SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
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by sec. 14a-6(e)(2))
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14a-12
SYNCOR INTERNATIONAL CORPORATION
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________________________________________________________________
[SYNCOR LETTERHEAD]
May 5, 1999
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders of Syncor International Corporation on Wednesday,
June 23, 1999, beginning at 1:00 p.m. local time. The meeting
will be held at the Warner Center Hilton Hotel, 6360 Canoga
Avenue, Woodland Hills, California 91367.
Enclosed you will find the Proxy Statement and the Annual Report
for the year ended December 31, 1998. This Notice of the Annual
Meeting and the Proxy Statement on the following pages cover the
formal business of the meeting, including the consideration of
the following proposals:
(1) To elect three Directors;
(2) To ratify the selection of KPMG LLP as the
Company's independent auditors for the 1999
fiscal year;
(3) To approve an amendment to the Company's
Restated Certificate of Incorporation to
increase the total number of authorized
shares of the Company's common stock;
(4) To approve the use of unused option shares
under the Universal Performance Equity
Participation Plan for awards under other
stock incentive plans; and
(5) To approve performance goals for the officers.
We urge you to review carefully the discussion of the proposals
in the Proxy Statement before you vote your proxy. The Board of
Directors recommends that you approve the five proposals.
To ensure that your shares are represented, even if you plan to
attend the meeting in person, we ask that you complete, date,
sign and return the enclosed proxy card in the accompanying
envelope today. You may revoke your proxy at any time prior to
the time it is voted.
We look forward to welcoming you at the Annual Meeting.
Sincerely,
/s/ Monty Fu /s/ Robert G. Funari
Monty Fu Robert G. Funari
Chairman of the Board President and Chief Executive Officer
SYNCOR INTERNATIONAL CORPORATION
6464 Canoga Avenue
Woodland Hills, California 91367-2407
_______________________________________________________________
PROXY STATEMENT
for Annual Meeting on June 23, 1999
_______________________________________________________________
PERSONS MAKING THE SOLICITATION
The enclosed proxy is solicited by the Board of Directors of
Syncor International Corporation ("Syncor" or the "Company") for
use at the annual meeting of stockholders of the Company ("Annual
Meeting") to be held June 23, 1999 at the Warner Center Hilton
Hotel, 6360 Canoga Avenue, Woodland Hills, California 91367-2407,
beginning at 1:00 p.m. local time, and any postponement(s) or
adjournment(s) thereof. The Company's proxy statement and form
of proxy/voting instruction card are being mailed to the
stockholders commencing May 5, 1999. Syncor will bear all
expenses incurred in connection with the solicitation. In
addition to solicitation by mail, proxies may be solicited by
Directors, executive officers or employees of Syncor in person or
by telephone or otherwise. They will not be specifically
compensated for such services. The Company is also engaging
ChaseMellon Shareholder Services, a proxy solicitation company,
to solicit proxies on behalf of the Company. The Company will
pay approximately $6,500 plus expenses for ChaseMellon's
services.
GENERAL INFORMATION
Votes cast by proxy or in person at the Annual Meeting will be
counted by the persons appointed by the Board of Directors of
Syncor to act as election inspectors at the meeting. The
election inspectors will treat shares represented by proxies that
reflect abstentions as shares that are present and entitled to
vote for purposes of determining the presence of a quorum.
Abstentions, however, do not constitute a vote "for" or "against"
any matter.
The election inspectors will treat shares referred to as "broker
non-votes" (i.e., shares held by brokers or nominees as to which
instructions have not been received from the beneficial owners or
other persons entitled to vote and that the broker or nominee
does not have discretionary power to vote on a particular matter)
as shares that are present and entitled to vote for purposes of
determining the presence of a quorum. However, for purposes of
determining the outcome of any matter as to which the broker has
indicated on the proxy that it does not have discretionary
authority to vote, those shares will be treated as not present
and not entitled to vote (even though the same shares are present
for quorum purposes and may be entitled to vote on other
matters).
Your executed proxy may be revoked at any time before it is
exercised by filing with the Secretary of Syncor, at the
principal executive office of Syncor, 6464 Canoga Avenue,
Woodland Hills, California 91367-2407, a duly executed written
revocation or a duly executed proxy bearing a later date. The
execution of the enclosed proxy will not affect your right to
vote in person should you find it convenient to attend the Annual
Meeting.
VOTING SECURITIES
The number of shares of the Company's $.05 par value common stock
("Common Stock") outstanding and entitled to vote at the Annual
Meeting is 11,615,170 shares. Each share is entitled to one
vote, and the stockholders are not entitled to cumulate their
votes in the election of Directors. Only stockholders of record
at the close of business on April 26, 1999, are entitled to
notice and to vote at the Annual Meeting. Shares represented by
all valid proxies will be voted according to the instructions
contained in the proxies. IN THE ABSENCE OF INSTRUCTIONS, SHARES
REPRESENTED BY VALID PROXIES WILL BE VOTED IN ACCORDANCE WITH THE
RECOMMENDATIONS OF THE BOARD OF DIRECTORS AS SHOWN ON THE PROXY.
WITH RESPECT TO OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE
MEETING, THE PROXY HOLDERS WILL VOTE THE PROXY IN ACCORDANCE WITH
THEIR BEST JUDGMENT.
The presence, either in person or by proxy, of the persons owning
a majority of Syncor's shares entitled to vote at the Annual
Meeting is necessary for a quorum for the transaction of
business. A plurality of the votes cast will elect the
Directors. Approval of each other proposal to be brought before
the Annual Meeting (not including the election of the Directors)
will require the affirmative vote of at least the majority in
voting interests of the stockholders present, in person or by
proxy, at the Annual Meeting and entitled to vote thereon.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Based on Section 13(g) filings made with the Securities and
Exchange Commission on or before March 31, 1999, the following
table sets forth certain information concerning persons known to
Syncor to own beneficially more than five percent of the
outstanding Syncor Common Stock (the only class of Syncor's
voting securities). All ownership is direct except as otherwise
noted.
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percent of
of Beneficial Owner Beneficial Ownership Class (1)
<S> <C> <C>
Merrill Lynch Trust Company, FSB (2)
Syncor International Corporation ESSOP
420 Montgomery Street, San Francisco, CA 94163 1,750,728 15.1 %
Wellington Management Company (3)
75 State Street, Boston, MA 02109 1,436,159 12.4 %
Monty Fu (4)
6464 Canoga Avenue, Woodland Hills, CA 91367-2407 947,299 8.1 %
Vanguard Specialized Portfolios, Inc. - Health Care Portfolio
Post Office Box 2600, Valley Forge, PA 19482-2600 856,559 7.4 %
Dimensional Fund Advisors
1299 Ocean Ave, 11th Floor, Santa Monica, CA 90401 592,300 5.1 %
[FN]
(1) Calculated on the basis of 11,614,670 shares (excluding treasury
shares) outstanding as of March 31, 1999. Percentages are calculated including shares
not outstanding which the beneficial owner has a right to acquire within 60 days
of March 31, 1999.
(2) Merrill Lynch Trust Company, FSB is the trustee for Syncor's Employees' Savings
and Stock Ownership Plan ("ESSOP"). The trustee will vote the ESSOP shares in
accordance with the instructions of the beneficial owners. With respect to ESSOP
shares for which no voting instructions are given by the beneficial owners, the
Company may direct the trustee on how to vote those shares.
(3) Includes 856,559 shares reported by Vanguard Specialized Portfolios, Inc. -
Health Care Portfolio.
(4) Includes 91,976 shares not outstanding which Mr. Fu has the right to acquire
pursuant to options that are exercisable on March 31, 1999 or within 60 days
thereafter, 10,474 shares owned by Mr. Fu by virtue of his participation in the
ESSOP as of March 31, 1999, and 14,600 shares held as trustee for his children.
</FN>
</TABLE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of March 31, 1999, the
beneficial ownership of Syncor Common Stock (the only class of
Syncor's voting securities) by each Syncor Director and by each
of the executive officers named in the "Summary Compensation
Table." All ownership is direct unless otherwise noted.
<TABLE>
<CAPTION>
Name of Amount and Nature Percent of
Beneficial Owner of Beneficial Ownership Class (1)
<S> <C> <C>
Dr. Steven B. Gerber 55,900 (2) (*)
George S. Oki 36,050 (3) (*)
Arnold E. Spangler 46,700 (4) (*)
Dr. Henry N. Wagner, Jr. 47,850 (5) (*)
Dr. Gail R. Wilensky 38,733 (6) (*)
Ronald A. Williams 19,250 (*)
Robert G. Funari 447,174 (7) 3.8 %
Monty Fu 947,299 (8) 8.1 %
Brad Nutter 98,287 (9) (*)
Haig S. Bagerdjian 239,352 (10) 2.0 %
Michael E. Mikity 112,156 (11) (*)
All Directors and executive
officers as a group
(15 individuals) 2,393,876 (12) 19.3 %
</TABLE>
[FN]
(1) Calculated on the basis of 11,614,670 shares (excluding
treasury shares) of Syncor Common Stock outstanding as
of March 31, 1999. Percentages and amounts are
calculated including shares not outstanding which the
individual has a right to acquire pursuant to options
exercisable on March 31, 1999 or within 60 days
thereafter. Exceptions are noted for each individual.
The executive officers' ESSOP shares are included and
separately noted for named executive officers in the
following notes. The ESSOP number and percentage are as
of March 31, 1999 but does not include matching shares
for the first quarter of 1999.
(2) Includes 33,400 shares not outstanding which the person
has the right to acquire pursuant to options and 22,500
shares held as co-trustee for his children.
(3) Includes 12,550 shares not outstanding which the person
has the right to acquire pursuant to options and 2,000
shares held as trustee for his children.
(4) Includes 20,200 shares not outstanding which the person
has the right to acquire pursuant to options.
(5) Includes 41,600 shares not outstanding which the person
has the right to acquire pursuant to options.
(6) Includes 25,733 shares not outstanding which the person
has the right to acquire pursuant to options.
(7) Includes 252,674 shares not outstanding which the person
has the right to acquire pursuant to options and 4,006
shares under the ESSOP.
(8) Includes 91,976 shares not outstanding which the person
has the right to acquire pursuant to options, 10,474
shares under the ESSOP, and 14,600 shares held as
trustee for his children.
(9) Includes 36,212 shares not outstanding which the person
has the right to acquire pursuant to options.
(10) Includes 90,196 shares not outstanding which the person
has the right to acquire pursuant to options and 2,499
shares under the ESSOP.
(11) Includes 65,644 shares not outstanding which the person
has the right to acquire pursuant to options and 8,075
shares under the ESSOP.
(12) Includes 791,106 shares not outstanding which the
individuals as a group have the right to acquire
pursuant to options and 35,107 shares under the ESSOP.
(*) Less than 1%.
</FN>
PROPOSAL ONE: ELECTION OF DIRECTORS
Identification of Directors and Nominees
In 1986, Syncor stockholders approved staggered three-year terms
for Directors. The three nominees named below are successors to
the class whose term expires at this Annual Meeting and, if
elected, will serve until the Annual Meeting in 2002 when their
respective successors are duly elected and qualified.
The nominees are described below with brief statements setting
forth their present principal occupations, their current ages,
the lengths of time they have served as Directors of Syncor, and
their business experience during at least the last five years.
The three nominees are currently Directors of Syncor.
All of the nominees have indicated their willingness to serve.
In the event, however, that any of them should be unable to
serve, the proxies named on the enclosed proxy card will vote in
their discretion for such other persons as the Board of Directors
may recommend, unless the Board of Directors reduces the number
of Directors to eliminate any vacancies.
The Board of Directors recommends that the stockholders vote FOR
the election of the nominees named. Unless otherwise instructed,
the proxies will vote for all of the nominees. The shares
represented in person and by proxy cannot be voted for more than
three nominees.
Nominees For Election
Monty Fu Director since May 17, 1985
Age: 52
Mr. Fu is the Chairman of the Board of Directors of Syncor. In
1975, Mr.Fu co-founded Pharmatopes, Inc., a radiopharmaceutical
company which,through a series of mergers, grew into what Syncor
is today. Mr. Fu also served as Chief Executive Officer for
Syncor from may 1985 until February 1989. Mr. Fu has a B.S.
degree in Pharmacy with a specialization in Nuclear Pharmacy.
Henry N. Wagner, Jr., M.D. Director since August 3, 1992
Age: 71
Dr. Wagner has spent more than 30 years at The Johns Hopkins
University, pioneering radioactive diagnostics and treatments.
He is currently a Professor of Radiological Science and
Environmental Health Sciences, as well as the Director of the
Division of Radiation Health Sciences. Dr. Wagner and his work
have been nationally and internationally recognized with numerous
honors and awards, including the prestigious American Medical
Association's Scientific Achievement Award. Dr. Wagner is a
member of many professional societies, including the Institute of
Medicine, and serves on several research committees for such
organizations as the National Institutes of Health, National
Research Council and the Nuclear Regulatory Commission.
Ronald A. Williams Director since December 4, 1998
Age: 49
Mr. Williams is the President of Blue Cross of California. He
joined Blue Cross in 1987 as Vice President, Marketing and
Specialty Products. He was promoted to Senior Vice President
that same year, to Executive Vice President in 1989, and to his
current position as President since May 1996. Mr. Williams
received a Master of Science in Management from the Massachusetts
Institute of Technology (MIT), and a B.A. in Psychology from
Roosevelt University. While at MIT, he was a Sloan Fellow, as
well as a Bush Leaderhip Fellow.
Terms Expiring In 2000
Steven B. Gerber, M.D. Director since May 1, 1990
Age: 45
Dr. Gerber has been a Managing Director for CIBC Oppenheimer
Corp. since 1993, and its head of health care research since
1997. Dr. Gerber has an M.B.A. in Finance from the University of
California, Los Angeles, and is a board-certified internist and
cardiologist with subspecialty training in Nuclear Cardiology.
He received his M.D. from Tufts University and a B.A. in
Psychology from Brandeis University. He is also a director of
Intracel Corp.
Arnold E. Spangler Director since August 9, 1985
Age: 50
Mr. Spangler has been a Managing Director of Mancuso & Company, a
private merchant banking firm, since 1993. Mr. Spangler was a
Managing Director of PaineWebber Incorporated and a Co-Director
of its mergers and acquisitions department from 1989 to 1991, and
a General Partner in the investment banking firm of Lazard Freres
& Co., where he worked primarily in the areas of mergers and
acquisitions and financial advising, from 1983 to 1989. Mr.
Spangler has a B.S. in Economics and an M.B.A.
Dr. Gail R. Wilensky Director since July 12, 1993
Age: 55
Dr. Wilensky's professional career spans 30 years of policy
analysis, management, and university-level teaching. She has
been the John M. Olin Senior Fellow at Project HOPE, an
international health foundation, since 1993, and has been chair
of the Medicare Payment Advisory Commission since October 1997.
She was chair of the Physician Payment Review Commission from
1995 to 1997. From 1992 to 1993, she served in the White House
as Deputy Assistant to the President for Policy Development.
Before joining the White House staff, she was the Administrator
of the Health Care Financing Administration in the Department of
Health and Human Services for two years. As Administrator, she
directed the Medicare and Medicaid programs. Dr. Wilensky is a
nationally recognized expert on a wide range of health policy and
financing issues and has published extensively on health
economics and other policy issues. Dr. Wilensky has received
numerous honors and awards and is an elected member of the
Institute of Medicine of the National Academy of Sciences. She
is a director of Advanced Tissue Sciences, Inc., St. Jude
Medical, Inc., United Healthcare Corporation, Quest Diagnostics
Incorporated, Shared Medical Systems Corporation, and HCR Manor
Care, Inc., and is a Trustee of the Combined Benefits Fund of the
United Mine Workers of America. Dr. Wilensky is also a member of
many professional societies and serves on several professional
committees.
Terms Expiring In 2001
George S. Oki Director since May 17, 1985
Age: 48
Mr. Oki has been the Chairman of the Board of Meta Information
Services Inc. since April 1, 1993. Mr. Oki was a Director of a
predecessor corporation of Syncor from July 1982 to August 1983
and from December 1984 until its merger into Syncor. Mr. Oki has
a B.S. degree in Horticulture from Colorado State University and
an M.B.A. from the University of Southern California.
Robert G. Funari Director since January 23, 1995
Age: 51
Mr. Funari has served as Chief Executive Officer for Syncor since
July 1996, and as President since January 1996. Mr. Funari
joined Syncor in August 1993 as Executive Vice President and
Chief Operating Officer. Prior to joining Syncor, Mr. Funari was
Executive Vice President and General Manager for McKesson Drug
Company. From 1975 to 1992, Mr. Funari held a number of key
management positions with Baxter International and its
subsidiaries, including as Corporate Vice President and as
President of its Pharmaseal Division. Mr. Funari received a
Bachelor of Science degree in Mechanical Engineering from Cornell
University and an M.B.A. from Harvard Business School. Mr.
Funari also serves as a director for three non-publicly traded
financial institutions that are affiliated with each other:
Peninsula Banking Group, Inc., since May 1995; Bay Cities
National Bank, since December 1994; and Community First Financial
Group, Inc., since January 1997.
There are no family relationships between any of the nominees,
Directors or executive officers, except that Mr. George Oki is a
brother-in-law of Mr. Monty Fu. Mr. Oki was affiliated with two
companies that were dissolved under Federal bankruptcy laws. Oki
Nursery Company, Inc., where Mr. Oki served as director until
1997, filed a Chapter 7 petition on December 1, 1994 and was
dissolved in 1997. Iko Land, Inc., where Mr. Oki serves as
President, acquired a general partner's interest in a partnership
which subsequently elected to restructure under a Chapter 11
plan. The restructuring, however, was unsuccessful, and the
partnership was dissolved in 1997.
IDENTIFICATION OF EXECUTIVE OFFICERS
The following persons are all of the executive officers of
Syncor. The executive officers serve at the discretion of the
Board of Directors.
<TABLE>
<CAPTION>
Director and/or
Name Age Officer Since Position(s)
<S> <C> <C> <C>
Robert G. Funari 51 August 1993 Director, President
and Chief Executive
Officer
Monty Fu 52 May 1985 Director, Chairman
of the Board
Brad Nutter 47 July 1997 Executive Vice
President and Chief
Operating Officer
Haig S. Bagerdjian 42 January 1995 Executive Vice
President, Chief
Legal Officer and
Secretary;
President and Chief
Executive Officer,
Syncor Overseas
Ltd.
David L. Ward 43 March 1999 Executive Vice
President;
President and Chief
Executive Officer,
Comprehensive
Medical Imaging,
Inc.
Michael E. Mikity 51 November 1985 Senior Vice
President, Chief
Financial Officer
and Treasurer
John S. Baumann 38 October 1998 Corporate Vice
President, Legal,
General Counsel and
Assistant Secretary
Jack L. Coffey 47 April 1989 Corporate Vice
President, Quality
and Regulatory
Sheila H. Coop 58 November 1992 Corporate Vice
President, Human
Resources
</TABLE>
BUSINESS EXPERIENCE OF EXECUTIVE OFFICERS
Mr. Robert Funari's and Mr. Monty Fu's business experiences are
described above. The following is a description of the business
experiences of the other executive officers.
Haig S. Bagerdjian has served as Executive Vice President, Chief
Legal Officer and Secretary for Syncor, and President and Chief
Executive Officer for Syncor Overseas Ltd., since June 1998. Mr.
Bagerdjian joined Syncor in 1991 as an Associate General Counsel
and Assistant Secretary, became Vice President, Secretary and
General Counsel in January 1995, and was appointed Senior Vice
President, Business Development, in October 1996. Mr. Bagerdjian
received a B.A. in International Relations and Slavic Languages
and Literature, and Certificates in Russian Studies, Strategic
Defense and National Security, from the University of Southern
California in 1983, and a J.D. from Harvard Law School in 1986.
He is admitted to the State Bar of California. Mr. Bagerdjian
has also served as a director of Advanced Machine Vision
Corporation (NASDAQ: "AMVC") since January 1997.
John S. Baumann has served as Corporate Vice President, Legal,
General Counsel and Assistant Secretary for Syncor since October
1998. Prior to joining Syncor, he served as Associate General
Counsel for KPMG LLP from March 1995 to October 1998, and as Vice
President and Associate Corporate Counsel for The Continental
Corporation from November 1991 to March 1995. Mr. Baumann
received his B.A. in Psychology from Columbia College in 1982,
and his J.D. from Harvard Law School in 1985. He is admitted to
the State Bar of New York.
Jack L. Coffey has served as Corporate Vice President, Quality
and Regulatory, since July 1, 1996, and previously served as Vice
President in various capacities. He joined Nuclear Pharmacy,
Inc., a predecessor of Syncor, in 1984 as Director of Radiation
Services. Mr. Coffey received a Bachelor of Science degree from
Cumberland College in 1973 and a Master's Degree in Radiation
Biology in 1978 from the University of Tennessee. He is also a
certified health physicist.
Sheila H. Coop has served as Corporate Vice President, Human
Resources, for Syncor since 1992. Ms. Coop joined Syncor in July
1991, as Director of Human Resources. Prior to joining Syncor,
Ms. Coop was a Senior Human Resources Consultant with Jorgensen
and Associates. From 1988 to 1990, Ms. Coop was Director of
Human Resources for Daylight Transport, Inc., a national
transportation company. Ms. Coop received a Bachelor of Science
degree from the University of California, Los Angeles, and a
Certificate of Professional Designation in Human Resources
Management from the University of California, Los Angeles, School
of Law and Graduate School of Business in 1983.
Michael E. Mikity is Senior Vice President, Treasurer and Chief
Financial officer for Syncor. He became Senior Vice President in
June 1996, and previously was Vice President, Treasurer and Chief
Financial Officer. From June 1993 until August 1994, Mr. Mikity
served as Vice President and Chief Information Officer for
Syncor. From 1983 until June 1993, Mr. Mikity served as Chief
Financial Officer and Treasurer for Syncor. Mr. Mikity is a
certified public accountant and received his Bachelor of Science
degree in Accounting from the University of Southern California
in 1973.
Brad Nutter has served as Executive Vice President and Chief
Operating Officer for Syncor since July 1997. Prior to joining
Syncor, Mr. Nutter worked for Sunrise Medical Inc. in various
management positions including Senior Vice President, Corporate
Marketing. From 1975 to 1993, Mr. Nutter worked for Baxter
International, where he was President of the Hospitex Division
from 1990 to 1993 and Vice President of Corporate Sales from 1985
to 1990. Mr. Nutter received a Bachelor of Business
Administration degree from Texas Christian University in 1975.
David L. Ward. has served as Executive Vice President for Syncor,
and as President and Chief Executive Officer for Comprehensive<PAGE>
Medical
Imaging, Inc., since March 1999. Prior to joining Syncor, Mr. Ward worked for
American Rehability Services, Inc., where he served as President from
November 1997 until February 1999, and as Chief Operating Officer from May
1996 until October 1997. From 1988 to 1996, Mr. Ward held various managerial
positions with NovaCare, Inc., including Region President. Mr. Ward received
a Bachelor of Science degree in Journalism/Public Relations from the University
of Kansas.
INFORMATION CONCERNING OPERATION OF THE
BOARD OF DIRECTORS AND ITS COMMITTEES
In order to facilitate the handling of various functions of the Board of
Directors, the Board has appointed a standing Audit Committee, Compensation
Committee, Nominating Committee, Quality Committee and Officer Director
Committee. The current membership of the committees is as follows, with the
chairman of each committee identified by an asterisk:
<TABLE>
<CAPTION>
Officer
Audit Compensation Nominating Quality Director
Committee Committee Committee Committee Committee
<S> <C> <C> <C> <C>
George Oki* Arnold Spangler* Steven Gerber* Gail Wilensky* Monty Fu*
Steven Gerber Steven Gerber Monty Fu Henry Wagner Robert Funari
Arnold Spangler Gail Wilensky George Oki Robert Funari
Robert Funari
</TABLE>
<PAGE>
Audit Committee. The functions of the Audit Committee include
review of those matters that primarily relate to a financial
audit of Syncor and its subsidiaries, including (i) the findings
of the independent auditors, (ii) the accounting principles used
by Syncor and actual or impending changes in financial accounting
requirements, (iii) the financial and accounting controls, and
(iv) the recommendations by the independent auditors. The
committee held two meetings during the fiscal year ending
December 31, 1998 ("Fiscal 1998").
Compensation Committee. The functions of the Compensation
Committee include (i) the review of the performance of the Chief
Executive Officer and other executive officers, (ii) the annual
review, examination and approval, as needed, of salary ranges and
salaries for the executive officers and compensation for non-
employee Directors, (iii) the review of compensation arrangements
involving major acquisitions, salary administration policy,
fringe benefit policy and other compensation matters as requested
by the Board of Directors, and (iv) the administration of the
Company's 1990 Master Stock Incentive Plan and other incentive
plans for executive officers. The committee held four meetings
during Fiscal 1998.
Nominating Committee. The functions of the Nominating Committee
include (i) setting-up procedures for identifying nominees for
Director positions, (ii)reviewing prospective new members of the
Board of Directors and nominations for successive terms of
current Board members, and (iii) making recommendations to the
Board of Directors for nominees for Director positions. The
Nominating Committee will consider the possible nomination as
Directors of persons recommended by stockholders. Any such
recommendations should be in writing and should be mailed or
delivered to the Company, marked for the attention of the
Nominating Committee, on or before the date for receipt of
stockholder proposals for the next annual meeting (see
"Stockholder Proposals"). The committee held two meetings during
Fiscal 1998.
Quality Committee. The functions of the Quality Committee
include establishing strategic priorities for quality, assessment
and evaluation of quality standards and determining who will
carry out the process. The committee also establishes
expectations and reviews plans and procedures to improve Syncor's
quality standards. The committee held one meeting during Fiscal
1998.
Officer Director Committee. The committee reviews current and
past compensation of non-employee Directors and administers the
Non-Employee Director Stock Compensation Plan, which was
allocated 25,000 shares of the Company's Common Stock in 1996 to
be used to compensate non-employee Directors from time to time.
In Fiscal 1998, the Officer Director Committee approved the
granting of 250 shares of the Company's Common Stock to each of
the non-employee Directors. The committee held three meetings
during Fiscal 1998.
Board of Directors. During Fiscal 1998, the Board of Directors
held ten meetings, four of which were telephonic. Each of the
Directors (except for Mr. Williams, who did not become a Director
until December 1998) attended more than 75 percent of the total
number of meetings of the Board of Directors and the total number
of meetings held by the Board Committees on which he or she
served.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Compensation of Directors. Each non-employee Director is paid an
annual retainer of $20,000, paid in quarterly payments of $5,000,
and $1,000 per day for Board meetings, including one travel day
per meeting if traveling outside their home states. In addition,
reasonable, out-of-pocket expenses of a Director incurred in
connection with his or her service as a Director is reimbursed by
the Company. For Fiscal 1998, non-employee Directors were paid
as follows: Dr. Gerber, $29,000; Mr. Oki, $29,000; Mr.
Spangler, $33,000; Dr. Wagner, $31,000; Dr. Wilensky, $33,000;
and Mr. Williams, $1,800. Each non-employee Director (other than
Mr. Williams) also received 250 shares of the Company's Common
Stock in 1998 pursuant to the Non-Employee Director Stock
Compensation Plan, under which non-employee Directors receive, at
the discretion of the Officer Director Committee of the Board of
Directors, shares of the Company's Common Stock as part of their
compensation for their services. The 250 shares had a fair
market value of $6,531. Each newly elected non-employee Board
member received on his or her date of election, an option to
purchase 10,000 shares of the Company's Common Stock and, subject
to certain restrictions, an additional option to purchase 5,000
shares following each subsequent Annual Meeting of Stockholders
attended by such Director, up to a total of 25,000 option shares,
exercisable within a ten year period. Mr. Williams received his
initial grant of 10,000 option shares in December 1998. The
other Directors have already received their allocation of 25,000
option shares. In 1998, each of the Board members (other than
Mr. Williams) also purchased Syncor shares under the 1998 Senior
Management Stock Purchase Plan. Some of those shares were
purchased at a price below fair market value, resulting in
imputed income of $14,828 for each of Dr. Gerber, Mr. Oki, Mr.
Spangler, and Dr. Wilensky, and $14,438 for Dr. Wagner. Finally,
Dr. Wilensky earned $80,188 from the exercise of options in
Fiscal 1998.
1990 Master Stock Incentive Plan, As Amended and Restated (the
"1990 MSIP"). The 1990 Master Stock Incentive Plan, amended and
restated on June 18, 1997, provides long term incentives for
Directors and employees through the grant of (a) options and (b)
other awards such as stock appreciation rights, restricted stock
awards and performance share awards ("Other Awards"). The
options granted to the non-employee Directors are fixed in the
1990 MSIP as described above in the paragraph captioned
"Compensation of Directors." The Board of Directors had
delegated its discretionary and administrative authority under
the 1990 MSIP to the Compensation Committee (the
"Administrator"). Options are granted to executive officers and
other key employees under the 1990 MSIP at the discretion of the
Administrator. The purchase price per option is determined by
the Administrator, but in the case of incentive stock options, it
must be at least fair market value on the date of grant. Options
are subject to a vesting schedule and period determined by the
Administrator. However, vesting cannot occur in less than six
months from the date of grant and the option period cannot exceed
ten years. Except as described in the subsection below captioned
"Performance Equity Plan," to date, no other Awards have been
granted under the 1990 MSIP, and although the 1990 MSIP permits
tandem rights, none of the options granted to date have tandem
rights.
Employees' Savings and Stock Ownership Plan ("ESSOP"). Eligible
employees may participate in the Company's ESSOP, as administered
pursuant to Section 401(k) of the Internal Revenue Code ("Code"),
by contributing up to two percent of their pay through pre-tax
payroll deductions for the purchase of the Company's Common
Stock. The Company matches such contributions in Company stock
on a share-for-share basis. In addition, participating employees
may contribute up to an additional 14 percent of their pay,
subject to a maximum dollar amount, to an account with several
investment fund choices. The Company will match these additional
contributions in Company stock at the rate of $.50 on the dollar
up to the first four percent of the employee's pay.
Executive Life Insurance Plan. All executive officers are part
of Syncor's life insurance plan receiving coverage computed on
the same basis as all salaried employees. In addition, the
executive officers each have term life insurance of $500,000,
premiums for which are paid by Syncor.
Executive Deferral Plan. All executive officers, members of the
Board of Directors and senior management are eligible to
participate in the Executive Deferral Plan (the "Deferral Plan").
The Deferral Plan allows each participant to defer up to 25
percent, and in the case of non-employee Directors, 100 percent,
of his or her annual compensation. The Deferral Plan is designed
to defer the payment of taxes on the deferred income until such
time as the deferments are distributed to the participants.
Under the Deferral Plan, the Company makes a monthly contribution
on behalf of the employee at a rate of 25% on up to 15% (100% for
non-employee Directors) of the deferred compensation. The
Deferral Plan is secured with a "Rabbi Trust" which is
responsible for plan investments. Currently, assets are invested
in a selection of separate and fixed accounts made available
through flexible variable life insurance policies owned by the
trust and in a selection of funds available through an
independent money management firm. The Deferral Plan
participants select from up to twenty three investment accounts.
The investment performance of each account selected will
determine the returns credited to the individual participant's
deferral account value.
Benefits Agreement. The Company entered into a Benefits
Agreement, the form of which was approved by the Board of
Directors in November 1989 and amended by the Board on June 20,
1995, with all of its Directors and certain of its employees.
The agreement provides for accelerated vesting of stock options,
deferred incentive earnings and all other awards under the
Company's incentive plans in the event of a "change in control"
as defined in such Benefits Agreement.
Corporate Executive Management Incentive Plan. Annual incentive
compensation is awarded to the officers only if the Company
achieves it earnings per share ("EPS") objective for the fiscal
year. The EPS objective for Fiscal 1998 was $.95, which was
achieved. The EPS objective for the year ending December 31,
1999 ("Fiscal 1999") is $1.45. Assuming that the EPS level is
reached and an officer achieves 100% of his or her MBOs, the
executive officer will receive as his or her annual incentive
compensation 40% to 100% of base salary, as determined in advance
by the Board of Directors.
Performance Equity Plan. To better align the interests of
stockholders and management, the Company implemented the
Performance Equity Plan for officers. Awards under the
Performance Equity Plan have three components of equal value as
measured at the time of grant: a stock grant, a stock option
grant, and a cash award. The awards are triggered upon the
attainment of separate Syncor Common Stock price targets. The
stock price targets must be maintained for at least ten trading
days in a period of twenty consecutive trading days during such
window period. The first two stock price targets ($20 and $25)
were achieved in 1998. If the stockholders approve Proposal Five
below, the next two targets will be $34 (by June 30, 2001) and
$43 (by June 30, 2002). In February 1999, the Board also
approved, subject to stockholder approval, two additional stock
price targets: $53 (by June 30, 2003) and $65 (by June 30, 2004).
If a stock price target is met within the specified window
period, an officer participating in the Performance Equity Plan
will receive awards with a total value of approximately one to
two times his or her base salary (including the value of the
options measured as of the time of grant), depending on the
officer's title; the cash and stock allocated for that target
period will be awarded, and the allocated stock option shares
will vest. The total value of the awards, however, may be
adjusted upward or downward depending on how Syncor Common Stock
performs in comparison to the S&P SmallCap Health Care Index. If
a stock price target is not met within the specified window
period, then the officer will lose the opportunity to earn the
cash or stock awards, or to accelerate the vesting of stock
options, designated for that target period. Stock options that
do not vest on an accelerated basis because stock price targets
are not met vest nine and one-half years after the date of grant.
The stock option and stock components of the Performance Equity
Plan were awarded or are to be awarded under the 1990 Master
Stock Incentive Plan, or, in the case of new officers, under the
New Employee Stock Option Plan. If there are insufficient shares
available for awards under the 1990 Master Stock Incentive Plan
for the $53 and $65 stock price targets, the Board will have
discretion to grant cash awards in lieu of the stock and option
components. See Proposal Five below for a more extensive
discussion of the Performance Equity Plan.
1996 and 1997 Management Incentive Plans (the "MIPs"). The 1996
and 1997 MIPs were designed to provide short-term and long-term
bonus opportunities for officers. The short-term components for
each of the MIPs were earned in 1996 and 1997, respectively, and
paid out in March 1997 and March 1998. The long-term component
for each of the MIPs is earned during a period of three years and
is designed to be consistent with (a) overall Company performance
measured by EPS, and (b) the officer's individual performance
measured by successful achievement of specific performance goals
for the officer and the financial goals for the department
managed by that officer. Achievement of these goals, measured as
a percentage of the objectives for the year, is more commonly
referred to as "management by objectives", or "MBOs". The amount
of the long-term award is computed as follows: (i) during the
first year, the officer's salary is multiplied by 12% if the
first EPS target (the "Threshold") is reached, or by 24% if the
second EPS target (the "Target") is reached; (ii) during the
first year of a MIP, there is also a Company match component
that is calculated by multiplying the amount resulting from (i)
above either by one-third if only the Threshold is reached or by
two-thirds if the Target is reached; (iii) and finally, during
the second and third years of a MIP, there is an additional
Company match component calculated as in (ii) above if the EPS
targets for those years are met. The EPS Threshold and Target
for each of 1996 ($.50 and $.55, respectively), 1997 ($.60 and
$.70, respectively) and 1998 ($.95 for the Threshold and Target)
were achieved. For 1999, the EPS Target of $1.45 must be
achieved in order to receive any Company match. Payment to the
officer of the long-term incentive award under the 1996 MIP is
deferred until after December 31, 1998, and under the 1997 MIP,
after December 31, 1999. An officer forfeits all of the Company
match component under either MIP if such officer leaves the
Company prior to December 31, 1998, in the case of the 1996 MIP,
or prior to December 31, 1999, in the case of the 1997 MIP. The
long-term payouts under the 1996 MIP were paid in March 1999.
Pursuant to its discretionary authority under the 1997 MIP, the
Compensation Committee of the Board made a decision to void the
Company's liabilities for payouts accrued under the 1997 MIP
during Fiscal 1997 and Fiscal 1998. The 1997 and 1998 payouts
could still be paid to the officers, but only if the Company can
achieve its EPS objective of $1.45 for 1999, after paying the
expense of the 1997 MIP for Fiscals 1997, 1998 and 1999. In
effect, the Board during its February 1999 meeting raised the
threshold (from the EPS targets of $.60 and $.70 in 1997 and $.95
in 1998 to $1.45 in 1999) that has to be met before the officers
can receive the long-term payouts from 1997 and 1998. Specific
long term incentive awards under the 1996 MIP are described in
the "Summary Compensation Table" and in the "Long Term Incentive
Plans - Awards in Last Fiscal Year" table below and the footnotes
thereto.
Executive Vacations and Disability Insurance. Each executive
officer receives four weeks of vacation annually and is covered
by disability insurance paying up to 70 percent or $15,000 per
month, whichever is less, of the executive officer's cash
compensation, upon total disability, until the age of 65.
Summary Compensation of Executive Officers. The following tables
and accompanying notes show the compensation for the Chief
Executive Officer and the four next highest paid executive
officers of Syncor and its subsidiaries during Fiscal 1998,
Fiscal 1997, and Fiscal 1996.<PAGE>
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Securities All
Annual Restricted Underlying Other
Compen- Stock Options/ LTIP Compen-
Name and Year Salary Bonus sation Award(s) SARs Payouts sation
Principal Position (1)($) (2)($) ($) ($) (#) (3)($) (4)($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert G. Funari 1998 307,499 258,575 -- -- 89,348 1,210,627 18,085
President and Chief 1997 240,000 144,643 -- -- 40,000 167,781 9,766
Executive Officer 1996 233,077 131,467 -- -- 50,000 -- 12,581
Monty Fu 1998 275,000 205,100 -- -- 66,152 936,630 17,625
Chairman of the 1997 240,000 140,251 -- -- 40,000 151,200 11,342
Board 1996 233,077 131,467 -- -- 50,000 -- 10,507
Brad Nutter 1998 230,002 285,516 -- -- 47,424 561,919 4,167
Executive Vice 1997 95,000 72,255 -- -- 50,000 -- 448
President and Chief
Operating Officer
Haig S. Bagerdjian 1998 213,869 354,476 -- -- 142,424 673,518 11,893
Executive Vice 1997 163,135 95,310 -- -- 25,000 75,600 5,861
President, Chief 1996 134,539 174,600 -- -- 35,000 -- 5,778
Legal Officer and
Secretary
Michael E. Mikity 1998 184,995 121,170 -- -- 31,788 483,767 17,401
Senior Vice 1997 160,000 91,744 -- -- 25,000 100,800 9,090
President, Chief 1996 155,385 91,744 -- -- 25,000 -- 9,631
Financial Officer and
Treasurer
</TABLE>
[FN]
(1) Amounts shown include cash and non-cash compensation earned
and received by executive officers as well as amounts earned
but deferred at the election of those officers under the
Deferral Plan and the ESSOP.
(2) The bonuses shown for 1998 were primarily from the 1998
Corporate Executive Management Incentive Plan and from over-
achievement bonuses paid out to officers and key employees
as a result of the Company's signficantly exceeding its
financial objectives for Fiscal 1998. Bonuses from the 1998
Corporate Executive Management Incentive Plan were paid in
March 1999 to the following officers: Mr. Funari, $198,575;
Mr. Fu, $155,100; Mr. Nutter, $135,516; Mr. Bagerdjian,
$230,000; and Mr. Mikity, $89,170. Over-achievement bonuses
were paid to the following officers: Mr. Funari, $60,000;
Mr. Fu, $50,000; Mr. Nutter, $150,000; Mr. Bagerdjian,
$42,000; and Mr. Mikity, $32,000. Mr. Bagerdjian also
received a bonus paid in Syncor stock with a value of
$82,476.
The bonuses shown for 1997 were earned pursuant to the 1997
MIP but were not paid until March 1998. With respect to the
bonus shown for Mr. Nutter, the amount also includes $15,000
as his starting bonus for beginning employment with Syncor.
The bonuses shown for 1996 were earned pursuant to the 1996
MIP but were not paid until March 1997. With respect to the
bonus shown for Mr. Bagerdjian in 1996, the amount also
includes: (i) $70,000 received pursuant to the successful
settlement of an insurance claim under which Syncor was
awarded $1,000,000, and (ii) $10,000 awarded in connection
with his receipt of the Chairman's Award from the Company.
(3) The long term incentive payouts for 1998 were awarded under
the 1996 MIP and the Performance Equity Plan (the "PEP").
Awards were made under the PEP as a result of the Company's
achieving its $20 and $25 stock price targets in 1998.
Awards under the PEP were made in cash and Syncor stock
(valued as of the date the targets were met). The officers
received the following long term incentive payouts: Mr.
Funari, $155,187 under the 1996 MIP and $1,055,440 under the
PEP; Mr. Fu, $155,187 under the 1996 MIP and $781,443 under
the PEP; Mr. Nutter, $561,919 under the PEP; Mr. Bagerdjian,
$111,600 under the 1996 MIP and $561,918 under the PEP; and
Mr. Mikity, $108,288 under the 1996 MIP and $375,479 under
the PEP.
The long term incentive payouts for 1997 were made under the
1995 MIP. Mr. Funari and Mr. Fu received an additional
$16,581 and $14,603, respectively, in 1998 under the 1995
MIP as a result of upward adjustments to their MBOs. Their
1997 long term incentive payouts above reflect the
adjustment.
(4) The amounts represent premiums paid for term life and
disability insurance (see "Executive Life Insurance Plan")
and the dollar value of Syncor's contribution under the
ESSOP. Under the ESSOP, named executive officers received
the following number of shares of Syncor Common Stock as
matching and bonus contributions: (i) for Fiscal 1998,
valued at an average of $27.25 per share as of December 31,
1998: Mr. Funari, 453, Mr. Fu, 436, Mr. Bagerdjian, 319, and
Mr. Mikity, 464; (ii) for Fiscal 1997, valued at an average
of $16.125 per share as of December 31, 1997: Mr. Funari,
595, Mr. Fu, 499, Mr. Bagerdjian, 310, and Mr. Mikity, 492;
and (ii) for Fiscal 1996, valued at an average of $13.38 per
share as of December 31, 1996: Mr. Funari, 702, Mr. Fu, 536,
Mr. Bagerdjian, 333, and Mr. Mikity, 559.
/FN
<PAGE>
<TABLE>
<CAPTION>
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
Estimated Future Payouts
Under Non-Stock Price-Based Plans
(a) (b) (c) (d) (e) (f) (g)
Number of Performance
Shares, or
Units or Other Period
Other Until
Rights Maturation or Threshold Target Maximum
Name Plan (#) (1) Payout (2) ($) ($) ($)
<S> <C> <C> <C> <C> <C> <C>
Robert G. Funari Perf. Equity 65,074 1/1/98 to -- -- --
Plan 6/30/2002
1996 MIP -- 12/31/ 17,243 17,243 34,486
Monty Fu Perf. Equity 50,401 1/1/98 to -- -- --
Plan 6/30/2002
1996 MIP -- 12/31/98 17,243 17,243 34,486
Brad Nutter Perf. Equity 36,196 1/1/98 to -- -- --
Plan 6/30/2002
Haig S. Bagerdjian Perf. Equity 36,196 1/1/98 to -- -- --
Plan 6/30/2002
1996 MIP -- 12/31/98 12,400 12,400 24,800
Michael E. Mikity Perf. Equity 24,217 1/1/98 to -- -- --
Plan 6/30/2002
1996 MIP -- 12/31/98 12,032 12,032 24,064
</TABLE>
[FN]
(1) The Performance Equity Plan has three components: Syncor stock, cash and
stock options. The stock option component is described in detail in the
table below captioned "Options/SAR Grants In Last Fiscal Year." The
numbers provided above represent performance rights that are
converted into Syncor stock or cash as stock price targets
are met. When the Performance Equity Plan was implemented
in 1998, the stock price targets were $20, $25, $34 and $43.
The first two stock price targets were achieved in 1998, and
as a result, performance rights allocated for those targets
vested in the form of Syncor stock and cash. In addition,
when the second stock price target was achieved, Syncor
stock outperformed the S&P SmallCap Health Care Index, which
resulted in the award of additional performance rights to
the officers that were immediately convertible into cash and
Syncor stock. The dollar values of the performance rights
that vested in 1998 are set forth in footnote (3) to the
"Summary Compensation Table" above. The remaining
performance rights may or may not vest, depending on whether
the Company will achieve the $34 stock price target by June
30, 2001 or the $43 stock price target by June 30, 2002.
Moreover, the performance rights for the $34 and $43 stock
price targets will be contingent on the stockholders'
approving Proposal Five below. The terms of the Performance
Equity Plan are described in more detail in the section
captioned "Compensation of Directors and Executive
Officers."
(2) Under the 1996 MIP, amounts earned under the long term
incentive component were not paid until March 1999. A more
detailed description of the 1996 MIP is provided under the
section captioned "Compensation of Directors and Executive
Officers.
/FN
<PAGE>
OPTION EXERCISES AND YEAR-END VALUES TABLE
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
This table gives information for options exercised by each of the named
executive officers in 1998, and the value (stock price less exercise price) of
"in-the-money" options held by those executive officers at year-end, based
upon the per-share closing price of Syncor stock of $27.25 on December 31, 1998,
as traded in NASDAQ.
<TABLE>
<CAPTION>
Number of Value of
Securities Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End at FY-End(1)
(#) ($)
___________ ____________
Name Shares Value Exercisable/
Acquired on Realized Exercisable/ Unexercisable
Exercise(#) ($) Unexercisable (1)
<S> <C> <C> <C> <C>
Robert G. Funari -- -- 215,174 / 99,674 3,643,873 / 1,453,248
Monty Fu -- -- 79,476 / 88,076 1,187,971 / 1,324,221
Brad Nutter -- -- 36,212 / 61,212 477,859 / 905,984
Haig S. Bagerdjian -- -- 83,946 / 158,712 1,272,558 / 1,856,921
Michael E. Mikity -- -- 65,644 / 47,144 1,033,608 / 669,008
/TABLE
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term
(a) (b) (c) (d) (e) (f) (g)
Number of % of Total
Securities Options
Underlying Granted to Exercise or
Options Employees in Base Price Expiration
Name Granted (1) Fiscal Year ($/sh) Date 5%($)(2) 10%($)(2)
<S> <C> <C> <C> <C> <C> <C>
Robert G. Funari 89,348 5.68 16.125 01/01/08 906,071 2,296,163
Monty Fu 66,152 4.21 16.125 01/01/08 670,843 1,700,047
Brad Nutter 47,424 3.02 16.125 01/01/08 480,923 1,218,754
Haig S. Bagerdjian 47,424 3.02 16.125 01/01/08 480,923 1,218,754
25,000 1.59 18.00 04/17/08 283,003 717,184
70,000 4.45 16.6875 06/16/08 734,628 1,861,690
Michael E. Mikity 31,788 2.02 16.125 01/01/08 322,360 816,923
</TABLE>
[FN]
(1) The options expiring on January 1, 2008 were granted on January 1, 1998
under the Performance Equity Plan and vest according to the attainment of
stock price targets ($20, $25, $34 and $43). Half of those option shares
vested in 1998 as a result of the $20 and $25 stock targets having been
attained. If a stock price target is not met ($34 by June 30, 2001 or $43
by June 30, 2002), the stock options allocated for those stock price
targets will vest on June 30, 2007. As for the 25,000 option
shares granted to Mr. Bagerdjian that expire on April 17, 2008 and 20,000
of the option shares expiring on June 16, 2008, one quarter of the
option shares will vest on each anniversary date of the grant thereof
during a four-year period. As for 50,000 of the option shares granted to
Mr. Bagerdjian that expire on June 16, 2008, one-third will vest after
December 31, 1999, another one-third will vest after December 31, 2000,
and another one-third will vest after December 31, 2001, but only
if certain performance objectives are achieved during the fiscal year
ending the above-mentioned December 31 dates; option shares that do not
vest because of failure to achieve the performance objectives will vest
on December 16, 2007.
(2) Assumes that the market price per share of Syncor Common
Stock appreciates in value from the date of grant to the end
of the option term at the rates indicated.
</FN>
EMPLOYMENT, SEVERANCE, INDEMNITY AND CHANGE OF
CONTROL ARRANGEMENTS
Employment Agreements for Mr. Fu and Mr. Funari. The employment
agreements for Mr. Fu and Mr. Funari, each dated January 1, 1997
and amended and restated on December 31, 1997, expire on December
31, 1999. Mr. Fu's base salary for Fiscal 1998 was $275,000, and
for Fiscal 1999 will be $310,000. Mr. Funari's base salary for
Fiscal 1998 was $325,000, and for Fiscal 1999 will be $400,000.
They also receive various fringe benefits, including
participation in the Company's Management Incentive Plans, the
Performance Equity Plan implemented in 1998, and any other
incentive plan approved by the Board of Directors and applicable
generally to the Company's executive officers. Both agreements
provide for various payments to their respective beneficiaries in
the event of death, disability or termination and in the event of
a change of control of Syncor. In the event of death or
termination due to disability, a termination for cause, or a
voluntary resignation or retirement, Mr. Fu or Mr. Funari, as the
case may be, or their respective beneficiaries, would be entitled
to receive a payment equal to the prorated portion of the
officer's then current salary and to receive prorated, earned and
deferred amounts due under any incentive plan in which such
officer is a participant. Payouts deferred under such incentive
plans would be paid in accordance with the terms of the
applicable plan, but the Company would have no obligation to pay
any portion of the Company matching component available under
such plan. Each officer would also be entitled to exercise any
vested stock options for a period of 90 days. In the event of a
termination without cause, the officer would receive the same
payments described above, plus severance compensation equal to
his annual salary payable in biweekly installments. If a
termination without cause occurred following a change of control
as defined below, Mr. Fu's and Mr. Funari's severance
compensation would equal two years' salary. A change of control
occurs under the agreement when (i) 20% or more of Syncor's
outstanding voting stock is acquired by a person, or group of
related persons not affiliated with Syncor, or (ii) Syncor sells
more than 50% of Syncor's assets not in the ordinary course of
business, or (iii) the Board of Directors fails to determine a
"Qualified Offer" as that term is defined in Section 1(a) of that
certain Rights Agreement, dated as of September 8, 1989, between
Syncor and the American Stock Transfer & Trust Company.
Other Agreements with Change of Control Arrangements. In
addition to the above agreements, each non-employee Director and
executive officer has a Benefits Agreement pursuant to which,
under certain limited conditions in the event of a change in
control, each person receives compensation for one year and all
stock options fully vest immediately. The 1990 Master Stock
Incentive Plan and the New Employee Stock Option Plan also
provide for the vesting of all unvested options upon a change of
control. Finally, the Performance Equity Plan, described above
under the section "Compensation of Directors and Officers,"
provides for the acceleration of the vesting of stock options,
the grant of stock awards and the payment of cash awards upon a
change of control.
Indemnity Agreement. Each non-employee Director and executive
officer has an Indemnity Agreement which under certain
conditions, provides for indemnification of the Directors or
executive officers for the duties performed for Syncor or its
subsidiaries and affiliates. The form of the Indemnity
Agreements was approved by the Company's stockholders.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee during Fiscal 1998 were
Arnold E. Spangler, Chairman, Dr. Steven B. Gerber and Dr. Gail
R. Wilensky, all of whom were non-employee Directors. From time
to time, members of the Compensation Committee asked the
participation of the executive officers, including the Chief
Executive Officer, in their deliberations for the purpose of
gathering information or recommendations. During Fiscal 1998,
none of the Compensation Committee members had a relationship
requiring disclosure under any paragraph of Item 404 of
Regulation S-K.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 1998, Syncor's stockholders approved the 1998 Senior
Management Stock Purchase Plan, which allows officers and
directors to buy shares of Syncor Common Stock to be paid with a
five-year secured promissory note. The following is a list of
the officers and directors who purchased shares under the Stock
Purchase Plan in 1998 and during the first quarter of 1999, and
the amount of their respective loans: Dr. Gerber, $321,234; Mr.
Oki, $321, 234; Mr. Spangler, $321, 234; Dr. Wagner, $83,438; Dr.
Wilensky, $196,078; Mr. Williams, $321,234; Mr. Funari,
$2,944,700; Mr. Fu, $3,001,218; Mr. Nutter, $1,141,350; Mr.
Bagerdjian, $2,476,350; Mr. Ward, $1,493,750; Mr. Mikity,
$602,950; Mr. Baumann, $737,550; Ms. Coop, $519,512; and Mr.
Coffey, $903,325.
RELATIONSHIP WITH INDEPENDENT AUDITORS
KPMG LLP was appointed by the Board of Directors as Syncor's
independent auditors for Fiscal 1999, subject to stockholder
ratification as set forth below. KPMG LLP served as Syncor's
independent auditors for Fiscal 1998.
A representative from KPMG LLP will be present at the Annual
Meeting, will have the opportunity to make statements, and will
be available to respond to appropriate questions.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "1934
Act"), requires Syncor's Directors and executive officers to file
reports of ownership and changes in ownership with the Securities
and Exchange Commission. Additionally, Item 405 of Regulation S-
K under the 1934 Act requires the Company to identify in its
proxy statement those individuals for whom one of the above-
referenced reports was not filed on a timely basis during the
most recent fiscal year or prior fiscal years. Based solely upon
its review of Forms 3, 4 and 5 furnished to the Company, the
Company believes that all reports required to be filed during
1998 pursuant to Section 16(a) of the Act were timely filed,
except that Mr. Funari, Mr. Fu, Mr. Nutter, Mr. Bagerdjian, Mr.
Mikity, Mr. Baumann, Ms. Coop and Mr. Coffey were eight days late
in filing their respective Forms 4 for December 1998 to report
the vesting of performance rights granted under the Company's
Performance Equity Plan for executive officers. The Company's
legal department typically prepares the Forms 3, 4 and 5 on
behalf of the executive officers. The Company did not become
aware during 1998 of any delinquent filings for prior fiscal
years.
The following Report of the Compensation Committee and the
Performance Graph included in this proxy statement shall not be
deemed to be incorporated by any general statement incorporating
by reference this proxy statement into any filing under the
Securities Act of 1933 or the 1934 Act, except to the extent
Syncor specifically incorporates this Report or the Performance
Graph by reference therein, and shall not be deemed soliciting
material or otherwise deemed filed under either of such Acts.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee reviews management's suggestions on
executive base salary compensation and annual incentive
compensation, makes recommendations to the Board of Directors,
and evaluates the executive officers' performance.
The Committee's Goals
In determining the compensation recommendations for executive
officers to the Board of Directors, the Compensation Committee's
goals are: (1) to attract, retain and motivate a highly capable
and experienced executive officer group; (2) to link pay to
Company, department and individual performance; and (3) to align
executive compensation with stockholder interests. Consistent
with these objectives, the Committee makes a high proportion of
executive officer compensation dependent on long-term performance
and on enhancing stockholder value. The Committee also
encourages stock ownership as a way for an employee to
continually focus on growing stockholder value.
Salaries and Annual Incentive Compensation
The Committee annually reviews salary levels of executive
officers using data from publicly traded biopharmaceutical
companies with similar net sales and number of employees, as well
as data from executive compensation surveys comparing companies
of similar size. The salary levels for 1998 and 1999 were
targeted for the median of salaries of corresponding positions at
the benchmark companies. For determining 1999 salaries, we used
a different mix of benchmark companies to reflect Syncor's growth
in net sales and number of employees in 1998.
The Compensation Committee designed the annual incentive
compensation to be consistent with (a) overall Company
performance measured in earnings per share or EPS, and (b) the
officer's performance measured by successful achievement of
specific performance goals as well as attainment of his or her
department's financial goals. The EPS target for 1998 was $.95,
which was achieved by the Company. For 1999, the EPS target is
$1.45. The individual performance goals are established each
year based on recommendations of the Chief Executive Officer, as
approved by the Compensation Committee and the Board of
Directors. Individual performance, in turn, is measured by
"management by objectives" or "MBOs," a goal-oriented measure
used to evaluate the performance of officers against established
individual and department objectives. Annual incentive
compensation for Syncor's executive officers can increase or
decrease significantly if individual performance or Syncor's
performance exceeds, or fails to achieve, targeted performance
levels. Assuming that the EPS level is reached, an officer
achieves 100% of his MBOs, and the officer's department achieves
its financial goals, the executive officer will receive as his or
her annual incentive compensation 40% to 100% of base salary, as
determined in advance by the Board of Directors.
Long Term Incentives
In 1998, the Board of Directors implemented the Performance
Equity Plan, a performance-based long-term incentive compensation
program designed to link executive rewards more directly to the
increase of stockholder value through stock price growth. It has
three components: cash, stock and stock options allocated for
each Syncor stock price target. If a Syncor stock price target
is met within a specified window period and maintained for ten
out of twenty consecutive trading days, officers receive the
stock and cash allocated for that period, and the allocated
options vest. Awards are adjusted upwards or downwards
depending on how Syncor stock performs relative to the S&P
SmallCap Health Care Index. The Performance Equity Plan is
described in more detail above in the section captioned
"Compensation of Directors and Executive Officers." We are
pleased to report that in 1998, the first year of the Performance
Equity Plan, the Company achieved its first two stock price
targets ($20 and $25). If the stockholders approve Proposal Five
below, the next targets will be $34, to be achieved by June 30,
2001, $43, to be achieved by June 30, 2002, $53, to be achieved
by June 30,2003, and $65, to be achieved by June 30, 2004. The
Compensation Committee believes that tying the awards to the
achievement of the stock price targets provides a more
quantifiable and objective measure of the performance of the
Company's executive officers. In addition, since executive
officers would receive their awards only if the stockholders
obtain a direct financial benefit through the achievement of
higher stock prices, the interests of the executive officers are
even more closely aligned with the interests of the stockholders.
The long-term incentives also include awards that may potentially
be paid out from the 1997 Management Incentive Plan (the "1997
MIP"). The 1997 MIP was designed as a three-year plan with
potential payouts based upon Company performance, measured by
EPS, and individual and department performance, measured by MBOs.
The 1997 MIP is described in further detail in the section
captioned "Compensation of Directors and Executive Officers."
Applying its discretion under the 1997 MIP, the Compensation
Committee determined that it would be in the Company's best
interests to void the Company's liabilities for the long-term
incentive payouts accrued under the 1997 MIP in 1997 and 1998.
The 1997 and 1998 payouts could still be potentially paid to the
officers, but only if the Company meets its EPS target of $1.45
in 1999 after taking into account the expense of the 1997 MIP for
the 1997, 1998 and 1999 fiscal years. The $1.45 EPS target is an
increase of 53% over the target for 1998. The Compensation
Committee believes that raising the hurdle for earning the
payouts creates an additional incentive for the officers to meet
the Company's objective for 1999. Long-term payouts under the
1997 MIP, if any, are scheduled to be distributed after December
31, 1999.
Stock Purchase Plan
The Company also has a policy to encourage stock ownership by
both directors and officers in order to closely align the
interests of management with those of the stockholders.
Consistent with this policy, in 1998, the Board presented to the
Company's stockholders the 1998 Senior Management Stock Purchase
Plan, which was approved by the stockholders. All officers and
directors subscribed to purchase shares under the plan. The
Committee believes that this commitment to employee stock
ownership has played a significant part in driving the Company's
recent success in creating value for its stockholders.
Compensation of Chairman of the Board and Chief Executive Officer
Mr. Fu's and Mr. Funari's compensation and related benefits are
based principally on their rights under their respective
employment agreements with Syncor, each of which is described
above in the section captioned "Employment, Severance, Indemnity
and Change of Control Arrangements." The annual incentive
compensation is summarized for Fiscals 1996, 1997 and 1998 in the
"Summary Compensation Table" and the related footnotes . The
long term incentive compensation is summarized for Fiscal 1998 in
the "Summary Compensation Table," the "Long-Term Incentive
Plans Awards in Last Fiscal Year" table, the "Option/SAR Grants
in Last Fiscal Year" table, and the related footnotes.
In determining total compensation for each executive officer, the
Company also takes into consideration Internal Revenue Service
regulations which limit corporate deductions to $1,000,000 per
executive officer for compensation not qualified under Section
162(m) of the Internal Revenue Code.
Dated: May 5, 1999 Compensation Committee of
the Board of Directors,
Syncor International Corporation
Arnold E. Spangler, Chairman
Dr. Gail R. Wilensky
Dr. Steven B. Gerber
SYNCOR STOCK PRICE PERFORMANCE
The following chart compares the value of $100 invested in Syncor
Common Stock from December 31, 1993, through December 31, 1998,
with a similar investment in the NASDAQ Composite (U.S.
companies) and with the S&P SmallCap Health Care (Medical
Products & Supplies) Index. The NASDAQ Composite (U.S.
companies) is an index comprised of all domestic common shares
traded on the NASDAQ National Market and the NASDAQ SmallCap
Market. The S&P SmallCap Health Care (Medical Products &
Services) Index is a composite index of twenty health care
companies in the S&P SmallCap 600, including Syncor (2.9%), that
primarily provide medical products and supplies. The table below
shows the value of each such investment on December 31, 1993,
1994, 1995, 1996, 1997 and 1998 assuming reinvestment of
dividend.
CUMULATIVE TOTAL RETURN GRAPH
<TABLE>
<CAPTION>
Dec-93 Dec-94 Dec-95 Dec-96 Dec-97 Dec-98
<S> <C> <C> <C> <C> <C> <C>
Syncor International $100 $ 31 $ 30 $ 60 $ 72 $122
Corporation
NASDAQ Stock Market $100 $ 98 $138 $170 $209 $293
(U.S.)
S&P SmallCap Health $100 $ 96 $141 $144 $168 $180
Care (Medical Products
& Supplies) Index
</TABLE>
PROPOSAL TWO
RATIFY SELECTION OF INDEPENDENT AUDITORS
The Board of Directors, upon the recommendation of its Audit
Committee, has appointed KPMG LLP to serve as Syncor's
independent auditors for 1999, subject to ratification by the
stockholders. In taking this action, the members of the Board
and the Audit Committee considered KPMG's long-standing
relationship with Syncor, its general reputation for adherence to
professional auditing standards, and its independence with
respect to the services to be performed. Representatives of the
firm will be present at the Annual Meeting to make a statement if
they desire to do so and to answer appropriate questions from
stockholders.
The affirmative vote of the holders of a majority of the shares
present and voting on this proposal at the Annual Meeting is
required to approve the proposal. The Board of Directors
recommends that the stockholders vote FOR ratification of the
appointment of KPMG LLP to serve as Syncor's independent auditors
for 1999. Proxies solicited by the Board of Directors will be so
voted unless stockholders specify otherwise in their proxies.
PROPOSAL THREE
AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION
TO INCREASE AUTHORIZED COMMON STOCK
The Board of Directors has approved, and is recommending to the
stockholders for approval, an amendment to Article FOURTH of the
Company's Restated Certificate of Incorporation to increase the
number of shares of Common Stock which the Company is authorized
to issue from 20,000,000 to 200,000,000. The full text of the
proposed amendment to the Restated Certificate of Incorporation
is as follows:
FOURTH: The total number of shares
which the Corporation shall have authority to
issue is 200,000,000 shares of Common Stock,
par value $.05 per share.
If the proposed amendment is adopted by the stockholders, the
Company will file a Certificate of Amendment to the Restated
Certificate of Incorporation to be effective as soon as
practicable following the Annual Meeting.
On March 31, 1999, of the 20,000,000 authorized shares of Common
Stock, 11,614,670 shares were outstanding, 1,356,200 shares were
held in the Company's treasury, and 4,006,754 shares were
reserved for issuance under our stock-based incentive plans. The
remaining authorized shares have not been issued nor reserved for
issuance.
The additional shares will be available for potential stock
splits, future acquisitions of property and of securities of
other companies, and other corporate purposes. An increase in
authorized Common Stock is necessary to permit such activities to
occur since the Company does not currently have sufficient
authorized but unissued shares to carry out such activities. The
Board believes that it is beneficial to the Company to have the
additional shares available for such purposes without delay or
the necessity of a special stockholders' meeting. The Board has
no immediate plans, arrangements, commitments or understandings
with respect to the issuance of any of the additional shares of
common stock which would be authorized by the proposed amendment.
The additional shares will be available for issuance from time to
time without further action by the stockholders and without first
offering such shares to the stockholders. Stockholders do not
have preemptive rights with respect to the Common Stock, which
means they do not have the right to purchase any new issuance of
Common Stock in order to maintain their proportionate interests
in the Company.
The Board has not proposed the increase in the authorized number
of shares with the intention of using the additional shares for
anti-takeover purposes, although the Board could theoretically
use the additional shares to make it more difficult or to
discourage an attempt to acquire control of the Company.
The affirmative vote of the holders of a majority of the shares
present and voting on this proposal at the Annual Meeting is
required to approve the proposal. The Board of Directors
recommends that the stockholders vote FOR the amendment of the
Company's Restated Certificate of Incorporation to increase the
authorized number of shares of Common Stock. Proxies solicited
by the Board of Directors will be so voted unless stockholders
specify otherwise in their proxies.
PROPOSAL FOUR
USE OF UNUSED SHARES UNDER
THE UNIVERSAL PERFORMANCE EQUITY PARTICIPATION PLAN
FOR OTHER STOCK OPTION PLANS
During the 1998 Annual Meeting, the Company's stockholders
approved the Universal Performance Equity Participation Plan (the
"Universal Plan"), under which all employees eligible to
participate in the Universal Plan were or will be granted options
to purchase shares of Syncor common stock. A total of 1,800,000
option shares (the "Universal Plan Shares") are authorized for
issuance under the Universal Plan. Under the current framework
of the Universal Plan, after July 1, 2001, employees will no
longer be eligible to receive options under the Universal Plan.
The Board of Directors believes that after July 1, 2001, there
will be authorized Universal Plan Shares that will remain unused
("Unused Shares"). The Board is requesting the stockholders to
approve a proposal to give the Board discretion to use any
projected Unused Shares for awards under the Company's other
stock incentive plans.
As of March 31, 1999, 1,061,300 shares remain available for
issuance under the Universal Plan. Employees who participate in
the Company's Employees Savings and Stock Ownership Plan (the
"ESSOP") and who work for more than 30 hours per week are
eligible to receive Universal Plan options. The number of
Universal Plan Shares granted to an employee is determined by
that employee's base salary. It cannot be accurately determined
at this time how many Universal Plan Shares will be used by July
1, 2001. Based on historical data, including data on ESSOP
participation, employee turnover, and employee salaries, the
Board projects that there could be approximately 400,000 Unused
Shares after July 1, 2001.
If this proposal is approved by the stockholders, the Unused
Shares could be used for awards under the Company's various stock
incentive plans, including the 1990 Master Stock Incentive Plan,
as amended and restated (the "1990 Plan"). The 1990 Plan is
available for officers, directors and key employees of the
Company. The Board has discretion to determine who is a "key
employee" and thus any employee can be eligible to receive an
award under the 1990 Plan if the Board determines that an
individual is a key employee. Under the terms of the Universal
Plan, officers who participate in the Performance Equity Plan for
executive officers (the "Performance Equity Plan") are not
eligible to receive options under the Universal Plan. This
proposal, if approved, would allow the Board to grant awards of
the Unused Shares to officers, among other eligible employees,
pursuant to the 1990 Plan, even if such officers participate in
the Performance Equity Plan.
The types of awards available for grant under the 1990 Plan
include stock options, stock appreciation rights, restricted
stock and performance shares. The 1990 Plan and a description of
the 1990 Plan are set forth in the Proxy Statement for the 1997
Annual Meeting of the Stockholders. Reference is made to the
1990 Plan for its specific terms.
If the stockholders approve the proposal, the maximum number of
shares that would be available for issuance under the 1990 Plan
would be increased by the number of Unused Shares. The 1990 Plan
would need to be amended to allow for the increased number of
available shares. With this proposal, the Board is also seeking
authority to make such amendment to the 1990 Plan, without
further stockholder approval, to increase the maximum number of
shares available for issuance under the 1990 Plan by the
projected number of Unused Shares.
If the stockholders approve the proposal, the Board intends to
use the Unused Shares to grant awards from time to time,
including prior to or after July 1, 2001. Approval of the
proposal would allow the Board to reserve shares for awards under
the Performance Equity Plan for the stock price targets of $53
and $65. The Board approved those targets in February 1999,
subject to the stockholders' approval of Proposal Five below, but
has not reserved any shares for awards because there are
insufficient shares available under the 1990 Master Stock
Incentive Plan. Approximately 210,000 shares would be allocated
for awards to executive officers for the two stock price targets.
A detailed description of the Performance Equity Plan is provided
above under the section captioned "Compensation of Directors and
Executive Officers" and below in Proposal Five.
The number of Unused Shares to be awarded will not exceed the
number of Unused Shares that the Board projects will be available
under the Universal Plan. In no event will the sum of (i) the
number of option shares outstanding under the Universal Plan and
(ii) the number of Unused Shares awarded under the 1990 Plan or
any other stock incentive plan, exceed the 1,800,000 shares
authorized for issuance under the Universal Plan.
In summary, the Board is requesting that the stockholders approve
(1) the grant of authority to the Board to use the projected
Unused Shares under the Universal Plan for awards under the 1990
Plan and any other stock incentive plan, and (2) the grant of
authority to the Board to amend the 1990 Plan, without further
stockholder approval, to increase the number of shares available
under the 1990 Plan by a number not to exceed the number of
Unused Shares.
The affirmative vote of the holders of a majority of the shares
present and voting on this proposal at the Annual Meeting is
required to approve the above proposal. The Board of Directors
recommends that the stockholders vote FOR the above proposal.
Proxies solicited by the Board of Directors will be so voted
unless stockholders specify otherwise in their proxies.
PROPOSAL FIVE
APPROVAL OF PERFORMANCE GOALS FOR EXECUTIVE OFFICERS
In order to closely align the interests of executive officers and
the Company's stockholders, the Company implemented the
Performance Equity Plan (the "Plan") for executive officers.
Under the terms of the Plan, officers are eligible to receive
stock and cash awards and to accelerate the vesting of options
granted under the Plan upon the Company's attainment of certain
stock price targets ($20, $25, $34 and $43). The Plans was
intended to be the long-term component of the officers' incentive
compensation. In 1998, the Company achieved its first two stock
price targets, an impressive achievement. The closing price for
Syncor stock On December 31, 1998 was $27.25, which represented a
69% increase over the stock price in the beginning of 1998.
In February 1999, the Board approved two additional stock price
targets: $53 and $65.
The Board is asking the stock holders to approve the stock and
cash awards that the participating officers would be eligible to
receive upon the attainment of the $34, $43, $53 and $65 stock
price targets.
Reason for Seeking Stockholder Approval
The Board is seeking stockholder approval in order to address
limitations on the deductibility of certain compensation in
excess of $1 million per year paid by a publicly traded company
to certain executive officers. If compensation is qualified as
"performance-based compensation," however, it will be excluded
from the limitation on deductibility. The Internal Revenue
Service in the regulations promulgated under Section 162(m) of
the Internal Revenue Code (the "Code") has indicated that four
conditions must be satisfied in order for compensation to qualify
as performance-based. Compensation will not be subject to the
deduction limit if (i) it its payable on account of the
attainment of one or more pre-established, objective performance
goals; (ii) the performance goals are established by a
compensation committee of the Board that is comprised solely of
two or more outside directors; (iii) the material terms of the
compensation and the performance goals are disclosed to and
approved by stockholders before payment; and (iv) the
compensation committee certifies that the performance goals have
been satisfied before payment. In an effort to comply with the
provisions of the Code and to qualify the compensation payable to
certain executive officers under the Plan as performance-based
compensation eligible for exclusion from the deduction limit, the
Board is submitting to stockholders for approval the cash and
stock awards to be paid under the Plan upon the attainment of the
$34, $43, $53 and $65 stock price targets.
Description of Awards under Plan
Awards under the Plan have three components: a stock grant, a
stock option grant, and a cash award. In order for the stock
target to be achieved, the stock price must be maintained for at
least ten trading days in a period of twenty consecutive trading
days. If a stock target is attained, the participant officer is
granted stock and awarded cash, and the stock option shares
allocated for that target will vest. The $34 target must be
attained by June 30, 2001, the $43 target by June 30, 2002, the
$53 target by June 30, 2003 and the $65 target by June 30, 2004.
If the stock price target is not attained on or before the
required time frame, the officer will lose the opportunity to
receive the stock and cash award and to accelerate the vesting of
the allocated stock option shares. Options that do not vest on
an accelerated basis for the $34 and $43 targets will vest on
June 30, 2007. Options that do not on an accelerated basis for
the $53 and $65 targets will vest on June 30, 2008. The stock
options were or will be granted, and the stock will be awarded as
performance shares, under the Company's 1990 Master Stock
Incentive Plan (the "Plan") or, in the case of new employees,
under the New Employee Stock Option Plan. The options allocated
for the $34 and $43 targets were granted on January 1, 1998 upon
the commencement of the Plan or, in the case of new officers, on
the starting date of employment. The options allocated for the
$53 and $65 targets will be granted on June 23, 1999 if the
stockholders approve this Proposal Five. If there are
insufficient shares for awards under the 1990 Plan, the Board has
discretion to grant cash in lieu of the stock and stock option
components.
Value of Awards for Each Officer
If a stock price target is attained, the officer will receive
awards with a total value of approximately one to two times his
or her base salary (including the value of the options valued as
of the date of grant), as determined in advance by the Board.
The value of the awards, however, may be adjusted upward or
downward depending on how Syncor stock performs in comparison to
the S&P SmallCap Health Care Index. The adjustment is better
explained with the following examples: if Syncor stock
outperforms the S&P SmallCap Health Care Index by 8%, we take the
square root of 1.08, which is 1.039, and we adjust the total
award upward by 3.9%; conversely, if Syncor stock underperforms
the Index by 8%, a downward adjustment of 3.9% is made to the
awards. If Syncor stock underperforms by 26% or more, no cash or
stock award will be made,nor will the vesting of the allocated
stock options be accelerated. The exact value of the award for
each officer is not presently determinable because it cannot be
known how Syncor stock will perform against the S&P SmallCap
Health Care Index until the stock price target is actually
attained.
Participants of the Plan
The participants of the Plan are all of the executive officers of
the Company.
Acceleration of Awards; Change in Control
Upon the occurrence of a merger, liquidation, sale of all the
assets, or "change in control" (as described below), all options
will vest, and all cash and stock awards will be awarded, even if
the stock price targets have not been achieved, unless the Board
determines otherwise. A "change in control" shall be deemed to
have occurred if (i) any person or entity (excluding the ESSOP)
becomes the beneficial owner, directly or indirectly, of 20% or
more of the Company's outstanding common stock, or (ii) during
any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors cease
for any reason to constitute a majority of the Board, unless the
election or nomination for election by the Company's
stockholders, of each new Director was approved by a vote of at
least three-fourths of the Board members then still in office who
were Directors at the beginning of such period.
Other Terms of the Plan; Effect If Stockholders Do Not Approve
Proposal
The above summary of the Plan is qualified by reference to the
Performance Equity Plan, filed as Exhibit 10.1 to the Company's
Form 10-Q for the quarter ended March 31, 1998, and the First
Amendment to the Performance Equity Plan, filed as Exhibit 10.25
to the Company's Form 10-K for the year ended December 31, 1998.
If the stockholders do not approve this Proposal Five, the
performance rights underlying the cash and stock awards allocated
for the $34 and $43 stock price targets will be voided, and no
performance rights will be granted for the $53 and $65 stock
price targets.
The affirmative vote of the holders of a majority of the shares
present and voting on this proposal at the Annual Meeting is
required to approve the proposal. The Board of Directors
recommends that the stockholders vote FOR approval of the cash
and stock awards described above upon the attainment of the $34,
$43, $53 and $65 stock price targets. Proxies solicited by the
Board of Directors will be so voted unless stockholders specify
otherwise in their proxies.
ANNUAL REPORT TO STOCKHOLDERS
The Annual Report to Stockholders concerning the operations of
Syncor for Fiscal 1998 including consolidated financial
statements for that period, is enclosed with this Proxy
Statement.
FINANCIAL STATEMENTS AND INFORMATION
Syncor's consolidated financial statements for Fiscal 1998 and
management's discussion and analysis of financial condition and
results of operations appear in Syncor's Annual Report to
Stockholders which accompanies this proxy statement, and are
incorporated herein by reference.
STOCKHOLDER PROPOSALS
Stockholder proposals for consideration at the Annual Meeting
expected to be held on June 20, 2000, must be received by the
Company no later than February 25, 2000 in order for such
proposals to be included in the proxy materials for the 2000
Annual Meeting. To be included, proposals must be proper under
law and must comply with the Rules and Regulations of the
Securities and Exchange Commission and the By-Laws of the
Company. All such proposals should be addressed to the Secretary
of the Company.
OTHER MATTERS
The Board of Directors is not aware of any other matters which
are to be presented at the Annual Meeting. However, if any other
matters should properly come before the Annual Meeting, the
persons named in the proxy will vote on such matters in
accordance with their judgment.
The above notice and proxy statement are sent by order of the
Board of Directors.
/s/ Haig S. Bagerdjian
May 5, 1999, HAIG S. BAGERDJIAN
Woodland Hills, California Secretary
AVAILABILITY OF ANNUAL REPORT ON FORM 10-K
UPON WRITTEN REQUEST, SYNCOR WILL PROVIDE, WITHOUT CHARGE, A COPY
OF ITS ANNUAL REPORT ON FORM 10-K, EXCEPT FOR EXHIBITS THERETO,
FOR THE PERIOD ENDED DECEMBER 31, 1998 FILED WITH THE UNITED
STATES SECURITIES AND EXCHANGE COMMISSION, TO ANY STOCKHOLDER OF
RECORD AT THE CLOSE OF BUSINESS ON APRIL 26, 1999. ANY EXHIBIT
WILL BE PROVIDED ON REQUEST UPON PAYMENT OF THE REASONABLE
EXPENSES OF FURNISHING THE EXHIBIT. REQUESTS SHOULD BE ADDRESSED
TO SYNCOR, TO THE ATTENTION OF INVESTOR RELATIONS, 6464 CANOGA
AVENUE, WOODLAND HILLS, CALIFORNIA 91367-2407, OR TELEPHONE (818)
737-4000.
