<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[X] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
BECTON, DICKINSON AND COMPANY
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
BECTON, DICKINSON AND COMPANY
(NAME OF PERSON(S) FILING PROXY STATEMENT)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
---------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------------
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
---------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------------------
3) Filing Party:
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4) Date Filed:
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<PAGE>
CLATEO CASTELLINI BECTON DICKINSON AND COMPANY
Chairman of the Board 1 Becton Drive
Franklin Lakes, New Jersey
07417-1880
[LOGO BECTON DICKINSON]
December 29, 1994
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of
Becton, Dickinson and Company scheduled for 2:30 P.M. on Tuesday, February 14,
1995, at the offices of the Company, 1 Becton Drive, Building II, Franklin
Lakes, New Jersey.
The matters expected to be acted upon at the meeting are described in detail
in the attached Notice of Meeting and Proxy Statement.
It is important that your shares be represented at the meeting. Whether or
not you plan to attend personally, please complete and mail the enclosed proxy
card in the enclosed return envelope.
Sincerely,
/s/ Clateo Castellini
Clateo Castellini
Chairman of the Board
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
OF
BECTON, DICKINSON AND COMPANY
1 BECTON DRIVE
FRANKLIN LAKES, NEW JERSEY 07417-1880
----------------
The Annual Meeting of Shareholders of BECTON, DICKINSON AND COMPANY will be
held at 2:30 P.M. on Tuesday, February 14, 1995, at the offices of the Company,
1 Becton Drive, Building II, Franklin Lakes, New Jersey, to act upon the
following proposals:
1. Election of six directors, two to terms of two years and four to terms of
three years.
2. Approval of the selection of independent auditors.
3. Approval of the 1995 Stock Option Plan.
4. A shareholder proposal relating to the disclosure of government
employment.
5. A shareholder proposal relating to the annual election of directors.
6. A shareholder proposal relating to a report on the Company's Mexican
operations.
7. Such other business as may properly come before the meeting.
Only shareholders of record at the close of business on December 19, 1994
will be entitled to vote at this meeting.
By order of the Board of
Directors,
/s/ R.P. Ohlmuller
Raymond P. Ohlmuller
Vice President and Secretary
Dated: December 29, 1994
<PAGE>
PROXY STATEMENT
----------------
BECTON, DICKINSON AND COMPANY
1 BECTON DRIVE
FRANKLIN LAKES, NEW JERSEY 07417-1880
----------------
GENERAL INFORMATION
The enclosed proxy/voting instruction card ("proxy") is solicited by the
Board of Directors of Becton, Dickinson and Company for the Annual Meeting of
Shareholders to be held at 2:30 P.M. on Tuesday, February 14, 1995, at the
offices of the Company, 1 Becton Drive, Building II, Franklin Lakes, New
Jersey. A proxy may be revoked at any time before it is voted by sending
written notice of revocation to the Secretary of the Company, by executing a
proxy bearing a later date or by voting in person at the meeting. The proxy and
this proxy statement are being mailed to shareholders on or about December 29,
1994.
On December 19, 1994, the record date for determining shareholders entitled
to notice of and to vote at the meeting, there were 67,284,787 shares of the
Company's Common Stock (the "Common Stock") outstanding, each entitled to one
vote. In addition, on December 19, 1994, there were 948,211 shares of the
Company's Series B ESOP Convertible Preferred Stock (the "ESOP Preferred
Stock") outstanding, all of which are held by State Street Bank and Trust
Company, as Trustee of the Company's Savings Incentive Plan ("SIP"). The shares
of ESOP Preferred Stock are entitled to vote on all matters submitted to a vote
of the Company's shareholders and also carry one vote per share. Each employee
participating in SIP is entitled to instruct the Trustee how to vote all shares
of Common Stock and ESOP Preferred Stock allocated to that employee's SIP
accounts. The enclosed proxy will serve as voting instructions to the Trustee
from SIP participants. Shares of each class of stock held in SIP for which
voting instructions are not received from SIP participants or which are not
allocated to participants' accounts are voted by the Trustee in the same
proportion as shares of that class for which the Trustee has received
instructions.
Proxies representing shares of Common Stock held of record will also
represent shares held under the Company's Automatic Dividend Reinvestment Plan
and, in addition, will vote shares of Common Stock and ESOP Preferred Stock
allocated to employees' accounts under SIP, if the registrations are the same.
Separate mailings will be made for shares not held under the same
registrations.
Directors are elected by a plurality of the votes cast at the meeting.
Abstentions with respect to one or more of the nominees will not be counted as
votes cast for such individuals and, accordingly, will have no effect on the
outcome of the vote. Similarly, shares which brokers do not have the authority
to vote in the absence of timely instructions from the beneficial owners
("broker non-votes"), if any, will not be counted and, accordingly, will have
no effect on the outcome of the vote.
Approval of Proposals 2, 4, 5 and 6 requires the affirmative vote of a
majority of the votes cast on such proposal. Under New Jersey law, in
determining whether the proposal has received the requisite number of
affirmative votes, abstentions and any broker non-votes will not be counted as
votes cast and, accordingly, will have no effect on the outcome of the vote.
Approval of Proposal 3 requires the affirmative vote of a majority of the
shares present or represented by proxy at the meeting that are entitled to
vote. Abstentions will have the effect of votes cast against Proposal 3, while
broker non-votes are not considered shares entitled to vote and, therefore,
will have no effect on the outcome of the vote.
<PAGE>
The Board of Directors is not aware of any matters to be presented at the
meeting other than those set forth in the accompanying notice. If any other
matters properly come before the meeting, the persons named in the proxy will
vote in accordance with their best judgment.
In addition to solicitation by mail, directors, officers and other employees
of the Company may solicit proxies personally, by telephone or by telegram.
Brokers and other nominees will be requested to solicit proxies or
authorizations from beneficial owners and will be reimbursed for their
reasonable expenses in doing so. The Company has retained Hill and Knowlton,
Inc. to assist in soliciting proxies for a fee not to exceed $12,500 plus
expenses. The cost of soliciting proxies will be borne by the Company.
SHARE OWNERSHIP OF
MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
According to CDA Investment Technologies, Inc., a firm that monitors
institutional share ownership, as of September 30, 1994, Oppenheimer & Co.,
L.P., World Financial Center, New York, New York 10281, was the beneficial
owner of 11,304,062 shares of Common Stock, constituting 16.6% of the
outstanding Common Stock, and FMR Corp., 82 Devonshire Street, Boston,
Massachusetts 02109, was the beneficial owner of 8,674,083 shares of Common
Stock, constituting 12.7% of the outstanding Common Stock. No changes in these
holdings have come to the Company's attention since then. The Company is not
aware of any other beneficial owner of more than 5% of its Common Stock.
The following tables set forth, as of October 31, 1994, information
concerning the beneficial ownership of Common Stock and ESOP Preferred Stock
by each director and nominee for director, each of the Company's executive
officers, and all directors and executive officers as a group, and the
beneficial owner of more than 5% of the outstanding ESOP Preferred Stock. No
director or executive officer owns more than 1% of the outstanding Common
Stock. All directors and executive officers as a group are the beneficial
owners of 1.6% of the Common Stock, including shares which may be acquired by
them within 60 days.
COMMON STOCK
<TABLE>
<CAPTION>
SHARES OWNED SHARES WHICH
DIRECTLY AND MAY BE ACQUIRED
NAME INDIRECTLY(1) WITHIN 60 DAYS(2)
---- ------------- -----------------
<S> <C> <C>
Harry N. Beaty........................... 2,498 0
Henry P. Becton, Jr. .................... 40,160(3) 0
Clateo Castellini........................ 15,186 277,000
Gerald M. Edelman........................ 1,751 0
Edmund B. Fitzgerald..................... 1,861 0
John W. Galiardo......................... 49,160 213,950
Raymond V. Gilmartin..................... 52,364(4) 0
Richard W. Hanselman..................... 4,261 0
Thomas A. Holmes......................... 15,481 0
Walter M. Miller......................... 25,891 185,095
Frank A. Olson........................... 12,974 0
Robert A. Reynolds....................... 10,280 174,000
Gloria M. Shatto......................... 1,961 0
Raymond S. Troubh........................ 25,707(5) 0
All Directors and Executive Officers as a
group (14 persons)...................... 259,535 850,045
</TABLE>
- --------
(1) Includes Common Stock allocated to individual accounts under the Savings
Incentive Plan as follows: Mr. Castellini, 2,089 shares, Mr. Galiardo
4,254 shares, Mr. Gilmartin, 0 shares, Mr. Miller, 2,372 shares, and Mr.
Reynolds, 9 shares, and all directors and executive officers as a group,
8,724 shares.
(2) Includes stock options available for exercise and shares to be
distributed under the Company's Stock Award Plan within 60 days.
(3) Includes 26,690 shares held by a trust of which Mr. Becton is a co-
trustee with shared investment and voting power and 13,000 shares held by
a corporation owned by the trust. Does not include 7,900 shares owned by
Mr. Becton's wife, 400 shares owned by a daughter or 22,160 shares held
in trusts for the benefit of his children, as to which he disclaims
beneficial ownership.
(4) Does not include 23,338 shares owned by Mr. Gilmartin's wife, 1,000
shares owned by a daughter or 1,000 owned by his son, as to which he
disclaims beneficial ownership.
(5) Does not include 10,000 shares owned by Mr. Troubh's wife, as to which
he disclaims beneficial ownership.
2
<PAGE>
ESOP PREFERRED STOCK
<TABLE>
<CAPTION>
SHARES OWNED
DIRECTLY AND
INDIRECTLY
------------
<S> <C>
Clateo Castellini........................................... 338(1)
John W. Galiardo............................................ 323(1)
Raymond V. Gilmartin........................................ 0(1)
Walter M. Miller............................................ 330(1)
Robert A. Reynolds.......................................... 295(1)
All Directors and Executive Officers as a group (14 per-
sons)...................................................... 1,286(1)
State Street Bank and Trust Company......................... 952,407(2)
225 Franklin Street
Boston, Massachusetts 02110
(as Trustee of the Savings Incentive Plan)
</TABLE>
- --------
(1) Shares allocated to individual accounts under the ESOP component of the
Savings Incentive Plan ("SIP"). Such shares constitute less than 1% of
the total beneficial ownership of the ESOP Preferred Stock. Mr. Gilmartin
received the value of his ESOP Preferred Stock in connection with the
closing out of his SIP accounts following his voluntary termination.
