<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
HENRY SCHEIN, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials:
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 22, 1997
------------------------
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Henry Schein, Inc. (the "Company"), to be held at 4:00 P.M., on Thursday, May
22, 1997 at the Huntington Hilton, 598 Broadhollow Road, Melville, New York.
The Annual Meeting will be held for the following purposes:
1. To elect 11 directors of the Company for terms expiring in 1998.
2. To amend the Company's Certificate of Incorporation to eliminate the
provision providing for a maximum number of directors, to provide
authority for the board to establish from time to time the number of
directors, to eliminate the provision preventing the board from amending
or repealing By-Laws adopted by the stockholders, and to eliminate
certain supermajority voting requirements.
3. To amend the Company's By-Laws to permit the directors to fill any board
vacancies that arise from time to time and to eliminate the provision
preventing the board from amending or repealing By-Laws adopted by the
stockholders.
4. To amend the Company's 1994 Stock Option Plan to increase the number of
shares issuable under the plan and to increase the maximum number of
shares subject to options that may be granted to a participant in any
fiscal year of the Company.
5. To ratify the selection of BDO Seidman, LLP as the Company's independent
auditors for the fiscal year ending December 27, 1997.
6. To transact such other business as may properly come before the meeting
or any adjournments or postponements thereof.
Only stockholders of record at the close of business on April 1, 1997 are
entitled to notice of and to vote at the meeting or any adjournments or
postponements thereof.
Whether or not you expect to attend the meeting in person, please complete,
date and sign the enclosed proxy exactly as your name appears thereon and
promptly return it in the envelope provided, which requires no postage if mailed
in the United States.
STANLEY M. BERGMAN
Chairman, Chief Executive Officer
and President
Melville, New York
April 23, 1997
<PAGE>
HENRY SCHEIN, INC.
135 DURYEA ROAD
MELVILLE, NEW YORK 11747
------------------------
PROXY STATEMENT
------------------------
The Board of Directors of Henry Schein, Inc. (the "Company") has fixed the
close of business on April 1, 1997 as the record date for determining the
holders of the Company's common stock, par value $.01 per share (the "Common
Stock"), entitled to notice of and to vote at the 1997 Annual Meeting of
Stockholders (the "Annual Meeting"). As of that date, there were outstanding
23,324,085 shares of Common Stock, each entitled to one vote. The Notice of
Annual Meeting, this Proxy Statement and the form of proxy are first being
mailed to stockholders of record of the Company on or about April 23, 1997. A
copy of the Company's 1996 Annual Report to Stockholders is being mailed with
this Proxy Statement but is not incorporated herein by reference.
Abstentions are counted in tabulations of the votes cast on proposals
presented to stockholders, whereas broker non-votes are not counted for purposes
of determining whether a proposal has been approved. Abstentions and broker
non-votes will have no effect on the election of directors (Proposal 1) or the
ratification of the selection of independent public accountants (Proposal 5).
Since approval of the proposed amendments to the Company's Certificate of
Incorporation (Proposal 2) requires the affirmative vote of 80% of the
outstanding shares, approval of the proposed amendment to the Company's By-Laws
(Proposal 3) requires the approval of two-thirds of the outstanding shares, and
the amendment to the Company's 1994 Stock Option Plan (Proposal 4) requires the
approval of a majority of the outstanding shares, shares abstaining and broker
non-votes will effectively be an "against" vote with respect to each such
matter.
The expense of this proxy solicitation will be borne by the Company. In
addition to solicitation by mail, proxies may be solicited in person or by
telephone, telegraph or other means by directors or employees of the Company or
its subsidiaries without additional compensation. The Company will reimburse
brokerage firms and other nominees, custodians and fiduciaries for costs
incurred by them in mailing proxy materials to the beneficial owners of shares
held of record by such persons. In addition, the Company has retained D.F. King
& Co., Inc. of New York, New York, a proxy solicitation organization, to assist
in the solicitation of proxies. The fee of such organization in connection
herewith is estimated to be $5,000, plus reasonable out-of-pocket expenses.
The enclosed proxy is solicited by the Board of Directors of the Company. It
may be revoked at any time prior to its exercise by giving written notice to the
Secretary of the Company, by executing a subsequent proxy and delivering it to
the Secretary of the Company, or by attending the meeting and voting in person.
Attendance at the Annual Meeting will not in and of itself constitute revocation
of a proxy.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table presents certain information regarding beneficial
ownership of the Company's Common Stock as of March 31, 1997 by (i) each person
known to the Company to be the beneficial owner of more than 5% of the
outstanding shares of Common Stock, (ii) each director of the Company, (iii)
each executive officer named in the Summary Compensation Table on page 14 of
this Proxy Statement and (iv) all directors and executive officers as a group.
Unless otherwise indicated, each person in the table has sole voting and
investment power as to the shares shown.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY OWNED
-----------------------
PERCENT
NAME AND ADDRESS NUMBER OF CLASS
- ----------------------------------------------------------------------- ---------- -----------
<S> <C> <C>
Stanley M. Bergman (1)(2).............................................. 8,424,175 35.6%
Marvin H. Schein, Individually and as Trustee (1)(3)................... 3,717,006 15.9%
Leslie J. Levine, as Trustee (1)(4).................................... 2,968,347 12.7%
Pamela Schein (1)(5)................................................... 1,642,504 7.0%
Irving Shafran and Judith Shafran, as Trustees (1)(5).................. 1,642,504 7.0%
Marion Bergman, as Trustee (1)(6)...................................... 1,429,285 6.1%
Leslie Bergman, as Trustee (1)(7)...................................... 1,238,120 5.3%
Barry J. Alperin....................................................... 2,667 *
Gerald A. Benjamin (8)................................................. 87,023 *
James P. Breslawski (9)................................................ 195,822 *
Leonard A. David (10).................................................. 33,413 *
Pamela Joseph (11)..................................................... 355,180 1.5%
Donald J. Kabat........................................................ 2,267 *
Mark E. Mlotek (12).................................................... 45,617 *
Steven Paladino (13)................................................... 92,023 *
Directors and Executive Officers as a Group (18 persons) (14).......... 9,112,089 38.5%
</TABLE>
- ------------------------
* Represents less than 1%.
(1) Unless otherwise indicated, the address for each person is c/o Henry
Schein, Inc., 135 Duryea Road, Melville, New York 11747.
(2) Includes (a) 9,900 shares which Mr. Bergman owns directly and which he has
the power to vote and the power to dispose of in accordance with the HSI
Agreement (as defined herein), (b) 2,897,020 shares which Mr. Bergman
shares the power to vote pursuant to voting trust agreements, (c) options
to purchase 367,464 shares of Common Stock exercisable within 60 days by
certain executives which shares will be subject to the Voting Trust (as
defined herein) and which Mr. Bergman will share the power to vote and (d)
an additional 5,149,791 shares held by certain stockholders of the
Company, which shares are required by the HSI Agreement to be voted for
the eight nominees for director selected by Mr. Bergman in accordance with
the HSI Agreement. The shares described in (a) through (c) must also be
voted for the nominees for director selected in accordance with the HSI
Agreement. See "ELECTION OF DIRECTORS--Certain Voting Arrangements."
(3) Includes (a) 748,659 shares which Mr. Schein owns directly and (b)
2,968,347 shares owned in trusts for the benefit of Mr. Schein and his
family members, and/or trusts for charities of which Mr. Schein and Mr.
Levine are co-trustees. Mr. Schein has the power to vote and to dispose of
such shares in accordance with the HSI Agreement. Mr. Schein has the right
to nominate one director to the Board of Directors in accordance with the
HSI Agreement. Certain stockholders of the Company (including Mr. Schein)
are required to vote for the nominees for director selected in accordance
with the HSI Agreement. See "ELECTION OF DIRECTORS--Certain Voting
Arrangements."
(4) Mr. Levine holds such shares as co-trustee of trusts for the benefit of
Marvin H. Schein and his family members, and/or trusts for charities. Mr.
Levine has the power to vote and to dispose of such
2
<PAGE>
shares in accordance with the HSI Agreement. All of such shares must be
voted for the nominees for director selected in accordance with the HSI
Agreement. See "ELECTION OF DIRECTORS - Certain Voting Arrangements."
(5) The shares are owned by a revocable trust established by Ms. Schein of
which Mr. Shafran and Ms. Shafran are co-trustees. Ms. Schein has the
power to dispose of such shares if she revokes the trust, subject to the
HSI Agreement. Mr. Shafran and Ms. Shafran have the power to dispose of
such shares in accordance with the HSI Agreement. All of such shares are
subject to the Voting Trust. Ms. Schein has the right to nominate one
director to the Board of Directors in accordance with the HSI Agreement.
Certain stockholders of the Company (including the trustees of the
revocable trust) are required to vote for the nominees for director
selected in accordance with the HSI Agreement. See "ELECTION OF
DIRECTORS--Certain Voting Arrangements."
(6) Ms. Bergman holds such shares as a trustee or co-trustee of trusts
established by Stanley M. Bergman for the benefit of Stanley M. Bergman
and his family members. Ms. Bergman has the power to vote and to dispose
of such shares in accordance with the HSI Agreement. All of such shares
must be voted for the nominees for director selected in accordance with
the HSI Agreement. See "ELECTION OF DIRECTORS -Certain Voting
Arrangements."
