<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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
OMNICARE, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
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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:
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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 O-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
[ LOGO ]
PRELIMINARY PROXY
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MATERIALS
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 20, 1996
The Annual Meeting of Stockholders of Omnicare, Inc. (the "Company")
will be held at The Phoenix Club, 812 Race Street, Cincinnati, Ohio, on Monday,
May 20, 1996 at 10:00 a.m. The purpose of the Annual Meeting is to consider
and act upon:
(1) the election of directors;
(2) the approval of the Company's Annual Incentive Plan for Senior
Executive Officers;
(3) the adoption of an amendment to the Company's Restated
Certificate of Incorporation increasing the number of
authorized shares of Common Stock from 44,000,000 to
110,000,000;
(4) the ratification of the selection of Price Waterhouse LLP as
independent accountants of the Company; and
(5) any other business as may properly be brought before the
meeting.
Stockholders of record at the close of business on April 8, 1996 are
entitled to notice of, and to vote at, the meeting and any adjournments
thereof.
Whether or not you plan to attend the meeting, please sign and date
the enclosed proxy and mail it in the enclosed envelope at your earliest
convenience. No postage is required if it is mailed in the United States.
Cheryl D. Hodges
Secretary
Cincinnati, Ohio
April 19, 1996
YOUR VOTE IS IMPORTANT! TO ENSURE THAT YOUR SHARES ARE REPRESENTED AT THE
MEETING, PLEASE TAKE A MOMENT TO SIGN, DATE AND PROMPTLY MAIL YOUR PROXY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
<PAGE> 3
PRELIMINARY PROXY
-----------------
MATERIALS
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OMNICARE, INC.
2800 CHEMED CENTER
255 EAST FIFTH STREET
CINCINNATI, OHIO 45202-4728
_________________________________
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished to stockholders in connection with
the solicitation by the Board of Directors of Omnicare, Inc. (the "Company") of
proxies to be used at the Annual Meeting of Stockholders of the Company to be
held on May 20, 1996, and any adjournments thereof ("Annual Meeting").
Stockholders of record as of the close of business on April 8, 1996 are
entitled to notice of, and to vote at, the Annual Meeting or any adjournment
thereof. As of such date, the Company had outstanding __________ shares of its
Common Stock, par value $1 per share ("Common Stock"), having one vote per
share.
To constitute a quorum at the Annual Meeting, the presence, in person
or by proxy, of the holders of a majority of the outstanding shares of Common
Stock is necessary. Shares represented by proxies received by the Company will
be counted as present at the Annual Meeting for the purpose of determining the
existence of a quorum, regardless of how or whether such shares are voted on a
specific proposal. Abstentions will be treated as votes cast on a particular
proposal as well as shares present at the Annual Meeting. Where nominee
stockholders are not permitted to vote on a specific issue because they did not
receive specified instructions on the specific issue from the beneficial owners
of the shares ("Broker Nonvotes"), such Broker Nonvotes will be treated as not
present at the meeting for purposes of calculating the results of the vote on
the specific issue. Accordingly, abstentions and Broker Nonvotes have the
effect of a negative vote on any proposal where the vote required to pass the
proposal is a percentage of the outstanding shares, but only abstentions have
the effect of a negative vote when the vote required to pass a proposal is a
percentage of the shares present at the Annual Meeting. Shares represented by
properly executed proxies received in the accompanying form will be voted in
accordance with the instructions contained therein. In the absence of contrary
instructions, such shares will be voted (1) to elect as directors the 16
persons named below; (2) to approve the Company's Annual Incentive Plan for
Senior Executive Officers; (3) to adopt the proposed amendment to the Company's
Restated Certificate of Incorporation increasing the number of authorized
shares of Common Stock; and (4) to ratify the selection of Price Waterhouse LLP
as independent accountants of the Company for 1996. A proxy may be revoked at
any time prior to its exercise by the execution of a proxy signed at a later
date or by the giving of written notice of revocation to the Secretary of the
Company. A revocation during the Annual Meeting will not affect any vote
previously taken.
This Proxy Statement and the accompanying proxy were first mailed to
stockholders on or about April 19, 1996.
All share amounts and per share data in this Proxy Statement have been
adjusted to reflect a two-for-one stock split distributed on June 21, 1995.
ELECTION OF DIRECTORS
The number of directors to be elected at the Annual Meeting has been
fixed by the Board of Directors at sixteen. Directors are to be elected to
serve until the following annual meeting of stockholders and until their
respective successors are duly elected and qualified. Set forth below are the
names of the persons to be nominated by the Board of Directors, together with a
description of each person's principal occupation during at least the past five
years and other pertinent information. Each of the nominees for election as a
director is currently a director of the Company.
The Company has a program under which certain nominations for
membership on the Board of Directors are generally rotated among senior
operating executives of the Company and its subsidiaries. The persons
considered to be in the rotating group are Messrs. Timothy E. Bien, Ronald K.
Baur, Richard L. Doane, Tracy Finn, Thomas W. Ludeke, Jeffrey M. Stamps and Ms.
Mary Lou Fox. Mr. Baur and Ms. Fox are being nominated from that group this
year. It is anticipated that additional executives of the Company will be
included in such rotating group in future years.
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<PAGE> 4
No person may be nominated for election as a director unless written
notice of intention to nominate such person (which notice shall contain the
prospective nominee's name, address and occupation) has been given to the
Chairman, the President or the Secretary of the Company by a stockholder
entitled to notice of, and to attend, a meeting of stockholders at which
directors are to be elected, not later than 15 business days before such
meeting.
Unless authority is withheld for individual nominees or all nominees,
it is intended that the shares represented by each proxy will be voted for the
nominees listed below. The Company anticipates that all nominees listed in
this Proxy Statement will be candidates when the election is held. However, if
for any reason any nominee is not a candidate at that time, proxies will be
voted for a substitute nominee designated by the Board of Directors and for the
remaining nominees (except where a proxy withholds authority with respect to
the election of directors).
NOMINEES
EDWARD L. HUTTON Mr. Hutton is Chairman of the Company and has
Director since 1981 held this position since May 1981. Additionally,
Age: 76 he is Chairman and Chief Executive Officer and a
director of Chemed Corporation, Cincinnati, Ohio
(a diversified public corporation with interests
in plumbing and drain cleaning services,
janitorial supplies and health care
services)(hereinafter "Chemed") and has held
these positions since November 1993 and April
1970, respectively. Previously, he was President
and Chief Executive Officer of Chemed, positions
he had held from April 1970 to November 1993. He
is also Chairman and a director of Roto-Rooter,
Inc., Cincinnati, Ohio (plumbing and drain
cleaning services)(hereinafter "Roto-Rooter"),
and is Chairman and a director of National
Sanitary Supply Company, Cincinnati, Ohio
(sanitary and maintenance supplies distributor)
(hereinafter "National Sanitary"). Mr. Hutton is
the father of Thomas C. Hutton who is a director
of the Company.
JOEL F. GEMUNDER Mr. Gemunder is President of the Company and has
Director since 1981 held this position since May 1981. From January
Age: 56 1981 until July 1981, he served as Chief
Executive Officer of the partnership organized as
a predecessor to the Company for the purpose of
owning and operating certain health care
businesses of Chemed and Daylin, Inc., each then
a subsidiary of W.R. Grace & Co. Mr. Gemunder was
an Executive Vice President of Chemed and Group
Executive of its Health Care Group from May 1981
through July 1981 and a Vice President of Chemed
from 1977 until May 1981. Mr. Gemunder is a
director of Chemed.
RONALD K. BAUR Mr. Baur is Regional Vice President-Operations of
Director since 1994 the Company, a position he has held since
Age: 54 February 1994. Previously, he was Regional Vice
President-Operations of the Company's Pharmacy
Services Group (a group of subsidiaries engaged
in providing pharmacy services to nursing homes)
(hereinafter "Pharmacy Services Group") from
March 1993 to February 1994 when the Pharmacy
Services Group was integrated into the corporate
management structure of the Company. He is also
President of Interlock Pharmacy Systems, Inc.,
St. Louis, Missouri (pharmacy services for
nursing homes)(hereinafter "Interlock"), a
subsidiary of the Company. He has held this
position since the Company's acquisition of
Interlock in July 1992. From 1973 to July 1992,
he was the sole stockholder and the President of
Interlock.
