<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
MERCK & CO., INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[LOGO] MERCK
Merck & Co, Inc.
Notice of Annual Meeting of Stockholders
April 27, 1999
----------------
To the Stockholders:
The Annual Meeting of Stockholders of Merck & Co., Inc. will be
held on Tuesday, April 27, 1999, 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 2001 and five
directors for terms ending in 2002;
. To consider and act upon a proposal to ratify the appointment
of independent public accountants for 1999;
. To consider and act upon a stockholder proposal concerning
annual election of directors;
. To consider and act upon a stockholder proposal concerning
bonuses for executive officers;
. To consider and act upon a stockholder proposal concerning
nomination of a wage-roll employee to the Board of Directors;
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 5,
1999, 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.
In order that your stock may be represented at the meeting if you
are not personally present, you are urged to vote your shares by (1)
a toll-free telephone call, (2) the Internet, or (3) completing,
signing and dating the enclosed proxy card and returning it promptly
in the accompanying addressed envelope. If you are voting by
telephone or the Internet, follow the instructions on the attachment
to the proxy card.
Admission to the meeting will be by ticket only. The ticket
attached to the proxy card will admit you and one guest to the
meeting. If you are a stockholder whose shares are held through an
intermediary such as a bank or broker and you plan to attend, you
may 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.
By order of the Board of Directors,
Celia A. Colbert
Vice President, Secretary and
Assistant General Counsel
March 18, 1999
<PAGE>
Merck & Co., Inc.
P. O. Box 100
Whitehouse Station, New Jersey 08889-0100
(908) 423-1000
March 18, 1999
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 which will be held
at the Edward Nash Theatre at Raritan Valley Community College, Route 28 and
Lamington Road, North Branch, New Jersey, on Tuesday, April 27, 1999, and all
adjournments thereof. The Company's Annual Report for 1998, including
financial statements, and proxy statement and proxy/voting instruction card
("proxy card" or "proxy") are being mailed to stockholders beginning March 18,
1999.
If a stockholder is a participant in the Merck Stock Investment 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 Merck & Co., Inc. Employee Savings and
Security Plan, Merck & Co., Inc. Employee Stock Purchase and Savings Plan,
Hubbard Farms, Inc. Employee Savings Plan, Medco 401(k) Savings Plan, Merck
Puerto Rico Employee Savings and Security Plan, Merck Frosst Canada Inc. Stock
Purchase Plan and Merial 401(k) Savings Plan ("Merial Plan"). Instead, these
participants will receive from the plan trustees separate voting instruction
cards covering these shares. If voting instruction cards for the Merial Plan
are not signed and returned, the plan trustee will vote the shares in the same
proportion as it voted the shares for which voting instructions were received.
Voting instruction cards for all other plans must be signed and returned or
those shares will not be voted.
Any proxy cards returned without specification will be voted as to each
proposal in accordance with the recommendations of the Board of Directors.
Stockholders of record can also vote their shares by telephone or the
Internet. The telephone and Internet voting procedures are designed to
authenticate stockholders' identities, to allow stockholders to give their
voting instructions and to confirm that these instructions have been properly
recorded. If your shares are held in the name of a bank or broker, the
availability of telephone and Internet voting will depend on their voting
processes; therefore, it is recommended that you follow the voting
instructions on the form you receive. The Company has been advised by legal
counsel that the procedures which have been put in place are consistent with
the requirements of applicable law.
The Proxy
Any person giving a proxy has the power to revoke it at any time before it
is voted by submitting a later dated proxy (including a proxy by telephone or
the Internet) or by giving timely written notice to Celia A. Colbert, Vice
President, 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, by
telephone or by electronic means. 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.,
Inc., 445 Park Avenue, New York, New York 10022, to aid in the solicitation of
proxies at an anticipated fee of $20,000 plus reasonable expenses.
<PAGE>
Beneficial Ownership of Securities and Voting Rights
On December 31, 1998, 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 were outstanding and entitled to vote as of the record date, March 5,
1999, 2,363,084,859 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.
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, when six directors are to be elected, a
holder of 100 shares may cast 600 votes for a single nominee, apportion 200
votes to each of three nominees, or apportion 600 votes in any other manner by
so noting in the space provided on the accompanying proxy card. The cumulative
voting feature applicable to the election of directors is only available by
voting the proxy card; it is not available by telephone or the Internet.
A stockholder may withhold votes from any or all nominees. Except to the
extent that a stockholder withholds votes from any or all nominees, the
persons named in the proxy card, 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 for election,
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 proxy will vote such proxy in
accordance with the specification made with respect to each of the other
proposals or, if no specification is made, for the proposal to ratify the
appointment of independent public accountants 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
Six directors are to be elected at the meeting. One director is to be
elected for a two-year term expiring in 2001 and five directors are to be
elected for three-year terms expiring in 2002. The Board's nominees are
Ms. Carleton S. Fiorina, a new candidate, for a two-year term and Mr. H.
Brewster Atwater, Jr., Mr. Raymond V. Gilmartin, Dr. Edward M. Scolnick, Dr.
Samuel O. Thier and Mr. Dennis Weatherstone, current directors of the Company,
for three-year terms. After the election of six directors at the meeting, the
Company will have fourteen directors, including the eight continuing directors
whose present terms extend beyond the meeting. Information on the nominees and
continuing directors follows.
2
<PAGE>
Name, Age Business Experience and Other Directorships or
and Year Significant Affiliations
First Elected ---------------------------
Director
- -------------
Nominees
For a term expiring in 2001
[PHOTO] Group President, Global Services Provider Business, Lucent
Technologies Inc. (communications systems and technology)
Carleton S. since October 1997; President, Lucent Technologies Consumer
Fiorina Products (October 1996 to October 1997); Executive Vice
Age--44 President, Corporate Operations, Lucent Technologies Inc.
(January 1996 to October 1996); President, North America
Region of the Network Systems Group, AT&T (January 1995 to
January 1996); President, Atlantic and Canada Region of the
Network Systems Group, AT&T (July 1994 to January 1995);
senior positions with AT&T prior to July 1994
Director, Kellogg Company
For terms expiring in 2002
[PHOTO] Retired (1996); Chairman of the Board and Chief Executive
Officer, General Mills, Inc. (consumer foods and restaurants)
H. Brewster for more than five years
Atwater, Jr.
Age--67 Director, Darden Restaurants, Inc., IDS Mutual Fund Group,
1988 Mayo Foundation, Public Radio International and Walker Art
Center; Member, The Business Council
[PHOTO] Chairman of the Board (since November 1994), President and
Chief Executive Officer (since June 1994) of the Company;
Raymond V. Chairman, President and Chief Executive Officer (1992 to
Gilmartin 1994), Becton Dickinson and Company (medical supplies and
Age--58 devices and diagnostic systems)
1994
Director, General Mills, Inc. and Public Service Enterprise
Group; Chairman, Pharmaceutical Research and Manufacturers of
America; Member, The Business Council and The Business
Roundtable
[PHOTO] Executive Vice President, Science and Technology and
President, Merck Research Laboratories for more than five
Edward M. years
Scolnick,
M.D. Member, National Academy of Sciences and its Institute of
Age--58 Medicine
1997
3
<PAGE>
Name, Age Business Experience and Other Directorships or
and Year Significant Affiliations
First Elected ---------------------------
Director
- -------------
[PHOTO] President (since April 1997) and Chief Executive Officer
(since July 1996), Partners HealthCare System, Inc.;
Samuel O. President, Massachusetts General Hospital (May 1994 to April
Thier, M.D. 1997); President, Brandeis University (October 1991 to May
Age--61 1994)
1994
Director, Fleet Financial Group; Member, Institute of Medicine
of the National Academy of Sciences; Fellow, American Academy
of Arts and Sciences; Trustee, Brandeis University, Boston
Museum of Science, Cornell University, The Commonwealth Fund
and WGBH Public Television; Master, American College of
Physicians
[PHOTO] Retired (1995); Chairman of the Board, J.P. Morgan & Co.
