<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [ ]
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 Rule 14a-11(c) or Rule 14a-12
PERRIGO COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
PERRIGO COMPANY
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 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:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
PERRIGO COMPANY
117 WATER STREET ALLEGAN, MICHIGAN 49010
TELEPHONE (616) 673-8451
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 30, 1996
To the Shareholders:
You are hereby notified that the Annual Meeting of Shareholders of Perrigo
Company will be held at the Smyrna Town Centre, 100 Sam Ridley Parkway, Smyrna,
Tennessee, on Wednesday, October 30, 1996 at 10:00 A.M. (Central Standard Time),
for the purpose of considering and taking action with respect to the following
matters:
1. The election of four directors of the Company;
2. The ratification of selection of independent accountants; and
3. Such other business as may properly come before the meeting.
The Board of Directors has fixed the close of business on September 4, 1996
as the record date for the determination of shareholders entitled to notice of
and to vote at the Annual Meeting of Shareholders. The transfer books of the
Company will not be closed.
Any shareholder who does not expect to attend the meeting in person is
requested to execute the enclosed proxy and return it as promptly as possible in
the accompanying stamped envelope. The proxy may be revoked by the shareholder
at any time before it is exercised and shareholders who are present at the
meeting may withdraw their proxies and vote in person.
A copy of the Company's 1996 Annual Report to Shareholders accompanies this
notice.
By Order of the Board of Directors
JOHN R. NICHOLS
Secretary
Allegan, Michigan
September 30, 1996
IMPORTANT--PLEASE MAIL YOUR SIGNED PROXY PROMPTLY
IN THE ENCLOSED ENVELOPE PROVIDED FOR THIS PURPOSE
<PAGE> 3
PERRIGO COMPANY
117 WATER STREET ALLEGAN, MICHIGAN 49010
TELEPHONE (616) 673-8451
------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 30, 1996
This proxy statement is furnished in connection with the solicitation of
proxies to be voted at the Annual Meeting of Shareholders of Perrigo Company, to
be held on Wednesday, October 30, 1996.
The enclosed proxy is solicited by the Board of Directors of the Company
and will be voted at the Annual Meeting and any adjournments thereof. Shares
represented by a properly executed proxy in the accompanying form will be voted
at the Annual Meeting and, when instructions have been given by the shareholder,
will be voted in accordance with those instructions. If no instructions are
given, the shareholder's shares will be voted according to the recommendations
of the Board of Directors. Those recommendations are described later in this
proxy statement.
You may revoke your proxy at any time before it is exercised by sending
written notice of revocation to the Secretary of the Company, or by signing and
delivering a later dated proxy. If you attend the Annual Meeting in person, you
may revoke your proxy by either giving notice of revocation to the inspectors of
election at the Annual Meeting or by voting at the Annual Meeting in person.
The only business which the Board of Directors intends to present or knows
will be presented is the election of four directors and the ratification of
selection of independent accountants. The proxy confers discretionary authority
upon the persons named therein, or their substitutes, with respect to any other
business which may properly come before the meeting.
The Company, as of September 4, 1996, the record date for the Annual
Meeting, had issued and outstanding 76,503,701 shares of Common Stock, without
par value. Each share is entitled to one vote.
Under Michigan law and the Company's By-Laws, the necessary quorum for the
Annual Meeting is the presence, in person or by proxy, of a majority of the
shares issued and outstanding as of the record date. If a quorum is present at
the Annual Meeting, the election of the four nominees for directors, the
ratification of selection of independent accountants and any other business
which may properly come before the meeting must be approved by the affirmative
vote of the majority of shares present in person or by proxy and entitled to
vote on the matter. Abstention from voting will have the practical effect of
voting against any of the matters since it is one less vote for approval. Broker
nonvotes on one or more matters will have no impact on such matters since they
are not considered "shares present" for voting purposes.
This proxy statement and the proxy were first mailed to shareholders on or
about September 30, 1996.
ELECTION OF DIRECTORS
The Board of Directors will consist of nine members, divided into three
classes. At this Annual Meeting, one nominee is to be elected to serve for a
term of two years and three nominees are to be elected to serve for a term of
three years and in each case until their respective successors are elected and
qualified. The remaining five directors will continue to serve as set forth
below, with three directors having terms expiring in November 1997 and two
directors having terms expiring in November 1998. Three of the four nominees are
currently directors of the Company. The nominees have agreed to serve if
elected. The proxy holders will vote the
1
<PAGE> 4
proxies received by them for the four nominees, or in the event of a contingency
not presently foreseen, for different persons as substitutes therefor.
The following sets forth with respect to each nominee and each director
continuing to serve, their name, age, principal occupation for the past five
years, the year in which they first became a director of the Company and
directorships in other business corporations.
NOMINEE FOR ELECTION TO THE BOARD OF DIRECTORS
FOR A TWO YEAR TERM EXPIRING NOVEMBER 1998
Larry D. Fredricks, 59, is the nominee for director of the Company to fill
the position being added to the Board on October 30, 1996. Mr. Fredricks has
been Executive Vice President and Chief Financial Officer of First Michigan Bank
Corp., a multi-bank holding company located in Holland, Michigan since January
1995 and also served as Senior Vice President and Chief Financial Officer from
May 1991 to January 1995.
The Board of Directors recommends a vote FOR the election of Mr. Fredricks.
Proxies solicited by the Board of Directors will be so voted unless shareholders
specify otherwise in their proxies.
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
FOR A THREE YEAR TERM EXPIRING NOVEMBER 1999
John W. Spoelhof, 56, was elected a director of the Company in April 1995.
Mr. Spoelhof has been President of Prince Corporation, an automotive component
manufacturer, since 1980 and employed by Prince Corporation in various
capacities since 1969. Mr. Spoelhof is a director of First Michigan National
Bank Corporation.
Mary Alice Taylor, 46, was elected a director of the Company in April 1995.
Ms. Taylor, employed by Federal Express Corporation in various capacities since
1980, has been a Senior Vice President since 1991 and was named Senior Vice
President-Americas and Caribbean in 1994. Ms. Taylor is a director of Autodesk,
Inc., a supplier of design software and multimedia tools, and Allstate Insurance
Company.
Peter R. Formanek, 53, was elected a director of the Company in November
1993. Mr. Formanek is a private investor. Mr. Formanek was Co-founder and
President of AutoZone, Inc., a specialty retailer of automotive parts and
accessories, from 1986 to his retirement in 1994. Mr. Formanek is a director of
Borders Group, Inc., a retailer of books and music.
The Board of Directors recommends a vote FOR the election of the
aforementioned nominees. Proxies solicited by the Board of Directors will be so
voted for all nominees unless shareholders specify otherwise in their proxies.
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING
IN OFFICE WHOSE TERMS EXPIRE NOVEMBER 1997
Richard G. Hansen, 51, was elected a director of the Company in September
1995. Mr. Hansen was President and Chief Operating Officer of the Company from
October 1991 until his retirement August 31, 1995. Mr. Hansen was Executive Vice
President and Chief Operating Officer from August 1989 to October 1991. Prior to
August 1989, he served in various executive capacities with the Company since
1979.
William C. Swaney, 58, was elected a director of the Company in January
1981. Mr. Swaney served as Chairman of the Board of Directors from January 1981
to October 1991 and President of the Company from 1978 to January 1983. Mr.
Swaney was appointed Chairman Emeritus in October 1991. Prior to 1978, Mr.
Swaney was employed by the Company in various executive capacities since 1964.
2
<PAGE> 5
F. Folsom Bell, 54, was a director of the Company from January 1981 to
February 1986 and was re-elected a director in June 1988. He has been the
Chairman since 1987 and President and Chief Executive Officer since July 1989 of
Thermo-Serv, Inc., a manufacturer of plastic insulated beverageware. Mr. Bell is
a director of Beverage America, Inc. and Styrochem International, Inc.
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING
IN OFFICE WHOSE TERMS EXPIRE NOVEMBER 1998
Michael J. Jandernoa, 46, was elected a director of the Company in January
1981, Chief Executive Officer of the Company in February 1986, Chairman of the
Board of Directors in October 1991 and President of the Company in September
1995. Mr. Jandernoa also served as President of the Company from January 1983 to
October 1991. Prior to January 1983, Mr. Jandernoa served in various executive
capacities with the Company since 1979. Mr. Jandernoa is a director of Old Kent
Financial Corporation and also serves on the Board of Advisors of the National
Association of Chain Drug Stores.
L.R. Jalenak, Jr., 66, was elected a director of the Company in June 1988.
Mr. Jalenak was Chairman of the Board of Cleo Inc., a manufacturer of gift wrap,
greeting cards and accessory items, from 1990 until his retirement on December
31, 1993 and was President of Cleo Inc. from 1977 to 1990. Mr. Jalenak is a
director of Lufkin Industries, Inc., a manufacturer of oil field pumping
equipment, marine propulsion gear and industrial hardware, a director of
Dyersburg Corporation, a manufacturer of fabric for the apparel industry, and a
trustee of First Funds.
BOARD OF DIRECTORS AND ITS COMMITTEES
There were five regular meetings of the Board of Directors of the Company
in fiscal year 1996 and one telephonic meeting. During fiscal year 1996, each
director, except Mr. Formanek, attended at least 75% of the aggregate of the
total number of Board meetings and meetings of committees of which he or she was
a member, held while he or she was a director and/or committee member. Due to
health and personal matters, Mr. Formanek attended 40% of the regular Board of
Directors meetings. The Board of Directors has established three standing
committees, the Audit Committee, the Nominating Committee and the Compensation
Committee, which deal with certain specific areas of the Board's responsibility.
The Audit Committee, which held two meetings in fiscal year 1996,
recommends the firm to be appointed as independent accountants to audit the
Company's financial statements, discusses the scope and results of the audit
with the independent accountants, reviews with management and the independent
accountants the Company's interim and year-end operating results, considers the
adequacy of the internal accounting controls and audit procedures of the Company
and reviews the non-audit services to be performed by the independent
accountants. The members of the Audit Committee are Messrs. Hansen, Formanek,
Jalenak and Ms. Taylor.
The Nominating Committee, which held one meeting in fiscal year 1996,
develops general criteria regarding the qualifications and selection of Board
members and recommends candidates for election to the Board of Directors. The
Nominating Committee will consider persons recommended by shareholders for
inclusion as nominees for election to the Board of Directors, if names of such
persons are submitted in writing to the Secretary of the Company. All
recommendations should be accompanied by a complete statement of such person's
qualifications and an indication of the person's willingness to serve. The
members of the Nominating Committee are Messrs. Jalenak, Bell and Swaney.
The Compensation Committee, which held two meetings in fiscal year 1996,
reviews and recommends the compensation arrangements for top management of the
Company, including salaries, bonuses and grants of options to purchase shares
under the Company's Employee Incentive Stock Option Plan. The members of the
Compensation Committee are Messrs. Bell, Formanek, Spoelhof and Swaney.
3
<PAGE> 6
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who beneficially own more than ten
percent of the Company's stock, to file initial reports of ownership and reports
of changes in ownership with the Securities and Exchange Commission and the
Nasdaq National Market. Executive officers, directors and greater than ten
percent beneficial owners are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to the
Company, and written representations from the Company's executive officers and
directors, the Company believes that all Section 16(a) filing requirements
applicable to its executive officers, directors and greater than ten percent
beneficial owners were complied with during fiscal year 1996.
4
<PAGE> 7
PRINCIPAL SECURITYHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of September 1, 1996, (i) by each
person who is known to the Company to own beneficially more than 5% of the
Common Stock, (ii) by each director and nominee for director, (iii) by the Chief
Executive Officer and the four next most highly compensated executive officers,
and (iv) by all directors, nominees for director and executive officers of the
Company as a group.
<TABLE>
<CAPTION>
OWNERSHIP
---------------------
DIRECTORS, EXECUTIVE OFFICERS AND 5% SHAREHOLDERS NUMBER PERCENT
- ------------------------------------------------------------------------- ---------- -------
<S> <C> <C>
5% SHAREHOLDERS
Wellington Management Company(1)......................................... 9,218,098 12.0%
Henry L. Hillman, Elsie Hilliard Hillman and
C.G. Grefenstette, Trustees(2)........................................... 4,540,660 5.9%
2000 Grant Building
Pittsburgh, PA 15219
DIRECTORS
Michael J. Jandernoa(3).................................................. 9,526,507 12.5%
c/o Perrigo Company
117 Water Street
Allegan, Michigan 49010
William C. Swaney(4)..................................................... 1,328,784 1.7%
F. Folsom Bell(5)........................................................ 14,468 *
L.R. Jalenak, Jr.(9)..................................................... 58,668 *
Peter R. Formanek(5)..................................................... 2,668 *
John W. Spoelhof(6)...................................................... 27,900 *
Mary Alice Taylor........................................................ -- --
Richard G. Hansen(7)..................................................... 1,387,028 1.8%
NAMED EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Mark P. Olesnavage(8).................................................... 454,106 *
Steve M. Neil(5)......................................................... 12,135 *
James H. Bloem(10)....................................................... 9,108 *
Craig G. Hammond......................................................... -- --
All directors and executive officers as a group (12
persons)(3)(4)(5)(6)(7)(8)(9)(10)...................................... 12,821,372 16.8%
</TABLE>
- ---------------
* Less than 1%
(1) Wellington Management Company, in its capacity as investment advisor, may
be deemed the beneficial owner of 7,769,188 shares which are owned by
numerous investment advisory clients. None of these clients individually
owns more than 5% of the Company's common stock.
(2) Includes 3,266,654 shares owned by a trust for the benefit of Henry L.
Hillman (the "HLH Trust") and 1,274,006 shares owned by Juliet Challenger,
Inc. ("JCI"). JCI is a Delaware private investment company owned by The
Hillman Company, a Pittsburgh, Pennsylvania firm engaged in diversified
investments and operations, which is controlled by the HLH Trust. The
trustees of the HLH Trust are Henry L. Hillman, Elsie Hilliard Hillman and
C.G. Grefenstette (the "HLH Trustees"). The HLH Trustees share voting power
and dispositive power of the stock of The Hillman Company. Does not include
an aggregate of 1,741,672 shares owned by four trusts for the benefit of
members of the Hillman family, of which Mr. Grefenstette is a trustee. Mr.
Grefenstette shares voting and investment power with respect to such shares
and may be deemed a beneficial owner of such shares.
(3) Includes 7,251,507 shares owned by the Michael J. Jandernoa Trust, of which
Mr. Jandernoa is the trustee. Includes 2,275,000 shares owned by M.S.J.
Investment Limited Partnership, a Michigan limited partnership ("MJLP").
Mr. Jandernoa is the sole general partner of MJLP, and 26% of MJLP is held
by each of three trusts established for the benefit of Mr. Jandernoa's
three children.
5
<PAGE> 8
(4) Includes 929,876 shares owned by Swaney Associates, a Michigan
Co-Partnership in which Mr. Swaney owns all but two shares of the initial
capital contribution. Includes 259,279 shares owned by the Nancy C. Swaney
Annuity Trust, in which Mrs. Swaney has a reversionary interest, and
139,629 shares owned by the William C. Swaney Annuity Trust, in which Mr.
Swaney has a reversionary interest.
(5) All shares are subject to options exercisable within 60 days following the
date hereof.
(6) Includes 2,900 shares owned by trusts for Mr. Spoelhof's grandchildren, for
which Mr. Spoelhof is the trustee, and in which Mr. Spoelhof disclaims
beneficial ownership.
(7) Includes 320,000 shares owned by the Sandra E. Hansen Trust, a trust for
the benefit of Mr. Hansen's wife, of which Mr. Hansen is the trustee,
931,178 shares owned by the Richard G. Hansen Trust, of which Mr. Hansen is
the trustee and 135,850 shares owned by trusts for the benefit of Mr.
Hansen's children and grandchildren, of which Mr. Hansen is the trustee.
(8) Includes 76,996 shares subject to options exercisable within 60 days
following the date hereof. Includes 56,472 shares owned by trusts for the
benefit of Mr. Olesnavage's children, of which Mr. Olesnavage is the
trustee.
(9) Includes 2,668 shares subject to options exercisable within 60 days
following the date hereof.
(10) Includes 8,334 shares subject to options exercisable within 60 days
following the date hereof.
COMPENSATION OF DIRECTORS
The Company's directors who are not employees of the Company receive a
retainer fee of $12,000 per year for Board membership and a fee of $1,000 for
attendance at each Board, shareholder or standing committee meeting or $500 for
participation in either a Board or a Committee meeting held by telephone
conference call. All directors are reimbursed for expenses incurred in
connection with attending Board and Committee meetings.
The Company's directors who are not employees of the Company are eligible
to participate in the Company's Non-Qualified Stock Option Plan for Directors
(the "Directors' Plan"). The Directors' Plan is administered by the Board of
Directors of the Company and provides for issuance of options covering up to
168,000 shares of Company Common Stock at a purchase price per share at least
equal to one hundred percent of the fair market value of a share of Common Stock
on the date of grant as determined by the Board of Directors. As of June 30,
1996, options to purchase 138,670 shares of Common Stock had been granted under
the Directors' Plan and options to purchase 75,800 shares of Common Stock were
outstanding under the Directors' Plan, of which there were 11,800 vested shares.
Peter R. Formanek, a non-employee director of the Company, was appointed an
independent director pursuant to the Michigan Business Corporation Act, to
investigate and recommend to the Board of Directors what action, if any, should
be taken regarding a possible derivative action against certain current and
former officers and directors of the Company. Mr. Formanek received a retainer
of $9,000 in fiscal year 1995 and was compensated at the rate of $250 per hour
for services rendered. During fiscal year 1996, Mr. Formanek earned $7,750 for
such services.
COMPENSATION OF EXECUTIVE OFFICERS
REPORT OF COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors reviews and recommends
the compensation arrangements for senior management of the Company (including
the executive officers named in the Summary Compensation Table below), with
respect to salaries, bonuses and grants of options to purchase shares of Common
Stock under the Company's Employee Incentive Stock Option Plan.
6
<PAGE> 9
OBJECTIVES AND POLICIES
The Compensation Committee strives to:
- motivate executive officers to create added value for the Company's
shareholders through compensation incentives that are tied to the
Company's operating and stock market performance;
- reward executive officers for their individual performance and the
performance of the Company;
- provide compensation and benefits at levels which enable the Company to
attract and retain high-quality executives; and
- align the interests of the Company's officers and directors with the
interests of the Company's shareholders through potential stock
ownership.
The Company has designed its management compensation policy to provide a
compensation package for executive officers which is generally competitive with
the compensation of executive officers of comparable manufacturing companies as
compiled by Wyatt Data Services with respect to salary and bonus, with more
emphasis on bonus. The Wyatt survey is comprised of non-durable goods
manufacturing companies, including some of those reflected in the Dow Jones
Pharmaceutical Index on the Performance Graph set forth on page 12. The
incentive portions of the package are intended to encourage and reward
outstanding individual and Company performance. Compensation for executive
officers of the Company consists of a base salary, an annual bonus, if one is
warranted under the criteria of the Management Incentive Bonus Plan ("Bonus
Plan"), any earned bonus payments under one of the Company's productivity
sharing plans (the "Improshare(R) Plan" or the "Excel Plan"), annual
contributions to the Company's Profit Sharing Retirement Plan and Trust, a
defined contribution profit sharing plan for certain Company employees (the
"Profit Sharing Plan"), Company contributions under the Company's 401(k) plan
and, for certain executive officers, the grant of stock options under the
Company's Employee Incentive Stock Option Plan. It is the objective of the
Compensation Committee that executive officers' salaries and bonuses approximate
the median as reflected in the Wyatt survey.
CASH-BASED COMPENSATION
Base Salary and Bonus -- The Compensation Committee employs a formal
approach for measuring and evaluating executive officer performance. Executive
officer base salary and individual bonus awards under the Bonus Plan are
determined based on the following factors (ranked in order of importance): (i)
Company-wide performance measured by attainment of specific strategic objectives
and quantitative measures, (ii) individual performance of each executive
officer, (iii) compensation levels at comparable manufacturing companies, and
(iv) historical cash and equity compensation levels. The primary quantitative
measure utilized is return on assets; however, earnings per share and revenue
growth are also considered. Qualitative assessments include the quality and
measured progress of the Company's marketing and manufacturing operations and
the success of strategic actions such as acquisitions of lines of business or
introduction of new products.
Under the Improshare(R) Plan and the Excel Plan, productivity improvements
are shared equally between the Company and the participants. These Plans cover
all employees of the Company and its subsidiaries and are calculated based upon
the ratio of total labor value of products produced to total hours worked by all
participants. Improshare(R) and Excel Plan payments are computed as a percentage
of base salary. The largest amount paid to an executive officer in fiscal year
1996 under the Improshare(R) Plan or the Excel Plan was $23,953 awarded to Mr.
Jandernoa. For individuals named in the Summary Compensation Table for fiscal
year 1996, their base salary and payments under the Improshare(R) Plan or Excel
Plan compose substantially all of their compensation.
The annual Company contribution under the Profit Sharing Plan is determined
at the discretion of the Board of Directors and is shared by all employees of
the Company and its subsidiaries with one year of service, other than employees
of Perrigo Company of Tennessee, Inc. and Perrigo Company of Missouri, Inc. who
participate in separate investment plans. The contribution to each individual
under the Profit Sharing Plan is based on the ratio of total individual
compensation (limited to a maximum of $150,000 for fiscal year 1996) to
7
<PAGE> 10
total compensation of all participants for the same plan year. For fiscal year
1996, the Company made Profit Sharing Plan contributions of $7,560 on behalf of
Messrs. Jandernoa, Olesnavage, Peabody and Neil. Messrs. Bloem and Hammond were
not eligible for participation in the Profit Sharing Plan in 1996.
The Company contribution under the Company's 401(k) plan was $400 for
Messrs. Jandernoa, Olesnavage and Neil.
STOCK OPTION GRANTS
Messrs. Olesnavage, Bloem, Hammond and Neil were granted stock options to
purchase 15,000, 50,000, 50,000 and 10,000 shares of Common Stock, respectively,
during fiscal year 1996. Stock option grants are intended to provide broad and
deep incentives throughout the Company aligned with shareholder value.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
As a principal shareholder of the Company prior to its sale of shares of
Common Stock to the public in December 1991, Mr. Jandernoa retains a substantial
share ownership in the Company, which aligns his interests with those of the
Company's shareholders. The Compensation Committee believes that Mr. Jandernoa's
compensation as Chief Executive Officer is below the compensation of the chief
executive officers of comparable companies. The same criteria described above
that are used to establish executive officer compensation are employed in
determining Mr. Jandernoa's base salary and annual bonus.
In the view of the Compensation Committee, the Company's results in fiscal
year 1996 were above average as measured by return on assets and growth in net
sales, and below average as measured by growth in net income. The Company's
return on assets of 7.4% compares to 3.9% for calendar year 1995 Fortune 500
companies and 4.7% for calendar year 1995 Standard and Poor's 500 companies. The
Company's sales growth was adversely affected by the softness of the total
analgesic market. Cost increases in material components also had a negative
impact on net income. Additionally, costs associated with unusual litigation had
an adverse impact on net income growth. While these results were below the
Company's trends over the last few years, the Compensation Committee believes
that the proactive steps taken by the Company's senior management relating to
the reorganization efforts and their continuing direction of the employee
involvement programs reflect an ongoing high performance level for senior
management. However, the Company did not achieve its primary performance targets
for fiscal year 1996 and thus the awards granted to executive officers under the
Bonus Plan were substantially less than targeted amounts.
The Compensation Committee believes that the performance of the Company's
Common Stock during fiscal year 1996 was adversely affected primarily by
below-average growth in net income, slower net sales growth than historically
attained and the negative impact of the class action litigation. The performance
of the Company's Common Stock is illustrated by the performance graph, on page
12, which compares total shareholder return for the Company with the returns of
the NASDAQ Composite Index and the Dow Jones Pharmaceutical Index.
8
<PAGE> 11
SUMMARY
Executive compensation at the Company is taken seriously by the
Compensation Committee, the Board of Directors and senior management. After
reviewing the Company's compensation programs, the Compensation Committee has
concluded that the amounts paid to executive officers, including stock options,
in fiscal year 1996 appropriately reflect individual performance, are linked to
the financial, operational and market results of the Company and are generally
competitive with amounts paid to executive officers of comparable companies.
COMPENSATION COMMITTEE
F. Folsom Bell
Peter R. Formanek
William C. Swaney
John W. Spoelhof
9
<PAGE> 12
SUMMARY COMPENSATION
The following table contains information regarding the individual
compensation of the Chief Executive Officer and the five other most highly
compensated executive officers of the Company in fiscal years 1996, 1995 and
1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
-------------------------
ANNUAL COMPENSATION
-------------------------------------- AWARDS
OTHER ------- ALL
NAME AND FISCAL ANNUAL STOCK OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) OPTIONS COMPENSATION(2)
- ------------------------------------- ------ -------- -------- --------------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Michael J. Jandernoa................. 1996 $343,100 $ 45,021 $ -- 0 $11,007
Chairman of the Board, 1995 302,500 29,316 -- 0 7,963
Chief Executive Officer and
President 1994 297,750 277,097 -- 0 13,170
Mark P. Olesnavage................... 1996 243,433 32,700 -- 15,000 7,960
President--Customer Business 1995 218,817 20,185 -- 9,000 7,963
Development 1994 176,067 182,584 -- 0 11,940
Steve M. Neil(4)..................... 1996 139,608 32,700 -- 10,000 7,960
Vice President--Finance, 1995 126,083 24,806 -- 26,400 7,963
Chief Financial Officer and
Treasurer
James H. Bloem(5).................... 1996 155,964 13,230 -- 50,000 --
Executive Vice President
Craig G. Hammond(5).................. 1996 160,064 13,074 -- 50,000 --
Executive Vice President and
Chief Operations Officer
Carl M. Peabody(3)(4)(6)............. 1996 270,400 20,415 -- 15,000 7,560
Executive Vice President and 1995 266,067 17,909 40,474 49,000 --
President of Perrigo International
Inc., a subsidiary of the Company
</TABLE>
- ---------------
(1) Except for Mr. Peabody as described in footnote (3) below none of the named
executive officers received perquisites or other personal benefits in excess
of the lesser of $50,000 or 10 percent of the total of his annual salary and
bonus as reported above.
(2) The amounts include contributions under the Company's 401(k) plans and the
Profit Sharing Plan, and the dollar value benefit of premium payments under
split dollar life insurance policies for which the Company will be
reimbursed for premiums paid.
(3) In conjunction with his relocation from Austria, the Company reimbursed Mr.
Peabody $40,474 for relocation expenses. Such compensation has been included
under Other Annual Compensation.
(4) Messrs. Peabody and Neil were appointed executive officers during fiscal
year 1995. Accordingly, only fiscal year 1996 and 1995 compensation data
have been included in the table.
(5) Mr. Bloem and Mr. Hammond were appointed executive officers during fiscal
year 1996. Accordingly, only fiscal year 1996 compensation data have been
included in the table.
(6) Mr. Peabody resigned as an officer of the Company on July 16, 1996. In
accordance with his separation agreement, Mr. Peabody will continue in the
employment of the Company until January 16, 1997 (the "Employment Term").
His employment will be extended until July 16, 1997 if Mr. Peabody does not
obtain employment or is not engaged as a consultant by another entity prior
to that date. Mr. Peabody will be compensated at his base salary rate as of
July 16, 1996 during the Employment Term and any extension thereof.
10
<PAGE> 13
STOCK OPTIONS
The following table shows grants of options to the named executive officers
of the Company in fiscal year 1996. The options were granted under the Company's
1988 Employee Incentive Stock Option Plan. Pursuant to Securities and Exchange
Commission rules, the table also shows the value of the options granted at the
end of the option terms (ten years) if the stock price were to appreciate
annually by 5% and 10%, respectively. There is no assurance that the stock price
will appreciate at the rates shown in the table. The table also indicates that
if the stock price does not appreciate, there will be no increase in the
potential realizable value of the options granted.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
-------------------------------------------------- VALUE AT
NUMBER OF PERCENT OF ASSUMED ANNUAL RATES OF
SECURITIES TOTAL OPTIONS STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM
OPTIONS EMPLOYEES IN PRICE EXPIRATION -------------------------
NAME GRANTED FISCAL YEAR ($/SH) DATE 0% 5% 10%
- ------------------------------ ---------- ------------- -------- ---------- --- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Mark P. Olesnavage............ 15,000 3.0% $12.25 08/15/05 $ 0 $115,500 $292,800
Carl M. Peabody............... 15,000 3.0 12.25 08/15/05 0 115,500 292,800
Steve M. Neil................. 10,000 2.0 12.25 08/15/05 0 77,000 195,200
James H. Bloem................ 50,000 10.0 12.25 08/18/05 0 385,000 976,000
Craig G. Hammond.............. 50,000 10.0 12.31 11/02/05 0 387,000 980,500
</TABLE>
The following table provides information concerning the value of stock
options held by each named executive officer on June 30, 1996.
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES JUNE 30, 1996 JUNE 30, 1996
ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE REALIZED(1) UNEXERCISABLE UNEXERCISABLE(2)
- --------------------------------- ----------- ----------- -------------- ----------------
<S> <C> <C> <C> <C>
Michael J. Jandernoa............. 0 $ -- 0/0 $ --/$ --
Mark P. Olesnavage............... 4,000 46,143 62,330/70,666 623,405/440,577
Carl M. Peabody.................. 0 -- 6,667/57,333 0/0
Steve M. Neil.................... 0 -- 6,668/54,732 0/1,675
James H. Bloem................... 0 -- 0/50,000 0/0
Craig G. Hammond................. 0 -- 0/50,000 0/0
</TABLE>
- ---------------
(1) Represents the difference between the closing price of the Company's Common
Stock on the date of exercise and the exercise price of the option.
(2) Represents the difference between the closing price of the Company's Common
Stock on June 30, 1996 and the exercise price of the option.
11
<PAGE> 14
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on the
Common Stock of the Company from December 17, 1991 (the date the Common Stock
was first offered to the public at an initial public offering price of $8.00 per
share) through June 30, 1996 with the cumulative total return on the NASDAQ
Composite Index and the Dow Jones Pharmaceutical Index from November 30, 1991
through June 30, 1996 (assuming the investment of $100 in the Company's Common
Stock and reinvestment of all dividends). The Company did not pay any dividends
during this period. The NASDAQ Composite Index and the Dow Jones Pharmaceutical
Index are published monthly. Correspondingly, the November 30, 1991 index
amounts have been used as the initial amounts for the graphic comparison. The
following companies comprise the Dow Jones Pharmaceutical Index: American Home
Products, Bristol-Myers Squibb, Johnson & Johnson, Lily (Eli) & Co., Merck &
Co., Pfizer Inc., Schering-Plough, Pharmacia & Upjohn Co. and Warner-Lambert.
COMPARISON OF 54 MONTH CUMULATIVE TOTAL RETURN
AMONG PERRIGO COMPANY, THE NASDAQ STOCK MARKET -- U.S. INDEX
AND THE DOW JONES PHARMACEUTICAL INDEX
<TABLE>
<CAPTION>
DOW JONES
MEASUREMENT PERIOD PERRIGO COM- NASDAQ STOCK PHARMACEUTI-
(FISCAL YEAR COVERED) PANY MARKET-U.S. CAL
<S> <C> <C> <C>
12/91 100.00 100.00 100.00
6/92 200.00 104.00 90.00
6/93 273.00 131.00 80.00
6/94 172.00 133.00 79.00
6/95 138.00 177.00 119.00
6/96 141.00 277.00 175.00
</TABLE>
The comparisons in this table are required by the Securities and Exchange
Commission and are not intended to forecast or be indicative of possible future
performance of the Company's Common Stock.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee during fiscal year 1996 were
Messrs. F. Folsom Bell, Peter R. Formanek, John W. Spoelhof and William C.
Swaney. Mr. Swaney, Chairman Emeritus and a non-employee director, was formerly
Chairman of the Board and President of the Company. The other directors on the
Compensation Committee are outside directors and have never been officers or
employees of the Company. Mr. Formanek was appointed an independent director
pursuant to the Michigan Business Corporation Act to investigate a possible
derivative action against certain current and former officers of the Company and
earned $7,750 during fiscal year 1996 for services rendered in that capacity.
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
On the recommendation of the Audit Committee, the Board of Directors has
selected BDO Seidman LLP as the independent accountants to examine the financial
statements of the Company and its subsidiaries for the fiscal year 1997. BDO
Seidman LLP has been employed to perform this function for the Company since
1988.
12
<PAGE> 15
One or more representatives of BDO Seidman LLP will be present at the
Annual Meeting and will have the opportunity to make a statement and to respond
to appropriate questions.
Although this appointment is not required to be submitted to a vote of
shareholders, the Board believes it is appropriate as a matter of policy to
request that the shareholders ratify the appointment. If the shareholders should
not ratify the appointment, the Audit Committee will investigate the reasons for
the shareholder rejection and the Board will reconsider the appointment. A
majority of the votes cast is required to ratify the appointment of the
independent accountants.
The Board of Directors recommends a vote FOR the proposal to ratify the
selection of BDO Seidman LLP. Proxies solicited by the Board of Directors will
be so voted unless shareholders specify otherwise in their proxies.
1997 SHAREHOLDER PROPOSALS AND NOMINATING PROCEDURES
Proposals of shareholders intended for inclusion in the Company's proxy
statement relating to the 1997 Annual Meeting must be received at the Company's
Principal Executive Offices (please address to the attention of John R. Nichols,
Secretary) not later than June 2, 1997. Any such proposal must comply with Rule
14a-8 of Regulation 14A of the proxy rules of the Securities and Exchange
Commission.
The By-Laws of the Company require that nominations for a director to be
elected at the 1997 Annual Meeting, other than those made by the Board, and any
other business to be properly brought before an annual meeting be submitted to
the Secretary of the Company not later than August 21, 1997. Any shareholder may
obtain a copy of the applicable By-Law from the Secretary of the Company upon
written request.
GENERAL
The cost of preparing, assembling and mailing this proxy statement and
accompanying papers will be borne by the Company. Solicitations will be made by
mail but in some cases may also be made by telephone or personal call by
officers, directors or regular employees of the Company, who will not be
specially compensated for such solicitation. The entire cost of such
solicitation will be borne by the Company, which will include the cost of
supplying the necessary additional copies of the solicitation materials for
beneficial owners of shares held of record by brokers, dealers, banks and voting
trustees, and their nominees and, upon request, the reasonable expenses of such
record holders for completing the mailing of the solicitation material to those
beneficial owners.
By Order of the Board of Directors
JOHN R. NICHOLS
Secretary
Allegan, Michigan
September 30, 1996
13
<PAGE> 16
perrigo logo
<PAGE> 17
PERRIGO COMPANY
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS OCTOBER 30, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. The undersigned
hereby appoints Michael J. Jandernoa, Steve M. Neil and John R. Nichols, as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent, and to vote as designated below, all the shares of Common
Stock of Perrigo Company held of record by the undersigned on September 4,
1996, at the Annual Meeting of Shareholders to be held on October 30, 1996, or
any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
This Proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2 AND AS OTHERWISE DETERMINED BY THE PROXYHOLDERS
IN THEIR DISCRETION.
(continued, and to be signed, on other side)
<PAGE> 18
[X] PLEASE MARK VOTES AS
IN THIS EXAMPLE
1.) Election of Directors With- For All
For hold Except
NOMINEES: [ ] [ ] [ ]
LARRY D. FREDRICKS, JOHN W. SPOELHOF, MARY ALICE TAYLOR AND
PETER R. FORMANEK
If you do not wish your shares voted "For" a particular nominee, mark
the "For All Except" box and strike a line through that nominee(s)
name. Your shares shall be voted for the remaining nominee(s).
For Against Abstain
2.) Ratification of Selection of BDO Seidman LLP [ ] [ ] [ ]
3.) In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Mark box at right if comments or address change [ ]
have been noted on the reverse side of this card.
Please be sure to sign and date this Proxy. Date_______________
___________________________________________________________________
Shareholder sign here----------------------------Co-owner sign here
Please sign exactly as name appears to the left. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