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<PAGE> 5
KENNETH W. CHESTERMAN Mr. Chesterman is an Executive Vice President of
Director since 1984 the Company and has held this position since
Age: 55 1984. He had also served as President of the
Pharmacy Services Group from August 1989 to
February 1994. From August 1984 to August 1989,
he held the position of President of the
Company's subsidiary, HPI Health Care Services,
Inc., Los Angeles, California (health care
services)(hereinafter "HPI"), which was sold in
August 1989.
CHARLES H. ERHART, JR. Mr. Erhart retired as President of W.R. Grace &
Director since 1981 Co., Boca Raton, Florida (international specialty
Age: 70 chemicals and health care) (hereinafter "Grace")
in August 1990. He had held this position since
July 1989. From November 1986 to July 1989, he
was Chairman of the Executive Committee of Grace.
From May 1981 to November 1986, he served as Vice
Chairman and Chief Administrative Officer of
Grace. Mr. Erhart is a director of Chemed,
Roto-Rooter and National Sanitary.
MARY LOU FOX Ms. Fox is Vice President-Marketing of the
Director since 1993 Company and has held this position since February
Age: 64 1994. From July 1993 to February 1994, she was
Vice President-Marketing of the Pharmacy Services
Group. She is also President of Westhaven
Services Co., Toledo, Ohio (pharmacy services for
nursing homes) (hereinafter "Westhaven"), a
subsidiary of the Company. She has held this
position since the Company's acquisition of
Westhaven in October 1992. From 1976 to October
1992, she was the sole stockholder and the
President of Westhaven.
CHERYL D. HODGES Ms. Hodges is Senior Vice President and Secretary
Director since May 1992 of the Company and has held these positions since
Age: 44 February 1994. From August 1986 to February 1994,
she was Vice President and Secretary of the
Company. From August 1982 to August 1986, she
served as Vice President-Corporate and Investor
Relations. Ms. Hodges has also served as a
director of the Company for four prior terms,
1984-85; 1986-87; 1988-89 and 1990-91.
THOMAS C. HUTTON Mr. Hutton is a Vice President of Chemed and has
Director since 1983 held this position since February 1988. Mr.
Age: 45 Hutton is a director of Chemed, Roto-Rooter and
National Sanitary. He is the son of Edward L.
Hutton, Chairman of the Company.
PATRICK E. KEEFE Mr. Keefe is Senior Vice President-Operations of
Director since 1993 the Company and has held this position since
Age: 50 February 1994. From April 1993 to February 1994,
he was Vice President-Operations of the Company.
From April 1992 to April 1993, he served as Vice
President-Pharmacy Management Programs of
Diagnostek, Inc., Albuquerque, New Mexico
(mail-service pharmacy and health care services)
(hereinafter "Diagnostek"). From September 1990
to April 1992, Mr. Keefe served as President of
HPI, a subsidiary of Diagnostek, which was
acquired from the Company in August 1989. From
August 1984 to September 1990, he served as
Executive Vice President of HPI.
SANDRA E. LANEY Ms. Laney is Senior Vice President and Chief
Director since 1987 Administrative Officer of Chemed and has held
Age: 52 these positions since November 1993 and May 1991,
respectively. From May 1984 to November 1993, she
was a Vice President of Chemed. Ms. Laney is a
director of Chemed, Roto-Rooter and National
Sanitary.
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<PAGE> 6
ANDREA R. LINDELL, DNSc, RN Dr. Lindell is Dean and Professor in the College
Director since 1992 of Nursing and Health at the University of
Age: 52 Cincinnati, a position she has held since
December 1990. She also serves as director -
Center for Allied Health at the University of
Cincinnati. From August 1981 to August 1990, Dr.
Lindell served as Dean and a Professor in the
School of Nursing at Oakland University,
Rochester, Michigan.
SHELDON MARGEN, M.D. Dr. Margen is a Professor Emeritus in the School
Director since 1983 of Public Health, University of California,
Age: 76 Berkeley, a position he has held since May 1989.
He had served as a Professor of Public Health at
the University of California, Berkeley, since
1979.
KEVIN J. McNAMARA Mr. McNamara is President of Chemed and has held
Director since 1986 this position since August 1994. From November
Age: 42 1993 to August 1994, Mr. McNamara was Executive
Vice President, Secretary and General Counsel of
Chemed. Previously, from May 1992 to November
1993, he held the positions of Vice Chairman,
Secretary and General Counsel of Chemed. From
August 1986 to May 1992, he served as Vice
President, Secretary and General Counsel of
Chemed. From November 1990 to December 1992, Mr.
McNamara served as an Executive Vice President
and Chief Operating Officer of the Company. From
November 1989 to November 1990, he served as a
Vice President of the Company. Mr. McNamara also
serves as Vice Chairman of Roto-Rooter and
National Sanitary. He is a director of Chemed,
Roto-Rooter and National Sanitary.
JOHN M. MOUNT Mr. Mount is a Principal of Lynch-Mount
Previously a Director Associates, Cincinnati, Ohio (management
from May 1988 to April 1991 consulting) and has held this position since
and since May 1994 November 1993. From April 1991 to November 1993,
Age: 54 Mr. Mount was Senior Vice President of Diversey
Corporation, Detroit, Michigan (specialty
chemicals) (hereinafter "Diversey"), and
President of Diversey's DuBois Industrial
Division. Previously, from May 1989 to April
1991, Mr. Mount was an Executive Vice President
of Chemed and President of Chemed's then
wholly-owned subsidiary, DuBois Chemicals, Inc.
He held the latter position from September 1986
to April 1991. He is a director of Chemed.
TIMOTHY S. O'TOOLE Mr. O'Toole is an Executive Vice President and
Director since 1989 the Treasurer of Chemed, positions he has held
Age: 40 since May 1992. From February 1989 to May 1992,
he was a Vice President and Treasurer of Chemed.
From May 1988 to February 1989, he served as Vice
President and Director of Taxes of Chemed. He is
a director of Chemed, Roto-Rooter, National
Sanitary and Vitas Healthcare Corporation, Miami,
Florida (hospice management).
D. WALTER ROBBINS, JR. Mr. Robbins retired as Vice Chairman of Grace in
Director since 1981 January 1987 and thereafter became a consultant
Age: 76 to Grace until July 1995. He is a director of
Chemed, Roto-Rooter and National Sanitary.
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<PAGE> 7
COMMITTEES AND MEETINGS OF THE BOARD
The Board of Directors of the Company has an Incentive Committee, a
Compensation Committee and an Audit Committee. The Company does not have a
Nominating Committee.
The Incentive Committee (a) administers the Company's stock-based
incentive plans under which it makes determinations concerning the grant of
stock options and stock awards to key employees of the Company and (b) makes
recommendations to the Board of Directors concerning additional year-end
contributions by the Company under the Company's Employees' Savings and
Investment Plan. The Incentive Committee consists of Messrs. Erhart, Mount and
Robbins. The Incentive Committee met on four occasions during 1995.
The Compensation Committee makes recommendations to the Board of
Directors concerning (a) salary and incentive compensation payable to officers
and certain other key employees of the Company, (b) establishment of incentive
compensation plans and programs generally and (c) adoption and administration
of certain employee benefit plans and programs. The Compensation Committee
consists of Messrs. Robbins and Mount and Dr. Margen. Ms. Laney was a member
of this Committee in 1995. The Compensation Committee met on five occasions
during 1995.
The Audit Committee (a) recommends to the Board of Directors a firm of
independent accountants to audit the Company and its consolidated subsidiaries,
(b) reviews and reports to the Board of Directors on the Company's annual
financial statements and the independent accountants' report on such financial
statements and (c) meets with the Company's senior financial officers, internal
auditors and independent accountants to review audit plans and other matters
regarding the Company's accounting, financial reporting and internal control
systems. The Audit Committee consists of Messrs. Erhart and Robbins,
Dr. Lindell and Ms. Laney. The Audit Committee met on two occasions during
1995.
During 1995, there were five meetings of the Board of Directors and
each director attended at least 75% of the aggregate of (a) the total number of
meetings held by the Board of Directors during the period for which he or she
has been a director and (b) the total number of meetings held by all Committees
of the Board of Directors during the period for which he or she served.
