<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
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[ ] Confidential, for use of Commission only (as permitted by Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12.
OMNICARE, INC.
(Name of Registrant as Specified in Its Charter)
OMNICARE, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
Not applicable
(2) Aggregate number of securities to which transaction applies:
Not applicable
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: Not applicable
(4) Proposed maximum aggregate value of transaction:
Not applicable
(5) Total fee paid:
Not applicable
[ ] 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:
Not applicable
(2) Form, schedule or registration statement no.:
Not applicable
(3) Filing party:
Not applicable
(4) Date filed:
Not applicable
<PAGE> 2
[ LOGO ]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 19, 1997
The Annual Meeting of Stockholders of Omnicare, Inc. (the "Company")
will be held at The Metropolitan Club, 50 E. RiverCenter Boulevard, Covington,
Kentucky on Monday, May 19, 1997 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 amendments to the Company's 1992 Long-Term
Stock Incentive Plan;
(3) the ratification of the selection of Price Waterhouse LLP as
independent accountants of the Company; and
(4) any other business as may properly be brought before the
meeting.
Stockholders of record at the close of business on March 21, 1997 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.
By Order of the Board of Directors
Cheryl D. Hodges
Secretary
Covington, Kentucky
March 31, 1997
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
OMNICARE, INC.
50 E. RIVERCENTER BOULEVARD
COVINGTON, KENTUCKY 41011
----------------------
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 19, 1997, and any adjournment thereof ("Annual Meeting").
Stockholders of record as of the close of business on March 21, 1997 are
entitled to notice of, and to vote at, the Annual Meeting or any adjournment
thereof. As of such date, the Company had outstanding 78,821,706 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 15 persons
named below; (2) to approve amendments to the Company's 1992 Long-Term Stock
Incentive Plan; and (3) to ratify the selection of Price Waterhouse LLP as
independent accountants of the Company for 1997. 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 March 31, 1997.
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 27, 1996.
ELECTION OF DIRECTORS
The number of directors to be elected at the Annual Meeting has been
fixed by the Board of Directors at fifteen. 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 on occasion 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, Gary W. Kadlec, Thomas W. Ludeke, Jeffrey M. Stamps and
Ms. Mary Lou Fox. Mr. Baur and Ms. Fox, who are currently directors, are again
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.
1
<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
<TABLE>
<S> <C>
EDWARD L. HUTTON Mr. Hutton is Chairman of the Company and has held this position since
Director since 1981 May 1981. Additionally, he is Chairman and Chief Executive Officer and
Age: 77 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 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 held this position since
Director since 1981 May 1981. From January 1981 until July 1981, he served as Chief
Age: 57 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 the Company, a position
Director since 1994 he has held since February 1994. Previously, he was Regional Vice
Age: 55 President-Operations of the Company's Pharmacy Services Group (a group
of subsidiaries engaged in providing pharmacy services to long-term care
facilities) (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
long-term care facilities) (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.
</TABLE>
2
<PAGE> 5
<TABLE>
<S> <C>
KENNETH W. CHESTERMAN Mr. Chesterman is an Executive Vice President of the Company and has
Director since 1984 held this position since 1984. He had also served as President of the
Age: 56 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 & Co., Boca Raton, Florida
Director since 1981 (international specialty chemicals and health care) (hereinafter "Grace") in
Age: 71 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 and
National Sanitary.
MARY LOU FOX Ms. Fox is Senior Vice President-Marketing of the Company and has held
Director since 1993 this position since May 1996. Previously she served as Vice President-
Age: 65 Marketing for the Company since February 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 long-term care facilities) (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 of the Company and has
Director since 1992 held these positions since February 1994. From August 1986 to February
Age: 45 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 held this position since
Director since 1983 February 1988. Mr. Hutton is a director of Chemed and National Sanitary.
Age: 46 He is the son of Edward L. Hutton, Chairman of the Company.
PATRICK E. KEEFE Mr. Keefe is Executive Vice President-Operations of the Company and has
Director since 1993 held this position since February 1997. Previously he was Senior Vice
Age: 51 President-Operations since 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 Administrative Officer of
Director since 1987 Chemed and has held these positions since November 1993 and May 1991,
Age: 53 respectively. From May 1984 to November 1993, she was a Vice President
of Chemed. Ms. Laney is a director of Chemed and National Sanitary.
</TABLE>
3
<PAGE> 6
<TABLE>
<S> <C>
ANDREA R. LINDELL, DNSc, RN Dr. Lindell is Dean and Professor in the College of Nursing and Health at
Director since 1992 the University of Cincinnati, a position she has held since December 1990.
Age: 53 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 of Public Health,
Director since 1983 University of California, Berkeley, a position he has held since May 1989.
Age: 77 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 this position since
Director since 1986 August 1994. From November 1993 to August 1994, Mr. McNamara was
Age: 43 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. Mr. McNamara also
serves as Vice Chairman of National Sanitary. He is a director of Chemed and
National Sanitary.
JOHN M. MOUNT Mr. Mount is a Principal of Lynch-Mount Associates, Cincinnati, Ohio
Director since 1994 (management consulting) and has held this position since November 1993.
Age: 55 From April 1991 to November 1993, 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 National Sanitary and Chemed. Mr. Mount has
also served as a director of the Company from 1988 to 1991.
D. WALTER ROBBINS, JR. Mr. Robbins retired as Vice Chairman of Grace in January 1987 and
Director since 1981 thereafter became a consultant to Grace until July 1995. He is a director of
Age: 77 Chemed and National Sanitary.
</TABLE>
4
<PAGE> 7
COMMITTEES AND MEETINGS OF THE BOARD
The Board of Directors of the Company has an Incentive Committee, a
Compensation Committee, an Audit Committee and an Executive 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 five occasions during 1996.
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. Mount and Robbins and Dr. Margen. The Compensation Committee met on
four occasions during 1996.
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 three occasions during 1996.
The Executive Committee is empowered to act for the full Board in
intervals between Board meetings, with the exception of certain matters that by
law or the Company's By-Laws may not be delegated. The committee meets as
necessary, and all actions by the committee are reported at the next Board of
Directors meeting. The Executive Committee consists of Messrs. Erhart, Hutton,
Gemunder, Robbins and Chesterman. The Executive Committee met on ten occasions
during 1996.
During 1996, there were seven 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 1996, each member of the Board of Directors who was not a regular
employee of the Company was paid $1,300 for his or her attendance at each
meeting of the Board, and $750 for each meeting of a Committee of the Board of
which he or she was a member. The non-employee members of the Executive
Committee received $1,300 for each meeting of the Executive Committee. The
Chairmen of the Committees of the Board (except for the Executive Committee)
were paid an additional $2,000 per year. During 1996, each member of the Board
of Directors was granted an annual unrestricted stock award covering 400 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 1996,
Mr. T.C. Hutton received additional stock awards covering 1,479 shares, Mr.
O'Toole received 1,538 shares, Mr. McNamara received 2,197 shares and Ms. Laney
received 2,709 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 1996,
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.
5
<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 1996, 1995
and 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Long-Term
Compensation
-----------------------
Annual Compensation Awards
----------------------------------------------------------------------
# of Shares All Other
Special Restricted Underlying Compensation
Name and Principal Position Year Salary Bonus Bonus Other (4) Stock (5) Options (6)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
E. L. Hutton - Chairman 1996 $1,031,105(1) $641,125 $1,685,000(2) $42,208 $2,742,731 100,000 $ --
1995 506,229(1) 491,125 -- 42,208 2,350,000 140,000 --
1994 364,471(1) 250,000 345,000(3) -- 470,000 -- --
J. F. Gemunder - President 1996 $539,067 $680,379 $1,819,000(2) $82,496 $2,879,450 100,000 $1,513,972
1995 473,750 504,200 -- 55,628 2,350,000 140,000 376,879
1994 336,975 250,000 345,000(3) -- 470,000 -- 134,753
K.W. Chesterman - Executive 1996 $201,800 $223,534 $307,000(2) -- $877,534 34,000 $458,748
Vice President 1995 187,800 190,297 -- -- 752,000 50,000 168,731
1994 174,605 128,000 62,000(3) -- 270,250 -- 53,596
P.E. Keefe - Executive 1996 $182,708 $205,730 $276,000(2) -- $877,534 30,000 $386,182
Vice President - 1995 155,937 157,037 -- -- 658,000 45,000 132,106
Operations 1994 128,750 102,500 44,000(3) -- 211,500 -- 41,430
C.D. Hodges - Senior Vice 1996 $150,000 $101,165 $470,000(2) -- $658,157 28,000 $372,944
President and Secretary 1995 127,350 73,756 -- -- 564,000 32,000 94,250
1994 109,468 40,000 90,000(3) -- 169,200 -- 43,287
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The amounts shown include $140,773 for 1994, $197,396 for 1995 and
$660,605 in 1996 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) The special bonus was awarded with respect to the successful completion
of a public offering of Common Stock in March 1996 in the following
amounts with deferrals for payment in 1997 and 1998 as indicated: Mr.
Hutton -- $1,685,000 of which $735,000 is deferred; Mr. Gemunder --
$1,819,000 of which $824,000 is deferred; Mr. Chesterman -- $307,000 of
which $132,000 is deferred; Mr. Keefe -- $276,000 of which $116,000 is
deferred; and Ms. Hodges -- $470,000 of which $200,000 is deferred.
6
<PAGE> 9
(3) The special bonus relates to the successful completion of a public
offering of Common Stock in November 1994.
