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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
BERGEN BRUNSWIG CORPORATION
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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] Fee not required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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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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(5) Total fee paid:
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[ ] 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:
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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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[BERGEN BRUNSWIG CORPORATION LOGO]]
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4000 Metropolitan Drive, Orange, California 92868 (714) 385-4000
ROBERT E. MARTINI
Chairman of the Board
April 30, 1997
Dear Shareowner:
You are cordially invited to attend the Annual Meeting of Shareowners of
Bergen Brunswig Corporation which will be held at our corporate headquarters
located at 4000 Metropolitan Drive, Orange, California on Friday, May 23, 1997,
at 10:00 A.M., Pacific Time. For your convenience, a map and directions to our
corporate headquarters are included on the back cover of the Proxy Statement.
This booklet includes the Notice of the Annual Meeting of Shareowners and
the Proxy Statement. The Proxy Statement describes the business to be transacted
at the Annual Meeting and provides information concerning the Company that you
should consider when you vote your shares. In addition to the formal items of
business to be brought before the meeting, members of management will report on
the Company's operations and answer shareowner questions.
As a shareowner, your vote is important. I encourage you to execute and
return your proxy card promptly whether or not you plan to attend so that we may
have as many shares as possible represented at the meeting. You may change your
vote at any time prior to, or at, the meeting.
Thank you for your cooperation and continued support and interest in Bergen
Brunswig Corporation.
Sincerely,
[SIG]
Robert E. Martini
Chairman of the Board
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NOTICE OF ANNUAL MEETING OF SHAREOWNERS
TO BE HELD MAY 23, 1997
BERGEN BRUNSWIG CORPORATION
4000 METROPOLITAN DRIVE
ORANGE, CALIFORNIA 92868
(714) 385-4000
BERGEN
BRUNSWIG
CORPORATION
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareowners
of Bergen Brunswig Corporation (the "Company") will be held
at the Company's headquarters located at 4000 Metropolitan
Drive, Orange, California on Friday, May 23, 1997, at 10:00
A.M., Pacific Time, for the following purposes:
1. To elect four directors for a term of three years;
2. To consider and vote upon a shareowner proposal relating
to the declassification of the Company's Board of
Directors as described on pages 19 through 20 in the Proxy
Statement;
3. To consider and vote upon a shareowner proposal relating
to compensation of non-employee members of the Company's
Board of Directors as described on pages 21 through 22 in
the Proxy Statement; and
4. To transact such other business as may properly come
before the meeting and any adjournment thereof.
Shareowners of record at the close of business on April 24,
1997, are entitled to receive notice of and to vote at the
meeting. It is important that your shares be represented at
the meeting, regardless of the number you may hold.
All shareowners are cordially invited to attend the meeting
in person. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU
ARE REQUESTED TO COMPLETE AND SIGN THE ENCLOSED PROXY CARD
AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE PREPAID
ENVELOPE. Any proxy given by a shareowner may be revoked at
any time before its exercise by sending a subsequently dated
proxy or by giving written notice to the Company, in each
case, to the attention of Milan A. Sawdei, Executive Vice
President, Chief Legal Officer and Secretary, at the above
address.
By order of the Board of
Directors,
[SIG]
Milan A. Sawdei
Executive Vice President,
Chief Legal Officer and
Secretary
Orange, California
April 30, 1997
YOUR VOTE IS IMPORTANT! YOUR ATTENTION IS DIRECTED TO THE
ACCOMPANYING PROXY STATEMENT AND PROXY CARD. YOU ARE
REQUESTED TO VOTE, SIGN, DATE AND RETURN THE ENCLOSED PROXY
CARD AS PROMPTLY AS POSSIBLE SO THAT YOUR SHARES MAY BE
REPRESENTED. A POSTAGE PREPAID ENVELOPE IS ENCLOSED FOR THAT
PURPOSE. EVEN IF YOU HAVE VOTED YOUR PROXY, YOU MAY CHANGE
YOUR VOTE PRIOR TO, OR AT, THE MEETING. PLEASE NOTE, HOWEVER,
THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR
OTHER NOMINEE AND YOU WISH TO ATTEND AND VOTE AT THE MEETING,
YOU MUST OBTAIN FROM SUCH BROKER, BANK OR OTHER NOMINEE, A
PROXY ISSUED IN YOUR NAME.
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BERGEN BRUNSWIG CORPORATION
4000 Metropolitan Drive
Orange, California 92868
PROXY STATEMENT
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of proxies
on behalf of the Board of Directors of Bergen Brunswig Corporation (the
"Company"), a New Jersey corporation, in the form of the accompanying proxy card
for use at the Annual Meeting of Shareowners to be held on Friday, May 23, 1997,
and at any adjournments thereof. The meeting will be held at the headquarters of
the Company, located at 4000 Metropolitan Drive, Orange, California. The Company
intends to mail this Proxy Statement and accompanying proxy card commencing on
April 30, 1997, to all shareowners entitled to vote at the meeting.
A form of proxy is enclosed for use at the meeting if a shareowner is unable to
attend in person. A shareowner proxy may be revoked by filing a written notice
of revocation with the Secretary of the Company at any time before the proxy is
voted. All shares represented by valid proxies received pursuant to this
solicitation (and not revoked before they are exercised) will be voted FOR the
election of the nominees for director and AGAINST the shareowner proposals set
forth in the attached Notice of Annual Meeting and in the discretion of the
proxy holder as to any other business that comes before the meeting. In the
event a shareowner specifies a different choice by means of the proxy card,
those shares will be voted in accordance with such shareowner's selections.
VOTING AT THE MEETING
The Board of Directors has fixed the close of business on April 24, 1997 as the
record date for the determination of shareowners entitled to receive notice of
and to vote at the meeting. As of that date, there were 40,158,779 shares of the
Company's Class A Common Stock ("Common Stock") outstanding and entitled to vote
at the meeting. The holders of outstanding shares as of the record date are
entitled to one vote for each share of Common Stock on any matter voted at the
meeting. Assuming a quorum is present, the four nominees receiving the largest
number of votes cast by holders of Common Stock will be elected as directors,
and the shareowner proposals relating to declassifying the Board of Directors
and changing the compensation of non-employee directors will require a majority
of the votes cast.
The presence in person or by proxy of the holders of a majority of the Company's
outstanding shares of Common Stock will constitute a quorum at the meeting. For
purposes of determining the votes cast with respect to any matter presented for
consideration at the meeting, only those votes cast "FOR" or "AGAINST" are
included. Abstentions and broker non-votes are counted only for the purpose of
determining whether a quorum is present at the meeting.
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1. ELECTION OF DIRECTORS (Item 1 on Proxy Card)
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The Company's Restated Certificate of Incorporation provides
that the Board of Directors ("Board") shall consist of not
more than 15 directors nor less than 9 directors, the exact
number within such limits to be fixed by the Board as
provided in the By-Laws, which currently provide for 12
directors. The directors are divided into three approximately
equivalent-sized classes, each class serving for a period of
three years on a staggered-term basis. Accordingly, at this
annual meeting there are four nominees for Class III
directors, whose terms are expiring.
It is intended that persons named as proxies in the
accompanying proxy card will vote, unless such authority is
withheld, for the election of the nominees named below to
serve until the expiration of their respective terms and
thereafter until their successors shall have been duly
elected and qualified. In the event the nominees named below
refuse or are unable to serve, which is not anticipated, the
persons named as proxies reserve full discretion to vote for
any or all persons as then may be nominated.