(7) Leslie Bergman holds such shares as co-trustee of trusts established by
Stanley M. Bergman for the benefit of Stanley M. Bergman and his family
members. Leslie Bergman has the power to vote and to dispose of such
shares in accordance with the HSI Agreement. All of such shares must be
voted for the nominees for director selected in accordance with the HSI
Agreement. See "ELECTION OF DIRECTORS--Certain Voting Arrangements."
(8) Includes (a) 1,000 shares owned directly, (b) 50,490 shares subject to the
Voting Trust and (c) options to purchase 35,533 shares of Common Stock
exercisable within 60 days which will be subject to the Voting Trust upon
exercise. See "ELECTION OF DIRECTORS--Certain Voting Arrangements."
(9) Mr. Breslawski has the power to dispose of such shares in accordance with
the HSI Agreement. All of such shares are subject to the Voting Trust and
must be voted for the nominees for director selected in accordance with
the HSI Agreement. See "ELECTION OF DIRECTORS - Certain Voting
Arrangements."
(10) Includes (a) 2,500 shares owned directly, (b) 14,850 shares subject to the
Voting Trust and (c) options to purchase 16,063 shares of Common Stock
exercisable within 60 days which will be subject to the Voting Trust upon
exercise. See "ELECTION OF DIRECTORS--Certain Voting Arrangements."
(11) Ms. Joseph has the power to dispose of such shares in accordance with the
HSI Agreement. All of such shares are subject to the Voting Trust. Ms.
Joseph has the right to nominate one director to the Board of Directors in
accordance with the HSI Agreement. Certain stockholders of the Company
(including Ms. Joseph) are required to vote for the nominees for director
selected in accordance with the HSI Agreement. See "ELECTION OF
DIRECTORS--Certain Voting Arrangements."
(12) Includes (a) 2,000 shares owned directly, (b) 14,850 shares subject to the
Voting Trust, (c) options to purchase 23,967 shares of Common Stock
exercisable within 60 days which will be subject to the Voting Trust upon
exercise and (d) 4,800 shares which Mr. Mlotek has the power to vote as
trustee of trusts for certain third parties. See "ELECTION OF
DIRECTORS--Certain Voting Arrangements."
(13) Includes (a) 3,500 shares owned directly, (b) 50,490 shares subject to the
Voting Trust and (c) options to purchase 38,033 shares of Common Stock
exercisable within 60 days which will be subject to the Voting Trust upon
exercise. Mr. Paladino has the power to dispose of such shares in
accordance with the HSI Agreement. All of such shares must be voted for
the nominees for director selected in accordance with the HSI Agreement.
See "ELECTION OF DIRECTORS--Certain Voting Arrangements."
(14) Includes (a) all shares described in the preceding notes (2) through (13),
and (b) 670,180 shares held by other executive officers which are not
subject to the Voting Trust, and 4,934 shares held by other directors
which are not subject to the Voting Trust. See "ELECTION OF
DIRECTORS--Certain Voting Arrangements."
3
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
Eleven directors are to be elected at the Annual Meeting to serve until the
1998 Annual Meeting of Stockholders and until their successors are elected and
qualified. The Board of Directors has approved the persons named below as
nominees and, unless otherwise marked, a proxy will be voted for such persons.
Each of the nominees currently serves as a director and was elected by the
stockholders at the 1996 Annual Meeting. All nominees have consented to be named
and to serve if elected. In the event that any nominee of the Company is unable
or declines to serve as a director at the time of the Annual Meeting, the
proxies may be voted in the discretion of the persons acting pursuant to the
proxy for the election of other nominees. Directors will be elected by plurality
vote. Set forth below is certain information concerning the nominees:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---------------------------------------------------- ----- ----------------------------------------------------
<S> <C> <C>
Stanley M. Bergman.................................. 47 Chairman, Chief Executive Officer, President and
Director
James P. Breslawski................................. 43 Executive Vice President and Director
Gerald A. Benjamin.................................. 44 Senior Vice President--Administration and Customer
Satisfaction and Director
Leonard A. David.................................... 48 Vice President--Human Resources, Special Counsel and
Director
Mark E. Mlotek...................................... 41 Vice President, General Counsel, Secretary and
Director
Steven Paladino..................................... 40 Senior Vice President, Chief Financial Officer and
Director
Barry J. Alperin.................................... 56 Director
Pamela Joseph....................................... 54 Director
Donald J. Kabat..................................... 61 Director
Marvin H. Schein.................................... 55 Founder, Schein Dental Equipment, and Director
Irving Shafran...................................... 53 Director
</TABLE>
STANLEY M. BERGMAN has been Chairman, Chief Executive Officer, and President
since 1989 and a director of the Company since 1982. Mr. Bergman held the
position of Executive Vice President of the Company and Schein Pharmaceutical,
Inc. from 1985 to 1989 and Vice President of Finance and Administration of the
Company from 1980 to 1985. Mr. Bergman is a certified public accountant.
JAMES P. BRESLAWSKI has been Executive Vice President of the Company since
1990, with primary responsibility for the North American Dental Group, the
Veterinary Group and corporate creative services, and a director of the Company
since 1990. Between 1980 and 1990, Mr. Breslawski held various positions with
the Company, including Chief Financial Officer, Vice President of Finance and
Administration and Controller. Mr. Breslawski is a certified public accountant.
GERALD A. BENJAMIN has been Senior Vice President of Administration and
Customer Satisfaction since January 1993, including responsibility for the
worldwide human resource function, and has been a director of the Company since
September 1994. Prior to holding his current position, Mr. Benjamin was Vice
President of Distribution Operations of the Company from 1990 to December 1992
and Director of Materials Management of the Company from 1988 to 1990. Before
joining the Company in 1988, Mr. Benjamin was employed for 13 years in various
management positions at Estee Lauder, where his last position was Director of
Materials Planning and Control.
4
<PAGE>
LEONARD A. DAVID has been Vice President of Human Resources and Special
Counsel since January 1995. Mr. David held the office of Vice President, General
Counsel and Secretary from 1990 to January 1995 and practiced corporate and
business law for eight years prior to joining the Company in 1990. Mr. David has
been a director of the Company since September 1994.
MARK E. MLOTEK joined the Company in December 1994 as Vice President,
General Counsel and Secretary and became a director of the Company in September
1995. Prior to joining the Company, Mr. Mlotek was a partner in the law firm of
Proskauer Rose Goetz & Mendelsohn LLP, specializing in mergers and acquisitions,
corporate reorganizations and tax law from 1989 until he joined the Company.
STEVEN PALADINO has been Senior Vice President and Chief Financial Officer
of the Company since April 1993 and has been a director of the Company since
December 1992. From 1990 to April 1993, Mr. Paladino served as Vice President
and Treasurer and from 1987 to 1990 served as Corporate Controller of the
Company. Before joining the Company in 1987, Mr. Paladino was employed as a
public accountant for seven years and most recently was with the international
accounting firm of BDO Seidman, LLP. Mr. Paladino is a certified public
accountant.
BARRY J. ALPERIN has been a director of the Company since May 1996. Mr.
Alperin has been a private consultant since August 1995. Mr. Alperin served as
Vice Chairman of Hasbro, Inc. from 1990 through July 1995. Mr. Alperin served as
Co-Chief Operating Officer of Hasbro, Inc. from 1989 through 1990 and as its
Senior Vice President and Executive Vice President from 1985 through 1989. Mr.
Alperin currently serves as a director for Seaman Furniture Company, Inc., a
furniture retailing company, and K'nex Industries, Inc., a wholesale toy
company.
PAMELA JOSEPH has been a director of the Company since September 1994. For
the past five years, Ms. Joseph has been a self-employed artist and is President
of Anderson Ranch Arts Center. Ms. Joseph is also a trustee of Alfred
University.
DONALD J. KABAT has been a director of the Company since May 1996. Mr. Kabat
is President of D.K. Consulting Services, Inc. and served as Chief Financial
Officer of Central Park Skaters, Inc. from September 1992 to September 1995.
From 1970 to 1992, Mr. Kabat was a partner in Andersen Consulting, an affiliate
of Arthur Andersen, LLP.
MARVIN H. SCHEIN has been a director of the Company since September 1994 and
has provided consulting services to the Company since 1982. Mr. Schein founded
Schein Dental Equipment Corp., a subsidiary of the Company, serving as its
President for the past 16 years. Prior to founding Schein Dental Equipment
Corp., Mr. Schein held various management and executive positions with the
Company.
IRVING SHAFRAN has been a director of the Company since September 1994 and
was nominated by Pamela Schein as her designee for director of the Company. Mr.
Shafran has been an attorney in private practice for the past 25 years. From
1991 through December 1995, Mr. Shafran was a partner in the law firm of
Anderson Kill Olick and Oshinsky, PC.
CERTAIN VOTING ARRANGEMENTS
The Amended and Restated HSI Agreement (the "HSI Agreement") among certain
stockholders of the Company, which was entered into in connection with the
Company's reorganization in 1994, provides that until the earlier of January 1,
1999 or the termination of the voting trust established in connection therewith
(the "Voting Trust"), Marvin H. Schein, Pamela Joseph and Pamela Schein each
have the right to select one nominee for director and Stanley M. Bergman (as
voting trustee) or his successor voting trustee has the right to select the
remaining nominees. Mr. Schein and Ms. Joseph have chosen to be nominees for
director and Ms. Schein has selected Mr. Shafran as a nominee for director. Mr.
