<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
ALZA CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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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.:
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4) Date Filed:
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<PAGE>
[ALZA LOGO]
ALZA CORPORATION
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 23, 1996 AT 1:00 PM
To the Stockholders of ALZA Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of ALZA
Corporation will be held at 950 Page Mill Road, Palo Alto, California, on
Thursday, May 23, 1996 at 1:00 pm, for the following purposes:
1. To elect three Class III directors to hold office for a term ending in
1999 and until their successors are elected;
2. To consider and act upon a stockholder proposal if presented at the
meeting;
3. To ratify the appointment of Ernst & Young LLP as ALZA's independent
auditors for the fiscal year ended December 31, 1996; and
4. To transact such other business as may properly be presented at the
meeting and at any adjournments or postponements thereof.
Only holders of record of ALZA's Common Stock at the close of business on
March 25, 1996 are entitled to notice of, and to vote at, the meeting and any
adjournments or postponements thereof.
By Order of the Board of Directors,
JULIAN N. STERN
SECRETARY
Palo Alto, California
April 1, 1996
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE SIGN THE
ACCOMPANYING PROXY CARD AND RETURN IT AS SOON AS POSSIBLE IN THE ACCOMPANYING
POSTPAID ENVELOPE. YOUR DOING SO MAY SAVE ALZA THE EXPENSE OF A SECOND MAILING.
<PAGE>
ALZA CORPORATION
PROXY STATEMENT
---------------------
To the Stockholders of ALZA Corporation:
The accompanying proxy is solicited on behalf of the Board of Directors (the
"Board") of ALZA Corporation ("ALZA" or the "Company"), a Delaware corporation,
for use at ALZA's 1996 Annual Meeting of Stockholders (the "Annual Meeting") to
be held at 1:00 pm on Thursday, May 23, 1996 at ALZA's headquarters located at
950 Page Mill Road, Palo Alto, California 94304; telephone number (415)
494-5000.
Only holders of record of ALZA's Common Stock as of the close of business on
March 25, 1996 are entitled to notice of, and to vote at, the Annual Meeting and
any adjournments or postponements thereof. At the close of business on that
date, ALZA had outstanding 84,147,560 shares of its Common Stock, par value $.01
per share. Holders of Common Stock are entitled to one vote for each share of
Common Stock held.
Any holder of Common Stock giving a proxy in the form accompanying this
Proxy Statement has the power to revoke the proxy prior to its use. A proxy can
be revoked (i) by an instrument of revocation delivered prior to the Annual
Meeting to the Secretary of ALZA, (ii) by a duly executed proxy bearing a later
date or time than the date or time of the proxy being revoked, or (iii) at the
Annual Meeting if the stockholder is present and elects to vote in person. Mere
attendance at the Annual Meeting will not serve to revoke a proxy.
Broker non-votes, and shares held by stockholders present in person or by
proxy at the meeting but abstaining on a vote, will be counted in determining
whether a quorum is present at the Annual Meeting. However, abstentions by
stockholders present in person or by proxy at the meeting are counted as votes
against a proposal for purposes of determining whether or not a proposal has
been approved, whereas broker non-votes are not counted for purposes of
determining whether a proposal has been approved.
This Proxy Statement and the accompanying proxy card are being mailed to
ALZA stockholders on or about April 1, 1996. Directors, officers and other
employees of ALZA may solicit proxies by personal interview, telephone or
facsimile, without special compensation. Any costs of such solicitation will be
borne by ALZA.
ELECTION OF DIRECTORS
ALZA's Certificate of Incorporation provides for three classes of directors:
Class I, Class II and Class III. Only one class of directors is elected at each
annual meeting of stockholders, each director to serve for a three-year term. In
accordance with the Certificate of Incorporation, Class III directors are to be
elected at the 1996 annual meeting, Class I directors are to be elected at the
1997 annual meeting and Class II directors are to be elected at the 1998 annual
meeting.
NOMINEES
There currently are four Class III directors, three of whom will be standing
for re-election. Mr. Rudolph Peterson, a director of ALZA since 1969, has
decided to retire from active status as a director, effective as of the date of
the Annual Meeting. Mr. Peterson will continue to provide advice to the Board
from time to time as a consultant. Mr. Martin Gerstel, a Class I director and
ALZA's former Chief Executive Officer, has also decided to retire from active
status as a director, effective as of the date of the Annual Meeting. Mr.
Gerstel will continue as a part-time employee of ALZA, undertaking special
projects as requested by the Chief Executive Officer. As a result of the
retirement of Mr. Gerstel and Mr. Peterson, ALZA's Nominating Committee is
actively engaged in efforts to identify and recruit additional qualified
directors for the Company.
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On February 15, 1996, the Board of Directors voted to amend ALZA's Bylaws,
effective as of the date of the Annual Meeting, to decrease the number of
directors constituting the Board from nine to seven directors to reflect the
retirement of Messrs. Gerstel and Peterson. As a result of this amendment, three
Class III directors are to be elected to the Board at the Annual Meeting, each
to serve until the annual meeting of stockholders to be held in 1999 and until
his successor has been elected and qualified, or until his earlier death,
resignation or removal. The nominees for election at the Annual Meeting are Dr.
Ernest Mario, Mr. Isaac Stein and Dr. Alejandro Zaffaroni.
Each of the nominees presently is a director of ALZA. If any nominee is
unable or unwilling to serve as a director, proxies may be voted for a
substitute nominee designated by the present Board. The Board has no reason to
believe that any nominee will be unable or unwilling to serve as a director if
elected. Proxies received will be voted "FOR" the election of all nominees
unless marked to the contrary. Pursuant to applicable Delaware corporation law,
assuming the presence of a quorum, three directors will be elected from among
those persons duly nominated for such positions by a plurality of the votes
actually cast by stockholders entitled to vote at the meeting who are present in
person or by proxy. Thus, nominees who receive the first, second and third
highest number of votes in favor of their election will be elected, regardless
of the number of abstentions or broker non-votes.
The following table provides the names of the nominees for election as
directors and each other director and indicates the periods during which such
persons have served as directors of ALZA.