The following sets forth information as of March 31, 1997,
concerning the nominees for election to the Board and
comparable information with respect to directors whose term
of office will continue beyond the meeting. All of the
nominees currently serve as directors of the Company.
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NOMINEES FOR DIRECTORS WHOSE TERM EXPIRES JANUARY 2000
(CLASS III DIRECTORS)
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RODNEY H. BRADY Director since 1973. Age 64.
President and Chief Executive Officer, Deseret Management
Corporation (a diversified corporate holding company) since
April 1996. Former President and Chief Executive Officer,
Bonneville International Corporation (broadcast
[PHOTO] communications) (1985 to 1996). Mr. Brady is a director of
Deseret Mutual Insurance Company and First Security
Corporation. Mr. Brady is a member of the Company's
Executive, Financing and Nominating Committees.
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CHARLES C. EDWARDS, M.D. Director since 1985. Age 73.
Former President (1993 to 1994) of California Healthcare
Institute (nonprofit association). Former President and Chief
Executive Officer, ScrippsHealth and Scripps Institutions
of Medicine and Science (health care) (1991 to 1993).
[PHOTO] Dr. Edwards is a director of Molecular Biosystems, Inc.,
Northern Trust Bank and IDEC Pharmaceutical Company. Dr.
Edwards is Chairman of the Company's Audit Committee and a
member of the Investment/Retirement Plan Committee.
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JAMES R. MELLOR Director since 1979. Age 66.
Chairman of the Board and Chief Executive Officer (since
1993), and former President and Chief Operating Officer (1991
to 1993), General Dynamics Corporation (diversified defense
[PHOTO] and aerospace). Mr. Mellor is a director of Kerr Group, Inc.,
General Dynamics Corporation, Aeromovel USA, Inc. and
Computer Sciences Corporation. Mr. Mellor is Vice Chairman of
the Company's Compensation/Stock Option Committee and a
member of the Investment/Retirement Plan Committee.
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FRANCIS G. RODGERS Director since 1982. Age 70.
Author and Lecturer. Former Vice President, Marketing, IBM
(information processing systems), retired. Mr. Rodgers is a
director of Dialogic Corporation, Mercantile Stores, Inc. and
[PHOTO] Milliken and Company. Mr. Rodgers is Chairman of the
Company's Compensation/Stock Option Committee and a member of
the Audit Committee.
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL OF THE
NOMINEES.
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DIRECTORS WHOSE TERM EXPIRES JANUARY 1998
(CLASS I DIRECTORS)
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ROBERT E. MARTINI Director since 1962. Age 65.
Chairman of the Board (since 1992) and formerly served as
Chief Executive Officer (1990 to 1997) and President (1981 to
[PHOTO] 1992) of the Company. Mr. Martini is a director of Mossimo,
Inc. Mr. Martini is Chairman of the Company's Executive,
Financing and Nominating Committees.
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JOHN CALASIBETTA Director since 1962. Age 91.
[PHOTO] Senior Vice President of the Company.
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NEIL F. DIMICK Director since 1995. Age 47.
Executive Vice President and Chief Financial Officer (since
1992) and formerly served as Vice President, Finance (1991 to
1992) of the Company. President, Alternate Site Distributors,
[PHOTO] Inc., a subsidiary of the Company, since September 1996. Mr.
Dimick is a member of the Company's Financing and
Investment/Retirement Plan Committees.
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DONALD R. RODEN Director since 1995. Age 50.
President and Chief Operating Officer (since 1995), and Chief
Executive Officer (since January 1997) of the Company. Prior
to joining the Company in 1995, Mr. Roden was a healthcare
[PHOTO] industry consultant (1993 to 1995) and Chief Executive, North
America (1989 to 1993) of Reed Elsevier Medical (publishing).
Mr. Roden is a member of the Company's Executive, Financing
and Nominating Committees.
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DIRECTORS WHOSE TERM EXPIRES JANUARY 1999
(CLASS II DIRECTORS)
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JOSE E. BLANCO, SR. Director since 1992. Age 70.
Chairman of the Board (since 1987) of J.M. Blanco, Inc.
(wholesale pharmaceutical distribution). Mr. Blanco is Vice
[PHOTO] Chairman of the Company's Audit and Investment/Retirement
Plan Committees, and a member of the Compensation/Stock
Option Committee.
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CHARLES J. LEE Director since 1972. Age 71.
Former Managing Director, Smith Barney Inc. (investment
[PHOTO] banking) (1989 to 1996). Mr. Lee is a member of the Company's
Executive, Financing and Nominating Committees.
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GEORGE R. LIDDLE Director since 1969. Age 69.
Investment Adviser. Former Vice President, Kidder, Peabody &
[PHOTO] Co., Inc. (stockbrokers), retired. Mr. Liddle is Chairman of
the Company's Investment/Retirement Plan Committee.
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GEORGE E. REINHARDT, JR. Director since 1985. Age 67.
Formerly served as consultant (1992 to 1995), Senior Vice
President (1991), Chief Financial Officer (1976 to 1991) and
[PHOTO] Vice President, Finance (1981 to 1991) of the Company. Mr.
Reinhardt is a member of the Company's Executive, Financing
and Nominating Committees.
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MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board holds regular quarterly meetings and meets on other
occasions when required by special circumstances. In addition
to meeting as a group to review Company business, all
directors also devote their time and talents to the Board's
six principal standing Committees. The Committees, their
membership and primary functions, are as follows:
The Executive Committee, unless provided otherwise by law,
exercises all of the authority of the Board of Directors when
the Board is not in session. The current members of this
Committee are Robert E. Martini, Chairman, Rodney H. Brady,
Charles J. Lee, George E. Reinhardt, Jr. and Donald R. Roden.
The Audit Committee reviews significant audit and accounting
policies and practices, meets with the Company's independent
auditors and reviews the performance of the internal auditing
functions. The current members of this Committee are Dr.
Charles C. Edwards, Chairman, Jose E. Blanco, Sr., Vice
Chairman and Francis G. Rodgers.
The Compensation/Stock Option Committee has the
responsibility for recommending to the Board the
compensation, bonus plans and stock options for the Company's
officers who are directors and for approving stock options
and bonuses for employees which are recommended by
management. This Committee also recommends to the Board the
annual and meeting fees for non-employee directors. The
current members of this Committee are Francis G. Rodgers,
Chairman, James R. Mellor, Vice Chairman and Jose E. Blanco,
Sr.
The Investment/Retirement Plan Committee has the
responsibility of reviewing and making investment decisions
relating to the retirement plans of the Company, as well as
overseeing and approving changes to those plans. The current
members of this Committee are George R. Liddle, Chairman,
Jose E. Blanco, Sr., Vice Chairman, Neil F. Dimick, Dr.
Charles C. Edwards and James R. Mellor.
The Nominating Committee has the responsibility to recommend
to the Board persons to fill vacancies on the Board of
Directors. The current members of this Committee are Robert
E. Martini, Chairman, Rodney H. Brady, Charles J. Lee, George
E. Reinhardt, Jr. and Donald R. Roden.
The Financing Committee assists the Board in reviewing the
asset and liability structure of the Company and considers
its funding and capital needs. It receives reports on the
progress of investment activities and reviews strategies that
have been developed to meet changing economic and market
conditions. The current members of this Committee are Robert
E. Martini, Chairman, Rodney H. Brady, Neil F. Dimick,
Charles J. Lee, George E. Reinhardt, Jr. and Donald R. Roden.
