MERCK & CO INC, DEF 14A, 1994-03-16

MERCK & CO INC
DEF 14A, 1994-03-16
PHARMACEUTICAL PREPARATIONS

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<PAGE> 1

SCHEDULE 14A
(RULE 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the registrant /X/
Filed by a party other than the registrant / /

Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12

MERCK & CO., INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

MERCK & CO., INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)

Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $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 transactions applies:

- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:/1

- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:

- --------------------------------------------------------------------------------
/ / 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 registrations 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:

- --------------------------------------------------------------------------------
- ---------------
/1 Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2

(LOGO)
NOTICE OF ANNUAL MEETING

and

PROXY STATEMENT

Annual Meeting of Stockholders

Edward Nash Theatre at Raritan Valley Community College

Route 28 and Lamington Road

North Branch, New Jersey

April 26, 1994
<PAGE> 3

Merck & Co., Inc.
P.O. Box 100

Whitehouse Station, New Jersey 08889-0100

(908) 423-1000

Notice of Annual Meeting of Stockholders

April 26, 1994
------------------

To the Stockholders:

The Annual Meeting of Stockholders of Merck & Co., Inc. will be held on
Tuesday, April 26, 1994, at 2:00 p.m., at the Edward Nash Theatre at Raritan
Valley Community College, Route 28 and Lamington Road, North Branch, New Jersey,
for the following purposes:

- To elect one director for a term ending in 1996 and three directors for
terms ending in 1997;

- To consider and act upon a proposal to ratify the appointment of
independent public accountants for 1994;

- To consider and act upon a proposal to amend the Executive Incentive
Plan;

- To consider and act upon a proposal to adopt the Merck Deferral Program;

- To consider and act upon a proposal to amend the 1991 Incentive Stock
Plan;

- To consider and act upon a stockholder proposal concerning annual
election of directors;

- To consider and act upon a stockholder proposal concerning executive
compensation; and

- To transact such other business as may properly come before the meeting
and all adjournments thereof.

Only stockholders of record at the close of business on March 8, 1994, the
record date and time fixed by the Board of Directors, are entitled to notice of,
and to vote at, said meeting. It is always important for you, as a stockholder,
to exercise your right to vote.

Admission to the meeting will be by ticket only. If you are a stockholder
of record and plan to attend, please check the appropriate box on the proxy card
and an admission ticket will be mailed to you. If you are a stockholder whose
shares are held through an intermediary such as a bank or broker and you plan to
attend, please request a ticket by writing to the Office of the Secretary, WS
3AB-05, Merck & Co., Inc., P.O. Box 100, Whitehouse Station, New Jersey
08889-0100. Evidence of your ownership, which you can obtain from your bank,
broker, etc., must accompany your letter.

IN ORDER THAT YOUR STOCK MAY BE REPRESENTED AT THE MEETING IN CASE YOU ARE
NOT PERSONALLY PRESENT, PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY/VOTING
INSTRUCTION CARD AND RETURN IT PROMPTLY IN THE ACCOMPANYING ADDRESSED ENVELOPE.

By order of the Board of Directors,

CELIA A. COLBERT
Secretary and Assistant General
Counsel
March 16, 1994
<PAGE> 4

Merck & Co., Inc.
P. O. Box 100

Whitehouse Station, New Jersey 08889-0100

(908) 423-1000

March 16, 1994

Proxy Statement
------------------

This proxy statement is furnished to stockholders of Merck & Co., Inc. in
connection with the solicitation by the Board of Directors of proxies to be used
at the Annual Meeting of Stockholders of the Company to be held at the Edward
Nash Theatre at Raritan Valley Community College, Route 28 and Lamington Road,
North Branch, New Jersey, on Tuesday, April 26, 1994, and all adjournments
thereof. The Company's Annual Report for 1993, including financial statements,
and proxy statement and form of proxy/voting instruction card ("proxy card" or
"proxy") are being mailed to the stockholders commencing March 16, 1994.

If a stockholder is a participant in the Automatic Dividend Reinvestment
and Cash Payment Plan, the proxy card covers the shares in the account for that
plan, as well as shares registered in the participant's name.

HOWEVER, THE PROXY CARD WILL NOT SERVE AS A VOTING INSTRUCTION CARD FOR THE
SHARES HELD FOR PARTICIPANTS IN THE EMPLOYEE SAVINGS AND SECURITY PLAN
("ES&SP"), EMPLOYEE STOCK PURCHASE AND SAVINGS PLAN ("ESP&SP"), HUBBARD FARMS,
INC. EMPLOYEE SAVINGS PLAN ("HFESP") OR MEDCO 401(K) SAVINGS PLAN ("MSP").
INSTEAD, THESE PARTICIPANTS WILL RECEIVE FROM THE PLAN TRUSTEES SEPARATE VOTING
INSTRUCTION CARDS COVERING THESE SHARES. VOTING INSTRUCTION CARDS FOR THE ES&SP,
ESP&SP AND HFESP MUST BE SIGNED AND RETURNED OR THE SHARES WILL NOT BE VOTED. IF
VOTING INSTRUCTION CARDS FOR THE MSP ARE NOT RETURNED, THE PLAN TRUSTEE WILL
VOTE THOSE SHARES IN THE SAME MANNER AS IT VOTED THE MAJORITY OF THE SHARES FOR
WHICH VOTING INSTRUCTIONS WERE RECEIVED.

Any cards returned without specification will be voted as to each proposal
in accordance with the recommendations of the Board of Directors.

THE PROXY

Any person giving a proxy has the power to revoke it at any time before it
is voted, upon written notice to Celia A. Colbert, Secretary and Assistant
General Counsel of the Company.

The Company will bear the costs of solicitation of proxies. Following the
mailing of proxy soliciting material, proxies may also be solicited by
directors, officers and regular employees of the Company in person or by
telephone or telegraph. The Company will also reimburse persons holding stock
for others in their names or in those of their nominees for their reasonable
expenses in sending proxy material to their principals and obtaining their
proxies. The Company will use the services of Morrow & Co., 909 Third Avenue,
New York, N.Y. 10022-4799, to aid in the solicitation of proxies at an
anticipated fee of $16,000 plus reasonable expenses.

BENEFICIAL OWNERSHIP OF SECURITIES AND VOTING RIGHTS

On December 31, 1993, no individual, corporation or other entity was known
by the Company to own beneficially more than five percent of the Company's
outstanding Common Stock.

There are outstanding and entitled to vote as of the record date, March 8,
1994, 1,255,934,048 shares of Common Stock of the Company. The holders of a
majority in interest of all the stock of the Company entitled to vote at the
meeting, present in person or by proxy, shall constitute a quorum for the
transaction of business.
<PAGE> 5

The holders of Common Stock are entitled to one vote per share but, in
connection with the cumulative voting feature applicable to the election of
directors, each stockholder is entitled to as many votes as shall equal the
number of shares held by such person at the close of business on the record
date, multiplied by the number of directors to be elected. A stockholder may
cast all of such votes for a single nominee or may apportion such votes among
any two or more nominees. For example, a holder of 100 shares may cast 400 votes
for a single nominee, apportion 200 votes to each of two nominees, or apportion
400 votes in any other manner by so noting in the space provided on the
accompanying form of proxy. A stockholder may withhold votes from any or all
nominees by notation to that effect on the accompanying form of proxy. Except to
the extent that a stockholder withholds votes from any or all nominees, the
persons named in the accompanying form of proxy, in their sole discretion, will
vote such proxy for, and, if necessary, exercise cumulative voting rights to
secure, the election of the nominees listed below as directors of the Company.

In the event that any of the nominees becomes unavailable, which the
Company does not expect, it is intended that, pursuant to the accompanying
proxy, votes will be cast for such substitute nominee or nominees as may be
designated by the Board of Directors, unless the Board of Directors reduces the
number of directors.

The persons named in the accompanying form of proxy will vote such proxy in
accordance with the specification made thereon with respect to each of the other
proposals or, if no specification is made, FOR the proposals to ratify the
appointment of independent public accountants, to amend the Executive Incentive
Plan, to adopt the Merck Deferral Program and to amend the 1991 Incentive Stock
Plan and AGAINST the stockholder proposals. A majority of the votes cast by
holders of Common Stock is required for approval of these proposals. Abstentions
and broker non-votes are not counted as votes cast on any matter to which they
relate.

1. ELECTION OF DIRECTORS

Four directors are to be elected at the meeting. One director is to be
elected for the two remaining years of a term expiring in 1996 and three
directors are to be elected for full three-year terms expiring in 1997. The
Board's nominees are Mr. Martin J. Wygod for a term expiring in 1996 and Mr.
Lawrence A. Bossidy, Mr. Charles E. Exley, Jr. and Dr. William N. Kelley for
terms expiring in 1997. Mr. Wygod was elected by the Board effective November
23, 1993, subject to election by the stockholders at this Annual Meeting. All
other candidates have previously been elected by the stockholders. Dr. Ruben F.
Mettler and Dr. Richard S. Ross, whose terms expire at the meeting, will retire
from the Board at that time. In accordance with the By-Laws of the Company, the
Board has taken action to decrease the number of directors to eleven, effective
April 26, 1994. After the election of four directors at the meeting, the Company
will have eleven directors, including seven directors whose present terms extend
beyond the meeting. Information on the nominees and continuing directors
follows.

2
<PAGE> 6

[PHOTO] Chairman of the Board, Medco Containment Services, Inc. ("Medco")
MARTIN J. WYGOD (managed prescription drug programs), a wholly-owned subsidiary of the
AGE - 54 Company since November 1993, for more than five years and Chief
1993 Executive Officer from June 1983 to January 1993 and since November 1993

Chairman of the Boards, Synetic, Inc. ("Synetic") (institutional
pharmacy services) and Medical Marketing Group, Inc. ("MMG")
(micromarketing services and programs for pharmaceuticals),
majority-owned subsidiaries of the Company; Trustee, New York University
and United Cerebral Palsy Research and Educational Foundation

<CAPTION>
FOR TERMS EXPIRING IN 1997
<S> <C>

[PHOTO] Chairman of the Board (since January 1992) and Chief Executive Officer
LAWRENCE A. (since July 1991), AlliedSignal, Inc. (aerospace, automotive products
BOSSIDY and engineered materials technology); Vice Chairman, General Electric
AGE - 59 Company from January 1984 to July 1991
1992
Member, The Business Council, The Business Roundtable, International
Council of J.P. Morgan & Co., Incorporated and The President's Advisory
Committee on Trade Policy and Negotiations

[PHOTO] Chairman of the Board and Chief Executive Officer, NCR Corporation
CHARLES E. (business information processing systems) from January 1988 to September
EXLEY, JR. 1991; Chairman of the Board, President and Chief Executive Officer from
AGE - 64 April 1984 to January 1988
1988
Director, Banc One Corporation and Owens-Corning Fiberglas Corporation;
Trustee, The Andrew W. Mellon Foundation; Member, The Business Council
and Board of Overseers, Columbia University Graduate School of Business

[PHOTO] Chief Executive Officer, University of Pennsylvania Medical Center and
WILLIAM N. Health System and Executive Vice President, Dean of the School of
KELLEY, M.D. Medicine and Professor of Medicine, Biochemistry and Biophysics,
AGE - 54 University of Pennsylvania since October 1989; Professor and Chairman of
1992 Internal Medicine and Professor of Biological Chemistry, University of
Michigan from August 1975 to September 1989

Director, Beckman Instruments, Greater Philadelphia First and Zoological
Society of Philadelphia; Trustee, Emory University; Member, Institute of
Medicine of the National Academy of Sciences, Advisory Council to the
Director of NIH, National Advisory Board of Rockefeller/Pew Health of
the Public Program, Board of Managers of Wistar Institute, Board of
Governors of Leonard Davis Institute of Health Economics
</TABLE>

3
<PAGE> 7

[PHOTO] Chairman of the Board, The RTZ Corporation PLC (international mining
SIR DEREK BIRKIN company) since June 1991; Chief Executive and Deputy Chairman from April
AGE - 64 1985 to May 1991
1992
Director, Unilever PLC, Barclays Bank PLC, CRA Limited (Australia),
Carlton Communications PLC and The Royal Opera House; Member, Council of
The Industrial Society

[PHOTO] President, The Andrew W. Mellon Foundation (philanthropic foundation)
WILLIAM G. for more than five years
BOWEN, PH.D.
AGE - 60 Director, American Express Company and Reader's Digest, Inc.; Trustee,
1986 Denison University

[PHOTO] International Health Care Consultant for more than five years
CAROLYNE K.
DAVIS, PH.D. Director, Beckman Instruments, Pharmaceutical Marketing Services, Inc.
AGE - 62 and The Prudential Insurance Company of America, Inc., Science
1989 Applications International Corp.; Member, Board of Governors of the
American Red Cross, National Museum of Medicine and Health, National
Rehabilitation Hospital and University of Pennsylvania Medical Center

[PHOTO] Professor of Psychiatry, Meharry Medical College for more than five
LLOYD C. ELAM, years
M.D.
AGE - 65 Director, First Union Bank of Tennessee, Premark, Inc. and BellSouth
1973 Telecommunications, Inc.; Trustee, Fisk University, Tennessee Department
of Mental Health and the Alfred P. Sloan Foundation
</TABLE>

4
<PAGE> 8

<TABLE>
<CAPTION>
NAME, AGE AND
YEAR FIRST BUSINESS EXPERIENCE AND OTHER DIRECTORSHIPS
ELECTED DIRECTOR OR SIGNIFICANT AFFILIATIONS
- ---------------- ------------------------------------------------------------------------
<S> <C>
[PHOTO] Chairman of the Board (since April 1986), Chief Executive Officer (since
P. ROY VAGELOS, July 1985) and President (July 1985 to December 1992 and since July
M.D. 1993) of the Company
AGE - 64
1984 Director, PepsiCo, Inc. and The Prudential Insurance Company of America,
Inc.; Trustee, University of Pennsylvania, The Rockefeller University
and The Danforth Foundation; Member, The Business Council, The Business
Roundtable and National Academy of Sciences and its Institute of
Medicine
<CAPTION>
DIRECTORS WHOSE TERMS EXPIRE IN 1996
<S> <C>
[PHOTO] Chairman of the Board and Chief Executive Officer, General Mills, Inc.
H. BREWSTER (consumer foods and restaurants) for more than five years
ATWATER, JR.
AGE - 62 Director, American Public Radio, General Electric Company, Mayo
1988 Foundation and Walker Art Center; Member, The Business Council, The
Business Roundtable and International Council of J.P. Morgan & Co.
Incorporated

[PHOTO] Chairman of the Board, J.P. Morgan & Co. Incorporated and Morgan
DENNIS Guaranty Trust Company of New York (banking and other financial
WEATHERSTONE services) since January 1990; Chairman of the Executive Committee of
AGE - 63 J.P. Morgan since February 1991; Chairman of the Executive Committee of
1988 Morgan Guaranty since January 1991; President of both from January 1987
to January 1990

Director, General Motors Corporation and Institute for International
Economics; President and Trustee, Royal College of Surgeons Foundation
Inc.; Trustee, The Economic Club of New York; Chairman, New York
Clearing House; Vice Chairman, The Business Council; Member, Council on
Foreign Relations and The Business Roundtable
</TABLE>

BOARD COMMITTEES

There are four standing committees of the Board of Directors: the Executive
Committee, the Audit Committee, the Compensation and Benefits Committee and the
Committee on Treasury Stock. Members of the individual committees are named
below:

<TABLE>
<CAPTION>
COMPENSATION
AND TREASURY
EXECUTIVE AUDIT BENEFITS STOCK
- ----------------- -------------------- ---------------------- -----------------
<S> <C> <C> <C>
W. G. Bowen D. Birkin H. B. Atwater, Jr.(a) W. G. Bowen
L. C. Elam C. K. Davis(b) L. A. Bossidy L. C. Elam
C. E. Exley, Jr. C. E. Exley, Jr.(a) W. G. Bowen C. E. Exley, Jr.
R. F. Mettler W. N. Kelley R. F. Mettler R. F. Mettler(a)
R. S. Ross D. Weatherstone R. S. Ross(b) R. S. Ross
P. R. Vagelos(a) P. R. Vagelos
</TABLE>

- ---------------
(a) Chairman (b) Vice Chairman

5
<PAGE> 9

The Executive Committee, among its varied functions, is charged with making
recommendations with respect to Board composition and acting as a screening and
nominating committee for candidates considered for election to the Board. In
this capacity it concerns itself with the composition of the Board with respect
to depth of experience, balance of professional interests, required expertise
and other factors and evaluates prospective nominees identified by the Committee
on its own initiative or referred to it by the other Board members, management,
stockholders or external sources. Names of prospective candidates may be
submitted to the Secretary of the Company for referral to the Committee. Any
stockholder who wishes to make a nomination at an annual or special meeting for
the election of directors must do so in compliance with procedures set forth in
the Company's By-Laws.

