<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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 (S) 240.14a-11(c) or (S) 240.14a-12
Alpharma Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
<PAGE>
[LOGO] ALPHARMA
ALPHARMA INC.
One Executive Drive
Fort Lee, New Jersey 07024
-------------------------------------
Notice of Annual Meeting of Stockholders
To Be Held on June 10, 1999
-------------------------------------
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 Millenium
Hilton, 55 Church Street, New York, New York, on Thursday, June 10, 1999, 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 2000 Annual Meeting of Stockholders and
until their successors shall be elected and shall qualify.
2. To approve an amendment to Article Fourth of the Company's Certificate
of Incorporation increasing the number of shares of Class A Common
Stock that the Company has authority to issue from 40,000,000 to
50,000,000 shares.
3. A proposal to amend the Company's Non-Employee Stock Option Plan, as
amended, to (i) change the manner of granting options to the non-
employee directors from an automatic annual grant to a grant as
approved by the Board of Directors (ii) increase the number of shares
subject to an annual grant from 2,000 shares of Class A Common Stock to
an amount not exceeding 5,000 shares of Class A Common Stock (iii)
allow the Board of Directors to fix the term of each option grant up to
a maximum term of 10 years, and (iv) provide that, as to directors who
have served for 5 or more years, the early termination date for any
options granted shall be the fifth (as opposed to the first)
anniversary of the date upon which such individual ceases to be a
director.
4. Transaction of such other business as may properly come before the
meeting or any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on April 12, 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, 1998 and a Proxy Statement accompany this notice.
By order of the Board of Directors,
Robert F. Wrobel
Secretary
April 12, 1999
<PAGE>
[LOGO] ALPHARMA
ALPHARMA INC.
One Executive Drive
Fort Lee, New Jersey 07024
MAILING DATE
April 12, 1999
-------------------------------------------
Proxy Statement for Annual Meeting of Stockholders
-------------------------------------------
To Be Held on June 10, 1999
This proxy statement (the "Proxy Statement") is furnished in connection with
the solicitation of proxies by the Board of Directors of Alpharma Inc., a
Delaware corporation (the "Company"), for use at the Annual Meeting of
Stockholders (the "Annual Meeting") to be held on Thursday, June 10, 1999 at
The Millenium Hilton, 55 Church Street, 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 2000 Annual Meeting of Stockholders and until
their successors shall be elected and shall qualify.
2. A proposal to amend Article Fourth of the Company's Certificate of
Incorporation to increase the number of shares of Common Stock.
3. A proposal to amend the Company's Non-Employee Stock Option Plan, as
amended, (the "Director Stock Option Plan" or the "Director Plan").
4. Transaction of such other business as may properly come before the
meeting or any adjournments or postponements thereof.
Record Date
The close of business on April 12, 1999 (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, 17,989,261 shares of Class A Stock and 9,500,000 shares
of Class B Stock were outstanding and entitled to vote.
- 1 -
<PAGE>
Quorum
For each matter to be voted upon at the Annual Meeting, the presence in
person or by proxy, of holders of stock entitled to be voted with respect to
such matter representing a majority of the aggregate voting power of all
shares of stock entitled to be voted with respect to such matter is necessary
to constitute a quorum with respect to such matter and to transact business
with respect to such matter at the Annual Meeting. For purposes of determining
whether a quorum exists with respect to the election of directors, shares as
to which authority to vote in the election of directors has been withheld and
broker non-votes (where a broker submits a proxy but does not have authority
to vote a customer's shares on one or more matters) with respect thereto will
be considered present at the Annual Meeting. For purposes of determining
whether a quorum exists with respect to amending the Company's Certificate of
Incorporation and the Director 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. 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 the Company's Certificate of Incorporation and Director Stock
Option Plan. Approval of the proposal to amend the Company's Certificate of
Incorporation requires the affirmative vote of a majority of the votes
represented by all outstanding shares of Class A and Class B Stock voting
together. The Director 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 Company's Certificate of Incorporation and
Director Stock Option Plan.
- 2 -
<PAGE>
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 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 Article Fourth of the
Company's Certificate of Incorporation, (iii) the proposal to amend the
Director Stock Option Plan and (iv) 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 Company's Certificate of
Incorporation and Director 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.
- 3 -
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Ownership of Common Stock
The following table sets forth as of March 15, 1999 (unless otherwise noted)
certain information regarding the beneficial ownership of the Class A Stock
and the Class B Stock by (a) each person who is known to the Company to be the
beneficial owner of more than 5% of the outstanding shares of either of such
classes, (b) each director and each nominee for director of the Company and
the five named executive officers (as defined below) and (c) all directors and
executive officers of the Company as a group. Unless otherwise indicated, each
beneficial owner possesses sole voting and dispositive power with respect to
the shares listed in this table.
<TABLE>
<CAPTION>
Percent of
Amount and Common
Nature of Percent of Stock (both
Title of Class Beneficial Class Classes)
Of Stock Name of Beneficial Owner Ownership Outstanding Outstanding
-------------------- ------------------------ ---------- ----------- -----------
<C> <S> <C> <C> <C>
A.L. Industrier AS
Class B Common Stock (1)(2)(3) 9,500,000 100.00% 34.56%
A.L. Industrier AS
Class A Common Stock (1)(2)(3) 0 * *
Wellington Management
Class A Common Stock Company, LLP (4) 1,654,813 9.32 6.07
Putnam Investments, Inc.
Class A Common Stock (5) 1,359,904 7.66 4.99
Class A Common Stock Fidelity Management and
Research Company (6) 1,163,271 6.55 4.27
Class A Common Stock Amvescap PLC (7) 1,223,651 6.89 4.49
Class A Common Stock Einar W. Sissener (8)(9) 508,668 2.83 1.85
Class A Common Stock Gert W. Munthe (10) 41,092
Class A Common Stock I. Roy Cohen (11) 17,044 * *
Class A Common Stock Thomas G. Gibian (11) 6,509 * *
Class A Common Stock Glen E. Hess (11) 8,842 * *
Erik G. Tandberg
Class A Common Stock (11)(12) 4,234 * *
Class A Common Stock Peter G. Tombros (11) 4,818 * *
Class A Common Stock Erik Hornnaess (12) 4,667 * *
Class A Common Stock Oyvin A. Broymer 5,000 * *
Jeffrey E. Smith
Class A Common Stock (11)(13) 106,214 * *
Class A Common Stock Thomas Anderson (11) 26,849 * *
Class A Common Stock Bruce I. Andrews (11) 34,607 * *
Class A Common Stock All directors and
executive officers as a
group (19 persons) (11) 1,058,655 5.88 3.85
</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. 4 to the Schedule 13D,
dated December 8, 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 in June of 1997
and to provide funds in connection with the Industrier Note (see
"Certain Relationships
- 4 -
<PAGE>
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 15, 1999, A.L. Industrier
would own approximately 35% of the then outstanding shares of Class A
Stock.
(4) The source of this information is the Amendment No.8 to Schedule 13G
dated December 31, 1998, filed with the Commission by Wellington
Management Company, LLP ("WMC"). Such Amendment No. 8 to Schedule 13G
reported that WMC, acting as an investment adviser, has shared voting
power and shared dispositive power with respect to 271,100 shares and
1,654,813 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 Fund
("Vanguard"), none of its clients is known to have more than 5%
beneficial ownership. Vanguard reported in Amendment No. 7 to Schedule
13G dated February 2, 1999, filed with the Commission by Vanguard, that
it had sole voting power and shared dispositive power with respect to
1,383,713 shares. The address of WMC is 75 State Street, Boston, MA
02109. The address of Vanguard is P.O. Box 2600, Valley Forge, PA 19482.
(5) The source of this information is the Schedule 13G dated February 17,
1999 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
136,956 shares and 1,333,304 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.
(6) The source of this information is Amendment No. 1 to Schedule 13G, dated
February 1,1999 and filed with the Commission by FMR Corp., the parent of
Fidelity Management and Research Company ("Fidelity"). Such Amendment No.
1 to Schedule 13G reports that Fidelity has the sole voting power for
4,300 shares and sole dispositive power for 1,222,471 shares including
209,838 shares resulting from the assumed conversion of the Company's
Convertible Subordinated Notes held by Fidelity. The address of Fidelity
is 82 Devonshire Street, Boston, MA 02109.
(7) The source of this information is the Schedule 13G dated February 8, 1999
filed with the Commission by Amvescap PLC ("Amvescap"). Such Schedule 13G
reports that subsidiaries of Amvescap hold voting and disposition power
with respect to all shares. Amvescap declares that its filing of Schedule
13G shall not be an admission of beneficial ownership by Amvescap or its
subsidiaries. The address of Amvescap is 11 Devonshire Square, London
EC2M 4YR England.
(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) Included shares held by, Mr. Sissener, his wife, Swekk, and EWS
Stiftelse, a trust established for the benefit of members of the family
of Mr. Sissener. All of these shares were acquired pursuant to the 1998
offer by the Company to exchange warrants obtained pro rata by all
shareholders of A.L. Industrier in 1994 (the "Warrant Tender Offer").
(10) Includes 40,492 shares of Class A Stock held by Mr. Munthe's wife which
were acquired in the Warrant Tender Offer. 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
- 5 -
<PAGE>
of A.L. Industrier Shares beneficially owned by Mr. Sissener (see footnote
(9) above) and that Mr. Munthe does not have any voting or dispositive
power over such shares. In addition, Mr. Munthe owns 10,000 shares of A.L.
Industrier.
(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 Company's 1997 Incentive Stock Option Plan
(the "Stock Option Plan") or the Director Stock Option Plan which are
exercisable as of March 15, 1999 or within 60 days thereafter as
follows: Mr. Smith--86,000 shares, Mr. Anderson--25,000 shares, Mr.
Andrews--33,750 shares, each of Messrs. Cohen, Gibian, Hess, Tandberg
and Tombros--4,000 shares. All named executive officers and directors as
a group--443,850 shares.
(12) Mr. Tandberg and Mr. Hornnaess also own 49, and 2,667 shares,
respectively, of A.L. Industrier.
(13) The Company has been advised by Mr. Smith that his wife or children own
5,350 of Mr. Smith's shares of Class A Stock but that he has voting
power over such shares.
ELECTION OF DIRECTORS
Election of Directors
The Company's Board of Directors intends to cause the nomination of the
nominees listed below under "Nominees for Directors; Nominees for Class A
Directors" and all proxies received from holders of the Class A Stock will be
voted FOR the election of such nominees as Class A Directors, except to the
extent that persons giving such proxies withhold authority to vote for such
nominees.
Each director is to be elected to hold office until the next Annual Meeting
of Stockholders and until his successor is chosen and qualified.
A.L. Industrier, which beneficially owns 100% of the shares of Class B
Stock, has advised the Company that it intends to vote its shares in favor of
the nominees listed below under "Nominees for Directors; Nominees for Class B
Directors," which would assure their election as Class B Directors.
Nominees for Directors
The Company believes that each of the nominees for director will be able to
serve. If any of the nominees would be unable to serve, the enclosed proxy
confers authority to vote in favor of such other person or persons as the
Company's Board of Directors at the time recommends to serve in place of the
person or persons unable to serve.
Nominees for Class A Directors. The name, age, principal business experience
during the last five years, and certain other information regarding each of
the persons proposed to be nominated for election as a Class A Director are
listed below.
<TABLE>
<CAPTION>
Name Age Principal Business Experience
---- --- -----------------------------
<C> <C> <S>
Thomas G. Gibian.. 77 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.
</TABLE>
- 6 -
<PAGE>
<TABLE>
<CAPTION>
Name Age Principal Business Experience
---- --- -----------------------------
<C> <C> <S>
Peter G. Tombros... 56 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. A Vice President of Pfizer, Inc.
from 1986 to 1994 with responsibility for corporate
strategic planning 1990 to 1994; Executive Vice
President of Pfizer Pharmaceuticals Division, 1986 to
1990 and served as Senior Vice President and General
Manager of Roerig Division of Pfizer and various other
positions with Pfizer Inc. 1968 to 1986. Also a
director of NPS Pharmaceuticals, Inc.
Erik Hornnaess..... 62 Director of the Company since 1998. Area Vice
President (Europe, Middle East and Africa) of Abbott
Laboratories Diagnostic Division from 1982 to 1997.
Director of Qiagen, The Netherlands.
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.
<CAPTION>
Name Age Principal Business Experience
---- --- -----------------------------
<C> <C> <S>
I. Roy Cohen....... 76 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....... 57 Director of the Company since 1983. Partner in the law
firm of Kirkland & Ellis since 1973.
Gert W. Munthe..... 42 Director of the Company since 1994. President and
Chief Operating Officer of the Company since May,
1998. President and Chief Executive Officer of NetCom
GSM AS., 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.
Einar W. Sissener.. 70 Chief Executive Officer 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 AS since October 1994. President,
Apothekernes AS (now AL Industrier AS) 1972 to 1994.
Chairman of A.L. Industrier AS since November 1994.
Erik G. Tandberg... 69 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... 50 Director of the Company since 1998. Executive Vice
President, Leif Hoegh Co., ASA, a commercial shipping
firm, 1996 to present; Executive Vice President,
Hafslund Nycomed, 1982-1996.
</TABLE>
- 7 -
<PAGE>
BOARD OF DIRECTORS AND COMMITTEES
Board Meetings and Attendance of Directors
The Company's Board of Directors held nine (9) meetings in 1998. Each person
who served as a director in 1998 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 Audit Committee also
monitors the Company's Business Conduct Guidelines. 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, Peter G. Tombros and Oyvin A.
Broymer. The Audit Committee held five (5) meetings in 1998.
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), Erik Hornnaess, Einar W.
Sissener and Gert W. Munthe. The Executive Committee held two (2) meetings in
1998 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 1997 Stock Option and Appreciation Rights Plan, as amended, with authority
to grant options to eligible employees of the Company and its subsidiaries.
The Compensation Committee held five (5) meetings in 1998.
- 8 -
<PAGE>
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee are Messrs. Peter G. Tombros
(Chairman), I. Roy Cohen, Thomas G. Gibian and Glen E. Hess. Mr. Cohen is a
former executive officer of the Company, having served as President and Chief
Executive Officer from 1976 to January, 1991 and as a member of the Office of
the Chief Executive from July, 1991 through 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 1998, each director (except Mr. Sissener) received directors' fees of
$22,500 (or in the case of Mr. Munthe $7,500 for that portion of 1998 prior to
his commencement of service as President of the Company) and (except Mr.
Sissener) a grant of an option to acquire 2,000 shares of Class A Stock
pursuant to the Director Stock Option Plan or, as to Mr. Munthe, title to 200
shares of Class A Common Stock. In addition, each director (other than Mr.
Sissener and after his commencement of service as President, Mr. Munthe)
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 1999;
subject to the changes contemplated by the proposed amendment to the Director
Stock Option Plan.
PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION
The Certificate of Incorporation of the Company presently provides that the
Company is authorized to issue 55,500,000 shares divided into three classes,
namely: 500,000 shares of Preferred Stock of the par value of $1.00 per share;
40,000,000 shares of Class A Common Stock of the par value of $.20 per share;
and 15,000,000 shares of Class B Common Stock of the par value of $.20 per
share. The Board of Directors proposes that the stockholders approve an
amendment of the Certificate of Incorporation of the Company to provide for an
increase in the total number of shares that the Company is authorized to issue
to 65,500,000. The number of authorized shares of Preferred Stock and Class B
Common Stock would remain the same, but the number of authorized shares of
Class A Common Stock would be increased to 50,000,000 shares.
The Board of Directors has not authorized or approved any transactions which
would require the issuance of additional shares of the Company's Common Stock,
however, in connection with the ongoing financing requirements of the Company,
it is anticipated that consideration will be given to the issuance of
additional Class A Common Stock. For this, and any other corporate purpose
which may arise in the future, the Board of Directors believes that it is
desirable to have additional authorized shares of Class A Common Stock
available for issuance without further action by the stockholders (unless such
action is required by applicable law or the rules of any stock exchange on
which the Company's securities may be listed) including, in addition to
financing requirements, possible additional future stock dividends or splits,
acquisitions or other general corporate purposes. The additional shares of
Class A Common Stock for which authorization is sought would be part of the
existing Class A Common Stock and, if and when issued, would have the same
respective rights and privileges as the shares of Class A Common Stock
presently outstanding. The holders of Common Stock are not entitled to
preemptive rights. The proposed amendment will not affect the authorized
shares of Preferred Stock or Class B Common Stock or alter the rights of the
Common Stock.
- 9 -
<PAGE>
The holders of the Class A Common Stock and Class B Common Stock will vote
together as a single class on the proposed amendment to the Company's
Certificate of Incorporation. A.L. Industrier has advised the Company that it
intends to vote in favor of the amendment, which would assure the affirmative
vote of the holders of a majority of the voting power as a single class and
would assure approval of the increase in the number of authorized shares of
Class A and Class B Common Stock.
The Board of Directors recommends that the stockholders vote for the
Proposal.
PROPOSAL TO AMEND THE DIRECTOR STOCK OPTION PLAN
General
The Director Stock Option Plan of the Company originally was adopted by the
Company's Board of Directors on March 14, 1996 and approved by the Company's
stockholders on May 30, 1996. As of March 15, 1999, the Plan provided that no
more than 150,000 shares were available for grant under the Plan. At such date
a total of 34,000 shares were reserved for issuance pursuant to outstanding
options under the Plan, and no shares had been issued pursuant to options
under the Plan. On March 18, 1999, the Company's Board of Directors approved
an amendment of the Plan which would; (i) change the manner of granting
options to the non-employee directors from an automatic annual grant to a
grant as approved by the Board of Directors (ii) change the annual grant to
each director from a fixed grant of an option for 2,000 shares of Class A
Common Stock to a grant of an option for up to 5,000 shares of Class A Common
Stock (iii) allow the Board of Directors to fix the term of each option grant
up to a maximum term of 10 years, and (iv) provide that, as to directors who
have served for 5 or more years, the early termination date for any options
granted shall be the fifth (as opposed to the first) anniversary of the date
upon which such individual ceases to be a director. At the Annual Meeting a
resolution will be submitted seeking approval of the stockholders for this
amendment.
The purpose of this Plan is to promote the interests of the Company (i) by
tying the compensation of directors more directly to the performance of the
Company as measured by the market price of its stock and (ii) through aligning
more closely the interests of directors with the interests of the Company's
stockholders.
For information regarding options granted during the last fiscal year to
each director who was not an employee of the Company see "Board of Directors
and Committees--Directors Compensation". Directors who are also employees of
the Company are not eligible for the grant of options under the Director Stock
Option Plan but may receive options under the Stock Option Plan.
Approval of the proposal to amend the Director Stock Option 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 Director Stock Option 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 Director Stock Option Plan
Attached as an appendix to this Proxy Statement is a copy of the Director
Stock Option Plan and the following summary description of the Plan (including
the proposed amendments) is qualified in its entirety by reference to such
appendix.
- 10 -
<PAGE>
General. The Director Stock Option Plan provides for the issuance of options
to acquire a maximum of 150,000 shares of the Company's Class A Stock at fair
market value of the shares on the date of grant.
Options. At the time the option is granted, the Board of Directors 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 granted.
Granting of Director Options
Each Director who is not an employee of the Company, may at the discretion
of the Board of Directors, be awarded an option to purchase up to 5,000 shares
of Class A Stock immediately following each annual meeting of stockholders of
the Company at which such director is elected to serve on the Board of
Directors of the Company. If a director is elected or appointed to the Board
of Directors other than at the annual meeting of stockholders, such director
may, at the discretion of the Board of Directors receive as of the date of
such election or appointment an option to purchase a maximum of a pro rata
number of shares.
Terms of Director Options:Vesting
Each Option under the Director Stock Option Plan shall have a term
determined by the Board of Directors, which may not be longer than ten years
from the date of grant (the "Option Term"); provided that if a director ceases
to be a director for any reason, all of the Options held by such Director
shall terminate on the earlier to occur of (i) the end of the Option Term or
(ii) the first anniversary of the date on which such individual ceases to
serve as a director or, if such individual has been a director for five or
more years or ceases to be a director on account of death or disability on the
fifth such anniversary (the "Early Termination Date"). Each Option shall vest
in full on the date of the first annual meeting of stockholders following the
date of grant of such option; provided that a person ceases to be director for
reason of disability or death prior to such vesting date, a pro rata portion
of any unvested Options held by such director shall vest as of the day
preceding the date such person ceases to be a director for such reason.
Transferability of Director Options
Options shall not be transferable otherwise than by will or the laws of
descent and distribution and shall be exercisable during the optionee's
lifetime only by him or by his guardian or legal representative.
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.
The discussion addresses only the United States Federal income tax
consequences to directors who are citizens or residents of the United States
and who perform services within the United States. Some directors 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 are highly technical,
and such laws are subject to change at any time, which could be retroactive in
nature.
- 11 -
<PAGE>
Options granted to non-employee directors will be treated as "nonstatutory"
options. In general, upon the grant of a nonstatutory option, the grantee will
not recognize taxable income or loss, and the Company will not be entitled to
a tax 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, and the
Company will be entitled to a corresponding tax deduction.
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.
- 12 -
<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 1998, 1997 and 1996:
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
----------------------- ------------
Other Annual All Other
Name and Principal Salary Bonus Compensation Option/SARS Compensation
Position during 1998 Year ($) ($) ($) (#) (1) ($)
- ------------------------ ---- ------- ------- ------------ ------------ ------------ ---
<S> <C> <C> <C> <C> <C> <C> <C>
Einar W. Sissener....... 1998 600,000 325,000 * 0 0
(Chairman, Director 1997 450,000 125,000 * 0 0
and Chief Executive 1996 365,839(2) * 0 19,515(3)
Officer)
Gert W. Munthe (4)...... 1998 263,068 170,000 * 100,000 69,177(5)
(President and Chief 1997 0 0 * 0
Operating Officer) 1996 0 0 * 0
Jeffrey E. Smith........ 1998 355,004 163,300 * 40,000 30,461(5)(6)
(Vice President-Finance 1997 355,004 60,000 * 24,000 24,999(5)
and Chief Financial
Officer) 1996 355,004 0 * 0 26,416(5)
Thomas Anderson (6)..... 1998 404,712 195,000 * 25,000 16,479(5)(6)
(Vice President and 1997 353,365 110,000 * 70,000 8,085(5)
President of U.S. 1996 0 0 0
Pharmaceuticals
Division)
Bruce I. Andrews (7).... 1998 379,643 189,822 * 55,000 20,186(5)(6)
(Vice President and
President, 1997 193,460 60,000 * 35,000 5,538(5)
Animal Health Division) 1996 0 0 0 0
</TABLE>
- ---------------------
* The Company provides automobile allowances to its executive officers and an
apartment (in lieu of hotel accommodations) to Mr. Sissener while he is in
the United States. The incremental cost of such perquisites in each of
1998, 1997, and 1996 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 1996, 1997 or 1998.
(2) At Mr. Sissener's request 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) Mr. Munthe became an employee of the Company on May 1, 1998. The Company
has made a loan to Mr. Munthe in the amount of $271,090 at an interest
rate of 6.125%, with respect to the purchase of his primary residence. In
addition, in November of 1998, the Company loaned Mr. Munthe $116,700 at
an interest rate of 4.5% which has been fully repaid.
- 13 -
<PAGE>
(5) Includes contributions by the Company to various employee profit-sharing
and saving plans and, as to Mr. Munthe, $17,190 for certain relocation
expenses and $50,000 for additional U.S. living expenses.
(6) 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.
(7) Mr. Andrews initially became an employee of the Company on May 1, 1997.
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 A/S, the Company's wholly-owned Norwegian subsidiary
("Alpharma Oslo") and in part by the Company. The agreement provides that for
ten years following his employment Mr. Sissener will provide consulting
services to the Company as requested for up to 36 days per year and will be
entitled to receive $54,000 annually (subject to adjustment based on the
consumer price index). The agreement does not affect the pension and other
benefits generally available to senior executives of Alpharma Oslo which Mr.
Sissener is entitled to receive.
Mr. Munthe is a party to an agreement dated March 13, 1998 for employment as
the President and Chief Operating Officer ("COO") of the Company until the
1999 Annual Meeting and thereafter as the President and Chief Executive
Officer ("CEO") of the Company. Mr. Munthe's salary as COO is at a rate of
$400,000 per annum with salary at an initial annual rate of $600,000 while
serving as CEO. Under his employment agreement, Mr. Munthe is also eligible
for an annual bonus of up to 75% of his salary and a grant of stock options
for 150,000 shares of the Company's Class A Common Stock. Mr. Munthe has
relocated 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 guaranteed a third party loan relating to Mr.
Munthe's primary residence and incurred certain other obligations as reflected
in the Summary Compensation Table. 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.
It is anticipated that the Board of Directors, at its meeting immediately
following the 1999 Annual Meeting, will elect Mr. Munthe CEO of the Company
and that Mr. Sissener will continue as Chairman of the Board.
Mr. Smith is a party to an employment arrangement with the Company dated
July 30, 1991 which provides that, if his employment is terminated by the
Company for any reason other than for cause, he is entitled to receive base
salary and certain benefits for one year. Mr. Smith participates in all of the
employee benefits available to executives of the Company. Upon retirement, the
Company will pay to Mr. Smith supplemental retirement benefits equal to the
amount, if any, by which the pension due under the Company's Non-Contributory
Retirement Plan without any limitation imposed by the Internal Revenue Service
exceeds any ceiling imposed by the Internal Revenue Service.
Mr. 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.
- 14 -
<PAGE>
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.
Annual Performance Incentive Plan
The Company has approved a Bonus Plan for the 1999 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 and the Company meets a Company wide earnings
threshold. The bonus for Mr. Smith and other executives having solely
corporate wide authority 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 target
bonuses of 50% of base salary. The Company reserves the right to alter the
terms and conditions of the Plan during 1999 for unanticipated events and
other equitable factors. Messrs. Sissener and Munthe are not covered by this
bonus plan. See "Employment Agreements".
Grants of Options
The following table discloses, for the named executive officers certain
information with respect to options granted during 1998. All grants are
options under the Company's Stock Option Plan.
<TABLE>
<CAPTION>
Number of
Shares of Class Potential Realizable Value at
A Common Stock Assumed Annual Rates of
Underlying Exercise Stock Price Appreciation for
Option Price Expiration Date(1) Option Term
--------------- -------- ------------------ ----------------------------- ---
Name 5% 10%
- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Einar Sissener.......... 0 -- -- -- --
Gert W. Munthe.......... 100,000 $21.625 July 8, 2005 $880,355 $2,051,601
Jeffrey E. Smith........ 40,000 22.125 March 25, 2005 360,284 839,615
Thomas L. Anderson...... 25,000 22.125 March 25, 2005 225,177 524,759
Bruce I. Andrews........ 55,000 22.125 March 25, 2005 495,390 1,154,470
</TABLE>
(1)Options vest at the rate of 25% on each of the first four anniversaries of
the date of grant.
- 15 -
<PAGE>
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, 1998.
1998 Aggregated Option Exercises and Year-end Values
<TABLE>
<CAPTION>
Number of Number of Shares Value of Unexercised
Shares Underlying Unexercised In-the-Money
Acquired Options at 12/31/98 Options at 12/31/98(1)
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
Gert W. Munthe.......... 0 0 0 100,000 0 1,368,750
Jeffrey E. Smith........ 23,250 364,369 70,000 58,000 1,268,688 913,375
Thomas L. Anderson...... 23,750 425,488 5,000 66,250 107,188 1,223,828
Bruce I. Andrews........ 15,000 224,613 20,000 55,000 413,750 725,313
</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, 1998 ($35.3125) minus the exercise price.
Section 16(a) Beneficial Ownership Reporting Compliance
The report to the Securities and Exchange Commission with respect to the
July 1998 grant of options to Mr. Munthe to purchase 100,000 shares of Class A
Common Stock was filed late.
Retirement Plans
Messrs. Gert W. Munthe, Jeffrey E. Smith, Thomas L. Anderson and Bruce I.
Andrews are participants in the Alpharma Inc. Pension Plan (a qualified
defined benefit plan) (the "Pension Plan"). Mr. Sissener does not participate
in the Pension Plan. Under the Pension Plan, both salaried and hourly
employees are eligible for benefits. Participants are entitled to receive
their specified annual benefit, in the form of a life annuity or, at the
election of participants, its actuarial equivalent in certain other forms,
commencing within one month of their 65th birthday. The specified annual
benefit is equal to (x) the sum of (i) 0.8% of the participant's highest five-
year Final Average Compensation (as defined below) up to "covered
compensation" (($31,128 for 1998) plus (ii) 1.45% of the participant's highest
five-year Final Average Compensation in excess of "covered compensation",
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.
- 16 -
<PAGE>
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 $24,153 $32,203 $40,254 $48,305 $48,305
$150,000 29,590 39,453 49,317 59,180 59,180
$175,000 35,028 46,703 58,379 70,055 70,055
$200,000 40,465 53,953 67,442 80,930 80,930
$225,000 45,903 61,203 76,504 91,805 91,805
$250,000 51,340 68,453 85,567 102,680 102,680
$275,000 56,778 75,703 94,629 113,555 113,555
$300,000 62,215 82,953 103,692 124,430 124,430
$325,000 67,653 90,203 112,754 135,305 135,305
$350,000 73,090 97,453 121,817 146,180 146,180
$375,000 78,528 104,703 130,879 157,055 157,055
$400,000 83,965 111,953 139,942 167,930 167,930
$425,000 89,403 119,203 149,004 178,805 178,805
$450,000 94,840 126,453 158,067 189,680 189,680
$475,000 100,278 133,703 167,129 200,555 200,555
$500,000 105,715 140,953 176,192 211,430 211,430
</TABLE>
- ---------------------
(1) Final average compensation. Current Federal pension law limits average
annual compensation considered for benefit purposes to $160,000 for 1998
and 1999.
(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 1998, the
respective amounts of the compensation of Messrs. Munthe, Smith, Anderson and
Andrews would have been $263,068, $355,044, $379,039, and $286,552,
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. Munthe, Smith, Anderson and Andrews under
the Pension Plan in 1998 were limited to $160,000. Mr. Munthe and Mr. Smith,
however, are 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 "Supplemental Benefit")
and Messrs. Andrews and Anderson are entitled to receive a Supplemental
Benefit based upon a maximum base compensation of $235,840 per annum. The
years of service credited under the Pension Plan as of December 31, 1998 to
such officers were as follows: Mr. Munthe 1 year, Mr. Smith 14 years, Mr.
Anderson 2 years and Mr. Andrews 2 years.
Under the Pension Plan, in the event of the termination of employment prior
to retirement, part of the employee's benefit may be forfeited. A retirement
benefit, payable in the form of a life annuity following the employee's 55th
birthday, is equal to an accrued percentage of the normal retirement benefit,
actuarially reduced to reflect commencement of payments prior to the normal
retirement date. As to employees hired on or after January 1, 1989, pension
benefits under the Pension Plan vest after five years of employment with the
Company. Pension benefits under the Pension Plan of employees hired prior to
January 1, 1989 are currently 100% vested.
- 17 -
<PAGE>
Mr. Einar W. Sissener is an active participant 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 (207,226 Norwegian Kroner ("NOK") or approximately $27,234
for 1998) 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 31,843 39,804 47,785 47,785
$150,000 31,383 41,843 52,304 82,785 82,785
$175,000 38,883 51,843 64,804 77,785 77,785
$200,000 48,383 61,843 77,304 92,785 92,785
$225,000 53,883 71,843 89,804 107,785 107,765
$250,000 61,383 81,843 102,304 122,785 122,785
$300,000 76,383 101,843 127,304 162,785 152,785
$400,000 105,383 141,843 177,304 212,785 212,785
$450,000 121,383 161,843 202,304 242,785 242,785
$500,000 138,383 181,843 227,304 272,785 272,785
</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
31, 1998 of NOK 7.6106 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 1998, the
amount of his Final Compensation for purposes of calculating his pension
benefits under the Oslo Pension Plan would have been NOK 1,350,000 (or
approximately $177,384). 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
under the Oslo Pension Plan.
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Company's Board of Directors is
responsible for reviewing the performance of the Chief Executive Officer
("CEO") and recommending to the Board the amount of
- 18 -
<PAGE>
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 amendment to an
existing material benefit plan. During 1998, 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 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 considers the deductibility of compensation which it approves or
recommends under Section 162 of the Internal Revenue code of 1986, as amended,
and consults with tax advisors as necessary to avoid or minimize any non-
deductible compensation.
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 December, 1997, the
Committee approved an annual performance incentive plan for 1998 which
provided that the Company's executive officers (other than the CEO) and other
highly paid personnel could receive cash bonuses within the target ranges
based upon Company-wide and divisional operating income targets set forth in
the plan. Under the plan bonuses were payable to executive 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 was met. For 1998 the Company-wide income
threshold was met. Consequently, bonuses at the high end of the target range
were approved for the vice presidents and other key divisional employees of
four of the Company's five divisions. Bonuses at 92% of target were approved
for officers and key employees having solely Company-wide responsibility.
Bonuses for the CEO and Chief Operating Officer ("COO") are not covered by the
plan but are provided for in their employment agreements. The COO's bonus was
prorated to reflect the portion of the year that he served as COO.
The CEO received base salary of $600,000 in 1998 pursuant to his employment
contract with the Company. He was entitled to receive a bonus up to 75% of his
base salary. Based upon the Company's and CEO's performance in 1998, with
particular weight given to the profitable operations of all divisions and the
successful completion of key acquisitions, the Committee had approved a
maximum bonus for the CEO; however, at his request, the bonus was reduced to
$325,000. The CEO was not awarded stock options in 1998 in view of his
beneficial ownership of a substantial amount of the Company's shares as well
as the long-term nature of option grants.
In early 1998 the Committee discussed means of structuring options under the
Stock Option Plan 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 officer to be at approximately the same level
(considering length of service). The Committee recommended that grants made to
key employees outside Norway consist of options vesting in four
- 19 -
<PAGE>
annual installments and have a seven year term. 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 have the terms recommended by the Committee. In addition,
pursuant to his employment agreement the COO received an option to purchase
100,000 Class A shares in July, 1998, following the commencement of his
employment with the Company and an option to purchase 50,000 Class A shares in
January, 1999.
In late 1998 the Committee began to review with the CEO and the COO the
policies applicable to granting options in 1999. In March, 1999, the stock
option committee approved grants of options to purchase Class A shares to
approximately 150 individuals. The standard terms of these options provided an
exercise price equal to the market price on the date of grant, vesting in
equal installments over four years and a seven year term. Due to the current
Norwegian tax laws the options granted to Norwegians varied from the standard
terms by having a three year term and vesting in 33% increments at the time of
grant and on the first and second anniversaries of the date of grant. All
Norwegian personnel were able to receive options with non-standard Norwegian
terms except certain senior executives, who received a combination of various
forms of options permitted under the Plan.
It is contemplated that Mr. Munthe, the current COO, will be elected CEO at
the Board meeting following the June annual meeting of stockholders. In
recognition of his increased responsibilities and his performance as COO, the
committee recommended that Mr. Munthe be granted an option to purchase 50,000
Class A shares at the time of his election as CEO.
By the Compensation Committee:
Peter G. Tombros (Chairman)
Thomas G. Gibian
I. Roy Cohen
Glen E. Hess
- 20 -
<PAGE>
Performance Graph
The following graph compares the Company's cumulative total stockholder
return during the last five years with the composite of the Media General
Financial Services Index for Drug Manufacturers--Other, Drug-Generic and Drug
Delivery Industry Groups (which indexes include 154 corporations that describe
themselves as drug manufacturers and are publicly traded) and The New York
Stock Exchange Index. The industry group used for comparison in the 1998 Proxy
Statement no longer exists. The graph assumes $100 invested on December 31,
1993 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.
5-year Cumulative Total Return
Among Alpharma Inc.
NYSE Market Index and MG Group Index
<TABLE>
<CAPTION>
Fiscal year Ending
-----------------------------------------------------------------------------
December 31, December 31, December 31, December 31, December 31, December 31,
Company, Index, Market 1993 1994 1995 1996 1997 1998
---------------------- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Alpharma Inc............ 100.00 145.93 189.49 107.11 161.11 263.72
NYSE Market Index....... 100.00 98.06 127.15 153.16 201.50 239.77
Media General Index..... 100.00 80.98 115.95 123.05 144.12 165.61
</TABLE>
- 21 -
<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
paid Alphama Oslo a minimum fee for services rendered during calendar year
1998 equal to NOK 3,000,000 (or $397,000). 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 1998, the Company through Alpharma Oslo and its subsidiaries sold
$2,722,000 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 1998 Alpharma Oslo purchased $32,000 of
product from a subsidiary of A.L. Industrier.
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. Subject
to certain adjustments the Notes and the Industrier Note can be converted into
4,371,585 and 2,372,896 shares of Class A and Class B Common Stock,
respectively. 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.
In September 1998, the Company caused the 1,383,004 warrants to purchase
Class A Common Stock held by Mr. Sissener to be registered under the
Securities Act of 1933 (as amended). This action was taken pursuant to a
contractual commitment made at the time the warrants were issued.
In November 1998, the Company made an offer to all holders of warrants to
purchase shares of Class A common stock of the Company (the "Warrants") to
tender the Warrants in exchange for a number of newly issued shares of Class A
Common Stock determined pursuant to an exchange formula which approximated $1
plus the difference between the Warrant exercise price ($20.69) and the
average market price of the Company's Class A common stock during a specified
ten day period ($30.23), Mr. Sissener, his immediate family and certain
entities over which he exercises control and the wife of Mr. Munthe,
respectively, tendered the 1,383,004 and
- 22 -
<PAGE>
110,094 Warrants beneficially owned by them. In return for such tender Mr.
Sissener received 508,668 shares of Class A Common Stock and Mr. Munthe's wife
received 40,492 shares of Class A Common Stock. In addition, other officers
and directors received an aggregate of 4,944 shares of Class A Common Stock in
exchange for Warrants.
All transactions with A.L. Industrier are subject to review by, and in
certain circumstances prior approval of, the Audit Committee. See "Board of
Directors and Committees--Committees of the Board" above.
Certain Other Transactions and Relationships
Mr. I. Roy Cohen, who as of January 15, 1991 retired as President and Chief
Executive Officer, has a contract to act as a special consultant to the
Company for a ten-year period following such retirement (the "Consultant
Term"). During the Consultant Term, the Company is required to pay him a
minimum annual consideration of $146,000 (for 1998) 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 1998 was $43,480. 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. Gert W. Munthe is a director of A.L. Industrier and the son-in-law of
Mr. Einar W. Sissener.
INDEPENDENT AUDITORS
PricewaterhouseCoopers L.L.P. has been selected to serve as the Company's
independent certified public accountants for the fiscal year ending December
31, 1999. 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.
The Company has been informed that, through an administrative oversight, a
pension plan as to which PricewaterhouseCoopers LLP is a sponsor, owned 10,352
shares of the Company's Class A Common Stock for a portion of 1998. The
Company was further informed that the members of the firm responsible for the
Company's audit had no knowledge of said investment when made and such shares
have been sold.
STOCKHOLDERS' PROPOSALS FOR THE 1999 ANNUAL MEETING
In order to be considered for inclusion in the proxy statement for the 2000
Annual Meeting of Stockholders, stockholder proposals must be submitted to the
Company on or before December 20, 1999.
- 23 -
<PAGE>
OTHER BUSINESS
As of the date hereof, the foregoing is the only business which management
intends to present, or is aware that others will present, at the Annual
Meeting. If any other proper business should be presented at the Annual
Meeting, the proxies will be voted in respect thereof in accordance with the
discretion and judgment of the person or persons voting the proxies.
By order of the Board of Directors
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
- 24 -
<PAGE>
APPENDIX
ALPHARMA INC.
NON-EMPLOYEE DIRECTOR OPTION PLAN
1. Purpose of the Plan
The purpose of this Plan is to promote the interests of the Company (i) by
tying more directly the compensation of directors to the performance of the
Company as measured by the market price of its stock and (ii) through aligning
more closely the interests of directors with the interests of the Company's
stockholders.
2. Administration
Except for the discretion reserved to the Board of Directors, the Plan shall
be administered by a committee of the Board of Directors of the Company
consisting of one or more directors (the "Director Options Committee")
appointed for such purpose by the Compensation Committee of the Board of
Directors. All questions of interpretation and application of this Plan to
options granted hereunder (the "Director Options") and of this Plan and any
related agreements and instruments shall be subject to the good faith
determination of the Director Options Committee, which shall be final and
binding on all persons. No member of the Committee shall be liable for
anything done or omitted to be done by him or her or by any other member of
the Committee in connection with the Plan, except for his or her own willful
misconduct or as expressly provided by statute.
3. Director Option Shares
The stock subject to the Director Options and other provisions of this Plan
shall be shares of the Company's Class A Common Stock, with $.20 par value
(hereinafter referred to as the "Class A Stock"). The aggregate number of
shares of Class A Stock authorized to be issued upon exercise of Director
Options and reserved for issuance under the Plan is 150,000. In the event that
application of any provision of this Plan would result in the issuance of, or
the right to purchase, any fractioned share of Class A Stock, the fraction
shall be rounded to a full share.
4. Granting of Director Options
Subject to the discretion and approval of the Board of Directors, each
director shall receive an option to purchase up to 5,000 shares of Class A
Stock immediately following each annual meeting of stockholders of the Company
at which such director is elected to serve on the Board of Directors of the
Company. If a director is elected or appointed to the Board of Directors other
than at the annual meeting of stockholders, such director shall receive as of
the date of such election or appointment an option to purchase a number of
share of Class A Stock equal to (i) the amount of the then most recent grant
multiplied by (ii) a fraction, the numerator of which is the number of days
remaining from the date of such election or appointment until the anniversary
of the preceding annual meeting of the stockholders and the denominator of
which is 365. The price at which shares may be purchased pursuant to any
Director Option shall be the fair market value of the shares on the date that
the Director Option is granted.
5. Eligibility
The individuals who will be eligible to receive Director Options will be
each person elected or appointed as a director of the Company who is not also
an employee of the Company or any of its subsidiaries at the time
<PAGE>
such person is so elected or appointed. A Director Option granted to a
director under this Plan shall continue to be effective in accordance with its
terms notwithstanding that prior to or subsequent to the grant of such option
such director was or becomes an employee of the Company or its subsidiaries.
6. Terms of Director Options; Vesting
Each Director Option shall have a term of ten years from the date of grant
or such lesser term as is approved by the Board of Directors (the "Option
Term"); provided that if a director ceases to be a director for any reason,
all Director Options held by such Director shall terminate on the fifth
anniversary, of the date on which such individual ceases to be a director, if
such director has served for five years or more, or otherwise on the first
anniversary of the date on which such individual ceases to serve as a Director
(the "Early Termination Date"). Each Director Option which has become vested
(as described below) may be exercised from time to time until the earlier of
(i) the end of the Option Term or (ii) the Early Termination Date, in part or
in whole. The exercise price of each Director Option may be paid in cash or by
delivery of shares of Class A Stock previously acquired by the optionee having
a fair market value equal to the exercise price of the Director Option being
exercised. Each Director Option shall vest in full on the date of the first
annual meeting of stockholders following the date of grant of such option;
provided that if a person ceases to be a director for reason of disability or
death prior to such vesting date, a portion of any unvested Director Options
held by such director shall vest as of the day preceding the date such person
ceases to be a director for such reason, which portion shall be equal to (i)
the number of unvested Director Options held by such director multiplied by
(ii) a fraction, the numerator of which is the number of days such Director
has held such unvested option and the denominator of which is 365. If a
Director is removed from the Board or resigns other than for reasons of
disability or death, the unvested Director Options held by such director shall
not vest following such removal or resignation.
7. Exercise of Director Options
Director Options shall be exercised by the delivery of written notice to the
Company (Attention: Treasurer) setting forth the number of shares with respect
to which the Director Option is to be exercised and the address to which the
certificates for such shares are to be mailed, together with (i) cash
(including checks, bank drafts or postal or express money orders payable to
the order of the Company) or (ii), shares of Class A Stock, previously
acquired, having an aggregate value equal to the option price of such shares.
As promptly as practicable after receipt of such written notification and
payment, the Company shall deliver to the optionee certificates for the number
of shares with respect to which such Director Option has been so exercised
("Option Shares"), issued in the optionee's name; provided, that such delivery
shall be deemed effected for all purposes when such certificates shall have
been deposited in the United States mail, addressed to the optionee, at the
address specified pursuant to this paragraph. For all purposes, an optionee
shall be deemed to have exercised a Director Option and to have purchased and
become the holder of the Option Shares as of the date the Company receives
written notification of exercise and payment as provided herein.
8. Transferability of Director Options
Director Options shall not be transferable otherwise than by will or the
laws of descent and distribution and shall be exercisable during the
optionee's lifetime only by him or by his guardian or legal representative.
9. Requirements Imposed by Law and Director Options Committee
The Company shall not be required to sell or issue any shares under any
Director Option if the issuance of such shares shall constitute a violation by
the optionee or by the Company of any provisions of any law or
- 2 -
<PAGE>
regulation of any governmental authority. Any determination in this connection
by the Director Options Committee shall be final, binding and conclusive.
The Company shall not be required to issue any shares upon exercise of any
option unless the Company has received the optionee's representation or other
evidence satisfactory to it to the effect that the holder of such Director
Option will not transfer such Option Shares in any manner which could
constitute a violation of any securities or other law, or which would not be
in compliance with such other conditions as the Director Options Committee may
deem appropriate.
The Director Options Committee may impose such other limitations on the
exercise of Director Options as it concludes are necessary to comply with
applicable law and carry out the intent and purpose of the Plan.
10. No Rights as Stockholder
No optionee shall have rights as a stockholder with respect to shares
covered by a Director Option until the date of exercise of such Director
Option; and, except as otherwise provided in paragraph 12 hereof, no
adjustment for dividends, or otherwise, shall be made if the record date
therefore is prior to the date of exercise of such option.
11. No Obligation to Retain Director
The granting of any option shall not impose upon Company, its stockholders
or the Board of Directors any obligation to elect, appoint or retain any
person as a member of the Board of Directors; and the right to remove any
director as provided by applicable law shall not be diminished or affected by
reason of the fact that a Director Option has been granted to such Director.
12. Changes in the Company's Capital Structure
The existence of outstanding Director Options shall not affect in any way
the right of power of the Company or its stockholders to make or authorize any
or all adjustment, recapitalizations, reorganization, or other changes in the
Company's capital structure or its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures or preferred or prior
preference stock senior to or otherwise affecting the Class A Stock or the
rights thereof, or the dissolution or liquidation of the Company, or any sale
or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or otherwise.
If the Company shall effect a subdivision or consolidation of shares or
other capital readjustment, or pay a dividend in shares of its Class A or
Class B Common Stock, then (a) the number, type, and per share price of shares
of stock subject to outstanding Director Options hereunder shall be
appropriately adjusted in such a manner as to entitle each optionee to receive
upon exercise of his Director Option, for the same aggregate consideration,
the same total number and type of shares as he would have received as a result
of the event requiring the adjustment had he exercise his Director Option in
full immediately prior to such event; provided, however, that if any such
adjustment would result in the right to purchase a fractional share, the
number of shares subject to the Director Option will be decreased to the next
lower whole number; and (b) the number and type of shares then reserved for
issuance under the Plan shall be adjusted by substituting for the total number
of shares of Class A Stock then reserved that number and type of shares of
stock that would have been received by the owner of an equal number of
outstanding shares of Class A Stock as the result of the event requiring the
adjustment.
- 3 -
<PAGE>
If the Company shall be a party to any merger or consolidation or effect any
recapitalization which causes a change in the Class A Stock which does not
effect an adjustment under the prior paragraph, the Director Options
Committee, in its discretion, may, if it considers it to be appropriate to
carry out the intent and purpose of the Plan, make such adjustments in the
nature or amount of securities subject to the Director Options or the Director
Option price as it considers appropriate, and such adjustments shall be
binding and conclusive of all holders of Options.
Except as expressly provided herein, the issue by the Company of shares of
stock of any class, or securities convertible into shares of stock of any
class, for cash or property, or for labor or services either upon sale, or
upon the exercise or rights or warrants to subscribe therefore, or upon
conversion of other securities, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of Class
A Stock then subject to outstanding Director Options.
13. Amendment or Termination of Plan
The Board of Directors of the Company may modify, revise or terminate this
Plan at any time and from time to time, except that none of the term of the
Plan, the eligibility of grantees, the aggregate number of shares reserved for
issuance pursuant to this Plan, the amount of Directors Options to be granted
to any director or the minimum option price shall, other than by operation of
paragraph 12 hereof, be modified or revised without the consent of the holders
of Class A and Class B Common Stock having a majority of the voting power. The
termination of the Plan by the Board of Directors shall not affect any
Director Options granted prior to such termination. The terms upon which
Directors Options are granted may not be amended more frequently than once
every six months (except to comply with applicable tax or other laws).
14. Written Option Agreements
Each Director Option granted hereunder may be embodied in a written option
agreement which shall contain such other provisions as the Director Options
Committee in its discretion shall deem advisable. The failure to provide a
written option agreement shall not affect the validity of Director Options
provided for herein or the rights of directors to receive and exercise such
options as herein provided.
15. Director and Stockholder Approval; Duration of Plan
This Plan has been duly adopted by the Board of Directors on March 14, 1996
and approved by the stockholders of the Company on May 30, 1996. This Plan
shall terminate on December 31, 2005 or by earlier action of the Board of
Directors pursuant to paragraph 13 hereof provided such termination shall not
affect any Director Options granted prior to such termination.
16. Election to Receive Shares If Subject to Detrimental Non-U.S. Income Tax
Consequences
If a person would be subject to significantly detrimental income tax
consequences as a result of receiving Director Options under any non-United
States income tax provisions, such person may elect (by written notice to the
Director Options Committee prior to the date of grant) to receive in lieu
thereof one share of Class A stock for every ten shares purchasable under the
Director Options such person would otherwise have received.
17. Reference to Employee Stock Option Plan ("Employee Plan")
To the extent not inconsistent with the terms of this Plan, the terms and
provisions of the Employee Plan shall apply to any options granted hereunder.
- 4 -
<PAGE>
3480-PS-99
<PAGE>
[LOGO] ALPHARMA
PROXY
ALPHARMA INC.
One Executive Drive, Fort Lee, New Jersey 07024
Proxy for Annual Meeting of Stockholders on June 10, 1999
Jeffrey E. Smith, Vice President and Chief Financial Officer and Robert F.
Wrobel, Vice President, Chief Legal Office and Secretary, or either 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 1999 Annual Meeting of Stockholders to be held at The
Millennium Hilton, 55 Church Street, New York, New York on Thursday, June 10,
1999 at 9:00 a.m., local time, and at all adjournments thereof, as follows on
the reverse side.
The Board of Directors recommends that the Stockholders vote FOR (i) the
nominees set forth in item 1 and (ii) items 2 and 3, 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) items 2 and 3, 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>
Dear Shareholder: April 12, 1999
You are cordially invited to attend the Annual Meeting of Shareholders to be
held at 9:00 a.m. on Thursday, June 10, 1999 at The Millennium Hilton, 55 Church
Street, 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,
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
2. Approval of the amendment to Article Fourth FOR AGAINST ABSTAIN
of the Company's Certificate of Incorporation [ ] [ ] [ ]
described in the accompanying Proxy Statement.
3. Approval of the amendment to the Company's [ ] [ ] [ ]
Non-Employee Stock Option Plan described in the
accompanying Proxy Statement.
4. 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:______
