<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
SCHERING-PLOUGH CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
SCHERING-PLOUGH CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registrations statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
- ---------------
(1)Set forth the amount on which the filing fee is calculated and state
how it was determined.
<PAGE> 2
[LOGO] Schering-Plough
------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 26, 1994
------------------
The Annual Meeting of Shareholders of Schering-Plough Corporation (the
"Corporation") will be held at the offices of the Corporation, Galloping Hill
Road, Kenilworth, New Jersey, on Tuesday, April 26, 1994, at 2:00 p.m. to:
(1) Elect three directors for terms of three years;
(2) Act upon the ratification of the designation of Deloitte & Touche to
audit the books and accounts of the Corporation for 1994;
(3) Act upon a proposal to approve the Executive Incentive Bonus Program,
including Performance Goals; and
(4) Transact such other business as may properly come before the meeting.
Only holders of record of Common Shares at the close of business on March
4, 1994 will be entitled to vote at the meeting, or any adjournment or
postponement thereof.
JOHN T. FOGARTY
Secretary
Madison, New Jersey
March 25, 1994
IMPORTANT
IF YOU DO NOT EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE COMPLETE,
DATE, AND SIGN THE ENCLOSED PROXY AND RETURN IT WITHOUT DELAY IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO ADDITIONAL POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE> 3
Schering-Plough Corporation
One Giralda Farms
Madison, New Jersey 07940-1000
March 25, 1994
------------------
PROXY STATEMENT
------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Schering-Plough Corporation (the
"Corporation") for use at its Annual Meeting of Shareholders on April 26, 1994
and any adjournments or postponements thereof. Shares represented at the meeting
by the enclosed proxy will be voted in accordance with any directions noted
thereon. A shareholder giving a proxy may revoke it before it is voted by giving
written notice of such revocation to the Secretary of the Corporation.
Attendance at the meeting by a shareholder who has given a proxy will not have
the effect of revoking it unless the shareholder gives such written notice of
revocation to the Secretary before the proxy is voted. The Corporation has
retained Kissel-Blake Inc. for a fee of $13,000 to aid solicitation, which will
be undertaken by mail, telephone, telegraph, facsimile transmission and personal
contact and which may include solicitation by officers and employees of the
Corporation. Costs of solicitation will be borne by the Corporation.
As of January 31, 1994, the Corporation had outstanding and entitled to
vote at the Annual Meeting 193,606,197 Common Shares, par value $1 per share
("Common Shares"). Each such share is entitled to one vote and only holders of
record of Common Shares as of the close of business on March 4, 1994 will be
entitled to vote at the meeting.
The Annual Report of the Corporation for 1993, including financial
statements for the year ended December 31, 1993, was mailed on or about March 7,
1994 to all shareholders of record as of the close of business on March 4, 1994.
This Proxy Statement and the accompanying form of proxy are being mailed to
shareholders on or about March 25, 1994.
<PAGE> 4
ELECTION OF DIRECTORS
PROXIES IN THE ACCOMPANYING FORM WILL BE VOTED AT THE MEETING, UNLESS
AUTHORITY TO DO SO IS WITHHELD, IN FAVOR OF THE ELECTION AS DIRECTORS OF THE
NOMINEES NAMED BELOW.
Pursuant to the Corporation's Certificate of Incorporation, the Board of
Directors is divided into three classes, the terms of which expire alternately
over a three-year period. At each Annual Meeting of Shareholders, successors to
directors whose terms expire at that meeting shall be elected for three-year
terms. Three directors are to be elected at this Annual Meeting of Shareholders
to hold office for a term of three years expiring at the 1997 Annual Meeting of
Shareholders and until a successor shall have been elected and qualified. In the
event one or more of the named nominees is unable to serve, the persons
designated as proxies may cast votes for other persons as substitute nominees.
The Board of Directors has no reason to believe that any of the nominees named
below will be unavailable, or, if elected, will decline to serve. Directors will
be elected by a plurality of the votes cast at the Annual Meeting. Abstentions
and broker non-votes will not be included in determining the number of votes
cast. Virginia A. Dwyer, whose term as a director is expiring, is retiring from
the Board under its retirement age policy and will not stand for re-election.
Certain information is given below for each nominee for director, and for
each director whose term of office will continue after the Annual Meeting. All
of the nominees are presently directors and were previously elected by the
shareholders.
NOMINEES FOR DIRECTOR
TERM TO EXPIRE 1997
<TABLE>
<CAPTION>
NOMINEE AND YEAR
FIRST ELECTED PRINCIPAL OCCUPATION
A DIRECTOR AND OTHER INFORMATION
- ----------------- ------------------------------------------------------------------------
<S> <C>
- ----------------- Former president and director of Ingersoll-Rand Company (machinery and
equipment manufacturer). Mr. Garfield, 66, served as vice chairman of
- ----------------- Ingersoll-Rand from 1974 to December 1980 and as president from
January 1981 until his retirement in June 1986. He is a director of
DAVID C. GARFIELD ASARCO Incorporated, chairman emeritus of the Board of Overseers of
1975 the Foundation at New Jersey Institute of Technology, and a governor
of the Iowa State University Foundation.
- ----------------- Chairman of the board and chief executive officer of the Corporation.
Mr. Luciano, 60, joined the Corporation as senior vice president
- ----------------- (administration) in July 1978, was executive vice president
(pharmaceutical operations) from July 1979 to September 1980,
ROBERT P. LUCIANO president and chief operating officer to January 1982, and president
1978 and chief executive officer until January 1984 when he assumed the
additional office of chairman of the board. He is a director of C. R.
Bard, Inc., Merrill Lynch & Co., Inc., AlliedSignal Inc., and Borden,
Inc.
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
NOMINEE AND YEAR
FIRST ELECTED PRINCIPAL OCCUPATION
A DIRECTOR AND OTHER INFORMATION
- ----------------- ------------------------------------------------------------------------
<S> <C>
- ----------------- Former chairman of the board and chief executive officer of Stauffer
Chemical Company. Mr. Morley was its chief executive officer from 1974
- ----------------- to 1985. He was elected a director of the Corporation in January 1979,
resigned in February 1985 and then rejoined the board in February
H. BARCLAY MORLEY 1987. Mr. Morley, 64, is a director of The Bank of New York Company,
1979 Inc., American Maize-Products Co., Borden, Inc. and Champion
International Corporation.
</TABLE>
DIRECTORS CONTINUING IN OFFICE
TERM TO EXPIRE 1995
<TABLE>
<CAPTION>
DIRECTOR AND YEAR
FIRST ELECTED PRINCIPAL OCCUPATION
A DIRECTOR AND OTHER INFORMATION
- ----------------- ------------------------------------------------------------------------
<S> <C>
- ----------------- Executive vice president (administration) of the Corporation. Mr.