Other important functions of the Executive Committee are acting for the
Board of Directors when action is required between Board meetings, consulting
with and advising management on certain important proposals and policy matters,
reviewing and making recommendations with respect to financial policy, and
monitoring management and Company performance with respect to matters of public
responsibility and interest concerning the Company and making recommendations
thereon.

The Audit Committee, consisting entirely of independent directors, oversees
the Company's financial reporting process and internal controls. The Committee
consults with management, the internal auditors and the Company's independent
auditors during the year on matters related to the annual audit, internal
controls, the published financial statements, and the accounting principles and
auditing procedures being applied. It meets with the auditors after year-end to
discuss the results of their examination. The Committee reviews management's
evaluation of the auditors' independence, approves audit fees and non-audit
services to ensure no compromise of auditor independence and submits to the
Board of Directors its recommendations for the appointment of an audit firm for
the upcoming year. It reviews the insurance program of the Company periodically
and makes recommendations to the Board of Directors on insurance policy and is
also charged with monitoring compliance with the Foreign Corrupt Practices Act
and the Company's policies on ethical business practices and reporting on the
same to the Board of Directors annually.

The Compensation and Benefits Committee, consisting entirely of independent
directors, administers the Company's Executive Incentive Plan and stock option
and incentive program and also appoints and monitors the Management Pension
Investment Committee. The Committee consults generally with management on
matters concerning executive compensation and on pension, savings and welfare
benefit plans where Board or stockholder action is contemplated with respect to
the adoption of or amendments to such plans. It makes recommendations to the
Board of Directors on organization, succession and compensation generally,
individual salary rates, supplemental compensation and special awards, the
election of officers, consultantships and similar matters where Board approval
is required.

The Committee on Treasury Stock, in accordance with directions given by the
Board of Directors, authorizes the purchase by the Company of outstanding shares
of Company stock out of retained earnings of the Company. Such purchases are
made from time to time under regulations determined by the Committee.

BOARD AND BOARD COMMITTEE MEETINGS

In the year 1993, there were ten meetings held by the Board of Directors.
Board committees met as follows during 1993: the Executive Committee, seven
times; the Audit Committee, three times; the Compensation and Benefits
Committee, six times; the Committee on Treasury Stock, once. The total combined
attendance for all Board and Committee meetings was 94%. All directors attended
at least 75% of the meetings of the Board and of the Committees on which they
served.

FAMILY RELATIONSHIPS

No family relationship exists between any of the directors or executive
officers of the Company except that Martin J. Wygod and Paul C. Suthern,
President and Chief Operating Officer of Medco, are brothers-in-law.

6
<PAGE> 10

RELATIONSHIPS WITH OUTSIDE FIRMS

Dennis Weatherstone is Chairman of the Boards and Executive Committees of
J. P. Morgan & Co. Incorporated and Morgan Guaranty Trust Company, which
performed commercial and investment banking services for the Company during 1993
and which are expected to perform such services for the Company during 1994.

COMPENSATION OF DIRECTORS

Each director who is not an employee of the Company is compensated for
services as a director by an annual retainer of $38,000 and a meeting fee of
$1,200 for each Board and Committee meeting attended. In addition, Chairmen of
the Compensation and Benefits Committee and of the Audit Committee are
compensated for such service by an annual retainer of $3,000 and the Chairman of
the Committee on Treasury Stock is compensated for such service by an annual
retainer of $1,000. Those directors who are employees of the Company do not
receive any compensation for their services as directors. The Company reimburses
all directors for travel and other necessary business expenses incurred in the
performance of their services for the Company.

Under the Plan for Deferred Payment of Directors Compensation, each
director may elect to defer all or a portion of such compensation. Any amount so
deferred is, at the director's election, valued as if invested in a money market
fund or the Company's Common Stock and is payable in cash in installments or as
a lump-sum upon termination of services as a director.

Under the Retirement Plan for the Directors of Merck & Co., Inc., directors
(excluding those who are current or former employees of the Company) who have
served on the Board for five years will receive, upon normal retirement
(generally age 70), an annual retirement benefit of 50% of their last annual
retainer. Each additional year of service up to ten years increases the benefit
by 10%, to a maximum of 100% of the retainer. Any such directors who have served
on the Board for ten years will receive, in the event of early retirement
(minimum age 65), an annual benefit of 100% of their last annual retainer. The
applicable benefit is payable for the lifetime of the retired director.

Under the Non-Employee Directors Stock Option Plan, directors (excluding
those who are current or former employees of the Company) each receive an option
to purchase 1,000 shares of Common Stock each year on the first Friday following
the Company's Annual Meeting of Stockholders. The options become exercisable
five years from date of grant and expire ten years from date of grant. The
exercise price is the higher of (i) the simple average of the high and low
prices at which the Common Stock is traded on the date of grant, or (ii) the
price of the last sale of Common Stock on that date. The exercise price is
payable in cash at the time the stock option is exercised.

7
<PAGE> 11

SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

Beneficial ownership of Common Stock of the Company and its subsidiaries as
of December 31, 1993 by each director of the Company, each executive officer of
the Company named in the Summary Compensation Table herein and by all directors
and executive officers as a group is set forth below. Unless otherwise stated,
the beneficial owners exercise sole voting and/or investment power over their
shares.

The Company

<TABLE>
<CAPTION>
COMPANY COMMON STOCK
-----------------------------------
RIGHT TO ACQUIRE
OWNERSHIP UNDER
NAME OF OPTIONS EXERCISABLE PERCENT
BENEFICIAL OWNER SHARES OWNED WITHIN 60 DAYS OF CLASS
- ------------------------------------------------------ ------------ ------------------- --------
<S> <C> <C> <C>
P. Roy Vagelos........................................ 854,203(a) 1,671,678 *
H. Brewster Atwater, Jr............................... 1,500 - *
Derek Birkin.......................................... 512 - *
Lawrence A. Bossidy................................... 10,000 - *
William G. Bowen...................................... 10,800 - *
Carolyne K. Davis..................................... 670(b) - *
Lloyd C. Elam......................................... 6,750 - *
Charles E. Exley, Jr.................................. 1,500 - *
William N. Kelley..................................... 100 - *
Dennis Weatherstone................................... 4,124 - *
Martin J. Wygod....................................... 1,792,956(c) 473,466(d) *
Jerry T. Jackson...................................... 51,877(e) 198,000 *
Judy C. Lewent........................................ 54,694(f) 122,700 *
Edward M. Scolnick.................................... 48,464(g) 246,000 *
Francis H. Spiegel, Jr................................ 390,271(h) 279,000 *
John L. Zabriskie**................................... 57,182(i) 257,850 *
All Directors and Executive Officers as a Group....... 3,373,854(j) 4,015,748 *
</TABLE>

- ---------------

(a) Includes 2,979 shares of Common Stock held by the Trustee of the Employee
Savings and Security Plan for the account of Dr. Vagelos and 28,000 shares
held by a charitable foundation of which Dr. Vagelos is trustee and has
voting and dispositive power. Does not include 49,030 shares of Common
Stock held by members of Dr. Vagelos' family and in which beneficial
ownership is disclaimed by him.

(b) Includes 40 shares of Common Stock held by Dr. Davis in custody for a
grandchild.

(c) Includes 1,165 shares of Common Stock held by the Trustee of the Medco
401(k) Savings Plan for the account of Mr. Wygod and 15,747 and 66,962
shares of Common Stock, respectively, owned by two charitable foundations
of which Mr. Wygod is a trustee and shares voting and dispositive power.
Does not include 5,072 shares of Common Stock held by Mr. Wygod's spouse in
which beneficial ownership is disclaimed by him.

(d) Includes 121,401 shares of Common Stock which a charitable foundation, of
which Mr. Wygod is a trustee and shares voting and dispositive power, has a
right to acquire within 60 days.

(e) Includes 6,722 shares of Common Stock held by the Trustee of the Employee
Savings and Security Plan for the account of Mr. Jackson.

(f) Includes 1,942 shares of Common Stock held by the Trustee of the Employee
Savings and Security Plan for the account of Ms. Lewent.

(g) Includes 1,384 shares of Common Stock held by the Trustee of the Employee
Savings and Security Plan for the account of Dr. Scolnick. Does not include
14,000 shares held by Dr. Scolnick's spouse in which beneficial ownership
is disclaimed by him.

8
<PAGE> 12

(h) Includes 30,845 shares of Common Stock held by the Trustee of the Employee
Savings and Security Plan for the account of Mr. Spiegel. Does not include
18,000 shares of Common Stock held by members of Mr. Spiegel's family and
in which beneficial ownership is disclaimed by him.

(i) Includes 1,262 shares of Common Stock held by the Trustee of the Employee
Savings and Security Plan for the account of Dr. Zabriskie. Does not
include 109 shares held by Dr. Zabriskie's spouse in which beneficial
ownership is disclaimed by him.

(j) Includes 64,380 shares of Common Stock held by the Trustees of the Employee
Savings and Security Plan and the Medco 401(k) Savings Plan for the
accounts of all eligible directors and executive officers. Does not include
86,516 shares of Common Stock held by family members and in which
beneficial ownership is disclaimed.

* Less than one percent of the Company's outstanding shares of Common Stock.

** Dr. Zabriskie was not an executive officer at the end of the last complete
fiscal year.

Synetic

Mr. Wygod owns 162,452 shares of Synetic common stock (does not include
2,000 shares held by his spouse in which he disclaims beneficial ownership) and
has the right to acquire an additional 114,510 shares of common stock within 60
days upon exercise of options or conversion of Synetic Convertible Subordinated
Debentures, together representing 1.6% of the class of Synetic common stock. All
directors and executive officers of the Company as a group beneficially own an
aggregate of 289,252 shares of Synetic common stock (not including 2,000 shares
held by family members in which beneficial ownership is disclaimed) and have the
right to acquire an additional 239,310 shares of common stock within 60 days
upon exercise of options or conversion of Synetic Convertible Subordinated
Debentures, together representing 2% of the class of Synetic common stock.

MMG

Mr. Wygod owns 603,227 shares of MMG common stock (including an aggregate
of 375,211 shares owned beneficially by five charitable remainder trusts of
which Mr. Wygod or his spouse are trustees; and an aggregate of 163,312 shares
held by two foundations as to which Mr. Wygod shares voting and dispositive
power but has no pecuniary interest and disclaims beneficial ownership; does not
include an aggregate of 600,000 shares held by two trusts as to which Mr. Wygod
has a pecuniary interest but has no voting or dispositive power) representing
4.8% of the class of MMG common stock. All directors and executive officers of
the Company as a group own 1,306,353 shares of MMG common stock (not including
10,000 shares held by family members in which beneficial ownership is
disclaimed) and have the right to acquire an additional 166,037 shares of common
stock within 60 days upon exercise of options, together representing 10.4% of
the class of MMG common stock.

9
<PAGE> 13

COMPENSATION AND BENEFITS COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The Compensation and Benefits Committee of the Board approves compensation
objectives and policy for all employees and sets compensation for the Company's
executive officers, including the individuals named in the Summary Compensation
Table below.

The Compensation and Benefits Committee is comprised entirely of
independent outside directors.

OBJECTIVES AND POLICIES

The Compensation and Benefits Committee seeks to:

- provide rewards which are closely linked to Company, team and individual
performance

- align the interests of the Company's employees with those of its
stockholders through potential stock ownership

- ensure that compensation and benefits are at levels which enable the
Company to attract and retain the high-quality employees it needs

The Committee applies these objectives and policies to most employees
through the broad and deep availability of performance-based cash incentive
opportunities and stock option grants.

Consistent with these objectives and in keeping with the long-term focus
required for the Company's research-based pharmaceutical business, it is the
policy of the Compensation and Benefits Committee to make a high proportion of
executive officer compensation and awards under stock ownership programs
dependent on long-term performance and on enhancing stockholder value.

Executive officer compensation and stock ownership programs have both
short-term and longer-term components. Short-term components include base salary
and annual bonus under the stockholder-approved Executive Incentive Plan
("EIP"). Longer-term components include stock option awards under the
stockholder-approved Incentive Stock Plan ("ISP") and awards of Performance
Shares under the Strategic Performance Feature of the EIP or the ISP.
Performance Share awards currently provide for a payment of stock at the end of
a five-year period, based on the Company's achievement of specified performance
targets.

The Company employs a formal system for developing measures of and
evaluating executive officer performance.

Provided that other compensation objectives are met, it is the Committee's
intention that executive compensation be deductible for federal income tax
purposes. For this reason, at this meeting it is recommended that stockholders
approve compensation plans which have been amended to comply with new
legislation on tax deductibility which is effective for the 1994 tax year.

BASE SALARY AND BONUS

Executive officer base salary and individual bonus awards are determined
with reference to Company-wide, divisional and individual performance for the
previous fiscal year, based on a wide range of quantitative and qualitative
measures which permit comparisons with competitors' performance and internal
targets set before the start of each fiscal year. The quantitative measures for
1993 were earnings and sales growth, return-on-equity and return-on-assets.
Qualitative assessments were the quality and measured progress of research,
marketing, manufacturing and administrative operations and the success of
strategic actions such as the formation of marketing and research alliances. For
1993, the most notable strategic action was the merger with Medco to create the
first coordinated pharmaceutical care company. In addition to Company-wide
measures of performance, the Compensation and Benefits Committee considers those
performance factors particular to each executive officer: the performance of the
division or divisions for which such officer had management responsibility and
individual managerial accomplishments.

10
<PAGE> 14

The Committee relies heavily, but not exclusively, on these quantitative
and qualitative measures. It exercises subjective judgment and discretion in the
light of these measures and in view of the Company's compensation objectives and
policies described above to determine base salaries, overall bonus funds and
individual bonus awards.

In 1993, to ensure that cost structures remain competitive, management took
a number of initiatives on staffing and costs, including offering voluntary
retirement incentive programs. As part of those actions, the Committee accepted
management's recommendation that the base salary rates of seven executive
officers (including the executive officers named in the Summary Compensation
Table) be reduced by 10% effective April 1, 1993. These reductions followed
increases awarded on January 1, 1993 to the named executive officers, excluding
Dr. Vagelos. These increases had recognized both performance and revised
responsibilities. A 5% reduction in base salary rates effective April 1, 1993
was made for an additional group of seventeen executives. The bonus awards made
to the named executive officers, other than the Chief Executive Officer, were
also reduced by 20% overall from the level paid for 1992. The Committee judged
that these actions appropriately reflected individual contributions and the
Company's overall performance which remained strong, but below the demanding
internal and competitive targets set for the year. An explanation of the bonus
award made to the Chief Executive Officer is included in the discussion of his
compensation below.

STOCK OPTIONS

Within the total number of shares authorized by stockholders, the
Compensation and Benefits Committee aims to provide stock option awards broadly
and deeply throughout the organization. In support of this objective, a
worldwide stock option grant to employees was approved. On October 20, 1993,
employees worldwide received a stock option grant to purchase 300 shares of
Company Common Stock at an exercise price of $32.50, the fair market value on
that date. The option first becomes exercisable on October 20, 1998 and expires
on October 19, 2003.

Individual executive officer stock option awards are based on level of
position, individual contribution and the Company's stock ownership objectives
for executives. The Committee also considers stock option grants previously made
and the aggregate of such grants. As with the determination of base salaries and
bonus awards, the Committee exercises subjective judgment and discretion in view
of the above criteria and its general policies. The Company's long-term
performance ultimately determines compensation from stock options, since stock
option value is entirely dependent on the long-term growth of the Company's
stock price.

