<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 Desmond Hotel and Conference Center, One Liberty
Boulevard, Malvern, Pennsylvania, on April 29, 1999, at 11:00 a.m. for the
following purposes:
1. To elect four Directors.
2. To ratify the selection of Ernst & Young LLP as independent auditors for
the year ending December 31, 1999.
3. To transact such other business as may properly come before the Meeting.
Only shareholders of record at the close of business on March 16, 1999 are
entitled to notice of, and to vote at, this meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ David M. Bronson
DAVID M. BRONSON
Senior Vice President Finance
Chief Financial Officer
and Corporate Secretary
West Chester, Pennsylvania
April 6, 1999
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
Dear Shareholder:
You are cordially invited to attend the VWR Scientific Products Corporation
Annual Meeting of Shareholders to be held at the Desmond Hotel and Conference
Center, One Liberty Boulevard, Malvern, Pennsylvania, on April 29, 1999, 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 four 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,
/s/ Jerrold B. Harris
JERROLD B. HARRIS
President and Chief Executive
Officer
West Chester, Pennsylvania
April 6, 1999
<PAGE>
VWR SCIENTIFIC PRODUCTS CORPORATION
CORPORATE OFFICES
1310 GOSHEN PARKWAY
WEST CHESTER, PENNSYLVANIA 19380
----------------
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 29, 1999
----------------
This proxy statement and accompanying proxy, which are being mailed to
shareholders on or about April 6, 1999, 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 April 29, 1999 at the Desmond Hotel and Conference Center, One Liberty
Boulevard, Malvern, 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 16, 1999, will be
entitled to vote at the meeting. On March 16, 1999, there were 28,962,527
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 four
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 the 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. James W. Bernard, Richard E. Engebrecht, Dieter
Janssen, and Stephen J. Kunst all of whom are current Directors, have been
nominated to be re-elected for a term which expires in 2002.
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.
Merck KGaA, Darmstadt, Germany, through its affiliates EM Laboratories,
Incorporated ("EML") and Merck Labor GmbH, is the beneficial owner of 49.89%
of the Company's issued and outstanding Common Shares as of March 16, 1999. An
affiliate of EML holds a $135 million 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, increase
their beneficial ownership of the Company's Common Shares above 49.89% without
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. Two of the nominees for election at the
Annual Meeting, Dieter Janssen and Stephen J. Kunst, Esq., are designees of
EML. Of the Directors whose terms will continue after the Annual Meeting,
Wolfgang Honn, Walter W. Zywottek and Dr. Harald J. Schroder 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 1998, in the ordinary course of VWR's business, VWR purchased $44
million of inventory from affiliates of Merck KGaA. Merck KGaA and its
affiliates manufacture and distribute pharmaceutical, laboratory, and chemical
products.
Nominees for Election
- ---------------------
JAMES W. BERNARD--Mr. Bernard, 61, retired, is Chairman of the Board of
Directors of Bonneville Pacific Corp, an oil and gas production and
cogeneration company. Mr Bernard was President and Chief Executive Officer of
Univar Corporation, a distributor of industrial chemicals, from 1986 to
October 1995. Mr. Bernard is on the Board of Directors of Hatch & Kirk, Inc.,
a marine and rail power systems company. Mr. Bernard has been a Director of
the Corporation since 1988.
RICHARD E. ENGEBRECHT--Mr. Engebrecht, 72, 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
("Momentum"), a distributor of photographic and graphic arts equipment and
supplies from January 1, 1993 until it merged with PrimeSource on September 1,
1994. Mr. Engebrecht has been a Director of the Corporation since 1986.
2
<PAGE>
DIETER JANSSEN--Mr. Janssen, 56, is Group Vice President--Finance and Chief
Financial Officer of EMI. Since 1994, Mr. Janssen has been the Divisional
Manager of Purchasing and Controlling for MEPRO, an affiliate of Merck KGaA.
