<PAGE> 1
================================================================================
SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
OMNICARE, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
================================================================================
<PAGE> 2
[OMNICARE LOGO]
Omnicare, Inc.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 18, 1998
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 18, 1998 at 10:00 a.m. The purpose of the Annual Meeting
is to consider and act upon:
(1) the election of directors;
(2) the adoption of an amendment to the Company's Restated
Certificate of Incorporation increasing the number of authorized
shares of Common Stock from 110,000,000 to 200,000,000;
(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 23, 1998 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, 1998
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 18, 1998, and any adjournment thereof ("Annual Meeting").
Stockholders of record as of the close of business on March 23, 1998 are
entitled to notice of, and to vote at, the Annual Meeting or any adjournment
thereof. As of such date, the Company had outstanding 82,729,938 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 14 persons
named below; (2) to adopt the proposed amendment to the Company's Restated
Certificate of Incorporation increasing the number of authorized shares of
Common Stock; and (3) to ratify the selection of Price Waterhouse LLP as
independent accountants of the Company for 1998. 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, 1998.
ELECTION OF DIRECTORS
The number of directors to be elected at the Annual Meeting has been
fixed by the Board of Directors at 14. 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,
except for Timothy E. Bien, 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. Ronald K. Baur, Timothy E. Bien, Richard L.
Doane, Tracy Finn, David W. Froesel, Jr., Gary W. Kadlec, Thomas W. Ludeke,
Jeffrey M. Stamps and Ms. Mary Lou Fox. Messrs. Baur and Bien and Ms. Fox are
being nominated from that group this year. Mr. Baur and Ms. Fox are currently
directors. It is anticipated that additional executives of the Company will be
included in such rotating group in future years.
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
1
<PAGE> 4
to the Chairman, the President or the Secretary of the Company by a stockholder
entitled to notice of, and to attend, a meeting of stockholders at which
directors are to be elected, not later than 15 business days before such
meeting.
Unless authority is withheld for individual nominees or all nominees, it
is intended that the shares represented by each proxy will be voted for the
nominees listed below. The Company anticipates that all nominees listed in this
Proxy Statement will be candidates when the election is held. However, if for
any reason any nominee is not a candidate at that time, proxies will be voted
for a substitute nominee designated by the Board of Directors and for the
remaining nominees (except where a proxy withholds authority with respect to the
election of directors).
NOMINEES
EDWARD L. HUTTON
Director since 1981
Age: 78 Mr. Hutton is Chairman of the Company and has held
this position since May 1981. Additionally, he is
Chairman and Chief Executive Officer and a director
of Chemed Corporation, Cincinnati, Ohio (a
diversified public corporation with interests in
plumbing and drain cleaning services, janitorial
supplies and health care services)(hereinafter
"Chemed") and has held these positions since November
1993 and April 1970, respectively. Previously, he was
President and Chief Executive Officer of Chemed,
positions he had held from April 1970 to November
1993. Mr. Hutton is the father of Thomas C. Hutton,
who is a director of the Company.
JOEL F. GEMUNDER
Director since 1981
Age: 58 Mr. Gemunder is President of the Company and has held
this position since May 1981. From January 1981 until
July 1981, he served as Chief Executive Officer of
the partnership organized as a predecessor to the
Company for the purpose of owning and operating
certain health care businesses of Chemed and Daylin,
Inc., each then a subsidiary of W.R. Grace & Co. Mr.
Gemunder was an Executive Vice President of Chemed
and Group Executive of its Health Care Group from May
1981 through July 1981 and a Vice President of Chemed
from 1977 until May 1981. Mr. Gemunder is a director
of Chemed and Ultratech Stepper, Inc. (a manufacturer
of photolithography equipment for the computer
industry).
RONALD K. BAUR
Director since 1994
Age: 56 Mr. Baur is a Vice President of the Company, a
position he has held since February 1998. From
February 1994 until February 1998, Mr. Baur was
Regional Vice President-Operations of the Company.
