<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
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 sec.240.14a-11(c) or sec.240.14a-12
BECKMAN INSTRUMENTS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
BECKMAN INSTRUMENTS, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
2500 Harbor Boulevard, Box 3100, Fullerton, CA 92634-3100
---------------------------------------------------------
[BECKMAN LOGO]
February 28, 1995
Dear Stockholder:
You are cordially invited to attend the 1995 Annual Meeting of Stockholders
of Beckman Instruments, Inc. to be held at 10:00 a.m., Thursday, April 6, 1995,
at the Company's headquarters, 2500 Harbor Boulevard, Fullerton, California.
The attached Notice of Annual Meeting of Stockholders and Proxy Statement
describe the matters to be acted upon. Whether or not you plan to attend
personally, and regardless of the number of shares you own, it is important that
your shares be represented. Accordingly, WE URGE YOU TO COMPLETE THE ENCLOSED
PROXY CARD AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED. If you attend the
Annual Meeting and wish to vote in person, you may withdraw your proxy at that
time.
If you plan to attend the Annual Meeting in person, mark the designated box
on the proxy card. Please promptly return the proxy card in sufficient time to
receive a card of admission, which you should present upon entering the meeting.
Sincerely,
[SIG]
LOUIS T. ROSSO
Chairman of the Board and
Chief Executive Officer
<PAGE> 3
2500 Harbor Boulevard, Box 3100, Fullerton, CA 92634-3100
---------------------------------------------------------
[BECKMAN LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 6, 1995
TO OUR STOCKHOLDERS:
The 1995 Annual Meeting of Stockholders of Beckman Instruments, Inc., a
Delaware corporation, will be held at the Company's headquarters, 2500 Harbor
Boulevard, Fullerton, California, on Thursday, April 6, 1995, at 10:00 a.m. for
the following purposes:
1. To elect a class of directors to serve until the expiration of their
term in 1998 and until their successors are elected and qualified; and
2. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only stockholders of record at the close of business on February 6, 1995
will be entitled to notice of and to vote at the meeting and any adjournment
thereof.
You are cordially invited to attend the meeting. Whether or not you expect
to attend, PLEASE PROMPTLY VOTE, SIGN, DATE AND RETURN THE ENCLOSED
PROXY/INSTRUCTION CARD IN THE ENCLOSED U.S. POSTAGE-PAID ENVELOPE. This will
ensure that your shares are voted in accordance with your wishes and that a
quorum will be present. Even though you have returned your proxy card, you may
withdraw your proxy at any time prior to its use and vote in person at the
meeting should you so desire.
By Order of the Board of Directors
[SIG]
William H. May
Secretary
Fullerton, California
February 28, 1995
<PAGE> 4
BECKMAN INSTRUMENTS, INC.
2500 HARBOR BOULEVARD
FULLERTON, CALIFORNIA 92634-3100
------------------------
PROXY STATEMENT
------------------------
INTRODUCTION
This Proxy Statement is furnished to holders of shares of common stock, par
value $.10 per share ("Common Stock"), of Beckman Instruments, Inc., a Delaware
corporation ("Beckman" or the "Company"), in connection with the solicitation by
the Company's Board of Directors ("Board") of the accompanying proxy to be used
at the 1995 Annual Meeting of Stockholders to be held at the Company's
headquarters, 2500 Harbor Boulevard, Fullerton, California, at 10:00 a.m. on
Thursday, April 6, 1995, and any adjournment or postponement thereof (the
"Annual Meeting"). Copies of this Proxy Statement and the accompanying proxy are
being mailed on or about February 28, 1995 to stockholders of record on February
6, 1995.
The expense of this solicitation will be paid by the Company. In addition
to solicitation by mail, officers and employees of the Company may solicit
proxies by telephone, by telex, or in person. The Company has engaged the firm
of D. F. King & Co., Inc., as proxy solicitors, to whom the fee payable for such
services is estimated to be $10,000 plus reimbursement of out-of-pocket
expenses. The Company will also reimburse brokers, nominees, fiduciaries and
other custodians for reasonable expenses incurred by them in forwarding proxy
materials to the beneficial owners of the stock.
Only holders of record of Common Stock at the close of business on February
6, 1995 ("Record Date") are entitled to vote at the Annual Meeting. On the
Record Date, there were outstanding for voting purposes 29,044,832 shares of
Common Stock. Each stockholder shall have one vote per share on all business of
the Annual Meeting. The Company's Benefit Equity Trust, established to assist
the Company in meeting its stock-related obligations for benefit programs, holds
976,130 of the shares outstanding for voting purposes. These are voted by the
trustee in the same proportion as instructions received from employees recently
participating in the Company's Employees' Stock Purchase Plan.
The shares represented by properly executed proxies received in time for
the Annual Meeting will be voted. The proxy may be revoked by a stockholder at
any time prior to its use by giving written notice of such revocation to the
Secretary of the Company, by submitting a later dated proxy, or by voting in
person at the Annual Meeting.
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock will constitute a quorum at the Annual
Meeting. Outstanding shares of Common Stock represented by a properly signed and
returned proxy will be treated as being present at the Annual Meeting for
purposes of determining a quorum, without regard to whether the proxy is marked
as casting a vote, abstaining, withholding a vote for the election of one or
more nominees for director or constituting a broker non-vote. The accompanying
proxy card provides space to vote for or to withhold voting for any or all
nominees for the Board of Directors. Directors are elected by the affirmative
vote of a majority of the shares present in person or represented by proxy at
the Annual Meeting and entitled to vote on the subject matter. Proxies marked as
abstaining or withholding a vote in connection with the election of one or more
nominees for director will not be counted as casting votes for such nominees,
although the shares covered by such proxies will be included in determining the
number of shares present at the meeting and entitled to vote on the subject
matter.
The Company does not presently know of any business other than the election
of directors that may properly come before the stockholders for a vote at the
Annual Meeting. As to any such other matters, unless a greater or different vote
were required by applicable law, the certificate of incorporation or the
by-laws, the
<PAGE> 5
affirmative vote of a majority of the shares present in person or
represented by proxy at the Annual Meeting and entitled to vote on the subject
matter would be required to approve such matter, and abstentions would be
treated as described above. Under the rules of the New York Stock Exchange,
Inc., brokers who hold shares in street name for customers have the authority
to vote on the election of directors and certain other matters when they have
not received instructions from beneficial owners, but lack such authority on
other matters. Proxies subject to such broker non-votes would not be counted as
casting votes for or against any matter as to which authority was so withheld,
and the shares covered by such proxies would not be included in determining the
number of shares present at the meeting and entitled to vote on the subject
matter in question.
UNLESS OTHERWISE DIRECTED IN THE PROXY, THE PERSONS NAMED IN THE PROXY CARD
WILL VOTE FOR THE DIRECTOR NOMINEES PRESENTED IN THE PROPOSAL BELOW. AS TO ANY
OTHER BUSINESS WHICH MAY PROPERLY COME BEFORE THE MEETING, THE PERSONS NAMED IN
THE PROXY CARD WILL VOTE IN ACCORDANCE WITH THEIR BEST JUDGMENT, ALTHOUGH THE
COMPANY DOES NOT PRESENTLY KNOW OF ANY OTHER BUSINESS.
PROPOSAL
ELECTION OF DIRECTORS
Four members of the Board are proposed to be elected for a term expiring at
the 1998 annual meeting of stockholders. The Board currently consists of twelve
persons and is divided into three classes, with the term of office of one class
expiring each year. All director nominees are currently directors of the Company
with terms expiring at this Annual Meeting.
The persons named in the accompanying proxy intend to vote the shares
represented by the proxy for the election of these director nominees, unless
authority to vote for one or more of such nominees is withheld in the proxy. The
proxies cannot be voted for a greater number of persons than the number of
nominees named. The Board is informed that all of the nominees are willing to
serve as directors, but if any of them should decline or be unable to act as a
director, the persons named in the proxy will vote for such substitute nominee
or nominees as may be designated by the Board unless the Board reduces the
number of directors accordingly.