(2) Constitutes 100% of the outstanding shares of ESOP Preferred Stock.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors to file initial reports of their ownership of
the Company's equity securities and reports of changes in such ownership with
the Securities and Exchange Commission (the "SEC") and the New York Stock
Exchange. Executive officers and directors are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file. Based
solely on a review of copies of such forms and written representations from
the Company's executive officers and directors, the Company believes that for
the period from October 1, 1993 through September 30, 1994, all of its
executive officers and directors were in compliance with the disclosure
requirements of Section 16(a).
BOARD OF DIRECTORS
MEETINGS; CERTAIN COMMITTEES
The Board of Directors, which held eight meetings during the fiscal year
ended September 30, 1994, has seven standing committees, including the Audit
Committee, the Corporate Responsibility Committee, the Compensation and
Benefits Committee and the Committee on Directors, which serves as a
nominating committee. Every director attended more than 75 percent of the
aggregate of the total number of meetings of the Board and the committees on
which such director served.
The Audit Committee reviews and discusses the plan and results of the annual
audit with the Company's independent and internal auditors and approves non-
audit services provided by the independent auditors. This Committee also
reviews the Company's internal auditing, control and accounting systems. In
addition, this Committee makes recommendations to the Board concerning the
selection of independent auditors. The members of this Committee, which met
three times during the year, are Henry P. Becton, Jr., Chairman, Harry N.
Beaty, Gerald M. Edelman, Frank A. Olson and Raymond S. Troubh.
The Corporate Responsibility Committee reviews the Company's policies and
procedures affecting its role as a responsible corporate citizen, including
those relating to issues such as equal employment opportunity and community
relations, to health, safety and environmental matters, and to proper business
practices. The members of this Committee, which met once during the year, are
Gerald M. Edelman, Chairman, Harry N. Beaty, Edmund B. Fitzgerald, John W.
Galiardo and Gloria M. Shatto.
3
<PAGE>
The Compensation and Benefits Committee fixes the compensation of corporate
officers and approves any employment or consulting contracts with corporate
officers who are not also directors. This Committee also reviews and makes
recommendations to the Board concerning proposed contracts with directors. In
addition, it administers the Company's stock option plans and the Stock Award
Plan. This Committee also oversees the administration of employee benefits and
benefit plans for the Company. The members of this Committee, which met four
times during the year, are Thomas A. Holmes, Chairman, Edmund B. Fitzgerald,
Richard W. Hanselman, Frank A. Olson and Raymond S. Troubh.
The Committee on Directors recommends candidates for election as directors to
the Board. It also reviews and makes recommendations concerning the
composition, organization and function of the Board and its committees, as well
as the performance and compensation of directors. The members of this
Committee, which met twice during the year, are Richard W. Hanselman, Chairman,
Henry P. Becton, Jr. and Thomas A. Holmes.
Any shareholder may recommend nominees for director to the Committee on
Directors by writing to the Secretary of the Company. Submissions should
include the full name and address and a statement of the qualifications of the
proposed nominee.
DIRECTORS' FEES
Each director who is not employed by the Company receives an annual retainer
of $40,000 for Board service plus attendance fees of $1,000 for special
meetings of the Board and $650 for committee meetings. An annual fee of $2,000
is also paid to committee chairmen. Directors may defer all or part of their
committee chairmen's fees and the cash portion of their annual retainers until
they retire from the Board or their principal occupations. In addition, Gerald
M. Edelman was engaged by the Company during the fiscal year as a consultant in
the fields of cell biology and solid tissue diagnostics. The Company paid Dr.
Edelman a fee of $50,000 for his consulting services.
Pursuant to the 1994 Restricted Stock Plan for Non-Employee Directors (the
"Restricted Stock Plan"), the quarterly retainer payable each April 30th to
non-employee directors is paid in shares of restricted Common Stock in lieu of
cash. In addition, participants in the Restricted Stock Plan may elect to have
one or more of their remaining quarterly retainer payments paid in shares of
restricted stock rather than in cash. Participants also had a one-time
opportunity during fiscal 1994 to acquire shares of restricted stock with their
previously deferred director's compensation.
After resignation or retirement from the Board, a qualifying director is
eligible to serve as a consultant for a term equal to his or her service on the
Board at an annual fee equal to the retainer paid to active non-employee
directors. To qualify, a director must serve on the Board for five years, and,
if employed by the Company, either must continue as an employee and a director
until age 60, unless termination of employment is by reason of disability, or
be reelected a director by the shareholders after termination of employment.
4
<PAGE>
PROPOSAL 1. ELECTION OF DIRECTORS
The Board of Directors is divided into three classes, the terms of which
expire alternately over a three-year period. The Board proposes the election of
Clateo Castellini and John W. Galiardo to serve for two years until the 1997
Annual Meeting and until their successors have been elected and have qualified.
Messrs. Castellini and Galiardo were elected to their present terms by the
Board effective June 16, 1994. The Board also proposes the election of four
directors to serve for three years until the 1998 Annual Meeting and until
their successors have been elected and have qualified. These candidates, Henry
P. Becton, Jr., Gerald M. Edelman, M.D., Edmund B. Fitzgerald and Richard W.
Hanselman, are incumbent directors who were elected to their present terms by
the shareholders.
NOMINEES FOR DIRECTOR--TERM TO EXPIRE 1997
[PHOTO] Clateo Castellini, 59, has been a director, Chairman of
the Board, President and Chief Executive Officer since
June, 1994. Prior thereto he served as Sector President--
Medical.
[PHOTO] John W. Galiardo, 61, has been a director and Vice
Chairman of the Board and General Counsel since June,
1994. Prior thereto he served as Vice President and
General Counsel.
TERM TO EXPIRE 1998
[PHOTO] Henry P. Becton, Jr., 51, has been a director since 1987.
He is President and General Manager of WGBH Educational
Foundation. WGBH is a producer and broadcaster of public
television and radio programs. It also produces books and
other educational materials. Mr. Becton is a director of
various Scudder mutual funds.
5
<PAGE>
[PHOTO] Gerald M. Edelman, M.D., Ph.D., 65, has been a director
since 1982. He is a Member of the Scripps Research
Institute, Chairman of its Department of Neurobiology,
and Director of The Neurosciences Institute. His research
is concerned with the developmental biology of the brain.
Dr. Edelman is a director of General American Investors
Co., Inc.
[PHOTO] Edmund B. Fitzgerald, 68, has been a director since 1990.
He is an Adjunct Professor at the Owen Graduate School of
Management at Vanderbilt University. Previously, he was
Chairman of the Board and Chief Executive Officer of
Northern Telecom Ltd., a manufacturer of digital
telecommunications equipment, from 1985 to 1990. He is a
director of Ashland Oil, Inc. and GTI Corp.
[PHOTO] Richard W. Hanselman, 67, has been a director since 1981.
He is a corporate director and consultant. Mr. Hanselman
was Chairman of the Board, President and Chief Executive
Officer of Genesco, Inc., a diversified manufacturer of
footwear and apparel, prior to 1986. Mr. Hanselman is a
director of Arvin Industries, Inc., Bradford Funds, Inc.,
Foundation Health Corp., Gryphon Holdings Inc.,
HealthTrust, Inc. and IMCO Recycling, Inc.
CONTINUING DIRECTORS
The directors listed below were elected by the shareholders to terms expiring
in 1996 and 1997, respectively, and will continue to serve.
TERM TO EXPIRE 1996
[PHOTO] Thomas A. Holmes, 71, has been a director since 1986.
Prior to his retirement in 1988, Mr. Holmes was Chairman
of the Board, President and Chief Executive Officer of
Ingersoll-Rand Company, a manufacturer of industrial
machinery and related products. He is a director of W.R.
Grace & Co., Newmont Gold Co. and Newmont Mining Corp.
6
<PAGE>
[PHOTO] Gloria M. Shatto, 63, has been a director since 1986. She
is President of Berry College. She is a director of
Georgia Power Co., K Mart Corp., The Southern Company and
Texas Instruments Inc.
[PHOTO] Raymond S. Troubh, 68, has been a director since 1977. He
is a financial consultant. Mr. Troubh is a director of ADT
Ltd., America West Airlines Inc., American Maize-Products
Co., Applied Power Inc., ARIAD Pharmaceuticals Inc.,
Benson Eyecare Corp., Foundation Health Corp., General
American Investors Co., Inc., Manville Corp., Olsten
Corp., Petrie Stores Corp., Riverwood International Corp.,
Time Warner, Inc., Triarc Companies Inc. and Wheeling-
Pittsburgh Corp.
TERM TO EXPIRE 1997
[PHOTO] Harry N. Beaty, M.D., 62, has been a director since 1985.
He is a Professor of Medicine and Dean of the Northwestern
University Medical School. Dr. Beaty is a specialist in
internal medicine and a subspecialist in infectious
diseases. He is a director of HealthTrust, Inc.
[PHOTO] Frank A. Olson, 62, has been a director since 1985. He is
Chairman of the Board and Chief Executive Officer of The
Hertz Corporation, a transportation company. Mr. Olson is
a director of Cooper Industries, Inc., Foundation Health
Corp., The Hertz Corporation and Unicom Corp.
7
<PAGE>
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION AND BENEFITS COMMITTEE
ON EXECUTIVE COMPENSATION
The compensation of the Company's executive officers is determined by the
Compensation and Benefits Committee of the Board. The Committee has five
members, each of whom is a non-employee director independent of management. No
member of the Committee has any insider or interlocking relationship with the
Company, as these terms are defined in applicable rules and regulations of the
SEC.
COMPENSATION PHILOSOPHY
The Company's executive compensation philosophy is to align the interests of
executive management with shareholder interests through compensation programs
linked to growth in shareholder value, principally measured by stock price
performance. Based on this philosophy, a significant portion of each executive
officer's total compensation is placed at-risk and linked to the achievement of
both short-term and long-term objectives. The total compensation package is
designed to attract the best people to the Company, motivate those individuals
to perform at their highest levels, reward sustained outstanding performance
and retain executives whose skills are essential for building shareholder value
over the long term.
The Committee determines a total compensation structure for each executive
officer, including the Chief Executive Officer, Mr. Castellini, focused
primarily upon base salary, annual incentive bonus and stock options. Base
salary levels and annual incentive bonus targets are set to approximate median
levels expected for companies engaged in similar businesses with jobs that are
similar to the Company's in terms of magnitude, complexity or scope of
responsibility, based on surveys of such companies conducted by external
consultants. The survey data are adjusted for size differences between the
Company and those surveyed using regression analysis. The compensation survey
group, which is representative of the Company's main competition for executive
talent, includes companies in addition to those measured in the Standard &
Poor's ("S&P") Medical Products and Supplies Index utilized in preparing the
Performance Graph set forth on page 16 hereof.