<TABLE>
<CAPTION>
DIRECTOR
CONTINUOUSLY
NAME AND POSITIONS WITH ALZA IN ADDITION TO DIRECTOR SINCE
- ------------------------------------------------------------------------------------------ ---------------
<S> <C>
NOMINEES (CLASS III DIRECTORS)
Dr. Ernest Mario.......................................................................... 1993
Co-Chairman and Chief Executive Officer
Isaac Stein............................................................................... 1987
Dr. Alejandro Zaffaroni................................................................... 1968
Co-Chairman and Founder
INCUMBENTS
CLASS I DIRECTORS
William G. Davis.......................................................................... 1989
Julian N. Stern........................................................................... 1982
Secretary
CLASS II DIRECTORS
Dr. Robert J. Glaser...................................................................... 1987
Dean O. Morton............................................................................ 1987
RETIRING DIRECTORS
Martin S. Gerstel......................................................................... 1980
Rudolph A. Peterson....................................................................... 1969
</TABLE>
BUSINESS EXPERIENCE OF DIRECTORS
NOMINEES (CLASS III DIRECTORS)
Dr. Ernest Mario, 57, is the Co-Chairman and Chief Executive Officer of
ALZA. Prior to joining ALZA, Dr. Mario served as Chief Executive of Glaxo
Holdings plc, a pharmaceutical corporation, from May 1989 to March 1993, and as
Deputy Chairman from January 1992 to March 1993. Prior to that time, Dr. Mario
served as Chairman and Chief Executive Officer of Glaxo, Inc., a subsidiary of
Glaxo Holdings, from 1988 to 1989 and as President and Chief Operating Officer
of Glaxo, Inc., from 1986 to 1988. Prior to joining Glaxo, Dr. Mario had held
various executive positions at Squibb Corporation and
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served as a director of that company. Dr. Mario is also a director of COR
Therapeutics, Inc., a biotechnology company, and Pharmaceutical Product
Development, Inc., a contract clinical research organization.
Isaac Stein, 49, has been President of Waverley Associates, Inc., a private
investment firm, since 1983. Mr. Stein served as Chairman of the Board of Esprit
de Corp from June 1990 to December 1992. Mr. Stein is also a trustee of the
Benham Group of Mutual Funds and a director of Raychem Corporation.
Dr. Alejandro Zaffaroni, 73, the founder of ALZA, has been Chairman of the
Board of ALZA since 1982 and Co-Chairman since 1987. He was ALZA's Chief
Executive Officer from 1968 until 1987. He was President of ALZA from its
inception in 1968 until 1982. From 1988 to March 1995, Dr. Zaffaroni was also
the Chairman and Chief Executive Officer of Affymax N.V., a drug discovery
company. He currently spends 50% of his time on the affairs of ALZA.
INCUMBENTS
CLASS I DIRECTORS
William G. Davis, 64, is an independent business consultant. Prior to his
retirement from Eli Lilly & Company in 1984, Mr. Davis held various senior
executive positions during his 27-year tenure with that company. Mr. Davis is a
director of Collagen Corporation, Endosonics Corporation and Target
Therapeutics, Inc.
Julian N. Stern, 71, has been Secretary of ALZA since 1968. He is the sole
employee of a professional corporation that is a member of the law firm of
Heller, Ehrman, White & McAuliffe.
CLASS II DIRECTORS
Dr. Robert J. Glaser, 77, has been the Director for Medical Science of the
Lucille P. Markey Charitable Trust, a philanthropic foundation supporting basic
biomedical research, since 1984, and a trustee since 1988. Prior to that time he
was President, Chief Executive Officer and a trustee of the Henry J. Kaiser
Family Foundation. Dr. Glaser is a director of Nellcor Puritan Bennett
Incorporated and Hanger Orthopedic Group, Inc. In 1991, Dr. Glaser retired as a
director of Hewlett-Packard Company after serving since 1971.
Dean O. Morton, 64, retired in October 1992 as Executive Vice President,
Chief Operating Officer and a director of Hewlett-Packard Company, where he held
various positions since 1960. Mr. Morton is a director of Raychem Corporation,
The Clorox Company, Centigram Communications Corporation and Tencor Instruments.
He is a trustee of the Metropolitan Series Funds, Metlife Portfolios and State
Street Research Funds.
RETIRING DIRECTORS
Rudolph A. Peterson, 91, is the President and Chief Executive Officer
(retired) and honorary director of Bank of America Corporation and Bank of
America N.T. & S.A. and the Administrator (retired) of the United Nations
Development Programme.
Martin S. Gerstel, 54, retired in August 1993 as ALZA's Co-Chairman and
Chief Executive Officer, having served in such capacity since 1987, and as
ALZA's Chief Financial Officer, having served in such capacity since 1968. Mr.
Gerstel served as ALZA's President from 1982 until 1987 and its Chief Operating
Officer from 1980 to 1987. Mr. Gerstel is a director of TEVA Pharmaceutical
Industries of Israel.
MEETINGS AND COMMITTEES OF THE BOARD
There were five meetings of the full Board during fiscal 1995. The Board
currently has three standing committees, the Compensation and Benefits
Committee, the Finance and Audit Committee and the Nominating Committee. The
current members of the Compensation and Benefits Committee are Dr. Glaser
(Chairman) and Messrs. Morton and Stein. The Compensation and Benefits
Committee, which met six times during fiscal 1995, approves all of ALZA's
compensation plans, including the
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<PAGE>
awarding of options under ALZA's stock plan and the compensation arrangements
for ALZA's senior management. The Finance and Audit Committee, which met five
times during fiscal 1995, consults with ALZA's independent auditors concerning
their auditing plan, the results of their audit, the appropriateness of
accounting principles used by ALZA and the adequacy of ALZA's general accounting
controls. The current members of the Finance and Audit Committee are Messrs.
Morton (Chairman), Peterson (retiring), Stern, Davis and Stein.
In 1995, the Board appointed a Nominating Committee, the members of which
are Messrs. Stein (Chairman), Davis and Morton and Dr. Glaser. The Nominating
Committee, which met two times during fiscal 1995, searches for qualified
persons to serve as directors of the Company. As a result of the announced
retirement of Messrs. Peterson and Gerstel, the Nominating Committee is
increasing its efforts to identify and recruit additional qualified directors.