REMUNERATION OF DIRECTORS
In 1995, each member of the Board of Directors who was not a regular
employee of the Company was paid $1,200 ($1,300 beginning November 1, 1995) for
his or her attendance at each meeting of the Board and $500 ($750 beginning
November 1, 1995) for each meeting of a Committee of the Board of which he or
she was a member. The Chairmen of the Committees of the Board were paid an
additional $1,200 ($2,000 after November 1, 1995) per year. During 1995, each
member of the Board of Directors was granted an annual unrestricted stock award
covering 200 shares of the Company's Common Stock under the 1992 Long-Term
Stock Incentive Plan ("1992 Plan"). In consideration of special services to
the Company during 1995, Mr. T.C. Hutton received additional stock awards
covering 400 shares, Mr. O'Toole received 500 shares and Ms. Laney received
additional stock awards covering 750 shares, all of which were granted under
the Company's 1992 Plan. Each of these individuals was a director of the
Company but did not serve as a member of the Incentive Committee of either the
Company or an affiliated company or as a regular employee of the Company at the
date of grant. Also during 1995, Messrs. Erhart and Robbins each received an
additional annual fee of $8,000 and Mr. T.C. Hutton received an additional
annual fee of $5,000. Such fees were paid in lieu of stock options granted to
directors in previous years. These individuals were members of the Incentive
Committee of either the Company or an affiliated company on the dates of such
grants and thus were ineligible to participate.
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<PAGE> 8
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation
of the Company's most highly compensated executive officers (the "named
executives") for services to the Company and its subsidiaries during 1995, 1994
and 1993.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
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Long-Term
Compensation
-----------------------
Annual Compensation Awards
-------------------------------- -----------------------
# of Shares All Other
Restricted Underlying Compensation
Name and Principal Position Year Salary Bonus Other Stock (5) Options (6)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
E. L. Hutton - Chairman 1995 $506,229(1) $491,125 $42,208 $2,350,000 140,000 --
1994 364,471(1) 595,000(3) -- 470,000 -- --
1993 328,839(1) 313,350(4) -- 325,268 34,000 --
J. F. Gemunder - President 1995 $473,750 $504,200 $55,628 $2,350,000 140,000 $376,879
1994 336,975 595,000(3) -- 470,000 -- 134,753
1993 309,350 264,450(4) -- 325,268 34,000 92,434
K.W. Chesterman - Executive Vice President 1995 $187,800 $190,297 -- $ 752,000 50,000 $168,731
1994 174,605 190,000(3) -- 270,250 -- 53,596
1993 163,630 144,025(4) -- 187,041 22,000 52,636
P.E. Keefe - Senior Vice President - Operations 1995 $155,937 $157,037 -- $ 658,000 45,000 $132,106
1994 128,750 146,500(3) -- 211,500 -- 41,430
1993 86,846(2) 79,415(4) -- 146,378 50,000 20,362
C.D. Hodges - Senior Vice President and Secretary 1995 $127,350 $ 73,756 -- $ 564,000 32,000 $ 94,250
1994 109,468 130,000(3) -- 169,200 -- 43,287
1993 96,560 87,225(4) -- 117,109 12,000 34,994
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</TABLE>
- ----------------------
(1) The amounts shown include $119,149 for 1993, $140,773 for 1994 and
$197,396 in 1995 representing annual compensation deferred by Mr.
Hutton. Mr. Hutton participates in a deferred compensation plan in
lieu of participation in the Company's pension and other benefit
plans. This deferred compensation plan provides that an amount equal
to 20% of the total compensation paid to Mr. Hutton by the Company,
plus a market rate interest equivalent thereon, will accumulate in an
account for Mr. Hutton's benefit. The plan further provides that
annually, beginning December 1, 1991, a specified percentage (20% in
1991 and 50% in 1992 and thereafter) of the then current balance of
his account is to be paid to him, and upon his death, any remaining
balance is to be paid in a lump sum payment to his beneficiaries.
(2) Mr. Keefe was employed by the Company on April 11, 1993.
(3) Includes special bonus related to the successful completion of a
public offering of Common Stock in November 1994 in the following
amounts: Mr. Hutton -- $345,000; Mr. Gemunder -- $345,000; Mr.
Chesterman -- $62,000; Mr. Keefe -- $44,000 and Ms. Hodges -- $90,000.
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<PAGE> 9
(4) Includes special bonus related to the successful completion of the
Company's $80,500,000 convertible note offering in October 1993 in the
following amounts: Mr. Hutton -- $150,000, Mr. Gemunder -- $150,000,
Mr. Chesterman -- $45,000, Mr. Keefe -- $20,000 and Ms. Hodges --
$60,000.
(5) Under the Company's stock award program, restricted shares of Common
Stock were issued as long-term, incentive compensation to the named
executives and other key employees. Restricted shares vest in five or
seven equal annual installments as determined by the Incentive
Committee. If the recipient's employment terminates due to death,
disability, retirement under a retirement plan of the Company, or
change in control of the Company, the restrictions terminate.
Otherwise, in the event of termination of employment, unvested shares
are forfeited. Recipients receive dividends on the awarded shares.
Restricted stock awards were granted in February 1996 for 1995
services as long-term incentive compensation. The numbers of
restricted shares granted in February 1996 to the named executives are
as follows: Mr. Hutton -- 50,000 shares; Mr. Gemunder -- 50,000
shares; Mr. Chesterman -- 16,000 shares; Mr. Keefe -- 14,000 shares;
and Ms. Hodges -- 12,000 shares. As of December 31, 1995, the number
and value of the aggregate restricted stock holdings of the named
executives were: Mr. Hutton -- 36,856 shares or $1,460,429; Mr.
Gemunder -- 36,856 shares or $1,460,429; Mr. Chesterman -- 21,194
shares or $839,802; Mr. Keefe -- 16,586 shares or $657,218; and Ms.
Hodges -- 13,270 shares or $525,811.
(6) This column includes the dollar value of shares of Common Stock
allocated to the named executives' accounts in the Company's Employee
Stock Ownership Plan (the "ESOP") which are attributable to the
Company's contributions to the ESOP. Participants are entitled to
receive the fully vested shares allocated to their accounts upon
death, disability, retirement or termination of employment. To the
extent benefits under the ESOP are otherwise limited by provisions of
the Internal Revenue Code, the Company's Excess Benefits Plan provides
that the Company will provide from its general funds a benefit to an
employee equal to the benefit which would have been provided but for
the limitations of the Internal Revenue Code. The benefits shown
include those provided under the Excess Benefits Plan. For 1995, the
numbers of shares attributable to these plans and the dollar values
thereof included in the table for each named executive are as follows:
Mr. Gemunder -- 9,899 shares or $358,770; Mr. Chesterman -- 4,199
shares or $149,511; Mr. Keefe -- 3,275 shares or $116,821; and Ms.
Hodges -- 2,337 shares or $85,926. This column also includes (a) life
insurance premiums paid by the Company (Mr. Gemunder - $1,530; Mr.
Chesterman - $873; Mr. Keefe - $612; Ms. Hodges - $492); and (b) the
value of premium payments made by the Company for the benefit of the
recipient under a split dollar life insurance policy, which provides
for the refund of premiums to the Company upon termination of the
policy (unrelated to term life insurance coverage) (Mr. Gemunder -
$16,579; Mr. Chesterman - $18,347; Mr. Keefe - $14,673 and Ms. Hodges
- $7,832).
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<PAGE> 10
STOCK OPTIONS
The following table sets forth information regarding stock options
granted to the named executives during 1995:
OPTION GRANTS IN 1995
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Individual Grants Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation for Option
Term
- -----------------------------------------------------------------------------------------------------------------------
Number
of Percent of
Shares Total Options
Underlying Granted to
Options Employees in Exercise price Expiration
Name Granted(1) Fiscal Year ($/Sh) Date 5% 10%
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
E.L. Hutton 140,000 26.5% $24.25 3-01-2005 $2,135,000 $5,411,000
J.F. Gemunder 140,000 26.5% $24.25 3-01-2005 2,135,000 5,411,000
K.W. Chesterman 50,000 9.5% $24.25 3-01-2005 762,500 1,932,500
P.E. Keefe 45,000 8.5% $24.25 3-01-2005 686,250 1,739,250
C.D. Hodges 32,000 6.0% $24.25 3-01-2005 488,000 1,236,800
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
__________________________
(1) All such options were granted on March 1, 1995 and provide for the
purchase of shares of the Company's common stock at a price equal to
the fair market value on the date of a grant and become exercisable in
four equal annual installments commencing one year from the date of
grant.
The following table sets forth information regarding stock options
exercised by the named executives during 1995 and the value of unexercised
options held by the named executives as of December 31, 1995.
AGGREGATED OPTION EXERCISES IN 1995 AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Number of Shares Underlying Value of Unexercised In-
Shares Unexercised Options at The-Money Options at
Acquired Fiscal Year-End (#) Fiscal Year-End ($)
on ------------------------------------------------------------
Name Exercise (#) Value Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
E.L. Hutton 38,500 $630,168 -0- 187,000 $ -0- $4,555,110
J.F. Gemunder 15,600 319,313 201,400 187,000 7,486,360 4,555,110
K.W. Chesterman 60,000 1,151,250 95,500 78,500 3,504,005 2,047,555
P.E. Keefe 12,500 206,625 -0- 70,000 -0- 1,845,125
C.D. Hodges 7,000 207,283 13,500 45,500 478,845 1,141,205
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE> 11
PENSION PLAN
The Company has a pension plan qualified under the Internal Revenue
Code (the "Code") which provides retirement benefits to employees of certain
business units (the "Qualified Plan") and an excess benefits plan (the "Excess
Benefits Plan") which provides retirement payments to participants in the
amount necessary so that they receive what they would have received under the
Qualified Plan if payments to them under the Qualified Plan were not limited by
the Code and other restrictions. The named executives, other than Mr. E. L.
Hutton, participate in the Qualified Plan and the Excess Benefits Plan.
Retirement benefits under the Qualified Plan are calculated on the
basis of the employee's earnings during the highest consecutive 60-month period
during the employee's last 120 months of employment ("Final Average
Compensation") and are subject to partial offset for social security benefits
and payments under the Company's prior pension plan. The following table shows
the estimated maximum annual retirement benefits payable at normal retirement
(age 65) under the Pension Plan and the Excess Benefits Plan at selected
compensation levels after various years of service. Amounts are shown on a
10-year certain and life form, after the applicable reduction for social
security benefits.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Years of Service (2)
Final Average ----------------------------------------------------------------------
Compensation (1) 15 20 25 30 35
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$150,000 $ 29,257 $ 39,010 $ 48,762 $ 58,514 $ 66,014
200,000 40,507 54,010 67,512 81,014 91,014
300,000 63,007 84,010 105,012 126,014 141,014
400,000 85,507 114,010 142,512 171,014 191,014
500,000 108,007 144,010 180,012 216,014 241,014
600,000 130,507 174,010 217,512 261,014 291,014
700,000 153,007 204,010 255,012 306,014 341,014
800,000 175,507 234,010 292,512 351,014 391,014
900,000 198,007 264,010 330,012 396,014 441,014
- -------------------------------------------------------------------------------------------------
</TABLE>
____________________________
(1) For purposes of the Pension Plan, such earnings generally
include base salary and incentive compensation which for the
named executives are set forth in the "Salary" and "Bonus"
columns of the Summary Compensation Table as well as the value
of stock awards vesting during the year.
(2) As of December 31, 1995, Messrs. Gemunder, Chesterman and
Keefe and Ms. Hodges had 32, 21, 5 and 14 years of service,
respectively. Mr. E.L. Hutton does not participate in the
Pension Plan; however, Mr. Hutton participates in a deferred
compensation plan. See "Summary Compensation Table."
9
<PAGE> 12
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with certain of its
executive officers. Mr. Gemunder's employment agreement provides for his
continued employment as President of the Company through August 3, 2000,
subject to earlier termination under certain circumstances, at a base salary of
$500,000 per annum or such higher amounts as the Board of Directors may
determine as well as participation in incentive compensation plans, stock
incentive plans and other employee benefit plans. The agreement also provides
for his continued nomination as a director of the Company. In the event of
termination without cause or a material reduction in authority or
responsibility, the agreement provides that Mr. Gemunder will receive severance
payments equal to 150% of his then current base salary plus the amount of
incentive compensation most recently paid or approved in respect of the
previous year and the fair market value of all stock awards which have vested
during the twelve months prior to termination ("Covered Compensation") for the
balance of the term of the agreement. Ms. Hodges' employment agreement is
essentially identical to that of Mr. Gemunder, except that her agreement
provides for a base salary of $135,000 per annum and provides for her
nomination as a director, no less frequently than bi-annually. Messrs.
Chesterman and Keefe each have employment agreements which are also essentially
identical to that of Mr. Gemunder except that minimum base salaries are
$193,300 and $168,500, respectively, director nomination is not stipulated and
severance payments resulting from the conditions described above would equal
100% of Covered Compensation.
JOINT REPORT OF THE COMPENSATION AND INCENTIVE
COMMITTEES ON EXECUTIVE COMPENSATION
The Company believes that executive compensation should be directly
and materially linked to the financial and operating performance of the Company
and increases in stockholder value. The Company's executive compensation
program combines base salary, annual cash incentive compensation, and long-term
incentive compensation in the form of stock options and restricted stock awards
with various benefit plans, including pension plans, savings plans and medical
benefits generally available to salaried employees of the Company.
The executive compensation program is administered through the
coordinated efforts of the Compensation Committee and the Incentive Committee
of the Board of Directors. The membership of both committees is comprised of
outside directors (i.e. non- employees of the Company). The Compensation
Committee is responsible for the review, approval and recommendation to the
Board of Directors of matters concerning base salary and annual cash incentive
compensation for key executives of the Company. The recommendations of the
Compensation Committee on such matters must be approved by the full Board of
Directors. The Incentive Committee administers the Company's stock incentive
plans under which it reviews and makes grants of stock options and restricted
stock awards. Both the Compensation and Incentive Committees may use their
discretion to set executive compensation where, in their judgment, external,
internal or individual circumstances warrant.
Base Salary and Annual Incentive Opportunity
In determining base salary levels, the Compensation Committee
considers the executive's responsibilities, experience, performance, and
specific issues particular to the Company. In general, base salaries are set
at levels believed by the Compensation Committee to be sufficient to attract
and retain qualified executives when considered with the other components of
the Company's compensation program.
Annual incentive compensation provides a direct financial incentive to
executives, in the form of an annual cash bonus, to achieve their business
unit's and the Company's annual goals. Financial and operational goals are
established at the beginning of each fiscal year and generally take into
account such measures of performance as sales and earnings growth,
profitability, cash flow and return on investment. Non-financial measures of
performance include organizational development, product or service expansion
and strategic positioning of the Company's assets. Specific relative weights
are not assigned to each performance factor, since the relative importance of
each factor varies depending upon the executive's specific job
responsibilities. Instead, each individual compensation decision is made on a
case-by-case basis and will ultimately depend upon the judgment of the
Compensation Committee.
Individual performance is also taken into account in determining the
amount of individual bonuses. The Committee believes that bonuses as a percent
of a executive's salary should be sufficiently high to provide a major
incentive for achieving annual performance targets. For the Chairman and the
President, annual cash incentive compensation for 1996 would be determined in
accordance with the "Annual Incentive Plan for
10
<PAGE> 13
Senior Executive Officers" (the "AIP"), if the AIP is approved by stockholders
at the Annual Meeting. The AIP is designed to comply with Section 162(m) of
the Internal Revenue Code (the "Code"), which is discussed below and under
"Approval of Annual Incentive Plan for Senior Executive Officers," at page
16.
Long-Term Incentive Compensation
The stock option and restricted stock program forms the basis of the
Company's long-term incentive plan for executives. This program seeks to align
executive and long-term stockholder interests by creating a strong and direct
link between executive compensation and shareholder return.
Stock options and restricted stock awards are granted annually and are
generally the primary incentive for long-term performance as they are granted
at or above fair market value and have vesting restrictions which generally
lapse over five to seven year periods. The Incentive Committee considers each
grantee's current stock option and award holdings in making such grants. Both
the amounts of restricted stock awards and the proportion of stock options
increase as a function of higher salary and position of responsibility within
the Company.
Policy on Deductibility of Compensation
The Compensation and Incentive Committees are continuing to review the
implications of Section 162(m) of the Code and the recently adopted Treasury
Regulations under that section. Section 162(m) limits to $1,000,000 the amount
that may be deducted by a publicly-held company for compensation paid each year
to each of its five most highly-paid executive officers. Federal law excludes
compensation from the $1,000,000 limit if it is paid under specified
conditions, including that the compensation is based on performance goals
determined by a committee of "outside" directors and approved by the Company's
stockholders. The AIP, being submitted to stockholders at the Annual Meeting,
is designed to comply with Section 162(m) as performance-based compensation.
The Committee's present intention is to comply in the future with Section
162(m) unless the Committee believes that such compliance would not be in the
best interests of the Company and its stockholders.