DIRECTOR NOMINEES FOR TERM EXPIRING IN 1998
CAROLYNE K. DAVIS, PH.D., 63, has been a national and international health
care advisor to Ernst & Young, certified public accountants, since 1985, and a
consultant and advisor to the Board of Beverly Enterprises, Inc., operator of
nursing facilities, retirement and congregate living projects, pharmacies and
home health care entities, since 1989. Dr. Davis served as Administrator of the
Health Care Financing Administration of the U.S. Department of Health and Human
Services from 1981 to 1985. She is a member of the Institute of Medicine, and a
member of the Board of The National Museum for Medicine and Health. Dr. Davis is
a trustee for the National Rehabilitation Hospital, Washington DC and for the
University of Pennsylvania Medical Center. She is a director of Merck & Co.,
Inc., The Prudential Insurance Company of America, Pharmaceutical Marketing
Services, Inc. and Science Applications International Corporation. Dr. Davis has
been a director of Beckman since 1989.
DENNIS C. FILL, 65, is Chairman and Chief Executive Officer of Advanced
Technology Laboratories, Inc., a worldwide leader in the development,
manufacturing and distribution of medical ultrasound systems, formerly known as
Westmark International. He was Chairman of the Board, Chief Executive Officer
and President of Westmark from 1986 to 1992. From 1978 to 1987, he served as
President and Chief Operating Officer of Squibb Corporation. He is a director of
ATL, SpaceLabs, Cytran, Inc. and Morton International. Mr. Fill has been a
director of Beckman since 1994.
WILLIAM N. KELLEY, M.D., 55, has served in his current role as Chief
Executive Officer of the University of Pennsylvania Medical Center and Health
System, Dean of the School of Medicine and Executive Vice President of the
University since 1989. He was the John G. Searle Professor and Chairman of the
Department of Internal Medicine and Professor of Biological Chemistry at the
University of Michigan in
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Ann Arbor from 1975 to 1989. Dr. Kelly is a director of Merck & Co., Inc. He has
been a director of Beckman since 1994.
HENRY WENDT, 61, is Managing Partner of the Finisterre Fund, a strategic
equity investment fund focused on the acquisition and management of selected
health care businesses. He served as Chairman of the Board of SmithKline Beecham
p.1.c., which manufactures and markets prescription and proprietary products for
human and animal health care, and its subsidiary, SmithKline Beecham
Corporation, from 1989 to 1994. He was President of SmithKline Beckman
Corporation, from 1982 to 1987 and from January to July 1989, Chief Executive
Officer from 1982 to 1989 and Chairman of the Board from 1987 to 1989. Mr. Wendt
is a director of Allergan, Inc., Atlantic Richfield Co., and Aviall Inc. He is a
member and former Chairman of the U.S. - Japan Business Council and a trustee of
the Trilateral Commission. He is Chairman of Pharmaceutical Partners for Better
Health Care, an association of Chief Executive Officers of 43 of the largest
research based pharmaceutical companies in the world. Mr. Wendt has been a
director of Beckman since 1988 and served as its Chairman of the Board until
1989.
Vote Required. The affirmative vote of a majority of the shares of Common
Stock present in person or represented by proxy at the Annual Meeting and
entitled to vote on the subject matter is required.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ABOVE NOMINEES.
BOARD OF DIRECTORS INFORMATION
CONTINUING DIRECTORS -- TERM EXPIRING IN 1997
EARNEST H. CLARK, JR., 68, has been Chairman and Chief Executive Officer of
The Friendship Group, an investment partnership, since 1989. He served as
Chairman of Baker Hughes Incorporated, which manufactures and services equipment
for drilling and completing oil wells and equipment for surface and underground
mining, from 1987 to 1989. From 1969 to 1987, he served its predecessor, Baker
International Corporation, as its Chairman of the Board. He also served as Chief
Executive Officer of Baker International Corporation from 1965 to 1987 and as
its President from 1962 to 1985, respectively. He is a director of CBI
Industries, Honeywell Inc., Kerr McGee Corporation, Regenesis, and The American
Mutual Fund. Mr. Clark is Chairman of the Board and Chief Volunteer Officer of
YMCA of the USA and a member of the Board of Trustees of Harvey Mudd College. He
has been a director of Beckman since 1988.
GAVIN S. HERBERT, 62, has been Chairman of the Board of Allergan, Inc., a
global provider of specialty therapeutic products which he helped found in 1950,
since 1977. He also served as its Chief Executive Officer from 1961 to 1991. He
was Executive Vice President of SmithKline Beckman Corporation, predecessor of
SmithKline Beecham Corporation, which markets prescription and proprietary
products for human and animal health care and diagnostic and analytical products
and services, from 1986 to 1989. Mr. Herbert is a trustee of the University of
Southern California and on the Boards of Directors of Research to Prevent
Blindness and California Healthcare Institute. He has been a director of Beckman
since 1988.
C. RODERICK O'NEIL, 64, has been Chairman of O'Neil Associates, an
investment management consulting firm, since 1987. He was a partner in Greenspan
O'Neil Associates from 1984 to 1987 and Chairman of the Finance Committee of
Travelers Corporation from 1977 to 1984. Mr. O'Neil is a director of AMBAC Inc.
and Fort Dearborn Fund. He has been a director of Beckman since 1994.
LOUIS T. ROSSO, 61, has been Chief Executive Officer of the Company since
1988 and Chairman of the Board since 1989. He served as the Company's President
from 1982 to October 1993. He also served as a Vice President of SmithKline
Beckman Corporation from 1982 to 1989. Mr. Rosso first joined Beckman in 1959
and was named Corporate Vice President in 1974. He is a director of Allergan,
Inc. and American Health Properties, Inc. He is a member of the St. Jude
Heritage Foundation and the Board of Trustees of Harvey Mudd College. Mr. Rosso
has been a director of Beckman since 1988.
3
<PAGE> 7
CONTINUING DIRECTORS -- TERM EXPIRING IN 1996
FRANCIS P. LUCIER, 67, has served as Chairman of the Board of Hartland &
Company, consultants for management of pension finance planning policy and
communication, since 1989. He served 21 years with the Black & Decker
Corporation, international manufacturer of power tools and home appliances,
holding the posts of President, Chief Executive Officer and Chairman of the
Board. He served thereafter as Chairman of the Board and Chief Executive Officer
of Mohawk Data Sciences Corporation, producers of electronic data processing
equipment, and Chairman of the Board of Micon Systems, Inc., a producer of data
communications products. Mr. Lucier has been a management consultant since 1985.
He is a director of PHH Corporation and Miami Subs Corporation. He has been a
director of Beckman since 1988.
DAVID S. TAPPAN, JR., 72, served Fluor Corporation, an international
engineering construction and technical services company with investments in
coal, as its Chief Executive Officer and Chairman of the Board from 1984 until
1989 and 1990, respectively, and as a director until December 1994. Mr. Tappan
is also a director of Advanced Tissue Sciences, Inc., Genentech, Inc., and
Allianz Insurance Company. He is a member of the Board of Trustees of The
Scripps Research Institute and the University of Southern California. Mr. Tappan
has been a director of Beckman since 1988.
JOHN P. WAREHAM, 53, has served as President and Chief Operating Officer of
the Company since October 1993. He served as the Company's Vice President,
Diagnostic Systems Group, from 1984 to 1993. Prior thereto, he had been
President of Norden Laboratories, Inc., a wholly owned subsidiary of SmithKline
Beckman Corporation engaged in developing, manufacturing and marketing animal
pharmaceutical vaccines. Mr. Wareham first joined SmithKline Corporation, a
predecessor of SmithKline Beckman Corporation, in 1968. He is a director of the
Little Rapids Corporation and the John Henry Foundation. He has been a director
of Beckman since 1993.
BETTY WOODS, 56, has served as President and Chief Executive Officer, since
1992 and 1993, respectively, of Blue Cross of Washington and Alaska, one of that
area's largest health care contractors. She became Chief Executive Officer of
PREMERA, holding company of Blue Cross of Washington and Alaska and Medical
Service Corporation of Eastern Washington, in 1994. She joined Blue Cross of
Washington and Alaska in 1976. Ms. Woods serves on the Board of Trustees of the
Greater Seattle Chamber of Commerce and is Vice Chair of the Snohomish County
Economic Development Council. She has been a director of Beckman since 1994.
BOARD COMPENSATION AND BENEFITS
Of the Board's current twelve members, two are officers of the Company who
do not receive additional compensation for Board or committee service. The
remaining non-employee directors receive an annual $22,000 retainer and $1,000
for each Board and each committee meeting attended. These directors receive an
additional business fee equal to the Board meeting fee for each day or
significant portion of a day spent on Company business, but are not paid an
additional business fee if receiving consulting fees from the Company. Directors
who chair major committees of the Board receive an additional fee of $500 per
committee meeting.
