<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:
[X] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
ALPHARMA INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
<PAGE>
PRELIMINARY COPY
[LOGO] ALPHARMA
ALPHARMA INC.
One Executive Drive
P.O. Box 1399
Fort Lee, New Jersey 07024
-------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 30, 1996
-------------------------------------
To the Stockholders of ALPHARMA INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of ALPHARMA
INC., a Delaware corporation (the "Company"), will be held at THE REGENCY
HOTEL, 540 PARK AVENUE, NEW YORK, NEW YORK, on Thursday, May 30, 1996, at 9:00
a.m., local time, to consider and act upon the following matters:
1. The election of seven directors to the Company's Board of Directors,
each to hold office until the 1997 Annual Meeting of Stockholders and
until their successors shall be elected and shall qualify.
2. Adoption of a Company stock option plan for non-employee directors of
the Company (the "Non-Employee Director Plan") described in the
accompanying Proxy Statement.
3. 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 1, 1996 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 copy of the Company's Annual Report for the year ended December 31, 1995
and a Proxy Statement accompany this notice.
By order of the Board of Directors,
Beth P. Hecht
Secretary
[April 3, 1996]
<PAGE>
[LOGO] ALPHARMA
ALPHARMA INC.
ONE EXECUTIVE DRIVE
P.O. BOX 1399
FORT LEE, NEW JERSEY 07024
MAILING DATE
[APRIL 3, 1996]
---------------------------------------------
Proxy Statement for Annual Meeting of Stockholders
---------------------------------------------
To Be Held on May 30, 1996
This proxy statement (the "Proxy Statement") is furnished in connection with
the solicitation of proxies by the Board of Directors of ALPHARMA INC., a
Delaware corporation (the "Company"), for use at the Annual Meeting of
Stockholders (the "Annual Meeting") to be held on Thursday, May 30, 1996 at
The Regency Hotel, 540 Park Avenue, New York, New York at 9:00 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 seven directors to the Company's Board of Directors,
each to hold office until the 1997 Annual Meeting of Stockholders and until
their successors shall be elected and shall qualify.
2. Adoption of a Company stock option plan for non-employee directors of
the Company (the "Non-Employee Director Plan") described in the
accompanying Proxy Statement.
3. 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 1, 1996 (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, [13,719,069] 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 with respect to the election of directors, 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 adopting the Non-Employee Director
Plan and 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
Votes Entitled to be Cast by Each Class of Stock. Except for the election of
directors (described below) and certain matters that require a class vote, the
holders of the Class A Stock and the holders of the 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. Holders of Class A Stock are not entitled to vote as a separate class
on the adoption of the Non-Employee Director Plan.
Election of Directors. Seven 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 33
1/3% of the Company's Board of Directors (rounded to the nearest whole number,
but in no event less than two members of the Company's Board of Directors),
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 five 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 five 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 holders of Class A Stock to vote for,
or withhold authority to vote for, either or both of the Company's two
nominees for Class A Directors. The proxy also provides space for stockholders
to vote for, against, or to abstain from voting on the proposed adoption of
the Non-Employee Director Plan.
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 (i) 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 (ii) the adoption of the proposed Non-Employee
Director Plan and, in the discretion of the proxy holder, as to any other
matter which may properly come before
- 2 -
<PAGE>
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. With respect to the
adoption of the Non-Employee Director Plan, (i) abstentions, pursuant to
Delaware law, will be considered present and entitled to vote but will not
have been cast and therefore will not be counted in determining whether such
proposal received the requisite votes and (ii) broker non-votes will be
considered not entitled to vote on such proposal and thus will not be counted
in determining whether such proposal has received the requisite 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.
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 United States
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.
- 3 -
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
OWNERSHIP OF COMMON STOCK
The following table sets forth as of March 1, 1996 (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 five named executive officers (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>
PERCENT OF
AMOUNT AND COMMON
NATURE OF PERCENT STOCK
TITLE OF CLASS BENEFICIAL OF (BOTH
OF STOCK NAME OF BENEFICIAL OWNER OWNERSHIP CLASS CLASSES)
-------------------- ------------------------ ---------- ------- ----------
<C> <S> <C> <C> <C>
Class B Common Stock A.L. Industrier AS (1) 8,226,562(2) 100.00% 37.49%
Class A Common Stock A.L. Industrier AS (1) 0(3) * (3) *
Class A Common Stock Wellington Management 1,991,180 14.51 9.07
Company (4)
Class A Common Stock INVESCO PLC (5)
INVESCO North American
Group, Ltd. (5)
INVESCO, Inc. (5)
INVESCO North American
Holdings, Inc. (5)
INVESCO Funds Group, 1,422,700 10.37 6.25
Inc. (5)
Class A Common Stock Government of Singapore
Investment Corporation
Pte Ltd. (6)
Government of Singapore
(6)
Monetary Authority of
Singapore (6)
Board of Commissioners 849,200 6.19 3.87
of Currency,
Singapore (6)
Class A Common Stock State of Wisconsin 682,600 4.97 3.11
Investment Board (7)
Class A Common Stock Vanguard Specialized 949,040 6.91 4.32
Portfolios, Inc.--
Health Care (8)
Class A Common Stock Einar W. Sissener (9)(17) 233,250 1.7 1.0
Class A Common Stock I. Roy Cohen 28,044 * *
Class A Common Stock Thomas G. Gibian 2,150 * *
Class A Common Stock Glen E. Hess 4,725 * *
Class A Common Stock Gert W. Munthe (10)(17) 110,294 * *
Class A Common Stock Erik G. Tandberg (11)(17) 275 * *
Class A Common Stock Peter G. Tombros 700 * *
Class A Common Stock Jeffrey E. Smith (12) 78,062 * *
Class A Common Stock David E. Cohen (13) 46,593 * *
Class A Common Stock George S. Barrett (14) 34,079 * *
Class A Common Stock Ingrid Wiik (15) 7,444 * *
Class A Common Stock All directors and 541,974 4.0 2.5
executive officers as a
group
(14 persons) (16)(17)
</TABLE>
- ---------------------
*Indicates ownership of less than one percent.
- 4 -
<PAGE>
(1) The address of A.L. Industrier AS (formerly known as Apothekernes
Laboratorium A.S), a corporation organized and existing under the laws of
the Kingdom of Norway ("A.L. Industrier"), 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. Industrier, although A.L. Industrier
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. Industrier has
agreed with the Company that, other than pledges of up to 2,000,000
shares (including the pledges of shares described above), 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, 1997.
(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.
Industrier were converted as of March 1, 1996, A.L. Industrier would own
approximately 59.96% of the then outstanding shares of Class A Stock.
(4) The source of this information is the Amendment No. 5 to Schedule 13G
dated February 13, 1996 and filed with the Securities and Exchange
Commission (the "Commission") by Wellington Management Company ("WMC").
Such Amendment No. 5 to Schedule 13G reported that WMC has shared voting
power and shared dispositive power with respect to 698,640 shares and
1,999,180 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
("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.
(5) The source of this information is the Amendment No. 3 to Schedule 13G
dated February 14, 1996 and filed with the Commission by INVESCO PLC, a
parent holding company, 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. Such Amendment No. 3 to Schedule 13G reported that
each of the reporting persons have shared voting power and shared
dispositive power with respect to 1,422,700 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.