D'Andrade, 55, joined the Corporation as senior vice president
- ----------------- (administration) in February 1981, assuming his present position in
January 1984. He is a director of the Biotechnology Industry
HUGH A. D'ANDRADE Organization and a trustee of Drew University.
1984
- ----------------- President and chief operating officer of the Corporation. Mr. Kogan, 52,
joined the Corporation as executive vice president (pharmaceutical
- ----------------- operations) in April 1982, assuming his present position in January
1986. Mr. Kogan is a director of National Westminster Bancorp Inc.,
RICHARD J. KOGAN General Signal Corporation, and the Pharmaceutical Manufacturers
1982 Association. He also serves on the Board of St. Barnabas Medical
Center and on the Board of Overseers of the Stern School of Business
at New York University.
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
DIRECTOR AND YEAR
FIRST ELECTED PRINCIPAL OCCUPATION
A DIRECTOR AND OTHER INFORMATION
- ----------------- ------------------------------------------------------------------------
<S> <C>
- ----------------- Chairman of the board, chief executive officer, president and a director
of ASARCO Incorporated (non-ferrous metals producer). Mr. Osborne, 60,
- ----------------- joined ASARCO in 1975 as vice president -- finance and chief financial
officer and was elected a director in 1976. He served as its executive
RICHARD DE J. vice president from 1977 until his election as president in 1982, and
OSBORNE assumed the additional position of chairman and chief executive
1988 officer in 1985. Mr. Osborne is a director of the Continental
Corporation, chairman and a director of the Copper Development
Association, a director of the Americas Society, the Council of the
Americas, and the United States Chamber of Commerce. He is also
chairman and a director of the American Mining Congress and a director
and former chairman of the International Copper Association. Mr.
Osborne is president and a director of the American-Australian
Association and a member of the Council on Foreign Relations, the
Economic Club of New York, and the Conference Board.
- ----------------- Chairman Emeritus of the Board of Merrill Lynch & Co., Inc. (securities
and investment banking). Mr. Schreyer, 66, has been associated with
- ----------------- Merrill Lynch since 1948. He was named president and chief
administrative officer of Merrill Lynch, Pierce, Fenner & Smith, Inc.
WILLIAM A. in 1978, chief executive officer in 1980, and chairman in 1981. A
SCHREYER member of the board of directors of Merrill Lynch & Co., Inc. since
1986 1976 and its executive committee since 1979, Mr. Schreyer was elected
president in 1982, chief executive officer in 1984, and chairman in
1985, retiring from Merrill Lynch in June 1993. His professional,
civic and international affiliations include: The Center for Strategic
and International Studies, The Council on Foreign Relations, The
Enterprise Foundation and Sigma Phi Epsilon Educational Foundation. A
life-long supporter of education, Mr. Schreyer is chairman of the
Board of Trustees of his alma mater, The Pennsylvania State
University, and also serves as a member of its Smeal College of
Business Administration Board of Visitors. He is a director of Deere &
Company, Foote, Cone and Belding Communications, Inc. and Willis
Corroon Group, plc., and is a trustee of the George Bush Presidential
Library Foundation and a member of the Corporate Committee of the
Barbara Bush Foundation for Family Literacy. Merrill Lynch, through
certain of its subsidiaries, has for some time in the ordinary course
of business performed investment banking, financial advisory, and
other services for the Corporation.
- ----------------- Former chairman of the board and chief executive officer of Borden, Inc.
(a worldwide producer of foods, non-food consumer products, and
- ----------------- packaging and industrial products). Mr. Ventres, 69, was executive
vice president of Borden and president of its Chemical Division from
R. J. VENTRES July 1983 until July 1985, when he became president and chief
1989 operating officer and a director. He was chief executive officer from
November 1986 to November 1991, and chairman from February 1987 until
his retirement in March 1992. Mr. Ventres is a director of Banc One
Corporation and Marsh & McLennan Companies, Inc., and a trustee of St.
Clare's Hospital and Health Center.
</TABLE>
4
<PAGE> 7
DIRECTORS CONTINUING IN OFFICE
TERM TO EXPIRE 1996
<TABLE>
<CAPTION>
DIRECTOR AND YEAR
FIRST ELECTED PRINCIPAL OCCUPATION
A DIRECTOR AND OTHER INFORMATION
- ----------------- ------------------------------------------------------------------------
<S> <C>
- ----------------- Chairman and chief executive officer of Deere & Company (a manufacturer
of mobile power machinery and a supplier of financial and health care
- ----------------- services). Mr. Becherer, 58, has been associated with Deere & Company
since 1962. He was named vice president in 1977, served as senior vice
HANS W. BECHERER president-overseas division from 1983 until 1986 when he was elected
1989 executive vice president-farm equipment and consumer products,
worldwide. He was elected to the board of directors of Deere & Company
in 1986, was elected president and chief operating officer in 1987,
president and chief executive officer in 1989, and chairman and chief
executive officer in May 1990. Mr. Becherer is a member of the board
of directors of AlliedSignal Inc., and a member of the Chase Manhattan
Bank International Advisory Committee. He serves on the board of
trustees of the Committee for Economic Development, and is a member of
the Business Council, the Business Roundtable, the Conference Board
and the Council on Foreign Relations.
- ----------------- Nancy R. McPherson Professor of Business Administration, Harvard
Business School since 1971. Professor Herzlinger, 50, is a director of
- ----------------- C.R. Bard, Inc., Deere & Company, Manor Care Inc. and Salick Health
Care, Inc. and also serves on the board of privately held companies
REGINA E. and non-profit organizations, including the Visiting Committee for
HERZLINGER Sponsored Research of the MIT Corporation and the Audit Committee of
1992 the town of Belmont, Massachusetts.
- ----------------- Chairman of the board and chief executive officer of The Great Atlantic
& Pacific Tea Company, Inc. ("A&P") (supermarkets), which office Mr.
- ----------------- Wood, 64, has held since 1980. From 1988 to 1993 and at other times
since 1980, he also served as president of A&P. He is a member of the
JAMES WOOD board of directors of the Food Marketing Institute, ASARCO
1987 Incorporated, and the United States Committee for UNICEF, and a member
of the board of governors of World USO.
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
DIRECTOR AND YEAR
FIRST ELECTED PRINCIPAL OCCUPATION
A DIRECTOR AND OTHER INFORMATION
- ----------------- ------------------------------------------------------------------------
<S> <C>
- ----------------- Chairman of the executive board of NV Koninklijke KNP BT (producer of
paper, board and packaging products; and distributor of graphic paper,
- ----------------- graphic and information systems and office products). Mr. van Oordt,
58, was executive vice president and a member of the office of the
ROBERT F. W. VAN OORDT president of the Hunter Douglas Group from 1979 and was appointed its
1992 chief operating officer in 1986. He joined Buhrmann-Tetterode (BT) in
May 1989 as a member of the board of managing directors and was
appointed president and chief executive officer in January 1990. Mr.
van Oordt assumed his current position in March 1993 after the merger
of KNP, BT and VRG, three leading Dutch based industrial corporations.
