<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 [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement. [ ] Confidential, for use of the
Commission only (as permitted by
Rule 14a-6(e)(2).
[X] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12.
Sybron International Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
SYBRON INTERNATIONAL CORPORATION
411 EAST WISCONSIN AVENUE
24TH FLOOR
MILWAUKEE, WISCONSIN 53202
(414) 274-6600
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 2, 2000
---------------------
Notice is hereby given that the Annual Meeting of Shareholders of Sybron
International Corporation, a Wisconsin corporation (the "Company"), will be held
on Wednesday, February 2, 2000, at 10:00 a.m., Eastern Standard Time, at the
offices of Donaldson, Lufkin & Jenrette, Inc., 277 Park Avenue, New York, New
York 10172, for the following purposes:
1. To elect two directors to serve as Class II directors until the
2003 Annual Meeting of Shareholders and until their respective successors
are duly elected and qualified;
2. To reapprove the Sybron International Corporation Senior Executive
Incentive Compensation Plan, as amended, as required by Section 162(m) of
the Internal Revenue Code (a copy of the amended and restated plan is
attached as Exhibit A to the accompanying Proxy Statement); and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on December 8, 1999
as the record date for determining the shareholders entitled to notice of, and
to vote at, the meeting or any adjournment thereof.
We hope you will assure that your shares will be represented at the
meeting, whether or not you expect to be present in person, either by voting
electronically via the Internet (by accessing http://www.eproxyvote.com/syb or
telephone (by dialing 1-877-779-8683 on a touch-tone telephone), or by signing
and returning the enclosed proxy card in the accompanying envelope. It is
important that proxies be submitted promptly. Returning your proxy promptly,
either via the Internet, via telephone, or in the enclosed envelope, will assist
the Company in reducing the expenses of additional proxy solicitation. Your vote
is important and the Board of Directors appreciates the cooperation of
shareholders in directing proxies to vote at the meeting.
By Order of the Board of Directors,
/S/ R. Jeffrey Harris
-----------------------------
R. JEFFREY HARRIS
Secretary
Milwaukee, Wisconsin
December 22, 1999
<PAGE> 3
SYBRON INTERNATIONAL CORPORATION
411 EAST WISCONSIN AVENUE
24TH FLOOR
MILWAUKEE, WISCONSIN 53202
(414) 274-6600
---------------------
PROXY STATEMENT
DECEMBER 22, 1999
---------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 2, 2000
---------------------
GENERAL INFORMATION
This Proxy Statement is furnished by the Board of Directors (the "Board of
Directors") of Sybron International Corporation, a Wisconsin corporation (the
"Company"), to the shareholders of the Company in connection with a solicitation
of proxies for use at the Annual Meeting of Shareholders (the "Annual Meeting")
to be held at 10:00 a.m., Eastern Standard Time, on Wednesday, February 2, 2000,
at the offices of Donaldson, Lufkin & Jenrette, Inc., 277 Park Avenue, New York,
New York 10172, and at any and all adjournments thereof. This Proxy Statement
and the accompanying materials are first being mailed to shareholders on or
about December 22, 1999.
This year, shareholders of record will have the option to vote by proxy
electronically via the Internet or a touch-tone telephone. Proxy voting through
electronic means is valid under Wisconsin law, and the Company is offering
electronic services both as a convenience to its shareholders and as a step
towards reducing costs. Shareholders not wishing to utilize electronic voting
methods may continue to cast votes by returning their signed and dated proxy
card.
Shareholders whose shares are registered directly with EquiServe may vote
either via the Internet or by calling EquiServe. Specific instructions to be
followed by any registered shareholder interested in voting via Internet or
telephone are set forth on the enclosed proxy card. The Internet and telephone
voting procedures are designed to authenticate the shareholder's identity and to
allow shareholders to vote their shares and confirm that their instructions have
been properly recorded.
If your shares are registered in the name of a bank or brokerage firm, you
may be eligible to vote your shares electronically over the Internet or by
telephone. A large number of banks and brokerage firms are participating in the
ADP Investor Communication Services online program. This program provides
eligible shareholders who receive a paper copy of the annual report and proxy
statement the opportunity to vote via the Internet or by telephone. If your bank
or brokerage firm is participating in ADP's program, your voting form will
provide instructions. If your voting form does not reference Internet or
telephone information, please complete and return the paper voting form in the
postage paid envelope provided.
Any proxy delivered pursuant to this solicitation is revocable at the
option of the person giving the same at any time before it is exercised. A proxy
may be revoked, prior to its exercise, by executing and delivering a later dated
proxy via the Internet, via telephone or by mail, by delivering written notice
of the revocation of the proxy to the Corporate Secretary prior to the Annual
Meeting, or by attending and voting at the Annual Meeting. Attendance at the
Annual Meeting, in and of itself, will not constitute a revocation of a proxy.
Unless previously revoked, the shares represented by a proxy, whether delivered
via the Internet, via telephone
<PAGE> 4
or by mail, will be voted in accordance with the shareholder's directions if the
proxy is duly submitted prior to the Annual Meeting. If no directions are
specified on a duly submitted proxy, the shares will be voted, in accordance
with the recommendations of the Board of Directors, FOR the election of the
directors nominated by the Board of Directors, FOR reapproval of the Sybron
International Corporation Senior Executive Incentive Compensation Plan, as
amended and restated (the "Incentive Plan"), and in accordance with the
discretion of the persons appointed as proxies on any other matters properly
brought before the Annual Meeting.
The expense of preparing, printing, and mailing this Proxy Statement and
the proxies solicited hereby will be borne by the Company. In addition to the
use of the Internet, telephones, and mail, proxies may be solicited by officers,
directors, and regular employees of the Company, without additional
remuneration, in person, or by telephone, telegraph or facsimile transmission.
The Company will also request brokerage firms, nominees, custodians, and
fiduciaries to forward proxy materials to the beneficial owners of shares of
Common Stock as of the record date and will provide reimbursement for the cost
of forwarding the proxy materials in accordance with customary practice. The
Company has retained Corporate Investor Communications, Inc. to aid in the
solicitation of proxies, including the soliciting of proxies from brokerage
firms, banks, nominees, custodians, and fiduciaries, for a fee not anticipated
to exceed $6,000 plus expenses. Your cooperation in promptly voting by proxy via
the medium of your choice will help to avoid additional expense.
At December 8, 1999, the Company had outstanding 104,026,205 shares of
Common Stock, and there were no outstanding shares of any other class of stock.
Only shareholders of record at the close of business on December 8, 1999 will be
entitled to notice of, and to vote at, the Annual Meeting. Each share of Common
Stock outstanding on the record date entitles the holder thereof to one vote on
each matter to be voted upon by shareholders at the Annual Meeting.
A majority of the votes entitled to be cast by shares entitled to vote,
present in person or by proxy, shall constitute a quorum at the Annual Meeting.
Abstentions are counted as shares present for purposes of determining the
presence or absence of a quorum. Proxies relating to "street name" shares that
are voted by brokers on some matters will be treated as shares present for
purposes of determining the presence or absence of a quorum, but will not be
treated as shares entitled to vote at the Annual Meeting on those matters as to
which authority to vote is withheld from the broker ("broker non-votes") absent
voting instructions from the beneficial owner under the rules of the New York
Stock Exchange. The Inspector of Election appointed by the Board of Directors
shall determine the shares represented at the meeting and the validity of
proxies and ballots, and shall count all votes and ballots. The voting
requirements and procedures described below are based upon provisions of the
Wisconsin Business Corporation Law, the Company's charter documents, and any
other requirements applicable to the matters to be voted upon.
Directors are elected by a plurality of the votes cast by the shares
entitled to vote in the election at a shareholders meeting at which a quorum is
present. "Plurality" means that the individuals who receive the largest number
of votes are elected as directors up to the maximum number of directors to be
chosen in the election. Therefore, any shares not voted, whether by withheld
authority, broker non-vote or otherwise, have no effect in the election of
directors except to the extent that the failure to vote for an individual
results in another individual receiving a larger number of votes.
If a quorum exists, the affirmative vote of a majority of the votes cast on
the proposal will be required to reapprove the performance goals in the
Incentive Compensation Plan, as required by Section 162(m) of the Internal
Revenue Code. Because neither abstentions nor broker non-votes are considered
votes cast, neither will have an effect on the voting for this proposal.
2
<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of the outstanding shares of Common Stock by persons known by the
Company to beneficially own more than 5% of the outstanding shares of Common
Stock, by nominees for director and directors of the Company, by the executive
officers named in the Summary Compensation Table, and by all directors and
executive officers of the Company as a group. Amounts are as of December 8, 1999
for nominees for director, directors, and executive officers. Amounts for 5%
shareholders are as of the date such shareholders reported such holdings in
filings under the Securities Exchange Act of 1934 (the "Exchange Act").
<TABLE>
<CAPTION>
COMMON STOCK
------------------------
NAME AND ADDRESS NUMBER OF PERCENT
OF OWNER(A) SHARES OWNED OF CLASS
---------------- ------------ --------
<S> <C> <C>
Harris Associates L.P.(b)................................... 6,387,764 6.1%
Two North LaSalle Street, Suite 500
Chicago, Illinois 60602-3790
Putnam Investments, Inc. (c)................................ 11,681,287 11.2%
One Post Office Square
Boston, Massachusetts 02109
Don H. Davis, Jr. (d)....................................... 77,530 *
Christopher L. Doerr (e).................................... 26,200 *
Robert B. Haas (d).......................................... 2,679,508 2.6%
Thomas O. Hicks (d)......................................... 1,794,464 1.7%
William U. Parfet (e)....................................... 36,500 *
Joe L. Roby (d)............................................. 225,942 *
Richard W. Vieser (d)....................................... 169,884 *
Kenneth F. Yontz (f)........................................ 2,171,487 2.1%
Dennis Brown (g)............................................ 825,842 *
R. Jeffrey Harris (h)....................................... 1,011,079 1.0%
Frank H. Jellinek, Jr. (i).................................. 469,683 *
Floyd W. Pickrell, Jr. (j).................................. 559,435 *
All directors and executive officers as a group (12
persons)(k)............................................... 10,047,554 9.4%
</TABLE>
- ---------------
* Represents less than 1% of the class.
(a) Except as otherwise indicated, each person has the sole power to vote and
dispose of all shares listed opposite his or its name.
(b) Based on Amendment No. 5 to Schedule 13G under the Exchange Act dated
February 11, 1999. Harris Associates L.P., reporting on behalf of itself and
its general partner, Harris Associates, Inc., has indicated shared voting
power with respect to all of the shares, shared investment power with
respect to 3,244,600 of the shares, and sole investment power with respect
to 3,143,164 of the shares of Common Stock reported.
