<PAGE> 1
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 (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 Rule 14a-11(c) or Rule 14a-12
Walgreen Co.
- --------------------------------------------------------------------------------
(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:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(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:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
WALGREENS LOGO
200 WILMOT ROAD
DEERFIELD, ILLINOIS 60015
November 24, 1998
Dear Walgreens Shareholder:
You are cordially invited to our Annual Shareholders' Meeting on Wednesday,
January 13, 1999, at 2:00 p.m., Central Standard Time. The meeting will be held
in the Grand Ballroom of Navy Pier, 600 East Grand Avenue, Chicago, Illinois.
We have selected this new location to more comfortably accommodate our
growing number of attendees. Navy Pier offers ample indoor parking and is
accessible by public transportation, with service provided by six CTA bus lines.
As usual, we will offer a sign language interpreter for the
hearing-impaired. If you would like to take advantage of this service, please
watch for a sign directing you to a special area or seek assistance from one of
our ushers.
We look forward to welcoming you to Navy Pier January 13. Whether or not
you plan to attend, it is important that you vote your proxy promptly in
accordance with the voting instructions on the enclosed proxy card.
Our best wishes for a happy holiday season!
Sincerely,
C.R. WALGREEN III
C. R. WALGREEN III
Chairman
L. DANIEL JORNDT
L. DANIEL JORNDT
CEO and President
<PAGE> 3
WALGREEN CO. LOGO
200 WILMOT ROAD
DEERFIELD, ILLINOIS 60015
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD WEDNESDAY, JANUARY 13, 1999
TO THE SHAREHOLDERS OF WALGREEN CO.:
The Annual Meeting of Shareholders of WALGREEN CO., an Illinois
corporation, will be held at the Grand Ballroom of Navy Pier, 600 East Grand
Avenue, Chicago, Illinois, on Wednesday, January 13, 1999, at 2:00 P.M. Central
Standard Time. The Annual Meeting is for the following purposes:
(1) To elect eleven directors to hold office until the next Annual Meeting
of Shareholders or until their successors are elected and qualified;
and
(2) To transact such other business as may properly come before the
meeting, or any adjournment thereof.
Only shareholders of record at the close of business on November 16, 1998,
are entitled to vote at the meeting.
Shareholders are cordially invited to attend the Annual Meeting. If
attending, you should bring the admission ticket attached to the enclosed proxy.
Please sign, date and return the proxy in the envelope provided whether or not
you plan to attend the Annual Meeting in person. The proxy may be revoked at any
time before it is voted. If you are present at the meeting, you may vote your
shares in person and the proxy will not be used. If you hold shares through a
broker or other custodian, please check the voting instructions used by that
broker or custodian.
For further information concerning individuals nominated as directors and
the use of the proxy, you are respectfully urged to read the proxy statement on
the following pages.
The Company's Annual Report to shareholders for 1998 is enclosed with this
proxy statement.
By order of the Board of Directors.
Julian A. Oettinger
JULIAN A. OETTINGER
Secretary
November 24, 1998
<PAGE> 4
WALGREEN CO. LOGO
200 WILMOT ROAD
DEERFIELD, ILLINOIS 60015
November 24, 1998
PROXY STATEMENT
This proxy statement is being sent on November 24, 1998, in connection with
the solicitation of proxies to be voted at the Annual Meeting of Shareholders of
Walgreen Co. to be held on January 13, 1999, and further to inform the
shareholders concerning the use of the proxy and the business to be transacted
at the meeting.
The enclosed proxy is solicited by the Board of Directors of the Company.
The proxy may be revoked at any time before it is voted, provided that written
notice thereof has been given to the Secretary of the Company. The items
enumerated herein constitute the only business which the Board of Directors
intends to present or is informed that others will present at the meeting. The
proxy does, however, confer discretionary authority upon the persons named
therein, or their substitutes, with respect to any other business which may
properly come before the meeting. Shareholders are entitled to one vote for each
share. Only shareholders of record at the close of business on November 16,
1998, are entitled to notice of, and to vote at, the meeting.
The expenses in connection with the solicitation of proxies will be borne
by the Company. Solicitation will be made by mail, but may in some cases also be
made by telephone or personal call by officers, directors or regular employees
of the Company who will not be specially compensated for such solicitation. The
Company may request brokerage houses and other nominees or fiduciaries to
forward copies of the Company's proxy material and Annual Report to beneficial
owners of stock held in their names, and the Company may reimburse them for
reasonable out-of-pocket expenses incurred in so doing. The Company may also
elect to retain professional solicitors to assist in the solicitation of
proxies. Any professional solicitors will be paid by the Company.
ELECTION OF DIRECTORS
There are eleven nominees for election to the Board of Directors. All of
the incumbent directors have been nominated for re-election. David W. Bernauer
and Alan G. McNally are being nominated for election to the Board of Directors
for the first time this year.
In the election of the Board of Directors, shareholders have the right to
vote the number of shares owned by them for each of the eleven nominees.
Alternatively, shareholders may cumulate their votes and give eleven votes to
one nominee for each share owned, or they may distribute their votes on the same
principal among as many nominees as they choose. Directors are elected by the
votes of a majority of the shares represented in person or by proxy at the
meeting. Withheld votes have the effect of votes against the election of
directors, since there are fewer votes for election. Broker non-votes will not
count as votes. As of the close of business on November 16, 1998, the Company
had outstanding 498,850,475 shares of Common Stock.
Proxy votes will be cast for the election of the nominees named below to
hold office for one year or until their successors are elected and qualified,
but should any of such individuals unexpectedly become unavailable for election,
the proxies reserve the right to nominate and vote for such other person as they
shall designate.
