<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:
/X/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
ALLERGAN, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ALLERGAN, INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT)
Paying of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-7(i)(2).
/ / $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.*
4) Proposed maximum aggregate value of transaction:
* Set forth the amount on which the filing fee is calculated and state how
it was determined.
/ / 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 of 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
[LOGO]
2525 DUPONT DRIVE, IRVINE, CA 92715 (714) 752-4500
March 17, 1994
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders to
be held at the corporate headquarters of Allergan, Inc., 2525 Dupont Drive,
Irvine, California, on Tuesday, April 19, 1994 at 10:00 A.M. We hope you will be
present to hear management's report to stockholders.
The attached notice of meeting and proxy statement describe the matters to
be acted upon. If you plan to attend the meeting in person, please mark the
designated box on the proxy card. We will then send you an admission card, which
you should present upon entering the meeting.
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 at the
meeting. Accordingly, we urge you to complete the enclosed proxy and return it
to our vote tabulators promptly in the postage prepaid envelope provided. If you
do attend the meeting and wish to vote in person, you may withdraw your proxy at
that time.
[SIG]
Gavin S. Herbert
Chairman of the Board
[SIG]
William C. Shepherd
President and Chief Executive Officer
<PAGE> 3
[ L O G O ]
2525 DUPONT DRIVE, IRVINE, CA 92715
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 19, 1994
TO OUR STOCKHOLDERS:
The annual meeting of stockholders of Allergan, Inc., a Delaware
corporation, will be held at the corporate headquarters of Allergan, Inc., 2525
Dupont Drive, Irvine, California, on Tuesday, April 19, 1994 at 10:00 A.M. for
the following purposes:
1. To elect four Class II directors to serve for three-year terms ending in
1997 and until their successors are elected and qualified.
2. To approve the Company's amended Stockholder Rights Plan.
3. To approve the Company's amended 1989 Nonemployee Director Stock Plan.
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Directors has fixed February 28, 1994 as the record date for
determining the stockholders entitled to notice of and to vote at the meeting
and, consequently, only stockholders of record at the close of business on
February 28, 1994 will be entitled to notice of and to vote at the meeting and
any adjournment thereof.
STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. Even
though a stockholder may now plan to attend the meeting, he or she is urged to
complete, sign and date the enclosed proxy card and to mail it promptly in the
enclosed postage-paid envelope. Any stockholder present at the meeting may
withdraw his or her proxy and vote personally on each matter brought before the
meeting. Stockholders attending the meeting whose shares are held in the name of
a broker or other nominee should bring with them a proxy or letter from that
firm confirming their ownership of shares.
By Order of the Board of Directors
[ S I G ]
Francis R. Tunney, Jr.
Secretary
March 17, 1994
<PAGE> 4
[ L O G O ]
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS -- APRIL 19, 1994
INTRODUCTION
The accompanying proxy is solicited by the Board of Directors of Allergan,
Inc. ("Allergan" or the "Company"), 2525 Dupont Drive, Irvine, California 92715
for use at the Annual Meeting of the Company's stockholders to be held on April
19, 1994, and at any adjournment thereof, pursuant to the accompanying Notice of
Annual Meeting. This proxy statement and the accompanying proxy card are being
mailed to all stockholders on or about March 17, 1994.
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 facsimile or in person. The Company has retained D.F.
King & Co., a professional soliciting organization, to aid in the solicitation
of proxies to be voted at the Annual Meeting at an estimated cost of $10,500
plus out-of-pocket expenses. The Company will also reimburse brokers, nominees,
fiduciaries and other custodians for reasonable expenses incurred by them in
sending proxy soliciting material to the beneficial owners of the stock.
GENERAL INFORMATION REGARDING VOTING, CONFIDENTIALITY AND PROXIES
The persons named in the accompanying proxy will vote FOR the election of
the nominees for directors and FOR the other two proposals, unless otherwise
directed in the proxy. The proxy may be revoked by the stockholder at any time
prior to its use by giving notice of such revocation to the independent vote
tabulators. As to any other business which may properly come before the meeting,
the persons named in the accompanying proxy card will vote in accordance with
their best judgment, although the Company does not presently know of any other
business.
Holders of record of the Company's common stock at the close of business on
February 28, 1994 are entitled to vote at the meeting. On that date Allergan had
64,xxx,xxx shares of common stock outstanding. Each stockholder has one vote per
share on all business of the meeting. A majority of the outstanding shares will
constitute a quorum at the meeting. Abstentions and broker non-votes are counted
for purposes of determining the presence or absence of a quorum for the
transaction of business. Abstentions are counted as if they were "no" votes in
tabulations of the votes cast on proposals presented to stockholders, whereas
broker non-votes are not counted for purposes of determining whether a proposal
has been approved.
It is the Company's policy that all proxies, ballots and voting materials
that identify the particular vote of a stockholder be kept confidential, except
in the following circumstances: (1) to allow the independent election inspectors
to certify the results of the vote; (2) as necessary to meet applicable legal
requirements, including the pursuit or defense of a judicial action; (3) where
the Company concludes in good faith that a bona fide dispute exists as to the
authenticity of one or more proxies, ballots, or votes, or as to the accuracy of
the tabulation of such proxies, ballots, or votes; (4) where a stockholder
expressly requests disclosure or has made a written comment on a proxy card; (5)
where contacting stockholders by the Company is necessary to obtain a quorum,
the names of stockholders who have or have not voted (but not how they voted)
may be
<PAGE> 5
disclosed to the Company by the independent election inspectors; (6) aggregate
vote totals may be disclosed to the Company from time to time and publicly
announced at the meeting of stockholders at which they are relevant; and (7) in
the event of any solicitation of proxies or written consents with respect to any
of the securities of the Company by a person other than the Company of which
solicitation the Company has actual notice.
ELECTION OF DIRECTORS
PROPOSAL 1
The Company's Restated Certificate of Incorporation provides for three
classes of directors, each class consisting, as nearly as may be possible, of
one third of the whole number of the Board of Directors. At each Annual Meeting
the directors elected by stockholders to succeed directors whose terms are
expiring are identified as being of the same class as those directors they
succeed and are elected for a term to expire at the third Annual Meeting of
Stockholders after their election and until their successors are duly elected
and qualified. The Board of Directors elects directors to fill vacancies on the
Board, as they occur, as well as newly created directorships. A director elected
to fill a vacancy is elected to the same class as the director he or she
succeeds, and a director elected to fill a newly created directorship holds
office until the next election by the stockholders of the class to which such
director is elected. The Board of Directors currently consists of 12 directors
and currently four each serve as Class I, Class II and Class III directors.
UNLESS OTHERWISE DIRECTED IN THE PROXY, THE PERSONS NAMED IN THE
ACCOMPANYING PROXY INTEND TO VOTE THE SHARES REPRESENTED BY THE PROXY FOR THE
ELECTION AS DIRECTORS OF THE FOUR NOMINEES NAMED BELOW, ALL OF WHOM ARE, AT
PRESENT, CLASS II DIRECTORS OF THE COMPANY.
Directors are to be elected by a plurality of the votes cast at the meeting
in person or by proxy by the holders of shares entitled to vote in the election.
The Board of Directors is informed that all 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 of Directors unless the Board reduces the
number of directors accordingly.
NOMINEES FOR DIRECTORS
CLASS II -- TERM EXPIRES 1997:
TAMARA J. ERICKSON, 39, is a Senior Vice President and a Managing Director
of Arthur D. Little, Inc., a management consulting company. From 1978 to 1991,
Ms. Erickson held various positions at Arthur D. Little, Inc. including, Vice
President and Managing Director, Health Industries from 1985 to 1989, Vice
President and Managing Director, Industry Management Section from 1989 to 1991,
and Vice President and Managing Director, North America Management Consulting
from 1991 to 1993. She directed the firm's global health care practice from 1983
to 1991. Ms. Erickson is co-author of "Third Generation Research and
Development -- Managing the Link to Corporate Strategy," published in April
1991. She is a member of the Board of Directors of the Boston Ballet. Ms.
Erickson was elected to the Board in June 1992 and is a member of the Board's
Nominating, and Organization and Compensation Committees.
WILLIAM R. GRANT, 69, is Chairman of Galen Associates, Inc., a venture
capital firm in the health care industry. From October 1987 to May 1989 he was
Chairman of New York Life International Investment, Inc. From 1979 to 1987 he
was Chairman of MacKay-Shields Financial Corporation, investment counselors.
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Mr. Grant is a director of Fluor Corporation, Witco Corporation, New York Life
Insurance Co., Inc., SmithKline Beecham p.1.c., Seagull Energy Corporation,
Datamedic Corp. and O.S.I. Corporation. He is a trustee of the Mary Cary Flagler
Trust. Mr. Grant was elected to the Board in January 1989 and is Chairman of the
Board's Organization and Compensation, and Nominating Committees, and a member
of the Audit Committee.
LOUIS T. ROSSO, 60, has been Chief Executive Officer of Beckman
Instruments, Inc., a manufacturer of laboratory instruments, since September
1988 and Chairman of the Board since August 1989. He also served as a President
from 1982 until October 1993 and as Vice President of SmithKline Beckman
Corporation from 1982 until July 1989. Mr. Rosso was elected to the Board in
January 1989 and is Chairman of the Board's Audit Committee and a member of the
Nominating Committee.
WILLIAM C. SHEPHERD, 55, has been President and Chief Executive Officer of
the Company since January 1992 and had been President and Chief Operating
Officer from January 1984 to December 1991. Prior thereto, he was President of
Allergan U.S., Senior Vice President, U.S. Operations and Vice President,
Operations. Mr. Shepherd first joined the Company in 1966. He is a director of
Ligand Pharmaceuticals Inc. and serves on the Board of Directors of the Orange
County Performing Arts Center. Mr. Shepherd has been a director of the Company
since 1984 and is a member of the Board's Finance Committee.
DIRECTORS CONTINUING IN OFFICE
CLASS III -- TERM EXPIRES 1995:
HANDEL E. EVANS, 59, has been Executive Chairman of Walsh International
Inc., an international supplier of market information and communication services
to the pharmaceutical industry, since 1986 and Chairman of the Board of its
affiliate, Pharmaceutical Marketing Services Inc., a supplier of specialized
marketing products and services to pharmaceutical companies in the United
States, Europe and Japan, since July 1991. He was elected to the Board in April
1989 and is a member of the Board's Audit, and Organization and Compensation
Committees.
GAVIN S. HERBERT, 61, has been Chairman of the Company since 1977 and was
also Chief Executive Officer from 1977 to December 1991. Prior thereto, Mr.
Herbert had been President and Chief Executive Officer of the Company since
1961. He was Executive Vice President of SmithKline Beckman Corporation from May
1986 to July 1989 and President of SmithKline Beckman Corporation's Eye and Skin
Care Products Operations from 1981 to July 1989. He is also a director of
Beckman Instruments, Inc. Mr. Herbert is a trustee of the University of Southern
California and is also a member of the Board of Directors of Research to Prevent
Blindness. Mr. Herbert first joined the Company in 1950. He has been a director
of the Company since 1950 and is a member of the Board's Finance Committee.
LESLIE G. MCCRAW, 59, is Chairman of the Board and Chief Executive Officer
of Fluor Corporation, an international engineering and construction company. Mr.
McCraw was Vice Chairman of the Board and Chief Executive Officer of Fluor from
January 1990 to January 1991. He was President and Chief Executive Officer of
Fluor Daniel, Inc. from 1988 and was President and Chief Executive Officer of
Daniel International Corporation from 1984. In 1975, Mr. McCraw joined Daniel,
which became a wholly-owned subsidiary of Fluor in 1977. He is also a director
of Multimedia, Inc. Mr. McCraw has been a director of the Company since February
1990 and is a member of the Board's Audit, and Organization and Compensation
Committees.
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HENRY WENDT, 60, is Chairman of the Board of SmithKline Beecham p.l.c., a
pharmaceutical company, and its subsidiary, SmithKline Beecham Corporation. He
was Chief Executive Officer of SmithKline Beckman Corporation from April 1987 to
July 1989 and was President and Chief Executive Officer from February 1982 to
April 1987. Mr. Wendt is also a director of Beckman Instruments, Inc. and
Atlantic Richfield Co. Mr. Wendt is the author of "Global Embrace," published in
February 1993. He has been a director of the Company since January 1989 and is
Chairman of the Board's Finance Committee and a member of the Nominating
Committee.
