<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
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
A. L. Laboratories, Inc.
(Name of Registrant as Specified In Its Charter)
A. L. Laboratories, Inc.
(Name of Person(s) Filing Proxy Statement)
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(j)(2).
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
(4) Proposed maximum aggregate value of transaction:
- --------
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
[_] 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>
LOGO
A. L. LABORATORIES, INC.
One Executive Drive
P.O. Box 1399
Fort Lee, New Jersey 07024
-------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 20, 1994
-------------------------------------
To the Stockholders of A. L. Laboratories, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of A. L.
Laboratories, Inc., a Delaware corporation (the "Company"), will be held at THE
PIERRE HOTEL, WEDGWOOD ROOM, FIFTH AVENUE AT 61ST STREET, NEW YORK, NEW YORK,
on Monday, June 20, 1994, at 11:00 a.m., local time, to consider and act upon
the following matters:
1. The election of eight directors to the Company's Board of Directors,
each to hold office until the 1995 Annual Meeting of Stockholders and
until their successors shall be elected and shall qualify.
2. Transaction of such other business as may properly come before the
meeting or any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on April 26, 1994 as
the record date for determining the stockholders entitled to notice of and to
vote at the meeting or any adjournment thereof.
YOUR REPRESENTATION AT THIS MEETING IS IMPORTANT. Whether or not you expect
to attend the Annual Meeting in person, please complete, date, sign and return
the enclosed proxy. An envelope is enclosed for your convenience which, if
mailed in the United States, requires no additional postage. If you attend the
Annual Meeting, you may then withdraw your proxy and vote in person.
A Proxy Statement accompanies this notice.
By order of the Board of Directors,
Beth P. Hecht
Secretary
April 29, 1994
<PAGE>
LOGO
A. L. LABORATORIES, INC.
ONE EXECUTIVE DRIVE
P.O. BOX 1399
FORT LEE, NEW JERSEY 07024
MAILING DATE
APRIL 29, 1994
---------------------------------------------
Proxy Statement for Annual Meeting of Stockholders
---------------------------------------------
To Be Held on June 20, 1994
This proxy statement (the "Proxy Statement") is furnished in connection with
the solicitation of proxies by the Board of Directors of A. L. Laboratories,
Inc., a Delaware corporation (the "Company"), for use at the Annual Meeting of
Stockholders (the "Annual Meeting") to be held on Monday, June 20, 1994, at The
Pierre Hotel, Wedgwood Room, Fifth Avenue at 61st Street, New York, New York,
at 11:00 a.m., local time, and at any adjournment or postponement thereof. The
cost of solicitation of the Company's stockholders will be paid by the Company.
Such cost will include the reimbursement of banks, brokerage firms, nominees,
fiduciaries and other custodians for expenses of forwarding solicitation
materials to beneficial owners of shares. In addition to the solicitation of
proxies by use of mail, the directors, officers and employees of the Company
may solicit proxies personally or by telephone, telegraph or facsimile
transmission. Such directors, officers and employees will not be additionally
compensated for such solicitation but may be reimbursed for out-of-pocket
expenses incurred in connection therewith.
THE ANNUAL MEETING
PURPOSE OF MEETING
At the Annual Meeting, the Company's stockholders will consider and act upon
the following matters:
1. The election of eight directors to the Company's Board of Directors,
each to hold office until the 1995 Annual Meeting of Stockholders and until
their successors shall be elected and shall qualify. See "Election of
Directors."
2. Transaction of such other business as may properly come before the
meeting or any adjournments or postponements thereof.
RECORD DATE
The close of business on April 26, 1994 (the "Record Date") has been fixed as
the record date for determining holders of outstanding shares of the Company's
Class A Common Stock, par value $.20 per share (the "Class A Stock"), and Class
B Common Stock, par value $.20 per share (the "Class B Stock"), entitled to
notice of, and entitled to vote at, the Annual Meeting. As of the Record Date,
13,333,869 shares of Class A Stock and 8,226,562 shares of Class B Stock were
outstanding and entitled to vote.
- 1 -
<PAGE>
QUORUM
For each matter to be voted upon at the Annual Meeting, the presence in
person or by proxy, of holders of stock entitled to be voted with respect to
such matter representing a majority of the aggregate voting power of all shares
of stock entitled to be voted with respect to such matter is necessary to
constitute a quorum with respect to such matter and to transact business with
respect to such matter at the Annual Meeting. For purposes of determining
whether a quorum exists, shares as to which authority to vote in the election
of directors has been withheld and broker non-votes (where a broker submits a
proxy but does not have authority to vote a customer's shares on one or more
matters) with respect thereto will be considered present at the Annual Meeting.
For purposes of determining whether a quorum exists with respect to any other
matter which may properly come before the Annual Meeting, shares abstaining on
such matter and all broker non-votes with respect to such matter will be
considered present at the Annual Meeting.
REQUIRED VOTE
Except for the election of directors (described below) and certain matters
that require a class vote, holders of Class A Stock and holders of Class B
Stock vote together, with each share of Class A Stock entitling the holder
thereof to one vote and each share of Class B Stock entitling the holder
thereof to four votes.
Eight directors will be elected at the Annual Meeting. Under the Company's
Certificate of Incorporation, the holders of the Class A Stock are entitled,
voting as a separate class, to elect at least 25% of the Company's Board of
Directors (or if such 25% is not a whole number, the nearest higher whole
number of directors that is at least 25% of such membership), and the holders
of the Class B Stock are entitled, voting separately as a class, to elect the
remaining directors. Therefore, the holders of the Class A Stock will elect two
directors (directors to be elected by the holders of Class A Stock being
referred to as the "Class A Directors") and the holders of the Class B Stock
will elect six directors (directors elected by the holders of Class B Stock
being referred to as the "Class B Directors"). The affirmative vote of a
plurality of the votes cast at the Annual Meeting by the holders of the Class A
Stock, voting as a single class, is necessary to elect the two
Class A Directors, and the affirmative vote of a plurality of the votes cast at
the Annual Meeting by the holders of the Class B Stock, voting as a single
class, is necessary to elect the six Class B Directors. (A plurality of the
votes cast means the greatest number of votes cast for a director.)
PROXIES
The enclosed proxy provides space for stockholders to vote for, or withhold
authority to vote for, either or both of the Company's two nominees for Class A
Directors.
Shares of Class A Stock represented by properly executed proxies received at
or prior to the Annual Meeting and which have not been revoked will be voted in
accordance with the instructions indicated therein. If no instructions are
indicated, such proxies will be voted FOR the election, as directors, of the
two nominees for Class A Directors nominated by the Company's Board of
Directors (see "Election of Directors -- Nominees for Directors -- Nominees for
Class A Directors" below); and, in the discretion of the proxy holder, as to
any other matter which may properly come before the Annual Meeting. With
respect to the election of directors, neither shares as to which authority to
vote has been withheld (to the extent withheld) nor broker non-votes will be
considered affirmative votes.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING,
PLEASE COMPLETE, DATE AND SIGN YOUR PROXY IN ORDER TO ENSURE THAT YOUR SHARES
WILL BE REPRESENTED AT THE ANNUAL MEETING. THE GIVING OF SUCH PROXY DOES NOT
AFFECT YOUR RIGHT TO VOTE IN PERSON IN THE EVENT YOU ATTEND THE ANNUAL MEETING.
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<PAGE>
A holder of Class A Stock who has given a proxy may revoke such proxy at any
time prior to its exercise at the Annual Meeting by (i) giving written notice
of revocation to the Secretary of the Company, (ii) properly submitting to the
Company a duly executed proxy bearing a later date or (iii) attending the
Annual Meeting and voting in person. Attendance at the Annual Meeting will not
in and of itself revoke a proxy. All written notices of revocation and other
communications with respect to revocation of proxies should be sent to the
attention of the Secretary of the Company at the Company's executive offices,
located at One Executive Drive, P.O. Box 1399, Fort Lee, New Jersey 07024.
