March 15, 2007

Dear Fellow Stockholder:

      It is my pleasure to invite you to the Unisys 2007 Annual Meeting of Stockholders. This year’s meeting will be held on Thursday, April 26, 2007, at The Hilton Inn at Penn, which is located at 3600 Sansom Street in Philadelphia, Pennsylvania. The meeting will begin at 9:30 a.m.

      In 2006 we made great progress in our multi-year plan to reposition Unisys for significantly improved profitability by 2008. Executing against the strategy we laid out at the end of 2005, we realigned our sales and services delivery model, restructured challenging outsourcing operations, expanded our use of offshore resources, announced major changes to our U.S. retirement plans, divested non-core assets, and significantly reduced our cost base. As we implemented the repositioning initiatives, our profitability improved during the year, and we closed the year with significant profit growth in the fourth quarter. While we have much more work to do, we are encouraged by the improvements we are seeing in our results, and we are focused on continuing the progress in 2007.

      Whether or not you plan to attend the annual meeting, I urge you to take a moment to vote on the items in this year’s proxy statement. Most stockholders have a choice of voting their shares over the Internet, by telephone, or by completing, signing, and returning a proxy card. Voting by any of these means takes only a few minutes, and it will ensure that your shares are represented at the meeting. If you vote over the Internet, you will also be given the opportunity to access future proxy statements and annual reports over the Internet instead of receiving paper copies in the mail. Electronic access saves our company the cost of producing and mailing these documents. I encourage you to take advantage of it.

      I look forward to seeing you at the annual meeting, where you will hear about our results for 2006 and our priorities for 2007.

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

April 26, 2007

       Unisys Corporation will hold its 2007 Annual Meeting of Stockholders at The Hilton Inn at Penn, 3600 Sansom Street, Philadelphia, Pennsylvania, on Thursday, April 26, 2007, at 9:30 a.m. to:

      Only record holders of Unisys common stock at the close of business on February 28, 2007 will be entitled to vote at the annual meeting.

Blue Bell, Pennsylvania

March 15, 2007

TABLE OF CONTENTS

PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS

April 26, 2007

       The Board of Directors of Unisys Corporation solicits your proxy for use at the 2007 Annual Meeting of Stockholders to be held on April 26, 2007 and at any adjournments. At the annual meeting, stockholders will be asked to elect three directors, to ratify the selection of the Company’s independent registered public accountants, to approve a new long-term incentive and equity compensation plan, to consider and vote on two stockholder proposals and to transact any other business properly brought before the meeting.

      The record date for the annual meeting is February 28, 2007. Only holders of record of Unisys common stock as of the close of business on the record date are entitled to vote at the meeting. On the record date, 346,885,727 shares of common stock were outstanding. The presence, in person or by proxy, of a majority of those shares will constitute a quorum at the meeting.

      This proxy statement, the proxy/voting instruction card and the annual report of Unisys, including the financial statements for 2006, are being mailed and made available on the Internet on or about March 15, 2007.

Required Vote

      Each share of Unisys common stock outstanding on the record date is entitled to one vote on each matter to be voted upon. Directors will be elected by the vote of a majority of the votes cast at the meeting. This means that a nominee will be elected if the number of votes cast “for” his or her election exceeds 50% of the total number of votes cast with respect to that nominee’s election. Votes cast with respect to the election of directors include votes to “withhold” authority but do not include abstentions and broker non-votes.

      Each of the other matters scheduled to come before the annual meeting will be approved if it receives the affirmative vote of a majority of shares present, in person or by proxy, and entitled to vote on the matter. Abstentions will be included in the vote totals for these matters and therefore will have the same effect as a negative vote; broker non-votes will not be included in the vote totals and therefore will have no effect on the vote.

Voting Procedures and Revocability of Proxies

      Your vote is important. Shares may be voted at the annual meeting only if you are present in person or represented by proxy. Most stockholders have a choice of voting (1) by completing a proxy/voting instruction card and mailing it in the postage-paid envelope provided, (2) over the Internet or (3) by telephone using a toll-free telephone number. Check the materials you have received to see which options are available to you and to obtain the applicable web site or telephone number. If you elected to receive proxy materials over the Internet, you should have already received e-mail instructions on how to vote electronically. Please be aware that if you vote over the Internet, you may incur costs associated with your electronic access, such as usage charges from Internet access providers and telephone companies, for which you will be responsible.

      You may revoke your proxy at any time before it is exercised by writing to the Corporate Secretary of Unisys, by timely delivery of a properly executed later-dated proxy (including an Internet or telephone vote) or by voting in person at the meeting.

      The method by which you vote will in no way limit your right to vote at the meeting if you later decide to attend in person. If your shares are held in the name of a bank, broker or other holder of record, you must obtain a proxy, executed in your favor, from the holder of record to be able to vote at the meeting.

      If you properly complete and return your proxy, and do not revoke it, the proxy holders will vote your shares in accordance with your instructions. If your properly completed proxy gives no instructions, the proxy holders will vote your shares FOR the election of directors, FOR the selection of independent registered public accountants, FOR the approval of the Unisys Corporation 2007 Long-Term Incentive and Equity Compensation Plan, AGAINST the two stockholder proposals and in their discretion on any other matters that properly come before the annual meeting.

      If you are a participant in the Unisys Savings Plan, the proxy/voting instruction card will serve as voting instructions to the plan trustee for any whole shares of Unisys common stock credited to your account as of February 28, 2007. The trustee will vote those shares in accordance with your instructions if it receives your completed proxy by April 23, 2007. If the proxy is not timely received, or if you give no instructions on a matter to be voted upon, the trustee will vote the shares credited to your account in the same proportion as it votes those shares for which it received timely instructions from other participants.

ELECTION OF DIRECTORS

      The Board of Directors currently consists of 10 members, divided into three classes. One class of directors is elected each year to hold office for a three-year term. The three directors whose terms expire in 2007, Henry C. Duques, Clayton M. Jones and Theodore E. Martin, have been nominated for reelection. The remaining seven directors will continue to serve as set forth below. Each of the nominees has agreed to serve as a director if elected, and Unisys believes that each nominee will be available to serve. However, the proxy holders have discretionary authority to cast votes for the election of a substitute should any nominee not be available to serve as a director.

           The Board of Directors recommends a vote “FOR” all nominees.

Information Regarding Nominees and Directors

      The names and ages of the nominees and directors, their principal occupations and employment during the past five years, and other information regarding them are as follows.

Members of the Board Continuing in Office

Board Meetings; Attendance at Annual Meetings

      The Board of Directors held 12 meetings in 2006. During 2006, all directors except Mr. Espe attended at least 75% of the meetings of the Board of Directors and standing committees on which they served.

      It is the Company’s policy that all directors should attend the annual meeting of stockholders. All of the Company’s directors attended the 2006 annual meeting.

