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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[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)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(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:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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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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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
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[LOGO OF BECTON, DICKINSON AND COMPANY]
Becton, Dickinson and Company
1 Becton Drive
Franklin Lakes, New Jersey 07417-1880
www.bd.com
December 17, 1999
Dear Fellow Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of
Becton, Dickinson and Company to be held at 2:30 P.M. on Tuesday, February 8,
2000, at the offices of the Company, 1 Becton Drive, Becton Building, Franklin
Lakes, New Jersey. A map showing directions to the meeting site is on the back
cover of the Proxy Statement. I look forward to greeting as many of you as
possible and reporting to you on the progress of our Company.
Details of the matters expected to be acted upon at the meeting are listed in
the Notice of Meeting and described in detail in the Proxy Statement.
Your vote is important. I encourage you to vote by completing and mailing the
enclosed proxy/voting instruction card in the return envelope that is provided,
or to vote telephonically or on the internet, so that your shares will be
represented and voted at the meeting even if you cannot attend. If you do not
vote by mail, telephone or internet, you still may attend the Annual Meeting
and vote in person.
Thank you for your continued support of our Company.
Sincerely,
/s/ Clateo Castellini
Clateo Castellini
Chairman of the Board
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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 8, 2000, at the offices of the Company,
1 Becton Drive, Becton Building, Franklin Lakes, New Jersey, to consider and
act upon the following proposals:
1. The election of directors;
2. The approval of the selection of independent auditors;
3. A shareholder proposal relating to cumulative voting; and
4. Such other business as may properly come before the meeting.
Shares represented by properly executed proxies that are hereby solicited by
the Board of Directors of Becton, Dickinson and Company will be voted in
accordance with instructions specified therein. Shares represented by proxies
that are not limited to the contrary will be voted in favor of the election as
directors of the persons nominated in the accompanying Proxy Statement, for
proposal 2 and on other matters as recommended by the Board.
Only shareholders of record at the close of business on December 14, 1999
will be entitled to vote at this meeting.
By order of the Board of Directors,
/s/ Bridget M. Healy
Bridget M. Healy
Vice President and Secretary
Dated: December 17, 1999
IT IS IMPORTANT THAT THE ENCLOSED PROXY/VOTING INSTRUCTION CARD BE SIGNED,
DATED AND PROMPTLY RETURNED IN THE ENCLOSED ENVELOPE OR THAT YOU REGISTER YOUR
VOTE BY TELEPHONE OR ON THE INTERNET BY FOLLOWING THE INSTRUCTIONS ON YOUR
PROXY/VOTING INSTRUCTION CARD, SO THAT YOUR SHARES WILL BE REPRESENTED,
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING.
<PAGE>
PROXY STATEMENT
----------------
2000 ANNUAL MEETING OF SHAREHOLDERS
To Be Held February 8, 2000
----------------
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 (the "Board") of Becton, Dickinson and Company, a New
Jersey corporation (the "Company" or "BD"), for use at the Annual Meeting of
Shareholders to be held at 2:30 P.M. on Tuesday, February 8, 2000, at the
offices of the Company, 1 Becton Drive, Becton Building, 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 delivering a
duly executed proxy bearing a later date or by voting in person at the
meeting. This proxy statement and the proxy/voting instruction card are being
mailed to shareholders of the Company on or about December 20, 1999.
At the close of business on December 14, 1999, the record date fixed by the
Board for determining the shareholders entitled to notice of and to vote at
the meeting, there were 251,530,308 shares of the Company's Common Stock (the
"Common Stock") outstanding, each entitled to one vote. In addition, on
December 14, 1999, there were 779,367 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 such 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.
The shares of Common Stock held by Wachovia Bank of North Carolina, N.A., as
Trustee of the Company's Salary and Bonus Deferral Plan ("SBDP") and the
Company's 1996 Directors' Deferral Plan ("DDP"), as well as the shares of
Common Stock held by Banque Internationale a Luxembourg ("BIL") in connection
with the Company's Global Share Investment Program ("GSIP"), also are entitled
to vote on all matters submitted to a vote of the Company's shareholders and
carry one vote per share. Each director participating in DDP and each employee
participating in SBDP and, if so provided under the terms of the local country
GSIP plan, in GSIP, is entitled to instruct the Trustee or BIL, as the case
may be, how to vote all shares of Common Stock allocated to that person's DDP,
SBDP or GSIP account, as well as how to vote a proportionate number of shares
held in DDP, SBDP or GSIP, respectively, for which voting instructions are not
received by the Trustee or BIL, as the case may be, from other DDP, SBDP or
GSIP participants. When returned properly dated and signed, the enclosed proxy
card will serve as voting instructions by a DDP participant, a SBDP
participant and a GSIP participant with respect to both allocated and unvoted
DDP shares, SBDP shares and GSIP shares, as the case may be.
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Proxies representing shares of Common Stock held of record also will
represent shares held under the Direct Stock Purchase Plan for shareholders of
the Company administered by First Chicago Trust Company of New York and, in
addition, shares of Common Stock and ESOP Preferred Stock, if any, allocated
to directors' accounts under DDP or to employees' accounts under SIP, SBDP and
GSIP, if the registrations are the same. Separate mailings will be made for
shares not held under the same registrations.
Shareowners of record and participants in SIP, DDP, SBDP or, if so provided
under the terms of the local country GSIP plan, in GSIP, may cast their votes
by:
(1) signing, completing and returning the enclosed proxy/voting instruction
card in the enclosed postage-paid addressed envelope;
(2) using the toll-free telephone number listed on the enclosed
proxy/voting instruction card; or
(3) using the internet and voting at the website listed on the enclosed
proxy/voting instruction card.
The telephone and internet voting procedures are designed to authenticate
votes cast by use of a personal identification number. The procedure allows
shareowners to appoint a proxy and the various SIP, DDP, SBDP and GSIP
participants to instruct the plan fiduciaries or BIL, as the case may be, to
vote their shares and to confirm their instructions have been properly
recorded. Specific instructions to be followed are set forth on the enclosed
proxy/voting instruction card.
Directors are elected by a plurality of the votes cast at the meeting.
Abstentions with respect to one or more of the nominees will be treated as
present at the meeting for purposes of determining a quorum, but will not be
counted as votes cast 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 and 3 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 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 to solicit proxies or
authorizations from beneficial owners and will be reimbursed for their
reasonable expenses in doing so. The Company has retained MacKenzie Partners,
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 Thompson Investor Relations, a firm that monitors institutional
share ownership, as of November 30, 1999, Oppenheimer & Co., L.P., 1 World
Financial Center, New York, New York 10281, was the beneficial owner of
19,225,115 shares of Common Stock, constituting 7.7% of the then outstanding
Common Stock. As of November 30, 1999, Fidelity Management & Research Company
(FMR), 82 Devonshire Street, Boston, Massachusetts 02109, was the beneficial
owner of 16,908,320 shares of Common Stock, constituting 6.7% of the then
outstanding Common Stock. No changes in these holdings have come to the
Company's
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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, 1999, 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 beneficially owns more
than 1% of the outstanding Common Stock. All directors and executive officers
as a group are the beneficial owners of approximately 2.5% of the Common
Stock, including shares which may be acquired by them within 60 days.