(6) The source of this information is the Amendment No. 2 to Schedule 13D
dated August 2, 1995 and filed with the Commission by Government of
Singapore Investment Corporation Pte Ltd. (the "Singapore Corporation"),
Government of Singapore ("Singapore"), Monetary Authority of Singapore
(the "Singapore Authority"), and Board of Commissioners of Currency of
Singapore ("Board of Commissioners"). Such Amendment No. 2 to Schedule
13D reports that (a) the Singapore Corporation beneficially owns an
aggregate of 849,200 shares which were bought by Singapore and has shared
voting power and shared dispositive power with respect to such shares,
(b) Singapore beneficially owns 602,800 shares and has shared voting
power and shared dispositive power with respect to such shares, (c) the
Singapore Authority beneficially owns 212,800 shares and has shared
voting power and shared dispositive power with respect to such shares,
and (d) the Board of Commissioners beneficially owns 33,600 shares and
has shared voting power and shared dispositive power with respect to such
shares. The address of the Singapore Corporation, Singapore, the
Singapore Authority and the Board of Commissioners is 250 North Bridge
Road, #33-00 Raffles City Tower, Singapore 0617.
- 5 -
<PAGE>
(7) The source of this information is the Amendment No. 2 to Schedule 13G
dated February 1, 1996 ("Wisconsin Filing") 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.
(8) The source of this information is the Amendment No. 4 to Schedule 13G
dated February 14, 1996 and filed with the Commission by Vanguard. Such
Amendment No. 4 to Schedule 13G reported that Vanguard had sole voting
power and shared dispositive power with respect to the 949,040 shares.
The address of Vanguard is P.O. Box 2600, Valley Forge, Pennsylvania
19482.
(9) Mr. Sissener is Chairman of the Board of A.L. Industrier and together
with A/S Swekk (Mr. Sissener's family-controlled private holding company)
("Swekk") and certain of his relatives beneficially owns approximately
50.8% of the outstanding ordinary shares of A.L. Industrier's capital
stock ("A.L. Industrier Shares"), which corresponds to 53.1% of the A.L.
Industrier Shares entitled to vote.
(10) Includes presently exercisable Warrants to purchase 110,094 shares of
Class A Stock in the name of Mr. Munthe's wife. (see footnote (17)
below). Mr. Munthe is a director of A.L. Industrier. The Company has been
advised by Mr. Munthe that members of his immediate family own 11,800
A.L. Industrier Shares which are included in the number of A.L.
Industrier Shares beneficially owned by Mr. Sissener (see footnote (9)
above) and that Mr. Munthe does not have any voting or dispositive power
over such shares.
(11) Includes presently exercisable Warrants to purchase 75 shares of Class A
Stock. Mr. Tandberg is a director of A.L. Industrier and also owns eight
A.L. Industrier Shares.
(12) Includes 64,250 shares that may be obtained upon exercise of stock
options granted under the Company's 1983 Incentive Stock Option Plan, as
amended, and are exercisable as of March 1, 1996 or within sixty days
thereof. The Company has been advised by Mr. Smith that his wife or
children own 3,750 of Mr. Smith's shares of Class A Stock but that he has
voting power over such shares.
(13) Includes 39,750 shares that may be obtained upon exercise of stock
options granted under the Company's 1983 Incentive Stock Option Plan, as
amended, and are exercisable as of March 1, 1996 or within sixty days
thereof.
(14) Includes 17,000 shares that may be obtained upon exercise of stock
options granted under the Company's 1983 Incentive Stock Option Plan, as
amended, and are exercisable as of March 1, 1996 or within sixty days
thereof.
(15) Includes presently exercisable Warrants to purchase 5,271 shares of Class
A Stock of which warrants for 140 shares are held of record by Ms. Wiik's
daughter. Also includes 2,000 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 March 1, 1996 or within sixty
days thereof. Ms. Wiik owns 565 A.L. Industrier Shares.
(16) Includes 128,625 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, which options are
exercisable as of March 1, 1996 or within sixty days thereof.
(17) As shareholders of A.L. Industrier, Mr. Sissener, Swekk, EWS Stiftelse, a
trust established for the benefit of the son of Mr. Sissener, certain of
Mr. Sissener's relatives (including Mr. Munthe's immediate family),
- 6 -
<PAGE>
Mr. Tandberg and Ms. Wiik each received in 1994 their pro rata share of
certain warrants to purchase Class A Stock (the "Warrants") in connection
with a certain transaction between A.L. Industrier and the Company. The
Warrants generally became exercisable on September 21, 1995 and expire on
January 3, 1999, except that the Warrants issued to or held by Mr.
Sissener or Swekk are not exercisable until October 3, 1997. As a result
of such transaction, Mr. Sissener beneficially owns Warrants to purchase
an aggregate of 1,383,004 shares of Class A Stock, of which 233,250 (owned
of record by EWS Stiftelse and by Mr. Sissener's wife) are currently
exercisable and the balance of which not exercisable until October 3,
1997. Mr. Sissener's beneficial ownership of Class A Stock reflected in
the table consists of the presently exercisable Warrants. Beneficial
ownership of Class A Stock of Messrs. Munthe and Tandberg and Ms. Wiik
reflected in the table includes currently exercisable Warrants to purchase
110,094, 74, and 5,271 shares, respectively.
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. Industrier, 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>
<CAPTION>
NAME AGE PRINCIPAL BUSINESS EXPERIENCE
- ---- --- -----------------------------
<S> <C> <C>
Thomas G. 74 Director of the Company since March, 1993. President and
Gibian.......... Chief Executive Officer of Henkel Corporation, a
specialty chemicals manufacturer and United States
subsidiary of Henkel KGaA, from 1980 to 1986.
Peter G. 53 Director of the Company since September, 1994. Director,
Tombros......... President and Chief Executive Officer of Enzon, Inc., a
developer and marketer of pharmaceutical products, since
April, 1994. Vice President Corporate Strategic Planning
of Pfizer Inc. from 1990-1994; Executive Vice President
of Pfizer Pharmaceuticals, Pfizer Inc. from 1986-1990 and
various other positions with Pfizer Inc. from 1968-1986.
</TABLE>
- 7 -
<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>
<CAPTION>
NAME AGE PRINCIPAL BUSINESS EXPERIENCE
- ---- --- -----------------------------
<S> <C> <C>
I. Roy Cohen............ 73 Director of the Company since 1975. Consultant to the
Company since January, 1991; Chairman of the Executive
Committee of the Company since June, 1987; 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............ 54 Director of the Company since September, 1983. Partner in
the law firm of Kirkland & Ellis since 1973.
Gert W. Munthe.......... 39 Director of the Company since June, 1994. President and
Chief Executive Officer of NetCom GSM A.S a Norwegian
cellular telecommunications company, since 1993.
Executive Vice President and division President of
Hafslund Nycomed A.S, a Norwegian energy and
pharmaceutical corporation, from 1988-1993. President of
Nycomed (Imaging) A.S, a wholly owned subsidiary of
Hafslund Nycomed A.S, from 1991 to 1993. Division
President in charge of the energy business of Hafslund
Nycomed A.S from 1988 to 1991.
Einar W. Sissener....... 67 Director of the Company since 1975. Chief Executive
Officer of the Company since June, 1994; member of the
Office of the Chief Executive of the Company from July,
1991 to June, 1994; Chairman of the Company since 1975;
President of A.L. Oslo, a subsidiary of the Company since
October, 1994; Chief Executive Officer and President of
A.L. Industrier from 1972 to October, 1994 and Chairman
of the Board of A.L. Industrier since November, 1994.
Erik G. Tandberg........ 66 Director of the Company since June, 1994. 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 four meetings in 1995. Each person who
served as a director in 1995 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.
