CENTOCOR INC, DEF 14A, 1996-04-19

CENTOCOR INC
DEF 14A, 1996-04-19
IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES

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<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
[X] Definitive Proxy Statement RULE 14C-5(D)(2))

[_] Definitive Additional Materials

[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12

CENTOCOR, 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] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.

[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).

[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

[_] Fee paid previously with preliminary materials.

[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:

Notes:

<PAGE>

CENTOCOR, INC.

MALVERN, PENNSYLVANIA 19355

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

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

MAY 15, 1996

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

TO THE SHAREHOLDERS:

The annual meeting of shareholders of Centocor, Inc. will be held at the
Company's principal office, 200 Great Valley Parkway, Great Valley Corporate
Center, Malvern, Pennsylvania, on Wednesday, May 15, 1996, at 10:00 A.M. for
the following purposes:

1. To elect nine members of the Board of Directors, each to serve until
the next annual meeting.

2. To transact such other business as may properly come before the
meeting.

The Board of Directors has fixed March 15, 1996 as the record date for
determining the holders of Common Stock entitled to notice of and to vote at
the meeting. Consequently, only holders of Common Stock of record of the
Company at the close of business on March 15, 1996 will be entitled to notice
of and to vote at the meeting.

Please complete, date and sign the enclosed proxy and return it promptly. If
you attend the meeting, you may vote in person.

George D. Hobbs
Secretary

April 10, 1996
<PAGE>

CENTOCOR, INC.

PROXY STATEMENT

INTRODUCTION

The accompanying proxy is solicited by the Board of Directors of Centocor,
Inc., 200 Great Valley Parkway, Great Valley Corporate Center, Malvern,
Pennsylvania 19355. Copies of this Proxy Statement and the accompanying proxy
are first being mailed on or about April 10, 1996 to the holders of record of
Common Stock on March 15, 1996. A proxy may be revoked by a shareholder at any
time prior to its use by giving written notice of such revocation to the
Secretary of the Company, by appearing at the meeting and voting in person, or
by returning a later dated proxy. The expense of this solicitation will be
paid by the Company. Some of the officers and employees of the Company may
solicit proxies personally and by telephone. The Company may use the services
of D. F. King & Co., Inc. to aid in the solicitation of proxies at an
anticipated fee of $5,500 plus reasonable expenses.

Holders of Common Stock of record at the close of business on March 15, 1996
will be entitled to vote at the meeting. On that date, the Company had
64,454,348 shares of Common Stock outstanding. Each shareholder is entitled to
cast one vote per share on all items of business properly presented at the
meeting, except that shareholders have cumulative voting rights with respect
to the election of directors, as described below. Under Pennsylvania law and
the by-laws of the Company, the presence of a quorum is required to transact
business at the meeting. The presence at the meeting, in person or by proxy,
of shareholders entitled to cast at least a majority of the votes that all
shareholders are entitled to cast shall constitute a quorum. Proxies received
with votes withheld or abstentions will be counted in determining the presence
of a quorum, but will not be voted. Broker non-votes will not be counted in
determining the presence of a quorum and will not be voted. As a result,
assuming a quorum is present, votes withheld, abstentions and broker non-votes
will have no impact on any matter submitted to a vote of the shareholders.

Shareholders have cumulative voting rights with respect to the election of
directors. Each shareholder is entitled to cast the number of votes in the
election of directors that is equal to the number of shares of Common Stock
held by such shareholder on the record date, multiplied by the number of
directors to be elected. A shareholder may cast all such votes for a single
nominee or may distribute votes among nominees as the shareholder sees fit.
The nine nominees for director receiving the highest number of votes cast by
shareholders entitled to vote thereon will be elected to serve on the Board of
Directors.

ELECTION OF DIRECTORS

Nine directors are to be elected at the annual meeting of shareholders to
serve one-year terms until the 1997 annual meeting of shareholders and until
their respective successors are elected and shall qualify. The persons named
in the accompanying proxy intend to vote for the election of Anthony B. Evnin,
William F. Hamilton, David P. Holveck, Antonie T. Knoppers, Ronald A.
Matricaria, Hubert J.P. Schoemaker, Richard D. Spizzirri, Lawrence Steinman
and Jean C. Tempel, unless authority to vote for one or more of such nominees
is specifically withheld in the proxy. All of the nominees are currently
directors of the Company. The persons named in the proxy will have the right
to vote cumulatively and to distribute their votes among such nominees as they
consider advisable. All the nominees have informed the Board of Directors that
they are willing to serve as directors, but if any of them should decline to
serve or become unavailable for election as a director at the meeting, an
event which the Board of Directors does not anticipate, the persons named in
the proxy will vote for such nominee or nominees as may be designated by the
Board of Directors, unless the Board of Directors reduces the number of
directors accordingly.
<PAGE>

The following table sets forth, as of March 15, 1996, information as to the
nominees, including their recent employment, positions with the Company, if
any, other directorships and age.