From 1988 to 1994, Mr. Janssen was Chief Financial Officer of Merck S.A.,
Caracas, Venezuela, an affiliate of Merck KGaA. Mr. Janssen has been a
Director of the Corporation since 1996.
STEPHEN J. KUNST, Esq.--Mr. Kunst, 50, is Vice President and, since 1995,
has been General Counsel of EMI and a Director of EMI and EML. From 1989
through 1995, Mr. Kunst served as Vice President--Administrative Services of
EMI. Mr. Kunst has been a Director of the Corporation since 1995.
Continuing Directors -- Term Expires in 2000
- --------------------------------------------
WOLFGANG HONN--Mr. Honn, 61, is a Partner and, since 1981, has been a member
of the Executive Board of Merck KGaA. Mr. Honn has been a Director of the
Corporation since 1995.
EDWARD A. MCGRATH, JR.--Mr. McGrath, 68, has been Chairman of the Board of
the Corporation since November 1996. 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, 69, has been Chairman of the Board of
Directors of PENWEST since February 1990. He is a Director of Fluke
Corporation, a manufacturer of electronic testing tools; U.S. Bancorporation,
a bank holding company; Penford Corporation, a manufacturer of carbohydrate-
based specialty chemicals; and Royal Pakhoed NV, a logistics and distribution
company. Mr. Rogers has been a Director of the Corporation since 1986.
Continuing Directors -- Term Expires in 2001
- --------------------------------------------
JERROLD B. HARRIS--Mr. Harris, 56, 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, 60, 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 J. SCHRODER--Dr. Schroder, 60, has been a Partner and member of
the Executive Board of Merck KGaA since 1990 and is currently serving as Vice
Chairman of the Executive Board. Dr. Schroder has been a Director of the
Corporation since 1995.
WALTER W. ZYWOTTEK--Mr. Zywottek, 51, is Managing Director, Merck Eurolab
N.V., Belgium. Mr. Zywottek had served as President and Chief Executive
Officer of EMI and EML until April, 1998. Since 1991, Mr. Zywottek has served
as Director and General Manager of the Pigments and Cosmetics Division of
Merck KGaA. Mr. Zywottek 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, 1999(1) January 31, 1999
- --------- ------------------------- ----------------
<S> <C> <C>
NOMINEES FOR ELECTION
James W. Bernard 90,718(2) *
Richard E. Engebrecht 95,640 *
Dieter Janssen -- (3) --
Stephen J. Kunst, Esq. -- (3) --
CONTINUING DIRECTORS--TERM EXPIRES
IN 2000
Wolfgang Honn -- (3) --
Edward A. McGrath, Jr. 6,078 *
N. Stewart Rogers 336,031(4) 1.16%
CONTINUING DIRECTORS--TERM EXPIRES
IN 2001
Jerrold B. Harris 393,784(5) 1.35%
Donald P. Nielsen 23,158 *
Dr. Harald J. Schroder -- (3) --
Walter W. Zywottek -- (3) --
Certain Executive Officers
- --------------------------
Paul J. Nowak 77,367(6) *
David M. Bronson 51,657(7) *
David S. Barth 43,211(8) *
Hal G. Nichter 47,423(9) *
Directors and Executive Officers
as a group
(17 persons) 1,228,136(10) 4.18%
Certain Beneficial Owners
- -------------------------
Merck KGaA 15,438,274(11) 49.89%
Darmstadt, Germany
FMR Corp.
Boston Massachusets 1,990,100(12) 6.87%
</TABLE>
- --------
*Less than one percent
(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. Bernard disclaims any beneficial interest in 40,500 shares (included
in the amounts shown in the above table) owned by his spouse.
(3) Excludes Common Shares owned by Merck KGaA, as to which the named
director disclaims beneficial ownership.
(4) 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).
(5) Includes 150,000 shares which Mr. Harris had the right to acquire within
60 days of January 31, 1999 through the exercise of options. Also
includes 23,760 shares held under the Company's benefit plans and 23,411
shares of restricted stock for which beneficial ownership is based upon
sole voting power.
(6) Includes 68,000 shares which Mr. Nowak had the right to acquire within 60
days of January 31, 1999 through the exercise of options. Also includes
8,539 shares held under the Company's benefit plans for which beneficial
ownership is based upon sole voting power.
(7) Includes 47,000 shares which Mr. Bronson had the right to acquire within
60 days of January 31, 1999 through the exercise of options. Also
includes 4,157 shares Mr. Bronson held under the Company's benefit plans
for which beneficial ownership is based upon sole voting power.
4
<PAGE>
(8) Includes 40,000 shares which Mr. Barth had the right to acquire within 60
days of January 31, 1999 through the exercise of options. Also includes
2,261 shares Mr. Barth held under the Company's benefit plans for which
beneficial ownership is based upon sole voting power.
(9) Includes 37,000 shares which Mr. Nichter had the right to acquire within
60 days of January 31, 1999 through the exercise of options. Also
includes 8,693 shares held under the Company's benefit plans for which
beneficial ownership is based upon sole voting power.
(10) Includes 402,000 shares which certain executive officers had the right to
acquire within 60 days of January 31, 1999 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.
(11) Ownership of Common Shares includes shares held by EM Laboratories,
Incorporated and Merck Labor GmbH, affiliates of Merck KGaA. Includes
1,089,380 shares Merck KGaA has the right, pursuant to the Standstill
Agreement, to acquire in the event employee stock options are exercised
to maintain a 49.89% interest in the event VWR issues additional shares.
(12) Ownership of Common Stock as of December 31, 1998, as per Schedule 13G
filed by such beneficial owner with the Securities and Exchange
Commission. Includes 1,251,200 shares which the beneficial owner has sole
investment power but does not have sole or shared voting power.
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, 1998 except for the late filing of Form 4 for the Executive
Officers regarding the issuance of stock options.
FEES TO DIRECTORS AND COMMITTEES OF THE BOARD
Each Non-employee Director receives for services an annual retainer of
$15,000, 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. The Chairman of the Board of
Directors receives an annual retainer of $25,000. Each Director who is not
also a Company employee or a designee of EML, is entitled, under the Non-
Employee Directors' Restricted Stock Plan to choose to be paid the annual
retainer for his elected term either in annual cash payments or by means of a
grant of restricted Common Shares of the Company, vesting in equal amounts of
shares at the end of each year of his elected term. 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.
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.
5
<PAGE>
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; granting 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 for 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 to the Board of
Directors a list of individuals 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 for this year's Annual Meeting.
The Audit/Pension Committee met two times, the Compensation Committee two
times, the Nominating Committee one time, and the entire Board of Directors
nine times during 1998.
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.
The Corporation maintains 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.
6
<PAGE>
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 13. 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 1998, the Corporation's pretax cost of capital as calculated in
accordance with the Bonus Plan was 15.11%.
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 1998, all bonuses were paid in cash
in accordance with the Bonus Plan.
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 a specified price
above 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 another, higher, specified price above 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.
7
<PAGE>
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 Common Shares only, up to 50% of the first 3% of each employee's earnings
as a matching contribution. Under the ESOP, the Corporation allocates VWR
Common Shares 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. Mr Harris' base salary for 1998 was
increased by approximately 10% from its 1997 level. Mr. Harris also
participates in the same Bonus Plan applicable to the other named executive
officers.
The Compensation Committee
Dr. Harald J. 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, 1998.
<TABLE>
<CAPTION>
Annual
Compensation Long-Term 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....... 1998 $369,170 $289,751 -- 80,000 $18,617
President and Chief 1997 340,020 350,677 -- -- 18,286
Executive Officer 1996 331,020 140,162 -- -- 18,177
Paul J. Nowak........... 1998 210,000 109,172 -- 60,000 15,910
Executive Vice 1997 165,000 97,284 -- -- 14,972
President
1996 150,000 55,094 -- -- 15,587
David M. Bronson........ 1998 166,020 81,369 -- 50,000 14,320
Senior Vice President 1997 155,010 91,297 -- -- 14,512
Finance,
Chief Financial Officer 1996 150,000 45,984 -- -- 15,347
and Corporate Secretary
David S. Barth.......... 1998 170,040 90,410 -- 50,000 17,707
Senior Vice President 1997 160,020 93,542 -- -- 15,913
1996 150,000 51,190 -- -- 15,396
Hal G. Nichter.......... 1998 175,855 103,971 -- 50,000 13,720
Senior Vice President 1997 157,093 93,542 -- -- 13,663
1996 150,000 52,925 -- -- 13,852
</TABLE>
- --------
(1) Mr. Harris holds 23,411 unvested restricted stock awards with a value of
$406,766 as of December 31, 1998.
(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, $13,508 in 1998, $13,508
in 1997, and $13,527 in 1996; Mr. Nowak, $13,508 in 1998, $13,508 in 1997,
and $13,527 in 1996; Mr. Bronson, $13,508 in 1998, $13,508 in 1997, and
$13,491 in 1996; Mr. Barth, $14,153 in 1998, $14,153 in 1997, and $14,236
in 1996; Mr. Nichter, $13,508 in 1998, $13,508 in 1997, and $13,527 in
1996.
9
<PAGE>
Option Grants in Last Fiscal Year
The following table contains information concerning the grant of stock
options made during fiscal 1998 under the Company's 1995 SIP to the named
executive officers.
<TABLE>
<CAPTION>
% to Total
Options
Shares Underlying Granted Grant Date
Option Grant Value Exercise Present
Name (#)(1) Realized Price($/Share) (2) Expiration Date Value ($) (3)
---- ----------------- ---------- ------------------ --------------- -------------
<S> <C> <C> <C> <C> <C>
Jerrold B. Harris....... 80,000 6.11% $32.13 May 10, 2008 $1,789,600
Paul J. Nowak........... 60,000 4.59% 32.13 May 10, 2008 1,342,200
David M. Bronson........ 50,000 3.82% 32.13 May 10, 2008 1,118,500
David S. Barth.......... 50,000 3.82% 32.13 May 10, 2008 1,118,500
Hal G. Nichter.......... 50,000 3.82% 32.13 May 10, 2008 1,118,500
</TABLE>
- --------
(1) Options have a ten-year term and vest at the earlier of nine years
following the issuance of the grant or 50% when the closing price per
common share is at least $45 per share for twenty consecutive days and the
remaining 50% when the closing price per common share is at least $51 for
twenty consecutive days.
(2) The exercise price is the market price of the Company's common shares on
the date the options were granted.
(3) The "grant date present value" is based upon the Black-Scholes option
pricing model adapted for use in valuing executive stock options. The
actual value, if any, the executive may realize upon exercise of the
option will depend on the excess of the stock price over the exercise
price on date the option is exercised, so there is no assurance the value
realized by the executive will be at or near the value estimated by the
Black-Scholes model. The principal assumptions incorporated into the
valuation model by the Company are as follows: (i) expected volatility of
68.3%, (ii) risk-free interest rate of 5.3%, and (iii) expected life of
seven years. No assumptions were made regarding dividend yields,
nontransferability or risk of forfeiture. The assumptions chosen
materially impact the resulting valuations.
10
<PAGE>
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following summary table details stock option exercises for the named
executive officers during 1998, including the aggregate value of gains on the
date of exercise. In addition, this table includes the number of shares
covered by both exercisable and unexercisable stock options as of December 31,
1998, and the values for "in-the-money" options, which represent the positive
spread between the exercise price of any such existing stock options and the
year-end price of common shares.
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-The-Money Options
Options at FY-End (#) at FY-End($)
------------------------- -------------------------
Shares Acquired Value
Name on Exercise (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jerrold B. Harris....... 4,170 $ 93,020 150,000 80,000 $1,101,300 $ 0
Paul J. Nowak........... 522 11,644 66,000 64,000 372,900 5,500
David M. Bronson........ 3,000 48,000 47,000 50,000 252,625 0
David S. Barth.......... 10,000 226,250 40,000 50,000 215,000 0
Hal G. Nichter.......... 15,000 340,313 34,000 56,000 146,750 8,250
</TABLE>
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 compensation and
years-of-service classifications. The table applies to benefits payable on or
after January 1, 1999. 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 $23,528 $31,370 $39,213 $47,055 $51,761
150,000 36,653 48,870 61,088 73,305 80,636
200,000 49,778 66,370 82,963 99,555 109,511
250,000 62,903 83,870 104,838 125,805 138,386
300,000 76,028 101,370 126,713 152,055 167,261
350,000 89,153 118,870 148,588 178,305 196,136
400,000 102,278 136,370 170,463 204,555 225,011
450,000 115,403 153,870 192,338 230,805 253,886
500,000 128,528 171,370 214,213 257,055 282,761
550,000 141,653 188,870 236,088 283,305 311,636
600,000 154,778 206,370 257,963 309,555 340,511
</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 $130,000. 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 $160,000.
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 apply, 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.
11
<PAGE>
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, 35; P. Nowak, 22; D. Bronson, 3; D. Barth, 3; H. Nichter, 6.
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 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 $1,126,000.
The Corporation is party to a change of control agreement (the "Agreement")
with 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 24-month period) would be $620,000.
The foregoing does not include the value of any employee benefits which might
be payable to Mr. Nowak during the compensation period.
12
<PAGE>
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.
Performance Graph
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG VWR SCIENTIFIC PRODUCTS CORPORATION,
MEDIA GENERAL COMPOSITE INDEX AND A PEER GROUP INDEX
Fiscal Years Ending Dec. 31, 1993 - 1998
Assumes $100 Invested on Jan. 1, 1994
Assumes Dividend Reinvested
[Performance Graph Appears Here]
1992 1993 1994 1995 1996 1997
VWR SCIENTIFIC PROD. $100 $ 92.63 $ 67.61 $107.70 $134.87 $227.47
MEDIA GENERAL INDEX* 100 114.79 113.84 147.60 178.25 231.46
PEER GROUP INDEX** 100 120.07 125.16 148.85 165.65 187.33
- --------
* 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.
13
<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, 1999. 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 2000 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 December
9, 1999. 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
/s/ David M. Bronson
DAVID M. BRONSON
Senior Vice President Finance
Chief Financial Officer
and Corporate Secretary
14
<PAGE>
PROXY
[VWR SCIENTIFIC PRODUCTS LOGO APPEARS HERE]
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 Rittenhouse
Hotel, 210 West Rittenhouse Square, Philadelphia, Pennsylvania, on May 1, 1999
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; FOR the proposal set forth
in Item 3, 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>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Please mark your votes like this in black or blue ink [X]
1. ELECTION OF DIRECTORS:
FOR all nominees listed to the left (except as marked to the contrary) [ ]
WITHHOLD AUTHORITY to vote for all nominees listed to the left [ ]
James W. Bernard; FOR AGAINST
[ ] [ ]
Richard E. Engebrecht; FOR AGAINST
[ ] [ ]
Dieter Janssen, FOR AGAINST
[ ] [ ]
Stephen J. Kunst FOR AGAINST
[ ] [ ]
----------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR ALL NOMINEES" IN ITEM 1.
2. PROPOSAL: Ratification of the selection of FOR AGAINST ABSTAIN
Ernst & Young LLP as independent auditors [ ] [ ] [ ]
for the year ending December 31, 1999.
3. To vote in their discretion upon such other business as may properly come
before the meeting and any adjournments thereof.
*INSTRUCTIONS: To withhold authority to vote for any individual nominee, or
to cumulate your votes for any such nominee(s), so indicate in the space
provided below.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
SIGNATURE(S) DATE , 1999
------------------------------------------ --------------
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.
