<PAGE> 1
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:
<TABLE>
<S> <C>
[ ] 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-2.
[ ] Confidential for the Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
</TABLE>
CARTER-WALLACE, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than 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 0-12.
(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> 2
CARTER-WALLACE, INC.
1345 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10105
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JULY 18, 2000
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 18, 2000, 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 LLP as independent auditors for the
Company for the current fiscal year; and
3. 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 5, 2000 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 16, 2000
<PAGE> 3
CARTER-WALLACE, INC.
1345 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10105
ANNUAL MEETING OF STOCKHOLDERS
JULY 18, 2000
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 2000 Annual Meeting of Stockholders (the "Meeting") to be
held at the Hotel du Pont, 11th and Market Streets, Wilmington, Delaware 19801,
on Tuesday, July 18, 2000, 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 16, 2000.
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 and (b) FOR the ratification of the
appointment of KPMG LLP as independent auditors for the Company. 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 5, 2000, 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
32,981,414 shares of Common Stock outstanding and entitled to vote and
12,269,315 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 12,104,983 shares of Common Stock, representing 36.70% of
the outstanding shares of Common Stock, and an aggregate of 11,799,600 shares of
Class B Common Stock, representing 96.17% of the outstanding shares of Class B
Common Stock; such holdings represent 83.57%, in the aggregate, of the voting
power of the shares entitled to vote at the Meeting. See "STOCK OWNERSHIP."
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.
<PAGE> 4
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 95.80% 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 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 OF COMMON PERCENT OF
NAME AND ADDRESS STOCK CLASS(1) STOCK CLASS(1)
---------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
THE CPI DEVELOPMENT CORPORATION....... 11,754,000 35.64% 11,754,000 95.80%
103 Springer Building
3411 Silverside Road
Wilmington, Delaware 19810
MARIO J. GABELLI and
MARC J. GABELLI..................... 7,575,000(2) 22.97%
One Corporate Center
Rye, New York 10580-1434
HENRY H. HOYT, JR..................... 12,517,767(3)(4) 37.30% 11,785,500(3) 96.06%
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) 95.89%
1110 Pine Avenue West
Montreal, H3A 1A3
Quebec, Canada
SUZANNE H. GARCIA..................... 11,773,800(3) 35.70% 11,776,800(3) 95.99%
P.O. Box 5040
Santa Fe, New Mexico 87502
T. ROSIE ALBRIGHT..................... 143,816(4)
DAVID M. BALDWIN...................... 3,000
THOMAS G. GERSTMYER................... 29,178(4)
SCOTT C. HOYT......................... 324
RALPH LEVINE.......................... 382,089(4) 1.15%
HERBERT M. RINALDI.................... 9,000
PAUL A. VETERI........................ 360,162(4) 1.08%
All directors and executive officers
of the Company as a group (21
persons)............................ 14,147,009(3)(4) 40.39% 11,799,600(3) 96.17%
</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. 16 to Schedule 13D,
dated March 3, 2000, filed with the Securities and Exchange Commission. The
shares are beneficially owned by Mario J.
2
<PAGE> 5
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.
(4) Includes 574,078 shares of Common Stock for Henry H. Hoyt, Jr., 127,556
shares for T. Rosie Albright, 29,178 shares for Thomas G. Gerstmyer, 349,269
shares for Ralph Levine and 325,242 shares for Paul A. Veteri, respectively,
and 2,042,026 shares for all directors and executive officers as a group,
including the persons named above, that may be acquired within 60 days of
the Record Date upon exercise of options granted to such persons under the
Company's 1996 Long-Term Incentive Plan (the "LTIP"). Does not include
388,220 shares of Common Stock in the case of Henry H. Hoyt, Jr., 42,992
shares in the case of T. Rosie Albright, 35,710 shares in the case of Thomas
G. Gerstmyer, 265,122 shares in the case of Ralph Levine and 234,941 shares
in the case of Paul A. Veteri, respectively, and 1,266,317 shares in the
case of all directors and executive officers as a group, including the
persons named above, awarded under the LTIP that are subject to forfeiture
under certain conditions.
ELECTION OF DIRECTORS
Eight 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; 71........................................ 1990
Chairman of the Board, David M. Baldwin Realty Co., Inc.
since prior to June 1995.
RICHARD L. CRUESS, M.D.; 70................................. 1977
Professor of Surgery, Center for Medical Education, McGill
University, Montreal, Quebec, Canada since June 1995.
SUZANNE H. GARCIA; 65....................................... 1997
Owner, La Tierra Beneficiaries (real estate development)
and Santa Fe Ranch since prior to June 1995(2)
HENRY H. HOYT, JR.; 72...................................... 1955
Chairman of the Board of Directors and Chief Executive
Officer of the Company since prior to June 1995(1)(2)
SCOTT C. HOYT; 47........................................... 1988
Vice President, New Products, Carter Products Division
since prior to June 1995.
RALPH LEVINE; 64............................................ 1990
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)
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
DIRECTOR
NAME, AGE, PRINCIPAL OCCUPATION AND OTHER INFORMATION SINCE
----------------------------------------------------- --------
<S> <C>
HERBERT M. RINALDI; 71...................................... 1977
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)
PAUL A. VETERI; 58.......................................... 1990
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)
</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 of Carella, Byrne, Bain, Gilfillan, Cecchi, Stewart & Olstein
performed legal services for the Company in the fiscal year ended March 31,
2000 ("fiscal 2000").
Directors will be elected by the vote of a majority of the votes of the
outstanding shares of Common Stock and Class B Common Stock voting as one class.
Votes that are withheld and broker non-votes will have the same effect as
negative votes in the election.
BOARD OF DIRECTORS AND COMMITTEES
In fiscal 2000, the Board of Directors held nine 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 2000. The Audit Committee, whose duties
and responsibilities are set forth in a written charter adopted by the Board of
Directors, monitors the integrity of the Company's financial reporting process
and systems of internal controls regarding finance, accounting and legal
compliance and the independence and performance of the Company's independent
auditors and internal audit personnel. The Audit Committee meets with both the
independent and internal auditors and reviews and reports to the Board of
Directors regarding the scope and results of their audits and its
recommendations relating to the appointment of independent auditors.
The Nominating Committee, composed of David M. Baldwin, Chairman, Richard
L. Cruess, M.D. and Herbert M. Rinaldi, met once in fiscal 2000. 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 2001 Annual
Meeting of Stockholders should be furnished in writing to the Secretary of the
Company by February 16, 2001 and should indicate the nominee's name, age and
business experience.
The Compensation Committee, composed of Richard L. Cruess, M.D., Chairman,
David M. Baldwin, Suzanne H. Garcia and Herbert M. Rinaldi, met once in fiscal
2000. 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.
4
<PAGE> 7
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>
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
----------------------------------------- ---------------------------
RESTRICTED AND
DEFERRED SECURITIES
FISCAL OTHER ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) AWARDS(2) OPTIONS(#) COMPENSATION(3)
--------------------------- ------ ---------- ---------- --------------- -------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Henry H. Hoyt, Jr............ 2000 $1,332,700 $1,332,700 $ 69,698 $3,913,494 144,443 $30,435
Chairman of the Board, 1999 1,281,400 794,500 60,942 1,236,971 277,774 31,548
Chief Executive Officer 1998 1,232,100 639,100 60,851 1,122,605 267,088 32,133
and Director
Ralph Levine................. 2000 $ 919,400 $ 919,400 $241,538 $2,699,802 99,647 $19,681
President and Chief
Operating 1999 884,000 548,100 68,905 853,343 191,628 18,886
Officer and Director 1998 850,000 478,100 48,175 774,470 184,260 18,481
Paul A. Veteri............... 2000 $ 811,200 $ 811,200 $ 67,686 $2,382,173 87,924 $16,553
Executive Vice President, 1999 780,000 483,600 55,113 752,952 169,084 16,764
Chief Financial Officer 1998 750,000 421,900 54,427 683,345 162,580 15,647
and Director
T. Rosie Albright............ 2000 $ 468,133 $ 358,100 $183,900 $ 291,673 37,678 $ 9,912
Vice President, 1999 454,500 268,400 104,262 186,176 41,806 8,282
Consumer Products, U.S. 1998 432,667 236,300 50,306 109,820 26,129 5,944
Thomas G. Gerstmyer.......... 2000 $ 459,000 $ 347,600 $ 63,544 $ 283,166 36,581 $ 9,777
Vice President, 1999 391,833 260,600 19,509 320,255 80,129 7,822
Pharmaceuticals, U.S.(4)
</TABLE>
---------------
(1) Included in this amount in fiscal 2000 was $25,881, $107,226, $31,576,
$119,218 and $28,045 for Mr. Hoyt, Mr. Levine, Mr. Veteri, Ms. Albright and
Mr. Gerstmyer, respectively, relating to withholding taxes paid by the
Company on the employee's behalf in respect of certain perquisites and other
taxable benefits. Also included is $79,460 for Mr. Levine and $43,196 for
Ms. Albright for country club membership fees and dues and $17,791 for Mr.
Hoyt, $18,184 for Mr. Veteri and $16,103 for Mr. Gerstmyer, representing the
imputed annual income related to a Company provided automobile.
(2) On March 31, 2000, Mr. Hoyt held 388,220 shares of restricted stock awarded
under the LTIP, the market value of which was $7,279,125, Mr. Levine held
265,122 shares, the market value of which was $4,971,038, Mr. Veteri held
234,941 shares, the market value of which was $4,405,144, Ms. Albright held
42,992 shares, the market value of which was $806,100 and Mr. Gerstmyer held
35,710 shares, the market value of which was $669,563. 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 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 2000 are as follows: Mr. Hoyt -- $25,612; Mr. Levine -- $17,957; Mr.
Veteri -- $15,568; Ms. Albright -- $9,087 and Mr. Gerstmyer -- $9,005. The
premiums paid with respect to the term life portion of the split-dollar
insurance for each Named Executive for fiscal 2000 are as follows: Mr.
Hoyt -- $4,823; Mr. Levine -- $1,724; Mr. Veteri -- $985; Ms.
Albright -- $825 and Mr. Gerstmyer -- $772.
(4) Mr. Gerstmyer was appointed Vice President, Pharmaceuticals, U.S. in January
1999.
5
<PAGE> 8
The following table contains information concerning options to purchase
shares of the Company's Common Stock granted to the Named Executives pursuant to
the LTIP during fiscal 2000.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------- POTENTIAL REALIZABLE VALUE AT
NUMBER OF % OF TOTAL ASSUMED ANNUAL RATES OF STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR OPTIONS TERM(3)
UNDERLYING GRANTED TO EXERCISE -------------------------------------------
OPTIONS EMPLOYEES IN PRICE EXPIRATION AT 0% ANNUAL AT 5% ANNUAL AT 10% ANNUAL
NAME GRANTED(#) FISCAL 2000 ($/SHARE)(1) DATE(2) GROWTH RATE GROWTH RATE GROWTH RATE
---- ---------- ------------ ------------ ---------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Henry H. Hoyt, Jr......... 144,443 21.12% $18.06 6/24/09 -0- $1,640,787 $4,158,077
Ralph Levine.............. 99,647 14.57% $18.06 6/24/09 -0- $1,131,931 $2,868,536
Paul A. Veteri............ 87,924 12.86% $18.06 6/24/09 -0- $ 998,765 $2,531,066
T. Rosie Albright......... 37,678 5.51% $18.06 6/24/09 -0- $ 428,000 $1,084,636
Thomas G. Gerstmyer....... 36,581 5.35% $18.06 6/24/09 -0- $ 415,539 $1,053,056
</TABLE>
---------------
(1) Market price of the stock on the date of grant.
(2) These options will become exercisable at the rate of 25% of the total award
in each year commencing on the first anniversary of the date of the grant.
(3) The dollar amounts under these columns are the results of calculations at 0%
and at the 5% and 10% annual appreciation rates set by the Securities and
Exchange Commission for illustrative purposes and, therefore, are not
intended to forecast future financial performance or possible future
appreciation, if any, in the price of Common Stock. Stockholders are,
therefore, cautioned against drawing any conclusion from the appreciation
data shown. Optionees will only realize value from these grants if the price
of Common Stock appreciates, which would benefit all stockholders
commensurately. The Company did not use an alternative formula for grant
valuation as it is not aware of any formula that will determine, with
reasonable accuracy, a present value based on future unknown or volatile
factors.
No options were exercised by the Named Executives during fiscal 2000. The
following table sets forth information with respect to the unexercised options
held by them at March 31, 2000.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
COMMON STOCK UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT MARCH 31, 2000(#) AT MARCH 31, 2000($)(1)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Henry H. Hoyt, Jr......................... 537,968 521,657 $2,025,250 $738,891
Ralph Levine.............................. 324,357 357,178 $1,161,275 $495,568
Paul A. Veteri............................ 303,261 316,167 $1,110,733 $442,569
T. Rosie Albright......................... 118,136 91,957 $ 515,606 $132,376
Thomas G. Gerstmyer....................... 20,032 96,678 $ 55,361 $191,232
</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, 2000 with respect to those options for which such closing price
exceeded the exercise price.
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
6
<PAGE> 9
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 of 1986, as amended (the
"Code") (currently $135,000, 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 $170,000,
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> <C>
$ 800,000 $156,561 $ 313,122 $ 471,402 $ 631,402 $ 791,402
$1,200,000 $236,561 $ 473,122 $ 711,402 $ 951,402 $1,191,402
$1,600,000 $316,561 $ 633,122 $ 951,402 $1,271,402 $1,591,402
$2,000,000 $396,561 $ 793,122 $1,191,402 $1,591,402 $1,991,402
$2,400,000 $476,561 $ 953,122 $1,431,402 $1,911,402 $2,391,402
$2,800,000 $556,561 $1,113,122 $1,671,402 $2,231,402 $2,791,402
$3,200,000 $636,561 $1,273,122 $1,911,402 $2,551,402 $3,191,402
</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, 2000.
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.
Covered remuneration for fiscal 2000 and credited years of service for
purposes of the Retirement Plan and the Executive Pension Benefits Plans at
March 31, 2000 for each Named Executive were $2,665,400 and 49 years for Mr.
Hoyt; $1,838,800 and 38 years for Mr. Levine; $1,622,400 and 24 years for Mr.
Veteri; $826,233 and four years for Ms. Albright and $806,600 and 18 years for
Mr. Gerstmyer.
EMPLOYMENT AGREEMENTS AND TERMINATION AND CHANGE IN CONTROL ARRANGEMENTS
The Company has entered into employment agreements with Messrs. Levine and
Veteri and Ms. Albright.
The employment agreements with Mr. Levine and Mr. Veteri provide for their
employment at base salaries of not less than $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
7
<PAGE> 10
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, 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 or such longer period as an applicable plan or program provides. 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 and other amounts they are entitled
to receive from the Company.
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 2000 is disclosed in the Summary
Compensation Table.
The Company has entered into a consulting agreement with Henry H. Hoyt, Jr.
pursuant to which Mr. Hoyt will consult with the Company at its request for up
to five days per month during a consulting term commencing with his retirement
and ending five years thereafter or, if earlier, upon his death or disability,
termination of such services by the Company for cause or by him as a result of a
diminution in his position, authority, duty or responsibilities or in certain
other circumstances or a Change in Control of the Company or, if he has agreed
to a continuation period following a Change in Control during which he will
continue to be employed by the Company or to render consulting services, the end
of such period. The Company has agreed to use its best efforts to cause him to
be nominated as a director and to be elected Chairman of the Board during the
consulting term. The Company has agreed to pay Mr. Hoyt a monthly consulting fee
during the consulting term equal to the greater of $66,635 or 60% of his monthly
salary in effect immediately prior to his retirement. He will also be entitled
to the fees otherwise payable to a non-employee director and, if applicable, to
a non-employee Chairman of the Board and he and his family will be eligible to
continue to participate in certain benefit programs, including medical and life
insurance during the consulting term. In the event the consulting term ends
following a Change in Control, Mr. Hoyt shall receive a lump sum payment equal
to 60 times the monthly consulting fee less any monthly consulting fees
previously paid. The consulting agreement also provides, in the event of a
Change in Control while Mr. Hoyt is still employed by the Company, that he shall
be entitled to receive a lump sum payment equal to 60 times the monthly
consulting fee that would otherwise have been payable unless there is a
continuation period after such Change in Control as discussed above, in which
case such payment will be made at the end of the continuation period and shall
be reduced by any consulting fees previously paid. The consulting agreement also
provides that all options, restricted stock and deferred stock held by Mr. Hoyt
at the time his employment terminates for any reason other than termination by
the Company for cause shall become fully vested and that such options shall be
exercisable for the remainder of the ten-year stated term. Mr. Hoyt will be made
whole on an after-tax basis in the event that any excise tax becomes payable on
the payments and other amounts received from the Company pursuant to the terms
of his consulting agreement.
The Company has also entered into agreements with certain executive
officers, including Ms. Albright and Mr. Gerstmyer, that provide for
continuation of their employment for two years in the event of a Change in
Control of the Company. During such two-year period, they will be entitled to
receive a salary equal to the highest annual base salary for any of the three
fiscal years immediately preceding the Change in Control and an annual bonus
equal to the greater of 100% of the target bonus for the year in which the
Change in Control occurs or the highest bonus earned during the three-year
period preceding the Change in Control and to receive benefits at least equal to
those in effect at the time the Change in Control occurs. If employment is
terminated by the Company for any reason other than for cause or is terminated
by the officer as a result of a
8
<PAGE> 11
diminution in position, authority, duties or responsibilities or in certain
other circumstances, the Company shall be obligated to pay such officer a lump
sum payment equal to two times the annual salary and bonus determined in the
manner described above and an increased benefit under the Company's Executive
Pension Benefits Plan based on final salary and bonus as determined above and
credit for three additional years of service and treating such benefit as fully
vested. In addition, the Company will continue the benefits specified above for
a two-year period following termination of employment or such longer period as
an applicable plan or program provides. The executive officers will be made
whole on an after-tax basis in the event any excise tax becomes payable on such
payments and other amounts they are entitled to receive from the Company.
Pursuant to the LTIP, outstanding awards of restricted and deferred 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.
Change in Control is defined for purposes of the LTIP, the Executive
Pension Benefits Plans and the agreements described above with Mr. Hoyt and
certain other executive officers 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 25% of the voting power of the Company's outstanding
securities, (ii) certain changes in the composition of the Company's Board of
Directors, (iii) certain business combination transactions or (iv) any other
event that the Board of Directors determines, in its discretion, would
materially alter the structure of the Company or its ownership.
LOANS TO EXECUTIVE OFFICERS
During fiscal 2000, the Company loaned four of the Named Executives and two
other executive officers the amount of the withholding taxes required to be paid
by them in connection with the vesting of restricted stock awards granted in
fiscal 1996 as follows: Mr. Hoyt -- $423,515; Mr. Levine -- $220,636; Mr.
Veteri -- $197,466; Ms. Albright -- $107,384; Adrian J.L. Huns -- $68,459; and
Peter J. Griffin -- $53,832. With the exception of Mr. Huns, all of such loans
were made on February 1, 2000 and bore interest at 6.11%, the short-term
Treasury Bill rate at such date. The loan to Mr. Huns was made on March 1, 2000
and bore interest at 6.35%, the then short-term Treasury Bill rate. All of such
loans were repaid in full, with interest, on or before May 15, 2000.
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. Dr. Cruess and
Mr. Rinaldi each received a fee of $25,000 in fiscal 2000 for serving on a
special committee of the Board. Directors who are salaried employees of the
Company receive a fee of $250 for each meeting of the Board of Directors that
they attend.
9
<PAGE> 12
REPORT ON EXECUTIVE COMPENSATION
General
The Company's Compensation Committee, consisting of Messrs. Baldwin, Cruess
(Chairman) and Rinaldi and Mrs. Garcia, 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 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 and stock options are
awarded in an effort to provide a strong incentive for outstanding long-term
performance. The restricted and/or deferred stock is forfeitable generally if
the executive leaves the Company prior to four years from the date on which the
restricted and/or deferred stock was awarded or if such executive is terminated
for cause. Awards of restricted and/or deferred stock and stock options are
directly tied to the interests of the Company's shareholders, inasmuch as the
value of the restricted and/or deferred stock 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 fiscal 2000, 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 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 and 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 2000 consisted of salary and bonus payments. In determining
Mr. Hoyt's fiscal 2000 base salary, the Compensation Committee granted a merit
increase in annual salary of 4%.
Submitted by the Company's Board of Directors:
<TABLE>
<S> <C>
David M. Baldwin Scott C. Hoyt
Richard L. Cruess, M.D. Ralph Levine
Suzanne H. Garcia Herbert M. Rinaldi
Henry H. Hoyt, Jr. Paul A. Veteri
</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
10
<PAGE> 13
of stock options granted under the LTIP will qualify as performance-based
compensation and will be exempt from the limit.
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. The graph assumes $100 invested on March 31,
1995 in the Company's Common Stock and each of the indices.
[Carter-Wallace Performance Graph]
<TABLE>
<CAPTION>
CARTER-WALLACE PEER GROUP WILSHIRE 5000
-------------- ---------- -------------
<S> <C> <C> <C>
1995 100.00 100.00 100.00
1996 142.50 114.50 132.20
1997 120.90 93.50 152.70
1998 160.30 105.10 225.60
1999 159.50 124.80 255.20
2000 161.50 324.40 315.40
</TABLE>
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
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 LLP as independent auditors, the Board of Directors will consider the
selection of another accounting firm. A representative of KPMG 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 2000. The fees paid
to this firm by the Company and its subsidiaries for auditing services were
approximately $830,000 for fiscal 2000. See "BOARD OF DIRECTORS AND COMMITTEES"
for information concerning the Company's Audit Committee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS RESOLUTION. PROXIES
SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS STOCKHOLDERS SPECIFY
A CONTRARY VOTE.
OTHER BUSINESS
The Board of Directors is not aware of any matter other than those referred
to above that may be presented for action at the Meeting. If any other matter
should be presented, the persons named as proxies will vote on such matter in
accordance with their best judgment.
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<PAGE> 14
SUBMISSION OF STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Stockholder proposals for presentation at the Company's 2001 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 16, 2001 in order to be considered for inclusion
in the Company's Proxy Statement and form of proxy.
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, 2000 (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 16, 2000
12
<PAGE> 15
PROXY
CARTER-WALLACE, INC.
ANNUAL MEETING OF STOCKHOLDERS, JULY 18, 2000
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. that the undersigned is
entitled to vote at the Annual Meeting of Stockholders to be held on July 18,
2000, 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).
(Continued and to be dated and signed on the reverse side)
CARTER-WALLACE, INC.
P.O. BOX 11068
NEW YORK, NY 10203-0068
<PAGE> 16
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS (1) AND (2).
(1) Election of Directors: FOR all nominees
listed below
WITHHOLD AUTHORITY to vote
for all nominees listed below
*EXCEPTIONS
Nominees: D.M. Baldwin, R.L. Cruess, M.D., S.H. Garcia, H.H. Hoyt, Jr., S.C.
Hoyt, R. Levine, H.M. Rinaldi, P.A. Veteri
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
*Exceptions ___________________________________________________________________
(2) Proposal to ratify the appointment of KPMG LLP as independent auditors for
the Company for the current fiscal year.
FOR AGAINST ABSTAIN
Change of Address and
or Comments Mark Here.
(Please sign exactly as name appears. If stock
is registered in two names, both should sign.)
DATED: _____________________, 2000
SIGNED: ______________________________________
______________________________________________
VOTES MUST BE INDICATED
(X) IN BLACK OR BLUE INK. X
SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