STRATEGIC PERFORMANCE FEATURE

AWARDS

Performance Shares under the Strategic Performance Feature are awarded to
executive officers based on the same factors as stock option grants. While
Performance Share awards are currently payable in stock, the Compensation and
Benefits Committee reserves the right to pay Performance Share awards in cash,
stock, or a combination of cash and stock. Just as for stock options, the
ultimate value of the Performance Shares is dependent on the Company's long-term
performance. In 1993, Performance Share awards were made for the 1993-1997 award
period. Any payouts thereunder will be made in 1998.

PAYOUTS

In 1993, payouts were made under the 1988-1992 award cycle of the Strategic
Performance Feature. Payouts for that cycle were made in cash. The current
practice of making Performance Share awards was started in 1989 for the
1989-1993 award period, and any payouts thereunder will be made in 1994.

11
<PAGE> 15

The level of payouts in 1993 to executive officers under the Strategic
Performance Feature resulted from the Company's sustained outstanding
competitive performance over the five-year period ending in 1992. The Committee
considered three quantitative measures: earnings-per-share-growth, sales growth
and return-on-assets in comparison with a group of healthcare companies selected
in 1988. This group includes eight out of the nine companies in the Dow Jones
Pharmaceutical Index (DJPI) other than the Company as well as Abbott
Laboratories and SmithKline Beecham PLC. The Committee also considered
return-on-assets performance against eleven other companies identified as growth
companies at the beginning of the period, and made individual payments using its
subjective judgment and discretion.

COMPENSATION OF THE CHIEF EXECUTIVE OFFICER

The Compensation and Benefits Committee believes that Dr. Vagelos' 1993
compensation as Chief Executive Officer appropriately reflects the performance
of the Company and his personal contributions in the short and longer term.

In 1992, the Committee decided that, in conjunction with a special one-time
stock option grant to Dr. Vagelos, it would not grant him further increases to
base salary or make further annual stock option grants to him. The Committee
recognized that he would reach the Company's mandatory retirement age in 1994.
In 1993, the Committee continued the implementation of those decisions, and no
annual stock option grant was made to Dr. Vagelos. However, the Committee
accepted Dr. Vagelos' recommendation that his own base salary be reduced by 10%
effective April 1, 1993 in line with other senior executive officers.

Using the quantitative and qualitative measures described above for
executive officers as a group, the Committee made a bonus award for 1993 to Dr.
Vagelos which was 14% less than for 1992. The Committee exercised its judgment
in determining this amount, which was endorsed by the full Board. It took into
account the completion of the Medco acquisition as well as the Company's
performance in 1993.

The Performance Share award and the Strategic Performance Feature payout
made to Dr. Vagelos in 1993 followed the same principles as those described for
executive officers.

The Company periodically retains outside compensation and benefits
consultants to compare base salary and incentive compensation programs for the
Company's executive officers with those of other leading industrial and
healthcare firms (including those in the DJPI) and to ensure that they are
appropriate to the Company's objectives. The Committee exercises judgment and
discretion in the information it reviews and the analyses it considers.

The Performance Graph on page 19, covering a five-year period ending on
December 31, 1993, shows that the Company had a compound annual growth rate of
total stockholder return (including dividends) of 15% in comparison with 15% for
both the DJPI and the Standard & Poor's 500 Index. Over the ten-year period
ending on December 31, 1993, the compound annual growth rate of total
stockholder return (with estimated dividends for the DJPI prior to December 31,
1987) was 24% for the Company, 19% for the DJPI and 15% for the Standard &
Poor's 500 Index.

<TABLE>
<S> <C>
H. Brewster Atwater, Jr. Richard S. Ross
Chairman Vice Chairman
Lawrence A. Bossidy William G. Bowen
Ruben F. Mettler
</TABLE>

12
<PAGE> 16

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------------------------------
ANNUAL COMPENSATION AWARDS
------------------------------------------------ ----------------------------------- PAYOUTS
OTHER RESTRICTED ----------
NAME AND ANNUAL STOCK SECURITIES UNDERLYING LTIP ALL OTHER
PRINCIPAL SALARY BONUS COMPENSATION AWARD(S) OPTIONS/SARS(d) PAYOUTS COMPENSATION
POSITION YEAR ($) ($) ($) ($) (#) ($) ($)
- --------- ---- ---------- ---------- ------------ ---------- --------------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
P. Roy 1993 $1,040,625 $1,200,000 $ - - 300 $1,303,200(f) $5,895(h)
Vagelos 1992 1,125,000 1,400,000 - - 680,000(e) - 5,721
1991 1,052,083 1,300,000 * - 180,300 992,400(g) *
Chairman
of the
Board,
President
and Chief
Executive
Officer

Edward M. 1993 555,000 500,000 78,861(b) - 110,300 401,700(f) 3,433(h)
Scolnick 1992 540,000 650,000 102,983(c) - 54,000 - 3,433
1991 487,500 510,000 * - 36,300 285,200(g) *
Executive
Vice
President,
Science
and
Technology
and
President,
Merck
Research
Labora-
tories

Francis 1993 555,000 500,000 - - 110,300 400,000(f) 5,616(h)
H. 1992 540,000 650,000 - - 54,000 - 5,616
Spiegel, 1991 487,500 580,000 * - 54,300 263,300(g) *
Jr.

Executive
Vice
President

Jerry T. 1993 531,876 480,000 - - 110,300 322,000(f) 5,721(h)
Jackson 1992 471,250 565,000 124,629(c) - 54,000 - 5,721
1991 405,000 490,000 * - 54,300 186,000(g) *
Executive
Vice
President

Judy C. 1993 305,250 280,000 77,718(b) - 60,300 - 5,876(h)
Lewent 1992 287,500 345,000 - - 31,500 - 5,721(h)
Senior 1991 237,500 275,000 * - 31,800 - *
Vice
President
and
Chief
Financial
Officer

John L. 1993 591,589(a) 450,000 - - 110,300 282,300(f) 9,973(i)
Zabriskie** 1992 471,250 565,000 - - 54,000 - 7,694(i)
1991 405,000 490,000 * - 54,300 - *
Executive
Vice
President
and
President,
Merck
Manufacturing
Division
</TABLE>

- ---------------

(a) Includes $59,713 representing payment in lieu of accrued vacation.

(b) Air commuting services in 1993 were $55,825 for Dr. Scolnick and $77,718 for
Ms. Lewent.

(d) No stock appreciation rights were granted. Options have been adjusted to
reflect the Company's 3-for-1 stock split on May 6, 1992.

(e) Includes a special, one-time grant of an option to purchase 500,000 shares
made to Dr. Vagelos on July 28, 1992 in lieu of future annual option grants
and in lieu of base salary increases after August 1991. This special option
will become exercisable on July 28, 1997.

(f) EIP Strategic Performance Feature payout in 1993 for services performed
during the five-year award cycle 1988-1992. Under the Strategic Performance
Feature of the EIP, awards were paid out in cash every other year following
completion of five-year award cycles. Awards for the last five-year cycle
(1988-1992) payable in cash only were paid out in 1993. From 1989 to 1993,
Performance Share awards were made annually under the Company's ISP. These
Performance Shares are payable in the year after completion of a five-year
award period, with the first payout in 1994. While Performance Shares are
currently payable in stock, the Compensation and Benefits Committee reserves
the right to pay out Performance Shares in cash, stock or a combination of
cash and stock.

(g) EIP Strategic Performance Feature payout for services performed during the
five year award cycle 1986-1990.

(h) Company contributions to the Employee Savings and Security Plan.

(i) Company contributions to the Employee Savings and Security Plan totalled
$5,719 in 1992 and $5,896 in 1993. Company-paid premium for survivor income
insurance totalled $1,975 in 1992 and $4,077 in 1993.

* In accordance with transitional provisions applicable to the revised rules
for executive compensation disclosure adopted by the Securities and Exchange
Commission, amounts of Other Annual Compensation and All Other Compensation
are not included for 1991.

** Dr. Zabriskie was not an executive officer at the end of the last complete
fiscal year.

13
<PAGE> 17

The following table sets forth stock options granted in 1993 to each of the
Company's executive officers named in the Summary Compensation Table and to all
employees as a group. The Company did not issue any stock appreciation rights.
The table also sets forth the hypothetical gains that would exist for the
options at the end of their ten-year terms, assuming compound rates of stock
appreciation of 0%, 5% and 10%. The actual future value of the options will
depend on the market value of the Company's Common Stock. All option exercise
prices are based on market price on the date of grant.

OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------------
NUMBER OF PERCENT
SECURITIES OF TOTAL POTENTIAL REALIZABLE VALUE
UNDERLYING OPTIONS/ AT ASSUMED ANNUAL RATES
OPTIONS/ SARS OF STOCK PRICE APPRECIATION
SARS GRANTED TO EXERCISE OR FOR OPTION TERM(b)
DATE OF GRANTED EMPLOYEES IN BASE PRICE EXPIRATION --------------------------------------
NAME GRANT (#) FISCAL YEAR ($/SH) DATE 0% ($) 5% ($) 10% ($)
- ------------------- -------- ---------- ------------ ----------- ---------- ------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
P. Roy Vagelos..... 10/20/93 300 - $32.500 10/19/03 - $ 6,132 $ 15,539

Edward M.
Scolnick......... 2/23/93 110,000 0.72% 37.750 2/22/03 - 2,611,485 6,618,016
10/20/93 300 - 32.500 10/19/03 - 6,132 15,539

Francis H. Spiegel,
Jr............... 2/23/93 110,000 0.72% 37.750 2/22/03 - 2,611,485 6,618,016
10/20/93 300 - 32.500 10/19/03 - 6,132 15,539

Jerry T. Jackson... 2/23/93 110,000 0.72% 37.750 2/22/03 - 2,611,485 6,618,016
10/20/93 300 - 32.500 10/19/03 - 6,132 15,539

Judy C. Lewent..... 2/23/93 60,000 0.39% 37.750 2/22/03 - 1,424,446 3,609,827
10/20/93 300 - 32.500 10/19/03 - 6,132 15,539

John L.
Zabriskie........ 2/23/93 110,000 0.72% 37.750 * - 2,611,485 6,618,016
10/20/93 300 - 32.500 * - 6,132 15,539

All employees as a
group............ (a) 15,289,077 100% (a) (a) - 329,898,142(c) 836,026,664(c)
---------------
</TABLE>

<TABLE>
<CAPTION>
0% 5% 10%
------ ------------ ------------
<S> <C> <C> <C>
Total potential stock price appreciation from February 23, 1993 to February 22,
2003 for all stockholders at assumed rates of stock price appreciation(d)...... - $29,769,378,017 $75,441,448,753
Potential realizable value of options granted to all employees at the end of
their ten-year option terms as a percentage of total potential stock price
appreciation from February 23, 1993 to February 22, 2003 for all stockholders
at assumed rates of stock price appreciation................................... - 1.11% 1.11%
</TABLE>

- ---------------
(a) Options were granted on January 4, 1993; February 23, 1993; April 30, 1993;
August 2, 1993, and October 20, 1993, with prices ranging from $30.750 to
$44.000. Options granted January 4, 1993; February 23, 1993; August 2,
1993, and October 20, 1993, become exercisable on January 4, 1998; February
23, 1996; April 30, 1998; August 2, 1998, and October 20, 1998,
respectively. (The October 20, 1993 grant was a grant made to all employees
under the Merck Worldshares Program.) Expiration is ten years from the date
of grant.

(b) These amounts, based on assumed appreciation rates of 0% and the 5% and 10%
rates prescribed by the Securities and Exchange Commission rules are not
intended to forecast possible future appreciation, if any, of the Company's
stock price. The Company did not use an alternative formula for a grant
date valuation as it is not aware of any formula which will determine with
reasonable accuracy a present value based on future unknown or volatile
factors.

(d) Based on a price of $37.50 on February 23, 1993 and a total of 1,253,934,700
shares of Common Stock outstanding.

* The shares underlying the options granted to Dr. Zabriskie on February 23
and October 20, 1993 were restored to the Company upon his resignation.

14
<PAGE> 18

The following table sets forth the number of shares acquired on exercise of
stock options and the aggregate gains realized on exercise in 1993 by the
Company's executive officers named in the Summary Compensation Table. The table
also sets forth the number of shares covered by exercisable and unexercisable
options held by such executives on December 31, 1993 and the aggregate gains
that would have been realized had these options been exercised on December 31,
1993, even though these options were not exercised, and the unexercisable
options could not have been exercised, on December 31, 1993. The Company did not
issue stock appreciation rights.

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES

<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
SECURITIES UNDERLYING IN-THE-MONEY
OPTIONS/SARS
UNEXERCISED OPTIONS/SARS AT AT FISCAL YEAR END(b)
SHARES ACQUIRED VALUE FY-END (#) ($)
ON EXERCISE REALIZED(a) --------------------------- ---------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------------------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
P. Roy Vagelos........................ - - 1,671,678 560,600 $15,560,458 $ 898,043
Edward M. Scolnick.................... - - 246,000 110,600 1,655,172 563
Francis H. Spiegel, Jr................ - - 279,000 110,600 1,361,916 563
Jerry T. Jackson...................... - - 198,000 110,600 690,264 563
Judy C. Lewent........................ - - 122,700 60,600 556,513 563
John L. Zabriskie..................... - - 257,850 110,600 1,578,962 563
</TABLE>

- ---------------

<TABLE>
<S> <C>
(a) Market value on the date of exercise of shares covered by options exercised, less option
exercise price.
(b) Market value of shares covered by in-the-money options on December 31, 1993, less option
exercise price. Options are in-the-money if the market value of the shares covered thereby
is greater than the option exercise price.
</TABLE>

The following table sets forth the Performance Share awards made in 1993
under the Strategic Performance Feature of the Company's ISP to each of the
executive officers named in the Summary Compensation Table. Performance Shares
currently provide for a payment of stock (though the Compensation and Benefits
Committee reserves the right to pay out awards in cash, stock or a combination
of cash and stock) at the end of a five-year period, based on the Company's
achievement of specified performance targets at the end of the period as
compared to a group of other leading healthcare companies chosen by the
Compensation and Benefits Committee of the Board at the start of the period. Any
payout of 1993 Performance Share awards will be made in 1998.

LONG-TERM INCENTIVE PLANS AWARDS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
NUMBER OF PERFORMANCE
SHARES, OR OTHER ESTIMATED FUTURE PAYOUTS UNDER NON-STOCK PRICE BASED PLANS
UNITS OR PERIOD -------------------------------------------------------------
OTHER UNTIL BELOW
RIGHTS(a) MATURATION THRESHOLD THRESHOLD(b) TARGET MAXIMUM(b)
NAME (#) OR PAYOUT ($ OR #) ($ OR #) ($ OR #) ($ OR #)
- -------------------------------- ---------- ----------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
P. Roy Vagelos.................. 13,000 5 years - #3,250 #13,000 #22,750
Edward M. Scolnick.............. 7,500 5 years - 1,875 7,500 13,125
Francis H. Spiegel, Jr.......... 7,500 5 years - 1,875 7,500 13,125
Jerry T. Jackson................ 7,500 5 years - 1,875 7,500 13,125
Judy C. Lewent.................. 4,000 5 years - 1,000 4,000 7,000
John L. Zabriskie............... 7,500 5 years - 1,875 7,500 13,125
</TABLE>

- ---------------

(a) Represents target Performance Share Awards under the Strategic Performance
Feature of the ISP for the 1993-1997 award period. Actual number of shares
to be paid out at the end of this five-year period will be based on the
Company's performance ranking for earnings-per-share growth and
return-on-assets versus a group of leading healthcare companies chosen at
the beginning of the period. This group includes eight out of the nine
companies in the DJPI other than the Company as well as Abbott
Laboratories, SmithKline Beecham PLC and Glaxo Holdings p.l.c. The closing
price of the Company's Common Stock on the New York Stock Exchange at the
start of the award period was $43.75.

