MYLAN LABORATORIES INC.
1030 Century Building
130 Seventh Street
Pittsburgh, Pennsylvania 15222
Notice of Annual Meeting of Shareholders
July 30, 1998
To The Shareholders of Mylan Laboratories Inc.
An annual meeting of shareholders of Mylan Laboratories Inc. will be held
at the DoubleTree Hotel, 1000 Penn Avenue, Pittsburgh, Pennsylvania on Thursday,
July 30, 1998 at 10:00 a.m. for the following purposes:
1. To elect seven directors to serve until the next annual meeting of
shareholders and until their respective successors shall have been elected and
shall have qualified.
2. To elect independent auditors of the Company for the fiscal year ending
March 31, 1999.
3. To transact such other business as may properly come before the meeting.
Shareholders of record at the close of business on May1, 1998 are entitled
to notice of and to vote at the meeting.
All shareholders, whether or not they expect to be present in person, are
requested to sign, date and return the enclosed proxy in the accompanying
envelope as promptly as possible.
Shareholders who plan to attend the Annual Meeting are requested to
complete and return the enclosed reservation card by July 15, 1998.
By Order of the Board of Directors
Robert W. Smiley, Secretary
May 31, 1998
Pittsburgh, Pennsylvania
<PAGE>
MYLAN LABORATORIES INC.
1030 Century Building
130 Seventh Street
Pittsburgh, Pennsylvania 15222
--------------------------------------------
PROXY STATEMENT
--------------------------------------------
Annual Meeting of Shareholders July 30, 1998
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Mylan Laboratories Inc., a Pennsylvania
corporation ("the Company"), for an annual meeting of shareholders to be held on
July 30, 1998. The approximate date on which this proxy statement and proxy are
being sent to shareholders of the Company is June 8, 1998.
The shares represented by each properly executed proxy, in the form
enclosed and received by the Company will be voted as specified thereon by the
shareholder. If no specification is made, such shares will be voted FOR the
nominees named and proposals described below. Any proxy given by a shareholder
may be revoked in writing at any time prior to its exercise, but the revocation
of the proxy shall not be effective until notice thereof has been received by
the Secretary of the Company. Abstentions and broker non-votes will be included
in determining the number of shares present and entitled to vote at the meeting
for purposes of determining whether a quorum is present but will not be
considered to be voted for any proposal. Because the election of directors is
based on a plurality and the other proposals being considered on a majority of
the votes cast, abstentions and broker non-votes will not affect the outcome of
those matters.
References herein to "fiscal 1998" mean the Company's fiscal year ended
March 31, 1998.
VOTING SECURITIES AND RECORD DATE
Persons who as of the close of business on May 1, 1998 held of record
shares of the Company's Common Stock, par value $.50 per share ("Common Stock"),
are entitled to notice of and to vote at the annual meeting. As of such date,
there were 122,229,350 shares of Common Stock outstanding. Holders of Common
Stock are entitled to one vote per share and do not have cumulative voting
rights in the election of directors.
See "Security Ownership" herein for information
with respect to the share ownership of the directors of the Company.
ELECTION OF DIRECTORS [Proposal No. 1]
Directors are elected to serve until the next annual meeting of
shareholders and until their respective successors are elected and qualify.
Proxies received in the accompanying form will be voted for the election to the
Board of Directors of the seven nominees listed below except in such instance
that authority to vote for any of the nominees is withheld. The seven nominees
receiving the highest number of votes shall be elected. Each of the nominees has
consented to serve as a director if elected. Information concerning the
nominees, all of whom are presently members of the Board of Directors, is set
forth below.
<PAGE>
Director
Name Principal Occupation Age Since
Milan Puskar Chairman of the Board,
C.E.O. and President
of the Company 63 1976
Dana G. Barnett Executive Vice President
of the Company 57 1982
Laurence S. Delynn Retail Consultant 73 1975
John C. Gaisford, M.D. Director of Burn Research, 82 1993
West Penn Hospital
Robert W. Smiley, Esq. Senior Counsel to the law firm
of Doepken Keevican & Weiss
Professional Corporation;
Secretary of the Company 76 1972
Patricia A. Sunseri Vice president of Investor
and Public Relations
of the Company 58 1997
C.B. Todd Senior Vice President
of the Company 64 1993
Mr. Puskar was employed by the manufacturing subsidiary of the Company from
1961 to 1972 and served in various positions, including Secretary-Treasurer,
Executive Vice President and a member of the Board of Directors. From 1972 to
1975, Mr. Puskar served as Vice President and General Manager of the Cincinnati
division of ICN Pharmaceuticals Inc. In addition, he has served as partner of
several pharmaceutical firms in foreign countries and is currently a director of
VivoRx, Inc., Santa Monica, California and Duquesne University, Pittsburgh,
Pennsylvania. Mr. Puskar has served as President of the Company since 1976 and
as Vice Chairman of the Board since 1980. He was elected Chairman of the Board
and C.E.O. on November 9, 1993.