<TABLE>
<CAPTION>
YEAR FIRST
NAME, AGE, PRINCIPAL OCCUPATIONS AND BUSINESSES ELECTED
DURING LAST FIVE YEARS AND OTHER CURRENT DIRECTORSHIPS DIRECTOR
------------------------------------------------------ ----------
<S> <C>
Anthony B. Evnin, 55............................................... 1980
General Partner of Venrock Associates, a venture capital limited
partnership. Director, Arris Pharmaceutical Corporation, Athena
Neurosciences, Inc., Escalon Medical Corp., Genetics Institute,
Inc., IDEXX Laboratories, Inc., Kopin Corporation, Opta Food In-
gredients, Inc. and Sugen, Inc.
William F. Hamilton, 56............................................ 1985
Landau Professor of Management and Technology at the Wharton
School of the University of Pennsylvania. Director, Hunt Manufac-
turing Co., Marlton Technologies, Inc. and Neose Technologies,
Inc.
David P. Holveck, 50............................................... 1994
President and Chief Executive Officer of the Company since Novem-
ber 1992; President and Chief Operating Officer from April 1992 to
October 1992; and Executive Vice President and President--Diagnos-
tics Division from December 1988 to April 1992.
Antonie T. Knoppers, 81............................................ 1986
Self-employed business consultant. Former President, Chief Operat-
ing Officer and Vice Chairman, Merck & Co., Inc., a research-based
health products company. Director, Agouron Pharmaceuticals, Inc.
Ronald A. Matricaria, 53........................................... 1994
President and Chief Executive Officer of St. Jude Medical, Inc., a
medical products company, since April 1993 and Chairman of the
Board since 1995. From 1970 to 1993, Mr. Matricaria was employed
by Eli Lilly and Company, Inc., a research-based pharmaceutical
company, where he served in a variety of capacities, including
President of the Medical Devices and Diagnostics Division and Ex-
ecutive Vice President of the Pharmaceutical Division and Presi-
dent of its North American operations. Director, St. Jude Medical,
Inc., Diametrics Medical, Inc., InControl, Inc. and the Health In-
dustry Manufacturers Association.
Hubert J.P. Schoemaker, 45......................................... 1983
Chairman of the Board since November 1987; Chief Executive Officer
of the Company from November 1987 to October 1992; President of
the Company from 1983 to 1987. Director, Apollon, Inc., Avitech,
Inc., Myco Pharmaceuticals, Inc. and Safeguard Scientifics Inc.
Richard D. Spizzirri, 63........................................... 1994
Senior Counsel to the law firm of Davis Polk & Wardwell since Jan-
uary 1995; Partner, Davis Polk & Wardwell from 1967 to 1994. Di-
rector, Sugen, Inc.
Lawrence Steinman, 48.............................................. 1991
Professor of Immunology, Weizmann Institute of Science, Rehovot,
Israel since 1994; Professor of Neurology and Neurological Sci-
ences and Pediatrics, Stanford University School of Medicine since
1991; Associate Professor of Neurology, Pediatrics and Genetics,
Stanford University School of Medicine from 1985 to 1991.
</TABLE>

2
<PAGE>

COMMITTEES OF THE BOARD OF DIRECTORS

The standing committees of the Board of Directors are the Audit Committee
and the Compensation Committee. The Audit Committee, consisting of Dr. Evnin,
Dr. Hamilton and Ms. Tempel, met twice during 1995. No member of the Audit
Committee is a member of the Company's management. The Audit Committee is
responsible for determining the adequacy of the Company's internal accounting
and financial controls. The Compensation Committee, consisting of Dr. Evnin,
Dr. Hamilton, Dr. Knoppers and Mr. Matricaria, met twice during 1995. The
Compensation Committee is responsible for reviewing matters pertaining to the
compensation of the executive officers of the Company.

BOARD MEETINGS AND ATTENDANCE OF DIRECTORS

The Board of Directors held six meetings during 1995. Each of the directors
attended at least 75% of the aggregate of all meetings of the Board and of all
committees of which he or she was a member during 1995.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

No member of the Compensation Committee is, or was at any time, a member of
the Company's management. During the fiscal year ended December 31, 1995, no
executive officer of the Company served on the Compensation Committee (or
other board committee performing equivalent functions) of any other entity,
one of whose executive officers is a member of the Company's Board of
Directors or Compensation Committee.

COMPENSATION OF DIRECTORS

During 1995, each director who was not an employee of the Company was
compensated in the amount of $2,000 for each of four Board of Directors'
meetings attended at the Company's Malvern, Pennsylvania offices, $3,000 for
one Board of Directors' meeting attended at the Company's Leiden, The
Netherlands offices and $1,000 for one telephonic Board of Directors' meeting
attended. Each director who was not an employee of the Company was also
granted options to purchase 15,000 shares of the Company's Common Stock during
1995. Options are granted to the Company's directors with an exercise price
equal to the closing price of the Company's Common Stock on the date of grant.