(b) Threshold represents 25% of target. Maximum represents 175% of target. No
payout will be made unless the Company achieves the median performance
level in comparison with the leading healthcare companies described in note
(a) above.

15
<PAGE> 19

The following table sets forth the estimated annual benefits payable under
the Retirement Plan for Salaried Employees and certain provisions of the
Supplemental Retirement Plan at age 65 to persons in specified compensation and
years-of-service classifications, based on a straight-life annuity form of
retirement income.

PENSION PLAN TABLE

<TABLE>
<CAPTION>
REMUNERATION
(AVERAGE PENSION COMPENSATION
DURING HIGHEST FIVE YEARS OF SERVICE
CONSECUTIVE YEARS (ESTIMATED ANNUAL RETIREMENT BENEFITS FOR
IN THE LAST TEN YEARS OF CREDITED SERVICE SHOWN BELOW*)
YEARS BEFORE ----------------------------------------------------------------
RETIREMENT) 15 20 25 30 35
- ------------------------------- -------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
$ 800,000................... $240,000 $ 320,000 $ 400,000 $ 480,000 $ 560,000
1,000,000................... 300,000 400,000 500,000 600,000 700,000
1,200,000................... 360,000 480,000 600,000 720,000 840,000
1,400,000................... 420,000 560,000 700,000 840,000 980,000
1,600,000................... 480,000 640,000 800,000 960,000 1,120,000
1,800,000................... 540,000 720,000 900,000 1,080,000 1,260,000
2,000,000................... 600,000 800,000 1,000,000 1,200,000 1,400,000
2,200,000................... 660,000 880,000 1,100,000 1,320,000 1,540,000
2,400,000................... 720,000 960,000 1,200,000 1,440,000 1,680,000
2,600,000................... 780,000 1,040,000 1,300,000 1,560,000 1,820,000
2,800,000................... 840,000 1,120,000 1,400,000 1,680,000 1,960,000
3,000,000................... 900,000 1,200,000 1,500,000 1,800,000 2,100,000
</TABLE>

- ---------------
* Benefits shown above do not include minimum or enhanced pension provisions
under the Company's Supplemental Retirement Plan for bona fide executives and
are exclusive of the social security offset provided for by the benefit
formula.

As of December 31, 1993, full years of actual credited service in these
Plans are: Dr. Vagelos -- 18 years; Mr. Spiegel -- 27 years; Dr. Scolnick -- 11
years; Mr. Jackson -- 28 years; Dr. Zabriskie -- 28 years and Ms. Lewent -- 13
years.

Pension compensation for a particular year as used for the calculation of
retirement benefits includes salaries and annual EIP bonus awards received
during the year. Pension compensation for 1993 differs from compensation
reported in the Summary Compensation Table in that pension compensation includes
the annual EIP bonus awards received in 1993 for services in 1992 rather than
the EIP bonus awards paid in 1994 for services in 1993. Pension compensation for
1993 was $2,440,625 for Dr. Vagelos, $1,205,000 for Dr. Scolnick, $1,205,000 for
Mr. Spiegel, $1,096,876 for Mr. Jackson, $650,250 for Ms. Lewent and $1,156,589
for Dr. Zabriskie.

The Supplemental Retirement Plan is an unfunded plan providing benefits to
participants in certain retirement plans (the "primary plans") maintained by the
Company and its subsidiaries as follows: (1) benefits not payable by the primary
plans because of the limitations on benefits stipulated by the Internal Revenue
Code, (2) benefits not payable by the primary plans because of the exclusion of
deferred compensation from the benefit formulas of those plans ("supplemental
benefit"), (3) a minimum annual aggregate benefit under this Plan and the
primary plans of $50,000 on a straight-life annuity basis for the incumbents at
time of actual retirement in positions designated as bona fide executive or high
policymaking under the Company's Corporate Policy on Executive Retirement,
(which include all the named executive officers in the Summary Compensation
Table) reduced in the event of retirement or death prior to normal retirement
date and (4) for employees who have occupied such executive or policymaking
positions and who do not have 35 years of credited service, an enhanced benefit
payable upon retirement at age 65 (unless consent of the Compensation and
Benefits Committee of the Board is obtained for payment upon early retirement,
death or disability prior to 65). The enhanced benefit is an amount calculated
under the benefit formula in the primary plan using one additional month of
credited service for each month of credited service accrued during or prior to

16
<PAGE> 20

attainment of the designated position (up to the 35-year total) less (i) the
minimum benefit where applicable, or the supplemental benefit, (ii) the primary
plan benefit and (iii) any retirement benefit payable from a plan not sponsored
by the Company. The effect of the provisions of the Supplemental Retirement Plan
described in (1) and (2) in the preceding sentence are included in the Pension
Plan Table; the effect of the provisions described in (3) and (4) are not. In
general, other terms and conditions of benefit payment are determined by
reference to the provisions of the primary plans.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

H. Brewster Atwater, Jr., Lawrence A. Bossidy, William G. Bowen, Ruben F.
Mettler and Richard S. Ross served on the Compensation and Benefits Committee
during 1993.

Dr. Vagelos served on the Compensation and Stock Option Committee of the
Board of TRW Inc. until March 31, 1993. Dr. Ruben F. Mettler, a member of the
Compensation and Benefits Committee, is a Director and former Chairman of the
Board and Chief Executive Officer of TRW Inc.

EMPLOYMENT CONTRACTS AND ARRANGEMENTS

Under Martin J. Wygod's employment agreement with Medco, which became a
subsidiary of the Company in November 1993, (the "Wygod Employment Agreement"),
Mr. Wygod receives a base salary for his services as the Chairman of the Board
of Medco, currently payable at an annual rate of $800,000. The Wygod Employment
Agreement also provided for Mr. Wygod to receive additional compensation upon
certain circumstances, including a sale of Medco, in the amount of 1% of the
aggregate consideration payable to Medco's stockholders. As a result of the
acquisition of Medco by the Company (the "Merger"), Mr. Wygod was paid
$62,407,561.

In addition, in connection with the Merger, Mr. Wygod entered into a letter
agreement with Medco dated July 27, 1993 (the "Letter Agreement") to amend the
Wygod Employment Agreement. Under the Letter Agreement, Mr. Wygod agreed to
invest 54% of his additional compensation resulting from the acquisition of
Medco by the Company in shares of the Company's Common Stock to be purchased on
the open market. Such shares cannot be sold or transferred until November 18,
1996 or until the earlier termination of Mr. Wygod's employment under certain
circumstances. Under the Letter Agreement, Mr. Wygod also agreed to waive the
acceleration of vesting that would have otherwise occurred upon consummation of
the Merger with respect to options he held to purchase shares of Medco common
stock (which now represent options to purchase Company Common Stock) and options
to purchase shares of common stock of Synetic, which options will continue to
vest in accordance with the otherwise applicable vesting schedule. Any options
to which the above waiver applies will immediately vest and become exercisable
upon a subsequent termination of Mr. Wygod's employment under certain
circumstances.

The Wygod Employment Agreement also provides that in the event that Medco,
during the employment period, (i) issues rights to stockholders to purchase
shares of stock of a subsidiary of Medco, or (ii) distributes to its
stockholders shares of stock of a subsidiary of Medco, Mr. Wygod will be
entitled to 1% of the number of shares offered pursuant to such rights at the
same price offered to Medco's stockholders or to receive 1% of such shares
distributed, as the case may be.

The term of the Wygod Employment Agreement extends through December 31,
1997, unless terminated earlier in accordance with its terms. If Mr. Wygod's
employment is terminated by Medco for any reason, other than conviction of a
fraud or felony directed against Medco, or if Mr. Wygod terminates his
employment for cause, he has the right to be paid the balance of his base salary
for the term of the Wygod Employment Agreement.

Under an agreement with Synetic, Mr. Wygod agreed to seek to identify
possible acquisitions or business combinations for Synetic and to provide
related services. Mr. Wygod will receive a fee for any such transaction
presented to Synetic during the period ending May 19, 1994 and entered into by
Synetic, in the aggregate amount of 1% of the purchase price paid by Synetic in
connection with such

17
<PAGE> 21

transaction under certain circumstances. Mr. Wygod has been paid a fee of
$450,561 in connection with acquisitions by Synetic to date.

Mr. Wygod has the right to acquire all rights in an apartment leased by
Medco in the event the apartment is converted to cooperative or condominium
ownership. This apartment is currently used by Medco as an office and meeting
place in connection with Mr. Wygod's duties. In the event of any such
conversion, Mr. Wygod would be required to pay Medco an amount equal to 125% of
the depreciated value of certain furniture, fixtures and leasehold improvements
related to such apartment.

In the event that Jerry T. Jackson elects to relinquish his duties as
Executive Vice President of the Company between January 1, 1995 and May 31,
1996, the Company has committed to pay Mr. Jackson a lump sum equal to one-half
his base pay then in effect and retain him as an employee until June 1, 1996. In
addition, in the event of such retirement on June 1, 1996, the Company will
increase Mr. Jackson's retirement income by an amount that is the actuarial
equivalent of 0.6 times his base pay in effect at the time he relinquishes his
duties as Executive Vice President.

18
<PAGE> 22

PERFORMANCE GRAPHS

FIVE-YEAR TOTAL RETURN

The following graph compares the cumulative total stockholder return (stock
price appreciation plus dividends) on the Company's Common Stock with the
cumulative total return of the S&P 500 Index and the Dow Jones Pharmaceutical
Index ("DJPI") for the five years ending December 31, 1993. Amounts below have
been rounded to the nearest dollar or percent.

COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
MERCK & CO., INC., DOW JONES PHARMACEUTICAL INDEX AND S&P 500 INDEX

<TABLE>
<CAPTION>
1993/1988
12/31/93 VALUE CAGR**
-------------- ---------------
<S> <C> <C>
Merck................................ $201 15%
DJPI................................. 202 15
S&P 500.............................. 197 15
</TABLE>

<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) MERCK DJPI S&P 500
<S> <C> <C> <C>
1988 100 100 100
1989 137 145 132
1990 163 170 127
1991 309 266 166
1992 246 218 179
1993 201 202 197
</TABLE>

* ASSUMES THAT THE VALUE OF THE INVESTMENT IN COMPANY COMMON STOCK AND EACH
INDEX WAS $100 ON DECEMBER 31, 1988 AND THAT ALL DIVIDENDS WERE REINVESTED.
** COMPOUND ANNUAL GROWTH RATE.

19
<PAGE> 23

TEN-YEAR TOTAL RETURN

The following graph compares the cumulative total stockholder return (stock
price appreciation plus dividends) on the Company's Common Stock with the
cumulative total return of the S&P 500 Index and the DJPI* for the ten years
ending December 31, 1993. The Company has presented ten-year data to provide a
longer time perspective in line with its primary business of discovering,
developing, producing and marketing pharmaceutical products and services.
Amounts below have been rounded to the nearest dollar or percent.

COMPARISON OF TEN-YEAR CUMULATIVE TOTAL RETURN**
MERCK & CO., INC., DOW JONES PHARMACEUTICAL INDEX AND S&P 500 INDEX

<TABLE>
<CAPTION>
1993/1983
12/31/93 VALUE CAGR***
-------------- ----------------
<S> <C> <C>
Merck............................... $873 24%
DJPI................................ 581 19
S&P 500............................. 400 15
</TABLE>

<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Merck DJPI S&P 500
<S> <C> <C> <C>
1983 100 100 100
1984 108 113 106
1985 161 167 140
1986 298 232 166
1987 387 251 174
1988 434 288 203
1989 596 418 267
1990 709 488 259
1991 1338 765 338
1992 1068 626 363
1993 873 581 400
</TABLE>

* AGGREGATE DIVIDEND DATA FOR THE DJPI IS NOT AVAILABLE FOR YEARS PRIOR TO
DECEMBER 31, 1987. THE COMPANY HAS ESTIMATED AGGREGATE DIVIDENDS FOR THIS
PERIOD IN ORDER TO CALCULATE A TOTAL RETURN FOR THE DJPI. DIVIDENDS FOR THE
DJPI FOR THE PERIOD FROM DECEMBER 31, 1983 THROUGH DECEMBER 31, 1987 WERE
ESTIMATED BY CALCULATING THE ACTUAL ANNUAL DIVIDEND RETURNS FOR EACH COMPANY
IN THE DJPI FOR EACH YEAR DURING THIS PERIOD AND WEIGHTING THESE RETURNS
ACCORDING TO EACH SUCH COMPANY'S YEAR-END MARKET CAPITALIZATION.
** ASSUMES THAT THE VALUE OF THE INVESTMENT IN COMPANY COMMON STOCK AND EACH
INDEX WAS $100 ON DECEMBER 31, 1983 AND THAT ALL DIVIDENDS WERE REINVESTED.
*** COMPOUND ANNUAL GROWTH RATE.

2. RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS

The Board of Directors, upon recommendation of its Audit Committee,
composed of independent members of the Board, has appointed Arthur Andersen &
Co. as independent public accountants of the Company with respect to its
operations for the year 1994, subject to ratification by the holders of Common
Stock of the Company. In taking this action, the members of the Board and the
Audit Committee considered carefully Arthur Andersen's performance for the
Company in that capacity since its original retention in 1971, its independence
with respect to the services to be performed, and its general reputation for
adherence to professional auditing standards. Representatives of the firm will
be available at the Annual Meeting with the

20
<PAGE> 24

opportunity to make a statement if they desire to do so and to answer
appropriate questions that may be asked by stockholders.

There will be presented at the Annual Meeting a proposal for the
ratification of this appointment, which the Board of Directors believes is
advisable and in the best interests of the stockholders. If the appointment of
Arthur Andersen & Co. is not ratified, the matter of the appointment of
independent public accountants will be considered by the Board of Directors.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.

3. AMENDMENT OF THE
EXECUTIVE INCENTIVE PLAN

There will be presented to the meeting a proposal to amend the Company's
Executive Incentive Plan (the "EIP"). The EIP has been amended in order to
preserve for the Company the tax deduction for compensation paid thereunder, in
accordance with a recently enacted change to the Internal Revenue Code, to
reduce the number of Participants, and to permit the award of Company Common
Stock thereunder.

The proposed EIP, as amended, is set forth in Exhibit A. Primary aspects of
the EIP as proposed to be amended are as follows.

EXECUTIVE INCENTIVE PLAN

The EIP provides performance-based awards to employees who are subject to
Section 16 of the Securities Exchange Act of 1934 or are key employees in a
position to have a direct and significant impact on the Company's long term
objectives. There will be approximately 30 employees in the EIP in 1994. The EIP
is administered by the Compensation and Benefits Committee of the Board of
Directors.

The amount available for awards under the EIP in any calendar year (the
"Award Fund") is 2.5% of the Company's net income. If there is no net income, no
awards are paid. The maximum amount which may be awarded to any participant is
10% of the maximum Award Fund, but the Committee reserves the right to decrease
or eliminate an award to any participant. The EIP provides for payment of awards
in cash, in Company Common Stock or a combination of both. Awards paid in stock
shall be charged against the Award Fund using the average of the high and low
prices of Company Common Stock on the New York Stock Exchange Composite tape on
the date the award is paid or deferred. In determining awards, the Committee
will consider the short term and long term goals and performance of the Company
and the individual executive.

Before the beginning of each award year, each participant may elect that
all or part of the award for that year be deferred and distributed at a later
date under the Merck Deferral Program. Any awards not deferred are paid in cash
or Company Common Stock (as the Committee decides) as soon as feasible after
awards are determined.

The EIP is being amended to limit eligibility to a smaller group of senior
executives, which is consistent with the initial concept underlying the EIP when
it was first proposed to shareholders. Additionally, in order to ensure that
awards under the EIP continue to be tax-deductible to the Company, the EIP is
being amended to clarify the performance-based criterion on which awards are
determined. The EIP is also being amended to permit the award of Company Common
Stock thereunder. The amount of Company Common Stock to be issued each year
under the EIP may not exceed one-tenth of one percent of the outstanding shares
of Company Common Stock on the last business day of the preceding calendar year
plus shares authorized in previous years under the EIP but not utilized, offset
by any shares distributed under the Merck Deferral Program after April 26, 1994.

