<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:
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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:
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[_] 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:
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2) Form, Schedule or Registration Statement No.:
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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 27, 1995
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 13,
1996, 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 13, 1996, at the offices of the Company,
1 Becton Drive, Building II, Franklin Lakes, New Jersey, to act upon the
following proposals:
1. Election of three directors to terms of three years.
2. Approval of the selection of independent auditors.
3. A shareholder proposal relating to the disclosure of government
employment.
4. A shareholder proposal relating to a report on the Company's operations
in Mexico.
5. Such other business as may properly come before the meeting.
Only shareholders of record at the close of business on December 18, 1995
will be entitled to vote at this meeting.
By order of the Board of
Directors,
/s/ Raymond P. Ohlmuller
Raymond P. Ohlmuller
Vice President and Secretary
Dated: December 27, 1995
<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 13, 1996, 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
28, 1995.
On December 18, 1995, the record date for determining shareholders entitled
to notice of and to vote at the meeting, there were 64,055,084 shares of the
Company's Common Stock (the "Common Stock") outstanding, each entitled to one
vote. In addition, on December 18, 1995, there were 919,812 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 as well as how to vote a proportionate number of
shares held in SIP for which voting instructions are not received by the
Trustee from other SIP participants or which are not allocated to
participants' accounts (the "unvoted and/or unallocated shares"). Unless
otherwise instructed by a SIP participant, the enclosed proxy will serve as
voting instructions to the Trustee with respect to both the allocated and the
unvoted and/or unallocated SIP shares. SIP shares for which no voting
instructions are received from any SIP participants will be voted by the
Trustee in its discretion.
Proxies representing shares of Common Stock held of record also will
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, 3 and 4 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.
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
<PAGE>
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, 1995, Oppenheimer & Co.,
L.P., World Financial Center, New York, New York 10281, was the beneficial
owner of 10,019,193 shares of Common Stock, constituting 14.8% of the then
outstanding Common Stock, and FMR Corp., 82 Devonshire Street, Boston,
Massachusetts 02109, was the beneficial owner of 3,427,016 shares of Common
Stock, constituting 5% of the then 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, 1995, information
concerning the beneficial ownership of Common Stock and ESOP Preferred Stock by
each director and nominee for director, by each executive officer named in the
Summary Compensation Table, by all directors and executive officers as a group,
and by the beneficial owner of more than 5% of the outstanding ESOP Preferred
Stock. None of the individuals listed below owns more than 1% of the
outstanding Common Stock. All directors and executive officers as a group are
the beneficial owners of approximately 2% 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........................... 2,890 0
Henry P. Becton, Jr...................... 40,253(3) 0
Clateo Castellini........................ 23,895 360,000
Gerald M. Edelman........................ 1,952 0
Edmund B. Fitzgerald..................... 2,253 0
John W. Galiardo......................... 47,618 263,600
Richard W. Hanselman..................... 4,462 0
Thomas A. Holmes......................... 16,248(4) 0
Edward J. Ludwig......................... 2,248 65,800
Walter M. Miller......................... 21,393(5) 218,000
Frank A. Olson........................... 13,175 0
James E. Perrella........................ 300(6) 0
Gloria M. Shatto......................... 2,162 0
Mark C. Throdahl......................... 3,347 47,093
Raymond S. Troubh........................ 26,462(7) 0
All Directors and Executive Officers as a
group (17 persons), including those
named above............................. 212,184 1,088,793
</TABLE>
- --------
(1) Includes Common Stock allocated to individual accounts under the Savings
Incentive Plan as follows: Mr. Castellini, 2,303 shares, Mr. Galiardo,
4,346 shares, Mr. Miller, 2,436 shares, Mr. Ludwig, 2,220 shares, Mr.
Throdahl, 337 shares, and all directors and executive officers as a
group, 13,655 shares.
(2) Consists of stock options available for exercise.
(3) Includes 26,220 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 23,360 shares held
in trusts for the benefit of his children, as to which he disclaims
beneficial ownership.
(4) Does not include 64 shares owned by Mr. Holmes' wife, as to which he
disclaims beneficial ownership.
(5) Does not include 280 shares owned by Mr. Miller's children, as to which
he disclaims beneficial ownership.
(6) Mr. Perrella purchased his shares in November 1995.
