<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
STRYKER CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant As Specified In Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
STRYKER CORPORATION
P.O. BOX 4085
KALAMAZOO, MICHIGAN 49003-4085
-------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 21, 1998
-------------------------
The Annual Meeting of Stockholders of Stryker Corporation will be held on
Tuesday, April 21, 1998, at 2:00 p.m., at the Radisson Plaza Hotel at The
Kalamazoo Center, Kalamazoo, Michigan, for the following purposes:
1. To elect seven directors;
2. To consider and act upon adoption of the 1998 Stock Option Plan; and
3. To transact such other business as may properly come before the meeting.
All stockholders are cordially invited to attend the meeting. Only holders
of record of Common Stock at the close of business on February 27, 1998 are
entitled to notice of and to vote at the meeting. If you attend the meeting, you
may vote in person if you wish, even though you previously have returned your
proxy.
A copy of the Company's 1997 Annual Report is enclosed.
STOCKHOLDERS ARE URGED TO COMPLETE,
DATE AND SIGN THE ENCLOSED PROXY AND
RETURN IT IN THE ACCOMPANYING ENVELOPE
David J. Simpson,
Secretary
March 12, 1998
<PAGE> 3
STRYKER CORPORATION
P.O. BOX 4085
KALAMAZOO, MICHIGAN 49003-4085
------------------------
PROXY STATEMENT
------------------------
This proxy statement is furnished in connection with the solicitation by
the Board of Directors of Stryker Corporation of proxies to be used at the
Annual Meeting of Stockholders of the Company to be held on Tuesday, April 21,
1998, and at all adjournments thereof. The solicitation will begin on or about
March 12, 1998.
All shares represented by a properly executed proxy will be voted unless it
is revoked and, if a choice is specified, will be voted in accordance with such
specification. If no choice is specified, the proxies will be voted FOR the
election of the seven nominees named under "Election of Directors," unless
authority to do so is withheld with respect to one or more of such nominees, and
FOR the adoption of the 1998 Stock Option Plan (the "1998 Plan"). A stockholder
may revoke a proxy at any time prior to the voting thereof.
Brokers holding shares of Common Stock for beneficial owners must vote
those shares according to specific instructions they receive from the owners. If
instructions are not received, brokers may vote those shares at their discretion
except on matters, such as the adoption of the 1998 Plan, as to which the rules
of the New York Stock Exchange preclude brokers from exercising their voting
discretion. On such matters, the absence of instructions results in a "broker
non-vote." Directors will be elected by a plurality of the votes cast at the
meeting. Approval of the adoption of the 1998 Plan will require a majority of
the votes cast. Votes that are withheld with respect to the election of
directors will be excluded entirely from the calculation and will have no effect
on the outcome. With respect to the adoption of the 1998 Plan, abstentions and
broker non-votes will have the effect of reducing the number of required
affirmative votes. In addition, a proxy will be voted in the discretion of the
proxyholders with respect to such other business as may properly come before the
meeting.
There were outstanding as of the close of business on February 27, 1998,
the record date for the determination of stockholders entitled to notice of and
to vote at the meeting, 96,235,065 shares of Common Stock of the Company. Each
share is entitled to one vote on each matter brought before the meeting.
Any proposal that a stockholder may desire to present to the 1999 Annual
Meeting must be received by the Company at the above address on or prior to
November 12, 1998 in order for such proposal to be considered for inclusion in
the proxy statement and form of proxy for such meeting.
1
<PAGE> 4
BENEFICIAL OWNERSHIP OF MORE THAN 5%
OF THE OUTSTANDING COMMON STOCK
As used in this proxy statement, "beneficial ownership" means the sole or
shared power to direct the voting and/or disposition of shares of Common Stock.
In addition, a person is deemed to have beneficial ownership of any shares of
Common Stock that such person has the right to acquire within 60 days.
The following table sets forth, as of January 31, 1998 except as otherwise
indicated, certain information with respect to the beneficial ownership of
Common Stock by each person known to the Company to be the beneficial owner of
more than 5% of the outstanding shares of Common Stock.
<TABLE>
<CAPTION>
NAME AND ADDRESS PERCENT
OF BENEFICIAL OWNER NUMBER OF SHARES OF CLASS
- ------------------- ---------------- --------
<S> <C> <C>
Arcadia Bank and Trust Company(1)........................... 22,850,100 23.8%
P.O. Box 50566
Kalamazoo, Michigan 49005
Putnam Investments, Inc.(2)................................. 7,441,304 7.7%
One Post Office Square
Boston, Massachusetts 02109
</TABLE>
- -------------------------
(1) Arcadia Bank and Trust Company owns such shares as Trustee of a trust for
the benefit of members of the Stryker family (the "Stryker Trust"). Under
the terms of the trust agreement, an Advisory Committee, consisting of Jon
L. Stryker, Patricia A. Short, Ronda E. Stryker, Gerard Thomas and Elizabeth
S. Upjohn-Mason, has full voting and disposition power with respect to the
shares of Common Stock owned by the Stryker Trust. Ronda E. Stryker is
currently a director of the Company. A majority vote of the Advisory
Committee is necessary with respect to matters regarding the shares of
Common Stock held in the Stryker Trust, including voting and disposition.
(2) Based solely upon information contained in a Schedule 13G, dated January 16,
1998, filed with the Securities and Exchange Commission. According to the
Schedule 13G, Putnam Investments, Inc. ("PI") and certain registered
investment advisers that are wholly owned by PI are considered "beneficial
owners" of an aggregate of 7,441,304 shares of Common Stock that are, in
turn, beneficially owned by clients of such investment advisers, including
members of the Putnam family of mutual funds and certain other institutional
clients. Of the total amount reported beneficially owned by PI, Putnam
Investment Management, Inc. has shared dispositive power over 7,025,317
shares of Common Stock and The Putnam Advisory Company, Inc. has shared
voting power over 222,187 shares and shared dispositive power over 415,987
shares. PI is a wholly owned subsidiary of Marsh & McLennan Companies, Inc.
