[front cover]
1 9 9 9
Notice of
Annual Meeting
and Proxy
Statement
----------------------------------------------
[logo: BAUSCH
& LOMB]
<PAGE>
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Corporate Offices One Bausch & Lomb Place
Rochester NY 14604-2701
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[logo: BAUSCH
& LOMB]
March 23, 1999
Dear Bausch & Lomb Shareholder:
We invite you to attend our annual meeting of shareholders on Tuesday, April 27,
1999 at our company's facility in St. Louis, Missouri.
This booklet includes the formal notice of the meeting and the proxy statement.
The proxy statement tells you about the agenda and the procedures for the
meeting. It also describes how the company's Board of Directors operates and
gives certain information about the company.
Our proxy statement has a new look this year. We hope that you find it easier to
read and understand.
We hope you will be able to attend the annual meeting. If you need special
assistance at the meeting, please contact the Secretary of the company at the
address above.
Sincerely,
/s/ William M. Carpenter
William M. Carpenter
Chairman and Chief Executive Officer
<PAGE>
Notice
of
Annual Meeting of Shareholders
of Bausch & Lomb Incorporated
<TABLE>
<S> <C>
Date: April 27, 1999
Time: 10:30 a.m.
Place: Bausch & Lomb Surgical, Inc.
3365 Tree Court Industrial Boulevard
St. Louis, Missouri 63122
(See directions on back cover)
Purpose: o Elect four directors
o Ratify appointment of independent accountants
o Conduct other business if properly raised
</TABLE>
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Your vote is important. Please 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 so indicate where provided on the proxy card.
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/s/ Jean F. Geisel
Jean F. Geisel
Secretary
March 23, 1999
<PAGE>
Table of Contents
<TABLE>
<S> <C>
Page
----
General Information .................................................... 1
Board of Directors ..................................................... 2
Matters to be Voted on by Shareholders ................................. 4
o Election of Directors (Item No. 1) .................................. 4
o Ratification of the Appointment of Independent
Accountants (Item No. 2) ............................................ 8
Security Ownership of Certain Beneficial Owners
and Directors and Executive Officers .................................. 8
Executive Compensation ................................................. 10
o Report of the Committee on Management ............................... 10
o Compensation Tables ................................................. 15
Total Return to Shareholders ........................................... 18
Defined Benefit Retirement Plans ....................................... 18
Related Transactions, Employment Contracts and
Termination of Employment and Change in Control Arrangements .......... 20
Additional Information ................................................. 20
</TABLE>
<PAGE>
Bausch & Lomb Incorporated
Proxy Statement
for
Annual Meeting of Shareholders
Tuesday, April 27, 1999
General Information
The approximate date on which the enclosed form of proxy and this proxy
statement are first being sent to shareholders is March 23, 1999.
Outstanding shares
On February 23, 1999, 56,171,809 shares of common stock and 655,548 shares of
class B stock were outstanding. Each common share and class B share has one
vote.
Who may vote
Shareholders of Bausch & Lomb Incorporated as of the company's record date,
March 12, 1999, may vote.
How to vote
You may vote by proxy or in person at the meeting. Even if you plan to attend
the meeting, we recommend that you vote by signing and returning the enclosed
proxy card. You can always change your vote as described below.
How proxies work
Bausch & Lomb's Board of Directors is asking for your proxy. By giving us your
proxy, you authorize the proxyholders (members of Bausch & Lomb management) to
vote your shares at the meeting in the manner you direct.
If you sign and return the enclosed proxy card but do not specify how you wish
us to vote your shares, your shares will be voted "for" all director candidates
and "for" the ratification of the appointment of PricewaterhouseCoopers LLP as
independent accountants for the company for 1999. Proxyholders will also vote
shares according to their discretion on any other matter properly brought
before the meeting.
You may receive more than one proxy card depending on how you hold your shares.
For example, if you hold shares through someone else, such as a stockbroker,
you may get proxy material from them. Shares registered in your name and shares
held in the company's Savings Plus Plan or Dahlberg Incentive Savings Plan are
covered by one card. If a proxy representing shares in the Bausch & Lomb
Savings Plus 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.
If for any reason any of the nominees for election as directors shall become
unavailable for election, discretionary authority may be exercised by the
persons named in the proxy card to vote for substitutes proposed by the Board
of Directors.
1
<PAGE>
Quorum
In order to carry out the business of the meeting, we must have a quorum. This
means that at least a majority of the outstanding shares eligible to vote must
be represented at the meeting, either by proxy or in person. Shares owned by
Bausch & Lomb are not voted and do not count for this purpose.
Changing your vote
You may revoke your proxy before it is voted by submitting a new proxy with a
later date, by voting in person at the meeting or by notifying Bausch & Lomb's
Secretary in writing at the address under "Questions?" on page 21.
Votes needed
Director nominees receiving the largest number of votes cast are elected, up to
the maximum number of directors fixed by the Board 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. Ratifying the appointment
of PricewaterhouseCoopers LLP as independent accountants for 1999, and any
other matter properly brought before the meeting, requires the favorable vote
of a majority of the votes cast.
Attending in person
Only shareholders, their designated proxies and Bausch & Lomb's guests may
attend the meeting.
Board of Directors
The Board of Directors of the company met six times in 1998. Each of the
directors attended 75% or more of the aggregate number of regularly scheduled
and special Board and committee meetings held during the year.
In 1998, Board members who were not employees of the company received an annual
retainer of $33,000, one-half of which was paid in company stock, and a fee of
$2,000 for each Board session (including concurrent committee meetings)
attended. For committee meetings not held in connection with a Board session,
committee members were paid a fee of $2,000. In addition, Board members who
chair committees and are not employees of the company received a $3,000 annual
fee. The company does not pay directors' fees to directors who are employees of
the company.
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 fair market value of the company's common stock on the date of grant. For
fiscal year 1998, each non-employee director was granted 1,776 options to
purchase class B shares.
