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 Section 240.14a-11(c) or Section 240.14a-2.
</TABLE>
C. R. BARD, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12.
(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:
------------------------------------------------------------------------
<PG$PCN>
[BARD LOGO]
C. R. BARD, INC.
730 CENTRAL AVENUE
MURRAY HILL, NEW JERSEY 07974
March 12, 1999
Dear Shareholder:
Your Board of Directors joins me in extending an invitation to attend the
1999 Annual Meeting of Shareholders which will be held on Wednesday, April 21,
1999 at the Hamilton Park Conference Center, 175 Park Avenue, Florham Park, New
Jersey. The meeting will start promptly at 10:00 a.m.
We sincerely hope you will be able to attend and participate in the
meeting. We will report on the Company's progress and respond to questions you
may have about the Company's business. There will also be important items to be
acted upon by shareholders.
Whether or not you plan to attend, it is important that your shares be
represented and voted at the meeting. This year, shareholders of record can vote
their shares by telephone. Instructions for using this new and convenient
service are set forth on the enclosed proxy card. You may also mark your vote on
the enclosed proxy card, sign and date it and mail it in the envelope provided.
Sincerely,
/s/ William H. Longfield
WILLIAM H. LONGFIELD
Chairman and
Chief Executive Officer
<PG$PCN>
C. R. BARD, INC.
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 21, 1999
---------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of C. R.
Bard, Inc. will be held on Wednesday, April 21, 1999 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 three Class III directors for a term of three years and one
Class II director for a term of two years;
2. To approve an amendment to, and reapprove certain provisions of, the
1993 Long Term Incentive Plan of C. R. Bard, Inc.;
3. To reapprove certain provisions of the 1994 Executive Bonus Plan of C.
R. Bard, Inc.;
4. To ratify the appointment of Arthur Andersen LLP as independent public
accountants for the year 1999; and
5. 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 March 1, 1999 are
entitled to notice of and to vote at the meeting.
A copy of the Annual Report of C. R. Bard, Inc. for 1998 is enclosed with
this Notice, the attached Proxy Statement and the accompanying proxy card.
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 vote
either: (i) by phone as directed on the enclosed proxy card; or (ii) by
completing, signing and dating the enclosed proxy card and returning it promptly
in the self-addressed envelope provided.
By order of the Board of Directors
NADIA C. ADLER
Secretary
March 12, 1999
NO MATTER HOW MANY SHARES YOU OWNED
ON THE RECORD DATE, YOUR VOTE IS IMPORTANT.
PLEASE INDICATE YOUR VOTING INSTRUCTIONS EITHER (I) BY PHONE AS
DIRECTED ON
THE ENCLOSED PROXY CARD; OR (II) ON THE ENCLOSED PROXY CARD BY
SIGNING, DATING
AND RETURNING 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 PHONING IN YOUR VOTE OR MAILING YOUR PROXY CARD
PROMPTLY.
<PG$PCN>
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 12, 1999 to each shareholder entitled to vote.
Shares represented by proxies, if such proxies are properly given and not
revoked, will be voted in accordance with the specifications given thereby or,
if no specifications are given, will be voted FOR the election as directors of
all nominees named herein, FOR Proposal Nos. 2, 3 and 4 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. The approval of Proposal No. 2 requires the
affirmative vote of a majority of the votes cast on the proposal, provided that
a majority of the outstanding shares of Common Stock vote on the proposal. The
approval of Proposal Nos. 3 and 4 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. Abstentions and broker non-votes will have
no effect on Proposal Nos. 2, 3 and 4; however, in the case of Proposal No. 2,
abstentions and broker non-votes will not be counted as votes cast for purposes
of determining whether a majority of the outstanding shares of Common Stock
voted on the proposal.
On March 1, 1999, the record date for the determination of shareholders
entitled to notice of and to vote at the Annual Meeting of Shareholders, the
outstanding voting securities of the Company consisted of 51,707,003 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 2000.
Class II consists of four directors whose terms expire in 2001. 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.
Four directors are to be elected at the Annual Meeting of Shareholders.
Three current members of the Board of Directors constituting Class III directors
are nominated for re-election. One current member of the Board of Directors, who
is designated as a nominee for election as a Class II director, is 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 four 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 the Board of Directors. Management has no reason
to believe that any nominee will be unable to serve.
<PG$PCN>
Set forth below are the names, principal occupations and ages of the four
nominees for election as directors and the other current directors, 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 III DIRECTORS
<TABLE>
<C> <S>
T. Kevin Dunnigan T. KEVIN DUNNIGAN
Chairman of Thomas & Betts Corporation
(electrical/electronic components, connectors and
accessories) since 1997; Chairman and Chief Executive
Officer from 1992 to 1997; Chief Executive Officer 1985 to
1992; President from 1980 to 1994; age 61. Mr. Dunnigan has
been a director since 1994 and is a member of the Executive
Committee, Audit Committee and Governance Committee. He is
also a director of Elsag Bailey Process Automation N.V.
Regina E. REGINA E. HERZLINGER
Herzlinger
Nancy R. McPherson Professor of Business Administration,
Harvard Business School since 1971; age 55. 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, Cardinal Health Inc., Schering-Plough Corporation
and Total Renal Care, Inc.
William H. WILLIAM H. LONGFIELD
Longfield
Chairman, President 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; age 60. 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 HCR Manor Care, Inc., West Pharmaceutical
Services, Inc. and Horizon Health Corporation.
</TABLE>
NOMINEE FOR ELECTION AS A CLASS II DIRECTOR
<TABLE>
<C> <S>
Anthony Welters ANTHONY WELTERS
Chairman and Chief Executive Officer of AmeriChoice
Corporation (managed health care services holding company)
and its predecessor companies since 1989; age 44. Mr.
Welters is a recipient of the prestigious Horatio Alger
award and now serves as a director of the Horatio Alger
Association. Mr. Welters was elected a director in 1999 and
is a member of the Finance Committee and Regulatory
Compliance Committee. He is also a director of West
Pharmaceutical Services, Inc. and serves as Vice Chairman of
the Board of Trustees for the Morehouse School of Medicine
in Atlanta.
</TABLE>
2
<PG$PCN>
OTHER DIRECTORS OF THE COMPANY
CLASS I DIRECTORS
(TERMS EXPIRE 2000)
<TABLE>
<C> <S>
[Marc C. Breslawsky MARC C. BRESLAWSKY
photo] 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 of Pitney Bowes
Office Systems from 1990 to 1994; age 56. Mr. Breslawsky has
been a director since 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.
[William T. Butler, WILLIAM T. BUTLER, M.D.
M.D. photo]
Chancellor of Baylor College of Medicine since January 1996,
having been President and Chief Executive Officer since
1979; and Chairman of Lyondell Chemical Company since June
1997; age 66. 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 Chemical Company.
</TABLE>
CLASS II DIRECTORS
(TERMS EXPIRE IN 2001)
<TABLE>
<C> <S>
[Robert P. Luciano ROBERT P. LUCIANO
photo] Retired Chairman and former Chief Executive Officer of
Schering-Plough Corporation (pharmaceuticals and consumer
products) having been Chairman and Chief Executive Officer
from January 1986 to December 1995 and Chairman from January
1996 to November 1998; age 65. 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., Merrill Lynch &
Co., Inc. and Schering-Plough Corporation.
[Tony L. White TONY L. WHITE
photo] 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 52. Mr. White has been a
director since 1996 and is a member of the Audit Committee,
Compensation Committee and Regulatory Compliance Committee.
He is also a director of Ingersoll-Rand Company.
</TABLE>
3
<PG$PCN>
RETIRING DIRECTORS
The Company wishes to acknowledge with gratitude the many years of service
by Joseph F. Abely, Jr. and Daniel A. Cronin, Jr., who will retire from the
Board of Directors as of the 1999 Annual Meeting, and William C. Bopp, who
retired from the Board of Directors as of December 31, 1998 concurrently with
his retirement from his position as the Company's Executive Vice President and
Chief Financial Officer.
<TABLE>
<C> <S>
[Joseph F. Abely, JOSEPH F. ABELY, JR.
Jr.
photo] 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 70. Mr.
Abely has been a director since 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.
[William C. Bopp WILLIAM C. BOPP
photo] Executive Vice President and Chief Financial Officer from
October 1995 to December 31, 1998, having been Senior Vice
President and Chief Financial Officer since 1992. Mr. Bopp
had been a director since 1995.
[Daniel A. Cronin DANIEL A. CRONIN, JR.
photo] President, Northbridge Management Company (investment
management); age 70. 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.
</TABLE>
4
<PG$PCN>
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The table below indicates all persons who, to the knowledge of management,
beneficially owned more than 5% of the Company's outstanding Common Stock as of
March 1, 1999:
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY
OWNED OF CLASS
- ------------------------------------ ------------------ --------
<S> <C> <C>
Edward C. Johnson 3d,(1).................................... 7,278,532(2) 13.58
Abigail P. Johnson and FMR Corp.
82 Devonshire Street Boston, Massachusetts 02109
Wellington Management Company, LLP(3)....................... 3,468,000(4) 6.47
75 State Street
Boston, Massachusetts 02109
Vanguard Specialized Portfolios, Inc.(5).................... 3,373,100(6) 6.29
Health Care Portfolio
Post Office Box 2600
Valley Forge, Pennsylvania 19482
</TABLE>
- ---------------
(1) Based upon a Schedule 13G, dated February 1, 1999.
(2) Represents beneficial ownership as follows:
Sole Voting Power
Edward C. Johnson 3d -- 326,702 shares
Abigail P. Johnson -- 0 shares
FMR Corp. -- 359,802 shares
Shared Voting Power
None
Sole Dispositive Power
Edward C. Johnson 3d -- 7,278,532
Abigail P. Johnson -- 7,278,532
FMR Corp. -- 7,278,532
Shared Dispositive Power
None
Mr. Johnson is the Chairman of FMR Corp. and owns 12% of the outstanding
voting stock of FMR Corp. Ms. Johnson is a director of FMR Corp. and owns
24.5% of the outstanding voting stock of FMR Corp. Of the shares shown, (i)
6,940,430 shares were beneficially owned by FMR Corp.'s wholly owned
subsidiary, Fidelity Management & Research Company, as a result of it acting
as an investment adviser or sub-adviser to various investment companies
(including Fidelity Growth & Income Fund, which owned 4,246,200 of such
shares (or 7.92% of the class)), (ii) 326,702 shares were beneficially owned
by FMR Corp.'s wholly owned subsidiary, Fidelity Management Trust Company,
as a result of it serving as investment manager to institutional accounts,
and (iii) 11,400 shares were beneficially owned by Fidelity International
Limited ("FIL"). Mr. Johnson and members of the Johnson family form a
controlling group with respect to FMR Corp. Approximately 40% of the voting
stock of FIL is owned by a partnership controlled by Mr. Johnson and members
of his family. Mr. Johnson serves as Chairman of FMR Corp. and FIL. As a
result of such common ownership and control, FMR Corp., Mr. Johnson and Ms.
Johnson may be deemed to beneficially own the shares beneficially owned by
FIL.
(3) Based upon a Schedule 13G, dated December 31, 1998.
(4) Denotes shared voting power with respect to 90,500 of such shares, shared
dispositive power with respect to all of such shares and sole voting power
and sole dispositive power with respect to none of such shares.
(5) Based upon a Schedule 13G, dated February 10, 1999.
(6) Denotes sole voting power and shared dispositive power with respect to all
such shares and shared voting power and sole dispositive power with respect
to none of such shares.
5
<PG$PCN>
SECURITIES OWNERSHIP OF MANAGEMENT
The table below contains information as of March 1, 1999 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). At that date, no director or executive officer owned more
than 1% of the outstanding Common Stock and all directors and executive officers
as a group (24 people) owned beneficially 1.1% of the outstanding Common 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
---------------------------------
RIGHT TO
ACQUIRE WITHIN
HELD AS OF 60 DAYS OF
MARCH 1, MARCH 1, 1999
NAME 1999(1) UNDER OPTIONS
- ---- ---------- --------------
<S> <C> <C>
Joseph F. Abely, Jr......................................... 6,506 3,400
Marc C. Breslawsky.......................................... 7,705 1,000
William T. Butler, M.D. .................................... 8,806 3,400
Daniel A. Cronin, Jr........................................ 14,906 1,000
T. Kevin Dunnigan........................................... 13,647 1,600
Regina E. Herzlinger........................................ 12,990 3,400
Guy J. Jordan............................................... 37,145 35,740
William H. Longfield........................................ 206,370 392,236
Robert P. Luciano........................................... 31,021 3,400
Timothy M. Ring............................................. 40,935 66,027
William T. Tumber........................................... 26,027 44,480
John H. Weiland............................................. 39,359 36,269
Anthony Welters............................................. 300 -0-
Tony L. White............................................... 7,704 1,000
All Directors and Executive Officers as a group (24
people)................................................... 561,975 802,570
</TABLE>
- ---------------
(1) Includes 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, 3,508; T. Kevin Dunnigan, 5,436;
Regina E. Herzlinger, 8,596; Tony L. White, 3,492. See "Compensation of
Outside Directors -- Fees and Deferred Compensation." Includes share
equivalent units credited to the accounts of non-employee directors under
the Stock Equivalent Plan for Outside Directors, as follows: Joseph F.
Abely, Jr., 2,189; Marc C. Breslawsky, 3,597; William T. Butler, M.D.,
2,189; Daniel A. Cronin, Jr., 2,189; T. Kevin Dunnigan, 6,411; Regina E.
Herzlinger, 2,189; Robert P. Luciano, 24,704; Tony L. White, 3,597. See
"Compensation of Outside Directors -- Stock Equivalent Plan for Outside
Directors."
