Douglas E. Scott - Secretary
A. Thomas Young - Non-Executive Chair, Member of Nominating & Corporate Governance Committee, Member of Finance Committee and Member of Classified Business Oversight Committee
John P. Jumper - Chief Executive Officer, President, Director, Member of Classified Business Oversight Committee and Member of Ethics & Corporate Responsibility Committee
Jere A. Drummond - Director, Chairman of Nominating & Corporate Governance Committee and Member of Ethics & Corporate Responsibility Committee
SAIC, Inc. (SAI) 2012 Annual Meeting of Stockholders June 15, 2012 9:00 AM ET
Douglas E. Scott
Good morning. I'd like to welcome all our employees, stockholders and other guests to the 2012 Annual Meeting of Stockholders. Besides stockholders, participating in person at today's meeting here at SAIC's Conference Center, we have stockholders listening from all over the world via a webcast. I'd like to introduce Tom Young, the Chair of SAIC's Board of Directors.
A. Thomas Young
Good morning. And on behalf of the Board of Directors, it's my privilege to welcome all of you to the Annual Shareholders Meeting, and to thank you very much for the interest in the company and your attendance today. I will be acting as Chair of this meeting. Doug Scott, the company secretary, will act as secretary of the meeting. And at this time, I would like to call the Annual Meeting of Stockholders to order.
The first privilege I have is to introduce the other Board members who are here with us today. I ask that when they're introduced that they would each stand and remain standing till everyone is introduced. And I will ask you to withhold your enthusiastic applause until after they've all been introduced.
First, France Córdova; Jere Drummond, who is Chair of the Nominating and Corporate Governance Committee; Tommy Frist, who is Chair of the Finance Committee; John Hamre, who is Chair of the Classified Business Oversight Committee; Mim John; Anita Jones, who is Chair of the Ethics and Corporate Responsibility Committee; John Jumper, who is Chief Executive Officer of the company; Harry Kraemer, who is the Chair of the Audit Committee; Larry Nussdorf; Sandy Sanderson, who is the Chair of the Human Resources and Compensation Committee. And enthusiastic applause will be now accepted.
Thank you very much. Also present today from Deloitte & Touche, who is our -- the company's auditor, is Mike Condro, who is available to answer any appropriate questions as we go through the meeting. And Mike, would you stand please again? Okay, thank you.
Mr. Secretary, was the notice of this meeting properly sent?
Douglas E. Scott
Yes. The notice of meeting properly states the name of the report together with the proxy and voting card, and properly delivered on or about April 30, 2012, to the company's stockholders of record as of April 16, 2011, which was the record date for this meeting. Extra copies of the proxy statement and annual report are available at the information table in the lobby. A list of the stockholders of record as of the record date has been available for inspection for the past 10 days. The list will remain available during the course of this meeting.
A. Thomas Young
At this time, I would like to introduce Scott Ballenger [ph], who will act as the inspectors of election of this meeting. Scott?
Mr. Secretary, will you please report to us on the presence of a quorum?
Douglas E. Scott
Certainly. As of April 16, 2011, the record date established for this meeting, there were 341,737,161 shares of the company's common stock outstanding. Holders of common stock are entitled to one vote per share. Delaware law requires that the holders of the majority and voting interest of the company shares be present in person or by proxy in order to constitute a quorum at a meeting of stockholders. Prior to the commencement of this meeting, I've received proxies or voting instructions representing an excess of 78% of the total voting interest of the shares outstanding on the record date. This constitutes the majority of outstanding voting interest, and a quorum is present for the conduct of business.
A. Thomas Young
Thank you, Mr. Secretary. And the Annual Meeting of Shareholders is now officially convened. We have 6 matters to consider and vote upon at this meeting. One, a proposal to elect 11 directors; two, a proposal to approve the merger of SAIC Inc. with, and into, its wholly-owned subsidiary, Science Applications International Corporation, to eliminate the current holding company structure; three, a proposal to amend our 2006 Equity Incentive Plan; four, an advisory vote on executive compensation; five, a proposal to ratify the appointment of Deloitte & Touche as the company's independent registered public accounting firm for the fiscal year ending January 31, 2013; and six, a shareholder proposal requesting that the Board of Directors take action to authorize stockholder action by written consent.
Your Board is recommending that you vote in favor of each proposal for the annual -- and for the annual advisory vote on executive compensation, but to oppose the stockholder proposal. A description of each item, your board's recommendation, and its rationale for the recommendations are set forth in detail in the proxy statement. As is our usual practice, there will be time for a discussion of each proposal after it has been formally presented. If you have a comment or a question concerning one of the proposals, please come up to one of the microphones that you'll see in the aisles and state your name and indicate whether you're a stockholder or a proxy holder.
The first item to be voted upon is a proposal to elect 11 directors to serve one-year terms ending in 2013. The nominees are France Córdova, Jere Drummond, Tommy Frist, John Hamre, Mim John, Anita Jones, John Jumper, Harry Kraemer, Larry Nussdorf, Sandy Sanderson and Tom Young. Is there any discussion of this proposal?
If there's no discussion, we'll take up the second item.
A proposal to approve the merger of SAIC Inc. with, and into, its wholly-owned subsidiary, Science Applications International Corporation, to eliminate the current holding company structure. Is there any discussion on this proposal?
We will now take up the third item. A proposal to approve the amendment of the...
Tom, there was a comment. [indiscernible].
A. Thomas Young
I'm sorry, is there a comment? Did I miss a comment? Okay, okay, thank you.
We will take up the third item, a proposal to approve the amendment of the 2006 Equity Incentive Plan. Again, any discussion upon this item?
We will now take up the fourth item. An advisory vote on executive compensation and it's an opportunity for discussion upon this topic.
If there's no discussion, we'll take up the fifth item and that's a proposal to ratify the appointment of Deloitte & Touche as the company's independent registered public accounting firm for the fiscal year ending January 31, 2013. And is there any discussion on this topic?
If there's no other discussion, we will now take up the last item, a stockholder proposal requesting that the board take the necessary action to implement stockholder action by written consent. This was presented by Mr. Kenneth Steiner. And I believe there is a representative of the stockholder here today to present this particular topic. And if so, if you would please identify yourself and we welcome you to come to the microphone.
Is this working? Okay, here? Yes, I am reading for Proposal 6, stockholder proposal regarding shareholder action by written consent, Kenneth Steiner of Great Neck, New York sponsored this proposal. Resolved, shareholders request that our Board of Directors undertake such steps as may be necessary to permit written consent by shareholders entitled to cast the minimum number of votes that would be necessary to authorize the action at a meeting at which all shareholders entitled to vote thereon were present and voting to the fullest extent permitted. This includes written consent regarding issues that our Board is not in favor of.
This proposal topic won majority shareholder support at 13 major companies in 2010. This included 67% support at both Allstate and Sprint. Hundreds of major companies enable shareholder action by written consent. Please encourage our Board to respond positively to this proposal to initiate improved corporate governance to make our company more competitive. Shareholder action by written consent, proposal 6. Thank you.
A. Thomas Young
Thank you very much for one, being here, and for second, to -- for defending and commenting upon the proposal. And I ask if there's any other discussion on this particular proposal?
Hearing none, we'll move along and move towards other activities that we need to deal with. Delaware corporate law requires that we announce the opening and closing of the polls for the matters to be voted upon. And I hereby declare the polls for the 6 matters, just discussed, will open on this 15th day of June at this particular time.
Mr. Scott, will you vote the proxies received by the company? And let me -- if there -- if you brought, meaning anyone here, if you brought your proxy card to the meeting and have not turned it in, please raise your hand so that one, your proxy can be collected. And the attendants also have ballot forms, such that you may use them to vote if you haven't voted and yet are that you wish to change your vote. If there's anyone who is voting personally by ballot, please raise your hand now so your ballot can be collected by one of the attendants.
Has everyone voted who wishes to do so? Is there anyone else who wishes to vote?
Seeing none, and it being 9:19 by the clock there, I declare that the polls are now closed. The inspector of election will tabulate the votes and report the results. And while the votes shall be tabulated, John Jumper, our Chief Executive Officer, will offer some comments relative to SAIC. John, welcome.
John P. Jumper
Thank you. If I could have my first slide, please. Welcome, everyone. It's a pleasure for me to be here and to be able to update you on the status of the company. I think everybody knows the size and shape of SAIC and what we do. I will tell you that -- okay, I'm sorry.
I will tell you that in my opportunities to go out and visit this company, I continue to be impressed beyond belief with the people that I find out there doing the company's work day in and day out. Incredibly dedicated people who are doing the most noble work you can possibly imagine, not only in the federal government sector, but in the commercial sectors in health, in energy and everything that we do. An impressive group of people.
We also have a dedicated leadership team here. It's been my pleasure to be able to work with Stu Shea, Mark Shop -- Mark Sopp, Vince and Brian, and the group presidents who all run incredibly complex businesses and do an incredibly good job for the shareholders of this company, and our workforce of 40,000 people.
I've told a story several times about going out to Frederick, Maryland 2 weeks ago and watching the dedication of a National Institute of Health National Cancer Institute Facility, where we are the federally funded agency for the U.S. government, whose commercial research into this facility. We have a group of scientists and engineers out there doing cancer research. And during the dedication of the building, one of the sponsors of the programs stood up and said, he expressed his belief that the cure for cancer would be found in the building that we built and include the scientists that populate -- our scientists that populate that building.
Okay, I've died with that one. I'm now changing microphones. Yes, I get one per slide, I guess. Our performance in that, the middle column there, as you can see include the impact of CityTime, and that's what is reported. I thought it would be informative for the shareholders to look at the right-hand column, which is a column that shows the operational performance of the company during the year that excludes the impact of CityTime. And you can see that we met our guidance and you can see that we generated a lot of cash, a book-to-bill ratio of 1.1. And we have, in the fiscal year, we have performed, I think, remarkably well in the situation that we find ourselves in, in these depressed markets. Next slide.
In this company, you've already heard me talk about the people. Our belief that our people in this market can perform even in a depressed market. I think that we do things that are so important that even in a depressed market, I don't know who else could do, and we prove that day in and day out.
The management team I've talked about, it's a pleasure to work with them. We've had remarkable success with our strategic acquisition, especially Vitalize, in the health care sector where we have been very successful in showing great success in being able to sell our products and deploy people throughout the health care industry and be able to leverage our information technology and our networking skills back across the enterprise in the health sector in a very productive way.
Landmark contract awards. As you can see, we've increased the number of our $100 million plus awards and we a have significant pipeline. And you can see that we have a really significant award from NASA at $1.3 billion. It's indicative of our intention to go for the higher -- a higher number of the higher dollar awards and it's a great testimony to our bid and proposal teams. We have a bid and proposal team here on this coast. We have one on the West Coast. If you've ever had a chance to see this in action, it's unbelievable, the 24/7 operation that goes on in the bid and proposal world, in this company. Our ability to keep ourselves on the forefront, to react to the request for proposals that come across. And to be able to put together credible bids, especially in government work, is a special skill and it is hard, hard work. I've never seen anything like it. I think we do it better than anyone. So next slide.
Where are we going? We have areas that we're going to emphasize that are listed up here on this slide. These are growth areas that we think we can continue to -- where we can continue to show improvement, and be more visible in those sectors. And even in the sectors that are not high growth, we think we have an incredible ability to compete. And that's what we intend to do.
In leveraging our capabilities, this is an important part of what's on our agenda. We have capabilities in the government sector that have an incredible application over the civil and commercial sectors that we plan to take advantage of. One of the things we worked on in this company and work on very hard is letting everybody know what we, in this sector, what we do over here in another sector, not reinventing things. It's a bit of a cultural change for us, but we continue to work it and we're getting better and better at it all the time. It's one of Touche's points of emphasis and we're working that very, very hard. Next slide.
We have responsibilities other than what we see directly related to business, to our employees, our incredible workforce. Again, in a depressed market, we have to pay especially close attention to the welfare of our workforce. They're the heart and soul of what we do. And in the difficult times, it's more and more important to make sure that we cultivate the talent that we have.
We have an incredible presence in the community. You can imagine, with 40,000 people in this company, we do a lot of good things. And what Amy Alving does and Debbie James in areas of education, science and technology, engineering and math out there in the community. Our relationships with -- on Capitol Hill are all incredible -- incredibly important features of our interfaces and our relationships that we have to work on every single day. And, of course, our commitment to the environment. And I think that we've had enough rewards that you've seen advertised on ISSAIC to show our commitment to being kind to the environment. Our exploits in energy also support that thesis. And even little things like the way we dispose of trash in this building make a visible evidence of our dedication to the environment. Next slide.
So I thank all of you for all that you do to support this company. We are a company on the move. I have every optimism for the future, and I think that we are on our way to new and different -- new and higher levels of success. So I thank you very much for your attention here today. Thank you.
A. Thomas Young
We have an opportunity in just a couple of minutes to ask questions of John and others. And John, thank you very much. For me, personally, and kind of on behalf of the Board, we both appreciate and are pleased with the manner in which you and your management team are going about implementing those things that maximize the success of, not only SAIC, but the success of the customers that SAIC serves every day. So thank you very much on behalf of the Board.
I would now like to ask the inspector to report on the results of the voting on the proposals.
Each of France Córdova, Jere Drummond, Tommy Frist, John Hamre, Mim John, Anita Jones, John Jumper, Harry Kraemer, Larry Nussdorf, Sandy Sanderson and Tom Young has received the necessary votes for election as director.
Proposal 2, the proposal to approve a merger of SAIC Inc. with and into Science Applications International Corporation to eliminate the company's holding company structure, received the required vote for approval and passed.
Proposal 3, the proposal to approve amendment of the 2006 Equity Incentive Plan, received the required vote for approval and passed.
Stockholders approved, on a nonbinding advisory basis, the compensation of the executive officers as described in the proxy statement.
The ratification of Deloitte & Touche LLP as the company's independent registered public accounting firm, for the fiscal year ending January 31, 2012, received sufficient votes to pass.
And finally, the stockholder proposal regarding stockholder actions by written consent did not receive sufficient votes to pass and has failed.
Thank you very much.
A. Thomas Young
Accordingly, each of the proposals had been approved except that the stockholder proposal action by written consent has failed as reported. The exact number of votes received in favor of each of the proposals will be recorded in the certificate of the inspector of election and in the minutes of the meeting, and will be reported publicly in the Form 8-K next week. The inspector of election will sign a certificate attesting to the voting on each proposal and the Secretary will file a copy of the certificate for the minutes of this meeting.
This concludes the formal stockholders meeting, and I now declare the formal meeting adjourned. I thank all of you, and I'd now like to open up the floor to any questions or comments or interactions that you would like to have with any of us. The floor is open for questions or comments.
My name is Joan Arshenum [ph]. I own a number of shares, or should I say stock. I'm a retired employee. And I wanted to, first of all, welcome Mr. Jumper, and it was refreshing that you could say going words about SAIC, that wasn't [indiscernible]. But my real question, my question is directed towards the Nominating Committee, because I'm not usually up in this position -- the Nominating Committee. We've been public for 6 years approximately, with -- since we've gone through and a number of CEOs, 2 in approximately 2 years or so each, with the request filing by the large lucrative extra compensation packages. And I'm wondering what steps you took for this current CEO, that hopefully he will stay on a bit longer than the last 2? Does that question make sense?
A. Thomas Young
Could you just repeat the question one more time for us just to be sure?
We seem to be going through CEOs at an alarming rate.
A. Thomas Young
Well, for a long of time, we didn't do it. And then once we got practice, we got going for it fast. But I do agree with you, that's a valid observation. And the essence of the question is this again?
When you made -- when you selected the third CEO, did you take different steps in selecting him than you did the first 2 or first 2 after Dr. Beyster? You have the same criteria for selecting the third CEO?
A. Thomas Young
Yes, maybe I should respond to that. When Ken Dahlberg left, he -- Ken Dahlberg at the time at which our bylaws defined, at that time, that the CEO should retire. And so, Ken Dahlberg served out the number of years that we had anticipated that he would and then retired, at that particular point. Walt Havenstein made a choice that he wanted to retire earlier than that. My personal belief, having significant knowledge of both of those, compensation was not a factor in their decision-making process. And if I might just add a little bit more, what we try to do is we try to compensate not only the CEO but the executive management team. We try to compensate them competitively with the companies with which we compete. We're not trying to be an extreme of either on the highest or on the lowest. And I think we're quite competitive as we do it -- as we do the compensation. And I don't think, personally, that that's been an adverse factor in it. And I guess, maybe that's about what I have to comment, relative to your question. We appreciate your question because it's a very good one. Others?
Nick Niehaus [ph], stockholder, employee for 22 years and Program Manager in the company. My question is directed to the Chairman of the Board, please. General Jumper gave us a good tactical overview of what's going on in the company, and the employees of the company continue to do good work. Over the past 6 years or so, since you have been Chairman of the Board and a Lead Director, I wonder if you could help us all understand, a little better, exactly how, on a strategic level, the company is better today than it was when you took over.
A. Thomas Young
That's a great question. I think that, as you said, the company has 2 basic challenges: one in the tactical regime, as you're talking about and that is to execute on a daily basis in an extraordinary way. And I think the company has done that. The second is to strategically posture the company to have a positive or an enhanced future. The -- no question but what SAIC operates in an environment today, I would call an environment -- and has been for at least at times, as an operating environment of ambiguity relative to many of our customers or to the fence establishment. And if you look at our peers, they have functioned in a similar kind of an ambiguous environment. In that environment, we have -- the strategic things that we have done is one, as John pointed earlier, we've raised enough amount of cash and we've deployed that cash in a collection of ways. One is to reinvest in SAIC, repurchasing shares, which mathematically, enhance the value of each share to a shareholder. We recently concluded that it would be appropriate and positive to reward shareholders by implementing something that it never had done in the corporation and that was a dividend, which I think today has a rate of about 4.2%, if I recall. And we've done some focusing upon some areas that the talent is adjacent to a lot of different markets: the defense; and largely in health, where we have built a credible health business; and in energy, where we have built a credible energy business. To develop these kinds of endeavors takes time, and under -- picking up from Walt and actually today under John's leadership, we are taking some really hard looks at looking at the strategic direction of the company and how we, both, continue to maintain a degree of success in our traditional markets, which will forever be significant markets to us, but also continue to develop new markets. So that would be my overall summary of a response to your question, which I appreciate very much. Thank you. Others? All the way in the back, there's one. All the way in the back, there are 2.
My name is Chris Cresapi [ph]. I'm a stockholder and also an employee. I have 2 questions, one my own, and then maybe I'd like to try to perhaps re-ask the lady's a question perhaps a little bit more specifically. But one, checking this morning, our stock is, I think, $11.65. Do you think that reflects our actual value or a misunderstanding of the company's value in the marketplace? And if you could maybe explain that. And then also I think if -- in relation to her question, she had asked if there have been steps taken to address the overturns of the CEOs. And so maybe, is the Board looking at -- or maybe another way to ask it, why have term limits if the CEO is doing a good job or bad job? Why not allow them to serve for the duration that the Board deems as it -- why put in constraints? And were there issues with this -- maybe with Mr. Havenstein that could have been foreseen that are now taken into consideration with having General Jumper that, going forward, we can maybe avoid these sort of term intervals. Because they do affect our company's bottom line in some way, I imagine.
A. Thomas Young
Two very good questions. I want to ask John if he will comment on the first question, and then others may. And I want to ask Jere Drummond, Chair of the Nominating and Governance Committee, if he'll comment on the second question.
John P. Jumper
Well, the stock price -- and Stu Shea can help me out here. The stock price is a function of many things. The thing that we have the most control over is the performance. And so what -- I think that you won't find any group better than our COO and our 3 group presidents in driving performance toward the sort of levels actually you've seen in the last quarter and you see day in and day out. That's what we have control over, that's what we emphasize. You've seen our rather robust activity and how we are in the big time into bid and proposals, to keeping ourselves active in the pipeline and the emphasis you saw on the $100 million contracts. So I think that to the extent the performance is the thing that we have control over, I think we're putting the right kind of emphasis on that and I think we can all be proud of.
Jere A. Drummond
Yes, let me address the question about CEO and CEO succession. As we stated earlier, Ken Dahlberg had a mandatory retirement age at 65. That's in the bylaws and that was the reason for that. That was expected, it was done in an orderly fashion. Walt Havenstein made a personal decision to retire early. That's unfortunate. We did a search. We felt at the time that John Jumper was the right person to take that job. We made an exception in the bylaws for him, age-wise. It's open-ended, so we have no specific time frame that he would have to step down. We think he's doing a good job and we support him staying. My disappointment has been that we've not been able to have an internal succession plan, and we've charged John with developing successors that can take over in an orderly fashion when he decides to retire. So I think we've managed it as well as we could. Again, I'm disappointed in the way the succession worked. But we've got a great CEO now, and I think he's doing a good job.
A. Thomas Young
If I could just add just one other item. A question must be going through your mind if we can make an exception for him, we could have made an exception for Ken Dahlberg. And that was not Ken's choice. I mean, we didn't do it. But I will tell you, we did talk about it. So it was not a subject that we didn't deliberate upon. And Ken was a, what do I say, he was -- thoroughly enjoyed and was an active CEO until the last day he was here. But Ken had other things he want to do with his life and he wanted to retire at that time period. So it wasn't a matter of us -- term living him out, though I don't want to dismiss -- that was -- that created probably the exact date. But it would -- but Ken was ready to go to a new life with family and grandkids and those kinds of things, which are not all bad. And Walt made a similar decision. So it does take 2 parties to make these things happen. And when it came to John, we were pretty quick to, as Jere was saying, to make that decision that -- our conclusion was after a broad search that John was the #1 choice. I will say he was the only person who was offered the job. Guess there is no confusion about that. And we thought that to make the adjustments in the bylaws to make all that possible was the right thing to do for the corporation.
Thank you. And for what it's worth, I think SAIC is a bargain buy right now. I really do. But the one -- Rockwell was another company that I think was doing well but wasn't necessarily understood by the market. And as a result, the Board, and rightfully so for this in terms of the shareholders interest, made the decision to break the company apart and sell it off. And that was, economically, the right decision. So SAIC, as a -- runs a complex business. I mean, it's hard for the average person to understand. And I guess behind my question was whether or not that factored into our current stock price.
A. Thomas Young
Yes. I think, again, not to prolong it. But first off, I'd like to say that the Board is unanimously in support of your comment, that it's a bargain buy. And the second item, I do think complexity adds to shareholders' decisions. And I think also, as I was mentioning earlier, ambiguity does it too. And that is there's a lot of uncertainty. And you see it every day when you see Defense Department officials testifying in public and commenting on their view of the cloudiness of the budget, it goes forward. So that has a factor. And as an earlier questioner asked, there's no question that the definition of the strategic direction for the future is important. And that's our responsibility, and that we are focusing upon that. But that's something that I think that we collectively have to be more crisp in defining and be more articulate in communicating. There was another question at the back.
Good morning. My name is Hampton Brown [ph]. I'm the brother of Truman Brown [ph], who's deceased and was a shareholder of your company and also an employee. My question then is to General Jumper. I heard about what you've been doing and how you've been doing and how you're sort of stabilizing in focusing. But I didn't hear in your presentation the spirit of entrepreneurship, which was what SAIC was in terms of the embryotic being able to build up businesses, investing in folks and be able to drive that. I also didn't hear anything about the comments about how do we capture the future. Because in the space, in the federal government that you're competing in, your usual suspects, around you, are competing in the same area. And I'm concerned because as you well know, the federal government is moving into a position where we may be back into the pre-Vietnam war budget, the cutbacks. And what I see on your slide up there are some of the heavy-duty assets that may not be around much longer. So I'd like to have your comment about what you see for the future and how you'll be able to exploit that, not from a strategic point of view but from a vision point of view.
John P. Jumper
The -- from the spirit of entrepreneurship, there's lots of definitions for that. One of the definitions in the old SAIC was that we hire people, we send them out, they build their own business, they generate revenue. As long as they're doing that, that's great. As the burden of regulation, of government oversight, of all of those things began to add to the overhead, of these small entrepreneurial packets, what you learn over time is, it doesn't scale. And there's a practical limit to how far you can take Dr. Beyster's vision of entrepreneurship. But if you look at the effects of entrepreneurship, what is it? It's a close intimate relationship with the customer and a deep, deep understanding of that customer's mission such that the customer wouldn't even think about going elsewhere to get done what needs done. That we can preserve. So that is -- those are the elements of entrepreneurship that we are going to work hard to preserve in this company. So what about the future? What are our limits today? Our limits today is, it's becoming more difficult to compete, especially in the services sector. As you say, there's lots of competition out there. I would argue, though, that the stuff that we do that takes advantage of close intimate relationship with the customer and a deep understanding of the mission are things that other people don't do as well as we do. And we are able to compete even in a depressed market. That's what I think. So as we look into the future, we have several things going that will ease the burden that we inflict on people at the working level, as far as transactions and other administrative sort of things. We continue to work that, so that they can continue to spend more time with the customer, more time on business development. We continue to work our organizational conflict-of-interest issues, so that we can compete in new places where we're not able to do it today. And so, as you look forward into the future, I think that what we have is a strategy which makes more business available to us and makes us more efficient in the way we operate. Realizing that, I think we're able to compete very, very well at what we do.
Can you give me some sense about your commercial footprint versus that of the federal footprint?
John P. Jumper
Well, as you know, the highest growth areas right now tend to be in health and energy. So, as you, logically, look forward to the future, we need to pay attention to those areas where the growth is available to us, especially when we are under pressure in the traditional core competencies of the company. We take and leverage the enterprise technical capability into these new areas that, by the way, are hungry for this kind of technical solutions. They want the technical solutions as bad as the government customer does. We're in a perfect position to do it. We leveraged that back into the commercial side, and that's what you see us doing in health and energy today. And look at the growth compared to what we're able to achieve in the depressed government market. So we're paying attention to these things is my message to you.
A. Thomas Young
I have 3 short questions. One, how much cash do we have in the bank today? Two, what plans do we have to use any of that if sequestering happens and we are hurt and we have to build. Do we have any plans to use any of it to build a bench so we don't lose our intellectual capital? And three, what was the Board's rationale for recommending we vote no on the sixth item, the stockholder proposal, which was defeated? What was the rationale for that?
A. Thomas Young
Marshall [ph], I'll just say, at this point, our stock position today is we have one -- cash, I meant, not stock. Cash is $1.2 billion, $1.3 billion. That's to answer your first question. The answer to your second question -- and if you want more, we'd be glad to do that. I think in the -- if we look forward as to what could be the most pessimistic of the outlooks that we would anticipate, this company has adequate liquidity that it -- that will not be a problem. Now I don't mean it's not a problem with new business and challenges and issues and that regard, but SAIC is a company that is postured from a capital structure standpoint. That under the most adverse of conditions, I think you might anticipate from the budget, there's not a liquidity or a budget issue and not an absence of funds that prevent us from doing what we think are the constructive things to do for the company. Item 3 is actually very well documented and included in the proxy as to what the Board of Directors' recommendation was in response to the shareholders' view. So rather than point through back, I would reference you to that, where a lot of thought went into what our reaction was to that and it is well documented there.
Donald M. Keith
Okay, I'll check that. I'm sorry. I didn't give my name. I'm Donald Keith. I'm a 19-year-old -- 90-year-old employee and I'm a stockholder.
A. Thomas Young
Fantastic. Other questions? Well, I think that's probably it. The only thing I'd like to conclude with for John, for the Board and for the management team, this has been an exceptionally good shareholders meeting. And what I mean by that is you all have asked questions, and asked some extraordinarily good questions and questions that kind of are those that will cause management of the Board to think hard about various issues. So we appreciate the questions and appreciate the penetrating nature of the questions. And not only our answers here, but the questions that you've asked will all be taken very seriously as we constitute our plans as we go forward. So with that, I say thank you very, very much, and I guess, we're adjourned second time. Thank you.
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