Committees of the Board
The Board of Directors has established four standing committees to assist it in
carrying out its responsibilities: the Executive Committee, the Audit
Committee, the Committee on Management and the Committee on Directors.
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Executive Committee
Number of Members: Five
Members: William M. Carpenter (Chair), Franklin E. Agnew, John R. Purcell,
William H. Waltrip and Kenneth L. Wolfe
Number of Meetings in 1998: Four
Functions: - Holds regularly scheduled and special meetings between regular
Board meetings to take action necessary for the company to operate
efficiently
- Possesses all of the authority of the full Board, except as limited
by the by-laws of the company
Audit Committee
Number of Members: Four non-employee directors
Members: Alvin W. Trivelpiece (Chair), Domenico De Sole, Ruth R. McMullin and
Linda Johnson Rice
Number of Meetings in 1998: Four
Functions: - Reviews the scope and results of the independent accountants'
annual examination of the company's consolidated financial
statements
- Reviews the overall adequacy of internal controls with the
company's internal and external auditors
- Recommends to the Board the appointment of the independent
accountants
- Provides for direct communication between the Board and the
independent accountants and the internal auditors
Committee on Management
Number of Members: Three non-employee directors
Members: Kenneth L. Wolfe (Chair), Franklin E. Agnew and Jonathan S. Linen
Number of Meetings in 1998: Four
Function: - Reviews compensation policies to ensure that they provide
appropriate motivation for corporate performance and increased
shareholder value
- Recommends to the Board remuneration of the chief executive officer
and the president and determines remuneration of other officers of
the company elected by the Board
- Conducts evaluation of the chief executive officer prior to
submission to the Board
- Grants options under and otherwise administers the company's stock
incentive plans and approves and administers any other compensation
plan in which officers of the company participate
- Reviews and ensures that a process is in place to provide
continuity and succession of officers and key employees
Committee on Directors
Number of Members: Three non-employee directors
Members: John R. Purcell (Chair), Jonathan S. Linen and Alvin W. Trivelpiece
Number of Meetings in 1998: Three
Functions: - Recommends to the Board all matters relating to the Board,
including the development of policies on composition, participation
and the size of the Board, and the tenure and retirement of
directors
- Recommends to the Board changes in the organization and procedures
of the Board, including corporate governance
- Considers director nominees, including those submitted by
shareholders, for recommendation to the Board
3
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The Committee on Directors will consider director candidates proposed by
shareholders. The company's by-laws provide that such shareholder submissions
must include certain biographical information concerning the recommended
individual, including age, address, employment history and board memberships,
if any, and the candidate's written consent to the nomination and to serve if
elected. To be considered for nomination at the 2000 annual meeting,
shareholder submissions for nomination must be received at the offices of the
company to the attention of the Secretary at One Bausch & Lomb Place,
Rochester, New York 14604-2701 between December 29, 1999 and January 28, 2000.
Matters to be Voted on by Shareholders
Item No. 1
Election of Directors
General
The Board of Directors currently has ten members and, pursuant to the company's
by-laws, is divided into three classes. One class is elected each year to serve
for three years. The term of office of each class will expire, respectively, on
the dates of the annual meeting of shareholders in 1999, 2000 and 2001. The
directors whose terms expire at the 1999 annual meeting of shareholders are
Jonathan S. Linen, John R. Purcell, Alvin W. Trivelpiece, and William H.
Waltrip. Accordingly, the Board of Directors has fixed the number of directors
to stand for reelection at the 1999 annual meeting of shareholders at four, to
serve until the 2002 annual meeting.
Information about the nominees for election as directors, as well as those
directors continuing in office, is presented below.
Nominees for Election as Directors -- Term Expiring 2002
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[photo: JONATHAN S. LINEN Director since 1996
Jonathan S. Age: 55
Linen]
Mr. Linen has served since 1993 as vice chairman of American
Express Company, a diversified worldwide travel and financial
services company. He joined that company in 1969 and held
various executive positions before being appointed president
and chief executive officer of Shearson Lehman Brothers in
1989. In 1992, he was named president and chief operating
officer of American Express Travel Related Services Company,
Inc. Mr. Linen is chairman of the board of trustees of the
National Urban League and is a member of the board of governors
of the American Red Cross.
4
<PAGE>
[photo: JOHN R. PURCELL Director since 1976
John R. Age: 67
Purcell]
Mr. Purcell has served since 1989 as chairman and chief
executive officer of Grenadier Associates Ltd., a venture
banking firm. From 1991 until 1997, he 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 senior vice president, finance of Gannett Co.,
Inc. He is a director of Omnicom Group, Inc., Technology
Solutions Company and Journal Register Company.
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[photo: ALVIN W. TRIVELPIECE, PH.D. Director since 1989
Alvin W. Age: 68
Trivelpiece]
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. In 1996, he was
named President of Lockheed Martin Energy Research Corporation.
He was director of the Office of Energy Research for the U.S.
Department of Energy from 1981 to 1987. He is chairman of the
board and president of the Tennessee Technology Development
Corporation and a member of the National Academy of
Engineering.
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[photo: WILLIAM H. WALTRIP Director since 1985
William H. Age: 61
Waltrip]
Mr. Waltrip served as chairman of Bausch & Lomb from 1996 to
December 1998 and as chief executive officer during 1996. He
has served as chairman of the board of directors of Technology
Solutions Company, a systems integration company, since 1993
and from 1993 until 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
Teachers Insurance and Annuity Association, Thomas & Betts
Corporation and Technology Solutions Company.
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The Board of Directors recommends a vote FOR election of the
individuals identified above as director nominees of the company.
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5
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Directors Continuing in Office -- Term Expiring 2000
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[photo: FRANKLIN E. AGNEW Director since 1982
Franklin E. Age: 64
Agnew]
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 The Prudential Insurance
Company of America.
