<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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 Section 240.14a-12
BARR LABORATORIES, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than 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)(4) 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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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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(4) Date Filed:
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<PAGE> 2
[BARR LABORATORIES, INC. LOGO]
BARR LABORATORIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders:
The Annual Meeting of Shareholders of Barr Laboratories, Inc. will be
held on October 26, 2000 at 10:00 a.m. at the Plaza Hotel, 5th Avenue and
Central Park South, New York, NY for the following purposes:
1. To elect a Board of eight Directors to serve until the next
Annual Meeting of Shareholders and until their successors are
elected and qualified;
2. To consider approval of an amendment to the Company's 1993
Stock Incentive Plan;
3. To transact such other business as may properly come before
the meeting.
Owners of record at the close of business on August 28, 2000 will be
entitled to vote at the meeting or at any adjournments or postponements thereof.
Each shareholder is requested to sign and date the enclosed proxy card
and to return it without delay in the enclosed postage-paid envelope. Any
shareholder present at the Annual Meeting may withdraw the proxy and vote
personally on each matter brought before the Annual Meeting.
By Order of the Board of Directors
Paul M. Bisaro
Secretary
2 Quaker Road
P.O. Box 2900
Pomona, New York 10970-0519
September 25, 2000
<PAGE> 3
BARR LABORATORIES, INC.
2 Quaker Road
P.O. Box 2900
Pomona, New York 10970-0519
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
To Be Held October 26, 2000
SOLICITATION AND REVOCABILITY OF PROXIES
This Proxy Statement is furnished in connection with the solicitation
of proxies by the management of Barr Laboratories, Inc., a New York corporation
(the "Company"), for use at the 2000 Annual Meeting of Shareholders of the
Company (the "Annual Meeting") to be held at 10:00 a.m. on October 26, 2000 at
the Plaza Hotel, 5th Avenue and Central Park South, New York, NY and at any
adjournment or postponement thereof. It is anticipated that this Proxy
Statement, together with the form of proxy, will first be mailed to the
Company's shareholders on or before September 25, 2000.
A person giving the enclosed proxy has the power to revoke it at any
time before it is exercised by (i) attending the Annual Meeting and voting in
person, (ii) duly executing and delivering a proxy for the Annual Meeting
bearing a later date or (iii) delivering written notice of revocation to the
Secretary of the Company prior to use of the enclosed proxy at the Annual
Meeting.
The Company will bear the cost of this solicitation of proxies,
including expenses in connection with the preparing, assembling and mailing of
proxy solicitation materials and the charges and expenses of brokerage firms and
others for forwarding solicitation materials to beneficial owners. In addition
to solicitation by mail, proxies may be solicited personally or by telephone by
Directors, Officers or employees of the Company, who will receive no additional
compensation for such services. The Company has retained Continental Stock
Transfer & Trust Company to aid in the solicitation of proxies for which the
Company expects to pay approximately $25,000, plus reimbursable expenses.
RECORD DATE
The close of business on August 28, 2000 is the record date for
determination of holders of the Company's Common Stock, $.01 par value (the
"Common Stock"), entitled to notice of and to vote at the Annual Meeting and any
adjournment or postponement thereof. On that date there were outstanding and
entitled to vote 35,169,337 shares of Common Stock, each entitled to one vote.
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ACTION TO BE TAKEN UNDER THE PROXY
The persons acting under the proxy will vote the shares represented
thereby for the election of the Company's nominees as Directors, and for
approval of the amendment to the Company's 1993 Stock Incentive Plan or, if
otherwise directed by the person executing the proxy, in accordance with such
direction. The Board of Directors does not know of any other business to be
brought before the meeting, but it is intended that, as to any such other
business, a vote may be cast pursuant to the proxy in accordance with the
judgment of the person or persons acting thereunder. Directors are elected by a
plurality of votes cast. Abstentions, broker non-votes and withheld votes will
not be considered as cast votes. The affirmative vote of a majority of all
outstanding shares is required to approve the amendment to the 1993 Stock
Incentive Plan; however, an abstention in connection with such proposal will
have the same legal effect as a vote against such proposal.
