<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
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):
[_] No fee required.
[_] 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>
[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 28, 1997
-------------------------------------
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 U.N. PLAZA
HOTEL, ONE U.N. PLAZA, NEW YORK, NEW YORK, on Wednesday, May 28, 1997, 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 1998 Annual Meeting of Stockholders and
until their successors shall be elected and shall qualify.
2. A proposal to amend the Company's 1983 Incentive Stock Option Plan, as
amended, including increasing the number of shares available for awards
thereunder by 1,000,000 shares.
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, 1997 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 on Form 10-K for the year ended
December 31, 1996 and a Proxy Statement accompany this notice.
By order of the Board of Directors,
Beth P. Hecht
Secretary
April 7, 1997
<PAGE>
[LOGO]ALPHARMA
ALPHARMA INC.
One Executive Drive
P.O. Box 1399
Fort Lee, New Jersey 07024
MAILING DATE
APRIL 8, 1997
---------------------------------------------
Proxy Statement for Annual Meeting of Stockholders
---------------------------------------------
To Be Held on May 28, 1997
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 Wednesday, May 28, 1997 at
The U.N. Plaza Hotel, One U.N. Plaza, 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 1998 Annual Meeting of Stockholders and until
their successors shall be elected and shall qualify.
2. A proposal to amend the Company's 1983 Incentive Stock Option Plan, as
amended, (the "Stock Option Plan" or the "Plan") including increasing the
number of shares available for awards thereunder by 1,000,000 shares.
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, 13,539,060 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 amending the Stock Option 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.
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.)
Amendment of 1983 Incentive Stock Option Plan. Approval of the proposal to
amend the Stock Option Plan requires the affirmative vote of a majority of the
votes cast by the holders of the Class A Stock and Class B Stock, voting
together, present and entitled to vote at the meeting.
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 and to vote for, against or abstain from voting
on the proposal to amend the Stock Option 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), (ii) for the proposal to amend the Stock Option
Plan and
- 2 -
<PAGE>
(iii) 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. With respect to amendment of the Stock Option 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, 1997 (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 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
COMMON
AMOUNT AND PERCENT STOCK
NATURE OF OF (BOTH
TITLE OF CLASS BENEFICIAL CLASS CLASSES)
OF STOCK NAME OF BENEFICIAL OWNER OWNERSHIP OUTSTANDING OUTSTANDING
-------------------- ------------------------ ---------- ----------- -----------
<C> <S> <C> <C> <C>
Class B Common Stock A.L. Industrier AS 9,500,000 100.00% 41.23%
(1)(2)
Class A Common Stock A.L. Industrier AS 0 * *
(1)(2)(3)
Class A Common Stock Wellington Management 2,023,280 14.94 9.30
Company, LLP (4)
Class A Common Stock State of Wisconsin 1,267,600 9.36 5.82
Investment Board (5)
Class A Common Stock Mellon Bank Corporation 1,103,000 8.15 5.07
(6)
Class A Common Stock Fidelity Management & 778,500 5.75 3.58
Research Co. (7)
Class A Common Stock Einar W. Sissener 233,250 1.72 1.07
(8)(14)
Class A Common Stock I. Roy Cohen (13) 30,044 * *
Class A Common Stock Thomas G. Gibian (13) 4,150 * *
Class A Common Stock Glen E. Hess (13) 6,725 * *
Class A Common Stock Gert W. Munthe (9)(14) 110,494 * *
Class A Common Stock Erik G. Tandberg 2,275 * *
(10)(13)(14)
Class A Common Stock Peter G. Tombros (13) 2,700 * *
Class A Common Stock Jeffrey E. Smith 78,062 * *
(11)(13)
Class A Common Stock David E. Cohen (13) 46,593 * *
Class A Common Stock George S. Barrett (13) 34,079 * *
Class A Common Stock Ingrid Wiik (12)(13)(14) 7,444 * *
Class A Common Stock Thor Kristiansen 8,165 * *
(13)(14)
Class A Common Stock All directors and
executive officers as a
group (18 persons)
(13)(14)(15) 563,981 4.17 2.59
</TABLE>
- ---------------------
* Indicates ownership of less than one percent.
(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 Harbitzalleen 3, 0275 Oslo,
Norway.
(2) The source of this information is Amendment No. 1 to the Schedule 13D,
dated February 20, 1997, filed with the Securities and Exchange
Commission (the "Commission") by A.L. Industrier A.S.
("A.L. Industrier"). The shares of Class B Stock reflected in the table
include 1,273,438 shares which A.L. Industrier has irrevocably agreed to
purchase in a transaction expected to close on or prior to November 30,
1997. The balance of the shares reflected in the table 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, A.L. Industrier will pledge up to 2,000,000
shares to a
- 4 -
<PAGE>
Norwegian bank as collateral borrowings to be made in connection with the
purchase of Class B Stock referred to above. A.L. Industrier has agreed
with the Company that, other than pledges of up to 50% of the 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, 1999 without the prior
approval of the Company's Board of Directors.
(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, 1997, A.L. Industrier would own
41.23% of the then outstanding shares of Class A Stock.
(4) The source of this information is the Amendment No. 6 to Schedule 13G
dated February 11, 1997 and filed with the Commission by Wellington
Management Company, LLP ("WMC"). Such Amendment No. 6 to Schedule 13G
reported that WMC, acting as an investment adviser, has shared voting
power and shared dispositive power with respect to 747,140 shares and
2,023,280 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. Vanguard reported in Amendment No. 5 to Schedule
13G dated February 4, 1997, which was filed with the Commission by
Vanguard, that it had sole voting power and shared dispositive power with
respect to 1,156,040 shares. The address of WMC is 75 State Street,
Boston, Massachusetts 02109. The address of Vanguard is P.O. Box 2600,
Valley Forge, Pennsylvania 19482.
(5) The source of this information is the Amendment No. 1 to Schedule 13G
dated February 7, 1997 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. Such Amendment No. 1 reports
that the Wisconsin Board retains sole voting and dispositive power for
all shares.
(6) The source of this information is from data supplied by Technimetric, Inc
and the Schedule 13G, dated January 24, 1997 and filed with the
Commission by Mellon Bank Corporation ("Mellon Bank"). Such Schedule 13G
reports that Mellon Bank has the sole voting power for 1,098,000 shares
and shared dispositive power for 1,019,000 shares of which The Dreyfus
Corporation holds 914,000 of such shares. The address of Mellon Bank is
One Mellon Bank Center, Pittsburgh, Pennsylvania 15258.
(7) The source of this information is the Schedule 13G, dated February 14,
1997 and filed with the Commission by FMR Corp. Such Schedule 13G
reported that FMR Corp. has the sole voting and dispositive power for
25,500 shares and the sole dispositive power for 778,500 shares.
(8) 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
55% of A.L. Industrier's outstanding ordinary shares entitled to vote
and, accordingly, may be deemed a controlling person of A.L. Industrier.
(9) Includes presently exercisable Warrants to purchase 110,094 shares of
Class A Stock in the name of Mr. Munthe's wife. (see footnote (15)
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.
(10) Includes presently exercisable Warrants to purchase 75 shares of Class A
Stock. Mr. Tandberg also owns eight A.L. Industrier Shares.
- 5 -
<PAGE>
(11) 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.
(12) 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. Ms. Wiik owns 565 A.L. Industrier Shares.
(13) The shares reflected in the table include shares that the executive
officer or director has the right to acquire upon the exercise of stock
options granted under the Stock Option Plan or the Non-Employee Director
Option Plan which are exercisable as of March 1, 1997 or within 60 days
thereof as follows: Mr. Smith--69,000 shares; Mr. D. Cohen--40,750
shares; Ms. Wiik--4,000 shares; Mr. Kristiansen--3,500 shares; Mr.
Barrett--20,500; Messrs. I. Roy Cohen, Gibian, Hess, Tandberg and
Tombros--2,000 shares; and all named executive officers and directors as
a group--147,750 shares.
(14) 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), Mr.
Tandberg, Mr. Kristiansen 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 are 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, Ms.
Wiik and Mr. Kristiansen reflected in the table includes currently
exercisable Warrants to purchase 110,094, 74, 5,271 and 4,665 shares,
respectively.
(15) Excludes Mr. Barrett, who prior to December 31, 1996 ceased being an
officer with the Company.
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.
