<PAGE>
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 Section240.14a-11(c) or
Section240.14a-12
BERGEN BRUNSWIG CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(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)(1)
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:
-----------------------------------------------------------------------
/ / 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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[LOGO]
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4000 Metropolitan Drive, Orange, California 92868 (714) 385-4000
ROBERT E. MARTINI
Chairman of the Board
January 14, 2000
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 Tuesday, February 15,
2000, 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 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 (or promptly submit your vote by calling the
toll-free telephone number as provided on the proxy card) 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.
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Sincerely,
[LOGO]
Robert E. Martini
CHAIRMAN OF THE BOARD
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NOTICE OF ANNUAL MEETING OF SHAREOWNERS
TO BE HELD FEBRUARY 15, 2000
BERGEN BRUNSWIG CORPORATION
4000 METROPOLITAN DRIVE
ORANGE, CALIFORNIA 92868
(714) 385-4000
BERGEN NOTICE IS HEREBY GIVEN that the Annual Meeting of
BRUNSWIG Shareowners of Bergen Brunswig Corporation (the "Company")
CORPORATION will be held at the Company's headquarters located at 4000
Metropolitan Drive, Orange, California on February 15, 2000,
at 10:00 A.M., Pacific Time, for the following purposes:
1. To elect four Class III directors for a term of three
years and one Class I director for a remaining term of one
year; 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 December
28, 1999, 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 OR PROMPTLY SUBMIT YOUR VOTE BY CALLING THE
TOLL-FREE TELEPHONE NUMBER AS PROVIDED ON THE PROXY CARD.
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.
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By order of the Board of Directors,
[LOGO]
Milan A. Sawdei
EXECUTIVE VICE PRESIDENT,
CHIEF LEGAL OFFICER AND SECRETARY
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Orange, California
January 14, 2000
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 OR CALL IN YOUR VOTE BY TELEPHONE AS PROMPTLY AS
POSSIBLE SO THAT YOUR SHARES MAY BE REPRESENTED. A POSTAGE
PREPAID ENVELOPE IS ENCLOSED AND A TOLL-FREE TELEPHONE
NUMBER IS PROVIDED 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,
AND YOU MUST VOTE SUCH SHARES IN ACCORDANCE WITH THE
INSTRUCTIONS YOU RECEIVE FROM SUCH BROKER, BANK OR OTHER
NOMINEE.
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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 Tuesday,
February 15, 2000, 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 January 14, 2000, 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 or a vote
which is made by telephone, those shares will be voted in accordance with such
shareowner's selections.
VOTING AT THE MEETING
The Board of Directors has fixed the close of business on December 28, 1999 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 134,311,910 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 four Class III nominees and the one
Class I nominee receiving the largest number of votes cast by holders of Common
Stock will be elected as directors and any other matters that are properly put
to a vote of the shareowners will require a majority of 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
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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 12
directors. The directors are divided into three
approximately equivalent-sized classes, and, unless there is
a legal requirement providing otherwise, each director in a
class will serve for a period of three years on a
staggered-term basis. Accordingly, at this annual meeting
there are four nominees for Class III directors, whose terms
are expiring, and one nominee for Class I director with a
remaining term of one year, who must be affirmed by the
shareowners.
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 November 1, 1999,
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.
NOMINEES FOR DIRECTORS FOR TERMS WHICH WILL EXPIRE AT THE
2003
ANNUAL MEETING (CLASS III DIRECTORS)
RODNEY H. BRADY Director since 1973. Age
[PHOTO] 66.
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 Vice Chairman of the Company's
Compensation/Stock Option Committee and is a member of the
Company's Executive, Financing and Nominating Committees.
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2
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BRENT R. MARTINI Director since 1999. Age
[PHOTO] 40.
Executive Vice President of the Company (since 1996).
President (since 1996), Executive Vice President, West
Region (1994 to 1996) and Vice President, Quality
Organizational Development and Training (1991 to 1994) of
Bergen Brunswig Drug Company, a subsidiary of the Company.
Mr. Martini is a director of National Wholesale Druggists'
Association.
JAMES R. MELLOR Director since 1979. Age
[PHOTO] 69.
Chairman of the Board, USEC, Inc. since July 1998. 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., USEC, Inc. and
Computer Sciences Corporation. Mr. Mellor is a member of the
Company's Audit and Compensation/Stock Option Committees.
FRANCIS G. RODGERS Director since 1982. Age
[PHOTO] 73.
Author and Lecturer. Former Vice President, Marketing, IBM
(information processing systems), retired. Mr. Rodgers is a
director of Milliken and Company, Protegrity Inc. and
Response Logic Inc. Mr. Rodgers is a member of the Company's
Audit Committee.
NOMINEE FOR DIRECTOR FOR A TERM WHICH WILL EXPIRE AT THE
2001
ANNUAL MEETING (CLASS I DIRECTOR)
CHARLES C. EDWARDS, M.D. Director since 1985. Age
[PHOTO] 76.
Former President and Chief Executive Officer, Scripps Clinic
and Research Foundation 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 Chairman of
the Company's Compensation/ Stock Option Committee and Vice
Chairman of the Company's Investment/ Retirement Plan
Committee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL OF THE
NOMINEES.
</TABLE>
3
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DIRECTORS WHOSE TERMS EXPIRE AT THE 2001 ANNUAL MEETING
(CLASS I DIRECTORS)
ROBERT E. MARTINI Director since 1962. Age
[PHOTO] 67.
Chairman of the Board (since 1992), interim Chief Executive
Officer (since November 1999), Chief Executive Officer (1990
to 1997) and President (1981 to 1992) of, and a consultant
(since 1997) to, the Company. Mr. Martini is a director of
Mossimo, Inc. Mr. Martini is Chairman of the Company's
Executive and Nominating Committees and a member of the
Company's Financing Committee. Mr. Martini is the father of
Brent R. Martini, an Executive Vice President and nominee
for director of the Company.
NEIL F. DIMICK Director since 1995. Age
[PHOTO] 50.
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) and its subsidiaries ASD
Specialty Healthcare, Inc. (since 1996) and Integrated
Commercialization Solutions, Inc. (since 1998). Mr. Dimick
is Chairman of the Company's Financing Committee and a
member of the Company's Investment/Retirement Plan
Committee.
DONALD R. RODEN Director since 1995. Age
[PHOTO] 53.
Formerly the President (1995 to 1999), Chief Executive
Officer (1997 to 1999) and 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).
DIRECTORS WHOSE TERMS EXPIRE AT THE 2002 ANNUAL MEETING
(CLASS II DIRECTORS)
JOSE E. BLANCO, SR. Director since 1992. Age
[PHOTO] 73.
Chairman of the Board (1987 to 1999) of J.M. Blanco, Inc.
(wholesale pharmaceutical distribution).
</TABLE>
4
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CHARLES J. LEE Director since 1972. Age
[PHOTO] 74.
Former Managing Director, Smith Barney Inc. (investment
banking) (1989 to 1996). Mr. Lee is Chairman of the
Company's Audit Committee and a member of the Company's
Executive, Financing and Nominating Committees.
GEORGE R. LIDDLE Director since 1969. Age
[PHOTO] 72.
Investment Adviser. Former Vice President, Kidder, Peabody &
Co., Inc. (stockbrokers), retired. Mr. Liddle is a member of
the Company's Investment/Retirement Plan Committee.
GEORGE E. REINHARDT, JR. Director since 1985. Age
[PHOTO] 70.
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 Chairman of the Company's Investment/Retirement
Plan Committee and a member of the Company's Executive,
Financing and Nominating Committees.
DIRECTOR EMERITUS
JOHN CALASIBETTA Director from 1962 to 1998. Age
[PHOTO] 94.
Former Senior Vice President of the Company.
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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 and George E. Reinhardt, Jr.
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 Charles J. Lee, Chairman, James R. Mellor and Francis G.
Rodgers.
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, Rodney H. Brady, 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 George E. Reinhardt, Jr.,
Chairman, Dr. Charles C. Edwards, Vice Chairman, Neil F.
Dimick and George R. Liddle.
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 and
George E. Reinhardt, Jr.
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 Neil F. Dimick,
Chairman, Rodney H. Brady, Charles J. Lee, Robert E. Martini
and George E. Reinhardt, Jr.
During fiscal 1999, there were twelve meetings of the Board,
twelve 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 four 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.
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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 1999 an
annual fee of $36,000 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 or she serves six months or more in a fiscal year,
receives 100% of the prevailing annual fee. The Company's
1999 Deferred Compensation Plan provides that a non-employee
director of the Company may elect to defer up to 100% of
these fees in an amount not less than $2,500 of such fees
into said Plan.
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 or her
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 or her termination from Board service, his
or her beneficiary will receive an amount equal to 100% of
the amount the Company would have paid the director had
normal retirement age been attained.
Under the Company's 1999 Non-Employee Directors' Stock Plan
each non-employee director is automatically entitled to an
option covering 20,000 shares of Common Stock upon the date
the Plan was adopted or upon his or her initial election or
appointment to the Board, and is thereafter entitled to an
annual grant of 6,000 shares ("Annual Grant"). During fiscal
1999, each non-employee director received an Annual Grant of
20,000 shares.
The 1999 Non-Employee Directors' Stock Plan provides that
each non-employee director will be granted a number of
shares of Common Stock ("Restricted Shares") equivalent to
25% of his or her annual retainer, in lieu of cash
compensation for such portion thereof, which will be
determined at the beginning of each fiscal year by dividing
25% of the non-employee director's annual retainer by the
fair market value of one share of Common Stock on the first
business day of such fiscal year. The Restricted Shares
granted to a non-employee director will vest in full as of
the first anniversary of the date such Restricted Shares
were awarded or will become fully vested upon a non-employee
director's termination of service due to death, disability,
retirement in accordance with the retirement policy for
non-employee directors then in effect, or involuntary
termination of service on the Board other than for cause.
The Restricted Shares will not vest if the non-employee
director voluntarily resigns or is terminated for cause
prior to the date that such shares otherwise would have
become fully vested.
In addition to receiving 25% of the annual fee in Restricted
Shares, a non-employee director may elect prior to the start
of each fiscal year to receive all or additional portions of
his or her annual retainer and other fees (except to the
extent that such fees are the subject of Restricted Shares)
in shares of Common Stock in lieu of cash therefor, which
will be determined by dividing the amount of such fees by
the fair market value of one share of Common Stock on the
first business day of such fiscal year.
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BENEFICIAL OWNERSHIP OF SECURITIES
PRINCIPAL The following table lists the beneficial ownership of each
SHAREOWNERS 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 November 1,
1999.
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<CAPTION>
NAME AND Amount and
ADDRESS OF Nature of Percent of
BENEFICIAL Beneficial Outstanding
OWNERS Title of Class Ownership(1) Shares
<S> <C> <C> <C>
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Sanford C. Bernstein & Co., Inc. Common Stock 15,960,967 11.9%
767 Fifth Avenue
New York, NY 10153
--------------------------------------------------------------------------------------------------
Putnam Investments, Inc. Common Stock 7,802,637 5.8%
One Post Office Square
Boston, MA 02109
--------------------------------------------------------------------------------------------------
Counsel Corporation(2) Common Stock 7,832,655 5.8%
103 King Street, Suite 1300
Toronto, Canada M5X
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(1) Based on disclosures made by the beneficial owners or
their agents in reports on Schedule 13D or 13G filed with
the Securities and Exchange Commission.
(2) On October 14, 1999, the Company filed suit against
Counsel Corporation in connection with the acquisition by
the Company on January 22, 1999 of Stadtlander Drug Company,
formerly a subsidiary of Counsel Corporation. The lawsuit is
described more fully in the Company's Annual Report on
Form 10-K for the fiscal year ended September 30, 1999 filed
with the Securities and Exchange Commission.
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VOTING SECURITIES The following table sets forth certain information regarding
OWNED BY the ownership of the Company's Common Stock as of November
DIRECTORS AND 1, 1999, by: (a) each director and nominee; (b) each of the
EXECUTIVE Named Executive Officers; and, (c) all directors and
OFFICERS executive officers as a group.
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<TABLE>
<CAPTION>
AGGREGATE
NUMBER
OF SHARES PERCENT OF
BENEFICIALLY OUTSTANDING
OWNED(1)(2) SHARES
<S> <C> <C> <C>
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Jose E. Blanco, Sr. 362 *
Rodney H. Brady(3) 120,174 *
Charles J. Carpenter 165,514 *
Neil F. Dimick 262,308 *
Dr. Charles C. Edwards 39,230 *
William J. Elliott(4) 161,740 *
Charles J. Lee 47,912 *
George R. Liddle(5) 84,072 *
Brent R. Martini(6) 743,804 *
Robert E. Martini(7) 5,548,950 4.1
James R. Mellor 45,032 *
George E. Reinhardt, Jr. 226,372 *
Donald R. Roden 387,292 *
Francis G. Rodgers 48,312 *
All directors and executive officers as a group including
those above (18 persons) 8,383,166 6.2
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* Denotes ownership of less than 1% of the outstanding
shares of Common Stock.
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(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 and except for 94,812 shares beneficially
owned by Robert E. Martini, 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 November 1, 1999,
or within 60 days thereafter under the Company's stock
option or stock incentive plans, as follows: Jose E. Blanco,
Sr.--0- shares; Rodney H. Brady-35,926 shares; Charles J.
Carpenter-125,318 shares; Neil F. Dimick-241,002 shares;
Dr. Charles C. Edwards-32,644 shares; William J.
Elliott-111,182 shares; Charles J. Lee-35,926 shares; George
R. Liddle-24,480 shares; Brent R. Martini-179,792 shares;
Robert E. Martini-314,668 shares; James R. Mellor-35,926
shares; George E. Reinhardt, Jr.-28,046 shares; Donald R.
Roden-332,292 shares; Francis G. Rodgers-35,926 shares, and
all directors and executive officers as a group, including
those above (18 persons)--1,533,128 shares.
(3) Includes 4,626 shares held by two sons living at home
and 79,622 shares held by Mr. Brady and his wife together as
tenants in common.
(4) Mr. Elliott resigned effective as of December 23, 1999.
(5) Includes 59,592 shares held by Mr. Liddle as co-trustee
for the benefit of him and his wife.
(6) Includes 486,012 shares held in trust for Brent R.
Martini's benefit and 32,000 shares for which he does not
have voting or dispositive power.
(7) Includes 94,812 shares beneficially owned by
Mr. Martini for which he does not have voting or dispositive
power.
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SECTION 16(A) Section 16(a) of the Securities Exchange Act (the "Exchange
BENEFICIAL Act") requires the Company's directors, officers and persons
OWNERSHIP who own more than ten percent of a registered class of the
REPORTING Company's equity securities to file reports of ownership and
COMPLIANCE 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 or
information furnished to the Company, the Company believes
that during the 1999 fiscal year all filing requirements
applicable to its directors and officers were satisfied on a
timely basis, except that Linda M. Burkett (an executive
officer of the Company) failed to file on a timely basis a
report disclosing an acquisition of shares of Common Stock.
This failure to file on a timely basis was inadvertent; the
required filing was made promptly after the failure to file
on a timely basis was noted.
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COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information for the fiscal
years ended September 30, 1999, 1998 and 1997, 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 during each such
fiscal year (collectively, the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-------------
ANNUAL COMPENSATION AWARDS
----------------------------------- -------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
COMPEN- OPTIONS/ COMPEN-
NAME AND SALARY BONUS(1) SATION SARS SATION(2)
PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------
Donald R. Roden(3) 1999 675,000 264,900 63,217(4) 50,000 10,000
President and Chief 1998 568,750 718,400 52,413(4) 300,000 5,000
Executive Officer 1997 500,000 465,700 67,694(4) 31,250 1,154
Neil F. Dimick 1999 425,000 178,150 51,411(5) 35,000 10,000
Executive Vice 1998 366,250 462,900 51,073(5) 180,000 5,000
President, Chief 1997 325,000 309,900 47,290(5) -- 4,750
Financial Officer
Brent R. Martini(6) 1999 325,000 170,300 -- 25,000 10,000
Executive Vice 1998 270,833 327,100 -- 150,000 5,000
President 1997 225,000 186,100 22,863 -- 2,841
Charles J. Carpenter(7) 1999 300,000 119,675 -- 25,000 10,000
Executive Vice 1998 257,083 312,200 -- 150,000 5,000
President 1997 225,000 200,000 15,605 -- 4,750
William J. Elliott(8) 1999 300,000 65,900 -- 13,100 10,000
Executive Vice 1998 283,333 217,400 -- 150,000 5,000
President 1997 265,000 185,400 51,786(9) 11,000 3,363
--------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
(1) Amounts in this column reflect the aggregate annual
bonuses which were earned for such fiscal year.
(2) Reflects Company contributions under the Company's
Pre-Tax Investment Retirement Account Employer Contributions
Plus Plan, unless otherwise indicated in the following
notes.
(3) Mr. Roden's employment with the Company was terminated
as of November 3, 1999.
(4) Includes $31,992, $35,188 and $41,990 of imputed
compensation reflecting the difference between the average
market interest rate for the Company and the interest free
loans to Mr. Roden for fiscal years 1997, 1998 and 1999,
described under "Certain Transactions" commencing on page
20, and $19,890 of incremental costs to the Company in
providing leased vehicles to Mr. Roden.
(5) Includes $18,281, $22,872 and $27,067 of imputed
compensation reflecting the difference between the average
market interest rate for the Company and the interest free
loans to Mr. Dimick for fiscal years 1997, 1998 and 1999,
respectively, described under "Certain Transactions"
commencing on page 20, and $17,700 of incremental costs to
the Company in providing leased vehicles to Mr. Dimick.
(6) Mr. Martini also serves as President of Bergen Brunswig
Drug Company, a subsidiary of the Company.
(7) Mr. Carpenter also serves as President and CEO of
PharMerica, Inc., a subsidiary of the Company.
(8) Mr. Elliott also served as President of Bergen Brunswig
Medical Corporation, a subsidiary of the Company.
Mr. Elliott resigned effective as of December 23, 1999.
(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 20.
</TABLE>
10
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<TABLE>
<S> <C>
------------------------------------------------------------
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 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.
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. Mr. Roden's employment with the Company
was terminated as of November 3, 1999, and his status under
his Employment Agreement is currently being negotiated
between Mr. Roden and the Company. Mr. Elliott resigned from
the Company effective as of December 23, 1999.
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.
The Company has agreed, subject to certain conditions, to
indemnify Mr. Roden and to pay his reasonable legal expenses
in connection with certain pending shareholder securities
class action lawsuits filed against the Company and certain
of its executive officers, including Mr. Roden.
Pursuant to the Employment Agreements, a Named Executive
Officer's employment may be terminated (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.
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, but only upon, 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 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
</TABLE>
11
<PAGE>
<TABLE>
<S> <C>
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.
------------------------------------------------------------
CONSULTING AGREEMENT
The Company and Robert E. Martini entered into a consulting
agreement as of June 1, 1997 (the "Consulting Agreement")
pursuant to which Mr. Martini continues to serve the Company
in exchange for a fee of $300,000 per year and certain
continued benefits. The Consulting Agreement provides for a
three-year evergreen term. The benefits provided to
Mr. Martini consist of continued participation in the
Company's Retired Officers' Medical Plan (the "ROM Plan")
and other benefits that are made available to executive
officers of the Company. In November 1999, the Board
approved increasing the amount of fees payable to
Mr. Martini to $675,000 per year in recognition of his
having assumed additional responsibilities as Chief
Executive Officer of the Company. Mr. Martini will also be
eligible for awards under the Company's management bonus and
stock incentive plans.
</TABLE>
12
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<TABLE>
<S> <C>
------------------------------------------------------------
RETIRED OFFICERS' MEDICAL PLAN
In addition to the above arrangements, the Company has an
unfunded, non-qualified ROM Plan available to certain named
officers of the Company and their spouses, including
executive officers now retired from the Company. The ROM
Plan provides for payment of the participant'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 at the time of such officer's retirement.
Based upon the various eligibility criteria under the ROM
Plan, two of the Named Executive Officers (Mr. Carpenter and
Mr. Brent R. Martini) presently are eligible to receive
benefits upon their retirement from the Company. One of the
other Named Executive Officers (Mr. Dimick) may become
eligible in the future to receive benefits under the ROM
Plan, but the remaining two Named Executive Officers
(Mr. Roden and Mr. Elliott) will not at anytime be eligible
to receive any benefits under the ROM Plan.
------------------------------------------------------------
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 the fiscal year ended
September 30, 1999 and with respect to stock options held
by the Named Executive Officers:
OPTION GRANTS IN LAST FISCAL YEAR
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
<CAPTION>
INDIVIDUAL GRANTS
-----------------
% OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO
OPTIONS/SARS EMPLOYEES IN EXERCISE GRANT DATE
GRANTED FISCAL YEAR PRICE EXPIRATION PRESENT
NAME (#)(1) 1999 ($/SHARE) DATE VALUE($)
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Donald R. Roden 25,000(2) 3.15 19.0000 4/9/09 260,407(3)
25,000 3.15 21.3750 5/5/09 290,725(4)
Neil F. Dimick 15,000(5) 1.89 19.0000 4/9/09 156,245(3)
20,000(6) 2.52 21.3750 5/5/09 232,580(4)
Brent R. Martini 12,500(7) 1.57 19.0000 4/9/09 130,205(3)
12,500(8) 1.57 21.3750 5/5/09 145,365(4)
Charles J. Carpenter 12,500(9) 1.57 19.0000 4/9/09 130,205(3)
12,500(10) 1.57 21.3750 5/5/09 145,365(4)
William J. Elliott 7,600(11) 0.95 19.0000 4/9/09 78,529(3)
5,500(12) 0.69 21.3750 5/5/09 63,960(4)
--------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
(1) 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 33 1/3% one
year after the date of grant and then 33 1/3% per year
thereafter.
(2) Of this amount, options covering 5,264 shares were
granted as incentive stock options, which vest 100% three
years after the date of grant.
(3) The grant date present value is based on a Black-Scholes
model and assumes a risk-free rate of return of 5.47%, an
option term of ten years, a dividend yield of 1.39% and a
stock volatility of 52.37%. The Black-Scholes value has been
adjusted for vesting by applying a 3% annual discount for
risk of forfeiture.
(4) The grant date present value is based on a Black-Scholes
model and assumes a risk-free rate of return of 5.72%, an
option term of ten years, a dividend yield of 1.52% and a
stock volatility of 52.23%.
</TABLE>
13
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<TABLE>
<S> <C>
(5) Of this amount, options covering 5,001 shares were
granted as incentive stock options, which vest 100% three
years after the date of grant.
(6) Of this amount, options covering 233 shares were granted
as incentive stock options, which vest 100% three years
after the date of grant.
(7) Of this amount, options covering 4,167 shares were
granted as incentive stock options, which vest 100% three
years after the date of grant.
(8) Of this amount, options covering 975 shares were granted
as incentive stock options, which vest 100% three years
after the date of grant.
(9) Of this amount, options covering 4,167 shares were
granted as incentive stock options, which vest 100% three
years after the date of grant.
(10) Of this amount, options covering 975 shares were
granted as incentive stock options, which vest 100% three
years after the date of grant.
(11) Of this amount, options covering 2,534 shares were
granted as incentive stock options, which vest 100% three
years after the date of grant.
(12) Of this amount, options covering 1,833 shares were
granted as incentive stock options, which vest 100% three
years after the date of grant.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED
ACQUIRED OPTIONS/SARS AT
ON VALUE FY END (#)
EXERCISE REALIZED ---------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C>
------------------------------------------------------------------------------
Donald R. Roden 0 0 301,040 348,962
Neil F. Dimick 0 0 216,626 185,004
Brent R. Martini 13,126 168,997 157,916 154,170
Charles J. Carpenter 8,696 130,983 103,442 154,168
William J. Elliott 0 0 98,682 140,224
------------------------------------------------------------------------------
<CAPTION>
VALUE OF UNEXERCISED(1)
IN-THE-MONEY OPTIONS/
SARS AT FY END ($)
---------------------------
FY END ($)
NAME EXERCISABLE UNEXERCISABLE
<S> <C> <C>
Donald R. Roden 186,559 62,191
Neil F. Dimick 346,310 5,626
Brent R. Martini 143,421 5,626
Charles J. Carpenter 16,874 5,626
William J. Elliott 0 0
----------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
(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 ($10.375 on Septem-
ber 30, 1999) and the exercise price of the options.
</TABLE>
<TABLE>
<S> <C>
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>
<TABLE>
<S> <C> <C> <C> <C>
----------------------------------------------------------------------------------------
AVERAGE ANNUAL ESTIMATED ANNUAL RETIREMENT BENEFITS FOR YEARS
COMPENSATION OF CREDITED SERVICE SHOWN BELOW
DURING HIGHEST OF FINAL -----------------------------------------------------
FIVE YEARS BEFORE RETIREMENT 10 20 30 40
----------------------------------------------------------------------------------------
$ 200,000 $57,000 $97,000 $97,000 $97,000
400,000 136,200 216,200 216,200 216,200
600,000 215,400 335,400 335,400 335,400
800,000 294,600 454,600 454,600 454,600
1,000,000 373,800 573,800 573,800 573,800
----------------------------------------------------------------------------------------
</TABLE>
14
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As of September 30, 1999, full years of actual credited
service in these plans are: Mr. Roden--4 years;
Mr. Dimick--8 years; Brent R. Martini--12 years;
Mr. Carpenter-- 19 years; and Mr. Elliott--3 years. Under
the SERP, no benefits are earned or accrued until the
participant has been employed continuously for five full
years with the Company.
Compensation for a particular year as used for the
calculation of retirement benefits under the SERP includes
base salary and the amount of bonuses received during the
year (including salary deferred under a salary reduction
arrangement) and excludes all other compensation. Benefits,
which are designed to be a certain percentage of the
participant's average monthly compensation over the three
calendar years in which the participant received his or her
highest earnings during the participant's last five years of
service, 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 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). 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, 1999: James R. Mellor, Dr. Charles C.
Edwards 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, 1999. 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.
</TABLE>
15
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<TABLE>
<S> <C>
------------------------------------------------------------
REPORT OF THE COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION/ NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF
STOCK OPTION THE COMPANY'S PREVIOUS FILINGS UNDER THE SECURITIES ACT OF
COMMITTEE 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 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 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 success-
fully attract and retain key employees permits it to enhance
shareowner values, provide
</TABLE>
16
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<S> <C>
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 compara-
ble 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 qualita-
tive improvements in certain individual performance
criteria. The financial measures for the 1999 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 up to 100% of base salary, and other
executive officers may qualify for a maximum award
generally of between 50% to 100% of base salary, with
the potential under extraordinary circumstances to earn
up to 120% of base salary. In addition, an
over-achievement bonus award may be made available in an
amount up to an additional 25% of the aggregate bonus
amount awarded. In practice, salary and bonus combined
have typically placed the Company at the midpoint in the
wholesale pharmaceutical industry.
- 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 Mr. Roden, the former Chief Executive
Officer, relative to his service during fiscal 1999 as Chief
Executive Officer were as follows:
- Salary Adjustment, Grant of Bonus and Stock Option in
fiscal 1999.
Mr. Roden was granted an 18.68% salary increase, which
brought his base pay to $675,000 per annum for fiscal
1999. This adjustment was made in large part because of
the increase in revenues and operating earnings for the
year ended September 30, 1998 and increases in the
Company's operating margin percentage.
Mr. Roden 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 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
</TABLE>
17
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<S> <C>
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. Roden during the
first two quarters of fiscal year 1999 in meeting each
such criterion, the Committee awarded Mr. Roden bonuses
in the amount of $127,000 and $137,200 for the first and
second fiscal quarters, respectively; however,
Mr. Roden was paid no bonuses for the last two quarters
of the fiscal year.
Mr. Roden also participated in the Company's
equity-based compensation program. Options granted in
fiscal 1999 are shown under the caption "Option Grants
in Last Fiscal Year". During fiscal 1999, option grants
were made on a quarterly basis. Mr. Roden received
option grants in respect of the first two quarters of
the fiscal year, but none for the last two quarters of
the fiscal year. In considering the grant of options to
Mr. Roden, 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 1999 Management Stock
Incentive Plan as "performance-based," the Company
sought and obtained shareowner approval at the 1999
annual meeting. The Plan establishes a maximum annual
grant of option shares to an employee. Similarly, the
Board approved and the shareowners approved the Com-
pany's 1999 Stock Accumulation Plan, which is intended
to qualify as "performance-based". For information
regarding such plan, see "Certain Transactions"
commencing on page 20.
</TABLE>
Compensation/Stock Option Committee of the Board of Directors
Dr. Charles C. Edwards, CHAIRMAN
Rodney H. Brady, VICE CHAIRMAN
James R. Mellor
18
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PERFORMANCE GRAPH
The following graph compares the cumulative total shareowner
return (stock price appreciation plus dividends) for the
five years ended September 30, 1999, 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; Herbalife International, Inc.; Mark
Solutions, Inc.; McKesson HBOC, Inc.; Moore Medical
Corporation and Tristar Corporation. Cumulative total share-
owner return (on an assumed initial investment of $100 at
September 30, 1994), 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 ended
September 30, 1999.
</TABLE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR
BERGEN BRUNSWIG CORPORATION
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
9/1/94 9/1/95 9/1/96 9/1/97 9/1/98 9/1/99
<S> <C> <C> <C> <C> <C> <C>
Bergen Brunswig Corporation 100 140.4 212.5 343.1 434 180.4
NYSE Stock Market (US Companies) 100 127.3 152 209.5 218 260.9
Self-Determined Peer Group 100 128.9 171.3 261.9 392.6 223.2
</TABLE>
<TABLE>
LEGEND
<S> <C> <C> <C> <C> <C> <C>
CRSP Total Returns Index for: 09/1994 09/1995 09/1996 09/1997 09/1998 09/1999
Bergen Brunswig Corporation 100.0 140.4 212.5 343.1 434.0 180.4
NYSE Stock Market (US Companies) 100.0 127.3 152.0 209.5 218.0 260.9
Self-Determined Peer Group 100.0 128.9 171.3 261.9 392.6 223.2
NOTES:
A. The lines represent monthly index levels derived from compounded returns that include all
dividends.
B. The indexes are reweighted daily, using the market capitalization on the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading day, the preceding trading
day is used.
D. The index level for all series was set to $100.0 on 09/30/1994.
</TABLE>
19
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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
certain executive officers of the Company, except those who
are also members of the Board. Under the original terms of
the program, (A) 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,
(B) an executive officer may borrow up to 125% of his or her
annual salary in effect upon the date of any request, and
(C) 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.
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 November 1, 1999 to Robert E.
Martini (executive officer and director of the Company) was
$1,400,000. The loans to Donald R. Roden (a former executive
officer and director of the Company) and Neil F. Dimick
(executive officer and director 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 November 1, 1999. In addition,
Mr. Elliott received a relocation loan in the amount of
$100,000 during fiscal 1997. Such amounts, together with the
loan amounts outstanding described hereinafter on page 21,
represent the largest aggregate amount of each executive
officer's indebtedness during the Company's last fiscal
year. On December 23, 1999, Mr. Elliott repaid all of his
indebtedness to the Company.
In 1998 the Company and the Named Executive Officers and
certain other executive officers 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 made under the
Executive Loan Program, 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.
In September 1998, the Board adopted the Company's 1999
Management Stock Accumulation Plan (the "Management Stock
Accumulation Plan"), which was approved by the shareowners
at the 1999 annual meeting. This plan is also for the
purpose of providing an incentive for key executive officers
to remain with the Company and to encourage ownership by
them of stock of the Company.
</TABLE>
20
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Loans granted under the Management Stock Accumulation Plan
may be for a term of between one and five years and in an
amount not in excess of three times the executive's annual
base salary in effect at the time the loan is granted;
provided, however, that the aggregate amount of loans issued
to any participant under the Plan may not exceed $1,000,000.
No loan may be issued under the Management Stock
Accumulation Plan after September 30, 2004. Loans will bear
a rate of interest determined by the Compensation/ Stock
Option Committee of the Board (but not less than the
"applicable federal rate" set forth under Section 1274(d) of
the Code in the case of any executive who is deemed a
"covered employee" under section 162(m)), and will be
payable on the expiration date of the loan term.
Loans issued under the Management Stock Accumulation Plan
are conditioned on the recipient's application of the
proceeds thereof towards the purchase of Common Stock on the
open market. Common Stock so acquired by a participant will
be held by the Company as collateral for the participant's
loan. During the term of a loan, the Compensation/Stock
Option Committee may award credits to participants based
upon the attainment for the applicable performance period of
specified performance targets for the Company related to
designated performance goals for such period selected by the
Committee. A participant's accumulated credits, if any,
shall be applied to the repayment of the loan on the loan
expiration date provided that the participant is either
employed by the Company or a subsidiary of the Company on
the expiration date or ceases to be so employed due to the
participant's death, disability, retirement after age 65 or
involuntary termination of employment other than for cause.
In general, in the event of a Change in Control (as defined
in the plan) each participant who is in the employ of the
Company or any subsidiary of the Company at such time will
continue to be awarded credits for the remainder of the term
of the loan(s) in an amount, or at a rate, which is not less
than the greater of the highest amount, or rate, of credits
earned by such participant during any year of the loan
preceding the Change in Control or earned by any other
participant in any year following the Change in Control. As
of November 1, 1999, there were no loan amounts outstanding
under the Management Stock Accumulation Plan.
In November 1998, the Board adopted a Company loan program
available to the Chief Executive Officer of the Company and
those executive officers directly reporting to him. Such
officers may borrow an amount up to 50% of their annual base
salary in effect at the time the loan is granted; provided,
however, that 50% of the loan proceeds must be applied by
the participant towards the purchase of Common Stock. Common
Stock so acquired by a participant will be held by the
Company as collateral for the loan. Although no interest is
charged by the Company to the participant, the participant
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
participant is also deemed to have paid interest in a like
amount to the Company. Such loan amounts become due and
payable upon termination of the participant's employment
with the Company. As of November 1, 1999, the principal
amounts of loans outstanding under this loan program to the
Named Executive Officers were $337,500, $212,500, $162,500,
$150,000 and $75,000 for Mr. Roden, Mr. Dimick, Mr. Brent R.
Martini, Mr. Carpenter and Mr. Elliott, respectively.
</TABLE>
21
<PAGE>
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<S> <C>
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.
On November 25, 1998, the Company entered into a Stock
Purchase Agreement with Jose E. Blanco Garrido, Thomas
Blanco Garrido and J.M. Blanco, Inc., pursuant to which the
Company acquired all of the outstanding capital stock of
J.M. Blanco, Inc. which was owned by Jose E. Blanco Garrido
and Thomas Blanco Garrido (collectively, the "Sellers"). The
cash purchase price was approximately $30 million. The
Sellers are the sons of Jose E. Blanco, Sr., who has served
as Chairman of the Board of J.M. Blanco, Inc. and also
serves on the Board of the Company.
</TABLE>
22
<PAGE>
<TABLE>
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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 next
Annual Meeting must be received by the Company before
September 15, 2000. In addition, the Company's bylaws
specify procedures (in addition to those set forth in the
Exchange Act) which must be followed to notify the Company
of business to be properly brought before any meeting of the
shareowners.
</TABLE>
23
<PAGE>
<TABLE>
<S> <C>
------------------------------------------------------------
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 solicitnig 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 $6,500, plus reasonable
expenses and disbursements. In addition to such solicitation
and the solicitation made hereby, proxies may be solicited
by the officers, directors and other regular employees of
the Company by telephone, telegraph or personal solicitation
and no additional compensation will be paid to such
individuals. Upon request from a record holder who is a
broker, dealer, bank, voting trustee or their nominee, the
Company shall reimburse such record holders for their
reasonable expenses in forwarding proxy material to their
principals.
</TABLE>
<TABLE>
<S> <C>
By order of the Board of Directors,
[LOGO]
Milan A. Sawdei
EXECUTIVE VICE PRESIDENT,
CHIEF LEGAL OFFICER AND SECRETARY
</TABLE>
<TABLE>
<S> <C>
------------------------------------------------------------
A copy of the Annual Report for the fiscal year ended
September 30, 1999, 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, 1999, 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 WHICH
ACCOMPANIES THIS PROXY STATEMENT, AND ALSO MAY BE OBTAINED
WITHOUT CHARGE BY SUBMITTING A WRITTEN REQUEST ADDRESSED TO
BERGEN BRUNSWIG CORPORATION, TO THE ATTENTION OF THE
INVESTOR RELATIONS DEPARTMENT, 4000 METROPOLITAN DRIVE,
ORANGE, CALIFORNIA 92868.
</TABLE>
24
<PAGE>
BERGEN BRUNSWIG CORPORATION
4000 Metropolitan Drive
Orange, California
[LOGO]
DIRECTIONS TO ANNUAL MEETING
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<CAPTION>
LOS ANGELES AIRPORT LOS ANGELES DOWNTOWN JOHN WAYNE AIRPORT
<S> <C> <C>
- - Century Boulevard east to San - Santa Ana Fwy. (5) south - Take Costa Mesa Fwy. (55) north
Diego 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 - Turn left at light
- - Turn left at light Drive - Turn left onto Metropolitan
- - Turn left onto Metropolitan - Follow to #4000 on the left Drive
Drive - Follow to #4000 on the left
- - Follow to #4000 on the left
</TABLE>
<PAGE>
Election of four directors to Class III and one director to Class I (for
remaining term of one year)
FOR all nominees WITHHOLD
listed to the right AUTHORITY
(except as marked to vote for the
to the contrary) nominees listed
/ / / /
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS BELOW.
NOMINEES: 01 Rodney H. Brady, 02 Brent R. Martini, 03 James R.
Mellor, 04 Francis G. Rodgers (Class III) and 05 Charles
C. Edwards, M.D. (Class I)
(INSTRUCTION: To withhold authority for any particular nominee,
write such nominee(s) name on the line below.)
-----------------------------------------------------------------
PHILIP J LACASTO
4719 E BLUE JAY
ORANGE CA 92869-1920
Dated: ________________________________, 2000
______________________________________________
(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.
- FOLD AND DETACH HERE -
VOTE BY TELEPHONE
QUICK***EASY***IMMEDIATE
YOUR VOTE IS IMPORTANT - YOU CAN VOTE IN ONE OF TWO WAYS:
1. TO VOTE BY PHONE: Call toll-free 1-800-840-1208 on a touch tone telephone
24 HOURS A DAY-7 DAYS A WEEK
THERE IS NO CHARGE TO YOU FOR THIS CALL. - HAVE YOUR PROXY CARD IN HAND.
You will be asked to enter a Control Number, which is located in the box in the
lower right hand corner of this form
OPTION 1: To vote as the Board of Directors recommends on proposal 1, press 1
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1.
If you choose to vote on proposal 1 separately, press 0. You will hear these
instructions:
Proposal 1 - To vote FOR ALL nominees, press 1; to WITHHOLD FOR ALL nominees,
press 9
To WITHHOLD FOR AN INDIVIDUAL nominee, press 0 and listen to the instructions.
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1.
OR
2. TO VOTE BY PROXY: Mark, sign and date your proxy card and return promptly
in the enclosed envelope.
NOTE: IF YOU VOTE BY TELEPHONE, THERE IS NO NEED TO MAIL BACK YOUR PROXY CARD.
THANK YOU FOR VOTING.
CONTROL NUMBER
478 001 463 45