- 8 -
<PAGE>
COMMITTEES OF THE BOARD
Pursuant to its bylaws, the Company has established standing Audit,
Executive and Compensation Committees.
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. Industrier (the beneficial owner of
all the outstanding Class B Stock) (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. Industrier 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. Industrier or otherwise have a
material relationship with either of them. The current members of the Audit
Committee are Messrs. Peter G. Tombros (Chairman), Thomas G. Gibian, and Erik
G. Tandberg. The Audit Committee held three meetings in 1995.
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. By resolution, the Company's Board of Directors
has specifically authorized and requested the Executive Committee to act on
behalf of the Board in emergency situations where the full Board is unable to
meet, to discuss and consult with the Chief Executive Officer of the Company
as requested by such officer and to act with respect to such matters as the
Board may from time to time designate. The members of the Executive Committee
are Messrs. I. Roy Cohen (Chairman), Einar W. Sissener, Peter G. Tombros and
Gert W. Munthe. The Executive Committee held two meetings in 1995 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 executive officers and other highly paid personnel of the
Company, except the Chief Executive Officer as to whom the Committee makes
compensation recommendations to the Company's Board of Directors. The
Committee also has authority with respect to the compensation and benefit
plans generally applicable to the Company's employees and 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. The
Compensation Committee held eleven meetings in 1995.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are Messrs. Thomas G. Gibian
(Chairman), I. Roy Cohen, Glen E. Hess and Peter G. Tombros. Mr. Einar W.
Sissener was a member of the committee until June, 1995. Mr. Cohen is a former
executive officer of the Company, having served as President and Chief
Executive Officer from 1976 to January, 1991 and as a member of the Office of
the Chief Executive from July, 1991 through 1992. He currently serves as a
consultant to the Company and as Chairman of the Executive Committee. See
"Certain Relationships and Related Transactions--Certain Other Transactions
and Relationships" for a description of Mr. Cohen's consulting agreement. Mr.
Hess' 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. Sissener and members of his family beneficially own a majority of the
outstanding shares of A.L. Industrier which controls the Company through its
ownership of all the Company's outstanding Class B stock.
- 9 -
<PAGE>
Since 1983 Mr. Sissener has served as the Chairman of the Board of Directors
of the Company and since June, 1994, has been the Chief Executive Officer of
the Company. Mr. Sissener also serves as President of A.L. Oslo. In 1995, the
Company through A.L. Oslo leased certain property from A.L. Industrier and
provided certain administrative services to A.L. Industrier and entered into
certain commercial transactions with subsidiaries of A.L. Industrier. See
"Certain Relationships and Related Transactions--Transactions with A.L.
Industrier" for a more detailed description of such transactions.
DIRECTORS' COMPENSATION
During 1995, each director (except Mr. Sissener) received directors' fees of
$22,500 and a grant of 200 shares of Class A Stock. In addition, each director
received $1,200 for each Board meeting attended in person, $600 for each
Committee meeting attended in person and one-half of the applicable fee for
each meeting attended by telephone (with certain exceptions). The Chairman of
each of the Audit, Executive and Compensation Committees received an
additional $7,500. The same compensation arrangements will continue in 1996
except that directors will receive an option to acquire 2,000 shares of Class
A Stock following the Annual Meeting of Stockholders in lieu of the grant of
200 shares (assuming approval of the Non-Employee Director's Option Plan to be
considered by stockholders at the Annual Meeting). The terms of the options to
be granted to directors are described under "Adoption of the Non-Employee
Director Option Plan."
ADOPTION OF THE NON-EMPLOYEE DIRECTOR OPTION PLAN
GENERAL
The Company currently grants options to key employees of the Company and its
subsidiaries under the 1983 Incentive Stock Plan, as amended (the "Employee
Plan"). The Employee Plan was originally adopted by the Company's Board of
Directors on September 26, 1983 and was approved by the Company's stockholders
on January 25, 1984. The purpose of the Employee Plan is to attract, retain
and provide incentive to present and future executive, managerial, marketing,
technical and other key employees of the Company and its subsidiaries by
affording such employees an opportunity to acquire or increase their
proprietary interest in the Company through the acquisition of shares of its
Class A Stock. The Company's Board of Directors believes that the Employee
Plan has been successful to date in accomplishing its purpose. Currently,
directors who are not employees may not participate in the Employee Plan.
The Company's Board of Directors has approved and recommends that the
Company's stockholders adopt the Non-Employee Director Option Plan (the
"Director Plan"). The Company's Board of Directors believes that the proposed
plan will promote the interests of the Company by tying more directly the
compensation of directors to the performance of the Company as measured by the
market price of its stock and by aligning more closely the interests of
directors with the interests of the Company's stockholders. Under the proposed
Director Plan, each director shall annually receive options to purchase 2,000
shares of Class A Stock (the "Director Options") at the beginning of each term
that such director serves as a member of the Board of Directors. If the
Director Plan receives the requisite approval of stockholders, the directors
will receive this annual option grant immediately following the stockholder's
meeting in lieu of the grant of 200 shares of Class A Stock which directors
received in 1995.
Approval of the proposal to adopt the Director Plan requires that a majority
of the votes cast by the holders of the shares of the Class A Stock and Class
B Stock, voting together, present and entitled to vote at the meeting be voted
for approval. A.L. Industrier has advised the Company that it intends to vote
its shares in favor of the
- 10 -
<PAGE>
proposal, which would assure its approval. The material features of the Non-
Employee Director Option Plan, are described below.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
PROPOSAL TO ADOPT THE NON-EMPLOYEE DIRECTOR OPTION PLAN.
SUMMARY DESCRIPTION OF THE COMPANY'S NON-EMPLOYEE DIRECTOR OPTION PLAN
Eligibility. The individuals who will be eligible to participate in the
Director Plan in a given year will be all persons elected or appointed as
directors of the Company during that year who are not also employees of the
Company or any of its subsidiaries. No employees of the Company or its
subsidiaries will be entitled to participate in the Director Plan.
Option Grants. Each director shall receive an annual grant of Director
Options to purchase 2,000 shares of Class A Stock on the date of each annual
meeting of stockholders at which such director is elected. If a director is
elected or appointed to the Board of Directors on a date other than the date
of the annual meeting of stockholders, such director shall receive Director
Options to purchase a number of Class A Stock equal to (i) 2,000 multiplied by
(ii) a fraction, the numerator of which is the number of days remaining until
the anniversary of the preceding annual meeting of the stockholders and the
denominator of which is 365.
Option Terms. The price at which shares of Class A Stock may be purchased
pursuant to any Director Option shall be the fair market value of the shares
on the date that the Director Option is granted. The exercise price of each
Director Option may be paid in cash or by delivery of shares of Class A Stock
previously owned by the optionee having a fair market value equal to the
exercise price of the Director Option being exercised. Each Director Option
shall have a term of ten years from the date of grant (the "Option Term");
provided that if a director ceases to be a director for any reason, all
Director Options held by such Director will be exercisable only until the
first anniversary of the date on which such individual ceases to serve as a
Director (the "Early Termination Date").
Each Director Option which has vested (as described below) may be exercised
at any time from time to time until the earlier of (i) the end of the Option
Term or (ii) the Early Termination Date, in part or in whole, subject to such
limitations that the Director Options Committee, in its discretion, may
specify at or prior to the time of grant. Director Options shall vest on the
date of the first annual meeting of stockholders following the date of grant;
provided that if a person ceases to be a director, for reason of disability or
death prior to the vesting of any Director Option held by such person, a
portion of such unvested Director Options shall vest, which portion shall be
equal to (i) the number of unvested Director Options held by such director at
the time such person ceases to be a director multiplied by (ii) a fraction,
the numerator of which is the number of days such Director has held such
unvested option and the denominator of which is 365. If a Director is removed
from the Board or resigns other than for reasons of disability or death, the
unvested Director Options held by such director shall not vest. The terms upon
which the Director Options are granted may not be amended more frequently than
once every six months (except in certain limited circumstances).