In 1994, the Company adopted a Deferred Directors Fee Program that permits
directors to defer all or a portion of their retainers and fees until
termination of their status as a director. Deferred amounts are treated as
having been invested in Common Stock and thus are valued according to
fluctuations in the market price of the Common Stock. Distributions will be made
in cash only. Dr. Kelley has elected to participate in the program beginning in
1995.
Non-employee directors of the Company who have not been an employee of the
Company or any of its subsidiaries for at least one year prior to the date of
grant automatically receive a non-qualified option to purchase 1,000 shares of
Common Stock (subject to adjustments occurring after the grant) on the date of
each annual meeting of stockholders, pursuant to the Company's Stock Option Plan
for Non-Employee Directors approved by stockholders in May 1989 and amended with
stockholder approval in 1992. The option price for each option granted is the
fair market value on the date of grant. Options are generally exercisable six
months from the date of grant (subject to the individual serving as director for
the duration of those six
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<PAGE> 8
months) and expire ten years after the date of grant (subject to earlier
termination if the director ceases to serve as a director). The amount of shares
pursuant to outstanding options under this plan which are exercisable or which
will become exercisable within 60 days of February 28, 1995, are included in the
table shown under "Security Ownership of Certain Beneficial Owners and
Management -- By Directors and Executive Officers" below.
MEETINGS OF BOARD AND COMMITTEES
The Company's Board held seven meetings during 1994. A total of seventeen
committee meetings also were held as follows: Finance Committee, five;
Organization and Compensation Committee, six; Audit Committee, four; and
Nominating Committee, two. Mr. Fill and Ms. Woods had commitments prior to
joining the Board in 1994; however, each attended 73% and 67%, respectively, of
the total number of meetings of the Board and the committees on which each
served. The average aggregate Board and committee meeting attendance for all
Board members was approximately 91%.
COMMITTEES OF THE BOARD
Audit Committee. This committee meets with the independent public
accountants and internal audit services staff to discuss the annual audit plan
and the results of their audit examinations. It also meets with the Company's
internal auditors to review the audit services department's activities and to
discuss the adequacy of the Company's accounting and control systems. This
committee also considers any issues raised by its members, the independent
public accountants, the internal audit staff, the legal staff or management.
Each year it recommends to the full Board an accounting firm to audit the
consolidated financial statements of the Company. This committee currently
consists of Mr. Lucier, Chairman, Mr. Herbert, Dr. Kelley, Mr. Wendt, and Ms.
Woods.
Organization and Compensation Committee. This committee reviews and
approves major corporate organization structure, reviews performance of
corporate officers and establishes overall executive compensation policies and
programs. It reviews and approves compensation elements such as base salary,
bonus awards, stock option grants and other forms of long-term incentives. No
member of the committee may be a member of management or eligible for
compensation other than as a director or consultant. This committee currently
consists of Mr. Tappan, Chairman, Mr. Clark, Mr. Fill and Mr. Lucier.
Finance Committee. This committee reviews, approves or modifies management
recommendations on corporate financial strategy and policy and, where
appropriate, makes recommendations to the Board. This committee currently
consists of Mr. Wendt, Chairman, Dr. Davis, Mr. Herbert and Mr. O'Neil.
Nominating Committee. This committee reviews the qualifications of
nominees for directors and makes recommendations to the Board to fill vacancies
and newly created directorships. It develops criteria to determine the
qualifications of directors and the appropriate retirement and tenure of
directors. Stockholders may submit recommendations for Board nominees to the
committee for its consideration by addressing them to the Secretary of the
Company at its headquarters in Fullerton, California. The committee may or may
not act or provide reasons related to its actions or inactions on any such
recommendations. This committee currently consists of Mr. Clark, Chairman, Dr.
Davis, and Mr. Tappan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Company's Organization and Compensation Committee is a
current or former officer or employee of the Company. In addition, there are no
compensation committee interlocks between Beckman and other entities involving
Beckman executive officers and Beckman Board members who serve as executive
officers of such other entities.
The Company employs the consulting services of Hartland & Company relating
to pension finance planning policy and communications for Beckman's Pension Plan
and Savings and Investment Plan. Beckman paid Hartland & Company $145,185 for
such consulting services in 1994. During 1994 and presently, Mr. Lucier is a
member of the Company's Organization and Compensation Committee. Mr. Lucier is
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Chairman of the Board of Hartland & Company, receives a fee from Hartland &
Company for his services, and owns 20% equity interest therein.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
BY DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the amount of shares of Common Stock
beneficially owned (as of February 1, 1995, unless otherwise indicated) by
directors of the Company, the Chief Executive Officer and the four highest paid
executive officers reported in the "Executive Compensation -- Summary
Compensation Table" below, and all directors and executive officers as a group.
Percentage of ownership is calculated using the number of outstanding shares as
of February 6, 1995, the Record Date.
<TABLE>
<CAPTION>
BECKMAN PERCENTAGE
COMMON OF
BENEFICIAL OWNER STOCK OWNERSHIP
---------------- ------- -----------
<S> <C> <C>
Directors:
L. T. Rosso..................................... 296,094(1)(2) 1.0%
E. H. Clark, Jr. ............................... 6,100(1) *
C. K. Davis..................................... 6,127(1) *
D. C. Fill...................................... 2,000(1) *
G. S. Herbert................................... 12,682(1)(3) *
W. N. Kelley.................................... 2,000(1) *
F. P. Lucier.................................... 7,586(1)(3) *
C. R. O'Neil.................................... 3,000(1) *
D. S. Tappan, Jr. .............................. 7,000(1) *
J. P. Wareham................................... 111,702(1)(2) *
H. Wendt........................................ 17,901(1)(3) *
B. Woods........................................ 1,000 *
Other Named Executive Officers:
M. O'Neill...................................... 104,646(1)(2)(3) *
A. Torrellas.................................... 48,037(1)(2)(3) *
A. Ziegler...................................... 47,299(1)(2) *
All Directors and Officers as a group (21
persons)........................................ 858,711(1)(2)(3) 2.9%
</TABLE>
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* Less than 1% of outstanding shares.
(1) Included are the following shares which directors and executive officers had
the current right to acquire, or will have the right to acquire within 60
days of February 28, 1995, upon the exercise of options under the Company's
Stock Option Plan for Non-Employee Directors and under the Company's
Incentive Compensation Plans for employees, as applicable: Messrs. Clark,
Lucier, and Tappan, and Dr. Davis, 6,000 shares each; Messrs. Herbert and
Wendt, 4,000 shares each; Messrs. Fill and O'Neil and Dr. Kelley, 1,000
shares each; Mr. Rosso, 207,020 shares; Mr. Wareham, 96,715 shares; Mr.
O'Neill, 88,430 shares; Mr. Ziegler, 43,360 shares; Mr. Torrellas, 42,700
shares; and all directors and executive officers as a group, 655,741 shares.
(2) Included are shares held in trust for the benefit of the named executive
officers and employee directors under the Company's Savings and Investment
Plan as of December 31, 1994, as follows: Mr. Rosso, 43,049 shares; Mr.
Wareham, 1,087 shares; Mr. O'Neill, 2,867 shares; Mr. Torrellas, 530 shares;
Mr. Ziegler, 500 shares; and all executive officers as a group, 61,388
shares. Also included in the above table are shares of restricted stock
which will be issued within 60 days of February 28, 1995, in addition to
previously issued shares of restricted stock as to which restrictions have
not yet lapsed, as follows: Mr. Rosso, 7,104 shares; Mr. Wareham, 3,932
shares; Mr. O'Neill, 3,234 shares; Messrs. Torrellas and Ziegler, 664 shares
each; and all executive officers as a group, 21,086 shares.
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<PAGE> 10
(3) Included are shares of Common Stock for the named individuals as follows:
Mr. Herbert, a total of 8,682 shares held as trustee or co-trustee in family
trusts; Mr. Lucier, 1,458 shares held by his pension plan; Mr. O'Neill,
9,731 shares held as trustee in a family trust; Mr. Torrellas, 2,366 shares
held by himself and his spouse as co-trustees in a family trust; and Mr.
Wendt, 3,415 shares held by his spouse. Also included are shares of Common
Stock for other executive officers totalling 5,598 shares held as trustees
or co-trustees in family trusts or as custodian for children.
BY OTHERS
Management of the Company knows of no person, except as set forth below,
who is the beneficial owner of more than 5% of the Company's issued and
outstanding Common Stock. The table sets forth information known to the Company
as of February 14, 1995, with percentage of ownership calculated using the
number of outstanding shares on February 6, 1995.
<TABLE>
<CAPTION>
SHARES
NAME OF BENEFICIALLY PERCENT
BENEFICIAL OWNERS OWNED OF CLASS
----------------- ------------ ---------
<S> <C> <C>
Trimark Investment Management, Inc.............................. 2,555,600(1) 8.8%
Brinson Partners, Inc. and related entities..................... 2,141,804(2) 7.4%
Quantum Partners LDC and related entities....................... 1,818,700(3) 6.3%
Fidelity Management & Research Company and related entities..... 1,643,400(4) 5.7%
Mellon Bank and its subsidiaries................................ 1,639,965(5) 5.6%
</TABLE>
- ---------------
(1) Based on the Schedule 13G amendment dated February 10, 1995, wherein Trimark
Investment Management Inc. ("TIMI") reported the beneficial ownership of
2,555,600 shares at December 31, 1994. The Schedule 13G amendment states
that TIMI is both manager of the assets and sole trustee of various trust
funds and, as such, has sole voting power and sole dispositive power in
respect of all 2,555,600 shares. TIMI's address is One First Canadian Place,
Suite 5600, P.O. Box 487, Toronto, Ontario, M5X 1E5.
(2) Based on information provided by Brinson Partners, Inc. ("BPI"), Brinson
Trust Company ("BTC"), and Brinson Holdings, Inc. ("BHI"), included in their
joint Schedule 13G amendment dated February 13, 1995, wherein they reported
the beneficial ownership of 2,141,804 shares at December 31, 1994. They
state that: BPI has sole voting and dispositive powers over the 1,578,559
shares (5.4% of outstanding shares) it beneficially owns; BTC has sole
voting and dispositive powers over the 563,245 shares (1.9% of outstanding
shares) it beneficially owns; and BHI beneficially owns the shares by BPI
and BTC solely through its ownership of BPI which in turns owns BTC. The
address for BPI, BTC and BHI is 209 South LaSalle, Chicago, Illinois
60604-1295.
(3) Based on a joint Schedule 13D amendment dated April 6, 1994, wherein
1,818,700 shares were reported as beneficially owned as of such date, as
follows:
Quantum Industrial Partners LDC ("QI Partners") reported aggregate
beneficial ownership of 616,800 shares (2.1% of outstanding shares) with no
voting or dispositive powers. QIH Management Investor, L.P. ("QIHMI")
reports investment discretion in the assets of QI Partners. George Soros is
the sole shareholder of QIH Management, Inc., which is the sole general
partner of QIHMI. QIHMI reports aggregate beneficial ownership and shared
voting and dispositive powers as to 616,800 shares; QIH Management, Inc.
reports aggregate beneficial ownership and shared voting and dispositive
powers as to 616,800 shares. George Soros reported aggregate beneficial
ownership of 1,219,600 shares (4.2% of outstanding shares), of which he
reported sole voting and dispositive powers with respect to 602,800 shares
and shared voting and dispositive powers with respect to 616,800 shares.
Purnendu Chatterjee, in his capacity as Sub-Advisor to QI Partners and in
his capacity as sole general partner of Chatterjee Fund Management, L.P.,
which is the sole general partner of Winston Partners, L.P. ("Winston"),
reported aggregate beneficial ownership of 1,215,900 shares (4.2% of
outstanding shares), of which he reported sole voting and dispositive
powers with respect to 559,100 shares and shared voting and dispositive
power with respect to 616,800 shares.
7
<PAGE> 11
The address of QI Partners principal office is Kaya Flamboyan 9, Curacao,
Netherlands Antilles. The business address for QIHMI, QIH Management, Inc.,
Mr. Soros, Chatterjee Fund Management, L.P., Winston, and Mr. Chatterjee is
888 Seventh Avenue, New York, New York 10106.
(4) Based on a Schedule 13G dated February 13, 1995, FMR Corp. ("FMR"), a parent
holding company, and Edward C. Johnson, Chairman of FMR, reported beneficial
ownership of 1,643,400 shares as of December 31, 1994. FMR's subsidiary,
Fidelity Management and Research Company ("Fidelity") was reported as the
beneficial owner of 1,584,500 shares as a result of acting as investment
adviser to several investment companies. Mr. Johnson, FMR (through its
control of Fidelity) and the funds were reported to each have sole
dispositive power with respect to the 1,584,500 shares held by the funds,
but voting power resides with the funds' Board of Trustees.
Fidelity was also reported as the beneficial owner with respect to 58,900
shares as a result of its serving as investment manager of the
institutional accounts. Mr. Johnson and FMR (through its control of
Fidelity) have sole voting power in respect of 56,900 shares, but no power
to vote 2,000 shares owned by institutional accounts.
The business address for FMR and Fidelity is 82 Devonshire Street, Boston,
Massachusetts 02019.
(5) Based on a Schedule 13G dated February 9, 1995, wherein Mellon Bank
Corporation and its subsidiaries, including also subsidiaries of The Boston
Company, Inc., ("Mellon") reported the beneficial ownership of 1,639,965
shares at December 31, 1994. The Schedule 13G states that all of the
securities are beneficially owned by Mellon in various fiduciary capacities,
with no individual accounts holding an interest of 5% or more. Mellon has
sole voting and dispositive powers in respect of 348,000 shares, shared
voting power in respect of 720,965 shares, sole dispositive power in respect
of 522,000 shares, and shared dispositive power in respect of 409,000
shares. Mellon Bank, N.A., as trustee of Beckman's Savings and Investment
Plan, disclaims beneficial ownership of all shares that have been allocated
to the individual accounts of employee participants for which directions
have been received and followed. The principal place of business is Mellon
Bank Corporation, One Mellon Bank Center, Pittsburgh, Pennsylvania 15258.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the directors
and officers of the Company and persons who own more than ten percent of a
registered class of the Company's equity securities ("Reporting Persons") to
file with the Securities and Exchange Commission and the New York Stock Exchange
initial reports of ownership and reports of changes in ownership of Common
Stock. In addition, under Section 16(a), trusts for which a Reporting Person is
a trustee and a beneficiary (or a member of his immediate family is a
beneficiary), may have a separate reporting obligation with regard to holdings
and transactions in Common Stock. Specific due dates for these reports have been
established and the Company is required to disclose in this proxy statement any
failure to file by these dates during 1994. To the Company's knowledge, all of
these requirements were satisfied, except that seventeen officers Forms 5 were
filed one day late due to a calendaring error.
8
<PAGE> 12
EXECUTIVE COMPENSATION
The following table sets forth information for the last three fiscal years,
as to the Chief Executive Officer and the four highest paid executive officers
of the Company in 1994:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION(1) LONG-TERM COMPENSATION
------------------- ----------------------------------------
AWARDS PAYOUTS
------------------------------ -------
SECURITIES
RESTRICTED UNDER-LYING ALL OTHER
STOCK OPTIONS/ LTIP COMPEN-
SALARY(2) BONUS(3) AWARD(S)(4)(5) SARS(6) PAYOUTS SATION(8)
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)(7) ($)
- --------------------------- ---- --------- -------- -------------- ------------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Louis T. Rosso 1994 462,375 215,500 105,707 84,000 shares -- 4,500
Chairman of the Board 1993 449,167 -- -- 50,000 shares -- 7,075
and Chief Executive Officer 1992 420,006 415,400 -- 45,000 shares -- 5,722
John P. Wareham 1994 325,008 138,500 67,583 45,000 shares -- 4,500
President, and 1993 273,008 -- -- 17,000 shares -- 7,075
Chief Operating Officer 1992 261,174 198,500 -- 19,000 shares -- 5,722
Michael T. O'Neill 1994 253,806 75,800 48,121 30,000 shares -- 4,500
Senior Vice President, 1993 246,008 -- -- 17,000 shares -- 7,075
Commercial Operations 1992 233,258 195,500 -- 19,000 shares -- 6,103
Arthur A. Torrellas 1994 203,392 73,800 -- 12,000 shares 27,100 4,500
Vice President, 1993 197,526 -- -- 7,000 shares -- 7,075
Diagnostic Commercial Operations 1992 186,472 132,000 -- 8,000 shares -- 6,103
Albert R. Ziegler 1994 202,834 66,100 -- 16,000 shares 24,400 4,500
Vice President, 1993 196,625 -- -- 7,000 shares -- 7,075
Diagnostic Development Center 1992 187,425 130,800 -- 8,000 shares -- 6,094
</TABLE>
- ---------------
(1) The aggregate amount of other annual compensation for each named individual
did not equal or exceed the lesser of either $50,000 or 10% of the total of
such individual's basic salary and bonus for each of the fiscal years
reported herein and is not shown.