Incorporated and Morgan Guaranty Trust Company of New York
Dennis (banking and other financial services) for more than five
Weatherstone years
Age--68
1988 Director, General Motors Corporation, L'Air Liquide and
Institute for International Economics; Independent Member of
the Board of Banking Supervision of the Financial Services
Authority, London; President, Royal College of Surgeons
Foundation; Trustee, The Alfred P. Sloan Foundation; Member,
The Business Council
Directors Whose Terms Expire in 2000
[PHOTO] Chairman of the Board and Chief Executive Officer,
AlliedSignal, Inc. (aerospace, automotive products and
Lawrence A. engineered materials technology) for more than five years
Bossidy
Age--64 Director, Champion International Corporation and J.P. Morgan &
1992 Co. Incorporated; Member, The Business Council and The
Business Roundtable
[PHOTO] Presidential Distinguished Professor, Emory University since
September 1998; President, Spelman College from 1987 to June
Johnnetta B. 1997
Cole, Ph.D.
Age--62 Director, Coca-Cola Enterprises, The Home Depot, Inc. and
1994 Management and Training Corporation; Trustee, Rockefeller
Foundation and Gallaudet University; Member, Council on
Foreign Relations and National Council of Negro Women; Fellow,
American Anthropological Association
4
<PAGE>
Name, Age and
Year First Business Experience and Other Directorships
Elected Director or Significant Affiliations
- -------------- ---------------------------
Retired (1991); Chairman of the Board and Chief Executive
Officer, NCR Corporation (business information processing
[PHOTO] systems) from January 1988 to September 1991
Charles E. Trustee, The Andrew W. Mellon Foundation; Member, The Business
Exley, Jr. Council and Board of Overseers, Columbia University Graduate
Age--69 School of Business
1988
Chief Executive Officer, University of Pennsylvania Health
System and Executive Vice President, Dean of the School of
[PHOTO] Medicine and Robert G. Dunlop Professor of Medicine,
Biochemistry and Biophysics, University of Pennsylvania, for
William N. more than five years
Kelley, M.D.
Age--59 Director, Beckman Coulter, Inc., Greater Philadelphia First
1992 and Philadelphia Orchestra Association; Trustee, Emory
University; Fellow, American Academy of Arts and Sciences;
Member, American Philosophical Society, Institute of Medicine
of the National Academy of Sciences, Board of Managers of
Wistar Institute; Chairman, Board of Governors of Leonard
Davis Institute of Health Economics; Master, American College
of Physicians
Directors Whose Terms Expire in 2001
Retired (1997); Chairman of the Board, The RTZ Corporation PLC
(international mining company) for more than five years
[PHOTO]
Director, Unilever PLC, Carlton Communications PLC and The
Sir Derek Merchants Trust PLC
Birkin
Age--69
1992
President, The Andrew W. Mellon Foundation (philanthropic
foundation) for more than five years
[PHOTO]
Director, American Express Company; Member, Board of
William G. Overseers, Teachers Insurance and Annuity Association of
Bowen, Ph.D. America--College Retirement Equities Fund; Trustee, Denison
Age--65 University
1986
5
<PAGE>
Name, Age Business Experience and Other Directorships or
and Year Significant Affiliations
First Elected ---------------------------
Director
- -------------
[PHOTO] International Health Care Consultant for more than five years
Carolyne K. Director, Beckman Coulter, Inc., The Prudential Insurance
Davis, Ph.D. Company of America, Inc., Minimed Inc. and Beverly
Age--67 Enterprises, Inc.; Trustee, University of Pennsylvania Health
1989 System; Member, Institute of Medicine of the National Academy
of Sciences
[PHOTO] Professor of Psychiatry, Meharry Medical College for more than
five years
Lloyd C.
Elam, M.D. Director, Premark International Inc. and Tupperware, Inc.;
Age--70 Trustee, Fisk University and The Alfred P. Sloan Foundation
1973
Board Committees
There are five standing committees of the Board of Directors: the Committee
on Directors, the Finance Committee, the Executive Committee, the Audit
Committee and the Compensation and Benefits Committee. Members of the
individual committees are named below:
<TABLE>
<CAPTION>
Committee on Compensation and
Directors Finance Executive Audit Benefits
------------ ------- --------- ----- ----------------
<S> <C> <C> <C> <C>
D. Birkin H. B. Atwater, Jr. H. B. Atwater, Jr. D. Birkin H. B. Atwater, Jr.(*)
L. A. Bossidy L. A. Bossidy W. G. Bowen C. K. Davis L. A. Bossidy
W. G. Bowen(*) J. B. Cole C. K. Davis C. E. Exley, Jr.(*) W. G. Bowen
W. N. Kelley C. E. Exley, Jr. L. C. Elam W. N. Kelley J. B. Cole
D. Weatherstone D. Weatherstone(*) R. V. Gilmartin(*) S. O. Thier L. C. Elam
S. O. Thier
</TABLE>
- --------
(*) Chairman
The Committee on Directors, consisting entirely of independent directors,
considers and makes recommendations on matters related to the practices,
policies and procedures of the Board. As part of its duties, the Committee
assesses the size, structure and composition of the Board and Board
committees, evaluates Board performance and reviews Board compensation. The
Committee also acts 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 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.
6
<PAGE>
The Finance Committee, consisting entirely of independent directors,
considers and makes recommendations on matters related to the financial
affairs and policies of the Company, including capital structure issues,
dividend policy, investment and debt policies, asset and portfolio management
and financial transactions, as necessary.
The Executive Committee acts for the Board of Directors when formal Board
action is required between meetings in connection with matters already
approved in principle by the full Board or to fulfill the formal duties of the
Board.
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, Base Salary
Deferral Plan, Deferral Program 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.
Board and Board Committee Meetings
In 1998, there were nine meetings held by the Board of Directors. Board
committees met as follows during 1998: the Committee on Directors, six times;
the Compensation and Benefits Committee, five times; the Audit Committee,
three times; the Finance Committee, twice. No meetings of the Executive
Committee were held in 1998. The average combined attendance for all Board and
Committee meetings was 97%. All directors attended at least 75% of the
meetings of the Board and of the Committees on which they served.
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 Committee on Directors, the Finance Committee, the Audit Committee and the
Compensation and Benefits Committee are compensated for such services by an
annual retainer of $3,000. 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 Merck & Co., Inc. Plan for Deferred Payment of Directors'
Compensation ("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 any of 18
investment measures, including the Company's Common Stock, and is payable in
cash in installments or as a lump-sum on or after termination of services as a
director.
7
<PAGE>
In 1996, the Retirement Plan for the Directors of Merck & Co., Inc. (the
"Directors' Retirement Plan") (which excludes current or former employees of
the Company) was discontinued for directors who join the Board after December
31, 1995. Participant directors who elected to remain in the Directors'
Retirement Plan and 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. The
applicable benefit is payable for the lifetime of the retired director.
Eligible directors who elected not to accrue additional retirement credits
under the Directors' Retirement Plan will receive at retirement a pension
benefit based on the amount of credits as of March 31, 1997. Such directors,
and directors who join the Board after December 1995, will be credited with an
additional $15,000 of compensation annually to be deferred in accordance with
the terms of the Plan for Deferred Payment of Directors' Compensation.
