<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 [ ] Confidential, for use of the
Commission only (permitted by
Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240-14a-12.
STRYKER CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its 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)(1) 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):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
STRYKER CORPORATION
P.O. BOX 4085
KALAMAZOO, MICHIGAN 49003-4085
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 19, 2000
------------------------
The Annual Meeting of Stockholders of Stryker Corporation will be held on
Wednesday, April 19, 2000, 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 an amendment to the Company's Restated Articles
of Incorporation, as amended, to increase the authorized Common Stock to
500,000,000 shares; 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 29, 2000 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 1999 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 17, 2000
<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 Wednesday, April 19,
2000, and at all adjournments thereof. The solicitation will begin on or about
March 17, 2000.
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 proposed amendment to the Restated Articles of Incorporation, as amended
(the "Restated Articles"), to increase the authorized Common Stock. 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. Directors will be elected by a plurality of the votes cast at the
meeting. 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. Abstentions and broker non-votes will have the same effect as a vote
against the proposal to increase the authorized Common Stock. 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 29, 2000,
the record date for the determination of stockholders entitled to notice of and
to vote at the meeting, 97,226,909 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 2001 Annual
Meeting must be received by the Company at the above address on or prior to
November 17, 2000 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 certain information, as of December 31, 1999
unless otherwise indicated, 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
OF BENEFICIAL OWNER NUMBER OF SHARES CLASS
------------------- ---------------- ----------
<S> <C> <C>
Advisory Committee for the Stryker Trusts(1)................ 31,434,962 32.3%
490 West South Street
Kalamazoo, Michigan 49007
W.P. Stewart & Co., Ltd.(2)................................. 10,096,501 10.4%
Trinity Hall
43 Cedar Avenue
Hamilton HM12 Bermuda
</TABLE>
- ---------------
(1) Based solely upon information as of December 31, 1999 contained in a
Schedule 13G amendment, dated February 3, 2000, filed with the Securities
and Exchange Commission. Under the terms of the trust agreement
establishing certain trusts for the benefit of members of the Stryker
family (the "Stryker Trusts"), an Advisory Committee, consisting of
Patricia A. Short, Jon L. Stryker, Ronda E. Stryker, Gerard Thomas and
Elizabeth S. Upjohn-Mason, has full voting and disposition power with
respect to 22,850,100 shares of Common Stock owned by the Stryker Trusts.
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 Trusts, including voting and
disposition. Members of the Advisory Committee beneficially own in the
aggregate an additional 8,584,862 shares of Common Stock in their
individual or other capacities as to which they have sole voting and
disposition power, except for 451,220 shares as to which Mrs. Upjohn-Mason
has shared voting and disposition power.
(2) Based solely upon information as of December 31, 1999 contained in a
Schedule 13G, dated February 4, 2000, filed with the Securities and
Exchange Commission. According to the Schedule 13G, W.P. Stewart & Co.,
Ltd., an investment adviser, has the sole power to make investment
decisions, including voting and disposition, with respect to such shares
for many unrelated clients but has no economic interest in such shares.
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 (including Mr.
Elenbaas, who resigned as an officer of the Company effective September 30,
1999) 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, 2000(1)
---- --------------------
<S> <C> <C>
John W. Brown............................................... 4,763,378(4.9%)
Howard E. Cox, Jr........................................... 198,600
Ronald A. Elenbaas.......................................... 364,472
Donald M. Engelman, Ph.D.................................... 56,800
Jerome H. Grossman, M.D..................................... 67,400
Stephen Si Johnson.......................................... 183,040
William T. Laube............................................ 388,590
John S. Lillard............................................. 149,420
Edward B. Lipes............................................. 176,830
William U. Parfet........................................... 26,400
David J. Simpson............................................ 381,390
Ronda E. Stryker............................................ 25,234,320(26.0%)(2)
Executive officers and directors as a group (18 persons).... 32,180,240(32.8%)(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 for
the Stryker Trusts, 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 242,000 shares for Mr. Brown, 26,400 shares for Mr.
Cox, 56,000 shares for Mr. Elenbaas, 54,400 shares for Dr. Engelman, 26,400
shares for Dr. Grossman, 66,000 shares for Mr. Johnson, 117,000 shares for
Mr. Laube, 12,000 shares for Mr. Lillard, 116,000 shares for Mr. Lipes,
6,400 shares for Mr. Parfet, 128,000 shares for Mr. Simpson, 4,000 shares
for Ms. Stryker and 997,200 shares for executive officers and directors as
a group that may be acquired within 60 days after January 31, 2000 upon
exercise of options. Does not include 908,046 shares of Common Stock owned
by the Company's Savings and Retirement Plans that are voted as directed by
the Company except in the case of certain non-routine matters that do not
include the election of directors and the increase in the authorized Common
Stock, as to which the individual participants, including executive
officers, may give voting instructions. Such number of shares does not
exceed 5,000 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 Trusts and attributed to Ms. Stryker as a member
of the Advisory Committee for the Stryker Trusts, 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 Trusts 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.