ALZA's Bylaws provide that stockholders may nominate candidates for election as
directors by delivery of written notice to ALZA's Secretary at least sixty days
in advance of the stockholders' meeting or ten days after notice of the meeting
is first given to stockholders, whichever is later. Any such notice must set
forth the name and address of the nominating stockholder and the nominee, and
such information concerning both such persons as would be required by the rules
and regulations of the Securities and Exchange Commission to be included in a
proxy statement soliciting proxies for the election of the nominee. The notice
must be accompanied by the written consent of the nominee to serve as a
director, if elected.
During 1995, each director attended at least 75% of the meetings of the full
Board and the committees of the Board on which he served.
Each director who is not an employee of ALZA receives an annual retainer fee
of $20,000 plus $1,000 for each meeting day of the Board and $750 for each
regular meeting of any standing committee, or other committee formed by the
Board from time to time, on which the director serves and $500 for each special
meeting of any committee on which the director serves (except for chairmen of
the committees, who receive $1,250 for each meeting day of their respective
committees). In addition, each director who is not an employee of ALZA receives
a fee of $350 for each teleconference meeting of the Board or of any committee
lasting more than one hour. ALZA's Secretary receives a fee for attending
meetings of the Compensation and Benefits Committee equal to the fee paid to the
directors who serve on that committee. ALZA's non-employee directors receive
options to purchase Common Stock pursuant to the automatic grant provisions of
ALZA's Amended and Restated Stock Plan.
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<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information relating to compensation
paid or accrued for services in all capacities during the fiscal years indicated
with respect to Dr. Ernest Mario, ALZA's Chief Executive Officer, and each of
ALZA's other four most highly compensated executive officers who were serving as
executive officers as of December 31, 1995 (the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------------- -------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITIONS YEAR SALARY (1) BONUS (1)(2) COMPENSATION (3) OPTIONS (4) COMPENSATION (5)
- ---------------------------------- --------- ----------- ------------ ---------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Dr. Ernest Mario (6).............. 1995 $ 570,840 $ 100,000 $ -- 75,000 $ 62,825
Co-Chairman and 1994 541,667 -- 68,316 75,000 31,864
Chief Executive Officer 1993 250,000 25,000 -- 750,000 6,063
Dr. Alejandro Zaffaroni (6)....... 1995 252,756 50,000 -- -- 209,969
Co-Chairman 1994 245,835 -- -- -- 177,284
and Founder 1993 222,917 15,000 -- -- 148,695
Dr. Felix Theeuwes................ 1995 331,680 70,000 -- 60,000 96,487
President, Research 1994 287,498 30,000 -- 75,000 80,337
and Development 1993 246,834 20,000 -- 25,000 85,335
Chief Scientist
Dr. Samuel R. Saks................ 1995 291,674 70,000 -- 45,000 6,360
Senior Vice President, 1994 260,334 40,000 -- 60,000 5,905
Medical Affairs
Peter D. Staple (6)............... 1995 232,500 50,000 91,643 40,000 8,165
Vice President and 1994 184,461 25,000 5,000 60,000 --
General Counsel
</TABLE>
- ------------------------
(1) Amounts shown include compensation earned and received by the Named
Executive Officers as well as amounts deferred at the election of such
persons under ALZA's Executive Deferral Plans and Tax Deferral Investment
Plan.
(2) Bonuses consist of amounts paid under ALZA's PACE bonus program (or the
predecessor Executive Incentive Plan, which has been discontinued).
(3) Amount shown for Dr. Mario consists of relocation expenses incurred and paid
in 1994. Amount shown for Mr. Staple in 1995 consists of $78,156 of
relocation expenses reimbursed and $13,487 of mortgage differential paid in
1995. Amount shown for Mr. Staple in 1994 consists of amounts paid in
connection with the commencement of his employment with ALZA.
(4) The options were granted for a term of ten years. All unvested options are
subject to earlier termination in the event of the termination of an
employee's relationship with ALZA. Of the options granted to Dr. Mario, one
option for 75,000 shares is fully exercisable on August 10, 1998, the other
option for 75,000 shares is fully exercisable on November 29, 1997 and the
option for 750,000 shares is exercisable in six equal annual installments
commencing on August 10, 1994. Of the options granted to Dr. Theeuwes, an
option for 30,000 shares is fully exercisable on October 13, 1998, another
option for 30,000 shares is fully exercisable on August 10, 1998, the option
for 75,000 shares is fully exercisable on June 6, 1997 and the option for
25,000 shares is fully exercisable on August 10, 1996. Of the options
granted to Dr. Saks, an option for 20,000 shares is fully exercisable on
October 13, 1998, an option for 25,000 shares is fully exercisable on August
10, 1998 and the option for 60,000 shares is fully exercisable on June 6,
1997. Of the options granted to Mr. Staple, an option for 30,000 shares is
fully exercisable on October 13, 1998, an option for 10,000 shares is fully
exercisable on August 10, 1998 and the option for 60,000 shares is fully
exercisable in three equal annual installments commencing on February 9,
1995. All options
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<PAGE>
were granted at fair market value on the date of grant. In the event that
certain change in control events were to occur, all such options would
become immediately exercisable, except options granted in October 1995
(which become exercisable in October 1998), which options generally provide
for acceleration of vesting only if the option holder's employment with the
Company is terminated (other than for "cause") within two years after a
change of control. The option exercise price may be paid, subject to certain
conditions, by delivery of already owned shares or with the proceeds from
the sale of the option shares. The tax withholding obligations related to
the exercise may be paid, subject to certain conditions, by delivery of
already-owned shares or by offset of the shares issuable upon exercise of
the option. Under the terms of ALZA's Amended and Restated Stock Plan, the
Compensation and Benefits Committee retains discretion, subject to plan
limits, to reprice options and to otherwise modify the terms (including the
exercise price and vesting dates) of outstanding options.
(5) Amounts shown for the fiscal year ended December 31, 1995 consist of: (i)
amounts contributed by ALZA to the employees' accounts under ALZA's
Retirement Plan as follows: $16,227 for Dr. Theeuwes, $6,293 for Dr. Saks
and $7,709 for Mr. Staple, and (ii) amounts representing interest in excess
of 120% of the applicable federal long-term rate on amounts deferred at the
election of the participants under ALZA's Executive Deferral Plans. Such
reportable interest for 1995 totaled $62,825 for Dr. Mario, $209,969 for Dr.