MISCELLANEOUS
The maximum number of shares of Class A Stock issuable pursuant to options
under the Plan is 150,000. The Plan terminates on December 31, 2005 unless
earlier terminated by the Board. The Board can modify or terminate the Plan,
but cannot change the number of shares for which Options are granted, the
eligibility of grantees, or the maximum shares issuable under the Plan or
provide for any exercise price lower than the market
- 11 -
<PAGE>
price without stockholder approval. Termination of the Plan shall not affect
previously issued Director Options. Unless otherwise specified in the Director
Plan, the terms and provisions of the Employee Plan shall apply to Director
Options. If a director would be subject to significantly detrimental income
tax consequences as a result of receiving Director Options under any non-
United States income tax provisions, such director may elect to receive in
lieu thereof one share of Class A Stock for every ten shares purchasable under
the Director Options such director would otherwise have received.
The Director Plan will be administered by a committee of the Company's
Directors appointed for that purpose, which committee will have authority to
interpret and apply the plan. The committee will not have discretion to
determine the amount, price or timing of the Director Options but will have
authority to place such limitations upon the exercise of the options as the
committee deems appropriate to comply with applicable laws and carry out the
intent and purpose of the Plan.
EXECUTIVE COMPENSATION
SUMMARY OF EXECUTIVE COMPENSATION
The following table (the "Summary Compensation Table") sets forth the annual
and long-term compensation paid or granted to, or accrued for, the executive
officers named below (the "named executive officers") by the Company or its
subsidiaries during 1995, 1994 and 1993:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------- ------------
OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL COMPENSATION OPTIONS/SARS COMPENSATION
POSITION DURING 1995 YEAR SALARY($) BONUS($) ($) (#)(1) ($)
-------------------- ---- ---------- --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Einar W. Sissener (5)... 1995 384,395(6) 0(6) * 0 32,583(6)
(Chairman, Director,
and 1994 341,263(2)(6) 75,000 * 0 0
Chief Executive Offi-
cer) 1993 215,932(2) 0 * 0 0
Jeffrey E. Smith........ 1995 355,066 40,000 * 15,000 21,300(3)
(Vice President-- Fi-
nance and 1994 365,630 50,000 * 9,000 15,573(3)
Chief Financial Offi-
cer) 1993 364,023 65,000 * 10,000 9,198(3)
David E. Cohen.......... 1995 279,994 100,000 * 15,000 16,800(3)
(Vice President and
President-- 1994 260,000 110,000 * 9,000 12,269(3)
Animal Health Divi-
sion) 1993 240,058 120,000 * 7,000 9,186(3)
George S. Barrett....... 1995 279,615 40,000 * 15,000 10,066(3)
(Vice President and
President-- 1994 259,615 116,110(4) * 7,000 11,244(3)
U.S. Pharmaceuticals
Division) 1993 230,232 168,031(4) * 7,000 3,598(3)
Ingrid Wiik (5)......... 1995 176,305 31,515 * 15,000 41,358(7)
(Vice President and 1994 36,765 0 * 8,000 4,315(9)
President--
International
Pharmaceuticals
Division)
</TABLE>
- 12 -
<PAGE>
- ---------------------
* The Company provides automobile allowances to its executive officers and an
apartment (in lieu of hotel accommodations) to Mr. Sissener while he is in
the United States. The incremental cost of such perquisites in each of
1995, 1994, and 1993 was not in excess of the lesser of (a) $50,000 and (b)
10% of the amounts reported as Salary and Bonus for such year in the
Summary Compensation Table.
(1) Reflects options granted under the Company's 1983 Incentive Stock Option
Plan. The Company has not granted any stock appreciation rights ("SARs")
to any of the named executive officers in 1993, 1994 or 1995.
(2) In 1993 and 1994, includes fees from the Company and its subsidiaries
(before deduction of Company charges for office and secretarial services)
for services as Chairman of the Board and as a member of committees of the
Company's Board of Directors and the board of directors of a subsidiary.
Since January 1, 1995, Mr. Sissener has not received fees for such
services in such positions.
(3) Includes contributions by the Company to various employee profit-sharing
and saving plans.
(4) The 1994 bonus consists of a bonus award of $30,000 and an additional
contractual bonus of $86,110, of which $46,110 is an incentive bonus based
on 1994 operating performance of NMC Laboratories, Inc. ("NMC"), a
subsidiary of the Company. The 1993 bonus consists of a bonus award of
$60,000 and an additional contractual bonus of $108,031, of which $68,031
was an incentive bonus based on 1993 operating performance of NMC.
(5) This list does not include compensation for Mr. Sissener or Ms. Wiik from
A.L. Oslo prior to the acquisition of A.L. Oslo by the Company in October,
1994.
(6) At Mr. Sissener's request his 1995 base salary was reduced by $40,000 from
the amount approved by the Compensation Committee and he received no bonus
with respect to 1995.
(7) Pension premiums paid to a Norwegian insurance company to fund pension
payments for executive officer.
(8) Includes compensation paid to Ms. Wiik after the acquisition of A.L. Oslo
by the Company in October, 1994.
(9) Includes fees from the Company for services on the Board of Directors of
Dumex-ALPHARMA A/S and A.L. Oslo after October, 1994.
EMPLOYMENT AGREEMENTS
Mr. E.W. Sissener is a party to an agreement dated March 14, 1996 for his
employment as Chairman and Chief Executive Officer through the annual
stockholders meeting in 1999. The agreement provides that his base salary for
1996 shall be $450,000, subject to review and increase by the Board in future
years, payable in part by A.L. Oslo and in part by the Company. If Mr.
Sissener's employment is terminated or he is not elected Chairman and Chief
Executive Officer for any reason other than cause, he is entitled to receive
one year's base salary. The agreement provides that for ten years following
his employment Mr. Sissener will provide consulting services to the Company as
requested for up to 36 days per year and will be entitled to receive $54,000
annually (subject to adjustment based on the consumer price index). The
agreement does not affect the pension and other benefits generally available
to senior executives of A.L. Oslo which Mr. Sissener is entitled to receive.
Mr. Jeffrey E. Smith is a party to an employment arrangement with the
Company dated July 30, 1991 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
- 13 -
<PAGE>
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. George S. Barrett 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 will be paid one year's base salary with
certain benefits. Mr. Barrett participates in all of the employment benefits
available to executives of the Company. Upon retirement, the Company will pay
to Mr. Barrett supplemental retirement benefits under the ALPHARMA INC.
Supplemental Pension Plan (a non-qualified defined benefit plan, the
"Supplemental Pension Plan"; See "Retirement Plans").
Mr. David E. Cohen 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 will be paid one year's base salary with
certain benefits, and if he does not take another executive position after
such twelve month period, he will be paid his base salary with certain
benefits until he takes another position and for up to six months thereafter.
Mr. Cohen participates in all of the employment benefits available to
executives of the Company. Upon retirement, the Company will pay to Mr. Cohen
supplemental retirement benefits under the Supplemental Pension Plan (See
"Retirement Plans").