Bergman has selected the remaining nominees for director. The parties to the HSI
Agreement, who currently have the right to vote approximately 35.1% of the
Company's outstanding Common Stock, are required to vote for all such nominees.
The HSI Agreement provides that, in general, from the earlier of January 1, 1999
or
5
<PAGE>
the termination of the Voting Trust until the earlier of (i) January 1, 2004,
(ii) the first date on which Marvin H. Schein and his family group no longer
beneficially own at least 25% of the outstanding Common Stock that they owned
immediately after the reorganization, or (iii) the date of certain changes in
the Company's management, Mr. Bergman (or his successor voting trustee) has the
right to select all of the nominees to the Board of Directors; provided, that if
Marvin H. Schein does not approve such nominations, Mr. Bergman (or his
successor trustee) and Mr. Schein will each select an equal number of nominees
(of which one will be an independent nominee) and an additional nominee will be
selected by the two independent nominees. If any director previously nominated
pursuant to the HSI Agreement ceases to hold office, the individual who
nominated such director shall have the right to nominate his or her successor.
The Voting Trust expires on December 31, 1998, unless earlier terminated.
The shares subject to the Voting Trust, which includes shares held by certain
executives and other stockholders of the Company, are voted by Mr. Bergman,
except that the participants in the Voting Trust retain the power to vote their
shares in connection with (i) a dissolution or liquidation of the Company, (ii)
a merger or consolidation of the Company or (iii) a sale, lease or other
transfer of all or substantially all the assets of the Company, whether directly
or indirectly, through a transfer of its subsidiaries or a significant business
of the Company. Approximately 13.4% of the Company's outstanding Common Stock is
held pursuant to the Voting Trust.
BOARD MEETINGS AND COMMITTEES
During the fiscal year ended December 28, 1996 ("fiscal 1996"), the Board of
Directors held seven meetings.
The Board of Directors has an Audit Committee which currently consists of
Messrs. Alperin and Kabat. The Audit Committee oversees the Company's financial
reporting process on behalf of the Board of Directors. In fulfilling its
responsibility, the Audit Committee recommends to the Board of Directors,
subject to stockholder approval, the selection of the Company's independent
public accountants. The Audit Committee also reviews the Company's consolidated
financial statements and the adequacy of the Company's internal controls. The
Audit Committee meets with the independent public accountants to discuss the
results of their audit of the Company, their evaluation of the Company's
internal controls and the overall quality of the Company's financial reporting.
The Audit Committee held two meetings in fiscal 1996.
The Board of Directors has a Compensation Committee which currently consists
of Messrs. Alperin and Kabat. The Compensation Committee makes recommendations
regarding the compensation and benefit policies and procedures of the Company.
The Compensation Committee held one meeting during fiscal 1996.
The Board of Directors has a Stock Option Committee which currently consists
of Messrs. Alperin and Kabat. The Stock Option Committee determines grants under
the Company's 1994 Stock Option Plan. The Stock Option Committee held one
meeting during fiscal 1996.
COMPENSATION OF DIRECTORS
In fiscal 1996, Messrs. Alperin and Kabat each received a $20,000 annual
retainer, plus an additional $500 per board meeting and $250 per committee
meeting attended, and were granted options to purchase 5,000 shares of the
Company's Common Stock. For fiscal 1997, Messrs. Alperin and Kabat each receive
a $25,000 annual retainer, plus an additional $1,000 per board meeting and $500
per committee meeting attended (or $750 if such committee meeting is held on a
day other than a day on which a board meeting is held), and were granted options
to purchase 1,000 shares of the Company's Common Stock. Directors are reimbursed
for their out-of-pocket expenses in attending board meetings and committee
meetings.
6
<PAGE>
PROPOSAL 2
AMENDMENT OF THE CERTIFICATE
OF INCORPORATION
Article "Fifth" of the Company's amended and restated certificate of
incorporation (the "Certificate of Incorporation"), the complete text of which,
prior to amendment as proposed hereby, is included as Exhibit A to this Proxy
Statement, contains various provisions relating to the governance of the
Company. Specifically:
(a) section "A" provides that the number of directors of the Company
shall be no less than five and no more than 11 through December 31, 1998,
and thereafter the number of directors shall be nine,
(b) section "B" provides, among other things, that stockholders may
adopt any By-Law and may amend or repeal any By-Law adopted by the Board of
Directors and that the Board of Directors may not amend or repeal any By-Law
adopted by the stockholders, and
(c) section "C" requires the affirmative vote of 80% of the outstanding
shares to amend or repeal, or to adopt any provisions inconsistent with,
Article "Fifth."
See "Election of Directors--Certain Voting Arrangements" regarding certain
agreements relating to the governance of the Company.
The proposed amendment to Article "Fifth" of the Certificate of
Incorporation would (a) eliminate the limit on the maximum number of directors
of the Company, while specifying only that the number of directors shall be as
specified in the By-Laws or as fixed from time to time by resolution of the
Board of Directors, and that there shall not be fewer than five directors, (b)
eliminate the provision preventing the Board of Directors from amending or
repealing By-Laws adopted by the stockholders and (c) eliminate the 80% voting
requirement with respect to amendments of Article "Fifth."
Sections "A" and "B1" of Article "Fifth," as proposed to be amended, would
read in their entirety as follows, and section "C" of Article "Fifth" would be
deleted:
FIFTH:
A. The number of directors which shall constitute the entire Board of
Directors shall be as provided in the Corporation's By-Laws or as fixed from
time to time by resolution of the Board of Directors, but shall not be fewer
than five.
B. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized:
1. To adopt, amend or repeal any By-Law (PROVIDED, HOWEVER, that any
By-Law made, amended or repealed by the Board of Directors may be amended
or repealed, and that any by-laws may be adopted, by the stockholders of
the Corporation);
The current version of section "A" of Article "Fifth" provides that the
maximum number of directors shall be 11 through December 31, 1998, which is the
number of individuals presently serving as director, and shall thereafter be
nine. The Board of Directors believes that it would be desirable to increase the
Company's flexibility to obtain the services of one or more additional
individuals as a director, by eliminating the limitation in the Certificate of
Incorporation on the maximum number of directors. The proposed amendment would
permit one or more additional directors to be added to the Board without the
need for a Board vacancy to exist as a result of the death, disability, removal
or resignation of a current director. In connection with the proposed
acquisition (the "Proposed Acquisition") by the Company of Micro Bio-Medics,
Inc. ("MBMI"), the Company has agreed with Bruce Haber, the President and Chief
Executive Officer of MBMI, pursuant to the terms of an employment agreement with
Mr. Haber (the
7
<PAGE>
"Haber Contract") which would become effective at the time the Proposed
Acquisition is completed, to use its reasonable best efforts to cause Mr. Haber
to be nominated for election as a director of the Company during the term of
such employment agreement. Accordingly, the Company intends, following
completion of the Proposed Acquisition and assuming stockholder approval of this
Proposal and of Proposal 3, to expand the number of directors to twelve and to
fill such newly created vacancy by electing Mr. Haber to the Board.
With regard to the proposed amendment to section "B1" of Article "Fifth",
section 109 of the Delaware General Corporation Law (the "DGCL") allows a
Delaware corporation to confer on its directors the power to adopt, amend or
repeal any bylaw, provided that such right of the directors shall not divest the
stockholders of the power to adopt, amend or repeal any bylaw. Article "Fifth"
currently allows the directors to adopt, amend or repeal any By-Law other than
any By-Law adopted by the stockholders of the Company. Since all of the By-Laws
of the Company were approved by the stockholders in September 1994, Article
"Fifth" effectively prevents the directors from amending or repealing any of the
Company's By-Laws. The Board of Directors believes that it would be desirable to
increase the Company's flexibility and its ability to respond to changing
conditions by permitting the directors to adopt, amend or repeal any of the
Company's By-Laws, regardless of the manner in which such By-Laws were
originally adopted. The proposed amendment to Article "Fifth" would eliminate
any restriction on the power of the directors to adopt, amend or repeal any
By-Laws of the Company, and would continue to expressly incorporate the retained
power of the stockholders under section 109 of the DGCL to adopt, amend or
repeal any By-Law, including any By-Law adopted, amended or repealed by the
directors. Proposal 3 includes a conforming amendment of the By-laws provision
that corresponds to section "B1" of Article "Fifth" of the Certificate of
Incorporation.
Absent a provision in the Certificate of Incorporation requiring a higher
percentage vote, under section 242 of the DGCL, a simple majority of the
outstanding shares of capital stock is sufficient to authorize any amendment to
a corporation's certificate of incorporation. Section "C" of Article "Fifth"
currently requires the affirmative vote of 80% of the outstanding shares of
Common Stock to amend or repeal, or adopt any provision inconsistent with, that
Article. The Board of Directors believes that it is desirable for the Company to
have the ability to amend its Certificate of Incorporation without the
requirement of an 80% "supermajority" vote and that the 80% supermajority
requirement would be inconsistent with the other amendments being made to
Article "Fifth," which amendments the directors believe increase the Company's
flexibility and its ability to respond to changing conditions. Accordingly, the
proposed amendment to Article "Fifth" would eliminate the 80% supermajority
requirement.