Zaffaroni, $80,260 for Dr. Theeuwes, $67 for Dr. Saks and $456 for Mr.
Staple.
(6) Dr. Mario joined ALZA in August 1993. Mr. Staple joined ALZA in March 1994.
Dr. Zaffaroni devoted 50% of his time to the affairs of ALZA during the
years shown.
1995 OPTION GRANTS
The following table sets forth information relating to options granted in
1995 to the Named Executive Officers. In addition, in accordance with the rules
of the Securities and Exchange Commission, the table shows hypothetical gains
that would exist for such options based on assumed rates of annual compound
stock price appreciation of 0%, 5% and 10% per year from the date the options
were granted over the full option term.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE AT
----------------------------------------------------- ASSUMED ANNUAL RATES OF STOCK
NUMBER OF PERCENT OF PRICE APPRECIATION FOR OPTION
SECURITIES TOTAL OPTIONS TERM (1)
UNDERLYING GRANTED TO EXERCISE -------------------------------
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION 0% PER 5% PER 10% PER
NAME GRANTED (2) FISCAL YEAR SHARE (3) DATE YEAR YEAR YEAR
- ----------------------------------- ----------- ------------- ---------- ---------- ------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Dr. Ernest Mario................... 75,000 4.16% $24.75 8/10/05 -- $1,167,750 $2,958,750
Dr. Alejandro Zaffaroni............ -- -- -- -- -- -- --
Dr. Felix Theeuwes................. 30,000 3.33 24.75 8/10/05 -- 467,100 1,183,500
30,000 23.00 10/13/05 -- 433,800 1,099,800
Dr. Samuel R. Saks................. 25,000 2.49 24.75 8/10/05 -- 389,250 986,250
20,000 23.00 10/13/05 -- 289,200 733,200
Peter D. Staple.................... 10,000 2.22 24.75 8/10/05 -- 155,700 394,500
30,000 23.00 10/13/05 -- 433,800 1,099,800
</TABLE>
- ------------------------
(1) The amounts represent certain assumed rates of appreciation over the
exercise price per share (before taxes). Actual gains, if any, on stock
option exercises are dependent on the future performance of ALZA Common
Stock. There can be no assurance that any of the values reflected in this
table will be achieved.
(2) For a description of the material terms of the options, see footnote 4 of
the Summary Compensation Table.
(3) Options were granted at an exercise price equal to the fair market value of
ALZA Common Stock, as determined by reference to the average of the high and
low price reported on the New York Stock Exchange on the date of grant.
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1995 AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
The following table sets forth with respect to the Named Executive Officers
certain information relating to options exercised during fiscal 1995.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END (2)
ACQUIRED ON VALUE -------------------------- --------------------------
NAME EXERCISE REALIZED (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dr. Ernest Mario............... 10,000 $ (1,250) 230,000 650,000 $ 977,500 $ 2,518,750
Dr. Alejandro Zaffaroni........ -- -- -- -- -- --
Dr. Felix Theeuwes............. -- -- 52,000 174,000 -- 151,250
Dr. Samuel R. Saks............. -- -- 15,000 135,000 -- 115,000
Peter D. Staple................ -- -- 20,000 80,000 10,000 65,000
</TABLE>
- ------------------------
(1) Market value of ALZA Common Stock based on the closing sales price as
reported on the composite tape at the exercise date minus the exercise
price.
(2) Market value of ALZA Common Stock at fiscal year-end based on the closing
sales price as reported on the composite tape on December 29, 1995 ($24 1/2)
minus the exercise price of "in-the-money" options. At March 1, 1996, the
closing sales price of ALZA Common Stock was $33 5/8.
CERTAIN EXECUTIVE AGREEMENTS
ALZA has entered into agreements (each an "Executive Agreement") with each
of its eight executive officers, other than Dr. Mario and Dr. Zaffaroni,
pursuant to which certain severance payments would be made in the event of the
executive's termination, other than for cause, following a "change in control"
of ALZA (as defined in the Executive Agreement).
If the executive's employment were terminated by ALZA during the two-year
period following a change in control (the "Severance Period") without "cause" or
by the executive for "good reason" (as defined in the Executive Agreement), the
executive would be entitled to receive a lump sum cash severance payment equal
to two times the sum of his salary and bonus paid or accrued in the 12 months
immediately preceding his termination. (Such amount would be reduced, on a
monthly basis, if the termination occurred more than one year after the change
in control.) In addition to the severance payments, the executive would be
entitled to a pro rata portion of all bonuses and awards relating to periods
that have not been completed as of the termination date and a lump sum cash
amount equal to the difference, if any, between the value of the benefits he
would have received under the Company's retirement, pension or deferred
compensation arrangements had he been fully vested under such arrangements, and
the benefits he is otherwise entitled to receive under such arrangements at the
time of termination. The executive would also receive medical and dental
benefits for up to two years. All outstanding options would become fully
exercisable (to the extent they have not previously become exercisable), and the
executive would be entitled to a cash-out of all options.
COMPENSATION AND BENEFITS COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation and Benefits Committee (the "Committee") of the Board of
Directors is generally responsible for decisions concerning the compensation to
be paid to ALZA's executive officers. The Committee consists of Dr. Glaser
(Chairman) and Messrs. Morton and Stein, each of whom is a non-employee director
of ALZA. In determining compensation policies, the Committee has access to
compensation surveys for regional high technology companies (which compete with
ALZA in the recruitment of senior personnel) and national pharmaceutical
industry compensation information. The Committee also consults with ALZA's
Senior Director of Compensation and Benefits. Set forth below is the report of
the Committee with respect to ALZA's compensation policies during 1995 as they
affected the company's Chief Executive Officer and the company's other executive
officers.
7
<PAGE>
COMPENSATION POLICIES AFFECTING EXECUTIVE OFFICERS
ALZA's compensation policies affecting its executive officers are designed
to provide targeted total compensation levels that are competitive with those of
regional high technology companies and national pharmaceutical companies, in
order to assist the company in attracting and retaining qualified executives.
The Committee believes that ALZA's compensation structure has historically been
at the low end of pharmaceutical companies with respect to salary and bonus
payable to its executive officers generally, and to its Chief Executive Officer
in particular. The S&P Drugs Index, the industry group included for comparison
in "Performance Graphs" below, consists of large national pharmaceutical
companies, which have been used as a reference in setting salaries of ALZA's
executives.