If a quorum is not obtained, the Annual Meeting may be adjourned for the
purpose of obtaining additional proxies or for any other purpose, and, 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 meeting (except for any proxies which have theretofore effectively been
revoked or withdrawn), notwithstanding that they may have been effectively
voted on the same or any other matter at a previous meeting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth as of April 1, 1994 (unless otherwise noted)
certain information regarding the beneficial ownership of the Class A Stock and
the Class B Stock by (a) each person who is known to the Company to be the
beneficial owner of more than 5% of the outstanding shares of either of such
classes, (b) each director and each nominee for director of the Company and the
six named individuals (as defined below) and (c) all directors and executive
officers of the Company as a group. Unless otherwise indicated, each beneficial
owner possesses sole voting and dispositive power with respect to the shares
listed in this table.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE PERCENT PERCENT OF
TITLE OF CLASS OF BENEFICIAL OF COMMON STOCK
OF STOCK NAME OF BENEFICIAL OWNER OWNERSHIP CLASS (BOTH CLASSES)
-------------------- ------------------------ ------------- ------- --------------
<C> <S> <C> <C> <C>
Class B Common Stock Apothekernes
Laboratorium A.S (1) 8,226,562(2) 100.00% 38.16%
Class A Common Stock Apothekernes
Laboratorium A.S (1) 0(3) *(3) *
Class A Common Stock Wellington Management
Company (4) 1,991,450 14.94 9.24
Class A Common Stock State of Wisconsin
Investment
Board (5) 1,171,400 8.79 5.43
Class A Common Stock Government of Singapore
Investment Corporation
Pte Ltd. (6) Government
of Singapore (6)
Monetary Authority of
Singapore (6) 1,086,500 8.15 5.04
Class A Common Stock INVESCO PLC (7)
INVESCO North American
Group, Ltd. (7)
INVESCO, Inc. (7)
INVESCO North American
Holdings, Inc. (7)
INVESCO Funds Group,
Inc. (7) 1,022,800 7.67 4.74
Class A Common Stock Vanguard Specialized
Portfolios, Inc.--
Health Care Portfolio
(8) 847,700 6.36 3.93
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND
NATURE PERCENT PERCENT OF
TITLE OF CLASS OF BENEFICIAL OF COMMON STOCK
OF STOCK NAME OF BENEFICIAL OWNER OWNERSHIP CLASS (BOTH CLASSES)
-------------------- ------------------------ ------------- ------- --------------
<C> <S> <C> <C> <C>
Class A Common Stock Einar W. Sissener (9) 0 * *
Class A Common Stock James Balog 11,000 * *
Class A Common Stock I. Roy Cohen 26,844 * *
Class A Common Stock Thomas G. Gibian 450 * *
Class A Common Stock Glen E. Hess 4,525 * *
Class A Common Stock Oscar W. Kaalstad 500 * *
Class A Common Stock William S. Leonhardt
(10) 9,187 * *
Class A Common Stock Gert W. Munthe (11) 0 * *
Class A Common Stock Sivert A. Nielsen 837 * *
Class A Common Stock Georg W. Sverdrup (12) 3,000 * *
Class A Common Stock Erik G. Tandberg (13) 0 * *
Class A Common Stock Jeffrey E. Smith (14) 51,109 * *
Class A Common Stock David E. Cohen (15) 37,346 * *
Class A Common Stock Niels L. Graugaard (16) 11,375 * *
Class A Common Stock George S. Barrett (17) 7,579 * *
Class A Common Stock All directors and
executive officers as a
group (13 persons) (18) 161,625 1.21 *
</TABLE>
- ----------------------
*Indicates ownership of less than one percent.
(1) The address of Apothekernes Laboratorium A.S, a corporation organized and
existing under the laws of the Kingdom of Norway ("A. L. Oslo"), is
Postboks 158 Skoyen, N-0212 Oslo 2, Norway.
(2) These shares of Class B Stock are held of record by A/S Wangs Fabrik, a
wholly owned subsidiary of A. L. Oslo ("Wangs Fabrik"), although A. L. Oslo
retains full beneficial ownership of these shares. Of such amount 1,828,125
shares have been pledged to two Norwegian banks as collateral for
outstanding debt and unused drawing facilities. A. L. Oslo has agreed with
the Company that, other than such pledge, it will not sell or otherwise
dispose of any of its Class B Stock or convert any such shares into
Class A Stock at any time prior to November 1, 1994. Wangs Fabrik also owns
17,000 ordinary shares of A. L. Oslo's capital stock ("A. L. Oslo Shares")
(approximately 4.25% of the outstanding A. L. Oslo Shares).
(3) Shares of Class B Stock are convertible into an equal number of shares of
Class A Stock. If all shares of Class B Stock beneficially owned by A. L.
Oslo were converted as of April 1, 1994, A. L. Oslo would own approximately
38.16% of the then outstanding shares of Class A Stock.
(4) The source of this information is the Amendment No. 3 to Schedule 13G dated
February 10, 1994 and filed with the Securities and Exchange Commission
(the "Commission") by Wellington Management Company ("WMC"). Such Amendment
No. 3 to Schedule 13G reported that WMC has shared voting power and shared
dispositive power with respect to 766,250 shares and 1,991,450 shares,
respectively, and does not have sole voting power or sole dispositive power
with respect to any shares. WMC also reported that, other than Vanguard
Specialized Portfolios, Inc. -- Health Care Portfolio ("Vanguard"), none of
its clients is known to have more than 5% beneficial ownership. See
footnote (8) below for information regarding Vanguard's ownership of shares
of Class A Stock. The address of WMC is 75 State Street, Boston,
Massachusetts 02109.
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<PAGE>
(5) The source of this information is the Schedule 13G dated February 8, 1994
and filed with the Commission by State of Wisconsin Investment Board (the
"Wisconsin Board"), a government agency which manages public pension funds.
The address of the Wisconsin Board is P.O. Box 7842, Madison, Wisconsin
53707.
(6) The source of this information is the Schedule 13D dated December 16, 1993
and filed with the Commission by Government of Singapore Investment
Corporation Pte Ltd. (the "Singapore Corporation"), Government of Singapore
("Singapore") and Monetary Authority of Singapore (the "Singapore
Authority"). Such Schedule 13D reports that (a) the Singapore Corporation
beneficially owns an aggregate of 1,086,500 shares which were bought by
Singapore and the Singapore Authority and has shared voting power and
shared dispositive power with respect to such shares, (b) Singapore
beneficially owns 794,500 shares and has shared voting power and shared
dispositive power with respect to such shares and (c) the Singapore
Authority beneficially owns 292,000 shares and has shared voting power and
shared dispositive power with respect to such shares. The address of the
Singapore Corporation, Singapore and the Singapore Authority is 250 North
Bridge Road, #33-00 Raffles City Tower, Singapore 0617.
(7) The source of this information is the Amendment No. 1 to Schedule 13G dated
February 8, 1994 and filed with the Commission by INVESCO PLC, a parent
holding company. Such Amendment No. 1 to Schedule 13G reported that each of
INVESCO PLC, INVESCO North American Group, Ltd., a holding company,
INVESCO, Inc., a holding company, INVESCO North American Holdings, Inc., a
holding company, and INVESCO Funds Group, Inc., an investment adviser
registered under Section 203 of the Investment Advisers Act of 1940, have
shared voting power and shared dispositive power with respect to 1,022,800
shares and such persons hold the shares on behalf of other persons (none of
whom has more than 5% beneficial ownership) who have the right to receive
or the power to direct the receipt of dividends from, or the proceeds from
the sale of, such shares. The address of INVESCO PLC, INVESCO North
American Group, Ltd., INVESCO, Inc., INVESCO North American Holdings, Inc.
and INVESCO Funds Group, Inc. is 11 Devonshire Square, London EC2M 4YR,
England.