On February 27, 1997, the Board of Directors unanimously adopted a
resolution approving the foregoing amendment to Article "Fifth" of the
Certificate of Incorporation and approving the submission of such amendment to
the Company's stockholders.
THE AFFIRMATIVE VOTE OF THE HOLDERS OF 80% OF THE OUTSTANDING SHARES OF THE
COMMON STOCK ENTITLED TO VOTE AT THE ANNUAL MEETING IS REQUIRED TO APPROVE THE
FOREGOING AMENDMENT TO THE CERTIFICATE OF INCORPORATION.
8
<PAGE>
PROPOSAL 3
AMENDMENT OF THE BY-LAWS
This proposal would effect an amendment of the Company's By-Laws in two
respects in a manner consistent with the proposed amendment of the Certificate
of Incorporation.
Article VI of the Company's By-Laws provides, in part, that the Board of
Directors may not amend or repeal any By-Laws adopted by the stockholders of the
Company. The complete text of Article VI of the Company's By-Laws, prior to
amendment as proposed hereby, is included as Exhibit B to this Proxy Statement.
Consistent with Proposal 2 concerning elimination of the corresponding section
of the Certificate of Incorporation, the Board of Directors is proposing
amendment of the By-Laws to eliminate such restriction in the By-Laws.
Article VI of the By-Laws, as proposed to be amended, would read in its
entirety as follows:
These By-Laws may be amended or repealed and any By-Laws may be adopted
at any annual meeting of the stockholders or at any special meeting thereof
if notice of the proposed amendment or repeal, or By-Law or By-Laws to be
adopted, be contained in that notice of such special meeting, by the
affirmative vote of holders of two-thirds of the shares of the stock issued
and outstanding and entitled to vote thereat (unless a greater percentage is
provided herein), or at any regular meeting of the Board of Directors, or at
any special meeting of the Board of Directors, if notice of the proposed
amendment or repeal, or By-Law or By-Laws to be adopted, be contained in the
notice of such special meeting, by the affirmative vote of two-thirds of the
Board of Directors.
Article III, Section 3 of the Company's By-Laws requires vacancies in the
Board of Directors to be filled by the affirmative vote of stockholders holding
at least 66 2/3% of the outstanding shares entitled to vote in any election of
directors. The Board of Directors believes that it is in the interest of the
Company to (i) enable the Board of Directors to fill any vacancy as and when
deemed by the Board of Directors to be necessary or desirable without the need
to call a special meeting of stockholders, and (ii) increase the Board of
Directors' flexibility in establishing the size of the Board of Directors and,
in particular, electing additional Board members from time to time to fill any
vacancy created by an increase in the size of the Board of Directors. Therefore,
consistent with the amendments proposed to Article "Fifth" of the Certificate of
Incorporation, the proposed amendment to Article III, Section 3 of the By-Laws
would eliminate the requirement that 66 2/3% of the outstanding shares entitled
to vote in any election is needed to fill any Board vacancies and would allow a
majority of the directors to fill any vacancies that may arise. See "Election of
Directors--Certain Voting Agreements" regarding certain agreements relating to
the nomination of successors to directors who cease to hold office.
The complete text of Article III, Section 3, prior to amendment as proposed
hereby, is included as Exhibit C to this Proxy Statement. As proposed to be
amended, Article III, Section 3, of the By-Laws would read in its entirety as
follows:
Section 3. VACANCIES. Newly created directorships resulting from any
increase in the number of directors and any other vacancies on the Board of
Directors, whether resulting from death, disability, resignation,
disqualification, removal or any other circumstances, shall be filled by the
affirmative vote of a majority of the directors then in office, although
less than a quorum of the Board of Directors. Any director elected in
accordance with the preceding sentence shall hold office until such
director's successor shall have been elected and qualified. Without limiting
the generality of the foregoing, a vacancy shall also be deemed to exist if
the stockholders fail at any annual meeting of stockholders at which any
director or directors are required to be elected, to elect the full
authorized number of directors to be voted for at that meeting.
9
<PAGE>
On February 27, 1997, the Board of Directors unanimously adopted a
resolution approving the foregoing amendment to Article VI and Article III,
Section 3 of the By-Laws and approving the submission of such amendment to the
Company's stockholders.
THE AFFIRMATIVE VOTE OF THE HOLDERS OF TWO-THIRDS OF THE OUTSTANDING SHARES
OF THE COMMON STOCK ENTITLED TO VOTE AT THE ANNUAL MEETING IS REQUIRED TO
APPROVE THE FOREGOING AMENDMENT TO THE BY-LAWS.
PROPOSAL 4
AMENDMENT OF 1994 STOCK OPTION PLAN
The Company maintains the Henry Schein, Inc. 1994 Stock Option Plan ("Stock
Option Plan") for the benefit of certain employees of the Company and its
designated subsidiaries.
The proposed amendment to the Stock Option Plan would increase the number of
shares issuable upon the exercise of Class B Options granted under the Stock
Option Plan by approximately 7.0% of the outstanding shares, or 1,600,000
shares. The proposed amendment would not change the number of shares issuable
upon the exercise of Class A Options, the maximum number of which have been
issued. The proposed amendment would also increase the maximum number of shares
subject to options that may be granted to a participant in any fiscal year of
the Company from 50,000 to 100,000.
The first sentence of Section 5(b) of the Stock Option Plan, as proposed to
be amended, would read in its entirety as follows:
Subject to adjustment as provided in this Section 5, the maximum
aggregate number of Shares that may be issued under the Plan shall be
2,279,635 shares of Common Stock of which a maximum of 237,897 of such
Shares shall be covered by Class A Options and the balance of such Shares
shall be covered by Class B Options.
The first sentence of Section 5(c) of the Stock Option Plan, as proposed to
be amended, would read in its entirety as follows:
The Maximum number of Shares subject to any Option which may be granted
under this Plan to each Participant on or after the HSI Public Offering
shall not exceed 100,000 Shares (subject to any adjustment pursuant to
Section 5(d)) during each fiscal year of HSI during the entire term of the
Plan.
The Board of Directors believes that it is desirable to increase the total
number of shares available under the Stock Option Plan and to increase the
maximum annual grants in order to attract, motivate and retain key employees or
individuals that would be key employees of the Company and its designated
subsidiaries.
DESCRIPTION OF THE STOCK OPTION PLAN
The purpose of the Stock Option Plan is to enable the Company and its
designated subsidiaries to attract, retain and motivate key employees who are
important to the success and growth of the Company and to create a mutuality of
interest between the key employees and the stockholders of the Company by
granting the key employees options to purchase Common Stock. Under the Stock
Option Plan, as currently constituted, 679,635 shares of Common Stock may be
issued. The Stock Option Plan provides for two classes of options: Class A
Options, which have an exercise price of $4.21 per share, and Class B Options,
which have an exercise price of not less than the fair market value of the
Common Stock at the time of grant. Class A Options to purchase an aggregate of
221,397 shares of Common Stock are presently outstanding, and Class B Options to
purchase an aggregate of 447,400 shares of Common Stock are presently
outstanding. If options are canceled, expire or terminate unexercised, the
shares of Common Stock shall again be available for the grant of options,
provided that the number of shares covered by Class A Options shall be reduced
by the number of Class A Options that are canceled, expire or are
10
<PAGE>
terminated. Both incentive stock options and non-qualified stock options may be
issued under the Stock Option Plan.
The maximum number of shares of Common Stock with respect to which options
may be granted under the Stock Option Plan to each participant could not exceed
50,000 shares in 1996, and, unless the proposed amendment is approved, could not
exceed 50,000 in each year thereafter. To the extent that shares for which
options are permitted to be granted to a participant during a year are not
covered by a grant of an option in such year, such shares shall automatically
increase the number of shares of Common Stock available for grant of options to
the participant in the subsequent year.
The Stock Option Plan is to be administered by the Company's Board of
Directors or by a committee appointed by the Board, consisting of two or more
directors, each of whom qualifies as a disinterested person within the meaning
of Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and as an outside director within the meaning of Section
162(m) of the Code. The Stock Option Plan is currently administered by the
Compensation Committee of the Board of Directors. The committee has the full
authority and discretion, subject to the terms of the Stock Option Plan, to
determine those individuals who are eligible to be granted options and the
amount and type of options. Terms and conditions of options are set forth in
written option agreements, consistent with the terms of the Stock Option Plan.
No option shall be granted under the Stock Option Plan on or after September 30,
2004 (the tenth anniversary of the effective date of the Stock Option Plan), but
options granted prior to such date may extend beyond that date.
The Stock Option Plan provides that it may be amended by the Company's Board
of Directors or the committee, except that no amendment may, without the
approval of stockholders of the Company, (i) increase the total number of shares
of Common Stock which may be acquired upon exercise of options granted under the
Stock Option Plan, (ii) change the types of employees eligible to participate in
the Stock Option Plan, (iii) effect any change that would require stockholder
approval under securities laws, (iv) effect any change that would require
stockholder approval under Section 162(m) of the Code or (v) reduce the purchase
price of an outstanding option below the fair market value of a share of Common
Stock on the date of such amendment.
