<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
ALPHARMA INC.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] 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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
LOGO
ALPHARMA INC.
One Executive Drive
Fort Lee, New Jersey 07024
-------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 8, 1998
-------------------------------------
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 REGAL U.N.
PLAZA HOTEL, ONE U.N. PLAZA, NEW YORK, NEW YORK, on Friday, May 8, 1998, at
9:00 a.m., local time, to consider and act upon the following matters:
1. The election of nine directors to the Company's Board of Directors, each
to hold office until the 1999 Annual Meeting of Stockholders and until
their successors shall be elected and shall qualify.
2. A proposal to amend the Company's 1997 Incentive Stock Option and
Appreciation Right Plan, as amended, to increase 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 March 24, 1998 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, 1997 and a Proxy Statement accompany this notice.
By order of the Board of Directors,
Robert F. Wrobel
Secretary
March 31, 1998
<PAGE>
LOGO
ALPHARMA INC.
One Executive Drive
Fort Lee, New Jersey 07024
MAILING DATE
MARCH 31, 1998
---------------------------------------------
Proxy Statement for Annual Meeting of Stockholders
---------------------------------------------
To Be Held on May 8, 1998
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 Friday, May 8, 1998 at The
Regal 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 nine directors to the Company's Board of Directors,
each to hold office until the 1999 Annual Meeting of Stockholders and until
their successors shall be elected and shall qualify.
2. A proposal to amend the Company's 1997 Incentive Stock Option and
Appreciation Right Plan, as amended, (the "Stock Option Plan" or the
"Plan") to increase 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 March 24, 1998 (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, 15,867,426 shares of Class A Stock and 9,500,000 shares
of Class B Stock were outstanding and entitled to vote.
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<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. The Board of Directors has taken action to increase
the number of directors from seven to nine members. These nine 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 three directors
(directors to be elected by the holders of Class A Stock being referred to as
the "Class A Directors") and the holders of the Class B Stock will elect six
directors (directors elected by the holders of Class B Stock being referred to
as the "Class B Directors"). The affirmative vote of a plurality of the votes
cast at the Annual Meeting by the holders of the Class A Stock, voting as a
single class, is necessary to elect the three Class A Directors, and the
affirmative vote of a plurality of the votes cast at the Annual Meeting by the
holders of the Class B Stock, voting as a single class, is necessary to elect
the six Class B Directors. (A plurality of the votes cast means the greatest
number of votes cast for a director.)
Amendment of 1997 Incentive Stock Option and Appreciation Right
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, all or any one of the Company's three
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
three nominees for
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<PAGE>
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) the proposal to amend the Stock Option Plan and (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 any
other matter which may properly come before the meeting, abstentions, and
broken non-votes will be considered present and entitled to vote but will not
have been cast and therefore will not be counted in determining whether any
matter received the requisite 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, 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 therefore effectively been
revoked or withdrawn), notwithstanding that they may have been effectively
voted on the same or any other matter at a previous meeting.
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
OWNERSHIP OF COMMON STOCK
The following table sets forth as of March 2, 1998 (unless otherwise noted)
certain information regarding the beneficial ownership of the Class A Stock
and the Class B Stock by (a) each person who is known to the Company to be the
beneficial owner of more than 5% of the outstanding shares of either of such
classes, (b) each director and each nominee for director of the Company and
the five named executive officers (as defined below) and (c) all directors and
executive officers of the Company as a group. Unless otherwise indicated, each
beneficial owner possesses sole voting and dispositive power with respect to
the shares listed in this table.
<TABLE>
<CAPTION>
PERCENT OF
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% 37.45%
(1)(2)(3)
Class A Common Stock A.L. Industrier AS 0 * *
(1)(2)(3)
Class A Common Stock Wellington Management 1,929,063 12.16 7.60
Company, LLP (4)
Class A Common Stock State of Wisconsin 861,000 5.43 3.39
Investment Board (5)
Class A Common Stock Schroder Capital 821,400 5.18 3.24
Management Inc. (6)
Class A Common Stock Putnam Investments, Inc. 990,443 6.24 3.90
(7)
Class A Common Stock Einar W. Sissener (8)(9) 1,383,004 8.72 5.45
Class A Common Stock Gert W. Munthe (10)(12) 110,694 * *
Class A Common Stock I. Roy Cohen (11) 30,211 * *
Class A Common Stock Thomas G. Gibian (11) 4,509 * *
Class A Common Stock Glen E. Hess (11) 6,842 * *
Class A Common Stock Erik G. Tandberg 2,234 * *
(11)(12)
Class A Common Stock Peter G. Tombros 2,818 * *
(11)(12)
Class A Common Stock Erik Hornnaess (12) 2,667 * *
Class A Common Stock Oyvin A. Broymer 5,000
Class A Common Stock Jeffrey E. Smith 103,256 * *
(11)(13)
Class A Common Stock Thomas Anderson (11) 14,682 * *
Class A Common Stock Bruce I. Andrews (11) 10,000 * *
Class A Common Stock Ingrid Wiik (11)(12) 16,274 * *
Class A Common Stock All directors and
executive officers as a
group (17 persons)
(9)(11)(14) 1,740,031 10.97 6.86
</TABLE>
- ---------------------
* Indicates ownership of less than one %.
