NOTICE OF
ANNUAL MEETING
and
PROXY STATEMENT
1996
BAUSCH & LOMB
One Bausch & Lomb Place
Rochester, New York 14604
<PAGE>
April 11, 1996
Dear Shareholder:
You are cordially invited to attend the 1996 annual meeting of
shareholders to be held in Rochester, New York, on Friday, May
10, at 10:30 a.m.
In addition to discussing 1995 developments concerning the
Company, shareholders will consider and act upon matters
described in detail in the attached notice of meeting and proxy
statement.
Regardless of your plans for attending in person, your vote is
important and we would appreciate the prompt return of your
signed proxy card in the enclosed envelope.
I hope you will be present at this year's meeting. If you plan
to attend, please also sign and return the enclosed reservation
card.
Sincerely,
[WHW Signature]
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The annual meeting of shareholders of Bausch & Lomb Incorporated
will be held at the Hyatt Regency Rochester, 125 East Main
Street, Rochester, New York, on Friday, May 10, 1996, at 10:30
a.m. for the following purposes:
1. To elect three directors to the class whose term will expire
in 1999 and one director to the class whose term will expire in
1997.
2. To ratify the appointment of Price Waterhouse LLP as
independent accountants for 1996.
3. To approve an Annual Retainer Stock Plan for Non-Employee
Directors, whereby one-half of the annual retainer paid to non-
employee directors would be paid in Company stock.
4. To transact such other business as may properly come before
the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March
25, 1996 as the record date for the determination of the
shareholders entitled to notice of, and to vote at, the meeting.
Shareholders are requested to sign, date and return the enclosed
proxy card promptly to ensure its arrival in time for the
meeting. If you plan to attend the meeting, please also sign,
date and return the reservation card.
The accompanying envelope will not require postage if mailed in
the United States.
By Order of the Board of Directors
Stephen A. Hellrung, Secretary
April 11, 1996
Rochester, New York
<PAGE> 1
PROXY STATEMENT
The enclosed proxy is solicited by authority granted by the Board
of Directors of the Company on February 27, 1996. When a proxy
is returned properly signed, the shares represented thereby will
be voted by the proxies in accordance with the shareholder's
directions. If the proxy is signed and returned without choices
having been specified, the shares will be voted for the election
as directors of the persons named herein, for the ratification of
the appointment of Price Waterhouse LLP as independent
accountants for 1996 and for approval of an Annual Retainer Stock
Plan for Non-Employee Directors whereby 50% of their annual
retainer will be paid in Company stock. If for any reason any of
the nominees for election as directors shall become unavailable
for election, discretionary authority may be exercised by the
proxies to vote for substitutes proposed by the Board of
Directors of the Company.
If a shareholder is a participant in the Bausch & Lomb Savings
Plus Plan or the Dahlberg Incentive Savings Plan, the proxy
represents the shares held in such Plans as well as shares
registered in the shareholder's name. If a proxy representing
shares in the Bausch & Lomb Plan is not returned, those shares
will be voted by the trustee of the Plan in accordance with the
direction of the majority of shares voted by other participants
in the Plan. If a proxy representing shares in the Dahlberg Plan
is not returned, those shares will be voted by the trustee of the
Plan in the same proportion as those shares for which proxies
have been received.
A shareholder giving a proxy has the right to revoke it at any
time before it is voted by filing with the Secretary of the
Company a written notice of revocation, or a duly executed later-
dated proxy, or by requesting return of the proxy at the annual
meeting of shareholders and voting in person.
Only record holders of voting Common and Class B stock at the
close of business on March 25, 1996 are entitled to notice of,
and to vote at, the annual meeting of shareholders. As of
February 27, 1996, the Company had outstanding 56,800,556 shares
of voting stock consisting of 56,031,154 shares of Common stock
and 769,402 shares of Class B stock, each entitled to one vote
per share at the annual meeting of shareholders.
The approximate date on which the enclosed form of proxy and this
proxy statement are first being sent to shareholders is April 11,
1996.
Board of Directors
The Board of Directors of the Company met seven times in 1995.
All of the directors attended 75% or more of the aggregate number
of applicable Board and committee meetings held during the year.
In 1995, Board members who were not employees of the Company
received an annual retainer of $25,000, a fee of $2,000 for each
Board meeting, $1,000 for each committee meeting held on the same
day as a Board meeting, and $2,000 for each committee meeting
held on a day other than a Board meeting day. In addition, Board
members who chair committees and are not employees of the Company
receive a $3,000 annual fee.
Under the 1990 Stock Incentive Plan, each year non-employee
directors also receive non-qualified, fully vested options to
purchase shares of Class B stock of the Company. The number of
options is determined by a fixed formula set forth in the Plan,
and the exercise price of all such options is determined by the
market value of the Company's Common stock on the date of grant.
For fiscal year 1995, each non-employee director was granted
2,231 options for Class B shares.
<PAGE> 2
As part of its overall program to promote charitable giving, the
Company maintains a charitable contribution program, under which
charitable contributions in the amount of $250,000 are made on
behalf of each director who attains five years of service with
the Company, payable at the director's death. The Company
maintains insurance on the lives of its directors to fund this
program and requires that each organization designated by a
director to receive a contribution be a bona fide, tax-exempt
charitable organization.
Corporate Governance Guidelines
The Board of Directors has developed and approved Corporate
Governance Guidelines which incorporate the principles under
which the Board operates. These Guidelines are reviewed annually
by the Board and a discussion of them is published in the
Company's 1995 Annual Report.
Committees of the Board
The Board has established four standing committees to assist it
in carrying out its responsibilities: the Executive Committee,
Audit Committee, Committee on Directors and Committee on
Management.
The members of the Executive Committee are Franklin E. Agnew,
William Balderston III, Jay T. Holmes, John R. Purcell and
William H. Waltrip (Chair). This Committee met four times in
1995 and, with certain exceptions, possesses all of the authority
of the full Board.
The members of the Audit Committee are Linda Johnson Rice, Alvin
W. Trivelpiece and Kenneth L. Wolfe (Chair). This Committee,
comprised of independent directors, has responsibility for
reviewing the scope and results of the independent accountants'
annual examination of the Company's consolidated financial
statements; reviewing the overall adequacy of internal controls
with the Company's internal auditors; recommending to the Board
of Directors the appointment of the independent accountants; and
providing for direct communications between the Board of
Directors and the independent accountants and internal auditors.
The Committee met six times in 1995.
The members of the Committee on Directors are William Balderston
III (Chair), John R. Purcell and Alvin W. Trivelpiece. This
Committee, comprised of independent directors, met one time in
1995 and is responsible for making recommendations to the Board
on all matters relating to directors, including compensation of
directors and composition of the Board of Directors. It also
considers nominees for directors, including those recommended by
shareholders. The Company's By-Laws provide that shareholder
submissions must include sufficient biographical information
concerning the recommended individual, including age, address,
employment history and board memberships, if any. Shareholder
recommendations must be received at the above offices of the
Company no fewer than 90 days prior to the date of the annual
meeting of shareholders to be considered for nomination at such
annual meeting. The By-Laws also provide that any candidate
nominated must submit a signed statement to the Secretary of the
Company that he or she consents to being a nominee and, if
elected, intends to serve as a director. Such statement must be
received by the Secretary of the Company at least 24 hours prior
to the date of the annual meeting of shareholders at which the
election will be conducted.
The members of the Committee on Management are Franklin E. Agnew,
Bradford R. Boss and Ruth R. McMullin (Chair). William H.
Waltrip resigned from this Committee upon assuming the
responsibilities of Chairman and Chief Executive Officer. This
Committee, comprised of independent directors, has general
responsibility for recommending to the Board remuneration for the
Chief Executive Officer and determining the remuneration of other
officers elected by the Board; approval of payments under the
Company's Executive Incentive Compensation Plan; granting options
under and otherwise administering the Company's stock incentive
plans; and approving and administering any other compensation
plans in which officers elected by the Board are eligible to
participate. The Committee also reviews and ensures that a
process is in place to provide continuity and succession of
officers and key employees. The Committee met five times in
1995.
<PAGE> 3
In October 1995, the Board of Directors appointed a Committee of
Independent Directors. This Committee was formed to review
certain of the Company's management and control practices. The
Committee members are William Balderston III (Chair), Franklin E.
Agnew, John R. Purcell and Kenneth L. Wolfe. The Committee
anticipates that it will complete its review during the first
half of 1996.
Election of Directors
(Proxy Item 1)
The Board of Directors currently has 10 members and, pursuant to
the Company's By-Laws, is divided into three classes, for which
the terms of office will expire, respectively, on the dates of
the annual meeting of shareholders in 1996, 1997 and 1998. One
class is elected each year to serve for three years.
The directors whose terms expire at the 1996 annual meeting of
shareholders are Jay T. Holmes, John R. Purcell, Alvin W.
Trivelpiece and William H. Waltrip. Mr. Holmes does not plan to
stand for re-election as a director when his term expires on May
10, 1996. In addition, Daniel E. Gill, whose term would have
expired at the 1997 annual meeting, recently resigned from the
Board in view of his decision to retire from the Company. In
accordance with the By-Laws which require that the three classes
of directors be as equal in number as possible, the Board has
recommended that the vacancy created by Mr. Gill's resignation be
filled by William M. Carpenter, the Company's President and Chief
Operating Officer.
The Board of Directors has accordingly fixed the number of
directors to be elected at the 1996 annual meeting of
shareholders at four. Messrs. Purcell, Trivelpiece and Waltrip
are nominated to stand for re-election to serve until the 1999
annual meeting. Mr. Carpenter is nominated to stand for election
to serve until the 1997 annual meeting.
Directors are elected by a plurality of the votes cast by the
holders of the Company's Common and Class B stock at a meeting at
which a quorum of shares is represented. This means that those
nominees receiving the largest number of votes cast are elected,
up to the maximum number of directors to be elected at the
meeting. As a result, any shares not voted (whether by
abstention, broker non-vote or otherwise) have no impact on the
election of directors, except to the extent that the failure to
vote for a particular nominee may result in another nominee
receiving a larger number of votes.
The names of, and certain information with respect to, the
persons nominated for election as directors, as well as those
directors continuing in office, are presented below.
Nominees for Election as Directors - Term Expiring 1999
[Picture of John R. Purcell
John R. Purcell] Director Since: 1976
Age: 64
Stock Owned: 24,139 shares
(includes 14,139 options)
Principal Occupation: Chairman and Chief Executive Officer,
Grenadier Associates, Ltd.