Compensation of the Company's President
As in the past, in determining Mr. Gemunder's overall compensation and
each component thereof, the Committee took into consideration the report of
Buck Consultants, Inc., independent, professional compensation consultants, and
the financial measures cited above. Mr. Gemunder's base salary was increased
from $342,500 in 1994 to $500,000 in 1995, and his annual cash bonus was
increased from $250,000 in 1994 to $450,000 in 1995. Mr. Gemunder also
received in 1994 a special cash bonus of $345,000 for services in connection
with the public offering of the Company's Common Stock in November 1994.
The survey data provided by the Company's consultants included 35
health care companies. The Company's performance for 1995 with respect to all
measures (including sales and earnings growth, return on average common equity,
and stock appreciation) exceeded the 90th percentile for surveyed companies.
Mr. Gemunder's base salary and annual cash compensation for 1995 are less than
the 75th percentile for the surveyed companies.
In 1995, as long-term incentive compensation, Mr. Gemunder was granted
options to purchase 140,000 shares of Common Stock at option prices equal to
the fair market value of a share on the date of grant and awarded 50,000 shares
of restricted Common Stock. Such restricted stock vests over a seven-year
period. The Company believes that it is key to the Company's success that Mr.
Gemunder be primarily motivated and rewarded on the basis of the Company's
successful execution of its growth strategy. From December 31, 1994 through
December 31, 1995, the number of nursing home residents served by the Company
increased 47% to 216,500. Sales for 1995 increased 30% to $399.6 million, net
income (excluding acquisition expenses related to pooling of interests
transactions) increased 67% to $25.7 million and fully diluted earnings per
share (excluding the aforementioned pooling expenses) increased 35% to 89
cents. Over this period the Company's stock price and market capitalization
increased 105% and 118%, respectively. At the same time that this outstanding
growth was being achieved, the Company's financial performance in relation to
the surveyed companies exceeded the 90th percentile.
11
<PAGE> 14
Through the use of annual cash incentive awards based primarily upon
the Company's most recent year performance and stock option grants and
restricted stock awards which become more valuable as the value of the
Company's Common Stock increases, the Committee believes its compensation
policies for executive officers, including Mr. Gemunder, effectively tie
executive compensation to the Company's performance and stockholder value.
Compensation Committee: Incentive Committee:
D. Walter Robbins, Jr., Chairman Charles H. Erhart, Jr., Chairman
Sandra E. Laney John M. Mount
Sheldon Margen, M.D. D. Walter Robbins, Jr.
John M. Mount
COMPENSATION AND INCENTIVE COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. E. L. Hutton and Gemunder, executive officers of the Company,
are directors of Chemed. Ms. Laney, an executive officer of Chemed, is a
member of the Audit Committee and was in 1995 a member of the Compensation
Committee of the Company. In addition, all members of the Compensation and
Incentive Committee, except Dr. Margen, are directors of Chemed.
CERTAIN TRANSACTIONS
The Company has contracted with a division of Chemed to assist in the
development of a new data processing system to integrate and standardize all
operational and financial reporting functions of the Company. The Company also
subleases its corporate offices from Chemed and is charged for the occasional
use of Chemed's corporate aviation department and other incidental expenses
based on Chemed's cost. The Company reimburses Chemed for all such services at
rates which are essentially equal to those which would have been incurred if
the Company were operating as an unaffiliated entity. During 1995, such
reimbursements totalled $4,535,000.
12
<PAGE> 15
COMPARATIVE STOCK PERFORMANCE
The following graph summarizes the cumulative total return on $100
invested in the Company's Common Stock, the Standard & Poor's 500 Stock Index,
and the Standard & Poor's Health Care Composite Index. The graph assumes
dividend reinvestment.
CUMULATIVE TOTAL STOCKHOLDER RETURN FOR
FIVE YEAR PERIOD ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
=======================================================================================================================
December 31, 1990 1991 1992 1993 1994 1995
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Omnicare, Inc. 100.00 250.75 341.85 409.27 562.45 1,154.63
- -----------------------------------------------------------------------------------------------------------------------
S&P 500 100.00 130.47 140.41 154.56 136.60 215.45
- -----------------------------------------------------------------------------------------------------------------------
S&P Health Care Composite 100.00 154.01 128.92 118.09 133.58 210.85
=======================================================================================================================
</TABLE>
The total return calculations reflected in the foregoing graph were
performed by Standard & Poor's Compustat Services, Inc.
13
<PAGE> 16
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of March 31, 1996 with
respect to the only person known to the Company to beneficially own more than
5% of the shares of its Common Stock:
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND ADDRESS OF AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP (a) CLASS (a)
-------------------------- ------------------------ ------------
<S> <C> <C>
Pilgrim Baxter & Associates, Ltd. 1,543,340 (b) %
1255 Drummers Lane
Suite 300
Wayne, PA 19087-1549
</TABLE>
________________
(a) Under applicable Securities and Exchange Commission regulations,
shares are treated as "beneficially owned" if a person has or shares
voting or dispositive power with respect to the shares or has a right
to acquire the shares within 60 days of March 31, 1996. Unless
otherwise indicated, sole voting power and sole dispositive power are
exercised by the named person. In calculating "Percent of Class" for
a person, shares which may be acquired by the person within such
60-day period are treated as owned by the person and as outstanding
shares.
(b) Such person has shared voting power but sole dispositive power with
respect to such shares.
The following table sets forth information as of March 31, 1996 with
respect to the shares of Common Stock beneficially owned by each of the
nominees and directors, each of the named executives, and all its directors and
executive officers as a group:
<TABLE>
<CAPTION>
NUMBER OF SHARES AND PERCENT OF
INDIVIDUAL OR GROUP NATURE OF BENEFICIAL OWNERSHIP CLASS (a)(b)
---------------------------------- ------------------------------ -------------------------
<S> <C> <C>
E.L. Hutton 94,586 (c)
38,500 (d)
370 (e)
J.F. Gemunder 196,377 (c)
274,900 (d)
R.K. Baur 9,390 (c)
K.W. Chesterman 94,574 (c)
131,000 (d)
C.H. Erhart, Jr. 3,800 (c)
</TABLE>
14
<PAGE> 17
<TABLE>
<S> <C> <C>
M.L. Fox 8,604 (c)
2,000 (d)
D.W. Froesel, Jr. 8,651 (c)
P.E. Keefe 34,052 (c)
23,750 (d)
C.D. Hodges 50,895 (c)
32,000 (d)
T.C. Hutton 2,142 (c)
1,500 (d)
370 (e)
3,510 (f)
S.E. Laney 11,118 (c)
6,750 (d)
3,510 (f)
A.R. Lindell 600 (c)
S. Margen 7,265 (c)
K.J. McNamara 1,380 (c)
7,500 (d)
3,510 (f)
J.M. Mount 1,000 (c)
T.S. O'Toole 1,984 (c)
1,500 (d)
D.W. Robbins, Jr. 1,800 (c)
ALL DIRECTORS AND EXECUTIVE 536,714 (c)
OFFICERS AS A GROUP (18 PERSONS) 522,900 (d)
370 (e)
3,510 (f) %
</TABLE>
_________________________________
(a) Under applicable Securities and Exchange Commission regulations,
shares are treated as "beneficially owned" if a person has or shares
voting or dispositive power with respect to the shares or has a right
to acquire the shares within 60 days of March 31, 1996. Unless
otherwise indicated, sole voting power and sole dispositive power are
exercised by the named person. In calculating "Percent of Class" for
a person, shares which may be acquired by the person within such
60-day period are treated as owned by the person and as outstanding
shares.
(b) Percent of Class is not shown if less than 1%.
(c) Shares held in individual capacity (or together with a member of his
or her household) as to which such person has voting and dispositive
powers (and includes shares allocated, as of December 31, 1995, to the
account of each named person or member of the group under the
Company's Employees' Savings and Investment Plan and its Employee
Stock Ownership Plan).
(d) Shares subject to outstanding options and/or warrants exercisable
within 60 days from March 31, 1996.
15
<PAGE> 18
(e) Messrs. E. L. Hutton and T. C. Hutton are trustees of the E. L. Hutton
Foundation which holds 370 shares of Common Stock over which the
trustees share both voting and dispositive powers.
(f) Messrs. T.C. Hutton and K. J. McNamara and Ms. Laney are trustees of
the Chemed Foundation which holds 3,510 shares of Common Stock over
which the trustees share both voting and dispositive powers.
Under Section 16(a) of the Securities Exchange Act of 1934, as
amended, persons deemed to be executive officers of the Company, directors of
the Company, and beneficial owners of more than 10% of the Common Stock are
required to file with the Securities and Exchange Commission initial reports of
ownership and reports of changes in ownership of Common Stock and other equity
securities of the Company. The Company believes that during 1995 all such
persons complied with these filing requirements. In making these statements,
the Company has relied upon the facts of which it is specifically aware and, in
the case of its directors and officers, upon their written representations.
APPROVAL OF ANNUAL INCENTIVE PLAN FOR SENIOR EXECUTIVE OFFICERS
The Board of Directors of the Company has adopted the Annual Incentive
Plan for Senior Executive Officers (the "Plan"), subject to approval by
stockholders. The Board recommends that stockholders approve the Plan at the
Annual Meeting. Stockholder approval is requested to ensure that annual
incentive awards paid to senior executives are fully tax deductible as
performance-based compensation, as defined by the regulations under Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"). A
summary of the principal features of the Plan is set forth below, and the full
text of the Plan is annexed as Appendix A to this Proxy Statement.
Under Section 162(m) of the Code, the amount which the Company may
deduct on its tax returns for compensation paid to certain "covered employees"
(generally the chief executive officer and the four highest paid executive
officers other than the chief executive officer) in any taxable year is
generally limited to $1 million per individual. However, compensation that
qualifies as "performance-based compensation" is not subject to the $1 million
deduction limit. In order for compensation to qualify as "performance-based"
for this purpose, it must meet certain conditions, one of which is that the
material terms of the performance goals under which the compensation is to be
paid must be disclosed to and approved by stockholders. Payment of any awards
pursuant to the Plan is contingent on stockholder approval of the Plan. If
such approval is not obtained, no awards will be paid under this Plan.
The persons who are eligible to be selected to participate in the Plan
are employees of the Company and its subsidiaries who are executive officers of
the Company and whose annual incentive compensation for any taxable year of the
Company commencing on or after January 1, 1996 the Committee anticipates would
not be deductible by the Company in whole or in part unless the incentive
compensation qualifies as "performance-based" under Section 162(m)(4)(C) of the
Code, including members of the Board of Directors who are such employees.
Based on this eligibility standard, only two persons, Messrs. Hutton and
Gemunder, are eligible to be selected to participate at the present time. Other
employees of the Company and its subsidiaries may be eligible to earn lower
amounts of annual incentive compensation under other arrangements that are
generally less restrictive than the Plan. However, a larger or smaller number
of persons may be eligible to be selected to participate in the Plan in the
future, depending on the compensation levels and the character of the
compensation payable to the Company's executive officers in the future. Under
the Plan, the Compensation Committee of the Board of Directors, or another
committee designated by the Board and consisting exclusively of "outside
directors" within the meaning of Section 162(m) of the Code (the "Committee"),
selects participants in the Plan, determines the amount of their award
opportunities, selects the performance criteria and the performance goals for
each year, and administers and interprets the Plan. An eligible employee may
(but need not) be selected to participate in the Plan each year.
No later than 90 days after the commencement of each year commencing
on or after January 1, 1996 (or by such other deadline as may apply under Code
Section 162(m)(4)(C) or the Treasury regulations thereunder), the Committee
will select the persons who will participate in the Plan in such year and
establish in writing the performance goals for that year as well as the method
for computing the amount of compensation which each such participant will be
paid if such performance goals are attained in whole or in part. Such method
will be stated in terms
16
<PAGE> 19
of an objective formula or standard that precludes discretion to increase the
amount that will be due upon attainment of the goals. The Committee retains
discretion under the Plan to reduce an award at any time before it is paid. In
developing the Plan and in formulating the performance criteria to be applied in
administering the Plan, the Company was assisted by Buck Consultants,
Inc., professional compensation consultants, who regularly serve as
compensation consultants to the Company's Compensation and Incentive
Committees.
The maximum amount of compensation that may be paid under the Plan to
any participant for any year is equal to the lesser of two and one-quarter
percent (2 1/4%) of the Company's consolidated income before income taxes, the
cumulative effect of accounting changes, and acquisition expenses (e.g.,
pooling of interests), as determined in accordance with generally accepted
accounting principles ("Adjusted Pre-Tax Income"), or $5.0 million. In
calculating Adjusted Pre-Tax Income, each extraordinary item which increases
Adjusted Pre-Tax Income (e.g. capital gain) will be included and each
extraordinary item which decreases Adjusted Pre-Tax Income (e.g. capital loss)
will be excluded.
Under the Plan, the performance goals for any year may be based on any
of the following criteria, either alone or in any combination, and on either a
consolidated or business unit level, and may include or exclude discontinued
operations and acquisition expenses (e.g., pooling of interests), as the
Committee may in each case determine: level of sales, earnings per share,
income before income taxes and the cumulative effect of accounting changes,
income before the cumulative effect of accounting changes or net income,
return on assets, return on equity, return on capital employed, total
stockholder return, market valuation, and completion of acquisitions. The
foregoing terms shall have any reasonable definitions that the Committee may
specify, which may include or exclude any or all of the following items, as
the Committee may specify: extraordinary, unusual or non-recurring items;
effects of accounting changes; effects of currency fluctuations; effects of
financing activities (e.g., effect on earnings per share of issuing convertible
debt securities); expenses for restructuring or productivity initiatives;
non-operating items; acquisition expenses (e.g., pooling of interests); and
effects of divestitures. Any of the foregoing criteria may apply to a
participant's award opportunity for any year in its entirety or to any
designated portion of the award opportunity, as the Committee may specify.
The performance goals that have been established by the Committee for
1996 are based on consolidated income before income taxes, the cumulative
effect of accounting changes, and acquisition expenses (e.g., pooling of
interests). The Committee has determined that, unless it determines otherwise,
extraordinary items which affect such 1996 consolidated income before income
taxes shall be automatically excluded or included in calculating the award that
has been earned, whichever will produce the higher award. (This provision was
made because the awards may qualify as "performance-based compensation" under
Section 162(m) of the Code if the Committee retains discretion to reduce an
award but not if the Committee retains discretion to increase an award).
Under the Plan, the Committee may use the same criterion or such
other criterion as set forth in the Plan for awards in future years.
Awards may be paid under the Plan for any year only if and to the
extent the awards are earned on account of the attainment of the performance
goals applicable to such year (including continued employment during the year).
The only exceptions to the continued employment requirement are if employment
terminates by reason of death or disability during a year, in which case a
prorated award may be paid after the close of the year, or if a Change of
Control (as defined in the Company's 1995 Premium-Priced Stock Option Plan)
occurs during a year, in which case a prorated award will be paid at the time
of the Change of Control based on the participant's projected award for the
year in which the Change of Control occurs (as determined by the Committee).
If a participant's employment terminates for any reason other than death or
disability during a year, any award for such year will be forfeited. However,
a prorated award may also be paid after the year if employment terminates by
retirement during the year, but only if such a payment will not prevent awards
from qualifying as "performance-based" compensation in the absence of any
termination of employment.
Unless the Committee provides otherwise, all payments pursuant to the
Plan are to be made in cash when the Committee certifies that the performance
goals for the year have been satisfied.
The Plan is in effect for the year commencing January 1, 1996 and will
continue in effect for subsequent years unless and until terminated by the
Committee in accordance with the provisions of the Plan. The Board may amend or
terminate the Plan without stockholder approval at any time.
For 1996, Messrs. Hutton and Gemunder are the only participants in the
Plan. While the actual amounts payable under the Plan for 1996 are not
determinable, the Committee has set the maximum award opportunity for each
participant for 1996 at $1,359,000. The maximum award under the Plan is only
earned if specified performance criteria fixed by the Committee are attained,
the Committee does not exercise its discretion to reduce the maximum award
opportunity, and the participant remains in the Company's employment for the
entire year.
Approval of the Plan requires the affirmative vote of the holders of a
majority of the shares of Common Stock represented in person or by proxy and
entitled to vote at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE PLAN.
17
<PAGE> 20
PROPOSAL TO INCREASE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors has approved, declared advisable and recommends
to the stockholders that an amendment to the Company's Restated Certificate of
Incorporation (the "Certificate of Incorporation") be adopted increasing the
number of authorized shares of Common Stock from 44,000,000 to 110,000,000 (the
"Proposed Amendment"). At March 31, 1996, there were [ ] shares of
Common Stock outstanding, [5,578,655] shares reserved for issuance upon
conversion of the Company's 5.75% Convertible Subordinated Debentures,
[1,113,136] shares reserved for potential exercise of stock options previously
granted, [422,073] shares reserved for possible grant under the Company's 1992
Long-Term Stock Incentive Plan, [1,260,000] shares reserved for the 1995
Premium-Priced Stock Option Plan, [515,000] shares reserved for issuance upon
exercise of outstanding warrants, and approximately [890,000] shares reserved
for possible issuance in connection with obligations of the Company in certain
pending or prior acquisition transactions. This leaves [1,911,022] shares of
Common Stock available for issuance out of the 44,000,000 presently
authorized. Upon adoption of the Proposed Amendment, [67,911,022] shares of
Common Stock would be available for issuance by the Board of Directors for
purposes for which shares are not currently reserved. The number of authorized
shares of Common Stock was last increased by stockholders in May 1995.
18
<PAGE> 21
The Board of Directors believes that it is desirable and in the best
interests of the Company and its stockholders that there be a substantial
number of authorized shares of Common Stock available for issuance in the
future. Such shares may be used for general corporate purposes, including
stock splits and stock dividends, acquisitions, public offerings, stock option
and other employee incentive plans. Authorized but unissued shares are
available for issuance from time to time to such persons and for such
consideration as the Board of Directors may determine, without requiring
further action by the stockholders, except as may be required by law, the
Certificate of Incorporation or pursuant to the rules of any stock exchange on
which the shares may then be listed. The Company has no present plans to issue
any of the additional shares of the Common Stock which would be authorized by
adoption of the Proposed Amendment, and there are no pending negotiations,
discussions, agreements or understandings which would obligate the Company to
the issuance of any such shares.
While the Board of Directors believes that it is in the best interests
of the stockholders for the Board to have the flexibility to issue additional
shares in any or all of the circumstances described in the preceding paragraph,
the holders of Common Stock do not have pre-emptive rights and the issuance of
additional shares other than on a pro rata basis to current stockholders, would
have the effect of diluting the voting power of current stockholders. In
addition, the availability of sufficient authorized and unissued shares could,
in certain circumstances, discourage an attempt by another person or entity to
acquire control of the Company. The proposal has not, however, been prompted
by an attempt by anyone to acquire control of the Company, and the Company is
not aware of any such attempt.
If the Proposed Amendment is adopted, the first sentence of Article 4
of the Certificate of Incorporation would be amended to read as follows:
4. The total number of shares of stock which the Corporation
shall have authority to issue is One Hundred Eleven Million
(111,000,000), of which One Hundred Ten Million (110,000,000) shares
of the par value of One Dollar ($1.00) each, amounting in the
aggregate to One Hundred Ten Million Dollars ($110,000,000), shall be
common stock and of which One Million (1,000,000) shares, without par
value, shall be preferred stock.
Adoption of the Proposed Amendment requires the affirmative vote of
the holders of a majority of the outstanding shares of Common Stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE
PROPOSED AMENDMENT.
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected the firm of Price Waterhouse LLP
as independent accountants for the Company and its consolidated subsidiaries
for the year 1996. That firm has acted as independent accountants for the
Company and its consolidated subsidiaries since 1981. Although the submission
of this matter to the stockholders is not required by law or the By-Laws of the
Company, the selection of Price Waterhouse LLP will be submitted for
ratification at the Annual Meeting. The affirmative vote of a majority of the
shares represented at the meeting is necessary to ratify the selection of Price
Waterhouse LLP. If the selection is not ratified at the meeting, the Board of
Directors will reconsider its selection of independent accountants.
It is expected that a representative of Price Waterhouse LLP will be
present at the Annual Meeting. Such representative will have the opportunity
to make a statement if he or she desires to do so and will be available to
respond to questions raised at the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION.
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STOCKHOLDER PROPOSALS
Any stockholder proposal intended to be considered for inclusion in
the proxy materials for presentation at the 1997 Annual Meeting of Stockholders
must be in writing and received by the Secretary of the Company not later than
December 11, 1996.
OTHER MATTERS
As of the date of this Proxy Statement, neither the Board of Directors
nor management knows of other matters which will be presented for consideration
at the Annual Meeting. However, if any other business should come before the
meeting, the persons named in the enclosed proxy (or their substitutes) will
have discretionary authority to take such action as shall be in accordance with
their best judgment.
EXPENSES OF SOLICITATION
The expense of soliciting proxies in the accompanying form will be
borne by the Company. The Company will request banks, brokers and other
persons holding shares beneficially owned by others to send proxy materials to
the beneficial owners and to secure their voting instructions, if any. The
Company will reimburse such persons for their expenses in so doing. In
addition to solicitation by mail, officers and regular employees of the Company
may, without extra remuneration, solicit proxies personally, by telephone or by
telegram from some stockholders, if such proxies are not promptly received.
The Company also expects to retain D.F. King & Co., Inc., a proxy soliciting
firm, to assist in the solicitation of such proxies at a cost which will not
exceed $7,000 plus reasonable expenses.
By Order of the Board of Directors
Cheryl D. Hodges
Secretary
April 19, 1996
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<PAGE> 23
APPENDIX A
OMNICARE, INC.
ANNUAL INCENTIVE PLAN FOR SENIOR EXECUTIVE OFFICERS
1. Application
This document sets forth the annual incentive plan applicable to those
employees of Omnicare, Inc. (the "Company") and its subsidiaries who are
executive officers of the Company and whose annual incentive compensation for
any taxable year of the Company commencing on or after January 1, 1996 the
Committee (as hereafter defined) anticipates would not be deductible by the
Company in whole or in part but for compliance with Section 162(m)(4)(C) of the
Internal Revenue Code of 1986 as amended ("162(m) Covered Employee"), including
members of the Board of Directors who are such employees. This plan is
hereafter referred to as the "Plan" or "Annual Incentive Plan".
2. Eligibility
All 162(m) Covered Employees shall be eligible to be selected to participate in
this Annual Incentive Plan. The Committee shall select the 162(m) Covered
Employees who shall participate in this Plan in any year no later than 90 days
after the commencement of the year (or no later than such earlier or later date
as may be the applicable deadline for the compensation payable to such 162(m)
Covered Employee for such year hereunder to qualify as "performance-based"
under Section 162(m)(4)(C) of the Internal Revenue Code of 1986 as amended (the
"Code")).
3. Administration
The Plan shall be administered by the Compensation Committee of the Board of
Directors (the "Board"), or by another committee appointed by the Board
consisting of not less than two (2) Directors who are not employees of the
Company or any subsidiary of the Company (the "Committee"). The Committee
shall be comprised exclusively of Directors who are not employees and who are
"outside directors" within the meaning of Section 162(m)(4)(C) of the Code.
The Committee shall have authority, subject to the provisions herein, to select
employees to participate herein; establish and administer the performance goals
and the award opportunities applicable to each participant and certify whether
the goals have been attained; construe and interpret the Plan and any agreement
or instrument entered into under the Plan; establish, amend, and waive rules
and regulations for the Plan's administration; and make all other
determinations which may be necessary or advisable for the administration of
the Plan. Any determination by the Committee pursuant to the Plan shall be
final, binding and conclusive on all employees and participants and anyone
claiming under or through any of them.
4. Establishment of Performance Goals and Award Opportunities
No later than 90 days after the commencement of each year commencing on or
after January 1, 1996 (or than such earlier or later date as may be the
applicable deadline for compensation payable hereunder for such year to qualify
as "performance-based" under Section 162(m)(4)(C) of the Code), the Committee
shall establish in writing the method for computing the amount of compensation
which will be payable under the Plan to each participant in the Plan for such
year if the performance goals established by the Committee for such year are
attained in whole or in part and if the participant's employment by the Company
or a subsidiary continues without interruption during that year. Such method
shall be stated in terms of an objective formula or standard that precludes
discretion to increase the amount of the award that would otherwise be due upon
attainment of the goals. No provision of this Plan shall preclude the
Committee from exercising negative discretion with respect to any award
hereunder, within the meaning of Treasury Regulation Section
1.162-27(e)(2)(iii)(A).