Mr. Barnett was employed by the Company in 1966. Since that time he has
held various management positions with the manufacturing subsidiary of the
Company. His responsibilities have covered production, quality control and
product development. Mr. Barnett became Vice President in 1974, Senior Vice
President in 1978 and Executive Vice President in 1987. He was elected President
and Chief Executive Officer of Somerset Pharmaceuticals, Inc., a joint-venture
subsidiary of the Company in June 1991, and in August of 1995 he was elevated to
Chairman and Chief Executive Officer of Somerset Pharmaceuticals, Inc.
Mrs. Sunseri has served as a Director of the Company since April 1997, as
the Vice President of Investor and Public Relations of the Company since 1989
and as the Director of Investor Relations of the Company from 1984 to 1989.
Mr. Todd has been employed by the Company since 1970. Prior to assuming his
present position in October, 1987 as Senior Vice President, Mr. Todd served as
Vice President-Quality Control. He also serves as President of Mylan
Pharmaceuticals Inc., a subsidiary of the Company.
Messrs. DeLynn and Gaisford have been engaged for more than the past five
years in the principal occupations set forth in the table above. Mr. Smiley
joined the law firm of Doepken Keevican & Weiss Professional Corporation in
October, 1992, which the law firm provided legal services to the Company in
fiscal 1998. Previously, he was a partner of Smiley, McGinty & Steger for more
than five years. Mr. DeLynn is currently a Director of One Valley Bank,
Morgantown, West Virginia.
In fiscal 1998, The Board of Directors conducted seven meetings. The Board
of Directors has established an Executive Committee, an Audit Committee, a
Compensation Committee, a Nominating Committee, and certain other committees.
The Executive Committee, which met formally and informally on numerous occasions
during fiscal 1998, is composed of Messrs. Puskar, Barnett, Todd and Smiley of
the Board of Directors of the Company. The Audit Committee, which met twice
during the fiscal year, reviews the preparations for and scope of the annual
audit of the Company's financial statements, reviews drafts of such statements,
makes recommendations as to the retention of independent auditors and as to
their fees, and performs such other duties relative to the financial statements
of the Company and other matters as the Board of Directors may assign from time
to time. The Audit Committee is composed of Messrs. DeLynn and
<PAGE> -2-
Gaisford. The Compensation Committee (which also serves as the Stock Option
Committee) has responsibility for establishing compensation policies and
objectives, determining the compensation payable to the Chief Executive Officer
and awarding stock options to employees. The Compensation Committee, which met
twice in fiscal 1998, is composed of Messrs. DeLynn and Gaisford. The Nominating
Committee is responsible for nominating candidates for election to the Board at
the annual shareholders' meeting or upon the occurrence of any vacancy on the
Board. Messrs. Puskar, Gaisford, Smiley and DeLynn were appointed to serve as
members of the Nominating Committee. The Nominating Committee met on two
occasions during fiscal 1998.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers to file reports of ownership of the Company's
equity securities (and derivative securities) and changes in such ownership with
the Securities and Exchange Commission and the New York Stock Exchange and to
provide copies of those filings to the Company. Based solely upon a review of
such reports and certain written representations, the Company believes that its
directors and executive officers are in compliance with their respective Section
16(a) filing requirements.
Compensation of Directors
The Company presently has seven directors, four of whom (Messrs. Puskar,
Barnett, Todd and Mrs. Sunseri) are executive officers of the Company and do not
receive any additional compensation for serving as directors of the Company. The
Company's non-employee directors (Messrs. DeLynn, Gaisford and Smiley) earned
director's fees of $24,000 in fiscal 1998 and Mr. Smiley received an additional
fee of $21,000 for serving on the Company's Executive Committee.