COMMON STOCK
<TABLE>
<CAPTION>
Shares which
Shares May be acquired
Owned directly Within 60
Name And indirectly(1) Days(2)
- ---- ---------------- ---------------
<S> <C> <C>
Harry N. Beaty............................... 28,230 0
Henry P. Becton, Jr.......................... 218,378(3) 0
Clateo Castellini............................ 207,086 2,009,007
Gary M. Cohen................................ 27,437 221,004
Albert J. Costello........................... 10,205 0
Gerald M. Edelman............................ 10,446 0
John W. Galiardo............................. 230,559 1,281,245
Richard W. Hanselman......................... 16,510 0
Edward J. Ludwig............................. 34,987 529,308
Frank A. Olson............................... 69,080 0
Willard J. Overlock, Jr...................... 2,016 0
James E. Perrella............................ 18,200 0
Alfred Sommer................................ 2,521 0
Raymond S. Troubh............................ 98,306(4) 0
Kenneth R. Weisshaar (5)..................... 20,244 489,536
Margaretha af Ugglas......................... 8,693 0
All Directors and Executive Officers as a
group (20 persons),
including those named above................. 1,058,229 5,184,205
</TABLE>
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(1) Includes Common Stock allocated to individual accounts under the Savings
Incentive Plan (the "SIP") as follows: Mr. Castellini, 11,390 shares, Mr.
Galiardo, 17,957 shares, Mr. Ludwig, 14,803 shares, Mr. Cohen, 8,477
shares, Mr. Weisshaar, 1,919 shares and all Directors and Executive
Officers as a group, 71,542 shares. Also includes Common Stock allocated
to individual accounts under the Salary and Bonus Deferral Plan as
follows: Mr. Cohen, 2,177 shares, Ms. Neff, 1,371 shares, and all
Executive Officers as a group, 3,548 shares, and Common Stock allocated to
individual accounts under the 1996 Directors' Deferral Plan as follows:
Dr. Beaty, 20,230 shares, Mr. Becton, 15,081 shares, Mr. Castellini, 5,594
shares, Mr. Costello, 6,205 shares, Dr. Edelman, 3,442 shares, Mr.
Galiardo, 1,634 shares, Mr. Hanselman, 4,510 shares, Mr. Olson, 49,080
shares, Mr. Overlock, 1,016 shares, Mr. Perrella, 10,600 shares, Dr.
Sommer, 2,521 shares, Mr. Troubh, 10,306 shares, Ms. af Ugglas, 2,693
shares and all Directors as a group, 132,912 shares.
(2) Consists of Stock Options available for exercise.
(3) Includes 146,085 shares held by trusts of which Mr. Becton is a co-trustee
with shared investment and voting power and 52,000 shares held by a
corporation owned by one of such trusts. Does not include 32,400 shares
owned by Mr. Becton's spouse, 1,600 shares owned by a daughter, 99,290
shares held in trusts for the benefit of his children or 88,200 shares
held in a charitable trust of which he is one of eight trustees, and as to
each of which he disclaims beneficial ownership.
(4) Does not include 40,000 shares owned by Mr. Troubh's spouse, as to which
he disclaims beneficial ownership.
(5) Mr. Weisshaar was an executive officer as of September 30, 1999 and
resigned as an executive officer on October 13, 1999.
3
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ESOP PREFERRED STOCK
<TABLE>
<CAPTION>
Shares
Owned directly
And indirectly
--------------
<S> <C>
Clateo Castellini.............................................. 421(1)
John W. Galiardo............................................... 528(1)
Edward J. Ludwig............................................... 412(1)
Gary M. Cohen.................................................. 328(1)
Kenneth R. Weisshaar (3)....................................... 420(1)
All Directors and Executive Officers as a group (20 persons)... 3,086(1)
State Street Bank and Trust Company............................ 786,612(2)
225 Franklin Street
Boston, Massachusetts 02110
(as Trustee of the Savings Incentive Plan)
</TABLE>
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(1) Shares allocated to individual accounts under the ESOP component of the
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.
(3) Mr. Weisshaar was an executive officer as of September 30, 1999 and
resigned as an executive officer on October 13, 1999.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors 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, 1998 through September 30, 1999, all of its
executive officers and directors were in compliance with the disclosure
requirements of Section 16(a), except that Henry P. Becton, Jr., a director of
the Company, inadvertently failed to report one gift of shares by him.
BOARD OF DIRECTORS
Meetings; Certain Committees
The Company is governed by a Board of Directors and various committees of
the Board which meet regularly throughout the year. The Board of Directors,
which held eight meetings during the fiscal year ended September 30, 1999, has
six principal standing committees, including the Audit Committee, the
Corporate Responsibility Committee, the Compensation and Benefits Committee
and the Corporate Governance Committee (formerly, the Committee on Directors),
which serves as a nominating committee. Each director attended more than 92
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 reviews non-
audit services provided by the independent auditors. This Committee also
reviews the Company's internal audit, control and accounting systems and makes
recommendations to the Board concerning the selection of independent auditors.
The members of this Committee, which met three times during the year, are
Harry N. Beaty, Chairman, Albert J. Costello, Richard W. Hanselman, Willard J.
Overlock, Jr., and Margaretha af Ugglas.
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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, 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, Frank A. Olson, Alfred
Sommer, and Margaretha af Ugglas.
The Compensation and Benefits Committee reviews annually the overall
compensation program for the Company's corporate officers, approves the
compensation of the executive officers and approves all employment and
consulting contracts of the Company or any subsidiary with corporate officers
who are not also directors. In addition, this Committee serves as the granting
and administrative committee for the Company's stock option plans and its
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 five times during the year, are Henry P. Becton, Jr., Chairman,
Frank A. Olson, Willard J. Overlock, Jr., James E. Perrella and Raymond S.
Troubh.
The Corporate Governance Committee recommends candidates for election as
directors to the Board. It also reviews and makes recommendations concerning
the composition, organization, structure and function of the Board and its
committees, as well as the performance and compensation of directors and other
matters of corporate governance and board practices. The members of this
Committee, which met three times during the year, are Clateo Castellini,
Chairman, Henry P. Becton, Jr., Richard W. Hanselman, James E. Perrella,
Alfred Sommer and Raymond S. Troubh.
Any shareholder may recommend nominees for director to the Corporate
Governance Committee 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' Compensation
Each director who is not employed by the Company is compensated for services
as a director by an annual retainer of $45,000 for Board service, plus
attendance fees of $1,000 for special meetings of the Board and for committee
meetings. In addition, an annual fee of $2,000 is paid to committee chairmen.