<PAGE> 5
The following tabulation sets forth the names, ages, principal occupations
and other information respecting the director nominees:
<TABLE>
<CAPTION>
NAMES AND AGES OF DIRECTOR NOMINEES, PERIOD OF SERVICE
THEIR PRINCIPAL OCCUPATIONS AS DIRECTOR
AND OTHER INFORMATION BEGAN IN
------------------------------------ -----------------
<S> <C>
Charles R. Walgreen III, 63--Chairman of the Board. Until 1963
January 1998, Mr. Walgreen was also Chief Executive
Officer.
David W. Bernauer, 54--Senior Vice President (since July
1996) and Chief Information Officer (since February 1995).
Mr. Bernauer was a Vice President from February 1990 to
July 1996. Effective January 1999, he will be Chief
Operating Officer and President.
William C. Foote, 47--Chairman of the Board and Chief 1997
Executive Officer of USG Corporation (since August 1997).
Until August 1997, Mr. Foote was also President of USG
Corporation. From January 1996 through March 1996, Mr.
Foote was Chief Executive Officer and President of USG
Corporation. Mr. Foote was Chief Operating Officer and
President of USG Corporation from January 1994 through
December 1995; and Chief Executive Officer and President
of USG Interiors, Inc. from January 1993 through December
1993.
Mr. Foote is also a director of USG Corporation and GATX
Corporation.
James J. Howard, 63--Chairman of the Board, Chief Executive 1986
Officer and President of Northern States Power Company.
Mr. Howard is also a director of Northern States Power
Company, Honeywell Inc., Ecolab, Inc., ReliaStar Financial
Corp. (formerly NWNL Companies, Inc.) and the Federal
Reserve Bank of Minneapolis.
Charles D. Hunter, 68--Retired Vice Chairman and Chief 1974
Financial Officer.
L. Daniel Jorndt, 57--Chief Executive Officer (since January 1990
1998), Chief Operating Officer and President. In January
1999, David W. Bernauer will become Chief Operating
Officer and President.
Alan G. McNally, 53--Chairman of the Board (since April
1998) and President (since April 1994) of Bankmont
Financial Corporation. Chairman of the Board (since April
1995) of Harris Bankcorp, Inc., Harris Bankmont, Inc. and
Harris Trust and Savings Bank. Mr. McNally has been Chief
Executive Officer of Harris Bankcorp, Inc. and Harris
Trust and Savings Bank since September 1993; Chief
Executive Officer of Harris Bankmont, Inc. since October
1994; and Vice Chairman of Bank of Montreal since 1990.
Cordell Reed, 60--Former Senior Vice President of 1994
Commonwealth Edison Co. (retired 1997).
Mr. Reed is also a director of LaSalle National Corporation,
LaSalle National Bank and LaSalle Bank F.S.B.
John B. Schwemm, 64--Former Chairman and Chief Executive 1985
Officer of R.R. Donnelley & Sons Company.
Mr. Schwemm is also a director of USG Corporation and
William Blair Mutual Funds, Inc.
William H. Springer, 69--Former Vice Chairman of Ameritech 1988
Corporation.
Mr. Springer is also a director of Baker, Fentress and
Company and a trustee of Northern Institutional Funds and
the Goldman Sachs group of investment funds.
Marilou M. von Ferstel, 60--Former Executive Vice President 1987
and General Manager of Ogilvy Adams & Rinehart (retired
1997).
Ms. von Ferstel is also a director of Illinova Corporation.
</TABLE>
2
<PAGE> 6
INFORMATION CONCERNING THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors met four times and there were 16 meetings of Board
Committees during the 1998 fiscal year. All directors attended more than 75% of
the aggregate of the meetings of the Board of Directors and the meetings of the
Board Committees on which he or she served.
COMPENSATION OF DIRECTORS
Full-time employees of the Company who serve as Directors receive only
reimbursement of expenses incurred in attending meetings. During fiscal year
1998, Directors who were not employees received a quarterly retainer of $6,375
for Board service, a fee of $1,200 for each Board of Directors and Board
Committee meeting attended, and reimbursement for expenses incurred in
connection with such meetings.
Mr. Hunter received $122,222 in consulting fees from the Company during
fiscal 1998 pursuant to a Consulting Agreement entered into prior to his
retirement as an officer of the Company. The Consulting Agreement, which ended
June 7, 1998, provided Mr. Hunter with one year's base salary over a three-year
term for consulting services. Mr. Hunter did not receive Director's fees during
the time period his Consulting Agreement was in effect.
Mr. Walgreen III did not receive Director's fees. He received $245,750 in
consulting fees from the Company during fiscal 1998 pursuant to a Consulting
Agreement entered into prior to his retirement as Chief Executive Officer of the
Company. The Consulting Agreement provides Mr. Walgreen III with 150% of his
base salary in effect at retirement over a three-year term for consulting
services and ends February 27, 2001.
Messrs. Howard, Schwemm, Springer and Ms. von Ferstel participated in
unfunded deferred compensation plans offered prior to 1993 that permitted
Directors to defer a portion of his or her retainer fees. During fiscal 1998,
payments were made to Directors under such plans as follows: Mr. Howard,
$25,050; Mr. Schwemm, $25,050; Mr. Springer, $19,894; and Ms. von Ferstel,
$22,950.
Effective November 1996, the Company established the Walgreen Co.
Nonemployee Director Stock Plan pursuant to which each nonemployee Director of
the Company will receive an annual equity grant, the amount of which is subject
to adjustment on an annual basis. In fiscal 1998, each director received a grant
of 1,400 shares. During the term of the Plan, each Director will also receive
fifty percent of his or her quarterly retainer in the form of shares, which may
be deferred into stock units. In addition, a Director may elect to receive all
or a portion of the cash component of his or her quarterly retainer and meeting
fees in the form of deferred stock units or to have such amounts placed in a
deferred cash compensation account. This Plan is a replacement for certain
compensation arrangements for nonemployee Directors in effect prior to November
1996, under the Walgreen Co. Retirement Plan for Outside Directors. The Walgreen
Co. Retirement Plan for Outside Directors will continue to apply in the future
only with respect to compensation earned by nonemployee Directors for periods of
service prior to November 1, 1996. Under the terms of the Walgreen Co.
