PERRIGO CO, DEF 14A, 1997-09-30

PERRIGO CO
DEF 14A, 1997-09-30
PHARMACEUTICAL PREPARATIONS

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<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))

[ ] 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] No Fee Required.

[ ] $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:

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(5) Total fee paid:

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[ ] Fee paid previously with preliminary materials.

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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.

(1) Amount previously paid:

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(2) Form, schedule or registration statement no.:

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(3) Filing party:

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(4) Date filed:

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<PAGE> 2

PERRIGO COMPANY
117 WATER STREET ALLEGAN, MICHIGAN 49010
TELEPHONE (616) 673-8451

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD NOVEMBER 6, 1997

To the Shareholders:

You are hereby notified that the Annual Meeting of Shareholders of Perrigo
Company will be held at the Griswold Auditorium, Allegan, Michigan, on Thursday,
November 6, 1997 at 10:00 A.M. (Eastern Standard Time), for the purpose of
considering and taking action with respect to the following matters:

1. The election of three directors of the Company;

2. The approval of an amendment to the Company's Employee Incentive Stock
Option Plan, adopted by the Board of Directors, to increase the number of shares
of Common Stock that may be issued pursuant to the Plan from 9,420,000 to
12,420,000;

3. The approval of an amendment to the Company's Non-Qualified Stock Option
Plan for Directors, adopted by the Board of Directors, to increase the number of
shares of Common Stock that may be issued pursuant to the Directors' Plan from
168,000 to 268,000;

4. The ratification of selection of independent accountants; and

5. Such other business as may properly come before the meeting.

The Board of Directors has fixed the close of business on September 8, 1997
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 1997 Annual Report to Shareholders accompanies this
notice.

By Order of the Board of Directors

JOHN R. NICHOLS
Secretary

Allegan, Michigan
September 30, 1997

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 NOVEMBER 6, 1997

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 Thursday, November 6, 1997.

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 three directors, the approval of amendments
increasing the number of shares reserved under the Employee Incentive Stock
Option Plan and the Non-Qualified Stock Option Plan for 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 8, 1997, the record date for the Annual
Meeting, had issued and outstanding 76,158,995 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 three nominees for directors, the
approval of the increase in shares reserved under the Company's two stock option
plans and 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, 1997.

ELECTION OF DIRECTORS

The Board of Directors consists of nine members, divided into three
classes. At this Annual Meeting, 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 six directors will continue to serve as set
forth below, with three directors having terms expiring in November 1998 and
three directors having terms expiring in

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November 1999. Two of the three nominees are currently directors of the Company.
The nominees have agreed to serve if elected. The proxy holders will vote the
proxies received by them for the three 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.

NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
FOR A THREE YEAR TERM EXPIRING NOVEMBER 2000

Richard G. Hansen, 52, was appointed 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.

F. Folsom Bell, 55, 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-Serve, Inc., a manufacturer and importer of beverageware and tableware.
Mr. Bell is a director of Beverage America, Inc. and Styrochem International,
Inc.

Christopher J. Coughlin, 45, has been President of Nabisco International
and Executive Vice President of Nabisco Holdings and Nabisco since February
1997. Previously he was Executive Vice President and Chief Financial Officer of
Nabisco Holdings and Nabisco from April 1996 to February 1997. Prior to that,
Mr. Coughlin was a consultant from 1995 to 1996 and served as Chief Financial
Officer and a member of the Board of Directors of Sterling Winthrop, Inc. (a
subsidiary of Eastman Kodak Company) from 1992 through 1994.

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 1998

Larry D. Fredricks, 60, was elected a director of the Company in October
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.

Michael J. Jandernoa, 47, 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., 67, 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.

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MEMBERS OF THE BOARD OF DIRECTORS CONTINUING
IN OFFICE WHOSE TERMS EXPIRE NOVEMBER 1999

John W. Spoelhof, 57, was appointed a director of the Company in April
1995. Mr. Spoelhof has been Chairman of the Board of Prince Corporation, an
automotive component manufacturer, since 1996 and employed by Prince Corporation
in various capacities since 1969. Mr. Spoelhof is a director of First Michigan
National Bank Corporation.

Mary Alice Taylor, 47, was appointed a director of the Company in April
1995. Ms. Taylor has served as Executive Vice President, Worldwide Operations
and Technology of Citicorp since January 1997. Previously Ms. Taylor served
Federal Express Corporation in various capacities from 1985-1996, and most
recently as Senior Vice President. Ms. Taylor is a director of Autodesk, Inc., a
supplier of design software and multimedia tools, and Allstate Insurance
Company.

Peter R. Formanek, 54, 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.

BOARD OF DIRECTORS AND ITS COMMITTEES

There were five regular meetings of the Board of Directors of the Company
in fiscal year 1997 and two telephonic meetings. During fiscal year 1997, each
director 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, except for Mr. Spoelhof, who
attended five out of seven Board meetings and two out of four Compensation
Committee 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 three meetings in fiscal year 1997,
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 accounts, 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. Formanek, Hansen,
Jalenak and Ms. Taylor.

The Nominating Committee, which held two meetings in fiscal year 1997,
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. Bell, Jalenak and Swaney.

The Compensation Committee, which held four meetings in fiscal year 1997,
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.

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

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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, the 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 1997, except for the
late filing by Larry D. Fredricks of his initial Section 16(a) filing on Form 3.

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PRINCIPAL SECURITYHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of September 8, 1997, (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)............................ 10,710,390 14.1%
Ohio-State Teachers Retirement System....................... 3,900,000 5.1%
DIRECTORS AND NOMINEE
Michael J. Jandernoa(2)..................................... 9,537,341 12.5%
c/o Perrigo Company
117 Water Street
Allegan, Michigan 49010
F. Folsom Bell(3)........................................... 17,135 *
Christopher J. Coughlin..................................... -- --
Peter R. Formanek(3)........................................ 5,335 *
Larry D. Fredricks.......................................... -- --
Richard G. Hansen(4)........................................ 1,378,028 1.8%
L. R. Jalenak, Jr.(5)....................................... 61,335 *
John W. Spoelhof(6)......................................... 30,567 *
William C. Swaney(7)........................................ 1,328,784 1.7%
Mary Alice Taylor........................................... 2,667 *
NAMED EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Mark P. Olesnavage(8)....................................... 504,106 *
Craig G. Hammond(9)......................................... 18,424 *
James H. Bloem(9)........................................... 28,518 *
Steve M. Neil(10)........................................... 35,480 *
All directors and executive officers as a group
(13 persons)(2)(3)(4)(5)(6)(7)(8)(9)(10).................. 12,947,720 17.0%
</TABLE>

- ---------------
* Less than 1%

(1) Wellington Management Company, in its capacity as investment advisor, may
be deemed the beneficial owner of 10,710,390 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 6,192,781 shares owned by the Michael J. Jandernoa Trust, of which
Mr. Jandernoa is the trustee. Includes 2,275,000 shares owned by the 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. Includes 476,190 shares owned by the Michael J. Jandernoa
Grantor Trust Two of which Mr. Jandernoa is trustee and under which he has
a reversionary interest. Includes 476,190 shares owned by the Susan M.
Jandernoa Grantor Trust Two of which Mrs. Jandernoa is trustee and under
which she has a reversionary interest and 106,346 shares owned by Michael
J. Jandernoa as Trustee of the Michael J. Jandernoa Charitable Annuity Lead
Trust. Includes 10,834 shares subject to options exercisable within 60 days
following the date hereof.

(3) All shares are subject to options exercisable within 60 days following the
date hereof.

(4) 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,
415,878 shares owned by the Richard G. Hansen Trust, of

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which Mr. Hansen is the trustee, 142,150 shares owned by trusts for the
benefit of Mr. Hansen's children and grandchildren, of which Mr. Hansen is
the trustee and 500,000 shares owned by Richard G. Hansen as Trustee for
the Richard G. Hansen Five-Year Grantor Retained Annuity Trust of which he
is Trustee and in which he has a reversionary interest.

(5) Includes 5,335 shares 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. Includes 2,667 shares subject to options exercisable
within 60 days following the date hereof.

(7) Includes 1,302,624 shares owned by Swaney Associates, a Michigan
Partnership in which Mr. Swaney owns all but two shares of the initial
capital contribution. Includes 26,160 shares owned by the Nancy C. Swaney
Annuity Trust, in which Mrs. Swaney has as a reversionary interest.

(8) Includes 123,496 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) All shares consist of shares subject to options exercisable within 60 days
and shares owned through the Company's direct stock purchase program and
401(k) plan.

(10) Includes 10 shares owned by a son of Mr. Neil, for which Mr. Neil is acting
as custodian under the Uniform Gift to Minors Act. All other shares are
comprised of 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 on the date of
grant as determined by the Board of Directors. As of June 30, 1997, options to
purchase 146,670 shares of common stock had been granted under the Directors'
Plan and options to purchase 83,800 shares of Common Stock were outstanding
under the Director's Plan, of which there were 19,804 vested shares.

Larry D. Fredricks was appointed as the independent director pursuant to
the Michigan Business Corporation Act. Mr. Fredricks will be compensated at the
rate of $250 per hour for services rendered in that capacity. Peter R. Formanek
served as the independent director of the Company thru October 30, 1996 and was
compensated in that capacity at the rate of $250 per hour for services rendered.

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.

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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 11. 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
1997 under the Improshare(R) Plan or the Excel Plan was $45,615 awarded to Mr.
Jandernoa. For individuals named in the Summary Compensation Table for fiscal
year 1997, their base salary and payments under the Improshare(R) Plan or Excel
Plan and Bonus 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 retirement 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 1997) to

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total compensation of all participants for the same plan year. For fiscal year
1997, the Company made Profit Sharing Plan contributions of $7,635 on behalf of
Messrs. Jandernoa, Bloem, Hammond, Neil and Olesnavage.

The Company contribution under the Company's 401(k) plan was $400 for
Messrs. Jandernoa, Bloem, Hammond, Neil and Olesnavage.

STOCK OPTION GRANTS

Messrs. Jandernoa, Bloem, Hammond, Neil and Olesnavage were granted stock
options to purchase 65,000, 60,000, 60,000, 60,000 and 60,000 shares of Common
Stock, respectively, during fiscal year 1997. 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 1997 were above average as measured by return on assets, growth in net
sales, and growth in net income. The Company's return on assets of 8.1% compares
to 4.1% for calendar year 1996 Fortune 500 companies and 5.9% for calendar year
1996 Standard and Poor's 500 companies. The Company's sales and net income
growth met targets established for fiscal year 1997. The trends in fiscal 1997
in gross profit, operating income, net income and earnings per share were all up
from the prior year. The Compensation Committee believes this was accomplished
while senior management continue to make good progress on long-term investments
in research and development, international market development and business
process redesign.

The Compensation Committee believes that the performance of the Company's
Common Stock during fiscal year 1997 improved over the prior year, as
illustrated by the performance graph on page 11. The performance of the
Company's Common Stock was substantially improved over the last half of fiscal
1997 as the financial results improved and the stock price increased by over 35
percent.

SUMMARY

Executive compensation at the Company is carefully reviewed 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 1997 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

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SUMMARY COMPENSATION

The following table summarizes compensation received for the last three
fiscal years by the Company's Chief Executive Officer and the four other most
highly paid executive officers for the three fiscal years ended June 30, 1997.

<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------------------- -------------------------
AWARDS
OTHER -------
NAME AND FISCAL ANNUAL STOCK ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) OPTIONS COMPENSATION(2)
------------------ ------ ------ ----- --------------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Michael J. Jandernoa........ 1997 $372,100 $353,391 $-- 65,000 $ 8,035
Chairman of the Board, 1996 343,100 45,021 -- 0 11,007
Chief Executive Officer
and 1995 302,500 29,316 -- 0 7,963
President
Mark P. Olesnavage.......... 1997 266,425 255,055 -- 60,000 8,035
President -- Customer 1996 243,433 32,700 -- 15,000 7,960
Business Development 1995 218,817 20,185 -- 9,000 7,963
Craig G. Hammond(3)......... 1997 239,350 252,637 -- 60,000 8,035
Executive Vice President
and 1996 160,064 13,074 -- 50,000 --
Chief Operations Officer
James H. Bloem(3)........... 1997 198,025 115,709 -- 60,000 8,035
Executive Vice President 1996 155,964 13,230 -- 50,000 --
Steve M. Neil(4)............ 1997 168,825 122,419 -- 60,000 8,035
Vice President -- Finance, 1996 139,608 32,700 -- 10,000 7,960
Chief Financial Officer, 1995 126,083 24,806 -- 26,400 7,963
Treasurer and President of
Perrigo International, a
subsidiary of the Company
</TABLE>

- ---------------
(1) 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, the dollar value benefit of premium payments under
split dollar life insurance policies for which the Company will be
reimbursed for premiums paid.

(3) Mr. Bloem and Mr. Hammond were appointed executive officers during fiscal
year 1996. Accordingly, only fiscal year 1996 and 1997 compensation data
have been included in the table.

(4) Effective September 30, 1997, Mr. Neil resigned as an executive officer of
the Company to return to his home state of California, accepting an
executive position with another company.

9
<PAGE> 12

STOCK OPTIONS

The following table shows grants of options to the named executive officers
of the Company in fiscal year 1997. 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>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
-------------------------------------------------- -------------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED FISCAL YEAR ($/SH) DATE 0% 5% 10%
---- ---------- ------------- -------- ---------- ----- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael J. Jandernoa.......... 65,000 5.3% $9.125 08/16/06 $0 $373,013 $945,288
Mark P. Olesnavage............ 60,000 4.9 9.125 08/16/06 0 344,319 872,574
Craig G. Hammond.............. 60,000 4.9 9.125 08/16/06 0 344,319 872,574
James H. Bloem................ 60,000 4.9 9.125 08/16/06 0 344,319 872,574
Steve M. Neil................. 60,000 4.9 9.125 08/16/06 0 344,319 872,574
</TABLE>

The following table provides information concerning the value of stock
options held by each named executive officer on June 30, 1997.

FISCAL YEAR END OPTION VALUES

<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES JUNE 30, 1997 JUNE 30, 1997
ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE REALIZED(1) UNEXERCISABLE UNEXERCISABLE(2)
---- ----------- ----------- ------------- ----------------
<S> <C> <C> <C> <C>
Michael J. Jandernoa............. 0 $ -- 0/ 65,000 $ --/221,406
Mark P. Olesnavage............... 3,500 33,468 73,496/116,000 794,678/594,687
Craig G. Hammond................. 0 -- 8,334/101,666 1,818/213,468
James H. Bloem................... 0 -- 8,334/101,666 --/204,375
Steve M. Neil.................... 0 -- 18,803/ 97,597 4,830/216,844
</TABLE>

- ---------------

(1) Represents the difference between the average of the high and low 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 average of the high and low price of
the Company's Common Stock on June 30, 1997 of $12.53 and the exercise price
of the option.

10
<PAGE> 13

PERFORMANCE GRAPH

The following graph compares the cumulative total shareholder return on the
Common Stock of the Company from June 30, 1992 through June 30, 1997, with the
cumulative total return on the Nasdaq Composite Index and the Dow Jones
Pharmaceutical Index from June 30, 1992 through June 30, 1997(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 June 30, 1992 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, Eli Lilly & Co., Merck & Co., Pfizer Inc., Schering-Plough,
Pharmacia & Upjohn Co. and Warner-Lambert.

COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG PERRIGO COMPANY, THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE DOW JONES PHARMACEUTICALS INDEX

<TABLE>
<CAPTION>
MEASUREMENT PERIOD PERRIGO NASDAQ STOCK DOW JONES
(FISCAL YEAR COVERED) COMPANY MARKET (U.S.) PHARMACEUTICALS
<S> <C> <C> <C>
6/92 100 100 100
6/93 136 126 89
6/94 86 127 87
6/95 69 169 131
6/96 70 218 193
6/97 78 265 300
</TABLE>

* $100 invested on 6/30/92 in stock or index -- including reinvestment of
dividends. Fiscal year ending June 30.

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 1997 were
Messrs. F. Folsom Bell, Chairman, 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.

11
<PAGE> 14

APPROVAL OF AMENDMENTS TO THE EMPLOYEE INCENTIVE
STOCK OPTION PLAN AS AMENDED

The Board of Directors has adopted, subject to approval by the Company's
shareholders, an amendment to the Perrigo Company Employee Incentive Stock
Option Plan (the "Plan") that would increase the number of shares of the
Company's Common Stock that may be issued upon exercise of options granted under
the Plan from 9,420,000 to 12,420,000.

For purposes of satisfying the requirements of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"), the amendment would also
limit the number of options that may be granted to any "covered employee" in any
fiscal year to 100,000 and clarify that the members of the committee that
administers the Plan must be "outside directors" as such term is described in
Code Section 162(m) and accompanying regulations. Covered employees include the
Company's Chief Executive Officer and the four other highest paid executive
officers of the Company.

The amendment would also effect certain securities law related changes and
certain other miscellaneous changes, which are incorporated in the summary of
the Plan set forth below and the full text of the Plan set forth in Exhibit A
hereto.

The Board of Directors believes that stock ownership by officers and key
employees provides performance incentives and fosters pride in the Company to
the benefit of both the Company and its shareholders. The Board, therefore,
recommends approval by the shareholders of the amendments to the Plan.

The following is a brief summary of the principal provisions of the Plan.
This summary does not purport to be complete and is qualified in its entirety by
reference to the text of the Plan set forth in Exhibit A hereto.

GENERAL

In August, 1988 the Board of Directors and the shareholders adopted and
approved the Plan which, as currently in effect, provides for the granting of
options to purchase not more than an aggregate of 9,420,000 shares of the
Company's Common Stock, subject to adjustment under certain circumstances. The
proposed amendment would increase the number of shares that may be issued upon
exercise of options granted under the Plan to 12,420,000. Some or all of such
options may be "incentive stock options" within the meaning of the Code.

ADMINISTRATION

The Plan is administered by a stock option committee appointed by the Board
of Directors (the "Committee"). The Committee consists of at least three members
of the Board of Directors, each of whom is a "non-employee director" within the
meaning of Rule 16b-3 under the Securities Exchange Act of 1934 (the "Exchange
Act") and an "outside director" within the meaning of Section 162(m) of the
Code. The Committee is authorized to grant stock options to all persons entitled
to be granted stock options under the Plan. The Committee has full power and
authority to interpret the provisions of the Plan, set the terms and conditions
of individual options and supervise the administration of the Plan with respect
to the persons to whom stock options may be granted.

OPTION GRANTS

Certain officers and other key employees of the Company (including any of
its subsidiaries) are eligible to participate in the Plan. Non-employee members
of the Board of Directors of the Company are not eligible to participate in the
Plan. The Committee determines, subject to the provisions of the Plan, to whom
options are granted, the number of shares of Common Stock subject to an option,
whether stock options shall be incentive stock options or non-qualified stock
options, the exercise price of such options, whether the options may be
exercised in full or in installments and the period during which such options
may be exercised. To the extent options granted under the Plan to an optionee
qualify as incentive stock options, the aggregate fair market value of the
Common Stock with respect to which such options are exercisable for the first
time by such optionee during any calendar year may not exceed $100,000. Fair
market value for this purpose is the

12
<PAGE> 15

average of the highest price and the lowest price at which the Common Stock is
traded on the date the option is granted, or on the most recent date on which
the Common Stock is traded prior to such grant date, as reported on the NASDAQ
National Market.

VESTING OF OPTIONS

The Committee generally has the discretion to set the expiration date and
vesting requirements for each option (subject to the 10-year term limit for
incentive stock options described below). Regardless of the vesting requirements
that otherwise apply to an option, such option shall immediately vest and may be
exercised in whole or in part upon the Participant's death or disability or upon
a "change in control" of the Company prior to the expiration date of the option.
For this purpose, a change in control shall be deemed to have occurred on the
date on which (i) any Person (as that term is defined in Section 2(2) of the
Securities Act of 1933 and Section 13(d)(3) of the Exchange Act) who is not a
shareholder of the Company acquires or otherwise becomes the owner of voting
stock of the Company, which, together with all other voting stock of the Company
then owned by such Person, represents fifty percent (50%) or more of the then
issued and outstanding voting stock of the Company or (ii) the composition of
the Company's Board of Directors is changed such that a majority of the members
of the Board of Directors is comprised of individuals who are neither incumbent
members on the date of adoption of the Plan nor nominated or appointed by a
majority of such incumbent members or their nominees.

TERMINATION OF EMPLOYMENT

If an optionee's employment with the Company is terminated for any reason
other than his or her death or disability, the vested but unexercised portion of
such optionee's incentive stock options will continue to be exercisable until
the earlier of the original expiration date of the incentive stock options or
three months after such termination of employment. If his or her termination of
employment is by reason of death or disability, then the unexercised portion of
such vested incentive stock options will continue to be exercisable for twelve
months after such termination of employment. The same rules will apply to
non-qualified stock options, subject to the Committee's discretion to vary the
exercisability provisions that apply to any non-qualified options.

EXERCISE PRICE AND TERM

The exercise price with respect to all options may not be less than 100% of
the fair market value of the Common Stock at the time the option is granted. In
addition, the exercise price with respect to incentive stock options granted to
any individual who owns greater than 10% of the Company's voting stock may not
be less than 110% of the fair market value of the Common Stock at the time the
option is granted. The latest date on which an incentive stock option may be
exercised is ten years from the date the option was granted. The Committee, in
its discretion, may specify an earlier exercise date for any option or a later
exercise date for any non-qualified option.

TERMINATION AND AMENDMENT OF THE PLAN

No options may be granted under the Plan after August 15, 2005, but options
granted prior to that date may be exercisable after that date. The Plan may be
amended from time to time by the Board of Directors. However, the Board of
Directors may not, without shareholder approval, amend the Plan to (i) increase
the number of shares of Common Stock which may be issued under the Plan (except
upon changes in capitalization as specified in the Plan), (ii) change the group
of employees eligible to receive options under the Plan, (iii) change the
provisions of the Plan respecting the price at which incentive stock options may
be granted, (iv) extend the time within which options may be granted, (v) alter
the Plan in such a way that incentive stock options already granted under the
Plan would not be considered incentive stock options within the meaning of the
Code, or (vi) amend the provisions of Section 14 of the Plan, which relates to
amendments to the Plan. In addition, no amendment shall adversely affect the
rights of any optionee (without the optionee's consent) under any option
previously granted.

13
<PAGE> 16

FEDERAL INCOME TAX CONSEQUENCES

The following is a brief summary of current Federal income tax consequences
of non-qualified stock options and incentive stock options under the relevant
provisions of the Code. This summary does not purpose to be complete and
reference should be made to the applicable provisions of the Code. In addition,
this summary does not discuss the provisions of the income tax laws of any
municipality, state or foreign country in which the employee may reside.

FEDERAL INCOME TAX CONSEQUENCES OF NON-QUALIFIED STOCK OPTIONS

Upon the exercise of a non-qualified stock option, the optionee will
realize ordinary income equal to the difference between the fair market value of
the Common Stock received by the optionee at the time of exercise over the
exercise price of such option. When the optionee eventually sells the Common
Stock, such optionee is taxed on the difference between the sale price and his
or her basis in the Common Stock (i.e., fair market value of the Common Stock at
the time of exercise). This will be taxed as ordinary income or capital gain or
loss, depending on the length of time the Common Stock is held by the optionee.
The Company will be entitled to a deduction equal to the ordinary income
recognized by the optionee at the time the optionee recognizes such income,
provided applicable withholding requirements are met.

FEDERAL INCOME TAX CONSEQUENCES OF INCENTIVE STOCK OPTIONS

There are generally no Federal income tax consequences to the optionee at
the time an incentive stock option is exercised; except the difference between
the fair market value of the Common Stock and the exercise price will be an
adjustment item for purposes of determining any Alternative Minimum Tax
liability. When any of the Common Stock received upon exercise of an incentive
stock option is sold, the optionee will realize a capital gain or loss, as
applicable, equal to the difference between the selling price of the Common
Stock sold and the exercise price paid by the optionee for such Common Stock,
provided (a) the disposition of Common Stock by the optionee is not within two
years after the date of grant of the option or within one year after the
transfer of such Common Stock to the optionee upon exercise, and (b) the
optionee was employed by the Company at all times from the date of grant of the
option until three months before the date of exercise. Special rules apply in
the case of death or disability. The Company will not be entitled to a deduction
for Federal income tax purposes upon the grant or exercise of an incentive stock
option.

If the above holding period requirements described in (a) above are not
met, the optionee will, in general, recognize ordinary income in the year of the
disqualifying disposition of the Common Stock received upon exercise of the
option. If the optionee does not satisfy the employment requirement described in
(b) above, the optionee will recognize ordinary income at the time of exercise
of the option. In either event, such ordinary income will be equal to the excess
of the fair market value of the Common Stock on the date of exercise over the
exercise price, but, in the case of a disqualifying disposition, shall not be
more than the gain, if any, realized on the disqualifying disposition (sale
price minus exercise price). The Company will be entitled to a deduction equal
to the ordinary income recognized by the optionee at the time the optionee
recognizes such income. If the gain realized on a disqualifying disposition is
greater than the excess of the fair market value over the exercise price, the
difference is taxed as capital gain. If a loss is sustained on the disqualifying
disposition (sale price is less than exercise price), the loss is allowable as a
capital loss.

APPROVAL OF AMENDMENTS TO THE NON-QUALIFIED
STOCK OPTION PLAN FOR DIRECTORS AS AMENDED

The Board of Directors has adopted, subject to approval by the Company's
shareholders, an amendment to the Perrigo Company Non-Qualified Stock Option
Plan for Directors (the "Plan") that would increase the number of shares of the
Company's Common Stock that may be issued upon exercise of options granted under
the Plan from 168,000 to 268,000. The amendment would also effect certain
securities law related changes and certain other miscellaneous changes, which
are incorporated in the summary of the Plan set forth below and the full text of
the Plan set forth in Exhibit B hereto.

14
<PAGE> 17

The Board of Directors believes that stock ownership by non-employee
directors provides performance incentives and enables the Company to attract and
retain experienced and knowledgeable non-employee directors to the benefit of
both the Company and its shareholders. The Board of Directors, therefore,
recommends approval by the shareholders of the amendments to the Plan.

GENERAL

In July, 1989 the Board of Directors and the shareholders adopted and
approved the Plan which, as currently in effect, provides for the granting of
options to purchase not more than an aggregate of 168,000 shares of the
Company's Common Stock, subject to adjustment under certain circumstances. The
proposed amendment would increase the number of shares that may be issued upon
exercise of options granted under the Plan to 268,000. All options granted under
the Plan shall be non-qualified stock options.

ADMINISTRATION

The Plan is administered by the Board of Directors or by a committee
appointed by the Board of Directors (hereinafter, this administrative body shall
be referred to as the "Board"). If a committee is appointed, it shall consist of
at least three members of the Board of Directors, each of whom is a "non-
employee director" within the meaning of Rule 16b-3 of the Securities Exchange
Act of 1934 (the "Exchange Act"). The Board is authorized to grant stock options
to all persons entitled to be granted stock options under the Plan. The Board
has full power and authority to interpret the provisions of the Plan, set the
terms and conditions of individual options and supervise the administration of
the Plan with respect to the persons to whom options may be granted.

OPTION GRANTS

All non-employee members of the Board of Directors of the Company are
eligible to participate in the Plan. The Board determines, subject to the
provisions of the Plan, to whom options are granted, the number of shares of
Common Stock subject to each option, the exercise price of each option, whether
the option may be exercised in full or in installments and the period during
which such option may be exercised.

VESTING OF OPTIONS

The Board generally has the discretion to set the expiration date and
vesting requirements for each option. Regardless of the vesting requirements
that otherwise apply to an option, such option shall immediately vest and may be
exercised in whole or in part upon the Participant's death or disability or upon
a "change in control" of the Company prior to the expiration date of the option.
For this purpose, a change in control shall be deemed to have occurred on the
date on which (i) any Person (as that term is defined in Section 2(2) of the
Securities Act of 1933 and Section 13(d)(3) of the Exchange Act) who is not a
shareholder of the Company acquires or otherwise becomes the owner of voting
stock of the Company, which, together with all other voting stock of the Company
then owned by such Person, represents fifty percent (50%) or more of the then
issued and outstanding voting stock of the Company or (ii) the composition of
the Company's Board of Directors is changed such that a majority of the members
of the Board of Directors is comprised of individuals who are neither incumbent
members on the date of adoption of the Plan nor nominated or appointed by a
majority of such incumbent members or their nominees.

TERMINATION OF EMPLOYMENT

The Board, in its discretion, shall determine the time period during which
each option shall be exercisable following the termination of the optionee's
directorship. If an optionee's directorship with the Company is terminated for
any reason, the vested but unexercised portion of such optionee's options will
continue to be exercisable until the earlier of the original expiration date of
the options or the applicable post-termination exercise period specified by the
Board.

15
<PAGE> 18

EXERCISE PRICE AND TERM

The exercise price with respect to any option may not be less than 100% of
the fair market value of the Common Stock at the time the option is granted.
Fair market value for this purpose is the average of the highest price and the
lowest price at which the Common Stock is traded on the date the option is
granted, or on the most recent date on which the Common Stock is traded prior to
such grant date, as reported on the NASDAQ National Market. The Board, in its
discretion, shall determine the expiration date for each option.

TERMINATION AND AMENDMENT OF THE PLAN

The Plan may be amended from time to time by the Board of Directors.
However, the Board of Directors may not, without shareholder approval, (i) amend
the Plan to increase the number of shares of Common Stock which may be issued
under the Plan (except upon changes in capitalization as specified in the Plan),
or (ii) amend the Plan in any way that would adversely affect the rights of any
optionee (without the optionee's consent) under any option previously granted.

FEDERAL INCOME TAX CONSEQUENCES

Below is a brief summary of current Federal income tax consequences of
non-qualified stock options under the relevant provisions of the Internal
Revenue Code of 1986, as amended (the "Code"). This summary does not purport to
be complete and reference should be made to the applicable provisions of the
Code. In addition, this summary does not discuss the provisions of the income
tax laws of any municipality, state or foreign country in which the employee may
reside.

Federal Income Tax Consequences of Non-Qualified Stock Options

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 fiscal year 1998. BDO Seidman
LLP has been employed to perform this function for the Company since 1988.

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 the
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 its appointment.

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.

16
<PAGE> 19

1998 SHAREHOLDER PROPOSALS AND NOMINATING PROCEDURES

Proposals of shareholders intended for inclusion in the Company's proxy
statement relating to the 1998 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 1, 1998. 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 1998 Annual Meeting, other than those made by the Board, and any
other business to be properly brought before the 1998 Annual Meeting be
submitted to the Secretary of the Company not later than August 20, 1998. 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 appears 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, 1997

17
<PAGE> 20

EXHIBIT A

PERRIGO COMPANY EMPLOYEE INCENTIVE STOCK OPTION PLAN

1. Name and Purpose.

This plan shall be known as the Perrigo Company Employee Incentive Stock
Option Plan (hereinafter called the "Plan"). The Plan is intended as an
incentive to certain officers and key employees (hereinafter called
"Participant" or "Participants") of Perrigo Company (hereinafter called the
"Company") and its Subsidiaries to remain in the employ of the Company and its
Subsidiaries, as the case may be, and to encourage stock ownership by the
Participants in the Company, in order that they may acquire a proprietary
interest in the business of the Company. Stock options granted under the Plan
may be of two types, incentive stock options ("Incentive Stock Options") and
non-qualified stock options. It is intended that Incentive Stock Options granted
under the Plan shall constitute "incentive stock options" within the meaning of
Section 422(b) of the Internal Revenue Code of 1986 as now in effect or as later
amended (the "Code") and shall be subject to the tax treatment described in
Section 421 of the Code. As used herein and in any option granted hereunder,
"Subsidiary" or Subsidiaries" shall mean the same as those terms as defined in
Section 424(f) of the Code.

2. Stock.

All stock subject to options under the Plan shall be authorized but
unissued or reacquired Class A Common Stock, par value $.10 per share, of the
Company (hereinafter called "Common Stock"). The aggregate number of shares of
Common Stock which may be issued to all Participants under options granted under
this Plan shall not exceed 12,420,000 shares.* In the event that any outstanding
option under the Plan expires for any reason, including failure to satisfy any
vesting requirement imposed pursuant to Section 7 of the Plan, the shares of
Common Stock allocable to the unexercised portion of such option may again be
subjected by the Company to an option under the Plan.

3. Administration.

The Plan shall be administered by a committee appointed by the Board of
Directors of the Company (the "Committee") to whom administration of the Plan
has been duly delegated. The Committee shall consist of three or more directors
of the Company. To the extent required to comply with Rule 16b-3 under the
Securities Exchange Act of 1934 (the "Exchange Act"), each member of the
Committee shall qualify as a "non-employee director," as defined therein. To the
extent required to comply with Code Section 162(m) and the related regulations,
each member of the Committee shall qualify as an "outside director," as defined
therein.

The Committee in its discretion shall determine whether and to what extent
options granted under the Plan shall be designated as Incentive Stock Options.
With respect to the granting of options pursuant to this Plan, the Committee
shall hold meetings at such times and places as it may determine, and all action
with respect to this Plan shall be taken by a majority of its members. The
management of the Company shall, if requested by the Committee, make
recommendations to the Committee with respect to the Participants who the
management believes should be granted options and the amount of Common Stock to
be subject to the options granted to each under the Plan, but the Committee
shall have the full right and responsibility to determine from time to time
which officers and employees of the Company and its Subsidiaries shall be
granted options under the Plan, the time or times at which options shall be
granted, the number of shares of Common Stock to be covered by each option and
the terms and conditions of each option granted. In making such determinations,
the Committee may take into account the nature of the services rendered by such
individuals, their present and potential contributions to the success of the
Company and such other factors as the Committee in its discretion shall deem
relevant.

- ---------------

* Adjusted for the three and one-half-for-one common stock split, effective
November, 1991 and the two-for-one
common stock split, effective August, 1993. Amended August, 1991, November,
1991, August, 1995 and August, 1997 to increase the shares of Common Stock which
may be issued under the Plan.

A-1
<PAGE> 21

The interpretation and construction by the Committee of any provisions of
the Plan or of any option granted under the Plan shall be final. No member of
the Committee or officer of the Company shall be liable for any action or
determination made in good faith with respect to the Plan or any option granted
under it. All actions taken by the Committee with respect to any option granted
pursuant to the Plan shall be conclusively binding on the Company and the
Participant.

4. Eligibility.

The Participants eligible to receive options shall be such key employees,
including officers, of the Company and its Subsidiaries as the Committee may
select from time to time. No non-employee director of the Company may
participate under the Plan. An employee who has been granted an option or
options at any time may be granted an additional option or options at a later
time or times if the Committee shall so determine.

5. Option Price.

Each option shall state the option price, which shall not be less than one
hundred percent (100%) of the fair market value of the shares of Common Stock of
the Company on the date of the granting of the option; provided, however, the
option price for any Incentive Stock Option granted to a Participant who then
owns (or is deemed to own under the applicable provisions of the Code and rules
and regulations promulgated thereunder) stock of the Company or its Subsidiaries
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or of any Subsidiary shall not be less than one
hundred and ten percent (110%) of the fair market value of the shares of Common
Stock of the Company on the date of granting of the option. For purposes of the
Plan "fair market value" shall be the average of the highest price and the
lowest price at which the Common Stock is traded on the date of determination,
or on the most recent date on which the Common Stock is traded prior to that
date, as reported on the NASDAQ National Market. Subject to the foregoing, the
Committee shall have full authority and discretion in fixing the option price,
and shall be fully protected in so doing.

6. General Limitation on Incentive Stock Options.

The aggregate fair market value (determined as of the date on which the
option is granted) of stock with respect to which options designated as
Incentive Stock Options, together with incentive stock options under any other
plan of the Company (and any parent corporation within the meaning of Section
424(e) of the Code or any subsidiary), are exercisable for the first time by any
employee in any calendar year shall not exceed $100,000. In addition, no option
designated as an Incentive Stock Option may be granted under the Plan if such
grant, together with any other applicable grant of Incentive Stock Options under
the Plan or incentive stock options under any other plan of the Company (and any
parent corporation within the meaning of Sections 424(e) of the Code or any
subsidiary), would exceed any other applicable maximum established under Section
422 of the Code for incentive stock options. If an option granted under the Plan
which is designated as an Incentive Stock Option exceeds such limitations, such
option, to the extent of such excess, shall be a separate non-qualified option.

7. Terms and Conditions of Options.

All options granted pursuant to the Plan shall be authorized by the
Committee and shall be issued in the form appended hereto or in such other form
as the Committee may from time to time prescribe; provided, however, that any
such options granted shall contain the following terms and conditions:

(a) Number of Shares and Option Price. Each option shall state the
number of shares of Common Stock to which it pertains and the option price
per share.

(b) Continued Employment. Each Participant shall agree to remain in
the employment of and to render to the Company or its Subsidiary, as the
case may be, his or her services for such time period, not to exceed six
(6) years, as may be determined by the Committee at the time of granting
the option, and such option shall not vest or be exercisable during said
time period; provided, however, that the

A-2
<PAGE> 22

Committee may, at its discretion, provide for staggered vesting, in which
event the option for those shares of Common Stock for which the required
vesting period has been met shall vest and may be exercised thereafter even
though the option as to other shares of stock in the same grant or any
subsequent grant has not then vested.

(c) Term and Vesting of Options. Each option shall vest and may only
be exercised, if at all, between the original exercise date and the
expiration date determined by the Committee and specified in the option,
provided that an option intended to qualify as an Incentive Stock Option
shall have a term of not more than ten years, and provided further that if
an optionee owns (or is deemed to own under applicable provisions of the
Code and the rules and regulations promulgated thereunder) stock of the
Company or its Subsidiaries possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company and an
option granted to such optionee is intended to qualify as an Incentive
Stock Option, the term of such option shall be no more than five years.
Notwithstanding the vesting period specified in any option granted under
the Plan, each such option shall immediately vest and may be exercised in
whole or in part at any time after the date on which (i) any Person (as
that term is defined in Section 2(2) of the Securities Act of 1933 and
Section 13(d)(3) of the Exchange Act, as hereafter amended from time to
time) who is not a shareholder of the Company on the date of adoption of
the Plan, acquires or otherwise becomes the owner of voting stock of the
Company, which, together with all other voting stock of the Company then
owned by such Person, represents fifty percent (50%) or more of the then
issued and outstanding voting stock of the Company or (ii) the composition
of the Company's Board of Directors is changed such that a majority of the
members of the Board of Directors is comprised of individuals who are
neither incumbent members on the date of adoption of the Plan nor nominated
or appointed by a majority of such incumbent members or their nominees or
(iii) the Participant's employment is terminated by his or her death or
disability (as defined in the Company's long-term disability insurance plan
under which such Participant is then covered) prior to the date on which
the right to exercise the option expires or terminates as determined by the
Committee and specified in the option.

(d) Nontransferability of Options. During the lifetime of the
Participant, the option shall be exercisable only by him or her while he or
she is employed by the Company or its Subsidiary or within the time period
specified in subsection (e) or (f) below, as the case may be, and shall not
be assignable or transferable by him or her and no other person shall
acquire any rights therein. On the death of the Participant, his or her
option may only be transferred or assigned by his or her will or by the
laws of descent and distribution and may only, in such event, be exercised
within the time period and in the manner specified in subsection (f) below.

(e) Termination of Employment Other Than by Death or
Disability. Subject to subsections (f) and (g) below, the Participant shall
have the right to exercise the option at any time within three months after
the termination of his or her employment with the Company or its Subsidiary
for any reason to the extent that the Participant's right to exercise such
option had vested (including without limitation by reason of subsection (c)
above) and had not previously been exercised prior to the Participant's
termination of employment.

If the Participant's employment with the Company or its Subsidiary is
terminated for any reason prior to the earliest date on which the
Participant's option may be exercised pursuant to its terms or, if such
employment is terminated for any reason after such date and the option is
not exercised prior to the first to occur of (i) the expiration date
specified by the Committee at the time the option is granted or (ii) 3
months following his or her termination of employment for any reason other
than death or disability, the option shall lapse. Whether authorized leave
of absence, or absence for military or governmental service, would
constitute termination of employment for the purposes of the Plan shall be
determined by the Committee, which determination shall be final and
conclusive.

(f) Termination of Employment by Death or Disability. Except as
provided in the following paragraph and in subsection (g) below, if the
Participant's employment with the Company or its Subsidiary is terminated
by his or her death or his or her disability (as defined in the Company's

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<PAGE> 23

long-term disability insurance plan under which such Participant is then
covered) an option may be exercised in whole or in part by the duly
appointed fiduciary of the estate of the deceased Participant or the person
or persons succeeding to his or her interest under the laws of descent and
distribution or by bequest under his or her will, or, in the case of
disability, by the disabled Participant or the conservator of his or her
estate, as the case may be, at any time within a period of 12 months
following his or her death or disability, but by no one else to the extent
that the Participant's right to exercise such option had vested and had not
previously been exercised prior to the date of his or her termination of
employment caused by his or her death or disability.

If the Participant's employment with the Company or its Subsidiary is
terminated by his or her death or disability and the option is not
exercised in the manner provided in the preceding paragraph of this
subsection (f) prior to the first to occur of (i) the expiration date
specified by the Committee at the time the option is granted or (ii) 12
months following his or her termination of employment, the option shall
lapse.

(g) Committee Discretion as to Non-Qualified Options. Notwithstanding
the provisions of subsections (e) and (f) above, the Committee, in its
discretion, may alter the terms and conditions respecting the time that an
optionholder has to exercise any non-qualified option and may extend the
time that an optionee has to exercise any outstanding non-qualified option,
but not beyond the specified expiration date of such non-qualified option.

(h) Covered Employee Limitation. Options for more than 100,000 shares
of Common Stock may not be granted in any calendar year to any Participant
who is or is expected to be a "covered employee" within the meaning of Code
Section 162(m) and the related regulations for the year in which such
options are taxable to such Participant.

8. Other Option Provisions.

Any option granted under the Plan may contain such provisions, including,
without limitation, restrictions upon the exercise of the option and subsequent
transfer of the underlying stock, as the Committee shall deem advisable,
provided that, with respect to an Incentive Stock Option, any such limitations
or restrictions do not violate the provisions of Section 422 of the Code, or of
any regulations promulgated thereunder.

9. Term of Plan.

Options must be granted pursuant to the Plan, if at all, within a period of
ten (10) years from August 15, 1995, which is the date the original term of the
Plan was extended; provided that the Committee may revise or discontinue the
Plan at any time in accordance with Section 14.

10. Exercise of Option and Payment of Option Price.

Subject to Sections 6 and 7 above, each option granted under the Plan may
be exercised in whole or in part, over the term of the option, by delivery to
the President, Secretary, Assistant Secretary or chief financial officer of the
Company of a duly executed notice of exercise in the form attached to the
option. The exercise price of an option shall be paid in full at the time of
exercise (i) in cash, (ii) through the surrender of previously-acquired shares
of Common Stock having a fair market value equal to the exercise price of the
option, (iii) through the withholding by the Company (upon such exercise) of
Common Stock having a fair market value equal to the exercise price or (iv) by a
combination of (i), (ii), and (iii). Upon exercise of the option, the Company
may withhold, or allow a Participant to remit to the Company any applicable
Federal, state or local income tax liability. In order to satisfy all or any
portion of such income tax liability, an option holder may elect to surrender
Common Stock previously acquired by the holder or to have the Company withhold
Common Stock that would otherwise have been issued to the holder pursuant to the
exercise of the option.

A-4
<PAGE> 24

11. Adjustment Provisions

In the event of changes in the outstanding Common Stock of the Company by
reason of stock dividends, split-ups, recapitalization, combination of shares,
exchange of shares, mergers, consolidations, separations, reorganizations,
liquidations, or otherwise, the number and class of shares available for options
under the Plan and the shares subject to any outstanding options and the option
price thereof shall be equitably adjusted by the Committee.

12. Mergers or Consolidations

In the event of the merger or consolidation of the Company into or with
another corporation in which the Company ceases to exist, the option shall be
transferred into options of the surviving corporation to purchase the same
comparable number of shares of the surviving corporation and on the same terms
and conditions as provided for and contained in the options granted under the
Plan, and the Company shall require, as a condition to such merger or
consolidation, that the surviving corporation adopt the Plan as its plan and
issue comparable options to purchase sharers of its stock.

13. Loans to Participants

The Company may make loans to any one or more of the Participants as
authorized by the Committee, and on terms and conditions set by the Committee,
for the purpose of financing the exercise of options granted under the Plan;
provided, however, that the maximum aggregate amount of any such loan or loans
to a Participant may not exceed the amount of the Participant's current year
base salary, excluding bonuses.

14. Amendment or Termination of Plan.

The Committee may amend, suspend or terminate this Plan at any time and
from time to time. However, without the approval of a majority in interest of
the stockholders of the Company, no amendment shall be made which shall either
(i) increase the maximum number of shares of Common Stock which may be issued
under the options granted under the Plan, (ii) expand the classes of persons
eligible to be granted options under the Plan, (iii) change the provisions of
the Plan respecting the price at which options shall be granted, or (iv) extend
the term of the Plan. No amendment of the Plan shall adversely affect rights or
obligations under the Plan with respect to options granted prior to such
amendment. To the extent that any provision of the Plan or any terms or
conditions of any Incentive Stock Option issued under the Plan shall hereafter
be determined to be in conflict with the provisions of Code Section 422, as
amended from time to time, such provision, term or condition shall be amended by
the Committee to bring such option into conformity with said Section.

15. General Provisions.

(a) Nothing in the Plan nor in any instrument executed pursuant hereto
shall confer upon any employee any right to continue in the employ of the
Company or a Subsidiary or shall affect the right of the Company or of a
Subsidiary to terminate the employment of any employee at any time with or
without cause.

(b) No shares of Common Stock shall be issued or transferred pursuant to an
option granted under the Plan unless and until all legal requirements applicable
to the issuance or transfer of such shares have, in the opinion of counsel to
the Company, been complied with.

(c) No employee and no beneficiary or other person claiming under or
through him or her shall have any right, title or interest in or to any shares
of Common Stock allocated or reserved for the purposes of the Plan or subject to
any option except as to such shares of Common Stock, if any, as shall have been
issued pursuant to the exercise of such option.

(d) The proceeds received by the Company from the sale of Common Stock
pursuant to options granted under the Plan may be used for any general corporate
purposes.

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<PAGE> 25

16. Effective Date and Termination Date of Plan.

The Plan was originally adopted by the Board of Directors of the Company on
August 24, 1988. The Plan was later amended and restated, effective as of August
15, 1995, at which time the term of the Plan was extended to August 15, 2005.
The Plan is hereby amended and restated, effective as of August, 1997. Unless
sooner terminated in the manner provided herein, the Plan shall terminate on
August 15, 2005.

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<PAGE> 26

EXHIBIT B

PERRIGO COMPANY NON-QUALIFIED STOCK OPTION PLAN FOR DIRECTORS

1. Name and Purpose

This plan shall be known as the Perrigo Company Non-Qualified Stock Option
Plan for Directors (hereinafter called the "Plan"). The Plan is intended to
attract and retain the services of experienced and knowledgeable non-employee
directors (hereinafter called "Participant" or "Participants") to serve on the
Board of Directors of Perrigo Company (hereinafter called the "Company") and to
provide additional incentive for such Participants to work for the best interest
of the Company and its shareholders through ownership of its common stock.

2. Stock

All stock subject to options under the Plan shall be authorized but
unissued or reacquired Class A Common Stock, par value $.10 per share, of the
Company (hereinafter called "Common Stock"). The aggregate number of shares of
Common Stock which may be issued to all Participants under options granted under
this Plan shall not exceed 268,000 shares.* In the event that any outstanding
option under the Plan expires for any reason, including failure to satisfy any
vesting requirement imposed pursuant to subsection 6(b) of the Plan, the shares
of Common Stock allocable to the unexercised portion of such option may again be
subjected by the Company to an option under the Plan.

3. Administration

The Plan shall be administered by the Board of Directors of the Company or
by a committee of the Board of Directors hereafter designated to administer the
Plan by the Board of Directors of the Company. Any committee of the Board of
Directors designated to administer the Plan shall consist of not less than three
directors of the Company. To the extent required to comply with Rule 16b-3 under
the Securities Exchange Act of 1934 (the "Exchange Act"), each member of any
such committee shall qualify as a "non-employee director," as defined therein.
As used herein, "Board" shall mean and include the Board of Directors of the
Company and any committee designated by the Board to administer the Plan.

With respect to the granting of options pursuant to the Plan, the Board
shall hold meetings at such times and places as it may determine, and all action
with respect to the Plan shall be taken by a majority of its members. The Board
shall have the full right and responsibility to determine from time to time
which outside Directors of the Company shall be granted options under the Plan,
the time or times at which options shall be granted, the number of shares of
Common Stock to be covered by each option and the terms and conditions of each
option granted.

The interpretation and construction by the Board of any provisions of the
Plan or of any option granted under the Plan shall be final. No member of the
Board or office of the Company shall be liable for any action or determination
made in good faith with respect to the Plan or any option granted under it. All
actions taken by the Board with respect to any option granted pursuant to the
Plan shall be conclusively binding on the Company and the Participant.

4. Eligibility

The Participants eligible to receive options shall be those Directors of
the Company who are not employed by the Company at the time of granting of any
option under this Plan to such Director.

- ---------------

* Adjusted for the three and one-half-for-one common stock split, effective
November, 1991 and the two-for-one
common stock split, effective August, 1993. Amended August, 1997 to increase
the shares of Common Stock which may be issued under the Plan.

B-1
<PAGE> 27

5. Option Price

Each option shall state the option price, which shall not be less than one
hundred percent (100%) of the fair market value of the shares of Common Stock of
the Company on the date of the granting of the option. For purposes of the Plan,
"fair market value" shall be the average of the highest price and the lowest
price at which the Common Stock is traded on the date of determination, or on
the most recent date on which the Common Stock is traded prior to that date, as
reported on the NASDAQ National Market. Subject to the foregoing the Board shall
have full authority and discretion in fixing the option price, and shall be
fully protected in so doing.

6. Terms and Conditions of Options

All options granted pursuant to the Plan shall be authorized by the Board
and shall be issued in the form appended hereto or in such other form as the
Board may from time to time prescribe; provided, however, that any such options
granted shall contain the following terms and conditions:

(a) Number of Shares and Option Price. Each option shall state the
number of shares of Common Stock to which it pertains and the option price
per share.

(b) Term and Vesting. Each option shall vest and may only be
exercised, if at all, between the original exercise date and the expiration
date determined by the Board and specified in the option. Each participant
shall agree to continue, if elected by the shareholders, as a Director of
the Company and to render to the Company his or her services as a Director
for such time period, not to exceed six (6) years, as may be determined by
the Board at the time of granting the option, and such option shall not
vest or be exercisable during said time period; provided, however, that the
Board may, at its discretion, provide for staggered vesting, in which event
the option for those shares of Common Stock for which the required vesting
period has been met shall vest and may be exercised thereafter even though
the option as to other shares of stock in the same grant or any subsequent
grant has not then vested.

(c) Early Vesting of Options. Notwithstanding the vesting period
specified in any option granted under the Plan, each such option shall
immediately vest and may be exercised in whole or in part at any time after
the date on which (i) any Person (as that term is defined in Section 2(2)
of the Securities Act of 1933 and Section 13(d)(3) of the Exchange Act, as
hereafter amended from time to time) who is not a shareholder of the
Company on the date of adoption of the Plan, acquires or otherwise becomes
the owner of voting stock of the Company, which, together will all other
voting stock of the Company then owned by such Person, represents fifty
percent (50%) or more of the then issued and outstanding voting stock of
the Company or (ii) the composition of the Company's Board of Directors is
changed such that a majority of the members of the Board of Directors is
comprised of individuals who are neither incumbent members on the date of
adoption of the Plan nor nominated or appointed by a majority of such
incumbent members or their nominees or (iii) the Participant's services as
a Director of the Company is terminated by his or her death or disability
(as defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as
amended (the "Code")) prior to the date on which the right to exercise the
option expires or terminates as determined by the Board and specified in
the option.

(d) Nontransferability of Options. During the lifetime of the
Participant, the option shall be exercisable only by him or her while he or
she is a Director of the Company or within the time period specified in
subsection (e) or (f) below, as the case may be, and shall not be
assignable or transferable by him or her and no other person shall acquire
any rights therein. On the death of the Participant, his or her option may
only be transferred or assigned by his or her will or by the laws of
descent and distribution and may only, in such event, be exercised within
the time period and in the manner specified in subsection (f) below.

(e) Termination of Service Other Than by Death or Disability. At the
time an option is granted, the Board shall determine the time period during
which the Participant may exercise the option following the termination of
his or her membership on the Board of Directors, and such post-termination
exercise period may vary based on the reason for such termination of Board
membership. Subject to

B-2
<PAGE> 28

subsections (f) and (g) below, the Participant shall have the right to
exercise the option at any time within this specified period after the
termination of his or her membership on the Board of Directors to the
extent that the Participant's right to exercise such option had vested
(including without limitation by reason of subsection (c) above) and had
not previously been exercised prior to the Participant's termination of
Board membership.

If the Participant's services as a Director of the Company is
terminated prior to the earliest date on which the Participant's option may
be exercised pursuant to its terms or, if such service is terminated after
such date, and the option is not exercised prior to the expiration date
specified by the Board at the time the option is granted, the option shall
lapse.

(f) Termination of Service by Death or Disability. Except as provided
in the following paragraph and in subsection (g) below, if a Participant
dies or becomes disabled (as defined in Code Section 22(e)(3)), his or her
option may be exercised in whole or in part by the duly appointed fiduciary
of the estate of the deceased Participant or the person or persons
succeeding to his or her interest under the laws of descent and
distribution or by bequest under his or her will, or, in the case of
disability, by the disabled Participant or the conservator or his or her
estate, as the case may be, at any time within the applicable
post-termination exercise period specified by the Board, to the extent that
the Participant's right to exercise such option had vested and had not
previously been exercised prior to the date of his or her death or
disability.

If the Participant dies or becomes disabled and the option is not
exercised in the manner provided in the preceding paragraph of this
subsection (f) prior the expiration date specified by the Board at the time
the option is granted, the option shall lapse.

(g) Board Discretion. Notwithstanding the provisions of subsections
(e) and (f) above, the Board, in its discretion, may extend the time that
an optionee has to exercise any outstanding option, but not beyond the
specified expiration date of the option.

7. Other Option Provisions

8. Term of Plan

The Plan shall continue indefinitely, provided that the Board of Directors
may revise or discontinue the Plan at any time in accordance with Section 12.

9. Exercise of Option and Payment of Option Price

Subject to Section 6 above, each option granted under the Plan may be
exercised in whole or in part, over the term of the option, by delivery to the
President, Secretary, Assistant Secretary or chief financial officer of the
Company of a duly executed notice of exercise in the form attached to the
option. The exercise price of an option shall be paid in full at the time of
exercise (i) in cash, (ii) through the surrender of previously-acquired shares
of Common Stock having a fair market value equal to the exercise price of the
option, (iii) through the withholding by the Company (upon such exercise) of
Common Stock having a fair market value equal to the exercise price or (iv) by a
combination of (i), (ii), and (iii). Upon exercise of the option, the Company
may withhold, or allow a Participant to remit to the Company any applicable
Federal, state or local income tax liability. In order to satisfy all or any
portion of such income tax liability, an option holder may elect to surrender
Common Stock previously acquired by the holder or to have the Company withhold
Common Stock that would otherwise have been issued to the holder pursuant to the
exercise of the option.

B-3
<PAGE> 29

10. Adjustment Provisions

11. Mergers or Consolidations

12. Amendment or Termination of Plan

The Board of Directors may amend, suspend or terminate this Plan at any
time and from time to time. No amendment of the Plan shall adversely affect
rights or obligations under the Plan with respect to options granted prior to
such amendment.

13. General Provisions

(a) Nothing in the Plan nor in any instrument executed pursuant hereto
shall confer upon any outside Director any right to continue as a Director of
the Company or shall affect the right of the shareholders of the Company to vote
against the reelection of an outside Director or of the Board of Directors to
remove an outside Director in the manner permitted by the By-laws of the
Company.

(c) No outside Director and no beneficiary or other person claiming under
or through him or her shall have any right, title or interest in or to any
shares of Common Stock allocated or reserved for the purposes of the Plan or
subject to any option except as to such shares of Common Stock, if any, as shall
have been issued pursuant to the exercise of such option.

(d) The proceeds received by the Company from the sale of Common Stock
pursuant to options granted under the Plan may be used for any general corporate
purposes.

14. Effective Date

The Plan was originally adopted by the Board of Directors of the Company in
July, 1989. It is hereby amended and restated, effective as of August, 1997,
subject in part to the approval of the shareholders of the Company at the
November, 1997 annual meeting.

B-4
<PAGE> 30

perrigo logo
<PAGE> 31
PERRIGO COMPANY

PROXY FOR ANNUAL MEETING OF SHAREHOLDERS - NOVEMBER 6, 1997

THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. The undersigned
hereby appoints Michael J. Jandernoa 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 8, 1997, at the Annual
Meeting of Shareholders to be held on November 6, 1997, or any adjournment
thereof.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3 AND 4.

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, 2, 3 AND 4 AND AS OTHERWISE DETERMINED BY THE
PROXYHOLDERS IN THEIR DISCRETION.

- --------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
- --------------------------------------------------------------------------------

HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?

- --------------------------------- ---------------------------------

<PAGE> 32
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE

- --------------------------------------------------------------------------------
PERRIGO COMPANY
- --------------------------------------------------------------------------------

Mark box at right if no address change or comment has been added on the
reverse side of this card. [ ]

RECORD DATE SHARES:

Please be sure to sign and date this Proxy. Date
- --------------------------------------------------------------------------------

- ---Shareholder sign here---------------------------Co-owner sign here-----------

DETACH CARD

1. Election of Directors:
Nominees:
F. Folosom Bell For all With- For All
Christopher J. Coughlin Nominees hold Except
Richard G. Hansen [ ] [ ] [ ]

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(s). Your shares
will be voted for the remaining nominee(s).

For Against Abstain
2. Approval of Amendment to the Company's [ ] [ ] [ ]
Employee Incentive Stock Option Plan.

3. Approval of Amendment to the Company's [ ] [ ] [ ]
Non-Qualified Stock Option Plan for Directors.

4. Ratification of selection of BDO Seidman, LLP. [ ] [ ] [ ]

5. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.

Please sign exactly as name(s) appear(s) 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.

DETACH CARD