(c) Based on Amendment to Schedule 13G under the Exchange Act, dated January 26,
1999. Putnam Investments, Inc., reporting on behalf of itself and its parent
holding company, Marsh & McLennan Companies, Inc., and its investment
advisors and subsidiaries, Putnam Investment Management, Inc., The Putnam
Advisory Company, Inc., and Putnam New Opportunities Fund, has indicated
shared voting power with respect to 155,900 of the shares, sole voting power
with respect to none of the shares, and shared investment power with respect
to all of the shares of Common Stock reported.
3
<PAGE> 6
(d) Includes, for each of Messrs. Davis, Haas, Hicks, Roby, and Vieser, 60,000
shares of Common Stock issuable upon the exercise of stock options granted
to each of them pursuant to the Company's Amended and Restated 1994 Outside
Directors' Stock Option Plan and 12,000 shares of Common Stock issuable upon
the exercise of stock options granted to each of them pursuant to the
Company's 1999 Outside Directors' Stock Option Plan. With respect to Mr.
Davis, includes 1,680 shares as to which he shares voting and investment
power. With respect to Mr. Haas, includes 1,905,000 shares as to which he
shares voting and investment power.
(e) Includes, for each of Messrs. Doerr and Parfet, 12,000 shares of Common
Stock issuable upon the exercise of stock options granted to each of them
pursuant to the Company's Amended and Restated 1994 Outside Directors' Stock
Option Plan and 12,000 shares of Common Stock issuable upon the exercise of
stock options granted to each of them pursuant to the Company's 1999 Outside
Directors' Stock Option Plan.
(f) Mr. Yontz has shared voting power with respect to 55,550 of the shares of
Common Stock reported and shared investment power with respect to 56,626 of
the shares of Common Stock reported. Includes 789,924 shares of Common Stock
issuable upon the exercise of outstanding employee stock options held by Mr.
Yontz.
(g) Mr. Brown has shared investment power with respect to 824 of the shares of
Common Stock reported. Includes 825,018 shares of Common Stock issuable upon
the exercise of outstanding employee stock options held by Mr. Brown.
(h) Mr. Harris has shared voting power with respect to 83,138 of the shares of
Common Stock reported and shared investment power with respect to 84,309 of
the shares of Common Stock reported. Includes 587,820 shares of Common Stock
issuable upon the exercise of outstanding employee stock options held by Mr.
Harris.
(i) Mr. Jellinek has shared investment power with respect to 891 of the shares
of Common Stock reported. Includes 298,400 shares of Common Stock issuable
upon the exercise of outstanding employee stock options held by Mr.
Jellinek.
(j) Mr. Pickrell has shared investment power with respect to 1,211 of the shares
of Common Stock reported. Includes 238,220 shares of Common Stock issuable
upon the exercise of outstanding employee stock options held by Mr.
Pickrell.
(k) Includes (i) 3,147,382 shares of Common Stock issuable upon the exercise of
outstanding stock options held by all directors and executive officers as a
group, (ii) 2,045,368 shares as to which there is shared voting power, and
(iii) 2,050,541 shares as to which there is shared investment power.
The above beneficial ownership information is based on information furnished
by the specified persons and is determined in accordance with Rule 13d-3 under
the Securities Exchange Act of 1934, as required for purposes of this Proxy
Statement; accordingly, it includes shares of Common Stock that are issuable
upon the exercise of stock options exercisable within 60 days of December 8,
1999. Such information is not necessarily to be construed as an admission of
beneficial ownership for other purposes.
4
<PAGE> 7
ELECTION OF DIRECTORS
Action will be taken at the Annual Meeting for the election of two
directors to serve as Class II directors until the 2003 annual meeting of
shareholders and until their respective successors are duly elected and
qualified. The election shall be determined by a plurality vote duly cast. It is
intended that the persons appointed as proxies in the proxy card will vote FOR
the election of the two nominees listed below, unless instructions to the
contrary are given therein. The two nominees have indicated that they are able
and willing to serve as directors. However, if some unexpected occurrence should
require the substitution of some other person or persons for any of the
nominees, it is intended that the proxies will vote FOR such substitute nominees
as the Board of Directors may designate.
The following table sets forth the principal occupations (for at least the
last five years) and directorships of the two nominees in Class II and of the
six directors whose terms of office will continue after the Annual Meeting.
<TABLE>
<CAPTION>
DIRECTOR OF
COMPANY
NAME(A) PRINCIPAL OCCUPATION AND DIRECTORSHIPS AGE SINCE
- ------- -------------------------------------- --- -----------
<S> <C> <C> <C>
Nominees for election as Class II Directors, whose terms will expire in 2003:
Thomas O. Hicks Actively involved in private investments since 1970, 53 1987
specializing in leveraged buyouts; currently serves as
Chairman of the Board and Chief Executive Officer of
Hicks, Muse, Tate & Furst Incorporated (an investment
firm specializing in strategic investments and
leveraged acquisitions). Chairman and director of
AMFM, Inc. (formerly Chancellor Media Corporation).
Director of CCI Holdings, CEI Citicorp Holdings, S.A.,
CorpGroup Limited, DAC Vision, Inc., Home Interiors &
Gifts, Inc., MVS Corporation, Stratford Capital
Partners, Triton Energy Limited, Viasystems Group,
Inc., Olympus Real Estate, Inc., Lin Television,
Teligent, Inc. and Mumms Perrier-Jouet. Chairman of
the Board and Owner of the Dallas Stars Hockey Club as
well as the Chairman and Owner of the Texas Rangers
Baseball Club.
Robert B. Haas Actively involved in private investments since 1978, 52 1987
specializing in leveraged buyouts and venture capital
investments; currently serves as Chairman of the Board
and Chief Executive Officer of Haas, Wheat & Partners
Incorporated (a private investment firm specializing
in leveraged acquisitions). Director of Haas, Wheat &
Partners Incorporated, Haas & Partners Incorporated,
Playtex Products, Inc., AMN Holdings, Inc., Walls
Holding Company, Inc., Nebraska Book Company, Inc.,
NBC Acquisition Corporation, Specialty Foods
Corporation, and Specialty Foods Acquisition
Corporation.
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
DIRECTOR OF
COMPANY
NAME(A) PRINCIPAL OCCUPATION AND DIRECTORSHIPS AGE SINCE
------- -------------------------------------- --- -----------
<S> <C> <C> <C>
Class I Directors, whose terms will expire in 2002:
Don H. Davis, Jr. Chairman and Chief Executive Officer of Rockwell 60 1992
International Corporation (a manufacturer of
electronic controls and communications) since February
1998; President and Chief Executive Officer of
Rockwell International Corporation from January 1997
to February 1998; President and Chief Operating
Officer of Rockwell International Corporation, January
1995 to January 1997; Executive Vice President and
Chief Operating Officer of Rockwell International
Corporation, 1994 to 1995; Senior Vice President and
President, Automation, Rockwell International
Corporation, 1993 to 1994; President of Allen-Bradley
Company (a manufacturer of industrial automation
control and information systems and a wholly owned
subsidiary of Rockwell International Corporation) from
1989 to 1994. Director of Rockwell International
Corporation and Ingram Micro Inc.
Richard W. Vieser Chairman and Chief Executive Officer of FL Industries, 72 1992
Inc. (a diversified manufacturing company) from June
1985 to December 1989; Chairman and Chief Executive
Officer of FL Aerospace (also a diversified
manufacturing company; formerly known as Midland-Ross
Corporation) from September 1986 to December 1989;
Chairman, President and Chief Executive Officer of
Lear Siegler, Inc. (a diversified manufacturing
company) from March 1987 to December 1989; and
President and Chief Operating Officer of McGraw-
Edison Company from April 1984 through June 1985.
Chairman, Varian Medical Systems, Inc. Director of
Harvard Industries, Inc., Global Industrial
Technologies, Inc., International Wire Group, Inc.,
and Viasystems Group, Inc.
Christopher L. Doerr President and Co-Chief Executive Officer of LEESON 50 1997
Electric Corporation (a manufacturer of custom and
standard industrial purpose electric motors). Director
of Kickhaefer Manufacturing Company.
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
DIRECTOR OF
COMPANY
NAME(A) PRINCIPAL OCCUPATION AND DIRECTORSHIPS AGE SINCE
------- -------------------------------------- --- -----------
<S> <C> <C> <C>
Class III Directors, whose terms will expire in 2001:
Kenneth F. Yontz President and Chief Executive Officer of the Company 55 1987
since October 1987; Chairman of the Board since
December 1987; President and Chief Executive Officer
of the company formerly known as Sybron Corporation
and acquired by the Company in 1987 (the "Acquired
Company") from February 1986 until September 1992;
director of the Acquired Company from February 1986 to
March 1988; previously Group Vice President and
Executive Vice President of the Allen-Bradley Company.
Director of Playtex Products, Inc., and Viasystems
Group, Inc.
Joe L. Roby President and Chief Executive Officer of Donaldson, 60 1989
Lufkin & Jenrette, Inc. ("DLJ") (an investment banking
firm) since February 1998; Chief Operating Officer of
DLJ from November 1995 until February 1998, and
President of DLJ since February 1996; Chairman of
Investment Banking Group of Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJSC") (a
subsidiary of DLJ) from 1989 to November 1995;
Managing Director of DLJSC from 1984 to November 1995.
Director of DLJ and Advanced Micro Devices, Inc.(b)
William U. Parfet Chairman and CEO of MPI Research (a pre-clinical 53 1997
toxicology research laboratory) since May 3, 1999;
Co-Chairman of MPI Research between October 1995 and
May 3, 1999; President and Chief Executive Officer of
Richard-Allan Medical Industries, Inc. from October
1993 to January 1996; Vice Chairman of the Board and
President of The Upjohn Company, 1991 to 1993.
Director of Pharmacia & Upjohn, Inc., CMS Energy
Corporation, Stryker Corporation, and MPI Research.
</TABLE>
- ---------------
(a) See "Committees and Meetings of the Board of Directors" for memberships on
Board committees.
(b) The Company engaged DLJSC during fiscal year 1999 to assist the Company in
the divestiture of its subsidiary, Nalge Process Technologies, Inc., and to
provide other financial advisory services.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Company has the following standing committees of the Board of
Directors, whose present members are as identified below. There is no standing
nominating committee.
Messrs. Doerr, Parfet, Roby and Vieser currently serve as members of the
Audit Committee. During the fiscal year ended September 30, 1999, this committee
met 3 times. The Audit Committee is responsible for assisting the Board of
Directors with respect to its oversight of corporate accounting, reporting
practices of the Company, and the quality and integrity of the financial reports
of the Company.
Messrs. Davis, Haas, Hicks, and Vieser serve as members of the
Compensation/Stock Option Committee. During the fiscal year ended September 30,
1999, this committee met 4 times. The Compensation/ Stock Option Committee is
responsible for making recommendations to the Board of Directors concerning
compensation of the Company's employees, officers, and directors, and is
authorized to determine the compensation of executive officers of the Company.