Independence of Directors

      All of the Company’s directors other than Mr. McGrath meet the independence requirements prescribed by the New York Stock Exchange and, in the case of members of the Audit Committee, also meet the audit committee independence requirements prescribed by the SEC. In assessing whether a director has a material relationship with Unisys (either directly or as a partner, stockholder or officer of an organization that has a relationship with Unisys), the Board uses the criteria outlined below in paragraph 2 of “Corporate Governance Guidelines”. All non-employee directors met these criteria in 2006. In particular, three of the Company’s non-employee directors, Mr. Duques, Mr. Espe and Mr. Jones, are the chief executive officers of companies that do business with Unisys in the ordinary course. In each instance, combined Unisys sales to and purchases from the director’s company in 2006 represented less than one percent of that company’s annual revenue. In addition, two of the Company’s non-employee directors, Mr. Bolduc and Mr. Espe, served as directors of organizations to which the Company made charitable contributions in 2006. In each instance, the amounts contributed by Unisys to the charitable organization represented less than one percent of the organization’s annual charitable receipts.

Committees

      The Board of Directors has a standing Audit Committee, Compensation Committee, Finance Committee and Nominating and Corporate Governance Committee. The specific functions and responsibilities of each committee are set forth in its charter, which is available on the Company’s Internet web site at www.unisys.com in the Investors section under Corporate Governance and Board of Directors and is also available in print to any stockholder who requests it.

Audit Committee

      The Audit Committee assists the Board in its oversight of the integrity of the Company’s financial statements and its financial reporting and disclosure practices, the soundness of its systems of internal financial and accounting controls, the independence and qualifications of its independent registered public accounting firm, the performance of its internal auditors and independent registered public accounting firm, the Company’s compliance with legal and regulatory requirements and the soundness of its ethical and environmental compliance programs. The Audit Committee held nine meetings in 2006. Its members are Mr. Espe, Ms. Fletcher, Mr. Huston (chair) and Ms. Kenne. The Board has determined that each of Mr. Espe, Ms. Fletcher and Mr. Huston is an audit committee financial expert as defined by the SEC.

Compensation Committee

      The Compensation Committee oversees the compensation of the Company’s executives, the Company’s executive management structure, the compensation-related policies and programs involving the Company’s executive management and the level of benefits of officers and key employees. In this capacity, the committee regularly reviews and approves the Company’s executive compensation strategy and principles to ensure that they are aligned with the Company’s business strategy and objectives and with stockholder interests. Under its charter, the Compensation Committee annually reviews and approves goals and objectives relevant to the compensation of the chief executive officer, evaluates the performance of the chief executive officer in light of those goals and makes recommendations to the independent members of the Board concerning the compensation level of the chief executive officer. The committee also annually reviews and approves compensation levels of the other elected officers. In this regard, the committee solicits input from the Company’s chief executive officer regarding the compensation of those executives who report directly to him. The Compensation Committee also reviews and recommends to the Board the adoption of director compensation programs. The Company’s guidelines regarding the compensation of directors are described more fully in paragraph 11 of “Corporate Governance Guidelines” below. To assist in carrying out its responsibilities, the Compensation Committee regularly receives reports and recommendations from management and from Towers Perrin, the committee’s outside compensation consultant. Under its charter, the committee also may consult with legal, accounting or other advisors, as appropriate, and may form and delegate authority to subcommittees when appropriate. The Compensation Committee held seven meetings in 2006. Its members are Dr. Duderstadt, Mr. Jones and Mr. Martin (chair).

Finance Committee

      The Finance Committee oversees the Company’s financial affairs, including its capital structure, financial arrangements, capital spending and acquisition and disposition plans. It also oversees the management and investment of funds in the pension, savings and welfare benefit plans sponsored by the Company. The Finance Committee held five meetings in 2006. Its members are Mr. Bolduc (chair) and Mr. Espe.

Nominating and Corporate Governance Committee

      The Nominating and Corporate Governance Committee identifies and reviews candidates and recommends to the Board of Directors nominees for membership on the Board of Directors. It also oversees the Company’s corporate governance. In identifying candidates for Board

Communications with Directors

      Stockholders and other interested parties may send communications to the Board of Directors or to the non-management directors as a group by writing to them c/o Corporate Secretary, Unisys Corporation, Unisys Way, Blue Bell, Pennsylvania 19424. All communications directed to Board members will be delivered to them.

Code of Ethics and Business Conduct

      Unisys has a code of ethics, the Unisys Code of Ethics and Business Conduct, that applies to all employees, officers (including the chief executive officer, chief financial officer and controller) and directors. The code is posted on the Company’s Internet web site at www.unisys.com in the Investors section under Corporate Governance and Board of Directors and is also available in print to any stockholder who requests it. The Company intends to post amendments to or waivers from the code (to the extent applicable to the Company’s chief executive officer, chief financial officer or controller) at this location on its web site.

Corporate Governance Guidelines

      The Board of Directors has adopted Guidelines on Significant Corporate Governance Issues. The full text of these guidelines, as amended through February 8, 2007, is available on the Company’s Internet web site at www.unisys.com in the Investors section under Corporate Governance and Board of Directors and is also available in print to any stockholder who requests it. Among other matters, the guidelines cover the following:

Related Party Transactions

      During 2006, the law firm Pepper Hamilton LLP, which has represented Unisys on a variety of matters for more than 20 years, provided legal services to Unisys for fees of approximately $254,000. The husband of Nancy Straus Sundheim is a partner in that firm. Ms. Sundheim has been Senior Vice President, General Counsel and Secretary of Unisys since 2001. Since that date, at the request of Mr. Sundheim, Pepper Hamilton has excluded from Mr. Sundheim’s annual compensation any income attributable to Unisys matters. Also, since 2001, it has been the Company’s practice that any decision to retain Pepper Hamilton is made by the chief executive officer, in consultation with the Unisys attorney responsible for the matter. Ms. Sundheim has no input in the decision to retain the firm.

Audit Committee Report

      In performing its oversight responsibilities as defined in its charter, the Audit Committee has reviewed and discussed the audited financial statements and reporting process, including the

      During 2006, the Audit Committee was kept informed of the progress of management’s documentation, testing and evaluation of the Company’s system of internal control over financial reporting required by Section 404 of the Sarbanes-Oxley Act of 2002 and related regulations and provided oversight to management during the process. At the conclusion of the process, the committee reviewed a report on the effectiveness of the Company’s internal control over financial reporting.

      Based on these reviews and discussions, the committee recommended to the Board of Directors that the audited financial statements be included in the Annual Report on Form 10-K for the year ended December 31, 2006 for filing with the SEC.

Audit Committee

Matthew J. Espe

Denise K. Fletcher

Edwin A. Huston

Leslie F. Kenne

Relationship with Independent Registered Public Accounting Firm

      Ernst & Young LLP has billed the Company the following fees for professional services rendered in respect of the years ended December 31, 2006 and 2005 (in millions of dollars):

      Audit fees consist of fees for the audit and review of the Company’s financial statements, statutory audits, comfort letters, consents, assistance with and review of documents filed with the SEC and Section 404 attestation procedures. Audit-related fees consist of fees for employee benefit plan audits, accounting advice regarding specific transactions and various attestation engagements. Tax fees principally represent fees for tax compliance services. All other fees are for non-prohibited advisory services to the Company’s federal government group.

