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 ss.240.14a-11(c) or
ss.240.14a-12
The Perkin-Elmer Corporation
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
|_| $125 per Exchange Act Rules 0-11(c) (1) (ii), 14a-6(i) (1), 14a-6(i) (2)
or Item 22(a)(2) of Schedule 14A.
|_| $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i) (3).
|_| Fee computed on table below per Exchange Act Rules 14a-6(i) (4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it is determined):
---------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
---------------------------------------------------------------
|X| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a) (2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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PERKIN ELMER
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Notice of
1996
Annual Meeting
of Shareholders
and
Proxy Statement
<PAGE>
TABLE OF CONTENTS
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Page
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Notice of Annual Meeting of Shareholders
Proxy Statement
Election of Directors (Proposal 1)................................................. 2
Voting Securities.................................................................. 7
Executive Compensation............................................................. 8
Ratification of Selection of Independent Accountants (Proposal 2).................. 17
Amendment to Restated Certificate of Incorporation to Limit the Liability of
Directors Consistent with the New York Business Corporation Law (Proposal 3)..... 17
Adoption of the 1996 Stock Incentive Plan to Replace the Expiring Plan (Proposal
4)............................................................................... 19
Adoption of the 1996 Employee Stock Purchase Plan to Replace the Expiring Plan
(Proposal 5)..................................................................... 24
Miscellaneous Matters.............................................................. 27
Submission of Shareholder Proposals for Inclusion in 1997 Proxy Materials.......... 27
Multiple Copies of Annual Report................................................... 27
</TABLE>
RETURN OF PROXY
Please complete, sign, date, and return the accompanying proxy promptly in
the enclosed pre-addressed envelope even if you plan to attend the Annual
Meeting. Postage need not be affixed to the enclosed envelope if mailed in the
United States. If you attend the Annual Meeting and vote in person, your proxy
will not be used. The immediate return of your proxy will be of great assistance
in preparing for the Annual Meeting and is therefore urgently requested.
IF YOU PLAN TO ATTEND THE MEETING
The Annual Meeting will be held at the Corporate Headquarters of The
Perkin-Elmer Corporation at 50 Danbury Road (old U.S. Route 7), Wilton,
Connecticut, approximately 1.7 miles north of Exit 40B (northbound or
southbound) on the Merritt Parkway (Connecticut Route 15). Signs will direct you
to the auditorium where the Annual Meeting will be held.
<PAGE>
[PERKIN ELMER LOGO]
The Perkin-Elmer Corporation
761 Main Avenue
Norwalk, CT 06859-0001
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
TO BE HELD THURSDAY,
OCTOBER 17, 1996
September 9, 1996
Notice is hereby given that the Annual Meeting of Shareholders of The
Perkin-Elmer Corporation, a New York corporation (hereinafter called the
"Corporation"), will be held in the Corporation's auditorium at 50 Danbury Road,
Wilton, Connecticut, on Thursday, October 17, 1996. The meeting will commence at
11:00 a.m. and will be held for the following purposes and to transact such
other business as may properly come before the meeting or any adjournment or
adjournments thereof:
(1) To elect 11 directors for the ensuing year;
(2) To consider and act upon a proposal to ratify the selection of Price
Waterhouse LLP as independent accountants for the fiscal year ending
June 30, 1997;
(3) To consider and act upon a proposal to amend the Restated Certificate
of Incorporation to limit the liability of directors consistent with
the New York Business Corporation Law;
(4) To consider and act upon a proposal to adopt the 1996 Stock Incentive
Plan to replace the expiring plan; and
(5) To consider and act upon a proposal to adopt the 1996 Employee Stock
Purchase Plan to replace the expiring plan.
The Board of Directors has fixed the close of business on August 30, 1996 as
the record date for the determination of shareholders entitled to notice of and
to vote at the Annual Meeting. Accordingly, only shareholders of record as of
the close of business on that date will be entitled to vote at the meeting. A
list of those shareholders will be available for inspection at the Annual
Meeting upon request of a shareholder. The transfer books of the Corporation
will not be closed.
By Order of the Board of Directors,
William B. Sawch
SECRETARY
<PAGE>
[PERKIN ELMER LOGO]
The Perkin-Elmer Corporation
761 Main Avenue
Norwalk, CT 06859-0001
September 9, 1996
PROXY STATEMENT
The accompanying proxy is solicited by the Board of Directors of The
Perkin-Elmer Corporation (hereinafter called the "Corporation") for use at the
Annual Meeting of Shareholders to be held on Thursday, October 17, 1996, at
11:00 a.m., and at any adjournment or adjournments thereof. This Proxy Statement
and the accompanying proxy are first being sent to shareholders on or about
September 11, 1996.
The Board of Directors has fixed the close of business on August 30, 1996 as
the record date for the determination of shareholders entitled to notice of and
to vote at the Annual Meeting. As of such date, there were issued and
outstanding 42,951,052 shares of Common Stock of the Corporation (the "Common
Stock"), each of which is entitled to one vote. The presence, in person or by
properly executed proxy, of the holders of a majority of the outstanding shares
of Common Stock entitled to vote is necessary to constitute a quorum for the
transaction of business at the Annual Meeting.
The accompanying proxy provides space for a shareholder to withhold voting
for any or all nominees for the Board of Directors and to abstain from voting on
the other proposals if he or she chooses to do so. Directors are elected by a
plurality of the votes cast, and the ratification of the selection of
independent accountants (Proposal 2) requires the approval of a majority of the
votes cast. Votes withheld in connection with the election of one or more
nominees for director will not be counted as votes cast in such election, and
abstentions and "broker non-votes" will not be counted in determining the number
of votes cast in connection with the ratification of the selection of
independent accountants. The approval of the holders of a majority of all
outstanding shares entitled to vote at the Annual Meeting is required for
approval of the amendment to the Restated Certificate of Incorporation (Proposal
3), the adoption of the 1996 Stock Incentive Plan (Proposal 4), and the adoption
of the 1996 Employee Stock Purchase Plan (Proposal 5). Accordingly, an
abstention or broker non-vote on any of these proposals will have the same legal
effect as a vote against such proposal.
A proxy may be revoked by a shareholder at any time before it is voted at
the Annual Meeting by (1) giving notice in writing of such revocation to the
Secretary of the Corporation, (2) submitting another proxy bearing a later date,
or (3) voting in person at the Annual Meeting. Unless so revoked, the shares
represented by a properly signed proxy will be voted at the Annual Meeting as
specified by the shareholder. If a proxy is properly signed and returned and no
specification is made, the shares represented thereby will be voted "FOR" (1)
the election of all nominees for director (Proposal 1); (2) the ratification of
the selection of independent accountants (Proposal 2); (3) the amendment to the
Restated Certificate of Incorporation (Proposal 3); (4) the adoption of the 1996
Stock Incentive Plan (Proposal 4); and (5) the adoption of the 1996 Employee
Stock Purchase Plan (Proposal 5).
1
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1. ELECTION OF DIRECTORS
The Board of Directors has nominated 11 candidates for election as directors
of the Corporation at the Annual Meeting, each to serve until the 1997 Annual
Meeting and until his or her successor has been duly elected and qualified. Each
of the nominees is currently serving as a director of the Corporation and has
consented to being named in this Proxy Statement and to serve if elected. If
prior to the Annual Meeting any nominee should become unavailable to serve for
any reason, the shares represented by all properly executed proxies not
containing contrary instructions will be voted for such other person as may be
designated by the Board of Directors, unless the Board shall determine to reduce
the number of directors pursuant to the By-laws.
The following brief biographies of the nominees include their principal
occupations, their ages, an account of their recent business experience, the
names of certain corporations of which they are directors, the committees of the
Board on which they serve, and the number of shares of Common Stock which they
beneficially owned as of August 15, 1996.(1) Unless otherwise indicated, each of
the nominees, individually or with his or her spouse, has sole voting or
investment power with respect to the shares indicated. No nominee beneficially
owns more than one percent of the outstanding Common Stock.
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Mr. Abely is the retired Chairman and Chief
Executive Officer of Sea-Land Corporation,
having served in that capacity from April, 1984
through April, 1987. From 1979 to April, 1984,
JOSEPH F. ABELY, JR. [Photo] he served as Vice Chairman of the Board and
67 Years Old Chairman of the Finance Committee of R.J.
Became Director 1984 Reynolds Industries, Inc. Previously, he was
Beneficially Owns Vice Chairman of General Foods Corporation. Mr.
3,444 Shares of Abely formerly served as a director of the
Common Stock Corporation from February, 1976 to April, 1977.
He is also a director of Burlington Industries,
Inc. and C.R. Bard, Inc. Mr. Abely is a member
of the Audit, Executive, and Management
Resources committees.
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Mr. Ayers is Chairman and Chief Executive
Officer of The Stanley Works, a position he has
held since May, 1989. He was President and Chief
Executive Officer from 1987 until May, 1989, and
RICHARD H. AYERS [Photo] he previously held various other positions at
53 Years Old The Stanley Works, a tool and hardware
Became Director 1988 manufacturer, including Division President and
Beneficially Owns General Manager, Group Vice President, Executive
3,131 Shares of Vice President, and Chief Operating Officer. Mr.
Common Stock Ayers is also a Director of Southern New England
Telecommunications Corporation. Mr. Ayers is a
member of the Management Resources and
Nominating committees.
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Mr. Belingard is Director General of the
Diagnostics Division and a member of the
Executive Committee of F. Hoffmann-La Roche
Ltd., a pharmaceutical manufacturer and
JEAN-LUC BELINGARD [Photo] strategic partner of the Corporation in the
47 Years Old biotechnology field. He joined Hoffmann-La Roche
Became Director 1993 in 1982, and held various positions prior to
Beneficially Owns being named to his current positions in 1990.
1,497 Shares of Mr. Belingard is also a director of Laboratory
Common Stock Corporation of America Holdings and a Foreign
Trade Advisor to the French Government. Mr.
Belingard is a member of the Technology Advisory
Committee.
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</TABLE>
2
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Dr. Hayes is the Philip Caldwell Professor of
ROBERT H. HAYES [Photo] Business Administration and Senior Associate
60 Years Old Dean for Faculty Development at the Harvard
Became Director 1985 Business School, a position he has held since
Beneficially Owns 1992. He has held various other positions at
2,110 Shares of Harvard since 1966. Dr. Hayes is a member of the
Common Stock Finance and Nominating committees.
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Mr. Melville is the retired Chairman and Chief
DONALD R. MELVILLE [Photo] Executive Officer of Norton Company, a
69 Years Old diversified manufacturer of industrial products.
Became Director 1981 He was Chief Executive Officer from 1980 to 1988
Beneficially Owns and Chairman from 1985 to 1988. He is also a
1,744 Shares of director of Bowater, Inc. Mr. Melville is a
Common Stock member of the Finance and Nominating committees
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Mr. Roberts is Chairman of Sweetheart Holdings
Inc., a manufacturer of disposable products for
the food industry, a position he has held since
September, 1993. Mr. Roberts previously served
BURNELL R. ROBERTS [Photo] as Chairman and Chief Executive Officer of Mead
69 Years Old Corporation, a forest products and electronic
Became Director 1985 publishing corporation, from 1982 until his
Beneficially Owns retirement in May, 1992. He is also a director
3,081 Shares of of Rayonier Inc., Day International, DPL Inc.,
Common Stock Armco Inc., and Universal Protective Packaging,
Inc., and a Limited Partner of American
Industrial Partners. Mr. Roberts is a member of
the Executive, Management Resources, and
Nominating committees.
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GEORGES C. ST. LAURENT, JR. [Photo] Mr. St. Laurent is Chief Executive Officer of
60 Years Old Western Bank, a position he has held since
Became Director 1996 January, 1988. He is also a director of Baxter
Beneficially Owns International Inc. Mr. St. Laurent is a member
2,081 Shares of of the Finance Committee.
Common Stock
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Dr. Slayman is the Sterling Professor of
Genetics and Deputy Dean for Academic and
Scientific Affairs at Yale University School of
CAROLYN W. SLAYMAN [Photo] Medicine. She joined the Yale faculty in 1967.
59 Years Old Dr. Slayman is a consultant to the National
Became Director 1994 Institutes of Health, most recently having
Beneficially Owns served as a member of the National Advisory
1,255 Shares of General Medical Sciences Council, and a member
Common Stock of the Scientific Review Board of the Howard
Hughes Medical Institute. Dr. Slayman is a
member of the Audit and Technology Advisory
committees.
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</TABLE>
3
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Mr. Smith is a director and Chairman and Chief
Executive Officer of Engelhard Corporation, a
provider of environmental technologies,
specialty chemical products, and engineered
ORIN R. SMITH [Photo] materials, a position he has held since January,
61 Years Old 1995. He previously served as President and
Became Director 1995 Chief Executive Officer of that company from
Beneficially Owns 1984 to December, 1994. He is also a director of
1,560 Shares of Ingersoll-Rand Company, The Louisiana Land and
Common Stock Exploration Company, The Summit Bancorporation,
Vulcan Materials Company, and Minorco. Mr. Smith
is a member of the Management Resources and
Nominating committees.
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RICHARD F. TUCKER [Photo] Mr. Tucker is the retired Vice Chairman of Mobil
69 Years Old Corporation and the retired President of Mobil
Became Director 1983 Oil Corporation. He is also a director of U.S.
Beneficially Owns Trust Corporation. Mr. Tucker is a member of the
1,897 Shares of Executive, Audit, and Finance committees.
Common Stock
- -------------------------------------------------------------------------------------------
Mr. White was elected Chairman, President and
Chief Executive Officer of the Corporation on
September 12, 1995. Prior to his joining the
Corporation, he was Executive Vice President and
TONY L. WHITE [Photo] a member of the Office of the Chief Executive of
50 Years Old Baxter International Inc., a manufacturer of
Became Director 1995 health care products and instruments. He also
Beneficially Owns 156,000 served as Group Vice President of Baxter from
Shares of Common Stock(2) 1986 to 1992. Mr. White is also a director of
C.R. Bard, Inc. He is a member of the Executive
and Finance committees and an EX OFFICIO member
of the Nominating Committee.
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</TABLE>
1 Includes units representing full shares of Common Stock which the following
have deferred under The Perkin-Elmer Corporation 1993 Director Stock Purchase
and Deferred Compensation Plan described below under "COMPENSATION OF
DIRECTORS" (the "Director Plan"): Mr. Abely, 1,444 units; Mr. Ayers, 2,631
units; Dr. Hayes, 1,610 units; Mr. Melville, 1,444 units; Mr. Roberts, 2,631
units; and Mr. Smith, 560 units.
2 Consists of 30,000 shares of restricted stock as to which Mr. White has sole
voting power but no investment power prior to the lapse of restrictions and
66,000 shares of restricted stock granted subject to shareholder approval as
to which Mr. White currently has neither voting nor investment power (see
"ADOPTION OF THE 1996 STOCK INCENTIVE PLAN TO REPLACE THE EXPIRING PLAN,"
below). Also includes 60,000 shares of Common Stock which Mr. White has the
right to acquire within 60 days of August 15, 1996 through the exercise of
vested stock options. No voting or investment power exists with respect to
such option shares prior to exercise.
THE BOARD OF DIRECTORS AND COMMITTEES
The business of the Corporation is managed under the direction of the Board
of Directors. The Board of Directors held nine meetings during the fiscal year
ended June 30, 1996. Attendance at these meetings averaged 93%, and all
incumbent directors attended at least 75% of the meetings of the Board and of
the committees on which they served held during the period they served as
directors.
The Board of Directors of the Corporation has established Audit, Executive,
Finance, Management Resources, Nominating, and Technology Advisory committees.
The Audit Committee is composed of non-employee directors. The Audit
Committee recommends to the Board of Directors the selection of independent
accountants, reviews the annual financial statements of
4
<PAGE>
the Corporation, reviews the scope, performance, and results of audit services
provided by the independent accountants, monitors proposed non-audit services to
be provided by the independent accountants to avoid conflicts of interest,
reviews the scope, findings, and recommendations of the Corporation's internal
auditors regarding internal accounting controls and operating efficiencies,
reviews policies and practices designed to assure the Corporation's compliance
with legal and ethical standards, and reviews the fees for audit and non-audit
services provided by the independent accountants. The Audit Committee met four
times during the fiscal year ended June 30, 1996.
The Executive Committee is composed of the Chairman of the Board and four
non-employee directors. The Executive Committee has the authority during the
intervals between meetings of the Board of Directors to exercise the powers of
the Board (except for certain powers reserved solely for the Board) in
situations, generally arising from unforeseen events, necessitating Board action
before a meeting can be convened. The Executive Committee did not meet during
the fiscal year ended June 30, 1996.
The Finance Committee advises the Board and management concerning certain
issues with respect to the financial structure of the Corporation, such as the
Corporation's financial and tax strategies, capital structure, financing, risk
management policies, dividend policies, and pension and savings plan policies
and investment performance. The Finance Committee met two times during the
fiscal year ended June 30, 1996.
The Management Resources Committee is composed of non-employee directors. It
reviews and approves all forms of remuneration for the senior management of the
Corporation and administers the Corporation's stock plans. The Management
Resources Committee also reviews management development and succession programs.
It met nine times during the fiscal year ended June 30, 1996.
The Nominating Committee recommends nominees to fill vacancies on the Board
and will consider responsible recommendations by shareholders of candidates to
be nominated as directors of the Corporation. All such recommendations must be
in writing and addressed to the Secretary of the Corporation in accordance with
the Corporation's By-laws. By accepting a shareholder recommendation for
consideration, the Nominating Committee does not undertake to adopt or to take
any other action concerning the recommendation or to give the proponent its
reasons for any action or failure to act. The Nominating Committee also reviews
the functioning and effectiveness of the Board, its committees, and its
individual members, and makes recommendations to the Board concerning the
compensation of non-employee directors and membership assignments for committees
of the Board. The Nominating Committee met three times during the fiscal year
ended June 30, 1996.
The Technology Advisory Committee advises the Board and management
concerning certain issues related to the development and implementation of the
Corporation's technological assets, including strategies for developing and
expanding these assets and assisting management in assessing third party
technology opportunities. The Technology Advisory Committee met three times
during the fiscal year ended June 30, 1996.
COMPENSATION OF DIRECTORS
Employee directors receive no additional compensation for service on the
Board of Directors or its committees. Non-employee directors receive an annual
retainer of $35,000. No additional amounts are paid for participation on
committees. All directors are reimbursed for expenses incurred in attending
Board and committee meetings.
Under the terms of the Director Plan, each non-employee director of the
Corporation is required to apply at least 50% of his or her annual retainer to
the purchase of Common Stock. Purchases under the Director Plan are made
automatically on the date during each fiscal quarter on which the quarterly
installment of the annual retainer is paid. The purchase price of the Common
Stock is the fair market value of a share of Common Stock on such date. The
Director Plan also permits non-employee directors to defer receipt of the cash
or stock portion of their annual retainer. The stock portion is credited to the
account of a
5
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participant in units quarterly as above, each unit representing one share of
Common Stock. Participants in the Director Plan do not have voting rights with
respect to any such units. The stock portion of a participant's account is
adjusted to take into account dividends paid on the Common Stock, and the cash
portion of a participant's account is credited quarterly with interest at the
prevailing prime rate of Citibank, N.A. As of June 30, 1996, seven directors
deferred the stock and/or cash portion of their annual retainer under the
Director Plan.
If the 1996 Stock Incentive Plan is approved by the shareholders at the
Annual Meeting, each director who is not an employee of the Corporation will
automatically be granted on the date of election or reelection to the Board of
Directors during the term of the plan (commencing on the date of the Annual
Meeting) an option to purchase 1,500 shares of Common Stock. The purchase price
of the Common Stock covered by the option will be the fair market value of a
share of Common Stock on the date of grant. Each option will have a ten-year
term and will generally become exercisable as to 750 shares on the date
immediately preceding the first annual meeting next following the date of grant
and as to the remaining 750 shares on the date immediately preceding the second
annual meeting next following the date of grant. See "ADOPTION OF THE 1996 STOCK
INCENTIVE PLAN TO REPLACE THE EXPIRING PLAN" for a more detailed description of
the 1996 Stock Incentive Plan.
As part of the Corporation's overall program to promote charitable giving,
the Board of Directors has established a Director's Charitable Award Program.
Under the Program, following a director's death, the Corporation will donate
$1,000,000 to the educational or charitable organizations selected by the
director and approved by the Corporation. In order to fund the donations, the
Corporation has acquired joint life insurance contracts on the lives of its
directors. Each policy will insure two directors with the death benefit payable
on the death of the second director. Individual directors will derive no
financial benefit from the Program since all insurance proceeds accrue solely to
the Corporation. The overall cost of the Program is not material to the
Corporation.
The Corporation entered into a consulting agreement with Dr. Hayes which
expired on March 31, 1996 pursuant to which Dr. Hayes agreed to provide
consulting services to the Corporation in connection with its quality and
competitiveness programs. During the fiscal year ended June 30, 1996, Dr. Hayes
was paid a total of $7,500 under the terms of this agreement, receipt of which
was deferred by Dr. Hayes.
6
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VOTING SECURITIES
The following are the only persons known by the Corporation, as of August
15, 1996, to own beneficially more than 5% of the outstanding Common Stock.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ----------------------------------------------- -------------------- ----------------
<S> <C> <C>
J.P. Morgan & Co., Incorporated................ 4,370,688(1) 10.2
60 Wall Street
New York, NY 10260
George Soros and Purnendu Chatterjee........... 3,271,292(2) 7.6
c/o Akin, Gump, Strauss, Hauer & Feld, L.L.P.
399 Park Avenue
New York, NY 10022
FMR Corp....................................... 2,962,286(3) 6.9
82 Devonshire Street
Boston, MA 02109
Phoenix Home Life Mutual Insurance Company..... 2,726,500(4) 6.3
One American Row
Hartford, CT 06102
</TABLE>
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1 Based on a Schedule 13G dated July 31, 1996 filed with the Securities and
Exchange Commission (the "SEC"), J.P. Morgan & Co., Incorporated has sole
voting power with respect to 2,575,950 shares, shared voting power with
respect to 31,845 shares, sole dispositive power with respect to 4,313,078
shares, and shared dispositive power with respect to 57,210 shares.
2 Based on an amendment dated January 23, 1996 to a Schedule 13D filed with the
SEC, these shares are held as follows: Mr. Soros and Mr. Chatterjee have sole
voting and dispositive power with respect to 542,381 and 393,136 shares,
respectively; Mr. Soros and Mr. Chatterjee have shared voting and dispositive
power with respect to 2,035,775 shares owned by an entity for which an
affiliate of Mr. Soros is the investment advisor and with respect to which Mr.
Chatterjee is a sub-advisor; and Mr. Soros has shared voting and dispositive
power with respect to an additional 300,000 shares held by Quantum Partners
LDC, an investment fund managed by Soros Fund Management of which Mr. Soros is
the sole proprietor.
3 Based on a Form 13F-E for the quarter ended June 30, 1996 filed with the SEC,
FMR Corp. has sole voting authority with respect to 167,828 shares and shared
investment discretion (as defined) with respect to 2,962,286 shares.
4 Based on a Form 13F for the quarter ended March 29, 1996 filed with the SEC,
Phoenix Home Life Mutual Insurance Company has shared voting authority and
sole investment discretion with respect to all such shares.
The following table sets forth, as of August 15, 1996, certain information
with respect to the beneficial ownership of Common Stock by each of the persons
named in the Summary Compensation Table below under "EXECUTIVE COMPENSATION,"
and by all directors and executive officers of the Corporation as a group. As of
such date, none of such persons beneficially owned more than one percent of the
outstanding Common Stock, and all directors and executive officers as a group
beneficially owned 2.5% of the outstanding Common Stock. Unless otherwise
indicated, voting and investment power is exercised solely by the beneficial
owner or is shared by such owner with his or her spouse or children.
<TABLE>
<CAPTION>
NAME OF NUMBER
BENEFICIAL OWNER OF SHARES(1)
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<S> <C>
Tony L. White................................................... 156,000(2)
Stephen O. Jaeger............................................... 50,224(2)
Michael W. Hunkapiller.......................................... 161,341(2)
Michael J. McPartland........................................... 43,724(2)
Peter Barrett................................................... 55,950(2)
Gaynor N. Kelley(3)............................................. 319,690(4)
All directors and executive officers as a group (24)............ 1,073,475(2,4,5)
</TABLE>
(FOOTNOTES ON FOLLOWING PAGE)
7
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(FOOTNOTES FOR PRECEDING PAGE)
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1 Includes shares which the following have the right to acquire within 60 days
of August 15, 1996 through the exercise of vested stock options: Mr. White,
60,000; Mr. Jaeger, 25,000; Dr. Hunkapiller, 60,701; Mr. McPartland, 26,000;
Dr. Barrett, 37,950; Mr. Kelley, 280,000; and all directors and executive
officers as a group, 634,101. No voting or investment power exists with
respect to such shares prior to exercise.
2 Includes 96,000 shares of restricted stock held by Mr. White; 16,000 shares of
restricted stock held by Mr. Jaeger; 10,000 shares of restricted stock held by
each of Messrs. Hunkapiller, McPartland, and Barrett; and 212,000 shares of
restricted stock held by all directors and executive officers as a group. With
the exception of 30,000 shares of restricted stock held by Mr. White as to
which Mr. White has sole voting power but no investment power prior to the
lapse of restrictions, all such shares were granted subject to shareholder
approval of the 1996 Stock Incentive Plan at the Annual Meeting and the holder
thereof currently has neither voting nor investment power (see "ADOPTION OF
THE 1996 STOCK INCENTIVE PLAN TO REPLACE THE EXPIRING PLAN," below).
3 Mr. Kelley resigned as Chairman, President and Chief Executive Officer of the
Corporation effective September 12, 1995.
4 Includes 750 shares held by each of Mr. Kelley's son and daughter as to which
Mr. Kelley disclaims beneficial ownership.
5 Includes 6,494 shares (including 1,444 units representing full shares of
Common Stock deferred under the Director Plan) beneficially owned by John S.
Scott who is retiring from the Board of Directors. Mr. Scott disclaims
beneficial ownership of 150 of these shares held by his wife. Also includes
10,320 units representing full shares of Common Stock deferred by the other
non-employee directors under the Director Plan.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Corporation is required to identify any officer, director, or owner of
more than 10% of the Common Stock who failed to timely file with the SEC and the
New York Stock Exchange a required report relating to beneficial ownership of
Common Stock under Section 16(a) of the Securities Exchange Act of 1934. Based
solely on a review of information provided to the Corporation, all persons
subject to these reporting requirements filed the required reports on a timely
basis for fiscal year 1996.
EXECUTIVE COMPENSATION
REPORT OF THE MANAGEMENT RESOURCES COMMITTEE
The Management Resources Committee (the "MRC") of the Board of Directors is
comprised of five non-employee directors, none of whom participate in any of the
executive compensation plans. One of the duties of the MRC is to review and
approve all forms of remuneration for the senior management of the Corporation.
OVERVIEW AND PHILOSOPHY
The overall objectives of the Corporation's executive compensation plans are
to:
. Attract and retain the highest quality talent to lead the Corporation,
. Reward key executives based on business performance,
. Provide incentives designed to maximize shareholder value, and
. Assure that objectives for corporate and individual performance are
established and measured.
For the fiscal year ended June 30, 1996, the Corporation employed four
programs in compensating its senior management: base salary, contingent
compensation (a short-term incentive plan), stock options, and restricted stock.
The philosophy which governs the compensation program is to provide a
competitive total compensation package to senior management based upon
professionally compiled surveys of the Corporation's peer group and other
comparable companies. For fiscal year 1996, the MRC particularly focused upon
competitive compensation practices for companies engaged in high technology and
biotechnology product development and manufacturing. To provide incentive to
senior managers to attain competitive returns for
8
<PAGE>
the Corporation, separate short-term pay for performance and long-term stock
based incentive plans have been designed with the assistance of external
professional compensation consultants.
During fiscal year 1996, the MRC reemphasized the focus of all compensation
programs to ensure that a significant portion of the remuneration provided to
executives of the Corporation was directly tied to shareholder results. The
Corporation expects to be competitive with the market for base pay and annual
incentive payments if corporate objectives are met.
BASE SALARY
Each year, the MRC obtains surveys of compensation trends and practices from
several reputable independent compensation consultants in order to determine the
competitiveness of the pay structure for its senior managers. Within the broad
comparative group of companies which the consultants survey, the MRC has
identified a group of companies which compete in similar markets and which
approximate the size of the Corporation in terms of employees, revenue, and
capitalization. This group includes some of the companies contained in the
industry index selected by the Corporation for purposes of the Performance Graph
set forth under that heading below.
Mr. White's base salary of $550,000 became effective on his date of hire on
September 12, 1995. The MRC established Mr. White's base salary based on its
experience in recruiting an executive with Mr. White's experience.
CONTINGENT COMPENSATION
The MRC also uses survey information from comparable companies in reviewing
and approving annual individual incentive plan participation percentages and
targets for each executive officer. The MRC uses earnings per share, operating
cash flow, and divisional EBIT (earnings before interest and taxes) targets as a
basis on which to measure the performance of its officers. These financial
measures are well recognized throughout the investment community, and the MRC
believes that achieving financial goals based upon these measures will maximize
shareholder return.
In determining annual contingent compensation awards, the MRC also considers
other business actions taken during the fiscal year which contribute to the
strategic growth and competitiveness of the Corporation. In the past, these
actions have included managerial leadership in acquiring new businesses,
divesting the Corporation of major assets which do not meet its strategic
business plan, and reorganizing business units to attain greater operating
efficiencies.
The contingent compensation award formula applicable to all of the
Corporation's executive officers consists of the components described above.
However, Mr. White, based on his review of an executive officer's performance
throughout the year, may propose modification of a contingent compensation
recommendation between 0 and 150% to reflect personal performance. The MRC is
responsible for final approval of all contingent compensation awards.
Mr. White's contingent compensation formula is based entirely on the
achievement of the Corporation's goals. Mr. White would receive an incentive
payment of 100% of base salary for achievement of all corporate goals, and a
maximum payment equal to 150% of base salary when corporate achievements exceed
125% of objectives. For the fiscal year ended June 30, 1996, Mr. White earned a
contingent compensation award of $825,000. This award represents 150% of Mr.
White's base salary and was based on the financial performance of the
Corporation during fiscal year 1996 and the strategic initiatives which Mr.
White has undertaken.
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<PAGE>
STOCK OPTIONS
The MRC believes that in order to achieve its long-term growth objectives
and to align management and shareholder interests, it is in the Corporation's
best interest to grant stock options to members of its management staff. The
number of stock options granted to senior management is dependent upon the
participant's management level in the Corporation. The allocation for a
particular management level is determined by applying a percentage of salary
against the salary grade midpoint, and dividing the value by the estimated fair
market value of a share of Common Stock on the date of grant.
The MRC approves the number of options granted to each participant in the
stock option plan during each fiscal year. The price of each option granted is
the fair market value of a share of Common Stock on the date of grant. All
options are exercisable for a period of ten years from the date of grant.
Under the terms of his employment agreement, Mr. White was granted options
to purchase 120,000 shares of Common Stock in September, 1995. Mr. White was
also granted options to purchase 75,000 shares of Common Stock in April, 1996 in
connection with the Corporation's customary annual grant of options to
employees.
RESTRICTED STOCK
Restricted stock awards are intended to further align management and
shareholder interests. These awards, which are at risk and dependent on the
creation of incremental shareholder value, also provide additional incentives
for individual performance. In connection with his employment with the
Corporation, the MRC granted Mr. White 30,000 shares of restricted stock on
September 12, 1995. These shares were subject to substantially the same terms as
shares of restricted stock granted to key officers during fiscal year 1995. The
vesting schedule of these awards was subsequently amended during fiscal 1996 to
reflect the strategic initiatives of Mr. White and to provide additional
incentives for performance during a period of transition of leadership of the
Corporation.
Upon the vesting of the shares of restricted stock granted in fiscal 1995,
the MRC granted new awards of restricted stock, subject to shareholder approval
of the 1996 Stock Incentive Plan, to continue alignment of management and
shareholder interests. These awards will vest as follows: 33.33%, if the fair
market value of a share of Common Stock averages $59.00 or more for a period of
ninety days; 66.67% if the fair market value of a share of Common Stock averages
$66.00 or more for a period of ninety days; and 100% if the fair market value of
a share of Common Stock averages $73.00 or more for a period of ninety days. Mr.
White was granted 30,000 shares of restricted stock subject to this vesting
schedule.
On August 15, 1996, Mr. White was granted an additional 36,000 shares of
restricted stock pursuant to the terms of his employment agreement. These shares
will vest as follows: 6,000 will vest automatically at the end of each fiscal
year during the term of his employment agreement and up to an additional 12,000
will vest following the end of each fiscal year during the term of his
employment agreement based upon the attainment of performance goals relating to
cumulative consolidated operating cash flow, for a possible maximum per fiscal
year of 18,000 shares.
STOCK OWNERSHIP GUIDELINES
In order to reinforce the linkage of an executive's financial gain with
shareholder results, the MRC has established a requirement that each executive
officer of the Corporation retain a personal investment in the Common Stock
equaling between one and three times the individual's annual base salary
(depending upon the individual's management level). Grants of restricted stock
and shares of Common Stock acquired upon exercise of stock options are credited
towards an executive's ownership, and executives are granted a period of time to
achieve these levels. As of June 30, 1996, each of the Named Executive Officers
had satisfied his individual stock ownership goal.
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COMPENSATION OF FORMER CHIEF EXECUTIVE OFFICER
Mr. Kelley resigned as Chairman of the Board, President and Chief Executive
Officer of the Corporation on September 12, 1995 upon Mr. White's employment and
retired from the Corporation effective June 1, 1996. Between the date of his
resignation as Chief Executive Officer and retirement from the Corporation, Mr.
Kelley continued to receive his base salary, which was last increased during
fiscal year 1994. The Committee also authorized the payment of a contingent
compensation award of $297,000 to Mr. Kelley for fiscal 1996 in recognition of
his leadership in identifying and selecting a new chief executive officer and in
facilitating the transition process. Mr. Kelley did not receive any stock
options or restricted stock during fiscal 1996.
CONCLUSION
The Corporation has designed its executive compensation plans, as described
above, to link the compensation of senior management with the achievement of
corporate and individual performance goals. These goals have been established at
levels necessary to achieve above average performance within the Corporation's
industry.
The MRC intends to continue its policy of linking executive compensation
with positive corporate performance and maximizing shareholder returns to the
extent possible through the measurement procedures described in this report.
Section 162(m) of the Internal Revenue Code of 1986 generally limits the tax
deductibility of certain compensation in excess of one million dollars paid to a
company's chief executive officer and the four other most highly compensated
executives. While the Corporation currently seeks to maximize the deductibility
of compensation paid to its executive officers, it will maintain flexibility to
take actions that may be based on considerations other than tax deductibility.
Management Resources Committee
Richard H. Ayers, Chairman
Joseph F. Abely, Jr.
Burnell R. Roberts
John S. Scott
Orin R. Smith
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PERFORMANCE GRAPH
The following line graph compares the yearly percentage change in the
Corporation's cumulative total shareholder return on the Common Stock for the
last five fiscal years with the cumulative total return on the Standard & Poor's
500 Stock Index (the "S&P 500") and the Dow Jones Diversified Technology Group
Index (the "DJ DTG"), a published industry index that includes the Corporation.
The other companies in the DJ DTG are: Varian Associates, Inc., Tektronix, Inc.,
Corning Incorporated, EG&G, Inc., Minnesota Mining and Manufacturing Company,
Rockwell International Corporation, Raytheon Company, TRW Inc., Texas
Instruments Incorporated, and United Technologies Corporation.
Cumulative total returns are calculated assuming that $100 was invested on
July 26, 1991 in each of the Common Stock, the S&P 500, and the DJ DTG, and that
all dividends were reinvested.
THE PERKIN-ELMER CORPORATION
Comparison of 5 Year Cumulative Returns
$225
$200
$175
$150
$125
$100
$75
1991 1992 1993 1994 1995 1996
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Perkin-Elmer 100.00 117.06 126.81 119.51 144.22 199.94
S&P 500 100.00 114.88 124.17 127.76 160.28 201.84
DJ DTG 100.00 115.38 134.10 143.75 181.06 216.56
</TABLE>
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<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth cash or other compensation received for the
last three fiscal years by the Corporation's Chief Executive Officer, the former
Chief Executive Officer, and the four other most highly paid executive officers
of the Corporation based on salary and bonuses paid for fiscal year 1996 (the
"Named Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------------
ANNUAL COMPENSATION
------------------------------ AWARDS PAYOUTS
OTHER --------------------- -------
ANNUAL RESTRICTED STOCK LTIP ALL OTHER
FISCAL SALARY BONUS COMPENSATION STOCK AWARDS OPTIONS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($)(1) ($) ($)(2) (#) ($)(3) ($)(4)
- ----------------------------------- ------ ------- ------- ------------ ------------ ------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Tony L. White...................... 1996 420,963 825,000 291,664(6) 2,593,125 195,000 0 1,625,801
Chairman, President and
Chief Executive Officer(5)
Stephen O. Jaeger.................. 1996 306,000 223,000 511,875 28,000 506,719 9,231
Vice President, Chief Financial 1995 78,462 67,500 0 50,000 0 31,671
Officer and Treasurer(7)
Michael W. Hunkapiller............. 1996 213,826 227,700 511,875 25,000 506,719 7,912
Vice President and General 1995 200,125 25,000 0 18,000 0 9,830
Manager Applied Biosystems
Division(8)
Michael J. McPartland.............. 1996 213,201 160,000 511,875 10,000 506,719 9,284
Vice President, 1995 205,000 15,785 0 0 0 10,069
Human Resources 1994 203,946 60,019 0 21,000 0 9,049
Peter Barrett...................... 1996 203,321 150,000 511,875 10,000 506,719 7,820
Vice President, Corporate Planning 1995 200,769 15,000 0 18,000 0 9,299
and Business Development(8)
Gaynor N. Kelley................... 1996 519,232 297,000 0 0 0 114,288
Former Chairman, President and 1995 540,000 65,340 0 0 0 26,524
Chief Executive Officer(9) 1994 527,501 232,256 0 120,000 0 23,358
</TABLE>
- ------------
1 Awards under the Corporation's Contingent Compensation Plan are variable and
tied to the Corporation's performance.
2 Consists of 30,000 shares of restricted stock awarded to Mr. White on
September 12, 1995 under the terms of his employment agreement which will vest
on September 21, 1996. Also includes 30,000 shares of restricted stock awarded
to Mr. White and 10,000 shares of restricted stock awarded to each of the
other Named Executive Officers (other than Mr. Kelley) on March 21, 1996
subject to shareholder approval of the 1996 Stock Incentive Plan at the Annual
Meeting. The dollar value is based on the fair market value of a share of
Common Stock of $35.25 on September 12, 1995 and $51.1875 on March 21, 1996.
Shares of restricted stock awarded on March 21, 1996 will vest according to
the following schedule: 33.33%, if the fair market value of a share of Common
Stock averages $59.00 or more for a period of ninety days; 66.67%, if the fair
market value of a share of Common Stock averages $66.00 or more for a period
of ninety days; and 100%, if the fair market value of a share of Common Stock
averages $73.00 or more for a period of ninety days. Prior to vesting, the
holders of restricted stock have the right to receive dividends (or dividend
equivalents) on such shares at the same rate as dividends paid to
shareholders. As of June 30, 1996, Messrs. White, Jaeger, Hunkapiller,
McPartland, and Barrett held 60,000, 10,000, 10,000, 10,000, and 10,000
unvested shares of restricted stock, respectively, having a fair market value
of $2,891,250, $481,875, $481,875, $481,875, and $481,875, respectively. Mr.
Kelley did not hold any shares of restricted stock at June 30, 1996.
3 On September 21, 1995, the Management Resources Committee of the Board of
Directors amended the vesting schedule of awards of restricted stock made to
certain executive officers of the Corporation to provide for vesting according
to the following schedule: 50%, if the fair market value of a share of Common
Stock averaged $40.00 or more for a period of ninety days; 75%, if the fair
market value of a share of Common Stock averaged $46.00 or more for a period
of ninety days; and 100%, if the fair market value of a share of Common Stock
averaged $52.00 or more for a period of ninety days. See "EXECUTIVE
COMPENSATION--REPORT OF THE MANAGEMENT RESOURCES COMMITTEE" for further
discussion of such action.
4 Amounts shown for fiscal year 1996 include (i) the Corporation's contributions
under the Corporation's Employee Savings Plan for Messrs. White, Jaeger,
Hunkapiller, McPartland, Barrett, and Kelley of $6,384, $6,231, $6,800,
$8,184, $6,910, and $6,799, respectively; and (ii) amounts accrued under the
savings plan component of the Corporation's Excess Benefit Plan for Messrs.
White, Jaeger, Hunkapiller, McPartland, Barrett, and Kelley of $5,419, $3,000,
$1,112, $1,100, $910, and $7,385, respectively. Amount for Mr. White includes
an aggregate of $1,613,998 in one-time payments in replacement of certain
benefits and rights from his former employer that were forfeited upon joining
the Corporation. These payments consisted of $1,213,998 for forfeited shares
of restricted stock and $400,000 representing Mr. White's annual bonus from
his former employer. Amount for Mr. Kelley includes $84,271 for vacation
earned but not taken and $15,833 under the terms of his deferred compensation
agreement.
5 Mr. White became Chairman, President and Chief Executive Officer of the
Corporation on September 12, 1995.
6 Includes $188,197 paid to Mr. White in connection with his relocation to
Connecticut and $88,082 for the payment of certain related taxes.
7 Mr. Jaeger became an employee and executive officer of the Corporation on
March 16, 1995.
8 Drs. Hunkapiller and Barrett became executive officers of the Corporation on
September 15, 1994.
9 Mr. Kelley resigned as Chairman, President and Chief Executive Officer
effective September 12, 1995 and retired from the Corporation effective June
1, 1996.
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<PAGE>
OPTION GRANT TABLE
The following table sets forth information regarding stock option grants to
the Named Executive Officers during the fiscal year ended June 30, 1996.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- ------------------------------------------------------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF PERCENT OF
SECURITIES TOTAL AT ASSUMED ANNUAL RATES OF
UNDERLYING OPTIONS GRANTED STOCK PRICE APPRECIATION FOR
OPTIONS TO EMPLOYEES IN OPTION TERM(2)
GRANTED FISCAL YEAR EXERCISE PRICE EXPIRATION ----------------------------
NAME (#)(1) 1996 ($/SH) DATE 5% ($) 10% ($)
- --------------------- ---------- --------------- -------------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
T. L. White.......... 120,000 14.9 35.25 9/12/05 2,660,224 6,741,531
75,000 9.3 54.8125 4/25/06 2,585,347 6,551,776
S. O. Jaeger......... 28,000 3.5 54.8125 4/25/06 965,196 2,445,996
M. W. Hunkapiller.... 25,000 3.1 54.8125 4/25/06 861,782 2,183,925
M. J. McPartland..... 10,000 1.2 54.8125 4/25/06 344,713 873,570
P. Barrett........... 10,000 1.2 54.8125 4/25/06 344,713 873,570
G. N. Kelley......... 0 0 0 0 0 0
- --------------------------------------------------------------------------------------------------------------------
ALL SHAREHOLDERS(3).... $936 MILLION $2.4 BILLION
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------
1 With the exception of the 120,000 stock options granted to Mr. White under the
terms of his employment agreement, all stock options were granted subject to
shareholder approval of the 1996 Stock Incentive Plan at the Annual Meeting
(see "ADOPTION OF THE 1996 STOCK INCENTIVE PLAN TO REPLACE THE EXPIRING PLAN,"
below). All stock options were granted with an exercise price equal to the
fair market value of a share of Common Stock on the date of grant and become
exercisable in two equal annual installments commencing one year after the
date of grant.
2 The values shown assume that the price of the Common Stock will appreciate at
the annual rates shown. These rates are arbitrarily assumed rates established
by the SEC and are not intended as a forecast of future appreciation. The
actual gain, if any, realized by the recipient will depend upon the actual
performance of the Common Stock.
3 These amounts represent the increase in the aggregate market value of the
Common Stock outstanding as of the date of the initial grant (42.2 million
shares) assuming the annual rates of stock price appreciation set forth above
over the ten-year period used for the Named Executive Officers.
OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table sets forth information regarding the exercise of options
by the Named Executive Officers during the fiscal year ended June 30, 1996, and
the value of their unexercised options at June 30, 1996.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT JUNE 30, 1996 AT JUNE 30, 1996
ACQUIRED ON VALUE (#) ($)(3)
EXERCISE REALIZED ---------------------------- ---------------------------
NAME (#) ($)(1) EXERCISABLE UNEXERCISABLE(2) EXERCISABLE UNEXERCISABLE
- ----------------------------- ----------- -------- ----------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
T. L. White.................. 0 0 0 195,000 0 1,552,500
S. O. Jaeger................. 0 0 25,000 53,000 484,375 484,375
M. W. Hunkapiller............ 0 0 54,701 41,000 1,413,033 279,500
M. J. McPartland............. 0 0 26,000 17,000 401,937 125,562
P. Barrett................... 0 0 31,950 26,000 580,715 279,500
G. N. Kelley................. 23,162 444,226 344,338 0 6,617,414 0
</TABLE>
- ------------
1 Represents the difference between the exercise price and the fair market value
on the date of exercise.
2 Includes options granted subject to shareholder approval of the 1996 Stock
Incentive Plan. See "ADOPTION OF THE 1996 STOCK INCENTIVE PLAN TO REPLACE THE
EXPIRING PLAN," below.
3 The fair market value of a share of Common Stock on June 30, 1996 was
$48.1875.
14
<PAGE>
RETIREMENT BENEFITS
The Corporation has in effect a qualified defined benefit Employee Pension
Plan covering all of its domestic employees, including the Named Executive
Officers, a non-qualified Excess Benefit Plan, which provides benefits that
would otherwise be denied participants by reason of certain limitations of the
Internal Revenue Code of 1986, as amended (the "Code"), on qualified plan
benefits, and a non-qualified Supplemental Retirement Plan, which provides
benefits based on payments made under the Corporation's Contingent Compensation
Plan for Key Employees and Incentive Compensation Plan. The Employee Pension
Plan and the Excess Benefit Plan provide annual benefits at normal retirement
age 65 based on a participant's final average base salary (measured over 36
months from October 1, 1995) and service from October 1, 1995. The Supplemental
Retirement Plan provides annual benefits at normal retirement age 65 based on a
participant's final average contingent compensation or incentive compensation
awards (measured over 36 months from July 1, 1995) and service from July 1,
1995.
The benefit under the Employee Pension Plan and the pension plan component
of the Excess Benefit Plan for service prior to October 1, 1995 was based on a
career average benefit formula providing 1.4% of base earnings during the period
of participation, plus 0.5% of base earnings above a specified wage base called
"covered compensation" (defined by the Internal Revenue Service as a function of
year of birth). After August 1, 1989, plan accruals for service over 35 years
were calculated at a rate of 1.7% of base earnings. A variable annuity option
was available to each participant for benefit accruals prior to October 1, 1995.
The benefit under the Supplemental Retirement Plan for service prior to July 1,
1995 was based on a career average formula providing 1.5% of the sum of all
payments made to a participant during his or her participation in the Contingent
Compensation Plan and the Incentive Compensation Plan.
The following table sets forth the estimated total annual benefits payable
at normal retirement age at 65 under the Employee Pension Plan, the Excess
Benefit Plan, and the Supplemental Retirement Plan to covered participants for
service after October 1, 1995.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
AVERAGE YEARS OF SERVICE FROM OCTOBER 1, 1995
ANNUAL -------------------------------------------------------------------
REMUNERATION 10 15 20 25 30 35
- ------------ ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
2$00,000.... 32,820 49,230 65,640 82,050 98,460 114,870
300,000.... 50,500 75,750 101,000 126,250 151,500 176,750
400,000.... 67,820 101,730 135,640 169,550 203,460 237,370
500,000.... 85,020 127,530 170,040 212,550 255,060 297,570
600,000.... 102,060 153,090 204,120 255,150 306,180 357,210
700,000.... 118,980 178,470 237,960 297,450 356,940 416,430
800,000.... 135,260 202,890 270,520 338,150 405,780 473,410
900,000.... 151,460 227,190 302,920 378,650 454,380 530,110
1,000,000.. 167,500 251,250 335,000 418,750 502,500 586,250
1,100,000.. 184,500 276,750 369,000 461,250 553,500 645,750
1,200,000.. 201,500 302,250 403,000 503,750 604,500 705,250
</TABLE>
The benefit amounts shown in the Pension Plan Table are computed on a
straight life annuity basis, payable at age 65, and assume covered compensation
for social security purposes of $50,000 in all cases. As of June 30, 1996, each
of the Named Executive Officers had 0.75 years of credited service from October
1, 1995 for pension purposes, and the average base salary and average contingent
compensation for each such person are as set forth in the salary and bonus
columns of the Summary Compensation Table above under "EXECUTIVE COMPENSATION."
Estimated annual benefits accrued prior to October 1, 1995 and payable upon
retirement at age 65 under the Employee Pension Plan, the Supplemental
Retirement Plan, and the Retirement Plan component of the Excess Benefit Plan to
Mr. White, Mr. Jaeger, Dr. Hunkapiller, Mr. McPartland, and Dr. Barrett are
15
<PAGE>
$267, $2,360, $20,850, $9,268, and $24,634, respectively, assuming continued
service for benefit eligibility and based on the current variable unit value, as
applicable.
Mr. Kelley, who retired from the Corporation effective June 1, 1996,
receives aggregate annual benefits of approximately $135,000 under the plans
described above.
Under the terms of Mr. White's employment agreement, Mr. White is entitled
to receive an additional retirement benefit equal to the annual benefit that he
would have received if he were credited under the Employee Pension Plan and
non-qualified plans (the Excess Benefit Plan and the Supplemental Retirement
Plan) with an additional 25 years of service, reduced by the annual benefit he
will receive from the Employee Pension Plan and non-qualified plans and further
reduced by $111,528. Mr. White was 50% vested in this additional benefit as of
his date of hire, and his vesting percentage increases by 10% each year to 100%
vesting in this additional benefit after five years of service.
The Employee Pension Plan preserves and protects the benefits of any active
participant in the plan whose employment by the Corporation is terminated within
three years following a change in control of the Corporation. In the event of
such a termination, the rights, expectancies, and the benefits of such
participants (as in effect on the date of the change in control) may not be
diminished through amendment or termination of the Employee Pension Plan after
the change in control. Additionally, in the event the Employee Pension Plan is
terminated within three years following a change in control, any funds remaining
after the satisfaction of all liabilities under the plan will be allocated among
participants in accordance with applicable United States Department of Labor
regulations.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT, CHANGE-IN-CONTROL, AND OTHER
AGREEMENTS
The Corporation entered into a three-year employment agreement with Mr.
White dated September 12, 1995 pursuant to which he serves as Chairman,
President and Chief Executive Officer of the Corporation. The agreement will be
automatically extended for consecutive one-year periods unless either party
gives at least 180 days notice of its intent not to renew. Under the terms of
the agreement, Mr. White will receive a minimum annual base salary of $550,000
and a target incentive payment under the Corporation's Contingent Compensation
Plan equal to 100% of his base salary. Mr. White received upon commencement of
employment 30,000 shares of restricted stock subject to substantially the same
vesting as shares of restricted stock granted to certain key officers of the
Corporation and a stock option for 120,000 shares of Common Stock. Under the
terms of the agreement, Mr. White was also granted 36,000 shares of restricted
stock on August 15, 1996 subject to shareholder approval of the 1996 Stock
Incentive Plan at the Annual Meeting (or substantially equivalent economic value
in performance units). The agreement provides for a special one-time payment to
Mr. White for the value of benefits under certain plans of his former employer
that were forfeited as a result of his resignation, and credit under the
Corporation's retirement program for service with his former employer. (See
"RETIREMENT BENEFITS" for a description of Mr. White's benefits under the
Corporation's retirement program.)
In the event of termination by the Corporation of Mr. White's employment
without cause or if Mr. White terminates employment for good reason (as
defined), Mr. White would receive three times his base salary and target bonus,
the fair market value of 36,000 shares of Common Stock, a pro rated incentive
payment, and other specified benefits.
The Corporation has entered into an agreement with Mr. Jaeger dated April
11, 1995 which provides that he will receive two times his base salary if his
employment with the Corporation is terminated prior to March 14, 1997 for
reasons other than cause or if he resigns for good reason (as defined).
The Corporation has agreements with each of the Named Executive Officers,
other than Mr. Kelley, providing for continuation of the officer's employment
for a term of three years following any change in control of the Corporation.
These agreements provide that if, following a change in control, any of the
Named Executive Officers leaves employment for good reason (as defined) or his
employment is terminated without cause, he will generally be entitled to receive
three times his base salary and average incentive compensation, full vesting of
all restricted stock and stock options, and other specified benefits.
16
<PAGE>
The Corporation has entered into deferred compensation contracts with each
of the Named Executive Officers, other than Messrs. Jaeger and White, which,
subject to certain conditions, provide for payments to be made for a maximum of
ten years of $25,000 per annum to each of Messrs. Hunkapiller, McPartland, and
Barrett, and $190,000 per annum to Mr. Kelley. Such payments would generally
commence upon retirement from the Corporation (or in the event of the
termination of employment of the officer for good reason (as defined) or without
cause following a change in control of the Corporation). The annual payment may
be reduced or forfeited if the recipient elects one of several optional forms of
payment based on actuarial determinations, terminates employment prior to normal
retirement age, or competes with the Corporation. Mr. Kelley's payments under
his deferred compensation contract commenced upon his retirement from the
Corporation effective June 1, 1996.
Messrs. Jaeger, Hunkapiller, and McPartland incurred indebtedness to the
Corporation for the payment of taxes in connection with the vesting of shares of
restricted stock during the fiscal year ended June 30, 1996. Such indebtedness
was evidenced by individual three-year promissory notes dated March 8, 1996 and
secured by shares of Common Stock. Interest is payable on amounts outstanding at
the federal short-term rate required by Section 7872 of the Code, compounded
semiannually. The largest aggregate amount of such indebtedness outstanding
during the 1996 fiscal year was $81,435, $85,263, and $81,745 for Messrs.
Jaeger, Hunkapiller, and McPartland, respectively, and the amount of such
indebtedness outstanding as of August 8, 1996 was $81,885, $85,733, and $82,196
for Messrs. Jaeger, Hunkapiller, and McPartland, respectively.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended June 30, 1996, Messrs. Abely, Ayers, Belingard,
Roberts, Scott, and Smith served as members of the MRC. Mr. Smith replaced Mr.
Belingard on the MRC on June 20, 1996. During the 1996 fiscal year, the
Corporation made payments to F. Hoffmann-La Roche Ltd. ("Roche") and its
affiliates of $59.7 million for the purchase of reagents and consumables for
resale in the Corporation's life science business. Mr. Belingard is Director
General of the Diagnostics Division and a member of the Executive Committee of
Roche.
2. RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected Price Waterhouse LLP, independent
accountants, to audit the books, records, and accounts of the Corporation and
its subsidiaries for the fiscal year ending June 30, 1997. This selection is
being presented to the shareholders for ratification at the Annual Meeting.
The firm of Price Waterhouse LLP has audited the Corporation's books
annually since 1944, has offices in or convenient to the localities in the
United States and foreign countries where the Corporation or its subsidiaries
operate, and is considered to be well qualified. If the shareholders do not
ratify the selection of Price Waterhouse LLP, the selection of independent
accountants will be reconsidered by the Audit Committee of the Board of
Directors.
A representative of Price Waterhouse LLP will attend the Annual Meeting,
will have the opportunity to make a statement, and will be available to respond
to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THIS
PROPOSAL.
3. AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION TO LIMIT THE LIABILITY OF
DIRECTORS CONSISTENT WITH THE NEW YORK BUSINESS CORPORATION LAW
The Board of Directors has approved, subject to approval by the shareholders
at the Annual Meeting, an amendment to the Corporation's Restated Certificate of
Incorporation (the "Certificate"), to limit the personal liability of the
Corporation's directors to the Corporation and its shareholders to the extent
permitted by the New York Business Corporation Law (the "NYBCL"). Specifically,
the Board of Directors proposes to add a new Article Twelfth to the Certificate
to read in its entirety as follows:
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TWELFTH: No director of the Corporation shall be personally liable
to the Corporation or its shareholders for damages for any breach
of duty as a director unless the elimination or limitation of
liability is expressly prohibited by the New York Business
Corporation Law as currently in effect or as it may be amended. No
amendment, modification, or repeal of this Article shall adversely
affect any right or protection of any director that exists at the
time of such change.
The proposed amendment to the Certificate is intended to implement an
amendment to the NYBCL adopted in 1987. As so amended, the NYBCL provides that a
New York corporation may include in its certificate of incorporation a provision
eliminating or limiting the personal liability of directors to the corporation
or its shareholders for damages for any breach of duty in their capacity as
directors except where a judgment or other final adjudication establishes that
their acts or omissions (a) were in bad faith; (b) involved intentional
misconduct or a knowing violation of law; (c) involved a personal gain of a
financial profit or other advantage to which the director was not legally
entitled; or (d) were in violation of Section 719 of the NYBCL. (Section 719
imposes liability on a director who votes for or concurs in certain prohibited
distributions.) The NYBCL further provides that no such provision may eliminate
or limit the liability of directors for any act or omission prior to the
adoption of such provision. Similar laws have been adopted in other
jurisdictions and many corporations have amended their charters to take
advantage of the protections afforded by these laws.
The proposed amendment to the Certificate would reduce the personal
liability of the directors to the Corporation and its shareholders for damages
to the maximum extent permitted under the NYBCL. The Board of Directors believes
that the adoption of this amendment is in the best interests of the Corporation
and its shareholders in that it would enable the Corporation to continue to
attract and retain the most qualified individuals to serve as its directors.
While the Corporation has not experienced any difficulty to date in securing the
services of highly qualified persons, the Corporation is concerned that its
future ability to do so could be adversely affected by the fact that many other
corporations provide for limitations on directors' liability for damages while
the Corporation does not. It should also afford directors the ability to freely
exercise their business judgment to the benefit of the Corporation and its
shareholders without undue concern for any potential personal liability. If the
proposed amendment is adopted, shareholders will not have a claim against a
director for damages based on a breach of the director's duties of care or
loyalty, except in the circumstances set forth above. Shareholders would,
however, continue to have the right to seek equitable relief, such as an
injunction prohibiting, or an order rescinding, an action taken or authorized by
the Board of Directors.
The proposed amendment would apply only to liability of directors (whether
or not they are also officers) acting as directors, and would have no effect on
the potential liability of individuals for their actions as officers. In
addition, there may be certain liabilities, such as those under the federal
securities laws, which a court may hold are unaffected by the proposed
amendment. Lastly, the proposed amendment would apply only to future conduct and
would not limit liability for conduct which predates the amendment.
Under the proposed amendment, if future amendments to the NYBCL were enacted
to permit further limitations to a director's liability, these further
limitations would automatically become effective to the extent permitted by the
NYBCL. Conversely, if future changes in the NYBCL were enacted to reduce the
scope of permitted limitations of a director's liability, such changes also
would automatically become effective with respect to the Corporation's
directors. The proposed amendment also provides that any amendment,
modification, or repeal of the amendment would not adversely affect any right or
protection of a director that exists at the time of such change.
In considering this Proposal, shareholders should be aware that the
directors have a personal interest in having the Proposal adopted and that the
shareholders may, by approving the proposed amendment, be giving up some
possible future claims for damages against the directors. The proposed amendment
may have the effect of reducing the likelihood of derivative litigation against
directors, and may also discourage or deter shareholders from bringing a lawsuit
against directors for breach of their duties of care or loyalty, even though
such an action, if successful, might otherwise have benefited the Corporation
and its
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shareholders. Nevertheless, for the reasons set forth above, the Board of
Directors believes that the adoption of the proposed amendment is in the best
interests of the Corporation and its shareholders.
The affirmative vote of the holders of a majority of all outstanding shares
of Common Stock entitled to vote at the Annual Meeting is required for approval
of the amendment.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THIS
PROPOSAL.
4. ADOPTION OF THE 1996 STOCK INCENTIVE PLAN TO REPLACE THE EXPIRING PLAN
The Board of Directors believes that it is in the best interests of the
Corporation and its shareholders to adopt the 1996 Stock Incentive Plan (the
"1996 Incentive Plan"). The 1996 Incentive Plan is intended to continue the
established policy of the Corporation of encouraging ownership of Common Stock
by employees, officers, and directors of the Corporation and of providing
incentives for such persons to put forth maximum efforts for the success of the
Corporation.
The Corporation currently has in effect its 1993 Stock Incentive Plan for
Key Employees (the "1993 Plan"), which was approved by the shareholders at the
1993 Annual Meeting. As of June 30, 1996, only 6,835 shares of Common Stock
remained available for the grant of new awards under the 1993 Plan, and no
further awards may be made under that plan after October 21, 1996. As noted in
the Report of the Management Resources Committee, a stock option plan is an
integral component of the Corporation's compensation system, and the 1996
Incentive Plan would reflect the principles that underlie the Corporation's
compensation policies. Specifically, the 1996 Incentive Plan would (a) further
efforts of the Corporation to place a portion of compensation "at risk" and tied
to the performance of corporate objectives, (b) further the goal of increased
ownership of Common Stock by employees and thereby further align the interests
of employees and shareholders, and (c) facilitate the structuring of appropriate
and necessary incentives to attract and retain highly qualified and talented
individuals. The Board of Directors further believes that approval of the 1996
Incentive Plan will promote the long-term growth and profitability of the
Corporation.
The following is a summary of the material provisions of the 1996 Incentive
Plan. This summary is qualified in its entirety by reference to the specific
provisions of the 1996 Incentive Plan, the full text of which is attached to
this Proxy Statement as Exhibit A.
SUMMARY OF THE 1996 INCENTIVE PLAN
SHARES SUBJECT TO THE PLAN; TERM. Subject to adjustment as provided below,
1,500,000 shares of Common Stock will be available for issuance under the 1996
Incentive Plan. Shares of Common Stock delivered under the 1996 Incentive Plan
may be newly issued shares, treasury shares, reacquired shares, or any
combination thereof. No options or awards may be made under the 1996 Incentive
Plan after October 31, 1998. As of August 15, 1996, the fair market value of a
share of Common Stock was $50.3125.
TYPES OF INCENTIVES. Incentives granted under the 1996 Incentive Plan may be
(1) employee stock options, consisting of incentive stock options within the
meaning of Section 422 of the Code and non-qualified stock options
(collectively, "Employee Options"), (2) director stock options, which will be
non-qualified stock options ("Director Options"), (3) shares of Common Stock,
which may be subject to restrictions ("Stock Awards"), or (4) shares of Common
Stock subject to performance goals ("Performance Shares").
ADMINISTRATION. The 1996 Incentive Plan will be administered by the
Management Resources Committee (the "Committee") of the Board of Directors. The
Committee will determine, subject to the express provisions of the 1996
Incentive Plan, the employees to whom, and the time or times at which, Employee
Options, Stock Awards, and Performance Shares (collectively, "Employee Awards")
are to be granted, as well as the terms and provisions governing each such
award. The Committee will also interpret the 1996 Incentive Plan, make rules and
regulations relating thereto, and be responsible for the administration thereof.
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<PAGE>
ELIGIBILITY. All regular salaried employees (including executive officers)
of the Corporation and its subsidiaries are eligible to receive Employee Awards,
and all non-employee directors of the Corporation will receive Director Options,
under the 1996 Incentive Plan. While the Committee has historically limited the
grant of options and other awards under the Corporation's stock incentive plans
to "key employees," it is currently contemplated that Employee Awards under the
1996 Incentive Plan would be made to a broader group of employees. The selection
of the employees to whom Employee Awards are to be granted is entirely within
the discretion of the Committee, and in making such determination, the Committee
will take into account the duties of the respective employees, their present and
potential contributions to the success of the Corporation, and such other
factors as the Committee deems relevant in connection with accomplishing the
purposes of the 1996 Incentive Plan. As of June 30, 1996, approximately 5,700
persons would be eligible to participate in the 1996 Incentive Plan.
STOCK OPTIONS--EMPLOYEE OPTIONS. The purchase price of a share of Common
Stock covered by an Employee Option will be determined by the Committee, but may
not be less than 100% of the fair market value of a share of Common Stock on the
date of the grant. The vesting period and all other terms and conditions of each
Employee Option will be determined by the Committee; provided, however, that if
no vesting schedule is specified, an Employee Option will, subject to the terms
of the 1996 Incentive Plan, vest in two equal annual installments commencing on
the first anniversary of the date of grant; and, provided further, that the term
of each Employee Option may not be more than ten years from the date of the
grant.
If the employment of an employee to whom an Employee Option has been granted
is terminated (other than by reason of retirement, disability, or death), the
Employee Option will be exercisable (to the extent that the employee would be
entitled to do so at the date of termination) for 30 days after such
termination, but not after the expiration of the term of the Employee Option.
If an employee to whom an Employee Option has been granted retires from the
Corporation at the employee's normal retirement date pursuant to any pension
plan provided by the Corporation, or retires earlier than the employee's normal
retirement date with the prior consent of the Corporation, or is totally and
permanently disabled, such Employee Option may be fully exercised without regard
to the period of continuous employment at any time: (a) in the case of an
incentive stock option, within three months after such retirement or disability,
but in no event after the expiration of the term of the Employee Option; or (b)
in the case of a non-qualified stock option, within one year after such
retirement or disability, but not after the expiration of the term of the
Employee Option.
If an employee to whom an Employee Option has been granted dies while
employed by the Corporation, such Employee Option may be exercised to the extent
that the employee was entitled to do so at the date of death by his or her
executor or administrator or other person at the time entitled by law to the
employee's rights under the Employee Option, at any time, not exceeding one year
after his death, as shall be prescribed in the option agreement, but not after
the expiration of the term of the Employee Option.
STOCK OPTIONS--DIRECTOR OPTIONS. As of the date of each election or
reelection to the Board of Directors of the Corporation, commencing on the date
of the Annual Meeting, each non-employee director of the Corporation will
automatically be granted a Director Option to purchase 1,500 shares of Common
Stock, subject to adjustment as provided below. The purchase price of a share of
Common Stock covered by a Director Option will be 100% of the fair market value
of a share of Common Stock on the date of the grant.
The term of each Director Option will be for a period of ten years from the
date of grant. Each Director Option will vest as to 750 shares of Common Stock
on the date immediately preceding the first annual meeting of shareholders next
following the date of grant and as to the remaining 750 shares on the date
immediately preceding the second annual meeting of shareholders next following
the date of grant, provided that the holder thereof continues to serve as a
member of the Board of Directors as of each such date.
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If a director's service as a member of the Board of Directors is terminated
(other than by reason of retirement, disability, resignation with the approval
of the Board, or death), the Director Option will be exercisable (to the extent
that the director would be entitled to do so at the date of termination) for 30
days after such termination, but not after the expiration of the term of the
option.
If a director to whom a Director Option has been granted ceases to serve as
a director as a result of (a) retiring from the Corporation upon normal
retirement age, (b) becoming totally and permanently disabled, or (c) resigning
or declining to stand for reelection with the approval of the Board of
Directors, such option may be fully exercised without regard to the period of
continuous service at any time within one year after such retirement, but not
after the expiration of the term of the Director Option.
If a director to whom a Director Option has been granted dies while serving
as a member of the Board of Directors, such Director Option may be exercised to
the extent that the director was entitled to do so at the date of death by his
or her executor or administrator or other person at the time entitled by law to
the director's rights under the Director Option, at any time, not exceeding one
year after his or her death, but not after the expiration of the term of the
Director Option.
STOCK OPTIONS--GENERAL. Employee Options and Director Options (collectively,
"Options") are exercisable only by the optionee or his or her guardian or legal
representative, and may not be transferred, except pursuant to a domestic
relations order; provided, however, that the Committee may, in its sole
discretion, permit an optionee to transfer a non-qualified stock option to (a) a
member of the optionee's immediate family, (b) a trust, the beneficiaries of
which consist exclusively of members of the optionee's immediate family, or (c)
a partnership, the partners of which consist exclusively of members of the
optionee's immediate family. After the death of an optionee, an Option may be
transferred pursuant to the laws of descent and distribution.
It is a condition to the exercise of an Option within one year following
termination of employment or service that the optionee has not (a) rendered
services or engaged directly or indirectly in any business which in the opinion
of the Committee competes with or is in conflict with the interests of the
Corporation, or (b) violated any written agreement with the Corporation. An
optionee's violation of either of these conditions will result in the forfeiture
of all Options held by such optionee.
LIMITATIONS ON THE GRANT OF OPTIONS. No one individual may be granted an
Option or Options under the 1996 Incentive Plan during any fiscal year of the
Corporation for an aggregate number of shares of Common Stock which exceeds 10%
of the total number of shares reserved for issuance under the 1996 Incentive
Plan.
STOCK AWARDS. Stock Awards may, but need not, be subject to such
restrictions as the Committee may determine. Until any conditions associated
with Stock Awards are met, none of such shares may be sold, assigned,
bequeathed, transferred, pledged, or otherwise disposed of in any way by the
recipient. Recipients of Stock Awards will otherwise be entitled to such rights
of a shareholder with respect to the shares of Common Stock subject to Stock
Awards as the Committee may determine, including the right to vote and receive
dividends and other distributions made with respect to such Common Stock.
In the event that a recipient of a Stock Award terminates employment before
any applicable restrictions have been met, by reason of death, total and
permanent disability, retirement, or discharge from employment other than for
cause, the Committee may, in its sole discretion, remove restrictions on all or
a portion of the Common Stock subject to the Stock Award.
LIMITATIONS ON STOCK AWARDS. Subject to adjustment as provided below, no
employee may receive a Stock Award representing more than 40,000 shares of
Common Stock during any fiscal year of the Corporation, and the maximum number
of shares of Common Stock that may be issued to all employees pursuant to Stock
Awards under the 1996 Incentive Plan is 60,000.
PERFORMANCE SHARES. Awards of Performance Shares will be subject to the
attainment of performance goals relating to one or more criteria within the
meaning of Section 162(m) of the Code and the regulations
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thereunder, including, without limitation, stock price, market share, sales,
earnings per share, return on equity, costs, and cash flow, as determined by the
Committee from time to time. Certificates representing Performance Shares will
be registered in the name of the award recipient but remain in the physical
custody of the Corporation until the Committee has determined that performance
goals and other stock restrictions have been attained. Until the Performance
Shares are delivered to an award recipient, none of such shares may be sold,
assigned, bequeathed, transferred, pledged, or otherwise disposed of in any way
by the recipient. Recipients of Performance Shares will otherwise be entitled to
such rights of a shareholder with respect to the Performance Shares as the
Committee may determine, including the right to vote and receive dividends and
other distributions made with respect to the Performance Shares.
In the event that a recipient of Performance Shares terminates employment
before all applicable performance goals have been attained, by reason of death,
total and permanent disability, retirement, or discharge from employment other
than for cause, the Committee may, in its sole discretion, remove restrictions
on all or a portion of the Performance Shares or determine the performance
objectives with respect to all or a portion of the Performance Shares to have
been attained; provided, however, that the Committee may not exercise such
discretion to the extent that it would cause the award of Performance Shares not
to qualify as performance based compensation under Section 162(m) of the Code.
LIMITATIONS ON PERFORMANCE SHARES. Subject to adjustment as provided below,
no employee may receive Performance Shares representing more than 100,000 shares
of Common Stock during any fiscal year of the Corporation, and the maximum
number of shares of Common Stock that may be issued to all employees pursuant to
awards of Performance Shares under the 1996 Incentive Plan is 300,000.
CHANGE OF CONTROL. All outstanding Options granted under the 1996 Incentive
Plan will become fully and immediately exercisable, all restrictions on Stock
Awards and awards of Performance Shares will immediately terminate, and all
performance objectives applicable to awards of Performance Shares will be deemed
attained (a) in the event that a tender offer or exchange offer (other than an
offer by the Corporation) for the Common Stock is made by any "person" within
the meaning of Section 14(d) of the Securities Exchange Act of 1934 and not
withdrawn within a specified period after the commencement thereof; or (b) in
the event of a "Change in Control" (as defined in the 1996 Incentive Plan).
TERMINATION AND AMENDMENT; NO REPRICING. No award may be made under the 1996
Incentive Plan after October 31, 1998. The Board of Directors may at any time
prior to that date terminate the 1996 Incentive Plan or make any amendment or
modification as it shall deem advisable; provided that amendments which would
(a) increase the aggregate number of shares which may be issued, or (b)
materially modify the requirements as to eligibility for participation would
require shareholder approval.
The terms of any outstanding Employee Award may be amended by the Committee
at any time in its discretion in any manner it deems appropriate, including to
accelerate the date of exercise of any award, terminate restrictions, or convert
an incentive stock option into a non-qualified stock option; provided that no
such amendment may adversely affect in any material manner any right of any
recipient without his or her consent; and, provided further, that the Committee
may not (a) amend any previously-issued award of Performance Shares to the
extent that the amendment would cause such award not to qualify as performance
based compensation under Section 162(m) of the Code, or (b) amend any
previously-issued Employee Option to reduce the purchase price thereof whether
by modification of the Employee Option or by cancellation of the Employee Option
in consideration of the immediate issuance of a replacement Employee Option
bearing a reduced purchase price.
ADJUSTMENTS. The 1996 Incentive Plan provides that the number of shares
available, the number of shares subject to Director Options, the maximum number
of shares that may be subject to awards to employees, and the terms of any
outstanding awards under the 1996 Incentive Plan may be adjusted by the
Committee in such manner as it deems appropriate in the event of changes in the
outstanding Common Stock by reason of stock dividends, stock splits,
recapitalizations, reorganizations, liquidations, or other similar events.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Corporation has been advised that under current law the federal income
tax consequences to participants and the Corporation of Options granted under
the 1996 Incentive Plan would generally be as set forth in the following
summary. This summary does not purport to be a complete analysis of all
potential tax consequences relevant to optionees and the Corporation, or to
describe tax consequences based upon particular circumstances.
An employee to whom an incentive stock option is granted will not recognize
income at the time of grant or exercise of such option (except that the
alternative minimum tax may apply), and no federal income tax deduction will be
allowable to the Corporation upon the grant or exercise of such option. When the
employee sells shares of Common Stock received upon the exercise of an incentive
stock option more than one year after the date of exercise and more than two
years after the date of grant of such option, the employee will normally
recognize a long-term capital gain or loss equal to the difference, if any,
between the sale price of such shares and the option exercise price. If the
employee does not hold such shares for these periods, when the employee sells
such shares the employee will recognize ordinary compensation income and
possibly capital gain or loss in such amounts as are prescribed by the Code and
the regulations thereunder. Subject to applicable provisions of the Code and the
regulations thereunder, in the event of a disposition prior to the end of the
holding periods noted above, the Corporation will generally be entitled to a
federal income tax deduction in the amount of such ordinary compensation income.
An employee or director to whom a non-qualified stock option (which is
treated as an option for federal income tax purposes) is granted will not
recognize income at the time of grant of such option. When the employee or
director exercises such option, he or she will recognize ordinary compensation
income equal to the difference, if any, between the option price paid and the
fair market value, as of the date of exercise, of the shares of Common Stock
received by such employee or director. The tax basis of such shares to such
employee or director will be equal to the fair market value on the date of
exercise, and the employee's or director's holding period for such shares will
commence on the day on which the employee or director recognized taxable income
in respect of such shares. Subject to applicable provisions of the Code and the
regulations thereunder, the Corporation will generally be entitled to a federal
income tax deduction in respect of non-qualified stock options in an amount
equal to the ordinary compensation income recognized by the employee or
director. Any compensation includable in the gross income of an employee or
director in respect of a non-qualified option will be subject to appropriate
federal income and employment taxes.
NEW PLAN BENEFITS
The Committee has made certain awards under the 1996 Incentive Plan, subject
to shareholder approval of the 1996 Incentive Plan at the Annual Meeting. The
following table sets forth information with respect to Employee Options, Stock
Awards, and Performance Shares granted under the 1996 Incentive Plan as of the
date of this Proxy Statement, and the number of Director Options which would be
granted on the date of the Annual Meeting under the 1996 Incentive Plan.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF NUMBER OF VALUE OF
NUMBER OF STOCK STOCK PERFORMANCE PERFORMANCE
NAME OPTIONS AWARDS AWARDS ($)(1) SHARES(2) SHARES ($)(1)
- ----------------------------------- --------- --------- --------------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
T. L. White........................ 75,000 12,000 603,750 54,000 2,716,875
S. O. Jaeger....................... 28,000 0 0 16,000 805,000
M. W. Hunkapiller.................. 25,000 0 0 10,000 503,125
M. J. McPartland................... 10,000 0 0 10,000 503,125
P. Barrett......................... 10,000 0 0 10,000 503,125
G. N. Kelley....................... 0 0 0 0 0
All executive officers as a
group.............................. 293,000 12,000 603,750 170,000 8,553,125
All directors who are not executive
officers........................... 15,000(3) 0 0 0 0
All employees, excluding executive
officers........................... 0 0 0 15,000 754,688
</TABLE>
(FOOTNOTES ON FOLLOWING PAGE)
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(FOOTNOTES FOR PRECEDING PAGE)
- ------------
1 The value is based on the fair market value of a share of Common Stock on
August 15, 1996 of $50.3125.
2 The receipt of Performance Shares is subject to the attainment of certain
specified performance goals.
3 Each nominee for director who is not an executive officer (10 persons) will,
if elected, receive a grant of a Director Option covering 1,500 shares of
Common Stock on the date of the Annual Meeting.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of the holders of a majority of all outstanding shares
of Common Stock entitled to vote at the Annual Meeting is required for approval
of the 1996 Incentive Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THIS
PROPOSAL.
5. ADOPTION OF THE 1996 EMPLOYEE STOCK PURCHASE PLAN TO REPLACE THE EXPIRING
PLAN
For the past forty years, the Corporation has maintained a series of
employee stock purchase plans to provide employees with an incentive to continue
in the service of the Corporation and to work effectively for its prosperity and
growth. The most recent of these plans, the Perkin-Elmer Employees 1991 Stock
Purchase Plan (the "1991 Plan"), was approved by the shareholders at the 1991
Annual Meeting and provided for the grant of a right to purchase shares of
Common Stock to eligible employees during each of the years 1992 through 1996.
The fifth and last grant under the 1991 Plan was made in January, 1996, and no
further grants may be made under that plan. Accordingly, the Board of Directors
believes that it is appropriate and in the best interests of the Corporation and
its shareholders to adopt a new employee stock purchase plan to become effective
in January, 1997.
A substantial number of the Corporation's employees have become, and
continue to be, shareholders in the Corporation as a result of these plans. The
Board of Directors believes that these plans have been mutually beneficial to
employees as well as the Corporation and its shareholders because they have
enhanced the interest of the employees in the continued success of the
Corporation and further aligned the interests of employees and shareholders. In
addition, the Board is of the opinion that employee stock purchase plans provide
an aid in recruiting highly qualified and talented employees. For these reasons,
the Board of Directors authorized the adoption of a new plan known as The
Perkin-Elmer Corporation 1996 Employee Stock Purchase Plan (the "1996 Purchase
Plan"), subject to the approval of shareholders at the Annual Meeting.
The following is a summary of the material provisions of the 1996 Purchase
Plan. This summary is qualified in its entirety by reference to the specific
provisions of the 1996 Purchase Plan, the full text of which is attached to this
Proxy Statement as Exhibit B.
SUMMARY OF THE 1996 PURCHASE PLAN
SHARES SUBJECT TO THE PLAN. Subject to adjustment as provided below, 600,000
shares of Common Stock will be available for issuance under the 1996 Purchase
Plan. Shares of Common Stock delivered under the 1996 Purchase Plan may be newly
issued shares, treasury shares, reacquired shares, or any combination thereof.
As of August 15, 1996, the fair market value of a share of Common Stock was
$50.3125.
ADMINISTRATION. The 1996 Purchase Plan will be administered by the
Committee. The Committee, whose members are not eligible to participate in the
1996 Purchase Plan, will interpret the 1996 Purchase Plan, make rules and
regulations relating thereto, and be responsible for the administration thereof.
PARTICIPATION. Any person who is an employee of the Corporation or of a
designated majority-owned subsidiary as of the date of each offering shall be
eligible to participate in the 1996 Purchase Plan. Directors who are not
employees of the Corporation and any person who, after grant of an option to
purchase, would hold 5% or more of the Common Stock are not eligible to
participate. As of June 30, 1996, approximately 3,000 domestic employees of the
Corporation would be eligible to participate in the 1996 Purchase Plan.
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Up to an additional approximately 2,700 non-domestic employees would be eligible
to participate in the 1996 Purchase Plan if the Board of Directors were to
designate all majority-owned subsidiaries of the Corporation as participating
subsidiaries. Whether or not any such majority-owned subsidiaries are so
designated will be determined by the Board in its sole discretion based upon the
relative costs and benefits of such designation.
PURCHASES UNDER THE 1996 PURCHASE PLAN. The Corporation may make an annual
offering to eligible employees of options to purchase shares of Common Stock
under the 1996 Purchase Plan during each of the three calendar years commencing
January 1, 1997. Each offering period will be for a period of one year from the
date of offering, and each eligible employee as of the date of offering will be
entitled to purchase shares of Common Stock at a purchase price equal to the
lower of 85% of the fair market value of the Common Stock on the first day of
the offering period or 85% of the fair market value of the Common Stock on the
last day of the offering period.
Payment for shares of Common Stock purchased under the 1996 Purchase Plan
will be made by authorized payroll deductions from an employee's compensation
(as defined in the 1996 Purchase Plan). Subject to the terms of the 1996
Purchase Plan, eligible employees who desire to participate in the 1996 Purchase
Plan will designate a stated whole percentage of their compensation, up to a
maximum of 10%, to be credited to an account maintained by the Corporation for
such employee. No participant in the 1996 Purchase Plan will be permitted to
purchase Common Stock under the 1996 Purchase Plan and all other stock purchase
plans of the Corporation and its subsidiaries at a rate that exceeds $25,000 of
the fair market value of such shares (determined as of the date of grant of such
right) for each calendar year during which any option granted to such individual
under any such plan is outstanding at any time.
A participating employee will have none of the rights or privileges of a
shareholder of the Corporation (including the right to receive dividends) until
the shares purchased under the 1996 Purchase Plan are fully paid for and issued.
WITHDRAWAL. At any time prior to the end of an offering period, a
participating employee may (a) direct the Corporation to make no further
deductions from his or her compensation, or (b) cancel his or her option to
purchase shares of Common Stock. If the employee has directed that payroll
deductions be discontinued, any sums deducted will be retained by the
Corporation until the end of the offering period, at which time the employee
will receive that number of whole shares which can be purchased with the amount
so retained, and any remaining balance will be paid to the employee in cash,
without interest. If the employee has directed that the option be canceled, the
Corporation will, as soon as practicable thereafter, refund in cash all amounts
credited to such employee's account, without interest.
TERMINATION OF EMPLOYMENT. If the employment of a participating employee is
terminated within three months prior to the end of an offering period because of
total and permanent disability or retirement, or at any time within an offering
period because of death, the employee or his or her legal representative may
either (a) cancel the option to purchase and, as soon as practicable thereafter,
receive a cash refund, without interest, of all payroll deductions credited to
his or her account with respect to the offering, or (b) elect to receive at the
end of the offering period that number of whole shares of Common Stock which
such payroll deductions will purchase, with any excess being refunded in cash,
without interest. If the employment of a participating employee is terminated
for any other reason, or if such employment is terminated more than three months
prior to the end of an offering period because of total and permanent disability
or retirement, the employee will receive, as soon as practicable thereafter, a
cash refund, without interest, of all payroll deductions credited to his or her
account with respect to the offering.
TRANSFERABILITY. A participating employee's rights under the 1996 Purchase
Plan are exercisable, during his or her lifetime, only by such employee and may
not be transferred in any manner. After the death of a participating employee,
his or her rights may be transferred pursuant to the laws of descent and
distribution.
TERMINATION AND AMENDMENT. The Board of Directors may terminate the 1996
Purchase Plan at any time or make any amendment or modification as it shall deem
advisable. In the event of any termination of
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the 1996 Purchase Plan, the date of such termination will be deemed the end of
the then current offering period. No offerings may be made under the 1996
Purchase Plan after December 31, 1999.
ADJUSTMENTS. The number and class of shares available under the 1996
Purchase Plan or covered by the options to purchase shares of Common Stock
granted under the 1996 Purchase Plan will be subject to adjustment by the
Committee in such manner as it deems appropriate in the event of changes in the
outstanding Common Stock by reason of stock dividends, stock splits,
recapitalizations, reorganizations, liquidations, or other similar events.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Corporation has been advised that under current law the federal income
tax consequences to participants and the Corporation of options granted under
the 1996 Purchase Plan would generally be as set forth in the following summary.
This summary does not purport to be a complete analysis of all potential tax
consequences relevant to employees and the Corporation, or to describe tax
consequences based upon particular circumstances.
It is intended that the option to purchase shares of Common Stock granted
under the 1996 Purchase Plan will constitute options issued pursuant to an
"employee stock purchase plan" within the meaning of Section 423 of the Code. If
such shares are issued to a participating employee upon his or her exercise of
an option to purchase granted under the 1996 Purchase Plan, and if no
disposition of such shares is made within two years of the date of grant of the
option, or within one year after the transfer to such participating employee of
such shares, or in the event of his or her death (whenever occurring) while
owning such shares, then: (a) no income will be realized by the participating
employee at the time of the transfer of the shares to such employee and (b) when
the participating employee sells or otherwise disposes of such shares (or dies
holding the shares), there shall be included in his or her gross income, as
compensation, an amount equal to the lesser of (i) the amount by which the fair
market value of the shares on the first day of the offering period exceeds the
purchase price for the shares, or (ii) the amount by which the fair market value
at time of disposition or death exceeds the purchase price per share. Any
further gain will be treated for tax purposes as long-term capital gain,
provided that the employee holds the shares for more than one year after the
last day of the offering period applicable to such shares.
No deduction will be allowed to the Corporation for federal income tax
purposes in connection with the granting or exercise of any option to purchase
shares under the 1996 Purchase Plan if there is no disposition of the shares
within either the two-year or the one-year periods referred to above. If there
is a disposition of shares by a participating employee within either of these
periods, such employee will realize ordinary income in the year of the
disposition in an amount equal to the difference between the purchase price and
the fair market value of the shares at the time of exercise of the option, and
the Corporation will be entitled to a deduction in the same amount. Any
difference between the amount received by an employee upon such a disposition
and the fair market value of the shares at the time of exercise of the option
will be capital gain or loss, as the case may be.
NEW PLAN BENEFITS
It cannot be determined at this time what benefits or amounts, if any, will
be received by or allocated to any person or group of persons under the 1996
Purchase Plan if the 1996 Purchase Plan is approved at the Annual Meeting, or
what benefits or amounts, if any, would have been received or allocated to any
person or group of persons for the fiscal year ended June 30, 1996 if the 1996
Purchase Plan had been in effect during such fiscal year.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of the holders of a majority of all outstanding shares
of Common Stock entitled to vote at the Annual Meeting is required for approval
of the 1996 Purchase Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THIS
PROPOSAL.
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MISCELLANEOUS MATTERS
Management does not know of any other matter to be voted upon at the Annual
Meeting. If any other matters properly come before the Annual Meeting, it is the
intention of the persons named in the accompanying proxy to vote said proxy in
accordance with their judgment on such matters unless otherwise instructed.
In addition to solicitation by mail, proxies may be solicited by directors,
officers, and other employees of the Corporation personally or by telephone or
other means of communication without additional compensation for such services.
The Corporation has retained D.F. King & Co., Inc., 77 Water Street, New York,
New York, to assist in the distribution of proxy materials and with the
solicitation of proxies for a fee estimated at $6,500, plus out-of-pocket
expenses. The Corporation will bear the cost of solicitation of proxies.
The Corporation will also reimburse brokerage houses and other custodians,
nominees and fiduciaries for their reasonable expenses for forwarding proxy
materials to the beneficial owners of Common Stock.
Effective July 1, 1996, the Corporation obtained insurance policies insuring
the directors and officers of the Corporation and its subsidiaries against
certain liabilities they may incur in the performance of their duties and
insuring the Corporation against obligations to indemnify such persons against
such liabilities. One year policies expiring July 1, 1997 have been obtained
from National Union Fire Insurance Company and Federal Insurance Company at
premiums of $387,848 and $218,785, respectively. The foregoing information is
provided to shareholders of the Corporation pursuant to Section 726(d) of the
NYBCL.
SUBMISSION OF SHAREHOLDER PROPOSALS FOR INCLUSION IN 1997 PROXY MATERIALS
Any shareholder who intends to present a proposal at the Corporation's 1997
Annual Meeting of Shareholders is advised that, in order for such proposal to be
included in the Board of Directors' proxy materials for such meeting, the
proposal must be directed to the Secretary of the Corporation at its principal
executive offices such that it is received no later than May 14, 1997, and the
proponent and the proposal must meet certain eligibility requirements of the
SEC.
MULTIPLE COPIES OF ANNUAL REPORT
The rules of the SEC require that this proxy statement be accompanied or
preceded by an annual report. As a result, shareholders with multiple accounts
and households with multiple shareholders may be receiving more than one copy of
the annual report, which is costly to the Corporation and may be inconvenient to
these shareholders. If you are the shareholder of record and you mark the
appropriate box on the applicable proxy card, the Corporation will discontinue
the mailing of annual reports on the accounts you select. However, at least one
account at each address must continue to receive an annual report. Eliminating
these duplicate mailings will not affect receipt of future proxy materials or
shareholder communications. To resume mailing of an annual report to the
shareholder of record, shareholders may call the Corporation's toll-free
shareholder services telephone number at (800) 730-4001.
By Order of the Board of Directors,
William B. Sawch
SECRETARY
Norwalk, Connecticut
September 9, 1996
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EXHIBIT A
THE PERKIN-ELMER CORPORATION
1996 STOCK INCENTIVE PLAN
1. PURPOSE OF THE PLAN.
The purpose of The Perkin-Elmer Corporation 1996 Stock Incentive Plan (the
"Plan") is to increase shareholder value and to advance the interests of The
Perkin-Elmer Corporation and its subsidiaries (collectively, the "Corporation")
by providing financial incentives designed to attract, retain, and motivate
employees, officers, and directors of the Corporation. The Plan continues the
established policy of the Corporation of encouraging ownership of its Common
Stock by key personnel and of providing incentives for such individuals to put
forth maximum efforts for the success of the Corporation.
2. DEFINITIONS.
As used herein, the following terms have the meanings hereinafter set forth
unless the context clearly indicates to the contrary:
2.1 "ACT" means the Securities Exchange Act of 1934, as amended from time to
time.
2.2 "AGREEMENT" means the written agreement between the Corporation and an
Optionee or Award Recipient, as the case may be, evidencing the grant of an
Option or Award and setting forth the terms and conditions thereof.
2.3 "AWARD" means a Stock Award or Performance Share Award.
2.4 "AWARD RECIPIENT" means an individual to whom an Award has been granted
under the Plan.
2.5 "BOARD OF DIRECTORS" means the Board of Directors of the Corporation.
2.6 "CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
2.7 "COMMITTEE" means the Management Resources Committee of the Board of
Directors, or any successor thereto or committee designated thereby whose
members qualify as outside directors as defined in Section 162(m) of the Code
and the Treasury Regulations issued pursuant thereto.
2.8 "COMMON STOCK" means the common stock, par value $1.00 per share, of the
Corporation.
2.9 "CONTINUOUS EMPLOYMENT" means an uninterrupted chain of continuous
regular employment by the Corporation. A leave of absence granted in accordance
with the Corporation's usual procedures which does not operate to interrupt
continuous employment for other benefits granted by the Corporation shall not be
considered a termination of employment nor an interruption of Continuous
Employment hereunder, and an employee who is granted such a leave of absence
shall be considered to be continuously employed during the period of such leave;
provided, however, that if regulations under the Code or an amendment to the
Code shall establish a more restrictive definition of a leave of absence, such
definition shall be substituted herein.
2.10 "DIRECTOR OPTION" means an Option granted pursuant to Section 7 hereof.
2.11 "EMPLOYEE OPTION" means an Option granted pursuant to Section 6 hereof.
2.12 "FAIR MARKET VALUE" means the simple average of the high and low sales
prices of a share of Common Stock as reported in the report of composite
transactions (or other source designated by the
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Committee) on the date on which fair market value is to be determined (or if
there shall be no trading on such date, then on the first previous date on which
sales were made on a national securities exchange).
2.13 "INCENTIVE STOCK OPTIONS" means those Options granted hereunder as
Incentive Stock Options as defined in, and which by their terms comply with the
requirements for such Options set out in, Section 422 of the Code and the
Treasury Regulations issued pursuant thereto.
2.14 "NON-EMPLOYEE DIRECTOR" means a member of the Board of Directors who is
not an employee or officer of the Corporation.
2.15 "NON-QUALIFIED STOCK OPTIONS" means those Options granted hereunder
which are not intended to qualify as Incentive Stock Options.
2.16 "OPTION" means an Employee Option or Director Option.
2.17 "OPTIONEE" means an individual to whom an Option has been granted under
the Plan.
2.18 "PERFORMANCE SHARE AWARD" means an award of Performance Shares granted
pursuant to Section 10 hereof.
2.19 "PERFORMANCE SHARES" means shares of Common Stock covered by a
Performance Share Award.
2.20 "STOCK AWARD" means an award of shares of Common Stock granted pursuant
to Section 9 hereof.
2.21 "STOCK RESTRICTIONS" mean the restrictions, including performance
goals, placed on a Stock Award or Performance Share Award under the Plan.
2.22 "TEN PERCENT SHAREHOLDER" means an individual who owns, within the
meaning of Section 422(b)(6) of the Code and the Treasury Regulations issued
pursuant thereto, stock possessing more than ten (10%) percent of the total
combined voting power of all classes of stock of the Corporation.
3. SHARES RESERVED FOR THE PLAN.
The aggregate number of shares of Common Stock available for Options and
Awards under the Plan is One Million Five Hundred Thousand (1,500,000), subject
to adjustment in accordance with Section 15. Shares of Common Stock issued under
the Plan shall be authorized but unissued shares. In lieu of such unissued
shares, the Corporation may, in its discretion, transfer on the exercise of
Options or the delivery of shares of Common Stock issued pursuant to Awards
treasury shares, reacquired shares, or shares acquired in the market for
purposes of the Plan.
If any Options or Awards granted under the Plan shall for any reason
terminate, be canceled, or expire without having been exercised or vested in
full, shares of Common Stock not issued or vested in full under such Options or
Awards shall be available again for issuance under the Plan.
4. ADMINISTRATION OF THE PLAN.
The Committee shall have plenary authority in its discretion, but subject to
the express provisions of the Plan, to administer the Plan, including, without
limitation, the authority to determine the individuals to whom, and the time or
times at which, Employee Options and Awards shall be granted, the number of
shares of Common Stock to be covered by each Employee Option and Award, and the
terms and conditions of each Employee Option and Award. The Committee shall also
have plenary authority in its discretion to interpret the Plan; to prescribe,
amend, and rescind rules and regulations relating to it; to determine the terms
(which need not be identical) of Agreements executed and delivered under the
Plan, including, without limitation, such terms and provisions as shall be
requisite in the judgment of the
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Committee to conform to any change in any law or regulation applicable thereto;
and to make any and all other determinations and take any and all actions deemed
necessary or advisable for the administration of the Plan. The Committee's
determination on the foregoing matters shall be conclusive and binding on all
persons having an interest in the Plan.
5. ELIGIBLE EMPLOYEES; FACTORS TO BE CONSIDERED IN GRANTING EMPLOYEE OPTIONS AND
AWARDS.
Subject to the terms of the Plan, an Employee Option or Award may be granted
to any person who, at the time the Employee Option or Award is granted, is a
regular full-time employee (which term shall include officers and directors) of
the Corporation. Non-Employee Directors shall not be eligible to receive
Employee Options or Awards. In determining the employees to whom Employee
Options or Awards shall be granted, the number of shares of Common Stock to be
covered by each Employee Option or Award, and the terms and conditions of each
Employee Option and Award, the Committee shall take into account the duties and
responsibilities of the respective employees, their present and potential
contributions to the success of the Corporation, and such other factors as they
shall deem relevant in connection with accomplishing the purposes of the Plan.
An employee who has been granted an Employee Option or Award may be granted and
hold additional Employee Options or Awards if the Committee shall so determine.
6. EMPLOYEE OPTIONS.
6.1 GRANT OF EMPLOYEE OPTIONS. Subject to the terms of the Plan, the
Committee may grant Employee Options to such employees at such time or times and
in such amounts as it shall determine. Each Employee Option granted hereunder
shall be designated as an Incentive Stock Option or Non-Qualified Stock Option
and shall be evidenced by an Agreement containing such terms and conditions
consistent with the Plan as the Committee shall determine.
6.2 PURCHASE PRICE. The purchase price of each share of Common Stock covered
by an Employee Option shall be 100% (or 110% in the case of an Incentive Stock
Option granted to a Ten Percent Shareholder) of the Fair Market Value of a share
of Common Stock on the date the Employee Option is granted.
6.3 TERM. The term of each Employee Option shall be for such period as the
Committee shall determine, but not more than ten (10) years (or five (5) years
in the case of an Incentive Stock Option granted to a Ten Percent Shareholder)
from the date of grant thereof, and shall be subject to earlier termination as
hereinafter provided. If the original term of any Employee Option is less than
ten (10) years (or five (5) years in the case of an Incentive Stock Option
granted to a Ten Percent Shareholder) from the date of grant, the Employee
Option prior to its expiration may be amended, with the approval of the
Committee and the employee, to extend the term so that the term as amended is
not more than ten (10) years (or five (5) years in the case of an Incentive
Stock Option granted to a Ten Percent Shareholder) from the original date of
grant of such Employee Option.
6.4 VESTING. An Employee Option shall be exercisable at such time or times
and in such manner and number of shares as the Committee shall determine. If no
exercise schedule is specified, an Employee Option shall be exercisable as to
one-half of the total number of shares covered by the Employee Option on or
after the date on which the Optionee shall have completed one (1) year of
Continuous Employment following the date of grant of the Employee Option and as
to the remaining one-half of the total number of shares covered by the Employee
Option on or after the date on which the Optionee shall have completed two (2)
years of Continuous Employment following the date of grant of the Employee
Option. Except as provided in the Plan, no Employee Option may be exercised at
any time unless the holder thereof is then a regular employee of the
Corporation. Employee Options granted under the Plan shall not be affected by
any change of duties or position so long as the holder continues to be an
employee of the Corporation.
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6.5 TERMINATION OF EMPLOYMENT. In the event that the employment of an
employee to whom an Employee Option has been granted under the Plan shall be
terminated (other than by reason of retirement, disability, or death) such
Employee Option may, subject to the provisions of the Plan, be exercised, to the
extent that the employee was entitled to do so at the date of termination of his
or her employment, at any time within thirty (30) days after such termination,
but in no event after the expiration of the term of the Employee Option.
6.6 RETIREMENT OR DISABILITY. If an employee to whom an Employee Option has
been granted under the Plan shall retire from the Corporation at normal
retirement date pursuant to any pension plan provided by the Corporation, or if
such retirement is earlier than the employee's normal retirement date and such
retirement is with the prior consent of the Corporation, or if an employee is
totally and permanently disabled, such Employee Option may be exercised,
notwithstanding the provisions of Section 6.5, in full without regard to the
period of Continuous Employment after the Employee Option was granted at any
time (a) in the case of an Incentive Stock Option within three (3) months after
such retirement or disability retirement, but in no event after the expiration
of the term of the Employee Option, or (b) in the case of a Non-Qualified Stock
Option within one (1) year after such retirement or disability retirement, but
in no event after the expiration of the term of the Employee Option.
6.7 DEATH. If an employee to whom an Employee Option has been granted under
the Plan shall die while employed by the Corporation, such Employee Option may
be exercised to the extent that the employee was entitled to do so at the date
of his or her death, by his or her executor or administrator or other person at
the time entitled by law to the employee's rights under the Employee Option, at
any time within such period, not exceeding one (1) year after his or her death,
as shall be prescribed in the Agreement, but in no event after the expiration of
the term of the Employee Option.
7. DIRECTOR OPTIONS.
7.1 GRANT OF DIRECTOR OPTIONS. As of the date of each election or reelection
to the Board of Directors, commencing on the date of approval of the Plan by the
shareholders of the Corporation, each Non-Employee Director shall automatically
be granted a Director Option to purchase 1,500 shares of Common Stock, subject
to adjustment in accordance with Section 15. All Director Options shall be
designated as Non-Qualified Stock Options and shall be evidenced by an Agreement
containing such terms and conditions consistent with the Plan as the Committee
shall determine.
7.2 PURCHASE PRICE. The purchase price of each share of Common Stock covered
by a Director Option shall be 100% of the Fair Market Value of a share of Common
Stock on the date the Director Option is granted.
7.3 TERM. The term of each Director Option shall be for a period of ten (10)
years from the date of grant thereof, and shall be subject to earlier
termination as hereinafter provided.
7.4 VESTING. Each Director Option shall be exercisable as to one-half of the
total number of shares covered by the Director Option as of the date immediately
preceding the date of the first annual meeting of shareholders next following
the date of grant and as to the remaining one-half of the total number of shares
covered by the Director Option as of the date immediately preceding the date of
the second annual meeting of shareholders next following the date of grant;
provided, however, that the holder thereof continues to serve as a member of the
Board of Directors as of each such date.
7.5 TERMINATION OF SERVICE. In the event that a Non-Employee Director's
service as a member of the Board of Directors shall be terminated (other than
pursuant to Section 7.6 or 7.7) any Director Option granted to such Non-Employee
Director may, subject to the provisions of the Plan, be exercised, to the extent
that the Non-Employee Director was entitled to do so at the date of termination
of his or her service as a member of the Board of Directors, at any time within
thirty (30) days after such termination, but in no event after the expiration of
the term of the Director Option.
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7.6 RETIREMENT OR DISABILITY. If a Non-Employee Director to whom a Director
Option has been granted under the Plan shall cease to serve as a director as a
result of (a) retiring from the Board of Directors upon reaching normal
retirement age, (b) becoming totally and permanently disabled, or (c) resigning
or declining to stand for reelection with the approval of the Board of
Directors, such Director Option may be exercised, notwithstanding the provisions
of Section 7.5, in full within one (1) year after such retirement or disability
retirement, but in no event after the expiration of the term of the Director
Option.
7.7 DEATH. If a Non-Employee Director to whom a Director Option has been
granted under the Plan shall die while serving as a member of the Board of
Directors, such Director Option may be exercised to the extent that the
Non-Employee Director was entitled to do so at the date of his or her death, by
his or her executor or administrator or other person at the time entitled by law
to the Non-Employee Director's rights under the Director Option, at any time
within one (1) year after his or her death, but in no event after the expiration
of the term of the Director Option.
8. TERMS AND CONDITIONS APPLICABLE TO ALL OPTIONS.
8.1 TRANSFERABILITY. During the lifetime of an Optionee, an Option shall not
be transferable, except pursuant to a domestic relations order; provided,
however, that the Committee may, in its sole discretion, permit an Optionee to
transfer a Non-Qualified Stock Option to (i) a member of the Optionee's
immediate family, (ii) a trust, the beneficiaries of which consist exclusively
of members of the Optionee's immediate family, or (iii) a partnership, the
partners of which consist exclusively of members of the Optionee's immediate
family. After the death of an Optionee, an Option may be transferred pursuant to
the laws of descent and distribution.
8.2 METHOD OF EXERCISE. An Option may be exercised by giving written notice
to the Corporation specifying the number of shares of Common Stock to be
purchased; provided that, except as otherwise provided by the Committee, an
Option may not be exercised as to fewer than 50 shares, or the remaining shares
covered by the Option if fewer than 50, at any one time. No Option may be
exercised with respect to a fractional share. The purchase price of the shares
as to which an Option shall be exercised shall be paid in full at the time of
exercise at the election of the holder of an Option (a) in cash or currency of
the United States of America, (b) by tendering to the Corporation shares of
Common Stock, then owned by such holder, having a Fair Market Value equal to the
cash exercise price applicable to the purchase price of the shares as to which
the Option is being exercised, (c) by making an election to have shares of
Common Stock underlying the Option withheld by the Corporation (provided that
the Option has been held for at least six (6) months), with such shares having a
Fair Market Value equal to the cash exercise price applicable to the purchase
price of the shares as to which the Option is being exercised, (d) a combination
of cash, previously owned shares of Common Stock, and/or share withholding, with
any shares of Common Stock valued at Fair Market Value, or (e) by payment of
such other consideration as the Committee shall from time to time determine. For
purposes of the immediately preceding sentence, Fair Market Value shall be
determined as of the business day immediately preceding the day on which the
Option is exercised. Notwithstanding the foregoing, the Committee shall have the
right to modify, amend, or cancel the provisions of clauses (b), (c), and (d)
above at any time upon prior notice to the holders of Options.
8.3 SHAREHOLDER RIGHTS. An Optionee shall have none of the rights of a
shareholder with respect to the shares subject to an Option until such shares
have been registered upon the exercise of the Option on the transfer books of
the Corporation in the name of such Optionee and then only to the extent that
any restrictions imposed thereon by the Committee shall have lapsed.
8.4 NO LOANS. Neither the Corporation, any company with which it is
affiliated, nor any of their respective subsidiaries may directly or indirectly
lend money to any person for the purpose of assisting such person in acquiring
or carrying shares of Common Stock issued upon the exercise of an Option.
8.5 CONDITIONS PRECEDENT TO EXERCISE. Notwithstanding any other provision of
the Plan, but subject to the provisions of Section 11, the exercise of an Option
within one (1) year following termination of
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employment or service shall be subject to the satisfaction of the conditions
precedent that the Optionee has not (a) rendered services or engaged directly or
indirectly in any business which in the opinion of the Committee competes with
or is in conflict with the interests of the Corporation; provided, however, that
the ownership by an Optionee of 5% or less of any class of securities of a
publicly traded company shall not be deemed to violate this clause, or (b)
violated any written agreement with the Corporation, including, without
limitation, any confidentiality agreement. An Optionee's violation of clause (a)
or (b) of the preceding sentence shall result in the immediate forfeiture of any
Options held by such Optionee.
8.6 LIMITATIONS ON THE GRANT OF OPTIONS. No one individual may be granted an
Option or Options under the Plan during any fiscal year of the Corporation for
an aggregate number of shares of Common Stock which exceeds 10% of the total
number of shares reserved for issuance under the Plan. The aggregate Fair Market
Value of the Common Stock (determined as of the date the Option is granted) with
respect to which Incentive Stock Options granted under the Plan and all other
stock option plans of the Corporation (or any parent or subsidiary of the
Corporation) are exercisable for the first time by any specific individual
during any calendar year shall not exceed $100,000. No Incentive Stock Option
may be granted hereunder to an individual who immediately after such Option is
granted is a Ten Percent Shareholder unless (a) the Option price is at least
110% of the fair market value of such stock on the date of grant and (b) the
Option may not be exercised more than five (5) years after the date of grant.
9. STOCK AWARDS.
9.1 GRANT OF STOCK AWARDS. Subject to the terms of the Plan, the Committee
may grant Stock Awards to such employees at such time or times and in such
amounts as it shall determine. Shares of Common Stock issued pursuant to Stock
Awards may, but need not, be subject to such restrictions as may be established
by the Committee at the time of the grant and reflected in an Agreement.
9.2 RESTRICTIONS ON STOCK AWARDS. Except as set forth in the Plan, any
shares of Common Stock subject to a Stock Award with respect to which Stock
Restrictions have not been satisfied shall be forfeited and all rights of the
employee to such Stock Award shall terminate without any payment of
consideration by the Corporation. Except as set forth in Section 9.5, a
recipient of a Stock Award subject to Stock Restrictions shall forfeit such
award in the event of the termination of his or her employment during the period
the shares are subject to Stock Restrictions.
9.3 SHAREHOLDER RIGHTS. The recipient of a Stock Award shall be entitled to
such rights of a shareholder with respect to the shares of Common Stock issued
pursuant to a Stock Award as the Committee shall determine, including the right
to vote such shares of Common Stock, except that cash and stock dividends with
respect to such shares may, at the discretion of the Committee, be either paid
currently or withheld by the Corporation for the Award Recipient's account, and
interest may be accrued on the amount of cash dividends withheld at a rate and
subject to such terms as determined by the Committee.
The Committee, in its discretion, may cause a legend or legends to be placed
on any certificate representing shares issued pursuant to Stock Awards, which
legend or legends shall make appropriate reference to the Stock Restrictions
imposed thereon. The Committee may also in its discretion require that
certificates representing shares issued pursuant to Stock Awards remain in the
physical custody of the Corporation or an escrow holder until any or all of the
Stock Restrictions imposed under the Plan have lapsed.
9.4 NON-TRANSFERABILITY. Prior to the time Stock Restrictions lapse, none of
the shares of Common Stock issued pursuant to a Stock Award may be sold,
assigned, bequeathed, transferred, pledged, hypothecated, or otherwise disposed
of in any way by the employee.
9.5 LAPSE OF RESTRICTIONS. In the event of the termination of employment of
an Award Recipient, prior to the lapse of Stock Restrictions, by reason of
death, total and permanent disability, retirement, or
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discharge from employment other than discharge for cause, the Committee may, in
its discretion, remove any Stock Restrictions on all or a portion of the Common
Stock subject to a Stock Award.
9.6 LIMITATIONS ON STOCK AWARDS. No employee may receive a Stock Award
representing more than Forty Thousand (40,000) shares of Common Stock during any
fiscal year of the Corporation, and the maximum number of shares of Common Stock
which may be issued to all employees pursuant to Stock Awards under the Plan
shall be Sixty Thousand (60,000), subject in each case to adjustment in
accordance with Section 15.
10. PERFORMANCE SHARE AWARDS.
10.1 GRANT OF PERFORMANCE SHARE AWARDS. Subject to the terms of the Plan,
the Committee may grant Performance Share Awards to such employees at such time
or times and in such amounts as it shall determine. Common Stock issued pursuant
to a Performance Share Award shall be subject to the attainment of performance
goals relating to one or more criteria within the meaning of Section 162(m) of
the Code and the Treasury Regulations issued pursuant thereto, including,
without limitation, stock price, market share, sales, earnings per share, return
on equity, costs, and cash flow, as determined by the Committee from time to
time. Any such objectives and the period in which such objectives are to be met
will be determined by the Committee at the time of the grant and reflected in an
Agreement. Each Performance Share Award shall also be subject to such other
restrictions as the Committee may determine.
10.2 DELIVERY OF PERFORMANCE SHARES. Certificates representing Performance
Shares shall be registered in the Award Recipient's name but shall remain in the
physical custody of the Corporation until the Committee has determined that the
performance goals and other Stock Restrictions with respect to such Performance
Shares have been met.
10.3 SHAREHOLDER RIGHTS. The recipient of a Performance Share Award shall be
entitled to such rights of a shareholder with respect to the Performance Shares
as the Committee shall determine, including the right to vote such shares of
Common Stock, except that cash and stock dividends with respect to the
Performance Shares may, at the discretion of the Committee, be either paid
currently or withheld by the Corporation for the Award Recipient's account, and
interest may be accrued on the amount of cash dividends withheld at a rate and
subject to such terms as determined by the Committee.
10.4 NON-TRANSFERABILITY. Prior to the time shares of Common Stock issued
pursuant to a Performance Share Award are delivered to an Award Recipient, none
of such shares may be sold, assigned, bequeathed, transferred, pledged,
hypothecated, or otherwise disposed of in any way by the employee.
10.5 LAPSE OF RESTRICTIONS. In the event of the termination of employment of
an Award Recipient, prior to the lapse of Stock Restrictions, by reason of
death, total and permanent disability, retirement, or discharge from employment
other than discharge for cause, the Committee may, at its sole and absolute
discretion, remove any Stock Restrictions on all or a portion of a Performance
Share Award, or determine the performance objectives with respect to all or a
portion of a Performance Share Award to have been attained; provided, however,
that the Committee shall not be entitled to exercise such discretion to the
extent that the ability to exercise such discretion would cause the Performance
Share Award not to qualify as performance based compensation under Section
162(m) of the Code.
10.6 LIMITATIONS ON PERFORMANCE SHARE AWARDS. No employee may receive
Performance Share Awards representing more than One Hundred Thousand (100,000)
shares of Common Stock during any fiscal year of the Corporation, and the
maximum number of shares of Common Stock which may be issued to all employees
pursuant to Performance Share Awards under the Plan shall be Three Hundred
Thousand (300,000), subject in each case to adjustment in accordance with
Section 15.
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11. ACCELERATION UPON A CHANGE OF CONTROL.
Notwithstanding any other provision of the Plan or any Option or Award
granted hereunder, (a) any Option granted hereunder and then outstanding shall
become immediately exercisable in full, (b) all Stock Restrictions shall
immediately terminate, and (c) all performance objectives applicable to any
Performance Share Award shall be deemed attained (i) in the event that a tender
offer or exchange offer (other than an offer by the Corporation) for the Common
Stock is made by any "person" within the meaning of Section 14(d) of the Act and
not withdrawn within ten (10) days after the commencement thereof; provided,
however, that the Committee may by action taken prior to the end of such ten
(10) day period extend such ten (10) day period for up to a period of ninety
(90) days after the commencement of such tender offer or exchange offer; and,
provided further, that the Committee may by further action taken prior to the
end of such extended period declare (a) all Options granted hereunder and then
outstanding to be immediately exercisable in full, (b) all Stock Restrictions to
be immediately terminated, and (c) all performance objectives applicable to any
Performance Share Award to be deemed attained, or (ii) in the event of a Change
in Control (as hereinafter defined).
For purposes of this Section 11, a "Change in Control" means an event that
would be required to be reported (assuming such event has not been "previously
reported") in response to Item 1(a) of the Current Report on Form 8-K, as in
effect on the effective date of the Plan, pursuant to Section 13 or 15(d) of the
Act; provided, however, that, without limitation, such a Change in Control shall
be deemed to have occurred at such time as (a) any "person" within the meaning
of Section 14(d) of the Act becomes the "beneficial owner" as defined in Rule
13d-3 thereunder, directly or indirectly, of more than 25% of the Common Stock,
(b) during any two-year period, individuals who constitute the Board of
Directors (the "Incumbent Board") as of the beginning of the period cease for
any reason to constitute at least a majority thereof, provided that any person
becoming a director during such period whose election or nomination for election
by the Corporation's shareholders was approved by a vote of at least
three-quarters of the Incumbent Board (either by a specific vote or by approval
of the proxy statement of the Corporation in which such person is named as a
nominee for director without objection to such nomination) shall be, for
purposes of this clause (b), considered as though such person were a member of
the Incumbent Board, or (c) the approval by the Corporation's shareholders of
the sale of all or substantially all of the stock or assets of the Corporation.
The Committee may adopt such procedures as to notice and exercise as may be
necessary to effectuate the acceleration of the exercisability of Options,
termination of Stock Restrictions, and attainment of performance objectives as
described above.
12. SHARE WITHHOLDING.
With respect to any Option or Award, the Committee may, in its discretion
and subject to such rules as the Committee may adopt, permit or require any
Optionee or Award Recipient to satisfy, in whole or in part, any withholding tax
obligation which may arise in connection with an Option or Award by electing to
have the Corporation withhold Common Stock having a Fair Market Value (as of the
date the amount of withholding tax is determined) equal to the amount of
withholding tax.
13. NO RIGHT TO CONTINUED EMPLOYMENT.
Nothing contained in the Plan or in any Option or Award granted or Agreement
entered into pursuant to the Plan shall confer upon any employee the right to
continue in the employ of the Corporation or any Non-Employee Director to
continue as a member of the Board of Directors or interfere with the right of
the Corporation to terminate such employee's employment or Non-Employee
Director's service at any time.
14. TIME OF GRANTING OPTIONS AND AWARDS.
Nothing contained in the Plan or in any resolution adopted by the Board of
Directors or the holders of Common Stock shall constitute the grant of any
Option or Award hereunder. An Option or Award under the Plan shall be deemed to
have been granted on the date on which the name of the recipient and the terms
of
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the Option or Award are set forth in an Agreement and delivered to the
recipient, unless otherwise provided in the Agreement.
15. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
Notwithstanding any other provision of the Plan, in the event of changes in
the outstanding Common Stock by reason of stock dividends, stock splits,
recapitalizations, combinations or exchanges of shares, corporate separations or
divisions (including, but not limited to, split-ups, split-offs, or spin-offs),
reorganizations (including, but not limited to, mergers or consolidations),
liquidations, or other similar events, the aggregate number and class of shares
available under the Plan, the number of shares subject to Director Options, the
maximum number of shares that may be subject to Options and Awards, and the
terms of any outstanding Options or Awards (including, without limitation, the
number of shares subject to an outstanding Option or Award and the price at
which shares of Common Stock may be issued pursuant to an outstanding Option)
shall be adjusted in such manner as the Committee in its discretion deems
appropriate.
16. TERMINATION AND AMENDMENT OF THE PLAN.
Unless the Plan shall have been terminated as hereinafter provided, no
Option or Award shall be granted hereunder after October 31, 1998. The Board of
Directors may at any time prior to that date terminate the Plan or make such
modification or amendment to the Plan as it shall deem advisable; provided,
however, that no amendment may be made without the approval by the holders of
Common Stock (except as provided by Section 15 hereof) which would (a) increase
the aggregate number of shares of Common Stock which may be issued under the
Plan, or (b) materially modify the requirements as to eligibility for
participation in the Plan. No termination, modification, or amendment of the
Plan may, without the consent of an Optionee or Award Recipient, adversely
affect in any material manner the rights of such Optionee or Award Recipient
under any Option or Award.
17. AMENDMENT OF EMPLOYEE OPTIONS AND AWARDS AT THE DISCRETION OF THE COMMITTEE.
The terms of any outstanding Employee Option or Award may be amended from
time to time by the Committee in its discretion in any manner that it deems
appropriate, including, without limitation, acceleration of the date of exercise
of any Employee Option or Award, termination of Stock Restrictions as to any
Award, or the conversion of an Incentive Stock Option into a Non-Qualified Stock
Option; provided, however, that no such amendment shall adversely affect in any
material manner any right of any Optionee or Award Recipient under the Plan
without his or her consent; and, provided further, that the Committee shall not
(a) amend any previously-issued Performance Share Award to the extent that such
amendment would cause such Performance Share Award not to qualify as performance
based compensation under Section 162(m) of the Code or (b) amend any
previously-issued Employee Option to reduce the purchase price thereof whether
by modification of the Employee Option or by cancellation of the Employee Option
in consideration of the immediate issuance of a replacement Employee Option
bearing a reduced purchase price.
18. GOVERNMENT REGULATIONS.
The Plan and the grant and exercise of Options and Awards hereunder, and the
obligation of the Corporation to issue, sell and deliver shares, as applicable,
under such Options and Awards, shall be subject to all applicable laws, rules,
and regulations.
Notwithstanding any other provision of the Plan, transactions under the Plan
are intended to comply with the applicable exemptions under Rule 16b-3 under the
Act as to persons subject to the reporting requirements of Section 16(a) of the
Act with respect to shares of Common Stock, and Options and Awards under the
Plan shall be fashioned and administered in a manner consistent with the
conditions applicable under Rule 16b-3.
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19. OPTIONS AND AWARDS IN FOREIGN COUNTRIES.
The Committee shall have the authority and discretion to adopt such
modifications, procedures, and subplans as it shall deem necessary or desirable
to comply with the provisions of the laws of foreign countries in which the
Corporation may operate in order to assure the viability of the benefits of the
Options and Awards made to individuals employed in such countries and to meet
the objectives of the Plan.
20. GOVERNING LAW.
The Plan shall be construed, regulated, and administered under the internal
laws of the State of Connecticut.
21. SHAREHOLDER APPROVAL.
The Plan shall become effective upon the date of adoption by the Board of
Directors, subject to approval by the affirmative vote of the holders of a
majority of all outstanding shares of Common Stock entitled to vote thereon.
Unless so approved within one (1) year after the date of the adoption of the
Plan by the Board of Directors, the Plan shall not be effective for any purpose.
Prior to approval by the Corporation's shareholders, the Committee may grant
Options and Awards under the terms of the Plan, but if shareholder approval is
not obtained in the specified period, such Options and Awards shall be of no
effect.
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EXHIBIT B
THE PERKIN-ELMER CORPORATION
1996 EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE OF THE PLAN.
The purpose of The Perkin-Elmer Corporation 1996 Employee Stock Purchase
Plan (the "Plan") is to provide an incentive for Eligible Employees to continue
to devote their best efforts to the success of the Corporation, and to afford
such employees an opportunity to obtain a proprietary interest in the continued
growth and prosperity of the Corporation through ownership of its Common Stock
acquired in a convenient fashion.
2. DEFINITIONS.
As used herein, the following terms have the meanings hereinafter set forth
unless the context clearly indicates to the contrary:
2.1 "ACT" means the Securities Exchange Act of 1934, as amended from time to
time.
2.2 "BOARD OF DIRECTORS" means the Board of Directors of the Corporation.
2.3 "CODE" means the Internal Revenue Code of 1986, as amended from time to
time.
2.4 "COMMITTEE" means the Management Resources Committee of the Board of
Directors, or any successor thereto or committee designated thereby.
2.5 "COMMON STOCK" means the common stock, par value $1.00 per share, of the
Corporation.
2.6 "COMPENSATION" means the rate of salary in effect for an Eligible
Employee on a Date of Offering. For employees paid a salary plus sales
commission, "Compensation" means the rate of salary in effect on a Date of
Offering plus an estimate, determined by the Corporation, of the sales
commission for the ensuing year.
2.7 "CORPORATION" means The Perkin-Elmer Corporation and such of its
Subsidiaries existing as of the effective date of the Plan or thereafter
acquired as may be designated from time to time by the Board of Directors.
2.8 "DATE OF OFFERING" means the date within the first fifteen (15) days of
January of each year of the Plan as specified by the Committee for any offering
made under the Plan.
2.9 "ELIGIBLE EMPLOYEE" means any person who is an employee of the
Corporation on a Date of Offering during the term of the Plan. Directors of the
Corporation who are not officers and any employee who, immediately after the
grant of an option hereunder, would own (within the meaning of Section 424(d) of
the Code) Common Stock (including stock which such employee may purchase under
outstanding options) possessing 5% or more of the total combined voting power or
value of all classes of the capital stock of the Corporation or of a Subsidiary,
shall be ineligible to participate in the Plan.
2.10 "FAIR MARKET VALUE" means the simple average of the high and low sales
prices of a share of Common Stock as reported in the report of composite
transactions (or other source designated by the Committee) on the date on which
fair market value is to be determined (or if there shall be no trading on such
date, then on the first previous date on which sales were made on a national
securities exchange).
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2.11 "OFFERING PRICE" means the lower of (a) 85% of the Fair Market Value of
a share of Common Stock on the applicable Date of Offering, and (b) 85% of the
Fair Market Value of a share of Common Stock on the last day of the applicable
Purchase Period.
2.12 "PARTICIPATING EMPLOYEE" means an Eligible Employee who has accepted
all or any part of an option to purchase shares of Common Stock under an
offering pursuant to Section 7 hereof.
2.13 "PURCHASE PERIOD" means, as to any offering under the Plan, a period of
one (1) year commencing on the Date of Offering.
2.14 "SUBSIDIARY" means any corporation in respect of which the Corporation
owns, directly or indirectly, more than 50% of the total combined voting power
of all classes of stock issued by such corporation.
3. SHARES RESERVED FOR THE PLAN.
The aggregate number of shares of Common Stock available for issuance under
the Plan is Six Hundred Thousand (600,000), subject to adjustment in accordance
with Section 16 hereof. Shares of Common Stock issued under the Plan shall be
authorized but unissued shares. In lieu of such unissued shares, the Corporation
may, in its discretion, deliver treasury shares, reacquired shares, or shares
acquired in the market for purposes of the Plan.
If any option granted under the Plan shall for any reason terminate, be
canceled, or expire without having been exercised, shares of Common Stock not
issued under such option shall be available again for issuance under the Plan.
4. ADMINISTRATION OF THE PLAN.
The Committee shall have plenary authority in its discretion, but subject to
the express provisions of the Plan, to administer the Plan. The Committee shall
also have plenary authority in its discretion to interpret the Plan, to
prescribe, amend, and rescind rules and regulations relating to it, and to make
any and all other determinations and take any and all actions deemed necessary
or advisable for the administration of the Plan. The Committee's determination
on the foregoing matters shall be conclusive and binding on all persons having
an interest in the Plan.
5. OFFERINGS.
Subject to the terms and conditions of the Plan, the Corporation may make an
annual offering to Eligible Employees to purchase shares of Common Stock under
the Plan during each of the three calendar years commencing January 1, 1997. The
terms and conditions of each such offering shall be determined by the Committee
and shall include the Date of Offering and the aggregate number of shares of
Common Stock that may be purchased in such offering.
6. AMOUNT OF COMMON STOCK EACH ELIGIBLE EMPLOYEE MAY PURCHASE.
6.1 AMOUNT OF PURCHASE. Subject to the terms of the Plan, and as to each
offering made hereunder, each Eligible Employee shall be offered an option to
purchase that number of whole shares of Common Stock equal to (a) the total
amount accumulated in such Eligible Employee's account established pursuant to
Section 8 hereof with respect to such offering as of the last day of the
applicable Purchase Period divided by (b) the Offering Price.
6.2 LIMITATIONS ON PURCHASES. No Eligible Employee shall be granted an
option to purchase shares of Common Stock under all employee stock purchase
plans (to which Section 423 of the Code is applicable)
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of the Corporation and its subsidiaries at a rate which exceeds $25,000 of the
Fair Market Value of the Common Stock (determined as of the date of grant of
such option) for each calendar year during which any option granted to such
individual under any such plan is outstanding at any time.
7. METHOD OF PARTICIPATION.
7.1 NOTICE OF OFFERING. The Committee shall give notice to each Eligible
Employee of each offering under the Plan and the terms and conditions of such
offering.
7.2 ELECTION BY ELIGIBLE EMPLOYEES. Each Eligible Employee who desires to
accept all or any part of the option to purchase shares of Common Stock under an
offering shall signify his or her election to do so in the form and manner
prescribed by the Committee. Each such Eligible Employee shall also authorize
the Corporation to make payroll deductions in accordance with Section 8 hereof
to cover the aggregate purchase price of those shares in respect of which he or
she has elected to accept an option. Such election and authorization shall
continue in effect unless and until such Eligible Employee withdraws from the
Plan or terminates employment with the Corporation, as hereinafter provided.
8. PAYROLL DEDUCTIONS.
8.1 PAYROLL DEDUCTIONS. Subject to the provisions of Section 8.2, each
Participating Employee shall authorize the Corporation, in the form and manner
prescribed by the Committee, to make payroll deductions equal to any whole
percentage of such Eligible Employee's Compensation up to a maximum of 10% to
cover the aggregate purchase price of those shares in respect of which he or she
has elected to accept an option. Payroll deductions shall be deducted from such
Participating Employee's compensation through weekly or bi-weekly payroll
deductions, as applicable, in substantially equal installments and shall
commence as soon as practicable following the applicable Date of Offering and
shall continue for a period of one (1) year thereafter. A separate bookkeeping
account shall be maintained by the Corporation for each Participating Employee,
and the amount of each Participating Employee's payroll deductions shall be
credited to such account.
8.2 ADJUSTMENTS TO PAYROLL DEDUCTIONS. In the event that the payroll
deductions authorized by a Participating Employee pursuant to Section 8.1 would,
as of the Date of Offering, result in the purchase of a fractional share
(assuming an Offering Price equal to 85% of the Fair Market Value of a share of
Common Stock on such Date of Offering), such payroll deductions shall be
increased such that the number of shares which would be purchased by such
payroll deductions as of the Date of Offering would be increased to the next
whole number. In the event that such payroll deductions when combined with the
payroll deductions of all other Participating Employees would, as of the Date of
Offering, result in the purchase of an aggregate number of shares in excess of
the number of shares of Common Stock specified by the Committee for such
offering (assuming an Offering Price equal to 85% of the Fair Market Value of a
share of Common Stock on such Date of Offering), such payroll deductions shall
be decreased such that the number of shares which would be purchased by such
payroll deductions as of the Date of Offering would not exceed such
Participating Employee's pro rata share of the total number of shares specified
for such offering (determined in a manner consistent with Section 9.2).
8.3 CONFLICTS WITH LAW. If any law, rule, or regulation applicable to any
Eligible Employee prohibits the use of payroll deductions for purposes of the
Plan, or if such deductions impair or hinder the operation of the Plan, an
alternative method of payment approved by the Committee may be substituted for
such Eligible Employee.
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9. EXERCISE OF OPTION AND PURCHASE OF SHARES.
9.1 EXERCISE OF OPTION. Unless a Participating Employee has subsequently
withdrawn from the offering pursuant to Section 12 hereof, such Participating
Employee's option shall be deemed to have been automatically exercised as of the
last day of the applicable Purchase Period and become on such date an
irrevocable obligation to purchase shares of Common Stock in accordance with the
provisions of the Plan. The number of whole shares of Common Stock so purchased
by each such Participating Employee shall be determined by dividing (a) the
amount accumulated in such Participating Employee's account by payroll
deductions with respect to the offering by (b) the Offering Price, rounded down
to a whole number of shares. Any amount remaining in the account of a
Participating Employee shall be refunded in cash to such Participating Employee,
without interest.
9.2 OVERSUBSCRIPTION. In the event that, with respect to any offering
hereunder, Participating Employees become entitled to purchase more shares of
Common Stock than the number of shares of Common Stock specified by the
Committee for such offering, the Committee shall apportion the aggregate shares
of Common Stock available for purchase under the offering among Participating
Employees on a pro rata basis in accordance with the number of shares of Common
Stock actually subscribed for by each such Participating Employee, and any
amount remaining in the accounts of Participating Employees shall be refunded in
cash, without interest.
10. ISSUANCE OF CERTIFICATES.
As soon as practicable following the exercise of options by Participating
Employees pursuant to Section 9 hereof, the Corporation shall issue certificates
to each such Participating Employee for the number of whole shares of Common
Stock purchased by such Participating Employee.
11. RIGHTS AS A SHAREHOLDER.
No Participating Employee shall be entitled to any rights or privileges of a
shareholder of the Corporation, including the right to receive any dividends
which may be declared on shares of Common Stock, until such time as the full
purchase price of such Participating Employee's shares has been paid and shares
have been issued to such Participating Employee.
12. WITHDRAWALS.
12.1 RIGHT TO WITHDRAWAL. At any time prior to the end of the Purchase
Period with respect to any offering, a Participating Employee may, by filing an
appropriate notice with the Committee, direct the Corporation to (a) make no
further deductions from his or her Compensation with respect to such offering,
or (b) cancel his or her entire option under such offering. Such notice shall be
irrevocable. As soon as practicable following receipt of such notice, the
Corporation shall cease all payroll deductions with respect to such offering by
such Participating Employee. If the employee has directed that payroll
deductions be discontinued, any sums theretofore deducted in respect of the
offering shall, subject to the provisions of Section 13 hereof, be retained by
the Corporation until the end of the applicable Purchase Period, at which time
there shall be issued to the employee that number of whole shares which can be
purchased with the sum deducted, and any remaining balance of the sum shall be
paid to such employee in cash, without interest. If the employee has directed
that his or her option be canceled, the Corporation shall, as soon as
practicable following receipt of such notice, refund in cash, without interest,
all amounts credited to the account of such employee with respect to the
applicable offering.
12.2 WAIVER OF WITHDRAWAL RIGHT. Notwithstanding the provisions of Section
12.1 above, a Participating Employee may, at any time prior to the expiration of
any Purchase Period, irrevocably elect to waive both the right to direct the
Corporation to make no further deductions from such Participating Employee's
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Compensation with respect to any option granted hereunder and the right to
cancel the entire option, which election shall be made by the filing of an
appropriate notice to such effect with the Committee. Upon the filing of such a
notice, such Participating Employee shall be irrevocably obligated to purchase
all of the shares of Common Stock covered by the option to which such notice
relates.
13. TERMINATION OF EMPLOYMENT.
13.1 DEATH, DISABILITY, OR RETIREMENT. In the event that the employment of a
Participating Employee is terminated within three (3) months prior to the end of
a Purchase Period because of total and permanent disability or retirement, or at
any time within a Purchase Period because of death, such Participating Employee
or his or her legal representative, as applicable, may either:
(a) cancel his or her entire option with respect to such offering, in
which event the Corporation shall, as soon as practicable thereafter, refund
in cash, without interest, all amounts credited to such Participating
Employee's account with respect to such offering; or
(b) elect to receive at the conclusion of the applicable Purchase Period
that number of whole shares of Common Stock which such Participating
Employee's payroll deductions actually made are sufficient to purchase, plus
the balance of such payroll deductions, if any, in cash, without interest.
13.2 ELECTION. The election of a Participating Employee or his or her legal
representative, as applicable, pursuant to Section 13.1 above, shall be made
within three (3) months of the event causing the termination of employment.
Notification of the election shall be filed in the form and manner prescribed by
the Committee and, in the event that no notification has been filed within the
prescribed period, the Corporation shall act in accordance with Section 13.1(a)
above.
13.3 OTHER TERMINATION OF EMPLOYMENT. In the event that the employment of a
Participating Employee is terminated for any reason other than those specified
in Section 13.1 above, or if such employment is terminated more than three (3)
months prior to the end of a Purchase Period because of total and permanent
disability or retirement, the Corporation shall, as soon as practicable
thereafter, refund in cash, without interest, all amounts credited to such
Participating Employee's accounts under all applicable offerings under the Plan.
13.4 TEMPORARY ABSENCE. In the event that the payroll deductions of a
Participating Employee are temporarily discontinued because of leave of absence,
temporary disability, or other similar reasons, then the number of shares of
Common Stock subject to purchase by such Participating Employee in any offering
shall be automatically reduced to that number of whole shares which his or her
aggregate payroll deductions actually made within the Purchase Period are
sufficient to purchase. The balance of such payroll deductions, if any, shall be
refunded to the Participating Employee in cash, without interest.
Notwithstanding the foregoing, such Participating Employee may make arrangements
to pay to the Corporation an amount equal to the amount which was not subject to
payroll deductions by reason of the temporary discontinuance thereof, and, in
that event, such Participating Employee shall then be entitled to purchase the
total number of shares of Common Stock for which he or she has accepted an
option.
14. RIGHTS NOT TRANSFERABLE.
A Participating Employee's rights under the Plan are exercisable, during his
or her lifetime, only by such Participating Employee and may not be sold,
pledged, assigned, or transferred in any manner. Any attempt to sell, pledge,
assign, or transfer such rights shall be void and unenforceable against the
Corporation or any affiliate. After the death of a Participating Employee, such
Participating Employee's rights may be transferred pursuant to the laws of
descent and distribution.
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15. NO RIGHT TO CONTINUED EMPLOYMENT.
Nothing contained in the Plan shall confer upon any employee the right to
continue in the employ of the Corporation or any subsidiary or interfere with
the right of the Corporation or such subsidiary to terminate such employee's
employment at any time.
16. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
Notwithstanding any other provision of the Plan, in the event of changes in
the outstanding Common Stock by reason of stock dividends, stock splits,
recapitalizations, combinations or exchanges of shares, corporate separations or
divisions (including, but not limited to, split-ups, split-offs, or spin-offs),
reorganizations (including, but not limited to, mergers or consolidations),
liquidations, or other similar events, the aggregate number and class of shares
available under the Plan and the number and class of shares under option but not
yet issued under the Plan shall be adjusted in such manner as the Committee in
its discretion deems appropriate.
17. TERMINATION AND AMENDMENT OF THE PLAN.
The Board of Directors may terminate the Plan at any time or make such
modification or amendment to the Plan as it shall deem advisable. Upon
termination of the Plan, shares of Common Stock shall be issued to Participating
Employees, and cash, if any, remaining in the accounts of the Participating
Employees shall be refunded to them, as if the end of the applicable Purchase
Period were the date of termination of the Plan.
18. GOVERNMENTAL REGULATIONS AND LISTING.
All rights granted or to be granted to Eligible Employees under the Plan are
expressly subject to all applicable laws and regulations and to the approval of
all governmental authorities required in connection with the authorization,
issuance, sale or transfer of the shares of Common Stock reserved for the Plan,
including, without limitation, there being a current registration statement of
the Corporation covering the offer of shares of Common Stock purchasable under
the options on the last day of the Purchase Period applicable to such options,
and if a registration statement shall not then be effective, the term of such
options and the Purchase Period shall be extended until the first business day
after the effective date of such registration statement, or post-effective
amendment thereto. In addition, all rights are subject to the due listing of
such shares of Common Stock on any securities exchange on which the Common Stock
is then listed.
Notwithstanding any other provision of the Plan, the Plan is intended to
comply with all applicable provisions of Section 423 of the Code. To the extent
that any provision of the Plan or any action by the Committee under the Plan
fails to so comply, such provision or action shall, without further action by
any person, be deemed automatically amended to the extent necessary to effect
compliance with Section 423, provided that if such provision or action cannot be
amended to effect such compliance, such provision or action shall be deemed null
and void, to the extent permitted by law and deemed advisable by the Committee.
Each option granted to an Eligible Employee under the Plan shall be deemed
issued subject to the foregoing qualification.
19. AWARDS IN FOREIGN COUNTRIES.
The Committee shall have the authority and discretion to adopt such
modifications, procedures, and subplans as it shall deem necessary or desirable
to comply with the provisions of the laws of foreign countries in which the
Corporation may operate in order to assure the viability of the benefits of the
options made to individuals employed in such countries and to meet the
objectives of the Plan.
B-6
<PAGE>
20. GOVERNING LAW.
Except where, and to the extent, offers of options under the Plan to foreign
employees are subject to foreign laws, the Plan shall be construed, regulated,
and administered under the internal laws of the State of Connecticut.
21. SHAREHOLDER APPROVAL.
The Plan shall not become effective unless and until it has been approved,
in the manner prescribed by law, by the shareholders of the Corporation.
B-7
<PAGE>
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- --------------------------------------------------------------------------------
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PERKIN ELMER
THE PERKIN-ELMER CORPORATION
761 Main Avenue
Norwalk, CT 06859-0001
[Recycled Symbol]
<PAGE>
[FOLD AND DETACH HERE]
THE PERKIN-ELMER CORPORATION
This Proxy is Solicited on Behalf of the Board of Directors for the Annual
Meeting of Shareholders on October 17, 1996
The undersigned shareholder(s) of The Perkin-Elmer Corporation (the
"Corporation") hereby appoints TONY L. WHITE, STEPHEN O. JAEGER, and WILLIAM B.
SAWCH, and each of them, as proxy or proxies, with power of substitution to vote
all shares of Common Stock of the Corporation which the undersigned is entitled
to vote (including shares, if any, held on behalf of the undersigned, and
indicated on the reverse hereof, by The First National Bank of Boston, under the
Corporation's Dividend Reinvestment Plan) at the 1996 Annual Meeting of
Shareholders and at any adjournment or adjournments thereof, as indicated on the
reverse side hereof, and, in their discretion, upon such other matters as may
properly come before the meeting, all as more fully described in the Proxy
Statement for such Annual Meeting.
THIS PROXY WHEN PROPERLY EXECUTED AND RETURNED WILL BE VOTED AS DIRECTED
ON THE REVERSE SIDE OR, IF NO DIRECTION IS GIVEN, IT WILL BE VOTED FOR THE
ELECTION OF ALL NOMINEES FOR DIRECTOR AND FOR PROPOSALS 2, 3, 4, AND 5.
CONTINUED, AND TO BE SIGNED, ON REVERSE SIDE
/SEE REVERSE SIDE/
<PAGE>
[LOGO]
YOUR VOTE IS IMPORTANT
PLEASE VOTE YOUR PREFERENCES ON THE PROXY CARD BELOW.
SIGN, DATE, AND RETURN YOUR PROXY AS SOON AS POSSIBLE IN THE ENCLOSED
PRE-ADDRESSED ENVELOPE.
[FOLD AND DETACH HERE]
/X/ Please mark votes as in this example.
The Board of Directors recommends a vote FOR all Proposals.
1. Election of Directors. Nominees: Joseph F. Abely, Jr., Richard H. Ayers,
Jean-Luc Belingard, Robert H. Hayes, Donald R. Melville, Burnell R.
Roberts, Georges C. St. Laurent, Jr., Carolyn W. Slayman, Orin R. Smith,
Richard F. Tucker, and Tony L. White.
FOR / / WITHHELD / / For all nominees except as noted above
2. Selection of Price Waterhouse LLP as independent accountants for the fiscal
year ending June 30, 1997.
FOR / / AGAINST / / ABSTAIN / /
3. Amendment to Restated Certificate of Incorporation to limit the liability
of directors consistent with the New York Business Corporation Law.
FOR / / AGAINST / / ABSTAIN / /
4. Adoption of the 1996 Stock Incentive Plan to replace the expiring plan.
FOR / / AGAINST / / ABSTAIN / /
5. Adoption of the 1996 Employee Stock Purchase plan to replace the expiring
plan.
FOR / / AGAINST / / ABSTAIN / /
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / /
MARK HERE IF YOU PLAN TO ATTEND THE MEETING / /
MARK HERE IF YOU WANT TO DISCONTINUE MAILING ANNUAL REPORT ON THIS ACCOUNT (AT
LEAST ONE ACCOUNT AT THIS ADDRESS MUST CONTINUE TO RECEIVE AN ANNUAL REPORT) / /
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS. IF ACTING AS ATTORNEY, EXECUTOR,
TRUSTEE, OR IN REPRESENTATIVE CAPACITY, SIGN NAME AND TITLE.
Signature: Date:
Signature: Date:
