<PAGE>
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 Section 240.14a-11(c) or Section
240.14a-12
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/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
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>
[LOGO]
C. R. BARD, INC.
730 CENTRAL AVENUE
MURRAY HILL, NEW JERSEY 07974
March 7, 1997
Dear Shareholder:
Your Board of Directors joins me in extending an invitation to attend
the 1997 Annual Meeting of Shareholders which will be held on Wednesday,
April 16, 1997 at the Hamilton Park Conference Center, 175 Park Avenue,
Florham Park, New Jersey. 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,
[LOGO]
WILLIAM H. LONGFIELD
CHAIRMAN AND
CHIEF EXECUTIVE OFFICER
<PAGE>
C. R. BARD, INC.
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 16, 1997
------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of C. R.
Bard, Inc. will be held on Wednesday, April 16, 1997 at the Hamilton Park
Conference Center, 175 Park Avenue, Florham Park, New Jersey, at 10:00 a.m. for
the following purposes:
1. To elect four Class I directors for a term of three years and one Class
II director for a term of one year;
2. To ratify the appointment of Arthur Andersen LLP as independent public
accountants for the year 1997; and
3. 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 24, 1997
are entitled to notice of and to vote at the meeting.
A copy of the Annual Report of C. R. Bard, Inc. for 1996 is enclosed with
this Notice, the attached Proxy Statement and the 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 7, 1997
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>
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 7, 1997 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, 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 Proposal No. 2 requires the
affirmative vote of a majority of the votes cast.
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 Proposal
No. 2.
On February 24, 1997, 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 57,008,260 shares of Common Stock. Each
share is entitled to one vote.
PROPOSAL NO. 1--ELECTION OF DIRECTORS
There are currently thirteen members of the Board of Directors, divided into
three classes. Class I consists of five directors whose terms expire in 1997.
Messrs. Butler, Carey and Cronin were elected to serve three-year terms in 1994.
Mr. Bopp was elected to serve a one-year term in 1996 and Mr. Breslawsky was
appointed by the Board of Directors on June 12, 1996. Mr. Carey is retiring as
of the 1997 Annual Meeting and Messrs. Bopp, Butler, Breslawsky and Cronin are
standing for election by shareholders at this time. Class II consists of five
directors whose terms expire in 1998. Messrs. Abely, Luciano, McCaffrey and
Smith were elected to serve three-year terms in 1995. Mr. McCaffrey is retiring
as of the 1997 Annual Meeting. Mr. White was appointed by the Board of Directors
on July 10, 1996 and is standing for election by shareholders at this time.
Class III consists of three directors whose terms expire in 1999. Upon election
by shareholders, 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 I directors
are nominated for re-election. One additional person, who is designated as a
nominee for election as a Class I director, and one additional person, who is
designated as a nominee for election as a Class II 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>
Set forth below are the names, principal occupations and ages of the five
nominees for election as directors, the current directors with unexpired terms
and the directors retiring as of the annual meeting, 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 I DIRECTORS
<TABLE>
<S> <C>
William C. Bopp................. Executive Vice President and Chief Financial Officer since
October 1995, having been Senior Vice President and Chief
Financial Officer since 1992 and Vice President and
Treasurer since 1988; age 53. Mr. Bopp has been a Director
since July 1995 and is a member of the Finance Committee.
William T. Butler, M.D.......... Chancellor of Baylor College of Medicine since January
1996, having been President and Chief Executive Officer
since 1979; age 64. Dr. Butler has been a Director since
1988 and is a member of the Compensation Committee;
Regulatory Compliance Committee; and Governance Committee.
He is a member of the Institute of Medicine of the
National Academy of Sciences. He is also a director of
Browning-Ferris Industries Inc. and Lyondell Petrochemical
Company.
Daniel A. Cronin, Jr............ President, Northbridge Management Company (investment
management); age 68. 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.
NOMINEE FOR ELECTION AS A CLASS I DIRECTOR
Marc C. Breslawsky.............. President and Chief Operating Officer of Pitney Bowes Inc.
(systems to manage the exchange and distribution of
information and packages) since May 1996, having been Vice
Chairman since October 1994 and President, Pitney Bowes
Office Systems from 1990 to 1994; age 54. Mr. Breslawsky
has been a director since June 1996 and is a member of the
Audit Committee; Finance Committee; and Regulatory
Compliance Committee. He is also a director of Pitney
Bowes Inc., The United Illuminating Company and Pitney
Bowes Credit Corp.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
NOMINEE FOR ELECTION AS A CLASS II DIRECTOR
<S> <C>
Tony L. White................... Chairman, President and Chief Executive Officer of The
Perkin-Elmer Corporation (life science systems and
analytical instruments) since September 1995, having been
Executive Vice President, Baxter International Inc. from
November 1993 to September 1995 and Executive Vice
President, Global Business, Baxter International Inc. from
March 1992 to November 1993; age 50. Mr. White has been a
Director since July 1996 and is a member of the Audit
Committee; Compensation Committee; and Regulatory
Compliance Committee. He is also a director of
Ingersoll-Rand Company.