2
<PAGE> 5
BENEFICIAL OWNERSHIP
OF MANAGEMENT
The following table sets forth certain information with respect to the
ownership of shares of Common Stock by the current directors of the Company, all
of whom are standing for reelection, the Named Executives referred to under the
caption "Executive Compensation" and all executive officers and directors of the
Company as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES AND
PERCENT OF CLASS OF
COMMON STOCK OF THE
COMPANY OWNED
BENEFICIALLY AS OF
NAME JANUARY 31, 1998(1)
- ---- --------------------
<S> <C>
John W. Brown............................................... 4,657,378 (4.8%)
Howard E. Cox, Jr. ......................................... 182,400
Ronald A. Elenbaas.......................................... 316,472
Donald M. Engelman, Ph.D. .................................. 65,600
Jerome H. Grossman, M.D. ................................... 61,200
William T. Laube............................................ 348,590
John S. Lillard............................................. 144,420
Edward B. Lipes............................................. 154,901
William U. Parfet........................................... 21,800
David J. Simpson............................................ 346,620
Ronda E. Stryker............................................ 25,260,320(26.3%)(2)
Executive officers and directors as a group (15 persons).... 31,682,301(32.7%)(2)
</TABLE>
- -------------------------
(1) Except for the shared beneficial ownership of 22,850,100 shares of Common
Stock attributed to Ms. Stryker as a member of the Advisory Committee of the
Stryker Trust, all as more fully set forth above under "Beneficial Ownership
of More Than 5% of the Outstanding Common Stock," such persons hold sole
voting and disposition power with respect to the shares shown in this
column. Includes 186,000 shares for Mr. Brown, 20,200 shares for Mr. Cox,
60,000 shares for Mr. Elenbaas, 64,200 shares for Dr. Engelman, 20,200
shares for Dr. Grossman, 89,000 shares for Mr. Laube, 12,000 shares for Mr.
Lillard, 108,000 shares for Mr. Lipes, 1,800 shares for Mr. Parfet, 92,000
shares for Mr. Simpson, 4,000 shares for Ms. Stryker and 733,000 shares for
executive officers and directors as a group that may be acquired within 60
days after January 31, 1998 upon exercise of options. Does not include
shares of Common Stock owned by the Company's Savings and Retirement Plan as
to which executive officers may give voting instructions on certain
non-routine matters that do not include either of the matters to be
considered at the Annual Meeting. Such number of shares does not exceed
2,000 in the case of any executive officer. Ownership percentages
representing less than one percent of the class outstanding have been
omitted.
(2) Includes the shared beneficial ownership of 22,850,100 shares of Common
Stock held in the Stryker Trust and attributed to Ms. Stryker as a member of
the Advisory Committee of the Stryker Trust, all as more fully set forth
above under "Beneficial Ownership of More Than 5% of the Outstanding Common
Stock." 7,616,700 of the shares in the Stryker Trust are held for the
benefit of Ms. Stryker.
3
<PAGE> 6
ELECTION OF DIRECTORS
Seven directors are to be elected to serve until the next Annual Meeting of
Stockholders and until their successors shall have been duly elected and
qualified. All of the nominees listed below are currently members of the Board
of Directors. The nominees for directors have consented to serve if elected and
the Company has no reason to believe that any of the nominees will be unable to
serve. Should any nominee become unavailable for any reason, proxies will be
voted for the alternate candidate, if any, chosen by the Board of Directors.
Should additional persons be nominated for election as directors, the seven
persons receiving the greatest number of votes shall be elected.
The following information respecting the nominees has been furnished by
them. Unless otherwise indicated, such persons have held the positions described
below for more than five years.
<TABLE>
<CAPTION>
NAME, AGE, PRINCIPAL OCCUPATION DIRECTOR
AND OTHER INFORMATION SINCE
------------------------------- --------
<S> <C>
JOHN W. BROWN, age 63....................................... 1977
Chairman of the Board, since January 1981, and President
and Chief Executive Officer of the Company, since February
1977. Also a director of Lunar Corporation, a medical
products company, First of America Bank Corporation, a
bank, Arthur D. Little, Inc., an international management
consulting company, the Health Industry Manufacturers
Association and the American Business Conference.
HOWARD E. COX, JR., age 54.................................. 1974
Co-Managing Partner of Greylock Capital Limited
Partnership, since February 1987, a General Partner of
Greylock Partners & Co., Greylock Ventures Limited
Partnership and Greylock Investments Limited Partnership,
venture capital limited partnerships, since January 1979,
May 1983, and January 1985, respectively, and affiliated
with Greylock Management Corporation, an investment
services organization, since August 1971. Also a director
of The Vincam Group, Inc., a professional employer
organization.
DONALD M. ENGELMAN, PH.D., age 57........................... 1989
Eugene Higgins Professor of Molecular Biophysics and
Biochemistry, Yale University, since 1979, with assignment
to Yale College, the Graduate School and the Medical
School. Blaise Pascal Professor, Fondacion de L'Ecole
Normale Superieure, Paris, since September 1997. Member,
National Academy of Science, since April 1997.
JEROME H. GROSSMAN, M.D., age 58............................ 1982
Chairman and Chief Executive Officer of Health Quality,
LLC, a corporation that develops and markets health
outcomes products and services, and Chairman Emeritus of
New England Medical Center, Inc., since 1995, and Fellow,
Harvard University, Kennedy School of Government, since
1996. Prior to 1995, Chairman of the Board and Chief
Executive Officer of New England Medical Center, Inc.,
from 1984, and President of New England Medical Center
Hospitals from 1979 to 1984. Also Chairman, Federal
Reserve Bank of Boston until 1997, a director of Arthur D.
Little, Inc., an international management consulting
company, and Adesso Corporation, a health maintenance
insurance organization, and a trustee of Wellesley
College.
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
NAME, AGE, PRINCIPAL OCCUPATION DIRECTOR
AND OTHER INFORMATION SINCE
------------------------------- --------
<S> <C>
JOHN S. LILLARD, age 67..................................... 1978
Corporate Director and Consultant since January 1996;
Chairman-Founder of JMB Institutional Realty Corp., a
registered real estate investment advisory firm, from
January 1992 to December 1995, and President thereof from
April 1979 to January 1992. Also a director of Cintas
Corporation, a uniform rental and manufacturing
corporation, and Wintrust Financial Corporation and Lake
Forest Bancorporation, bank holding companies.
WILLIAM U. PARFET, age 51................................... 1993
Co-Chairman of MPI Research, a drug safety and
pharmaceutical development company, since January 1996.
Prior thereto, President and Chief Executive Officer of
Richard-Allan Medical Industries, Inc., a manufacturer of
medical products, from October 1993. Prior thereto, Vice
Chairman of the Board of The Upjohn Company, a
manufacturer of pharmaceutical, chemical and agricultural
products, April 1992 to September 1993, President thereof
from January 1991 to April 1992 and Executive Vice
President from January 1989 to January 1991. Also a
director of Pharmacia & Upjohn, Inc., a pharmaceutical and
healthcare company, CMS Energy Corporation, a global
utility and energy company, and Sybron International
Corp., a dental and laboratory supply company.
