SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
OWENS & MINOR
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than 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:
<PAGE>
[LOGO]
OWENS & MINOR, INC.
NOTICE OF
1997
ANNUAL MEETING
AND
PROXY STATEMENT
WHETHER OR NOT YOU PRESENTLY PLAN TO ATTEND THE MEETING
IN PERSON, THE BOARD OF DIRECTORS URGES YOU TO SIGN AND
RETURN THE PROXY IN THE ENCLOSED ENVELOPE.
OWENS & MINOR, INC.
4800 COX ROAD
GLEN ALLEN, VIRGINIA 23060-6292
<PAGE>
[LOGO]
Owens & Minor, Inc.
4800 Cox Road, Post Office Box 27626
Glen Allen, Virginia
23060-6292
(804) 747-9794 FAX (804)
270-7281
March 18, 1997
Dear Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of
Owens & Minor, Inc. The meeting will be held on Tuesday, April 29, 1997 at 10:00
a.m. at the Virginia Historical Society, 428 North Boulevard, Richmond,
Virginia. Morning refreshments will be served. Parking is available at the
Virginia Museum parking lot; DIRECTIONS ARE ON THE BACK OF THE PROXY STATEMENT.
The primary business of the meeting will be to elect three directors and
to ratify the appointment of KPMG Peat Marwick LLP as independent auditors.
During the meeting I will also report to you on the condition and performance of
Owens & Minor during 1996 and the first quarter of 1997. You will have the
opportunity to meet members of the Board of Directors as well as management and
to ask questions on matters of importance to you and all shareholders.
I hope to see you on April 29, 1997. Whether you plan to attend or not,
please complete, sign, date and return the enclosed proxy card as soon as
possible in the postage-paid envelope provided. Your vote is important. All of
us at Owens & Minor appreciate your continued interest in and support of the
Company.
Warm Regards,
/s/ Q. Gilmer Minor, III
------------------------
G. GILMER MINOR, III
Chairman, President and
Chief Executive Officer
<PAGE>
[LOGO]
OWENS & MINOR, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD TUESDAY, APRIL 29, 1997
TO THE SHAREHOLDERS OF OWENS & MINOR, INC.:
You are hereby notified that the Annual Meeting of Shareholders of Owens &
Minor, Inc., a Virginia corporation (the "Company"), will be at the Virginia
Historical Society, 428 North Boulevard, Richmond, Virginia, on Tuesday, April
29, 1997 at 10:00 a.m.
The purposes of the meeting are:
1. To elect three directors to serve until the Annual Meeting of
Shareholders in 2000 (Proposal 1);
2. To ratify the appointment of KPMG Peat Marwick LLP as independent
auditors (Proposal 2); and
3. To transact such other business as may properly be brought before the
meeting.
The Board of Directors has fixed the close of business on March 4, 1997 as
the record date for the determination of shareholders entitled to receive notice
of and to vote at the meeting and any adjournment(s) or postponement(s) thereof.
Your attention is directed to the attached Proxy Statement.
BY ORDER OF THE BOARD OF DIRECTORS
DREW ST. J. CARNEAL,
Secretary
Richmond, Virginia
March 18, 1997
WHETHER OR NOT YOU PRESENTLY PLAN TO ATTEND THE MEETING IN PERSON, THE BOARD OF
DIRECTORS URGES YOU TO SIGN AND RETURN THE PROXY IN THE ENCLOSED ENVELOPE.
<PAGE>
[LOGO]
OWENS & MINOR, INC.
STREET ADDRESS MAILING ADDRESS
4800 Cox Road P.O. Box 27626
Glen Allen, Virginia 23060-6292 Richmond, Virginia 23261-7626
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 29, 1997
March 18, 1997
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Owens & Minor, Inc., a Virginia corporation
(the "Company"), for use at the Annual Meeting of Shareholders of the Company,
to be held at the Virginia Historical Society, 428 North Boulevard, Richmond,
Virginia, on April 29, 1997 at 10:00 a.m., and at any adjournment(s) or
postponement(s) thereof, for the purposes set forth herein and in the
accompanying Notice of Annual Meeting.
The expense of this solicitation will be borne by the Company. The Company
will reimburse brokers and other persons holding stock in their name as nominees
for their expenses in obtaining authorization to execute proxies from their
principals. Corporate Investor Communications, Inc. has been retained to aid in
such solicitation of proxies by telephone or telegraph or by personal calls at
an anticipated cost to the Company of $4,000 plus expenses.
All proxies received pursuant to this solicitation will be voted FOR the
election of directors as set forth below and in favor of Proposal 2 unless
contrary instructions are given. Any person who has returned a proxy to the
Company has the power to revoke it at any time before its exercise by submitting
a subsequently dated proxy, by giving notice in writing to the Secretary of the
Company prior to the commencement of the meeting or by voting in person at the
meeting.
Only shareholders of record at the close of business on March 4, 1997
will be entitled to vote at the meeting or any adjournment(s) or postponement(s)
thereof. As of such record date, the Company had outstanding and entitled to
vote 31,921,718 shares of Common Stock, $2.00 par value per share (the "Common
Stock"), each of which is entitled to one vote, and 1,150,000 shares of Series B
Cumulative Preferred Stock, $100 par value per share (the "Series B Preferred
Stock"), each of which is entitled to 6.06 votes. The holder of the Series B
Preferred Stock has agreed to vote its shares of Series B Preferred Stock with
respect to each matter to be voted upon at the Annual Meeting in the same
proportion as the votes cast on such matter by holders of the Common Stock
(excluding certain holders of 5% or more of the Common Stock).
This Proxy Statement and form of proxy is first being mailed to
shareholders of the Company on or about March 18, 1997.
1
<PAGE>
PROPOSAL 1. ELECTION OF DIRECTORS
In February, 1997, the Board of Directors adopted an amendment to the
Company's bylaws, to become effective on the date of the Annual Meeting,
reducing the number of directors from 10 to 9. This reduction would eliminate
the vacancy created upon the retirement of William F. Fife at the time of the
Annual Meeting. The Board will remain divided into three classes, with one class
being elected every year for a term of three years. Three nominees are expected
to be elected at this Annual Meeting to serve for a term of three years. All
nominees are to serve until their successors are elected and have qualified. The
remaining six directors will continue to serve as set forth below. Each of the
nominees is currently a director of the Company and has agreed to serve if
elected. Unless otherwise directed, a proxy will be voted for the three nominees
shown below. If some unexpected occurrence should, in the judgment of the Board
of Directors, make necessary the substitution of some other person for any of
the nominees, the shares represented by proxies will be voted for such other
person as the Board of Directors may select, or the Board of Directors may amend
the Bylaws to reduce the number of directors to the total of the remaining
nominees and any such substitute nominee or nominees in which case the shares
represented by proxies shall be voted for the remaining nominees and any such
substitute nominee or nominees. No proxy can be voted for more than three
persons.
The election of each nominee for director requires the affirmative vote of
a plurality of the votes cast in the election of directors by the holders of the
Common Stock and Series B Preferred Stock, voting together as a single class.
Votes that are withheld and Broker Shares that are not voted in the election of
directors will not be included in determining the number of votes cast.
The names and ages of the nominees and continuing directors, their
principal occupation or employment during the past five years and other relevant
data regarding them as of March 4, 1997, based on information received from the
respective nominees and continuing directors, are set forth below. Each of the
nominees and the directors has served continuously since the year he or she
joined the Board of Directors.
2
<PAGE>
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
For the Three-Year Term Expiring April 2000:
<TABLE>
<CAPTION>
<S> <C>
[PHOTO] JOSIAH BUNTING, III, 56, is Superintendent of the Virginia
Military Institute, Lexington, Virginia. From 1987 to 1995 he
served as Headmaster of The Lawrenceville School in Princeton,
New Jersey. General Bunting has been a director since 1995 and
is a member of the Audit and Strategic Planning Committees.
[PHOTO] JAMES E. UKROP, 59, is Vice Chairman and Chief Executive
Officer of Ukrop's Super Markets, Inc., a retail grocery chain.
Mr. Ukrop has been a director since 1987 and is a member of the
Compensation & Benefits and Strategic Planning Committees. Mr.
Ukrop also serves on the Boards of Directors of Richfood
Holdings, Inc. and Legg Mason, Inc.
[PHOTO] JAMES E. ROGERS, 51, is President of SCI Investors Inc, a
private equity investment firm. Mr. Rogers has been a director
since 1991 and is Chairman of the Compensation & Benefits
Committee and a member of the Executive and Strategic Planning
Committees. Mr. Rogers also serves on the Boards of Directors
of Wellman, Inc. and Caraustar Industries, Inc.
</TABLE>
3
<PAGE>
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
Terms Expiring April 1999:
<TABLE>
<CAPTION>
<S> <C>
[PHOTO] VERNARD W. HENLEY, 67, is Chairman of the Board and Chief
Executive Officer of Consolidated Bank and Trust Company,
Richmond, Virginia. Mr. Henley has been a director since 1993
and is a member of the Audit, Governance and Nominating and
Compensation & Benefits Committees.
[PHOTO] G. GILMER MINOR, III, 56, is Chairman, President and Chief
Executive Officer of the Company. Mr. Minor has been a director
since 1980 and is Chairman of the Executive Committee and a
Committee. Mr. Minor also member of the Strategic Planning
serves on the Boards of Directors of Crestar Financial
Corporation and Richfood Holdings, Inc.
[PHOTO] R.E. CABELL, JR., ESQ., 73, is retired (Of Counsel) from the
law firm of Williams, Mullen, Christian & Dobbins. Mr. Cabell
has been a director since 1962 and is Chairman of the Audit
Committee and a member of the Executive Committee. Mr. Cabell
also serves on the Board of Directors of The C.F. Sauer Company
and is a Trustee of Hampden-Sydney College.
</TABLE>
4
<PAGE>
Terms Expiring April 1998:
<TABLE>
<CAPTION>
<S> <C>
[PHOTO] E. MORGAN MASSEY, 70, is Chairman of Inter-American Coal, N.V.
and Chairman Emeritus of A.T. Massey Coal Company, Inc., both
coal companies. Mr. Massey has been a director since 1988 and
is a member of the Compensation & Benefits, Governance &
Nominating and Strategic Planning Committees. Mr. Massey also
serves on the Massey Cancer Center Advisory Board, Richmond,
Virginia, as Vice Chairman of the U.S. Energy Association,
Washington, D.C. and as a member of the Board of the University
of Virginia Engineering Foundation. He is also Vice Chairman of
the Marine Advisory Council of the Virginia Institute for
Marine Science.
[PHOTO] JAMES B. FARINHOLT, JR., 62, is Executive Director of the
Virginia Biotechnology Research Park and Special Assistant to
the President of Virginia Commonwealth University for Business
Development, advising on campus expansion and commercialization X
of scientific discoveries. From 1978 to 1995, Mr. Farinholt
served as President of Galleher & Company, Inc., an investment
company. Mr. Farinholt has been a director since 1974 and is
Chairman of the Strategic Planning Committee and a member of
the Audit and Executive Committees.
[PHOTO] ANNE MARIE WHITTEMORE, 51, is a partner in the law firm of
McGuire, Woods, Battle & Boothe, L.L.P. Mrs. Whittemore has
been a director since 1991 and is Chairperson of the Governance X
& Nominating Committee and a member of the Executive and
Compensation & Benefits Committees. Mrs. Whittemore also serves X
on the Boards of Directors of USF&G Corporation, James River
Corporation, T. Rowe Price Associates, Inc. and Albemarle
Corporation.
</TABLE>
5
<PAGE>
SERIES B PREFERRED STOCK DIRECTOR
Pursuant to the Company's Articles of Incorporation, the holders of the
Series B Preferred Stock are entitled to elect one member of the Board of
Directors of the Company for so long as any share of Series B Preferred Stock
remains outstanding. Such director (the "Series B Director") is in addition to
the number of Directors of the Company elected by the holders of the Common
Stock and Series B Preferred Stock, voting together as a single class. On April
30, 1996, the holders of the Series-B Preferred Stock elected C.G. Grefenstette
as the Series B Director, to serve until the next annual meeting of the holders
of Series B Preferred Stock. It is anticipated that the holders of the Series B
Preferred Stock will re-elect Mr. Grefenstette in 1997.
<TABLE>
<CAPTION>
<S> <C>
[PHOTO] C.G. GREFENSTETTE, 69, is Chairman and Chief Executive Officer
of The Hillman Company, diversified investments and operations.
From 1989 to 1993, Mr. Grefenstette served as President & Chief X
Executive Officer of The Hillman Company. Mr. Grefenstette also
serves on the Boards of Directors of The Hillman Company, The
Hillman Foundation, The Polk Foundation, Inc., Duquesne
University and PNC Bank Corp. Mr. Grefenstette has been a
director of the Company since 1994 and is a member of the
Audit, Governance & Nominating and Strategic Planning
Committees.
</TABLE>
6
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held five meetings during 1996. All directors
attended at least 75% of the total meetings of the Board of Directors and any
Committees on which they serve. The Board has Executive, Audit, Compensation &
Benefits, Governance & Nominating, and Strategic Planning Committees.
None of the members of the Audit Committee are employees of the Company
or its subsidiaries. The function of the Audit Committee is to oversee the
Company's financial reporting and internal control structure and to serve as a
direct line of communication among the Company's independent auditors, the
Company's Internal Audit Department and the Board of Directors. The Audit
Committee met four times during the past year.
None of the members of the Compensation & Benefits Committee are
employees of the Company or its subsidiaries. The function of the Compensation &
Benefits Committee is to recommend to the Board of Directors the salaries and
compensation of the executive officers of the Company, and to make such other
studies and recommendations concerning compensation and compensation policies as
may be brought to their attention for consideration. The Compensation & Benefits
Committee administers the Savings & Protection Plan, the Employee Stock Purchase
Plan, the 1985 and 1993 Stock Option Plans, the Supplemental Executive
Retirement Plan and the Annual Incentive Plan for employees who are subject to
Section 16 of the Securities Exchange Act of 1934 (the "Exchange Act"). The
Compensation & Benefits Committee met four times during the past year.
In April 1996, the Board of Directors appointed a Governance and
Nominating Committee. The functions of the Governance and Nominating Committee
are to make recommendations to the Board of Directors concerning the selection
of candidates as nominees as Directors, and to advise on directorship practices
and corporate governance matters. The Committee will consider candidates
recommended by shareholders entitled to vote for the election of directors.
Notice of nominations made by shareholders with respect to the 1998 annual
meeting must be received in writing by the Secretary of the Company no later
than November 19, 1997 and must set forth (i) the name, age and address of each
nominee proposed in such notice, (ii) the principal occupation or employment of
each such nominee and (iii) the number and class of capital shares of the
Company beneficially owned by each such nominee, if any. The Governance and
Nominating Committee met three times during the past year.
7
<PAGE>
CAPITAL STOCK OWNED BY
PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth as of March 4, 1997 the number of shares
of Common Stock and Series B Preferred Stock beneficially owned by each director
and nominee, the named executive officers in the Summary Compensation Table, all
current executive officers and directors of the Company as a group, and all
persons (including any "group" as that term is used in Section 13(d)(3) of the
Exchange Act) who, to the knowledge of the Company, are the beneficial owners of
more than 5% of Common Stock or Series B Preferred Stock.
<TABLE>
<CAPTION>
Sole Voting
and Aggregate
Title Name of Investment Percentage
of Class Beneficial Owner Power(1) Other(2) Owned
- ------------------ ----------------------------------------------- ------------ --------- ----------
<S> <C> <C> <C> <C>
COMMON G. Gilmer Minor, III........................... 556,553 16,453 1.8%
Josiah Bunting, III............................ 2,832 0 *
R. E. Cabell, Jr............................... 86,314 8,655 *
James B. Farinholt, Jr......................... 15,660 0 *
Carl G. Grefenstette........................... 6,064 6,969,000(3) 17.9%
Vernard W. Henley.............................. 6,846 750 *
E. Morgan Massey............................... 204,193 0 *
James E. Rogers................................ 16,190 0 *
James E. Ukrop................................. 45,626 0 *
Anne Marie Whittemore.......................... 14,910 500 *
Robert E. Anderson, III........................ 134,632 1,957 *
Henry A. Berling............................... 399,927 9,751 1.3%
Craig R. Smith................................. 96,681 2,115 *
Drew St.J. Carneal............................. 71,741 6,833 *
All Executive Officers and Directors as a group
(24 persons)................................. 1,910,400 7,054,647 22.6%
Wilmington Securities, Inc. (3)
824 Market Street, Suite 900
Wilmington, DE 19801......................... 6,969,000 0 17.9%
Wellington Management Company, LLP (4)
75 State Street
Boston, MA 02109............................. 0 2,339,400 7.3%
Westport Asset Management, Inc. (5)
253 Riverside Avenue
Westport, CT 06880........................... 18,700 1,842,825 5.8%
Valenzuela Capital Management, Inc. (6)
1270 Avenue of the Americas, Suite 508
New York, NY 10020........................... 1,730,000 0 5.4%
SERIES B
PREFERRED
STOCK(7)(8) Wilmington Securities, Inc. (3)
824 Market Street, Suite 900
Wilmington, DE 19801........................... 1,150,000 -- 100.0%
</TABLE>
*Represents less than 1% of the total number of shares outstanding.
8
<PAGE>
(1) Includes 697,380 shares which certain officers and directors of the
Company have the right to acquire through the exercise of stock options within
60 days following March 4, 1997.
(2) Includes: (a) shares held by certain relatives; (b) shares held in
various fiduciary capacities; (c) shares held by the Company's Employee Stock
Purchase Plan and 401(k) Plan; (d) grants of restricted stock through the
Company's Annual Incentive Plan; and (e) shares that the shareholder has shared
power to dispose of or to direct disposition of. These shares may be deemed to
be beneficially owned under the rules and regulations of the Securities and
Exchange Commission ("SEC"), but the inclusion of such shares in the table does
not constitute an admission of beneficial ownership.
(3) Wilmington Securities, Inc. ("Wilmington") owns 1,150,000 shares of
Series B Preferred Stock which are convertible into approximately 6,969,000
shares of Common Stock. Wilmington acquired the 1,150,000 shares of Series B
Preferred Stock in January 1996 from the former shareholders of Stuart Medical,
Inc. Wilmington is a private investment company and an indirect wholly-owned
subsidiary of The Hillman Company ("Hillman"), a firm engaged in diversified
investments and operations which is controlled by the Henry L. Hillman Trust
U/A/T dated November 18, 1985 (the "Trust"). The trustees of the Trust are Henry
L. Hillman, Elsie Hilliard Hillman and C.G. Grefenstette (the "Trustees"). The
Trustees share voting and investment power with respect to the shares held of
record by Wilmington and may be deemed to be the beneficial owners of such
shares.
(4) The number of shares owned is as of January 24, 1997, as reported in
the Schedule 13G filed by Wellington Management Company, LLP and received by the
Company on or about February 16, 1997.
(5) The number of shares owned is as of February 13, 1997, as reported in
the Schedule 13G filed by Westport Asset Management, Inc. and received by the
Company on or about February 16, 1997.
(6) The number of shares owned is as of January 23, 1997, as reported on
the Schedule 13G filed by Valenzuela Capital Management, Inc. and received by
the Company on or about February 16, 1997.
(7) The 1,150,000 shares of outstanding Series B Preferred Stock are
convertible into approximately 6,969,000 shares of Common Stock and are owned by
Wilmington. Wilmington has agreed that so long as it owns any shares of Series B
Preferred Stock or owns at least 5% of the outstanding shares of Common Stock,
it will vote such shares, with respect to each matter to be voted upon by the
holder(s) of such shares, in the same proportion as the votes cast on such
matter by all other holders of Common Stock (excluding certain holders of 5% or
more of the Common Stock). Such voting agreement does not apply to certain
matters including specified amendments to the Company's articles of
incorporation or bylaws, the election of the Series B Director and certain
matters specified by Virginia law.
(8) None of the directors, or named executive officers in the Summary
Compensation Table, other than Mr. Grefenstette, owns any Series B Preferred
Stock.
TRANSACTIONS WITH MANAGEMENT AND OTHERS. In June, 1996, the Company
entered into an agreement with James L. Grigg, Senior Vice President, Supply
Chain Management, to purchase his residence in Grapevine, Texas for a sum of
$191,750. This purchase was agreed upon pursuant to the Company's Relocation
Policy and was a term of Mr. Grigg's employment package when he was hired in May
of 1996.
9
<PAGE>
In October 1996 the Company entered into an agreement to sell a parcel of
real estate located in Sanford, Florida (the Company's former Harbor Medical
facility) to Alfhausen Assoc. Limited Partnership ("Alfhausen") for a sum of
$1,650,000. Alfhausen is a limited partnership of which Henry A. Berling,
Executive Vice President of the Company, is managing partner. Details of the
transaction were fully disclosed to the Executive Committee of the Board of
Directors, which, after reviewing information regarding the fair market value of
the property, approved the transaction as equitable.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE. The Company's
directors, its executive officers, and any persons holding more than 10% of
outstanding shares of Common Stock are required to file reports with the SEC
concerning their initial ownership of Common Stock and any subsequent changes in
that ownership. The Company believes that the filing requirements were satisfied
in 1996. In making this disclosure, the Company has relied solely on written
representations of its directors, executive officers and beneficial owners of
more than 10% of the Common Stock and copies of the reports that they have filed
with the SEC.
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION & BENEFITS COMMITTEE
The Compensation & Benefits Committee (the "Committee") of the Board of
Directors is comprised of five outside directors who are not current or past
employees of the Company. The principal functions of the Committee are to
oversee the design and competitiveness of the Company's total compensation
program, to evaluate the performance of the Company's senior executives and
approve related compensation actions, and to administer the Company's 1993 Stock
Option Plan, Supplemental Executive Retirement Plan, Savings & Protection Plan,
and Annual Incentive Plan for employees who are subject to Section 16 of the
Exchange Act, in accordance with the terms of each respective plan. The
Committee met four times during calendar year 1996.
EXECUTIVE COMPENSATION PHILOSOPHY
With respect to executive compensation, the Committee's philosophy is to
establish and maintain programs and practices that incent achievement of the
Company's strategic objectives and provide rewards that reflect the Company's
performance. Compensation for executives is therefore based upon measures of the
Company's financial performance and strategic results that are intended to lead
to the creation of shareowner value. The Committee also strives to maintain
market competitive compensation levels and therefore regularly evaluates
executive compensation levels through comparisons against the peer companies
reflected in the Performance Graph of this proxy statement, and other companies
of similar size and operating characteristics. Base salary levels generally are
maintained somewhat below competitive market averages for like experienced
executives. Base salaries are combined with incentive compensation opportunities
to fully reach competitive average total compensation levels when warranted by
the Company's and the individual officer's performance. This combination is
intended to focus management on the annual and longer-term success of the
Company. The Committee recognizes it may sometimes be necessary to sacrifice
short-term financial performance to obtain longer-term business success. This
belief leads the Committee to regularly monitor the balance between annual and
longer-term rewards, and act as needed to encourage meaningful levels of share
ownership among executives.
10
<PAGE>
Consistent with the Committee's philosophy of competitive
pay-for-performance, 1996 base salaries for the named executives increased over
1995. These increases were reflective of progress made toward performance
enhancement initiatives, the prior year's reduction in officer salaries, and the
need for more competitive pay levels. The base salary for the CEO increased 9%
over 1995, for a two-year annualized increase of 4.8%. Base salaries for the
other named executives increased an average of 7.8% over 1995, for a two-year
average annualized increase of 7%.
COMMITTEE PROCESS AND ANNUAL INCENTIVE PLAN
Early each year the Committee meets to review key aspects of the upcoming
year's business plan and establish Annual Incentive Plan goals for each
corporate officer, including the Chief Executive Officer, executive and senior
vice presidents, and vice presidents. Goals under this plan are weighted to
reflect their importance and contribution to desired Company and shareowner
outcomes. The 1996 Annual Incentive Plan goals for named executives were based
solely on the Company's earnings per share performance. The Committee receives
periodic updates during the year on business performance in relation to
incentive plan goals, particularly with respect to senior executives.
Discussions of management contribution and performance are the norm, not the
exception, in Committee meetings.
At the close of each year, the Committee meets to discuss financial and
other performance compared to Annual Incentive Plan goals and longer-term
strategic business goals. These longer-term business goals center around the
Company's strategic objectives to remain customer oriented in everything it does
and to actively evolve its business consistent with the service needs of
customers and the Company's markets. In deciding the level of annual salary
increases, incentive payments and granting of stock options, the Committee looks
to the Chief Executive Officer for recommendations on senior executives and then
meets privately, without the presence of management, including the Chief
Executive Officer in relation to his own compensation, to determine compensation
actions. The Committee's decision-making process is benefited by input from the
Company's Human Resources Department, and periodically from outside advisors, to
maintain the desired level of competitiveness and technically sound compensation
and benefit programs.
The Company's operating performance for 1996 showed marked improvement
over 1995 as a result of profitability enhancement initiatives. Company
performance from recurring operations in 1996 saw sales increase 1.4% to $3.02
billion and net income increase to $13.0 million from a 1995 net loss of $1.0
million. Net income per common share was $0.25 versus a loss of $0.20 per share
in 1995.
The maximum award payable under the Company's Annual Incentive Plan to the
Chief Executive Officer for full attainment of earnings per share goals would be
65% of his base salary. Despite improved 1996 performance, the Company did not
achieve the desired level of earnings per share appropriate for incentive award
payment. The Committee therefore did not award annual incentive payments to the
Chief Executive Officer or other named executives.
Under the Company's Annual Incentive Plan, executives are also eligible to
receive a bonus of Common Stock equivalent to 25% of the cash incentive payment
which vests provided the officer maintains a continuous employment relationship
with the Company for the following three years. The restricted stock bonus for
named executives is dependent on performance against the same goals as for the
Annual Incentive
11
<PAGE>
Plan. The Chief Executive Officer and other named executives did not receive
shares of stock for 1996, as no incentive award was made.
LONG-TERM INCENTIVE PLAN
Each year the Committee considers the desirability of granting senior
executives awards under the Company's Stock Option Plan. The plan provides for
the use of non-qualified stock options, incentive stock options, and stock
appreciation rights. The Committee's decision to grant stock options is
discretionary and largely determined by key financial performance measures and
strategic accomplishments, though no specific performance targets are applied
for this purpose. Option grant decisions may also be based upon outstanding
individual performance, job promotions, and greater responsibility within the
Company. Stock option levels are a component of competitive total compensation
and include such considerations as salary grade levels, responsibility levels,
and expectations of future impact on overall Company performance. The Committee
believes stock option grants have historically been effective in helping to
focus executives on enhancing long-term profitability and shareholder value. The
Committee granted 45,000 stock options to the Chief Executive Officer in 1996 as
a result of performance improvements over 1995, progress toward profitability
enhancement initiatives and to incent future growth in shareholder returns.
Grants were also provided to the other named executives. The Committee does not
specifically consider the number of options currently held by an officer in
determining current option grant levels.
CORPORATE TAX CONSIDERATIONS
Congress passed a law effective in 1994, covered in Internal Revenue
Service Code ("IRC") Section 162(m), that disallows corporate tax deductions for
executive compensation in excess of $1 million for "proxy table" executives.
This law does allow for certain exemptions to the deduction cap, including pay
plans that depend on formulas rather than discretion and therefore are
"performance-based."
All current executive compensation is fully deductible. The Committee
intends for the Company's pay plans and actions to be performance-based and
therefore fully eligible for compensation expense deductions.
The foregoing report has been furnished by Mrs. Whittemore and Messrs.
Henley, Massey, Rogers (Chairman), and Ukrop.
12
<PAGE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
The following performance graph compares the performance of the Common
Stock to the S&P 500 Index and a Peer Group, which includes the Company and the
companies listed below, for the Company's last five fiscal years. The graph
assumes that the value of the investment in the Common Stock and each index was
$100 on December 31, 1991 and that all dividends were reinvested.
5 - YEAR TOTAL SHAREHOLDER RETURN
[GRAPH]
<TABLE>
<CAPTION>
Dec-91 Dec-92 Dec-93 Dec-94 Dec-95 Dec-96
<S> <C> <C> <C> <C> <C> <C>
Owens & Minor, Inc. $100 $111 $174 $164 $149 $122
S&P 500 100 108 118 120 165 203
Industry Peer Index 100 127 155 158 216 287
</TABLE>
The Peer Group selected for purposes of the above graph consists of
companies engaged in the business of distribution, and includes Owens & Minor,
Inc., Arrow Electronics Inc., Bergen Brunswig Corp., Bindley Western Industries,
Cardinal Health, Inc., Hughes Supply Inc., Moore Medical Corp., Nash Finch
Company, Richfood Holdings, Inc., Rykoff-Sexton Inc., United Stationers Inc. and
VWR Scientific Products. The Peer Group no longer includes Super Food Services,
Inc. which was acquired by Nash Finch Company in November 1996.
13
<PAGE>
COMPENSATION OF DIRECTORS
CASH COMPENSATION. In 1996, each non-employee director was paid an annual
retainer of $10,000 ($13,000 for committee chairmen), plus $1,000 for each Board
meeting attended, $800 for each meeting of the Board's committees and $500 for
telephone conference meetings.
DIRECTORS COMPENSATION PLAN. The Directors Compensation Plan (the
"Directors Plan") provides for automatic, annual grants of options to purchase
Common Stock. During 1996, each eligible director was granted options to
purchase 2,532 shares of the Company's Common Stock at a per share exercise
price of $13.50. In addition, the Directors Plan allows eligible directors to
defer the receipt of all or part of their director fees. Amounts deferred are
"invested" in bookkeeping accounts that measure earnings and losses based on the
performance of a particular investment. There are two subaccounts into which
directors may elect to defer their fees in integral multiples of 10%: (i) an
account based upon the price of the Company's Common Stock, and (ii) an account
based upon the current interest rate of the Company's fixed income fund in its
401(k) Plan, currently 4.5%. Subject to certain restrictions, a director will be
permitted to take cash distributions in whole or in part from a deferred fee
account either prior to or following the termination of his or her service as a
director. The Directors Plan also allows eligible directors to receive payment
of all or part of their director fees in Common Stock rather than cash.
14
<PAGE>
SUMMARY COMPENSATION TABLE
The following table shows, for the fiscal years ended December 31, 1996,
1995 and 1994, the cash compensation paid by the Company, as well as certain
other compensation paid or accrued, to the Company's Chief Executive Officer and
its four other most highly compensated executive officers (the "Named Executive
Officers").
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation(1)
-------------------------------- ---------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h)
Awards
----------------------
Other Restricted Securities All
Name and Annual Stock Underlying Other
Principal Salary Bonus Compensation Awards Options Compensation
Position Year ($) ($) ($)(2) ($)(3) (#)(4) ($)(5)
- ----------------------------- ---- -------- -------- ------------ ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
G. Gilmer Minor, III 1996 $409,619 $ 0 -- $ 0 45,000 $ 33,217
Chairman, President 1995 375,000 0 -- 0 0 35,611
& Chief Executive 1994 372,654 172,800 -- 43,206 90,000 29,670
Officer
Craig R. Smith 1996 231,620 0 -- 0 20,000 15,563
Executive Vice President 1995 203,091 0 -- 0 30,000 15,366
Chief Operating Officer 1994 178,654 70,110 -- 17,528 33,750 13,666
Henry A. Berling 1996 223,789 0 -- 0 15,000 15,133
Executive Vice President 1995 206,938 0 -- 0 0 16,700
Partnership Development 1994 202,210 73,745 -- 18,440 37,500 18,941
Chief Sales Officer
Robert E. Anderson, III 1996 203,099 0 -- 0 7,500 23,892
Executive Vice President 1995 192,500 0 -- 0 0 25,996
Planning & Business 1994 187,649 53,000 -- 13,253 33,750 16,473
Development
Drew St. J. Carneal 1996 167,633 0 -- 0 15,000 2,894
Senior Vice President 1995 164,175 0 -- 0 0 3,370
General Counsel & 1994 159,820 58,740 -- 14,498 30,000 3,009
Secretary
</TABLE>
(1) The Company has no Long-Term Incentive Plans as defined by Item 402(a)(7)
(iii) of Regulation S-K.
(2) None of the Named Executive Officers received Other Annual Compensation in
excess of the lesser of $50,000 or 10% of combined salary and bonus for
fiscal years 1996, 1995 or 1994.
(3) Aggregate restricted stock holdings and values at December 31, 1996 for the
Named Executive Officers are as follows: (i) Mr. Minor: 5,696 shares,
$58,384; (ii) Mr. Smith: 2,332 shares, $23,903; (iii) Mr. Berling: 2,474
shares, $25,358; (iv) Mr. Anderson: 2,046 shares, $20,971; and (v) Mr.
Carneal: 2,012 shares, $20,623. Dividends are paid on restricted stock at
the same rate as all shareholders of record.
15
<PAGE>
(4) No SARs were granted in 1996, 1995 or 1994.
(5) Includes in 1996 for (i) Mr. Minor: $4,520 company contributions to defined
contribution plans, $28,697 benefit attributable to company-owned life
insurance policy; (ii) Mr. Smith: $3,392 company contributions to defined
contribution plans, $12,171 benefit attributable to company-owned life
insurance policy; (iii) Mr. Berling: $15,133 benefit attributable to
company-owned life insurance policy; (iv) Mr. Anderson: $3,167 company
contributions to defined contribution plans, $20,725 benefit attributable
to company-owned life insurance policy; and (v) Mr. Carneal: $2,894 company
contributions to defined benefit plans.
EXECUTIVE SEVERANCE AGREEMENTS. In 1989, the Board authorized the Company
to enter into Severance Agreements (the "Severance Agreements") with certain
officers of the Company in order to encourage key management personnel to remain
with the Company and to avoid distractions regarding potential or actual changes
in control of the Company.
The Severance Agreements include senior vice presidents and higher
ranking corporate officers, including the Named Executive Officers, who have
been employed by the Company for a period of at least one year and also vice
presidents who have been employed by the Company for at least ten years and are
approved for participation by the Compensation & Benefits Committee.
The Severance Agreements provide for the payment of a severance benefit
if such participant's employment with the Company is terminated for any reason,
other than as a consequence of death, disability, or normal retirement, within
two years after a Change in Control of the Company (as defined in the Severance
Agreements). The severance benefit is equal to 2.99 times the average of the
participant's total annual compensation from the Company, including all bonuses,
which was included in gross income for income tax purposes for the five calendar
years preceding the Change in Control of the Company, provided, however, no
payments will be made to participants which would be treated as an "excess
parachute payment" under Section 280G of the IRC.
Each Severance Agreement continues in effect through December 31, 1997,
and unless notice is given to the contrary, the term is automatically extended
for an additional year at the end of each year.
CONSULTING ARRANGEMENT. The Company has entered into a consulting
agreement with Mr. Anderson, who retired as Executive Vice President, Planning &
Business Development of the Company effective December 31, 1996, pursuant to
which Mr. Anderson will render certain services to the Company and provide
advice and assistance on business development, strategic planning and other
matters. In consideration for his services, the Company has agreed to pay Mr.
Anderson $7,926 per month plus reimbursement of reasonable documented business
expenses incurred in the performance of services and COBRA premiums for medical
insurance. The agreement commenced on January 1, 1997 and terminates on April
30, 1999.
16
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning the grant of options
made during 1996 under the Company's 1993 Stock Option Plan to the Named
Executive Officers. The Company granted no SARs during 1996.
<TABLE>
<CAPTION>
Grant
Date
Individual Grants(1) Value(2)
- ----------------------------------------------------------------------------------------------------- --------
<S> <C> <C> <C> <C> <C>
Number of
Securities % of Total Grant
Underlying Options Granted Exercise or Date
Options to Employees Base Price Expiration Present
Name Granted in Fiscal Year ($/Share) Date Value($)
- ------------------------ -------------------- --------------- ------------- ---------- --------
G. Gilmer Minor, III 45,000 7.45% $ 13.8125 4/30/06 $320,477
Henry A. Berling 15,000 2.48% $ 13.8125 4/30/06 106,826
Robert E. Anderson, III 7,500 1.24% $ 13.8125 4/30/06 51,682
Craig R. Smith 20,000 3.31% $ 13.8125 4/30/06 142,434
Drew St.J. Carneal 15,000 2.48% $ 13.8125 4/30/06 106,826
</TABLE>
(1) Options are exercisable beginning on the first anniversary of grant
date, with 40% being exercisable at that time and an additional 30% and 30%
becoming exercisable on the second and third anniversary of grant date,
respectively.
(2) Based upon Black Scholes option valuation model. Volatility is based
on the variance of the rate of return as measured over the most recent 180
trading days prior to the grant. Other assumptions include a riskless rate of
return of 6.51%, annual dividend yield of 1.39%, and option maturity of 10
years.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL
YEAR-END OPTION VALUES
The following table sets forth information with respect to the Named
Executive Officers concerning the exercise of options during 1996, and
unexercised options held by them on December 31, 1996. There were no SARs
exercised during 1996 or outstanding on December 31, 1996.
<TABLE>
<CAPTION>
Number of Value of
Securities Unexercised
Underlying In-the-Money
Unexercised Options at
Options at FY End FY End
Shares Acquired Value Exercisable/ Exercisable/
Name Upon Exercise Realized Unexercisable Unexercisable
- ------------------------ --------------- ------------ ----------------- --------------------
<S> <C> <C> <C> <C>
G. Gilmer Minor, III 13,500 $ 24,192 130,500/72,000 $253,148/ 0
Henry A. Berling 0 0 60,000/26,250 126,574/ 0
Robert E. Anderson, III 22,500 $110,633 75,000/ 0 126,574/ 0
Craig R. Smith 0 0 75,000/48,125 144,231/ 0
Drew St.J. Carneal 0 0 54,750/24,000 126,574/ 0
</TABLE>
17
<PAGE>
RETIREMENT PLANS
PENSION PLAN. The Company provides retirement benefits under a defined
benefit pension plan (the "Pension Plan"), pursuant to which benefits are based
upon both length of service and compensation. Pension Plan benefits are
determined under a formula based on an individual's earnings and years of
credited service. Funding is determined on an actuarial basis. Effective
December 31, 1996, participants in the Pension Plan will cease to accrue
additional benefits; provided, however, that participants who have completed at
least five years of service as of January 1, 1997 and whose age plus years of
service equal at least 65 will continue to earn an accrued benefit until the
earlier of (i) December 31, 2001 or (ii) until retirement, death or termination
of employment (with the exception of certain highly compensated employees if the
Pension Plan does not meet certain coverage requirements of the IRC).
The following table shows estimated annual benefits payable at normal
retirement age of 65 years to persons with specified remuneration and years of
service, under the Pension Plan:
<TABLE>
<CAPTION>
Average Straight Life Annuity Benefits Based
on Years of Credited Service
Average --------------------------------------------------------
Compensation(1) 15 yrs. 20 yrs. 25 yrs. 30 yrs. 35 yrs.
- --------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 125,000 $21,986 $27,886 $33,785 $39,685 $45,584
150,000 25,343 32,482 39,621 46,761 53,900
175,000 28,699 37,078 45,457 53,836 62,215
200,000 32,055 41,674 51,293 60,912 70,531
</TABLE>
(1) Average compensation represents compensation based upon a benefit
formula applied to an employee's career average earnings, which approximates the
amount of salary set forth in the Summary Compensation Table. The maximum amount
of covered compensation is $150,000, or some other amount as may be determined
by the Secretary of Treasury pursuant to IRC Section 401(a)(17).
Benefits are computed on a straight-life annuity basis, and are not
subject to offset for Social Security benefits or other amounts. The years of
service credited for the Named Executive Officers under the Pension Plan are
presently as follows: Mr. Minor, III, 33 years; Mr. Berling, 30 years; Mr.
Smith, 7 years; Mr. Anderson, 28 years; and Mr. Carneal, 8 years.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. The Company provides
supplemental retirement benefits to certain employees selected by the
Compensation & Benefits Committee under the Supplemental Executive Retirement
Plan (the "SERP"). The SERP entitles participants to receive a specified
percentage of the participant's average base monthly salary during the five
years preceding his retirement (in the case of the Named Executive Officers,
65%) reduced by the benefit payable under the Pension Plan and Social Security.
The estimated annual benefits payable under the SERP upon retirement at normal
retirement age for the Named Executive Officers are: Mr. Minor, III, $175,046;
Mr. Berling, $82,432; Mr. Smith, $113,758; Mr. Anderson, $73,533; and Mr.
Carneal, $78,408. These benefits have been calculated assuming a frozen Pension
Plan benefit at December 31, 1996, as discussed above.
In addition, the Board of Directors approved the payment of $4,140 in
additional monthly SERP benefits, commencing on January 15, 1997, to Mr.
Anderson who retired as Executive Vice President, Planning & Business
Development of the Company effective December 31, 1996. The additional benefits
18
<PAGE>
were approved in consideration of Mr. Anderson's many years of service to the
Company and will be paid until terminated pursuant to the provisions of the
SERP.
PROPOSAL 2. SELECTION OF INDEPENDENT AUDITORS
Action will be taken at the meeting to ratify the appointment by the
Board of Directors of KPMG Peat Marwick LLP as the independent auditors of the
Company. The Audit Committee and the Board of Directors recommend that the
shareholders ratify their appointment. Unless otherwise directed, the persons
named in the enclosed form of proxy intend to vote such proxy for the
ratification of the appointment by the Board of Directors of KPMG Peat Marwick
LLP as independent auditors of the Company.
Representatives of KPMG Peat Marwick LLP are expected to be present at
the Annual Meeting of Shareholders. They will have the opportunity to make a
statement, if they desire to do so, and will be available to respond to
appropriate questions from shareholders.
PROPOSALS OF SHAREHOLDERS
Shareholders wishing to present proposals for action at the Company's
Annual Meeting of Shareholders in 1998 must submit the proposals to the Company
for inclusion in the Company's 1998 Proxy Statement not later than November 19,
1997 in writing at the address shown in the heading of this Proxy Statement.
MISCELLANEOUS
The Company does not know of any other matter to be presented for action
by the shareholders at the meeting. If any other matter properly comes before
the meeting, it is intended that the persons named in the accompanying form of
proxy will vote thereon in their discretion.
March 18, 1997
BY ORDER OF THE BOARD OF DIRECTORS
DREW ST. J. CARNEAL,
Secretary
19
<PAGE>
Directions to
Owens & Minor, Inc. Annual Meeting of Shareholders
Tuesday, April 29, 1997 -- 10:00 a.m.
Virginia Historical Society
428 North Boulevard
Richmond, Virginia
The Boulevard is Exit 78 on both I-64 and I-95:
From Washington DC, follow I-95 South to the exit.
From Petersburg, follow I-95 North.
From Charlottesville, follow I-64 East.
From Norfolk and the Airport, follow I-64 West.
Take the Boulevard south just past Kensington Avenue, turn right into The
Historical Society. Parking is available behind the building.
<PAGE>
FRONT
PROXY
OWENS & MINOR, INC.
Proxy Solicited by the Board of Directors for the Annual Meeting of
Shareholders
The undersigned hereby appoints Messrs. Vernard W. Henley, G. Gilmer
Minor, III and R.E. Cabell, Jr. and each of them with power of substitution, the
proxy (and if the undersigned is a proxy, the substitute proxy) of the
undersigned to vote all shares held of record on March 4, 1997 by the
undersigned as directed below and in their discretion on all other matters which
may properly come before the Annual Meeting of Shareholders of Owens & Minor,
Inc., to be held on April 29, 1997 at 10:00 A.M. at the Virginia Historical
Society, 428 North Boulevard, Richmond, Virginia, and any adjournments or
postponements thereof.
The undersigned directs said proxies to vote as specified upon the items shown
herein which are referred to in the Notice of Annual Meeting and as set forth in
the Proxy Statement.
This Proxy, when properly executed, will be voted in the manner directed by the
undersigned shareholder(s). If no direction is made, this Proxy will be voted
FOR Proposals 1 and 2.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
Please sign exactly as your name appears herein. Attorneys-in-fact, executors,
administrators, trustees and guardians should give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
Shareholders who are present at the meeting may withdraw their proxy and vote in
person if they so desire.
BACK
1. Election of Directors:
For a term of three years: Messrs. Josiah Bunting, III, James E. Ukrop
and James E. Rogers.
FOR WITHHOLD FOR ALL EXCEPT
NOTE: If you do not wish your shares voted "for" a particular nominee, mark the
"For All Except" box and strike a line through the nominee's(s') name(s). Your
shares will be voted for the remaining nominees.
2. Ratification of appointment of KPMG Peat Marwick, LLP as independent
auditors.
FOR AGAINST ABSTAIN
3. In their discretion the proxies are authorized to vote upon such other
matters as may properly come before the meeting.
The Board of Directors recommends a vote FOR Proposals 1 and 2.
Mark box at right if an address chnage or comment has been noted on the reverse
side of this card.
Please be sure to sign and date this Proxy. Date ____________
- --------------------------------------------------------------
Shareholder sign here Co-owner sign here
??