<TABLE>
<CAPTION>
NAME, AGE, PRINCIPAL OCCUPATION DIRECTOR
AND OTHER INFORMATION SINCE
------------------------------- --------
<S> <C>
JOHN W. BROWN, age 65....................................... 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, National City Corporation, a bank,
Arthur D. Little, Inc., an international management
consulting company, the American Business Conference, an
association of mid-size growth companies, the Health
Industry Manufacturers Association and the Food and Drug
Law Institute.
HOWARD E. COX, JR., age 56.................................. 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.
DONALD M. ENGELMAN, PH.D., age 59........................... 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. Director of the Division of Biological Sciences,
Yale University, since September 1999. Member, National
Academy of Science, since April 1997.
JEROME H. GROSSMAN, M.D., age 60............................ 1982
Chairman and CEO of Lion Gate Management Corporation,
which serves as a holding company for a group of endeavors
to advance the health care delivery system, since 1999.
Also, Chairman Emeritus of New England Medical Center,
Inc., since 1995, and Fellow, Harvard University, Kennedy
School of Government, since 1996. From 1995 to 1999,
Chairman and Chief Executive Officer of Health Quality
Inc., a corporation that developed and marketed health
outcomes products and services. 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 Landacorp, Inc., a
developer of medical software for managed care
organizations and hospitals, and a trustee of Wellesley
College.
JOHN S. LILLARD, age 69..................................... 1978
Chairman of Wintrust Financial Corporation, a bank holding
company, since May 1998. Prior thereto, Corporate Director
and Consultant from January 1996 to April 1998 and
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 Lake Forest Bank and Trust, a bank.
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
NAME, AGE, PRINCIPAL OCCUPATION DIRECTOR
AND OTHER INFORMATION SINCE
------------------------------- --------
<S> <C>
WILLIAM U. PARFET, age 53................................... 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 45.................................... 1984
Granddaughter of the founder of the Company and daughter
of the former President of the Company. Also Vice Chairman
and a director of Greenleaf Trust, a bank, 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, Dr.
Grossman and Mr. Lillard, met twice during 1999. The Board of Directors has also
designated a Compensation Committee, which currently consists of Ms. Stryker
(Chairman), Mr. Cox 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 six meetings during 1999 and acted once by
unanimous written consent. All of the directors attended more than 75% of the
total meetings of the Board and all committees of which they were members in
1999. Directors who are not employees received directors' fees of $3,000 for
each Board meeting attended and a fixed annual fee of $27,500. Directors who are
also members of committees of the Board received a fee of $1,750 per day for
committee meetings attended if such meetings were held on the same day as a
Board meeting and $3,000 per day if such meetings were held on a day on which
there was not a Board meeting. During 1999, each director was granted an option
under the Company's 1998 Stock Option Plan (the "Plan") to purchase 5,000 shares
of the Company's Common Stock. 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
and Dr. Grossman each received $15,000 for these services in 1999. Also, $79,800
was paid to Dr. Engelman in 1999 as a consultant to the Company on its bone
growth project.
