SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
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VWR Scientific Products Corporation
________________________________________________________________________________
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/_/ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
/X/ No fee required.
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2) Aggregate number of securities to which transaction applies:
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<PAGE>
[ LOGO ]
Dear Shareholder:
You are cordially invited to attend the VWR Scientific Products Corporation
Annual Meeting of Shareholders to be held at the Philadelphia National Bank
Building, 1345 Chestnut Street, Philadelphia, Pennsylvania, on May 8, 1997, at
11:00 am. At the Meeting, we will report on the operations of the Corporation
and respond to any questions you may have.
Your Board of Directors recommends that you vote to re-elect three
Directors whose terms of office will expire this year, and ratify the selection
of Ernst & Young LLP as our independent auditors. These matters are described
more fully in the formal notice of annual meeting and proxy statement which
appear on the following pages.
YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the Meeting,
it is important that your shares be represented. Therefore, I urge you to sign,
date, and promptly return the accompanying proxy in the enclosed postage paid
envelope. If you attend the Meeting, you will, of course, have the privilege of
voting in person.
I look forward to greeting you personally; and on behalf of the Board of
Directors and management of the Corporation, I would like to express our
appreciation for your interest in VWR Scientific Products Corporation.
Sincerely,
[SIGNATURE CUT]
JERROLD B. HARRIS
President and Chief Executive Officer
West Chester, Pennsylvania
April 10, 1997
<PAGE>
VWR SCIENTIFIC PRODUCTS CORPORATION
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
------------------------
TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders of VWR Scientific Products Corporation
will be held at the Philadelphia National Bank Building, 1345 Chestnut Street,
Philadelphia, Pennsylvania, on May 8, 1997, at 11:00 am. for the following
purposes:
1. To elect three Directors.
2. To ratify the selection of Ernst & Young LLP as independent auditors for
the year ending December 31, 1997.
3. To transact such other business as may properly come before the Meeting.
Only shareholders of record at the close of business on March 28, 1997, are
entitled to notice of, and to vote at, this meeting.
BY ORDER OF THE BOARD OF DIRECTORS
[SIGNATURE CUT]
BY
DAVID M. BRONSON
Senior Vice President Finance
Corporate Secretary
West Chester, Pennsylvania
April 10, 1997
EACH SHAREHOLDER IS URGED TO SIGN AND RETURN PROMPTLY THE ACCOMPANYING PROXY IN
THE ENCLOSED ENVELOPE TO WHICH NO POSTAGE NEED BE AFFIXED IF MAILED IN THE
UNITED STATES.
<PAGE>
VWR SCIENTIFIC PRODUCTS CORPORATION
CORPORATE OFFICES
1310 GOSHEN PARKWAY
WEST CHESTER, PENNSYLVANIA 19380
------------------------
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 8, 1997
------------------------
This proxy statement and accompanying proxy, which are being mailed to
shareholders on or about April 10, 1997, are furnished in connection with the
solicitation of proxies on behalf of the Board of Directors of VWR Scientific
Products Corporation (the "Corporation," "Company" or "VWR") to be voted at the
Annual Meeting of Shareholders of the Corporation to be held at 11:00 a.m. on
May 8, 1997 at the Philadelphia National Bank Building, 1345 Chestnut Street,
Philadelphia, Pennsylvania, for the purposes set forth in the accompanying
Notice of Annual Meeting of Shareholders. Shareholders who execute proxies
retain the right to revoke them at any time before they are voted. A proxy may
be revoked by written notice to the Secretary of the Corporation at 1310 Goshen
Parkway, West Chester, Pennsylvania 19380; by submission of a proxy with a later
date; or by a request in person to return the executed proxy.
The Company has engaged Corporate Investor Communications, Inc. to assist
in the solicitation of proxies for a fee of approximately $4,000. The cost of
solicitation of proxies is to be borne by the Corporation.
Shareholders of record at the close of business on March 28, 1997, will be
entitled to vote at the meeting. On March 28, 1997, there were 22,343,998 common
shares outstanding.
Each common share is entitled to one vote on all matters to come before the
Annual Meeting, except that, because of the existence of a "40% Shareholder" (as
defined in VWR's Articles of Incorporation) as discussed below in this proxy
statement, shareholders have the right to cumulate their votes in the election
of Directors. This means that shareholders may multiply the number of votes to
which they are entitled by the number of Directors to be elected, and the whole
number of such votes may be cast for one nominee or distributed among any two or
more nominees. If you wish to cumulate your votes in this manner, you must
clearly indicate on your proxy card your desire to cumulate and the number of
votes you wish to cast for each nominee.
In the election of Directors, assuming a quorum is present, the three
nominees receiving the highest number of votes cast at the Meeting will be
elected Directors. Ratification of the selection of Ernst & Young LLP as
independent auditors requires the affirmative vote of a majority of the votes
cast by all shareholders entitled to vote thereon. If a proxy is marked as
"withhold authority" or "abstain" on any matter, or if specific instructions are
given that no vote be cast on any specific matter (a "specified non-vote"), the
shares represented by such proxy will not be voted on such matter. Accordingly,
abstentions and specified non-votes will have no effect on the vote for election
of Directors or ratification of Ernst & Young LLP as independent auditors.