- 6 -
<PAGE>
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. Gibian........ 75 Director of the Company since March, 1993. President and
Chief Executive Officer of Henkel Corporation, a specialty
chemicals manufacturer and United States subsidiary of Henkel
KGaA, from 1980 to 1986.
Peter G. Tombros........ 54 Director of the Company since September, 1994. Director,
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>
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............ 74 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............ 55 Director of the Company since September, 1983. Partner in the
law firm of Kirkland & Ellis since 1973.
Gert W. Munthe.......... 40 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 to
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....... 68 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 Alpharma AS
("Alpharma 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........ 67 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>
- 7 -
<PAGE>
BOARD OF DIRECTORS AND COMMITTEES
BOARD MEETINGS AND ATTENDANCE OF DIRECTORS
The Company's Board of Directors held 5 meetings in 1996. Each person who
served as a director in 1996 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.
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 and revised in 1997. 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. Thomas G. Gibian (Chairman), Erik
G. Tandberg and Peter G. Tombros. The Audit Committee held 6 meetings in 1996.
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 current members of the Executive
Committee are Messrs. I. Roy Cohen (Chairman), Einar W. Sissener and Gert W.
Munthe. The Executive Committee held 2 meetings in 1996 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 two members of the
committee (Messrs. Tombros and Gibian) serve as the committee administering
the Stock Option Plan, with authority to grant options to eligible employees
of the Company and its subsidiaries. The Compensation Committee held 7
meetings in 1996.
- 8 -
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are Messrs. Peter G. Tombros
(Chairman), I. Roy Cohen, Thomas G. Gibian and Glen E. Hess. 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.
DIRECTORS' COMPENSATION
During 1996, each director (except Mr. Sissener) received directors' fees of
$22,500 and a grant of an option to acquire 2,000 shares of Class A Stock
pursuant to the Non-Employee Director Option Plan adopted by the stockholders
of the Company on May 30, 1996 (or in the case of Mr. Munthe, a grant of 200
shares). 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 1997.
PROPOSAL TO AMEND THE STOCK OPTION PLAN
GENERAL
The Stock Option Plan of the Company originally was adopted by the Company's
Board of Directors on September 26, 1983 and approved by the Company's
stockholders on January 25, 1984. The Plan has been amended in various
respects, with certain amendments having been approved by stockholders. As of
March 10, 1997, the Plan provided that no more than 2.5 million shares were
available for grant under the Plan. At such date a total of 887,775 shares
were reserved for issuance pursuant to outstanding options under the Plan,
824,311* shares were available for the issuance of future options to be
granted under the Plan and 787,914 shares had been issued pursuant to options
under the Plan. On March 21, 1997 the Company's Board of Directors approved an
amendment and restatement of the Plan (the "1997 Restatement") which amended
the Plan in various respects. At the annual meeting a resolution will be
submitted seeking approval of the stockholders for that part of the 1997
Restatement (the "Proposal") which (1) increases the maximum number of shares
available for grant under the plan to 3.5 million shares and (2) expands
flexibility to grant stock appreciation units ("Units") under the Plan. Other
amendments included in the 1997 Restatement which do not require, and will not
be submitted for, stockholder approval include (1) changing the name of the
Plan to the "1997 Incentive Stock Option and Appreciation Right Plan," (2)
providing that awards under the Plan may be transferred to such transferees
and on such terms and conditions as the Committee administering the Plan may
approve; (3) permitting options to be exercised up to two years following the
termination of a participant's employment; and (4) eliminating certain
provisions relating to Section 16(b) of the Securities Exchange Act of 1934,
as amended.
The purpose of the Plan is to enhance the Company's ability to attract,
retain and provide incentive to present and future executive, managerial,
marketing, technical and other key employees of the Company and its
- ---------------------
* It should be noted that the 453,750 options granted by the Committee on
March 13, 1997 are not reflected in these numbers.
- 9 -
<PAGE>
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 or Units based on the value of the Class A Stock. The
Company's Board of Directors believes that the Plan has been successful to
date in accomplishing its purpose, and that the Proposal will further this
purpose. See "Report of the Compensation Committee." Information regarding
options granted during the last fiscal year to each named executive officer is
set forth below under "Information Regarding Executive Compensation--Summary
Compensation Table."
The numbers of shares underlying options granted during 1996 to all current
executive officers as a group and all employees (including executive officers)
as a group were 34,000 shares and 34,000 shares, respectively. The Plan does
not permit options to be granted to directors who are not employees although
such directors may receive options under the Non-Employee Director Option
Plan. See "Board of Directors and Committees--Directors Compensation."
As of March 10, 1995, approximately 152 people held options under the Plan.
The grant of options or units under the Plan is determined by the Committee
and thus future grants to any individual under the Plan cannot be determined.
As described in the Report of the Compensation Committee, options were granted
on March 13, 1997 under the Plan to 137 key personnel, including all of the
named executive officers except for the Chairman. As a result, no new options
are currently proposed to be issued under the Plan to any specific individuals
in 1997.
Approval of the proposal to amend the 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 votes
for approval. A.L. Industrier has advised the Company that it intends to vote
its shares in favor of the proposal, which would assure its approval. The
material features of the Plan, as amended (including the 1997 Restatement),
are described below.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
PROPOSAL.
SUMMARY DESCRIPTION OF THE COMPANY'S 1997 INCENTIVE STOCK OPTION PLAN
(FORMERLY 1983 INCENTIVE STOCK OPTION PLAN)
Attached as an appendix to this Proxy Statement is a copy of the 1997
Incentive Stock Option Plan (formerly 1983 Incentive Stock Option Plan and
hereafter referred to as the "Plan") and the following summary description is
qualified in its entirety by reference to such appendix.
General. The Plan provides for the issuance by a Committee of the Company's
Board of Directors appointed for such purpose (the "Committee") of options to
acquire shares of the Company's Class A Stock and stock appreciation units
which entitle the grantee to receive a payment equal to the difference between
(i) the base value and (ii) the fair market value of a share of Class A Stock
on the maturity date (as defined in the Plan) of the unit. The Plan is
administered by a committee of the Company's Board of Directors appointed for
such purpose (the "Committee"). The individuals who are eligible to
participate in the Plan are such executive, managerial, marketing, technical
and other key employees of the Company and its subsidiaries as the Options
Committee determines from time to time. In the discretion of the Committee,
options granted under the Plan may be either "incentive stock options" as such
term is defined in Section 422 of the United States Internal Revenue Code of
1986, as amended ("Incentive Stock Options"), or options which do not meet
such definition. The number of shares which may be subject to options granted
or on which units may be issued under the Plan shall be determined by the
Committee in its discretion and shall be subject to adjustment for any stock
splits, recapitalization or other changes in the Company's capital structure.
Options or units for more than 100,000
- 10 -
<PAGE>
shares (subject to adjustment for any stock splits, recapitalization and other
changes in the Company's capital structure) may not be granted to any
participant in any taxable year.
Options. At the time the option is granted, the Committee specifies the
price at which shares may be purchased pursuant to any option, and such price
may not be less than the fair market value of the shares on the date that the
option is granted. The exercise price 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 options being exercised. The
Committee also determines the term of each option, which in no event may
exceed ten years (in the case of an Incentive Stock Option) or ten years and
one month (in the case of any other option) from the date of grant. If for any
reason the full number of shares covered by any option are not issued before
the option expires or terminates, shares not issued under such option are
again available for the grant of options under the Plan.
Each option may be exercised from time to time during its term, in part or
in whole, subject to such vesting requirements and any other limitations that
the Committee, in its discretion, may specify at the time of grant. Unless the
Committee otherwise determines at the time of grant, options become
exercisable (or vest) at the rate of 25% per year that the employee holds such
options so that options do not become fully exercisable until four years from
the date of grant. Subject to certain limitations, the Committee may, in its
discretion: (i) accelerate the time at which any outstanding option or part
thereof shall become exercisable and (ii) extend the time during which any
outstanding option may be exercised, provided that no option may be exercised
more than ten years (in the case of an Incentive Stock Option) or ten years
and one month (in the case of any other option) after the date of grant.