Under the Non-Employee Directors Stock Option Plan adopted by stockholders
in 1996 (the "1996 Non-Employee Directors Stock Option Plan"), directors
(excluding those who are current or former employees of the Company) each
receive options to purchase 1,000 shares of Common Stock every year on the
first Friday following the Company's Annual Meeting of Stockholders. In view
of the 2-for-1 split of the Company's common stock on February 16, 1999, it is
expected that the 1996 Non-Employee Directors Stock Option Plan will be
amended to increase the number of options granted to directors annually. The
options become exercisable five years from date of grant and expire ten years
from date of grant. The exercise price of the options is the closing price of
the Company's Common Stock on the date of grant as quoted on the composite
tape of the New York Stock Exchange. The exercise price is payable in cash at
the time the stock options are exercised. In addition, the 1996 Non-Employee
Directors Stock Option Plan and the prior Non-Employee Directors Stock Option
Plan allow directors under certain circumstances to transfer stock options to
members of their immediate family, family partnerships and family trusts.
Security Ownership of Directors and Executive Officers
Beneficial ownership of Common Stock of the Company as of February 17, 1999
by each director and nominee for director of the Company, each executive
officer of the Company named in the Summary Compensation Table and by all
directors, nominees 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.
<TABLE>
<CAPTION>
Company Common Stock
--------------------------------------------------
Right to Acquire Percent
Shares Ownership Under Options of
Name of Beneficial Owner Owned(a) Exercisable Within 60 Days Class
------------------------ --------- -------------------------- -------
<S> <C> <C> <C>
Raymond V. Gilmartin....... 240,863(b)(c) -- *
H. Brewster Atwater, Jr. .. 33,766 8,000 *
Derek Birkin............... 1,133 2,000 *
Lawrence A. Bossidy........ 32,466 2,000 *
William G. Bowen........... 25,419(b) 2,000 *
Johnnetta B. Cole.......... 4,465 -- *
Carolyne K. Davis.......... 7,120 -- *
Lloyd C. Elam.............. 47,590(c) 6,000 *
Charles E. Exley, Jr. ..... 30,824 8,000 *
Carleton S. Fiorina........ 180 -- *
William N. Kelley.......... 15,135 2,000 *
Edward M. Scolnick......... 250,058(b) 181,200 *
Samuel O. Thier............ 20(d) -- *
Dennis Weatherstone........ 30,598 8,000 *
Judy C. Lewent............. 162,512 437,650 *
Per G.H. Lofberg........... 172,606 409,506 *
Per Wold-Olsen............. 81,765 195,000 *
All Directors, Nominees and
Executive Officers as a
Group..................... 1,377,547(b) 2,505,656(b) *
</TABLE>
8
<PAGE>
(a) Includes equivalent shares of Common Stock held by the Trustee of the
Merck & Co., Inc. Employee Savings and Security Plan or shares of Common
Stock held by the Trustee of the Medco 401(k) Savings Plan for the
accounts of individuals as follows: Mr. Gilmartin--3,523 shares, Dr.
Scolnick--3,478 shares, Ms. Lewent--5,014 shares, Mr. Lofberg--5,219
shares, Mr. Wold-Olsen--5,469 shares and all directors and executive
officers as a group--59,694 shares. Also includes shares of phantom Common
Stock held in the Plan for Deferred Payment of Directors' Compensation or
in the Merck & Co., Inc. Deferral Program as follows: Mr. Gilmartin--
45,233 shares, Mr. Atwater--30,766 shares, Mr. Bossidy--2,466 shares,
Dr. Bowen--1,819 shares, Dr. Cole--4,005 shares, Dr. Davis--1,194 shares,
Dr. Elam--32,090 shares, Mr. Exley--27,824 shares, Dr. Kelley--12,935
shares, Mr. Weatherstone--598 shares, Ms. Lewent-- 7,808 shares, Mr.
Lofberg--9,351 shares and all directors and executive officers as a
group--211,736 shares.
(b) Excludes shares of Common Stock held by family members and in which
beneficial ownership is disclaimed by the individuals as follows: Mr.
Gilmartin--22,600 shares, Dr. Scolnick--28,000 shares and all directors
and executive officers as a group--109,821 shares. Excludes 1,800 shares
held by a trust of which Dr. Bowen is a trustee and in which he disclaims
beneficial ownership. Excludes 23,335 shares beneficially held by a family
limited partnership in a trust for the benefit of Mr. Gilmartin's family;
Mr. Gilmartin disclaims beneficial ownership in the trust of which his
spouse is a trustee. Also excludes rights to acquire ownership under
options that have been transferred to a family member of an executive
officer and in which beneficial ownership is disclaimed by the executive
officer.
(c) Includes 132,235 shares of Common Stock held by Mr. Gilmartin in a family
limited partnership in which he shares voting and investment power. Also
includes 1,320 shares of Common Stock held by Dr. Elam in a trust in which
he and his spouse are trustees and beneficiaries.
(d) Prior to the end of 1998, under the policy of his employer, Dr. Thier was
allowed to hold only a de minimis amount of stock in any vendor
corporation.
(*) Less than one percent of the Company's outstanding shares of Common Stock.
Compensation and Benefits Committee
Report on Executive Compensation
The Compensation and Benefits Committee of the Board (the "Committee")
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.
The Committee is comprised entirely of independent outside directors.
Objectives and Policies
The Committee seeks to ensure that:
. rewards are closely linked to Company-wide, division, area, team and
individual performance;
. the interests of the Company's employees are aligned with those of its
stockholders through potential stock ownership; and
. compensation and benefits are set at levels that enable the Company to
attract and retain the high-quality employees it needs.
The Committee applies these objectives and policies 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 Committee to make a high proportion of executive officer
compensation dependent on long-term performance and on enhancing stockholder
value.
Executive officer compensation programs have both short-term and longer-term
components. Short-term components include base salary and annual bonus awards
under the stockholder-approved Executive Incentive
9
<PAGE>
Plan ("EIP"). Longer-term components include stock option grants under the
stockholder-approved Incentive Stock Plan ("ISP"). Prior to 1995, awards of
Performance Shares were made under the Strategic Performance Feature ("SPF").
Those awards provide for payment of stock or cash or a combination thereof at
the end of five-year periods, the last of which ended in 1998. Payments in
cash are equal to the market value on the payment date of the stock that the
cash replaces. Payments are based on the Company's achievement of specified
performance targets.
The Company employs a formal system for developing measures of executive
officer performance and for evaluating performance.
Provided that other compensation objectives are met, it is the Committee's
intention that executive compensation be deductible for federal income tax
purposes.
Base Salary and Bonus
Executive officer base salary and bonus awards are determined with reference
to Company-wide, division, area, team and individual performance for the
previous fiscal year, based on a wide range of measures that permit
comparisons with competitors' performance and internal targets set before the
start of each fiscal year and by comparison to the base salary and bonus award
levels of executive officers of other leading healthcare companies.
Performance measures for 1998 covered operational, strategic and human
resources areas. The operational measures were earnings per share growth and
sales growth compared to other leading healthcare companies (Abbott
Laboratories, American Home Products, Bristol-Myers Squibb, Glaxo Wellcome,
Johnson & Johnson, Eli Lilly, Pfizer, Pharmacia & Upjohn, Roche Holding,
Schering-Plough, SmithKline Beecham and Warner-Lambert) and the change in the
Company's return on operating assets versus the prior year. The strategic
measures refer to the Company's communicated goal of being a top-tier growth
company by continuing a strong commitment to research, achieving the full
potential of managed pharmaceutical care, with particular reference to Merck-
Medco, and preserving profitability through productivity in manufacturing. The
human resources measures refer to teamwork, respect for the individual,
flexibility and agility. These were assessed through a review of Company
achievements in fostering a productive work environment and strengthening
individual competencies so that the Company can attract, develop and retain
employees with the skills, abilities and attitudes to meet business
requirements now and in the future. The Company met or exceeded all
performance measure targets in 1998. In addition to Company-wide measures of
performance, the Committee considered those performance factors particular to
each executive officer--i.e., the performance of the division or area for
which such officer had management responsibility and individual managerial
accomplishments.