<CAPTION>
OTHER DIRECTORS OF THE COMPANY
CLASS II DIRECTORS (TERMS EXPIRE 1998)
<S> <C>
Joseph F. Abely, Jr. ........... Retired Chairman and Chief Executive Officer of Sea-Land
Corporation (international intermodal freight
transportation and related trade services) since 1987,
having been, prior thereto, Vice Chairman of the Board and
a director of RJR Nabisco, Inc. (international consumer
products); age 68. 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 The Perkin-Elmer
Corporation and Burlington Industries, Inc.
Robert P. Luciano............... Chairman of the Board of Schering-Plough Corporation
(pharmaceuticals and consumer products) since January
1996, having been Chairman and Chief Executive Officer
since January 1986; age 63. Mr. Luciano has been a
Director since 1981 and is a member of the Executive
Committee; Compensation Committee; and Governance
Committee. He is also a director of AlliedSignal Inc. and
Merrill Lynch & Co., Inc.
Benson F. Smith................. President and Chief Operating Officer since October 1995,
having been Executive Vice President and Chief Operating
Officer from July 1994 to October 1995, Executive Vice
President-Operations from December 1993 to July 1994 and,
prior thereto, Group Vice President from September 1991 to
December 1993; age 49. Mr. Smith has been a Director since
July 1994 and is a member of the Finance Committee.
<CAPTION>
CLASS III DIRECTORS (TERMS EXPIRE 1999)
<S> <C>
T. Kevin Dunnigan............... Chairman and Chief Executive Officer of Thomas & Betts
Corporation (electrical/electronic components, connectors
and accessories) since 1992, having been Chief Executive
Officer since 1985 and President from 1980 to 1994; age
59. 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>
3
<PAGE>
<TABLE>
<S> <C>
Regina E. Herzlinger............ Nancy R. McPherson Professor of Business Administration,
Harvard Business School since 1971; age 53. Professor
Herzlinger has been a Director since 1991 and is a member
of the Audit Committee; Finance Committee; and Regulatory
Compliance Committee. She is also a director of Deere &
Company, Manor Care, Inc., Cardinal Health 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............ Chairman and Chief Executive Officer since September 1995,
having been President and Chief Executive Officer since
June 1994 and President and Chief Operating Officer from
September 1991 to June 1994. In addition, from October
1993 to September 1995, Mr. Longfield had 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 58. Mr. Longfield has been a Director since
1990 and is a member of the Executive Committee and
Governance Committee. He is also a director of Manor Care,
Inc., United Dental Care, The West Company and Horizon
Mental Health Management, Inc.
</TABLE>
DIRECTORS RETIRING AS OF THE 1997 ANNUAL MEETING
The Company wishes to acknowledge with gratitude the many years of service
by the following Directors who will retire as of the 1997 Annual Meeting:
<TABLE>
<S> <C>
Raymond B. Carey, Jr. .......... Retired Chairman and Chief Executive Officer of ADT, Inc.
(electronic protection systems) since 1988; age 70. Mr.
Carey has been a Director since 1991 and has served as a
member of the Audit Committee; Regulatory Compliance
Committee; and Finance Committee. He is also a director of
Thomas & Betts Corporation.
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 70. Mr. McCaffrey has been a Director
since 1976 and has served as a member of the Executive
Committee; Finance Committee; and Governance Committee. He
is also a director of KLM Communications, Inc.
</TABLE>
4
<PAGE>
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The table below indicates all persons who management knows as of the record
date to beneficially own more than 5% of the Company's outstanding Common Stock:
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK
BENEFICIALLY PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED OF CLASS
- -------------------------------------------------------------------------------------- ---------------- -----------
<S> <C> <C>
Wellington Management Company, LLP(1)................................................. 5,695,400(2) 9.98
75 State Street
Boston, Massachusetts 02109
Swiss Bank Corporation(3)............................................................. 3,415,757(4) 6.0
Aeschenplatz 6 CH-4002
Basel, Switzerland
</TABLE>
- ------------------------
(1) Based upon a Schedule 13G, dated January 24, 1997.