3
<PAGE>

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

To the best of the Company's knowledge, each of the following entities were
the only beneficial owners of more than five percent of the Company's Common
Stock as of March 15, 1996:

<TABLE>
<CAPTION>
NME AND ADDRESS OFA NUMBER OF SHARES OF PERCENT OF
BNEFICIAL OWNER(1)E COMMON STOCK (1) CLASS
- - ------------------- ------------------- ----------
<S> <C> <C>
AXA (2)......................................... 3,349,950(2) 5.2%
23, Avenue Matignon
Paris, France
Amerindo Investment Advisors, Inc. (3).......... 4,055,496(3) 6.3%
One Embarcadero
Suite 2300
San Francisco, CA 94111
State of Wisconsin Investment Board (4)......... 4,325,600(4) 6.7%
646 Steamboat Road
Greenwich, CT 06830
</TABLE>
- - --------
(1) Under the rules of the Securities and Exchange Commission (the
"Commission"), a person is deemed to be the beneficial owner of securities
if such person has, or shares, "voting power" (which includes the power to
vote, or to direct the voting of, such securities) or "investment power"
(which includes the power to dispose, or direct the disposition, of such
securities). Under these rules, more than one person may be deemed the
beneficial owner of the same securities. The information set forth in the
above table includes all shares of Common Stock of the Company over which
the above persons individually or together share voting power or
investment power, adjusted, however, to eliminate the reporting of shares
more than once in order not to overstate the aggregate beneficial
ownership of such persons.
(2) Based on a copy of a Schedule 13G dated February 9, 1996, provided to the
Company under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), filed by Alpha Assurances I.A.R.D. Mutuelle, Alpha
Assurances Vie Mutuelle, AXA Assurances I.A.R.D. Mutuelle, AXA Assurances
vie Mutuelle and Uni Europe Assurance Mutuelle, as a group pursuant to
rules of the Exchange Act (the "Mutuelle Group"), AXA and The Equitable
Companies Incorporated ("Equitable"). According to such Schedule 13G,
Equitable filed the Schedule 13G as a parent holding company in accordance
with Rule 13d-1(b)(ii)(G) of the Exchange Act, reporting sole voting power
with respect to 3,153,050 of such shares and sole investment power with
respect to 3,342,950 of such shares; AXA filed as a parent holding company
and as the beneficial owner of a majority interest in Equitable, reporting
sole voting power with respect to 3,159,750 of such shares and sole
investment power with respect to all of such shares, and the Mutuelle
Group filed the Schedule 13G as a parent holding company, as a group which
beneficially owns a majority interest in AXA, reporting sole voting power
with respect to 3,159,750 of such shares and sole investment power with
respect to all of such shares.
(3) Based on a copy of an Amendment No. 1 to Schedule 13G provided to the
Company under the Exchange Act, filed by Amerindo Investment Advisors
Inc., a California corporation ("Amerindo"), Amerindo Advisors (U.K.)
Limited ("Amerindo UK"), Amerindo Investment Advisors, Inc., a Panama
corporation ("Amerindo Panama"), and the Amerindo Investment Advisors Inc.
Profit Sharing Trust (the "Plan") (collectively, the "Entities"), and
Alberto W. Vilar and Gary A. Tanaka. According to the Schedule 13G, each
of Amerindo, Amerindo UK, Amerindo Panama and the Plan are investment
advisors and the shares of Common Stock covered by the Schedule 13G were
purchased in the ordinary course of their respective businesses. In the
Schedule 13G each of the Entities reports shared voting and investment
power with respect to the following number of shares of Common Stock:
Amerindo--3,477,996; Amerindo UK--290,000; Amerindo Panama--282,500; and
the Plan--5,000. Each of Messrs. Vilar and Tanaka, as the sole
shareholders and directors of each of the Entities, are deemed to have
shared voting and

4
<PAGE>

investment power with the Entities with respect to the aggregate of
4,055,496 shares of Common Stock covered by the Schedule 13G. Additionally,
Mr. Vilar, as the sole trustee of the Plan, is deemed to have sole voting
and investment power with respect to 5,000 shares of Common Stock covered
by the Schedule 13G.
(4) Based on a copy of a Schedule 13G dated February 1996 provided to the
Company pursuant to the Exchange Act, the State of Wisconsin Investment
Board has sole voting and investment power with respect to all of the
shares of Common Stock covered by the Schedule 13G.

SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth, as of March 15, 1996, the number of shares
and percentage of the Company's Common Stock beneficially owned by each
director, each executive officer named in the Summary Compensation Table in
this Proxy Statement, and all directors and executive officers as a group.

