<PAGE> 1
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
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
Bergen Brunswig Corporation
(Name of Registrant as Specified in its Charter)
Bergen Brunswig Corporation
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE> 2
[LOGO]
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4000 Metropolitan Drive, Orange, California 92668 (714) 385-4000
ROBERT E. MARTINI
Chairman of the Board and
Chief Executive Officer
December 22, 1994
Dear Shareowner:
You are cordially invited to attend the Annual Meeting of
Shareowners of Bergen Brunswig Corporation which will be held at
our corporate headquarters located at 4000 Metropolitan Drive,
Orange, California on Thursday, January 26, 1995, at 10:00 A.M.,
Pacific Time. For your convenience, a map and directions to our
corporate headquarters are included on the back cover of the Proxy
Statement.
This booklet includes the Notice of the Annual Meeting of
Shareowners and the Proxy Statement. The Proxy Statement describes
the business to be transacted at the Annual Meeting and provides
information concerning the Company that you should consider when
you vote your shares. In addition to the formal items of business
to be brought before the meeting, members of management will
report on the Company's operations and answer shareowner
questions.
As a shareowner, your vote is important. I encourage you to
execute and return your proxy card promptly whether or not you
plan to attend so that we may have as many shares as possible
represented at the Meeting. You may change your vote at any time
prior to, or at, the meeting.
Thank you for your cooperation and continued support and
interest in Bergen Brunswig Corporation.
Sincerely,
[SIG]
Robert E. Martini
Chairman of the Board and
Chief Executive Officer
<PAGE> 3
NOTICE OF ANNUAL MEETING OF SHAREOWNERS
TO BE HELD JANUARY 26, 1995
BERGEN BRUNSWIG CORPORATION
4000 METROPOLITAN DRIVE
ORANGE, CALIFORNIA 92668
(714) 385-4000
BERGEN NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareowners
BRUNSWIG of Bergen Brunswig Corporation (the "Company") will be held
CORPORATION at the Company's headquarters located at 4000 Metropolitan
Drive, Orange, California on Thursday, January 26, 1995, at
10:00 A.M., Pacific Time, for the following purposes:
1. To elect three directors for a term of three years, three
directors for a term of two years and two directors for a
term of one year;
2. To approve amendments to the Company's 1989 Stock
Incentive Plan as described on pages 19 through 26 in the
Proxy Statement; and
3. To transact such other business as may properly come
before the meeting and any adjournment thereof.
Shareowners of record at the close of business on December 1,
1994, are entitled to receive notice of and to vote at the
meeting. It is important that your shares be represented at
the meeting, regardless of the number you may hold.
All shareowners are cordially invited to attend the meeting
in person. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU
ARE REQUESTED TO COMPLETE AND SIGN THE ENCLOSED PROXY CARD
AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE PREPAID
ENVELOPE. Any proxy given by a shareowner may be revoked at
any time before its exercise by sending a subsequently dated
proxy or by giving written notice to the Company, in each
case, to the attention of Milan A. Sawdei, Executive Vice
President, Chief Legal Officer and Secretary, at the above
address.
By order of the Board of Directors,
[SIG]
Milan A. Sawdei
Executive Vice President,
Chief Legal Officer and Secretary
Orange, California
December 22, 1994
YOUR VOTE IS IMPORTANT! YOUR ATTENTION IS DIRECTED TO THE
ACCOMPANYING PROXY STATEMENT AND PROXY CARD. YOU ARE
REQUESTED TO VOTE, SIGN, DATE AND RETURN THE ENCLOSED PROXY
CARD AS PROMPTLY AS POSSIBLE SO THAT YOUR SHARES MAY BE
REPRESENTED. A POSTAGE PREPAID ENVELOPE IS ENCLOSED FOR THAT
PURPOSE. EVEN IF YOU HAVE VOTED YOUR PROXY, YOU MAY CHANGE
YOUR VOTE PRIOR TO, OR AT, THE MEETING. PLEASE NOTE, HOWEVER,
THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR
OTHER NOMINEE AND YOU WISH TO ATTEND AND VOTE AT THE MEETING,
YOU MUST OBTAIN FROM SUCH BROKER, BANK OR OTHER NOMINEE, A
PROXY ISSUED IN YOUR NAME.
<PAGE> 4
BERGEN BRUNSWIG CORPORATION
4000 Metropolitan Drive
Orange, California 92668
PROXY STATEMENT
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of proxies
on behalf of the Board of Directors of Bergen Brunswig Corporation (the
"Company"), a New Jersey corporation, in the form of the accompanying proxy card
for use at the Annual Meeting of Shareowners to be held on Thursday, January 26,
1995, and at any adjournments thereof. The meeting will be held at the
headquarters of the Company, located at 4000 Metropolitan Drive, Orange,
California. The Company intends to mail this Proxy Statement and accompanying
proxy card commencing on December 23, 1994, to all shareowners entitled to vote
at the meeting.
A form of proxy is enclosed for use at the meeting if a shareowner is unable to
attend in person. A shareowner proxy may be revoked by filing a written notice
of revocation with the Secretary of the Company at any time before the proxy is
voted. All shares represented by valid proxies received pursuant to this
solicitation (and not revoked before they are exercised) will be voted FOR all
matters set forth in the attached Notice of Annual Meeting and in the discretion
of the proxy holder as to any other business that comes before the meeting. In
the event a shareowner specifies a different choice by means of the proxy card,
those shares will be voted in accordance with such shareowner's selections.
VOTING AT THE MEETING
The Board of Directors has fixed the close of business on December 1, 1994 as
the record date for the determination of shareowners entitled to receive notice
of and to vote at the meeting. As of that date, there were 37,213,063 shares of
the Company's Class A Common Stock ("Common Stock") outstanding and entitled to
vote at the meeting. The holders of outstanding shares as of the record date are
entitled to one vote for each share of Common Stock on any matter voted at the
meeting. Assuming a quorum is present the eight nominees receiving the largest
number of votes cast by holders of Common Stock will be elected as directors and
the proposal to amend the 1989 Stock Incentive Plan will require a majority of
the votes cast.
The presence in person or by proxy of the holders of a majority of the Company's
outstanding shares of Common Stock will constitute a quorum at the meeting. For
purposes of determining the votes cast with respect to any matter presented for
consideration at the meeting, only those votes cast "FOR" or "AGAINST" are
included. Abstentions and broker non-votes are counted only for the purpose of
determining whether a quorum is present at the meeting.
1
<PAGE> 5
1. ELECTION OF DIRECTORS (Item 1 on Proxy Card)
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The Company's Restated Certificate of Incorporation provides
that the Board of Directors ("Board") shall consist of not
more than 15 directors nor less than 9 directors, the exact
number within such limits to be fixed by the Board as
provided in the By-Laws, which currently provide for 11
directors. The directors are divided into three classes, each
class serving for a period of three years on a staggered-term
basis. During fiscal 1994, all shares of the Company's Class
B Common Stock automatically converted into Class A Common
Stock pursuant to the Company's Recapitalization Plan adopted
by the shareowners in January, 1989. As a result of the
conversion, it has become necessary to classify each of the
directors into one of the three classes and to provide for
approximately equivalent sized classes. Accordingly, there
are three nominees for Class I directors, three nominees for
Class II directors, and two nominees for Class III directors
at this annual meeting.
It is intended that persons named as proxies in the
accompanying proxy card will vote, unless such authority is
withheld, for the election of the nominees named below to
serve until the expiration of their respective terms and
thereafter until their successors shall have been duly
elected and qualified. In the event the nominees named below
refuse or are unable to serve, which is not anticipated, the
persons named as proxies reserve full discretion to vote for
any or all persons as then may be nominated.
The following sets forth information as of September 30,
1994, concerning the nominees for election to the Board and
comparable information with respect to directors whose term
of office will continue beyond the meeting. All of the
nominees currently serve as directors of the Company.
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NOMINEES FOR DIRECTORS WHOSE TERM EXPIRES JANUARY 1998
(CLASS I DIRECTORS)
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ROBERT E. MARTINI Director since 1962.
Age 62.
Photo 1 Chairman of the Board (since 1992) and Chief Executive
Officer (since 1990) of the Company and formerly served as
its President (1981 to 1992). Mr. Martini is Chairman of the
Company's Executive and Nominating Committees.
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DWIGHT A. STEFFENSEN Director since 1985.
Age 51.
President (since 1992) and Chief Operating Officer (since
Photo 2 1990) of the Company and formerly served as its Executive
Vice President (1985 to 1992). Mr. Steffensen is a director
of Merisel, Inc. Mr. Steffensen is Chairman of the Company's
Investment/Retirement Plan Committee and a member of the
Executive and Nominating Committees.
2
<PAGE> 6
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JOHN CALASIBETTA Director since 1962.
Age 89.
Photo 3 Senior Vice President of the Company.
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NOMINEES FOR DIRECTORS WHOSE TERM EXPIRES JANUARY 1996
(CLASS II DIRECTORS)
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JOSE E. BLANCO, SR. Director since 1992.
Age 68.
Photo 4 Chairman of the Board (since 1987) of J.M. Blanco, Inc.
(wholesale pharmaceutical distribution). Mr. Blanco is Vice
Chairman of the Company's Compensation/Stock Option Committee
and a member of the Audit Committee.
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GEORGE R. LIDDLE Director since 1969.
Age 67.
Photo 5 Investment Adviser. Former Vice President, Kidder, Peabody &
Co., Inc. (stockbrokers), retired. Mr. Liddle is Chairman of
the Company's Audit Committee and a member of the
Investment/Retirement Plan Committee.
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GEORGE E. REINHARDT, JR. Director since 1985.
Age 65.
Consultant to the Company (since 1991) and formerly served as
Photo 6 its Senior Vice President (1991), Chief Financial Officer
(1976 to 1991) and Vice President, Finance (1981 to 1991).
Mr. Reinhardt is a member of the Company's Executive and
Nominating Committees.
3
<PAGE> 7
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NOMINEES FOR DIRECTORS WHOSE TERM EXPIRES JANUARY 1997 (CLASS
III DIRECTORS)
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RODNEY H. BRADY Director since 1973.
Age 61.
President and Chief Executive Officer, Bonneville
Photo 7 International Corporation (broadcast communications). Mr.
Brady is a director of Deseret Mutual Insurance Company,
First Security Corporation, Flying "J" Oil Corporation and
Smith's Food & Drug, Inc. Mr. Brady is a member of the
Company's Executive and Nominating Committees.
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JAMES R. MELLOR Director since 1979.
Age 64.
President (since 1991) and Chief Executive Officer (since
1993), former Chief Operating Officer (1991-1993) and
Executive Vice President (1986-1990), General Dynamics
Corporation (diversified defense and aerospace). Mr. Mellor
Photo 8 is a director of Kerr Group, Inc., General Dynamics
Corporation, Computer Sciences Corporation and GDE Systems,
Inc. Mr. Mellor is the Chairman of the Company's
Compensation/Stock Option Committee, Vice Chairman of the
Audit Committee and a member of the Investment/Retirement
Plan Committee.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL OF THE
NOMINEES.
