SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commision Only (as permitted by
Rule 14a-6(e)(2))
/xx/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
BARR LABORATORIES, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No Fee Required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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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)
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4) Proposed maximum aggregate value of transaction:
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/ / Fee paid previously with prelimianry materials.
/ / Check box if any part of the fee is offset as provided
by Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date of
its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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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 4, 1996 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 Incentive Plan;
3. To consider approval of an amendment to the Company's 1993
Stock Option Plan for Non-Employee Directors;
4. To transact such other business as may properly come before
the meeting.
Owners of record at the close of business on October 15,
1996 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
October 25, 1996
Barr Laboratories, Inc.
2 Quaker Road
P.O. Box 2900
Pomona, New York 10970-0519
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
To Be Held December 4, 1996
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 1996
Annual Meeting of Shareholders of the Company (the "Annual
Meeting") to be held at 11:00 a.m. on December 4, 1996 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 October 25, 1996.
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 15, 1996 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 14,053,673 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 amendments to the Company's
1993 Stock Incentive Plan and 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 amendments to the 1993 Stock Incentive
Plan and 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 amendments to the 1993 Stock
Incentive Plan and 1993 Stock Option Plan for Non-Employee
Directors will have the same legal effect as a vote against any
such proposal.
1
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 1997Annual 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.
Six meetings of the Board of Directors were held during the
fiscal year ended June 30, 1996. 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
four times during the fiscal year ended June 30, 1996, 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. Four meetings of the Committee
were held during the fiscal year ended June 30, 1996.
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. Four meetings of the
Committee were held during the fiscal year ended June 30, 1996.
Compensation of Directors
During the fiscal year ended June 30, 1996, Directors,
excluding Mr. Sherman and Mr. Downey, received an annual retainer
of $15,000 and a fee of $750 for attendance at each meeting of
the Board and at each Committee Meeting. In addition, Mr. Bolger
received $11,400 for consulting expenses provided to the Company
during the fiscal year ended June 30, 1996. See Executive
Agreements for amounts paid to Mr. Cohen pursuant to his
consulting agreement with the Company.
Under the Company's 1993 Stock Option Plan for Non-Employee
Directors, as amended effective December 1995, 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 7,500 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 18,000. 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, 1995, each participating director received a grant of
an option to purchase 7,500 shares at an exercise price of $15.50
per share.
2
Information on Nominees
Bruce L. Downey, 48, 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.
Robert J. Bolger, 74, 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.
Edwin A. Cohen, RPh, 64, 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.
Michael F. Florence, CA, 59, was elected a Director of the
Company in February 1988. Mr. Florence is President of Sherfam,
Inc. and has been since 1989. He is Vice President of Shermfin
Corp., 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 President and 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.
Wilson L. Harrell, 77, was elected a Director of the Company
in February of 1988. Since July 1990, Mr. Harrell has been a
columnist, consultant and speaker and President of Harrell
Consulting, Inc. He is author of the book, For Entrepreneurs
Only. From 1987 to July 1990, he was publisher of INC. magazine.
Jacob ("Jack") M. Kay, 55, was elected a Director of the
Company in December 1994. Mr. Kay is President of Apotex, Inc.,
and also serves as Chairman of the Canadian Drug Manufacturers
Association. He is a Director of York Finch Hospital (Toronto).
Bernard C. Sherman, PhD, 54, 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
and Chairman of the Board of Apotex, Inc., a Canadian
manufacturer of generic and brand name drugs. He is also
Chairman of the Board of Cangene Corp., President of Sherman
Delaware, Inc., President of Sherfin Corp., President of Apotex
Holdings 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.
George P. Stephan, 63, was elected a Director of the Company
in February 1988. Since 1994, Mr. Stephan has been Managing
Director of Stonington, Inc., (financial intermediaries and
consultants). From 1992 to 1994, Mr. Stephan was counsel to
Murtha, Cullina, Richter and Pinney in Hartford, Connecticut.