(8) The source of this information is the Amendment No. 2 to Schedule 13G dated
February 10, 1994 and filed with the Commission by Vanguard. Such Amendment
No. 2 to Schedule 13G reported that Vanguard had sole voting power and
shared dispositive power with respect to the 847,700 shares. The address of
Vanguard is P.O. Box 2600, Valley Forge, Pennsylvania 19482.
(9) Mr. Sissener is President and Chief Executive Officer of A. L. Oslo and
together with certain members of his immediate family beneficially owns
approximately 50.8% of the outstanding A. L. Oslo Shares.
(10) Mr. Leonhardt also beneficially owns 12,000 A. L. Oslo Shares
(approximately 3% of the outstanding A. L. Oslo Shares). The Company has
been advised by Mr. Leonhardt that (i) he has sole voting power and sole
investment power with respect to 2,000 A. L. Oslo Shares and (ii) as a
result of a proxy granted to him, he has voting and investment power over
6,000 A. L. Oslo Shares owned by his children, 2,000 A. L. Oslo Shares
owned by a trust for his grandchildren and 2,000 A. L. Oslo Shares owned
by an estate of one of his children.
(11) Mr. Munthe has been nominated for election as a director of A. L. Oslo and
beneficially owns 11,800 A. L. Oslo Shares (approximately 3% of the
outstanding A. L. Oslo Shares). The Company has been advised by Mr. Munthe
that such A. L. Oslo Shares are owned by members of his immediate family
and are included in the number of shares beneficially owned by Mr.
Sissener (see footnote (9) above) and he does not have any voting or
dispositive power over such shares.
(12) These shares of Class A Stock are owned by Unger-Vetlesen Medical Fund.
Mr. Sverdrup has advised the Company that, as Chairman of the Board of
Unger-Vetlesen Medical Fund, he has sole voting power with respect to, and
may be deemed to be the beneficial owner of, such shares. Mr. Sverdrup is
also the Vice Chairman of A. L. Oslo's Corporate Assembly (the corporate
body which elects A. L. Oslo's directors) and owns 2,000 A. L. Oslo Shares
(approximately 0.5% of the outstanding A. L. Oslo Shares).
(13) Mr. Tandberg is a director of A. L. Oslo and owns eight A. L. Oslo Shares.
- 5 -
<PAGE>
(14) Includes 40,125 shares that may be obtained upon exercise of stock options
granted under the Company's 1983 Incentive Stock Option Plan, as amended,
and exercisable as of April 1, 1994 or within sixty days thereof. The
Company has been advised by Mr. Smith that his children own 2,000 of these
shares but that he has voting power over such shares.
(15) Includes 28,625 shares that may be obtained upon exercise of stock options
granted under the Company's 1983 Incentive Stock Option Plan, as amended,
and exercisable as of April 1, 1994 or within sixty days thereof.
(16) Comprised of shares that may be obtained upon exercise of stock options
granted under the Company's 1983 Incentive Stock Option Plan, as amended,
and exercisable as of April 1, 1994 or within sixty days thereof.
(17) Includes 5,750 shares that may be obtained upon exercise of stock options
granted under the Company's 1983 Incentive Stock Option Plan, as amended,
and exercisable as of April 1, 1994 or within sixty days thereof.
(18) Includes 86,500 shares that the executive officers of the Company as a
group may obtain upon exercise of stock options granted under the
Company's 1983 Incentive Stock Option Plan, as amended, and exercisable as
of April 1, 1994 or within sixty days thereof.
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
The Company's Board of Directors intends to cause the nomination of the
nominees listed below under "-- Nominees for Directors -- Nominees for Class A
Directors" and all proxies received from holders of the Class A Stock will be
voted FOR the election of such nominees as Class A Directors, except to the
extent that persons giving such proxies withhold authority to vote for such
nominees.
Each director is to be elected to hold office until the next Annual Meeting
of Stockholders and until his successor is chosen and qualified.
A. L. Oslo, which beneficially owns 100% of the shares of Class B Stock, has
advised the Company that it intends to vote its shares in favor of the nominees
listed below under "--Nominees for Directors--Nominees for Class B Directors,"
which would assure their election as Class B Directors.
NOMINEES FOR DIRECTORS
The Company believes that each of the nominees for director will be able to
serve. If any of the nominees would be unable to serve, the enclosed proxy
confers authority to vote in favor of such other person or persons as the
Company's Board of Directors at the time recommends to serve in place of the
person or persons unable to serve.
Nominees for Class A Directors. The name, age, principal business experience
during the last five years, and certain other information regarding each of the
persons proposed to be nominated for election as a Class A Director are listed
below.
<TABLE>
<S> <C>
James Balog............. Age 65. Director of the Company since September 1983. Chairman
of 1838 Investment Advisors, Chairman of Lambert Brussels Capi-
tal Corporation from February, 1988 to December 31, 1992.
Thomas G. Gibian........ Age 72. Director of the Company since March 1993. President and
Chief Executive Officer of Henkel Corporation, a speciality
chemicals manufacturer and United States subsidiary of Henkel
KGaA, from 1980 to 1986.
</TABLE>
- 6 -
<PAGE>
Nominees for Class B Directors. The name, age, principal business experience
during the last five years, and certain other information regarding each of the
persons proposed to be nominated for election as a Class B Director are listed
below.
<TABLE>
<S> <C>
I. Roy Cohen............ Age 71. Director of the Company since 1975. Consultant to the
Company and Chairman of the Executive Committee; Chairman of the
Office of the Chief Executive of the Company from July, 1991 to
December, 1992; Vice Chairman of the Board of Directors of the
Company from January, 1991 to December 31, 1992; President and
Chief Executive Officer of the Company from 1976 to January,
1991.
Glen E. Hess............ Age 52. Director of the Company since September 1983. Partner in
the law firm of Kirkland & Ellis since 1973.
Gert W. Munthe.......... Age 37. President and Chief Executive Officer of NetCom GMS A.S,
a Norwegian mobile cellular company, since 1993. President of
Nycomed (Imaging) A.S, a wholly owned subsidiary of Hafslund
Nycomed A.S, from 1991 to 1993. Executive Vice President in
charge of the energy business of Hafslund Nycomed A.S, an
industrial group engaged in the energy and pharmaceutical
businesses, from 1988 to 1991.
Einar W. Sissener....... Age 65. Director of the Company since 1975. Member of the Office
of the Chief Executive of the Company since July, 1991; Chairman
of the Company since 1975; Chief Executive Officer and President
of A. L. Oslo since 1972.
Georg W. Sverdrup....... Age 65. Executive Vice President of Frydenland Ringnes Breweries
A.S, a brewery in Oslo, Norway, from 1970 to 1993. Vice Chairman
of the Board of A/S Elje Oslo, an investment company, since 1977.
Chairman of Unger-Vetlesen Medical Fund, a beneficiary trust in
Jersey Channel Islands, since 1983. Member of the Corporate
Assembly of A. L. Oslo since 1973 and Vice Chairman of the
Corporate Assembly of A. L. Oslo since 1986.
Erik G. Tandberg........ Age 64. Partner in Corporate Development International, a
consulting partnership specializing in international searches
for companies, since 1986. President of Arco Chemical Europe
Inc., a chemical company, from 1982 to 1986.