The Compensation/Stock Option Committee is authorized to administer the various
incentive plans of the Company and has all of the powers attendant thereto,
including the power to grant employee stock options.
7
<PAGE> 10
During the fiscal year ended September 30, 1999, the Board of Directors met
5 times. No member of the Board of Directors attended fewer than 75% of the
total number of meetings held by the Board of Directors and the committees on
which he served, except Mr. Hicks, who attended more than 66% of those meetings.
SHAREHOLDER NOMINATION OF DIRECTOR CANDIDATES
The Bylaws of the Company provide that any shareholder who shall be
entitled to vote for the election of directors at a meeting called for such
purpose may nominate persons for election to the Board of Directors subject to
the following notice requirements.
A shareholder desiring to nominate a person or persons for election to the
Board of Directors must send a written notice to the Secretary of the Company
setting forth: (a) the name and address of the shareholder who intends to make
the nomination(s) and of the person or persons to be nominated; (b) a
representation that the shareholder is a holder of record or a beneficial holder
of stock of the Company entitled to vote at the meeting (including the number of
shares the shareholder owns and the length of time the shares have been held)
and intends to appear in person or by proxy at the meeting to nominate the
person or persons specified in the notice; (c) a description of all
relationships, arrangements, and understandings between the shareholder and each
nominee and any other person or persons (naming such person or persons) pursuant
to which the nomination or nominations are to be made by the shareholder; (d)
such other information regarding each nominee proposed by such shareholder as
would have been required to be included in a proxy statement filed pursuant to
the proxy rules of the Securities and Exchange Commission (whether or not such
rules are applicable) had each nominee been nominated, or intended to be
nominated, by the Board of Directors; and (e) the written consent of each
nominee to serve as a director of the Company if so elected, with such written
consent attached thereto. The Bylaws require similar notice with respect to
shareholder proposals for other actions to be taken at a meeting of
shareholders. See "Shareholder Proposals" below.
To be timely, such notice must be delivered to or mailed and received at
the principal executive offices of the Company (i) in the case of an annual
meeting, not less than 60 days nor more than 90 days prior to the first
anniversary of the preceding year's annual meeting (any time from November 4,
2000 to and including December 4, 2000, with respect to the 2001 annual meeting)
or (ii) in the event that the date of the annual meeting is changed by more than
30 days from such anniversary date and in the case of a special meeting, notice
must be so received not later than the close of business on the tenth day
following the earlier of the day on which notice of the date of the meeting was
mailed or the day on which public disclosure of the meeting date was made.
DIRECTORS' COMPENSATION
Directors of the Company are entitled to reimbursement of their reasonable
out-of-pocket expenses in connection with their travel to and attendance at
meetings of the Board of Directors or committees thereof. In addition, during
fiscal 2000, each director of the Company who is not also an officer or employee
of the Company (an "Outside Director") will receive an annual retainer of
$18,000 and a fee of $1,000 for each meeting of the Board of Directors at which
such director is present. Each Outside Director who is a member of a committee
of the Board of Directors will also receive a fee of $750 for each meeting of
such committee at which such director is present. For fiscal 1999, those fees
were also $18,000, $1,000 and $750, respectively. In addition, each person
serving as an Outside Director has been automatically granted an option each
year to purchase 12,000 shares of Company Common Stock pursuant to the terms of
the Sybron International Corporation Amended and Restated 1994 Outside
Directors' Stock Option Plan, which was replaced last year with the Sybron
International Corporation 1999 Outside Directors' Stock Option Plan, at an
exercise price equal to the fair market value of the Common Stock on the date of
grant.
On June 8, 1995, Richard-Allan Scientific Company, a subsidiary of the
Company ("RASC"), entered into a consulting agreement with William U. Parfet,
who became a director of the Company during fiscal 1997. The consulting
agreement, which relates to the identification of opportunities for RASC and
promotion of its products by Mr. Parfet, continues until June 7, 2000. During
the first six (6) months of the term, Mr. Parfet was required to devote at least
two (2) eight-hour days per month to performing his duties under
8
<PAGE> 11
the consulting agreement. During the remainder of the term, he is required to
spend at least one (1) eight-hour day per month performing those duties. For his
services, Mr. Parfet is paid $8,333 per month. RASC may terminate the consulting
agreement prior to expiration of the term in the event Mr. Parfet breaches his
obligations thereunder.
SHAREHOLDER RETURN COMPARISON
The graph below sets forth the cumulative total shareholder return on
Company Common Stock during the preceding five fiscal years, as compared to the
returns of the Standard & Poor's 500 Stock Index and the Standard & Poor's
Health Care Composite Index. The graph assumes that $100 was invested on
September 30, 1994 in Company Common Stock and in each of the two Standard &
Poor's indices, and that, as to such indices, dividends were reinvested. The
Company has not, since its inception, paid any dividends on its Common Stock.
COMPARISON OF CUMULATIVE TOTAL RETURN
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
SYBRON S&P 500 S&P HEALTH CARE
------ ------- ---------------
<S> <C> <C> <C>
9/94 100.00 100.00 100.00
3/95 104.40 108.20 112.30
9/95 116.70 126.30 134.70
3/96 142.00 139.50 155.50
9/96 168.10 148.60 179.40
3/97 160.90 163.60 196.50
9/97 248.90 204.70 243.80
3/98 302.90 238.10 305.90
9/98 221.70 219.80 335.80
3/99 289.90 278.00 386.00
9/99 311.60 277.20 353.20
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
9/94 3/95 9/95 3/96 9/96 3/97 9/97 3/98 9/98 3/99 9/99
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sybron $100.00 $104.4 $116.7 $142.0 $168.1 $160.9 $248.9 $302.9 $221.7 $289.9 $311.6
- --------------------------------------------------------------------------------------------------------------------------------
S&P 500 $100.00 $108.2 $126.3 $139.5 $148.6 $163.6 $204.7 $238.1 $219.8 $278.0 $277.2
- --------------------------------------------------------------------------------------------------------------------------------
S&P Health Care $100.00 $112.3 $134.7 $155.5 $179.4 $196.5 $243.8 $305.9 $335.8 $386.0 $353.2
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
COMPENSATION/STOCK OPTION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Compensation/Stock Option Committee of the Board of Directors (the
"Committee") is responsible for analyzing and approving the Company's general
compensation policies and for making specific compensation decisions with
respect to the Company's executive officers. During fiscal 1999, the Committee
was comprised of the individuals listed at the end of this Report, each of whom
is an Outside Director.
COMPENSATION PHILOSOPHY
The general philosophy of the Company's executive compensation program is
to offer its key executives competitive compensation based both on the Company's
performance and on the employee's individual
9
<PAGE> 12
contribution and performance. The Company's executive compensation policies are
intended to motivate and reward highly qualified executives for long-term
strategic management and the enhancement of shareholder value, support a
performance-oriented environment that rewards achievement of internal Company
goals which are designed to be consistent with the interests of shareholders,
and attract and retain executives whose abilities are critical to the long-term
success and competitiveness of the Company.
The Company's executive compensation program consists of three main
components:
- Base Salary
- Annual Cash Bonus Incentives
- Stock Incentives
BASE SALARY
In September of each year, the Committee meets to consider and finalize
executive officer base salaries for the following calendar year. In setting such
salaries, the Committee considers competitive market data, the relevant impact
of each executive's performance on the future growth and success of the Company,
the complexity of the Company's businesses in which the executive is involved,
the overall economic environment, and such other factors as the Committee may
deem relevant to the particular executive. With respect to the executives who
are the presidents of, and directly responsible for managing, the Company's
principal operating subsidiaries (currently Sybron Laboratory Products
Corporation and Sybron Dental Specialties, Inc.), the Committee also considers
the nature and complexity of each executive's subsidiary's operations, each
executive's subsidiary's contribution to the Company in terms of sales volume
and earnings, the nature and number of foreign operations for which the
executive is responsible, and the relevant impact of the performance of the
executive's operating subsidiary on the future growth and success of the
Company. Using a similar analysis, the Committee will consider changes to an
executive officer's compensation at any time if a change in the scope of the
executive officer's responsibilities justifies such consideration.
In light of the factors set forth above, when setting base salaries for
calendar 1999, the Committee used as its reference point salaries in the 95th
percentile for executives in companies with sales volumes comparable to that of
the Company or the relevant subsidiaries of the Company. The competitive market
information examined by the Committee was derived from a linear regression
analysis of compensation survey data with respect to approximately 316 United
States corporations having sales volumes between $90 million and $153 billion.
This group of companies differs from the group of companies included in the S&P
Health Care Composite Index reflected in the Company's performance graph
contained elsewhere in this Proxy Statement. The survey data, compiled by a
national compensation consulting firm, included compensation information for
15,543 executives in multiple industries. As a test of the survey data's ability
to reflect the market for executive compensation, the Committee compared the
executive compensation market as indicated by this survey data with the
executive compensation market as indicated by the survey data of a second
national compensation consulting firm. The second firm's survey data included
more than 110 executive positions as reported by 710 participating companies
with sales volumes ranging from $142 million to $178 billion.
When it set base salaries for calendar year 1999, the Committee increased
base salaries by an average of 7.9% (inclusive of grade level reclassifications)
over the salaries then in effect for calendar year 1998. The 1998 salaries
included a supplemental increase for Mr. Jellinek in connection with his
appointment as president of Sybron Laboratory Products Corporation in May 1998.
The average increase for 1999 reflected in the survey data was 6.0%. The base
salary paid to the Chief Executive Officer for fiscal 1999 was $737,500 (which
incorporates portions of his calendar year salaries for both 1998 and 1999),
representing a 7.7% increase over fiscal 1998. In setting Mr. Yontz's salary,
the Committee applied the same analysis as it did with respect to all other
executive officers, as described above.
ANNUAL CASH BONUS INCENTIVES
Annual cash bonuses for executive officers are intended to reflect the
Committee's belief that a significant portion of the annual compensation of each
executive officer should be contingent upon the financial
10
<PAGE> 13
performance of the Company. In 1994, the Committee redesigned the Company's
executive compensation program to place a greater emphasis on performance based
compensation and to improve the alignment of internal financial goals,
year-over-year earnings growth, enhancement of shareholder value and executive
incentives. The Senior Executive Incentive Compensation Plan (the "Incentive
Plan"), which was initially approved by the shareholders at the 1995 Annual
Meeting, is a component of the redesigned program. The Incentive Plan became
effective for the Company's 1995 fiscal year, replacing the previous annual
incentive plan under which bonuses were dependent solely upon actual Company
performance versus budgeted performance. The Incentive Plan has a budget
component which preserves the benefits of the budget discipline, but also has an
earnings growth component to provide a tangible, direct link between management
incentives and the expectations of the investment community. There are minimum
levels of financial performance set by the Committee for bonuses to be
triggered, and individual awards depend upon salary grades and the extent to
which the goals are exceeded. With respect to the budget component, a
participant can earn up to 100% of his or her target award by attaining set
operating income targets. With respect to the earnings growth component, once a
minimum hurdle growth rate of 8% over the previous year's operating income is
reached, a participant can earn an additional bonus amount dependent solely upon
the actual rate of year-over-year earnings growth that is achieved. An amendment
to add an individual maximum award limitation was approved by shareholders at
the 1997 Annual Meeting.
The Company's 1999 fiscal year was another excellent performance year. As a
result, the Chief Executive Officer earned a fiscal 1999 incentive award equal
to 158% of his calendar year base salary calculated in accordance with the
Incentive Plan bonus formula. Other executive officers eligible under the
Incentive Plan received fiscal 1999 awards ranging from 106% to 176% of their
base salaries depending on their specific grade levels and the success factor
applied to the individual subsidiary (or consolidated) financial performance
results.
A further description of the Incentive Plan and the method by which awards
are determined thereunder is set forth under "Proposal to Reapprove the Sybron
International Corporation Senior Executive Incentive Compensation Plan" included
in this proxy statement. The full text of the Incentive Plan is attached as
Exhibit A to this proxy statement. The Incentive Plan was designed to qualify
the performance-based compensation paid thereunder for exclusion from the $1
million limit on deductible executive compensation under Section 162(m) of the
Internal Revenue Code. Qualification under Section 162(m) requires shareholder
approval of the performance goals provided for in the Plan, which was initially
obtained in 1995. Continued qualification requires the Plan to be reapproved by
shareholders at least every five years. Because this is the fifth year from
initial approval, in order to continue the Incentive Plan's qualification under
Section 162(m), we are asking the shareholders to reapprove the Incentive Plan
at the 2000 Annual Meeting.
STOCK INCENTIVES
At their 1995 Annual Meeting, the Company's shareholders approved the
Sybron International Corporation Amended and Restated 1993 Long-Term Incentive
Plan (the "Stock Plan"), under which incentive stock options, non-qualified
stock options, and restricted stock could be granted to executive officers and
other key employees of the Company. In 1998, the shareholders approved
amendments to the Stock Plan to, among other things, increase the number of
shares available for issuance thereunder and eliminate all provisions relating
to restricted stock. The Committee views stock-based compensation as a critical
component of the Company's overall executive compensation program.
The Stock Plan was a key component in the Committee's redesign of the
Company's executive compensation program in 1994 to improve the alignment of
internal financial goals, year-over-year earnings growth, enhancement of
shareholder value and executive compensation. Pursuant to this program, in
fiscal 1994 and 1995 the Committee granted nonqualified stock options to
purchase a total of 4,000,000 shares of Company Common Stock to executive
officers (after giving effect to the Company's 2-for-1 stock splits on December
15, 1995 and February 20, 1998), thus providing them an opportunity to realize
significant gains should earnings growth and enhanced shareholder value be
realized. The Committee continued with this program of significant option grants
to executive officers in 1998, when it granted nonqualified options to purchase
a total of 3,478,000 shares of Company Common Stock to executive officers, in
order to sustain the
11
<PAGE> 14
forces driving shareholder value and the vigor with which the executive officers
pursue the Company's growth strategies. As a corollary to these significant
grants, the executive officers do not receive option grants under the Company's
broader annual grant program for key executives. Executive officers have,
however, remained eligible to receive special option grants when warranted, such
as in connection with a significant increase in responsibilities. No options
were granted to executive officers in 1999.
Typically, options granted under the Stock Plan vest in equal annual
installments on each of the first four anniversaries following the grant date
(provided the optionee is still an employee of the Company at that time and
provided further that vesting is accelerated upon the optionee's death,
disability or retirement). Such options are granted with an exercise price equal
to the market value of the Company's Common Stock on the date of the grant, thus
serving to focus the optionees' attention on managing the Company from the
perspective of an owner with an equity stake in the business.
SECTION 162(M)
Section 162(m) of the Internal Revenue Code limits, to $1 million, the
deductibility by a publicly-held corporation of compensation paid in a taxable
year to an individual who, on the last day of the taxable year, was (i) the
Chief Executive Officer or (ii) among the four other highest compensated
executive officers whose compensation is required to be reported in the Summary
Compensation Table. Qualified performance-based compensation is not subject to
the deduction limit if certain conditions are met. The Committee has taken the
steps necessary to satisfy those conditions in order to preserve the
deductibility of executive compensation to the fullest extent possible
consistent with its other compensation objectives and overall compensation
philosophy. One of the conditions is shareholder approval of the Company's
performance-based compensation plans. The Company's shareholders have previously
approved the Incentive Plan and the Stock Plan. Shareholder reapproval must be
obtained at least every five years for a performance-based plan such as our
Incentive Plan which has targets or goals that the Committee has authority to
change. Because the Incentive Plan was last approved in its entirety by
shareholders in 1995, reapproval by shareholders is being sought at the 2000
Annual Meeting.
COMPENSATION/STOCK OPTION COMMITTEE
Robert B. Haas, Chairman
Thomas O. Hicks
Don H. Davis, Jr.
Richard W. Vieser
12
<PAGE> 15
EXECUTIVE COMPENSATION
COMPENSATION SUMMARY
The following table summarizes certain information for each of the last
three fiscal years concerning the compensation awarded or paid to or earned by
the Company's Chief Executive Officer and each of the Company's other four most
highly compensated executive officers who were serving as executive officers at
the end of fiscal 1999 (collectively, the "named executive officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------
AWARDS PAYOUTS
----------------------- -------
ANNUAL COMPENSATION SECURITIES
---------------------------------- RESTRICTED UNDERLYING
OTHER ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
SALARY BONUS COMPENSATION AWARD(S) SARS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($)(A) ($)(B) ($) ($) (#)(C) ($) ($)(D)
- --------------------------- ---- ------ ------ ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Kenneth F. Yontz........... 1999 737,500 1,183,875(e) 123,205(f) 0 0 0 4,286
Chairman of the Board, 1998 685,000 831,600 119,291(f) 0 1,000,000 0 4,536
President, and Chief 1997 630,000 1,387,983 121,442(f) 0 0 0 4,750
Executive Officer
Frank H. Jellinek, Jr. .... 1999 522,500 932,588 54,519(g) 0 0 0 4,286
President of the 1998 397,500 870,240 60,971(g) 0 750,000 0 4,286
Company's subsidiary, 1997 282,500 588,555 55,811(g) 0 0 0 4,071
Sybron Laboratory
Products Corporation
Floyd W. Pickrell, Jr. .... 1999 392,500 424,000 31,475(h) 0 0 0 4,286
President of the 1998 363,750 388,500 29,410(h) 0 578,000 0 4,286
Company's subsidiary, 1997 336,250 389,425 38,702(h) 0 0 0 4,071
Sybron Dental
Specialties, Inc.
R. Jeffrey Harris.......... 1999 312,500 413,280 31,789(i) 0 0 0 4,473
Vice President -- General 1998 278,750 281,880 38,412(i) 0 500,000 0 4,539
Counsel and Secretary 1997 241,250 265,482 36,818(i) 0 0 0 4,770
Dennis Brown............... 1999 312,500 413,280 70,486(j) 0 0 0 4,523
Vice 1998 278,750 281,880 49,853(j) 0 500,000 0 4,579
President -- Finance, 1997 241,250 265,482 46,834(j) 0 0 0 4,775
Chief Financial Officer
and Treasurer
</TABLE>
- ---------------
(a) The salary amounts set forth include amounts deferred at the named executive
officer's option through contributions to the Sybron International
Corporation Savings and Thrift Plan (the "Savings Plan").
(b) Consists of bonuses earned pursuant to the Sybron International Corporation
Senior Executive Incentive Compensation Plan, which amounts were either paid
as soon as practicable following the beginning of the next fiscal year or
deferred pursuant to the Sybron International Corporation Deferred
Compensation Plan.
(c) Consists entirely of stock options.
(d) Consists entirely of employer contributions to the Savings Plan allocated to
the account of the named executive officer.
(e) The total bonus earned by Mr. Yontz for fiscal 1996 was $798,600. A portion
of this bonus was deferred by the Compensation/Stock Option Committee to the
extent that the bonus exceeded the amount able to be deducted by the Company
for federal income tax purposes in the 1996 taxable year. The amount
deferred, which was paid during fiscal 1997, was $479,823, which amount is
included in the 1997 bonus amount in the table.
13
<PAGE> 16
(f) For 1999, includes $27,447 for executive life insurance (including tax
gross-up payments), $33,050 for an executive car and related expenses
(including tax gross-up payments), $9,468 for club memberships, $10,000 for
financial planning services, $655 for an executive physical and $42,585 for
personal use of Company aircraft. For 1998, includes $27,447 for executive
life insurance (including tax gross-up payments), $33,005 for an executive
car and related expenses (including tax gross-up payments), $8,483 for club
memberships, $10,000 for financial planning services and $40,356 for
personal use of Company aircraft. For 1997, includes $27,447 for executive
life insurance (including tax gross-up payments), $31,912 for an executive
car and related expenses (including tax gross-up payments), $9,211 for club
memberships, $10,000 for financial planning services and $42,872 for
personal use of Company aircraft.
(g) For 1999, includes $25,764 for executive life insurance (including tax
gross-up payments), $24,136 for an executive car and related expenses
(including tax gross-up payments), $3,900 for club memberships and $719 for
personal use of Company aircraft. For 1998, includes $22,768 for executive
life insurance (including tax gross-up payments), $30,351 for an executive
car and related expenses (including tax gross-up payments), $3,900 for club
memberships, $1,285 for financial planning services and $2,667 for personal
use of Company aircraft. For 1997, includes $13,559 for executive life
insurance (including tax gross-up payments), $22,915 for an executive car
and related expenses (including tax gross-up payments), $13,250 for club
memberships and $6,087 for personal use of Company aircraft.
(h) For 1999, includes $11,983 for executive life insurance (including tax
gross-up payments), $15,079 for an executive car and related expenses
(including tax gross-up payments), $3,980 for club memberships and $433 for
an executive physical. For 1998, includes $11,983 for executive life
insurance (including tax gross-up payments), $13,062 for an executive car
and related expenses (including tax gross-up payments), $3,780 for club
memberships and $585 for an executive physical. For 1997, includes $11,983
for executive life insurance (including tax gross-up payments), $18,069 for
an executive car and related expenses (including tax gross-up payments),
$3,780 for club memberships, $742 for an executive physical and $4,128 for
personal use of Company aircraft.
(i) For 1999, includes $6,374 for executive life insurance (including tax
gross-up payments), $14,190 for an executive car and related expenses
(including tax gross-up payments), $7,225 for club memberships and $4,000
for financial planning services. For 1998, includes $6,374 for executive
life insurance (including tax gross-up payments), $20,670 for an executive
car and related expenses (including tax gross-up payments), $5,360 for club
memberships, $4,000 for financial planning services and $2,008 for personal
use of Company aircraft. For 1997, includes $6,374 for executive life
insurance (including tax gross-up payments), $19,578 for an executive car
and related expenses (including tax gross-up payments), $5,360 for club
memberships, $4,000 for financial planning services and $1,506 for personal
use of Company aircraft.
(j) For 1999, includes $18,833 for executive life insurance (including tax
gross-up payments), $19,876 for an executive car and related expenses
(including tax gross-up payments), $30,427 for club memberships and $1,350
for financial planning services. For 1998, includes $18,833 for executive
life insurance (including tax gross-up payments), $19,832 for an executive
car and related expenses (including tax gross-up payments), $7,972 for club
memberships, $1,208 for financial planning services and $2,008 for personal
use of Company aircraft. For 1997, includes $18,833 for executive life
insurance (including tax gross-up payments), $18,784 for an executive car
and related expenses (including tax gross-up payments), $6,861 for club
memberships, $850 for financial planning services and $1,506 for personal
use of Company aircraft.
14
<PAGE> 17
STOCK OPTIONS
The following table sets forth certain information concerning individual
exercises of stock options by the named executive officers during fiscal 1999,
as well as the number and value of options outstanding at the end of fiscal 1999
for each of the named executive officers. There were no individual grants of
options to purchase Company Common Stock made to the named executive officers
during fiscal 1999.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES(A)
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FISCAL YEAR-END(#) FISCAL YEAR-END($)
SHARES ACQUIRED VALUE ---------------------------- ----------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth F. Yontz.......... 0 N/A 789,924 750,000 10,568,789 1,945,350
Frank H. Jellinek, Jr. ... 50,672 1,017,192 298,400 562,500 2,477,796 1,459,013
Floyd W. Pickrell, Jr. ... 179,734 3,409,626 238,220 433,500 2,020,766 1,124,412
R. Jeffrey Harris......... 0 N/A 587,820 375,000 8,974,218 972,675
Dennis Brown.............. 76,450 1,440,156 825,018 375,000 13,598,598 972,675
</TABLE>
- ---------------
(a) Consists entirely of stock options.
EMPLOYMENT CONTRACTS
All of the named executive officers have entered into employment contracts
(the "Employment Contracts") with the Company. Each of the Employment Contracts
provided for an initial term which expired on December 31, 1993. Each of the
Employment Contracts provides that at the close of the initial term, and at the
close of each two-year term thereafter, the contract is extended for a two-year
period unless written notice of an intention not to renew the Employment
Contract is given to the other party thereto by either the employee or the
Company at least ninety days prior to the date the automatic extension otherwise
would occur. Each of the Employment Contracts also provides that upon a Change
in Control (as defined in the Employment Contract) the term shall automatically
be extended for a two-year period ending on the second anniversary of the Change
in Control. Pursuant to each of their respective Employment Contracts, these
executive officers have agreed to serve in their respective executive officer
capacities, and each is to devote his full time to the performance of his duties
thereunder. The Employment Contracts of Messrs. Yontz, Jellinek, Pickrell,
Harris and Brown provide for calendar year 1999 base salaries of $750,000,
$530,000, $400,000, $320,000 and $320,000, respectively, which base salaries are
subject to annual merit increases at the discretion of the Compensation/Stock
Option Committee. In addition, these executives are entitled to benefits
customarily accorded executives of the Company and its subsidiaries, including
participation in the Company's Senior Executive Incentive Compensation Plan. In
the event of death or permanent disability, the executive, his beneficiaries or
estate, as the case may be, will be entitled to continue to receive the
executive's then current base salary for a period of twelve months following the
termination of employment as a result of such event. In addition, each
Employment Contract may be terminated at any time by the Board of Directors for
Cause (as defined in the Employment Contract). Each of the Employment Contracts
provides that if an event constituting a Change in Control shall have occurred,
the executive officer is entitled to receive a severance payment equal to 2.99
times such officer's "Base Amount" as such term is defined under section
280G(b)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), upon
the termination of his employment with the Company or its subsidiaries unless
such termination is (i) because of death or retirement, (ii) by the Company or
any of its subsidiaries for total disability or Cause, or (iii) by such officer
other than for Good Reason (as defined in the Employment Contract). The Company
must require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to assume the Company's obligations pursuant to the
Employment Contracts, and any failure to obtain such assumption shall entitle
the executives to the same benefits they would receive if they terminated the
Employment Contracts on the date of succession for Good Reason following a
Change in Control. The Employment
15
<PAGE> 18
Contracts also subject the executives to confidentiality obligations and contain
restrictions on their competing with, and soliciting clients and employees of,
the Company for a period of one and three years, respectively, following
termination of the Employment Contract.
PENSION BENEFIT PLANS
Retirement Plan. The Company has a Retirement Security Plan (the
"Retirement Plan") for certain U.S. employees who are not covered by a
collective bargaining agreement, including its executive officers. The plan
combines several prior pension plans of the company formerly known as Sybron
Corporation and acquired by the Company in 1987 (the "Acquired Company") and is
a "career average" type plan. The benefit formula directly relates to annual
salary, length of service and Social Security covered compensation. To the
extent that pension benefits exceed the benefit limits and limits on covered
compensation imposed by the Employee Retirement Income Security Act of 1974, as
amended, the Company plans to make the appropriate payments under the unfunded
pension plan described below as they become due. The total compensation covered
by the Retirement Plan (including unfunded amounts) is the amount shown in the
salary and bonus columns of the Summary Compensation Table.
Annual pension benefits expected to be distributed upon retirement
(normally at age 65) to most executive officers of the Company, including the
named executive officers, are equal to the sum of past and future service
benefit formulas. Past service benefit (for service prior to January 1, 1987) is
an amount equal to the sum of (a) 0.0105 times the average annual pay for the
employee's final three years, up to the Social Security covered compensation for
1987, plus (b) 0.015 times the average annual pay for the employee's final three
years, in excess of the Social Security covered compensation in 1987, which sum
is multiplied by the total number of years of credited service before January 1,
1987. The amount so calculated is reduced by the amount of any benefit the
participant is eligible to receive from a prior pension plan or due to
participation in any prior profit sharing plan. Future service benefit (for
service since January 1, 1987) for credited service not in excess of 35 years is
an amount equal to the sum of all future year annual benefits calculated for
each year as 0.0105 times annual pay up to the Social Security covered
compensation for that year, plus 0.015 times annual pay in excess of the Social
Security covered compensation for that year. Future service benefit for credited
service in excess of 35 years is an amount equal to 0.014 times a participant's
annual salary for such year. The Company may from time to time move the past
service formula to a more current date which would have the effect of increasing
the amount of average compensation upon which benefits are calculated.
The following table illustrates the projected annual pension benefits
payable for life (without provision for survivor pension) from the Retirement
Plan and, where applicable, the Unfunded Plan described below upon retirement at
age 65 to the executive officers named in the Summary Compensation Table.
<TABLE>
<CAPTION>
PROJECTED ASSUMED FULL YEARS OF
NAME OF ANNUAL RETIREMENT ADDITIONAL YEARS SERVICE AS OF
INDIVIDUAL BENEFIT AT AGE 65* OF SERVICE SEPT. 30, 1999
---------- ------------------ ---------------- --------------
<S> <C> <C> <C>
Kenneth F. Yontz............................. $477,892 10 13
Frank H. Jellinek, Jr........................ 386,600 11 32
Floyd W. Pickrell, Jr........................ 228,770 12 26
R. Jeffrey Harris............................ 297,546 21 14
Dennis Brown................................. 181,988 14 6
</TABLE>
- ---------------
* Assumes no salary increases.
As of December 31, 1985, the Acquired Company had purchased annuities to
cover past service benefits for all employees covered under the Salaried Pension
Plan of the Acquired Company through such date.
Unfunded Pension Plan. The Company currently maintains an unfunded,
non-qualified retirement plan providing benefits to employees of the Company in
excess of the limitations set forth under section 415 of the Code (the "Unfunded
Plan"). The individuals named in the Summary Compensation Table and executives
as a group are eligible to participate in the Unfunded Plan.
16
<PAGE> 19
Under the Unfunded Plan, benefits are paid from a Rabbi Trust sponsored by
the Company. Participants are entitled to a monthly benefit upon their
retirement equal to the actuarial value of the benefit that would be payable to
the participant if the provisions of the Retirement Plan dealing with limits on
pensions pursuant to Code section 415 were inapplicable.
The compensation covered by the Unfunded Plan includes salary, bonus, and
deferred compensation payable to the participant for services rendered. The
compensation in the salary and bonus columns of the Summary Compensation Table,
above, includes each of these elements. For Mr. Yontz, the benefit was
calculated using his 1999 calendar year base salary of $750,000 and the bonus
earned for fiscal 1999 of $1,183,875. Benefits under the Unfunded Plan are
computed on a straight-life annuity basis, and are subject to an offset of the
actuarial value of benefits payable to participants under the terms of the
Retirement Plan.
PROPOSAL TO REAPPROVE THE SYBRON INTERNATIONAL CORPORATION
SENIOR EXECUTIVE INCENTIVE COMPENSATION PLAN
The shareholders of the Company approved the Sybron International
Corporation Senior Executive Incentive Compensation Plan (the "Incentive Plan")
at the 1995 Annual Meeting, and approved amendments to the Incentive Plan at the
1997 Annual Meeting. As permitted by the Incentive Plan, the Compensation/ Stock
Option Committee (the "Committee") further amended the Incentive Plan in 1998
and 1999 to make it more restrictive and to better control working capital and
capital expenditures. The Incentive Plan, as amended and restated, is being
submitted to the shareholders for reapproval because Section 162(m) of the
Internal Revenue Code requires such reapproval by the Company's shareholders
every five years for the Company to remain eligible for a tax deduction for
awards paid under the Incentive Plan to an executive officer of the Company
whose annual compensation is in excess of $1 million.
The principal objectives of the Incentive Plan are to (i) emphasize
performance-based compensation, (ii) align internal financial goals,
year-over-year earnings growth, enhancement of shareholder value and executive
incentives, and (iii) assist in attracting and retaining qualified managerial
employees by providing a total compensation opportunity competitive with the
marketplace.
A copy of the Incentive Plan, as amended and restated, is attached hereto
as Exhibit A. The following description of the Incentive Plan is qualified in
its entirety by reference to the complete text set forth in Exhibit A.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" REAPPROVAL OF THE INCENTIVE
PLAN.
PRINCIPAL TERMS OF THE INCENTIVE PLAN
Any key executive who can directly influence the financial results of the
Company or its subsidiaries is eligible to participate in the Incentive Plan.
The pool of individuals eligible to participate in the Incentive Plan is
determined annually by the Committee. For fiscal 1999, there were 20 eligible
participants in the Incentive Plan. Information with respect to awards made
during fiscal 1999 is contained in the "New Plan Benefits" table below.
An award under the Incentive Plan is calculated by multiplying the
participant's target award by the applicable success factor. A participant's
target award depends upon a percentage of base salary associated with the
participant's salary grade. For those participants who work for one of the
Company's operating subsidiaries, the success factor depends upon the financial
performance of that subsidiary. For those participants who have overall
corporate responsibilities, the success factor is based upon a weighted average
of the financial performance of each subsidiary. In no event may the actual
award for a plan year for any participant exceed $2.8 million.
The terms of the Incentive Plan, as approved by the shareholders, permit
the Committee to amend the provisions of the Incentive Plan to further restrict
the conditions pursuant to which awards under the Incentive Plan may be made.
The Committee took such action in fiscal 1998 and fiscal 1999 to better control
working capital and capital expenditures by imposing a cost of capital charge
for working capital or capital
17
<PAGE> 20
expenditures which exceed certain amounts. Those amendments are reflected in the
following description of the principal terms of the Incentive Plan, as well as
in the copy of the Incentive Plan attached hereto as Exhibit A.
Following is an explanation of the calculation of both the target award and
the applicable success factor, along with an example of how an award under the
Incentive Plan is calculated.
Target Award Calculation
The target award for a participant in the Incentive Plan is a percentage of
the participant's annual base salary as of the end of the year for which the
award is payable, which percentage is based upon salary grade. The target awards
range from 16% of base salary for a participant at executive salary grade 3 to
55% of base salary for a participant at executive salary grade 21. For example,
an executive officer with salary grade 17 and a salary of $400,000 would have a
target award of 50% of the executive's base salary, or $200,000. This amount
would be multiplied by the applicable success factor to determine the
participant's award under the Incentive Plan.
Success Factor Calculation
The success factor is calculated by totaling the percentages by which the
actual performance with respect to certain financial measurement components
exceeds the goals set forth for such components. If certain threshold results
are not achieved, then the success factor will be 0% and no bonus will be paid.
Certain of the components are subject to caps regardless of the level of
performance.
The financial measurement components of the success factor are as follows:
actual operating income compared to budget (the "Budgeted Operating Income
Component") and growth in operating income over the prior year (the
"Year-Over-Year Growth Component"). The performance threshold for the Budgeted
Operating Income Component is the achievement of at least 80% of the budgeted
amount. Performance between 80% and 100% of the budgeted amount results in a
proportionate credit to the success factor. No credit is given for performance
over 100% of the budgeted amount for this component. This limitation means that
the portion of the success factor attributable to this component cannot exceed
an aggregate of 100%.
The performance threshold for the Year-Over-Year Growth Component is an 8%
growth in operating income over the prior year. The credit to the success factor
is 0% until 8% growth is achieved, at which level the credit to the success
factor is 80%. At 10% growth, the credit to the success factor is 100%, and so
on with a proportionate, linear increase in the credit to the success factor for
growth beyond 10%.
Earnings growth through acquisitions is encouraged by the Incentive Plan
because earnings from acquisitions are included in operating income. However,
operating income is adjusted to offset the imputed cost of funding the
acquisition and the amortization of intangibles associated with the acquisition.
To further control cash flow, certain penalties are applied through an
adjustment to operating income if capital expenditures or investments in working
capital exceed predetermined levels. If a business' capital expenditures exceed
its depreciation, it will be charged an 8% cost of capital on the excess. If a
business' working capital ratio (working capital / sales) exceeds the average
level of its previous four years' working capital ratios, it will be charged an
8% cost of capital on the product of such excess multiplied by its sales.
Calculation of Incentive Award -- Example
As stated above, an incentive award is calculated by multiplying a
participant's target award by the applicable success factor. As an example,
assume: (1) an executive officer participant who is an employee of a subsidiary
of the Company with a salary of $400,000, at salary grade 17 (which corresponds
to a target award of 50% of base salary); (2) the subsidiary achieves operating
income of 105% of the amount budgeted; and (3) the subsidiary achieves operating
income growth of 10% over the prior year's operating income.
18
<PAGE> 21
This participant's target award would be $200,000 (i.e., 50% of $400,000).
The applicable success factor would be calculated as follows:
<TABLE>
<S> <C> <C>
- Budgeted Operating Income Component (105% of budget, capped 100%
at 100%)....................................................
- Year-Over-Year Growth Component (10% growth equals a 100%
credit to the 100%
success factor).............................................
---
- Success factor (aggregate of the components)................ 200%
</TABLE>
The incentive award would be equal to $400,000, which is $200,000 (the
target award) multiplied by 200% (the success factor).
Miscellaneous
Awards under the Incentive Plan are paid in cash as soon as practicable
after the financial results for the relevant plan year have been determined. The
actual award for a participant who is transferred between subsidiaries within a
plan year is based upon a pro rata calculation of the financial performance of
each subsidiary for which the participant worked during the plan year.
Participants who terminate employment other than for retirement, disability
or death at any time during a plan year or before award payments are made with
respect to that plan year shall not be entitled to receive any award under the
Incentive Plan unless specifically approved by the Committee. Participants (or
their beneficiaries or legal representatives, if applicable) who retire, become
disabled or die during a plan year shall receive an actual award based upon the
portion of the plan year during which the participant was actively employed.
The Incentive Plan is administered by the Committee, no member of which is
eligible for an award thereunder. The Committee has the authority to interpret
the provisions of the Incentive Plan, identify eligible key employees to
participate therein, and establish rules and regulations and make all
determinations necessary or advisable for the administration of the plan. In the
event of special circumstances of an unusual or significant nature outside the
course of normal business operations, the Committee may also adjust previously
approved financial objectives of the Company or its subsidiaries, or the amount
of an award earned under the Incentive Plan, if the Committee believes the
integrity, purpose and fairness of the Incentive Plan would be better served.
However, any such adjustment made after the beginning of the period in which
awards are earned shall not permit the actual awards earned, either by any
participant or in the aggregate, to be greater than they would have been had the
financial objectives approved prior to such period been operative. The Committee
may at any time amend, suspend or terminate the Incentive Plan.
FEDERAL TAX CONSEQUENCES OF INCENTIVE PLAN AWARDS
A participant will realize income at the time an award is paid to the
participant under the Incentive Plan. The Company will be entitled to a
deduction for the amount of the award at the same time provided that, with
respect to the deduction to be taken for any award paid to an executive officer
who is subject to Section 162(m) which exceeds, when combined with other
compensation paid to that officer, $1 million, shareholder reapproval of the
Incentive Plan is obtained and the Incentive Plan continues to qualify for such
deduction under Section 162(m).
19
<PAGE> 22
NEW PLAN BENEFITS
The following table sets forth certain information with respect to awards
earned during fiscal 1999 by the designated individuals pursuant to the
Incentive Plan:
<TABLE>
<CAPTION>
DOLLAR VALUE OF
NAME AND POSITION AWARDS($)
----------------- ---------------
<S> <C>
Kenneth F. Yontz............................................ $1,183,875
Chairman of the Board, President and Chief Executive
Officer
Frank H. Jellinek, Jr....................................... $ 932,588
President, Sybron Laboratory Products Corporation
Floyd W. Pickrell, Jr....................................... $ 424,000
President, Sybron Dental Specialties, Inc.
R. Jeffrey Harris........................................... $ 413,280
Vice President -- General Counsel and Secretary
Dennis Brown................................................ $ 413,280
Vice President -- Finance, Chief Financial Officer and
Treasurer
Executive Group (5 persons)................................. $3,367,023
Non-Executive Officer Director Group........................ 0
Non-Executive Officer Employee Group (15 persons)........... $1,536,067
</TABLE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) of the Securities Exchange Act of 1934, the
Company's directors, its executive officers, and any persons who beneficially
own more than 10% of the Company's Common Stock are required to report their
initial ownership of Company Common Stock and subsequent changes in that
ownership to the Securities and Exchange Commission and the New York Stock
Exchange. Specific due dates for those reports have been established and the
Company is required to disclose in this Proxy Statement any failure to file by
those due dates during fiscal 1999. Based upon a review of such reports
furnished to the Company, or written representations that no reports were
required, the Company believes that all of those filing requirements were
satisfied with respect to fiscal 1999.
INDEPENDENT PUBLIC ACCOUNTANTS
Acting on the recommendation of the Audit Committee, the Board of Directors
has selected the public accounting firm of KPMG LLP (formerly KPMG Peat Marwick
LLP) as the Company's independent auditors for the current fiscal year. A
representative of KPMG LLP is expected to be present at the Annual Meeting to
respond to appropriate questions and will be given an opportunity to make a
statement on behalf of KPMG LLP if desired.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
Annual Meeting. However, if any other matters are properly brought before the
Annual Meeting, it is the intention of the persons named in the accompanying
proxy to vote in accordance with their judgment on such matters.
SHAREHOLDER PROPOSALS
Shareholder proposals for the 2001 Annual Meeting of Shareholders of the
Company must be received no later than August 24, 2000 at the Company's
principal executive offices, 411 East Wisconsin Avenue, 24th Floor, Milwaukee,
Wisconsin 53202, directed to the attention of the Secretary, in order to be
considered for inclusion in next year's annual meeting proxy material under the
Securities and Exchange Commission's
20
<PAGE> 23
proxy rules. Under the Company's Bylaws, written notice of shareholder proposals
for the 2001 Annual Meeting of Shareholders of the Company which are not
intended to be considered for inclusion in next year's annual meeting proxy
material (shareholder proposals submitted outside the processes of Rule 14a-8)
must be received no later than December 4, 2000 and no earlier than November 4,
2000 at such offices, directed to the attention of the Secretary, and such
notice must contain the information specified in the Company's Bylaws.
The foregoing notice and Proxy Statement are sent by order of the Board of
Directors.
R. JEFFERY HARRIS
R. JEFFREY HARRIS
Secretary
December 22, 1999
A COPY (WITHOUT EXHIBITS) OF THE COMPANY'S ANNUAL REPORT TO THE SECURITIES
AND EXCHANGE COMMISSION ON FORM 10-K FOR THE FISCAL YEAR ENDED SEPTEMBER 30,
1999 HAS BEEN PROVIDED WITH THIS PROXY STATEMENT. THE COMPANY WILL PROVIDE TO
ANY SHAREHOLDER, WITHOUT CHARGE, UPON WRITTEN REQUEST OF SUCH SHAREHOLDER, AN
ADDITIONAL COPY OF SUCH ANNUAL REPORT. SUCH REQUESTS SHOULD BE ADDRESSED TO
TRICIA MINTZLAFF, SYBRON INTERNATIONAL CORPORATION, 411 EAST WISCONSIN AVENUE,
24TH FLOOR, MILWAUKEE, WISCONSIN 53202.
21
<PAGE> 24
EXHIBIT A
SYBRON INTERNATIONAL CORPORATION
AMENDED AND RESTATED
SENIOR EXECUTIVE INCENTIVE COMPENSATION PLAN
POLICY STATEMENT
1. OBJECTIVES
The Sybron International Corporation Senior Executive Incentive
Compensation Plan ("Plan") is designed to:
- Focus the efforts of the organization on improving shareholder value.
- Effectively motivate and reward key employees according to their
contributions to organizational success.
- Serve as a management tool in directing energies of key employees towards
the achievement of agreed upon operating goals for each unit and for the
Company in aggregate.
- Equate personal financial success with organizational financial success.
- Assist in retaining and attracting qualified managerial employees by
providing a total compensation opportunity competitive with the
marketplace.
2. ADMINISTRATION
The Plan shall be administered by the Compensation/Stock Option Committee
of the Board of Directors ("Committee"). No member of the Committee shall be
eligible for awards under the Plan.
The Committee shall interpret the Plan, identify those Subsidiaries
eligible to participate in the Plan, establish rules and regulations for the
administration thereof, and make all determinations deemed necessary or
advisable for the administration of the Plan. The Committee shall be assisted by
the Corporate Human Resources Department staff in fulfilling its administrative
responsibilities.
3. ELIGIBILITY
Key executives who can directly influence the financial results of Sybron
International Corporation or its Subsidiaries shall constitute the class of
employees eligible to participate in the Plan.
"Subsidiary" shall mean any Subsidiary of the Corporation designated by the
Committee for the purpose of financial measurement and the determination of
payments under the Plan prior to the beginning of the period during which awards
are earned. An individual's eligibility to participate under the Plan shall be
determined annually by the Committee. Participation in the Plan during a fiscal
year shall not imply the right of participation in any following year.
4. TARGET AWARDS
Target Awards for all participants shall be a percentage of the
participant's actual annual base salary as of the end of each plan year for
which awards are payable. The percentage shall be determined from the salary
grade to which the participant is assigned as of the end of the plan year, all
as set forth in the Administrative Guidelines for the Plan which are included by
reference herein.
Bonuses will be based on a combination of operating earnings growth and
actual financial results compared with budgeted results for the year. Bonuses at
the corporate level shall be determined by computing the weighted average of the
performance of each Subsidiary.
A-1
<PAGE> 25
5. DETERMINATION OF ACTUAL AWARDS
A participant's Actual Award will be determined by multiplying the total
Target Award by a Success Factor.
The Success Factor is the aggregate of two different elements of financial
performance; namely, operating income compared with budget and growth in
earnings over prior year. The budgeted operating income component cannot exceed
100%.
Composition of the Success Factor is as follows:
<TABLE>
<S> <C> <C>
Operating income performance vs. budget (capped at 100%) = a
Growth in operating income performance = b
---
Success Factor = a+b
===
</TABLE>
Section 5 of the Administrative Guidelines defines elements of the Success
Factor in detail and a rather complete example of how an individual's bonus is
computed can be found following Section 10 of the Administrative Guidelines.
Notwithstanding any other provision of this Plan, in no event shall the
Actual Award for a plan year for any participant exceed $2,800,000 (the "Maximum
Dollar Amount").
6. CHANGE IN EMPLOYMENT STATUS
Participants who are transferred between Subsidiaries within a plan year
shall receive an award based on a pro rata calculation of the Financial
Performance Components of any Subsidiary in which the participants were employed
during the plan year. Participants who terminate employment with the Corporation
or Subsidiary, or whose employment is terminated by the Corporation or
Subsidiary (except for retirement, disability or death), at any time during a
plan year or before award payments are made shall not be entitled to receive any
awards under the Plan, unless such awards are specifically approved by the
Committee.
Participants (or their beneficiaries or legal representatives) who retire,
become disabled or die during the plan year shall receive an Actual Award based
on the portion of the plan year during which the participant was actively
employed.
7. METHOD OF PAYMENT
Awards under the Plan shall be paid in cash as soon as practicable after
financial results for the plan year have been determined and verified.
8. COMMITTEE DISCRETION
In the event of special circumstances of unusual or significant nature
outside the course of normal business operations, the Committee may adjust
previously approved financial objectives of the Corporation or any of its
Subsidiaries, or the amount of Actual Awards earned, when it believes the
integrity, purpose and fairness of the Plan will be better served. Any such
adjustment made after the beginning of the period in which the awards are earned
shall not, however, permit Actual Awards, either to any person or in the
aggregate, to be greater than they otherwise would have been under the financial
objectives approved prior to the beginning of such period.
9. AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN
The Committee may, at any time, amend, suspend or terminate the Plan.
A-2
<PAGE> 26
ADMINISTRATIVE GUIDELINES
The Administrative Guidelines ("Guidelines") have been established by the
Corporate Human Resources Department staff, approved by the Compensation/Stock
Option Committee ("Committee") of the Board of Directors, and shall remain in
effect until changed by the Committee. These Guidelines combined with the Sybron
Senior Executive Compensation Plan Policy Statement (together, the "Plan") shall
govern the amounts and terms of incentive awards payable to eligible
participants.
1. TARGET AWARDS
Target Awards shall be determined from a participant's salary grade.
Current salary schedules and Target Award percentages for U.S. and non-U.S.
participants are included in Section 9 below. The Target Award for all
participants shall be the pre-determined percentage for the participant's grade
applied against the base salary of the participant as of the end of each plan
year.
2. ACTUAL AWARDS
A participant's Actual Award will be determined by multiplying the total
Target Award by a Success Factor, provided that the Actual Award shall not
exceed the Maximum Dollar Amount.
3. SUCCESS FACTOR (OPERATING SUBSIDIARIES)
The Success Factor for operating Subsidiaries is determined by aggregating
actual performance for each of the two contributing elements.
As defined in Section 5 of the Plan Policy Statement, elements of the
Success Factor are:
Operating income performance vs. budget
+ Growth in operating income performance
Actual performance will be measured at currency exchange rates consistent
with those budgeted to neutralize the effects of foreign exchange movements.
4. SUCCESS FACTOR (CORPORATE EMPLOYEES)
The corporate Success Factor will be equal to a weighted average of the
Success Factors derived for each of the operating Subsidiaries.
The weighting of Success Factors will be based on actual levels of
operating income for each Subsidiary.
5. SUCCESS FACTOR -- ELEMENTS
Participants will be rewarded according to performance in each of the
following areas:
(i) Actual operating income compared with budget.*
- Award will be zero until 80% of budgeted operating income is
achieved. Maximum award will be equal to 100% when budgeted
operating income is achieved. Performance between 80% and 100% of
budgeted income would result in a proportional award being
earned.
OPERATING INCOME
<TABLE>
<CAPTION>
BUDGET AMOUNT
($000)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Percent Achievement 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97
<CAPTION>
BUDGET AMOUNT
($000)
<S> <C> <C> <C>
Percent Achievement 98 99 100
</TABLE>
(ii) Actual rate of growth in operating income over prior year.*
- Award will be zero until 8% growth in operating earnings over
prior year is achieved. At a growth level of 8%, the award will
be equal to 80%.
A-3
<PAGE> 27
- At 10% growth, the award will be equal to 100% and at 20% growth,
the award will be 200%, continuing on a linear basis, in an
unlimited fashion such that for each 10% growth, the award will be
equal to 100%.
OPERATING INCOME GROWTH
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Percent Growth
Achieved 8 10 12 14 16 18 20 22 24
Percent
Achievement........ 80 100 120 140 160 180 200 220 240
<S> <C> <C>
26 28 30
260 280 300
</TABLE>
* Earnings from acquired businesses will also be included,
subject to adjustment as described below.
6. EARNINGS FROM ACQUISITIONS
An important goal of this Plan is to encourage the acquisition of suitable
companies and/or product lines as a way of growing earnings.
Earnings from acquisitions will, therefore, be included in the Success
Factor element after an adjustment is made to the basis of measurement to offset
the imputed cost of funding the acquisition and the amortization of intangibles
associated with the acquisition.
7. IMPUTED COST OF CAPITAL
With respect to acquisitions, there will be charged an imputed cost of
capital equal to 8% of the purchase price of the acquired business for the first
twelve months following an acquisition. Thereafter, this charge will be
decreased by 1% each year to reflect the anticipated positive cash flow from the
earnings of the acquired entity.
An imputed cost of capital of 8% will be charged when the amount by which
the applicable plan year's working capital ratio (computed on a 13-month
average, September through September, basis) exceeds the average of the previous
four years' working capital ratios (computed on a similar basis). The charge is
calculated by multiplying such excess, if any, by the applicable plan year's
sales, and charging 8% on such product. Additionally, an imputed cost of capital
of 8% will be charged for the amount by which the applicable plan year's capital
expenditures exceed such year's depreciation if such excess occurs.
From time to time the percentage imputed cost of capital charge may change
if commercial interest rates change.
A-4
<PAGE> 28
8. DEFINITION OF OPERATING INCOME
For purposes of this policy, operating income is operating income as
adjusted, which means operating income as reported on management accounting
statements, less amortization of intangible assets, less the imputed cost of
capital.
EXAMPLE
<TABLE>
<S> <C>
- - Subsidiary operating income for applicable plan year
excluding acquisition....................................... $100,000,000
- - Acquisition cost of "NEWCO" made 10/1 of year 1........... 5,000,000
- - Net book value of "NEWCO"................................. 3,000,000
- - "NEWCO" goodwill.......................................... 2,000,000
- - "NEWCO" annual operating earnings......................... 1,000,000
- - Subsidiary applicable plan year sales..................... 500,000,000
- - Applicable plan year's working capital ratio.............. 25.1%
- - Average of previous four years' working capital ratios.... 23.4%
- - Capital expenditures for applicable plan year............. 10,000,000
- - Depreciation for applicable plan year..................... 8,000,000
</TABLE>
A. COST OF CAPITAL CHARGE FOR ACQUISITIONS ($ IN THOUSANDS)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cost of Capital Rate 8% 7% 6% 5% 4%
Purchase Cost of "NEWCO" 5,000 5,000 5,000 5,000 5,000
Cost of Capital Charge (400) (350) (300) (250) (200)
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
B. COST OF CAPITAL CHARGE FOR EXCESS WORKING CAPITAL ($ IN THOUSANDS)
<TABLE>
<S> <C>
- -----------------------------------------------------------------------------
- Applicable Plan Year's Working Capital Ratio 25.1%
- Average of Prior Four Years' Working Capital Ratio 23.4%
- Applicable Plan Year's Sales 500,000
- -----------------------------------------------------------------------------
Working Capital Charge 500,000 X (.251-.234) X .08 680
- -----------------------------------------------------------------------------
</TABLE>
C. COST OF CAPITAL CHARGE FOR EXCESS CAPITAL EXPENDITURES ($ IN THOUSANDS)
<TABLE>
<S> <C>
- ----------------------------------------------------------------------------
- Applicable Plan Year's Capital Expenditures 10,000
- Applicable Plan Year's Depreciation 8,000
- ----------------------------------------------------------------------------
Cost of Capital Charge (10,000 -- 8,000) X .08 160
- ----------------------------------------------------------------------------
</TABLE>
D. ADJUSTED OPERATING INCOME COMPUTATION ($ IN THOUSANDS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- Subsidiary Earnings Excluding Acquisition 100,000 100,000 100,000 100,000 100,000
- "NEWCO" Earnings 1,000 1,000 1,000 1,000 1,000
- Amortization of Goodwill (50) (50) (50) (50) (50)
- Cost of Capital -- Acquisitions (400) (350) (300) (250) (200)
- Cost of Capital -- Excess Working Capital (680) * * * *
- Cost of Capital -- Excess Capital
Expenditures (160) * * * *
- ------------------------------------------------------------------------------------------------------------
Adjusted Operating Income 97,100 100,600 100,650 100,700 100,750
- ------------------------------------------------------------------------------------------------------------
</TABLE>
* Amount depends on working capital, capital expenditures and depreciation
calculations for these years.
A-5
<PAGE> 29
9. SALARY GRADES/TARGET AWARD PERCENTAGES
SALARY GRADES/
TARGET AWARD PERCENTAGES
---------------------------------------------------------------------------
<TABLE>
<CAPTION>
U.S. NON-U.S.
- ---------------------------------------------------------------------------------
SALARY GRADE TARGET AWARD % SALARY GRADE TARGET AWARD %
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
3 .16 3 .11
4 .18 4 .13
5 .20 5 .15
6 .22 6 .17
7 .24 7 .19
8 .26 8 .21
9 .28 9 .23
10 .30 10 .25
11 .33
12 .36
13 .39
14 .42
15 .45
16 .48
17 .50
18 .52
19 .53
20 .54
21 .55
</TABLE>
10. FORMULA FOR CALCULATION OF BONUS AWARDS
Target Award
Base Salary at 9/30 x Salary Grade Target Award Percent
Bonus Award
Target Award x Average Success Factor
Bonus Award for Corporate Staff Participants
Target Award x Weighted Average Success Factor
(Weighting based upon actual operating income at each Subsidiary.)
Success Factor Components Above Thresholds
Operating Income Percent Achieved (capped at 100%)
+ Operating Income Growth Percent Achieved
= Success Factor
____________
A-6
<PAGE> 30
EXAMPLE
Assumptions:
1. U.S. executive -- Grade 12
2. Budgeted operating income -- $12,500,000
3. Actual operating income -- $13,000,000
4. Prior year's operating income -- $11,600,000
5. Operating income growth -- 12%
(i) Operating Income Achievement
<TABLE>
<S> <C> <C>
Actual $13,000,000
------------------------------------
Budget $12,500,000
</TABLE>
Performance exceeds 100%, therefore,
award equal to maximum. = 100
(ii) Operating Income Growth
Actual growth = 12%
Which corresponds with award of = 120
Determination of Success Factor
<TABLE>
<S> <C> <C>
Operating Income Percent Achieved = 100
+ Operating Income Growth Percent Achieved = 120
---
Success Factor 220
===
</TABLE>
Bonus Calculation
<TABLE>
<S> <C>
Grade 12 Target Award % 0.36
</TABLE>
Bonus as Percent of Base Salary
<TABLE>
<S> <C>
0.36 X 220% 79.2%, but not to exceed the Maximum Dollar Amount.
</TABLE>
A-7
<PAGE> 31
AMENDED AND RESTATED
SENIOR EXECUTIVE INCENTIVE COMPENSATION PLAN
FINANCIAL MEASUREMENT CRITERIA
DEFINITIONS
1. OPERATING INCOME, AS ADJUSTED
<TABLE>
<S> <C>
Net Sales
- (Cost of Sales)
- (Commercial Expenses)
- (Cost of Capital Imputation)
- (Amortization of Intangibles)
-------------------------------
= Adjusted Operating Income
===============================
</TABLE>
2. WORKING CAPITAL
<TABLE>
<S> <C>
Trade Accounts Receivable
+ Inventory
- (Trade Accounts Payable)
----------------------------
= Working Capital
============================
</TABLE>
3. WORKING CAPITAL RATIO
<TABLE>
<C> <C> <S>
Working Capital
--------------- X 100
Sales
</TABLE>
4. COST OF CAPITAL
For imputation on acquisition earnings = 8% of transaction cost.
For imputation on excess working capital = 8% of the product of the amount
(if any) by which the applicable year's working capital ratio exceeds the
average of the previous four years' working capital ratios, multiplied by
the applicable year's sales.
For imputation on excess capital expenditures = 8% of the amount (if any) by
which the applicable year's capital expenditures exceed such year's
depreciation.
(Rate subject to annual review.)
A-8
<PAGE> 32
0697-PS-99
<PAGE> 33
SYBRON INTERNATIONAL CORPORATION
2000 ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 2, 2000
10:00 A.M.
YOU MAY VOTE BY TELEPHONE, BY INTERNET, OR BY MAIL
(SEE INSTRUCTIONS ON REVERSE SIDE)
YOUR VOTE IS IMPORTANT
[0697 - SYBRON INTERNATIONAL CORPORATION] [FILE NAME: SYB63B.ELX] [VERSION - 2]
[12/10/99] [ORIG. 12/9/99]
SYB83B DETACH HERE
PROXY
SYBRON INTERNATIONAL CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Kenneth F. Yontz, Dennis Brown and R. Jeffrey Harris, or any of them, with the
power of substitution to each, are hereby authorized to represent the
undersigned at the Annual Meeting of Shareholders of Sybron International
Corporation to be held in New York, New York, on Wednesday, February 2, 2000,
at 10:00 a.m., Eastern Standard Time, and to vote the number of shares which
the undersigned would be entitled to vote if personally present on the matters
listed on the reverse side hereof and in their discretion upon such other
business as may properly come before the Annual Meeting and any and all
adjournments thereof, all as set out in the Notice and Proxy Statement relating
to the meeting, receipt of which is hereby acknowledged.
TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS, SIGN AND
DATE THIS CARD IN THE SPACES ON THE REVERSE SIDE; NO BOXES NEED TO BE CHECKED.
- --------------- ---------------
| SEE REVERSE | CONTINUED AND TO BE SIGNED ON REVERSE SIDE | SEE REVERSE |
| SIDE | | SIDE |
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<PAGE> 34
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- --------------------- --------------------
| VOTE BY TELEPHONE | | VOTE BY INTERNET |
- --------------------- --------------------
It's fast, convenient, and immediate! It's fast, convenient, and your vote is immediately
Call Toll-Free on a Touch-Tone Phone confirmed and posted.
1-877-PRX-VOTE (1-877-779-8683).
FOLLOW THESE FOUR EASY STEPS: FOLLOW THESE FOUR EASY STEPS:
1. READ THE ACCOMPANYING PROXY STATEMENT AND 1. READ THE ACCOMPANYING PROXY STATEMENT AND
PROXY CARD. PROXY CARD.
2. CALL THE TOLL-FREE NUMBER 2. GO TO THE WEBSITE
1-877-PRX-VOTE (1-877-779-8683). FOR HTTP://WWW.EPROXYVOTE.COM/SYB
SHAREHOLDERS RESIDING OUTSIDE THE UNITED
STATES CALL COLLECT ON A TOUCH-TONE PHONE 3. ENTER YOUR 14-DIGIT VOTER CONTROL NUMBER
1-201-536-8073. LOCATED ON YOUR PROXY CARD ABOVE YOUR NAME.
3. ENTER YOUR 14-DIGIT VOTER CONTROL NUMBER 4. FOLLOW THE INSTRUCTIONS PROVIDED.
LOCATED ON YOUR PROXY CARD ABOVE YOUR NAME.
4. FOLLOW THE RECORDED INSTRUCTIONS.
YOUR VOTE IS IMPORTANT! YOUR VOTE IS IMPORTANT!
Call 1-877-PRX-VOTE anytime! Go to HTTP://WWW.EPROXYVOTE.COM/SYB anytime!
DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR INTERNET
[0697 - SYBRON INTERNATIONAL CORPORATION] [FILE NAME: SYB63A.ELX] [VERSION - 3] [12/13/99] [ORIG. 12/9/99]
SYB63A DETACH HERE
- ----- Please mark
| X | votes as in ---
- ----- this example |
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" (1) ELECTION OF DIRECTORS AND (2) REAPPROVAL OF THE SYBRON
INTERNATIONAL CORPORATION SENIOR EXECUTIVE INCENTIVE COMPENSATION PLAN. THIS PROXY WILL BE VOTED AS YOU
DIRECT: IN THE ABSENCE OF SUCH DIRECTION, IT WILL BE VOTED "FOR" EACH OF THESE MATTERS.
FOR AGAINST ABSTAIN
1. ELECTION OF DIRECTORS: 2. To reapprove the Sybron International ----- ----- -----
NOMINEES: (01) Thomas O. Hicks and Corporation Senior Executive Incentive | | | | | |
(02) Robert B. Haas Compensation Plan. ----- ----- -----
FOR ----- ----- WITHHELD
BOTH | | | | FROM
NOMINEES ----- ----- BOTH
NOMINEES
-----
| |
----- ---------------------------------------
For both nominees except as noted above
-----
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT | |
-----
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
Please sign your name as it appears hereon.
Joint owners should each sign. Executors,
administrators, trustees, etc., should give
full title as such. If the signer is a
corporation, please sign in full corporate
name by duly authorized officer.
Signature: Date: Signature: Date:
---------------------- ---------------- ---------------------- ---------------
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<PAGE> 35
[SYBRON INTERNATIONAL CORPORATION LETTERHEAD]
December 31, 1999
Dear Shareholders:
Enclosed is the Notice of Meeting and Proxy Statement for the Annual
Meeting of Shareholders to be held on February 2, 2000, and a copy of our 1999
Annual Report to Shareholders which includes a copy of our Form 10-K filed with
the Securities and Exchange Commission.
Due to an unexpected delay in the production of our Annual Report after our
proxy material was printed, the proxy statement and accompanying materials are
first being mailed to shareholders on or about December 31, 1999, instead of
December 22, 1999 as contemplated in the Proxy Statement. As noted in the proxy
material, this year shareholders of record will have the option of voting by
proxy electronically via the Internet or touch-tone telephone, in substantially
the same manner as beneficial owners of our shares held in street name have been
able to give their voting instructions for the past few years. This is just
another alternative offered for your convenience; you may still give voting
directions by completing and returning the appropriate paper form, if you
prefer.
Thank you for your support of our company as we all enter a new century of
opportunities and challenges.
Sincerely,
/s/ Kenneth F. Yontz
Kenneth F. Yontz
Chairman of the Board,
President and Chief Executive Officer