General Background: Mr. Purcell has served since 1989 as
chairman and chief executive officer of Grenadier Associates,
Ltd., a venture banking firm. Since 1991, he has also served as
chairman of Donnelley Marketing, Inc., a data-based direct
marketing company. From 1987 until 1990, he served as chairman
of Mindscape, Inc., an educational and entertainment computer
software company. Mr. Purcell served from 1982 until 1986 as
chairman and president of SFN Companies, Inc., a communications
company. Prior to that he served as executive vice president of
CBS, Inc. and as vice president, finance of Gannett Co., Inc. He
is a director of Omnicom Group, Inc., Repap Enterprises Inc.,
Donnelley Marketing, Inc. and Technology Solutions Company.
<PAGE> 4
[Picture of Alvin W. Trivelpiece, Ph.D.
Alvin W. Trivelpiece] Director Since: 1989
Age: 65
Stock Owned: 15,211 shares
(includes 11,211 options)
Principal Occupation: Director, Oak Ridge National Laboratory
and President, Lockheed Martin Energy Research Corporation.
General Background: Dr. Trivelpiece has served since 1989 as
director of the Oak Ridge National Laboratory, a multi-program
science and energy research laboratory managed by Lockheed Martin
Energy Research Corporation for the U.S. Department of Energy.
He was director of the Office of Energy Research for the U.S.
Department of Energy from 1981 to 1987. From 1987 to 1989, he
was the executive officer of the American Association for the
Advancement of Science. He is a member of the National Academy
of Engineering.
[Picture of William H. Waltrip
William H. Waltrip] Director Since: 1985
Age: 58
Stock Owned: 13,607 shares
(includes 11,211 options)
Principal Occupation: Chairman and Chief Executive Officer,
Bausch & Lomb Incorporated.
General Background: Mr. Waltrip was named chairman and chief
executive officer of Bausch & Lomb in January 1996. He has
served as chairman of Technology Solutions Company, a systems
integration company, since 1993 and from 1993 until June 1995, he
was chief executive officer of that company. From 1991 to 1993
he was chairman and chief executive officer of Biggers Brothers,
Inc., a food service distribution company and was a consultant to
private industry from 1988 to 1991. From 1985 to 1988, he served
as president and chief operating officer of IU International
Corporation, a transportation, environmental and distribution
company. Earlier, he had been president, chief executive officer
and a director of Purolator Courier Corporation. He is a
director of Recognition Equipment, Inc., Teachers Insurance and
Annuity Association and Thomas & Betts Corporation.
Nominee for Election as Director
Term Expiring 1997
[Picture of William M. Carpenter
William M. Carpenter] Age: 43
Stock Owned: 34,646 shares
(includes 16,668 options)
Principal Occupation: President and Chief Operating Officer,
Bausch & Lomb Incorporated.
General Background: Mr. Carpenter joined Bausch & Lomb in
March 1995 as executive vice president and global business
manager - eyewear. He was named president and chief operating
officer in December 1995. From 1991 to 1994 he held several
executive positions at Reckitt & Colman, Inc., the U.S.
subsidiary of Reckitt & Colman, plc, during the last year of
which he served as its president and chief executive officer.
From 1977 to 1991, Mr. Carpenter held several executive positions
with Johnson & Johnson's health care and consumer products
businesses.
<PAGE> 5
Directors Continuing in Office
Term Expiring 1997
[Picture of Franklin E. Agnew
Franklin E. Agnew] Director Since: 1982
Age: 61
Stock Owned: 18,139 shares
(includes 14,139 options)
Principal Occupation: Business Consultant.
General Background: Mr. Agnew serves as a business consultant
to private industry. From 1989 until 1990, Mr. Agnew was trustee
in reorganization of Sharon Steel Corporation. From 1971 until
1986, Mr. Agnew was a director of H. J. Heinz Company, a
worldwide provider of processed food products and services, and
from 1973 until 1986 was a group executive with responsibility
for various Heinz affiliates. Mr. Agnew is a director of John
Wiley & Sons, Inc. and Prudential Insurance Company.
[Picture of Ruth R. McMullin
Ruth R. McMullin] Director Since: 1987
Age: 54
Stock Owned: 16,951 shares
(includes 11,069 options)
Principal Occupation: Business Consultant.
General Background: Mrs. McMullin serves as a business
consultant to private industry. She was a member of the faculty
of the Yale School of Management as a Management Fellow from 1994
to June 1995. From 1992 to 1994 she was president and chief
executive officer of the Harvard Business School Publishing
Corporation. From 1990 to 1992, Mrs. McMullin was a consultant
to private industry, and from 1991 to 1992 she was also acting
chief executive officer of UNR Industries, Inc. and a member of
that company's chairman's committee. From 1989 to 1990, Mrs.
McMullin was president and chief executive officer of John Wiley
& Sons, Inc., a publishing company. She joined that company as
executive vice president and chief operating officer in 1987.
She is a director of Middlesex Mutual Assurance Company, UNR
Industries, Inc. and Secure Technologies, Inc.
[Picture of Linda Johnson Rice
Linda Johnson Rice] Director Since: 1990
Age: 38
Stock Owned: 13,211 shares
(includes 11,211 options)
Principal Occupation: President and Chief Operating Officer,
Johnson Publishing Company, Inc.
General Background: Mrs. Johnson Rice has served since 1987 as
president and chief operating officer of Johnson Publishing
Company. In addition to management of the Company, she oversees
the editorial content of Ebony, Jet and Ebony Man magazines. She
is also creative consultant for Fashion Fair Cosmetics, a
division of Johnson Publishing. Mrs. Johnson Rice is a director
of Bank of America Illinois and The Dial Corp.
<PAGE> 6
Directors Continuing in Office - Term Expiring 1998
[Picture of William Balderston III
William Balderston III] Director Since: 1989
Age: 68
Stock Owned: 14,469 shares
(includes 12,069 options)
Principal Occupation: Retired. Formerly Executive Vice
President, The Chase Manhattan Bank, N.A.
General Background: Mr. Balderston held various executive
positions from 1966 until his retirement in 1993 with The Chase
Manhattan Bank and its predecessor banks. He was elected
president of Chase Lincoln First Bank in 1980, chief executive
officer in 1984 and chairman in 1986. He was named executive
vice president of The Chase Manhattan Bank and vice chairman of
Chase Lincoln First Bank in 1991. Mr. Balderston is a director
of Rochester Gas and Electric Corporation and Home Properties of
New York, Inc.
[Picture of Bradford R. Boss
Bradford R. Boss] Director Since: 1986
Age: 63
Stock Owned: 17,339 shares
(includes 14,139 options)
Principal Occupation: Chairman of the Board, A. T. Cross
Company.
General Background: Mr. Boss has served since 1979 as chairman
of the board and from 1979 to 1993 as chief executive officer of
the A. T. Cross Company, a manufacturer of writing instruments.
From 1971 to 1979 he served as president. Mr. Boss is a director
of Fleet Financial Group, Inc.
[Picture of Kenneth L. Wolfe
Kenneth L. Wolfe] Director Since: 1989
Age: 57
Stock Owned: 14,344 shares
(includes 12,069 options)
Principal Occupation: Chairman of the Board and Chief Executive
Officer, Hershey Foods Corporation.
General Background: Mr. Wolfe has served since 1994 as
chairman and chief executive officer of Hershey Foods
Corporation, a food products manufacturing firm. He joined that
firm in 1968 and held various executive positions before being
appointed vice president and chief financial officer in 1981. In
1984, Mr. Wolfe was named senior vice president. From 1985 until
1993, he was president and chief operating officer. Mr. Wolfe is
a director of the Hershey Trust Company and Carpenter Technology
Corporation.
<PAGE> 7
<TABLE>
Security Ownership of Certain Beneficial
Owners and Management
Beneficial Owners of More than 5% of the Company's
Voting Stock
<CAPTION>
Percent of
Name and Address Outstanding
of Beneficial Owners Number of Shares Voting Stock
<S> <C> <C>
FMR Corp. 5,171,448<F1> 9.19%
82 Devonshire Street
Boston, MA 02109
J.P. Morgan & Co., 6,505,347<F2> 11.3%
Incorporated
60 Wall Street
New York, NY 10260
Scudder, Stevens and 4,096,700<F3> 7.2%
Clark, Inc.
345 Park Avenue
New York, NY 10154
<FN>
<F1> Shares are as of February 14, 1996 and include 48,086 shares
with respect to which there is sole power to vote and 5,171,448
shares with respect to which there is sole power of disposition.
<F2> Shares are as of December 29, 1995 and include 3,748,247
shares with respect to which there is sole power to vote; 16,320
shares with respect to which there is shared power to vote;
6,386,827 shares with respect to which there is sole power of
disposition; and 64,320 shares with respect to which there is
shared power of disposition.
<F3> Shares are as of February 7, 1996 and include 989,500 shares
with respect to which there is sole power to vote; 2,758,100
shares with respect to which there is shared power to vote; and
4,096,700 shares with respect to which there is sole power of
disposition.
</FN>
</TABLE>
Security Ownership of Management
Presented below is information concerning the amount of Company
stock beneficially owned by each director and director nominee,
each non-director officer named in the Summary Compensation Table
appearing on page 21, and all directors and officers of the
Company as a group. All numbers stated are as of February 27,
1996, and include beneficial ownership of shares of Common and
Class B stock, which are identical with respect to dividend and
liquidation rights and vote together as a single class for all
purposes.
Except for Class B stock, which is transferable only in
accordance with the terms of the Company's Stock Incentive Plan
under which it was acquired, and except as otherwise indicated,
sole voting and investment power exists with respect to all
shares listed as beneficially owned. No individual named below
beneficially owns more than 1% of the Company's outstanding
voting stock, and the shares beneficially owned by all directors
and officers as a group constitute 3.4% of the Company's
outstanding voting stock.
<PAGE> 8
<TABLE>
<CAPTION>
Name of Amount and Nature
Beneficial Owner of Beneficial Ownership
<S> <C>
Franklin E. Agnew 18,139<F1>
William Balderston III 14,469<F2>
Bradford R. Boss 17,339<F1>
William M. Carpenter 34,646<F3>
James C. Foster 44,945<F4>
Daniel E. Gill 632,510<F5>
Jay T. Holmes 136,638<F6>
Alex Kumar 56,499<F7>
Ruth R. McMullin 16,951<F8>
John R. Purcell 24,139<F1>
Linda Johnson Rice 13,211<F9>
Alvin W. Trivelpiece 15,211<F9>
William H. Waltrip 13,607<F9>
Kenneth L. Wolfe 14,344<F2>
All Directors and Officers 1,881,189
as a group (32 persons)
<FN>
<F1> Includes 14,139 shares which may be acquired within 60
days through the exercise of stock options.