</TABLE>
BOARD OF DIRECTORS AND COMMITTEES
BOARD MEETINGS AND ATTENDANCE OF DIRECTORS
The Company's Board of Directors held eight meetings in 1993, excluding
separate meetings of the U.S. Directors (as specified below). Each person who
served as a director in 1993 attended at least 75% of the aggregate of (i) the
total number of meetings of the Company's Board of Directors held while such
person was a member and (ii) the total number of meetings held by all
committees of the Company's Board of Directors on which such person served
while such person was a member of such committee.
In addition to the meetings of the Company's entire Board of Directors, the
U.S. Directors, consisting of Messrs. James Balog, Thomas G. Gibian, I. Roy
Cohen, Glen E. Hess, Oscar W. Kaalstad and William S. Leonhardt in 1993, held a
total of eighteen meetings and telephone conferences in 1993 principally to
discuss matters relating to a possible combination of the Company and certain
related businesses of A. L. Oslo. See "Certain Relationships and Related
Transactions -- Transactions with A. L. Oslo."
COMMITTEES OF THE BOARD
Pursuant to its bylaws, the Company has established standing Audit, Executive
and Compensation Committees.
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<PAGE>
The Audit Committee reviews and makes recommendations to the Company's Board
of Directors regarding internal accounting and financial controls and
accounting principles, auditing practices, the engagement of independent public
accountants and the scope of the audit to be undertaken by such accountants.
The Audit Committee also monitors compliance with the Company's Code of Ethics,
which was adopted in 1989. In addition, the Company's Board of Directors has
adopted a resolution requiring the Audit Committee to review transactions
between the Company and A. L. Oslo (or their respective subsidiaries) involving
more than $50,000 and to report to the Company's Board of Directors regarding
whether such transactions are fair to the Company. Such resolution also
requires prior approval of the Audit Committee for any transaction with A. L.
Oslo which involves $500,000 or more, except that prior approval of the Audit
Committee is required for any sale or transfer of assets other than inventory
sold or transferred in the ordinary course of business. The bylaws of the
Company require that a majority of the members of the Audit Committee not be
employees of the Company or A. L. Oslo or otherwise have a material
relationship with either of them. The current members of the Audit Committee
are Messrs. James Balog (Chairman), Thomas G. Gibian and William S. Leonhardt.
The Audit Committee held two meetings in 1993.
The Executive Committee is generally empowered, to the fullest extent
permitted by Delaware law, to exercise all power and authority vested in the
Company's Board of Directors. The members of the Executive Committee are
Messrs. Einar W. Sissener, James Balog and I. Roy Cohen (Chairman). The
Executive Committee held three meetings in 1993 and also communicated
informally throughout the year.
The Compensation Committee has the authority of the Company's Board of
Directors with respect to the compensation, benefit and employment policies and
arrangements for all officers of the Company, except the Chief Executive
Officer, and with respect to the compensation and benefit plans generally
applicable to the Company's employees. The members of the Compensation
Committee are Messrs. I. Roy Cohen, Einar W. Sissener, Glen E. Hess and William
S. Leonhardt (Chairman). The Compensation Committee held three meetings in
1993. The Compensation Committee also administers the Company's 1983 Incentive
Stock Option Plan, as amended, with authority to grant options to eligible
employees of the Company and its subsidiaries.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. I. Roy Cohen was the Chairman of the Office of the Chief Executive from
July 1, 1991 until December 31, 1992 and was Vice Chairman of the Company from
January 15, 1991 until July 1, 1991. Prior thereto Mr. Cohen was President and
Chief Executive Officer of the Company. Mr. Cohen currently is a consultant to
the Company and Chairman of the Executive Committee. Mr. Einar W. Sissener has
been, and is currently, the Chairman of the Board of Directors of the Company
and member of the Office of the Chief Executive and is President and Chief
Executive Officer of A. L. Oslo. Mr. Glen E. Hess's professional corporation is
a partner of Kirkland & Ellis, a law firm which since 1978 has performed and
continues to perform significant legal services for the Company.
DIRECTORS' COMPENSATION
As compensation for services to the Company, the Chairman of the Board of
Directors receives an annual fee of $87,500 (before deduction of Company
charges for office and secretarial services). All other directors receive
directors' fees at a current annual rate of $22,500 and an annual grant of
shares of Class A Stock having a market value of approximately $2,500. In
addition, each director receives $1,200 for each Board meeting and each meeting
of the U.S. Directors attended and $850 for each Committee meeting attended.
The Chairman of each of the Audit, Executive and Compensation Committees
receives an additional $4,500 per year. As additional consideration for serving
as members of a special committee to assess a possible combination of the
Company and certain related businesses of A. L. Oslo, Messrs. Balog and Gibian
received $150,000 and $45,000, respectively, during 1993.
- 8 -
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY OF EXECUTIVE COMPENSATION
The functions of the Chief Executive Officer are carried out by the Office of
the Chief Executive consisting, during 1993 and presently, of Messrs. Jeffrey
E. Smith and Einar W. Sissener, acting together. Although the responsibilities
and authority of the Chief Executive Officer are shared between the members of
the Office of the Chief Executive as they determine, Mr. Sissener, prior to
August 1993, generally served as a strategist and advisor to the Company. In
August 1993, at the request of the Company's Board of Directors, Mr. Sissener
undertook, in the context of the Office of the Chief Executive, greater
responsibilities than he previously had for management of the Company.
The following table (the "Summary Compensation Table") sets forth the annual
and long-term compensation paid or granted to, or accrued for, the persons
named below (the "named individuals") during 1993, 1992 and 1991:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------------- ------------
AWARDS
OTHER ANNUAL ------------ ALL OTHER
COMPENSATION OPTIONS/SARS COMPENSATION
NAME AND PRINCIPAL POSITION DURING 1993 YEAR SALARY ($) BONUS ($) ($) (1) (#) (2) ($) (1)
- --------------------------------------- ---- ---------- --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Einar W. Sissener 1993 100,000 0 28,685(3) 0 115,932(4)
(Chairman, Director and Member of 1992 0 120,000 * 0 119,284
the Office of the Chief Executive) 1991 0 0 0
I. Roy Cohen 1993 339,600(5) 80,000 * 0 66,549(6)
(Director, Chairman of the 1992 402,371 246,530 * 0 78,752
Executive Committee and Consultant) 1991 545,223 100,000 0
Jeffrey E. Smith 1993 329,992 65,000 * 10,000 43,229(7)
(Executive Vice President and 1992 323,703 125,000 * 10,000 44,021
Member of the Office of the Chief 1991 241,535 115,000 27,500
Executive)
David E. Cohen 1993 240,058 120,000 * 7,000 9,186(8)
(President -- Animal Health 1992 232,637 80,000 * 7,000 8,925
Division) 1991 199,423 70,000 7,500
Niels L. Graugaard 1993 237,041 30,864 * 7,000 41,251(9)
(President and Managing Director -- 1992 240,225 66,269 * 7,000 40,797
A/S Dumex Ltd. ("Dumex"))(10) 1991 180,099 187,617 0
George S. Barrett 1993 230,232 168,031(11) * 7,000 3,598(12)
(President -- Barre-National, Inc. 1992 229,327 107,345 * 7,000 28,574
("Barre-National"); President-- 1991 171,416 90,914 3,000
NMC Laboratories, Inc. ("NMC"))
</TABLE>
- ----------------------
* Perquisites in such year were not in excess of the lesser of (a) $50,000 and
(b) 10% of Salary and Bonus for such year. There is no other "Other Annual
Compensation."
(1) In accordance with the transitional provisions applicable to the revised
rules on executive compensation disclosure adopted by the Commission,
disclosure has not been provided regarding amounts of Other Annual
Compensation and All Other Compensation for 1991.
(2) The Company has not granted any stock appreciation rights ("SARs") to any
of the named individuals in 1991, 1992 or 1993.