Stock Appreciation Units. Prior to the 1997 Restatement, the Plan provided
that the Committee, in its discretion, may confer upon the grantee of any
option under the Plan the right to exercise, with respect to shares of Class A
Stock which could be purchased under the option otherwise exercisable under
the Plan, an alternative cash settlement right in lieu of purchasing shares
under such option. Such right could have been conferred at the time the
options are granted or with respect to outstanding options. An alternative
cash settlement right means the right, in lieu of purchasing shares under an
option which is otherwise exercisable under the Plan, to receive a payment in
cash equal to the excess of the value of one share of Class A Stock over the
option price set forth in the option, times the number of shares as to which
the alternative cash settlement right is exercised. Under the Plan as amended
by the 1997 Restatement, the Committee is given discretion to grant units
having such maturity date as the Committee may specify (including units which
are "exercisable" by the grantee through his or her selection of the maturity
date). The number of units granted and the terms and conditions of all units
shall be determined by the Committee. The base value of a unit shall not be
less than the fair market value of a share of Class A Stock on the date of
grant and no unit shall have a maturity date later than ten years and one
month after the date of grant. Unless the Committee shall otherwise determine,
each unit shall have a base value equal to the fair market value of the Class
A Stock on the date of grant, shall have a maturity date which is the fifth
anniversary of the date of grant and shall provide that the grantee is not
entitled to payment unless such employee has remained an employee of the
Company from the date of grant to the maturity date (except in the event of
death or retirement, in which case the maturity date shall be the date the
employee ceases to be employed by the Company or a subsidiary).
Transferability of Options. Options and units are not transferable otherwise
than by will or the law of descent and distribution, except to such
transferees and on such terms as the committee may approve.
Termination of Employment or Death of Optionee. Except as expressly provided
in the Plan, options terminate on the earlier of: (i) the date of expiration
thereof, (ii) immediately upon termination of the
- 11 -
<PAGE>
employment relationship between the Company and the optionee for cause, or
(iii) 30 days (or up to two years if the Committee so provides) after
termination of the employment relationship between the Company and the
optionee without cause for any reason other than death, retirement in good
standing or disability.
If an optionee dies while in the employ of the Company and before the date
of expiration of an option, such option terminates on the earlier of such date
of expiration or two years following the date of such death. After the death
of an optionee, his or her executors or administrators have the right, at any
time prior to the termination of such option, to exercise such option to the
extent that such option was vested immediately prior to his or her death.
If the optionee is retired in good standing from the employment of the
Company for reason of age or disability before the date of expiration of an
option, such option terminates on the earlier of such date of such expiration
or a date from 90 days to two years (as the Committee determines) after the
date of such retirement. In the event of such retirement the optionee has the
right prior to the termination of such option to exercise the option to the
extent to which he or she was entitled to exercise such option immediately
prior to such retirement.
Tax Consequences. The following discussion is intended only as a brief
summary of the United States Federal income tax consequences of the grant and
exercise of options and units. The discussion addresses only the United States
Federal income tax consequences to employees who are citizens or residents of
the United States and who perform services within the United States. Some
employees who are employees of the Company's foreign subsidiaries may be
subject to tax under the law of the country where they are citizens or
residents, which may differ significantly from the United States income tax
law. The laws governing the tax aspects of stock options and stock
appreciation rights are highly technical, and such laws are subject to change
at any time, which could be retroactive in nature.
The Committee has the discretion to grant either (i) Incentive Stock Options
with the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended, or (ii) options which do not qualify as Incentive Stock Options and
which shall be referred to herein as "nonstatutory options." The United States
income tax consequences will vary depending on which type of option is
granted.
Tax Consequences of Incentive Stock Options to United States Citizens or
Residents. An optionee generally will not recognize taxable income or loss on
the grant or exercise of an Incentive Stock Option, but he may incur
alternative minimum tax liability on exercise of the Incentive Stock Option.
Neither the Company nor any subsidiary will be entitled to any deduction on
the grant or exercise of an Incentive Stock Option.
An optionee's tax consequences from the sale or other disposition of shares
acquired on the exercise of an Incentive Stock Option will depend on when such
sale or disposition occurs. If the optionee holds the option shares for more
than two years after the Incentive Stock Option was granted and for more than
one year after the Incentive Stock Option was exercised (the "Required Holding
Periods"), he will recognize long-term capital gain or loss when he sells or
disposes of his shares equal to the difference between the proceeds he
receives and his tax basis in the option shares (generally the exercise price
paid for the shares, except as otherwise discussed below). In such case,
neither the Company nor any subsidiary will be entitled to a deduction on the
optionee's sale or disposition of his shares.
If an optionee sells the shares acquired upon exercise of an option without
satisfying the Required Holding Periods (a "Disqualifying Disposition"), he
generally will recognize ordinary taxable income, and the Company, or a United
States subsidiary, if the subsidiary is the optionee's employer, will be
entitled to a deduction for the amount of ordinary income taxed to the
optionee. The amount of ordinary income taxable to the optionee (and the
corresponding deduction) is calculated by deducting the option price from the
lesser of (i) the fair market
- 12 -
<PAGE>
value of the shares on the exercise date and (ii) the price at which the
optionee sells or otherwise disposes the shares (unless such sale or
disposition is to a related party, in which case the fair market value must be
used even if the sales price is lower). If the price at which the optionee
sells the shares exceeds the shares' fair market value on the exercise date,
the excess will be taxed as capital gain. This capital gain will be either
long or short-term depending on whether the optionee held the shares for more
than one year. Neither the Company nor any subsidiary will be entitled to a
deduction for the capital gain.
If an optionee delivers previously-acquired Class A Stock (other than stock
acquired upon exercise of an Incentive Stock Option and not held for the
Required Holding Periods) in payment of all or part of the option price of an
Incentive Stock Option, the optionee generally will not be required to
recognize as taxable income or loss any appreciation or depreciation in the
value of the previously-acquired stock after its acquisition date. The
optionee's tax basis in, and holding period (for capital gain, but not
Disqualifying Disposition, purposes) for, the previously-acquired stock
surrendered carries over to an equal number of the option shares received on a
share-for-share basis. Shares received in excess of the number of shares
surrendered have a tax basis equal to the amount paid (if any) in excess of
the previously-acquired shares used to pay the exercise price, and the holding
period of those excess shares will begin on the date of exercise. Proposed
regulations provide that where an Incentive Stock Option is exercised using
previously-acquired stock, a later Disqualifying Disposition of the shares
received will be deemed to have been a disposition of the shares having the
lowest basis first.
If an optionee pays the exercise price of an Incentive Stock Option in whole
or in part with Class A Stock that was previously acquired upon the exercise
of an Incentive Stock Option and that has not been held for the Required
Holding Periods, the optionee will recognize ordinary taxable income with
respect to the shares surrendered under the rules applicable to Disqualifying
Dispositions. The Company will be entitled to a corresponding deduction. The
optionee's basis in the shares received in exchange for the shares surrendered
will be increased by the amount of ordinary income recognized by the optionee.
Tax Consequences of Nonstatutory Options and Stock Appreciation Units to
United States Citizens or Residents. In general, upon the grant of a
nonstatutory option or unit, the grantee will not recognize taxable income or
loss, and neither the Company nor any subsidiary will be entitled to a
deduction.
Upon the exercise of a nonstatutory option or the amount by which the fair
market value of the shares at the time of exercise exceeds the option price
will constitute ordinary taxable income to the optionee. Payment of amounts
due to an employee pursuant to a stock appreciation unit will constitute
ordinary taxable income to the employee at the time of payment. The Company,
or if the optionee is employed by a subsidiary of the Company, the subsidiary,
will be entitled to a corresponding deduction. In the event the Company makes
payment pursuant to a unit in the form of shares of Class A Stock, the
employee's basis in such stock will equal the fair market value thereof on the
date of payment.
If an optionee delivers previously-acquired Class A Stock, however acquired,
in payment of all or part of the option exercise price of a nonstatutory
option, the optionee generally will not, as a result of such delivery, be
required to recognize as taxable income or loss any appreciation or
depreciation in the value of the previously-acquired stock after its
acquisition date. The optionee's tax basis in, the holding period for, the
previously-acquired stock surrendered carries over to an equal number of the
option shares received on a share-for-share basis. The excess of the fair
market value of the shares received over the option exercise price constitutes
compensation taxable to the optionee as ordinary income. Such fair market
value is determined on the date of exercise. Shares received in excess of the
number of shares surrendered have a tax basis equal to their fair market value
on the exercise date, and their holding period begins on the exercise date.
The Company generally is entitled to a tax deduction equal to the compensation
income recognized by the optionee.