<F2> Includes 12,069 shares which may be acquired within 60
days through the exercise of stock options.
<F3> Includes 16,668 shares which may be acquired within 60
days through the exercise of stock options.
<F4> Includes 24,934 shares which may be acquired within 60
days through the exercise of stock options.
<F5> Includes 506,706 shares and 7,509 shares, respectively,
which may be acquired within 60 days through the exercise of
stock options and acquired under the Savings Plus Plan. Mr. Gill
retired in January 1996.
<F6> Includes 68,082 shares and 3,085 shares, respectively,
which may be acquired within 60 days through the exercise of
stock options and acquired under the Savings Plus Plan.
<F7> Includes 33,260 shares and 1,685 shares, respectively,
which may be acquired within 60 days through the exercise of
stock options and acquired under the Savings Plus Plan.
<F8> Includes 11,069 shares which may be acquired within 60
days through the exercise of stock options.
<F9> Includes 11,211 shares which may be acquired within 60
days through the exercise of stock options.
</FN>
</TABLE>
The Company's directors and executive officers are required to
file reports with the Securities and Exchange Commission
concerning their ownership of Company stock. Based on its review
of such reports, the Company believes that all filing
requirements were met by its directors and officers during 1995.
<PAGE> 9
Executive Compensation
Report of the Committee on Management
The Committee on Management of the Board of Directors, composed
of three non-employee directors of the Company, is charged with
overseeing executive compensation, the organizational structure
of the Company, and continuity of the organization through
succession planning for senior executive positions in the
Company. The Committee meets at least three times a year and
reviews and approves the design of executive incentive and stock
plans, reviews and approves individual awards for senior officers
of the Company, reviews the planning and progress of any
management changes in the organization, ensures that there is a
process in place for management continuity, and reviews
succession plans for all officer positions and other key
employees. A key function of the Committee on Management is
evaluating, and establishing performance criteria for, the Chief
Executive Officer.
In 1995, the Committee implemented a new process for formally
evaluating the Chief Executive Officer. Factors considered, on
an unweighted basis, are strategic direction, financial/operating
results, organizational leadership and internal/external
relations. The process included a written performance evaluation
and review with the CEO and the Committee. In view of the
retirement of the CEO at year end, the process was abbreviated in
1995.
In 1995, the Committee met five times. In advance of each
meeting, management reviews the agenda with the Committee Chair
and, prior to the meeting, each Committee member receives a
complete briefing book, which details each topic to be considered
by the Committee. The Committee Chair briefs the full Board of
Directors on any key actions and discussion.
Compensation Philosophy and Policy
The Executive Compensation Plan at Bausch & Lomb is designed to
motivate and reward executives responsible for attaining
financial and strategic objectives. The Plan is also structured
to attract and retain the highest caliber executives.
The Bausch & Lomb program provides a competitive level of total
compensation opportunity and offers incentive and equity
ownership opportunities linked to annual and long-term Company
performance and to shareholder returns.
To maintain a competitive level of compensation, the Company
commissions an independent consulting firm to conduct an annual
survey of executive compensation in a group of 14 companies
engaged in production of prescription and over-the-counter health
care products. The surveyed companies were selected based on the
following criteria: (i) the similarity of their product lines to
those of Bausch & Lomb; (ii) the competitive market for executive
talent; and (iii) the availability of compensation data provided
confidentially to a third party. Thus, while a majority of the
companies included in the compensation survey are also part of
the industry group presented in the Performance Graph on page 33,
the groups are not identical. The annual survey compares Bausch
& Lomb's total executive compensation opportunity to the
compensation of matched jobs in the peer group of companies,
based on the relative size of the company or the division which
the executive leads. The study includes base compensation,
annual incentives and long-term incentives, including stock-based
compensation. The aggregate compensation package is targeted to
pay at the 66th percentile of the peer group of companies, if
performance criteria are achieved (i.e., if financial performance
and stock appreciation meet expectations). The relative
financial performance of Bausch & Lomb and its peer group,
together with the compensation survey results, are reviewed by
the Committee at least annually.
<PAGE> 10
After considering the survey data, business objectives, and
compensation philosophy and strategy, the Committee determines
targeted levels of base compensation, long- and short-term
incentives, and stock options for the officers of the Company.
In approving salary and incentive payments for individuals other
than the CEO, the Committee also considers recommendations made
by the CEO.
As to incentive and stock-based compensation, the Company seeks
to comply with Section 162(m) of the Internal Revenue Code which
limits deductibility of annual compensation exceeding one million
dollars, unless plans providing such excess compensation enjoy
shareholder approval and conform to guidelines stated in the tax
regulations. Both annual and long-term incentives conforming to
the tax guidelines were submitted to and approved by the
Company's shareholders in 1994.
In December 1995, Daniel E. Gill announced his retirement as
Chairman and Chief Executive Officer of the Company. In
recognition of Mr. Gill's 17 years of service and his leadership
in transforming the Company into an internationally recognized
leader in the fields of healthcare and optics, as well as his
undertaking to consult with the Company on certain matters and to
refrain from competing with the Company's businesses, the Board
approved a special retirement arrangement for Mr. Gill. The
arrangement is described on page 36 of this proxy statement.
Base Pay
Base pay levels and increases for each officer take into
consideration the individual's current performance, experience,
the scope and complexity of his or her position within the
Company and the external competitive marketplace for comparable
positions at peer companies. Base pay for officers is reviewed
twice each year, and generally adjusted annually. In 1995, the
Company's average officer base compensation was slightly below
the targeted 66th percentile of peer group officer base pay.
Mr. Gill's base pay was set at $1,000,000 in December of 1993 for
1994. His pay was not increased for 1995. In making a base pay
determination, the Board considers the targeted percentile for
aggregate compensation, the chief executive officer compensation
(on a size-adjusted basis) and compensation forecasts for the
surveyed companies, as well as the financial and strategic
performance of the Company in the preceding year. The Committee
does not assign weights to the foregoing factors in its overall
assessment. In 1995, Mr. Gill's base pay was 6% above the
midpoint of his salary grade.
Upon Mr. Gill's retirement, Mr. Waltrip's base pay as CEO was set
at $600,000 per year. Mr. Waltrip's pay was set after
consideration of competitive pay for full-time, long-term CEOs
and interim CEOs.
Annual Incentive Awards
Under the Company's Executive Incentive Compensation Program,
corporate officers are eligible for annual incentive awards,
based on a combination of corporate, individual and, for officers
with operating unit responsibilities, operating unit
performance. The bonus target for each officer is expressed as a
percentage of base pay, falling within a range of 32-65%,
depending upon the position, with the CEO at 65%. These
incentive targets are just below the average or 50th percentile
of the peer group. They are based on a review of competitive
bonus targets (also assessed annually in the survey of peer
companies). The minimum payout is zero, and the maximum payout
is 175% of the target payment. In 1995, the Committee on
Management approved an increase in the target bonuses for certain
officer salary grades within the range described above.
<PAGE> 11
Under the annual incentive plan, objectives are established at
the beginning of each year. Minimum and maximum performance
levels are also defined. An individual's objectives may include
corporate, division or individual goals or some combination of
these. The CEO's goals are based solely on the overall
performance of the Company. Company goals include the following
criteria and weightings: sales growth, 30%; earnings growth,
30%; return on equity, 30%; and improvement in aggregate customer
satisfaction ratings from operating divisions, 10%. For officers
managing operating units, the division goals include sales
growth, earnings growth, asset management and achievement of
long-term, strategic goals pertinent to that business. For
officers with accountability for global business segments, a
global strategy goal is included.
The Committee on Management of the Board has approved a
Supplemental Management Executive Incentive Plan to enable
recognition of unique contributions or individual performance not
recognized in the annual financial results. None of the officers
presented in the compensation table received any payment under
this supplemental plan.
The Company establishes performance goals, with a significant
increase or reduction in incentive payments if actual performance
exceeds or fails to meet specified levels. In 1995, the Company
performance fell below the standard target, but above the defined
minimum. Mr. Gill received a bonus payout of $468,000. The
calculated result reflected ongoing operations and did not
include the one-time positive effect of the divestiture of the
Company's Sports Optics Division nor the one-time expense of the
provisions established for litigation, restructuring, or Mr.
Gill's retirement package.
As Mr. Carpenter was hired during 1995, a standard annual
incentive payment was guaranteed as a component of his hiring
package; his bonus does not reflect annual financial results.
Bonuses for other officers, including those presented in the
Summary Compensation Table on page 21, were based on financial
results of ongoing operations as described above.
Long-Term Incentive Awards
The package of long-term incentives offered to officers in 1995
included stock options and a long-term performance stock grant.
Consistent with the overall compensation philosophy, the package
of long-term incentives is targeted at the 66th percentile of
peer company long-term incentive awards.
Stock option awards are determined by reviewing peer group data,
from which competitive multiples of pay are set for each salary
grade. The percentage is multiplied by the salary midpoint and
then divided by the stock price to set the number of options.
The Committee may then vary the award based on factors which may
include Company or individual performance.
Senior officers were designated to participate in the Company's
current Long-Term Performance Stock Plan I. For the Chief
Executive Officer, Chief Administrative Officer and Chief
Financial Officer, three-year goals of cumulative sales growth
and return on equity were set annually by the Committee on
Management. The performance matrix is relatively more sensitive
to each percent of return on equity improvement than to each
percent of sales growth. The targets were based on Bausch &
Lomb's long-term strategic plans and historic analysis of Bausch
& Lomb and its peer companies' performance.
For the cycle starting in 1993, for officers who head major
business units, three-year goals were based solely on key
strategic financial measures for that operating unit such as
sales and earnings growth, product development and manufacturing
costs. The Company also set targets for officers in staff
positions relevant to their functions; those officers are also
rated on overall corporate performance with respect to return on
equity and sales growth.
<PAGE> 12
The target award for each officer was based on the scope and
complexity of the position and competitive compensation data. At
the beginning of each three-year cycle, the executive was
credited with stock-related performance units valued at one-half
the target award for that cycle. During the cycle, the only
payments actually received were "dividend equivalents" on the
performance units equal to the dividends paid to shareholders on
an equivalent number of shares of Common stock. For the cycle
beginning in 1993, the cash payout may range from 0-200%, and the
performance unit payout may range from 50-200% of the targeted
award.
The Company's sales growth and return on equity over the three-
year cycle from 1993 through 1995 did not meet the established
goals, resulting in a minimum payout of 50% of the stock portion
for Mr. Holmes. Four staff officers received payouts based on
individual performance. Two officers with division goals
received a payout under the long-term plan.