(2) Amounts shown include salary reductions under the Company's Flexible
Benefits Plan and compensation deferred under the Savings and Investment
Plan, pursuant, respectively, to Sections 125 and 401(k) of the Internal
Revenue Code of 1986, as amended.
(3) These amounts were paid pursuant to annual Executive Bonus and Executive
Incentive Plans and were contingent upon the attainment of certain
organizational and individual goals prescribed by the Board's Organization
and Compensation Committee. No bonus amount was earned for the year 1993.
Awards for services performed in 1992 and 1994 were paid in cash. The plans
did not provide for deferrals.
(4) The amounts shown represent the values of restricted stock to be issued
under the Incentive Compensation Plan of 1990 as elected by the individuals
shown in lieu of a cash payment of awards under the long-term incentive
plan, the Two-Year Economic Value Added Incentive Plan ("LTIP") (see also
note 7 below). For purposes of this table, values were calculated using the
1994 year-end closing price per share and do not include any diminution
effect attributable to restrictions on such stock. The number of whole
shares of restricted stock per individual is determined by adding 33 1/3% to
the amount which would have been paid in cash under the LTIP and dividing
this amount by the year-end closing price per share of Common Stock ($27.875
as reported on the New York Stock Exchange). The number of shares of
restricted stock per named individual (to be issued on the date in 1995 that
cash awards are paid to other LTIP participants) is as follows: Mr. Rosso,
3,792 shares; Mr. Wareham, 2,242 shares; and Mr. O'Neill, 1,726 shares.
Restrictions lapse 24 months from the date of issuance, but can lapse sooner
in the event of death, total disability, normal or late retirement pursuant
to the Company's Pension Plan, and a change of control of the Company (as
defined in the Restricted Stock Agreement). Non-preferential dividends are
paid.
9
<PAGE> 13
(5) The aggregate restricted stock holdings at 1994 year-end for the named
individuals and their values (calculated by multiplying the number held by
the year-end per share closing price of $27.875, and not including any
diminution effect attributable to the restrictions on such stock) are as
follows: Mr. Rosso, 3,312 shares, $92,322; Messrs. Wareham and O'Neill,
1,508 shares, $42,036 each; and Messrs. Torrellas and Ziegler, 664 shares,
$18,509 each. The foregoing number of shares of restricted stock represent
the remaining 40% of the number issued in 1991 for which restrictions have
not lapsed. Pursuant to the terms of that grant, restrictions lapse annually
as to 20% of the total number of shares which were awarded. Restrictions may
lapse sooner in the event of termination of employment due to death or total
disability, retirement occurring at least six months after the award, or a
change of control (as defined in the Restricted Stock Agreement).
Non-preferential dividends are paid.
(6) No SARs have been awarded. Options are for shares of Common Stock. One-half
of the number of shares shown for 1994 relate to options with a performance
vesting feature as shown at the "Option/SAR Grants in Last Fiscal Year"
table below.
(7) Consists of cash payout under the LTIP for the two-year cycle ended fiscal
year 1994. See note 4 above regarding the restricted stock in lieu of cash
payout alternative. See also "Long-Term Incentive Awards" below for
information about this plan.
(8) Amounts shown reflect Company matching contributions to the defined
contribution plan, wherein eligible employees of the Company and certain
subsidiaries may invest in various funds generally up to 15% of their
compensation through payroll deductions. The Company makes contributions to
the plan equal to 50% or 60%, depending upon investment of Company matching
contributions, of up to the first 5% of each employee's contribution
(subject to certain limitations).
FISCAL YEAR OPTION GRANTS
The following table sets forth the number of options granted and the
estimated grant date present value for the named executive officers during the
fiscal year ended December 31, 1994:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS GRANT DATE VALUE
- --------------------------------------------------------------------------------------- ----------------
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OF
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION GRANT DATE
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE PRESENT VALUE($)
- ---- ------------ ------------ ----------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
L. Rosso................. 42,000(1) 5.4% $ 26.3750 3/29/04 $ 431,760(2)(5)
42,000(3) 5.4% 26.3750 3/29/04 421,260(4)(5)
J. Wareham............... 22,500(1) 2.9% 26.3750 3/29/04 231,300(2)(5)
22,500(3) 2.9% 26.3750 3/29/04 225,675(4)(5)
M. O'Neill............... 15,000(1) 1.9% 26.3750 3/29/04 154,200(2)(5)
15,000(3) 1.9% 26.3750 3/29/04 150,450(4)(5)
A. Torrellas............. 6,000(1) 0.8% 26.3750 3/29/04 61,680(2)(5)
6,000(3) 0.8% 26.3750 3/29/04 60,180(4)(5)
A. Ziegler............... 8,000(1) 1.0% 26.3750 3/29/04 82,240(2)(5)
8,000(3) 1.0% 26.3750 3/29/04 80,240(4)(5)
</TABLE>
- ---------------
(1) No free-standing or tandem SARs were granted. Non-qualified stock options
were granted in 1994 pursuant to the Company's Incentive Compensation Plan
of 1990 at an option price equal to the fair market value of the stock at
the date of grant. The option price may be paid by delivery of already owned
shares, subject to certain conditions. The number of options exercisable
increases in 33% increments after each successive anniversary of the date of
grant. Options may become exercisable sooner in the event of death,
disability, or retirement occurring after six months from the date of grant
or in the event of a
10
<PAGE> 14
change of control. The options have a term of ten years, subject to
sooner expiration in the event of termination of employment. The
Organization and Compensation Committee of the Board retains discretion,
subject to plan limits, to modify the terms of outstanding options, to
reprice options, and to adjust the number, price and kind of shares in the
event of certain changes affecting Company stock. No adjustments or
repricing of any options has occurred.
(2) Grant date present value estimates were made using a variation of the
Black-Scholes pricing model. The following factors and assumptions were
used: option price ($26.375, the fair market value on the date of grant);
term of option (10 years); risk of forfeiture due to termination (adjusted
by 3% for each year of the three-year vesting period); risk free rate of
return (7.10%); dividend yield (1.49%); volatility (.221); and market price
($26.375).
(3) See note 1 above for general features of the Company's non-qualified stock
option grants, with the exception that this grant contains a performance
vesting feature. Vesting will occur upon the earlier of 9.5 years after the
date of grant, or at the time the Common Stock meets certain targeted stock
appreciation levels during the first four years from the date of grant. For
accelerated vesting to occur, the average Common Stock per share price must
be as follows: 1) $30.46 by September 29, 1995 for 33% vesting; 2) $35.11 by
March 29, 1997 for 66% vesting; and 3) $38.62 by March 29, 1998 for 100%
vesting. For purposes of this grant, each price shown is an average of
closing prices (on the exchange on which Common Stock is then trading)
during any thirty consecutive trading day period ending no later than the
fifteenth trading day following the designated dates.
(4) Grant date present value estimates were made using a variation of the
Black-Scholes pricing model and assumed accelerated vesting based on the
targeted stock price appreciation levels. Construction of the model included
the following factors and assumptions: option price ($26.375, the fair
market value on the date of grant); term of option (10 years); risk of
forfeiture due to termination (adjusted by a 3% annualized risk factor
applied to each performance vesting time period during the first four years
from the date of grant); risk free rate of return (7.10%); dividend yield
(1.49%); volatility (.221); and market price ($26.375).
(5) Although the Black-Scholes pricing model is widely used, the value of stock
options cannot be guaranteed because of the wide range of assumptions and
variations which may occur from time to time. No assumptions made, nor any
performance vesting criteria presented, in connection with this table are
intended to represent a forecast of possible future appreciation of Common
Stock, stockholder return, or performance of the Company.