(4) These amounts represent payments made to the executive officer as
required to offset the tax liability associated with premiums paid by
the Company on behalf of the officer under split dollar life insurance
policies.
(5) Under the Company's stock award program, restricted shares of Common
Stock were issued as 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 1997 for 1996 services as incentive compensation.
The numbers of restricted shares granted in February 1997 to the named
executives are as follows: Mr. Hutton -- 102,532 shares; Mr. Gemunder
-- 107,643 shares; Mr. Chesterman -- 32,805 shares; Mr. Keefe -- 32,805
shares; and Ms. Hodges -- 24,604 shares. As of December 31, 1996, the
number and value of the aggregate restricted stock holdings of the
named executives were: Mr. Hutton -- 159,570 shares or $2,948,021; Mr.
Gemunder -- 159,570 shares or $2,948,021; Mr. Chesterman -- 66,258
shares or $1,095,909; Mr. Keefe -- 54,810 shares or $927,142; and Ms.
Hodges -- 45,450 shares or $779,329.
(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 1996, 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 -- 53,079 shares or $1,490,557; Mr. Chesterman -- 15,187
shares or $432,335; Mr. Keefe -- 12,914 shares or $366,571; and Ms.
Hodges -- 12,827 shares or $360,778. This column also includes (a) life
insurance premiums paid by the Company (Mr. Gemunder - $3,672; Mr.
Chesterman - $1,530; Mr. Keefe - $714; and Ms. Hodges - $1,530); and
(b) the present value to the recipient of future benefits derived from
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 - $19,743;
Mr. Chesterman - $24,883; Mr. Keefe - $18,897; and Ms. Hodges -
$10,636).
7
<PAGE> 10
STOCK OPTIONS
The following table sets forth information regarding stock options
granted to the named executives during 1996:
OPTION GRANTS IN 1996
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Individual Grants Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation for Option
Term
- ---------------------------------------------------------------------------------------------------------------------------
Number
of Percent of
Shares Total Options
Underlying Granted to
Options Employees in Exercise price Expiration
Name Granted(1) Fiscal Year ($/Sh) Date 5% 10%
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
E.L. Hutton 100,000 19.7% $26.22 3/21/2006 $1,648,890 $4,178,600
J.F. Gemunder 100,000 19.7% $26.22 3/21/2006 1,648,890 4,178,600
K.W. Chesterman 34,000 6.7% $26.22 3/21/2006 560,623 1,420,724
P.E. Keefe 30,000 5.9% $26.22 3/21/2006 494,667 1,253,580
C.D. Hodges 28,000 5.5% $26.22 3/21/2006 461,689 1,170,008
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) All such options were granted on March 21, 1996 and provide for the
purchase of shares of the Company's common stock at a price equal to
the fair market value on the date of a grant and become exercisable in
four equal annual installments commencing one year from the date of
grant.
The following table sets forth information regarding stock options
exercised by the named executives during 1996 and the value of unexercised
options held by the named executives as of December 31, 1996.
AGGREGATED OPTION EXERCISES IN 1996 AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Number of Shares Underlying Value of Unexercised In-The-
Unexercised Options at Fiscal Money Options at Fiscal Year-
Shares Year-End (#) End ($)
Acquired on ---------------------------------------------------------------
Name Exercise (#) Value Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
E.L. Hutton 147,000 $2,840,418 -0- 327,000 $ -0- $5,266,875
J.F. Gemunder -0- -0- 549,800 327,000 14,939,012 5,266,875
K.W. Chesterman -0- -0- 262,000 120,000 7,136,395 2,008,976
P.E. Keefe 15,000 345,225 32,500 122,500 730,150 2,232,249
C.D. Hodges -0- -0- 64,000 82,000 1,642,460 1,293,464
- ----------------------------------------------------------------------------------------------------------------------------
</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>
- ---------------------------------------------------------------------------------------------------------------------
Final Average Years of Service (2)
Compensation (1) 15 20 25 30 35
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 200,000 $ 40,226 $ 53,635 $ 67,044 $ 80,453 $ 90,453
300,000 62,726 83,635 104,544 125,453 140,453
400,000 85,226 113,635 142,044 170,453 190,453
500,000 107,726 143,635 179,544 215,453 240,453
600,000 130,226 173,635 217,044 260,453 290,453
700,000 152,726 203,635 254,544 305,453 340,453
800,000 175,226 233,635 292,044 350,453 390,453
900,000 197,726 263,635 329,544 395,453 440,453
1,000,000 220,226 293,635 367,044 440,453 490,453
1,100,000 242,726 323,635 404,544 485,453 540,453
1,200,000 265,226 353,635 442,044 530,453 590,453
- ---------------------------------------------------------------------------------------------------------------------
</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, 1996, Messrs. Gemunder, Chesterman and
Keefe and Ms. Hodges had 33, 24, 7 and 15 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, 2001, subject
to earlier termination under certain circumstances, at a base salary of $558,600
per annum, beginning May 20, 1996, 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
12 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
$165,000 per annum, beginning May 20, 1996, 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 annual base salaries, beginning May 20, 1996, are
$210,300 and $199,500, 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 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, subject to
the provisions of the Company's compensation plans, 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 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
10
<PAGE> 13
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. However, for
the Chairman and the President, annual incentive compensation for 1996 was
determined in accordance with the "Annual Incentive Plan for Senior Executive
Officers," approved by stockholders on May 20, 1996. The Committee believes that
bonuses as a percent of an executive's salary should be sufficiently high to
provide a major incentive for achieving annual performance targets.
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 stockholder 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 Treasury Regulations adopted
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 Annual
Incentive Plan for Senior Executive Officers, approved by stockholders on May
20, 1996, and amendments to the 1992 Long-Term Stock Incentive Plan being
submitted to stockholders at the Annual Meeting are designed to comply with
Section 162(m) relating to 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
$500,000 in 1995 to $558,600 in 1996. As measured against the survey data of 35
health care companies provided by Buck Consultants, the Company's 1995
performance exceeded the 90th percentile for surveyed companies in all measures
cited (including sales and earnings growth, return on average common equity and
stock appreciation). Mr. Gemunder's base salary for 1996 is less than the 75th
percentile for the surveyed companies.
Mr. Gemunder's annual incentive compensation was determined based on
the attainment of performance targets established by the Compensation Committee
in accordance with the Annual Incentive Plan for Senior Executive Officers. For
1996 these performance targets were directly related to the Company's pretax
income before adjustments for the cumulative effect of accounting changes and
acquisition expenses related to pooling of interests transactions. As a result
of the Company's performance in 1996, Mr. Gemunder received a cash bonus of
$600,000.
In 1996, as long-term incentive compensation, Mr. Gemunder was granted
options to purchase 100,000 shares of Common Stock at option prices equal to the
fair market value of a share on the date of grant. He was awarded 107,643 shares
of restricted Common Stock in February 1997 under the Annual Incentive Plan as
long-term incentive compensation. 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. Sales for 1996 increased 34% to
$536.6 million, net income (excluding acquisition expenses related to pooling of
interests transactions) increased 71% to $44.0 million and fully diluted
11
<PAGE> 14
earnings per share (excluding the aforementioned pooling expenses) increased 39%
to 61 cents after a 16% increase in shares outstanding. During 1996, the
Company's stock price increased 44% following a 105% increase in 1995 versus
1994 and its market value increased by over $1.0 billion, or 72%, following an
increase of approximately $800 million, or 118%, in 1995 versus 1994.
Also in 1996, Mr. Gemunder was awarded a special cash bonus for
services in connection with the Company's $298,000,000 Common Stock offering in
March 1996, of which $995,000 was paid in 1996 and the balance of $824,000 will
be paid in 1997 and 1998. Crucial to the Company's successful execution of its
growth strategy in the rapidly changing and consolidating healthcare industry
has been its ability to raise substantial capital in a timely manner and at
favorable prices. The Compensation Committee has used special bonuses for key
executives to emphasize the importance of the Company's ongoing capital raising
initiatives and to reward the accomplishment of these initiatives, which have
raised over $540,000,000 in the capital markets since November 1993. Mr.
Gemunder and certain other executives were paid special bonuses in 1996 for
their efforts in the planning and implementation and the successful completion
of the Company's $298,000,000 common stock offering in March 1996. In
determining the amount of the bonuses, the Compensation Committee considered the
success of the offering measured against other offerings in the same timeframe,
the importance of the offering to the Company's business strategy, and the
favorable impact of the offering on the Company's overall market capitalization.
Through the use of annual 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:
John M. Mount, Chairman Charles H. Erhart, Jr., Chairman
Sheldon Margen, M.D. John M. Mount
D. Walter Robbins, Jr. D. Walter Robbins, Jr.
COMPENSATION AND INCENTIVE COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. E. L. Hutton and Gemunder, executive officers of the Company,
are directors of Chemed. 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 data processing system to integrate and standardize all
operational and financial reporting functions of the Company. The Company also
subleases 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 had
obtained such services from other parties. During 1996, such reimbursements
totalled $7,139,000.
The Company has contracted with MLF Co. to provide advisory and
consulting services with respect to the Company's institutional pharmacy
business for a period of five years commencing February 1, 1996. Mary Lou Fox, a
director of the Company and nominee for re-election as a director, has an
ownership interest in MLF Co. Under the consulting agreement, MLF Co. receives
$12,500/month for its services.
12
<PAGE> 15
COMPARATIVE STOCK PERFORMANCE
The following graph compares the cumulative total return for the last
five years on a $100 investment on January 1, 1992 in each of the Company's
Common Stock, the Standard & Poor's 500 Stock Index, and the Standard & Poor's
Health Care-500 Index. The graph assumes dividend reinvestment.