      The Audit Committee annually reviews and pre-approves the services that may be provided by the independent registered public accounting firm. The committee has also adopted an Audit and Non-Audit Services Pre-Approval Policy that contains a list of pre-approved services, which the committee may revise from time to time. In addition, the Audit Committee has delegated pre-approval authority, up to a fee limitation of $150,000 per service, to the chairman of the committee.

RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

      The Audit Committee has selected the firm of Ernst & Young LLP as the independent registered public accounting firm to audit the Company’s books and accounts for the year ending December 31, 2007. Ernst & Young LLP has served as the Company’s independent registered public accounting firm since 1986. Its representatives will be present at the annual meeting and will have the opportunity to make a statement if they desire to do so and to respond to appropriate questions asked by stockholders.

      The Board of Directors considers Ernst & Young LLP to be well qualified to serve as the independent registered public accounting firm for Unisys. If, however, stockholders do not ratify the selection of Ernst & Young LLP, the appointment will be reconsidered.

      The Board of Directors recommends a vote “FOR” the proposal to ratify the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2007.

APPROVAL OF THE UNISYS CORPORATION 2007

LONG-TERM INCENTIVE AND EQUITY COMPENSATION PLAN

      On February 8, 2007, the Board of Directors unanimously approved and adopted the Unisys Corporation 2007 Long-Term Incentive and Equity Compensation Plan (the “2007 Plan”), authorized 24,000,000 shares for issuance under the plan, and directed that the plan be submitted to stockholders for approval. The 2007 Plan will become effective when it is approved by stockholders.

      The purposes of the 2007 Plan are to support the Company’s ongoing efforts to attract, retain and develop exceptional talent and to enable the Company to provide incentives directly linked to the Company’s short-term and long-term objectives and to increases in stockholder value. In addition, under the 2007 Plan, the Company will have the ability to grant performance-based compensation awards that meet the requirements of Section 162(m) of the Internal Revenue Code, thereby preserving the Company’s ability to receive federal income tax deductions for the awards.

      The 2007 Plan will be in addition to the Unisys Corporation 2003 Long-Term Incentive and Equity Compensation Plan (the “2003 Plan”). The 2003 Plan was adopted by stockholders in 2003 and provides for the award of stock options and stock-based awards to elected officers, outside directors, and key employees of the Company. As set forth under “Equity Compensation Plan Information” on page 19, at December 31, 2006, 5.94 million shares of the Company’s common stock remained available for future issuance under the 2003 Plan. As of March 7, 2007, after taking into account awards made in 2007, as well as the expiration, termination or forfeiture of existing awards, 3.13 million shares were available for issuance under the 2003 Plan.

      The following is a summary of the material features of the 2007 Plan. This summary is subject in all respects to the complete text of the 2007 Plan, which is attached as Appendix A.

      Shares Available. Twenty-four million shares of the Company’s common stock are authorized for issuance under the 2007 Plan. Under the plan, if an award is cashed out or is exercised, terminates or expires without a payment being made in the form of the Company’s common stock, the shares subject to that award again become available for issuance. However, shares of the Company’s common stock that are (1) tendered in payment of the exercise price of an option, (2) withheld by the Company to satisfy any tax withholding obligation with respect to an award or (3) repurchased by the Company on the open market with the proceeds of the exercise of an option, may not again be available for issuance in connection with awards under the plan. Also, if the Company pays the spread value of a stock appreciation right in shares of the Company’s common stock, the greater of (1) the number of shares so paid and (2) the number of shares subject to the stock appreciation right will be unavailable for issuance under the plan. The number of authorized shares will be proportionately substituted for or adjusted to reflect a merger, reorganization, consolidation, recapitalization, share exchange, stock dividend, stock split, reverse stock split, split-up, spin-off, issuance of rights or warrants, or other similar event. The Company anticipates that the number of authorized shares will cover awards made under the plan for at least the next three years.

      Eligibility. All employees, officers and non-employee directors of the Company and its subsidiaries and affiliates are eligible to receive awards under the 2007 Plan. The Compensation Committee (the “Committee”) of the Board of Directors has the authority to select participants and to determine the amount, type and terms of each award. In 2007, awards under the 2003 Plan have been made to the 12 elected officers of the Company, the nine non-employee directors and approximately 125 non-officer employees of the Company and its subsidiaries.

      Types of Awards. The Committee may award stock options (including nonqualified options and incentive stock options), stock appreciation rights (“SARs”), restricted shares, other stock-based awards and cash incentive awards.

      Stock Options. A stock option represents the right to purchase a share of common stock at a predetermined exercise price. Stock options granted under the 2007 Plan may be in the form of incentive stock options (“ISOs”) or nonqualified stock options, as determined in the discretion of the Committee. The terms of each stock option, including the number of shares, exercise price, vesting period and option duration, will be set forth in an award agreement, but in no event will a stock option be exercisable later than the tenth anniversary of the date on which it was granted. Stock options may be exercised, in whole or in part, by payment in full of the exercise price in cash. In addition, if authorized by the Committee, payment in full or in part may also be made in the form of Company common stock already owned by the participant or through a broker cashless exercise program authorized by the Company. Stock options expire on the earlier of the expiration date of the stock option (as set forth in the applicable award agreement) or the participant’s termination of employment (or, in the case of a non-employee director, termination of service on the Board). Under certain conditions, a stock option may be exercised after a participant’s termination (e.g., retirement, death, disability, or termination at or after attainment of age 55 with 5 years of service), but not later than the expiration date for the option.

      Stock Appreciation Rights. A SAR represents the right to receive a payment, in cash, shares of common stock, or both (as determined by the Committee), equal to the spread value

      Restricted Shares. Restricted shares are shares of stock that are awarded to a participant and that are subject to forfeiture during a pre-established period if certain conditions (e.g., continued employment or attainment of pre-determined performance goals) are not met. The terms of a participant’s restricted share award are determined by the Committee and are set forth in an award agreement. Restricted shares may not be sold, assigned, transferred, pledged or otherwise encumbered while the shares are subject to forfeiture. A participant generally will have all the rights of a holder of common stock, including the rights to receive any dividends and to vote, during the restricted period. Any dividends with respect to restricted shares that are payable in common stock will be paid in the form of restricted shares.

      Other Stock-Based Awards. Other stock-based awards are awards, other than stock options, SARs or restricted shares, that are denominated or valued in whole or in part by reference to, or otherwise based on or related to, the value of common stock. The purchase, exercise, exchange or conversion of other stock-based awards will be on such terms and conditions and by such methods as will be specified by the Committee and will be set forth in an award agreement.

      Incentive Awards. Incentive Awards are performance-based awards that are expressed in U.S. currency, but that may be payable in the form of cash, stock or a combination of both, and are payable upon the satisfaction of pre-determined performance goals over performance periods. Incentive awards may be either annual incentive awards (that measure performance over a period of one year or less) or long-term incentive awards (that measure performance over a period in excess of one year). The terms of a participant’s incentive award will be established by the Committee and will be set forth in an award agreement.