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[photo: WILLIAM M. CARPENTER Director since 1996
William M. Age: 46
Carpenter]
Mr. Carpenter became chairman of Bausch & Lomb in January 1999
and has served as chief executive officer of Bausch & Lomb
since 1997. He joined the company in March 1995 as executive
vice president and global business manager--eyewear and 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, including serving 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.
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[photo: RUTH R. McMULLIN Director since 1987
Ruth R. Age: 57
McMullin
Mrs. McMullin is the chairperson of trustees and interim
executive director of the Eagle-Picher Personal Injury
Settlement Trust. She was a member of the faculty of the Yale
School of Management as a Management Fellow from 1994 to 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 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 Rohn, Inc. (formerly UNR Industries,
Inc.).
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[photo: LINDA JOHNSON RICE Director since 1990
Linda Johnson Age: 41
Rice]
Mrs. 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 and Jet magazines. She is also president of Fashion
Fair Cosmetics, a division of Johnson Publishing. Mrs. Rice is
a director of Kimberly-Clark Corporation and VIAD Corp.
6
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Directors Continuing in Office -- Term Expiring 2001
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[photo: DOMENICO DE SOLE Director since 1996
Domenico Age: 55
de Sole
Mr. De Sole has served since 1995 as president and chief
executive officer of Gucci Group N.V., a designer, producer and
distributor of personal luxury accessories and apparel. He
joined that company in 1984 as president and chief executive
officer of Gucci America, Inc. and in 1994 was named chief
operating officer of Gucci Group N.V.
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[photo: KENNETH L. WOLFE Director since 1989
Kenneth L. Age: 60
Wolfe]
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 1967 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.
7
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Item No. 2
Ratification of the Appointment of Independent Accountants
The Board of Directors has unanimously approved and voted to recommend that
shareholders ratify the appointment of PricewaterhouseCoopers LLP as
independent accountants of the company for 1999. They have been independent
accountants of the company since 1927. A representative of
PricewaterhouseCoopers 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.
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The Board of Directors recommends a vote FOR ratifying the appointment of
PricewaterhouseCoopers LLP as independent accountants of the company for 1999.
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Security Ownership of Certain Beneficial
Owners and Directors and Executive Officers
Beneficial Owners of More than 5% of the Company's Common Stock
<TABLE>
<CAPTION>
Percent of
Outstanding
Name and Address of Beneficial Owners Number of Shares Common Stock
- --------------------------------------- ------------------ -------------
<S> <C> <C>
FMR Corp.(1)
82 Devonshire Street
Boston, MA 02109 4,529,888 8.2%
Dodge & Cox Incorporated(2)
35th Floor
One Sansome Street
San Francisco, CA 94104 3,852,935 6.9%
Trimark Financial Corporation(3)
One First Canadian Place
Suite 5600, P.O. Box 487
Toronto, Ontario M5X 1E5
Canada 3,638,600 6.6%
</TABLE>
(1) Shares are as of December 31, 1998 and include 102,508 shares with respect
to which there is sole power to vote and 4,529,888 shares with respect to
which there is sole power of disposition.
(2) Shares are as of December 31, 1998 and include 3,440,535 shares with
respect to which there is sole power to vote; 51,300 shares with respect to
which there is shared power to vote; and 3,852,935 shares with respect to
which there is sole power of disposition.
(3) Shares are as of December 31, 1998 and include 3,638,600 shares with
respect to which there is sole power to vote and 3,638,600 shares with
respect to which there is sole power of disposition.
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Security Ownership of Directors and Executive Officers
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 15, and all
directors and executive officers of the company as a group. All numbers stated
are as of February 23, 1999, 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 executive officers as a
group constitute 2.0% of the company's outstanding voting stock.
<TABLE>
<CAPTION>
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Name of Amount and Nature
Beneficial Owner of Beneficial Ownership
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<S> <C>
Franklin E. Agnew 25,885(1)
William M. Carpenter 241,360(2)
Domenico De Sole 4,877(3)
James C. Foster 64,093(4)
Dwain L. Hahs 84,924(5)
Jonathan S. Linen 5,884(3)
Stephen C. McCluski 81,424(7)
Ruth R. McMullin 24,773(6)
John R. Purcell 31,885(8)
Linda Johnson Rice 20,957(8)
Carl E. Sassano 120,712(9)
Alvin W. Trivelpiece 22,957(8)
William H. Waltrip 143,427(10)
Kenneth L. Wolfe 22,090(1)
All Directors and Executive Officers
as a group (20 persons) 1,138,546
</TABLE>
In addition to shares beneficially owned by executive officers of the company,
as indicated above, such persons also own common stock equivalents under
deferred compensation plans of the company, reflecting further the executives'
economic stake in the value of the company's common stock. Directors of the
company have a similar ability to defer directors' fees into a deferred
compensation plan under which they may own common stock equivalents. Two
directors of the company have elected to defer portions of their fees into this
plan. Accordingly, as of February 23, 1999, the following common stock
equivalents were owned by (i) the company's executive officers: Mr. Carpenter,
28,650; Mr. Sassano, 17,591; Mr. Hahs, 6,725; Mr. McCluski, 7,512; (ii) the
company's directors: Mrs. McMullin, 2,567; Mr. Purcell, 19,842; and (iii) all
executive officers and directors of the company as a group: 111,568.
(1) Includes 18,733 shares which may be acquired within 60 days through the
exercise of stock options.
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(2) Includes 198,055 shares and 249 shares, respectively, which may be acquired
within 60 days through the exercise of stock options and acquired under the
Savings Plus Plan, and 29,250 shares of restricted stock subject to
satisfaction of certain vesting conditions.
(3) Includes 3,943 shares which may be acquired within 60 days through the
exercise of stock options.
(4) Includes 45,040 shares which may be acquired within 60 days through the
exercise of stock options and 3,000 shares of restricted stock subject to
satisfaction of certain vesting conditions.
(5) Includes 53,377 shares and 2,324 shares, respectively, which may be
acquired within 60 days through the exercise of stock options and acquired
under the Savings Plus Plan, and 11,000 shares of restricted stock subject
to satisfaction of certain vesting conditions.