CUMULATIVE TOTAL STOCKHOLDER RETURN FOR
FIVE-YEAR PERIOD ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
=============================================================================================================================
December 31, 1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
Omnicare, Inc. 100.00 156.27 163.20 224.28 460.43 662.57
S&P 500 Index 100.00 107.62 118.46 120.03 165.13 203.05
S&P Health Care-500 100.00 83.71 76.67 86.73 136.90 165.31
=============================================================================================================================
</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 21, 1997, unless
otherwise indicated, with respect to the only persons 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>
Putnam Investments, Inc. 8,155,367 (b) 10.3%
One Post Office Square
Boston, MA 02109
Janus Capital Corporation 5,237,125 (c) 6.6%
100 Fillmore Street
Denver, CO 80206-4928
AIM Management Group, Inc. 5,027,820 (d) 6.4%
11 Greenway Plaza
Suite 1919
Houston, TX 77046-1173
</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 21, 1997. 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) Represents shares held by two wholly owned investment advisers, having
shared dispositive power with respect to all of the listed shares and
shared voting power with respect to 633,601 of the shares.
(c) Janus Capital Corporation is an investment adviser with shared
dispositive power and shared voting power with respect to all of the
shares listed, and ownership is presented as of December 31, 1996.
(d) Represents shares held by two subsidiaries which are investment
advisors, having shared dispositive power and shared investment power
with respect to all of the listed shares.
14
<PAGE> 17
The following table sets forth information as of March 21, 1997 with
respect to the shares of Common Stock beneficially owned by each of the nominees
and directors, each of the named executives, and all directors and executive
officers of the Company 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 288,432 (c)
112,000 (d)
4,540 (e)
J.F. Gemunder 498,656 (c)
661,800 (d) 1.5%
R.K. Baur 23,213 (c)
5,500 (d)
K.W. Chesterman 239,699 (c)
242,500 (d)
C.H. Erhart, Jr. 8,000 (c)
M.L. Fox 59,885 (c)
15,000 (d)
C.D. Hodges 128,495 (c)
93,000 (d)
T.C. Hutton 5,353 (c)
4,540 (e)
4,546 (f)
P.E. Keefe 102,691 (c)
87,500 (d)
S.E. Laney 25,055 (c)
10,950 (d)
4,546 (f)
A.R. Lindell 1,600 (c)
S. Margen 14,930 (c)
K.J. McNamara 5,549 (c)
4,546 (f)
J.M. Mount 2,400 (c)
T.S. O'Toole 4,491 (c)
D.W. Robbins, Jr. 4,000 (c)
ALL DIRECTORS AND EXECUTIVE 1,516,959 (c)
OFFICERS AS A GROUP (19 PERSONS) 1,253,250 (d)
4,540 (e)
4,546 (f) 3.5%
</TABLE>
15
<PAGE> 18
- ----------
(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 21, 1997. 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, 1996, 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 exercisable within 60 days from
March 21, 1997.
(e) Messrs. E. L. Hutton and T. C. Hutton are trustees of the E. L. Hutton
Foundation, which holds 4,540 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 4,546 shares of Common Stock over
which the trustees share both voting and dispositive powers.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 1996 all such persons complied
with these filing requirements, except that the surrender of 752 shares of
Common Stock to the Company by M.L. Fox, a director of the Company, in
connection with the exercise of employee stock options was inadvertently omitted
from a Form 5 Report which was timely filed on her behalf. 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 AMENDMENTS TO 1992 LONG-TERM STOCK INCENTIVE PLAN
The Board of Directors of the Company has adopted certain amendments to
the Company's 1992 Long-Term Stock Incentive Plan which was approved by
stockholders in 1992 (the "Plan"). The Board recommends that stockholders
approve the amendments to the Plan at the Annual Meeting. Stockholder approval
is requested to ensure that stock options and stock awards issued under the Plan
can be 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"). The amendments do NOT increase the number of shares that
may be issued under the Plan.
Under Section 162(m) of the Code, the amount which the Company may
deduct on its tax returns in any taxable year 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) 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 certain
material terms of the compensation arrangement must be disclosed to and approved
by stockholders. The amendments satisfy that requirement. The following
description of the amendments and the Plan is subject in its entirety to the
full text of the amended Plan, which is annexed as Appendix A to this Proxy
Statement.
16
<PAGE> 19
The amendments are contingent on stockholder approval. If such approval is not
obtained, those amendments will be of no force or effect and the unamended Plan
will remain in effect.
The amendments to the Plan provide:
(a) that the maximum number of shares of Common Stock with respect to
which options or stock appreciation rights ("SARs") may be granted under the
Plan to any employee during any calendar year shall be 1.5 million shares,
subject to adjustment in the event of recapitalizations, stock splits, and
similar corporate transactions. Prior to its amendment, the Plan did not
contain such a limitation;
(b) that the maximum amount of compensation that may be paid to any key
employee pursuant to stock awards granted in any calendar year shall be 500,000
shares of Common Stock (or the equivalent amount of cash) including any
dividends thereon, subject to adjustment in the event of recapitalizations,
stock splits and similar corporate transactions. Prior to its amendment, the
Plan did not contain such a limitation;
(c) that the performance objectives on which the issuance or retention
of shares under stock awards may (but need not) be made contingent by the
Incentive Committee shall be based on the fair market value or book value of
Common Stock or on any of the following other business criteria, on either a
consolidated or business unit or divisional level, as the Incentive Committee
may 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, net income, net worth, return on total assets,
return on net assets, return on equity, return on capital employed, total
stockholder return, market valuation, and completion of acquisitions. Prior to
its amendment, the Plan did not limit the business criteria on which performance
objectives could be based;
(d) that the business criteria listed in paragraph (c) above shall have
any reasonable definitions that the Incentive Committee may specify, which may
include or exclude any or all of the following items, as the Incentive Committee
may specify: discontinued operations; 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); changes in the statutory corporate Federal, state
and local tax rates; expenses for restructuring or productivity initiatives;
non-operating items; acquisition expenses (e.g., pooling of interests); and
effects of divestitures;
(e) that the Incentive Committee may grant awards under the Plan,
including options, SARs and stock awards, that qualify as "performance-based
compensation," as well as awards that do not qualify as "performance-based
compensation." In general, to qualify as "performance-based compensation" under
Section 162(m) of the Code, such an award (other than an option grant) must be
paid solely on account of the attainment of a pre-established, objective
performance goal which is based on one or more of the criteria described above
and which is established by a compensation committee of "outside directors," who
must certify that the performance goals were satisfied before the compensation
may be paid;
(f) that the Incentive Committee may grant stock awards for such lawful
consideration as it may determine, rather than only in payment of incentive
compensation earned or to be earned;
(g) that, unless the Board of Directors directs otherwise, the
committee administering the Plan shall consist of persons who qualify as
"outside directors" within the meaning of Section 162(m) of the Code and
"non-employee directors" within the meaning of revised SEC Rule 16b-3, rather
than as "disinterested directors," which was the requirement under SEC Rule
16b-3 prior to its recent amendment; and
(h) that stockholders approve any amendment of the Plan which is
required to be approved by them under Section 162(m) of the Code.
Summary of the Plan
Eligibility: The persons who are eligible to be selected to participate
in the Plan are employees of the Company or a subsidiary who, in the opinion of
the committee which administers the Plan, can contribute significantly
17
<PAGE> 20
to the growth and successful operations of the Company or a subsidiary. It is
estimated that approximately 150 persons are eligible to be selected to
participate. Each eligible person is not necessarily selected to participate in
the Plan. Members of the Board of Directors (currently 16 in number) participate
in the automatic, nondiscretionary stock award feature of the Plan described
under "Stock Awards," below.
Administration: The Plan is administered by a committee (the "Incentive
Committee") consisting of at least three directors designated by the Board of
Directors of the Company. The composition of the Incentive Committee is the
subject of the amendment described in paragraph (g) above. The Incentive
Committee selects participants from among those persons eligible, determines the
type, size and time of grant of stock incentive awards, determines the terms and
conditions of awards, subject to the terms and conditions of the Plan, and makes
all other determinations necessary or advisable for the administration of the
Plan.
Limitation on Available Shares: The number of shares of Common Stock
that may be subject to stock incentives granted under the Plan may not on any
given date exceed that number of shares equal to (i) 5% of the Company's issued
and outstanding Common Stock as of the preceding December 31 reduced by (ii) the
total number of stock incentives granted under the Plan at any time during the
then-current calendar year and during the immediately preceding two calendar
years (the "Granting Period") increased by (iii) the total number of shares
covered by previously granted stock incentives forfeited during the Granting
Period.
Types of Awards: Stock incentives which may be issued under the Plan
consist of stock options (which for federal income tax purposes may be either
"non-qualified" options or "incentive" options which meet the requirements of
Section 422 of the Code), SARs, stock awards or any combination of the
foregoing.
Stock Awards: Stock awards are shares of Common Stock which may be
issued to the participant at the time the award is granted, or at a later date,
with or without amounts equivalent to dividends. The amendment described in
paragraph (b) above established a limit on the number of shares and related
dividends which may be issued to any employee pursuant to stock awards granted
in any calendar year. A stock award shall be subject to such terms, conditions
and restrictions (including restrictions on the transfer of the shares issued
pursuant to the award) as the Incentive Committee may determine, including
specified performance objectives the attainment of which may, but is not
required to, be specified as a condition to the participant's right to receive,
transfer or retain some or all of the shares covered by the award. The
performance objectives which may be used are the subject of the amendment
described in paragraphs (c) and (d) above. The consideration for which stock
awards may be issued is the subject of the amendment described in paragraph (f)
above.