      Awards Granted at Fair Market Value. The exercise price of a stock option and the grant price of a SAR may not be less than 100% of the fair market value of a share of Unisys common stock on the date of grant. In addition, if the value of another stock-based award is based on spread value, the grant price for the other stock-based award may not be less than 100% of the fair market value on the date of grant. The only exception is for awards made in substitution for similar awards made to a participant under a predecessor company plan that has been assumed by the Company as a result of a reorganization, merger, consolidation or other similar transaction.

      Minimum Vesting Period For Awards. Except in the case of a new-hire award or under such other circumstances deemed appropriate by the Committee, no stock option, SAR, restricted share or other stock-based award will be granted with a vesting period of less than one year.

      Stock Option/SAR Repricing. Except for automatic adjustments to reflect a merger, reorganization, consolidation, recapitalization, share exchange, stock dividend, stock split, reverse stock split, split-up, spin-off, issuance of rights or warrants, or other similar event, stock options and SARs may not be repriced (whether through modification of the exercise or grant

      Award Limitations. The total number of restricted shares and other shares of stock underlying stock options, SARs and other stock-based awards awarded to any participant during any year may not exceed (1) 2,000,000 shares multiplied by (2) the number of calendar years during which the participant has been eligible to participate in the 2007 Plan and reduced by (3) the number of shares with respect to which the participant has received awards of restricted shares, stock options, SARs and/or other stock-based awards under the 2007 Plan. An annual incentive award paid to a participant may not exceed $5,000,000. A long-term incentive award paid to a participant may not exceed $3,000,000 times the number of years in the performance cycle applicable to the award.

      Performance-Based Awards. Any award granted under the 2007 Plan may be conditioned on the attainment of one or more performance goals over a specified performance cycle. If the Committee intends that an award made to a “covered employee” (generally the chief executive officer and the four most highly compensated executive officers) will constitute “performance-based” compensation within the meaning of Section 162(m) of the Internal Revenue Code, then the performance goals will be based on one or more of the following criteria: earnings per share; total stockholder return; operating income; net income; cash flow; free cash flow; return on equity; return on capital; revenue growth; earnings before interest, taxes, depreciation and amortization (“EBITDA”); stock price; debt-to-capital ratio; stockholders’ equity per share; operating income as a percent of revenue; gross profit as a percent of revenue; selling, general and administrative expenses as a percent of revenue; operating cash flow; pre-tax profit; orders; revenue; and customer value. The performance goals may relate to results obtained by the individual, the Company, a subsidiary or any business unit, division or geographic region thereof.

      Change In Control. In the event of a change in control, as defined in the 2007 Plan, all stock options and SARs will become fully vested and immediately exercisable. All restrictions applicable to outstanding restricted shares and other stock-based awards that are not performance-related will lapse. Outstanding incentive awards and other stock-based awards that are performance-related will become vested and will be paid out based on the targeted award opportunity of such awards for the full performance cycle.

      Plan Administration. The 2007 Plan will be administered by the Committee, which will have the power to interpret the plan and to adopt such rules and guidelines for carrying out the plan as it may deem appropriate. The Committee will have the authority to adopt such modifications, procedures and subplans as may be necessary or desirable to comply with the laws, regulations, compensation practices and tax and accounting principles of the countries in which the Company or a subsidiary may operate to assure the viability of the benefits of awards made to individuals employed in such countries and to meet the objectives of the plan. Subject to the terms of the plan, the Committee will have the authority to determine those individuals eligible to receive awards and the amount, type and terms of each award and to establish and administer any performance goals applicable to such awards. The Committee may delegate its authority and power under the plan in whole or in part to a subcommittee consisting of two or more non-employee directors (who are “outside directors” within the meaning of Section 162(m) of the Internal Revenue Code) or, with respect to determinations and decisions regarding participants who are not elected officers or non-employee directors, to one or more officers of the Company, subject to guidelines prescribed by the Committee.

New Plan Benefits

      Because benefits under the 2007 Plan will depend on the discretion of the Committee and the fair market value of the Company’s common stock at various future dates, it is not possible to determine the benefits that will be received if the 2007 Plan is approved by stockholders. The table below shows benefits under the 2003 Plan for the year ended December 31, 2006 received by or allocated to the executive officers named on page 33, all elected officers as a group, all non-employee directors as a group and all other employees as a group.

U.S. Federal Income Tax Consequences

      The following is a brief description of the principal U.S. federal income tax consequences, based on current law, of awards under the 2007 Plan.

      Tax Consequences to Participants. Generally, when a participant receives an award under the 2007 Plan, the participant’s receipt of cash or Company stock in settlement of the award is conditioned on the participant’s performing future services for the Company and/or the attainment of performance goals. The award, therefore, is not taxable at grant. Instead, when and if a participant later receives cash in settlement of the award, he or she will have income, taxable at ordinary income rates, equal to the amount of cash received. Similarly, when and if a participant receives Company stock in settlement of an award, he or she will, subject to

      Thus, participants generally will be taxable on any cash or the fair market value of any stock received in settlement of an incentive award or other stock-based award or upon exercise of a SAR. Similarly, participants will have taxable income on exercise of a nonqualified stock option equal to the difference between the fair market value of the stock subject to the option and the exercise price of the option.

      Special rules apply in the case of an ISO. Participants generally recognize no taxable income on exercise of an ISO. Instead, they have gain, taxable at capital gains rates, upon the disposition of the stock acquired on exercise of the ISO in an amount equal to the excess of the amount realized on disposition of the stock over the exercise price of the ISO. (In some cases, participants may become subject to tax as the result of the exercise of an ISO, because the excess of the fair market value of the stock at exercise over the exercise price is an adjustment item for alternative minimum tax purposes.) The special tax treatment afforded to ISOs is only available, however, if the participant does not dispose of the stock acquired upon exercise of the ISO before the first anniversary of the date on which he or she exercised the ISO or, if later, the second anniversary of the date on which the ISO was granted. If the participant disposes of stock before the expiration of this holding period, a “disqualifying disposition” occurs and the participant will recognize income, taxable at ordinary income rates, in the year of the disqualifying disposition. The amount of this income will generally be equal to the excess, if any, of the lesser of (1) the fair market value of the stock on the date of exercise and (2) the amount realized upon disposition of the stock over the exercise price paid for the stock. If the amount realized upon a disqualifying disposition is greater than the fair market value of the stock on the date of exercise, the difference will be taxable to the employee as capital gain.

      Special rules also apply to awards of restricted shares. A participant generally will not recognize taxable ordinary income when he or she receives restricted shares. Instead, the participant will have taxable income in the first year in which the shares cease to be subject to a substantial risk of forfeiture, generally when all applicable restrictions lapse. The participant will then have taxable income equal to the fair market value of the stock at that time over the amount, if any, the participant paid for the stock. The participant may, however, make an election to include in income, when the restricted stock is first transferred to him or her, an amount equal to the excess of the fair market value of the stock at that time over the amount, if any, paid for the stock. The result of this election is that appreciation in the value of the stock after the date of transfer is then taxable as capital gain, rather than as ordinary income.