Under Service Benefit Agreements entered into with the Company in January
1995, Messrs. DeLynn, Gaisford and Smiley are entitled to receive $18,000
annually, payable in monthly installments for a 10 year period from the date of
their termination of service to the Company. Upon the death or at the election
of the director, the aggregate amount of any unpaid benefit is payable in a lump
sum, discounted to present value at the per annum rate of 7%.
<PAGE> -3-
EXECUTIVE COMPENSATION
Report on Executive Compensation
Overview and Philosophy
The Company's executive compensation policy is to (i) provide compensation
to employees at such levels as will enable the Company to attract and retain
employees of the highest caliber, (ii) compensate employees in a manner best
calculated to recognize individual, group and Company performances and (iii)
seek to align the interests of the employees with the interests of the Company's
shareholders. Total compensation includes base salary, annual cash bonuses,
long-term incentives and employee benefits. The Company seeks to reward
outstanding executive performance contributing to superior operating results and
enhanced shareholder value.
The Compensation Committee is charged with responsibility for (i)
establishing the objectives and policies governing the compensation of the
Company's employees generally; (ii) determining the amount of compensation
payable annually to the Chairman and Chief Executive Officer and any other
executive officer of the Company whose annual compensation is subject to the
limitations of Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"); (iii) awarding stock options to employees of the Company; and (iv)
making such recommendations to the Board from time to time as it deems
appropriate concerning the Company's compensation of employees and its award of
stock options. Generally, the actions of the Compensation Committee do not
require the approval of the full Board to become effective.
The Board and the Compensation Committee have taken actions designed to
increase the Company's opportunity to deduct all compensation paid to highly
compensated officers for Federal income tax purposes. However, no assurance can
be given that such actions will ensure the deductibility for Federal income tax
purposes of all executive compensation paid by the Company. Furthermore, neither
the Board nor the Compensation Committee subscribes to the view that any
executive's compensation should be limited to the amount deductible if such
executive deserves compensation in excess of $1,000,000 and it is not reasonably
practicable to compensate him or her in a manner such that the compensation
payable is fully deductible by the Company.
Executive Bonus Plan
In fiscal 1995, the Committee reviewed and considered numerous proposals
for establishing objective performance-based criteria to award the Chairman and
Chief Executive Officer of the Company and any other executive officers who,
from time to time, are determined by the Committee to be eligible to receive a
bonus based on such criteria. Among the criteria considered by the Committee in
establishing an executive bonus plan (Athe Executive Bonus Plan@) were (i)
earnings per share above fixed benchmarks, (ii) earnings per share above prior
year's earnings per share, (iii) stock prices reaching certain benchmarks, (iv)
percentage increases in stock prices, (v) approval by the Food and Drug
Administration ("FDA") of a fixed number of applications submitted by the
Company, (vi) sales above fixed benchmarks and (vii) sales above prior year's
sales.
The Committee believes that using earnings per share above fixed benchmarks
provides the most meaningful objective measure of the Company's performance and
provides an appropriate vehicle for rewarding the Chairman and Chief Executive
Officer and other executives participating in the Executive Bonus Plan. The
other alternatives considered were dismissed by the Compensation Committee for
the following reasons:
First, as to earnings per share in excess of prior year's earnings, factors
beyond the control of the executives (such as the onset of a recessionary
environment in the pharmaceutical industry or sharply higher costs resulting
from implementation of new government regulations relating to the approval or
marketing of drugs) could make a comparison with prior year's earnings
meaningless. For example, the exemplary performance by an executive in the face
of sharply higher costs due to new governmental burdens could go unrewarded if a
comparison with
<PAGE> -4-
prior year's earnings were made. Further, the comparison of current earnings
with those of a prior period could operate as a disincentive for the executive
to approve new ventures, to enter into new markets, to introduce new products or
to seek new merger, acquisition or joint-venture opportunities if the start-up
costs associated therewith would reduce earnings in the short term.
Second, as to stock prices, the Compensation Committee was concerned that
stock prices are subject to fluctuation based on general economic factors,
interest rates, the national and international political climate, trade balances
and other factors which bear no relationship to the effectiveness of an
executive or the performance of a particular corporation. Consequently, the
Compensation Committee did not believe that use of stock prices alone would be
an appropriate way to create incentives for its executives.