Previously, he was Regional Vice 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
also served as President of Interlock Pharmacy
Systems, Inc., St. Louis, Missouri (pharmacy services
for long-term care facilities) (hereinafter
"Interlock"), a subsidiary of the Company, from July
1992 to May 1997. From 1973 to July 1992, he was the
sole stockholder and the President of Interlock.
TIMOTHY E. BIEN
Nominee
Age: 47 Mr. Bien is Senior Vice President-Professional
Services and Purchasing of the Company, a position he
has held since May 1996. From May 1992 until May
1996, he served as Vice President of Professional
Services and Purchasing of the Company. Prior to
that, he was Vice President and a former owner
2
<PAGE> 5
of Home Care Pharmacy, a wholly-owned subsidiary that
the Company acquired in December 1988.
CHARLES H. ERHART, JR.
Director since 1981
Age: 72 Mr. Erhart retired as President of W.R. Grace & Co.,
Boca Raton, Florida (international specialty
chemicals, construction and packaging) (hereinafter
"Grace") in August 1990. He had held this position
since July 1989. From November 1986 to July 1989, he
was Chairman of the Executive Committee of Grace.
From May 1981 to November 1986, he served as Vice
Chairman and Chief Administrative Officer of Grace.
Mr. Erhart is a director of Chemed.
MARY LOU FOX
Director since 1993
Age: 66 Ms. Fox is Senior Vice President-Marketing of the
Company and has held this position since May 1996.
Previously she served as Vice President-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
Director since 1992
Age: 46 Ms. Hodges is Senior Vice President and Secretary of
the Company and has held these positions since
February 1994. From August 1986 to February 1994, she
was Vice President and Secretary of the Company. From
August 1982 to August 1986, she served as Vice
President-Corporate and Investor Relations. Ms.
Hodges has also served as a director of the Company
for four prior terms: 1984-85; 1986-87; 1988-89; and
1990-91.
THOMAS C. HUTTON
Director since 1983
Age: 47 Mr. Hutton is a Vice President of Chemed and has held
this position since February 1988. Mr. Hutton is a
director of Chemed. He is the son of Edward L.
Hutton, Chairman of the Company.
PATRICK E. KEEFE
Director since 1993
Age: 52 Mr. Keefe is Executive Vice President-Operations of
the Company and has held this position since February
1997. Previously he was Senior Vice
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 Health Care Services, Inc. (hereinafter "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
Director since 1987
Age: 54 Ms. Laney is Senior Vice President and Chief
Administrative Officer of Chemed and has held these
positions since November 1993 and May 1991,
respectively. From May 1984 to November 1993, she was
a Vice President of Chemed. Ms. Laney is a director
of Chemed.
ANDREA R. LINDELL, DNSC, RN
Director since 1992
Age: 54 Dr. Lindell is Dean and Professor in the College of
Nursing and Health at the University of Cincinnati, a
position she has held since December 1990. She also
serves as Director-Center for Health Related Programs
at the University of Cincinnati. From August 1981 to
August 1990, Dr. Lindell
3
<PAGE> 6
served as Dean and a Professor in the School of
Nursing at Oakland University, Rochester, Michigan.
SHELDON MARGEN, M.D.
Director since 1983
Age: 78 Dr. Margen is a Professor Emeritus in the School of
Public Health, University of California, Berkeley, a
position he has held since May 1989. He had served as
a Professor of Public Health at the University of
California, Berkeley, since 1979.
KEVIN J. MCNAMARA
Director since 1986
Age: 44 Mr. McNamara is President of Chemed and has held this
position since August 1994. From November 1993 to
August 1994, Mr. McNamara was Executive Vice
President, Secretary and General Counsel of Chemed.