      Tax Consequences to the Company. Generally, any time a participant recognizes taxable income, as opposed to capital gain, as the result of the settlement of any award under the 2007 Plan, the Company will be entitled to a deduction equal to the amount of income recognized by the participant.

      Other Tax Considerations. Internal Revenue Code Section 162(m) places a $1,000,000 annual limit on the compensation deductible by the Company paid to covered employees (as described above). The limit, however, does not apply to “qualified performance-based compensation”. The Company believes that awards of stock options, SARs and other awards payable upon the attainment of performance goals under the 2007 Plan will qualify as qualified performance-based compensation. Also, awards that are granted, accelerated or enhanced upon the occurrence of a change in control may give rise, in whole or in part, to “excess

      State and local tax consequences may in some cases differ from the federal tax consequences. In addition, awards under the 2007 Plan may be made to participants who are subject to tax in jurisdictions other than the United States and may result in consequences different from those described above.

      The foregoing summary of the income tax consequences in respect of the 2007 Plan is for general information only. Interested parties should consult their own advisors as to specific tax consequences, including the application and effect of foreign, state and local tax laws.

      The Board of Directors recommends a vote “FOR” approval of the Unisys Corporation 2007 Long-Term Incentive and Equity Compensation Plan.

EQUITY COMPENSATION PLAN INFORMATION

      The following table sets forth information as of December 31, 2006 with respect to compensation plans under which Unisys common stock is authorized for issuance.

STOCKHOLDER PROPOSAL

(Corporate Political Contributions and Trade Association Payments)

      The Calvert Social Index Fund, 4550 Montgomery Avenue, Bethesda, MD 20814, beneficial owner of 3,375 shares of the Company’s common stock, has proposed the adoption of the following resolution:

      Resolved, that the shareholders of Unisys Corporation (“Company”) hereby request that the Company provide a report, updated semi-annually, disclosing the Company’s:

The report shall be presented to the board of directors’ audit committee or other relevant oversight committee and posted on the company’s website to reduce costs to shareholders.

Stockholder Supporting Statement

      As long-term shareholders of Unisys Corporation, we support policies that apply transparency and accountability to corporate spending on political activities. Such disclosure is consistent with public policy and in the best interest of the Company’s shareholders.

      Company executives exercise wide discretion over the use of corporate resources for political activities. These decisions involve political contributions, called “soft money,” and payments to trade associations and related groups that are used for political activities. Most of these expenditures are not disclosed. According to the Center for Political Accountability (http://policialaccountability.net), Unisys Corporation has contributed more than $135,000 in corporate funds since the 2002 election cycle. However, its payments to trade associations used for political activities are undisclosed and unknown. These activities include direct and indirect political contributions to candidates, political parties or political organizations; independent expenditures; or electioneering communications on behalf of a federal, state or local candidate. The result: shareholders and, in many cases, management do not know how trade associations use their company’s money politically. The proposal asks the Company to disclose its political contributions and payments to trade associations and other tax-exempt organizations.

Statement of Unisys in Opposition to Stockholder Proposal

      The Board of Directors has considered the above proposal and recommends that you vote against it for the following reasons:

      Amounts the Company spends on political contributions and trade association memberships are insignificant in comparison to the size and scope of its business. Unisys has in place effective reporting and compliance procedures to ensure that it makes contributions in accordance with applicable laws. While the Company pays membership dues and fees for services such as educational programs to trade associations, it does not make political contributions through them.

      The Unisys Code of Ethics and Business Conduct, which is available at http://www.unisys.com/common/investors/other/Code of Ethics.pdf, addresses Unisys policies and procedures for political contributions and activity. Under this policy, no Company funds, products, services or other resources may be contributed directly or indirectly to any elected officials, political candidates or parties at the U.S. federal level.

      Unisys has established a Political Action Committee (PAC) in the United States called the Unisys Employees Political Action Committee. The Unisys PAC accepts employee contributions in order to make political contributions to U.S. federal candidates supportive of the interests of Unisys employees. All contributions to the PAC are voluntary and are reported in filings with the Federal Election Commission, which are publicly available.

      Outside the United States, and within the United States at the state and local levels, corporate resources may in certain circumstances be contributed to elected officials, political candidates or parties to the extent permitted by law and in accordance with Company policy. Unisys publicly discloses information about these contributions as required by applicable law.

      Implementation of the proposal would involve additional time and expense to the Company with little, if any, corresponding benefit for stockholders. Accordingly, the Board believes there is no need for the Company to use its financial and other resources to provide additional information.

      The Board of Directors recommends a vote “AGAINST” the adoption of the foregoing stockholder proposal.

STOCKHOLDER PROPOSAL

(Sustainability Report)

      The New York City Employees’ Retirement System, the New York City Teachers’ Retirement System, the New York City Police Pension Fund, the New York City Fire Department Pension Fund and the New York City Board of Education Retirement System, c/o the Office of the Comptroller of the City of New York, 1 Centre Street, New York, NY 10007-2341, beneficial

WHEREAS:

Investors increasingly seek disclosure of companies’ social and environmental practices in the belief that they impact shareholder value. Many investors believe companies that are good employers, environmental stewards, and corporate citizens are more likely to be accepted in their communities and to prosper long-term. According to Innovest, an environmental investment research consultant, major investment firms including ABN-AMRO, Neuberger Herman, Schroders, T. Rowe Price, and Zurich Scudder subscribe to information on companies’ social and environmental practices.

Sustainability refers to development that meets present needs without impairing the ability of future generations to meet their own needs. The Dow Jones Sustainability Group defined corporate sustainability as “a business approach that creates long-term shareholder value by embracing opportunities and managing risks deriving from economic, environmental and social developments.”

Globally, approximately 1,900 companies produce reports on sustainability issues (www.corporateregister.com), including more than half of the global Fortune 500 (KPMG International Survey of Corporate Responsibility Reporting 2005).

Companies increasingly recognize that transparency and dialogue about sustainability are elements of business success. For example, Unilever’s Chairman stated in a 2003 speech, “So when we talk about corporate social responsibility, we don’t see it as something business “does” to society but as something that is fundamental to everything we do. Not just philanthropy or community investment, important though that is, but the impact of our operations and products as well as the interaction we have with the societies we serve.”

An October 6, 2004 statement published by social research analysts reported that they value public reporting because “we find compelling the large and growing body of evidence linking companies’ strong performance addressing social and environmental issues to strong performance in creating long-term shareholder value...We believe that companies can more effectively communicate their perspectives and report performance on complex social and environmental issues through a comprehensive report than through press releases and other ad hoc communications.” (www.socialinvest.org)

      RESOLVED: Shareholders request that the Board of Directors issue a sustainability report to shareholders, at reasonable cost, and omitting proprietary information, by December 31, 2007.

Supporting Statement

The Report should include the company’s definition of sustainability, as well as a company-wide review of company policies, practices, and indicators related to measuring long-term social and environmental sustainability.