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 year 1998 all these filing requirements were
timely satisfied.
BOARD MEETINGS AND COMMITTEES
Seven regular meetings of the Board of Directors were held during 1998. The
average attendance of all directors at the seven Board meetings was 99%. The
average attendance of all directors at all meetings of the
6
<PG$PCN>
Board and Committees of the Board during 1998 was 97%. During this period each
director attended 85% or more of all meetings of the Board of Directors and of
the Committees 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, Cronin,
Dunnigan, Herzlinger and White, met three times during 1998. The principal
functions of the Audit Committee are to (i) make recommendations to the full
Board of Directors 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 each of the independent public accountants
and the internal auditors and (vi) consider other audit and nonaudit matters
from time to time as requested by the full Board of Directors.
The Compensation Committee, currently composed of directors Abely, Butler,
Luciano and White, met four times during 1998. 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, 1993 Long Term Incentive Plan, as amended
and restated, and Management Stock Purchase Plan.
The Governance Committee, currently composed of directors Butler, Dunnigan,
Longfield and Luciano, met two times during 1998. 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. In
addition, the Governance Committee administers the Company's Stock Equivalent
Plan for Outside Directors and the Company's 1988 Directors Stock Award Plan, as
amended and restated.
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.
Stock Ownership Program
To further align the interests of management and shareholders, in 1998 the
Compensation Committee established formal stock ownership guidelines for the
Named Executive Officers and others holding senior executive positions at the
corporate and divisional levels. The targets are expressed in terms of the value
of the Company's Common Stock held by the executive as a multiple of that
executive's base salary.
Under the guidelines of this program, the Chief Executive Officer is
required to own a multiple of five times base salary, the Chief Financial
Officer and Group Presidents three times base salary and other executives one to
two times base salary. Ownership levels must be achieved by July 15, 2002.
Beginning with bonuses earned in 1998, executives subject to the stock ownership
guidelines were required to contribute a minimum of 25% of their bonuses to
purchase Common Stock of the Company under the Company's Management Stock
Purchase Plan (the "MSPP") and will be required to continue to do so annually
until such time as the executive has reached the applicable ownership
guidelines. After the executive has reached the applicable ownership guidelines,
contribution to the MSPP is voluntary. Messrs. Longfield, Ring, Weiland
7
<PG$PCN>
and Jordan contributed 100%, 29%, 100% and 25%, respectively, of their 1998
bonuses to purchase Common Stock of the Company under the MSPP. Executives newly
hired who are subject to ownership guidelines will have five years to meet the
applicable guidelines. See "Certain Compensation Arrangements."
While the Named Executive Officers and other executives in this program
have been given five years in which to comply with this program, the Committee
will monitor participation and expects that incremental progress will be made
each year by each executive during the phase-in period.
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 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
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 analysis of
competitive salary data.
The Compensation Committee considers the recommendation of Mr. Longfield in
approving the base salaries of all executives whose base salaries exceed
$150,000 annually, including the Named Executive Officers. Goals and objectives
for these individuals are based on the targeted levels described above for the
Divisions or corporate staff functions for which they are responsible and on
individual strategic and operational initiatives. Performance is weighed more
heavily than competitive salary data.
Each year, the Compensation Committee establishes a merit fund which is
used to increase base salaries for professional and managerial employees. The
amount of the merit fund is determined on the basis of an analysis of several
industry specific and general, non-industry specific surveys which are conducted
on an annual basis by consulting companies and trade associations. Individuals
receive a salary increase paid out of the merit fund based on a formula which is
designed to reward superior individual performance.
Bonus Plans
Awards under the Company's bonus plans are determined on the basis of the
degree to which corporate and, in certain cases, group financial and individual,
non-financial goals are attained.
Actual incentive compensation awards may be either more or less than
targeted amounts depending on actual results compared with corporate and group
and individual performance measures. Thus, the Company's incentive plans create
a direct link between pay and performance.
At the beginning of each year, the Board of Directors, for corporate
planning purposes and in consultation with the management of the Company,
approves certain financial targets for the Company, including an earnings per
share target. The earnings per share target then becomes the critical financial
indicator used by
8
<PG$PCN>
the Compensation Committee in determining awards under the Company's bonus plans
for Mr. Longfield and the other executive officers, other than Group Presidents
whose bonuses are determined as described below. All bonuses are based on
operational results exclusive of certain 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 1998 were determined by reference to the degree to
which the Company's earnings per share target for 1998 was achieved and, with
respect to Group Presidents, including Messrs. Ring, Weiland and Jordan, with
equal weight by reference to the degree to which the net income target
established for their respective groups was achieved. In 1998, the Company's
earnings per share target was achieved and the net income targets for the groups
of Messrs. Ring, Weiland and Jordan were achieved.
Bonuses for the Company's other executive officers for 1998 were determined
by reference to the degree to which the Company's earnings per share target for
1998 was achieved. In 1998, the Company's earnings per share target was
achieved.
Restricted Stock Awards
Under the Company's 1993 Long Term Incentive Plan, as amended and restated,
in 1998 the Compensation Committee granted restricted stock to selected
executive officers. In 1998, no grants of restricted stock were made to the
Named Executive Officers. Restricted stock vests in accordance with a schedule
specified by the Compensation Committee.
Certain grants of restricted stock ("Performance Shares") made in 1997,
including all grants of restricted stock made to the Named Executive Officers,
vest based upon appreciation in the price of the Company's Common Stock. With
respect to such grants, 50% of the Performance Shares became eligible for
vesting on November 20, 1998 when the price of the Company's Common Stock
reached $42.00 per share and the average of the closing prices of the Company's
Common Stock during the following 30 day period remained at least $42.00 per
share, and the remaining 50% of the Performance Shares became eligible for
vesting on February 4, 1999 when the price of the Company's Common Stock reached
$48.00 per share and the average of the closing prices of the Company's Common
Stock during the following 30 day period remained at least $48.00 per share.
Performance Shares generally vest five years after becoming eligible for
vesting.
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. The
formula for determining the number of shares of restricted stock other than
Performance Shares granted to each individual is weighted for attainment of
goals and objectives. 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 number of Performance Shares granted to each individual is
determined by the Compensation Committee.
Stock Options
Under the Company's 1993 Long Term Incentive Plan, as amended and restated,
in 1998 the Compensation Committee granted stock options to selected executive
officers, including the Named Executive Officers. The Compensation Committee
granted limited stock appreciation rights, which may only be exercised in the
event of a change of control of the Company, in tandem with all stock options
granted to executive officers. Stock options vest in accordance with a schedule
specified by the Compensation Committee.
All Grants of stock options ("Performance Options") made in 1998 become
exercisable based, in part, upon appreciation in the price of the Company's
Common Stock. With respect to such grants, the Performance Options were to
become exercisable on the earliest of (i) when, prior to the second anniversary
of the Grant Date, the closing price of Common Stock is at least $48.00 and the
average of the closing price of Common Stock during the following 30 consecutive
day period is at least $48.00; (ii) when, prior to the third
9
<PG$PCN>
anniversary of the Grant Date, the closing price is at least $50.00 and the
average of the closing price during the following 30 consecutive day period is
at least $50.00; (iii) when, prior to the fourth anniversary of the Grant Date,
the closing price is at least $52.00 and the average of the closing price during
the following 30 consecutive day period is at least $52.00; or (iv) the seventh
anniversary of the Grant Date. All Performance Options granted in 1998 became
exercisable on February 4, 1999.
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. In determining
the number of options granted to each individual, including Performance Options,
the Compensation Committee uses a formula weighted for attainment of goals and
objectives. Executive Officers may receive 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." The number
of Performance Options granted to each individual is determined by the
Compensation Committee.
The Company uses the Black-Scholes method to determine the potential value
of stock options.
Compliance with Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code of 1986, enacted in 1993,
generally disallows a tax deduction to public companies for compensation over
$1,000,000 paid to the Chief Executive Officer and the four other most highly
compensated executive officers for 1994 and thereafter. Qualifying
performance-based compensation is not subject to the deduction limit if certain
requirements are met. The Company's 1994 Executive Bonus Plan and 1993 Long Term
Incentive Plan, as amended and restated, have been structured such that annual
incentive bonuses and long-term equity-based compensation paid thereunder for
the Company's most senior executives should constitute qualifying
performance-based compensation under Section 162(m). The Company's shareholders
have approved both such plans. However, the Compensation Committee recognizes
that unanticipated future events, such as a change of control of the Company or
a change in executive personnel, could result in a disallowance of compensation
deduction under Section 162(m). Moreover, the Compensation Committee may from
time to time award compensation that is non-deductible under Section 162(m) when
in the exercise of the Compensation Committee's business judgment such award
would be in the best interest of the Company. The Compensation Committee
believes that all compensation reported in the Summary Compensation Table below
for 1998 should be deductible under the Internal Revenue Code.
THE COMPENSATION COMMITTEE
Robert P. Luciano, Chairman
Joseph F. Abely, Jr.
William T. Butler, M.D.
Tony L. White
10
<PG$PCN>
SUMMARY COMPENSATION TABLE
The table below sets forth information concerning compensation earned by
the Named Executive Officers during the last three fiscal years.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
---------------------------------
ANNUAL 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.......... 1998 683,000 614,700 520,386 -0- 80,000 -0-
216,080
Chairman and Chief 1997 650,000 286,000 19,110 -0-(6) 55,980 32,893
209,476
Executive Officer 1996 625,000 287,500 18,018 263,812 67,048 34,426
206,864
Timothy M. Ring............... 1998 323,552 219,375 51,777 -0- 20,000 -0-
15,484
Group President 1997 278,075 82,600 -0- -0-(6) 12,348 -0-
14,408
1996 244,787 83,000 -0- 43,641 12,976 -0- 13,530
John H. Weiland*.............. 1998 318,333 191,588 155,891 -0- 20,000 -0-
15,298
Group President 1997 280,833 116,300 -0- -0-(6) 12,212 -0-
13,084
1996 208,333 76,100 -0- 119,140 21,432 -0- 8,892
Guy J. Jordan................. 1998 293,283 172,800 35,175 -0- 20,000 -0-
39,916
Group President 1997 245,000 93,200 -0- -0-(6) 13,056 -0-
16,866
1996 194,500 86,500 -0- 31,500 6,124 -0- 15,031
William T. Tumber............. 1998 292,056 208,834 9,620 -0- 20,000 15,428
328,690
Senior Vice President 1997 292,056 97,300 9,100 -0-(6) 12,624 14,126
7,710
1996 274,275 44,800 8,580 47,906 11,856 27,456
31,027
</TABLE>
- ---------------
* Prior to March 1, 1996, Mr. Weiland was not affiliated with the Company.
(1) For 1998, the amount for Mr. Longfield includes $20,202 of dividend
equivalents paid under the Long Term Performance Incentive Plan ("LTPIP
Dividend Equivalents") and the entire amount for Mr. Tumber represents LTPIP
Dividend Equivalents. For 1997 and 1996, all amounts represent LTPIP
Dividend Equivalents. No grants have been made under the Long Term
Performance Incentive Plan since January 1, 1993.
Beginning with bonuses earned in 1998, the Named Executive Officers are in
certain circumstances required to contribute a portion of their bonuses to
purchase Common Stock of the Company at a discount under the MSPP. The
executives are also permitted to contribute the remaining portion of their
bonuses to purchase Common Stock of the Company at the same discount under
the MSPP. See "Executive Compensation -- Compensation Committee
Report -- Stock Ownership Program." Messrs. Longfield, Ring, Weiland and
Jordan contributed 100%, 29%, 100% and 25%, respectively, of their 1998
bonuses to purchase Common Stock of the Company under the MSPP. For 1998,
the amount for Mr. Longfield includes a discount of $500,184 on Common Stock
of the Company purchased under the MSPP (the "MSPP Discount") and the entire
amounts for Messrs. Ring, Weiland and Jordan represent the MSPP Discount.
None of the shares of Common Stock acquired under the MSPP can be
transferred during the three-year period beginning from the time they are
acquired. In addition, with respect to shares of Common Stock representing
the discount, a prorated number of such shares are forfeited if the
executive's employment is terminated because of death, retirement or
disability during such three-year period and all of such shares are
forfeited if the executive's employment is otherwise terminated during such
three-year period. In the event of a change of control of the Company,
however, all restrictions on the shares of Common Stock acquired under the
MSPP lapse.
(2) As of December 31, 1998: William H. Longfield held an aggregate of 81,660
shares of restricted stock with an aggregate value of $4,062,585; Timothy M.
Ring held an aggregate of 15,360 shares of restricted stock with an
aggregate value of $764,160; John H. Weiland held an aggregate of 13,410
shares of restricted stock with an aggregate value of $667,147; Guy J.
Jordan held an aggregate of 13,000 shares of restricted stock with an
aggregate value of $646,750 and William T. Tumber held an aggregate of
17,690 shares of restricted stock with an aggregate value of $880,077. The
foregoing numbers of shares and amounts and the amounts in the table exclude
holdings and grants of Performance Shares (as defined above under "Executive
Compensation -- Compensation Committee Report -- Restricted Stock Awards").
See footnote (6) below.
Dividends are paid on all shares of restricted stock.
(3) Grants consist of stock options with attached limited rights exercisable in
the event of a change of control. See "Certain Compensation Arrangements"
below for a description of the material features of the limited stock
appreciation rights.
11
<PG$PCN>
(4) The dollar amounts for 1998, 1997 and 1996 were derived by multiplying the
number of vested performance units by $11.02, $10.09 and $10.56,
respectively, the book values of a share of the Common Stock of the Company
at December 31, 1998, December 31, 1997 and December 31, 1996, respectively.