In addition to stock awards which may be granted at the discretion of
the Incentive Committee, the Plan provides for certain automatic,
nondiscretionary stock awards to be made to directors of the Company.
Immediately following each annual meeting of stockholders, each director then in
office receives a stock award of 400 shares.
Stock Options: A stock incentive in the form of a stock option provides
for the purchase of shares of Common Stock in the future at an option price per
share which may not be less than 100% of the fair market value of the shares
covered thereby on the date the stock option is granted. An incentive option
granted to a person who, on the date of grant, owns 10% or more of the shares of
voting stock of the Company or its subsidiaries must have an option price of not
less than 110% of the fair market value of the Common Stock on the date of
grant. Options may be granted for such lawful consideration as the Incentive
Committee may determine. Each option shall be exercisable in full or in part six
months after the date the option is granted, or may become exercisable in one or
more installments and at such later time or times, as the Incentive Committee
shall determine. Options may, but are not required to, be made subject to the
attainment of the performance objectives described in paragraphs (c) and (d)
above. Unless otherwise provided in the option, an option, to the extent it is
or becomes exercisable, may be exercised at any time in whole or in part until
the expiration or termination of the option.
All stock options granted under the Plan expire within 11 years from
the date of grant (or 10 years, in the case of incentive options). Unexercised
options terminate upon termination of employment, except that if termination
arises from a resignation with the consent of the Incentive Committee, the
options terminate three months after such termination of employment, and except
further that if an optionee ceases to be an employee by reason of his or her
death, retirement or disability, or if the optionee should die within three
months following his or her resignation, then
18
<PAGE> 21
with the consent of the Incentive Committee, the options terminate 15 months
after an optionee's termination of employment but may be exercised only to the
extent that they could have been exercised by the optionee, had he or she lived,
three months after he or she ceased to be an employee. A leave of absence for
military or governmental service or for other purposes, if approved by the
Incentive Committee, does not constitute a termination of employment, but no
options are exercisable during any such leave of absence.
Under the Plan the Incentive Committee has the authority to include a
reload feature in options. A reload feature is a provision to the effect that at
such time as the option in question is exercised, the optionee will
automatically receive a replacement option in an amount equal to the number of
shares received on exercise, the number of shares used to pay the exercise price
or for tax withholding, or any fraction, multiple and/or combination thereof
that the Incentive Committee may deem appropriate.
Stock Appreciation Rights: A SAR entitles the holder to receive from
the Company cash, shares of Common Stock, or a combination of cash and such
shares having an aggregate value equal to the excess of the fair market value of
one share of Common Stock on the date of exercise of the SAR over the fair
market value of one such share on the date of grant of the SAR. Each SAR shall
be exercisable in full or in part six months after the date it is granted, or
may become exercisable in one or more installments and at such later time or
times, as the Incentive Committee specifies.
At the time of exercise the holder of the SAR may elect the form of
consideration to be received in satisfaction of the SAR, if the form of
consideration was not otherwise provided by the Incentive Committee at the time
the SAR was granted. Such consideration may be in the form of cash, shares of
Common Stock, or partly in cash and partly in shares of Common Stock. However,
the Incentive Committee may consent to or disapprove any request to receive cash
in full or partial settlement of such SAR.
All SARs that may be granted under the 1992 Plan expire within 10 years
from the date of grant. A SAR is not transferable or assignable by the holder
otherwise than by will or by the laws of descent and distribution, and each SAR
is exercisable, during the holder's lifetime, only by the holder. In the event
of termination of employment, SARs terminate at the same times and on the same
terms and conditions as those described above that apply to options.
Change of Control: Notwithstanding any vesting schedule contained in
any stock incentives granted under the Plan, if a change of control of the
Company occurs, any stock incentives under the Plan that have been outstanding
for over six months will become immediately exercisable in full. A change of
control is defined to have occurred if, without prior Board approval, (i) any
person (individual, entity or group) becomes the beneficial owner of securities
of the Company representing 20% or more of the combined voting power of the
Company's then-outstanding securities, or (ii) as a result of, or in connection
with, or within two years following, a tender or exchange offer for the voting
stock of the Company, a merger or other business combination to which the
Company is a party, the sale or other disposition of all or substantially all of
the assets of the Company, a reorganization of the Company, or a proxy contest
in connection with the election of members of the Board, the persons who were
directors of the Company immediately prior to any of such transactions cease to
constitute a majority of the Board or the board of directors of any successor to
the Company (except for resignations due to death, disability or normal
retirement).
Plan Amendments: The Board of Directors, upon recommendation of the
Incentive Committee, may amend the Plan, subject to stockholder approval in the
case of specified amendments. The Plan may be discontinued at any time by the
Board of Directors. No amendment or discontinuance of the Plan shall, without
the consent of the employee, adversely affect any stock incentive held by him
under the Plan.
Term of the Plan: The Plan shall remain in effect until such time as it
is terminated by the Board of Directors of the Company. However, no Incentive
Options may be granted after May 18, 2002.
Certain Federal Income Tax Consequences
The following is a brief summary of the principal United States Federal
income tax consequences of awards under the Plan and is based on Federal income
tax laws currently in effect.
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Limitation on Corporate Deductions for Certain Executives'
Compensation: As mentioned in paragraph (e) above, the amendments authorize the
Committee to grant awards that qualify as "performance-based compensation" under
Section 162(m) of the Code, as well as awards that do not. As a result, the
Company may not be entitled to any deduction mentioned below if the individual
in question is a "covered employee" within the meaning of the Code, the amount
in question does not qualify as "performance-based compensation," and the amount
in question, when added to the covered employee's other taxable compensation
that is not "performance-based" in the same taxable year, exceeds $1 million.
Effect of Change of Control: Under the golden parachute tax provisions
of the Code, if compensatory payments made to certain officers, employees and
stockholders, including the vesting of stock options and stock awards, are
contingent, or are deemed to be contingent, on a change in control of a
publicly-traded corporation, and if the value of such payments exceeds certain
limits, the person who receives such payments may be subject to a 20% excise tax
on most of the payments, payable in addition to ordinary income taxes, and the
corporation may be denied a deduction for the portion of the payments which is
subject to such excise tax. If a change in control of the Company occurs, awards
under the Plan that are deemed to be contingent on the change in control may be
subject to such excise tax, in whole or in part, and may be nondeductible by the
Company. The tax summaries that follow do not reflect the potential application
of these Code provisions in the event of a change in control.
Stock Options: There are no Federal income tax consequences either to
the optionee or the Company upon the grant of an Incentive Option or a
Non-qualified Option. If shares are purchased under an Incentive Option (i.e.,
an Incentive Option is exercised) during employment or within three months
thereafter, the optionee will not recognize any income and the Company will not
be entitled to a deduction in respect of the option exercise. However, the
excess of the fair market value of the shares on the date of such exercise over
the purchase price of the shares under the option will be includible in the
optionee's alternative minimum taxable income. Generally, if the optionee
disposes of shares purchased under an Incentive Option within two years of the
date of grant or one year of the date of exercise of the Incentive Option, the
optionee will recognize ordinary income, and the Company will be entitled to a
deduction, equal to the excess of the fair market value of the shares on the
date of exercise (or, if less, the amount realized by the optionee on the
disposition of the shares) over the purchase price of such shares. Any gain
after the date on which the optionee purchased the shares will be treated as
capital gain to the optionee and will not be deductible by the Company. If the
shares are disposed of after the two-year and one-year periods mentioned above,
the Company will not be entitled to any deduction, and the entire gain or loss
realized by the optionee will be treated as capital gain or loss.
When shares are purchased under a Non-qualified Option, the excess of
the fair market value of the shares on the date of purchase over the purchase
price of such shares under the option will generally be taxable to the optionee
as ordinary income and deductible by the Company. The disposition of shares
purchased under a Non-qualified Option will generally result in a capital gain
or loss for the optionee, but will have no tax consequences for the Company.
Stock Appreciation Rights: Upon the exercise of a SAR, the holder will
realize ordinary income equal to the amount of the cash or stock received upon
the exercise, and the Company will be entitled to deduct the same amount from
its taxable income.
Stock Awards: An employee who receives cash or shares of Common Stock
pursuant to a stock award will generally recognize ordinary income equal to the
sum of the cash and the fair market value of the shares received, and the
Company will generally be entitled to a corresponding deduction from its income.
However, an employee who pursuant to a stock award receives Common Stock that is
restricted as to transferability and subject to a substantial risk of
forfeiture, will not recognize taxable income at the time the stock is issued
unless the employee makes a special election in accordance with applicable
Treasury regulations to be taxed (at ordinary income rates) on the fair market
value of the shares at that time (with fair market value determined for this
purpose without regard to any restrictions other than restrictions, if any,
which by their terms will never lapse), in which case the Company would be
entitled to a deduction at the same time equal to the amount of income realized
by the employee but would not be entitled to deduct any dividends thereafter
paid on the shares. Absent such an election, an employee who has been awarded
such restricted stock will not recognize taxable income until the shares become
transferable or cease to be subject to a substantial risk of forfeiture, at
which time the recipient will recognize ordinary income and the
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<PAGE> 23
Company will be entitled to a corresponding deduction equal to the excess of the
fair market value of the shares at that time over the amount (if any) paid by
the recipient for the shares. Dividends paid to the recipient on the restricted
shares prior to that time will be ordinary compensation income to the recipient
and deductible by the Company.
