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GUIDANT CORP
DEF 14A, 2000-03-29
SURGICAL & MEDICAL INSTRUMENTS & APPARATUS

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SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [_]

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[_]	Preliminary Proxy Statement	[_]	CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14A-6(E)(2))
[X]	Definitive Proxy Statement
[_]	Definitive Additional Materials
[_]	Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12

 

Guidant Corporation

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(Name of Registrant as Specified In Its Charter)

 

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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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Notes:

March 30, 2000

JAMES M. CORNELIUS Chairman of the Board of Directors

RONALD W. DOLLENS President and Chief Executive Officer

1.

To elect four directors of Guidant, each for a three-year term;

2.

To ratify the appointment by the Board of Directors of Ernst & Young LLP as independent auditors for the year 2000; and

3.

To transact such other business as may properly come before the meeting or any adjournment thereof.

By order of the Board of Directors,

J.B. King

Secretary

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Ÿ

Election of four directors (Mr. James M. Cornelius, Mr. Michael Grobstein, Dr. Mark Novitch and Mr. Eugene L. Step); and

Ÿ

Ratification of Ernst & Young LLP as Guidant’s independent auditors.

Shareholders as of the close of business on March 6, 2000, the record date for the Annual Meeting, are entitled to vote at the Annual Meeting. You are entitled to one vote for each share of common stock you own on the record date. As of March 6, 2000, there were 306,864,687 shares of Guidant common stock outstanding.

If you hold your shares as a shareholder of record, you can vote in person at the Annual Meeting or you can vote via the Internet, by telephone or by mail. You are a “shareholder of record” if you hold your shares directly in your own name. If you hold your shares indirectly in the name of a bank, broker or other nominee, you are a “street name shareholder.” If you are a street name shareholder, you will receive instructions from your bank, broker or other nominee describing how to vote your shares.

The enclosed proxy card contains instructions for Internet, telephone and mail voting. Whichever method you use, the proxies identified on the back of the proxy card will vote the shares of which you are shareholder of record in accordance with your instructions. If you submit a proxy card without giving specific voting instructions, the proxies will vote those shares as recommended by the Board of Directors.

The Board recommends you vote FOR the election of each nominee for director and the ratification of the selection of Ernst & Young LLP as independent auditors for 2000.

You can revoke your proxy card by:

Ÿ

Submitting a new proxy card;

Ÿ

Giving written notice before the meeting to Guidant’s Secretary stating that you are revoking your proxy card; or

Ÿ

Attending the Annual Meeting and voting your shares in person.

Unless you decide to vote your shares in person, you should revoke your prior proxy card in the same way you initially submitted it—that is, via the Internet, by telephone or by mail.

Sign your name exactly as it appears on the proxy card. If you are signing in a representative capacity (for example, as a guardian, trustee, executor, administrator, attorney or the officer or agent of a company), include your name and title or capacity. If the shares are held in custody (for example, under the Uniform Transfer to Minors Act), the custodian should sign, not the minor. If the shares are held in joint ownership, both owners must sign.

It means you hold shares registered in more than one account. You should sign and return all proxy cards to ensure all your shares are voted.

A quorum of shareholders is necessary to hold a valid meeting of shareholders. A majority of the outstanding shares, present in person or represented by proxy, constitutes a quorum for the Annual Meeting. Abstentions and broker non-votes (as described below) are counted as present for establishing a quorum.

The two proposals have different vote requirements. Directors will be elected by a plurality of the votes cast by the shareholders at the Annual Meeting, which means that the four nominees receiving the most votes will be elected directors. In an uncontested election for directors, the plurality requirement is not a factor. We will vote proxy cards FOR the four management nominees unless the proxy cards contain instructions to the contrary. Abstentions, broker non-votes and instructions on proxy cards to withhold authority to vote for one or more of the nominees will result in those nominees receiving fewer votes. However, the number of votes otherwise received by the nominee will not be reduced by these actions.

The proposal to ratify the selection of the auditors will be approved if the votes cast for the ratification exceed those cast against the ratification. Abstentions and broker non-votes will not be counted either for or against the ratification.

A broker non-vote occurs when a broker submits a proxy card that does not indicate a vote for some of the proposals because the broker did not receive instructions from the beneficial owners on how to vote on those proposals and does not have discretionary authority to vote in the absence of instructions.