- 13 -
<PAGE>
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 1996, 1995 and 1994:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------- ------------
OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL COMPENSATION OPTIONS/SARS COMPENSATION
POSITION DURING 1996 YEAR SALARY($) BONUS($) ($) (#)(1) ($)
-------------------- ---- ---------- --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Einar W. Sissener (5)... 1996 365,839(6) 0 * 0 19,515(8)
(Chairman, Director,
and 1995 384,395(6) 0 * 0 32,583(8)
Chief Executive Offi-
cer) 1994 341,263(2) 75,000 * 0 0
Jeffrey E. Smith........ 1996 355,004 0 * 0 26,416(3)
(Vice President--Fi-
nance 1995 355,066 40,000 * 15,000 21,300(3)
and Chief Financial Of-
ficer) 1994 365,630 50,000 * 9,000 15,573(3)
David E. Cohen.......... 1996 290,004 0 * 0 18,318(3)
(Vice President and
President-- 1995 279,994 100,000 * 15,000 16,800(3)
Animal Health Division) 1994 260,000 110,000 * 9,000 12,269(3)
George S. Barrett (9)... 1996 293,884 0 * 0 15,351(3)
(Vice President and
President-- 1995 279,615 40,000 * 15,000 10,066(3)
U.S. Pharmaceuticals
Division) 1994 259,615 116,110(4) * 7,000 11,244(3)
Ingrid Wiik (5)......... 1996 184,543(7) 0 * 0 47,006(8)
(Vice President and
President-- 1995 176,305(7) 31,515 * 15,000 41,358(8)
International Pharma-
ceuticals 1994 41,020(7) 0 * 8,000 0
Division)
Thor Kristiansen (5).... 1996 166,269(7) 0 * 0 43,219(8)
(Vice President and
President-- 1995 154,764(7) 25,212 * 15,000 41,852(8)
Fine Chemicals Divi-
sion) 1994 28,842(7) 0 * 7,000 0
</TABLE>
- ---------------------
* 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
1996, 1995, and 1994 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 Stock Option Plan. The Company has not
granted any stock appreciation rights ("SARs") to any of the named
executive officers in 1994, 1995 or 1996.
(2) In 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.
- 14 -
<PAGE>
(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.
(5) The table does not include compensation for Mr. Sissener, Mr. Kristiansen
or Ms. Wiik from Alpharma Oslo prior to the acquisition of Alpharma 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 his 1996 salary was
reduced by $64,302 from the minimum amount specified in his employment
agreement.
(7) Includes fees from the Company for services on the Board of Directors of
Dumex Alpharma AS and other subsidiaries of the Company after October,
1994.
(8) Reflects pension premiums paid to a Norwegian insurance company to fund
pension payments for executive officers.
(9) Mr. Barrett ceased to be an officer of the Company prior to December 31,
1996.
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 Alpharma 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 Alpharma 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
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 ceased being an officer of the Company prior to
December 31, 1996. Pursuant to his employment termination arrangement, Mr.
Barrett will be paid one year's base salary with certain benefits through
December 31, 1997.
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 have another executive position after
such twelve month period, he will be paid his base salary with certain
benefits until he takes another position for up to six months thereafter. Mr.
Cohen participates in all of the employment benefits available to executives
of the Company.
Ms. Ingrid Wiik is a party to an employment arrangement with Alpharma 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
- 15 -
<PAGE>
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 Alpharma Oslo. (See "Retirement Plans").
Mr. Thor Kristiansen is a party to an employment arrangement with Alpharma
Oslo which provides that in the event he (x) is terminated without cause or,
(y) wishes to terminate his employment due to organizational changes or other
significant changes of his working conditions or responsibilities which he
does not wish to accept, in both cases he is entitled to receive salary and
certain other benefits for a period of eighteen (18) months thereafter. Mr.
Kristiansen participates in all of the employment benefits available to
executives of Alpharma Oslo (See "Retirement Plans").
ANNUAL PERFORMANCE INCENTIVE PLAN
In March 1997 the Company approved a new Annual Performance Incentive Plan
which provides that all executive officers will be entitled to receive a cash
bonus within a target range (and subject to certain individual performance
factors) if the Company's earnings per share meets a base level and the
appropriate operating group achieves certain operating income levels relative
to its budget. Higher bonuses may be paid if specified income levels are
exceeded but no bonuses will be payable if the applicable income thresholds
are not met. Messrs. Smith and D. Cohen have target bonus levels of 30% of
base salary with possible increases which are subject to exceeding base income
targets and achieving certain individual performance goals. As with
substantially all international employees, the target bonus level for Ms. Wiik
and Mr. Kristiansen in 1997 is 4%. The Performance Incentive Plan has become
effective with respect to 1997.
GRANTS OF OPTIONS
The Company did not grant any options to the named executive officers in
1996.
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, 1996.
1996 AGGREGATED OPTION EXERCISES AND YEAR-END VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
NUMBER OF UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT 12/31/96 (1) OPTIONS AT 12/31/96
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 69,000 22,000 83,689 0
David E. Cohen.......... 3,000 17,376 40,750 21,250 65,376 0
George S. Barrett....... 0 0 20,500 3,500 0 0
Ingrid Wiik............. 0 0 4,000 19,000 0 0
Thor Kristiansen........ 0 0 3,500 18,500 0 0
</TABLE>
- ---------------------
(1) All grants are options under the Company's Stock Option Plan.
(2) Value is based on the closing price of a share of Class A Common Stock on
December 31, 1996 ($14.625) minus the exercise price.
- 16 -
<PAGE>
RETIREMENT PLANS
Messrs. Jeffrey E. Smith, David E. Cohen and George S. Barrett are
participants in the Alpharma Inc. Pension Plan (a qualified defined benefit
plan) (the "Pension Plan"). Mr. Sissener, Ms. Wiik and Mr. Kristiansen 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" (($27,576 for 1996) plus (ii) 1.45% of the participant's highest
five-year Final Average Compensation in excess of "covered compensation"
($27,576 for 1996), 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.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
------------------------------------------------------------
REMUNERATION (1) 15 20 25 30 35 (2)
- ---------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000 $ 24,499 $ 32,665 $ 40,831 $ 48,998 $ 48,998
$150,000 29,936 39,915 49,894 59,873 59,873
$175,000 35,374 47,165 58,956 70,748 70,748
$200,000 40,811 54,415 68,019 81,623 81,623
$225,000 46,249 61,665 77,081 92,498 92,498
$250,000 51,686 68,915 86,144 103,373 103,373
$300,000 62,561 83,415 104,269 125,123 125,123
$400,000 84,311 112,415 140,519 168,623 168,623
$450,000 95,186 126,915 158,644 190,373 190,373
$500,000 106,061 141,415 176,769 212,123 212,123
</TABLE>
- ---------------------
(1) Final average compensation. Current Federal pension law limits average
annual compensation considered for benefit purposes to $150,000 for 1996
and $160,000 for 1997.
(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 1996, the
respective amounts of the compensation of Messrs. Smith, Cohen and Barrett
would have been $355,004, $290,004, and $293,884, 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 1996 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
- 17 -
<PAGE>
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, 1996 to such officers were as follows: Mr. Smith--12 years, Mr.
Cohen--21 years and Mr. Barrett--6 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, Ms. Ingrid Wiik and Mr. Thor Kristiansen are active
participants in the pension plan of Alpharma 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 difference between (i) 60% of such participant's Final Compensation
(as defined below) and (ii) the social security benefit (187,300 Norwegian
Kroner ("NOK") or approximately $28,962 for 1996) 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 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 23,716 31,621 39,027 47,432 47,432
$150,000 31,216 41,621 82,027 62,432 62,432
$175,000 38,716 51,621 84,527 77,432 77,432
$200,000 46,218 61,621 77,027 92,432 92,432
$225,000 63,716 71,621 89,527 107,432 107,432
$250,000 61,216 81,621 102,027 122,432 122,432
$300,000 78,216 101,621 127,027 152,432 152,432
$400,000 106,216 141,621 177,027 212,432 212,432
$450,000 121,216 161,621 202,027 242,432 242,432
$500,000 138,216 181,621 227,027 272,432 272,432
</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, 1996 of NOK 6.79 to $1.00.
(2) Final compensation.
(3) The Plan provides that there is a maximum of 30 years of service for
computation of benefits.