During fiscal 1996, there were six meetings of the Board,
seven meetings of the Executive Committee, seven meetings of
the Compensation/Stock Option Committee, three meetings of
the Audit Committee, two meetings of the
Investment/Retirement Plan Committee, one meeting for the
Nominating Committee and no meetings of the Financing
Committee. All directors attended more than 75% of the
aggregate of (a) the total number of meetings of the Board,
and (b) the total number of meetings held by all Committees
of the Board on which they served as members.
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DIRECTOR COMPENSATION
Employee directors of the Company are not paid any fees, as
such, for service on the Board or on any Board Committee.
Each non-employee director received for fiscal 1996 an annual
fee of $30,000 for Board service and an attendance fee of
$2,000 for each Board meeting attended in person or $600 for
each such meeting participated in by telephone. For Committee
meetings, non-employee directors received $1,000 for each
Committee meeting attended in person or $600 for each such
meeting participated in by telephone. The Chairman of each
Committee who is a non-employee director received a fee of
$1,500 for each Committee meeting attended in person or $900
for each telephone meeting of the Committee in which he
participated. Non-employee directors are also reimbursed for
all expenses incident to their Board service. Each
non-employee director who serves less than six months in a
fiscal year receives 50% of the annual fee, and if he serves
six months or more in a fiscal year, receives 100% of the
prevailing annual fee. Under the Company's Deferred
Compensation Plan, a non-employee director of the Company may
elect to defer up to 100% of these fees or any fixed amount
not less than $2,500.
The Company has a nonqualified Capital Accumulation Plan for
its non-employee directors. The maximum benefit available to
these directors is $150,000, payable upon retirement in 120
equal consecutive monthly installments. If the non-employee
director has served for less than ten years, his benefit upon
retirement will be based upon 10% of the maximum benefit for
each year of Board service with a minimum of three years of
service required for inclusion in the plan. If a director
dies before the normal retirement age of 70 and his
termination from Board service, his beneficiary will receive
an amount equal to 100% of the amount the Company would have
paid the director had normal retirement age been attained.
Each non-employee director is automatically entitled to an
option grant of 3,000 shares of Common Stock under the
Company's Amended and Restated 1989 Stock Incentive Plan upon
his initial election or appointment to the Board, and is
thereafter entitled to an annual grant of 2,000 shares
("Annual Grant") only if the Company attains a ten percent or
greater return on common equity in the preceding fiscal year.
During fiscal 1996, each non-employee director received an
Annual Grant of 2,000 shares.
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BENEFICIAL OWNERSHIP OF SECURITIES
PRINCIPAL
SHAREOWNERS
The following table lists the beneficial ownership of each
person or group who owns, to the Company's knowledge, more
than five percent of its outstanding voting securities, based
on the number of shares outstanding as of March 31, 1997.
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NAME AND Amount and
ADDRESS OF Nature of Percent of
BENEFICIAL Title of Beneficial Outstanding
OWNERS(5) Class Ownership Shares
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FMR Corp.(1) Common Stock 2,994,290(1) 7.46
(including subsidiaries)
82 Devonshire Street
Boston, Massachusetts 02109
Wellington Management(2) Common Stock 2,234,118(2) 5.56
Company, LLP
75 State Street
Boston, Massachusetts 02109
Robert E. Martini(3) Common Stock 2,200,156(4) 5.48
4000 Metropolitan Drive
Orange, California 92868
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(1) This information was provided by FMR Corp. ("FMR"), in its
capacities as serving as an investment advisor to various
registered investment companies and other funds as well as serving
as trustee or managing agent for various private investment
accounts. According to a Schedule 13G, dated February 14, 1997, as
filed with the Securities and Exchange Commission, FMR had sole
voting power over 540,460 shares and sole dispositive power over
2,994,290 shares.
(2) This information has been furnished to the Company by
Wellington Management Company, LLP ("WMC") as of January 24, 1997.
WMC advises that it is an investment advisor registered with the
Securities and Exchange Commission under the Investment Advisers
Act of 1940, as amended, and as of January 24, 1997, in its
capacity as investment advisor, WMC may be deemed to have
beneficial ownership of the number of shares indicated, that are
owned by numerous investment advisory clients, none of which is
known to have such interest with respect to more than five percent
of the class. As of such date, WMC advises it had shared voting
power over 1,771,108 shares and shared dispositive power over
2,234,118 shares.
(3) Information as to beneficial ownership has been furnished to
the Company by Robert E. Martini as of February 6, 1997. Except as
indicated otherwise by the following notes, shares shown
beneficially owned are those to which Mr. Martini may have sole
voting and dispositive power.
(4) Includes 115,308 shares which, as of March 31, 1997, may be
acquired within sixty days pursuant to the exercise of stock
options and 29,925 shares beneficially owned by Mr. Martini for
which he does not have voting and dispositive power.
(5) In addition to the information provided in the table above,
IVAX Corporation ("IVAX"), 4400 Biscayne Boulevard, Miami, Florida
33137, reported in a Schedule 13D filed with the Securities and
Exchange Commission that as of March 27, 1997, IVAX beneficially
owned 12,157,432 shares of the Company's Common stock, with sole
voting and dispositive power over 9,953,076 shares, and shared
voting power over 2,204,356 shares. The Company does not believe
that IVAX has the interest in shares of the Company's Common Stock
as stated in such Schedule 13D filing. As stated in the Company's
Current Report on Form 8-K filed with the Securities and Exchange
Commission on March 21, 1997, the Company terminated its
previously announced merger with IVAX and the related merger
agreement, and filed suit against IVAX alleging, among other
things, various breaches of the merger agreement. IVAX stated in
its Schedule 13D filing its intention to pursue a counterclaim
against the Company for an alleged breach of the merger agreement.
The Company believes IVAX's claim of beneficial ownership of
Company shares relates to a stock option arrangement granted under
the merger agreement, the validity of which the Company will
contest in such litigation. If IVAX were to prevail as to the
validity of the stock option agreement, the shares represented by
the options would constitute approximately 24.3% of the Company's
Common Stock outstanding, after giving effect to the issuance of
shares represented by such options. However, the Company believes
IVAX's claims are without merit.
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VOTING SECURITIES The following table sets forth certain information
OWNED BY DIRECTORS regarding the ownership of the Company's Common Stock
AND EXECUTIVE as of March 31, 1997, by: (a) each director and
OFFICERS nominee; (b) the chief executive officer and the four
most highly compensated executive officers named in
the Summary Compensation Table (see "Compensation of
Executive Officers"); and, (c) all directors and
executive officers as a group:
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AGGREGATE NUMBER
OF SHARES PERCENT
BENEFICIALLY OF OUTSTANDING
OWNED(1)(2) SHARES
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Jose E. Blanco, Sr. 7,318 *
Rodney H. Brady(3) 44,023 *
John Calasibetta 185,910 *
Neil F. Dimick 33,674 *
Dr. Charles C. Edwards 11,646 *
Charles J. Lee 15,118 *
George R. Liddle(4) 31,596 *
Robert E. Martini(5) 2,200,156 5.48
James R. Mellor 13,967 *
George E. Reinhardt, Jr. 99,629 *
Donald R. Roden 27,500 *
Francis G. Rodgers 13,839 *
Milan A. Sawdei(6) 38,014 *
Denny W. Steele 29,807 *
All directors and executive officers as a group
including those above (20 persons) 2,752,197 6.85
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* Denotes ownership of less than 1% of the outstanding shares
of Common Stock.
(1) Information as to beneficial ownership by the directors
and executive officers named above has been furnished to the
Company by such individuals. Except as indicated otherwise in
the footnotes, shares shown as beneficially owned are those
to which the individual has sole voting and dispositive
power. Such shares, where applicable, may be subject to
community property laws and related statutes under which a
spouse may be entitled to share in the management of the
community property, which may include the right to vote or
dispose of the shares.
