing costs, and flight crew salaries.
 
    Mr. Mancuso: automobile, $16,569; financial planning services, $3,750; matching contribution to the defined contribution plan, $5,117; life insurance premiums, $1,489.
 
    Mr. Cook: automobile, $11,286; matching contribution to the defined contribution plan, $3,772; and life insurance premiums, $1,376.
 
    Mr. Owen: automobile, $10,748; matching contribution to the defined contribution plan, $5,661 and life insurance premiums, $1,367.
 
    Mr. Sheaffer: matching contribution to the defined contribution plan, $7,768 and life insurance premiums, $1,266.
 
42
 

 

Summary of CEO Compensation Realized in Fiscal 2011
 
     The table below provides a different perspective on compensation that is supplemental to the information contained in the Summary Compensation Table. This table provides details of actual pre-tax income realized by our CEO during Fiscal 2011 from base salary, annual incentive compensation and from long term incentive compensation regardless of the year in which the equity award was granted. It does not include changes in pension value and non-qualified deferred compensation or other compensation included in column “h” of the Summary Compensation Table.
 
     In addition, this table facilitates comparison of approved or award date value versus actual income earned and received for each component of compensation. As such, it provides further evidence of the pay for performance underpinning of our executive compensation program by demonstrating diminished realized income, especially in our annual and long term incentive programs, relative to potential during a period of minimal appreciation in shareholder value.
 
            Pre-Tax    
    Applicable   Annual Rate/   Realized    
Cash Compensation       Period       Target ($)       Income ($)       Explanation
Salary
 
Fiscal 2011
 
1,125,000
 
1,107,692
  Following the Fiscal 2010 salary freeze, Mr. Laphen’s annual salary rate was increased by 7% effective June 26, 2010. Fiscal 2011 salary earned includes 6 bi-weekly paychecks at the Fiscal 2010 annual salary rate of $1,050,000 and 20 biweekly paychecks at the Fiscal 2011 annual salary rate.
                 
Annual Cash Incentive
 
Fiscal 2011
 
2,250,000
 
1,314,000
 
Based upon CSC’s Fiscal 2011 performance, Mr. Laphen’s actual AMIP award was 58.4% of his target award of 200% of annual salary rate. Please see “Annual Incentive Compensation” for additional details.
                 
Total Cash Compensation       3,775,000   2,421,692    
                   
            Pre-Tax    
     Applicable   Award   Realized    
Equity Compensation   Period   Date Value ($)   Income ($)   Explanation
Restricted Stock
 
5/2005-5/2010
 
322,193
 
361,759
 
This award was granted while Mr. Laphen was President and COO of CSC. 7,273 shares of CSC stock were delivered on May 23, 2010 at the end of the five year vesting period. Pre-Tax Realized Income was 12.3% above the grant date value which is equal to the percentage increase in CSC stock price on the date of release ($49.74) relative to the share price on the grant date ($44.30).
                 
Stock Option
 
5/2002-5/2010
 
247,650
 
75,000
 
This award was granted while Mr. Laphen was President of CSC European Group. All 15,000 shares underlying this award were exercised at an aggregate net gain of $5 per share before tax reflecting a 10.5% increase in CSC stock price at the time of exercise ($51.90) relative to the grant date/exercise price ($46.90).
 
43
 

 

            Pre-Tax    
    Applicable   Award   Realized    
Equity Compensation       Period       Date Value ($)       Income ($)       Explanation
Service RSUs
 
 
5/2006-5/2010
 
 
469,645
 
 
422,044
 
 
This award was granted while Mr. Laphen was President and COO of CSC. The issuance of 8,485 shares on settlement of the RSUs is the second of three equal tranches which vest on the third, fourth and fifth anniversaries of the grant date. Pre-Tax Realized Income was 10.1% below the grant date value which is equal to the percentage decline in CSC stock price on the date of release ($49.74) relative to the share price on the grant date ($55.35).
                 
Service RSUs
 
 
6/2007-6/2010
 
836,845
 
 
765,631
 
 
This award was granted shortly after Mr. Laphen was elected President and CEO of CSC. The issuance of 15,152 shares on settlement of the RSUs is the first of three equal tranches which vest on the third, fourth and fifth anniversaries of the grant date. Pre-Tax Realized Income was 8.5% below the grant date value which is equal to the percentage decline in CSC stock price on the date of release ($50.53) relative to the share price on the grant date ($55.23).
                 
Performance Shares Units
 
 
5/2009-5/2011
 
1,919,745
 
  0   Mr. Laphen was in his current role as Chairman, President and CEO of CSC when this award was granted. The grant date value represents the value of this award if 100% of the target number of units (45,578) were earned, based on the closing price of CSC stock on the grant date. Actual performance was below target on both the relative revenue and two-year ROIC factors resulting in 0%, or no PSUs being earned and issued on settlement.
                 
Total Equity Compensation
 
 
 
3,796,078
 
1,624,434
 
 
Total Realized Compensation           4,046,126    

44
 

 

Grants of Plan-Based Awards
 
     The following table provides information on AMIP awards, RSUs and stock options granted to the NEOs in the Fiscal Year ended April 1, 2011.
 
                                    All Other   All Other        
                                    Stock   Option       Grant
                                    Awards;   Awards;   Exercise   Date Fair
                                    Number of   Number of   or Base   Value of
            Estimated Future Payouts Under   Estimated Future Payouts Under   Shares of   Securities   Price of   Stock and
            Non-Equity Incentive Plan Awards1   Equity Incentive Plan Awards2   Stock or   Underlying   Option   Option
    Grant   Approval   Threshold   Target   Maximum   Threshold   Target   Maximum   Units3   Options   Awards   Awards2
Name   Date   Date   ($)   ($)   ($)   (#)   (#)   (#)   (#)   (#)   ($/Sh)   ($)
(a)       (b)       (c)       (d)       (e)       (f)       (g)       (h)       (i)       (j)       (k)       (l)       (m)
Michael W. Laphen                                                
AMIP       1,125,000   2,250,000   3,375,000              
RSUs – Service   5/25/2010   5/19/2010               47,723       2,301,203
RSUs – Performance   5/25/2010   5/19/2010         4,772   47,723   95,446         2,301,203
Stock Option   5/25/2010   5/19/2010                 189,179   48.22   2,703,160
Michael J. Mancuso                                                
AMIP       316,000   632,000   948,000              
RSUs – Service   5/25/2010   5/18/2010               10,724       517,111
RSUs – Performance   5/25/2010   5/18/2010         1,072   10,724   21,448         517,111
RSUs – Career Shares   5/25/2010   5/18/2010               5,982       288,452
Stock Option   5/25/2010   5/18/2010                   42,511   48.22   607,435
James D. Cook                                                
AMIP       319,000   638,000   957,000              
RSUs – Service   5/25/2010   5/18/2010               9,842       474,581
RSUs – Performance   5/25/2010   5/18/2010         984   9,842   19,684         474,581
Stock Option   5/25/2010   5/18/2010                 39,013   48.22   557,453
Russell H. Owen                                                
AMIP       320,650   641,300   961,950              
RSUs – Service   5/25/2010   5/18/2010               9,893       477,040
RSUs – Performance   5/25/2010   5/18/2010         989   9,893   19,786         477,040
Stock Option   5/25/2010   5/18/2010                 39,215   48.22   560,339
James W. Sheaffer                                                
AMIP       298,100   596,200   894,300              
RSUs – Service   5/25/2010   5/18/2010               9,197       443,479
RSUs – Performance   5/25/2010   5/18/2010         920   9,197   18,394         443,479
RSUs – Career Shares   5/25/2010   5/18/2010               5,214       251,419
Stock Option   5/25/2010   5/18/2010                 36,457   48.22   520,930
____________________
 
1.        The amounts shown in Columns (d), (e) and (f) reflect the threshold, target and maximum amounts which could be earned under the AMIP for Fiscal 2011. Actual amounts earned for Fiscal 2011 under the AMIP are set forth in column (f) of the Summary Compensation Table. Due to the Company’s performance in Fiscal 2011, the AMIP paid out below target levels.
 
2.   The number of shares which vest ranges from zero if revenue underperforms the Peer Index by 3% and ROIC drops to 8.5% to two times the number of target shares if revenue exceeds the Peer Index by 3% and ROIC reaches 11.5%. The threshold number contained in Column (g) represents achievement of 10% of target, but the actual payment could range to zero.
 
3.   Career Shares are RSUs that vest upon the executive reaching age 65, or age 55 or older with 10 or more years of service, or as otherwise determined by the Compensation Committee. They are settled in shares of CSC stock at the rate of 10% of the shares granted on each of the first ten anniversaries of the executive’s retirement date.
 