PROPOSAL 1. ELECTION OF DIRECTORS
If all of the Company's nominees are elected, the Board of Directors of
the Company will consist of Bruce L. Downey (Chairman), Edwin A. Cohen
(Vice-Chairman), Paul M. Bisaro, Robert J. Bolger, Michael F. Florence, Jacob M.
Kay, Bernard C. Sherman and George P. Stephan, who will serve as Directors until
the 2001 Annual Meeting of Shareholders and until their respective successors
are duly elected and qualified. If any nominee becomes unable or declines to
accept nomination or election, which is not anticipated, it is intended that the
persons acting under the proxy will vote for the election in his stead of such
other person as the Board of Directors recommends. The Company does not have a
standing nominating committee; the current nominees for Directors have been
proposed by the Company's Chairman and the Company's principal shareholder.
Seven meetings of the Board of Directors were held during the fiscal
year ended June 30, 2000. In addition, there were nine committee meetings. No
Director attended fewer than 75% of the total number of meetings of the Board
and all committees on which the Director served.
AUDIT COMMITTEE
The functions of the Audit Committee are to assist the Board in
overseeing and reviewing the Company's internal accounting controls, to review
the audited financial statements and to investigate and make recommendations to
the Board with respect to the appointment of independent auditors. The
Committee, which met four times during the fiscal year ended June 30, 2000, is
composed of Messrs. Stephan and Bolger.
COMPENSATION COMMITTEE
The Compensation Committee is responsible for reviewing and authorizing
the granting of stock options to Officers and other key employees under the
Company's stock option plans and for reviewing compensation to be paid to
Officers and other key personnel of the
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Company. Current members of the Committee, none of whom is an employee of the
Company, are Messrs. Florence and Stephan. Four meetings of the Committee were
held during the fiscal year ended June 30, 2000.
BUSINESS DEVELOPMENT COMMITTEE
The Business Development Committee is responsible for evaluating and
providing advice to management on the merits of various business ventures,
including but not limited to, mergers, acquisitions, joint ventures, strategic
partnerships and other business arrangements. Current members of the Committee
are Messrs. Downey, Cohen, Bisaro and Kay. The Committee met once during the
fiscal year ended June 30, 2000, with all other business development matters
discussed by the full Board of Directors at each Board meeting.
COMPENSATION OF DIRECTORS
During fiscal 2000, directors, excluding Messrs. Downey and Bisaro,
received quarterly retainers of $7,500 covering their attendance at the Board
Meetings and participation in Committee Meetings. During fiscal 2000, Mr. Bolger
received $7,400 for consulting services provided to the Company. During fiscal
2000, Mr. Cohen was paid $200,000 pursuant to his consulting agreement with the
Company which expires on June 30, 2002. Under the Company's 1993 Stock Option
Plan for Non-Employee Directors, as amended, each Director who is not an
employee of the Company (other than a Director who owns 40% or more of the
Common Stock) receives an annual option grant to purchase 7,500 shares at an
option price equal to 100% of the fair market of the Common Stock on the date of
grant. Each option has a ten-year term and becomes exercisable on the date of
the first annual shareholders' meeting immediately following the date of the
grant. On October 28, 1999, each participating Director received a grant of an
option to purchase 7,500 shares at an exercise price of $19.60 per share.
INFORMATION ON NOMINEES
BRUCE L. DOWNEY, 52, became a member of the Board of Directors in
January 1993 and was elected Chairman of the Board and Chief Executive Officer
in February of 1994. From January 1993 to December 1999, he served as the
Company's President and Chief Operating Officer. Prior to assuming these
positions, from 1981 to 1993, Mr. Downey was a partner in the law firm of
Winston & Strawn and a predecessor firm of Bishop, Cook, Purcell and Reynolds.