The Long-Term Performance Stock cycle which commenced in 1994 was
terminated.
In lieu of the former long-term performance cycles, in 1995
officers were awarded long-term performance stock grants, based
on targeted, competitive levels of compensation. The grants were
targeted to vest one-third each year if the Company achieved
stock price hurdles of $40, $45 and $50 for 20 of 30 consecutive
trading days on the New York Stock Exchange, before successive
December 15ths. The first price hurdle was achieved during 1995
and participants, including those shown in the Summary
Compensation Table, vested in one-third of the grant on December
15, 1995.
Supplemental Executive Retirement Plan
An additional key element of total compensation for Messrs. Gill
and Holmes is the Supplemental Executive Retirement Plan ("SERP")
I and the associated tax payments made with respect to Plan
contributions on behalf of the participants. In 1985, the
Company put this Plan in place for Messrs. Gill and Holmes,
funded by life insurance to minimize the cost to the Company.
This Plan was designed to provide a competitive retirement
benefit (60% replacement ratio) for senior officers who forfeited
accrued retirement benefits by coming to Bausch & Lomb in mid-
career. As this benefit has neither the tax advantages nor the
security of a tax-qualified government insured plan, it is
currently expensed and funded in secular trusts. Contributions
to the trusts are taxable income to the participants, and the
income presented in this proxy statement for Messrs. Gill and
Holmes includes payments to offset the income tax liability. Mr.
Kumar participates in SERP III and Mr. Carpenter is eligible to
participate in SERP III, described on page 34. Mr. Foster
participates in a separate Supplemental Executive Retirement Plan
established by the Company's Charles River Laboratories, Inc.
subsidiary, described on page 35. Contributions made under SERP
III and Charles River SERP Plans do not result in taxable income
to the participants.
Awards Under The Stock Incentive Plan
Under the Company's 1990 Stock Incentive Plan, which was approved
by the shareholders, officers of the Company are eligible to
receive awards of stock options and stock grants, as approved by
the Committee. Guidelines for stock options and stock grants are
based on competitive survey data (as described above) in
combination with an internal assessment of the scope and
complexity of the executive's position. For each officer
position, a target stock award is defined as a multiple of pay
(the target amount for options is below the targeted percentile
for aggregate compensation). That dollar amount is then divided
by the current stock price to determine the number of shares.
The Committee reviews the competitiveness of the target awards
annually. In 1995, option award targets were increased for
certain officer grades, but not for the CEO. Each officer's
performance is reviewed to determine if a target, maximum,
minimum or no stock option award will be made. In
<PAGE> 13
1995, the Committee awarded options within this framework. The
1995 options will vest over three years. Mr. Carpenter was
granted 50,000 options upon hiring and 50,001 options upon being
named President and Chief Operating Officer of the corporation.
Mr. Waltrip was granted 100,000 options upon assuming the
responsibilities of Chairman and Chief Executive Officer. Mr.
Waltrip's options will vest in full on the date a new Chairman
and Chief Executive Officer is named to succeed him.
All stock options granted to date are priced at the fair market
value of the underlying stock as of the date of the grant. In
1995, Mr. Gill received options on 80,340 shares of the Company's
stock with an exercise price of $41.500 per share (i.e., the fair
market value of the Company's stock on the date of grant).
Stock grants may be awarded periodically to officers of the
Company. As part of his hiring agreement, Mr. Carpenter was
awarded 10,000 shares of stock to vest in thirds on the
anniversary date of his employment.
Conclusion
Each element of the officer compensation package is reviewed by
the Committee on Management to ensure that base pay and incentive
opportunities are at competitive levels and to provide incentive
systems reflecting strong financial performance and an alignment
with shareholder interests. In summary, we believe the total
compensation philosophy and compensation program serve the best
interests of the shareholders.
Committee on Management
Ruth R. McMullin, Chair
Franklin E. Agnew
Bradford R. Boss
<PAGE> 14
Compensation Tables
The individuals named in the following tables include the
Company's Chief Executive Officer and the four other most highly
compensated executive officers of the Company as of December 30,
1995, and the Company's former Chief Executive Officer, who
retired from the Company in December 1995.
<TABLE>
Summary Compensation Table
ANNUAL COMPENSATION
<CAPTION>
Other
Name Annual
and Compen-
Principal Salary Bonus sation
Position Year ($) ($) ($) <F1>
_________ ____ ______ _____ ________
<S> <C> <C> <C> <C>
W.H. Waltrip 1995 $ 32,350 $ 0 $ 49,000
Chairman 1994 $ 0 $ 0 $ 48,000
and CEO 1993 $ 0 $ 0 $ 47,375
D.E. Gill <F4> 1995 $1,000,000 $468,000 $636,977
Retired 1994 $1,000,000 $ 0 $609,419
Chairman 1993 $ 950,000 $680,000 $900,474
and CEO
W.M. Carpenter 1995 $ 272,708 $175,000 $ 22,089
President and
COO
J.T. Holmes 1995 $ 370,000 $133,200 $209,652
Exec. V.P. and 1994 $ 336,000 $ 0 $136,479
Chief 1993 $ 320,000 $176,000 $218,390
Administrative
Officer
J.C. Foster 1995 $ 252,500 $231,188 $ 29,747
Sr. V.P. and 1994 $ 215,000 $167,481 $ 25,635
President and 1993 $ 215,000 $103,953 $ 31,643
CEO - Charles
River
Laboratories, Inc.
A. Kumar 1995 $ 300,000 $139,500 $ 14,269
Sr. V.P. - 1994 $ 259,000 $ 43,706 $ 3,293
Int'l. Oper. 1993 $ 238,334 $ 62,000 $ 3,024
<FN>
<F1> The numbers reported in this column for 1995 include
$482,848 and $133,254 paid to Messrs. Gill and Holmes,
respectively, to offset tax liabilities incurred under the
Company's Supplemental Executive Retirement Plan I, which is
described on page 34. The numbers reported in this column for
Mr. Waltrip consist solely of the compensation earned as a
director of the Company.
</FN>
</TABLE>
<TABLE>
LONG TERM COMPENSATION
<CAPTION>
AWARDS PAYOUTS
______________________ ________ _________
Securities
Restricted Underlying All Other
Stock Options/ LTIP Compen-
Award(s) SARs Payouts sation
Year ($) <F2> (#) ($) ($) <F3>
____ ________ _______ ________ __________
(Cash and
Stock)
<S> <C> <C> <C> <C> <C>
W.H. Waltrip
1995 $ 0 2,231 $0 $ 0
1994 $ 0 2,399 $0 $ 0
1993 $ 0 1,549 $0 $ 0
D.E. Gill<F4>
1995 $415,000 80,340 $477,163 $6,485,749
1994 $ 0 27,948 $ 0 $ 31,239
1993 $ 0 157,944 $378,721 $ 56,619
W.M. Carpenter
1995 $356,250 122,201 $122,930 $ 0
J.T. Holmes
1995 $ 62,250 22,200 $220,519 $ 11,100
1994 $ 0 5,670 $ 0 $ 11,328
1993 $ 0 32,040 $128,786 $ 16,385
J.C. Foster
1995 $ 41,500 20,988 $107,564 $ 0
1994 $ 0 2,700 $ 33,367 $ 0
1993 $ 0 15,100 $ 0 $ 0
A. Kumar
1995 $ 41,500 17,490 $122,930 $ 3,750
1994 $ 0 3,480 $ 56,145 $ 6,930
1993 $ 0 19,560 $ 0 $ 6,546
<FN>
<F2> With the exception of those shares awarded to Mr. Carpenter,
the remaining shares vested on December 15, 1995. With respect
to Mr. Carpenter, the restricted stock award reported in this
column vests annually in one-third increments over a three-year
period. Dividends are paid to all holders of restricted stock.
At December 31, 1995 the aggregate number of shares and
corresponding value of restricted stock owned by the named
individuals was as follows: Mr. Gill, 10,000 shares valued at
$415,000; Mr. Carpenter, 10,000 shares valued at $356,250; Mr.
Holmes, 1,500 shares valued at $62,250; Mr. Foster, 1,000 shares
valued at $41,500; and Mr. Kumar, 1,000 shares valued at $41,500.
<F3> With the exception of those amounts relating to Mr. Gill,
the amounts reported in this column for 1995 consist solely of
the Company's matching contributions under its 401(k) plan and
401(k) excess plan. The amount reported for Mr. Gill includes
(i) $26,400 relating to contributions under the Company's 401(k)
and 401(k) excess plans; (ii) $2,588,167 in transitional payments
in connection with Mr. Gill's retirement arrangement; (iii)
$1,733,100 relating to accelerated vesting of 43,600 previously
issued stock grants; (iv) $1,881,732 relating to amended SERP
benefits accelerated to a 60% after-tax benefit based on final
average compensation; and (v) $256,350 in other retirement
transition benefits. The after-tax effect to the Company of Mr.
Gill's retirement arrangement was approximately $4 million.
<F4> Retired, effective January 31, 1996.
</FN>
<PAGE> 15
</TABLE>
<TABLE>
OPTION/SAR Grants in Last Fiscal Year
<CAPTION>
Individual Grants
__________________________________________________________
Number of % of
Securities Total
Underlying Options/SARs
Options/ Granted to Exercise
SARs Employees or Base
Granted In Fiscal Price Expiration
Name (#) <F2> Year <F3> ($/Sh)<F4> Date
____ _______ __________ ________ __________
<S> <C> <C> <C> <C>
All
share-
holders
All
optionees 1,181,585 100.00% $40.98 During 2005<F5>
Gain to all
optionees
as a percent
of gain to
shareholders
D.E. Gill 80,340 6.80% $41.500 July 18, 2005
Gain to CEO
as a percent
of gain to
shareholders
W.H. Waltrip 2,231 0.19% $41.9375 July 25, 2005
Gain to CEO
as a percent
of gain to
shareholders
W.M.
Carpenter 50,000 4.23% $35.6250 March 22, 2005
22,200 1.88% $41.5000 July 18, 2005
50,001 4.23% $36.9375 Dec. 12, 2005
J.T. Holmes 22,200 1.88% $41.5000 July 18, 2005
J.C. Foster 20,988 1.78% $41.5000 July 18, 2005
A. Kumar 17,490 1.48% $41.5000 July 18, 2005
<FN>
<F2> All options granted to the named executives in 1995 vest
annually in one-third increments. All options granted to the
named executives have attached to them limited Stock Appreciation
Rights, which only become exercisable in the event of a change in
control.
<F3> Based on total number of options granted to employees equal
to 1,181,585.