(7) 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.......................................... 290(1)
John W. Galiardo........................................... 368(1)
Walter M. Miller........................................... 377(1)
Edward J. Ludwig........................................... 264(1)
Mark C. Throdahl........................................... 218(1)
All Directors and Executive Officers as a group (17
persons)................................................... 2,015(1)
State Street Bank and Trust Company........................ 925,304(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.
(2) As Trustee, holding 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, 1994 through September 30, 1995, all of its
executive officers and directors were in compliance with the disclosure
requirements of Section 16(a), except that one transaction inadvertently was
reported late by Edward J. Ludwig, an executive officer of the Company.
BOARD OF DIRECTORS
MEETINGS; CERTAIN COMMITTEES
The Board of Directors, which held eight meetings during the fiscal year
ended September 30, 1995, 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, Edmund B. Fitzgerald, Gloria M. Shatto 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
3
<PAGE>
opportunity and community relations, as well as health, safety and
environmental matters and proper business practices. The members of this
Committee, which met twice during the year, are Gerald M. Edelman, Chairman,
Harry N. Beaty, Henry P. Becton, Jr., Clateo Castellini, John W. Galiardo and
Gloria M. Shatto.
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 six
times during the year, are Thomas A. Holmes, Chairman, Henry P. Becton, Jr.,
Edmund B. Fitzgerald, Richard W. Hanselman, Frank A. Olson, James E. Perrella
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 three times during the year, are Richard W. Hanselman,
Chairman, Henry P. Becton, Jr., Gerald M. Edelman, Thomas A. Holmes, Frank A.
Olson and James E. Perrella.
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 $45,000 for Board service, payable in cash and in shares of restricted stock
as described below, plus attendance fees of $1,000 for special meetings of the
Board and $1,000 for committee meetings. An annual fee of $2,000 also is 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 $57,500 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. In July, 1995, the Board adopted formal
stock ownership guidelines calling for all non-employee directors, with limited
exceptions, to own within three years from the date of the guidelines Company
stock equal in value to at least three times the amount of the annual retainer.
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 being paid from time to time to
active non-employee directors, if such qualifying director was first elected to
the Board prior to March 28, 1995, and at an annual fee equal to the annual
retainer being paid on the date of such director's retirement or resignation
from the Board, if such qualifying director was elected to the Board after
March 28, 1995. 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
James E. Perrella, Gloria M. Shatto and Raymond S. Troubh to serve for three
years until the 1999 Annual Meeting and until their successors have been
elected and have qualified. Mr. Perrella was elected to his present term by the
Board effective July 25, 1995. Ms. Shatto and Mr. Troubh are incumbent
directors who were elected to their present terms by the shareholders.
NOMINEES FOR DIRECTOR--TERM TO EXPIRE 1999
James E. Perrella, 60, has been a director since July,
1995. He is Chairman, President and Chief Executive
Officer of Ingersoll-Rand Company, a manufacturer of
industrial machinery and related products. He is a
director of Cincinnati Milacron, the U.S. Chamber of
Commerce, the U.S.--China Business Council and the
Business Council for the United Nations and chairman of
the National Foreign Trade Council.
(PHOTO)
Gloria M. Shatto, 64, 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, 69, has been a director since 1977. He
is a financial consultant. Mr. Troubh is a director of
ADT Ltd., America West Airlines Inc., 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 WHX Corporation.
(PHOTO)
5
<PAGE>
CONTINUING DIRECTORS
The directors listed below were elected by the shareholders to terms expiring
in 1997 and 1998, respectively, and will continue to serve.
TERM TO EXPIRE 1997
Harry N. Beaty, M.D., 63, 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.
(PHOTO)
Clateo Castellini, 60, 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. Mr. Galiardo is a director of New Jersey
Manufacturers Insurance Co., Inc.
(PHOTO)
Frank A. Olson, 63, 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.
(PHOTO)
6
<PAGE>
TERM TO EXPIRE 1998
Henry P. Becton, Jr., 52, 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
The Providence Journal Company and various Scudder mutual
funds.
(PHOTO)
Gerald M. Edelman, M.D., Ph.D., 66, 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, 69, 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, 68, 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., Benson Eyecare
Corporation, Bradford Funds, Inc., Columbia HCA
Healthcare Corporation, Foundation Health Corp., Gryphon
Holdings Inc., and IMCO Recycling, Inc.
(PHOTO)
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 seven
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 500 ("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.