(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. 3 to the Schedule 13D,
dated March 30, 1998, filed with the Securities and Exchange Commission
(the "Commission") by A.L. Industrier A.S. ("A.L. Industrier"). 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. A.L. Industrier has
pledged approximately 50% of such shares and 50% of the Industrier Note
to a Norwegian bank as collateral borrowings made in connection with the
purchase of certain Class B Stock
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<PAGE>
in June of 1997 and to provide funds in connection with the Industrier
Note (see "Certain Relationships and Related Transactions"). A.L.
Industrier has agreed with the Company that, other than pledges of up to
50% of the shares, 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, 1998, A.L. Industrier
would own approximately 37% of the then outstanding shares of Class A
Stock.
(4) The source of this information is the Amendment No. 7 to Schedule 13G
dated January 12, 1998 filed with the Commission by Wellington
Management Company, LLP ("WMC"). Such Amendment No. 7 to Schedule 13G
reported that WMC, acting as an investment adviser, has shared voting
power and shared dispositive power with respect to 580,350 shares and
1,929,063 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. 6 to Schedule
13G dated February 9, 1998, which was filed with the Commission by
Vanguard, that it had sole voting power and shared dispositive power
with respect to 1,348,713 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. 2 to Schedule 13G
dated January 20, 1998 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. 2 reports that
the Wisconsin Board retains sole voting and dispositive power for all
shares.
(6) The source of this information is the Schedule 13G, dated February 12,
1998 and filed with the Commission by Schroder Capital Management Inc.
("Schroder"). Such Schedule 13G reports that Schroder has the sole
voting power for 747,800 shares and sole dispositive power for 821,400
shares. The address of Schroder is 787 Seventh Avenue, New York, NY
10019.
(7) The source of this information is the Schedule 13G dated January 16,
1998 filed with the Commission by Putnam Investments Inc. ("PII"). Such
Schedule 13G reported that investment advisors and subsidiaries of PII
have shared voting power and shared disposition power with respect to
316,632 shares and 990,443 shares, respectively, and do not have sole
voting power or sole disposition power with respect to any shares. PII
declares that its filing of Schedule 13G shall not be an admission of
beneficial ownership by PII. The address of PII is One Post Office
Square, Boston, MA 02109.
(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 50.1%
of A.L. Industrier's outstanding ordinary shares entitled to vote and,
accordingly, may be deemed a controlling person of A.L. Industrier.
(9) 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)
and Mr. Tandberg 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. As a result
of such transaction, Mr. Sissener beneficially owns Warrants to purchase
an aggregate of 1,383,004 shares of Class A Stock, all of which are
currently exercisable and expire on January 3, 1999. Mr. Sissener has
the right to require the Company to register the Warrants and the shares
of Class A Stock purchased pursuant to the Warrants. Mr. Sissener's
beneficial ownership of Class A Stock reflected in the table consists of
the presently exercisable Warrants.
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<PAGE>
(10) Includes presently exercisable Warrants to purchase 110,094 shares of
Class A Stock in the name of Mr. Munthe's wife. Mr. Munthe is a director
of A.L. Industrier. The Company has been advised by Mr. Munthe that
members of his immediate family own 15,500 A.L. Industrier Shares which
are included in the number of A.L. Industrier Shares beneficially owned
by Mr. Sissener (see footnote (8) above) and that Mr. Munthe does not
have any voting or dispositive power over such shares.
(11) 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 2, 1998 or within 60 days
thereof as follows: Mr. Smith--89,875 shares; Ms. Wiik--10,500 shares,
Mr. Anderson--13,750 shares, Mr. Andrews--10,000 shares and each of
Messrs. Cohen, Gibian, Hess, Tandberg and Tombros--2,000 shares. All
named executive officers and directors as a group--163,550 shares.
(12) Beneficial ownership of Class A Stock of Ms. Wiik reflected in the table
includes currently exercisable Warrants to purchase 5,220 shares. Mr.
Munthe, Mr. Tandberg, Mr. Hornnaess and Ms. Wiik also own 10,000, 49,
2,667 and 565 shares, respectively, of A.L. Industrier.