Directors may defer, in an unfunded cash account or in shares of Common Stock,
all or part of their attendance, committee and chairmen's fees, as well as all
or part of their annual retainers, until up to ten years after retirement from
the Board pursuant to the provisions of the 1994 Restricted Stock Plan for
Non-Employee Directors, as amended, and the 1996 Directors' Deferral Plan. 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 $65,000 for his consulting services. The
Company reimburses all directors for travel and other necessary business
expenses incurred in the performance of their services for the Company.
Each non-employee director elected at, or continuing as a director after,
each annual meeting of shareholders also will be granted 400 shares of Common
Stock, to be deferred in a Common Stock account under the 1996 Directors'
Deferral Plan and distributed no earlier than retirement, in installments or
as a lump-sum. Prior to the distribution of shares of Common Stock credited to
the accounts of directors under the 1996 Directors' Deferral Plan, the number
of shares credited will be increased to reflect the payment and reinvestment
of dividends on the Common Stock.
The Board has adopted formal stock ownership guidelines, requiring each non-
employee director, with limited exceptions, to own shares of Common Stock
valued at five times or more the amount of the annual retainer fee at or prior
to the later of July 24, 2000 and the date of the director's fifth anniversary
on the Board. Based upon the closing price of the Company's Common Stock on
December 14, 1999, these guidelines represent approximately 8,450 shares, and
all but two of the Company's non-employee directors already own sufficient
shares to comply with the guidelines.
5
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Board Evaluation
Like the year before, in fiscal 1999 the Board's Corporate Governance
Committee (formerly, the Committee on Directors) undertook the process of
evaluating Board performance and effectiveness, whereby each director
completed a Board Evaluation Questionnaire. The questionnaire was developed by
the Corporate Governance Committee and provided a range of grades and trend
indicators to be completed by each director, as well as space for written
comments, with respect to each of the following seventeen criteria:
1. The Board understands and approves the Company's mission statement,
values and objectives, as well as its strategic and operating plans.
2. The Board understands the industries in which the Company operates and
the implications of current general economic and political trends to
those businesses.
3. The Board evaluates the Company's research and development performance
and level of commitment.
4. The Board considers the performance of peer companies when assessing
Company performance.
5. The Board evaluates and reviews the performance and values of the
chief executive officer.
6. The Board reviews senior management development and compensation and
considers the correlation between compensation levels and Company
performance.
7. Board meetings foster open communication and timely resolution of
issues presented.
8. The Corporate Governance Committee reviews and communicates the
Board's expectations concerning director responsibilities and monitors
the productivity of Board and Committee meetings.
9. The Board assesses and modifies, as necessary, the structure of the
Board and its Committees, as well as the frequency of the Board and
Committee meetings.
10. The Board establishes criteria and policies to ensure the
representation of characteristics and expertise among its membership
necessary to its effectiveness.
11. The Board seeks to optimally and appropriately utilize each Board
member's experiences in terms of Committee appointments.
12. The Board reviews the availability, content and timeliness of
information provided to it, prepares appropriately for Board meetings
and requests additions or changes to the material provided, when
appropriate.
13. The Board verifies the independence of each non-employee director and
considers the impact, if any, of changes in the principal employment
of non-employee directors.
14. The Board monitors and understands current issues and trends in
corporate governance.
15. The Board reviews and adopts annual capital and operating budgets and
monitors Company performance against them during the year.
16. The Board reviews the adequacy of existing accounting and financial
controls and oversees ethical conduct and legal compliance by the
Company.
17. The Board reviews succession plans for the chief executive officer and
senior management.
The collective ratings and comments of the directors were compiled and
presented by the Chairman of the Corporate Governance Committee to the full
Board for discussion, for the assessment of progress in the areas targeted for
improvement a year earlier, and for the development of recommendations to
enhance the Board's effectiveness.
6
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For the second consecutive year, in fiscal 1999 the Board also assessed the
performance of the individual directors standing for re-election to the Board
at the next annual meeting of shareholders, and, if applicable, considered the
impact of any change in the principal occupations of these directors during
their prior terms of service.
The Corporate Governance Committee conducted the individual evaluations
against criteria designed to measure performance in five critical areas:
1. Personal Characteristics
2. Core Competencies
3. Independence
4. Level of Commitment
5. Board and Company Considerations
Upon completion of the individual director evaluation process, the Corporate
Governance Committee reported to the full Board its conclusions and
recommendations for nominations to the Board.
7
<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 Harry N. Beaty, Clateo Castellini, Edward J. Ludwig, Frank A. Olson and
Willard J. Overlock, Jr. to serve for three years until the 2003 Annual
Meeting and in each case until their successors have been elected and
qualified. Messrs. Overlock and Ludwig were elected to their present terms by
the Board effective May 25, 1999 and November 22, 1999, respectively. Messrs.
Beaty, Castellini, and Olson are incumbent directors who were elected to their
present terms by the shareholders.
Nominees for Director--Terms to Expire 2003
[PHOTO] Harry N. Beaty, M.D., 67, has been a director since 1985. He
is Emeritus Dean of the Northwestern University Medical School
and serves on the Board of the Northwestern Medical Faculty
Foundation. Dr. Beaty is a specialist in internal medicine and
a subspecialist in infectious diseases. He also is a director
of Banner Health, Arizona.
[PHOTO] Clateo Castellini, 64, has been a director, Chairman of the
Board, and Chief Executive Officer of the Company since 1994.
Until May 1999, he also served as President of the Company,
and prior to 1994, was Sector President-Medical. Mr.
Castellini also is a director of Bestfoods.
[PHOTO] Edward J. Ludwig, 48, has been a director and President of the
Company since 1999, and served as Executive Vice President
from July 1998 to May 1999. Prior thereto, Mr. Ludwig was
Senior Vice President-Finance and Chief Financial Officer. He
also is a trustee of Health Net, Inc., a subsidiary of The
Valley Hospital, Ridgewood, New Jersey.
8
<PAGE>
[PHOTO] Frank A. Olson, 67, has been a director since 1985. He is
Chairman of the Board of The Hertz Corporation, a
transportation company. Mr. Olson also is a director of
Amerada Hess, White Mountains Insurance Group and The Hertz
Corporation.
[PHOTO]
Willard J. Overlock, Jr., 53, has been a director since 1999.
He retired in 1996 as a partner in Goldman, Sachs & Co., where
he served as a member of its management committee. Mr.
Overlock also is a director of Select Reinsurance Ltd. and
SummerWinds Garden Centers, Inc.
CONTINUING DIRECTORS
The directors listed below were elected by the shareholders to terms
expiring in 2001 and 2002, respectively, and will continue to serve.