Retirement Plan for Outside Directors, the annual benefits payable to a Director
for the shorter of (i) the number of years the Director served as a non-employee
member of the Board, or (ii) ten years, were equal to the sum of 80% of the
annual Board retainer in effect on the date of retirement, plus 4% of the
Director's final annual retainer for each year of service as a non-employee
Director in excess of ten years. In no case could the annual benefit payment
exceed 100% of the annual retainer in effect and payable to the Director on the
date of his or her retirement from the Board of Directors.
COMMITTEES
The Board of Directors had standing Executive, Audit, Compensation, Finance
and Nominating and Governance Committees during fiscal 1998, each of which is
described below.
The Executive Committee met three times during the fiscal year. The
Committee is composed of L. Daniel Jorndt, Chairman; Charles D. Hunter; Cordell
Reed; John B. Schwemm and William H. Springer. During intervals between meetings
of the Board of Directors, the Executive Committee possesses such powers of the
Board of Directors in the management of the business and affairs of the Company
as may be delegated
3
<PAGE> 7
by the Board of Directors, subject to such limitations as may be imposed by law
and the By-Laws of the Company.
The Audit Committee met four times during the fiscal year. The Committee is
composed of John B. Schwemm, Chairman; William C. Foote; and Marilou M. von
Ferstel. The Committee's responsibilities include evaluation of significant
matters relating to the audit and internal controls of the Company and review of
the scope and results of audits by the independent auditors.
The Compensation Committee met four times during the fiscal year. The
Committee is composed of William H. Springer, Chairman; James J. Howard; and
John B. Schwemm. The Committee reviews the Company's remuneration policies and
practices, including executive salaries, compensation and other employee
benefits; and administers the Company's Restricted Performance Share Plan, the
1982 Employees Stock Purchase Plan, the Executive Stock Option Plan, the 1986,
1988, 1992 and 1997 Executive Deferred Compensation/Capital Accumulation Plans,
the Walgreen Co. Section 162(m) Deferred Compensation Plan and the Walgreen Co.
Nonemployee Director Stock Plan.
The Finance Committee met four times during the fiscal year. The Committee
is composed of Charles D. Hunter, Chairman; L. Daniel Jorndt; Cordell Reed; and
Charles R. Walgreen III. The Finance Committee reviews the financial
requirements and practices of the Company and makes recommendations to the Board
of Directors concerning such matters.
The Nominating and Governance Committee met one time during the fiscal
year. The Committee is composed of John B. Schwemm, Chairman; James J. Howard;
and Marilou M. von Ferstel. The Nominating and Governance Committee considers
matters related to corporate governance, develops general criteria regarding the
qualifications and selection of board members and recommends candidates for
election to the Board of Directors. The Nominating and Governance Committee will
consider persons recommended by shareholders for inclusion as nominees for
election to the Board of Directors, if the names of such persons are submitted
in writing in a timely manner to the Secretary of the Company. All
recommendations should be accompanied by a complete statement of such person's
qualifications and an indication of the person's willingness to serve.
4
<PAGE> 8
SECURITIES OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following tabulation sets forth information as of November 16, 1998,
concerning the ownership of Common Stock by each Director, each of the executive
officers named in the Summary Compensation Table included in this proxy
statement, and all Directors and executive officers as a group. Except as
otherwise noted, the individual named possessed sole voting and investment power
over such shares.
<TABLE>
<CAPTION>
AMOUNT OF SHARES PERCENT OF
NAME OF INDIVIDUAL BENEFICIALLY OWNED CLASS
------------------ --------------------- ----------
<S> <C> <C>
Charles R. Walgreen III..................................... 2,738,589(1)(2)(3)(9) .5479
David W. Bernauer........................................... 178,353(3)(4)(9) .0357
Vernon A. Brunner........................................... 439,567(3)(9) .0881
William C. Foote............................................ 3,841 .0008
James J. Howard............................................. 16,626 .0033
Charles D. Hunter........................................... 3,419,426(1)(7)(9) .6852
L. Daniel Jorndt............................................ 786,557(3)(5)(9) .1575
Glenn S. Kraiss............................................. 172,113(3)(6)(9) .0345
Alan G. McNally............................................. 3,000 .0006
Cordell Reed................................................ 7,757 .0016
John A. Rubino.............................................. 166,994(3)(8)(9) .0335
John B. Schwemm............................................. 19,304(10) .0039
William H. Springer......................................... 18,957 .0038
Marilou M. von Ferstel...................................... 11,000(11) .0022
All Directors and executive officers as a group (24
individuals).............................................. 9,405,113(3)(9)(12) 1.8731
</TABLE>
- ------------
(1) Included in the table for Mr. Hunter are 66,977 shares owned by four trusts
for which he serves as a co-trustee. Mr. Hunter possesses shared voting
power and investment power with others with respect to all of the shares
held by such trusts. These shares are listed pursuant to the requirements
of Section 13(d) of the Securities Exchange Act of 1934 and the definition
of beneficial ownership therein. Mr. Hunter disclaims any beneficial
interest in these shares. Mr. Walgreen III has shared beneficial interest
in 27,489 shares owned by one of the trusts; these shares are also included
in the table for Mr. Walgreen III. In addition, the table for Mr. Hunter
contains 2,979,255 shares owned by nineteen other trusts for which he
serves as co-trustee. These shares are also listed pursuant to the
requirements of Section 13(d) of the Securities Exchange Act of 1934. Mr.
Hunter disclaims any beneficial interest in these shares.
(2) Does not include 5,613 shares owned by Mr. Walgreen III's wife, 66,536
shares held in trust for her benefit, and 26,014 shares owned by other
family members. These shares are noted pursuant to the requirements of
Section 13(d) of the Securities Exchange Act of 1934 and the definition of
beneficial ownership therein. Mr. Walgreen III disclaims any beneficial
interest in these shares.
(3) Includes shares granted pursuant to the Walgreen Restricted Performance
Share Plan as follows: Mr. Walgreen III, 5,473 shares; Mr. Bernauer, 8,695
shares; Mr. Brunner, 14,241 shares; Mr. Jorndt, 29,112 shares; Mr. Kraiss,
14,241 shares; Mr. Rubino, 9,607 shares; all Directors and executive
officers as a group, 144,514 shares. Each individual possesses sole voting
power with respect to these shares.
(4) Does not include 20,000 shares owned by Mr. Bernauer's wife. Mr. Bernauer
disclaims any beneficial interest in such shares.
(5) Does not include 58,812 shares owned by Mr. Jorndt's wife. Mr. Jorndt
disclaims any beneficial interest in such shares.
(6) Does not include 5,947 shares owned by Mr. Kraiss' wife. Mr. Kraiss
disclaims any beneficial interest in such shares.
(7) Does not include 274,296 shares held in trust for the benefit of Mr.
Hunter's wife. Mr. Hunter serves as a co-trustee for such trust and
disclaims any beneficial interest in such shares.
5
<PAGE> 9
(8) Does not include 21,761 shares owned by Mr. Rubino's wife. Mr. Rubino
disclaims any beneficial interest in such shares.
(9) Includes shares of stock which may be acquired within 60 days after
November 16, 1998, by exercise of stock options as follows: Mr. Walgreen
III, 985,080 shares; Mr. Bernauer, 131,656 shares; Mr. Brunner, 288,616
shares; Mr. Hunter, 210,496 shares; Mr. Jorndt, 541,092 shares; Mr. Kraiss,
157,872 shares; Mr. Rubino, 131,244 shares; all Directors and executive
officers as a group, 3,260,542 shares.
(10) Does not include 2,400 shares owned by Mr. Schwemm's wife. Mr. Schwemm
disclaims any beneficial interest in these shares.
(11) Does not include 2,000 shares owned by Ms. von Ferstel's husband. Ms. von
Ferstel disclaims any beneficial interest in these shares.
(12) Includes 139,097 shares held by family members of executive officers, the
beneficial ownership of which has been disclaimed by such officers in
reports filed with the Securities and Exchange Commission.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who beneficially own more than ten
percent (10%) of the Company's Common Stock, to file initial reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Based on a review of the copies of such forms furnished to the Company and
written representations from the Company's executive officers and directors, the
Company believes that all forms were filed in a timely manner during fiscal
1998, except that Glenn S. Kraiss filed a report showing option exercises and
related sales twelve days late and Marilou M. von Ferstel filed one report
showing a sale of 557 shares two months late.
6
<PAGE> 10
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes the compensation of the Company's Chairman,
the Chief Executive Officer, and the next four most highly compensated executive
officers for the last three fiscal years.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
-------------------------------------- ----------------------------------------
AWARDS PAYOUTS
--------------------------- ----------
OTHER SECURITIES
ANNUAL RESTRICTED UNDERLYING
COMPEN- STOCK OPTIONS LTIP
NAME AND PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($)(1) SATION($) AWARD(S)($)(2) (#) PAYOUTS($)
- ------------------------------ ---- ------------ ----------- --------- -------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles R. Walgreen III(4) 1998 491,500 310,778 303,157 147,429 109,475 0
Chairman of the Board and 1997 924,667 603,487 226,815 273,900 0 0
former Chief Executive
Officer 1996 869,667 490,565 129,821 240,174 0 0
L. Daniel Jorndt 1998 806,667 507,379 115,196 215,985 280,185 0
Chief Executive Officer,
Chief 1997 678,333 438,591 92,825 200,987 0 0
Operating Officer and
President 1996 636,667 355,588 12,237 175,739 0 0
Vernon A. Brunner 1998 399,583 243,793 93,300 103,925 28,584 0
Executive Vice President 1997 376,667 236,656 75,314 98,538 0 0
1996 356,667 193,385 39,407 86,608 0 0
Glenn S. Kraiss 1998 399,583 243,793 95,551 103,925 28,584 0
Executive Vice President 1997 376,667 236,656 72,439 98,538 0 0
1996 356,667 193,385 44,197 86,608 0 0
John A. Rubino 1998 294,500 175,751 37,169 70,064 18,969 0
Senior Vice President 1997 279,500 171,612 42,607 66,479 0 0
1996 264,500 139,992 22,154 58,457 0 0
David W. Bernauer 1998 292,000 174,133 28,841 68,879 18,645 0
Senior Vice President 1997 266,167 162,687 21,461 62,865 0 0
1996 233,000 121,744 16,508 49,074 0 0
<CAPTION>
ALL OTHER
COMPENSATION
NAME AND PRINCIPAL POSITION ($)(3)
- ------------------------------ ------------
<S> <C>
Charles R. Walgreen III(4) 452,456
Chairman of the Board and 589,882
former Chief Executive
Officer 515,785
L. Daniel Jorndt 410,486
Chief Executive Officer,
Chief 377,328
Operating Officer and
President 349,839
Vernon A. Brunner 220,595
Executive Vice President 209,579
198,484
Glenn S. Kraiss 242,700
Executive Vice President 231,101
217,750
John A. Rubino 139,124
Senior Vice President 143,347
135,701
David W. Bernauer 143,565
Senior Vice President 128,022
102,378
</TABLE>
- ------------
(1) Includes amounts earned in fiscal year, whether or not deferred.
(2) All restricted shares reflected in this column were granted as a result of
the attainment of performance goals under the Restricted Performance Share
Plan (a description of the Plan and the performance measures are provided in
the Compensation Committee Report on Executive Compensation). Fifty percent
of the award earned in 1998 is payable in cash (reflected in the All Other
Compensation column), and the remaining fifty percent is payable in
restricted shares. Both the cash and stock awards vest in equal amounts over
a four-year period. The total number of restricted shares and their
aggregate market value at August 31, 1998: Mr. Walgreen III, 5,473 shares
valued at $210,026; Mr. Jorndt, 29,112 shares valued at $1,117,173; Mr.
Brunner, 14,241 shares valued at $546,498; Mr. Kraiss, 14,241 shares valued
at $546,498; Mr. Rubino, 9,607 shares valued at $368,669; and Mr. Bernauer,
8,695 shares valued at $333,671. The aggregate market value is based on the
fair market value of Common Stock as of August 31, 1998 of $38.375.
Dividends are paid on the restricted shares in the same amount and at the
same time as dividends paid to all other owners of Common Stock.
(3) Detail of the amounts reported in the All Other Compensation column for 1998
is provided in the table below. Split-dollar life insurance represents the
actuarial value of the benefit to the executive of the current year's
insurance premium paid by the Company in excess of that required to fund the
death benefit under the policy. Cumulative net life insurance premiums paid
are recovered by the Company at the later of retirement or 11 years.
<TABLE>
<CAPTION>
MR. MR. MR. MR. MR. MR.
ITEM WALGREEN III JORNDT BRUNNER KRAISS RUBINO BERNAUER
---- ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Split-Dollar Life Insurance........... $ 69,636 $ 33,775 $ 20,762 $ 35,041 $ 14,348 $ 12,438
Above-Market Interest Earned on
Deferred Compensation............... 83,140 22,949 19,009 29,934 12,170 6,731
Profit-Sharing Retirement Plan........ 6,928 6,928 6,928 6,928 6,928 6,928
Profit-Sharing Restoration Plan....... 145,281 130,819 69,921 66,822 35,582 48,587
Restricted Performance Share Plan Cash
Award............................... 147,471 216,015 103,975 103,975 70,096 68,881
-------- -------- -------- -------- -------- --------
Total........................ $452,456 $410,486 $220,595 $242,700 $139,124 $143,565
======== ======== ======== ======== ======== ========
</TABLE>
(4) Mr. Walgreen III retired on February 27, 1998.
7
<PAGE> 11
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information regarding non-qualified
options granted to the named executive officers during the Company's last fiscal
year.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- --------------------------------------------------------------------------------------------------
% OF TOTAL
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED TO OR GRANT DATE
OPTIONS EMPLOYEES BASE PRICE EXPIRATION PRESENT VALUE
NAME GRANTED(#) IN FISCAL YEAR(1) ($/SH)(2) DATE ($)(3)
---- ---------- ----------------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Charles R. Walgreen III........... 109,475 11.10 26.9375 02/27/03 940,400
L. Daniel Jorndt.................. 80,185 8.13 26.9375 09/01/07 829,260
200,000 20.28 31.2500 01/14/08 2,223,600
Vernon A. Brunner................. 28,584 2.90 26.9375 09/01/07 295,611
Glenn S. Kraiss................... 28,584 2.90 26.9375 09/01/07 295,611
John A. Rubino.................... 18,969 1.92 26.9375 09/01/07 196,174
David W. Bernauer................. 18,645 1.89 26.9375 09/01/07 192,823
</TABLE>
- ------------
(1) Based on 986,081 options granted to all employees.
(2) Fair market value on the date of grant. For all grants except one, options
are not exercisable until September 1, 2000. For the grant of 200,000 shares
to Mr. Jorndt (made on January 14, 1998), the options are not exercisable
until January 14, 2003.
(3) Present value was determined under the Black-Scholes option pricing model
based on the following weighted average assumptions: volatility of 20.39%,
representing the annual variance in the monthly percentage change in the
price of the Company's Common Stock over a six-year period prior to the date
of grant; a risk-free interest rate of 6.03%, representing the average
seven-year treasury bill; an average expected term of 6.8 years; and an
annual cash dividend yield of 0.53%. The Company's use of this model in
accordance with rules adopted by the Securities and Exchange Commission does
not constitute an endorsement of the model nor an acknowledgment that such
model can accurately determine the value of options. The ultimate realizable
value of an option will depend on the market value of the Company's Common
Stock on the date of exercise as compared to the exercise price of the
option. The weighted average assumptions incorporate different variables due
to the retirement of Mr. Walgreen III and the January 1998 grant to Mr.
Jorndt.
8
<PAGE> 12
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table provides information regarding stock option exercises
by the named executive officers during fiscal 1998, as well as the assumed value
at August 31, 1998, of unexercised options held by such officers.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR-END(#) AT FISCAL YEAR-END($)(1)
ACQUIRED ON VALUE ------------------------------ ------------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Charles R. Walgreen III... 170,776 7,103,214 985,080 109,475 28,892,580 1,252,120
L. Daniel Jorndt.......... 79,592 4,360,841 541,092 280,185 15,634,454 2,342,116
Vernon A. Brunner......... 39,792 876,668 288,616 28,584 8,470,683 326,930
Glenn S. Kraiss........... 130,744 3,791,153 157,872 28,584 4,573,355 326,930
John A. Rubino............ 47,144 1,596,255 131,244 18,969 3,791,567 216,958
David W. Bernauer......... 45,712 1,411,357 131,656 18,645 3,906,204 213,252
</TABLE>
- ------------
(1) Based on the fair market value of Company stock as of August 31, 1998 of
$38.375.
EMPLOYMENT AGREEMENTS
The Company has employment agreements (the "Agreements") with the persons
named in the Summary Compensation Table and other key employees of the Company
that become effective only upon a Change of Control (as defined in the
Agreements).
In the event that an employee is dismissed without Cause or resigns for
Good Reason (as such terms are defined in the Agreements), he or she will be
entitled to all accrued but unpaid compensation and benefits and a lump sum cash
payment consisting of the employee's base salary through the date of
termination, a proportionate bonus based upon the employee's annual bonus
pursuant to the Management Incentive Plan for the last three fiscal years, the
sum of the base salary plus bonus that the employee would be entitled to for the
remainder of the employment period under the Agreement, unpaid deferred
compensation and vacation pay, and the difference between the actuarial
equivalent of the retirement benefit the employee would receive if the employee
remained employed for the employment period and the actuarial equivalent of the
employee's actual retirement benefits. In addition, for the remainder of the
employment period, the employee is entitled to continued employee welfare
benefits. The termination of employment of any of these individuals during the
thirty-day period following the first anniversary of the effective date shall be
deemed to be for Good Reason.
The Agreement between the Company and Mr. Jorndt also provides that, in
addition to the three-year term of employment described therein, upon
termination of his employment, the Company will enter into a consulting
agreement, consistent with the Company's past practice, providing him with one
year's base salary over a three-year term for consulting services.
The Compensation Committee Report on Executive Compensation and the
performance graph that follow shall not be deemed to be incorporated by
reference into any filing made by the Company under the Securities Act of 1933
or the Securities Exchange Act of 1934, notwithstanding any general statement
contained in any such filing incorporating this proxy statement by reference,
except to the extent the Company incorporates such Report and graph by specific
reference.
9
<PAGE> 13
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report describes the Company's executive compensation program and the
basis on which fiscal year 1998 compensation determinations were made by the
Committee with respect to the executive officers of the Company, including the
Chief Executive Officer and the other executive officers named in the
compensation tables in this proxy statement. The Committee establishes all
components of executive pay and recommends or reports its decisions to the Board
of Directors for approval.
To ensure the program is administered in an objective manner, the Committee
is comprised entirely of independent directors. Further, Committee members have
no "interlocking" relationships as defined by the Securities and Exchange
Commission.
The duties of the Committee include recommending to the Board of Directors
the base salary levels for all executive officers as well as the design of
awards in connection with all other elements of the executive pay program. The
Committee further evaluates executive performance and addresses other matters
related to executive compensation.
COMPENSATION POLICY AND OVERALL OBJECTIVES
In developing recommendations regarding the amount and composition of
executive compensation, the Committee's goal is to provide a compensation
package that will enable the Company to attract and retain talented executives,
reward outstanding performance and link the interests of the Company's
executives to the interests of the Company's shareholders. In determining actual
compensation levels, the Committee considers all elements of the program in
total rather than any one element in isolation.
The Committee members believe that each element of the compensation program
should target compensation levels at rates that take into account current market
practices. Offering market-comparable pay opportunities allows the Company to
maintain a stable, successful management team.
Competitive market data is provided by an outside compensation consultant.
The data provided compares the Company's compensation practices to those of a
group of comparator companies. The Company's market for compensation comparison
purposes is comprised of a group of companies that have business operations in
the retail drug industry, as well as companies having operations within broader
retail and wholesale industries. In addition, the Committee considers companies
which have similar sales volumes, market capitalizations and employment levels.
In establishing a comparator group for compensation purposes, the Committee
neither bases its decisions on quantitative relative weights of various factors,
nor follows mathematical formulae. Rather, the Committee exercises its
discretion and makes its judgment after considering the factors described above.
The companies chosen for the comparator group used for compensation
purposes are not the same companies which comprise the peer group index in the
Performance Graph included in this proxy statement. The Committee believes that
the Company's most direct competitors for executive talent are not necessarily
the companies that would be included in a peer group established for comparing
shareholder returns.
The key elements of the Company's executive compensation are base salary,
annual bonuses, and long-term incentives. Each of these is addressed separately
below. In determining compensation, the Committee considers all elements of an
executive's total compensation package, including severance plans, insurance,
and other benefits.
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to public companies for compensation over $1 million
paid to a company's Chief Executive Officer and its four other most highly
compensated executive officers. Qualifying performance-based compensation will
not be subject to the deduction limit if certain requirements are met. It is the
Committee's objective to maximize deductibility under Section 162(m) with
minimal sacrifices in flexibility and corporate objectives. Accordingly, with
respect to compensation payable to an applicable executive officer which would
otherwise be nondeductible, it is the Company's policy that such amounts be
deferred until the limitation on deductibility no longer applies with respect to
such person.
10
<PAGE> 14
BASE SALARIES
The Committee regularly reviews each executive's base salary. The base
salary ranges of the Company's executives are targeted at approximately the 50th
percentile of the base pay ranges of similarly positioned executives in the
group of comparator companies selected for compensation comparison purposes.
Base salaries for executives are initially determined by evaluating
executives' levels of responsibility, prior experience, breadth of knowledge,
internal equity issues, and external pay practices. Increases to base salaries
are driven primarily by performance, evaluated based on sustained levels of
contribution to the Company.
The factors impacting base salary levels are not independently assigned
specific weights. Rather, the Committee reviews all of the factors, and makes
base pay recommendations which reflect the Committee's analysis of the aggregate
impact of these factors. Overall, executive salaries were increased at rates
comparable to the increases provided at other similarly situated companies and
are near or at market levels.
As reflected in the Summary Compensation Table, Mr. Jorndt's salary was
increased in 1998 by $128,334 (18.9%). In determining Mr. Jorndt's base salary
for 1998, the Committee considered the Company's financial performance for the
prior year and over an extended period of time, Mr. Jorndt's individual
performance, his additional responsibilities as Chief Executive Officer
beginning January 1998, and his long-term contributions to the success of the
Company. The Committee also compared Mr. Jorndt's base salary and total
compensation to the base salaries and total compensation of chief executive
officers at comparator companies.
ANNUAL BONUSES
The Walgreen Management Incentive Plan (the "Annual Plan") promotes the
Company's pay-for-performance philosophy by providing executives and other
employees with direct financial incentives in the form of annual cash bonuses to
achieve performance goals tied to return on invested capital.
Annual bonus opportunities allow the Company to communicate specific goals
that are of primary importance during the coming year and motivate executives to
achieve these goals. The Annual Plan emphasizes team performance by establishing
a bonus pool covering all plan participants and by maintaining terms which are
consistent for all participants.
Each year, the Committee establishes specific goals, the achievement of
which will determine the funding of the bonus pool. In turn, the size of the
bonus pool will determine the amount of the relative awards to participants.
Accordingly, executives' opportunities to earn bonuses correspond to the degree
to which the preestablished goals are achieved.
Target bonus awards for the named executive officers are established at
levels approximating the 50th percentile of marketplace practices for executive
positions. Actual payouts can rise above or fall below the targeted levels,
depending upon performance relative to the preestablished performance
objectives. In 1998, Mr. Jorndt's bonus represented 62.9% of his salary. This
resulted in a bonus award under the Annual Plan of $507,379.
LONG-TERM INCENTIVES
Long-term incentives are provided pursuant to the Restricted Performance
Share Plan and the Executive Stock Option Plan.
In keeping with the Company's commitment to provide a total compensation
package which includes at-risk components of pay, the Committee makes annual
decisions regarding appropriate long-term incentive grants for each executive.
When determining these awards, the Committee considers the Company's financial
performance in the prior year, executives' levels of responsibility, prior
experience, historical award data, and compensation practices at comparator
companies. In determining award sizes, the Committee does not assign specific
weights to these factors. Rather, the factors are evaluated on an aggregate
basis.
11
<PAGE> 15
RESTRICTED PERFORMANCE SHARE PLAN: The Plan provides for contingent grants
of restricted Common Stock and restricted cash at the beginning of one-year
performance periods. The participants, the amounts of the grants to each, the
performance requirements for each period, and the restrictions, are determined
by the Compensation Committee.
The performance requirements are annual FIFO earnings goals, subject to a
minimum return on invested capital. The degree to which the goals are met
determines the amount of the contingent grant that is earned, if any. The
restricted Common Stock and restricted cash awards earned for the performance
period ended August 31 of each fiscal year are restricted for a period of four
years, with the restrictions lapsing at the rate of 25% per year.
Based on the achievement of results which exceeded the annual FIFO earnings
goals and met the Company's return on invested capital standard, Mr. Jorndt was
granted 8,018 restricted performance shares and $216,015 restricted cash for
fiscal 1998. This grant reflected performance exceeding the target performance
levels. The target grant level as well as grant levels in the case of
performance exceeding target performance are established in furtherance of the
overall objectives detailed above and by comparison to similar grants to chief
executive officers at comparator companies.
EXECUTIVE STOCK OPTION PLAN: Stock options are granted periodically to the
Company's executives at the discretion of the Committee to enhance the link
between shareholder value creation and executive pay. Grant levels are
coordinated with those under the Restricted Performance Share Plan, in order to
maintain competitive levels of long-term incentive pay under the Company's
long-term compensation programs.
Stock options are granted at an option price not less than the fair market
value of the Company's Common Stock on the date of grant. Accordingly, stock
options have value only if the stock price appreciates following the date the
options are granted. Further, stock options reflected in the Summary
Compensation Table are subject to a 36-month vesting period (60 months for the
grant received by Mr. Jorndt in January 1998). This approach focuses executives
on the creation of shareholder value over the long term and encourages equity
ownership in the Company.
In fiscal 1998, Mr. Jorndt received options to purchase a total of 280,185
shares at the fair market value of shares on the dates of grant. These grants
were established by comparison to 50th percentile long-term incentive grants at
comparator companies. The Committee believes that this equity interest provides
a strong link to the interests of shareholders.
William H. Springer, Chairman
James J. Howard
John B. Schwemm
12
<PAGE> 16
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
The following graph compares the five-year cumulative total return of the
Company's Common Stock with the Value Line Drug Store Industry Peer Group and
the S&P 500 Stock Index. The graph assumes a $100 investment made September 1,
1993, and the reinvestment of all dividends.
<TABLE>
<CAPTION>
Walgreen Co.
Common Peer Group S & P 500
<S> <C> <C> <C>
'1993' 100 100 100
'1994' 98 96 105
'1995' 130 112 128
'1996' 177 145 152
'1997' 294 232 214
'1998' 421 323 231
</TABLE>
<TABLE>
<CAPTION>
DOLLAR VALUE OF INVESTMENT AT AUGUST 31
---------------------------------------
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Walgreen Co. Common.................................. $100 $ 98 $130 $177 $294 $421
Peer Group........................................... $100 $ 96 $112 $145 $232 $323
S & P 500............................................ $100 $105 $128 $152 $214 $231
</TABLE>
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen L.L.P. will serve as the independent auditors for the
Company and its subsidiary corporations for the fiscal year ending August 31,
1999. This firm has served as the independent auditors for the Company since
1924. Representatives of the firm are expected to be present at the Annual
Meeting to respond to shareholders' questions and to have the opportunity to
make any statements they consider appropriate.
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Shareholders may submit proposals appropriate for shareholder action at the
Company's Annual Meeting consistent with the regulations of the Securities and
Exchange Commission. For proposals to be considered for inclusion in the Proxy
Statement for the 2000 Annual Meeting they must be received by the Company no
later than July 27, 1999. Such proposals should be directed to Walgreen Co.,
Attention: Secretary, 200 Wilmot Road, Deerfield, Illinois 60015.
In addition, the Company's By-Laws establish an advance notice procedure
with regard to certain matters, including shareholder proposals not included in
the Company's proxy statement, to be brought before an Annual Meeting. In
general, notice must be received by the corporate Secretary not less than 90
days nor more than 120 days prior to the anniversary of the immediately
preceding Annual Meeting. The notice should contain a brief description of the
business desired to be brought before the Annual Meeting and the reasons for
conducting such business at the Annual Meeting; the name and address, as they
appear in the Company's books, of the shareholder proposing such business; the
class and number of shares of the Company that are beneficially owned by the
shareholder; and any material interest of the shareholder in such business. Any
13
<PAGE> 17
proposal received less than 45 days prior to the anniversary of the mailing date
of the proxy statement for the immediately preceding Annual Meeting may be voted
on by the individuals named in the proxies in their discretion.
By order of the Board of Directors.
Julian A. Oettinger
JULIAN A. OETTINGER
Secretary
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH PERSON WHOSE PROXY IS
SOLICITED, AND TO EACH PERSON REPRESENTING THAT AS OF THE RECORD DATE FOR THE
MEETING HE OR SHE WAS A BENEFICIAL OWNER OF SHARES ENTITLED TO BE VOTED AT THE
MEETING, ON WRITTEN REQUEST, A COPY OF THE COMPANY'S 1998 ANNUAL REPORT ON FORM
10-K TO THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE FINANCIAL
STATEMENTS AND SCHEDULES THERETO. SUCH WRITTEN REQUEST SHOULD BE DIRECTED TO
WALGREEN CO., ATTENTION: MR. JEFFREY A. REIN, TREASURER, 200 WILMOT ROAD,
DEERFIELD, ILLINOIS 60015.
14
<PAGE> 18
APPENDIX
PROXY PROXY
WALGREEN CO.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints CHARLES R. WALGREEN III, L. DANIEL JORNDT
and CHARLES D. HUNTER, or any of them, with full power of substitution, as
attorneys and proxies to vote all shares of common stock which the undersigned
is entitled to vote, with all powers which the undersigned would possess if
personally present, at the Annual Meeting of Shareholders of WALGREEN CO. (and
any adjournment thereof) to be held at the Grand Ballroom of Navy Pier, 600
East Grand Avenue, Chicago, Illinois, on Wednesday, January 13, 1999, upon the
matters referred to on the reverse side and, in their discretion, upon such
other matters as may properly come before the meeting.
NOMINEES:
Charles R. Walgreen III, David W. Bernauer, William C. Foote, James J. Howard,
Charles D. Hunter, L. Daniel Jorndt, Alan G. McNally, Cordell Reed, John B.
Schwemm, William H. Springer, Marilou M. von Ferstel.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED. IF NO
DIRECTION IS SPECIFIED THIS PROXY WILL BE VOTED FOR ELECTION OF DIRECTORS.
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
* DETACH PROXY CARD *
- --------------------------------------------------------------------------------
ADMISSION TICKET
[LOGO]
ANNUAL MEETING OF SHAREHOLDERS
Wednesday, January 13, 1999
2:00 P.M. Central Standard Time
Grand Ballroom of Navy Pier
600 East Grand Avenue
Chicago, Illinois
A map detailing directions to the meeting site is shown on reverse side.
Please present this original for admission. Photocopies will not be accepted.
You may be asked for identification at the time of admission.
- --------------------------------------------------------------------------------
<PAGE> 19
WALGREEN CO.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [ ]
[ ]
<TABLE>
<S> <C> <C> <C> <C>
FOR WITHHOLD FOR ALL
1. Election of Directors ALL ALL EXCEPT* In their discretion, the Proxies are
NOMINEES: authorized to vote on such other matters
Charles R. Walgreen III, David [ ] [ ] [ ] as may properly come before the meeting.
W. Bernauer, William C. Foote,
James J. Howard, Charles D.
Hunter, L. Daniel Jorndt, Alan
G. McNally, Cordell Reed, John YES NO
B. Schwemm, William H. Springer, Will you be attending the Annual Meeting of [ ] [ ]
Marilou M. von Ferstel Shareholders?
The signatory hereby acknowledges receipt of
- ----------------------------------------------------- the accompanying Notice of Annual Meeting of
* (Except nominee(s) written above.) shareholders and Proxy Statement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED. Dated:______________
IF NO DIRECTION IS SPECIFIED THIS PROXY WILL BE VOTED FOR
ELECTION OF DIRECTORS. Signature(s)________________
____________________________
PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS. JOINT OWNERS SHOULD EACH
SIGN WHERE APPLICABLE, INDICATE YOUR
OFFICIAL POSITION OR REPRESENTATION
CAPACITY.
- -----------------------------------------------------------------------------------------------------------------------------------
PLEASE SIGN AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE.
To Our Shareholders:
Whether or not you are able to attend the Annual Meeting of IMPORTANT
Shareholders, it is important that your shares be represented. THIS IS YOUR
Accordingly, please complete and sign the proxy card printed PROXY CARD
above, tear at the perforation, and mail the card in the CAREFULLY FOLD AND TEAR
enclosed postage paid envelope addressed to Walgreen Co. c/o ALONG PERFORATION
Harris Trust and Savings Bank.
NAVY PIER ACCESS MAP
(DOWNTOWN CHICAGO)
Parking is available on the north side
of Navy Pier. Once on the north dock,
please pass the West Parking Garage and
proceed to the EAST PARKING GARAGE, the
garage closest to the Grand Ballroom.
Shareholders should use ENTRANCE 2, LOBBY
3 for access to the Grand Ballroom. Please
follow posted signs.
</TABLE>