The EIP may be amended or discontinued by the Board of Directors or the
shareholders at any time subject to applicable law. However, no amendment may
materially adversely affect any award

21
<PAGE> 25

already made. Only shareholders may amend the EIP in a manner that substantially
increases its cost to the Company.

NEW PLAN BENEFITS

Annual cash EIP bonus awards to be issued in the future under the EIP
cannot be determined at this time. The Committee approved Performance Shares
under the EIP in February 1994, subject to the approval of the amended EIP by
the Company's stockholders at this Annual Meeting. Performance Shares will be
awarded under the EIP, rather than the ISP, in order to insure the tax
deductability of payments made thereunder to the Company. The following table
sets forth the annual cash EIP bonus awards that the individuals and groups
referred to below would have received in 1993 if the amendments to the EIP had
been in effect since the beginning of 1993 and the Performance Share awards that
the individuals and groups referred to below will receive in 1994 if the amended
EIP is approved by the Company's stockholders at this Annual Meeting.

EXECUTIVE INCENTIVE PLAN

<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
DOLLAR PERIOD -------------------------------------------
VALUE NUMBER UNTIL BELOW
NAME AND POSITION ($)(a) OF UNITS(b) PAYOUT THRESHOLD THRESHOLD(c) TARGET MAXIMUM(c)
- --------------------------- ---------------- ----------- ------- --------- ------------ ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
P. Roy Vagelos
Chairman of the Board,
President and Chief
Executive Officer........ $1,200,000 15,844 5 years - 3,961 15,844 27,727
Edward M. Scolnick
Executive Vice President,
Science and Technology
and President, Merck
Research Laboratories.... 500,000 9,141 5 years - 2,285 9,141 15,997
Francis H. Spiegel, Jr.
Executive Vice
President................ 500,000 9,141 5 years - 2,285 9,141 15,997
Jerry T. Jackson
Executive Vice
President................ 480,000 9,141 5 years - 2,285 9,141 15,997
Judy C. Lewent
Senior Vice President and
Chief Financial
Officer.................. 280,000 4,875 5 years - 1,219 4,875 8,531
John L. Zabriskie
Executive Vice President
and President, Merck
Manufacturing Division... 450,000 - - - - - -
Executive Group............ 4,704,000 83,486 5 years - 20,873 83,486 146,099
Non-Executive Director
Group.................... - - - - - - -
Non-Executive Officer
Employee Group........... 2,535,400 48,751 5 years - 12,191 48,751 85,311
</TABLE>

- ---------------

(a) Represents annual EIP cash bonus awards that would have been made in 1993 to
the listed individuals and groups had the EIP, as amended as provided
above, been in effect since the beginning of 1993.

(b) Represents target Performance Share awards to be made under the EIP in 1994
for the 1994-1998 award period. Actual number of shares to be paid out at
the end of this five year period will be based on the Company's performance
ranking for earnings-per-share growth and return-on-assets versus a group
of leading healthcare companies chosen at the beginning of the period and
total stockholder return versus

22
<PAGE> 26

the Standard & Poor's 500 Index. The group of healthcare companies includes
eight out of the nine companies in the DJPI other than the Company, as well
as Abbott Laboratories, SmithKline Beecham PLC and Glaxo Holdings p.l.c.
The closing price of the Company's Common Stock on the New York Stock
Exchange at the start of the award period was $36.00.

(c) Threshold represents 25% of target. Maximum represents 175% of target. No
payout will be made unless the Company achieves the median performance
against the performance measures.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.

4. ADOPTION OF THE MERCK DEFERRAL PROGRAM

There will be presented to the meeting a proposal to adopt the Merck
Deferral Program (the "Program"). The Program was previously part of the EIP,
but has been restructured as an independent vehicle which can serve as a
deferral mechanism for a select group of management who participate in various
incentive plans of the Company, including the EIP.

The proposed Program is set forth in Exhibit B. Primary aspects of the
Program, as proposed to be adopted, are as follows.

THE MERCK DEFERRAL PROGRAM

The Program is a vehicle through which a select group of management,
including those who participate in the EIP, can defer part or all of their
income earned under incentive or bonus plans of the Company. Only amounts in
excess of $3,000 may be deferred. This Program is administered by the
Compensation and Benefits Committee of the Board of Directors. Approximately 400
employees are eligible to participate in this Program.

If an award is deferred under the Program, the participant determines
whether such deferred award shall be measured by Treasury bills, bond indexes,
Company Common Stock or mutual funds. The transactions which take place under
the Program include initial crediting of accounts, redesignations between
investments, crediting of dividends or interest, and distributions. Transactions
in Company Common Stock are valued at the closing price of the stock on the date
of the transaction, except at the initial crediting of the participants'
accounts when the stock is valued at the average of the high and low prices of
the stock on the day awards are approved for payment.

At no time are investments actually made under the Program; rather,
investment results are accounted for administratively until date of
distribution. In essence, a participant who defers income becomes a creditor of
the Company. Participants may switch among investments not more than four times
in any one calendar year. Redesignations are not permitted into Company Common
Stock and only redesignations in excess of three times base pay are permitted
out of Company Common Stock and then only once a year.

Distributions are made at the time elected by the participants, usually at
or after retirement. Distributions are in cash except for investments measured
by Company Common Stock which are paid in shares, with cash for any partial
share. If, at the time employment terminates, a participant's account is less
than $125,000, or if the participant is not retiring from active service, the
participant's account is automatically paid out in a lump sum.

The Committee has the right to amend this Program at any time. The amount
of stock issued each year under the Program may not exceed one-tenth of one
percent of outstanding shares of Company Common Stock on the last business day
of the preceding calendar year plus shares authorized in previous years under
the Program but not utilized, offset by any shares issued under the EIP after
April 26, 1994.

This Program was previously a part of the EIP. There have been no material
substantive changes to the terms of this deferral program except for a new
formula to calculate the number of shares of Company Common Stock issuable
thereunder; it has simply been restructured to stand alone and to receive
deferrals under other bonus plans of the Company.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.

23
<PAGE> 27

5. AMENDMENT OF THE 1991 INCENTIVE STOCK PLAN

There will be presented to the meeting a proposal to amend the 1991
Incentive Stock Plan (the "ISP") to comply with recent changes to the Internal
Revenue Code which will preserve for the Company the tax deduction for
compensation paid thereunder.

The proposed ISP is set forth in Exhibit C. Primary aspects of the ISP as
it is proposed to be amended are as follows.

GENERAL INFORMATION

The ISP would authorize the Compensation and Benefits Committee of the
Board of Directors, to grant (i) incentive stock options under the Internal
Revenue Code of 1986, (ii) nonqualified stock options, (iii) stock appreciation
rights, (iv) performance share awards, and (v) restricted stock grants to
regular employees of the Company, its subsidiaries, or affiliates who are
designated by the Committee. There are approximately 47,100 employees eligible
to participate in the ISP.

The aggregate number of shares of the Company's Common Stock that may be
issued or transferred to grantees under the ISP each year shall not exceed 1% of
the Company's outstanding shares of common stock on the first business day of
the calendar year plus shares available from prior years under the ISP, the 1987
Incentive Stock Plan, 1981 Incentive Stock Option Plan and 1981 Nonqualified
Stock Option Plan. If there is a stock split, stock dividend or other relevant
change affecting the Company's shares, appropriate adjustments would be made in
the number of shares that could be issued or transferred in the future and in
the number of shares and price in all outstanding grants made before such event.
If shares under a grant are not issued or transferred, those shares would again
be available for inclusion in future grants. Payment of cash in lieu of shares
would be considered an issuance or transfer of the shares. On March 8, 1994, the
closing price of the Company's Common Stock on the New York Stock Exchange was
$31.75.

GRANTS UNDER THE PLAN

Stock Options. The Committee could grant options qualifying as incentive
stock options under the Internal Revenue Code of 1986, other statutory stock
options and nonqualified stock options. The term of an option shall be fixed by
the Committee. The option price shall not be less than the fair market value of
the Company's Common Stock on the date of grant.

Stock Appreciation Rights. The Committee could grant stock appreciation
rights ("SARs") either singly or in combination with an underlying stock option
under the ISP or the 1987 Incentive Stock Plan, 1981 Incentive Stock Option Plan
or 1981 Nonqualified Stock Option Plan. The term of an SAR may be fixed by the
Committee. SARs entitle the grantee to receipt of the same economic value that
would have been derived from exercise of an option. Payment would be made in
cash, in shares, or a combination of both at the discretion of the Committee. If
an SAR granted in combination with an underlying stock option is exercised, the
right under the underlying option to purchase shares would terminate.

Performance Share Awards. The Committee could grant Performance Share
awards under which payment would be made in shares of the Company's Common
Stock, a combination of shares and cash, or cash if the performance of the
Company or any subsidiary or division of the Company selected by the Committee
meets certain goals established by the Committee during an award period. The
Committee would determine the goals, the length of an award period, the maximum
payment value of an award, and the minimum performance required before a payment
would be made. The Committee could revise the goals and the computation of
payment at any time to account for unforeseen events which occur during an award
period and which have a substantial effect on the performance of the Company,
subsidiary or division.

24
<PAGE> 28

In order to receive payment, a grantee must remain in the employ of the
Company until the completion of the award period, except that the Committee
could provide complete or partial exceptions to that requirement as it deems
equitable.

Restricted Stock Grants. The Committee could also issue or transfer shares
under a Restricted Stock Grant. The grant would set forth a restriction period
during which the grantee must remain in the employ of the Company. If the
grantee's employment terminates during the period, the grant would terminate and
the grantee must return the shares to the Company. However, the Committee could
provide complete or partial exceptions to this requirement as it deems
equitable. The grantee could not dispose of the shares prior to the expiration
of the restriction period. During this period, the grantee would be entitled to
vote the shares and, at the discretion of the Committee, receive dividends. Each
certificate would bear a legend giving notice of the restrictions in the grant.

FEDERAL INCOME TAX CONSEQUENCES

Stock Options. The grant of an incentive stock option or a nonqualified
stock option would not result in income for the grantee or in a deduction for
the Company.

The exercise of a nonqualified stock option would result in ordinary income
for the optionee and a deduction for the Company measured by the difference
between the option price and the fair market value of the shares received at the
time of exercise. Income tax withholding would be required.

The exercise of an incentive stock option would not result in income for
the grantee if the grantee (i) does not dispose of the shares within two years
after the date of grant or one year after the transfer of shares upon exercise
and (ii) is an employee of the Company or a subsidiary of the Company from the
date of grant until three months before the exercise date. If these requirements
are met, the basis of the shares upon later disposition would be the option
price. Any gain will be taxed to the employee as long-term capital gain and the
Company would not be entitled to a deduction. The excess of the market value on
the exercise date over the option price is an item of tax preference,
potentially subject to the alternative minimum tax.

If the grantee disposes of the shares prior to the expiration of either of
the holding periods, the grantee would recognize ordinary income and the Company
would be entitled to a deduction equal to the lesser of the fair market value of
the shares on the exercise date minus the option price or the amount realized on
disposition minus the option price. Any gain in excess of the ordinary income
portion would be taxable as long-term or short-term capital gain.

SARs and Performance Share Awards. The grant of an SAR or a Performance
Share award would not result in income for the grantee or in a deduction for the
Company. Upon the exercise of an SAR or the receipt of shares or cash under a
Performance Share award, the grantee would recognize ordinary income and the
Company would be entitled to a deduction measured by the fair market value of
the shares plus any cash received. Income tax withholding would be required.

Restricted Stock Grants. The grant of Restricted Stock should not result
in income for the grantee or in a deduction for the Company for federal income
tax purposes, assuming the shares transferred are subject to restrictions
resulting in a "substantial risk of forfeiture" as intended by the Company. If
there are no such restrictions, the grantee would recognize ordinary income upon
receipt of the shares. Dividends paid to the grantee while the stock remained
subject to restriction would be treated as compensation for federal income tax
purposes. At the time the restrictions lapse, the grantee would receive ordinary
income, and the Company would be entitled to a deduction measured by the fair
market value of the shares at the time of lapse. Income tax withholding would be
required.

OTHER INFORMATION

The ISP will terminate on December 31, 1995 unless terminated earlier by
the Board of Directors or unless extended by the Board with the approval of the
stockholders. The Board could amend the ISP as it deems advisable but, if the
Securities Exchange Act of 1934 requires the Company to obtain

25
<PAGE> 29

shareholder approval, then such approval will be sought. No employee may receive
grants under the ISP in any given year which, singly or in the aggregate, cover
more than one-quarter of one-percent of the outstanding shares of the Company's
Common Stock on the first business day of the calendar year. This limitation on
individual grants is the only change being made to the ISP. Employees who will
participate in the ISP in the future and the amounts of their allotments are to
be determined by the Committee subject to any restrictions outlined above. Since
no such determinations have yet been made, it is not possible to state the terms
of any individual options which may be issued under the ISP or the names or
positions of or respective amounts of the allotment to any individuals who may
participate.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.

6. STOCKHOLDER PROPOSAL CONCERNING
ANNUAL ELECTION OF DIRECTORS

Mrs. Evelyn Y. Davis, Watergate Office Building, 2600 Virginia Avenue N.W.,
Suite 215, Washington, D.C. 20037, owner of 225 shares of Common Stock of the
Company, has given notice that she intends to present for action at the Annual
Meeting the following resolution:

"RESOLVED: That the shareholders of Merck recommend that the Board of
Directors take the necessary steps to reinstate the election of directors
ANNUALLY, instead of the stagger system which was recently adopted.

"REASONS: Until recently, directors of Merck were elected annually by
all shareholders.

"The great majority of New York Stock Exchange listed corporations
elect all their directors each year.

"This insures that ALL directors will be more accountable to ALL
shareholders each year and to a certain extent prevents the
self-perpetuation of the Board.

"Last year the owners of 218,908,366 shares, representing
approximately 29.8% of shares voting, voted FOR this proposal.

"If you AGREE, please mark your proxy FOR this resolution."

BOARD OF DIRECTORS' STATEMENT IN OPPOSITION TO THE RESOLUTION

This proposal has been submitted by the same stockholder at the last eight
Annual Meetings of Stockholders and has been overwhelmingly defeated on each
occasion. The Board of Directors continues to believe that this proposal is not
in the best interest of the Company or its stockholders.

The Company's current system for electing directors, with the Board divided
into three classes of directors serving staggered three-year terms, was adopted
by the Company's stockholders in 1985 by an affirmative vote of 79%.

The Board believes that the staggered system of electing directors provides
important benefits to the Company:

- The staggered system helps assure continuity and stability of the
Company's business strategies and policies. Since at least two
stockholders' meetings will generally be required to effect a change in
control of the Board, a majority of directors at any given time will have
prior experience as directors of the Company. This is particularly
important to a research-based organization such as the Company, where
product development often requires many years.

- In the event of any unfriendly or unsolicited proposal to take over
or restructure the Company, the staggered system would permit the Company
time to negotiate with the sponsor, to consider alternative proposals and
to assure that stockholder value is maximized.

26
<PAGE> 30

As part of the 1985 amendment to the Company's Restated Certificate of
Incorporation (the "Charter") to provide for the current staggered system of
electing directors, the stockholders also approved a requirement that any change
in the provisions of the amendment be approved by the holders of shares of stock
of the Company representing at least 80% of the votes entitled to be cast
generally for the election of directors. This stockholder resolution does not
propose an amendment to the Charter but, instead, seeks to have the Board take
any necessary steps to return to annual election of directors. Thus, the
proposal's approval by stockholders would not itself re-establish annual
election of directors but would require the Board to submit a Charter amendment
for action by stockholders at the 1995 Annual Meeting and an 80% stockholder
vote would be necessary for approval.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.

7. STOCKHOLDER PROPOSAL CONCERNING
EXECUTIVE COMPENSATION

Ms. Virginia F. Gruber, 131 Northfield Road, Millington, NJ 07946, owner of
2,054 shares of Common Stock of the Company, has given notice that she intends
to present for action at the Annual Meeting the following resolution:

"RESOLVED: That the shareholders of Merck recommend that the Board of
Directors take the necessary steps to see that not any Merck executive (or
other employee) receive compensation (summation of salary, bonuses,
receipts from stock options, etc.) amounting to more than 25 times that of
the average Merck employee.