5
<PAGE> 8
EXECUTIVE COMPENSATION
GENERAL
Set forth below is certain summary information with respect to the
compensation of the Company's Chief Executive Officer, the four most highly
compensated executive officers other than the Chief Executive Officer (based on
amounts reported as salary and bonus for 1999) who were serving as executive
officers at December 31, 1999 and Mr. Elenbaas (the "Named Executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
------------
SHARES OF
COMMON
ANNUAL COMPENSATION STOCK ALL OTHER
-------------------- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) ($)(1)
--------------------------- ---- --------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
John W. Brown................................ 1999 700,000 700,000 50,000 154,000
Chairman of the Board, President and 1998 600,000 700,000 40,000 121,000
Chief Executive Officer 1997 550,000 500,000 200,000 110,000
Ronald A. Elenbaas........................... 1999 400,000 350,000 50,000 96,250
Vice President; 1998 335,000 475,000 40,000 69,850
Group President, MedSurg (2) 1997 310,000 300,000 40,000 61,050
Stephen Si Johnson........................... 1999 236,743 200,000 30,000 45,268
Vice President; Group President, MedSurg
William T. Laube............................. 1999 325,000 200,000 25,000 55,000
Vice President; President, 1998 300,000 175,000 30,000 51,150
Stryker Pacific Limited 1997 275,000 165,000 25,000 46,750
Edward B. Lipes.............................. 1999 375,000 350,000 50,000 71,500
Vice President; Group President, 1998 325,000 275,000 40,000 57,750
Howmedica Osteonics 1997 300,000 200,000 40,000 55,000
David J. Simpson............................. 1999 360,417 375,000 50,000 75,396
Vice President, Chief Financial Officer 1998 327,500 325,000 40,000 64,625
and Secretary 1997 299,583 260,000 40,000 57,704
</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) Mr. Elenbaas resigned as Vice President of the Company and Group President
of the Company's MedSurg Group effective September 30, 1999. Pursuant to an
agreement entered into at that time, Mr. Elenbaas will continue to be
employed as an advisor to the Company's Chief Executive Officer and Board
of Directors until May 31, 2002, will continue to receive salary at the
rate of $33,333 per month through December 31, 2000 and at the rate of
$1,000 per month from January 1, 2001 through May 31, 2002 and was paid his
full 1999 bonus of $350,000. In addition, notwithstanding the termination
of his employment on May 31, 2002, options to purchase shares of the
Company's Common Stock previously granted to Mr. Elenbaas will continue to
vest in accordance with the terms of the grant and may be exercised during
the ten-year period from the date of grant, except that all options held by
Mr. Elenbaas will terminate in the event he works for or provides
assistance to any business that competes with the Company.
6
<PAGE> 9
STOCK OPTIONS
The following table contains information covering options to purchase
shares of the Company's Common Stock granted to the Named Executives in 1999
pursuant to the Company's 1998 Stock Option Plan.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SHARES OF TOTAL
COMMON OPTIONS
STOCK GRANTED
UNDERLYING TO
OPTIONS EMPLOYEES EXERCISE GRANT DATE
GRANTED IN PRICE EXPIRATION PRESENT VALUE
NAME (#)(1) 1999 ($/SH) DATE ($)(2)
---- ---------- ---------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C>
John W. Brown......................... 50,000 3.4 48.5625 April 19, 2009 1,167,500
Ronald A. Elenbaas.................... 50,000 3.4 48.5625 April 19, 2009 1,167,500
Stephen Si Johnson.................... 30,000 2.0 48.5625 April 19, 2009 700,500
William T. Laube...................... 25,000 1.7 48.5625 April 19, 2009 583,750
Edward B. Lipes....................... 50,000 3.4 48.5625 April 19, 2009 1,167,500
David J. Simpson...................... 50,000 3.4 48.5625 April 19, 2009 1,167,500
</TABLE>
- ---------------
(1) Such options were granted at 100% of fair market value on the date of grant
and become exercisable as to 20% of the shares covered thereby on each of
the first five anniversary dates of the date of grant.
(2) The Grant Date Present Value has been calculated using the Black-Scholes
option pricing model and assumes a risk-free rate of return of 6.46%, an
option term of ten years, a dividend yield of approximately 0.29% and a
stock volatility of 38%. No adjustment was made for nontransferability or
forfeitures. Such assumptions are based upon historical experience and are
not a forecast of future stock price performance or volatility or of future
dividend policy. Such information, which is presented in accordance with
the requirements of the Securities and Exchange Commission, is not
necessarily indicative of the actual value that such options will have to
the Named Executives, which will be dependent upon market prices for the
Common Stock.
The following table sets forth information with respect to option exercises
during 1999 by the Named Executives and as to the unexercised options held by
them at December 31, 1999.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
FISCAL YEAR-END(#) FISCAL YEAR-END($)(1)
SHARES ------------------ -----------------------
ACQUIRED VALUE
ON EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($)(1) UNEXERCISABLE UNEXERCISABLE
---- ----------- --------- ------------------ -----------------------
<S> <C> <C> <C> <C>
John W. Brown....................... -- -- 232,000/218,000 11,674,800/7,501,625
Ronald A. Elenbaas.................. -- -- 48,000/122,000 2,123,000/3,789,125
Stephen Si Johnson.................. 40,000 1,709,700 63,000/67,000 3,304,888/2,102,875
William T. Laube.................... -- -- 112,000/80,000 5,812,560/2,645,313
Edward B. Lipes..................... -- -- 108,000/122,000 5,492,700/3,789,125
David J. Simpson.................... 12,000 661,410 120,000/122,000 6,121,560/3,789,125
</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 New York
Stock Exchange-Composite Transactions for the exercise date or December 31,
1999, 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 in January 1999
and held informal discussions on several occasions during 1999. The members of
the Compensation Committee, each of whom is an independent outside director, are
Ms. Stryker (Chairman), Mr. Cox 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 1999 were determined
at the meeting of the Compensation Committee held in January 1999. 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 January 1999
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 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 elements in
such calculation for the Named Executives in 1999 were earnings growth and cash
flow. The final determination of the actual bonuses paid 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. Pursuant to the agreement
entered into at the time of his resignation as an officer of the Company, the
bonus paid to Mr. Elenbaas for 1999 equaled his full potential.
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 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.
8
<PAGE> 11
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 Stock Option 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
Howard E. Cox, Jr.
William U. Parfet
Stock Option Committee
Ronda E. Stryker, Chairman
John S. Lillard
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, 1994 in the Company's
Common Stock and each of the indices.
INDEXED RETURNS PERFORMANCE GRAPH
<TABLE>
<CAPTION>
STRYKER CORPORATION S&P MIDCAP 400 INDEX S&P HEALTH CARE 500 INDEX
------------------- -------------------- -------------------------
<S> <C> <C> <C>
1994 100.00 100.00 100.00
1995 143.10 130.94 169.01
1996 163.41 156.08 193.98
1997 204.35 206.43 241.84
1998 302.72 245.87 348.58
1999 383.50 282.06 322.87
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
1994 1995 1996 1997 1998 1999
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Stryker Corporation $100.00 $143.10 $163.41 $204.35 $302.72 $383.50
- --------------------------------------------------------------------------------------------------------------
S&P MidCap 400 Index $100.00 $130.94 $156.08 $206.43 $245.87 $282.06
- --------------------------------------------------------------------------------------------------------------
S&P Health Care 500 Index $100.00 $169.01 $193.98 $241.84 $348.58 $322.87
- --------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 12
AMENDMENT OF THE RESTATED ARTICLES TO
INCREASE THE AUTHORIZED COMMON STOCK
The Board of Directors has recommended that action be taken by the
stockholders to amend Article III of the Restated Articles to increase the
authorized shares of Common Stock, $.10 par value, which the Company shall have
authority to issue from 150,000,000 to 500,000,000 shares.
The increase in the number of authorized shares of Common Stock is believed
by the Board of Directors to be desirable in order to provide flexibility of
action in the future and to enable the Company to act promptly in connection
with stock splits, stock dividends, acquisitions, financings and such other
corporate matters involving the issuance of Common Stock as the Board of
Directors may deem advisable. Although it is advantageous to have the additional
shares available, there are no present plans for their use.
The additional shares of Common Stock, together with the currently
authorized but unissued shares which are not reserved for issuance upon exercise
of options granted under the Company's Stock Option Plans, may be issued at such
times, to such persons and for such consideration as the Board of Directors may
determine to be in the Company's best interest without (except as otherwise
required by law or applicable stock exchange rule) further authority from the
stockholders. The additional shares of Common Stock would have the same voting,
dividend and other rights as the presently authorized Common Stock. Stockholders
presently have no preemptive rights and would have none in respect of the
proposed additional shares of Common Stock.
Adoption of the proposed amendment requires the affirmative vote of the
holders of a majority of the outstanding shares of Common Stock entitled to vote
at the Annual Meeting. The Board of Directors recommends that stockholders vote
FOR the proposed amendment.
10
<PAGE> 13
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 2000. 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.
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 17, 2000
11
<PAGE> 14
STRYKER CORPORATION
P.O. BOX 4085, KALAMAZOO, MICHIGAN 49003-4085
ANNUAL MEETING OF STOCKHOLDERS
APRIL 19, 2000
<TABLE>
<S> <C>
P
R THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF STRYKER CORPORATION
O
X The undersigned, having received the Notice of Annual Meeting of Stockholders and Proxy Statement, each dated
March 17, 2000, hereby appoints John S. Lillard and Ronda E. Stryker, and each of them, Proxies, with full power
Y 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
19, 2000, and at all 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 *
</TABLE>
<PAGE> 15
[X] Please mark you --- |
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
ITEM 2 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 AND "FOR" ITEM 2.
- --------------------------------------------------------------------------------
FOR WITHHELD
1. Election of Withhold authority
directors [ ] [ ] to vote for all
(see reverse). nominees.
FOR all nominees (except those whose names are listed below):
FOR AGAINST ABSTAIN
2. Amendment of the Company's Restated Articles of
Incorporation, as amended, to increase the authorized [ ] [ ] [ ]
Common Stock to 500,000,000 shares.
3. In their discretion, the Proxies are 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.)
------------------------------------------------------------
2000
------------------------------------------------------------
SIGNATURE(S) DATE
- --------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