45
 

 

Outstanding Equity Awards at Fiscal Year-End
 
     The following table provides information on unexercised stock options and unvested RSUs held by the NEOs on April 1, 2011. Shaded awards represent stock options and RSUs granted as all or part of an AMIP award. The practice of granting equity as all or part of an AMIP award was discontinued after payment of the Fiscal Year 2006 AMIP.
 
        Option Awards     Stock Awards
                                                        Equity
                                                    Equity   Incentive
                                                    Incentive   Plan Awards:
                                                    Plan Awards:   Market or
                                                    Number of   Payout Value
        Number of   Number of               Number of           Unearned   of Unearned
        Securities   Securities               Shares or   Market Value   Shares, Units   Shares, Units
        Underlying   Underlying               Units of   of Shares or   or Other   or Other
        Unexercised   Unexercised   Option       Stock   Units of Stock   Rights That   Rights That
        Options   Options   Exercise   Option   That Have   That Have   Have not   Have Not
        (#)   (#)   Price   Expiration   Not Vested   Not Vested   Vested   Vested
Name       Exercisable   Unexercisable   ($)   Date   (#)   ($)   (#)   ($)
(a)   Grant Date   (b)   (c)   (d)   (e)   (f)   (g)   (h)   (i)
Michael W. Laphen   05/25/2010           189,1791       48.22     05/25/2020     95,4462       4,713,124      
    05/26/2009     65,218       130,4353       42.12     05/26/2019     119,6424       5,907,922      
    05/27/2008     79,722       39,8605       48.61     05/27/2018     43,5385       2,149,906      
    06/18/2007     125,000       —         55.15     06/18/2017     30,3036       1,496,362      
    06/15/2007           100,0007       55.23     06/15/2017     —              
    05/22/2006     70,000       —         55.35     05/22/2016     8,4858       418,989      
    05/23/2005     60,000       —         44.30     05/23/2015     —              
    05/12/2004     50,000       —         39.04     05/12/2014     —              
    04/01/2003     50,000       —         32.41     04/01/2013     —              
    05/05/2003     2,031       —         8.29     05/05/2013     —              
Michael J. Mancuso   05/25/2010           42,5111       48.22     05/25/2020     21,4482       1,059,102      
    05/26/2009     12,977       25,9543       42.12     05/26/2019     23,8064       1,175,540      
    01/15/2009     21,394       10,6979       36.66     01/15/2019     14,1359       697,987      
James D. Cook   05/25/2010           39,0131       48.22     05/25/2020     19,6842       971,996      
    05/26/2009     14,697       29,3933       42.12     05/26/2019     26,9604       1,331,284      
    05/27/2008     20,377       10,1885       48.61     05/27/2018     11,1285       549,501      
    06/18/2007     20,000       —         55.23     06/18/2017     4,8486       239,394      
    05/22/2006     20,000       —         55.35     05/22/2016     2,4248       119,697      
    05/23/2005     17,500       —         44.30     05/23/2015     —              
    05/12/2004     12,500       —         39.04     05/12/2014     —              
    06/13/2002     50,394       —         45.61     06/13/2012     —              
Russell H. Owen   05/25/2010           39,2151       48.22     05/25/2020     19,7862       977,032      
    05/26/2009     12,645       25,2883       42.12     05/26/2019     23,1964       1,145,418      
    05/27/2008     17,532       8,7655       48.61     05/27/2018     9,5745       472,764      
    06/18/2007     30,000       —         55.23     06/18/2017     7,2736       359,141      
    05/22/2006     27,500       —         55.35     05/22/2016     3,3338       164,584      
    05/23/2005     22,500       —         44.30     05/23/2015     —              
    05/12/2004     20,100       —         39.04     05/12/2014     —              
    06/13/2002     46,860       —         45.61     06/13/2012     —              

46
 

 

        Option Awards     Stock Awards
                                                        Equity
                                                    Equity   Incentive
                                                    Incentive   Plan Awards:
                                                    Plan Awards:   Market or
                                                    Number of   Payout Value
        Number of   Number of               Number of           Unearned   of Unearned
        Securities   Securities               Shares or   Market Value   Shares, Units   Shares, Units
        Underlying   Underlying               Units of   of Shares or   or Other   or Other
        Unexercised   Unexercised   Option       Stock   Units of Stock   Rights That   Rights That
        Options   Options   Exercise   Option   That Have   That Have   Have not   Have Not
        (#)   (#)   Price   Expiration   Not Vested   Not Vested   Vested   Vested
Name       Exercisable   Unexercisable   ($)   Date   (#)   ($)   (#)   ($)
(a)   Grant Date   (b)   (c)   (d)   (e)   (f)   (g)   (h)   (i)
James W. Sheaffer   05/25/2010           36,4571       48.22     05/25/2020     23,60810       1,165,763      
    05/26/2009     12,879       25,7563       42.12     05/26/2019     30,47511       1,504,856      
    05/27/2008     17,856       8,9285       48.61     05/27/2018     14,61612       721,738      
    06/18/2007     30,000       —         55.23     06/18/2017     7,273       359,141      
    05/22/2006     25,000       —         55.35     05/22/2016     3,030       149,621      
    12/19/2005     25,000       —         49.10     12/19/2015     —               
    05/23/2005     10,000       —         44.30     05/23/2015     —               
    05/12/2004     7,500       —         39.04     05/12/2014     —               
    03/03/2003     5,000       —         30.64     03/03/2013     —               
____________________
 
1.        One-third of this amount vests on each of May 25, 2011, May 25, 2012, and May 25, 2013.
 
2.   One-half of this amount represents Performance Share Units that vest, subject to performance, on March 29, 2013; the other half represents Service RSUs that vest on May 25, 2013.
 
3.   One-half of this amount vests on each of May 26, 2011 and May 26, 2012.
 
4.   One-half of this amount represents Performance Share Units that vest, subject to performance, on March 30, 2012; the other half represents Service RSUs that vest on May 26, 2012.
 
5.   Vested 100% on May 27, 2011.
 
6.   One-half of this amount vests on each of June 18, 2011 and June 18, 2012.
 
7.   One-third of this amount vests on each of June 15, 2011, June 15, 2012 and June 15, 2013.
 
8.   Vested 100% on May 22, 2011.
 
9.   Vests 100% on January 15, 2012.
 
10.   5,214 of this amount represents Career Shares that vested on May 15, 2011 and are settled at a rate of 10% per year following the executive’s retirement; 9,197 of this amount represents Performance Share Units and vests, subject to performance on March 29, 2013; and 9,197 of this amount represents Service RSUs that vest on May 25, 2013.
 
11.   6,849 of this amount represents Career Shares that vested on May 15, 2011 and are settled at a rate of 10% per year following the executive’s retirement; 11,813 of this amount represents Performance Share Units that vest, subject to performance on March 30, 2012; and 11,813 of this amount represents Service RSUs that vested on May 26, 2012.
 
12.   4,864 of this amount represents Career Shares that vested on May 15, 2011 and are settled at a rate of 10% per year following the executive’s retirement; 9,752 of this amount represents Service RSUs that vested on May 27, 2011.
 
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Option Exercises and Stock Vested
 
     The following table provides information on stock options held by the NEOs that were exercised and RSUs and restricted stock held by the NEOs that vested, during the Fiscal Year ended April 1, 2011.
 
    Option Awards   Stock Awards
    Number of           Number of        
    Shares Acquired   Value Realized   Shares Acquired   Value Realized
    on Exercise   on Exercise   on Vesting1   on Vesting
Name   (#)   ($)   (#)   ($)
(a)       (b)       (c)       (d)       (e)
Michael W. Laphen     15,000       75,000       30,910         1,549,433  
Michael J. Mancuso                 2        
James D. Cook                 6,970         348,604  
Russell H. Owen                 9,697         485,202  
James W. Sheaffer                 10,0613       498,759  
____________________
 
1.        Does not include the Performance Share Units granted in Fiscal 2010 which paid out at 0% of target based on the Company’s performance over the relevant two-year performance period.
 
2.   Not shown are 5,982 Career Shares. One-tenth of this amount will be settled in shares of Common Stock on the 1st through 10th anniversaries of the NEO’s retirement date.
 
3.   Not shown are 5,214 Career Shares vested on May 15, 2011. One-tenth of this amount will be settled in shares of Common Stock on the 1st through 10th anniversaries of the NEO’s retirement date.
 