CLASS I -- TERM EXPIRES 1996:
HOWARD E. (TED) GREENE, JR., 51, has been Chairman and Chief Executive
Officer of Amylin Pharmaceuticals, Inc., a biotech company involved in
therapeutic research and development, since 1989. He is also a General Partner
of Biovest Partners, a seed venture capital firm specializing in medical
technology companies, a position he has held since 1986. He is also Chairman of
the Boards of Cytel Corporation and Pyxis Corporation. Mr. Greene was elected to
the Board in October 1990 and is a member of the Finance Committee.
RICHARD M. HAUGEN, 41, has been Executive Vice President and Chief
Operating Officer since April 1992 and had been Corporate Vice President of the
Company and President, Worldwide Eye Marketing and Sales & Operations since
January 1992. Prior thereto, Mr. Haugen was Corporate Vice President and
President, Americas Region in 1991 and had been President of Allergan Optical
and Senior Vice President of the Company from 1989 to 1991. Prior thereto he was
Senior Vice President and President of Allergan Pharmaceuticals from 1988 to
1989 and was Senior Vice President, Planning and Business Development since
1987. Mr. Haugen first joined the Company in 1976. Mr. Haugen was elected to the
Board in April 1992 and is a member of the Board's Finance Committee.
KENNETH N. KERMES, 58, is the owner of Pond House Associates, a consulting
company specializing in strategic planning and organizational design. He was
Group Corporate Development Director of SmithKline Beecham p.l.c., a
pharmaceutical and health care company, from July 1989 to December 31, 1991 and
was Executive Vice President, Corporate Finance of SmithKline Beckman
Corporation from January 1987 until July 1989. Mr. Kermes was elected to the
Board in January 1989 and is a member of the Board's Audit and Finance
Committees.
LEONARD D. SCHAEFFER, 48, has been Chairman of the Board of Blue Cross of
California, a health insurance organization, since 1989 and President and Chief
Executive Officer since 1986. He has also been Chairman of the Board and Chief
Executive Officer of WellPoint Health Networks Inc., a for-profit managed health
care company, since August 1992. Mr. Schaeffer was the Administrator of the
Health Care Financing Administration (HCFA) from 1978 to 1980. Mr. Schaeffer is
also a director of Tokos Medical Corporation. Mr. Schaeffer was elected to the
Board in April 1993 and is a member of the Organization and Compensation
Committee.
INFORMATION REGARDING THE BOARD OF DIRECTORS
MEETINGS AND COMMITTEES
The Board of Directors held seven meetings during 1993 and its standing
committees also met from time to time to address issues within their respective
jurisdictions. Average attendance by directors at regular and
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special Board and committee meetings was 89% and all directors attended 75% or
more of the meetings of the Board and committees on which they served, except
Leslie G. McCraw who attended 71% of such meetings.
Audit Committee -- The Audit Committee, which had four meetings in 1993,
nominates the firm of independent auditors for appointment by the Board and
meets with the independent auditors to discuss the scope and results of their
audit examination and the fees related to such work. It also meets with the
Company's internal auditors and financial management to review the internal
audit department's activities; to discuss the Company's accounting practices and
procedures; to review the adequacy of the Company's accounting and control
systems; and to report to the Board any considerations or recommendations the
Audit Committee may have with respect to such matters. The Committee also
reviews the audit schedule and considers any issues raised by its members, the
independent public accountants retained to audit the books and records of the
Company, the internal audit staff, the legal staff or management. In addition,
the Committee monitors the Business Ethics Policy for the Company's employees,
coordinates compliance and reviews and investigates noncompliance matters. None
of the members of the Audit Committee are officers or employees of the Company
or any of its subsidiaries.
Finance Committee -- The Finance Committee, which had five meetings in
1993, reviews, approves or modifies management recommendations on corporate
financial strategy and policy and, where appropriate, makes recommendations to
the Board of Directors.
Nominating Committee -- The Nominating Committee was established to
recommend qualified candidates for election as directors of the Company,
including the slate of directors which the Board proposes for election by
stockholders at the Annual Meeting. The Nominating Committee held no formal
meetings in 1993; however, its members conferred with one another from time to
time to discuss matters of pertinance to the nominating process. The Nominating
Committee met in January 1994 to recommend the slate of directors proposed by
the Board for election at the Annual Meeting for which proxies are hereby
solicited.
Organization And Compensation Committee -- The Organization and
Compensation Committee, which had six meetings in 1993, reviews and approves
corporate organizational structure; reviews performance of corporate officers;
establishes overall employee compensation policies; and recommends to the Board
of Directors major compensation programs. The Committee also reviews and
approves compensation of directors and corporate officers, including salary and
bonus awards, and administers the 1989 Incentive Compensation Plan. No member of
the Organization and Compensation Committee is a member of management or
eligible for compensation other than as a director. The report of the Committee
begins on page 15.
STOCKHOLDER NOMINATIONS
The Restated Certificate of Incorporation of the Company provides that any
stockholder entitled to vote for the election of directors at a meeting may
nominate persons for election as directors only if timely written notice of such
stockholder's intent to make such nomination is given, either by personal
delivery or United States mail, postage prepaid, to the Secretary, Allergan,
Inc., 2525 Dupont Drive, Irvine, CA 92715. To be timely, a stockholder's notice
must be delivered to, or mailed and received at, the address provided not less
than 30 days nor more than 60 days prior to the scheduled annual meeting,
regardless of any postponements, deferrals or adjournments of that meeting to a
later date; provided, however, that if less than 40 days' notice or prior public
disclosure of the date of the scheduled annual meeting is given or made, notice
by the stockholder, to be timely, must be so delivered or received not later
than the close of business on the tenth day following the earlier of the day on
which such notice of the date of the scheduled annual meeting was mailed or the
day on which such public disclosure was made. A stockholder's notice to the
Secretary must set forth: (a) as to
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each person whom the stockholder proposes to nominate for election or
re-election as a director, (i) the name, age, business address and residence
address of the person, (ii) the principal occupation or employment of the
person, (iii) the class and number of shares of capital stock of the Company
beneficially owned by the person, (iv) any other information relating to the
person that is required to be disclosed in solicitations for proxies for
election of directors pursuant to Rule 14a under the Securities Exchange Act of
1934, as amended; and (b) as to the stockholder giving the notice (i) the name
and address, as they appear on the Company's books, of the stockholder and (ii)
the class and number of shares of the Company's stock which are beneficially
owned by the stockholder on the date of such stockholder notice. The Company may
require any proposed nominee to furnish such other information as may be
reasonably required by the Company to determine the eligibility of such proposed
nominee to serve as director of the Company.
DIRECTOR COMPENSATION
Of the Board's current 12 members, three are officers of the Company who do
not receive additional compensation for Board or committee service. The
remaining directors received, during the period from 1989 through 1993, an
annual $20,000 retainer plus $1,000 for each Board meeting and $750 for each
committee meeting attended. Effective January 1994, meeting fees have been
increased to the following: board meetings, $1,300; committee meetings attended
by members, $1,000; committee meetings attended by the committee chair, $1,500.
Mr. Herbert, Chairman of the Board of the Company, has announced his
retirement, effective March 31, 1994 as an executive officer and employee of the
Company. Mr. Herbert will continue to serve in the capacity of Chairman of the
Board and will provide ongoing advisory services to Allergan focusing on
government affairs and industry relations. For these advisory services and his
services as Chairman, he will receive an annual retainer of $150,000. He will
also be paid attendance fees as described above, receive grants of restricted
stock under the 1989 Nonemployee Director Stock Plan and be eligible to
participate in the Deferred Directors Fee Program, both as described below.
In 1991, the Company adopted a Deferred Directors Fee Program that permits
directors to defer all or a portion of their retainers and meeting fees until
termination of their status as a director. Deferred amounts are treated as
having been invested in Common Stock of the Company and thus are valued
according to fluctuations in the market price of the Common Stock. Distributions
will be made in cash only. Ms. Erickson and Messrs. Evans, Grant, Greene,
Kermes, McCraw, Rosso and Wendt chose to defer all or a portion of their
retainers and meeting fees for the period January 1, 1993 through December 31,
1993. Mr. Schaeffer has elected to participate in the program beginning in 1994.
In accordance with the Company's 1989 Nonemployee Director Stock Plan (the
"Director Plan"), each director who is not an employee of the Company receives
1,000 shares of restricted stock upon initial election to the Board of Directors
for a three year term, or a pro rata share if the election is for a shorter
period. Thereafter the award is 700 shares upon such director's re-election to
the Board. All such restricted stock grants vest at the rate of 33 1/3% per year
assuming the director held office for a full three year term. In the event that
an individual ceases to serve as a director prior to full vesting of a
restricted stock grant for reasons other than death, disability or normal
retirement those shares not then vested will be returned to the Company without
payment of any consideration to the director. The Director Plan provides that
the number of shares available for issuance under the Director Plan shall be
adjusted in the event of certain changes in capitalization, such as stock splits
and stock dividends.
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The Board has approved amendments to the Director Plan to provide that
grants of restricted stock upon (a) initial election to the Board be 500 shares
per year for each year, including a partial year of the term to be served, to a
maximum of three years and (b) reelection to the Board be 500 shares per year
for each of the three years of the new term. The amendments do not become
effective unless approved by the stockholders at this meeting. The proposed
amendments are described in greater detail beginning on page 23.
OTHER MATTERS
Allergan is a defendant in a consolidated class action currently pending in
the United States District Court for the Central District of California, Santa
Ana Division, In Re Allergan Shareholders, SACV 89-643 AHS (RWRx). Also named as
defendants are SmithKline Beckman Corporation ("SKB"), SmithKline Beecham p.1.c.
and certain directors and officers of Allergan. The allegations center around
claims that untrue statements or omissions of material facts about the business
and future prospects of the Company were made in connection with the spinoff of
the Company by its former parent, SKB, effective July 27, 1989 (the
"Distribution Date"), and that the defendants continued to make such allegedly
untrue statements and material omissions until January 24, 1990. On the
Distribution Date, as part of a transaction by which SKB and Beecham Group
p.1.c. were consolidated to form SmithKline Beecham p.1.c., the stockholders of
SKB received, among other things, 100% of the outstanding Allergan common stock
in the form of a dividend of .5 of a share for each share of SKB common stock
held and Allergan thereby became a stand-alone publicly-traded company (the
"Spinoff Distribution"). The plaintiffs have demanded a jury trial and, based on
various theories of recovery, seek actual and punitive damages, prejudgment
interest, attorneys' and experts' fees, costs and other relief. SKB and
SmithKline Beecham p.1.c. have asserted that any liability incurred by them in
connection with these lawsuits are the responsibility of Allergan under
indemnification provisions of the Distribution Agreement dated April 11, 1989 by
and among SKB, Allergan and Beckman Instruments, Inc. which governed certain
aspects of the Spinoff Distribution. The Company is not able at this time to
determine with certainty the ultimate outcome of this lawsuit or the claims for
indemnification. It is possible that the interests of Allergan on the one hand,
and SKB and SmithKline Beecham p.1.c. on the other hand, could become adverse
with respect to the indemnifiable nature of any liability or expense incurred by
the latter companies in connection with the lawsuits. Messrs. Evans, Grant,
Kermes and Wendt currently serve or have served as directors and/or officers of
SmithKline Beecham p.1.c., SKB or other SmithKline Beecham subsidiaries.
On August 29, 1990, several purported minority Allergan stockholders filed
a derivative action in the Superior court of the State of California for the
county of Los Angeles, Peter Stuyvesant, Ltd. v. Herbert, et. al., No. BC009384.