From January 1991 to November 1991, he served as Interim Chief
Executive Officer of Kollmorgen Corporation (NYSE), a diversified
technology company. He also served as Chairman of Kollmorgen's
Board of Directors from 1991 to February 1996. Mr. Stephan
continues to serve as a Director of Kollmorgen Corporation and as
a member of its executive committee.
The Board of Directors recommends a vote "FOR" the election of
the above nominees.
3
PROPOSAL 2. APPROVAL OF THE AMENDMENT TO THE 1993 STOCK
INCENTIVE PLAN
In December 1993, the shareholders ratified the adoption by
the Board of Directors of the 1993 Stock Incentive Plan (the
"Plan"). The purpose of the Plan, among other things, is to
provide competitive incentives that will attract, retain,
motivate and reward employees. After giving effect to the March
1996 3-for-2 stock split, an aggregate of 1,125,000 shares of
Common Stock are available under the Plan, of which 823,113
shares are subject to outstanding options as of June 30, 1996,
including 506,990 shares subject to options held by the Company's
Executive Officers as a group. Each such option has a ten-year
term and is exercisable at an option exercise price equal to 100%
of the fair market value of the shares on the date of grant. 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
option holder.
The Board recommends approval of an amendment to the Plan to
ensure that the Company will continue to have an adequate number
of shares of Common Stock available for grants of incentive stock
options ("ISOs") that qualify for special tax treatment under
Section 422 of the Internal Revenue Code of 1986, as amended, and
stock options that do not so qualify ("non-qualified stock
options" or "NQSOs"). Upon approval of the amendment the total
number of shares of Common Stock for which options may be granted
under this Plan will increase by 750,000 shares to an aggregate
of 1,875,000. No other provision of the Plan will be changed by
the proposed amendment.
In addition to stock options, the Plan permits the grant of
stock appreciation rights, stock bonuses, restricted stock
awards, performance unit awards and any other awards that provide
the participant with the right to purchase or otherwise acquire
shares of Common Stock or that are valued by reference to the
market value of shares of Common Stock. Although the Plan
permits the Committee to grant a wide variety of awards, the Plan
does not obligate the Committee to do so and the Committee has
not previously done so and does not currently anticipate doing
so.
Under current law, there are no federal income tax
consequences either to the optionee or to the Company upon the
grant of an ISO or a NQSO. On the exercise of an ISO during
employment or within three months thereafter, the optionee will
not recognize any income and the Company will not be entitled to
a deduction, although the excess of the fair market value of the
shares on the date of exercise over the option price is included
in the optionee's alternative minimum taxable income, which may
give rise to alternative minimum tax liability for the optionee.
Generally, if the optionee disposes of shares acquired upon
exercise of an ISO within two years of the date of grant or one
year of the date of exercise, the optionee will recognize
ordinary income, and the Company will be entitled to a deduction,
equal to the excess of the fair market value of the shares on the
date of exercise over the option price (limited generally to the
gain on the sale). The balance of any gain or loss will be
treated as a capital gain or loss to the optionee. If the shares
are disposed of after the two year and one year periods mentioned
above, the Company will not be entitled to any deduction, and the
entire gain or loss for optionee will be treated as a capital
gain or loss. On exercise of a NQSO, the excess of the date-of-
exercise fair market value of the shares acquired over the option
price will be generally taxable to the optionee as ordinary
income and deductible by the Company. The disposition of shares
acquired upon exercise of a NQSO will generally result in a
capital gain or loss for the optionee, but will have no tax
consequences for the Company.
The Board of Directors recommends a vote "FOR" approval of the
amendment to the 1993 Stock Incentive Plan.