All shareholders of record on March 6, 2000 can attend the meeting. However, you must have an admittance card to attend the meeting. To obtain an admittance card, return the enclosed Request for Admittance Card.

Together, they own approximately 0.7% of Guidant’s common stock as of March 6, 2000. (See page 9 for details.)

To be considered for inclusion in next year’s Proxy Statement, Guidant must receive the shareholder proposal by November 30, 2000. A shareholder must submit the proposal in writing to Guidant’s Secretary, 111 Monument Circle, 29th Floor, P.O. Box 44906, Indianapolis, Indiana 46244-0906.

Name		Position with Guidant or Principal Occupation		Age		Served as Director from
Nominees for director for three-year terms ending in 2003
James M. Cornelius		Chairman of the Board of Directors of Guidant		56		1994
Michael Grobstein		Retired Vice Chairman, Ernst & Young LLP		57		1999
Mark Novitch, M.D.		Adjunct Professor of Health Care Sciences, George Washington University Medical Center		67		1995
Eugene L. Step (1)		Retired Director, Executive Vice President and President of the Pharmaceutical Division, Eli Lilly and Company		71		1995
Directors continuing in office until 2001
Kim B. Clark, Ph.D.		Dean of the Faculty and the George F. Baker Professor of Administration at Harvard Business School		51		1998
Maurice A. Cox, Jr.		President and Chief Executive Officer, The Ohio Partners, LLC		49		1995
Ronald W. Dollens		President and Chief Executive Officer of Guidant		53		1994
Enrique C. Falla		Director and Senior Consultant, The Dow Chemical Company		60		1995
Directors continuing in office until 2002
J. B. King		Vice President, General Counsel and Secretary of Guidant		70		1994
Susan B. King		President, The Leadership Initiative, a support corporation of Duke University		59		1996
J. Kevin Moore		Senior Vice President and Chief Operating Officer, Carolinas Medical Center		45		1995
Ruedi E. W äger, Ph.D.		Chief Executive Officer, Aventis Behring LLC		56		1995

(1)	The Board of Directors’ Corporate Governance Guidelines provide that non-employee directors must retire effective as of the Annual Meeting of Shareholders that follows his or her 72nd birthday. Guidant anticipates that Mr. Step will retire at the Annual Meeting of Shareholders in 2001.

Dr. Clark is Dean of the Faculty and the George F. Baker Professor of Administration at Harvard Business School. Dr. Clark has been a member of the Harvard faculty since 1978. Dr. Clark was a Member of the Committee on High Technology Ceramics in Japan, National Materials Advisory Board, National Academy of Engineering, in 1983. He was also the Rapporteur for the Automobile Panel, Committee on International Trade and Technology, National Academy of Engineering from 1980-1982. He is also a director of Tower Automotive, Inc.

Mr. Cornelius is Chairman of the Board of Directors and a Director of Guidant. Previously, he was Vice President, Finance and Chief Financial Officer of Eli Lilly and Company (“Lilly”) from 1983 until his retirement in October 1995 and was a Director of Lilly. Mr. Cornelius has served as Treasurer of Lilly and as President of IVAC Corporation, a former Lilly medical device subsidiary. He joined Lilly in 1967. Mr. Cornelius is a director of American United Life Insurance Company, Chubb Corporation, Lilly Industries, Inc., and the National Bank of Indianapolis. Mr. Cornelius also serves as a Trustee of the University of Indianapolis and the Indianapolis Museum of Art.

Mr. Cox is President and Chief Executive Officer of The Ohio Partners, LLC (a venture capital company), a position he has held since July 1995. Previously, he served as President and Chief Executive Officer of CompuServe Incorporated from 1990 to June 1995. Mr. Cox joined CompuServe in 1979 and has served as Vice President, Product Management and as Executive Vice President of CompuServe ’s Information Services Division. He also is a director of Teach.com, Apropos Technologies, Callisto, Inc., AccuMedia and ULTRYX.