RONDA E. STRYKER, age 43.................................... 1984
Granddaughter of the founder of the Company and daughter
of the former President of the Company. Also a director of
the Kalamazoo Foundation and a trustee of Kalamazoo
College and Spelman College.
</TABLE>
The Board of Directors has designated from among its members an Audit
Committee which has general charge of the review of the Company's financial and
accounting practices and controls. It also meets with the Company's independent
accountants to determine the scope of the annual audit and review the reports
and recommendations of such accountants on the results of such audit. The Audit
Committee, which currently consists of Mr. Parfet (Chairman), Dr. Engelman and
Mr. Lillard, met twice during 1997. The Board of Directors has also designated a
Compensation Committee, which currently consists of Ms. Stryker (Chairman), Dr.
Engelman and Mr. Parfet, and a Stock Option Committee, which currently consists
of Ms. Stryker (Chairman) and Mr. Lillard. The duties of these committees are
described below under "Executive Compensation -- Report of Compensation and
Stock Option Committees on Executive Compensation." The Board of Directors has
not designated a nominating committee or other committee performing a similar
function. Such matters are discussed by the Board as a whole.
DIRECTOR COMPENSATION
The Board of Directors held five meetings during 1997. All of the directors
attended more than 75% of the total meetings of the Board and all committees of
which they were members in 1997. Directors who are not employees received
directors' fees of $2,750 for each Board meeting attended and a fixed annual fee
of $17,500. Directors who are also members of committees of the Board received a
fee of $1,500 per day for committee meetings attended if such meetings were held
on the same day as a Board meeting and $2,750 per day if such meetings were held
on a day on which there was not a Board meeting. The Company also makes $50,000
of group life insurance available to its outside directors. In addition, Mr. Cox
and Dr. Grossman consult with the Company with respect to long-range planning.
Mr. Cox received $13,750 and Dr. Grossman received $11,000 for these services in
1997. Also, $128,783 was paid to Dr. Engelman in 1997 as a consultant to the
Company on its bone growth project.
5
<PAGE> 8
EXECUTIVE COMPENSATION
GENERAL
Set forth below is certain summary information with respect to the
compensation of the Company's Chief Executive Officer and the four most highly
compensated executive officers other than the Chief Executive Officer (based on
amounts reported as salary and bonus for 1997) who were serving as executive
officers at December 31, 1997 (the "Named Executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
------------
SHARES OF
ANNUAL COMPENSATION COMMON STOCK ALL OTHER
--------------------- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) ($)(1)
--------------------------- ---- --------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
John W. Brown............................. 1997 550,000 500,000 200,000 110,000
Chairman of the Board, President and 1996 500,000 450,000 40,000(2) 88,000
Chief Executive Officer 1995 475,000 300,000 -- 33,000
Ronald A. Elenbaas........................ 1997 310,000 300,000 40,000 61,050
Vice President; President, Stryker 1996 275,000 245,000 40,000(2) 48,950
Surgical Group 1995 260,000 170,000 -- 27,000
William T. Laube.......................... 1997 275,000 165,000 25,000 46,750
Vice President; President, Stryker 1996 260,000 150,000 40,000(2) 45,100
Pacific 1995 240,000 150,000 -- 33,000
Edward B. Lipes........................... 1997 300,000 200,000 40,000 55,000
Vice President; President, Osteonics 1996 275,000 200,000 40,000(2) 50,050
Corp. 1995 250,000 180,000 -- 33,000
David J. Simpson.......................... 1997 299,583 260,000 40,000 57,704
Vice President, Chief Financial Officer 1996 274,583 225,000 40,000(2) 49,454
and Secretary 1995 249,583 175,000 -- 33,000
</TABLE>
- -------------------------
(1) Represents the Company's contributions, including matching of voluntary
contributions by such person, under its 401(k) plan and its supplemental
deferred compensation plan.
(2) Excludes options granted on February 20, 1996 for 40,000 shares that were
canceled on April 24, 1996 upon the grant of new stock options.
6
<PAGE> 9
STOCK OPTIONS
The following table contains information covering options to purchase
shares of the Company's Common Stock granted to the Named Executives in 1997
pursuant to the Company's 1988 Stock Option Plan (the "1988 Plan").
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
COMMON PERCENT OF
STOCK TOTAL
UNDERLYING OPTIONS
OPTIONS GRANTED TO EXERCISE
GRANTED EMPLOYEES IN PRICE EXPIRATION GRANT DATE
NAME (#)(1) 1997 ($/SH) DATE PRESENT VALUE ($)(2)
---- ---------- ------------ -------- ---------- --------------------
<S> <C> <C> <C> <C> <C>
John W. Brown................. 50,000 5.9 28.375 March 3, 2007 564,500
150,000 17.8 31.125 April 29, 2007 1,860,000
Ronald A. Elenbaas............ 40,000 4.7 28.375 March 3, 2007 451,600
William T. Laube.............. 25,000 3.0 28.375 March 3, 2007 282,250
Edward B. Lipes............... 40,000 4.7 28.375 March 3, 2007 451,600
David J. Simpson.............. 40,000 4.7 28.375 March 3, 2007 451,600
</TABLE>
- -------------------------
(1) Such options were granted at 100% of fair market value on the date of grant
and become exercisable as to 20% of the shares covered thereby on each of
the first five anniversary dates of the date of grant.
(2) The Grant Date Present Value has been calculated using the Black-Scholes
option pricing model and assumes a risk-free rate of return of 5.65%, an
option term of ten years, a dividend yield of approximately 0.4% and a stock
volatility of 29.4%. No adjustment was made for nontransferability or
forfeitures. Such assumptions are based upon historical experience and are
not a forecast of future stock price performance or volatility or of future
dividend policy. Such information, which is presented in accordance with the
requirements of the Securities and Exchange Commission, is not necessarily
indicative of the actual value that such options will have to the Named
Executives, which will be dependent upon market prices for the Common Stock.
The following table sets forth information with respect to option exercises
during 1997 by the Named Executives and as to the unexercised options held by
them at December 31, 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
FISCAL YEAR-END(#) FISCAL YEAR-END($)(1)
SHARES ---------------------- -----------------------
ACQUIRED VALUE
ON EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($)(1) UNEXERCISABLE UNEXERCISABLE
---- ----------- -------- ------------- -------------
<S> <C> <C> <C> <C>
John W. Brown.................... -- -- 176,000/244,000 5,126,000/2,144,500
Ronald A. Elenbaas............... -- -- 52,000/80,000 1,190,880/1,039,000
William T. Laube................. -- -- 84,000/65,000 2,074,000/905,875
Edward B. Lipes.................. 60,000 1,939,950 96,000/84,000 2,520,160/1,143,240
David J. Simpson................. 12,000 473,190 84,000/80,000 2,026,720/1,039,000
</TABLE>
- -------------------------
(1) Calculated by determining the difference between the exercise price and the
closing price of the Company's Common Stock as reported by The Nasdaq Stock
Market prior to July 24, 1997 and The New York Stock Exchange-Composite
Transactions thereafter for the exercise date or December 31, 1997, as the
case may be.