Base salary and bonus award comparisons are made within the healthcare
industry using the following United States owned companies as comparisons:
Abbott Laboratories, American Home Products, Bristol-Myers Squibb, Johnson &
Johnson, Eli Lilly, Pfizer, Pharmacia & Upjohn, Schering-Plough and Warner-
Lambert. Generally, the base salary and bonus award practices of the non-
United States owned companies cannot be meaningfully compared with those of
the Company since their senior executive officers are based outside the United
States and compensation practices differ. The Committee also considers broader
industry information that it judges to be appropriate.
The Committee judged that executive officer salary and bonus compensation
for 1998 was consistent with the level of accomplishment and appropriately
reflected Company performance, including earnings per share growth, sales
growth, return on operating assets and strong progress in research, managed
pharmaceutical care, manufacturing productivity and the management of human
resources. The Committee relies heavily, but not exclusively, on these
measures. It exercises subjective judgment and discretion in 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.
Stock Options
Within the total number of shares authorized by stockholders, the Committee
aims to provide stock option grants broadly and deeply throughout the
organization.
10
<PAGE>
Executive officer stock option grants are based on level of position and
individual contribution. 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 gains from stock option exercises are entirely dependent on the
long-term growth of the Company's stock price.
The Committee expects the CEO to hold 70% and the other executive officers
named in the Summary Compensation Table to hold 60% of the shares which may be
purchased from the gain on stock option exercise after deducting option price,
taxes and transaction costs.
Strategic Performance Feature
Awards
No awards were made in 1998 consistent with the Committee's decision to
discontinue the SPF in 1995 and to rely on stock option awards as the only
long-term incentive. Since 1989, the SPF had allowed for the award of
Performance Shares to executive officers based on the level of position.
Awards previously made under the SPF, which were for five-year periods, will
continue to their term. The last payment that may be made, dependent on
Company performance, would be in 1999 for the 1994-1998 Award Period.
Payments
In 1998, payments were made for the 1993-1997 Award Period of the SPF.
Payments for that period were made in cash or stock.
For 1993, 1995, 1996 and 1997, the Committee considered two measures:
earnings per share growth and return on assets as compared to a group of
leading healthcare companies selected in 1993. This group consisted of
companies in the Dow Jones Pharmaceutical Index--United States Owned Companies
("DJPI") as of the applicable time period other than the Company and also
included Abbott Laboratories, Glaxo Wellcome and SmithKline Beecham. The
Company placed third for each of these measures.
For 1994, the Committee used the measures of net income growth versus a
group of leading healthcare companies (as defined in the prior paragraph),
return on assets against plan and total stockholder return versus the Standard
& Poor's 500 Index. The Company placed fourth for net income growth, met its
planned return on assets and placed in the top 80-89th percentile of the
Standard & Poor's 500 companies for total stockholder return.
Overall, the result was payment of 101.3% of target out of a possible
payment range from zero to 175%. (See Summary Compensation Table.) The
Committee considered the Company's performance under the measures described
above and made individual payments using its subjective judgment and
discretion.
Compensation of the Chief Executive Officer
Base Salary and Bonus
Mr. Gilmartin's base salary and bonus award for 1998 were determined with
reference to the same measures used for all executive officers of the Company,
including the Company performance measures of earnings per share and sales
growth, return on operating assets and continuing strong progress in research,
managed pharmaceutical care, manufacturing productivity and the management of
human resources. The Company met or exceeded its targets on all Company
performance measures. Mr. Gilmartin's base salary for 1998 was $1,100,004,
unchanged from 1997. Mr. Gilmartin's bonus award was $1,450,000 for 1998, in
comparison to $1,500,000 for 1997. The Committee exercised its subjective
judgment and discretion in determining Mr. Gilmartin's base salary and bonus
award for 1998.
11
<PAGE>
Stock Options
The stock option grant to Mr. Gilmartin in 1998 was determined with
reference to the same criteria used for all executive officers of the Company,
as described in the "Stock Options" section above.
Strategic Performance Feature
Mr. Gilmartin was not eligible for any payment in 1998 under the SPF since
he was not employed by the Company at the time the 1993-1997 SPF award was
made.
Compensation Analyses and Reviews
The Company periodically retains outside compensation and benefits
consultants to compare base salary and incentive compensation programs for the
Company's executive officers with those of other leading healthcare companies
(including those in the DJPI) and leading industrial companies to ensure that
they are appropriate to the Company's objectives. The Committee exercises
judgment and discretion in the information it reviews and the analyses it
considers.
Compensation and Benefits Committee
H. Brewster Atwater, Jr.
Chairman
Lawrence A. Bossidy William G.
Bowen
Johnnetta B. Cole Lloyd C. Elam
12
<PAGE>
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
--------------------------------------- ---------------------------------------
Awards Payouts
--------------------------- -----------
Other Restricted Securities
Annual Stock Underlying LTIP All Other
Salary Bonus Compensation Awards(d) Options/SARs (e) Payouts (f) Compensation
Name and Principal Position Year ($) ($) ($) ($) (#) ($) ($)
- --------------------------- ---- ---------- ---------- ------------ ---------- ---------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Raymond V. Gilmartin 1998 $1,100,004 $1,450,000 $ -- -- 350,000 $ -- $7,200(g)
Chairman of the Board, 1997 1,100,004 1,500,000 -- -- 350,000 -- 7,200(g)
President and Chief 1996 1,000,000 1,300,000 -- -- 300,000 -- 6,750(g)
Executive Officer
Edward M. Scolnick 1998 724,004 815,000 -- -- 200,000 864,510 3,600(g)
Executive Vice 1997 689,004 825,000 -- -- 200,000 855,592 3,600(g)
President, Science 1996 663,000 800,000 -- -- 200,000 1,006,698 3,375(g)
and Technology and
President, Merck
Research Laboratories
Judy C. Lewent 1998 475,000 490,000 -- -- 140,000 461,042 7,200(g)
Senior Vice President 1997 443,334 500,000 -- -- 140,000 366,998 7,200(g)
and Chief Financial 1996 410,000 460,000 57,398(a) -- 140,000 419,288 6,750(g)
Officer
Per G.H. Lofberg 1998 455,778 490,000 -- -- 140,000 -- 8,632(h)
President, Merck- 1997 412,778 500,000 -- -- 180,000 -- 5,992(h)
Medco Managed Care, 1996 374,460 440,000 2,898(b) -- 140,000 -- 2,645(h)
L.L.C.
Per Wold-Olsen 1998 417,504 490,000 -- -- 140,000 288,208 7,200(g)
President, Human 1997 374,504 250,000 5,900(c) -- 120,000 251,580 7,200(g)
Health--Europe, 1996 325,668 385,000 20,014(c) -- 90,000 325,528 6,750(g)
Middle East & Africa
</TABLE>
- --------
(a) Includes air commuting service of $39,225 and automobile service of
$18,173.
(b) Represents compensation received in the form of discount for purchase
price of Merck Common Stock paid by the Company which was available to
Merck-Medco salaried employees under the Merck-Medco Employee Stock
Purchase Plan. Effective December 29, 1996, Merck-Medco employees earning
$120,000 or more are no longer eligible to participate in this plan.
(c) Reimbursement of tax liability for relocation expenses.
(d) Aggregate restricted stock holdings as of December 31, 1998, valued at the
closing market price at year end, were 50,000 shares with a value of
$3,687,500 for Mr. Gilmartin. The number of shares and price have been
adjusted to reflect the Company's 2-for-1 stock split on February 16,
1999. Regular dividends on these shares were paid quarterly.
(e) The number of shares has been adjusted to reflect the Company's 2-for-1
stock split on February 16, 1999. No stock appreciation rights were
granted to the executive officers named in the Summary Compensation Table.
(f) SPF payouts in 1998 were for services performed during the five-year award
cycle 1993-1997; SPF payouts in 1997 were for services performed during
the five-year award cycle 1992-1996; SPF payouts in 1996 were for services
performed during the five-year award cycle 1991-1995.
(g) Company contribution to the Merck & Co., Inc. Employee Savings and
Security Plan.
(h) Includes Company contributions to the Medco 401(k) Employee Savings Plan
of $6,040, $3,400 and $2,123 for 1998, 1997 and 1996, respectively, and
imputed income for survivor insurance of $2,592 for each of 1998 and 1997
and $522 for 1996.
13
<PAGE>
The following table sets forth stock options granted in 1998 to each of the
Company's executive officers named in the Summary Compensation Table and stock
options granted to all employees as a group. The table also sets forth the
hypothetical gains that would exist for the options at the end of their ten-
year terms for the executive officers named in the Summary Compensation Table
and for all employees as a group (assuming their options had ten-year terms)
at assumed compound rates of stock appreciation of 5% and 10%. The actual
future value of the options will depend on the market value of the Company's
Common Stock. All option exercise prices are based on market price on the date
of grant. In addition, all references below to number of shares, stock
appreciation rights and price have been adjusted to reflect the Company's 2-
for-1 stock split on February 16, 1999.
Option/SAR Grants In Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants(a) For Option Term(b)
------------------------------------------------ ------------------------------------------
Percent
of Total
Number of Options/
Securities SARs
Underlying Granted
Options/ To Exercise
SARs Employees or Base
Date of Granted in Fiscal Price Expiration
Name Grant (#) Year ($/Sh) Date 0% ($) 5% ($) 10% ($)
---- ------- ---------- --------- -------- ---------- ------ --------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Raymond V. Gilmartin.... 2/24/98 350,000 1.03% $63.9688 2/23/08 -- $ 14,080,361 $ 35,682,400
Edward M. Scolnick...... 2/24/98 200,000 0.59% 63.9688 2/23/08 -- 8,045,921 20,389,943
Judy C. Lewent.......... 2/24/98 140,000 0.41% 63.9688 2/23/08 -- 5,632,144 14,272,960
Per G.H. Lofberg........ 2/24/98 140,000 0.41% 63.9688 2/23/08 -- 5,632,144 14,272,960
Per Wold-Olsen.......... 2/24/98 140,000 0.41% 63.9688 2/23/08 -- 5,632,144 14,272,960
All Employees as a
Group.................. (c) 34,107,626 100.00% (c) (c) -- $ 1,367,377,553(d) $ 3,465,203,188(d)
----------------
<CAPTION>
0% 5% 10%
------ --------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total potential stock price appreciation from February 24, 1998 to
February 23, 2008 for all stockholders at assumed rates of stock price
appreciation(e)......................................................... -- $94,960,069,437 $240,647,460,214
Potential actual realizable value of options granted to all employees,
assuming ten-year option terms, as a percentage of total potential stock
price appreciation from February 24, 1998 to February 23, 2008 for all
stockholders at assumed rates of stock price appreciation............... -- 1.44% 1.44%
</TABLE>
- --------
(a) Options granted under the ISP to the Company's executive officers named in
the Summary Compensation Table are first exercisable five years from date
of grant and include a transferable stock option feature that allows the
transfer of stock options to immediate family members, family partnerships
and family trusts. The Company did not issue stock appreciation rights in
1998 to any of the executive officers named in the Summary Compensation
Table.
(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.
(c) Options and stock appreciation rights were granted under the Company's
stock option programs throughout 1998 with various vesting schedules and
expiration dates through the year 2008. The average exercise price of all
options granted to employees in 1998 is $63.7469.
(d) No gain to the optionees is possible without an increase in stock price,
which will benefit all stockholders.
(e) Based on a split-adjusted price of $63.9688 on February 24, 1998, and a
split-adjusted total of 2,360,452,552 shares of Common Stock outstanding.
14
<PAGE>
The following table sets forth the number of shares acquired on exercise of
stock options and the aggregate gains realized on exercise in 1998 by the
Company's executive officers named in the Summary Compensation Table. The
table also sets forth the number of shares covered by exercisable and
unexercisable options held by such executives on December 31, 1998 and the
aggregate gains that would have been realized had these options been exercised
on December 31, 1998, even though these options were not exercised and the
unexercisable options could not have been exercised on December 31, 1998.
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised In-
Underlying Unexercised The-
Options/SARs at FY- Money Options/SARs at
Shares Acquired Value End (c) (#) Fiscal Year End (d) ($)
On Exercise (a) Realized (b) ------------------------- -------------------------
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Raymond V. Gilmartin.... -- $ -- -- 2,360,000 $ -- $101,596,025
Edward M. Scolnick...... -- -- 221,200 980,000 12,138,525 35,615,050
Judy C. Lewent.......... 14,475 1,573,642 337,650 660,000 18,388,734 23,495,660
Per G.H. Lofberg........ -- -- 339,508 803,334 20,269,704 30,842,574
Per Wold-Olsen.......... 6,825 706,716 135,000 503,000 7,413,624 16,268,723
</TABLE>
- --------
(a) Reflects pre-split number of shares.
(b) Market value on the date of exercise of shares covered by options
exercised, less option exercise price.
(c) Adjusted to reflect the Company's 2-for-1 stock split on February 16,
1999.
(d) Market value of shares covered by in-the-money options on December 31,
1998, less split-adjusted option exercise price. Options are in-the-money
if the market value of the shares covered thereby is greater than the
option exercise price.
The Long-Term Incentive Plans--Awards in Last Fiscal Year table has been
eliminated since no SPF Performance Share Awards, or other Long-Term Incentive
Plan awards, were made by the Company in 1998.
Annual Benefits Payable Under Merck & Co., Inc. Retirement Plans
Annual benefits payable under the Retirement Plan for Salaried Employees of
Merck & Co., Inc. and the Merck & Co., Inc. Supplemental Retirement Plan are
based on a formula which (i) multiplies (a) the participant's final average
compensation (as defined in the plans) by (b) a multiplier of 2% for years of
credited service (as defined in the plans) earned prior to July 1, 1995 and a
multiplier of 1.6% for years of credited service earned after that date (total
credited service not to exceed 35 years) and then (ii) subtracts 1.6% of the
participant's Social Security benefits (not to exceed 50% of the primary
Social Security benefit).
The following tables set forth the estimated annual benefits payable using
the 1.6% and 2% multipliers, respectively, under the Retirement Plan for
Salaried Employees and 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 and without regard to the
Social Security offset. Annual benefits payable under the plans can be
estimated by adding the years of service earned prior to July 1, 1995 (Table
2) to those which could be earned after that date (Table 1).
15
<PAGE>
Pension Plan Tables
Table 1: 1.6% Formula
<TABLE>
<CAPTION>
Remuneration
(Average Pension
Compensation
During Highest
Five Consecutive Years
in the Years of Service
Last Ten Years Before (Estimated Annual Retirement Benefits For Years
Retirement) of Credited Service Shown Below)(a)
---------------------- -------------------------------------------------
15 20 25 30 35
-------- -------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
$ 800,000.............$192,000.$256,000 $ 320,000 $ 384,000 $ 448,000
1,000,000..............240,000 320,000 400,000 480,000 560,000
1,200,000..............288,000 384,000 480,000 576,000 672,000
1,400,000..............336,000 448,000 560,000 672,000 784,000
1,600,000..............384,000 512,000 640,000 768,000 896,000
1,800,000..............432,000 576,000 720,000 864,000 1,008,000
2,000,000..............480,000 640,000 800,000 960,000 1,120,000
2,200,000..............528,000 704,000 880,000 1,056,000 1,232,000
2,400,000..............576,000 768,000 960,000 1,152,000 1,344,000
2,600,000..............624,000 832,000 1,040,000 1,248,000 1,456,000
2,800,000..............672,000 896,000 1,120,000 1,344,000 1,568,000
3,000,000..............720,000 960,000 1,200,000 1,440,000 1,680,000
</TABLE>
Table 2: 2% Formula(b)
<TABLE>
<CAPTION>
Remuneration
(Average Pension
Compensation
During Highest
Five Consecutive Years Years of Service
in the (Estimated Annual Retirement Benefits
Last Ten Years Before For Years
Retirement) of Credited Service Shown Below)(a)
---------------------- ---------------------------------------
10 15 20 25
-------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$ 800,000..............$160,000 $240,000 $ 320,000 $ 400,000
1,000,000.............. 200,000 300,000 400,000 500,000
1,200,000.............. 240,000 360,000 480,000 600,000
1,400,000.............. 280,000 420,000 560,000 700,000
1,600,000.............. 320,000 480,000 640,000 800,000
1,800,000.............. 360,000 540,000 720,000 900,000
2,000,000.............. 400,000 600,000 800,000 1,000,000
2,200,000.............. 440,000 660,000 880,000 1,100,000
2,400,000.............. 480,000 720,000 960,000 1,200,000
2,600,000.............. 520,000 780,000 1,040,000 1,300,000
2,800,000.............. 560,000 840,000 1,120,000 1,400,000
3,000,000.............. 600,000 900,000 1,200,000 1,500,000
</TABLE>
- --------
(a) Benefits shown are exclusive of the Social Security offset provided for by
the benefit formula.