Third, measuring performance through FDA approvals appeared to the
Compensation Committee to be too imperfect a measure of performance in that the
groundwork for an approval could precede the approval by a considerable time,
the timing of approvals is too uncertain, and the number of expected approvals
in any period of time is too small a class.
Finally, the Compensation Committee felt that sales provided the best
method of measuring the Company's performance next to earnings. However, in that
a measure based on sales alone does not provide an incentive to executives to
control costs, the Compensation Committee felt that this measure provided a less
satisfactory measure of performance than earnings.
Accordingly, the Compensation Committee approved an executive bonus
plan("the Executive Bonus Plan"), subsequently approved by the shareholders at
the Company's June 1995 annual meeting, which provides for awards to
participating executives of cash bonuses of an amount fixed by the Compensation
Committee of up to $100,000 per $.01 by which earnings per share exceed
benchmarks fixed by the Compensation Committee. Although broad latitude is
afforded to the Compensation Committee to fix the benchmarks and amount of the
award per $.01 increase, the bonuses payable to any executive cannot exceed
$1,500,000 per annum under the Executive Bonus Plan and the aggregate amount of
bonuses payable thereunder in any fiscal year to all participating executives
cannot exceed $2,500,000.
Compensation of Executive Officers
The salaries of executive officers other than the Chairman and Chief
Executive Officer were determined by Milan Puskar. Mr. Puskar's determinations
were based upon various subjective factors such as the responsibilities,
positions, qualifications, individual performances and years of service with the
Company of such executives. In making such determination, the Chairman and Chief
Executive Officer did not undertake a formal survey or analysis of the
compensation paid to executives in other companies. Such salaries are not tied
to the Company's performance. The bonuses of executive officers other than the
Chairman and Chief Executive Officer were awarded by Milan Puskar based upon his
perception of each officer's contribution to the Company's success. Mr. Puskar
neither undertook to conduct a formal survey or analysis of the bonuses awarded
(or total compensation packages offered) by other pharmaceutical companies nor
established numerical goals or targets in determining these bonuses.
Compensation of Chief Executive Officer
The Compensation Committee did not consider any adjustments to the salary
of Milan Puskar, the Company's Chairman and Chief executive Officer, in fiscal
1998, which was continued at the fiscal 1996 level. However, in order to create
a performance-based reward intended to be fully deductible by the Company for
Federal income tax purposes as well as serving as an incentive to Mr. Puskar to
seek to maximize earnings for the balance of the fiscal year, in August 1996 the
Compensation Committee awarded to him a bonus pursuant to the Executive Bonus
Plan of $50,000 for each $.005 that earnings for the second, third and fourth
quarters of fiscal 1998 in the aggregate exceeded $.33 per share, not to exceed
$500,000. The Compensation Committee reported that it had selected this
benchmark in light of numerous factors and considerations, including identified
<PAGE> -5-
developments in the pharmaceutical industry, the status of the Company=s own
efforts to obtain FDA approvals and its negotiation of business arrangements.
The benchmark was met in fiscal year 1998 by the company and Mr. Puskar was
granted a bonus of $500,000 for his work as the Company's Chairman, President,
and Chief Executive Officer in fiscal 1998.
Submission of Report
This Report on Executive Compensation is submitted by the members of the
Compensation Committee, Laurence S. DeLynn and John C. Gaisford, except for the
matters described under "Compensation of Other Executive Officers," which, as to
the compensation of executive officers, other than the Chairman and Chief
Executive Officer, is submitted by Milan Puskar.
Compensation Committee Interlocks and Insider Participation
Laurence S. DeLynn and John C. Gaisford served as members of the
Compensation Committee during fiscal 1998. There are no interlocking
relationships, as defined in the regulations of the Securities and Exchange
Commission, involving members of the Board of Directors, or its Compensation
Committee.
Employment Contract and Termination of Employment and
Change-in-Control Arrangements
The Company entered into an employment contract with Mr. Puskar on April
28, 1983 which specifies his respective duties and provides for ordinary
insurance and health benefits as provided for the Company's salaried employees.
This employment contract originally called for a term expiring on March 31,
1988, and since this date has been continued on a year-to-year basis subject to
termination by either the Company or the executive at any time. Salary and
bonuses under this employment contract are determined by the Company's Board of
Directors. Mr. Puskar's employment contract provides for continued payments of
salary for a period of one year following any termination of his employment
contract by the Company. The Salary Continuation Plan referred to in the notes
to the "Summary Compensation Table" provides for the payment of post-retirement
compensation pursuant to agreements with key employees, including executive
officers, over a period not exceeding fifteen years, as more fully described in
such Note. The Company has no other compensatory plan or arrangements resulting
from the resignation, retirement or other termination (including any termination
or change in responsibility following a change-in-control) of an executive
officer's employment with the Company or its subsidiaries.
<PAGE> -6-
Performance Graph
Set forth below is a performance graph comparing the cumulative total
returns (assuming reinvestment of dividends) for the five years ended March 31,
1998 of $100 invested March 31, 1993 in each of the Company's Common Stock, the
Standard & Poor's 500 Composite Index and the Dow Jones Pharmaceutical Index.
Mylan Labs Inc. DJ Pharmaceuticals S&P 500
------------------ -------------------- -----------
3/93 100 100 100
3/94 60 91 101
3/95 111 133 117
3/96 111 207 154
3/97 78 265 185
3/98 124 456 274
* $100 Invested on 03/31/93 in stock or index-
including reinvestment of dividends.
Fiscal year ending March 31.
<PAGE> -7-
SUMMARY COMPENSATION TABLE
The following table sets forth information regarding the compensation paid
by the Company and its subsidiaries in the past three fiscal years to the Chief
Executive Officer and its five most highly compensated executive officers other
than the Chief Executive Officer (collectively, the "Named Executive Officers"):
<TABLE>
<S> <C> <C> <C> <C> <C>
Long-Term Compensation
Annual Compensation Options/ All Other
Fiscal Year Salary Bonus SARs(1) Compensation(2)
Name and Principal Position Ended March 31 ($) ($) # ($)
- ------------------ -------------- ------- -------- ------------ ----------
Milan Puskar, 1998 1,000,000 500,000 100,000 681,500
Chairman of the Board, 1997 1,000,000 -0- -0- 65,000
C.E.O., President and 1996 1,000,000 -0- -0- 513,600
Director
Dana G. Barnett, 1998 200,000 -0- 80,000 402,400
Executive Vice President 1997 200,000 -0- -0- 23,100(4)
and Director (3) 1996 200,000 -0- -0- 290,000
C.B. Todd, 1998 200,000 250,000 80,000 394,600
Senior Vice President 1997 200,000 250,000 -0- 23,100(4)
and Director 1996 200,000 250,000 -0- 290,000
Roderick P. Jackson, 1998 200,000 250,000 80,000 86,300
Senior Vice President 1997 200,000 250,000 -0- 86,700(4)
1996 200,000 250,000 -0- 255,600
Louis J. DeBone, 1998 144,500 175,000 60,000 86,300
Vice President 1997 144,500 175,000 -0- 86,700(4)
1996 137,500 175,000 -0- 255,600
Patricia A. Sunseri, 1998 144,500 175,000 60,000 86,300
Vice President and 1997 144,500 175,000 -0- 86,700(4)
Director 1996 137,500 175,000 -0- 255,600
- ---------------------
</TABLE>
(1) The Company does not currently offer stock appreciation rights ("SARs") to
its employees.
(2) This column includes (i) the Company's contributions to the Employees
Profit Sharing Plan and (ii) the amounts accrued by the Company under the
Salary Continuation Plan described below. During fiscal 1998, contributions
to the Employees Profit Sharing Plan were made in the amount of $16,100 for
each of Messrs. Puskar, Barnett, Todd, Jackson and DeBone and Mrs. Sunseri,
and amounts were accrued under the Salary Continuation Plan of $607,200,
$364,300, $364,300, $70,200, $70,200, $70,200 for Messrs. Puskar, Barnett,
Todd, Jackson and DeBone and Mrs. Sunseri, respectively. Additionally,
$58,200, $22,000, $14,200 of life insurance premiums were paid by the
Company for Messrs. Puskar, Barnett and Todd respectively pursuant to
split-dollar life insurance agreements with respective trusts. Neither the
executive officers nor their respective trusts has any interest in the cash
surrender value of the insurance policies subject to that agreement.
Pursuant to a Salary Continuation Plan approved by the Board of Directors
in January 1995, the Company entered into Retirement Benefit Agreements
with various key employees, including each of the Named Executive Officers.