<F4> With the exception of the exercise price for "all
optionees" which is the average market value for all the options
granted during 1995, the price reflected in this column is equal
to the fair market value at date of grant.
<F5> The expiration date for all optionees is the tenth
anniversary of the date on which the 1995 option was granted.
</FN>
</TABLE>
<TABLE>
Potential Realizable Value at Assumed Annual
Rates of Stock Price Appreciation for Option Term <F1>
<CAPTION>
_____________________________________________________
0% 5%
Stock Dollar Stock Dollar
Name Price Gain Price<F6> Gain
____ _____ _____ ________ ______
<S> <C> <C> <C> <C>
All
share-
holders $41.5000 $0 $67.60 $1,461,600,000<F7>
All
optionees $40.98 $0 $66.75 $ 30,449,445
Gain to all
optionees as
a percent
of gain to
shareholders 2.08%
D.E. Gill $41.5000 $0 $67.60 $ 2,096,874
Gain to CEO
as a percent
of gain to
shareholders 0.14%
W.H. Waltrip $41.9375 $0 $68.31 $ 58,837
Gain to CEO 0.00%
as a percent
of gain to
shareholders
W.M. Carpenter $35.6250 $0 $58.03 $ 1,120,250
$41.5000 $0 $67.60 $ 579,420
$36.9375 $0 $60.17 $ 1,161,648
J.T. Holmes $41.5000 $0 $67.60 $ 579,420
J.C. Foster $41.5000 $0 $67.60 $ 547,787
A. Kumar $41.5000 $0 $67.60 $ 456,489
<FN>
<F1> There is no assurance that the value realized by an optionee
will be at or near the amount estimated using this model. These
amounts rely on assumed future stock price movements which cannot
be predicted with a reliable degree of accuracy.
<F6> Fair market value of stock at end of actual option term (ten
years), assuming annual compounding at the stated value.
<F7> Total dollar gains based on assumed annual rates of
appreciation and calculated on 56,000,000 outstanding shares.
</FN>
</TABLE>
<TABLE>
Potential Realizable Value at Assumed Annual
Rates of Stock Price Appreciation for Option Term <F1>
<CAPTION>
10%
Stock Dollar
Name Price<F6> Gain
____ ________ _______
<S> <C> <C>
All
share-
holders $107.64 $3,703,840,000<F7>
All
optionees $106.29 $ 77,169,316
Gain to all
optionees as
a percent
of gain to
shareholders 2.08%
D. E. Gill $107.64 $ 5,313,688
Gain to CEO
as a percent
gain to
shareholders 0.14%
W. H. Waltrip $108.78 $ 149,126
Gain to CEO 0.00%
as a percent
gain to
shareholders
W. M. Carpenter $ 92.40 $ 2,838,750
$107.64 $ 1,468,308
$ 95.81 $ 2,943,684
J. T. Holmes $107.64 $ 1,468,308
J. C. Foster $107.64 $ 1,388,146
A. Kumar $107.64 $ 1,156,789
<FN>
<F1> There is no assurance that the value realized by an optionee
will be at or near the amount estimated using this model. These
amounts rely on assumed future stock price movements which cannot
be predicted accurately.
<F6> Fair market value of stock at end of actual option term (ten
years), assuming annual compounding at the stated value.
<F7> Total dollar gains based on assumed annual rates of
appreciation and calculated on 56,000,000 outstanding shares.
</FN>
</TABLE>
<TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
<CAPTION>
Shares Acquired Value
Name on Exercise (#) Realized($)<F1>
____ _______________ _______________
<S> <C> <C>
W. H. Waltrip 0 $ 0
D. E. Gill 0 $ 0
W. M. Carpenter 0 $ 0
J. T. Holmes 10,746 $124,737
J. C. Foster 0 $ 0
A. Kumar 0 $ 0
<FN>
<F1> Market Value of Company's Common stock at date of exercise
or year-end, minus the exercise price.
</FN>
</TABLE>
<TABLE>
Aggregated Option/SAR Exercises in Last
Fiscal Year and FY-End Option/SAR Values
<CAPTION>
Number of
Securities Value of
Underlying Unexercised,
Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End (#) at FY-End ($)
Exercisable/ Exercisable/
Name Unexercisable Unexercisable<F1>
____ _____________ ________________
<S> <C> <C>
W. H. Waltrip 11,211 $ 19,757
0 $ 0
D.E. Gill 328,762 $605,518
177,944 $ 75,693
W.M. Carpenter 0 $ 0
122,201 $334,378
J.T. Holmes 68,082 $142,263
42,000 $ 15,356
J.C. Foster 24,934 $ 30,181
30,338 $ 7,313
A. Kumar 32,260 $ 72,310
29,590 $ 9,425
<FN>
<F1> Market value of Company's Common stock at date of exercise
or year end, minus the exercise price.
</FN>
</TABLE>
<PAGE> 16
<TABLE>
Long-Term Incentive Plan Awards in Last Fiscal Year <F1>
<CAPTION>
Number of Performance or
Shares, Units Other Period
or Other Until Maturation
Name Rights (#)<F1> of Payout
____ _____________ ________________
<S> <C> <C>
D. E. Gill<F2> 55,400 3 years
W. M. Carpenter 9,120 3 years
J. T. Holmes 16,710 3 years
J. C. Foster 9,980 3 years
A. Kumar 11,120 3 years
<FN>
<F1> These grants will vest on successive December 15ths
following achievement of stock performance of $40, $45 and $50 on
20 of 30 consecutive trading days. Only one-third of the grant
may vest in any fiscal year.
<F2> The vesting of Mr. Gill's grants was accelerated upon his
retirement and the amount of the award is included in the "all
other compensation" section of the Summary Compensation Table.
</FN>
</TABLE>
<TABLE>
Long Term Incentive Plan Awards in Last Fiscal Year <F1>
<CAPTION>
Estimated Future Payouts
Under Non-Stock Price Based Plans
_________________________________
Threshold Target Maximum
Name ($ or #) ($ or #) ($ or #)
____ _________ ________ ________
<S> <C> <C> <C> <C>
D.E. Gill shares N/A N/A N/A
W.M. Carpenter shares N/A N/A N/A
J.T. Holmes shares N/A N/A N/A
J.C. Foster shares N/A N/A N/A
A. Kumar shares N/A N/A N/A
<FN>
<F1> These grants will vest on successive December 15ths
following achievement of stock performance of $40, $45 and $50 on
20 of 30 consecutive trading days. Only one-third of the grant
may vest in any fiscal year.
</FN>
</TABLE>
[Comparison of Five-Year Cumulative Total Shareholder Return
Table]
Graph required by 402(l) of Regulation S-K containing the data
points and data set forth in the chart below.
<TABLE>
Comparison of Five-Year Cumulative Total Shareholder Return<F1>
December 1990 through December 1995
<CAPTION>
S&P Health
Care Composite
Date Bausch & Lomb Group S&P 500
<S> <C> <C> <C>
December 1990 $100.00 $100.00 $100.00
December 1991 $165.96 $153.94 $130.34
December 1992 $158.44 $128.94 $140.25
December 1993 $151.61 $118.12 $154.32
December 1994 $102.72 $133.66 $156.42
December 1995 $123.27 $209.81 $214.99
<FN>
<F1> Assumes $100 invested on last day of December 1990.
Dividends are reinvested quarterly.
</FN>
</TABLE>
The Standard & Poor's Health Care Composite Group consists of the
following companies:
Abbott Laboratories
Allergan Incorporated
Alza Corporation
American Home Products Corporation
Amgen Inc.
Bard (C. R.) Inc.
Bausch & Lomb Incorporated
Baxter International Inc.
Becton Dickinson and Company
Beverly Enterprises, Inc.
Biomet, Inc.
Boston Scientific Corp.
Bristol-Myers Squibb Company
Columbia/HCA Healthcare VTG
Community Psychiatric Centers
Eli Lilly and Company
Johnson & Johnson
Mallinckrodt Group Inc.
Manor Care, Inc.
Medtronic, Inc.
Merck & Co., Inc.
Pfizer, Inc.
Pharmacia & Upjohn Inc.
St. Jude Medical, Inc.
Schering-Plough Corporation
Tenet Healthcare Corp.
U.S. Surgical Corp.
Warner-Lambert Company
<PAGE> 17
Defined Benefit Retirement Plans
Under the Company's Retirement Benefits Plan, all employees of
the Company and of certain subsidiaries who have reached age 21
and have at least one year of service are participants.
Employees are permitted to make additional contributions as set
forth in the Plan. Monthly benefits paid under the Plan are
based on employee earnings as defined in the Plan, Social
Security Covered Compensation, and credited years of service at
the time of retirement. Noncontributing employees accrue
benefits at the rate of 1.25% of their earnings up to Social
Security Covered Compensation, and contributing employees
additionally accrue a benefit of 1.55% of their earnings over
Social Security Covered Compensation. Benefits vest after five
years of service as defined in the Plan. Benefits for all years
prior to 1991 are based on earnings during the five-year period
1986 through 1990. Assuming continued employment to normal
retirement age, the estimated annual benefits payable upon
retirement at normal retirement age for each of the eligible
individuals named in the Summary Compensation Table are as
follows: Messrs. Holmes and Kumar, who are contributing
participants, $66,323 and $53,385, respectively. Mr. Gill, who
retired in early 1996, has an annual benefit of $3,086.
In addition, the Company maintains a separate Retirement Benefit
Restoration Plan which provides eligible employees additional
retirement benefits which would otherwise be provided under the
Retirement Benefits Plan but are excluded from that Plan by
specific federal regulatory limitations. Mr. Kumar is a vested
participant under this Plan. Assuming continued employment to
normal retirement age, the estimated annual benefits payable to
him from this Plan upon retirement at normal retirement age is
$134,601.
Mr. Foster participates in the Charles River Laboratories, Inc.
Pension Plan, which is similar to the Company's Retirement
Benefits Plan described above, except that employees do not
contribute to the Charles River Plan, and benefits accrue at the
rate of 1.125% of the employee's final five-year average
compensation. Assuming continued employment to normal retirement
age, the estimated annual benefit payable upon retirement to Mr.
Foster is $67,800.
The Company maintains three Supplemental Executive Retirement
Plans ("SERP"), under which officers may become eligible for
retirement benefits in addition to those provided under the
Company's Retirement Benefits Plan. In addition, the Company's
subsidiary, Charles River Laboratories, Inc., maintains a
separate Supplemental Executive Retirement Plan, which is
discussed below. No officer is eligible to participate in more
than one Company SERP, and the officers named in the Summary
Compensation Table are each participants in one of the SERPs
described below. Participants who vest under SERP I or II will
receive annual benefits, payable monthly, in an amount equal to a
percentage of their final average compensation. The percentage
used is a function of age at retirement: 32% at age 55 (or in
the case of SERP I, age 55 or below), and up to 60% at age 62.
