<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the
Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
CARTER-WALLACE, INC.
- --------------------------------------------------------------------------------
(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (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.
<PAGE> 2
CARTER-WALLACE, INC.
1345 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK 10105
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JULY 21, 1998
------------------------
The Annual Meeting of Stockholders of Carter-Wallace, Inc. will be held at
the Hotel du Pont, 11th and Market Streets, Wilmington, Delaware 19801, on
Tuesday, July 21, 1998, at 1:00 P.M., Eastern Daylight time, for the following
purposes:
1. To elect directors;
2. To consider and take action upon the ratification of the
appointment by the Board of Directors of KPMG Peat Marwick LLP as
independent auditors for the Company for the current fiscal year;
3. To consider a stockholder proposal; and
4. To transact any other business that may properly come before the
meeting.
Only holders of record of Common Stock and Class B Common Stock at the
close of business on June 8, 1998 will be entitled to vote at the meeting.
To assure your representation at the meeting, please date, sign and mail
promptly the accompanying proxy, for which a postpaid return envelope is
provided. Please return the proxy in a timely fashion to save the Company the
expense of an additional mailing of the proxy materials.
STEPHEN R. LANG
Secretary
New York, New York
June 24, 1998
<PAGE> 3
CARTER-WALLACE, INC.
1345 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK 10105
------------------
ANNUAL MEETING OF STOCKHOLDERS
JULY 21, 1998
------------------
PROXY STATEMENT
------------------
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Carter-Wallace, Inc. (the "Company") of proxies for
use at the Company's 1998 Annual Meeting of Stockholders (the "Meeting") to be
held at the Hotel du Pont, 11th and Market Streets, Wilmington, Delaware 19801,
on Tuesday, July 21, 1998, at 1:00 P.M., Eastern Daylight Time, and at any
adjournment thereof. The date of mailing of this Proxy Statement and the
accompanying proxy is on or about June 24, 1998.
At the Meeting, all shares represented by a properly executed proxy in the
accompanying form (which has not been revoked) will be voted and, where
instructions are specified, will be voted in accordance with such
specifications. Where instructions are not specified, the shares represented by
such proxy will be voted (a) FOR the election of each of the nominees for
director named in this Proxy Statement, (b) FOR the ratification of the
appointment of KPMG Peat Marwick LLP as independent auditors for the Company and
(c) AGAINST the stockholder proposal. If any nominee for election as a director
should be unable to serve, which is not presently anticipated, proxies will be
voted for a nominee designated by the Board of Directors. In addition, proxies
will be voted in the discretion of the proxy holders with respect to such other
business that may properly come before the Meeting.
Any proxy may be revoked by a stockholder by a written communication to the
Secretary of the Company delivered prior to or at the Meeting, to the extent the
proxy has not theretofore been voted. Sending in a signed proxy will not affect
a stockholder's right to attend the Meeting and to vote in person.
VOTING RIGHTS
On each matter submitted to a vote at the Meeting, (i) each holder of
Common Stock, par value $1.00 per share, of the Company ("Common Stock") is
entitled to one (1) vote for each such share registered in his name at the close
of business on June 8, 1998, the record date stated in the Notice of Annual
Meeting of Stockholders (the "Record Date"), and (ii) each holder of Class B
Common Stock, par value $1.00 per share, of the Company ("Class B Common Stock")
is entitled to ten (10) votes for each such share registered in his name at the
close of business on the Record Date. As of the Record Date, the Company had
32,979,430 shares of Common Stock outstanding and entitled to vote and
12,349,309 shares of Class B Common Stock outstanding and entitled to vote. On
all actions to be taken at the Meeting, holders of Common Stock and holders of
Class B Common Stock vote together as a single class. On the Record Date,
officers and directors of the Company and members of their immediate families
owned an aggregate of 11,934,278 shares of Common Stock, representing 36.19% of
the outstanding shares of Common Stock, and an aggregate of 11,802,405 shares of
Class B Common Stock, representing 95.57% of the outstanding shares of Class B
Common Stock; such holdings represent 83.06%, in the aggregate, of the voting
power of shares entitled to vote at the Meeting. See "STOCK OWNERSHIP."
<PAGE> 4
STOCK OWNERSHIP
As used in this Proxy Statement, "beneficial ownership" means the sole or
shared power to vote, or to direct the voting of, a security, or the sole or
shared investment power with respect to a security (that is, the power to
dispose of, or to direct the disposition of, a security). In addition, for
purposes of this Proxy Statement, a person is deemed as of any date to have
"beneficial ownership" of any security that such person has the right to acquire
within 60 days after such date through the exercise of an option or similar
right or otherwise and of any security held in the name of such person's spouse
or minor children.
As of the Record Date, the only persons known to the Company who
beneficially owned more than 5% of either the outstanding shares of Common Stock
or the outstanding shares of Class B Common Stock were The CPI Development
Corporation ("CPI") and its directors and stockholders and Mario J. Gabelli and
Marc J. Gabelli and various entities directly or indirectly controlled by them
or for which one of them acts as chief investment officer. CPI is a personal
holding company, the assets of which consist of 11,754,000 shares of Common
Stock, which represent 35.64% of the outstanding shares of Common Stock, and
11,754,000 shares of Class B Common Stock, which represent 95.18% of the
outstanding shares of Class B Common Stock. The directors of CPI are Henry H.
Hoyt, Jr., Chairman of the Board of Directors and Chief Executive Officer of the
Company, and Richard L. Cruess, M.D. and Suzanne H. Garcia, each of whom is
currently a director of the Company. Henry H. Hoyt, Jr., Richard L. Cruess and
Suzanne H. Garcia are the beneficial owners of substantially all the outstanding
voting securities of CPI.
The table below sets forth certain information as to shares of Common Stock
and of Class B Common Stock beneficially owned as of the Record Date (unless
otherwise noted) by persons who beneficially own more than 5% of either class,
each director named under "ELECTION OF DIRECTORS," each executive officer named
in the Summary Compensation Table under "EXECUTIVE COMPENSATION AND OTHER
INFORMATION" and the directors and executive officers of the Company as a group.
Such ownership information is based upon information furnished by such persons.
Except as otherwise indicated, such persons have sole voting and investment
power with respect to such shares.
<TABLE>
<CAPTION>
CLASS B
COMMON PERCENT COMMON PERCENT
NAME AND ADDRESS STOCK OF CLASS(1) STOCK OF CLASS(1)
---------------- ------ ----------- ------- -----------
<S> <C> <C> <C> <C>
THE CPI DEVELOPMENT CORPORATION 11,754,000 35.64% 11,754,000 95.18%
103 Springer Building
3411 Silverside Road
Wilmington, Delaware 19810
MARIO J. GABELLI and MARC J. GABELLI 5,091,300(2) 15.44%
One Corporate Center
Rye, New York 10580-1434
HENRY H. HOYT, JR. 12,036,299(3)(4) 36.33% 11,785,530(3) 95.43%
1345 Avenue of the Americas
New York, New York 10105
RICHARD L. CRUESS, M.D. 11,763,300(3) 35.67% 11,763,300(3) 95.25%
1110 Pine Avenue West
Montreal, H3A 1A3
Quebec, Canada
SUZANNE H. GARCIA 11,773,800(3) 35.70% 11,776,800(3) 95.36%
P.O. Box 5040
Santa Fe, New Mexico 87502
T. ROSIE ALBRIGHT 42,380(4)
DANIEL J. BLACK 60,015 2,775
DAVID M. BALDWIN 3,000
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
CLASS B
COMMON PERCENT COMMON PERCENT
NAME AND ADDRESS STOCK OF CLASS(1) STOCK OF CLASS(1)
---------------- ------ ----------- ------- -----------
<S> <C> <C> <C> <C>
SCOTT C. HOYT 324
RALPH LEVINE 84,320(4)
HERBERT M. RINALDI 9,000
HERBERT SOSMAN 49,140(4)
PAUL A. VETERI 84,880(4)
All directors and executive officers of
the Company as a group (21 persons) 12,557,201(3)(4) 37.37% 11,802,405(3) 95.57%
</TABLE>
- ---------------
(1) Ownership percentages representing less than one percent of the class
outstanding have been omitted.
(2) Based solely upon information contained in Amendment No. 9 to Schedule
13D, dated June 2, 1998, filed with the Securities and Exchange Commission. The
shares are beneficially owned by Mario J. Gabelli and Marc J. Gabelli and
various entities that they directly or indirectly control or for which one of
them acts as chief investment officer.
(3) Includes the number of shares of Common Stock and of Class B Common
Stock, as the case may be, owned of record by CPI as to which Henry H. Hoyt,
Jr., Richard L. Cruess and Suzanne H. Garcia are deemed to have shared
beneficial ownership by virtue of their relationships with CPI. Also includes
9,000 shares of Common Stock and 9,000 shares of Class B Common Stock held in
trust under the will of Kate Good Orcutt; Henry H. Hoyt, Jr. and Suzanne H.
Garcia are trustees and beneficiaries of the trust and Richard L. Cruess is a
trustee of the trust and, as such, are deemed to have shared beneficial
ownership of such shares. Henry H. Hoyt, Jr., Richard L. Cruess and Suzanne H.
Garcia each disclaim beneficial ownership of the shares of Common Stock and
Class B Common Stock owned by CPI and such trust. In no case do the additional
shares beneficially owned directly by such persons constitute more than 1/2 of
1% of the outstanding shares of Common Stock or Class B Common Stock, as the
case may be, and they do not change the approximate percentage of ownership
reflected in the table.
(4) Includes 149,820 shares of Common Stock for Henry H. Hoyt, Jr., 42,380
shares for T. Rosie Albright, 81,320 shares for Ralph Levine, 49,140 shares for
Herbert Sosman and 79,780 shares for Paul A. Veteri, respectively, and 622,923
shares for all directors and executive officers as a group, including the
persons named above, that may be acquired within 60 days of June 8, 1998 upon
exercise of options granted to such persons under the 1996 Long-Term Incentive
Plan (the "LTIP"). Does not include 159,352 shares of Common Stock in the case
of Henry H. Hoyt, Jr., 32,652 shares in the case of T. Rosie Albright, 97,565
shares in the case of Ralph Levine, 37,843 shares in the case of Herbert Sosman
and 90,605 shares in the case of Paul A. Veteri, respectively, and 585,178
shares in the case of all directors and executive officers as a group, including
the persons named above, awarded under the LTIP and the Company's Restricted
Stock Award Plan that are subject to forfeiture under certain conditions.
3
<PAGE> 6
ELECTION OF DIRECTORS
Nine directors will be elected to serve until the next Annual Meeting of
Stockholders or until their successors are elected. Shares represented by
proxies solicited by the Board of Directors will, unless otherwise specified
thereon, be voted for the election of the nominees named below, each of whom is
presently a director. All nominees for director were elected at the last annual
meeting of stockholders.
<TABLE>
<CAPTION>
DIRECTOR
NAME, AGE, PRINCIPAL OCCUPATION AND OTHER INFORMATION SINCE
----------------------------------------------------- --------
<S> <C>
DAVID M. BALDWIN; 69;
Chairman of the Board, David M. Baldwin Realty Co., Inc.
since February 28, 1994; prior thereto, President,
Helmsley-Noyes Company, Inc. since prior to June 1993.... 1990
DANIEL J. BLACK; 66;
Consultant to the Company; President and Chief Operating
Officer of the Company for more than five years prior to
March 28, 1997(1)........................................ 1975
RICHARD L. CRUESS, M.D.; 68;
Professor of Surgery, Center for Medical Education,
McGill University, Montreal, Quebec, Canada since June
1995; Dean, Faculty of Medicine, McGill University,
Montreal, Quebec, Canada from prior to June 1993 to May
1995..................................................... 1977
SUZANNE H. GARCIA; 63;
Owner, La Tierra Beneficiaries (real estate development)
and Santa Fe Ranch since prior to June 1993(2)........... 1997
HENRY H. HOYT, JR.; 70;
Chairman of the Board of Directors and Chief Executive
Officer of the Company since prior to June 1993(1)(2).... 1955
SCOTT C. HOYT; 45;
Vice President, New Products, Carter Products Division
("CPD") since August 1993; Vice President, Personal
Products Marketing, CPD from prior to June 1993 to July
1993(2).................................................. 1988
RALPH LEVINE; 62;
President and Chief Operating Officer of the Company
since April 1, 1997; Vice President, Secretary and
General Counsel of the Company for more than five years
prior to April 1, 1997(1)................................ 1990
HERBERT M. RINALDI; 69;
Of Counsel to the firm of Carella, Byrne, Bain,
Gilfillan, Cecchi, Stewart & Olstein (attorneys), of
which he was a Partner for more than five years prior to
December 31, 1996(3)..................................... 1977
PAUL A. VETERI; 56;
Executive Vice President and Chief Financial Officer of
the Company since April 1, 1997, Vice President, Finance
and Chief Financial Officer of the Company for more than
five years prior to April 1, 1997(1)..................... 1990
</TABLE>
- ---------------
(1) Member of the Executive Committee.
(2) Henry H. Hoyt, Jr. and Suzanne H. Garcia are siblings. Scott C. Hoyt is
the nephew of Henry H. Hoyt, Jr. and Suzanne H. Garcia. There are no other
family relationships among the directors and officers of the Company.
(3) The firm Carella, Byrne, Bain, Gilfillan, Cecchi, Stewart & Olstein has
performed legal services for the Company in the fiscal year ended March 31, 1998
("fiscal 1998").
Directors will be elected by the vote of a majority of the shares entitled
to vote at the Meeting. Votes that are withheld and broker non-votes will have
the same effect as negative votes in the election.
4
<PAGE> 7
BOARD OF DIRECTORS AND COMMITTEES
In fiscal 1998, the Board of Directors held 11 meetings. The Board of
Directors has appointed an Audit Committee, an Executive Committee, a Nominating
Committee and a Compensation Committee.
The Audit Committee, composed of Herbert M. Rinaldi, Chairman, and David M.
Baldwin, held four meetings in fiscal 1998. The Audit Committee meets with the
Company's independent auditors, the Company's internal audit personnel and other
corporate officers on matters relating to corporate financial reporting and
accounting procedures and policies, the adequacy of the Company's financial,
accounting and operational controls and the scope of the audits of both the
independent and internal auditors, and reviews and reports to the Board of
Directors the results of such audits and its recommendations relating to the
appointment of independent auditors, financial reporting and accounting
practices and policies.
The Nominating Committee, composed of David M. Baldwin, Chairman, Richard
L. Cruess, M.D. and Herbert M. Rinaldi, met once in fiscal 1998. The Nominating
Committee identifies and recommends candidates for election to the Board of
Directors. The Nominating Committee will consider nominees recommended by
stockholders. Such nominations for directors to be elected at the 1999 Annual
Meeting of Stockholders should be furnished in writing to the Secretary of the
Company by February 24, 1999 and should indicate the nominee's name, age and
business experience.
The Compensation Committee, composed of Richard L. Cruess, M.D., Chairman,
Herbert M. Rinaldi and David M. Baldwin, met once in fiscal 1998. The
Compensation Committee is empowered to make recommendations to the Board with
respect to the base salary of the two senior officers of the Company.
All of the Company's directors attended at least 75% of the meetings of the
Board of Directors and of the committees on which they served.
5
<PAGE> 8
EXECUTIVE COMPENSATION AND OTHER INFORMATION
EXECUTIVE COMPENSATION
The Summary Compensation Table shows certain information for the Company's
Chief Executive Officer and each of the four other most highly compensated
executive officers of the Company (the "Named Executives") for services rendered
in all capacities during the last three fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION AWARDS
------------------------------------------------ -----------------------------
RESTRICTED SECURITIES ALL
NAME AND FISCAL OTHER ANNUAL AND DEFERRED UNDERLYING OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) STOCK AWARDS(2) OPTIONS(#) COMPENSATION(3)
- ------------------ ------ ------ ----- --------------- --------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Henry H. Hoyt, Jr. .......... 1998 $1,232,100 $693,100 $60,851 $1,122,605 267,088 $32,133
Chairman of the Board, 1997 1,140,800 641,700 63,075 477,090 141,360 22,816
Chief Executive Officer 1996 1,056,300 594,100 78,504 787,050 228,960 21,126
and Director
Ralph Levine................. 1998 $ 850,000 $478,100 $48,175 $ 774,470 184,260 $18,481
President and Chief Operating 1997 625,000 367,500 56,933 292,680 86,720 12,500
Officer and Director(4) 1996 493,900 288,800 85,671 410,025 119,280 9,878
Paul A. Veteri............... 1998 $ 750,000 $421,900 $54,427 $ 683,345 162,580 $15,647
Executive Vice President, 1997 600,000 341,300 51,769 271,890 80,560 12,000
Chief Financial Officer 1996 493,900 288,800 55,738 410,025 119,280 9,878
and Director(5)
Herbert Sosman............... 1998 $ 521,000 $273,500 $78,861 $ 127,150 30,252 $13,466
Vice President, 1997 491,500 258,000 64,687 154,170 45,680 9,830
Pharmaceuticals, U.S. 1996 463,600 243,400 66,293 259,325 75,440 9,272
T. Rosie Albright............ 1998 $ 432,667 $236,300 $50,306 $ 109,820 26,129 $ 5,944
Vice President, 1997 408,000 222,600 61,250 133,110 39,440 3,264
Consumer Products, U.S.(6)
</TABLE>
- ---------------
(1) Included in this amount in fiscal 1998 was $22,502, $22,625, $24,596,
$32,936, and $26,860 for Messrs. Hoyt, Levine, Veteri and Sosman and Ms.
Albright, respectively, relating to withholding taxes paid by the Company on the
employee's behalf in respect of certain perquisites and other taxable benefits.
(2) On March 31, 1998, Mr. Hoyt held 159,352 shares of restricted and/or
deferred stock awarded under the LTIP, the market value of which was $2,918,135,
Mr. Levine held 97,565 shares of LTIP stock, the market value of which was
$1,786,660, Mr. Veteri held 90,605 shares of LTIP stock, the market value of
which was $1,659,205, Mr. Sosman held 37,843 shares of LTIP stock, the market
value of which was $693,000, and Ms. Albright held 32,652 shares of LTIP stock,
the market value of which was $597,940. Dividends accumulated since the date of
grant are paid to the recipient of the award at vesting.
(3) Includes Company contributions vested pursuant to the Supplemental
Retirement and Savings Plan and the Executive Savings Plan and, with respect to
fiscal 1998, premiums paid by the Company with respect to the term life portion
of split-dollar life insurance policies with respect to the Named Executives.
The Named Executives do not have any interest in the cash surrender value under
such policies. The vested contributions to the Supplemental Retirement Savings
Plan and the Executive Pension Benefits Plans for each Named Executive for
fiscal 1998 are as follows: Mr. Hoyt-$23,735; Mr. Levine-$16,658; Mr.
Veteri-$14,450; Mr. Sosman-$10,294 and Ms. Albright-$4,992. The premiums paid
with respect to the term life portion of the split-dollar insurance for each
Named Executive for fiscal 1998 are as follows: Mr. Hoyt-$8,398; Mr.
Levine-$1,823; Mr. Veteri-$1,197; Mr. Sosman-$3,172; and Ms. Albright-$952.
(4) Mr. Levine was appointed President and Chief Operating Officer
effective April 1, 1997. Prior to that date, he served as Vice President,
Secretary and General Counsel of the Company.
(5) Mr. Veteri was appointed Executive Vice President and Chief Financial
Officer effective April 1, 1997. Prior to that date, he served as Vice
President, Finance and Chief Financial Officer of the Company.
6
<PAGE> 9
(6) Ms. Albright was appointed Vice President, Consumer Products, U.S. on
December 4, 1995.
The following table contains information concerning options to purchase
shares of the Company's Common Stock granted to the Named Executives pursuant to
the LTIP during fiscal 1998.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK PRICE
INDIVIDUAL GRANTS APPRECIATION FOR OPTION TERM(3)
------------------------------------------------------ -------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN PRICE EXPIRATION AT 0% ANNUAL AT 5% ANNUAL AT 10% ANNUAL
NAME GRANTED(#) FISCAL 1998 ($/SHARE)(1) DATE(2) GROWTH RATE GROWTH RATE GROWTH RATE
- ---- ----------- ------------ ------------ ---------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Henry H. Hoyt, Jr.... 267,088 25.50% $16.81 2/02/08 -0- $2,823,999 $7,156,568
Ralph Levine......... 184,260 17.59% $16.81 2/02/08 -0- $1,948,235 $4,937,209
Paul A. Veteri....... 162,580 15.52% $16.81 2/02/08 -0- $1,719,006 $4,356,298
Herbert Sosman....... 30,252 2.89% $16.81 2/02/08 -0- $ 319,863 $ 810,596
T. Rosie Albright.... 26,129 2.49% $16.81 2/02/08 -0- $ 276,270 $ 700,121
</TABLE>
- ---------------
(1) Market price of the stock on the date of grant.
(2) These options will become exercisable at the rate of 25% of the total
award in each year commencing on the first anniversary of the date of the grant.
(3) The dollar amounts under these columns are the results of calculations
at 0%, and at the 5% and 10% annual appreciation rates set by the Securities and
Exchange Commission for illustrative purposes and, therefore, are not intended
to forecast future financial performance or possible future appreciation, if
any, in the price of Common Stock. Stockholders are, therefore, cautioned
against drawing any conclusion from the appreciation data shown. Optionees will
only realize value from this grant if the price of Common Stock appreciates,
which would benefit all stockholders commensurately. The Company did not use an
alternative formula for grant valuation as it is not aware of any formula that
will determine, with reasonable accuracy, a present value based on future
unknown or volatile factors.
No options were exercised by the Named Executives during fiscal 1998. The
following table sets forth information with respect to the unexercised options
held by them at March 31, 1998.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT MARCH 31, 1998(#) AT MARCH 31, 1998($)(1)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Henry H. Hoyt, Jr. .............................. 149,820 487,588 $692,389 $1,433,168
Ralph Levine..................................... 81,320 308,940 $376,443 $ 861,503
Paul A. Veteri................................... 79,780 282,640 $369,031 $ 806,749
Herbert Sosman................................... 49,140 102,232 $227,056 $ 382,352
T. Rosie Albright................................ 42,380 88,229 $195,824 $ 329,920
</TABLE>
- ---------------
(1) Calculated by determining the difference between the exercise price and
the closing price of the Company's Common Stock on the New York Stock Exchange
on March 31, 1998 with respect to those options for which such closing price
exceeded the exercise price.
7
<PAGE> 10
The Employees' Retirement Plan of Carter-Wallace, Inc. (the "Retirement
Plan") is a noncontributory defined benefit plan. The Retirement Plan provides
for a pension payable upon retirement at age 65 in an amount calculated on the
basis of the number of years of credited service and the individual's average
covered compensation during the five consecutive highest paid years in the
ten-year period immediately preceding the individual's retirement date. Covered
compensation does not include deferred compensation or other incentive
compensation. The Retirement Plan permits early retirement and deferred
retirement under specified conditions.
Amounts payable under the Retirement Plan may not exceed the limitation
imposed by Section 415 of the Internal Revenue Code (the "Code") (currently
$130,000, but subject to periodic cost-of-living adjustments, or the
individual's average covered compensation for his three highest paid years,
whichever is less) and the amount of credited compensation which may be taken
into account in the computation of pension benefits may not exceed the amount
permitted under Section 401(a)(17) of the Code (currently $160,000, subject to
cost-of-living adjustments). Amounts shown in the table below include benefits
in excess of such limitations that are payable under the Executive Pension
Benefits Plan and the Executive Pension Benefits Core Plan (collectively, the
"Executive Pension Benefits Plans") described below.
The Executive Pension Benefits Plans are unfunded plans that provide for
the payment of vested pension benefits that would otherwise be payable under the
Retirement Plan but for the limitations of Sections 415 and 401(a)(17) of the
Code and the exclusion from covered compensation of amounts deferred under the
Executive Savings Plan and that mitigate the reduction in retirement benefits of
corporate officers who elect early retirement. Corporate officers' covered
compensation used in calculating benefits under the Executive Pension Benefits
Plans includes accrued bonuses.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
COVERED 10 YEARS 20 YEARS 30 YEARS 40 YEARS 50 YEARS
COMPENSATION SERVICE SERVICE SERVICE SERVICE SERVICE
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 600,000 $116,714 $233,429 $ 351,786 $ 471,786 $ 591,786
$ 800,000 $156,714 $313,429 $ 471,786 $ 631,786 $ 791,786
$1,000,000 $196,714 $393,429 $ 591,786 $ 791,786 $ 991,786
$1,200,000 $236,714 $473,429 $ 711,786 $ 951,786 $1,191,786
$1,400,000 $276,714 $553,429 $ 831,786 $1,111,786 $1,391,786
$1,600,000 $316,714 $633,429 $ 951,786 $1,271,786 $1,591,786
$1,800,000 $356,714 $713,429 $1,071,786 $1,431,786 $1,791,786
$2,000,000 $396,714 $793,429 $1,191,786 $1,591,786 $1,991,786
$2,200,000 $436,714 $873,429 $1,311,786 $1,751,786 $2,191,786
$2,400,000 $476,714 $953,429 $1,431,786 $1,911,786 $2,391,786
</TABLE>
The above table shows the estimated annual benefits payable on retirement
to eligible employees, including officers and directors, under the Retirement
Plan and the Executive Pension Benefits Plans as in effect on March 31, 1998.
Amounts shown are based on the assumptions that the Retirement Plan and the
Executive Pension Benefits Plans remain in effect without change and that the
individual receives a straight life benefit with no reduction to allow for
payment to a surviving spouse, as is permitted by the Retirement Plan and the
Executive Pension Benefits Plans.
The above computation of benefits assumes continued employment to at least
age 65 and covered compensation as described above. Amounts shown are before
applicable federal and state income taxes payable by the recipient and are net
of a portion of applicable Social Security benefits received. The portion of the
benefits accrued as of September 30, 1980 is subject to annual cost-of-living
adjustments.
8
<PAGE> 11
Current covered remuneration and credited years of service for purposes of
the Retirement Plan and the Executive Pension Benefits Plans for each Named
Executive are $1,925,200 and 46 years for Mr. Hoyt; $1,328,100 and 34 years for
Mr. Levine; $1,171,900 and 21 years for Mr. Veteri; $794,500 and 19 years for
Mr. Sosman; and $668,967 and 2 years for Ms. Albright.
EMPLOYMENT AGREEMENTS AND TERMINATION AND CHANGE IN CONTROL ARRANGEMENTS
The Company has entered into employment agreements with Messrs. Levine,
Veteri and Sosman and Ms. Albright.
The employment agreements with Mr. Levine and Mr. Veteri provide for their
employment at base salaries of $884,000 and $780,000, respectively. Pursuant to
these agreements, each of Mr. Levine and Mr. Veteri will be entitled to certain
additional payments if his employment is terminated by the Company for any
reason other than for cause or is terminated by him as a result of a diminution
in his position, authority, duties or responsibilities or in certain other
circumstances. In such event, Mr. Levine or Mr. Veteri, as the case may be,
shall receive a lump sum payment equal to three times the sum of his annual base
salary at the time of termination and the greater of 100% of the target bonus
for the year of termination or the highest bonus earned by him in any of the
three preceding years. In addition, he shall receive an increased benefit under
the Company's Executive Pension Benefits Plan based on his final salary and
bonus as determined above and credit for five additional years of service and,
in the case of Mr. Veteri, five additional years of age, his outstanding options
and restricted and deferred stock grants shall become immediately vested and he
and his family will be eligible to continue to participate in certain benefit
programs, including medical and life insurance, for three years following
termination. Mr. Levine and Mr. Veteri will be made whole on an after-tax basis
in the event any excise tax becomes payable on such payments.
Mr. Sosman's current employment agreement, which expires October 30, 1999,
provides for his employment as a Vice President of the Company and President of
the Company's Wallace Laboratories Division at a base salary of not less than
$521,000. If Mr. Sosman's employment is terminated by the Board of Directors at
any time during the term without cause, the Company is obligated to pay Mr.
Sosman, as severance, an amount equal to two times his annual base salary in 24
equal monthly installments.
Ms. Albright's employment agreement provides for her employment at a base
salary of at least $400,000 per year through December 3, 2000.
In addition to the base salary provided for under the employment
agreements, such persons are entitled to annually determined bonus payments
pursuant to the Company's Profit Sharing Plan. The actual cash compensation paid
to such persons with respect to fiscal 1998 is disclosed in the Summary
Compensation Table.
Pursuant to the LTIP, outstanding awards of LTIP stock become fully vested
and outstanding options become immediately exercisable upon the occurrence of a
Change in Control of the Company. In addition, upon termination of employment
following a Change in Control, options will remain exercisable for the balance
of their term and, upon exercise of an option within one year after the
occurrence of a Change in Control, the optionee will be entitled to receive, in
addition to the shares of Common Stock thereby purchased, a cash payment in
respect of each such share equal to the excess, if any, of the highest price
paid or offered for the Common Stock during the six-month period preceding the
Change in Control over the market price of the Common Stock on the date of
exercise.
A Change in Control also results in the immediate vesting and payment of
benefits under the Executive Pension Benefits Plans and, in the case of certain
officers (including certain of the Named Executives), the elimination of early
retirement reductions. Participants will be made whole on an after-tax basis in
the event any excise tax becomes payable as a result of the payment of benefits
under the Executive Pension Benefits Plan.
9
<PAGE> 12
Change in Control is defined for purposes of the LTIP and the Executive
Pension Benefits Plans as the acquisition by any person, other than a member of
the Hoyt family or trusts for the benefit of or parties controlled by them, of
(i) more than 50% of the voting power of the Company's outstanding securities,
(ii) all or substantially all of the properties and assets of the Company or
(iii) the power to cause the direction of the management or policies of the
Company through stock ownership or by contract, proxy or otherwise.
COMPENSATION OF DIRECTORS
Directors, other than those who are salaried employees of the Company,
receive an annual fee of $45,000 for serving on the Board of Directors and a fee
of $500 for each meeting of the Audit Committee that they attend, but do not
receive a fee for attendance at meetings of the Board of Directors or meetings
of any committee other than the Audit Committee. Directors who are salaried
employees of the Company receive a fee of $250 for each meeting of the Board of
Directors that they attend.
The Company entered into a three-year consulting agreement effective as of
April 1, 1997 with Daniel J. Black, who was President and Chief Operating
Officer of the Company for more than five years prior to March 28, 1997,
providing for an annual fee of $400,000, pursuant to which he renders consulting
and advisory services relating to subjects assigned to him by the Company.
REPORT ON EXECUTIVE COMPENSATION
General
The Company's Compensation Committee, consisting of Messrs. Baldwin, Cruess
and Rinaldi, non-employee Directors of the Company, makes recommendations to the
Board of Directors with respect to the base salaries of the Company's Chief
Executive Officer and its President and Chief Operating Officer. The base salary
of the Company's Chief Executive Officer and its President are determined by the
entire Board of Directors after consideration of the recommendation of the
Compensation Committee. The compensation of all other executive officers is
recommended to the Board for its determination by the Company's Executive
Committee.
The Company's compensation program for its executive officers consists of
the following significant components: annually determined salary; annually
determined bonus payments pursuant to the Company's Profit Sharing Plan; and
periodic grants of restricted and/or deferred stock units and stock options. The
elements of the Company's compensation are designed with different purposes in
mind. Salary and bonus payments are primarily intended to compensate for current
and past performance. Restricted and/or deferred stock units and stock options
are awarded in an effort to provide a strong incentive for outstanding long-term
performance. The restricted and/or deferred stock units are forfeitable
generally if the executive holding the units leaves the Company prior to four
years from the date on which the restricted stock and/or deferred units were
awarded or if such executive is terminated for cause. Awards of restricted stock
and/or deferred units and stock options are directly tied to the interests of
the Company's shareholders, inasmuch as the value of the units will increase or
decrease based upon the future price of the Company's stock and the options will
be of value to the holder only if the future price of the Company's stock
exceeds the price at which the options are exercisable.
In determining the amount and the form of the executive compensation
package for 1998, the Compensation Committee and the Board considered the
Company's overall performance over a number of years rather than considering any
single year. The Compensation Committee also considered the objectives the
Company desires to achieve in the future as well as the challenges with which
the Company would be confronted. Given this overall view, the Compensation
Committee considered several specific factors. They included continued efforts
to acquire and market new drugs, continued efforts to license the Company's
products to others and continued efforts to upgrade the Company's management of
its inventory and thus improve the Company's working
10
<PAGE> 13
capital and cash flow. However, in making the compensation determination, no
specific weight was given to any one factor. In December 1995, the Company
adopted the LTIP, under which certain key employees of the Company have been
granted awards of restricted and/or deferred stock, together with options to
purchase the Company's Common Stock, as indicated above.
Chief Executive Officer Compensation
The compensation of Henry H. Hoyt, Jr., the Company's Chief Executive
Officer, in fiscal 1998 consisted of salary and bonus payments. In determining
Mr. Hoyt's fiscal 1998 base salary, the Compensation Committee granted a merit
increase in annual salary of 8%.
Submitted by the Company's Board of Directors:
<TABLE>
<S> <C>
Daniel J. Black Scott C. Hoyt
David M. Baldwin Ralph Levine
Richard L. Cruess, M.D. Herbert M. Rinaldi
Henry H. Hoyt, Jr. Paul A. Veteri
Suzanne H. Garcia
</TABLE>
TAX DEDUCTION CONSIDERATIONS
Section 162(m) of the Internal Revenue Code of 1986 (the "Code") limits to
$1 million the Company's deduction for compensation paid in any taxable year to
the Company's Chief Executive Officer and the Named Executives, subject to an
exception for "performance-based compensation." While compensation paid by the
Company to such individuals will be subject to this deduction limit, income
realized from the exercise of stock options granted under the LTIP will qualify
as performance-based compensation and will be exempt from the limit.
11
<PAGE> 14
PERFORMANCE GRAPH
The following graph compares the yearly change in the cumulative total
shareholder return on the Company's Common Stock for each of the Company's last
five fiscal years with the cumulative total return (assuming reinvestment of
dividends) of (i) the Wilshire 5000 Index and (ii) a peer group of five
companies within the Company's Standard Industry Codes (SIC) and with market
capitalization similar to the Company consisting of the following companies:
Alpharma Inc., Block Drug Company, Inc., Ivax Corporation, Alberto-Culver
Corporation and Del Laboratories.
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Carter-Wallace Peer Group Wilshire 5000
<S> <C> <C> <C>
1993 100.00 100.00 100.00
1994 76.00 85.20 100.30
1995 44.30 101.40 110.70
1996 61.70 116.10 143.20
1997 52.00 94.80 162.30
1998 69.90 106.60 236.10
</TABLE>
12
<PAGE> 15
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors will recommend at the Meeting that a resolution be
adopted ratifying the appointment by the Board of Directors of the firm of KPMG
Peat Marwick LLP to audit the financial statements of the Company and its
subsidiaries for the current fiscal year. If the stockholders do not ratify the
appointment of KPMG Peat Marwick LLP as independent auditors, the Board of
Directors will consider the selection of another accounting firm. A
representative of KPMG Peat Marwick LLP is expected to be present at the
Meeting, to have an opportunity to make a statement if he desires to do so and
to be available to answer any questions relating to their audit of the financial
statements of the Company for fiscal 1998. The fees paid to this firm by the
Company and its subsidiaries for auditing services were approximately $820,000
for fiscal 1998. See "BOARD OF DIRECTORS AND COMMITTEES" for information
concerning the Company's Audit Committee.
MANAGEMENT RECOMMENDS A VOTE "FOR" THIS RESOLUTION. PROXIES SOLICITED BY
THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS STOCKHOLDERS SPECIFY A CONTRARY
VOTE.
STOCKHOLDER PROPOSAL
William Steiner, 4 Radcliff Drive, Great Neck, New York 11024, who was the
beneficial owner of 500 shares of Common Stock at October 31, 1997, has given
notice that he intends to present the following proposal at the Meeting. The
proposed resolution and Mr. Steiner's supporting statement, for which the Board
of Directors and the Company accept no responsibility, are as follows:
MAXIMIZE VALUE RESOLUTION
Resolved that the shareholders of Carter-Wallace, Inc. Corporation urge the
Carter-Wallace, Inc. Board of Directors to arrange for the prompt sale of
Carter-Wallace, Inc. to the highest bidder.
SUPPORTING STATEMENT
The purpose of the Maximize Value Resolution is to give all Carter-Wallace,
Inc. shareholders the opportunity to send a message to the Carter-Wallace, Inc.
Board that they support the prompt sale of Carter-Wallace, Inc. to the highest
bidder. A strong and or majority vote by the shareholders would indicate to the
board the displeasure felt by the shareholders of the financial performance of
the company over many years and the drastic action that should be taken. Even if
it is approved by the majority of the Carter-Wallace, Inc. shares represented
and entitled to vote at the annual meeting, the Maximize Value Resolution will
not be binding on the Carter-Wallace, Inc. Board. The proponent however believes
that if this resolution receives substantial support from the shareholders, the
board may choose to carry out the request set forth in the resolution:
The prompt auction of Carter-Wallace, Inc. should be accomplished by
any appropriate process the board chooses to adopt including a sale to the
highest bidder whether in cash, stock, or a combination of both. It is
expected that the board will uphold its fiduciary duties to the utmost
during the process.
The proponent further believes that if the resolution is adopted, the
management and the board will interpret such adoption as a message from the
company's stockholders that it is no longer acceptable for the board to continue
with its current management plan and strategies.
I URGE YOUR SUPPORT. VOTE FOR THIS RESOLUTION.
13
<PAGE> 16
BOARD OF DIRECTORS' STATEMENT IN OPPOSITION
The Board of Directors believes that this proposal would not serve the
Company's best interests and recommends a vote AGAINST it.
The Board of Directors believes that the proposal could have a detrimental
effect on the financial interests of the Company's stockholders. The proposal is
urging the prompt sale of the Company at the highest bid, which would not
necessarily be a bid that would represent the true value of the Company.
Further, although the proposal only requests that certain action be taken by the
Board and does not obligate the Board to take action, announcement that the
proposal has been adopted could adversely affect the Company's relationships
with its customers and employees by creating uncertainty about its future. In
that event, revenues and profits and, in turn, stockholder value could decline.
The Board of Directors consists of persons familiar with the business of
the Company and the industry in which it operates. The Board should retain full
discretion to consider all possible strategic alternatives for the Company's
future and issues of timing in respect thereof and should not be urged to pursue
only one course of action at a particular point in time, which may well not have
the effect of maximizing stockholder value.
For all of the foregoing reasons, the Board of Directors recommends a vote
AGAINST this proposal.
The approval of the above-described proposal requires the favorable vote of
at least a majority of the outstanding shares of Common Stock and Class B Common
Stock voting as one class. Abstentions and broker non-votes will have the same
effect as a negative vote with respect to this matter.
PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED AGAINST THE ABOVE
STOCKHOLDER PROPOSAL UNLESS STOCKHOLDERS SPECIFY A CONTRARY VOTE.
OTHER BUSINESS
The Board of Directors is not aware of any matters other those referred to
above that may be presented for action at the Meeting. If any other matters
should be presented, the persons named as proxies will vote on such matters in
accordance with their best judgment.
SUBMISSION OF 1999 STOCKHOLDER PROPOSALS
Stockholder proposals for presentation at the Company's 1999 Annual Meeting
of Stockholders must be received in writing by the Secretary of the Company at
the Company's executive offices, 1345 Avenue of the Americas, New York, New York
10105, not later than February 24, 1999 in order to be considered for inclusion
in the Company's Proxy Statement and form of proxy.
14
<PAGE> 17
MISCELLANEOUS
The solicitation of proxies will be by mail and the cost will be borne by
the Company. The Company will request banks, brokers and other nominees,
custodians and fiduciaries to forward proxy material to beneficial owners and to
seek authorization for the execution of proxies, and the Company will reimburse
them for their expense in this connection.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED MARCH 31, 1998 (WITHOUT EXHIBITS) AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION WILL BE MADE AVAILABLE WITHOUT CHARGE TO ANY STOCKHOLDER
UPON WRITTEN REQUEST ADDRESSED TO STEPHEN R. LANG, SECRETARY, AT THE COMPANY'S
PRINCIPAL EXECUTIVE OFFICES, CARTER-WALLACE, INC., 1345 AVENUE OF THE AMERICAS,
NEW YORK, NEW YORK 10105.
BY ORDER OF THE BOARD OF DIRECTORS
STEPHEN R. LANG
Secretary
New York, New York
June 24, 1998
15
<PAGE> 18
PROXY
CARTER-WALLACE, INC.
ANNUAL MEETING OF STOCKHOLDERS, JULY 21, 1998
HOTEL DUPONT, 11TH AND MARKET STREETS, WILMINGTON, DELAWARE 19801
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints HENRY H. HOYT, JR. and RALPH LEVINE, and
either of them, as proxies with full power of substitution, to represent and to
vote all shares of stock of Carter-Wallace, Inc. which the undersigned is
entitled to vote at the Annual Meeting of Stockholders to be held on July 21,
1998, and all adjournments thereof, as designated on the reverse side of this
Proxy.
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Shares represented by this Proxy will be voted as specified. If no
specification is made, this Proxy will be voted FOR Proposals (1) and (2) and
AGAINST Proposal (3).
(Continued and to be dated and signed on the reverse side)
<PAGE> 19
(Continued from other side)
PLEASE MARK BOXES M OR [X] IN BLUE OR BLACK INK.
(1) Election of Directors: [ ] FOR, nominees listed below (except as stated to
the contrary below)
[ ] WITHHOLD AUTHORITY to vote for all nominees
listed below
D.M. Baldwin, D.J. Black, R.L. Cruess, M.D., S.H. Garcia, H.H.
Hoyt, Jr., S.C. Hoyt, R. Levine, H.M. Rinaldi, P.A.
Veteri
(INSTRUCTION: To withhold authority to vote for an individual nominee, write
that nominee's name on the line below.)
- --------------------------------------------------------------------------------
(2)
Proposal to ratify the appointment of KPMG Peat Marwick LLP as independent
auditors for the Company for the current fiscal year.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) Stockholder proposal relating to maximizing shareholder value.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Date:
- ------------------------------, 1998 Signed:
--------------------------------
--------------------------------
(Please sign exactly as name
appears. If stock is registered
in two names, both should sign.)
SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
<PAGE> 20
P R O X Y
CARTER-WALLACE, INC.
ANNUAL MEETING OF STOCKHOLDERS, JULY 21, 1998
Hotel duPont, 11th and Market Streets, Wilmington, Delaware 19801
This Proxy is solicited on behalf of the Board of Directors
The undersigned hereby appoints HENRY H. HOYT, JR. and RALPH LEVINE, and
either of them, as proxies with full power of substitution, to represent and to
vote all shares of stock of Carter-Wallace, Inc. which the undersigned is
entitled to vote at the Annual Meeting of Stockholders to be held on July 21,
1998, and all adjournments thereof, as designated on the reverse side of this
Proxy.
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Shares represented by this Proxy will be voted as specified. If no
specification is made, this Proxy will be voted FOR Proposals (1) and (2) and
AGAINST Proposal (3).
(Continued and to be dated and signed on the reverse side)
Carter-Wallace, Inc.
P.O. Box 11068
New York, N.Y. 10203-0068
<PAGE> 21
(1) Election of Directors:
WITHHOLD
AUTHORITY
FOR to vote for all
nominees nominees
listed below [X] listed below [X] Exceptions
D.M. Baldwin, D.J. Black, R.L. Cruess, M.D., S.H. Garcia, H.H. Hoyt, Jr.,
S.C. Hoyt, R. Levine, H.M. Rinaldi, P.A. Veterl
(INSTRUCTION: To withhold authority to vote for an individual nominee, mark the
exceptions box and write that nominee's name on the line below.)
Exceptions ____________________________________________________________________
(2) Proposal to ratify the appointment of KPMG Peat Marwick LLP as Independent
auditors for the Company for the current fiscal year
For [X] Against [X] Abstain [X]
(3) Stockholder proposal relating to maximizing shareholder value.
For [X] Against [X] Abstain [X]
(Please sign exactly as name appears. If stock is
registered in two names, both should sign.)
DATED _____________________________________, 1998
SIGNED __________________________________________
_________________________________________________
Votes MUST be indicated
(x) in Black or Blue ink. [X]
Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope.