- 9 -
<PAGE>
(3) Consists of $20,060 and $8,625, representing the cost to the Company of an
apartment (in lieu of a hotel room) and an automobile and parking space (in
lieu of a limousine service), respectively, made available to Mr. Sissener
while he is in the United States.
(4) Director and committee fees from the Company and its subsidiaries (before
deduction of Company charges for office and secretarial services).
(5) Mr. Cohen's compensation for 1993 and 1992 consists of consulting fees, and
for 1991 consists of base salary and consulting fees, in each case paid by
the Company pursuant to Mr. Cohen's employment agreement which is described
in more detail below.
(6) Director and committee fees from the Company and its subsidiaries.
(7) Consists of a $24,000 travel allowance, $10,031 in director fees from the
Company's foreign subsidiary and $9,198 in contributions by the Company to
the Company's Voluntary Contributory Retirement Income Plan for Salaried
Employees.
(8) Contributions by the Company to the Company's Voluntary Contributory
Retirement Income Plan for Salaried Employees.
(9) Consists of $12,531 in director fees from the Company's foreign subsidiary
and $28,720 in contributions by Dumex to a defined contribution pension
plan.
(10) Mr. Graugaard is paid in Danish kroner ("DKr."). Mr. Graugaard's salary
for 1993, 1992 and 1991 was DKr. 1,536,026, DKr. 1,450,000, and DKr.
1,151,912, respectively. For purposes of the Summary Compensation Table,
such Danish kroner amounts were translated into United States dollars
using the average exchange rate for the year presented. The average
exchange rate of Danish kroner for United States dollars for each of 1993,
1992 and 1991 was DKr. 6.480 to $1.00, DKr. 6.036 to $1.00 and DKr. 6.396
to $1.00, respectively.
(11) Consists of a contractual bonus of $108,031, of which $68,031 is an
incentive bonus based on 1993 operating performance of NMC, and an
additional bonus award for 1993 of $60,000.
(12) Contributions by the Company to Barre-National, Inc.'s Voluntary Savings
Plan.
EMPLOYMENT AGREEMENTS
Mr. I. Roy Cohen, who as of January 15, 1991 retired as President and Chief
Executive Officer, has an employment contract as a special consultant to the
Company for a ten-year period following his retirement (the "Consultant Term").
During the Consultant Term, the Company is required to pay him a minimum
aggregate consideration (which minimum consideration was $128,400 for 1993)
which may be increased to reflect additional services rendered, inflation and
other factors, and will continue to provide him with an automobile allowance
and certain other employee benefits. Total payments pursuant to such contract
in 1993 were $339,600. The contract provides, in the event of Mr. Cohen's
disability, death or termination during the Consultant Term, for continued
payments to Mr. Cohen (or his wife or children in the case of his death) of the
remaining amounts he would otherwise be entitled to receive. Beginning October
1987, the Company began paying Mr. Cohen supplemental retirement benefits equal
to the excess of the amount which would have been paid to him under the
Company's Non-Contributory Retirement Plan (as defined below) absent the
benefit limitations of the Internal Revenue Service over the amount payable
with such limitation. Such payments are made for life or a ten year term,
whichever is longer. In December 1991, the Company's Board of Directors granted
Mr. Cohen the right to receive a payment equal to 10,000 times the excess over
$21 per share, if any, of the arithmetic average of the closing prices of the
Class A Stock on the New York Stock Exchange on each of the business days in
December 1992. This payment equalled $21,530 and was paid on December 31, 1992.
In December 1992, the Company's Board of Directors granted Mr. Cohen a similar
right to receive 20,000 times the excess, if any, over $24.25 per share of the
arithmetic average of the closing prices of such shares during December 1994.
- 10 -
<PAGE>
Mr. Jeffrey E. Smith is a party to an employment arrangement with the
Company which provides that, if his employment is terminated by the Company
for any reason other than for cause, he is entitled to receive base salary and
certain benefits for one year. Mr. Smith participates in all of the employee
benefits available to executives of the Company. Upon retirement, the Company
will pay to Mr. Smith supplemental retirement benefits equal to the amount, if
any, by which the pension due under the Company's Non-Contributory Retirement
Plan without any limitation imposed by the Internal Revenue Service exceeds
any ceiling imposed by the Internal Revenue Service.
Mr. Niels L. Graugaard serves as President and Managing Director of the
Company's subsidiary, Dumex, under an employment contract which entitled him
to an annual base salary in 1993 of DKr. 1,536,026 and an annual bonus based
upon targets to be determined annually. Prior to Mr. Graugaard reaching age
65, the contract may be terminated by Dumex only on 12 months notice.
Following Mr. Graugaard's reaching age 65, the contract may be terminated
without notice.
Mr. George S. Barrett and the Company entered into an employment agreement
in August 1990 concurrent with the Company's acquisition of its topical creams
and ointments pharmaceutical subsidiary, NMC. Such agreement contemplates that
Mr. Barrett would serve as NMC's President and provides for a minimum annual
salary and bonus through December 31, 1995 and an incentive bonus based upon
the operating performance of NMC for each of the four years in the period
ending December 31, 1994. In the event of Mr. Barrett's resignation or
termination by the Company for any reason other than for cause, he is entitled
to receive 75% of such amounts. In July 1991, Mr. Barrett was also appointed
President of the Company's liquid pharmaceutical subsidiary, Barre-National,
and the minimum annual salary set forth in his employment agreement was
increased to $200,000.
- 11 -
<PAGE>
GRANTS OF OPTIONS
The following table discloses, for the named individuals, information
regarding stock options granted during 1993. All grants described below are
"nonstatutory options" granted under the Company's 1983 Incentive Stock Option
Plan, as amended, and have a term of ten years. All outstanding options are
subject to vesting provisions under which 25% of the shares covered by each
option becomes exercisable on each of the first four anniversaries of the date
of grant.
1993 OPTION GRANTS
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT EXPIRATION USING
ASSUMED ANNUAL
RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM (1)
- ------------------------------------------------------------------------- -----------------------------
NUMBER OF PERCENT OF
SHARES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS EMPLOYEES BASE PRICE
NAME GRANTED (2) IN 1993 ($/SH) EXPIRATION DATE 5% ($) (3) 10% ($) (4)
- ------------------ ----------- ------------- ----------- --------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Einar W. Sissener 0 * * * * *
I. Roy Cohen 0 * * * * *
Jeffrey E. Smith 10,000 8.16 22.13 3/23/2003 139,143 352,616
David E. Cohen 7,000 5.71 22.13 3/23/2003 97,400 246,831
Niels L. Graugaard 7,000 5.71 22.13 3/23/2003 97,400 246,831
George S. Barrett 7,000 5.71 22.13 3/23/2003 97,400 246,831
</TABLE>
- ---------------------
*Not applicable.
(1) Amounts reflect certain assumed annual stock price appreciation rates set
forth in the Commission's executive compensation disclosure rules. Actual
gains on a stock option exercise, if any, will depend on the Class A Stock
market price on the date of exercise.
(2) Twenty-five percent of each of the options granted to Messrs. Jeffrey E.
Smith, David E. Cohen,
Niels L. Graugaard and George S. Barrett in 1993 become exercisable on March
23, 1994, 1995, 1996 and 1997.
(3) Assumes Class A Stock price would be $36.04
(4) Assumes Class A Stock price would be $57.39
OPTION EXERCISES AND VALUES
The following table discloses, for the named individuals, (a) the number of
shares acquired upon exercise of options or with respect to which such options
were exercised and the aggregate dollar value realized upon such exercise and
(b) the number and value of unexercised options, in each case as of December
31, 1993.