7
<PAGE> 10
REPORT OF COMPENSATION AND STOCK OPTION COMMITTEES ON EXECUTIVE COMPENSATION
There are three basic elements in the Company's executive compensation
program -- base salary, bonus and stock options. The Compensation Committee,
which reviews executive compensation on an annual basis and is responsible for
determinations regarding base salary and bonuses, formally met once during 1997
and held informal discussions on several occasions during the year. The members
of the Compensation Committee, each of whom is an independent outside director,
are Ms. Stryker (Chairman), Dr. Engelman and Mr. Parfet. Stock option awards are
made by the Stock Option Committee, the members of which are Ms. Stryker
(Chairman) and Mr. Lillard.
The salaries of the Company's executive officers for 1997 were determined
at the meeting of the Compensation Committee held in December 1996. Prior to
such meeting, the members of the Committee were provided with broad-based survey
reports on executive compensation prepared by the Health Industry Management
Association and The Conference Board that provided compensation information for
companies in the health care industry and U.S. corporations generally. While
information concerning the compensation of most of the companies included in the
Standard & Poor's Health Care (Medical Products and Supplies) 500 Index (see
"Performance Graph," below) was included in at least one of such reports, the
particular reports were selected for the general information contained therein.
The Chief Executive Officer reviewed the overall performance of each of the
other executive officers during the year with the Committee at its December
meeting. Based on a subjective evaluation of such performance and the Company's
overall performance during the prior year and, in the case of division officers,
that of the respective divisions, as well as general consideration of the
information contained in the survey reports reviewed, the base salaries of the
Company's executive officers, including Mr. Brown, were established by the
Committee.
A substantial portion of annual compensation of each of the Named
Executives consists of the bonus element. In determining the amount of the bonus
to be paid to each Named Executive, the Compensation Committee initially reviews
the results of mathematical computations in which actual performance of the
Company, in the case of Mr. Brown (the Chief Executive Officer) and Mr. Simpson
(the Chief Financial Officer), whose responsibilities are at the corporate
level, and of the operations for which such person had direct management
responsibility, in the case of the other three Named Executives, is compared to
goals and objectives established at the beginning of the year and a percentage
so determined is applied to the dollar bonus potential established for each
person at the beginning of the year. The bonus potential is established in the
same general manner as salaries, with the view that, if the full potential is
attained, the Named Executive's total cash compensation should be in the upper
end of the range for companies of a comparable size. The primary element in such
calculation for the Named Executives other than Mr. Brown in 1997, accounting
for approximately 60% to 75%, was earnings growth. The other factors related to
sales or order growth, asset management (accounts receivable and inventory) and
cash flow in the case of Mr. Elenbaas, Mr. Laube and Mr. Lipes, and cash flow,
tax management and expense control in the case of Mr. Simpson. In Mr. Brown's
case, a number of performance targets were considered, including growth in
Company-wide earnings and orders and profit and sales growth for specific
operations. The final determination of the actual bonuses paid to the Named
Executives included a subjective evaluation of individual performance in light
of the competitive environment in the operations for which they have
responsibility and other challenges faced by such persons and achievements by
them during the year.
The Company has had stock option plans in effect since it became a
publicly-held company in 1979. The purpose of these plans has been to provide
executive officers and other employees with a personal and financial interest in
the success of the Company through stock ownership, thereby aligning the
long-range interests of such persons with those of stockholders by providing
them with the opportunity to build a meaningful stake in the Company.
Historically, stock options have had significant value to optionees, reflecting
the appreciation in the market value of the Common Stock. The determination with
respect to the number of options to be granted to any particular executive
officer is subjective in nature and no specific performance measures or factors
are applied. The number and status of options previously granted to an
individual are not accorded significant weight in the determination. Current
option grants are intended to encourage performance that will result in
continued appreciation. Outstanding option grants, all of which have a ten-year
term, become exercisable as to 20% on the first anniversary of the date of grant
and as to an additional 20% on each
8
<PAGE> 11
successive anniversary. Accordingly, to realize the full value thereof, an
executive officer must remain in the Company's employ for five years from the
date of grant. Management of the Company believes that the stock option plans
have been helpful in attracting and retaining skilled executive personnel.
Section 162(m) of the Internal Revenue Code limits the deductibility by a
publicly-held corporation of compensation paid in a taxable year to the Chief
Executive Officer and any other Named Executive to $1 million. Qualified
performance-based compensation will not be subject to the deduction limit if
certain conditions are met. The 1998 Plan limits the number of options that may
be granted to any employee or director in any calendar year to 500,000, thereby
ensuring that gain recognized on the exercise of options will be treated as
performance-based compensation. It is the Committee's intent that executive
compensation generally be deductible. However, the Committee will authorize
compensation that is not entirely deductible when doing so is consistent with
its other compensation objectives and overall compensation philosophy.
Compensation Committee
Ronda E. Stryker, Chairman
Donald M. Engelman
William U. Parfet
Stock Option Committee
Ronda E. Stryker, Chairman
John S. Lillard
9
<PAGE> 12
PERFORMANCE GRAPH
Set forth below is a graph comparing the total returns (assuming
reinvestment of dividends) of the Company, the Standard & Poor's MidCap 400
Index and the Standard & Poor's Health Care (Medical Products and Supplies) 500
Index. The graph assumes $100 invested on December 31, 1992 in the Company's
Common Stock and each of the indices.
[LINE GRAPH]
<TABLE>
<CAPTION>
S&P Health
Measurement Period Stryker S&P MidCap Care 500
(Fiscal Year Covered) Corporation 400 Index Index
<S> <C> <C> <C>
1992 $ 100.00 $ 100.00 $ 100.00
1993 72.39 113.95 76.26
1994 94.37 109.87 90.43
1995 135.04 143.86 152.85
1996 154.21 171.49 175.42
1997 192.84 226.80 218.71
</TABLE>
A similar graph that assumes $100 invested on December 31, 1987 in the
Company's Common Stock and each of the indices is set forth below in order to
illustrate the relative performance on a longer-term basis.