Mr. Dollens is President, Chief Executive Officer and a Director of Guidant. Previously, he served as President of Lilly’s Medical Devices and Diagnostics (“MDD”) Division from 1991 until 1995. Mr. Dollens served as Vice President of Lilly’s MDD Division and Chairman of Guidant’s subsidiary, Advanced Cardiovascular Systems, Inc. (“ACS”) from 1990 to 1991. He also held the position of President and Chief Executive Officer of ACS. Mr. Dollens joined Lilly in 1972. Mr. Dollens currently serves on the boards of Beckman Coulter, Inc., the Eiteljorg Museum, the Health Industry Manufacturers Association, St. Vincent Hospital Foundation, the Indiana State Symphony Society Board, and the Healthcare Leadership Council.

Mr. Falla is a Senior Consultant for The Dow Chemical Company. Previously, he was an Executive Vice President from 1991 to 1997. He has also served as Chief Financial Officer. He joined The Dow Chemical Company in 1967 and is a member of the Finance and Investment Policy Committees. Mr. Falla is a director of The Dow Chemical Company and Dow Corning Corporation and is a member of the Board of Trustees of the University of Miami.

Mr. Grobstein served as Vice Chairman, Ernst & Young LLP from 1984 until 1993, and as Vice Chairman, Ernst & Young International from 1993 until his retirement in 1998. He joined Ernst & Young in 1964, and was admitted to partnership in 1975. Mr. Grobstein is a trustee of the Central Park Conservancy and a director of the Coro Foundation.

Mr. King is Vice President, General Counsel, Secretary and a Director of Guidant. Mr. King also acts as counsel to the law firm of Baker & Daniels, which provides legal services to Guidant. He previously was Vice President and General Counsel for Lilly, a position he held from 1987 until he retired in 1995. Before joining Lilly, Mr. King was a partner and chairman of the management committee of Baker & Daniels. Mr. King is a director of the Indiana Legal Foundation, IWC Resources, Inc., and the James Whitcomb Riley Memorial Association.

Ms. King is the President of The Leadership Initiative, a support corporation of Duke University. Most recently, Ms. King was the Leader in Residence and Chair of the Board of Advisors for the Hart Leadership Program at Duke University, a position she held from January 1995 through November 1999. Prior to assuming this position, she served as Senior Vice President, Corporate Affairs for Corning Incorporated from 1992 to December 1995. Ms. King served as President for its Steuben Glass Division from 1987 to 1992. She joined Corning Incorporated in 1982. She also served as Chair of the U.S. Consumer Product Safety Commission from 1978 to 1981. Ms. King is a director of The Coca-Cola Company and the Health Effects Institute. She is also a Trustee for the Eurasia Foundation, the National Public Radio Foundation and Duke University.

Mr. Moore is Senior Vice President and Chief Operating Officer of the Carolinas Medical Center, having first held the position of Vice President since 1997. Previously, Mr. Moore was Associate Chief Operating Officer for Duke University Medical Center from March 1994 to 1997. Prior to assuming that position, he served as Assistant Director, Surgical Private Diagnostic Clinics, and Adjunct Associate Professor, Graduate School of Health Administration, from April 1989 to March 1994. Mr. Moore served as Assistant Director for Duke Hospital from May 1988 to April 1989 and he served as Director of Management Services, Medical Center Administration, and Adjunct Assistant Professor, Graduate School of Health Administration, from May 1984 to April 1988. Mr. Moore is a director of the American Red Cross Regional Chapter.

Dr. Novitch joined George Washington University Medical Center as Professor of Health Care Sciences in 1994 and became Adjunct Professor in 1997. Prior to joining George Washington University Medical Center, he retired as Vice Chairman of the Board and Chief Compliance Officer of The Upjohn Company in December 1993. Prior to joining Upjohn in 1985, Dr. Novitch was Deputy Commissioner of the federal Food and Drug Administration (“FDA”) from 1981 until 1985. He served as Acting Commissioner of the FDA from 1983 to 1984. Dr. Novitch is currently serving a five-year term as a Trustee and Past President of the U.S. Pharmacopeial Convention, which term ends on April 12, 2000. Dr. Novitch is a director of Alteon, Inc., Calypte Biomedical, Inc., Neurogen Corporation, Osiris Therapeutics, Inc., and Kos Pharmaceuticals, Inc.