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Pension Benefits
 
     In addition to a tax-qualified Pension Plan, the Company has a supplemental executive retirement plan and an excess benefit plan feature (the “SERP” and the “Excess Plan”, respectively). Messrs. Mancuso and Sheaffer do not participate in the Pension Plan, SERP or the Excess Plan.
 
     The following table provides information on the actuarial value of each NEO’s accumulated benefit under the Pension Plan, the SERP and the Excess Plan as of April 1, 2011, as applicable, determined using the assumptions set forth in Note 12 of the Company’s 2011 Annual Report filed on Form 10-K.
 
        Number of Years   Present Value of   Payments During
        Credited Service1   Accumulated Benefit   Last Fiscal Year
Name   Plan Name   (#)   ($)   ($)
(a)       (b)       (c)       (d)       (e)
Michael W. Laphen   Pension Plan     22       1,173,032        
    SERP     34       11,097,267        
    Excess Plan     12       555,891        
Michael J. Mancuso   Pension Plan     N/A       N/A       N/A  
    SERP     N/A       N/A       N/A  
    Excess Plan     N/A       N/A       N/A  
James D. Cook   Pension Plan     10       496,910        
    SERP     15       5,302,989        
    Excess Plan     10       285,765        
Russell H. Owen   Pension Plan     18       479,730        
    SERP     18       3,336,876        
    Excess Plan     8       85,614        
James W. Sheaffer   Pension Plan     N/A       N/A       N/A  
    SERP     N/A       N/A       N/A  
    Excess Plan     N/A       N/A       N/A  
____________________
 
1.        The Number of Years of Credited Service for each of the NEOs under the plans does not exceed such officer’s total years of service with the Company and its affiliates. For the Pension Plan, the Number of Years Credited Service means all years of service except for years for which any required employee contributions were not made. For the SERP, the Number of Years of Credited Service means all years of service with the Company and with any affiliates. For the Excess Plan, the Number of Years of Credited Service means the number of years since the executive’s entry into a predecessor supplemental executive retirement plan, of which the Excess Plan is a successor plan.
 
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     Pension Plan. The Pension Plan is a contributory, career average defined benefit pension plan. The Pension Plan generally provides for annual retirement benefits, calculated on a single life annuity basis, equal to 2.25% of the participant’s base salary during all years of participation. The Pension Plan was “frozen” for most participants, including all NEOs, effective July 10, 2009 and no new accruals occur after that date.
 
     Pursuant to Internal Revenue Code requirements, the maximum benefits payable under the Pension Plan and the maximum base salary used to compute Pension Plan benefits are limited each year. For calendar year 2011, the maximum annual benefit is $195,000 and the maximum base salary is $245,000. To the extent that an additional benefit that would be payable under the Pension Plan absent these limitations (the “Excess Benefit”) is not paid under the Pension Plan, that Excess Benefit is paid under the Excess Plan to persons who participate in those plans. However, compensation for periods of time prior to the executive’s date of first participation in the Excess Plan is not taken into account. Normal retirement is defined as age 65 or older under the Pension Plan and the Excess Plan, and there is a 6% reduction in benefits for each year by which a participant’s age at retirement is less than 65.
 
     SERP. The SERP is an unfunded plan which provides a retirement benefit to a participant for his or her lifetime in an annual amount equal to 50% of the participant’s average cash compensation for the highest three (of the last five) fiscal years (“highest three fiscal years”) for which a bonus has been determined, less 100% of the amount of Company-provided defined benefit plan benefits. For purposes of this calculation:
 
       (i)   “Average cash compensation” means the sum of (a) the average base salary earned during the highest three fiscal years, plus (b) the lesser of (1) the average bonus earned during the highest three fiscal years or (2) 100% of the average base salary rate on the last day of each of the highest three fiscal years.
   
  (ii)        “Company-provided defined benefits” means the aggregate amount the participant is entitled to receive on a periodic basis, for life, from governmental or private pension or defined benefit pension plans or similar vehicles, but only to the extent attributable to contributions or funding by the Company. This amount is generally equal to the sum of (a) 50% of the amount of primary Social Security benefits payable at the time of determination, (b) the amount of the Pension Plan benefits attributable to Company funding, and (c) 100% of Excess Plan benefits.
 
     As indicated above, the SERP benefit is subject to offsets from other Company pension plans and government plans, and these offset amounts are subject to change. However, the SERP benefit at a participant’s termination date, in conjunction with Company-funded benefits payable as of that date and Company-funded government benefits (payable as of that date, or age 62, if later), generally will not be less than 50% of the participant’s average cash compensation (at his termination date) for the highest three fiscal years for which a bonus has been determined, as described above. Upon the participant’s death, a spousal benefit of 50% of the participant’s benefit is payable for the spouse’s lifetime.
 
     Payment of the SERP benefit commences upon normal retirement at age 62 or older with at least 12 years of continuous employment, or upon early retirement at age 55 or older with at least ten years of continuous employment. The amount of the SERP benefit payable will be reduced by 5% for each year by which a participant’s age at retirement is less than 62, and by 1/12 for each year by which the participant’s period of continuous employment is less than 12 years. If the participant’s age plus years of service at retirement is 85 or more, however, the reduction for age less than 62 shall be 2.5% per year, rather than 5% per year.
 
     There is a potential six-month delay in payments under the SERP to certain specified employees (as determined under Section 409A of the Internal Revenue Code) for amounts deemed to be deferred on or after January 1, 2005. The SERP provides for the crediting of interest during any such payment delay period.
 
     The Company pays a participant’s FICA taxes attributable to SERP benefits and pays the participant a tax gross-up to cover the federal, state and local income taxes on the amount of the FICA tax payment.
 
     Additional benefits may be payable following a Change in Control, as discussed below under “Potential Payments Upon Change in Control and Termination of Employment; SERP and Excess Plan.”
 
     Excess Plan. The Excess Plan is a separate, unfunded plan for SERP participants, providing a retirement benefit which generally restores the shortfall of Pension Plan benefits resulting from Internal Revenue Code limits prospectively from the date of first participation as described above under “Pension Plan.” See “Potential Payments Upon Change in Control and Termination of Employment; SERP and Excess Plan” below for a description of the
 
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circumstances following a Change in Control under which a participant may, in accordance with a prior election, receive a lump sum payment equal to the present value of all remaining Excess Plan benefits and/or any spousal benefits in lieu of any further payments under the Excess Plan, subject to the potential six-month delay (due to Section 409A of the Internal Revenue Code) and the crediting of interest during such delay period as discussed above for SERP benefits.
 
Fiscal Year 2011 Nonqualified Deferred Compensation
 
     The Deferred Compensation Plan is an unfunded, nonqualified plan which permits participants to defer U.S. federal and most state income tax on all or part of their AMIP award, all or part of their annual base salary in excess of a specified amount ($245,000 for calendar years 2009, 2010 and 2011) or amounts payable in cash to non-employee directors for Board services. Amounts deferred are credited each year with a return equal to the 120 month rolling average yield to maturity of the Merrill Lynch U.S. Corporate, A Rated, 15+ Years Index, calculated as of December 31 of the preceding year. Participants elect when they wish to receive distributions of their Deferred Compensation Plan account balances upon termination of employment on or after age 62, death, disability, change in control or a date certain. If participants terminate employment prior to age 62, the full value of their account is paid to them as a lump sum on or about 30 days after termination. There is a potential six-month delay in payments under the Deferred Compensation Plan to certain specified employees (as determined under Section 409A of the Internal Revenue Code) for amounts deferred on or after January 1, 2005 (as determined under Section 409A). The Deferred Compensation Plan provides for the crediting of interest during any such payment delay period.
 
     The following table summarizes, for each NEO, the contributions and earnings under the Deferred Compensation Plan in Fiscal Year 2011 and the aggregate account balance as of April 1, 2011. There were no contributions by the Company, or withdrawals or distributions by any of the NEOs during Fiscal Year 2011.
 
    Executive           Aggregate        
    Contributions   Aggregate Earnings   Withdrawals/   Aggregate Balance
    in Last FY   in Last FY   Distribution   at Last FYE
Name       ($)       ($)       ($)       ($)
(a)   (b)   (c)   (d)   (e)
Michael W. Laphen                    
Michael J. Mancuso                    
James D. Cook           141,857         2,254,403  
Russell H. Owen                    
James W. Sheaffer     311,150       173,447         2,806,369  

     The Summary Compensation Table provides for each of the NEOs preferential earnings, if any, during the fiscal year under the Deferred Compensation Plan. In this proxy statement, such amounts (which are a subset of the amounts set forth in Column (c) of this table) are included in Column (g) of the Summary Compensation Table and are described in note 6 to that table. The Executive Contributions set forth on Column (b) of this table are not reported as compensation in the Summary Compensation Table.
 