1993 AGGREGATED OPTION EXERCISES AND YEAR-END VALUES
<TABLE>
<CAPTION>
NUMBER OF
SHARES UNDERLYING VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED OPTIONS IN-THE-MONEY
SHARES AT 12/31/93 (1) OPTIONS AT 12/31/93 (1)
ACQUIRED ON VALUE ------------------------- ---------------------------------
NAME EXERCISE REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE (2) UNEXERCISABLE (2)
- ------------------ ----------- ------------ ----------- ------------- --------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Einar W. Sissener 0 0 0 0 0 0
I. Roy Cohen 0 0 0 0 0 0
Jeffrey E. Smith 0 0 33,875 33,125 $76,189 0
David E. Cohen 0 0 23,125 17,875 82,002 0
Niels L. Graugaard 0 0 9,625 14,875 16,404 $5,468
George S. Barrett 0 0 3,250 13,750 0 0
</TABLE>
- ---------------------
- 12 -
<PAGE>
(1) All grants are in the form of options under the Company's 1983 Incentive
Stock Option Plan, as amended.
(2) Value is based on the closing price of a share of Class A Stock on December
31, 1993 ($14.00) minus the exercise price.
RETIREMENT PLANS
Messrs. Jeffrey E. Smith and David E. Cohen are active participants in the
Company's Non-Contributory Retirement Income Plan for Salaried Employees (a
defined benefit plan) (the "Non-Contributory Retirement Plan"). Under the Non-
Contributory Retirement Plan, both salaried and hourly employees are eligible
for benefits. Participants are entitled to receive their specified annual
benefit, in the form of annuity payments paid monthly for life (with 120
monthly payments guaranteed) or, at the election of participants, its actuarial
equivalent in certain other forms, commencing within one month of their 65th
birthday. The specified annual benefit is equal to 60% of the participant's
highest five-year Average Annual Compensation (as defined below), less 17.25%
of 1989 "covered compensation" ($28,200 x 17.25%), multiplied by a fraction,
the numerator of which is the number of years of service and denominator of
which is the greater of 30 years of service and the number of years from the
time the participant commences employment with the Company until the
participant's 65th birthday. The Non-Contributory Retirement Plan also provides
for an early retirement benefit which is equal to the specified annual benefit
described above, reduced actuarially for each year by which the early
retirement date precedes the normal retirement date.
The following table sets forth the approximate annual retirement benefit
based on years of service and Average Annual Compensation.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
--------------------------------------------
REMUNERATION (1) 15 20 25 30 35 (2)
- ----------------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000........................... $ 35,068 $ 46,757 $ 58,446 $ 70,136 $ 70,136
$150,000........................... 42,568 56,757 70,946 85,136 85,136
$175,000........................... 50,068 66,757 83,446 100,136 100,136
$200,000........................... 57,568 76,757 95,946 115,136 115,136
$225,000........................... 65,068 86,757 108,446 130,136 130,136
$250,000........................... 72,568 96,757 120,946 145,136 145,136
$300,000........................... 87,568 116,757 145,946 175,136 175,136
$400,000........................... 117,568 156,757 195,946 235,136 235,136
$450,000........................... 132,568 176,757 220,946 265,136 265,136
$500,000........................... 147,568 196,757 245,946 295,136 295,136
</TABLE>
- ----------------------
(1) Average annual compensation. Current Federal pension law limits average
annual compensation considered for benefit purposes to $235,840 for 1993
and $150,000 for 1994.
(2) The Non-Contributory Retirement Plan provides that there is a maximum of
the greater of 30 years of service and the number of years from the time
the employee commences employment with the Company until the employee's
65th birthday for computations under such plan. The table above assumes a
maximum of 30 years of service.
- 13 -
<PAGE>
For purposes of the Non-Contributory Retirement Plan, an employee's "Average
Annual Compensation" is his regular cash salary (excluding bonuses, overtime
pay and other extraordinary items), for the five consecutive years of service
in which his compensation was highest during the ten years of service
immediately preceding his retirement. In 1993, the respective amounts of the
compensation of Messrs. Jeffrey E. Smith and David E. Cohen would have been
$329,992 and $240,058, respectively, under the Non-Contributory Retirement Plan
if there were no limitations under Federal pension law. However, due to the
Federal pension law, the respective amounts of compensation of Messrs. Jeffrey
E. Smith and David E. Cohen under the Non-Contributory Retirement Plan in 1993
were limited to $235,840. Mr. Jeffrey E. Smith, however, is entitled to
supplemental retirement benefits from the Company equal to the amount, if any,
by which the pension due under the Company's Non-Contributory Retirement Plan
without any limitation imposed by the Internal Revenue Service exceeds any
ceiling imposed by the Internal Revenue Service. The years of service credited
under the Non-Contributory Retirement Plan as of December 31, 1993 to such
officers were as follows: Mr. Jeffrey E. Smith -- 9 years and Mr. David E.
Cohen -- 18 years.
Under the Non-Contributory Retirement Plan, in the event of the termination
of employment prior to retirement, part of the employee's benefit may be
forfeited. A termination benefit, payable in the form of a life annuity with
120 monthly payments guaranteed following the employee's 55th birthday, is
equal to an accrued percentage of the normal retirement benefit, actuarially
reduced to reflect commencement of payments prior to the normal retirement
date. As to employees hired on or after January 1, 1989, termination benefits
vest after five years of employment with the Company. Termination benefits of
employees hired prior to January 1, 1989 are currently 100% vested.
Mr. George S. Barrett participates in retirement programs administered by
Barre-National. Such programs, which are not more favorable than the plans
described above, include a non-contributory Retirement Income Plan, a defined
benefit plan. Contributions to the Retirement Income Plan are made on an
actuarial basis.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Company's Board of Directors has
responsibility for establishing general compensation and employee benefit
policies and the specific compensation of the Company's executive officers and
other highly paid personnel, except the Chief Executive Officer. As to the
Chief Executive Officer's compensation, the Compensation Committee makes
recommendations to the Company's Board of Directors. The Compensation Committee
also serves as the committee established under the Company's 1983 Incentive
Stock Option Plan with authority to fix the terms of, and grant options under,
such plan. The Compensation Committee is comprised of non-employee directors
although Mr. Sissener, as a member of the Office of the Chief Executive, is
active in the management of the Company and Mr. Cohen, as a consultant to the
Company and the Chairman of the Executive Committee, confers regularly with the
management of the Company on strategic and managerial decisions.
In general, the Compensation Committee strives to meet the following
objectives in making compensation decisions and recommendations: (1) provide
overall compensation that equals or exceeds industry standards so that the
Company is competitive in its ability to attract and retain highly qualified
personnel; (2) relate compensation to the degree to which the Company attains
its annual earnings or other performance targets; (3) reward excellent
individual performance, with special consideration for specific projects
completed or adverse conditions overcome; and (4) provide incentive to
contribute to the long-term growth of the Company's businesses and shareholder
value. The Company does not intend to pay any compensation to its executive
officers which would not be deductible under Section 162 of the Internal
Revenue Code of 1986, as amended.
- 14 -
<PAGE>
As reflected in the Summary Compensation Table above, there are currently
three principal components of senior executive compensation -- salaries,
bonuses and stock options. Salaries are determined annually, primarily on the
basis of industry standards as applied to each executive's background,
experience and overall performance with the Company. Bonuses are determined
annually on the basis of an informal plan which sets potential bonus targets
that an individual may achieve. A portion of each potential bonus is based on
individual performance during the year, a second portion is based on the
performance of the business unit for which the executive is responsible and a
third portion is based on the Company's earnings performance for such year.
Bonuses may also be adjusted to reflect special projects or events relating to
the performance of the individual. Executives whose responsibilities are
broader than a particular business unit have a larger portion of their annual
bonus potential dependent on the overall earnings performance of the Company.