(2) Reflects the number of shares that could be purchased by
exercise of options exercisable as of March 31, 1997, or
within 60 days thereafter under the Company's stock option or
stock incentive plans, as follows: Jose E. Blanco, Sr.-7,318
shares; Rodney H. Brady-10,469 shares; Neil F. Dimick-29,474
shares; Dr. Charles C. Edwards-9,156 shares; Charles J.
Lee-10,469 shares; George R. Liddle-7,319 shares; Robert E.
Martini-115,308 shares; James R. Mellor-10,469 shares; George
E. Reinhardt, Jr.-20,443 shares; Donald R. Roden-17,500
shares; Francis G. Rodgers-10,469 shares; Milan A. Sawdei-
37,384 shares; Denny W. Steele-29,807 shares; and all
directors and executive officers as a group, including those
above (20 persons)- 419,304 shares.
(3) Includes 1,850 shares held by two sons living at home and
31,704 shares held in trust by Mr. Brady as trustee for his
own benefit.
(4) Includes 23,735 shares held by Mr. Liddle as co-trustee
for the benefit of him and his wife.
(5) Includes 29,925 shares beneficially owned by Mr. Martini
for which he does not have voting and dispositive power.
(6) Includes 630 shares held by Mr. Sawdei as trustee for his
son.
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SECTION 16(A)
BENEFICIAL
OWNERSHIP
REPORTING
COMPLIANCE
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Section 16(a) of the Securities Exchange Act of 1934
("Exchange Act") requires the Company's directors, officers
and persons who own more than ten percent of a registered
class of the Company's equity securities, to file initial
reports of ownership and changes in ownership of such
securities with the Securities and Exchange Commission and
the New York Stock Exchange. Directors, officers and greater
than ten percent beneficial owners are required by applicable
regulations to furnish the Company with copies of all Section
16(a) forms they file.
Based solely upon a review of the copies of the forms
furnished to the Company and written representations from the
Company's directors and officers, the Company believes that
during the 1996 fiscal year all filing requirements
applicable to its directors and officers were satisfied,
except that Brent Martini, Executive Vice President of the
Company and President of Bergen Brunswig Drug Company, a
Company subsidiary, filed a Form 3 Initial Statement of
Beneficial Ownership of Securities for the month of
September, 1996, which inadvertently excluded reporting
certain shares of the Company's Common Stock owned indirectly
by Mr. Martini.
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COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information for the fiscal
years ended September 30, 1996, 1995 and 1994, respectively,
with respect to certain compensation awarded or paid to the
Company's Chief Executive Officer and its other four most
highly compensated executive officers (collectively, the
"Named Executive Officers"):
SUMMARY COMPENSATION TABLE
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LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS
--------------------------------- ------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
COMPEN- OPTIONS/ COMPEN-
NAME AND SALARY BONUS SATION SARS SATION(1)
PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($)
---------------------------------------------------------------------------------------------
Robert E. Martini 1996 560,000 502,600 108,561(2) 25,000 33,005(3)
Chairman of the 1995 553,269 428,000 168,229(2) 15,750 36,774(3)
Board 1994 534,808 350,000 117,356(2) 10,000 34,278(3)
Donald R. Roden 1996 400,000 359,000 63,601(5) 95,000 -0-
President and Chief 1995(4) -- -- -- -- --
Executive Officer 1994(4) -- -- -- -- --
Neil F. Dimick 1996 275,000 269,300 132,631(6) 40,000 4,571
Executive Vice
President, 1995 256,731 200,000 35,049(6) 5,250 4,500
Chief Financial
Officer 1994 233,654 175,000 30,604(6) 20,000 2,520
Milan A. Sawdei 1996 210,000 141,400 48,087(7) 30,000 4,571
Executive Vice
President, 1995 180,000 105,000 33,457(7) 5,250 4,500
Chief Legal Officer
and 1994 165,478 100,000 34,855(7) 15,000 2,520
Secretary
Denny W. Steele(8) 1996 200,000 134,700 34,824(9) 15,000 4,598
Executive Vice
President 1995 184,809 120,000 29,464(9) 10,250 5,000
1994 165,354 100,000 29,323(9) 15,750 2,520
---------------------------------------------------------------------------------------------
(1) Reflects Company contributions under the Company's
Pre-Tax Investment Retirement Account Plus Plan, unless
otherwise indicated in the following notes.
(2) Includes $68,250, $92,120 and $80,780 of imputed
compensation reflecting the difference between the average
market interest rate for the Company and the interest-free
loan to Mr. Martini during fiscal years 1994, 1995 and 1996
respectively, referenced on page 18.
10
14
(3) Includes $31,198, $31,774, $28,418 of allocated premiums
paid by the Company to a split-dollar life insurance plan on
Mr. Martini during fiscal years 1994, 1995 and 1996,
respectively.
(4) Mr. Roden's employment with the Company commenced during
fiscal year 1996 and, accordingly, no amounts are reportable
for fiscal years 1994 and 1995.
(5) Includes $16,362 of imputed compensation reflecting the
difference between the average market interest rate for the
Company and the interest-free loan to Mr. Roden for fiscal
year 1996, referenced on page 18.
(6) Includes $12,174, $18,506 and $16,288 of imputed
compensation reflecting the difference between the average
market interest rate for the Company and the interest-free
loan to Mr. Dimick for fiscal years 1994, 1995 and 1996,
respectively, referenced on page 18.
(7) Includes $9,100, $13,160, $11,540 of imputed compensation
reflecting the difference between the average market interest
rate for the Company and the interest-free loan to Mr. Sawdei
for fiscal years 1994, 1995 and 1996, respectively,
referenced on page 18.
(8) Mr. Steele tendered his resignation as an executive
officer of the Company in September 1996 and, pursuant to the
rules promulgated by the Securities and Exchange Commission,
is to be included in the table.
(9) Includes $9,100, $13,160 and $11,540 of imputed
compensation reflecting the difference between the average
market interest rate for the Company and the interest-free
loan to Mr. Steele for fiscal years 1994, 1995 and 1996,
respectively, referenced on page 18.
-------------------------------------------------------------
EMPLOYMENT AND SEVERANCE AGREEMENTS
For certain information regarding employment contracts, and
termination of employment and change in control arrangements
between the Company and certain executive officers of the
Company, see "Employment and Severance Agreements" as set
forth in Part III, Item 11, "Executive Compensation", of the
Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 1996, which is included within the Annual
Report mailed along with and accompanying this proxy
statement.
-------------------------------------------------------------
STOCK OPTION GRANTS AND EXERCISES
The following tables provide information with respect to
stock options granted to and held by the Named Executive
Officers:
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
------------------
% OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO
OPTIONS/SARS EMPLOYEES IN GRANT DATE
GRANTED FISCAL YEAR EXERCISE PRICE EXPIRATION PRESENT
NAME (#)(1) 1996 ($/SHARE) DATE VALUE ($)
---------------------------------------------------------------------------------------------
Robert E. Martini 25,000 3.3 $ 24.44 11/08/05 $219,000(6)
Donald R. Roden 50,000(2) 12.6 21.56 10/15/04 401,500(7)
20,000 24.44 11/08/05 175,200(6)
25,000(3) 28.75 09/04/06 260,750(8)
Neil F. Dimick 15,000 5.3 24.44 11/08/05 131,400(6)
25,000(4) 28.75 09/04/06 260,750(8)
Milan A. Sawdei 15,000 4.0 24.44 11/08/05 131,400(6)
15,000(5) 28.75 09/04/06 156,450(8)
Denny W. Steele 15,000 2.0 24.44 11/08/05 131,400(6)
-------------------------------------------------------------
(1) All shares granted as nonstatutory stock options at 100%
of fair market value on the date of grant, unless otherwise
noted and vest 25% one year after the date of grant and then
25% per year thereafter.