Defendants named in the action include Allergan, as a nominal defendant,
SmithKline Beecham p.1.c. and the Allergan officers and directors previously
named in the consolidated class action. The substantive allegations of the
Derivative Complaint essentially mirror those contained in the Consolidated
Complaint in the stockholders action and concern the identical factual
situation. In the derivative suit, plaintiffs seek among other things, a
judgment awarding damages to the Company, plaintiffs' attorneys fees, as well as
a return to the Company of all salaries and compensation paid to the individual
defendants for the periods of the alleged breach. The derivative action has been
stayed pending resolution of the consolidated class action.
Allergan management believes that the ultimate disposition of these suits
will not have a material adverse effect on the consolidated financial position
of the Company.
In June 1992, the Company entered into a joint venture with Ligand
Pharmaceuticals Incorporated ("Ligand") for the research and development and
commercial exploitation of pharmaceutical products based
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on retinoid technology. Each company has agreed to contribute $15 million to the
venture over three years. Allergan Pharmaceuticals (Ireland) Ltd. Inc. also
purchased, in conjunction with the formation of the joint venture and
thereafter, an approximately 14.65% equity interest in Ligand for approximately
$24 million, including the exercise of warrants in 1993. William C. Shepherd,
President and CEO of the Company became a director of Ligand shortly after the
formation of the joint venture.
COMPLIANCE WITH SEC REPORTING REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers, directors and persons who own more than ten percent of a
registered class of the Company's equity securities to file reports of ownership
and changes in ownership with the Securities and Exchange Commission ("SEC") and
the New York Stock Exchange. Executive officers, directors and greater than
ten-percent stockholders are required by SEC regulation to furnish the Company
with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms furnished to the
Company and written representations that no other reports were required during
the fiscal year ended December 31, 1993, all Section 16(a) filing requirements
applicable to its officers, directors and greater than ten-percent beneficial
owners were complied with except that Michael J. Donohoe filed his Form 3 upon
becoming an executive officer in a timely manner but inadvertently omitted to
report 100 shares held by a trust in which Mr. Donohoe is co-trustee and has a
pecuniary interest. He subsequently amended such Form 3 to reflect such
ownership and filed a Form 3 on behalf of the trust, which filings were late.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
BY MANAGEMENT
The following table sets forth information as of January 31, 1994 regarding
the beneficial ownership of the Common Stock of the Company by each nominee,
present directors of the Company, each of the executive officers named in the
Summary Compensation Table and all of the directors and executive officers of
the Company as a group.
<TABLE>
<CAPTION>
SHARES OF RIGHTS TO
COMMON STOCK ACQUIRE
BENEFICIALLY BENEFICIAL
BENEFICIAL OWNER OWNED(1)(2) OWNERSHIP(3) TOTAL
- ----------------------------------------------------- ------------ ------------ ---------
<S> <C> <C> <C>
CLASS II DIRECTOR NOMINEES:
Tamara J. Erickson................................... 640 -- 640
William R. Grant..................................... 14,311 -- 14,311
Louis T. Rosso....................................... 44,750 -- 44,750
William C. Shepherd.................................. 95,618 142,496 238,114
CLASS III DIRECTORS:
Handel E. Evans...................................... 4,394 -- 4,349
Gavin S. Herbert..................................... 482,077(4) 205,367 687,444(5)
Leslie G. McCraw..................................... 2,450 -- 2,450
Henry Wendt.......................................... 61,603 -- 61,603
</TABLE>
8
<PAGE> 12
<TABLE>
<CAPTION>
SHARES OF RIGHTS TO
COMMON STOCK ACQUIRE
BENEFICIALLY BENEFICIAL
BENEFICIAL OWNER OWNED(1)(2) OWNERSHIP(3) TOTAL
- ----------------------------------------------------- ------------ ------------ ---------
<S> <C> <C> <C>
CLASS I DIRECTORS:
Howard E. Greene, Jr................................. 2,560 -- 2,560
Richard M. Haugen.................................... 39,836 67,073 106,909
Kenneth N. Kermes.................................... 5,922 -- 5,922
Leonard D. Schaeffer................................. 1,000 -- 1,000
OTHER NAMED EXECUTIVE OFFICERS
Michael J. Donohoe................................... 7,629 31,759 39,388
Lester J. Kaplan, Ph.D............................... 14,275 37,632 51,907
All current directors and executive officers (23
persons, including those named above).............. 850,700 691,750 1,542,450(6)
</TABLE>
- ---------------
(1) In addition to shares held in the individual's sole name, this column
includes shares held by the spouse and other members of the named person's
immediate household who share that household with the named person, and
shares held in family trusts. This column also includes shares held in trust
for the benefit of the named party or group in the Company's Savings and
Investment Plan and the Employee Stock Ownership Plan as of December 31,
1993.
(2) In addition to the foregoing beneficial ownership amounts, the Directors
listed below elected to defer all or a portion of their annual retainer and
meeting fees, with such deferred amounts treated as having been invested in
Common Stock of the Company. As of December 31, 1993, such amounts
constitute the economic equivalent of the following numbers of shares of
Common stock:
<TABLE>
<CAPTION>
ECONOMIC EQUIVALENT
NUMBER OF SHARES
-------------------
<S> <C>
Tamara J. Erickson............................. 1,418
Handel E. Evans................................ 4,041
William R. Grant............................... 4,089
Howard E. Greene, Jr........................... 2,162
Kenneth N. Kermes.............................. 4,139
Leslie G. McCraw............................... 3,012
Louis T. Rosso................................. 1,351
Henry Wendt.................................... 3,749
</TABLE>
(3) Shares which the party or group has the right to acquire within 60 days
after January 31, 1994 upon the exercise of stock options.
(4) Includes 137,140 shares held in two trusts for which Mr. Herbert serves as
co-trustee and in which he or his sister has a beneficial interest.
(5) Represents 1.1% of the shares outstanding as of January 31, 1994.
(6) Represents 2.5% of the shares outstanding as of January 31, 1994.
9
<PAGE> 13
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.
<TABLE>
<CAPTION>
SHARES
NAME AND ADDRESS OF BENEFICIALLY PERCENT
BENEFICIAL OWNERS OWNED OF CLASS
--------------------------------------------------- ------------ --------
<S> <C> <C>
State Farm Mutual.................................. 5,898,600(1) 9.2%
Automobile Insurance Company
One State Farm Plaza
Bloomington, Illinois 61710
INVESCO MIM, Inc................................... x(2) x%
1315 Peachtree Street, N.E.
Suite 300
Atlanta, Georgia 30309
Brinson Partners, Inc.............................. x(3) x%
209 South LaSalle Street
Chicago, Illinois 60604
Mellon Bank Corporation............................ 3,985,329(4) 6.2%
One Mellon Bank Center
Pittsburgh, PA 15258-0001
</TABLE>
- ---------------
(1) Based on a Schedule 13G, dated January 28, 1994, filed with the Securities
and Exchange Commission by the named beneficial owner on behalf of itself
and related entities, as updated by more recent information supplied by the
named beneficial owner on March x, 1994.
(2) Based on a Schedule 13G, dated January x, 1994, filed with the Securities
and Exchange Commission by the named beneficial owner on behalf of itself
and related entities, as updated by more recent information supplied by the
named beneficial owner on March x, 199x.
(3) Based on a Schedule 13G, dated February x, 1994, filed with the Securities
and Exchange Commission by the named beneficial owner on behalf of itself
and related entities, as updated by more recent information supplied by the
named beneficial owner on March x, 1994.
(4) Based on a Schedule 13G, dated February 8, 1994, filed with the Securities
and Exchange Commission by the named beneficial owner on behalf of itself
and related entities, as updated by more recent information supplied by the
named beneficial owner on March x, 1994.
10
<PAGE> 14
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows the compensation for the Company's Chief
Executive Officer and the four remaining most highly paid executive officers for
services rendered in all capacities to the Company and its subsidiaries for the
years ended December 31, 1991, 1992 and 1993.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
AWARDS
-------------------------
ANNUAL COMPENSATION RESTRICTED
NAME AND ---------------------------- STOCK ALL OTHER
PRINCIPAL SALARY BONUS OTHER AWARD(S) COMPENSATION
POSITION YEAR ($)(1) ($)(2) ($)(3) ($)(4) OPTIONS(#) ($)(3)(5)
- ---------------------------- ---- ------- ------- ------ ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
William C. Shepherd, 1993 494,348 320,000 61,000 24,609
President & CEO 1992 416,004 340,000 240,000 61,000 25,182
1991 391,663 278,000 -- 42,000
Gavin S. Herbert, 1993 304,008 210,000 -- 34,300 38,461
Chairman of the 1992 400,008 280,000 -- 34,300 35,569
Board 1991 491,670 374,000 -- 64,000
Richard M. Haugen, 1993 351,796 200,000 -- 34,300 15,905
Executive Vice 1992 289,680 224,000 -- 36,500 21,166
President & COO 1991 223,830 150,000 -- 29,000
Michael J. Donohoe, 1993 218,938 106,800 (6) -- 24,000 13,463
Corporate Vice 1992 202,750 126,880 (6) -- 24,800 16,239
President & President, 1991 181,986 117,000 21,000
Europe Region
Lester J. Kaplan, 1993 219,625 106,900 16,000 17,576
Ph.D., Corporate 1992 203,300 115,000 108,750 13,300 12,892
Vice President, R&D 1991 178,750 93,000 -- 14,000
</TABLE>
- ---------------
(1) The amounts shown include cash compensation earned and received by executive
officers as well as amounts earned but deferred at the election of those
officers.
(2) The amounts shown represent bonus performance awards which were paid in
February of the following year under the Company's Management Bonus Plan for
services rendered during the fiscal year covered.
(3) In accordance with the transitional provisions applicable to the revised
rules on executive officer compensation disclosure adopted by the Securities
and Exchange Commission, amounts of Other Annual Compensation and All Other
Compensation are excluded for 1991.
(4) All shares of restricted stock vest, in whole, in three years or more and
receive non-preferential dividends. The amounts shown in the table represent
the value of the restricted stock awards on the date of grant. The following
number of restricted shares (and the value based on the closing price of the
stock on December 31, 1993) were held by each of the named executives as of
December 31, 1993: Mr. Shepherd, 10,000 ($226,250); Mr. Donohoe, 600
($13,575); and Dr. Kaplan, 5,000 ($113,125).
11
<PAGE> 15
(5) The total amounts shown in this column for the last fiscal year consist of
contributions to the Allergan, Inc. Savings and Investment Plan ("SIP"), the
Allergan, Inc. Employee Stock Ownership Plan ("ESOP"), the cost of term life
insurance and term executive post-retirement life insurance premiums ("Ins")
and payment in lieu of vacation ("Vac"), as follows:
<TABLE>
<CAPTION>
SIP ESOP INS VAC
------ ------ ------- ------
<S> <C> <C> <C> <C>
Mr. Shepherd........................... $3,212 $4,299 $15,724 $ --
Mr. Herbert............................ $4,497 $4,299 $29,665 --
Mr. Haugen............................. $2,249 $4,299 $ 2,515 6,842
Mr. Donohoe............................ $7,499 $4,299 $ 1,665 --
Dr. Kaplan............................. $7,323 $4,299 $ 1,714 4,240
</TABLE>
(6) Mr. Donohoe temporarily relocated to the United Kingdom in February 1992 in
connection with his election as President, Europe Region. As a U.S.-based
employee assigned abroad, Mr. Donohoe is entitled to certain payments that
are made available generally to employees as part of the assignment. These
amounts, which typically are associated with the expenses of maintaining two
households, home visits, tax equalization and additional education costs for
such employees' children, have not been included in this table.
STOCK OPTIONS
The following table shows information regarding stock options granted to
the named executive officers during 1993. The Company has not issued any stock
appreciation rights (SARs) since the Spinoff Distribution.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES EXERCISE OR GRANT DATE
GRANTED IN FISCAL BASE PRICE EXPIRATION PRESENT
NAME (#)(1) 1993 PER SHARE DATE VALUE ($)(2)
- ---------------------------------- ---------- ---------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
William C. Shepherd............... 61,000 7.1% $ 23.34 4/27/03 $502,640
Gavin S. Herbert.................. 34,300 4.0% 23.34 4/27/03 282,632
Richard M. Haugen................. 34,300 4.0% 23.34 4/27/03 282,632
Michael J. Donohoe................ 24,000 2.8% 23.34 4/27/03 197,760
Lester J. Kaplan, Ph.D. .......... 16,000 1.9% 23.34 4/27/03 131,840
</TABLE>
- ---------------
(1) All options disclosed above were granted pursuant to the 1989 Incentive
Compensation Plan (the "Incentive Plan") on April 27, 1993 and become
exercisable 25% per year beginning April 27, 1994. The exercise price and
the tax withholding obligations related to exercise may be paid by delivery
of already-owned shares. The Incentive Plan grants broad discretion to
change material terms, including the acceleration of vesting upon a "Change
in Control." See "Change in Control Arrangements" on page 14.
(2) Based on the Black-Scholes model of option valuation to determine grant date
present value. The actual value, if any, an executive may realize will
depend on the excess of the stock price over the exercise price on the date
the option is exercised, so that there is no assurance the value realized by
an executive will be at or near the value estimated by the Black-Scholes
model. With respect to the 1993 option grants, the
12
<PAGE> 16
following assumptions were used in the Black-Scholes model: market price of
stock, $23.34; exercise price of option, $23.34; stock volatility, .239
(based on two year volatility and dividend yield); annualized risk-free
interest rate, 6.00%; option term, 10 years; dividend yield, 1.65, risk of
termination per year of vesting, 3%.
OPTION EXERCISES AND HOLDINGS
The following table shows stock option exercises by the named executive
officers during 1993, including the aggregate value of gains on the date of
exercise. In addition, this table includes the number of shares covered by both
exercisable and non-exercisable stock options as of December 31, 1993. Also
reported are the values for "in-the-money" options which represent the positive
spread between the exercise price of any such existing stock options and the
year-end price of Common Stock.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS IN-THE-MONEY OPTIONS
ACQUIRED VALUE AT 12/31/93(#)(1) AT 12/31/93($)(2)
ON EXERCISE REALIZED --------------------------- ---------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------ ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William C. Shepherd........... 8,826 $ 81,199 166,032 138,750 $ 578,634 $ 121,906
Gavin S. Herbert.............. -- -- 205,367 109,525 473,221 151,884
Richard M. Haugen............. -- -- 68,544 82,425 174,397 72,078
Michael J. Donohoe............ 2,495 24,139 31,759 55,400 44,741 37,213
Lester J. Kaplan, Ph.D. ...... -- -- 37,632 37,350 89,316 40,447
</TABLE>
- ---------------
(1) In accordance with the agreement entered into between the Company and SKB
governing the Spinoff Distribution, each employee or former employee of the
Company who as of the Distribution Date held an SKB stock option was granted
a nonqualified stock option under the Incentive Plan in substitution of the
SKB option. The exercise prices of the Company options were set by the
Company's Incentive Compensation Plan Committee, then in existence, in a
manner designed to preserve the gain in the SKB option at the time of
substitution. The numbers shown include the value of options accumulated,
and not yet exercised, over a ten-year period, including the period when the
Company was a subsidiary of SKB.
(2) Based on the closing price of $22.625 on the New York Stock Exchange of the
Company's Common Stock.
DEFINED BENEFIT PENSION PLANS
The Company has established a defined benefit retirement plan as a
successor to the pension benefit obligations of SKB's retirement plan with
respect to Allergan employees. The Allergan plan, into which certain assets of
the SKB plan were transferred in conjunction with the Spinoff Distribution,
provides pension benefits to employees, including officers, based upon the
average of the highest 60 consecutive months of eligible earnings and years of
service integrated with covered compensation as defined by the Social Security
Administration.
13
<PAGE> 17
Allergan has also established two supplemental retirement plans ("SRP") for
employees, including officers. These plans pay benefits directly to a
participant to the extent benefits under the Pension Plan are limited by certain
Internal Revenue Code provisions.
The following table illustrates the annual combined retirement benefits
payable under the retirement plans based on an age 62 retirement. If an employee
elects a benefit for his or her surviving spouse, the retirement benefit for the
employee is reduced to reflect this additional coverage.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
-------------------------------------------------------------------
FINAL AVERAGE PAY 15 20 25 30 35 40 45
- ----------------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
$200,000........................ 49,700 66,300 82,900 99,400 116,000 121,000 126,000
$250,000........................ 62,700 83,600 104,500 125,400 146,300 152,500 158,800
$300,000........................ 75,700 100,900 126,100 151,300 176,600 184,100 191,600
$350,000........................ 88,600 118,200 147,700 177,300 206,800 215,600 224,300
$400,000........................ 101,600 135,500 169,400 203,200 237,100 247,100 257,100
$500,000........................ 127,600 170,100 212,600 255,100 297,700 310,200 322,700
$600,000........................ 153,500 204,700 255,900 307,000 358,200 373,200 388,200
$700,000........................ 179,500 239,300 299,100 358,900 418,800 436,300 453,800
$800,000........................ 205,400 273,900 342,400 410,800 479,300 499,300 519,300
$900,000........................ 231,400 308,500 385,600 462,700 539,900 562,400 584,900
</TABLE>
Eligible earnings include basic salary and bonuses earned during the year.
Unreduced benefits are payable at age 62, but employees may continue employment
beyond then and earn additional retirement benefits. Credited years of service
at normal retirement for the individuals named in the compensation table would
be as follows: Mr. Shepherd, 34 years; Mr. Herbert, 45 years; Mr. Haugen, 35
years; Mr. Donohoe, 18 years; and Dr. Kaplan, 29 years.
CHANGE IN CONTROL ARRANGEMENTS
The Company has entered into agreements with each of its executive officers
and certain other officers which provide certain benefits in the event of a
change in control of the Company. A "change in control" of the Company is
defined as, in general, the acquisition by any person of beneficial ownership of
20% or more of the voting stock of the Company, certain business combinations
involving the Company or a change in a majority of the incumbent members of the
Board of Directors, except for changes in the majority of such members approved
by such members. If, within two years after a change in control, the Company or,
in certain circumstances, the executive, terminates his or her employment, the
executive is entitled to a severance payment equal to one, two or three
(depending on the executive in question) times (i) such executive's highest
annual salary within the five-year period preceding termination plus (ii) a
bonus increment equal to the average of the two highest of the last five bonuses
paid to such executive under the Company's Management Bonus Plan. In addition,
the executive is entitled to the continuation of all employment benefits for a
one-, two-or three-year period (depending on the executive in question), the
vesting of all stock options and certain other benefits, including payment of an
amount sufficient to offset any "excess parachute payment" excise tax payable by
the executive pursuant to the provisions of the Internal Revenue Code or any
comparable provision of state law. The multiple of salary and bonus (as
calculated above) and the number of years of continued coverage of other
benefits are as follows: Messrs. Herbert, Shepherd and Haugen -- three
14
<PAGE> 18
years; Messrs. Kaplan and Donohoe, and the other 9 executive officers -- two
years; other covered officers (25 persons) -- one year.
In addition, the Company's SRP, Incentive Plan, Savings and Investment
Plan, Employee Stock Ownership Plan and Nonemployee Director Stock Plan each
contain provisions for the accelerated vesting of benefits under such plans upon
a change in control of the Company. For such purposes a change in control is
deemed to occur upon the acquisition by any person of 50% or more of the
combined voting power of the Company's then outstanding voting securities, a
change in composition of a majority of the Board of Directors unless approved by
incumbent directors, and certain other acquisition related events.
REPORT OF THE ORGANIZATION AND COMPENSATION COMMITTEE
As members of the Organization and Compensation Committee, it is our duty,
pursuant to our charter to: administer the Company's Management Bonus Plan and
the 1989 Incentive Compensation Plan, review and adjust base compensation
levels, evaluate performance, and consider and approve management succession for
corporate officers.
Allergan's executive compensation programs are designed to attract,
motivate, and retain the executive talent needed to optimize shareholder value
in a competitive environment. The programs support the goal of increasing
shareholder value of the Company by achieving specific financial and strategic
objectives.
Allergan's executive compensation programs are designed to provide:
- levels of base compensation that are competitive with comparable
pharmaceutical and health care companies;
- annual incentive compensation that varies in a consistent and predictable
manner with achievement of the financial performance objectives of the
Company; and
- long-term incentive compensation that focuses executive efforts on
building shareholder value through meeting longer-term financial and
strategic goals.
In designing and administering its executive compensation program, the
Company attempts to strike an appropriate balance among these various elements,
each of which is discussed in greater detail below.
BASE SALARY
Base salary is targeted at the 50th percentile level, consistent with
comparable pharmaceutical and health care companies. In surveying comparable
companies, the Company utilizes available survey data from S&P Health Care
(Diversified) Index companies when it is available as well as other similar
companies in order to obtain a representative picture of competitive market
practices. Allergan's salary increase program is designed to reward individual
performance consistent with the Company's overall financial performance in the
context of competitive practice. Annual performance reviews and formal merit
increase guidelines determine individual salary increases.
THE MANAGEMENT BONUS PLAN
The Management Bonus Plan is designed to reward management level-employees
for their contributions to corporate and individual objectives. Each eligible
employee's award is expressed as a percentage of the participant's December 31,
1993 base salary. Bonus targets begin at 10% for managers and range from 30% to
15
<PAGE> 19
60% for executive officers, it being the Committee's compensation philosophy
that increasing portions of compensation should be "at risk" for those employees
with greater influence on shareholder value. Individual performance is measured
against objectives that reflect what executives must do in order for Allergan to
meet its short-and long-term business goals. A participant's individual bonus
target award may be modified from 0% to 150%.
Organizational objectives are measured in terms related to Allergan's
increase in shareholder value: cash flow return on investment (CFROI), sales
growth over the prior year, and operating margin objectives. The Committee
believes that these measures are primary determinants with the highest
historical correlation with share price. Targets based on organizational
objectives are established as part of the annual operating plan process which
includes a review of peer group company performance.
The bonus target is set at 100% when 100% of operating plan objectives for
CFROI, sales growth, and operating margin are achieved. The bonus award
guideline is highly leveraged with the possible percentage ranging from 0% to
200%, and is linked to company performance against the three measures. For 1993,
the Company's bonus award guideline percentage was 97%, with results in CFROI
and Operating Margin exceeding planned levels and sales growth below the planned
level.
The following illustrates the bonus determination process:
<TABLE>
<CAPTION>
Employee's Organizational Individual Individual
Bonus Objective Performance Bonus
Target Achievement Achievement Percentage
<S> <C> <C> <C> <C>
X X
=
e.g. 25% 97% 110% 26.7%
</TABLE>
For bonus year 1993, the Committee approved a total bonus fund of $8.3
million for approximately 450 participating employees.
TOTAL ANNUAL CASH COMPENSATION (BASE SALARY PLUS BONUS)
Total cash compensation is set competitively at the 50th percentile,
consistent with comparable pharmaceutical and health care companies when annual
operating plans and targets are achieved. Top-quartile cash compensation can be
attained only if business results significantly exceed the operating plan.
INCENTIVE COMPENSATION PLAN
The 1989 Incentive Compensation Plan (the "Incentive Plan") authorizes the
granting of various stock-based incentive awards to officers and key employees
of the Company and its subsidiaries. The plan has been designed to:
- link management's financial success to that of the shareholders via
broad-based participation of Allergan management employees (approximately
460 managers received grants in 1993);
- focus attention on building shareholder value through meeting longer-term
financial and strategic goals;
- balance long-term with short-term decision making; and
- encourage and create ownership and retention of the Company's stock.
16
<PAGE> 20
COMMITTEE ACTIVITIES
In 1993, the Committee had six formal meetings as well as many interim
discussions. The following summarizes the Committee's major activities:
- Approved the 1993 Executive Salary Plan. This plan sets the salary
grades, ranges, and target bonus percentages based on competitive
information from comparable pharmaceutical and health care companies.
- Reviewed and determined 1993 salary increases for each corporate officer
based on their performance.
- Determined 1992 management bonus awards for corporate officers based on
assessment of their performance against objectives. Approved the 1993
Management Bonus Plan's corporate financial objectives.
- Reviewed and recommended 1993 stock awards for executive officers as well
as for approximately 450 other participants.
- Recommended the election of 1993 corporate officers and the designation
of executive officers covered under section 16 of the Securities Exchange
Act of 1934.
- Reviewed and approved executive stock ownership guidelines. The Chairman
and the President and CEO are each expected to hold three times their
salary in Company stock; the guideline for the Executive Vice President
and COO is two times his salary; and the guideline for corporate vice
presidents is one time salary.
- Considered the limitation on the deductibility of executive compensation
under Section 162(m) of the Internal Revenue Code, as amended by OBRA 93.
The Committee believes that the Incentive Plan is likely to be able to
meet the requirements to permit exemption from the limitation. The
Committee will consider various alternatives to preserving the
deductibility of payments under the Management Bonus Plan to the extent
reasonably practicable and to the extent consistent with its other
compensation objectives.
The Company, with the approval of the Committee, has retained the services
of Towers Perrin, a Human Resources consulting firm, since 1989 to provide
advice and review the reasonableness of compensation paid to executive officers
of the Company. As part of its services, Towers Perrin reviews and, as
appropriate, provides recommendations with respect to the 1993 Executive Salary
Plan and Stock Award Guidelines.
SALARY INCREASES
The CEO received an increase of 9.6% effective February 1, 1994, reflecting
the Committee's assessment of Mr. Shepherd's 1993 performance when evaluated
against the objectives established for the year. Of particular noteworthiness
were his outstanding accomplishments above and beyond normal CEO
responsibilities. He successfully integrated the new management team concept in
a very difficult health care environment, recruited six key executives,
completed key joint ventures, the licensing and co-marketing of several products
and maintained the momentum on R&D programs successfully. He also concluded the
sale of the international contact lens business. The Committee, in setting Mr.
Shepherd's increase, also took into consideration the fact that Mr. Shepherd's
salary is below the midpoint for his salary grade, owing in large measure to the
relatively short time he has served as CEO.
17
<PAGE> 21
Other executive officers received an average increase of 6.8% effective
February 1, 1994 to reflect performance that was generally above average, thus
enabling the Company to achieve excellent results considering market conditions.
MANAGEMENT BONUS PLAN AWARDS
At the January 1994 meeting, the Committee approved bonus awards for
executive officers. All of these awards were within the terms of the Management
Bonus Plan.
The CEO received a Management Bonus Plan award of $320,000, based on the
Committee's assessment of Mr. Shepherd's performance and Allergan's 1993
corporate financial results. For purposes of compensation decisions, the
Company's performance is measured under the Management Bonus Plan against goals
established prior to the start of the fiscal year.
In the case of Mr. Shepherd, the Committee was influenced by the same
business factors discussed above in connection with his salary increase.
LONG-TERM INCENTIVE GRANTS
At the April 1993 meeting, the Committee considered long-term incentive
grants for each of the executive officers of the Company. The guidelines for
each grade level are set periodically based upon a comparison of Allergan to
survey data for over 200 companies prepared and analyzed by Towers Perrin in
order to approximate 75th percentile level compensation if the Company is
successful and that success results in increased stock prices.
The CEO received 61,000 non-qualified stock options, which was equal to the
guideline amount previously set for the position. The Committee was influenced
by, among other things, the Company's performance, continued progress in
divesting non-core businesses and the continued smooth transition of leadership
responsibilities from Mr. Herbert to Mr. Shepherd.
In the case of each of the other named executives, the stock award was
within the Company's guideline and reflects the assessment of individual
performance as well as the performance of the Company as discussed in the
previous paragraph.
No member of the Organization and Compensation Committee is a former or
current officer or employee of the Company or any of its subsidiaries.
Organization and Compensation
Committee,
William R. Grant, Chairman
Ms. Tamara J. Erickson
Mr. Handel E. Evans
Mr. Leslie G. McCraw
Mr. Leonard D. Schaeffer
18
<PAGE> 22
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. There are no compensation
committee interlocks between the Company and other entities involving Allergan
executive officers and Allergan Board members who serve as executive officers of
such other entities.
Walsh International Inc. and Pharmaceutical Marketing Services Inc., of
which Handel E. Evans, a director of the Company and a member of the
Organization and Compensation Committee, is the Chairman, provided
pharmaceutical marketing research data during 1993 for which the Company paid
approximately $291,000.
Blue Cross of California, of which Leonard D. Schaeffer, a director of the
Company and a member of the Organization and Compensation Committee, is the
Chairman, provided administrative services for certain of the Company's health
plans during 1993 for which the Company paid approximately $200,000.
19
<PAGE> 23
STOCK PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total stockholder return on the Company's Common Stock with the
cumulative total return of the S&P 500 Stock Index, the S&P Health Care (Drugs)
Index and the S&P Health Care (Diversified) Index for the period beginning July
27, 1989 (the Distribution Date) and ending December 31, 1993. The graph assumes
that all dividends have been reinvested. The Company has selected the S&P Health
Care (Diversified) Index to use in this Proxy Statement, based on its belief
that such S&P Health Care (Diversified) Index more accurately reflects the
Company's peers when considering such factors as product mix than the index
previously used, the S&P Health Care (Drugs) Index. Both indexes are shown in
the graph.
<TABLE>
<CAPTION>
S&P Health
Measurement Period S&P Health Care Diversi-
(Fiscal Year Covered) AGN S&P 500 Care Drugs fied
<S> <C> <C> <C> <C>
7/27/89 100 100 100 100
12/31/89 69 106 114 111
12/31/90 71 103 130 135
12/31/91 101 134 215 200
12/31/92 108 145 172 171
12/31/93 96 159 158 163
</TABLE>
20
<PAGE> 24
AMENDMENT AND CONTINUATION OF THE STOCKHOLDER RIGHTS PLAN
PROPOSAL 2
The Company's Stockholder Rights Plan (the "Plan") was adopted in 1989 in
an effort to protect stockholders from undesirable attempts to acquire the
Company, including the use of abusive takeover tactics, and to improve the Board
of Directors' ability to negotiate on behalf of all stockholders in the event a
takeover proposal was made.
In light of recent changes in the level and type of takeover activity
generally, and concerns expressed by certain institutional stockholders of the
Company about various features of stockholder rights plans generally, the Board
of Directors, upon recommendation of the Company's management, undertook a
detailed review of the Plan, with the participation of institutional
stockholders and outside legal and financial advisors. As a result of the
review, the Board of Directors has approved amendments to the Plan to strengthen
the stockholders' ultimate control over the Plan.
The Board of Directors has determined that, in order to continue in effect,
the Plan as amended must be approved by the affirmative vote of a majority of
the shares present and voting at the Meeting. The Board of Directors recommends
that the Stockholders vote for this Proposal to continue in effect the Plan as
now amended.
Specifically, the amendments to the Plan adopted by the Board of Directors
(the "Amendments") provide for the following:
Stockholder Referendum. Prior to adoption of the Amendments,
redemption of the rights issued under the Plan (the "Rights") was solely
within the discretion of the Board of Directors. Pursuant to the
Amendments, redemption of the Rights (and, accordingly, the elimination of
the Plan) will be submitted to a binding stockholder vote if an offer for
all outstanding shares meeting certain conditions is made and within 60
days thereafter the Board of Directors has not either redeemed the Rights
or approved a financially superior alternative transaction. The Board must
redeem the Rights if holders of a majority of the Company's then
outstanding voting shares vote to request such redemption to allow the
completion of that offer or a financially superior offer. Thus, regardless
of the Board of Directors' position, the stockholders can cause the
redemption of the Rights to allow completion of an offer meeting the
specified conditions.
The specified conditions are (i) that the offer must be for all
outstanding common shares at the same price, (ii) if an offer all or
partially for a cash consideration, that the offer must be fully financed,
(iii) if an offer all or partially for non-cash consideration, that such
consideration must be New York Stock Exchange-listed securities and that
the offer will provide tax-deferred treatment for stockholders, and (iv)
that the offer is not subject to financing, funding or due diligence
conditions.
Term of Plan. Prior to adoption of the Amendments, the Plan was
scheduled to expire in 1999. Pursuant to the Amendments, the Plan will now
expire in 1997 unless holders of a majority of the votes cast at the 1997
annual meeting vote affirmatively to extend the term of the Plan. If the
stockholders approve the extension at the 1997 annual meeting, the Plan
will expire (without redemption of the Rights) at the end of the year 2000.
The Board is not required by law to submit the Plan, as amended, to a
stockholder vote. However, the Board has determined that, since the Plan is
intended to protect stockholders' interests, the Plan will expire unless the
stockholders approve continuation of the Plan.
21
<PAGE> 25
The Board of Directors believes that the Plan, as it has been amended,
continues to meet the primary objectives which originally caused the Board to
adopt the Plan while also placing significant control of the use of the Plan in
stockholders' hands, thereby addressing corporate governance issues which have
been raised by some institutional and other stockholders.
The Board of Directors continues to be concerned that certain takeovers
could be undesirable and deprive stockholders of the long-term value of their
stock. The Plan continues to be designed to discourage takeovers and takeover
proposals that use abusive tactics, do not provide for adequate payments to
stockholders for their stock, or enable an offeror to obtain effective control
of the Company, but less than all of the Company's stock, without offering all
stockholders the opportunity to receive the long-term value for all of their
stock. The Plan also continues to be intended to increase the negotiating
position of the Board for the benefit of the stockholders in the event a
takeover proposal is made.
The Board of Directors believes that the concerns underlying these
objectives are of particular import for a company in the pharmaceutical
business, which is research and development intensive. Since bidders likely
would not be able to fully analyze and value the research and development
component of the Company's business in the short 20 business-day time frame
provided for tender offers under federal law, the Board believes that a bidder
would be likely to undervalue the Company, depriving stockholders of the
opportunity to receive the maximum price for their shares.
The amendments to the Plan are intended to be responsive to the perceived
desire of the Company's stockholders to have more control over the use of the
Plan in meeting the objectives described above. Although the stockholder
referendum procedure described above neither requires the Board of Directors to
approve or recommend any offer to acquire the Company, nor precludes the Board
from pursuing or recommending alternatives to any offer, it does provide for the
stockholders, with the requisite vote, to eliminate the impediments caused by
the existence of the Rights for an offer meeting the specified conditions. The
Board believes that offers meeting the conditions (essentially, fully-financed
offers for all outstanding shares) avoid several of the concerns the Plan is
designed to protect against. The Board also believes that, although such an
offer may not necessarily reflect the long-term value of the Company's stock,
the stockholders should be able to determine for themselves whether they wish to
avail themselves of the protection of the Rights in those circumstances.
Certain other provisions contained in the Company's Certificate of
Incorporation, and certain federal and state laws applicable to the Company, may
also discourage certain takeovers that would deprive the stockholders of the
long-term value of their stock. The Board of Directors believes that the Plan is
nonetheless desirable. These other provisions and laws, do not, in the view of
the Board of Directors, afford equivalent protection provided by the Plan, and
do not provide any protection against a person or group accumulating a
substantial stock position and then making a bid at an inadequate price
(effectively blocking other potential buyers who would be willing to pay higher
prices), taking control of the Company through a proxy contest (with no payment
at all to stockholders), or taking certain other actions detrimental to the
stockholders.
As in the case of the Plan prior to the amendments, the Plan may discourage
certain mergers, tender offers or other purchases of the Company's stock and
certain proxy contests. The Board of Directors does not believe that the
potential disadvantage outweighs the benefits of the Plan.
IT IS, THEREFORE, RECOMMENDED THAT THE STOCKHOLDERS VOTE FOR THE PROPOSAL.
If the Proposal is approved, the Plan as amended will remain in effect. If the
Proposal is not approved, the Plan as amended will terminate (without redemption
of the Rights) and will be of no further force or effect.
22
<PAGE> 26
A copy of the Plan, as amended and restated, is available upon request from
the Company, free of charge. The foregoing discussion is qualified in all
respects by reference to the full text of the amended and restated Plan.
AMENDMENT OF THE 1989 NONEMPLOYEE DIRECTOR STOCK PLAN
PROPOSAL 3
The Company seeks stockholder approval of amendments to its 1989
Nonemployee Director Stock Plan (the "Director Plan") which will change the
formula pursuant to which automatic grants of restricted stock are awarded to
Nonemployee directors under the Director Plan, and implement certain other
changes as discussed below.
Currently, the Director Plan provides for (i) an automatic grant of 1,000
shares of restricted stock to each non-employee director upon initial election
to the Board of Directors for a three-year term (or a lesser amount prorated
monthly if the initial election is for a shorter period) and (ii) an additional
automatic grant of 700 shares of restricted stock upon such director's
re-election to the Board. Generally, such restricted stock grants vest at a rate
of 33 1/3% per year assuming the director holds office for a full three-year
term (prorated monthly for partial years). At such time as an individual ceases
to serve as a director (for any reason other than death, disability or
retirement), any then unvested restricted shares will be returned to the Company
without payment of any consideration to the director.
If approved by the affirmative vote of a majority of the shares present and
voting at the meeting, stockholders, the proposed amendments to the Director
Plan will implement the following changes effective as of the date of the 1994
Annual Meeting of Stockholders:
- The number of shares of restricted stock which will be awarded to each
nonemployee director upon initial election or appointment as well as upon
each subsequent re-election will be 500 shares multiplied by the number
of years, including any partial year as a full year for this purpose, of
the applicable term of office to be served. For example, each of the
Class II nominees who are non-employees will receive an automatic grant
of 1,500 shares under this proposed amendment.
- Grants of restricted stock made on and after such Annual Meeting will
vest in equal installments of 500 shares as of the date of each
subsequent regular annual meeting of stockholders at which any directors
are to be elected.
- Certain provisions of the Director Plan will also be amended to delete
provisions which could (if applicable) cause acceleration of vesting upon
retirement from the Board. Since the Company currently does not have a
retirement age policy for its nonemployee directors, mandatory or
otherwise, this change to the Director Plan is intended to conform the
Plan to actual current practice. As a result, only death, disability or a
change in control (as discussed more fully below) will result in
acceleration of vesting.
The primary purpose of the proposed amendments to the Director Plan is to
increase the number of shares included in the automatic grants to nonemployee
directors in order to keep the total package of nonemployee director
compensation competitive with comparable publicly-traded companies. The other
changes being proposed are intended to simplify administration of the Director
Plan. IT IS, THEREFORE, RECOMMENDED THAT THE STOCKHOLDERS VOTE FOR THE PROPOSAL.
23
<PAGE> 27
The following is a summary of the Director Plan as proposed to be amended.
The full text of the Plan (as proposed to be amended) is attached as Exhibit A,
and the following summary, together with the preceding discussion of the
proposed amendments, is qualified in its entirety by reference to such Exhibit
A.
The Director Plan was originally approved and adopted in 1989 by the
Company's Board of Directors and then sole stockholder, SmithKline Beckman
Corporation. Under the Plan, up to 50,000 shares of Common Stock of the Company
may be issued through periodic automatic grants of restricted stock to
nonemployee directors only. The purposes of the Director Plan are to enable the
Company to attract and retain the services of experienced and knowledgeable
non-employee directors and to further align their interests with those of the
stockholders by providing for or increasing the proprietary interests of such
directors in the Company. To date, 14,294 shares have been awarded to
non-employee directors under the Director Plan. The shares issuable under the
Director Plan may be newly-issued or treasury shares (including those acquired
by the Company in the open market). The Director Plan provides that
proportionate adjustment will be made to the maximum number of shares authorized
under the Plan and, to the extent appropriate, to other aspects of existing or
future awards in the event of a stock split, recapitalization or similar event.
The shares awarded under the Director Plan are subject to restrictions on
transferability as well as the vesting schedule described above. In the event
that a recipient of a restricted stock award under the Director Plan ceases to
be a director of the Company for any reason other than death or total
disability, any shares which are then unvested shall be subject to forfeiture
back to the Company. Once vested, the shares are no longer restricted as to
transferability and no longer subject to forfeiture to the Company upon
termination of director status. Upon death or total disability of a nonemployee
director, or in the event of a "change in control" of the Company, all unvested
shares will be deemed vested. A "change of control" for this purpose occurs if
(i) any person or group becomes the beneficial owner of 50% or more of the
Company's outstanding voting securities, (ii) a change occurs in the majority of
the incumbent directors (except for changes approved by such members), (iii) a
merger or other business combination involving the Company is approved by
stockholders (other than a merger or other transaction in which (A) the
Company's stockholders as of immediately prior to such transaction would
continue to own 50% or more of the outstanding voting securities of the Company
or successor after the transaction is consummated and (B) no person or group
becomes a 50% or more beneficial owner of Company voting securities, or (iv) a
plan of complete liquidation or the sale of all or substantially all of the
Company's assets is approved by stockholders.
The Company does not receive any consideration upon grant or vesting of
restricted stock awards. Recipients of restricted stock awards are, unless
forfeited pursuant to the terms of the Plan, entitled to vote and to receive
dividends on the shares subject to the award from the original grant date
through the vesting date (at which time the recipient receives unrestricted
ownership of the shares).
Under existing federal income tax provision, a director who receives shares
of restricted stock under the Director Plan which are subject to restrictions
which create a "substantial risk of forfeiture" (within the meaning of section
83 of the Internal Revenue Code) will not normally realize any income, nor will
the Company normally receive any deduction for federal income tax purposes, in
the year of the grant or award. Such director will normally realize taxable
income on the date the shares become transferable or no longer subject to
substantial risk of forfeiture or on the date of their earlier disposition. The
amount of such taxable income will be equal to the amount by which the fair
market value of the shares of Common Stock on the date such restrictions lapse
(or any earlier date on which the shares become transferable or are disposed of)
exceeds their purchase price, if any. A director may elect, however, to include
in income in the year of grant the excess of the fair market value of the shares
of Common Stock (without regard to any restrictions) on the date of grant. If
this election is made, the director will ordinarily not be entitled to recognize
any loss
24
<PAGE> 28
thereafter attributable to the shares as a result of forfeiture. The foregoing
is a brief summary of certain federal income tax consequences associated with
restricted stock grants under the Director Plan. This summary does not purport
to be a complete statement of the law and does not cover tax consequences under
foreign, state or local laws.
The Director Plan is intended to be a nondiscretionary plan for purposes of
rules and interpretations of the Securities and Exchange Commission relating to
Section 16 of the Securities Exchange Act of 1934, as amended. Subject to the
provisions of the Director Plan, including the automatic nature of awards
thereunder, administrative authority with respect to the Plan is vested in the
Board of Directors, and may be delegated to a committee of the Board consisting
of persons ineligible to receive awards under the Director Plan. No such
committee has been appointed. The Board may at any time amend, suspend or
terminate the Director Plan provided that (I) no such action shall deprive the
recipient of an award under the Plan of such award without the consent of such
recipient and (II) stockholder approval is necessary to increase the maximum
number of shares authorized under the Plan, to accelerate vesting, to extend the
duration of the Plan, to materially modify eligibility criteria, or to
materially increase benefits accruing to recipients of awards under the Plan.
Unless sooner terminated, the Director Plan will terminate, as to the authority
to grant new awards, on December 31, 1999.
The table below summarizes certain information with respect to restricted
stock awards under the Director Plan:
NEW PLAN BENEFITS
ALLERGAN 1989 NONEMPLOYEE DIRECTOR STOCK PLAN
<TABLE>
<CAPTION>
DOLLAR VALUE NUMBER OF UNITS
AT 12/31/93 (SHARES)
------------ ---------------
<S> <C> <C>
Nonemployee Directors Scheduled to Receive Grants in 1994.... $101,813 4,500
</TABLE>
The information in the table above reflects only the number of restricted
shares which will be automatically awarded to the three nonemployee directors
who are Class II nominees for election at the 1994 Annual Meeting of
Stockholders. Future awards to other nonemployee directors will be made if and
when they are re-elected in subsequent years. Any new nonemployee who is
appointed to serve as a director (whether to fill a vacancy created by an
increase in the size of the Board or by resignation or other termination of
director status) during 1994 or any subsequent year will also be entitled to an
automatic grant of restricted stock under the Director Plan.
INDEPENDENT AUDITORS
KPMG Peat Marwick, independent auditors, audited the consolidated financial
statements of the Company for the fiscal year ended December 31, 1993.
Representatives of KPMG Peat Marwick are expected to be present at the
stockholders' meeting, will have the opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions.
Independent public accountants for the fiscal year ending December 31, 1994 will
be selected by the Board of Directors after a review and recommendation to the
Board by the Audit Committee.
25
<PAGE> 29
ANNUAL REPORT
The Annual Report to Shareholders, including consolidated financial
statements for the year ended December 31, 1993, accompanies the proxy material
being mailed to all stockholders. The Annual Report is not a part of the proxy
solicitation material.
DEADLINE FOR STOCKHOLDER PROPOSALS
Any stockholder of the Company wishing to have a proposal considered for
inclusion in the Company's 1995 proxy solicitation materials must, in addition
to other applicable requirements, set forth such proposal in writing and send
the proposal to the Secretary of the Company so that it is received on or before
November 16, 1994.
OTHER BUSINESS
PRESENTED BY MANAGEMENT
As of the date of this Proxy Statement, management knows of no other
matters to be brought before the stockholders at the Annual Meeting. Should any
other matters properly come before the meeting, action may be taken thereon
pursuant to the proxies in the form enclosed, which confer discretionary
authority on the persons named therein or their substitutes with respect to such
matters.
26
<PAGE> 30
PRESENTED BY STOCKHOLDERS
Pursuant to the Company's Restated Certificate of Incorporation only such
business shall be conducted at an annual meeting of stockholders as is properly
brought before the meeting. For business to be properly brought before an annual
meeting by a stockholder, in addition to any other applicable requirements,
timely notice of the matter must be first given to the Secretary of the Company.
To be timely, written notice must be received by the Secretary no less than 30
days nor more than 60 days prior to the meeting. If less than 40 days' notice or
prior public disclosure of the meeting has been given to stockholders, then
notice of the proposed business matter must be received by the Secretary not
later than ten days after the mailing of notice of the meeting or such public
disclosure. Any notice to the Secretary must include as to each matter the
stockholder proposes to bring before the meeting: (a) a brief description of the
proposal desired to be brought before the meeting and the reason for conducting
such business at the annual meeting, (b) the name and record address of the
stockholder proposing such business and any other stockholders known by such
stockholder to be supporting such proposal, (c) the class and number of shares
of the Company which are beneficially owned by the stockholder on the date of
such stockholder notice and by other stockholders known by such stockholder to
be supporting such proposal on the date of such stockholder notice, and (d) any
material interest of the stockholder in such business.
By Order of the Board of Directors
[SIG]
Francis R. Tunney, Jr.
Secretary
March 17, 1994
Irvine, California
27
<PAGE> 31
EXHIBIT A
ALLERGAN, INC.
1989 NONEMPLOYEE DIRECTOR STOCK PLAN
(AS AMENDED AND RESTATED)
I. GENERAL PROVISIONS
1.1 Purposes of Plan. Allergan, Inc. (the "Company") has
adopted this 1989 Nonemployee Director Stock Plan (the "Plan") to enable the
Company to attract and retain the services of experienced and knowledgeable
Nonemployee Directors and to align further their interests with those of the
stockholders of the Company by providing for or increasing the proprietary
interests of the Nonemployee Directors in the Company.
1.2 Definitions. The following terms, when used in this
Plan, shall have the meanings set forth in this Section 1.2:
(a) "Award" means an award of Restricted Stock
under the Plan.
(b) "Board" or "Board of Directors" means the
Board of Directors of the Company.
(c) "Change in Control" means the following and
shall be deemed to occur if any of the following events occur:
(i) Any "person," as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 50% or more of
the combined voting power of the Company's then outstanding voting
securities;
(ii) Individuals who, as of the date
hereof, constitute the Board of Directors (the "Incumbent Board"),
cease for any reason to constitute at least a majority of the Board,
provided that any person becoming a director subsequent to the date
hereof whose election, or nomination for election by the Company's
stockholders, is approved by a vote of at least a majority of the
directors then comprising the Incumbent Board (other than an election
or nomination of an individual whose initial assumption of office is
in connection with an actual or threatened election contest relating
to the election of the directors of the Company, as such terms are
used Rule 14a-11 of Regulation 14A promulgated under the Exchange
Act) shall, for the purposes of this Plan, be
<PAGE> 32
considered as though such person were a member of the Incumbent Board;
(iii) The stockholders of the Company
approve a merger or consolidation with any other corporation, other
than
(A) a merger or consolidation
which would result in the voting securities of the
Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being
converted into voting securities of another entity) more
than 50% of the combined voting power of the voting
securities of the Company or such other entity
outstanding immediately after such merger or
consolidation, and
(B) a merger or consolidation
effected to implement a recapitalization of the Company
(or similar transaction) in which no person acquires 50%
or more of the combined voting power of the Company's
then outstanding voting securities; or
(iv) The stockholders of the Company
approve a plan of complete liquidation of the Company or an agreement
for the sale or other disposition by the Company of all or
substantially all of the Company's assets.
Notwithstanding the preceding provisions of this Paragraph (c), a Change in
Control shall not be deemed to have occurred (1) if the "person" described in
the preceding provisions of this Paragraph, is an underwriter or underwriting
syndicate that has acquired the ownership of 50% or more of the combined voting
power of the Company's then outstanding voting securities solely in connection
with a public offering of the Company's securities or (2) if the "person"
described in the preceding provisions of this Paragraph is an employee stock
ownership plan or other employee benefit plan maintained by the Company (or any
of its affiliated companies) that is qualified under the provisions of the
Employee Retirement Income Security Act of 1974, as amended.
(d) "Common Stock" means the common stock, par
value $.01 per share, of the Company.
(e) "Company" means Allergan, Inc., a Delaware
corporation, or any successor thereto.
(f) "Nonemployee Director" means any member of
the Board of Directors who is not an employee of the Company or of
2
<PAGE> 33
an parent or subsidiary corporation (as defined in Section 425 of the Internal
Revenue Code) with respect to the Company.
(g) "Participant" means any Nonemployee Director
who receives an Award pursuant to the terms of the Plan.
(h) "Plan" means the Allergan, Inc. 1989
Nonemployee Director Stock Plan as set forth herein, as amended from time to
time.
(i) "Restricted Stock" means Common Stock which
is the subject of an Award under this Plan and which is nontransferable and
subject to a substantial risk of forfeiture until specific conditions are met
as set forth in this Plan.
1.3 Common Shares Subject to Plan.
(a) Subject to the provisions of Article IV and
of this Section 1.3, the maximum number of shares of Common Stock which may be
issued or transferred pursuant to Awards under this Plan shall not exceed
50,000 shares.
(b) The shares of Common Stock to be delivered
under the Plan shall be made available, at the discretion of the Board of
Directors, either from authorized but unissued shares of Common Stock or from
shares of Common Stock held by the Company as treasury shares, including shares
purchased in the open market.
(c) If, on or before termination of the Plan, any
shares of Common Stock subject to an Award shall not be issued or transferred
and shall cease to be issuable or transferable for any reason, or if such
shares shall have been reacquired by the Company pursuant to restrictions
imposed on such shares under the Plan, the shares not so issued or transferred
and the shares so reacquired shall not longer be charged against the limitation
provided for in Paragraph (a) of this Section 1.3 and may be again made the
subject of Awards under this plan.
1.4 Administration of Plan.
(a) Subject to the provisions of Paragraph (b)
below, this Plan shall be administered by the Board of Directors. Awards under
the plan shall be automatic as described elsewhere in this Plan. Subject to
the provisions of this Plan, the Board shall be authorized and empowered to do
all things necessary or desirable in connection with the administration.
3
<PAGE> 34
(b) The Board, in its absolute discretion, may at
any time and from time to time delegate to a committee of three or more persons
appointed by the Board (the "Committee") all or any part of the authority,
powers and discretion of the Board under this Plan. Any determinations,
decisions, interpretations, rules, regulations or other actions of the
Committee shall have the same effect as if made or taken by the Board. Members
of the Committee shall be subject to removal at any time as determined by the
Board, and the Board may at any time abolish the entire Committee, in which
case all authority, powers and discretion delegated to the Committee shall
immediately become revested in the Board. The Board also may limit the
Committee's authority and power at any time, in which case any specified
authority or power removed from the Committee shall immediately become revested
in the Board. No Nonemployee Director shall be eligible to be a member of the
Committee.
1.5 Participation. All Nonemployee Directors shall receive
Awards under this Plan, which Awards shall be granted automatically as provided
in Section 2.1 below.
II. GRANTS OF RESTRICTED STOCK
2.1 Restricted Stock Awards -- Pre-1994.
(a) Immediately following the effective date of
this Plan (as determined pursuant to Section 5.2 hereof), each Nonemployee
Director who is then serving as a member of the Board of Directors shall
automatically be granted an Award consisting of a number of shares of
Restricted Stock (rounded to the nearest whole number of shares) equal to 1,000
multiplied by the Applicable Service Fraction (as defined in Paragraph (e)
below) with respect to such Nonemployee Director determined as of the effective
date of this Plan.
(b) Thereafter, each Nonemployee Director who is
newly appointed or elected to the Board for a full term of three years shall
automatically be granted an award consisting of 1,000 shares of Restricted
Stock at the time such Nonemployee Director first joins the Board. Such Award
shall be made on the first business day following the date of the regular
annual meeting of stockholders of the Company, or any adjournment thereof, at
which directors are elected.
(c) Each Nonemployee Director who is appointed or
elected to fulfill a term of less than three years (whether by replacing a
director who retires, resigns or otherwise terminates his service as a director
prior to the expiration of this term or otherwise) shall automatically be
granted an Award consisting of a number of shares of Restricted Stock (rounded
to the nearest whole number of shares) equal to 1,000
4
<PAGE> 35
multiplied by the Applicable Service Fraction with respect to such Nonemployee
Director determined as of the date of such Nonemployee Director's appointment
or election to the Board. Such Award shall be made as of the first business
day following the date of such Nonemployee Director's appointment or election
to the Board.
(d) Each Nonemployee Director who is re-elected
(or, in the case of a Nonemployee Director who was appointed to the Board and
received an Award pursuant to any of the preceding provisions of this Section
2.1 (an "Appointed Director"), elected) to the Board for a full term of three
years shall automatically be granted an Award consisting of 700 shares of
Restricted Stock at the time of such Nonemployee Director's re-election (or, in
the case of an Appointed Director, election) to the Board. Such Award shall be
made on the first business day following the date of the annual meeting of
stockholders of the Company, or any adjournment thereof, at which directors of
the Company are elected.
(e) As used herein, "Applicable Service Fraction"
means, with respect to any Nonemployee Director, a fraction the numerator of
which is the number of months remaining in such Nonemployee Director's term at
the time the Applicable Service Fraction is to be determined pursuant hereto
and the denominator of which is 36.
2.2 Purchase Price. Participants under the Plan shall not be
required to pay any purchase price for the shares of Common Stock to be
acquired pursuant to an Award, unless otherwise required under applicable law
or regulations for the issuance of shares of Common Stock which are
nontransferable and subject to a substantial risk of forfeiture until specific
conditions are met. If so required, the price at which shares of Common Stock
shall be sold to Participants under this Plan pursuant to an Award shall be the
minimum purchase price required in such law or regulations, as determined by
the Board in the exercise of its sole discretion.
2.3 Terms of Payment. The purchase price, if any, of shares
of Common Stock sold by the Company hereunder shall be payable by the
Participant in cash at the time such Award is granted.
2.4 Restricted Stock Awards -- 1994 and After. Effective as
of immediately prior to the 1994 Annual Meeting of Stockholders of the Company:
(a) No new Awards shall be made pursuant to the
provisions of Section 2.1.
5
<PAGE> 36
(b) Upon election, re-election or appointment of
a Nonemployee Director to the Board occurring at or after the 1994 Annual
Meeting of Stockholders, such Nonemployee Director shall automatically be
granted an Award consisting of the following number of shares of Restricted
Stock: 500 multiplied by the number of years which remain in the term of the
person so elected, re-elected or appointed. For purposes of such calculation,
a year shall be the period between annual meetings of stockholders of the
Company or any part of such period (exclusive of the 60 days immediately
preceding the first annual meeting to be held following such election,
re-election or appointment giving rise to such Award). For example, if a
Nonemployee Director is appointed to the Board in January of 1995 to serve a
term which will expire at the 1997 Annual Meeting of Stockholders (and the 1995
Annual Meeting of Stockholders is held more than 60 days after such
appointment), the term of such person would be considered to be three years for
purposes of calculating the Award.
(c) Awards automatically granted pursuant to this
Section 2.4 shall be made on the first business day following the date of such
election, re-election or appointment, as applicable.
III. RESTRICTIONS ON GRANTED STOCK
3.1 Restrictions on Shares Issued. All shares of Common
Stock granted pursuant to an Award under this Plan shall be subject to the
following restrictions:
(a) The shares may not be sold, assigned,
transferred, pledged, hypothecated or otherwise disposed of, alienated or
encumbered until the restrictions set forth in Paragraph (b) below lapse and
are removed as provided in Paragraph (d) below, and any additional requirements
or restrictions set forth in or imposed pursuant to this Plan have been
satisfied, terminated or expressly waived by the Company in writing.
(b) In the event a Participant's service as a
director of the Company terminates for any reason other than death or total
disability, all shares of Common Stock acquired under this Plan by such
Participant with respect to which, at the date of such termination of service,
the vesting restrictions imposed under this Plan have not lapsed and been
removed as provided in Paragraph (d) below shall be returned to the Company
forthwith, and all rights of the Participant to such shares shall immediately
terminate upon payment by the Company to such Participant of the amount, if
any, that the Participant paid to the Company for such shares.
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(c) In the event a Participant's service as a
director of the Company terminates because of death or total disability, the
Participant shall not be obligated to return any shares as described in
Paragraph (b) above and, except for any continuing and additional restrictions
which may exist as set forth in or imposed pursuant to this Plan, the vesting
restrictions imposed upon the shares of Common Stock acquired by such
Participant under this Plan shall lapse and be removed (and the shares of
Common Stock acquired by such Participant under Awards pursuant to the Plan
shall vest) upon such termination of service.
(d) The restrictions imposed under Paragraph (b)
above shall lapse and be removed (and the shares of Common Stock acquired by a
Participant pursuant to an Award shall vest) in accordance with the following
rules:
(i) Subject to the provisions of
Subparagraphs (iii) and (iv) below, in the case of an Award granted
pursuant to Paragraph (a) or (c) of Section 2.1, as of the date of
each regular annual meeting of stockholders of the Company at which
directors are to be elected following the date of such Award, the
vesting restrictions imposed under this Plan shall lapse and be
removed from such number of shares of Restricted stock acquired
pursuant to the Award as is required to cause the aggregate number of
shares of Common Stock acquired pursuant to such Award with respect
to which the vesting restrictions imposed pursuant to this Plan have
lapsed and been removed (and in which the Participant shall be fully
vested) to equal the number (rounded to the nearest whole number of
shares) computed by multiplying the total number of shares of
restricted Stock that were initially the subject of such Award by the
lesser of (A) one or (b) a fraction the numerator of which is the
number of months the Participant has served as a member of the Board
of Directors subsequent to the date upon which the Award was granted
and the denominator of which is the total number of months in the
term of such Nonemployee Director determined as of the date upon
which the Award was granted.
(ii) Subject to the provisions of
Subparagraphs (iii) and (iv) below, in the case of an Award pursuant
to Paragraph (b) or (d) of Section 2.1, as of the date of each
regular annual meeting of stockholders of the Company at which
directors are to be elected following the date of such Award, the
vesting restrictions imposed pursuant to this Plan shall lapse and be
removed (and the Participant shall be fully vested) with respect to
one-third (rounded to the nearest whole number) of the number of
shares acquired by the Participant pursuant to the
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<PAGE> 38
Award, such that the restrictions shall lapse and be removed (and the
Participant shall be fully vested) with respect to all of the shares
acquired by the Participant pursuant to such Award as of the date of
the third such annual meeting of stockholders following the date upon
which the Award is granted.
(iii) Notwithstanding the provisions of
Subparagraphs (i), (ii) and (v) of this Section 3.1, in the event
that a Participant's service as a director of the Company terminates
because of death or total disability, as of the date of such
termination of service the vesting restrictions imposed pursuant to
this Plan shall lapse and be removed (and the Participant shall be
fully vested) with respect to all shares of Common Stock acquired by
such Participant under Awards pursuant to this plan.
(iv) Notwithstanding the provisions of
Subparagraphs (i), (ii) and (v) of this Section 3.1, in the event of
a Change in Control, as of the date of such Change in Control the
vesting restrictions imposed pursuant to this Plan shall lapse and be
removed (and Participants shall be fully vested) with respect to all
shares of Common Stock acquired under Awards pursuant to this Plan.
(v) Subject to the provisions of Subparagraphs
(iii) and (iv) of this Section 3.1, Awards made pursuant to Section
2.4, as of the date of each annual meeting of stockholders following
the date of such Award, the vesting restrictions imposed pursuant to
this Plan shall lapse and be removed (and the Participant shall be
fully vested) with respect to 500 of the shares covered by such
Award.
3.2 Rights With Respect to Shares of Restricted Stock. A
Nonemployee Director to whom an Award has been made shall be notified of the
Award, and upon payment in full of the purchase price (if any) required for the
shares of the Restricted Stock, the Company shall promptly cause to be issued
or transferred to the name of the Nonemployee Director a certificate or
certificates for the number of shares of Restricted Stock granted, subject to
the provisions of Sections 3.3, 3.4 and 3.5 below. From and after the date of
the Award, the Nonemployee Director shall be a Participant and shall have all
rights of ownership with respect to such shares of Restricted Stock, including
the right to vote and to receive dividends and other distributions with respect
thereto, subject to the terms, conditions and restrictions described in this
Plan.
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<PAGE> 39
3.3 Custody of Stock Certificates. In order to enforce the
restrictions imposed upon shares of Restricted Stock pursuant to this Plan, the
Board may require that the certificates representing such shares of Restricted
Stock remain in the physical custody of the Company until any or all of the
restrictions imposed pursuant to the Plan expire or shall have been removed.
3.4 Legends on Stock Certificates. The Board shall cause
such legend or legends making reference to the restrictions imposed hereunder
to be placed on certificates representing shares of Common Stock which are
subject to restrictions hereunder as the Board deems necessary or appropriate
in order to enforce the restrictions imposed upon shares of Restricted Stock
issued pursuant to Awards granted hereunder.
3.5 Securities Law Requirements. Shares of Common Stock
shall not be offered or issued under this Plan unless the offer, issuance and
delivery of such shares shall comply with all applicable provisions of law,
domestic or foreign, including, without limitation, the Securities Act of 1933,
as amended, the California Corporate Securities Law of 1968, as amended, and
the requirements of any stock exchange upon which the Common Stock may then be
listed. As a condition precedent to the issuance of shares of Common Stock
pursuant to an Award, the Company may require the Participant to take any
reasonable action to comply with such requirements.
IV. ADJUSTMENT PROVISIONS
4.1 Adjustments. If the outstanding shares of the Common
Stock of the Company are increased, decreased or exchanged for a different
number or kind of shares or other securities, or if additional shares or new or
different shares or other securities are distributed in respect of such shares
of Common Stock (or any stock or securities received with respect to such
Common Stock), through merger, consolidation, sale or exchange of all or
substantially all of the properties of the Company, reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split, spin-off or other distribution in respect of such shares of Common Stock
(or any stock or securities received with respect to such (Common Stock), and
appropriate and proportionate adjustment shall be made in (i) the maximum
number of securities provided in Section 1.3 of the Plan, (ii) the number of
shares to be included in each grant of Restricted Stock of the Plan; (iii) the
number and kind of shares then subject to restrictions pursuant to Section 3.1
of the Plan, and (iv) the repurchase price, if any, for each share of Common
Stock subject to such restrictions. The Board's determination of the
adjustments required under this
9
<PAGE> 40
Section 4.1 shall be final, binding and conclusive. No fractional interests
shall be issued under the Plan on account of any such adjustment.
V. MISCELLANEOUS PROVISIONS
5.1 Amendment, Suspension and Termination of Plan. The Board
of Directors may at any time amend, suspend, or terminate the Plan; provided,
however, that no such action shall deprive the holder of an Award of such Award
without the consent of such holder; and further provided that the
nondiscretionary manner in which Awards are made to Nonemployee Directors under
Section 2.1 and Section 2.4 shall not be modified or amended (provided that the
number of shares to be included in each automatic grant thereunder may be
changed with the approval of the stockholders). Furthermore, no such amendment
shall, without approval of the stockholders of the Company, except as provided
in Article IV hereof:
(a) increase the maximum number of shares
specified in paragraph (a) of Section 1.3;
(b) change the price of Common Stock specified in
Section 2.2;
(c) change the terms of payment specified in
Section 2.3;
(d) accelerate the restriction-removal schedule
specified in Paragraph (d) of Section 3.1;
(e) extend the duration of the Plan;
(f) materially modify the requirements as to
eligibility for participation in the Plan; or
(g) materially increase in any other way the
benefits accruing to the holder of an Award already granted or that
subsequently may be granted under this Plan.
Except as provided in Article IV, no termination, suspension or
amendment of this Plan may, without the consent of the holder thereof, affect
Common Stock previously acquired by a Participant pursuant to this Plan.
5.2 Effective Date and Duration of Plan. This Plan shall
become effective on the later of (a) the date of its approval by the Board of
Directors of the Company, (b) the date of its approval by the holders of the
outstanding shares of Common Stock (either by a vote of a majority of such
outstanding shares present in person or by proxy and entitled to vote at a
meeting of the stockholders of the Company or by
10
<PAGE> 41
written consent), or (c) the date of the distribution by SmithKline Beckman
Corporation ("SKB") of the stock of the Company pursuant to the terms of that
certain Distribution Agreement, dated as of April 11, 1989, among SKB, the
Company and Beckman Instruments, Inc. Unless previously terminated by the
Board of Directors, this Plan shall terminate at the close of business on
December 31, 1999, and no Award may be granted under the Plan thereafter, but
such termination shall not affect any Award theretofore granted and any shares
of Common Stock granted pursuant thereto.
5.2 Additional Limitations on Common Stock. With respect to
any shares of Common Stock issued or transferred under any provisions of the
Plan, such shares may be issued or transferred subject to such conditions, in
addition to those specifically provided in the Plan as the Board may direct.
5.4 Director Status. Nothing in this Plan or in any
instrument executed pursuant hereto shall confer upon any Nonemployee Director
any right to continue as a member of the Board of Directors of the Company or
any subsidiary thereof or shall interfere with or restrict the right of the
Company or its stockholders (or of a subsidiary or its stockholders, as the
case may be) to terminate the service of any Nonemployee Director at any time
and for any reason whatsoever, with or without good cause.
5.5 Securities Law Legends. In addition to any legend or
legends pursuant to Section 3.4 above, each certificate representing shares of
Common Stock issued under the Plan shall be endorsed with such legends as the
Company may, in its discretion, deem reasonably necessary or appropriate to
comply with or give notice of applicable federal and state securities laws.
5.6 No Entitlement to Shares. No Nonemployee Director
(individually or as a member of a group), and no beneficiary or other person
claiming under or through such Nonemployee Director, shall have any right,
title, or interest in or to any shares of Common Stock allocated or reserved
for the purpose of the Plan or subject to any Award except as to such shares of
Common Stock, if any, as shall have been issued or transferred to such
Nonemployee Director. A Nonemployee Director's rights to any shares of Common
Stock issued or transferred to the name of such Nonemployee Director pursuant
to an Award under this Plan shall be subject to such limitations and
restrictions as are set forth in or imposed pursuant to this Plan.
5.7 Withholding of Taxes. The Company may make such
provisions as it deems appropriate for the withholding by the Company of such
amounts as the Company determines it is
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<PAGE> 42
required to withhold in connection with any Award. The Company may require a
Participant to satisfy any relevant tax requirements before authorizing any
issuance of Common Stock to such Participant. Any such settlement shall be
made in the form of cash, a certified or bank cashier's check or such other
form of consideration as is satisfactory to the Board.
5.8 Transferability. No award or right under this Plan,
contingent or otherwise, shall be assignable or otherwise transferable other
than by will or the laws of descent and distribution, or shall be subject to
any encumbrance, pledge or charge or any nature. Any Award shall be accepted
during a Participant's lifetime only by the Participant or the Participant's
guardian or other legal representative.
5.9 Other Plans. Nothing in this Plan is intended to be a
substitute for, or shall preclude or limit the establishment or continuation
of, any other plan, practice or arrangement for the payment of compensation or
benefits to directors generally, which the Company now has or may hereafter
lawfully put into effect, including, without limitation, any retirement,
pension, insurance, stock purchase, incentive compensation or bonus plan.
5.10 Invalid Provisions. In the event that any provision of
this Plan document is found to be invalid or otherwise unenforceable under any
applicable law, such invalidity or unenforceability shall not be construed as
rendering any other provisions contained herein invalid or unenforceable, and
all such other provisions shall be given full force and effect to the same
extent as though the invalid or unenforceable provision were not contained
herein.
5.11 Singular, Plural; Gender. Whenever used herein, nouns in
the singular shall include the plural, and the masculine pronoun shall include
the feminine gender, as the context may require.
5.12 Applicable Law. This Plan shall be governed by,
interpreted under, and construed and enforced in accordance with the internal
laws, and not the laws relating to conflicts or choice of laws, of the State of
California applicable to agreements made and to be performed wholly within the
State of California.
5.13 Successors and Assigns of the Company. The Plan shall be
binding upon the successors and assignees of the Company.
5.14 Successors and Assigns of Participants. The provisions
of this Plan and any agreement executed upon the acquisition of shares
hereunder shall be binding upon each
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<PAGE> 43
Participant in the Plan, and such Participant's heirs, executors,
administrators, personal representatives, transferees, assignees and successors
in interest.
5.15 Headings, Etc. Not Part of Plan. Heading of Articles and
Sections hereof are inserted for convenience and reference only, and they shall
not constitute a part of the Plan.
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[LOGO] ALLERGAN
CONFIDENTIAL PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE COMPANY FOR ANNUAL MEETING APRIL 19, 1994
The undersigned hereby constitutes and appoints Gavin S. Herbert,
Francis R. Tunney, Jr. and Richard M. Haugen, and each of them, his true
and lawful agents and proxies with full power of substitution in each to
represent the undersigned at the Annual Meeting of Stockholders of
P ALLERGAN, INC. to be held at its corporate headquarters, 2525 Dupont
Drive, Irvine, CA on Tuesday, April 19, 1994, and at any adjournments
thereof, on all matters coming before the meeting.
R
Election of Directors, Nominee:
O Tamara J. Erickson, William R. Grant, Louis T. Rosso, William C.
Shepherd
X This card constitutes voting instructions to the plan trustees as to
shares held for the undersigned in the Allergan, Inc. Employee Stock
Ownership Plan, the Allergan, Inc. Savings and Investment Plan and the
Y Allergan, Inc. Puerto Rico Savings and Investment Plan.
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' RECOMMENDATION. THE PROXY
COMMITTEE CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
----------------
SEE REVERSE SIDE
----------------
<PAGE> 45
5893
/ X / Please mark your votes as in this example
This proxy when properly executed will be voted in the manner directed
herein. If no direction is made, this proxy will be voted FOR election of
directors, and FOR proposals 2 and 3.
The Board of Directors recommends FOR Election of Directors
FOR WITHHELD
1. Election of Directors / / / /
(see reverse)
For, except vote withheld from the following nominee(s):
________________________________________________________
The Board of Directors recommends a vote FOR proposals 2 and 3.
FOR AGAINST ABSTAIN
2. Approval of the amended
Stockholder Rights Plan. / / / / / /
3. Approval of amended 1989
Nonemployee Director Stock
Plan. / / / / / /
Please check the box if you plan to attend the annual meeting / /
Please check the box if you wish to have your vote disclosed
to the Company. The Company's Confidential Voting Policy is / /
described in the Proxy Statement accompanying this Proxy.
NOTE: Please sign 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