For SERP III, benefits are based on a rate of 0.5% of final
average compensation for each year of officer service with a
limitation that total retirement benefits payable from this Plan
are restricted to a maximum which, in total with benefits
provided by other Company plans, does not exceed 60% of final
average earnings. A limited retirement benefit also vests upon
the completion of either one or five years of designated service,
depending on the plan, and the plans provide for the payout of
the net present value of all benefits in the event of a change in
control of the Company.
<PAGE> 18
Mr. Holmes has vested under SERP I and Mr. Kumar has vested under
SERP III. The anticipated benefits payable to eligible
participants under SERP I are funded through trusts established
for these purposes, and SERP I provides for the reimbursement to
vested participants in that plan of tax liabilities associated
with funding their trusts. The estimated annual after-tax
benefits payable at normal retirement age for Mr. Holmes under
SERP I is $118,416. The estimated pre-tax benefit payable at
normal retirement age for Mr. Kumar under SERP III is $101,123.
As a result of his special arrangement, as described on page 36,
Mr. Gill will receive annual amended SERP I after-tax benefits of
$577,740.
Mr. Foster is fully vested in an Executive Life/Supplemental
Retirement Income Plan maintained by Charles River Laboratories,
Inc. This Plan is funded through insurance policies purchased on
the participants' lives. Annual benefits under this Plan will
equal a percentage of final average compensation, less amounts
payable under Charles River's Pension Plan and an offset for
Social Security benefits received by the participant. The age-
based percentages are 46% at age 59, and up to 55% at age 62 and
over. Participants vest as to 50% of the total benefit after
five years of designated service, with a 10% incremental increase
in vesting percentage for each year thereafter. The estimated
pre-tax benefit payable at normal retirement age under this Plan
for Mr. Foster is $361,300.
Related Transactions and Employment Contracts
In connection with Class B shares purchased under the Company's
Stock Incentive Plans, the Company may loan the participant an
amount equal to the full amount of the purchase price of those
shares, in which case the shares are deposited with the Company
as collateral for the loan. The rate of interest on loans to
participants is the lesser of (i) the applicable federal rates
announced monthly by the Internal Revenue Service pursuant to
Section 1274(d) of the Internal Revenue Code of 1986, or (ii) 6%
(if made between July 1, 1975 and June 30, 1981), or 9% (if made
after June 30, 1981). To the extent applicable, the largest
aggregate amount of indebtedness outstanding which exceeded
$60,000 at any time since December 31, 1994 for each of the
individuals named in the preceding compensation tables was as
follows: Mr. Gill, $510,560; Mr. Holmes, $672,940; Mr. Foster,
$181,777; and all executive officers and directors as a group,
$3,149,264. As of February 27, 1996, the outstanding amount of
such indebtedness was as follows: Mr. Holmes, $672,940; Mr.
Foster, $179,920; and all executive officers and directors as a
group, $2,644,116.
The Company has entered into agreements, for an indefinite term,
with all persons named in the Summary Compensation Table. Each
agreement provides that, in the event of a change in control (as
defined in the agreements) which is followed within three years
by (i) termination of the officer's employment, (ii) a
downgrading of the officer's position, or (iii) voluntary
termination under circumstances specified in the agreements, the
officer will be entitled to: (a) salary and pro rata bonus then
due; and (b) a lump sum separation payment equal to three times
annual base salary and bonus as determined under the agreements.
Each officer will also be entitled to a continuation of certain
benefits and perquisites for up to three additional years. These
benefits and perquisites may be reduced by corresponding benefits
or perquisites provided by a subsequent employer during the
period in which they are provided.
<PAGE> 19
Employment Contracts, Termination of Employment and Change of
Control Arrangements
In December 1995, Daniel E. Gill announced his retirement as
Chairman and Chief Executive Officer of the Company. In
recognition of Mr. Gill's 17 years of service and his leadership
in transforming the Company into an internationally recognized
leader in the fields of healthcare and optics, as well as his
undertakings to consult with the Company on certain matters and
to refrain from competing with the Company's businesses, the
Board approved a special retirement arrangement for Mr. Gill
which included a transition payment of $2,588,167 based
principally on projected salary continuation through June 1998
and accelerated vesting of 43,600 previously awarded restricted
stock grants valued at $1,733,100. The vesting of all unvested
stock options was accelerated to January 31, 1996. Based on Mr.
Gill's average final compensation of $1,604,833, the cost of the
acceleration of the amended SERP I benefit to a 60% after-tax
benefit is $1,881,732. In determining final average compensation
for purposes of SERP I, 1995 compensation was deemed to include
an additional amount equal to approximately one month of the
transition payment. In addition, Mr. Gill received other
transition benefits in the amount of $256,350. The after-tax
cost to the Company relating to Mr. Gill's retirement package was
approximately $4 million.
Appointment of Independent Accountants
(Proxy Item 2)
The Board of Directors has unanimously approved and voted to
recommend to shareholders that Price Waterhouse LLP be appointed
as independent accountants of the Company for 1996. They have
been independent accountants of the Company since 1927. A
representative of Price Waterhouse LLP plans to be present at the
meeting, will have the opportunity to make a statement and is
expected to be available to respond to questions.
Annual Retainer Stock Plan for Non-Employee Directors
(Proxy Item 3)
On February 27, 1996, the Board of Directors of the Company
approved for submission to the shareholders at the 1996 annual
meeting the Annual Retainer Stock Plan for Non-Employee Directors
(the "Plan"). The Plan is intended to align the economic
interests of the Company's non-employee directors more closely
with those of its shareholders. The Plan provides that one-half
of the annual retainer for non-employee directors which has
previously been paid entirely in cash shall be paid in the form
of Company Common Stock. The following summary describes the
material features of the Plan. This summary is qualified in its
entirety by reference to the specific provisions of the Plan, the
full text of which is set forth as Exhibit A.
Material Features of the Plan
Beginning with the annual meeting in 1996, each non-employee
director will receive an annual retainer of $30,000, in addition
to separate fees for attendance at meetings of the Committees of
the Board. Should the Plan be adopted, the directors would be
paid each year an annual cash retainer (the "Annual Cash
Retainer") which for 1996 would be $15,000, or one-half of the
annual retainer of $30,000 the directors would otherwise have
received, and a grant of shares of the Company's Common Stock
equal in value to the Annual Cash Retainer ($15,000 for 1996)
(such grant the "Stock Retainer"). For purposes of the Plan,
the annual stock retainer shall not be increased more than once
every three years. A maximum of 100,000 shares of Common Stock
may be paid in the form of stock retainers under the Plan,
subject to customary anti-dilution adjustment.
Each individual who is a director on the Effective Date and each
individual who becomes a director thereafter during the term of
the Plan, shall be a participant ("Participant") in the Plan,
during such period as such individual remains a director and is
not an employee of the Company or any of its subsidiaries.
<PAGE> 20
The number of shares of Common Stock paid to each Participant as
the Stock Retainer for a given Plan Year shall be determined by
dividing (i) the Annual Cash Retainer amount for such Participant
for such Plan year by (ii) the fair market value of the Company's
Common Stock on a specified date, as defined in the Plan, and
then rounding to the nearest whole share. The Stock Retainer
shall be payable immediately following the annual meeting each
year, provided that the Stock Retainer payable to any person who
becomes a Participant other than at the Company's annual meeting,
whether by appointment or election as a director or by change in
status from a full-time employee, shall be credited on the date
such person first becomes a Participant. The shares granted
under the Plan may be treasury shares or shares purchased in the
open market.
The proposed number of shares that would be granted in 1996 under
the Plan is not presently determinable. Assuming a stock price
of $39.125 (Fair Market Value as defined in the Plan of a share
of Common Stock on a hypothetical grant date of February 27,
1996), the following table sets forth the number of shares that
would be automatically granted under the Plan to non-employee
directors individually and as a group in fiscal 1996.
BENEFITS UNDER PROPOSED NEW PLAN
NAME OF NON-EMPLOYEE DIRECTORS NUMBER OF SHARES
Franklin E. Agnew 383
William Balderston III 383
Bradford B. Boss 383
Ruth R. McMullin 383
John R. Purcell 383
Linda Johnson Rice 383
Alvin W. Trivelpiece 383
Kenneth L. Wolfe 383
All current non-employee 3,064
directors as a group (eight
persons)
Pursuant to the Plan, a Participant may make an annual election,
which election shall remain in effect for each subsequent Plan
Year unless changed, to defer delivery of the Stock Retainer
until (a) three years from the date of the annual meeting for
which it was originally payable, (b) the date on which the
Participant ceases to be a director for any reason (the
"Departure Date") payable in a lump sum, or (c) the Departure
Date, payable in five equal annual installments commencing on the
Departure Date. Such election shall be made no later than six
months prior to the Plan Year in which it is to be effective, and
no more than one deferral election or change thereof may be made
in any Plan Year. Shares so deferred shall be credited to
accounts established for each Participant for this purpose, and a
director's account will be credited with dividends and other
distributions paid on the Common Stock based on the number of
shares credited to such account when such dividend or
distribution is paid. No Common Stock received by a Participant
pursuant to the Plan may be sold until at least six months after
the date of grant.
The Company shall have the right to require, prior to the
issuance or delivery of any shares of Common Stock pursuant to
the Plan, that a Participant make arrangements satisfactory to
the Plan Committee, as defined in the Plan, for the withholding
of any taxes required by law to be withheld with respect to the
issuance or delivery of such shares, including without limitation
by the withholding of shares that would otherwise be so issued or
delivered, by withholding from any other payment due to the
Participant, or by a cash payment to the Company by the
Participant.
<PAGE> 21
The Company shall not be required to issue or deliver
certificates for Common Stock under the Plan prior to listing or
registration thereof, as defined in the Plan, or prior to
obtaining any necessary consent or approval from a state or
federal government agency.
The Plan provides for certain adjustments to the deferred stock
accounts of a Participant in the event of any change in the
capitalization of the Company or certain corporate transactions.
Upon a change of control, as defined in the Plan, the shares in
the deferred stock accounts would become immediately deliverable.
Shareholder Proposals
In order to be eligible for inclusion in the Company's proxy
materials for next year's annual meeting of shareholders, any
shareholder proposal (other than the submission of nominees for
directors) must be received by the Company at its principal
executive offices not later than the close of business on
December 12, 1996.
Other Matters
The Board of Directors does not intend to present, and has not
been informed that any other person intends to present, any
matters for action at this meeting other than those specifically
referred to in this proxy statement. If any other matters
properly come before the meeting, it is intended that the holders
of the proxies will act in respect thereof in accordance with
their best judgment.
The Company has purchased insurance from the Chubb Group,
American International Group, Zurich Insurance and Aetna insuring
the Company against obligations it might incur as a result of the
indemnification of its directors and officers for certain
liabilities they might incur, and insuring such directors and
officers for additional liabilities against which they may not be
indemnified by the Company. This insurance was renewed effective
January 30, 1996 for a period of one year at a cost of $680,000.
The cost of solicitation of proxies will be borne by the Company.
In addition to the solicitation of proxies by use of the mails,
some of the officers and regular employees of the Company,
without extra remuneration, may solicit proxies personally or by
telephone, telefax or similar transmission. The Company has
retained Georgeson & Co. to aid in the solicitation of proxies
for shares held of record by banks, brokers and other custodians,
nominees and fiduciaries. The Company will pay Georgeson & Co.
an anticipated fee of $10,000, plus expenses, for these services,
and will also reimburse such record holders for their expenses in
forwarding proxies and proxy soliciting material to the
beneficial owners of the shares held by them.
According to rules of the Securities and Exchange Commission
("SEC"), the information presented in this proxy statement under
the captions "Report of the Committee on Management" and
"Comparison of Five-Year Cumulative Total Shareholder Return"
shall not be deemed to be "soliciting material" or to be filed
with the SEC under the Securities Act of 1933 or the Securities
Exchange Act of 1934, and nothing contained in any previous
filings made by the Company under the aforementioned Acts shall
be interpreted as incorporating by reference the information
presented under the specified captions.
April 11, 1996
<PAGE> 22
EXHIBIT A
BAUSCH & LOMB INCORPORATED ANNUAL RETAINER STOCK PLAN FOR NON-
EMPLOYEE DIRECTORS
1. INTRODUCTION
This plan shall be known as the "Bausch & Lomb Annual
Retainer Stock Plan For Non-Employee Directors" and is
hereinafter referred to as the "Plan". The purposes of the Plan
are to enable Bausch & Lomb Incorporated, a New York corporation
(the "Company"), to promote the interests of the Company and its
shareholders by attracting and retaining non-employee Directors
capable of furthering the future success of the Company and by
aligning their economic interests more closely with those of the
Company's shareholders, by paying half of what heretofore had
been their annual cash retainer in the form of shares of the
Company's Common Stock, par value $.40 per share (the "Common
Stock").
2. DEFINITIONS
The following terms shall have the meanings set forth below:
"Annual Meeting" means an annual meeting of the shareholders of
the Company.
The "Annual Cash Retainer Amount" for a Participant means the
dollar amount of the annual cash retainer payable to the
Participant for service on the Board for the Plan Year or the
portion of the Plan Year during which he or she is a Participant;
provided that, for these purposes only, such dollar amount shall
not be increased more than once every three years. The Annual
Cash Retainer Amount for the first Plan Year shall be $15,000,
which is one-half the retainer amount that would be paid in cash
to Directors for service on the Board during the year commencing
with the annual meeting in 1996, absent the Plan.
The "Board" means the Board of Directors of the Company.
"Change of Control" has the meaning set forth in Section 12(d).
The "Code" means the Internal Revenue Code of 1986, as amended,
and the rules and regulations thereunder. References to any
provision of the Code or rule or regulation thereunder shall be
deemed to include any amended or successor provision, rule or
regulation.
The "Committee" means the committee that administers the Plan, as
more fully defined in Section 13.
"Common Stock" has the meaning set forth in Section 1.
The "Company" has the meaning set forth in Section 1.
"Deferral Election" has the meaning set forth in Section 6.
"Deferred Stock Account" means a bookkeeping account maintained
by the Company for a Participant representing the Participant's
interest in the shares credited to such Deferred Stock Account
pursuant to Section 7.
"Delivery Date" has the meaning set forth in Section 6.
"Director" means an individual who is a member of the Board of
Directors of the Company.
<PAGE> 23
The "Dividend Equivalent" for a given dividend or other
distribution means a number of shares of Common Stock having a
Fair Market Value, as of the record date for such dividend or
distribution, equal to the amount of cash, plus the fair market
value on the date of distribution of any property, that is
distributed with respect to one share of Common Stock pursuant to
such dividend or distribution; such fair market value to be
determined by the Committee in good faith.
The "Effective Date" has the meaning set forth in Section 3.
The "Exchange Act" has the meaning set forth in Section 13(b).
The "Fair Market Value" means the mean between the highest and
lowest reported sales prices of the Common Stock on the NYSE
Composite Tape or, if not listed on such exchange, on any other
national securities exchange on which the Common Stock is listed
or on NASDAQ on the last trading day prior to the date with
respect to which the Fair Market Value is to be determined.
"Participant" has the meaning set forth in Section 4.
"Payment Time" means the time when a Stock Retainer is payable to
a Participant pursuant to Section 5 (without regard to the effect
of any Deferral Election).
"Plan Year" means the period from the date of an annual meeting
through the day immediately preceding the date of the next annual
meeting.
"Stock Retainer" has the meaning set forth in Section 5.
"Third Anniversary" has the meaning set forth in Section 6.
The "Valuation Date" for a Stock Retainer means the date of the
annual meeting that begins the Plan Year with respect to which
such Stock Retainer is payable; provided that, if a person
becomes a Participant on a day other than the date of an annual
meeting, that day shall be the "Valuation Date" for such
Participant for the Plan Year in which that day occurs.
3. EFFECTIVE DATE OF THE PLAN
The Plan shall be effective as of the date of the annual
meeting that occurs in 1996 (the "Effective Date"), provided that
it is approved by the shareholders at such annual meeting.
4. ELIGIBILITY
Each individual who is a Director on the Effective Date and
each individual who becomes a Director thereafter during the term
of the Plan, shall be a participant ("Participant") in the Plan,
in each case during such period as such individual remains a
Director and is not an employee of the Company or any of its
subsidiaries. Each credit of shares of Common Stock pursuant to
the Plan shall be evidenced by a written agreement duly executed
and delivered by or on behalf of the Company and a Participant,
if such an agreement is required by the Company to assure
compliance with all applicable laws and regulations.
5. GRANTS OF SHARES
Commencing on the Effective Date, one-half of the amount
that had prior to the Effective Date been paid in cash to each
Participant for service on the Board shall instead be payable in
shares of Common Stock (the "Stock Retainer") pursuant to this
Plan. The number of shares of Common Stock paid to each
Participant as the Stock Retainer for a given Plan Year shall be
<PAGE> 24
determined by dividing (i) the Annual Cash Retainer Amount for
such Participant for such Plan Year by (ii) the Fair Market Value
on the Valuation Date, and then rounding to the nearest whole
share. The Stock Retainer shall be payable immediately following
the Company's annual meeting, provided that the Stock Retainer
payable to any person who becomes a Participant following the
Company's annual meeting, whether by appointment or election as a
Director or by change in status from a full-time employee, shall
be payable on the date such person first becomes a Participant.
Shares of Common Stock credited to a Deferred Stock Account
pursuant to Section 7 shall be delivered pursuant to Section 8
hereof.
6. DEFERRAL ELECTION
From and after the Effective Date, a Participant may make an
election (a "Deferral Election") on an annual basis to defer
delivery of the Stock Retainer for the subsequent Plan Year,
specifying which one of the following ways the Stock Retainer is
to be delivered: (a) on the date which is three years after the
date of the annual meeting for which it was originally payable
(the "Third Anniversary"), (b) on the date upon which the
Participant ceases to be a Director for any reason (the
"Departure Date") or (c) in five equal annual installments
commencing on the Departure Date (the "Third Anniversary" and the
"Departure Date" each being referred to herein as a "Delivery
Date"). Such Deferral Election shall remain in effect for each
subsequent Plan Year unless changed, provided that, any Deferral
Election with respect to a particular Plan Year may not be
changed less than six months prior to the beginning of such Plan
Year and provided, further, that no more than one Deferral
Election or change thereof may be made in any Plan Year.
Any Deferral Election and any change or revocation thereof
shall be made by delivering written notice thereof to the
Committee no later than six months prior to the beginning of the
Plan Year in which it is to be effected; provided that, with
respect to the Plan Year beginning on the Effective Date, any
Deferral Election or revocation thereof must be delivered no
later than the close of business on the 30th day prior to the
1996 annual meeting.
7. DEFERRED STOCK ACCOUNTS
The Company shall maintain a Deferred Stock Account for each
Participant who makes a Deferral Election to which shall be
credited, as of the applicable Payment Time, the number of shares
of Common Stock payable pursuant to the Stock Retainer to which
the Deferral Election relates. So long as any amounts in such
Deferred Stock Account have not been delivered to the Participant
under Section 8, each Deferred Stock Account shall be credited as
of the payment date for any dividend paid or other distribution
made with respect to the Common Stock, with a number of shares of
Common Stock equal to (a) the number of shares of Common Stock
shown in such Deferred Stock Account on the record date for such
dividend or distribution multiplied by (b) the Dividend
Equivalent for such dividend or distribution.
8. DELIVERY OF SHARES
(a) The shares of Common Stock in a Participant's Deferred
Stock Account with respect to any Stock Retainer for which a
Deferral Election has been made (together with dividends
attributable to such shares credited to such Deferred Stock
Account) shall be delivered in accordance with this Section 8 as
soon as practicable after the applicable Delivery Date. Except
with respect to a Deferral Election pursuant to Section 6(c),
such shares shall be delivered at one time; provided that, if the
number of shares so delivered includes a fractional share, such
number shall be rounded to the nearest whole number of shares.
If the Participant has in effect a Deferral Election pursuant to
Section 6(c), then such shares shall be delivered in five equal
annual
<PAGE> 25
installments (together with dividends attributable to such shares
credited to such Deferred Stock Account), with the first such
installment being delivered on the first anniversary of the
Delivery Date; provided that, if in order to equalize such
installments, fractional shares would have to be delivered, such
installments shall be adjusted by rounding to the nearest whole
share. If any such shares are to be delivered after the
Participant has died or become legally incompetent, they shall be
delivered to the Participant's estate or legal guardian, as the
case may be, in accordance with the foregoing; provided that, if
the Participant dies with a Deferral Election pursuant to Section
6(c) in effect, the Committee shall deliver all remaining
undelivered shares to the Participant's estate immediately.
References to a Participant in this Plan shall be deemed to refer
to the Participant's estate or legal guardian, where appropriate.
(b) The Company may, but shall not be required to, create a
grantor trust or utilize an existing grantor trust (in either
case, the "Trust") to assist it in accumulating the shares of
Common Stock needed to fulfill its obligations under this Section
8. However, Participants shall have no beneficial or other
interest in the Trust and the assets thereof, and their rights
under the Plan shall be as general creditors of the Company,
unaffected by the existence or nonexistence of the Trust, except
that deliveries of Stock Retainers to Participants from the Trust
shall, to the extent thereof, be treated as satisfying the
Company's obligations under this Section 8.
9. SHARE CERTIFICATES; VOTING AND OTHER RIGHTS
The certificates for shares delivered to a Participant
pursuant to Section 8 above shall be issued in the name of the
Participant, and from and after the date of such issuance the
Participant shall be entitled to all rights of a shareholder with
respect to Common Stock for all such shares issued in his or her
name, including the right to vote the shares, and the Participant
shall receive all dividends and other distributions paid or made
with respect thereto.
10. GENERAL RESTRICTIONS
(a) Notwithstanding any other provision of the Plan or
agreements made pursuant thereto, the Company shall not be
required to issue or deliver any certificate or certificates for
shares of Common Stock under the Plan prior to fulfillment of all
of the following conditions:
(i) Listing or approval for listing upon official
notice of issuance of such shares on the New York Stock Exchange,
Inc., or such other securities exchange as may at the time be a
market for the Common Stock;
(ii) Any registration or other qualification of such
shares under any state or federal law or regulation, or the
maintaining in effect of any such registration or other
qualification which the Committee shall, upon the advice of
counsel, deem necessary or advisable; and
(iii) Obtaining any other consent, approval, or permit
from any state or federal governmental agency which the Committee
shall, after receiving the advice of counsel, determine to be
necessary or advisable.
(b) Nothing contained in the Plan shall prevent the Company
from adopting other or additional compensation arrangements for
the Participants.
(c) No Common Stock received by a Participant pursuant to
the Plan may be sold until at least six months after the Payment
Date for such Common Stock.
<PAGE> 26
11. SHARES AVAILABLE
Subject to Section 12 below, the maximum number of shares of
Common Stock which may in the aggregate be paid as Stock
Retainers pursuant to the Plan is 100,000. Shares of Common
Stock issuable under the Plan may be taken from treasury shares
of the Company or purchased on the open market.
12. ADJUSTMENTS; CHANGE OF CONTROL
(a) In the event that there is, at any time after the Board
adopts the Plan, any change in corporate capitalization, such as
a stock split, combination of shares, exchange of shares,
warrants or rights offering to purchase Common Stock at a price
below its fair market value, reclassification, or
recapitalization, or a corporate transaction, such as any merger,
consolidation, separation, including a spin-off, or other
extraordinary distribution of stock or property of the Company,
any reorganization (whether or not such reorganization comes
within the definition of such term in Section 368 of the Code) or
any partial or complete liquidation of the Company (each of the
foregoing a "Transaction"), in each case other than any such
Transaction which constitutes a Change of Control (as defined
below), (i) the Deferred Stock Accounts shall be credited with
the amount and kind of shares or other property which would have
been received by a holder of the number of shares of Common Stock
held in such Deferred Stock Account had such shares of Common
Stock been outstanding as of the effectiveness of any such
Transaction, (ii) the number and kind of shares or other property
subject to the Plan shall likewise be appropriately adjusted to
reflect the effectiveness of any such Transaction and (iii) the
Committee shall appropriately adjust any other relevant
provisions of the Plan and any such modification by the Committee
shall be binding and conclusive on all persons.
(b) If the shares of Common Stock credited to the Deferred
Stock Accounts are converted pursuant to Section 12(a) into
another form of property, references in the Plan to the Common
Stock shall be deemed, where appropriate, to refer to such other
form of property, with such other modifications as may be
required for the Plan to operate in accordance with its purposes.
Without limiting the generality of the foregoing, references to
delivery of certificates for shares of Common Stock shall be
deemed to refer to delivery of cash and the incidents of
ownership of any other property held in the Deferred Stock
Accounts.
(c) In lieu of the adjustment contemplated by Section
12(a), in the event of a Change of Control, the following shall
occur on the date of the Change of Control: (i) the shares of
Common Stock held in each Participant's Deferred Stock Account
shall be deemed to be issued and outstanding as of the Change of
Control; (ii) the Company shall forthwith deliver to each
Participant who has a Deferred Stock Account all of the shares of
Common Stock or any other property held in such Participant's
Deferred Stock Account; and (iii) the Plan shall be terminated.
(d) For purposes of this Plan, Change of Control shall mean
any of the following events:
(i) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"))
(a "Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more of
either (a) the then outstanding shares of Common Stock of the
Company (the "Outstanding Company Common Stock") or (b) the
combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities");
provided, however, that the following acquisitions shall not
constitute a Change of Control: (a) any acquisition directly
from the Company
<PAGE> 27
(excluding an acquisition by virtue of the exercise of a
conversion privilege unless the security being so converted was
itself acquired directly from the Company), (b) any acquisition
by the Company, (c) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (d) any acquisition by
any corporation pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or
consolidation, the conditions described in clauses (a), (b) and
(c) of paragraph (iii) of this Section 12(d) are satisfied; or
(ii) Individuals who, as of the date hereof,
constitute the Board of Directors of the Company (the "Board"
and, as of the date hereof, the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result
of either an actual or threatened election contest (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the
Board; or
(iii) Approval by the shareholders of the Company
of a reorganization, merger, binding share exchange or
consolidation, unless, following such reorganization, merger,
binding share exchange or consolidation (a) more than 60% of,
respectively, the then outstanding shares of Common Stock of the
corporation resulting from such reorganization, merger, binding
share exchange or consolidation and the combined voting power of
the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities
immediately prior to such reorganization, merger, binding share
exchange or consolidation in substantially the same proportions
as their ownership, immediately prior to such reorganization,
merger, binding share exchange or consolidation, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (b) no Person (excluding the
Company, any employee benefit plan (or related trust) of the
Company or such corporation resulting from such reorganization,
merger, binding share exchange or consolidation and any Person
beneficially owning, immediately prior to such reorganization,
merger, binding share exchange or consolidation, directly or
indirectly, 20% or more of the Outstanding Company Common Stock
or Outstanding Company Voting Securities, as the case may be)
beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of Common Stock of the
corporation resulting from such reorganization, merger, binding
share exchange or consolidation or the combined voting power of
the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors and (c)
at least a majority of the members of the board of directors of
the corporation resulting from such reorganization, merger,
binding share exchange or consolidation were members of the
Incumbent Board at the time of the execution of the initial
agreement providing for such reorganization, merger, binding
share exchange or consolidation; or
(iv) Approval by the shareholders of the Company
of (a) a complete liquidation or dissolution of the Company or
(b) the sale or other disposition of all or substantially all of
the assets of the Company, other than to a corporation, with
respect to which following such sale or
<PAGE> 28
other disposition, (x) more than 60% of, respectively, the then
outstanding shares of Common Stock of such corporation and the
combined voting power of the then outstanding voting securities
of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities
immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately
prior to such sale or other disposition, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities,
as the case may be, (y) no Person (excluding the Company and any
employee benefit plan (or related trust) of the Company or such
corporation and any Person beneficially owning, immediately prior
to such sale or other disposition, directly or indirectly, 20% or
more of the Outstanding Company Common Stock or Outstanding
Company Voting Securities, as the case may be) beneficially owns,
directly or indirectly, 20% or more of, respectively, the then
outstanding shares of Common Stock of such corporation and the
combined voting power of the then outstanding voting securities
of such corporation entitled to vote generally in the election of
directors and (z) at least a majority of the members of the board
of directors of such corporation were members of the Incumbent
Board at the time of the execution of the initial agreement or
action of the Board providing for such sale or other disposition
of assets of the Company.
13. ADMINISTRATION; AMENDMENT AND TERMINATION
(a) The Plan shall be administered by a committee
consisting of three members who shall be the Chief Executive
Officer, the Chief Financial Officer and the Senior Vice
President - Human Resources or such other senior executive
officers or other directors who are not Participants as may be
designated by the Chief Executive Officer (the "Committee"),
which shall have full authority to construe and interpret the
Plan, to establish, amend and rescind rules and regulations
relating to the Plan, and to take all such actions and make all
such determinations in connection with the Plan as it may deem
necessary or desirable.
(b) The Board may from time to time make such amendments to
the Plan, including to preserve or come within any exemption from
liability under Section 16(b) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), as it may deem proper and
in the best interest of the Company without further approval of
the Company's stockholders, provided that, to the extent required
under New York law or to qualify transactions under the Plan for
exemption under Rule 16b-3 promulgated under the Exchange Act, no
amendment to the Plan shall be adopted without further approval
of the Company's stockholders and, provided, further, that if and
to the extent required for the Plan to comply with Rule 16b-3
promulgated under the Exchange Act, no amendment to the Plan
shall be made more than once in any six-month period that would
change the amount, price or timing of the grants of Common Stock
hereunder other than to comport with changes in the Internal
Revenue Code of 1986, as amended, the Employee Retirement Income
Security Act of 1974, as amended, or the regulations thereunder.
(c) The Board may terminate the Plan at any time by a vote
of a majority of the members thereof.
(d) Notwithstanding any other provision of the Plan,
neither the Board nor the Committee shall be authorized to
exercise any discretion with respect to the selection of persons
to receive shares or credits of shares of Common Stock under the
Plan or concerning the amount or timing of such receipt or
credits under the Plan, and no amendment or termination of the
Plan shall adversely affect the interest of any Participant in
shares previously credited to such Participant's Deferred Stock
Account without that Participant's express written consent.
<PAGE> 29
14. MISCELLANEOUS
(a) Nothing in the Plan shall be deemed to create any
obligation on the part of the Board to nominate any Director for
reelection by the Company's shareholders or to limit the rights
of the shareholders to remove any Director.
(b) The Company shall have the right to require, prior to
the issuance or delivery of any shares of Common Stock pursuant
to the Plan, that a Participant make arrangements satisfactory to
the Committee for the withholding of any taxes required by law to
be withheld with respect to the issuance or delivery of such
shares, including without limitation by the withholding of shares
that would otherwise be so issued or delivered, by withholding
from any other payment due to the Participant, or by a cash
payment to the Company by the Participant.
15. GOVERNING LAW
The Plan and all actions taken thereunder shall be governed
by and construed in accordance with the laws of the State of New
York.