Mr. Downey is also a Director of Warner Chilcott, plc.
EDWIN A. COHEN, 68, founded the Company in 1970. Mr. Cohen served as
President, Chairman of the Board and Chief Executive Officer until 1994. In
February of 1994, he was elected to the position of Vice Chairman of the Board
and became a consultant to the Company.
PAUL M. BISARO, 39, was elected a Director of the Company in June 1998
and in December 1999 was appointed to the position of President and Chief
Operating Officer. Previously, he served as Senior Vice President - Strategic
Business Development and General
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Counsel. Mr. Bisaro also serves as Secretary. Prior to joining the Company in
1992 as General Counsel, Mr. Bisaro was associated with the law firm of Winston
& Strawn, and a predecessor firm, Bishop, Cook, Purcell and Reynolds.
ROBERT J. BOLGER, 78, was elected a Director of the Company in February
1988. Mr. Bolger has been President of Robert J. Bolger Associates, a marketing
consulting company since January 1988. From 1962 through 1987, he served as
President of the National Association of Chain Drug Stores, a major trade
association.
MICHAEL F. FLORENCE, 63, was elected a Director of the Company in
February 1988. Mr. Florence is President of Sherfam, Inc. and has been since
1989. He is also Vice President of Shermfin Inc., Vice President of Apotex, Inc.
and Vice President of Sherman Delaware, Inc. From January 1964 through April
1989, Mr. Florence was a partner in Wm. Eisenberg & Co., Canadian Chartered
Accountants. He is also President and a Director of Citadel Gold Mines, Inc. Mr.
Florence and Dr. Sherman are brothers-in-law.
JACOB ("JACK") M. KAY, 60, was elected a Director of the Company in
December 1994. Mr. Kay is President of Apotex, Inc., and also serves as Chair of
the Canadian Drug Manufacturers Association. He is also a Director of Humber
River Regional Hospital (Toronto), Chair of the Canadian Schizophrenia
Foundation, and a Director of Cangene Corporation.
BERNARD C. SHERMAN, 58, was Chairman of the Board of the Company from
July 1981 to January 1993. He remains a Director of the Company. Dr. Sherman is
Chief Executive Officer and Chairman of the Board of Apotex, Inc., a Canadian
manufacturer of generic drugs. He is also Chairman of the Board of Cangene
Corp., President of Sherman Delaware, Inc. and President of Shermfin Inc.
GEORGE P. STEPHAN, 67, was elected a Director of the Company in
February 1988. In April 1990, Mr. Stephan retired as Vice Chairman of Kollmorgen
Corporation (NYSE), a diversified, international technology company in which he
had served in several executive capacities for over 20 years. Mr. Stephan was
also a director of Kollmorgen since 1982 and served as Chairman of the Board
from 1991 to 1996. He continued as a director of Kollmorgen until June 2000,
when it was acquired by Danaher Corporation. From 1994 to April 1999 Mr. Stephan
also was a Managing Director of Stonington Group LLC, financial intermediaries
and consultants. He is currently a business consultant and a director of
Sartorius Sports Limited, a privately held specialty sports retailer.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION
OF THE ABOVE NOMINEES.
PROPOSAL 2. APPROVAL OF THE AMENDMENT TO THE 1993 STOCK INCENTIVE PLAN
In December 1993, the shareholders ratified the adoption by the Board
of Directors of the 1993 Stock Incentive Plan (the "Plan"). The purpose of the
Plan, among other things, is to provide competitive incentives that will
attract, retain, motivate and reward employees. After giving effect to the March
1996, May 1997 and June 2000 3-for-2 stock splits, and an amend-
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ment to the plan in 1996, an aggregate of 2,932,785 shares of Common Stock are
available under the Plan, of which 2,276,626 shares are subject to outstanding
options as of June 30, 2000, including 1,726,576 shares subject to options held
by the Company's Officers as a group. The closing price of the Company's Common
Stock on August 28, 2000, as reported on the New York Stock Exchange, was $72.44
per share.