<TABLE>
<CAPTION>
PERCENTAGE OF COMMON
NUMBER OF SHARES STOCK OUTSTANDING IF
NAME BENEFICIALLY OWNED(1) GREATER THAN 1%
---- --------------------- --------------------
<S> <C> <C>
Anthony B. Evnin.................... 163,952
William F. Hamilton................. 130,974
David P. Holveck.................... 514,953
Antonie T. Knoppers................. 101,832
Ronald A. Matricaria................ 9,100
Hubert J.P. Schoemaker.............. 1,028,007 1.5%
Richard D. Spizzirri................ 97,744
Lawrence Steinman................... 44,800
Jean C. Tempel...................... 21,300
Timothy P. Cost (2)................. 0
Martin R. Page...................... 162,967
James N. Woody (3).................. 262,697
All directors and executive officers
as a group......................... 2,605,803 3.9%
</TABLE>
- - --------
(1) Includes shares which the individual named in the table has the right to
acquire, on or before May 15, 1996, through the vesting of awards under
the Company's 1983 Restricted Common Stock Award Plan or the exercise of
stock options pursuant to individual agreements, the Company's 1987 Non-
Qualified Stock Option Plan or 1989 Non-Employee Directors' Non-Qualified
Stock Option Plan, as follows: Anthony B. Evnin--104,800; William F.
Hamilton--119,800; David P. Holveck--445,221; Antonie T. Knoppers--99,800;
Ronald A. Matricaria--9,100; Hubert J.P. Schoemaker--792,750; Richard D.
Spizzirri--5,300; Lawrence Steinman--44,800; Jean C. Tempel--18,900;
Martin R. Page--145,700; James N. Woody--252,500; and all directors and
executive officers as a group--2,103,261.
(2) Mr. Cost resigned as an officer of the Company effective as of January 5,
1996.
(3) Dr. Woody resigned as an officer of the Company effective as of March 29,
1996.

Section 16 of the Exchange Act requires that the officers and directors of a
corporation, such as the Company, that has a class of equity securities
registered under Section 12 of the Exchange Act, file reports of their
ownership of such securities, as well as monthly statements of changes in such
ownership, with the Commission and the National Association of Securities
Dealers, Inc. Based upon written representations received by the Company from
its officers and directors, and the Company's review of the monthly statements
of changes filed with the Commission by its officers and directors, the
Company notes that an amended Form 5 was filed on behalf of Dr. Woody in
connection with his delivery to the Company of 647 shares of Common Stock to
cover the income tax withholding

5
<PAGE>

requirements associated with the vesting of 2,000 shares of Common Stock
pursuant to a prior restricted stock award, which withholding of shares of
Common Stock was not timely reported on his original Form 5 filing. The
Company further notes that Form 5's were not timely filed on behalf of
Dr. Bogard and Mr. Caruso in connection with each of their deliveries to the
Company of 39 shares of Common Stock to cover the income tax withholding
requirements associated with the vesting in each of them of 120 shares of
Common Stock pursuant to prior restricted stock awards, and, in the case of
Mr. Caruso, the grant by the Company of options to purchase 2,000 shares of
Common Stock.

EXECUTIVE OFFICERS OF THE COMPANY

The executive officers of the Company, who are elected to serve at the
discretion of the Board of Directors, are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
David P. Holveck..................... 50 President and Chief Executive Officer
Warren C. Bogard, Jr. ............... 46 Senior Vice President and General
Manager--Diagnostics Division
Martin R. Page....................... 51 Senior Vice President--Regulatory
Affairs and Quality Assurance
Dominic J. Caruso.................... 38 Vice President--Finance and Chief
Financial Officer
</TABLE>

Mr. Holveck has been associated with Centocor since June 1983, as President
and Chief Executive Officer since November 1992, as President and Chief
Operating Officer from April 1992 to October 1992, and as Executive Vice
President and President--Diagnostics Division from December 1988 to April
1992.

Dr. Bogard has been associated with Centocor since January 1982, as Senior
Vice President and General Manager--Diagnostics Division since October 1994,
as Vice President, Program Management from April 1992 to October 1994, and as
Director, Scientific Affairs--Pharmaceutical Division from November 1990 to
April 1992.

Mr. Page has been associated with Centocor since September 1987, as Senior
Vice President-- Regulatory Affairs and Quality Assurance since March 1994, as
Senior Vice President--Worldwide Regulatory Affairs from August 1992 to March
1994, as Vice President--Worldwide Regulatory Affairs from June 1990 to August
1992, and as Vice President--International Regulatory Affairs from September
1987 to June 1990.

Mr. Caruso has been associated with Centocor since November 1985, as Vice
President--Finance and Chief Financial Officer since December 1994, and as
Vice President and Corporate Controller from January 1991 to November 1994.

6
<PAGE>

EXECUTIVE COMPENSATION AND OTHER INFORMATION

REPORT OF BOARD OF DIRECTORS' COMPENSATION
COMMITTEE ON EXECUTIVE COMPENSATION

The Compensation Committee of the Board of Directors, consisting entirely of
non-employee directors, is responsible for establishing and reviewing the
compensation of the Company's executive officers.