These agreements provide for fixed annual payments to these executives over
a 15-year period, in the case of Messrs. Puskar, Barnett and Todd, and over
a 10-year period, in the case of Messrs. Jackson and DeBone and Mrs.
Sunseri, commencing upon their termination of employment with the Company.
Upon the death following retirement or at the election of the executive,
the aggregate amount of the unpaid benefit is payable in a lump sum,
discounted to present value at the per annum rate of 7%.
<PAGE> -8-
The annual benefits awarded to the Named Executive Officers are as follows:
Retirement Other than Retirement Due to
Due to Disability Disability
---------------------- -----------------
Milan Puskar.................... $366,700 $500,000
Dana G. Barnett................. $220,000 $300,000
C. B. Todd...................... $220,000 $300,000
Roderick P. Jackson............. $90,000 to $100,000 $100,000*
Louis J. DeBone................. $90,000 to $100,000 $100,000*
Patricia A. Sunseri ............ $90,000 to $100,000 $100,000*
- --------------
* Or retirement following a change of control of the Company.
If any of these executives dies prior to retirement, his beneficiaries will
receive (under life insurance policies purchased by the Company) lump sum
payments of $1,645,000, in the case of Mr. Puskar, $1,500,000, in the case of
Messrs. Barnett and Todd, and $1,250,000, in the case of Messrs. Jackson and
DeBone and Mrs. Sunseri. In addition, if Mr. Puskar dies prior to his
retirement, the Company will pay his beneficiaries the additional sum of
$1,600,000.
(3) The amounts for Mr. Barnett exclude payments made by Somerset
Pharmaceuticals, Inc., a non-consolidated subsidiary.
(4) Represents corrections from last year's published proxy statement.
Option Awards. The following table sets forth information concerning options to
purchase the Company's Common Stock granted to Named Executive Officers in
fiscal 1998. All of the options shown in this table were awarded under the
Company's 1997 Incentive Stock Option Plan. The stock options listed below were
awarded at the fair market value of shares of Common Stock at the date of award,
and are immediately exercisable. The Company does not currently offer stock
appreciation rights ("SARs") to its employees.
Option/SAR Grants in Last Fiscal Year
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants for Option Term
--------------------------------------------------------- -----------------
Number of %of Total
Securities Options/SARs
Underlying Granted to Exercise or
Option/SARs Employees in Base Price Expiration
Name Granted(#) Fiscal year ($/Sh) Date 5% ($) 10% ($)
- ----- ----------- ------------ ------------ ----------- ------- --------
Milan Puskar 50,000 4.16% 16.688 7/25/2007 524,750 1,329,819
50,000 4.16% 17.750 1/29/2008 558,144 1,414,446
Dana G. Barnett 40,000 3.33% 16.688 7/25/2007 419,800 1,063,855
40,000 3.33% 17.750 1/29/2008 446,515 1,131,557
C.B. Todd 40,000 3.33% 16.688 7/25/2007 419,800 1,063,855
40,000 3.33% 17.750 1/29/2008 446,515 1,131,557
Roderick P. Jackson 40,000 3.33% 16.688 7/25/2007 419,800 1,063,855
40,000 3.33% 17.750 1/29/2008 446,515 1,131,557
Louis J. DeBone 30,000 2.50% 16.688 7/25/2007 314,850 797,891
30,000 2.50% 17.750 1/29/2008 334,886 848,668
Patricia A. Sunseri 30,000 2.50% 16.688 7/25/2007 314,850 797,891
30,000 2.50% 17.750 1/29/2008 334,886 848,668
</TABLE>
<PAGE> -9-
Option Holdings and Values. The following table sets forth information
concerning the aggregate number and values of options held by Named Executive
Officers as of March 31, 1998. The Company does not currently offer SARs to its
employees.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR OPTIONS
<TABLE>
<S> <C> <C> <C> <C>
Number of Value of
Securities Unexercised
Underlying In-the-Money
Shares Acquired Unexercised Options/SARs at Options/SARs at
on Value Fiscal Year End (#) Fiscal Year End ($)
Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable(1) Unexercisable(1)
------ ---------- ------- --------------------- --------------------
Milan Puskar 0 0 100,000/0 578,100/0
Dana G. Barnett 0 0 230,000/0 2,112,480/0
C.B. Todd 0 0 230,000/0 2,112,480/0
Roderick P. Jackson 0 0 233,750/0 2,137,545/0
Louis J. DeBone 0 0 135,000/0 1,171,860/0
Patricia A. Sunseri 0 0 60,000/0 346,869/0
</TABLE>
(1) Of the options shown, Mr. Jackson beneficially owns an option to purchase
750 shares of the Company's Common Stock at an exercise price of $10.58 per
share, the option was issued under the Company's 1986 Stock Option Plan.