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DIRECTOR WHOSE TERM EXPIRES JANUARY 1996 (CLASS II DIRECTOR)
- --------------------------------------------------------------------------------
CHARLES J. LEE Director since 1972.
Age 69.
Managing Director (since 1989), Smith Barney Shearson Inc.
(investment banking). Executive Vice President and Chief
Photo 9 Financial Officer (1987 to 1989), Mattel, Inc. (toy
manufacturer). Mr. Lee served as a director of Greyhound
Lines, Inc. during part of fiscal 1994. Mr. Lee is a member
of the Executive and Nominating Committees.
4
<PAGE> 8
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DIRECTORS WHOSE TERM EXPIRES JANUARY 1997 (CLASS III
DIRECTORS)
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CHARLES C. EDWARDS, M.D. Director since 1985.
Age 71.
President (since 1993) of California Healthcare Institute
(nonprofit association). Former President and Chief Executive
Photo 10 Officer, ScrippsHealth and Scripps Institutions of Medicine
and Science (health care) (1991-1993). Former President and
Chief Executive Officer, Scripps Clinic and Research
Foundation (health care) (1977-1991). Dr. Edwards is a
director of Molecular Biosystems, Inc. Dr. Edwards is a
member of the Company's Audit and Investment/Retirement
Plan Committees.
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FRANCIS G. RODGERS Director since 1982.
Age 68.
Author and Lecturer. Former Vice President, Marketing, IBM
(information processing systems), retired. Mr. Rodgers is a
Photo 11 director of Dialogic Corporation, Mercantile Stores, Inc. and
Milliken and Company. Mr. Rodgers is a member of the
Company's Investment/Retirement Plan and Compensation/Stock
Option Committees.
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MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board holds regular quarterly meetings and meets on other
occasions when required by special circumstances. In addition
to meeting as a group to review Company business, all
directors also devote their time and talents to the Board's
five principal standing Committees. The Committees, their
membership and primary functions, are as follows:
The Executive Committee, unless provided otherwise by law,
exercises all of the authority of the Board of Directors when
the Board is not in session. The current members of this
Committee are Robert E. Martini, Chairman, Rodney H. Brady,
Charles J. Lee, George E. Reinhardt, Jr. and Dwight A.
Steffensen.
The Audit Committee reviews significant audit and accounting
policies and practices, meets with the Company's independent
auditors and reviews the performance of the internal auditing
functions. The current members of this Committee are George
R. Liddle, Chairman, James R. Mellor, Jose E. Blanco and Dr.
Charles C. Edwards.
The Compensation/Stock Option Committee has the
responsibility for recommending to the Board the
compensation, bonus plans and stock options for the Company's
officers who are directors and for approving stock options
and bonuses for employees which are recommended by
management. This Committee also recommends to the Board the
annual and meeting fees for non-employee directors. The
current members of this
5
<PAGE> 9
Committee are James R. Mellor, Chairman, Jose E. Blanco, Sr.,
Vice Chairman and Francis G. Rodgers. The Committee's report
on executive compensation is on pages 14 through 16.
The Investment/Retirement Plan Committee has the
responsibility of reviewing and making investment decisions
relating to the retirement plans of the Company, as well as
overseeing and approving changes to those plans. The current
members of this Committee are Dwight A. Steffensen, Chairman,
Dr. Charles C. Edwards, George R. Liddle, James R. Mellor and
Francis G. Rodgers.
The Nominating Committee has the responsibility to recommend
to the Board persons to fill vacancies on the Board of
Directors. The current members of this Committee are Robert
E. Martini, Chairman, Rodney H. Brady, Charles J. Lee, George
E. Reinhardt, Jr. and Dwight A. Steffensen.
During fiscal 1994, there were nine meetings of the Board,
seven meetings of the Executive Committee, six meetings of
the Compensation/Stock Option Committee, five meetings of the
Audit Committee, two meetings of the Investment/Retirement
Plan Committee and none for the Nominating Committee. All
directors attended more than 75% of the aggregate of (a) the
total number of meetings of the Board, and (b) the total
number of meetings held by all Committees of the Board on
which they served as members.
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DIRECTOR COMPENSATION
Employee directors of the Company are not paid any fees, as
such, for service on the Board or on any Board Committee.
Each non-employee director received during fiscal 1994 an
annual fee of $30,000 for Board service and an attendance fee
of $2,000 for each Board meeting attended in person or $600
for each such meeting participated in by telephone. For
Committee meetings, non-employee directors received $1,000
for each Committee meeting attended in person or $600 for
each such meeting participated in by telephone. The Chairman
of each Committee who is a non-employee director received a
fee of $1,500 for each Committee meeting attended in person
or $900 for each telephone meeting of the Committee in which
he participated. Non-employee directors are also reimbursed
for all expenses incident to their Board service. Each
non-employee director who serves less than six months in a
fiscal year receives 50% of the annual fee, and if he serves
six months or more in a fiscal year, receives 100% of the
prevailing annual fee. Under the Company's Deferred
Compensation Plan, a non-employee director of the Company may
elect to defer up to 100% of these fees or any fixed amount
above $2,500 of such fees.
The Company has a nonqualified Capital Accumulation Plan for
its non-employee directors. The maximum benefit available to
these directors is $150,000, payable upon retirement in 120
equal consecutive monthly installments. If the non-employee
director has served for less than ten years, his benefit upon
retirement will be based upon 10% of the maximum benefit for
each year of Board service with a minimum of three years of
service required for inclusion in the plan. If a director
dies before the normal retirement age of 70 and his
termination from Board service, his beneficiary will receive
an amount equal to 100% of the amount the Company would have
paid the director had normal retirement age been attained.
6
<PAGE> 10
Each non-employee director is automatically entitled to an
option grant of 3,000 shares of Common Stock under the
Company's 1989 Stock Incentive Plan upon his initial election
or appointment to the Board, and is thereafter entitled to an
annual grant of 1,000 shares ("Annual Grant") only if the
Company attains a ten percent or greater return on common
equity in the preceding fiscal year. During fiscal 1994, each
non-employee director received an Annual Grant of 1,000
shares. If the amendments to the 1989 Stock Incentive Plan
are approved by shareowners, then these directors would be
entitled to an Annual Grant of 2,000 shares beginning in
1995, subject to the Company attaining such financial
results. See pages 19 through 26 for a description of these
amendments.
Mr. Blanco, a director of the Company and Vice Chairman of
its Compensation/Stock Option Committee, is Chairman of J. M.
Blanco, Inc. The Company, from time to time, has sold to and
purchased product from J. M. Blanco, Inc. in the normal
course of business. During fiscal 1994, the amounts of these
sales and purchases totaled $110,295 and $144,261,
respectively.
George E. Reinhardt, Jr. serves as a consultant to the
Company under a three-year consulting agreement entered into
in December 1991. The agreement provides for an annual fee of
$100,000, which was fully paid in a lump sum amount during
fiscal 1992.
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BENEFICIAL OWNERSHIP OF SECURITIES
PRINCIPAL The following table lists the beneficial ownership of each
SHAREOWNERS person or group who owned, to the Company's knowledge, more
than five percent of its outstanding voting securities, as
of October 31, 1994.
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<TABLE>
<CAPTION> NAME AND AMOUNT AND
ADDRESS OF NATURE OF PERCENT OF
BENEFICIAL TITLE OF BENEFICIAL OUTSTANDING
OWNER CLASS OWNERSHIP SHARES
-----------------------------------------------------------------------------------
<S> <C> <C> <C>
Ariel Capital Management, Inc.(1) Common Stock 3,758,084(1) 10.09
307 North Michigan Avenue
Chicago, Illinois 60601
FMR Corp.(2) Common Stock 2,584,200(2) 6.94
(including subsidiaries)
82 Devonshire Street
Boston, MA 02109
Robert E. Martini(3) Common Stock 2,335,726(4) 6.27
4000 Metropolitan Drive
Orange, California 92668
</TABLE>
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(1) This information was provided by Ariel Capital
Management, Inc. ("Ariel"), in its capacity as a registered
investment advisor. According to Ariel, as of October 31,
1994, Ariel had sole voting power over 2,647,489 shares,
shared voting power over 216,656 shares and sole dispositive
power over 3,758,084 shares.
(2) This information was provided by FMR Corp. ("FMR"), in
its capacities as serving as an investment advisor to various
registered investment companies and other funds as well as
serving as trustee or managing agent for various private
investment accounts. According to FMR, as of October 31,
1994, FMR had sole voting power over 451,600 shares and sole
dispositive power over 2,584,200 shares.
(3) Information as to beneficial ownership has been furnished
to the Company by Robert E. Martini as of October 31, 1994.
Except as indicated otherwise by the following notes, shares
shown beneficially owned are those to which Mr. Martini has
sole voting and dispositive power.
(4) Includes 40,746 shares which, as of October 31, 1994, may
be acquired within sixty days pursuant to the exercise of
stock options and 29,827 shares owned by Mr. Martini's wife.
7
<PAGE> 11
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VOTING SECURITIES The following table sets forth certain information regarding
OWNED BY the ownership of the Company's Common Stock October 31,
DIRECTORS AND 1994, by: (a) each director and nominee; (b) the chief
EXECUTIVE executive and the the four most highly compensated executive
OFFICERS officers named in the Summary Compensation Table (See
"Compensations of Executive Officers"); and, (c) all
directors and executive officers as a group.
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<TABLE>
<CAPTION>
AGGREGATE NUMBER
OF SHARES PERCENT
BENEFICIALLY OF OUTSTANDING
OWNED(1)(2) SHARES
---------------------------------------------------------------------------------------------
<S> <C> <C>
Jose E. Blanco, Sr. 2,668 *
Rodney H. Brady(3) 38,624 *
John Calasibetta 208,773 *
Neil F. Dimick 9,200 *
Dr. Charles C. Edwards 7,789 *
Phillip R. Engle 29,514 *
Charles J. Lee 11,095 *
George R. Liddle(4) 25,790 *
Robert E. Martini(5) 2,335,726 6.27
James R. Mellor 9,999 *
George E. Reinhardt, Jr. 83,600 *
Francis G. Rodgers 9,877 *
Milan A. Sawdei(6) 16,881 *
Dwight A. Steffensen 97,265 *
All directors and executive officers as a group
including those above (19 persons) 2,959,092 7.93
</TABLE>
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* Denotes ownership of less than 1% of the outstanding shares
of Common Stock.
(1) Information as to beneficial ownership by the directors
and executive officers named above has been furnished to the
Company by such individuals. Except as indicated otherwise in
the footnotes, shares shown as beneficially owned are those
to which the individual has sole voting and dispositive
power. Such shares, where applicable, may be subject to
community property laws and related statutes under which a
spouse may be entitled to share in the management of the
community property, which may include the right to vote or
dispose of the shares.
(2) Reflects the number of shares that could be purchased by
exercise of options exercisable as of October 31, 1994, or
within 60 days thereafter under the Company's stock option or
stock incentive plans, as follows: Jose E. Blanco,
Sr. - 2,668 shares; Rodney H. Brady - 6,667 shares; Neil F.
Dimick - 5,200 shares; Dr. Charles C. Edwards - 5,417 shares;
Phillip R. Engle - 27,952 shares; Charles J. Lee - 6,667
shares; George R. Liddle - 3,067 shares; Robert E.
Martini - 40,746 shares; James R. Mellor - 6,667 shares;
George E. Reinhardt, Jr. - 3,667 shares; Francis G.
Rodgers - 6,667 shares; Milan A. Sawdei - 16,281 shares;
Dwight A. Steffensen - 29,822 shares; and all directors and
executive officers as a group, including those above (19
persons) - 203,708 shares.
(3) Includes 881 shares held by a son living at home, 881
shares held by a son as custodian for another son and 30,195
shares held in trust by Mr. Brady as trustee for his own
benefit.
(4) Includes 22,723 shares held by Mr. Liddle as co-trustee
for the benefit of him and his wife.
(5) Includes 29,827 shares owned by Mr. Martini's wife.
(6) Includes 600 shares held by Mr. Sawdei as trustee for his
son.
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COMPLIANCE WITH Section 16(a) of the Securities Exchange Act of 1934
SECTION 16(A) ("Exchange Act") requires the Company's directors, officers
and persons who own more than ten percent of a registered
class of the Company's equity securities, to file initial
reports of ownership and changes in ownership of such
securities with the Securities and Exchange Commission and
the New York Stock Exchange. Directors, officers and greater
than ten percent beneficial owners
8
<PAGE> 12
Based solely upon a review of the copies of the forms
furnished to the Company and written representations from the
Company's directors and officers, the Company believes that
during the 1994 fiscal year all filing requirements
applicable to its directors and officers were satisfied.
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COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information for the fiscal
years ended September 30, 1994, and August 31, 1993 and 1992,
respectively, with respect to certain compensation awarded or
paid to the Company's Chief Executive Officer and its other
four most highly compensated executive officers
(collectively, the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
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<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS
--------------------------------- ------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND COMPEN- OPTIONS/ COMPEN-
PRINCIPAL SALARY BONUS SATION(2) SARS SATION(2)(3)
POSITION YEAR(1) ($) ($) ($) (#) ($)
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------
Robert E. Martini 1994 534,808 350,000 117,356(4) 10,000 34,278(5)
Chairman and
Chief 1993 559,154 200,000 111,373(4) 79,364 28,275(5)
Executive Officer 1992 460,308 250,000 -- 10,000 --
Dwight A.
Steffensen 1994 399,808 300,000 48,228(6) 20,000 2,520
President and
Chief 1993 412,077 150,000 46,847(6) 20,804 1,321
Operating Officer 1992 311,096 200,000 -- 10,000 --
Phillip R. Engle 1994 249,231 125,000 36,006(7) 15,000 2,772
Executive Vice
President, 1993 259,615 70,000 37,861(7) 5,000 1,256
Supplier
Relations and 1992 209,135 100,000 -- 5,000 --
Operations
Neil F. Dimick 1994 233,654 175,000 30,604(8) 20,000 2,520
Executive Vice
President, 1993 240,654 100,000 34,560(8) 8,000 709
Chief Financial
Officer 1992 175,769 125,000 -- 0 --
Milan A. Sawdei 1994 165,478 100,000 34,855(9) 15,000 2,520
Executive Vice
President, 1993 171,385 40,000 26,187(9) 5,000 943
Chief Legal
Officer and 1992 129,308 40,000 -- 2,500 --
Secretary
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</TABLE>
(1) The Company changed its fiscal year-end from August 31 to
September 30 during fiscal 1994. Therefore, all amounts
attributed to fiscal year 1994 are for the twelve months
ended September 30, 1994.
(2) As permitted by the rules promulgated by the Securities
and Exchange Commission, no amounts are shown for fiscal year
1992.
(3) Reflects Company contributions under the Company's
Pre-Tax Investment Retirement Account Plus Plan, unless
otherwise indicated in the following notes.
(4) Includes $63,000 and $68,250 of imputed compensation
reflecting the difference between the average market interest
rate for the Company and the interest-free loan to Mr.
Martini described on pages 18 and 19 during fiscal years 1993
and 1994, respectively.
(5) Includes $26,954 and $31,198 of allocated premiums paid
by the Company to a split-dollar life insurance plan on Mr.
Martini during fiscal years 1993 and 1994, respectively.
(6) Includes $19,887 and $21,897 of imputed compensation
reflecting the difference between the average market interest
rate for the Company and the interest-free loan to Mr.
Steffensen described on pages 18 and 19 for fiscal years 1993
and 1994, respectively.
9
<PAGE> 13
(7) Includes $11,868 and $13,650 of imputed compensation
reflecting the difference between the average market interest
rate for the Company and the interest-free loan to Mr. Engle
described on pages 18 and 19 for fiscal years 1993 and 1994,
respectively.
(8) Includes $9,844 and $12,174 of imputed compensation
reflecting the difference between the average market interest
rate for the Company and the interest-free loan to Mr. Dimick
described on pages 18 and 19 for fiscal years 1993 and 1994,
respectively.
(9) Includes $8,058 and $9,100 of imputed compensation
reflecting the difference between the average market interest
rate for the Company and the interest-free loan to Mr. Sawdei
described on pages 18 and 19 for fiscal years 1993 and 1994,
respectively.
-------------------------------------------------------------
EMPLOYMENT AND SEVERANCE AGREEMENTS
In May 1994, the Board authorized the Company to enter into
written employment agreements (the "Employment Agreements")
and severance agreements (the "Severance Agreements") with
Mr. Martini (as Chairman and Chief Executive Officer), Mr.
Steffensen (as President and Chief Operating Officer), Mr.
Engle (as Executive Vice President, Supplier Relations and
Operations), Mr. Dimick (as Executive Vice President, Chief
Financial Officer), and Mr. Sawdei (as Executive Vice
President, Chief Legal Officer and Secretary).
Each of the Employment Agreements is for a term of three
years. The Employment Agreements automatically extend on a
monthly basis so that the outstanding term is always three
years, subject to the option of either party to terminate the
automatic extension provision at any time. Pursuant to each
Employment Agreement, each Named Executive Officer is to
receive his then-effective annual base compensation, a bonus
that shall be no less than fifty percent of the average of
the Named Executive Officer's previous three annual bonuses,
and other benefits and allowances. In the event of death or
disability, each Named Executive Officer will receive the
compensation provided for under his Employment Agreement for
the term of the Agreement, calculated as if notice to
terminate had been given 30 days prior to such event.
Pursuant to the Employment Agreements, the Company will
indemnify each Named Executive Officer with respect to any
actions, claims or settlements arising out of the performance
of his duties, including the payment of all reasonable
attorneys' fees and necessary costs and expenses. In
addition, the Company will pay as incurred all reasonable
attorneys' fees and necessary costs and disbursements
incurred by the Named Executive Officer in connection with
any dispute under the Employment Agreement, whether or not
the Named Executive Officer prevails.
Pursuant to the Employment Agreements, a Named Executive
Officer's employment may be terminated without a claim for
damages arising against the Company (1) upon notice by the
Named Executive Officer, except for "good reason" discussed
below; (2) by mutual agreement between the Named Executive
Officer and the Company; or (3) by the Company for cause. If
the Employment Agreement is terminated by the Company for any
other reason, or if the Named Executive Officer terminates
the Employment Agreement for good reason (including, but not
limited to, an adverse change in such officer's position from
his position at the time he entered into the Employment
Agreement), he will be entitled to damages equal to the
present value equivalent of the compensation he would have
been paid under the Employment Agreement for the next three
years, less his earned income from other employment, if any.
The Severance Agreements with the Named Executive Officers
provide for payment of cash and other benefits in the event
of a voluntary or involuntary termination of
10
<PAGE> 14
employment within three years following a Change in Control
(as hereinafter defined) of the Company. Payment under the
Severance Agreements would consist of 2.99 times the average
annual compensation paid by the Company for the most recent
five taxable years of the Named Executive Officer ending
before the date of the Change in Control if, following a
Change of Control, such Named Executive Officer is terminated
without cause, such Named Executive Officer terminates for
any reason within 180 days after a Change in Control, or if
such Named Executive Officer terminates for good reason
(including, but not limited to, an adverse change in such
officer's position from his position at the time of the
Change in Control). The Severance Agreement continues until
three years and one day after a Change in Control or until
the Named Executive Officer receives the severance payment
under the Agreement.
Under the Severance Agreement, a Change in Control with
respect to the Company is deemed to occur 90 days prior to
(i) the acquisition by any person, entity or group, within
the meaning of Section 13(d) and 14(d) of the Exchange Act
(excluding for this purpose, (A) the Company or (B) any
employee benefit plan of the Company which acquires
beneficial ownership of voting securities of the Company) of
50% or more of beneficial ownership (within Rule 13d-3
promulgated under the Exchange Act) of the combined voting
power of the Company's then outstanding securities; (ii) any
rolling period of two consecutive years in which individuals
who at the beginning of such period constitute the Board of
Directors of the Company (and any new director whose election
or nomination for election was approved by a vote of at least
2/3 of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved) cease for
any reason to constitute a majority of the Board of
Directors; provided, however, no director shall be considered
to have been so approved if such director initially assumed
office as a result of either an actual or threatened
"election contest" (as described in Rule 14a-11 under the
Exchange Act) or other actual or threatened solicitation of
proxies or consent by or on behalf of any person other than
the Board of Directors, including as a result of any
agreement intended to avoid or settle any such election
contest or proxy contest; (iii) the approval by the Company's
shareowners of a dissolution or liquidation of the Company;
(iv) the sale (or similar transaction) of substantially all
of the Company's operating assets; or (v) a merger or
consolidation, or a transaction having a similar effect,
where (A) the Company is not the survivor, (B) the majority
of the Common Stock of the Company is no longer held by the
holders of Common Stock of the Company immediately prior to
the transaction, or (C) the Company's Common Stock is
converted into cash, securities or other property.
If any payment would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended
("Code"), then the Named Executive Officer shall be entitled
to receive an additional "gross-up bonus" in an amount
necessary to provide the Named Executive Officer with
sufficient after-income tax funds to fully pay all such
excise taxes on both the payment and the gross-up bonus.
Pursuant to the Severance Agreement, the Company will pay as
incurred all reasonable attorneys' fees and necessary costs
and disbursements incurred by the Named Executive Officer in
connection with any dispute under the Severance Agreement,
whether or not the Named Executive Officer prevails.
11
<PAGE> 15
STOCK OPTION GRANTS AND EXERCISES
The following tables provide information with respect to
stock options granted to and held by the Named Executive
Officers:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------
% OF TOTAL
OPTIONS/SARS
SECURITIES GRANTED TO
UNDERLYING EMPLOYEES IN
OPTIONS/SARS FISCAL YEAR EXERCISE PRICE EXPIRATION
NAME GRANTED (#) 1994 ($/SHARE) DATE
------------ ------------ -------------- ----------
<S> <C> <C> <C> <C>
Robert E. Martini 10,000(2) 2.0 $ 15.56 10/13/03
Dwight A. Steffensen 10,000(3) 2.0 15.56 10/13/03
10,000(4) 2.0 17.75 1/18/04
Phillip R. Engle 5,000(3) 1.0 15.56 10/13/03
10,000(4) 2.0 17.75 1/18/04
Neil F. Dimick 10,000(3) 2.0 15.56 10/13/03
10,000(5) 2.0 17.75 1/18/04
Milan A. Sawdei 5,000(3) 1.0 15.56 10/13/03
10,000(3) 2.0 17.75 1/18/04
</TABLE>
-------------------------------------------------------------
(1) The grant date present value is based on a Black-Scholes
model and assumes a risk-free rate of return of 6.5%, an
option term of ten years, a dividend yield of 1.99%, a stock
volatility of .2759 and a forfeiture risk of 3% for each of
the four years of vesting.
(2) One thousand shares granted as incentive stock options
and 9,000 shares granted as nonstatutory stock options. Both
granted at 100% of fair market value on the date of grant.
Options vest 20% one year after the date of grant, and then
yearly thereafter at 20%, 30% and 30%.
(3) Incentive stock options at 100% of fair market value on
date of grant. Options vest 20% one year after the date of
grant, and then yearly thereafter at 20%, 30% and 30%.
(4) Five thousand shares granted as incentive stock options
and 5,000 shares granted as nonstatutory stock options. Both
granted at 100% of fair market value on the date of grant.
Options vest 20% one year after the date of grant, and then
yearly thereafter at 20%, 30% and 30%.
(5) One thousand five hundred shares granted as incentive
stock options and 8,500 shares granted as nonstatutory stock
options. Both granted at 100% of fair market value on the
date of grant. Options vest 20% one year after the date of
grant and then yearly thereafter at 20%, 30% and 30%.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE MONEY OPTIONS
SHARES OPTIONS/SARS AT FY END (#) SARS AT FY END ($)
ACQUIRED ON VALUE -------------------------- --------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Robert E. Martini 0 0 19,873 79,491 $ (1) $8,150
Dwight A. Steffensen 0 0 20,661 42,643 (1) 8,150
Phillip R. Engle 0 0 24,452 22,000 130,443 4,075
Neil F. Dimick 0 0 5,200 22,800 (1) 8,150
Milan A. Sawdei 0 0 16,281 17,750 56,029 4,075
- -----------------------------------------------------------------------------------------------------------------------
<Caption
</TABLE>
(1) The exercise price of these exercisable options was
greater than the market price of the Common Stock as of
September 30, 1994. Accordingly, none of these options were,
as of that date, "In-the-Money."
12
<PAGE> 16
- --------------------------------------------------------------------------------
PENSION TABLE
RETIREMENT The following table shows the estimated annual benefits
BENEFITS payable under the Company's non-qualified Supplemental
Executive Retirement Plan ("SERP") at age 62 to persons in
specified compensation and years-of-service classifications,
based on a joint and 75 percent survivor annuity form of
retirement income. The table also includes benefits payable
under the Company's Capital Accumulation Plan ("CAP") for
executives who participate in the CAP, which was the SERP's
predecessor plan and which was frozen to new employee
participants on October 7, 1987.
-------------------------------------------------------------
<TABLE>
<CAPTION>
AVERAGE ANNUAL
COMPENSATION ESTIMATED ANNUAL RETIREMENT BENEFITS FOR
DURING HIGHEST THREE OF YEARS OF CREDITED SERVICE SHOWN BELOW
FINAL -----------------------------------------------
FIVE YEARS BEFORE RETIREMENT 10 20 30 40
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 200,000 $ 80,900 $134,300 $134,300 $134,300
400,000 184,100 290,800 290,800 290,800
600,000 287,300 447,300 447,300 447,300
800,000 391,900 605,200 605,200 605,200
1,000,000 498,500 765,200 765,200 765,200
</TABLE>
-------------------------------------------------------------
As of September 30, 1994, full years of actual credited
service in these plans are Mr. Martini -- 38 years; Mr.
Steffensen -- 9 years; Mr. Engle -- 19 years; Mr. Dimick -- 3
years; and, Mr. Sawdei -- 11 years.
Compensation for a particular year as used for the
calculation of retirement benefits under SERP includes base
salary received during the year (including salary deferred
under a salary deferral plan) and excludes all other
compensation. Benefits are reduced by the following amounts:
(1) the participant's primary insurance amount payable under
the Social Security Act at retirement age; (2) the
participant's benefit under the CAP; (3) an annuitized amount
based upon an assumed level of participation in the Company's
Pre-Tax Investment Retirement Account Plus Plan; and, (4) any
amounts owed by a participant to the Company (except to the
extent that such amount owed is under a program that
expressly provides that there will not be an offset).
Benefits are payable under the SERP in the form of a joint
and survivor annuity, consisting of periodic payments to each
participant or a lump sum distribution to a participant's
beneficiary should a participant die before attaining normal
retirement age. In the alternative, a participant may elect
to receive his or her benefit in a lump sum. A $5,000 funeral
benefit is available to a participant's estate, offset by any
funeral benefit paid under the CAP Plan. Because participants
may be required to pay income and payroll taxes based upon
payments made by the Company under SERP, the Company will pay
affected participants an additional amount that the Company
estimates will be equal to such tax liability. Generally, the
CAP benefit is a monthly retirement benefit paid over a
specified number of months that, at the election of a
participant, may be paid in a lump sum.
13
<PAGE> 17
- --------------------------------------------------------------------------------
REPORT OF THE COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION/
STOCK OPTION
COMMITTEE Notwithstanding anything to the contrary set forth in any of
the Company's previous filings
under the Securities Act of 1933, as amended, or the Exchange
Act that might incorporate future filings, including this
Proxy Statement, in whole or in part, the following report
and the Performance Graph on page 18 shall not be
incorporated by reference into any such filings.
The Company applies a consistent philosophy toward the
compensation for its executive officers. This philosophy is
based on the premise that the achievements of the Company
result from the coordinated efforts of all individuals
working toward its stated mission. The Company strives to
achieve those objectives through teamwork that is focused on
meeting the expectations of its customers, shareowners and
employees.
The Compensation/Stock Option Committee ("Committee") is
currently comprised of three (3) non-employee directors.
COMPENSATION PHILOSOPHY
The goals of the compensation program are to (1) align
individual contributions with business objectives and
performance; (2) enable the Company to attract, retain and
reward executive officers who contribute to the long-term
success of the Company; and, (3) motivate those executives to
advance shareowner interest. The Company's compensation
program for executive officers is based on the same two
policies applicable to compensation decisions for other
officers of the Company:
- The Company pays based on Company and individual
performance.
Executive Officers are rewarded based upon corporate
performance and individual performance. Corporate performance
is evaluated by reviewing the extent to which strategic and
business plan goals are met, including such factors as
increase in net earnings, return on equity, sales growth and
improvements in the Company's customer and employee
satisfaction index. Individual performance is evaluated by
reviewing individual efforts and accomplishments,
organizational and management development progress against
personal and functional area objectives and the degree to
which teamwork and Company values are fostered.
- The Company provides a total compensation package which is
competitive. The Company regularly compares its pay
practices for its executive officers with those of other
leading companies and sets, in part, its pay parameters
based on this review. The Company strives to set the
compensation paid to an individual based upon comparisons
to other executives inside the Company and at comparable
organizations. The Company believes that the Company's most
direct competitors for executive talent are not necessarily
all the companies that would be included in the peer group
established to compare shareowner returns. Consideration is
given to annual national surveys and each executive's
talent and experience. Thus, the groups used for evaluation
of competitive compensation are not the same as the peer
group index in the Comparison of Five Year Cumulative Total
Return graph included in this Proxy Statement.
14
<PAGE> 18
COMPENSATION VEHICLES
The Company has a simple total compensation program that
consists of cash- and equity-based compensation. Having a
compensation program that allows the Company to successfully
attract and retain key employees permits it to provide
efficient service to customers, enhance shareowner values,
foster Company values and teamwork, and adequately reward
employees. These vehicles are:
- Cash-Based Compensation.
Cash-based compensation represents a combination of base
salary and annual incentive based bonus. Salary levels are
determined based on a review of competitive data and
internal pay levels for various positions. Base salary
levels are typically at the midpoint in the wholesale
pharmaceutical industry but below the median in comparable
size companies.
The annual incentive based bonus is measured against the
achievement of financial criteria established by senior
management and the Board each year as well as qualitative
improvements in customer satisfaction, employee
satisfaction and individual performance. The financial
measures for the 1994 fiscal year were based upon a
comparison of actual performance with goals established
near the beginning of the year, with respect to net
earnings, return on equity, sales growth and, for some
executive officers, operating expenses relative to the
Company's sales growth rate. The Chief Executive Officer
and Chief Operating Officer may earn a maximum of 115% of
base salary and other executive officers may qualify for a
maximum award of between 75% to 100% of base salary. In
practice, salary and bonus combined have typically placed
the Company at the midpoint in the wholesale pharmaceutical
industry, but below the median for comparable size
companies.
- Equity-Based Compensation.
The purpose of the Stock Option Program is to provide
longer term incentives to employees to work to maximize
shareowner value. This program also utilizes vesting
periods designed to encourage key employees to continue in
the employ of the Company. The Committee, based on
recommendations of compensation consultants, management and
historical practices, grants stock options to a broad-based
management population representing approximately seven
percent of the total employee pool.
CEO COMPENSATION
Actions recommended by the Committee (and approved by the
Board) specific to the Chief Executive Officer during fiscal
1994 were as follows:
- Salary adjustment, Grant of Bonus and Stock Option in 1995
for fiscal year 1995.
Mr. Martini was granted a 3.9% salary increase, his first
salary increase since October 1991, which brought his base
pay to $535,000 per annum. This adjustment was made in
large part because of the increase in revenues and
operating earnings for the year ended September 30, 1994,
and recent increases in the Company's operating margin
percentage.
Mr. Martini was evaluated by the Committee against several
criteria that form the Company's bonus plan. The Company's
bonus plan is comprised of both objective and subjective
elements. Those objective criteria include an evaluation
related to meeting
15
<PAGE> 19
the annual corporate objectives, increases in net earnings,
return on equity, sales growth, and maintaining operating
expenses as a factor of sales growth. These criteria allow
Mr. Martini to earn up to 35%, 20%, 20%, 15% and 10%,
respectively, of his base salary. An additional 15% of Mr.
Martini's base salary may be earned if the Committee
determines that he has met other non-financial and numeric-
based management objectives. Based upon an evaluation of
these objectives, the percentage of achievement by Mr.
Martini in comparison with the potential amounts to be
earned under the Bonus Plan, the Committee awarded Mr.
Martini the sum of $350,000.
Mr. Martini also participated in the Company's equity-based
compensation program. Options granted in fiscal 1994 are
shown under the caption "Option Grants in Last Fiscal
Year," and an additional option for 15,000 shares was
granted in October 1994. In considering the grant of
options to Mr. Martini, the Committee took into
consideration those items discussed above.
The Committee believes that the Company's most direct
competitors for executive talent are not necessarily all of
the companies that would be included in a peer group
established to compare shareowner returns. Thus, the groups
used for evaluation of competitive compensation are not the
same as the peer group index in the Comparison of Five Year
Cumulative Total Return graph included in this Proxy
Statement.
Committee Policy Regarding Compliance with Section 162(m) of
the Code:
The 1993 Omnibus Budget Reconciliation Act ("OBRA") became
law in August 1993. Under the law, income tax deductions of
publicly-traded companies may be limited to the extent total
compensation (including base salary, annual bonus, stock
option exercises and non-qualified benefits) for certain
executive officers exceeds $1,000,000 in any one year. Under
OBRA, the deduction limit does not apply to payments which
qualify as "performance-based." To qualify as
"performance-based," compensation payments must be made from
a plan that is administered by a committee of outside
directors and be based on achieving objective performance
goals. In addition, the material terms of the plan must be
disclosed to and approved by shareowners, and the Committee
must certify that the performance goals were achieved before
payments can be awarded.
The Committee intends to consider and evaluate all the
Company's compensation programs in light of the OBRA
legislation and related regulations. However, the Company may
pay compensation which is not deductible in certain
circumstances if sound business judgment so requires.
In order to qualify the Company's 1989 Stock Incentive Plan
as "performance-based" the Company is proposing an amendment
to this Plan in this Proxy Statement which establishes a
maximum annual grant of option shares to an employee under
this Plan (see "Amendments to the 1989 Stock Incentive Plan"
below).
Compensation/Stock Option Committee of the Board of Directors
James R. Mellor, Chairman
Jose E. Blanco, Sr., Vice Chairman
Francis G. Rodgers
16
<PAGE> 20
-------------------------------------------------------------
COMPENSATION/STOCK OPTION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
The present members of this Committee are Messrs. Blanco,
Mellor and Rodgers. During fiscal 1994, Messrs. Brady and Lee
also served on the Committee. Mr. Brady was an executive
officer of the Company from 1972 to 1978 and Mr. Lee served
as an executive officer from 1972 to 1974.
Mr. Blanco, a director of the Company and Vice Chairman of
its Compensation/Stock Option Committee, is Chairman of J.M.
Blanco, Inc. The Company, from time to time, has sold to and
purchased product from J. M. Blanco, Inc. in the normal
course of business. During fiscal 1994, the amounts of these
sales and purchases totaled $110,295 and $144,261,
respectively.
-------------------------------------------------------------
PERFORMANCE GRAPH
The following graph compares the cumulative total shareowner
return (stock price appreciation plus dividends) for the five
years ending September 30, 1994, on the Company's Common
Stock with the cumulative return of the American Stock
Exchange Index, New York Stock Exchange Index and the stocks
for peer companies with Standard Industrial Classification
Code 5122, drugs and proprietary wholesale (weighting the
returns of these peer companies based on stock market
capitalization). The peer companies selected by the Company
are Akorn, Inc.; Allou Health & Beauty; Bindley Western
Industries, Inc.; Cardinal Health, Inc.; Choice Drug Systems,
Inc.; D & K Wholesale Drug, Inc.; FoxMeyer Corporation;
Herbalife International, Inc.; McKesson Corporation; Moore
Medical Corporation; National Intergroup, Inc.; Showcase
Cosmetics; and Tristar Corporation. Cumulative total
shareowner return (on an assumed initial investment of $100
at August 31, 1989), as determined at the end of the
Company's fiscal year, reflects the change in stock price,
assuming reinvestment of dividends for the five years and one
month ended September 30, 1994. As previously indicated, the
Company changed its fiscal year-end during fiscal 1994 from
August 31 to September 30. Additionally, the Company switched
from the American Stock Exchange to the New York Stock
Exchange as it listed its Common Stock on the New York Stock
Exchange during fiscal 1994.
As a result of the transaction by Eli Lilly & Company in
acquiring the pharmacy benefit manager operation of McKesson
Corporation, an entity of the Company's peer company index
("Peer Group"), the per share price of McKesson stock
increased by approximately 100% during the Company's 1994
fiscal year. The market capitalization of McKesson
constituted approximately 58% of the Company's Peer Group as
of September 30, 1994. The combination of the increase in
value of McKesson stock and its significant market
capitalization within the Peer Group enhanced the performance
of this group.
17
<PAGE> 21
<TABLE>
<CAPTION>
CRSP Index for
AMEX Stock Self-D CRSP Index for
Measurement Period Bergen Brun- Market (US etermined Peer NYSE Stock
(Fiscal Year Covered) swig Corp. Companies) Group Market
<S> <C> <C> <C> <C>
08/31/89 100.0 100.0 100.0 100.0
08/31/90 87.6 83.4 88.6 93.3
08/30/91 104.8 103.2 122.2 118.5
08/31/92 94.5 107.6 119.3 128.5
08/31/93 87.8 136.8 149.8 147.8
09/30/94 84.5 135.6 250.4 153.1
</TABLE>
Assumes $100 invested 8/31/89 in Bergen Brunswig Corporation
Common Stock, New York Stock Exchange Index, American Stock
Exchange Index and Industry peer group (drugs and
proprietary, wholesale companies) (dividends reinvested),
respectively. Fiscal year ending September 30.
-------------------------------------------------------------
LOAN CERTAIN TRANSACTIONS
EXECUTIVE
PROGRAMS In April 1990, the Board approved an unfunded deferred
compensation loan program available to the executive officers
of the Company (the "Executive Loan Program") for the
purpose of providing them with an incentive to remain with
the Company. Under this program, loans are available to
all executive officers of the Company, except those who are
also members of the Board. Each outstanding loan matures
upon the officer's termination of employment unless extended
by the Board, and is evidenced by a secured promissory
note in the principal amount of the loan which bears no
interest. An executive officer may borrow up to 125%
of his or her annual salary then in effect upon the
date of request. The value of collateral securing the loan
must equal at least 125% of the principal loan amount.
Although no interest is charged by the Company to the
employee, the employee is deemed by the Internal Revenue
Service to have compensation in the amount of interest
calculated according to a formula prescribed by the Internal
Revenue Service. The employee is also deemed to have paid
interest in a like amount to the Company. The Company has the
right at any time to amend, modify or terminate this program
but is limited in terminating or modifying outstanding loans.
In addition to the above loans, the Board has approved making
loans to other key employees under terms similar to the
Executive Loan Program and the principal amount of these
loans outstanding as of September 30, 1994, to Messrs.
Martini and Steffensen
18
<PAGE> 22
were $1,400,000 and $481,250, respectively. The loans to
Messrs. Engle, Dimick and Sawdei, made pursuant to the
Executive Loan Program, are in the amounts of $300,000,
$281,250 and $200,000, respectively. Such amounts represent
the largest aggregate amount of each executive officer's
indebtedness during the Company's last fiscal year.
The Company entered into a life insurance plan for Mr.
Martini in 1985. Under this insurance plan, the Company pays
the premiums on certain life insurance policies which provide
him (or his assignees) with a death benefit of $1,400,000 and
which may provide certain alternative benefits in the event
of a lifetime surrender of the policy. The Company expects to
maintain this policy in force until his 75th birthday,
whether he is employed by the Company or has retired.
- --------------------------------------------------------------------------------
2. APPROVAL OF THE AMENDMENTS TO THE 1989 STOCK INCENTIVE PLAN
(Item 2 on Proxy Card)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Board proposes that the shareowners approve the
amendments to the 1989 Stock Incentive Plan of Bergen
Brunswig Corporation and Subsidiary Companies (the "Plan")
described below. In October 1994, the Board adopted
amendments to the Plan (the "Plan Amendments"), several of
which are presented for shareowner approval. For a detailed
description of the Plan Amendments, see "Plan Amendments to
be Approved by Shareowners" below. The following is a summary
of the material provisions of the Plan and the Plan
Amendments.
A FULL COPY OF THE AMENDMENTS TO THE PLAN PRESENTED FOR
SHAREOWNER APPROVAL IS ATTACHED AS APPENDIX "A" TO THIS PROXY
STATEMENT. ALTHOUGH THE MAJOR FEATURES OF THESE AMENDMENTS
ARE SUMMARIZED BELOW, THIS IS ONLY A SUMMARY AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO THE COMPLETE TEXT OF THE
AMENDMENTS. CAPITALIZED TERMS NOT OTHERWISE DEFINED HEREIN
HAVE THE MEANINGS ASCRIBED TO THEM IN THE AMENDED PLAN. A
FULL COPY OF THE AMENDED PLAN IS AVAILABLE FROM THE COMPANY
UPON REQUEST.
Awards. Under the Plan, which was initially approved by the
shareowners at the 1989 annual meeting of shareowners,
DESCRIPTION OF incentive stock options ("ISOs"), nonstatutory stock
THE PLAN options ("NSSOs") (together, the "Options") and stock
appreciation rights ("SARs") may be granted to officers and
key employees of the Company or its subsidiaries with respect
to the Common Stock of the Company. The Options and SARs may
be referred to as "Awards." In addition, initial grants of
director stock options are granted to non-employee directors
("Eligible Directors"), and Annual Grants may be awarded upon
the Company attaining certain pre-established financial
results (collectively, the "Director Options").
Limit on Awards under the Plan. Currently, the maximum number
of shares with respect to which Options and SAR's may be
granted is 1,875,000, of which 187,500 shares are utilized
for nondiscretionary grants of NSSO's to Eligible Directors
and the remaining shares available for grants of Options and
SARs to employees and other persons as described in the Plan
and as determined by the Committee. There are 609,311
remaining shares available for grants under the Plan of which
133,750 shares are reserved for Director Options. There is no
specific limit on the number of shares which may be issued in
order to preserve the benefits intended to be available under
the Plan in the
19
<PAGE> 23
event of a stock dividend, merger, consolidation or other
event described in the Plan. The shares delivered under the
Plan are available from the authorized but unissued shares of
the Company or from shares reacquired by the Company. Shares
subject to lapsed or cancelled Options or SARs (other than
Options cancelled upon exercise of SARs) are available for
further Awards. The Plan Amendments will impose a limitation
on the number of shares allowed to be granted to any one
individual during any fiscal year of 150,000 shares.
Additionally, the Plan Amendments provide that the number of
shares available for grant with respect to Awards and
Director Options in any fiscal year shall equal the number of
shares remaining available for grant from prior years plus an
increased number of shares (if applicable) to be calculated
as follows. If at any time during the fiscal year the number
of shares available for grant to individuals other than
Eligible Directors falls below 1% of the issued shares of
Common Stock as of the end of the immediately preceding
fiscal year, then the maximum number of shares which may be
granted in the current fiscal year shall be increased by an
amount equal to 1% of the issued shares of Common Stock as of
the last day of the immediately preceding fiscal year. The
amendments provide that any increase in the number of shares
which may be granted may only occur once during any fiscal
year.
Administration. Except for the grants of Director Options,
the selection of participants in the Plan and the extent of
the participation of each is determined by a committee
consisting of not less than three directors (the "Committee")
whose members are designated by the Board of Directors and
who are eligible to receive Director Options, but will not be
eligible to receive Options or SARs under the Plan. The
Committee's determination is made after such consultation
with management. The Committee administers the Plan, subject
to such resolutions adopted by the Board of Directors. Under
the Plan Amendments, the members of the Committee would be
limited to directors who are both "disinterested persons" as
defined in Rule 16b-3 under the Exchange Act and "outside
directors" for purposes of OBRA.
Eligibility for Director Options. Only Eligible Directors are
eligible to receive Director Options. Currently, each
Eligible Director receives an annual grant of 1,000 shares
immediately following the adjournment of each annual
shareowner's meeting if the return on common equity of the
Company for the immediately preceding fiscal year is equal to
or greater than ten percent (10%). The Plan Amendments will
increase this annual grant amount to 2,000 shares beginning
in 1995. In addition, Eligible Directors automatically
receive a Director Option of 3,000 shares upon their initial
election to the Board. All Director Options are 100% vested
upon grant, and are exercisable in equal installments over
three years. Director Options expire ten years from the date
such option is granted and may be exercised only by the
Eligible Director, except in the case of his death. In the
event of death of the Eligible Director, Director Options may
be exercised by the person to which the Eligible Director's
rights under the Director Option are transferred by will or
the laws of descent and distribution, but may not be
exercised beyond the expiration date of the Director Option.
Under the Plan Amendments, a Director Option would be
transferable to members of the Eligible Director's immediate
family, including trusts and other certain entities which are
solely for the benefit of such family members.
Eligibility for Options and SARs. The persons eligible to
receive Options and SARs under the Plan consist of key
employees (including officers) and, in some instances, other
persons who are actively engaged in the conduct of the
business of the Company or its
20
<PAGE> 24
subsidiaries. The persons receiving Options and SARs under
the Plan ("Optionees") currently total approximately 420 in
number. At the discretion of the Committee, an Optionee may
receive both Options and SARs.
Stock Options. Options granted under the Plan may be either
NSSOs or ISOs. Optionees may not receive ISOs which first
become exercisable during any calendar year on shares with a
value in excess of $100,000 on the date of grant. Each Option
granted under the Plan expires not more than ten years from
the date such option is granted and may be exercised, in the
case of employees, only after not less than one year of the
Optionee's continued employment and (except in the event of
death, disability or retirement) only during the continuance
of employment with the Company or one of its subsidiary
companies. Each Option is exercisable over the term of the
Option in periodic installments or in full as the Committee
may determine at the time the Option is granted. In the event
of retirement at or after age 65, Options remain exercisable
for a period of 90 days following retirement. In the event of
the death or disability of an Optionee, Options granted to
the Optionee may be exercised by the person to which such
Optionee's rights under the Option are transferred by will or
the laws of descent and distribution, but not beyond the
earlier of the original expiration date of the Option or 365
days after the Optionee's death. Upon termination for
misconduct, an Option may not be exercised after notice of
termination. Upon termination of employment for any reason
other than as described above, any Options previously granted
to, but not exercised by, the Optionee will be exercisable,
in certain circumstances, for a period of ninety days
following such termination. Under the Plan Amendments, (i)
the exercise period upon retirement for Options granted after
January 26, 1995 will be automatically extended until the end
of the exercise period, and, (ii) with respect to Options
granted prior to January 26, 1995, the Committee will be
permitted, in its discretion, to extend the exercise period
of Options in the event of retirement, but in no case for a
period longer than the expiration date of the Option.
Transferability. An Option may not be transferred except by
will or the laws of descent and distribution, and may be
exercised only by such Optionee. Under the Plan Amendments,
the Committee would have discretion to grant Options which
would be transferable to members of the Optionee's immediate
family, including trusts and certain other entities which are
solely for the benefit of such family members.
Exercise Price. The price at which shares may be purchased
upon exercise of any NSSO will not be less than 50% of the
fair market value of such shares on the date such option is
granted or, in the case of Director Options, at 100% of the
fair market value of such shares on the date such option is
granted. In the case of an ISO, the exercise price will not
be less than 100% of the fair market value of such shares on
the date of grant, or 110% of such value in the case of ISOs
granted to ten percent (10%) shareowners. Upon exercise, the
shares are to be paid for in full in cash or, unless
prohibited by the Committee, through the delivery of shares
of Common Stock, with a value equal to the total option
price, or a combination of cash, shares or such other
consideration acceptable to the Committee.
Stock Appreciation Rights. SARs may be granted to Optionees
(other than Eligible Directors) under the Plan. Any SAR is
exercisable at such time as the Committee determines, but
only upon surrender of the related Option and only to the
extent that the related Option (or the portion thereof as to
which such SAR is exercised) is exercisable. Upon exercise of
a SAR the holder is entitled to receive the excess of the
fair market
21
<PAGE> 25
value of the shares for which the right is exercised over the
option price under the related Option. For administrative
convenience, the Plan allows the Committee to provide that
any exercise of a SAR by a person subject to the rules of
Section 16(b) of the Exchange Act during the third through
the twelfth business day after the release of the Company's
quarterly financial results will be deemed to occur on the
day during such period on which the price of the Company's
Common Stock was the highest.
The Committee has the authority to determine whether the
value of a SAR is paid in cash or shares of Common Stock of
the Company, or both. The Committee may at any time amend,
suspend or terminate any SAR. An SAR has not been granted
under the Plan.
Certain Adjustments. In the event that the shares of Common
Stock should, as a result of a stock split, stock dividend,
combination or exchange of shares, exchange for other
securities, reclassification, reorganization, or other such
similar change, be increased or decreased or changed into or
exchanged for a different number or kind of shares of Common
Stock or other securities of the Company, or of another
corporation, then (a) there shall automatically be
substituted for each share of Common Stock subject to an
unexercised Option and Director Option granted under the Plan
and, each share of Common Stock available for additional
grants of Options and Director Options under the Plan, the
number and kind of shares of Common Stock or other securities
into which each outstanding share of Common Stock shall be
changed or for which each such share shall be exchanged, (b)
the option price shall be increased or decreased
proportionately so that the aggregate purchase price for the
securities subject to the Option or Director Option shall
remain the same as immediately prior to such event and (c)
the Board shall make such other adjustments to the securities
subject to Options and Director Options and make such other
modifications of the Plan as may be appropriate and
equitable. Any adjustment may provide for the elimination of
fractional shares.
Amendments, Suspension or Discontinuance of the Plan. The
Board may amend, suspend or discontinue the Plan at any time
provided that shareowner approval will be required if
necessary to comply with any applicable rules.
Termination of the Plan. No Award or Director Option may be
granted under the Plan after October 20, 1999.
Federal Income Tax Consequences of the Plan. The federal
income tax consequences of the Plan are as follows:
(1) With respect to NSSOs and Director Options granted under
the Plan: Except as noted in (4) and (5) below, when an
Optionee or Eligible Director exercises an option, the
difference between the option price and any higher fair
market value of the shares on the date of exercise will be
ordinary income to the optionee and the Company will be
allowed a deduction for federal income tax purposes.
(2) With respect to ISOs granted under the Plan: When an
employee exercises an ISO while employed by the Company or a
Subsidiary or within a three month (one year for disability)
period after termination of employment, no ordinary income
will be recognized by the Optionee at that time but the
excess of the fair market value of the shares acquired by
such exercise over the option price will be an adjustment to
taxable income for purposes of the federal alternative
minimum tax applicable to individuals. If the shares acquired
upon exercise are disposed of more than one year after the
date of exercise and two years after the date of grant, the
excess of the sale proceeds over the aggregate option price
of such shares will be long term capital gain, but the
Company will not be
22
<PAGE> 26
entitled to any tax deduction with respect to such gain.
Except as noted in (4) below, if the shares are disposed of
prior to such dates (a "disqualifying disposition"), the
excess of the fair market value of such shares at the time of
exercise over the aggregate option price (but not more than
the gain on the disposition if the disposition is a
transaction on which a loss, if realized, would be
recognized) will be ordinary income at the time of such
disqualifying disposition (and the Company or its Subsidiary
will be entitled to a federal tax deduction in a like
amount).
(3) With respect to SARs under the Plan: Except as noted in
(4) and (5) below, when an Optionee exercises a SAR granted
to him under the Plan, the amount of cash and the fair market
value of any shares of Common Stock received will be ordinary
income to the Optionee and the Company will be allowed a
deduction for federal income tax purposes.
(4) Special rules: If an Optionee who is subject to Section
16(b) of the Exchange Act receives shares by reason of the
exercise of an Option or SAR, there is no ordinary income
recognized at that time unless the election described below
is made. Such Optionee will instead recognize ordinary income
equal to the fair market value of the shares received (less
the amount paid for the shares, if any) on the first day the
sale of such shares at a profit is no longer subject to
Section 16(b) of the Exchange Act and the Company, or its
Subsidiary, will be entitled to a deduction of a like amount
for federal income tax purposes at that time. Income tax
regulations state that such date is six months (less one day)
after the acquisition of such shares in the case of shares
received by reason of the exercise of an Option or SAR
notwithstanding any extension of the period during which
Section 16(b) is applicable because of other purchases after
such date of acquisition. However, such a participant may
elect within 30 days after the transfer of such shares to
have the normal rules described in (1) or (3) above apply to
the receipt of such shares.
(5) The Plan permits the Company to grant an NSSO if the
exercise price thereof is not less than 50% of the fair
market value of the underlying shares as of the date such
Option is granted. If the exercise price of an Option granted
under the Plan is less than the fair market value of the
stock as of the date the Option is granted, the Option might
not be "performance-based" under the provisions of OBRA, and
therefore the Company could be deprived of a tax deduction
with respect to such Option to the extent such Option caused
the total taxable compensation of an executive officer
subject to Section 162(m) of the Code to whom the Option was
granted to exceed $1,000,000 in a given year.
All Options previously granted under the Plan had an exercise
price of not less than 100% of the fair market value as of
the date of grant.
23
<PAGE> 27
The following individuals and groups were granted Options in
October 1994 under the Plan, as amended:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
BERGEN BRUNSWIG CORPORATION
1989 STOCK INCENTIVE PLAN
---------------------------
NAME NUMBER OF SHARES
---------------------------------------------------------------------------------------------
<S> <C>
Robert E. Martini 15,000
Dwight A. Steffensen 10,000
Phillip R. Engle 5,000
Neil F. Dimick 5,000
Milan A. Sawdei 5,000
Executive Officers as a group (8 persons) 47,500
Non-Executive Officer Employees as a group (131 persons) 227,000
----------------------------------------------------------------------------------------------------
</TABLE>
On December 15, 1993, the Internal Revenue Service ("IRS")
released proposed regulations (the "Proposed Regulations")
REASONS FOR under Section 162(m) of the Code, which was adopted
PROPOSALS as part of OBRA. For all years commencing on or after
January 1, 1994, Section 162(m) denies a federal income tax
deduction to publicly held corporations for compensation in
excess of $1 million ("Deduction Limitation") paid to certain
designated officers of these corporations, generally being
the chief executive officer on the last day of the taxable
year and the four other most highly paid executive officers
who are so employed on the last day of the taxable year
unless such compensation meets certain exceptions, including
as a result of being paid pursuant to qualified
performance-based compensation plans established by a
compensation committee consisting solely of two or more
outside directors, the material terms of which are disclosed
to and approved by the Company's shareowners before payment.
Special rules apply to stock options, in part requiring that
they be granted pursuant to a plan approved by the
shareowners which limits the number of shares for which
options may be granted to any one individual during a
specified period. The Proposed Regulations provide transition
rules ("Transition Rules") which, among other things, treat
plans which satisfy the shareowner approval requirements of
Section 16b-3 of the Exchange Act as having satisfied the
Section 162(m) shareowner approval requirement until the
earlier of (i) the termination or material modification of
the Plan or (ii) the date of the first shareowner meeting
after December 31, 1996. In addition, for exempted plans, the
individual limit requirement will be treated as having been
met for the transition period by plans which establish an
aggregate number of shares for which options or rights can be
granted.
The Board, in seeking to bring the Plan into compliance with
Section 162(m) of the Code, approved, on October 20, 1994, an
amendment to the Plan limiting the number of shares of the
Company's Common Stock for which options could be granted to
any one individual during any fiscal year to 150,000 shares,
and to restrict the membership of the Committee to directors
who meet the requirements of both OBRA and Exchange Act. This
amendment is subject to the approval by the shareowners.
Subject to limitations set forth in paragraph (5) on page 23,
the Company believes that if this amendment is approved by
the shareowners at the January 26, 1995 Annual Meeting, the
IRS should recognize any compensation arising as a result of
Option grants as qualifying for full deductibility under the
Proposed Regulations.
24
<PAGE> 28
Additionally, grants under the Plan are not transferable
except by laws of descent and distribution. However, in order
to facilitate the estate planning for Optionees and Eligible
Directors, the Board has amended the Plan, subject to
shareowner approval, to permit the grant of Options and
Director Options which would be transferable to members of
the immediate family, including trusts and certain other
entities which are solely for the benefit of such family
members of the Optionee or the Eligible Directors, as the
case may be.
The Board approved the "replenishment" or "evergreen"
provisions described above pertaining to the number of shares
available for grant under the Plan because it believes that
its stock option program is an important factor in
attracting, retaining and motivating individuals who will
dedicate their maximum efforts toward the advancement of the
Company. The Board believes this amendment furthers these
objectives by assuring continuing availability of stock
options in appropriate circumstances. The Board also believes
that the Plan Amendment submitted to shareowners will help to
contain costs by reducing the number of times which the Plan
must be submitted to shareowners for the purpose of
increasing the authorized shares under the Plan.
The Board approved the increase in the number of shares which
will be available for Director Options to Eligible Directors
on an annual basis from 1,000 to 2,000 beginning in 1995
because it believes that the Company's stock option program
for Eligible Directors is an important factor in attracting
and retaining highly qualified and dedicated individuals to
serve on the Board. The Board believes that this amendment
furthers these objectives by rewarding directors for their
service.
The Plan currently enables the Committee which administers
the Plan to determine the exercisability schedule of Options
and SAR's granted to employees under the Plan. The vesting
schedule for Director Options is set forth in the current
Plan.
The Board approved, subject to shareowner approval, the Plan
Amendment which (i) automatically extends the exercise period
of an Option after retirement (but not beyond the expiration
date of the Option) to the expiration date of the underlying
Option for Options granted after January 26, 1995, and (ii)
permits the Committee, in its discretion, to extend such
period with respect to previously granted Options in order to
reward Optionees who have contributed to the growth of the
Company and provide the Committee with greater flexibility in
administering the Plan..
In sum, the Plan Amendments to be approved by shareowners
would (i) limit the number of NSSO's and SARs authorized for
PLAN AMENDMENTS grant to any participant during any fiscal year
TO BE APPROVED to 150,000 shares; (ii) limit the membership of the
BY SHAREOWNERS Committee to directors who are both "disinterested
persons" as defined in Rule 16b-3 under the Exchange
Act and "outside directors" as defined for purposes
of OBRA and the regulations promulgated thereunder; (iii)
increase the number of shares annually available for Director
Options to Eligible Directors from 1,000 to 2,000 shares
beginning in 1995; (iv) provide for the transferability of
Options and Director Options in limited circumstances; (v)
provide that the maximum number of shares authorized for
grant under the Plan during any fiscal year may be increased
by one percent (1%) of the shares of Common Stock issued at
the end of the preceding fiscal year; and (vi) automatically
extend the exercise period of an Option granted after January
26, 1995, following retirement to the expiration date of the
underlying Option and permit the Committee, in its
discretion, to extend such period with respect to previously
granted Options.
25
<PAGE> 29
OTHER In addition, the Board has adopted certain other amendments
AMENDMENTS to the Plan which do not materially increase the benefits
accruing to Optionees and Eligible Directors. These
amendments do not require shareowner approval under
applicable law or pursuant to the terms of the Plan.
The affirmative vote of a majority of the shares of Common
Stock that are actually cast at the meeting is required for
approval of the Plan Amendments.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF
THE PLAN AMENDMENTS.
-------------------------------------------------------------
3. OTHER MATTERS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
At the time this Proxy Statement was published, the Board
knew of no other matters constituting a proper subject for
action by the shareowners which would be presented at the
meeting. However, if any matters properly come before the
meeting, it is the intention of the persons named in the
enclosed proxy card to vote the shares represented by said
proxies in accordance with their judgment on such matters.
-------------------------------------------------------------
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Article VII of the Company's Restated Certificate of
Incorporation ("Restated Certificate"), every person who is
or was a director, officer, employee or agent of the Company
and the legal representative of such a person is entitled to
receive indemnification from the Company to the fullest
extent permitted by law. Under New Jersey law, directors and
officers may be indemnified in certain situations, subject to
the Company's having taken certain actions and the directors
and officers having met certain specified standards of
conduct. In 1986, the Company entered into individual
agreements (collectively, the "Indemnity Agreement") to
indemnify each of its directors against liabilities and
defense costs to the extent that such directors would have
been insured under the director and officer liability
insurance policies which were in effect on December 31, 1984
(the "1984 Policy"). The 1984 Policy afforded the broadest
coverage for liabilities arising under ERISA, securities and
antitrust laws. The obligation of the Company to indemnify a
director under the Indemnity Agreement is limited to $30
million, the maximum coverage available under the 1984
Policy. However, the Indemnity Agreement does not limit a
director's right to recover in excess of $30 million from the
Company if the director is otherwise entitled to statutory
indemnification. The Indemnity Agreement was ratified by the
shareowners at the December 1986 Annual Meeting. In addition,
the Company currently maintains a primary directors and
officers insurance policy which provides liability coverage
up to $10 million.
-------------------------------------------------------------
INDEPENDENT ACCOUNTANTS
The Company's financial statements have been examined by
Deloitte & Touche LLP , independent certified public
accountants. The selection of these independent accountants
for the current fiscal year has been made by the Board upon
the recommendation of
26
<PAGE> 30
the Audit Committee. As in the past, a representative of
Deloitte & Touche LLP, is expected to be present at the
meeting and such representative will have the opportunity to
make a statement and respond to appropriate questions.
-------------------------------------------------------------
SHAREOWNER PROPOSALS
All shareowners desiring to submit proposals for
consideration by the shareowners and for inclusion in the
Company's Proxy Statement for presentation at the January
1996 Annual Meeting must be received by the Company no later
than August 11, 1995.
-------------------------------------------------------------
COST AND METHOD OF SOLICITATION
The entire expense of preparing, assembling, printing and
mailing the Notice of Meeting, this Proxy Statement, the form
of proxy, and the cost of soliciting proxies relating to the
meeting will be borne by the Company. The Company has engaged
Georgeson & Co., Inc., a firm of professional proxy
solicitors, to solicit proxies in favor of the election of
the nominees described above for election as directors and
amending the 1989 Stock Incentive Plan. The Company
anticipates that the fees it will incur for this service will
be approximately $8,500, plus reasonable expenses and
disbursements. In addition to such solicitation and the
solicitation made hereby, proxies may be solicited by the
officers, directors and other regular employees of the
Company by telephone, telegraph, or personal solicitation and
no additional compensation will be paid to such individuals.
Upon request from a record holder who is a broker, dealer,
bank, voting trustee or their nominee, the Company shall
reimburse such record holders for their reasonable expenses
in forwarding proxy material to their principals.
By order of the Board of Directors,
[SIG]
Milan A. Sawdei
Executive Vice President,
Chief Legal Officer and Secretary
December 22, 1994
A copy of the annual report for the fiscal year ended
September 30, 1994, including financial statements, is
included herewith. Such report is not to be regarded as proxy
soliciting material or as a communication by means of which
any solicitations are to be made.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE
FISCAL YEAR ENDED SEPTEMBER 30, 1994, AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, WHICH PROVIDES CERTAIN
ADDITIONAL INFORMATION CONCERNING THE COMPANY AND ITS
MANAGEMENT, IS AVAILABLE WITHOUT CHARGE TO SHAREOWNERS UPON
WRITTEN REQUEST DIRECTED TO LISA RIORDAN, SHAREOWNER
RELATIONS, 4000 METROPOLITAN DRIVE, ORANGE, CALIFORNIA 92668.
27
<PAGE> 31
APPENDIX A
AMENDMENTS TO THE AMENDED AND RESTATED
1989 STOCK INCENTIVE PLAN OF
BERGEN BRUNSWIG CORPORATION AND SUBSIDIARY COMPANIES
Amendments presented for shareowner approval to the Amended
and Restated 1989 Stock Incentive Plan for Bergen Brunswig
Corporation and Subsidiary Companies are as follows:
1. The second sentence of subparagraph 3.1(a) shall be
deleted and replaced with the following sentence:
EACH MEMBER OF THE COMMITTEE SHALL BOTH BE A
"DISINTERESTED PERSON" AS DEFINED IN RULE 16B-3(C)(1)(I)
(OR ANY SUCCESSOR PROVISION) PROMULGATED UNDER THE
EXCHANGE ACT, AND AN "OUTSIDE DIRECTOR" AS DEFINED FOR
PURPOSES OF SECTION 162(M) (OR ANY SUCCESSOR PROVISION)
OF THE CODE AND THE REGULATIONS PROMULGATED THEREUNDER.
2. Subparagraph 4.1(a) shall be deleted and replaced with the
following:
(A) SUBJECT TO THE ADJUSTMENT PURSUANT TO SUBPARAGRAPH
4.1(C), THE MAXIMUM AGGREGATE NUMBER OF SHARES OF COMMON
STOCK WITH RESPECT TO WHICH OPTIONS, STOCK APPRECIATION
RIGHTS AND DIRECTOR STOCK OPTIONS MAY BE GRANTED IN ANY
FISCAL YEAR UNDER THE PLAN SHALL EQUAL THE NUMBER OF
SHARES REMAINING AVAILABLE FOR GRANT FROM PRIOR YEARS
PLUS, IF APPLICABLE, THE INCREASED NUMBER OF SHARES
DETERMINED AS SET FORTH BELOW. IF AT ANY TIME DURING THE
FISCAL YEAR, THE NUMBER OF SHARES AVAILABLE FOR GRANT TO
INDIVIDUALS OTHER THAN ELIGIBLE DIRECTORS FALLS BELOW 1%
OF THE ISSUED SHARES OF COMMON STOCK AS OF THE LAST DAY
OF THE IMMEDIATELY PRECEDING FISCAL YEAR (INCLUDING IN
SUCH NUMBER OF ISSUED SHARES ANY SHARES REACQUIRED BY THE
COMPANY), THEN THE MAXIMUM NUMBER OF SHARES WITH RESPECT
TO WHICH OPTIONS, STOCK APPRECIATION RIGHTS AND DIRECTOR
STOCK OPTIONS MAY BE GRANTED IN THE CURRENT FISCAL YEAR
SHALL BE INCREASED BY AN AMOUNT EQUAL TO 1% OF THE ISSUED
SHARES OF COMMON STOCK AS OF THE LAST DAY OF THE
IMMEDIATELY PRECEDING FISCAL YEAR. ANY INCREASE IN THE
NUMBER OF SHARES WHICH MAY BE GRANTED, AS DESCRIBED IN
THE PRECEDING SENTENCE, MAY ONLY OCCUR ONCE DURING ANY
FISCAL YEAR. NOTWITHSTANDING THE FOREGOING, NO MORE THAN
370,000 SHARES OF COMMON STOCK SHALL BE AVAILABLE FOR THE
GRANT OF INCENTIVE STOCK OPTIONS DURING EACH FISCAL YEAR.
THE AGGREGATE NUMBER OF SHARES OF COMMON STOCK WITH
RESPECT TO WHICH OPTIONS, STOCK APPRECIATION RIGHTS AND
DIRECTOR STOCK OPTIONS MAY BE GRANTED TO ANY ONE
INDIVIDUAL IN ANY FISCAL YEAR MAY NOT EXCEED 150,000,
SUBJECT TO ADJUSTMENT PURSUANT TO SUBPARAGRAPH 4.1(C). IF
AN OPTION GRANTED UNDER THE PLAN SHALL EXPIRE OR
TERMINATE FOR ANY REASON OTHER THAN THE EXERCISE OF A
STOCK APPRECIATION RIGHT, THE SHARES SUBJECT TO SUCH
OPTION GRANT SHALL BE AVAILABLE FOR OTHER OPTION GRANTS,
AND NOT BE INCLUDED WITHIN THE 1% CALCULATION DESCRIBED
ABOVE.
3. Paragraph 6.6 shall be amended by adding the following
clause immediately preceding the first sentence:
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCES, . . .
and by adding the following sentences to the end of such
paragraph 6.6:
THE COMMITTEE SHALL HAVE DISCRETIONARY AUTHORITY TO GRANT
AWARDS WHICH WOULD BE TRANSFERABLE TO MEMBERS OF AN
EMPLOYEE'S IMMEDIATE FAMILY, INCLUDING TRUSTS FOR
28
<PAGE> 32
THE BENEFIT OF SUCH FAMILY MEMBERS AND PARTNERSHIPS IN
WHICH SUCH FAMILY MEMBERS ARE THE ONLY PARTNERS. FOR
PURPOSES OF PARAGRAPH 6.7, A TRANSFERRED AWARD MAY BE
EXERCISED ONLY BY THE TRANSFEREE TO THE EXTENT THAT THE
EMPLOYEE WOULD HAVE BEEN ENTITLED HAD THE AWARD NOT BEEN
TRANSFERRED.
4. Subparagraph 6.7(d) shall be deleted and replaced with the
following:
(D) EXCEPT AS OTHERWISE PROVIDED FOR IN AN AWARD GRANTED
SUBSEQUENT TO JANUARY 26, 1995, IF A RECIPIENT TERMINATES
ACTIVE SERVICE BECAUSE OF RETIREMENT (AND NOT ON ACCOUNT
OF MISCONDUCT, AS DETERMINED UNDER SUBPARAGRAPH (A)), THE
EXERCISE PERIOD OF AN AWARD SHALL AUTOMATICALLY BE
EXTENDED TO ITS EXPIRATION DATE. IN ADDITION, THE
COMMITTEE MAY, IN ITS DISCRETION, EXTEND TO THE
EXPIRATION DATE THE EXERCISE PERIOD OF AWARDS GRANTED
PRIOR TO JANUARY 26, 1995 FOR RECIPIENTS WHO TERMINATE
ACTIVE SERVICE BECAUSE OF RETIREMENT (AND NOT ON ACCOUNT
OF MISCONDUCT, AS DETERMINED UNDER SUBPARAGRAPH (A)).
5. Subparagraph 7.1(b)(iii) shall be amended by replacing
"1990" with "1995" and by replacing "1,000" with "2,000".
6. Subparagraph 7.1(e) shall be amended by adding the
following to the end of the first sentence:
PROVIDED, HOWEVER, THAT A DIRECTOR STOCK OPTION SHALL BE
TRANSFERABLE TO MEMBERS OF AN ELIGIBLE DIRECTOR'S
IMMEDIATE FAMILY, INCLUDING TRUSTS FOR THE BENEFIT OF
SUCH FAMILY MEMBERS AND PARTNERSHIPS IN WHICH SUCH FAMILY
MEMBERS ARE THE ONLY PARTNERS.
29
<PAGE> 33
Bergen Brunswig Corporation
4000 Metropolitan Drive
Orange, California
MAP
(Figure 1)
Directions to Annual Meeting
<TABLE>
<S> <C> <C>
Los Angeles Airport Los Angeles Downtown John Wayne Airport
. Century Boulevard east to San Diego Fwy. (405) south . Santa Ana Fwy. (5) south . Take Costa Mesa Fwy. (55) north
. Continue south and change to Garden Grove . Exit at State College Boulevard/ . Change to Garden Grove Fwy. (22) west
Fwy. (22) east The City Drive . Exit at The City Drive
. Exit at The City Drive . Turn right onto The City Drive . Turn left at light
. Turn left at light . Turn right onto Metropolitan Drive . Turn right onto Metropolitan Drive
. Turn left onto Metropolitan Drive . Follow to #4000 on the left . Follow to #4000 on the left
. Follow to #4000 on the left
</TABLE>
<PAGE> 34
(LOGO) BERGEN BRUNSWIG CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR
THE ANNUAL MEETING OF SHAREOWNERS JANUARY 26, 1995
The undersigned hereby appoints Charles C. Edwards, Francis G. Rodgers and
Charles J. Lee and each of them, attorneys and proxies, with power of
substitution in each of them, to vote for and on behalf of the undersigned at
the annual meeting of shareowners of the Company to be held on January 26,
1995, and at any adjournment thereof, upon matters properly coming before the
meeting, as set forth in the Notice of Meeting and Proxy Statement, both of
which have been received by the undersigned and upon all such other matters
that may properly be brought before the meeting, as to which the undersigned
hereby confers discretionary authority to vote upon said proxies. Without
otherwise limiting the general authorization given hereby, said attorneys and
proxies are instructed to vote as follows:
(THIS PROXY CARD CONTINUES AND MUST BE SIGNED ON THE REVERSE SIDE.)
________________________________________________________________________
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES FOR DIRECTOR AND
"FOR" THE PROPOSAL TO AMEND THE 1989 STOCK INCENTIVE PLAN. IF NOT OTHERWISE
SPECIFIED, THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF DIRECTORS.
Please mark
[X] your votes
as this
1. ELECTION OF DIRECTORS.
NOMINEES: JOSE E. BLANCO, SR., RODNEY H. BRADY, JOHN CALASIBETTA, GEORGE R.
LIDDLE, ROBERT E. MARTINI, JAMES R. MELLOR, GEORGE E. REINHARDT, JR., DWIGHT
A. STEFFENSEN
[ ] FOR the nominees listed (except as indicated to the contrary)
[ ] WITHHOLD AUTHORITY to vote for the nominees listed
INSTRUCTION: To withhold authority for any particular nominee, write such
nominee(s) name on the line below.
--------------------------------------------------------------
2. ADOPTION OF PROPOSED AMENDMENTS TO THE 1989 STOCK INCENTIVE PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
DATED: , 1995
--------------------------
---------------------------------------
(Signed)
---------------------------------------
(Signed)
Please sign exactly as your name
appears below. Give full title
if an Attorney, Executor,
Administrator, Trustee, Guardian, etc.
For an amount in the name of two or
more persons, each should sign. If a
corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
PLEASE SIGN THIS PROXY AND RETURN IT
PROMPTLY WHETHER OR NOT YOU EXPECT TO
ATTEND THIS MEETING. YOU MAY
NEVERTHELESS VOTE IN PERSON IF YOU DO
ATTEND.
This proxy is to be used by holders of
Class A Common Stock.
<PAGE> 35
APPENDIX
Photo 1. Photo of Robert E. Martini is located on page 2.
Photo 2. Photo of Dwight A. Steffensen is located on page 2.
Photo 3. Photo of John Calasibetta is located on page 3.
Photo 4. Photo of Jose E. Blanco, Sr. is located on page 3.
Photo 5. Photo of George R. Liddle is located on page 3.
Photo 6. Photo of George E. Reinhardt, Jr. is located on page 3.
Photo 7. Photo of Rodney H. Brady is located on page 4.
Photo 8. Photo of James R. Mellor is located on page 4.
Photo 9. Photo of Charles J. Lee is located on page 4.
Photo 10. Photo of Charles C. Edwards, M.D. is located on page 5.
Photo 11. Photo of Francis G. Rodgers is located on page 5.
Figure 1. Map showing location of Annual Meeting is located on Back Cover
of Proxy Statement.