We recommend that the company use the Global Reporting Initiative’s Sustainability Reporting Guidelines (“The Guidelines”) to prepare the report. The Global Reporting Initiative (www.globalreporting.org) is an international organization with representatives from the business, environmental, human rights, and labor communities. The Guidelines provide guidance on report content, including performance in six categories (direct economic impacts, environmental, labor practices and decent work conditions, human rights, society, and product

Statement of Unisys in Opposition to Stockholder Proposal

      The Board of Directors has considered the above proposal and recommends that you vote against it for the following reasons:

      Unisys understands that social responsibility enhances the Company’s reputation and strengthens long-term relationships with clients, partners and others, who prefer doing business with a responsible corporate citizen. The Company’s existing social responsibility and environmental practices already adequately address the concerns raised in this stockholder proposal. Unisys provides information on those practices at http://www.unisys.com/about unisys/commitments/index.htm. We review and update the information we provide annually.

      For the fifth consecutive year, Unisys has earned a place in the Dow Jones Sustainability World Index. The purpose of this index is to provide investors with an independent benchmark based on economic, environmental and social criteria, and the Company’s selection recognizes its proactive policies in responsibly managing the economic, environmental and social aspects of doing business. The index includes approximately 300 companies worldwide (of 2,500 considered for inclusion). Only 23 technology companies (including Unisys) are included in the index, nine of which are U.S. companies. In the computer services and Internet industry, only three companies (including Unisys) are in the index.

      The Company’s Code of Ethics and Business Conduct and its Environmental Safety and Health policies codify its culture of conducting business as a responsible citizen, ensuring compliance with applicable governmental environmental, safety and health requirements, building a business environment where diversity is respected, sought and valued, and providing a safe and healthy workplace. Unisys has a staff of skilled professionals who are responsible for identifying and resolving environmental, safety and health issues in a timely, cost-effective and technically sound manner.

      Unisys believes in conducting business with respect and concern for the environment. We take a proactive role in maintaining a safe and healthy workplace, operating our facilities in an environmentally sound manner, and promoting programs that support environmental stewardship. For example, the Company promotes recycling programs worldwide and frequently incorporates recycled materials into its products. In fact, since 1997, more than 26 million pounds of obsolete products have been collected and processed through Unisys parts-recovery facilities and third party recycling operations, with many of the parts refurbished for future use. Unisys instituted programs for recovery and recycling of end-of-life electronic products well in advance of any governmental directives or regulations, and it is committed to complying with governmental legislative and regulatory requirements for providing environmentally sound recovery, recycling, and disposal of customer end-of-life Unisys name-branded electrical and electronic equipment.

      In designing its products, Unisys follows programs to ensure that parts it obtains from external sources and uses in its products comply with applicable regulatory requirements as they evolve around the globe. These programs have resulted in a significant reduction in the presence of hazardous substances in our supplier parts. In addition, Unisys uses environmentally safe packing materials and shipping cartons.

      Unisys has long supported science and technology education in the community. The Company is proud of its long history of support for The Franklin Institute Science Museum in Philadelphia, and of its efforts to preserve its records of the early years of the computer industry and make them available to the public for research purposes.

      Unisys has a long history of support for United Way agencies in communities where employees live and work. In 2005, Unisys made a special contribution to the Red Cross to support relief efforts in the wake of Hurricane Katrina’s devastation along the U.S. Gulf Coast. The Company is a founding donor of the National Constitution Center in Philadelphia, an independent, non-partisan national organization dedicated to increasing public understanding of, and appreciation for, the U.S. Constitution and its history and contemporary relevance. The Company supports employee diversity councils, whose leadership spans gender, ethnicity and cultures.

      In summary, for a considerable number of years Unisys has been proactive in responsibly managing the economic, environmental and social aspects of doing business. The Company publicly discloses its social responsibility and environmental practices on its web site and, for the past five years, has been named to the Dow Jones Sustainability World Index. Producing an additional report of the nature described in the stockholder proposal is unnecessary and would be costly and time-intensive. The Company believes that its corporate resources should be put to more productive use.

      The Board of Directors recommends a vote “AGAINST” the adoption of the foregoing stockholder proposal.

SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      Shown below is information with respect to persons or groups that beneficially own more than five percent of Unisys common stock. This information is derived from Schedules 13D and 13G filed by such persons or groups.

EXECUTIVE COMPENSATION

Compensation Discussion & Analysis

Compensation Philosophy

      The Company’s executive compensation program is based upon the following objectives:

Given these objectives, the Company’s executive compensation program is designed to provide a mix of fixed compensation and at-risk compensation that is heavily weighted towards variable compensation tied to the achievement of specific business objectives and corporate financial goals (both short-term and long-term), as well as to the attainment of the executive’s individual performance objectives. To that end, the principal components of executive officer compensation are:

In addition, executive officers receive other benefits that the Company believes are reasonable and consistent with its overall compensation program. These include supplemental retirement programs, executive life insurance and executive perquisites.

      The Company’s executive compensation program also takes into account the compensation practices of companies with which Unisys competes or could compete for executive talent. In establishing total compensation for executive officers, the Compensation Committee reviews total annual compensation, as well as each component of total compensation, against executive compensation benchmarking data provided by Towers Perrin, the committee’s outside compensation consultant. The benchmark data reflect median compensation levels for persons holding comparable positions at the benchmark companies. The benchmark companies consist of the approximately 25 companies in the Towers Perrin TriComp survey (companies that are principally in the businesses of systems integration and consulting, information technology outsourcing, infrastructure services and hardware technology) and approximately 55 companies from a variety of industries that are comparable to the Company in terms of revenue size and global scope. In general, total target compensation, as well as each element of total compensation, is intended to be consistent with the median for the benchmark companies. However, because both individual and corporate performance are taken into account in determining compensation, any given executive can be compensated at, above or below the median benchmark levels. For 2006, base salaries and annual incentive targets were generally in line with the benchmark companies. For the reasons

      In addition to reviewing executive officer compensation against the benchmark data from the two peer groups, the Compensation Committee also solicits input from the Company’s president and chief executive officer regarding total compensation for those executives reporting directly to him.

Principal Components of Executive Officer Compensation

      As set forth above, the principal elements of the Company’s executive compensation program consist of base salary, annual variable cash incentives and long-term incentive compensation. Each element of compensation is reviewed individually and considered collectively with the other elements of the Company’s compensation program to ensure that it is consistent with the goals and objectives of both that particular element of compensation and the overall compensation program.

Base Salary

      Base salaries for elected officers are initially determined by evaluating the responsibilities of the position held and the experience of the individual and comparing such salaries to the benchmark compensation data. Increases in salary are based on the Compensation Committee’s evaluation of such factors as the level of responsibility, individual performance, pay levels of both the executive in question and other similarly situated executives and the benchmark compensation data. In February 2006, each of the Named Officers listed in the Summary Compensation table on page 33 received increases in base salary. Except for Mr. Blackmore and Mr. Baroni, these increases represented an approximately 5% increase over 2005 salary. Each of Mr. Blackmore and Mr. Baroni received a greater percentage increase to put his base salary in line with benchmark base salaries. The amount of each increase and the resultant base salary for 2006 were as follows:

Variable Annual Incentive Compensation

      During 2006, all of the Company’s elected officers participated in the Company’s executive variable compensation plan (“EVC Plan”) and the Company’s turnaround incentive program.