EXECUTIVE COMPENSATION POLICIES

The Company's executive compensation programs are designed to attract and
retain experienced and well-qualified executive officers who will enhance the
performance of the Company and build shareholders' equity. The Company's
executive compensation packages generally include four components: base
salary; a discretionary annual cash bonus; stock options and restricted stock
awards; and executive benefits.

In setting the compensation level for executive officers, the Committee is
guided by the following considerations:

--compensation levels should be competitive with compensation generally
being paid to executives in the pharmaceutical and biotechnology industries to
ensure the Company's ability to attract and retain superior executives;

--a significant portion of executive officer compensation should be paid in
the form of equity-based incentives to link closely shareholder and executive
interests and to encourage stock ownership by executive officers; and

--each individual executive officer's compensation should reflect the
performance of the Company as a whole, the performance of the officer's
business unit, if applicable, and the performance of the executive officer.

BASE SALARY

An executive's base salary is determined by the Company's overall
performance, the responsibility of the particular position, and an assessment
of his/her performance against his/her individual responsibilities and
objectives, including, where appropriate, the impact of such performance on
the business results of the Company. The Committee also may consider non-
financial indicators, including, but not limited to, strategic developments
for which an executive officer has responsibility and intangible elements of
managerial performance. Executive officer salaries are generally reviewed
annually and adjusted on a calendar year basis based upon these
considerations.

ANNUAL CASH BONUS

The Committee may make cash awards to executive officers based on certain
financial and non-financial indicators of corporate performance. An individual
executive's annual bonus is a percentage of his/her base salary determined by
the executive's job level and scope of responsibility.

Based on the Company's performance in 1995, the Committee elected not to
award cash bonuses to its executive officers with respect to such year.

STOCK OPTIONS AND RESTRICTED STOCK AWARDS

The Committee may grant stock options and/or restricted stock awards to
executive officers. The Committee sets guidelines for the number of stock
options granted or shares awarded, based on the

7
<PAGE>

Company's performance and the targeted value of each executive's overall
compensation package. In setting such guidelines, the Committee evaluates the
long-term incentive packages offered to the Company's executives in relation
to the long-term incentive packages other biotechnology companies which the
Committee considers to be in the Company's peer group offer their executives.
The Committee considers the Company's peer group to be: Amgen Inc.; Biogen,
Inc.; Genentech Inc.; Genzyme Corporation and Chiron Corporation.

The Committee granted all executive officers stock options and restricted
stock awards in 1995 as an incentive for future performance.

EXECUTIVE BENEFITS

In order to provide an attractive package for executive officers, thereby
enabling the Company to attract and retain necessary executive talent, the
Company often supplements the standard benefits package offered to all
employees with special executive benefits.

COMPENSATION OF THE CHIEF EXECUTIVE OFFICER

Mr. Holveck's 1995 compensation consisted of base salary, stock options, and
executive benefits.

In view of Mr. Holveck's responsibility and seniority, the Committee set his
1995 base salary at $309,000, to be competitive with base salaries paid to
other executives in the biotechnology industry with similar responsibilities
and seniority. Based on his achievement of certain objectives, in 1995, the
Committee granted Mr. Holveck options to purchase 90,000 shares of Common
Stock and awarded him 30,000 shares of Common Stock under the Company's
Restricted Common Stock Award Plan. These option grants and restricted stock
awards, together with prior grants and awards, reflect the Committee's policy
of encouraging long-term performance and promoting executive retention while
further aligning management's and shareholders' interest in the performance of
the Company's Common Stock.

COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)

Section 162(m) of the Internal Revenue Code, applicable in tax years
beginning on or after January 1, 1994, generally disallows a tax deduction to
publicly-held companies for annual compensation in excess of $1 million earned
by the chief executive officer or any of the other four highest compensated
officers. The deduction limit does not apply, however, to performance-based
compensation that satisfies certain requirements. The Committee does not
anticipate that in the foreseeable future any officer of the Company will earn
compensation in excess of $1 million that would not qualify as performance-
based compensation. Therefore, the Committee has not yet determined a policy
with respect to Section 162(m). The Committee intends to review the
implications of Section 162(m) when it becomes more relevant with respect to
the Company's executive compensation policies.