Mr. van Oordt serves as the chairman of the Supervisory Board of the
Dutch Cable Works, is a member of the Council of International
Advisers of the Swiss Bank Corporation, a member of the Supervisory
Board of the Swiss Bank Corporation Nederland NV, and is honorary
consul general for Finland in the Netherlands.
</TABLE>
6
<PAGE> 9
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Corporation has standing Finance and Audit,
Executive Compensation and Organization, Nominating, and Pension Committees,
each consisting exclusively of non-employee directors.
The members of the Finance and Audit Committee are Hans W. Becherer, David
C. Garfield, H. Barclay Morley, Richard de J. Osborne, R. J. Ventres, and James
Wood. This Committee, which held five meetings in 1993, reviews and recommends
to the Board dividend policies and actions; reviews corporate borrowing and
investment activities; reviews internal audit activities; recommends to the
Board the engagement of independent auditors; reviews the professional services
to be rendered by the independent auditors, the scope of their audit, their
fees, and the results of their engagement; reviews insurance and risk management
activities; and oversees compliance with the Corporation's business conduct
policy.
The members of the Executive Compensation and Organization Committee are
Virginia A. Dwyer, H. Barclay Morley, Richard de J. Osborne, R. J. Ventres, and
James Wood. This Committee, responsible for approving or recommending to the
Board compensation, incentive awards, stock options, and benefit programs for
officers and senior executives of the Corporation, held five meetings during
1993.
The members of the Nominating Committee are Hans W. Becherer, H. Barclay
Morley, William A. Schreyer, and Robert F. W. van Oordt. The Committee held one
meeting in 1993. This Committee is responsible for reviewing and making
recommendations to the Board with respect to the composition of the Board and
the election and re-election of directors, and will consider shareholder
recommendations for directors; such recommendations should be forwarded by the
shareholder to the Secretary of the Corporation with biographical data about the
recommended individual. The By-laws of the Corporation provide a formal
procedure for nominations by shareholders of director candidates. A shareholder
intending to make such a nomination is required to deliver to the Secretary of
the Corporation, not less than 30 days prior to a meeting called to elect
directors, a notice with the name, age, business and residence addresses and
principal employment of, and number of shares of stock of the Corporation owned
by, such nominee, such other information regarding the nominee as would be
required in a proxy statement, and a consent to serve, if elected, of the
nominee. A nomination not made in accordance with this procedure would be void.
The members of the Pension Committee are Virginia A. Dwyer, Regina E.
Herzlinger, William A. Schreyer, and Robert F. W. van Oordt. This Committee,
which held three meetings in 1993, has general oversight responsibility for the
investment of funds under the employee benefit plans of the Corporation,
establishing investment policies and reviewing the performance of managers and
trustees for the plans.
BOARD MEETINGS AND ATTENDANCE OF DIRECTORS
The Board of Directors held nine meetings in 1993. All directors attended
more than 75% of the aggregate of (i) the total number of meetings of the Board
of Directors held while they were members, and (ii) the total number of meetings
held by all Committees of the Board on which they served as members.
DIRECTORS' COMPENSATION
Employee directors receive no fees for services rendered in their capacity
as directors. Non-employee directors receive an annual retainer of $36,000, a
fee of $1,000 per meeting for each board and for each committee meeting
attended, and a $1,000 per diem fee for special assignments. The chairman of
each Committee receives an additional fee of $1,000 for each meeting. Directors
may elect to defer until termination of service as a director all or a portion
of such fees under a Deferred Compensation Plan. Amounts deferred are, at the
director's election, valued as if invested in the Corporation's Common Shares or
in a simple interest fund and are payable in cash in installments or in a lump
sum.
Upon their initial election or any re-election to the Board, non-employee
directors are awarded Common Shares of the Corporation at the rate of 200 shares
for each year (or portion thereof) of the term to which the director is elected.
During 1993, Messrs. Becherer, van Oordt and Wood, and Professor Herzlinger were
each awarded 600 shares.
7
<PAGE> 10
Directors who are not entitled to receive employee pension benefits from
the Corporation or its subsidiaries are covered by a nonfunded pension plan
under which an eligible director who retires at or after age 72 with at least
five years' service, or because of sickness or disability with at least ten
years' service, receives annually for life the annual retainer in effect at the
time of his retirement. An eligible director who retires because of sickness or
disability with at least five but less than ten years' service receives a
proportionately reduced benefit.
SECURITY OWNERSHIP
The Corporation is not aware of any person who is the beneficial owner of
more than five percent of the Corporation's outstanding Common Shares.
Set forth below is information with respect to beneficial ownership of the
Common Shares of the Corporation as of January 31, 1994 by each director,
certain executive officers and by all directors and executive officers of the
Corporation as a group:
<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES(a)
- ---------------- ---------
<S> <C>
Hans W. Becherer........................................................... 2,400
David E. Collins........................................................... 95,962(b)(c)
Donald R. Conklin.......................................................... 105,090(b)(c)
Hugh A. D'Andrade.......................................................... 88,641(b)
Virginia A. Dwyer.......................................................... 2,800
David C. Garfield.......................................................... 18,000(c)
Regina E. Herzlinger....................................................... 900
Richard J. Kogan........................................................... 185,098(b)
Robert P. Luciano.......................................................... 266,119(b)
H. Barclay Morley.......................................................... 3,615
Richard de J. Osborne...................................................... 5,209
William A. Schreyer........................................................ 7,600
Robert F. W. van Oordt..................................................... 1,300
R.J. Ventres............................................................... 3,000
James Wood................................................................. 6,200
All directors and executive officers as a group including those
above(27)................................................................ 1,107,370(b)(c)
</TABLE>
- ---------------
(a) The total for each individual is less than 0.2%, and for the group is less
than 0.6%, of the outstanding Common Shares of the Corporation (including
shares which could be acquired within 60 days of January 31, 1994 through
the exercise of outstanding options and the distribution of shares under
the Corporation's Stock Incentive Plans). The information shown is based
upon information furnished by the director or executive officer.
(b) Includes shares which could be acquired within 60 days of January 31, 1994
through the exercise of employee stock options and the distribution of
shares under the Corporation's Stock Incentive Plans as follows: Mr.
Collins (87,710); Mr. Conklin (80,070); Mr. D'Andrade (67,300); Mr. Kogan
(162,800); Mr. Luciano (240,800); all directors and executive officers as a
group (905,690).
(c) Does not include shares owned by their family members and as to which
beneficial ownership is disclaimed: Mr. Collins, 830 shares; Mr. Conklin,
400 shares; Mr. Garfield, 3,600 shares; one other executive officer, 1,735
shares.
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Corporation to identify any director or officer who failed to timely file
with the Commission a required report on ownership and changes in ownership of
Common Shares and other equity securities of the Corporation. Based on
information provided to the Corporation, the Corporation believes that all such
reports were timely filed during 1993.