      The EVC Plan’s purpose is to motivate and reward elected officers and other key executives for the attainment of corporate and/or individual performance goals. Under the plan, the Compensation Committee has the discretion to determine the conditions (including performance objectives) applicable to annual award payments and the amounts of such awards. The amount of incentive compensation awards payable under the plan depends upon (1) a participant’s target annual incentive, (2) the amount of funding the Company makes available for the plan and (3) individual performance. Individual targets for elected officers are approved by the committee and are intended to be in line with benchmark levels and to take into account the responsibilities of the individual’s position. For 2006, target award amounts, which are typically stated as a percentage of base salary, were as follows for the Named Officers: Joseph M. McGrath — 100%; Janet B. Haugen — 85%; Peter Blackmore — 85%; Greg J. Baroni — 85%; Randy J. Hendricks — 85%.

      The extent to which the Company makes funding available for the plan depends upon the degree to which the Company achieves performance targets approved by the Compensation Committee at the beginning of each year. For 2006, the committee determined that awards under the plan would be funded if the Company met certain revenue and pre-tax profit performance targets (exclusive of pension expense, gains from divestitures and restructuring charges) that were based on the Company’s Board-approved operating and strategic plans. Each target was weighted 50%. Threshold, target and maximum performance levels were set for each criterion. The amount of funding to be made available in respect of each criterion could range from 50% of the total target awards (if threshold performance levels were met) to 150% (if maximum levels were achieved). Performance at the target levels would result in funding at 100%. No funding would be provided by the Company in respect of a criterion if performance was below the threshold level. In addition, the committee determined that if pre-tax profit at the target level was not achieved, all funding for the year would be reduced by 50%. Both the pre-tax profit and revenue goals were subject to adjustment by the chief executive officer and the Compensation Committee for one-time and extraordinary items. Assuming available funding, the amount of awards granted to individual executives would then depend upon individual performance and could range from 0% to 150% of the funded target amounts.

      For 2006, the Company’s revenue was below the threshold level, and therefore the Company made funding available only in respect of pre-tax profit. In determining the amount of funding the Company should make available, the Compensation Committee considered the differences between actual results and operating plan assumptions regarding divestitures and restructurings. As a result, the total amount of funding made available was approximately 17% of the total target amount. Given the limited amount of funds available for payments to EVC Plan participants, the Compensation Committee determined not to pay EVC awards to the Company’s officers, including the Named Officers, in respect of 2006 because these individuals also participated in the 2006 turnaround cash incentive program discussed below.

      2006 Turnaround Cash Incentive Program

      On February 9, 2006, the Compensation Committee approved a turnaround cash incentive program to incent certain key employees of the Company, including the Named Officers, to execute the turnaround of the Company. Under this program, up to $12.6 million in the aggregate was made available for payment as a turnaround incentive. Amounts actually payable to a participant would depend primarily on the participant’s achievement of individual revenue, cost management and/or cash management targets for 2006. Participants could

Long-Term Incentive Awards

      Long-term incentives in the form of equity-based compensation are intended to ensure that the Company’s executives have a continuing stake in the long-term success of the Company and to align their interests with those of stockholders. In 2006, long-term incentives generally took the form of restricted stock unit awards (“RSUs”) that vest into shares of Unisys stock after certain restrictions lapse or performance goals are met. Prior to 2006, the Company had generally granted long-term incentive awards in the form of stock options. The Company elected to grant RSUs instead of stock options in 2006 because RSUs are perceived by employees to have a greater value than stock options, and the Company could grant fewer RSUs for the same amount of expense, but lower dilution. In 2006, the Company granted stock options only to certain newly hired employees as part of their new hire compensation package.

      In determining RSU awards made to the elected officers, the Compensation Committee considered the number of shares available for grant under the Company’s long-term incentive plan, the potential dilutive impact of grants, the financial expense caused by such grants and the appropriate allocation of grants among elected officers and all other eligible employees. The committee also considered the benchmark data in setting the general parameters for awards. The individual awards within these parameters depended upon the committee’s assessment of the individual’s performance. The 2006 grant for elected officers was below the median for the benchmark companies, primarily because the Company did not want to incur the additional compensation expense that would have been required to be recorded if the grants had been larger. The total number of RSUs granted to each Named Officer in 2006 is set forth in the Grants of Plan-Based Awards Table, under the headings “Estimated Future Payouts Under Equity-Incentive Plan Awards” and “All Other Stock Awards”.

      For 2006, 75% of the RSU award was a performance-based award, in keeping with the Company’s emphasis on tying compensation to the achievement of corporate financial goals, and 25% of the RSU award was a time-based award. The time-based portion vests into shares of Unisys common stock in three equal annual installments beginning with the first anniversary of the date of the grant and requires that the executive remain with the Company over this time period to receive the award. The performance-based portion also vests into shares of Unisys common stock in three equal annual installments beginning with the first anniversary of the date of grant, but vesting depends upon the degree to which pre-tax profit (exclusive of pension expense, gains from divestitures and restructuring charges) and/or revenue growth rate goals are met in the related 2006, 2006-2007 and 2006-2008 performance periods. Threshold, target and maximum performance levels were set for each of the two performance measures for each performance period, and each performance measure was weighted 50%. Performance-based units will be converted into shares at rates ranging from 0.5 shares per unit if the threshold level

      For 2006, the Company’s pre-tax profit performance was at target, and revenue was below threshold. Therefore, the performance-based RSUs associated with the 2006 performance period were converted into shares at a ratio of 0.5 shares per unit (1.0 share for each unit based on pre-tax profit and no shares for units based on revenue growth). Based on 2006 performance, the Company anticipates that pre-tax profit goals for the remaining performance periods are achievable at target and that the Company will need to over perform against its operating and strategic plans in order to achieve the revenue targets.

Stock Ownership Guidelines

      Since 1998, the Company has had stock ownership guidelines in place for both directors and elected officers in order to more closely link their interests with those of stockholders. Under the guidelines, as revised in 2005, elected officers are expected to own a specified number of shares of Unisys stock as follows: chief executive officer — 200,000 shares; executive vice presidents — 75,000 shares; senior vice presidents — 45,000 shares; vice presidents — 25,000 shares. Stock options, including vested stock options, and restricted stock units do not count toward fulfillment of the ownership guidelines. The ownership guidelines are expected to be met by 2010, or within five years for newly elected officers. The Compensation Committee reviews compliance with the guidelines on an annual basis. The number of shares owned by each of the Named Officers is set forth in the stock ownership table on page 26.