(2) Granted as incentive stock options.
11
15
(3) Of this amount, 3,478 shares granted as incentive stock
options.
(4) Of this amount, 11,733 shares granted as incentive stock
options.
(5) Of this amount, 9,396 shares granted as incentive stock
options.
(6) The grant date present value is based on a Black-Scholes model
and assumes a risk-free rate of return of 6.25%, an option term of
ten years, a dividend yield of 2.58%, and a stock volatility of
.322.
(7) The grant date present value is based on a Black-Scholes model
and assumes a risk-free rate of return of 6.25%, an option term of
ten years, a dividend yield of 2.11% and a stock volatility of
.301.
(8) The grant date present value is based on a Black-Scholes model
and assumes a risk-free rate of return of 6.72%, an option term of
ten years, a dividend yield of 2.40% and a stock volatility of
.296.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
SHARES OPTIONS/SARS AT FY END (#)
ACQUIRED ON VALUE ------------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE
-----------------------------------------------------------------------------------------
Robert E. Martini 0 0 115,308 29,775
Donald R. Roden 0 0 17,500 74,022
Neil F. Dimick 0 0 26,325 45,175
Milan A. Sawdei 0 0 34,234 36,750
Denny W. Steele 0 0 26,657 25,500
VALUE OF UNEXERCISED(1)
IN-THE-MONEY OPTIONS/
------------------------------
NAME EXERCISABLE UNEXERCISABLE
--------------------------------------------------------------------
Robert E. Martini $1,396,520 $ 269,156
Donald R. Roden 163,975 566,925
Neil F. Dimick 367,426 294,874
Milan A. Sawdei 530,519 264,874
Denny W. Steele 345,074 257,862
-------------------------------------------------------------
(1) Pursuant to the rules promulgated by the Securities and
Exchange Commission, these values were calculated by determining
the difference between the value of the Company's stock at fiscal
year end ($31.75 on September 30, 1996) and the exercise price of
the options.
-------------------------------------------------------------
PENSION TABLE
RETIREMENT BENEFITS The following table shows the estimated annual
benefits payable under the Company's non-qualified Supplemental
Executive Retirement Plan ("SERP") at age 62 to persons in
specified compensation and years-of-service classifications, based
on a joint and 75 percent survivor annuity form of retirement
income. The table also includes benefits payable under the
Company's Capital Accumulation Plan ("CAP") for executives who
participate in the CAP, which was the SERP's predecessor plan and
which was frozen to all employee participants on October 7, 1987.
AVERAGE ANNUAL
COMPENSATION ESTIMATED ANNUAL RETIREMENT BENEFITS FOR
DURING HIGHEST THREE OF YEARS OF CREDITED SERVICE SHOWN BELOW
FINAL -----------------------------------------------
FIVE YEARS BEFORE RETIREMENT 10 20 30 40
-------------------------------------------------------------------------------
$ 200,000 $ 73,500 $126,800 $126,800 $126,800
400,000 176,100 282,700 282,700 282,700
600,000 278,700 438,700 438,700 438,700
800,000 381,500 594,800 594,800 594,800
1,000,000 488,000 754,700 754,700 754,700
-------------------------------------------------------------
As of September 30, 1996, full years of actual credited service in
these plans are Mr. Martini--40 years; Mr. Roden--1 year; Mr.
Dimick--5 years; Mr. Sawdei--13 years; and, Mr. Steele--6 years.
12
16
Compensation for a particular year as used for the
calculation of retirement benefits under SERP includes base
salary received during the year (including salary deferred
under a salary deferral plan) and excludes all other
compensation. Benefits are reduced by the following amounts:
(1) the participant's primary insurance amount payable under
the Social Security Act at retirement age; (2) the
participant's benefit under the CAP; (3) an annuitized amount
based upon an assumed level of participation in the Company's
Pre-Tax Investment Retirement Account Plus Plan; and, (4) any
amounts owed by a participant to the Company (except to the
extent that such amount owed is under a program that
expressly provides that there will not be an offset).
Benefits are payable under the SERP in the form of a joint
and survivor annuity, consisting of periodic payments to each
participant or a lump sum distribution to a participant's
beneficiary should a participant die before attaining normal
retirement age. In the alternative, a participant may elect
to receive his or her benefit in a lump sum. A $5,000 funeral
benefit is available to a participant's estate, offset by any
funeral benefit paid under the CAP Plan. Because participants
may be required to pay income and payroll taxes based upon
payments made by the Company under SERP, the Company will pay
affected participants an additional amount that the Company
estimates will be equal to such tax liability. Generally, the
CAP benefit is a monthly retirement benefit paid over a
specified number of months that, at the election of a
participant, may be paid in a lump sum. Upon a change in
control (as defined in the CAP and SERP), certain senior
executive officers' benefits payable under the SERP would be
accelerated such that their credited years of service in
these plans would be as if they had attained the normal
retirement age. In addition, a master trust for certain
executive officer deferral plans has been established to
preserve these and certain other executive benefits.
------------------------------------------------------------
REPORT OF THE
COMPENSATION/
STOCK OPTION
COMMITTEE
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Notwithstanding anything to the contrary set forth in any of
the Company's previous filings under the Securities Act of
1933, as amended, or the Exchange Act that might incorporate
future filings, including this Proxy Statement, in whole or
in part, the following report and the Performance Graph on
page 17 shall not be incorporated by reference into any such
filings.
The Company applies a consistent philosophy toward the
compensation for its executive officers. This philosophy is
based on the premise that the achievements of the Company
result from the coordinated efforts of all individuals
working toward its stated mission. The Company strives to
achieve those objectives through teamwork that is focused on
meeting the expectations of its customers, shareowners and
employees.
The Compensation/Stock Option Committee ("Committee") is
currently comprised of three (3) non-employee directors.
COMPENSATION PHILOSOPHY
The goals of the compensation program are to (1) align
individual contributions with business objectives and
performance; (2) enable the Company to attract, retain and
reward executive officers who contribute to the long-term
success of the Company; and, (3) motivate those executives to
advance shareowner interest. The Company's compen-
13
17
sation program for executive officers is based on the
following two policies of the Company:
- The Company pays based on Company and individual
performance.
Executive Officers are rewarded based upon corporate
performance and individual performance. Corporate
performance is evaluated by reviewing the extent to which
strategic and business plan goals are met, including such
factors as increase in net earnings, return on equity,
sales growth and improvements in the Company's customer and
employee satisfaction index. Individual performance is
evaluated by reviewing individual efforts and
accomplishments, the implementation of new programs and
services, organizational and management development
progress against personal and functional area objectives
and the degree to which teamwork and Company values are
fostered.
- The Company provides a total compensation package which is
competitive.
The Company regularly compares its pay practices for its
executive officers with those of other leading companies
and sets, in part, its pay parameters based on this review.
The Company strives to set the compensation paid to an
individual based upon comparisons to other executives
inside the Company and at comparable organizations. The
Company believes that the Company's most direct competitors
for executive talent are not necessarily all the companies
that would be included in the peer group established to
compare shareowner returns. Consideration is given to
annual national surveys and each executive's talent and
experience. Thus, the groups used for evaluation of
competitive compensation are not the same as the peer group
index in the Comparison of Five Year Cumulative Total
Return graph included in this Proxy Statement.