No later than 90 days after the commencement of each year commencing on or
after January 1, 1996 (or than such earlier or later date as may be the
applicable deadline for compensation payable hereunder for such year to qualify
as "performance-based" under Section 162(m)(4)(C) of the Code), the Committee
shall establish in writing the performance goals for such year, which shall be
based on any of the following performance criteria, either alone or in any
combination, on either a consolidated or business unit or divisional level, and
which shall include or exclude
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<PAGE> 24
discontinued operations and acquisition expenses (e.g., pooling of interests),
as the Committee may determine; level of sales, earnings per share, income
before income taxes and cumulative effect of accounting changes, income before
cumulative effect of accounting changes or net income, return on assets,
return on equity, return on capital employed, total stockholder return, market
valuation, and completion of acquisitions. The foregoing criteria shall have
any reasonable definitions that the Committee may specify, which may include or
exclude any or all of the following items, as the Committee may specify:
extraordinary, unusual or non-recurring items; effects of accounting changes;
effects of currency fluctuations; effects of financing activities (e.g., effect
on earnings per share of issuing convertible debt securities); expenses for
restructuring or productivity initiatives; non-operating items; acquisition
expenses (e.g., pooling of interests); and effects of divestitures. Any such
performance criterion or combination of such criteria may apply to the
participant's award opportunity in its entirety or to any designated portion or
portions of the award opportunity, as the Committee may specify.
5. Maximum Award
The maximum amount of compensation that may be paid under the Plan to any
participant for any year is equal to the lesser of two and one-quarter percent
(2 1/4%) of the Company's consolidated income before income taxes, the
cumulative effect of accounting changes, and acquisition expenses (e.g.,
pooling of interests), as determined in accordance with generally accepted
accounting principles ("Adjusted Pre-Tax Income"), or $5.0 million. In
calculating Adjusted Pre-Tax Income, each extraordinary item which increases
Adjusted Pre-Tax Income (e.g. capital gain) will be included and each
extraordinary item which decreases Adjusted Pre-Tax Income (e.g. capital loss)
will be excluded.
6. Attainment of Performance Goals Required
Awards shall be paid under this Plan for any year solely on account of the
attainment of the performance goals established by the Committee with respect
to such year, within the meaning of applicable Treasury regulations. Awards
shall also be contingent on continued employment by the Company or a subsidiary
of the Company during such year. The only exceptions to this rule apply in the
event of termination of employment by reason of death or disability (as
determined by the Committee), or in the event of a Change of Control of the
Company (as such term is defined in the Company's 1995 Premium-Priced Stock
Option Plan), during such year, in which case the following provisions shall
apply. In the event of termination of employment by reason of death or
disability during a Plan year, an award shall be payable under this Plan to the
participant or the participant's estate for such year, which shall be paid at
the same time as the award the participant would have received for such year
had no termination of employment occurred, and which shall be equal to the
amount of such award multiplied by a fraction the numerator of which is the
number of full or partial calendar months elapsed in such year prior to
termination of employment and the denominator of which is the number twelve.
In the event of a Change of Control during a Plan year and prior to termination
of employment, an incentive award shall be paid under the Plan at the time of
such Change of Control to each participant, with the amount of such award being
equal to the participant's projected award under the Plan (as determined by the
Committee) for the year in which the Change of Control occurs, multiplied by a
fraction the numerator of which is the number of full or partial calendar
months elapsed in such year prior to the Change of Control and the denominator
of which is the number twelve. An additional exception shall apply in the
event of termination of employment by reason of retirement during a Plan year,
but only if and to the extent it will not prevent any award payable hereunder
(other than an award payable in the event of death, disability, Change of
Control or retirement) from qualifying as "performance-based compensation"
under Section 162(m)(4)(C) of the Code. Subject to the preceding sentence, in
the event of termination of employment by reason of retirement during a Plan
year an award shall be payable under this Plan to the participant for such
year, which shall be paid at the same time as the award the participant would
have received for such year had no termination of employment occurred, and
which shall be equal to the amount of such award multiplied by a fraction the
numerator of which is the number of full or partial calendar months elapsed in
such year prior to termination of employment and the denominator of which is
the number twelve. A participant whose employment terminates prior to the end
of a Plan year for any reason not excepted above shall not be entitled to any
award under the Plan for that year.
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<PAGE> 25
7. Stockholder Approval and Committee Certification Contingencies; Payment of
Awards
Payment of any awards under this Plan shall be contingent upon stockholder
approval of the Plan, prior to payment, in accordance with applicable Treasury
regulations under Code Section 162(m). Unless and until such stockholder
approval is obtained, no award shall be paid pursuant to this Plan. Subject to
the provisions of Paragraph 6 above relating to death, disability, Change of
Control and retirement, payment of any award under this Plan shall also be
contingent upon the Compensation Committee's certifying in writing that the
performance goals and any other material terms applicable to such award were in
fact satisfied, in accordance with applicable Treasury regulations under Code
section 162(m). Unless and until the Committee so certifies, such award shall
not be paid. Unless the Committee provides otherwise, (a) earned awards shall
be paid promptly following such certification, and (b) such payment shall be
made in cash (subject to any payroll tax withholding the Company may determine
applies).
8. Amendment or Termination
The Board of Directors may amend, modify or terminate this Plan at any time,
provided that no such amendment, modification or termination shall adversely
affect the incentive opportunity of any participant with respect to the portion
of the year elapsed prior to the date of such amendment, modification or
termination, without such participant's written consent.
9. Interpretation and Construction
Any provision of this Plan to the contrary notwithstanding, (a) awards under
this Plan are intended to qualify as performance-based compensation under Code
Section 162(m)(4)(C), and (b) any provision of the Plan that would prevent an
award under the Plan from so qualifying shall be administered, interpreted and
construed to carry out such intention and any provision that cannot be so
administered, interpreted and construed shall to that extent be disregarded.
No provision of the Plan, nor the selection of any eligible employee to
participate in the Plan, shall constitute an employment agreement or affect the
duration of any participant's employment, which shall remain "employment at
will" unless an employment agreement between the Company and the participant
provides otherwise. Both the participant and the Company shall remain free to
terminate employment at any time to the same extent as if the Plan had not been
adopted.
10. Governing Law
The terms of this Plan shall be governed by the laws of the State of Delaware,
without reference to the conflicts of laws principles of that State.
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OMNICARE, INC. PRELIMINARY PROXY MATERIAL
2800 CHEMED CENTER --------------------------
255 EAST FIFTH STREET PLEASE MARK, SIGN, DATE AND RETURN
CINCINNATI, OHIO 45202-4728 PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
STOCKHOLDERS, MAY 20, 1996.
The undersigned hereby appoints E. L. Hutton, J. F. Gemunder, and C. D. Hodges
as Proxies, each with the power to appoint a substitute, and hereby authorizes
them to represent and to vote, as designated below, all the shares of common
stock of Omnicare, Inc. held of record by the undersigned as of April 8, 1996
at the Annual Meeting of Stockholders to be held on May 20, 1996, or at any
adjournment thereof.
ELECTION OF DIRECTORS
Nominees:
Edward L. Hutton Cheryl D. Hodges Kevin J. McNamara
Joel F. Gemunder Thomas C. Hutton John M. Mount
Ronald K. Baur Patrick E. Keefe Timothy S. O'Toole
Kenneth W. Chesterman Sandra E. Laney D. Walter Robbins, Jr.
Charles H. Erhart, Jr. Andrea R. Lindell
Mary Lou Fox Sheldon Margen, M.D.
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
(continued from other side)
(1) Election of Directors (see reverse)
______ FOR ALL NOMINEES ______ WITHHOLD ALL
listed (except those whose AUTHORITY to vote in the
names are inserted on the election of
line to the right) directors
_________________________
(2) To approve and adopt the Company's Annual
Incentive Plan for Senior Executive
Officers. _____ _____ _____
FOR AGAINST ABSTAIN
(3) To adopt an amendment to the Company's
Certificate of Incorporation increasing
the number of authorized shares of Common
Stock from 44,000,000 to 110,000,000. _____ _____ _____
FOR AGAINST ABSTAIN
(4) To ratify the selection of independent
accountants. _____ _____ _____
FOR AGAINST ABSTAIN
(5) In their discretion, the Proxies are
authorized to vote upon such other
business as may properly come before
the meeting.
IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSALS (1) (2) (3)
(4) AND (5).
When signed on behalf of a corporation,
partnership, estate, trust, or other
stockholder, state your title or capacity or
otherwise indicate that you are authorized to
sign.
Dated: ________________________________, 1996
(Be sure to date Proxy)
Signed: ______________________________________
______________________________________________
(please sign exactly as name(s) appear at left)