For 1997, Messrs. Hutton, Gemunder, Chesterman, Keefe and Ms. Hodges
(the "identified executives") are the only participants in the Plan for whom the
Incentive Committee has established specific performance-based goals with
respect to stock awards. The actual amounts of stock options and stock awards to
the identified executives or any other participant for 1997 are not determinable
and have not yet been granted under the Plan as proposed to be amended. For
1996, the number of restricted shares issued as stock awards under the Plan to
the following persons and groups was: Mr. Hutton - 102,532, Mr. Gemunder -
107,643, Mr. Chesterman - 32,805, Mr. Keefe - 32,805, Ms. Hodges - 24,604, all
executive officers as a group - 361,500, and all employees as a group, excluding
executive officers - 53,190. The number of shares subject to options granted
under the Plan in 1996 to the following persons and groups was: Mr. Hutton -
100,000, Mr. Gemunder - 100,000, Mr. Chesterman - 34,000, Mr. Keefe - 30,000,
Ms. Hodges - 28,000, all executive officers as a group - 372,000, and all
employees as a group, excluding executive officers - 136,400. The market value
of a share of common stock on March 21, 1997, was $26.00.
Stockholder Resolution
In order to effect approval of the amendments described above, the
following resolution will be presented to the Annual Meeting:
"RESOLVED, that the amendments to the 1992 Long-Term Stock
Incentive Plan set forth in Appendix A to the Proxy Statement
for the Annual Meeting of Stockholders of the Company to be
held on May 19, 1997, be, and the same hereby are, approved."
The foregoing resolution will be approved if it receives the
affirmative vote of the holders of a majority of the Common Stock represented in
person or by proxy and entitled to vote at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE PLAN
AMENDMENTS.
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 1997. 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 1998 Annual Meeting of Stockholders must
be in writing and received by the Secretary of the Company not later than
December 1, 1997.
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
March 31, 1997
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APPENDIX A
OMNICARE, INC.
1992 LONG-TERM STOCK INCENTIVE PLAN
(Amendments subject to stockholder approval are italicized)
1. PURPOSES: The purposes of this Plan are (a) to secure for the
Company the benefits of incentives inherent in ownership of Common Stock by Key
Employees, (b) to encourage Key Employees to increase their interest in the
future growth and prosperity of the Company and to stimulate and sustain
constructive and imaginative thinking by Key Employees, (c) to further the
identity of interest of those who hold positions of major responsibility in the
Company and its Subsidiaries with the interests of the Company's stockholders,
(d) to induce the employment or continued employment of Key Employees and (e) to
enable the Company to compete with other organizations offering similar or other
incentives in obtaining and retaining the services of competent executives.
2. DEFINITIONS: Unless otherwise required by the context, the following
terms when used in this Plan shall have the meanings set forth in this section
2.
Board of Directors: The Board of Directors of the Company.
Change of Control: The event which shall be deemed to have occurred if
either (i) after the date this Plan is adopted by the Company's stockholders,
without prior approval of the Board, any "person" becomes a beneficial owner,
directly or indirectly, of securities of the Company representing 20% or more of
the combined voting power of the Company's then outstanding securities; or (ii)
without prior approval of the Board, as a result of, or in connection with, or
within two years following, a tender or exchange offer for the voting stock of
the Company, a merger or other business combination to which the Company is a
party, the sale or other disposition of all or substantially all of the assets
of the Company, a reorganization of the Company, or a proxy contest in
connection with the election of members of the Board of Directors, the persons
who were directors of the Company immediately prior to any of such transactions
cease to constitute a majority of the Board of Directors or of the board of
directors of any successor to the Company (except for resignations due to death,
disability or normal retirement).
For purposes of this definition, a person shall be deemed the
"beneficial owner" of any securities (i) which such person or any of its
Affiliates or Associates beneficially owns, directly or indirectly; or (ii)
which such person or any of its Affiliates or Associates, has directly or
indirectly, (1) the right to acquire (whether such right is exercisable
immediately or only after the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion rights, exchange
rights, warrants or options, or otherwise, or (2) the right to vote pursuant to
any agreement, arrangement or understanding; or (iii) which are beneficially
owned, directly or indirectly, by any other person with which such person or any
of its Affiliates or Associates has any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of any securities.
For purposes of this definition, a "person" shall mean any individual,
firm, company, partnership, other entity or group, and the terms "Affiliate" or
"Associate" shall have the respective meanings ascribed to such terms in Rule
12b- 2 of the General Rules and Regulations promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as in effect on
the date the Plan is approved by the stockholders of the Company and becomes
effective.
Code: The Internal Revenue Code of 1986, as amended and from time to
time in effect. References in the Plan to any section of the Code also shall be
deemed to refer to any related Treasury regulations, whether proposed, temporary
or final.
Common Stock: The Common Stock of the Company, par value $1.00 per
share.
Company: Omnicare, Inc., a Delaware corporation.
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Fair Market Value: As applied to any date, the mean between the high
and low sales prices of a share of Common Stock on the principal stock exchange
on which the Company is listed, or, if it is not so listed, the mean between the
bid and the ask prices of a share of Common Stock in the over-the-counter market
as reported by the National Association of Securities Dealers Automated
Quotation System on such date or if no such sales or prices were made or quoted
on such date, on the next preceding date on which there were sales or quotes of
Common Stock on such exchange or market, as the case may be; provided, however,
that, if the Common Stock is not so listed or quoted, Fair Market Value shall be
determined in accordance with the method approved by the Board of Directors,
and, provided further, if any of the foregoing methods of determining Fair
Market Value shall not be consistent with the regulations of the Secretary of
the Treasury or his delegate at the time applicable to a Stock Incentive of the
type involved, Fair Market Value in the case of such Stock Incentive shall be
determined in accordance with such regulations and shall mean the value as so
determined.
Incentive Committee: The Incentive Committee designated to administer
this Plan pursuant to the provisions of section 12.
Incentive Compensation: Bonuses, extra and other compensation payable
in addition to a salary or other base amount, whether contingent or
discretionary or required to be paid pursuant to an agreement, resolution or
arrangement, and whether payable currently, or on a deferred basis, in cash,
Common Stock or other property, awarded by the Company or a Subsidiary prior or
subsequent to the date of the approval and adoption of this Plan by the
stockholders of the Company (including, without limitation, incentive
compensation awarded under section 8.05 or any successor provision of the
By-Laws of the Company).
Incentive Option: An option granted under this Plan which is designated
to be an incentive stock option under the provisions of Section 422 of the
Internal Revenue Code of 1986, as amended; and any provisions elsewhere in this
Plan or in any such Incentive Option which would prevent such option from being
an incentive stock option may be deleted and/or voided retroactively to the date
of the granting of such option, by action of the Incentive Committee.
Key Employee: An employee of the Company or of a Subsidiary who in the
opinion of the Incentive Committee can contribute significantly to the growth
and successful operations of the Company or a Subsidiary. The recommendation of
the grant of a Stock Incentive to an employee by the Incentive Committee shall
be deemed a determination by the Incentive Committee that such employee is a Key
Employee. For the purposes of this Plan, a director or officer of the Company or
of a Subsidiary shall be deemed an employee regardless of whether or not such
director or officer is on the payroll of, or is otherwise paid for services by,
the Company or a Subsidiary.
Nonqualified Option: An option granted under this Plan which is not an
incentive stock option under the provisions of Section 422 of the Internal
Revenue Code of 1986, as amended; and which is exercisable even though there is
outstanding an Incentive Option which was granted before the granting of the
Non-Qualified Option to the same participant. Such Non-Qualified Option shall
not be affected by any actions taken retroactively as provided above with
respect to Incentive Options.
Option: An option to purchase shares of Common Stock.
Performance Objectives: Stated criteria which may, but need not be, set
forth in a Stock Incentive at the discretion of the Incentive Committee, the
successful attainment of which is specified in the Stock Incentive as a
condition precedent to the issuance, transfer or retention of some or all of the
shares of Common Stock covered by the Stock Incentive. Performance Objectives
shall be based on (a) the Fair Market Value or book value of Common Stock, (b)
any of the following, on either a consolidated or business unit or divisional
level, as the Incentive 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, net income, net worth,
return on total assets, return on net assets, return on equity, return on
capital employed, total stockholder return, market valuation, and completion of
acquisitions, or (c) a combination of any two or more of
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the business criteria set forth in (a) and/or (b). The foregoing business
criteria shall have any reasonable definitions that the Incentive Committee may
specify, which may include or exclude any or all of the following items, as the
Incentive Committee may specify: discontinued operations; 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); changes in the statutory
corporate Federal, state and local tax rates; expenses for restructuring or
productivity initiatives; non-operating items; acquisitions expenses (e.g.,
pooling of interests); and effects of divestitures.
Plan: The 1992 Long-Term Stock Incentive Plan herein set forth as the
same may from time to time be amended.
Reload Feature: A provision which the Incentive Committee may, but
shall not be required to include in any Option granted under this Plan to the
effect that at such time as the Option is exercised, the optionee shall
automatically be granted a new Option pursuant hereto to purchase a number of
shares equal to the number of shares purchased pursuant to the exercise or the
number of shares utilized by the optionee to pay the option exercise price
and/or the federal, state or local income tax to be withheld with respect to the
exercise, or any fraction, multiple or combination thereof as the Incentive
Committee may determine.