"REASONS: While it has been argued that high-paying incentive plans
are needed to retain 'key' employees, modern psychology suggest that the
best executives are goal-orientated individuals who are motivated by the
responsibilities and challenges of their positions rather than the monetary
gains available to them. Besides lowering operating costs, keeping
differences of compensation and levels between executives and other
employees comparatively small (<25 times) provides increased self-esteem
and thus increased productivity for the average employee.

"Is 25 times (or less) the average employee's compensation fair
compensation for an executive -- even for the CEO? Although the executive's
job of managing Merck's business affairs is certainly important to Merck's
success, it is Merck's many scientists, their support staffs, and the many
other employees who are instrumental in the manufacturing and marketing of
Merck's products -- these average employees -- who are the true backbone of
Merck's business. To compensate any executive (even the CEO) 25 times that
of the average employee is more than fair -- it is generous.

"If health care reform brings what is promised -- health care to every
American, the volume of pharmaceutical sales will increase dramatically.
This will provide a golden opportunity for the pharmaceutical industry.
However, with this opportunity, comes responsibility. Taxes fed into the
system will help pay for prescription drugs as well as for other medical
costs of those who cannot afford to pay their share. To use public monies
to provide excessive compensation to pharmaceutical executives would be
unconscionable.

"Help Merck, in these times of fierce competition (and opportunities),
to meet their public responsibilities, and to become more equitable and
efficient. Vote FOR this resolution."

BOARD OF DIRECTORS' STATEMENT IN OPPOSITION TO THE RESOLUTION

The Board of Directors believes that a cap on executive compensation could
prevent the Company from attracting, retaining and motivating the
extraordinarily talented people essential to manage the Company for maximum
stockholder value. The companies with which the Company competes are not subject
to a pay cap on executive compensation. A pay cap would eliminate a crucial
element of flexibility in setting executive compensation and would place the
Company at a severe competitive

27
<PAGE> 31

disadvantage. Accordingly, the Board believes that this proposal is not in the
best interest of the Company or its stockholders.

The Company's compensation policies are approved by the Compensation and
Benefits Committee of the Board, which is comprised entirely of independent
outside directors. Company executive compensation is highly dependent on the
Company's performance and the performance of its stock.

The compensation of the Company's executives is within a range of
comparable companies. The Company periodically retains outside compensation and
benefits consultants to assure that its compensation programs are not
inconsistent with those of other leading industrial and healthcare companies.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.

FILINGS UNDER SECTION 16(A)

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership of such securities with the Securities and
Exchange Commission and the New York Stock Exchange. Officers, directors and
greater than ten-percent beneficial owners are required by applicable
regulations to furnish the Company with copies of all Section 16(a) forms they
file. The Company is not aware of any beneficial owner of more than ten percent
of its Common Stock.

Based solely upon a review of the copies of the forms furnished to the
Company, or written representations from certain reporting persons that no Forms
5 were required, the Company believes that all filing requirements applicable to
its officers and directors were complied with during the 1993 fiscal year.

DEADLINE FOR STOCKHOLDER PROPOSALS FOR 1995

Stockholder proposals to be presented at the 1995 Annual Meeting must be
received by the Company on or before November 16, 1994 for inclusion in the
proxy statement and form of proxy relating to that meeting.

OTHER MATTERS

The Board of Directors is not aware of any other matters to come before the
meeting. However, if any other matters properly come before the meeting, it is
the intention of the persons named in the enclosed form of proxy to vote said
proxy in accordance with their judgment in such matters.

MERCK & CO., INC.

March 16, 1994

28
<PAGE> 32

EXHIBIT A

MERCK & CO., INC.

EXECUTIVE INCENTIVE PLAN

(AS AMENDED EFFECTIVE FEBRUARY 23, 1994)
<PAGE> 33

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
I. PURPOSE......................................................................... A-1
II. DEFINITIONS..................................................................... A-1
III. ADMINISTRATION.................................................................. A-1
IV. ELIGIBILITY..................................................................... A-2
V. AWARD FUND...................................................................... A-2
VI. AWARDS.......................................................................... A-2
VII. DEFERRAL OF AWARDS.............................................................. A-2
VIII. LIMITATIONS..................................................................... A-2
IX. LIMITATION OF ACTIONS........................................................... A-3
X. CLAIMS PROCEDURE................................................................ A-3
XI. PLAN AMENDMENT, SUSPENSION OR TERMINATION....................................... A-3
</TABLE>

i
<PAGE> 34

I. PURPOSE

This Plan is designed to provide for awards to selected salaried employees
in managerial or other important positions, who, individually or as members of a
group, contribute in a substantial degree to the success of the Company, and who
are in a position to have a direct and significant impact on the growth and
success of the Company, thus affording to them a means of participating in that
success and an incentive to contribute further to that success.

II. DEFINITIONS

The following words and phrases shall have the meanings set forth below:

(1) "Administrative Regulations" shall mean the procedures and regulations
established by the Committee pursuant to Section III hereof for the purpose of
administering the Plan.

(2) "Award Fund" shall mean the aggregate amount made available in any
given year pursuant to Section V hereof from which awards determined under
Section VI hereof may be made.

(3) "Committee" shall mean the Compensation and Benefits Committee of the
Board of Directors of the Company, the membership of which shall be members of
the Board who are not Employees.

(4) "Company" shall mean Merck & Co., Inc. or any successor thereto.

(5) "Deferred Award" shall mean that portion of a Participant's award the
payment of which he/she has elected to defer in accordance with the provisions
of Section VII hereof.

(6) "Employee" shall mean any salaried employee of the Company, a
Subsidiary or an affiliate, the Merck Institute for Therapeutic Research,
whether full-time or part-time and whether or not an officer or director,
excluding, however, any temporary employee or any person serving the Company
only in the capacity of director.

(7) "Net Income" shall mean the amount reported by the Company as
consolidated income before extraordinary items and the cumulative effect of
accounting changes, adjusted, however, by adding any amount which has been
expensed (after taxes) for awards under the Plan in computing such Net Income.

(8) "Participant" shall mean an Employee who is subject to Section 16 of
the Securities Exchange Act of 1934, as amended, or who has been designated by
the Committee to participate in the Plan pursuant to Section IV hereof.

(9) "Plan" shall mean this Merck & Co., Inc. Executive Incentive Plan as
amended from time to time.

(10) "Subsidiary" shall mean any corporation, domestic or foreign (other
than the Company), 50% or more of the total voting power of which is held by the
Company and/or a Subsidiary or Subsidiaries.

III. ADMINISTRATION

The Plan shall be administered by the Committee. The Committee may, by
majority vote, establish Administrative Regulations as it deems necessary for
the proper administration of the Plan and make such determinations and take such
action in connection with or in relation to the Plan as it deems necessary. Each
determination made by the Committee shall be final, binding and conclusive for
all purposes and upon all persons. The Committee may rely conclusively on the
determinations made by the Company's independent public accountants.

A-1
<PAGE> 35

IV. ELIGIBILITY

Those employees who are subject to Section 16 of the Securities Exchange
Act of 1934, as amended, and those employees who are key officers or management
employees of the Company, a Subsidiary or affiliate who, in the opinion of the
Committee, are in a position to have a direct and significant impact on
achievement of the Company's long term objectives are eligible to participate in
the Plan.

V. AWARD FUND

An Award Fund shall be established at 2.5% of Net Income. No amounts are
paid under the Plan for any year unless the Company has Net Income. However, the
Committee reserves the right to decrease the amount of the Award Fund.

VI. AWARDS

No Participant may receive more than 10% of the maximum Award Fund in any
given year. However, the Committee reserves the right to pay less than 10% of
the Award Fund to any individual. All such determinations, except in the case of
the award for the chief executive officer of the Company, shall be made after
considering the recommendations of the chief executive officer and such other
matters as the Committee shall deem relevant. In making such determinations, the
Committee may, in addition to achievement of short-term business objectives,
take into account achievement by key executives of long-term goals of the
Company. All awards shall be charged against the Award Fund and may be paid in
cash or stock (as the Committee may determine).

Awards paid in stock shall be charged against the Award Fund using the
average of the high and low prices of Merck common stock on the New York Stock
Exchange composite tape on the date the Award is paid or deferred. The number of
shares authorized for distribution under this Plan each year is one-tenth of
one-percent of outstanding shares of Company Common Stock on the last business
day of the preceding calendar year plus any shares authorized under this Plan in
previous years but not used, minus any shares distributed under the Merck
Deferral Program after April 26, 1994. These shares may be delivered from
authorized but unissued shares or from the treasury. In the event of a
reorganization, recapitalization, stock split, stock dividend, combination of
shares, merger, consolidation, rights offering, or any other change in the
corporate structure or shares of the Company, the Committee shall make such
adjustment, if any, as it may deem appropriate in the number and kind of shares
authorized by the EIP.

VII. DEFERRAL OF AWARDS

A Participant may elect, subject to the approval of, and within limits
established by, the Committee, to designate all or any portion of an award as a
Deferred Award under the Merck & Co., Inc. Deferral Program, which is
incorporated herein by reference. Such election shall be irrevocable. Any
portion of an award which is not so deferred shall be paid as soon as
practicable after approval of such award by the Committee.

VIII. LIMITATIONS

Although this Plan sets the maximum amount which may be paid to a
participant in any given year, the Committee reserves the right to decrease the
maximum or eliminate any award to any participant. No director, officer,
employee of the Company nor any other person shall have the authority to enter
into any agreement with any person for the making or payment of an award or to
make any representation or warranty with respect thereto.

A-2
<PAGE> 36

Neither the action of the Company in establishing the Plan nor any action
taken by it or by the Committee under the provisions hereof, nor any provision
of the Plan, shall be construed as giving to any Employee the right to be
retained in the employ of the Company, its Subsidiaries or affiliates.

The Company may offset against any payments to be made to a Participant or
his/her beneficiary under this Plan any amounts owing to the Company, its
Subsidiaries or affiliates from the Participant for any reason.

IX. LIMITATION OF ACTIONS

Every asserted right of action by or on behalf of the Company or by or on
behalf of any stockholder against any past, present or future member of the
Committee or director, officer or Employee of the Company or any Subsidiary or
affiliate thereof, arising out of or in connection with this Plan, shall,
irrespective of the place where such right of action may arise or be asserted
and irrespective of the place of residence of any such member director, officer
or Employee, cease and be barred upon the expiration of three years (i) from the
date of the alleged act or omission in respect of which such right of action
arises or (ii) from the date upon which the Company's Annual Report to
stockholders setting forth the aggregate amount of the awards to all or any part
of which such action may relate is made generally available to stockholders,
whichever date is later; and every asserted right of action by or on behalf of
any Employee, past, present or future, or any beneficiary, spouse, child or
legal representative thereof, against the Company or any Subsidiary or affiliate
thereof, arising out of or in connection with this Plan, shall irrespective of
the place where such right of action may arise or be asserted, cease and be
barred by the expiration of three years from the date of the alleged act or
omission in respect of which such right of action arises.

X. CLAIMS PROCEDURE

In the case of any Participant (whether active, retired or terminated) or
beneficiary whose claim for an award under this Plan has been denied, the
Company shall provide adequate notice in writing of such adverse determination
setting forth the specific reasons for such denial in a manner calculated to be
understood by the recipient thereof. Such Participant or beneficiary shall be
afforded a reasonable opportunity for a full and fair review of the decision
denying the claim by the Committee.

XI. PLAN AMENDMENT, SUSPENSION OR TERMINATION

The Board of Directors or the stockholders may discontinue the Plan at any
time and may from time to time amend or revise the terms of the Plan as
permitted by applicable statutes; provided, however, that no such
discontinuance, amendment or revision shall materially adversely affect any
right or obligation with respect to any award theretofore made. Any amendment or
revision which increases the cost of the Plan by a substantial proportion may be
made only by the stockholders. The Plan will continue in operation until
discontinued as herein provided.

A-3
<PAGE> 37

EXHIBIT B

MERCK & CO., INC.

DEFERRAL PROGRAM
<PAGE> 38

MERCK & CO., INC. DEFERRAL PROGRAM

The Deferral Program ("the Program") is intended to permit a select group
of management to defer income which would otherwise be immediately payable to
them under various incentive plans of Merck & Co., Inc. ("the Company").

I. ADMINISTRATION

This Program is administered by the Compensation and Benefits Committee of
the Company's Board of Directors. This Committee is composed of non-employee
directors only. The Committee shall have responsibility for determining which
investments will be available under the Program, and those investments shall be
listed on Schedule I hereto. The Committee shall review the investment
selections at least once every five years. The Committee shall make all
decisions affecting the timing, price or amount of any and all of the Deferred
Awards of participants subject to Section 16 of the Securities Exchange Act of
1934, as amended, but may otherwise delegate any of its authority under this
Program.

II. ELIGIBILITY

Eligibility to defer under this Program will be determined in accordance
with the terms of the Company's various incentive plans. However, the Committee
has the authority to refuse to permit an employee to participate in this
Program, if the Committee determines that such participation would jeopardize
the Program's compliance with applicable law or the Program's status as a top
hat plan under ERISA.

III. DEFERRAL INTO A DEFERRED AWARD ACCOUNT

A participant's decision to defer under the Program must be made, for
annual incentive plans, prior to the commencement of the performance year during
which the bonus monies to be deferred will be earned and for long-term incentive
plans, prior to the commencement of the last year of the award period during
which the bonus monies to be deferred will be earned. Only amounts in excess of
$3,000 may be deferred. Amounts so deferred are known as "Deferred Awards" and
will be credited to the participant's "Deferred Award Account". The participant
shall designate, in multiples of 1% of the Deferred Award, the portion to be
allocated to each investment available under this Program.

The participant shall also elect a distribution schedule for his/her
Deferred Award. A participant may elect to have payments begin at the
participant's actual retirement date, subsequent to that date or prior thereto.
A participant may elect a lump sum or up to 15 annual installments. No
installment, however, may be payable more than fifteen years after the
participant's termination of employment.

Deferred Awards shall be held in one account regardless of the incentive
plan under which they were earned.

IV. VALUATION OF DEFERRED AWARD ACCOUNTS

A. COMMON STOCK

1. Initial Crediting

The amount allocated to Merck Common Stock shall be used to determine the
number of full and partial shares of Merck Common Stock which such amount would
purchase at the average of the high and low prices of the Common Stock on the
New York Stock Exchange composite tape on the date cash payments are approved
for the participant under the Company's relevant incentive plan ("the Award
Date"). However, should the Committee determine that such valuation would not
constitute

B-1
<PAGE> 39

fair market value, then the Committee shall decide on which date fair market
value shall be determined using the valuation method set forth in this
paragraph. The Company shall credit the participant's Deferred Award Account
with the number of full and partial shares of Merck Common Stock so determined.
However, at no time prior to the delivery of such shares shall any shares be
purchased or earmarked for such Account and the participant shall not have any
of the rights of a shareholder with respect to shares credited to his/her
Deferred Award Account.

2. Dividends

The Company shall credit the Participant's Deferred Award Account with the
number of full and partial shares of Merck Common Stock purchasable at the
closing market price of the Common Stock on the New York Stock Exchange
composite tape as of the date each dividend is paid on the Common Stock, with
the dividends which would have been paid on the number of shares credited to
such Account (including pro-rata dividends on any partial share) had the shares
so credited then been issued and outstanding.

3. Redesignations

The value of Merck Common Stock for purposes of redesignation shall be the
closing market price of the Common Stock on the New York Stock Exchange
composite tape on the day the participant's redesignation request is received by
the Director, Benefits Financing (or if that day is not a business day, then on
the next business day). However, if the request to redesignate is received early
in the day, prior to the opening of the New York Stock Exchange, then the
redesignation will be valued using the prior day's closing price.

4. Distributions

Distributions of Merck Common Stock will be valued at the closing price on
the New York Stock Exchange composite tape of Merck Common Stock on the
distribution date.