ALZA's compensation policies take into account ALZA's overall performance
during the prior year, as well as the achievements and contributions to the
company during the year by each individual executive officer and the operational
areas of the company for which he is responsible. In addition, ALZA's
compensation policies recognize the importance of stock ownership by, and stock
option programs for, executives in order to promote identity of long-term
interests between the executives and the stockholders of ALZA.
In determining the compensation to be paid to ALZA's executive officers, the
Committee employs compensation policies designed to align compensation with
ALZA's overall business strategy, values and management initiatives. These
policies are intended to (i) reward executives for long-term strategic
management and the enhancement of stockholder value; (ii) support a
performance-oriented environment that rewards achievement of internal company
objectives; (iii) recognize company performance compared to performance levels
of comparable companies; and (iv) attract and retain executives whose abilities
are critical to the long-term success and competitiveness of ALZA. As a result,
compensation consists of salary and bonus, which provide current incentives, and
stock options, which provide longer term incentives.
The key components of executive officer compensation at ALZA are (i) salary,
which is based on factors such as the individual officer's level of
responsibility for meeting the company's financial and strategic objectives and
comparison to similar positions in the company and comparable companies; (ii)
cash bonus awards, which are based on the performance of the executive, the
performance of his or her operational groups, and the performance of ALZA,
measured in terms of attainment of ALZA's financial and strategic objectives;
and (iii) stock option grants, which are intended to align the executive
officers' interests in the company's long-term success with the interests of the
company's stockholders, as measured by changes over time in the company's stock
trading price.
Stock options are an integral part of each executive officer's compensation.
The Committee believes that the opportunity for stock appreciation, through
exercise of stock options that vest over time, closely aligns the interests of
the executive officers with ALZA's stockholders. The size of individual awards
take into account the executive officer's salary, the number and vesting
schedule of outstanding options held by the officer and past contributions to
ALZA. No one factor is given special weight, but all are part of an overall
assessment.
The compensation to be paid to any particular executive has not been based
on any particular mathematical formula. Rather, the Committee reviews
objectives, accomplishments, performance (including that indicated in the
company's peer evaluation process) and compensation as a whole for each
executive (and all executives) and makes appropriate compensation determinations
in the exercise of its business judgment.
8
<PAGE>
RELATIONSHIP OF CORPORATE PERFORMANCE TO COMPENSATION PLANS
The executive officers' compensation during 1995 comprised the following
elements: (i) base salary; (ii) cash bonuses based on a combination of overall
company and individual performance during the year; and (iii) grant of stock
options. Both base compensation and cash bonus take into consideration the
achievement by ALZA of the financial and strategic objectives described below
established by the Board of Directors for the company at the beginning of the
year, and the individual's (and his or her operating groups') contribution
toward achieving those objectives. The option grant takes into account the
executive's respective number and vesting schedule of outstanding options,
salary and contributions to the company.
ALZA's corporate performance measurements focus on both financial and
strategic objectives. During 1995, ALZA achieved the strategic objectives set by
its Board of Directors, which related to the following general areas:
- extending ALZA's technological leadership position in drug delivery;
- sustaining 1994 levels of ALZA's product development business with other
pharmaceutical companies;
- increasing ALZA's direct commercialization activities;
- obtaining increased royalties and fees as compared with 1994;
- accelerating development of products with Therapeutic Discovery
Corporation; and
- increasing earnings per share significantly over 1994.
OTHER COMPENSATION PLANS
ALZA has adopted certain broad-based employee benefit plans in which the
executive officers may participate on the same basis as other employees who meet
eligibility criteria, subject to legal limitations on the benefits that may be
made available to an individual executive officer. During 1995, these plans
included an Employee Stock Purchase Plan qualified under Section 423 of the
Internal Revenue Code, under which an individual could elect to purchase up to
$25,000 of ALZA's Common Stock at a price equal to 85 percent of its fair market
value, and the contribution by ALZA for the benefit of each employee (including
executive officers) to the ALZA Retirement Plan (a defined contribution plan) of
an amount based on the employee's base salary and age.
CHIEF EXECUTIVE OFFICER'S COMPENSATION
Dr. Ernest Mario, ALZA's Chief Executive Officer, received an increase of 5%
in salary for 1995 over his 1994 salary, for a total annual salary of $570,840.
He also was granted an option to purchase 75,000 shares of Common Stock, vesting
after three years and expiring in 2005. The exercise price of the option is
$24.75, the fair market value of the Common Stock on the date the option was
granted. The Committee believes that Dr. Mario's salary is on the low end of
salaries for chief executive officers of other technology-based companies of
similar size and in the same geographic region as ALZA, as well as for chief
executives of pharmaceutical companies on a nationwide basis. In 1995, Dr. Mario
provided strong leadership to the company in its achievement of its strategic
and financial objectives for the year and in progressing toward meeting ALZA's
long-term objectives, and accordingly was awarded a bonus of $100,000.
9
<PAGE>
POLICY ON DEDUCTIBILITY OF EXECUTIVE OFFICER COMPENSATION
Section 162(m) of the Internal Revenue Code generally places a $1 million
per person limit on the deduction a publicly held corporation may take for
compensation paid to its chief executive officer and its four other highest paid
executive officers unless, in general, the compensation is exempt as
"performance based." For stock compensation to be "performance based," Section
162(m) requires a limit to be set on the number of options that may be granted
to employees subject to the deduction cap. The Board of Directors has approved a
limit of 200,000 as the maximum number of shares as to which options may be
granted to any employee, consultant or director under the Amended and Restated
Stock Plan in any one-year period, and a limit of 750,000 as the maximum number
of shares as to which options may be granted in connection with an offer of
employment. These limitations allow gains realized upon exercise of options to
qualify as "performance based" and, therefore, to be excluded from compensation
subject to the $1 million deductibility limit. ALZA believes that all of its
compensation paid to date meets the requirements for deductibility. In general,
the Committee will consider the deductibility limits of Section 162(m) in
determining executive compensation.
COMPENSATION AND BENEFITS COMMITTEE
Dr. Robert J. Glaser, Chairman
Dean O. Morton
Isaac Stein
10
<PAGE>
PERFORMANCE GRAPHS
FIVE-YEAR TOTAL RETURN
The rules of the Securities and Exchange Commission require that ALZA
include in this Proxy Statement a line-graph presentation comparing cumulative
stockholder returns on an indexed basis with the S&P 500 Index and either a
nationally recognized industry standard index or an index of peer companies
selected by ALZA for the five years ending December 31, 1995. ALZA has elected
to use the S&P Drugs Index for purposes of the performance comparison which
appears below. The past performance of ALZA's Common Stock is no indication of
future performance.
The graph has been prepared to give effect to the distribution to ALZA
stockholders on June 11, 1993 of units (the "Units"), each Unit consisting of
one share of Class A Common Stock of Therapeutic Discovery Corporation ("TDC")
and one warrant to purchase one-eighth of one share of ALZA Common Stock at a
price of $65 per share, exercisable at any time commencing on the earlier of
June 11, 1996 or the date ALZA exercises its purchase option with respect to all
outstanding Class A Common Stock of TDC and expiring on December 31, 1999. Each
holder of Common Stock of ALZA received one Unit for every ten shares of Common
Stock held on May 28, 1993, the record date for the distribution. The graph
below assumes that the one-tenth of one Unit received in respect of one share of
ALZA Common Stock was sold on the distribution date (June 11, 1993) at the
closing sale price of the Units on such date ($6.25 per full Unit) and the
proceeds thereof immediately applied toward the purchase of 0.0239 shares of
ALZA's Common Stock at a price based on the closing sales price of the Common
Stock on such date ($26.125).
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG ALZA, THE S&P 500 AND THE S&P DRUGS INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ALZA S&P DRUGS S&P 500
<S> <C> <C> <C>
1990 $100.00 $100.00 $100.00
1991 193.12 164.78 130.47
1992 184.77 132.09 140.41
1993 113.71 120.88 154.57
1994 72.45 140.73 156.61
1995 98.62 241.32 215.46
</TABLE>
The S&P Drugs Index includes the following: Eli Lilly, Schering-Plough, Merck,
Syntex (through 6/6/94), Pfizer, Upjohn (through 11/2/95) and Pharmacia &
Upjohn, Inc. (effective 11/3/95).
11
<PAGE>
TEN-YEAR TOTAL RETURN
The following graph compares the cumulative stockholder returns on ALZA's
Common Stock with the cumulative total return of the S&P 500 Index and the S&P
Drugs Index for the ten years ending December 31, 1995. ALZA has presented
ten-year data to provide a longer term perspective which is consistent with the
timeframe for ALZA's business of developing, manufacturing and commercializing
pharmaceutical products. The graph below has been prepared in accordance with
the same assumptions used for the five-year graph above. In addition, the
ten-year graph below has been prepared to give effect to a subscription
offering, completed in 1988, to ALZA stockholders. Each ALZA stockholder of
record on November 18, 1988 received one right for each share of ALZA Common
Stock held. The graph below assumes that one subscription right was sold on the
first day of such offering (November 22, 1988) at the price of the rights on
such date ($0.50), and the proceeds thereof immediately applied toward the
purchase of 0.0423 shares of ALZA's Common Stock at a price based on the closing
sales price of ALZA's Common Stock on such date ($11.81). The past performance
of ALZA's Common Stock is no indication of future performance.
COMPARISON OF TEN-YEAR CUMULATIVE TOTAL RETURN
AMONG ALZA, THE S&P 500 AND THE S&P DRUGS INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ALZA S&P DRUGS S&P 500
<S> <C> <C> <C>
1985 $100.00 $100.00 $100.00
1986 121.14 138.27 118.56
1987 174.80 153.12 124.81
1988 151.69 178.23 145.30
1989 297.44 266.90 191.35
1990 344.90 305.07 185.40
1991 666.07 502.69 241.89
1992 637.26 402.96 260.32
1993 391.83 368.76 286.56
1994 249.66 429.32 290.35
1995 339.81 736.20 399.46
</TABLE>
The S&P Drugs Index includes the following: Eli Lilly, Schering-Plough, Merck,
Syntex (through 6/6/94), Pfizer, Upjohn (through 11/2/95) and Pharmacia &
Upjohn, Inc. (effective 11/3/95).
12
<PAGE>
BENEFICIAL STOCK OWNERSHIP
The following table sets forth beneficial ownership of ALZA's Common Stock
as of March 1, 1996 (except as otherwise noted) (i) by each person, entity or
"group" of persons or entities known by ALZA to be beneficial owners of more
than 5% of ALZA's Common Stock, (ii) by each director, including nominees, and
each of the Named Executive Officers, and (iii) by all executive officers and
directors as a group. Except as described below, each person has sole voting and
dispositive power with respect to the Common Stock described in the table.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL PERCENT OF
NAME OWNERSHIP (1)(2) CLASS (3)
- ----------------------------------------------------------------- ------------------------- -------------
<S> <C> <C>
J.P. Morgan & Co. Incorporated .................................. 6,365,020 7.6%
and its subsidiaries
60 Wall Street
New York, NY (4)
Brinson Partners, Inc. .......................................... 4,655,250 5.5
and affiliated entities
209 South LaSalle
Chicago, IL (5)
William G. Davis................................................. 42,000 --
Martin S. Gerstel................................................ 298,700 --
Dr. Robert J. Glaser............................................. 18,884 --
Dr. Ernest Mario................................................. 260,000 --
Dean O. Morton................................................... 18,000 --
Rudolph A. Peterson.............................................. 47,163 --
Dr. Samuel R. Saks............................................... 15,000 --
Peter D. Staple.................................................. 40,377 --
Isaac Stein...................................................... 23,608 --
Julian N. Stern.................................................. 131,679 --
Dr. Felix Theeuwes............................................... 236,773 --
Dr. Alejandro Zaffaroni.......................................... 954,600 1.1
All Executive Officers and Directors as a group (17 persons)..... 2,323,726 2.7
</TABLE>
- ------------------------
(1) Includes outstanding stock options, exercisable on or before April 30, 1996,
to purchase the number of shares of ALZA Common Stock as follows: 40,000 for
Mr. Davis; 115,000 for Mr. Gerstel; 8,000 for Dr. Glaser; 230,000 for Dr.