1
<PAGE>
ELECTION OF DIRECTORS
Your Corporation has a classified Board of eleven Directors. Directors are
elected for terms of three years in two classes of four and one class of three.
This year, Messrs. Edward A. McGrath, Jr., N. Stewart Rogers, and Wolfgang Honn,
all of whom are current Directors, have been nominated to be re-elected for a
term which expires in 2000. Messrs. James H. Wiborg and Curtis P. Lindley, who
have been Directors since 1986, retired from the Board in 1996 having reached
the mandatory retirement age of 72. Mr. Alfred Koch resigned from the Board of
Directors in 1996 in accordance with the Standstill Agreement with EM
Laboratories, Incorporated, described below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF, AND UNLESS
YOU INDICATE OTHERWISE, YOUR SIGNED PROXY WILL BE VOTED FOR THE ELECTION OF
THESE NOMINEES (IN EQUAL AMOUNTS OR CUMULATIVELY AS THE PERSONS VOTING THE
PROXIES MAY DETERMINE). The Board of Directors expects that each of the nominees
will be available for election; but if any of them is not a candidate at the
time the election occurs, it is intended that such proxy will be voted for the
election of another nominee to be designated to fill any such vacancy by the
Board of Directors of the Corporation.
EM Laboratories, Incorporated ("EML"), an affiliate of Merck KGaA,
Darmstadt, Germany, is the beneficial owner of 49.89% of the Company's issued
and outstanding stock as of March 28, 1997. An affiliate of EML holds a $135
million subordinated debenture of the Company. EML and its direct parent, EM
Industries, Incorporated ("EMI") are parties to a Standstill Agreement with the
Company, pursuant to which EML and EMI agreed that they and their affiliates
would not, subject to certain specified exceptions, prior to April 13, 1999,
increase their beneficial ownership of the Company's common shares above 49.89%
without the prior consent of the Company.
Pursuant to the Standstill Agreement VWR is required annually to cause
representatives of EML to be nominated for election to the Board so as to
provide EML with Board representation, rounded down to the next whole number,
which is commensurate with the proportion of common shares of VWR owned by EML
and its affiliates. EML is also entitled to be represented on any committee of
the Board. Five members of VWR's current Board, which consists of eleven
Directors, are representatives of EML. One of the nominees for election at the
Annual Meeting, Wolfgang Honn is a designee of EML. Of the Directors whose terms
will continue after the Annual Meeting, Walter W. Zywottek, Dr. Harald Schroder,
Stephen J. Kunst, Esq., and Dieter Janssen are serving as designees of EML. THE
STANDSTILL AGREEMENT OBLIGATES EML TO VOTE ITS COMMON SHARES FOR THE ELECTION OF
ITS DESIGNATED NOMINEES AND FOR THE ELECTION OF THOSE PERSONS NOMINATED BY VWR'S
DIRECTORS WHO ARE NOT AFFILIATED WITH EML.
During 1996, in the ordinary course of VWR's business, VWR purchased $37.6
million of inventory from affiliates of Merck KGaA. Merck KGaA and its
affiliates manufacture and distribute pharmaceutical, laboratory, and chemical
products.
2
<PAGE>
NOMINEES FOR ELECTION
WOLFGANG HONN--Mr. Honn, 59, is a Partner and member of the Executive Board
of E. Merck and Merck KGaA. Mr. Honn has been a Director of the Corporation
since 1995.
EDWARD A. MCGRATH, JR.--Mr. McGrath, 66, is Chairman of the Board of the
Corporation. He was President, Chief Executive Officer and Chairman of Graybar
Electric Company, Inc., an electrical distributor, from 1989 to July 1995. Mr.
McGrath has been a Director of the Corporation since 1992.
N. STEWART ROGERS--Mr. Rogers, 67, has been Chairman of the Board of
Directors of PENWEST Ltd. ("PENWEST"), a manufacturer of specialty carbohydrate
chemicals and flavor and food additive products since February, 1990. He is a
Director of Fluke Corporation, a manufacturer of electronic testing tools; and
U.S. Bancorporation, a bank holding company. Mr. Rogers has been a Director of
the Corporation since 1986.
CONTINUING DIRECTORS -- TERM EXPIRES IN 1998
JERROLD B. HARRIS--Mr. Harris, 54, was elected President and Chief
Executive Officer of VWR effective March 1, 1990. He is a Director of the
Provident Institutional Funds, Institutional Money Market Fund. Mr. Harris has
been a Director of the Corporation since 1988.
DONALD P. NIELSEN--Mr. Nielsen, 58, retired, was founder, President, Chief
Executive Officer, and Chairman of Hazleton Corporation, a biological and
chemical research and testing company, headquartered in Herndon, Virginia. Mr.
Nielsen has been a Director of the Corporation since 1988.
DR. HARALD SCHRODER--Dr. Schroder, 58, is a member and Vice Chairman of the
Executive Board of E. Merck and Merck KGaA. Dr. Schroeder has been a Director of
the Corporation since 1995.
