<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / 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
FoxMeyer Health Corporation
- - - --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- - - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 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:
- - - --------------------------------------------------------------------------------
<PAGE> 2
FOXMEYER HEALTH CORPORATION
1220 SENLAC DRIVE
CARROLLTON, TEXAS 75006
June 28, 1996
To our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders of
FoxMeyer Health Corporation (the "Company") to be held on Thursday, August 22,
1996, at the Four Seasons Hotel, 4150 North MacArthur Blvd., Irving, Texas
75038, at 8:30 a.m., local time (the "Annual Meeting").
The accompanying Notice of Annual Meeting of Stockholders and Proxy
Statement describe the business to be transacted at the Annual Meeting.
Directors and officers of the Company will be present at the Annual Meeting to
respond to any questions that our stockholders may have.
It is important that your shares be represented at the Annual Meeting.
Whether or not you plan to attend the Annual Meeting, we urge you to sign, date
and return the enclosed proxy card at your earliest convenience. Your prompt
cooperation will be greatly appreciated.
<TABLE>
<S> <C>
Very truly yours,
/s/ ABBEY J. BUTLER /s/ MELVYN J. ESTRIN
ABBEY J. BUTLER MELVYN J. ESTRIN
Co-Chairman of the Board Co-Chairman of the Board
and Co-Chief Executive Officer and Co-Chief Executive Officer
</TABLE>
<PAGE> 3
FOXMEYER HEALTH CORPORATION
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
---------------------
The Annual Meeting of Stockholders of FoxMeyer Health Corporation, a
Delaware corporation (the "Company"), will be held on Thursday, August 22, 1996,
at the Four Seasons Hotel, 4150 North MacArthur Blvd., Irving, Texas 75038, at
8:30 a.m., local time (the "Annual Meeting"), for the purpose of considering and
acting upon the following matters, that are described more fully in the
accompanying Proxy Statement:
(a) To elect three directors to the Company's Board of Directors, two
of whom to hold office for a three year term and one of whom to hold office
for a one year term; and
(b) To transact such other business as may properly come before the
Annual Meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on June 28, 1996 as
the record date for the purpose of determining the stockholders who are entitled
to receive notice of and to vote at the Annual Meeting and any adjournment or
postponement thereof.
A list of the stockholders entitled to vote at the Annual Meeting will be
made available for examination by any stockholder, for any purpose germane to
the Annual Meeting, during ordinary business hours, at the offices of the
Company at 1220 Senlac Drive, Carrollton, Texas 75006, commencing on
approximately August 12, 1996, and at the Annual Meeting.
STOCKHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY
CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE THAT HAS BEEN PROVIDED FOR
YOUR CONVENIENCE AND THAT REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
THE PROMPT RETURN OF PROXY CARDS WILL ENSURE A QUORUM. ANY STOCKHOLDER PRESENT
AT THE ANNUAL MEETING MAY VOTE PERSONALLY ON ALL MATTERS BROUGHT BEFORE THE
ANNUAL MEETING AND, IN THAT EVENT, HIS OR HER PROXY WILL NOT BE USED.
/s/ KEVIN J. ROGAN
KEVIN J. ROGAN
Secretary
Carrollton, Texas
June 28, 1996
<PAGE> 4
FOXMEYER HEALTH CORPORATION
1220 SENLAC DRIVE
CARROLLTON, TEXAS 75006
---------------------
PROXY STATEMENT
---------------------
INTRODUCTION
This Proxy Statement is being furnished to holders of shares of common
stock of FoxMeyer Health Corporation, a Delaware corporation (the "Company"), in
connection with the solicitation of proxies by the Board of Directors of the
Company for use at the Annual Meeting of Stockholders of the Company to be held
on Thursday, August 22, 1996, at the Four Seasons Hotel, 4150 North MacArthur
Blvd., Irving, Texas 75038, at 8:30 a.m., local time, and at any and all
adjournments or postponements thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders (the "Annual Meeting"). It
is expected that the Notice of Annual Meeting, this Proxy Statement and the
enclosed proxy card will be mailed to each stockholder who is entitled to vote
at the Annual Meeting commencing on or about June 28, 1996.
Stockholders can ensure that their shares are voted at the Annual Meeting
by signing, dating and returning the enclosed proxy card in the envelope
provided. The submission of a signed proxy card will not affect a stockholder's
right to attend the Annual Meeting and vote in person. Stockholders who execute
proxies retain the right to revoke them at any time before they are voted by
filing with the Secretary of the Company a written revocation or a proxy bearing
a later date, or by attending the Annual Meeting and voting in person. The
presence at the Annual Meeting of a stockholder who has signed a proxy card does
not itself revoke that proxy.
VOTING OF PROXIES
Proxies will be voted as specified by the stockholders. Where specific
choices are not indicated, proxies will be voted FOR the proposals submitted to
the stockholders for approval. The proxy card provides space for a stockholder
to withhold voting for any or all nominees to the Board of Directors. For
purposes of determining the number of votes cast with respect to any voting
matter, only those votes cast "for" or "against" are included. Abstentions or
broker non-votes are counted only for the purpose of determining whether a
quorum is present at the Annual Meeting.
If the Annual Meeting is postponed or adjourned for any reason, at any
subsequent reconvening of the Annual Meeting all proxies will be voted in the
same manner as such proxies would have been voted at the original convening of
the Annual Meeting (except for any proxies that have theretofore been
effectively revoked or withdrawn).
If any other matters are properly presented at the meetings for
consideration, including, among other things, consideration of a motion to
adjourn the meeting to another time and/or place (including, without limitation,
for the purpose of soliciting additional proxies), the persons named in the
enclosed form of proxy and acting thereunder will have discretion to vote on
such matters in accordance with their best judgment.
GENERAL INFORMATION
The Company is a holding company principally involved in health care
services, including the distribution of a full line of pharmaceutical products
and health and beauty aids, as well as providing managed care services, through
FoxMeyer Corporation ("FoxMeyer"), FoxMeyer Drug Company, and other wholly-owned
subsidiaries. FoxMeyer's geographic coverage extends to the entire continental
United States, and is the fourth largest wholesale drug distributor in the
United States. In addition, the Company owns (a) approximately 41 percent of the
outstanding shares of FoxMeyer Canada Inc. ("FoxMeyer Canada"), which is an
integrated managed care company whose services include pharmacy benefit
management and software products for
<PAGE> 5
physicians, pharmacists, dentists and hospitals, (b) approximately 17 percent of
Ben Franklin Retail Stores, Inc. ("Ben Franklin"), which is engaged in the
franchising and operation of crafts stores and the wholesale distribution of
products to those stores, and (c) on its own behalf and through a limited
liability company, approximately 29.4 percent (net of minority interest) of
Phar-Mor, Inc. ("Phar-Mor"), which owns over 100 deep discount drug stores.
RECORD DATE
The Board of Directors has fixed the close of business on June 28, 1996 as
the record date (the "Record Date") for the determination of the stockholders of
the Company who are entitled to receive notice of and to vote at the Annual
Meeting. At the close of business on the Record Date, the Company had issued and
outstanding approximately 16,772,778 shares of common stock, par value $5 per
share (the "Common Stock"), which number does not include any shares of Common
Stock held in the Company's treasury. The presence at the Annual Meeting, in
person or by proxy, of the holders of 40 percent of the issued and outstanding
shares of Common Stock is necessary to constitute a quorum at the Annual
Meeting.
ELECTION OF DIRECTORS
The Board of Directors of the Company is divided into three classes, each
having a three year term, and the Company's By-laws provide that the total
number of directors is to be allocated among the three classes as equally as
possible. There are currently six members of the Board of Directors, and one
vacancy currently exists on the Board. Thomas L. Anderson, who was a director of
the Company since October 1994 and whose term of office would have expired at
the annual meeting of stockholders in 1997, resigned as a member of the Board on
February 1, 1996. The Board of Directors does not presently intend to name a
successor to fill the vacancy on the Board created by Mr. Anderson's
resignation.
The terms of three members of the Board of Directors, Abbey J. Butler,
Melvyn J. Estrin and William G. Tull, expire at the Annual Meeting. The
remaining members of the Board are Sheldon W. Fantle, who was previously elected
to serve until the Company's annual meeting to be held in 1997, and Paul M.
Finfer and Alfred H. Kingon, who were previously elected to serve until the
Company's annual meeting to be held in 1998. As a result of the vacancy on the
Board, and to equalize the allocation of directors among the three classes, Mr.