Stock option grant levels and terms are established to provide opportunity
for compensation levels at the higher end of the range for comparable positions
in the marketplace, if management is successful in achieving above-average
long-term growth in total shareholder value. As a consequence, compensation
packages for the Company's executive officers are more heavily weighted toward
performance-based, longer-term compensation than those of the surveyed
companies.
PRINCIPAL COMPENSATION ELEMENTS
The principal elements of executive compensation at the Company are base
salary, annual incentive bonus and stock options.
The Committee's consideration of increases in base salary for the executive
officers takes into account (generally in order of relative significance)
sustained performance, level of experience, scope of responsibilities,
contribution to the business, and competitive levels compared to the surveyed
companies. Based upon these factors, the executive officers' salaries were
reviewed and adjusted in 1994. In addition, Messrs. Castellini and Galiardo
received base salary adjustments during the year to reflect their increased
responsibilities.
Executive officers have an annual incentive bonus opportunity under the
Company's Executive Bonus Plan, with awards based on the overall performance of
the Company and, if applicable, on the performance of an operating group or
staff department. An executive's annual incentive bonus opportunity is a
percentage of salary determined by the executive's position in the organization
and competitive practice. Annual bonus awards for each of the Company's
executive officers are approved
8
<PAGE>
by the Committee. The Executive Bonus Plan sets forth specific formulas and
factors to be used in assessing each executive officer's financial and
strategic performance during the fiscal year for purposes of determining an
annual award under the Executive Bonus Plan. The factors stress annual
performance in achieving earnings levels that meet or exceed annual budgets,
concrete accomplishments in improving the Company's competitive position and
achieving the Company's strategic objectives. The strategic accomplishments
measured include, but are not limited to, new product introductions,
technological or quality improvements and fundamental improvements in
operations and contributions to business success.
Consistent with this approach, bonus awards for Messrs. Castellini, Galiardo
and Reynolds are based principally (75%) upon the Company's reported earnings
per share compared to annual growth targets established in concurrence with the
Board. Additional weight (25%) is given to each individual's specific
accomplishments during the year toward achieving the Company's strategic
objectives. Bonus awards for Sector Presidents (Mr. Miller) are based
principally (50%) upon the operating income generated by the respective
business Sector compared to the target incorporated in the annual budget
approved by the Board. Additional weight is given to the Company's overall
earnings per share performance (25%) and to strategic accomplishments (25%). In
all cases, there are minimum thresholds of overall Company (and, where
applicable, Sector) financial performance that must be achieved before any
bonus is paid for a particular fiscal year.
Stock options have been awarded each year by the Committee to executive
officers in accordance with the Company's 1990 Stock Option Plan (the "1990
Stock Option Plan"), as applied to the executive officers through the Senior
Executive Option Policy adopted by the Committee in May, 1990. The Senior
Executive Option Policy established an indexed stock option program intended to
compensate executive officers both for absolute growth in shareholder value and
for relative Company Common Stock price performance compared to the performance
of the S&P 500 Index (the "S&P 500 Index"). The addition of a "relative"
performance measure (e.g. comparison to performance of the S&P 500) through the
Senior Executive Option Policy would result in a reduced value when performance
is below the S&P 500 and an increased value when performance exceeds the S&P
500, and creates a strong pay-for-performance link for the senior management
group.
The Committee believes this program for annual option grants to the executive
officers provides a strong incentive to achieve a pattern of sustained
performance which increases shareholder value and to surpass the average return
available to investors as represented by the S&P 500 Index. Consequently, as a
part of this program, the executive officers are no longer eligible for grants
under the Company's Stock Award Plan, and have not received any grants under
that Plan since the Senior Executive Option Policy was adopted.
The operation of the Senior Executive Option Policy provided an annual grant
through 1994 to each of the executive officers of a specified minimum number of
nonqualified options with exercise prices indexed to the change from May 21,
1990 in the S&P 500 Index. On that date, the mean of the high and low of the
Company's Common Stock price (the "fair market value") was $31.565 and the S&P
500 Index closed at 358.00. To the extent that changes in the per share price
of the Company's Common Stock from that date outperform the S&P 500 Index, the
exercise price of future option grants would be set at a discount from the
Common Stock's fair market value on the date of grant. Conversely, to the
extent the Company's Common Stock does not perform as well as the S&P 500
Index, such future grants would have an exercise price greater than the fair
market value of the Company's Common Stock on the date of each grant.
Each annual grant is exercisable for a period of ten years from the date of
grant. The maximum potential value of each grant will be realized by achieving
sustained favorable Company performance throughout this period and by deferring
exercise until the latter portion of the ten-year exercise period.
The following table summarizes the relative performance of the S&P 500 Index
and the Company's per-share price since the inception of this policy in May,
1990, and the impact upon stock option grant
9
<PAGE>
price levels for the 1991, 1992, 1993 and 1994 grants. On May 24, 1994, the
executive officers were granted options at an exercise price of $40.10 per
share, which was above the $37.50 per share fair market value on that date.
This premium over the current market price creates an additional incentive to
achieve stock price growth in the future.
<TABLE>
<CAPTION>
(5/21) (5/21) (5/19) (5/24) (5/24)
1990 1991 1992 1993 1994
------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C>
S&P 500 Index......................... 358.00 375.35 416.37 448.00 454.81
Company Per-Share Market Value........ $31.565 $38.78 $35.845 $37.25 $37.50
Senior Executive Option Policy
Grant Price.......................... $31.565 $33.095 $36.71 $39.50 $40.10
Discount/(Premium).................... -0- $ 5.685 $(0.865) $(2.25) $(2.60)
</TABLE>
COMPENSATION OF THE CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE
OFFICER
Mr. Castellini was elected by the Board to the position of Chairman of the
Board, President and Chief Executive Officer effective June 16, 1994, following
the resignation of Raymond V. Gilmartin to accept a similar position with Merck
& Co., Inc. Mr. Castellini participates in the same compensation programs
provided to the other executive officers. In connection with this appointment,
Mr. Castellini's salary was increased to $500,000 per year. In addition, he
received a special one-time stock option grant of 60,000 shares priced at
$37.81 under the Company's 1990 Stock Option Plan, effective June 9, 1994. This
award, in recognition of his increased responsibilities, was in addition to the
stock option grant of 36,000 shares he received in May, 1994 as Sector
President--Medical. The Committee authorized an annual incentive bonus award of
$380,000 for Mr. Castellini for 1994.
Mr. Gilmartin received a stock option grant of 60,000 shares in May, 1994
under the terms of the Senior Executive Option Policy. He is not eligible for
any award this year under the Executive Bonus Plan. Mr. Gilmartin received no
special payments from the Company upon his resignation in June, 1994. His
benefit and compensation program participation was resolved in accordance with
the standard provisions of the applicable programs for employees who resign.
1994 COMPENSATION ACTIONS: OTHER EXECUTIVE OFFICERS
Mr. Galiardo was elected to the Board and to the new position of Vice
Chairman of the Board effective June 16, 1994. In connection with this
appointment, Mr. Galiardo's salary was increased to $370,000 per year. In
addition, he received a one-time stock option grant of 30,000 shares priced at
$37.81 under the Company's 1990 Stock Option Plan, effective June 9, 1994. This
award, in recognition of his increased responsibilities, was in addition to the
stock option grant of 30,000 shares he received in May, 1994 as Vice President
and General Counsel.
The other executive officers received merit increases that averaged 4.0%,
consistent with a 4.0% guideline for merit increases established for U. S.
management and professional staff in 1994. The Committee authorized annual
incentive bonus awards for the executive officers that ranged from 104% to 113%
of target. The executive officers received indexed stock options under the
Senior Executive Option Policy during 1994.
TAX DEDUCTIBILITY CONSIDERATIONS
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
enacted in 1993, precludes a public corporation from taking a deduction in
taxable years commencing on or after January 1, 1994 for compensation in excess
of $1 million for its Chief Executive Officer or any of its four other highest
paid executive officers. Certain performance-based compensation, however, is
specifically exempt from the deduction limit.
10
<PAGE>
The Committee has reviewed the Company's compensation plans with regard to
the deduction limitation. In December, 1993 and December, 1994, the Internal
Revenue Service issued proposed regulations implementing the legislation. The
regulations will not become final until after a period of public comment. There
is no anticipated loss of deductibility attributable to compensation approved
and/or paid in 1994.
Based on the proposed regulations, any compensation derived from the exercise
of stock options or stock appreciation rights granted under the 1990 Stock
Option Plan and prior stock option plans should be exempt from the limit on the
corporate tax deduction. The new 1995 Stock Option Plan being presented for
shareholder approval as a successor to the 1990 Stock Option Plan incorporates
new provisions, such as an annual cap on individual awards, that are intended
to comply with the proposed regulations. When final regulations are issued, the
Committee will assess the practical impact of the new tax legislation on
executive compensation and determine what further action, if any, is
appropriate to preserve deductibility, while ensuring that the Committee has
the flexibility it needs to carry out its responsibilities in the best
interests of shareholders.
The tables and graph following this report set forth information on the
compensation for the Company's five executive officers (the "named
executives").
COMPENSATION AND BENEFITS COMMITTEE
THOMAS A. HOLMES, CHAIRMAN
EDMUND B. FITZGERALD FRANK A. OLSON
RICHARD W. HANSELMAN RAYMOND S. TROUBH
11
<PAGE>
COMPENSATION OF NAMED EXECUTIVES
GENERAL
The following table shows, for the fiscal years ended September 30, 1992,
1993 and 1994, compensation provided by the Company to each of the named
executives in all capacities in which they served.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
---------------------
ANNUAL COMPENSATION AWARDS
-------------------------------------------- ---------------------
SECURITIES
OTHER RESTRICTED UNDERLYING
NAME AND FISCAL ANNUAL STOCK OPTIONS/ ALL OTHER
PRINCIPAL POSITION YEAR SALARY(A) BONUS(A) COMPENSATION(B)(C) AWARDS(D) SARS(D)(E) COMPENSATION(B)(F)
- ------------------ ------ --------- -------- ------------------ ---------- ---------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Clateo Castellini(G) 1994 $376,042 $380,000 0 0 96,000 $52,275
Chairman, President 1993 312,500 165,000 0 0 36,000 21,086
and Chief Executive 1992 285,000 100,000 -- 0 36,000 --
Officer
John W. Galiardo(H) 1994 308,375 200,000 0 0 60,000 5,468
Vice Chairman and 1993 271,083 115,000 0 0 30,000 18,738
General Counsel 1992 255,333 93,000 -- 0 30,000 --
Walter M. Miller 1994 316,667 165,000 0 0 36,000 4,750
Sector President-- 1993 302,500 0 0 0 36,000 6,891
Diagnostic 1992 270,833 90,000 -- 0 36,000 --
Robert A. Reynolds 1994 258,667 115,000 0 0 30,000 6,025
Vice President-- 1993 245,000 105,000 0 0 30,000 16,171
Finance and Controller 1992 226,667 85,000 -- 0 30,000 --
Raymond V. Gilmartin(I) 1994 462,917 0 0 0 60,000 50,800
Former Chairman, 1993 629,167 420,000 0 0 60,000 29,388
President and 1992 575,000 250,000 -- 0 60,000 --
Chief Executive Officer
</TABLE>
- --------
(A) Amounts shown reflect salary and bonuses earned by the named executives
for the applicable fiscal year. Bonuses are paid in the fiscal year
following the fiscal year for which they are earned, unless deferred at
the election of the executive.
(B) Information for fiscal years ending prior to December 15, 1992 has been
omitted in accordance with the rules and regulations of the SEC.
(C) None of the named executives received perquisites and other personal
benefits exceeding the lesser of $50,000 or 10% of each named executive's
annual salary and bonus.
(D) The named executives have not been eligible for further awards under the
Company's Stock Award Plan since the adoption of the Senior Executive
Option Policy in May, 1990. The following table contains information
relating to the outstanding holdings of restricted stock of the named
executives, which all relate to undistributed portions of awards granted
under the Stock Award Plan in 1990 and preceding years.
<TABLE>
<CAPTION>
CURRENT MARKET
NUMBER OF VALUE OF
RESTRICTED RESTRICTED
NAME SHARES HELD SHARES HELD
---- ----------- --------------
<S> <C> <C>
Clateo Castellini............................ 10,578 $510,389
John W. Galiardo............................. 9,702 468,122
Walter M. Miller............................. 7,304 352,418
Robert A. Reynolds........................... 17,062 823,242
Raymond V. Gilmartin......................... 0 0
</TABLE>
Under the terms of the Stock Award Plan, most of these holdings (stated as a
percentage of each named executive's total holdings) may not be distributed
until retirement or termination of employment: 9,978 (94%) for Mr.
Castellini; 9,252 (95%) for Mr. Galiardo; 6,704 (92%) for Mr. Miller; and
16,612 (97%) for Mr. Reynolds. Mr. Gilmartin forfeited his stock awards upon
his voluntary termination in June, 1994.
Values are determined by multiplying the number of undistributed shares by
$48.25, the September 30, 1994 closing price for the Company's Common Stock.
No discount has been taken to reflect (1) the continuing restrictions on
distribution and transferability, or (2) the fact that undistributed shares
are not dividend-bearing.
12
<PAGE>
(E) All option grants shown are awarded in accordance with the Senior
Executive Option Policy described above. As a result, each option grant
reflects a discount (or premium) to current market value, depending upon
the Company's cumulative share price growth compared to the S&P 500 Index,
as follows:
1994 ($2.60 ) per share premium
1993 ($2.25 ) per share premium
1992 ($0.865) per share premium
The grants to Messrs. Castellini and Galiardo include special one-time stock
option grants of 60,000 shares and 30,000 shares, respectively, granted
under the Company's 1990 Stock Option Plan.
(F) Amounts shown represent the sum of (1) the Company's matching
contributions to the Company's Savings Incentive Plan ("SIP"), a qualified
defined contribution plan available to U.S. employees at all levels, and
(2) the dollar value of split-dollar life insurance policies provided for
each of the named executives.
During the fiscal year the Company made contributions to SIP of $4,525 for
Mr. Castellini, $5,468 for Mr. Galiardo, $4,750 for Mr. Miller, $6,025 for
Mr. Reynolds and $4,500 for Mr. Gilmartin. These amounts represent Company
matching contributions at a 50% rate of the first 6% of base pay contributed
to SIP by each of the named executives, in accordance with applicable SIP
rules and subject to limits imposed by the IRS upon maximum contributions to
such tax-qualified plans.
The Company has made a split-dollar life insurance policy available to the
named executives in lieu of full participation in the Company's group life
insurance program. The death benefit payable to the beneficiary of an
insured named executive is two times that executive's base salary. Under
this split-dollar arrangement, the premiums are paid by the Company in a
fixed time period during the initial years in which the policies are in
effect. If assumptions about mortality, dividends and other factors are
realized, the Company will recover all of its payments for premiums from the
cash value of the policy at the later of a designated period or retirement
of the named executive. Full ownership of the policy will be transferred to
the named executive at that time. The premiums paid on behalf of each named
executive during fiscal 1994 have been prorated to reflect the current value
of term life insurance coverage for the fiscal year plus the deferred
reimbursement to the Company of the premium payments. The compensatory
portion of the premium payments for each named executive during the year was
$47,750 for Mr. Castellini, $0 for Mr. Galiardo, $0 for Mr. Miller, $0 for
Mr. Reynolds and $46,300 for Mr. Gilmartin.
(G) Mr. Castellini became Chairman of the Board, President and Chief Executive
Officer on June 16, 1994. Prior thereto he was Sector President--Medical.
(H) Mr. Galiardo became Vice Chairman of the Board and General Counsel on June
16, 1994. Prior thereto he was Vice President and General Counsel.
(I) Mr. Gilmartin resigned as Chairman of the Board, President and Chief
Executive Officer effective June 16, 1994.
STOCK OPTION GRANTS
The following table contains information relating to stock option grants and
tandem stock appreciation rights ("SARs") made in fiscal 1994 under the 1990
Stock Option Plan through the Senior Executive Option Policy described above.
OPTION/SAR GRANTS IN 1994
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS/SARS
OPTIONS/ GRANTED TO GRANT DATE
SARS EMPLOYEES IN EXERCISE EXPIRATION PRESENT
NAME GRANTED (A) FISCAL YEAR PRICE (B) DATE VALUE (C)
---- ----------- ------------ --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Clateo Castellini....... 36,000 2.9% $40.10 5/23/04 $504,900
60,000 4.8% 37.81 6/08/04 900,634
John W. Galiardo........ 30,000 2.4% 40.10 5/23/04 420,750
30,000 2.4% 37.81 6/08/04 450,317
Walter M. Miller........ 36,000 2.9% 40.10 5/23/04 504,900
Robert A. Reynolds...... 30,000 2.4% 40.10 5/23/04 420,750
Raymond V. Gilmartin.... 60,000 4.8% 40.10 N/A(D) 841,500
--------- ----- ------ -------- ----------
TOTAL................... 282,000 22.6% 39.37 N/A $4,043,751
All Optionees........... 1,258,370 100% 35.64 06/08/04 17,136,170
</TABLE>
- --------
(A) All option grants to the named executives are for a ten-year term. They
are exercisable immediately, subject to applicable rules and regulations
of the SEC. These option grants are issued in tandem with limited SARs,
exercisable only in the event of a tender offer for the Company's Common
Stock or a change in control of the Company, as defined in the 1990 Stock
Option Plan.
13
<PAGE>
(B) Option grants to the named executives are in accordance with the terms of
the Senior Executive Option Policy described above, except for special
grants of 60,000 shares for Mr. Castellini and 30,000 shares for Mr.
Galiardo reflecting their increased responsibilities. The exercise price
of $40.10 represents a premium of $2.60 over the fair market value of
Company Common Stock on May 24, 1994 (the date of the grant). On January
24, 1994, the Company awarded 976,370 option grants to other participants
in its stock option programs at an exercise price of $34.56.
(C) This estimate of value has been developed solely for purposes of
comparative disclosure in accordance with the rules and regulations of the
SEC, and does not necessarily reflect the Company's view of the
appropriate value or methodology for purposes of financial reporting. The
estimated value has been determined by application of the Black-Scholes
option pricing model, based upon the terms of the option grant and the
Company's stock price performance history as of the date of the grant. The
key assumptions set forth below used in the valuation are based upon
historical experience, and are not a forecast of future stock price
performance or volatility or of future dividend policy. No adjustments
have been made for forfeitures or nontransferability.
Dividend Yield: 0.0171
Volatility: 0.2067
Risk-free Rate of Return: 7.3%
Expected Exercise Period: 10 years
(D) Mr. Gilmartin exercised all exercisable options in accordance with the
terms of the 1990 Stock Option Plan following his voluntary termination.
STOCK OPTION EXERCISES
The following table contains information relating to the exercise of stock
options by the named executives in fiscal 1994 as well as the number and value
of their unexercised options as of September 30, 1994.
AGGREGATED OPTION/SAR EXERCISES IN 1994 AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
VALUE SECURITIES UNDERLYING VALUE OF UNEXERCISED
REALIZED UNEXERCISED IN-THE-MONEY
SHARES (MARKET VALUE OPTIONS/SARS AT OPTIONS/SARS AT
ACQUIRED LESS FISCAL YEAR-END FISCAL YEAR-END
NAME ON EXERCISE EXERCISE PRICE) (ALL EXERCISABLE) (B) (ALL EXERCISABLE) (A)(B)
---- ----------- --------------- --------------------- ------------------------
<S> <C> <C> <C> <C>
Clateo Castellini....... 3,000 $ 88,912 277,000 $3,689,993
John W. Galiardo........ 18,650 587,506 213,950 2,924,901
Walter M. Miller........ 5,643 92,733 185,095 2,287,678
Robert A. Reynolds...... 0 0 174,000 2,443,570
Raymond V. Gilmartin.... 481,800 5,479,285 0(C) 0
</TABLE>
- --------
(A) The value of unexercised options represents the difference between the
closing price of the Company's Common Stock on September 30, 1994
($48.25), and the exercise price of each unexercised option held by the
named executives with an exercise price of less than $48.25.
(B) All option grants to the named executives are for a ten-year term. They
are exercisable immediately, subject to applicable rules and regulations
of the SEC. These option grants are issued in tandem with limited SARs,
exercisable only in the event of a tender offer for the Company's Common
Stock or a change in control of the Company, as defined under the
Company's 1990 Stock Option Plan.
(C) Mr. Gilmartin exercised all exercisable options in accordance with the
terms of each stock option plan pursuant to which he held options
following his voluntary termination.
RETIREMENT PLAN
The Company's Retirement Plan (the "Retirement Plan") is a non-contributory
defined benefit plan. It provides for normal retirement at age 65 and permits
earlier retirement in certain cases. Benefits are based upon years of service
and compensation (comprised of salary, commissions, bonuses and stock award
distributions ("Covered Compensation")) for the five consecutive calendar
years which produce the highest average compensation ("Maximum Average
Compensation"). The Retirement Plan is integrated with Social Security.
The Code limits the maximum annual benefit which may be paid to any
individual from the Retirement Plan's trust fund and the amount of
compensation that may be recognized. Under the Company's Retirement Benefit
Restoration Plan (the "Restoration Plan"), the Company will make supplemental,
unfunded payments to offset any reductions in benefits which may result from
such
14
<PAGE>
limitations. The Company's obligations to pay retirement benefits under the
Restoration Plan and employment agreements with certain key employees of the
Company (including the named executives, whose employment agreements are more
fully discussed below under "Contractual Obligations"), as well as deferred
amounts under the Executive Bonus Plan, are secured by a trust. The trust is
currently secured by a letter of credit. The trustee is required to draw on the
letter of credit, up to specified limits, following a change in control of the
Company (as defined in the trust agreement).
The table below shows the estimated annual retirement benefits payable under
the Retirement Plan and the Restoration Plan at normal retirement date to all
eligible employees, including the named executives, in specified remuneration
and years of service classifications.
ESTIMATED ANNUAL RETIREMENT BENEFITS
<TABLE>
<CAPTION>
MAXIMUM YEARS OF CREDITED SERVICE
AVERAGE --------------------------------------------------------------
COMPENSATION 10 15 20 25 30 35 40
- ------------ -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 200,000 $ 28,864 $ 43,296 $ 57,728 $ 72,160 $ 86,592 $101,024 $115,456
300,000 48,864 65,796 87,728 109,660 131,592 153,524 175,456
400,000 58,864 88,296 117,728 147,160 176,592 206,024 235,456
500,000 73,864 110,796 147,728 184,660 221,592 258,524 295,456
600,000 88,864 133,296 177,728 222,160 266,592 311,024 355,456
700,000 103,864 155,796 207,728 259,660 311,592 363,524 415,456
800,000 118,864 178,296 237,728 297,160 356,592 416,024 475,456
900,000 133,864 200,796 267,728 334,660 401,592 468,524 535,456
1,000,000 148,864 223,296 297,728 372,160 446,592 521,024 595,456
1,100,000 163,864 245,796 327,728 409,660 491,592 573,524 655,456
1,200,000 178,864 268,296 357,728 447,160 536,592 626,024 715,456
1,300,000 193,864 290,796 387,728 484,660 581,592 678,524 775,456
1,400,000 208,864 313,296 417,728 522,160 626,592 731,024 835,456
</TABLE>
Covered Compensation includes all components of each named executive's Annual
Compensation as set forth in the Summary Compensation Table on page 12 hereof,
plus the distributed portion of awards granted to him through January, 1990
under the Company's Stock Award Plan . Amounts shown are calculated on a
straight-life annuity basis, and are not subject to any further deduction for
Social Security benefits or other offsets. Employees may elect to receive the
actuarial value of their retirement benefits in a lump sum in lieu of a
lifetime pension.
Under the Retirement Plan, years of credited service as of December 31, 1994,
and Covered Compensation for the calendar year ending December 31, 1994, are 16
years and $836,380 for Mr. Castellini, 17 years and $562,359 for Mr. Galiardo,
14 years and $518,625 for Mr. Miller, 39 years and $404,391 for Mr. Reynolds
and 18 years and $362,209 for Mr. Gilmartin.
In addition, employment agreements with the named executives (more fully
discussed below under "Contractual Obligations") provide for a supplemental
pension computed by assuming additional years of credited service for purposes
of calculating this benefit under the Retirement Plan in the event of
termination of employment under certain stated conditions. This calculation
would result in 15 additional years for Mr. Castellini, 15 additional years for
Mr. Galiardo, and 12 additional years for Mr. Miller. These supplemental
pension amounts would be offset by any pensions payable from prior employers.
Mr. Gilmartin is not eligible for additional years of credited service due to
his voluntary termination.
CONTRACTUAL OBLIGATIONS
The named executives have employment agreements with the Company which
provide for continuation of their base salaries and fringe benefits for two
years after termination by the Company other than for cause or by the employee
for good reason not within three years following a change in control of the
Company. The terms "cause", "good reason" and "change in control" are defined
in the agreements. In the event of termination other than for cause or for good
reason within three years following a change in control, each named executive
would receive a payment equal to two times his highest aggregate annual
compensation (salary, bonus and stock award distributions) in any of the
15
<PAGE>
three calendar years preceding the calendar year in which termination occurs,
and his fringe benefits, reduced to the extent provided by any subsequent
employer, would be continued for life. Had Messrs. Castellini, Galiardo, Miller
and Reynolds been terminated on September 30, 1994 following a change in
control, they would have been entitled to cash payments of $1,030,928,
$876,959, $852,785 and $794,128, respectively.
In the event of termination other than for cause or for good reason within
three years following a change in control, each named executive would be
entitled to all of the pension benefits which he would have earned had he
remained an employee until age 65. If any termination payments to a named
executive pursuant to his agreement should be subject to the excise tax imposed
by Section 4999 of the Code (the "Excise Tax"), the Company would reimburse him
in an amount such that he would retain the same amount, net of all taxes, that
he would have retained had the Excise Tax not been in effect.
PERFORMANCE COMPARISON
The following graph presents a comparison of cumulative total return to
shareholders for the five-year period ended September 30, 1994, for the
Company, the S&P 500 Index, and the S&P Medical Products and Supplies Index.
This is the comparison period required by applicable rules and regulations of
the SEC. Cumulative total return to shareholders is measured by dividing total
dividends (assuming dividend reinvestment) plus per share price change for the
period by the share price at the beginning of the measurement period. The
Company's cumulative shareholder return is based on an investment of $100 on
September 30, 1989 and is compared to the cumulative total return of the S&P
500 Index and the S&P Medical Products and Supplies Index over the same period
with a like amount invested.
Companies measured in the S&P Medical Products and Supplies Index, in
addition to the Company, are C.R. Bard, Inc., Bausch & Lomb, Inc., Baxter
International Inc., Biomet, Inc., Medtronic, Inc., St. Jude Medical, Inc. and
United States Surgical Corporation.
[GRAPH APPEARS HERE]
<TABLE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN TO SHAREHOLDERS
AMONG BECTON, DICKINSON AND COMPANY, S&P 500 INDEX AND
S&P MEDICAL PROD & SPL INDEX
<CAPTION>
S&P MEDICAL
Measurement period BECTON, DICKINSON S&P 500 PROD & SUPL
(Fiscal year Covered) AND COMPANY Index Index
- --------------------- ---------------- ------- -----------
<S> <C> <C> <C>
Measurement PT -
FYE 09/30/89 $ 100 $ 100 $ 100
12/31/89 $ 109 $ 102 $ 108
03/31/90 $ 107 $ 99 $ 101
06/30/90 $ 124 $ 105 $ 114
FYE 09/30/90 $ 117 $ 91 $ 107
12/31/90 $ 133 $ 99 $ 126
03/31/91 $ 140 $ 113 $ 158
06/30/91 $ 134 $ 113 $ 152
FYE 09/30/91 $ 123 $ 119 $ 168
12/31/91 $ 124 $ 129 $ 206
03/31/92 $ 128 $ 126 $ 174
06/30/92 $ 136 $ 128 $ 174
FYE 09/30/92 $ 138 $ 132 $ 164
12/31/92 $ 145 $ 139 $ 177
03/31/93 $ 135 $ 145 $ 154
06/30/93 $ 149 $ 146 $ 142
FYE 09/30/93 $ 141 $ 149 $ 124
12/31/93 $ 134 $ 153 $ 135
03/31/94 $ 142 $ 147 $ 129
06/30/94 $ 155 $ 148 $ 137
FYE 09/30/94 $ 184 $ 155 $ 159
</TABLE>
* $100 INVESTED ON 09/30/89 IN STOCK OR INDEX. INCLUDING REINVESTMENT OF
DIVIDENDS. FISCAL YEAR ENDING SEPTEMBER 30.
16
<PAGE>
PROPOSAL 2. SELECTION OF INDEPENDENT AUDITORS
The Board of Directors, pursuant to the recommendation of the Audit
Committee, has selected Ernst & Young LLP to audit the accounts of the Company
and its subsidiaries for the fiscal year ending September 30, 1995. A
representative of Ernst & Young LLP will attend the Annual Meeting to respond
to appropriate questions and will have the opportunity to make a statement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE SELECTION OF
ERNST & YOUNG LLP. If approval is withheld, the Board will reconsider its
selection.
PROPOSAL 3. APPROVAL OF 1995 STOCK OPTION PLAN
The Senior Executive Option Policy described on page 9 hereof expired in May,
1994. In view of the expiration of this policy and the limited number of shares
which remain available for the granting of stock options under the 1990 Stock
Option Plan, the Board of Directors adopted in December, 1994, the 1995 Stock
Option Plan (the "1995 Plan"), subject to shareholder approval. The Board of
Directors continues to believe that stock-based incentives are important
factors in attracting, retaining, and rewarding officers and other selected
employees and closely aligning their interests with those of shareholders.
If approved by shareholders, the Board of Directors has authorized for
issuance under the 1995 Plan 6,000,000 shares of the Company's Common Stock for
the granting of options, which is 8.8% of the shares of Common Stock
outstanding on December 19, 1994. The closing price of a share of Common Stock
on the New York Stock Exchange on December 19, 1994 was $49.25.
A brief description of the material provisions of the 1995 Plan is as
follows:
1. Administration. The 1995 Plan will be administered by a committee of
at least three directors, presently the Compensation and Benefits Committee
(the "Committee"), none of whom will be eligible to participate in the 1995
Plan for at least one year prior to their appointment to the Committee. In
administering the 1995 Plan, the Committee has the power to interpret its
provisions and to promulgate, amend, and rescind rules and regulations for
its administration, and to select individuals to receive grants.
2. Option Grants. The 1995 Plan provides for the granting of both
incentive and nonqualified stock options. Options may be granted to
officers and other key employees of the Company and its subsidiaries, as
determined by the Committee. Approximately 600 employees were granted stock
options in fiscal 1994 and it is anticipated that approximately that number
of employees will be eligible for stock options in fiscal 1995. The
Committee also determines the times at which options become exercisable,
their transferability and the dates, not more than ten years after the date
of grant, on which options will expire. In the event of a tender offer for
more than 25% of the Company's outstanding stock, or a "change in control"
(as defined in the 1995 Plan) of the Company, all outstanding options
become immediately exercisable. The fair market value of the stock with
respect to which incentive stock options under the 1995 Plan or any other
plan of the Company first become exercisable may not exceed $100,000 in any
year. The option price of incentive stock options is to be at least 100% of
the fair market value on the date of grant. The 1995 Plan, however, permits
the Committee to grant nonqualified stock options at any exercise price
consistent with the purposes of the 1995 Plan, whether or not such exercise
price is equal to the fair market value of the stock on the date of grant.
See "3. Senior Executive Option Grants", immediately following.
17
<PAGE>
It is not possible at this time to determine who may be selected to
receive options under the 1995 Plan or the number of options to be granted
to any individual. Such selections and determinations will be made by the
Committee on the basis of the duties, responsibilities, and present and
future contributions of individuals to the success of the Company. The 1995
Plan does, however, establish a maximum number of 300,000 shares that may
be granted to an individual in any calendar year.
3. Senior Executive Option Grants. On May 21, 1990, the then-five
executive officers of the Company received grants under the Senior
Executive Option Policy, and the Committee expressed its intention upon the
adoption of the 1990 Stock Option Plan to make annual nonqualified stock
option grants over the following four years to those same executives, with
exercise prices which were indexed to the change in the S&P 500 Index from
the May 21, 1990 grant date. On that date, the fair market value of the
Company's Common Stock was $31.565 and the S&P 500 Index closed at 358.00.
To the extent that changes in the per share price of the Company's Common
Stock from that date outperformed the S&P 500 Index, the exercise price of
option grants was set at a discount from the Common Stock's fair market
value on the date of grant. Conversely, to the extent the Company's Common
Stock did not perform as well as the S&P 500 Index, option grants had an
exercise price greater than the fair market value of the Company's Common
Stock on the date of grant. As part of this program, the five executive
officers were not eligible for further grants under the Company's Stock
Award Plan. The history of stock option grants through 1994 under this
Policy is set forth in the Report of the Committee on Executive
Compensation set forth on pages 8-11 hereof.
Under the 1995 Plan, the Senior Executive Option Policy is intended to be
renewed for an additional five-year period starting with the 1995 grant,
subject to amendment by the Committee and the changes discussed below. It
is intended that participation in the indexed stock option program will be
extended to all corporate officers and division presidents in lieu of
further grants under the Company's Stock Award Plan. The option exercise
price for grants to these new participants will be indexed each year,
unless otherwise provided by the Committee, to the date such participants
receive their upcoming stock option grants in January, 1995. The option
exercise price for grants to executive officers who previously participated
in the indexed stock option program (as identified in the Summary
Compensation Table on page 12 hereof) will be indexed each year, unless
otherwise provided by the Committee, to the change in the S&P 500 Index
from May 24, 1994 (the date indexed stock options were last granted to
these individuals). On that date, the S&P 500 Index closed at 454.81. This
resulted in a grant of options with an exercise price of $40.10, which was
above the $37.50 per share fair market value of the Company's Common Stock
on that date.
4. Stock Appreciation Rights. The 1995 Plan permits the Committee to
grant stock appreciation rights in connection with any stock option. These
rights enable an optionee to surrender an option and to receive a cash or
stock payment, as determined by the Committee, equal to the difference
between the option price and the fair market value of the Common Stock on
the date of surrender.
5. Termination of Employment. Unless otherwise provided by the Committee,
the following rules will apply to all options granted under the 1995 Plan.
Options granted under the 1995 Plan expire immediately if an employee is
terminated for cause. They expire three months after a voluntary or
involuntary termination without cause. In the event of an employee's death
within such three-month period, the employee's estate may exercise the
number of shares exercisable at the date of termination for one year after
death but in no event beyond the expiration dates of the options. Options
outstanding at the time an employee retires under a Company retirement plan
or becomes disabled shall be exercisable only to the extent that the
optionee was otherwise entitled
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to exercise them at the time of such cessation of employment with the
Company or a subsidiary thereof, but in no event after the expiration of
the option period. If an employee dies, whether before or after such
retirement or disability, the employee's estate may exercise the number of
shares exercisable at the date of termination of employment for up to three
years after death, but in no event beyond the expiration dates of the
options.
6. Income Tax Consequences. Under present law the federal income tax
treatment of stock options under the 1995 Plan is generally as follows:
Incentive Stock Options. For regular income tax purposes, an optionee
will not realize taxable income upon either the grant of an incentive
stock option or its exercise if the optionee has been an employee of
the Company or a subsidiary at all times from the date of grant to a
date not more than three months before the date of exercise. An
optionee may, instead, under certain circumstances have an alternative
minimum tax to pay as a result of an exercise of an incentive stock
option.
If the shares acquired upon an exercise of an incentive stock option
are not disposed of by the optionee within two years from the date of
grant or within one year from the date of exercise, any gain realized
upon a subsequent sale of the shares will be taxable as a capital gain.
In that case, the Company will not be entitled to a deduction in
connection with the grant or the exercise of the option or the
subsequent disposition of the shares by the optionee.
If the optionee disposes of the shares within two years from the date
of grant or within one year from the date of exercise, the optionee
will realize ordinary income in an amount equal to the excess of the
fair market value of the shares at the date of exercise (or the amount
realized on disposition, if less) over the option price, and the
Company will be allowed a corresponding deduction. If the amount
realized on the disposition exceeds the fair market value of the shares
at the date of exercise the gain on disposition in excess of the amount
treated as ordinary income will be treated as a capital gain. Any such
capital gain will be a long-term capital gain if the optionee holds the
shares for more than one year from the date of exercise.
Nonqualified Stock Options. An optionee will not realize income upon
the grant of a nonqualified option. Upon the exercise of a nonqualified
option, an optionee will be required to recognize ordinary income in an
amount equal to the excess of the fair market value at the date of
exercise over the option price, and the Company will be entitled to a
corresponding deduction. Upon a subsequent sale of the stock, any
amount realized in excess of such fair market value will constitute a
capital gain. Any such capital gain will be a long-term capital gain if
the optionee holds the shares for more than one year from the date of
exercise.
Stock appreciation rights will not result in taxable income upon grant.
Upon exercise, the optionee will realize ordinary income in an amount equal
to the cash and/or the fair market value of any shares received and the
Company is entitled to a corresponding deduction.
Individual states and local tax authorities may also tax stock options
granted under the 1995 Plan.
7. Amendments. The Board of Directors may amend the 1995 Plan at any
time, but may not, without prior shareholder approval, increase the
aggregate number of shares that may be issued thereunder.
The 1995 Plan incorporates new provisions designed to meet certain of the
requirements in Section 162(m) of the Code for stock options and stock
appreciation rights. When final regulations are issued, the Company's
management and the Compensation and Benefits Committee of the Board will
determine what further action, if any, is appropriate.
THE FOREGOING SUMMARY OF THE 1995 PLAN IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE PROVISIONS OF THE 1995 PLAN, A COPY OF WHICH IS ATTACHED AS
EXHIBIT A TO THIS PROXY STATEMENT.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 3.
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SHAREHOLDERS' PROPOSALS
PROPOSAL 4. DISCLOSURE OF GOVERNMENT EMPLOYMENT
Mrs. Evelyn Y. Davis, Watergate Office Building, 2600 Virginia Avenue N.W.,
Suite 215, Washington D.C. 20037, owner of 200 shares of Common Stock, has
informed the Company that she plans to introduce the following resolution at
the meeting:
RESOLVED: "That the stockholders of Becton Dickinson assembled in Annual
Meeting in person and by proxy hereby request the Board of Directors to
have the Company furnish the stockholders each year with a list of people
employed by the Corporation with the rank of Vice President or above, or as
a consultant, or as a lobbyist, or as legal counsel or investment banker or
director, who, in the previous five years have served in any governmental
capacity, whether Federal, City or State, or as a staff member of any
CONGRESSIONAL COMMITTEE or regulatory agency, and to disclose to the
stockholders whether such person was engaged in any matter which had a
direct bearing on the business of the Corporation and/or its subsidiaries,
provided that information directly affecting the competitive position of
the Corporation may be omitted."
The shareholder's statement in support of this resolution is as follows:
REASONS: "Full disclosure on these matters is essential at Becton
Dickinson because of its many dealings with Federal and State agencies, and
because of pending issues forthcoming in Congress and/or State and
Regulatory agencies."
"If you AGREE, please mark your proxy FOR this resolution."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL 4.
Ample safeguards against the conflicts of interest which might arise from the
employment of former government employees are currently afforded in the form of
applicable laws, as well as by the Company's own internal policies regarding
the avoidance by its employees of actual or potential conflicts of interest. In
addition, under SEC rules, the business experience during the past five years
of all executive officers and directors of the Company must be disclosed in
either the Company's Proxy Statement or its Annual Report on Form 10-K. This
proposal therefore is unnecessary as to this latter group.
Similar safeguards apply to law firms and various consultants and advisors
engaged by the Company. The Company engages such entities on the basis of their
professional competence and expects that they will comply with applicable
conflicts of interest laws, rules of professional conduct governing the
subject, and the Company's policies which apply to its relationships with them.
In summary, the Board of Directors is of the opinion that the compilation and
distribution of the information requested by this proposal would involve an
unnecessary burden and expense, and would serve no useful purpose.
PROPOSAL 5. ANNUAL ELECTION OF DIRECTORS
Mr. William Steiner, 4 Radcliff Drive, Great Neck, New York 11024, owner of
800 shares of the Company's Common Stock, has informed the Company that he
plans to present the following resolution at the meeting:
"RESOLVED: That the stockholders of Becton, Dickinson and Company (the
"Company") request that the Board of Directors take the necessary steps, in
accordance with state law, to declassify the Board of Directors so that all
directors are elected annually, such declassification to be effected in a
manner that does not affect the unexpired terms of directors previously
elected."
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The shareholder's statement in support of the resolution is as follows:
"The election of directors is the primary avenue for stockholders to
influence corporate governance policies and to hold management accountable
for its implementation of those policies. I believe that the classification
of the Board of Directors, which results in only a portion of the Board
being elected annually, is not in the best interests of the Company and its
stockholders.
The Board of Directors of the Company is divided into three classes
serving staggered three-year terms. I believe that the Company's classified
Board of Directors maintains the incumbency of the current Board and
therefore of current management, which in turn limits management's
accountability to stockholders.
The elimination of the Company's classified Board would require each new
director to stand for election annually and allow stockholders an
opportunity to register their views on the performance of the Board
collectively and each director individually. I believe this is one of the
best methods available to stockholders to insure that the Company will be
managed in a manner that is in the best interests of the stockholders.
As a founding member of the Investors Rights Association of America I
believe that concerns expressed by companies with classified boards that
the annual election of all directors could leave companies without
experienced directors in the event that all incumbents are voted out by
stockholders, are unfounded. In my view, in the unlikely event that
stockholders vote to replace all directors, this decision would express
stockholder dissatisfaction with the incumbent directors and reflect the
need for change.
I URGE YOUR SUPPORT, VOTE FOR THIS RESOLUTION."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL 5.
Similar shareholder proposals have been submitted to the shareholders several
times since the election of directors by classes was approved by the
shareholders in 1984, and have been rejected each time. The Board continues to
be of the opinion that a classified Board of Directors is beneficial to the
Company and its shareholders because it provides continuity, stability and
experience in the composition of the Board, while still providing for the
election of a portion of the Board each year. It also enables the Board to
represent more effectively the interests of all shareholders in a wide variety
of circumstances, including those created by the actions of a minority
shareholder or group of shareholders.
PROPOSAL 6. MEXICAN OPERATIONS REPORT
The Benedictine Resource Center, 3120 W. Ashby, San Antonio, Texas 78228,
owner of 2,000 shares of the Company's Common Stock, and the Congregation of
Divine Providence, P.O. Box 197, Helotes, Texas 78023, owner of 100 shares of
the Company's Common Stock, have respectively informed the Company that they
plan to present the following resolution at the meeting:
"WHEREAS:
We believe U.S. corporations operating in Mexico should practice
fundamental principles of safe environmental practices, establish adequate
health and safety standards and promote a fair and dignified quality of
life for workers and their communities.
Research indicates many U.S. corporations with maquiladoras and other
Mexican operations are harming workers and their families through use of
solvents and other chemicals without proper safeguards and polluting both
sides of the U.S.-Mexico border through improper disposal of hazardous
wastes.
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Many maquiladoras do not provide adequate health and safety practices, a
fair standard of living with an adequate wage for employees or respect for
employee rights. For example, many U.S. companies pay a minimum wage that
does not meet the basic subsistence needs of an employee and their family.
RESOLVED:
The shareholders request the Board of Directors to provide a
comprehensive report describing our Company's maquiladora operations in
Mexico. The report should be available to shareholders on request, may omit
confidential information and be prepared at reasonable cost.
The shareholders' statement in support of the resolution is as follows:
NAFTA, the North America Free Trade Agreement, has already stimulated
investment along the border and in Mexico. We believe the growth of plants
known as maquiladoras on the border enables some U.S. corporations to use
this system as a means to increase profits and productivity by paying
minimal compensation to employees and by avoiding health, safety and
environmental regulations. To change this trend companies which own
maquiladoras must apply high standards. The report requested will
illustrate that our company is serious about the welfare of its employees
and the environment.
We hope this report will include:
1. Operating policies for maquiladora plants.
2. Toxic chemical releases into air, water and land and the
environmental technologies used to control these amounts and
dispose of the wastes.
3. Toxic chemicals used in facilities and methods by which employees
are informed about and protected against adverse exposure.
4. Frequency and extent of plant inspections by environmental
consultants.
5. Information, as is available under U.S. Right to Know provisions,
provided to employees and communities on chemicals used in our
plants.
6. Minimum and average wages, profit sharing and other compensation
paid to employees and how wages compare with local cost of living.
If applicable, discuss employee use of company dormitories.
7. Ways by which employee rights, such as the right to organize, are
protected and sexual harassment is prevented.
8. Actions taken to improve local infrastructure e.g. housing,
potable water, child care, sewers, upgrading management and
mechanical skills of workers, transfer of technology.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL 6.
It is the Company's policy on a worldwide basis to provide fair, market-based
compensation and benefit packages as well as safe and healthy workplaces for
its employees, and to promote protection of the environment wherever the
Company has operations. Consistent with this policy, the Company operates its
Mexican facilities in compliance with all applicable Mexican workplace, health,
safety and environmental laws.
In summary, the Board is of the opinion that the Company's activities in
Mexico, where incidentally the Company has had a substantial presence for over
40 years, reflect its commitment to the Company's worldwide values and
therefore address on an ongoing basis all of the concerns raised in this
proposal.
SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
Shareholder proposals for the 1996 Annual Meeting must be received at the
principal executive offices of the Company, 1 Becton Drive, Franklin Lakes, New
Jersey 07417-1880, not later than September 7, 1995, for inclusion in the proxy
statement and form of proxy.
* * * *
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EXHIBIT A
BECTON, DICKINSON AND COMPANY
1995 STOCK OPTION PLAN
SECTION 1. PURPOSE
The purpose of this Stock Option Plan is to provide an additional incentive
to key employees of Becton, Dickinson and Company and its subsidiaries, to aid
in attracting and retaining employees of outstanding ability, and to closely
align their interests with those of shareholders.
SECTION 2. DEFINITIONS
Unless the context clearly indicates otherwise, the following terms, when
used in this Stock Option Plan, shall have the meanings set forth in this
Section 2.
(a) "Board" shall mean the Board of Directors of Becton, Dickinson and
Company.
(b) "Change in Control." A change in control of the Company shall be
deemed to have occurred if, over the initial opposition of the then-
incumbent Board (whether or not such Board ultimately acquiesces therein),
(i) any person or group of persons shall acquire, directly or indirectly,
stock of the Company having at least 25% of the combined voting power of
the Company's then- outstanding securities, or (ii) any shareholder or
group of shareholders shall elect a majority of the members of the Board.
(c) "Code" shall mean the Internal Revenue Code of 1986 as it may be
amended from time to time.
(d) "Committee" shall mean the Compensation and Benefits Committee of the
Board or such other committee as may be designated by the Board. The
Committee shall consist of three or more members of the Board who are not
eligible to participate in the Plan and who, within one year prior to their
appointment, have not been eligible to participate in the Plan.
(e) "Company" shall mean Becton, Dickinson and Company.
(f) "Date of Exercise" shall mean the earlier of the date on which
written notice of exercise, together with payment in full, is received at
the office of the Secretary of the Company or the date on which such notice
and payment are mailed to the Secretary of the Company at its principal
office by certified or registered mail.
(g) "Employee" shall mean any employee, including any officer, of the
Company or any of its Subsidiaries.
(h) "Fair Market Value" shall mean for any day the mean of the highest
and lowest selling prices of the Stock as reported on the Composite Tape
for securities traded on the New York Stock Exchange.
(i) "Grantee" shall mean an Employee granted a Stock Option.
(j) "Granting Date" shall mean the date on which the Committee authorizes
the issuance of a Stock Option for a specified number of shares of Stock to
a specified Employee.
(k) "Plan" shall mean the Becton, Dickinson and Company 1995 Stock Option
Plan as set forth herein and amended from time to time.
(l) "Policy" shall mean the Senior Executive Option Policy described in
the Company's Proxy Statement dated December 29, 1994, as amended from time
to time.
(m) "Stock" shall mean the Common Stock, par value $1.00 per share, of
the Company.
(n) "Stock Appreciation Right" shall mean a right granted pursuant to the
Plan to receive Stock, cash, or a combination thereof, upon the surrender
of the right to purchase all or part of the shares of Stock covered by a
Stock Option.
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(o) "Stock Option" shall mean an Incentive or Nonqualified Stock Option
granted pursuant to the Plan to purchase shares of Stock.
(p) "Subsidiary" shall mean any subsidiary corporation as defined in
Section 424 of the Code.
SECTION 3. SHARES OF STOCK SUBJECT TO THE PLAN
Subject to adjustment pursuant to Section 9, 6,000,000 shares of Stock shall
be reserved for issuance upon the exercise of Stock Options granted pursuant to
this Plan. Shares delivered under the Plan may be authorized and unissued
shares or issued shares held by the Company in its treasury. If any Stock
Options expire or terminate without having been exercised, the shares of Stock
covered by such Stock Options shall become available again for the grant of
Stock Options hereunder. Similarly, if any Stock Options are surrendered for
cash pursuant to the provisions of Section 7, the shares of Stock covered by
such Stock Options shall also become available again for the grant of Stock
Options hereunder. Shares of Stock covered by Stock Options surrendered for
Stock pursuant to Section 7, however, shall not become available again for the
grant of Stock Options hereunder.
SECTION 4. ADMINISTRATION OF THE PLAN
(a) The Plan shall be administered by the Committee. Subject to the
express provisions of the Plan, the Committee shall have authority to
interpret the Plan, to prescribe, amend and rescind rules and regulations
relating to it, to determine the terms and provisions of Stock Option
grants, and to make all other determinations necessary or advisable for the
administration of the Plan.
(b) It is intended that the Plan and any transaction hereunder meet all
of the requirements of Rule 16b-3 promulgated by the Securities and
Exchange Commission, as such rule is currently in effect or as hereafter
modified or amended, and all other applicable laws. If any provision of the
Plan or any transaction would disqualify the Plan or such transaction
under, or would not comply with, Rule 16b-3 or other applicable laws, such
provision or transaction shall be construed or deemed amended to conform to
Rule 16b-3 or such other applicable laws or otherwise shall be deemed to be
null and void, in each case to the extent permitted by law and deemed
advisable by the Committee.
(c) Any controversy or claim arising out of or related to this Plan shall
be determined unilaterally by and at the sole discretion of the Committee.
SECTION 5. GRANTING OF STOCK OPTIONS
(a) Only key Employees shall be eligible to receive Stock Options under
the Plan. Directors of the Company who are not also Employees shall not be
eligible for Stock Options.
(b) The purchase price of each share of Stock subject to an Incentive
Stock Option shall be at least 100% of the Fair Market Value of a share of
the Stock on the Granting Date.
(c) The purchase price of each share of Stock subject to a Nonqualified
Stock Option shall be 100% of the Fair Market Value of a share of the Stock
on the Granting Date, or such other price either greater than or less than
the Fair Market Value (but in no event less than the par value of the
Stock) as the Committee shall determine appropriate to the purposes of the
Plan and to the Company's total compensation program, including the Policy.
(d) The Committee shall determine and designate from time to time those
key Employees who are to be granted Stock Options and whether the
particular Stock Options are to be Incentive Stock Options or Nonqualified
Stock Options, and shall also specify the number of shares covered by and
the exercise price per share of each Stock Option.
(e) The aggregate fair market value (determined at the time the option is
granted) of the Stock with respect to which Incentive Stock Options are
exercisable for the first time by any individual during any calendar year
(under all such plans of the individual's employer corporation and its
parent and subsidiary corporations) shall not exceed $100,000.
(f) A Stock Option shall be exercisable during such period or periods and
in such installments as shall be fixed by the Committee at the time the
option is granted or in any amendment thereto; but each Stock Option shall
expire not later than ten years from the Granting Date.
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(g) The Committee shall have the authority to grant both transferable
Stock Options and nontransferable Stock Options, and to amend outstanding
nontransferable Stock Options to provide for transferability. Each
nontransferable Stock Option intended to qualify under Rule 16b-3 shall
provide by its terms that it is not transferable otherwise than by will or
the laws of descent and distribution and is exercisable, during the
Grantee's lifetime, only by the Grantee. Each transferable Stock Option may
provide for such limitations on transferability and exercisability as the
Committee may designate at the time a Stock Option is granted or is
otherwise amended to provide for transferability.
(h) Stock Options may be granted to an Employee who has previously
received Stock Options or other options whether such prior Stock Options or
other options are still outstanding, have previously been exercised or
surrendered in whole or in part, or are canceled in connection with the
issuance of new Stock Options.
(i) Subject to adjustment pursuant to Section 9, the aggregate number of
shares of Stock subject to Stock Options granted to an Employee under the
Plan during any calendar year shall not exceed 300,000 shares.
SECTION 6. EXERCISE OF STOCK OPTIONS
(a) Except as provided in Section 8, no Stock Option may be exercised at
any time unless the Grantee is an employee of the Company or a subsidiary
on the Date of Exercise.
(b) The Grantee shall pay the option price in full on the Date of
Exercise of a Stock Option in cash, by check, or by delivery of full shares
of Stock of the Company, duly endorsed for transfer to the Company with
signature guaranteed, or by any combination thereof. Stock will be accepted
at its Fair Market Value on the Date of Exercise.
SECTION 7. STOCK APPRECIATION RIGHTS
(a) The Committee may grant to any key Employee Stock Appreciation Rights
in connection with any Stock Option.
(b) Stock Appreciation Rights shall be exercisable at such times and to
the extent that the related Stock Option shall be exercisable, unless the
Committee specifies a more restrictive period.
(c) Upon the exercise of a Stock Appreciation Right, the Grantee shall
surrender the related Stock Option or a portion thereof and shall be
entitled to receive payment of an amount determined by multiplying the
number of shares as to which option rights are surrendered by the
difference obtained by subtracting the exercise price per share of the
related Stock Option from the Fair Market Value of a share of Stock on the
Date of Exercise of the Stock Appreciation Right.
(d) Payment of the amount determined under Section 7(c) shall be made in
Stock, in cash, or partly in cash and partly in Stock as the Committee
shall determine in its sole discretion.
(e) Except as provided in Section 10(b), the exercise of a Stock
Appreciation Right for cash may be made only during the period beginning on
the third business day following the release of quarterly or annual
financial data and ending on the twelfth business day following such date.
SECTION 8. TERMINATION OF EMPLOYMENT
Except as otherwise provided by the Committee at the time the option is
granted or in any amendment thereto, if a Grantee ceases to be an Employee,
then:
(a) if termination of employment is voluntary or involuntary without
cause, the Grantee may exercise each Stock Option held by him within three
months after such termination (but not after the expiration date of the
option) to the extent of the number of shares subject to the option which
are purchasable pursuant to its terms at the date of termination;
(b) if termination is for cause, all Stock Options held by the Grantee
shall be canceled as of the date of termination;
(c) subject to the provisions of Section 8(d), if termination is (i) by
reason of retirement at a time when the Grantee is entitled to the current
receipt of benefits under any retirement plan
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maintained by the Company or any Subsidiary, or (ii) by reason of
disability, each Stock Option held by the Grantee may be exercised by the
Grantee at any time (but not after the expiration date of the option) to
the extent of the number of shares subject to the option which were
purchasable pursuant to its terms at the date of termination;
(d) if termination is by reason of the death of the Grantee, or if the
Grantee dies after retirement or disability as referred to in Section 8(c),
each Stock Option held by the Grantee may be exercised by the Grantee's
estate, or by any person who acquires the right to exercise the option by
reason of the Grantee's death, at any time within a period of three years
after death (but not after the expiration date of the option) to the extent
of the total number of shares subject to the option which were purchasable
pursuant to its terms at the date of termination; or
(e) if the Grantee should die within three months after voluntary
termination of employment or involuntary termination without cause, as
contemplated in Section 8(a), each Stock Option held by the Grantee may be
exercised by the Grantee's estate, or by any person who acquires the right
to exercise by reason of the Grantee's death, at any time within a period
of one year after death (but not after the expiration date of the option)
to the extent of the number of shares subject to the option which were
purchasable pursuant to its terms at the date of termination.
SECTION 9. ADJUSTMENTS
In the event of any merger, consolidation, reorganization, recapitalization,
stock dividend, stock split or other change in the corporate structure or
capitalization affecting the Company's Stock, there shall be an appropriate
adjustment made by the Board in the number and kind of shares that may be
granted in the aggregate and to individual Employees under the Plan, the number
and kind of shares subject to each outstanding Stock Option and Stock
Appreciation Right and the option prices.
No exercise of conversion rights with respect to the shares of the Company's
Series B ESOP Convertible Preferred Stock shall call for any adjustment under
this Section 9.
SECTION 10. TENDER OFFER; CHANGE IN CONTROL
(a) A Stock Option shall become immediately exercisable to the extent of
the total number of shares subject to the option in the event of (i) a
tender offer by a person or persons other than the Company for all or any
part of the outstanding Stock if, upon consummation of the purchases
contemplated, the offeror or offerors would own, beneficially or of record,
an aggregate of more than 25% of the outstanding Stock, or (ii) a Change in
Control of the Company.
(b) The Committee may authorize the payment of cash upon the exercise of
a Stock Appreciation Right during a period (i) beginning on the date on
which a tender offer as described in (a), above, is first published or sent
or given to holders of Stock and ending on the date which is seven days
after its termination or expiration, or (ii) beginning on the date on which
a Change in Control of the Company occurs and ending on the twelfth
business day following such date.
SECTION 11. GENERAL PROVISIONS
(a) Each Stock Option shall be evidenced by a written instrument
containing such terms and conditions, not inconsistent with this Plan, as
the Committee shall approve.
(b) The granting of a Stock Option in any year shall not give the Grantee
any right to similar grants in future years or any right to be retained in
the employ of the Company or any Subsidiary or interfere in any way with
the right of the Company or such Subsidiary to terminate an Employee's
employment at any time.
(c) Notwithstanding any other provision of the Plan, the Company shall
not be required to issue or deliver any certificate or certificates for
shares of Stock under the Plan prior to fulfillment of all of the following
conditions:
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(i) The listing, or approval for listing upon notice of issuance, of
such shares on the New York Stock Exchange;
(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 may, in
its discretion upon the advice of counsel, deem necessary or advisable;
and
(iii) The obtaining of any other consent, approval or permit from any
state or federal governmental agency which the Committee may, in its
discretion upon the advice of counsel, determine to be necessary or
advisable.
(d) The Company shall have the right to deduct from any payment or
distribution under the Plan any federal, state or local taxes of any kind
required by law to be withheld with respect to such payments or to take
such other action as may be necessary to satisfy all obligations for the
payment of such taxes. In case distributions are made in shares of Stock,
the Company shall have the right to retain the value of sufficient shares
to equal the amount of tax to be withheld for such distributions or require
a recipient to pay the Company for any such taxes required to be withheld
on such terms and conditions prescribed by the Committee.
SECTION 12. AMENDMENT AND TERMINATION
(a) The Plan shall terminate on December 14, 2004 and no Stock Option
shall be granted hereunder after that date, provided that the Board may
terminate the Plan at any time prior thereto.
(b) The Board may amend the Plan at any time without notice, provided
however, that the Board may not, without prior approval by the
shareholders, increase the maximum number of shares for which options may
be granted (except as contemplated by the provisions of Section 9).
(c) No termination or amendment of the Plan may, without the consent of a
Grantee to whom a Stock Option shall theretofore have been granted,
adversely affect the rights of such Grantee under such Stock Option.
SECTION 13. EFFECTIVE DATE AND SHAREHOLDERS' APPROVAL
The Plan shall become effective December 15, 1994 upon its approval by the
Board, subject to approval or ratification by the affirmative votes of the
holders of a majority of the securities of the Company present, or represented,
and entitled to vote thereon at the next Annual Meeting of Shareholders of the
Company or any adjournment or postponement thereof. The Committee may grant
Stock Options, the exercise of which shall be expressly subject to the
condition that the Plan shall have been approved or ratified by the
shareholders of the Company.
A-5
<PAGE>
PROXY/VOTING INSTRUCTION CARD
BECTON, DICKINSON AND COMPANY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR
ANNUAL MEETING ON FEBRUARY 14, 1995
The undersigned hereby appoints Clateo Castellini, John W. Galiardo and Raymond
P. Ohlmuller, and any of them, with full power of substitution, proxies to
attend the annual meeting of the shareholders of the Company to be held at 2:30
P.M. on Tuesday, February 14, 1995, at the offices of the Company, 1 Becton
Drive, Building II, Franklin Lakes, New Jersey, and any adjournment thereof,
and to vote all shares of the Common Stock of the Company which the undersigned
is entitled to vote upon each of the matters referred to in this proxy and, in
their discretion, upon such other matters as may properly come before the
meeting.
This card constitutes voting instructions to the Trustee for any shares of
Common Stock and Series B ESOP Convertible Preferred Stock allocated to the
undersigned under the Company's Savings Incentive Plan.
Election of Directors, Nominees:
Term to expire 1997
Clateo Castellini
John W. Galiardo
Term to expire 1998
Henry P. Becton, Jr., Gerald M. Edelman, M.D., Edmund B. Fitzgerald,
Richard W. Hanselman
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, SEE
REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. PLEASE SIGN AND RETURN THIS CARD
USING THE ENCLOSED ENVELOPE.
CONTINUED, AND TO BE SIGNED, ON
REVERSE SIDE
<PAGE>
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE. 1508
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ELECTION OF DIRECTORS,
FOR PROPOSALS 2 AND 3 AND AGAINST PROPOSALS 4, 5 AND 6.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.
- --------------------------------------------------------------------------------
FOR WITHHELD
1. Election of Directors. (see reverse) [_] [_]
For, except vote withheld from the
following nominee(s):
- ----------------------------------
FOR AGAINST ABSTAIN
2. Approval of Independent auditors. [_] [_] [_]
3. Approval of 1995 Stock Option Plan. [_] [_] [_]
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSALS 4, 5 AND 6.
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
4. Disclosure of government employment. [_] [_] [_]
5. Annual election of directors. [_] [_] [_]
6. Mexican operations report. [_] [_] [_]
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGNATURE(S) DATE
<PAGE>
GRAPHIC MATERIAL CROSS-REFERENCE PAGE
PHOTOS OF THE DIRECTORS AND NOMINEES FOR DIRECTOR APPEAR TO THE LEFT OF EACH
RESPECTIVE NAME ON PAGES 5, 6 AND 7.
A PERFORMANCE GRAPH SHOWING A COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
TO SHAREHOLDERS AMONG BECTON, DICKINSON AND COMPANY, S&P 500 INDEX AND S&P
MEDICAL PRODUCTS & SUPPLIES INDEX APPEARS ON PAGE 16. (THE NUMBERS USED IN GRAPH
APPEAR ON PAGE 16.)