Ms. Ingrid Wiik is a party to an employment arrangement with A.L. Oslo which
provides that in the event she (x) is terminated for any reason other than for
cause, or (y) wishes to terminate her employment due to organizational changes
or other significant changes of her working conditions or responsibilities
which she does not wish to accept, in both cases she is entitled to receive
salary and certain other benefits for a period of eighteen (18) months
thereafter. Ms. Wiik participates in all of the employment benefits available
to executives of A.L. Oslo. (See "Retirement Plans").
GRANTS OF OPTIONS
The following table discloses, for the named executive officers, information
regarding stock options granted during 1995. All grants described below are
"nonstatutory options" granted under the Company's 1983 Incentive Stock Option
Plan, as amended.
The options granted reflected in the following table are exercisable between
October 1, 1998 and January 31, 1999 into shares of the Company's Class A
Stock at an exercise price of $18.50 per share.
1995 OPTION GRANTS
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- ---------------------------------------------------------------
POTENTIAL REALIZABLE VALUE AT
PERCENT OF EXPIRATION USING ASSUMED
NUMBER OF TOTAL ANNUAL RATES OF STOCK PRICE
SHARES OPTIONS APPRECIATION FOR OPTION
UNDERLYING GRANTED TO EXERCISE OR TERM (1)
OPTIONS EMPLOYEES BASE PRICE EXPIRATION ---------------------------------
NAME GRANTED IN 1995 ($/SH) DATE 5% 10%
- ----------------- ---------- ---------- ----------- ---------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Einar W. Sissener 0 0 * * * *
Jeffrey E. Smith 15,000 4.86% $18.50 03/31/99 $ 55,714(2) $ 119,221(3)
David E. Cohen 15,000 4.86 18.50 03/31/99 55,714(2) 119,221(3)
George S. Barrett 15,000 4.86 18.50 03/31/99 55,714(2) 119,221(3)
Ingrid Wiik 15,000 4.86 18.50 03/31/99 55,714(2) 119,221(3)
</TABLE>
- 14 -
<PAGE>
*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) Assumes a 3.75 year term and a final Class A Stock price of $22.21.
(3) Assumes a 3.75 year term and a final Class A Stock price of $26.45.
OPTION EXERCISES AND VALUES
The following table discloses, for the named executive officers, (a) the
number of shares acquired upon exercise of options or with respect to which
such options were exercised and the aggregate dollar value realized upon such
exercise and (b) the number and value of unexercised options, in each case as
of December 31, 1995.
1995 AGGREGATED OPTION EXERCISES AND YEAR-END VALUES
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF SHARES UNDERLYING VALUE OF UNEXERCISED IN-THE-MONEY
SHARES UNEXERCISED OPTIONS AT 12/31/95 (1) OPTIONS AT 12/31/95 (1)
ACQUIRED ON VALUE ----------------------------------- ---------------------------------
NAME EXERCISE REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE (2) UNEXERCISABLE (2)
- ------------------------ ----------- ------------ ----------------- ------------------ --------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Einar W. Sissener....... 0 0 0 0 0 0
Jeffrey E. Smith........ 0 0 61,750 29,250 $651,970 $236,156
David E. Cohen.......... 0 0 38,000 27,000 459,377 225,188
George S. Barrett....... 0 0 15,250 23,750 106,375 98,219
Ingrid Wiik............. 0 0 2,000 21,000 20,000 174,375
</TABLE>
- ---------------------
(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, 1995 ($26.13) minus the exercise price.
RETIREMENT PLANS
Messrs. Jeffrey E. Smith, David E. Cohen and George S. Barrett are active
participants in the ALPHARMA INC. Pension Plan (a qualified defined benefit
plan) (the "Pension Plan"). Mr. Sissener and Ms. Wiik do not participate in
the Pension Plan. Under the Pension Plan, both salaried and hourly employees
are eligible for benefits. Participants are entitled to receive their
specified annual benefit, in the form of a life annuity 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 (x) the sum of (i) 0.8% of the participant's highest five-year Final
Average Compensation (as defined below) up to "covered compensation" (($25,686
for 1995) plus (ii) 1.45% of the participant's highest five-year Final Average
Compensation in excess of "covered compensation" ($25,920 for 1995),
multiplied by (y) the number of years of benefit service (up to a maximum of
30 years). The Pension 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
under the Pension Plan based on years of service and Final Average
Compensation.
- 15 -
<PAGE>
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
------------------------------------------------------------
REMUNERATION (1) 15 20 25 30 35 (2)
- ---------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000 $ 24,817 $ 33,089 $ 41,362 $ 49,634 $ 49,634
$150,000 30,255 40,339 50,424 60,509 60,509
$175,000 35,692 47,589 59,487 71,384 71,384
$200,000 41,130 54,839 68,549 82,259 82,259
$225,000 46,567 62,089 77,612 93,134 93,134
$250,000 52,005 69,339 86,674 104,009 104,009
$300,000 62,880 83,839 104,799 125,759 125,759
$400,000 84,630 112,839 141,049 169,259 169,259
$450,000 95,505 127,339 159,174 191,009 191,009
$500,000 106,380 141,839 177,299 212,759 212,759
</TABLE>
- ---------------------
(1) Final average compensation. Current Federal pension law limits average
annual compensation considered for benefit purposes to $150,000 for 1995
and $150,000 for 1996.
(2) The Plan provides that there is a maximum of 30 years of service for
computation of benefits.
For purposes of the Pension Plan, an employee's "Final Average Compensation"
generally is his regular cash salary (excluding bonuses) for the five
consecutive years of service in which his compensation was highest during the
ten years of service immediately preceding his retirement. In 1995, the
respective amounts of the compensation of Messrs. Smith, Cohen and Barrett
would have been $351,156, $279,994, and $279,615, respectively, under the
Pension Plan if there were no limitations under Federal pension law. However,
due to the Federal pension law, the respective amounts of compensation of
Messrs. Smith, Cohen and Barrett under the Pension Plan in 1995 were limited
to $150,000. Mr. Smith, however, is entitled to supplemental retirement
benefits from the Company equal to the amount, if any, by which the pension
due under the Pension Plan without any limitation imposed by the Internal
Revenue Service exceeds any ceiling imposed by the Internal Revenue Service.
In addition, Messrs. Cohen and Barrett are participants in the Supplemental
Pension Plan. Under the Supplemental Pension Plan, participants are entitled
to supplemental retirement benefits from the Company equal to the amount, if
any, by which (x) the lesser of (i) the pension due under the Pension Plan
without any limitation imposed by the Internal Revenue Service and (ii)
$235,840 exceeds (y) any ceiling imposed by the Internal Revenue Service. The
years of service credited under the Pension Plan and the Supplemental Pension
Plan as of December 31, 1995 to such officers were as follows: Mr. Smith--11
years, Mr. Cohen--20 years and Mr. Barrett--5 years.
Under the Pension Plan, in the event of the termination of employment prior
to retirement, part of the employee's benefit may be forfeited. A retirement
benefit, payable in the form of a life annuity 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, pension
benefits under the Pension Plan vest after five years of employment with the
Company. Pension benefits under the Pension Plan of employees hired prior to
January 1, 1989 are currently 100% vested. Under the Supplemental Pension
Plan, all participants' benefits vest after ten years of employment with the
Company.