5. Limitations

Shares of Merck Common Stock to be delivered under the provisions of this
Program may be delivered by the Company from its authorized but unissued shares
of Common Stock or from Common Stock held in the treasury. The amount of shares
available each year under this Program shall be one-tenth of one-percent of
outstanding shares of Merck Common Stock on the last business day of the
preceding calendar year plus any shares authorized under this Program in
previous years but not used, minus any shares distributed under the Executive
Incentive Plan after April 26, 1994.

6. Adjustments

In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidation, rights offering or any
other change in the corporate structure or shares of the Company or a Mutual
Fund, the Committee shall make such adjustment, if any, as it may deem
appropriate in the number and kind of shares of Merck Common Stock or Mutual
Funds credited to participants' Deferred Award Accounts.

B. MUTUAL FUNDS

1. Initial Crediting

The amount allocated to each Mutual Fund shall be used to determine the
number of full and partial Mutual Fund shares which such amount would purchase
at the closing net asset value of the Mutual Fund shares on the Award Date. The
Company shall credit the participant's Deferred Award Account with the number of
full and partial Mutual Fund shares so determined. However, no Mutual

B-2
<PAGE> 40

Fund shares shall be purchased or earmarked for such Account nor shall the
participant have the rights of a shareholder with respect to such Mutual Fund
shares.

2. Dividends

The Company shall credit the participant's Deferred Award Account with the
number of full and partial Mutual Fund shares purchasable, at the closing net
asset value of the Mutual Fund shares as of the date each dividend is paid on
the Mutual Fund shares, with the dividends which would have been paid on the
number of shares credited to such Account (including pro rata dividends on any
partial share) had the shares then been owned by the participant for purposes of
the above computation.

3. Redesignations

The value of Mutual Fund shares for purposes of redesignation shall be the
net asset value of such Mutual Fund shares at the close of business on the day
on which the redesignation request is received by the Director, Benefits
Financing (or if that day is not a business day, then on the next business day).
However, if the request to redesignate is received early in the day, prior to
the opening of the New York Stock Exchange, then the redesignation will be
valued using the prior day's closing price. The participant's Account shall be
credited with the number of Mutual Fund shares so determined.

4. Distributions

Mutual Fund distributions will be valued based on the closing net asset
value of the Mutual Fund shares on the distribution date.

C. 91-DAY U.S. TREASURY BILLS

1. Initial Crediting

The amount allocated to 91-Day U.S. Treasury Bills will be credited to the
participant's Deferred Award Account at $1 per share. No Treasury Bills will be
actually purchased or earmarked for a participant's Account.

2. Interest

The Company shall credit interest to the participant's Deferred Award
Account. The annual rate of interest applicable during each calendar quarter of
the year shall be the interest equivalent yield on 91-Day U.S. Treasury Bills at
the last Monday auction of such Bills immediately preceding such calendar
quarter, rounded to the nearest one-hundredth of one percent. The interest so
determined shall be compounded quarterly.

3. Redesignations

The value for purposes of redesignation of 91-Day U.S. Treasury Bill shares
shall be $1.

4. Distributions

Distributions will be valued at $1 per share.

D. BOND INDEXES

1. Initial Crediting

The amount allocated to each Bond Index shall be used to determine the
number of full and partial Bond Index shares which such amount would purchase at
the Bond Index at the Award Date divided by 100. The Company shall credit the
participant's Deferred Award Account with the number of Bond shares so
determined. No Bonds will be actually purchased or earmarked for a participant's
Account.

B-3
<PAGE> 41

2. Redesignations

The value of Bond Index shares for purposes of redesignation shall be
determined by the Bond Index divided by 100 on the day on which the
redesignation request is received by the Director, Benefits Financing (or if
that day is not a business day, then on the next business day). However, if the
request to redesignate is received early in the day, prior to the opening of the
New York Stock Exchange, then the redesignation will be valued using the prior
day's Bond Index.

3. Distributions

Distributions of Bond Index shares will be valued at the Bond Index on the
distribution date divided by 100.

V. REDESIGNATION WITHIN A DEFERRED AWARD ACCOUNT

A. GENERAL

A participant, and the beneficiary or legal representative of a deceased
participant, may redesignate amounts credited to a Deferred Award Account among
the investments available under this Program. However, no such redesignation
shall be made into Merck Common Stock.

Participants who wish to redesignate out of a particular investment vehicle
may not at the same time redesignate into such investment vehicle. No
redesignation may take place during the 30 days prior to a scheduled
distribution under this Program.

B. BASIC REDESIGNATION GROUND RULES

(1) Eligible Participants -- Active employees and retired participants are
eligible to redesignate; provided, however, that no participant whose
balance in Merck Common Stock is less than three times such
participant's annual base salary ("Annual Base Salary") may redesignate
amounts from Common Stock. For the purposes of this Section V, Annual
Base Salary for an active participant shall be such participant's
monthly base salary at the December 31 prior to redesignation,
annualized, and for a deceased or retired participant, monthly base
salary at the December 31 prior to death or retirement, annualized.

(2) Permitted Frequency -- Redesignation may be made not more than four
times in each calendar year, but redesignations out of Merck Common
Stock may only be made once a calendar year.

(3) Amount and Extent of Redesignation -- Redesignation must be in 1%
multiples of the investment from which redesignation is being made.
Redesignation of amounts in Merck Common Stock is restricted to amounts
in excess of three times Annual Base Salary (the "Excess").

(4) Timing -- Redesignation shall take place on the day the participant's
written redesignation is received by the Director, Benefits Financing
(or if that day is not a business day, then on the next business day).
However, if the redesignation request is received early in the day,
prior to the opening of the New York Stock Exchange, then the
redesignation will be valued using the prior day's numbers.

(5) Beneficiaries or Legal Representatives -- The beneficiary or legal
representative of a deceased participant may redesignate subject to the
same rules as participants. However, the beneficiary or legal
representative has only one opportunity to redesignate out of Merck
Common Stock but may redesignate amounts up to and including the entire
value of the participant's investment in Merck Common Stock.

B-4
<PAGE> 42

C. SPECIAL RULES FOR REDESIGNATION OUT OF COMMON STOCK

(1) Material, Nonpublic Information -- The Committee in its sole discretion
and with advice of counsel at any time may rescind a redesignation out
of Merck Common Stock if such redesignation was made by a participant
who, a) at the time of the redesignation was in the possession of
material, nonpublic information with respect to the Company; and b) in
the Committee's estimation benefited from such information in the timing
of his/her redesignation.

The Committee's determination shall be final and binding. In the event
of such rescission, the participant's Deferred Award Account shall be
returned to a status as though such redesignation had not occurred.
Notwithstanding the above, the Committee shall not rescind a
redesignation if the facts were reviewed by the participant with the
General Counsel of the Company or a designee prior to the redesignation
and if the General Counsel or designee had concluded that such
participant was not in possession of adverse material, nonpublic
information.

(2) 16(b) Participants -- A participant subject to Section 16(b) of the
Securities Exchange Act of 1934 may redesignate out of Merck Common
Stock only during the "window period" beginning on the third business
day following the public release of any quarterly annual statements of
sales and earnings by the Company and ending on the twelfth day
following such release.

D. CONVERSION OF COMMON STOCK ACCOUNTS

The Committee may, in its sole discretion, convert all of the shares of
Merck Common Stock allocated to a participant's Deferred Award Account in the
manner provided below where a position which a terminated or retired participant
has taken or wishes to take is in the opinion of the Committee such as would
make uncertain the propriety of the participant's having a continued interest in
Merck Common Stock. The date of conversion shall be the date of commencement of
such other employment or the date of the Committee's action, whichever is later.

Conversion shall be from an expression of value in shares of Merck Common
Stock in the participant's Deferred Award Account to an expression of value in
United States dollars in another available investment. The value of the Merck
Common Stock shall be based upon its closing price on the New York Stock
Exchange composite tape on the date of conversion or if no trading took place on
such Exchange on such day, the next business day on which trading took place.
Any conversion under this paragraph shall be irrevocable and absolute.

VI. DISTRIBUTION OF DEFERRED AWARD ACCOUNTS

Distribution of Deferred Award Accounts shall be made in accordance with
the participant's distribution schedule pro rata by investment. Distributions
from Merck Common Stock will be made in shares, with cash payable for any
partial share. Distributions from Mutual Funds, Treasury Bills or Bond Indexes
will be in cash. Distributions will be made on the first business day of the
month.

1. Retirement

A participant's retirement from active service will cause distributions of
his/her Deferred Award Account to commence as soon as administratively feasible
in accordance with the participant's previously elected schedule.

If a participant retires from active service prior to age 65, the Committee
may establish a different distribution schedule. The schedule chosen by the
Committee, however, shall not be shorter than the participant's previously
elected schedule unless there has been or would be a significant change in the
participant's economic circumstances attributable to the participant's early
retirement. If the Committee decides to change the participant's distribution
schedule, the participant's Deferred Award Account

B-5
<PAGE> 43

must be distributed ratably over no less than five years. However, if a
participant has retired at the Company's request, the limitation in the
preceding sentence does not apply.

2. Death

In the event of a participant's death, distributions under this Program
will commence as soon as administratively feasible in accordance with his/her
previously elected schedule. The participant's beneficiary or legal
representative, however, may request that the Committee change such distribution
schedule.

3. Hardship Distributions

The Committee, in its sole discretion, may accelerate the time of
distribution of a participant's Deferred Award Account, if the participant
experiences severe financial hardship due to illness, accident or death in the
immediate family, loss of or damage to property due to casualty, or other
extraordinary and unforseeable circumstances. Such participant should provide
the Committee with a statement in reasonable detail as to the nature of such
financial hardship together with a statement that such acceleration is necessary
to alleviate such hardship.

4. Post-Retirement Modifications

A participant who has retired from active service may submit one petition
to the Committee requesting an extension of the period of distribution of
his/her Deferred Award Account. Any revised distribution schedule may not exceed
fifteen years from the date of actual retirement, and will be effective the
beginning of the next calendar year. The Committee shall in no event grant a new
schedule under which the participant would cumulatively receive a greater
portion of his/her Deferred Award Account as measured at the end of each
calendar year. A participant who is an active employee may not make a request
under this paragraph.

5. Automatic Distribution

If a participant terminates employment for reasons other than death and is
not eligible to retire from active service under one of the Company's pension
plans, then his/her Deferred Award Account will be automatically paid in a lump
sum as soon as administratively feasible following his/her termination of
employment. Furthermore, any participant who dies, or retires from active
service, but whose Deferred Award Account is valued at less than $125,000 on the
date of his/her death or retirement, will have his/her Deferred Award Account
distributed in a lump sum as soon as administratively feasible following his/her
death or retirement.

VII. DEDUCTIONS FROM DISTRIBUTIONS

The Company will deduct from each distribution amounts required to be
withheld for income, Social Security and other tax purposes. Such withholding
will be done on a pro rata basis per investment. The Company may also deduct any
amounts the participant owes the Company for any reason.

VIII. BENEFICIARY DESIGNATIONS

A participant under this program may designate a beneficiary to receive
his/her Deferred Award Account upon the participant's death. Should the
beneficiary predecease the participant or should the participant not name a
beneficiary, the participant's Deferred Award Account will be distributed to the
participant's estate.

IX. AMENDMENTS

The Committee may amend this Program at any time. However, such amendment
shall not materially adversely affect any right or obligation with respect to
any Deferred Award made theretofore.

B-6
<PAGE> 44

SCHEDULE I

INVESTMENTS

MERCK COMMON STOCK
Mutual Funds
Acorn Fund
American Capital Pace Fund, Inc.
Bond Fund of America
Fidelity Daily Income Trust
Fidelity Equity Income Fund
Fidelity Magellan Fund
Fidelity U.S. Equity Index
Janus Fund
Pennsylvania Mutual Fund, Inc.
Scudder International Fund
Sequoia Fund
Templeton Growth Fund, Inc.
Vanguard Wellington Fund

91-DAY U.S. TREASURY BILLS
Bond Indexes
Lehman Brothers Treasury Bond Index -- Intermediate-Term
Lehman Brothers Treasury Bond Index -- Long-Term

B-7
<PAGE> 45

EXHIBIT C

MERCK & CO., INC.

1991 INCENTIVE STOCK PLAN

(AS AMENDED EFFECTIVE FEBRUARY 23, 1994)
<PAGE> 46

1991 INCENTIVE STOCK PLAN

The 1991 Incentive Stock Plan ("ISP") is established to encourage employees
of the Company, its subsidiaries and the Merck Institute for Therapeutic
Research to acquire Common Stock in Merck & Co., Inc. (the "Company"). It is
believed that the ISP will stimulate employees' efforts on the Company's behalf,
will tend to maintain and strengthen their desire to remain with the Company,
will be in the interest of the Company and its Stockholders, and will encourage
such employees to have a greater personal financial investment in the Company
through ownership of its Common Stock.

1. ADMINISTRATION

The ISP shall be administered by the Compensation and Benefits Committee of
the Board of Directors of the Company (the "Committee"). The Committee is
authorized, subject to the provisions of the ISP, to establish such rules and
regulations as it deems necessary for the proper administration of the ISP, and
to make such determinations and to take such action in connection therewith or
in relation to the ISP as it deems necessary or advisable, consistent with the
ISP. The Committee may delegate some or all of its power and authority hereunder
to the Chief Executive Officer or other senior member of management as the
Committee deems appropriate; provided however, that the Committee may not
delegate its authority with regard to any matter or action affecting an officer
subject to Section 16 of the Securities Exchange Act of 1934.

For the purpose of this section and all subsequent sections, the ISP shall
be deemed to include this plan and any comparable sub-plans established by
subsidiaries which, in the aggregate, shall constitute one plan governed by the
terms set forth herein.

2. ELIGIBILITY

Regular full-time and part-time employees of the Company, its subsidiaries,
and the Merck Institute for Therapeutic Research, including officers, whether or
not directors of the Company, shall be eligible to participate in the ISP
("Eligible Employees") if designated by the Committee or its delegate. Those
directors who are not regular employees are not eligible.

3. INCENTIVES

Incentives under the ISP may be granted in any one or a combination of (a)
Incentive Stock Options (or other statutory stock option); (b) Nonqualified
Stock Options; (c) Stock Appreciation Rights; (d) Performance Share Awards; and
(e) Restricted Stock Grants (together "Incentives"). All Incentives shall be
subject to the terms and conditions set forth herein and to such other terms and
conditions as may be established by the Committee. Determinations by the
Committee under the ISP including without limitation, determinations of the
Eligible Employees, the form, amount and timing of Incentives, the terms and
provisions of Incentives, and the agreements evidencing Incentives, need not be
uniform and may be made selectively among Eligible Employees who receive, or are
eligible to receive, Incentives hereunder, whether or not such Eligible
Employees are similarly situated.

4. SHARES AVAILABLE FOR INCENTIVES

(a) SHARES SUBJECT TO ISSUANCE OR TRANSFER. Subject to adjustment as
provided in Section (b) hereof, there is hereby reserved for issuance under the
ISP in each calendar year one percent (1%) of the outstanding shares of the
Company's Common Stock as of the first business day of each calendar year
("Common Stock"). The shares available for granting awards in any year shall be
increased by the number of shares available under the Plan in previous years but
not covered by Awards granted under the Plan in those years plus any shares as
to which options or other benefits granted under the Plan have lapsed, expired,
terminated or been canceled. In addition, any shares reserved for issuance under
the Company's 1987 Incentive Stock Plan, 1981 Incentive Stock Option Plan and
1981 Nonqualified Stock Option Plan ("Prior Plans") in excess of the number of
shares as to which options or other benefits have

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been awarded thereunder, plus any such shares as to which options or other
benefits granted under the Prior Plans may lapse, expire, terminate or be
cancelled, shall also be reserved and available for issuance or reissuance under
the ISP in any calendar year. No further options or other benefits are to be
granted under the Prior Plans; provided that any outstanding options or other
benefits may be exercised in accordance with the terms thereof.