Executives with less ability to influence Company-wide or segment performance
have a greater proportion of their bonus dependent on individual performance.
In addition, in certain instances the compensation of certain executive
officers and other highly paid personnel is determined with regard to
contractual commitments made in connection with acquisitions or in other
circumstances, and thus the compensation of certain individuals may reflect
factors in addition to those described above.
Stock option grants are intended to provide incentive for long-term
contribution to the Company by providing rewards which are earned over a
substantial period of employment, which reflect growth in the value of
stockholder equity and which align the interests of key personnel with those of
stockholders. The policy of the Compensation Committee has been to consider
option grants for executives annually and to provide option vesting in annual
increments over four years. In determining how broadly in the organization
options should be distributed and the number of options to be granted to an
individual, the overriding consideration is the importance of the employee's
experience, skills and knowledge to the long-term performance of the Company.
In making individual grants, the Committee also considers prior grants to each
individual and the terms of previously granted options.
During 1993 an executive compensation consulting firm was retained to advise
the Compensation Committee and report regarding the competitiveness of the
Company's executive compensation and the effectiveness of current compensation
policies to achieve the objective of attracting, retaining and providing
incentives for key executives and management personnel. The consulting firm has
provided its report and its recommendations are being considered by the
Compensation Committee.
In recommending compensation for the Chief Executive Officer, the
Compensation Committee has historically followed the same principles generally
applicable to other senior executives. However, since the establishment in mid-
1991 of the Office of the Chief Executive (the "OCE") consisting of more than
one officer, the Committee's actions have also been influenced by the unique
structure and circumstances of the OCE. In 1993 the members of the OCE were
Messrs. Einar W. Sissener and Jeffrey E. Smith. Although the responsibilities
and authority of the Chief Executive Officer are shared between the members of
the OCE as they determine, Mr. Sissener, prior to August 1993, generally served
as a strategist and advisor to the Company. In August, 1993, at the request of
the Company's Board of Directors, Mr. Sissener undertook, in the context of the
OCE, greater responsibilities than he previously had for management of the
Company.
The compensation recommended by the Compensation Committee for Messrs.
Sissener and Smith with respect to 1993 reflect the circumstances of the OCE,
the performance of its members and the performance of the Company. In August
the Committee determined to pay Mr. Sissener a base compensation of $10,000 per
month, reflecting his commitment to be more active and assume greater
responsibility as a member of the OCE. This compensation was recommended on the
basis that he would continue to perform the duties of President of A. L. Oslo
(for which he is compensated by A. L. Oslo and its subsidiaries) and that a
year-end
- 15 -
<PAGE>
adjustment would reflect the amount of time actually spent carrying out his
responsibilities as a member of the OCE as well as the quality of his
performance and the performance of the Company. On this basis, the committee
recommended an adjustment of $55,000 for Mr. Sissener. Mr. Sissener is not an
employee of the Company and thus is ineligible to receive stock options under
the Committee's policies; however, because of his substantial indirect
financial interest in the Company through his and his family's stock ownership
of A. L. Oslo, the Committee believes his interests are generally aligned with
those of the Company's stockholders (except for transactions between A. L. Oslo
and the Company, which are subject to review by the Audit Committee).
The 1993 bonus recommended by the Compensation Committee for Mr. Smith
reflected the Compensation Committee's view of his individual performance and
the Company's overall earnings performance. As the highest ranking full-time
officer responsible for Company-wide activities, the recommendation for Mr.
Smith's bonus for 1993 was lower than in 1992, and substantially less than his
potential target bonus due to the Company's overall performance. The
Compensation Committee did not view Mr. Smith's duties as being significantly
diminished by Mr. Sissener's assumption of greater responsibility as a member
of the OCE and, therefore, did not recommend lower compensation on that basis.
In granting stock options for 10,000 shares to Mr. Smith, the Compensation
Committee sought to provide additional long-term motivation and incentive for
Mr. Smith to continue his efforts on behalf of the Company.
The Compensation Committee also makes recommendations for any bonus for Mr.
I. Roy Cohen. Although Mr. Cohen is not an officer or employee of the Company,
as Chairman of the Executive Committee and retired Chief Executive Officer, he
participates, as a consultant, in various strategic and managerial decisions.
In addition, he undertakes special projects assigned to him by the Company's
Board of Directors. Mr. Cohen's compensation as a consultant is established by
his consulting agreement entered into on January 1, 1987 and amended on
December 12, 1989, which provides for per diem fees but does not obligate
Mr. Cohen to provide more than 40 days of consulting services. The Compensation
Committee's recommendation of a 1993 bonus for Mr. Cohen was based on the
extent of his services in excess of the amount required by his consulting
agreement, particularly his involvement in certain special projects.
Each of the other executive officers of the Company (Messrs. David E. Cohen,
Niels L. Graugaard and George S. Barrett) has responsibility for a separate
principal business group of the Company. Accordingly, the Compensation
Committee's 1993 bonus determinations for these officers were largely
influenced by the performance of the relevant business group and, to a lesser
extent, by each individual's performance and the Company's overall performance,
except that Mr. Barrett's bonus was affected by obligations to him under his
employment agreement with the Company.
By the Compensation
Committee:
William S. Leonhardt
(Chairman)
I. Roy Cohen
Glen E. Hess
Einar W. Sissener
- 16 -
<PAGE>
PERFORMANCE GRAPH
The following graph compares the Company's cumulative total stockholder
return during the last five years with the Media General Financial Services
Index for Pharmaceutical Companies (which index includes 223 corporations that
describe themselves as drug manufacturers and are publicly traded) and The New
York Stock Exchange Index. The graph assumes $100 invested on December 31, 1988
in the Company's Class A Stock and $100 invested at that time in each of the
selected indices. The comparison assumes that all dividends are reinvested.
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG A. L. LABORATORIES, INC., MEDIA GENERAL FINANCIAL SERVICES FOR
PHARMACEUTICAL COMPANIES INDEX AND NY STOCK EXCHANGE INDEX
<TABLE>
<CAPTION>
Media General
Financial Services
A. L. for Pharmaceutical NY Stock
Measurement period Laboratories, Companies Exchange
(Fiscal year Covered) Inc. Index Index
- --------------------- ------------- ------------------ --------
<S> <C> <C> <C>
Measurement PT -
1988 $ 100 $ 100 $ 100
FYE 1989 $ 132.60 $ 139.43 $ 127.57
FYE 1990 $ 185.72 $ 167.22 $ 122.36
FYE 1991 $ 271.19 $ 272.82 $ 158.35
FYE 1992 $ 288.73 $ 223.81 $ 165.80
FYE 1993 $ 157.68 $ 202.97 $ 188.25
</TABLE>
- 17 -
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH A. L. OSLO
During 1993, as in prior years, the Company and A. L. Oslo engaged in a
variety of transactions, including the Company's purchase of products and its
licensing of technology from, and the sale of goods to, A. L. Oslo. The Company
acts as distributor in the United States for pharmaceutical grade bacitracin
and feed grade zinc bacitracin manufactured by A. L. Oslo. During 1993, the
Company's animal health and bulk antibiotics group purchased $5,932,000 of
products, principally bacitracin antibiotics, from A. L. Oslo; A. L. Oslo and
its subsidiaries purchased $975,000 of pharmaceutical and animal health
products from the Company and its subsidiaries, principally on a contract
manufacturing basis; and the Company and its subsidiaries incurred an aggregate
of $1,874,000 payable to A. L. Oslo as fees payable under the Technology
Agreement (defined below).