Mr. Einar W. Sissener and Ms. Ingrid Wiik are active participants in the
pension plan of A.L. Oslo, the Company's Norwegian subsidiary (a defined
benefit plan) (the "Oslo Pension Plan"). Under the Oslo Pension Plan, both
salaried and hourly employees are eligible for benefits. The retirement age
under the Oslo Pension Plan is 67 years of age. A participant's specified
annual benefit under the Oslo Pension Plan is equal to (x) the
- 16 -
<PAGE>
difference between (i) 60% of such participant's Final Compensation (as
defined below) and (ii) the social security benefit (179,222 Norwegian Kroner
("NOK") or approximately $28,313 for 1995) multiplied by (y) a fraction, the
numerator of which is the number of years of service (up to a maximum of 30
years) and the denominator of which is 30. The Oslo Pension Plan does not
provide for an early retirement benefit.
The following table sets forth the approximate annual retirement benefit
under the Oslo Pension Plan based on years of service and Final Compensation.
OSLO PENSION PLAN TABLE (1)
<TABLE>
<CAPTION>
YEARS OF SERVICE
------------------------------------------------------------
REMUNERATION (2) 15 20 25 30 35 (3)
- ---------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000 $ 24,657 $ 32,876 $ 41,095 $ 49,314 $ 49,314
$150,000 32,157 42,876 53,595 64,314 64,314
$175,000 39,657 52,876 66,095 79,314 79,314
$200,000 47,157 62,876 78,595 94,314 94,314
$225,000 54,657 72,876 91,095 109,314 109,314
$250,000 62,157 82,876 103,595 124,314 124,314
$300,000 77,157 102,876 128,595 154,314 154,314
$400,000 107,157 142,876 178,595 214,314 214,314
$450,000 122,157 162,876 203,595 244,314 244,314
$500,000 137,157 182,876 228,595 274,314 274,314
</TABLE>
- ---------------------
(1) The payments under the Oslo Pension Plan are made in Norwegian kroner. For
purposes of the Oslo Pension Plan Table, such Norwegian kroner amounts
were translated into United States dollars using the exchange rate at
December 29, 1995 of NOK 6.3251 to $1.00.
(2) Final compensation.
(3) The Plan provides that there is a maximum of 30 years of service for
computation of benefits.
For purposes of determining his benefit under the Oslo Pension Plan, salary
or bonus payable by the Company or a subsidiary other than AL Oslo is
excluded. For purposes of the Oslo Pension Plan, an employee's "Final
Compensation" is his or her base cash salary in his last year of service. If
Mr. Sissener were to retire with his last year of service being 1995, the
amount of his Final Compensation for purposes of calculating his pension
benefits under the Oslo Pension Plan would have been NOK (1,080,000) (or
approximately $170,748). If Ms. Wiik were to retire with her last year of
service being 1995, the amount of her Final Compensation for purposes of
calculating her benefits under the Oslo Pension Plan would have been NOK
1,115,147 or approximately $176,305. In addition, under the Oslo Pension Plan
if a participant dies, such participant's spouse is entitled to receive 55% of
the participant's specified annual benefit. Mr. Sissener and Ms. Wiik have
and years of service, respectively, under the Oslo Pension Plan.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Company's Board of Directors is
responsible for reviewing the performance of the Chief Executive Officer
("CEO") and recommending to the Board the amount of compensation and other
benefits payable to the CEO, reviewing and approving the compensation and
benefits of other executive officers and highly paid personnel, reviewing the
general compensation and employment benefit policies for management personnel,
reviewing management development and succession matters and approving any
material new benefit plan or reviewing amendment to an existing benefit plan.
During 1995 the
- 17 -
<PAGE>
Compensation Committee also served as the committee established under the
Company's 1983 Incentive Stock Option Plan (the "Option Plan") with authority
to fix the terms of, and grant options under, such plan. The Compensation
Committee is comprised of non-employee directors.
In general, the Compensation Committee strives to meet the following
objectives in making compensation decisions and recommendations for executive
officers and other key personnel: (1) provide overall compensation that is
competitive in its ability to attract and retain highly qualified personnel;
(2) relate compensation to the degree to which the Company (and/or the
specific business unit for which an executive is responsible) 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 stockholder value. In
recommending and approving compensation for executive officers and other
management personnel, the Committee considers the different business, tax and
other factors which affect compensation payable to non-U.S. personnel. The
Committee does not intend to approve or recommend compensation which would not
be deductible under Section 162 of the Internal Revenue Code of 1986, as
amended and consults with tax advisors as necessary to avoid any unintended
result.
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 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 general, performance is measured by the operating income of individual
business units and the net income of the Company, in each case relative to
budgeted amounts and after consideration of events not reasonably anticipated
which affected income and accomplishments which may not immediately have
income benefits. 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.
The Committee considered and approved bonuses for 1995 based on
recommendations from the CEO and after consideration of the Company's 1995
operating results. The Company's overall earnings performance in 1995 was less
than budgeted and as a result the bonuses of all executive officers were lower
than the target level. In addition, executive officers responsible for
business units which failed to meet budget levels were additionally reduced.
Because the Company failed to reach its budgeted goals in 1995 and in view of
the generally lower level of cash bonuses to be recommended for other
executive personnel, the CEO requested that his 1995 salary be reduced by
approximately $40,000 from the amount set by the Compensation Committee in
January 1995 and that he be awarded no bonus for 1995. The Committee agreed to
accept his request and thus did not determine the amount of the 1995 bonus for
the CEO that it was prepared to recommend to the Board. The Committee,
however, did review the CEO's performance during 1995 and determined to
recommend a 1996 salary of $450,000 (an approximately 6% increase over the
Committee's 1995 salary recommendation) and a target bonus of 100% of salary.
This level of increase over the level approved for 1995 is at the higher end
of the range of
- 18 -
<PAGE>
salary adjustments approved by the Committee for other executive officers. The
Committee also reviewed with the CEO plans for periods after 1996 and
recommended for Board approval (which occurred in March, 1996) an employment
contract which would continue the present employment relationship through the
1999 Annual Meeting of Stockholders.
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. 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 prior granted options.
During 1995 the Committee approved approximately 92,000 option grants to
executive officers and key employees. These options all vest in annual
increments over four years and have a ten year term, except for the options
("short-term options") which were granted to the six executive officers who,
together with the CEO, comprise the Company-wide operating committee. The
short-term options granted to such executive officers in May, 1995, do not
become exercisable until October 1, 1998 and expire (if not previously
exercised) on March 31, 1999. The Committee determined that because the
members of the operating committee are in the position to most influence the
performance of the Company, the terms of the short-term options would provide
increased incentive to remain with the Company and enhance its performance in
the near term and would create an economic interest which generally coincides
with the interests of the holders of the Company's outstanding warrants which
expire on January 1, 1999. In granting the short-term options the Committee
considered that the grantees also held previously granted 10 year options. The
Committee, at the request of the CEO, did not consider granting options to
him. The Committee believes that the interest of the CEO is closely aligned
with the stockholders as a result of his and his family's substantial direct
and indirect ownership of the Company's stock and warrants.
By the Compensation Committee:
Thomas G. Gibian (Chairman)
I. Roy Cohen
Glen E. Hess
Peter G. Tombros
- 19 -
<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 248 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,
1990 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]
<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG ALPHARMA INC, INDUSTRY INDEX AND NY STOCK EXCHANGE INDEX
<CAPTION>
Measurement period ALPHARMA Industry NY Stock Exchange
(Fiscal year Covered) Inc. Index Index
- --------------------- --------- --------- ---------
<S> <C> <C> <C>
Measurement PT -
1990 $ 100 $ 100 $ 100
FYE 1991 $ 146.02 $ 163.16 $ 129.41
FYE 1992 $ 155.46 $ 133.85 $ 135.50
FYE 1993 $ 84.90 $ 121.38 $ 153.85
FYE 1994 $ 123.90 $ 130.59 $ 150.86
FYE 1995 $ 160.88 $ 208.33 $ 195.61
</TABLE>
- 20 -
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH A.L. INDUSTRIER
A.L. Industrier and A.L. Oslo are parties to a lease (the "Skoyen Lease")
pursuant to which A.L. Industrier leases to A.L. Oslo the land and facility in
Oslo, Norway where A.L. Oslo's principal administrative offices and
fermentation plant for its bulk antibiotics and animal health businesses are
located. The Skoyen Lease has a term of 20 years, which term is renewable, at
the option of A.L. Oslo, for four additional consecutive five year terms.