11
<PAGE> 15
OPTION EXERCISES AND YEAR-END OPTION VALUES
None of the named executive officers exercised stock options during the
fiscal year ended December 31, 1994. No free-standing or tandem SARs have been
granted. The table below shows the number of exercisable and unexercisable
in-the-money stock options and their values at fiscal year-end. An option is
in-the-money if the fair market value of the underlying securities exceeds the
exercise price of the option.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT FISCAL IN-THE-MONEY OPTIONS/SARS
YEAR-END(#)(1) AT FISCAL YEAR-END($)(2)
----------------------------- -----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
L. Rosso.................. 161,360 132,800 $ 1,448,370 $ 426,550
J. Wareham................ 77,220 62,850 704,403 179,594
M. O'Neill................ 71,410 47,850 653,109 157,094
A. Torrellas.............. 35,690 19,410 328,634 64,629
A. Ziegler................ 35,690 23,410 328,634 70,629
</TABLE>
- ---------------
(1) All options granted have a term of ten years, subject to earlier
termination, with options becoming exercisable in general over periods of
two, three, or four years from dates of grant. See notes 1 and 3 to the
preceding table entitled "Option/SAR Grants in Last Fiscal Year" for
additional information on general terms which apply to stock option awards
made and performance vesting information.
(2) Values were calculated by multiplying the closing market price of the Common
Stock at December 31, 1994 ($27.875 per share) by the respective number of
shares and subtracting the option price, without any adjustment for any
vesting or termination contingencies or other variables.
LONG-TERM INCENTIVE AWARDS
The following table displays target long-term incentive awards for the
named executive officers for the two-year performance cycle ending in 1995 under
the Company's long-term incentive plan ("LTIP"), the Two-Year Economic Value
Added Incentive Plan. Awards are based on total company performance in
maintaining and improving the efficiency of capital as measured by certain
financial objectives. For purposes of this table, the opportunity to participate
in the plan and to achieve an eventual payout is considered an award; however,
no payouts will be made if the threshold performance level established by the
Organization and Compensation Committee is not met.
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
NUMBER OF PERFORMANCE OR UNDER NON-STOCK
SHARES, UNITS OTHER PERIOD PRICE-BASED PLANS(1)
OR OTHER UNTIL ------------------------------
RIGHTS MATURATION OR THRESHOLD TARGET MAXIMUM
NAME (#) PAYOUT ($) ($) ($)
---- ------------- -------------- --------- ------- --------
<S> <C> <C> <C> <C> <C>
L. Rosso................. -- 1/94-12/95 $41,700 $83,400 $166,900
J. Wareham............... -- 1/94-12/95 26,800 53,600 107,300
M. O'Neill............... -- 1/94-12/95 19,100 38,200 76,300
A. Torrellas............. -- 1/94-12/95 14,300 28,600 57,100
A. Ziegler............... -- 1/94-12/95 12,800 25,600 51,200
</TABLE>
- ---------------
(1) Assuming the minimum or threshold performance level is met, the percentage
of the target award eventually paid to participants depends upon the overall
results achieved for this two-year performance period compared to target.
Amounts shown are based upon base rates of pay at 1994 year-end; however,
actual payouts will be based on the individual's base rate of pay at
year-end 1995 which is not presently known. Payouts, if any, are made in
cash under the LTIP; however, the Committee may grant an award of restricted
stock under the Incentive Compensation Plan of 1990 in lieu of cash payout
under the LTIP Plan.
12
<PAGE> 16
TERMINATION AND MANAGEMENT CHANGE IN CONTROL AGREEMENTS
All senior management who are Vice Presidents or above of the Company,
including the named executives, have entered into agreements with the Company
that are effective if, within two years after the occurrence of a change in
control of the Company (as defined in the agreements), any of these individuals
is terminated without cause or has a material change to compensation or
responsibilities. Under these agreements, the Company will pay up to three times
the individual's annual compensation as specified in the agreements, as well as
a limited continuance of certain Company benefits.
DEFINED BENEFIT PENSION PLANS
The Company's defined benefit qualified and non-qualified supplemental
pension plans provide pension benefits to employees, including officers of the
Company, based upon the average of the highest 60 consecutive months of eligible
compensation and years of eligible service. Eligible compensation includes basic
salary, bonuses earned during the year and the LTIP cash payouts. Benefit
amounts are offset generally by a portion of the employee's Social Security
Covered Compensation and, if applicable, amounts from any other similar Company
or subsidiary sponsored plan. If an employee elects a form of payment providing
a benefit for his or her beneficiary, the benefit amount for the employee is
reduced.
Normal retirement age generally is 65, but employees may continue
employment beyond age 65 and earn additional retirement benefits. Credited years
of eligible service at normal retirement for the other named executive officers
would be as follows: Mr. Rosso, 40 years; Mr. Wareham, 38 years; Mr. O'Neill, 33
years; Mr. Torrellas, 18 years; and Mr. Ziegler, 30 years.
The Company has entered into an agreement under the non-qualified
supplemental pension plan with Mr. Torrellas. Under certain stipulations on
employment tenure with the Company, the agreement provides additional retirement
benefits under the non-qualified plan as if he had a 38% increase in the single
life annuity amount under the Company's qualified pension plan.
The following table illustrates the annual pension benefits, before any
offsets, calculated as a single life annuity, payable at normal retirement.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
--------------------------------------------------------------------------------------
REMUNERATION* 15 20 25 30 35 40 45
- ------------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 300,000 $ 76,500 $102,000 $127,500 $153,000 $178,500 $186,000 $193,500
350,000 89,250 119,000 148,750 178,500 208,250 217,000 255,750
400,000 102,000 136,000 170,000 204,000 238,000 248,000 258,000
450,000 114,750 153,000 191,250 229,500 267,750 279,000 290,250
500,000 127,500 170,000 212,500 255,000 297,500 310,000 322,500
550,000 140,250 187,000 233,750 280,500 327,250 341,000 354,750
600,000 153,000 204,000 255,000 306,000 357,000 372,000 387,000
650,000 165,750 221,000 276,250 331,500 386,750 403,000 419,250
700,000 178,000 238,000 297,500 357,000 416,500 434,000 451,500
750,000 191,250 255,000 318,750 382,500 446,250 465,000 483,750
</TABLE>
- ---------------
* The average of the highest sixty consecutive months of eligible compensation.
13
<PAGE> 17
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION(1)
Among the duties of the Organization and Compensation Committee of the
Board is the determination of compensation for all executive officers, including
the Chief Executive Officer ("CEO").
The committee intended that the 1994 executive compensation be competitive
and that it further align the interests of management and stockholders as well
as allow reward for long-term vision and growth. For executive officers,
including the CEO, competitiveness was defined as providing a total cash
compensation opportunity that approximates the 50th percentile predicted value
in the annual pay analysis conducted by the company in collaboration with an
independent, nationally recognized consulting organization specializing in
executive compensation. Executive incentive plans were also designed to provide
a higher earnings opportunity for exceeding financial targets.
PROGRAM CHANGES
A change to the executive compensation program in 1994 involved the
introduction of a long-term incentive plan ("LTIP"), the Two-Year Economic Value
Added Incentive Plan, which rewards participants for increasing and sustaining
the efficiency of capital. Payout opportunities in the annual incentive plan
were reduced as an offset to projected biennial awards under the long-term plan.
This new measure in combination with an annual incentive plan which focuses
on Earnings Per Share (EPS) growth represents the variable compensation
component of executive pay for the CEO and other executive officers. The
existing stock option program remains as the third element of compensation that
will be discussed in this report.
COMPETITIVE ASSESSMENT
The primary resource for cash compensation analysis was the 1994 Towers
Perrin Compensation Data Bank ("Data Bank") which included 393 companies from
all business sectors and 251 CEO positions. This larger data base was viewed as
more reliable than data from the small number of companies in the peer group
referenced on the Stock Performance Graph. Also, data on comparable positions is
unavailable for many of the Company's direct competitors which are, generally,
either privately held foreign corporations or divisions of substantially larger
corporations. Compensation targets were derived using a single-regression
analysis to predict the compensation values for benchmark executive positions
based on the magnitude of company sales.
The analysis for determining the Company's 1994 stock option grant was
based on option grant values from the Towers Perrin 1993 Long-Term Incentive
Plan Survey which covered 276 employers, 13,500 individuals and over 400
long-term incentive plans.
CEO BASE SALARY
The CEO base salary determination by the committee, approved by the other
outside members of the Board, was to increase Mr. Rosso's base pay from $450,000
to $463,500, a 3.0% increase. This change, while sustaining base pay at a level
below the 50th percentile for CEO positions in companies of comparable size, is
consistent with compensation changes for both management and non-management
members of the Beckman workforce in 1994.
CEO CASH INCENTIVES
Mr. Rosso's targeted variable cash compensation was based 70% on the annual
incentive plan and 30% on the economic value added under the LTIP.
- ---------------
(1) This Section is not "soliciting material," is not deemed filed with the
SEC and is not to be incorporated by reference in any filing of the Company
under the Securities Act of 1933 ("Securities Act") or the Securities Exchange
Act of 1934 ("Exchange Act"), whether made before or after the date hereof and
irrespective of any general incorporation language in any such filing.
14
<PAGE> 18
For the fiscal year ending December 31, 1994, the CEO earned an annual
incentive award of $215,500. This represented 46.5% of base salary, with 35.8%
of base salary attributable to the level of EPS achievement and the remaining
percentage reflecting the committee's evaluation of Mr. Rosso's performance
against pre-established expected work outcomes. The committee noted that most
numeric objectives were achieved or marginally missed as implementation of
strategic redirection, reorganization and restructuring is progressing smoothly
as the Company positions itself for success in a volatile health care sector.
Resources have been realigned and focused for current and anticipated market
conditions and opportunities. The committee commended the Company on its
performance in a challenging year.
For the first two-year cycle under the LTIP, Mr. Rosso earned an award of
$79,300 (17.1% of base salary) based solely on the 1994 financial results. In
lieu of cash payment under the LTIP, Mr. Rosso had elected to receive restricted
stock under the Incentive Compensation Plan of 1990 (as discussed in note 4 of
the "Summary Cash Compensation" table).
The total cash compensation opportunity, including base salary and variable
cash incentives, at target for 1994 was $740,475. The combined incentive awards
plus Mr. Rosso's base salary earnings of $462,375 in 1994, resulted in earned
total cash compensation of $757,175, just above the 50th percentile total cash
compensation of $742,410 for his position in the competitive assessment
described above.
STOCK OPTIONS
The Company's stock option program is considered to be a significant
element of compensation at the executive level and extends further into the
organization. As a departure from past practice, the committee approved a double
stock option grant in 1994 in recognition of the strategic redirection and as a
further incentive for key employee contributions during a critical transition
period associated with substantial change.
An important provision for 50% of the 1994 grant was a performance vesting
feature which emphasized specific levels of stock price appreciation within
certain time lines. This feature further links Company performance and rewards
to the achievement of growing shareholder value.
Stock option grants continue to be non-qualified with a ten year term and a
non-discounted strike price. A three year vesting period applied to 50% of the
1994 options with the remaining shares vesting upon the earlier of 9.5 years
after the date of grant or at the time the Common Stock meets the targeted stock
appreciation levels during the first four years.
Grant levels for executive officers, including the CEO, closely
approximated the 50th percentile of option grant values calculated from data
reported in the Towers Perrin Long-Term Incentive Plan Survey (discussed above).
OTHER MATTERS
The committee is in the process of assessing program modifications which
may be necessitated by provisions of the Omnibus Budget Reconciliation Act of
1993. This legislation amended Section 162 of the Internal Revenue Code by
limiting to one million dollars the deductibility of compensation paid to
certain executives.
No member of the committee is a former or current officer or employee of
the Company. The committee is composed entirely of outside directors.
Organization and Compensation Committee
David S. Tappan, Jr.
Earnest H. Clark, Jr.
Dennis C. Fill
Francis P. Lucier
15
<PAGE> 19
PERFORMANCE GRAPH(1)
The line graph below compares the cumulative total stockholder return on
Beckman's Common Stock (based on its market price and assuming reinvestment of
dividends) with the S&P 500 Composite Index, the S&P 500 Medical Products Index
and the indicated peer group, for the last five fiscal years.
Stock price performance shown on the graph is not necessarily indicative of
future price performance and in no way reflects the Company's forecast of future
financial performance.
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN
<TABLE>
<CAPTION>
MEASUREMENT PERIOD S&P 500 MED.
(FISCAL YEAR COVERED) BECKMAN S&P 500 PEER GROUP PROD.
<S> <C> <C> <C> <C>
12/89 100 100 100 100
12/90 86 97 113 117
12/91 106 126 118 192
12/92 139 136 132 164
12/93 164 150 129 125
12/94 170 152 150 149
</TABLE>
* Assumes $100 invested on December 31, 1989.
Beckman has the unique characteristic of serving both the life sciences and
diagnostic markets. The Company has historically attempted to construct an index
to simulate this characteristic. However, many direct competitors for Beckman's
diagnostic products are privately held foreign corporations or divisions of
substantially larger public companies. In addition, industry consolidation has
reduced the number of competitors available for comparison in the life sciences
market. As a result, the previous competitive peer group which included Applied
Bio-Systems, Becton-Dickinson, Bio-Rad Laboratories, Diagnostic Products,
Millipore, and Perkin-Elmer has been replaced. The Company has selected the S&P
500 Medical Products Index ("Medical Products Index") as an industry index which
includes Allergan, C.R. Bard, Baxter International, Bausch & Lomb,
Becton-Dickinson, Biomet, Medtronic, St. Jude Medical, and U.S. Surgical. The
Medical Products Index was selected because it includes companies that are
global, research and development based manufacturers serving the same general
customer. Included in the above graph is a comparison of both the previous peer
index and the Medical Products Index. While the performance of each index may
not be comparable at any point in time, an investment at the beginning of the
measured period
- ---------------
(1) This Section is not "soliciting material," is not deemed filed with the SEC
and is not to be incorporated by reference in any filing of the Company
under the Securities Act or the Exchange Act, whether made before or after
the date hereof and irrespective of any general incorporation language in
any such filing.
16
<PAGE> 20
resulted in approximately the same value at the end of 1994. The Company intends
to utilize the Medical Products Index for the foreseeable future.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board has appointed the Audit Committee, whose members and functions
are described under "Board of Directors Information -- Committees of the Board"
above. Upon recommendation of the Audit Committee, the Board has appointed the
firm of KPMG Peat Marwick LLP as the Company's independent accountants for the
current year. KPMG Peat Marwick LLP has served as auditor of the Company since
it was selected on March 29, 1990 to serve as the Company's independent
accountant for the year ended December 31, 1990.
Representatives of KPMG Peat Marwick LLP are expected to be present at the
Annual Meeting, will have the opportunity to make a statement if they desire to
do so, and will be available to respond to appropriate questions.
ADDITIONAL INFORMATION
ANNUAL REPORT
A copy of the 1994 Annual Report to stockholders which includes the
financial statements, but excludes Form 10-K exhibits, is being mailed to each
stockholder of record as of February 6, 1995, together with the proxy materials.
DEADLINE FOR STOCKHOLDER PROPOSALS
Any proposal of an eligible stockholder intended to be presented at the
Company's 1996 annual meeting must be received in writing by the Secretary of
the Company on or before October 26, 1995, if the proposal is to be considered
by the Board for inclusion in the Company's proxy materials for that meeting.
OTHER BUSINESS
The Board does not intend to present any business at the Annual Meeting
other than as stated above. If any other matters properly come before the Annual
Meeting, the persons named in the accompanying proxy will have discretionary
authority to vote all proxies in accordance with their best judgment.
By Order of the Board of Directors
[SIG]
WILLIAM H. MAY
Secretary
February 28, 1995
17
<PAGE> 21
BECKMAN INSTRUMENTS, INC.
PROXY/VOTING INSTRUCTION CARD
PROXY SOLICITED BY BOARD OF DIRECTORS FOR ANNUAL MEETING OF STOCKHOLDERS
BECKMAN INSTRUMENTS, INC. HEADQUARTERS, FULLERTON, CALIFORNIA
THURSDAY, APRIL 6, 1995, 10:00 A.M.
The undersigned hereby authorizes and appoints Louis T. Rosso and John
P. Wareham and each of them, as true and lawful agents and proxies with full
power of substitution in each, to represent the undersigned as indicated on the
reverse side hereof and in their discretion on all matters as may come before
the 1995 Annual Meeting of Stockholders or any adjournments or postponements
thereof.
Nominees for Director for Term Expiring in 1998:
Carolyne K. Davis, Ph.D., Dennis C. Fill, William N. Kelly, M.D., Henry Wendt
This card provides voting instructions, as applicable, to (1) the
appointed proxies for shares held of record by the undersigned including those
held under the Company's Dividend Reinvestment Plan ("Common") and for shares
held in First Chicago book entry accounts for certain employee purchases
("FCBE"), and (2) the Trustee for shares held on behalf of the undersigned in
Company's Savings and Investment Plan ("SIP") (See "Savings and Investment Plan
Voting Information" sheet, enclosed if applicable). IF REGISTRATIONS ARE NOT
IDENTICAL, YOU MAY RECEIVE MORE THAN ONE SET OF PROXY MATERIALS. PLEASE SIGN,
DATE AND RETURN ALL CARDS YOU RECEIVE.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES
(SEE REVERSE SIDE) BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. SHARES CANNOT BE
VOTED FOR YOU UNLESS YOU SIGN AND RETURN THIS CARD.
SEE REVERSE
SIDE
<PAGE> 22
/X/ PLEASE MARK YOUR
VOTES AS IN THIS 9830
EXAMPLE
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSAL 1.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR:
1. Election FOR WITHHELD
of / / / /
Directors
(see reverse)
For, except vote withheld from the following nominee(s)
- ---------------------------------------------------------
Please check the box if you plan to attend the
Annual Meeting. You will be mailed an admittance
card.
/ /
The signer hereby revokes all instructions
heretofore given by the signer to vote at said
meeting or any adjournment thereof.
NOTE: Please date and sign exactly as name
appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator,
trustee or guardian, please give full title as
such.
-------------------------------------------------
-------------------------------------------------
SIGNATURE(S) DATE
<PAGE> 23
MELLON TRUST
ATTENTION
SAVINGS AND INVESTMENT PLAN VOTING INFORMATION
PLEASE COMPLETE AND RETURN THE "PROXY/VOTING INSTRUCTION CARD,"
ENCLOSED IN THE OUTSIDE ENVELOPE WINDOW POCKET*, IN ORDER TO DIRECT US IN THE
VOTING OF THE SHARES OF BECKMAN COMMON STOCK HELD BY US, AS TRUSTEE FOR THE
BECKMAN SAVINGS AND INVESTMENT PLAN. A RETURN ENVELOPE (U.S. POSTAGE PAID) IS
PROVIDED.
YOUR INSTRUCTIONS MUST BE RECEIVED BY APRIL 4, 1995, IN ORDER TO BE
INCLUDED IN THE TABULATION; OTHERWISE, THE SHARES HELD FOR YOUR BECKMAN STOCK
FUND ACCOUNTS(S) WILL NOT BE VOTED AT THE 1995 ANNUAL MEETING.
Your individual voting instructions are held in confidence and will not be
disclosed to Beckman or others, unless otherwise required by law, regulation,
or court order. This applies to all shares indicated on the proxy/instruction
card, not just to those indicated as held by the Savings and Investment Plan
Trust.
WE LOOK FORWARD TO RECEIVING YOUR INSTRUCTIONS AND ENCOURAGE YOU TO
COMPLETE AND RETURN THE ENCLOSED "PROXY/VOTING INSTRUCTION CARD" TO ENABLE THE
SHARES TO BE VOTED.
MELLON BANK, TRUSTEE
Beckman Instruments, Inc.
Savings and Investment Plan
February 1995
* A "TRUSTEE VOTING INSTRUCTION CARD" MAY ALSO BE ENCLOSED IN THE
OUTSIDE WINDOW ENVELOPE AND YOU MAY RECEIVE MORE THAN ONE PACKAGE OF
PROXY MATERIALS DEPENDING ON DIFFERENCES IN THE RECORDING OF YOUR NAME ON
EMPLOYEE OR STOCK REGISTRATION RECORDS. PLEASE COMPLETE AND RETURN ALL
CARDS RECEIVED. YOU MAY USE THE SAME RETURN ENVELOPE FOR ALL CARDS.
<PAGE> 24
MELLON BANK
ATTENTION
TRUSTEE VOTING INSTRUCTION INFORMATION
BENEFIT EQUITY TRUST
PLEASE COMPLETE AND RETURN THE "TRUSTEE VOTING INSTRUCTION
CARD," ENCLOSED IN THE OUTSIDE ENVELOPE WINDOW POCKET*. IT MUST BE
RECEIVED BY APRIL 4, 1995 TO ENABLE TABULATION IN TIME FOR THE
1995 ANNUAL MEETING. A RETURN ENVELOPE (U.S. POSTAGE PAID) IS PROVIDED.
The Benefit Equity Trust was established to assist Beckman in meeting
its stock-based obligations. You will note that there is nothing on this card
indicating a designated number of shares in your name. This is because you do
not have any interests, entitlements, claims, ownership or beneficial ownership
in any stock or other assets of the Beckman Benefit Equity Trust. Pursuant to
the terms of this trust, we as trustee hereby request your assistance as a
recent participant in the Beckman Employees' Stock Purchase Plan by directing
the vote of the trust's holding of Beckman Common Stock. Your individual
voting instructions are held in confidence and will not be disclosed to Beckman
or others, unless otherwise required by law, regulation, or court order.
ALL BECKMAN COMMON STOCK HELD IN THE TRUST WILL BE VOTED BY MELLON BANK,
AS TRUSTEE, AND THE VOTE WILL BE IN THE SAME PROPORTIONS AS THE NUMBER OF
INSTRUCTIONS RECEIVED BY US. ACCORDINGLY, WE ARE LOOKING FORWARD TO YOUR
ASSISTANCE IN PROVIDING US WITH YOUR VOTING PREFERENCES AND ENCOURAGE YOU TO
COMPLETE AND RETURN THE ENCLOSED TRUSTEE VOTING INSTRUCTION CARD.
MELLON BANK, TRUSTEE
Beckman Instruments, Inc.
Benefit Equity Trust
February 1995
* A "PROXY/VOTING INSTRUCTION CARD" MAY ALSO BE ENCLOSED IN THE
OUTSIDE WINDOW ENVELOPE AND YOU MAY RECEIVE MORE THAN ONE PACKAGE OF
PROXY MATERIALS DEPENDING ON DIFFERENCES IN THE RECORDING OF YOUR NAME ON
EMPLOYEE AND STOCK REGISTRATION RECORDS. PLEASE COMPLETE AND RETURN ALL
CARDS RECEIVED. YOU MAY USE THE SAME RETURN ENVELOPE FOR ALL CARDS.
<PAGE> 25
TRUSTEE VOTING INSTRUCTION CARD
BECKMAN INSTRUMENTS, INC. ("BECKMAN") BENEFIT EQUITY TRUST
The Board of Directors of Beckman has solicited a proxy from Mellon Bank,
as Trustee for the Beckman Benefit Equity Trust, on matters presented at
the Beckman Annual Meeting of Stockholders, April 6, 1995, and any
adjournments or postponements thereof (see "Trustee Voting Instruction
Information - Benefit Equity Trust" enclosed with proxy materials). The
undersigned directs the Trustee, on the reverse side hereof, on the vote
upon the nominees for Director for the term expiring in 1998:
Carolyne K. Davis, Ph.D., Dennis C. Fill, William N. Kelly, M.D., and
Henry Wendt.
This card constitutes voting instructions to the Trustee only.
Completion of this card does not imply, create, or bestow on the undersigned
any ownership or other rights to assets in the Beckman Benefit Equity Trust.
All shares of Beckman Common Stock held in the Trust on the Record Date will be
voted as directed in proportion to the number of responses received by the
Trustee.
You may receive more than one set of proxy materials if you hold Beckman
Common Stock of record, in street name, in the Beckman Dividend Reinvestment
Plan, in a First Chicago book entry account for certain employee puchases, or
such stock is held on your behalf in the Beckman Savings and Investment Plan.
PLEASE SIGN, DATE AND RETURN ALL CARDS THAT YOU RECEIVE.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES,
SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS.
SEE REVERSE SIDE
<PAGE> 26
PLEASE MARK YOUR
X VOTES AS IN THIS 7785
EXAMPLE
THE INSTRUCTION CARD MUST BE PROPERLY EXECUTED IN ORDER FOR
SHARES TO BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED.
IF PROPERLY EXECUTED, BUT NO DIRECTION IS INDICATED, IT WILL BE COUNTED
AS A VOTE FOR PROPOSAL 1.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR:
FOR WITHHELD
1. Election / / / /
of
Directors
(see reverse)
For, except vote withheld from the following nominee(s)
----------------------------------------------------------
NOTE: Please date and sign exactly as name appears hereon.
-----------------------------------------------------------
-----------------------------------------------------------
SIGNATURE(S) DATE