The options entitle the holder to purchase a specified number of shares of
Common Stock, subject to vesting provisions, at a price set by the committee at
the time of grant, subject to certain limitations. The term of each option will
be specified by the committee upon grant, but may not exceed ten years from the
date of grant (five years in the case of incentive stock options granted to
owners of 10% or more of the Company's outstanding voting stock). The committee
will determine the time or times at which each option may be exercised. Options
may be exercisable in installments, and the exercisability of options may be
accelerated in some cases, including upon a change of control of the Company (as
defined in the Stock Option Plan).
Under the Stock Option Plan, the committee may grant incentive stock options
that qualify under Section 422 of the Code or non-qualified stock options.
Incentive stock options are subject to certain requirements under the Stock
Option Plan, as well as under the Code.
A participant may elect to exercise one or more of his or her options by
giving written notice to the committee of such election at any time. The
participant shall specify the number of options to be exercised and provide
payment in full of the aggregate purchase price for the shares of Common Stock
for which options are being exercised. Payment may be made (i) in cash or by
check, bank draft or money order, (ii) if so permitted by the committee, through
delivery of unencumbered shares of Common Stock, a promissory note or a
combination of cash and either of the foregoing, or (iii) on such other terms
and conditions as may be acceptable to the committee or as set forth in the
participant's option agreement. No options were granted to the Named Executive
Officers, as that term is defined below, under the Stock Option Plan in 1996.
11
<PAGE>
In March, 1997, the Compensation Committee granted options for a total of
336,800 shares, including options to the following Named Executive Officers, at
an exercise price of $24.56 per share: James Breslawski, 15,000 shares, Gerald
Benjamin, 12.500 shares, Steven Paladino, 14,000 shares, and Mark Mlotek, 10,000
shares. All such grants are subject to approval of the amendment proposed
hereby.
Pursuant to the terms of the Proposed Acquisition of MBMI, the Company would
assume the currently outstanding options to purchase MBMI common stock. At the
closing of the Proposed Acquisition, such options would be converted to options
to acquire up to 1,142,454 shares of Company Common Stock and would otherwise be
governed by the terms of MBMI's stock option plans. Such options would not be
issuable under or governed by the Stock Option Plan. Additionally, pursuant to
the terms of the Haber Contract, upon completion of the Proposed Acquisition,
Mr. Haber would be issued options having a value of $1,000,000 determined by
application of the Black-Sholes formula and, thereafter, during the term of his
employment with the Company, would be issued annual options, subject to
achievement of certain performance goals. All such options would be issuable
under the Stock Option Plan.
A copy of the Stock Option Plan is available upon request from the Company.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES The principal Federal income tax
consequences with respect to stock options granted pursuant to the Stock Option
Plan are summarized below:
INCENTIVE STOCK OPTIONS. Options granted under the Stock Option Plan may be
incentive stock options as defined in the Code, provided that such options
satisfy the requirements under the Code therefor. In general, neither the grant
nor the exercise of an incentive stock option will result in taxable income to
the optionee or a deduction to the Company. The sale of Common Stock received
pursuant to the exercise of an option which satisfied all the requirements of an
incentive stock option, as well as the holding period requirement described
below, will result in a long-term capital gain or loss to the optionee equal to
the difference between the amount realized on the sale and the option price and
will not result in a tax deduction to the Company. To receive incentive stock
option treatment, the optionee must not dispose of the Common Stock purchased
pursuant to the exercise of an option either (i) within two years after the
option is granted, or (ii) within one year after the date of exercise.
If all requirements for incentive stock option treatment other than the
holding period rules are satisfied, the recognition of income by the optionee is
deferred until disposition of the Common Stock, but, in general, any gain (in an
amount equal to the lesser of (i) the fair market value of the Common Stock on
the date of exercise (or, with respect to officers and directors, the date that
sale of such stock would not create liability ("Section 16(b) liability") under
Section 16(b) of the Exchange Act minus the option price or (ii) the amount
realized on the disposition minus the option price) is treated as ordinary
income. Any remaining gain is treated as long-term or short-term capital gain
depending on the optionee's holding period for the stock disposed of. The
Company generally will be entitled to a deduction at that time equal to the
amount of ordinary income realized by the optionee.
The Stock Option Plan provides that an optionee may, if permitted by the
committee pay for Common Stock received upon the exercise of an option
(including an incentive stock option) with other shares of Common Stock. In
general, an optionee's transfer stock acquired pursuant to the exercise of a
"statutory option," which includes an incentive stock option, to acquire other
stock in connection with the exercise of an incentive stock option may result in
ordinary income if the transferred stock has not met the minimum statutory
holding period necessary for favorable tax treatment as an incentive stock
option. For example, if an optionee exercises an incentive stock option and uses
the stock so acquired to exercise another incentive stock option with the
two-year or one-year holding periods discussed above, the optionee may realize
ordinary income under the rules summarized above.
NON-QUALIFIED STOCK OPTIONS. An optionee will realize no income at the time
he or she is granted a non-qualified stock option. Such conclusion is predicated
on the assumption that, under existing Treasury Department regulations, a
non-qualified stock option, at the time of its grant, has no readily
ascertainable fair market value. Ordinary income will be realized when a
non-qualified stock option is exercised. The
12
<PAGE>
amount of such income will be equal to the excess of the fair market value on
the exercise date of the shares of Common Stock issued to an optionee over the
option price. The optionee's holding period with respect to the shares acquired
will begin on the date of exercise.
The tax basis of the stock acquired upon the exercise of any option will be
equal to the sum of (i) the exercise price of such option and (ii) the amount
included in income with respect to such option. Any gain or loss on a subsequent
sale of the stock will be either long-term or short-term capital gain or loss,
depending on the optionee's holding period for the stock disposed of. The
Company generally will be entitled to a deduction for Federal income tax
purposes at the same time and in the same amount as the optionee is considered
to have realized ordinary income in connection with the exercise of the option.
CERTAIN OTHER TAX ISSUES. In addition, (i) any entitlement to a tax
deduction on the part of the Company is subject to applicable Federal tax rules
(including, without limitation, Code Section 162(m) regarding the $1,000,000
limitation on deductible compensation), (ii) the exercise of an option may have
implications in the computation of alternative minimum taxable income, and (iii)
in the event that the exercisability or vesting of any option is accelerated
because of a change in control, such option (or a portion thereof), either alone
or together with certain other payments, may constitute parachute payments under
Section 280G of the Code, which excess amounts may be subject to excise taxes.
On February 27, 1997, the Board of Directors unanimously approved for
submission to the stockholders the foregoing amendment to the 1994 Stock Option
Plan.
THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES
OF THE COMMON STOCK PRESENT IN PERSON OR REPRESENTED BY PROXY AND ENTITLED TO
VOTE AT THE ANNUAL MEETING IS REQUIRED TO APPROVE THE FOREGOING AMENDMENT TO THE
STOCK OPTION PLAN.
13
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning annual and long-term
compensation for the Company's Chief Executive Officer and the other four most
highly paid executive officers (collectively, the "Named Executive Officers")
for the fiscal years ended December 31, 1994, December 30, 1995 and December 28,
1996.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
----------------------------------- ---------------------------------------
OTHER ANNUAL RESTRICTED STOCK LTIP OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION STOCK AWARDS OPTIONS PAYOUTS COMPENSATION
POSITION YEAR ($) ($) ($)(1) ($)(2) (#) ($)(3) ($)(4)
- -------------------------- --------- --------- --------- ------------- ------------ ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Stanley M. Bergman........ 1996 504,050 298,523 19,343 -- -- -- 37,023
Chairman, Chief 1995 479,050 307,034 19,343 -- -- -- 36,144
Executive Officer and 1994 469,050 260,496 258,259 -- -- 17,303,475 24,988
President
James P. Breslawski....... 1996 285,000 65,000 14,400 -- -- -- 20,970
Executive Vice President 1995 270,782 66,000 13,500 -- -- -- 21,458
1994 257,782 60,000 1,000,364 1,171,788 -- 382,618 19,184
Gerald A. Benjamin........ 1996 220,000 60,000 14,400 -- 47,200 -- 16,545
Senior Vice President of 1995 205,000 52,500 13,500 -- -- 243,825 15,064
Administration and 1994 185,000 42,500 189,714 220,761 13,722
Customer Satisfaction
Steven Paladino........... 1996 220,000 62,500 14,400 -- -- -- 16,264
Senior Vice President 1995 205,000 52,500 13,500 -- 54,700 -- 14,812
and Chief Financial 1994 185,000 42,500 189,714 220,761 -- 243,825 13,496
Officer
Mark E. Mlotek............ 1996 225,000 50,000 14,400 -- -- -- 16,566
Vice President, General 1995 212,000 45,000 13,500 -- 32,300 -- 8,729
Counsel and Secretary 1994 9,770 -- 82,434 92,758 -- -- --
</TABLE>
- ------------------------
(1) The 1994 amounts shown in this column include amounts recorded for each of
Messrs. Breslawski, Benjamin and Paladino of $986,864, $175,674 and
$175,674, respectively, to pay income taxes attributable to the stock
issuances made to each of them in 1994. Mr. Bergman was given a cash bonus
of $258,259 in 1994 to pay certain additional income taxes attributable to
the certain stock issuances described below. The 1995 amount shown in this
column for Mr. Mlotek comprised an amount recorded to pay income taxes
attributable to stock issuances made to him in 1995.