Pursuant to an agency agreement, a Danish subsidiary of the Company purchases
and resells pharmaceutical products manufactured by A. L. Oslo and is
reimbursed for its promotion costs in connection with such sales. During 1993,
such subsidiary purchased $5,241,000 of such products from A. L. Oslo and
received a promotion cost reimbursement of $660,000.
Under a Technical Support and Technology Agreement dated September 30, 1983
(the "Technology Agreement"), A. L. Oslo provides the Company on an ongoing
basis with fermentation, technical, engineering and managerial advice and
services. This Technology Agreement was renewed in 1993 for an additional ten-
year period. Under the Technology Agreement as presently in effect, the Company
has an exclusive license until December 2003 (followed by one ten-year renewal
option at the election of the Company) to use the manufacturing and technical
know-how of A. L. Oslo with respect to the manufacture and sale of bacitracin
methylene disalicylate ("BMD") antibiotic feed grade and soluble BMD antibiotic
in North America. A. L. Oslo furnishes the Company with technical and
engineering services, and microorganisms necessary for the production of the
Company's BMD antibiotic. The Technology Agreement also provides that the
Company will have access to the services of executive and professional
personnel of A.L.Oslo on an occasional basis which does not interfere with such
personnel's responsibilities to A. L. Oslo. A. L. Oslo has agreed to use its
best efforts to have such personnel available on a short-term basis to meet the
needs of the Company. For its services and license under the Technology
Agreement, the Company pays A. L. Oslo 2 1/2% of the net sales of its
production of BMD antibiotic (excluding soluble BMD antibiotic), 1/3% of the
consolidated net sales value of certain pharmaceutical and antibiotic products
and 10% of the net sales of soluble BMD antibiotic.
During 1993, unlike previous years, the Company did not purchase any BMD feed
grade from A. L. Oslo. As a result, A. L. Oslo contends that the Company has a
contract to purchase 60,000 KgA of BMD feed grade per year. The Company denies
that such a contract exists.
A special committee of the Company's Board of Directors was appointed in 1992
to evaluate the feasibility of combining the Company and certain related
businesses of A. L. Oslo. During 1993, such special committee, together with
management and the Company's Board of Directors, discussed various proposed
structures and terms of a transaction in which such related businesses of A. L.
Oslo would become part of the Company. The discussions are continuing. While
any such transaction would be submitted for approval by the holders of Class A
Stock, there is no assurance that any transaction will be proposed.
All transactions with A. L. Oslo are subject to review by, and in certain
circumstances prior approval of, the Audit Committee. See "Board of Directors
and Committees -- Committees of the Board" above.
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<PAGE>
CERTAIN OTHER TRANSACTIONS AND RELATIONSHIPS
Mr. Glen E. Hess's professional corporation is a partner of Kirkland & Ellis,
a law firm which since 1978 has performed and continues to perform significant
legal services for the Company.
Mr. Oscar W. Kaalstad, a director of the Company, is the Chairman and
President of EuroConsult, Inc., a technology consulting firm to which the
Company paid $7,902 for consulting services during 1993.
Mr. David E. Cohen, the President and General Manager of the Company's Animal
Health Division, is the nephew of Mr. I. Roy Cohen.
Mr. Gert W. Munthe, a nominee for election as a Class B Director and a
director of A. L. Oslo, is the son-in-law of Mr. Einar W. Sissener.
Two shareholder class action complaints were filed against the Company and
Messrs. Einar W. Sissener, I. Roy Cohen and Jeffrey E. Smith in the United
States District Court for the District of New Jersey in November 1992. The
complaints, which were consolidated, alleged that the defendants caused the
Company to issue a series of statements in violation of the Securities Exchange
Act of 1934, as amended, and rules promulgated thereunder. While the Company
believed the claims were without merit and denied all liability with respect to
such claims, it believed that a settlement was desirable. On September 15,
1993, it entered into a comprehensive agreement settling all claims raised by
the consolidated complaint for the amount of $2,250,000 plus the costs (not to
exceed $50,000) of providing notice of the settlement to the class members. On
February 28, 1994, the court approved such settlement and dismissed the
combined lawsuit. In accordance with the Company's Certificate of Incorporation
and Delaware law, the Company's Board of Directors authorized the Company to
pay the defense and settlement costs of Messrs. Sissener, Cohen and Smith in
connection with such matter. A significant portion of the costs of the
settlement were covered by insurance.
INDEPENDENT AUDITORS
Coopers & Lybrand has been selected to serve as the Company's independent
certified public accountants for the fiscal year ending December 31, 1994. A
representative of that firm will be present at the Annual Meeting with the
opportunity to make a statement if he desires to do so and to respond to
questions of stockholders. The appointment of the auditors has been approved by
the Company's Board of Directors based upon the recommendation of the Audit
Committee.
STOCKHOLDERS' PROPOSALS FOR THE 1995 ANNUAL MEETING
In order to be considered for inclusion in the proxy statement for the 1995
Annual Meeting of Stockholders, stockholder proposals must be submitted to the
Company on or before December 30, 1994.
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<PAGE>
OTHER BUSINESS
As of the date hereof, the foregoing is the only business which management
intends to present, or is aware that others will present, at the Annual
Meeting. If any other proper business should be presented at the Annual
Meeting, the proxies will be voted in respect thereof in accordance with the
discretion and judgment of the person or persons voting the proxies.
By order of the Board of
Directors
Beth P. Hecht
Secretary
A. L. Laboratories, Inc.
YOUR VOTE IS IMPORTANT
PLEASE PROMPTLY COMPLETE AND SIGN THE ENCLOSED
FORM OF PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE
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<PAGE>
A. L. LABORATORIES, INC.
ONE EXECUTIVE DRIVE, P.O. BOX 1399, FORT LEE, NEW JERSEY 07024
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS ON JUNE 20, 1994
Jeffrey E. Smith, Executive Vice President, Beth P. Hecht, Secretary, and
Gale R. Cataraso, Assistant Secretary, or any one of them, with full power of
substitution, are hereby authorized to vote the shares of Class A Common Stock
of A. L. Laboratories, Inc., which the undersigned is entitled to vote at the
1994 Annual Meeting of Stockholders to be held at The Pierre Hotel, Wedgwood
Room, Fifth Avenue at 61st Street, New York, New York on Monday, June 20, 1994
at 11:00 a.m. local time, and at all adjournments thereof, as follows:
1. ELECTION OF DIRECTORS
[_]FOR all nominees listed [_]WITHHOLD AUTHORITY to
below (except as marked vote for all nominees
to the contrary below) listed below
JAMES BALOG, THOMAS G. GIBIAN
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE ANY INDIVIDUAL NOMINEE, WRITE THAT
NOMINEE'S NAME IN THE SPACE PROVIDED BELOW:)
- --------------------------------------------------------------------------------
2. As such persons may in their discretion determine upon such matters as may
come before the meeting.
(CONTINUED ON REVERSE SIDE)
<PAGE>
(CONTINUED FROM REVERSE SIDE)
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR ITEM 1. THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED STOCKHOLDER OR, IF NO DIRECTION IS INDICATED, WILL BE VOTED FOR
ITEM 1.
Dated: ___________________, 1994 ___________________________________________
___________________________________________
___________________________________________
SIGNATURE OF STOCKHOLDER(S)
NOTE: THE SIGNATURE SHOULD CORRESPOND
EXACTLY WITH THE NAME OF THE STOCKHOLDER
AS IT APPEARS HEREON. WHERE STOCK IS
REGISTERED IN JOINT TENANCY, ALL TENANTS
SHOULD SIGN. PERSONS SIGNING AS EXECUTORS,
ADMINISTRATORS, TRUSTEES, ETC., SHOULD SO
INDICATE.
PLEASE MARK, SIGN AND MAIL THIS PROXY
PROMPTLY IN THE ENCLOSED ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES.