Previously, from May 1992 to November 1993, he held
the positions of Vice Chairman, Secretary and General
Counsel of Chemed. From August 1986 to May 1992, he
served as Vice President, Secretary and General
Counsel of Chemed. From November 1990 to December
1992, Mr. McNamara served as an Executive Vice
President and Chief Operating Officer of the Company.
He is a director of Chemed.
D. WALTER ROBBINS, JR.
Director since 1981
Age: 78 Mr. Robbins retired as Vice Chairman of Grace in
January 1987 and thereafter became a consultant to
Grace until July 1995. He is a director of Chemed.
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 four occasions during 1997.
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
six occasions during 1997.
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 1997.
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 Keefe. The Executive Committee met on ten occasions during
1997.
During 1997, there were nine 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 1997, 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 1997, 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 1997,
Mr. T.C. Hutton received additional stock awards covering 1,639 shares, Mr.
McNamara received 1,280 shares and Ms. Laney received 2,869 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 1997, 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 1997, 1996
and 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Long-Term
Compensation
------------------------
Annual Compensation Awards
-------------------------------------------------------------------------
# of Shares
Special Restricted Underlying All Other
Name and Principal Position Year Salary Bonus Bonus(2) Other(3) Stock(4) Options Compensation
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
E.L. Hutton - Chairman 1997 $391,000 $941,125 $ -- $ 42,208 $2,474,750 60,000 $ 394,857(5)
1996 370,500 641,125 1,685,000 42,208 2,742,731 100,000 660,605(5)
1995 308,833 491,125 -- 42,208 2,350,000 140,000 197,396(5)
J.F. Gemunder -President 1997 $558,600 $980,625 $ -- $ 82,749 $2,605,000 60,000 $1,209,732(6)
1996 539,067 680,379 1,819,000 82,496 2,879,450 100,000 1,513,972
1995 473,750 504,200 -- 55,628 2,350,000 140,000 376,879
P.E. Keefe - Executive Vice
President - 1997 $199,500 $301,773 $ -- -- $ 797,781 20,000 $ 367,645(6)
Operations 1996 182,708 205,730 276,000 -- 877,534 30,000 386,182
1995 155,937 157,037 -- -- 658,000 45,000 132,106
D.W. Froesel, Jr. - Senior
Vice President 1997 $197,500 $206,623 $ -- -- $ 618,688 17,000 $ 273,846(6)
and Chief Financial 1996 157,724 119,848 155,000 -- 575,901 28,000 81,866
Officer(1) 1995 -- -- -- -- -- -- --
C.D. Hodges - Senior Vice
President 1997 $165,000 $149,180 $ -- -- $ 586,125 17,000 $ 275,858(6)
and Secretary 1996 150,000 101,165 470,000 -- 658,157 28,000 372,944
1995 127,350 73,756 -- -- 564,000 32,000 94,250
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) Mr. Froesel was employed by the Company on March 4, 1996.
(2) The special bonus relates to the successful completion of a public
offering of Common Stock in March 1996. A portion of the special bonus
was paid in 1996, and payment of the balance was deferred to 1997 and
1998. The amount of the above-listed bonus as to which payment was
deferred was: Mr. Hutton, $735,000; Mr. Gemunder, $824,000; Mr. Keefe,
$116,000; Mr. Froesel, $65,000; and Ms. Hodges, $200,000.
(3) 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.
(4) 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 three, five or seven
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
6
<PAGE> 9
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 1998 for 1997 services as incentive
compensation. The numbers of restricted shares granted in February 1998
to the named executives are as follows: Mr. Hutton -- 76,000 shares; Mr.
Gemunder -- 80,000 shares; Mr. Keefe -- 24,500 shares; Mr.
Froesel -- 19,000 shares; and Ms. Hodges -- 18,000 shares. As of
December 31, 1997, the number and value of the aggregate restricted
stock holdings of the named executives were: Mr. Hutton -- 242,960
shares or $5,441,059; Mr. Gemunder -- 248,071 shares or $5,577,779; Mr.