COMPENSATION VEHICLES
The Company has a simple total compensation program that
consists of cash- and equity-based compensation. Having a
compensation program that allows the Company to successfully
attract and retain key employees permits it to enhance
shareowner values, provide efficient service to customers,
foster Company values and teamwork, and adequately reward
employees. These vehicles are:
- Cash-Based Compensation.
Cash-based compensation represents a combination of base
salary and annual incentive based bonus. Salary levels are
determined based on a review of competitive data and
internal pay levels for various positions. Base salary
levels are typically at the midpoint in the wholesale
pharmaceutical industry but below the median in comparable
size companies.
The annual incentive based bonus is measured against the
achievement of financial criteria established by senior
management and the Board each year as well as qualitative
improvements in customer satisfaction, employee
satisfaction and individual performance. The financial
measures for the 1996 fiscal year were based upon a
comparison of actual performance with goals established
near the beginning of the year with respect to increase in
net earnings, return on equity, sales growth and, for some
executive officers, earnings as a percentage of sales,
profit plan achievement and meeting objectives relative to
corporate priorities for the fiscal year. The Chief
14
18
Executive Officer, Chief Operating Officer and Chief
Financial Officer may earn a maximum of 100% of base
salary, and other executive officers may qualify for a
maximum award of between 50% to 75% of base salary. In
practice, salary and bonus combined have typically placed
the Company at the midpoint in the wholesale pharmaceutical
industry, but below the median for comparable size
companies.
- Equity-Based Compensation.
The purpose of the Stock Option Program is to provide
longer term incentives to employees to work to maximize
shareowner value. This program also utilizes vesting
periods designed to encourage key employees to continue in
the employ of the Company. The Committee, based on
recommendations of compensation consultants, management and
historical practices, grants stock options to a broad-based
management population representing approximately seven
percent of the total employee pool.
CEO COMPENSATION
Actions recommended by the Committee (and approved by the
Board) specific to the Chief Executive Officer relative to
fiscal 1996 were as follows:
- Salary adjustment, Grant of Bonus and Stock Option in
fiscal 1996.
Mr. Martini was granted a 4.7% salary increase, which
brought his base pay to $560,000 per annum for fiscal 1996.
This adjustment was made in large part because of the
increase in revenues and operating earnings for the year
ended September 30, 1995, and recent increases in the
Company's operating margin percentage.
Mr. Martini was evaluated by the Committee against several
criteria that form the Company's bonus plan. The Company's
bonus plan is comprised of both objective and subjective
elements. Those objective criteria include an evaluation
related to meeting the annual corporate objectives,
increases in net earnings, return on equity, sales growth,
earnings as a percentage of sales and profit plan
achievement. These criteria allow Mr. Martini to earn up to
15%, 20%, 20%, 15% and 15%, respectively, of his base
salary. A discretionary award of up to 50% of Mr. Martini's
base salary may be earned if the Committee determines that
he has met other non-financial and numeric-based management
objectives, but such discretionary award combined with the
award for the objective criteria may not exceed 100%, in
the aggregate, of base salary. For fiscal 1996, however,
Mr. Martini did not receive a discretionary award. Based
upon an evaluation of the potential award amount for each
of the objective criteria under the Bonus Plan compared to
the level of achievement attained by Mr. Martini in meeting
each such criterion, the Committee awarded Mr. Martini the
sum of $502,600.
Mr. Martini also participated in the Company's equity-based
compensation program. Options granted in fiscal 1996 are
shown under the caption "Option Grants in Last Fiscal
Year". In considering the grant of options to Mr. Martini,
the Committee took into consideration those items discussed
above.
The Committee believes that the Company's most direct
competitors for executive talent are not necessarily all of
the companies that would be included in a peer group
established to compare shareowner returns. Thus, the groups
used for evaluation of competitive compensation are not the
same as the peer group index in the Comparison of Five Year
Cumulative Total Return graph included in this Proxy
Statement.
15
19
Committee Policy Regarding Compliance with Section 162(m) of
the Code:
The 1993 Omnibus Budget Reconciliation Act ("OBRA") became
law in August 1993. Under the law, income tax deductions of
publicly-traded companies may be limited to the extent total
compensation (including base salary, annual bonus, stock
option exercises and non-qualified benefits) for certain
executive officers exceeds $1,000,000 in any one year. Under
OBRA, the deduction limit does not apply to payments which
qualify as "performance-based". To qualify as
"performance-based", compensation payments must be made from
a plan that is administered by a committee of outside
directors and be based on achieving objective performance
goals. In addition, the material terms of the plan must be
disclosed to and approved by shareowners, and the Committee
must certify that the performance goals were achieved before
payments can be awarded.
The Committee will continue to consider and evaluate all the
Company's compensation programs in light of the OBRA
legislation and related regulations. However, the Company may
pay compensation which is not deductible in certain
circumstances if sound business judgment so requires.
In order to qualify the Company's Amended and Restated 1989
Stock Incentive Plan as "performance-based", the Company
amended this Plan in fiscal 1995 after receiving shareowner
approval at the annual meeting. The amendment establishes a
maximum annual grant of option shares to an employee under
this Plan.
Compensation/Stock Option Committee of the Board of Directors
Francis G. Rodgers, Chairman
James R. Mellor, Vice Chairman
Jose E. Blanco, Sr.
16
20
-------------------------------------------------------------
PERFORMANCE GRAPH
The following graph compares the cumulative total shareowner
return (stock price appreciation plus dividends) for the five
years ending September 30, 1996, on the Company's Common
Stock with the cumulative return of the New York Stock
Exchange Index and the stocks for peer companies with
Standard Industrial Classification Code 5122, drugs and
proprietary wholesale (weighting the returns of these peer
companies based on stock market capitalization). The peer
companies selected by the Company are Akorn, Inc.; Allou
Health & Beauty Care, Inc.; Bindley Western Industries, Inc.;
Capstone Pharmacy Services, Inc.; Cardinal Health, Inc.;
D & K Wholesale Drug, Inc.; Herbalife International, Inc.;
McKesson Corporation; Moore Medical Corporation; FoxMeyer
Corporation; Mark Solutions; and Tristar Corporation.
Cumulative total shareowner return (on an assumed initial
investment of $100 at August 31, 1991), as determined at the
end of the Company's fiscal year, reflects the change in
stock price, assuming reinvestment of dividends for the five
years and one month ended September 30, 1996. (The Company
changed its fiscal year-end during fiscal 1994 from August 31
to September 30.)
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
MEASUREMENT PERIOD BERGEN BRUNSWIG NYSE STOCK MARKET SELF-DETERMINED PEER
(FISCAL YEAR COVERED) CORP. (US COMPANIES) GROUP
--------------------- --------------- ----------------- --------------------
08/30/91 100.0 100.0 100.0
08/31/92 90.1 108.4 97.6
08/31/93 83.7 126.4 122.5
08/30/94 80.6 129.1 204.6
09/29/95 113.2 164.3 265.6
09/30/96 171.3 196.2 337.5
17
21
-------------------------------------------------------------
CERTAIN TRANSACTIONS
For certain information regarding loans to executive officers
and other arrangements between the Company and certain
executive officers of the Company, see "Certain Transactions"
as set forth in Part III, Item 13, "Certain Relationships and
Related Transactions", of the Company's Annual Report on Form
10-K for the fiscal year ended September 30, 1996, which is
included within the Annual Report mailed along with and
accompanying this proxy statement.