The Compensation Committee

Dr. Anthony B. Evnin
Dr. William F. Hamilton
Dr. Antonie T. Knoppers
Mr. Ronald A. Matricaria

8
<PAGE>

SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION

The following table sets forth, for the fiscal years ended December 31,
1995, 1994 and 1993, the cash compensation paid by the Company, as well as
certain other compensation paid with respect to those years, to the chief
executive officer and each of the four other most highly compensated policy
making principals of the Company in all capacities in which they served. Cash
bonuses are stated in the year for which they are awarded, whether paid or
accrued.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
---------------------------
ANNUAL COMPENSATION AWARDS
------------------------------- ---------------------------
SECURITIES
NAME AND OTHER ANNUAL RESTRICTED UNDERLYING ALL OTHER
PRINCIPAL COMPENSATION STOCK AWARD(S) OPTIONS/SARS COMPENSATION
POSITION YEAR SALARY($) BONUS($) ($) ($)(1) (#)(2) ($)(3)
--------- ---- --------- -------- ------------ -------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
David P. Holveck........ 1995 $309,000 -- -- $423,750 90,000 $6,066
President and 1994 $300,000 -- -- -- 120,000 $6,463
Chief Executive 1993 $279,000 $50,000 -- $ 80,000 174,000 $6,146
Officer
Hubert J.P. Schoemaker.. 1995 $371,000 -- -- $423,750 90,000 $6,718
Chairman of the Board 1994 $360,000 -- -- -- 125,000 $6,724
1993 $340,000 $55,000 -- $ 80,000 210,000 $7,411
Timothy P. Cost(4)...... 1995 $181,000 -- -- -- 25,000 $4,723
Senior Vice President, 1994 $171,000 $25,000 $35,362(6) $101,250 45,000 $4,136
Investor Relations and
Strategic Operations
Martin R. Page.......... 1995 $204,000 -- -- $141,250 25,000 $4,942
Senior Vice President, 1994 $198,000 -- -- -- 40,000 $5,013
Regulatory Affairs and 1993 $183,000 $12,500 -- $ 40,000 40,000 $4,660
Quality Assurance
James N. Woody(5)....... 1995 $273,000 -- -- $211,875 35,000 $5,643
Senior Vice President-- 1994 $265,000 -- -- -- 60,000 $5,861
Research and 1993 $241,000 $20,000 -- $ 80,000 110,000 $5,657
Development, Chief
Scientific Officer
</TABLE>
- - --------
(1) Of the 36,000 shares awarded to Mr. Holveck under the Company's 1983
Restricted Common Stock Award Plan (the "1983 Award Plan") during the
three fiscal years ended December 31, 1995, 6,000 vest 20% each year for
five consecutive years after the award and 30,000 vest 25% each year for
four consecutive years after the award. At December 31, 1995, Mr. Holveck
held unvested awards under the 1983 Award Plan for an aggregate of 44,200
shares with a market value of $1,364,675.

Of the 36,000 shares awarded to Dr. Schoemaker under the 1983 Award Plan
during the three fiscal years ended December 31, 1995, 6,000 vest 20% each
year for five consecutive years after the award and 30,000 vest 25% each
year for four consecutive years after the award. At December 31, 1995, Dr.
Schoemaker held unvested awards under the 1983 Award Plan for an aggregate
of 39,600 shares with a market value of $1,222,650.

The 10,000 shares awarded to Mr. Cost under the 1983 Award Plan during the
three fiscal years ended December 31, 1995 vest 20% each year for five
consecutive years after the award. At December 31, 1995, Mr. Cost held
unvested awards under the 1983 Award Plan for an aggregate of 8,000 shares
with a market value of $247,000.

Of the 13,000 shares awarded to Mr. Page under the 1983 Award Plan during
the three fiscal years ended December 31, 1995, 3,000 vest 20% each year
for five consecutive years after the award and

9
<PAGE>

10,000 vest 25% each year for four consecutive years after the award. At
December 31, 1995, Mr. Page held unvested awards under the 1983 Award Plan
for an aggregate of 14,500 shares with a market value of $447,688.

Of the 21,000 shares awarded to Dr. Woody under the 1983 Award Plan during
the three fiscal years ended December 31, 1995, 6,000 vest 20% each year
for five consecutive years after the award and 15,000 vest 25% each year
for four consecutive years after the award. At December 31, 1995, Dr. Woody
held unvested awards under the 1983 Award Plan for an aggregate of 27,800
shares with a market value of $858,325.

The vesting of all of the foregoing unvested shares may be accelerated
under certain events constituting a change in control of the Company.

With respect to restricted stock awards, shares of Common Stock are not
issued prior to the vesting of an award. The holder of unvested restricted
stock awards has no rights as a shareholder of the Company, including the
right to receive dividends. The Company has not paid any dividends on its
Common Stock and does not expect to pay any dividends in the foreseeable
future.

(2) All of the options granted to Mr. Holveck, Dr. Schoemaker, Mr. Cost, Mr.
Page and Dr. Woody in the three fiscal years ended December 31, 1995 were
granted in tandem with limited stock appreciation rights ("LSARs"). LSARs
may be exercised only upon the occurrence of certain events constituting a
change in control of the Company, only during the 30-day period following
shareholder approval of any such event (but may not in any event be
exercised for six months after the date of grant of the LSAR), and will be
exercisable only if and to the extent that the options to which they
relate are exercisable. For each share for which an LSAR is exercised, the
optionee will receive an amount in cash equal to the difference between
(1) the exercise price per share of the option to which the LSAR relates
and (2) the fair market value per share of the Common Stock issuable upon
exercise of the option on the date the LSAR is exercised.