Mario; 8,000 for Mr. Morton; 17,000 for Mr. Peterson; 15,000 for Dr. Saks;
40,000 for Mr. Staple; 12,000 for Mr. Stein; 24,000 for Mr. Stern; 56,000
for Dr. Theeuwes; and 676,100 for all executive officers and directors as a
group.
(2) Excludes shares covered by outstanding warrants, each to purchase one-eighth
of one share of ALZA Common Stock at a price of $65 per share, exercisable
at any time commencing on the earlier of June 11, 1996 or the date ALZA
exercises its purchase option with respect to all outstanding Class A Common
Stock of TDC and expiring on December 31, 1999.
(3) Percentages are not shown if holdings total less than 1% of total
outstanding shares.
(4) Information is as of December 29, 1995 as provided by the holder in
Amendment No. 13 to its Schedule 13G dated December 29, 1995 and filed with
the Securities and Exchange Commission. As to such shares, the holder has
provided the following information: sole voting power -- 3,266,896 shares;
shared voting power -- 81,397 shares; sole dispositive power -- 6,174,922
shares; and shared dispositive power -- 108,497 shares.
(5) Information is as of February 9, 1996 as provided by the holder in its
Schedule 13G dated February 9, 1996 and filed with the Securities and
Exchange Commission. The holder has shared voting and dispositive power with
respect to all shares.
13
<PAGE>
CERTAIN TRANSACTIONS
In October 1995, Mr. Adrian Gerber, ALZA's Executive Vice President,
Commercial Development, retired from employment with ALZA. In connection with
his retirement, ALZA made a lump sum payment of approximately $48,000 to Mr.
Gerber. ALZA paid medical and dental insurance premiums for Mr. Gerber through
March 1996. Mr. Gerber is providing consulting services to ALZA, for which he
was paid $64,500 for 1995. Upon completion of six months of such services, and
achievement of specified goals in connection therewith, Mr. Gerber's principal
and accrued interest on his loan from the Company ($113,892 of principal and
accrued interest as of December 31, 1995) will be forgiven. The loan was made in
connection with Mr. Gerber's relocation to California when he accepted
employment with ALZA in 1990. During 1995, ALZA paid Mr. Gerber a mortgage
differential of $7,088 as provided for in his employment arrangement with ALZA.
In connection with Mr. Gerber's retirement, the vesting date of his outstanding
stock options was accelerated.
In September 1995, ALZA made a loan to Bruce C. Cozadd, its Vice President
and Chief Financial Officer, in the principal amount of $86,000, in connection
with the purchase of his principal residence. The loan bears interest at a rate
of 6.04% per annum and is payable in full in September 2000. On December 31,
1995, the outstanding principal and accrued interest on the loan totaled
$87,537. Repayment of the loan is secured by a second deed of trust on Mr.
Cozadd's residence.
In July 1995, ALZA made a loan to Peter D. Staple, its Vice President and
General Counsel, in the principal amount of $88,000, in connection with the
purchase of his principal residence. The loan bears interest at a rate of 6.28%
and is payable in full in July 2000. On December 31, 1995, the outstanding
principal on the loan totaled $88,000 and all accrued interest had been paid.
Repayment of the loan is secured by a second deed of trust on Mr. Staple's
residence.
STOCKHOLDER PROPOSAL
Mr. William Steiner, 4 Radcliff Drive, Great Neck, NY 11024, owner of 350
shares of Common Stock, has given notice that he, or his representative, will
present the resolution set forth below at the Annual Meeting. For the reasons
set forth below, ALZA's Board of Directors recommends a vote "AGAINST" this
proposal. The text of Mr. Steiner's proposal is as follows:
"RESOLVED, that the stockholders of the Company request that the Board of
Directors take the necessary steps, in accordance with state law, to declassify
the Board of Directors so that all directors are elected annually, such
declassification to be effected in a manner that does not affect the unexpired
terms of directors previously elected.
"SUPPORTING STATEMENT: The election of directors is the primary avenue for
stockholders to influence corporate governance policies and to hold management
accountable for its implementation of those policies. I believe that the
classification of the Board of Directors, which results in only a portion of the
Board being elected annually, is not in the best interests of the Company and
its stockholders.
"The Board of Directors of the Company is divided into three classes serving
staggered three-year terms. I believe that the Company's classified Board of
Directors maintains the incumbency of the current Board and therefore of current
management, which in turn limits management's accountability to stockholders.
"The elimination of the Company's classified Board would require each new
director to stand for election annually and allow stockholders an opportunity to
register their views on the performance of the Board collectively and each
director individually. I believe this is one of the best methods available to
stockholders to insure that the Company will be managed in a manner that is in
the best interests of the stockholders.
"I am a founding member of the Investors Rights Association of America and I
believe that concerns expressed by companies with classified boards that the
annual election of all directors could
14
<PAGE>
leave companies without experienced directors in the event that all incumbents
are voted out by stockholders, are unfounded. In my view, in the unlikely event
that stockholders vote to replace all directors, this decision would express
stockholder dissatisfaction with the incumbent directors and reflect the need
for change.
"I urge your support, vote for this resolution."
COMMENT AND RECOMMENDATION BY BOARD
ALZA'S BOARD OF DIRECTORS OPPOSES THE STOCKHOLDER PROPOSAL. The Board
believes that the success of the Company in producing stockholder value, as
reflected in capital appreciation, requires long-term strategic planning as well
as careful and consistent application of the Company's financial and other
resources. A classified Board helps provide continuity in direction by ensuring
that a majority of the Board at any given time would have prior experience as
directors of the Company. An abrupt change of control could be disruptive to the
Company in achieving its long-term strategic goals and might deprive
stockholders of the opportunity to realize the full value of their investment.
A classified Board enhances the ability of the Company's Board to evaluate
and respond to takeover attempts in a manner which maximizes stockholder value.
In the particular case of a research-based company like the Company where
product development often requires many years, market price at a given time may
not be an accurate measure of the Company's intrinsic value. Accordingly, ALZA
could be vulnerable to unfair and abusive takeover tactics, and an unsolicited
proposal to acquire or restructure the Company that is not negotiated with a
classified Board could result in a price which is not indicative of the
Company's true value.