[LINE GRAPH]
<TABLE>
<CAPTION>
S&P Health
Measurement Period Stryker S&P MidCap Care 500
(Fiscal Year Covered) Corporation 400 Index Index
<S> <C> <C> <C>
1987 $ 100 $ 100 $ 100
1988 115.70 120.87 94.35
1989 212.10 163.83 129.44
1990 267.81 155.44 151.90
1991 857.90 233.31 248.43
1992 672.32 261.11 212.85
1993 486.66 297.54 162.32
1994 634.47 286.87 192.49
1995 907.93 375.64 325.33
1996 1036.77 447.77 373.39
1997 1296.53 592.19 465.51
</TABLE>
10
<PAGE> 13
ADOPTION OF 1998 STOCK OPTION PLAN
The Company has had stock option plans in effect since it became a public
company in 1979 in order to provide employees and directors with a personal and
financial interest in the success of the Company and to enable the Company to
compete with others for the services of new employees and directors. Management
believes that these plans have been helpful in attracting and retaining skilled
personnel. No options may be granted under the 1988 Plan after April 27, 1998.
Excluding options that were canceled or expired, options covering an aggregate
of 5,348,000 shares have been granted under the 1988 Plan.
The Board of Directors has recommended that the stockholders authorize the
continuance of the stock option program by adopting the 1998 Plan. The following
is a summary of the 1998 Plan, a copy of which will be sent to stockholders upon
request.
The 1998 Plan provides for the grant of options covering up to 10,000,000
shares of Common Stock, which may be authorized but unissued shares or treasury
shares. If any option granted under the 1998 Plan is canceled or expires for any
reason prior to being exercised in full, the unpurchased shares may again be
subjected to an option under the 1998 Plan. The 1998 Plan contains an
anti-dilution provision, which provides for adjustment in the number of shares
in the event of stock splits, stock dividends and the like.
Options may be granted under the Plan to any employee or director of the
Company and its subsidiaries. The persons to whom options will be granted and
the terms thereof will be determined by the Stock Option Committee appointed by
the Board of Directors, except that the full Board of Directors shall make such
determination in the case of the non-employee directors. The number of shares
subject to stock options that may be granted to any employee or director in any
calendar year is limited to 500,000. This limitation is intended to ensure that
the gain recognized on the exercise of stock options by the Company's highest
paid executive officers will be treated as performance-based compensation and,
therefore, not subject to the $1 million limitation on the deductibility of
executive compensation imposed by Section 162(m) of the Internal Revenue Code.
The Stock Option Committee (or the Board of Directors, in the case of
options granted to non-employee directors) is authorized to prescribe the times
at which an option may be exercised and the number of shares as to which an
option may be exercised at such times. However, no option may be exercised
before the expiration of one year from the date of grant, except in the case of
the merger, consolidation, sale of assets or dissolution of the Company or if
the optionee ceases to be an employee or director by reason of death, disability
or retirement, or more than ten years after the date of grant, and no option may
be granted after April 20, 2008. Under the 1998 Plan, the option price cannot be
less than 100% of the fair market value of the Common Stock on the date the
option is granted. The option price may be paid in cash, shares of Common Stock
of the Company valued at the fair market value thereof on the date of exercise
or any combination of cash and Common Stock. In addition, if the Stock Option
Committee (or the Board of Directors, in the case of options granted to
non-employee directors) so provides, payment of the exercise price may be made
by delivering the exercise notice together with irrevocable instructions to a
broker to deliver promptly to the Company the amount of sale or loan proceeds
necessary to pay the exercise price in full. The closing price of the Common
Stock as reported on The New York Stock Exchange-Composite Transactions on
February 27, 1998 was $40.9375.
The Stock Option Committee (or the Board of Directors in the case of
options granted to non-employee directors) may provide at the time of grant that
the optionee may transfer any nonstatutory stock option granted under the 1998
Plan to or for the benefit of one or more members of the optionee's immediate
family. Otherwise, options under the 1998 Plan are exercisable during the
optionee's lifetime only by the optionee and may not be transferred except by
will or the laws of descent and distribution. The options terminate one month
after the optionee ceases to be an employee or director, except that in the case
of termination of employment because of death, disability or retirement, the
options terminate one year thereafter. In the case of termination of employment
because of death, disability or retirement or if otherwise approved by the Stock
Option Committee (or the Board of Directors, in the case of options granted to
non-employee directors), an option may be exercised during the applicable period
following termination with respect to all or any part of the shares subject
thereto regardless of whether the option was fully vested at the time of
termination.
11
<PAGE> 14
The Board of Directors may terminate or amend the 1998 Plan, but the Board
may not, without stockholder approval, increase the number of shares covered by
the 1998 Plan or the limitation on the number of shares subject to options
granted to any person in a calendar year, reduce the minimum purchase price or
extend the term of the 1998 Plan or the maximum term of any option granted
thereunder.
Options granted under the 1998 Plan will be designated to be "nonstatutory
stock options" or "incentive stock options" under Section 422 of the Internal
Revenue Code. The grant of an option will have no immediate tax consequences to
the optionee or the Company.
The exercise of a nonstatutory stock option will require an optionee to
include in income, as compensation, the amount by which the fair market value of
the acquired shares on the exercise date exceeds the option price. Upon a
subsequent sale or taxable exchange of shares acquired upon exercise of a
nonstatutory stock option, an optionee will recognize long or short-term capital
gain or loss equal to the difference between the amount realized on the sale and
the tax basis of such shares. The Company will be entitled to a deduction at the
same time and in the same amount as the optionee is in receipt of income in
connection with the exercise of a nonstatutory stock option.
If the optionee exercises an incentive stock option and does not dispose of
the acquired shares within two years after the date of grant of the option nor
within one year after the date of the transfer of such shares to him (a
"disqualifying disposition"), the optionee will realize no compensation income
and any gain or loss that the optionee realizes on a subsequent disposition of
such shares will be treated as long-term capital gain or loss. For purposes of
computing the alternative minimum tax, however, the option generally will be
treated as if it were a non-qualified stock option. If an optionee makes a
disqualifying disposition, the optionee will be required to include in income,
as compensation, the lesser of (i) the difference between the option price and
the fair market value of the acquired shares on the exercise date or (ii) the
amount of gain realized on such disposition. In addition, depending on the
amount received as a result of such disposition, the optionee may realize long
or short-term capital gain or loss. The Company will be entitled to a deduction
at the same time and in the same amount as the optionee is in receipt of
compensation income as a result of a disqualifying disposition. If there is no
disqualifying disposition, no deduction will be available to the Company.