Keefe -- 79,851 shares or $1,712,289; Mr. Froesel --36,360 or $936,479;
and Ms. Hodges -- 63,762 shares or $1,361,690.
(5) The amounts shown represent deferrals under a deferred compensation plan
in which Mr. Hutton participates in lieu of participation in the
Company's Qualified and Excess Benefits pension plans. Under this plan,
payment of 20% of his total compensation is deferred. The deferred
amounts accrue interest at market rates and are paid in subsequent
years.
(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 1997, 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 -- 45,269 shares or $1,186,878; Mr. Keefe --13,599 shares or
$350,140; Mr. Froesel -- 9,057 shares or $235,434; and Ms.
Hodges -- 9,851 shares or $264,793. This column also includes (a) life
insurance premiums paid by the Company (Mr. Gemunder -- $5,100; Mr.
Keefe -- $714; Mr. Froesel -- $595; and Ms. Hodges -- $1,530); (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 -- $17,754; Mr.
Keefe -- $16,791; Mr. Froesel -- $13,160; and Ms. Hodges -- $9,535); and
(c) as to Mr. Froesel, also includes $24,657 which the Company credited
to a deferred account established for him in lieu of his participation
in the Company's Qualified and Excess Benefits pension plans.
7
<PAGE> 10
STOCK OPTIONS
The following table sets forth information regarding stock options granted
to the named executives during 1997:
OPTION GRANTS IN 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Potential Realizable Value at
Individual Grants Assumed Annual Rates of Stock
Price Appreciation for Option
Term($)
- ---------------------------------------------------------------------------------------------------------------------------------
Number of Percent of
Shares Total Options
Underlying Granted to Exercise
Options Employees in Price Expiration
Name Granted(1) Fiscal Year ($/Share) Date 5% 10%
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
E.L. Hutton 60,000 17.57% $30.2188 11/05/07 $1,140,266 $2,889,660
J.F. Gemunder 60,000 17.57% 30.2188 11/05/07 1,140,266 2,889,660
P.E. Keefe 20,000 5.86% 30.2188 11/05/07 380,089 963,220
D.W. Froesel, Jr. 17,000 4.98% 30.2188 11/05/07 323,076 818,737
C.D. Hodges 17,000 4.98% 30.2188 11/05/07 323,076 818,737
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) All such options were granted on November 5, 1997, provide for the
purchase of shares of the Company's common stock at a price equal to the
fair market value on the date of a grant, become exercisable in four
equal annual installments commencing one year from the date of grant,
and expire 10 years after date of grant unless previously exercised.
The following table sets forth information regarding stock options
exercised by the named executives during 1997 and the value of unexercised
options held by the named executives as of December 31, 1997.
AGGREGATED OPTION EXERCISES IN 1997 AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Number of Shares Underlying Value of Unexercised
Unexercised Options at In-The-Money Options at
Number of Fiscal Year-End Fiscal Year-End($)
Shares -------------------------------------------------------------------
Acquired on Value
Name Exercise Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
E.L. Hutton 70,000 $1,045,625 25,000 275,000 $ 119,530 $3,047,962
17,000 455,005
J.F. Gemunder 18,802 500,015 642,998 275,000 15,687,829 3,047,962
P.E. Keefe -0- -0- 87,500 87,500 1,795,213 1,008,435
D.W. Froesel, Jr. -0- -0- 7,000 38,000 33,468 113,686
C.D. Hodges -0- -0- 93,000 70,000 2,067,268 717,686
- ---------------------------------------------------------------------------------------------------------------------------------
</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 Messrs. E.L. Hutton and
Froesel, 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 Qualified Plan and the Excess Benefits Plan at selected compensation levels
after various years of service. Amounts are shown on a 10-year certain and life
form, after the applicable reduction for social security benefits.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Years of Service(2)
---------------------------------------------------------------------------------------------------
Final Average ---------------------------------------------------------------------------------------------------
Compensation(1) 15 20 25 30 35
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 200,000 $ 40,169 $ 53,558 $ 66,948 $ 80,338 $ 90,338
400,000 85,169 113,558 141,948 170,338 190,338
600,000 130,169 173,558 216,948 260,338 290,338
800,000 175,169 233,558 291,948 350,338 390,338
1,000,000 220,169 293,558 366,948 440,338 490,338
1,200,000 265,169 353,558 441,948 530,338 590,338
1,400,000 310,169 413,558 516,948 620,338 690,338
1,600,000 355,169 473,558 591,948 710,338 790,338
1,800,000 400,169 533,558 666,948 800,338 890,338
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------
(1) For purposes of the Qualified 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, 1997, Messrs. Gemunder and Keefe and Ms. Hodges had
34, 9, and 16 years of service, respectively. Messrs. E.L. Hutton and
Froesel do not participate in the Qualified Plan or the Excess Benefits
Plan.