8
<PAGE> 11
SUMMARY COMPENSATION TABLE
The following table sets forth compensation of the five most highly
compensated executive officers of the Corporation, including the Chief Executive
Officer.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------------
AWARDS
ANNUAL COMPENSATION ----------------------------
-------------------------------------- SECURITIES
NAME AND PRINCIPAL OTHER ANNUAL RESTRICTED STOCK UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION(A) AWARDS(B) OPTIONS COMPENSATION(C)
- ----------------------- ---- --------- -------- --------------- ---------------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert P. Luciano...... 1993 $1,070,000 $947,000 $52,824 $1,378,000 44,000 $ 178,294
Chairman and Chief 1992 985,000 852,500 56,352 1,530,750 44,000 181,170
Executive Officer 1991 900,000 774,000 -- 1,267,500 44,000 --
Richard J. Kogan....... 1993 $ 735,000 $551,000 -- $ 848,000 30,000 $ 125,484
President and Chief 1992 680,000 498,000 -- 942,000 30,000 118,564
Operating Officer 1991 620,000 451,500 -- 780,000 30,000 --
Hugh A. D'Andrade...... 1993 $ 492,500 $335,500 -- $ 424,000 11,200 $ 82,361
Executive Vice 1992 460,000 306,000 -- 471,000 10,600 83,035
President 1991 420,000 278,500 -- 390,000 12,600 --
Administration
Donald R. Conklin...... 1993 $ 492,500 $326,000 -- $ 424,000 11,200 $ 80,364
Executive Vice 1992 460,000 297,000 -- 471,000 10,500 75,637
President 1991 420,000 270,000 -- 390,000 12,600 --
Pharmaceuticals
David E. Collins....... 1993 $ 480,000 $298,500 -- $ 424,000 9,600 $ 167,193
Executive Vice 1992 455,000 287,000 -- 471,000 10,500 235,807
President 1991 415,000 275,000 -- 390,000 11,000 --
HealthCare Products
</TABLE>
- ---------------
(a) Includes non-cash compensation in the amount of $46,824 in 1993 and $50,362
in 1992 for transportation provided by the Corporation.
(b) Shares are distributable in five equal annual installments, and cash
equivalent to the amount of dividends on the Corporation's Common Shares is
paid on all undistributed shares. The annual installments of awards granted
in February each year are typically distributed in December, commencing in
the year prior to the first anniversary of the award date. In order to
avoid the possible loss to the Corporation of a Federal income tax
deduction because of a change in the Federal tax laws which would be
effective for 1994 and thereafter, all of the annual installments under the
February 1993 awards to the named executive officers were distributed in
December 1993; however, installments under awards made prior to February
1993 were not distributed in December, and will be distributed on each
anniversary of the award date. This change preserves the income tax
deduction for the Corporation and does not result in any additional income
to the officers. In February 1993 restricted stock awards were granted to
Mr. Luciano for 26,000 shares, to Mr. Kogan for 16,000 shares and to each
of Messrs. D'Andrade, Conklin and Collins for 8,000 shares. At December 31,
1993, the total number and value of undistributed shares for the named
executive officers were: Mr. Luciano 52,000 shares ($3,562,000); Mr. Kogan
32,000 shares ($2,192,000); Mr. D'Andrade 16,000 shares ($1,096,000); Mr.
Conklin 16,000 shares ($1,096,000); Mr. Collins 16,000 shares ($1,096,000).
(c) Consists of, respectively, contributions under the profit-sharing plans of
the Corporation, and the cost of supplemental life and medical insurance:
for 1993, Mr. Luciano ($160,500 and $17,794); Mr. Kogan ($110,250 and
$15,234); Mr. D'Andrade ($73,875 and $8,486); Mr. Conklin ($73,875 and
$6,489); Mr. Collins ($72,000 and $10,393); and for 1992, Mr. Luciano
($147,750 and $33,420); Mr. Kogan ($102,000 and $16,564); Mr. D'Andrade
($69,000 and $14,035); Mr. Conklin ($69,000 and $6,637); Mr. Collins
($42,656 and $4,751). In addition, for Mr. Collins, includes cash payments
of $84,800 in 1993 and $188,400 in 1992 pursuant to his employment
agreement referred to on page 10.
EMPLOYMENT AND TERMINATION ARRANGEMENTS
Mr. Luciano has an agreement providing for his employment until December
31, 1995 as Chairman of the Board and Chief Executive Officer, and then as
Chairman of the Board and Chairman of the Executive
9
<PAGE> 12
Committee until November 1, 1998 at an annual base salary of not less than
$710,000. Mr. Kogan has an agreement providing for his employment as President
and Chief Operating Officer through September 30, 1994 at an annual base salary
of not less than $500,000. Mr. Kogan's agreement provides that his employment is
automatically extended on a yearly basis unless either he or the Corporation
gives notice to terminate the agreement within 30 days of its scheduled
expiration date. Under each agreement, if the executive's employment is
terminated (i) by reason of death or disability, (ii) by the Corporation without
cause, (iii) by the executive for good reason, or (iv) within a 30-day period
following the first anniversary of a change of control, he is generally entitled
to (i) receive a lump sum equal to two times (a) his annual base salary and (b)
the higher of his most recent incentive compensation and profit-sharing awards
and the average of such awards for the three preceding years, and (ii) continue
in the Corporation's retirement and benefit plans. If the executive remains
employed through the first anniversary of a change of control, the executive is
entitled to a special bonus equal to (i) his annual base salary and (ii) the
higher of his most recent incentive compensation and profit-sharing awards and
the average of such awards for the three preceding years. If his employment
terminates for any of the other reasons enumerated above and the special bonus
has not been paid, then his severance payment is increased by an amount equal to
the special bonus. A change of control is generally defined as (i) the
acquisition of 20% or more of the Common Shares, (ii) a change in a majority of
the Board of Directors, unless approved by the incumbent directors (other than
as a result of a contested election) and (iii) certain reorganizations, mergers,
consolidations, liquidations or dissolutions. If any payment or distribution by
the Corporation to the executive is determined to be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code, he is entitled to receive
from the Corporation a payment on an after-tax basis equal to the excise tax
imposed. Additionally, each agreement provides for retirement benefits as
described in the Pension Plan Table on page 12.
Mr. Collins has an agreement providing for his employment as Executive Vice
President of the health care products operations of the Corporation at an annual
base salary of not less than $385,000. Under the agreement, Mr. Collins received
through 1993 an annual award of 8,000 Deferred Stock Units under the Stock
Incentive Plan, and cash payments in an amount equal to the market value of the
Corporation's stock for 1,600 shares in 1993 and 3,200 shares in 1992. These
cash payments to Mr. Collins are included in the summary compensation table. If
Mr. Collins' employment is terminated without cause, or within two years
following a change of control of the Corporation, he is entitled to receive a
severance payment of three times his highest remuneration (including incentive
compensation and profit-sharing) in any of the three years prior to the
termination, but not to exceed a pro rata amount if his normal retirement would
have been less than three years from the termination date.