(2) At the end of fiscal 1996, Messrs. Breslawski, Benjamin, Paladino and Mlotek
held 195,822, 50,490, 50,490 and 14,850 shares of restricted common stock,
respectively, with an aggregate value of $6,731,381, $1,735,594, $1,735,594
and $510,469 respectively.
(3) Mr. Bergman was issued 1,466,685 shares of Common Stock and was issued
shares of common stock of Schein Pharmaceutical, Inc. on December 24, 1992.
The value of these shares on September 30, 1994 was $17.3 million in the
aggregate. These shares when issued had a value of $6.2 million and $2.6
million, respectively, the entire amount of which was charged as deferred
compensation. The issuances to Mr. Bergman are being included herein at
their fair market value on September 30, 1994
14
<PAGE>
because, on that date, certain contingencies relating to the stock were
eliminated and the shares became fully vested. Accordingly, the deferred
compensation which was charged in 1992 and a mark-to-market adjustment to
fair market value on such date was recorded in 1994. Mr. Breslawski received
$382,618 in 1994 in satisfaction of his Executive Incentive Plan balance,
payable with 30,294 shares of Common Stock with an aggregate value of
$214,454 on December 31, 1994 and a $168,164 cash payment. Each of Messrs.
Benjamin and Paladino received $243,825 in 1994 in satisfaction of their
Executive Incentive Plan balance, payable with 19,305 shares of Common Stock
with an aggregate value of $136,662 on December 31, 1994 and $107,163 in
cash.
(4) The 1994 amounts shown in this column represent (i) profit sharing
contributions made by the Company on behalf of Mr. Bergman and Mr.
Breslawski of $9,434, on behalf of Mr. Benjamin of $7,519 and on behalf of
Mr. Paladino of $7,524, (ii) Employee Stock Ownership Plan ("ESOP")
contributions made by the Company on each executives' behalf of $4,500, and
(iii) excess life insurance and Supplemental Executive Retirement Plan
("SERP") contributions of $1,186 and $9,868 for Mr. Bergman, $950 and $4,300
for Mr. Breslawski, $653 and $1,050 for Mr. Benjamin, and $422 and $1,050
for Mr. Paladino, respectively. The 1995 amounts shown in this column
represent (i) profit sharing contributions made by the Company on behalf of
each of Messrs. Bergman, Breslawski, Benjamin and Paladino of $6,000 and on
behalf of Mr. Mlotek of $4,566, (ii) ESOP contributions made by the Company
on behalf of each of Messrs. Bergman, Breslawski, Benjamin and Paladino of
$4,500 and on behalf of Mr. Mlotek of $3,425, (iii) excess life insurance
and SERP contributions of $2,610 and $23,034 for Mr. Bergman, $1,003 and
$8,455 for Mr. Breslawski, $714 and $3,850 for Mr. Benjamin, $462 and $3,850
for Mr. Paladino, and $738 and $0 for Mr. Mlotek, respectively, and (iv) an
anniversary bonus to Mr. Breslawski of $1,500. The 1996 amounts shown in
this column represent (i) profit sharing contributions made by the Company
on each executive's behalf of $6,000, (ii) ESOP contributions made by the
Company on each executive's behalf of $4,500, and (iii) excess life
insurance and SERP contributions of $1,740 and $24,783 for Mr. Bergman,
$1,020 and $9,450 for Mr. Breslawski, $795 and $5,250 for Mr. Benjamin, $514
and $5,250 for Mr. Paladino, and $816 and $5,250 for Mr. Mlotek,
respectively.
AGGREGATED FISCAL 1996 YEAR-END OPTION VALUES
The following table summarizes the number of all shares subject to options
held by the Named Executive Officers at the end of fiscal 1996, and their value
at that date if they were in-the-money. No stock options were exercised in
fiscal 1996.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
IN-THE-MONEY OPTIONS AT 12/28/96
NUMBER OF SECURITIES -----------------------------------------------
UNDERLYING UNEXERCISED
OPTIONS AT 12/28/96 EXERCISABLE UNEXERCISABLE
---------------------------------- ----------------------- ----------------------
NAME EXERCISABLE (#) UNEXERCISABLE (#) SHARES (#) TOTAL ($) SHARES (#) TOTAL ($)
- -------------------------------------- --------------- ----------------- ----------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Gerald A. Benjamin.................... 35,533 11,667 35,533 1,034,173 11,667 224,590
Steven Paladino....................... 38,033 16,667 38,033 1,082,298 16,667 320,840
Mark E. Mlotek........................ 23,966 8,334 23,966 694,787 8,334 160,430
</TABLE>
EMPLOYMENT AND OTHER AGREEMENTS
The Company and Stanley M. Bergman entered into an employment agreement
dated as of January 1, 1992 (the "Employment Agreement"), providing for his
continued employment as Chairman of the Board, President and Chief Executive
Officer until December 31, 1999. The Employment Agreement provides Mr. Bergman
with a base salary of $519,050 for 1997, $544,050 for 1998, and $559,050 for
1999. In addition, the Employment Agreement provides for incentive compensation
to be determined by the Compensation Committee of the Board of Directors (or, if
there is no Compensation Committee, the
15
<PAGE>
Board of Directors). Based on the range of incentive compensation provided for
in the employment agreement, it is anticipated that incentive compensation for
1997 will be in the range of $75,000 to $445,000. The range of incentive
compensation increases to $80,000 to $465,000 in 1998, and $85,000 to $485,000
in 1999. The Employment Agreement also provides that Mr. Bergman will continue
to participate in all benefit, welfare and perquisite plans, policies and
programs generally available to either the Company's employees or the Company's
senior executive officers. The Company provides Mr. Bergman with the use of an
automobile and expenses related thereto, and other miscellaneous benefits. If
Mr. Bergman's employment with the Company is terminated by the Company without
cause or terminated by Mr. Bergman following a material breach by the Company of
the Employment Agreement which is not cured during the requisite period for cure
of such breach, Mr. Bergman will receive all amounts then owed to him as salary
and deferred compensation and any benefits accrued and owed to him or his
beneficiaries under the then applicable benefit plans, programs and policies of
the Company. In addition, Mr. Bergman will receive as severance pay, 100% of his
then annual base salary and a payment equal to the account balance or accrued
benefit Mr. Bergman would have been credited with under each pension plan
maintained by the Company, in each case assuming the Company would have
continued contributions until the natural expiration of the Employment
Agreement, less Mr. Bergman's vested account balance or accrued benefits under
each pension plan. Unless the Employment Agreement is terminated for cause or
pursuant to Mr. Bergman's voluntary resignation, the Company will continue the
participation of Mr. Bergman and his family in the health and medical plans,
policies and programs in effect with respect to senior executive officers of the
Company and their families. Coverage for Mr. Bergman and his spouse will
continue from the end of Mr. Bergman's employment until their respective deaths,
and coverage for his children will continue until their attainment of the age of
twenty-one.
The Company has entered into agreements with the Named Executive Officers to
provide that if an executive's employment is terminated by the Company or by the
executive without cause or for good reason, respectively, and not within two
years after a change in control of the Company, the Company will pay to the
executive severance pay equal to one month's base salary for each month the
executive has been employed by the Company, with a minimum of six months and a
maximum of twelve months, subject to offset for remuneration for subsequent
employment. If the executive is terminated within two years following a change
in control of the Company which has not been approved by a supermajority of the
Board of Directors, the executive's severance pay will equal three times the
severance pay the executive would have received had no change of control
occurred, plus three times the amount of executive's incentive bonus for the
year preceding the year of termination.
In September 1994, the Company, Schein Pharmaceutical, Inc. and Marvin
Schein, a director and principal stockholder of the Company, agreed to terminate
a lifetime consulting agreement entered into in 1982 between the Company's
predecessor and Mr. Schein, and the Company and Mr. Schein agreed to continue
the consulting arrangement on the terms set forth in a new lifetime consulting
agreement (the "Consulting Agreement"). The current Consulting Agreement
modified certain of the terms of the 1982 agreement, including the elimination
of a provision limiting Mr. Schein's compensation to $100,000 per annum if the
Company's pre-tax income were less than $3.5 million for two consecutive years.
The 1982 agreement provided, and the current Consulting Agreement provides, for
Mr. Schein's consulting services to the Company with respect to the marketing of
dental supplies and equipment, from time to time. The consulting Agreement
currently provides for initial compensation of $258,000 per year, increasing
$25,000 every fifth year beginning in 1997. The Consulting Agreement also
provides that Mr. Schein will participate in all benefit, compensation, welfare
and perquisite plans, policies and programs generally available to either the
Company's employees or the Company's senior executive officers, excluding the
Company's Stock Option Plan, that Mr. Schein's spouse, and his children until
they attain the age of 21, will be covered by the Company's health plan, and
that the Company will provide Mr. Schein with the use of an automobile and
expenses related thereto. The Consulting Agreement was originally entered into
as part of a recapitalization of the Company's predecessor in 1982 among Mr.
