<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:
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2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
-------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
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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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE> 2
(LOGO) BERGEN BRUNSWIG CORPORATION
- - --------------------------------------------------------------------------------
4000 Metropolitan Drive, Orange, California 92668 (714) 385-4000
ROBERT E. MARTINI
Chairman of the Board and
Chief Executive Officer
December 14, 1995
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 25, 1996, 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,
ROBERT E. MARTINI
-------------------------
Robert E. Martini
Chairman of the Board and
Chief Executive Officer
<PAGE> 3
NOTICE OF ANNUAL MEETING OF SHAREOWNERS
TO BE HELD JANUARY 25, 1996
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 25, 1996, at
10:00 A.M., Pacific Time, for the following purposes:
1. To elect four directors for a term of three years and two
directors for a term of two years;
2. To consider and vote upon a shareowner proposal relating
to the declassification of the Company's Board of
Directors as described on pages 21 through 22 in the Proxy
Statement;
3. To consider and vote upon a shareowner proposal relating
to compensation of non-employee members of the Company's
Board of Directors as described on pages 23 through 24 in
the Proxy Statement; and
4. 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 November
30, 1995, 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,
MILAN A. SAWDEI
--------------------------
Milan A. Sawdei
Executive Vice President,
Chief Legal Officer and
Secretary
Orange, California
December 14, 1995
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 25,
1996, 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 14, 1995, 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 the
election of the nominees for director and AGAINST the shareowner proposals 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 November 30, 1995 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 39,855,121 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 six nominees receiving the largest
number of votes cast by holders of Common Stock will be elected as directors,
and the shareowner proposals relating to declassifying the Board of Directors
and changing the compensation of non-employee directors 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)
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
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 13
directors. The directors are divided into three approximately
equivalent-sized classes, each class serving for a period of
three years on a staggered-term basis. Accordingly, at this
annual meeting there are four nominees for Class II
directors, whose terms are expiring, and two nominees for
Class I directors, which class is being expanded.
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 October 31, 1995,
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)
-------------------------------------------------------------
NEIL F. DIMICK Director since 1995. Age 46.
Executive Vice President and Chief Financial Officer (since
[PHOTO] 1992) and formerly served as Vice President, Finance (1991 to
1992) of the Company. Prior to that, Partner, Deloitte &
Touche LLP (public accounting).
------------------------------------------------------------
DONALD R. RODEN Director since 1995. Age 49.
President and Chief Operating Officer (since 1995) of the
Company. Prior to joining the Company in 1995, Mr. Roden was
[PHOTO] a healthcare industry consultant (1993 to 1995) and Chief
Executive, North America (1989 to 1993) of Reed Elsevier
Medical (publishing).
2
<PAGE> 6
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NOMINEES FOR DIRECTORS WHOSE TERM EXPIRES JANUARY 1999
(CLASS II DIRECTORS)
-------------------------------------------------------------
JOSE E. BLANCO, SR. Director since 1992. Age 69.
Chairman of the Board (since 1987) of J.M. Blanco, Inc.
[PHOTO] (wholesale pharmaceutical distribution). Mr. Blanco is Vice
Chairman of the Company's Audit Committee and a member of the
Investment/Retirement Plan Committee.
-------------------------------------------------------------
CHARLES J. LEE Director since 1972. Age 70.
Former Managing Director, Smith Barney Inc. (investment
banking). Former Executive Vice President and Chief Financial
[PHOTO] Officer (1987 to 1989), Mattel, Inc. (toy manufacturer). Mr.
Lee is a member of the Company's Executive, Financing and
Nominating Committees.
-------------------------------------------------------------
GEORGE R. LIDDLE Director since 1969. Age 68.
Investment Adviser. Former Vice President, Kidder, Peabody &
[PHOTO] Co., Inc. (stockbrokers), retired. Mr. Liddle is Vice
Chairman of the Company's Investment/Retirement Plan
Committee and a member of the Financing Committee.
-------------------------------------------------------------
GEORGE E. REINHARDT, JR. Director since 1985. Age 66.
Formerly served as consultant (1992 to 1995), Senior Vice
President (1991), Chief Financial Officer (1976 to 1991) and
[PHOTO] Vice President, Finance (1981 to 1991) of the Company. Mr.
Reinhardt is a member of the Company's Executive, Financing
and Nominating Committees.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL OF THE
NOMINEES.
-------------------------------------------------------------
3
<PAGE> 7
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DIRECTORS WHOSE TERM EXPIRES JANUARY 1997 (CLASS III
DIRECTORS)
-------------------------------------------------------------
RODNEY H. BRADY Director since 1973. Age 62.
President and Chief Executive Officer, Bonneville
International Corporation (broadcast communications). Mr.
[PHOTO] Brady is a director of Deseret Mutual Insurance Company,
First Security Corporation and Smith's Food & Drug, Inc. Mr.
Brady is a member of the Company's Executive, Financing and
Nominating Committees.
-------------------------------------------------------------
CHARLES C. EDWARDS, M.D. Director since 1985. Age 72.
Former President (1993-1994) of California Healthcare
Institute (nonprofit association). Former President and Chief
Executive Officer, ScrippsHealth and Scripps Institutions of
Medicine and Science (health care) (1991-1993). Former
[PHOTO] President and Chief Executive Officer, Scripps Clinic and
Research Foundation (health care) (1977-1991). Dr. Edwards is
a director of Molecular Biosystems, Inc., Northern Trust Bank
and IDEC Pharmaceutical Company. Dr. Edwards is Chairman of
the Company's Compensation/Stock Option Committee and a
member of the Audit Committee.
-------------------------------------------------------------
JAMES R. MELLOR Director since 1979. Age 65.
Chairman of the Board and Chief Executive Officer (since
1993), former President and Chief Operating Officer
(1991-1993) and Executive Vice President (1986-1990), General
[PHOTO] Dynamics Corporation (diversified defense and aerospace). Mr.
Mellor is a director of Kerr Group, Inc., General Dynamics
Corporation and Computer Sciences Corporation. Mr. Mellor is
the Chairman of the Company's Audit Committee and a member of
the Compensation/Stock Option Committee.
-------------------------------------------------------------
FRANCIS G. RODGERS Director since 1982. Age 69.
Author and Lecturer. Former Vice President, Marketing, IBM
(information processing systems), retired. Mr. Rodgers is a
director of Dialogic Corporation, Mercantile Stores, Inc. and
[PHOTO] Milliken and Company. Mr. Rodgers is Chairman of the
Company's Investment/Retirement Plan Committee and Vice
Chairman of the Compensation/Stock Option Committee.
4
<PAGE> 8
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DIRECTORS WHOSE TERM EXPIRES JANUARY 1998
(CLASS I DIRECTORS)
-------------------------------------------------------------
ROBERT E. MARTINI Director since 1962. Age 63.
Chairman of the Board (since 1992) and Chief Executive
[PHOTO] Officer (since 1990) of the Company and formerly served as
its President (1981 to 1992). Mr. Martini is Chairman of the
Company's Executive, Financing and Nominating Committees.
-------------------------------------------------------------
JOHN CALASIBETTA Director since 1962. Age 90.
[PHOTO] Senior Vice President of the Company.
-------------------------------------------------------------
DWIGHT A. STEFFENSEN Director since 1985. Age 52.
Formerly served as President (1992 to 1995), Chief Operating
Officer (1990 to 1995) and Executive Vice President (1985 to
[PHOTO] 1992) of the Company. Mr. Steffensen is a director of
Merisel, Inc. and during fiscal 1995 was a member of the
Company's Executive, Financing and Nominating Committees.
5
<PAGE> 9
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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
six 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 Donald R. Roden.
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 James R.
Mellor, Chairman, Jose E. Blanco, Sr., Vice Chairman 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 Committee are Dr. Charles C. Edwards,
Chairman, Francis G. Rodgers, Vice Chairman and James R.
Mellor.
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 Francis G. Rodgers, Chairman,
George R. Liddle, Vice Chairman and Jose E. Blanco, Sr.
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 Donald R. Roden.
The Financing Committee reviews the asset and liability
structure of the Company and considers its funding and
capital needs. It receives reports on the progress of
investment activities and reviews strategies that have been
developed to meet changing economic and market conditions.
The current members of this Committee are Robert E. Martini,
Chairman, Rodney H. Brady, Charles J. Lee, George R. Liddle,
George E. Reinhardt, Jr. and Donald R. Roden.
During fiscal 1995, there were eight meetings of the Board,
six meetings of the Executive Committee, three meetings of
the Compensation/Stock Option Committee, five meetings of the
Audit Committee, three meetings of the Investment/Retirement
Plan Committee, one meeting for the Nominating Committee and
five meetings of the Financing 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.
6
<PAGE> 10
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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 for fiscal 1995 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
not less than $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.
Each non-employee director is automatically entitled to an
option grant of 3,000 shares of Common Stock under the
Company's Amended and Restated 1989 Stock Incentive Plan upon
his initial election or appointment to the Board, and is
thereafter entitled to an annual grant of 2,000 shares
("Annual Grant") only if the Company attains a ten percent or
greater return on common equity in the preceding fiscal year.
During fiscal 1995, each non-employee director received an
Annual Grant of 2,000 shares.
George E. Reinhardt, Jr. served as a consultant to the
Company under a three-year consulting agreement entered into
in December 1991 and which expired in fiscal 1995. The
agreement provided for an annual fee of $100,000, which was
fully paid in a lump sum amount during fiscal 1992.
7
<PAGE> 11
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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, 1995.
<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>
FMR Corp.(1) Common Stock 2,280,090(1) 5.73
(including subsidiaries)
82 Devonshire Street
Boston, MA 02109
Robert E. Martini(2) Common Stock 2,244,852(3) 5.63
4000 Metropolitan Drive
Orange, California 92668
-----------------------------------------------------------------------------------
</TABLE>
(1) 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,
1995, FMR had sole voting power over 707,115 shares and sole
dispositive power over 2,280,090 shares.
(2) Information as to beneficial ownership has been furnished
to the Company by Robert E. Martini as of October 31, 1995.
Except as indicated otherwise by the following notes, shares
shown beneficially owned are those to which Mr. Martini may
have sole voting and dispositive power.
(3) Includes 76,969 shares which, as of October 31, 1995, may
be acquired within sixty days pursuant to the exercise of
stock options and 29,925 shares beneficially owned by Mr.
Martini for which he does not have voting and dispositive
power.
8
<PAGE> 12
-------------------------------------------------------------
VOTING SECURITIES The following table sets forth certain information
OWNED BY regarding the ownership of the Company's Common Stock as of
DIRECTORS AND October 31, 1995, by: (a) each director and nominee; (b) the
EXECUTIVE chief executive officer and the four most highly compensated
OFFICERS executive officers named in the Summary Compensation Table
(See "Compensation of Executive Officers"); and, (c) all
directors and executive officers as a group:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
AGGREGATE NUMBER
OF SHARES PERCENT
BENEFICIALLY OF OUTSTANDING
OWNED(1)(2) SHARES
-------------------------------------------------------------------------------------
<S> <C> <C>
Jose E. Blanco, Sr. 4,550 *
Rodney H. Brady(3) 41,255 *
John Calasibetta 190,910 *
Neil F. Dimick 17,692 *
Dr. Charles C. Edwards 8,878 *
Charles J. Lee 12,350 *
George R. Liddle(4) 29,068 *
Robert E. Martini(5) 2,244,852 5.63
James R. Mellor 11,199 *
George E. Reinhardt, Jr. 88,479 *
Donald R. Roden 10,000 *
Francis G. Rodgers 11,071 *
Milan A. Sawdei(6) 24,551 *
Denny W. Steele 15,094 *
Dwight A. Steffensen(7) 118,655 *
All directors and executive officers as a group
including those above (17 persons) 2,860,951 7.18
--------------------------------------------------------------------------------------
</TABLE>
* 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, 1995, or
within 60 days thereafter under the Company's stock option or
stock incentive plans, as follows: Jose E. Blanco,
Sr. - 4,550 shares; Rodney H. Brady - 7,701 shares; Neil F.
Dimick - 13,492 shares; Dr. Charles C. Edwards - 6,388
shares; Charles J. Lee - 7,701 shares; George R. Liddle -
4,551 shares; Robert E. Martini - 76,969 shares; James R.
Mellor - 7,701 shares; George E. Reinhardt, Jr. - 4,550
shares; Francis G. Rodgers - 7,701 shares; Milan A.
Sawdei - 23,921 shares; Denny W. Steele - 15,094 shares;
Dwight A. Steffensen - 47,841 shares; and all directors and
executive officers as a group, including those above (17
persons) - 259,188 shares.
(3) Includes 1,850 shares held by two sons living at home and
31,704 shares held in trust by Mr. Brady as trustee for his
own benefit.
(4) Includes 23,775 shares held by Mr. Liddle as co-trustee
for the benefit of him and his wife.
(5) Includes 29,925 shares beneficially owned by Mr. Martini
for which he does not have voting and dispositive power.
(6) Includes 630 shares held by Mr. Sawdei as trustee for his
son.
(7) Mr. Steffensen's resignation as an executive officer of
the Company was effective as of October 15, 1995.
9
<PAGE> 13
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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 are required by applicable
regulations to furnish the Company with copies of all Section
16(a) forms they file.
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 1995 fiscal year all filing requirements
applicable to its directors and officers were satisfied,
except that Mr. Calasibetta inadvertently filed a Form 4
Statement of Changes in Beneficial Ownership for the month of
June, 1995, reflecting a disposition of shares of the
Company's Common Stock after the applicable filing period.
-------------------------------------------------------------
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information for the fiscal
years ended September 30, 1995, September 30, 1994, and
August 31, 1993, 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
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS
--------------------------------- ------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
COMPEN- OPTIONS/ COMPEN-
NAME AND SALARY BONUS SATION SARS SATION(2)
PRINCIPAL POSITION YEAR(1) ($) ($) ($) (#) ($)
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert E. Martini 1995 553,269 428,000 168,229(3) 15,750 36,774(4)
Chairman and Chief 1994 534,808 350,000 117,356(3) 10,000 34,278(4)
Executive Officer 1993 559,154 200,000 111,373(3) 79,364 28,275(4)
Dwight A.
Steffensen 1995 422,885 328,000 53,790(5) 10,500 5,000
President and Chief 1994 399,808 300,000 48,228(5) 20,000 2,520
Operating Officer 1993 412,077 150,000 46,847(5) 20,804 1,321
Neil F. Dimick 1995 256,731 200,000 35,049(6) 5,250 4,500
Executive Vice
President, 1994 233,654 175,000 30,604(6) 20,000 2,520
Chief Financial
Officer 1993 240,654 100,000 34,560(6) 8,000 709
Denny W. Steele 1995 184,809 120,000 29,464(7) 10,250 5,000
Executive Vice
President, 1994 165,354 100,000 29,323(7) 15,750 2,520
Chief Information
Officer 1993 172,395 40,000 30,622(7) 5,000 862
Milan A. Sawdei 1995 180,000 105,000 33,457(8) 5,250 4,500
Executive Vice
President, 1994 165,478 100,000 34,855(8) 15,000 2,520
Chief Legal Officer
and Secretary 1993 171,385 40,000 26,187(8) 5,000 943
------------------------------------------------------------------------------------------------
</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 1993 are for the twelve months
ended August 31, 1993.
(2) Reflects Company contributions under the Company's
Pre-Tax Investment Retirement Account Plus Plan, unless
otherwise indicated in the following notes.
(3) Includes $63,000, $68,250 and $92,120 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 page 20 during fiscal years
1993, 1994 and 1995, respectively.
(4) Includes $26,954, $31,198 and $31,774 of allocated
premiums paid by the Company to a split-dollar life insurance
plan on Mr. Martini during fiscal years 1993, 1994 and 1995,
respectively.
10
<PAGE> 14
(5) Includes $19,887, $21,897 and $31,666 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 page 20 for fiscal years
1993, 1994 and 1995, respectively.
(6) Includes $9,844, $12,174 and $18,506 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 page 20 for fiscal years
1993, 1994 and 1995, respectively.
(7) Includes $8,058, $9,100 and $13,160 of imputed
compensation reflecting the difference between the average
market interest rate for the Company and the interest-free
loan to Mr. Steele described on page 20 for fiscal years
1993, 1994 and 1995, respectively.
(8) Includes $8,058, $9,100 and $13,160 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 page 20 for fiscal years
1993, 1994 and 1995, 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 (then President and Chief Operating Officer), Mr.
Dimick (as Executive Vice President, Chief Financial
Officer), Mr. Sawdei (as Executive Vice President, Chief
Legal Officer and Secretary) and Mr. Steele (as Executive
Vice President, Chief Information Officer); and, in October
1995, with Mr. Roden (as President and Chief Operating
Officer). As previously indicated, Mr. Steffensen is no
longer an executive officer of the Company, and his status
under the Employment Agreement is in the process of being
negotiated.
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 equal to that paid to other executive officers
at the same level, but in any event 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 or their beneficiary, as the case may be,
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
11
<PAGE> 15
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 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 W-2 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 or acceleration of benefits extended from the
Company to any Named Executive Officer upon a Change in
Control 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.
12
<PAGE> 16
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.
In addition to the above arrangements, the Company has an
unfunded, non-qualified Retired Officers Medical Plan
available to certain executive officers of the Company and
their spouses, including executive officers now retired from
the Company. The plan provides for payment of the covered
individual's medical, dental, vision and prescription
expenses at a level commensurate with the Company's medical
benefit plans that are in effect upon the executive officer's
retirement (as defined in the plan documents), but limited to
the difference between benefits received or potentially
available from other insurance sources (including
governmental programs), if any, and the total expense
actually incurred. The duration of the benefit is for the
lifetime of the executive officer and the executive officer's
spouse if such officer is married. Upon a change of control
(as defined in the plan documents), the Company would be
required to pre-fund the plan in an amount necessary to
provide future benefits to the covered individuals eligible
to receive benefits under the plan. Based upon the various
eligibility criteria under the plan, three of the Named
Executive Officers (Messrs. Martini, Steffensen and Sawdei)
would be eligible to receive benefits upon their retirement
from the Company.
-------------------------------------------------------------
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
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO
OPTIONS/SARS EMPLOYEES IN GRANT DATE
GRANTED FISCAL YEAR EXERCISE PRICE EXPIRATION PRESENT
NAME (#)(2) 1995 ($/SHARE) DATE VALUE ($)(1)
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Robert E. Martini 15,750 5.3 $ 15.00 10/19/04 $92,925
Dwight A. Steffensen 10,500 3.5 15.00 10/19/04 61,950
Neil F. Dimick 5,250 1.8 15.00 10/19/04 30,975
Milan A. Sawdei 5,250 1.8 15.00 10/19/04 30,975
Denny W. Steele 5,250(3) 1.8 15.00 10/19/04 30,975
5,000(3) 1.7 21.62 7/26/05 38,800(4)
-----------------------------------------------------------------------------------------------------
</TABLE>
(1) The grant date present value is based on a Black-Scholes
model and assumes a risk-free rate of return of 8.00%, an
option term of ten years, a dividend yield of 2.34%, a stock
volatility of .301 and a forfeiture risk of 3% for each of
the four years of vesting, unless otherwise noted.
(2) All shares granted as nonstatutory stock options at 100%
of fair market value on the date of grant, unless otherwise
noted.
(3) Five thousand two hundred fifty shares granted as
nonstatutory stock options and 5,000 shares granted as
incentive stock options. Both granted at 100% of fair market
value on date of grant. The two options vest, respectively,
25% one year after the date of grant and then 25% per year
thereafter.
(4) The grant date present value is based on a Black-Scholes
model and assumes a risk-free rate of return of 6.00%, an
option term of ten years, a dividend yield of 2.37%, a stock
volatility of .318 and a forfeiture risk of 3% for each of
the four years of vesting.
13
<PAGE> 17
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/
SHARES OPTIONS/SARS AT FY END (#) SARS AT FY END ($)
ACQUIRED ON VALUE ----------------------------- -----------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert E. Martini 0 0 42,783 77,300 $ 62,712 $227,429
Dwight A. Steffensen 0 0 33,413 43,557 84,227 185,251
Neil F. Dimick 0 0 7,560 27,090 13,230 142,658
Milan A. Sawdei 0 0 19,196 21,788 135,044 107,004
Denny W. Steele 0 0 10,369 26,788 28,516 107,004
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
- - --------------------------------------------------------------------------------
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 $ 78,700 $132,000 $132,000 $132,000
400,000 181,800 288,500 288,500 288,500
600,000 284,900 444,900 444,900 444,900
800,000 388,800 602,100 602,100 602,100
1,000,000 495,500 762,100 762,100 762,100
-------------------------------------------------------------------------------
</TABLE>
As of September 30, 1995, full years of actual credited
service in these plans are Mr. Martini -- 39 years; Mr.
Steffensen -- 10 years; Mr. Dimick -- 4 years; Mr. Sawdei --
12 years; and, Mr. Steele -- 5 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
14
<PAGE> 18
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. Upon a change of control (as defined in the CAP and
SERP), certain senior executive officers' benefits payable
under the SERP would be accelerated such that their credited
years of service in these plans would be as if they had
attained the normal retirement age. In addition, a master
trust for certain executive officer deferral plans has been
established to preserve these and certain other executive
benefits.
-------------------------------------------------------------
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
REPORT OF THE Notwithstanding anything to the contrary set forth in any of
COMPENSATION/ the Company's previous filings under the Securities Act of
STOCK OPTION 1933, as amended, or the Exchange Act that might incorporate
COMMITTEE future filings, including this Proxy Statement, in whole or
in part, the following report and the Performance Graph on
page 19 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 following two
policies 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, the implementation of new programs and
services, organizational and management development
progress against personal and
15
<PAGE> 19
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.
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 enhance
shareowner values, provide efficient service to customers,
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 1995 fiscal year were based upon a
comparison of actual performance with goals established
near the beginning of the year with respect to increase in
net earnings, return on equity, sales growth and, for some
executive officers, earnings as a percentage of sales,
profit plan achievement and meeting objectives relative to
corporate priorities for the fiscal year. The Chief
Executive Officer, Chief Operating Officer and Chief
Financial Officer may earn a maximum of 100% of base
salary, and other executive officers may qualify for a
maximum award of between 50% to 75% 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,
16
<PAGE> 20
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 relative to
fiscal 1995 were as follows:
- Salary adjustment, Grant of Bonus and Stock Option in
fiscal 1996 based upon services rendered in fiscal year
1995.
Mr. Martini was granted a 4.7% salary increase which
brought his base pay to $560,000 per annum. This adjustment
was made in large part because of the increase in revenues
and operating earnings for the year ended September 30,
1995, 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 the annual corporate objectives,
increases in net earnings, return on equity, sales growth
earnings as a percentage of sales and profit plan
achievement. These criteria allow Mr. Martini to earn up to
15%, 20%, 20%, 15% and 15%, respectively, of his base
salary. A discretionary award of up to 50% 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, but such discretionary award combined with the
award for the objective criteria may not exceed 100%, in
the aggregate, of base salary. For fiscal 1995, however,
Mr. Martini did not receive a discretionary award. Based
upon an evaluation of the potential award amount for each
of the objective criteria under the Bonus Plan compared to
the level of achievement attained by Mr. Martini in meeting
each such criterion, the Committee awarded Mr. Martini the
sum of $428,000.
Mr. Martini also participated in the Company's equity-based
compensation program. Options granted in fiscal 1995 are
shown under the caption "Option Grants in Last Fiscal
Year," and an additional option for 25,000 shares was
granted in November 1995. 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
17
<PAGE> 21
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 will continue 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 Amended and Restated 1989
Stock Incentive Plan as "performance-based," the Company
amended this Plan in fiscal 1995 after receiving shareowner
approval at last year's annual meeting. The amendment
establishes a maximum annual grant of option shares to an
employee under this Plan.
Compensation/Stock Option Committee of the Board of Directors
Dr. Charles C. Edwards, Chairman
Francis G. Rodgers, Vice Chairman
James R. Mellor
18
<PAGE> 22
-------------------------------------------------------------
PERFORMANCE GRAPH
The following graph compares the cumulative total shareowner
return (stock price appreciation plus dividends) for the five
years ending September 30, 1995, on the Company's Common
Stock with the cumulative return of the 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 Care, Inc.; Bindley Western Industries, Inc.;
Cardinal Health, Inc.; Choice Drug Systems, Inc.; D & K
Wholesale Drug, Inc.; Herbalife International, Inc.; McKesson
Corporation; Moore Medical Corporation; FoxMeyer Health
Corporation (formerly known as National Intergroup, Inc.);
Mark Solutions (formerly known as Showcase Cosmetics); and
Tristar Corporation. Cumulative total shareowner return (on
an assumed initial investment of $100 at August 31, 1990), 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, 1995. As
previously indicated, the Company changed its fiscal year-end
during fiscal 1994 from August 31 to September 30.
<TABLE>
<CAPTION>
Self-Deter- CRSP Index for
Measurement Period Bergen mined Peer NYSE Stock
(Fiscal Year Covered) Brunswig Corp. Group Market
--------------------- -------------- ------------ --------------
<S> <C> <C> <C>
08/31/90 100.0 100.0 100.0
08/30/91 119.7 137.9 127.0
08/31/92 107.9 134.6 137.7
08/31/93 100.2 169.0 160.6
09/30/94 96.5 282.1 164.0
09/30/95 135.5 365.4 208.8
</TABLE>
19
<PAGE> 23
-------------------------------------------------------------
CERTAIN TRANSACTIONS
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, 1995, to Messrs.
Martini and Steffensen were $1,400,000 and $481,250,
respectively; and, the Board has approved the making of a
loan to Mr. Roden in an amount up to $500,000, but no funds
have been advanced yet in respect of such authorization. The
loans to Messrs. Dimick (at the time made), Sawdei and Steele
were made pursuant to the Executive Loan Program and are in
the amounts of $281,250, $200,000 and $200,000, respectively.
Such amounts represent the largest aggregate amount of each
executive officer's indebtedness during the Company's last
fiscal year. In the event of a change in control (as defined
in the promissory notes for the applicable loans or, in the
case of Mr. Roden, the loan that may be made), the
indebtedness to the Company of Messrs. Martini, Dimick,
Roden, Sawdei and Steele would be deemed forgiven.
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.
20
<PAGE> 24
------------------------------------------------------------------
2. SHAREOWNER PROPOSAL REGARDING THE ELECTION OF DIRECTORS BY
CLASSES (Item 2 on Proxy Card)
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
The Company has been advised that Mr. Kenneth Steiner, 14
Stoner Avenue, Suite 2-M, Great Neck, New York 11021, the
owner of 600 shares of Common Stock, intends to introduce the
proposal set forth below for consideration and action by the
shareowners at the Annual Meeting. Mr. Steiner's proposal and
supporting statement, for which the Board of Directors and
the Company accept no responsibility, are set forth below:
SHAREOWNER "RESOLVED, that the stockholders of the Company request
PROPOSAL AND that the Board of Directors take the necessary steps, in
STATEMENT accordance with state law, to declassify the Board of
Directors so that all directors are elected annually,
such declassification to be effected in a manner that
does not affect the unexpired terms of directors
previously elected."
SUPPORTING STATEMENT
"The election of directors is the primary avenue for
stockholders to influence corporate governance policies
and to hold management accountable for its
implementation of those policies. I believe that the
classification of the Board of Directors, which results
in only a portion of the Board being elected annually,
is not in the best interests of the Company and its
stockholders.
The Board of Directors of the Company is divided into
three classes serving staggered three-year terms. I
believe that the Company's classified Board of Directors
maintains the incumbency of the current Board and
therefore of current management, which in turn limits
management's accountability to stockholders.
The elimination of the Company's classified Board would
require each new director to stand for election annually
and allow stockholders an opportunity to register their
views on the performance of the Board collectively and
each director individually. I believe this is one of the
best methods available to stockholders to insure that
the Company will be managed in a manner that is in the
best interests of the stockholders.
I am a founding member of the Investors Rights
Association of America and I believe that concerns
expressed by companies with classified boards that the
annual election of all directors could leave companies
without experienced directors in the event that all
incumbents are voted out by stockholders are unfounded.
In my view, in the unlikely event that stockholders vote
to replace all directors, this decision would express
stockholder dissatisfaction with the incumbent directors
and reflect the need for change.
I urge your support, vote for this resolution."
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<PAGE> 25
THE THE BOARD OF DIRECTORS' STATEMENT IN OPPOSITION TO THE
COMPANY'S FOREGOING SHAREOWNER PROPOSAL
STATEMENT
The Board believes that the reasons for supporting a
classified Board are as valid today as when originally
adopted.
First, classification helps the Board maintain a greater
continuity of experience since the majority of directors at
any given time will have experience with the business affairs
and operations of the Company. This permits more effective
long-term strategic planning. A classified board also helps
the Company to attract and retain prominent and well-
qualified individuals who are able to commit the time and
resources to understand the Company and its operations.
Continuity and quality of leadership resulting from the
classified board create long-term value for the shareowners
of the Company.
Second, a classified board reduces the possibility of a
sudden change in majority control of the board. In the event
of a hostile takeover attempt, the fact that approximately
one-third of the directors have terms of more than one year
would encourage a person seeking control of the Company to
initiate arms'-length discussions with management and the
Board, who are in a position to negotiate a transaction that
is most favorable to the shareowners of the Company.
The Board believes that a classified board continues to
benefit the Company and its shareowners and those with whom
the Company does business by permitting all to rely on the
consistency and continuity of corporate policy. At the same
time, annual elections, in which a third of the Board is
elected each year, offer shareowners a regular opportunity to
renew and reinvigorate corporate decision-making while
maintaining the basic integrity of corporate policy year to
year for the benefit of all who rely on it.
ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST
THE FOREGOING SHAREOWNER PROPOSAL. Proxies solicited by the
Board of Directors will be so voted unless shareowners
specify otherwise.
22
<PAGE> 26
------------------------------------------------------------------
3. SHAREOWNER PROPOSAL REGARDING COMPENSATION OF NON-EMPLOYEE
DIRECTORS (Item 3 on Proxy Card)
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- - --------------------------------------------------------------------------------
The Company has been advised that Mr. William Steiner, 4
Radcliffe Drive, Great Neck, New York 11024, the owner of
1,919 shares of Common Stock, intends to introduce the
proposal set forth below for consideration and action by the
shareowners at the Annual Meeting. Mr. Steiner's proposal and
supporting statement, for which the Board of Directors and
the Company accept no responsibility, are set forth below:
SHAREOWNER "RESOLVED, that the shareholders recommend that the
PROPOSAL AND Board of Directors take the necessary steps to ensure
STATEMENT that from here forward all non-employee directors should
receive a minimum of fifty percent of their total
compensation in the form of company common stock which
cannot be sold for three years."
SUPPORTING STATEMENT
"A significant equity ownership by outside directors is
probably the best motivator for enhancing shareholder
value and facilitating identification with shareholders.
Traditionally, outside directors, sometimes selected by
management, were routinely compensated with a fixed fee,
regardless of corporate performance. In today's
competitive global economy, outside directors must
exercise a critical oversight of management's
performance in furthering corporate profitability. All
too often, outside directors' oversight has been too
relaxed and their actions were too late to effect any
meaningful change.
Corporate America has too many examples of company
assets being eroded on an extended series of strategic
errors. Meanwhile, Boards of Directors stood by and
passively allowed serious problems to develop.
When compensation is in company stock, there is a
greater likelihood that outside directors will be more
vigilant in protecting their own as well as corporate
and shareholder interests.
What is being recommended in this proposal is neither
novel nor untried. A number of corporations have already
established versions of such practices, namely, Scott
Paper, The Travelers, Hartford Steam Boiler and
Alexander & Alexander.
Robert B. Stobough, Professor of Business Administration
at the Harvard Business School did a series of studies
comparing highly successful to poorly performing
companies. He found that outside directors in the better
performing companies had significantly larger holdings
of company stock than outside directors in the more
mediocre and poorly performing companies.
It can be argued that awarding stock options to outside
directors accomplishes the same purpose of insuring
directors' allegiance to a company's profitability as
paying them exclusively in stock. However, it is our
contention that stock options are rewarding on the
upside but offer no penalties on the downside while
shareholders bear the full downside risks. There are few
strategies that are more likely to cement
23
<PAGE> 27
outside directors with shareholder interests and company
profitability than one which results in their sharing
the same bottom line. Directors, like common
stockholders, should sacrifice and invest their own
money and get their stock at prevailing market prices."
THE THE BOARD OF DIRECTORS' STATEMENT IN OPPOSITION TO THE
COMPANY'S FOREGOING SHAREOWNER PROPOSAL
STATEMENT
The Company's Board shares the proponent's belief in the
importance of incentive-based compensation for directors. The
Board also believes that directors should have a financial
stake in the Company. Indeed, as indicated by the table on
page 9, which sets forth the ownership of the Company's
Common Stock by management, all of the Company's current
non-employee directors are beneficial owners of Common Stock.
In addition, the Company's 1989 Stock Incentive Plan, as
amended, provides for an initial option grant to non-employee
directors upon their being elected, and then annual grants
thereafter if, and only if, the Company attains certain
financial results. The options do not become exercisable
until one year after grant, and then only in percentage
increments over several years. The options have restricted
transferability and thus provide long-term incentive,
consistent with continuity in service on the Board. The
proposal to pay non-employee directors partly in shares of
Common Stock with a three-year restriction provides no
advantage over the options, which require three years to
become fully exercisable.
The Board believes the existing director compensation
structure offers directors the flexibility to balance
stock-related and cash compensation in a manner compatible
with their individual circumstances. The directors and the
Compensation/Stock Option Committee periodically review the
compensation of the Company's non-employee directors and
ensure that it remains consistent with industry standards and
continues to be fair and appropriate in light of the
obligations and responsibilities of corporate directors. The
Board believes these goals are being met and no changes are
required at this time.
ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST
THE FOREGOING SHAREOWNER PROPOSAL. Proxies solicited by the
Board of Directors will be so voted unless shareowners
specify otherwise.
24
<PAGE> 28
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4. 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 Company believes that the coverage
addresses 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, in the aggregate, the maximum coverage available
under the 1984 Policy. However, the Indemnity Agreement does
not limit a director's right to recover in excess of such $30
million maximum 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.
-------------------------------------------------------------
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 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 proposals that shareowners desire to submit for
consideration by the shareowners and for inclusion in the
Company's Proxy Statement for presentation at the January
1997 Annual Meeting must be received by the Company no later
than August 12, 1996.
25
<PAGE> 29
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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 in
opposition to the two shareowner proposals. The Company
anticipates that the fees it will incur for this service will
be approximately $11,000, 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,
MILAN A. SAWDEI
--------------------------
Milan A. Sawdei
Executive Vice President,
Chief Legal Officer and
Secretary
December 14, 1995
A copy of the annual report for the fiscal year ended
September 30, 1995, 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, 1995, 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.
26
<PAGE> 30
[LOGO] BERGEN BRUNSWIG CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR
THE ANNUAL MEETING OF SHAREOWNERS JANUARY 25, 1996
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 25,
1996, and 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
- - --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 31
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF
DIRECTORS AND AGAINST ITEMS 2 AND 3 BELOW.
<TABLE>
<S> <C>
1. Election of four directors to Class II THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS BELOW.
and two directors to Class I. NOMINEES: Jose E. Blanco, Sr., Neil F. Dimick, Charles J. Lee, George R. Liddle,
George E. Reinhardt, Jr. and Donald R. Roden
FOR all moninees WITHHOLD (INSTRUCTION: To withhold authority for any particular nominee, write such
listed to the right AUTHORITY nominee(s) name on the line below.)
(except as marked to vote for the
to the contrary nominees listed ______________________________________________________________________________
/ / / /
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ITEMS 2 AND 3 BELOW.
2. Shareowner Proposal No. 2 on declass- 3. Shareowner Proposal No. 3 on com-
ification of Board of Directors pensation of non-employee Directors
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN Dated ____________________________, 199___
/ / / / / / / / / / / / __________________________________________
(Signed)
__________________________________________
(Signed)
Please sign exactly as your name appears
below. Give full title if an Attorney,
Executor, Administrator, Trustee, Guardian,
etc. For an account 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.
- - -----------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
</TABLE>