(2) Denotes shared dispositive power with respect to 5,695,400 of such shares,
shared voting power with respect to 1,557,800 of such shares and sole
dispositive power and sole voting power with respect to none of such shares.
(3) Based upon a Schedule 13G, dated February 12, 1997. SBC Holding (USA), Inc.
("SBCUSA"), located at 222 Broadway, New York, New York, is a wholly-owned
subsidiary of Swiss Bank Corporation ("SBC"), a holding company. Brinson
Holdings, Inc. ("BHI"), located at 209 South LaSalle, Chicago, Illinois, is
a wholly-owned subsidiary of SBCUSA. Brinson Partners, Inc. ("BPI"), located
at 209 South LaSalle, Chicago, Illinois, is a wholly-owned subsidiary of
BHI. By virtue of these corporate relationships, SBC, SBCUSA, BHI and BPI
may be deemed to beneficially own and have the power to dispose and vote or
direct the disposition or voting of all such shares which are held by BPI or
its wholly-owned subsidiary, Brinson Trust Company.
(4) Denotes shared dispositive power and shared voting power with respect to all
shares indicated.
5
<PAGE>
SECURITIES OWNERSHIP OF MANAGEMENT
The table below contains information as of February 24, 1997 with respect to
the beneficial ownership of Common Stock of the Company by each director of the
Company and the Company's Chief Executive Officer and four other 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 (24 people)
own beneficially 1.2% of the outstanding stock. Unless otherwise noted in the
footnotes 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
------------------------------------
<S> <C> <C>
RIGHT TO ACQUIRE
WITHIN 60 DAYS
OF
HELD AS OF FEBRUARY 24,
FEBRUARY 24, 1997
NAME 1997(1) UNDER OPTIONS
- ----------------------------------------------------------------------- ------------------ ----------------
Joseph F. Abely, Jr.................................................... 3,800 1,800
William C. Bopp........................................................ 24,031 40,197
Marc C. Breslawsky..................................................... 200 -0-
William T. Butler, M.D................................................. 6,100 1,800
Raymond B. Carey, Jr................................................... 3,800 1,800
Daniel A. Cronin, Jr................................................... 15,200 1,800
T. Kevin Dunnigan...................................................... 1,400 200
Regina E. Herzlinger................................................... 1,700 1,800
William H. Longfield................................................... 52,219 188,081
Robert P. Luciano...................................................... 5,800 1,800
Robert H. McCaffrey(2)................................................. 362,453 1,800
Timothy M. Ring........................................................ 7,475 21,200
Benson F. Smith........................................................ 42,436 74,255
William T. Tumber...................................................... 19,958 23,391
Tony L. White.......................................................... 200 -0-
All Directors and Executive Officers as a group (24 people)............ 655,142 481,948
</TABLE>
- ------------------------
(1) Excludes phantom stock shares credited to the accounts of non-employee
directors under the Deferred Compensation Agreement for Non-Employee
Directors, as follows: Marc C. Breslawsky, 934; T. Kevin Dunnigan, 2,721;
Regina E. Herzlinger, 5,750; Tony L. White, 807. See "Compensation of
Outside Directors--Fees and Deferred Compensation." Excludes 29,553 share
equivalent units credited to the accounts of non-employee directors under
the Stock Equivalent Plan for Outside Directors. See "Compensation of
Outside Directors--Stock Equivalent Plan for Outside Directors."
(2) Includes 10,970 shares owned by his wife as to which he disclaims beneficial
ownership. Includes 19,000 shares held by a trust for his child. Includes
13,325 shares owned by a foundation of which he is President. Includes
151,999 shares owned by two foundations of which he is a co-trustee and as
to all of which investment or voting power is shared.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 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 1996 all these filing requirements were
timely satisfied.
6
<PAGE>
BOARD MEETINGS AND COMMITTEES
The Board of Directors met seven times in 1996. No director of the Company
attended fewer than 85% 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 and a Governance Committee.
The Audit Committee, currently composed of Directors Breslawsky, Carey,
Cronin, Dunnigan, Herzlinger and White, met two times during 1996. 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 control structure, (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,
Luciano and White, met three times during 1996. The principal functions of the
Compensation Committee are to review and report to the Board of Directors on all
matters involving compensation of employees and management and to administer the
Company's 1994 Executive Bonus Plan and 1993 Long Term Incentive Plan, as
amended and restated.
The Governance Committee, currently composed of Directors Butler, Longfield,
Luciano and McCaffrey, met four times during 1996. The principal functions of
the Governance Committee are to advise and make 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.
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 Products and
Supplies Index in the Comparison of Five Year Cumulative Total Returns below, as
the Company believes that reference to the S&P Medical
7
<PAGE>
Products and Supplies 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.
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.
The Compensation Committee considers the recommendation of the Chairman and
Chief Executive Officer in approving the base salaries of Messrs. Smith, Bopp,
Ring, Tumber 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.
Each year, the Compensation Committee establishes 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 1996 were determined by reference to the degree to
which the Company's earnings per share target for 1996 was achieved and, with
respect to Group Vice Presidents, including Messrs. Ring and Tumber, with equal
weight by reference to the degree to which the net income target established for
their respective groups was achieved. In 1996, 93% of the Company's earnings per
share target (exclusive of items of an unusual and/or non-recurring nature) was
achieved and 90.7% and 56.2% of the net income targets for the respective groups
of Messrs. Ring and Tumber were achieved. In awarding bonuses to the Named
8
<PAGE>
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 1996 were determined by reference to the degree to which the
Company's earnings per share target for 1996 was achieved and the degree to
which individual strategic and operational initiatives for 1996 were achieved.
The Chairman and 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 1996 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.
STOCK OPTIONS
Under the Company's 1993 Long Term Incentive Plan, as amended and restated,
in 1996 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, as amended and restated, in 1996
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 $1,000,000
paid to the Chief Executive Officer and the four other most highly compensated
executive officers for 1994 and thereafter. Qualifying performance-based
compensation is not subject to the deduction limit if certain requirements are
met. The Company's 1994 Executive Bonus Plan and 1993 Long Term Incentive Plan,
as amended and restated, have been structured
9
<PAGE>
such that annual incentive bonuses and long-term equity-based compensation paid
thereunder for the Company's most senior executives should constitute qualifying
performance-based compensation under Section 162(m). The Company's shareholders
have approved both such plans. However, the Compensation Committee recognizes
that unanticipated future events, such as a change of control of the Company or
a change in executive personnel, could result in a disallowance of compensation
deductions under Section 162(m). Moreover, the Compensation Committee may from
time to time award compensation that is non-deductible under Section 162(m) when
in the exercise of the Compensation Committee's business judgment such award
would be in the best interest of the Company. The Compensation Committee
believes that all compensation reported in the Summary Compensation Table below
for 1996 should be deductible under the Internal Revenue Code.
THE COMPENSATION COMMITTEE
Robert P. Luciano, Chairman
Joseph F. Abely, Jr.
William T. Butler, M.D.
Tony L. White
10
<PAGE>
SUMMARY COMPENSATION TABLE
The table below sets forth information concerning compensation paid to the
Named Executive Officers during the last three fiscal years.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------------------------- -------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
AWARDS
------------------------ PAYOUTS
OTHER RESTRICTED SECURITIES -----------
ANNUAL STOCK UNDERLYING LTPIP
NAME AND SALARY BONUS COMPENSATION AWARDS OPTIONS PAYOUTS
PRINCIPAL POSITION YEAR ($) ($) ($)(1) ($)(2) (#)(3) ($)(4)
- ------------------------------------------ --------- --------- --------- --------------- ----------- ----------- -----------
William H. Longfield...................... 1996 625,000 287,500 18,018 263,812 67,048 34,426
Chairman and 1995 575,000 310,500 16,926 303,747 74,220 53,999
Chief Executive Officer 1994 525,000 315,000 15,834 302,563 89,352 46,137
Benson F. Smith........................... 1996 416,000 175,500 10,560 124,687 27,892 29,568
President and 1995 374,256 198,000 9,920 359,164 29,360 27,692
Chief Operating Officer 1994 317,500 192,500 9,280 119,130 34,128 23,660
William C. Bopp........................... 1996 254,000 97,400 4,950 51,516 11,612 12,250
Executive Vice President and Chief 1995 226,057 109,800 4,650 203,742 12,260 11,472
Financial Officer 1994 208,700 104,400 4,350 59,796 15,264 12,675
Timothy M. Ring........................... 1996 244,787 83,000 -0- 43,641 12,976 -0-
Group Vice President 1995 224,000 106,800 -0- 54,442 13,008 -0-
1994 201,458 95,600 -0- 49,637 14,296 -0-
William T. Tumber......................... 1996 274,275 44,800 8,580 47,906 11,856 27,456
Senior Vice President 1995 246,925 78,000 8,060 56,822 12,452 25,714
1994 235,125 87,500 7,540 47,607 13,756 21,970
<CAPTION>
<S> <C>
ALL OTHER
NAME AND COMPENSATION
PRINCIPAL POSITION ($)(5)
- ------------------------------------------ --------------
William H. Longfield...................... 206,864
Chairman and 193,826
Chief Executive Officer 171,270
Benson F. Smith........................... 37,877
President and 34,625
Chief Operating Officer 28,968
William C. Bopp........................... 53,077
Executive Vice President and Chief 47,742
Financial Officer 42,921
Timothy M. Ring........................... 13,530
Group Vice President 12,572
11,148
William T. Tumber......................... 31,027
Senior Vice President 76,749
73,038
</TABLE>
- ------------------------
(1) All of these amounts represent dividend equivalents paid under the Long Term
Performance Incentive Plan ("LTPIP"). No grants have been made under this
Plan since January 1, 1993.
(2) As of December 31, 1996: William H. Longfield held an aggregate of 37,750
shares of restricted stock with an aggregate value of $1,057,000; Benson F.
Smith held an aggregate of 23,560 shares of restricted stock with an
aggregate value of $659,680; William C. Bopp held an aggregate of 12,180
shares of restricted stock with an aggregate value of $341,040; Timothy M.
Ring held an aggregate of 6,380 shares of restricted stock with an aggregate
value of $176,640; and William T. Tumber held an aggregate of 7,690 shares
of restricted stock with an aggregate value of $215,320. 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 1996, 1995 and 1994 were derived by multiplying the
number of vested performance units by $10.56, $9.89 and $8.45, respectively,
the book values of a share of the Common Stock of the Company at December
31, 1996, December 31, 1995 and December 31, 1994, respectively. These
payouts are not made until the employee retires or otherwise leaves
employment with the Company. No grants have been made under this Plan since
January 1, 1993.
(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, Bopp, Ring and Tumber
would be $121,922, $35,953, $27,588, $8,164 and $32,288, respectively, in
1996, $111,158, $31,878, $24,554, $6,423 and $31,574, respectively, in 1995
and $96,732, $24,484, $22,001, $0 and $28,207, respectively, in 1994, as
opposed to the amounts shown in the column.
11
<PAGE>
For William H. Longfield, the 1996 amount in the column represents Company
contributions of $3,750 under the Retirement Savings Plan, $197,738 accrued
under the Supplemental Insurance/Retirement Plan and $5,376 which, net of
tax, is reimbursement for insurance premiums paid under such latter plan;
the 1995 amount in the column represents Company contributions of $3,750
under the Retirement Savings Plan, $185,680 accrued under the Supplemental
Insurance/Retirement Plan and $4,396 which, net of tax, is reimbursement for
insurance premiums paid under such latter plan; 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.
For Benson F. Smith, the 1996 amount in the column represents Company
contributions of $3,750 under the Retirement Savings Plan, $32,374 accrued
under the Supplemental Insurance/Retirement Plan and $1,753 which, net of
tax, is reimbursement for insurance premiums paid under such latter plan;
the 1995 amount in the column represents Company contributions of $3,750
under the Retirement Savings Plan, $29,424 accrued under the Supplemental
Insurance/Retirement Plan and $1,451 which, net of tax, is reimbursement for
insurance premiums paid under such latter plan; 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.
For William C. Bopp, the 1996 amount in the column represents Company
contributions of $3,750 under the Retirement Savings Plan, $47,904 accrued
under the Supplemental Insurance/Retirement Plan and $1,423 which, net of
tax, is reimbursement for insurance premiums paid under such latter plan;
the 1995 amount in the column represents Company contributions of $3,750
under the Retirement Savings Plan, $42,830 accrued under the Supplemental
Insurance/Retirement Plan and $1,162 which, net of tax, is reimbursement for
insurance premiums paid under such latter plan; 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.
For Timothy M. Ring, the 1996 amount in the column represents Company
contributions of $3,750 under the Retirement Savings Plan, $9,197 accrued
under the Supplemental Insurance/Retirement Plan and $583 which, net of tax,
is reimbursement for insurance premiums paid under such latter plan; the
1995 amount in the column represents Company contributions of $3,750 under
the Retirement Savings Plan, $8,327 accrued under the Supplemental
Insurance/Retirement Plan and $495 which, net of tax, is reimbursement for
insurance premiums paid under such latter plan; the 1994 amount in the
column represents Company contributions of $3,750 under the Retirement
Savings Plan, $6,961 accrued under the Supplemental Insurance/Retirement
Plan and $437 which, net of tax, is reimbursement for insurance premiums
paid under such latter plan.
For William T. Tumber, the 1996 amount in the column represents Company
contributions of $3,750 under the Retirement Savings Plan, $24,078 accrued
under the Supplemental Insurance/Retirement Plan and $3,199 which, net of
tax, is reimbursement for insurance premiums paid under such latter plan;
the 1995 amount in the column represents Company contributions of $3,750
under the Retirement Savings Plan, $70,210 accrued under the Supplemental
Insurance/Retirement Plan and $2,709 which, net of tax, is reimbursement for
insurance premiums paid under such latter plan; 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.
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 Mr. Longfield's death, permanent
disability or termination of employment for cause. Benefits include (i)
severance pay of three times the sum of Mr. Longfield'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 Messrs. Smith, Bopp, Ring, Tumber and
seven 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
generally 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) an amount equal to the annual payment that would
be made to Mr. Longfield if
12
<PAGE>
the sum of benefits to which Mr. Longfield is entitled under the Company's
qualified and non-qualified pension plans (as of the date benefits under the
agreement commence) were converted into an actuarially equivalent 15-year
installment payment of benefits. 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.
The Company's 1993 Long Term Incentive Plan, as amended and restated,
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.
Stock options granted under the Company's prior stock option plans; stock
options, stock appreciation rights and restricted stock granted under the
Company's 1993 Long Term Incentive Plan, as amended and restated; 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 $25,000 annual retainer plus $1,200 per
Board meeting attended and an additional $1,200 per committee meeting attended,
except for committee chairmen who receive a committee meeting fee of $2,400 for
each committee meeting chaired. Under the Deferred Compensation Agreement for
Non-Employee Directors, 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 such units were Common Stock of
the Company (phantom stock shares). 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 fees as Directors for
attendance at Board and committee meetings.
1988 DIRECTORS STOCK AWARD PLAN, AS AMENDED
Under the Company's 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.
13
<PAGE>
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 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.
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.
STOCK EQUIVALENT PLAN FOR OUTSIDE DIRECTORS
On December 11, 1996, the Board of Directors approved the Stock Equivalent
Plan for Outside Directors (the "Stock Equivalent Plan"), effective January 1,
1997, to replace a retirement income plan formerly maintained by the Company.
Pursuant to the Stock Equivalent Plan, on December 31 of each year, commencing
December 31, 1997, each non-employee director of the Company is credited with a
number of units equal to (i) the sum of (A) the annual retainer for non-employee
directors then in effect and (B) 12 times the per meeting fee for non-employee
directors then in effect, divided by (ii) the average of the high and low
selling prices of the Common Stock of the Company on the New York Stock Exchange
on such date. Upon termination of service as a non-employee director, a
participant in the Stock Equivalent Plan who shall have served on the Board of
Directors for at least five years shall become entitled to receive an amount in
cash equal to the product of (i) the number of units credited to such
14
<PAGE>
participant and (ii) the average of the closing prices of the Common Stock of
the Company on the New York Stock Exchange during the six-month period
immediately preceding such participant's termination of service, payable in
installments over that number of years equal to the number of full or partial
years of such participant's service on the Board of Directors. In the event of a
change of control of the Company (defined substantially the same as under
"Certain Compensation Arrangements" above), participants in the Stock Equivalent
Plan become entitled to receive benefits thereunder as described in the
preceding paragraph. In the event of a participant's death, his or her surviving
spouse shall receive the same benefits that such director would have received
had he or she survived.
The Company formerly maintained a retirement income plan for non-employee
directors who served on the Board of Directors for at least five years. Upon
retirement, such directors became entitled to 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 were made
for that number of years equal to the number of full or partial years of service
on the Board of Directors. In the event of the retired director's death, his or
her surviving spouse became entitled to receive the same benefits that such
director would have received had he or she survived. Currently-serving
non-employee directors of the Company entitled to benefits accumulated under the
retirement income plan elected either to have such benefits paid out upon
retirement as provided under the former retirement income plan or to convert
such benefits into share equivalent units under the Stock Equivalent Plan. The
Company continues to make payments under the retirement income plan for the
benefit of non-employee directors who retired prior to January 1, 1997 with at
least five years of service on the Board of Directors.
RELATED TRANSACTIONS
Regina Herzlinger, a member of the Company's Board of Directors, serves on
the Board of Directors of Belmont Instrument Corp. ("Belmont"). In 1996, the
Vascular Systems Division of the Company purchased from Belmont approximately
$3,553,000 of a product developed by Belmont and distributed by the Company.
Professor Herzlinger's husband, George, is the President and a director of
Belmont, and the Herzlingers are its majority shareholders. The Company's
business relationship with Belmont predates and is independent of Professor
Herzlinger's election to the Company's Board of Directors. The Company's Board
of Directors has determined that the contract between the Company and Belmont is
fair and reasonable and in the best interest of the Company's shareholders.
Professor Herzlinger excused herself from the meeting of the Board of Directors
while such matter was discussed and such determination made.
15
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The table below sets forth information concerning options granted to the
Named Executive Officers during the last fiscal year.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS GRANT DATE
NUMBER OF ----------------------------------------------- VALUE(1)
SECURITIES % OF TOTAL ----------------
UNDERLYING OPTIONS GRANTED EXERCISE OR GRANT DATE
OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION PRESENT VALUE
NAME GRANTED(#)(2) FISCAL YEAR ($/SHARE) DATE ($)
- ------------------------------------ ------------- ----------------- ----------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
William H. Longfield................ 67,048 9.6 32.8125 July 10, 2006 644,331
Chairman and
Chief Executive Officer
Benson F. Smith..................... 27,892 4.0 32.8125 July 10, 2006 268,042
President and
Chief Operating Officer
William C. Bopp..................... 11,612 1.7 32.8125 July 10, 2006 111,591
Executive Vice President and
Chief Financial Officer
Timothy M. Ring..................... 12,976 1.9 32.8125 July 10, 2006 124,699
Group Vice President
William T. Tumber................... 11,856 1.7 32.8125 July 10, 2006 113,936
Group Vice President
</TABLE>
- ------------------------
(1) The valuation calculations are solely for the purposes of compliance with
the rules and regulations promulgated under the Securities Exchange Act of
1934, as amended, and are not intended to forecast possible future
appreciation, if any, of the Company's stock price. 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 29.00% 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 6.67%; (c) the
Company's Common Stock five-year dividend yield of 2.00%; and (d) an
expected option life of 4.4 years.
(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.
16
<PAGE>
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- 188,081/177,239 853,850/255,238
Chairman and
Chief Executive Officer
Benson F. Smith.................................... 2,600 43,712 74,255/ 70,801 348,282/ 97,567
President and
Chief Operating Officer
William C. Bopp.................................... -0- -0- 43,597/ 30,714 179,318/ 44,343
Executive Vice President and
Chief Financial Officer
Timothy M. Ring.................................... -0- -0- 21,200/ 31,480 59,117/ 40,867
Group Vice President
William T. Tumber.................................. -0- -0- 23,391/ 31,673 58,367/ 41,899
Group Vice President
</TABLE>
- ------------------------
(1) These options were granted over a period of years.
(2) Rounded value at $28.00 per share market price.
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 1996.
<TABLE>
<CAPTION>
FIVE YEAR YEARS OF PARTICIPATION
AVERAGE ----------------------------------------------------------------------------------
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>
17
<PAGE>
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,
Bopp, Ring and Tumber are 7, 16, 15, 4 and 16, 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.
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, 1991 and that all dividends were reinvested.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
C.R. BARD, INC. S&P MEDICAL PRODUCTS & SUPPLIES INDEX S&P 500 INDEX
<S> <C> <C> <C>
1991 100 100 100
1992 110.06 85.68 107.62
1993 85.64 65.34 118.46
1994 93.68 77.48 120.03
1995 114.31 130.96 165.13
1996 101.3 150.3 203.05
</TABLE>
18
<PAGE>
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, 1997. 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.
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.
The Annual Report of the Company for 1996, 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 7, 1997.
19
<PAGE>
C.R. BARD, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
P
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
R 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
O Hamilton Park Conference Center, 175 Park Avenue, Florham Park, New Jersey,
on Wednesday, April 16, 1997 at 10:00 a.m. and at any adjournments thereof
(a) as specified on the items listed on the reverse hereof, and (b) in
X accordance with their discretion on any other business which may properly
come before said meeting.
Y ELECTION OF DIRECTORS, NOMINEES:
WILLIAM C. BOPP, MARC C. BRESLAWSKY, WILLIAM T. BUTLER, M.D.,
DANIEL A. CRONIN, JR. AND TONY L. WHITE
SEE REVERSE
SIDE
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
<TABLE>
/X/ PLEASE MARK YOUR 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.
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
- -------------------------------------------------------------------------------------------------------------------------
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of | | | | 2. Ratification of | | | | | |
Directors | | | | Independent | | | | | |
---- ---- Public Accountants ---- ---- ----
For, except vote withheld from the following nominee(s):
_________________________________________________________
- -------------------------------------------------------------------------------------------------------------------------
PLEASE MARK THIS BOX IF YOU PLAN TO
ATTEND THE MEETING / /
NOTE: THIS PROXY MUST BE SIGNED EXACTLY AS
NAME(S) APPEARS(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
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
FOLD AND DETACH HERE
[LOGO]
DEAR BARD EMPLOYEE,
THIS PAST YEAR WE FACED AN ENVIRONMENT THAT HAS BECOME INCREASINGLY MORE
COMPETITVE. I KNOW THAT EVERY EMPLOYEE HAS WORKED HARD TO MAKE A DIFFERENCE
AND HELP THE COMPANY BE SUCCESSFUL.
YOUR EFFORTS CONTINE TO BE THE MOST CRITICAL FACTOR IN OUR ABILITY TO ACHIEVE
OUR GOALS AND ARE GREATLY APPRECIATED.
/s/ Bill
WILLIAM H. LONGFIELD
<PAGE>
C.R. BARD, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
p
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
R 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
O Hamilton Park Conference Center, 175 Park Avenue, Florham Park, New Jersey,
on Wednesday, April 16, 1997 at 10:00 a.m. and at any adjournments thereof
(a) as specified on the items listed on the reverse hereof, and (b) in
X accordance with their discretion on any other business which may properly
come before said meeting.
Y ELECTION OF DIRECTORS, NOMINEES:
WILLIAM C. BOPP, MARC C. BRESLAWSKY, WILLIAM T. BUTLER, M.D.,
DANIEL A. CRONIN, JR. AND TONY L. WHITE
SEE REVERSE
SIDE
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
<TABLE>
/X/ PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREON HEREON BY THE UNDERSIGNED
SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2.
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
- -------------------------------------------------------------------------------------------------------------------------
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of | | | | 2. Ratification of | | | | | |
Directors | | | | Independent | | | | | |
---- ---- Public Accountants ---- ---- ----
For, except vote withheld from the following nominee(s):
_________________________________________________________
- -------------------------------------------------------------------------------------------------------------------------
PLEASE MARK THIS BOX IF YOU PLAN TO
ATTEND THE MEETING / /
NOTE: THIS PROXY MUST BE SIGNED EXACTLY AS
NAME(S) APPEARS(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
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
FOLD AND DETACH HERE
[LOGO]
SHAREHOLDER SERVICES
--------------------
DIRECTSERVICE PROGRAM FOR SHAREHOLDERS
--------------------------------------
UNDER THE DIRECTSERVICE PROGRAM, REGISTERED SHAREHOLDERS AND NON-SHAREHOLDERS
MAY PURCHASE BARD COMMON STOCK AT ANY TIME WITH A LOW FEE STRUCTURE COMPARED
WITH NORMAL BROKERAGE FEES. DIVIDENDS MAY BE REINVESTED IN BARD STOCK AT NO
COST TO THE SHAREHOLDER. THE PROGRAM IS A CONVENIENT AND ECONOMICAL WAY FOR
SHAREHOLDERS TO INITIATE AND INCREASE THEIR INVESTMENT IN BARD THROUGH THE
PURCHASE OF SHARES WITH VOLUNTARY CASH PAYMENTS AND ALL OR PART OF THEIR
DIVIDENDS. CASH PAYMENTS MAY BE MADE BY MAIL OR THROUGH AUTOMATIC MONTHLY
DEDUCTIONS FROM YOUR BANK ACCOUNT.
DIRECT DEPOSIT OF DIVIDENDS
---------------------------
SHAREHOLDERS RECEIVING A DIVIDEND CHECK MAY HAVE PAYMENTS DEPOSITED DIRECTLY
INTO THEIR CHECKING OR SAVINGS ACCOUNT AT ANY FINANCIAL INSTITUTION
PARTICIPATING IN THE ACH NETWORK. THROUGH AN ELECTRONIC FUNDS TRANSFER, YOUR
DIVIDEND CAN BE DEPOSITED ELECTRONICALLY ON THE DIVIDEND PAYMENT DATE.
THERE IS NO CHARGE TO SHAREHOLDERS FOR THIS SERVICE.
FOR DETAILS OR ENROLLMENT IN THE DIRECTSERVICE PROGRAM OR FOR DIRECT DEPOSIT
OF DIVIDENDS, SIMPLY CONTACT FIRST CHICAGO TRUST COMPANY OF NEW YORK, WHO
ADMINISTERS THESE PROGRAMS FOR BARD. THEIR ADDRESS AND CONVENIENT "800"
NUMBERS ARE SHOWN BELOW.
DIRECTSERVICE PROGRAM EXISTING SHAREHOLDERS: (800) 446-2617
FOR SHAREHOLDERS OF C.R. BARD, INC. NON-SHAREHOLDERS INQUIRING
C/O FIRST CHICAGO TRUST COMPANY OF ABOUT THE PROGRAM: (800) 828-1639
NEW YORK
P.O. BOX 2598
JERSEY CITY, NEW JERSEY 07303-2598 BE SURE TO INCLUDE A REFERENCE TO
C.R. BARD, INC.