WALTER W. ZYWOTTEK--Mr. Zywottek, 49, is President and Chief Executive
Officer of EMI and EML. He also serves as North American Regional Manager of
Merck AG and is a Director of Dey Laboratories, Inc., both of which are
affiliates of Merck KGaA. Mr. Zywottek has been a Director of the Corporation
since 1995.
CONTINUING DIRECTORS -- TERM EXPIRES IN 1999
JAMES W. BERNARD--Mr. Bernard, 59, retired, was President and Chief
Executive Officer of Univar Corporation, a distributor of industrial chemicals,
from 1986 to October, 1995. Mr. Bernard has been a Director of the Corporation
since 1988.
RICHARD E. ENGEBRECHT--Mr. Engebrecht, 70, is Chairman of the Board of
PrimeSource Corporation ("PrimeSource"), a distributor of graphic arts equipment
and supplies. He was Chairman of the Board of Momentum Corporation, a
distributor of photographic and graphic arts equipment and supplies ("Momentum")
from January 1, 1993 until it merged with PrimeSource on September 1, 1994, and
President and Chief Executive Officer of Momentum from March 1, 1990 through
December 31, 1992. He is a Director of PENWEST, and SeaMED Corporation, a
manufacturer of medical instruments. Mr. Engebrecht has been a Director of the
Corporation since 1986.
DIETER JANSSEN--Mr. Janssen, 54, is North American Group Vice President--
Finance and Chief Financial Officer of EMI. Mr. Janssen has been a Director of
the Corporation since 1996.
STEPHEN J. KUNST, ESQ.--Mr. Kunst, 48, is Vice President and General
Counsel of EMI and a Director of EMI and EML. Mr. Kunst has been a Director of
the Corporation since 1995.
3
<PAGE>
OWNERSHIP OF VWR SCIENTIFIC PRODUCTS CORPORATION COMMON SHARES
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL
OWNERSHIP OF PERCENT OF
COMMON SHARES CLASS AS OF
DIRECTORS AS OF JANUARY 31, 1997(1) JANUARY 31, 1997
- --------- ------------------------- ----------------
<S> <C> <C>
NOMINEES FOR ELECTION
Edward A. McGrath, Jr. 6,078 .03%
N. Stewart Rogers 336,031(2) 1.49%
Wolfgang Honn --(3) --
CONTINUING DIRECTORS--TERM EXPIRES IN 1998
Jerrold B. Harris 308,185(4) 1.37%
Donald P. Nielsen 23,158 .10%
Dr. Harald Schroder --(5) --
Walter W. Zywottek --(6) --
CONTINUING DIRECTORS--TERM EXPIRES IN 1999
James W. Bernard 90,718(7) 0.40%
Richard E. Engebrecht 110,640 0.49%
Dieter Janssen --(8) --
Stephen J. Kunst --(9) --
CERTAIN EXECUTIVE OFFICERS
David M. Bronson 1,273(10) 0.01%
David S. Barth 1,807(11) 0.01%
Paul J. Nowak 17,143(12) 0.08%
Hal G. Nichter 15,046(13) 0.07%
Directors and Executive Officers as a group
(19 persons) 911,083(14) 4.04%
CERTAIN BENEFICIAL OWNERS
EM Laboratories, Incorporated
7 Skyline Drive
Hawthorne, New York 10532 11,145,923(15) 49.89%
</TABLE>
4
<PAGE>
- ------------------------------
(1) Except as otherwise indicated, beneficial ownership represents sole voting
and sole investment power with respect to $1.00 par value common shares,
the Corporation's only outstanding class of stock.
(2) Mr. N. Stewart Rogers is a trustee of a trust for grandchildren which holds
4,000 shares (included in the amounts shown in the above table).
(3) Mr. Honn disclaims beneficial ownership of all common shares owned by EML.
(4) Includes 74,170 shares which Mr. Harris had the right to acquire within 60
days of January 31, 1997 through the exercise of options. Also includes
20,266 shares held under the Company's benefit plans and 36,181 shares of
restricted stock for which beneficial ownership is based upon sole voting
power.
(5) Dr. Schroder disclaims beneficial ownership of all common shares owned by
EML.
(6) Mr. Zywottek disclaims beneficial ownership of all common shares owned by
EML.
(7) Mr. Bernard disclaims any beneficial interest in 40,500 shares (included in
the amounts shown in the above table) owned by his spouse.
(8) Mr. Janssen disclaims beneficial ownership of all common shares owned by
EML.
(9) Mr. Kunst disclaims beneficial ownership of all common shares owned by EML.
(10) Includes 166 shares Mr. Bronson held under the Company's benefit plans for
which beneficial ownership is based upon sole voting power.
(11) Includes 375 shares Mr. Barth held under the Company's benefit plans for
which beneficial ownership is based upon sole voting power.
(12) Includes 12,522 shares which Mr. Nowak had the right to acquire within 60
days of January 31, 1997 through the exercise of options. Also includes
3,627 shares held under the Company's benefit plans for which beneficial
ownership is based upon sole voting power.
