SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
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sec. 14a-6(e)(2))
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[ ] Soliciting Materials Pursuant to sec. 14a-11(c) or Rule 14a-12
SYNCOR INTERNATIONAL CORPORATION
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_____________________________________________________________________________
[SYNCOR LETTERHEAD]
May 12, 2000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Syncor International Corporation on Tuesday, June 20, 2000, 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, 1999. 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 2000 fiscal year; and
(3) To approve the 2000 Master Stock Incentive Plan.
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 three 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 20, 2000
_____________________________________________________________________________
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 20,
2000 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 12, 2000. 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.
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
11,786,469 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 24,
2000, 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 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, 2000, 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) (before May 1, 2000) 1,607,579 13.6 %
Syncor International Corporation ESSOP
420 Montgomery Street, San Francisco, CA 94163
North Star ESOP & Fiduciary Services, LLC (from May 1, 2000)
500 West Madison Street, Suite 3800
Chicago, IL 60661
Wellington Management Company (3) 1,137,859 9.7 %
75 State Street, Boston, MA 02109
Monty Fu (4) 991,948 8.3 %
6464 Canoga Avenue, Woodland Hills, CA 91367-2407
FMR Corp. (Fidelity Investments) 938,042 8.0 %
82 Devonshire Street, Boston, MA 02109
Vanguard Specialized Portfolios, Inc. - Health Care Fund 856,559 7.3 %
Post Office Box 2600, Valley Forge, PA 19482-2600
</TABLE>
[FN]
(1) Calculated on the basis of 11,786,332 shares (excluding treasury
shares) outstanding as of March 31, 2000. Percentages are calculated
including shares not outstanding which the beneficial owner has a right
to acquire within 60 days of March 31, 2000.
(2) On May 1, 2000, North Star ESOP & Fiduciary Services, LLC became the
new trustee of Syncor's Employees' Savings and Stock Ownership Plan
("ESSOP"). On that date, Merrill Lynch Trust Company, FSB transferred
all of the ESSOP shares in its possession to the new trustee. The new
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 Fund.
(4) Includes 131,014 shares not outstanding which Mr. Fu has the right to
acquire pursuant to options that are exercisable on March 31, 2000 or
within 60 days thereafter, 10,723 shares owned by Mr. Fu by virtue of
his participation in the ESSOP as of March 31, 2000, and 17,420 shares
held as trustee for his children.
</FN>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of March 31, 2000, 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 33,550 (3) (*)
Arnold E. Spangler 46,700 (4) (*)
Dr. Henry N. Wagner, Jr. 47,850 (5) (*)
Dr. Gail R. Wilensky 40,400 (6) (*)
Ronald A. Williams 22,584 (7) (*)
Robert G. Funari 466,434 (8) 3.9%
Monty Fu 991,948 (9) 8.3%
Brad Nutter (10) 16,560 (*)
Haig S. Bagerdjian 295,855 (11) 2.5%
Michael E. Mikity 125,597 (12) 1.1%
All Directors and executive
officers as a group
(16 individuals) 2,532,160 (13) 20.1%
</TABLE>
[FN]
(1) Calculated on the basis of 11,786,332 shares (excluding treasury
shares) of Syncor Common Stock outstanding as of March 31, 2000.
Percentages and amounts are calculated including shares not outstanding
which the individual has a right to acquire pursuant to options
exercisable on March 31, 2000 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,
2000 but does not include matching shares for the first quarter of
2000.
(2) Includes 18,400 shares not outstanding which the person has the right
to acquire pursuant to options and 37,500 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.
(4) Includes 14,200 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 27,400 shares not outstanding which the person has the right
to acquire pursuant to options.
(7) Includes 3,334 shares not outstanding which the person has the right to
acquire pursuant to options.
(8) Includes 247,511 shares not outstanding which the person has the right
to acquire pursuant to options and 4,288 shares under the ESSOP.
(9) Includes 131,014 shares not outstanding which the person has the right
to acquire pursuant to options, 10,723 shares under the ESSOP, and
17,420 shares held as trustee for his children.
(10) Mr. Nutter's employment with the Company terminated on February 11,
2000.
(11) Includes 124,052 shares not outstanding which the person has the right
to acquire pursuant to options and 2,661 shares under the ESSOP.
(12) Includes 76,091 shares not outstanding which the person has the right
to acquire pursuant to options and 8,342 shares under the ESSOP.
(13) Includes 834,193 shares not outstanding which the individuals as a
group have the right to acquire pursuant to options and 36,453 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 2003 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
Steven B. Gerber, M.D. Director since May 1, 1990
Age: 46
Dr. Gerber has been a Managing Director for CIBC World Markets 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: 51
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 from Iowa State University and an M.B.A.
from Harvard Business School.
Dr. Gail R. Wilensky Director since July 12, 1993
Age: 56
Dr. Wilensky's professional career spans more than 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: 49
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: 52
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 Corporate Vice President and 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.
Terms Expiring In 2002
Monty Fu Director since May 17, 1985
Age: 53
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: 72
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: 50
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
Leadership Fellow.
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 Monty
Fu.
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 52 August 1993 Director, President and
Chief Executive Officer
Monty Fu 53 May 1985 Director, Chairman of the
Board
Haig S. Bagerdjian 43 January 1995 Executive Vice President and
Secretary; President and
Chief Executive Officer,
Syncor Overseas Ltd.
David L. Ward 44 March 1999 Executive Vice President;
President and Chief
Executive Officer,
Comprehensive Medical
Imaging, Inc.
Michael E. Mikity 52 November 1985 Senior Vice President, Chief
Financial Officer and
Treasurer
John S. Baumann 39 October 1998 Senior Vice President,
General Counsel and
Assistant Secretary
Michael L. Lach 57 December 1999 Senior Vice President and
Chief Information Officer
Jack L. Coffey 48 April 1989 Corporate Vice President,
Quality and Regulatory
Sheila H. Coop 59 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 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. He also served as Chief Legal Officer
from June 1998 until June 1999. 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 Senior Vice President, General Counsel and
Assistant Secretary for Syncor since June 1999. He joined Syncor in October
1998 as Corporate Vice President and General Counsel. 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 L. Lach has served as Senior Vice President and Chief Information
Officer for Syncor since December 1999. Prior to joining Syncor, Mr. Lach
was with Allergan, Inc., where he served as Chief Information Officer from
1985 to October 1998, and as Senior Vice President from 1990 to October 1998.
Mr. Lach received his B.A. in Mathematics from St. Mary's College in
Minnesota in 1964, and a Masters in Management Science from the United States
International University in San Diego in 1970.
Michael E. Mikity is Senior Vice President, Treasurer and Chief Financial
Officer for Syncor. He has been Chief Financial Officer and Treasurer for
Syncor since 1983, except for the period between June 1993 until August 1994
when he served as Chief Information Officer. He was also Vice President from
June 1993 until June 1996, when he was promoted to Senior Vice President.
Mr. Mikity is a certified public accountant and received his Bachelor of
Science degree in Accounting from the University of Southern California in
1973.
David L. Ward. has served as Executive Vice President for Syncor, and as
President and Chief Executive Officer for Comprehensive Medical Imaging,
Inc., since March 1999. Prior to joining Syncor, Mr. Ward was with 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 and Governance 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>
Audit Compensation Nominating and Quality Officer Director
Committee Committee Governance Committee Committee Committee
<S> <C> <C> <C> <C>
Steven Gerber* George Oki Monty Fu Robert Funari Monty Fu*
Arnold Spangler Arnold Spangler* Robert Funari Steven Gerber Robert Funari
Gail Wilensky Ronald Williams George Oki* Henry Wagner
Ronald Williams Gail Wilensky*
</TABLE>
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 2 meetings in 1999.
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 3 meetings in 1999.
Nominating and Governance Committee. This committee, which was formerly
called the Nominating Committee, was renamed the Nominating and Governance
Committee in February 2000. The functions of the Nominating and Governance
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,
(iii) making recommendations to the Board of Directors for nominees for
Director positions, (iv) reviewing the governance structure of the Board,
and (v) advising and making recommendations to the Board on matters
concerning directorship practices. The 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 and Governance Committee,
on or before the date for receipt of stockholder proposals for the next
annual meeting. The committee held 1 meeting in 1999.
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 2 meetings in 1999.
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. The committee held 1 meeting in 1999.
Board of Directors. The Board of Directors held 11 meetings in 1999, 7 of
which were telephonic. Each of the Directors 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. In 1999, the Company changed the way in which it
compensates non-employee directors to make it more consistent with the
philosophy of tying a greater portion of compensation to the performance of
the Company's stock, and thereby aligning more closely the interests of
directors and stockholders. In line with this philosophy, each non-employee
director received an option to purchase 5,000 shares in 1999 under the 1999
Non-Employee Director Stock Incentive Plan or, in the case of Mr. Williams,
under the 1990 Master Stock Incentive Plan. If the stockholders approve the
2000 Master Stock Incentive Plan, as described in Proposal Number Three, each
non-employee director will be eligible to receive a stock option grant upon
appointment or reelection with an average annual Black-Scholes value (a
widely accepted method of determining the fair market value of options)
not to exceed 80% of the annual compensation opportunity for the director for
each year of his or her pending term of service. For example, for 2000, the
Board approved a stock option grant for each non-employee director with a
Black-Scholes value of $70,000, or 74% of the annual compensation
opportunity. If at the time of grant the Black-Scholes value per option
share is $17.90 (which was the Black-Scholes value on March 31, 2000), the
non-employee director will receive on the date of appointment or re-election
for a 3-year term an option to purchase 11,732 Syncor shares (3 x
$70,000/$17.90 = 11,732 shares). Current non-employee directors who are not
up for re-election in 2000 will receive a stock option grant with a Black-
Scholes value equal to the product of $70,000 multiplied by the number of
years remaining in their term.
Each non-employee director also receives an annual retainer of $15,000 (a
reduction from $20,000 during previous years), plus a fee of $1,000 per day
for regular Board meetings (including one travel day per meeting if traveling
outside of their home states) and $500 per telephonic meeting. The Chairman
of the Compensation Committee receives an additional annual fee of $2,500.
Non-employee directors are also eligible to participate in the Company's
Executive Deferral Plan, pursuant to which the Company contributes on behalf
of the non-employee director an amount equal to 25% of the deferred
compensation. Employee directors receive no additional compensation for
service on the Board or its committees.
1990 Master Stock Incentive Plan (the "1990 MSIP"). The 1990 MSIP 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 1990 MSIP
expires on September 15, 2000, and thereafter no award may be granted under
the plan. 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
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.
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 (the "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 Deferral Plan. All executive officers, Directors and members of
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 23 investment accounts. The investment performance of each
account selected will determine the returns credited to the individual
participant's deferral account value.
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.
Split Dollar Arrangement with Monty Fu. On January 8, 1999, the Company
entered into a split dollar arrangement with Monty Fu and a trust for the
benefit of his children, by which Mr. Fu relinquished all his then-current
and future interests in the Executive Deferral Plan in exchange for the
Company's agreement to pay the premiums on a life insurance policy insuring
Mr. Fu and his wife and owned by the trust. The after-tax net present
value of the premiums under the split dollar plan was calculated to be
identical to the then-net present value of what Mr. Fu would have received
under the Deferred Compensation Plan. Under the split dollar agreement, the
Company will pay the annual premium of $412,000 for seven years, but will be
repaid the full amount of the cumulative premiums in the sixteenth year of
the plan, or earlier upon the death of Mr. Fu and his wife. The
beneficiaries of the trust would be entitled to any proceeds from the policy
in excess of the amount repaid to Syncor. The Company also pays the annual
cost of Mr. Fu's term life insurance policy.
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 1999 was $1.45, which was achieved. The EPS objective for 2000 is $1.95.
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. The third stock price target ($34) was achieved in
1999. The next three targets are $43 (by June 30, 2002), $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 under the 1990 Master
Stock Incentive Plan, or, in the case of new officers, under the New Employee
Stock Option Plan.
1997 Management Incentive Plan (the "1997 MIP"). The 1997 MIP, which was
implemented in 1997, was designed to provide short-term and long-term bonus
opportunities for officers during the three-year cycle from 1997 to 1999.
The short-term component was earned and paid out in 1998. The long-term
component was determined during the course of the three-year cycle based on
the Company's attainment of its EPS targets for each of those years and was
paid out in February 2000. No more bonuses will be paid out under the 1997
MIP in the future.
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.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee reviews management's suggestions on executive base
salary compensation and annual incentive compensation, evaluates the
executive officers' performance, and makes recommendations to the Board of
Directors.
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.
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.
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 1999 and 2000
were targeted for the median of salaries of corresponding positions at the
benchmark companies.
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 1999 was $1.45, which was
achieved by the Company. For 2000, the EPS target is $1.95. 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 1999, the second year of the
Performance Equity Plan, the Company achieved its third stock price target
($34). The next targets are $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.
In January 2000, the Performance Equity Plan was expanded to include 18 other
members of Syncor's management who have direct responsibilities for
implementing the goals and strategies set forth by the directors and
executive officers. As a result, a significant portion of these employees'
compensation is now also tied to the achievement of the $43, $53 and $65
stock price targets. This arrangement not only synchronizes the long-term
incentives for all levels of management, but also underscores for each
participant the rewards associated with creating stockholder wealth, as well
as the pitfalls of falling short of the stock price targets.
The 1997 Management Incentive Plan (the "1997 MIP"), which constituted the
long-term component of the officers' compensation prior to the Performance
Equity Plan, 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. In 1999, the Board made a decision to void
the Company's liabilities for the long-term incentive payouts accrued in 1997
and 1998 under the 1997 MIP, but gave the executive officers an opportunity
to re-earn those payouts if the Company achieved its EPS targets for 1999.
The Company, in fact, had an EPS of $1.51 for 1999, well in excess of its
target of $1.45. As a result, in February 2000, the executive officers
received their long-term incentive awards under the 1997 MIP, which included
the long-term payouts accrued for 1997 and 1998, as well as for 1999.
Universal Performance Equity Participation Plan (the "Universal Plan")
Over 1,300 employees below the executive officer level have been awarded
stock option grants under the Universal Plan. This program is a crucial
element of the Company's drive to motivate all of Syncor's employees to
sustain and enhance Syncor's long-term performance, and to reinforce in each
employee the same entrepreneurial spirit that Monty Fu brought to that
radiopharmacy he first opened in 1974.
1998 Senior Management Stock Purchase Plan (the "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 Stock Purchase Plan, which was
approved by the stockholders. All officers and directors subscribed to
purchase shares under the plan in 1998. The officers subsequently purchased
more shares in 1999. In addition, 15 other members of Syncor's management
team have purchased 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
1999 was an excellent year for Syncor, with record earnings in excess of $19
million, representing a 23% increase in EPS. These financial results came
from strong performances across the board from Syncor's radiopharmacy,
medical imaging and overseas businesses. The Committee believes that the
leadership of Mr. Funari and Mr. Fu was key to these accomplishments. 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 below in the section captioned "Employment,
Severance, Indemnity and Change of Control Arrangements." Their compensation
is detailed in the tables that follow this report.
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee are Arnold E. Spangler, George S.
Oki and Ronald A. Williams, all of whom are 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.
Mr. Oki is the brother-in-law of Mr. Fu, and abstains from any voting
involving compensation for Mr. Fu. None of the other members of the
Compensation Committee had a relationship requiring disclosure under any
paragraph of Item 404 of Regulation S-K.
Compensation Committee of
the Board of Directors,
Syncor International Corporation
Arnold E. Spangler, Chairman
George S. Oki
Ronald A. Williams
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 1999, 1998, and 1997.
<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 Salary Bonus sation Award(s) SARs Payouts sation
Principal Position Year (1)($) (2)($) (3)($) ($) (#) (4)($) (5)($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert G. Funari 1999 400,000 252,200 24,675 -- 53,974 981,939 1,301,366
President and Chief 1998 307,499 258,575 -- -- 89,348 1,210,627 71,283
Executive Officer 1997 240,000 144,643 -- -- 40,000 167,781 9,766
Monty Fu 1999 300,000 171,000 23,970 -- 19,014 678,801 13,431
Chairman of the Board 1998 275,000 205,100 -- -- 66,152 936,630 67,413
1997 240,000 140,251 -- -- 40,000 151,200 11,342
Brad Nutter 1999 280,000 224,000 21,150 -- 15,210 492,154 951,638
Former Executive Vice 1998 230,002 285,516 -- -- 47,424 561,919 9,917
President and Chief 1997 95,000 72,255 -- -- 50,000 -- 448
Operating Officer
Haig S. Bagerdjian 1999 240,000 237,600 21,150 -- 13,038 462,073 477,596
Executive Vice 1998 213,869 354,476 -- -- 142,424 673,518 47,343
President and 1997 163,135 95,310 -- -- 25,000 75,600 5,861
Secretary
Michael E. Mikity 1999 210,000 104,790 7,050 -- 9,506 368,191 251,708
Senior Vice President, 1998 184,995 121,170 -- -- 31,788 483,767 17,401
Chief Financial 1997 160,000 91,744 -- -- 25,000 100,800 9,090
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 executive officers under the Executive
Deferral Plan and the ESSOP.
(2) Annual bonuses are paid under the Corporate Executive Management
Incentive Plan. Bonuses for 1999 were paid in February 2000. Bonuses
for 1998 also include over-achievement bonuses paid out as a result of
the Company's significantly exceeding its financial objectives for
1998. Mr. Bagerdjian's bonus for 1998 also includes a bonus paid in
Syncor stock with a value of $82,476. Mr. Nutter's bonus for 1997 also
includes a $15,000 starting bonus.
(3) Imputed income as a result of purchases of Syncor shares under the 1998
Senior Management Stock Purchase Plan at prices below fair market
value.
(4) The following long term incentive payouts for 1999 were awarded under
the Performance Equity Plan (the "PEP") as a result of the achievement
of the $34 stock price target in 1999 and under the 1997 MIP: Mr.
Funari, $811,214 under the PEP and $170,725 under the 1997 MIP; Mr. Fu,
$513,259 under the PEP and $165,542 under the 1997 MIP; Mr. Nutter,
$424,577 under the PEP and $67,577 under the 1997 MIP; Mr. Bagerdjian,
$349,577 under the PEP and $112,496 under the 1997 MIP; and Mr. Mikity,
$259,903 under the PEP and $108,288 under the 1997 MIP. Awards under
the PEP were made in cash and Syncor stock (valued as of the date the
targets were met). The following long term incentive payouts for 1998
were awarded under the PEP as a result of the achievement of the $20
and $25 stock price targets in 1998 and under the 1996 MIP: Mr.
Funari, $1,055,440 under the PEP and $155,187 under the 1996 MIP; Mr.
Fu, $781,443 under the PEP and $155,187 under the 1996 MIP; Mr. Nutter,
$561,919 under the PEP; Mr. Bagerdjian, $561,918 under the PEP and
$111,600 under the 1996 MIP; and Mr. Mikity, $375,479 under the PEP and
$108,288 under the 1996 MIP. Mr. Funari and Mr. Fu received an
additional $16,581 and $14,603, respectively, in 1998 under the 1995
Management Incentive Plan (the "1995 MIP") as a result of upward
adjustments to their MBOs. The long term incentive payouts for 1997
were made under the 1995 MIP.
(5) Under the ESSOP, named executive officers received Syncor shares as
matching contributions and, except for 1999, bonus contributions with
the following values based on the respective December 31 closing price:
Mr. Funari, $5,476 in 1999, $12,344 in 1998, and $9,594 in 1997; Mr. Fu,
$4,747 in 1999, $11,881 in 1998, and $8,046 in 1997; Mr. Bagerdjian,
$3,291 in 1999, $8,693 in 1998, and $4,999 in 1997; and Mr. Mikity,
$5,184 in 1999, $12,644 in 1998, and $7,934 in 1997. The following
officers also earned the following amounts from stock option exercises
in 1999: Mr. Funari, $1,221,098; Mr. Nutter, $940,467; Mr. Bagerdjian,
$433,750; and Mr. Mikity, $241,250. Under the Executive Deferral Plan,
the following matches were made to each officer's contributions: Mr.
Funari, $68,618 in 1999, and $53,198 in 1998; Mr. Fu, $49,788 in 1998;
Mr. Nutter, $7,000 in 1999 and $5,750 in 1998; and Mr. Bagerdjian,
$36,494 in 1999, and $35,450 in 1998. Under the executive deferral
plan in effect prior to 1998, upon a participant's retirement or
termination, Syncor would have "grossed-up" by 42.9% the surrender
value of the participant's deferral account. When Syncor changed to
the new Executive Deferral Plan, each participant's deferral account
was given credit for the value of the "gross-up" amount that Syncor
would have contributed under the former executive deferral plan had the
participant terminated his or her employment on January 21, 1998. The
Company also reimbursed Mr. Fu $2,510 to cover expenses to pay the
annual cost of the term life insurance policy described in the
paragraph on the Company's Split Dollar arrangement with Mr. Fu under
the section "Compensation of Directors and Executive Officers." The
balance of the amounts in column (i) represents premiums paid for term
life and disability insurance under the Executive Life Insurance Plan.
</FN>
<TABLE>
<CAPTION>
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
Estimated Future Payouts
Under Non-Stock Price-Based Plans
(a) (b) (c) (d) (e) (f) (g)
Number of Performance
Shares, or
Units or Other Period
Other Until
Name Plan Rights Maturation or Threshold Target Maximum
(#) (1) Payout ($) ($) ($)
<S> <C> <C> <C> <C> <C> <C>
Robert G. Funari Perf. Equity 21,756 6/23/99 to -- -- --
Plan 6/30/2004
Monty Fu Perf. Equity 13,006 6/23/99 to -- -- --
Plan 6/30/2004
Brad Nutter (2) Perf. Equity 11,337 6/23/99 to -- -- --
Plan 6/30/2004
Haig S. Bagerdjian Perf. Equity 8,568 6/23/99 to -- -- --
Plan 6/30/2004
Michael E. Mikity Perf. Equity 6,720 6/23/99 to -- -- --
Plan 6/30/2004
</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 awarded in 1999
that are convertible into Syncor stock or cash as stock price targets
are met. The stock price targets for most of these performance rights
are $53 and $65. A small portion of the performance rights vest with
the achievement of the $43 stock price target. The performance rights
may or may not vest, or may only partially vest, depending on whether
the Company will achieve the $43 stock price target by June 30, 2002,
the $53 stock price target by June 30, 2003 or the $65 stock price
target by June 30, 2004. The terms of the Performance Equity Plan are
described in more detail in the section captioned "Compensation of
Directors and Executive Officers."
(2) Mr. Nutter's performance rights terminated upon the termination of his
employment on February 11, 2000.
</FN>
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 1999, 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 $29.125 on December 31,
1999, as traded in NASDAQ.
<TABLE>
<CAPTION>
Number of Value of
Securities Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End at FY-End(1)
(#)(1) ($)(1)
__________ __________
Shares Value Exercisable/
Acquired on Realized Exercisable/ Unexercisable
Name Exercise(#) ($) Unexercisable (1)
<S> <C> <C> <C> <C>
Robert G. Funari 50,000 1,221,098 235,011 / 83,811 3,776,768 / 916,944
Monty Fu -- -- 118,514 / 68,052 1,984,795 / 841,557
Brad Nutter 60,568 940,467 0 / 52,066 0 / 629,128
Haig S. Bagerdjian 18,000 433,750 117,802 / 119,894 1,790,492 / 1,420,222
Michael E. Mikity 10,000 241,250 76,091 / 36,203 1,268,596 / 439,249
</TABLE>
[FN]
(1) Mr. Nutter's options were terminated upon the termination of his
employment on February 11, 2000.
</FN>
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term
(a) (b) (c) (d) (e) (f) (g)
Number of % of Total
Securities Options
Underlying Granted to Exercise or
Options Employees in Base Price Expiration
Name Granted (1) Fiscal Year ($/sh) Date 5% ($)(2) 10% ($)(2)
<S> <C> <C> <C> <C> <C> <C>
Robert G. Funari 25,000 2.71 27.625 2/24/09 434,330 1,100,678
28,974 3.14 32.625 6/23/09 594,479 1,506,528
Monty Fu 19,014 2.06 32.625 6/23/09 390,123 988,649
Brad Nutter (3) 15,210 1.65 32.625 6/23/09 312,074 790,857
Haig S. Bagerdjian 13,038 1.41 32.625 6/23/09 267,510 677,922
Michael E. Mikity 9,506 1.03 32.625 6/23/09 195,041 494,273
</TABLE>
[FN]
(1) The options expiring on June 23, 2009 were granted on June 23, 1999
under the Performance Equity Plan and vest according to the
attainment of stock price targets ($53 and $65). If a stock price
target is not met ($53 by June 30, 2003 or $65 by June 30, 2004), the
stock options allocated for those stock price targets will vest on
June 30, 2008. As for the 25,000 option shares granted to Mr. Funari
that expire on February 24, 2009, 100% of the option shares vested on
the date of the grant.
(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.
(3) Mr. Nutter's options terminated upon the termination of his
employment on February 11, 2000.
</FN>
EMPLOYMENT, SEVERANCE, INDEMNITY AND CHANGE OF CONTROL ARRANGEMENTS
Robert Funari's Employment Agreement. Mr. Funari recently entered into a new
employment agreement with the Company, effective as of January 1, 2000. The
agreement expires on December 31, 2001, and may be extended thereafter for
another two years unless the Company or Mr. Funari decides not to extend the
agreement. The agreement entitles Mr. Funari to a salary of $400,000 per
year, and a stock option grant for 15,415 shares in 2000. He also receives
various fringe benefits, including participation in the Company's Management
Incentive Plans, the Performance Equity Plan, and any other incentive plan
approved by the Board and applicable generally to the Company's executive
officers. In the event of a termination without cause, Mr. Funari would
receive the unpaid portion of his salary for the period of time remaining in
his employment agreement, plus prorated incentive plan payments. He would
also have the right to exercise all vested stock options, and would be
entitled to receive any award that vests under the Performance Equity Plan
within 30 days after termination of employment. Upon a change of control as
defined in the employment agreement, the vesting of all stock option grants
and the benefits under all incentive plans shall be accelerated. Upon a
termination without cause following a change of control, the employment
period is extended to include the two year period following the termination.
If the change of control results in the voluntary or involuntary termination
of his employment, Mr. Funari would be entitled to receive all amounts due
under any incentive plan applicable to him through the expiration of his
employment period.
Monty Fu's Employment Agreement. Mr. Fu's employment agreement was effective
as of January 1, 2000. The agreement expires on December 31, 2001, and may
be extended thereafter for another two year period unless the Company or Mr.
Fu decides not to extend the agreement. The agreement entitles Mr. Fu to a
salary of $300,000 per year. Mr. Fu's agreement also contains the same
provisions found in Mr. Funari's agreement regarding benefits, change of
control, and termination of employment.
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. The Performance
Equity Plan, described above under "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. The
split dollar arrangement with Monty Fu's family trust described above under
"Compensation of Directors and Officers" also contains a provision that
allows the trust to accelerate the Company's payment obligations or to
terminate the requirement to repay the Company for premiums paid 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.
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 1999, and the principal amount of their
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. 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. The Company also loaned $135,000 to Mr. Ward in
April 2000, which loan is payable on May 31, 2001. All loans bear interest
at the federal rate imputed by the Internal Revenue Service.
RELATIONSHIP WITH INDEPENDENT AUDITORS
KPMG LLP was appointed by the Board of Directors as Syncor's independent
auditors for 2000, subject to stockholder ratification as set forth below.
KPMG LLP served as Syncor's independent auditors for 1999. 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
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. Oki was late by 7 days in
filing his Form 4 for March 1999 to report a sale.
SYNCOR STOCK PRICE PERFORMANCE
The following chart compares the value of $100 invested in Syncor Common
Stock from December 31, 1994, through December 31, 1999, 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
21 health care companies in the S&P SmallCap 600, including Syncor
(4.2%), that primarily provide medical products and supplies. The table
below shows the value of each such investment on December 31, 1994, 1995,
1996, 1997 , 1998 and 1999 assuming reinvestment of dividend.
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN GRAPH
Dec-94 Dec-95 Dec-96 Dec-97 Dec-98 Dec-99
<S> <C> <C> <C> <C> <C> <C>
Syncor International $100 $ 96 $191 $230 $389 $416
Corporation
NASDAQ Stock Market $100 $141 $174 $213 $300 $542
(U.S.)
S&P SmallCap Health Care $100 $148 $151 $176 $188 $233
(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 2000,
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 2000. Proxies solicited by the Board of Directors will be so
voted unless stockholders specify otherwise in their proxies.
PROPOSAL THREE
APPROVAL OF 2000 MASTER STOCK INCENTIVE PLAN
At the Annual Meeting, stockholders will be asked to approve the 2000 Master
Stock Incentive Plan (the "Plan"). The Plan will replace the 1990 Master
Stock Incentive Plan which, by its terms, expires on September 15, 2000. The
Board of Directors believes that stock options and other stock-based
incentives play an important role in retaining the services of outstanding
personnel and in encouraging such employees to have a greater financial stake
in the Company.
The Plan is attached as Exhibit A. The major provisions of the Plan,
including a description of the types of awards that may be granted
thereunder, are summarized below.
Administration. The Plan is administered by the Compensation Committee of
the Board or any other Committee of Directors appointed by the Board for
purposes of serving as the committee under the Plan ("Administrator"). The
Administrator has considerable discretion under the Plan.
Grants of Awards to Employees. The Administrator in its capacity as grantor
of awards, may grant awards to any officer or employee of Syncor and its
subsidiaries. Potentially all full-time Syncor employees, including officers
who are also Directors, are considered eligible at the present time for
discretionary awards under the plan if the Administrator determines that they
are able to make key contributions to the success of Syncor. The
Administrator also determines which employees will actually receive awards.
There is currently no separate individual maximum number of awards and the
specific amounts or benefits to be received pursuant to these amendments are
not determinable. Under the proposed amendments, the maximum number of
shares subject to options that may be granted to an employee during any given
fiscal year will be 200,000 shares.
Typically, the only consideration received by Syncor for the grant of an
award will be past and/or the expectation of future services. The number and
type of awards under the Plan to be received by any eligible person cannot be
determined at this time because no determination has been made as to any
specific award.
Grant of Options to Non-Employee Directors. Each non-employee director would
be eligible to receive a stock option grant upon appointment or reelection
with an average annual Black-Scholes value (a widely accepted method of
determining the fair market value of options) not to exceed 80% of the
annual compensation opportunity for the director for each year of his or her
pending term of service. For example, for 2000, the Board approved a stock
option grant for each non-employee director with a Black-Scholes value of
$70,000, or 74% of the annual compensation opportunity. If at the time of
grant the Black-Scholes value per option share is $17.90 (which was the
Black-Scholes value on March 31, 2000), the non-employee director will
receive on the date of appointment or re-election for a 3-year term an option
to purchase 11,732 Syncor shares (3 x $70,000/$17.90 = 11,732 shares).
Current non-employee directors who are not up for re-election in 2000 will
receive a stock option grant with a Black-Scholes value equal to the product
of $70,000 multiplied by the number of years remaining in their term.
Shares That May Be Issued Under The Plan. The number of shares that may be
issued or transferred to grantees under the Plan cannot exceed 2 million
shares. Reload options may, however, be granted without regard to the 2
million limit. The number and kind of shares available under the Plan as
well as under outstanding awards are subject to adjustment in the event of a
reorganization or merger in which Syncor is the surviving entity, or a
combination, recapitalization, stock split, stock dividend or other similar
event which changes the number or kind of shares outstanding. Shares
relating to options (other than reload options) or SARs which are not
exercised and lapse or are terminated, shares relating to restricted stock
awards which do not vest, and shares relating to performance share awards
which are not issued will again be available for purposes of the Plan.
Awards Under The Plan
Options. An option is the right to purchase shares of Syncor Common
Stock at a future date at the exercise price (which may be less than fair
market value) fixed by the Administrator on the date the option is granted.
The purchase price may be paid in cash, with shares of Syncor Common Stock or
with such other lawful consideration as the Administrator may approve. The
Administrator will designate each option as a "non-qualified" or an
"incentive stock option." For a summary of the differences in the tax
treatment of the two types of options, please refer to "Federal Income Tax
Consequences" below. Incentive stock options may be subsequently amended in
a manner that disqualifies them from such treatment.
Subject to early termination or acceleration provisions (which are summarized
below), an option is exercisable from the date specified in the related award
agreement until the expiration date determined by the Administrator. In no
event, however, is an option exercisable prior to six months or after ten
years and one day, from its date of grant. The Administrator may in its
discretion permit a holder of a non-qualified option to defer the receipt of
any shares upon the exercise of such option.
Stock Appreciation Rights. A stock appreciation right ("SAR") is a
right to receive payment based on the appreciation in the fair market value
of Syncor Common Stock from the date of grant to the date of exercise. In
its discretion, the Administrator may grant an SAR concurrently with the
grant of an option or independent of the grant of an option. An SAR granted
concurrently with the grant of an option may extend to all or a portion of
the shares covered by such option. An SAR granted concurrently with an
option is only exercisable at such time, and to the extent, that the related
option is exercisable. The number of shares with respect to which SARs are
exercised will be charged against the aggregate amount of Syncor Common Stock
available under the Plan.
Restricted Stock Awards. A Restricted Stock Award is an award of a
fixed number of shares of Syncor Common Stock subject to restrictions. The
Administrator specifies the price, if any, the recipient must pay for such
shares and the restrictions imposed on such shares. The recipient typically
is entitled to dividends and voting rights pertaining to such shares even
though they have not vested, so long as such shares have not been forfeited.
Performance Share Awards. A performance share award is an award of a
fixed number of shares of Syncor Common Stock, the issuance of which is
contingent upon the attainment of such performance objectives, and the
payment of such consideration, if any, as specified by the Administrator.
Reload Options. A reload option, if granted at the discretion of the
Committee, gives the optionee the right to purchase a number of shares of
Common Stock equal to the number of shares surrendered to pay the exercise
price or used to pay the withholding taxes applicable to an option exercise.
Reload options do not increase the net equity position of a participant.
Their purpose is to facilitate continued stock ownership in the Company by
the participant. Reload options may be any type of option permitted under
the Internal Revenue Code and will be granted subject to such terms,
conditions, restrictions and limitations as may be determined by the
Committee from time to time. Reload options may be granted only as non-
qualified options and may be granted without regard to the limit on the
maximum number of shares which may be issued under the Plan. Reload options
may not be granted in connection with incentive stock options which have
already been granted.
Stock Depreciation Rights. A stock depreciation right, if awarded,
entitles an officer or director to a payment by Syncor in the event that the
fair market value of shares issued upon exercise of an option declines during
the six month period after exercise while those shares are still held by the
officer or director, to the extent that such shares if sold would be subject
to matching liability under Section 16 of the Securities Exchange Act by
virtue of a prior purchase.
Tax-Offset Bonuses. A tax-offset bonus, if awarded, is a cash payment
which the Company makes upon the exercise of an option equal to a percentage
of the difference between the fair market value of the shares upon exercise
and the exercise price. The purpose of the bonus is to partially offset the
income taxes owed as a result of the exercise.
Continuation of Employment. Except under certain circumstances more
specifically described in the Plan, no option or SAR will be exercisable, no
shares subject to a restricted stock award will vest and no performance share
award will be paid unless the recipient remains in the continuous employment
of Syncor or its subsidiaries for at least six months following the
applicable date of grant.
Termination of Employment. Upon a termination of employment, shares subject
to the recipient's restricted stock awards which have not become vested by
that date or shares subject to the recipient's performance share awards which
have not been issued usually will be forfeited in accordance with the terms
of the related award agreements. In addition, on such date, the recipient's
options which have not yet become exercisable usually will terminate, while
options which have become exercisable usually must be exercised within three
months from such date or one year from such date if the termination of
employment is a result of death, total disability or, in the case of
incentive stock options, retirement. Such periods, however, cannot exceed
the expiration dates of the options and are subject to extension,
acceleration of ability to exercise or amendment in the discretion of the
Administrator. SARs have the same termination provisions as the options to
which they relate.
Other Acceleration of Awards; Change in Control. Upon the occurrence of a
merger, liquidation, sale of all the assets, or change in control, which
constitutes an "Event" (as defined in the Plan), each option and each SAR
will immediately become exercisable, each share covered by a restricted stock
award will immediately vest, and each share covered by a performance share
award will be issued to the recipient. Such acceleration will automatically
occur unless the Administrator, prior to the Event, determines otherwise.
Termination or Changes to the Plan. The Board may, at any time, amend,
modify, suspend or terminate the Plan, but any amendment must be approved by
the stockholders if required by law. Unless previously terminated by the
Board, the Plan will terminate on June 20, 2010, and no awards will be
granted under it thereafter, but such termination will not affect any award
previously granted.
Tax Consequences of the Plan. The federal income tax consequences of the
Plan under current federal law, which is subject to change, are summarized in
the following discussion which deals with the general tax principles
applicable to the Plan. State and local tax consequences are beyond the
scope of this summary.
Non-Qualified Stock Options. No taxable income will be realized by an
optionee upon the grant of a non-qualified stock option. Upon exercise of a
non-qualified stock option, the optionee will realize ordinary income in an
amount measured by the excess of the fair market value of the shares on the
date of exercise over the option price, and Syncor will be entitled to a
corresponding deduction. Upon a subsequent disposition of the shares, the
participant will realize short-term or long-term capital gain or loss
measured by the difference between the fair market value of the shares on the
date of exercise and the amount realized upon disposition of the shares.
Syncor will not be entitled to any further deduction at that time.
If an optionee elects to defer the receipt of shares upon exercise of a non-
qualified option, the optionee will not be treated as having received taxable
income in respect of such shares until the end of the deferral period. The
amount of taxable income will equal the value of the shares at the end of
such period over the exercise price, and the optionee's holding period will
commence at the end of such period. Syncor will be entitled to a deduction
at such time and in such amount as the optionee recognizes taxable income.
Incentive Stock Options. An optionee who receives an incentive stock
option will not be treated as receiving taxable income upon the grant of the
option or upon the exercise of the option. However, any appreciation in
share value from the date of grant to the date of exercise will be an item of
tax preference in determining liability for the alternative minimum tax. If
stock acquired pursuant to an incentive stock option is not sold or otherwise
disposed of within two years from the date of grant of the option or within
one year after the date of exercise, any gain or loss resulting from
disposition of the stock will be treated as long-term capital gain or loss.
If stock acquired upon exercise of an incentive stock option is disposed of
prior to the expiration of such holding periods (a "disqualifying
disposition"), the optionee will realize ordinary income in the year of such
disposition in an amount equal to the excess of the fair market value of the
stock on the date of exercise over the exercise price. Any gain in excess of
that ordinary income amount generally will be capital gain. However, under
a special rule, the ordinary income realized upon a disqualifying disposition
will not exceed the amount of the optionee's gain.
Syncor will not be entitled to any deduction as a result of the grant or
exercise of an incentive stock option, or on a later disposition of the stock
received, except that in the event of a disqualifying disposition Syncor will
be entitled to a deduction equal to the amount of ordinary income realized by
the optionee.
Stock Depreciation Rights and Tax-Offset Bonuses. Payments made
pursuant to stock depreciation rights and tax-offset bonuses will constitute
ordinary income to an employee when received by the employee. The Company
generally will be entitled to a deduction equal to the amount of the payment
included in the employee's income.
Stock Appreciation Rights. At the time of receiving an SAR, the
participant will not recognize any taxable income. Likewise, Syncor will not
be entitled to a deduction for the SAR. Upon the exercise of an SAR, the
participant will generally recognize ordinary income in an amount equal to
the cash and/or fair market value of the shares received. If a participant
receives stock, then the amount recognized as ordinary income becomes the
participant's tax basis for determining gains or losses (taxable either as
short-term or long-term capital gain or loss, depending on whether or not the
shares are held for more than one year) on the subsequent sale of such stock.
The holding period for such shares commences as of the date ordinary income
is recognized. Syncor will be entitled to a deduction in the amount and at a
time that the participant first recognizes ordinary income.
Restricted Stock. The recipient of restricted stock will recognize
ordinary income equal to the excess of the fair market value of the
restricted stock at the time the restrictions lapse over the amount which the
recipient paid for the restricted stock. However, the recipient may elect,
within 30 days after the date of receipt, to report the fair market value of
the stock (less the amount paid therefor by the recipient) as ordinary income
at the time of receipt. Syncor may deduct an amount equal to the income
recognized by the recipient at the time the recipient recognizes the income.
The tax treatment of restricted stock which is disposed of will depend upon
whether the recipient made an election to include the net value of the stock
in income when awarded. If the recipient made such an election, any
disposition after the restrictions lapse will result in a long-term or short-
term capital gain or loss depending upon the period the restricted stock is
held. If, however, such election is made and for any reason the restrictions
imposed on the restricted stock fail to lapse, and a forfeiture results, the
individual will not be entitled to a deduction as to any such forfeiture,
even though the election will have resulted in an acceleration of taxable
income. A capital loss will be available to the extent of any amount paid
for the restricted stock. If an election is not made, disposition after the
lapse of restrictions will result in short-term or long-term capital gain or
loss equal to the difference between the amount received on disposition and
the greater of the amount paid for the stock by the recipient or its fair
market value at the date the restrictions lapsed.
Performance Awards. A participant who has been granted a performance
award will not realize taxable income at the time of the grant, and Syncor
will not be entitled to a deduction at that time. When an award is paid,
whether in cash or shares, the participant will have ordinary income, and
Syncor will have a corresponding deduction. The measure of such income and
deduction will be the amount of cash and the fair market value of the shares
at the time the award is paid.
Special Rules Governing Persons Subject to Section 16(b). Under the
federal tax law, special rules may apply to participants in the Plan who are
subject to the restrictions on resale of Syncor Common Stock under Section
16(b) of the Securities Exchange Act. These rules, which effectively take
into account the Section 16(b) restrictions, apply in limited circumstances
and may impact the timing and/or amount of income recognized by these persons
with respect to certain stock-based awards under the Plan.
Limitations on Deductibility. If, as a result of certain changes in
control in Syncor, a participant's options or SARs become immediately
exercisable, or if restrictions immediately lapse on restricted stock, or if
shares covered by a performance award are immediately issued, the additional
economic value, if any, attributable to the acceleration may be deemed a
"parachute payment." The additional value will be deemed a parachute payment
if such value, when combined with the value of other payments which are
deemed to result from the change in control, equals or exceeds a threshold
amount equal to 300 percent of the participant's average annual taxable
compensation over the five calendar years preceding the year in which the
change in control occurs. In such case, the excess of the total parachute
payments over such participant's average annual taxable compensation will be
subject to a 20 percent non-deductible excise tax in addition to any income
tax payable. Syncor will not be entitled to a deduction for that portion of
any parachute payment which is subject to the excise tax. A "change in
control" for those purposes is defined in Section 2.1(h) of the Plan.
The amount which may be deducted by Syncor with respect to compensation paid
to the Chief Executive Officer and four other most highly compensated
Executives is limited to $1 million per tax year for each individual.
Certain awards under the Plan may be exempt from the $1 million limit because
of a "performance-based" exception.
Stock Payments. A participant who receives a stock payment in lieu of a
cash payment that would otherwise have been made will be taxed as if the cash
payment has been received and Syncor will have a deduction in the same amount.
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 2000 Master Stock Incentive Plan. 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
1999 including consolidated financial statements for that period, is enclosed
with this Proxy Statement.
FINANCIAL STATEMENTS AND INFORMATION
Syncor's consolidated financial statements for 1999 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 19, 2001, must be received by the Company no later than
February 23, 2001 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 12, 2000 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, 1999 FILED WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION, TO ANY STOCKHOLDER OF RECORD AT THE CLOSE OF BUSINESS ON APRIL
24, 2000. 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.
EXHIBIT A
SYNCOR INTERNATIONAL CORPORATION
2000 MASTER STOCK INCENTIVE PLAN
I. THE PURPOSE.
The purpose of this Plan is to promote the success of the Company by
providing an additional means to attract, motivate and retain employees and
directors through the grant of Options and other Awards that provide added
long term incentives for high levels of performance and for significant
efforts to improve the financial performance of the Company.
II. DEFINITIONS.
2.1 Definitions.
(a) "Administrator" shall mean the Compensation Committee
or any other Committee of directors appointed by the Board for purposes of
serving as the Committee under this Plan.
(b) "Award" shall mean a Nonqualified Stock Option, an
Incentive Stock Option, a Performance Stock Option, a Reload Option, a Stock
Appreciation Right, a Restricted Stock Award, a Performance Share Award, or
any other stock award granted under this Plan.
(c) "Award Agreement" shall mean a written agreement
setting forth the terms of an Award.
(d) "Award Date" shall mean the date upon which the
Administrator took the action granting an Award or such later date as is
prescribed by the Administrator.
(e) "Award Period" shall mean the period beginning on an
Award Date and ending on the expiration date of such Award.
(f) "Beneficiary" shall mean the person, persons, trust or
trusts entitled by will or the laws of descent and distribution to receive
the benefits specified under this Plan in the event of a Participant's death,
and shall mean the Award holder's executor or administrator in such
circumstances if no other Beneficiary is identified and able to act.
(g) "Board" shall mean the Board of Directors of the
Corporation.
(h) "Change in Control" shall be deemed to have occurred
if (A) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Corporation representing 20% or more of the combined voting power of the
Corporation's then outstanding securities; or (B) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Administrator cease for any reason to constitute at least a majority
thereof, unless the election, or the nomination for election by the
Corporation's shareholders, of each new Administrator member was approved by
a vote of at least three-fourths of the Administrator members then still in
office who were Administrator members at the beginning of such period.
(i) "Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time.
(j) "Commission" shall mean the Securities and Exchange
Commission.
(k) "Committee" shall mean a committee of directors
satisfying the requirements for disinterested administration under Rule
l6b-3.
(l) "Common Stock" shall mean the Common Stock of the
Corporation.
(m) "Company" shall mean, collectively, Syncor
International Corporation and its Subsidiaries.
(n) "Corporation" shall mean Syncor International
Corporation and its successors.
(o) "Disinterested" shall mean disinterested within the
meaning of any applicable regulatory requirements, including those set forth
in Rule 16b-3 or otherwise promulgated under Section 16 of the Exchange Act.
(p) "Eligible Employee" shall mean an officer or employee
of the Company.
(q) "Event" shall mean any of the following:
(1) Approval by the shareholders of the
Corporation of the dissolution or liquidation of the Corporation;
(2) Approval by the shareholders of the
Corporation of an agreement to merge or consolidate, or otherwise
reorganize, with or into one or more entities which are not
Subsidiaries, as a result of which less than 50% of the outstanding
voting securities of the surviving or resulting entity are, or are to
be, owned by former shareholders of the Corporation;
(3) Approval by the shareholders of the
Corporation of the sale of substantially all of the Corporation's
business and/or assets to a person or entity which is not a Subsidiary;
or
(4) A Change in Control.
(r) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
(s) "Fair Market Value" shall mean (i) if the stock is
listed or admitted to trade on a national securities exchange, the closing
price of the stock on the Composite Tape, as published in the Western Edition
of The Wall Street Journal, of the principal national securities exchange on
which the stock is so listed or admitted to trade, on such date, or, if there
is no trading of the stock on such date, then the closing price of the stock
as quoted on such Composite Tape on the next preceding date on which there
was trading in such shares; (ii) if the stock is not listed or admitted to
trade on a national securities exchange, the last price for the stock on such
date, as furnished by the National Association of Securities Dealers, Inc.
("NASD") through the NASDAQ National Market Reporting System or a similar
organization if the NASD is no longer reporting such information; (iii) if
the stock is not listed or admitted to trade on a national securities
exchange and is not reported on the National Market Reporting System, the
mean between the bid and asked price for the stock on such date, as furnished
by the NASD; or (iv) if the stock is not listed or admitted to trade on a
national securities exchange, is not reported on the National Market
Reporting System and if bid and asked prices for the stock are not furnished
by the NASD or a similar organization, the values established by the
Administrator for purposes of the Plan.
(t) "Incentive Stock Option" shall mean an option which is
designated as an incentive stock option within the meaning of Section 422 of
the Code, the award of which contains such provisions as are necessary to
comply with that section.
(u) "Non-Employee Director" shall mean a director of the
Corporation who is not an officer or employee of the Company.
(v) "Nonqualified Stock Option" shall mean an option which
is designated as a Nonqualified Stock Option or an option that fails (or to
the extent that it fails) to satisfy the applicable requirements under the
Code for an Incentive Stock Option.
(w) "Option" shall mean an option to purchase Common Stock
under this Plan. An Option shall be designated by the Administrator as a
Nonqualified Stock Option, an Incentive Stock Option, or a Performance Stock
Option.
(x) "Optionee" shall mean the person to whom an Option is
granted.
(y) "Participant" shall mean an Eligible Employee who has
been awarded an Award.
(z) "Performance Share Award" shall mean an award of shares
of Common Stock, issuance of which is contingent upon attainment of
performance objectives specified by the Administrator.
(aa) "Performance Stock Option" shall mean an option granted
under Section 4.6 of this Plan, the exercise of which is contingent upon the
attainment of specified performance objectives.
(bb) "Personal Representative" shall mean the legal
representative or representatives who, upon the disability or incompetence of
a Participant, shall have acquired on behalf of the Participant by legal
proceeding or otherwise the power to exercise the rights and receive the
benefits specified in this Plan.
(cc) "Plan" shall mean this 2000 Master Stock Incentive
Plan.
(dd) "Reload Option" shall have the meaning set forth in
Section 4.8 of this Plan.
(ee) "Restricted Stock" shall mean those shares of Common
Stock issued pursuant to a Restricted Stock Award which are subject to the
restrictions set forth in the related Award Agreement.
(ff) "Restricted Stock Award" shall mean an award of a
fixed number of shares of Common Stock to the Participant subject, however,
to payment of such consideration, if any, and such forfeiture provisions, as
are set forth in the Award Agreement.
(gg) "Retirement" shall mean retirement at age 65.
(hh) "Rule l6b-3" means Rule l6b-3 under Section 16 of the
Exchange Act, as applicable to this Plan (taking into consideration relevant
transition period provisions) and as the same may be amended from time to
time.
(ii) "Section l6 Person" means a person subject to the
reporting requirements of Section 16(a) of the Exchange Act.
(jj) "Securities Act" shall mean the Securities Act of
1933.
(kk) "Stock Appreciation Right" shall mean a right to
receive a number of shares of Common Stock or an amount of cash, or a
combination of shares and cash, determined as provided in the applicable
Section of this Plan or in the Award Agreement with respect thereto.
(ll) "Stock Depreciation Right" shall mean a right to
receive a number of shares of Common Stock or an amount of cash, or a
combination of shares and cash, determined as provided in the applicable
Section of this Plan or in an Award Agreement providing for such right.
(mm) "Subsidiary" shall mean any corporation or other entity
a majority or more of whose outstanding voting stock or voting power is
beneficially owned directly or indirectly by the Corporation.
(nn) "Tax-Offset Bonus" shall mean a bonus payable upon
exercise of a nonstatutory Option or upon a disqualifying disposition of
Common Stock acquired pursuant to the exercise of an Incentive Stock Option,
determined as provided in the applicable Section of this Plan or in an Award
Agreement providing for such Bonus.
(oo) "Total Disability" shall mean a "permanent and total
disability" within the meaning of Section 22(e)(3) of the Code.
III. THE PLAN
3.1 Administration.
(a) This Plan shall be administered by the Administrator;
provided that the provisions of Section 4.9 with respect to Awards granted to
Non-Employee Directors shall be, to the maximum extent possible, self-
effectuating and shall not be subject to administrative discretion with
respect to the amount, price, or timing of the grant or realization of such
Awards. The Administrator may delegate ministerial, nondiscretionary
functions to individuals who are officers or employees of the Company.
(b) Subject to the express provisions of this Plan, the
Administrator shall have the authority to construe and interpret this Plan
and any agreements defining the rights and obligations of the Company and
Participants under this Plan; to identify among Eligible Employees those to
whom Awards will be granted and (consistent with express limits of this Plan)
the terms of such Awards; to further define the terms used in this Plan and
prescribe, amend and rescind rules and regulations relating to the
administration of this Plan; either generally or on a case by case base
(except with respect to awards granted pursuant to Section 4.9) to establish
terms and conditions pertaining to termination of employment, modify or amend
any outstanding Award or waive any condition or restriction of an Award, or
extend (up to a maximum term of ten (10) years after the initial Award Date)
the term or post-termination exercise period of any outstanding Award, or
reduce (subject to Sections 4.4, 5.2(d) and 8.5) the minimum vesting period
after initial grant to a Participant; to determine the duration and purposes
of leaves of absence which may be granted to Participants without
constituting a termination of their employment for purposes of this Plan; and
to make all other determinations necessary or advisable for the
administration of this Plan. The determinations of the Administrator on the
foregoing matters shall be conclusive.
(c) Any action taken by, or inaction of, the Corporation,
any Subsidiary, the Board or the Administrator relating to this Plan shall be
within the absolute discretion of that entity or body. No member of the
Administrator, or officer of the Corporation or any Subsidiary, shall be
liable for any such action or inaction.
3.2 Participation. Awards may be granted only to Eligible
Employees. An Eligible Employee who has been granted an Award may, if
otherwise eligible, be granted additional Awards if the Administrator shall
so determine. Members of the Administrator who are not officers or employees
of the Company shall not be eligible to receive Awards, except pursuant to
Section 4.9 of this Plan.
3.3 Stock Subject to the Plan. The maximum aggregated amount of
Common Stock that may be issued pursuant to Awards granted under this Plan
shall not exceed 2,000,000 shares, subject to adjustment as set forth in
Section 8.2. Reload Options, however, may be granted pursuant to Section 4.8
without regard to the limit in the preceding sentence.
3.4 Grant of Awards. Subject to the express provisions of the Plan,
the Administrator shall determine from the class of Eligible Employees those
individuals to whom Awards under the Plan shall be granted, the terms of
Awards (which need not be identical) and the number of shares of Common Stock
subject to each Award. Each Award shall be subject to the terms and
conditions set forth in the Plan and such other terms and conditions
established by the Administrator as are not inconsistent with the purpose and
provisions of the Plan.
3.5 Exercise of Awards. Notwithstanding any other provision of this
Plan, the Administrator may impose, by rule and in Award Agreements, such
conditions upon the exercise of Awards (including, without limitation,
conditions limiting the time of exercise to specified periods) as may be
required to satisfy applicable regulatory requirements, including without
limitation Rule l6b-3.
3.6 Share Reservation. No Award may be granted under this Plan
unless, on the date of grant, the sum of (i) the maximum number of shares
issuable at any time pursuant to such Award, plus (ii) the number of shares
that previously have been issued pursuant to Awards granted under this Plan,
other than reacquired shares available for reissue consistent with any
applicable limitations under Rule 16b-3, plus (iii) the maximum number of
shares that may be issued after such date of grant pursuant to Awards granted
under this Plan that remain outstanding on such date, does not exceed the
share limit in Section 3.3.
3.7 Provisions for Certain Cash Awards. The number of Awards under
this Plan that are payable solely in cash that would constitute derivative
securities ("Cash Only Awards") shall be determined by reference to the
number of shares referenced for purpose of determining the value or price of
the Cash Only Award (the "underlying shares"). The maximum number of Cash
Only Awards under this Plan shall not, together with the number of shares
previously issued and subject to then outstanding Awards payable (or deemed
payable) in shares under this Plan, exceed the share limit in Section 3.3.
To the extent that any Cash Only Awards expire or are terminated without the
cash payment being made, the underlying shares shall again be available under
this Plan.
3.8 Reissue of Awards and Shares. Other Awards payable in cash or
payable in cash or shares that are forfeited or for any reason are not so
paid under this Plan, as well as shares subject to Awards that expire or for
any reason are terminated and are not issued, shall again, to the extent
permitted under Rule l6b-3, be available for subsequent Awards under the
Plan. The foregoing shall not apply to any forfeited or unexercised Reload
Options.
3.9 Plan Not Exclusive. Nothing in this Plan shall limit or be
deemed to limit the authority of the Board or the Administrator to grant
awards or authorize any other compensation, with or without reference to the
Common Stock, under any other plan or authority.
IV. OPTIONS.
4.1 Grants. One or more Options may be granted to any Eligible
Employee. Each Option so granted shall be designated by the Administrator as
either a Nonqualified Stock Option, an Incentive Stock Option, or a
Performance Stock Option. The maximum number of shares underlying Options
that may be granted to any one Eligible Employee during any given fiscal year
of the Corporation shall be 200,000 shares.
4.2 Option Price.
(a) Subject to applicable law, the purchase price per share
of the Common Stock covered by each Option shall be determined by the
Administrator, but in the case of any Incentive Stock Option, unless
otherwise permitted under the Code, shall not be less than 100% (or 110% in
the case of a Participant who owns or under applicable Code provisions is
deemed to own more than 10% of the total combined voting power of all classes
of stock of the Company) of the Fair Market Value of the Common Stock on the
date the Incentive Stock Option is granted. The purchase price of any shares
purchased on exercise of any Option shall be paid in full at the time of each
purchase in one or a combination of the following methods:
(i) in cash, or by check payable to the order of
the Corporation,
(ii) if authorized by the Administrator or specified
in the Option being exercised, by a promissory note made by the
Participant in favor of the Corporation, upon the terms and
conditions determined by the Administrator, bearing interest at
a rate sufficient to avoid imputed interest under the Code, and
secured by the Common Stock issuable upon exercise in compliance
with applicable law (including, without limitation, state
corporate law and federal margin requirements), or
(iii) by shares of Common Stock of the Corporation
already owned by the Participant; provided, however, the
Administrator may in its absolute discretion limit the
Participant's ability to exercise an Option by delivering
shares, and any shares delivered which were initially acquired
upon exercise of a stock option must have been owned by the
Participant at least six months as of the date of delivery.
Shares of Common Stock used to satisfy the exercise price of an Option shall
be valued at their Fair Market Value on the date of exercise.
(b) In addition to the payment methods described in
subsection (a), the Option may provide that the Option can be exercised and
payment made by delivering a properly executed exercise notice together with
irrevocable instructions to a bank or broker to promptly deliver to the
Corporation the amount of sale or loan proceeds necessary to pay the exercise
price and, unless otherwise allowed by the Administrator, any applicable tax
withholding under Section 8.6. The Corporation shall not be obligated to
deliver certificates for the shares unless and until it receives full payment
of the exercise price therefor.
(c) An Option shall be deemed to be exercised when the
Secretary of the Corporation receives written notice of such exercise from
the Participant, together with payment of the purchase price made in
accordance with Section 4.2(a) and satisfaction of any applicable tax
withholding under Section 6.6, except to the extent payment may be permitted
to be made following delivery of written notice of exercise in accordance
with Section 4.2(b).
(d) At the discretion of the Committee, an Optionee may also
arrange to have the appropriate number of shares otherwise issuable upon
exercise withheld or sold to cover the withholding tax liability associated
with the Option exercise.
(e) Notwithstanding any other provision of the Plan, at the
sole discretion of the Committee, an Optionee may, at least six months before
exercising any Nonqualified Stock Option granted to him or her under the
Plan, elect to defer the receipt of any shares upon the exercise of such
Option by entering into a deferred compensation agreement approved by the
Committee.
4.3 Option Period. Each Option and all rights or obligations
thereunder shall expire on such date as shall be determined by the
Administrator, but not later than 10 years after the Award Date, and shall be
subject to earlier termination as hereinafter provided.
4.4 Exercise of Options. Except as otherwise provided in Section
8.4 or in the case of death or Total Disability, no Option shall be
exercisable for at least six months after the Award Date. The Administrator
may, at any time after grant of the Option and from time to time, increase
the number of shares purchasable on or after any particular date so long as
the total number of shares then subject to the Option is not increased. No
Option shall be exercisable except in respect of whole shares, and fractional
share interests shall be disregarded. Not less than 10 shares of Common
Stock may be purchased at one time unless the number purchased is the total
number at the time available for purchase under the terms of the Option.
4.5 Limitations on Grant of Incentive Stock Options.
(a) To the extent that the aggregate Fair Market Value of
stock with respect to which an Option intended as an Incentive Stock Option
first exercisable by a Participant in any calendar year exceeds any
applicable limits from time to time imposed under the Code, such options
shall be treated as Nonqualified Stock Options. To the extent any
discretionary action is necessary to meet any such limits, the Administrator
on behalf of the Corporation may, in the manner and to the extent permitted
by law, take such action.
(b) There shall be imposed in any Award Agreement relating
to Incentive Stock Options such terms and conditions as are required in order
that the Option be an "incentive stock option" as that term is defined in
Section 422 of the Code.
(c) Unless otherwise permitted under applicable provisions
of the Code, no Incentive Stock Option may be granted to any person who, at
the time the Incentive Stock Option is granted, owns or under applicable Code
provisions is deemed to own shares of outstanding Common Stock possessing
more than 10% of the total combined voting power of all classes of stock of
the Company, unless the exercise price of such Option is at least 110% of the
Fair Market Value of the stock subject to the Option and such Option by its
terms is not exercisable after the expiration of five years from the date
such Option is granted.
4.6 Performance Stock Options. The Administrator may grant
Performance Stock Options to Eligible Employees who are deemed by the
Administrator to be members of senior management whose performance has a
direct relationship to improvement of the earnings of the Company. Vesting
of such Options shall be contingent upon attainment of performance objectives
measured by compounded earnings growth and such other criteria as may be
established by the Administrator.
4.7 Stock Depreciation Rights; Tax Offset Bonuses.
(a) The Administrator may grant Stock Depreciation Rights to
a Participant who is subject to Section 16(b) of the Exchange Act. Such
Stock Depreciation Rights shall be evidenced in the Award Agreement or by
means of an amendment to the Award Agreement in the event an employee becomes
subject to Section 16(b) of the Exchange Act subsequent to the date of grant
of the Option. A Stock Depreciation Right shall entitle such officer or
director to a payment by the Company in the event that the Fair Market Value
of shares of Common Stock issued pursuant to the exercise of an Option
declines during the six month period after exercise while such Common Stock
is still held by a Participant to the extent that such shares if sold would
be subject to matching liability under Section 16 by virtue of a prior
purchase. Payment may be made in cash in an amount per covered share equal
to the lesser of (i) the difference between the Fair Market Value of a share
of Common Stock on the date of expiration of such six month period and the
Fair Market Value of a share of Common Stock on the date of exercise, (ii)
the difference between the Fair Market Value of a share of Common Stock on
the date of disposition of the covered share and the Fair Market Value of a
share of Common Stock on the date of exercise and (iii) the difference
between the Fair Market Value of a share of Common Stock on the date of
exercise and the exercise price. This amount per share shall become payable
subsequent to the disposition of the covered shares on or after the
expiration of the six month period subject to such conditions, limits and
rules as the Administrator may impose, including, without limitation,
conditions required to satisfy the applicable regulatory requirements under
Rule l6b-3.
(b) In its discretion the Administrator may, in the Award
Agreement, provide for a Tax-Offset Bonus to Participants upon exercise of
Nonqualified or Performance Stock Options or to any Participant who elects to
make a disqualifying disposition (as defined in Section 422(a)(l) of the
Code) of Common Stock acquired pursuant to the exercise of an Incentive Stock
Option. The Tax-Offset Bonus shall be in the form of a cash payment equal to
a percentage of the difference between the exercise price and the Fair Market
Value on the date of exercise of the Common Stock with respect to which the
Bonus is payable. Such percentage shall be designed to offset the impact of
additional taxes which result from the exercise of the Option or the
disqualifying disposition, as the case may be.
4.8 Reload Options. If an Optionee tenders shares of Common Stock to
pay the exercise price of an Option in accordance with Section 4.2(a)(iii) or
arranges to have a portion of the shares otherwise issuable upon exercise
withheld or sold to pay the applicable withholding taxes in accordance with
Section 4.2(d), the Optionee may receive, at the discretion of the Committee,
a new "Reload Option" equal to the number of shares tendered to pay the
exercise price and the number of shares used to pay withholding taxes.
Reload Options shall be issued only as Nonqualified Stock Options and will be
granted under such terms, conditions, restrictions and limitations as may be
determined by the Committee from time to time. Reload Options may also be
granted in connection with the exercise of options granted under any other
plan of the Company which may be designated by the Committee from time to
time, except as to Incentive Stock Options which have already been granted.
4.9 Option Grants to Non-Employee Directors.
(a) Direct grants of Non-Qualified Stock Options to Non-
Employee Directors of the Company shall be made as follows:
(i) Non-Employee Directors will be granted a stock
option upon appointment or reelection;
(ii) each stock option grant shall have a Black-
Scholes value (a widely accepted method of
determining the fair market value of an option)
not to exceed 80% of the annual compensation
opportunity for the Non-Employee Director
multiplied by the number of years, or pro rata
portion thereof, from the date of appointment or
reelection until the date the Non-Employee
Director is again up for reelection (the "Service
Period");
(iii) a fraction of the option shares shall vest on
each anniversary date of the appointment or
reelection, which fraction shall have a numerator
equal to one and a denominator equal to the
number of years during the Service Period;
(iv) if a Service Period contains a fractional year
(such as 1/2 year or 2-1/2 years), then for
purposes of calculating the denominator described
in (iii) above, the Service Period shall be
rounded upwards to the nearest whole number
(i.e., 1/2 year becomes 1 year, 2-1/2 years
becomes 3 years); and
(v) in 2000, each Non-Employee Director who is not up
for re-election will receive a stock option grant
with a Black-Scholes value not to exceed 80% of
the annual compensation opportunity for the Non-
Employee Director multiplied by the number of
years remaining in his or her term.
(b) A Non-Employee Director who becomes an employee of the
Company shall not thereafter receive grants of Options pursuant to the
provisions of this Section, and a person who becomes an employee of the
Company in connection with and at substantially the same time as his or her
election or appointment as a director of the Company shall not receive any
grants of options pursuant to this Section.
(c) Each Option granted pursuant to this Section shall be
for a term of ten years or until one year after the director ceases to be a
director of the Company, whichever occurs first; shall have an exercise price
equal to the Fair Market Value of the Common Stock on the date of grant;
shall (except to the extent permitted by Rule l6b-3) be exercisable only by
the Optionee (or in event of his or her Death or Disability, by the
Optionee's Beneficiary or Personal Representative, as the case may be) and
shall be nontransferable, except by will or the laws of descent and
distribution, or for estate or financial planning purposes provided no
consideration is exchanged; shall provide for payment of the exercise price
in cash or by delivery of shares of Common Stock valued at their Fair Market
Value at the date of exercise; shall not contain any provision for tax offset
bonuses, stock appreciation rights, or stock depreciation rights, and shall
otherwise conform to the terms and conditions of this Plan.
(d) The provisions of this Section 4.9 and other provisions
of this Plan with respect to the amount, price and timing of securities
awarded pursuant to this Section shall not be amended more than once every
six months, other than to comport with changes in the Internal Revenue Code,
or any applicable rules thereunder, or as may otherwise be permitted with
respect to formula plan awards under Rule l6b-3.
V. STOCK APPRECIATION RIGHTS.
5.1 Grants. In its discretion, the Administrator may grant Stock
Appreciation Rights concurrently with the grant of Options. A Stock
Appreciation Right shall extend to all or a portion of the shares covered by
the related Option. A Stock Appreciation Right shall entitle the Participant
who holds the related Option, upon exercise of the Stock Appreciation Right
and surrender of the related Option, or portion thereof, to the extent the
Stock Appreciation Right and related Option each were previously unexercised,
to receive payment of an amount determined pursuant to Section 5.3. Any
Stock Appreciation Right granted in connection with an Incentive Stock Option
shall contain such terms as may be required to comply with the provisions of
Section 422 of the Code and the regulations promulgated thereunder. In its
discretion, the Administrator may also grant Stock Appreciation Rights
independently of any Option subject to such conditions as the Administrator
may in its absolute discretion provide.
5.2 Exercise of Stock Appreciation Rights.
(a) A Stock Appreciation Right granted concurrently with an
option shall be exercisable only at such time or times, and to the extent,
that the related Option shall be exercisable and only when the Fair Market
Value of the stock subject to the related Option exceeds the exercise price
of the related Option.
(b) In the event that a Stock Appreciation Right granted
concurrently with an Option is exercised, the number of shares of Common
Stock subject to the related Option shall be charged against the maximum
amount of Common Stock that may be issued or transferred pursuant to Awards
under this Plan. The number of shares subject to the Stock Appreciation
Right and the related Option of the Participant shall also be reduced by such
number of shares.
(c) If a Stock Appreciation Right granted concurrently with
an Option extends to less than all the shares covered by the related Option
and if a portion of the related Option is thereafter exercised, the number of
shares subject to the unexercised Stock Appreciation Right shall be reduced
only if and to the extent that the remaining number of shares covered by such
related Option is less than the remaining number of shares subject to such
Stock Appreciation Right.
(d) A Stock Appreciation Right granted independently of any
Option shall be exercisable pursuant to the terms of the Award Agreement but
in no event earlier than six months after the Award Date, except in the case
of death or Total Disability.
5.3 Payment.
(a) Upon exercise of a Stock Appreciation Right and
surrender of an exercisable portion of the related Option, the Participant
shall be entitled to receive payment of an amount determined by multiplying
(l) the difference obtained by subtracting the
exercise price per share of Common Stock under the related Option from
the Fair Market Value of a share of Common Stock on the date of exercise
of the Stock Appreciation Right, by
(2) the number of shares with respect to which the
Stock Appreciation Right shall have been exercised.
(b) The Administrator, in its sole discretion, may settle
the amount determined under paragraph (a) above solely in cash, solely in
shares of Common Stock (valued at Fair Market Value on the date of exercise
of the Stock Appreciation Right), or partly in such shares and partly in
cash, provided that the Administrator shall have determined that such
exercise and payment are consistent with applicable law. In any event, cash
shall be paid in lieu of fractional shares. Absent a determination to the
contrary, all Stock Appreciation Rights shall be settled in cash as soon as
practicable after exercise. The exercise price for the Stock Appreciation
Right shall be the exercise price of the related Option. Notwithstanding the
foregoing, the Administrator may, in the Award Agreement, determine the
maximum amount of cash or stock or a combination thereof which may be
delivered upon exercise of a Stock Appreciation Right.
(c) Upon exercise of a Stock Appreciation Right granted
independently of any Option, the Participant shall be entitled to receive
payment of an amount based on a percentage, specified in the Award Agreement,
of the difference obtained by subtracting the Fair Market Value per share of
Common Stock on the Award Date from the Fair Market Value per share of Common
Stock on the date of exercise of the Stock Appreciation Right. Such amount
shall be paid as described in paragraph (b) above.
VI. RESTRICTED STOCK AWARDS.
6.1 Grants. Subject to Section 3.3, the Administrator may, in its
discretion, grant one or more Restricted Stock Awards to any Eligible
Employee. Each Restricted Stock Award Agreement shall specify the number of
shares of Common Stock to be issued to the Participant, the date of such
issuance, the consideration to be paid for such shares by the Participant and
the restrictions imposed on such shares, which restrictions shall not
terminate earlier than six (6) months nor later than ten (10) years after the
Award Date.
6.2 Restrictions.
(a) Except as provided in or pursuant to Section 8.12,
shares of Common Stock comprising Restricted Stock Awards may not be sold,
assigned, transferred, pledged or otherwise disposed of or encumbered, either
voluntarily or involuntarily, until such shares have vested.
(b) Unless the Administrator otherwise provides,
Participants receiving Restricted Stock shall be entitled to dividend and
voting rights for the shares issued even though they are not vested, provided
that such rights shall terminate immediately as to any forfeited Restricted
Stock.
(c) In the event that the Participant shall have paid cash
in connection with the Restricted Stock Award, the Award Agreement shall
specify whether and to what extent such cash shall be returned upon a
forfeiture (with or without an earnings factor).
(d) Restricted Stock Awards may include performance or other
conditions to vesting as the Administrator deems appropriate.
VII. PERFORMANCE SHARE AWARDS.
7.1 Grants. The Administrator may, in its discretion, grant other
types of performance-based Awards related to equity of the Company or any
part thereof ("Performance Share Awards") to Eligible Employees based upon
such factors as the Administrator shall determine. A Performance Share Award
Agreement shall specify the number of shares of Common Stock subject to the
Performance Share Award, the price, if any, to be paid for such shares by the
Participant and the conditions upon which issuance to the Participant shall
be based, which issuance shall not be earlier than six (6) months nor later
than ten (10) years after the Award Date.
VIII. OTHER PROVISIONS.
8.1 Rights of Eligible Employees, Participants and Beneficiaries.
(a) Adoption of this Plan shall not be construed as a
commitment that any Award will be made under this Plan to an Eligible
Employee or to Eligible Employees generally.
(b) Nothing contained in this Plan (or in Award Agreements or
in any other documents related to this Plan or to Awards) shall confer upon
any Eligible Employee or Participant any right to continue in the employ of
the Company or constitute any contract or agreement of employment, or
interfere in any way with the right of the Company to reduce such person's
compensation or other benefits or to terminate the employment of such
Eligible Employee or Participant, with or without cause. Nothing contained
in this Plan or any document related thereto shall affect any other
contractual right of any Eligible Employee or Participant.
8.2 Adjustments Upon Changes in Capitalization.
(a) If the outstanding shares of Common Stock are changed
into or exchanged for cash or a different number or kind of shares or
securities of the Corporation or of another issuer, or if additional shares
or new or different securities are distributed with respect to the
outstanding shares of the Common Stock, through a reorganization or merger to
which the Corporation is a party, or through a combination, consolidation,
recapitalization, reclassification, stock split, stock dividend, reverse
stock split, stock consolidation or other capital change or adjustment, an
appropriate proportionate, equitable adjustment shall be made in the number
and kind of shares or other consideration that is subject to or may be
delivered under this Plan and pursuant to outstanding Awards. Corresponding
adjustments to the consideration payable with respect to Awards granted prior
to any such change and to the price, if any, paid in connection with or the
criteria applicable to Restricted Stock Awards or Performance Share Awards
shall also be made. Any such adjustments, however, shall be made without
change in the total payment, if any, applicable to the portion of the Award
not exercised but with a corresponding adjustment in the price for each
share. Corresponding adjustments shall be made with respect to Stock
Appreciation Rights based upon the adjustments made to the Options to which
they are related or, in the case of Stock Appreciation Rights granted
independently of any Option, based upon the adjustments made to Common Stock.
(b) Upon the dissolution or liquidation of the Corporation, or
upon a reorganization, merger or consolidation of the Corporation with one or
more corporations as a result of which the Corporation is not the surviving
corporation, the Plan shall terminate. The Administrator may provide in
writing in connection with, or in contemplation of, any such transaction for
any or all of the following alternatives (separately or in combination): (i)
for the assumption by the successor corporation (if any) of the Awards
theretofore granted or the substitution by such corporation for such Awards
of awards covering the stock of the successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to the number and kind of
securities and/or other property and prices; (ii) for the continuance of the
Plan by such successor corporation in which event the Plan and the Awards
shall continue in the manner and under the terms so provided; or (iii) for
the payment in cash, securities and/or other property in lieu of and in
complete satisfaction of such Awards.
(c) In adjusting Awards to reflect the changes described in
this Section 8.2, or in determining that no such adjustment is necessary, the
Administrator may rely upon the advice of independent counsel and accountants
of the Corporation, and the determination of the Administrator shall be
conclusive. No fractional shares of stock shall be issued under this Plan on
account of any such adjustment.
8.3 Termination of Employment. Unless the Administrator otherwise
expressly provides, either in the applicable Award Agreement or by subsequent
modification thereof:
(a) If the Participant's employment by the Company
terminates for any reason other than Retirement (except in cases involving
Incentive Stock Options), death or Total Disability, the Participant shall
have, subject to earlier termination pursuant to or as contemplated by
Section 4.3, three (3) months from the date of termination of employment to
exercise any Option to the extent it shall have become exercisable on the
date of termination of employment, and any Option not exercisable on that
date shall terminate. Notwithstanding the preceding sentence, in the event
the Participant is discharged for cause as determined by the Administrator in
its sole discretion, all Options shall terminate immediately upon receipt of
the notice of termination of employment.
(b) If the Participant's employment by the Company
terminates as a result of Retirement (except in cases involving Incentive
Stock Options) or Total Disability, the Participant or Participant's Personal
Representative, as the case may be, shall have, subject to earlier
termination pursuant to or as contemplated by Section 4.3, twelve (12) months
from the date of termination of employment to exercise any Option to the
extent it shall have become exercisable by the date of termination of
employment, and any Option not exercisable on that date shall terminate.
(c) If the Participant's employment by the Company
terminates as a result of death while the Participant is employed by the
Company or during the twelve (12) month period referred to in subsection (b)
above, the Participant's Option shall be exercisable by the Participant's
Beneficiary, subject to earlier termination pursuant to or as contemplated by
Section 4.3, during the twelve (12) month period following the Participant's
death, as to all or any part of the shares of Common Stock covered thereby to
the extent exercisable on the date of death (or earlier termination).
(d) Each Stock Appreciation Right granted concurrently with
an Option shall have the same termination provisions and exercisability
periods as the Option to which it relates. The termination provisions and
exercisability periods of any Stock Appreciation Right granted independently
of an Option shall be established in accordance with Section 5.2(d). The
exercisability period of a Stock Appreciation Right shall not exceed that
provided in Section 4.3 or in the related Award Agreement and the Stock
Appreciation Right shall expire at the end of such exercisability period.
(e) In the event of termination of employment with the
Company for any reason, (i) shares of Common Stock subject to a Participant's
Restricted Stock Award shall be forfeited in accordance with the provisions
of the related Award Agreement to the extent such shares have not become
vested on that date; and (ii) shares of Common Stock subject to the
Participant's Performance Share Award shall be forfeited in accordance with
the provisions of the related Award Agreement to the extent such shares have
not been issued or become issuable on that date.
(f) In the event of (or in anticipation of) a Participant's
termination of employment with the Company for any reason, other than
discharge for cause, the Administrator may, in its discretion, accelerate the
exercisability of or increase the portion of the Participant's Award
available to the Participant, or Participant's Beneficiary or Personal
Representative, as the case may be, or (subject to the ten (10)-year limit)
extend the period after termination during which the Award may continue to
vest and/or be exercisable upon such terms and subject to such conditions as
the Administrator shall determine.
(g) If an entity ceases to be a Subsidiary, such action
shall be deemed for purposes of this Section 8.3 to be a termination of
employment of each employee of that entity who does not continue as an
employee of another entity within the Company.
8.4 Acceleration of Awards. Except to the extent that prior to an
Event the Administrator determines that, upon its occurrence, there shall be
no acceleration of Awards held by Participants or determines those Awards
held by Participants that will be accelerated and the extent to which they
will be accelerated, upon the occurrence of an Event (i) each Option and each
related Stock Appreciation Right shall become immediately exercisable to the
full extent theretofore not exercisable, (ii) Restricted Stock shall
immediately vest free of restrictions and (iii) the number of shares covered
by each Performance Share Award shall be issued to the Participant; subject,
however, to compliance with applicable regulatory requirements, including
without limitation Rule l6b-3 promulgated by the Commission pursuant to the
Exchange Act and Section 422 of the Code.
8.5 Government Regulations. This Plan, the granting of Awards under
this Plan and the issuance or transfer of shares of Common Stock (and/or the
payment of money) pursuant thereto are subject to all applicable federal and
state laws, rules and regulations and to such approvals by any regulatory or
governmental agency (including without limitation "no action" positions of
the Commission) which may, in the opinion of counsel for the Corporation, be
necessary or advisable in connection therewith. Without limiting the
generality of the foregoing, no Awards may be granted under this Plan, and no
shares shall be issued by the Corporation, nor cash payments made by the
Corporation, pursuant to or in connection with any such Award, unless and
until, in each such case, all legal requirements applicable to the issuance
or payment have, in the opinion of counsel to the Corporation, been complied
with. In connection with any stock issuance or transfer, the person
acquiring the shares shall, if requested by the Corporation, give assurances
satisfactory to counsel to the Corporation in respect of such matters as the
Corporation may deem desirable to assure compliance with all applicable legal
requirements.
8.6 Tax Withholding.
(a) Upon the disposition by a Participant or other person of
shares of Common Stock acquired pursuant to the exercise of an Incentive
Stock Option prior to satisfaction of the holding period requirements of
Section 422 of the Code, or upon the exercise of a Nonqualified Stock Option
or a Performance Stock Option, the exercise of a Stock Appreciation Right,
the vesting of a Restricted Stock Award, the payment of a Performance Share
Award, payment pursuant to a Stock Depreciation Right or payment of a Tax-
Offset Bonus, the Company shall have the right to require such Participant or
such other person to pay by cash, or certified or cashier's check payable to
the Company, the amount of any taxes which the Company may be required to
withhold with respect to such transactions. The above notwithstanding, in
any case where a tax is required to be withheld in connection with the
issuance or transfer of shares of Common Stock under this Plan, the
Participant may elect, pursuant to such rules as the Administrator may
establish, to have the Company reduce the number of such shares issued or
transferred by the appropriate number of shares to accomplish such
withholding; provided, the Administrator may impose such conditions on the
payment of any withholding obligation as may be required to satisfy
applicable regulatory requirements, including, without limitation, Rule 16b-3
promulgated by the Commission pursuant to the Exchange Act.
(b) The Administrator may, in its discretion, permit a loan
from the Company to a Participant in the amount of any taxes which the
Company may be required to withhold with respect to shares of Common Stock
received pursuant to a transaction described in subsection (a) above. Such a
loan will be for a term, at a rate of interest and pursuant to such other
terms and rules as the Administrator may establish.
8.7 Amendment, Termination and Suspension.
(a) The Board may, at any time, terminate or, from time to
time, amend, modify or suspend this Plan (or, subject to Section 4.9 (d), any
part hereof). The amendment shall be approved by the stockholders to the
extent then required by Rule 16b-3, Section 425 of the Internal Revenue Code
or any successors thereto, or any other applicable law or rules.
(b) In the case of Awards issued before the effective date
of any amendment, suspension or termination of this Plan, such amendment,
suspension or termination of this Plan shall not, without specific action of
the Administrator and the consent of the Participant, in any manner
materially adverse to the Participant, modify, amend, alter or impair any
rights or obligations under any Award previously granted under this Plan.
(c) No Awards may be granted during any suspension of this
Plan or after its termination, but Awards theretofore granted may be amended
to the same extent as if this Plan had not been terminated or suspended,
provided no additional shares become the subject of the Award by reasons of
the amendment.
(d) The Administrator may, subject to the consent of the
Participant in the case of an amendment that might have a material adverse
effect on the Participant, make such modifications of the terms and
conditions of such Participant's Award as it shall deem advisable, including
an amendment to the terms of any Option to provide that the Option price of
the shares remaining subject to the original Award shall be established at a
price not less than 100% of the Fair Market Value of the Common Stock on the
effective date of the amendment. No modification of any other term or
provision of any Option which is amended in accordance with the foregoing
shall be required, although the Administrator may, in its discretion, make
such other modifications of any such Option as are not inconsistent with or
prohibited by this Plan.
(e) Adjustments pursuant to Section 8.2 shall not be deemed
amendments requiring the consent of the Participant.
8.8 Privileges of Stock Ownership; Nondistributive Intent. A
Participant shall not be entitled to the privilege of stock ownership as to
any shares of Common Stock not actually issued to him or her. Upon the
issuance and transfer of shares to the Participant, unless a registration
statement is in effect under the Securities Act, relating to such issued and
transferred Common Stock and there is available for delivery a prospectus
meeting the requirements of Section 10 of the Securities Act, the Common
Stock may be issued and transferred to the Participant only if he or she
represents and warrants in writing to the Corporation that the shares are
being acquired for investment and not with a view to the resale or
distribution thereof. No shares shall be issued and transferred unless and
until there shall have been full compliance with any then applicable
regulatory requirements (including those of exchanges upon which any Common
Stock of the Corporation may be listed).
8.9 Effective Date of the Plan. This Plan shall be effective upon
its approval by the shareholders of the Corporation.
8.10 Term of the Plan. Unless previously terminated by the Board,
this Plan shall terminate at the close of business on June 20, 2010, and no
Awards shall be granted under it thereafter, but such termination shall not
affect any Award theretofore granted or the authority of the Administrator
with respect to then outstanding Awards.
8.11 Governing Law. This Plan and the documents evidencing Awards
and all other related documents shall be governed by, and construed in
accordance with, the laws of the State of Delaware. If any provision shall
be held by a court of competent jurisdiction to be invalid and unenforceable,
the remaining provisions of this Plan shall continue to be fully effective.
8.12 Transfer Restrictions.
(a) Awards constituting derivative securities shall be
exercisable only by, and shares, cash or other property payable pursuant to
such Awards shall be paid only to, the Participant (or, in the event of the
Participant's death, to the Participant's Beneficiary or, in the event of the
Participant's Total Disability, to the Participant's Personal Representative
or, if there is none, to the Participant). Other than by will or the laws of
descent and distribution, no such Awards, or interest in or under any such
Award or this Plan, shall be transferable or subject in any manner to
encumbrance or other charge and any such attempted transfer or charge shall
be void.
(b) The restrictions on exercise, transfer and payment in
Section 8.12 (a) shall not be deemed to prohibit (l) "cashless exercise"
procedures through unaffiliated third parties which provide financing for the
purpose of exercising an Award consistent with applicable legal restrictions
and Rule 16b-3, nor (2) to the extent permitted by the Administrator and
expressly set forth in the Award Agreement or an amendment thereto, transfers
without consideration for estate or financial planning purposes,
notwithstanding that the inclusion of such features may render the particular
Awards ineligible for the benefits of Rule l6b-3, nor (3) in the case of
Participants who are not Section 16 Persons, transfers in such other
circumstances as the Administrator may (to the extent consistent with Rule
16b-3, applicable provisions of the Code and applicable securities or other
laws) in the applicable Award Agreement or other writing expressly provide,
nor (4) the subsequent transfer of shares issued on exercise of a derivative
security or the vesting of a Restricted Stock or Performance Share Award
(except to the extent that the Award, this Plan or the Administrator
otherwise expressly provides).
(c) No Participant, Beneficiary or other person shall have
any right, title or interest in any fund or in any specific asset (including
shares of Common Stock) of the Company by reason of any Award granted
hereunder. Neither the provisions of this Plan (or of any documents related
hereto), nor the creation or adoption of this Plan, nor any action taken
pursuant to the provisions of this Plan shall create, or be construed to
create, a trust of any kind or a fiduciary relationship between the Company
and any Participant, Beneficiary or other person. To the extent that a
Participant, Beneficiary or other person acquires a right to receive an Award
hereunder, such right shall be no greater than the right of any unsecured
general creditor of the Company.
8.13 Limitations as to Section 16 Persons; Plan Construction.
It is the intent of the Corporation that this Plan and Awards
hereunder satisfy and be interpreted in a manner that in the case of persons
who are or may be subject to Section 16 of the Exchange Act satisfies the
applicable plan requirements of Rule l6b-3, so that such persons will be
entitled (unless otherwise expressly acknowledged in writing) to the benefits
of the Rule 16b-3 or other exemptive rules under Section 16 Exchange Act and
will not be subjected to avoidable liability thereunder. In furtherance of
such intent, any provision of this Plan or of any Award would otherwise
frustrate or otherwise conflict with the intent expressed above, that
provision to the extent possible shall be interpreted and deemed amended so
as to avoid conflict, but to the extent of any remaining irreconcilable
conflict with such intent as to such persons in the circumstances, such
provision may be deemed void.