(6) Includes 17,733 shares which may be acquired within 60 days through the
exercise of stock options.
(7) Includes 65,998 shares and 949 shares, respectively, which may be acquired
within 60 days through the exercise of stock options and acquired under the
Savings Plus Plan, and 4,000 shares of restricted stock subject to
satisfaction of certain vesting conditions.
(8) Includes 17,875 shares which may be acquired within 60 days through the
exercise of stock options.
(9) Includes 79,158 shares and 3,887 shares, respectively, which may be
acquired within 60 days through the exercise of stock options and acquired
under the Savings Plus Plan, and 8,000 shares of restricted stock subject
to satisfaction of certain vesting conditions.
(10) Includes 136,211 shares which may be acquired within 60 days through the
exercise of stock options.
Section 16(a) Beneficial Ownership Reporting Compliance
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 the company's review of such reports, all reports were
filed on a timely basis and there are no known failures to file by directors
and executive officers during 1998.
Executive Compensation
Report of the Committee on Management
In 1998, the Committee on Management of the Board of Directors met four 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 reports to the Board of Directors on committee discussions and
key actions.
Compensation Philosophy and Policy
Executive compensation at Bausch & Lomb is designed to align the financial
interests of executives with the interests of shareholders by leveraging the
mix of base salary, annual incentives and long-term incentives, placing greater
emphasis on "at risk" pay components tied to key stock appreciation drivers.
Overall compensation 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 return.
To maintain a competitive level of compensation, the company commissions an
independent consulting firm to conduct an annual survey of executive
compensation in a defined group of companies. The surveyed companies are
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. The
10
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surveyed companies include many, but not all, of the companies in the S&P
Health Care Composite used in the Comparison of Five-Year Cumulative Total
Shareholder Return chart on page 18. Complete compensation data is not widely
available for all of the companies in the S&P Health Care Composite.
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 peer company or, for certain officers
managing operating units, the division or the business which that 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 50th 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.
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 option award levels for
the officers of the company. In approving salary and incentive payments for
individuals other than the chief executive officer, the committee also
considers recommendations made by the chief executive officer.
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 each
year, and generally adjusted annually. In 1998, the company's average officer
base compensation was below the targeted 50th percentile of peer group officer
base pay.
In determining Mr. Carpenter's base salary, the committee considered the
comparator companies' actual and forecasted chief executive officer
compensation (on a size-adjusted basis), targeting the 50th percentile of the
peer group chief executive officer base pay. The committee also considered
financial and strategic performance of the company in the preceding year under
Mr. Carpenter's direction. No weighting was assigned to the foregoing factors.
In 1998, Mr. Carpenter's base salary was below the targeted 50th percentile of
the peer group chief executive officer base pay.
Annual Incentive Awards
In 1998, under the company's Economic Value Added, or EVA(R)(1), incentive
compensation program, corporate officers, including those identified in the
Summary Compensation Table on page 15, were eligible for annual incentive
awards. These awards were based upon actual performance of the company, or, for
operating units identified as separate EVA centers, the actual performance of
that EVA center, in achieving EVA improvement against targets established by
the Committee on Management in early 1998. EVA improvement occurs when the
ratio of: (i) net operating profit after tax to (ii) capital employed in the
business increases over time. This establishes a direct link between incentive
compensation and return on capital. The bonus target for each officer is
expressed as a percentage of base pay, falling within a range of 37-80%,
depending upon the position, with the chief executive officer's target set at
80%. Incentive targets for the executive officers were at the 50th percentile
of the comparator group of companies. Mr. Carpenter's incentive target was at
the 50th percentile of the comparator group of companies.
- -------------
(1) EVA(R) is a registered trademark of Stern Stewart & Co.
11
<PAGE>
The committee defined performance intervals to establish measurement standards
for determining the range of payouts as a percentage of the target payment. The
performance intervals establish the criteria for a payout from zero to 200% of
the target payment, but there is no cap and no floor in the incentive
calculation.
The EVA program provides the incentive of an uncapped bonus opportunity, but
also uses a "cumulative bonus bank" feature to ensure that extraordinary EVA
improvements are sustained before extraordinary awards are paid out. If EVA
performance exceeds the EVA goal, the target bonus plus one-half of the
incentive calculation in excess of the target amount is paid currently, and the
other half of the additional incentive is carried forward, in the "bank", to
the next year, payment of which is subject to future results. Similarly, a
decline in EVA performance creates a negative bonus bank balance which is
carried into future years and reduces future awards. This bonus bank creates
short- and long-term incentive features, rewarding sustained performance and
continued employment.
For the chief executive officer and all executive officers identified in the
Summary Compensation Table on page 15, except for Mr. Foster, 1998 annual
incentives were based entirely on overall corporate EVA performance. For Mr.
Foster, 1998 annual incentives were based entirely on the EVA performance of
the company's Charles River Laboratories, Inc. subsidiary, for which Mr. Foster
has managerial responsibility. In 1998, Bausch & Lomb's corporate EVA
improvement resulted in a payout of approximately 160% of target and Mr.
Carpenter received a bonus payment of $783,650. An additional $195,650 was
carried forward in the bonus "bank" to be paid to Mr. Carpenter in accordance
with the EVA program if performance is sustained in future years. In 1998, Mr.
Carpenter earned the right to receive payment of $19,250, from amounts placed
in the bonus "bank" in 1997, as provided in the EVA program.
Long-Term Incentive Awards
The package of long-term incentives offered to officers in 1998 included stock
options and stock grants. Consistent with the overall compensation philosophy,
the package of long-term incentives is targeted at the 50th percentile of peer
company long-term incentive awards.
Under the Bausch & Lomb 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 a review of comparator company data 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 July 1998, the committee awarded options within this framework. The 1998
options will vest over three years. All stock options were priced at the fair
market value of the underlying stock as of the date of the grant. In 1998, Mr.
Carpenter received options to purchase 106,000 shares of class B stock with an
exercise price of $50.9375 per share. This award was at the maximum level for
an annual award based on market considerations and the committee's evaluation
of Mr. Carpenter's progress as chief executive officer.
In 1998, the committee approved the Cumulative EVA Long-Term Incentive
Performance program (the "Cumulative EVA Program"). Under the Cumulative EVA
Program, corporate officers, including
12
<PAGE>
those identified in the Summary Compensation Table on page 15, received
restricted stock grants made pursuant to the company's 1990 Stock Incentive
Plan.
Each restricted stock grant under the Cumulative EVA Program vests based on
achievement by the company of three-year corporate EVA goals approved by the
committee at the time of grant. These awards are targeted at 15-30% of
participants' aggregate long-term incentive compensation, with the chief
executive officer's award under the Cumulative EVA Program targeted at 30% of
such long-term incentive compensation. Actual awards under the Cumulative EVA
Program, upon vesting, can range from 0-200% of the target number of shares
awarded, depending upon company performance against pre-approved goals. In
addition, since awards are expressed in shares of company stock, the actual
value of awards upon vesting will vary based upon upward and downward changes
in the market value of Bausch & Lomb common stock from the date of grant to the
vesting date. The Cumulative EVA Program was designed to provide executives
with incentives for long-term EVA improvements while also increasing stock
ownership to further align executives' interests with those of shareholders.
The committee also made transition grants to participants, including those
identified in the Summary Compensation Table on page 15, vesting one and two
years from the grant date, based upon pre-determined corporate EVA improvement
goals over the vesting period.
In accordance with the Cumulative EVA Program, in 1998 Mr. Carpenter was
awarded the shares of class B restricted stock described in the table on page
17 entitled Long Term Incentive Plan -- Awards in Last Fiscal Year.
Based upon the company's achievement against pre-established EVA improvement
goals in 1998, Cumulative EVA Program awards for company executive officers,
including Mr. Carpenter, vested at 200% of the target award, with the value set
forth in the Summary Compensation Table on page 15.
Stock grants may be awarded periodically to officers of the company. In 1998,
stock grants were awarded to officers, including the persons identified in the
Summary Compensation Table on page 15, to reflect promotions, hiring packages
or the company's desire to retain key executive talent. Based on the foregoing
factors, and in an effort to bring his total compensation package to the
targeted level, Mr. Carpenter was awarded 9,000 shares of restricted class B
stock, which are to vest 50% after two years and the remaining 50% after three
years.
Supplemental Executive Retirement Plan
An additional key element of total compensation for Mr. Carpenter is the
Supplemental Executive Retirement Plan ("SERP") II, under which he is eligible
to vest. This Plan, funded by life insurance, is designed to minimize the cost
to the company, and to provide a competitive retirement benefit (60%
replacement ratio). Mr. Foster participates in a separate Supplemental
Executive Retirement Plan established by the company's Charles River
Laboratories, Inc. subsidiary, described on page 19. All other executive
officers participate in SERP III, described on page 19. Contributions made
under SERP II, SERP III and Charles River SERP Plans do not result in taxable
income to the participants.
Response to Internal Revenue Code Limits
on Deductibility of Certain Compensation
Section 162(m) of the Internal Revenue Code of 1986 (the "Code") limits to
$1,000,000 per person the company's tax deduction of certain
non-performance-based compensation paid in a given year to its most highly
compensated officers. The levels of non-performance-based salary, bonus and
13
<PAGE>
other compensation paid by the company do not typically exceed this level,
except that the total compensation paid to Mr. Carpenter for services in fiscal
1998 which remains subject to the Section 162(m) limitation exceeded this level
by $165,343. In order to minimize the potential for lost tax deductibility, the
committee recommended, and shareholders approved, 1998 amendments to certain
company plans which were designed to assure that performance-based compensation
plans currently in place achieve compliance with the requirements of Section
162(m) of the Code. The committee's present intention is to use the
requirements of Section 162(m) as a guide in its compensation-related
decisions, except where the best interests of the company and its shareholders
dictate otherwise.
Conclusion
Each element of the officer compensation package is reviewed by the Committee
on Management to ensure that base pay and incentive opportunities are at
competitive levels and to provide incentive systems reflecting strong financial
performance and an alignment with shareholder interests. In summary, we believe
the total compensation philosophy and compensation program serve the best
interests of the shareholders.
Committee on Management
Kenneth L. Wolfe, Chair
Franklin E. Agnew
Jonathan S. Linen
14
<PAGE>
Compensation Tables
The individuals named in the following tables include the company's chief
executive officer and the four other most highly compensated executive officers
of the company for the fiscal year ended December 26, 1998.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
--------------------------------------- -------------------------------------
Other Restricted Securities All Other
Annual Stock Underlying Compen-
Compensation Award(s) Options/ LTIP sation
Name Year Salary ($) Bonus ($) ($) (1) ($) (2) SARs (#) Payouts ($) ($) (3)
- ------------------- ------ ------------ ----------- -------------- ------------ ------------ ----------- ----------
(Cash and
Stock)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
W.M. Carpenter 1998 $735,000 $764,400 $1,136,621 $405,000 106,000 $19,250 $22,073
Chairman and 1997 $641,667 $551,834 $28,979 $211,875 83,160 $0 $21,395
CEO 1996 $400,000 $110,000 $32,665 $395,063 72,201 $0 $0
C.E. Sassano 1998 $402,800 $288,002 $502,491 $287,188 48,000 $ 7,477 $14,370
President and 1997 $362,500 $214,328 $31,725 $ 84,750 34,020 $0 $14,384
COO 1996 $282,000 $127,781 $25,163 $182,813 18,900 $0 $12,969
D.L. Hahs 1998 $345,000 $246,675 $385,851 $135,000 37,000 $ 6,497 $9,825
Exec. V.P. 1997 $315,000 $186,244 $13,625 $84,750 28,584 $0 $11,850
and President 1996 $246,000 $80,000 $ 9,480 $146,250 19,332 $0 $10,314
Eyewear
S.C. McCluski 1998 $340,200 $243,243 $263,982 $90,000 31,000 $ 6,600 $13,305
Sr. V.P. and 1997 $320,000 $189,200 $32,349 $0 23,820 $0 $12,000
CFO 1996 $292,500 $80,000 $22,099 $182,813 25,200 $0 $12,254
J.C. Foster 1998 $308,700 $218,174 $204,985 $0 19,000 $12,532 $0
Sr. V.P. and 1997 $294,000 $186,764 $20,053 $0 18,690 $0 $0
President and 1996 $284,000 $143,065 $48,559 $0 18,900 $0 $0
CEO--Charles River
Laboratories, Inc.
</TABLE>
(1) The amounts reported in this column for 1998 include transition grants of
company restricted class B shares under the company's EVA Long-Term
Incentive Plan which vested based on the company's 1998 EVA improvement.
These amounts are reported in this column rather than as Long-Term
Incentive Plan payouts because, as transition grants, the performance
period did not exceed one year. The dollar value on the date of vesting of
such transition grants are, for Mr. Carpenter, $1,103,642; Mr. Sassano,
$477,250; Mr. Hahs, $357,938; Mr. McCluski, $238,625; and Mr. Foster,
$178,969. Further information about the EVA Long-Term Incentive Plan is set
forth in the table entitled Long-Term Incentive Plan -- Awards in Last
Fiscal Year on page 17, and in the Report of the Committee on Management on
page 10.
(2) The restricted stock awards reported in this column vest, dependent upon
continued employment, as follows: Mr. Carpenter, 4,500 shares vest in 2000
and 4,500 shares vest in 2001; Mr. Sassano, 2,000 shares vest in 2000 and
2,000 shares vest in 2001; Mr. Hahs, 1,500 shares vest in 2000 and 1,500
shares vest in 2001; and Mr. McCluski, 1,000 shares vest in 2000 and 1,000
shares vest in 2001. Holders of restricted stock receive voting rights and
dividends on the shares. At December 26, 1998, the aggregate number of
shares and corresponding value of restricted stock owned by the named
individuals were as follows: Mr. Carpenter, 20,000 shares valued at
$1,173,750; Mr. Sassano, 8,000 shares valued at $469,500; Mr. Hahs, 5,000
shares valued at $293,438; and Mr. McCluski, 2,000 shares valued at
$117,375.
(3) The amounts reported in this column for 1998 consist solely of the
company's matching contributions under its 401(k) plan and 401(k) excess
plan.
15
<PAGE>
Options/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed Annual
Rates of Stock Price
Appreciation for Option
Individual Grants Term (1)
------------------------------------------------------ ----------------------
% of
Number of Total
Securities Options/
Underlying SARs
Options/ Granted to
SARs Employees Exercise or 0%
Granted in Fiscal Base Price Expiration Stock Dollar
Name (#) (2) Year (3) ($/Sh) (4) Date Price Gain
- ------------------ ------------ ----------- ------------ ---------------- ------------- --------
<S> <C> <C> <C> <C> <C> <C>
All shareholders $59.0300 $0
All optionees 1,401,376 100.00% $50.6300 During 2008(5) $50.6300 $0
Gain to all optionees as a percentage of gain to shareholders
W.M. Carpenter 106,000 7.56% $50.9375 July 27, 2008 $50.9375 $0
Gain to CEO as a percentage of gain to shareholders
C.E. Sassano 48,000 3.43% $50.9375 July 27, 2008 $50.9375 $0
D.L. Hahs 37,000 2.64% $50.9375 July 27, 2008 $50.9375 $0
S.C. McCluski 31,000 2.21% $50.9375 July 27, 2008 $50.9375 $0
J.C. Foster 19,000 1.36% $50.9375 July 27, 2008 $50.9375 $0
<CAPTION>
Potential Realizable Value at Assumed Annual
Rates of Stock Price Appreciation for Option Term (1)
-----------------------------------------------------------------------
5% 10%
Stock Dollar Stock Dollar
Name Price (6) Gain Price (6) Gain
- ------------------ ----------- ----------------------- ----------- -----------------------
<S> <C> <C> <C> <C>
All shareholders $96.16 $2,075,567,000(7) $153.11 $5,259,072,000(7)
All optionees $82.47 $44,619,812 $131.32 $113,077,029
Gain to all 2.15% 2.15%
optionees as a
percentage of gain
to shareholders
W.M. Carpenter $82.97 $3,395,445 $132.12 $8,605,345
Gain to CEO as a 0.16% 0.16%
percentage of gain
to shareholders
C.E. Sassano $82.97 $1,537,560 $132.12 $3,896,760
D.L. Hahs $82.97 $1,185,203 $132.12 $3,003,753
S.C. McCluski $82.97 $993,008 $132.12 $2,516,658
J.C. Foster $82.97 $608,618 $132.12 $1,542,468
</TABLE>
(1) There is no assurance that the value realized by an optionee will be at or
near the amount estimated using this model. These amounts rely on assumed
future stock price movements which management believes cannot be predicted
with a reliable degree of accuracy.
(2) All options to the named executives vest annually in one-third increments.
All options granted to the named executives have attached to them limited
Stock Appreciation Rights, which only become exercisable in the event of a
change in control.
(3) Based on total number of options granted to employees equal to 1,401,376.
(4) With the exception of the exercise price for "all optionees", which is the
average market value for all options granted during 1998, the price
reflected in this column is equal to the fair market value at date of
grant.
(5) The expiration date for all optionees is the tenth anniversary of the date
on which the 1998 option was granted.
(6) Fair market value of stock at end of actual option term, assuming annual
compounding at the stated value.
(7) Total dollar gains based on assumed annual rates of appreciation and
calculated on 55,900,000 outstanding shares.
Aggregated Option/SAR Exercises in
Last Fiscal Year and FY-End Option/SAR Values
<TABLE>
<CAPTION>
Number of Securities Underlying
Unexercised Options/SARs at Value of Unexercised, In-the-Money
FY-End (#) Options/SARs at FY-End ($)
------------------------------- ------------------------------------
Number
of Shares
Acquired on Value
Name Exercise Realized(1) Exercisable Unexercisable Exercisable(1) Unexercisable(1)
- ---------------- ------------- ------------- ------------- --------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
W.M. Carpenter 0 $0 198,055 185,507 $4,156,932 $2,267,134
C.E. Sassano 0 $0 85,698 76,980 $1,483,195 $888,836
D.L. Hahs 3,318 $83,365 53,377 62,500 $958,398 $753,661
S.C. McCluski 0 $0 65,998 55,280 $1,252,930 $695,118
J.C. Foster 362 $10,238 73,740 37,760 $1,244,664 $497,373
</TABLE>
(1) Market value of company's common stock at exercise or year-end, minus the
exercise price.
16
<PAGE>
Long-Term Incentive Compensation
As described in more detail in the Report of the Committee on Management on
page 10, the EVA Plan requires that 50% of accrued bonuses payable in excess of
100% of target bonus be banked. The amount in the bonus bank is at risk in the
sense that in any year the accrued bonus is negative, the negative bonus amount
is subtracted from the outstanding bonus bank balance. For fiscal 1998, the
accrued bonus for each of the named individuals was positive and the amounts
banked as reported below were added to the bonus bank for each of the named
executive officers, to be paid out in future years, subject to the terms of the
EVA Plan. In addition, a portion of the amount banked in 1998 as a result of
1997 performance was paid to the named executives, including Mr. Carpenter, in
accordance with the EVA Plan, and such amounts are reflected as Long-Term
Incentive Plan Payouts in the Summary Compensation Table on page 15.
<TABLE>
<CAPTION>
Name Amounts Banked (Forfeited) ($)
-------------- ------------------------------
<S> <C>
W.M. Carpenter $176,400
C.E. Sassano $ 66,462
D.L. Hahs $ 56,925
S.C. McCluski $ 56,133
J.C. Foster $ 48,389
</TABLE>
Long-Term Incentive Plan - Awards in Last Fiscal Year (1)
<TABLE>
<CAPTION>
Number of Performance Threshold Target Maximum
Name Shares Period (years) (shares) (shares) (shares)
- ---------------- ----------- ---------------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C>
W.M. Carpenter 9,250 2 0 9,250 18,500
9,250 3 0 9,250 18,500
C.E. Sassano 4,000 2 0 4,000 8,000
4,000 3 0 4,000 8,000
D.L. Hahs 3,000 2 0 3,000 6,000
3,000 3 0 3,000 6,000
S.C. McCluski 2,000 2 0 2,000 4,000
2,000 3 0 2,000 4,000
J.C. Foster 1,500 2 0 1,500 3,000
1,500 3 0 1,500 3,000
</TABLE>
(1) Grants under the Company's Cumulative EVA Program will vest at the end of
each respective performance period after approval by the Committee on
Management of the company's EVA performance results for each said period.
17
<PAGE>
Total Return to Shareholders
Comparison of Five-Year Cumulative Total Shareholder Return
December 1993 through December 1998
[line chart]
Assumes $100 invested on last day of December 1993. Dividends are reinvested
quarterly.
<TABLE>
<CAPTION>
S&P
Bausch Health Care S&P
Date & Lomb Composite 500
- ------------- ------------ ------------- ------------
<S> <C> <C> <C>
Dec. 1993 $100.00 $100.00 $100.00
Dec. 1994 $ 67.75 $112.94 $101.36
Dec. 1995 $ 81.30 $180.12 $139.32
Dec. 1996 $ 73.82 $217.95 $171.32
Dec. 1997 $ 85.69 $311.23 $228.27
Dec. 1998 $132.60 $447.73 $293.04
</TABLE>
[end line chart]
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
18
<PAGE>
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 1996 are based on earnings during the
five-year period 1991 through 1995. 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 on page 15 are as follows: Messrs. Carpenter, Sassano, Hahs
and McCluski, who are contributing participants, $56,871, $108,344, $96,183 and
$63,984, respectively.
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. Messrs. Hahs,
McCluski and Sassano are vested participants under this Plan. Assuming
continued employment to normal retirement age, the estimated annual benefits
payable to Messrs. Sassano, Hahs and McCluski under this Plan upon retirement
at normal retirement age is $283,314, $213,776 and $202,953, respectively.
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 $96,000.
The company maintains two 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 on page 15 are each participants in one of the
SERPs described below. Participants who vest under SERP 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, 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.
Mr. Carpenter is eligible to vest under SERP II. Messrs. Hahs, McCluski and
Sassano have vested under SERP III. The estimated annual benefit payable at
normal retirement age for Messrs. Hahs, McCluski and Sassano under SERP III is
$127,396, $132,917 and $211,242, respectively.
Mr. Foster is fully vested in the SERP 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
19
<PAGE>
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 annual benefit payable at normal retirement age under this Plan for
Mr. Foster is $405,353.
Related Transactions, Employment Contracts and Termination of Employment and
Change in Control Arrangements
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 serve as
collateral for the loan. The rate of interest on loans to participants is the
lesser of the applicable federal rates announced monthly by the Internal Revenue
Service pursuant to Section 1274(d) of the Internal Revenue Code of 1986, or 9%.
To the extent applicable, the largest aggregate amount of indebtedness
outstanding which exceeded $60,000 at any time in the company's 1998 fiscal year
for executive officers of the company was as follows: Mr. Sassano, $189,865; Mr.