Tull has been nominated by the Board of Directors to serve until the annual
meeting of stockholders to be held in 1997, and Messrs. Butler and Estrin have
been nominated by the Board of Directors to serve until the annual meeting of
stockholders to be held in 1999.
All properly executed proxies received in response to this solicitation
will be voted. Unless otherwise specified in the proxy, it is the intention of
the persons named in the proxies solicited by the Board of Directors to vote FOR
the re-election of Messrs. Butler, Estrin and Tull to the Board. If events not
now known or anticipated makes either of them unable to serve, the proxies will
be voted, at the discretion of the holders thereof, for other nominees supported
by the management of the Company in lieu of those unable to serve.
2
<PAGE> 6
The following sets forth information concerning the members of the Board of
Directors:
TERMS EXPIRING IN 1996
<TABLE>
<S> <C>
ABBEY J. BUTLER Abbey J. Butler has served as a director of the
(59) Company since 1990. Mr. Butler has also served as
Co-Chairman of the Board of the Company since March
1991, and was appointed Co-Chief Executive Officer
of the Company in October 1991. Mr. Butler has
served as Co-Chairman of the Board of FoxMeyer
since March 1991 and became Co-Chief Executive
Officer of FoxMeyer in May 1993, and has also
served as Co-Chairman of the Board of Ben Franklin
since November 1991. Mr. Butler serves as managing
partner of Centaur Partners, L.P., an investment
partnership. Mr. Butler has also been the President
and a director of C.B. Equities Corp., a private
investment company, since 1982. Mr. Butler
presently serves as a director and a member of the
Executive Committee of FWB Bancorporation ("FWB"),
the holding company of FWB Bank of Maryland, and,
in connection with investments by the Company and
its subsidiaries, as a director of FoxMeyer Canada,
Phar-Mor, Urohealth Systems, Inc. ("Urohealth"), a
developer, manufacturer and distributor of
urological, gynecological and general surgical
products, CST Entertainment Imaging, Inc. ("CST"),
a company engaged in digital color enhancement of
black and white films, and Cyclone, Incorporated
("Cyclone"), a distributor and installer of chain
link fence systems, highway guard rails and
industrial gates and posts. Mr. Butler is a trustee
and a member of the Executive Committee of the
Board of Trustees of The American University, and a
director of the Starlight Foundation, a charitable
organization. Mr. Butler was appointed by President
George Bush to serve on the President's Advisory
Committee on the Arts, and he now serves as a
member of the Executive Committee of the National
Committee for the Performing Arts, John F. Kennedy
Center, Washington, D.C.
MELVYN J. ESTRIN Melvyn J. Estrin has served as a director of the
(56) Company since 1990. Mr. Estrin has also served as
Co-Chairman of the Board of the Company since March
1991 and was appointed Co-Chief Executive Officer
of the Company in October 1991. Mr. Estrin has
served as Co-Chairman of the Board of FoxMeyer
since March 1991 and became Co-Chief Executive
Officer of FoxMeyer in May 1993. Mr. Estrin has
also served as the Co-Chairman of the Board of Ben
Franklin since November 1991. Mr. Estrin serves as
managing partner of Centaur Partners, L.P., an
investment partnership. Mr. Estrin presently serves
as a director and a member of the Executive
Committee of FWB, and as a director of Washington
Gas Light Company, FoxMeyer Canada, Phar-Mor and
Urohealth. Mr. Estrin also served as a Trustee of
the University of Pennsylvania and was appointed as
Commissioner of the National Capital Planning
Commission by President Bush. Mr. Estrin's past experience
includes Chairman, President and CEO of American
Health Services and Vice President and director of
Spectro Industries, a pharmaceutical distributor.
</TABLE>
3
<PAGE> 7
<TABLE>
<S> <C>
WILLIAM G. TULL William G. Tull has served as a director of the
(67) Company since 1990. Mr. Tull served as the
President and Chief Operating Officer of American
Security Bank, N.A., a commercial bank, from April
1985 until January 1990. Since his retirement in
January 1990, Mr. Tull has also served as President
of WGT Associates, Inc., a financial consulting
firm. Mr. Tull serves as a director of Ramtron
International Corporation, a company that develops,
manufactures and sells non-volatile semiconductor
memory products, and of London Life Reinsurance
Company, a wholly-owned subsidiary of London Life
Insurance Company.
TERM EXPIRING IN 1997:
SHELDON W. FANTLE Sheldon W. Fantle has served as a director of the
(73) Company since 1991. Mr. Fantle has also served as
the Chairman and Chief Executive Officer of Fantle
Enterprises, Inc., a venture capital, consulting
and public relations firm since 1990. From 1987 to
1990, he served as the Chairman of the Board,
President and Chief Executive Officer of Dart Drug
Stores, Inc. From 1975 through 1987, he served as
Chairman of the Board, President and Chief
Executive Officer of Peoples Drug Stores, Inc. Mr.
Fantle currently serves as a director of Ben
Franklin, Color Me Beautiful, a cosmetics
manufacturing company, Medlantic Healthcare
Corporation, a hospital management company, and the
National Association of Chain Drug Stores. Mr.
Fantle is a trustee and a member of the Executive
Committee of The American University and a trustee
of the National Symphony. He serves on the Board of
Governors of United Way of America.
TERMS EXPIRING IN 1998:
PAUL M. FINFER Paul M. Finfer has served as a director of the
(57) Company since 1991. Mr. Finfer was President and
Chief Executive Officer of Franklin Acceptance
Corporation, a consumer finance company, from
October 1989 until June 1996. From May 1986 through
February 1988, he served as the Chairman of the
Board and Chief Executive Officer of FBX
Corporation, a manufacturer and distributor of
electronic fire and burglar alarm signal processing
products.
ALFRED H. KINGON Alfred H. Kingon has served as a director of the
(65) Company since 1991. Mr. Kingon is a principal of
Kingon International, Inc., an international
investment and consulting firm since September
1989. From April 1987 through June 1989, he served
as the United States Ambassador to the European
Union. Mr. Kingon served as the Assistant to the
President of the United States and Secretary of the
Cabinet from February 1985 through April 1987. Mr.
Kingon also serves as a director of Ben Franklin.
</TABLE>
4
<PAGE> 8
THE BOARD OF DIRECTORS
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has four ongoing committees and one special
committee that was formed during the fiscal year ended March 31, 1996 ("Fiscal
1996"). The principal responsibilities and membership of each committee are
described in the following paragraphs.
Audit Committee. The Audit Committee reviews the work of the Company's
independent auditors, management and internal audit staff to ensure that each is
properly discharging its responsibilities in the area of financial controls and
reporting. This committee is presently comprised of Mr. Kingon, who is the
Chairman, and Messrs. Fantle and Tull. This committee held six meetings during
Fiscal 1996.
Executive and Nominating Committee. The Executive and Nominating Committee
has the authority to exercise substantially all of the powers of the Board of
Directors in the management and business affairs of the Company, except it does
not have the authority to declare dividends, authorize the issuance of Common
Stock, modify the Company's Restated Certificate of Incorporation or By-laws,
adopt any agreement of merger or consolidation or recommend to the stockholders
the sale, lease or exchange of all or substantially all of the Company's assets
or the dissolution of the Company. In addition, this committee recommends
prospective nominees for election to the Board of Directors. As a consequence,
the occasions on which this committee is required to take action are limited.
The members of this committee are Messrs. Butler and Estrin. The committee did
not meet in Fiscal 1996.
Finance and Pension Committee. The Finance and Pension Committee reviews
and monitors the financial planning and structure of the Company and the
performance of investments in the Company's pension plans. This committee is
presently comprised of Mr. Tull, who is the Chairman, and Messrs. Butler, Estrin
and Finfer. This committee held two meetings in Fiscal 1996.
Personnel and Compensation Committee. The Personnel and Compensation
Committee reviews the performance of the management of the Company, determines
the compensation of management and makes recommendations with respect to the
establishment of management compensation plans. This committee is presently
comprised of Mr. Fantle, who is the Chairman, and Messrs. Finfer and Kingon.
This committee held five meetings in Fiscal 1996.
Distribution Committee. The Distribution Committee was created to determine
and set the record and payment dates in connection with the distribution of a
portion of Ben Franklin common stock owned by the Company to holders of the
Company's common stock. This committee consists of Messrs. Butler and Estrin,
and held one meeting in Fiscal 1996. The committee will not exist after Fiscal
1996.
MEETINGS OF THE BOARD OF DIRECTORS
During Fiscal 1996, there were six meetings of the Board of Directors. Each
director attended at least 75 percent of the meetings of the Board of Directors
and the committees of the Board of Directors of which he was a member in Fiscal
1996.
