<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
PHARMACIA & UPJOHN
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(Name of Registrant as Specified in Its Charter)
[COMPANY NAME]
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing
fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
PHARMACIA & UPJOHN LOGO
PHARMACIA & UPJOHN LOGO
March 23, 1998
To Our Shareholders:
You are cordially invited to attend our Annual Meeting of Shareholders to be
held on Friday, May 8, 1998 at 10:00 a.m. at the Globe Annex in Stockholm,
Sweden. The meeting will begin with the election of four directors to serve for
a term of three years. The meeting will also provide a report on operations and
an opportunity for shareholders to meet members of the Board and ask questions
or make comments if they wish.
For shareholders unable to attend the meeting in Stockholm, an informational
meeting will be held at the Radisson Plaza Hotel in Kalamazoo, Michigan, USA, at
11:00 a.m. on Monday, May 11, 1998. This meeting will include the presentations
made at the Annual Meeting in Stockholm and provide an opportunity for
shareholders to ask questions and make comments, but no votes will be taken.
Persons who were shareholders of record of the Company at the close of
business on March 10, 1998, are entitled to have their votes counted at the
meeting. The enclosed proxy card appoints the Chairman of the Board and the
Chief Executive Officer of the Company as proxies or agents to vote your shares
at the meeting as you direct. Whether or not you expect to personally attend the
meeting in Stockholm, please complete the enclosed proxy card and either return
it promptly in the envelope provided or, in the U.S., call the toll-free number
indicated on the proxy card. If you have mailed your proxy card, you do not need
to telephone.
SOREN GYLL
Soren Gyll
Chairman of the Board
FRED HASSAN
Fred Hassan
Chief Executive Officer
<PAGE> 3
PHARMACIA & UPJOHN, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
STOCKHOLM, SWEDEN
MAY 8, 1998
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The Annual Meeting of Shareholders of Pharmacia & Upjohn, Inc., a Delaware
corporation, will be held on Friday, May 8, 1998, at 10:00 a.m., at the Globe
Annex, Stockholm, Sweden. The purposes of the Annual Meeting are to:
1. Elect four directors for a term of three years; and
2. Transact such other business as may properly come before the meeting.
There will also be an informational meeting for shareholders on Monday, May
11, 1998 at 11:00 a.m. at the Radisson Plaza Hotel in Kalamazoo, Michigan. This
meeting will include the presentations provided during the Annual Meeting in
Stockholm, but no votes will be taken.
Shareholders will have an opportunity to ask questions and make comments at
either meeting.
Only shareholders of record at the close of business on March 10, 1998 are
entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof.
By Order of the Board
March 23, 1998 Don W. Schmitz
Secretary
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WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, THE BOARD OF DIRECTORS
REQUESTS THAT YOU SIGN THE ENCLOSED PROXY CARD AND EITHER RETURN IT PROMPTLY IN
THE ENVELOPE PROVIDED OR, IN THE U.S., CALL THE TOLL-FREE NUMBER INDICATED ON
THE PROXY CARD.
<PAGE> 4
PHARMACIA & UPJOHN
THE PHARMACIA & UPJOHN MANAGEMENT CENTRE
67 ALMA ROAD
WINDSOR, BERKSHIRE
UNITED KINGDOM
PROXY STATEMENT
This proxy statement is being distributed to shareholders of Pharmacia &
Upjohn, Inc. (the "Company") on or about March 23, 1998 in connection with the
solicitation by the Company's Board of Directors of proxies to be used at the
Annual Meeting of Shareholders of the Company. The Annual Meeting will be held
at the Globe Annex, Stockholm, Sweden, on Friday, May 8, 1998, at 10:00 a.m.
Any shareholder giving a proxy has the power to revoke it at any time before
it is voted. The Company will bear the costs of solicitation of proxies. The
Company may also reimburse persons holding stock in their names or in those of
their nominees for their reasonable expenses in sending proxy material to their
principals and obtaining their proxies.
It is the Company's policy that all proxies, ballots and voting tabulations
that identify how shareholders voted will be kept confidential, except where
disclosure may be required by applicable law, where disclosure is expressly
requested by a shareholder, and in proxy solicitations not approved and
recommended by the Board of Directors, and that the tabulators and the
inspectors of election be independent and not employees of the Company.
Shareholders of record at the close of business on March 10, 1998 are entitled
to notice of and to vote at the meeting. At the close of business on January 31,
1998, the Company had 507,245,672 shares (excluding 1,401,835 treasury shares)
of Common Stock outstanding, each share being entitled to one vote. These shares
will be voted as specified in the shareholder's proxy card or by the shareholder
in person or through his nominee at the Annual Meeting. The Company's fiscal
year is the calendar year.
At the close of business on January 31, 1998, shares of Convertible Perpetual
Preferred Stock of the Company were held by the Pharmacia & Upjohn Employee
Stock Ownership Trust pursuant to the Pharmacia & Upjohn Employee Savings Plan.
These shares have votes equivalent to 10,125,183 shares of Common Stock. Each
participant in the Plan may direct State Street Bank and Trust Company, as the
Trustee of the Plan, how to vote the shares allocated to the participant's
account under the Plan. A participant may also direct the Trustee how to vote
the participant's "proportionate share" of the votes attributable to shares
which have not been allocated to participant accounts or for which no
instructions were timely received. If a participant is also a shareholder of
record, the proxy card given by such person will govern the voting of shares
held by the participant both directly and through the Plan.
Matters submitted to a vote of shareholders, other than the election of
directors, must be approved by the holders of a majority of the shares voting at
the Annual Meeting whether in person, by nominee or by proxy card. In
determining whether a quorum exists at the meeting, all votes "for" or
"against," as well as all abstentions (including votes to withhold authority to
vote in certain cases), with respect to the proposal receiving the most such
votes, will be counted. With respect to the election of directors, since the
nominees receiving the four highest vote "for" totals will be elected as
directors of the Company, abstentions and broker non-votes will not be counted.
If an individual has signed the Company's proxy card but failed to indicate a
vote, such proxy will be voted for all nominees and in the proxies' discretion
on any other matters that may properly come before the meeting. The Company has
engaged the services of D. F. King & Co., Inc. to assist in the solicitation of
proxies for a fee not to exceed $20,000, plus out-of-pocket expenses.
