<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
BIO-RAD LABORATORIES, INC.
________________________________________________________________________________
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement)
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:
____________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
_____________________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on
which the filing fee is calculated and state how it was
determined):
_____________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_____________________________________________________________________________
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: _________________________________________________
2) Form, Schedule or Registration Statement no.: ___________________________
3) Filing party: ___________________________________________________________
4) Date filed: _____________________________________________________________
___________
<PAGE>
BIO-RAD LABORATORIES, INC.
1000 Alfred Nobel Drive
Hercules, California 94547
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS OF
BIO-RAD LABORATORIES, INC.
TO BE HELD APRIL 27, 1999
----------------
To the Stockholders of Bio-Rad Laboratories, Inc.:
The annual meeting of the stockholders of Bio-Rad Laboratories, Inc. ("Bio-
Rad" or the "Company") will be held at the Company's corporate offices, 1000
Alfred Nobel Drive, Hercules, California 94547 on Tuesday, April 27, 1999 at
4:00 p.m., Pacific Daylight Time, to consider and vote on:
(1) The election of two directors of the Company by the holders of
outstanding Class A Common Stock and five directors of the Company by
the holders of outstanding Class B Common Stock;
(2) A proposal to ratify the selection of Arthur Andersen LLP as the
Company's independent auditors for the fiscal year ending December 31,
1999;
(3) A proposal to amend the Amended and Restated 1988 Employee Stock
Purchase Plan; and
(4) Such other matters as may properly come before the meeting and at any
adjournments or postponements thereof.
The Board of Directors of the Company has fixed the close of business on
March 1, 1999 as the record date for the determination of the stockholders
entitled to notice of and to vote at this annual meeting and at any
adjournments or postponements thereof. The stock transfer books of the Company
will not be closed.
All stockholders are invited to attend the annual meeting in person, but
those who are unable to do so are urged to execute and return promptly the
enclosed Proxy in the provided postage-paid envelope. Since a majority of the
outstanding shares of each class of common stock of the Company must be
present or represented at the annual meeting to elect directors and conduct
the other business matters referred to above, your promptness in returning the
enclosed Proxy will be greatly appreciated. Your Proxy is revocable and will
not affect your right to vote in person in the event you attend the meeting
and revoke your Proxy.
All stockholders who attend the annual meeting are invited to join the
Company for a reception and light dinner immediately following the meeting.
By order of the Board of Directors
Bio-Rad Laboratories, Inc.
SANFORD S. WADLER, Secretary
Hercules, California
April 1, 1999
<PAGE>
BIO-RAD LABORATORIES, INC.
1000 Alfred Nobel Drive
Hercules, California 94547
----------------
PROXY STATEMENT
----------------
INFORMATION REGARDING PROXIES
The enclosed Proxy is solicited on behalf of the Board of Directors of Bio-
Rad Laboratories, Inc., a Delaware corporation ("Bio-Rad" or the "Company"),
in connection with the annual meeting of stockholders of the Company to be
held at the Company's corporate offices, 1000 Alfred Nobel Drive, Hercules,
California 94547 on Tuesday, April 27, 1999 at 4:00 p.m., and at any
adjournments or postponements thereof. Solicitation of Proxies will be by mail
at the expense of the Company. Copies of this Proxy Statement and the
accompanying notice and Proxy are first being mailed to stockholders on or
about April 1, 1999.
Shares for which a properly executed Proxy in the enclosed form is returned
will be voted at the meeting in accordance with the directions on such Proxy.
If no voting instructions are indicated with respect to one or more of the
proposals, the Proxy will be voted in favor of the proposal(s). Any Proxy may
be revoked by the record owner of the shares at any time prior to its exercise
by filing with the Secretary of the Company a written revocation or duly
executed Proxy bearing a later date or by attending the meeting in person and
announcing such revocation.
VOTING SECURITIES
The securities of the Company entitled to vote at the meeting consist of
shares of its Class A Common Stock and Class B Common Stock, both $1.00 par
value (collectively, "Common Stock"). 9,973,679 shares of Class A Common Stock
(9,591,681 net of Treasury shares) and 2,488,899 shares of Class B Common
Stock (2,488,899 net of Treasury shares) were issued and outstanding at the
close of business on March 1, 1999. Only stockholders of record at the close
of business on March 1, 1999 will be entitled to notice of and to vote at the
meeting. The presence, in person or by Proxy, of the holders of a majority of
the Voting Power will constitute a quorum for the transaction of business.
Each share of Class A Common Stock is entitled to one-tenth of a vote and each
share of Class B Common Stock is entitled to one vote, except in the election
of directors and any other matter requiring the vote of one or both classes of
Common Stock voting separately. The sum of one-tenth the number of shares of
Class A Common Stock and the number of shares of Class B Common Stock
constitutes the "Voting Power" of the Company.
The holders of Class A Common Stock, voting as a separate class, are
entitled to elect two directors. The holders of Class B Common Stock, also
voting as a separate class, are entitled to elect the other five directors.
The affirmative vote of the holders of a majority of each class of Common
Stock present in person or represented by Proxy is necessary for the election
of directors by that class. The stockholders do not have any right to vote
cumulatively in any election of directors.
On all other matters submitted to a vote at the annual meeting (except
matters requiring the vote of one or both classes voting separately), the
affirmative vote of the holders of a majority of the Voting Power present in
person or represented by Proxy is necessary for approval. The Board of
Directors is not aware of any matters that might come before the meeting other
than those mentioned in this Proxy Statement. If, however, any other matters
properly come before the annual meeting, it is intended that the proxies will
be voted in accordance with the judgment of the person or persons voting such
proxies.
<PAGE>
Under the Company's Bylaws and Delaware law: (1) shares represented by
proxies that reflect abstentions or "broker non-votes" (i.e., shares held by a
broker or nominee which are represented at the meeting, but with respect to
which such broker or nominee is not empowered to vote on a particular
proposal) will be counted as shares that are present and entitled to vote for
purposes of determining the presence of a quorum; (2) the director nominees
receiving the highest number of votes, up to the number of directors to be
elected, are elected and, accordingly, abstentions, broker non-votes and
withholding of authority to vote will not affect the election of directors;
and (3) proxies that reflect abstentions as to a particular proposal will be
treated as voted for purposes of determining the approval of that proposal and
will have the same effect as a vote against that proposal, while proxies that
reflect broker non-votes will be treated as unvoted for purposes of
determining approval of that proposal and will not be counted as votes for or
against that proposal.
2
<PAGE>
PRINCIPAL AND MANAGEMENT STOCKHOLDERS
The following table presents certain information as of March 1, 1999, with
respect to Class A Common Stock and Class B Common Stock beneficially owned
by: (i) any person who is known to the Company to be the beneficial owner of
more than five percent of the outstanding Common Stock of either class, (ii)
each director of Bio-Rad, (iii) certain executive officers of Bio-Rad named in
the "Summary Compensation Table" of this Proxy Statement, and (iv) all
directors and executive officers of Bio-Rad as a group. The address for all
executive officers and directors is c/o Bio-Rad Laboratories, Inc., 1000
Alfred Nobel Drive, Hercules, California 94547.
<TABLE>
<CAPTION>
CLASS A COMMON STOCK(1) CLASS B COMMON STOCK
------------------------------ ------------------------------
NAME AND, WITH RESPECT TO PERCENT PERCENT
OWNER OF 5% OR MORE, NUMBER OF SHARES AND OF NUMBER OF SHARES AND OF
ADDRESS NATURE OF OWNERSHIP(2) CLASS NATURE OF OWNERSHIP(2) CLASS
- ------------------------- ---------------------- ------- ---------------------- -------
<S> <C> <C> <C> <C>
Bernard A. Egan.......... 910,380 of record 9.5% no shares owned of 0.0%
1900 Old Dixie Highway and beneficially record or beneficially
Fort Pierce, FL 34946
Private Capital 860,517 of record 9.0% no shares owned of 0.0%
Management, Inc.........
3003 Tamiami Trail North and beneficially record or beneficially
Naples, FL 34103
David and Alice N. 1,608,430 of record 16.8% 1,781,990 of record 69.1%
Schwartz................
Bio-Rad Laboratories, and beneficially(3) and beneficially(3)(5)
Inc.
1000 Alfred Nobel Drive
Hercules, CA 94547
Norman Schwartz(4)....... 144,916 of record 1.5% 215,666 of record 8.7%
Bio-Rad Laboratories, and beneficially(5) and beneficially(5)
Inc.
1000 Alfred Nobel Drive
Hercules, CA 94547
Steven Schwartz(4)....... 81,174 of record 0.8% 157,987 of record 6.3%
Bio-Rad Laboratories, and beneficially and beneficially
Inc.
1000 Alfred Nobel Drive
Hercules, CA 94547
James J. Bennett......... 70,096 of record 0.7% 23,727 of record 1.0%
and beneficially(5) and beneficially
George Bers.............. 8,439 of record 0.1% 207 of record 0.0%
and beneficially(5) and beneficially
Albert J. Hillman........ 4,454 of record 0.0% 4,117 of record 0.2%
and beneficially and beneficially
Philip L. Padou.......... no shares owned of 0.0% no shares owned of 0.0%
record or beneficially record or beneficially
Sanford S. Wadler........ 17,313 of record 0.2% no shares owned of 0.0%
and beneficially(5) record or beneficially
Burton A. Zabin.......... 12,621 of record 0.1% 59,664 of record 2.4%
and beneficially(5) and beneficially
All directors and
executive officers as a 1,868,757 of record 19.4% 2,085,371 of record 80.8%
group (12 persons)...... and beneficially(5) and beneficially(5)
</TABLE>
3
<PAGE>
- --------
(l) Excludes Class A Common Stock that may be acquired on conversion of Class
B Common Stock. Class B Common Stock may be converted to Class A Common
Stock on a one for one basis and, if fully converted, would result in the
following percentage ownership of Class A Common Stock: Bernard A. Egan
7.5%; Private Capital Management, Inc. 7.1%; David and Alice N. Schwartz
27.9%; Norman Schwartz 3.0%; Steven Schwartz 2.0%; James J. Bennett 0.8%;
George Bers 0.1%; Albert J. Hillman 0.1%; Philip L. Padou 0.0%; Sanford S.
Wadler 0.1%; Burton A. Zabin 0.6%; and all directors and executive
officers as a group 32.3%. Management considers any substantial
conversions by the executive officers or directors listed in the table to
be highly unlikely.
(2) Except as otherwise indicated and subject to applicable community property
and similar statutes, the persons listed as beneficial owners of the
shares have sole voting and investment power with respect to such shares.
Number of shares is based on the statements of the stockholders where not
identified specifically in the stockholder register.
(3) David and Alice N. Schwartz each have a one-half community property
interest in these shares.
(4) Norman Schwartz and Steven Schwartz are sons of David and Alice N.
Schwartz.
(5) Includes shares with respect to which such persons have the right to
acquire beneficial ownership immediately or within sixty days of March 1,
1999, under the Company's employee stock purchase plan and stock option
agreements, as follows: David Schwartz, 91,351 Class B shares; Norman
Schwartz, 8,439 Class A shares and 938 Class B shares; James J. Bennett,
18,751 Class A shares; George Bers, 8,439 Class A shares; Sanford S.
Wadler, 7,500 Class A shares; Burton A. Zabin, 7,501 Class A shares; and
all directors and executive officers as a group, 53,006 Class A shares and
92,289 Class B shares.
4
<PAGE>
I. ELECTION OF DIRECTORS
The Board of Directors has seven members. Management has nominated the
seven persons listed in the following table as the candidates of the
respective class of Common Stock indicated. All are currently directors of the
Company, with terms expiring as of the date of the annual meeting of
stockholders or on election and qualification of their successors. David
Schwartz and Alice N. Schwartz are husband and wife; Norman Schwartz is their
son. No other family relationships exist among the Company's current and
nominated directors or executive officers. As husband and wife, David and
Alice N. Schwartz share equally in all remuneration and other benefits
accorded to either of them by the Company.
The directors elected at this meeting will serve until the next annual
meeting of stockholders or until their respective successors are elected and
qualified. It is the intention of the persons named in the Proxy to vote the
shares subject to such Proxy for the election as directors of the persons
listed in the following table. Although it is not contemplated that any
nominee will decline or be unable to serve as a director, in the event that at
the meeting or any adjournments or postponements thereof any nominee declines
or is unable to serve, the persons named in the enclosed Proxy will, in their
discretion, vote the shares subject to such Proxy for another person selected
by them for director.
<TABLE>
<CAPTION>
Class of
Common Stock Present Principal Employment Director
Name to Elect Age and Prior Business Experience Since
---- ------------ --- ----------------------------- --------
<S> <C> <C> <C> <C>
James J. Bennett........ Class B 70 Executive Vice President and Chief Oper- 1977
ating Officer of the Company since 1993;
Vice President and Group Manager, Clini-
cal Diagnostics of the Company from 1985
to 1993; Vice President and Chief Oper-
ating Officer of the Company from 1977
to 1985.
Albert J. Hillman....... Class A 67 Of Counsel in the law firm of Townsend 1980
and Townsend and Crew since 1995 and
partner in the firm from 1965 to 1995,
which firm serves as patent counsel for
the Company.
Philip L. Padou......... Class A 64 Retired since 1991; Vice President and 1980
Chief Financial Officer of Ozier Perry
and Associates (a risk assessment soft-
ware and consulting company)
from 1987 to 1991.
Alice N. Schwartz....... Class B 72 Retired since 1979; Research Associate, 1967
University of California, from 1972 to
1978.
David Schwartz.......... Class B 75 President of the Company since 1957. 1957
Norman Schwartz......... Class B 49 Vice President of the Company since 1989 1995
and Group Manager, Life Science of the
Company since 1997; Group Manager, Clin-
ical Diagnostics of the Company from
1993 to 1997.
Burton A. Zabin......... Class B 63 Vice President of the Company since 1968
1982; Group Manager, Life Science of the
Company from 1982 to 1997.
</TABLE>
In January 1997, the Company entered into a non-competition and employment
continuation agreement with James J. Bennett pursuant to which management of
the Company has agreed to nominate him as director for a period of three years
following his resignation from his present position. See "Executive
Compensation and Other Information."
5
<PAGE>
In addition to James J. Bennett, David Schwartz, Norman Schwartz and Burton
A. Zabin, the following persons were executive officers of the Company during
all or part of 1998: George Bers, Thomas C. Chesterman, Rello L. Cristea,
Ronald W. Hutton and Sanford S. Wadler. George Bers (age 48), Vice President
and Group Manager of Clinical Diagnostics, was Group Manager of the Molecular
Bioscience Group from 1995 to 1997 and was appointed Vice President in 1996.
Previously, he was a division manager within Bio-Rad from 1991 to 1996. Thomas
C. Chesterman (age 39) was appointed Treasurer in 1996 and named Chief
Financial Officer in March 1997. Prior to joining Bio-Rad, he was Vice
President and Chief Financial Officer of NordicTel Holdings AB (Sweden) from
1993 to 1996. Rello L. Cristea (age 55) Vice President and Group Manager of
Analytical Instruments was appointed Vice President in 1998. Previously, he
was President of Dayton Products Division of Emerson Electric Company from
1994. Ronald W. Hutton (age 41) was appointed Treasurer in 1997. Previously,
he was Director of Treasury at Kaiser Aluminum & Chemical Corporation from
1993 to 1997. Sanford S. Wadler (age 52) has been General Counsel and
Secretary since 1989 and was appointed Vice President in 1996.
The above named individuals also serve in various management capacities
with wholly owned subsidiaries of Bio-Rad. David Schwartz, by virtue of his
Common Stock ownership (see "Principal and Management Stockholders") and his
position as a director and the President of Bio-Rad, may be deemed to be a
control person of the Company.
The Board of Directors recommends that you vote FOR the above-named
director nominees for the class or classes of Common Stock that you hold.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company has an Audit Committee and a
Compensation Committee. The Board of Directors has no nominating committee or
other committees performing similar functions. During 1998, the Board of
Directors held a total of eleven meetings (including regularly scheduled and
special meetings) and no director attended fewer than 91% of such meetings and
meetings of any committee on which such director served.
The Audit Committee is composed of Philip L. Padou and met three times in
1998. The Audit Committee recommends to the Board of Directors the firm to be
employed by the Company as its independent auditors and is primarily
responsible for approving the services performed by the Company's independent
auditors and for reviewing and evaluating the Company's accounting policies
and its system of internal accounting controls.
The Compensation Committee, consisting of two non-employee directors,
Albert J. Hillman and Philip L. Padou, met two times in 1998. The Compensation
Committee reviews and approves the Company's executive compensation policies.
A more complete discussion is provided in the "Report of the Compensation
Committee of the Board of Directors" of this Proxy Statement.
COMPENSATION OF DIRECTORS
In 1998, Townsend and Townsend and Crew, the patent law firm of which
Albert J. Hillman is Of Counsel, rendered legal services to the Company. The
Board of Directors has relied upon the Company's General Counsel to determine
that the services of Townsend and Townsend and Crew were provided on terms at
least as fair to the Company as if they had been provided by a non-affiliate.
The General Counsel is responsible for the management of all of the Company's
relationships with providers of legal services.
Pursuant to the policy of the Board of Directors of Bio-Rad, directors who
are not also employees of Bio-Rad are paid for serving as directors a fee of
$1,400 per month plus $100 for any meetings in excess of sixteen per year.
Audit Committee members are paid $625 per month.
The Company has entered into employment and non-compete agreements with
James J. Bennett and Burton A. Zabin. See "Executive Compensation and Other
Information--Other Executive Compensation."
6
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following Summary Compensation Table presents compensation paid or
accrued by the Company for services rendered during 1998, 1997, and 1996 for
the CEO and the four other most highly compensated executive officers of the
Company ("Named Executive Officers") whose total annual salary and bonus
exceeded $100,000 in 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation(2)
--------------------------
Annual
Compensation(1) Shares
Name and --------------------- Underlying All Other
Principal Position Year Salary Bonus Options Compensation(3)
------------------ ---- -------- ------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
David Schwartz................ 1998 $525,080 $86,537 38,500 $8,000
President 1997 $525,238 $ 0 35,425 $8,000
1996 $519,267 $87,200 36,750 $7,500
James J. Bennett.............. 1998 $445,584 $76,507 7,500 $8,000
Executive Vice President 1997 $437,677 $ 0 7,500 $8,000
and Chief Operating Officer 1996 $419,821 $73,468 7,500 $7,500
Sanford S. Wadler............. 1998 $259,200 $38,932 3,000 $8,000
Vice President, 1997 $259,374 $ 0 3,000 $8,000
General Counsel and Secretary 1996 $247,367 $36,944 3,000 $7,500
Norman Schwartz............... 1998 $240,241 $36,084 3,750 $8,000
Vice President and 1997 $228,893 $12,784 3,750 $8,000
Group Manager 1996 $208,105 $56,557 3,750 $7,500
George Bers................... 1998 $235,116 $30,894 3,750 $8,000
Vice President and 1997 $224,003 $ 0 3,750 $8,000
Group Manager 1996 $203,605 $ 7,632 3,750 $7,500
</TABLE>
- --------
(1) All Other Annual Compensation amounts for each of the Named Executive
Officers were less than the amounts required for separate reporting and
are included in salary.
(2) There were no Restricted Stock awards.
(3) Amounts reported are contributions made pursuant to the Employees'
Deferred Profit Sharing Retirement Plan. A more complete discussion is
provided in the section titled "Profit Sharing Plan Contributions" of the
"Report of the Compensation Committee of the Board of Directors" in this
Proxy Statement.
7
<PAGE>
The following table presents certain information regarding stock options
granted to the Named Executive Officers in 1998.
OPTION GRANTS IN 1998
<TABLE>
<CAPTION>
Individual Grants
------------------------------------------
Potential Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation
Number of % of Total for Option Term(2)
Securities Options -----------------------------
Underlying Granted to Exercise Assumed Assumed
Options Employees Price Expiration Appreciation Appreciation
Name Granted(1) in 1998 ($/Share) Date of 5% of 10%
---- ---------- ---------- --------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
David Schwartz.......... 7,567 5.0% $ 26.33 02/11/03 $ 24,093 $ 82,579
30,933 20.5% $23.937 02/11/03 $ 172,514 $ 411,596
James J. Bennett........ 4,710 3.1% $ 23.13 02/11/03 $ 30,069 $ 66,472
2,790 1.9% $ 23.13 02/11/03 $ 17,811 $ 39,375
Sanford S. Wadler....... 3,000 2.0% $ 23.13 02/11/03 $ 19,152 $ 42,339
Norman Schwartz......... 3,750 2.5% $ 26.33 02/11/03 $ 11,940 $ 40,924
George Bers............. 3,750 2.5% $ 23.13 02/11/03 $ 23,940 $ 52,924
</TABLE>
- --------
(1) All stock options granted in 1998 are incentive stock options with the
exception of non-qualified stock options for 30,933 shares granted to
David Schwartz and 2,790 shares granted to James J. Bennett. The exercise
prices are equal to at least 100% of the fair market value of the
underlying securities at the time such options were granted. All shares
subject to the above options are shares of Class A Common Stock with the
exception of all of the options granted to David Schwartz, and 3,750
shares to Norman Schwartz which were for shares of Class B Common Stock.
All stock options have a term of five years and become exercisable at a
rate not greater than 25% per annum commencing one year after the date of
grant. In 1998, options to purchase 64,000 shares were granted to all
executive officers as a group, and options to purchase 86,653 shares were
granted to all other employees.
(2) Potential realizable value is based on an assumption that the stock price
of the applicable class of Common Stock appreciates at the annual rate
shown (compounded annually) from the date of grant until the end of the
five year option term. These numbers are calculated based on the
requirements promulgated by the Securities and Exchange Commission and do
not reflect the Company's estimate of future stock price growth.
The following table presents the number of shares for which options were
exercised, as well as the number of exercisable and unexercisable options held
by the Named Executive Officers at December 31, 1998.
AGGREGATE OPTION EXERCISES IN 1998 AND
DECEMBER 31, 1998 OPTION VALUES
<TABLE>
<CAPTION>
Number of
Securities Underlying Value of Unexercised
Shares Unexercised Options In-The-Money Options
Acquired at December 31, 1998 at December 31, 1998(1)
on Value ------------------------- -------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- -------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David Schwartz.......... 36,000 $671,370.00 90,571 92,554 $538,498.35 $24,839.40
James J. Bennett........ 1,875 $ 30,946.88 11,251 18,749 $ 15,693.75 $ 5,231.25
Sanford S. Wadler....... 2,250 $ 44,527.50 7,500 7,500 $ 47,167.50 $ 2,092.50
Norman Schwartz......... 3,750 $ 61,743.75 9,377 9,373 $ 51,066.11 $ 908.89
George Bers............. 2,250 $ 51,037.50 4,689 9,373 $ 5,231.25 $ 2,614.23
</TABLE>
- --------
(1) The closing prices of Class A Common Stock and Class B Common Stock at
December 31, 1998 were $21.00 and $19.75 per share, respectively.
8
<PAGE>
Other Executive Compensation
In January 1997, the Company entered into a non-competition and employment
continuation agreement with James J. Bennett, its Executive Vice President and
Chief Operating Officer and a Director of the Company. Under the terms of this
Agreement, James J. Bennett will give the Company six months notice of any
intention to resign from his present position and will not compete with the
Company for two years after the end of his employment with Bio-Rad. Management
has agreed to nominate him as director for a period of three years following
his resignation from his present position. Following his resignation from his
present position, James J. Bennett will continue to serve as an employee
taking on mutually agreed tasks for six weeks in each twelve-month period for
up to five years from his resignation. For this six weeks, he will be paid his
weekly salary in effect at the time of his resignation plus $2,500 per week.
For mutually agreed assignments extending beyond the six weeks, or if James J.
Bennett does not remain a director, his compensation would be at his weekly
pay rate in effect at the time of his resignation from his present position.
He will be entitled to exercise his stock options for a period of two years
after the end of his employment with Bio-Rad.
In August 1997, the Company entered into an employment and non-compete
agreement with Burton A. Zabin, a Vice President and Director of the Company.
Under the terms of this agreement, he will be employed by the Company until
March 18, 2001, unless he gives the Company six months notice of his intention
to resign earlier, and he will not compete with the Company during the period
ending four years after his scheduled termination of employment with Bio-Rad.
During the term of this agreement, he will make himself available to the
Company on a flexible time basis for an average of one hundred thirty-five
days during each twelve month period (and, in the case of the final period,
nine month period) of the agreement to undertake reasonable assignments
provided to him which utilize his knowledge and experience in the life science
research market. He will receive a salary equal to one-half of the salary he
was receiving just prior to entering into the agreement. Burton A. Zabin will
not participate in bonus or stock programs of the Company. He will be entitled
to exercise his stock options for a period of two years after the end of his
employment with Bio-Rad. He will remain a director for the remainder of his
current term.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is composed of Albert J. Hillman and Philip L.
Padou. The Company currently has no interlocking relationships involving any
of its Compensation Committee members and no executive officer of the Company
serves on the Compensation Committee. James J. Bennett, David Schwartz, Norman
Schwartz and Burton A. Zabin participate in general Board of Directors'
discussions of compensation, bonuses and stock options. David, Norman and
Alice N. Schwartz were absent from and did not participate in the discussions
or decisions concerning the President's compensation.
9
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation. The Compensation Committee was
formed in December 1993. The report also refers to decisions made by Philip L.
Padou, Albert J. Hillman and other members of the Board of Directors prior to
the formation of the Compensation Committee. The function of the Compensation
Committee is to review and approve the compensation arrangements for the
Company's senior management and any compensation plans in which the executive
officers and directors are eligible to participate.
Objectives and Overview
The overall objectives of the Company's executive compensation programs are
to:
. Attract, retain and motivate key executive talent;
. Reward key executives based on business performance;
. Align executive incentives with the interests of stockholders; and
. Encourage the achievement of Company objectives.
Executive compensation consists of four components: 1) base salary; 2)
annual and special incentive bonus payments; 3) long-term incentives in the
form of stock options; and 4) contributions to the Company's profit sharing
plan. The Company strives to provide a competitive total compensation package
to senior management based on professionally compiled surveys of broad groups
of companies of comparable size within related industries.
Base Salary
Each year, the Company obtains studies of compensation trends, practices
and levels from a variety of nationally recognized independent compensation
surveys in order to determine the competitiveness of the pay structure for its
senior managers. Within the comparative groups of companies surveyed, the
Company sets executive base salaries and total compensation near and below the
arithmetic mean of the surveys, respectively. Each executive's base salary is
determined by an assessment of the executive's job description and current
salary in relation to the salary range designated for the position in the
compensation surveys. Adjustments are made when necessary to reflect changes
in responsibilities or competitive industry pressures. Each executive's
performance is evaluated annually to determine individual merit increases
within the overall guidelines established in each year's budget process. For
1998, the Company merit increase guideline was 4.5% and was based on the
compensation surveys.
Incentive Bonus Payments
Executive officers of the Company, including the President, are eligible
for an annual incentive bonus and special bonuses, determined as a percentage
of the officers' eligible wages. Annual bonuses are awarded to executive
officers, including the President and other key employees of the Company and
its operating units, who meet certain annual Company and operating unit goals
which are previously established by senior management. In 1998, the
performance factors used in calculating bonuses include sales volume and
return on controllable assets, as measured against annual objectives.
Performance goals have been established for the Company as a whole and for
each operating unit. Bonuses are determined using these performance factors
and comparisons to competitive industry standards. The bonus calculation is
weighted between Company performance and operating unit performance according
to the responsibilities of each executive. In addition to the annual incentive
bonuses, special bonuses are awarded by the Board of Directors in recognition
of other specific business actions taken during the year which contributed to
the strategic growth, profitability or competitiveness of the Company. In the
past, these bonuses have been awarded for significant achievements, such as
successfully completing
10
<PAGE>
acquisitions or divestitures and settling legal disputes. Such bonuses may be
distributed over several years. Incentive bonuses may be awarded in cash
and/or stock.
Bonuses for performance in 1998 were awarded in February 1999 and ranged
from 1.75% to 25.00% of base salaries. Bonuses for 1997 were awarded in March
1998 and ranged from 0.0% to 19.50% of base salaries. Bonuses for 1996 were
awarded in March 1997 and ranged from 1.90% to 27.20% of base salaries.
Because bonuses are based on growth and profitability, trends in bonus awards
generally track operating unit and Company performance. Special bonuses are
awarded only on completion of specific projects or transactions.
Long-Term Incentives
The Company provides its executive officers and other key employees with
long-term incentive compensation through the granting of stock options. The
Company believes that stock options provide the Company's key employees with
the opportunity to purchase and maintain an equity interest in the Company and
to share in the appreciation of the value of the stock. Stock options are
intended to align executive interests with the interests of stockholders and
therefore directly motivate senior management to maximize long-term
stockholder value. The stock options also create an incentive to remain with
the Company for the long term because the options are vested over a four-year
period. Because all options are granted at no less than the fair market value
of the underlying stock on the date of grant, stock options provide value to
the recipients only when the price of Bio-Rad Common Stock increases over
time.
The Board of Directors has delegated certain responsibilities of
administration of the Company's stock option plans to the Stock Option Award
Committee. The Stock Option Award Committee is composed of Albert J. Hillman
and Philip L. Padou and is responsible for determining the timing and
distribution of grants subject to the terms of the current option plans. The
Stock Option Award Committee also determines the total number of shares
granted and the allocation of shares to individual executive officers and key
employees. Recommendations from senior management and other factors are
considered including: the responsibility level, individual performance and
contribution to the Company's business of each officer and key employee. The
option grants are submitted to the Board of Directors for ratification and the
date of grant is the date of the Board of Directors meeting. In 1998, the
Company granted approximately 150,653 options to a group of about 254
executive officers and key employees.
Profit Sharing Plan Contributions
The Company's employees who are directors or officers are entitled to
participate in the Bio-Rad Laboratories, Inc. Employees' Deferred Profit
Sharing Retirement Plan ("Profit Sharing Plan") on the same basis as all other
Company employees. The Profit Sharing Plan covers all full-time employees of
the Company, or any of its participating subsidiaries, who have completed one
year of service. Contributions to the Profit Sharing Plan are determined each
year by the Board of Directors in its sole discretion and are allocated among
each participant based on the ratio his or her compensation bears to the
aggregate compensation of all participants. For 1998, the Board of Directors
approved a contribution of 5.0% of eligible compensation. Participants are
vested 100.0% after five years of service, but funds are not distributed until
retirement, termination of employment with the Company or as required by
regulation or law.
President's Compensation
For 1998, the Compensation Committee was primarily responsible for
determining and approving the President's compensation. The President's
compensation was compared with compensation of other CEOs in the above
mentioned surveys and proxy statements for comparable companies. The salary of
David Schwartz is typically set within the mid-range of CEO's salaries
surveyed for comparable companies. There was no change to the salary of David
Schwartz in 1997 or 1998. His salary was increased 5% in 1996.
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The President's annual bonus is based on the achievement of the Company's
financial goals. The same performance criteria are used to calculate his
annual bonus as those established for other eligible executive officers. These
criteria are discussed above under Incentive Bonus Payments. A bonus was paid
in 1999 based on performance against previously established growth and
profitability targets for 1998.
In 1998, David Schwartz was granted a non-qualified stock option to
purchase 30,933 shares of Class B Common Stock and an incentive stock option
for 7,567 shares of Class B Common Stock. The exercise price of the non-
qualified option was 100% of the market price on the date of grant. Pursuant
to the general restrictions of the option plan, vesting of incentive stock
options granted to David Schwartz is limited to $100,000 per year which
results in vesting at a slower rate than other optionees. This option grant
was comparable with options granted to CEO's of similar size companies.
To the extent readily determinable and as one of the factors in its
consideration of compensation matters, the Compensation Committee considers
the anticipated tax consequences to the Company and to its executives of
various payments and benefits. Some types of compensation payments and their
deductibility (e.g., the spread on exercise of non-qualified options) depend
upon the timing of an executive's vesting or exercise of previously granted
rights. Further, interpretations of and changes in the tax laws and other
factors beyond the Compensation Committee's control also affect the
deductibility of compensation. For these and other reasons, the Compensation
Committee will not necessarily limit executive compensation to that deductible
under Section 162(m) of the Internal Revenue Code. The Compensation Committee
will consider various alternatives to preserving the deductibility of
compensation payments and benefits to the extent reasonably practicable and to
the extent consistent with its other compensation objectives.
The Compensation Committee
Albert J. Hillman
Philip L. Padou
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STOCK PERFORMANCE GRAPH
The following graph compares the cumulative stockholder returns over the
past five years for the Company's Class A Common Stock, the American Stock
Exchange Market Value Index and a selected peer group, assuming $100 invested
on December 31, 1993 and reinvestment of dividends:
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
BIO-RAD................. 100 277 424 449 391 314
PEER GROUP(1)........... 100 122 173 198 220 275
AMEX MARKET............. 100 93 120 122 152 163
</TABLE>
- --------
(1) The peer group consists of the following public companies: Beckman
Coulter; Becton Dickinson; Diagnostic Products; KLA Tencor; Life
Technologies; Millipore; and Perkin-Elmer. Companies in the peer group
reflect Bio-Rad's participation in three different markets: life science
research products, clinical diagnostics and analytical instruments. No
single public or private company has a comparable mix of products which
serve the same markets. In many cases, only one division of a peer group
company competes in the same markets as Bio-Rad. Collectively, the peer
group reflects products and markets similar to those of Bio-Rad.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
ten percent of a registered class of the Company's equity securities
("Insiders"), to file with the Securities and Exchange Commission (the "SEC")
initial reports of ownership and reports of changes in ownership of Common
Stock of the Company. Insiders are required by SEC regulations to furnish the
Company with copies of all Section 16(a) reports which they file.
To the Company's knowledge, based solely upon its review of the copies of
such reports furnished to the Company and written representations from certain
Insiders that no other reports were required, during fiscal year ended
December 31, 1998 all Section 16(a) filing requirements applicable to Insiders
were complied with, with the following exceptions: one filing reflecting
certain transfers (Form 4) within the Schwartz family was delayed, and one
filing reflecting the appointment of Rello L. Cristea as an executive officer
was delayed.
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II. RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Arthur Andersen LLP, independent public
accountants, to serve as Bio-Rad's auditors for the fiscal year ending
December 31, 1999. A representative of Arthur Andersen LLP is expected to be
present at the annual meeting of stockholders to make a statement if he or she
desires to do so and to respond to appropriate questions.
Although it is not required to do so, Bio-Rad wishes to provide
stockholders with the opportunity to express their opinion on the selection of
auditors, and accordingly is submitting a proposal to ratify the selection of
Arthur Andersen LLP. If the stockholders should fail to ratify this proposal,
the Board of Directors will consider the selection of another auditing firm.
The Board of Directors recommends that you vote FOR ratification of Arthur
Andersen LLP to serve as the Company's auditors for the fiscal year ending
December 31, 1999.
III. APPROVAL OF AMENDMENT TO THE AMENDED AND RESTATED
1988 EMPLOYEE STOCK PURCHASE PLAN
The Amended and Restated 1988 Employee Stock Purchase Plan (the "Purchase
Plan") was approved by stockholders in 1988. The original Purchase Plan
authorized the use of 150,000 newly issued shares and 150,000 outstanding
shares, purchased from the open market, for sale to eligible employees at a
discount of 15%. The Purchase Plan was amended in 1992 and 1994 to authorize
an aggregate of 300,000 additional newly issued shares (to a new total of
450,000 newly issued shares) and the resale of 45,000 additional shares (to a
new total of 195,000 shares). From inception, 439,767 newly issued shares and
157,144 outstanding shares have been purchased by eligible employees. As of
March 1, 1999, 10,233 newly issued shares and 37,856 outstanding shares remain
authorized and available. The addition of shares to the Purchase Plan is
necessary to continue availability of shares for purchase by employees.
The Amendment
Subject to stockholder approval, the Board of Directors has approved an
amendment to the Purchase Plan increasing by 100,000 the number of shares to
be sold to employees participating in the Purchase Plan. These shares may be
newly issued or outstanding shares purchased from the open market.
Description of the Purchase Plan
The Purchase Plan is intended to provide employees with an equity interest
in the Company and to enhance the employees' sense of participation in Company
affairs. The Purchase Plan is designed to meet the requirements of Section 423
of the Internal Revenue Code and afford to participating employees the tax
benefits available under Section 423. See "Federal Income Tax Consequences."
A committee of the Board of Directors or an Administrator selected by the
Board administers the Purchase Plan consistent with Rule 16b-3 under the
Securities Exchange Act of 1934, as amended. The committee or administrator
designates the enrollment period, scheduled purchase dates and other such
administrative matters. Significant modifications, such as increasing the
number of authorized shares, require approval of the stockholders.
All full-time employees of the Company and participating subsidiaries,
including officers and directors who are also employees, are eligible to
participate in the Purchase Plan after six months of employment. All eligible
employees have equal rights and privileges under the Purchase Plan. Employees
owning five percent or more of the Voting Power of the Company are not
eligible to participate in the Purchase Plan. Any eligible employee may enroll
in the Purchase Plan as of the first trading day of any three-month period. As
of March 1, 1999, approximately 1,434 employees were eligible to participate
and 402 were enrolled in the Purchase Plan.
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<PAGE>
Participating employees may elect to make contributions to the Purchase
Plan through payroll deductions at a designated percentage of monthly base
earnings from the Company up to a maximum of 10%. No employee is permitted
under the Purchase Plan to purchase Common Stock at a rate which exceeds
$25,000 of fair market value of Common Stock in any calendar year. At any time
before a scheduled purchase date, a participant may elect to withdraw funds
contributed to the Purchase Plan.
The cost for each share purchased is 85% of the lower of the fair market
value on the first trading day or the last trading day of an enrollment
period. The length of each enrollment period is currently three months. As of
March 1, 1999 the closing market price of Class A Common Stock was $20.50.
As of March 1, 1999 the following shares of Class A Common Stock were
purchased for contributions made in fiscal year 1998: David Schwartz, 0
shares; James J. Bennett, 0 shares; Sanford S. Wadler, 0 shares; Norman
Schwartz, 0 shares; George Bers, 0 shares; all executive officers as a group,
112 shares; and all other employees, 55,400 shares.
Federal Income Tax Consequences
The following discussion is a general summary of the current material U.S.
federal income tax consequences to U.S. participants in the Purchase Plan. The
summary does not discuss all aspects of federal income taxation that may be
relevant to a particular participant in light of such participant's personal
investment circumstances, nor does it describe state or other tax
consequences. The Purchase Plan is intended to meet the requirements of an
"employee stock purchase plan" under Section 423 of the Internal Revenue Code.
Neither the grant of the right to purchase shares, nor the purchase of
shares, under the Purchase Plan has a federal income tax effect on employees
or the Company. Any United States tax liability to the employee and any tax
deductions to the Company are deferred until the employee sells the shares,
disposes of the shares by gift or dies.
In general, if shares are held for more than one year after they are
purchased and for more than two years from the beginning of the enrollment
period in which they are purchased, or if the employee dies while owning the
shares, gain on the sale or other disposition of the shares constitutes
ordinary income to an employee (with no corresponding deduction to the
Company) to the extent of the lesser of (1) 15% of the fair market value of
the shares at the beginning of the enrollment period, or (2) the gain on the
sale (the amount by which the market value of the shares on the date of sale,
gift or death, exceeds the employee's purchase price). Any additional gain is
a capital gain. If the shares are sold or disposed of prior to meeting both of
the holding periods, an employee recognizes ordinary income (and the Company
receives a corresponding deduction) to the extent that the fair market value
of the shares at the date of the purchase exceeds the employee's purchase
price. Any appreciation or depreciation after the date of the employee's
purchase (measured with respect to the market value of the shares on the date
of the employee's purchase) is treated as capital gain or loss.
The Board of Directors recommends that you vote FOR the proposal to amend
the Amended and Restated 1988 Employee Stock Purchase Plan.
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<PAGE>
APPENDIX A
CLASS A FRONT OF CARD:
PROXY
CLASS A STOCK
BIO-RAD LABORATORIES, INC.
Proxy is Solicited on Behalf of the Board of Directors for the
Annual Meeting of Stockholders
April 27, 1999
The undersigned does hereby appoint DAVID SCHWARTZ and SANFORD S. WADLER
and each of them, attorneys-in-fact and agents with full powers of substitution,
for and in the name, place and stead of the undersigned, to vote as proxies or
proxy all the shares of Class A Common Stock of Bio-Rad Laboratories, Inc.
("Bio-Rad"), to be held at the Company's corporate offices, 1000 Alfred Nobel
Drive, Hercules, California, on Tuesday, April 27, 1999 at 4:00 p.m., Pacific
Daylight Time, and at any and all adjournments or postponements thereof:
PLEASE VOTE, SIGN, DATE AND MAIL THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
(Continued and to be signed on the reverse side.)
CLASS A BACK OF CARD:
BIO-RAD LABORATORIES, INC.
PLEASE MARK VOTES AS IN THIS EXAMPLE USING DARK INK ONLY. |_|
This proxy will be voted as specified below. If no voting instructions are
indicated with respect to one or more of the proposals, the proxy will be voted
in favor of the proposal(s). This proxy confers authority for each of the
persons indicated on the reverse to vote in his discretion on other matters
which may properly come before the meeting. The Board of Directors recommends a
Vote FOR Items 1, 2 and 3.
(1) ELECTION OF DIRECTORS For Withhold For All
ALBERT J. HILLMAN, PHILIP L. PADOU All All Except
|_| |_| |_|
- ---------------------------------------
(Instruction: To withhold authority to vote for any nominee(s), write the
name(s) of such nominee(s) above.)
(2) PROPOSAL to ratify the selection of Arthur Andersen LLP to serve as the
Company's independent auditors.
For Against Abstain
|_| |_| |_|
(3) PROPOSAL to amend the 1988 Employee Stock Purchase Plan to increase the
number of shares available by 100,000.
For Against Abstain
|_| |_| |_|
Receipt of the Notice of Annual Meeting of Stockholders and proxy statement is
hereby confirmed.
Please sign exactly as your name appears hereon or on the stock certificate.
Executors, administrators or trustees should indicate their capacities. If
stock is held in joint names, both registered holders should sign. No
witness or notarization is necessary.
Date: ---------------------------------
Signature: ---------------------------------
Signature, if held jointly:---------------------------------
<PAGE>
APPENDIX B
CLASS B FRONT OF CARD:
PROXY
CLASS B STOCK
BIO-RAD LABORATORIES, INC.
Proxy is Solicited on Behalf of the Board of Directors for the
Annual Meeting of Stockholders
April 27, 1999
The undersigned does hereby appoint DAVID SCHWARTZ and SANFORD S. WADLER
and each of them, attorneys-in-fact and agents with full powers of substitution,
for and in the name, place and stead of the undersigned, to vote as proxies or
proxy all the shares of Class B Common Stock of Bio-Rad Laboratories, Inc.
("Bio-Rad"), to be held at the Company's corporate offices, 1000 Alfred Nobel
Drive, Hercules, California, on Tuesday, April 27, 1999 at 4:00 p.m., Pacific
Daylight Time, and at any and all adjournments or postponements thereof:
PLEASE VOTE, SIGN, DATE AND MAIL THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
(Continued and to be signed on the reverse side.)
CLASS B BACK OF CARD:
BIO-RAD LABORATORIES, INC.
PLEASE MARK VOTES AS IN THIS EXAMPLE USING DARK INK ONLY. |_|
This proxy will be voted as specified below. If no voting instructions are
indicated with respect to one or more of the proposals, the proxy will be voted
in favor of the proposal(s). This proxy confers authority for each of the
persons indicated on the reverse to vote in his discretion on other matters
which may properly come before the meeting. The Board of Directors recommends a
Vote FOR Items 1, 2 and 3.
(1) ELECTION OF DIRECTORS For Withhold For All
JAMES J. BENNETT, ALICE N. SCHWARTZ, All All Except
DAVID SCHWARTZ, NORMAN SCHWARTZ, |_| |_| |_|
BURTON A. ZABIN
- -----------------------------------------
(Instruction: To withhold authority to vote for any nominee(s), write the
name(s) of such nominee(s) above.)
(2) PROPOSAL to ratify the selection of Arthur Andersen LLP to serve as the
Company's independent auditors.
For Against Abstain
|_| |_| |_|
(3) PROPOSAL to amend the 1988 Employee Stock Purchase Plan to increase the
number of shares available by 100,000.
For Against Abstain
|_| |_| |_|
Receipt of the Notice of Annual Meeting of Stockholders and proxy statement is
hereby confirmed. Please sign exactly as your name appears hereon or on the
stock certificate. Executors, administrators or trustees should indicate their
capacities. If stock is held in joint names, both registered holders should
sign. No witness or notarization is necessary.
Date: ---------------------------------
Signature: ---------------------------------
Signature, if held jointly:---------------------------------