These payouts are not made until the employee retires or otherwise leaves
employment with the Company. No grants have been made under the LTPIP 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, Ring, Weiland, Jordan and
Tumber would be $135,792, $11,121, $17,492, $18,546 and $36,860,
respectively, in 1998, $130,029, $9,796, $16,070, $16,100 and $34,871,
respectively, in 1997, and $121,922, $8,164, $9,817, $12,365 and $32,288,
respectively, in 1996, as opposed to the amounts reflected in the column.
For William H. Longfield, the 1998 amount in the column represents Company
contributions of $4,000 under the Retirement Savings Plan, $204,702 accrued
under the Supplemental Insurance/Retirement Plan and $7,378 which, net of
tax, is reimbursement for insurance premiums paid under such latter plan;
the 1997 amount in the column represents Company contributions of $4,000
under the Retirement Savings Plan, $198,810 accrued under the Supplemental
Insurance/Retirement Plan and $6,666 which, net of tax, is reimbursement for
insurance premiums paid under such latter plan; 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.
For Timothy M. Ring, the 1998 amount in the column represents Company
contributions of $4,000 under the Retirement Savings Plan, $10,626 accrued
under the Supplemental Insurance/Retirement Plan and $858 which, net of tax,
is reimbursement for insurance premiums paid under such latter plan; the
1997 amount in the column represents Company contributions of $4,000 under
the Retirement Savings Plan, $9,634 accrued under the Supplemental
Insurance/Retirement Plan and $774 which, net of tax, is reimbursement for
insurance premiums paid under such latter plan; 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.
For John H. Weiland, the 1998 amount in the column represents Company
contributions of $4,000 under the Retirement Savings Plan and $11,298
accrued under the Supplemental Insurance/Retirement Plan; the 1997 amount in
the column represents Company contributions of $4,000 under the Retirement
Savings Plan and $9,084 accrued under the Supplemental Insurance/Retirement
Plan; the 1996 amount in the column represents Company contributions of
$3,392 under the Retirement Savings Plan and $5,500 accrued under the
Supplemental Insurance/Retirement Plan.
For Guy J. Jordan, the 1998 amount in the column represents Company
contributions of $4,000 under the Retirement Savings Plan and $35,916
accrued under the Supplemental Insurance/Retirement Plan; the 1997 amount in
the column represents Company contributions of $4,000 under the Retirement
Savings Plan and $12,866 accrued under the Supplemental Insurance/Retirement
Plan; the 1996 amount in the column represents Company contributions of
$3,750 under the Retirement Savings Plan and $11,281 accrued under the
Supplemental Insurance/Retirement Plan.
For William T. Tumber, the 1998 amount in the column represents $320,000 of
benefits under an early retirement program (see "Certain Compensation
Arrangements"), Company contributions of $4,000 under the Retirement Savings
Plan and $4,690 which, net of tax, is reimbursement for insurance premiums
paid under the Supplemental Insurance/Retirement Plan; the 1997 amount in
the column represents Company contributions of $4,000 under the Retirement
Savings Plan and $3,710 which, net of tax, is reimbursement for insurance
premiums paid under the Supplemental Insurance/Retirement Plan; 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.
(6) All grants of restricted stock awards in 1997 to the Named Executive
Officers were grants of Performance Shares. As of December 31, 1997: William
H. Longfield held 50,000 Performance Shares with a value of $1,565,500;
Timothy M. Ring held 10,000 Performance Shares with a value of $313,100;
John H. Weiland held 10,000 Performance Shares with a value of $313,100; Guy
J. Jordan held 10,000 Performance Shares with a value of $313,100 and
William T. Tumber held 10,000 Performance Shares with a value of $313,100.
No Performance Shares were granted in 1998 or 1996. For a discussion of the
terms upon which such Performance Shares vest, see "Executive
Compensation -- Compensation Committee Report -- Restricted Stock Awards."
Dividends are paid on all Performance Shares.
CERTAIN COMPENSATION ARRANGEMENTS
The Company has an agreement with Mr. Longfield that provides for benefits
upon any termination of employment within three years after a change of control
(defined to include the acquisition by a person or a group of 20% or more of the
voting power of the Company's stock or a change in the members of the Board of
Directors such that the continuing directors cease to constitute a majority of
the Board of Directors). This agreement expires three years after any change of
control, but under certain circumstances may be terminated by the Board of
Directors prior to any change of control and will expire immediately upon the
earlier of
12
<PG$PCN>
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. Ring, Weiland and Jordan. In addition, the Company has entered into a
Supplemental Executive Retirement Agreement with Mr. Longfield that 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 that 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 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.
Following the Company's sale of certain of its businesses in 1998, the
Company offered an early retirement program to certain corporate staff employees
in order to take advantage of cost savings opportunities. Mr. Tumber retired on
December 31, 1998 from his position as Senior Vice President under this program.
Under the program, eligible employees retiring between November 16, 1998 and
December 31, 1998 were entitled to receive, among other benefits, an amount
between one and two times their qualified projected 1998 pensionable pay
determined by reference to the employee's qualified projected 1998 pensionable
pay and years of credited service.
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).
Restrictions on shares of Common Stock of the Company acquired under the
MSPP lapse upon a change of control of the Company (defined in substantially the
same manner as in the agreement with Mr. Longfield). See footnote (1) to the
Summary Compensation Table.
13
<PG$PCN>
COMPENSATION OF OUTSIDE DIRECTORS
Fees and Deferred Compensation
Non-employee directors receive an annual retainer of $26,000 cash plus
$4,400 to be paid at the director's election in either shares of Common Stock
based on the fair market value of the stock on September 9, 1998 and on each
subsequent September Board meeting date, or added to deferred compensation in an
equivalent amount of phantom stock. In addition, for each Board and Committee
meeting attended, each non-employee director receives a fee of $1,200, 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 cash 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 under the Company's 1988 Directors Stock Award Plan, as amended.
Formula-Based Stock Options and Stock Awards
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 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
14
<PG$PCN>
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.
Nonformula-Based Stock Options and Stock Appreciation Rights
The Governance Committee may award to non-employee directors non-qualified
stock options with or without stock appreciation rights. Nonformula-based
options may be awarded with terms ranging from one to ten years. Unless
otherwise specifically set forth in the grant thereof no nonformula-based option
will be exercisable during the 12 months following the date of the grant. After
the 12-month period, 25% of the total number of nonformula-based options granted
are exercisable; after 24 months from the date of grant, 50% are exercisable;
after 36 months, 75% are exercisable; and, after 48 months, 100% of the
nonformula-based options granted are exercisable. Notwithstanding anything to
the contrary, the Governance Committee may, when granting nonformula-based
options to any non-employee director, grant options that are exercisable
immediately or options that are exercisable according to a schedule different
from that set forth in the preceding sentence. The exercise price per share of
Common Stock with respect to each nonformula-based option shall not be less than
100% of the fair market value of a share of Common Stock on the day the
nonformula-based option is granted.
If a non-employee director shall cease to be a member of the Board of
Directors by reason of retirement, a nonformula-based option held by such
non-employee director will remain exercisable after cessation of employment for
three years to the extent such nonformula-based option was otherwise exercisable
at the time of retirement. If a non-employee director ceases to be a
non-employee director because of death, a nonformula-based option held by such
non-employee director shall remain exercisable for one year and, if not already
fully exercisable, shall become exercisable with respect to all shares subject
thereto. If a non-employee director ceases to be a non-employee director other
than by reason of death or retirement, a nonformula-based option held by such
non-employee director shall remain exercisable for 60 days, to the extent such
nonformula-based option was otherwise exercisable at the time of termination. If
a non-employee director shall die after the date he or she ceases to be a member
of the Board of Directors while holding an outstanding nonformula-based option,
such option shall be exercisable to the extent, and during the period, that such
nonformula-based option would, but for his or her death, have otherwise been
exercisable by such non-employee director. In no event shall a nonformula-based
option be exercisable beyond the end of the option period.
The Governance Committee may grant stock appreciation rights. Stock
appreciation rights entitle a non-employee director to receive Common Stock or,
with the consent of the Governance Committee, cash in an amount equal to the
excess of the fair market value of a share of Common Stock on the date the right
is exercised over the price at which the non-employee director could exercise a
nonformula-based option to purchase that share. Stock appreciation rights shall
be granted only in connection with the granting of nonformula-based stock
options. Stock appreciation rights shall be exercisable on the same terms as the
nonformula-based options with which they are paired, and a non-employee director
may choose to exercise either a nonformula-based option or the related stock
appreciation right. The exercise of one terminates the other.
Nonformula-Based Restricted Stock, Stock Awards and Unrestricted Stock
An award of restricted stock to a non-employee director entitles the
non-employee director to receive the number of shares of Common Stock specified
by the Governance Committee. An award of restricted stock will vest in
accordance with a schedule specified by the Governance Committee. Except as
otherwise provided by the Governance Committee, a non-employee director
receiving an award of restricted stock shall, prior to the vesting of such
restricted stock, have all the rights of a holder of Common Stock, including the
right to receive dividends or dividend equivalents paid on and the right to vote
such stock. However, prior to the vesting of an award of restricted stock, such
restricted stock may not be sold, assigned, transferred, pledged or
15
<PG$PCN>
otherwise encumbered. If, prior to the vesting of a non-employee director's
restricted stock, such non-employee director ceases to be a member of the Board
of Directors during the restricted period for any reason other than death or
retirement, the Governance Committee may at the time of cessation of service as
a member of the Board of Directors terminate the restricted period with respect
to any or all of such restricted stock. If the Governance Committee does not
terminate the restricted period with respect to such restricted stock at the
time of such cessation, such restricted stock will be forfeited. If a
non-employee director holding restricted stock ceases to be a member of the
Board of Directors during the restricted period by reason of death or
retirement, restricted stock held by that non-employee director shall become
free of all restrictions thereon and the Company will deliver that restricted
stock to that non-employee director or that non-employee director's beneficiary,
as the case may be, within 60 days.
The Governance Committee may grant stock awards in its discretion to
non-employee directors of the Company. A stock award consists of Common Stock to
be distributed in three approximately equal installments, the first delivery on
the date of the stock award and thereafter on the first and second anniversaries
of such date, unless otherwise specified by the Governance Committee. No such
installment will be delivered on any anniversary of the date of the stock award
to a non-employee director whose service as a member of the Board has ceased
(except, in the discretion of the Governance Committee, by reason of death or
retirement).
The Governance Committee may grant awards of unrestricted Common Stock
under the 1988 Plan to non-employee directors, which Common Stock is delivered
to the non-employee director on or about the award date and which is not subject
to any restrictions.
In 1998, the only non-formula awards granted under the 1988 Plan were
awards of Common Stock to those directors who elected to receive a portion of
their annual retainer in shares of Common Stock as described under "-- Fees and
Deferred Compensation."
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
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. 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
16
<PG$PCN>
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 Corporation ("Belmont"). Professor
Herzlinger's husband, Dr. George Herzlinger, is the President and a director of
Belmont, and the Herzlingers are its majority shareholders. Pursuant to a
contract with Belmont (the "Vascular Systems Contract"), in 1998 the Vascular
Systems Division of the Company purchased from Belmont approximately $4,369,647
of a product developed by Belmont and distributed by the Company. This business
relationship 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 Vascular Systems Contract 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.
In March 1998, the Company entered into a Product Development and Asset
Purchase Agreement with Belmont (the "PDAP Agreement") pursuant to which the
Company agreed to acquire certain assets from Belmont and the Company and
Belmont agreed to pursue certain product development initiatives. The
consideration to be paid to Belmont under the PDAP Agreement is based on
performance milestones, and if all such milestones are met, Belmont could
realize up to $10,000,000. In 1998, the Company made aggregate milestone
payments of $1,750,000 to Belmont. The consideration to be paid to Belmont under
the PDAP Agreement was determined based on negotiations between Belmont and the
Company, with various members of the Company's senior management participating.
The Board of Directors received a letter from a nationally-recognized investment
banking firm as to the fairness of the consideration. Professor Herzlinger did
not participate in, or contribute to, the analysis or consideration of the
transaction by the Company's management or by Belmont, and Professor Herzlinger
excused herself from that portion of the meeting of the Board of Directors
during which the transaction was considered and approved.
On December 1, 1998, the Company completed the sale of its cardiac assist
business to Arrow International, Inc. As part of this transaction, the Company's
rights and obligations under the Vascular Systems Contract and the PDAP
Agreement have been assigned to and assumed by Arrow International, Inc.
Accordingly, the Company has no further obligations, and will make no further
payments, to Belmont under either of these agreements.
On August 17, 1998, the Company loaned $250,000, with interest at the
Applicable Federal Rate compounded semiannually (4.77% per annum at March 1,
1999), to Todd C. Schermerhorn for the purchase of a primary residence in
connection with Mr. Schermerhorn's relocation to New Jersey as Vice President
and Treasurer of the Company. The largest amount outstanding on the loan since
the loan was made was an aggregate of $256,341 of principal and accrued interest
at March 1, 1999.
17
<PG$PCN>
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 DATE
INDIVIDUAL GRANTS VALUE(1)
------------------------------------------------------- ----------
NUMBER OF
SECURITIES % OF TOTAL GRANT DATE
UNDERLYING OPTIONS VALUE(1)
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.............. 80,000 10.5 40.3438 7/8/2008 964,000
Chairman and Chief Executive
Officer
Timothy M. Ring................... 20,000 2.6 40.3438 7/8/2008 241,000
Group President
John H. Weiland................... 20,000 2.6 40.3438 7/8/2008 241,000
Group President
Guy J. Jordan..................... 20,000 2.6 40.3438 7/8/2008 241,000
Group President
William T. Tumber................. 20,000 2.6 40.3438 7/8/2008 241,000
Senior 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 price of the Company's Common Stock. 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 exercise
price on the date the option is exercised. Accordingly, 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
26.00% 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
6.20%; (c) the Company's Common Stock five-year dividend yield of 2.00%; and
(d) an expected option life of 6.25 years.