To further underscore the importance of linking executive and shareholder
interests, in September 1995 the Committee established formal stock ownership
guidelines for all Senior Executive Option participants, representing
approximately the top forty executives which include the Company's executive
officers, the other Corporate Officers and certain other members of senior
management. Under the guidelines, participants are expected within three years
to own Company stock equivalent to the following multiples of their base
salary: Chief Executive Officer and Vice Chairman -- five times base salary,
Senior Vice Presidents -- three times base salary, and other participants --
two times base salary.
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
8
<PAGE>
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 1995.
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 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 earning levels that meet or
exceed annual budgets, improving the Company's return on net assets, 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 Ludwig are based principally upon the Company's reported earnings per share
compared to annual growth targets established in concurrence with the Board.
Additional weight is given to RONA (Return on Net Assets) and to each
individual's specific accomplishments during the year toward achieving the
Company's strategic objectives. Bonus awards for Messrs. Miller and Throdahl
are based principally upon the operating income generated by their respective
business areas compared to the related targets incorporated in the annual
budget approved by the Board. Additional weight is given to the Company's
overall earnings per share performance and RONA and to strategic
accomplishments. In all cases, minimum established thresholds of overall
Company (and, when applicable, business area) financial performance must be
achieved before any bonus is paid for a particular fiscal year.
Stock options are awarded each year by the Committee to members of senior
management in accordance with the Company's 1995 Stock Option Plan (the "1995
Stock Option Plan"), as applied to the executive officers through the Senior
Executive Option Policy. The Senior Executive Option Policy continues the
concept established in 1990 of 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 Standard & Poor's 500 Composite Stock Price Index (the "S&P 500 Index").
As amended by the Committee in September, 1995, "relative" performance
comparison to the S&P 500 will result in an option exercisable at the fair
market value on the date of grant for a reduced number of shares when
performance is below the S&P 500 and an increased number of shares when
performance exceeds the S&P 500 rather than as in the past setting an exercise
price at the date of grant that is either greater than or at a discount from
the Common Stock's fair market value. This policy applies to approximately
forty senior executives.
The Committee believes the Senior Executive Option Policy provides a strong
incentive and is directly linked to achieving a pattern of sustained
performance which increases shareholder value and to surpassing the average
return available to investors as represented by the S&P 500 Index.
The operation of the Senior Executive Option Policy provides for an annual
grant through 1999 to each of the participants, whereby the number of options
is indexed each year, unless otherwise provided by the Committee, to the change
from January 23, 1995 (for new participants), and from
9
<PAGE>
May 24, 1994 (for continuing participants) in the S&P 500 Index. On January 23,
1995, the S&P 500 Index closed at 465.81. The options were granted to new
participants at an exercise price of $50.19, which was the fair market value on
that date. On May 24, 1994 the S&P 500 Index closed at 454.81 and the Committee
determined to grant 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. In the future, rather than granting the options at a premium or discount
(as provided in the earlier stock option program), the number of option shares
granted will be increased to reflect the value of the discount if the changes
in the per share price of the Company's Common Stock outperform the S&P 500
Index or decreased to reflect the value of the premium if the changes in the
per share price of the Company's Common Stock underperform the S&P 500 Index,
in each case based on the value of the option determined in accordance with the
Black-Scholes option pricing model. All grants will be made at the fair market
value of the Company's Common Stock on the grant date. Each annual grant will
be exercisable for a period of ten years from the date of grant.
The following table summarizes the relative performance of the S&P 500 Index
and the Company's per-share price, and the impact, if any, upon stock option
grant price levels in 1995. On May 23, 1995, the executive officers who were
continuing participants (Messrs. Castellini, Galiardo and Miller) were granted
options at an exercise price of $46.61, which was below the $57.13 per share
fair market value on that date. New participants (including Messrs. Ludwig and
Throdahl) received their first grant under the program on January 23, 1995 at
$50.19, which was the fair market value on that date. In the future, as noted
above, all grants under the Senior Executive Option Policy will be at fair
market value.
<TABLE>
<CAPTION>
JANUARY 23, MAY 23,
1995 1995
----------- -------
<S> <C> <C>
S&P 500 Index............................................... 465.81 528.59
Company Per-Share Market Value.............................. $50.19 $57.13
Senior Executive Option Policy Grant Price.................. $50.19 $46.61
Discount/(Premium).......................................... -0- $10.52
</TABLE>
COMPENSATION OF THE CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE
OFFICER
The compensation of Mr. Castellini consists of the same elements as that of
other senior executives, namely base salary, annual incentives and stock
options.
In determining Mr. Castellini's aggregate compensation package, the Committee
reviewed the Company's financial and business performance for fiscal year 1995.
This review was based on a number of factors including sales, earnings, return
on equity, growth in earnings and total shareholder return. The Committee does
not assign relative weights or rankings to each of these factors, but instead
makes a qualitative determination based on consideration of all such factors.
Mr. Castellini's base salary was increased to $650,000 per year based upon
the Committee's evaluation of his performance and contribution toward
achievement of the Company's financial, strategic and other goals, as well as
upon external chief executive officer compensation information.
Mr. Castellini received an award of 90,000 stock options in May 1995 in
accordance with the Senior Executive Option Policy. The Committee believes
these options represent the most valuable component of his compensation, and
they are the only vehicle now used to provide long-term compensation to Mr.
Castellini. By relying solely upon stock option grants indexed to the
performance
10
<PAGE>
of the S&P 500, the Committee believes it is providing Mr. Castellini
significant incentive to achieve sustained, long-term increases in shareholder
value that are superior to the average performance of the market.
The Committee authorized an annual incentive bonus of $600,000 for Mr.
Castellini for fiscal 1995.
1995 COMPENSATION ACTIONS: OTHER EXECUTIVE OFFICERS
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 1995. In addition, Messrs. Ludwig and
Throdahl received promotion related increases to reflect their elevation from
Division Presidents to executive officers during the year. The Committee
authorized annual incentive bonus awards for the executive officers that ranged
from 114% to 149% of target. The executive officers received indexed stock
options under the Senior Executive Option Policy during 1995.
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. On December 19, 1995 final regulations were issued
implementing this legislation. Under present law and regulations, certain
qualifying performance-based compensation is exempt from the deduction limit
provided certain requirements are met.
The Committee previously reviewed the Company's compensation plans with
regard to the proposed deduction limitations. The 1995 Stock Option Plan, as
approved by shareholders, was designed and intended to satisfy the requirements
for deductibility under the Code. Until the Committee has had the opportunity
to review and assess the impact of the final regulations on the various other
elements of compensation and on its ability to exercise its judgment and
discretion in the best interests of shareholders, the Committee does not
propose to amend the other compensation plans. The anticipated loss of
deductibility from deferring action with respect to such other aspects of
compensation is expected to be nominal and the Committee will continue to
monitor developments and assess what changes, if any, to the Company's
compensation plans might be both appropriate and in the best interests of the
Company and its shareholders.
The tables and graph following this report set forth information on the
compensation for the Company's chief executive officer and the four most highly
compensated officers other than the chief executive officer (the "named
executives").
COMPENSATION AND BENEFITS COMMITTEE
THOMAS A. HOLMES, CHAIRMAN
HENRY P. BECTON, JR. FRANK A. OLSON
EDMUND B. FITZGERALD JAMES E. PERRELLA
RICHARD W. HANSELMAN RAYMOND S. TROUBH
11
<PAGE>
GENERAL
The following table shows, for the fiscal years ended September 30, 1993,
1994 and 1995, 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
NAME AND OTHER RESTRICTED UNDERLYING
PRINCIPAL FISCAL ANNUAL STOCK OPTIONS/ ALL OTHER
POSITION YEAR SALARY(A) BONUS(A) COMPENSATION(B) AWARDS(C) SARS(D) COMPENSATION(E)
--------- ------ --------- -------- --------------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Clateo Castellini 1995 $543,750 $600,000 0 0 90,000 $110,710
Chairman, President 1994 376,042 380,000 0 0 96,000 52,275
and Chief Executive 1993 312,500 165,000 0 0 36,000 21,086
Officer
John W. Galiardo 1995 386,042 275,000 0 0 55,000 $ 15,362
Vice Chairman and 1994 308,375 200,000 0 0 60,000 5,468
General Counsel 1993 271,083 115,000 0 0 30,000 18,738
Walter M. Miller 1995 326,667 185,000 0 0 35,000 $ 11,980
Senior Vice President 1994 316,667 165,000 0 0 36,000 4,750
1993 302,500 0 0 0 36,000 6,891
Edward J. Ludwig 1995 225,000 140,000 0 0 35,000 $ 19,942
Senior Vice President 1994 176,667 90,000 0 1,735 10,000 5,355
and Chief Financial 1993 167,500 0 0 1,100 10,000 5,025
Officer
Mark C. Throdahl 1995 225,000 155,000 0 0 35,000 $ 21,981
Senior Vice President 1994 181,500 70,000 0 2,060 6,000 5,490
1993 171,583 52,000 0 1,760 6,000 5,147
</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) 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.
(C) Messrs. Castellini, Galiardo and Miller 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. Effective with their January,
1995 grant under the Senior Executive Option Policy, Messrs Ludwig and
Throdahl were not eligible for further awards under the Company's Stock
Award Plan. 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.
<TABLE>
<CAPTION>
CURRENT MARKET
NUMBER OF VALUE OF
UNDISTRIBUTED UNDISTRIBUTED
RESTRICTED RESTRICTED
NAME SHARES HELD SHARES HELD
---- ------------- --------------
<S> <C> <C>
Clateo Castellini.......................... 9,978 $627,417
John W. Galiardo........................... 9,252 581,766
Walter M. Miller........................... 6,704 421,548
Edward J. Ludwig........................... 4,712 296,291
Mark C. Throdahl........................... 4,497 282,771
</TABLE>
Under the terms of the Stock Award Plan, none of the holdings reflected for
Messrs. Casstellini, Galiardo or Miller may be distributed prior to their
retirement or termination of employment. 2,460 shares for Mr. Ludwig (52% of
his total holdings) and 1,857 shares for Mr. Throdahl (41% of his total
holdings) may not be distributed prior to retirement or termination of
employment.
Current market values are determined by multiplying the number of
undistributed shares by $62.88, the September 29, 1995 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.
(D) Each option grant for Messrs. Castellini, Galiardo and Miller 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:
12
<PAGE>
1995 $10.52 per share discount
1994 ($2.60 ) per share premium
1993 ($2.25 ) per share premium
(E) 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 fiscal 1995, the Company made contributions to SIP of $4,500 for Mr.
Castellini, $4,500 for Mr. Galiardo, $4,500 for Mr. Miller, $4,942 for Mr.
Ludwig, and $4,781 for Mr. Throdahl. 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 1995 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
$106,210 for Mr. Castellini, $10,862 for Mr. Galiardo, $7,480 for Mr.
Miller, $15,000 for Mr. Ludwig and $17,200 for Mr. Throdahl.
STOCK OPTION GRANTS
The following table contains information relating to stock option grants and
tandem stock appreciation rights ("SARs") made in fiscal 1995 under the 1995
Stock Option Plan through the Senior Executive Option Policy described above.
OPTION/SAR GRANTS IN 1995
<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..... 90,000 6.40% $46.61 5/23/05 $2,257,206
John W. Galiardo...... 55,000 3.90% 46.61 5/23/05 1,379,404
Walter M. Miller...... 35,000 2.50% 46.61 5/23/05 877,802
Edward J. Ludwig...... 35,000 2.50% 50.19 1/23/05 723,740
Mark. C. Throdahl..... 35,000 2.50% 50.19 1/23/05 723,740
--------- ------ ------ ------- ----------
TOTAL................. 250,000 17.80% 48.18 N/A 5,961,892
All Optionees......... 1,408,818 100.00% 49.73 5/23/05 29,924,255
</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 1995 Stock
Option Plan.
(B) The exercise price of $46.61 for Messrs. Castellini, Galiardo and Miller
represents a discount of $10.52 below the fair market value of the Company
Common Stock on May 23, 1995 (the date of grant). On January 23, 1995, the
Company awarded 629,818 option grants to other participants including
Messrs. Ludwig and Throdahl in its stock option programs at an exercise
price of $50.19.
(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
13
<PAGE>
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.
<TABLE>
January 23, 1995 Grant May 23, 1995 Grant
---------------------- ------------------
<S> <C>
Dividend Yield: 0.0174 Dividend Yield: 0.0173
Volatility: 0.2085 Volatility: 0.2016
Risk-free Rate of Return: 7.8% Risk-free Rate of Return: 6.6%
Expected Exercise Period: 10 years Expected Exercise Period: 10 years
</TABLE>
STOCK OPTION EXERCISES
The following table contains information relating to the exercise of stock
options by the named executives in fiscal 1995 as well as the number and value
of their unexercised options as of September 30, 1995.
AGGREGATED OPTION/SAR EXERCISES IN 1995 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....... 7,000 $298,042 360,000 $9,978,550
John W. Galiardo........ 5,350 230,799 263,600 7,503,661
Walter M. Miller........ -0- -0- 218,000 6,169,535
Edward J. Ludwig........ 5,200 161,027 65,800 1,485,049
Mark C. Throdahl........ 13,007 293,435 47,093 846,347
</TABLE>
- --------
(A) The value of unexercised options represents the difference between the
closing price of the Company's Common Stock on September 29, 1995 ($62.88)
and the exercise price of each unexercised option held by the named
executives.
(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
1995 Stock Option Plan.
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 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.
14
<PAGE>
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 $ 28,784 $ 43,176 $ 57,568 $ 71,960 $ 86,352 $100,744 $115,136
300,000 43,784 65,676 87,568 109,460 131,352 153,244 175,136
400,000 58,784 88,176 117,568 146,960 176,352 205,744 235,136
500,000 73,784 110,676 147,568 184,460 221,352 258,244 295,136
600,000 88,784 133,176 177,568 221,960 266,352 310,744 355,136
700,000 103,784 155,676 207,568 259,460 311,352 363,244 415,136
800,000 118,784 178,176 237,568 296,960 356,352 415,744 475,136
900,000 133,784 200,676 267,568 334,460 401,352 468,244 535,136
1,000,000 148,784 223,176 297,568 371,960 446,352 520,744 595,136
1,100,000 163,784 245,676 327,568 409,460 491,352 573,244 655,136
1,200,000 178,784 268,176 357,568 446,960 536,352 625,744 715,136
1,300,000 193,784 290,676 387,568 484,460 581,352 678,244 775,136
1,400,000 208,784 313,176 417,568 521,960 626,352 730,744 835,136
</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, for Messrs. Castellini, Galiardo and
Miller and through January, 1993 for Messrs. Ludwig and Throdahl. 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, 1995,
and Covered Compensation for the calendar year ending December 31, 1995, are 17
years and $1,212,036 for Mr. Castellini, 18 years and $697,881 for Mr.
Galiardo, 15 years and $544,952 for Mr. Miller, 16 years and $414,193 for Mr.
Ludwig, and 7 years and $424,895 for Mr. Throdahl.
In addition, employment agreements with three of 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.
CONTRACTUAL OBLIGATIONS
Messrs. Castellini, Galiardo and Miller 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 of the three named executives would receive a payment equal to two times
his highest aggregate annual compensation (salary, bonus and stock award
distributions) in any of the 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 and Miller been terminated on September 30, 1995 following
a change in control, they would have been entitled to cash payments of
$1,666,820, $1,124,717 and $1,037,249, respectively.
15
<PAGE>
In the event of termination other than for cause or for good reason within
three years following a change in control, each of the three named executives
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, 1995, 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, 1990 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., Boston Scientific, Medtronic, Inc., St. Jude
Medical, Inc. and United States Surgical Corporation.
[GRAPH APPEARS HERE]
<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG BECTON, DICKINSON & COMPANY, THE S&P 500
INDEX AND THE S&P MEDICAL PRODUCTS & SUPPLIES INDEX
<CAPTION> S&P Medical
Measurement period Becton Dickinson S&P 500 Products & Supplies
(Fiscal year Covered) and Company Index Index
- --------------------- ---------------- ------- ---------
<S> <C> <C> <C>
Measurement PT -
FYE 09/30/90 $100 $100 $100
FYE 12/31/90 $114 $109 $118
FYE 03/31/91 $120 $125 $147
FYE 06/30/91 $114 $125 $142
FYE 09/30/91 $105 $131 $157
FYE 12/31/91 $106 $142 $193
FYE 03/31/92 $110 $139 $163
FYE 06/30/92 $117 $141 $162
FYE 09/30/92 $118 $146 $153
FYE 12/31/92 $124 $153 $165
FYE 03/31/93 $115 $160 $144
FYE 06/30/93 $127 $160 $133
FYE 09/30/93 $120 $165 $116
FYE 12/31/93 $115 $168 $126
FYE 03/31/94 $121 $162 $121
FYE 06/30/94 $133 $163 $128
FYE 09/30/94 $157 $171 $148
FYE 12/31/94 $157 $171 $149
FYE 03/31/95 $178 $187 $176
FYE 06/30/95 $192 $205 $197
FYE 09/30/95 $208 $221 $239
</TABLE>
* $100 INVESTED ON 9/30/95 IN STOCK OR INDEX. INCLUDING REINVESTMENT OF
DIVIDENDS.
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, 1996. 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.
SHAREHOLDERS' PROPOSALS
PROPOSAL 3.
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."
"Last year the owners of 1,882,412 shares, representing approximately
3.3% of shares voting, voted for this proposal."
"If you AGREE, please mark your proxy FOR this resolution."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL 3.
The Board of Directors believes that the current laws and regulations
regarding the conduct of former government employees in their relationships
with government agencies and the disclosure required by those laws and
regulations provide ample and extensive safeguards against impropriety.
Further, this proposal would require the Company to undertake costly and
time-consuming inquiries into the backgrounds of a large number of people,
including not only members of management but also representatives of the
various firms retained by the Company that provide legal, consulting and
financial advisory services. These persons and entities are retained for their
professional expertise and competence and are subject to applicable rules with
respect to conflicts of interest and professional conduct, as well as the
Company's own policies governing its relationships with them.
17
<PAGE>
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 4. REPORT ON OPERATIONS IN MEXICO
The Benedictine Resource Center, 3120 W. Ashby, San Antonio, Texas 78228,
owner of 2,000 shares of the Company's Common Stock, the Congregation of Divine
Providence, P.O. Box 197, Helotes, Texas 78023, owner of 100 shares of the
Company's Common Stock, and United States Trust Company Boston, 40 Court
Street, Boston, Massachusetts 02108, owner of the lesser of $1,000 or one
percent of the securities entitled to be voted at the annual meeting of
shareholders, each 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."
"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.
18
<PAGE>
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 4.
The Company's policies call for fair and competitive wage and benefit
packages, along with safe workplaces, for all of its employees worldwide and
require strict compliance with all applicable health, safety and environmental
laws and regulations. The Company closely adheres to and enforces these
policies on a global basis, including in its operations in Mexico. The workers
at our maquiladora facilities in Mexico are valued members of the Becton
Dickinson worldwide team of employees and as such, are treated fairly and with
the same consideration as are other employees of the Company, both in the
United States and in other parts of the world.
In summary, the Board is of the opinion that the Company's activities in
Mexico, where the Company has had a substantial presence for over 40 years, are
conducted in a manner that addresses the concerns raised by this proposal and
are consistent with and reflect the commitment of the Company to its worldwide
values.
SHAREHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Shareholder proposals for the 1997 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 August 29, 1996, for inclusion in the proxy
statement and form of proxy.
* * * *
19
<PAGE>
PROXY/VOTING INSTRUCTION CARD
BECTON, DICKINSON AND COMPANY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR ANNUAL MEETING ON
FEBRUARY 13, 1996
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 13, 1996, 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 ("SIP") and unless the
appropriate box provided below is checked, also constitutes voting
instructions to the Trustee for a proportionate number of shares of Common
Stock and Series B ESOP Convertible Preferred Stock in the SIP that have not
been allocated to participants or for which no instruction card has been
received from other participants ("unallocated/unvoted SIP shares").
Election of Directors, Nominees:
Term to expire 1999
James E. Perrella
Gloria M. Shatto
Raymond S. Troubh
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 1508
VOTES AS IN THIS
EXAMPLE.
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 PROPOSAL 2 AND AGAINST PROPOSALS 3 AND 4.
- ------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
- ------------------------------------------------------------------
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.
- ----------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSALS 3 AND 4.
- ----------------------------------------------------------------------
FOR AGAINST ABSTAIN
3. Disclosure of [_] [_] [_]
government
employment.
FOR AGAINST ABSTAIN
4. Mexican [_] [_] [_]
operations
report.
- ----------------------------------------------------------------------
If this box is checked, this card
does NOT constitute voting instructions [_]
to the Trustee with respect to
unallocated/unvoted SIP shares.
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 FOR ALL SHARES (OTHER THAN UNALLOCATED/UNVOTED SIP SHARES IF THE
BOX IMMEDIATELY ABOVE IS CHECKED):
- ------------------------
- ------------------------
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 OF 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.)