Schein and its other stockholders, and
16
<PAGE>
to secure for the Company the consulting services of Mr. Schein, who had served
the Company in various executive capacities for more than the prior twenty
years.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Committee has responsibility for the philosophy, competitive strategy,
design, and administration of the Company's compensation program for its
executive officers (including the Named Executive Officers). The Committee seeks
to ensure that the executive officer compensation program is competitive in
level and structure with the programs of comparably-sized businesses and that it
is supportive of the Company's financial and operating objectives and aligned
with the financial interests of the Company's stockholders. The Company and the
Compensation Committee have retained the services of an independent executive
compensation consulting firm for advice regarding the competitive structure and
administration of the officer compensation program.
PHILOSOPHY AND PROGRAM COMPONENTS
The Company's executive officer compensation program is structured to enable
the Company to attract and retain the caliber of officers needed to ensure the
Company's continued growth and profitability and to competitively compensate
them based on their and the Company's performance and on the longer-term value
they create for the Company's stockholders. The components of the officer
compensation program consist of base salary, annual bonuses paid under the
Company's annual Performance Incentive Plan, and periodic grants of stock
options.
The Company measures the competitiveness of its compensation program
relative to the practices of other companies with annual revenues comparable to
those of the Company. The Committee has adopted a philosophy which would seek to
set salaries so as to be competitive within the 50th to 75th percentiles of
practices at companies with annual revenues comparable to those of the Company.
The philosophy also aims to structure Annual Performance Incentive Plan award
opportunities so that an officer's salary plus annual bonus will fall within the
50th to 75th percentiles of competitive practices, assuming the Company's
achievement of annual financial performance targets established by the Committee
at the start of the year, and the achievements of the individual officer,
evaluated against pre-established goals and objectives, Stock option grants
would similarly be administered with reference to the 50th and 75th percentiles
of option granting practices for companies of comparable revenue size.
BASE SALARY
The Company annually reviews officer salaries and makes adjustments as
warranted based on competitive practices and the individual's performance.
Salary increases are generally approved during the first quarter of the calendar
year retroactive to January 1 of the year. The 1996 salaries of the Named
Executive Officers, excluding Mr. Bergman, the Company's Chief Executive
Officer, were increased by an average of 6.5%. The Committee was advised by its
consultant that such officers' average 1996 salaries approximated the 65th
percentile of competitive practices. Mr. Bergman's 1996 salary was increased
pursuant to the terms of his employment agreement.
ANNUAL INCENTIVE COMPENSATION
Annual incentive compensation for executive officers, other than Mr.
Bergman, are paid under the Company's Performance Incentive Plan (PIP) which is
designed to reward the achievement of pre-established corporate, business unit
and individual performance goals so as to compensate them for both their
individual performance and team financial results. The Chief Executive Officer
annually determines those who will participate in the PIP and they are notified
of their participation at the beginning of each year. The Chief Executive
Officer determines the PIP performance goals for officers who report directly to
17
<PAGE>
him and determines goals for other participants in consultation with their
supervisors. Performance goals are reviewed at mid-year to ensure their
continued relevance.
During the first quarter of the year, the Chief Executive Officer reviews
financial and individual performance relative to PIP performance measures,
standards and award payment opportunities established early in the prior year,
and determines PIP award payments. The Chief Executive Officer reviews the
performance achievements of the Company, its business units, and the executive
officers, and the proposed PIP awards for executive officers, with the
Compensation Committee which must approve the payment of these awards. PIP
payments for 1996 performance for the Named Executive Officers, other than Mr.
Bergman, were based on (1) the Company's 1996 net income measured against
pre-established goals, (2) overhead expense measured against budgeted amounts,
(3) achievement of customer service commitment goals, and (4) 'Team Schein'
goals reflecting the professional growth and development of staff members and
the promotion and support of the Company's cultural values. In addition, Mr.
Breslawski's bonus reflected the sales and pretax income performance of the
business units he manages.
PIP payments for 1996 for the Named Executive Officers other than Mr.
Bergman ranged from 22% to 28% of salary and averaged 25%. The Committee's
compensation consultant has advised it that the average 1996 salary plus 1996
bonus for these four executive officers approximated the 25th percentile of
annual cash compensation at businesses of comparable size.
STOCK OPTIONS
No stock options were granted to executive officers in fiscal 1996. The
Company and the Committee believe that stock options directly align the
long-term financial interests of the Company's officers and stockholders and
intend to make grants on an annual basis commencing in 1997. In March 1997, the
Committee granted options for a total of 336,800 shares, including options to
the following Named Executive Officers, at an exercise price of $24.56 per
share: James Breslawski, 15,000 shares, Gerald Benjamin, 12,500 shares, Steven
Paladino, 14,000 shares, and Mark Mlotek, 10,000 shares. All such grants are
subject to stockholder approval of an amendment of the 1994 Stock Option Plan.
THE CHIEF EXECUTIVE OFFICER
Mr. Bergman's 1996 salary of $504,050 was set in accordance with the terms
of his employment contract. The contract also provides that Mr. Bergman's bonus
be within a specified range based on the Company's performance as determined by
the Committee. The Committee awarded Mr. Bergman an annual bonus of $288,523
with respect to 1996. In making its bonus determination, the Committee evaluated
the Company's 1996 net operating income relative to target ranges set forth in
Mr. Bergman's contract. These target ranges were adjusted to reflect the cost of
capital related to stock issuances at the Company's average borrowing rate.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Section 162(m) of the Internal Revenue Code prohibits the Company from
deducting annual compensation in excess of $1 million paid to any of the Named
Executive Officers, unless such compensation is performance-based and paid
pursuant to criteria approved by the stockholders. The Committee believes that
annual bonuses paid under the PIP, and pursuant to Mr. Bergman's contract, are
perform-
ance-based in accordance with Section 162(m), although these arrangements have
not been approved by the stockholders. Since the 1996 compensation paid to each
of the Named Executive Officers does not exceed $1 million, all of these
payments will be tax deductible by the Company. The Committee will continue to
consider 162(m) in making its compensation decisions so as to ensure the
deductability of future compensation paid to Named Executive Officers.
Respectfully submitted,
BARRY J. ALPERIN
DONALD J. KABAT
18
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Stanley M. Bergman, James P. Breslawski, Gerald A. Benjamin, Leonard A.
David, Mark E. Mlotek and Steven Paladino are executive officers of the Company
and members of the Board of Directors which approved incentive compensation for
the Named Executive Officers for fiscal 1996 based upon the recommendations of
the Compensation Committee. None of the Named Executive Officers participated in
any deliberations of the Board of Directors with respect to their own
compensation for fiscal 1996.
CERTAIN TRANSACTIONS
In the ordinary course of its business, the Company buys products from and
sells products to Schein Pharmaceutical, Inc. in arms-length transactions. In
1996, the Company's purchases from Schein Pharmaceutical, Inc. amounted to
approximately $7.0 million. Certain of the Company's stockholders and directors,
including Stanley M. Bergman, Marvin H. Schein, Pamela Schein, and Pamela
Joseph, and related persons thereto, own approximately 70% of the outstanding
shares of common stock of Schein Pharmaceutical, Inc.
19
<PAGE>
STOCK PERFORMANCE GRAPH
The graph below compares the cumulative total stockholder return on $100
invested on November 3, 1995, the date of the initial public offering of the
Company's Common Stock, through the end of fiscal 1995, and through the end of
fiscal 1996, with the cumulative total return for the same periods on the same
amount invested in the Nasdaq Stock Market (U.S. Companies) Composite Index and
an index of peer companies selected by the Company. The Peer Group Index
consists of 27 companies (including the Company) based on the same Standard
Industrial Code.*
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
HENRY SCHEIN, INC. SIC CODE INDEX NASDAQ MARKET INDEX
<S> <C> <C> <C>
11-3-95 100.00 100.00 100.00
30-Dec-95 129.67 108.16 101.13
12-28-96 151.65 103.14 125.67
</TABLE>
<TABLE>
<S> <C> <C> <C>
November 3, 1995 December 30, 1995 December 28, 1996
Henry Schein, Inc. 100.00 129.67 151.65
Peer Group 100.00 108.16 103.14
NASDAQ Composite 100.00 101.13 125.67
</TABLE>
- ------------------------
* Allegiance Corporation, American Homepatient, Inc., BEC Group, Inc.,
Biodynamics International Inc., Cantel Industries, Inc., Cyberonics Inc.,
Electroscope, Inc., Elron Electronic Industries Ltd., ESC Medical Systems
Ltd., Graham-Field Health Products, Inc., Gulf South Medical Supply, Henry
Schein, Inc., Innovative Medical Services, Micro Bio-Medics, Inc., Netmed
Inc., Novoste Corporation, Owens & Minor, Inc., Patterson Dental Company,
Physician Sales & Services, Inc., Prime Capital Corporation, Pro-Dex Inc.,
Strategic Distribution, Inc., Suburban Ostomy Supply Co., Inc., Sullivan
Dental Products, Inc., Thermo-Mizer Environmental Corp., US-China Industrial
Exchange, Inc., Vallen Corporation.