COMPENSATION OF DIRECTORS
Directors who are not officers or employees of the Company or one of its
subsidiaries or members of the Executive and Nominating Committee receive an
annual fee of $22,500. They also receive $1,000 for each meeting of the Board of
Directors or of a committee of the Board of Directors (other than the Executive
and Nominating Committee) they attend. Chairmen of each of the committees
receive an additional $1,000 for each meeting of the committee they attend.
Directors are reimbursed for travel and lodging expenses in connection with
Board and committee meetings.
Under the terms of the Company's 1993 Stock Option and Performance Award
Plan, as amended (the "Plan"), directors who are not officers or employees of
the Company or one of its subsidiaries ("outside directors") are automatically
granted options to purchase 15,000 shares of Common Stock when first elected
5
<PAGE> 9
to serve on the Board of Directors and, in each year each director continues to
serve as a member of the Board of Directors, options to purchase 1,000 shares of
Common Stock on the third trading date following the later of (i) the date on
which the annual meeting of the Company's stockholders, or any adjournment
thereof, is held each year or (ii) the date on which the Company's earnings for
the fiscal quarter immediately preceding the date of such annual meeting are
released to the public.
The Company has a Director's Retirement Plan that provides for the payment
of retirement benefits to directors (other than directors who are, or at any
time subsequent to December 31, 1975 have been, officers of the Company or an
affiliated corporation). Each qualifying director is entitled, at the later of
retirement or age 60, to receive a monthly benefit for a period equal to his
years of service or 15 years, whichever is less. Such monthly benefit is equal
to one-twelfth ( 1/12) of the highest annual fee in effect for directors during
such director's years of service on the Board of Directors.
EXECUTIVE OFFICERS
A brief biography of each executive officer of the Company (other than the
Co-Chairmen of the Board and Co-Chief Executive Officers, whose biographies are
set forth above) who served during Fiscal 1996 is provided below. Executive
officers are elected by the Board of Directors at its annual meeting and hold
office until the next annual meeting of the Board of Directors or until their
successors have been duly elected and qualified.
William L. Estes, 49, has served as Chief Operating Officer of FoxMeyer
since February 1, 1996. Prior thereto, he served as Executive Vice President
since 1995 and as Senior Vice President -- Sales and Operations of FoxMeyer
since August 1994. He joined FoxMeyer in December 1993 as Senior Vice
President -- Operations. From October 1991 to December 1993, he was Vice
President and Chief Operating Officer of the U.S. operations of The Body Shop,
Inc., a manufacturer and distributor of specialty skin and hair-color products
with worldwide sales of $600 million. From 1983 to October 1991, he was employed
by Frito-Lay, Inc., a subsidiary of PepsiCo, Inc., where he served from March
1990 as Vice President, Operations Support, and was responsible for the
warehousing and distribution of all Frito-Lay products.
Kevin J. Rogan, 44, has served as Senior Vice President, General Counsel
and Secretary of the Company since September 1994. He has also served as Senior
Vice President, General Counsel and Secretary of FoxMeyer since September 1994.
From March 1992 to August 1994, he was Senior Vice President, General Counsel
and Secretary of Pearle Vision, Inc., and from 1988 to 1992 he was Vice
President and General Counsel of The Haagen-Dazs Company, Inc. Both Pearle
Vision and Haagen-Dazs are subsidiaries of Grand Metropolitan PLC. Prior to
Grand Metropolitan PLC, Mr. Rogan served as an attorney for PepsiCo, Inc.
Edward L. Massman, 37, has served as Senior Vice President and Chief
Financial Officer of the Company since May 1996. Prior thereto, he served as
Senior Vice President of Finance and Controller since February 1996, as Vice
President and Controller of the Company since July 1994 and as Controller of the
Company since July 1993. He has also served as Senior Vice President and Chief
Financial Officer of FoxMeyer since May 1996 and, prior thereto, as Vice
President and Controller of FoxMeyer since September 1994 and as Director of
Accounting of FoxMeyer since September 1990. Mr. Massman was employed by
Deloitte & Touche LLP from January 1983 to September 1990, serving most recently
as Senior Audit Manager.
FORMER EXECUTIVE OFFICERS
Thomas L. Anderson, 47, served as President and Chief Operating Officer and
as a director of the Company from October 1994 to February 1, 1996. He also
served as President of FoxMeyer from May 1993 to February 1, 1996, and as Chief
Operating Officer of FoxMeyer from 1991 to February 1, 1996. Mr. Anderson served
as a director of FoxMeyer and FoxMeyer Canada until February 1, 1996.
Peter B. McKee, 58, served as Senior Vice President and Chief Financial
Officer of the Company from October 1994 until beyond the end of the Company's
fiscal year, through May 10, 1996. He also served as Senior Vice President and
Chief Financial Officer of FoxMeyer from January 1994 until May 10, 1996.
6
<PAGE> 10
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the compensation for the three fiscal years
ended March 31, 1996 received by the Company's Co-Chief Executive Officers, the
former President and Chief Operating Officer of the Company, and the three
remaining most highly compensated executive officers of the Company in Fiscal
1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
(A)
------------
AWARDS
ANNUAL COMPENSATION ------------
--------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL FISCAL COMPENSATION OPTIONS/ COMPENSATION
POSITION YEAR SALARY($) BONUS($) ($)(B) SARS(#) ($)(C)
- - - ---------------------------------- ------ --------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Abbey J. Butler (D) 1996 858,000 0 198,978 50,000 4,620
Co-Chairman of the 1995 804,761 700,000 108,058 800,000 4,995
Board and Co-Chief 1994 709,000 318,330 53,974 28,000 5,372
Executive Officer
Melvyn J. Estrin (D) 1996 858,000 0 201,176 50,000 4,620
Co-Chairman of the 1995 804,761 700,000 109,234 800,000 4,995
Board and Co-Chief 1994 709,000 318,330 50,997 28,000 5,958
Executive Officer
William L. Estes (E) 1996 237,500 0 31,995 160,000 4,620
Chief Operating Officer 1995 195,000 15,000 12,000 0 1,500
of FoxMeyer Corporation 1994 45,692 34,850 3,000 54,250 0
Peter B. McKee (F) 1996 212,500 0 27,692 8,000 4,620
Senior Vice President and 1995 203,753 13,000 (I) 0 1,537
Chief Financial Officer 1994 44,302 35,750 (I) 54,240 0
(resigned May 10, 1996)
Kevin J. Rogan (G) 1996 187,500 0 (I) 8,000 2,850
Senior Vice President, 1995 96,923 0 (I) 20,000 0
General Counsel and 1994
Secretary
FORMER EXECUTIVE OFFICER:
Thomas L. Anderson (H) 1996 400,000 0 63,744 25,000 4,620
President and Chief 1995 331,080 40,000 70,301 300,000 5,370
Operating Officer 1994 305,664 155,088 (I) 0 4,947
</TABLE>
- - - ---------------
(A) The Company made no awards of restricted stock and no payments under any
long term incentive plan ("LTIP") during the three fiscal years ended March
31, 1996 to any of the executive officers of the Company named in the
Summary Compensation Table. The LTIP adopted by FoxMeyer in 1993 was
cancelled during Fiscal 1996.
(B) The amount set forth under "Other Annual Compensation" includes amounts paid
by the Company or FoxMeyer to each executive officer under FoxMeyer's
Supplemental Savings Plan, which is a nonqualified plan for employees whose
contributions to the FoxMeyer 401(k) Plan are limited by the Internal
Revenue Code's limitations on elective contributions thereto (and includes
payments made on account of annual bonuses paid in Fiscal 1996 for the prior
fiscal year), any personal use of corporate property by the executive
officer, and other personal benefits.
(C) Represents amounts contributed by the Company or FoxMeyer to each executive
officer's account under FoxMeyer's 401(k) Plan.
(D) In Fiscal 1996, Mr. Butler and Mr. Estrin each received $350,000 from the
Company for serving as Co-Chief Executive Officer of the Company, $400,000
from FoxMeyer for serving as Co-Chairman of the Board and Co-Chief Executive
Officer of FoxMeyer and $108,000 from Ben Franklin for serving as Co-
Chairman of the Board of Ben Franklin. Mr. Butler and Mr. Estrin each did
not receive any bonuses for
7
<PAGE> 11
Fiscal 1996 from the Company, FoxMeyer or Ben Franklin. In Fiscal 1996, Mr.
Butler received $174,736, and Mr. Estrin received $181,281.44, under
FoxMeyer's Supplemental Savings Plan, which amounts exceeded 25% of the
total Other Annual Compensation received by each of them in Fiscal 1996.