Approval of the proposed amendment of the 1998 Plan requires the
affirmative vote of a majority of the votes cast at the Annual Meeting. The
Board of Directors recommends that stockholders vote FOR the adoption of the
1998 Plan.
MISCELLANEOUS
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed Ernst & Young LLP, independent
accountants, to audit the accounts of the Company and its subsidiaries for the
year 1998. Ernst & Young LLP has acted in this capacity for many years. Ernst &
Young LLP has advised the Company that neither the firm nor any of its members
or associates has any direct financial interest or any material indirect
financial interest in the Company or any of its affiliates other than as
accountants. Representatives of Ernst & Young LLP are expected to be present at
the Annual Meeting with the opportunity to make a statement if they desire to do
so and are expected to be available to respond to appropriate questions.
OTHER ACTION
The management has at this time no knowledge of any matters to be brought
before the meeting other than those referred to above. If any additional matters
should properly come before the meeting, it is the intention of the persons
named in the enclosed proxy to vote said proxy in accordance with their judgment
on such matters.
12
<PAGE> 15
EXPENSES OF SOLICITATION
The cost of this solicitation will be borne by the Company. In addition to
solicitation by mail, proxies may be solicited by officers, directors and
regular employees of the Company personally or by telephone or other means of
communication. The Company will, upon request, reimburse brokers and other
nominees for their reasonable expenses in forwarding proxy material to the
beneficial owners of the stock held of record by such person.
By Order of the Board of Directors
David J. Simpson,
Secretary
March 12, 1998
13
<PAGE> 16
APPENDIX
1998 Stock Option Plan
of
STRYKER CORPORATION
1. Purpose. The purpose of the 1998 Stock Option Plan of Stryker
Corporation (the "Plan") is to advance the interests of Stryker Corporation
(the "Company") and its subsidiaries by providing a larger personal and
financial interest in the success of the Company and its subsidiaries to
employees and directors upon whose judgment, interest and special efforts the
Company and its subsidiaries are dependent for the successful conduct of its
and their operations and to enable the Company and its subsidiaries to compete
effectively with others for the services of new employees and directors as may
be needed for the continued improvement of the enterprise. It is believed that
the acquisition of such interest will stimulate the efforts of such employees
and directors on behalf of the Company and its subsidiaries and strengthen
their desire to continue to serve the Company and its subsidiaries.
2. Participants. Options may be granted under the Plan to any employee
or director of the Company and its subsidiaries. The employees and directors
of the Company and its subsidiaries to whom options are granted and the terms
of such options shall be determined by the Stock Option Committee appointed
pursuant to Section 10 hereof, except that the full Board of Directors, acting
by affirmative vote of a majority of the directors then in office, shall make
such determinations in the case of directors who are not also employees of the
Company or any subsidiary ("Non-Employee Directors"). A grantee may hold more
than one option. The number of shares of Common Stock, par value $.10 per
share (the "Common Stock"), of the Company subject to options that may be
granted under this Plan in any calendar year to any employee or director shall
not exceed 500,000 (the "Annual Limit"). To the extent required by Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), shares
subject to options that are canceled shall continue to be counted against the
Annual Limit and, if the purchase price of the shares subject to an option is
reduced after the grant of such option, the transaction shall be treated as a
cancellation of such option and the grant of a new option and both options
shall be counted against the Annual Limit.
Nothing contained in this Plan, nor in any option granted pursuant to this
Plan, shall confer upon any employee or director any right to the continuation
of his or
<PAGE> 17
her employment or directorship nor limit in any way the right of the Company or
its subsidiaries to terminate such employment or directorship at any time.
As used herein, the term "subsidiary" shall mean any present or future
entity that is controlled by the Company, directly or through one or more
intermediaries.
3. Effectiveness and Termination of Plan. This Plan shall become
effective upon approval thereof by the holders of a majority of the votes cast
at a meeting held, among other things, for such purpose, provided that the
total vote cast on the proposal represents over 50% in interest of the Common
Stock entitled to vote at the meeting. The date of the meeting at which such
approval is given shall be the adoption date of this Plan. This Plan shall
terminate on the earliest of (i) ten (10) years from its adoption date (ii)
when all shares of Common Stock that may be issued under this Plan shall have
been issued through exercise of options granted under this Plan or (iii) at any
earlier time that the Board of Directors may determine.
Any option outstanding under this Plan at the time of its termination
shall remain in effect in accordance with its terms and conditions and those of
this Plan.
4. The Common Stock. The aggregate number of shares of Common Stock of
the Company that may be issued under this Plan shall consist of 10,000,000
shares, subject to further adjustment as provided in Section 7 hereof. Such
number of shares may be set aside out of the authorized but unissued shares of
Common Stock of the Company not reserved for any other purpose or out of shares
of Common Stock held in or acquired for the treasury of the Company. All or
any shares of Common Stock subjected under this Plan to an option that, for any
reason, is canceled, terminates, lapses or expires unexercised as to such
shares may again be subjected to an option under this Plan.
5. Types of Options and Terms and Conditions.
(a) Options granted under this Plan shall be in the form of (i) incentive
stock options as defined in Section 422 of the Code ("incentive stock options")
or (ii) options not qualifying under said Section ("nonstatutory stock
options").
(b) Options may be granted at any time and from time to time prior to the
termination of this Plan. Except as hereinafter provided, all options granted
pursuant to this Plan shall be subject to the following terms and conditions:
-2-
<PAGE> 18
(i) Price. The purchase price of the shares of Common Stock
issuable upon exercise of options granted under this Plan shall be not
less than 100% of the fair market value of the Common Stock on the date
of the grant of the option. For purposes of this Plan, "fair market
value" of the Common Stock shall mean the closing sales price of the
Common Stock (or the closing bid, if no sales were reported) as reported
on the New York Stock Exchange-Composite Transactions for the last market
trading day prior to the time of determination or, if the Common Stock is
not then listed on the New York Stock Exchange, the price determined in
good faith by the Stock Option Committee (or the Board of Directors in
the case of options granted to Non-Employee Directors). The purchase
price shall be paid in full at the time of such purchase, in (A) cash,
(B) shares of Common Stock of the Company (which, in the case of shares
acquired upon exercise of an option, must have been owned for more than
six months) valued at the fair market value of the Common Stock on the
date of purchase or (C) any combination of cash and Common Stock. In
addition, if the Stock Option Committee (or the Board of Directors in the
case of options granted to Non-Employee Directors) so provides at the
time of grant, an option may be exercised by delivering a properly
executed exercise notice together with irrevocable instructions to a
broker to deliver promptly to the Company the amount of sale or loan
proceeds necessary to pay the purchase price and applicable withholding
taxes in full and such other documents as the Stock Option Committee (or
the Board of Directors in the case of options granted to Non-Employee
Directors) may determine. The purchase price shall be subject to
adjustment, but only as provided in Section 7 hereof.