Basic rent during the initial 20-year term is $1.00 per year and, during any
renewal term thereafter, basic rent will be the then prevailing fair rental
value of the premises. In addition to basic rent, A.L. Oslo pays documented
expenses of ownership and operation of such facility, such as taxes and
maintenance expenses. A.L. Oslo has the right to terminate the Skoyen Lease at
any time during its term upon twelve months written notice to A.L. Industrier.
A.L. Oslo is a party to an administrative services agreement (the
"Administrative Services Agreement") with A.L. Industrier, pursuant to which
A.L. Oslo provides certain administrative services to A.L. Industrier. Such
services are provided on a full cost basis, except that A.L. Industrier is
required to pay A.L. Oslo a minimum fee for services rendered during calendar
years 1995 and 1996 equal to NOK 4,000,000 and NOK 3,000,000, respectively. In
1995, A.L. Industrier paid A.L. Oslo NOK 4,000,000 (or $630,000 based on the
NOK exchange rates in effect on the dates such fees were paid). The
Administrative Services Agreement has a term continuing until January, 1997
and will be automatically extended for one-year terms thereafter unless
terminated by either of the parties thereto.
During 1995, the Company through A.L. Oslo and its subsidiaries sold
$3,353,000 of products, primarily multivitamins and adhesive products, to a
subsidiary of A.L. Industrier for distribution of these products to retail
food stores. In addition, during 1995 A.L. Oslo paid $214,000 to A.L.
Industrier to reimburse A.L. Industrier for costs incurred in producing an
aquatic animal health product for A.L. Oslo.
All transactions with A.L. Industrier 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.
CERTAIN OTHER TRANSACTIONS AND RELATIONSHIPS
Mr. I. Roy Cohen, who as of January 15, 1991 retired as President and Chief
Executive Officer, has a contract to act as a special consultant to the
Company for a ten-year period following such retirement (the "Consultant
Term"). During the Consultant Term, the Company is required to pay him a
minimum annual consideration ($135,500 for 1995) which may be increased to
reflect services rendered in excess of 40 days during the year, inflation and
other factors, and to provide him with an automobile allowance and certain
other employee benefits. Total amounts earned under such contract with respect
to 1995 were $160,500. 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.
Mr. Glen E. Hess' 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. David E. Cohen, a Vice President of the Company and President of the
Company's Animal Health Division, is the nephew of Mr. I. Roy Cohen.
Mr. Gert W. Munthe is a director of A.L. Industrier and the son-in-law of
Mr. Einar W. Sissener.
- 21 -
<PAGE>
INDEPENDENT AUDITORS
Coopers & Lybrand L.L.P. has been selected to serve as the Company's
independent certified public accountants for the fiscal year ending December
31, 1996. 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 1997 ANNUAL MEETING
In order to be considered for inclusion in the proxy statement for the 1997
Annual Meeting of Stockholders, stockholder proposals must be submitted to the
Company on or before December 5, 1996.
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
ALPHARMA INC.
YOUR VOTE IS IMPORTANT
PLEASE PROMPTLY COMPLETE AND SIGN THE ENCLOSED
FORM OF PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE
- 22 -
<PAGE>
APPENDIX I
ALPHARMA INC.
NON-EMPLOYEE DIRECTOR OPTION PLAN
1. PURPOSE OF THE PLAN
The purpose of this Plan is to promote the interests of the Company (i) by
tying more directly the compensation of directors to the performance of the
Company as measured by the market price of its stock and (ii) through aligning
more closely the interests of directors with the interests of the Company's
stockholders.
2. ADMINISTRATION
This Plan shall be administered by a committee of the Board of Directors of
the Company consisting of one or more directors (the "Director Options
Committee") appointed for such purpose by the Compensation Committee of the
Board of Directors. All questions of interpretation and application of this
Plan to options granted hereunder (the "Director Options") and of this Plan
and any related agreements and instruments shall be subject to the good faith
determination of the Director Options Committee, which shall be final and
binding on all persons. No member of the Committee shall be liable for
anything done or omitted to be done by him or her or by any other member of
the Committee in connection with the Plan, except for his or her own willful
misconduct or as expressly provided by statute.
3. DIRECTOR OPTION SHARES
The stock subject to the Director Options and other provisions of this Plan
shall be shares of the Company's Class A Common Stock, with $.20 par value
(hereinafter referred to as the "Class A Stock"). The aggregate number of
shares of Class A Stock authorized to be issued upon exercise of Director
Options and reserved for issuance under the Plan is 150,000. In the event that
application of any provision of this Plan would result in the issuance of, or
the right to purchase, any fractioned share of Class A Stock, the fraction
shall be rounded to a full share.
4. GRANTING OF DIRECTOR OPTIONS
Each director shall receive an option to purchase 2,000 shares of Class A
Stock immediately following each annual meeting of stockholders of the Company
at which such director is elected to serve on the Board of Directors of the
Company. If a director is elected or appointed to the Board of Directors other
than at the annual meeting of stockholders, such director shall receive as of
the date of such election or appointment an option to purchase a number of
shares of Class A Stock equal to (i) 2,000 multiplied by (ii) a fraction, the
numerator of which is the number of days remaining from the date of such
election or appointment until the anniversary of the preceding annual meeting
of the stockholders and the denominator of which is 365. The price at which
shares may be purchased pursuant to any Director Option shall be the fair
market value of the shares on the date that the Director Option is granted.
The grant of options provided for hereto shall be automatic and shall not
require any action of the Board of Directors or the Director Options
Committee.
5. ELIGIBILITY
The individuals who will be eligible to receive Director Options will be
each person elected or appointed as a director of the Company who is not also
an employee of the Company or any of its subsidiaries at the time such person
is so elected or appointed. A Director Option granted to a director under this
Plan shall continue to
<PAGE>
be effective in accordance with its terms notwithstanding that prior to or
subsequent to the grant of such option such director was or becomes an
employee of the Company or its subsidiaries.
6. TERMS OF DIRECTOR OPTIONS; VESTING
Each Director Option shall have a term of ten years from the date of grant
(the "Option Term"); provided that if a director ceases to be a director for
any reason, all Director Options held by such Director shall terminate on the
first anniversary of the date on which such individual ceases to serve as a
Director (the "Early Termination Date"). Each Director Option which has become
vested (as described below) may be exercised from time to time until the
earlier of (i) the end of the Option Term or (ii) the Early Termination Date,
in part or in whole, subject to such limitations that the Director Options
Committee, in its discretion, may specify at or prior to the time of grant.