The Board recommends approval of an amendment to the Plan to ensure
that the Company will continue to have an adequate number of shares of Common
Stock available for grants of incentive stock options ("ISOs") that qualify for
special tax treatment under Section 422 of the Internal Revenue Code of 1986, as
amended, and stock options that do not so qualify ("non-qualified stock options"
or "NQSOs"). Upon approval of the amendment the total number of shares of Common
Stock for which options may be granted under this Plan will increase by
1,500,000 shares to an aggregate of 4,432,785 shares. No other provision of the
Plan will be changed by the proposed amendment.
In addition to stock options, the Plan permits the grant of stock
appreciation rights, stock bonuses, restricted stock awards, performance unit
awards and any other awards that provide the participant with the right to
purchase or otherwise acquire shares of Common Stock or that are valued by
reference to the market value of shares of Common Stock. Although the Plan
permits the Committee to grant a wide variety of awards, the Plan does not
obligate the Committee to do so and the Committee has not previously done so and
does not currently anticipate doing so.
Under current law, there are no federal income tax consequences either
to the optionee or to the Company upon the grant of an ISO or a NQSO. On the
exercise of an ISO during employment or within three months thereafter, the
optionee will not recognize any income and the Company will not be entitled to a
deduction, although the excess of the fair market value of the shares on the
date of exercise over the option price is included in the optionee's alternative
minimum taxable income, which may give rise to alternative minimum tax liability
for the optionee. Generally, if the optionee disposes of shares acquired upon
exercise of an ISO within two years of the date of grant or one year of the date
of exercise, the optionee will recognize ordinary income, and the Company will
be entitled to a deduction, equal to the excess of the fair market value of the
shares on the date of exercise over the option price (limited generally to the
gain on the sale). The balance of any gain or loss will be treated as a capital
gain or loss to the optionee. If the shares are disposed of after the two year
and one year periods mentioned above, the Company will not be entitled to any
deduction, and the entire gain or loss for optionee will be treated as a capital
gain or loss. On exercise of a NQSO, the excess of the date-of-exercise fair
market value of the shares acquired over the option price will be generally
taxable to the optionee as ordinary income and deductible by the Company. The
disposition of shares acquired upon exercise of a NQSO will generally result in
a capital gain or loss for the optionee, but will have no tax consequences for
the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL
OF THE AMENDMENT TO THE 1993 STOCK INCENTIVE PLAN.
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<PAGE> 8
OWNERSHIP OF SECURITIES
The following table sets forth information regarding the beneficial
ownership of the Company's voting securities on June 30, 2000, except as noted
below, by (i) each person who beneficially owns more than 5% of the Company's
voting securities; (ii) each Director of the Company; (iii) each Officer of the
Company named in the Summary Compensation Table; and (iv) all Directors and
Officers of the Company as a group.
<TABLE>
<CAPTION>
Name and Address of
Beneficial Owner Number of Shares Common Percent
-------------------------------------------------------------------------------------------------
<S> <C> <C>
Bernard C. Sherman(1) 14,832,038(2) 40.6%
150 Signet Drive, Weston, Ontario, Canada M9L 1T9
Bruce L. Downey(1) 590,903(3) 1.6%
Edwin A. Cohen(1) 280,029(3) *
Paul M. Bisaro(1) 190,361(3) *
George P. Stephan(1) 146,250(3) *
Timothy P. Catlett 80,402(3) *
Jacob M. Kay(1) 72,000(3) *
Robert J. Bolger(1) 61,875(3) *
Salah U. Ahmed 68,355(3) *
Michael F. Florence(1) 34,125(3) *
Mary E. Petit 37,000(3) *
All Directors and Officers
as a group (21 persons) 16,875,580(3) 46.18%
</TABLE>
* Less than 1%
(1) A Director of the Company
(2) Consists of 14,832,038 common shares held of record by Sherman Delaware,
Inc. ("SDI"), of which 14,496,638 shares have been pledged to banks to
secure a guaranty by SDI.