- 18 -
<PAGE>
For purposes of determining a benefit under the Oslo Pension Plan, salary or
bonus payable by the Company or a subsidiary other than Alpharma 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 1996, the
amount of his Final Compensation for purposes of calculating his pension
benefits under the Oslo Pension Plan would have been NOK (1,200,000) (or
approximately $176,163). If Ms. Wiik were to retire with her last year of
service being 1996, the amount of her Final Compensation for purposes of
calculating her benefits under the Oslo Pension Plan would have been NOK
1,080,000 or approximately $158,952. If Mr. Kristiansen were to retire with
his last year of service being 1996, the amount of his Final Compensation for
purposes of calculating his benefits under the Oslo Pension Plan would have
been NOK 995,000 or approximately $146,324. It should be noted that payments
under the Oslo Pension Plan are indexed, such that the amount of such payments
are increased by the same percentage as any increase in Norwegian Social
Security benefits. 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 has accrued the maximum
thirty years of service and Ms. Wiik and Mr. Kristiansen have each accrued
twenty-five years of service (including those accrued when each was employed
by unaffiliated companies) 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 1996, two members of the Compensation Committee (Messrs. Gibian and
Tombros) also served as the committee established under the Company's 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.
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. 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 three
principal components of senior executive compensation--salaries, bonuses and
long-term stock-based incentives. 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. Prior to 1996, bonuses
were determined annually on the basis of an informal plan which set potential
bonus targets related to individual base salary, with a portion of each
potential bonus based on individual performance during the year, a second
portion based on the performance of the business unit for which the executive
was responsible and a third portion based on the Company's performance for
such year. Executives whose responsibilities were broader than a particular
business unit had a larger portion
- 19 -
<PAGE>
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 had a greater proportion of their bonus dependent on
individual performance. In general, performance was 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.
During 1996, the Committee met on a regular basis with the Vice President--
Human Resources who joined the Company in April 1996. The Committee requested
the Vice President--Human Resources to develop a new incentive program with
annual bonus criteria which more consistently correlated bonus levels to
individual performance and to key corporate performance criteria, including
net income per share, operating income, and other factors. The Committee also
discussed the different business, tax, employee benefits and other factors
relevant to compensation payable to non-U.S. personnel and how the new
incentive program might deal with those differences. The Committee also
requested the Vice President--Human Resources to review the Company's prior
practices with respect to the grant of stock options and to develop a long-
term compensation program utilizing stock options or other stock-based awards
which would enhance the alignment of interests of key personnel with those of
shareholders. In addition, in connection with its review of the Company's
program for the granting of stock options, the Committee reviewed and approved
the amendments to the Company's 1983 Incentive Stock Option Plan which are
described herein.
With respect to 1996, the Committee did not approve any bonus payments for
the Company's executive officers and other key personnel. The determination
not to award cash bonuses was based on (i) the Company's disappointing 1996
operations which resulted in a net loss, (ii) the failure of any of the
Company's five principal operating divisions to attain their budgeted
performance, (iii) management's recommendations and advice that the base
salaries of the Company's executive officers and other highly paid personnel
were generally in line with comparable personnel at competitive companies and
(iv) the anticipation that an improved annual incentive bonus program and an
enhanced stock-based long-term incentive plan would be implemented for key
personnel in 1997 and future periods. On the basis of the same factors, the
Committee approved only small base salary increases for a limited number of
executive officers and other highly paid personnel.
In March 1997 the Company approved a new Annual Performance Incentive Plan
which provides that all executive officers and other highly paid personnel
will be entitled to receive a cash bonus within a target range if the
Company's earnings per share meets a base level and the appropriate operating
group achieves certain operating income levels relative to its budget. Higher
bonuses may be paid if specified income levels are exceeded but no bonuses
will be payable if the applicable earnings per share threshold is not met. The
Performance Incentive Plan has become effective with respect to 1997.
In March, 1996, the Committee approved an employment contract with the CEO
which continued his employment relationship through the 1999 Annual Meeting of
Stockholders at a base salary of $450,000. In view of the Company's
disappointing performance in 1996, the CEO unilaterally waived the receipt of
a portion of base salary for the fourth quarter of 1996 and requested that,
notwithstanding the provisions of his contract, he not be considered for any
bonus with respect to 1996. The Committee accepted the CEO's request with
respect to 1996. The CEO will not participate in the Annual Performance
Incentive Plan but is entitled under his employment agreement to receive a
bonus up to 100% of his salary as recommended by the Committee. After
discussion of the CEO's performance in 1996, the Committee reviewed with the
CEO and set the earnings, sales and stock price levels which would be the key
factors for judging the CEO's 1997 performance. The Committee also reviewed
the CEO's succession plans and recommendations.
The only stock options recommended by the Compensation Committee in 1996
were grants of options for 34,000 shares to several officers and highly paid
personnel who joined the Company during the year. The failure
- 20 -
<PAGE>
to grant any options to existing personnel in 1996 was based on the
anticipated adoption of a new stock-based long-term incentive program referred
to above and delays in adopting such a program as a result of certain tax
developments in Norway which adversely affected the grant of options to the
Company's Norwegian personnel. In March, 1997, the Committee under the Option
Plan granted options to purchase 453,750 Class A shares to 137 personnel. Each
of these options has a five-year term and vests in equal installments over
four years but is not exercisable (except in the event of termination of
employment or hardship) until the fourth anniversary of grant. These options
were granted on the basis of a program, reviewed and approved by the
Committee, under which the number of options issued to an individual is based
on his or her salary level and the benefit that is projected to result from
the option if certain earnings and share price levels are attained by the
Company. Because of matters relating to Norwegian tax laws, those recipients
employed in Norway received options with a higher exercise price, but received
a larger amount of options relative to their salary level. The Committee
determined not to include the CEO in option grants under the new program due
to the extended period of non-exercisability of the options. Nevertheless, the
Committee believes that the interest of the CEO is closely aligned with the
stockholders as a result of his substantial ownership of the Company's
warrants.
By the Compensation Committee:
Peter G. Tombros (Chairman)
Thomas G. Gibian
I. Roy Cohen
Glen E. Hess
- 21 -
<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 298 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,
1991 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.
(MAC CHART)
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
ALPHARMA INC. 100.00 106.47 58.14 84.85 110.18 62.68
INDUSTRY INDEX 100.00 82.04 74.40 80.04 127.69 155.61
NY STOCK EXCHANGE
INDEX 100.00 104.70 118.88 116.57 151.15 182.08
- 22 -
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH A.L. INDUSTRIER
A.L. Industrier and Alpharma Oslo are parties to a lease (the "Skoyen
Lease") pursuant to which A.L. Industrier leases to Alpharma Oslo the land and
facility in Oslo, Norway where Alpharma 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 Alpharma 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,
Alpharma Oslo pays documented expenses of ownership and operation of such
facility, such as taxes and maintenance expenses. Alpharma Oslo has the right
to terminate the Skoyen Lease at any time during its term upon twelve months
written notice to A.L. Industrier.
Alpharma Oslo is a party to an administrative services agreement (the
"Administrative Services Agreement") with A.L. Industrier, pursuant to which
Alpharma 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 Alpharma Oslo a minimum fee for services rendered during
calendar year 1996 equal to NOK 3,000,000. In 1996, A.L. Industrier paid
Alpharma Oslo NOK 3,000,000 (or $464,000 based on the NOK exchange rates in
effect on the dates such fees were paid). The Administrative Services
Agreement expired in January 1997 and was automatically extended for a one-
year term. Such one-year extensions will continue unless the agreement is
terminated by either of the parties thereto, upon six months' notice.
During 1996, the Company through Alpharma Oslo and its subsidiaries sold
$3,075,000 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 1996 Alpharma Oslo paid $200,000 to A.L.
Industrier to reimburse A.L. Industrier for costs incurred in producing an
aquatic animal health product for Alpharma Oslo.
On February 10, 1997, A.L. Industrier entered into a Stock Subscription and
Purchase Agreement with the Company, whereby A.L. Industrier irrevocably
subscribed for and agreed to purchase from the Company 1,273,438 additional
shares of Class B Stock for an aggregate subscription consideration of
$20,807,976. The Closing of the transaction is expected to take place on or
before November 30, 1997.
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 ($138,900 for 1996) 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 1996 were $221,460. 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.
- 23 -
<PAGE>
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.
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, 1997. 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 1998 ANNUAL MEETING
In order to be considered for inclusion in the proxy statement for the 1998
Annual Meeting of Stockholders, stockholder proposals must be submitted to the
Company on or before December 3, 1997.
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
- 24 -
<PAGE>
APPENDIX
ALPHARMA INC.