In Fiscal 1995, Mr. Butler and Mr. Estrin each received $387,507 from the
Company for serving as Co-Chief Executive Officer of the Company, $331,254
from FoxMeyer for serving as Co-Chairman of the Board and Co-Chief
Executive Officer of FoxMeyer and $86,000 from Ben Franklin for serving as
Co-Chairman of the Board of Ben Franklin. For Fiscal 1995, Mr. Butler and
Mr. Estrin each received a $650,000 bonus from the Company and a $50,000
bonus from Ben Franklin.
In Fiscal 1994, Mr. Butler and Mr. Estrin each received $350,000 from the
Company for serving as Co-Chief Executive Officer of the Company, $275,000
from FoxMeyer for serving as Co-Chairman of the Board and Co-Chief
Executive Officer of FoxMeyer and $84,000 from Ben Franklin for serving as
Co-Chairman of the Board of Ben Franklin. For Fiscal 1994, Mr. Butler and
Mr. Estrin each received a $175,000 bonus from the Company and a $137,500
bonus from FoxMeyer, and a $5,830 bonus under FoxMeyer's performance plan
(which paid bonuses to all FoxMeyer employees upon the attainment by
FoxMeyer of an earnings target).
In Fiscal 1996, Mr. Butler and Mr. Estrin were each granted options to
purchase 50,000 shares of the Company's Common Stock. In addition, Ben
Franklin cancelled options to purchase 118,000 shares of Ben Franklin
common stock, at exercise prices between $3.875 and $5.00 per share, that
were previously granted to Mr. Butler and Mr. Estrin in their capacity as
Co-Chairman of the Board of Ben Franklin, and granted each of them
replacement options to purchase 118,000 shares of Ben Franklin common stock
at $1.8125 per share.
In Fiscal 1995, Mr. Butler and Mr. Estrin were each granted options to
purchase 800,000 shares of the Company's Common Stock and each also
accepted the offer of the Company's Board of Directors to receive a cash
payment equal to the difference between the exercise price and the closing
market price on October 26, 1994 with respect to the options to purchase
440,000 shares of the Company's Common Stock granted to each of them in
Fiscal 1993, or $935,000. In addition, in their capacity as Co-Chairman of
the Board of Ben Franklin, Mr. Butler and Mr. Estrin were each granted
options to purchase 50,000 shares of Ben Franklin common stock.
In Fiscal 1994, in their capacity as Co-Chairman of the Board of Ben
Franklin, Ben Franklin extended the expiration date (from April 27, 1997 to
April 27, 2001) of options to purchase 10,000 shares of Ben Franklin common
stock held by each of Mr. Butler and Mr. Estrin and granted each of them
additional options to purchase 18,000 shares of Ben Franklin common stock.
In addition to the amounts set forth in the Summary Compensation Table
above, in Fiscal 1996 (i) in their capacity as directors of Phar-Mor, Mr.
Butler and Mr. Estrin were each paid $25,000 in annual director fees, plus
per meeting fees, and were each granted options to purchase 5,000 shares of
Phar-Mor common stock and (ii) in their capacity as directors of Urohealth,
Mr. Butler and Mr. Estrin were each paid $1,000 in director fees and were
each granted options to purchase 7,500 shares of Urohealth common stock. In
addition, in his capacity as a director of CST, Mr. Butler was granted
warrants to purchase 50,000 shares of CST common stock during CST's fiscal
year ended June 30, 1996. In Fiscal 1995, in their capacity as directors of
FoxMeyer Canada, Mr. Butler and Mr. Estrin were each granted options to
purchase 100,000 shares of FoxMeyer Canada common stock.
(E) Mr. Estes serves as Chief Operating Officer of FoxMeyer, which paid all of
his compensation for services rendered in Fiscal 1996, Fiscal 1995 and
Fiscal 1994. In Fiscal 1996, Mr. Estes was granted options to purchase a
total of 160,000 shares of the Company's Common Stock. In Fiscal 1994, Mr.
Estes was granted options to purchase 60,000 shares of FoxMeyer Common
Stock, which converted into options to purchase 54,240 shares of the
Company's Common Stock in connection with the 1994 merger of FoxMeyer into
FoxMeyer Acquisition Corp., a Delaware corporation and wholly owned
subsidiary of the Company (the "Merger"). In Fiscal 1996, Mr. Estes received
$17,626 under FoxMeyer's Supplemental
8
<PAGE> 12
Savings Plan and $13,800 in automobile fringe benefits, each of which
amounts exceeded 25% of the total Other Annual Compensation received by Mr.
Estes in Fiscal 1996.
(F) Mr. McKee served beyond the end of the Company's fiscal year, until May 10,
1996, as Senior Vice President and Chief Financial Officer of the Company
but did not receive compensation from the Company in such capacity. Mr.
McKee also served until May 10, 1996 as Senior Vice President and Chief
Financial Officer of FoxMeyer, which paid all of his compensation for
services rendered in Fiscal 1996, Fiscal 1995 and Fiscal 1994. In Fiscal
1996, Mr. McKee was granted options to purchase 8,000 shares of the
Company's Common Stock. In Fiscal 1994, Mr. McKee was granted options to
purchase 60,000 shares of FoxMeyer Common Stock, which converted into
options for 54,240 shares of the Company's Common Stock in connection with
the Merger. In Fiscal 1996, Mr. McKee received $14,337 under FoxMeyer's
Supplemental Savings Plan and $12,000 in automobile fringe benefits, each
of which amounts exceeded 25% of the total Other Annual Compensation
received by Mr. McKee in Fiscal 1996.
(G) Mr. Rogan serves as Senior Vice President, General Counsel and Secretary of
the Company but does not receive compensation from the Company in such
capacity. Mr. Rogan also serves as Senior Vice President, General Counsel
and Secretary of FoxMeyer, which paid all of his compensation for services
rendered in Fiscal 1996 and the portion of Fiscal 1995 in which he was
employed by the Company and FoxMeyer. In Fiscal 1996, Mr. Rogan was granted
options to purchase 8,000 shares of the Company's Common Stock. In Fiscal
1995, Mr. Rogan was granted options to purchase 20,000 shares of the
Company's Common Stock.
(H) Mr. Anderson served until February 1, 1996 as President and Chief Operating
Officer of the Company but did not receive compensation from the Company in
such capacity. Mr. Anderson also served until February 1, 1996 as President
and Chief Operating Officer of FoxMeyer, which paid all of his compensation
for services rendered in Fiscal 1996, 1995 and 1994. In Fiscal 1996, Mr.
Anderson was granted options to purchase 25,000 shares of the Company's
Common Stock. In Fiscal 1995, Mr. Anderson was granted options to purchase
300,000 shares of the Company's Common Stock. In addition, in Fiscal 1995,
in his capacity as a director of FoxMeyer Canada, options to purchase
100,000 shares of FoxMeyer Canada common stock. In Fiscal 1996, Mr.
Anderson received $46,601 under FoxMeyer's Supplemental Savings Plan and
$15,995 in automobile fringe benefits, each of which amounts exceeded 25%
of the total Other Annual Compensation received by Mr. Anderson in Fiscal
1996.
(I) Other annual compensation to this executive officer did not exceed the
lesser of $50,000 or 10 percent of such executive officers's total salary
and bonus for such fiscal year.
REPORT OF THE PERSONNEL AND COMPENSATION COMMITTEE
The Personnel and Compensation Committee of the Board of Directors (the
"Compensation Committee") is comprised of three directors: Mr. Sheldon W.
Fantle, who is the Chairman, and Messrs. Paul M. Finfer and Alfred H. Kingon,
all of whom are outside directors.
EXECUTIVE COMPENSATION
Compensation for the Company's executive officers is comprised of base
salary, annual incentive payments and long-term incentive awards in the form of
stock option grants. The goal of the Company's executive compensation policy is
to reward its executive officers for overseeing and managing the Company's
operating subsidiaries, for their contributions towards long-term strategic
planning and for improving long-term stockholder value. Decisions with respect
to the compensation of the Co-Chief Executive Officers of the Company are made
by the Compensation Committee. In general, the Company -- FoxMeyer Health
Corporation -- does not pay any compensation (other than stock options) to the
Company's other executive officers, whose salaries and bonuses are paid by its
principal operating subsidiaries, FoxMeyer Corporation and FoxMeyer Drug
Company.
FoxMeyer provides an executive compensation program that aims to reinforce
FoxMeyer's overall business mission, strategies, values and objectives. The
goals of FoxMeyer's executive compensation program
9
<PAGE> 13
are to motivate and reward its executive officers and other key employees to
improve long-term stockholder value and to attract and retain high-quality
executive talent. FoxMeyer's executive compensation program consists of base
salary, annual and long-term incentive payments, Company stock options and
employee benefits. FoxMeyer reviews its compensation programs periodically and
compares its pay practices with other companies in the wholesale distribution
business and with companies staffed with similarly-skilled executives.
FoxMeyer's objective is to position total compensation at approximately the
median of market pay for executives in similar positions. Annual incentive
payments are based on the attainment of specific financial and personal goals
and objectives established each year. Long-term incentives, in the form of stock
option grants, are designed to reward sustained corporate performance over a
three to five-year period. The formal Long Term Incentive Plan that was adopted
by FoxMeyer in 1993 was cancelled during Fiscal 1996.
During the first fiscal quarter of each year, the Compensation Committee
meets to review salary increases for the current year and incentive payments to
be made in connection with the previous year's performance. The Compensation
Committee also reviews the current fiscal year's business plan and establishes
performance objectives for each FoxMeyer executive officer. Goals relating to
FoxMeyer's financial performance, based on such factors as return on capital,
pre-tax income or net income, are set as a primary component of executive
incentive compensation. Individual performance objectives are also determined
for officers and are weighted to reflect their respective functions,
significance and contribution to FoxMeyer business goals. In making its
decisions, the Compensation Committee receives recommendations from FoxMeyer's
Co-Chief Executive Officers regarding other senior executives and then meets
privately, without the presence of such senior executives, to determine their
compensation. The Company also meets privately, without the presence of
FoxMeyer's Co-Chief Executive Officers, to determine their compensation. The
Compensation Committee's decisions are based on input from FoxMeyer's human
resources department, and periodically from outside advisors, to maintain the
desired level of competitiveness and congruence with long-term company
performance.
During the year, the Compensation Committee receives periodic updates on
FoxMeyer's operating results and the progress made by FoxMeyer's executive
officers towards performance targets relevant to FoxMeyer's incentive programs.
Discussions of management contribution and performance are held periodically.
CO-CHIEF EXECUTIVE OFFICERS
During Fiscal 1996, in accordance with their respective Employment
Agreements with the Company (see below), the Company paid each of Messrs. Butler
and Estrin, the Company's Co-Chief Executive Officers and Co-Chairmen of the
Board, a base salary of $350,000. This base salary was approved by the Board of
Directors in January 1995, based upon the recommendation of the Compensation
Committee (which had consulted with an outside advisor). For Fiscal 1996, the
Board of Directors of the Company, based upon the recommendation of the
Compensation Committee, did not award any bonuses to the Co-Chief Executive
Officers.
During Fiscal 1996, in accordance with their respective Employment
Agreements with FoxMeyer (see below), each Co-Chief Executive Officer received
$400,000 from FoxMeyer for his services as Co-Chairman of the Board and Co-Chief
Executive Officer of FoxMeyer. The Board of Directors of FoxMeyer (the "FoxMeyer
Board") consisted of five members at the end of Fiscal 1996, including Messrs.
Butler and Estrin (who were also directors of the Company). Although Messrs.
Butler and Estrin are members of the FoxMeyer Board, they do not participate in
the determination of their annual compensation and bonuses to them. The $400,000
payment to each of Messrs. Butler and Estrin was approved by the FoxMeyer Board
(without the participation of Messrs. Butler and Estrin) based upon the
substantial, but not full-time services they were expected to render to
FoxMeyer, including financial and strategic planning and supervisory and
managerial services. See "EMPLOYMENT AGREEMENTS" below. For Fiscal 1996, the
FoxMeyer Board did not award any bonuses to the Co-Chief Executive Officers.
The Board of Directors of Ben Franklin (the "Ben Franklin Board") consisted
of six members at the end of Fiscal 1996, including Messrs. Butler, Estrin,
Fantle and Kingon (who were also directors of the Company). Although Messrs.
Butler and Estrin are members of the Ben Franklin Board, they do not
10
<PAGE> 14
participate in the determination of their annual fees, bonuses and the grant of
Ben Franklin options to them. For Fiscal 1996, in accordance with their
respective Employment Agreements with Ben Franklin (see below), the Ben Franklin
Board approved (without the participation of Messrs. Butler and Estrin) the
payment of $108,000 per annum to each of them for serving as Co-Chairman of the
Board of Ben Franklin, in which capacity each of them would render substantially
the same services as those rendered to FoxMeyer. For Fiscal 1996, the Ben
Franklin Board did not award any bonuses to the Co-Chief Executive Officers.
SHELDON W. FANTLE (CHAIRMAN)
PAUL M. FINFER
ALFRED H. KINGON
The foregoing report is not incorporated by reference in any prior or
future filings of the Company under the Securities Act of 1933, as amended (the
"1933 Act"), or under the Securities Exchange Act of 1934, as amended (the "1934
Act"), directly or by reference to the incorporation of proxy statements of the
Company, unless the Company specifically incorporates the report by reference,
and the report shall not otherwise be deemed filed under such Acts.
OPTION/SAR GRANTS IN FISCAL YEAR 1996 TO EXECUTIVE OFFICERS
The following table provides information regarding options granted during
Fiscal 1996 by the Company, Ben Franklin, Phar-Mor and Urohealth to the
Company's executive officers named in the Summary Compensation Table. The
following table also provides information regarding warrants granted by CST
during its fiscal year ended June 30, 1996 to the Company's executive officers
named in the Summary Compensation Table. No options or warrants were granted
during Fiscal 1996 by FoxMeyer Canada, CST or Cyclone to the Company's executive
officers named in the Summary Compensation Table.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------
PERCENT OF POTENTIAL REALIZABLE
TOTAL VALUE
NUMBER OF OPTIONS/ AT ASSUMED ANNUAL RATES
SECURITIES SARS OF STOCK PRICE
UNDERLYING GRANTED TO APPRECIATION
OPTIONS/ EMPLOYEES EXERCISE OR FOR OPTION TERM(A)
SARS IN FISCAL BASE PRICE EXPIRATION -------------------------
NAME GRANTED(#) YEAR ($/SH) DATE 5%($) 10%($)
- - - -------------------------- ---------- ---------- ----------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
GRANTS BY THE COMPANY:
Abbey J. Butler........... 50,000(B) 9.5% 22.375 09-28-00 $ 309,090 $ 683,008
Melvyn J. Estrin.......... 50,000(B) 9.5% 22.375 09-28-00 309,090 683,008
William L. Estes.......... 10,000(B) 1.9% 22.375 09-28-00 61,817 136,601
150,000(C) 28.5% 16.625 03-01-01 688,977 1,522,459
Peter B. McKee............ 8,000(B) 1.5% 22.375 09-28-00 Terminated.
Kevin J. Rogan............ 8,000(B) 1.5% 22.375 09-28-00 49,453 109,280
Thomas L. Anderson........ 25,000(B) 4.7% 22.375 09-28-00 Terminated.
GRANTS BY BEN FRANKLIN:
Abbey L. Butler........... 118,000(D) 16.25% 1.8125 02-08-06 134,505 340,862
Melvyn J. Estrin.......... 118,000(D) 16.25% 1.8125 02-08-06 134,505 340,862
GRANTS BY PHAR-MOR:
Abbey L. Butler........... 5,000(E) .005% 7.06 10-02-00 9,753 21,551
Melvyn J. Estrin.......... 5,000(E) .005% 7.06 10-02-00 9,753 21,551
GRANTS BY UROHEALTH:
Abbey J. Butler........... 7,500(F) .003% 7.25 09-27-00 15,022 33,196
Melvyn J. Estrin.......... 7,500(F) .003% 7.25 09-27-00 15,022 33,196
GRANTS BY CST:
Abbey J. Butler........... 50,000(G) .049% .8125 01-29-01 11,224 24,802
</TABLE>
11
<PAGE> 15
- - - ---------------
(A) The potential realizable values set forth under these columns result from
calculations assuming 5% and 10% growth rates as set by the Securities and
Exchange Commission ("SEC") and are not intended to forecast future price
appreciation of the stock indicated. The amounts reflect potential future
value based upon growth at these prescribed rates. The Company did not use
an alternative formula for a grant date valuation, an approach which would
state gains at present, and therefore lower, value. The Company is not
aware of any formula which will determine with reasonable accuracy a
present value based on future unknown or volatile factors. Actual gains, if
any, on stock option exercises are dependent on the future performance of
the stock indicated. There can be no assurance that the amounts reflected
in this table will be achieved.