(3) Includes shares of common stock which Directors and Officers have currently
exercisable rights to acquire through the exercise of incentive and
non-qualified options, in the amount of 419,998 shares for Mr. Downey,
131,062 shares for Mr. Cohen, 146,250 shares for Mr. Stephan, 61,875 shares
for Mr. Bolger, 34,125 shares for Mr. Florence, 72,000 shares for Mr. Kay,
28,045 shares for Mr. Ahmed, 173,306 shares for Mr. Bisaro, 22,500 shares
for Ms. Petit, 63,919 shares for Mr. Catlett and 1,479,424 shares for all
Directors and Officers as a group.
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EXECUTIVE COMPENSATION
The following table sets forth as to the Chairman and Chief Executive
Officer, and the four other Executive Officers earning the highest aggregate
compensation in the fiscal year ended June 30, 2000, the compensation earned,
awarded or paid for services rendered to the Company in all capacities during
each of the three fiscal years ended June 30, 2000, in which each such person
served as an Officer.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
------------------------------------------------------------------------------------
Stock All Other
Name & Year Salary Bonus ($) Options Compensation
Principal Position ($)(1) (#)(2) ($)(3)
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Bruce L. Downey 2000 $550,000 $300,000 60,000 $84,901
Chairman and 1999 548,654 300,000 74,999 15,000
CEO 1998 498,846 300,000 59,999 15,000
Paul M. Bisaro 2000 259,250 110,000 40,000 35,425
President, COO 1999 239,731 95,000 29,999 17,000
& Secretary 1998 229,539 90,000 29,999 15,000
Mary E. Petit 2000 240,000 95,000 -- 33,500
Senior Vice President 1999 239,731 95,000 22,500 17,000
Prop. Product Devel. 1998 229,539 90,000 22,500 15,000
Timothy P. Catlett 2000 234,692 90,000 20,000 32,469
Senior Vice President 1999 224,596 90,000 29,999 16,250
Sales & Marketing 1998 209,307 80,000 22,500 15,000
Salah U. Ahmed 2000 199,692 105,000 20,000 30,469
Vice President 1999 189,461 105,000 22,500 16,000
Product Development 1998 169,539 95,000 22,500 15,000
</TABLE>
(1) Includes amounts deferred by the employee (a) for all years under the
Company's Savings and Retirement Plan, and (b) for 2000 under the
Company's Excess Savings and Retirement Plan.
(2) Stock options adjusted for the June 2000 3-for-2 stock split effected
in the form of a 50% stock dividend.
(3) The amounts shown in this column represent the Company's annual
contributions to its Savings and Retirement Plan and, in fiscal 2000,
also includes its annual contribution to the Company's Excess Savings
and Retirement Plan.
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OPTION GRANTS
The following table shows all stock options that were granted to the
Officers named in the Summary Compensation Table during the fiscal year ended
June 30, 2000.
OPTION GRANTS IN THE LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants (1)
-------------------------
Number of % of Total Potential Realizable Value at
Shares Options Assumed Annual Rates
Underlying Granted to Per Share Of Stock Price Appreciation
Options Employees In Exercise or Expiration for Option Term
---------------------------------
Name Granted (#) Fiscal Year Base Price Date 5%($) 10%($)
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Bruce L. Downey 74,999 12% $24.890 8/11/09 $ 1,173,973 $ 2,975,079
Salah U. Ahmed 22,500 4% $24.890 8/11/09 352,197 892,536
Paul M. Bisaro 29,999 5% $24.890 8/11/09 469,580 1,190,008
Timothy P. Catlett 29,999 5% $24.890 8/11/09 469,580 1,190,008
Mary E. Petit 22,500 4% $24.890 8/11/09 352,197 892,536
All Shareholders (2) $981,532,778 $2,487,396,772
</TABLE>
(1) Consists of options granted under the Company's 1993 Stock Incentive
Plan, as amended. All options listed were granted on August 11, 1999.