Mr. Step served as Director, Executive Vice President, President of the Pharmaceutical Division and a member of the Executive Committee of Lilly until his retirement in 1992. He joined Lilly in 1956. Mr. Step is a director of Cell Genesys, Inc., Medco Research, Inc., Pathogenesis, Inc., Scios-Nova, Inc., and DBT Online, Inc.

Dr. Wäger is Chief Executive Officer of Aventis Behring LLC, a position he has held since February 1998. Aventis Behring LLC is a leading manufacturer and distributor of blood plasma and therapeutic proteins. Dr. Wäger is also Chairman of the Supervisory Board of Aventis Behring Gmbh, Marburg, Germany. Prior to assuming this position he was President and Chief Executive Officer of ZLB Central Laboratory Blood Transfusion Service SRC (a plasma fractionation business in Switzerland), a position he held since February 1994. He served as Senior Vice President at Sandoz Pharma Ltd. (a multinational pharmaceutical company) from March 1989 to January 1994. From January 1993 to January 1994, Dr. W äger served as Head of Corporate Project Management and member of the Executive Committee at Sandoz Pharma, Ltd., and from March 1989 to December 1993, he served as Head of Worldwide Marketing and member of the Executive Committee at Sandoz Pharma Ltd. Dr. Wäger joined Sandoz, Ltd. in 1973.

Members: Directors Falla (Chair), Cox, Moore and Wäger

Number of Meetings in 1999: 4

Functions:

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Annually recommends independent auditors for appointment by the Board of Directors and oversees their activities, including reviewing reports submitted by them; and

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Oversees internal controls, auditors, and audits, including determining the duties and responsibilities of the internal auditors, reviewing the internal audit program, and reviewing reports submitted by the internal auditing staff.

Members: Directors Novitch (Chair), Clark, Dollens, Grobstein, S. King, and W äger

Number of Meetings in 1999: 2

Functions:

Ÿ

Reviews Guidant ’s compliance with applicable laws, regulations and internal procedures, except for financial controls and the internal audit function.

Members: Directors Step (Chair), Falla, S. King and Novitch

Number of Meetings in 1999: 3

Functions:

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Determines executive officers’ compensation;

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Reviews succession planning; and

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Administers the Guidant Corporation 1998 Stock Plan and the 1994 Stock Plan.

Members: Directors Cox (Chair), Cornelius, Moore and Step

Number of Meetings in 1999: 2

Functions:

Ÿ

Proposes candidates for director to be recommended by the Board to shareholders;

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Recommends to the Board the size and composition of the Board;

Ÿ

Considers candidates for the Board recommended by shareholders; and

Ÿ

Oversees matters of corporate governance.

When evaluating which candidates for director to propose that the Board of Directors recommend to shareholders, this committee will consider director candidates recommended in writing by shareholders. A candidate must be highly qualified and be both willing and expressly interested in serving on the Board. A shareholder who wishes to recommend a candidate for the committee’s consideration should forward the candidate’s name and information about the candidate’s qualifications to Guidant’s Secretary. The Secretary must receive the recommendation at least 120 days prior to the date of the Annual Meeting of Shareholders in 2001. If a shareholder wishes to nominate a candidate for director for consideration by shareholders at the Annual Meeting, the shareholder must give Guidant written notice of the nomination 60 days before the meeting. However, if Guidant gives less than 70 days notice of the date of the annual meeting, the shareholder must give written notice to Guidant by the tenth day after the date on which Guidant gives notice of the date of the annual meeting. The shareholder must forward the candidate’s name and information about the candidate’s qualifications to Guidant’s Secretary. Guidant’s By-Laws describe the information the notice must contain.

Name of Individuals or Identity of Group		Shares Owned Beneficially(1)
Kim B. Clark, Ph.D.		2,430	(2,3)
James M. Cornelius		760,511	(4,5)
Maurice A. Cox, Jr.		25,550	(3)
Ronald W. Dollens		318,654	(6,7)
Enrique C. Falla		9,894	(3)
A. Jay Graf		124,458	(8,9)
Michael Grobstein		1,950	(3)
J.B. King		165,768	(9,10)
Susan B. King		10,761	(3)
J. Kevin Moore		9,550	(3)
Mark Novitch, M.D.		13,579	(3)
Eugene L. Step		9,551	(3)
Richard M. van Oostrom		87,089	(9,11)
Ruedi E. W äger, Ph.D.		23,730	(3)
All directors and executive officers as a group (27 persons)		2,170,592

(1)

Unless otherwise indicated in a footnote, each person listed in the table possesses sole voting and investment power with respect to the shares shown in the table to be owned by that person. No person listed in the table owns more than 0.25% of the outstanding common stock of Guidant. All directors and executive officers as a group own 0.7% of the outstanding common stock of Guidant. The shares shown do not include the following shares that may be purchased pursuant to stock options that are exercisable within 60 days of March 6, 2000: Mr. Clark, 8,000 shares; Mr. Cornelius, 500,000 shares; Mr. Cox, 24,000 shares; Mr. Dollens, 901,404 shares; Mr. Falla, 24,000 shares; Mr. Graf, 340,136 shares; Mr. King, 358,944 shares; Ms. King, 24,000 shares; Mr. Moore, 16,000 shares; Dr. Novitch, 24,000 shares; Mr. Step, 24,000 shares; Mr. van Oostrom, 490,860 shares; Dr. Wäger, 8,000 shares; and all directors and executive officers as a group, 5,057,825 shares. The shares shown include shares credited to the accounts of certain of those persons listed in the table under The Guidant Employee Savings and Stock Ownership Plan (“ESSOP”) as of December 31, 1999.

(2)	The shares shown for Dr. Clark include 600 shares held by the Clark Family Trust.

(3)	Includes 950 shares of restricted stock granted pursuant to the Guidant Corporation 1996 Nonemployee Directors Stock Plan (“Directors Stock Plan”). The restrictions on these shares lapse on May 17, 2000.

(4)	The Cornelius Family Foundation, Inc. owns 70,000 of those shown in the table, and he disclaims any beneficial ownership therein. The shares shown for Mr. Cornelius include 7,737 shares credited to his account under the ESSOP.

(5)	Includes 50,000 shares of restricted stock granted pursuant to the 1998 Stock Plan. The restrictions on these shares lapse on approximately one-third of the shares each year, beginning January 15, 2002.

(6)	Mr. Dollens’ children own 1,584 shares of those shown in the table, and he disclaims any beneficial ownership therein. The shares shown for Mr. Dollens include 53,434 shares credited to his account under the ESSOP.

(7)	Includes 40,000 shares of restricted stock granted pursuant to the 1998 Stock Plan. The restrictions on these shares lapse on approximately one-third of the shares each year, beginning on January 15, 2002.

(8)	The shares shown for Mr. Graf include 44,050 shares credited to his account under the ESSOP.

(9)	Includes 20,000 shares of restricted stock granted pursuant to the 1998 Stock Plan. The restrictions on these shares lapse on approximately one-third of the shares each year, beginning on January 15, 2002.

(10)	Mr. King’s wife owns 4,000 shares of those shown in the table, and he disclaims any beneficial ownership therein. The shares shown for Mr. King include 6,296 shares credited to his account under the ESSOP.

(11)	The shares shown for Mr. van Oostrom include 52,225 shares credited to his account under the ESSOP.

Name and Address		Number of Shares			Percent
1. AMVESCAP, Plc 11 Devonshire Square London, England EC2M 4YR		27,193,219	(1)		8.85	%
2. Capital Group International, Inc. 11100 Santa Monica Blvd. Los Angeles, CA 90025		16,787,290	(2)		5.5	%
3. Capital Research and Management Company 333 South Hope Street Los Angeles, CA 90071		16,271,000	(3)		5.3	%

(1)

AMVESCAP, Plc has shared voting and dispositive power over 27,193,219 shares. AMVESCAP is the parent holding company of subsidiaries which acquired shares of Guidant common stock. The subsidiaries hold the shares on behalf of other persons who have the right to receive, or the power to direct the receipt of, the proceeds from the sale of the shares.

(2)

Capital Group International, Inc. (“CGII”) has the sole power to vote 13,955,890 shares and has the sole power to dispose of 16,787,290 shares. CGII is the parent company of five investment management companies that hold investment power and, in some cases, voting power over the shares of Guidant stock reported in CGII’s Schedule 13G.

(3)	Capital Research and Management Company (“CRMC”) has the sole power to dispose of 16,271,000 shares.

Annual Retainer:		Grant of option to purchase 4,000 shares of Guidant’s common stock (the option price equals the fair market value on the date of grant).
		Grant of number of shares of restricted stock determined by dividing $50,000 by the fair market value of a share of Guidant common stock on the date of grant.
Attendance Fees:		$2,000 for each Board meeting
		$2,000 for each committee meeting, if not held in conjunction with a Board meeting
		Reasonable expenses related to attendance
Committee Chairman Retainer:		$2,500 annually for Management Development and Compensation and Corporate Governance Committees
		$5,000 annually for Audit and Compliance Committees

Name and Principal Position		Annual Compensation									Long-Term Compensation(1)					All Other Compensation(5)
											Awards
		Year		Salary		Bonus(2)		Other Annual Compensation			Restricted Stock Award(3)		Number of Securities Underlying Options Granted(4)
James M. Cornelius		1999		$676,236		$   624,000		$13,214			$2,737,500		200,000			$38,612
Chairman of the Board		1998		650,200		1,300,000		835			0		450,000			71,522
		1997		625,200		812,000		0			0		350,000			50,016
													150,000	(6)
Ronald W. Dollens		1999		475,008		456,000		10,454			2,190,000		130,000			38,001
President and Chief Executive Officer		1998		426,000		680,000		2,222			0		288,000			46,860
		1997		387,240		362,500		9,947			0		224,000			30,979
J.B. King		1999		330,720		144,000		10,452			1,095,000		60,000			26,458
Vice President, General Counsel and		1998		318,000		300,000		24,760			0		144,000			34,980
Secretary		1997		300,000		145,000		13,896			0		112,000			21,142
A. Jay Graf		1999		327,000		144,000		11,687			1,095,000		60,000			27,523
Group Chairman(8)		1998		300,000		300,000		7,720			0		144,000			33,000
		1997		274,740		145,000		430			0		112,000			21,979
Richard M. van Oostrom		1999		294,108		144,000		177,895	(7)		1,095,000		60,000			23,604
President of Operations, Europe, Middle		1998		282,780		300,000		345,905	(7)		0		144,000			31,106
East and Africa(9)		1997		264,230		145,000		366,525	(7)		0		112,000			21,142

(1)	During the years indicated, no long-term incentive plan payouts were made and no stock appreciation rights were granted.

(2)	Represents amounts awarded in cash under the Guidant Corporation Economic Value Added (EVA*) Bonus Plan (the “EVA Bonus Plan”).

(3)

Messrs. Cornelius, Dollens, King, Graf and van Oostrom each received an award of shares of restricted stock in January 1999. The dollar value of the shares of stock is based upon the closing market price of the Company’s stock on the date of grant. The aggregate number of shares of restricted stock held by Named Executive Officers at 12/31/99 and the value of such shares on that date (based upon a closing stock price of $47.00 per share) are as follows: Mr. Cornelius held 50,000 shares valued at $2,350,000; Mr. Dollens held 40,000 shares valued at $1,880,000; and each of Messrs. King, Graf and van Oostrom held 20,000 shares valued at $940,000.

(4)	Options to acquire Guidant common stock. The number of shares for 1997 and 1998 has been adjusted to reflect the two-for-one stock split which was effective in January 1999.

(5)	Contributions by Guidant to the executive’s account in the ESSOP.

(6)	An option to purchase 150,000 shares of Guidant’s common stock was granted to Mr. Cornelius to compensate him for the reduction in his expected retirement benefits that was an unanticipated consequence of the transition from Lilly. These options vest upon the retirement of Mr. Cornelius.

(7)	Allowances paid for service outside the United States, consisting primarily of tax equalization payments, housing allowances and cost of living adjustments.

(8)	Mr. Graf began serving in this position as of March 1, 2000.

(9)	As of January 1, 2000, Mr. van Oostrom is serving as Chairman of the Guidant European Policy Board.

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Name		Number of Securities Underlying Options Granted		% of  Total Option Shares Granted to Employees in Fiscal Year			Exercise or Base Price Per Share(2)		Expiration Date		Grant Date Present Values(3)
James M. Cornelius		200,000		2.4	%		$53.98		1/15/09		$3,511,000
Ronald W. Dollens		130,000		1.5	%		$53.98		1/15/09		2,282,150
J.B. King		60,000		0.71	%		$53.98		1/15/09		1,053,300
A. Jay Graf		60,000		0.71	%		$53.98		1/15/09		1,053,300
Richard M. van Oostrom		60,000		0.71	%		$53.98		1/15/09		1,053,300

(1)	Stock appreciation rights were not granted during 1999.

(2)	The fair market value of Guidant’s common stock on the date of grant. All of the options will become exercisable beginning on January 15, 2002.

(3)	These values were established using the Black-Scholes stock option valuation model. Assumptions used to calculate the Grant Date Present Value of these option shares were:

(a)

Expected Volatility —The average variance in the percent change in monthly closing stock price during the period from April 1996 through September 1998, which was 38.6%.

(b)

Risk Free Rate of Return—The assumed rate for a U.S. Treasury obligation having a term of 7 years during the month of grant based on the actual 5 and 10-year U.S. Treasury rates as published in the Federal Reserve Statistical Release, which was 4.73%.

(c)

Time of Exercise —The expected average actual option term, which was 7 years.

(d)

Turnover—The expected turnover rate for executives who receive stock options, which is 10%.

The disclosure above is required pursuant to executive compensation disclosure rules of the Securities and Exchange Commission. However, Guidant does not believe that the Black-Scholes model, or any other valuation model, is a reliable method of computing the present value of Guidant’s employee stock options. The value ultimately realized, if any, will depend on the amount that the market price of the stock exceeds the exercise price on the date of exercise.

Name		Number of Shares Acquired on Exercise		Value Realized		Number of Securities Underlying Unexercised Options at Fiscal Year End				Value of Unexercised In The Money Options at Fiscal Year End(2)
						Exercisable		Unexercisable		Exercisable		Unexercisable
James M. Cornelius		471,076		$21,799,861		500,000		1,150,000		$18,117,500		$13,918,250
Ronald W. Dollens		80,000		$   3,934,616		901,404		642,000		$35,362,631		$   7,335,680
J.B. King		160,000		$   7,879,481		358,944		316,000		$13,581,284		$   3,667,840
A. Jay Graf		147,584		$   7,059,776		345,136		316,000		$13,093,814		$   3,667,840
Richard M. van Oostrom		–0 –		–0 –		490,860		316,000		$19,422,498		$   3,667,840

(1)	No stock appreciation rights were outstanding during 1999.

(2)	Represents the amount by which the market price of Guidant’s common stock exceeded the exercise prices of unexercised options on December 31, 1999.

Average  Annual Earnings (Highest 5 of Last 10 Years)		Estimated Annual Benefit(1)
$  375,000		$   177,947
525,000		251,678
675,000		325,409
825,000		399,140
975,000		472,871
1,125,000		546,602
1,275,000		620,333
1,425,000		694,064
1,575,000		767,795
1,725,000		841,526
1,875,000		915,257
2,025,000		988,988
2,175,000		1,062,719
2,325,000		1,136,450
2,475,000		1,210,181

(1)	Assuming the executive officer is age 65 upon retirement, the estimated annual benefit payable to an executive officer will not vary with years of service.

·

Compensation of Guidant’s employees, including that of executive officers, was based on the level of job responsibility, the individual’s level of performance and Guidant’s performance. Members of senior management had a greater portion of their pay based on Company performance than other employees.

·

Compensation also reflected the value of the job in the marketplace. To retain Guidant ’s highly skilled work force, Guidant attempted to remain competitive with the pay of employers of a similar stature who compete with Guidant for talent.

·

Compensation programs were developed and administered to foster the long-term focus required for success in a highly competitive, innovation-based industry.

	Eugene L. Step (Chair)
Enrique C. Falla	Susan B. King	Mark Novitch, M.D.

		Base Period 1994		1995		1996		1997		1998		1999
Guidant		100		264.49		357.52		781.81		1,382.5		1,181.41
S&P 500		100		137.58		169.17		225.60		290.08		351.12
S&P Health Care		100		169.01		193.98		241.84		348.58		322.87

*Total return assumes reinvestment of dividends.

By order of the Board of Directors,

J.B. King

Secretary

Guidant Corporation Annual Meeting of Shareholders Monday, May 15, 2000, 10:00 a.m. Indianapolis, Indiana   Please return this card only if you plan to attend the meeting. If you do not plan to attend, you only need to vote in advance of the meeting by using one of the three voting methods available. Even if you plan to attend the meeting, we encourage you to vote in advance of the meeting. You may vote (1) by returning the enclosed proxy card; or (2) by telephone; or (3) via the Internet.

I plan to attend the meeting.   Please type or print clearly: Name Street Address City State                                                                                                                                                                                                     Zip Code

 

The undersigned hereby appoints, J.M. Cornelius, J.B. King and R.W. Dollens, and each of them, as proxies of the undersigned, each with full power to act without the others and with full power of substitution, to vote all the shares of Common Stock of GUIDANT CORPORATION held in the name of the undersigned at the close of business on March 6, 2000, at the Annual Meeting of Shareholders to be held on May 15, 2000 at 10:00 a.m. (local time), and at any adjournment thereof, with all the powers the undersigned would have if personally present, as set forth on the reverse side.

This Proxy may also reflect shares held by employees or former employees of Guidant Corporation in The Guidant Employee Savings and Stock Ownership Plan ("ESSOP") or The Guidant Corporation Employee Stock Ownership Plan for Puerto Rico Affiliates ("ESOP"). With respect to those shares, if any, the undersigned hereby directs the trustee under the ESSOP or ESOP, as applicable, to vote the number of shares credited to the undersigned's account as set forth on the reverse side.

Change of Address:

(If you have written in the above space, please mark the corresponding box on the reverse side of this card.)

---

	Date:	May 15, 2000
	Time:	10:00 a.m. (Local Time)
	Place:	Hilbert Circle Theatre
		45 Monument Circle
		Indianapolis, Indiana 46204

 

xPlease mark your votes as in this example.

If this Proxy is properly executed, the shares represented thereby will be voted in the manner directed by the undersigned shareholder. If no direction is made, this Proxy will be voted FOR Proposals 1 and 2.

The Board of Directors recommends a vote FOR each of the following:
1.	Election of Directors Nominees: 01. J. M. Cornelius 02. M. Grobstein 03. M. Novitch 04. E. L. Step For, except vote withheld from the following nominee(s):	FOR [_]	WITHHELD [_]
2.	Ratification of the appointment by the Board of Directors of Ernst & Young LLP as independent auditors for 2000.	FOR [_]	AGAINST [_]	ABSTAIN [_]
3.	In their direction upon such other matters as may properly come before the meeting, all in accordance with the accompanying Notice and Proxy Statement.
	If you would like us to change your address on our records, please check the box and indicate your new address in the space provided on the other side of this card.			[_]
	If you plan to attend the meeting, please check this box and return the enclosed Request for Admittance Card.			[_]
	SIGNATURE(s)______________________________________________________ ______________________ Date:_______________
	Please sign exactly as name appears hereon. Joint owners should each sign. When signing in a representative capacity, please give full title. Your signature serves as acknowledgement of receipt of the accompanying Notice and Proxy Statement.
/\ FOLD AND DETACH HERE /\

 

GUIDANT CORPORATION

 

PROXY VOTING INSTRUCTION CARD

Your vote is important. Casting your vote in one of the three ways described on this instruction card votes all common shares of Guidant Corporation that you are entitled to vote and gives voting instructions for any common shares held on your behalf in the Guidant ESSOP or ESOP.

Please consider the issues discussed in this proxy statement and cast your vote by:

• Accessing the World Wide Web site http://www.eproxyvote.com/gdt to vote via the Internet.
• Using a touch-tone telephone to vote by phone toll free from the U.S. or Canada. Simply dial 1-877-779-8683 and follow the instructions. When you are finished voting, your vote will be confirmed and the call will end.
• Completing, dating, signing, and mailing the proxy card in the postage-paid envelope included with the Proxy Statement or sending it to Guidant Corporation, c/o First Chicago Trust Company of New York , P.O. Box 8574, Edison, New Jersey 08818-9440.

You can vote by phone or via the Internet anytime prior to May 15, 2000. You will need the control number printed at the top of this instruction card to vote by phone or via the Internet. If you do so, you do not need to mail in your proxy card.

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