Certain officers, including Messrs. Conklin and D'Andrade, have agreements
with the Corporation providing for a severance payment in the event of a
termination of employment other than for normal retirement, death, willful
misconduct, or permanent disability within two years following a change of
control of the Corporation. A change of control is generally defined in these
agreements as a change in a majority of the directors as a result of (a) a
tender offer or other acquisition of securities, or (b) a merger, consolidation,
or sale of assets, or (c) a contested election. In the event the officer's
employment is so terminated, he will receive a severance payment of two times
(for Mr. D'Andrade), or three times (for Mr. Conklin) his highest remuneration
(including incentive compensation and profit-sharing) in any of the three years
prior to his termination, but not to exceed a pro rata amount if his normal
retirement would have been less than two or three years from the termination
date.
Under separate agreements with certain officers and key executives,
including Messrs. Collins, Conklin and D'Andrade, in the event that any payment
or distribution to such officers or executives is determined to be subject to
the excise tax imposed by Section 4999 of the Internal Revenue Code, then the
officer or executive shall receive from the Corporation a payment on an
after-tax basis equal to the excise tax imposed.
10
<PAGE> 13
OPTION TABLES
The following tables provide information with respect to stock options
granted to or held by the named executive officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS GRANT DATE VALUE
------------------------------------------------------- ----------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS GRANTED
OPTIONS TO EMPLOYEES IN EXERCISE EXPIRATION GRANT DATE
NAME GRANTED(A) FISCAL YEAR PRICE DATE PRESENT VALUE(B)
- --------------------------------- ---------- --------------- -------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Robert P. Luciano................ 44,000 7.2% $53.00 2/21/03 $622,600
Richard J. Kogan................. 30,000 4.9 53.00 2/21/03 424,500
Hugh A. D'Andrade................ 11,200 1.8 53.00 2/21/03 158,480
Donald R. Conklin................ 11,200 1.8 53.00 2/21/03 158,480
David E. Collins................. 9,600 1.6 53.00 2/21/03 135,840
</TABLE>
- ---------------
(a) All options are for a term of 10 years and become exercisable after one year
on February 22, 1994. The exercise price of the option is the market value
of the Common Shares on the date of grant. Limited stock appreciation
rights accompany the options and only become exercisable for a period of 30
days after the occurrence of a change of control. Although permitted under
the plan, no standard stock appreciation rights were granted in tandem with
the options.
(b) Options are valued using the Black-Scholes method with the following
assumptions: the average dividend yield from the second quarter of 1988 to
the first quarter of 1993 (2.62%); volatility of the Corporation's
quarterly total returns from the second quarter of 1988 to the first
quarter of 1993 (0.1686); an annualized risk-free interest rate of 6.0%;
and an option term of 10 years. However, options will have no actual value
unless, and only to the extent that, the price of the Common Shares
appreciates from the grant date to the exercise date. If the named officers
realize the grant date values shown in the table, total shareholder value
will have appreciated by approximately $2.7 billion, and the value of the
named officers' options will be approximately 0.05% of the total
shareholder appreciation.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FY-END AT FY-END
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------- ----------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert P. Luciano............ 94,932 $1,886,773 176,000 144,000 $3,063,500 $3,869,500
Richard J. Kogan............. 61,052 1,281,434 120,000 130,000 2,088,750 3,652,500
Hugh A. D'Andrade............ 32,590 692,538 49,700 111,200 884,187 3,361,100
Donald R. Conklin............ 12,170 214,496 62,470 111,200 1,142,234 3,361,100
David E. Collins............. -- -- 73,310 69,600 1,360,989 2,061,300
</TABLE>
11
<PAGE> 14
PENSION PLAN TABLE
The approximate total annual benefits payable upon retirement at age 65 in
specified compensation and years of service classifications are shown in the
following table.
<TABLE>
<CAPTION>
APPROXIMATE ANNUAL BENEFIT
HIGHEST AVERAGE ANNUAL ------------------------------------------------------------
COMPENSATION FOR ANY PERIOD 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
OF 60 CONSECUTIVE MONTHS DURING OF OF OF OF OF
LAST 120 MONTHS OF EMPLOYMENT SERVICE SERVICE SERVICE SERVICE SERVICE
- ------------------------------- -------- --------- --------- --------- ---------
<C> <S> <C> <C> <C> <C> <C>
$800,000....................... $280,000 $ 320,000 $ 360,000 $ 400,000 $ 440,000
1,000,000....................... 350,000 400,000 450,000 500,000 550,000
1,200,000....................... 420,000 480,000 540,000 600,000 660,000
1,600,000....................... 560,000 640,000 720,000 800,000 880,000
2,000,000....................... 700,000 800,000 900,000 1,000,000 1,100,000
2,200,000....................... 770,000 880,000 990,000 1,100,000 1,210,000
2,400,000....................... 840,000 960,000 1,080,000 1,200,000 1,320,000
2,600,000....................... 910,000 1,040,000 1,170,000 1,300,000 1,430,000
</TABLE>
The table above reflects benefits on a life annuity basis and amounts
payable are not subject to Social Security or other offset. Covered compensation
consists of salary and bonus which, for the named executive officers, is shown
in the Summary Compensation Table on page 9. The credited years of service as of
December 31, 1993 for such named individuals are: Mr. Collins (4 years); Mr.
Conklin (31 years); Mr. D'Andrade (13 years); Mr. Kogan (11 years); and Mr.
Luciano (16 years). Additionally, under their employment agreements referred to
on pages 9 and 10, Messrs. Kogan and Luciano are entitled to receive a minimum
annual benefit of 55% of final annual average compensation upon retirement at or
after age 62, and if their employment is terminated at any time (a) by the
Corporation without cause, (b) by them for good reason, or (c) in the 30-day
period immediately following the anniversary of a change of control (as defined
in the employment agreements), a pension benefit determined as though they had
continued in employment for three years following the date of termination.
12
<PAGE> 15
PERFORMANCE GRAPH
COMPARISON OF CUMULATIVE TOTAL RETURN
FOR THE FIVE YEARS ENDED DECEMBER 31, 1993
(GRAPH)
<TABLE>
<CAPTION>
1988 1989 1990 1991 1992 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Schering-Plough Corporation 100 154 164 249 248 274
Composite Peer Group Index 100 139 163 255 210 194
S&P 500 Index 100 132 128 166 179 197
</TABLE>
The graph above assumes a $100 investment on December 31, 1988, and
reinvestment of all dividends, in the Corporation's Common Shares, the S&P 500
Index, and a composite peer group of the following drug and health care
companies: Abbott Laboratories, American Cyanamid Company, American Home
Products Corporation, Bristol-Myers Squibb Company, Johnson & Johnson, Eli Lilly
and Company, Merck & Co., Inc., Pfizer Inc., Syntex Corporation, The Upjohn
Company, and Warner-Lambert Company.