(13) The Company has been advised by Mr. Smith that his wife or children own
4,450 of Mr. Smith's shares of Class A Stock but that he has voting
power over such shares.
(14) Excludes Mr. David E. Cohen who, prior to December 31, 1997, ceased
being an officer of the Company.
In connection with the issuance of certain convertible subordinated notes
(see "Certain Relationships and Related Transactions"), A.L. Industrier and
each of the officers and directors of the Company listed above have agreed not
to sell any shares of Common Stock or Warrants for a period ending 90 days
after the initial purchase of said notes.
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.
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<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
---- --- -----------------------------
<C> <C> <S>
Thomas G. Gibian............ 76 Director of the Company since 1993.
President and Chief Executive Officer of
Henkel Corporation, a specialty chemicals
manufacturer and United States subsidiary of
Henkel KGaA, 1980 to 1986.
Peter G. Tombros............ 55 Director of the Company since 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. 1990-1994;
Executive Vice President of Pfizer
Pharmaceuticals, Pfizer Inc. 1986 to 1990
and various other positions with Pfizer Inc.
1968 to 1986.
Erik Hornnaess.............. 61 Nominee for election as a Director of the
Company. Presently Chairman of the Board of
AXIS Biochemicale ASA; Area Vice President
(Europe, Middle East and Africa) of Abbott
Laboratories Diagnostic Division from 1982
to 1997. Director of Qiagen, The
Netherlands, Radiometer A/S, Denmark,
Shields Diagnostics Ltd., Scotland,
Orsys/Ilex Ltd., Israel and Meditron A/S,
Norway.
</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
---- --- -----------------------------
<C> <C> <S>
I. Roy Cohen................ 75 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
July 1991 to December, 1992; Vice Chairman
of the Board of Directors of the Company
January 1991 to December 31, 1992; President
and Chief Executive Officer of the Company
1976 to January 1991.
Glen E. Hess................ 56 Director of the Company since 1983. Partner
in the law firm of Kirkland & Ellis since
1973.
Gert W. Munthe.............. 41 Director of the Company since 1994.
President and Chief Operating Officer of the
Company as of May 1, 1998. President and
Chief Executive Officer of NetCom GSM A.S.,
a Norwegian cellular telecommunications
company, 1993 to 1998. Executive Vice
President and division President of Hafslund
Nycomed A.S., a Norwegian energy and
pharmaceutical corporation, 1988 to 1993.
President of Nycomed (Imaging) A.S, a wholly
owned subsidiary of Hafslund Nycomed A.S.,
1991 to 1993. Division President in charge
of the energy business of Hafslund Nycomed
A.S 1988 to 1991.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL BUSINESS EXPERIENCE
---- --- -----------------------------
<C> <C> <S>
Einar W. Sissener........... 69 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 July 1991 to May
1994. Chairman of the Company since 1975.
President Alpharma A.S. since October 1994.
President, Apothekernes Laboratorium A.S.
1972 to 1994. Chairman of A.L. Industrier
A.S. since November, 1994.
Erik G. Tandberg............ 68 Director of the Company since 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, 1982 to 1986.
Oyvin A. Broymer............ 49 Nominee for election as a Director of the
Company. Executive Vice President Leif Hoegh
Co., ASA, a commercial shipping firm, 1996
to present; Executive Vice President
Hafslund Nycomed, 1982-1996.
</TABLE>
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<PAGE>
BOARD OF DIRECTORS AND COMMITTEES
BOARD MEETINGS AND ATTENDANCE OF DIRECTORS
The Company's Board of Directors held 7 meetings in 1997. Each person who
served as a director in 1997 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. 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 4 meetings in 1997.
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 3 meetings in 1997 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 11
meetings in 1997.
- 9 -
<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 December, 1992. He currently
serves as a consultant to the Company and as Chairman of the Executive
Committee. See "Certain Relationships and Related Transactions" 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 1997, 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 1998.
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 1, 1998, the Plan provided that no more than 3.5 million shares were
available for grant under the Plan. At such date a total of 1,263,489 shares
were reserved for issuance pursuant to outstanding options under the Plan,
1,466,802* shares were available for the issuance of future options to be
granted under the Plan and 769,709 shares had been issued pursuant to options
under the Plan. As of March 27, 1998, the Company's Board of Directors
approved an amendment of the Plan to increase the maximum number of shares
available for grant under the plan to 4.5 million shares. At the Annual
Meeting a resolution will be submitted seeking approval of the stockholders
for this amendment.
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
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" and "Grants of Option."
- ---------------------
* It should be noted that the 813,000 options granted by the Committee in
March of 1998 are not reflected in these numbers.