(b) Credited service is shown for the years specified to approximate the
actual years of credited service earned prior to July 1, 1995 (at the 2%
multiplier) by the executive officers named in the Summary Compensation
Table other than Mr. Gilmartin and Mr. Lofberg. Mr. Gilmartin earned 1.0
years prior to July 1, 1995. Mr. Lofberg does not participate in the
Retirement Plan for Salaried Employees but participates in the Medco
Retirement Plan described below.
Years of actual credited service in the Retirement Plan for Salaried
Employees and the Supplemental Retirement Plan as of July 1, 1995 and December
31, 1998, respectively, are: Dr. Scolnick--13 years and 16.5 years; Ms.
Lewent--15 years and 18.5 years; Mr. Wold-Olsen--21.5 years and 25 years. In
addition, if these
16
<PAGE>
individuals retire from service with the Company at age 65 and with less than
35 years of actual credited service, pursuant to the enhanced pension
provision of the Supplemental Retirement Plan applicable to bona fide
executives, described in greater detail below, they will receive an additional
month of credited service for each month of actual credited service prior to
January 1, 1995 up to an aggregate total of 35 years of credited service. As
of July 1, 1995 and December 31, 1998, Mr. Gilmartin had 1.0 and 4.5 years,
respectively, of actual credited service in the Retirement Plan for Salaried
Employees and the Supplemental Retirement Plan and was credited with 28 years
of credited service under the Supplemental Retirement Plan, as provided in and
subject to the employment agreement described below.
For purposes of the Retirement Plan for Salaried Employees and the
Supplemental Retirement Plan, 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 1998
differs from compensation reported in the Summary Compensation Table in that
pension compensation includes the annual EIP bonus awards received in 1998 for
services in 1997 rather than the EIP bonus awards paid in 1999 for services in
1998. Pension compensation in 1998 was $2,600,004 for Mr. Gilmartin;
$1,549,004 for Dr. Scolnick; $975,000 for Ms. Lewent and $667,504 for Mr.
Wold-Olsen.
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 includes 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 high 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 age
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 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 Supplemental Retirement Plan was amended as of January 1, 1995 to
eliminate prospectively the enhanced benefit except for certain grandfathered
participants. In general, other terms and conditions of benefit payments are
determined by reference to the provisions of the primary plans.
Annual Benefit Payable Under Medco Retirement Plan
Mr. Lofberg participates in the Medco Retirement Plan, a defined benefit
plan. His retirement income is determined in accordance with the following
formula: For each calendar year ("Plan Year"), the accrued benefit of each
participant who completes at least 1,000 hours of service in such Plan Year is
increased by an amount equal to the sum of (i) 250/1535 of 1% of the
participant's compensation, as defined in the Medco Retirement Plan, and (ii)
the amount of credited interest calculated for such Plan Year on the basis of
the participant's accrued benefit stated as a lump sum value as of January 1
of such Plan Year. A participant vests in 20% of such participant's accrued
benefit after the completion of three years of service, with the remainder
vesting 20% upon completion of each year of service thereafter. The estimated
annual retirement income payable as a single life annuity commencing at normal
retirement age for Mr. Lofberg is $25,752. The Medco Retirement Plan does not
provide for an offset for Social Security benefits.
Compensation Committee Interlocks and Insider Participation
H. Brewster Atwater, Jr., Lawrence A. Bossidy, William G. Bowen, Johnnetta
B. Cole and Lloyd C. Elam served on the Compensation and Benefits Committee
during 1998. There were no Compensation and Benefits Committee interlocks or
insider (employee) participation during 1998.
17
<PAGE>
Employment Contracts and Arrangements
As of June 9, 1994, the Company and Mr. Gilmartin entered into an employment
agreement (the "Agreement") under which Mr. Gilmartin serves as President,
Chief Executive Officer, Director and Chairman of the Board of Directors of
the Company. The Agreement provides that Mr. Gilmartin will be paid a base
salary of $1.0 million per year (or such higher salary as the Board may from
time-to-time determine), and that he will be eligible for annual bonus awards
under the Company's Executive Incentive Plan or any successor plan.
In recognition of the forfeiture by Mr. Gilmartin of common stock ownership
rights provided by his previous employer, on June 16, 1994 Mr. Gilmartin was
granted 50,000 shares of restricted Company Common Stock (which will remain
restricted until June 16, 1999). In addition, Mr. Gilmartin was granted
options under the Company's ISP to acquire 1,000,000 shares of the Company's
Common Stock on June 16, 1994 and 360,000 shares on February 28, 1995 at the
market price of the Company's Common Stock on the date of grant as determined
under the ISP. (In all cases, the number of shares has been adjusted to
reflect the Company's 2-for-1 stock split on February 16, 1999.) Both grants
become exercisable on the fifth anniversary of the date of grant and expire on
the tenth anniversary of the date of grant. Subsequent annual stock option
grants are as determined by the Board of Directors.
Pursuant to the Agreement, Mr. Gilmartin participates in the Retirement Plan
for Salaried Employees of Merck & Co., Inc. and the Supplemental Retirement
Plan. In determining benefits payable under such Plans, Mr. Gilmartin's
credited service will equal his credited service with the Company plus 28
years, and the percentage multiple used in the formula for benefit calculation
will be 1.6%. Benefits payable under the Company plans will be net of
retirement benefits payable by Mr. Gilmartin's previous employer.
If Mr. Gilmartin's employment is terminated by the Company without "Gross
Cause" or by Mr. Gilmartin with "Good Cause," the restricted stock and stock
options issued on June 16, 1994 will immediately become exercisable and, for a
period of two years from the date of termination, Mr. Gilmartin will be
entitled to receive his cash compensation under the Agreement, he will accrue
additional retirement benefits and his other stock options will become
exercisable on their original vesting dates. If Mr. Gilmartin's employment is
terminated by the Company for "Gross Cause" or is terminated by Mr. Gilmartin
without "Good Cause," he will forfeit any restricted stock and unvested stock
options and all cash compensation will cease.
"Gross Cause" is defined as (i) employee's conviction of a felony or (ii)
employee's willful gross neglect or willful gross misconduct in carrying out
employee's duties resulting, in either case, in material economic harm to the
Company, unless employee believed in good faith that such act or non-act was
in the best interests of the Company. "Good Cause" is defined as termination
of employee's employment at the initiative of employee within six months
following (i) any act or failure to act by the Board of Directors which would
cause employee (A) to be removed from the office of President and Chief
Executive Officer or the office of Chairman of the Board of Directors on a
date earlier than October 31, 1999, or (B) to not be nominated for election as
a director by the stockholders of the Company at any meeting of stockholders
of the Company held for that purpose on a date earlier than October 31, 1999;
(ii) any significant diminution in the powers, responsibilities and
authorities described in the Agreement without the consent of employee; (iii)
the failure of the Company to obtain in writing the assumption of its
obligation to perform the Agreement by any successor, prior to or concurrent
with a merger, consolidation, sale or similar transaction; and (iv) any
material breach of the Agreement by the Company which is unremedied after
notice by employee.