18
22
----------------------------------------------------------------
2. SHAREOWNER PROPOSAL REGARDING THE ELECTION OF DIRECTORS BY
CLASSES
(Item 2 on Proxy Card)
================================================================
The Company has been advised that Mr. Kenneth Steiner, 14
Stoner Avenue, Suite 2-M, Great Neck, New York 11021, the
owner of 367 shares of Common Stock, intends to introduce the
proposal set forth below for consideration and action by the
shareowners at the Annual Meeting. Mr. Steiner's proposal and
supporting statement, for which the Board of Directors and
the Company accept no responsibility, are set forth below:
SHAREOWNER
PROPOSAL AND
STATEMENT
"RESOLVED, that the stockholders of the Company request
that the Board of Directors take the necessary steps, in
accordance with state law, to declassify the Board of
Directors so that all directors are elected annually,
such declassification to be effected in a manner that
does not affect the unexpired terms of directors
previously elected."
SUPPORTING STATEMENT
"At last year's annual meeting of stockholders a similar
resolution was supported by approximately 47 percent of
the voting shares.
The election of directors is the primary avenue for
stockholders to influence corporate governance policies
and to hold management accountable for its
implementation of those policies. I believe that the
classification of the Board of Directors, which results
in only a portion of the Board being elected annually,
is not in the best interests of the Company and its
stockholders.
The Board of Directors of the Company is divided into
three classes serving staggered three-year terms. I
believe that the Company's classified Board of Directors
maintains the incumbency of the current Board and
therefore of current management, which in turn limits
management's accountability to stockholders.
The elimination of the Company's classified Board would
require each new director to stand for election annually
and allow stockholders an opportunity to register their
views on the performance of the Board collectively and
each director individually. I believe this is one of the
best methods available to stockholders to insure that
the Company will be managed in a manner that is in the
best interests of the stockholders.
A classified board might also be seen as an impediment
to a potential takeover of the company's stock at a
premium price. With the inability to replace a majority
of the board at one annual meeting, an outside suitor
might be reluctant to make an offer in the first place.
I am a founding member of the Investors Rights
Association of America and I believe that concerns
expressed by companies with classified boards that the
annual election of all directors could leave companies
without experience [sic] directors in the event that all
incumbents are voted out by stockholders, are unfounded.
In my view, in the unlikely event that stockholders vote
to replace all directors this decision would express
stockholder dissatisfaction with the incumbent directors
and reflect the need for change.
I URGE YOUR SUPPORT. VOTE FOR THIS RESOLUTION."
19
23
THE
COMPANY'S
STATEMENT
THE BOARD OF DIRECTORS' STATEMENT IN OPPOSITION TO THE
FOREGOING SHAREOWNER PROPOSAL
The proponent states that last year approximately 47% of the
"voting shares" supported this proposal. However, the Company
believes it is more accurate to say that the proposal was
supported by approximately 34% of the shares eligible to
vote, which was 46.2% of the votes cast.
The Board believes that the reasons for supporting a
classified board are as valid today as when originally
adopted.
First, classification helps the Board maintain a greater
continuity of experience since the majority of directors at
any given time will have experience with the business affairs
and operations of the Company. This permits more effective
long-term strategic planning. A classified board also helps
the Company to attract and retain prominent and well-
qualified individuals who are able to commit the time and
resources to understand the Company and its operations.
Continuity and quality of leadership resulting from the
classified board create long-term value for the shareowners
of the Company.
Second, a classified board reduces the possibility of a
sudden change in majority control of the Board. In the event
of a hostile takeover attempt, the fact that approximately
one-third of the directors have terms of more than one year
would encourage a person seeking control of the Company to
initiate arms-length discussions with management and the
Board, who are in a position to negotiate a transaction that
is most favorable to the shareowners of the Company.
The proponent's supporting statement suggests that a
classified board might be an impediment to a potential
takeover of the Company's stock at a premium price. However,
the Investor Responsibility Research Center (IRRC) reported
in 1996 that a wealth of evidence shows that companies with
anti-takeover defenses receive higher premiums in deals
compared to target firms that do not have them.
The Board believes that a classified board continues to
benefit the Company and its shareowners and those with whom
the Company does business by permitting all to rely on the
consistency and continuity of corporate policy. At the same
time, annual elections, in which a third of the Board is
elected each year, offer shareowners a regular opportunity to
renew and reinvigorate corporate decision-making while
maintaining the basic integrity of corporate policy year to
year for the benefit of all who rely on it.
ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST
THE FOREGOING SHAREOWNER PROPOSAL. Proxies solicited by the
Board of Directors will be so voted unless shareowners
specify otherwise.
20
24
-----------------------------------------------------------------
3. SHAREOWNER PROPOSAL REGARDING COMPENSATION OF NON-EMPLOYEE
DIRECTORS (Item 3 on Proxy Card)
=================================================================
The Company has been advised that Mr. William Steiner, 4
Radcliffe Drive, Great Neck, New York 11024, the owner of
1970 shares of Common Stock, intends to introduce the
proposal set forth below for consideration and action by the
shareowners at the Annual Meeting. Mr. Steiner's proposal and
supporting statement, for which the Board of Directors and
the Company accept no responsibility, are set forth below:
SHAREOWNER
PROPOSAL AND
STATEMENT
"RESOLVED, that the shareholders recommend that the
Board of Directors take the necessary steps to ensure
that from here forward all non-employee directors should
receive a minimum of fifty percent of their total
compensation in the form of company common stock which
cannot be sold for three years."
SUPPORTING STATEMENT
"Last year, a similar proposal received approximately
17% of the total vote.
A significant equity ownership by outside directors is
probably the best motivator for enhancing shareholder
value and facilitating identification with shareholders.
Traditionally, outside directors, sometimes selected by
management, were routinely compensated with a fixed fee,
regardless of corporate performance. In today's
competitive global economy, outside directors must
exercise a critical oversight of management's
performance in furthering corporate profitability. All
too often, outside directors' oversight has been too
relaxed and their actions were too late to effect any
meaningful change.
The history of corporate America has too many examples
of company assets having been eroded on an extended
series of strategic errors. Unfortunately boards of
directors stood by and passively allowed serious
problems to develop.
When compensation is in company stock, there is a
greater likelihood that outside directors will be more
vigilant in protecting their own, as well as corporate
and shareholder interests.
What is being recommended in this proposal is neither
novel nor untried. A number of corporations have already
established versions of such practices, including the
Travelers, Hartford Steam Boiler, Alexander and
Alexander, NYNEX, Westinghouse, and many others.
Harvard Business School did a series of studies
comparing highly successful to poorly performing
companies. They found that outside directors in the
better performing companies had significantly larger
holdings of company stock than outside directors in the
more mediocre and poorly performing companies.
Additionally, the National Association of Corporate
Directors (NACD) Blue Ribbon Commission recently
recommended that directors receive their retainer in
stock rather than cash.
21
25
It can be argued that awarding stock options to outside
directors accomplishes the same purpose of insuring
directors' allegiance to companies' profitability as
paying them exclusively in stock. However, it is our
contention that stock options are rewarding on the
upside but offer no penalties on the downside while
shareholders bear the full downside risks. There are few
strategies that are more likely to cement outside
directors with shareholder interests and company
profitability than one which results in their sharing
the same bottom line.
I urge your support. Vote for this resolution."
THE
COMPANY'S
STATEMENT
THE BOARD OF DIRECTORS' STATEMENT IN OPPOSITION TO THE
FOREGOING SHAREOWNER PROPOSAL
The Company's Board shares the proponent's belief in the
importance of incentive-based compensation for directors. The
Board also believes that directors should have a financial
stake in the Company. Indeed, as indicated by the table on
page 9, which sets forth the ownership of the Company's
Common Stock by management, all of the Company's current
non-employee directors are beneficial owners of Common Stock.