20
<PAGE>
PROPOSAL 5
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
Upon the recommendation of the Audit Committee, the Board of Directors has
selected BDO Seidman, LLP as independent auditors for the Company for the year
ending December 27, 1997, subject to ratification of such selection by the
stockholders at the Annual Meeting. If the stockholders do not ratify the
selection of BDO Seidman, LLP, another firm of independent public accountants
will be selected by the Board of Directors. Representatives of BDO Seidman, LLP
will be present at the Annual Meeting, will have an opportunity to make a
statement if they desire to do so, and will be available to respond to
appropriate questions from stockholders in attendance.
THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES OF
THE COMMON STOCK PRESENT IN PERSON OR REPRESENTED BY PROXY AND ENTITLED TO VOTE
AT THE ANNUAL MEETING IS REQUIRED TO RATIFY THE SELECTION OF BDO SEIDMAN, LLP AS
INDEPENDENT AUDITORS FOR THE COMPANY FOR THE YEAR ENDING DECEMBER 27, 1997.
VOTING OF PROXIES AND OTHER MATTERS
The Board of Directors recommends that an affirmative vote be cast in favor
of each of the proposals listed on the proxy card.
The Board of Directors knows of no other matters that may be brought before
the meeting which require submission to a vote of the stockholders. If any other
matters are properly brought before the meeting, however, the persons named in
the enclosed proxy or their substitutes will vote in accordance with their best
judgment on such matters.
A complete list of stockholders entitled to vote at the Annual Meeting will
be available for inspection on May 12, 1997 at the Company's headquarters
located at 135 Duryea Road, Melville, New York 11747.
STOCKHOLDER PROPOSALS
Stockholders wishing to present proposals for action by the stockholders at
the next Annual Meeting must present such proposals at the principal offices of
the Company not later than December 24, 1997. It is suggested that any such
proposals be submitted by certified mail, return receipt requested.
BY ORDER OF THE BOARD OF DIRECTORS
STANLEY M. BERGMAN
Chairman, Chief Executive Officer
and President
Melville, New York
April 23, 1997
21
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<S> <C>
Exhibit A: Article Fifth of the Company's Restated Certificate of Incorporation Prior to
the Proposed Amendment
Exhibit B: Article VI of the Company's Amended and Restated By-Laws Prior to the Proposed
Amendment
Exhibit C: Article III, Section 3 of the Company's Amended and Restated By-Laws Prior to
the Proposed Amendment
</TABLE>
<PAGE>
EXHIBIT A
ARTICLE FIFTH OF THE COMPANY'S RESTATED CERTIFICATE
OF INCORPORATION PRIOR TO THE PROPOSED AMENDMENT
FIFTH:
A. The business and affairs of the Corporation shall be managed by its Board
of Directors whose members need not be residents of the State of Delaware nor
stockholders of the Corporation. The number of directors which shall constitute
the entire Board of Directors shall be no less than five and no more than 11
through December 31, 1998; thereafter the number of directors which shall
constitute the entire Board of Directors shall be nine.
B. In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors is expressly authorized:
1. To adopt, amend or repeal any By-Law (PROVIDED, HOWEVER, that (a)
any By-Law made, amended or repealed by the Board of Directors may be
amended or repealed, and that any by-laws may be adopted, by the
stockholders of the Corporation and (b) the Board of Directors may not amend
or repeal any By-Law adopted by the stockholders of the Corporation);
2. To authorize and cause to be executed mortgages and liens upon the
real and personal property of the Corporation;
3. To set apart out of any of the funds of the Corporation available
for dividends a reserve or reserves for any proper purpose and to abolish
any such reserve in the manner in which it was created; and
4. By resolution passed by a majority of the whole Board, to designate
one or more committees, each committee to consist of two or more of the
directors of the Corporation, which, to the extent provided in such
resolution or in the By-Laws of the Corporation, shall have and may exercise
all the powers and the authority of the Board of Directors in the management
of the business and affairs of the Corporation, and may authorize the seal
of the Corporation to be affixed to all papers which may require it. Such
committee or committees shall have such name or names as may be stated in
the By-Laws of the Corporation or as may be determined from time to time by
resolution adopted by the Board of Directors.
C. The affirmative vote of the holders of 80% or more of the shares entitled
to vote in the election of directors shall be required to amend or repeal, or
adopt any provisions inconsistent with, this Article FIFTH.
<PAGE>
EXHIBIT B
ARTICLE VI OF THE COMPANY'S AMENDED AND RESTATED
BY-LAWS PRIOR TO THE PROPOSED AMENDMENT
These By-Laws may be amended or repealed and any By-Laws may be adopted at
any annual meeting of the stockholders or at any special meeting thereof if
notice of the proposed amendment or repeal, or By-Laws or By-Laws to be adopted,
be contained in that notice of such special meeting, by the affirmative vote of
holders of two-thirds of the shares of the stock issued and outstanding and
entitled to vote thereat (unless a greater percentage is provided herein), or at
any regular meeting of the Board of Directors, or at any special meeting of the
Board of Directors, if notice of the proposed amendment or repeal, or By-Law or
By-Laws to be adopted, be contained in the notice of such special meeting, by
the affirmative vote of two-thirds of the Board of Directors, provided that the
Board of Directors may not amend or repeal any By-Laws adopted by the
stockholders of the Corporation.
<PAGE>
EXHIBIT C
ARTICLE III, SECTION 3 OF THE COMPANY'S AMENDED AND RESTATED
BY-LAWS PRIOR TO THE PROPOSED AMENDMENT
Section 3. VACANCIES. Subject to the provisions of the Corporation's
Restated Certificate of Incorporation and except as otherwise provided by law,
vacancies in the Board of Directors may be filled by the affirmative vote of
stockholders holding at least 66 2/3% of the outstanding shares entitled to vote
in any election of directors, and any director so chosen shall hold office for
the remainder of the full term of the director whose place he or she has been
elected to fill and until his or her successor shall be elected and qualified.
If there are no directors in office, then an election of directors may be held
in the manner provided by law.
Further subject to the Corporation's Restated Certificate of Incorporation,
a vacancy or vacancies shall be deemed to exist in case of the death,
resignation or removal of any director, or if the stockholders fail at any
annual meeting of stockholders at which any director or directors are required
to be elected, to elect the full authorized number of directors to be voted for
at that meeting, or if there are newly created directorships resulting from any
increase in the authorized number of directors.
<PAGE>
HENRY SCHEIN, INC.
135 DURYEA ROAD
MELVILLE, NEW YORK 11747
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, having duly received the Notice of Annual Meeting of
Stockholders and the Proxy Statement, dated April 18, 1997, hereby appoints
Stanley M. Bergman and Mark E. Mlotek, as proxies (each with the power to act
alone and with the power of substitution and revocation), to represent the
undersigned and to vote, as designated below, all shares of Common Stock of
Henry Schein, Inc. held of record by the undersigned on April 1, 1997, at the
Annual Meeting of Stockholders to be held at 4:00 pm on Thursday, May 22, 1997
at the Huntington Hilton, 598 Broadhollow Road, Melville, New York and at any
adjournments or postponements thereof. The undersigned hereby revokes any
previous proxies with respect to the matters covered by this Proxy.
HENRY SCHEIN, INC.'S BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
FOLLOWING PROPOSALS
1. PROPOSAL TO ELECT ELEVEN DIRECTORS FOR TERMS EXPIRING AT THE 1998 ANNUAL
MEETING.
<TABLE>
<S> <C>
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY
(except as marked to the contrary) to vote for all nominees listed below
</TABLE>
Stanley M. Bergman, James P. Breslawski, Gerald A. Benjamin, Leonard A. David,
Mark E. Mlotek, Steven Paladino,
Barry J. Alperin, Pamela Joseph, Donald J. Kabat, Marvin H. Schein and Irving
Shafran
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL, WRITE THAT
NOMINEE'S NAME ON THE SPACE PROVIDED BELOW:
- --------------------------------------------------------------------------------
2. PROPOSAL TO APPROVE AMENDMENT OF CERTIFICATE OF INCORPORATION
/ / FOR / / AGAINST / / ABSTAIN
3. PROPOSAL TO APPROVE AMENDMENT OF THE BY-LAWS
/ / FOR / / AGAINST / / ABSTAIN
4. PROPOSAL TO APPROVE AMENDMENT OF THE 1994 STOCK OPTION PLAN
/ / FOR / / AGAINST / / ABSTAIN
<PAGE>
5. PROPOSAL TO RATIFY THE APPOINTMENT OF BDO SEIDMAN, LLP AS INDEPENDENT
AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 27, 1997.
/ / FOR / / AGAINST / / ABSTAIN
6. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED ON
THE PROXY BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR ELECTION OF ALL NOMINEES FOR DIRECTOR LISTED IN
PROPOSAL 1 AND FOR PROPOSALS 2, 3, 4 AND 5.
Please sign exactly as names appear on
this proxy. Where shares are held by
joint tenants, both should sign. If
signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in full
corporate name by president or other
authorized person. If a partnership,
please sign in partnership name by an
authorized person.
Dated: _______________________________
______________________________________
(Signature)
PLEASE MARK, SIGN, DATE AND RETURN
THIS
PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