(13) Includes 6,000 shares which Mr. Nichter had the right to acquire within 60
days of January 31, 1997 through the exercise of options. Also includes
8,316 shares held under the Company's benefit plans for which beneficial
ownership is based upon sole voting power.
(14) Includes 92,692 shares which certain executive officers had the right to
acquire within 60 days of January 31, 1997 through the exercise of options.
Members of the group shared voting and/or investment power with other
persons as to 4,000 of such shares.
(15) Ownership of common shares includes 1,527,930 shares held by Merck KGaA, an
affiliate of EM Laboratories, Incorporated, issued as interest payments
under the terms of the subordinated debenture held by another affiliate of
Merck KGaA. Pursuant to the Standstill Agreement, EML and its affiliates
have the right to maintain its 49.89% interest in the event VWR issues
additional shares.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1984, as amended, requires
the Company's Directors, executive officers and holders of more than 10% of the
Company's Common Stock to file with the Commission initial reports of ownership
and reports of changes in ownership of Common Stock and other equity securities
of the Company. The Company believes that all parties subject to Section 16(a)
complied with the filing requirements during the year ended December 31, 1996
with the following exceptions: Donald P. Nielsen, Director, reported one
disposition of stock late on a subsequently filed Form 4; Dieter Janssen,
Director, filed Form 3 late.
FEES TO DIRECTORS AND COMMITTEES OF THE BOARD
Each Non-employee Director receives for services an annual retainer of
$10,000 (which has been paid in shares of restricted stock for Directors who are
not representatives of EML and in cash for Directors who are representatives of
EML), fees of $1,000 for attendance at each Board of Directors meeting ($2,500
if the meeting is held outside a Director's state of residence), fees of $500
for attendance at each Board Committee meeting, and reimbursement of travel
expenses in connection with meetings. Each member of the Executive Committee
receives an annual retainer of $2,000 and the Chairman of each standing
Committee of the Board receives an annual retainer of $2,000.
5
<PAGE>
The Corporation's Board of Directors has standing Audit/Pension,
Compensation and Nominating Committees. The members of each Committee and the
functions performed thereby are outlined below:
Messrs. Nielsen, McGrath, Kunst, Janssen and Rogers, are members of the
AUDIT/PENSION COMMITTEE of which Mr. Rogers is Chairman. The Audit/Pension
Committee has responsibility for recommending to the Board of Directors the firm
of independent auditors to be retained by the Corporation; reviewing with the
Corporation's auditors the scope of the audit; reviewing and recommending
corporate accounting policies to the Board of Directors; reviewing reports of
independent auditors as to the adequacy of the Corporation's accounting system,
controls, and other matters; and reviewing areas of possible conflicts of
interest and sensitive payments. The Committee also has the responsibility of
general oversight of the administration of the assets of the Company's
retirement and pension plans, and of the investment of the funds of such plans;
and reviewing and making recommendations to the Board of Directors with respect
to the performance of any third parties responsible for the administration and
for the investment of funds.
Messrs. Bernard, Engebrecht, Zywottek, and Dr. Schroder are members of the
COMPENSATION COMMITTEE of which Dr. Schroder is Chairman. The Compensation
Committee has the responsibility for recommending compensation of officers who
are corporate vice presidents and higher; establishing bonus criteria; reviewing
annually the operation of all compensation and benefit practices and salary
administration procedures; grants of options, except for executive officers,
whose grants are made by the Board of Directors; consulting with the
Audit/Pension Committee regarding the pension cost effects of trends in
compensation; recommending benefit levels in the Corporation's retirement
program; and recommending Directors' fees.
Messrs. Bernard, Nielsen, Honn, Zywottek and Harris (Ex-Officio) are
members of the NOMINATING COMMITTEE of which Mr. Bernard is the Chairman. The
Nominating Committee has the responsibility of receiving, reviewing, and
maintaining files of individuals qualified to be recommended as nominees for
election as Directors; reviewing annually the capability of each incumbent
Director to continue to serve as Director; recommending a list of individuals to
the Board of Directors for nomination for election to the Board of Directors;
and recommending individuals for appointment to various committees of the board.
Shareholder nominations to the Board of Directors must be made in
accordance with the procedures set forth in the Bylaws of the Corporation which
require, among other things, that nominations must be received not less than 120
days prior to the date which corresponds to the date on which the Corporation
mailed its proxy statement for the previous year's Annual Meeting of
Shareholders. So long as the Corporation has a "40% Shareholder" (as defined in
the Articles of Incorporation), Article IX of the Articles of Incorporation
allows Disinterested Directors or persons beneficially owning shares of Voting
Stock having a Market Price of $250,000 or more to nominate one or more
candidates for election as a Director and to have information relating to such
nominees included in the Corporation's proxy statement, and provides that each
shareholder of VWR has cumulative voting rights in such election. No such
nomination was made in 1996.
The Audit/Pension Committee met 3 times, the Compensation Committee one
time, the Nominating Committee 3 times, and the entire Board of Directors 6
times during 1996. Dr. Schroder attended 67% of the Board of Directors meetings
during 1996.
6
<PAGE>
EXECUTIVE COMPENSATION
REPORT OF COMPENSATION COMMITTEE
The Corporation's executive compensation program is administered by the
Compensation Committee ("Committee"), which is composed of four independent,
non-employee directors. Following review and approval by the Committee, all
issues pertaining to executive compensation are submitted to the full Board of
Directors for ratification.
Since its spin off from Univar in 1986, the Corporation has maintained the
philosophy that compensation of its executive officers (including its Chief
Executive Officer) and management should be directly and materially linked to
value creation for shareholders. The objective is to make the annual incentive
bonus, which rewards executives for meeting financial targets based on the
relationship of the Corporation's return on capital to its cost of capital, the
largest component of an executive's compensation.
The Corporation's executive compensation program consists of four
components: base salary, annual incentive bonus, long-term equity-based
incentive compensation, and the Corporation's contributions to various savings
and stock ownership programs. The Committee has not yet deemed it necessary to
consider its policy with respect to the possible tax effect on the Corporation,
under the federal Revenue Reconciliation Act of 1993, of annual compensation
exceeding $1 million paid to any individual.
BASE SALARY
Base salary is designed to be competitive, although generally conservative
as compared to equivalent positions at comparable companies, such as those that
are included in the Wholesale Trade Distributors Index shown in the Performance
Graph on page 12. Since 1986, the Corporation's philosophy is to place a
relatively greater emphasis on the annual incentive components of compensation.
ANNUAL INCENTIVE COMPENSATION PLAN
The Corporation's Executive Bonus Plan (the "Bonus Plan") provides annual
cash and incentive stock awards, which are based upon the relationship of the
Corporation's return on "invested capital" to its "cost of capital" (as both
terms are defined in the Bonus Plan). Each year the Committee approves bonus
targets by salary grade. The Corporation determines an individual's potential
bonus award by multiplying that person's target bonus by a factor which is
calculated using the percentage which the Corporation's return on invested
capital bears to its cost of capital. No bonuses are earned if the Corporation's
return on invested capital is less than 60% of its cost of capital. The
potential awards may then be adjusted (from zero to 1.5 times the potential
award) by an assessment of the executive's performance, which is determined by
the Chief Executive Officer based on subjective factors and is subject to the
Committee's approval. The Committee assesses the Chief Executive Officer's
performance.
For 1996, the Corporation's pre-tax cost of capital as calculated in
accordance with the Bonus Plan was 13.00%.
In accordance with the Bonus Plan, bonus awards are paid as follows: an
award of up to 150% of a participant's target bonus is paid in cash; any portion
of the award in excess of 150% but less than 200% of target is paid in
unrestricted stock, and in excess of 200% of target is paid in restricted stock.
The Bonus Plan does not take into consideration an executive officer's current
stock ownership and options. For 1996, all bonuses were paid in cash in
accordance with the Bonus Plan.
7
<PAGE>
LONG-TERM INCENTIVE STOCK PLAN
Additional stock incentives (incentive stock options, non-qualified stock
options, and restricted stock grants) have been provided under the 1986
Long-Term Incentive Stock Plan (1986 LTIP) and the 1995 Stock Incentive Plan
(1995 SIP). Restricted stock grants under the 1986 LTIP generally vest over four
years. Stock options under the 1986 LTIP were awarded with an exercise price
equal to the fair market value at the date of grant and have not been repriced.
These options generally vest over a seven year period.
Stock options under the 1995 SIP are awarded at an exercise price not less
than the fair market value at the date of grant. Options awarded executive
officers to date vest at the earlier of nine years following issuance of the
grant or 50% when the closing price per common share is at least 150% of the
fair market value of the common shares on the date of grant for twenty
consecutive days and the remaining 50% when the closing price per common share
is at least 175% of the fair market value of the common shares on the date of
grant for twenty consecutive days. Exercise cannot occur within twelve months of
the grant date.
Restricted stock grants and stock options are intended to align an
executive's interests with those of shareholders. The Corporation will
periodically grant additional stock awards under the 1995 SIP. Such awards are
recommended by the Chief Executive Officer and are subject to Committee
approval. The size of previous awards and the number of options held are
considered by the Committee, but are not determinative.
OTHER PLANS
The Corporation maintains a 401(k) savings plan and an Employee Stock
Ownership Plan (ESOP). Under the 401(k) Plan, the Corporation contributes, in
VWR stock only, up to 50% of the first 3% of each employee's earnings as a
matching contribution, which is invested entirely in VWR Common Stock. Under the
ESOP, the Corporation allocates VWR common stock evenly among all eligible
participants, irrespective of salary or position in the Corporation. The ESOP
shares vest equally over an employment period of five years, at which point the
employee is vested 100% in the plan.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Committee's objective is to correlate Mr. Harris' remuneration with the
performance of the Corporation. The Committee believes Mr. Harris' base salary
is average as compared with the salaries of chief executive officers of
comparable companies such as those included in the Wholesale Trade Distributors
Index referred to above. The Committee increased Mr. Harris' base salary for
1996 from its 1995 level by $45,000. Mr. Harris also participates in the same
Bonus Plan applicable to the other named executive officers.
THE COMPENSATION COMMITTEE
Dr. Harald Schroder, Chairman
James W. Bernard
Richard E. Engebrecht
Walter W. Zywottek
8
<PAGE>
SUMMARY COMPENSATION TABLE
The Summary compensation Table includes individual compensation information
on the Chief Executive Officer and the four other most highly-paid executive
officers, for services rendered in all capacities for the three fiscal years
ended December 31, 1996.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL --------------------------
COMPENSATION RESTRICTED SHARES ALL OTHER
NAME AND --------------------- STOCK UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) AWARDS($)(1) OPTIONS ($)(2)
------------------ ---- --------- -------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Jerrold B. Harris ...................... 1996 $331,020 $140,162 -- -- $18,177
President and Chief 1995 286,020 250,000 $510,792 80,000 16,245
Executive Officer 1994 275,004 -- -- -- 19,895
David M. Bronson* ...................... 1996 150,000 45,984 -- -- 15,347
Senior Vice-President Finance, 1995 29,803 5,000 -- 50,000 13,972
Chief Financial Officer and 1994 -- -- -- -- --
Corporate Secretary
Paul J. Nowak........................... 1996 150,000 55,094 -- -- 15,587
Senior Vice-President 1995 135,000 66,466 -- 50,000 16,263
1994 115,020 -- -- -- 15,898
Dave S. Barth* ......................... 1996 150,000 51,190 -- -- 15,396
Senior Vice-President 1995 27,257 5,000 -- 50,000 4,312
1994 -- -- -- -- --
Hal G. Nichter.......................... 1996 150,000 52,925 -- -- 13,852
Senior Vice-President 1995 121,945 35,600 -- 40,000 13,048
1994 119,040 -- -- -- 12,978
</TABLE>
- ------------------
* Messrs. Bronson and Barth were employed by VWR in November and September,
1995, respectively.
(1) Mr. Harris was awarded 42,566 shares of restricted stock with a value of
$510,792 on September 15, 1995.
(2) Includes Company matching contributions to the Investor Tax Savings Plan
and Company automobile allowance. The following named executive officers
received Company automobile benefits: Mr. Harris, $13,527 in 1996, $13,313
in 1995 and 1994; Mr. Bronson, $13,491 in 1996, $2,142 in 1995; Mr. Nowak,
$13,527 in 1996, $13,313 in 1995 and 1994; Mr. Barth, $14,236 in 1996,
$3,051 in 1995; Mr. Nichter, $13,527 in 1996, $12,968 in 1995, and $12,853
in 1994.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following summary table details stock option exercises for the named
executive officers during 1996, including the aggregate value of gains on the
date of exercise. In addition, this table includes the number of shares covered
by both exercisable and unexercisable stock options as of December 31, 1996, and
the values for "in-the-money" options, which represent the positive spread
between the exercise price of any such existing stock options and the year-end
price of common shares.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FY-END(#) AT FY-END ($)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Harris............. 6,812 $50,382 60,170 94,000 $530,425 $505,510
Bronson............ -- -- -- 50,000 -- 237,500
Nowak.............. -- -- 10,522 60,000 76,773 261,430
Barth.............. -- -- -- 50,000 -- 237,500
Nichter............ -- -- 3,000 52,000 2,250 199,000
</TABLE>
9
<PAGE>
DEFINED BENEFIT RETIREMENT PLAN
The table below shows the estimated annual benefits payable on retirement
under VWR's Retirement Plan ("Plan") to persons in specified remuneration and
years-of-service classifications. The table applies to benefits payable on or
after January 1, 1997. The retirement benefits shown are based upon retirement
at normal retirement age.
<TABLE>
<CAPTION>
HIGHEST AVERAGE ANNUAL
COMPENSATION DURING ANY YEARS OF SERVICE
CONSECUTIVE FIVE --------------------------------------------------------
YEARS OF EMPLOYMENT 15 20 25 30 35
----------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$100,000 $ 23,798 $ 31,730 $ 39,663 $ 47,575 $ 52,355
150,000 36,923 49,230 61,538 73,845 81,230
200,000 50,048 66,730 83,413 100,095 110,105
250,000 63,173 84,230 105,288 126,345 138,980
300,000 76,298 101,730 127,163 152,595 167,855
350,000 89,423 119,230 149,038 178,845 196,730
400,000 102,548 136,730 170,913 205,095 225,605
450,000 115,673 154,230 192,788 231,345 254,480
500,000 128,798 171,730 214,663 257,595 283,355
550,000 141,923 189,230 236,538 283,845 312,230
600,000 155,048 206,730 258,413 310,095 341,105
</TABLE>
With certain exceptions, Section 415 of the Internal Revenue Code currently
limits pensions which may be paid under plans qualified under the Internal
Revenue Code to an annual benefit of $120,000. Additionally, Section 401 of the
Internal Revenue Code limits compensation which must be taken into account in
providing benefits under qualified plans to an annual limit of $150,000. The
Board of Directors, upon the recommendation of the Compensation Committee, has
authorized the establishment of supplemental benefits for executive officers to
whom the limits of Sections 415 and 401 applies, or will apply in the future so
that these executive officers will obtain retirement benefits comparable to
other retirement plan participants not impacted by the Sections 415 and 401
limits.
Under the terms of the agreement by which Momentum was spun off by the
Corporation (in 1990), the Corporation has agreed to pay two-thirds of all
supplemental benefits payable to Richard E. Engebrecht and PrimeSource
(successor to Momentum by merger) will pay the remaining one-third. The
Corporation has guaranteed payment of the one-third payable by PrimeSource and
PrimeSource has guaranteed payment of the two-thirds payable by the Corporation.
Compensation of executive officers for purposes of the Plan includes
salaries and bonuses as reported in the "Summary Compensation" table on page 9,
above. The following are the approximate years of credited service (rounded to
the nearest year) of the persons named in that table under the Plan: J. Harris,
33; D. Bronson, 1; P. Nowak, 19; D. Barth, 1; H. Nichter, 4.
Compensation of all non-executive officer employees for purposes of the
Plan includes salaries, commissions, and bonuses. All regular, full-time
employees not members of a collective bargaining unit (except for bargaining
units participating in all Corporation benefits), are eligible to participate in
the Plan.
AGREEMENTS WITH CERTAIN OFFICERS
On September 15, 1995, as a condition to the Common Share and Debenture
Purchase Agreement between VWR and EML, the Corporation entered into a five-year
employment agreement with Mr. Harris. This agreement replaced a previous
agreement which included change of control provisions. During the employment
period, Mr. Harris' base salary and bonus will be determined by the Compensation
Committee at its own discretion. In addition, the Corporation has issued and
granted to Mr. Harris 42,566 of the Corporation's common shares as a restricted
stock award. The restricted stock award vests based upon the following schedule:
15% vests on the
10
<PAGE>
succeeding anniversary date of the agreement through and including the fourth
anniversary date of the employment agreement and the remaining 40% will vest on
the fifth anniversary date of the employment agreement. If the Company were to
terminate Mr. Harris without cause (as defined), Mr. Harris would be paid
beginning on the date of termination and ending on the fifth anniversary of the
date of the agreement, at an annual rate equal to the greater of (i) the sum of
Mr. Harris' most-recent annual salary plus most-recent annual bonus or (ii) the
average salary and bonus earned by Mr. Harris during the term of the employment
agreement. In addition, effective upon any such termination, Mr. Harris would
become fully vested in the restricted stock award.
The estimated amount payable over the remaining term of the employment
agreement in the event the Company were to terminate Mr. Harris' employment
without cause would be approximately $1,798,000.
The Board of Directors has approved a change of control agreement (the
"Agreement") between the Corporation and one of its current executive officers,
Paul J. Nowak. The Agreement provides that Mr. Nowak would continue to receive
compensation if his employment is terminated (voluntarily or involuntarily) for
any reason other than gross misconduct, death, disability, or reaching age 65,
provided such termination occurs within 24 months after certain defined events
which might lead to a change in control of the Corporation. The term of the
compensation period decreases to a minimum of 12 months during the 24 months
following the change of control. The compensation would be paid at a rate equal
to Mr. Nowak's then-current salary and target bonus. The compensation is subject
to a minimum annual rate of not less than Mr. Nowak's average compensation for
the preceding three calendar years, and is subject to reduction if the aggregate
present value of all payments would exceed three times Mr. Nowak's "annualized
includable compensation," as defined in Section 280G of the Internal Revenue
Code, for the Executive's most recent five taxable years. Mr. Nowak would also
continue to have "employee" status for the compensation period and would be
entitled to retain most employee benefits and rights during this period.
The estimated aggregate amounts presently payable in the event the
Corporation's obligations under the Agreement were triggered (assuming Mr. Nowak
receives payments for the maximum 12 month period now available) would be
$232,000. The foregoing does not include the value of any employee benefits
which might be payable to Mr. Nowak during the compensation period.
Although the Corporation believes that the compensation or other benefits
payable or vesting upon Mr. Nowak's termination should not constitute "golden
parachute payments" under the Internal Revenue Code, the Agreement does provide
for indemnification against excise taxes payable by Mr. Nowak in the event of
such a determination. The Corporation may cease payments in the event Mr. Nowak
breaches certain noncompetition or confidentiality covenants. The Corporation
also has the right to terminate the Agreement upon a one-year notice, except as
to rights accruing as a result of an event which has triggered the change of
control provisions of the Agreement. The Board of Directors believes that the
terms and conditions of the Agreement are in the best interest of the
Corporation.
11
<PAGE>
PERFORMANCE GRAPH
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
BETWEEN VWR SCIENTIFIC PRODUCTS CORP.,
MEDIA GENERAL COMPOSITE INDEX AND A PEER GROUP INDEX
225
200
D 175
O
L 150
L
A 100
R
S 75
50
25
0
1991 1992 1993 1994 1995 1996
1991 1992 1993 1994 1995 1996
--O-- VWR SCIENTIFIC PROD. $100 $142.53 $132.04 $ 96.36 $153.50 $192.24
--x-- MEDIA GENERAL INDEX* 100 104.00 119.39 118.39 153.50 185.38
--z-- PEER GROUP INDEX** 100 110.73 128.91 123.44 155.69 176.57
FISCAL YEAR ENDING DEC. 31, 1996
ASSUMES $100 INVESTED ON JAN. 1, 1992
ASSUMES DIVIDEND REINVESTED
- ------------------
* The Media General Composite Index is a broad market index of 7,000 NASDAQ,
NYSE and AMEX issues.
** This index consists of Wholesale Trade Distributors: Durable Goods (Standard
Industry Code 50) and NonDurable goods (Standard Industry Code 51), and has
been prepared by and is available from Media General, P.O. Box 85333,
Richmond, VA, 23293.
12
<PAGE>
SELECTION OF INDEPENDENT AUDITORS
The Board of Directors requests that the shareholders ratify its selection
of Ernst & Young LLP as independent auditors for the Corporation for the year
ending December 31, 1997. If the shareholders do not ratify the selection of
Ernst & Young LLP, another firm of independent auditors will be selected as
independent auditors by the Board of Directors. Representatives of Ernst & Young
LLP will be present at the Annual Meeting and will be available to respond to
appropriate questions. They will also have the opportunity to make a statement
if they desire to do so.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF ITS
SELECTION OF ERNST & YOUNG LLP.
PROPOSALS OF SECURITY HOLDERS
Under Securities and Exchange Commission rules and the Corporation's
Bylaws, certain shareholder proposals may be included in the Corporation's proxy
statement. Any shareholder desiring to have such a proposal included in the
Corporation's proxy statement for the Annual Meeting to be held in 1998 must
cause a proposal in full compliance with Rule 14a-8 under the Securities
Exchange Act of 1934 to be received by the Corporation not later than January 8,
1998. The timing and procedure with respect to the submission by shareholders of
nominees for Directors are discussed in this Proxy Statement under the caption
"FEES TO DIRECTORS AND COMMITTEES OF THE BOARD."
OTHER BUSINESS
The Board of Directors has no knowledge of any other business to be acted
upon at this meeting. However, if any other business is presented at the
meeting, proxies will be voted in accordance with the judgment of the person or
persons voting such proxies.
BY ORDER OF THE BOARD OF DIRECTORS
[SIGNATURE CUT]
DAVID M. BRONSON
Senior Vice President--Finance
Corporate Secretary
13
P R O X Y
[ LOGO ]
1310 GOSHEN PARKWAY
WEST CHESTER, PA 19380
The undersigned hereby appoints Jerrold B. Harris, and David M. Bronson, or
either of them, each with full power of substitution and revocation, as Proxies
to vote, as designated below, all Common Shares of VWR Scientific Products
Corporation which the undersigned would be entitled to vote if personally
present at the Annual Meeting of the Corporation to be held at the Philadelphia
National Bank Building, 1345 Chestnut Street, Philadelphia, Pennsylvania, on May
8, 1997 and at any adjournments thereof.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholders. If no direction is made, this Proxy will
be voted FOR the nominees listed in Item 1 on the reverse side hereof (in equal
amounts or cumulatively as the proxies may determine) or, if any such nominee(s)
should be unable to serve, for such person(s) as may be recommended by the Board
of Directors; FOR the proposal set forth in Item 2; and, in the Proxies'
discretion, upon such other business as may properly come before the Annual
Meeting and any adjournments thereof. The undersigned hereby revokes any proxy
or proxies heretofore given to vote at said Annual Meeting and any adjournments
thereof.
(Continued and to be signed on reverse side)
FOLD AND DETACH HERE
<PAGE>
Please mark
your votes like /X/
this in black or
blue ink.
1. Election of Directors:
*INSTRUCTIONS: To withhold
WITHHOLD authority to vote for any
FOR all nominees AUTHORITY individual nominee, or to
listed to the right to vote for all cumulate your votes for any
(except as marked nominees listed such nominee(s), so indicate
to the contrary) to the right in the space provided below.
/ / / / Wolfgang Honn;
Edward A. McGrath, Jr.;
N. Stewart Rogers
YOUR BOARD OF DIRECTORS RECOMMENDS A
VOTE "FOR ALL NOMINEES" IN ITEM 1.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
2. PROPOSAL: Ratification of the FOR AGAINST ABSTAIN
selection of Ernst & Young LLP
as independent auditors for the / / / / / /
year ending December 31, 1997.
3. To vote in their discretion upon such other business as may properly come
before the meeting and any adjournments thereof.
--------------------------------------------
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
--------------------------------------------
Signature(s) ___________________________________ Date _________________, 1997
NOTE: Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee, or guardian, please give your full title as such. If a corporation,
please sign in full corporate name by President or other authorized officer. If
a partnership, please sign in partnership name by authorized person.
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