In addition, the Company's 1989 Stock Incentive Plan, as
amended, provides for an initial option grant to non-employee
directors upon their being elected, and then annual grants
thereafter if, and only if, the Company attains certain
financial results. The options do not become exercisable
until one year after grant, and then only in percentage
increments over several years. The options have restricted
transferability and thus provide long-term incentive,
consistent with continuity in service on the Board. The
proposal to pay non-employee directors partly in shares of
Common Stock with a three-year restriction provides no
advantage over the options, which require three years to
become fully exercisable.
The Board believes the existing director compensation
structure offers directors the flexibility to balance
stock-related and cash compensation in a manner compatible
with their individual circumstances. The directors and the
Compensation/Stock Option Committee periodically review the
compensation of the Company's non-employee directors and
ensure that it remains consistent with industry standards and
continues to be fair and appropriate in light of the
obligations and responsibilities of corporate directors. The
Board believes these goals are being met and no changes are
required at this time.
ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST
THE FOREGOING SHAREOWNER PROPOSAL. Proxies solicited by the
Board of Directors will be so voted unless shareowners
specify otherwise.
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26
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4. OTHER MATTERS
=================================================================
At the time this Proxy Statement was published, the Board
knew of no other matters constituting a proper subject for
action by the shareowners which would be presented at the
meeting. However, if any matters properly come before the
meeting, it is the intention of the persons named in the
enclosed proxy card to vote the shares represented by said
proxies in accordance with their judgment on such matters.
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INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Article VII of the Company's Restated Certificate of
Incorporation ("Restated Certificate"), every person who is
or was a director, officer, employee or agent of the Company
and the legal representative of such a person is entitled to
receive indemnification from the Company to the fullest
extent permitted by law. Under New Jersey law, directors and
officers may be indemnified in certain situations, subject to
the Company's having taken certain actions and the directors
and officers having met certain specified standards of
conduct. In 1986, the Company entered into individual
agreements (collectively, the "Indemnity Agreement") to
indemnify each of its directors against liabilities and
defense costs to the extent that such directors would have
been insured under the director and officer liability
insurance policies which were in effect on December 31, 1984
(the "1984 Policy"). The Company believes that the coverage
addresses liabilities arising under ERISA, securities and
antitrust laws. The obligation of the Company to indemnify a
director under the Indemnity Agreement is limited to $30
million, in the aggregate, the maximum coverage available
under the 1984 Policy. However, the Indemnity Agreement does
not limit a director's right to recover in excess of such $30
million maximum from the Company if the director is otherwise
entitled to statutory indemnification. The Indemnity
Agreement was ratified by the shareowners at the December
1986 Annual Meeting.
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INDEPENDENT ACCOUNTANTS
The Company's financial statements have been examined by
Deloitte & Touche LLP, independent certified public
accountants. The selection of these independent accountants
for the current fiscal year has been made by the Board upon
the recommendation of the Audit Committee. As in the past, a
representative of Deloitte & Touche LLP, is expected to be
present at the meeting and such representative will have the
opportunity to make a statement and respond to appropriate
questions.
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SHAREOWNER PROPOSALS
All proposals that shareowners desire to submit for
consideration by the shareowners and for inclusion in the
Company's Proxy Statement for presentation at the January
1998 Annual Meeting must be received by the Company no later
than August 14, 1997.
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COST AND METHOD OF SOLICITATION
The entire expense of preparing, assembling, printing and
mailing the Notice of Meeting, this Proxy Statement, the form
of proxy, and the cost of soliciting proxies relating to the
meeting will be borne by the Company. The Company has engaged
Georgeson & Co., Inc., a firm of professional proxy
solicitors, to solicit proxies in favor of the election of
the nominees described above for election as directors and in
opposition to the two shareowner proposals. The Company
anticipates that the fees it will incur for this service will
be approximately $15,000, plus reasonable expenses and
disbursements. In addition to such solicitation and the
solicitation made hereby, proxies may be solicited by the
officers, directors and other regular employees of the
Company by telephone, telegraph or personal solicitation and
no additional compensation will be paid to such individuals.
Upon request from a record holder who is a broker, dealer,
bank, voting trustee or their nominee, the Company shall
reimburse such record holders for their reasonable expenses
in forwarding proxy material to their principals.
By order of the Board of
Directors,
[SIG]
Milan A. Sawdei
Executive Vice President,
Chief Legal Officer and
Secretary
A copy of the annual report for the fiscal year ended
September 30, 1996, including financial statements current
through December 31, 1996, is included herewith. Such report
is not to be regarded as proxy soliciting material or as a
communication by means of which any solicitations are to be
made.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE
FISCAL YEAR ENDED SEPTEMBER 30, 1996, AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, WHICH PROVIDES CERTAIN
ADDITIONAL INFORMATION CONCERNING THE COMPANY AND ITS
MANAGEMENT, IS INCLUDED WITHIN THE ANNUAL REPORT ACCOMPANYING
THIS PROXY STATEMENT.
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28
BERGEN BRUNSWIG CORPORATION
MAP AND DIRECTIONS
TO ANNUAL MEETING
29
BERGEN BRUNSWIG CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR
THE ANNUAL MEETING OF SHAREOWNERS MAY 23, 1997
The undersigned hereby appoints Robert E. Martini, Donald R. Roden and Charles
J. Lee, and each of them, attorneys and proxies, with power of substitution in
each of them, to vote for and on behalf of the undersigned at the Annual
Meeting of Shareowners of the Company to be held on May 23, 1997, and any
adjournment thereof, upon matters properly coming before the meeting, as set
forth in the Notice of Meeting and Proxy Statement, both of which have been
received by the undersigned and upon all such other matters that may properly
be brought before the meeting, as to which the undersigned hereby confers
discretionary authority to vote upon said proxies. Without otherwise limiting
the general authorization given hereby, said attorneys and proxies are
instructed to vote as follows:
(THIS PROXY CARD CONTINUES AND MUST BE SIGNED ON THE REVERSE SIDE.)
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
30
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS
AND AGAINST ITEMS 2 AND 3 BELOW.
Please mark
your votes as [X]
indicated in
this example
Election of four directors to Class III
FOR all nominees WITHHOLD
listed to the right AUTHORITY
(except as marked to vote for the
to the contrary) nominees listed
[ ] [ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS BELOW.
NOMINEES: Rodney H. Brady, Charles C. Edwards, M.D., James R. Mellor and
Francis G. Rodgers
(INSTRUCTION: To withhold authority for any particular nominee, write such
nominee(s) name on the line below.)
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ITEMS 2 AND 3 BELOW.
2. Shareowner Proposal No. 2 on declassification
of Board of Directors
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Shareowner Proposal No. 3 on compensation
of non-employee Directors
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Dated: , 19
---------------------- ----
- ---------------------------------------
(Signed)
- ---------------------------------------
(Signed)
Please sign exactly as your name appears
hereon. Give full title if an Attorney, Executor,
Administrator, Trustee, Guardian, etc. For an
account in the name of two or more persons, each
should sign. If a Corporation, please sign in full
corporate name by President or other authorized officer.
If a partnership, please sign in partnership name
by authorized person.
PLEASE SIGN THIS PROXY AND RETURN IT
PROMPTLY WHETHER OR NOT YOU EXPECT TO
ATTEND THIS MEETING. YOU MAY NEVERTHELESS
VOTE IN PERSON IF YOU DO ATTEND.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE