<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, 1999
Dear Walgreens Shareholder:
You are cordially invited to our Annual Shareholders' Meeting on Wednesday,
January 12, 2000, 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.
This will be our second meeting at Navy Pier. We're aware that some of you
experienced parking problems there last January, and we have taken steps to
minimize this inconvenience. A trolley service will run from the parking garages
to Entrance 2, Lobby 3. Five dollar parking passes will be available at the
registration desk.
We look forward to reviewing our 25th consecutive year of record results
with you and sharing our plans and strategy. Fiscal 2000 has started off well,
with excellent sales, the introduction of our new pharmacy website (please visit
www.walgreens.com), and the opening of more than 65 new stores just since
September 1.
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 seeing you January 12. 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.
Thank you for your support of Walgreens. . . and our best wishes for a
happy holiday season.
Sincerely,
/s/ L. DANIEL JORNDT
L. DANIEL JORNDT
Chairman and CEO
/s/ D. W. BERNAUER
D. W. BERNAUER
President and COO
<PAGE> 3
WALGREEN CO. LOGO
200 WILMOT ROAD
DEERFIELD, ILLINOIS 60015
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD WEDNESDAY, JANUARY 12, 2000
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 12, 2000, 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;
(2) To consider a shareholder proposal recommending confidential voting at
all meetings of shareholders; and
(3) 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 15, 1999,
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.
You may vote your shares by telephone, via the Internet or by mail by following
the instructions on your proxy card. If you vote by telephone or via the
Internet, you should not return your proxy card. If you choose to vote by mail,
please sign, date and return the proxy card in the envelope provided. The proxy
may be revoked at any time before it is voted at the meeting by submitting
written notice of revocation to the Secretary or by submitting another timely
proxy by telephone, Internet or mail. 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 1999 is enclosed with this
proxy statement.
By order of the Board of Directors.
Julian A. Oettinger
JULIAN A. OETTINGER
Secretary
November 24, 1999
<PAGE> 4
WALGREEN CO. LOGO
200 WILMOT ROAD
DEERFIELD, ILLINOIS 60015
November 24, 1999
PROXY STATEMENT
This proxy statement is being sent beginning November 24, 1999, in
connection with the solicitation of proxies to be voted at the Annual Meeting of
Shareholders of Walgreen Co. to be held on January 12, 2000, 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 at the meeting by
submitting written notice of revocation to the Secretary of the Company or by
submitting another timely proxy by telephone, Internet or mail. The items
enumerated herein constitute the only business that 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 that may
properly come before the meeting. Shareholders have cumulative voting rights in
the election of directors and one vote per share on all other matters. Only
shareholders of record at the close of business on November 15, 1999, are
entitled to notice of, and to vote at, the meeting. Your vote is confidential
and will not be disclosed to the Company unless required by law or requested by
you.
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 has retained
D.F. King to assist in solicitation for a fee not to exceed $5,000, plus
reasonable expenses.
ELECTION OF DIRECTORS
There are eleven nominees for election to the Board of Directors. Charles
D. Hunter and William H. Springer are retiring from the Board of Directors and
are not standing for re-election.
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 15, 1999, the Company
had outstanding 1,005,145,383 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.
Should any nominee 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 table 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> <C>
[JORNDT PHOTO] L. Daniel Jorndt, 58--Chairman of the Board (since July 1990
1999) and Chief Executive Officer (since January 1998). Mr.
Jorndt was President and Chief Operating Officer from
January 1990 to January 1999.
[BERNAUER PHOTO] David W. Bernauer, 55--President and Chief Operating 1999
Officer (since January 1999). Mr. Bernauer was Senior Vice
President from July 1996 to January 1999 and Chief
Information Officer from February 1995 to January 1999. Mr.
Bernauer was a Vice President from February 1990 to July
1996.
[BRUNNER PHOTO] Vernon A. Brunner, 59--Executive Vice President. Mr. 1999
Brunner is also a director of First Midwest Bankcorp, Inc.
[FOOTE PHOTO] William C. Foote, 48--Chairman of the Board, President and 1997
Chief Executive Officer of USG Corporation. Mr. Foote was
President and Chief Operating Officer of USG Corporation
from January 1994 through December 1995. Mr. Foote is also
a director of USG Corporation and GATX Corporation.
[HOWARD PHOTO] James J. Howard, 64--Chairman of the Board, President and 1986
Chief Executive Officer 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.
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
NAMES AND AGES OF DIRECTOR NOMINEES, PERIOD OF SERVICE
THEIR PRINCIPAL OCCUPATIONS AS DIRECTOR
AND OTHER INFORMATION BEGAN IN
------------------------------------ -----------------
<S> <C> <C>
[MCNALLY PHOTO] Alan G. McNally, 54--Chairman of the Board (since April 1999
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.
[REED PHOTO] Cordell Reed, 61--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.
[SCHWARTZ PHOTO] David Y. Schwartz, 58--Independent business advisor and
consultant. Former Partner at Arthur Andersen L.L.P.
(retired 1997).
[SCHWEMM PHOTO] John B. Schwemm, 65--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.
[VON FERSTEL PHOTO] Marilou M. von Ferstel, 61--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>
3
<PAGE> 7
<TABLE>
<CAPTION>
NAMES AND AGES OF DIRECTOR NOMINEES, PERIOD OF SERVICE
THEIR PRINCIPAL OCCUPATIONS AS DIRECTOR
AND OTHER INFORMATION BEGAN IN
------------------------------------ -----------------
<S> <C> <C>
[WALGREEN PHOTO] Charles R. Walgreen, III, 64--Former Chairman of the Board 1963
(until July 1999) and Chief Executive Officer (until
January 1998).
</TABLE>
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 1999 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
1999, 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. Walgreen III did not receive Director's fees. He received $491,500 in
consulting fees from the Company during fiscal 1999 pursuant to a Consulting
Agreement entered into prior to his retirement as Chief Executive Officer of the
Company. He also received secretarial support and payment of $36,106 for a
company car and country club dues. 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 and Springer and Ms. von Ferstel participated in
unfunded deferred compensation plans offered prior to 1993 that permitted
Directors to defer a portion of their retainer fees. During fiscal 1999,
payments were made to Directors under such plans as follows: Mr. Schwemm, $6,049
and Mr. Springer, $19,894.
Effective November 1996, the Company established the Walgreen Co.
Nonemployee Director Stock Plan pursuant to which each non-employee Director of
the Company will receive an annual equity grant, the amount of which is subject
to adjustment on an annual basis. In fiscal 1999, each director received a grant
of 2,000 shares (Mr. Walgreen received a prorated grant of 1,334 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 non-employee 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.
4
<PAGE> 8
COMMITTEES
The Board of Directors had standing Executive, Audit, Compensation,
Finance, and Nominating and Governance Committees during fiscal 1999, 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; David W. Bernauer; Vernon
A. Brunner; 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 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 adequacy of the audits conducted 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; David W. Bernauer; L. Daniel Jorndt;
Alan G. McNally; 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 William C. Foote, Chairman; James J. Howard;
John B. Schwemm 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.
5
<PAGE> 9
SECURITIES OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following tabulation sets forth information as of November 15, 1999,
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. All amounts have been adjusted to reflect a two-for-one stock
split on February 12, 1999.
<TABLE>
<CAPTION>
AMOUNT OF SHARES PERCENT OF
NAME OF INDIVIDUAL BENEFICIALLY OWNED CLASS
------------------ ---------------------- ----------
<S> <C> <C>
L. Daniel Jorndt........................................... 1,429,327(3)(5)(9) *
David W. Bernauer.......................................... 326,910(3)(4)(9) *
Vernon A. Brunner.......................................... 847,854(3)(9) *
William C. Foote........................................... 9,682 *
James J. Howard............................................ 35,154 *
Charles D. Hunter.......................................... 6,257,189(1)(7) *
Glenn S. Kraiss............................................ 231,542(3)(6)(9) *
Alan G. McNally............................................ 7,525 *
Cordell Reed............................................... 17,514 *
John A. Rubino............................................. 306,647(3)(8)(9) *
David Y. Schwartz.......................................... 1,700 *
John B. Schwemm............................................ 40,965(10) *
William A. Shiel........................................... 353,309(3)(9)(11) *
William H. Springer........................................ 39,914 *
Marilou M. von Ferstel..................................... 20,100(12) *
Charles R. Walgreen III.................................... 5,464,926(1)(2)(9) *
All Directors and executive officers as a group (26
individuals)............................................. 18,265,021(3)(9)(13) 1.8067
</TABLE>
- ------------
(1) Included in the table for Mr. Hunter are 133,954 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 54,978 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 5,797,689 shares owned by thirty-four 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 10,570 shares owned by Mr. Walgreen III's wife, 133,072
shares held in trust for her benefit, and 53,432 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. Jorndt, 44,632 shares; Mr. Bernauer, 13,604
shares; Mr. Brunner, 21,046 shares; Mr. Kraiss, 21,046 shares; Mr. Rubino,
14,147 shares; Mr. Shiel, 13,650 shares; all Directors and executive
officers as a group, 217,848 shares. Each individual possesses sole voting
power with respect to these shares.
(4) Does not include 40,000 shares owned by Mr. Bernauer's wife. Mr. Bernauer
disclaims any beneficial interest in such shares.
(5) Does not include 116,999 shares owned by Mr. Jorndt's wife. Mr. Jorndt
disclaims any beneficial interest in such shares.
(6) Does not include 24,444 shares owned by Mr. Kraiss' wife. Mr. Kraiss
disclaims any beneficial interest in such shares.
6
<PAGE> 10
(7) Does not include 542,492 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.
(8) Does not include 43,522 shares owned by Mr. Rubino's wife. Mr. Rubino
disclaims any beneficial interest in such shares.
(9) Includes shares of stock that may be acquired within 60 days after November
15, 1999, by exercise of stock options as follows: Mr. Jorndt, 935,216
shares; Mr. Bernauer, 230,160 shares; Mr. Brunner, 577,232 shares; Mr.
Kraiss, 210,496 shares; Mr. Rubino, 230,120 shares; Mr. Shiel, 292,064
shares; Mr. Walgreen III, 1,970,160 shares; all Directors and executive
officers as a group, 5,805,420 shares.
(10) Does not include 4,800 shares owned by Mr. Schwemm's wife. Mr. Schwemm
disclaims any beneficial interest in these shares.
(11) Does not include 15,744 shares owned by Mr. Shiel's wife and 4,620 shares
owned by Mr. Shiel's children. Mr. Shiel disclaims any beneficial interest
in these shares.
(12) Does not include 4,000 shares owned by Ms. von Ferstel's husband. Ms. von
Ferstel disclaims any beneficial interest in these shares.
(13) Includes 320,988 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.
* Each individual owns less than 1% of the Company's Common Stock.
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
1999.
7
<PAGE> 11
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes the compensation of the Company's Chairman
and Chief Executive Officer, and the next five most highly compensated executive
officers for the last three fiscal years. All numbers have been adjusted to
reflect a two-for-one stock split on February 12, 1999.
<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>
L. Daniel Jorndt 1999 883,333 583,457 133,786 254,986 132,466 0
Chairman of the Board and 1998 806,667 507,379 115,196 215,985 560,370 0
Chief Executive Officer 1997 678,333 438,591 92,825 200,987 0 0
David W. Bernauer (4) 1999 405,668 259,457 29,305 76,076 42,018 0
President and 1998 292,000 174,133 28,841 68,879 37,290 0
Chief Operating Officer 1997 266,167 162,687 21,461 62,865 0 0
Vernon A. Brunner 1999 417,000 267,145 102,632 110,688 47,922 0
Executive Vice President 1998 399,583 243,793 93,300 103,925 57,168 0
1997 376,667 236,656 75,314 98,538 0 0
Glenn S. Kraiss (5) 1999 410,000 262,397 107,636 110,688 47,922 0
Executive Vice President 1998 399,583 243,793 95,551 103,925 57,168 0
1997 376,667 236,656 72,439 98,538 0 0
John A. Rubino 1999 309,497 194,224 44,509 73,670 31,896 0
Senior Vice President 1998 294,500 175,751 37,169 70,064 37,938 0
1997 279,500 171,612 42,607 66,479 0 0
William A. Shiel 1999 299,167 187,217 50,460 71,264 30,856 0
Senior Vice President 1998 284,500 169,276 43,527 67,667 36,640 0
1997 269,500 164,918 42,012 64,070 0 0
<CAPTION>
ALL OTHER
COMPENSATION
NAME AND PRINCIPAL POSITION ($)(3)
- ------------------------------ ------------
<S> <C>
L. Daniel Jorndt 536,473
Chairman of the Board and 410,486
Chief Executive Officer 377,328
David W. Bernauer (4) 177,425
President and 143,565
Chief Operating Officer 128,022
Vernon A. Brunner 252,138
Executive Vice President 220,595
209,579
Glenn S. Kraiss (5) 271,432
Executive Vice President 242,700
231,101
John A. Rubino 172,736
Senior Vice President 139,124
143,347
William A. Shiel 157,000
Senior Vice President 132,014
122,891
</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 1999 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, 1999, was: Mr. Jorndt, 44,632 shares
valued at $1,034,905; Mr. Bernauer, 13,604 shares valued at $315,443; Mr.
Brunner, 21,046 shares valued at $488,004; Mr. Kraiss, 21,046 shares valued
at $488,004; Mr. Rubino, 14,147 shares valued at $328,034; and Mr. Shiel,
13,650 shares valued at $316,509. The aggregate market value is based on the
fair market value of Common Stock as of August 31, 1999 of $23.1875.
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 1999
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 10 years.
<TABLE>
<CAPTION>
MR. MR. MR. MR. MR. MR.
ITEM JORNDT BERNAUER BRUNNER KRAISS RUBINO SHIEL
---- ------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Split-Dollar Life Insurance............... 56,150 19,443 17,991 30,520 12,860 8,945
Above-Market Interest Earned on Deferred
Compensation............................ 26,436 7,424 21,739 29,340 13,813 4,243
Profit-Sharing Retirement Plan............ 8,522 8,522 8,522 8,522 8,522 8,522
Profit-Sharing Restoration Plan........... 190,350 65,952 93,173 92,337 63,851 63,993
Restricted Performance Share Plan Cash
Award................................... 255,015 76,084 110,713 110,713 73,690 71,297
------- ------- ------- ------- ------- -------
Total............................ 536,473 177,425 252,138 271,432 172,736 157,000
======= ======= ======= ======= ======= =======
</TABLE>
(4) Mr. Bernauer was elected President and Chief Operating Officer on January
13, 1999.
(5) Mr. Kraiss retired as an officer of the Company on January 14, 1999.
8
<PAGE> 12
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. All numbers have been adjusted to reflect a two-for-one stock split on
February 12, 1999.
<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>
L. Daniel Jorndt................. 132,466 5.08 19.25 09/01/08 909,298
David W. Bernauer................ 32,934 1.26 19.25 09/01/08 226,072
9,084 0.35 29.28125 01/01/09 107,025
Vernon A. Brunner................ 47,922 1.84 19.25 09/01/08 328,955
Glenn S. Kraiss.................. 47,922 1.84 19.25 12/08/04 299,254
John A. Rubino................... 31,896 1.22 19.25 09/01/08 218,946
William A. Shiel................. 30,856 1.18 19.25 09/01/08 211,808
</TABLE>
- ------------
(1) Based on 2,606,350 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, 2001. For the grant of 9,084 shares
to Mr. Bernauer (made on January 1, 1999), the options are not exercisable
until January 1, 2002.
(3) Present value was determined under the Black-Scholes option pricing model
based on the following weighted average assumptions: volatility of 21.77%,
representing the annual variance in the monthly percentage change in the
price of the Company's Common Stock over a seven-year period prior to the
date of grant; a risk-free interest rate of 5.13%, representing the treasury
bill rate for the expected term of the option; an expected term of 6.9
years; and an annual cash dividend yield of 0.32%. 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.
Kraiss and the January 1999 grant to Mr. Bernauer.
9
<PAGE> 13
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 1999, as well as the assumed value
at August 31, 1999, of unexercised options held by such officers.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL OPTIONS AT
SHARES YEAR-END(#) FISCAL YEAR-END($)(1)
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
L. Daniel Jorndt....... 146,968 3,387,153 935,216 692,836 17,260,357 5,105,181
David W. Bernauer...... 0 0 263,042 79,308 4,954,461 492,090
Vernon A. Brunner...... 0 0 577,232 105,090 10,779,611 744,294
Glenn S. Kraiss........ 105,248 2,777,560 210,496 105,090 3,890,887 744,294
John A. Rubino......... 32,368 844,603 230,120 69,834 4,244,734 494,300
William A. Shiel....... 0 0 292,064 67,496 5,456,054 477,591
</TABLE>
- ------------
(1) Based on the fair market value of Company stock as of August 31, 1999 of
$23.1875. All numbers have been adjusted to reflect a two-for-one stock
split on February 12, 1999.
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.
10
<PAGE> 14
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report describes the Company's executive compensation program and the
basis on which fiscal year 1999 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
that 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 that 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 that would
otherwise be
11
<PAGE> 15
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.
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 that 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 1999 by $76,666 (9.5%). In determining Mr. Jorndt's base salary for
1999, 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 that 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 1999, Mr. Jorndt's bonus represented 66.1% of his salary. This
resulted in a bonus award under the Annual Plan of $583,457.
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 that 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.
12
<PAGE> 16
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 that exceeded the annual FIFO earnings
goals and met the Company's return on invested capital standard, Mr. Jorndt was
granted 13,246 restricted performance shares and $255,015 restricted cash for
fiscal 1999. 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. This approach
focuses executives on the creation of shareholder value over the long term and
encourages equity ownership in the Company.
In fiscal 1999, Mr. Jorndt received options to purchase a total of 132,466
shares at the fair market value of shares on the date of grant. This grant was
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
13
<PAGE> 17
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,
1994, and the reinvestment of all dividends.
Line Graph
<TABLE>
<CAPTION>
WALGREEN CO. COMMON PEER GROUP S & P 500
------------------- ---------- ---------
<S> <C> <C> <C>
1994 100.00 100.00 100.00
1995 132.00 121.00 121.00
1996 180.00 157.00 144.00
1997 298.00 241.00 203.00
1998 428.00 340.00 219.00
1999 520.00 376.00 307.00
</TABLE>
<TABLE>
<CAPTION>
DOLLAR VALUE OF INVESTMENT AT AUGUST 31
--------------------------------------------
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Walgreen Co. Common.................................. $100 $132 $180 $298 $428 $520
Peer Group........................................... $100 $121 $157 $241 $340 $376
S & P 500............................................ $100 $121 $144 $203 $219 $307
</TABLE>
SHAREHOLDER PROPOSAL
Edwin D. Hill, as Trustee of the International Brotherhood of Electrical
Workers' Pension Benefit Fund, 1125 Fifteenth Street, N.W., Washington, D.C.
20005, the beneficial holder of 25,462 shares of the Company's Common Stock, has
given notice of the Fund's intention to introduce the following resolution at
the Annual Meeting:
RESOLVED: That the stockholders of Walgreen Company ("Company"), recommend
that our Board of Directors take the steps necessary to adopt and implement a
policy of Confidential Voting at all meetings of its stockholders, which
includes the following provisions:
1. That the voting of all proxies, consents and authorizations be
secret, and that no such document shall be available for examination nor
shall the vote or identity of any shareholder be disclosed except to the
extent necessary to meet the legal requirements, if any, of the
Corporation's state of incorporation; and
2. That the receipt, certification, and tabulation of such votes shall
be performed by independent election inspectors.
SUPPORTING STATEMENT:
It is the proponent's belief that it is vitally important that a system of
Confidential Proxy Voting be established at Walgreen. Confidential voting is a
basic tenet of our electoral process, ensuring its integrity. The
14
<PAGE> 18
integrity of corporate board elections should also be protected against
potential abuses given the importance of corporate policies and practices to
corporate owners (stockholders) and our national economy.
The implementation of a Confidential Voting System would enhance
shareholder rights in several ways. First, in protecting the confidentiality of
the corporate ballot, shareholders would feel free to oppose management nominees
and issue positions without fear of retribution. This is especially important
for professional money managers whose business relationships can be jeopardized
by their voting positions.
A second important benefit of Confidential Voting would be to invigorate
the corporate governance process at the Corporation. We believe that shareholder
activism would be promoted within the Corporation. It is our belief that
shareholders empowered with a free and protected vote would be more active in
the proposing of corporate policy resolutions and alternate board candidates.
Finally, it is our belief that the enhancement of the proxy voting process
would change the system where too often shareholders vote "with their feet," not
with their ballots. This change would help to develop a long-term investment
perspective where corporate assets could be deployed, and used in a more
efficient and effective manner.
The vast majority of major corporations have adopted a Confidential Voting
Policy and it's time for WALGREEN to join them.
WE URGE YOU TO VOTE FOR THIS PROPOSAL.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE ADOPTION OF THIS
PROPOSAL FOR THE FOLLOWING REASONS:
It is the opinion of the Company that the action sought by this shareholder
is unnecessary, as the Company has adopted the following Confidential Voting
Policy:
Shareholder proxies, ballots and voting materials that identify the votes
of specific shareholders shall be kept confidential and will not be disclosed to
the company, its directors, officers and employees except (i) in the case of
communications intended for management, (ii) in the event of certain contested
matters, including proxy contests, or (iii) as required by law. Votes will be
received and tabulated by independent tabulators (which can be the company's
transfer agent) and summaries of the tabulation will be provided to management
and publicly announced at the meeting of shareholders to which such vote totals
relate. Certain outside agents, such as those serving as proxy solicitors, who
have agreed to comply with this policy, may be permitted access to proxies and
ballots to facilitate their participation in soliciting proxies and conducting
the meeting. The agents may notify the Company if a shareholder has failed to
vote so that the shareholder may be reminded and requested to do so.
The proponent suggests that shareholders may have concerns of retribution
regarding certain votes. Even prior to the adoption of the Company's
confidential voting policy, Company management was not aware of the receipt of
any reports of such retribution. The Company believes that it has consistently
conducted shareholder solicitations in a fair and equitable manner. The
Company's policy contains an exception to confidentiality in the event of a
proxy contest or other contested matters. The Company believes that maintaining
confidentiality under such circumstances could place Company management at an
unfair disadvantage, since those waging the contest would not be bound by the
same policy.
The Company's intent in providing access to ballots by outside agents (such
as proxy solicitors) is to enable the solicitors to determine which shareholders
might not have voted. It is not the Company's intent that the solicitor's role
in the proxy process will permit the Company to have access to information it
otherwise could not obtain. Thus, the policy states that outside agents must
agree to comply with the Company's confidential voting policy.
Pursuant to the Company's policy, proxies for the Company's meeting of
shareholders are received, tabulated and certified by the Company's transfer
agent, appointed by the Board of Directors to serve as Inspectors of Election.
The Inspectors report only the total vote and not the nature of any particular
shareholder's vote. It is not the policy's intent that Company management and
Directors be able to review incoming proxy votes prior to tabulation.
15
<PAGE> 19
For the above reasons, the Company believes that its confidential voting
policy is acceptable as adopted.
The affirmative vote of a majority of the shares of Common Stock
represented in person or by proxy at the Annual meeting is required for approval
of this proposal. Abstentions are considered shares present for purposes of
determining a quorum and will have the effect of a vote against the proposal.
Broker non-votes are considered shares present for quorum purposes but are not
considered shares voted and will not affect the outcome of the vote.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE AGAINST THIS
SHAREHOLDER PROPOSAL. PROXIES SOLICITED BY THE BOARD WILL BE SO VOTED UNLESS
SHAREHOLDERS SPECIFY A CONTRARY CHOICE ON THE PROXY CARD.
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,
2000. 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 2001 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 2001 Annual Meeting they must be received by the Company no
later than July 27, 2000. 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 or 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. If the Company
does not receive notice of a shareholder proposal within this time frame, the
individuals named in the proxies solicited by the Company's Board of Directors
for that meeting will exercise discretionary voting power with respect to that
proposal.
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 1999 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.
16
<PAGE> 20
WALGREEN CO.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
<TABLE>
<S> <C>
[ ]
1. Election of Director nominees listed below: FOR WITHHOLD FOR ALL This proxy when properly
01-L. Daniel Jorndt 02-David W. Bernauer 03-Vernon A. Brunner ALL ALL EXCEPT* executed will be voted as
04-William C. Foote 05-James J. Howard 06-Alan G. McNally directed. If no direction
07-Cordell Reed 08-David Y. Schwartz 09-John B. Schwemm [ ] [ ] [ ] is specified this proxy
10-Marilou M. von Ferstel 11-Charles R. Walgreen III will be voted FOR the
election of directors and
--------------------------------------------------------------------------- FOR AGAINST ABSTAIN AGAINST the shareholder
*(Except nominee(s) written above.) proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1. [ ] [ ] [ ]
2. Shareholder Proposal. In their discretion, the
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL 2. Proxies are authorized to
vote on such other
matters as may properly
come before the meeting.
The signatory hereby
acknowledges receipt of
the accompanying Notice
of Annual Meeting of
Shareholders and Proxy
Statement.
Dated:
------------
Signature(s)
-------------
-------------------------
PLEASE SIGN EXACTLY AS
YOUR NAME APPEARS. JOINT
OWNERS SHOULD EACH SIGN.
WHERE APPLICABLE,
INDICATE YOUR OFFICIAL
POSITION OR
REPRESENTATION CAPACITY.
THIS IS YOUR PROXY CARD, FOLD AND DETACH BELOW
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
INSTRUCTIONS FOR VOTING BY TELEPHONE, THE INTERNET OR MAIL
Walgreen Co. encourages you to take advantage of new and convenient ways to vote
your shares for proposals to be covered at the ANNUAL MEETING OF SHAREHOLDERS.
Please take this opportunity to use one of the three voting methods detailed
below to vote your shares. This year, voting has been made easier than ever.
VOTE BY PHONE. Call TOLL-FREE AT 1-800-542-0557 using a touch-tone
telephone to vote 24 hours a day, 7 days a week. Have your proxy card
(above) and social security number in hand when you call. Please enter
the 6-digit control number which is located to the left and above, just
below your proxy card.
Option 1 To vote as the Board of Directors recommends on ALL
proposals, press 1. Your vote will be confirmed and cast
as directed and the call will end. If you wish to vote on
each proposal separately, press 0.
Option 2 If you selected 0 to vote on each proposal separately, you
will hear these instructions:
PROPOSAL 1 (ELECTION OF DIRECTORS) - To vote FOR all
nominees, press 1; to WITHHOLD for all nominees, press 9;
to WITHHOLD for AN INDIVIDUAL nominee, press 0 and enter
the two digit number that appears on the proxy card
(above) next to the name of the ~ nominee you DO NOT wish
to vote for. Once you have completed voting for Directors,
press 0.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1.
PROPOSAL 2 (SHAREHOLDER PROPOSAL) - To vote FOR, press 1;
to vote AGAINST, press 9; to ABSTAIN, press 0. Your vote
selection will be repeated and you will have an
opportunity to confirm it.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL
2.
VOTE VIA THE INTERNET 24 hours a day, 7 days a week, at:
WWW.HARRISBANK.COM/WPROXY Have your proxy card (above) and social
security number in hand when you access the web site.
VOTE BY MAIL. Please vote, sign, date and return your proxy card
(above) using the enclosed postage-paid envelope.
IF YOU VOTE BY TELEPHONE OR VIA THE INTERNET PLEASE DO NOT MAIL YOUR PROXY CARD.
THANK YOU FOR VOTING
<PAGE> 21
PROXY [WALGREEN CO. LOGO] PROXY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints L. DANIEL JORNDT, JOHN B. SCHWEMM and
CHARLES R. WALGREEN III, 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 12, 2000, 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:
L. Daniel Jorndt, David W. Bernauer, Vernon A. Brunner, William C.
Foote, James J. Howard, Alan G. McNally, Cordell Reed, David Y. Schwartz,
John B. Schwemm, Marilou M. von Ferstel, Charles R. Walgreen III.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED. IF NO
DIRECTION IS SPECIFIED THIS PROXY WILL BE VOTED FOR THE ELECTION OF
DIRECTORS AND AGAINST THE SHAREHOLDER PROPOSAL.
If voted by mail, this proxy must be signed and dated on the reverse side.
- --------------------------------------------------------------------------------
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. [MAP]
If you park in the Navy Pier parking garage, please pick up a
voucher for $5 parking at our registration desk. Without the
voucher, parking will be $11.50 or $14.50 depending on the
length of time you are parked.
ADMISSION TICKET TO WALGREENS ANNUAL MEETING OF SHAREHOLDERS
[WALGREENS LOGO]
This is your Admission Ticket to Walgreens Annual Meeting of Shareholders to be
held Wednesday, January 12, 2000, at 2:00 p.m., Central Standard Time, at the
Grand Ballroom of Navy Pier. A map detailing directions to the meeting site is
shown above. Please present this original ticket for admission. Photocopies will
not be accepted and you may be asked for identification at the time of
admission.
<PAGE> 22
WALGREEN CO.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
<TABLE>
<S> <C>
[ ]
1. Election of Director nominees listed below: FOR WITHHOLD FOR ALL THIS PROXY WHEN PROPERLY
01-L. Daniel Jorndt 02-David W. Bernauer 03-Vernon A. Brunner ALL ALL EXCEPT* EXECUTED WILL BE VOTED AS
04-William C. Foote 05-James J. Howard 06-Alan G. McNally DIRECTED. IF NO DIRECTION
07-Cordell Reed 08-David Y. Schwartz 09-John B. Schwemm [ ] [ ] [ ] IS SPECIFIED THIS PROXY
10-Marilou M. von Ferstel 11-Charles R. Walgreen III WILL BE VOTED FOR THE
ELECTION OF DIRECTORS AND
--------------------------------------------------------------------------- FOR AGAINST ABSTAIN AGAINST THE SHAREHOLDER
*(Except nominee(s) written above.) PROPOSAL.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1. [ ] [ ] [ ]
2. Shareholder Proposal. In their discretion, the
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL 2. Proxies are authorized to
vote on such other
matters as may properly
come before the meeting.
The signatory hereby
acknowledges receipt of
the accompanying Notice
of Annual Meeting of
Shareholders and Proxy
Statement.
Dated:
------------
Signature(s)
-------------
-------------------------
PLEASE SIGN EXACTLY AS
YOUR NAME APPEARS. JOINT
OWNERS SHOULD EACH SIGN.
WHERE APPLICABLE,
INDICATE YOUR OFFICIAL
POSITION OR
REPRESENTATION CAPACITY.
THIS IS YOUR PROXY CARD, FOLD AND DETACH BELOW
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
INSTRUCTIONS FOR VOTING BY TELEPHONE, THE INTERNET OR MAIL
Walgreen Co. encourages you to take advantage of new and convenient ways to vote
your shares for proposals to be covered at the ANNUAL MEETING OF SHAREHOLDERS.
Please take this opportunity to use one of the three voting methods detailed
below to vote your shares. This year, voting has been made easier than ever.
VOTE BY PHONE. Call TOLL-FREE AT 1-800-542-0301 using a touch-tone
telephone to vote 24 hours a day, 7 days a week. Have your proxy card
(above) and social security number in hand when you call. Please enter
the 6-digit control number which is located to the left and above, just
below your proxy card.
Option 1 To vote as the Board of Directors recommends on ALL
proposals, press 1.~ Your vote will be confirmed and cast
as directed and the call will end. If you wish to~ vote on
each proposal separately, press 0.
Option 2 If you selected 0 to vote on each proposal separately, you
will hear these instructions:
PROPOSAL 1 (ELECTION OF DIRECTORS) - To vote FOR all
nominees, press 1; to WITHHOLD for all nominees, press 9;
to WITHHOLD for AN INDIVIDUAL nominee, press 0 and enter
the two digit number that appears on the proxy card
(above) next to the name of the ~ nominee you DO NOT wish
to vote for. Once you have completed voting for Directors,
press 0.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1.
PROPOSAL 2 (SHAREHOLDER PROPOSAL) - To vote FOR, press 1;
to vote AGAINST, press 9; to ABSTAIN, press 0. Your vote
selection will be repeated and you will have an
opportunity to confirm it.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL
2.
VOTE VIA THE INTERNET 24 hours a day, 7 days a week, at:
WWW.HARRISBANK.COM/WPROXY~ Have your proxy card (above) and social
security number in hand when you access the web site.
VOTE BY MAIL. Please vote, sign, date and return your proxy card
(above) using the enclosed postage-paid envelope.
IF YOU VOTE BY TELEPHONE OR VIA THE INTERNET PLEASE DO NOT MAIL YOUR PROXY CARD.
THANK YOU FOR VOTING
<PAGE> 23
PROXY PROXY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints L. DANIEL JORNDT, JOHN B. SCHWEMM and
CHARLES R. WALGREEN III, 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 12, 2000, 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:
L. Daniel Jorndt, David W. Bernauer, Vernon A. Brunner, William C.
Foote, James J. Howard, Alan G. McNally, Cordell Reed, David Y. Schwartz,
John B. Schwemm, Marilou M. von Ferstel, Charles R. Walgreen III.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED. IF NO
DIRECTION IS SPECIFIED THIS PROXY WILL BE VOTED FOR THE ELECTION OF
DIRECTORS AND AGAINST THE SHAREHOLDER PROPOSAL.
If voted by mail, this proxy must be signed and dated on the reverse side.
- --------------------------------------------------------------------------------
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. [MAP]
If you park in the Navy Pier parking garage, please pick up a
voucher for $5 parking at our registration desk. Without the
voucher, parking will be $11.50 or $14.50 depending on the
~length of time you are parked.
ADMISSION TICKET TO WALGREENS ANNUAL MEETING OF SHAREHOLDERS
[WALGREENS LOGO]
This is your Admission Ticket to Walgreens Annual Meeting of Shareholders to be
held Wednesday, January 12, 2000, at 2:00 p.m., Central Standard Time, at the
Grand Ballroom of Navy Pier. A map detailing directions to the meeting site is
shown above. Please present this original ticket for admission. Photocopies will
not be accepted and you may be asked for identification at the time of
admission.