Messrs. Barnett, Todd and Jackson each hold options to purchase 150,000
shares of the Company's Common Stock and Mr. DeBone holds an option to
purchase 75,000 shares of the Company's Common Stock, in each case at an
exercise price of $12.00 per share, all of which options were issued under
the Company's 1986 Incentive Stock Option Plan. The remaining options were
issued under the Company's 1997 Incentive Stock Option Plan at exercise
prices ranging from $16.688 to $17.75 per share, as more fully described
under the "Option/SAR Grants in Last Fiscal Year" table, above. The value
of the option shares is the excess of the market price for the Company's
Common Stock as of March 31, 1998, $23.00 per share, over the exercise
prices of the options shown.
SECURITY OWNERSHIP
The following table sets forth information as of May 1, 1998 regarding the
amount and nature of Common Stock ownership by all directors and named executive
officers, and all directors and executive officers as a group and all persons
known by management to beneficially own 5% or more of the Company=s Common
Stock.
Shares
Beneficially
Owned (1) Percent
Name (#) of Class
- -------------- ------------ ----------
Milan Puskar 2,550,000 2.11
Dana G. Barnett 305,970 .25
Laurence S. Delynn 355,000 .29
John C. Gaisford, M.D. 66,896 .06
Robert W. Smiley, Esq. 130,000 .11
Patricia A. Sunseri 508,750 .42
C.B. Todd 600,316 .50
Roderick P. Jackson 283,500 .23
Louis J. DeBone 165,000 .14
All directors and executive
officers as a group 5,231,532 (2) 4.28
Invesco Capital Management, Inc.(3) 9,519,550 7.88
(1) In each case, the director or officer has sole or shared direct beneficial
ownership of the shares. Amounts include unissued shares under option.
<PAGE> -10-
(2) Includes 1,350,750 unissued shares under option exercisable at prices
ranging from $10.58 per share to $17.75 per share.
(3) Invesco Capital Management, Inc. 11 Devonshire Square London, EC2M 4YR
England
INDEPENDENT AUDITORS [Proposal No. 2]
The Board of Directors has recommended that Deloitte & Touche LLP be
elected by the shareholders to act as auditors of the Company for the current
fiscal year. Proxies received in the accompanying form will be so voted unless
other specification is made. The affirmative votes of a majority of the shares
of Common Stock present and voting (in person or by proxy) are required to adopt
the proposal.
The Company's financial statements for fiscal 1998 were examined by
Deloitte & Touche LLP. In connection with the examination of the financial
statements, Deloitte & Touche LLP also reviewed the Company's annual report to
shareholders and its filings with the Securities and Exchange Commission.
It is expected that a representative of Deloitte & Touche LLP will be
present at the annual meeting with the opportunity to make a statement if he or
she desires to do so, and will be available to respond to appropriate questions.
1999 SHAREHOLDER PROPOSALS
To be considered for inclusion in the Company's proxy statement for the
annual meeting to be held in 1999, shareholder proposals must be received by the
Company at its principal executive offices not later than January 21, 1999.
OTHER MATTERS [Proposal No. 3]
The Board of Directors does not know of any matters to be presented at the
annual meeting other than those discussed above. If other matters should
properly come before the meeting, shares in respect of which properly executed
proxies are received will be voted on such matters in accordance with the
judgment of the persons named in such proxies.
The cost of the solicitation of proxies on behalf of the Board of Directors
will be borne by the Company. In addition to solicitation by mail, regular
employees of the Company may solicit proxies in person or by telephone.
Upon written request to the undersigned Secretary (at the address specified
on page 1) by any shareholder whose proxy is solicited hereby, the Company will
furnish a copy of its Annual Report on Form 10-K for the fiscal year ended March
31, 1998 as filed with the Securities and Exchange Commission, together with
financial statements and schedules thereto, without charge to the shareholder
requesting same.
By Order of the Board of Directors,
Robert W. Smiley, Secretary
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