Terms to Expire 2001
[PHOTO] Henry P. Becton, Jr., 56, has been a director since 1987. He
is President and General Manager of WGBH Educational
Foundation, a producer and broadcaster of public television
and radio programs and books and other educational materials.
Mr. Becton is a director of various Scudder mutual funds, A.H.
Belo Company and The Public Broadcasting Service (PBS).
[PHOTO] Gerald M. Edelman, M.D., Ph.D., 70, has been a director since
1982. He is a Professor of The Scripps Research Institute and
Chairman of its Department of Neurobiology. In addition, he is
the Director of The Neurosciences Institute. His research is
concerned with the developmental biology of the brain. In
1972, Dr. Edelman was the recipient of the Nobel Prize in
Physiology or Medicine. Dr. Edelman also is a director of
General American Investors Co., Inc.
9
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[PHOTO] Margaretha af Ugglas, 60, has been a director since 1997. She
is the former Minister of Foreign Affairs of Sweden. She is a
director of the University of Stockholm and of the Jarl
Hjalmarson Foundation.
Nominees for Director--Term to Expire 2002
[PHOTO] Albert J. Costello, 64, has been a director since 1996. In
1999, he retired as Chairman of the Board, President and Chief
Executive Officer of W.R. Grace & Co., a global supplier of
packaging and speciality chemicals. Prior to joining W.R.
Grace & Co., Mr. Costello was Chairman of the Board and Chief
Executive Officer and President of American Cyanamid Company,
a technology-based life sciences company in agriculture,
pharmaceuticals and medical devices. Mr. Costello also is a
director of FMC Corporation.
[PHOTO] James E. Perrella, 64, has been a director since 1995. He is a
director and Chairman of the Board of Ingersoll-Rand Company,
a manufacturer of industrial machinery and related products.
He is also a director of Milacron Inc., Bombardier, Arvin
Industries and Rio Algom Limited.
[PHOTO] Alfred Sommer, 57, has been a director since May 1998. He is
Dean of The Johns Hopkins School of Hygiene and Public Health,
and Professor of Ophthalmology, Epidemiology and International
Health. Dr. Sommer was founding Director of the Dana Center
for Preventive Ophthalmology at Johns Hopkins, which focuses
on clinical epidemiology and public health aspects of
blindness prevention and child health.
10
<PAGE>
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION AND BENEFITS COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation and Benefits Committee of the Board (the "Committee")
reviews the overall compensation program for the Company's corporate officers,
determines and administers the compensation of the executive officers of the
Company, including the individuals named in the Summary Compensation Table,
and oversees the administration of employee benefits and benefit plans for the
Company and its subsidiaries. The Committee is composed exclusively of non-
employee directors, as defined in applicable rules and regulations of the
Securities and Exchange Commission, and none of the members of the Committee
is an employee or former employee of the Company or eligible to participate in
any of the Company's executive compensation programs. Each of the members of
this Committee also satisfies the criteria necessary for purposes of Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
Overview
As Becton, Dickinson and Company ("BD") continues its transformation, its
focus is to help all people live healthy lives while generating superior total
shareholder return. With this focus in mind, the Committee has developed and
implemented a compensation philosophy designed to reward and support superior
performance.
Performance-Based Pay
Management short- and long-term incentive payments are based on performance
measures designed to build shareowner value: total shareholder return, revenue
growth, earnings growth and the creation of economic value.
Challenging Targets
BD's management compensation program emphasizes the establishment of
challenging goals through a number of factors, including: the Committee's
active assessment of management's proposed performance goals and the link
between goal attainment and short- and long-term management incentives; a
significant proportion of total compensation being contingent on achievement
of predetermined goals; highly leveraged compensation plans; and long-term
compensation and performance measured and determined relative to that of a
group of high quality healthcare institutions with which BD competes for
management talent, as well as the selected peer group of companies used in
preparing the Performance Graph set forth on page 20 hereof (collectively, the
"Comparison Group").
Executive and Shareholder Alignment
Each of the executives identified below is required, with limited
exceptions, to own within a prescribed period of time a significant ownership
stake in the Company representing varying multiples of the executive's base
salary, depending on the executive's position. The Company can extend the
period of time within which the guidelines are to be satisfied when
circumstances, such as a promotion, significantly increase the level of share
ownership required. The current ownership guideline requirements are as
follows:
<TABLE>
<S> <C>
Chief Executive Officer.................................... 5 times salary
President.................................................. 5 times salary
Extended Leadership Team (approximately 15 persons)........ 3 times salary
All Other Corporate Officers and Business Presidents....... 2 times salary
</TABLE>
The Company periodically monitors individuals' satisfaction of these
ownership guidelines. Stock options, including vested options, are not
included in determining whether an individual has met his or her ownership
guidelines. The Company does not, and has not, provided any loans to
management to assist them in satisfying these ownership guidelines.
In addition, the Committee has recommended, as an aspirational goal, that an
additional management group representing approximately 250 persons seek to
accumulate and maintain shares of Common Stock representing an amount equal to
fifty percent of their base salaries.
11
<PAGE>
Management Development
Our compensation programs must attract and retain the talent necessary to
meet BD's current and future leadership needs. Pay practices, for all BD
associates, must support and reinforce the Company's values and the
performance criteria BD has termed its "New World Success Factors." These
factors are: "Living the BD Values', "Entrepreneurial Initiative', "One
Company Collaboration', "Building Customer Loyalty', "Driving for Results',
and "Learning for Tomorrow'. The Company's pay practices are designed to
attract achievement-oriented people who demonstrate individual and team
commitment to superior performance and improving shareholder value.
In assessing the effectiveness and competitiveness of BD's executive
compensation structure, the Committee reviews compensation practices of other
highly-regarded companies with the assistance of independent outside
consultants. Comparison companies are selected based on their total
shareholder return or the similarity of their lines of business to those of
BD. The Comparison Group includes not only firms that compete in the Company's
primary lines of business, but also those with which the Company competes for
talent.
Principal Compensation Elements
The key elements of executive compensation are base salary, annual incentive
awards, and long-term equity participation.
Base Salary
The Committee annually reviews and determines the base salaries of executive
officers. The Committee evaluates management's salary recommendations based on
the results achieved by each executive officer, his or her future potential,
scope of responsibilities and experience, as well as competitive salary
practices. The Company generally targets executive officer salaries to
approximate the median levels expected to be paid by companies in the
Comparison Group to persons holding equivalent positions.
Annual Incentive Awards
The Company's 1997 Management Incentive Plan (the "Plan") is designed to
reward executives based on the overall performance of the Company, as well as
the performance of each executive officer and that of his or her area of
responsibility or operating group. The Committee set target incentives for
each participating executive at the beginning of the year. These dollar
amounts were established as a percentage of the executive's salary and were
calculated to deliver compensation to the executive at the median range for
the Comparison Group companies.
The Committee adopted performance measures to determine the amount of
incentive to be paid at different levels of performance. The performance
measures address both financial and strategic goals. The performance measures
were established at levels which reflected the aggressive performance
expectations established for the businesses. For fiscal 1999, the financial
measures used to determine the amounts of the incentive awards included
earnings per share growth, improvement in economic value added (EVA(R)), and
revenue growth. All factors were weighted equally. The strategic
accomplishments measured included, but were not limited to, maximizing revenue
growth through acquisitions, geographic expansion and new product development;
preserving profitability through operations excellence and improvements in
productivity, quality, and customer service; and enhancing organizational
effectiveness.
At the end of the fiscal year, financial and strategic results were measured
for the Company as a whole and for each business unit. As a whole, the Company
fell below the aggressive goals it had set for itself, resulting in an
aggregate annual incentive pool that fell significantly below target levels.
The Leadership Team, therefore, recommended to the Committee that it forego
receipt of any and all Plan payments for fiscal 1999 performance. Other Plan
participants should receive annual incentive awards equal to approximately
half of what they might otherwise have received if the Company had achieved
its 1999 performance goals.
- --------
EVA(R) is a registered trademark of Stern Stewart & Co.
12
<PAGE>
Stock Options
The Committee grants stock options broadly and deeply throughout the
organization, and thus provides additional incentives to employees to maximize
shareholder value. Actual grants are based on individual performance and
contribution.
Stock option grant levels and terms are established to provide senior
management with the opportunity for compensation levels at the top quartile of
the competitive range for comparable positions in the market place, provided
management is successful in achieving above-average long-term growth in total
shareholder value.
Stock options are awarded each year by the Committee to members of senior
management in accordance with the Company's Senior Executive Option Policy
which was adopted by the Committee in September 1997.
The Senior Executive Option Policy is an indexed stock option program,
intended to compensate executive officers for both absolute and relative
growth in shareholder value, as well as the achievement of certain internal
financial and strategic goals. The program is intended to focus management on
the long-term creation of shareholder value by linking incentive compensation
to quantifiable measures that drive shareholder value creation over time.
Beginning with fiscal year 1998, the Company's total shareholder return
("TSR") has been measured against that of the selected peer group of companies
listed on page 20 (the "Peer Group"). Internal measures of performance include
the achievement of certain earnings and strategic goals, including improved
EVA(R) and revenue growth. The number of stock options targeted for grant
under the Senior Executive Option Policy is determined based (1) three-fourths
on the Company's annualized, cumulative TSR over a three-year period
commencing October 1, 1997 relative to that of the Peer Group over the same
three-year period, and (2) one-fourth on the Company's EVA(R) and revenue
growth over such three-year period. As applied, "relative" performance under
the indexed stock option plan results in an option exercisable at the fair
market value on the date of grant for either a reduced or an increased number
of shares depending upon actual performance compared to the Peer Group TSR and
the established internal financial and strategic goals.
Stock option grant levels and terms are established to provide Senior
Management with the opportunity for overall compensation levels targeted at
the top quartile of the range of total compensation of the Comparison Group,
with the opportunity and risk, through indexing, to earn long-term
compensation at levels of between zero and 150% of target.
On January 25, 1999, the Committee awarded the second grant under the 1998
Senior Executive Option Policy to approximately 20 members of the Extended
Leadership Team, including executive officers, based on performance results as
of September 30, 1998. With respect to the January 1999 option grant, BD's
performance as a percentage of Peer Group TSR, which accounted for 75% of the
total grant, was 123%, resulting in a grant of 146% of target. The Company's
cumulative revenue growth during the three-year performance period was 13% and
EVA(R) growth was 71%, which resulted in 140% of target for each measure. Both
revenue growth and EVA(R) were weighted at 12.5%. Based on the respective
weightings and yields of each of the applicable measures, the resulting total
Senior Executive Stock Option grant level was at 144.5% of target.
Compensation of the Chairman of the Board and Chief Executive Officer
The determination of the Chief Executive Officer's salary, annual incentive
and stock option grants was made by the Committee based on the same policies
and calculations applicable to all executive officers.
In June 1999, Mr. Castellini's salary was increased to $975,000 based on the
Committee's evaluation of his and the Company's performance, as well as upon
competitive chief executive officer compensation information.
Consistent with the Leadership Team's recommendation to the Committee to
forego receipt of any annual incentive awards for this year, Mr. Castellini
was paid no annual incentive in fiscal 1999.
In January 1999, Mr. Castellini received an award of 195,000 stock options
in accordance with the Senior Executive Option Policy. In November 1999, Mr.
Castellini was awarded an additional grant of 100,000 stock options, in
recognition of his continuing service as Chairman. One-half of the options
granted to Mr. Castellini
13
<PAGE>
in November 1999 are exercisable when the Common Stock has traded at or above
$44.00 for 30 consecutive trading days, and the balance of the options granted
to Mr. Castellini in November 1999 are exercisable when the Common Stock has
traded at or above $50.00 for 30 consecutive trading days.
The Committee believes that the structure of the Company's compensation
program, with its emphasis on long-term compensation, serves to focus Company
executives on attaining a sustained high level of Company performance and
creating long-term shareholder value.
1999 Compensation Actions: President
On May 25, 1999, Mr. Ludwig was appointed President of the Company, at which
time his salary was increased to $450,000. Consistent with the Leadership
Team's recommendation to the Committee to forego receipt of any annual
incentive awards for this year, Mr. Ludwig was not paid any annual incentive
in fiscal 1999.
In January 1999, Mr. Ludwig received an award of 51,000 stock options in
accordance with the Senior Executive Option Policy and in November 1999, he
was granted an additional award of 100,000 stock options, in recognition of
his election as Chief Executive Officer, effective January 1, 2000.
1999 Compensation Actions: Other Executive Officers
The other executive officers, including the named executives (as defined
below), received salary increases that averaged 7.5%, which included merit
increases of 4.2%, as well as a number of promotion and market adjustments.
Consistent with the recommendation of the Leadership Team, the Committee made
no annual incentive awards for fiscal 1999 to the executive officers. The
executive officers were granted stock options under the Senior Executive
Option Policy during 1999.
Internal Revenue Code Section 162(m)
Section 162(m) of the Code precludes a public corporation from taking a
deduction for compensation in excess of $1 million for its chief executive
officer or any of its four other highest paid executive officers, unless
certain specific and detailed criteria are satisfied.
The Committee considers the anticipated tax treatment to the Company and to
the executive officers in its review and establishment of compensation
programs and payments. The deductibility of some types of compensation
payments can depend upon the timing of an executive's vesting or exercise of
previously granted rights. Interpretations of and changes in applicable tax
laws and regulations as well as other factors beyond the control of the
Committee also can affect deductibility of compensation. For these and other
reasons, the Committee has determined that it will not necessarily seek to
limit executive compensation to that deductible under Section 162(m) of the
Code. The Committee will continue to monitor developments and assess
alternatives for preserving the deductibility of compensation payments and
benefits to the extent reasonably practicable, consistent with its
compensation policies and as determined to be in the best interests of the
Company and its shareholders.
Compensation Data
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
Henry P. Becton, Jr., Chairman
Frank A. Olson
Willard J. Overlock, Jr.
James E. Perrella
Raymond S. Troubh
14
<PAGE>
Compensation of Named Executives
General
The following table shows, for the fiscal years ended September 30, 1999,
1998 and 1997, respectively, 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
Annual Compensation Awards Compensation
----------------------------- ---------------------
Securities
Restricted Underlying
Name and Fiscal Stock Options/ All Other
Principal Position Year Salary(A) Bonus(A) Awards(B) SARs Compensation(C)
- ------------------ ------- ---------- --------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Clateo Castellini....... 1999 $ 921,875 $ 0 0 195,000 $108,841
Chairman, and 1998 846,875 900,000 0 270,000 106,861
Chief Executive Officer 1997 771,875 825,000 0 438,686 106,861
John W. Galiardo........ 1999 485,833 0 0 60,000 17,642
Vice Chairman and 1998 465,833 300,000 0 110,000 15,662
General Counsel 1997 447,250 330,000 0 292,458 15,662
Edward J. Ludwig........ 1999 407,500 0 0 51,000 6,780
President 1998 331,667 220,000 0 50,000 4,800
1997 300,000 205,000 0 207,216 4,800
Gary M. Cohen........... 1999 387,083 0 0 51,000 7,677
President--Worldwide
Medical Systems 1998 266,667 220,000 0 50,000 5,082
1997 218,333 150,000 0 106,568 4,977
Kenneth R. Weisshaar.... 1999 374,000 0 0 43,000 6,841
Senior Vice President -- 1998 316,667 200,000 0 50,000 4,800
Finance and Chief
Financial Officer (D) 1997 300,000 190,000 0 207,216 4,800
</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. The Leadership Team, which includes the
five named executives, did not receive bonuses for fiscal year 1999.
(B) Messrs. Castellini and Galiardo 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 the January 1995 grant
under the Senior Executive Option Policy, Messrs. Ludwig, Weisshaar and
Cohen were no longer 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
Current Deferred Restricted Restricted
Name Portion Portion Shares Held Shares Held
---- ------- -------- ------------- --------------
<S> <C> <C> <C> <C>
Clateo Castellini.............. 0 39,912 39,912 $1,120,031
John W. Galiardo............... 0 37,008 37,008 1,038,537
Edward J. Ludwig............... 0 9,840 9,840 276,135
Gary M. Cohen.................. 0 0 0 0
Kenneth R. Weisshaar........... 0 11,308 11,308 317,331
</TABLE>
Under the terms of the Stock Award Plan, none of the holdings reflected may
be distributed prior to retirement or termination of employment.
15
<PAGE>
Current market values are determined by multiplying the number of
undistributed shares by $28.0625, the September 30, 1999 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.
(C) 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 1999, the Company made contributions to SIP of $4,800 for each
of Messrs. Castellini, Galiardo, Ludwig, Cohen and Weisshaar. 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. In addition, for the plan
year ended June 30, 1999, 23,921 preferred shares accumulated in the trust
in excess of the Company's matching obligation due to the favorable
performance of the Company's common stock over the past several years. As a
result, the Company matched up to an additional 1% of each eligible
participant's salary. This additional Company contribution amounted to
$1,980 for each of Messrs. Castellini, Galiardo and Ludwig, $2,409 for Mr.
Cohen and $2,041 for Mr. Weisshaar.
The Company has made collateral assignment or endorsement method split-
dollar life insurance policies 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 collateral assignment
arrangements, the premiums are paid by the Company for 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 premium payments from the cash value of the policies at
the later of a designated date or retirement of the executive. At that time,
full ownership of the policy will be transferred to the named executive.
Messrs. Castellini, Galiardo, Ludwig and Weisshaar have collateral
assignment split-dollar life insurance arrangements. The compensatory
portion represented in the table consists of the premium payments made on
behalf of these four named executives during the fiscal year. The payments
are $102,061 for Mr. Castellini, $10,862 for Mr. Galiardo and $0 for Messrs.
Ludwig and Weisshaar. Under endorsement split-dollar arrangements, the
Company owns the policy and grants the executive the right to name a
beneficiary for a part of the death proceeds equal to two times the
executive's base salary. The compensatory portion of the arrangement
reflects the term life coverage for the fiscal year. Mr. Cohen has an
endorsement split-dollar life insurance arrangement. The reportable amount
for Mr. Cohen for fiscal year 1999 is $468.
(D) Mr. Weisshaar was an executive officer as of September 30, 1999 and
resigned as an executive officer on October 13, 1999.
Stock Option Grants
The following table contains information relating to stock option grants and
tandem stock appreciation rights ("SARs") made in fiscal 1999 under the 1995
Stock Option Plan through the Senior Executive Option Policy described above.
OPTION/SAR GRANTS IN FISCAL YEAR 1999
<TABLE>
<CAPTION>
Individual Grants
-----------------------------------------------
Number of % of Total
Securities Options/SARs
Underlying Granted to Grant Date
Options/SARs Employees in Exercise Expiration Present
Name Granted(A) Fiscal Year Price Date Value(B)
- ---- ------------ ------------ -------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Clateo Castellini....... 195,000 6.3% $35.0625 1/25/09 $ 2,490,150
John W. Galiardo........ 60,000 1.9% 35.0625 1/25/09 766,200
Edward J. Ludwig........ 51,000 1.6% 35.0625 1/25/09 651,270
Gary M. Cohen........... 51,000 1.6% 35.0625 1/25/09 651,270
Kenneth R. Weisshaar.... 43,000 1.4% 35.0625 1/25/09 549,110
--------- ----- -------- -----------
TOTAL................... 400,000 12.9% $35.0625 1/25/09 $ 5,108,000
All Optionees........... 3,097,747(C) 100.0% Various Various $39,558,229
</TABLE>
- --------
(A) All option grants to the named executives are for a ten-year term. They
are exercisable 50% after two years from date of grant and 100% after
three years from date of grant. 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.
16
<PAGE>
(B) This estimate of value has been developed solely for purposes of
comparative disclosure in accordance with the rules and regulations of the
Securities and Exchange Commission ("SEC") and is consistent with the
assumptions the Company is using for Statement of Financial Accounting
Standards ("SFAS") 123 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 experience, and are not a forecast of
future stock price or volatility, or of future dividend policy. No
adjustments have been made for the risk of forfeitures or for limitations
on transferability.
January 25, 1999 Grant
Dividend Yield: 1.09%
Volatility: 31.0%
Risk-free Rate of Return: 4.79%
Expected Exercise Period: 6 years
(C) This excludes options to purchase 73,074 shares of the Company's Common
Stock which were granted to eligible employees of a business acquired in
fiscal 1999.
Stock Option Exercises
The following table contains information relating to the exercise of stock
options by the named executives in fiscal 1999, as well as the number and
value of their unexercised options as of September 30, 1999.
AGGREGATED OPTION/SAR EXERCISES IN FISCAL YEAR 1999 AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Value
Realized Number of
(Market Securities Underlying Value of Unexercised
Value Unexercised In-the-Money
Shares less Options/SARs at Options/SARs at
Acquired Exercise Fiscal Year-End Fiscal Year-End
Name on Exercise Price) Exercisable/Unexercisable(B) Exercisable/Unexercisable(A)(B)
- ---- ----------- ---------- ---------------------------- -------------------------------
<S> <C> <C> <C> <C>
Clateo Castellini....... 0 $ 0 2,009,007/684,343 $26,263,043/712,865
John W. Galiardo........ 60,000 2,055,853 1,281,245/316,229 17,106,169/475,244
Edward J. Ludwig........ 5,000 150,984 529,308/204,608 5,746,968/336,726
Gary M. Cohen........... 25,020 676,706 221,004/154,284 2,045,145/173,173
Kenneth R. Weisshaar.... 0 0 489,536/196,608 5,000,454/336,726
</TABLE>
- --------
(A) The value of unexercised options represents the difference between the
closing price of the Company's Common Stock on September 30, 1999
($28.0625) 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.
Beginning with the January 1997 grant, options are exercisable 50% after
two years from date of grant and 100% after three years from date of
grant, subject to applicable rules and regulations of the SEC. All options
issued to the named executives prior to 1997 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. 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 Company's Salary and Bonus Deferral Plan,
17
<PAGE>
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>
Years of Credited Service
--------------------------------------------------------------
Maximum
Average
Compensation 10 15 20 25 30 35 40
- ------------ -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 200,000 $ 28,443 $ 42,664 $ 56,886 $ 71,107 $ 85,329 $ 99,550 $113,772
300,000 43,443 65,164 86,886 108,607 130,329 152,050 173,772
400,000 58,443 87,664 116,886 146,107 175,329 204,550 233,772
500,000 73,443 110,164 146,886 183,607 220,329 257,050 293,772
600,000 88,443 132,664 176,886 221,107 265,329 309,550 353,772
700,000 103,443 155,164 206,886 258,607 310,329 362,050 413,772
800,000 118,443 177,664 236,886 296,107 355,329 414,550 473,772
900,000 133,443 200,164 266,886 333,607 400,329 467,050 533,772
1,000,000 148,443 222,664 296,886 371,107 445,329 519,550 593,772
1,100,000 163,443 245,164 326,886 408,607 490,329 572,050 653,772
1,200,000 178,443 267,664 356,886 446,107 535,329 624,550 713,772
1,300,000 193,443 290,164 386,886 483,607 580,329 677,050 773,772
1,400,000 208,443 312,664 416,886 521,107 625,329 729,550 833,772
</TABLE>
Covered Compensation includes all components of each named executive's
Annual Compensation as set forth in the Summary Compensation Table on page 15
hereof, plus the distributed portion of awards granted to him through January
1990 under the Company's Stock Award Plan for Messrs. Castellini and Galiardo
and through January 1993 for Messrs. Ludwig, Cohen and Weisshaar. 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,
1999, and Covered Compensation for the calendar year ending December 31, 1999,
are 21 years and $940,625 for Mr. Castellini, 22 years and $490,833 for Mr.
Galiardo, 20 years and $425,000 for Mr. Ludwig, 16 years and $392,500 for Mr.
Cohen and 11 years and $374,000 for Mr. Weisshaar.
In addition, employment agreements with two 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 and 15
additional years for Mr. Galiardo. These supplemental pension amounts would be
offset by any pensions payable from prior employers.
Contractual Obligations
Messrs. Castellini and Galiardo 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
18
<PAGE>
for cause or by the employee for good reason at a date more than 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 these 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 and Galiardo been terminated on
September 30, 1999 following a change in control, they would have been
entitled to cash payments of $3,381,250, and $1,601,666, respectively.
In the event of termination other than for cause or for good reason within
three years following a change in control, each of the two 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, 1999, for the
Company, the S&P 500 Index, and for a peer group of fourteen companies,
selected on a line-of-business basis (the "Peer Group"). The comparison period
presented is 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, 1994 and is compared to the cumulative total return of the S&P
500 Index and the weighted, average performance of the Peer Group over the
same period with a like amount invested.
The companies composing the Peer Group consist of St. Jude Medical, Inc.,
Beckman Coulter Inc., Guidant Corp., Boston Scientific Corp., Allergan Inc.,
C.R. Bard, Inc., Bausch & Lomb, Inc., Medtronic, Inc., Baxter International
Inc., Abbott Laboratories, Pfizer, Inc., American Home Products Corp.,
Bristol-Myers Squibb and Johnson & Johnson.
The Company determined to use the Peer Group's performance rather than the
S&P Medical Index as one of the bases against which to compare its change in
cumulative total shareholder return. This change is consistent with the
Company's practice introduced in 1998 to measure relative Company performance
against that of the Peer Group when determining the size of option grants
under the 1998 Senior Executive Option Policy.
19
<PAGE>
COMPARISION OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG BECTON, DICKINSON & COMPANY, THE S & P 500 INDEX
AND A SELECTED PEER GROUP
[LINE GRAPH]
BECTON DICKINSON
& COMPANY PEER GROUP S & P 500
--------- ---------- ---------
9/94 100 100 100
12/94 100 105 100
3/95 113 117 110
6/95 122 131 120
9/95 132 146 138
12/95 158 164 138
3/96 173 172 145
6/96 170 183 151
9/96 188 197 156
12/96 185 200 169
3/97 193 211 174
6/97 217 268 204
9/97 206 261 219
12/97 216 287 226
3/98 294 334 257
6/98 336 358 266
9/98 357 354 239
12/98 371 412 290
3/99 334 437 304
6/99 262 434 326
9/99 246 406 306
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, 2000. 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.
20
<PAGE>
SHAREHOLDER PROPOSAL
Proposal 3.
PROPOSAL ON CUMULATIVE VOTING
Mrs. Evelyn Y. Davis, Watergate Office Building, 2600 Virginia Avenue N.W.,
Suite 215, Washington, D.C. 20037, owner of 800 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
take the necessary steps to provide for cumulative voting in the election
of directors, which means each stockholder shall be entitled to as many
votes as shall equal the number of shares he or she owns multiplied by the
number of directors to be elected, and he or she may cast all of such votes
for a single candidate, or any two or more of them as he or she may see
fit."
REASONS: "Many states have mandatory cumulative voting, so do National
Banks."
"In addition, many corporations have adopted cumulative voting."
"Last year, the owners of 60,472,334 shares, representing approximately
36.6% of the votes cast, voted FOR this proposal."
"If you AGREE, please mark your proxy FOR this resolution."
The Board of Directors recommends a vote AGAINST Proposal 3.
Like most major corporations, BD provides that each share of common stock is
entitled to one vote for each nominee for director. This procedure ensures
that each of your directors is elected by a plurality of all the votes cast at
the annual meeting. It has served the Company well. Your directors regard
their constituency to be all the shareholders. Each director shares the common
objective of advancing the best interests of all shareholders rather than
those of any particular group. In contrast to this approach, cumulative voting
favors special interest groups and would permit the election of a director by
a relatively small group of shareholders. A director elected through
cumulative voting is more likely to represent the particular interests of the
shareholders who elected him or her, at the expense of the interests of the
shareholders as a whole.
Our shareholders have rejected this proposal at each of our last three
annual meetings and have rejected similar proposals each time they have been
presented. Your Board of Directors continues to believe that changing the
current voting procedure would not be in the best interests of all of our
shareholders or of the Company.
Accordingly, the Board recommends a vote against this proposal.
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Any proposal that a shareholder wishes to submit for inclusion in the
Company's Proxy Statement and proxy card/voting instruction card for the 2001
Annual Meeting of Shareholders ("2000-2001 Proxy Statement") pursuant to SEC
Rule 14a-8 must be received by the Company no later than August 21, 2000.
In addition, notice of any proposal that a shareholder wishes to propose for
consideration at the 2001 Annual Meeting of Shareholders, but does not seek to
include in the Company's 2000-2001 Proxy Statement pursuant to Rule 14a-8,
must be delivered to the Company no earlier than October 11, 2000 and no later
than November 10, 2000, if the proposing shareholder wishes for the Company to
describe the nature of the proposal in the 2000-2001 Proxy Statement as a
condition to exercising its discretionary authority to vote proxies on the
proposal. Any shareholder proposals or notices submitted to the Company in
connection with the 2001 Annual Meeting of Shareholders should be addressed
to: Corporate Secretary, Becton, Dickinson and Company, 1 Becton Drive,
Franklin Lakes, New Jersey 07417.
21
<PAGE>
DIRECTIONS TO
BECTON, DICKINSON AND COMPANY
from WESTERN NJ from TAPPAN ZEE BRIDGE
Over Tappan Zee onto New York Thruway
Route 80 East to Route 287 North, to (287 West). Take Thruway to Exit 15
Route 208 South. Once on Route 208, (Route 287 & 17 South)--to Exit 59
stay in extreme right lane to BD (208 South/Franklin Lakes). Stay in
entrance ramp. extreme right lane, Follow Route 208
South for 1 mile. Entrance to BD on
right.
[ROADMAP to BECTON DICKINSON]
from NEWARK AIRPORT from LAGUARDIA AIRPORT
Grand Central Parkway West (follow
Interstate 95 North to Exit 16W signs for George Washington Bridge)
(Route 3). Take Route 3 West to Route to Tri-Boro Bridge. Over Bridge onto
17 North, then Route 17 North to Major Deegan Expressway North.
Route 4 West, to Route 208 North. Proceed to Cross Bronx Expressway,
Proceed about 8 miles on Route 208 over the GW Bridge, onto Route 4
North to BD entrance ramp. West, to Route 208 North. Proceed
about 8 miles on Route 208 to BD
entrance ramp.
PARKING WILL BE AVAILABLE
<PAGE>
PROXY
PROXY/VOTING INSTRUCTION CARD
BECTON, DICKINSON AND COMPANY
Proxy Solicited on Behalf of the Board of Directors for
Annual Meeting on February 8, 2000
The undersigned hereby appoints Clateo Castellini, John W. Galiardo and Bridget
M. Healy, 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 PM, on
Tuesday, February 8, 2000 at the offices of the Company, 1 Becton Drive, Becton
Building, 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 and the Custodian,
respectively, for any shares of Common Stock allocated to the undersigned
under the Company's 1996 Directors' Deferral Plan ("DDP"), the Company's Salary
and Bonus Deferral Plan ("SBDP") and, when so provided, under the Company's
Global Share Investment Program ("GSIP"), and also constitutes voting
instructions to the Trustee and the Custodian for a proportionate number of
shares of Common Stock in the DDP, SBDP and GSIP, respectively, for which no
instruction card has been received from other participants.
This card also 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 2003
01 - Harry N. Beaty 04 - Frank A. Olson
02 - Clateo Castellini 05 - Willard J. Overlock, Jr.
03 - Edward J. Ludwig
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. If you do not vote by
telephone or over the internet, please sign and return this card using the
enclosed envelope.
CONTINUED AND TO BE SIGNED, ON REVERSE SIDE
- -------------------------------------------------------------------------------
/\ DETACH CARD /\
<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
Proposal 2 and AGAINST Proposal 3.
The Board of Directors recommends a vote FOR Proposals 1 and 2.
1. Election of FOR WITHHELD 2. Approval of FOR AGAINST ABSTAIN
Directors [_] [_] independent auditors. [_] [_] [_]
(see reverse)
For, except vote withheld from the following nominee(s):
- --------------------------------------------------------
The Board of Directors recommends a vote AGAINST Proposal 3.
3. Cumulative voting. FOR AGAINST ABSTAIN
[_] [_] [_]
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
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE IF YOU ARE RETURNING YOUR VOTED PROXY/VOTING INSTRUCTION
CARD BY MAIL
[LOGO] BD INDISPENSABLE TO
HUMAN HEALTH
Dear Shareholder:
Becton, Dickinson and Company (BD) encourages you to take advantage of new and
convenient ways by which you can vote your shares. You can vote your shares 24
hours a day, 7 days a week, using either a touch-tone telephone or through the
internet. If you choose to vote your shares by telephone or through the
internet, there is no need to mail back your proxy/voting instruction card.
To vote your shares electronically you must use the control number printed in
the box above,just below the perforation. The series of numbers that appear in
the box above must be used to access the system. YOUR INTERNET OR TELEPHONE VOTE
MUST BE RECEIVED BY 12:01 A.M., NEW YORK CITY TIME, ON FEBRUARY 7, 2000.
1. To vote over the internet, log on to the internet and go to the Web Site
http://www.eproxyvote.com/bdx.
2. To vote over the telephone, on a touch-tone telephone dial 1-877-PRXVOTE
(1-877-779-8683). Outside of the U.S. and in Canada, shareholders should call
1-201-536-8073.
Your telephone or internet vote authorizes the proxies named on the above
proxy/voting instruction card in the same manner as if you marked, signed, dated
and returned the proxy/voting instruction card. If you choose to vote
telephonically or through the internet, there is no need to mail back your
proxy/voting instruction card.
Your vote is important. Thank you for voting.