1997 INCENTIVE STOCK OPTION AND APPRECIATION RIGHT PLAN
(FORMERLY 1983 INCENTIVE STOCK OPTION PLAN)
<PAGE>
TABLE OF CONTENTS
<TABLE>
<C> <S> <C>
1. Purpose of the Plan.............................................. A-1
2. Administration................................................... A-1
3. Shares Relating to Options and Units............................. A-1
4. Authority to Grant Options and Units............................. A-1
Limitation on Value of Shares Covered by Incentive Stock Options
5. granted to any Employee.......................................... A-2
6. Eligibility...................................................... A-2
7. Option Price and Base Value...................................... A-2
8. Terms of Options; Vesting........................................ A-2
9. Terms and Conditions of Units; Vesting........................... A-3
10. Exercisability of Options and Exercisable Units.................. A-4
10A. Procedure for Exercise of Options................................ A-4
10B. Withholding Tax Requirements on Exercise of Options.............. A-4
10C. Option Exercise with Previously Acquired Stock................... A-5
11. Transferability of Benefits...................................... A-5
12. Termination of Employment or Death Options....................... A-5
13. Requirements Imposed by Law...................................... A-6
14. No Rights as Stockholder......................................... A-6
15. No Employment Obligation......................................... A-6
16. Changes in the Firm's Capital Structure.......................... A-6
17. Amendment or Termination of Plan................................. A-7
18. Written Agreement................................................ A-7
19. Director and Stockholder Approval: Duration of Plan.............. A-8
</TABLE>
<PAGE>
ALPHARMA INC.
1997 INCENTIVE STOCK OPTION AND APPRECIATION RIGHT PLAN
(FORMERLY 1983 INCENTIVE STOCK OPTION PLAN)
1. Purpose of the Plan.
This 1997 Incentive Stock Option and Appreciation Right Plan (the "Plan") of
Alpharma Inc. (the "Company") is designed to provide incentive to present and
future executive, managerial, marketing, technical and other key employees of
the Company and of its subsidiaries (hereinafter referred to as "Employees")
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 Common Stock, with $.20 par value (hereinafter referred to as the
"Common Stock") or benefits based on the value of such shares. By encouraging
stock ownership by, or providing benefits based on the value of the Company's
shares to, such Employees, the Company seeks to attract and retain in its and
its subsidiaries' employ persons of exceptional competence and seeks to
furnish an added incentive for them to increase their efforts on behalf of the
Company.
2. Administration.
This Plan shall be administered by a committee of the Board of Directors of
the Company consisting of two or more directors (the "Committee") appointed
for such purpose. All questions of interpretation and application of this
Plan, of any options ("Options") or stock appreciation units ("Units") granted
hereunder (collectively referred to as "Benefits"), of any related agreements
and instruments, and of the value of shares of Common Stock subject to
Benefits shall be subject to the good faith determination of the Committee
which shall be final and binding. If for any reason a Committee shall not have
been appointed, all authority and duties of the Committee under this Plan
shall be vested in and exercised by the Board of Directors of the Company.
3. Shares Relating to Options and Units.
The stock subject to the Options and other provisions of this Plan and which
is the basis for the Units shall be shares of Common Stock. The total amount
of the Common Stock with respect to which Benefits may be granted shall not
exceed in the aggregate 3,500,000/1/ shares; provided, however, that the type
and aggregate number of shares which may be subject to Benefits granted
hereunder shall be subject to adjustment in accordance with the provisions of
section 16 hereof, and further provided that if Incentive Stock Options (as
hereinafter defined) are granted, the aggregate fair market value (determined
as of the time the option is granted) of the Common Stock with respect to
which Options are exercisable for the first time by any single employee during
any calendar year shall not exceed $100,000. Shares deliverable on exercise of
any Option or as payment pursuant to any Unit may be treasury shares or
authorized but unissued shares.
If for any reason the full number of shares covered by any Option are not
issued before the Option expires or terminates, shares not issued under such
Option shall again be available for the grant of Benefits under this Plan. If
any Units cease to be outstanding before the maturity date thereof because the
grantee has ceased to be an Employee or for any other reason, the number of
shares as to which such unmatured Units relate shall again be available for
the grant of Benefits under this Plan.
4. Authority to Grant Options and Units.
The Committee may grant Options and Units from time to time to such eligible
Employees as it shall determine; provided, however, that no Options or Units
may be granted to any person who is a member of the
- ---------------------
/1As/restated on March 21, 1997
A-1
<PAGE>
Committee at the time of such grant. Subject only to any applicable
limitations set forth in this Plan, the number of shares of Common Stock which
may be purchased pursuant to any Option or as to which any Units are based
shall be as determined by the Committee, but in no event may the number of
Options and Units granted to any person under the Plan exceed 100,000 in any
annual taxable period.
In the discretion of the Committee, Options granted under this Plan may be
"incentive stock options" as such term is defined in Section 422A of the
Internal Revenue Code of 1986 ("Incentive Stock Options"), or Options which do
not meet such definition. The option agreement with respect to any Option
intended to qualify as an Incentive Stock Option shall so identify such
Option.
The Committee may grant Options and Units to the same Employee and, without
limiting the Committee's authority to set conditions for any Benefits, may
condition the maturity of the Units upon exercise of the Options or vice
versa.
5. Limitation on Value of Shares Covered by Incentive Stock Options granted to
any Employee.
The aggregate fair market value (determined as of the time the Option is
granted) of the Common Stock with respect to which any employee may be granted
Incentive Stock Options under this Plan and any other plans of the Company or
any parent or subsidiary of the Company shall not exceed the amount permitted
by Section 422A of the Internal Revenue Code of 1986.
6. Eligibility.
The individuals who shall be eligible to receive Benefits under the Plan
shall be such Employees from the class of executive, managerial, marketing,
technical and other key employees as the Committee shall determine from time
to time.
7. Option Price and Base Value.
The price at which shares may be purchased pursuant to any Option and the
base value with respect to any Unit shall be specified by the Committee at the
time the Benefit is granted, and shall be equal to or greater than the fair
market value, as determined by the Options Committee, of the shares of Common
Stock on the date the Benefit is granted.
For all purposes of this Plan the fair market value of the Common Stock
shall be the closing price on the principal exchange on which the Common Stock
is traded on the day such value is measured (or most recent trading day), or
if no such price is available, the value shall be determined in such manner as
the Committee shall determine to be appropriate; provided that for purposes of
determining the fair market value of the common stock on the maturity date of
an exercisable Unit (as defined below), the Committee may provide that the
fair market value of the common stock shall be the average of the closing
prices on such principal exchange for the ten trading days prior to the
maturity date.
8. Terms of Options; Vesting.
The Committee shall determine the term of each Option and any vesting or
other conditions to the exercise of any Options, provided that in no event
shall the term of an Option exceed ten years and one month from the date of
grant. Unless the Committee shall otherwise determine at the time of grant,
Options shall vest at the rate of 25% per year that the Employee holds such
Option so that Options shall not become fully exercisable until four years
from the date of grant. Accordingly, unless the Committee shall otherwise
determine at the time of grant, Options cannot be exercised until one year
after the Option has been granted and then 25% of the Option
A-2
<PAGE>
Shares may be purchased during the second year, an additional 25% during the
third year, an additional 25% during the fourth year, and the final 25% after
four years. Subject to the limitations contained in paragraph 12 hereof, the
Committee may, in its discretion: (a) accelerate the time at which any
outstanding Option or part thereof shall become exercisable, (b) extend the
time during which any outstanding Option may be exercised (provided that no
Option may be exercised more than ten years and one month after the date of
grant) and (c) waive, in whole or in part, any condition to exercisability of
an Option. There shall be deemed to be part of the conditions and terms of
every Option granted hereunder as an Incentive Stock Option each condition,
term, limitation or restriction which is required under Section 422A of the
Internal Revenue Code and the applicable regulations for such Option to
qualify as an Incentive Stock Option.