This plan permits the Compensation Committee in its discretion to
cancel any option granted under such plan and re-grant it at a lower
price, however, no such action was taken during the fiscal year.
(2) Potential realizable values for all shareholders are based on
34,827,937 shares outstanding as of June 30, 2000, and the per share
market price of $44.813 on that date.
Note: The dollar amounts under the 5% and 10% columns in the table
above are the result of calculations required by the Securities and
Exchange Commission's rules and therefore are not intended to forecast
possible future appreciation of the stock price of the Company.
Although permitted by the SEC's rules, the Company did not use an
alternate formula for a grant date valuation because the Company is not
aware of any formula which will determine with reasonable accuracy a
present value based on future unknown or volatile factors.
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OPTION EXERCISES AND OPTION VALUES
The following table provides information as to the value of options
exercised and options held by Officers named in the Summary Compensation Table.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR END JUNE 30, 2000 OPTION VALUES
<TABLE>
<CAPTION>
Shares Number of Shares Subject to Value of Unexercised In-the-
Acquired Value Unexercised Options at Year-End Money Options at Year-End(2)
Name on Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Bruce L. Downey -- $ -- 419,998 134,996 $14,341,126 $2,750,055
Salah U. Ahmed 61,141 1,131,994 28,045 42,499 755,171 873,288
Paul M. Bisaro 28,499 703,939 173,306 54,997 6,066,725 1,133,727
Timothy P. Catlett 32,421 900,533 63,919 52,498 1,899,677 1,068,618
Mary E. Petit 56,301 1,600,074 22,500 44,999 442,181 919,219
</TABLE>
(1) Valued at the difference between the fair market value of the shares at
the time of exercise and the options' exercise price.
(2) Valued at the difference between the fair market value of the shares at
June 30, 2000 ($44.813) and the options' exercise price.
Note: All options held by these individuals are in the money based on the
June 30, 2000 closing price of $44.813 per share.
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<PAGE> 12
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Regulations of the Securities and Exchange Commission require the
Compensation Committee of the board of directors of a publicly-traded company to
publish in each proxy statement involving the election of directors a report
addressing certain aspects of executive officer compensation for the last
completed fiscal year. The following report is provided pursuant to those
regulations.
The Compensation Committee decides or recommends to the Board for its
decision on all matters of policy relating to compensation of executive
management and approves the salaries of Officers (other than an
Officer-Director, whose salary is approved by the Board). The Committee also
approves grants of stock options.
Compensation programs for executive officers are designed to attract,
retain and motivate employees who will contribute to the achievement of
corporate goals and objectives. Elements of executive compensation include
salaries, bonuses and awards of stock options, with the last two being variable.
In making its decisions or recommendations, the Committee takes into account
factors it deems relevant to the specific compensation component being
considered, including compensation paid by other business organizations of
comparable size in the same industry and related industries, profitability, the
attainment of annual individual and business objectives, an assessment of
individual contributions relative to others and historic compensation awards.
The Committee considered the factors described above in determining Mr.
Downey's total compensation. Specifically, the Committee and the Board
recognized that during fiscal 2000, under Mr. Downey's leadership, the Company,
among other things, met strategic objectives approved by the Company's Board of
Directors. During fiscal 2000, the Company reported the most successful and
profitable year in its history, resulting from the achievement of several key
corporate objectives. These included the continued market share expansion of
Tamoxifen Citrate and Warfarin Sodium. The Company also continued the execution
of its patent challenge strategy, including arguing the successful appeal of the
Prozac(R) patent challenge and initiating the challenge of two branded oral
contraceptives. Also during fiscal 2000, the Company made significant progress
in its transition from a pure generic pharmaceutical manufacturer to a fully
integrated, specialty pharmaceutical company, with the filing of Investigational
New Drug(IND) applications with the FDA for the CyPat(TM) therapy related to the
symptoms of prostate cancer therapy and the SEASONALE(TM) oral contraceptive. In
addition, the Company completed an alliance with DuPont Pharmaceuticals that
simultaneously provided co-development funding for three of the Company's
proprietary products, a marketing partner with a fourth product, and allowed
Barr to enter proprietary product marketing by assuming responsibility for
DuPont's VIAPSPAN(R) organ transplant preservation agent. The Company also
effected its third stock split in four years.