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 his base salary as last
set by the Board of Directors 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. The provisions of Ms. Hodges' employment agreement are
essentially identical to those of Mr. Gemunder, except that her agreement
provides for her nomination as a director, no less frequently than bi-annually.
Mr. Keefe is employed under an agreement which is also essentially identical to
that of Mr. Gemunder except that director nomination is not stipulated and
severance payments resulting from the conditions described above would equal
100% of Covered Compensation. Mr. Froesel is employed under an agreement with an
initial term expiring on March 3, 1999, except that the agreement automatically
renews at that time for a three-year period unless advance notice of termination
is given by either party. In the event the Company were to terminate Mr.
Froesel's employment on account of a change of control of the Company, he would
be entitled to be paid his then-current base salary and cash bonus compensation
for the then remaining term of the agreement, plus an additional two-year
period, subject to certain limitations specified in the agreement.
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. 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.
10
<PAGE> 13
At the beginning of each fiscal year, financial and operational goals are
established, which 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 used by the Committee in determining the
annual cash bonus award include organizational development, product or service
expansion and strategic positioning of the Company's assets. Specific relative
weights are not assigned to each performance factor, since the relative
importance of each factor varies depending upon the executive's specific job
responsibilities. Instead, each individual compensation decision is made on a
case-by-case basis and will ultimately depend upon the judgment of the
Compensation Committee. However, when fixing the annual bonus of the President
and Chairman, the Committee acts within the parameters provided for in the
"Annual Incentive Plan for Senior Executives," approved by stockholders on May
20, 1996. Under that plan, an annual cash bonus for 1997 was dependent on the
level of the Company's pretax income before adjustments for the cumulative
effect of accounting changes, acquisition expenses related to
pooling-of-interests transactions and nonrecurring charges exceeding the target
level established at the beginning of the year.
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.
For the executive officers listed in the Summary Compensation Table (the
"named executives"), restricted share awards for 1997 under the 1992 Long-Term
Stock Incentive Plan were to be made only if the percentage increase for the
last fiscal year in the Company's earnings per share before the cumulative
effect of accounting changes and acquisition expenses related to
pooling-of-interests transactions exceeded a threshold established at the
beginning of the year.
Policy on Deductibility of Compensation
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 approved by
stockholders on May 19, 1997 bring the plans into compliance with Section 162(m)
relating to performance-based compensation. The Committees' present intention is
to comply in the future with Section 162(m) unless the Committees believe 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. In accordance with Company practice, Mr.
Gemunder's salary was not up for review in 1997. In 1996 his salary had been
increased to $558,600 from $500,000 in 1995. This increase was based on a survey
performed by Buck Consultants. The base salary established for Mr. Gemunder in
1996 was at that time less than the 75th percentile for the surveyed companies.
The Committee awarded Mr. Gemunder a cash bonus of $900,000 for 1997. In
determining the amount of the award, the Committee took into consideration that
the Company significantly exceeded the threshold measure for bonus awards under
the 1992 Annual Incentive Plan for Senior Executive Officers, the Company's
11
<PAGE> 14
strong performance in 1997 in the areas which it believes are key measures of
the Company's success, and the advice of its consultants.
In 1997, as long-term incentive compensation, Mr. Gemunder was granted
options to purchase 60,000 shares of Common Stock at option prices equal to the
fair market value of a share on the date of grant. Under the 1992 Long-Term
Stock Incentive Plan, Mr. Gemunder was awarded in February 1998 in respect of
1997 performance 80,000 restricted shares, which vest over a seven-year period.
In determining this share award, the Committee took into account that the
Company significantly exceeded the performance measure under that plan for
awards, the Company's performance in 1997, and the fact that the awards should
provide substantial incentive to Mr. Gemunder to achieve the long-term goals of
the Company.
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. The Company experienced a record
year in 1997 in acquisition activity, completing pharmacy acquisitions which
added 117,600 new long-term care facility residents to the Company's existing
clients. This increase in clients through acquisitions, coupled with strong
internal growth, brought the number of residents served to 443,100 at year-end
1997, a 48% increase over the prior year. As a result, sales in 1997 increased
67% to $895.7 million, net income (excluding acquisition expenses related to
pooling-of-interests transactions and a nonrecurring charge) increased 47% to
$64.7 million, and diluted earnings per share (excluding the aforementioned
charges) increased 33% to 81 cents.
1998 Review of Market Practices
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 strives to effectively tie executive compensation
to the Company's performance and stockholder value. The Committee has recently
selected The Hay Group, an independent compensation consulting firm, to assist
with a comprehensive review of the Company's executive compensation program.
This study will review the compensation of the named executives and the balance
of the Company's management team. Each component of pay will be reviewed
separately as well as in the aggregate to assure that the design and delivery of
executive pay continues to motivate executives to meet the Company's strategic
objectives and effectively links compensation to Company performance and
stockholder value. The Hay Group, as part of its engagement, reviewed the 1997
annual incentive award and the restricted share award for 1997 performance for
Mr. Gemunder. It was concluded that the awards are representative of the
Company's current marketplace, strong financial performance and rapid growth
rate.
<TABLE>
<S> <C>
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.
</TABLE>
COMPENSATION AND INCENTIVE COMMITTEES 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
Committees, 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 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
12
<PAGE> 15
rates which are essentially equal to those which would have been incurred if the
Company had obtained such services from other parties. During 1997, such
reimbursements totaled $4,039,000.
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.
COMPARATIVE STOCK PERFORMANCE
The following graph compares the cumulative total return for the last
five years on a $100 investment on January 1, 1993 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, 1997
<TABLE>
<CAPTION>
Measurement Period S&P Health Care-
(Fiscal Year Covered) Omnicare, Inc. S&P 500 Index 500
<S> <C> <C> <C>
1992 100.00 100.00 100.00
1993 104.44 110.08 91.60
1994 143.52 111.53 103.61
1995 294.64 153.45 163.55
1996 423.99 188.68 197.49
1997 410.16 251.63 283.82
</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 December 31, 1997, 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>
NAME AND ADDRESS OF NUMBER OF SHARES AND NATURE PERCENT OF
BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP(A) CLASS(A)
------------------- --------------------------- ----------
<S> <C> <C>
Putnam Investments, Inc. 9,598,117(b) 11.6%
One Post Office Square
Boston, MA 02109
Janus Capital Corporation 8,950,892(c) 10.8%
100 Fillmore Street
Denver, CO 80206-4928
Amvescap PLC 6,615,443(d) 8.0%
11 Devonshire Square
London EC2M 4YR
England
</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 December 31, 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) Wholly-owned investment advisers have shared dispositive power with
respect to all of the listed shares and shared voting power with respect
to 817,800 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.
(d) Wholly-owned investment advisers have 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 23, 1998 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 311,176(c)
250,000(d)
12,476(e)
J.F. Gemunder 565,795(c)
868,000(d) 1.7%
21,621(f)
R.K. Baur 42,450(c)
24,000(d)
T.E. Bien 76,802(c)
55,000(d)
K.W. Chesterman 88,267(c)
84,000(d)
40,916(g)
C.H. Erhart, Jr. 8,400(c)
M.L. Fox 71,096(c)
59,000(d)
D.W. Froesel, Jr. 62,137(c)
38,000(d)
C.D. Hodges 150,394(c)
154,250(d)
T.C. Hutton 6,504(c)
12,476(e)
5,422(h)
P.E. Keefe 131,793(c)
150,000(d)
S.E. Laney 30,093(c)
27,350(d)
5,422(h)
A.R. Lindell 2,000(c)
S. Margen 15,788(c)
K.J. McNamara 5,997(c)
5,422(h)
J.M. Mount 2,800(c)
D.W. Robbins, Jr. 4,400(c)
</TABLE>
15
<PAGE> 18
<TABLE>
<CAPTION>
NUMBER OF SHARES AND PERCENT OF
INDIVIDUAL OR GROUP NATURE OF BENEFICIAL OWNERSHIP CLASS(A)(B)
------------------- ------------------------------ -----------
<S> <C> <C>
ALL DIRECTORS, NOMINEES, AND EXECUTIVE 1,575,892(c)
OFFICERS AS A GROUP (17 PERSONS) 1,709,600(d)
12,476(e)
21,621(f)
40,916(g) 4.0%
5,422(h)
</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 23, 1998. 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, 1997, 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 23, 1998.
(e) Messrs. E.L. Hutton and T.C. Hutton are trustees of the E.L. Hutton
Foundation, which holds 12,476 shares of Common Stock over which the
Trustees share both voting and dispositive powers.
(f) Mr. Gemunder is a trustee of the Joel F. Gemunder Foundation, which
holds 21,621 shares of Common Stock, over which he holds both voting
and dispositive powers.
(g) Mr. Chesterman is a trustee of the Chesterman Family Foundation, which
holds 40,916 shares of Common Stock, over which he holds both voting and
dispositive powers.
(h) Messrs. T.C. Hutton and K.J. McNamara and Ms. Laney are trustees of the
Chemed Foundation, which holds 5,422 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 1997 all such persons complied
with these filing requirements. In making these statements, the Company has
relied upon the facts of which it is specifically aware and, in the case of its
directors and officers, upon their written representations.
PROPOSAL TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors has approved, declared advisable and recommends to
the stockholders that an amendment to the Company's Restated Certificate of
Incorporation (the "Certificate of Incorporation") be adopted increasing the
number of authorized shares of Common Stock from 110,000,000 to 200,000,000 (the
"Proposed Amendment"). At March 23, 1998, there were 82,729,938 shares of Common
Stock outstanding,
16
<PAGE> 19
8,712,121 shares reserved for issuance upon conversion of the Company's 5%
Convertible Subordinated Debentures, 2,112,622 shares reserved for potential
exercise of stock options previously granted, 2,110,154 shares reserved for
possible grant under the Company's 1992 Long-Term Stock Incentive Plan,
2,520,000 shares reserved for the 1995 Premium-Priced Stock Option Plan and
807,460 shares reserved for issuance upon exercise of outstanding warrants. This
leaves 11,007,705 shares of Common Stock available for issuance out of the
110,000,000 presently authorized. Upon adoption of the Proposed Amendment,
101,007,705 shares of Common Stock would be available for issuance by the Board
of Directors for purposes for which shares are not currently reserved. The
number of authorized shares of Common Stock was last increased by stockholders
in May 1996.