In the event of a lapse, expiration, termination or cancellation of any
Incentive granted under the ISP without the issuance of shares or payment of
cash, or if shares are issued under a Restricted Stock Grant hereunder and are
reacquired by the Company pursuant to rights reserved upon the issuance thereof,
the shares subject to or reserved for such Incentive may again be used for new
Incentives hereunder; provided that in no event may the number of shares issued
hereunder exceed the total number of shares reserved for issuance.

(b) In any given year, no eligible employee may receive Incentives
covering more than one-quarter of one-percent of the outstanding shares of the
Company's Common Stock as of the first business day of the calendar year.

(c) RECAPITALIZATION ADJUSTMENT. In the event of a reorganization,
recapitalization, stock split, stock dividend, combination of shares, merger,
consolidation, rights offering, or any other change in the corporate structure
or shares of the Company, the Committee shall make such adjustment, if any, as
it may deem appropriate in the number and kind of shares authorized by the ISP,
in the number and kind of shares covered by Incentives granted, in the case of
Stock Options, in the option price, and in the case of stock appreciation
rights, in the fair market value.

5. STOCK OPTIONS

The Committee may grant options qualifying as Incentive Stock Options under
the Internal Revenue Code of 1986, as amended or any successor code thereto (the
"Code"), other statutory options under the Code, and Nonqualified Options
(collectively "Stock Options"), and such Stock Options shall be subject to the
following terms and conditions and such other terms and conditions as the
Committee may prescribe:

(a) OPTION PRICE. The option price per share with respect to each Stock
Option shall be determined by the Committee, but shall not be less than 100% of
the fair market value of the Common Stock on the date the Stock Option is
granted, as determined by the Committee.

(b) PERIOD OF OPTION. The period of each Stock Option shall be fixed by
the Committee.

(c) PAYMENT. The option price shall be payable at the time the Stock
Option is exercised in cash or, at the discretion of the Committee, in whole or
in part in the form of shares of Common Stock already owned by the grantee
(based on the fair market value of the Common Stock on the date the option is
exercised as determined by the Committee). No shares shall be issued until full
payment therefor has been made. A grantee of a Stock Option shall have none of
the rights of a stockholder until the shares are issued.

(d) EXERCISE OF OPTION. The shares covered by a Stock Option may be
purchased in such installments and on such exercise dates as the Committee may
determine. Any shares not purchased on the applicable exercise date may be
purchased thereafter at any time prior to the final expiration of the Stock
Option. In no event (including those specified in paragraphs (e), (f) and (g) of
this section below) shall any Stock Option be exercisable after its specified
expiration period.

(e) TERMINATION OF EMPLOYMENT. Upon the termination of a Stock Option
grantee's employment (for any reason other than retirement, death or termination
for deliberate, willful or gross misconduct), Stock Option privileges shall be
limited to the shares which were immediately exercisable at the date of such
termination. The Committee, however, in its discretion may provide that any
Stock Options outstanding but not yet exercisable upon the termination of a
Stock Option grantee may become exercisable in accordance with a schedule to be
determined by the Committee. Such Stock

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Option privileges shall expire unless exercised or surrendered under a Stock
Appreciation Right within such period of time after the date of such termination
as may be established by the Committee. If a Stock Option grantee's employment
is terminated for deliberate, willful or gross misconduct, as determined by the
Company, all rights under the Stock Option shall expire upon receipt of the
notice of such termination.

(f) RETIREMENT. Upon retirement of the Stock Option grantee, Stock Option
privileges shall apply to those shares immediately exercisable at the date of
retirement. The Committee, however, in its discretion, may provide that any
Stock Options outstanding but not yet exercisable upon the retirement of the
Stock Option grantee may become exercisable in accordance with a schedule to be
determined by the Committee. Stock Option privileges shall expire unless
exercised within such period of time as may be established by the Committee.

(g) DEATH. Upon the death of a Stock Option grantee, Stock Option
privileges shall apply to those shares which were immediately exercisable at the
time of death. The Committee, however, in its discretion, may provide that any
Stock Options outstanding but not yet exercisable upon the death of a Stock
Option grantee may become exercisable in accordance with a schedule to be
determined by the Committee. Such privileges shall expire unless exercised by
legal representatives within a period of time as determined by the Committee but
in no event later than the date of the expiration of the Stock Option.

(h) LIMITS ON INCENTIVE STOCK OPTIONS. Except as may otherwise be
permitted by the Code, the Committee shall not, in the aggregate, grant an
Eligible Employee Incentive Stock Options that are first exercisable during any
one calendar year to the extent that the aggregate fair market value of the
Common Stock, at the time the Incentive Stock Options are granted, exceeds
$100,000.

6. STOCK APPRECIATION RIGHTS

The Committee may, in its discretion, grant a right to receive the
appreciation in the fair market value of shares of Common Stock ("Stock
Appreciation Right") either singly or in combination with an underlying Stock
Option granted hereunder or under the Prior Plans. Such Stock Appreciation
Rights shall be subject to the following terms and conditions and such other
terms and conditions as the Committee may prescribe:

(a) TIME AND PERIOD OF GRANT. If a Stock Appreciation Right is granted
with respect to an underlying Stock Option, it may be granted at the time of the
Stock Option Grant or at any time thereafter but prior to the expiration of the
Stock Option Grant. If a Stock Appreciation Right is granted with respect to an
underlying Stock Option, at the time the Stock Appreciation Right is granted the
Committee may limit the exercise period for such Stock Appreciation Right,
before and after which period no Stock Appreciation Right shall attach to the
underlying Stock Option. In no event shall the exercise period for a Stock
Appreciation Right granted with respect to an underlying Stock Option exceed the
exercise period for such Stock Option. If a Stock Appreciation Right is granted
without an underlying Stock Option, the period for exercise of the Stock
Appreciation Right shall be set by the Committee.

(b) VALUE OF STOCK APPRECIATION RIGHT. If a Stock Appreciation Right is
granted with respect to an underlying Stock Option, the grantee will be entitled
to surrender the Stock Option which is then exercisable and receive in exchange
therefor an amount equal to the excess of the fair market value of the Common
Stock on the date the election to surrender is received by the Company over the
Stock Option price multiplied by the number of shares covered by the Stock
Option which are surrendered. If a Stock Appreciation Right is granted without
an underlying Stock Option, the grantee will receive upon exercise of the Stock
Appreciation Right an amount equal to the excess of the fair market value of the
Common Stock on the date the election to surrender such Stock Appreciation Right
is received by the Company over the fair market value of the Common Stock on the
date of grant multiplied by the number of shares covered by the grant of the
Stock Appreciation Right.

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(c) PAYMENT OF STOCK APPRECIATION RIGHT. Payment of a Stock Appreciation
Right shall be in the form of shares of Common Stock, cash, or any combination
of shares and cash. The form of payment upon exercise of such a right shall be
determined by the Committee either at the time of grant of the Stock
Appreciation Right or at the time of exercise of the Stock Appreciation Right.

7. PERFORMANCE SHARE AWARDS

The Committee may grant awards under which payment may be made in shares of
Common Stock, cash or any combination of shares and cash if the performance of
the Company or any subsidiary or division of the Company selected by the
Committee during the Award Period meets certain goals established by the
Committee ("Performance Share Awards"). Such Performance Share Awards shall be
subject to the following terms and conditions and such other terms and
conditions as the Committee may prescribe:

(a) AWARD PERIOD AND PERFORMANCE GOALS. The Committee shall determine and
include in a Performance Share Award grant the period of time for which a
Performance Share Award is made ("Award Period"). The Committee shall also
establish performance objectives ("Performance Goals") to be met by the Company,
subsidiary or division during the Award Period as a condition to payment of the
Performance Share Award. The Performance Goals may include earnings per share,
return on stockholders' equity, return on assets, net income, or any other
financial or other measurement established by the Committee. The Performance
Goals may include minimum and optimum objectives or a single set of objectives.

(b) PAYMENT OF PERFORMANCE SHARE AWARDS. The Committee shall establish
the method of calculating the amount of payment to be made under a Performance
Share Award if the Performance Goals are met, including the fixing of a maximum
payment. The Performance Share Award shall be expressed in terms of shares of
Common Stock and referred to as "Performance Shares". After the completion of an
Award Period, the performance of the Company, subsidiary or division shall be
measured against the Performance Goals, and the Committee shall determine
whether all, none or any portion of a Performance Share Award shall be paid. The
Committee, in its discretion, may elect to make payment in shares of Common
Stock, cash or a combination of shares and cash. Any cash payment shall be based
on the fair market value of Performance Shares on, or as soon as practicable
prior to, the date of payment.

(c) REVISION OF PERFORMANCE GOALS. At any time prior to the end of an
Award Period, the Committee may revise the Performance Goals and the computation
of payment if unforeseen events occur which have a substantial effect on the
performance of the Company, subsidiary or division and which in the judgment of
the Committee make the application of the Performance Goals unfair unless a
revision is made.

(d) REQUIREMENT OF EMPLOYMENT. A grantee of a Performance Share Award
must remain in the employment of the Company until the completion of the Award
Period in order to be entitled to payment under the Performance Share Award;
provided that the Committee may, in its sole discretion, provide for a partial
payment where such an exception is deemed equitable.

(e) DIVIDENDS. The Committee may, in its discretion, at the time of the
granting of a Performance Share Award, provide that any dividends declared on
the Common Stock during the Award Period, and which would have been paid with
respect to Performance Shares had they been owned by a grantee, be (i) paid to
the grantee, or (ii) accumulated for the benefit of the grantee and used to
increase the number of Performance Shares of the grantee.

8. RESTRICTED STOCK GRANTS

The Committee may issue shares of Common Stock to a grantee which shares
shall be subject to the following terms and conditions and such other terms and
conditions as the Committee may prescribe ("Restricted Stock Grant"):

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(a) REQUIREMENT OF EMPLOYMENT. A grantee of a Restricted Stock Grant must
remain in the employment of the Company during a period designated by the
Committee ("Restriction Period"). If the grantee leaves the employment of the
Company prior to the end of the Restriction Period, the Restricted Stock Grant
shall terminate and the shares of Common Stock shall be returned immediately to
the Company; provided that the Committee may, at the time of the grant, provide
for the employment restriction to lapse with respect to a portion or portions of
the Restricted Stock Grant at different times during the Restriction Period. The
Committee may, in its discretion, also provide for such complete or partial
exceptions to the employment restriction as it deems equitable.

(b) RESTRICTIONS ON TRANSFER AND LEGEND ON STOCK CERTIFICATES. During the
Restriction Period, the grantee may not sell, assign, transfer, pledge, or
otherwise dispose of the shares of Common Stock except to a successor under
Section 10 hereof. Each certificate for shares of Common Stock issued hereunder
shall contain a legend giving appropriate notice of the restrictions in the
grant.

(c) ESCROW AGREEMENT. The Committee may require the grantee to enter into
an escrow agreement providing that the certificates representing the Restricted
Stock Grant will remain in the physical custody of an escrow holder until all
restrictions are removed or expire.

(d) LAPSE OF RESTRICTIONS. All restrictions imposed under the Restricted
Stock Grant shall lapse upon the expiration of the Restriction Period if the
conditions as to employment set forth above have been met. The grantee shall
then be entitled to have the legend removed from the certificates.

(e) DIVIDENDS. The Committee shall, in its discretion, at the time of the
Restricted Stock Grant, provide that any dividends declared on the Common Stock
during the Restriction Period shall either be (i) paid to the grantee, or (ii)
accumulated for the benefit of the grantee and paid to the grantee only after
the expiration of the Restriction Period.

9. DISCONTINUANCE OR AMENDMENT OF THE PLAN

The Board of Directors may discontinue the ISP at any time and may from
time to time amend or revise the terms of the ISP as permitted by applicable
statutes, except that it may not revoke or alter, in a manner unfavorable to the
grantees of any Incentives hereunder, any Incentives then outstanding, nor may
the board amend the ISP without stockholder approval, where the absence of such
approval would cause the Plan to fail to comply with Rule 16b-3 under the
Securities Exchange Act of 1934, or any other requirement of applicable law or
regulation. No Incentive shall be granted under the ISP after December 31, 1995
but Incentives granted theretofore may extend beyond that date.

10. NONTRANSFERABILITY

Each Incentive granted under the ISP shall not be transferable other than
by will or the laws of descent and distribution, and with respect to Stock
Options, shall be exercisable, during the grantee's lifetime, only by the
grantee or the grantee's guardian or legal representative.

11. NO RIGHT OF EMPLOYMENT

The ISP and the Incentives granted hereunder shall not confer upon any
Eligible Employee the right to continued employment with the Company or affect
in any way the right of the Company to terminate the employment of an Eligible
Employee at any time and for any reason.

12. TAXES

The Company shall be entitled to withhold the amount of any tax
attributable to any amount payable or shares deliverable under the ISP after
giving the person entitled to receive such amount or shares notice as far in
advance as practicable.

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(LOGO)

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<TABLE>
<S> <C> <C> <C>
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MERCK & CO., INC. PROXY/VOTING INSTRUCTION CARD
P.O. BOX 100, WHITEHOUSE STATION, NJ 08889-0100 ANNUAL MEETING OF STOCKHOLDERS -- APRIL 26, 1994
THIS PROXY IS SOLICITED ON BEHALF The shares represented by this proxy will be voted as
OF THE BOARD OF DIRECTORS directed by the stockholder. If no specification is made, the
shares will be voted FOR proposals 1, 2, 3, 4 and 5 and
AGAINST proposals 6 and 7.
When signing as attorney, executor, administrator, trustee or
guardian, give full title as such, and when stock has been
issued in the names of two or more persons, all should sign
unless evidence of authority to sign on behalf of others is
attached.
Signature(s) ...............................................
.............................................................
Dated.................................................., 1994
</TABLE>

Please complete, sign, date and return
promptly using the enclosed envelope.

<TABLE>
<S> <C>
/ / Please check ONLY if you plan to attend the Annual
Meeting. (Over)
An admission ticket will be mailed to you.
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<TABLE>
<S> <C>
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The undersigned hereby appoints P. ROY VAGELOS, MARY M. McDONALD and CELIA A. COLBERT, as Proxies, each with the power to
appoint his or her substitute, and hereby authorizes them to represent and to vote ALL of the stock of MERCK & CO., Inc.
standing in the name of the undersigned at the ANNUAL MEETING OF STOCKHOLDERS to be held on April 26, 1994, and at all
adjournments thereof, upon the matters below, as designated (including the power to vote cumulatively in the election of
directors), and upon such other matters as may properly come before the meeting. This card also provides voting instructions
for shares held for the account of the undersigned in the dividend reinvestment plan, as described in the proxy statement.
Any prior proxy or voting instructions are hereby revoked.
THE DIRECTORS RECOMMEND A VOTE FOR PROPOSALS 1, 2, 3, 4 AND 5.
1. Election of Directors: Nominees are Martin J. Wygod for a term expiring in 1996; Lawrence A. Bossidy, Charles E. Exley,
Jr. and William N. Kelley for terms expiring in 1997.
AUTHORITY TO VOTE FOR ANY NOMINEE MAY BE WITHHELD BY LINING THROUGH THE NOMINEE'S NAME ABOVE. To cumulate votes as to a
particular nominee(s) as explained in the proxy statement, indicate the name(s) and the number of votes to be given to such
nominee(s):

<CAPTION>
<S> <C>
FOR all nominees (except as WITHHOLD AUTHORITY
marked to the contrary above) / / to vote for all nominees / /
2. Ratification of Appointment of Independent Public
Accountants.............................................. FOR / / AGAINST / / ABSTAIN / /
3. Proposal to amend Executive Incentive Plan............... FOR / / AGAINST / / ABSTAIN / /
4. Proposal to adopt the Merck Deferral Program............. FOR / / AGAINST / / ABSTAIN / /
5. Proposal to amend 1991 Incentive Stock Plan.............. FOR / / AGAINST / / ABSTAIN
THE DIRECTORS RECOMMEND A VOTE AGAINST PROPOSALS 6 AND 7.
6. Stockholder proposal re Annual Election of Directors..... FOR / / AGAINST / / ABSTAIN / /
7. Stockholder proposal re Executive Compensation........... FOR / / AGAINST / / ABSTAIN / /
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</TABLE>