COMPENSATION COMMITTEE REPORT
PRINCIPLES AND PROGRAM
The Corporation's executive compensation program is fundamentally a
"pay-for-performance" program. It is designed to
- target executive compensation at a level sufficient to ensure the
Corporation's ability to attract and retain superior executives;
- motivate those executives to advance shareholder interests with
compensation plans that are tied to the Corporation's operating and
market performance; and
- provide a compensation package that balances individual contributions
and overall business results.
To meet those objectives, the program has both cash and equity
elements -- base salary, an annual incentive bonus, and long-term equity-based
compensation. In determining executive compensation, the Executive Compensation
and Organization Committee (the "Committee") evaluates both the total
compensation package and its individual elements. As part of its review, the
Committee considers compensation data, developed by established and independent
compensation consultants, for companies that represent the Corporation's direct
competitors for executive talent. The data include information on those drug and
health
13
<PAGE> 16
care companies within the peer index used in the Performance Graph in the proxy
statement, other pharmaceutical and consumer products companies, including some
for which public information is not available, and other industrial companies
with which competition for executives exists. The Committee annually ratifies
the selection of the Corporation's principal compensation consultant.
The Committee believes that executive compensation should serve the broader
strategic goals of the Corporation and thereby promote the creation of long-term
shareholder value.
CASH-BASED COMPENSATION
SALARY -- The Committee assesses a number of factors in fixing the salary
of the executive officers (including the five most highly compensated), such as
the responsibility of the particular position, the individual's performance, the
Corporation's overall financial performance, certain non-financial indicators of
corporate performance, and the business and inflationary climate. In addition,
in the case of executive officers with responsibility for a particular business
unit, the Committee considers such unit's financial results. Non-financial
indicators can include, among other things, strategic developments for which an
executive officer has responsibility (such as acquisitions or product approvals
and development), or managerial performance (such as succession planning,
resource allocation and social responsibility). The evaluation of an executive's
non-financial indicators is reflected in his performance rating, as is the case
for all employees.
Each year, the Committee reviews with the Chief Executive Officer his
performance ratings of the other executive officers, and evaluates compensation
levels against levels at the competitor companies. Established and independent
compensation consultants are used to confirm that the salary levels at the
Corporation are within the peer group range. To ensure that compensation policy
for the top executive officers is consistent with overall Corporation results
and executive compensation strategies, the Committee reviews the compensation
awarded to the approximately 90 most highly compensated executives.
Based on the Committee's evaluation of these same factors, Mr. Luciano, the
Corporation's Chief Executive Officer, was awarded a base salary of $1,070,000
for 1993, an 8.6% increase over the prior year. Mr. Luciano is subject to a
long-term employment contract. The Committee believes that given Mr. Luciano's
record, his status in the industry, and his experience and leadership, such
contract significantly benefits the Corporation and the shareholders by securing
Mr. Luciano's services for the future and by encouraging him to focus on the
long-term strategic interests of the Corporation.
The Committee fixed the 1993 salaries of the Corporation's executive
officers, including the Chief Executive Officer, to fall within a range above
the median but below the high end of the salary levels at the competitor
companies. In fixing salaries within these competitive ranges, the Committee
considered principally the financial indicators of corporate performance
referred to above, and to a lesser extent the non-financial indicators reflected
in individual performance ratings, although no particular weighting was assigned
to any such factor.
ANNUAL INCENTIVE BONUS -- The Executive Incentive Plan, the Corporation's
bonus plan, allows the Committee to make cash awards to the executive officers
based on certain financial and non-financial indicators of corporate
performance. The amount of these cash awards to the Corporation's executive
officers, including the Chief Executive Officer, bears a significant
relationship to corporate financial performance since a combined 75% weighting
of the target award is assigned to measurable financial indicators. Each year,
the Committee sets earnings per share and return on equity targets for the
coming year based on a comparison to the performance of major drug and health
care companies, and a pre-tax earnings target. The Committee awards bonuses
based principally on the extent to which the established corporate financial
targets have been achieved, with the earnings per share and return on equity
targets each assigned a 20% weighting, and the pre-tax earnings target assigned
a weighting of 35%. As in the case of the decisions concerning salary, in
awarding a bonus the Committee also considers the non-financial factors
reflected in the performance evaluation and described above under "Salary." Such
non-financial factors, however, cannot constitute the basis for more than 25% of
the target bonus award. In 1993, corporate results either met or exceeded the
targets; earnings per share before accounting changes grew by 18%, pre-tax
earnings increased 13%, and return on equity equaled 46%.
14
<PAGE> 17
Based on these results, Mr. Luciano was awarded a bonus of $947,000 for
1993, an increase of 11% over the prior year. In awarding the bonus, the
Committee also considered Mr. Luciano's continued role in promoting the
long-term strategic growth of the Corporation as is reflected by the consistent
improvement in the Corporation's financial performance.
EQUITY-BASED COMPENSATION
STOCK INCENTIVE PLAN -- Under the Stock Incentive Plan, which was adopted
pursuant to shareholder approval, the Committee can grant stock options and
restricted stock awards to the executive officers and other key employees. The
Committee relies on a valuation of stock options provided by its independent
compensation consultant using the Black-Scholes valuation methodology.
Restricted stock awards are also assigned a dollar value based on the share
price at the time of grant and discounted for vesting restrictions. Stock
options are awarded with an exercise price equal to the market price at the time
of grant, are first exercisable after one year and generally are exercisable for
a term of ten years. Restricted stock awards are generally distributable ratably
over five years.
The Committee sets guidelines for the size of the awards for each of the
executive officers except for Mr. Luciano, and for Mr. Kogan, the Corporation's
Chief Operating Officer, based on the performance evaluation and competitive
compensation data used to determine salary. In the case of Messrs. Luciano and
Kogan, because of their status as the Corporation's most senior officers and the
important role they have in achieving overall corporate goals, the Committee in
making their awards sets no fixed guideline, but takes into consideration their
total compensation package and competitive compensation data, overall corporate
financial performance, Messrs. Luciano's and Kogan's role in attaining such
results, and the number of options and awards previously granted, although no
particular weighting is assigned to any factor. In 1993, the Committee awarded
Mr. Luciano 44,000 stock options and 26,000 restricted stock awards, the same
number of options and awards granted in 1992 and 1991.
The Committee believes that this long-term equity-based compensation aligns
the interest of the executive officers with that of the shareholders, as any
appreciation in the price of the stock will benefit all shareholders
commensurately, and particularly in the case of the restricted stock awards
which are received by the executive officers over time. Additionally, the
restricted stock awards, since they vest over a five year period, can serve as
an inducement for the officers to remain with the Corporation.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to public companies for compensation over $1,000,000
paid to the Chief Executive Officer and the four other most highly compensated
executive officers for 1994 and thereafter. Qualifying performance-based
compensation will not be subject to the deduction limit if certain requirements
are met. The Committee has restructured the annual incentive bonus and long-term
equity-based compensation programs for its most senior executives so that such
bonuses and restricted stock awards should constitute qualifying
performance-based compensation under Section 162(m), subject to shareholder
approval of a program that includes objective performance goals for the payment
of certain cash incentive bonuses under the Executive Incentive Plan.
EXECUTIVE COMPENSATION AND
ORGANIZATION COMMITTEE
James Wood, Chairman
Virginia A. Dwyer
H. Barclay Morley
Richard de J. Osborne
R. J. Ventres
15
<PAGE> 18
DESIGNATION OF AUDITORS
Upon the recommendation of the Finance and Audit Committee, the Board of
Directors has designated Deloitte & Touche to audit the books and accounts of
the Corporation for the year ending December 31, 1994, and will offer a
resolution at the meeting to ratify said designation. Deloitte & Touche has been
the principal auditor of the Corporation since its formation in 1970.
Representatives of Deloitte & Touche will be present at the meeting to respond
to appropriate questions, and they will have an opportunity, if they desire, to
make a statement.
EXECUTIVE INCENTIVE BONUS PROGRAM, INCLUDING PERFORMANCE GOALS
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), which was enacted in 1993 and becomes effective in 1994, generally
disallows a tax deduction to a public company for compensation over $1,000,000
paid to any individual who, on the last day of a taxable year, is the chief
executive officer or among the four other highest compensated officers of the
company. Compensation is generally exempted from the deduction limit as
"qualifying performance-based compensation" if (i) it is compensation payable on
account of the attainment of one or more objective performance goals; (ii) the
performance goals are established by a compensation committee of the board of
directors that is comprised solely of two or more outside directors; (iii) the
material terms under which the compensation is to be paid, including the
performance goals, are disclosed to and approved by shareholders before payment;
and (iv) the compensation committee certifies that the performance goals have
been satisfied before payment.
The Board of Directors believes that the consistently strong financial
performance of the Corporation attests to the effectiveness of its
"pay-for-performance" executive compensation program. The Board has also
determined that the program should be structured so as to avoid, if possible,
the payment of compensation that is non-deductible under Section 162(m). It
should be noted, however, that because Section 162(m) is newly enacted and the
Internal Revenue Service has not yet promulgated final regulations interpreting
it, it is impossible to be certain that all compensation paid by the Company
will be deductible under Section 162(m). Moreover, unanticipated future events,
such as a change of control of the Company or a change in executive personnel,
could result in the disallowance of compensation deductions under Section
162(m).
For more than 20 years the Corporation has maintained the Executive
Incentive Plan (the "Incentive Plan") in order to (a) improve corporate and
individual performance through financial incentives which provide rewards to
executives and managers whose activities most significantly affect the
profitability of the Corporation; (b) support the planning efforts of the
Corporation and encourage cooperation and group effort toward the attainment of
corporate goals; and (c) help attract and retain outstanding executives and
managers.
Each year the Executive Compensation and Organization Committee of the
Board (the "Committee") designates those key executives and managers of the
Corporation who are to participate in the Incentive Plan and sets financial and
non-financial performance targets for the coming year. In recent years, the
Committee has made cash incentive bonus awards under the Incentive Plan to the
executive officers named in the Summary Compensation Table based principally on
the extent to which objective financial performance goals were achieved or
exceeded. However, the Committee also considered the executive officer's
individual performance evaluation, which took into account subjective,
non-financial factors.
In order to help preserve the tax deductibility of cash incentive bonus
awards under the Incentive Plan in light of the new tax provisions, the
Committee has determined to utilize only the objective performance goals as the
criteria for determining the maximum bonus awards for certain senior executives,
while retaining the discretion to reduce the amount of such awards after
considering other subjective factors, such as the Committee's judgment of an
individual executive's performance. To this end, the Committee has adopted,
subject to shareholder approval, the Executive Incentive Bonus Program (the
"Bonus Program"), including the Performance Goals, described below, for Covered
Executives, and the Board unanimously recommends that the shareholders approve
such Program and Goals. For purposes of the Bonus Program, "Covered Executive"
means the Chairman of the Board, the Chief Executive Officer, the Chief
Operating Officer, an Executive Vice President, and the President of each of
Schering-Plough Research Institute, Schering Laboratories and Schering-Plough
International. The Corporation currently has nine Covered Executives.
16
<PAGE> 19
The amount of a Covered Executive's incentive award for any calendar year
("Plan Year") will be determined by a formula that measures the Corporation's
actual earnings per share, return on equity and pre-tax earnings for the Plan
Year against the Performance Goal for Earnings Per Share, the Performance Goal
for Return on Equity and the Performance Goal for Pre-Tax Earnings established
by the Committee. The "Performance Goal for Earnings Per Share" for a Plan Year
means the average of the First Call Corporation consensus projected earnings per
share growth of the Peer Group for their fiscal year ending in such Plan Year.
The "Performance Goal for Return on Equity" for a Plan Year means the average
return on equity of the Peer Group for the five consecutive years ending with
the second year prior to the commencement of such Plan Year. "Peer Group" means
the drug and health care companies within the peer index used in the Performance
Graph on page 13. The "Performance Goal for Pre-Tax Earnings" for a Plan Year
means the Corporation's planned income before income taxes for such Plan Year as
approved by the Committee.
The Committee has fixed specified percentages of base salary as target
incentive bonus awards ("Target Awards") for Covered Executives, and each
Performance Goal has been assigned a one-third weighting toward the attainment
of the Target Award. To the extent that actual earnings per share, return on
equity and pre-tax earnings are equal to, greater than, or less than, the
corresponding Performance Goal, the actual cash incentive bonus award of a
senior executive may be equal to, greater than, or less than, his Target Award.
Actual earnings per share, return on equity and pre-tax earnings will be based
upon amounts shown in the Corporation's financial statements in its Annual
Report to shareholders, as adjusted for accounting changes and other special
items set forth in the Bonus Program and certified by the Corporation's
independent auditors. The Committee may, in its discretion, reduce the amount of
the incentive bonus award determined pursuant to the Program formula when the
Committee's consideration of other subjective factors, such as its judgment of
an individual's performance, so warrants. However, the Committee may not
increase the amount of any incentive bonus award determined pursuant to the
Program formula, and in no event may an incentive bonus award for any Plan Year
to any Covered Executive exceed $1,750,000. While the amount of the incentive
bonus that may be awarded to a Covered Executive for any Plan Year cannot be
determined, the Corporation believes that if the Bonus Program had been in
effect for 1993, the executive officers named in the Summary Compensation Table
would have received bonuses in approximately the same amounts as are shown in
the Table for 1993.
Cash incentive bonus awards for a Plan Year will be payable to the Covered
Executives following the close of such Plan Year not earlier than the date on
which the Committee certifies in writing that the Performance Goals and other
material terms of the Bonus Program have been satisfied. A Covered Executive may
elect either to receive his award currently, or to have any part of such award
deferred. Deferred amounts will be valued as if invested in any of certain fixed
income, money market, and equity funds or indices, and/or the Corporation's
Common Shares. The Bonus Program is administered by the Committee, which is
composed entirely of "outside directors" as defined in Section 162(m) of the
Code and the proposed regulations thereunder.
The payment of a cash incentive bonus award to any Covered Executive shall
be subject to the approval of the Bonus Program, including the Performance
Goals, by the shareholders. Approval of the Bonus Program, including the
Performance Goals, must receive more votes cast in favor of such proposal by
holders of shares present in person or represented by proxy at the Annual
Meeting and entitled to vote thereon than votes cast in opposition to such
proposal by such holders. Abstentions and broker non-votes will not be included
in determining the number of votes cast.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE
FOR THE APPROVAL OF THE BONUS PROGRAM, INCLUDING THE PERFORMANCE GOALS,
DESCRIBED ABOVE.
17
<PAGE> 20
OTHER BUSINESS
The By-laws of the Corporation provide a formal procedure for bringing
business before the Meeting. A shareholder proposing to present a matter before
the Meeting is required to deliver to the Secretary of the Corporation, not less
than 30 nor more than 60 days prior to the Meeting, (or in the event that less
than 40 days' notice or prior public disclosure of the date of the Meeting is
given or made, not later than the close of business on the 10th day following
such notice or disclosure), a notice with a brief description of the business
desired to be brought, the name and address of the shareholder and the number of
shares of the Corporation's stock the shareholder beneficially owns, and any
material interest of the shareholder in such business. If such procedures are
not complied with, the proposed business shall not be transacted at the Meeting.
The Board of Directors knows of no other business which will be presented
at the meeting. If, however, other matters are properly presented, the persons
named in the enclosed proxy will vote the shares represented thereby in
accordance with their best judgment.
1995 ANNUAL MEETING OF SHAREHOLDERS
If any shareholder intends to present a proposal for consideration at the
1995 Annual Meeting of Shareholders, such proposal must be received by the
Corporation not later than November 25, 1994 for inclusion in the Corporation's
proxy statement for such meeting.
18
<PAGE> 21
CAPITAL ACCUMULATION PLANS
OF
SCHERING-PLOUGH
VOTING INSTRUCTIONS
Under the Capital Accumulation Plans of the Corporation (the "Plans"),
you may direct the voting of the shares credited to your accounts under the
Plans at the Corporation's Annual Meeting of Shareholders on April 26, 1994.
The number of shares shown on the reverse side represents the total share
holdings you have in the Plans in which you participate.
Enclosed is a copy of the Notice of Annual Meeting and Proxy Statement
describing the items to be presented at the meeting. If no direction is given,
shares will be voted FOR items 1, 2 and 3.
UNLESS YOU SIGN AND RETURN THE CARD, YOUR SHARES CANNOT BE VOTED.
To: Vanguard Fiduciary Trust Company as Trustee.
In accordance with the provisions of the Plans, I hereby direct that,
at the Annual Meeting of Shareholders of Schering-Plough Corporation on April
26, 1994, and at all adjournments or postponements thereof, the number of
shares of Schering-Plough Corporation stock credited to my accounts under the
Plans and entitled to vote at said meeting shall be voted or caused to be voted
as specified.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
<TABLE>
<CAPTION>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSALS:
<S> <C>
1. Election of Directors
Nominees are: David C. Garfield, Robert P. Luciano, H. Barclay Morley
(To withhold authority to vote for any individual nominee, draw a
line through the nominee's name above.)
[ ] FOR [ ] WITHHELD
2. Ratification of Designation of Independent Auditors
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Approval of Executive Incentive Bonus Program, including Performance Goals
[ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
THIS PROXY WILL BE VOTED FOR ITEMS 1, 2 and 3 , UNLESS INSTRUCTIONS TO THE
CONTRARY ARE INDICATED.
Change of address and/or comments, mark here [ ]
PROXY DEPARTMENT
NEW YORK, N.Y. 10203-0013
DATED: 1994
--------------------------------
-------------------------------------------
SIGNATURE
PLEASE COMPLETE, DATE, SIGN AND MAIL CARD IN THE ENVELOPE PROVIDED. POSTAGE
NOT NECESSARY IF MAILED IN THE UNITED STATES
VOTE MUST BE INDICTED (X) IN BLACK OR BLUE INK. [X]
<PAGE> 22
SCHERING-PLOUGH CORPORATION-PROXY
SOLICITED BY BOARD OF DIRECTORS
FOR
ANNUAL MEETING OF SHAREHOLDERS-APRIL 26, 1994
The undersigned appoints HUGH A. D'ANDRADE, RICHARD J. KOGAN, AND
ROBERT P. LUCIANO, or any one or more of them, attorneys and proxies with power
of substitution to vote all of the Common Shares of SCHERING-PLOUGH CORPORATION
standing in the name of the undersigned at the Annual Meeting of Shareholders
on April 26, 1994, and at all adjournments or postponements thereof, upon the
matters set forth in the Notice and Proxy Statement of said meeting, receipt of
which is acknowledged.
The shares represented by this proxy will be voted as directed by the
Shareholder. IF YOU WISH TO VOTE IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE
BOARD OF DIRECTORS, YOU MAY SIGN ON THE REVERSE SIDE AND MAIL IN THE ENVELOPE
PROVIDED. If no direction is given, shares will be voted FOR items 1, 2 and 3.
Specific choices may be made on the reverse side.
(Continued and to be signed on the reverse side)
<TABLE>
<CAPTION>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1, 2 and 3.
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1. Election of Directors
Nominees are: David C. Garfield, Robert P. Luciano, H. Barclay Morley
(To withhold authority to vote for any individual nominee, line through
the nominee's name above.)
[ ] FOR [ ] WITHHELD
2. Ratification of Designation of Independent Auditors
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Approval of Executive Incentive Bonus Program, including Performance Goals
[ ] FOR [ ] AGAINST [ ] ABSTAIN
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THIS PROXY WILL BE VOTED FOR ITEMS 1, 2 and 3, UNLESS
INSTRUCTIONS TO THE CONTRARY ARE INDICATED.
Change of address and/or comments, mark here [X]
PROXY DEPARTMENT
NEW YORK, N.Y. 10203-0371
DATED: 1994
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SIGNATURE
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SIGNATURE
(Please sign exactly as name or names appear
hereon. Full title of one signing in
representative capacity should be clearly
designated after signature. Names of all
joint holders should be written even if
signed by only one.)
PLEASE COMPLETE, DATE, SIGN AND MAIL PROXY CARD IN THE ENVELOPE PROVIDED.
POSTAGE NOT NECESSARY IF MAILED IN THE UNITED STATES.
VOTE MUST BE INDICATED (X) IN BLACK OR BLUE INK. [X]