The Board of Directors believes that it is desirable and in the best
interests of the Company and its stockholders that there be a substantial number
of authorized shares of Common Stock available for issuance in the future. Such
shares may be used for general corporate purposes, including stock splits and
stock dividends, acquisitions, public offerings, stock option and other employee
incentive plans. Authorized but unissued shares are available for issuance from
time to time to such persons and for such consideration as the Board of
Directors may determine, without requiring further action by the stockholders,
except as may be required by law, the Certificate of Incorporation or pursuant
to the rules of any stock exchange on which the shares may then be listed. The
Company has no present plans to issue any of the additional shares of the Common
Stock which would be authorized by adoption of the Proposed Amendment, and there
are no pending negotiations, discussions, agreements or understandings which
would obligate the Company to the issuance of any such shares.
While the Board of Directors believes that it is in the best interests of
the stockholders for the Board to have the flexibility to issue additional
shares in any or all of the circumstances described in the preceding paragraph,
the holders of Common Stock do not have pre-emptive rights and the issuance of
additional shares other than on a pro rata basis to current stockholders, would
have the effect of diluting the voting power of current stockholders. In
addition, the availability of sufficient authorized and unissued shares could,
in certain circumstances, discourage an attempt by another person or entity to
acquire control of the Company. The proposal has not, however, been prompted by
an attempt by anyone to acquire control of the Company, and the Company is not
aware of any such attempt.
If the Proposed Amendment is adopted, the first sentence of Article 4 of
the Certificate of Incorporation would be amended to read as follows:
4. The total number of shares of stock which the Corporation
shall have authority to issue is Two Hundred One Million
(201,000,000), of which Two Hundred Million (200,000,000) shares of
the par value of One Dollar ($1.00) each, amounting in the aggregate
to Two Hundred Million Dollars ($200,000,000), shall be common stock
and of which One Million (1,000,000) shares, without par value, shall
be preferred stock.
Adoption of the Proposed Amendment requires the affirmative vote of the
holders of a majority of the outstanding shares of Common Stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE PROPOSED
AMENDMENT.
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected the firm of Price Waterhouse LLP as
independent accountants for the Company and its consolidated subsidiaries for
the year 1998. 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.
17
<PAGE> 20
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.
STOCKHOLDER PROPOSALS
Any stockholder proposal intended to be considered for inclusion in the
proxy materials for presentation at the 1999 Annual Meeting of Stockholders must
be in writing and received by the Secretary of the Company not later than
December 1, 1998.
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, 1998
18
<PAGE> 21
OMNICARE, INC.
50 E. RIVERCENTER BOULEVARD
COVINGTON, KENTUCKY 41011
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR
THE ANNUAL MEETING OF STOCKHOLDERS, MAY 18, 1998.
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 23,
1998 at the Annual Meeting of Stockholders to be held on May 18, 1998, or at any
adjournment thereof.
Election of Directors
Nominees:
<TABLE>
<S> <C> <C>
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
Timothy E. Bien Patrick E. Keefe D. Walter Robbins, Jr.
Charles H. Erhart, Jr. Sandra E. Laney
</TABLE>
(Continued and to be signed on other side)
<PAGE> 22
(Continued from other side)
<TABLE>
<S> <C> <C> <C>
(1) Election of Directors (see reverse)
[ ] FOR ALL NOMINEES listed (except those
whose names are inserted on the line to the
right) ---------------------------------------
[ ] WITHHOLD ALL AUTHORITY to vote in the
election of directors
</TABLE>
(2) To adopt an amendment to the Company's Restated Certificate of Incorporation
increasing the number of authorized shares of Common Stock from 110,000,000
to 200,000,000.
<TABLE>
<S> <C> <C>
[ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
(3) To ratify the selection of independent accountants.
<TABLE>
<S> <C> <C>
[ ] FOR [ ] AGAINST [ ] ABSTAIN
</TABLE>
(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.
<TABLE>
<S> <C>
SIGNED: -------------------------------------
DATED: ____________________________, 1998 ------------------------------------------------
(Be sure to date Proxy) (Please sign exactly as name(s) appear at left)
</TABLE>
PLEASE MARK, SIGN, DATE AND RETURN PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.