The exercise price of each Director Option may be paid in cash or by delivery
of shares of Class A Stock previously acquired by the optionee having a fair
market value equal to the exercise price of the Director Option being
exercised. Each Director Option shall vest in full on the date of the first
annual meeting of stockholders following the date of grant of such option;
provided that if a person ceases to be a director for reason of disability or
death prior to such vesting date, a portion of any unvested Director Options
held by such director shall vest as of the day preceding the date such person
ceases to be a director for such reason, which portion shall be equal to (i)
the number of unvested Director Options held by such director multiplied by
(ii) a fraction, the numerator of which is the number of days such Director
has held such unvested option and the denominator of which is 365. If a
Director is removed from the Board or resigns other than for reasons of
disability or death, the unvested Director Options held by such director shall
not vest following such removal or resignation.
7. EXERCISE OF DIRECTOR OPTIONS
Director Options shall be exercised by the delivery of written notice to the
Company (Attention: Treasurer) setting forth the number of shares with respect
to which the Director Option is to be exercised and the address to which the
certificates for such shares are to be mailed, together with (i) cash
(including checks, bank drafts or postal or express money orders payable to
the order of the Company) or (ii), shares of Class A Stock, previously
acquired, having an aggregate value equal to the option price of such shares.
As promptly as practicable after receipt of such written notification and
payment, the Company shall deliver to the optionee certificates for the number
of shares with respect to which such Director Option has been so exercised
("Option Shares"), issued in the optionee's name; provided, that such delivery
shall be deemed effected for all purposes when such certificates shall have
been deposited in the United States mail, addressed to the optionee, at the
address specified pursuant to this paragraph. For all purposes, an optionee
shall be deemed to have exercised a Director Option and to have purchased and
become the holder of the Option Shares as of the date the Company receives
written notification of exercise and payment as provided herein.
8. TRANSFERABILITY OF DIRECTOR OPTIONS
Director Options shall not be transferable otherwise than by will or the
laws of descent and distribution and shall be exercisable during the
optionee's lifetime only by him or by his guardian or legal representative.
9. REQUIREMENTS IMPOSED BY LAW AND DIRECTOR OPTIONS COMMITTEE
The Company shall not be required to sell or issue any shares under any
Director Option if the issuance of such shares shall constitute a violation by
the optionee or by the Company of any provisions of any law or regulation of
any governmental authority. Any determination in this connection by the
Director Options Committee shall be final, binding and conclusive.
- 2 -
<PAGE>
The Company shall not be required to issue any shares upon exercise of any
option unless the Company has received the optionee's representation or other
evidence satisfactory to it to the effect that the holder of such Director
Option will not transfer such Option Shares in any manner which could
constitute a violation of any securities or other law, or which would not be
in compliance with such other conditions as the Director Options Committee may
deem appropriate.
The Director Options Committee may impose such other limitations on the
exercise of Director Options as it concludes are necessary to comply with
applicable law and carry out the intent and purpose of the Plan.
10. NO RIGHTS AS STOCKHOLDER
No optionee shall have rights as a stockholder with respect to shares
covered by a Director Option until the date of exercise of such Director
Option; and, except as otherwise provided in paragraph 12 hereof, no
adjustment for dividends, or otherwise, shall be made if the record date
therefore is prior to the date of exercise of such option.
11. NO OBLIGATION TO RETAIN DIRECTOR
The granting of any option shall not impose upon Company, its stockholders
or the Board of Directors any obligation to elect, appoint or retain any
person as a member of the Board of Directors; and the right to remove any
director as provided by applicable law shall not be diminished or affected by
reason of the fact that a Director Option has been granted to such Director.
12. CHANGES IN THE COMPANY'S CAPITAL STRUCTURE
The existence of outstanding Director Options shall not affect in any way
the right of power of the Company or its stockholders to make or authorize any
or all adjustment, recapitalizations, reorganization, or other changes in the
Company's capital structure or its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures or preferred or prior
preference stock senior to or otherwise affecting the Class A Stock or the
rights thereof, or the dissolution or liquidation of the Company, or any sale
or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or otherwise.
If the Company shall effect a subdivision or consolidation of shares or
other capital readjustment, or pay a dividend in shares of its Class A or
Class B Common Stock, then (a) the number, type, and per share price of shares
of stock subject to outstanding Director Options hereunder shall be
appropriately adjusted in such a manner as to entitle each optionee to receive
upon exercise of his Director Option, for the same aggregate consideration,
the same total number and type of shares as he would have received as a result
of the event requiring the adjustment had he exercise his Director Option in
full immediately prior to such event; provided, however, that if any such
adjustment would result in the right to purchase a fractional share, the
number of shares subject to the Director Option will be decreased to the next
lower whole number; and (b) the number and type of shares then reserved for
issuance under the Plan shall be adjusted by substituting for the total number
of shares of Class A Stock then reserved that number and type of shares of
stock that would have been received by the owner of an equal number of
outstanding shares of Class A Stock as the result of the event requiring the
adjustment.
If the Company shall be a party to any merger or consolidation or effect any
recapitalization which causes a change in the Class A Stock which does not
effect an adjustment under the prior paragraph, the Director Options
Committee, in its discretion, may, if it considers it to be appropriate to
carry out the intent and purpose of the
- 3 -
<PAGE>
Plan, make such adjustments in the nature or amount of securities subject to
the Director Options or the Director Option price as it considers appropriate,
and such adjustments shall be binding and conclusive of all holders of
Options.
Except as expressly provided herein, the issue by the Company of shares of
stock of any class, or securities convertible into shares of stock of any
class, for cash or property, or for labor or services either upon sale, or
upon the exercise or rights or warrants to subscribe therefore, or upon
conversion of other securities, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of
Class A Stock then subject to outstanding Director Options.
13. AMENDMENT OR TERMINATION OF PLAN
The Board of Directors of the Company may modify, revise or terminate this
Plan at any time and from time to time, except that none of the term of the
Plan, the eligibility of grantees, the aggregate number of shares reserved for
issuance pursuant to this Plan, the amount of Directors Options to be granted
to any director or the minimum option price shall, other than by operation of
paragraph 12 hereof, be modified or revised without the consent of the holders
of Class A and Class B Common Stock having a majority of the voting power. The
termination of the Plan by the Board of Directors shall not affect any
Director Options granted prior to such termination. The terms upon which
Directors Options are granted may not be amended more frequently than once
every six months (except to comply with applicable tax or other laws).
14. WRITTEN OPTION AGREEMENTS
Each Director Option granted hereunder may be embodied in a written option
agreement which shall contain such other provisions as the Director Options
Committee in its discretion shall deem advisable. The failure to provide a
written option agreement shall not affect the validity of Director Options
provided for herein or the rights of directors to receive and exercise such
options as herein provided.
15. DIRECTOR AND STOCKHOLDER APPROVAL; DURATION OF PLAN
This Plan has been duly adopted by the Board of Directors on March 14, 1996
and approved by the stockholders of the Company on May 30, 1996. This Plan
shall terminate on December 31, 2005 or by earlier action of the Board of
Directors pursuant to paragraph 13 hereof provided such termination shall not
affect any Director Options granted prior to such termination.
16. ELECTION TO RECEIVE SHARES IF SUBJECT TO DETRIMENTAL NON-U.S. INCOME TAX
CONSEQUENCES
If a person would be subject to significantly detrimental income tax
consequences as a result of receiving Director Options under any non-United
States income tax provisions, such person may elect (by written notice to the
Director Options Committee prior to the date of grant) to receive in lieu
thereof one share of Class A stock for every ten shares purchasable under the
Director Options such person would otherwise have received.
17. REFERENCE TO EMPLOYEE STOCK OPTION PLAN ("EMPLOYEE PLAN")
To the extent not inconsistent with the terms of this Plan, the terms and
provisions of the Employee Plan shall apply to any options granted hereunder.
- 4 -
