<PAGE> 1
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:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
C. R. BARD, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
(BARD LOGO)
C. R. BARD, INC.
730 CENTRAL AVENUE
MURRAY HILL, NEW JERSEY 07974
March 10, 1995
Dear Shareholder:
Your Board of Directors joins me in extending an invitation to attend the
1995 Annual Meeting of Shareholders which will be held on Wednesday, April 19,
1995 at the Hamilton Park Conference Center, 175 Park Avenue, Florham Park, New
Jersey 07932. The meeting will start promptly at 10:00 a.m.
We sincerely hope you will be able to attend and participate in the
meeting. We will report on the Company's progress and respond to questions you
may have about the Company's business. There will also be important items which
are required to be acted upon by shareholders.
Whether or not you plan to attend, it is important that your shares be
represented and voted at the meeting, and, therefore, we urge you to complete,
sign, date and return the enclosed proxy card in the envelope provided for this
purpose.
Sincerely yours,
/s/ William H. Longfield
WILLIAM H. LONGFIELD
President and
Chief Executive Officer
<PAGE> 3
C. R. BARD, INC.
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 19, 1995
---------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of C. R.
Bard, Inc. will be held on Wednesday, April 19, 1995 at the Hamilton Park
Conference Center, 175 Park Avenue, Florham Park, New Jersey 07932 at 10:00 a.m.
for the following purposes:
1. To elect four Class II directors for a term of three years and one
Class III director for a term of one year;
2. To ratify the appointment of Arthur Andersen LLP as independent
public accountants for the year 1995;
3. To consider and vote upon a shareholder proposal; and
4. To transact such other business as may properly come before the
meeting and any adjournments thereof.
Only shareholders of record at the close of business on February 27, 1995
are entitled to notice of and to vote at the meeting.
A copy of the Annual Report of C. R. Bard, Inc. for 1994 is enclosed with
this Notice, the attached Proxy Statement and accompanying proxy.
All shareholders are urged to attend the meeting in person or by proxy.
Shareholders who do not expect to attend the meeting are requested to complete,
sign and date the enclosed proxy and return it promptly in the self-addressed
envelope provided.
By order of the Board of Directors
RICHARD A. FLINK
Secretary
March 10, 1995
- --------------------------------------------------------------------------------
NO MATTER HOW MANY SHARES YOU OWNED
ON THE RECORD DATE, YOUR VOTE IS IMPORTANT.
PLEASE INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD, SIGN,
DATE AND RETURN IT IN THE ENVELOPE PROVIDED, WHICH IS ADDRESSED FOR YOUR
CONVENIENCE AND NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES. IN ORDER TO
AVOID THE ADDITIONAL EXPENSE TO THE COMPANY OF FURTHER SOLICITATION, WE ASK YOUR
COOPERATION IN MAILING YOUR PROXY PROMPTLY.
- --------------------------------------------------------------------------------
<PAGE> 4
C. R. BARD, INC.
730 CENTRAL AVENUE
MURRAY HILL, NEW JERSEY 07974
---------------------
PROXY STATEMENT
---------------------
GENERAL
The accompanying proxy is solicited on behalf of the Board of Directors of
C. R. Bard, Inc. (the "Company") for use at the Annual Meeting of Shareholders
referred to in the foregoing notice and at any adjournment thereof. It is
expected that this Proxy Statement and the accompanying proxy will be mailed
commencing March 10, 1995 to each shareholder entitled to vote.
Shares represented by proxies, if such proxies are properly executed,
received in time and not revoked, will be voted in accordance with the
specifications thereon or, if no specifications are made, will be voted FOR the
election as directors of all nominees named herein, FOR Proposal No. 2, AGAINST
Proposal No. 3 and in accordance with the discretion of the named attorneys and
proxies on any other business. Any proxy may be revoked at any time before it is
exercised by notice in writing delivered to the Secretary of the Company.
Under New Jersey law and the Company's By-Laws, the presence in person or
by proxy of the holders of a majority of the shares of Common Stock issued and
outstanding and entitled to vote at the Annual Meeting of Shareholders
constitutes a quorum. Directors are elected by a plurality of the votes cast at
the Annual Meeting of Shareholders. Adoption of Proposals No. 2 and 3 requires
the affirmative vote of a majority of the votes cast on the proposal.
Votes cast at the Annual Meeting of Shareholders will be tabulated by the
Company's transfer agent. Votes withheld for the election of directors have no
impact on the election of directors, except that votes withheld may result in
another individual receiving a higher number of votes. Abstentions and broker
non-votes will not be counted in tabulating the number of votes cast on
Proposals No. 2 and 3.
On February 27, 1995, the record date for the determination of shareholders
entitled to notice of and to vote at the meeting, the outstanding voting
securities of the Company consisted of 52,094,131 shares of Common Stock. Each
share is entitled to one vote.
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
There are currently ten members of the Board of Directors, divided into
three classes. Class I consists of three directors whose terms expire in 1997.
Class II consists of four directors whose terms expire in 1995. Class III
consists of three directors whose terms expire in 1996. In each case, directors
serve for a three-year term and until their successors are elected and
qualified.
Five directors are to be elected at the Annual Meeting of Shareholders.
Three current members of the Board of Directors constituting Class II directors
are nominated for re-election. Two additional persons, one of whom is designated
as a nominee for election as a Class II director and the other of whom is
designated as a nominee for election as a Class III director, are also nominated
to be elected.
Votes pursuant to the accompanying proxy will be cast, unless otherwise
indicated on the proxy, for the election of the five nominees named below. In
the event that any such nominee shall be unable to serve as a director, it is
intended that the proxy solicited hereby will be voted for such other person or
persons as may be nominated by management. Management has no reason to believe
that the nominees will be unable to serve.
<PAGE> 5
Set forth below are the names, principal occupations and ages of the five
nominees for election as directors and the current directors with unexpired
terms, as well as certain information relating to other positions held by them
with the Company and other companies. Except as otherwise indicated, the
information set forth below as to principal occupation is for at least the last
five years. There are no family relationships among directors and nominees.
NOMINEES FOR RE-ELECTION AS CLASS II DIRECTORS
<TABLE>
<S> <C>
Joseph F. Abely, Jr. ....... Retired Chairman and Chief Executive Officer of Sea-Land
Corporation (international intermodal freight transportation
and related trade services), having been, prior thereto, Vice
Chairman of the Board and a director of RJR Nabisco, Inc.
(international consumer products); age 66. Mr. Abely has been a
Director since December 1985 and is a member of the
Compensation Committee; Finance Committee; and Regulatory
Compliance Committee. He is also a director of Perkin-Elmer
Corporation, Burlington Industries, Inc. and Marine Spill
Response Corporation.
Robert P. Luciano........... Chairman and Chief Executive Officer of Schering-Plough
Corporation (pharmaceuticals and consumer products) since
January 1986; age 61. Mr. Luciano has been a Director since
1981 and is a member of the Executive Committee; Compensation
Committee; and Policy, Procedures and Organization Committee.
He is also a director of AlliedSignal Inc. and Merrill Lynch &
Co., Inc.
Robert H. McCaffrey......... Retired Chairman of the Board of Directors since February 1991,
having been Chairman of the Board of Directors from January
1989 to February 1991 and, prior thereto, Chairman of the Board
of Directors and Chief Executive Officer since 1976; age 68.
Mr. McCaffrey has been a Director since 1976 and is a member of
the Executive Committee and Policy, Procedures and Organization
Committee. He is also a director of KLM Communications, Inc.
NOMINEE FOR ELECTION AS CLASS II DIRECTOR
Benson F. Smith............. Executive Vice President and Chief Operating Officer since July
1994, having been Executive Vice President -- Operations since
December 1993 and, prior thereto, Group Vice President from
September 1991 to December 1993 and Group Executive from
February 1990 to September 1991. Prior to February 1990, Mr.
Smith was President, Bard Urological Division; age 47. Mr.
Smith has been a director since July 1994 and is a member of
the Finance Committee.
NOMINEE FOR ELECTION AS CLASS III DIRECTOR
T. Kevin Dunnigan........... Chairman and Chief Executive Officer of Thomas & Betts
Corporation (electrical/electronics components) since 1992 and,
prior thereto, President from 1980 to 1994; age 57. Mr.
Dunnigan has been a director since December 1994 and is a
member of the Audit Committee and Regulatory Compliance
Committee. He is also a director of Lukens, Inc. and Elsag
Bailey Process Automation N.V.
</TABLE>
2
<PAGE> 6
<TABLE>
<S> <C>
OTHER DIRECTORS OF THE COMPANY
CLASS III DIRECTORS (TERMS EXPIRE 1996)
Regina E. Herzlinger........ Nancy R. McPherson Professor of Business Administration,
Harvard Business School since 1971; age 51. Professor
Herzlinger has been a Director since 1991 and is a member of
the Audit Committee and Regulatory Compliance Committee. She is
also a director of Deere & Company, Manor Care, Inc., Salick
Health Care, Inc. and Schering-Plough Corporation, and is a
member of the Visiting Committee on Sponsored Research of the
Massachusetts Institute of Technology.
William H. Longfield........ President and Chief Executive Officer since June 1994, having
been President and Chief Operating Officer from September 1991
to July 1994 and Executive Vice President and Chief Operating
Officer from February 1989 to September 1991. In addition,
since October 1993, Mr. Longfield has been delegated the
additional responsibilities of Chairman of the Board and from
October 1993 to June 1994 he had been delegated the additional
responsibilities of Chief Executive Officer; age 56. Mr.
Longfield has been a Director since 1990 and is a member of the
Executive Committee and Policy, Procedures and Organization
Committee. He is also a director of Manor Care, Inc. and United
Dental Care.
CLASS I DIRECTORS (TERMS EXPIRE 1997)
William T. Butler, M.D. .... President and Chief Executive Officer of Baylor College of
Medicine since 1979; age 62. Dr. Butler has been a Director
since 1988 and is a member of the Compensation Committee;
Regulatory Compliance Committee; and Policy, Procedures and
Organization Committee. He is Chairman of the Texas Higher
Education Coordinating Board Health Professions Education
Advisory Committee. He is also a director of Browning-Ferris
Industries Inc., First City Bancorporation of Texas, Inc. and
Lyondell Petrochemical Company.
Raymond B. Carey, Jr. ...... Retired Chairman and Chief Executive Officer of ADT, Inc.
(electronic protection systems); age 68. Mr. Carey has been a
Director since 1991 and is a member of the Audit Committee;
Regulatory Compliance Committee; and Finance Committee. He is
also a director of Thomas & Betts Corporation and the Kroger
Co.
Daniel A. Cronin, Jr. ...... President, Northbridge Management Company (investment
management); General Partner, Ampersand Associates (venture
capital fund); age 66. Mr. Cronin had been a Director from 1968
to 1976 when he resigned to join the staff of the United States
Secretary of Commerce, a position he held until 1977. He was
re-elected a Director in 1979 and is a member of the Audit
Committee; Finance Committee; and Executive Committee. He is
also a director of Altron Corporation.
</TABLE>
3
<PAGE> 7
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Brinson Holdings, Inc., together with its wholly-owned subsidiary, Brinson
Partners, Inc., a registered investment advisor, and Brinson Partners, Inc.'s
wholly-owned subsidiary, Brinson Trust Company, a bank, each located at 209
South LaSalle, Chicago, Illinois, have reported that as of December 31, 1994,
Brinson Partners, Inc. held sole voting power and sole dispositive power over
2,415,350 shares of Common Stock of the Company, or 4.6% of the outstanding
shares, and Brinson Trust Company held sole voting power and sole dispositive
power over 901,900 shares of Common Stock of the Company, or 1.7% of the
outstanding shares.
As of the record date, management knows of no other person who owned
beneficially more than 5% of the Company's outstanding stock.
SECURITIES OWNERSHIP OF MANAGEMENT
The table below contains information as of February 27, 1995 with respect
to the beneficial ownership of Common Stock of the Company by each director of
the Company, the Company's Chief Executive Officer and the Company's other four
most highly compensated executive officers (collectively, the "Named Executive
Officers") and all directors and executive officers as a group (including the
Named Executive Officers). No director or executive officer owns more than 1% of
the outstanding stock. All directors and executive officers as a group (22
people) own beneficially 1.3% of the outstanding stock. Unless otherwise noted
in the footnote following the table, the persons as to whom the information is
given had sole voting and investment power over the shares of Common Stock shown
as beneficially owned.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED
-------------------------------------
RIGHT TO ACQUIRE
WITHIN 60 DAYS OF
HELD AS OF FEBRUARY 27, 1995
NAME FEBRUARY 27, 1995 UNDER OPTIONS
---- ----------------- -----------------
<S> <C> <C>
Joseph F. Abely, Jr............................................ 3,400 600
William C. Bopp................................................ 8,033 23,025
William T. Butler, M.D......................................... 5,700 600
Raymond B. Carey, Jr........................................... 1,800 600
Daniel A. Cronin, Jr........................................... 16,000 600
T. Kevin Dunnigan.............................................. 1,000 -0-
Regina E. Herzlinger........................................... 1,300 600
William H. Longfield........................................... 32,959 90,350
Robert P. Luciano.............................................. 5,400 600
Robert H. McCaffrey(*)......................................... 412,040 600
Benson F. Smith................................................ 21,777 42,176
Richard J. Thomas.............................................. 10,451 19,950
William T. Tumber.............................................. 13,555 28,636
All Directors and Executive Officers as a group (22 people).... 652,873 356,562
</TABLE>
- ---------------
(*) Includes 10,515 shares owned by his wife as to which he disclaims beneficial
ownership. Includes 19,000 shares held by a trust for his child. Includes
17,874 shares owned by a foundation of which he is President. Includes
154,124 shares owned by two foundations of which he is a co-trustee and as
to all of which investment or voting power is shared.
BOARD MEETINGS AND COMMITTEES
The Board of Directors met nine times in 1994. No director of the Company
attended fewer than 98% of the aggregate of (i) the total number of meetings of
the Board of Directors and (ii) the total number of meetings held by all
committees of the Board on which they served.
The Board of Directors has several standing committees, including, among
others, an Audit Committee, a Compensation Committee (formerly the Compensation
and Stock Option Committee) and a Policy, Procedures and Organization Committee.
4
<PAGE> 8
The Audit Committee, currently composed of Directors Carey, Cronin,
Dunnigan and Herzlinger, met two times during 1994. The principal functions of
the Audit Committee are to (i) make recommendations to the full Board concerning
the appointment of independent public accountants, (ii) review the scope of the
audit and related fees, (iii) review the Company's accounting principles,
policies and reporting practices with the independent public accountants,
internal auditors and management, (iv) discuss with the independent public
accountants the results of their audit and determine what action, if any, is
required with respect to the Company's internal controls, (v) meet separately
with the independent public accountants as well as separate meetings with the
internal auditors and (vi) consider other audit and nonaudit matters from time
to time as requested by the full Board.
The Compensation Committee, currently composed of Directors Abely, Butler
and Luciano, reviews and reports to the Board of Directors on all matters
involving compensation of employees and management and administers the Company's
1994 Executive Bonus Plan and 1993 Long Term Incentive Plan. During 1994 there
were three meetings of the Compensation Committee.
The Policy, Procedures and Organization Committee, currently composed of
Directors Butler, Longfield, Luciano and McCaffrey, advises and makes
recommendations to the Board of Directors on all matters concerning Board
procedures and directorship practices. The Committee also reviews and makes
recommendations to the Board of Directors concerning the qualifications and
selection of candidates as nominees for election as directors and will consider
nominees recommended by shareholders. Such recommendations should be submitted
to the Secretary of the Company. The Policy, Procedures and Organization
Committee met three times during 1994.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT
The Company's executive compensation program is designed to create a link
between pay and performance. Performance is the critical factor in all
compensation decisions. The Company relies on established compensation
consultants to analyze and evaluate the total compensation paid to executives
against that of competitive companies. The components of total compensation are
base salary, annual cash bonus incentives and long-term incentives. The
Compensation Committee believes that a strong link between pay and performance
will enhance the Company's ability to attract, motivate and retain key
employees.
Base Salaries
Base salaries are determined by evaluating the responsibility of the
executive and by reference to the competitive marketplace for executive talent.
In order to attract and retain high caliber executives, base salaries are
targeted slightly above average but below the high end compared with the
Company's competition for executive talent. The Company believes that its
competition for executive talent comes from a selected group of companies in the
same industry as, and with sales and products similar to those of, the Company.
This selected group of companies is larger than, and does not contain all the
companies in, the peer group which makes up the S&P medical product index in the
Comparison of Five Year Cumulative Total Return below, as the Company believes
that reference to the S&P medical product index provides the most meaningful
comparison for shareholder returns, while the larger, selected group of
companies is more representative of the Company's competition for executive
talent.
In determining base salary increases as well as total compensation, the
Compensation Committee takes into account corporate and individual performance,
inflation rates and the salary levels prevailing at the selected group of
companies described above. Increases in base salaries are influenced by the
performance of the Company and the individual as compared with established goals
and objectives. Goals and objectives vary by individual and include the
attainment of targeted levels of sales, net profits, earnings per share and
return on shareholders' investment, as well as individual goals consisting of
the attainment of strategic and operational initiatives (i.e., expansion of
globalization, acquisitions/divestitures). For purposes of base salary
increases, no particular weight is assigned to any goal.
5
<PAGE> 9
In determining the base salary of Mr. Longfield, the Compensation Committee
weighed corporate and individual performance more heavily than inflation or
analysis of competitive salary data. Mr. Longfield, who was delegated the
responsibilities of Chairman and Chief Executive Officer in October of 1993, was
elected Chief Executive Officer in June of 1994.
The Compensation Committee considers the recommendation of the Chief
Executive Officer in approving the base salaries of Messrs. Smith, Tumber,
Thomas, Bopp and all other executives whose base salaries exceed $150,000
annually. Goals and objectives for these individuals are based on the targeted
levels described above for the Divisions or corporate staff functions for which
they are responsible and individual strategic and operational initiatives.
Performance is weighed more heavily than inflation and competitive salary data.
The Compensation Committee establishes each year a merit fund which is used
to increase base salaries for professional and managerial employees. The amount
of the merit fund is determined on the basis of an analysis of several industry
specific and general non-industry specific surveys which are conducted on an
annual basis by consulting companies and trade associations. Individuals receive
a salary increase paid out of the merit fund based on a formula which is
designed to reward superior individual performance.
Bonus Plans
Awards under the Company's bonus plans are determined based on the degree
to which corporate and, in certain cases, group financial and individual,
non-financial goals are attained.
Actual incentive compensation awards may be either more or less than
targeted amounts depending on actual results compared with corporate and group
and individual performance measures. Thus the Company's incentive plans create a
direct link between pay and performance.
At the beginning of each year, the Board of Directors, for corporate
planning purposes and in consultation with the management of the Company,
approves certain financial targets for the Company, including an earnings per
share target. The earnings per share target then becomes the critical financial
indicator used by the Compensation Committee in determining awards under the
Company's bonus plans for Mr. Longfield and the other executive officers, other
than Group Vice Presidents whose bonuses are determined as described below. All
bonuses are based on operational results exclusive of items of an unusual and/or
non-recurring nature.
Certain executive officers of the Company, including the Named Executive
Officers, receive their bonuses under the Company's 1994 Executive Bonus Plan.
Bonuses under this plan for 1994 were determined by reference to the degree to
which the Company's earnings per share target for 1994 was achieved and, with
respect to Group Vice Presidents, including Messrs. Tumber and Thomas, with
equal weight by reference to the degree to which the net income target
established for their respective groups was achieved. In 1994, 100% of the
Company's earnings per share target (exclusive of items of an unusual and/or
non-recurring nature) was achieved and 90% and 85% of the net income targets for
the respective groups of Messrs. Tumber and Thomas were achieved. In awarding
bonuses to the Named Executive Officers, the Compensation Committee may grant
less than, but not more than, the amounts determined pursuant to guidelines
established pursuant to the 1994 Executive Bonus Plan.
Except as set forth below, bonuses for the Company's other executive
officers for 1994 were determined by reference to the degree to which the
Company's earnings per share target for 1994 was achieved and the degree to
which individual strategic and operational initiatives for 1994 were achieved.
The Chief Executive Officer establishes individual strategic and operational
goals taking into account the executive's position in the Company and the
executive's particular strengths and opportunities for improvement.
Approximately 80% of the bonuses awarded to these executives in 1994 was based
on the degree of achievement of the Company's earnings per share target and
approximately 20% was based on the degree of achievement of individual strategic
and operational initiatives. The executive officers of the Company who are
responsible for quality control and regulatory and medical affairs do not
participate in the Company's bonus plans.
6
<PAGE> 10
Stock Options
Under the 1993 Long Term Incentive Plan, in 1994 the Compensation Committee
granted stock options to selected executive officers, including the Named
Executive Officers. The Compensation Committee may, in its discretion, grant
limited stock appreciation rights that may only be exercised in the event of a
change of control of the Company. Limited stock appreciation rights were granted
in tandem with all options granted to executive officers.
Stock options are combined with other long term incentives to target total
compensation for long term incentives at slightly above the average but below
the high end of the selected group of companies described above. Actual awards
may be more or less than targeted amounts depending on actual results compared
with corporate and, in certain cases, group and individual performance measures
as described under "Bonus Plans".
In determining the number of options granted to each individual the
Compensation Committee uses a multiple of base salary divided by the share price
on the date of grant.
The Company uses the Black-Scholes method to determine the potential value
of stock options.
Restricted Stock Awards
Under the 1993 Long Term Incentive Plan, in 1994 the Compensation Committee
granted restricted stock to selected executive officers, including the Named
Executive Officers. Restricted stock vests in accordance with a schedule
specified by the Compensation Committee. Restricted stock is combined with other
long term incentives to target total compensation for long term incentives at
slightly above the average but below the high end of the selected group of
companies described above. Executive officers may receive more or less than the
targeted amounts depending on actual results compared with corporate and, in
certain cases, group and individual performance measures as described under
"Bonus Plans".
The formula for determining the number of shares of restricted stock
granted to each individual is a multiple of base salary weighted for attainment
of goals and objectives and divided by the share price on the date of grant.
Compliance with Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to public companies for compensation over $1,000,000
paid to the Chief Executive Officer and the four other most highly compensated
executive officers for 1994 and thereafter. Qualifying performance-based
compensation is not subject to the deduction limit if certain requirements are
met. The Company's 1994 Executive Bonus Plan and 1993 Long Term Incentive Plan
have been structured such that annual incentive bonuses and long-term
equity-based compensation paid thereunder for the Company's most senior
executives should constitute qualifying performance-based compensation under
Section 162(m). The Company's shareholders have approved both such plans.
However, the Compensation Committee recognizes that unanticipated future events,
such as a change of control of the Company or a change in executive personnel,
could result in a disallowance of compensation deductions under Section 162(m).
Moreover, the Compensation Committee may from time to time award compensation
that is non-deductible under Section 162(m) when in the exercise of the
Compensation Committee's business judgment such award would be in the best
interest of the Company. The Compensation Committee believes that all
compensation reported in the Summary Compensation Table below for 1994 is
deductible under the Internal Revenue Code.
THE COMPENSATION COMMITTEE
Robert P. Luciano, Chairperson
Joseph F. Abely, Jr.
William T. Butler, M.D.
7
<PAGE> 11
SUMMARY COMPENSATION TABLE
The table below sets forth information concerning compensation paid to the
Named Executive Officers during the last three fiscal years.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------------------- -------------------------------
AWARDS PAYOUTS
---------------------- -------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING LTPIP ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARDS OPTIONS PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($)(1) ($)(2) (#)(3) ($)(4) ($)(5)
- -------------------------- ---- ------- ------- ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William H. Longfield...... 1994 525,000 315,000 15,834 302,563 89,352 46,137 171,270
President and 1993 442,278 250,000 14,742 162,908 39,400 40,131 121,533
Chief Executive Officer 1992 390,000 257,400 13,650 -0- 19,600 40,076 85,861
Benson F. Smith........... 1994 317,500 192,500 9,280 119,130 34,128 23,660 28,968
Executive Vice President 1993 243,237 146,000 8,640 63,130 15,300 9,555 25,561
and Chief Operating 1992 221,000 125,800 4,250 -0- 10,000 9,659 15,312
Officer
William T. Tumber......... 1994 235,125 87,500 7,540 47,607 13,756 21,970 73,038
Group Vice President 1993 225,000 75,500 7,020 59,118 14,400 8,820 76,532
1992 212,000 109,100 3,900 -0- 9,400 8,916 69,945
Richard J. Thomas......... 1994 235,125 79,400 6,090 43,320 12,508 17,745 12,911
Group Vice President 1993 225,000 47,500 5,670 59,118 14,400 15,435 15,626
1992 204,500 127,200 5,250 -0- 9,400 15,603 14,248
William C. Bopp........... 1994 208,700 104,400 4,350 59,796 15,264 12,675 42,921
Senior Vice President and 1993 195,000 76,000 4,050 37,183 9,100 2,499 30,818
Chief Financial Officer 1992 180,000 102,000 850 -0- 8,400 2,526 16,330
</TABLE>
- ---------------
(1) All of these amounts represent dividend equivalents paid under the Long Term
Performance Incentive Plan ("LTPIP").
(2) As of December 31, 1994: William H. Longfield held an aggregate of 19,500
shares of restricted stock with an aggregate value of $526,500; Benson F.
Smith held an aggregate of 7,640 shares of restricted stock with an
aggregate value of $206,280; William T. Tumber held an aggregate of 4,320
shares of restricted stock with an aggregate value of $116,640; Richard J.
Thomas held an aggregate of 4,130 shares of restricted stock with an
aggregate value of $111,510; and William C. Bopp held an aggregate of 3,730
shares of restricted stock with an aggregate value of $100,710. Dividends
are paid on all shares of restricted stock.
(3) Grants consist of stock options with attached limited rights exercisable in
the event of a change of control. See "Certain Compensation Arrangements"
below for a description of the material features of the limited stock
appreciation rights.
(4) The dollar amounts for 1994, 1993 and 1992 were derived by multiplying the
number of vested performance units by $8.45, $7.35 and $7.43, respectively,
the book values of a share of the Common Stock of the Company at December
31, 1994, December 31, 1993 and December 31, 1992, respectively. These
payouts are not made until the employee retires or otherwise leaves
employment with the Company.
(5) As required by the rules of the Securities and Exchange Commission, the
amounts reflected in this column include the annual accruals to the
employees' accounts under the Supplemental Insurance/Retirement Plan. Under
this plan, the annual accruals are disproportionately higher in the later
years of an employee's participation in order to create an incentive to an
executive to continue employment with the Company until at least age 62 when
accruals cease. The Company believes that a more realistic reflection of the
accruals under the Supplemental Insurance/Retirement Plan is the actuarial
average, over the years of an executive's participation in the plan, of the
aggregate expected accruals under the plan. On this basis, the actuarial
average accrual amounts for Messrs. Longfield, Smith, Tumber, Thomas and
Bopp would be $96,732, $24,484, $28,207, $15,012 and $22,002, respectively,
in 1994, $84,736, $18,282, $27,190, $14,540 and $19,196, respectively, in
1993, and $48,509, $11,434, $19,533, $8,835 and $10,382, respectively, in
1992, as opposed to the amounts shown in the column.
For William H. Longfield, the 1994 amount in the column represents Company
contributions of $3,750 under the Retirement Savings Plan, $163,940 accrued
under the Supplemental Insurance/Retirement Plan and $3,580 which, net of
tax, is reimbursement for insurance premiums paid under such latter plan;
the 1993 amount in the column represents Company contributions of $8,648
under the Retirement Savings Plan, $110,060 accrued under the Supplemental
Insurance/Retirement Plan and $2,825 which, net of tax, is reimbursement for
insurance premiums paid under such latter plan; the 1992 amount in the
column represents Company contributions of $8,040 under the Retirement
Savings Plan, $75,736 accrued under the Supplemental Insurance/Retirement
Plan and $2,085 which, net of tax, is reimbursement for insurance premiums
paid under such latter plan.
8
<PAGE> 12
For Benson F. Smith, the 1994 amount in the column represents Company
contributions of $3,750 under the Retirement Savings Plan, $24,160 accrued
under the Supplemental Insurance/Retirement Plan and $1,058 which, net of
tax, is reimbursement for insurance premiums paid under such latter plan;
the 1993 amount in the column represents Company contributions of $5,482
under the Retirement Savings Plan, $19,228 accrued under the Supplemental
Insurance/Retirement Plan and $851 which, net of tax, is reimbursement for
insurance premiums paid under such latter plan; the 1992 amount in the
column represents Company contributions of $5,384 under the Retirement
Savings Plan, $9,341 accrued under the Supplemental Insurance/Retirement
Plan and $587 which, net of tax, is reimbursement for insurance premiums
paid under such latter plan.
For William T. Tumber, the 1994 amount in the column represents Company
contributions of $3,750 under the Retirement Savings Plan, $66,786 accrued
under the Supplemental Insurance/Retirement Plan and $2,502 which, net of
tax, is reimbursement for insurance premiums paid under such latter plan;
the 1993 amount in the column represents Company contributions of $3,747
under the Retirement Savings Plan, $70,392 accrued under the Supplemental
Insurance/Retirement Plan and $2,393 which, net of tax, is reimbursement for
insurance premiums paid under such latter plan; the 1992 amount in the
column represents Company contributions of $3,629 under the Retirement
Savings Plan, $64,584 accrued under the Supplemental Insurance/Retirement
Plan and $1,732 which, net of tax, is reimbursement for insurance premiums
paid under such latter plan.
For Richard J. Thomas, the 1994 amount in the column represents Company
contributions of $3,750 under the Retirement Savings Plan, $8,436 accrued
under the Supplemental Insurance/Retirement Plan and $725 which, net of tax,
is reimbursement for insurance premiums paid under such latter plan; the
1993 amount in the column represents Company contributions of $5,621 under
the Retirement Savings Plan, $9,340 accrued under the Supplemental
Insurance/Retirement Plan and $665 which, net of tax, is reimbursement for
insurance premiums paid under such latter plan; the 1992 amount in the
column represents Company contributions of $5,050 under the Retirement
Savings Plan, $8,732 accrued under the Supplemental Insurance/Retirement
Plan and $466 which, net of tax, is reimbursement for insurance premiums
paid under such latter plan.
For William C. Bopp, the 1994 amount in the column represents Company
contributions of $3,750 under the Retirement Savings Plan, $38,156 accrued
under the Supplemental Insurance/Retirement Plan and $1,015 which, net of
tax, is reimbursement for insurance premiums paid under such latter plan;
the 1993 amount in the column represents Company contributions of $4,872
under the Retirement Savings Plan, $25,016 accrued under the Supplemental
Insurance/Retirement Plan and $930 which, net of tax, is reimbursement for
insurance premiums paid under such latter plan; the 1992 amount in the
Column represents Company contributions of $4,325 under the Retirement
Savings Plan, $11,334 accrued under the Supplemental Insurance/Retirement
Plan and $671 which, net of tax, is reimbursement for insurance premiums
paid under such latter plan.
CERTAIN COMPENSATION ARRANGEMENTS
The Company has an agreement with Mr. Longfield which provides for benefits
upon any termination of employment within three years after a change of control
(defined to include the acquisition by a person or a group of 20% or more of the
voting power of the Company's stock or a change in the members of the Board of
Directors such that the continuing directors cease to constitute a majority of
the Board of Directors during a two-year period). This agreement expires three
years after any change of control, but under certain circumstances may be
terminated by the Board of Directors prior to any change of control and will
expire immediately upon the earlier of the officer's death, permanent disability
or termination of employment for cause. Benefits include (i) severance pay of
three times the sum of the officer's highest base salary and his average annual
bonus during the three years prior to severance and (ii) continued participation
in the Company's benefit plans for one year (or, if such participation is not
possible, provision for substantially similar benefits). The Company has similar
agreements with Mr. Smith, Mr. Bopp and five other executive officers. In
addition, the Company has entered into a Supplemental Executive Retirement
Agreement with Mr. Longfield which provides for additional benefits each year
for a period of fifteen years to Mr. Longfield equal to (i) 50% of his salary
and bonus averaged over the five completed calendar years which provide the
highest average of all the completed calendar years ending before the time Mr.
Longfield becomes entitled to benefits under such agreement minus (ii) the sum
of benefits which Mr. Longfield receives under the Company's qualified and
non-qualified pension plans in the applicable year. Benefits under this plan
commence upon death, disability, termination other than by reason of discharge
for cause, voluntary retirement on or after age 62 or voluntary retirement
within two years after a change of control. Change of control for this purpose
is defined in substantially the same manner as described above.
The Company provides supplemental annuities to certain officers, including
the Named Executive Officers, and other key employees for a fifteen-year period
commencing on retirement pursuant to the Supplemental Insurance/Retirement Plan
or, with respect to officers, following a termination of employment within two
years after a change of control. Change of control for this purpose is defined
in substantially the same manner as in the agreements with Mr. Longfield.
9
<PAGE> 13
The Company's 1993 Long Term Incentive Plan provides that the Compensation
Committee may grant limited stock appreciation rights entitling the holder
thereof to surrender to the Company, under certain circumstances, such rights in
exchange for cash as described below. A limited stock appreciation right can
only be exercised within the sixty-day period commencing upon the date of the
first public disclosure of a change of control. Change of control for this
purpose is defined in substantially the same manner as in the agreements with
Mr. Longfield. Limited stock appreciation rights are exercisable whether or not
the holder thereof is then employed by the Company. Upon exercise of a limited
stock appreciation right, the holder thereof shall be entitled to receive an
amount in cash equal to the greater of (i) the fair market value of the shares
of the Common Stock of the Company with respect to which the limited stock
appreciation right was exercised over the option price of such shares and (ii)
if the change of control is the result of a transaction or a series of
transactions, the highest price per share of Common Stock of the Company paid in
such transaction or transactions during the sixty-day period up to the date of
exercise over the option price of such shares. There are also limited stock
appreciation rights outstanding under the Company's 1989 Employee Stock
Appreciation Rights Plan, as amended.
Stock options granted under the Company's prior stock option plans, and
stock options, stock appreciation rights and restricted stock granted under the
Company's 1993 Long Term Incentive Plan and performance units (representing the
right to future cash payments based on the per share net book value of the
Company's Common Stock) granted under the Company's Long Term Performance
Incentive Plan vest immediately upon the occurrence of a change of control
(defined in substantially the same manner as in the agreements with Mr.
Longfield).
COMPENSATION OF OUTSIDE DIRECTORS
Fees and Deferred Compensation
Non-employee directors receive a $22,000 annual retainer plus $1,100 per
Board meeting attended and an additional $1,100 per committee meeting attended,
except for committee chairpersons who receive a committee meeting fee of $2,200
for each committee meeting chaired. All or a portion of such fees may be
deferred at the election of the director, and any amount so deferred is valued
at the election of the director either (i) as if invested in an interest-bearing
account or (ii) as if invested in units which are valued as if invested in
Common Stock of the Company. Deferred fees are payable in cash, in installments
or as a lump sum upon termination of services as a director. Directors who are
also employees do not receive any such fees.
1988 Directors Stock Award Plan, as Amended
Under the 1988 Directors Stock Award Plan, as amended (the "1988 Plan"),
directors who are not employees of the Company are awarded additional
compensation in the form of shares of Common Stock of the Company and options to
purchase shares of Common Stock of the Company.
In October of the year in which a non-employee director is elected to the
Board of Directors, such non-employee director is granted the right to receive
200 shares of Common Stock of the Company during each year of the director's
term. However, such director is not entitled to any such installment of shares
in the event that for any reason such director is not a non-employee director on
the date on which an installment of shares of Common Stock would otherwise be
transferable under the 1988 Plan. The 1988 Plan provides that no shares of
Common Stock awarded to a non-employee director under the 1988 Plan may be
disposed of for any purpose until the expiration of two years from the date of
the transfer of such shares to the non-employee director; however, such transfer
restriction ceases to apply upon the death or permanent disability of the non-
employee director.
In July of each year, each non-employee director is granted an option to
purchase 600 shares of Common Stock of the Company. Such options have a ten-year
term and become exercisable with respect to 200 shares of Common Stock of the
Company subject thereto on each of the first three anniversaries following the
date of grant. The purchase price per share of Common Stock of the Company
purchased under an option granted pursuant to the 1988 Plan shall not be less
than the mean between the high and low sale price, regular way, on the New York
Stock Exchange-Composite Tape on the date the option was granted.
10
<PAGE> 14
If a non-employee director shall, by reason other than death or retirement,
cease to be a member of the Board of Directors of the Company while holding an
outstanding option, such non-employee director shall be permitted to exercise
such option within sixty days from the day he or she ceased to be a member of
the Board of Directors; but in no event later than the expiration date of the
option, with respect to all or any part of the entire balance of shares of
Common Stock of the Company to the extent exercisable by such non-employee
director at the time he or she ceased to be a member of the Board of Directors.
If a non-employee director shall die after the date he or she ceases to be a
member of the Board of Directors of the Company while holding an outstanding
option, such option shall be exercisable to the extent, and during the period,
that such option would, but for his or her death, have otherwise been
exercisable by such non-employee director. If a non-employee director shall
cease to be a member of the Board of Directors of the Company by reason of
retirement while holding an outstanding option, such non-employee director shall
be permitted to exercise such option within three years from the last day of the
month in which he or she retired; but in no event later than the expiration date
of the option, with respect to all or any part of the entire balance of shares
of Common Stock of the Company to the extent exercisable by such non-employee
Director at the time he or she retired. If a non-employee director shall die
while holding an outstanding option, and at the time of death, such option was
then exercisable with respect to less than 100% of the shares subject thereto,
the number of shares with respect to which such option shall be exercisable
shall be increased to 100% of the total number of shares subject thereto. The
period during which such option shall be exercisable shall commence on the date
of death and end on the first anniversary of the month in which the date of
death occurred, but in no event shall the period extend beyond the expiration
date of the option.
Retirement Plan for Outside Directors
The Company maintains a retirement income plan for non-employee directors
who have served on the Board of Directors for at least five years. Upon
retirement, such directors will receive annual payments equal to an amount
composed of the annual retainer together with an amount based upon the annual
meeting fees in effect at the time of retirement. Such payments will be made for
that number of years equal to the number of full or partial years of service on
the Board. In the event of the retired director's death, his or her surviving
spouse shall receive the same benefits that such director would have received
had he or she survived.
Related Transactions
Regina Herzlinger, a member of the Company's Board of Directors, serves on
the Board of Directors of Belmont Instrument Corp. In 1994 the Cardiopulmonary
Division of the Company purchased from Belmont Instrument Corp. approximately
$2,813,000 of a product originally developed by Belmont Instrument Corp. and
licensed to the Company. Professor Herzlinger's husband, George, is the
President and a director of the corporation, and the Herzlingers are its
majority shareholders. The Company's business relationship with Belmont
Instrument Corp. predates and is independent of Professor Herzlinger's election
to the Company's Board of Directors, and pursuant to existing Company policies,
the subsequent execution of a contract with this corporation did not require
submission to the Company's Board of Directors for approval. The Company
believes that the transactions with Belmont Instrument Corp. were on terms no
less favorable than if the transactions were with an unaffiliated party.
11
<PAGE> 15
OPTION GRANTS IN LAST FISCAL YEAR
The table below sets forth information concerning options granted to the
Named Executive Officers during the last fiscal year.
<TABLE>
<CAPTION> GRANT
INDIVIDUAL GRANTS DATE VALUE(1)
------------------------------------------------------ -------------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS
OPTIONS GRANTED TO EXERCISE OR GRANT DATE
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME (#)(2) FISCAL YEAR ($/SHARE) DATE VALUE($)
---- ----------- ------------ ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
William H. Longfield........ 89,352 13.1 22.5625 July 13, 2004 833,654
President and
Chief Executive Officer
Benson F. Smith............. 34,128 5.0 22.5625 July 13, 2004 318,414
Executive Vice President
and Chief Operating Officer
William T. Tumber........... 13,756 2.0 22.5625 July 13, 2004 128,343
Group Vice President
Richard J. Thomas........... 12,508 1.8 22.5625 July 13, 2004 116,699
Group Vice President
William C. Bopp............. 15,264 2.2 22.5625 July 13, 2004 142,413
Senior Vice President and
Chief Financial Officer
</TABLE>
- ---------------
(1) Grant date values are based on the Black-Scholes option pricing model
adapted for use in valuing executive stock options. The actual value, if
any, an executive may realize will depend on the excess of the stock price
over the exercising price on the date the option is exercised, so that there
is no assurance the value realized by an executive will be at or near the
value estimated by the Black-Scholes model. The grant date values were
determined based in part upon the following assumptions: (a) an expected
volatility of .31224 based on daily stock prices of the Company's Common
Stock for the one-year period prior to the grant date, (b) a risk-free rate
of return of 7.30%, (c) the Company's Common Stock five-year dividend yield
of 2.48% and (d) a ten-year period from time of grant until exercise.
(2) Grants consist of stock options with attached limited stock appreciation
rights which are exercisable in the event of a change of control. See
"Certain Compensation Arrangements" above for a description of the material
features of the limited stock appreciation rights. Options become
exercisable in four annual installments commencing one year after the date
of grant and are exercisable at a price equal to the market price on the
date of grant.
12
<PAGE> 16
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR, AND FISCAL YEAR-END OPTION
VALUES
The table below sets forth information concerning exercises of stock
options by the Named Executive Officers during the last fiscal year and the
fiscal year-end value of the Named Executive Officers' unexercised options.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FY-END(#)(1) FY-END($)(1)
SHARES VALUE --------------- ---------------
ACQUIRED ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) ($) UNEXERCISABLE UNEXERCISABLE(2)
---- ------------ -------- --------------- ---------------
<S> <C> <C> <C> <C>
William H. Longfield................. -0- -0- 90,350/133,702 468,888/416,141
President and
Chief Executive Officer
Benson F. Smith...................... 8,000 147,500 42,176/52,228 298,502/160,452
Executive Vice President and
Chief Operating Officer
William T. Tumber.................... -0- -0- 28,636/30,756 152,760/69,511
Group Vice President
Richard J. Thomas.................... 5,400 66,488 19,950/29,458 49,656/63,967
Group Vice President
William C. Bopp...................... 5,875 81,664 23,025/27,414 98,655/74,568
Senior Vice President and
Chief Financial Officer
</TABLE>
- ---------------
(1) These options were granted over a period of years.
(2) Rounded value at $27.00 per share market price.
13
<PAGE> 17
PENSION TABLE
The table below sets forth the aggregate estimated annual retirement
benefits payable under the Company's Employees' Retirement Plan, Excess Benefit
Plan and Supplemental Executive Retirement Plan for employees retiring at normal
retirement age (65) in 1994.
<TABLE>
<CAPTION>
FIVE YEAR AVERAGE YEARS OF PARTICIPATION
- ------------------------- --------------------------------------------------------------------------
COMPENSATION 10 15 20 25 30 35 40
- ------------------------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 50,000............... $ 7,000 $ 10,500 $ 14,000 $ 17,500 $ 21,000 $ 24,500 $ 28,000
100,000............... 14,500 22,000 29,000 36,500 43,500 51,000 58,000
150,000............... 22,000 33,000 44,000 55,000 66,000 77,000 88,000
200,000............... 29,500 44,500 59,500 74,000 88,500 103,500 118,000
250,000............... 37,000 55,500 74,000 92,500 111,000 129,500 148,000
300,000............... 44,500 67,000 89,000 111,500 133,500 156,000 178,000
400,000............... 59,500 89,500 119,000 149,000 178,500 208,500 238,000
500,000............... 74,500 112,000 149,000 186,500 223,500 261,000 298,000
600,000............... 89,500 134,500 179,000 224,000 268,500 313,500 358,000
700,000............... 104,500 157,000 209,000 261,500 313,500 366,000 418,000
800,000............... 119,500 179,500 239,000 299,000 358,500 418,500 478,000
900,000............... 134,500 202,000 269,000 336,500 403,500 471,000 538,000
1,000,000............... 149,500 224,500 299,000 374,000 448,500 523,500 598,000
</TABLE>
Under the Company's Employees' Retirement Plan, Excess Benefit Plan and
Supplemental Executive Retirement Plan, benefits are determined on the basis of
an employee's pensionable earnings, which include regular salary, commissions,
bonuses, overtime pay and shift differentials. Annual bonus amounts reflected in
the Summary Compensation Table relate to the year in which such bonuses were
accrued and are not included in the calculation of annual compensation for
purposes of the Company's Employees' Retirement Plan, Excess Benefit Plan and
Supplemental Executive Retirement Plan until the succeeding year.
The estimated credited full years of service for Messrs. Longfield, Smith,
Tumber, Thomas and Bopp are 5, 14, 14, 9 and 13, respectively. The estimated
annual retirement benefits payable are based on employer contributions on a
lifetime annuity basis to persons whose highest average compensation over a
period of five consecutive years of service are in the indicated
classifications. The benefits listed in the table are not subject to deductions
for Social Security or any other offset amounts.
Under the Supplemental Executive Retirement Agreement between the Company
and Mr. Longfield described above under "Certain Compensation Arrangements," if
Mr. Longfield were to retire at age 62, his estimated annual benefit at such
time would be approximately $120,000 annually more than the estimated value of
the Company's qualified and non-qualified pension plans available to Mr.
Longfield at such age.
14
<PAGE> 18
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURNS
The graph below compares the cumulative total shareholder return on the
Company's Common Stock for the last five years with the cumulative total return
on the S&P 500 Index and the S&P Medical Products & Supplies Index over the same
period. The graph assumes the investment of $100 in each of the Company's Common
Stock, the S&P 500 Index and the S&P Medical Products & Supplies Index on
December 31, 1989 and that all dividends were reinvested.
<TABLE>
<CAPTION>
S&P Medical
Measurement Period C.R. Bard, Products &
(Fiscal Year Covered) Inc. S&P 500 Index Supplies Index
<S> <C> <C> <C>
1989 100 100 100
1990 80 95 117
1991 144 127 189
1992 158 137 166
1993 125 150 130
1994 137 152 148
</TABLE>
PROPOSAL NO. 2 -- RATIFICATION OF THE APPOINTMENT OF
ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Arthur Andersen LLP to audit the
accounts of the Company for the fiscal year ending December 31, 1995. Since
their report will be addressed to the shareholders as well as the Board of
Directors, the holders of Common Stock are asked to ratify this selection. The
Company has been advised that a representative of Arthur Andersen LLP will be
present at the Annual Meeting of Shareholders with the opportunity to make a
statement if the representative desires to do so. It is expected that the
representative will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL NO. 2.
15
<PAGE> 19
PROPOSAL NO. 3 -- SHAREHOLDER PROPOSAL
RELATING TO ANNUAL ELECTION OF DIRECTORS
A shareholder of the Company has advised the Company that he will submit
the resolution set forth below for action at the Annual Meeting of Shareholders.
The name and address of the proponent and the number of shares of the Company's
Common Stock held by the proponent will be furnished by the Company to any
person, orally or in writing as requested, promptly upon the receipt of any oral
or written request. The Board of Directors has concluded that it cannot support
this proposal for the reasons stated in the Board of Directors' statement below.
RESOLVED, that the stockholders of the Company request that the Board of
Directors take the necessary steps, in accordance with state law, to
declassify the Board of Directors so that all directors are elected
annually, such declassification to be effected in a manner that does not
affect the unexpired terms of directors previously elected.
The proponent's statement in support of the resolution is as follows:
The election of directors is the primary avenue for stockholders to
influence corporate governance policies and to hold management accountable
for its implementation of those policies. I believe that the classification
of the Board of Directors, which results in only a portion of the Board
being elected annually, is not in the best interests of the Company and its
stockholders.
The Board of Directors of the Company is divided into three classes
serving staggered three-year terms. I believe that the Company's classified
Board of Directors maintains the incumbency of the current Board and
therefore of current management, which in turn limits management's
accountability to stockholders.
The elimination of the Company's classified Board would require each
new director to stand for election annually and allow stockholders an
opportunity to register their views on the performance of the Board
collectively and each director individually. I believe this is one of the
best methods available to stockholders to insure that the Company will be
managed in a manner that is in the best interests of stockholders.
As a founding member of the Investors Rights Association of America I
believe that concerns expressed by companies with classified boards that
the annual election of all directors could leave companies without
experienced directors in the event that all incumbents are voted out by
stockholders, are unfounded. In my view, in the unlikely event that
stockholders vote to replace all directors, this decision would express
stockholder dissatisfaction with the incumbent directors and reflect the
need for change.
I URGE YOUR SUPPORT, VOTE FOR THIS RESOLUTION.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THE
SHAREHOLDER PROPOSAL
THE BOARD OF DIRECTORS' STATEMENT AGAINST THE SHAREHOLDER PROPOSAL IS AS
FOLLOWS:
Under the Company's current system for electing directors, the Board of
Directors is divided into three classes, with the number of directors in each
class being as nearly equal as possible. Each director serves a three-year term,
and directors for one of the three classes are elected each year. This staggered
system of election is similar to procedures which have been adopted by the
shareholders of many major corporations, including more than half of all Fortune
500 companies.
The Board of Directors believes that the staggered system of election
facilitates continuity and stability of leadership and policy by assuring that
experienced personnel familiar with the Company and its business will be on the
Board of Directors at all times. The classified Board of Directors is also
intended to prevent precipitous changes in the composition of the Company's
Board of Directors and thereby serves to moderate those changes in the Company's
policies, business strategies and operations which the Board of Directors
16
<PAGE> 20
deems not to be in the best interest of the Company and its shareholders. The
Company's directors are fully accountable to serve the shareholders' interests
throughout their terms.
Board classification is also intended to encourage any person seeking to
acquire control of the Company to initiate such action through arm's-length
negotiations with management and the Board of Directors, who are in a position
to negotiate a transaction which is in the best interest of all shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THE
SHAREHOLDER PROPOSAL.
MISCELLANEOUS
The Company does not know of any business other than that described above
to be presented for action to the shareholders at the meeting, but it is
intended that the proxies will be exercised upon any other matters and proposals
that may legally come before the meeting and any adjournments thereof in
accordance with the discretion of the persons named therein.
The cost of this solicitation will be borne by the Company. It is
contemplated that proxies will be solicited through the use of the mails, but
officers and regular employees of the Company may solicit proxies personally or
by telephone or special letter. The Company has retained the firm of D.F. King &
Co., Inc. to assist in the solicitation of proxies and expects to pay such firm
a fee of approximately $10,000 plus out-of-pocket expenses. Although there is no
formal agreement to do so, the Company will reimburse banks, brokerage houses
and other custodians, nominees and fiduciaries for their reasonable expenses in
forwarding proxy material to their principals.
Under the federal securities laws, the Company's directors, officers and
ten percent shareholders are required to report to the Securities and Exchange
Commission and the New York Stock Exchange, by specific due dates, transactions
and holdings in the Company's Common Stock. Based solely on its review of the
copies of such forms received by it or written representations from certain
reporting persons that no annual corrective filings were required for those
persons, the Company believes that during fiscal 1994 all these filing
requirements were satisfied.
The Annual Report of the Company for 1994, including certified financial
statements, has been furnished to all persons who were shareholders of the
Company on the record date for the Annual Meeting of Shareholders.
PROPOSALS OF SECURITY HOLDERS
A proposal of a security holder intended to be presented at the next Annual
Meeting of Shareholders and to be included in the proxy statement must be
received at the Company's principal executive offices at 730 Central Avenue,
Murray Hill, New Jersey 07974 on or before November 11, 1995.
17
<PAGE> 21
P R O X Y
C. R. BARD, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints William C. Bopp and Richard A.
Flink, and each of them, his true and lawful attorneys and proxies, with power
of substitution, to represent the undersigned and to vote all of the shares of
stock of C. R. BARD, INC. that the undersigned is entitled to vote at the Annual
Meeting of Shareholders of C. R. BARD, INC. to be held at the Hamilton Park
Conference Center, 175 Park Avenue, Florham Park, New Jersey 07932 on Wednesday,
April 19, 1995 at 10:00 a.m. and at any adjournments thereof (a) as specified on
the items listed on the reverse hereof, and (b) in accordance with their
discretion on any other business which may properly come before said meeting.
ELECTION OF DIRECTORS: JOSEPH F. ABELY, JR., T. KEVIN DUNNIGAN, ROBERT P.
LUCIANO, ROBERT H. MCCAFFREY AND BENSON F. SMITH
- FOLD AND DETACH HERE -
<PAGE> 22
PLEASE MARK YOUR 1436
/X/ VOTES AS IN THIS
EXAMPLE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREON BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1 AND 2 AND AGAINST PROPOSAL 3.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
- --------------------------------------------------------------------------------
FOR WITHHELD
1. Election of / / / /
Directors
FOR AGAINST ABSTAIN
2. Ratification of / / / / / /
Independent Public
Accountants
For, except vote withheld from the following nominee(s):
- --------------------------------------------------------
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL 3.
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
3. Shareholder proposal / / / / / /
relating to annual
election of directors
PLEASE MARK THIS BOX IF YOU PLAN TO ATTEND THE MEETING / /
NOTE: This proxy must be signed exactly as name(s) appear(s) hereon. Executors,
administrators, trustees, guardians, attorneys and officers signing for
corporations should give full title. For joint accounts each owner should sign.
- -------------------------------------------------
- -------------------------------------------------
SIGNATURE(S) DATE
- FOLD AND DETACH HERE -
[BARD LOGO]
DIVIDEND REINVESTMENT PLAN
--------------------------
C. R. BARD, INC. OFFERS A DIVIDEND REINVESTMENT PLAN TOGETHER WITH A CASH
CONTRIBUTION FEATURE FOR ALL SHAREHOLDERS OF BARD COMMON STOCK.
PLAN HIGHLIGHTS
- THE PLAN PROVIDES A CONVENIENT AND ECONOMICAL WAY TO
INCREASE YOUR INVESTMENT IN BARD THROUGH THE PURCHASE OF
ADDITIONAL SHARES WITH ALL OR PART OF YOUR DIVIDENDS AND
ANY VOLUNTARY CASH PAYMENTS ($10 MINIMUM, $5,000 MAXIMUM,
PER MONTH) YOU WISH TO MAKE.
- ALL BROKERAGE COMMISSIONS AND COSTS FOR ADMINISTERING THE
PLAN CONNECTED WITH STOCK PURCHASES WILL BE PAID BY BARD.
FOR MORE INFORMATION ABOUT THE PLAN AND AN ENROLLMENT FORM, OR FOR QUESTIONS
CONCERNING YOUR ACCOUNT, PLEASE CONTACT:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
DIVIDEND REINVESTMENT PLAN
P.O. BOX 2598
JERSEY CITY, NJ 07303-2598
(800) 446-2617
BE SURE TO INCLUDE A REFERENCE TO C. R. BARD, INC. IN
YOUR CORRESPONDENCE.
<PAGE> 23
P R O X Y
C. R. BARD, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints William C. Bopp and Richard A.
Flink, and each of them, his true and lawful attorneys and proxies, with power
of substitution, to represent the undersigned and to vote all of the shares of
stock of C. R. BARD, INC. that the undersigned is entitled to vote at the Annual
Meeting of Shareholders of C. R. BARD, INC. to be held at the Hamilton Park
Conference Center, 175 Park Avenue, Florham Park, New Jersey 07932 on Wednesday,
April 19, 1995 at 10:00 a.m. and at any adjournments thereof (a) as specified on
the items listed on the reverse hereof, and (b) in accordance with their
discretion on any other business which may properly come before said meeting.
ELECTION OF DIRECTORS: JOSEPH F. ABELY, JR., T. KEVIN DUNNIGAN, ROBERT P.
LUCIANO, ROBERT H. MCCAFFREY AND BENSON F. SMITH
- FOLD AND DETACH HERE -
<PAGE> 24
PLEASE MARK YOUR 1436
/X/ VOTES AS IN THIS
EXAMPLE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREON BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1 AND 2 AND AGAINST PROPOSAL 3.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
- --------------------------------------------------------------------------------
FOR WITHHELD
1. Election of / / / /
Directors
2. Ratification of FOR AGAINST ABSTAIN
Independent Public / / / / / /
Accountants
For, except vote withheld from the following nominee(s):
- --------------------------------------------------------
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL 3.
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
3. Shareholder proposal / / / / / /
relating to annual
election of directors
PLEASE MARK THIS BOX IF YOU PLAN TO ATTEND THE MEETING / /
NOTE: This proxy must be signed exactly as name(s) appear(s) hereon. Executors,
administrators, trustees, guardians, attorneys and officers signing for
corporations should give full title. For joint accounts each owner should sign.
- --------------------------------------------------
- --------------------------------------------------
SIGNATURE(S) DATE
- FOLD AND DETACH HERE -
[BARD LOGO]
DEAR BARD EMPLOYEE,
JUST A SHORT NOTE OF THANKS FOR ALL YOUR HARD WORK AND DEDICATION WHICH IS
REFLECTED IN OUR 1994 ANNUAL REPORT.
THERE ARE MANY CHALLENGES FACING US IN HEALTH CARE. I KNOW THAT YOUR DRIVE AND
TEAM SPIRIT WILL PROPEL US TO THE TOP OF THE PERFORMANCE LIST. YOUR PAST AND
FUTURE EFFORTS ARE GREATLY APPRECIATED.
/s/ Bill
------------------------
WILLIAM H. LONGFIELD