4
PROPOSAL 3. 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") and in December 1995
shareholders approved an amendment to the Directors' Plan
increasing the number of shares covered by each annual option
from 4,500 to 7,500. After giving effect to the March 1996 3-
for-2 stock split, an aggregate of 225,000 shares of Common Stock
are available under the Directors' Plan, of which 144,000 shares
are subject to outstanding options. The following named nominees
for election as Directors hold those 144,000 options in the
amounts set forth after their respective names as follows: Cohen
(12,000), Bolger (30,000), Florence (30,000), Harrell (30,000),
Kay (12,000) and Stephan (30,000). 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 7,500 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. The Board recommends approval of an amendment to
the Directors' Plan to ensure that the Company will continue to
have an adequate number of shares of Common Stock available for
grants of options thereunder. Upon approval of the amendment the
total number of shares of Common Stock for which options may be
granted under the Directors' Plan will increase by 150,000 shares
to an aggregate of 375,000 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.
5
Ownership of Securities
The following table sets forth information regarding the
beneficial ownership of the Company's voting securities as of
June 30, 1996, 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) 9,162,951(2) 62.5%
150 Signet Drive
Weston, Ontario, Canada M9L 1T9
FMR, Edward C. Johnson, 3rd 1,216,800(4) 8.3%
and Abigail P. Johnson
82 Devonshire Street, Boston, MA 02109
Edwin A. Cohen(1) 599,926(3) 4.1%
Bruce L. Downey(1) 123,873(3) *
George P. Stephan(1) 52,500(3) *
Wilson L. Harrell(1) 37,500(3) *
Robert J. Bolger(1) 30,000(3) *
Michael F. Florence(1) 22,800(3) *
Jacob M. Kay(1) 12,000(3) *
Gerald F. Price 79,918(3) *
Ezzeldin A. Hamza 58,898(3) *
Paul M. Bisaro 34,904(3) *
Mary E. Petit 10,524(3) *
Timothy P. Catlett 7,500(3) *
All Directors and Officers
as a group (16 persons) 10,289,160(3) 70.2%
<FN>
* Less than 1%
(1) A Director of the Company.
(2) Consists of 8,832,414 common shares held of record by
Sherman Delaware, Inc. ("SDI") and 330,537 common shares held of
record by Glastex Investments, Inc.
2
(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 120,000
shares for Mr. Downey, 142,431 shares for Mr.Cohen, 47,250 shares
for Mr. Stephan, 37,500 shares for Mr. Harrell, 30,000 shares for
Mr. Bolger, 22,500 shares for Mr. Florence, 4,500 shares for Mr.
Kay, 66,247 shares for Mr. Price, 56,248 shares for Mr. Hamza,
33,749 shares for Mr. Bisaro, 7,499 shares for Ms. Petit, 7,500
shares for Mr. Catlett, and 626,049 shares for all Directors and
officers as a group.
(4) Reflects shares beneficially owned as of February 14, 1996
(restated for the 3-for-2 stock split) 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, Abigail P. Johnson, FMR Corp.
(through its control of Fidelity) and the Funds each has sole
power to dispose of the 1,216,800 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' Boards of Trustees.
Various persons have the right to receive or 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 1,141,800 shares or
7.8% of the class.
Changes in Control
All of the shares held of record by Sherman Delaware Inc.
and affiliated companies ("SDI") have been pledged to banks 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.
7
Executive Compensation
The following table sets forth as to the Chairman and Chief
Executive Officer, and the five other executive officers earning
the highest aggregate compensation in the fiscal year ended June
30, 1996, 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, 1996, in which each such person
served as an officer.
Summary Compensation Table
Long-Term Compensation
Annual Compensation Awards
Stock All Other
Name & Year Salary Bonus Other Options Compensation
Principal Position ($)(1) ($) ($) (#)(2) ($)(3)
Bruce L. Downey 1996 399,039 200,000 3,266 60,000 15,000
Chairman, CEO 1995 349,231 200,000 1,132 60,000 14,607
& President 1994 299,712 187,500 53,072(4) - 14,757
Gerald F. Price 1996 199,904 60,000 23,181(7) 29,999 14,982
Executive Vice 1995 194,836 50,000 15,121(7) 22,500 11,536
President 1994 185,000 55,500 29,996(5) 15,000 11,710
Ezzeldin A. Hamza 1996 174,904 60,000 20,378(6) 17,249 15,000
Sr. Vice President 1995 169,846 50,000 13,718(6) 9,750 12,422
Research & Development 1994 160,000 48,000 11,262(6) 1,125 12,265
Paul M. Bisaro 1996 164,712 65,000 3,859 29,999 15,000
Chief Financial Officer 1995 149,461 50,000 236 22,500 13,346
General Counsel & 1994 111,635 46,000 - 7,500 12,501
Secretary
Mary E. Petit 1996 165,000 65,000 4,989 15,000 15,000
Vice President,Quality 1995 76,154 60,365 - 14,998 6,980
1994
Timothy P. Catlett 1996 165,000 65,000 27,615(5) 15,000 15,000
Vice President 1995 74,250 30,000 - 15,000 6,980
Sales & Marketing 1994
<FN>
(1) Includes amounts deferred by the employee under the Company's
Savings and Retirement Plan.
(2) Stock options adjusted for the March 1996 3-for-2 stock
split.
(3)The amounts shown in this column represent the Company's
annual contributions to its Savings and Retirement Plan.
(4) Mr. Downey was elected an officer of the Company on January
5, 1993. Amount represents relocation expenses paid pursuant to
his employment agreement. See "Executive Agreements."
(5) Amount primarily represents reimbursement of relocation
expenses.
(6) Primarily represents amounts accrued in order to fund
deferred compensation payable pursuant to agreement. See
"Executive Agreements".
(7) Amount primarily represents reimbursement of interest.
8
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, 1996.
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)
Number of % of Total Potential Realizable Value at
Shares Options Assumed Annual Rates
Underlying Granted to Per Share Of Stock Price Appreciation
Options Employees Exercise Expiration for Option Term
Granted In Fiscal or Base Date 5%($) 10%($)
Name (#) Year Price
Bruce L. Downey 60,000 16% $15.790 09/13/05 595,815 1,509,912
Gerald F. Price 29,999 8% $15.790 09/13/05 297,897 754,931
Ezzeldin A. Hamza 17,249 5% $15.790 09/13/05 171,287 434,074
Paul M. Bisaro 29,999 8% $15.790 09/13/05 297,897 754,931
Mary E. Petit 15,000 4% $15.790 09/13/05 148,954 377,478
Timothy P. Catlett 15,000 4% $15.790 09/13/05 148,954 377,478
All Shareholders (2) 227,316,130 576,063,703
<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 14,037,027 outstanding shares as of June 30,
1996 and the market price on that date ($25.75)
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.
9
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, 1996 Option Values
Number of Shares Subject to Value of Unexercised In-the-
Shares Acquired Value Unexercised Options at Year-End Money Options at Year-End(2)
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
(1)
Bruce L. Downey - - 120,000 150,000 $2,041,500 $2,071,500
Gerald F. Price 6,500 $140,200 66,247 41,249 1,109,266 425,802
Ezzledin A. Hamza - - 56,248 60,373 1,031,751 944,144
Paul M. Bisaro - - 33,749 41,249 518,952 425,802
Mary E. Petit - - 7,499 22,499 66,591 215,991
Timothy P. Catlett - - 7,500 22,500 70,050 219,450
<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, 1996 ($25.75) 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. For the fiscal year ended
June 30, 1996, Mr. Cohen received $150,000 in compensation and
earned an additional fee of $63,080. The consulting agreement,
as amended in June 1995 and again in June 1996, provides that 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 from the 80 days originially contemplated under the
agreement. Beginning jJuly 1 of 1997, the agreements reverts to
the original term of 80 days per year for each fiscal year
thereafter until June 30, 2002. Accordingly, for the year ending
June 30, 1997, Mr. Cohen will be compensated at a rate of
$150,000 per annum, and beginning July 1, 1997, Mr. Cohen will be
compensated at the rate of $100,000 per annum. During fiscal
1996 and for each of the next six 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.