(B) One-third ( 1/3) of these options will become exercisable on each
anniversary of the grant date, commencing on September 28, 1996.
(C) One-half ( 1/2) of these options will become exercisable on each anniversary
of the grant date, commencing on March 1, 1997.
(D) One-third ( 1/3) of these options will become exercisable on each
anniversary of the grant date, commencing on February 9, 1997.
(E) All of these options are immediately exercisable.
(F) All of these options will become exercisable on the first anniversary of the
grant date, September 27, 1996.
(G) All of these warrants are immediately exercisable.
AGGREGATE OPTIONS/SAR EXERCISES
IN FISCAL 1996 BY EXECUTIVE OFFICERS
The following table provides information as to options exercised in Fiscal
1996 by each of the executives named in the Summary Compensation Table and the
value of options for the Company's Common Stock held by such executives at
Fiscal 1996 year end measured in terms of the last reported sale price for the
shares of the Company's Common Stock on March 31, 1996 ($18.125, as reported on
the New York Stock Exchange Composite Tape).
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SAR'S AT OPTIONS AT MARCH 31,
FY-END(#) 1996($)(B)
SHARES ACQUIRED VALUE REALIZED ---------------------------- ----------------------------
NAME ON EXERCISE(#) ($)(A) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - - --------------------------- --------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Abbey J. Butler............ -- -- 344,640 650,000 $ 364,101 $ 0
Melvyn J. Estrin........... -- -- 344,640 650,000 364,101 0
William L. Estes........... -- -- 36,160 178,080 202,900 326,450
Peter B. McKee............. 2,100 $ 12,495 34,060 (C) 155,793 (C)
Kevin J. Rogan............. -- -- 6,667 21,333 9,165 18,333
Thomas L. Anderson(D)...... 5,000 16,051 126,696(E) (C) 104,165(E) (C)
</TABLE>
- - - ---------------
(A) Market value on the date of exercise of shares covered by options exercised,
less option price.
(B) Market value of shares covered by in-the-money options on March 31, 1996,
less option price. Options are in-the-money if the market value of the
shares covered thereby is greater than the option exercise price.
(C) All unexercisable options have terminated.
(D) Excludes options to purchase shares beneficially owned by Mr. Anderson as a
result of Mr. Anderson's marriage to Brenda Fugagli.
(E) As of March 31, 1996, Mr. Anderson held options to purchase 216,136 shares
of common stock. Between March 31 and June 1, 1996, Mr. Anderson exercised
options to purchase 89,440 shares of Common Stock and realized
approximately $327,290 in value from such exercises. The value of Mr.
Anderson's
12
<PAGE> 16
remaining options to purchase 126,696 shares of Common Stock, based on the
March 31, 1996 sale price of the Common Stock, is $104,165.
PERFORMANCE GRAPH
The following performance graph compares the performance of the Common
Stock, the Standard & Poor's 500 Index and an index of peer companies selected
by the Company (the "Peer Group Index") for the Company's last five fiscal
years. The graph assumes that the value of the investment in the Common Stock
and in each index was $100 on April 1, 1991, and that all dividends were
reinvested.
Through approximately the first half of Fiscal 1996, the Company had two
principal operating subsidiaries: FoxMeyer, in which the Company owns 100% of
the outstanding shares and Ben Franklin, in which the Company owned
approximately 67% of the outstanding shares through September 1995. The Peer
Group Index shown on the performance graph (which is weighted on the basis of
market capitalization) consists of the Company and Ben Franklin; the following
companies that are engaged primarily in the wholesale drug distribution
business: Bergen Brunswig Corporation, Bindley Western Industries, Inc.,
Cardinal Health, Inc., D&K Wholesale Drug, Inc., McKesson Corporation, Moore
Medical Corporation and Owens & Minor, Inc.; and the following companies that
are engaged primarily in the sale of variety and crafts merchandise: Ambers
Stores, Inc. and Michaels Stores, Inc.
<TABLE>
<CAPTION>
Measurement Period S&P 500 Peer Group
(Fiscal Year Covered) The Company Index Index
<S> <C> <C> <C>
4/1/91 100.00 100.00 100.00
1992 86.99 111.04 102.64
1993 84.85 127.95 120.87
1994 104.44 129.84 156.49
1995 126.47 150.05 261.64
1996 118.31 198.22 292.53
</TABLE>
The foregoing graph is not incorporated in any prior or future filings of
the Company under the 1933 Act or the 1934 Act, directly or by reference to the
incorporation of proxy statements of the Company, unless the Company
specifically incorporates the graph by reference, and the graph shall not
otherwise be deemed filed under such Acts.
COMPLIANCE WITH SECTION 16(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the 1934 Act ("Section 16(a)"), requires the Company's
directors, executive officers and persons who beneficially own more than 10
percent of a registered class of the Company's equity securities ("10% Owners")
to file reports of beneficial ownership of the Company's securities and changes
in such beneficial ownership with the SEC. Directors, executive officers and 10%
Owners are also required by rules
13
<PAGE> 17
promulgated by the Commission to furnish the Company with copies of all forms
they file pursuant to Section 16(a).
Based solely upon a review of the copies of the forms filed pursuant to
Section 16(a) furnished to the Company, or written representations that no
year-end Form 5 filings were required for transactions occurring during Fiscal
1996, the Company believes that its directors, executive officers and 10% Owners
complied with Section 16(a) filing requirements applicable to them during Fiscal
1996.
EMPLOYMENT AGREEMENTS
Effective February 27, 1995, each of the Company and FoxMeyer entered into
employment agreements with Messrs. Butler and Estrin pursuant to which they each
agreed to serve as Co-Chairmen and Co-Chief Executive Officers of the Company
and FoxMeyer for a rolling three-year term at a minimum annual base salary of
$350,000 and $400,000, respectively, subject to periodic increases by the
respective Board of Directors. In addition, effective February 27, 1995, Ben
Franklin entered into employment agreements with Messrs. Butler and Estrin
pursuant to which they each agreed to serve as Co-Chairmen of Ben Franklin for a
rolling three-year term at a minimum annual base salary of $108,000, subject to
periodic increases by the Board of Directors. Under the terms of the agreements,
Messrs. Butler's and Estrin's minimum annual base salaries may not be less than
their annual base salaries as of February 27, 1995 (which are the amounts
indicated above). If either Mr. Butler's or Mr. Estrin's employment with the
Company, FoxMeyer or Ben Franklin is terminated for any reason other than for
cause, Mr. Butler or Mr. Estrin, as the case may be, will be entitled to receive
from the relevant company, monthly severance payments equivalent to his monthly
base salary and any bonus awards that otherwise would have been paid during the
term of the agreements. The Co-Chief Executive Officers are also entitled to
participate in the benefits generally available to senior executives of the
Company and to receive such other amounts as the Board of any other entity
controlled by the Company may authorize. For additional compensation received by
Messrs. Butler and Estrin, see the Summary Compensation Table and Note D
thereto.
Mr. Estes, the Chief Operating Officer of FoxMeyer, has an employment
agreement with FoxMeyer that expires on February 28, 1998. Under the terms of
the agreement, Mr. Estes' minimum annual base salary may not be less than his
annual base salary as of February 28, 1996 (which was $325,000 per annum). Mr.
Estes is also entitled to certain additional special bonuses under specified
circumstances. If Mr. Estes' employment with FoxMeyer is terminated for any
reason other than for cause, Mr. Estes will be entitled to receive monthly
severance payments equivalent to his monthly base salary in effect at the time
of termination for a period equal to the longer of the remaining term of his
employment agreement or eighteen months.
Mr. Rogan, the Senior Vice President, General Counsel and Secretary of the
Company, has an employment agreement with FoxMeyer in his capacity as Senior
Vice President, General Counsel and Secretary of FoxMeyer that expires on March
31, 1998. Under the terms of the agreement, Mr. Rogan's minimum annual base
salary may not be less than his annual base salary as of March 31, 1996 (which
was $190,000 per annum). If Mr. Rogan's employment with FoxMeyer is terminated
for any reason other than for cause, Mr. Rogan will be entitled to receive
monthly severance payments equivalent to his monthly base salary in effect at
the time of termination for a period equal to the longer of the remaining term
of his employment agreement or eighteen months.
OWNERSHIP OF COMMON STOCK OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of June 1, 1996 with
respect to the beneficial ownership of Common Stock by (i) persons known to the
Company to be the beneficial owners of more than 5 percent of the outstanding
shares of Common Stock, (ii) all directors and nominees for election as
directors of the Company, (iii) each of the executive officers of the Company,
and (iv) all directors and executive officers as a group.
14
<PAGE> 18
The number of shares of Common Stock beneficially owned by each individual
set forth below is determined under rules of the Securities and Exchange
Commission (the "Commission") and the information is not necessarily indicative
of beneficial ownership for any other purpose. Under such rules, beneficial
ownership includes any shares as to which an individual has sole or shared
voting power or investment power and any shares that an individual presently, or
within 60 days of the date of the Annual Meeting, has the right to acquire
through the exercise of any stock option or other right. Unless otherwise
indicated, each individual has sole voting and investment power (or shares such
powers with his spouse) with respect to the shares of Common Stock set forth in
the following table.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF
NAME AND ADDRESS(1) OF COMMON STOCK OUTSTANDING
OF BENEFICIAL OWNER BENEFICIALLY OWNED SHARES(14)
- - - ----------------------------------------------------------- ------------------ -------------
<S> <C> <C>
The Centaur Group.......................................... 3,811,591(2) 20.9%
c/o Centaur Partners IV
17 Battery Place, Suite 709
New York, New York 10004
DIRECTORS AND NOMINEES FOR DIRECTORS
(INCLUDING THOSE WHO ARE ALSO EXECUTIVE OFFICERS):
Abbey J. Butler.......................................... 4,377,027(2)(3) 24.0%
Melvyn J. Estrin......................................... 4,376,653(2)(4) 23.9%
Sheldon W. Fantle........................................ 34,772(5) (15)
Paul M. Finfer........................................... 34,229(6) (15)
Alfred H. Kingon......................................... 18,500(7) (15)
William G. Tull.......................................... 24,212(8) (15)
EXECUTIVE OFFICERS:
William L. Estes......................................... 39,627(9) (15)
Kevin J. Rogan........................................... 16,000(10) (15)
Edward L. Massman........................................ 10,333(11) (15)
FORMER EXECUTIVE OFFICERS:
Thomas L. Anderson....................................... 160,320(12) (15)
Peter B. McKee........................................... 34,060(13) (15)
All Directors and Current Executive Officers as a Group (11
persons)................................................. 5,314,144(16) 29.1%(16)
State of Wisconsin Investment Board(17).................... 2,311,067 12.7%
Warburg, Pincus Counsellors, Inc.(18)...................... 1,223,000 6.7%
</TABLE>
- - - ---------------
(1) The business address of each of the directors and current executive
officers listed above is c/o FoxMeyer Health Corporation, 1220 Senlac
Drive, Carrollton, Texas 75006.
(2) The Centaur Group is comprised of Messrs. Butler and Estrin, Centaur
Partners IV, a New York general partnership ("Centaur IV"), Estrin Equities
Limited Partnership, a Maryland limited partnership ("Estrin Equities"),
and Butler Equities II, L.P., a Delaware limited partnership ("Butler
Equities"). The general partners of Centaur IV are Estrin Equities and
Butler Equities.
Mr. Estrin owns 69.8% of the outstanding capital stock of Human Service
Group, Inc., a Delaware corporation ("Human Service"), subject to a dispute
involving ownership of approximately 9% of the shares of Human Service.
Human Service owns all of the capital stock of HSG Acquisition Co., a
Delaware corporation ("HSG"). HSG and MJE, Inc., a Virginia corporation
controlled by Mr. Estrin, are the general partners of Estrin Equities.
Mr. Butler owns all of the outstanding capital stock of AB Acquisition
Corp., a Delaware corporation ("AB Acquisition"). AB Acquisition is the
sole general partner of Butler Equities.
The Centaur Group in the aggregate holds 3,811,591 shares of Common Stock.
These shares are held directly by the persons and entities described above
as follows: Mr. Butler, 185,600; Mr. Estrin, 392,375; Centaur IV, 1,000
shares; Estrin Equities, 1,344,616 shares; and Butler Equities, 1,888,000
shares. Pursuant to the terms of the Centaur IV partnership agreement,
neither Estrin Equities nor Butler Equities may acquire or dispose of
shares of Common Stock without the consent of Centaur IV. In addition,
pursuant to the Centaur IV partnership agreement, Estrin Equities and
Butler Equities must vote all shares of Common Stock owned by each such
entity as directed by Centaur IV. Accordingly, Centaur IV, which directly
holds 1,000 shares, may be deemed to share the power to direct the voting
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and disposition of the 1,344,616 and the 1,888,000 shares held by each of
Estrin Equities and Butler Equities, respectively.
Estrin Equities has designated Mr. Estrin and Butler Equities has
designated Mr. Butler to act as a "Coordinating Person" pursuant to the
Centaur IV partnership agreement. Messrs. Estrin and Butler, acting
together, manage the affairs of Centaur IV and have the authority to make
all decisions concerning Centaur IV's interest in the Common Stock.
Estrin Equities disclaims beneficial ownership of the shares of Common
Stock owned by Butler Equities and Mr. Butler individually, and Butler
Equities disclaims beneficial ownership of the shares of Common Stock owned
by Estrin Equities and Mr. Estrin individually.
(3) In addition to his beneficial ownership of Common Stock through The Centaur
Group, Mr. Butler holds 4,130 shares of Common Stock through his
participation in the FoxMeyer Employees' Savings and Profit Sharing Program
(the "FoxMeyer 401(k) Plan"). Pursuant to the terms of the Centaur IV
partnership agreement, Mr. Butler has agreed to exercise all voting and
other rights of beneficial ownership with respect to such shares as
directed by the Coordinating Persons. Mr. Butler also holds options to
purchase 561,307 shares of Common Stock that are presently exercisable or
exercisable within 60 days of the Annual Meeting. The total shares
beneficially owned by Mr. Butler, other than through the Centaur Group,
represent 3.1% of the outstanding Common Stock.
(4) In addition to his beneficial ownership of Common Stock through The Centaur
Group, Mr. Estrin holds 3,756 shares of Common Stock through his
participation in the FoxMeyer 401(k) Plan. Pursuant to the terms of the
Centaur IV partnership agreement, Mr. Estrin has agreed to exercise all
voting and other rights of beneficial ownership with respect to such shares
as directed by the Coordinating Persons. Mr. Estrin is also a co-trustee
for two trusts that hold an aggregate of 18,080 shares of Common Stock (the
beneficial ownership of which he disclaims), and he holds options to
purchase 561,307 shares of Common Stock that are presently exercisable or
exercisable within 60 days of the Annual Meeting. The total shares
beneficially owned by Mr. Estrin, other than through the Centaur Group,
represent 3% of the outstanding Common Stock. Mr. Estrin is also a
co-trustee for two trusts that hold an aggregate of 10,000 shares of Ben
Franklin Common Stock (the beneficial ownership of which he disclaims).
(5) Mr. Fantle owns 904 shares of Common Stock, which converted from 1,000
shares of FoxMeyer Common Stock in connection with the Merger and options
to purchase 33,868 shares of Common Stock that are presently exercisable or
exercisable within 60 days of the Annual Meeting.
(6) Mr. Finfer owns 361 shares of Common Stock, which converted from 400 shares
of FoxMeyer Common Stock in connection with the Merger and options to
purchase 33,868 shares of Common Stock that are presently exercisable or
exercisable within 60 days of the Annual Meeting.
(7) Mr. Kingon holds options to purchase 18,500 shares of Common Stock that are
presently exercisable or exercisable within 60 days of the Annual Meeting.
(8) Mr. Tull owns 5,712 shares of Common Stock, 2,712 of which converted from
3,000 shares of FoxMeyer Common Stock in connection with the Merger and
options to purchase 18,500 shares of Common Stock that are presently
exercisable or exercisable within 60 days of the Annual Meeting.
(9) Mr. Estes owns 134 shares of Common Stock through his participation in the
FoxMeyer 401(k) Plan, and holds options to purchase 39,493 shares of Common
Stock that are presently exercisable or exercisable within 60 days of the
Annual Meeting.
(10) Mr. Rogan holds options to purchase 16,000 shares of Common Stock that are
presently exercisable or exercisable within 60 days of the Annual Meeting.
(11) Mr. Massman holds options to purchase 10,333 shares of Common Stock that
are presently exercisable or exercisable within 60 days of the Annual
Meeting.
(12) As of June 1, 1996, Mr. Anderson held options to purchase 126,696 shares of
Common Stock that were exercisable as of such date. In addition, as a
result of Mr. Anderson's marriage to Brenda Fugagli, Mr. Anderson may be
deemed to beneficially hold options to purchase 33,624 shares of Common
Stock held by Ms. Fugagli as of June 1, 1996. The Company has no record of
whether Mr. Anderson and Ms. Fugagli retained ownership of the 3,212 shares
of Common Stock owned by them as of February 1, 1996, the last day of Mr.