Potential Payments Upon Change in Control and Termination of Employment
 
Change in Control Termination Benefits
 
     The table below reflects the value of compensation and benefits that would become payable to each of the NEOs under plans and arrangements existing as of April 1, 2011, if a change in control had occurred on that date and, in circumstances explained below, the executive’s employment had terminated. These amounts are reported based upon the executive’s compensation and service levels as of such date and, if applicable, and in accordance with SEC regulations, based on the Company’s closing stock price $49.38 on April 1, 2011. These benefits are in addition to benefits available prior to the occurrence of any termination of employment, including under then-exercisable stock options, retirement plans and deferred compensation plans, and benefits available generally to salaried employees, such as distributions under the Company’s broad based 401(k) plan.
 
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     The actual amounts that would be paid upon a NEO’s termination of employment or in connection with a change in control can be determined only at the time of any such event. Due to the number of factors that affect the nature and amount of any benefits provided upon the events discussed below, any actual amounts paid or distributed may be higher or lower than reported below. Factors that could affect these amounts include the timing during the year of any such event, the Company’s stock price and the executive’s age and service.
 
     The benefits payable as a result of a change in control as reported in the columns of this table are as follows:
  • Cash Severance Benefit: Under the Severance Plan, upon an involuntary termination or a voluntary termination for good reason within a specified number of years following a change in control, participants are paid a multiple of base salary plus average annual earned/paid AMIP;
     
  • Benefits Continuation: The Severance Plan provides that upon an involuntary termination or termination for good reason within a specified number of years following a change in control, participants also receive the continuation of health benefits for a specified period following the termination of employment;
     
  • SERP and Excess Plan: The amounts reported in the table below are the increased value in the lump sum benefit payable under terms of the SERP and the Excess Plan providing that upon an involuntary termination or a voluntary termination within specified periods following a change in control, benefits from the SERP shall not be less than those that would be payable if the participant were age 62 or older and had at least 12 years of continuous employment and as if the participant was 100% vested in benefits accrued under the SERP and benefits from the Excess Plan shall not be less than those that would be payable as if the participant was 100% vested in benefits accrued under that Plan;
     
  • Equity Awards: The amounts reported in the table below are the intrinsic value of stock options and RSU awards (including Performance Share Units and Career Shares) that vest upon a change in control regardless of whether the executive officer’s employment terminates; and
     
  • Excise Tax and Gross Up: The Severance Plan provides that the Company would reimburse participants for all excise taxes they would be required to pay as a consequence of a change in control. The excise tax and gross up provisions have been eliminated for new participants in the Plan.
     Additional information regarding the conditions under which these benefits are payable and the definitions used under the arrangements for determining whether an event triggering the benefit has occurred are discussed further following the table.
 
    Cash                   Early Vesting of:        
    Severance   Benefits           Stock       Excise Tax &   Aggregate
    Benefit   Continuation   SERP   Excess   Options1   RSUs1   Gross Up   Payments
Name      ($)      ($)      ($)      Plan      ($)      ($)      ($)      ($)
Michael W. Laphen   9,940,500     37,323     1,128,789     N/A   1,197,098   14,686,303   10,948,528   37,938,541
Michael J. Mancuso   2,632,200     4,154     N/A     N/A   373,805   2,932,629   N/A   5,942,788
James D. Cook   2,358,467     16,903     1,469,102     N/A   266,493   3,211,872   3,144,663   10,467,500
Russell H. Owen   2,154,200     22,765     6,372,0832   N/A   235,829   3,118,939   4,258,181   16,161,997
James W. Sheaffer   2,116,067     16,710      N/A     N/A   236,153   3,901,119   N/A   6,270,049
Totals   19,201,434     97,855     8,969,974     N/A   2,309,378   27,850,862   18,351,372   76,780,875
____________________
 
1.        The intrinsic value of RSUs, per share, is equal to the closing market price per share of CSC stock on April 1, 2011 ($49.38). The intrinsic value of a stock option, per share, is equal to the excess of (a) the closing market price of CSC stock on April 1, 2011 ($49.38), over (b) the option exercise price per share. RSUs include Service RSUs, Performance Share Units and Career Shares.
 
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2.       Unlike the other NEOs who participate in the SERP, Mr. Owen has not yet reached the earliest age (age 55) at which a SERP benefit would be payable absent a change in control. Thus, unlike the other SERP participants listed in the table, Mr. Owen would not receive any payment under the SERP if his employment had terminated on April 1, 2011, absent a change of control.
 
Severance Plan for Senior Management and Key Employees
 
     Each of the NEOs participates in the Severance Plan, which provides certain benefits to participants in the event of a Change of Control (as defined below) of the Company.
 
     If there were a Change of Control and any of them either:
  • had a voluntary termination of employment for Good Reason (as defined below) within two years afterward, or
     
  • had an involuntary termination of employment, other than for death, disability or Cause (as defined below), within three years afterward,
then he would receive a one-time payment and health benefits during a specified period after termination.
 
     The amount of the one-time payment is equal to a multiple of the participant’s then-current annual base salary, plus the average of the three most recent annual AMIP awards paid or determined. The multiple is two for Messrs. Cook, Mancuso, Owen, and Sheaffer and three for Mr. Laphen. The number of years after termination of employment during which a participant would receive medical benefits is equal to the same applicable multiples.
 
     The Severance Plan also provides that the Company would reimburse participants for all excise taxes they would be required to pay as a consequence of a Change of Control. The excise tax gross up has been eliminated for persons who become participants in the Plan in Fiscal Year 2009 and thereafter. Of the NEOs, Messrs. Laphen, Cook and Owen are entitled to the excise tax gross up.
 
     There is a potential six-month delay in payments and benefits provided under the Severance Plan to certain specified employees (as determined under Section 409A). The Severance Plan provides for the crediting of interest during any such payment or benefits delay period.
 
     For purposes of the Severance Plan, the following definitions apply:
  • “Change of Control” means the consummation of a “change in the ownership” of the Company, a “change in effective control” of the Company or a “change in the ownership of a substantial portion of the assets” of the Company, in each case, as defined under Section 409A of the Internal Revenue Code.
     
  • A participant’s termination of employment with the Company is deemed for “Good Reason” if it occurs within six months of any of the following without the participant’s express written consent:
     
    • A substantial change in the nature, or diminution in the status, of the participant’s duties or position from those in effect immediately prior to the Change of Control;
       
    • A reduction by the Company in the participant’s annual base salary as in effect on the date of a Change of Control or as in effect thereafter if such compensation has been increased and such increase was approved prior to the Change of Control;
       
    • A reduction by the Company in the overall value of benefits provided to the participant, as in effect on the date of a Change of Control or as in effect thereafter if such benefits have been increased and the increase was approved prior to the Change of Control;
       
    • A failure to continue in effect any stock option or other equity-based or non-equity based incentive compensation plan in effect immediately prior to the Change of Control, or a reduction in the participant’s participation in any such plan, unless the participant is afforded the opportunity to participate in an alternative incentive compensation plan of reasonably equivalent value;
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    • A failure to provide the participant the same number of paid vacation days per year available to him or her prior to the Change of Control, or any material reduction or the elimination of any material benefit or perquisite enjoyed by the participant immediately prior to the Change of Control;
       
    • Relocation of the participant’s principal place of employment to any place more than 35 miles from the participant’s previous principal place of employment;
       
    • Any material breach by CSC of any provision of the Severance Plan or of any agreement entered into pursuant to the Severance Plan or any stock option or restricted stock agreement;
       
    • Conduct by the Company, against the participant’s volition, that would cause the participant to commit fraudulent acts or would expose the participant to criminal liability; or
       
    • Any failure by the Company to obtain the assumption of the Severance Plan or any agreement entered into pursuant to the Severance Plan by any successor or assign of CSC;
provided that for purposes of bullets 2 through 5 above, “Good Reason” will not exist (i) if the aggregate value of all salary, benefits, incentive compensation arrangements, perquisites and other compensation is reasonably equivalent to the aggregate value of salary, benefits, incentive compensation arrangements, perquisites and other compensation as in effect immediately prior to the Change of Control, or as in effect thereafter if the aggregate value of such items has been increased and such increase was approved prior to the Change of Control, or (ii) if the reduction in aggregate value is due to reduced performance by the Company, the operating unit of the Company for which the participant is responsible, or the participant, in each case applying standards reasonably equivalent to those utilized by the Company prior to the Change of Control.
  • “Cause” means:

    • fraud, misappropriation, embezzlement or other act of material misconduct against the Company or any of its affiliates;
       
    • conviction of a felony involving a crime of moral turpitude;
       
    • willful and knowing violation of any rules or regulations of any governmental or regulatory body material to the business of the Company; or
       
    • substantial and willful failure to render services in accordance with the terms of the Severance Plan (other than as a result of illness, accident or other physical or mental incapacity), provided that (i) a demand for performance of services has been delivered to the participant in writing by or on behalf of CSC’s Board of Directors at least 60 days prior to termination identifying the manner in which the Board believes that the participant has failed to perform and (ii) the participant has thereafter failed to remedy such failure to perform.
SERP and Excess Plan
 
     If there were a Change in Control (as defined below) and a participant in the SERP and the Excess Plan, either:
  • had an involuntary termination of employment or a voluntary termination of employment for Good Reason (as defined below), within three years thereafter, or
     
  • had any voluntary termination of employment (including by death) more than one but within three years afterwards,
then payment of benefits under the SERP, would commence upon termination of employment and would be calculated as if the participant were age 62 or older and had at least 12 years of continuous employment and as if the participant were 100% vested in such benefits and payment of benefits under the Excess Plan would commence upon termination of employment and would be calculated as if the participant was 100% vested in such benefits. Within 30 days after individuals first become participants in the SERP and the Excess Plan, they have the opportunity to elect to receive, upon a termination of employment prior to the third anniversary of a Change in Control, a lump sum payment equal
 
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to the present value of all remaining SERP and Excess Plan benefits, including spousal benefits. This lump sum payment is in lieu of any further payments under those plans and is subject to the potential six month delay (due to Section 409A of the Internal Revenue Code) discussed previously and the crediting of interest during such delay period.
 
     For purposes of the SERP and the Excess Plan, the following definitions apply:
  • “Change in Control” has the same meaning as described above (for a Change of Control) under “Severance Plan for Senior Management and Key Employees”; and
     
  • “Good Reason” has the same meaning as described above under “Severance Plan for Senior Management and Key Employees,” excluding the last bullet.
Stock Options and RSUs
 
     Equity Issued as an AMIP Award in Prior Years. In prior fiscal years, CSC had a program pursuant to which some or all of an AMIP award was paid in the form of RSUs (Fiscal Year 2006), restricted stock (Fiscal Year 2005) or discounted stock options with an exercise price equal to 25% of the market value of the underlying shares on the grant date (Fiscal Year 2004 and earlier) (collectively, “AMIP Equity Securities”). All outstanding AMIP Equity Securities are currently vested.
 
     Non-AMIP Equity Securities. All stock options, RSUs and restricted stock awards held by the NEOs that were not issued as payment of AMIP awards (collectively, “Non-AMIP Equity Securities”) provide for accelerated vesting in full upon a Change in Control (as defined in “Severance Plan for Senior Management and Key Employees” above), although in some cases the accelerated vesting can be prevented by action of the Compensation Committee. Stock options and RSUs, including Performance Share Units and Career Shares, granted after Fiscal Year 2009, provide for accelerated vesting in full upon a Change in Control, defined as a change in ownership of the Company, a change in effective control of the Company or a change in the ownership of a substantial portion of the assets of the Company, in each case as defined in Section 409A of the Internal Revenue Code.
 
     The following table sets forth the intrinsic value on April 1, 2011 of all Non-AMIP Equity Securities held by each of the NEOs, which were not then vested, but which would have vested on April 1, 2011, if there had been a Change in Control on that date, assuming that the Compensation Committee took no action to prevent such accelerated vesting.
 
Value of Non-AMIP Equity Awards Vesting Upon a Change of Control
 
                Intrinsic Value1
Name   Type of Non-AMIP Equity Securities   ($)
(a)   (b)   (c)
Michael W. Laphen   RSU’s      14,686,303   
    Stock Options     1,197,098  
Michael J. Mancuso   RSU’s     2,932,629  
    Stock Options     373,805  
James D. Cook   RSU’s     3,211,872  
    Stock Options     266,493  
Russell H. Owen   RSU’s     3,118,939  
    Stock Options     235,829  
James W. Sheaffer   RSU’s     3,901,119  
    Stock Options     236,153  
____________________
 
1.       The intrinsic value of RSUs, per share, is equal to the closing market price per share of CSC stock on April 1, 2011 ($49.38). The intrinsic value of a stock option, per share, is equal to the excess of (a) the closing market price of CSC stock on April 1, 2011 ($49.38), over (b) the option exercise price per share.
 
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Vesting of Equity Awards upon Other Terminations of Employment
 
     All AMIP Equity Securities which are stock options and which are vested but unexercised upon termination of employment remain exercisable until the earlier of (a) the option expiration date or (b) the fifth anniversary of employment termination (for all terminations at age 62 or older other than for Cause), the third anniversary of employment termination (for involuntary terminations without Cause, or voluntary terminations for Good Reason, at age 61 or younger), the first anniversary of employment termination (for terminations for death or permanent disability) or three months after employment termination (for all other terminations).
 
     All Non-AMIP Equity Securities provide for accelerated vesting in full, unless the Compensation Committee determines otherwise, upon retirement, other than for Cause (as defined below), at age 62 or older with at least ten years of service. Stock options other than AMIP Equity Securities, which are vested but unexercised upon termination of employment remain exercisable until the earlier of (a) the option expiration date or (b) the fifth anniversary of employment termination (for all terminations at age 62 or older other than for Cause), the first anniversary of employment termination (for terminations due to death or permanent disability) or three months after employment termination (for all other terminations). “Cause” means:
    • fraud, misappropriation, embezzlement or other act of material misconduct against the Company or any of its affiliates;
       
    • conviction of a felony involving a crime of moral turpitude;
       
    • willful and knowing violation of any rules or regulations of any governmental or regulatory body material to the business of the Company; or
       
    • substantial and willful failure to render services in accordance with the terms of his or her employment (other than as a result of illness, accident or other physical or mental incapacity), provided that (i) a demand for performance of services has been delivered to the Employee in writing by the Employee’s supervisor at least 60 days prior to termination identifying the manner in which such supervisor believes that the Employee has failed to perform and (ii) the Employee has thereafter failed to remedy such failure to perform.
     There are provisions in the award agreements for all stock options, RSUs, including Performance Share Units and Career Shares, and restricted stock, other than AMIP Equity Securities, which require the holder of such securities to deliver to the Company an amount in cash equal to the intrinsic value of the securities on the date (the “Realization Date”) they vested (in the case of RSUs or restricted stock) or were exercised (in the case of stock options) if the holder:
  • competes with the Company after voluntary termination of employment and prior to six months after the Realization Date, or
     
  • solicits the Company’s customers or solicits for hire or hires the Company’s employees, or discloses the Company’s confidential information, after voluntary or involuntary termination of employment and prior to one year after a Realization Date.
     These forfeiture provisions do not apply if there has been a Change in Control within three years prior to the employment termination date.
 
Employment and Other Agreements
 
     Currently, the Company is not a party to any employment agreement with any of the NEOs, other than Mr. Laphen.
 
     Employment Agreement with Mr. Laphen. The Company and Mr. Laphen entered into an employment agreement on September 10, 2007, pursuant to which the Company agreed to employ Mr. Laphen as its Chairman and Chief Executive Officer through September 10, 2013 at a minimum annual base salary of $1,000,000 and a minimum target bonus of 200% of annual base salary. Mr. Laphen reports directly to the Board of Directors, and his salary and
 
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target incentive are subject to annual review and increase by the Board. Mr. Laphen participates in the Company’s employee benefits plans and its bonus, stock option and other incentive compensation plans on terms no less favorable than those applying to other senior officers of the Company.
 
     Under the employment agreement, if Mr. Laphen resigns for good reason (as defined) or is terminated by the Company without cause (as defined) or with the consent of the Board, he will be entitled to receive: (i) base salary through the date of termination; (ii) a pro rata annual incentive based upon actual Company performance for the year; (iii) a severance payment in an amount equal to the product of (a) two, multiplied by (b) the sum of his annual base salary and target incentive immediately prior to termination; (iv) reimbursement of COBRA premiums for continued medical, dental and vision insurance for 18 months after termination, and (v) immediate vesting of all stock options, restricted stock and RSUs, and extension of the stock option exercise period until the earlier of the option expiration date or the second anniversary of the employment termination date.
 
     Accordingly, absent a Change in Control, if Mr. Laphen’s employment had terminated on April 1, 2011 due to his resignation for good reason (as defined) or termination by the Company without cause (as defined) or with the consent of the Board, he would have received: (i) base salary through the date of termination; (ii) his Fiscal Year 2011 annual incentive as reported in the Summary Compensation Table; (iii) a $6,750,000 severance payment; (iv) reimbursement of COBRA premiums, and (v) immediate vesting of all unvested stock options and RSUs, assuming the approval of the Compensation Committee, which on that date had an intrinsic value of $15,883,401, and extension of the stock option exercise period as described above. In addition, he would be entitled to annual payments of $128,934 under the Pension Plan, $51,578 under the Excess Plan and $880,031 under the SERP, if he elected to commence receiving such benefits at the earliest opportunity without a benefit reduction (age 65 for Pension Plan and Excess Plan benefits and age 62 for SERP benefits). If he terminated employment as of April 1, 2011, and instead elected to commence receiving benefits upon termination of employment, he would receive annual payments of $93,477 under the Pension Plan, $37,394 under the Excess Plan and $860,307 under the SERP. Under the employment agreement, if Mr. Laphen resigns other than for good reason, or his employment is terminated by the Company for cause, he will be entitled to receive base salary through the date of termination and any earned but unpaid portion of his annual incentive for the fiscal year preceding the year of termination.
 
     Under the employment agreement, if Mr. Laphen’s employment is terminated for disability or by death, he or his estate will be entitled to receive: (i) base salary through the date of termination; (ii) a pro rata annual incentive based upon actual Company performance for the year; and (iii) immediate vesting of all stock options, restricted stock and RSUs.
 
     There will be a six-month delay in payments and benefits provided under the employment agreement following certain terminations of Mr. Laphen’s employment if such payments and benefits are determined to be subject to the provisions of Section 409A of the Internal Revenue Code at the time of termination. The employment agreement provides for the crediting of interest during any such payment or benefits delay period.
 
PROPOSAL 2
 
ADVISORY VOTE APPROVING EXECUTIVE COMPENSATION
 
     In accordance with recently adopted Section 14A of the Exchange Act we are providing our stockholders the opportunity to approve, on a nonbinding, advisory basis, the compensation of our named executive officers as disclosed in this proxy statement. We urge the stockholders to read the CD&A appearing elsewhere in this proxy statement, as well as the 2011 Summary Compensation Table and related compensation tables and narrative, which provide detailed information on our compensation policies and practices and our named executive officers’ compensation. As disclosed in the CD&A, the Company’s compensation programs focus on aligning pay to performance.
 
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     In Fiscal 2011, this focus is evidenced by the compensation mix of our CEO and other NEOs highlighted below, which indicates a small percentage of our executive’s total target direct compensation is fixed, with 90% of target compensation for our CEO and 80% of target compensation for the other NEOs tied to annual and long-term incentives.
 
 Chief Executive Officer                   Other Named Executive Officers

*       at target annual incentive and target long-term incentive grant values.
 
     The actual incentive compensation paid to our NEOs in Fiscal 2011 was below target due to our performance relative to our goals:
  • Fiscal 2011 Revenue, OI, FCF, and EPS – the financial measures of performance used in our Annual Management Incentive Plan (“AMIP”) – resulted in payment at 58.4% of target. See “Annual Incentive Compensation – Fiscal 2011 Financial Results and AMIP Payout” below for details.
     
  • Revenue growth relative to our competitors and achieved two-year average ROIC for Fiscal 2010 and Fiscal 2011 resulted in 0% payout on account of the performance-vested RSUs (“Performance Share Units”) for that period. See “Long-Term Equity Incentive Compensation – Performance Share Units” above for details.
     In addition, stock options granted at $48.22 in May 2010 have no intrinsic value as of the date hereof, and restricted stock units granted in May 2010 have declined in potential value.
 
     Also, the Compensation Committee has taken Fiscal 2011 performance into account in setting compensation for the NEOs for Fiscal 2012.
 
     We believe that the information provided in this proxy statement demonstrates that our compensation policies and practices are aligned with our stockholders’ interests and reward our named executive officers for performance. We are therefore asking our stockholders to approve, on a non-binding basis, the following advisory resolution at the 2011 Annual Meeting of Stockholders:
 
     RESOLVED, that the stockholders of Computer Sciences Corporation approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Computer Sciences Corporation 2011 definitive proxy statement pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and the accompanying footnotes and narratives.
 
Vote Required and Recommendation of the Board of Directors
 
     This proposal, which is non-binding, requires an affirmative “FOR” vote of a majority of the votes cast (i.e., of the votes “FOR or “AGAINST”) to be approved.
 
The Board of Directors recommends a vote FOR the approval of the Advisory resolution on
executive compensation.
 
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PROPOSAL 3
 
ADVISORY VOTE ON THE FREQUENCY OF ADVISORY VOTES ON
EXECUTIVE COMPENSATION
 
     In accordance with recently adopted Section 14A of the Exchange Act we are providing our stockholders the opportunity to recommend on a nonbinding, advisory basis, the frequency of future advisory votes on executive compensation. In accordance with the Exchange Act, stockholders may recommend advisory votes on executive compensation every one, two or three years or they may abstain from a recommendation. We are asking stockholders to support an annual vote on executive compensation.
 
     The Board of Directors believes annual advisory votes will allow the Board to obtain information on stockholders’ views of the compensation of our NEOs on a more consistent basis, and will provide our Board and compensation Committee with frequent input from stockholders on our compensation programs.
 
     The option that receives a plurality of the votes cast at the Annual Meeting will be considered by the Board and the Compensation Committee as the stockholders’ recommendation as to the frequency of future advisory votes on the compensation of our NEOs. However, the outcome of this vote is not binding on us or the Board.
 
The Board of Directors recommends a vote for the recommendation of an ANNUAL advisory vote
on executive compensation.
 
PROPOSAL 4
 
APPROVAL OF 2011 OMNIBUS INCENTIVE PLAN
 
     On May 17, 2011, the Board approved on recommendation of the Compensation Committee the Computer Sciences Corporation 2011 Omnibus Incentive Plan (the “2011 Incentive Plan” or the “Plan”) and is submitting it for approval by the stockholders at this Annual Meeting.
 
     At April 1, 2011, 6,607,531 shares were available for grant under CSC’s existing employee stock incentive plans, the most recent of which was approved by the stockholders in 2007. Since 2007, we have granted on an annual basis an average of 3,400,000 shares of Common Stock to employees in the form of options and RSUs. After giving effect to the Fiscal 2012 annual grant in June, 2011, approximately 3,600,000 shares remain available for grant under the existing stock incentive plans. Subject to stockholder approval of the 2011 Incentive Plan, 11,000,000 shares of our common stock will be reserved under the 2011 Incentive Plan and available for new grants. We anticipate that the shares to be reserved under the 2011 Incentive Plan will be sufficient for the next three fiscal years.
 
     The 2011 Incentive Plan is attached as Appendix B to this proxy statement. The following summary of the material features of the 2011 Incentive Plan is qualified in its entirety by reference to the full text of the Plan.
 
Summary of the 2011 Plan
 
Eligibility
 
     All CSC employees are eligible for awards under the Plan. As of April 1, 2011, there were approximately 91,000 employees.
 
Administration
 
     The 2011 Incentive Plan is administered by our Compensation Committee, except as otherwise provided with respect to actions or determinations by our Board.
 
Types of Awards
 
     Options to purchase shares of common stock, stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”) and cash awards may be granted under the Plan. Awards may be structured as performance awards subject to the attainment of one or more performance goals. Performance awards may be in the form of performance based RSUs or “performance units”, restricted stock, options, SARs or cash awards.
 
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     The per share exercise price of an option cannot be less than the fair market value per share of the common stock on the date of grant. Options and SARs must have fixed terms no longer than ten years. Options may be granted as incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”) or nonqualified stock options. Options may not include provisions that “reload” the option upon exercise.
 
Repricing
 
     Repricing of options and SARs is prohibited under the 2011 Incentive Plan without approval of our stockholders.
 
Vesting Limitations
 
     Any restricted stock, RSU, option or SAR (an “award”) that is not a performance award generally must have a minimum vesting period of three years. Any performance award generally must have a performance period of not less than three years. Earlier vesting of awards may occur in the events of death, disability, change in control, retirement, involuntary termination without cause or voluntary termination for good reason and to the extent provided for in an employee’s employment agreement that was effective prior to the effective date of the 2011 Incentive Plan. Vesting of options and SARs may occur incrementally over the three-year restricted period or three-year performance period, as applicable. However, 550,000 or five percent of the total number of shares of common stock available for issuance under the 2011 Incentive Plan will not be subject to the minimum restricted period or performance period, as applicable, that is described above.
 
Shares Reserved
 
     The 2011 Incentive Plan currently provides that the number of shares of common stock as to which awards may be granted is 11,000,000 shares, which is referred to as the Maximum Share Limit. Under the terms of the 2011 Incentive Plan, no more than 11,000,000 shares may be used for options and stock appreciation rights (the “Option/ SAR Limit”) and no more than 5,500,000 shares may be used for awards other than options and stock appreciation rights (the “Full Value Award Limit”).
 
     Each Option and SAR granted shall reduce each of the Maximum Share Limit and the Option/SAR Limit by one share and the Full Value Award Limit by one-half share; and each Award other than an Option or SAR granted shall reduce each of the Maximum Share Limit and the Options/SAR Limit by two shares and the Full Value Award Limit by one share. Awards only settled in cash will not reduce the maximum share limit under the 2011 Incentive Plan.
 
     If an award expires or is terminated, cancelled or forfeited, the shares of common stock associated with the expired, terminated, cancelled or forfeited award will again be available for awards under the 2011 Incentive Plan. In the case of an Award other than an Option or SAR that expires, terminates, is cancelled or is forfeited, the Maximum Share Limit and the Option/SAR Limit shall each be increased by two shares of Common Stock, and the Full Value Award Limit shall be increased by one share of Common stock for each such Award that is not an Option or SAR. In the case of an Option or SAR that expires, terminates, is cancelled or is forfeited, the Maximum Share Limit and Option/SAR Limit shall each be increased by one share of Common Stock and the Full Value Award Limit shall be increased by one-half share for each such Option or SAR. However, the following shares of common stock will not become available again for issuance under the 2011 Incentive Plan:
  • Shares of common stock that are tendered by a participant or withheld as full or partial payment of minimum withholding taxes or as payment for the exercise price of an award; and
     
  • Shares of common stock reserved for issuance upon grant of an SAR, to the extent the number of reserved shares of common stock exceeds the number of shares of common stock actually issued upon exercise or settlement of such SAR.
     If cash is issued in lieu of shares of common stock pursuant to an award, the shares will not become available for issuance under the Plan.
 
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Award Limits
 
     Under the 2011 Incentive Plan, no employee may be granted, in any fiscal year period: options or SARs that are exercisable for more than 1,000,000 shares of common stock; stock awards covering more than 1,000,000 shares of common stock; or cash awards or RSUs that may be settled solely in cash having a value greater than $10,000,000.
 
Adjustments
 
     The 2011 Incentive Plan provides for appropriate adjustments in the number of shares of common stock subject to awards and available for future awards, the exercise price of outstanding awards, as well as the maximum award limits under the 2011 Incentive Plan, in the event of changes in our outstanding common stock by reason of a merger, stock split, reorganization, recapitalization or similar events.
 
Award Agreements
 
     Each award granted under the 2011 Incentive Plan will be evidenced by an agreement that contains such additional terms and conditions not inconsistent with the 2011 Incentive Plan as may be determined by the Compensation Committee in its sole discretion. Such terms and conditions may include, among other things, the date of grant, the number of shares covered by the award or the cash amount of the award, the purchase or exercise price per share, the treatment upon a termination of employment of a participant, the means of payment for the shares, the purchase or exercise period and the terms and conditions of purchase or exercise, if applicable. No awards will provide any right to continued employment.
 
Dividends
 
     The Compensation Committee may include provisions in stock awards for the payment or crediting of dividends or dividend equivalents upon vesting of the award. No dividends or dividend equivalents will be paid on unvested stock, RSU or performance unit awards prior to vesting.
 
Performance Awards
 
     Any award available under the 2011 Incentive Plan may be structured as a performance award. Performance awards not intended to qualify as qualified performance-based compensation under Code Section 162(m) will be based on achievement of such goals and will be subject to such terms, conditions and restrictions as the Compensation Committee will determine.
 
     Performance awards granted under the 2011 Incentive Plan that are intended to qualify as qualified performance-based compensation under Code Section 162(m) will be paid, vested or otherwise deliverable solely on account of the attainment of one or more pre-established, objective performance goals established by the Compensation Committee. One or more of such goals may apply to the employee, one or more of our operating units, divisions or sectors, or our entire company, and if so desired by the Compensation Committee, by comparison with a peer group of companies including by direct reference to peers, by reference to an index, or by a similar mechanism. Performance awards may be based on any one or more of the following measures:
 
          contract awards;     backlog;     market share;
    revenue;   sales;   days’ sales outstanding;
    overhead;   other expense management;   operating income;
    operating income margin;   earnings (including net   earnings margin;
            earnings, EBT, EBIT and      
            EBITDA);      
    earnings per share;   cash flow;   working capital;
    book value per share;   improvement in capital   credit rating;
            structure;      
    return on stockholders’ equity;   return on investment;   cash flow return on
                  investment;
    return on assets;   total stockholder return;   economic profit;
    stock price;   total contract value; or   annual contract value.
 
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     The Compensation Committee may provide in any particular performance award agreement that any evaluation of performance may include or exclude any of the following events that occurs during a performance period: (i) asset write-downs, (ii) litigation or claim judgments or settlements, (iii) the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results, (iv) any reorganization and restructuring programs, (v) extraordinary nonrecurring items as described in Accounting Principles Board Opinion No. 30 and/or in management’s discussion and analysis of financial condition and results of operations appearing in the annual report to stockholders for the applicable year, (vi) acquisitions or divestitures, (vii) foreign exchange gains and losses and (viii) settlement of hedging activities. Awards that are intended to qualify as qualified performance-based awards may not be adjusted upward. The Compensation Committee may retain the discretion to adjust any performance awards downward, either on a formula or discretionary basis or any combination, as the Compensation Committee determines.
 
Change in Control
 
     Unless (i) an award agreement provides otherwise or (ii) the agreement effectuating a change in control provides for the assumption or substitution of awards, upon the date of a change in control:
  • all outstanding options that have not vested in full shall be fully vested and exercisable;
     
  • all restrictions applicable to outstanding restricted stock will lapse in full;
     
  • all outstanding restricted stock units that have not vested in full will be fully vested; and
     
  • all performance awards will be considered earned and payable at their target value and prorated (if the change in control occurs during the performance period), and will be immediately paid or settled.
Assignability and Transfer
 
     Generally, no award under the 2011 Incentive Plan will be assignable or otherwise transferable except by will or the laws of descent and distribution or pursuant to a domestic relations order issued by a court of competent jurisdiction.
 
Award Termination; Forfeiture; Disgorgement
 
     The Compensation Committee will have full power and authority to determine whether, to what extent and under what circumstances any award will be terminated, or forfeited or the participant should be required to disgorge the gains attributable to the award. In addition, awards will be subject to any recoupment or clawback policy adopted by, or applicable to, us.
 
Duration; Plan Amendments
 
     The 2011 Incentive Plan has a term of ten years from its effective date. The Board may at any time amend, modify, suspend or terminate the 2011 Incentive Plan (and the Compensation Committee may amend or modify an award agreement) but in doing so cannot adversely affect any outstanding award without the participant’s written consent or make any amendment to the Plan without stockholder approval, if stockholder approval is otherwise required by applicable legal requirements.
 
Material Federal Income Tax Consequences of Awards Under the 2011 Incentive Plan
 
     The following summary is based on current interpretations of existing federal income tax laws. The discussion below is not purported to be complete, and it does not discuss the tax consequences arising in the context of the participant’s death or the income tax laws of any local, state or foreign country in which a participant’s income or gain may be taxable.
 
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Stock Options
 
     Some of the options issuable under the 2011 Incentive Plan may constitute incentive stock options, while other options granted under the 2011 Incentive Plan may be nonqualified stock options. The Code provides for special tax treatment of stock options qualifying as incentive stock options, which may be more favorable to employees than the tax treatment accorded nonqualified stock options. On grant of either form of option, the optionee will not recognize income for tax purposes, and we will not receive any deduction. Generally, on the exercise of an incentive stock option, the optionee will recognize no income for U.S. federal income tax purposes. However, the difference between the exercise price of the incentive stock option and the fair market value of the shares at the time of exercise is an adjustment in computing alternative minimum taxable income that may require payment of an alternative minimum tax. On the sale of shares of common stock acquired by exercise of an incentive stock option (assuming that the sale does not occur within two years of the date of grant of the option or within one year of the date of exercise), any gain will be taxed to the optionee as long-term capital gain. In contrast, on the exercise of a nonqualified option, the optionee generally recognizes taxable income (subject to withholding) in an amount equal to the difference between the fair market value of the shares of common stock acquired on the date of exercise and the exercise price. On any sale of those shares by the optionee, any difference between the sale price and the fair market value of the shares on the date of exercise of the nonqualified option will be treated generally as capital gain or loss. No deduction is available to us on the exercise of an incentive stock option (although a deduction may be available if the employee sells the shares acquired on exercise before the applicable holding periods expire); however, on exercise of a nonqualified stock option, we generally are entitled to a deduction in an amount equal to the income recognized by the employee. Except in the case of the death or disability of an optionee, an optionee has three months after termination of employment in which to exercise an incentive stock option and retain favorable tax treatment on exercise. An incentive stock option exercised more than three months after an optionee’s termination of employment other than on death or disability of an optionee cannot qualify for the tax treatment accorded incentive stock options. Any such option would be treated as a nonqualified stock option for tax purposes.
 