- 10 -
<PAGE>
The numbers of shares underlying options granted during 1997 to all current
executive officers as a group and all employees (including executive officers)
as a group were 215,200 shares and 633,075 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 1, 1998, approximately 156 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
in March of 1998 under the Plan to 135 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 1998.
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 amendment being
proposed), 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 AND
APPRECIATION RIGHT PLAN
Attached as an appendix to this Proxy Statement is a copy of the 1997
Incentive Stock Option and Appreciation Right Plan (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 a minimum of 4.5 million 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 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
- 11 -
<PAGE>
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. Under the Plan 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 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.
- 12 -
<PAGE>
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 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
- 13 -
<PAGE>
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, 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 and, 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.
- 14 -
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY OF EXECUTIVE COMPENSATION
The following table (the "Summary Compensation Table") sets forth the annual
and long-term compensation paid, or accrued for, the executive officers named
below (the "named executive officers") by the Company or its subsidiaries
during 1997, 1996 and 1995:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
------------
ANNUAL
COMPENSATION OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL -------------------- COMPENSATION OPTION/SARS COMPENSATION
POSITION DURING 1997 YEAR SALARY($) BONUS($) ($) (#)(1) ($)
-------------------- ---- --------- -------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Einar W. Sissener........ 1997 450,000 125,000 * 0 0
(Chairman, Director and 1996 365,839(2) 0 * 0 19,515(3)
Chief Executive Officer 1995 384,395(2) 0 * 0 32,583(3)
Jeffrey E. Smith......... 1997 355,004 60,000 * 24,000 24,999(4)
(Vice President--Finance 1996 355,004 0 * 0 26,416(4)
and Chief Financial
Officer) 1995 355,066 40,000 * 15,000 21,300(4)
Thomas Anderson (5)...... 1997 353,365 110,000 * 70,000 8,085(4)
(Vice President and
President of 1996 0 0 0
U.S. Pharmaceuticals
Division) 1995 0 0 0
Bruce I. Andrews (6)..... 1997 193,460 60,000 * 35,000 5,538(4)
(Vice President and 1996 0 0 0 0
President, Animal 1995 0 0 0 0
Health Division)
Ingrid Wiik.............. 1997 183,286 0 * 18,000 47,304(3)
(Vice President and 1996 184,543 0 0 47,006(3)
President, 1995 176,305 31,515 15,000 41,358(3)
International
Pharmaceutical
Division)
David E. Cohen (7)....... 1997 292,591 0 * 20,000 553,236(8)
(Former Vice President
and 1996 290,004 0 0 18,318
President--
Animal Health Division) 1995 279,994 100,000 15,000 16,800
</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
1997, 1996, and 1995 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 1995, 1996 or 1997.
- 15 -
<PAGE>
(2) 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.
(3) Includes pension premiums paid to a Norwegian insurance company to fund
pension payments for executive officers.
(4) Includes contributions by the Company to various employee profit-sharing
and saving plans.
(5) Mr. Anderson initially became an employee of the Company on January 1,
1997. He was an executive officer of FoxMeyer Corporation until February
of 1996; approximately six months prior to FoxMeyer's filing for
protection under Chapter 11 of the Bankruptcy Act.
(6)Mr. Andrews initially became an employee of the Company on May 1, 1997.
(7) Mr. Cohen ceased to be an officer of the Company prior to December 31,
1997.
(8) Includes $536,667 which the Company has accrued for payment to Mr. Cohen
from January 1, 1998 through April 30, 2000 in connection with the change
of his status from an officer of the Company to that of a consultant. As a
consultant Mr. Cohen, to the extent requested by the Company, must perform
at least 30 days of consulting per annum. Also includes $16,569 with
respect to Company contributions to various employee profit sharing and
savings plans. Does not include any consulting services in excess of 30
days per annum which may be performed after January 1, 1998; for which Mr.
Cohen would receive $1,260 per day.
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 and
cash bonus is subject to review and increase by the Board and is payable in
part by Alpharma Oslo and in part by the Company. His salary for 1998 has been
established at $600,000. 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 (a
subsidiary of the Company) 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.
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
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").
- 16 -
<PAGE>
Mr. Anderson is a party to an employment arrangement with the Company which
provides that in the event he is terminated for any reason other than cause or
the disposition of the Company's U.S. Pharmaceutical Division (the "Unit
Disposition") he will receive salary and certain other benefits for up to 18
months. If Mr. Anderson's employment is terminated in connection with a Unit
Disposition he will receive salary and certain fringe benefits for up to 24
months. He participates in all of the employee benefits available to
executives of the Company.