(3) All of such amounts constitute contributions made by the Company to the
Company's Qualified Savings and Retirement Plan for the accounts of the
named principals.

(4) Mr. Cost joined the Company on January 4, 1994 and resigned as an officer
of the Company effective as of January 5, 1996.

(5) Dr. Woody resigned as an officer of the Company effective as of March 29,
1996.

(6) Amount consists of: $22,560 for reimbursement of relocation expenses and a
$12,802 automobile allowance.

10
<PAGE>

STOCK OPTIONS AND STOCK APPRECIATION RIGHTS

The following table sets forth information concerning the grant of stock
options and LSARs under the Company's 1987 Non-Qualified Stock Option Plan to
the principals named in the Summary Compensation Table during the fiscal year
ended December 31, 1995:
<TABLE>
<CAPTION>
OPTION/LSAR GRANTS IN LAST FISCAL YEAR

INDIVIDUAL GRANTS POTENTIAL REALIZABLE
- - ------------------------------------------------------------------------------ VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF
SECURITIES % OF TOTAL STOCK PRICE
UNDERLYING OPTIONS/LSARS APPRECIATION FOR
OPTIONS/LSARS GRANTED EXPIRA- OPTION TERM
GRANTED TO EMPLOYEES EXERCISE TION ---------------------
NAME (#)(1) IN FISCAL YEAR PRICE ($/SH)(2) DATE (3) 5% ($) 10% ($)
---- ------------- -------------- --------------- -------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
David P. Holveck........ 90,000 12.75% $13.875 5/10/05 $ 785,332 $ 1,990,186
Hubert J.P. Schoemaker.. 90,000 12.75% $13.875 5/10/05 $ 785,332 $ 1,990,186
Timothy P. Cost......... 25,000 3.54% $13.875 5/10/05 $ 218,148 $ 552,829
Martin R. Page.......... 25,000 3.54% $13.875 5/10/05 $ 218,148 $ 552,829
James N. Woody.......... 35,000 4.96% $13.875 5/10/05 $ 305,407 $ 773,961
</TABLE>

- - --------
(1) Such options first become exercisable as to one-half of the option shares
on May 10, 1997, one-quarter of the option shares on May 10, 1998, and
one-quarter of the option shares on May 10, 1999. The exercisability of
all of the options will accelerate upon the occurrence of certain events
constituting a change in control of the Company. All of the options were
granted in tandem with LSARs.
(2) The price payable upon exercise of options may be paid in cash, property,
services rendered, or, under certain circumstances, in shares of the
Company's Common Stock having a fair market value equal on the date of
exercise to the exercise price, or any combination thereof.
(3) Each of the options generally expires upon the earlier of six months after
the employee's termination of employment or the expiration date noted
above.

The following table sets forth information with respect to option exercises
by the principals named in the Summary Compensation Table during the fiscal
year ended December 31, 1995, and the unexercised options and LSARs held by
each of those principals as of the end of such fiscal year:

AGGREGATED OPTION/LSAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/LSAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/LSARS OPTIONS/LSARS
AT FY-END (# ) AT FY-END ($)
------------------------- -------------------------
SHARES VALUE
ACQUIRED ON REALIZED
NAME EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
David P. Holveck........ -- -- 373,665(1) 260,335(1) $ 6,634,798 $5,224,451
Hubert J.P. Schoemaker.. -- -- 713,165(1) 275,835(1) $12,037,923 $5,569,826
Timothy P. Cost......... -- -- 6,667(1) 63,333(1) $ 138,340 $1,164,159
Martin R. Page.......... -- -- 126,900(2) 71,300(3) $ 2,741,675 $1,409,975
James N. Woody.......... 15,000 $138,750 223,333(1) 106,667(1) $ 3,057,909 $2,122,090
</TABLE>
- - --------
(1) All of such options were granted in tandem with LSARs.
(2) 35,000 of such options were granted in tandem with LSARs.
(3) 70,000 of such options were granted in tandem with LSARs.

11
<PAGE>

PERFORMANCE GRAPH

The following graph compares the yearly percentage change in the cumulative
total shareholder return on the Company's Common Stock during the five fiscal
years ended December 31, 1995 with the cumulative total return on the Nasdaq
Stock Market Index (U.S. and Foreign Companies) and the Hambrecht & Quist
Biotechnology Index. The comparison assumes $100 was invested on December 31,
1990 in the Company's Common Stock and in each of the foregoing indices and
further assumes reinvestment of dividends. The Company did not declare or pay
any dividends during the comparison period.

[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Nasdaq Stock Market 100 159.61 185.19 214.39 207.37 287.97
Index (US and Foreign
Companies)

Hambrecht & Quist 100 235.99 209.72 180.78 171.74 292.14
Biotechnology Index

Centocor, Inc. 100 240.45 73.03 53.37 73.03 138.76
</TABLE>

TRANSACTIONS INVOLVING DIRECTORS AND MANAGEMENT

At various times in 1995, various executive officers were awarded and vested
in shares awarded pursuant to the 1983 Award Plan, and were granted and
exercised options pursuant to the 1987 Non-Qualified Stock Option Plan.

The Company has arrangements with all executive officers other than Mr.
Holveck pursuant to which each will receive severance payments of twelve
months compensation in certain cases in the event of termination of his
employment by the Company. The Company has an arrangement with Mr. Holveck
pursuant to which he will receive a lump-sum payment of twelve months
compensation in certain cases in the event of termination of his employment by
the Company.

The terms of currently unexercisable options for an aggregate of 1,097,703
shares and currently unvested restricted stock awards for an aggregate of
186,940 shares granted to all executive officers and certain other employees of
the Company provide for the acceleration of the exercisability of such options
and the vesting of such common stock awards upon the occurrence of certain
events constituting a change in control of the Company.

12
<PAGE>

Dr. Steinman serves on the Company's Scientific Advisory Board. In
consideration of such services rendered during 1995, Dr. Steinman received
from the Company a $10,000 retainer and $2,500 for each of three Scientific
Advisory Board meetings he attended during the year. Dr. Steinman also
provides scientific consulting services to the Company under a consulting
agreement. In 1995, the Company paid Dr. Steinman $48,000 for services
rendered under such agreement.

OTHER BUSINESS

The Board of Directors knows of no business that will be presented at the
meeting other than the election of directors. If any other matter is properly
presented to the meeting, the persons named in the accompanying proxy will
have discretionary authority to vote proxies with respect to such matter in
accordance with their best judgment.

ADDITIONAL INFORMATION

INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

KPMG Peat Marwick LLP, independent certified public accountants, audited the
consolidated financial statements of the Company for the year ended December
31, 1995. Representatives of KPMG Peat Marwick LLP are expected to attend the
1996 annual meeting of shareholders, will have the opportunity to make a
statement if they desire to do so and are expected to be available to answer
appropriate questions. The Board of Directors has selected KPMG Peat Marwick
LLP as the independent public accountants to audit the Company's consolidated
financial statements for the year ending December 31, 1996.

DEADLINE FOR SHAREHOLDERS' PROPOSALS

The Company must receive any proposal which a shareholder wishes to submit
to the 1997 annual meeting of shareholders before December 11, 1996, if the
proposal is to be considered by the Board of Directors for inclusion in the
proxy material for that meeting.

George D. Hobbs
Secretary

April 10, 1996

13
<PAGE>

CENTOCOR, INC.
Malvern, PA

Proxy Solicited on Behalf of the Board of Directors of the Company

for the Annual Meeting of Shareholders to be held May 15, 1996

The undersigned hereby appoints David P. Holveck and George D. Hobbs, and
each of them, attorneys and proxies, with power of substitution in each of them,
to vote and act for and on behalf of the undersigned at the annual meeting of
shareholders of Centocor, Inc. to be held on Wednesday, May 15, 1996, and at all
adjournments thereof, according to the number of shares which the undersigned
would be entitled to vote if then personally present, as indicated hereon, and
in their discretion upon such other business as may arise during the meeting,
all as set forth in the notice of the meeting and in the proxy statement
furnished herewith, copies of which have been received by the undersigned; and
hereby ratifies and confirms all that said attorneys and proxies may do or cause
to be done by virtue hereof.

It is agreed that unless otherwise marked on the reverse side, said
attorneys and proxies are appointed with authority to vote FOR the election of
directors.

(PLEASE FILL IN, SIGN AND DATE THIS PROXY CARD ON
THE REVERSE SIDE AND RETURN IT PROMPTLY IN
THE ENCLOSED ENVELOPE.)

PROXY
-------------
SEE REVERSE
SIDE
-------------
<PAGE>
CEN 3

-----
[X] Please mark
votes as in
this example.

1. ELECTION OF DIRECTORS
Nominees: Anthony B. Evnin, William F. Hamilton, David P. Holveck, Antonie
T. Knoppers, Ronald A. Matricaria, Hubert J.P. Schoemaker, Richard D.
Spizzirri, Lawrence Steinman and Jean C. Tempel.

FOR WITHHELD
ALL (for all
NOMINEES nominees)
[_] [_]

For, except vote withheld from the following nominees:

[_]____________________________________________

MARK HERE MARK HERE
FOR ADDRESS [_] IF YOU PLAN [_]
CHANGE AND TO ATTEND
NOTE AT LEFT THE MEETING ON
MAY 15, 1996

Signature should be the same as the name printed hereon:
Executors, administrators, trustees, guardians, attorneys and
officers of corporations should add their title when signing.

Signature Date
----------------------------------------- ------------------------