1
<PAGE> 5
ELECTION OF FOUR DIRECTORS
The Board of Directors is composed of three classes of members. One class of
directors is elected each year to hold office for a three-year term and until
successors of such class are duly elected and qualified. Except where the
authority to do so has been withheld, it is the intention of the persons named
in the Company's proxy to vote to elect Gustaf Douglas, Fred Hassan, Olof Lund
and C. Steven McMillan as directors.
These nominees have indicated a willingness to serve, but if, for any
unforeseen cause, any of them should decline or be unable to serve, the proxies
will be voted to fill any vacancy so arising before the Annual Meeting of
Shareholders in accordance with the discretionary authority of the proxies.
Jan Ekberg, Daryl Grisham, William LaMothe and William Mulholland, current
members of the Board of Directors of the Company, will not continue in office
after the Annual Meeting of Shareholders. As a result, the Board of Directors of
the Company has approved reducing the size of the Board to 12 members after the
Annual Meeting.
Information with respect to the nominees for election and the directors
continuing in office with respect to age and positions with the Company or other
principal occupations for the past five years follows. Each individual, except
F. Hassan and C. Steven McMillan, was initially elected as a director of the
Company in November 1995 following the combination (the "Combination") of The
Upjohn Company ("Upjohn") and Pharmacia Aktiebolag ("Pharmacia").
<TABLE>
<S> <C>
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
FOR THREE-YEAR TERM EXPIRING IN 2001
GUSTAF DOUGLAS, AGE 60, CHAIRMAN OF INVESTMENT AB LATOUR, AN
GUSTAF DOUGLAS INVESTMENT HOLDING COMPANY. Mr. Douglas is also Vice
PHOTO Chairman of Securitas AB and Sveriges Television AB, and is
a member of the Board of Directors of Assa Abloy AB, AB
Fagerhult, Munksjo AB, and Stiftelsen Svenska Dagbladet. He
had served as a Director of Pharmacia before the
Combination. He is a member of the Audit Committee of the
Board of Directors.
FRED HASSAN, AGE 52, PRESIDENT AND CHIEF EXECUTIVE OFFICER
FRED HASSAN PHOTO OF THE COMPANY. Mr. Hassan had been Executive Vice President
and a member of the Board of Directors of American Home
Products Corporation immediately prior to joining the
Company in May 1997, and had been Senior Vice President of
American Home Products Corporation before that. He is a
member of the Executive Committee of the Board of Directors.
OLOF LUND, AGE 67, FORMER PRESIDENT AND CHIEF EXECUTIVE
OLOF LUND PHOTO OFFICER OF CELSIUS INDUSTRIER AB, A DEFENSE MANUFACTURING
COMPANY. Mr. Lund is the Chairman of AssiDoman AB, Enator
AB, SIAR Foundation and the Swedish Financial Accounting
Standards Council, and is a member of the Board of Directors
of FPG/AMFK, Posten AB and the Federation of Swedish
Industries. Mr. Lund is also a member of the Royal Academy
of War Sciences. He had served as a Director of Pharmacia
before the Combination. He is a member of the Executive and
the Nominating and Corporate Governance Committees of the
Board of Directors.
</TABLE>
2
<PAGE> 6
<TABLE>
<S> <C>
C. STEVEN MCMILLAN, AGE 52, PRESIDENT AND CHIEF OPERATING
C. STEVEN OFFICER OF SARA LEE CORPORATION, A CONSUMER GOODS COMPANY.
McMILLAN PHOTO Mr. McMillan previously held other management positions at
Sara Lee before assuming his current position. Mr. McMillan
is a member of the Board of Directors of Sara Lee
Corporation and Illinova Corporation, and is Chairman of the
Board of Electrolux Corporation (North America). He also
serves on the Boards of several not-for-profit and civic
organizations.
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
TERM EXPIRING IN 1999
RICHARD H. BROWN, AGE 50, CHIEF EXECUTIVE OFFICER, CABLE AND
RICHARD H. BROWN WIRELESS PLC, A TELECOMMUNICATIONS COMPANY. Prior to joining
Cable and Wireless plc, Mr. Brown had been President and
Chief Executive Officer of H&R Block, Inc., a tax and
financial services company, and before that had been Vice
Chairman of Ameritech Corp., a telecommunications company.
He is a member of the Board of Directors of Cable and
Wireless plc and the Seagram Co., Ltd., and is a member of
the Board of Trustees of Ohio University Foundation. He had
served as a Director of Upjohn before the Combination. He is
a member of the Executive and the Compensation Committees of
the Board of Directors.
M. KATHRYN EICKHOFF, AGE 58, PRESIDENT, EICKHOFF ECONOMICS
M. KATHRYN INCORPORATED, ECONOMIC CONSULTANTS. Ms. Eickhoff is the
EICKHOFF PHOTO former Associate Director for Economic Policy, United States
Office of Management and Budget. She also serves as a
director of AT&T, Tenneco Inc. and Fleet Bank, NA. Ms.
Eickhoff is a member of several business organizations
including the Conference of Business Economists, the
Economic Club of New York and the National Association of
Business Economists. She had served as a Director of Upjohn
before the Combination. She is a member of the Audit
Committee of the Board of Directors. The Company has
retained Eickhoff Economics Incorporated to provide economic
services to the Company for an annual fee of $25,000.
BERTHOLD LINDQVIST, AGE 59, PRESIDENT AND CHIEF EXECUTIVE
BERTHOLD OFFICER OF GAMBRO AB, A GLOBAL MEDICAL TECHNOLOGY COMPANY.
LINDQVIST PHOTO Mr. Lindqvist is also a member of the Board of Directors of
Gambro AB, Trelleborg AB, PLM AB, Munters AB and Securitas
AB. Mr. Lindquist is also a member of the Royal Academy of
Sciences. He had served as a Director of Pharmacia before
the Combination. He is a member of the Compensation
Committee of the Board of Directors.
BENGT SAMUELSSON, M.D., AGE 63, PROFESSOR OF MEDICAL AND
BENGT SAMUELSSON PHYSIOLOGICAL CHEMISTRY, AND, FORMERLY, PRESIDENT,
PHOTO KAROLINSKA INSTITUTE. Dr. Samuelsson was the Nobel Laureate
in Physiology or Medicine in 1982 and is currently Chairman
of the Nobel Foundation. He is also a member of the Board of
Directors of Svenska Handelsbanken and the Liposome Company.
Dr. Samuelsson is a member of the Royal Swedish Academy of
Sciences, the American Academy of Arts and Sciences, the
Association of American Physicians, Academie des Sciences,
Paris, the U.S. National Academy of Sciences, and the Royal
Society, London. He had served as a Director of Pharmacia
before the Combination. He is a member of the Nominating and
Corporate Governance Committee of the Board of Directors.
</TABLE>
3
<PAGE> 7
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
TERM EXPIRING IN 2000
<TABLE>
<S> <C>
FRANK C. CARLUCCI, AGE 67, CHAIRMAN, THE CARLYLE GROUP, A
FRANK C. CARLUCCI MERCHANT BANK. Mr. Carlucci had been Vice Chairman of The
PHOTO Carlyle Group from 1989 to 1993. He served as U.S. Secretary
of Defense from 1987 to 1989. Mr. Carlucci is currently on
the Board of Directors of Ashland, Inc., Kaman Corporation,
Neurogen Corporation, Northern Telecom Limited, The Quaker
Oats Company, SunResorts, Ltd., N.V. and Texas Biotechnology
Corporation. He also serves on the board of trustees for the
nonprofit Rand Corporation. He had served as a Director of
Upjohn before the Combination. He is a member of the Audit
Committee of the Board of Directors.
SOREN GYLL, AGE 57, CHAIRMAN OF THE BOARD OF THE COMPANY AND
SOREN GYLL PHOTO FORMER PRESIDENT AND CHIEF EXECUTIVE OFFICER OF AB VOLVO, AN
AUTOMOBILE MANUFACTURER. Mr. Gyll had also been Chairman of
Procordia AB, the predecessor of Pharmacia, from 1992 until
1995, and before that had served as Procordia's President
and Chief Executive Officer. Mr. Gyll is a member of the
Board of Directors of Bilia AB, AB Volvo, SKF AB, SCA AB,
Skanska AB, Oresa Ventures, the Federation of Swedish
Industries, and the Swedish Employer's Confederation. Mr.
Gyll is also a member of the Royal Swedish Academy of
Engineering Sciences, the Swedish National Association of
Engineering Industries and the Board of the Swedish Works
Association. He had served as a Director of Pharmacia before
the Combination. He is Chairman of the Executive Committee
of the Board of Directors.
WILLIAM U. PARFET, AGE 51, CO-CHAIRMAN OF MPI RESEARCH, LLC,
WILLIAM U. PARFET A PRE-CLINICAL TOXICOLOGY AND CLINICAL PHARMACEUTICAL
PHOTO TESTING LABORATORY. Mr. Parfet assumed his current position
in November 1995 and had previously served from October 1993
to January 1996 as President and Chief Executive Officer of
Richard-Allan Medical Industries, a medical device
manufacturer. Prior to that, he had served as Vice Chairman
of the Board of Upjohn. Mr. Parfet serves as a member of the
Board of Directors of CMS Energy Corporation, the Financial
Accounting Foundation, Stryker Corporation and Sybron
International. He had served as a Director of Upjohn before
the Combination. He is a member of the Nominating and
Corporate Governance Committee of the Board of Directors.
From time to time, the Company has retained MPI Research,
LLC to conduct pre-clinical and clinical testing work for
the Company. Mr. Parfet is the brother of Donald R. Parfet,
Senior Vice President of the Company.
ULLA REINIUS, AGE 60, PRESIDENT OF U. REINIUS FINANSFAKTA
ULLA REINIUS AB, PUBLISHER AND FINANCIAL INFORMATION CONSULTANT. Ms.
PHOTO Reinius is also a member of the Board of Directors of the
Swedish Association for Share Promotion. She is a former
member of the Swedish Government Ethical Committee. She had
served as a Director of Pharmacia before the Combination.
She is a member of the Audit Committee of the Board of
Directors.
</TABLE>
4
<PAGE> 8
INFORMATION CONCERNING SECURITY OWNERSHIP
Under regulations of the United States Securities and Exchange Commission,
persons who have power to vote or dispose of shares of the Company, either alone
or jointly with others, are deemed to be beneficial owners of such shares.
Set forth in the following table is the beneficial ownership of what the
Company believes were the holders of 5% or more of the Company's Common Stock as
of December 31, 1997:
SHARES OF COMMON STOCK BENEFICIALLY OWNED
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP % OF CLASS
------------------- -------------------- ----------
<S> <C> <C>
Putnam Investments, Inc.(1)................................. 38,068,759 7.5
Swedish Ministry of Industry and Commerce(2)................ 35,519,540 7.0
Wellington Management Company(3)............................ 28,254,120 5.6
</TABLE>
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(1) The address for Putnam Investments, Inc. is One Post Office Square, Boston,
Massachusetts 02109 USA.
(2) Based on information available to the Company, it is believed that these
shares are held by the Ministry of Industry and Commerce of the Kingdom of
Sweden through Forvaltningsaktiebolaget Stattum, Fredsgatan 8, S-103 33,
Stockholm, Sweden.
(3) The address for Wellington Management Company is 75 State Street, Boston,
Massachusetts 02109 USA.
5
<PAGE> 9
Set forth in the following table are the beneficial ownership of the Company's
Common Stock (either as Common Stock or in the form of Swedish Depositary
Shares) as of the close of business on January 31, 1998 of individual directors
continuing in office after the Annual Meeting, the nominees for election at the
Annual Meeting, the two former Presidents and Chief Executive Officers of the
Company, the Company's other officers set forth in the Summary Compensation
Table included in this proxy statement, and all such directors, nominees and
officers as a group.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK BENEFICIALLY OWNED
---------------------------------------------------------------------
SHARED
TOTAL SOLE VOTING VOTING OPTIONS
AMOUNT OF AND/OR AND/OR EXERCISABLE
BENEFICIAL DISPOSITIVE DISPOSITIVE WITHIN 60 % OF
OWNERSHIP POWER POWER DAYS CLASS
---------- ----------- ----------- ----------- -----
<S> <C> <C> <C> <C> <C>
Goran A. Ando............................ 133,000 3,000 130,000 *
Richard H. Brown(2)(3)................... 10,403 10,403 *
Frank C. Carlucci(3)..................... 20,846 20,846 *
Richard T. Collier....................... -- -- *
Kenneth M. Cyrus(1)(4)................... 288,135 50,458 237,677 *
Gustaf Douglas........................... 1,250 1,250 *
M. Kathryn Eickhoff(3)................... 5,846 5,846 *
Jan Ekberg(2)............................ 6,550 6,550 *
Fred Hassan(2)........................... 422,000 422,000 *
Soren Gyll............................... 7,000 7,000 *
Berthold Lindqvist....................... 1,250 1,250 *
Olof Lund................................ 1,625 1,625 *
C. Steven McMillan....................... -- -- *
William U. Parfet(1)(3)(4)(5)............ 1,022,789 615,659 407,130 *
Ulla Reinius............................. 1,250 1,250 *
Robert C. Salisbury(1)(4)................ 366,433 56,985 309,448 *
Bengt Samuelsson......................... 1,000 1,000 *
Ley S. Smith(1)(2)(4).................... 198,240 34,990 163,250 *
John L. Zabriskie(1)(2).................. 73,339 73,339 *
Directors, Nominees and Named Officers as
a Group (19 persons)(1)(2)(3)(4)(5).... 2,560,956 1,313,451 407,130 840,375 *
</TABLE>
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* Less Than 1%
(1) Excludes the following share units which were awarded under the Company's
prior Incentive Compensation Plans but payment of which is deferred: K.M.
Cyrus, 46,497; W.U. Parfet, 479; R.C. Salisbury, 52,952; L.S. Smith, 17,925;
J.L. Zabriskie, 19,730; and directors, nominees and such officers as a
group, 137,583.
(2) Excludes 507 shares held by the spouse of R.H. Brown; 610 shares held by the
spouse of J. Ekberg; 5,200 shares held by the spouse of F. Hassan; 3,190
shares held by the spouse of L.S. Smith; and 145 shares held by the spouse
of J.L. Zabriskie; and 9,652 shares held by the spouses of directors,
nominees and such officers as a group.
(3) Includes the following number of shares representing deferred directors'
fees payable in stock which are held in trust with respect to which the
individual has shared voting power: R.H. Brown, 9,924; F.C. Carlucci,
20,110; M.K. Eickhoff, 2,671; and W.U. Parfet, 248.
(4) Includes the following number of shares or share equivalents credited under
the Company's Employee Savings Plan with respect to which the individual has
sole voting power: K.M. Cyrus, 6,536; W.U. Parfet, 6,704; R.C. Salisbury,
6,830; L.S. Smith, 3,200; and directors, nominees and such officers as a
group, 23,270.
(5) Includes shares held in trust over which voting and/or dispositive power is
shared in his capacity as trustee under various trusts.
6
<PAGE> 10
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held seven meetings during 1997. The Board consists
entirely of non-employee directors except for the President and Chief Executive
Officer of the Company.
The Compensation Committee of the Board of Directors met five times during
1997 to determine the compensation and benefits of the Board and the Company's
executive officers. Current members of the Compensation Committee are R. H.
Brown, Chairman, J. Ekberg, D. F. Grisham and B. Lindqvist, none of whom is an
employee nor eligible for incentive compensation or stock option awards from the
Company.
The Audit Committee, which met five times in 1997, assists the Board in
overseeing the accounting, financial reporting, auditing, internal control,
business ethics and clinical development policies and procedures of the Company.
The Committee recommended to the Board of Directors the selection of Coopers &
Lybrand, LLP as the Company's independent auditors; reviewed the annual
financial statements and discussed them with the auditors and financial staff of
the Company prior to their submission to the Board of Directors; reviewed the
independence of the independent accountants conducting the audit; reviewed the
services provided by the independent accountants; reviewed the scope of the
Company's internal audit program; discussed with management and the auditors the
Company's accounting system and related systems of internal control; reviewed
the Company's information security program; and consulted as it deemed necessary
with the independent accountants, internal auditors and the Company's internal
financial staff. Current members of the Audit Committee are G. Douglas,
Chairman, F. C. Carlucci, M. K. Eickhoff and U. Reinius.
The Nominating and Corporate Governance Committee of the Board met seven times
during 1997. The Committee makes recommendations to the Board regarding Board
and committee membership, director performance, officer candidates and plans for
management succession. The Committee also reviews and recommends to the Board
appropriate corporate governance policies and practices. The Committee will
consider director nominees recommended by shareholders. Any such recommendations
should be made in writing to the Secretary of the Company at the address set
forth on the first page of this proxy statement. Current members of the
Nominating and Corporate Governance Committee are W. E. LaMothe, Chairman, O.
Lund, W. U. Parfet and B. Samuelsson.
BOARD OF DIRECTORS COMPENSATION
Annual compensation for non-employee members of the Board of Directors
consists of a retainer fee of $50,000 ($100,000 for the Chairman of the Board)
and 500 shares of the Company's Common Stock. The chairperson of each Board
committee receives an additional annual fee of $5,000. There are no additional
fees for attending regular meetings or serving on regular Board committees. The
Company's Chief Executive Officer does not receive separate compensation for
serving on the Board of Directors. Board members who were involved in selecting
the Company's new President and Chief Executive Officer during 1997 received
$1,500 for each meeting attended, and the Chairman of the Nominating and
Corporate Governance Committee received an additional $5,000.
7
<PAGE> 11
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation Committee, consisting of four non-employee directors of the
Company who have no known conflicts, is responsible for the establishment and
oversight of executive compensation policies and practices for the Company's
executive officers.
COMPENSATION POLICIES
In general, the Company seeks to encourage and reward executive efforts which
create shareholder value through achievement of corporate objectives, business
strategies and performance goals by blending annual cash and equity compensation
and long-term equity compensation, and, in so doing, to align the interests of
executives with those of shareholders. More specifically, the Committee's
compensation policies can be summarized as:
(a) total executive compensation should be targeted at or near the median
competitive level of comparable global pharmaceutical companies for
competitive performance, and, similarly, differentiated performance should
be recognized;
(b) incentive-based (at-risk) compensation should be at least 30% of total cash
compensation, with the higher-ranking executives having a greater proportion
of incentive-based compensation;
(c) equity-based compensation should be used to further link executive
performance to shareholder interests, promote and encourage stock ownership
in the Company and provide an incentive to create long-term shareholder
value.
It is the Committee's belief that a compensation program designed around these
policies will enhance the returns to the Company's shareholders relative to the
group of comparable global pharmaceutical companies, consisting of American Home
Products Corporation, Astra AB, Bristol-Myers Squibb Company, Eli Lilly and
Company, Glaxo Wellcome plc, Hoffmann-LaRoche and Company, Ltd, Merck & Company,
Inc., Novartis AG, Pfizer Inc., Rhone-Poulenc Rorer, Inc., Schering-Plough
Corporation, SmithKline Beecham plc and Zeneca Group plc. Each component of
compensation (base salary, annual incentive bonus, and long-term equity-based
compensation) is described more fully below.
BASE SALARIES
Executive salaries are based on several factors: competitive labor market
position determined from market surveys, level of job responsibility, and
individual performance. Our objective is to ensure a base salary component that
is competitive (at a level near the median of comparable global pharmaceutical
companies) and allows for attracting and retaining key talent. Officer
performance ratings and salary increases are reviewed by the Committee annually.
INCENTIVE-BASED COMPENSATION
Payments under the Company's Incentive Compensation Plan are the "at-risk" or
variable component of annual executive compensation, constituting at least 30%
of total cash compensation, with senior executives having the highest proportion
of incentive-based compensation.
For 1997, 30% of targeted incentive compensation was based on external
measures compared to the group of comparable global pharmaceutical companies,
and the remaining 70% was based on growth in the Company's sales, earnings and
cash flow and on individual performance.
8
<PAGE> 12
For 1998, 70% of our executive officers' targeted incentive compensation will
be based on the Company's sales and earnings per share growth and the remaining
30% will be based on individual performance.
LONG-TERM EQUITY-BASED COMPENSATION
The Committee grants annual stock options with ten-year terms at an exercise
price equal to the fair market value on the date of grant. The stock options
have value based on the level of stock price appreciation over the market price
on the date of grant. This provides an incentive for executives to develop
shareholder value and rewards them in proportion to the gain received by other
shareholders. The Committee considers the level of stock options granted by the
group of comparable global pharmaceutical companies and the number of Company
stock options previously granted in reaching its decision to make additional
grants of stock options, but does not have a specific weighting formula for each
factor.
POLICY ON DEDUCTIBILITY OF COMPENSATION
The U.S. Internal Revenue Code limits to $1 million the corporate tax
deduction for compensation paid to certain executive officers unless the
compensation is based upon non-discretionary, pre-established performance goals.
The Committee believes the stock options granted to the Company's executive
officers meet the requirements for fully deductible compensation. However, since
the annual incentive compensation plan reserves some discretion for the
Committee to adjust awards to ensure that the efforts of the incentive
compensation group are compensated fairly and appropriately, such awards may not
be fully deductible under the Internal Revenue Code.
CHIEF EXECUTIVE OFFICER COMPENSATION
The compensation of J. L. Zabriskie, who was President and Chief Executive
Officer of the Company until January 20, 1997, was established by the Committee
based on an analysis of his past performance as Chief Executive Officer, review
of comparable compensation of chief executive officers of other leading global
pharmaceutical companies, and application of the compensation policies described
above. J. L. Zabriskie's annual base salary had been $950,000 and his annual
incentive compensation target had been $850,000.
J. Ekberg, who served as President and Chief Executive Officer of the Company
from January 20, 1997 until May 10, 1997, received compensation at the same rate
provided to J. L. Zabriskie in 1996 on a pro rata basis for the period during
which he served as the Company's President and Chief Executive Officer. J.
Ekberg had previously received $225,000 for services rendered to the Company as
a consultant prior to becoming President and Chief Executive Officer of the
Company.
The compensation of F. Hassan, who was appointed President and Chief Executive
Officer of the Company on May 10, 1997, consists of an annual base salary of
$1,000,000 and an annual incentive compensation target award of $1,000,000. The
Committee reviews his compensation compared to the compensation of chief
executive officers of other leading global pharmaceutical companies and applies
the compensation policies described above. The Committee is assisted in this
process by an independent compensation consulting firm.
The Board of Directors will evaluate the performance of the Company's
President and Chief Executive Officer at least annually based upon both the
Company's financial performance and the extent to which the strategic and
business goals established for the Company are met. The Committee does not
assign relative weights or rankings to particular factors but will make its
determination based upon a consideration of all such factors.
COMPENSATION COMMITTEE
R. H. Brown J. Ekberg D. F. Grisham B. Lindqvist
9
<PAGE> 13
EXECUTIVE COMPENSATION
The following table shows the total compensation received for the last three
calendar years (or for such shorter period that the individual has been employed
by the Company and its predecessors) by the current and former Presidents and
Chief Executive Officers of the Company, by the next most highly compensated
executive officers of the Company and by two former officers of the Company
whose supplemental pay received upon termination of employment would have made
them among the five most highly compensated officers in 1997. Compensation shown
was received by the individual from the Company, and prior to the Combination,
from either Upjohn or Pharmacia.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
---------------------------------------------- --------------------------------------------------
SECURITIES
OTHER RESTRICTED STOCK UNDERLYING
BASE ANNUAL AND PERFORMANCE OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) SHARE AWARDS (# OF SHARES) COMPENSATION(3)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
F. Hassan, 1997 $644,445 $ 636,000 $ 42,280 $10,080,000(2) 500,000 0
President and Chief
Executive Officer(4)
J. Ekberg, 1997 $555,895 0 0 0 0 0
Former President and
Chief Executive Officer(5)
J. L. Zabriskie, 1997 $ 48,522 0 0 0 0 $4,775,153
Former President and 1996 $950,000 $ 477,955 $165,640 0 180,000 0
Chief Executive Officer(6) 1995 $904,167 $1,172,760 0 $ 336,250(2) 174,000 $ 6,525
G. A. Ando, 1997 $598,782 $ 197,000 $ 20,028 0 65,000 0
Executive Vice President 1996 $535,000 $ 193,994 $170,840 0 65,000 0
and President, Research 1995 $407,430 $ 201,368 $120,000 0 0 0
and Development
R. C. Salisbury, 1997 $439,000 0 $155,000 0 65,000 0
Executive Vice President 1996 $425,000 $ 168,690 $152,665 0 65,000 0
and Chief Financial 1995 $369,797 $ 298,822 0 $ 78,481(2) 40,600 $ 6,525
Officer(7)
R. T. Collier, 1997 $ 29,167 $ 140,000 0 0 20,000 0
Senior Vice President
and General Counsel(8)
L. S. Smith, 1997 $491,667 0 0 0 75,000 $2,914,892
Former Executive Vice 1996 $575,000 $ 263,970 0 0 75,000 $ 4,425
President(9) 1995 $541,047 $ 575,576 0 $ 168,125(2) 87,000 $ 6,525
K. M. Cyrus, 1997 $250,667 0 $101,250 0 32,000 $1,637,493
Former Senior Vice 1996 $365,000 $ 118,083 $150,665 0 32,000 0
President, Secretary and 1995 $318,287 $ 263,110 0 $ 71,756(2) 37,120 $ 6,525
General Counsel(10)
</TABLE>
- -------------------------
(1) For 1996 and 1997, includes, among other things, amounts for reimbursement
of taxes in excess of those that would have been incurred in the
individual's home country, assistance in preparing required income tax
returns, use of a Company car, a cost-of-living allowance in the amount of
$135,000 for J.L. Zabriskie in 1996, $135,000 for R.C. Salisbury in 1996
and 1997, $135,000 in 1996 and $101,250 in 1997 for K.M. Cyrus, and in the
case of G.A. Ando, a supplemental pension contribution equal to
approximately $130,000 in 1996 and $111,000 in 1995.
(2) Under the terms of his employment agreement, in order to replace equity
compensation awards received from his prior employer that he forfeited by
joining the Company, Mr. Hassan received 315,000 restricted shares of the
Company's Common Stock, which are included in the table in accordance with
the rules of the United States Securities and Exchange Commission at the
fair market value on date of grant. Of these shares, 75,000 vested on
January 1, 1998 and the remainder will vest on June 1, 1998. Dividends are
paid on these shares. At year-end, these shares had a market value of
$11,536,875. The Performance
10
<PAGE> 14
Shares included in the table for J.L. Zabriskie, R.C. Salisbury, L.S. Smith
and K.M. Cyrus are included at the fair market value of the number of
shares of Upjohn Common Stock on the date of grant. These performance
shares were earned in 1996 and had a value on the date earned as follows:
J.L. Zabriskie, $467,481; L.S. Smith, $242,442; R.C. Salisbury, $152,510;
and K.M. Cyrus, $148,370.
(3) All other compensation represents the Company match under the Company's
Employee Savings Plan, and, in the case of J.L. Zabriskie, L.S. Smith and
K.M. Cyrus, additional compensation received following termination of
employment from the Company.
(4) F. Hassan has held such office since May 10, 1997.
(5) J. Ekberg held such office from January 20, 1997 until May 10, 1997.
(6) J.L. Zabriskie held such office until January 20, 1997.
(7) R.C. Salisbury will leave such office on March 30, 1998.
(8) R.T. Collier has held such office since December 1, 1997.
(9) L.S. Smith retired on October 31, 1997.
(10) K.M. Cyrus retired on August 31, 1997.
STOCK OPTION GRANTS
During 1997, the following officers were granted stock options to purchase
shares of the Company's Common Stock at an exercise price equal to the market
price on date of grant. Stock options provide value to the officers in
proportion to the value provided to all shareholders based on appreciation in
the Company's stock price. Options can be exercised in full after one year of
employment from the date of grant with payment in either cash or shares of the
Company's Common Stock. Upon a stock-for-stock exercise, the optionee will
receive a new, non-qualified reloaded stock option at the then current market
price for the number of shares tendered to exercise the option. The reloaded
stock option will have an exercise term equal to the remaining term of the
exercised option. Options granted in 1997 may only be exercised during
employment or within three months after employment ceases, except that following
retirement at or after age 65 or other termination of employment approved by the
Compensation Committee of the Board, stock options may be exercised for periods
specified in the option grant up to five years (but not beyond the original
expiration date of the option).
ORIGINAL STOCK OPTION GRANTS IN LAST FISCAL YEAR(2)
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- --------------------------------------------------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS GRANT
UNDERLYING GRANTED TO EXERCISE OR DATE
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME GRANTED FISCAL YEAR ($/SH) DATE VALUE(1)
- --------------------------------------- ---------- ------------ ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
F. Hassan.............................. 500,000 11.25% 32.0000 5/09/07 $3,405,000
G. A. Ando............................. 65,000 1.46% 38.1250 2/24/07 $ 525,850
R. C. Salisbury........................ 65,000 1.46% 38.1250 2/24/07 $ 525,850
L. S. Smith............................ 75,000 1.69% 38.1250 11/01/02 $ 606,750
K. M. Cyrus(3)......................... 32,000 0.72% 38.1250 9/01/02 $ 258,880
R. T. Collier.......................... 20,000 0.45% 34.2188 12/01/07 $ 145,600
</TABLE>
- -------------------------
(1) In accordance with the rules of the United States Securities and Exchange
Commission, the Black-Scholes option pricing model was chosen to estimate
the grant date present value of the options set forth in this table. The
Company cannot predict or estimate the future price of the Company's Common
Stock, and neither the Black-Scholes model nor any other model can
11
<PAGE> 15
accurately determine the value of an option. Accordingly, there is no
assurance that the value realized by an officer, if any, will be at or near
the value estimated in the Black-Scholes model. The Black-Scholes Ratio of
21.40% was determined using the following assumptions: an industry average
volatility of 21.00%, a dividend yield of 2.83%, a risk-free interest rate
of 5.45%, a projected exercise period of 5.3 years and no additional value
for reloaded stock options.
(2) No grants were made to J.L. Zabriskie or J. Ekberg. The Stock Options
granted to F. Hassan were granted on May 9, 1997, the date he first became
employed by the Company. The Board of Directors of the Company elected F.
Hassan President and Chief Executive Officer of the Company on May 10, 1997.
(3) K.M. Cyrus made stock-for-stock option exercises in 1997 and received
reloaded stock options for the number of shares tendered in the exercises as
follows: (a) 2,703 shares with an exercise price of $37.00 and an expiration
date of 2/19/01; (b) 20,562 shares with an exercise price of $37.00 and an
expiration date of 9/01/02; (c) 2,897 shares with an exercise price of
$34.50 and an expiration date of 9/01/02; and (d) 2,898 shares with an
exercise price of $34.50 and an expiration date of 2/18/02.
STOCK OPTION EXERCISES
The following table shows the number of stock options exercised and the value
realized by the named officers during 1997 and the number of unexercised stock
options remaining at year-end and the potential value thereof based on the
year-end closing market price of the Company's Common Stock of $36.625:
AGGREGATED STOCK OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES*
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FY-END(#) FY-END($)
SHARES --------------- ---------------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- -------------------------------- ------------ ----------- --------------- ---------------------
<S> <C> <C> <C> <C>
F. Hassan....................... 0 0 0/500,000 $ 0/2,312,500
J. L. Zabriskie................. 0 0 841,500/ 0 $10,435,000/ 0
G. A. Ando...................... 0 0 65,000/ 65,000 0/ 0
R. C. Salisbury................. 5,913 $ 81,945 201,431/ 65,000 $ 981,336/ 0
R. T. Collier................... 0 0 0/ 20,000 $ 0/ 46,124
L. S. Smith..................... 0 0 163,250/ 0 0/ 0
K. M. Cyrus..................... 52,887 $676,425 237,677/ 0 $ 1,257,447/ 0
</TABLE>
- -------------------------
* No options were granted to J. Ekberg
12
<PAGE> 16
COMPARISON OF CUMULATIVE TOTAL SHAREHOLDER RETURN
Since the Company only became public on November 2, 1995, the Company's
cumulative total shareholder return over a five-year period cannot be provided.
However, the following graph shows the change in the Company's cumulative total
shareholder return (stock price appreciation plus the cumulative value of
reinvested dividends) compared to the Standard & Poor's 500 Stock Index and the
Standard & Poor's Health Care (Drugs) Index (which includes Eli Lilly & Company,
Merck & Company, Inc., Pfizer, Inc., Schering-Plough Corporation and the
Company) for the period from November 2, 1995, when public trading in the
Company's Common Stock began, until December 31, 1997. The graph assumes $100
was invested on November 2, 1995. It should be noted that during the period from
August 18, 1995, the last trading day prior to the public announcement of the
Combination of Upjohn and Pharmacia, until November 2, 1995, which is the
starting date for the graph below, the market price for both Upjohn and
Pharmacia stock increased significantly in anticipation of the benefits to be
derived from the Combination. The stock performance as shown on the following
graph should not be interpreted as a prediction of future stock performance.
<TABLE>
<CAPTION>
Measurement Period Pharmacia & S&P Health
(Fiscal Year Covered) Upjohn S&P 500 Care-Drugs
<S> <C> <C> <C>
11/2/95 100 100 100
12/95 106.52 104.83 109.76
3/96 110.32 110.25 113.13
6/96 123.64 115.19 119.32
9/96 115.89 118.75 125.61
12/96 111.96 128.65 136.88
3/97 104.23 132.10 145.39
6/97 99.79 155.17 186.54
9/97 105.57 166.79 190.73
12/97 106.63 171.58 218.01
</TABLE>
RETIREMENT BENEFITS
The Company's executive officers participate in the Global Officer Pension
Plan, which supplements the officer's other sources of retirement income to
provide the officer with the actuarial value of an annual life annuity of 65% of
the officer's final three-year average annual salary and cash bonus compensation
prior to retirement from the Company, provided the officer retires at age 65
with at least ten years of service under the Plan. Appropriate adjustments will
be made if the officer has less than ten years of service under the Plan or
retires before age 65. In no event will an executive officer receive a
retirement benefit less than what he would have received had he remained in his
home country pension plan for the duration of his employment with the Company.
The following table illustrates the estimated annual benefits that would be
payable under the Company's Global Officer Pension Plan (before deductions for
social security or other governmental retirement income and before deduction of
any other sources of retirement income from the Company, its predecessors and
any prior employers) if the individual had retired at the end
13
<PAGE> 17
of last year (assuming he was at least age 55, the minimum age for retirement
under the Plan) and upon reaching age 65:
GLOBAL OFFICER PENSION PLAN TABLE(1)
<TABLE>
<CAPTION>
AGE AT ANNUAL BENEFIT AT ANNUAL BENEFIT
DECEMBER 31, 1997 DECEMBER 31, 1997(3)($) AT AGE 65($)
----------------- ----------------------- --------------
<S> <C> <C> <C>
F. Hassan(2)................. 52 45,000 1,300,000
G. A. Ando(2)................ 48 133,000 517,000
R. C. Salisbury(2)........... 54 188,000 N/A
R. T. Collier(2)............. 44 1,000 364,000
</TABLE>
- -------------------------
(1) For purposes of this table, the individual's Final Average Salary under the
Plan for both December 31, 1997 and at age 65 is deemed to be the annualized
base salary and targeted incentive compensation at year-end, which was
$2,000,000 for F. Hassan, $795,000 for G.A. Ando, $573,435 for R.C.
Salisbury, and $560,000 for R.T. Collier.
(2) The officers included in the above table would not have been entitled to
actually receive this benefit if they had retired at December 31, 1997 since
they were not age 55, the minimum age for retirement under the Plan.
(3) During 1997, J.L. Zabriskie received a pension plan lump sum payment of
$10,088,168; L.S. Smith received a pension plan lump sum payment of
$6,685,682; and K.M. Cyrus received a pension plan lump sum payment of
$2,896,799.
EMPLOYMENT AGREEMENTS AND TERMINATION
AND CHANGE-IN-CONTROL ARRANGEMENTS
Dr. J. L. Zabriskie, former President and Chief Executive Officer of the
Company, resigned from the Company on January 20, 1997. As a result of his
resignation, Dr. Zabriskie received 2.5 times his 1996 base salary and target
incentive bonus; 87,629 shares of the Company's Common Stock, plus accumulated,
reinvested dividends thereon; an additional 60 days' base salary; the costs of
relocation to the United States; continued employee benefit coverage for up to
30 months; and a period of 5 years to exercise all of his stock options that
were outstanding on such date. Dr. Zabriskie also received retirement benefits
from the Company as if he had been employed by the Company for 28 years plus his
actual years of service assuming he had been employed through November 29, 1997,
less the value of his pension from former employment.
All executive officers have employment agreements with the Company providing
for the payment of severance pay equal to twice the officer's annualized cash
compensation (whether or not deferred) in the event such officer's employment is
terminated by the Company other than for "cause" or by the employee with "good
reason" as such terms are defined in the agreements.
As previously disclosed to the public last August, in order to recruit Mr.
Hassan from his prior position as Executive Vice President and member of the
Board of Directors of American Home Products Corporation, the Company entered
into an employment agreement with him establishing his compensation and
benefits. Under his employment agreement, Mr. Hassan's annual base salary was
set at $1 million and his annual incentive compensation target award was set at
$1 million, with a minimum cash bonus of $636,000 for 1997. To replace equity
compensation awards received from his prior employer that he forfeited by
joining the Company, and to provide an incentive to increase shareholder value,
Mr. Hassan received 315,000 restricted shares of the Company's Common Stock,
75,000 shares of which vested on January 1, 1998 and the remainder of which will
vest on June 1, 1998, and a stock option for 500,000 shares of the Company's
Common Stock, vesting ratably on June 1, 1998, June 1, 1999 and June 1, 2000 or
earlier upon a Change in Control of the Company, his death or disability or his
termination of employment by the Company without Cause or by him with Good
Reason (as such terms are defined in his employment agreement). Mr. Hassan's
14
<PAGE> 18
employment agreement also provides that in the event his employment is
terminated by the Company without Cause or by him with Good Reason prior to June
1, 2000, he shall be entitled to (i) severance pay equal to the total amount of
base salary and annual target incentive compensation he would have received had
he continued to be employed until June 1, 2000 (but not less than two years of
annual compensation); (ii) retirement and other employee benefits as if he had
continued to be employed until November 12, 2000; (iii) immediate vesting of all
outstanding restricted stock and stock options; and (iv) if termination occurs
within one year following a Change in Control of the Company and if the
before-tax value (based on the spread between the then current market price and
the exercise price) of all stock options ever granted to him (even if previously
exercised or not yet exercisable) is less than $15 million, receipt of a cash
amount, grossed up for any resulting excise taxes, equal to the amount by which
such aggregate stock option value is less than $15 million. Finally, in order to
protect Mr. Hassan against losing pension benefits as a result of joining the
Company, his employment agreement provides that he will receive a pension equal
to the greater of (i) the amount he would have received if he had remained
employed with his prior employer until age 55 or such later date that he retires
from the Company and if his compensation had been the same as that received from
the Company (or had increased only at a 5% rate annually if he is terminated
with Cause or leaves without Good Reason); or (ii) the amount determined under
the Company's Global Officer Pension Plan, offset in either case by any pension
benefits actually received from his prior employer.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
Coopers & Lybrand, LLP, has been selected by the Board of Directors to be the
Company's independent accountants. Representatives from the firm will be present
at the Annual Meeting of Shareholders and will be given an opportunity to make a
statement, if so desired, and will be available to respond to appropriate
questions.
RECEIPT OF SHAREHOLDER PROPOSALS
For inclusion in the Company's 1999 proxy statement, all shareholder proposals
for consideration at the Annual Meeting of Shareholders of the Company to be
held in 1999 must be received by the Secretary of the Company at the address set
forth on the first page of this proxy statement by December 15, 1998. Such
proposals must also comply with all regulations of the Securities and Exchange
Commission.
OTHER BUSINESS
The Company knows of no other business to come before the meeting. If,
however, other matters properly come before the meeting, it is the intention of
the persons named in the enclosed proxy to vote the shares represented thereby
in their discretion in accordance with their best judgment.
By order of the Board of Directors,
Don W. Schmitz
Secretary
Dated: March 23, 1998
15
<PAGE> 19
PHARMACIA & UPJOHN LOGO
K 97-178 3/98
<PAGE> 20
PHARMACIA & UPJOHN, INC.
ANNUAL MEETING, MAY 8, 1998 PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints S. Gyll and F. Hassan and each of them,
as proxies with power of substitution, to vote all the stock of PHARMACIA &
UPJOHN, INC. which the undersigned has the power to vote at the Company's
Annual Meeting or at any adjournment thereof, as specified on the reverse side,
and in their discretion upon such other matters as may properly come before the
meeting. If applicable, this proxy shall also govern the voting of stock held
for the account of the undersigned in the Company's Employee Savings Plan.
IF YOU SIGN THIS PROXY WITHOUT MARKING ANY OVALS, THIS PROXY SHALL BE
VOTED FOR ALL NOMINEES AND IN THE PROXIES' DISCRETION ON ANY OTHER MATTERS
PROPERLY COMING BEFORE THE MEETING.
[ ] Check here for address change.
New Address:
----------------------
----------------------------------
----------------------------------
[ ] Check here if you plan to
attend the meeting.
Dear Shareholder:
On the reverse side of this card are instructions on how to vote for
the election of directors by telephone. Please consider voting by telephone.
Your vote is recorded as if you mailed in your proxy card. We believe voting
this way is convenient and it also saves the Company money.
Thank you for your attention to these matters.
<PAGE> 21
PHARMACIA & UPJOHN, INC.
PLEASE MARK VOTE IN OVAL USING DARK INK ONLY.
<TABLE>
<S><C>
The Board of Directors recommends a vote FOR all nominees FOR WITHHELD FOR
all from all all
nominees nominees nominees, except vote withheld from
the following nominees:
1. NOMINEES: 01 - Gustaf Douglas, 02 - Fred Hassan, 03 - 0lof
Lund, 04 - C. Steven McMillan for three-year terms / / / / / /
--------------------------
2. In their discretion on any other matters properly arising FOR AGAINST
during the meeting / / / /
PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS. IF ACTING AS ATTORNEY,
EXECUTOR, TRUSTEE, OR IN
REPRESENTATIVE CAPACITY, SIGN
NAME AND INDICATE TITLE.
--------------------------------
Signature Date
--------------------------------
Signature Date
PLEASE VOTE, SIGN, DATE, AND
RETURN THIS PROXY CARD PROMPTLY
TO HARRIS TRUST AND SAVINGS BANK
USING THE ENCLOSED ENVELOPE.
</TABLE>
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
TELEPHONE VOTING INSTRUCTIONS
Dear Shareholders:
Your vote is important to us. We have provided an automated telephone
option for granting your proxy which you may access 24 hours a day by dialing
this TOLL FREE NUMBER: 1-888-221-0693 (if located within the U.S.) on a
touch tone telephone.
After dialing 1-888-221-0693, you will hear the following instructions:
Please enter your six digit control number which appears directly
above the words "Dear Shareholders".
Please press 1 if you wish to vote for the recommendations of the
Board of Directors.
Please press 0 if you wish to vote on each proposal separately
and the system will prompt you for your vote with instructions.
Once this is completed, the telephone option will automatically hang up
and your proxy will be voted as you directed.
THERE IS NO NEED FOR YOU TO MAIL BACK YOUR PROXY CARD.