Anderson's employment with the Company, and assumes such shares have been
sold.
(13) As of June 1, 1996, Mr. McKee held options to purchase 34,060 shares of
Common Stock that were exercisable as of such date.
(14) Percentages are based on 16,772,788 shares outstanding as of June 1, 1996,
plus 1,487,556 shares that are subject to options that are presently
exercisable, or exercisable within 60 days of the Annual Meeting, held by
all directors and executive officers of the Company as a group under the
Company's 1987 Restated Stock Option and Performance Award Plan.
(15) Indicates less than 1%.
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(16) Includes (a) 3,811,591 shares of Common Stock held by members of The
Centaur Group, (b) 14,997 shares of Common Stock owned by directors and
executive officers of the Company, and (c) 1,487,556 shares of Common Stock
that are subject to options that are presently exercisable, or exercisable
within 60 days of the Annual Meeting, held by directors and executive
officers of the Company.
(17) The address of the State of Wisconsin Investment Board ("SWIB") is P.O. Box
7842, Madison, Wisconsin 53707. SWIB provided information regarding its
stock ownership in the Company as of December 31, 1995.
(18) The address of Warburg, Pincus Counsellors, Inc. ("Warburg") is 466
Lexington Avenue, New York, New York 10017. Warburg provided information
regarding its stock ownership in the Company as of December 31, 1995.
CERTAIN TRANSACTIONS
The Company, through a number of wholly-owned subsidiaries (the
"Development Subsidiaries"), engages in the buying, holding, operating and
disposing of real estate, notes secured by real estate and other investments.
These activities are typically conducted through joint ventures (the "Joint
Ventures") in which the Development Subsidiaries hold a general partner's
interest. The managing general partner of each of the Joint Ventures is an
affiliate of The Bernstein Companies, a real estate development firm based in
Washington, D.C.
Mr. Estrin, who is Co-Chairman and the Co-Chief Executive Officer of the
Company, is a director of each of the Development Subsidiaries. Mr. Estrin is
the brother of Wilma E. Bernstein and the brother-in-law of Stuart A. Bernstein,
owners of The Bernstein Companies.
As of March 31, 1996, the average annual return over the life of the real
estate investments of the Development Subsidiaries in the Joint Ventures was
approximately 32 percent. As of March 31, 1996, approximately $4.9 million was
invested by the Development Subsidiaries in the real estate Joint Ventures and
$200,000 was invested in one non-real estate Joint Venture.
In addition, one of the Joint Ventures holds a $2,770,000 note issued by
RCHLP Limited Partnership and secured by a hotel property in Bethesda, Maryland.
The general partner of RCHLP Limited Partnership is Z Investors, Inc., which is
owned by Stuart Bernstein. Mr. Bernstein also guaranteed the note. One of the
Joint Ventures is also indebted under a Promissory Note payable to Wilma E.
Bernstein in the amount of $150,000.
During Fiscal 1995, Oceanside Enterprises, Inc., a Delaware corporation and
a wholly-owned subsidiary of the Company ("Oceanside"), purchased the right to
acquire a certain $2,600,000 promissory note (the "Note") from FWB. The Note was
secured by certain real property and improvements located in Clarke County,
Virginia (the "Property"). Oceanside purchased the right to acquire the Note
with the intention of acquiring the Property through foreclosure, which it did
in November 1994. During Fiscal 1996, Oceanside sold a major portion of the
Property for $3,000,000. Pursuant to the terms of Oceanside's purchase of the
right to acquire the Note, Oceanside received the entire amount of its original
investment plus a preferred return of 15 percent, prior to FWB receiving any
portion of the proceeds of the sale of the Property. In addition, Oceanside
retains ownership of the remaining portion of the Property and the right to
share with FWB in the proceeds of a sale of such Property. Mr. Butler and Mr.
Estrin, Co-Chairman of the Board and Co-Chief Executive Officers of the Company,
are members of the Board of Directors of Oceanside, and are also significant
owners of FWB capital stock, and serve as directors and members of the Executive
Committee of FWB.
During Fiscal 1996, the Company, which owns approximately 17 percent of Ben
Franklin, loaned $5 million to Ben Franklin in the form of a fully secured,
short term note. The note was paid in full, with interest, prior to maturity. In
addition, Ben Franklin leased a portion of the real property owned by FoxMeyer
Drug Company in Wichita, Kansas, and subleased a portion of the real property
leased by FoxMeyer in Carol Stream, Illinois, and FoxMeyer and FoxMeyer Drug
Company provided and allocated to Ben Franklin certain data processing,
utilities, telephone, insurance, and other expenses in accordance with the
lease, the sublease and other agreements. The total rent and other charges for
all of these services during Fiscal 1996 was
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<PAGE> 21
approximately $2.5 million. FoxMeyer Drug Company also sells general merchandise
inventory to Ben Franklin in the ordinary course of business. As of June 28,
1996, FoxMeyer and FoxMeyer Drug Company were owed a total of approximately $2.5
million on account of inventory sold and services provided and allocated to Ben
Franklin.
GENERAL
As of the date of this Proxy Statement, management does not intend to
present at the Annual Meeting, and has no knowledge that others will present,
any matters other than the matters set forth in the Notice of Annual Meeting of
Stockholders. If any other matters should properly come before the Annual
Meeting, the persons named in the accompanying proxy will vote on such matters
in accordance with their own judgment.
Deloitte & Touche LLP served as independent auditors for the Company for
the fiscal year ended March 31, 1996 and will continue in that capacity for the
fiscal year ending March 31, 1997. Representatives of Deloitte & Touche will be
present at the Annual Meeting. It is not expected that such representatives will
make a statement at the Annual Meeting, but they will have an opportunity to
make a statement if they so desire and will be available to respond to
appropriate questions from stockholders.
Proxies in the form enclosed are solicited by or on behalf of the Board of
Directors. The Company will bear the cost of preparing, assembling and mailing
material in connection with this solicitation of proxies and may reimburse
persons holding stock in their names or those of their nominees for their
expenses in sending solicitation material to their principals.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, STOCKHOLDERS
ARE URGED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE ACCOMPANYING
STAMPED AND ADDRESSED ENVELOPE.
STOCKHOLDER NOMINATIONS AND PROPOSALS FOR 1996
Stockholders intending to submit names of nominees for election to the
Board of Directors at any annual meeting must comply with Section 12A of the
Company's By-laws which requires, among other things, notice to the Secretary of
the Company 45 days in advance of such meeting.
Any proposals intended to be presented to stockholders at the Company's
1997 Annual Meeting of Stockholders must be received by the Company for
inclusion in the proxy statement for such annual meeting by March 1, 1997.
/s/ KEVIN J. ROGAN
---------------------------------
KEVIN J. ROGAN
Secretary
Carrollton, Texas
June 28, 1996
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PROXY
FOXMEYER HEALTH CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING OF STOCKHOLDERS TO BE HELD ON AUGUST 22, 1996
The undersigned, a stockholder of Foxmeyer Health Corporation (the
"Corporation"), hereby constitutes and appoints Abbey J. Butler and Melvyn J.
Estrin and each of them, as the true and lawful proxies and attorneys-in-fact of
the undersigned, with full power of substitution and revocation in each of them,
to represent the undersigned at the Annual Meeting of Stockholders of the
Corporation to be held at 8:30 a.m. on August 22, 1996, and at any and all
adjournments or postponements thereof, with authority to vote all shares held or
owned by the undersigned in accordance with the direction indicated herein.
Receipt of the Notice of Annual Meeting of Stockholders dated June 28, 1996
and the Proxy Statement furnished therewith is hereby acknowledged.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ITEM 1 AND PURSUANT TO ITEM 2.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1.
-----------
(Continued and to be signed on the reverse side) SEE REVERSE
SIDE
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<PAGE> 23
[X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
1. Election of FOR WITHHELD NOMINEES: Abbey J. Butler
Directors: [ ] [ ] Melvyn J. Estrin
William G. Tull
For, except vote WITHHELD from the following nominee(s):
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly be presented to the meeting or any adjournment
thereof.
---------------------------
SIGNATURE __________________________________________ DATE ____________________
The signature should agree with the name on your stock certificate. If acting
as attorney, executor, administrator, trustee, guardian, etc., you should so
indicate when signing. If the signer is a corporation, please sign the full
corporate name by duly authorized officer. If shares are held jointly, each
stockholder should sign.