The Agreement terminates on October 31, 1999. Mr. Gilmartin will continue to
serve in his capacity as President, Chief Executive Officer, Director and
Chairman of the Board of Directors of the Company after the expiration of the
Agreement.
As of May 24, 1996, the Company and Per G. H. Lofberg entered into a letter
agreement with respect to the terms of Mr. Lofberg's employment (the "Letter
Agreement"). The Letter Agreement terminated, in most respects, Mr. Lofberg's
employment agreement dated as of April 1, 1993, as amended on July 27, 1993.
The Letter Agreement sets forth exercise periods post-termination for certain
stock options that vested in 1996 and
18
<PAGE>
1997 in the event that Mr. Lofberg's employment with the Company terminates
after June 1, 1996. Any stock options granted by the Company to Mr. Lofberg
after November 18, 1993 shall terminate upon the termination of Mr. Lofberg's
employment if such stock options have not vested prior to the date of
termination. Additionally, the Letter Agreement provides for the immediate
forfeiture of all stock options in the event of a breach of certain covenants,
including covenants addressing proprietary information and noncompetition.
Performance Graph
The following graph compares the cumulative total stockholder return (stock
price appreciation plus reinvested dividends) on the Company's Common Stock
with the cumulative total return (including reinvested dividends) of the Dow
Jones Pharmaceutical Index--United States Owned Companies ("DJPI") and the
Standard & Poor's 500 Index ("S&P 500 Index") for the five years ending
December 31, 1998. 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>
Period 1998/1993
Value CAGR**
------ ---------
<S> <C> <C>
Merck.................................................... $480 37%
DJPI..................................................... 544 40
S&P 500.................................................. 294 24
</TABLE>
[GRAPH]
- -----------------------------------------------------------------------------
1993 1994 1995 1996 1997 1998
- -----------------------------------------------------------------------------
MERCK 100.00 114.86 202.57 251.09 340.27 480.49
- -----------------------------------------------------------------------------
DJPI 100.00 114.53 187.51 235.60 366.00 544.29
- -----------------------------------------------------------------------------
S&P 500 100.00 101.37 139.33 171.24 228.35 293.60
- -----------------------------------------------------------------------------
- --------
*Assumes that the value of the investment in Company Common Stock and each
index was $100 on December 31, 1993 and that all dividends were reinvested.
** Compound Annual Growth Rate.
19
<PAGE>
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 LLP as
independent public accountants of the Company with respect to its operations
for the year 1999, 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 LLP'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 present at the Annual Meeting 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 interest of the stockholders. If the appointment of
Arthur Andersen LLP 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. 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 450 shares of Common Stock of the
Company (after giving effect to the 2-for-1 stock split on February 16, 1999),
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 359,145,389 shares, representing approximately
46.3% 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
Similar proposals have been submitted at 11 of the last 12 Annual Meetings
of Stockholders and have been 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 continues to believe that the staggered system of electing
directors provides important benefits to the Company:
20
<PAGE>
. The staggered system helps assure continuity and stability of the
Company's business strategies and policies. Since at least two
stockholders' meetings will 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.
In addition, the Board believes that directors who are elected to three-year
terms are just as accountable to stockholders as directors who are elected on
an annual basis. The directors have fiduciary duties that do not depend on how
often they are elected.
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 reestablish annual
election of directors but would require the Board to submit a Charter
amendment for action by stockholders at the 2000 Annual Meeting and an 80%
stockholder vote would be necessary for approval.
The Board believes this proposal is not in the best interest of the Company
or its stockholders.
The Board of Directors recommends a vote AGAINST this proposal.
4. STOCKHOLDER PROPOSAL CONCERNING BONUSES FOR EXECUTIVE OFFICERS
Fred and Mazie Wilson, 3011 Miles Drive, Edmond, Oklahoma 73034, owners of
200 shares of Common Stock of the Company (without giving effect to the 2-for-
1 stock split on February 16, 1999), have given notice that they intend to
present for action at the Annual Meeting the following resolution:
"RESOLVED: That all bonuses be voted on by the share holders and limited
to 10% of the annual salaries of the executive officers [sic]
compensations. The executive officers are identified as those filling the
positions as follows:
1. Chairman, President, and Chief Executive Officer
2. President
3. Executive Vice Chairman and President (Science & tech) and Pres Merck
Research Labs
4. Senior Vice Pres and Chief Financial Officer
5. President Merck-Medco Managed Care
6. President, Human Health--Americas
"REASONS: It is my opinion that the executive officers are grossly
overpaid. I believe that any man can live very comfortably on a lot less
than what the executive officers are currently being paid. These executives
are not unique; as they all have great staffs and/or assistants at their
disposal to advise them in all their decision making. It is therefore my
opinion that the executives are not justified in receiving the unusually
large bonuses which are apparently spontaneously awarded by the Board of
Directors. It seems that the fine salaries should be sufficient
justification and incentive for doing a good job."
21
<PAGE>
Board of Directors' Statement in Opposition to the Resolution
The Company's compensation policies with respect to executive officers and
employees are approved by the Compensation and Benefits Committee of the
Board, which is comprised entirely of non-employee directors. The objectives
and policies governing the amount of compensation that employees receive are
highly dependent on the Company's performance and the performance of its
stock. The requirement that all bonuses to be paid to certain executive
officers be limited to 10% of their respective annual salaries and be
submitted for stockholder approval would substitute an arbitrary standard for
the performance-based criteria currently employed.
Moreover, the compensation of the Company's executive officers is within a
range of compensation offered by comparable companies. The Company
periodically retains outside compensation and benefit consultants to ensure
that its compensation and benefit programs are competitive with those of other
leading healthcare and industrial companies.
The Board believes that this proposal is not in the best interest of the
Company or its stockholders.
The Board of Directors recommends a vote AGAINST this proposal.
5. STOCKHOLDER PROPOSAL CONCERNING NOMINATION OF A WAGE-ROLL
EMPLOYEE TO THE BOARD OF DIRECTORS
Mr. Kenneth Burrows, 2746 Pala Dura Drive, Henderson, Nevada 89014, owner of
110 shares of Common Stock of the Company (without giving effect to the 2-for-
1 stock split on February 16, 1999), has given notice that he intends to
present for action at the Annual Meeting the following resolution:
"RESOLVED: That the stockholders of Merck and Co., Inc., assembled in
annual meeting in person and by proxy, hereby request that the Board of
Directors give consideration to taking the necessary steps to require that
a Merck wage-roll employee who is currently serving as a representative of
employees at his or her work location be nominated for election to the
Board of Directors.
"STOCKHOLDERS' STATEMENT: At this time, the Board is composed of thirteen
individuals who have the following qualifications and experience:
-- two executives of Merck
-- retired chief executives of a cereal company, an information systems
company, a mining company and an investment banking firm
-- the chief executive officers of a manufacturing company, a health
care company and a university medical center
-- the president of a philanthropic organization
-- a former college president
-- a professor of psychiatry
-- a health care consultant
"I believe it would be of great benefit to Merck for a wage-roll Merck
employee who is currently serving as a representative of workers at his or
her site, to serve on the Board of Directors. At this time, the majority of
Merck's wage-roll employees have already elected employee representatives.
Furthermore, the majority of such represented wage-roll employees are
stockholders and a near-majority are routinely granted Merck stock options.
A wage-roll employee who has spent years working in a company facility, who
as an employee representative has listened first hand to employees,
learning what motivates them positively and negatively, would provide the
Board with knowledge and insight that is not now present on the Board.
Moreover, such an addition to the Board would be viewed by wage-roll
employees, who comprise the vast
22
<PAGE>
majority of the Merck workforce, as a sincere effort by Merck to recognize
and understand their concerns. In the 1996 Annual Report to Shareholders,
Merck speaks of a `fundamental belief that long-term business goals goes
[sic] hand in hand with employee satisfaction.' Some important long-term
goals have evidently not been met. Over the period 1993-1998, the
cumulative total shareholder return for Merck has lagged behind the Dow
Jones Pharmaceutical Index by 9 percent. To reach the Company's long term
goals, it is thus necessary that the wage-roll employees' voice be present
at the highest decision making level of the Company. For all of the above
reasons, such an individual would not only bring a unique and valuable
perspective to the Board, but would, at the same time represent the
interests of all stockholders as opposed to those of any particular
constituency."
Board of Directors' Statement in Opposition to the Resolution
The Board of Directors believes that each director should represent all
stockholders and has long been opposed to electing a director to represent a
particular point of view or particular constituency other than stockholders as
a whole.
It is important to the Board that its members possess a breadth of
experience, insight and knowledge to exercise independent judgment in carrying
out its responsibilities for broad corporate policy and the overall
performance of the Company. When it reviews potential nominees to recommend to
the Board, the Committee on Directors considers a wide range of criteria,
which will vary over time depending on the needs of the Board.
In the Board's view, the interests of all stockholders are best served when
the Committee on Directors and the Board are able to exercise discretion to
consider potential qualified nominees who will bring broad experience, skills
and perspectives to bear on the Company's efforts to achieve continued
business success and increase stockholder value.
The Board believes that this proposal is not in the best interest of the
Company or its stockholders.
The Board of Directors recommends a vote AGAINST this proposal.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 1998
fiscal year.
DEADLINE FOR STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
If a shareholder notifies the Company after February 1, 2000 of an intent to
present a proposal at the Company's 2000 Annual Meeting, the Company will have
the right to exercise its discretionary voting authority with respect to such
proposal, if presented at the meeting, without including information regarding
such proposal in its proxy materials. Stockholder proposals to be presented at
the 2000 Annual Meeting must be received by the Company on or before November
18, 1999 for inclusion in the proxy statement and proxy card relating to that
meeting.
23
<PAGE>
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 proxy to vote said proxy in
accordance with their judgment in such matters.
Merck & Co., Inc.
March 18, 1999
24
<PAGE>
[LOGO] MERCK
Merck & Co, Inc.
<PAGE>
[LOGO] MERCK
YOUR VOTE IS IMPORTANT
VOTE BY TELEPHONE/INTERNET
24 HOURS A DAY, 7 DAYS A WEEK
<TABLE>
<S> <C>
VOTE BY PHONE: Call TOLL-FREE On a Touch-Tone telephone 1-888-297-9639.
There is no charge to you for this call. You will be asked to enter the number
located in the box marked "Control Number."
OPTION A: To vote as the Board of Directors recommends on ALL items, press 1.
OPTION B: If you choose to vote on each item separately, press 0.
Item 1: To vote FOR ALL nominees, press 1; to WITHHOLD FOR ALL nominees,
press 9. To WITHHOLD FOR AN INDIVIDUAL nominee, press 0 and listen
to the instructions.
Items 2-5: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0.
When Asked, You Must Confirm Your Vote By Pressing 1.
VOTE BY INTERNET: The Web Address is: http://www.proxyvoting.com/merck
Follow the instructions that appear on your computer screen. You will be
asked to enter the number located in the box marked "Control Number."
</TABLE>
IF YOU VOTE BY TELEPHONE OR BY INTERNET, DO NOT MAIL THE PROXY CARD. YOUR
TELEPHONE OR INTERNET VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR SHARES IN
THE SAME MANNER AS IF YOU VOTED YOUR PROXY CARD EXCEPT FOR THE CUMULATIVE VOTING
FEATURE APPLICABLE TO THE ELECTION OF DIRECTORS, WHICH IS ONLY AVAILABLE BY
VOTING THE PROXY CARD. THE TELEPHONE AND INTERNET VOTING FACILITIES WILL CLOSE
AT 8:00 A.M. ON APRIL 27, 1999.
___________________________
| CONTROL NUMBER FOR |
|TELEPHONE/INTERNET VOTING|
___________________________
- DETACH PROXY CARD HERE IF YOU ARE NOT VOTING BY TELEPHONE OR BY INTERNET -
________________________________________________________________________________
Proxy Card
The Board of Directors recommends a vote FOR Items 1 and 2.
1. Election of Directors - The Board of Directors recommends a vote FOR the
nominees listed below:
Nominees: 01 - Carleton S. Fiorina(*) 02 - H. Brewster Atwater, Jr.(**)
03 - Raymond V. Gilmartin(**) 04 - Edward M. Scolnick, M.D.(**)
05 - Samuel O. Thier, M.D.(**) 06 - Dennis Weatherstone(**)
(*)Term expiring 2001 (**)Term expiring 2002
FOR all WITHHOLD AUTHORITY
nominees listed to vote for all nominees listed EXCEPTIONS
[_] [_] [_]
To withhold authority to vote for any individual nominee, mark the "Exceptions"
box and write that nominee's name in the space provided below.
Exceptions____________________________________________________________________
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).
Cumulate______________________________________________________________________
2. Ratification of Appointment of FOR AGAINST ABSTAIN
Independent Public Accountants [_] [_] [_]
_____________________________________________________________________________
The Board of Directors recommends a vote AGAINST Items 3, 4 and 5.
3. Stockholder Proposal Concerning FOR AGAINST ABSTAIN
Annual Election of Directors [_] [_] [_]
4. Stockholder Proposal Concerning Bonuses for FOR AGAINST ABSTAIN
Executive Officers [_] [_] [_]
5. Stockholder Proposal Concerning Nomination of FOR AGAINST ABSTAIN
Wage-Roll Employee to the Board of Directors [_] [_] [_]
I do not wish to
receive an Annual
Report for this [_]
account at this
address.
I plan to attend
the Annual [_]
Meeting.
Please sign exactly as name or names appear on this Proxy Card. When
signing as attorney, executor, administrator, trustee, custodian or guardian,
give full title. If there is more than one named stockholder, all should sign
unless evidence of authority to sign on behalf of others is attached.
Dated:______________________, 19________
________________________________________
Signature of Stockholder
________________________________________
Signature of Stockholder
Please complete, sign, date and return the proxy card promptly using the
enclosed envelope.
<PAGE>
[LOGO] MERCK
ADMISSION TICKET
Annual Meeting of Stockholders
Tuesday, April 27, 1999, 2:00 p.m.
Edward Nash Theatre, Raritan Valley Community College
Route 28 and Lamington Road, North Branch, New Jersey
[MAP APPEARS HERE]
Follow Raritan Valley Community College signs at Exit 26 of Route 78 and on
Route 22 in North Branch. Enter Raritan Valley Community College at Lamington
Road entrance. Proceed to Parking Lot 5 which is reserved for Merck
stockholders. A continuous shuttle bus service from the parking lot to the
theatre will be available.
This ticket admits the named Stockholder(s) and one guest.
- --------------------------------------------------------------------------------
[LOGO] MERCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints RAYMOND V. GILMARTIN, 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 27, 1999, and at all adjournments thereof, upon
the matters set forth on the reverse side, 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 Merck
Stock Investment Plan, as described in the proxy statement. Any prior proxy or
voting instructions are hereby revoked.
The shares represented by this proxy will be voted as directed by the
stockholder. If no specification is made, the shares will be voted FOR proposals
1 and 2 and AGAINST proposals 3, 4 and 5.
(Continued, and to be signed and dated on the reverse side.)