Stock Appreciation Rights
 
     The amount of any cash or the fair market value of any shares of common stock received by the holder on the exercise of SARs in excess of the exercise price will be subject to ordinary income tax in the year of receipt, and we will be entitled to a deduction for that amount.
 
Restricted Stock
 
     Generally, a grant of shares of common stock under the 2011 Incentive Plan subject to vesting and transfer restrictions will not result in taxable income to the participant for federal income tax purposes or a tax deduction to us at the time of grant. The value of the shares will generally be taxable to the participant as compensation income in the year in which the restrictions on the shares lapse. Such value will be the fair market value of the shares as to which the restrictions lapse on the date those restrictions lapse. Any participant, however, may elect pursuant to Code Section 83(b) to treat the fair market value of the restricted shares on the date of grant as compensation income in the year of grant, provided the participant makes the election pursuant to Code Section 83(b) within 30 days after the date of grant. In any case, we will receive a deduction for federal income tax purposes equal to the amount of compensation included in the participant’s income in the year in which that amount is so included.
 
Restricted Stock Units
 
     A grant of a right to receive shares of common stock or cash in lieu of the shares will result in taxable income for federal income tax purposes to the participant at the time the award is settled in an amount equal to the fair market value of the shares or the amount of cash awarded. We will be entitled to a corresponding deduction at such times for the amount included in the participant’s income.
 
Performance Units
 
     The amount of any cash or the fair market value of any shares of common stock received by the holder on the settlement of performance units under the 2011 Incentive Plan will be subject to ordinary income tax in the year of receipt, and we will be entitled to a deduction for that amount in the year in which that amount is included.
 
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Cash Awards
 
     Cash awards under the 2011 Incentive Plan are taxable income to the participant for federal income tax purposes at the time of payment. The participant will have compensation income equal to the amount of cash paid, and we will have a corresponding deduction for federal income tax purposes.
 
Basis; Gain
 
     A participant’s tax basis in vested shares of common stock purchased under the 2011 Incentive Plan is equal to the sum of the price paid for the shares, if any, and the amount of ordinary income recognized by the participant on the transfer of vested shares. The participant’s holding period for the shares begins on the transfer to the participant of vested shares. If a participant sells shares, any difference between the amount realized in the sale and the participant’s tax basis in the shares is taxed as long-term or short-term capital gain or loss (provided the shares are held as a capital asset on the date of sale), depending on the participant’s holding period for the shares.
 
Certain Tax Code Limitations on Deductibility
 
     In order for us to deduct the amounts described above, such amounts must constitute reasonable compensation for services rendered or to be rendered and must be ordinary and necessary business expenses. The ability to obtain a deduction for awards under the 2011 Incentive Plan could also be limited by Code Section 280G, which provides that certain excess parachute payments made in connection with a change in control of an employer are not deductible.
 
     The ability to obtain a deduction for amounts paid under the 2011 Incentive Plan could also be affected by Code Section 162(m), which limits the deductibility, for U.S. federal income tax purposes, of compensation paid to certain employees to $1 million during any taxable year. However, certain exceptions apply to this limitation in the case of qualified performance-based compensation. It is intended that the approval of the 2011 Incentive Plan by our stockholders will satisfy the stockholder approval requirement for the qualified performance-based exception and we will be able to comply with the requirements of the Code and Treasury Regulation Section 1.162-27 as they relate to the grant and payment of certain qualified performance-based awards (including options and SARs) under the Incentive Plan so as to be eligible for the qualified performance-based exception. In certain cases, we may determine it is in our interests to not satisfy the requirements for the qualified performance-based exception.
 
Code Section 409A
 
     Code Section 409A generally provides that deferred compensation subject to Code Section 409A that does not meet the requirements for an exemption from Code Section 409A must satisfy specific requirements, both in operation and in form, regarding: (i) the timing of payment; (ii) the election of deferrals; and (iii) restrictions on the acceleration of payment. Failure to comply with Code Section 409A may result in the early taxation (plus interest) to the participant of deferred compensation and the imposition of a 20% penalty on the participant of the deferred amounts included in the participant’s income.
 
Benefits Granted Under the 2011 Incentive Plan
 
     No benefits or awards have been granted, awarded or received under the 2011 Incentive Plan. The number and type of awards that will be granted under the 2011 Incentive Plan, or that would have been granted under the 2011 Incentive Plan in the last fiscal year, are not determinable at this time as the Compensation Committee or the full board of directors, as applicable, will make these determinations in its sole discretion.
 
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Other Information
 
     The following table gives information about our Common Stock that may be issued under our equity compensation plans as of April 1, 2011.
 
                    Number of
    Number of           securities remaining
    securities to be           available for future
    issued upon           issuance under
    exercise of           equity
    outstanding   Weighted-average   compensation plans
    options,   exercise price of   (excluding
    warrants   outstanding options,   securities reflected
    and rights   warrants and rights   in column (a))
Plan category       (a)       (b)       (c)
Equity compensation plans approved                        
       by security holders     18,697,504       $42.88       6,760,531
1
Equity compensation plans not approved                        
       by security holders                  
Total     18,697,504               6,760,531  
                         
____________________
 
1      
Includes 152,267 shares issuable under the 2001 Stock Incentive Plan. This Plan permits shares to be issued pursuant to any type of arrangement that by its terms involves or might involve the issuance of Common Stock or derivative securities with an exercise or conversion privilege at a price related to the Common Stock or with a value derived from the value of the Common Stock, including, without limitation, sales, bonuses and other transfers of stock, restricted stock, stock options, reload stock options, stock purchase warrants, other rights to acquire stock, RSUs, other securities convertible into or redeemable for stock, stock appreciation rights, limited stock appreciation rights, phantom stock, dividend equivalents, performance units and performance shares, and any two or more of the foregoing in tandem or in the alternative.
 
   
Includes 3,000 shares available for future issuance under the 2006 Non-Employee Director Incentive Plan. This plan permits shares to be issued pursuant to stock options, restricted stock, and RSUs. Includes 150,000 shares available for future issuance under the 2010 Non-Employee Director Incentive Plan. This plan permits shares to be issued pursuant to RSUs and restricted stock.
 
   
Includes 1,029,527 and 5,425,737 shares available for future issuance under the 2004 and 2007 Incentive Plans, respectively. Each of these plans permits shares to be issued pursuant to stock options, restricted stock or RSUs, or pursuant to performance awards payable in shares of CSC stock, restricted stock, RSUs or any combination of the foregoing. Of the shares available for issuance under the 2007 plan, 5,425,737 shares are available for future grant as stock options with each option granted counted as one share against the available shares under such plan or assuming no options are granted, 2,712,868 shares are available for future awards of restricted stock or RSUs, after giving effect to the requirement set forth in the 2007 plan that a grant of one share of restricted stock or one RSU be counted as two shares against the available shares under such plan. Under the 2007 Incentive Plan, shares of common stock that are tendered by a participant or withheld as full or partial payment of minimum withholding taxes or as payment for the exercise price of an award will not become available again for issuance.
 
Vote Required
 
     A majority of the votes cast at the Annual Meeting is necessary for the approval of this proposal.
 
The Board of Directors recommends a vote FOR approval of the 2011 Omnibus Incentive Plan.
 
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PROPOSAL 5
 
RATIFICATION OF INDEPENDENT AUDITORS
 
     The Audit Committee has appointed Deloitte & Touche LLP as independent auditors for the fiscal year ending March 30, 2012. As a matter of good corporate governance, the Board of Directors is submitting the appointment of Deloitte & Touche LLP for ratification at the Annual Meeting. If stockholders do not ratify the appointment of the independent auditors, the Audit Committee will evaluate the stockholder vote when considering the selection of a registered public accounting firm for the audit engagement for the 2013 Fiscal Year.
 
     We expect that a representative of Deloitte & Touche LLP will attend the Annual Meeting. He will have an opportunity to make a statement, if desired, and will be available to respond to appropriate questions.
 
Fees