The Board does not believe that a classified board limits management's
accountability and responsiveness to the Company's stockholders. The
stockholders retain their ability to replace incumbent directors or to propose
alternate nominees for the class of directors to be elected at an annual
meeting. By altering the composition of the Board, the stockholders can properly
and effectively express their views with respect to, and thus influence, the
Company's policies. The Board believes that incumbent directors who continue in
office will be aware of and influenced by any such stockholder action.
Under the corporation law of the state of Delaware, where ALZA is
incorporated, the Company's Certificate of Incorporation must be amended in
order to declassify the Board of Directors. Such an amendment to the Company's
Certificate of Incorporation contemplated by this proposal must either (i) be
approved by 75% of the members of the Board of Directors, or (ii) be submitted
to the stockholders for a vote, and approved by the holders of at least 80% of
the outstanding shares of capital stock of the Company entitled to vote in an
election of directors. The Board of Directors is opposed to such an amendment.
The stockholder proposal is merely a recommendation that the Board take certain
actions, and not a proposal to amend the Certificate of Incorporation.
Therefore, a vote in favor of the proposal is only an advisory recommendation to
the Board to submit an amendment to the Certificate of Incorporation to a vote
of the stockholders.
BOARD RECOMMENDATION AND VOTE REQUIRED
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "AGAINST" THE
STOCKHOLDER PROPOSAL. The affirmative vote of a majority of the shares of Common
Stock present or represented and entitled to a vote at the meeting is required
to approve the proposal. Proxies received will be voted "AGAINST" the
stockholder proposal unless marked to the contrary.
RATIFICATION OF INDEPENDENT AUDITORS
The Board recommends that the stockholders ratify the appointment of Ernst &
Young LLP as independent auditors to audit the financial statements of ALZA for
the year ending December 31, 1996. Ernst & Young LLP (and its predecessor
company) has acted as ALZA's auditor since ALZA's inception. A representative of
Ernst & Young LLP will be present at the Annual Meeting, will have an
opportunity to make a statement if he or she desires to do so, and will be
available to respond to
15
<PAGE>
appropriate questions. A favorable vote of a majority of the shares of Common
Stock present or represented and entitled to vote at the meeting is required to
ratify the appointment of Ernst & Young LLP.
ANNUAL REPORT TO STOCKHOLDERS
ALZA's Annual Report to Stockholders for the year ended December 31, 1995,
containing the audited consolidated balance sheets as of December 31, 1995 and
1994 and the related consolidated statements of operations, stockholders' equity
and cash flows for each of the past three fiscal years, is being mailed with
this Proxy Statement to stockholders entitled to notice of the Annual Meeting.
STOCKHOLDER PROPOSALS
ALZA received a stockholder proposal for this Proxy Statement from the
Carpenters Pension Fund which recommended changes in the provisions of the
Company's Certificate of Incorporation concerning the issue of directors'
personal liability and indemnification. After discussions between the Company
and the stockholder, the stockholder has withdrawn the proposal and the Company
has agreed to study the issue further and discuss it with the stockholder in the
future.
ALZA will, in future proxy statements of the Board, include stockholder
proposals complying with the applicable rules of the Securities and Exchange
Commission and the procedures set forth in ALZA's Bylaws. In order for a
proposal by a stockholder to be included in the proxy statement of the Board
relating to the annual meeting of stockholders to be held in the spring of 1997,
that proposal must be received in writing by the Secretary of ALZA no later than
December 2, 1996.
OTHER MATTERS
The Board knows of no other matters that will be presented at the Annual
Meeting. If, however, any matter is properly presented at the Annual Meeting,
the proxy solicited hereby will be voted in accordance with the judgment of the
proxyholders.
By Order of the Board of Directors,
JULIAN N. STERN
SECRETARY
Palo Alto, California
April 1, 1996
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO SIGN AND RETURN THE
ACCOMPANYING PROXY CARD AS SOON AS POSSIBLE IN THE ACCOMPANYING POSTPAID
ENVELOPE. YOUR DOING SO MAY SAVE ALZA THE EXPENSE OF A SECOND MAILING.
16
<PAGE>
DETACH HERE
PROXY
ALZA CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) JULIAN N. STERN, PETER D. STAPLE and
BRUCE C. COZADD, or any of them, each with full power of substitution, the
lawful attorneys and proxies of the undersigned to attend the Annual Meeting
of Stockholders of ALZA CORPORATION to be held on May 23, 1996 and at any
adjournments and postponements thereof, to vote the number of shares the
undersigned would be entitled to vote if personally present, and to vote in
their discretion upon any other business that may properly come before the
meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED "FOR" PROPOSALS 1 AND 2 AND "AGAINST" PROPOSAL 3. THIS PROXY MAY BE
REVOKED AT ANY TIME PRIOR TO THE TIME IT IS VOTED BY ANY MEANS DESCRIBED IN
THE ACCOMPANYING PROXY STATEMENT.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
SEE REVERSE
SIDE
<PAGE>
DETACH HERE
Please mark
/ X / votes as in
this example.
- -----------------------------------------------------------------------
THE BOARD OF DIRECTORS OF ALZA CORPORATION UNANIMOUSLY RECOMMENDS
A VOTE "FOR" PROPOSALS 1 AND 2:
- -----------------------------------------------------------------------
1. To Elect as Class III Directors:
NOMINEES: Dr. Ernest Mario, Isaac Stein and
Dr. Alejandro Zaffaroni
FOR WITHHELD
/ / / /
/ / ___________________________________
For all nominees except as noted above
/ / MARK HERE FOR ADDRESS CHANGE AND NOTE
BELOW
2. To ratify the appointment of Ernst & Young FOR AGAINST ABSTAIN
LLP as ALZA's independent public auditors / / / / / /
for fiscal 1996.
- ------------------------------------------------------
THE BOARD OF DIRECTORS OF ALZA CORPORATION UNANIMOUSLY
RECOMMENDS A VOTE "AGAINST" PROPOSAL 3:
- -----------------------------------------------------
3. Stockholder proposal FOR AGAINST ABSTAIN
regarding declassification / / / / / /
of board of directors.
- -------------------------------------------------------
Please date and sign exactly as name(s) appear(s) hereon.
If shares are held jointly, each holder should sign.
Please give full title and capacity in which signing if
not signing as an individual stockholder.
Signature:_______________ Date:________ Signature:_____________ Date:______