Stock Appreciation Right (SAR): A right to receive cash, shares of
Common Stock, or a combination thereof, as the case may be, having an aggregate
value equal to the excess of the Fair Market Value of one share of Common Stock
on the date of exercise of such right over the Fair Market Value of one such
share on the date of grant of such right.
Stock Award: An issuance or transfer of shares of Common Stock at the
time the Stock Incentive is granted or as soon thereafter as practicable, or an
undertaking to issue or transfer such shares in the future.
Stock Incentive: A stock incentive granted under this Plan in one of
the forms provided for in section 3.
Subsidiary: A company or other form of business association of which
shares (or other ownership interests) having 50% or more of the voting power are
owned or controlled, directly or indirectly, by the Company.
3. GRANTS OF STOCK INCENTIVES:
(a) Subject to the provisions of this Plan, the Incentive
Committee may at any time, or from time to time, grant Stock
Incentives under this Plan to, and only to, Key Employees.
Directors shall also be entitled to automatic grants of Stock
Awards under section 5(f).
(b) Stock Incentives may be granted in the following forms:
(i) a Stock Award, or
(ii) an Option, or
(iii) a SAR, or
(iv) a combination of a Stock Award, an Option
and/or a SAR.
(c) Stock Incentives contingently granted prior to the
approval of this Plan by the Company's stockholders but
subject to such approval shall be deemed to be granted
hereunder as of the date of such stockholder approval.
4. STOCK SUBJECT TO THIS PLAN:
The total number of shares of Common Stock subject to Stock Incentives
granted under this Plan shall not, on any given date during the term of this
Plan ("Determination Date"), exceed that number of shares equal to (i) 5% of the
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Company's issued and outstanding Common Stock as of the close of business on the
December 31 immediately preceding the Determination Date, reduced by (ii) the
total number of shares that were issued or designated for issuance pursuant to
Stock Incentives granted under the Plan at any time during the then-current
calendar year to date or during the immediately preceding two calendar years
("Granting Period"), increased by (iii) the total number of shares covered by
previously granted Stock Incentives forfeited during the Granting Period. For
purposes of this section 4, if any shares of Common Stock subject to a Stock
Incentive shall not be issued or transferred and shall cease to be issuable or
transferable because of the termination, in whole or in part, of such Stock
Incentive or for any other reason, or if any such shares shall, after issuance
or transfer, be reacquired by the Company or a Subsidiary because of an
employee's failure to comply with the terms and conditions of a Stock Incentive,
then such shares shall constitute "forfeited" shares. The maximum number of
shares of Common Stock with respect to which Options or SARs may be granted to
any Key Employee during any calendar year shall be 1.5 million shares of Common
Stock. The maximum amount of compensation that may be paid to any Key Employee
pursuant to Stock Awards granted in any calendar year shall be 500,000 shares of
Common Stock (or the equivalent amount of cash), including any dividends
thereon. Shares of Common Stock which may be issued pursuant to Stock Incentives
granted under this Plan may be either authorized but unissued shares or shares
held in the Company's treasury, or any combination thereof.
5. STOCK AWARDS: Stock Incentives in the form of Stock Awards shall be
subject to the following provisions:
(a) A Stock Award shall be granted for such lawful
consideration as the Incentive Committee may determine.
(b) For the purposes of this Plan, in determining the value of
a Stock Award, all shares of Common Stock subject to such
Stock Award shall be valued at not less than 100% of the Fair
Market Value of such shares on the date such Stock Award is
granted, regardless of whether or when such shares are issued
or transferred to the Key Employee and whether or not such
shares are subject to restrictions which affect their value.
(c) Shares of Common Stock subject to a Stock Award may be
issued or transferred to the Key Employee at the time the
Stock Award is granted, or at any time subsequent thereto, or
in installments from time to time, as the Incentive Committee
shall determine. In the event that any such issuance or
transfer shall not be made to the Key Employee at the time the
Stock Award is granted, the Incentive Committee may provide
for payment to such Key Employee, either in cash or in shares
of Common Stock from time to time or at the time or times such
shares shall be issued or transferred to such Key Employee, of
amounts not exceeding the dividends which would have been
payable to such Key Employee in respect of such shares (as
adjusted under section 9) if they had been issued or
transferred to such Key Employee at the time such Stock Award
was granted. Any amount payable in shares of Common Stock
under the terms of a Stock Award may, at the discretion of the
Company, be paid in cash, on each date on which delivery of
shares would otherwise have been made, in an amount equal to
the Fair Market Value on such date of the shares which would
otherwise have been delivered.
(d) A Stock Award shall be subject to such terms and
conditions, including, without limitation, restrictions on
sale or other disposition of the Stock Award or of the shares
issued or transferred pursuant to such Stock Award, as the
Incentive Committee shall determine; provided, however, that
upon the issuance or transfer of shares pursuant to a Stock
Award, the recipient shall, with respect to such shares, be
and become a stockholder of the Company fully entitled to
receive dividends, to vote and to exercise all other rights of
a stockholder except to the extent otherwise provided in the
Stock Award. The Incentive Committee may, in its sole
discretion, but shall not be required to, specify in any Stock
Award that the issuance, transfer and/or retention of some or
all of the shares of Common Stock covered by the Stock Award
shall be subject to the attainment of Performance Objectives.
Any such Stock Award may (but need not) be granted in a manner
which qualifies as "performance-based compensation" under
Section 162(m)(4)(C) of the Code. Each Stock Award shall be
evidenced by
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a written instrument in such form as the Incentive Committee
shall determine, provided such written instrument is
consistent with this Plan and incorporates it by reference.
(e) In the event the holder of shares of Common Stock subject
to a Stock Award dies prior to the time such shares are no
longer subject to forfeiture pursuant to the terms of the
Stock Award, the estate of such holder may retain such shares
subject to the restrictions set forth in the Stock Award.
(f) Each director holding office immediately following the
Company's annual meeting of stockholders each year commencing
in 1992 shall automatically receive a nondiscretionary,
unrestricted Stock Award of 400 shares ("Nondiscretionary
Award").
6. OPTIONS: Stock Incentives in the form of Options shall be subject to
the following provisions:
(a) Upon the exercise of an Option, the purchase price shall
be paid in cash or, unless otherwise provided by the Incentive
Committee (and subject to such terms and conditions as are
specified in the Option or by the Incentive Committee), in
shares of Common Stock delivered to the Company by the
optionee or by the withholding of shares issuable upon
exercise of the Option or in a combination of such payment
methods. Shares of Common Stock thus delivered or withheld
shall be valued at their Fair Market Value on the date of the
exercise. The purchase price per share shall be not less than
100% of the Fair Market Value of a share of Common Stock on
the date the Option is granted.
(b) Each Option shall be exercisable in full or in part not
less than six months after the date the Option is granted, or
may become exercisable in one or more installments at such
later time or times as the Incentive Committee shall
determine. Unless otherwise provided in the Option, an Option,
to the extent it is or becomes exercisable, may be exercised
at any time in whole or in part until the expiration or
termination of the Option. Any term or provision in any
outstanding Option specifying that the Option not be
immediately exercisable or that it be exercisable in
installments may be modified at any time during the life of
the Option by the Incentive Committee, provided, however, no
such modifications of an outstanding Option shall, without the
consent of the optionee, adversely affect any Option
theretofore granted to him.
(c) An Option, to the extent that it shall not have been
exercised, shall terminate when the optionee ceases to be an
employee of the Company or a Subsidiary, unless he ceases to
be an employee because of his resignation with the consent of
the Incentive Committee (which consent may be given before or
after resignation), or by reason of his death, incapacity or
retirement under a retirement plan of the Company or a
Subsidiary. Except as provided in the next sentence, if the
optionee ceases to be an employee by reason of such
resignation, the Option shall terminate three months after he
ceases to be an employee. If the optionee ceases to be an
employee by reason of such death, incapacity or retirement, or
if he should die during the three-month period referred to in
the preceding sentence, the Option shall terminate 15 months
after he ceases to be an employee. Where an Option is
exercised more than three months after the optionee ceased to
be an employee, the Option may be exercised only to the extent
it could have been exercised on the date three months after he
ceased to be an employee. A leave of absence for military or
governmental service or for other purposes shall not, if
approved by the Incentive Committee, be deemed a termination
of employment within the meaning of this paragraph (c);
provided, however, that an Option may not be exercised during
any such leave of absence. Notwithstanding the foregoing
provisions of this paragraph (c) or any other provisions of
this Plan, no Option shall be exercisable after expiration of
the term for which the Option was granted, which shall in no
event exceed 11 years. Where an Option is granted for a term
of less than 11 years, the Incentive Committee may, at any
time prior to the expiration of the Option, extend its terms
for a period ending not later than 11 years from the date the
Option was granted. Such an extension shall not be deemed the
grant of an Option under this Plan.
(d) Options shall be granted for such lawful consideration as
the Incentive Committee shall determine.
A-5
<PAGE> 30
(e) Neither the Company nor any Subsidiary may directly or
indirectly lend any money to any person for the purpose of
assisting him to purchase or carry shares of Common Stock
issued or transferred upon the exercise of an Option.
(f) No option nor any right thereunder may be assigned or
transferred by the optionee except by will or the laws of
descent and distribution or pursuant to a qualified domestic
relations order (as defined in the Code or the Employee
Retirement Income Security Act of 1974), provided, however,
the Incentive Committee may by written action permit any
holder of a Nonqualified Option, either before or after the
time of grant, to transfer a Nonqualified Option during his
lifetime to one or more members of his family, to one or more
trusts for the benefit of one or more members of his family,
or to a partnership or partnerships of members of his family,
provided that no consideration is paid for the transfer and
that such transfer would not result in the loss of any
exemption under Rule 16b-3 for any option granted under any
plan of the Company. The transferee of a Nonqualified Option
shall be subject to all restrictions, terms and conditions
applicable to the Nonqualified Option prior to its transfer.