(ii) Duration and Exercise of Options. Options may be granted for
terms of up to but not exceeding ten (10) years from the date the
particular option is granted. Options shall be exercisable as provided
by the Stock Option Committee (or the Board of Directors in the case of
options granted to Non-Employee Directors) at the time of grant thereof.
(iii) Termination of Employment or Service as a Director. Upon the
termination of the grantee's employment or service as a director, his or
her rights to exercise an option shall be only as follows:
Death, Disability or Retirement. If the grantee's employment is
terminated by reason of death, disability or retirement, the grantee or
the grantee's estate may, within one year following such termination,
exercise
-3-
<PAGE> 19
the option with respect to all or any part of the shares of Common Stock
subject thereto, regardless of whether the right to purchase such shares
had accrued on or before the last day on which the grantee was either an
employee or director of the Company or any subsidiary. If an incentive
stock option is exercised after the exercise period that is applicable
for purposes of Section 422 of the Code, such option shall be treated as
a nonstatutory stock option. For purposes of this Plan, "disability"
shall mean qualifying for and receiving payments under a disability pay
plan of the Company or any subsidiary and "retirement" shall mean
termination of employment with the Company and/or its subsidiaries on or
after the grantee's 65th birthday or the grantee's 60th birthday if the
grantee has completed ten (10) years of service with the Company and/or
its subsidiaries.
Other Reasons. If the grantee ceases to be an employee or director for
any reason other than those provided above under "Death, Disability or
Retirement," the grantee or the grantee's estate (in the event of the
grantee's death after such termination) may, within the one month period
following such termination, exercise the option with respect to only such
number of shares of Common Stock as to which the right of exercise had
accrued on or before the last day on which the grantee was either an
employee or director of the Company or any subsidiary unless the Stock
Option Committee (or the Board of Directors in the case of options
granted to Non-Employee Directors) determines that the option shall be
exercisable as to a greater portion thereof.
General. Notwithstanding the foregoing, no option shall be exercisable
in whole or in part (A) after the termination date provided in the
option, or (B) except as provided in the second paragraph of Section 10
or in the event of termination of employment or service as a director
because of disability, retirement or death, unless the grantee shall have
continued in the employ of, or to serve as a director of, the Company or
one of its subsidiaries for one year following the date the option was
granted. A grantee's "estate" shall mean the grantee's legal
representatives upon the grantee's death or any person who acquires the
right under the laws of descent and distribution to exercise an option by
reason of the grantee's death.
(iv) Transferability of Option. Except as otherwise provided
herein, options shall be transferable only by will or the laws of descent
and distribution and shall be exercisable during the grantee's lifetime
only by him or her. A grantee may
-4-
<PAGE> 20
transfer any nonstatutory stock option granted under this Plan to members
of his or her immediate family (defined as a spouse, children and/or
grandchildren) or to one or more trusts for the benefit of such family
members if the instrument evidencing such option expressly so provides
and the grantee does not receive any consideration for the transfer;
provided, however, that any such transferred option shall continue to be
subject to the same terms and conditions that were applicable to such
option immediately prior to its transfer (except that such transferred
option may not be further transferred by the transferee during the
transferee's lifetime). An option and all rights thereunder shall
terminate immediately if the holder attempts to or does sell, assign,
transfer, pledge, hypothecate or otherwise dispose of the option or any
rights thereunder to any person except as permitted herein.
(v) Surrender of Options. The Stock Option Committee (or the Board
of Directors in the case of options granted to Non-Employee Directors)
may require the surrender of outstanding options as a condition precedent
to the grant of new options. Upon each such surrender, the option or
options surrendered shall be canceled and the shares of Common Stock of
the Company previously subject to the option or options under this Plan
shall thereafter be available for the grant of options under this Plan.
(vi) Other Terms and Conditions. Options may also contain such
other provisions, which shall not be inconsistent with any of the
foregoing terms, as the Stock Option Committee (or the Board of Directors
in the case of options granted to Non-Employee Directors) shall deem
appropriate.
(c) Incentive stock options granted pursuant to this Plan shall be
subject to all the terms and conditions included in subsection (b) and to the
following terms and conditions:
(i) No incentive stock option shall be granted to an individual who
is not an employee of the Company or a "subsidiary corporation" as
defined in Section 424(f) of the Code;
(ii) No incentive stock option shall be granted to an employee who
owns stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company; and
-5-
<PAGE> 21
(iii) No incentive stock option may be granted under this Plan if
such grant, together with any applicable prior grants that are incentive
stock options within the meaning of Section 422(b) of the Code, would
exceed any maximum established under the Code for incentive stock options
that may be granted to an individual employee.
6. Rights of a Shareholder. A recipient of an option shall have no
rights as a shareholder with respect to any shares issuable or transferable
upon exercise thereof until the date of issuance of a stock certificate for
such shares. Except as otherwise provided pursuant to Section 7 hereof, no
adjustment shall be made for dividends or other rights for which the record
date is prior to the date of such stock certificate.
7. Adjustment of and Changes in Common Stock. In the event that the
shares of Common Stock of the Company, as presently constituted, shall be
changed into or exchanged for a different number or kind of shares of stock or
other securities of the Company or of another corporation (whether by reason of
merger, consolidation, recapitalization, reclassification, split-up,
combination of shares, or otherwise) or if the number of such shares of Common
Stock shall be increased through the payment of a stock dividend or a dividend
on the shares of Common Stock of rights or warrants to purchase securities of
the Company shall be made, then there shall be substituted for or added to each
share of Common Stock theretofore appropriated or thereafter subject or that
may become subject to an option under this Plan, the number and kind of shares
of stock or other securities into which each outstanding share of Common Stock
of the Company shall be so changed, or for which each such share shall be
exchanged, or to which each such share shall be entitled, as the case may be,
and references herein to the Common Stock shall be deemed to be references to
any such stock or other securities as appropriate. Outstanding options shall
also be appropriately amended as to price and other terms as may be necessary
to reflect the foregoing events. In the event there shall be any other change
in the number or kind of the outstanding shares of the Common Stock of the
Company, or of any stock or other securities into which such Common Stock shall
have been changed or for which it shall have been exchanged, then if the Board
of Directors shall, in its sole discretion, determine that such change
equitably requires an adjustment in any option theretofore granted or that may
be granted under this Plan, such adjustments shall be made in accordance with
such determination. Fractional shares resulting from any adjustment in options
pursuant to this Section 7 may be settled in cash or otherwise as the Board of
Directors shall determine. Notice of any adjustment shall be given by the
-6-
<PAGE> 22
Company to each holder of an option that shall have been so adjusted and such
adjustment (whether or not such notice is given) shall be effective and binding
for all purposes of this Plan.