Mr. Andrews is a party to an employment arrangement with the Company which
provides that in the event he is terminated for any reason other than cause or
the disposition of the Company's Animal Health Division he will receive salary
and certain other benefits for up to 18 months. If Mr. Andrew's employment is
terminated in connection with a Unit Disposition he will receive salary and
certain fringe benefits for up to 24 months. He participates in all of the
employee benefits available to executives of the Company.
On March 13, 1998 Mr. Gert W. Munthe agreed to an employment contract with
the company pursuant to which he will become the President and Chief Operating
Officer ("COO") of the Company effective May 1, 1998 and the President and
Chief Executive Officer ("CEO") of the Company effective as of the 1999 Annual
Meeting. Mr. Munthe will receive salary at an annual rate of $400,000 while
serving as COO and salary at an initial annual rate of $600,000 while serving
as CEO. Mr. Munthe will also be eligible for an annual bonus of up to 75% of
his salary with a guaranteed minimum bonus of $75,000 for calendar 1998 and
stock option grants aggregating 150,000 shares of the Company's Class A Common
Stock during 1998 and 1999. Mr. Munthe has agreed to relocate his primary
residence to the New York Metropolitan area to allow him to establish his
office at the Company's U.S. headquarters. In connection with this relocation,
the Company has agreed to reimburse Mr. Munthe for certain relocation expenses
and to guaranty or otherwise facilitate a loan with respect to his new primary
residence. In addition Mr. Munthe will participate in all other employee
benefits available to executives of the Company and, if his employment is
terminated for any reason other than for cause, or he is not elected to the
executive positions set forth above, he is entitled to an amount equal to two
years base salary.
ANNUAL PERFORMANCE INCENTIVE PLAN
The Company has approved a Bonus Plan for the 1998 fiscal year which
provides that all executive officers performing services for one of the
Company's operating divisions will be entitled to receive a cash bonus within
a target range if the appropriate operating group achieves certain operating
income levels relative to budget. The bonus for Mr. Smith and other corporate
executives is based upon the overall performance of the Company both in terms
of operating income and earnings per share relative to budget. In addition all
bonuses take into consideration certain individual performance factors. Higher
bonuses than the target level may be paid if specified income levels are
exceeded but no bonuses will be paid if applicable income thresholds are not
met. Messrs. Smith, Anderson and Andrews have a target bonus of 50% of base
salary. As with all similarly situated international employees, the target
bonus level for Ms. Wiik is 16% of base salary. The Company reserves the right
to alter the terms and conditions of the Plan during 1998 for unanticipated
events and other equitable factors. Messrs. Sissener and Munthe are not
covered by this bonus plan. (See "Employment Agreements").
- 17 -
<PAGE>
GRANTS OF OPTIONS
The following table discloses, for the named executive officers (a) the
number of shares as to which options were granted during 1997 and 1998
(through March 30) and (b) the option exercise price (which was in all cases,
not less than the market price on date of the grant). All grants are options
under the Company's Stock Option Plan.
<TABLE>
<CAPTION>
1997 1998(3)
------------------------------- -------------------------------
NAME NUMBER OF SHARES EXERCISE PRICE NUMBER OF SHARES EXERCISE PRICE
- ---- ---------------- -------------- ---------------- --------------
<S> <C> <C> <C> <C>
Einar W. Sissener....... 0 0 0 0
Jeff Smith.............. 24,000 $13.875 40,000 $22.125
Thomas Anderson......... 70,000 13.607(1) 25,000 22.125
Bruce Andrews........... 35,000 14.625 55,000 22.125
Ingrid Wiik............. 18,000 22.20 (2) 75,000 30.09 (2)
</TABLE>
- ---------------------
(1) Multiple grants made; exercise price is the average for all grants during
year.
(2) Options granted at over the market price on the date of grant due to
Norwegian tax considerations.
(3) 1998 options were granted after the dates used to determine information
contained in the tables under "Security Ownership of Certain Beneficial
Owners" and "Option Exercises and Values" and are therefore not reflected
therein.
OPTION EXERCISES AND VALUES
The following table discloses, for the named executive officers, (a) the
number of shares acquired upon exercise of options or with respect to which
such options were exercised and the aggregate dollar value realized upon such
exercise and (b) the number and value of unexercised options, in each case as
of December 31, 1997.
1997 AGGREGATED OPTION EXERCISES AND YEAR-END VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
NUMBER OF UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT 12/31/97 (1) OPTIONS AT 12/31/97 (1)
ACQUIRED ON VALUE ------------------------- ---------------------------------
NAME EXERCISE REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE (2) UNEXERCISABLE (2)
- ---- ----------- ------------ ----------- ------------- --------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Einar W. Sissener....... 0 0 0 0 0 0
Jeffrey E. Smith........ 3,750 36,095 70,000 41,250 370,500 256,313
David E. Cohen.......... 3,000 27,126 41,750 37,250 238,500 224,813
Tom Anderson ........... 0 0 0 70,000 0 570,000
Bruce I. Andrews ....... 0 0 0 35,000 0 249,375
Ingrid Wiik............. 0 0 6,000 35,000 33,750 60,000
</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, 1997 ($21.75) minus the exercise price.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
As a result of an administrative delay in informing said individuals of the
March, 1997 grant of options, each of the named executive officers, except Mr.