9. Terms and Conditions of Units; Vesting.
Each Unit shall entitle the Employee to whom such Unit is granted to receive
a payment equal to any positive difference between (i) the fair market value
of one share of Common Stock on the maturity date of the Unit and (ii) the
base value of the Unit. The Committee may grant Units from time to time to
Employees and at the time of grant shall determine: (i) the maturity date
(which may be a specific date or a date based on an occurrence, such as
operating results of the Company or a division thereof, or an indeterminate
date to be specified by the grantee upon "exercise" of the Unit); provided the
maturity shall in no event be later than two years following termination of
Employee's employment relationship; (ii) the base value of each Unit granted;
(iii) any vesting or other conditions to maturity of the Units and the
Employee's right to payment; (iv) any events which may accelerate or defer
maturity of the Units; and (v) any other terms relating to such Units. In no
event shall the maturity date of a Unit be earlier than six months after the
date of grant or be (or be deferred to) later than ten years and one month
after the date of grant. A Unit as to which the grantee may select the
maturity date shall be referred to in this Plan as an "Exercisable Unit".
Unless the Committee shall otherwise determine, each Unit shall have a base
price equal to the fair market value of the Common Stock on the date of grant,
shall have a maturity date which is the fifth anniversary of the date of grant
and shall not entitle the grantee to any payment unless such Employee shall
remain an Employee of the Company from the date of grant to the maturity date
(except that in the event the Employee dies or retires in accordance with
established Company rules as a result of disability or age before the maturity
date, the maturity date of such Units shall be accelerated to the date such
Employee ceases to be an Employee due to death or retirement). In no event
shall a maturity date or any Unit be accelerated in the event that the
employment relationship of any Employee is terminated for cause prior to the
maturity date of such Unit.
Payments with respect to Units shall be made to the persons entitled thereto
in cash or, if the Committee so determines, shares of Common Stock having a
fair market value on the maturity date equal to the amount of payment to which
the recipient is entitled, or any combination of cash or such shares. Unless
deferred as hereafter provided, such payment shall be made by the Company
within ninety days after the maturity date.
An account shall be established for each Employee to whom Units are granted
in which shall be recorded the number of Units granted to such Employee, the
base price and maturity date of such Units and other appropriate data. If the
Committee so determines, an Employee who becomes entitled to receive a payment
with respect to any Units may have the right to defer such payment under such
deferred payment arrangement as the Company (or the subsidiary employing such
Employee) may from time to time provide. It shall be a condition of payment by
the Company with respect to any Unit that the person entitled to receive such
payment shall make appropriate payment or other arrangement acceptable to the
Company with respect to any withholding or similar tax requirement, and the
Company may withhold any amount so required from any payment it makes with
respect to any Units.
A-3
<PAGE>
10. Exercisability of Options and Exercisable Units.
Each Option and Exercisable Unit may be exercised, so long as it has vested
and is valid and outstanding, from time to time, in part or in whole, subject
to any limitations with respect to the number of shares for which the Option
or Unit may be exercised at a particular time and to such other conditions as
the Committee in its discretion, may specify.
Each Exercisable Unit may be exercised by written notice to the Company,
(attention Treasurer) setting forth the maturity date of such Unit which in no
event shall be a date earlier than the day following the date on which each
such notice is received by the Company.
10A. Procedure for Exercise of Options.
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 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), unless prohibited by the Committee in accordance with
section 10C, shares of Common Stock previously acquired with an aggregate fair
market value equal to the option price of such shares. As promptly as
practicable after receipt of such written notification and payment and subject
to section 1OB hereof, the Company shall deliver to the optionee certificates
for the number of shares with respect to which such Option has been so
exercised, 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 an 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.
10B. Withholding Tax Requirements on Exercise of Options.
It shall be a condition of exercise of any Option (including any Option
which has been transferred as permitted by section 11 of the Plan) that the
person exercising the Option make appropriate payment or other provision
acceptable to the Company with respect to any withholding tax requirement
arising from such exercise. The amount of withholding tax required, if any,
with respect to any Option exercise (the "Withholding Amount") shall be
determined by the Treasurer or other appropriate officer of the Company, and
each Employee shall furnish such information and make such representations as
such officer requires to make such determination with respect to all Options
granted to such Employee. If the Company determines that withholding tax is
required with respect to any Option exercise, the Company shall notify the
Employee of the Withholding Amount, and the Employee shall pay to the Company,
by check or other means acceptable to the Company, an amount not less than the
Withholding Amount. In lieu of making such payment, the Employee may elect to
pay the Withholding Amount by either (i) delivering to the Company a number of
shares of Common Stock having an aggregate fair market value as of the
"measurement date" (as hereinafter defined) not less than the Withholding
Amount or (ii) directing the Company to withhold (and not to deliver or issue
to such Employee) a number of shares of Common Stock otherwise issuable upon
the Option exercise having an aggregate fair market value as of the
measurement date not less than the Withholding Amount. If the Company
approves, an Employee may elect pursuant to the prior sentence to deliver or
direct the withholding of shares of Common Stock having an aggregate value in
excess of the minimum Withholding Amount but not in excess of the Employee's
applicable highest marginal combined federal income and state income tax rate,
as estimated in good faith by the Employee. Any fractional share interests
resulting from the delivery or withholding of shares of Common Stock to meet
withholding tax requirements shall be settled in cash. All amounts paid to or
withheld by the Company and the
A-4
<PAGE>
value of all shares of Common Stock delivered to or withheld by the Company
pursuant to this section 1OB shall be deposited in accordance with applicable
law by the Company as withholding tax for the Employee's account. If the
Treasurer or other appropriate officer of the Company determines that no
withholding tax is required with respect to the exercise of any Option
(because such Option is an Incentive Stock Option or otherwise), but
subsequently it is determined that the exercise resulted in taxable income as
to which withholding is required (as a result of a disposition of shares or
otherwise), the Employee shall promptly, upon being notified of the
withholding requirement, pay to the Company by means acceptable to the Company
the amount required to be withheld; and at its election the Company may
condition any transfer of shares issued upon exercise of an Incentive Stock
Option upon receipt of such payment. The term "measurement date" as used in
this section IOB shall mean the date on which any taxable income resulting
from the exercise of an Option is determined under applicable federal income
tax provisions.
10C. Option Exercise with Previously Acquired Stock.
Unless the Committee, in its discretion, shall by rule applicable to all or
any specified class of Options prohibit the use of shares of Common Stock to
pay the option price, any Employee may pay the option price for the shares
being acquired upon the exercise of an Option to be paid, in full or in part,
by the delivery to the Company of a number of shares of Common Stock having an
aggregate fair market value as of the "exercise measurement date" (as
hereinafter defined) equal to the exercise price for the shares being
acquired. The term "exercise measurement date" as used in this section 10C
shall mean the date on which the Option is exercised in accordance with
section 10.
11. Transferability of Benefits.
Benefits shall not be transferable other than by will or by the laws of
descent and distribution, or in the case of Benefits which are not Incentive
Stock Options upon such terms and conditions and to such transferee as the
Option Committee may approve (through a rule applicable to all or specific
classes of Employees, pursuant to provisions of an option agreement approved
by the Committee, or upon request in individual cases).
12. Termination of Employment or Death Options.
Except as expressly provided herein, Options shall terminate on the earlier
of:
a. the date of expiration of the term thereof, specified pursuant to
section 8 of this Plan,
b. immediately upon termination of the employment relationship between
the Company and the optionee for cause, or
c. thirty (30) days or, if the written option agreement (as specified
pursuant to section 18 hereof) specifically provides or the Committee
specifically approves, for a longer period not to exceed two years after
termination of the employment relationship between the Company and the
optionee without cause, other than death or retirement in good standing
from the employ of the Company for reasons of age or disability under then
established rules of the Company or the subsidiary employing the optionee.
The Committee shall determine in its sole discretion whether authorized
leave of absence, or absence on military or government service shall
constitute termination of the employment's relationship.
In the event of the death of the holder of an Option while in the employ of
the Company and before the date of expiration of such Option, such Option
shall terminate on the earlier of such date of expiration or two years
following the date of such death. After the death of the optionee and subject
to any condition relating to such Option, his or her executors,
administrators, or any person or persons to whom his or her Option may be
transferred by will or by the laws of descent and distribution or as permitted
by section 11 of the Plan, shall
A-5
<PAGE>
have the right, at any time prior to such termination to exercise such
portions of such Option which shall have been vested immediately prior to his
or her death. If, before the date of expiration of an Option, the optionee
shall be retired in good standing from the employ of the Company for reasons
of age or disability under the then established rules of the Company, such
Option shall terminate on the earlier of such date of expiration or 90 days
after the date of such retirement unless the written option agreement
specifically provides for a longer period not to exceed two years after the
date of such retirement. In the event of such retirement, the optionee or a
transferee permitted by section 11 of the Plan shall have the right prior to
the termination of such Option and subject to any condition relating to such
Option, to exercise such portion of such Option which shall have been vested
immediately prior to the date of retirement.
For all purposes of this Plan, an employment relationship between the
Company and any holder of any Benefit shall be deemed to exist during any
period in which such holder is employed by the Company or by any subsidiary of
the Company.
13. Requirements Imposed by Law.
No Employee who is subject to Section 16(b) of the Securities and Exchange
Act of 1934 shall sell any shares of Common Stock acquired on exercise of an
Option or transfer any Option for consideration until the lapse of at least
six months from the date of grant of such Option.
The Company shall not be required to sell or issue any shares under any
Option or make any payment with respect to a Unit if the issuance of such
shares or making of such payments shall constitute a violation by the optionee
or holder of Units or by the Company of any provisions of any law or
regulation of any governmental authority. Any determination in this connection
by the Committee shall be final, binding and conclusive.
The Company shall not be required to issue any shares upon exercise of any
Option or payment with respect to any Unit unless the Company has received the
optionee's or holder's representation or other evidence satisfactory to it to
the effect that such optionee or holder of such Unit will not transfer such
Shares in any manner which would constitute a violation of any securities or
other law, or which would not be in compliance with such other conditions as
the Committee may deem appropriate.
14. No Rights as Stockholder.
No holder of any Benefit under this Plan shall have rights as a stockholder
with respect to shares covered relating to such holder's Benefit (except upon
exercise of an Option); and, except as otherwise provided in section 16
hereof, no adjustment for dividends, or otherwise, shall be made if the record
date therefor is prior to the date of exercise of such Option or maturity of a
Unit.
15. No Employment Obligation.
The granting of any Benefit shall not impose upon the Company any obligation
to employ or continue to employ any holder of a Benefit under the Plan, and
the right of the Company to terminate the employment of any officer or other
employee shall not be diminished or affected by reason of the fact that a
Benefit has been granted to him or her.
16. Changes in the Firm's Capital Structure.
The existence of outstanding Benefits hereunder shall not affect in any way
the right or power of the Company or its stockholders to make or authorize any
or all adjustments, recapitalizations, reorganizations, 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
A-6
<PAGE>
Common 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 Options hereunder or on which a Unit is based
shall be appropriately adjusted in such a manner as to entitle the holder of
such Benefit to receive upon exercise of his Option or maturity of his Unit,
for the same aggregate consideration (in the case of Options), the same total
number and type of shares (in the case of Options) or the same value (in the
case of Units) as he would have received as a result of the event requiring
the adjustment had he exercised his Option or the Unit had matured in full
immediately prior to such event; provided, however, that, if any such
adjustment would result in the right to purchase a fractional share under an
Option, the number of shares subject to the Option will be decreased to the
next lower whole number; and (b) the number and type of shares with respect to
which Benefits may be granted under the Plan shall be adjusted by substituting
for the total number of shares of Common 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 Common 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 Common Stock which does not
effect an adjustment under the prior paragraph, the Committee, in its
discretion, may, if it considers it to be appropriate to carry out the intent
and purpose of the Plan, make such adjustments in the nature, amount or price
of securities subject to the Benefits as it considers appropriate, and such
adjustments shall be binding and conclusive on all holders of Benefits.
Except as expressly provided herein, the issuance 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 direct sale,
or upon the exercise of rights or warrants to subscribe therefor, 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 Common
Stock then covered by or relating to outstanding Benefits.
17. Amendment or Termination of Plan.
The Board of the Directors of the Company may modify, revise or terminate
this Plan at any time and from time to time, except that the aggregate number
of shares as to which Benefits may be granted under to this Plan, the maximum
number of Benefits which may be granted to any Employee in a particular fiscal
year, the minimum option price specified in paragraph 7 of this Plan and the
minimum base value for Units specified in Section 9 shall not, other than by
operation of paragraph 16 hereof, be adjusted without the consent of the
holders of Class A and Class B Common Stock having a majority of the voting
power. Any amendment of this Plan shall apply to all Benefits outstanding at
the time of such amendment (i) unless otherwise specified in the amendment or
(ii) to the extent such amendment is materially adverse to the outstanding
Benefits.
18. Written Agreement.
Each Benefit granted hereunder shall be embodied in a written agreement or
other document which shall be subject to the terms and conditions prescribed
above and shall be signed by the Employee holding the Benefit and by the
President or a Vice-President of the Company for and in the name and on behalf
of the Company. Such an option agreement or other document shall contain such
other provisions as the Committee in its discretion shall deem advisable.
A-7
<PAGE>
19. Director and Stockholder Approval: Duration of Plan.
This Plan has been duly adopted by the Board of Directors originally on
September 26, 1983 and approved by the stockholders of the Company on January
25, 1984, and restated by the Board on March 21, 1997. Options may not be
granted under this Plan after September, 2003. This Plan shall terminate (a)
when the total amount of Common Stock with respect to which Benefits may be
granted shall have been issued upon the exercise of Options, or (b) by action
of the Board of Directors pursuant to paragraph 17 hereof, whichever shall
first occur.
A-8
<PAGE>
3480-PS-97
<PAGE>
DETACH HERE
P R O X Y
APPENDIX
--------
[ALPHARMA LOGO]
ALPHARMA INC.
ONE EXECUTIVE DRIVE, P.O. BOX 1399, FORT LEE, NEW JERSEY 07024
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS ON MAY 28, 1997
Jeffrey E.Smith, Vice President and Chief Financial Officer, Beth P.
Hecht, Secretary and Corporate Counsel, and Cheryl L. Whalen, 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 Alpharma Inc. (the
"Company"), which the undersigned is entitled to vote at the 1997 Annual Meeting
of Stockholders to be held at The U.N. Plaza Hotel, One United Nations Plaza,
New York, New York on Wednesday, May 28, 1997 at 9:00 a.m., local time, and at
all adjournments thereof, as follows on the reverse side.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR (I) THE
NOMINEES SET FORTH IN ITEM 1 AND (II) ITEM 2. SHARES REPRESENTED BY THIS PROXY
WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED
STOCKHOLDER AND IN THE DISCRETION OF THE PROXY HOLDERS AS TO ANY OTHER MATTER
THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING OF STOCKHOLDERS OR, IF NO
DIRECTION IS INDICATED, WILL BE VOTED FOR (I) THE NOMINEES SET FORTH IN ITEM 1
AND (II) ITEM 2; AND IN THE DISCRETION OF THE PROXY HOLDERS AS TO ANY OTHER
MATTER THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING OF STOCKHOLDERS.
-----------
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE
<PAGE>
[ALPHARMA LOGO]
April 7, 1997
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders to be
held at 9:00 a.m. on Wednesday, May 28, 1997 at the U.N. Plaza Hotel, One United
Nations Plaza, New York, New York. Detailed information is contained in the
accompanying Notice of Annual Meeting and Proxy Statement.
Regardless of whether you plan to attend the meeting, it is important that your
shares be voted. Accordingly, we ask that you sign and return your proxy as soon
as possible in the envelope provided. If you do plan to attend the meeting,
please mark the appropriate box on the proxy.
Best regards,
Beth P. Hecht
Secretary
DETACH HERE
[X]PLEASE MARK VOTES
AS IN THIS EXAMPLE. ]
FOR AGAINST ABSTAIN
1.ELECTION OF DIRECTORS 2.Approval of the amendments [ ] [ ] [ ]
Nominees: Thomas G. Gibian to the Company's 1983 Incentive
and Peter G. Tambros Stock Option Plan described
in the accompanying Proxy
Statement.
[ ]FOR [ ] WITHHELD
BOTH FROM BOTH 3.As such persons may in their discretion
NOMINEES NOMINEES determine upon such matters as may come
before the meeting.
[ ] ____________________
For both nominees except MARK HERE FOR MARK HERE IF YOU
as noted above ADDRESS CHANGE PLAN TO ATTEND
AND NOTE AT LEFT THE MEETING
Please mark, sign and mail this proxy promptly
in the enclosed envelope, which requires no
postage if mailed in the United States.
NOTE: The signature should correspond exactly
with the name of the stockholder as it appears
herein. Where stock is registered in Joint
Tenency, all tenants should sign. Persons
signing as Executors, Administrators, Trustees,
etc., should so indicate.
Signature_____________ Date__________ Signature_____________ Date_____________