Foster, $184,149; Mr. Hahs, $99,955; Mr. Robert B. Stiles, $271,026; Mr. Jurij
Z. Kushner, $220,358; and all executive officers and directors as a group,
$1,107,019. As of February 23, 1999, the outstanding amount of such indebtedness
was as follows: Mr. Sassano, $187,867; Mr. Foster, $182,293; Mr. Hahs, $99,955;
Mr. Stiles, $269,694; Mr. Kushner, $218,927; and all executive officers and
directors as a group, $1,098,914.
The company has entered into agreements, for an indefinite term, with all
persons named in the Summary Compensation Table on page 15. 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 either two or three times annual base
salary and bonus as determined under the agreements. In 1996, the company
reduced the benefits to new executive officers, so that they will receive
benefits equal to two times his or her compensation rather than three times his
or her compensation. Each officer will also be entitled to a continuation of
certain benefits and perquisites for up to two or three additional years as
determined under the agreements. 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.
Additional Information
Directors and Officers Insurance
The company has purchased insurance from the Chubb Group and American
International Group, 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, 1999 for a period of
one year at a cost of $689,075.
Other Business
We do not expect any business to come up for shareholder vote at the meeting
other than the items described in this booklet. If other business is properly
raised, your proxy card authorizes the proxyholders to vote as they deem
appropriate.
The company's by-laws contain provisions regarding matters which may properly
be brought before the shareholders at an annual meeting. The most recently
revised by-laws are attached as Exhibit (3)-a to the company's Form 10-Q filed
November 10, 1998.
20
<PAGE>
Shareholder Proposals for Next Year
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 to the
attention of the Secretary at its principal executive offices not later than
the close of business on November 24, 1999.
Shareholder proposals received by the company between December 29, 1999 and
January 28, 2000 may also be considered at next year's annual meeting of
shareholders but will not be included in the proxy materials for next year's
annual meeting of shareholders.
How We Solicit Proxies
Bausch & Lomb pays the costs of soliciting proxies. We are paying Georgeson &
Co. a fee of $12,000 plus expenses to help with the solicitation. In addition
to this mailing, the company may solicit proxies personally, electronically or
by telephone. We also reimburse brokers and other nominees for their expenses
in sending these materials to you and getting your voting instructions.
People Needing Special Assistance
If you plan to attend the meeting, we can provide reasonable assistance to help
you participate in the meeting if you let us know. Please call or write the
Secretary at least two weeks before the meeting at the number or address under
"Questions?" below.
Questions?
If you have questions or need more information about the annual meeting, write
to the
Secretary
Bausch & Lomb Incorporated
One Bausch & Lomb Place
Rochester, New York 14604-2701
or call us at (716) 338-6010.
For additional information about the company, we invite you to visit Bausch &
Lomb's Internet site at www.bausch.com. Internet site materials are for your
general information and are not part of this proxy solicitation.
21
<PAGE>
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.
YOUR VOTE IS IMPORTANT!
Please sign and promptly return your proxy card
in the enclosed envelope.
March 23, 1999
22
<PAGE>
[map showing directions to Bausch & Lomb Surgical Headquarters]
Directions to Bausch & Lomb Surgical Headquarters
3365 Tree Court Industrial Boulevard
St. Louis, Missouri 63122
(314) 225-7600
From Lambert Airport:
Take I-70 West to I-270 exit
Take I-270 South exit (towards Memphis)
Merge onto I-270 South
Take Big Bend Boulevard exit
Turn right onto Big Bend Boulevard
Turn left onto Tree Court Industrial Boulevard
Turn right into driveway in front of building
From Downtown:
Take I-64/Highway 40 West to I-270 exit
Take I-270 South exit (towards Memphis)
Merge onto I-270 South
Take Big Bend Boulevard exit
Turn right onto Big Bend Boulevard
Turn left onto Tree Court Industrial Boulevard
Turn right into driveway in front of building
<PAGE>
[Front of Proxy Card]
BAUSCH
& LOMB
PROXY
BAUSCH & LOMB INCORPORATED
The undersigned hereby appoints W.M. Carpenter, C.E. Sassano and R.B.
Stiles, or any one or all of them, with full power of substitution, attorneys
and proxies to represent the undersigned at the annual meeting of shareholders
of Bausch & Lomb Incorporated to be held on April 27, 1999, and at any
adjournment thereof, with all the power which the undersigned would possess if
personally present and to vote, as specified above, all shares of stock which
the undersigned may be entitled to vote at said meeting.
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SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
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<PAGE>
[Back of Proxy Card]
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1 AND 2.
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Please mark
your votes as [X]
indicated in
this example
1. Election of Directors.
FOR all nominees WITHHOLD
listed below AUTHORITY
(except as marked to vote for all nominees
to the contrary) listed below
[ ] [ ]
2. Ratification of PricewaterhouseCoopers
LLP as independent accountants for 1999.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Nominees: Jonathan S. Linen, John R. Purcell,
Alvin W. Trivelpiece, William H. Waltrip
(Instruction: To withhold authority to vote for any one or more individual
nominee(s), write that nominee(s) name on the space provided below.)
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IF YOU PLAN TO ATTEND THE MEETING, PLEASE MARK
THE "ATTEND MEETING" BOX BELOW.
MARK HERE IF YOU PLAN MARK HERE FOR ADDRESS
TO ATTEND THE MEETING [ ] CHANGE AND NOTE BELOW [ ]
The proxies are hereby authorized to vote in accordance with their judgment
in connection with the transaction of such other business, if any, as may
properly come before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS.
PLEASE DATE, SIGN AND RETURN IN THE ENCLOSED ENVELOPE. IF NOT OTHERWISE
MARKED, THE SHARES REPRESENTED BY THIS PROXY SHALL BE VOTED "FOR" ITEMS
1 AND 2.
Signature ________________________________ Date ____________________________
Signature ________________________________ Date ____________________________
NOTE: Please sign as name appears on this proxy. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
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BAUSCH
& LOMB
ANNUAL MEETING OF SHAREHOLDERS
Tuesday, April 27, 1999
10:30 a.m.
Bausch & Lomb
3365 Tree Court Industrial Boulevard
St. Louis, Missouri 63122