Sissener, were approximately 30 days late in reporting said grant to the
Securities and Exchange Commission.
RETIREMENT PLANS
Messrs. Jeffrey E. Smith, Tom Anderson and Bruce I. Andrews are participants
in the Alpharma Inc. Pension Plan (a qualified defined benefit plan) (the
"Pension Plan"). Mr. Sissener and Ms. Wiik do not participate in the Pension
Plan. Under the Pension Plan, both salaried and hourly employees are eligible
for benefits. Participants are entitled to receive their specified annual
benefit, in the form of a life annuity or, at the election of participants,
its actuarial equivalent in certain other forms, commencing within one month
of their
- 18 -
<PAGE>
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" (($29,304 for 1997) plus (ii)
1.45% of the participant's highest five-year Final Average Compensation in
excess of "covered compensation" ($29,304 for 1997), 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 $ 24,330 $ 32,440 $ 40,551 $ 48,661 $ 48,661
$150,000 29,768 39,690 49,613 59,536 59,536
$175,000 35,205 46,940 58,676 70,411 70,411
$200,000 40,643 54,190 67,738 81,286 81,286
$225,000 46,080 61,440 76,801 92,161 92,161
$250,000 51,518 68,690 85,863 103,036 103,036
$275,000 56,955 75,940 94,926 113,911 113,911
$300,000 62,393 83,190 103,988 124,786 124,786
$325,000 67,830 90,440 113,051 135,661 135,661
$350,000 73,268 97,690 122,113 146,536 146,536
$375,000 78,705 104,940 131,176 157,411 157,411
$400,000 84,143 112,190 140,238 168,286 168,286
$425,000 89,580 119,440 149,301 179,161 179,161
$450,000 95,018 126,690 158,363 190,036 190,036
$475,000 100,455 133,940 167,426 200,911 200,911
$500,000 105,893 141,190 176,488 211,786 211,786
</TABLE>
- ---------------------
(1) Final average compensation. Current Federal pension law limits average
annual compensation considered for benefit purposes to $160,000 for 1997
and $160,000 for 1998.
(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 1997, the
respective amounts of the compensation of Messrs. Smith, Anderson and Andrews
would have been $355,004, $353,365, and $193,460, 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, Anderson and Andrews under the Pension Plan in 1997 were
limited to $160,000. 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. The years of service credited under the Pension Plan as of December
31, 1997 to such officers were as follows: Mr. Smith 13 years, Mr. Anderson 1
year and Mr. Andrews 1 year.
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
- 19 -
<PAGE>
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.
Mr. Einar W. Sissener and Ms. Ingrid Wiik 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 (194,156 Norwegian Kroner ("NOK") or
approximately $26,500 for 1997) 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 24,250 32,333 40,416 48,500 48,500
$150,000 31,750 42,333 52,916 63,500 63,500
$175,000 39,250 52,333 65,416 78,500 78,500
$200,000 46,750 62,333 77,916 93,500 93,500
$225,000 54,250 72,333 90,416 108,500 108,500
$250,000 61,750 82,333 102,916 123,500 123,500
$300,000 76,750 102,333 127,916 153,500 153,500
$400,000 106,750 142,333 177,916 213,500 213,500
$450,000 121,750 162,333 202,916 243,500 243,500
$500,000 136,750 182,333 227,916 273,500 273,500
</TABLE>
- ---------------------
(1) The payments under the Oslo Pension Plan are made in Norwegian kroner. For
purposes of the Oslo Pension Plan Table, such NOK amounts were translated
into United States dollars using the exchange rate at December 29, 1997 of
NOK 7.3267 to $1.00.
(2)Final compensation.
(3)The Plan provides that there is a maximum of 30 years of service for
computation of benefits.
For purposes of determining 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 their last year of service. If
Mr. Sissener were to retire with his last year of service being 1997, the
amount of his Final Compensation for purposes of calculating his pension
benefits under the Oslo Pension Plan would have been NOK 1,250,000 (or
approximately $170,609). If Ingrid Wiik were to retire with her last year of
service being 1997, the amount of her Final Compensation for purposes of
calculating her benefits under the Oslo Pension Plan would have been NOK
1,140,000 (or approximately $155,595). 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 Ingrid Wiik has accrued 26 years of service (including those accrued when
each was employed by unaffiliated companies) under the Oslo Pension Plan.