Section 162(m) of the Internal Revenue Code limits deductibility of
compensation in excess of $1,000,000 paid in any one year to the Company's chief
executive officer and to each of the other four highest paid executive officers.
Under the Code and corresponding regulations, compensation that is based on
attainment of pre-established, objective performance goals and complies with
certain other requirements will be excluded from the $1,000,000 deduction
limitation. Regulations under Section 162(m) provide that gain realized upon the
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<PAGE> 13
exercise of stock options can qualify as "performance-based" compensation if
various conditions are satisfied. Certain of those conditions were not satisfied
for some of the options outstanding under the Company's 1993 Stock Incentive
Plan and 1986 Stock Option Plan. When the Company became aware of this
situation, it took the action required so that the gain realized from exercising
options granted thereafter will be excluded from the deductibility limitations
under Section 162(m). During the fiscal year ended June 30, 2000 all taxable
income of the Company's chief executive officer and its other four highest paid
executive officers in excess of $1,000,000 qualified as "performance-based"
compensation.
The Compensation Committee
Michael F. Florence
George P. Stephan
EXECUTIVE AGREEMENTS
On January 4, 1993, the Company employed Mr. Downey as President and
Chief Operating Officer. He was subsequently elected Chairman of the Board and
Chief Executive Officer. Mr. Downey's Employment Agreement, entered into in
1993, continues from year-to-year unless terminated by either party. Under the
Agreement, he is paid a base salary, presently $650,000 per year, and is
eligible for an annual bonus at the discretion of the Compensation Committee. If
the Agreement is terminated by the Company without cause or by Mr. Downey for
good reason, he will be entitled to a lump sum payment equal to 18 months base
salary then in effect.
On October 28, 1999, the Company elected Mr. Bisaro to the position of
President and Chief Operating Officer. Mr. Bisaro's Employment Agreement
continues from year-to-year unless terminated by either party. Under the
Agreement, he is paid a base salary, presently $325,000 per year, and is
eligible for an annual bonus at the discretion of the Compensation Committee. If
the Agreement is terminated by the Company without cause or by Mr. Bisaro for
good reason, he will be entitled to a lump sum payment equal to 18 months base
salary then in effect.
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<PAGE> 14
PERFORMANCE GRAPH
The graph below compares the cumulative total shareholder returns on
the Common Stock (BRL) for the last five fiscal years with the cumulative total
return of the Standard & Poor's Health Care Drugs Index and the Standard &
Poor's 500 Index over the same period, assuming an investment of $100 in the
Common Stock, the S&P Health Care Drugs Index and the S&P 500 Index on June 30,
1995, and reinvestment of dividends.
Comparison of Five Year Cumulative Total Return
[LINE GRAPH]
FISCAL YEAR ENDED JUNE 30
$100 Invested on 06/30/95
<TABLE>
<CAPTION>
JUNE 30,
COMPANY/INDEX NAME 1995 1996 1997 1998 1999 2000
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Barr Laboratories, Inc. $100 $178.61 $457.80 $413.58 $414.88 $699.36
S&P Health Care Drugs Index 100 148.73 232.52 347.88 382.62 440.55
S&P 500 Index 100 126.00 169.73 220.92 271.19 280.85
</TABLE>
12
<PAGE> 15
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the fiscal year ended June 30, 2000, the Company sold certain of
its pharmaceutical products and bulk pharmaceutical materials in the amount of
$7,479,000 to companies owned or controlled by Dr. Bernard Sherman, a Director
of the Company. The Company also purchased bulk pharmaceutical materials from a
company owned by Dr. Sherman in the amount of $2,716,000. The Company believes
the amounts of such transactions approximate the amounts of similar transactions
with unaffiliated third parties.