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
10
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. Specifically, the
Committee and the Board recognized that during fiscal 1996, the
Company, under Mr. Downey's leadership, met and exceeded
strategic objectives approved by the Board in the Company's
fiscal 1996 Business Plan. Barr maintained strong financial
growth through increased sales volume and value-added customer
service, despite increased competition for certain products,
demonstrated measurable progress in new product research and
development, and initiated an aggressive, $40 million capital
expansion program so that the Company will have adequate
manufacturing capacity to meet the demand that new products will
generate between now and the end of the century. Mr. Downey's
initiatives in research and development resulted in the filing of
six Abbreviated New Drug Applications (ANDAs), representing
approximately 21 new products. In addition to extending current
product lines in existing therapeutic categories, efforts were
concentrated in a new therapeutic category with significant
potential: hormone replacement. Mr. Downey continues to manage
current performance to meet the challenges of increased
competitive pressures on mature products, while simultaneously
setting the stage for sustainable shareholder growth as new
product approvals are received going forward.
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, 1996 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
11
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, 1991, and reinvestment of
dividends.
Comparison of Five Year Cumulative Total Return*
among Barr Laboratories, The S&P Health Care Drugs
Index, and the S&P 500 Index
(Graphic omitted)
Fiscal Year Ended June 30,
*$100 Invested on 6/30/91
June 30,
Company/Index Name 1991 1992 1993 1994 1995 1996
Barr Laboratories, Inc. 100 $ 41 $ 96 $ 99 $ 115 $ 206
S&P 500 Index 100 113 129 131 165 208
S&P Health Care Drugs Index 100 115 96 93 145 216
12
Certain Relationships and Related Transactions
During the fiscal year ended June 30, 1996 the Company sold
certain of its pharmaceutical products and bulk pharmaceutical
materials to four other companies controlled by Dr. Bernard
Sherman, a Director of the Company. The Company was paid an
aggregate of approximately $4,296,000 upon such sales. The
Company also purchased bulk pharmaceutical materials from a
company controlled by Dr. Sherman in the amount of $1,800,000.
The Company believes the amounts of such transactions approximate
the amounts of similar transactions with unaffiliated third
parties. During fiscal 1996, the Company also entered a multi-
year agreement with a company controlled by Dr. Sherman to share
litigation costs in connection with one of its patent challenges.
For the year ended June 30, 1996, the Company received $570,000
in connection with such agreement.
The Company has purchased a directors' and officers'
liability insurance policy from the National Union Fire Insurance
Company of Pittsburgh, Pennsylvania that insures the Company for
certain obligations incurred in the indemnification of its
directors and officers under New York law and insures directors
and officers where such indemnification is not provided by the
Company. The one-year cost of the current policy is $232,766.
The Company has also purchased an insurance policy from
Chubb Insurance Company 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
$18,050.
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. As of June 30, 1996, the
final payment amount (on the "claims made basis") has not been
determined or paid. In connection with this action, the Company
had separately agreed to indemnify Mr. Guerci in connection
therewith. As of June 30, 1996, the Company has 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
1997 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 June 27, 1997.
Other Matters
Services performed by Deloitte & Touche LLP, the Company's
independent accountants, for the year ended June 30, 1996,
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
accounting and tax matters. Deloitte & Touche LLP also performed
certain management advisory services in connection with the
Company's implementation of new telephone and computer systems
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.
13
BARR LABORATORIES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD DECEMBER 4, 1996
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 4, 1996, 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 Incentive Plan For Against Abstain
3. Amendment of 1993 Stock Option Plan for Non-Employee Directors
For Against Abstain
4. 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 and 3.
BARR LABORATORIES, INC. PROXY
The undersigned hereby acknowledge receipt of the Proxy Statement and Notice
of Annual Meeting to be held December 4, 1996.
Date: ,1996
(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:____Yes ____No