Stock Option/ RSU Granting Practices

      As set forth above, in 2006, long-term incentives generally took the form of RSUs, rather than stock options, and stock options were granted only to certain newly hired employees as part of their compensation package. Prior to 2006, the Company had primarily granted long-term incentives in the form of stock options. The most prevalent form of stock option grant was the annual grant made to executives. The annual grants were approved at a specified, regularly scheduled meeting of the Compensation Committee early each year. Since 2000, annual stock option grants had been approved at the February meeting; prior to 2000, annual grants were approved at the April meeting. For grants in the United States, the grant date was always the date of the meeting, and the exercise price was at least 100% of the fair market value (calculated as the average of the quoted high and low sales prices on the New York Stock Exchange) of Unisys common stock on the date of grant. The dates of regularly scheduled board and committee meetings are generally determined many months in advance as part of the normal board calendaring process.

      Stock options granted as part of the hiring process have a grant date no earlier than the date of approval, have an exercise price at least equal to fair market value on the date of grant and, except as noted below, are approved by the Compensation Committee or the Board of Directors. New hire stock option grants are typically reviewed and approved by the Compensation Committee at its regularly scheduled meetings. For these grants, the date of grant is the date of the meeting, if the individual receiving the grant has already commenced employment at Unisys. If the individual has not yet commenced employment, the date of grant is the business day following the individual’s first day of employment. The Compensation Committee has also delegated to the Company’s chief executive officer the authority to grant a limited number of stock options during the year to eligible individuals (other than the chief

      2006 was the first year in which long-term incentive awards primarily took the form of RSUs. As with stock options, the principal award was the annual grant to executives. In 2006, this grant was not made at the February meeting because this was the first time that performance-based units were to be granted, and the performance criteria had not yet been finalized. The grant was made on March 8, 2006, on the day the Compensation Committee approved the performance targets. As with stock options, RSUs are also granted as part of the hiring process. The same procedures regarding timing of stock option grants to new employees also apply with respect to RSUs granted to new hires.

Other Benefits

      Elected officers participate in the retirement programs discussed below under “Pension Benefits” and “Non-Qualified Deferred Compensation”. In addition, the Company has historically offered life insurance benefits to executive officers through split-dollar and later through corporate-owned life insurance. All split-dollar life policies for current executives are being converted to corporate-owned life insurance policies in 2007. Life insurance premiums paid in 2006 for each of the Named Officers are disclosed in the footnotes to the Summary Compensation Table. Perquisites provided to executive officers include car allowance, club memberships, financial counseling/tax preparation services, annual physical and umbrella liability insurance.

Deductibility of Executive Compensation

      Section 162(m) of the Internal Revenue Code imposes a $1 million annual limit on the amount of compensation that may be deducted by the Company with respect to each Named Officer employed as of the last day of the applicable year. The limitation does not apply to compensation based on the attainment of objective performance goals.

      The Company’s 2003 Long-Term Incentive and Equity Compensation Plan and the proposed 2007 Long-Term Incentive and Equity Compensation Plan that has been submitted to stockholders for their approval at the 2007 annual meeting permit the Compensation Committee to design compensation awards to Named Officers that will meet the requirements of Section 162(m) of the Internal Revenue Code. The committee may grant awards under the plans that meet the requirements of Section 162(m) of the Internal Revenue Code at such times as the committee believes that such awards are in the best interests of the Company. The committee has considered the impact of the deduction limitation and has determined that it is not in the best interests of the Company or its stockholders to base compensation solely on objective performance criteria. Rather, the committee believes that it should retain the flexibility to base compensation on its subjective evaluation of performance as well as on the attainment of objective goals.

Compensation Committee Report

      The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis set forth above with management. Based on such review and discussion, the committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.

Compensation Committee

James J. Duderstadt

Clayton M. Jones

Theodore E. Martin

Summary Compensation Table

      The following table sets forth information concerning the total compensation paid to the chief executive officer, the chief financial officer and the other three most highly compensated executive officers of Unisys in 2006 (the “Named Officers”) for services rendered in all capacities to Unisys.

Grants of Plan-Based Awards

      The following table sets forth information on grants of plan-based awards during 2006 to the Named Officers.

      Awards shown under “Estimated Future Payouts Under Non-Equity Incentive Plan Awards” are target award amounts under the Company’s turnaround incentive program, which was approved on February 9, 2006 to incent certain key employees to execute the turnaround of the Company. Under this program, amounts payable were dependent upon the achievement by each participant of individual revenue, cost management and/or cash management targets for 2006. Participants could receive from 0 to 100% of the target award depending on the degree to which their incentive targets were achieved. Amounts actually payable to each participant were determined in February 2007, and the amounts payable to each Named Officer are set forth in the Summary Compensation Table under the heading “Non-Equity Incentive Plan Compensation”.

      Awards shown under “Estimated Future Payouts Under Equity Incentive Plan Awards” are performance-based restricted stock units granted on March 8, 2006 under the Unisys Corporation 2003 Long-Term Incentive and Equity Compensation Plan. Performance-based

      Awards shown under “All Other Stock Awards” are time-based restricted stock units granted on March 8, 2006 under the Unisys Corporation 2003 Long-Term Incentive and Equity Compensation Plan. Time-based units will vest into shares of Unisys common stock in three equal annual installments beginning with the first anniversary of the date of grant.

Outstanding Equity Awards at Fiscal Year-End

      The following table shows equity awards to the Named Officers that were outstanding as of December 31, 2006.

Option Exercises and Stock Vested

      The following table gives information on stock option exercises and the vesting of stock awards during 2006 for each of the Named Officers.

Pension Benefits

      Each Named Officer participates in three pension plans sponsored by Unisys in the United States:

      The table below presents pension plan information as of December 31, 2006 for the Named Officers.

      Mr. Blackmore’s years of credited service in the U.S. sponsored plans do not reflect his 16.583 years of service while employed with Unisys in the U.K. However, the U.K. service is reflected for vesting purposes in the U.S. plans.

      The following summarizes the benefits under the specific plans:

Unisys Pension Plan (UPP)

      Prior to December 31, 2006, all employees of Unisys were eligible to participate in the UPP on the January 1 or July 1 first following attainment of both age 21 and one year of service with Unisys. The plan was frozen effective December 31, 2006, and no new participants are now allowed.

      The UPP provides benefits under two benefit formulas:

      For both formulas, plan compensation is salary, commissions, overtime pay, paid bonus and paid accrued and unused vacation. Compensation includes amounts deferred under the Unisys Savings Plan. Excluded from compensation are severance payments, supplements, compensation deferred under a non-qualified plan and other forms of extraordinary compensation. Plan compensation is limited by Section 401(a)(17) of the Internal Revenue Code.

      As of December 31, 2006, all Named Officers were vested in their UPP benefit and would have been eligible to immediately receive the cash balance portion of their benefit upon termination of employment. None of the Named Officers is currently eligible to receive an early retirement benefit under the career pay formula.

      Effective December 31, 2006, benefits ceased to accrue under the UPP. However, the cash balance accounts continue to grow with interest credits.

Unisys Corporation Supplemental Executive Retirement Income Plan (SERIP)

      Prior to December 31, 2006, all employees of Unisys were eligible to participate in the SERIP on the January 1 or July 1 first following attainment of both age 21 and one year of service with Unisys. The plan was frozen effective December 31, 2006, and no new participants are now allowed.

      The SERIP provides benefits under the same provisions as the UPP except as follows: