<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
BERGEN BRUNSWIG CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LETTERHEAD OF BERGEN BRUNSWIG CORPORATION APPEARS HERE]
ROBERT E. MARTINI
Chairman of the Board
August 21, 1998
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, September 24, 1998, 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,
/s/ Robert E. Martini
Robert E. Martini
Chairman of the Board
<PAGE>
BERGEN BRUNSWIG CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREOWNERS
TO BE HELD SEPTEMBER 24, 1998
BERGEN BRUNSWIG CORPORATION
4000 METROPOLITAN DRIVE
ORANGE, CALIFORNIA 92868
(714) 385-4000
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Shareowners of Bergen Brunswig Corporation (the "Company")
will be held at the Company's headquarters located at 4000
Metropolitan Drive, Orange, California on September 24,
1998, at 10:00 A.M., Pacific Time, for the following
purposes:
1. To elect three directors for a term of three years; and
2. 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 July 30,
1998, 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,
/s/ Milan A. Sawdei
Milan A. Sawdei
Executive Vice President,
Chief Legal Officer and Secretary
Orange, California
August 21, 1998
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>
BERGEN BRUNSWIG CORPORATION
4000 Metropolitan Drive
Orange, California 92868
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, September 24, 1998, 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 anticipates mailing this Proxy
Statement and accompanying proxy card commencing on or about
August 24, 1998, 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 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
July 30, 1998 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 50,544,997 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 three nominees
receiving the largest number of votes cast by holders of
Common Stock will be elected as directors.
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
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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 12 directors. The Board
has taken action which will decrease the number of directors to 11, effective
as of September 23, 1998. 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 three
nominees for Class I directors, whose terms are expiring.
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 June 30, 1998, 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 FOR TERMS WHICH WILL EXPIRE AT THE 2001 ANNUAL MEETING
(CLASS I DIRECTORS)
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[PHOTO OF ROBERT E. MARTINI APPEARS HERE]
ROBERT E. MARTINI Director since 1962. Age 66.
Chairman of the Board (since 1992) of, and consultant (since June 1997) to,
the Company and formerly its Chief Executive Officer (1990 to January 1997)
and President (1981 to 1992). Mr. Martini is a director of Mossimo, Inc. Mr.
Martini is Chairman of the Company's Executive, Financing and Nominating
Committees. Mr. Martini is the father of Brent R. Martini, an Executive Vice
President of the Company.
2
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[PHOTO OF NEIL F. DIMICK APPEARS HERE]
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NEIL F. DIMICK Director since 1995. Age 48.
Executive Vice President and Chief Financial Officer (since 1992) of the
Company and formerly its Vice President, Finance (1991 to 1992). President of
Bergen Brunswig Specialty Company (since 1998), ASD Specialty Healthcare, Inc.
(formerly known as Alternate Site Distributors, Inc.) (since 1996), and
Integrated Commercialization Solutions, Inc. (since 1998), each subsidiaries
of the Company.
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[PHOTO OF DONALD R. RODEN APPEARS HERE]
DONALD R. RODEN Director since 1995. Age 51.
Chief Executive Officer (since January 1997) and formerly the Chief Operating
Officer (1995 to 1997) of the Company. Prior to joining the Company in 1995,
Mr. Roden was a healthcare industry consultant (1993 to 1995) and Chief
Executive, North America (1989 to 1993) of Reed Elsevier Medical (publishing).
Mr. Roden 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.
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DIRECTORS WHOSE TERM EXPIRES AT THE 1999 ANNUAL MEETING
(CLASS II DIRECTORS)
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[PHOTO OF JOSE E. BLANCO, SR. APPEARS HERE]
JOSE E. BLANCO, SR. Director since 1992. Age 71.
Chairman of the Board (since 1987) of J.M. Blanco, Inc. (wholesale
pharmaceutical distribution). Mr. Blanco is Vice Chairman of the Company's
Investment/Retirement Plan Committee, and a member of the Audit Committee.
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[PHOTO OF CHARLES J. LEE APPEARS HERE]
CHARLES J. LEE Director since 1972. Age 72.
Former Managing Director, Smith Barney Inc. (investment banking) (1989 to
1996). Mr. Lee is Vice Chairman of the Company's Audit Committee and a member
of the Company's Executive, Financing and Nominating Committees.
3
<PAGE>
[PHOTO OF GEORGE R. LIDDLE APPEARS HERE]
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GEORGE R. LIDDLE Director since 1969. Age 71.
Investment Adviser. Former Vice President, Kidder, Peabody & Co., Inc.
(stockbrokers), retired. Mr. Liddle is Chairman of the Company's Investment/
Retirement Plan Committee.
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[PHOTO OF GEORGE E. REINHARDT, JR. APPEARS HERE]
GEORGE E. REINHARDT, JR.
Director since 1985. Age 69.
Formerly a consultant (1992 to 1995) to, and Senior Vice President (1991),
Chief Financial Officer (1976 to 1991) and Vice President, Finance (1981 to
1991) of, the Company. Mr. Reinhardt is a member of the Company's Executive,
Financing, Investment/Retirement Plan and Nominating Committees.
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DIRECTORS WHOSE TERM EXPIRES AT THE 2000 ANNUAL MEETING
(CLASS III DIRECTORS)
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[PHOTO OF RODNEY H. BRADY APPEARS HERE]
RODNEY H. BRADY Director since 1973. Age 65.
President and Chief Executive Officer, Deseret Management Corporation
(diversified corporate holding company) since April 1996. Former President and
Chief Executive Officer, Bonneville International Corporation (broadcast
communications) (1985 to 1996). Mr. Brady is a director of Deseret Mutual
Insurance Company and First Security Corporation. Mr. Brady is a member of the
Company's Executive, Financing, Compensation/Stock Option and Nominating
Committees.
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[PHOTO OF CHARLES C. EDWARDS APPEARS HERE]
CHARLES C. EDWARDS, M.D.
Director since 1985. Age 74.
Former President of California Healthcare Institute (nonprofit association)
(1993 to 1994). Former President and Chief Executive Officer, ScrippsHealth
and Scripps Institutions of Medicine and Science (health care) (1991 to 1993).
Dr. Edwards is a director of Molecular Biosystems, Inc., Northern Trust Bank
and IDEC Pharmaceutical Company. Dr. Edwards is Vice Chairman of the Company's
Compensation/Stock Option Committee and a member of the Investment/Retirement
Plan Committee.
4
<PAGE>
[PHOTO OF JAMES R. MELLOR APPEARS HERE]
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JAMES R. MELLOR Director since 1979. Age 68.
Former Chairman of the Board and Chief Executive Officer (1993 to 1997), and
former President and Chief Operating Officer (1991 to 1993) of General
Dynamics Corporation (diversified defense and aerospace). Mr. Mellor is a
director of General Dynamics Corporation, Aeromovel USA, Inc., Computer
Sciences Corporation and Pinkerton's, Inc. Mr. Mellor is Chairman of the
Company's Compensation/Stock Option Committee.
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[PHOTO OF FRANCIS G. RODGERS APPEARS HERE]
FRANCIS G. RODGERS Director since 1982. Age 71.
Author and Lecturer. Former Vice President, Marketing, IBM (information
processing systems), retired. Mr. Rodgers is a director of Dialogic
Corporation, Mercantile Stores, Inc. and Milliken and Company. Mr. Rodgers is
Chairman of the Company's Audit Committee.
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DIRECTOR EMERITUS (AS OF SEPTEMBER 23, 1998)
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[PHOTO OF JOHN CALASIBETTA APPEARS HERE]
JOHN CALASIBETTA Director from 1962 to 1998.
Age 93.
Former Senior Vice President of the Company.
5
<PAGE>
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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 Francis G. Rodgers, Chairman, Charles J. Lee, Vice
Chairman and Jose E. Blanco, Sr.
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 James R. Mellor,
Chairman, Dr. Charles C. Edwards, Vice Chairman and Rodney
H. Brady.
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 George R. Liddle, Chairman,
Jose E. Blanco, Sr., Vice Chairman, Dr. Charles C. Edwards
and George E. Reinhardt, Jr.
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 E.
Reinhardt, Jr. and Donald R. Roden.
During fiscal 1997, there were thirteen meetings of the
Board, sixteen meetings of the Executive Committee, four
meetings of the Compensation/Stock Option Committee, four
meetings of the Audit Committee, three meetings of the
Investment/Retirement Plan Committee, no meetings for the
Nominating Committee and no 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>
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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 1997 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 (other than the
Chairman of the Committees) received $1,000 for each
Committee meeting attended in person and $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 and
$900 for each telephone meeting of the Committee in which he
participated. A 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 covering 3,750 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 2,500 shares
("Annual Grant") only if the Company attains a ten percent
or greater return on common equity in the preceding fiscal
year. During fiscal 1997, each non-employee director
received an Annual Grant of 2,500 shares.
7
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PRINCIPAL SHAREOWNERS
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BENEFICIAL OWNERSHIP OF SECURITIES
The following table lists the beneficial ownership of each person or group who
owns, to the Company's knowledge, more than five percent of its outstanding
voting securities, based on the number of shares outstanding as of June 30,
1998.
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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
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<S> <C> <C> <C>
Robert E. Martini Common Stock 2,733,768(/1/)(/2/) 5.41
4000 Metropolitan Drive
Orange, California 92868
</TABLE>
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(/1/) Except as indicated otherwise by the following note, shares shown
beneficially owned are those to which Mr. Martini may have sole voting and
dispositive power.
(/2/) Includes 157,077 shares which, as of June 30, 1998, may be acquired
within sixty days pursuant to the exercise of stock options and 47,406 shares
beneficially owned by Mr. Martini for which he does not have voting or
dispositive power.
8
<PAGE>
VOTING SECURITIES OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
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The following table sets forth certain information regarding the ownership of
the Company's Common Stock as of June 30, 1998, by: (a) each director and
nominee; (b) each of the Named 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
OWNED(/1/)(/2/) OUTSTANDING SHARES
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<S> <C> <C>
Jose E. Blanco, Sr. 11,690 *
Rodney H. Brady (/3/) 57,573 *
John Calasibetta(/4/) 232,387 *
Charles J. Carpenter 27,187 *
Neil F. Dimick 64,109 *
Dr. Charles C. Edwards 17,101 *
William J. Elliott 11,479 *
Charles J. Lee 21,442 *
George R. Liddle (/5/) 40,802 *
Brent R. Martini (/6/) 281,521 *
Robert E. Martini (/7/) 2,733,768 5.41
James R. Mellor 20,002 *
George E. Reinhardt, Jr. 110,672 *
Donald R. Roden 71,873 *
Francis G. Rodgers 19,842 *
All directors and executive officers as a
group including those above (20 persons) 3,896,944 7.71
</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/) Includes the number of shares that could be purchased by exercise of
options exercisable as of June 30, 1998, or within 60 days thereafter under
the Company's stock option or stock incentive plans, as follows: Jose E.
Blanco, Sr.-11,690 shares; Rodney H. Brady-15,630 shares; Neil F. Dimick-
58,859 shares; Dr. Charles C. Edwards-13,989 shares; Charles J. Lee-15,630
shares; George R. Liddle-10,707 shares; Robert E. Martini-157,077 shares;
James R. Mellor-15,630 shares; George E. Reinhardt, Jr.-11,690 shares; Donald
R. Roden-59,373 shares; Francis G. Rodgers-15,630 shares; William J. Elliott-
11,479 shares; Charles J. Carpenter-17,187 shares; Brent R. Martini-40,650
shares, and all directors and executive officers as a group, including those
above (20 persons)-609,884 shares.
(/3/) Includes 2,313 shares held by two sons living at home and 39,630 shares
held in trust by Mr. Brady as trustee for his own benefit.
(/4/) Held in trust by Mr. Calasibetta for his own benefit.
(/5/) Includes 29,168 shares held by Mr. Liddle as co-trustee for the benefit
of him and his wife.
(/6/) Includes 228,359 shares held in trust for Brent R. Martini's benefit.
(/7/) Includes 47,406 shares beneficially owned by Mr. Martini for which he
does not have voting or dispositive power.
9
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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Section 16(a) of the Securities Exchange Act (the "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 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 10 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, the Company believes that during the 1997 fiscal year all filing
requirements applicable to its directors and officers were satisfied on a
timely basis, except that William J. Elliott (an executive officer of the
Company) failed to file on a timely basis a report disclosing the grant of
stock options, Brent R. Martini (an executive officer of the Company) failed
to file on a timely basis a report disclosing his beneficial ownership of
shares held by a related trust and John P. Naughton (an executive officer of
the Company) failed to file on a timely basis a report disclosing an
acquisition of shares pursuant to an exercise of a stock option. These
failures to file on a timely basis were inadvertent; the required filings were
made promptly after the failures to file on a timely basis were noted.
10
<PAGE>
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COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information for the fiscal years ended
September 30, 1997, 1996 and 1995, respectively, with respect to certain
compensation awarded or paid to the Company's former Chief Executive Officer,
its current Chief Executive Officer and its other four most highly compensated
executive officers during fiscal 1997 (collectively, the "Named Executive
Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
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<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS
----------------------- ------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
COMPEN- OPTIONS/ COMPEN-
NAME AND SALARY BONUS SATION SARS SATION(/1/)
PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)
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<S> <C> <C> <C> <C> <C> <C> <C>
Robert E. Martini 1997(/2/) 412,500 200,000 270,592(/3/) 66,250 2,286,370(/4/)
Chairman 1996 560,000 502,600 108,561(/3/) 31,250 33,005(/4/)
1995 553,269 428,000 168,229(/3/) 19,688 36,774(/4/)
Donald R. Roden 1997(/5/) 500,000 465,700 67,694(/6/) 31,250 1,154
President and Chief 1996(/5/) 400,000 359,000 63,601(/6/) 118,751 --
Executive Officer 1995(/5/) -- -- -- -- --
Neil F. Dimick 1997 325,000 309,900 47,290(/7/) -- 4,750
Executive Vice
President, 1996 275,000 269,300 132,631(/7/) 50,001 4,571
Chief Financial Officer 1995 256,731 200,000 35,049(/7/) 6,563 4,500
William J. Elliott 1997 265,000 185,400 51,786(/9/) 11,000 3,363
Executive Vice President 1996(/8/) -- -- -- 31,250 --
1995(/8/) -- -- -- -- --
Charles J. Carpenter 1997 225,000 200,000 15,605(/1//0/) -- 4,750
Executive Vice
President, 1996 169,167 117,800 7,200 31,250 2,591
Chief Procurement
Officer 1995 150,000 30,000 5,400 18,750 4,500
Brent R. Martini 1997 225,000 186,100 22,863(/1//1/) -- 2,841
Executive Vice President 1996 171,667 114,600 7,200 32,263 4,571
1995 152,917 76,800 5,800 18,750 4,317
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</TABLE>
(/1/)Reflects Company contributions under the Company's Pre-Tax Investment
Retirement Account Employer Contributions Plus Plan, unless otherwise
indicated in the following notes.
(/2/)Includes compensation for Mr. Martini through January 1997 as the
Company's C.E.O. and thereafter as an employee and then a consultant to the
Company.
(/3/)Includes $92,120, $80,780 and $81,900 of imputed compensation reflecting
the difference between the average market interest rate for the Company and
the interest free loan to Robert E. Martini during fiscal years 1995, 1996 and
1997, respectively, described under "Certain Transactions" commencing on
page 22. For fiscal 1997, also includes $129,167 of annuity payments made to
Mr. Martini under the Bergen Brunswig Capital Accumulation Plan (the "CAP").
(/4/)Includes $31,774, $28,418 and $5,197 of allocated premiums paid by the
Company to a split dollar life insurance plan for Robert E. Martini during
fiscal years 1995, 1996 and 1997, respectively. For fiscal 1997, amounts also
include a lump sum payment of $1,059,610 made to Mr. Martini under the
Company's Amended and Restated Supplemental Executive Retirement Plan in
connection with the termination of Mr. Martini's participation in that plan
and payments of $1,216,813 made to Mr. Martini reflecting amounts that Mr.
Martini would have received under the CAP had he retired at age 62.
(/5/)Mr. Roden's employment with the Company commenced during fiscal year
1996; accordingly, no amounts are reportable for fiscal year 1995. Mr. Roden's
compensation for fiscal 1997 includes compensation for services as C.O.O.
(through January 1997) and C.E.O. (thereafter).
11
<PAGE>
(/6/)Includes $16,362 and $31,992 of imputed compensation reflecting the
difference between the average market interest rate for the Company and the
interest free loan to Mr. Roden for fiscal years 1996 and 1997, described
under "Certain Transactions" commencing on page 22.
(/7/)Includes $18,506, $16,288 and $18,281 of imputed compensation reflecting
the difference between the average market interest rate for the Company and
the interest free loan to Mr. Dimick for fiscal years 1995, 1996 and 1997,
respectively, described under "Certain Transactions" commencing on page 22.
(/8/)Mr. Elliott's employment with the Company commenced during fiscal year
1997; accordingly, no compensation amounts (other than options granted
immediately prior to the commencement of active employment) are reportable for
fiscal years 1996 and 1995.
(/9/)Includes $17,763 of imputed compensation reflecting the difference
between the average market interest rate for the Company and the interest free
loan to Mr. Elliott for fiscal year 1997, described under "Certain
Transactions" commencing on page 22.
(/1//0/)Includes $4,113 of imputed compensation reflecting the difference
between the average market interest rate for the Company and the interest free
loan to Mr. Carpenter for fiscal year 1997 described under "Certain
Transactions" commencing on page 22.
(/1//1/)Includes $6,169 of imputed compensation reflecting the difference
between the average market interest rate for the Company and the interest free
loan to Brent R. Martini for fiscal year 1997 described under "Certain
Transactions" commencing on page 22.
12
<PAGE>
- -------------------------------------------------------------------------------
EMPLOYMENT AND SEVERANCE AGREEMENTS
In April 1994, the Board authorized the Company to enter into written
employment agreements (the "Employment Agreements") and severance agreements
(the "Severance Agreements") with certain executive officers of the Company,
including Robert E. Martini and Mr. Dimick. Similar agreements were entered
into in October 1995 with Mr. Roden, in September 1996 with Mr. Carpenter and
Brent R. Martini, and in October 1996 with Mr. Elliott. For information
regarding arrangements made with Robert E. Martini after he ceased to serve as
the Company's Chief Executive Officer, see "Consulting Agreement".
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, regardless of what may be paid to
other executives, 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"; (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, which provide for
benefits additional to the Employment Agreements, require 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
13
<PAGE>
of the Named Executive Officer ending before the date of the Change in Control
if, following a Change in 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 Agreements continue until three years and one day
after a Change in Control or until the Named Executive Officer receives the
severance payment under the Severance Agreements.
Under the Severance Agreements, 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
Securities Exchange Act of 1934 (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 the meaning of Rule 13(d)-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 14(a)-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 all or 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 any 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.
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.
14
<PAGE>
- -------------------------------------------------------------------------------
CONSULTING AGREEMENT
The Company and Robert E. Martini have entered into a consulting agreement
(the "Consulting Agreement") pursuant to which Mr. Martini will continue to
serve the Company as a consultant in exchange for a fee of $300,000 per year
and certain continued benefits. The Consulting Agreement currently provides
for a three-year evergreen term. The benefits to be provided to Mr. Martini
will consist of continued participation in the Company's Retired Officers'
Medical Plan (the "ROM Plan").
- -------------------------------------------------------------------------------
RETIRED OFFICERS' MEDICAL PLAN
In addition to the above arrangements, the Company has an unfunded, non-
qualified ROM Plan available to certain officers of the Company and their
spouses, including executive officers now retired from the Company. The ROM
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 ROM 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. Based
upon the various eligibility criteria under the ROM Plan, three of the Named
Executive Officers (Robert E. Martini, Charles J. Carpenter and Brent R.
Martini) presently are 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 exercised by the Named Executive Officers during Fiscal 1997 and with
respect to stock options held by the Named Executive Officers:
OPTION GRANTS IN LAST FISCAL YEAR(/1/)
<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/) 1997 ($/SHARE) DATE VALUE ($)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Robert E. Martini 62,500(/3/) 13.38 26.00 11/07/06 602,500(/4/)
3,750 .80 29.15 05/22/07 41,850(/4/)
Donald R. Roden 31,250 6.69 26.00 11/07/06 301,250(/5/)
Neil F. Dimick 0 N/A N/A N/A N/A
William J. Elliott 11,000 2.35 42.00 08/24/07 189,970(/6/)
Charles J. Carpenter 0 N/A N/A N/A N/A
Brent R. Martini 0 N/A N/A N/A N/A
</TABLE>
- -------------------------------------------------------------------------------
(/1/)All option information with respect to stock options granted prior to
June 2, 1997 has been adjusted retroactively to reflect a 25% stock dividend
effected as of that date.
(/2/)All options were granted as nonstatutory stock options to purchase shares
of the Company's Class A Common Stock (the "Common Stock") at 100% of fair
market value on the date of grant, unless otherwise noted, and vest 25% one
year after the date of grant and then 25% per year thereafter.
15
<PAGE>
(/3/)Of this amount, options covering 15,204 shares were granted as incentive
stock options.
(/4/)The grant date present value is based on a Black-Scholes model and
assumes a risk-free rate of return of 6.50%, an option term of ten years, a
dividend yield of 2.11% and a stock volatility of .300.
(/5/)The grant date present value is based on a Black-Scholes model and
assumes a risk-free rate of return of 6.50%, an option term of ten years, a
dividend yield of 2.17% and a stock volatility of .296.
(/6/)The grant date present value is based on a Black-Scholes model and
assumes a risk-free rate of return of 6.50%, an option term of ten years, a
dividend yield of 1.97% and a stock volatility of .332.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED(/1/)
SHARES OPTIONS/SARS AT IN-THE-MONEY OPTIONS/
ACQUIRED ON FY END (#) SARS AT FY END ($)
EXERCISE VALUE ------------------------- -------------------------
NAME (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert E. Martini 20,606 300,545 123,538 103,473 3,053,738 1,819,825
Donald R. Roden 0 -- 29,686 120,315 627,045 2,330,343
Neil F. Dimick 0 -- 44,652 48,663 1,101,281 1,011,122
William J. Elliott 0 -- 7,812 34,438 135,694 407,118
Charles J. Carpenter 29,347 523,903 12,499 37,501 233,277 699,908
Brent R. Martini 0 0 30,580 44,526 714,911 894,817
</TABLE>
- -------------------------------------------------------------------------------
(/1/)Pursuant to the rules promulgated by the Securities and Exchange
Commission, these values were calculated by determining the difference between
the value of the Company's stock at fiscal year end ($40.37 on September 30,
1997) and the exercise price of the options.
- -------------------------------------------------------------------------------
PENSION TABLE
The following table shows the estimated annual 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 all employee participants
on October 7, 1987.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AVERAGE
ANNUAL
COMPENSATION
DURING
HIGHEST
THREE OF
FINAL ESTIMATED ANNUAL RETIREMENT BENEFITS FOR
FIVE YEARS YEARS OF CREDITED SERVICE SHOWN BELOW
BEFORE -------------------------------------------
RETIREMENT 10 20 30 40
- ---------------------------------------------------------
<S> <C> <C> <C> <C>
$ 200,000 $ 70,600 $ 124,000 $ 124,000 $ 124,000
400,000 173,100 279,800 279,800 279,800
600,000 275,700 435,700 435,700 435,700
800,000 378,200 591,500 591,500 591,500
1,000,000 484,100 750,800 750,800 750,800
</TABLE>
- -------------------------------------------------------------------------------
As of September 30, 1997, full years of actual credited service in these plans
are: Robert E. Martini--41 years; Mr. Roden--2 years; Mr. Dimick--6 years; Mr.
Elliott--1 year; Mr. Carpenter--17 years; and Brent R. Martini--10 years.
Compensation for a particular year as used for the calculation of retirement
benefits under the SERP includes base salary received during the year
(including salary deferred under a salary reduction arrangement) 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
16
<PAGE>
benefit under the CAP; (3) an annuitized amount based upon an assumed level of
participation in the Company's Pre-Tax Investment Retirement Account Employer
Contributions 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), but only if payment of
benefits commences before a change in control (as defined by the SERP).
Benefits are payable under the SERP in the form of a joint and survivor
annuity, consisting of monthly payments to each participant for his or her
life and, upon his or her death, a specified percentage of his or her monthly
benefit to his or her surviving beneficiary for the beneficiary's remaining
life. In the alternative, a participant may elect to receive his or her
benefit in a lump sum. The Company may direct that any vested benefit of a
participant be paid in a lump sum upon the death of the participant. A $5,000
funeral benefit is available to a participant's estate, offset by any funeral
benefit paid under the CAP. 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 in 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 (the assets of which are subject to the claims of the
Company's general creditors) for certain executive officer deferral plans has
been established to preserve these and certain other executive benefits.
- -------------------------------------------------------------------------------
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following persons served on the Company's Compensation/Stock Option
Committee during the fiscal year ended September 30, 1997: Francis G. Rodgers,
James R. Mellor, Charles C. Edwards, Jose E. Blanco, Sr. and Rodney H. Brady.
None of the persons named was an officer or employee of the Company or any of
its subsidiaries during the current fiscal year or during the fiscal year
ended September 30, 1997. With the exception of Mr. Brady, none of the persons
named is a former officer of the Company or any of its subsidiaries; Mr. Brady
was an officer of the Company and its subsidiaries more than ten years ago.
For information regarding indemnification arrangements applicable to the
Company's directors, see "Other Matters" on page 23.
- -------------------------------------------------------------------------------
REPORT OF THE COMPENSATION/ STOCK OPTION COMMITTEE
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
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 21
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.
17
<PAGE>
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 compensation 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 increases 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
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.
18
<PAGE>
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 1997
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, 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 1997 were as follows:
.Salary Adjustment, Grant of Bonus and Stock Option in fiscal 1997.
Mr. Roden (who has served as CEO since February 1997) was granted a 25.0%
salary increase, which brought his base pay to $500,000 per annum for fiscal
1997. This adjustment was made in large part because of the increase in
revenues and operating earnings for the year ended September 30, 1996, recent
increases in the Company's operating margin percentage and the increase in
management responsibility assumed by Mr. Roden upon his becoming CEO.
Mr. Martini (who served as CEO through January 1997) and Mr. Roden were
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 and other predetermined objectives. These criteria
allow the Chief Executive Officer to earn up to 25%, 25%, 25% and 25%,
respectively, of his base salary. A discretionary award of up to 50% of his
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. 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 and
19
<PAGE>
Mr. Roden during their respective terms as Chief Executive Officer in meeting
each such criterion, the Committee awarded Mr. Martini the sum of $200,000
and Mr. Roden the sum of $465,700.
Mr. Martini and Mr. Roden also participated in the Company's equity-based
compensation program. Options granted in fiscal 1997 are shown under the
caption "Option Grants in Last Fiscal Year". In considering the grant of
options to Mr. Martini and Mr. Roden, respectively, the Committee took into
consideration those items discussed above.
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 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 the 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
James R. Mellor, Chairman
Dr. Charles C. Edwards, Vice Chairman
Rodney H. Brady
20
<PAGE>
- --------------------------------------------------------------------------------
PERFORMANCE GRAPH
The following graph compares the cumulative total shareowner return (stock
price appreciation plus dividends) for the five years ending September 30,
1997, 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.; D & K Healthcare
Resources, Inc. (formerly known as D&K Wholesale Drug, Inc.); FoxMeyer
Corporation; Herbalife International, Inc.; Mark Solutions, Inc.; McKesson
Corporation; Moore Medical Corporation; PharMerica, Inc. (formerly known as
Capstone Pharmacy Services, Inc.) and Tristar Corporation. Cumulative total
shareowner return (on an assumed initial investment of $100 at August 31,
1992), 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, 1997. (The Company changed its fiscal year-
end during fiscal 1994 from August 31 to September 30).
COMPARISON FIVE-YEAR CUMULATIVE TOTAL RETURNS
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
08/31/92 08/31/93 09/30/94 09/29/95 09/30/96 09/30/97
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Bergen Brunswig
Corporation 100.0 92.9 89.4 125.6 190.0 306.8
- ----------------------------------------------------------------------------
NYSE Stock Market (US
Companies) 100.0 116.6 119.1 151.6 181.1 249.5
- ----------------------------------------------------------------------------
Self-Determined Peer
Group 100.0 127.3 215.2 275.7 369.4 555.8
</TABLE>
21
<PAGE>
- -------------------------------------------------------------------------------
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 in effect upon the date of any
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. The principal
amount of these loans outstanding as of June 30, 1998 to Robert E. Martini (an
executive officer and director of the Company) was $1,400,000. The loans to
Donald R. Roden and Neil F. Dimick (executive officers and directors of the
Company), at the time made, and to William J. Elliott, Charles J. Carpenter
and Brent R. Martini (executive officers of the Company) were made pursuant to
the Executive Loan Program and were in the amounts of $625,000, $406,250,
$331,250, $281,250 and $281,250, respectively, as of June 30, 1998. In
addition, Mr. Elliott received a relocation loan in the amount of $100,000
during fiscal 1997. Such amounts also represent the largest aggregate amount
of each executive officer's indebtedness during the Company's last fiscal
year.
The Company and the Named Executive Officers and certain other executive
officers have entered into separate agreements which have the effect of
amending (without any conditions or further actions required on the part of
such officers) the above-mentioned executive loans, as evidenced by their
respective promissory notes and related loan documentation, such that if
either (A) the applicable executive officer remains in continuous employment
with the Company until August 2001, or (B) such executive officer's employment
with the Company is terminated before such date by the Company without cause
or by such executive officer with good reason (as such term is defined in the
Employment Agreements) or as a result of such executive officer's death or
disability, then upon such date or the date of such termination, as
applicable, the entire unpaid principal balance of the loan will be
unconditionally and automatically (meaning no action required on the part of
such officer) forgiven and canceled with no interest due.
The Company entered into a life insurance plan for Robert E. 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 full force until Mr. Martini's seventy-fifth birthday, whether he is
employed by the Company or has retired.
22
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OTHER MATTERS
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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.
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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.
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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.
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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 next Annual Meeting must be received by the Company a
reasonable time before the solicitation of proxies is made, pursuant to Rule
14a-8 under the Exchange Act.
23
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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 Morrow & 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. The Company anticipates that the
fees it will incur for this service will be approximately $5,000, 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,
/s/ Milan A. Sawdei
Milan A. Sawdei
Executive Vice President,
Chief Legal Officer and Secretary
A copy of the Annual Report for the fiscal year ended September 30, 1997,
including certain financial statements for the six months ended March 31,
1998, accompanies this proxy statement. 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, 1997, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION,
WHICH PROVIDES CERTAIN ADDITIONAL INFORMATION CONCERNING THE COMPANY AND ITS
MANAGEMENT, IS INCLUDED WITHIN THE ANNUAL REPORT ACCOMPANYING THIS PROXY
STATEMENT.
24
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BERGEN BRUNSWIG CORPORATION
4000 Metropolitan Drive
Orange, California
[MAP APPEARS HERE]
DIRECTIONS TO ANNUAL MEETING
<TABLE>
<S> <C> <C>
LOS ANGELES AIRPORT LOS ANGELES DOWNTOWN JOHN WAYNE AIRPORT
. Century Boulevard east to San Diego . Santa Ana Fwy. (5) south . Take Costa Mesa Fwy. (55) north
Fwy. (405) south . Exit at State College . Change to Garden Grove Fwy.
. Continue south and change to Boulevard/ The City Drive (22) west
Garden Grove Fwy. (22) east . Turn right onto The City Drive . Exit at The City Drive
. Exit at The City Drive . Turn right onto Metropolitan Drive . Turn left at light
. Turn left at light . Follow to #4000 on the left . Turn left onto
. Turn left onto Metropolitan Drive Metropolitan Drive . Follow to #4000 on the
. Follow to #4000 on the left left
</TABLE>
<PAGE>
[LOGO OF BERGEN BRUNSWIG CORPORATION]
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR
THE ANNUAL MEETING OF SHAREOWNERS SEPTEMBER 24, 1998
The undersigned hereby appoints Robert E. Martini, Donald R. Roden and Charles
C. Edwards, M.D. 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 September 24,
1998, 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.)
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COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE
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FOLD AND DETACH HERE
<PAGE>
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
below.
<TABLE>
<CAPTION>
<S> <C>
1. Election of three directors to Class 1 THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS BELOW.
FOR all nominees WITHHOLD NOMINEES: Robert E. Martini, Donald R. Roden and Nell F. Dimick
listed to the right AUTHORITY
(except as marked to vote for the (INSTRUCTION: To withhold authority for any particular nominee, write such
to the contrary) nominees listed nominee(s) name on the line below.)
[_] [_] _____________________________________________________________________________
</TABLE>
Dated:______________________________,19_____
____________________________________________
(Signed)
_____________________________________________
(Signed)
Please sign exactly as your name appears
hereon. 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.
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FOLD AND DETACH HERE