- 20 -
<PAGE>
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 1997, 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, 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. In March 1997, the
Committee approved an annual performance incentive plan for 1997 which
provided that the Company's executive officers (other than the CEO) and other
highly paid personnel could receive cash bonuses within target ranges based
upon company wide and divisional earnings thresholds. The plan generally
provided for potentially higher bonuses to the extent income thresholds were
exceeded and no bonuses to the extent that the applicable divisional threshold
was not met. Executives whose responsibilities were broader than a particular
division had a larger portion of their bonus potential dependent on the
overall earnings performance of the Company. Executives with less ability to
influence Company-wide or divisional performance have a greater proportion of
their bonus dependent on individual performance. The plan was also subject to
discretion of the CEO and Committee with respect to individual performance and
other factors. Certain variations were made in bonus determinations which the
Compensation Committee considered appropriate.
In early 1998 the Committee approved a modified performance incentive plan
for 1998 which established a minimum Company-wide operating income level and
operating income targets for each division. Under the 1998 plan bonuses will
be payable to executives and other key employees based upon levels by which
operating income of the applicable operating unit exceeded the levels set
forth in the plan but only if the Company-wide income threshold is met. The
Committee believes that the bonus targets in the 1998 plan properly tie an
executive's bonus to the performance, as measured by operating income, of the
Company and, if applicable, the appropriate division. The CEO is not covered
by the plan.
During 1997 the Committee continued to review plans with the CEO for a
successor chief executive. After discussions with the CEO, meeting with the
candidate selected and reviewing his background and experience,
- 21 -
<PAGE>
the Committee negotiated and recommended to the Board an employment agreement
with Mr. Gert Munthe which was executed in March, 1998. Under the employment
agreement Mr. Munthe will serve as Chief Operating Officer commencing May 1,
1998 and is expected to be elected Chief Executive Officer at the time of the
Company's Annual Meeting of Stockholders in 1999. The compensation
arrangements with Mr. Munthe were established after reviewing a report from
Coopers & Lybrand analyzing compensation and other employment terms that were
competitive with comparable companies.
The CEO received base salary of $450,000 in 1997 pursuant to his employment
contract with the Company which entitles him to receive a bonus up to 100% of
his base salary. The Compensation Committee determined to award a bonus of
$125,000 to the CEO with respect to 1997. The bonus was determined after
reviewing the Company's and CEO's performance in 1997, with particular weight
given to the return to profitable operations of all divisions, the addition of
new Presidents in the Animal Health and United States Pharmaceutical
Divisions, the CEO's role in establishing the successor arrangement and the
increase in 1998 base salary referred to below. In view of the relatively low
base salary of the CEO (compared to industry surveys reviewed by the Committee
and to the compensation level provided in Mr. Munthe's employment arrangement)
as well as the Company's improving performance, the Committee approved an
increase in the CEO's base salary to $600,000 for 1998. The CEO was not
awarded stock options in 1997 in view of the CEO's personal ownership of a
substantial amount of the Company's outstanding warrants as well as the long
term nature of option grants.
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 with a larger concomitant amount of options
relative to their salary level.
In late 1997 and early 1998 the Committee discussed the program for granting
options under the Stock Option Plan in 1998. The Committee discussed means of
structuring options to enhance the mutuality of interests of key employees and
stockholders in share value appreciation and, based upon a review of
information concerning comparable public companies, recommended generally
larger grants for all key personnel and that executive officers with similar
responsibilities receive grants in 1998 which would result in the total
options held by such officers to be at approximately the same level
(considering length of service). The Committee recommended that all grants
made to key employees outside Norway consist of options vesting in four annual
installments and having a seven year term. As with the 1997 grants, Norwegian
tax considerations resulted in the Committee recommending that Norwegian key
employees receive larger grants of shorter term options, with exercise prices
above the market price of the shares on the grant date. In March 1998 the
Committee under the stock option plan granted 142 personnel options to
purchase 813,000 Class A shares which options have the terms recommended by
the Committee. At such time the named executive officers received options as
set forth elsewhere in the Proxy Statement.
By the Compensation Committee:
Peter G. Tombros (Chairman)
Thomas G. Gibian
I. Roy Cohen
Glen E. Hess
- 22 -
<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,
1992 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.
[PLOT POINTS TO COME]
- 23 -
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
A.L. Industrier and the Company subsidiary 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 ending in 2014, which term is renewable, at the option of Alpharma Oslo,
for four additional consecutive five year terms. Basic rent during the initial
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 expense. 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 1997 equal to NOK 3,000,000. In 1997, A.L. Industrier paid
Alpharma Oslo NOK 3,000,000 (or $424,000 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 1997, the Company through Alpharma Oslo and its subsidiaries sold
$3,107,000 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 1997 Alpharma Oslo purchased $34,000 of
product from a subsidiary of A.L. Industrier.
On June 27, 1997 A.L. Industrier purchased 1,273,438 additional shares of
Class B Common Stock for net consideration of $20,379,000.
On March 30, 1998, Industrier purchased at par for cash a convertible
subordinated note issued by the Company (the "Industrier Note") in the
principal amount of $67,850,000, concurrently with the issuance by the Company
of $125,000,000 of Convertible Subordinated Notes to unaffiliated third
parties (the "Notes"). The Industrier Note has substantially the same terms
(including interest rate, conversion price and maturity date) as, and will
rank pari passu with, the Notes, except that the Industrier Note is
convertible into Class B Common Stock instead of Class A Common Stock. The
Industrier Note, so long as it is held by Industrier or any other affiliate of
the Company, is not convertible at the holder's discretion but instead will
automatically be converted into Class B Common Stock on or after the third
anniversary of issuance if at least 75% of the Notes are converted into Class
A Common Stock by the holders thereof. The Industrier Note is exchangeable, in
whole or in part, into Notes at any time after October 31, 1999, solely for
the purpose of enabling the holder to sell the Notes received in such exchange
to an unaffiliated transferee. Industrier has agreed not to sell the
Industrier Note or any Common Stock of the Company until after October 31,
1999.
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.
- 24 -
<PAGE>
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 of $143,500 (for 1997) 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. The amount earned under such contract for excess days
over 40 with respect to 1997 was $92,410. The contract provides, in the event
of Mr. Cohen's disability, death or termination during the Consultant Term,
for continued payments to Mr. Cohen (or his wife or children in the case of
his death) of the remaining amounts he would otherwise be entitled to receive.
Mr. Glen E. Hess' professional corporation is a partner of Kirkland & Ellis,
a law firm which since 1978 has performed and continues to perform significant
legal services for the Company.
Mr. David E. Cohen, 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, 1998. 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 1999 ANNUAL MEETING
In order to be considered for inclusion in the proxy statement for the 1999
Annual Meeting of Stockholders, stockholder proposals must be submitted to the
Company on or before December 3, 1998.
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
Robert F. Wrobel
Secretary
ALPHARMA INC.
YOUR VOTE IS IMPORTANT
PLEASE PROMPTLY COMPLETE AND SIGN THE ENCLOSED
FORM OF PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE
- 25 -
<PAGE>
APPENDIX
ALPHARMA INC.
1997 INCENTIVE STOCK OPTION AND APPRECIATION RIGHT 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
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 4,500,000/1/ 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
- ---------------------
/1/ As restated in March of 1998
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.
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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
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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
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<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.
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<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.
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<PAGE>
[LOGO] ALPHARMA(TM)
Dear Shareholders: March 31, 1998
You are cordially invited to attend the Annual Meeting of Shareholders to be
held at 9:00 a.m. on Friday, May 8, 1998 at The Regal 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,
/s/ Robert F. Wrobel
Robert F. Wrobel
Secretary
DETACH HERE
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE. ______
|
|
1. ELECTION OF CLASS A DIRECTORS
NOMINEES: Thomas G. Gibian, Peter G. Tombros,
Eric Hornnaess
[ ] FOR [ ] WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
[ ]__________________________________________
For all nominees except as noted above
FOR AGAINST ABSTAIN
2. Approval of the amendment to the [ ] [ ] [ ]
Company's 1997 Incentive Stock
Option and Appreciation Right Plan
described in the accompanying
Proxy Statement.
3. As such persons may in their discretion determine upon such
matters as may come before the meeting.
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
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 hereon. Where stock is registered in Joint
Tenancy, all tenants should sign. Persons signing as Executors,
Administrators, Trustees, etc., should so indicate.
Signature:______________Date:___________Signature:______________Date:___________
<PAGE>
DETACH HERE
[LOGO] ALPHARMA(TM)
PROXY
ALPHARMA INC.
ONE EXECUTIVE DRIVE, FORT LEE, NEW JERSEY 07024
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS ON MAY 8, 1998
Jeffrey E. Smith, Vice President and Chief Financial Officer, Robert F.
Wrobel, Vice President, Chief Legal Officer and Secretary, 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 1998 Annual
Meeting of Stockholders to be held at The Regal U.N. Plaza Hotel, One United
Nations Plaza, New York, New York on Friday, May 8, 1998 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 FOR 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.
- ----------- -----------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- ----------- -----------
<PAGE>
3480-PS-98