During fiscal 1996, the Company also entered a multi-year agreement
with a company owned by Dr. Sherman to share costs in connection with one of its
patent challenges. For the year ended June 30, 2000, the Company received
$668,000 in connection with such agreement.
During the fiscal year ended June 30, 1999, the Company obtained
multi-year directors and officers liability insurance coverage from National
Union Fire Insurance Company of Pittsburgh, Pennsylvania and Federal Insurance
Company. These policies cover the period from October 1, 1998 through September
30, 2001 and insure the Company for certain obligations incurred in the
indemnification of its Directors and Officers under New York law and insure
Directors and Officers where such indemnification is not provided by the
Company. The three-year cost of the policies is $638,957.
The Company has also purchased an insurance policy from Federal
Insurance Company that provides coverage for employees (including officers) who
are fiduciaries of the Company's employee benefit plans against expenses and
defense costs incurred as a result of alleged breaches of fiduciary duty as
defined in ERISA. The one-year cost of the current policy is $6,120.
RECEIPT OF SHAREHOLDER PROPOSALS
Any shareholder proposal intended to be presented at the 2001 Annual
Meeting must be received by the Company at 2 Quaker Road, P.O. Box 2900, Pomona,
New York 10970-0519; Attention: The Secretary, not later than May 28, 2001.
OTHER MATTERS
Services performed by Deloitte & Touche LLP, the Company's independent
accountants, for the year ended June 30, 2000, consisted of an audit of the
consolidated financial statements of the Company, an audit of the financial
statements of the Barr Laboratories, Inc. Savings and Retirement Plan,
preparation of the Company's federal and state tax returns, and limited
assistance and consultation in connection with pending accounting and tax
matters.
The Company expects representatives of Deloitte & Touche LLP to be
present at and available to respond to appropriate questions which may be raised
at the Annual Meeting. Representatives of Deloitte & Touche LLP will have the
opportunity to make a statement if they so desire.
13
<PAGE> 16
BARR LABORATORIES, INC. PROXY
The undersigned hereby acknowledge receipt of the Proxy Statement and Notice of
Annual Meeting to be held October 26, 2000.
Date: __________________, 2000
________________________(SEAL)
________________________(SEAL)
(Please sign exactly as your
name appears hereon. If stock
is registered in more than one
name, each holder should sign.
When signing as an attorney,
administrator, executor,
guardian or trustee, please
add your title as such. If
executed by a corporation, the
proxy should be signed by a
duly authorized officer).
PLEASE DATE AND PROMPTLY
RETURN THIS PROXY IN THE
ENCLOSED ENVELOPE. NO POSTAGE
IS REQUIRED IF MAILED IN THE
UNITED STATES.
I PLAN TO ATTEND:___Yes ___No
<PAGE> 17
BARR LABORATORIES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD OCTOBER 26, 2000
The undersigned hereby appoints Bruce L. Downey and Edwin A. Cohen, jointly or
individually, proxies with the power of substitution to vote all shares the
undersigned is entitled to vote at the Annual Meeting of Shareholders at 10:00
AM, on October 26, 2000, at the Plaza Hotel, 5th Avenue and Central Park
South, New York, NY or adjournments thereof.
1. ELECTION OF DIRECTORS / / For all nominees listed below (except as
marked)
/ / Withhold authority to vote for nominees
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW).
Paul M.Bisaro, Robert J. Bolger, Edwin A. Cohen, Bruce L. Downey, Michael F.
Florence, Jacob M. Kay, Bernard C. Sherman, George P. Stephan
2. AMENDMENT OF 1993 STOCK INCENTIVE PLAN
For / / Against / / Abstain / /
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY COME BEFORE THE MEETING OR ADJOURNMENTS THEREOF.
THIS PROXY, DULY EXECUTED, WILL BE VOTED AS SPECIFIED.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 and 2.