8. Securities Act Requirements. No option granted pursuant to this Plan
shall be exercisable in whole or in part, and the Company shall not be
obligated to sell any shares of Common Stock subject to any such option, if
such exercise and sale would, in the opinion of counsel for the Company,
violate the Securities Act of 1933 (or other Federal or State statutes having
similar requirements), as in effect at that time. Each option shall be subject
to the further requirement that, if at any time the Board of Directors shall
determine in its discretion that the listing or qualification of the shares of
Common Stock subject to such option under any securities exchange requirements
or under any applicable law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in connection
with, the issue of shares thereunder, such option may not be exercised in whole
or in part unless such listing, qualification, consent or approval shall have
been effected or obtained free of any conditions not acceptable to the Board of
Directors.
9. Withholding. Appropriate provision (which may, in accordance with
rules determined by the Stock Option Committee (or the Board of Directors in
the case of options granted to Non-Employee Directors), include the election by
the grantee to have the Company withhold from the Common Stock to be issued
upon exercise of an option a number of shares having an aggregate fair market
value that would satisfy the withholding amount due or to deliver to the
Company shares of Common Stock already owned having such aggregate fair market
value to satisfy the withholding amount) shall be made for all taxes required
to be withheld from shares of Common Stock issued under this Plan under the
applicable laws or other regulations of any governmental authority, whether
federal, state or local, and domestic or foreign. To that end, the Company may
at any time take such steps as it may deem necessary or appropriate (including
sale or retention of shares) to provide for payment of such taxes.
10. Administration and Amendment of Plan. The Board of Directors shall
appoint a Stock Option Committee composed of two or more directors. The Board
of Directors (but not the Stock Option Committee) may from time to time remove
members from such Committee or add members thereto, and vacancies in such
Committee, however caused, shall be filled by the Board. The Stock Option
Committee (or the Board of Directors in the case of options granted to
Non-Employee Directors) from time to time may adopt rules and
-7-
<PAGE> 23
regulations for carrying out this Plan. The interpretation and construction by
the Stock Option Committee (or the Board of Directors in the case of options
granted to Non-Employee Directors) of any provision of this Plan or any option
granted pursuant hereto shall be final and conclusive. No member of the Stock
Option Committee or the Board of Directors shall be liable for any action or
determination made in good faith with respect to this Plan or any option
granted pursuant thereto. The Board of Directors (but not the Stock Option
Committee) may from time to time make such changes in and additions to this
Plan as it may deem proper and in the best interests of the Company, without
further action on the part of the shareholders of the Company except as
required by law, regulation or by the rules of the principal trading market of
the Company's Common Stock at that time; provided, however, that, unless the
shareholders of the Company shall have first approved thereof (i) except as
provided in Section 7 hereof, the total number of shares of Common Stock
subject to this Plan and the Annual Limit shall not be increased and the
minimum purchase price shall not be changed (ii) no option shall be exercisable
more than ten (10) years after the date it is granted and (iii) the expiration
date of this Plan shall not be extended.
The Board of Directors shall have the power, in the event of any
disposition of substantially all of the assets of the Company, its dissolution
or of any consolidation or merger of the Company with or into any other
corporation, to amend all outstanding options to permit the exercise of all
such options prior to the effectiveness of any such transaction and to
terminate such options as of such effectiveness. If the Board of Directors
shall exercise such power, all options then outstanding and subject to such
requirement shall be deemed to have been amended to permit the exercise thereof
in whole or in part by the grantee at any time or from time to time as
determined by the Board of Directors prior to the effectiveness of such
transaction and such options shall be deemed to terminate upon such
effectiveness.
-8-
<PAGE> 24
STRYKER CORPORATION
P.O. BOX 4085, KALAMAZOO, MICHIGAN 49003-4085
P ANNUAL MEETING OF STOCKHOLDERS
APRIL 21, 1998
R
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
STRYKER CORPORATION
O
The undersigned, having received the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated March 12, 1998, hereby
appoints John S. Lillard and Ronda E. Stryker, and each of them,
X Proxies, with full power of substitution in each, to represent and
to vote, as designated below, all shares of Common Stock of Stryker
Corporation which the undersigned is entitled to vote at the Annual
Meeting of Stockholders to be held on April 21, 1998, and at all
Y adjournments thereof, as set forth on the reverse side hereof.
ELECTION OF DIRECTORS, NOMINEES: COMMENTS: (change of address)
John W. Brown, Howard E. Cox, Jr.,
Donald M. Engelman, Ph.D., Jerome ----------------------------
H. Grossman, M.D., John S. Lillard,
William U. Parfet, Ronda E. Stryker. ----------------------------
----------------------------
----------------------------
(If you have written in the
above space, please mark the
corresponding box on the
reverse side of this card.)
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICE BY MARKING THE APPROPRIATE BOX ON THE
REVERSE SIDE. IF YOU DO NOT MARK ANY BOXES, YOUR PROXY WILL BE VOTED IN
ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS. THE PROXIES
CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
-----------
SEE REVERSE
SIDE
-----------
- --------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
<PAGE> 25
[X] Please mark your - | 5869
votes as in this | -
example.
EVERY PROPERLY SIGNED PROXY WILL BE VOTED AS DIRECTED. UNLESS OTHERWISE
DIRECTED, THIS PROXY WILL BE VOTED FOR ALL NOMINEES NAMED IN ITEM 1, FOR
THE PROPOSED ADOPTION OF THE 1988 STOCK OPTION PLAN AND IN THE DISCRETION
OF THE PROXIES WITH RESPECT TO ANY OTHER MATTERS REFERRED TO IN ITEM 3.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES:
- --------------------------------------------------------------------------------
FOR WITHHELD Withhold 2.Approval of FOR AGAINST ABSTAIN
1.Election of [ ] [ ] authority to the adoption [ ] [ ] [ ]
directors vote for all of the 1998
(see reverse). nominees. Stock Option
Plan.
FOR all nominees (except those whose 3.In their discretion, the Proxies
names are listed below): authorized to vote in accordance
with their own judgment upon
- ----------------------------------- such other matters as may
properly come before the meeting.
CHANGE OF ADDRESS/ [ ]
COMMENTS ON REVERSE SIDE
- --------------------------------------------------------------------------------
(Please mark, date and sign as your
name appears hereon and return in the
enclosed, postage paid envelope. If
acting as executor, administrator,
trustee, guardian, etc., you should so
indicate when signing. If the signer is
a corporation, please sign the full
corporate name, by duly authorized
officer. If shares are held jointly,
each stockholder named should sign.)
-----------------------------------------
1998
-----------------------------------------
SIGNATURE(S) DATE
- --------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