(2) Grants consist of stock options with attached limited stock appreciation
rights that 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. All options reflected in
the table were to become exercisable based, in part, on appreciation in the
price of the Company's Common Stock. For a discussion of the terms upon
which these options became exercisable, see "Executive
Compensation -- Compensation Committee Report -- Stock Options."
18
<PG$PCN>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR, AND FISCAL YEAR-END
OPTION
VALUES
The table below sets forth information concerning exercises of stock
options by the Named Executive Officers during the last fiscal year and the
fiscal year-end value of the Named Executive Officers' unexercised options.
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SHARES SECURITIES UNDERLYING UNEXERCISED
IN-THE-
ACQUIRED UNEXERCISED OPTIONS MONEY
OPTIONS AT
ON FY-END(#)(1) FY-END($)(1)
EXERCISE VALUE --------------------------- ------------------------------
NAME (#) REALIZED($) EXERCISABLE UNEXERCISABLE
EXERCISABLE UNEXERCISABLE(2)
- ---- -------- ----------- ----------- ------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
William H. Longfield.... 15,000 343,594 312,236 174,064 7,364,023
2,176,639
Chairman and Chief
Executive Officer
Timothy M. Ring......... -0- -0- 46,027 39,001 1,013,004 490,935
Group President
John H. Weiland......... -0- -0- 13,769 39,875 198,383 456,878
Group President
Guy J. Jordan........... -0- -0- 15,740 34,302 307,682 383,689
Group President
William T. Tumber(3).... -0- -0- 87,688 -0- 1,544,244 -0-
Senior Vice President
</TABLE>
- ---------------
(1) These options were granted over a period of years.
(2) Rounded value at $49.50 per share market price.
(3) Mr. Tumber retired on December 31, 1998. In accordance with the Company's
1993 Long Term Incentive Plan, the Compensation Committee accelerated the
vesting of all of Mr. Tumber's outstanding options that were not yet vested.
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 1998.
<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
1,100,000 164,500 247,000 329,000 411,500 493,500 576,000 658,000
1,200,000 179,500 269,500 359,000 449,000 538,500 628,500 718,000
</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
19
<PG$PCN>
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, Ring,
Weiland, Jordan and Tumber are 9, 6, 2, 12 and 18, 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 $150,000 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 $100 in each of the Company's Common
Stock, the S&P 500 Index and the S&P Medical Products & Supplies Index on
December 31, 1993 and that all dividends were reinvested.
[Chart]
20
<PG$PCN>
PROPOSAL NO. 2 -- APPROVAL OF AMENDMENT TO THE 1993 LONG TERM
INCENTIVE PLAN OF C. R. BARD, INC., AS PREVIOUSLY AMENDED
The Board of Directors has approved, subject to shareholder approval, an
amendment to the Company's 1993 Long Term Incentive Plan, as previously amended
(the "1993 Plan"), to (i) provide for an increase of 2,000,000 shares in the
number of shares authorized to be issued under the 1993 Plan and (ii) increase
the annual per-participant limit on grants of performance-based awards that are
intended to be deductible by the Company under Section 162(m) of the Internal
Revenue Code of 1986 ("Performance-Based Awards") from $500,000 to 25,000 shares
of Common Stock. See "Executive Compensation -- Compensation Committee
Report -- Compliance with Internal Revenue Code Section 162(m)."
Under the 1993 Plan, originally adopted by shareholders at the 1993 Annual
Meeting of Shareholders and amended by amendments approved by shareholders at
the 1996 and 1998 Annual Meetings of Shareholders, the maximum number of
authorized shares of Common Stock that may be issued under the 1993 Plan is
5,500,000 shares. As of December 31, 1998, approximately 850,000 shares of
Common Stock remained available under the 1993 Plan. As a result of the limited
number of shares of Common Stock remaining available for the 1993 Plan,
shareholders are requested to authorize additional shares of Common Stock under
the 1993 Plan to cover anticipated awards to be granted by the Company in the
future in accordance with its normal compensation practices. The Company
believes that the potential dilutive effect of the shares that would be
available for issuance under the 1993 Plan if Proposal No. 2 is adopted,
together with the shares available for issuance under the Company's other
employee benefit plans, is less than the median potential dilutive effect of the
shares available for issuance under the employee benefit plans of S&P 500
companies that sought to add shares to existing plans in 1998.
In 1996, shareholders approved an amendment to the 1993 Plan which limited
to $500,000 the maximum dollar amount of Performance-Based Awards that may be
granted during each calendar year to any participant under the 1993 Plan. In
order to more closely align the compensation of key employees of the Company and
its subsidiaries to the Company's long-term performance and the shareholders"
interests, the Company seeks to grant larger Performance-Based Awards on a less
frequent basis. These awards are intended to be tied to longer-term performance.
Accordingly, shareholders are requested to approve the increase in the limit on
the amount of Performance-Based Awards that may be granted during each calendar
year to any participant under the 1993 Plan. This approval is required in order
for such awards to continue to be treated as qualified performance-based
compensation under Section 162(m) of the Internal Revenue Code of 1986. See
"-- Tax Status of 1993 Plan Awards -- Section 162(m)."
In addition, shareholder approval of Proposal No. 2 will constitute
reapproval of (i) the performance criteria upon which Performance-Based Awards
may be based under the 1993 Plan, (ii) the annual per-participant limit of
400,000 shares on grants of options and stock appreciation rights that may be
made under the 1993 Plan and (iii) the class of employees eligible to receive
awards under the 1993 Plan. This reapproval is required every five years in
order for such awards to continue to be treated as qualified performance-based
compensation under Section 162(m) of the Internal Revenue Code of 1986. See
"-- Tax Status of 1993 Plan Awards -- Section 162(m)."
The Company believes that the 1993 Plan has helped it to attract and retain
the services of selected key employees of the Company and its subsidiaries who
are in a position to make a material contribution to the successful operation of
the business of the Company and its subsidiaries by enabling the Company to
offer a variety of long term incentive awards. The description of the 1993 Plan
(as proposed to be amended) set forth below is a summary, does not purport to be
complete and is qualified in its entirety by reference to the provisions of the
1993 Plan itself. The complete text of the 1993 Plan (as proposed to be amended)
is attached as Exhibit A to this Proxy Statement.
DESCRIPTION OF THE 1993 PLAN (AS PROPOSED TO BE AMENDED)
ADMINISTRATION. The 1993 Plan is administered by the Compensation
Committee, which consists of disinterested, non-employee directors.
21
<PG$PCN>
ELIGIBILITY. Participants in the 1993 Plan are selected by the
Compensation Committee from key employees of the Company and its subsidiaries
who are in a position to have a material impact on the results of operations of
the Company and its subsidiaries. Participants may be selected and awards may be
made at any time during the period that awards may be made under the 1993 Plan.
The maximum number of shares to which options or stock appreciation rights
(including limited stock appreciation rights issued in tandem with options) may
be granted under the 1993 Plan during each calendar year to any given
participant is 400,000 shares. The maximum amount of Performance-Based Awards
that may be granted under the 1993 Plan during each calendar year to any given
participant may not exceed 25,000 shares of Common Stock of the Company. As of
December 31, 1998, 15 executive officers and approximately 1,000 other officers
and key employees were eligible for participation in the 1993 Plan.
DETERMINATION AND MAXIMUM NUMBER OF AWARDS. Awards under the 1993
Plan
shall be in the form of stock options, restricted stock, stock awards,
unrestricted stock and stock appreciation rights. The total number of shares of
Common Stock that may be granted under the 1993 Plan shall not exceed 7,500,000.
The maximum number of shares of Common Stock that may be granted as awards of
restricted stock, stock awards and unrestricted stock in any calendar year shall
not exceed 40 percent of the total number of shares of Common Stock granted or
subject to awards granted under the 1993 Plan during such year. The Compensation
Committee has exclusive power to determine the amount of, and method for
determining, awards.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS. The Compensation
Committee
may award to selected key employees incentive stock options and non-qualified
stock options with or without stock appreciation rights. Except as specifically
set forth in the grant thereof, options may be awarded with terms ranging from
one to ten years and no option will be exercisable during the 12 months
following the date of the grant. After the 12-month period, 25% of the total
number of options granted are exercisable; after 24 months from the date of
grant, 50% are exercisable; after 36 months, 75% are exercisable; and, after 48
months, 100% of the options granted are exercisable. Notwithstanding anything to
the contrary in this paragraph, the Committee may, when granting options to any
participant under the 1993 Plan, grant options that are exercisable immediately
or options that are exercisable according to a schedule different from that set
forth in the preceding sentence. The exercise price per share of Common Stock
for any option awarded shall not be less than 100% of the fair market value of a
share of Common Stock on the day the option is granted. The aggregate fair
market value, determined as of the day an option is granted, of the Common Stock
for which any employee may be awarded incentive stock options that are first
exercisable by the employee during any calendar year under the 1993 Plan or any
other stock option plan maintained by the Company or any of its subsidiaries may
not exceed $100,000.
An option may be exercised by paying the exercise price by certified or
bank cashier's check, and/or, to the extent permitted by law, Common Stock or
other form of consideration acceptable to the Company. The proceeds received
from the sale of shares upon the exercise of an option shall be added to the
general funds of the Company and used for general corporate purposes.
If an employee ceases to be an employee because of retirement, an option
held by such employee shall remain exercisable after cessation of employment for
three months, if an incentive option, or three years, if a non-qualified option,
to the extent such option was otherwise exercisable at the time of retirement.
The Compensation Committee may, however, in its discretion, accelerate the
vesting date and allow retiring employees to exercise outstanding options that
would not otherwise be exercisable on the date of retirement. If an employee
ceases to be an employee because of death, an option held by such employee shall
remain exercisable for one year and, if not already fully exercisable, shall
become exercisable with respect to all shares subject thereto. If an employee
ceases to be an employee because of termination other than by reason of death or
retirement, an option held by such employee shall remain exercisable for 60
days, to the extent such option was otherwise exercisable at the time of
termination. The Compensation Committee may, however, in its discretion,
accelerate the vesting date and allow terminated employees to exercise
outstanding options that would not otherwise be exercisable on the date of
termination. Upon the occurrence of a change of control of the Company, all
outstanding options that are not then exercisable shall become exercisable in
full immediately. In no event shall an option be exercisable beyond the end of
the option period.
22
<PG$PCN>
The Compensation Committee may grant stock appreciation rights. Stock
appreciation rights entitle an employee to receive Common Stock or, with the
consent of the Compensation Committee, cash in an amount equal to the excess of
the fair market value of a share of Common Stock on the date the right is
exercised over the price at which the employee could exercise an option to
purchase that share. Stock appreciation rights shall be granted only in
connection with the granting of non-qualified stock options. Stock appreciation
rights shall be exercisable on the same terms as the options with which they are
paired, and an employee may choose to exercise either an option or the related
stock appreciation right. The exercise of one terminates the other.
The Compensation Committee may, in its discretion, grant limited stock
appreciation rights that may only be exercised during the 60-day period
commencing upon the date of the first public disclosure of a change of control
of the Company. Such limited stock appreciation rights shall be exercisable
whether or not the holder is then employed by the Company. Upon exercise of a
limited stock appreciation right, the employee shall be entitled to receive an
amount in cash equal to the greater of (i) the fair market value of the Common
Stock 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 paid in such transaction or transactions during the exercise
period of the limited stock appreciation right up to the date of exercise over
the option price of such shares.
RESTRICTED STOCK, STOCK AWARDS AND UNRESTRICTED STOCK. An award of
restricted stock to an employee entitles the employee to receive the number of
shares of Common Stock specified by the Compensation Committee. An award of
restricted stock will vest in accordance with a schedule specified by the
Compensation Committee. Except as otherwise provided by the Compensation
Committee, the restricted period specified in respect of any award of restricted
stock shall not be less than three years, except that the Committee may provide
for a restricted period to terminate at any time after one year upon the
attainment of established performance-based objectives. Except as otherwise
provided by the Compensation Committee, an employee receiving an award of
restricted stock shall, prior to the vesting of such restricted stock, have all
the rights of a holder of Common Stock, including the right to receive dividends
paid on and the right to vote such stock. However, prior to the vesting of an
award of restricted stock, such restricted stock may not be sold, assigned,
transferred, pledged or otherwise encumbered. If, prior to the vesting of an
employee's restricted stock, such employee ceases to be an employee of the
Company or any of its subsidiaries for any reason other than death or
retirement, the Compensation Committee may accelerate the vesting of all
unvested restricted stock to the date of cessation of employment. If the
Compensation Committee does not accelerate the vesting of restricted stock held
by such employee, such unvested restricted stock shall be forfeited to the
Company. If prior to the vesting of an employee's restricted stock employment is
terminated by reason of death or retirement, all restricted stock held by such
employee shall be immediately vested on the date of such termination.
The Compensation Committee may grant stock awards in its discretion to
selected key employees of the Company and its subsidiaries. A stock award
consists of Common Stock to be distributed in three approximately equal
installments, the first delivery on the date of the stock award and thereafter
on the first and second anniversaries of such date, unless otherwise specified
by the Compensation Committee. No such installment will be delivered if, prior
to such delivery, the employee is terminated (except, in the discretion of the
Compensation Committee, by reason of death or retirement). Stock awards are made
only in lieu of salary and cash bonuses.
Upon the occurrence of a change of control of the Company (defined
substantially in the same manner as in the agreement with Mr. Longfield,
described under "Certain Compensation Arrangements" above), all restricted stock
and stock awards shall vest and all restrictions on restricted stock shall
expire.
The Compensation Committee may grant awards of unrestricted Common Stock
under the 1993 Plan to employees in lieu of salary or cash bonus, which Common
Stock is delivered to the employee on or about the award date and which is not
subject to any restrictions.
Certain awards of restricted stock, stock awards and unrestricted stock
granted under the 1993 Plan may be granted in a manner which should be
deductible by the Company under Section 162(m) of the Internal Revenue Code of
1986. Such awards ("Performance-Based Awards") shall be based upon earnings per
share,
23
<PG$PCN>
net income, group financial goals set forth in the Company's 1994 Executive
Bonus Plan, return on shareholders' investment, return on assets, attainment of
strategic and operational initiatives, appreciation in the price of the
Company's Common Stock, customer income, market share, sales, net profits,
economic value-added models or comparisons with the Standard & Poor's Medical
Product Index and 500-Stock Index. With respect to Performance-Based Awards, (i)
the Compensation Committee shall establish in writing the objective performance
goals applicable to a given period of service no later than 90 days after the
commencement of such period of service (but in no event after 25% of such period
of service has elapsed) and (ii) no awards shall be granted to any participant
for a given period of service until the Compensation Committee certifies in
writing that the objective performance goals (and any other material terms)
applicable to such period have been satisfied.
AMENDMENT AND TERMINATION. The Board of Directors may amend or terminate
the 1993 Plan at any time, provided that it may not, without stockholder
approval, increase the number of shares that may be acquired under the 1993
Plan, extend the term during which options may be granted under the 1993 Plan or
reduce the exercise price below the fair market value of the Common Stock on the
date on which an option was granted if continuation of the exemption under Rule
162(b)-3 under the Securities Exchange Act of 1934 requires such approval. No
amendment or termination of the 1993 Plan shall deprive any participant of
awards already made. No awards may be made under the 1993 Plan after April 20,
2003.
TAX STATUS OF 1993 PLAN AWARDS
INTRODUCTION. The following discussion of the federal income tax status of
awards under the 1993 Plan, as proposed to be amended and restated, is based on
present federal tax laws and regulations and does not purport to be a complete
description of the federal income tax laws. Employees may also be subject to
certain state and local taxes that are not described below.
INCENTIVE STOCK OPTIONS. If the option is an incentive stock option, no
income shall be realized by the employee upon award or exercise of the option,
and no deduction shall be available to the Company. If the Common Stock
purchased upon the exercise of an incentive stock option is held by an employee
for at least two years from the date of the award of such option and for at
least one year after exercise, any resulting gain shall be taxed at long-term
capital gains rates. If the Common Stock purchased pursuant to the option is
disposed of before the expiration of that period, any gain on the disposition,
up to the difference between the fair market value of the Common Stock at the
time of exercise and the option price, shall be taxed at ordinary rates as
compensation paid to the employee, and the Company shall be entitled to a
deduction for an equivalent amount. Any amount realized by the employee in
excess of the fair market value of the stock at the time of exercise shall be
taxed at capital gains rates.
NON-QUALIFIED OPTIONS. If the option is a non-qualified option, no income
shall be realized by the employee at the time of award of the option, and no
deduction shall be available to the Company. At the time of exercise, ordinary
income shall be realized by the employee in an amount equal to the difference
between the option price and the fair market value of the shares on the date of
exercise, and the Company shall receive a tax deduction for the same amount.
Upon disposition, any appreciation or depreciation of the Common Stock after the
date of exercise shall be treated as either short-term, mid-term or long-term
capital gain or loss depending on whether the shares have been held more than
one year.
STOCK APPRECIATION RIGHTS. No income shall be realized by the employee at
the time a stock appreciation right is awarded, and no deduction shall be
available to the Company. When the right (including a limited stock appreciation
right) is exercised, ordinary income shall be realized in the amount of the cash
or Common Stock received by the employee, and the Company shall be entitled to a
deduction of equivalent value.
RESTRICTED STOCK, STOCK AWARDS AND UNRESTRICTED STOCK. The
Company shall
receive a deduction and the employee shall recognize taxable income equal to the
fair market value of the restricted stock at the time the restrictions on the
shares awarded lapse, unless the employee elects to pay such tax as may be then
due not later than 30 days after the date of the transfer by the Company to the
employee of a restricted stock award as permitted under Section 83(b) of the
Internal Revenue Code of 1986 in which case both the Company's
24
<PG$PCN>
deduction and the employee's inclusion in income occur on the award date. The
value of each installment of a stock award distributed to employees shall be
taxable as ordinary income to such employees in the year in which such
installment is received, and the Company will be entitled to a corresponding tax
deduction. The value of shares of Common Stock of the Company awarded to
employees as unrestricted stock will be taxable as ordinary income to such
employees in the year received, and the Company will be entitled to a
corresponding tax deduction.
SECTION 162(M). Section 162(m) of the Internal Revenue Code of 1986
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 in any year. Qualifying performance-based
compensation is not subject to the deduction limit if certain requirements are
met. One requirement is shareholder approval of any amendment to, and
shareholder reapproval at least once every five years of, (i) the performance
criteria upon which Performance-Based Awards may be based, (ii) the annual
per-participant limits on grants of Performance-Based Awards and stock options
and stock appreciation rights and (iii) the class of employees eligible to
receive awards. In the case of Performance-Based Awards, other requirements are
that objective performance goals and the amounts payable upon achievement of the
goals be established by a committee of at least two outside directors and that
no discretion be retained to increase the amount payable under the awards. In
the case of options and stock appreciation rights, other requirements are that
the option or stock appreciation right be granted by a committee of at least two
outside directors and that the exercise price of the option or stock
appreciation right be not less than fair market value of the Common Stock on the
date of grant. The Company believes that if Proposal No. 2 is approved by
shareholders, compensation received on vesting of Performance-Based Awards and
exercise of options and stock appreciation rights granted under the 1993 Plan in
compliance with all of the above requirements will be exempt from the $1,000,000
deduction limit.
ADOPTION OF PROPOSAL NO. 2
The Company believes that its best interests will be served by the approval
of Proposal No. 2, which will enable the Company to continue to be in a position
to grant long term incentive awards to officers and other key employees,
including those who through promotions and development of the Company's business
will be entrusted with new and more important responsibilities, while preserving
the tax deductibility of these awards.
Approval of Proposal No. 2 requires the affirmative vote of a majority of
the Company's Common Stock represented at the Annual Meeting of Shareholders,
provided that a majority of the outstanding shares of the Common Stock votes on
the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL NO. 2.
PROPOSAL NO. 3 -- REAPPROVAL OF THE 1994
EXECUTIVE BONUS PLAN OF C. R. BARD, INC.
In 1994 the Board of Directors and the Company's shareholders approved the
1994 Executive Bonus Plan of C. R. Bard, Inc. (the "1994 Plan"). The 1994 Plan
is designed to help attract, retain and motivate the executives required to
manage the Company and promote the achievement of rigorous but realistic
financial goals. The 1994 Plan is also designed to qualify compensation under
the plan for a federal income tax deduction as performance-based compensation.
Approval of Proposal No. 3 will constitute reapproval of (i) the performance
criteria upon which awards may be based under the 1994 Plan, (ii) the annual
per-participant limit of $1,400,000 on awards that may be made under the 1994
Plan and (iii) the class of employees eligible to receive awards under the 1994
Plan. This reapproval is required every five years in order for such awards to
continue to be treated as qualified-based compensation under Section 162(m) of
the Internal Revenue Code of 1986. See "Section 162(m)."
The description of the 1994 Plan set forth below is a summary, does not
purport to be complete and is qualified in its entirety by reference to the
provisions of the 1994 Plan itself. A copy of the 1994 Plan is attached as
Exhibit B.
25
<PG$PCN>
ADMINISTRATION. The Plan is administered by the Compensation Committee,
which contains at least two outside directors (as such term is defined in
Section 162(m) of the Internal Revenue Code of 1986 and the regulations
thereunder).
ELIGIBILITY. Participants in the 1994 Plan in any of the Company's fiscal
years will be limited to individuals who on the first day of such fiscal year
occupy the office of Chairman, Chief Executive Officer, President, Vice
Chairman, Chief Operating Officer, Executive Vice President, Chief Financial
Officer or Group President. Five officers are currently eligible for the 1994
Plan.
DETERMINATION OF AWARDS. Awards under the 1994 Plan shall be in the form
of cash. No award to any individual in any fiscal year shall exceed $1,400,000.
Awards will be made to participants by reference to the Company's earnings
per share for each fiscal year, and, with respect to Group Presidents, by
reference to an established group financial goal. Prior to the 90th day of the
plan year, the Compensation Committee will set the earnings per share and group
financial goal targets and the amount of bonus (expressed as a percentage of
base salary in effect on the first day of the fiscal year) payable to each
participant to the extent that the earnings per share and, as applicable, the
group financial performance equal, or fall within a range above or below, the
applicable target.
PAYMENT OF AWARDS. Each award will be paid in cash following the fiscal
year to which it relates; however, a participant may, prior to a fiscal year,
elect to defer all or any portion of an award for that fiscal year. Deferred
awards will be held by the Company in an interest-bearing account for the
participant, and shall be paid in a lump sum upon termination of employment or
in installments as requested by the participant and agreed to by the
Compensation Committee. Participants may, and in certain circumstances are
required to, contribute a portion of their bonuses to purchase Common Stock of
the Company under the MSPP. See "Executive Compensation -- Compensation
Committee Report -- Stock Ownership Program."
AMENDMENT AND TERMINATION. The Compensation Committee, with the approval
of the Board of Directors, may amend or terminate the 1994 Plan at any time. No
amendment or termination of the 1994 Plan shall deprive any participant of
awards for fiscal years already ended.
SECTION 162(m). Section 162(m) of the Internal Revenue Code of 1986
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 in any fiscal year. Qualifying performance-based
compensation is not subject to the deduction limit if certain requirements are
met. One requirement is shareholder approval at least once every five years of
(i) the performance criteria upon which awards may be based, (ii) the annual
per-participant limit on grants of awards and (iii) the class of employees
eligible to receive awards. Other requirements are that objective performance
goals and the amounts payable upon achievement of the goals be established by a
committee of at least two outside directors and that no discretion be retained
to increase the amount payable under the amounts. The Company believes that if
Proposal No. 3 is approved by shareholders, awards granted under the 1994 Plan
in compliance with all of the above requirements will be exempt from the
$1,000,000 deduction limit.
ADOPTION OF PROPOSAL NO. 3
The Company believes that its best interests will be served by the approval
of Proposal No. 3, which will enable the Company to continue to be in a position
to grant bonus awards to officers, including those who through promotions and
development of the Company's business will be entrusted with new and more
important responsibilities, while preserving the tax deductibility of these
awards.
Approval of Proposal No. 3 requires the affirmative vote of a majority of
shares of the Company's Common Stock cast on the proposal. If such approval is
not obtained, the Company may forfeit tax deductions on a portion of the bonus
awards that the Compensation Committee may approve for 1999 and subsequent
years.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL NO. 3.
26
<PG$PCN>
PROPOSAL NO. 4 -- 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, 1999. 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. 4.
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 Georgeson &
Company Inc. to assist in the solicitation of proxies and expects to pay such
firm a fee of approximately $8,000 plus out-of-pocket expenses. Although there
is no formal agreement to do so, the Company will reimburse banks, brokerage
houses and other custodians, nominees and fiduciaries for their reasonable
expenses in forwarding proxy material to their principals.
The Annual Report of the Company for 1998, including certified financial
statements, has been furnished to all persons who were shareholders of the
Company on the record date for the Annual Meeting of Shareholders.
PROPOSALS OF SECURITY HOLDERS
A proposal of a security holder intended to be presented at the next Annual
Meeting of Shareholders and to be included in the Company's proxy statement must
be received at the Company's principal executive offices at 730 Central Avenue,
Murray Hill, New Jersey 07974 on or before November 13, 1999.
In addition, the Company's By-laws set forth procedures to be followed by
shareholders who wish to bring business before an annual meeting of shareholders
or nominate candidates for election to the Board of Directors at an annual
meeting of shareholders. Such procedures require that the shareholder give
timely written notice to the Secretary of the Company. To be timely, such notice
must be delivered to or mailed and received at the principal executive offices
of the Company not less than 90 days nor more than 120 days prior to the first
anniversary of the preceding year's annual meeting, provided, that in the event
that the date of the annual meeting is more than 30 days before or more than 60
days after such anniversary date, to be timely notice must be received not later
than the close of business on the 10th day following the day on which public
announcement of the date of the annual meeting is first made.
27
<PG$PCN>
EXHIBIT A
1993 LONG TERM INCENTIVE PLAN
OF
C. R. BARD, INC.
(AS AMENDED AND RESTATED)
SECTION 1 -- PURPOSE AND TERM OF PLAN
The Long Term Incentive Plan of C. R. Bard, Inc. is designed to attract and
retain the services of selected key employees of the Corporation and its
Subsidiaries who are in a position to make a material contribution to the
successful operation of the business of the Corporation and its Subsidiaries.
Awards under the Plan shall be made to selected key employees in the form of
Options, Restricted Stock, Stock Appreciation Rights and other stock-based
awards. The Plan, as amended and restated, shall be effective on April 15, 1998.
No awards may be made under the Plan after April 20, 2003.
SECTION 2 -- DEFINITIONS
For purposes of the Plan, the following terms shall have the indicated
meanings:
(a) "Board" means the Board of Directors of the Corporation.
(b) "Change of Control Event" means a change of control of the nature
that would be required to be reported in response to item (a) of the
Current Report on Form 8-K as in effect on April 21, 1993 pursuant to
Section 13 or 15(d) of the Exchange Act, provided that, without limitation,
a "Change of Control Event" shall be deemed to have occurred if (i) any
person shall become the beneficial owner, as those terms are defined
herein, of capital stock of the Corporation, the voting power of which
constitutes 20% or more of the general voting power of all of the
Corporation's outstanding capital stock or (ii) individuals who, as of
April 21, 1993, constitute the Board (the "Incumbent Board") cease for any
reasons to constitute at least a majority of the Board, provided that any
person becoming a Director subsequent to April 21, 1993 whose election, or
nomination for election by the Corporation's shareholders, was approved by
a vote of at least three quarters of the Directors comprising the Incumbent
Board (other than an election or nomination of an individual whose initial
assumption of office is in connection with an actual or threatened election
contest relating to the election of the Directors of the Corporation, which
is or would be subject to Rule 14a-11 of the Regulation 14A promulgated
under the Exchange Act) shall be, for purposes of the Plan, considered as
though such person were a member of the Incumbent Board. No sale to
underwriters or private placement of its capital stock by the Corporation
nor any acquisition by the Corporation, through merger, purchase of assets
or otherwise, effected in whole or in part by issuance or reissuance of
shares of its capital stock, shall constitute a Change of Control Event.
For purposes of the definition of "Change of Control Event," the following
definitions shall be applicable:
(i) The term "person" shall mean any individual, group, corporation
or other entity.
(ii) Any person shall be deemed to be the beneficial owner of any
shares of capital stock of the Corporation:
(A) which that person owns directly, whether or not of record,
or
(B) which that person has the right to acquire pursuant to any
agreement or understanding or upon exercise of conversion rights,
warrants, or options, or otherwise, or
(C) which are beneficially owned, directly or indirectly
(including shares deemed owned through application of clause (B)
above), by an "affiliate" or "associate" (as defined in the
A-1
<PG$PCN>
rules of the Securities and Exchange Commission under the Securities
Act of 1933) of that person, or
(D) which are beneficially owned, directly or indirectly
(including shares deemed owned through application of clause (B)
above), by any other person with which that person or such person's
"affiliate" or "associate" (defined as aforesaid) has any agreement,
arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of capital stock of the Corporation.
(iii) The outstanding shares of capital stock of the Corporation
shall include shares deemed owned through application of clauses (ii)
(B), (C) and (D), above, but shall not include any other shares which
may be issuable pursuant to any agreement or upon exercise of conversion
rights, warrants or options, or otherwise, but which are not actually
outstanding.
(iv) Shares of capital stock, if any, held by The Chase Manhattan
Bank N.A. under the Indenture and the Escrow Agreement dated as of
November 1, 1971 between International Paper Company and said bank shall
not be deemed owned by International Paper Company or by said bank for
purposes of this Plan, so long as they are held by said bank under said
Escrow Agreement, but said shares shall be deemed outstanding for the
purpose of determining the aggregate number of outstanding shares of
capital stock of the Corporation.
(c) "Change of Control Exercise Period" means the 60-day period
commencing upon the date of the first public disclosure of a Change of
Control Event.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means the Compensation Committee of the Board or such
other committee as may be designated by the Board.
(f) "Common Stock" means the Common Stock of the Corporation, par
value $0.25 per share.
(g) "Corporation" means C. R. Bard, Inc., a New Jersey corporation.
(h) "Director" means a member of the Board.
(i) "Disinterested Persons" means Directors who are not full time
employees of the Corporation and who are eligible to serve as Plan
administrators or to approve Plan awards under the provisions of Rule 16b-3
promulgated under the Exchange Act. The preceding sentence shall have no
effect if any specification of such persons is eliminated from the rules
promulgated under Section 16 of the Exchange Act.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(k) "Fair Market Value" of the Common Stock on a specified day means
(1) the mean between the high and low sales price on that day as reported
on the New York Stock Exchange -- Composite Transactions Tape or, if no
sale of the Common Stock shall have occurred on the New York Stock Exchange
on that day, on the next preceding day on which there was a sale, or (2) in
the case of a simultaneous exercise and sale, the actual price an optionee
receives in the open market on the date of the exercise. If the Common
Stock is not traded on the New York Stock Exchange, the Fair Market Value
shall be the amount that is reasonably determined by the Committee.
(l) "Limited Stock Appreciation Rights" shall have the meaning set
forth in Section 4.8.
(m) "Option" means an Option to purchase Common Stock awarded to a
Participant as provided in Section 4.
(n) "Option Period" means the period from the date of the grant of an
Option to the date of its expiration as provided in Section 4.3.
(o) "Optionee" means a Participant who has been granted an Option
under the Plan.
A-2
<PG$PCN>
(p) "Participant" means a key employee, including officers and
Directors who are employees, of the Corporation or any of its Subsidiaries
who has been selected by the Committee to receive an award under the Plan.
(q) "Performance-Based Awards" shall have the meaning set forth in
Section 5.11.
(r) "Plan" means the 1993 Long Term Incentive Plan of C. R. Bard, Inc.
(s) "Restricted Period" means the vesting period, if any, of up to 10
years specified by the Committee pursuant to Section 5.2.
(t) "Restricted Stock" means Common Stock awarded to a Participant
subject to restrictions as provided in Section 5 as long as those
restrictions are in effect.
(u) "Retirement" means normal or early retirement under the terms of a
pension plan of the Corporation or voluntary termination of employment,
provided that in each case the Corporation must have given its prior
consent to treat the person's termination of employment as a retirement.
(v) "Stock Appreciation Right" means a right awarded to a Participant
as provided in Section 4 to receive in the form of Common Stock or, with
the consent of the Committee, cash, an amount equal to the excess of the
Fair Market Value of a share of Common Stock on the day the right is
exercised over the price at which the Participant could exercise an Option
to purchase that share.
(w) "Stock Award" means an award of Common Stock delivered in
installments as specified by the Committee pursuant to Section 5.8.
(x) "Subsidiary" means any corporation or other legal entity, domestic
or foreign, more than 50% of the voting power of which is owned or
controlled, directly or indirectly, by the Corporation.
(y) "Unrestricted Stock" means Common Stock awarded to a Participant
which Common Stock is not subject to a vesting period or installment
delivery specified by the Committee.
SECTION 3 -- GENERAL PROVISIONS
3.1 The Committee in its sole discretion shall select those key employees
to whom awards are made under the Plan and shall specify the type of awards
made, the number of Options, shares of Restricted Stock, Stock Awards,
Unrestricted Stock and Stock Appreciation Rights which in each case are awarded,
the Restricted Period, number of installments or Option Period applicable to the
awards and any other conditions relating to the awards that are consistent with
the Plan and that the Committee deems appropriate. Participants shall be
selected from among the key employees of the Corporation and its Subsidiaries
who are in a position to have a material impact on the future results of
operations of the Corporation and its Subsidiaries. Participants may be selected
and awards may be made at any time during the period that awards may be granted
under the Plan. Participants do not have to be selected and awards do not have
to be made at the same time by the Committee. Any award made to a Participant
shall not obligate the Committee to make any subsequent awards to that
Participant.
3.2 Shares of Common Stock acquired under the Plan may be authorized and
unissued shares of Common Stock or authorized and issued shares of Common Stock
held in the Corporation's treasury. Subject to Section 8.7, the total number of
shares of Common Stock which may be acquired under the Plan shall not exceed
7,500,000. The number of shares of Common Stock available at any time for awards
under the Plan shall be determined in a manner which reflects the number of
shares of Common Stock then subject to outstanding awards and the number of
shares of Common Stock previously acquired under the Plan. For purposes of such
determinations, shares of Common Stock returned to the Corporation as a result
of the forfeiture of Restricted Stock, Stock Awards or Options which expire or
terminate, other than by reason of the exercise of Stock Appreciation Rights,
shall again be available for awards under the Plan.
A-3
<PG$PCN>
SECTION 4 -- OPTIONS AND STOCK APPRECIATION RIGHTS
4.1 Subject to the provisions of this Section 4, the Committee may grant
incentive Options and nonqualified Options with or without Stock Appreciation
Rights to selected key employees of the Corporation and its Subsidiaries. Each
Option shall be evidenced by a Stock Option Agreement between the Corporation
and the Optionee which contains the terms and conditions specified by this
Section 4 and such other terms and conditions as the Committee in its sole
discretion shall specify.
4.2 The exercise price per share of Common Stock with respect to each
Option shall not be less than 100% of the Fair Market Value of a share of Common
Stock on the day the Option is granted.
4.3 Except as otherwise specifically set forth in the grant thereof in
accordance with this paragraph, each Option shall be for a term of up to ten
years as determined by the Committee, and no Option shall be exercisable during
the 12 months following the date of the grant. After the 12 month period, 25% of
the total number of options granted are exercisable; after 24 months from the
date of grant, 50% are exercisable; after 36 months, 75% are exercisable; and,
after 48 months, 100% of the options granted are exercisable. Notwithstanding
anything to the contrary in this paragraph, the Committee may, when granting
Options to any person under the Plan, grant Options that are exercisable
immediately or Options that are exercisable according to a schedule different
from that set forth in the preceding sentence. In addition, notwithstanding any
of the foregoing, upon the occurrence of a Change of Control Event, all Options
shall be immediately exercisable. Accrued installments of Options may be
exercised in whole or in part, and in no case may a fraction of a share be
purchased under the Plan.
4.4 At the time any Option is exercised in whole or in part, the Optionee
or other person exercising the Option shall pay to the Corporation, by certified
or bank cashier's check payable to the order of the Corporation, and/or, to the
extent permitted by law, Common Stock or other form of consideration acceptable
to the Corporation, the full exercise price of the shares purchased, and the
purchased shares shall be delivered to the Optionee promptly. No Optionee or his
or her legal representatives, legatees or distributees, as the case may be,
shall be deemed to be a holder of any shares upon the exercise of an Option
until the date of issuance of a stock certificate to the Optionee for those
shares. The proceeds from the sale of shares upon the exercise of Options shall
be added to the general funds of the Corporation and used for general corporate
purposes.
4.5 If an Optionee shall cease to be employed by the Corporation or any of
its Subsidiaries prior to the end of the Option Period by reason of Retirement,
each Option then held by the Optionee shall, to the extent that it was
exercisable at the time of Retirement, remain exercisable for a period of (a)
three months from the date of Retirement, if an incentive Option or (b) three
years from the last day of the month of Retirement, if a non-qualified Option,
and thereafter, such Option shall terminate; provided, however, if an Optionee
shall die after Retirement, each Option then held by the Optionee shall be
exercisable to the extent, and during the period, that it would, but for the
Optionee's death, have otherwise been exercisable after Retirement.
Notwithstanding anything to the contrary contained in this paragraph, the
Committee may, in its discretion, accelerate the vesting date and allow retiring
employees to exercise outstanding Options which would not otherwise be
exercisable under the Plan on the date of such employee's Retirement. If an
Optionee shall cease to be employed by the Corporation or any of its
Subsidiaries prior to the end of the Option Period by reason of death, each
Option then held by the Optionee shall, without regard to the extent that it was
exercisable at the time of death, be fully exercisable for a period of one year
from the first day of the month in which the Optionee died, and thereafter, such
Option shall terminate. If the employment of an Optionee with the Corporation
shall terminate, each Option then held by the Optionee shall, to the extent it
was exercisable on the date of termination, be exercisable until 60 days
following the date of termination and thereafter, such Option shall terminate.
Notwithstanding anything to the contrary contained in this paragraph, the
Committee may, in its discretion, accelerate the vesting date and allow
terminated employees to exercise outstanding Options which would not otherwise
be exercisable under the Plan on the date of such employee's termination.
Notwithstanding the foregoing, no Option shall be exercisable later than the end
of the Option Period relating thereto.
4.6 The Committee may grant Stock Appreciation Rights to Optionees in
tandem with non-qualified Options so that exercise of a Stock Appreciation Right
will have the effect of terminating the Option or
A-4
<PG$PCN>
portion thereof to which it relates, and exercise of an Option or portion
thereof to which a Stock Appreciation Right relates will have the effect of
terminating the Stock Appreciation Right. Stock Appreciation Rights shall be
exercisable in the same installments and be subject to the same terms and
conditions as the Options to which they relate and to such other terms and
conditions as the Committee in its sole discretion shall specify.
4.7 The aggregate Fair Market Value, determined as of the date an Option
is granted, of the Common Stock for which any Participant may be awarded
incentive Options which are first exercisable by the Participant during any
calendar year under the Plan or any other stock option plan maintained by the
Corporation or its Subsidiaries shall not exceed $100,000.
4.8 The Committee may, in its discretion, grant limited stock appreciation
rights ("Limited Stock Appreciation Rights") that, notwithstanding any other
provision of the Plan, may only be exercised during a Change of Control Exercise
Period, and such Limited Stock Appreciation Rights shall be so exercisable
during the Change of Control Exercise Period whether or not such person is then
employed by the Corporation. 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 (a) the Fair Market Value of the shares of the Common Stock
with respect to which the Limited Stock Appreciation Right was exercised over
the option price of such shares under the Plan and (b) if the Change of Control
Event is the result of a transaction or a series of transactions, the highest
price per share of Common Stock paid in such transaction or transactions during
the Change of Control Exercise Period up to the date of exercise over the
exercise price per share of Common Stock under the Plan. The Committee is
authorized to amend the terms of a Limited Stock Appreciation Right held by any
employee subject to Section 16 of the Exchange Act, as may be necessary so that
the holding and exercise of such Limited Stock Appreciation Right will be exempt
under such Section.
4.9 The maximum number of Options, Stock Appreciation Rights and Limited
Stock Appreciation Rights that may be granted to each Participant during any
calendar year shall not exceed 400,000.
SECTION 5 -- RESTRICTED STOCK, STOCK AWARDS AND UNRESTRICTED STOCK
5.1 An award of Restricted Stock, Stock Awards and Unrestricted Stock to a
Participant shall entitle the Participant to receive the number of shares of
Common Stock specified by the Committee in accordance with the terms and
conditions of this Section 5.
5.2 During the Restricted Period specified by the Committee, Restricted
Stock awarded to a Participant may not be sold, assigned, transferred, pledged
or otherwise encumbered, except as hereinafter provided. Except as otherwise
provided by the Committee, the Restricted Period specified in respect of any
award of Restricted Stock shall not be less than three years, except that the
Committee may provide for a Restricted Period to terminate at any time after one
year upon the attainment of performance-based objectives established as provided
in clause (i) of Section 5.11. Except as provided in this Section 5.2 and/or as
otherwise provided by the Committee, a Participant, as the owner of Restricted
Stock, shall have all the rights of a holder of Common Stock, including but not
limited to the right, subject to the provisions of Sections 8.7 and 8.8, to
receive all dividends or dividend equivalents paid on and the right to vote such
Restricted Stock. Notwithstanding anything to the contrary in the Plan, upon the
occurrence of a Change of Control Event the Restricted Period applicable to
Restricted Stock shall end and all restrictions on Restricted Stock shall
expire.
5.3 If a Participant holding Restricted Stock ceases to be an employee of
the Corporation or any of its Subsidiaries during the Restricted Period for any
reason other than death or Retirement, the Committee may at the time of
cessation of employment terminate the Restricted Period with respect to any or
all of such Restricted Stock. If the Committee does not terminate the Restricted
Period with respect to such Restricted Stock at the time of cessation of
employment, such Restricted Stock shall be forfeited.
5.4 If a Participant holding Restricted Stock ceases to be an employee of
the Corporation or any of its Subsidiaries during the Restricted Period by
reason of death or Retirement, Restricted Stock held by that Participant shall
become free of all restrictions thereon and, pursuant to Section 5.7, the
Corporation shall deliver that Restricted Stock to that Participant or that
Participant's beneficiary, as the case may be, within 60 days.
A-5
<PG$PCN>
5.5 Each Participant awarded Restricted Stock, Stock Awards or
Unrestricted Stock shall enter into such agreement with the Corporation as may
be specified by the Committee in which the Participant agrees to the terms and
conditions of the award and such other matters as the Committee in its sole
discretion shall specify.
5.6 Each certificate representing Restricted Stock awarded under the Plan
shall be registered in the name of the Participant to whom the Restricted Stock
was awarded, deposited by the Participant with the Corporation together with a
stock power endorsed in blank and bear the following, or a substantially
similar, legend:
The transferability of this Certificate and the Common Stock
represented hereby is subject to the terms and conditions, including
forfeiture, contained in Section 5 of the 1993 Long Term Incentive Plan of
C. R. Bard, Inc., as amended, and an Agreement entered into between the
registered owner and C. R. Bard, Inc. Copies of the Plan and Agreement are
on file in the executive office of C. R. Bard, Inc., 730 Central Avenue,
Murray Hill, New Jersey 07974.
5.7 When the restrictions imposed by Section 5.2 and any related
restrictions on Restricted Stock have expired or have otherwise been satisfied,
the Corporation shall deliver to the Participant holding that Restricted Stock,
or the Participant's legal representative, beneficiary or heir, a certificate or
certificates, without the legend referred to in Section 5.6, for the number of
shares of Restricted Stock deposited with the Corporation by the Participant
pursuant to Section 5.6 with respect to which all restrictions have expired or
been satisfied. At that time, the Agreement referred to in Section 5.5 shall
terminate forthwith as to those shares.
5.8 Stock Awards shall be made by the Committee in numbers of shares, and,
unless otherwise specified by the Committee and subject to Section 5.9, a Stock
Award shall be delivered to a Participant in three approximately equal
installments (in order to avoid the issuance of fractional shares) on the date
of the Stock Award and on the following anniversaries of the date of the Stock
Award. Stock Awards shall be made only in lieu of salary and cash bonuses.
Notwithstanding anything to the contrary in the Plan, upon the occurrence of a
Change of Control Event, any installment of a Stock Award not yet delivered
shall become immediately deliverable.
5.9 No installment of shares shall be delivered on any anniversary of the
date of the Stock Award to a Participant whose employment has been terminated,
or who has, or has been, served notice of termination prior to the award or
anniversary date of such installment; provided, however, that where such
termination has occurred due to a Participant's death or retirement, the
Committee may, in its discretion, waive this condition precedent to delivery of
awarded but undelivered shares. Any shares not delivered to a Participant
pursuant to this Section 5.9 may be subsequently awarded to another Participant.
A Participant shall have no voting rights with respect to, and shall not be
entitled to any dividends declared in respect of, any awarded but undelivered
shares.
5.10 The Committee may award Unrestricted Stock to a Participant in lieu
of salary or cash bonus, which Common Stock shall not be subject to forfeiture
pursuant to this Section 5. Certificates representing Unrestricted Stock shall
be delivered to the Participant as soon as practicable following the grant
thereof.
5.11 Notwithstanding the foregoing, certain awards granted under this
Section 5 of the Plan may be granted in a manner which is deductible by the
Corporation under Section 162(m) of the Code. Such awards (the
"Performance-Based Awards") shall be based upon earnings per share, net income,
Group Financial Goals (as defined in the C. R. Bard, Inc. 1994 Executive Bonus
Plan), return on shareholders' investment, return on assets, attainment of
strategic and operational initiatives, appreciation in the price of Common
Stock, customer income, market share, sales, net profits, economic value-added
models or comparisons with the Standard & Poor's Medical Product Index and
500-Stock Index. With respect to Performance-Based Awards, (i) the Committee
shall establish in writing the objective performance goals applicable to a given
period of service no later than 90 days after the commencement of such period of
service (but in no event after 25 percent of such period of service has elapsed)
and (ii) no awards shall be granted to any participant for a given period of
service until the Committee certifies in writing that the objective performance
goals (and any
A-6
<PG$PCN>
other material terms) applicable to such period have been satisfied. The number
of shares of Common Stock awarded as Performance-Based Awards during any
calendar year shall not exceed 25,000.
5.12 The maximum number of shares of Common Stock that may be granted as
Restricted Stock, Stock Awards and Unrestricted Stock in any calendar year shall
not exceed 40 percent of the total number of shares of Common Stock granted or
subject to awards granted under the Plan during such calendar year.
SECTION 6 -- ADMINISTRATION
6.1 The Plan shall be administered by the Committee, which shall consist
of Disinterested Persons (and in the case of awards granted to individuals
subject to Section 162(m) of the Code, the Committee shall also consist of
Directors who are "outside directors" within the meaning of Section 162(m) of
the Code and the regulations promulgated thereunder), and such Directors shall
serve at the pleasure of the Board.
6.2 Subject to the provisions of the Plan, the Committee shall have
exclusive power to select the key employees who shall be Participants and to
determine the amount of, or method of determining, the awards to be made to
Participants.
6.3 The Committee's interpretation of the Plan and of any award granted
under the Plan shall be final and binding on all Participants.
6.4 The Committee shall have the authority to establish, adopt or revise
such rules and regulations relating to the Plan and to make such determinations
as it deems necessary or advisable for the administration of the Plan.
SECTION 7 -- AMENDMENT OR TERMINATION
7.1 The Board may amend any provision of the Plan and any agreement under
the Plan at any time, provided that no amendment may be made that would (a)
increase the maximum number of shares of Common Stock which may be acquired
under the Plan, (b) extend the term during which Options may be granted under
the Plan or (c) reduce the exercise price per share to less than the Fair Market
Value of the Common Stock on the date an Option was granted unless the amendment
has been approved by the stockholders of the Corporation as provided in Rule
16(b)-3(b) under the Exchange Act, if continuation of the exemption granted by
Rule 16(b)-3 under the Exchange Act requires such approval. The Board shall also
have the right to terminate the Plan at any time. Except with a Participant's
consent, no amendment, suspension or termination shall impair the rights of the
Participant in any Options, Restricted Stock or Stock Appreciation Rights
awarded to the Participant under the Plan.
7.2 The Committee may refrain from designating Participants and from
making any awards, but that shall not be deemed a termination of the Plan. No
employee of the Corporation or any of its Subsidiaries shall have any claim or
right to be granted awards under the Plan.
SECTION 8 -- MISCELLANEOUS
8.1 The fact that a key employee of the Corporation or any of its
Subsidiaries has been designated a Participant shall not confer on that employee
any right to be retained in the employ of the Corporation or any of its
Subsidiaries or to subsequent awards under the Plan.
8.2 No award under the Plan shall be taken into account in determining a
Participant's compensation for purposes of any group life insurance or other
employee benefit or pension plan of the Corporation, including the Company's
Employees' Retirement Plan, Excess Benefit Plan and Supplemental Executive
Retirement Plan.
8.3 The Plan shall not be deemed an exclusive method of providing
incentive compensation for the officers and employees of the Corporation and its
Subsidiaries, and it shall not preclude the Board from authorizing or approving
other forms of incentive compensation.
A-7
<PG$PCN>
8.4 All expenses and costs in connection with the operation of the Plan
shall be borne by the Corporation.
8.5 Options, Restricted Stock and Stock Appreciation Rights awarded under
the Plan shall not be transferable by a Participant other than by will or the
laws of descent and distribution, and Options and Stock Appreciation Rights
awarded under the Plan shall be exercisable during a Participant's lifetime only
by the Participant.
8.6 A Participant may appoint a beneficiary, on a form supplied by the
Committee, to exercise Options and Stock Appreciation Rights in the event of the
Participant's death and may change that beneficiary at any time prior to the
date of the Participant's death.
8.7 In the event of any change in the outstanding shares of Common Stock
by reason of any stock dividend or split, recapitalization, merger,
consolidation, combination or exchange of shares or other similar corporate
change, the maximum aggregate number and class of shares in which awards may be
granted under the Plan, the number of shares subject to outstanding Options and
Stock Appreciation Rights and the maximum number and class of shares in which
Performance-Based Awards may be granted under the Plan in any calendar year
shall be appropriately adjusted by the Committee, whose determination shall be
conclusive. Any shares of stock or other securities distributed to a Participant
with respect to Restricted Stock shall be subject to the restrictions and
requirements imposed by Section 5, including depositing the certificates
therefor with the Corporation together with a stock power and bearing a legend
as provided in Section 5.6.
8.8 If the Corporation shall be consolidated or merged with another
corporation, each Participant who has received Restricted Stock that is still
subject to restrictions imposed by Section 5.2 may be required to deposit with
the successor corporation the certificates for the stock or securities or the
other property that the Participant is entitled to receive by reason of
ownership of Restricted Stock in a manner consistent with Section 5.6, and such
stock, securities or other property shall become subject to the restrictions and
requirements imposed by Section 5, and the certificates therefor or other
evidence thereof shall bear a legend similar in form and substance to the legend
set forth in Section 5.6.
8.9 The Corporation shall have the right to deduct from any payment made
under the Plan any federal, state or local income or other taxes required by law
to be withheld with respect to such payment at the highest marginal individual
income tax rate. It shall be a condition to the obligation of the Corporation to
deliver shares or pay any cash pursuant to any award that the Participant pay to
the Corporation such amount as may be requested by the Corporation for the
purpose of satisfying any liability for such withholding taxes. Any award
agreement may provide that the Participant may elect, in accordance with any
conditions set forth in such award agreement, to pay a portion or all of such
withholding taxes by (a) delivery of shares of Common Stock or (b) having shares
of Common Stock withheld by the Corporation from the shares otherwise to be
received. The number of shares so delivered or withheld shall have an aggregate
Fair Market Value sufficient to satisfy the applicable withholding taxes. The
acceptance of any such election by a Participant shall be at the sole discretion
of the Committee, and, in the case of a Participant subject to Section 16 of the
Exchange Act, the Corporation may require that the method of making such payment
be in compliance with Section 16 and the rules and regulations thereunder.
8.10 The Plan shall be construed in accordance with the laws of the State
of New Jersey. Notwithstanding anything to the contrary in the Plan, nothing in
the Plan shall be construed to prevent the transfer of funds to a grant or trust
for the purpose of paying benefits under the Plan.
8.11 If in the opinion of counsel for the Corporation, any issuance or
delivery of shares of Common Stock to a Participant will violate the
requirements of any applicable federal or state laws, rules and regulations
(including, without limitation, the provisions of the Securities Act of 1933, as
amended, or the Exchange Act), such issuance or delivery may be postponed until
the Corporation is satisfied that the distribution will not violate such laws,
rules or regulations. Certificates delivered to Participants pursuant to Section
5 hereof or issued on exercise of Options or Stock Appreciation Rights may bear
such legends as the Corporation may deem advisable to reflect restrictions which
may be imposed by law, including, without limitation, the Securities Act of
1933.
A-8
<PG$PCN>
EXHIBIT B
C. R. BARD, INC.
1994 EXECUTIVE BONUS PLAN
This is the C. R. Bard, Inc. 1994 Executive Bonus Plan (the "Plan"), as
authorized by the Board of Directors (the "Board") of C. R. Bard, Inc. (the
"Company"), for the payment of incentive compensation to designated employees.
1. Definitions
As used in the Plan, the following terms have the following meanings:
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Committee" shall mean the Compensation and Stock Option Committee of the
Board.
"Earnings Per Share" shall mean net income per share as reported in the
audited annual consolidated financial statements of the Company and its
subsidiaries, as adjusted for any items of an unusual and/or nonrecurring nature
which are specified in writing by the Committee prior to the 90th day of the
plan year and are confirmed as such by the Company's independent auditors.
"Group Financial Goal" as to any person shall mean the sum of the amounts
reported as net income on the respective financial statements of the divisions
or operating units which report to such person, as adjusted for any items of an
unusual and/or nonrecurring nature which are specified in writing by the
Committee prior to the 90th day of the plan year and are confirmed as such by
the Company's independent auditors.
"Outside Directors" shall have the meaning ascribed to it in Section 162(m)
of the Code and the regulations proposed or adopted thereunder.
2. Objectives
The objectives of the Plan are to:
- Help attract, retain and motivate the executives required to manage the
Company; and
- Promote the achievement of rigorous but realistic financial goals and
encourage intensive fact-based business planning.
3. Administration
The Plan will be administered by the Committee. The Committee shall contain
at least two Outside Directors. Subject to the provisions of the Plan, the
Committee will have full authority to interpret the Plan, to establish and amend
rules and regulations relating to it, to determine the terms and provisions for
making awards and to make all other determinations necessary or advisable for
the administration of the Plan.
4. Participation
Participation in the Plan in any fiscal year will be limited to individuals
who on the first day of the Company's fiscal year occupy the office of Chairman,
Chief Executive Officer, President, Vice Chairman, Chief Operating Officer,
Executive Vice President, Chief Financial Officer or Group President.
5. Performance Goals
Bonuses hereunder for all participants except Group Presidents will be
determined by reference to Earnings Per Share for each fiscal year, and bonuses
hereunder for Group Presidents will be determined 50 percent by reference to
each of (i) Earnings Per Share for each fiscal year and (ii) the Group Financial
Goal for each fiscal year. Prior to the 90th day of the plan year, the Committee
shall establish the Earnings Per Share and Group Financial Goal targets and the
amount of bonus (expressed as a percentage of base salary in effect on the first
day of the fiscal year) payable to each participant to the extent that Earnings
Per Share and, as applicable, the Group Financial Goal equal, or fall within a
range above or below the applicable
B-1
<PG$PCN>
target; provided, however, that with respect to the 1994 fiscal year, the
Committee shall set such targets and percentages no later than April 1, 1994. In
the event of any change in the outstanding shares of Common Stock by reason of
any stock dividend or split, recapitalization, or other similar corporate
change, the Earnings Per Share target shall be appropriately adjusted by the
Committee.
6. Maximum
No bonus payable to an individual under this Plan for a given fiscal year
shall exceed $1,400,000.
7. Time and Form of Payment
(a) Payment. Except as provided in paragraph (b) of this Section 7, awards
will be paid in cash as soon as practicable following the public announcement by
the Company of its financial results for the fiscal year and written
certification from the Committee that the goals described in Section 5 hereof
have been attained.
(b) Deferral. A participant in the Plan may, prior to the commencement of
a fiscal year, elect to defer payment of all or any portion of a bonus award.
Amounts so deferred will be credited by the Company to an account for the
participant and will be credited with interest on a quarterly basis at (i) the
average interest rate received by the Company on its United States short-term
investments for the fiscal quarter for which interest is credited or (ii) if no
such short-term investments were held, the prime rate in effect on the last
business day of the fiscal quarter announced by J. P. Morgan or, if no such rate
is published, the prime rate published in The Wall Street Journal on such date.
Amounts deferred pursuant to this paragraph 7(b) shall be paid in a lump sum
upon termination of employment by reason of retirement, death, disability or
otherwise or in installments as requested by the participant and agreed to by
the Committee.
8. Death or Disability
A participant in the Plan (or a participant's beneficiary) whose employment
terminates during a fiscal year due to death or disability shall receive, after
the end of the fiscal year, an amount equal to the bonus which would have been
payable to such participant, pro-rated for that portion of the fiscal year
during which the participant was employed.
9. Miscellaneous
(a) Amendment and Termination of the Plan. The Committee with the approval
of the Board may amend, modify or terminate this Plan at any time and from time
to time. Notwithstanding the foregoing, no such amendment, modification or
termination shall affect payment of a bonus for a fiscal year already ended.
(b) No Assignment. Except as otherwise required by applicable law, no
interest, benefit, payment, claim or right of any participant under the Plan
shall be subject in any manner to any claims of any creditor of any participant
or beneficiary, nor to alienation by anticipation, sale, transfer, assignment,
bankruptcy, pledge, attachment, charge or encumbrance of any kind, and any
attempt to take any such action shall be null and void.
(c) No Rights to Employment. Nothing contained in the Plan shall give any
person the right to be retained in the employment of the Company or any of its
affiliates or associated corporations or affect the right of any such employer
to dismiss any employee.
(d) Beneficiary Designation. The Committee shall establish such procedures
as it deems necessary for a participant to designate a beneficiary to whom any
amounts would be payable in the event of the participant's death.
(e) Communications.
(i) All notices and communications to the Committee in connection with
the Plan shall be in writing, shall be delivered by first class mail, by
courier or by hand, shall be addressed to the Committee and shall be deemed
to have been given and delivered only upon actual receipt thereof by the
Committee. All notices and communications from the Committee to
participants or beneficiaries which the Committee deems necessary in
connection with the Plan shall be in writing and shall be delivered to the
B-2
<PG$PCN>
participant or beneficiary or other person at the person's address last
appearing on the records of the Company.
(ii) Each participant shall file with the Committee such pertinent
information concerning the participant or the participant's beneficiary as
is required by the Committee.
(f) Plan Unfunded. The entire cost of this Plan shall be paid from the
general assets of the Company. The rights of any person to receive benefits
under the Plan shall be only those of a general unsecured creditor, and neither
the Company, the Board nor the Committee shall be responsible for the adequacy
of the general assets of the Company to meet and discharge Plan liabilities nor
shall the Company be required to reserve or otherwise set aside funds for the
payment of its obligations hereunder.
(g) Applicable Law. The Plan and all rights thereunder shall be governed
by and construed in accordance with the laws of the State of New Jersey.
B-3
<PG$PCN>
Please mark your
[X] votes as in this 1436
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 the election of directors and FOR proposals 2, 3 and 4.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR each of the following proposals:
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
FOR AGAINST ABSTAIN
1. Election of / / / / 2. Approval of / / / / / / 4. Ratification of / / / / /
/
Directors Amendment to Independent
(see reverse) the 1993 Long Public Accountants.
Term Incentive
Plan.
For, except vote withheld from the
following nominee(s):
3. Reapproval of / / / / / /
1994 Executive
_____________________________ Bonus Plan
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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 time. For joint
accounts each owner must sign.
_____________________________________________
_____________________________________________
SIGNATURE(S) DATE
*DETACH PROXY CARD HERE IF YOU ARE VOTING BY MAIL*
AND RETURN IN ENCLOSED ENVELOPE
[BARD GREEN LOGO]
Dear Shareholder:
C. R. Bard, Inc. now offers a new and convenient way to vote your shares. You
can vote your shares telephonically 24 hours a day, 7 days a week. This
eliminates the need to return the proxy card.
To vote by phone: (on a touch-tone telephone)
- - From the U.S. and Canada - call 1-800-OK2-VOTE (1-800-652-8683)
- - From outside the U.S. and Canada - call 201-324-0377.
You will be asked to enter the voter control number located in the box just
below the perforation of the proxy card. The recorded instructions will guide
you through the vote-by-phone process.
Your telephonic vote authorizes the named proxies, set forth on the reverse side
of the above proxy card, to vote your shares in the same manner as if you
marked, signed, dated and returned the proxy card.
If you vote your shares telephonically, there is no need for you to mail back
your proxy card.
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING.
<PG$PCN>
C. R. BARD, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Charles P. Slacik and
P Nadia C. Adler, and each of them, his true and lawful attorneys and
proxies, with power of substitution, to represent the undersigned and
R 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
O of C. R. BARD, INC. to be held at the Hamilton Park Conference Center,
175 Park Avenue, Florham Park, New Jersey, on Wednesday, April 21,
X 1999 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
Y their discretion on any other business which may properly come before
said meeting.
Election of Directors,
Nominees: 1. T. Kevin Dunnigan
2. Regina E. Herzlinger
3. William H. Longfield
4. Anthony Welters
TO VOTE BY TELEPHONE, PLEASE SEE THE REVERSE SIDE OF THIS CARD. TO
VOTE BY MAIL,
PLEASE MARK, SIGN AND DATE ON THE REVERSE SIDE AND RETURN PROMPTLY
IN THE
ENCLOSED ENVELOPE.
* FOLD AND DETACH HERE *
<PG$PCN>
PLEASE MARK YOUR
/X/ VOTES AS IN THIS 1436
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 THE ELECTION OF DIRECTORS
AND FOR PROPOSALS 2, 3 AND 4.
- -------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE
FOLLOWING PROPOSALS:
- -------------------------------------------------------------------------------
1. Election of Directors (see reverse)
FOR WITHHELD
/ / / /
For, except vote withhold from the following nominee(s):
---------------------------------------------------------------------------
2. Approval of Amendment to the 1993 Long Term Incentive Plan.
FOR AGAINST ABSTAIN
/ / / / / /
3. Reapproval of 1994 Executive Bonus Plan.
FOR AGAINST ABSTAIN
/ / / / / /
4. Ratification of Independent Public Accountants.
FOR AGAINST ABSTAIN
/ / / / / /
- -------------------------------------------------------------------------------
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 must sign.
-------------------------------------------
-------------------------------------------
SIGNATURE(S) DATE
- DETACH PROXY CARD HERE IF YOU ARE VOTING BY MAIL AND
RETURN IN ENCLOSED ENVELOPE -
[BARD GREEN LOGO]
Dear Shareholder:
C. R. Bard, Inc. now offers a new and convenient way to vote your shares. You
can vote your shares telephonically 24 hours a day, 7 days a week. This
eliminates the need to return the proxy card.
TO VOTE BY PHONE: (ON A TOUCH-TONE TELEPHONE)
- - FROM THE U.S. AND CANADA - CALL 1-800-OK2-VOTE (1-800-652-8683)
- - FROM OUTSIDE THE U.S. AND CANADA - CALL 201-324-0377.
YOU WILL BE ASKED TO ENTER THE VOTER CONTROL NUMBER LOCATED IN THE
BOX JUST
BELOW THE PERFORATION OF THE PROXY CARD. THE RECORDED INSTRUCTIONS
WILL GUIDE
YOU THROUGH THE VOTE-BY-PHONE PROCESS.
Your telephonic vote authorizes the named proxies, set forth on the reverse
side of the above proxy card, to vote your shares in the same manner as if you
marked, signed, dated and returned the proxy card.
If you vote your shares telephonically, there is no need for you to mail back
your proxy card.
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING.
<PG$PCN>
P C. R. BARD, INC.
R
0 PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
X
Y
The undersigned hereby constitutes and appoints Charles P. Slacik and Nadia
C. Adler, 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, on
Wednesday, April 21, 1999 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, Nominees: 1. T. Kevin Dunnigan
2. Regina E. Herzlinger
3. William H. Longfield
4. Anthony Welters
TO VOTE BY TELEPHONE, PLEASE SEE THE REVERSE SIDE OF THIS CARD. TO
VOTE BY
MAIL, PLEASE MARK, SIGN AND DATE ON THE REVERSE SIDE AND RETURN
PROMPTLY IN THE
ENCLOSED ENVELOPE.
. FOLD AND DETACH HERE .
[BARD LOGO]
Dear Bard Employee,
This past year we were able to see the results of the effort that has been
made by all our employees toward growing the business profitably. We feel we
are well positioned for continued success and appreciate your ongoing support
in achieving our goals.
/s/ Bill
William H. Longfield
<PG$PCN>
C.R. BARD, INC.
P PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
R The undersigned hereby constitutes and appoints Charles P. Slacik and Nadia
C. Adler, and each of them, his true and lawful attorneys and proxies, with
O power of substitution, to represent the undersigned and to vote all of the
shares of stock of C.R. BARD, INC. that the undersigned is entitled to vote
X at the Annual Meeting of Shareholders of C.R. BARD, INC. to be held at the
Hamilton Park Conference Center, 175 Park Avenue, Florham Park, New Jersey,
Y on Wednesday, April 21, 1999 at 10:00 a.m. and at any adjournments thereof
(a) as specified on the items listed on the reverse hereof, and (b) in
accordance with their discretion on any other business which may properly
come before said meeting.
ELECTION OF DIRECTORS, NOMINEES: T. KEVIN DUNNIGAN, REGINA E.
HERZLINGER,
WILLIAM H. LONGFIELD AND ANTHONY WELTERS
SEE REVERSE
SIDE
<PG$PCN>
/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 THE ELECTION
OF
DIRECTORS AND FOR PROPOSALS 2,3 AND 4.
________________________________________________________________________________
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE
FOLLOWING PROPOSALS:
________________________________________________________________________________
FOR WITHHELD
1. Election of / / / /
Directors
(see reverse)
For, except vote withheld from the following nominee(s):
___________________________________________________
FOR WITHHELD ABSTAIN
2. Approval of Amendment / / / / / /
to the 1993 Long Term
Incentive Plan
3. Reapproval of 1994 / / / / / /
Executive Bonus Plan
4. Ratification of Independent / / / / / /
Public Accountants.
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 must sign.
__________________________________________________
__________________________________________________
SIGNATURE(S) DATE
<PG$PCN>