The Incentive Committee may impose on any transferable
Nonqualified Option and on the shares of Common Stock to be
issued upon the exercise of a Nonqualified Option such
limitations and conditions as the Committee deems appropriate.
If so provided in the Option or if so authorized by the
Incentive Committee and subject to such terms and conditions
as are specified in the Option or by the Incentive Committee,
the Company shall have the right, upon or without the request
of the holder of the Option and at any time or from time to
time, to cancel all or a portion of the Option then subject to
exercise and either (i) pay the holder an amount of money
equal to the excess, if any, of the Fair Market Value, at such
time or times, of the shares subject to the portion of the
Option so cancelled over the aggregate purchase price of such
shares, or (ii) issue or transfer shares of Common Stock to
the holder with a Fair Market Value, at such time or times,
equal to such excess.
(g) Each Option shall be evidenced by a written instrument,
which shall contain such terms and conditions (including,
without limitation, Performance Objectives and/or a Reload
Feature), and shall be in such form, as the Incentive
Committee may determine, provided the Option is consistent
with this Plan and incorporates it by reference.
Notwithstanding the preceding sentence, an Option if so
recommended by the Incentive Committee, may include
restrictions and limitations in addition to those provided for
in this Plan.
(h) Any federal, state or local withholding taxes payable by
an optionee upon the exercise of an Option shall be paid in
cash or, unless otherwise provided by the Incentive Committee,
by the surrender of shares of Common Stock or the withholding
of shares of Common Stock to be issued to the optionee, or in
any combination thereof, or in such other form as the
Incentive Committee may authorize from time to time. All such
shares so surrendered or withheld shall be valued at Fair
Market Value on the date they are surrendered to the Company
or authorized to be withheld.
(i) Options may be either Incentive Options or Nonqualified
Options at the discretion of the Incentive Committee. Options
not otherwise designated shall be Nonqualified Options.
Notwithstanding any other provisions herein, the following
provisions shall apply to Incentive Options: (i) the exercise
price of any Incentive Option granted to any person who on the
date of grant owns (within the meaning of Section 425(d) of
the Internal Revenue Code) stock possessing more than 10% of
the total combined voting power of all classes of stock of the
Company or any Subsidiary shall not be less than 110% of the
Fair Market Value of the stock on the date of grant; (ii) the
maximum term of any Incentive Option granted hereunder shall
be 10 years, except that the maximum term of any Incentive
Option granted to a person described in section 6(i)(i) above
shall be five years; (iii) no Incentive Option may be granted
subsequent to the tenth anniversary of the date of stockholder
approval of this Plan; (iv) Incentive Options may only be
granted to persons who are employees of the Company or any
Subsidiary within the meaning of the Internal Revenue Code;
and (v) Incentive Options may not be granted with respect to
more than an aggregate of 500,000 shares of Common Stock under
this Plan.
A-6
<PAGE> 31
7. STOCK APPRECIATION RIGHTS: Stock Incentives in the form of Stock
Appreciation Rights (SAR's) shall be subject to the following provisions:
(a) Each SAR shall be evidenced by a written instrument (the
"SAR Agreement") specifying the number of shares of Common
Stock to which it relates and containing such other terms and
conditions (which may, but need not, include Performance
Objectives), and shall be in such form as the Incentive
Committee may determine, provided the SAR is consistent with
this Plan and incorporates it by reference.
(b) Each SAR Agreement shall specify the period during which
the pertinent SAR(s) may be exercised and shall provide that
the SAR(s) shall expire at the end of such period (or
periods); provided that such expiration date shall not be
later than 10 years from the date of grant thereof. Except as
otherwise provided herein, any SAR must be exercised during
the period of the holder's employment with the Company. Each
SAR may be exercisable in full or in part six months after the
date the SAR is granted, or may become exercisable in one or
more installments at such later time or times as the Incentive
Committee shall determine. Unless otherwise provided in the
SAR Agreement, a SAR, to the extent it is or becomes
exercisable, may be exercised at any time in whole or in part
until the expiration or termination of the SAR. Any term or
provisions in any outstanding SAR specifying that the SAR not
be immediately exercisable or that it is to be exercisable in
installments may be modified at any time during the life of
the SAR by the Incentive Committee, provided, however, no such
modifications of any outstanding SAR shall, without the
consent of the grantee adversely affect any SAR theretofore
granted to him.
(c) Each SAR shall be exercisable during the life of the
grantee only by him and, after his death, only by his estate
or by a person who acquired the right to exercise the SAR by
will or the laws of descent and distribution. A SAR, to the
extent that it shall not have been exercised, shall terminate
when the grantee ceases to be an employee of the Company or a
Subsidiary, unless he ceases to be an employee because of his
resignation with the consent of the Incentive Committee (which
consent may be given before or after resignation), or by
reason of his death, incapacity or retirement under a
retirement plan of the Company or a Subsidiary. Except as
provided in the next sentence, if the grantee ceases to be an
employee by reason of such resignation, the SAR shall
terminate three months after he ceases to be an employee. If
the grantee ceases to be an employee by reason of such death,
incapacity or retirement, or if he should die during the
three-month period referred to in the preceding sentence, the
SAR shall terminate 15 months after he ceases to be an
employee. Where a SAR is exercised more than three months
after the grantee ceased to be an employee the SAR may be
exercised only to the extent it could have been exercised on
the date three months after he ceased to be an employee. A
leave of absence for military or governmental service or for
other purposes shall not, if approved by the Incentive
Committee, be deemed a termination of employment within the
meaning of this paragraph (c); provided, however, that a SAR
may not be exercised during any such leave of absence.
(d) No SAR may be assigned or transferred by the grantee
except by will or the laws of descent and distribution.
(e) If the form of consideration to be received upon exercise
of the SAR is not specified in the agreement governing the
SAR, upon the exercise thereof, the holder may request the
form of consideration he wishes to receive in satisfaction of
such SAR, which may be in shares of Common Stock (valued at
Fair Market Value on the date of exercise of the SAR), or in
cash, or partly in cash and partly in shares of Common Stock,
as the holder shall request; provided, however, that the
Incentive Committee, in its sole discretion, may consent to or
disapprove any request of the grantee to receive cash in full
or partial settlement of such SAR.
(f) Any federal, state or local withholding taxes payable by
the grantee upon the exercise of a SAR shall be paid in cash
or, unless otherwise provided by the Incentive Committee, by
the surrender of shares of Common Stock in the case of a SAR
to be paid in the form of Common Stock, or by the withholding
of shares of Common Stock to be issued to the grantee, or in
any combination thereof,
A-7
<PAGE> 32
or in such other form as the Incentive Committee may authorize
from time to time. All such shares so surrendered or withheld
shall be valued at Fair Market Value on the date they are
surrendered to the Company or authorized to be withheld.
8. COMBINATIONS OF STOCK AWARDS AND OPTIONS: Stock Incentives
authorized by paragraph (b)(iv) of section 3 in the form of combinations of
Stock Awards, Options and/or SAR's shall be subject to the following provisions:
(a) A Stock Incentive may be a combination of any form of
Stock Award with any form of Option and/or with any form of
SAR; provided, however, that the terms and conditions of such
Stock Incentive pertaining to a Stock Award are consistent
with section 5, the terms and conditions of such Stock
Incentive pertaining to an Option are consistent with section
6, and the terms and conditions of such Stock Incentive
pertaining to a SAR are consistent with section 7.
(b) Such combination Stock Incentive shall be subject to such
other terms and conditions as the Incentive Committee may
determine, including, without limitation, a provision
terminating in whole or in part a portion thereof upon the
exercise in whole or in part of another portion thereof. Such
combination Stock Incentive shall be evidenced by a written
instrument in such form as the Incentive Committee shall
determine, provided it is consistent with this Plan and
incorporates it by reference.
9. ADJUSTMENT PROVISIONS: In the event that any spinoff of assets,
recapitalization, reclassification, split-up or consolidation of shares of
Common Stock shall be effected, or the outstanding shares of Common Stock are,
in connection with a merger or consolidation of the Company or a sale by the
Company of all or a part of its assets, exchanged for a different number of
class of shares of stock or other securities of the Company or for shares of the
stock or other securities of any other company, or a record date for
determination of holders of Common Stock entitled to receive a dividend payable
in Common Stock shall occur, (a) the number and class of shares or other
securities that may be issued or transferred pursuant to Stock Incentives or
with respect to which a cash payment pursuant to the Stock Incentive is
determinable, (b) the number and class of shares or other securities which have
not been issued or transferred under outstanding Stock Incentives, (c) the
purchase price to be paid per share or other security under outstanding Options,
(d) the price to be paid by the Company or a Subsidiary for shares or other
securities issued or transferred pursuant to Stock Incentives which are subject
to a right of the Company or a Subsidiary to reacquire such shares or other
securities, and (e) the maximum number of shares with respect to which Options
or SARs may be granted to any Key Employee during any calendar year and the
maximum number of shares or equivalent amount of cash which any Key Employee may
be paid pursuant to Stock Awards granted in any calendar year, shall in each
case be equitably adjusted.
