Barr Laboratories, Inc.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders:
The Annual Meeting of Shareholders of Barr Laboratories, Inc. will
be held on December 6, 1995 at 11:00 a.m. at the Woodcliff Lake Hilton,
Tice Boulevard-Woodcliff Lake, New Jersey for the following purposes:
1. To elect a Board of eight Directors to serve until
the next Annual Meeting of Shareholders and until their
successors are elected and qualified;
2. To consider approval of an amendment to the Company's 1993
Stock Option Plan for Non-Employee Directors;
3. To transact such other business as may properly come before
the meeting.
Owners of record at the close of business on October 26, 1995 will
be entitled to vote at the meeting or at any adjournments or postponements
thereof.
Each shareholder is requested to sign and date the enclosed proxy card
and to return it without delay in the enclosed postage-paid envelope. Any
shareholder present at the Annual Meeting may withdraw the proxy and vote
personally on each matter brought before the Annual Meeting.
By Order of the Board of Directors
Paul M. Bisaro
Secretary
2 Quaker Road
P.O. Box 2900
Pomona, New York 10970-0519
November 6, 1995
Barr Laboratories, Inc.
2 QuakerRoad
P.O. Box 2900
Pomona, New York 10970-0519
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
To Be Held December 6, 1995
Solicitation and Revocability of Proxies
This Proxy Statement is furnished
in connection with the solicitation of proxies by the management
of Barr Laboratories, Inc., a New York corporation (the
"Company"), for use at the 1995 Annual Meeting of Shareholders of
the Company (the "Annual Meeting") to be held at 11:00 a.m. on
December 6, 1995 at the Woodcliff Lake Hilton, Tice
Boulevard_Woodcliff Lake, New Jersey and at any adjournment or
postponement thereof. It is anticipated that this Proxy
Statement, together with the form of proxy, will first be mailed
to the Company's shareholders on or before November 6, 1995.
A person giving the enclosed proxy has the power to revoke it at
any time before it is exercised by (i) attending the Annual
Meeting and voting in person, (ii) duly executing and delivering
a proxy for the Annual Meeting bearing a later date or (iii)
delivering written notice of revocation to the Secretary of the
Company prior to use of the enclosed proxy at the Annual Meeting.
The Company will bear the cost of this solicitation of proxies,
including expenses in connection with the preparing, assembling
and mailing of proxy solicitation materials and the charges and
expenses of brokerage firms and others for forwarding
solicitation materials to beneficial owners. In addition to
solicitation by mail, proxies may be solicited personally or by
telephone or telegraph by Directors, Officers or employees of the
Company, who will receive no additional compensation for such
services. The Company has retained Continental Stock Transfer &
Trust Company to aid in the solicitation of proxies for which the
Company expects to pay approximately $4,000, plus reimbursable
expenses.
Record Date
The close of business on October 26, 1995 is the record date
for determination of holders of the Company's Common Stock, $.01 par
value (the "Common Stock"), entitled to notice of and to vote at the
Annual Meeting and any adjournment or postponement thereof. On that date
there were outstanding and entitled to vote 9,303,088 shares of Common
Stock, each entitled to one vote.
Action to be Taken Under the Proxy
The persons acting under the proxy will vote the shares
represented thereby for the election of the Company's nominees as
Directors, and for approval of the amendment to the Company's
1993 Stock Option Plan for Non-Employee Directors, or, if
otherwise directed by the person executing the proxy, in
accordance with such direction. The Board of Directors does not
know of any other business to be brought before the meeting, but
it is intended that, as to any such other business, a vote may be
cast pursuant to the proxy in accordance with the judgment of the
person or persons acting thereunder. Directors are elected by a
majority of votes cast. The affirmative vote of a majority of
all outstanding shares is required to approve the amendment to
the 1993 Stock Option Plan for Non-Employee Directors.
Abstentions, broker non-votes and withheld votes will not be
considered as votes cast; however, an abstention in connection
with the proposal to approve the amendment to the 1993 Stock
Option Plan for Non-Employee Directors will have the same legal
effect as a vote against such proposal.
PROPOSAL 1. ELECTION OF DIRECTORS
If all of the Company's nominees are elected, the Board of Directors
of the Company will consist of Bruce L. Downey (Chairman), Edwin A. Cohen
(Vice-Chairman), Robert J. Bolger, Michael F. Florence, Wilson L.
Harrell, Jacob M. Kay, Bernard C. Sherman and George P. Stephan,
who will serve as Directors until the 1996 Annual Meeting of
Shareholders and until their respective successors are duly
elected and qualified. If any nominee becomes unable or declines
to accept nomination or election, which is not anticipated, it is
intended that the persons acting under the proxy will vote for
the election in his stead of such other person as the Board of
Directors recommends. The Company does not have a standing
nominating committee; the current nominees for Directors have
been proposed by the Company's chairman and the Company's
principal shareholder.
Five meetings of the Board of Directors
were held during the fiscal year ended June 30, 1995. In
addition, there were twelve committee meetings. No Director
attended fewer than 75% of the total number of meetings of the
Board and all committees on which the Director served.
Audit Committee
The functions of the Audit Committee are to assist the
Board in overseeing and reviewing the Company's internal
accounting controls, to review the audited financial statements
and to investigate and make recommendations to the Board with
respect to the appointment of independent auditors. The
Committee, which met five times during the fiscal year ended June
30, 1995, is composed of Messrs. Florence, Harrell, Stephan and
Bolger.
Compensation Committee
The Compensation Committee is responsible for reviewing and
authorizing the granting of stock options to Officers and other key
employees under the Company's stock option plans and for reviewing
compensation to be paid to Officers and other key personnel of the Company.
Current members of the Committee, none of whom is an employee of the Company,
are Messrs. Cohen, Florence, Harrell and Stephan. Five meetings of
the Committee were held during the fiscal year ended June 30, 1995.
Business Development Committee
The Business Development Committee is responsible for evaluating and
providing advice to management on the merits of various business ventures,
including but not limited to, mergers, acquisitions, joint ventures,
strategic partnerships and other business arrangements. Current
members of the Committee are Messrs. Downey, Cohen, Bolger and
Kay. Two meetings of the Committee were held during the fiscal
year ended June 30, 1995.
Compensation of Directors
During the fiscal year ended June 30, 1995, Directors, excluding
Mr. Sherman and Mr. Downey, received an annual retainer of $12,500 and
a fee of $500 for attendance at each meeting of the Board and at each
Committee Meeting. In addition, Messrs. Bolger and Harrell
received $9,000 and $7,500 for consulting and out-of-pocket
expenses provided to the Company during the fiscal year ended
June 30, 1995. See Executive Agreements for amounts paid to Mr.
Cohen pursuant to his consulting agreement with the Company. For
the fiscal year ending June 30, 1996, the annual retainer and fee
for attendance at meetings has been increased to $15,000 and
$750, respectively.
Under the Company's 1993 Stock Option Plan for Non-Employee
Directors, each Director who is not an employee of the Company
(other than a Director who owns 40% or
more of the Common Stock) receives an annual grant of an option
to purchase 3,000 shares at an option price equal to 100% of the
fair market value of the Common Stock on the date of grant,
except that, in the case of the first grant (the date of the 1993
Annual Meeting of Shareholders), the number of shares covered by
each such grant was 12,000. Each option has a ten-year term and
becomes exercisable on the date of the first annual shareholders'
meeting immediately following the date of grant. On December 7,
1994, each participating director received a grant of an option
to purchase 3,000 shares at an exercise price of $25.63 per
share.
Information on Nominees
Bruce L. Downey became the Company's President, Chief Operating
Officer and a member of the Board of Directors in January 1993 and was
elected Chairman of the Board and Chief Executive Officer in February of
1994. Prior to assuming these positions, from 1981 to 1993, Mr. Downey
was a partner in the law firm of Winston & Strawn and a
predecessor firm of Bishop, Cook, Purcell and Reynolds. Mr.
Downey served as the Company's lead attorney throughout its legal
proceedings with the FDA. Mr. Downey is 47.
Edwin A. Cohen, RPh, founded the Company in 1970. Mr. Cohen served as
President, Chairman of the Board and Chief Executive Officer until 1994.
In February of 1994, he was elected to the position of Vice Chairman
of the Board and became a Consultant to the Company. Mr. Cohen
is 63.
Robert J. Bolger was elected a Director of the Company
in February 1988. Mr. Bolger has been President of Robert J.
Bolger Associates, a marketing consulting company since January
1988. From 1962 through 1987, he served as President of the
National Association of Chain Drug Stores, a major trade
association. Mr. Bolger is also a Director of General Computer
Corporation. Mr. Bolger is 73.
Michael F. Florence, CFA, was elected a Director of the Company in
February 1988. Mr. Florence is President of Sherfam, Inc. and has been
since 1989. He is also President of Citadel Gold Mines, Ltd., Vice President
of Apotex, Inc. and Vice President of Sherman Delaware, Inc. From January
1964 through April 1989, Mr. Florence was a partner in Wm.
Eisenberg & Co., Canadian Chartered Accountants. He is a
Director of Citadel Gold Mines, Inc. (NASDAQ), Nutrition for Life
International, Inc. (NASDAQ) and was previously a Director of
Kinesis, Inc. Mr. Florence and Dr. Sherman are brothers-in-law.
Mr. Florence is 58.
Wilson L. Harrell was elected a Director of
the Company in February of 1988. Since July 1990, Mr. Harrell
has been a columnist, consultant and speaker. He is author of
the book, For Entrepreneurs Only. From 1987 to July 1990, he was
publisher of INC. magazine. Mr. Harrell is also a Director of
Harrell International (NASDAQ). Mr. Harrell is 76.
Jacob ("Jack") M. Kay was elected a Director of the Company in December
1994. Mr. Kay is President of Apotex, Inc., and also serves as
Vice Chairman of the Canadian Drug Manufacturers Association. He
is also a member of the Sectoral Advisory Group on International
Trade. Mr. Kay is 54.
Bernard C. Sherman, PhD, was Chairman of the Board of the Company from
July 1981 to January 1993. He remains a Director of the Company.
Dr. Sherman is Chief Executive Officer of Apotex, Inc., a Canadian
manufacturer of pharmaceutical products. He is also President of Sherman
Delaware, Inc. and a Director of Citadel Gold Mines, Inc.
(NASDAQ). In July 1994, Dr. Sherman and Shermfin Corp. consented
to the issuance of an Order of the Securities and Exchange
Commission (the "Commission") that they cease and desist from
violations of certain reporting and anti-fraud provisions of the
Securities Exchange Act of 1934. Dr. Sherman and Shermfin Corp.
consented to this Order without admitting or denying the findings
of the Commission that they had failed to file reports of
beneficial ownership of the common stock of Kinesis, Inc. with
the Commission on Form 3 and Schedule 13G. The Company has no
relationship with Kinesis, Inc. Dr. Sherman is 53.
George P. Stephan was elected a Director of the Company in February 1988.
Since July 1993, Mr. Stephan has been a business consultant and
private investor. From December 1991 to July 1993, Mr. Stephan
was of counsel to Murtha, Cullina, Richter and Pinney in
Hartford, Connecticut and a business consultant, specializing in
international business. From January 1991 to November 1991, he
served as Chairman of the Board and Interim Chief Executive
Officer of Kollmorgen Corporation, a diversified technology
company, and was a consultant to Kollmorgen Corporation from
April 1990 to January 1991. Mr. Stephan was Vice Chairman of
Kollmorgen from 1988 to 1990. Mr. Stephan is 62.
The Board of Directors recommends a vote "FOR" the election of the above
nominees.
PROPOSAL 2. APPROVAL OF THE AMENDMENT TO THE 1993 STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
In December 1993, the shareholders ratified the adoption by the
Board of Directors of the 1993 Stock Option Plan for Non-Employee
Directors (the "Directors' Plan"). An aggregate of 150,000
shares of Common Stock are available under the Directors' Plan,
of which 66,000 shares are subject to outstanding options. The
following names nominees for election as directors hold those
66,000 options in the amounts set forth after their respective
named as follows: Cohen (3,000), Bolger (15,000), Florence
(15,000), Harrell (15,000), Kay (3,000) and Stephan (15,000).
This formula plan, among other things, enhances the Company's
ability to attract and retain experienced Directors. Currently,
each Eligible Director (as that term is defined in the Directors'
Plan) on any grant date is granted a non-qualified option to
purchase 3,000 shares. Each such option has a ten-year term, is
exercisable at an option exercise price equal to 100% of the fair
market value of the shares on the date of grant, and becomes
exercisable on the date of the first annual shareholders' meeting
immediately following the date of grant of the option, provided
there has been no interruption of the optionee's service on the
Board before that date. The options are not transferable except
by will or the laws of descent and distribution, or to a
designated beneficiary, and may be exercised during an option
holder's lifetime only by the Director. Upon approval of this
amendment, commencing with the annual meeting of shareholders at
which the shareholders of the Company approve this amendment, and
continuing with each annual meeting thereafter until the
Directors' Plan is terminated or expires, each person who is an
Eligible Director immediately following such annual meeting shall
be granted an option to purchase 5,000 shares of Common Stock
instead of 3,000 shares. No other provision of the Directors'
Plan will be changed by the proposed amendment.
Under current law, certain of the federal income tax consequences to
non-employee directors and the Company under the Directors' Plan are
as follows: A director to whom a non-qualified stock option is
granted (which is treated as an option for federal income tax
purposes) does not recognize income at the time of grant of such
option and the Company is not entitled to a deduction at that
time. When a director exercises the stock option, the director
will recognize ordinary compensation income equal to the
difference, if any, between the exercise price paid and the fair
market value as of the date of option exercise, on the shares the
director receives. The Company will generally be entitled to a
federal income tax deduction in respect of the stock option in
the Company's tax year in which the option is exercised, with the
amount of the deduction being equal to the ordinary compensation
income recognized by the director as described above.
The Board of Directors recommends a vote "FOR" approval of the amendment to
the 1993 Stock Option Plan for Non-Employee Directors.
Ownership of Securities
The following table sets forth information regarding the beneficial
ownership of the Company's voting securities as of June 30, 1995, by (i)
each person who beneficially owns more than 5% of the Company's voting
securities; (ii) each Director of the Company; (iii) each named
Officer of the Company; and (iv) all Directors and Officers of
the Company as a group.
Name and Address of
Beneficial Owner Number of Shares Common Percent
Bernard C. Sherman(1) 6,108,634(2) 63.2%
150 Signet Drive
Weston, Ontario
Canada M9L 1T9
FMR and Edward C. Johnson, 3rd 799,800(4) 8.3%
2 Devonshire Street
Boston, MA 02109
Edwin A. Cohen(1) 466,953(3) 4.8%
Bruce L. Downey(1) 61,944(3) *
George P. Stephan(1) 32,000(3) *
Robert J. Bolger(1) 22,000(3) *
Wilson L. Harrell(1) 22,000(3) *
Michael F. Florence(1) 12,200(3) *
Jacob M. Kay(1) 5,000 *
Gerald F. Price 53,359(3) *
Ezzeldin A. Hamza 45,521(3) *
Paul M. Bisaro 23,126(3) *
Bruce W. Hooey 5,658(3) *
All Directors and Officers
as a group (17 persons) 6,896,404(3) 71.3%
<FN>
* Less than 1%
(1) A Director of the Company.
(2) Consists of 5,888,276 common shares held of record by Sherman
Delaware, Inc. ("SDI") and 220,358 common shares held of record
by Glastex Investments, Inc. All of the shares held of record by
SDI have been pledged to a bank to secure a guaranty made by SDI.
A change in control of the Company could result in the event SDI
were to default in its guaranty obligation.
(3) Includes shares of common stock which Directors and Officers have
currently exercisable rights to acquire through the exercise of incentive
and non-qualified options, in the amount of 60,000 shares for Mr.
Downey, 91,954 shares for Mr.Cohen, 28,500 shares for Mr.
Stephan, 22,000 shares each for Mr. Harrell and Mr. Bolger,
12,000 shares for Mr. Florence, 48,500 shares for Mr. Price,
45,000 shares for Mr. Hamza, 22,500 shares for Mr. Bisaro, 5,000
shares for Mr. Hooey, and 390,204 shares for all Directors and
officers as a group.
(4) Reflects shares beneficially owned as of
December 31, 1994 according to a statement on Schedule 13G filed
with the Securities and Exchange Commission. Fidelity Management
& Research Corp. ("Fidelity"), a wholly-owned subsidiary of FMR
Corp. and an investment adviser registered Investment Advisers
Act of 1940, is the beneficial owner of the shares shown as a
result of acting as investment adviser to several investment
companies ("the Funds") registered under the Investment Company
Act of 1940.
Edward C. Johnson 3rd, FMR Corp. (through its control of Fidelity)
and the Funds each has sole power to dispose of the 799,800 shares owned
by the Funds.
Neither FMR Corp. nor Edward C. Johnson 3rd has the sole power to vote
or direct the voting of the shares owned directly by the Funds, which power
resides with the Funds' Boards of Trustees. Fidelity carries out the voting
of the shares under written guidelines established by the Funds' Board of
Trustees.
Various persons have the right to receive of the power to direct the
receipt of dividends from, or the proceeds from the sale of, the shares
shown. The interest of one person, Fidelity Convertible Securities Fund,
an investment company registered under the Investment Act of 1940, amounted
to 761,200 shares or 7.9% of the class.
Executive Compensation
The following table sets forth as to the Chairman and Chief
Executive Officer, and the four other executive officers earning
the highest aggregate compensation in the fiscal year ended June
30, 1995, the compensation earned, awarded or paid for services
rendered to the Company in all capacities during each of the
three fiscal years ended June 30, 1995, in which each such person
served as an officer.
Summary Compensation Table
Name & Principal Stock All Other
Position Year Salary($) Bonus($) Other($) Options(#) Compensation
(1) ($)(2)
Bruce L. Downey 1995 349,231 200,000 1,132 40,000 14,607
Chairman, Chief 1994 299,712 187,500 53,072(3) - 14,757
Executive Officer 1993 132,211 - 22,850(3) 100,000 10,316
& President
Gerald F. Price 1995 194,846 50,000 15,121(6) 15,000 11,536
Executive Vice 1994 185,000 55,500 29,996(4) 10,000 11,710
President 1993 181,243 10,000 85,098(4) - 8,761
Ezzeldin A. Hamza 1995 169,846 50,000 13,718(5) 6,500 12,422
Sr. Vice 1994 160,000 48,000 11,262(5) 750 12,265
President 1993 145,111 47,000 40,000(5) 44,000 13,817
Research &
Development
Paul M. Bisaro 1995 149,461 50,000 236 15,000 13,346
Chief Financial 1994 111,635 46,000 - 5,000 12,501
Officer, General 1993 89,316 10,000 54,373(4) 10,000 9,740
Counsel and
Secretary
Bruce W. Hooey 1995 114,923 40,000 20,806(4) 5,000 10,814
Chief Information 1994 - - - - -
Officer 1993 - - - - -
<FN>
(1) Includes amounts deferred under the Company's Savings and
Retirement Plan.
(2) The amounts shown in this column represent the Company's
annual contributions to its Savings and Retirement Plan.
(3) Mr. Downey was elected an officer of the Company on January 5,
1993. Amounts represent relocation expenses paid pursuant to
his employment agreement. See "Executive Agreements."
(4) Amounts represent reimbursement of relocation expenses.
(5) Amounts accrued in order to fund deferred compensation
payable pursuant to agreement. See "Executive Agreements".
(6) Amount represents reimbursement of interest.
Option Grants
The following table shows all stock options that were
granted to the officers named in the preceding Summary
Compensation Table during the fiscal year ended June 30, 1995.
The exercise price of all such options was the fair market value
on the date of the grant.
Option Grants in the Last Fiscal Year
Individual Grants (1)
Potential Realizable
Number of % of Total Value at Assumed Annual
Shares Options Rates of Stock Price
Underlying Granted to Per Share Appreciation for Option
Options Employees Excercise Expiration Term
Name Granted (#)Fiscal YearBase PriceDate 5%($) 10%($)
Bruce L. Downey 40,000 21% $21.69 08/17/04 545,629 1,382,731
Gerald F. Price 15,000 8% 21.69 08/17/04 204,611 518,524
Ezzeldin A. Hamza 6,500 3% 21.69 08/17/04 88,665 224,694
Paul M. Bisaro 15,000 8% 21.69 08/17/04 204,611 518,524
Bruce W. Hooey 5,000 3% 21.69 08/17/04 68,204 172,841
All Shareholders(2) 26,239,581 319,915,883
<FN>
(1) Consists of options granted under the Company's stock
option plan approved by shareholders in 1993. This plan
permits the Compensation Committee in its discretion to cancel
any option granted under such plan and re-grant it at a lower
price, however, no such action was taken during the fiscal
year.
(2) Total dollar gains on assumed rates of appreciation shown
here calculated on 9,282,427 outstanding shares as of June 30,
1995 and the market price on that date ($21.625)
Note: The dollar amounts under the 5% and 10% columns in the
table above are the result of calculations required by the
Securities and Exchange Commission's rules and therefore are not
intended to forecast possible future appreciation of the stock
price of the Company. Although permitted by the SEC's rules, the
Company did not use an alternate formula for a grant date
valuation because the Company is not aware of any formula which
will determine with reasonable accuracy a present value based on
future unknown or volatile factors. As shown in the % column
above, no gain to the named officers is possible without
appreciation in the price of the Company's common stock, which
will benefit all shareowners.
Option Exercises and Option Values
The following table provides information as to the value of
options exercised and options held by Officers named in the
preceding Summary Compensation Table at fiscal year end measured
in terms of the closing price of the Company's common stock (see
Notes 1 and 2 below).
Aggregated Option Exercises and Fiscal Year-End June 30, 1995
Option Values
Number of Shares Subject Value of Unexercised
Shares to Unexercised Options In-the-Money Options
Acquired on Value at Year-End at Year-End(2)
Name Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
Bruce L.
Downey - - 40,000 100,000 $455,000 $682,500
Gerald F.
Price - - 36,000 20,000 405,000 23,125
Ezzledin
A. Hamza - - 32,875 40,875 395,759 396,984
Paul M.
Bisaro - - 12,500 17,500 125,313 11,563
Bruce W.
Hooey - - 2,500 7,500 3,438 3,438
<FN>
(1) Valued at the difference between the fair market value of the
shares at the time of exercise and the options' grant price.
(2) Valued at the difference between the fair market value of the
shares at June 30, 1995 ($21.625) and the options' grant price.
Executive Agreements
In January 1994, the Company entered into a consulting agreement
with Mr. Cohen for a term ending June 30, 2002. From January 31, 1994,
when the agreement commenced, and through June 30, 1995, Mr. Cohen provided
consulting services related to certain business development
projects and received compensation at the rate of $250,000 per
annum. The consulting agreement, as amended in June 1995,
provides that beginning July 1, 1995, Mr. Cohen's duties will,
among other things, include consulting and advising with regard
to products and process development and attendance at industry
associations and technology groups for up to 120 days during the
twelve months ending June 30, 1996 and up to 80 days during each
fiscal year until June 30, 2002. For the fiscal year ending June
30, 1996, Mr. Cohen will be compensated at the rate of $150,000
per annum and $100,000 during each of the six subsequent years.
During each of the next seven years, Mr. Cohen will also receive
an additional fee equal to one percent of the Company's pre-tax
earnings between $5 million and $15 million for each such year.
In the event of Mr. Cohen's death during the term of the
agreement, all amounts which would otherwise have been payable
thereafter will be paid at the times provided in the agreement to
his designated beneficiary or his estate. In addition, during
the term of the agreement, Mr. Cohen is entitled to receive the
same compensation as other non-employee Directors of the Company
for his services as a Director, to exercise any outstanding non-
qualified stock options granted to him prior to January 21, 1994
and to be provided with medical and dental benefits equivalent to
those which the Company provides for its senior officers from
time to time on the same terms and conditions. At commencement
of the term of the agreement, the Company transferred to Mr.
Cohen title to the automobile which the Company was then
providing to him for use in its business.
On January 4, 1993, the Company employed Mr. Downey as President and
Chief Operating Officer. The Agreement, initially for three years, and
year-to-year thereafter unless terminated by either party, provides for
(i) a base annual salary of approximately $350,000 (as of July 1,
1994) which may be increased by the Company; (ii) participation
in the executive incentive plan with the opportunity to receive
an annual bonus of up to 50% of the then base salary; (iii) grant
of options to purchase 100,000 shares of common stock; and (iv)
financial assistance in relocating, including indemnification of
up to $30,000 of any loss sustained on the sale of his present
residence. If the Agreement is terminated by the Company without
cause or by Mr. Downey for good reason (as defined therein), Mr.
Downey will be entitled to a lump sum payment equal to 18 months
base salary.
On August 9, 1989 the Company entered into an
Agreement with Mr. Hamza in order to induce him to remain as an
employee until at least August 9, 1993 at which time the benefits
accrued pursuant to the Agreement vested. The Agreement provides
for deferred payments to Mr. Hamza annually from 1997 to 2004,
both inclusive, in order to coincide with the higher education
requirements of his three children. The total amount payable is
$300,000, of which $25,000 is payable in each of four of the
eight years and $50,000 is payable in each of the other four
years. Such obligation is recorded at its present value and is
included as part of Other Liabilities in the consolidated balance
sheets.
Compensation Committee Report on Executive Compensation
Regulations of the Securities and Exchange Commission require the
compensation committee of the Board of Directors of a publicly-
traded company to publish in each proxy statement involving the
election of Directors a report addressing certain aspects of
Executive Officer compensation for the last completed fiscal
year. The following report is provided pursuant to those
regulations.
The Compensation Committee decides or recommends
to the Board for its decision on all matters of policy relating
to compensation of Executive management and approves the salaries
of Officers (other than the Officer-Directors, whose salaries are
approved by the Board). The Committee also approves grants of
stock options.
Compensation programs for Executive Officers are
designed to attract, retain and motivate employees who will
contribute to the achievement of corporate goals and objectives.
Elements of Executive compensation include salaries, bonuses and
awards of stock options, with the last two being variable. In
making its decisions or recommendations, the Committee takes into
account factors it deems relevant to the specific compensation component
being considered, including compensation paid by other business
organizations of comparable size in the same industry and related industries,
profitability, the attainment of annual individual and business
objectives, an assessment of individual contributions relative to
others' and historic compensation awards.
The Committee considered the factors described above in determining Mr.
Downey's total compensation. More specifically, the Committee recognized
that during fiscal 1995, the Company, under Mr. Downey's leadership,
improved significantly its profits over fiscal 1994, and effected
and maintained a substantial positive
change in its relations with the Food and Drug Administration.
The Committee also considered key decisions and actions taken by
Mr. Downey to secure and maintain a finding of current Good
Manufacturing Practice compliance from the FDA, which contributed
to the three new product approvals received during fiscal 1995;
and, his efforts to continue to build a management team that is
capable of further improving the performance of the Company.
Also, during fiscal 1995, the Company achieved the major
objectives approved by the Board in the Company's fiscal 1995
Business Plan.
The Committee is responsible for addressing issues
raised by the change in the Internal Revenue Code which
establishes a limit on the deductibility of annual compensation
for certain Executives which exceeds $1,000,000. The change had
no impact for the fiscal year ended June 30, 1995 since no
Executive Officer received compensation in excess of $1,000,000.
The Committee intends to review this matter from time to time in
the future to determine whether changes should be made to meet
the requirements for deductibility.
The Compensation Committee
Edwin A. Cohen
Michael F. Florence
Wilson L. Harrell
George P. Stephan
Performance Graph
The graph below compares the cumulative total shareholder
returns on the common stock of the Company (BRL) for
the last five fiscal years with the cumulative
total return of the Standard & Poor's Health Care
Drugs Index and the Standard & Poor's 500 Index over the same
period, assuming an investment of $100 in the Company's common
stock, the S&P Health Care Drugs Index and the S&P 500 Index on
June 30, 1990, and reinvestment of dividends.
(Graphic omitted)
June 30,
1990 1991 1992 1993 1994 1995
Barr Laboratories, Inc. 100 238 97 229 237 275
Health Care Drugs Index 100 123 142 119 115 179
S&P 500 Index 100 107 122 138 140 177
Certain Relationships and Related Transactions
During the fiscal year ended June 30, 1995 the Company
sold certain of its pharmaceutical products and bulk
pharmaceutical materials to four other companies owned
by Dr. Bernard Sherman, a Director of the
Company. The Company was paid an aggregate of approximately
$2,585,000 upon such sales. The Company also purchased bulk
pharmaceutical materials from a company owned by Dr. Sherman in
the amount of $435,000. The Company believes the amounts of such
transactions would approximate the amounts of similar
transactions with unaffiliated third parties.
The Company has purchased a directors' and officers' liability
insurance policy from the National Union Fire Insurance Company of
Pittsburgh, Pennsylvania, and an excess directors' and officers' liability
insurance policy from RLI Insurance Company, that insure the
Company for certain obligations incurred in the indemnification
of its directors and officers under New York law and insure
Directors and Officers where such indemnification is not provided
by the Company. The one-year cost of the combined current
policies will be approximately $233,000 for the fiscal year
ending June 30, 1996.
The Company has also purchased an insurance policy from National
Union Fire Insurance Company of Pittsburgh, Pennsylvania,
that provides coverage for employees (including officers)
who are fiduciaries of the Company's employee
benefit plans against expenses and defense costs
incurred as a result of alleged breaches of fiduciary duty as
defined in ERISA. The one-year cost of the current policy is
$6,975.
In June 1992, a shareholder action was filed against
the Company and Edwin A. Cohen, then President of the Company,
and Louis J. Guerci, who was a Vice President of the Company. In
November 1994, the Company agreed to settle this matter.
Management strongly believed that the case was without merit, but
determined that it was in the Company's best interest to settle
rather than participate in continued litigation. In December
1994, the court approved the settlement. In connection with this
action, the Company had separately agreed to indemnify Mr. Guerci
in connection therewith. In the three years ended June 30, 1995,
the Company made advances of approximately $288,000 and $35,000
in legal fees and expenses to legal counsel on behalf of Mr.
Guerci and Mr. Cohen, respectively.
Receipt of Shareholder Proposals
Any shareholder proposal intended to be presented at
the 1996 Annual Meeting must be received by the Company at 2
Quaker Road, P.O. Box 2900, Pomona, New York 10970-0519;
Attention: The Secretary, not later than July 8, 1996.
Other Matters
As previously disclosed in the Company's Annual Report
on Form 10-K for the year ended June 30, 1994, on March 21, 1994,
the Company dismissed KPMG Peat Marwick LLP ("Peat Marwick") as
principal accountants for the Company and its consolidated
subsidiaries.
The reports of Peat Marwick on the Company's
consolidated financial statements for the then two most recent
fiscal years did not contain an adverse opinion or a disclaimer
of opinion and were not qualified or modified as to audit scope
or accounting principles; however, one report included an
explanatory paragraph as to an uncertainty. The auditors' report
for the fiscal year ended June 30, 1992 stated that the matters
referred to therein raised substantial doubt about the Company's
ability to continue as a going concern. Those matters were the
failure of the Company to be in compliance with certain covenants
in its debt agreements, the Company's anticipation that it might
need additional capital to finance operations and the Company's
ongoing litigation with the Food and Drug Administration. In
addition, the auditors' reports for each of the then two most
recent fiscal years stated that no provision had been made in the
accompanying consolidated financial statements for any liability
which might result from a pending shareholder action against the
Company.
During the Company's then two most recent fiscal
years and the subsequent interim period of the fiscal year ended
June 30, 1994, there were no disagreements between the Company
and Peat Marwick on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or
procedure, which disagreements, if not resolved to the
satisfaction of Peat Marwick, would have caused it to make
reference to the subject matter of the disagreements in
connection with its reports on the Company's financial
statements.
Effective March 21, 1994, the Company engaged
Deloitte & Touche LLP ("Deloitte") as its independent auditors to
audit the Company's consolidated financial statements. Before
confirming the engagement, neither the Company nor anyone acting
on its behalf consulted Deloitte about the application of
accounting principles to a specific completed or contemplated
transaction, or the type of audit opinion Deloitte might render
on the Company's financial statements.
The Company's Board ofDirectors approved the decisions to discharge
Peat Marwick and to engage Deloitte, based on recommendations of its Audit
Committee and senior management of the Company. The Board approved these
recommendations on March 21, 1994. The recommendations of the
Audit Committee and senior management were made after they had
received presentations from four accounting firms of recognized
national standing, including Peat Marwick and Deloitte, with
regard to the auditing and related services which each would
provide to the Company if it were selected to be the Company's
independent auditors.
Services performed by Deloitte & Touche LLP, the Company's independent
accountants, for the year ended June 30, 1995, consisted of an audit of
the consolidated financial statements of the Company, an audit of the
Company's Employee Savings Plan, preparation of the Company's federal and
state tax returns, and limited assistance and consultation in
connection with filings with the Securities and Exchange
Commission and on pending tax matters. Deloitte & Touche LLP
also performed certain management advisory services in connection
with the Company's implementation of a new computer system and
evaluation of financing alternatives.
The Company expects representatives of Deloitte & Touche LLP to be
present at and available to respond to appropriate questions which may
be raised at the Annual Meeting. Representatives of Deloitte & Touche LLP
will have the opportunity to make a statement if they so desire.
APPENDIX
(Proxy Card)
BARR LABORATORIES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD DECEMBER 6, 1995
The undersigned hereby appoints Bruce L. Downey and Edwin A.
Cohen, jointly or individually, proxies with the power of
substitution to vote all shares the undersigned is entitled to
vote at the Annual Meeting of Shareholders on December 6, 1995,
or adjournments thereof.
1. Election of Directors
/ / For all nominees listed below (except as marked)
/ / Withhold authority to vote for nominees
(Instructions: To withhold authority to vote for any individual
nominee strike a line through the nominee's name in the list below).
Robert J. Bolger, Edwin A. Cohen, Bruce L. Downey, Michael F.
Florence, Wilson L. Harrell, Jacob M. Kay, Bernard C. Sherman,
George P. Stephan
2. Amendment of 1993 Stock Option Plan for Non-Employee Directors
For Against Abstain
/ / / / / /
3. In their discretion, the proxies are authorized to vote upon
such other business as may come before the meeting or
adjournments thereof.
THIS PROXY, DULY EXECUTED, WILL BE VOTED AS SPECIFIED. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 & 2.
BARR LABORATORIES, INC.
PROXY
The undersigned hereby acknowledge receipt of the Proxy Statement
and Notice of Annual Meeting to be held December 6, 1995.
Date: ___________,1995
___________(SEAL)
___________(SEAL)
(Please sign exactly as your name appears hereon. If stock is
registered in more than one name, each holder should sign. When
signing as an attorney, administrator, executor, guardian or
trustee, please add your title as such. If executed by a
corporation, the proxy should be signed by a duly authorized
officer).
PLEASE DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
I PLAN TO ATTEND______