10. ACCELERATION. In the event of a Change of Control, any Stock
Incentives which have then been outstanding hereunder for at least six months
shall be immediately exercisable (without regard to any limitation imposed by
the Plan or the Incentive Committee at the time the Stock Incentive was granted,
which permits all or any part of the Stock Incentive to be exercised only after
the lapse of time or the attainment of Performance Objectives or other
conditions to exercise), and will remain exercisable until the expiration of the
Stock Incentive.
11. TERM: This Plan shall be deemed adopted and shall become effective
on the date it is approved and adopted by the stockholders of the Company. This
Plan shall remain in effect until such time as it is terminated by the Board of
Directors; provided, however, that no Incentive Options may be granted hereunder
after May 18, 2002.
12. ADMINISTRATION:
(a) The Plan shall be administered by the Incentive Committee,
which shall consist of not less than three directors of the
Company designated by the Board of Directors in accordance
with Article IV of the By-Laws of the Company; provided,
however, that unless the Board determines otherwise no
director shall be designated as or continue to be a member of
the Incentive Committee unless he shall at the time of
designation and service be a "non-employee director" within
the meaning of Rule 16b-3 of the Securities and Exchange
Commission (or any successor provision at the time in effect)
and an "outside director" within the meaning of Section
162(m)(4)(C)(i) of the Code.
A-8
<PAGE> 33
A member of the Incentive Committee shall not be eligible to
be granted a Stock Incentive while serving on the Incentive
Committee, except a Nondiscretionary Award under section 5(f).
Grants of Stock Incentives may be recommended by the Incentive
Committee either in or without consultation with employees,
but, anything in this Plan to the contrary notwithstanding,
the Incentive Committee shall have full authority to act in
the matter of selection of all Key Employees and in
recommending Stock Incentives to be granted to them.
(b) The Incentive Committee may establish such rules and
regulations, not inconsistent with the provisions of this
Plan, as it deems necessary to determine eligibility to
participate in this Plan and for the proper administration of
this Plan, and may amend or revoke any rule or regulation so
established. The Incentive Committee may make such
determinations and interpretations under or in connection with
this Plan as it deems necessary or advisable. All such rules,
regulations, determinations and interpretations shall be
binding and conclusive upon the Company, its Subsidiaries, its
stockholders and all employees, and upon their respective
legal representatives, beneficiaries, successors and assigns
and upon all other persons claiming under or through any of
them.
(c) Members of the Board of Directors and members of the
Incentive Committee acting under this Plan shall be fully
protected in relying in good faith upon the advice of counsel
and shall incur no liability except for gross negligence or
willful misconduct in the performance of their duties.
13. ACQUISITIONS: If the Company or any Subsidiary should merge or
consolidate with, or purchase stock or assets or otherwise acquire the whole or
part of the business of, another company, the Company in connection therewith,
upon the recommendation of the Incentive Committee and the approval of the Board
of Directors, (a) may assume, in whole or in part and with or without
modifications or conditions, any stock options granted by the acquired company
to its employees, in their capacity as such, or (b) may grant new Options in
substitution therefor; provided that the granting of an Option with the terms
and conditions of the assumed or substitute options is permissible under either
this Plan or a plan approved by the shareholders of the acquired company. For
the purposes of the preceding sentence, the permissibility of the granting of an
option under a plan shall be determined as of the date of grant of the original
option by the acquired company and not as of the date of assumption or
substitution by the Company.
14. GENERAL PROVISIONS:
(a) Nothing in this Plan nor in any instrument executed
pursuant hereto shall confer upon any employee any right to
continue in the employ of the Company or a Subsidiary, or
shall affect the right of the Company or of a Subsidiary to
terminate the employment of any employee with or without
cause.
(b) No shares of Common Stock shall be issued or transferred
pursuant to a Stock Incentive unless and until all legal
requirements applicable to the issuance or transfer of such
shares, in the opinion of counsel to the Company, have been
complied with. In connection with any such issuance or
transfer the person acquiring the shares shall, if requested
by the Company, give assurances, satisfactory to counsel to
the Company, that the shares are being acquired for investment
and not with a view to resale or distribution thereof and
assurances in respect of such other matters as the Company or
a Subsidiary may deem desirable to assure compliance with all
applicable legal requirements.
(c) No employee (individually or as a member of a group), and
no beneficiary or other person claiming under or through him,
shall have any right, title or interest in or to any shares of
Common Stock allocated or reserved for the purposes of this
Plan or subject to any Stock Incentive except as to shares of
Common Stock, if any, as shall have been issued or transferred
to him.
(d) The Company or a Subsidiary may, with the approval of the
Incentive Committee, enter into an agreement or other
commitment to grant a Stock Incentive in the future to a
person who is or will be
A-9
<PAGE> 34
a Key Employee at the time of grant, and, notwithstanding any
other provision of this Plan, any such agreement or commitment
shall not be deemed the grant of a Stock Incentive until the
date on which the Company takes action to implement such
agreement or commitment.
(e) In the case of a grant of a Stock Incentive to an employee
of a Subsidiary, such grant may, if the Incentive Committee so
directs, be implemented by the Company issuing or transferring
the shares, if any, covered by the Stock Incentive to the
Subsidiary, for such lawful consideration as the Incentive
Committee may specify, upon the condition or understanding
that the Subsidiary will transfer the shares to the employee
in accordance with the terms of the Stock Incentive specified
by the Incentive Committee pursuant to the provisions of this
Plan. Notwithstanding any other provision hereof, such Stock
Incentive may be issued by and in the name of the Subsidiary
and shall be deemed granted on the date it is approved by the
Incentive Committee on the date it is delivered by the
Subsidiary or on such other date between said two dates, as
the Incentive Committee shall specify.
(f) The Company or a Subsidiary may make such provisions as it
may deem appropriate for the withholding of any taxes which
the Company or a Subsidiary determines it is required to
withhold in connection with any Stock Incentive.
(g) Nothing in this Plan is intended to be a substitute for,
or shall preclude or limit the establishment or continuation
of, any other plan, practice or arrangement for the payment of
compensation or fringe benefits to employees generally, or to
any class or group of employees, which the Company or any
Subsidiary or other affiliate now has or may hereafter
lawfully put into effect, including, without limitation, any
retirement, pension, group insurance, stock purchase, stock
bonus or stock option plan.
(h) Any provision of the Plan to the contrary notwithstanding:
(i) the Plan is intended to give the Incentive Committee the
authority to grant awards that qualify as performance-based
compensation under Section 162(m)(4)(C) of the Code as well as
awards that do not so qualify; and (ii) any provision of the
Plan that would prevent the Incentive Committee from
exercising the authority referred to in clause (i) above or
that would prevent an award that the Incentive Committee
intends to qualify as performance-based compensation under
Section 162(m)(4)(C) of the Code 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.
15. AMENDMENTS AND DISCONTINUANCE:
(a) This Plan may be amended by the Board of Directors upon
the recommendation of the Incentive Committee, provided that,
without the approval of the stockholders of the Company, no
amendment shall be made which (i) increases the maximum
aggregate number of shares of Common Stock that may be issued
or transferred pursuant to Stock Incentives as provided in
section 4 or requires stockholder approval under the Code
(including Sections 162(m) and 422 thereof), (ii) withdraws
the administration of this Plan from the Incentive Committee
or amends the provisions of paragraph (a) of section 12 with
respect to eligibility and disinterest of members of the
Incentive Committee, (iii) permits any person who is not at
the time a Key Employee of the Company or of a Subsidiary to
be granted a Stock Incentive, (iv) permits any Option to be
exercised more than 11 years after the date it is granted, (v)
amends section 11 to extend the date set forth therein or (vi)
amends this section 15; and provided that any permitted
amendments to section 5(f) above shall not be made more than
once every six months other than to comport with changes in
the Internal Revenue Code or the rules thereunder.
(b) The Board of Directors may by resolution adopted by a
majority of the entire Board of Directors discontinue this
Plan.
A-10
<PAGE> 35
(c) No amendment or discontinuance of this Plan by the Board
of Directors or the stockholders of the Company shall, without
the consent of the employee, adversely affect any Stock
Incentive theretofore granted to him.
A-11
<PAGE> 36
<TABLE>
<S> <C>
OMNICARE, INC.
50 E. RIVERCENTER BOULEVARD PLEASE MARK, SIGN, DATE AND RETURN PROXY
COVINGTON, KENTUCKY 41011 CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
- -------------------------------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
STOCKHOLDERS, MAY 19, 1997.
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 March 21, 1997 at the Annual Meeting of
Stockholders to be held on May 19, 1997, or at any adjournment thereof.
ELECTION OF DIRECTORS
Nominees:
Edward L. Hutton Mary Lou Fox Andrea R. Lindell
Joel F. Gemunder Cheryl D. Hodges Sheldon Margen, M.D.
Ronald K. Baur Thomas C. Hutton Kevin J. McNamara
Kenneth W. Chesterman Patrick E. Keefe John M. Mount
Charles H. Erhart, Jr. Sandra E. Laney D. Walter Robbins, Jr.
(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 names are AUTHORITY to vote in the
inserted on the line to the right) election of directors
---------------------------
(2) To approve the amendments to the Company's 1992
Long-Term Stock Incentive Plan. ____ ____ _____
FOR AGAINST ABSTAIN
(3) To ratify the selection of independent accountants. ____ ____ _____
FOR AGAINST ABSTAIN
(4) 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) AND
(3).
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: , 1997
--------------------------------
(Be sure to date Proxy)
SIGNED:
----------------------------------
----------------------------------------------
(Please sign exactly as name(s) appear at left)
</TABLE>
