SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
BERGEN BRUNSWIG CORPORATION
(Name of Registrant as Specified In Its Charter)
N/A
(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
[LOGO OF BERGEN BRUNSWIG CORPORATION]
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4000 Metropolitan Drive, Orange, California 92868 (714) 385-4000
ROBERT E. MARTINI
Chairman of the Board
January 12, 2001
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 Tuesday, February 13, 2001, 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 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
submit your vote promptly and efficiently by calling the toll-free
telephone number as provided on the proxy card or, if you prefer,
by signing and returning your proxy card 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,
/s/ ROBERT E. MARTINI
Robert E. Martini
Chairman of the Board
Notice of Annual Meeting of Shareowners
To Be Held February 13, 2001
Bergen Brunswig Corporation
4000 Metropolitan Drive
Orange, California 92868
(714) 385-4000
Bergen NOTICE IS HEREBY GIVEN that the Annual Meeting of
Brunswig Shareowners of Bergen Brunswig Corporation (the "Company")
Corporation will be held at the Company's headquarters located at 4000
Metropolitan Drive, Orange, California on February 13, 2001,
at 10:00 A.M., Pacific Time, for the following purposes:
1. To elect three directors to serve on the Board of
Directors of the Company for a term of three years (the
"Bergen Board Proposal");
2. To ratify adoption of the Company's 2001 Employee Stock
Purchase Plan (the "Employee Stock Purchase Plan
Proposal");
3. To act on a shareowner proposal (the "Shareowner
Proposal"); 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 December
26, 2000, 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 promptly submit your vote by calling
the toll-free telephone number as provided on the proxy card
or by signing the enclosed proxy card and returning 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,
/s/ MILAN A. SAWDEI
Milan A. Sawdei
Executive Vice President,
Chief Legal Officer and
Secretary
Orange, California
January 12, 2001
YOUR VOTE IS IMPORTANT! Your attention is directed to the
accompanying Proxy Statement and proxy card. You are
requested to call in your vote by telephone or by signing,
dating and returning the enclosed proxy card as promptly as
possible so that your shares may be represented. A toll-free
telephone number and a postage prepaid envelope are provided
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, and you must vote such
shares in accordance with the instructions you receive from
such broker, bank or other nominee.
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
Tuesday, February 13, 2001, 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 anticipates mailing this Proxy Statement and
accompanying proxy card commencing on or about January 12,
2001, 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 Bergen Board Proposal,
FOR the Employee Stock Purchase Plan Proposal, AGAINST the
Shareowner Proposal, 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 or a vote which is made by
telephone, 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
December 26, 2000 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 135,043,168 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. Subject to certain quorum requirements, the
Employee Stock Purchase Plan Proposal and the Shareowner
Proposal require the affirmative vote of a majority of the
votes cast by holders of Common Stock with respect to each
such proposal at the Annual Meeting. The Bergen Board
Proposal requires the affirmative vote of a plurality of the
shares of Common Stock voted at the Annual Meeting.
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.
1
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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 11
directors. The directors are divided into three
approximately equivalent-sized classes, and, unless there is
a legal requirement providing otherwise, each director in a
class will serve for a period of three years on a staggered-
term basis. Accordingly, at this annual meeting there are
three nominees for Class I directors.
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 November 1, 2000,
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 For Terms Which Will Expire At The
2004 Annual Meeting (Class I Directors)
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[PHOTO OF Robert E. Martini Director since 1962. Age 68.
ROBERT E.
MARTINI] Chairman of the Board (since 1992), Chief Executive Officer
(since November 1999), Chief Executive Officer (1990 to
1997) and President (1981 to 1992) of, and a consultant
(since 1997) to, the Company. Mr. Martini is a director of
Mossimo, Inc. Mr. Martini is a member of the Company's
Executive and Financing Committees. Mr. Martini is the
father of Brent R. Martini, an Executive Vice President and
member of the Board of the Company.
2
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[PHOTO OF Neil F. Dimick Director since 1995. Age 51.
NEIL F.
DIMICK] Executive Vice President and Chief Financial Officer (since
1992) of the Company and formerly its Vice President,
Finance (1991 to 1992). President of Bergen Brunswig
Specialty Company (1996 to 2000). Mr. Dimick is Chairman of
the Company's Financing Committee and is a member of the
Company's Investment/Retirement Plan Committee.
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[PHOTO OF Charles C. Director since 1985. Age 77.
CHARLES C. Edwards, M.D.
EDWARDS]
Former President and Chief Executive Officer, Scripps Clinic
and Research Foundation and Scripps Institutions of Medicine
and Science (health care) (1991 to 1993). Dr. Edwards is a
director of Molecular Biosystems, Inc., Northern Trust Bank
and IDEC Pharmaceutical Company. Dr. Edwards is Chairman of
the Company's Compensation/Stock Option Committee, Vice
Chairman of the Company's Investment/Retirement Plan
Committee and is a member of the Company's Nominating
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 At The 2002 Annual Meeting
(Class II Directors)
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[PHOTO OF Jose E. Blanco, Sr. Director since 1992. Age 74.
JOSE E.
BLANCO, SR.] Former Chairman of the Board (1987 to 1999) of J.M. Blanco,
Inc. (wholesale pharmaceutical distribution).
3
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[PHOTO OF Charles J. Lee Director since 1972. Age 75.
CHARLES J.
LEE] Former Managing Director, Smith Barney Inc. (investment
banking) (1989 to 1996). Mr. Lee is Chairman of the
Company's Audit Committee and is a member of the Company's
Executive and Financing Committees.
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[PHOTO OF George R. Liddle Director since 1969. Age 73.
GEORGE R.
LIDDLE] Investment Adviser. Former Vice President, Kidder, Peabody &
Co., Inc. (stockbrokers), retired. Mr. Liddle is a member of
the Company's Investment/Retirement Plan Committee.
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[PHOTO OF George E. Director since 1985. Age 71.
GEORGE E. Reinhardt, Jr.
REINHARDT,
JR.] Formerly a consultant (1992 to 1995) to, and Senior Vice
President (1991), Chief Financial Officer (1976 to 1991) and
Vice President, Finance (1981 to 1991) of, the Company. Mr.
Reinhardt is Chairman of the Company's Investment/Retirement
Plan Committee and is a member of the Company's Executive,
Compensation/Stock Option, Financing and Nominating
Committees.
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Directors Whose Terms Expire At The 2003 Annual Meeting
(Class III Directors)
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[PHOTO OF Rodney H. Brady Director since 1973. Age 67.
RODNEY H.
BRADY] President and Chief Executive Officer, Deseret Management
Corporation (diversified corporate holding company) since
April 1996. Former President and Chief Executive Officer,
Bonneville International Corporation (broadcast
communications) (1985 to 1996). Mr. Brady is a director of
Deseret Mutual Insurance Company and First Security
Corporation. Mr. Brady is Vice Chairman of the Company's
Compensation/Stock Option Committee and is a member of the
Company's Executive and Financing Committees.
4
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[PHOTO OF Brent R. Martini Director since 1999. Age 41.
BRENT R.
MARTINI] Executive Vice President of the Company (since 1996).
President (since 1996), Executive Vice President, West
Region (1994 to 1996) and Vice President, Quality
Organizational Development and Training (1991 to 1994) of
Bergen Brunswig Drug Company, a subsidiary of the Company.
Mr. Martini is a director of Healthcare Distribution
Management Association.
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[PHOTO OF James R. Mellor Director since 1979. Age 70.
JAMES R.
MELLOR] Chairman of the Board, USEC, Inc. since 1998. Former
Chairman of the Board and Chief Executive Officer (1993 to
1997), and former President and Chief Operating Officer
(1991 to 1993) of General Dynamics Corporation (diversified
defense and aerospace). Mr. Mellor is a director of General
Dynamics Corporation, Aeromovel USA, Inc., USEC, Inc. and
Computer Sciences Corporation. Mr. Mellor is Chairman of the
Company's Executive and Nominating Committees and is a
member of the Company's Audit Committee.
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[PHOTO OF Francis G. Rodgers Director since 1982. Age 74.
FRANCIS G.
RODGERS] Author and Lecturer. Former Vice President, Marketing, IBM
(information processing systems), retired. Mr. Rodgers is a
director of Milliken and Company, Protegrity Inc. and
Response Logic Inc. Mr. Rodgers is a member of the Company's
Audit, Compensation/Stock Option and Nominating Committees.
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Director Emeritus
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[PHOTO OF JOHN John Calasibetta Director from 1962 Age 95.
CALASIBETTA] to 1998.
Former Senior Vice President of the Company.
5
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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 James R. Mellor, Chairman, Rodney H.
Brady, Charles J. Lee, Robert E. Martini and George E.
Reinhardt, Jr.
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 Charles J. Lee, Chairman, James R. Mellor 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 Dr. Charles C.
Edwards, Chairman, Rodney H. Brady, Vice Chairman, George E.
Reinhardt, Jr. and Francis G. Rodgers.
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 E. Reinhardt, Jr.,
Chairman, Dr. Charles C. Edwards, Vice Chairman, Neil F.
Dimick and George R. Liddle.
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 James
R. Mellor, Chairman, Dr. Charles C. Edwards, George E.
Reinhardt, Jr. and Francis G. Rodgers.
The Financing Committee reviews 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 Neil F. Dimick,
Chairman, Rodney H. Brady, Charles J. Lee, Robert E. Martini
and George E. Reinhardt, Jr.
During fiscal 2000, there were thirteen meetings of the
Board, fifteen meetings of the Executive Committee, six
meetings of the Compensation/Stock Option Committee, five
meetings of the Audit Committee, three meetings of the
Investment/Retirement Plan Committee, one meeting of the
Nominating Committee and one meeting 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.
6
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Audit Committee Charter
The Audit Committee of the Board has adopted a charter and
it is attached to this Proxy Statement as Appendix A. The
Company's securities are listed on the New York Stock
Exchange and are governed by its listing standards. All
members of the Audit Committee meet the independence
standards of the rules promulgated by the Securities and
Exchange Commission and the standards of the New York Stock
Exchange.
Audit Committee Report
December 22, 2000
To the Board of Directors of Bergen Brunswig Corporation:
The Board of Directors adopted a written Audit Committee
Charter on November 15, 2000. All members of the Audit
Committee are independent as defined in the New York Stock
Exchange's listing standards.
The Audit Committee has reviewed and discussed with the
Company's management and the Company's independent auditors
the audited financial statements of the Company for the
fiscal year ended September 30, 2000 (the "Audited Financial
Statements").
Without limiting the foregoing, the Audit Committee has also
discussed with the Company's independent auditors the
matters required to be discussed pursuant to SAS 61
(Codification of Statements on Auditing Standards, AU ss.
380).
Based on the review and discussions described in the
immediately preceding paragraph, the Audit Committee
recommended to the Board of Directors that the Audited
Financial Statements be included in the Company's Annual
Report on Form 10-K for the fiscal year ended September 30,
2000, filed with the U.S. Securities and Exchange
Commission.
Audit Committee Members:
Charles J. Lee, Chairman
James R. Mellor
Francis G. Rodgers
The foregoing report of the Audit Committee is not to be
deemed "soliciting material" or deemed to be filed with the
Securities and Exchange Commission or subject to Regulation
14A of the Securities Exchange Act of 1934, except to the
extent specifically requested by the Company or incorporated
by reference in documents otherwise filed.
7
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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 2000 an
annual fee of $36,000 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 (other than the
Chairman of the Committees) received $1,000 for each
Committee meeting attended in person and $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 and
$900 for each telephone meeting of the Committee in which he
participated. A non-employee director who serves less than
six months in a fiscal year receives 50% of the annual fee,
and if he or she serves six months or more in a fiscal year,
receives 100% of the prevailing annual fee. The Company's
1999 Deferred Compensation Plan provides that a non-employee
director of the Company may elect to defer up to 100% of
these fees in an amount not less than $2,500 of such fees
into said Plan.
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. The Board intends to
amend the Plan to allow payment in a lump sum amount or
installments of 60 equal consecutive monthly installments.
If the non-employee director has served for less than ten
years, his or her 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 or her termination from Board
service, his or her beneficiary will receive an amount equal
to 100% of the amount the Company would have paid the
director had normal retirement age been attained.
Under the Company's 1999 Non-Employee Directors' Stock Plan
each non-employee director is automatically entitled to an
option covering 20,000 shares of Common Stock upon the date
the Plan was adopted or upon his or her initial election or
appointment to the Board, and is thereafter entitled to an
annual grant of 6,000 shares ("Annual Grant"). During fiscal
2000, each non-employee director received an Annual Grant of
6,000 shares with an exercise price of $5.53 per share.
The 1999 Non-Employee Directors' Stock Plan provides that
each non-employee director will be granted a number of
shares of Common Stock ("Restricted Shares") equivalent to
25% of his or her annual retainer, in lieu of cash
compensation for such portion thereof, which will be
determined at the beginning of each fiscal year by dividing
25% of the non-employee director's annual retainer by the
fair market value of one share of Common Stock on the first
business day of such fiscal year. The Restricted Shares
granted to a non-employee director will vest in full as of
the first anniversary of the date such Restricted Shares
were awarded or will become fully vested upon a non-employee
director's termination of service due to death, disability,
retirement in accordance with the retirement policy for non-
employee directors then in effect, or involuntary
termination of service on the Board other than for cause.
The Restricted Shares will not vest if the non-employee
director voluntarily resigns or is terminated for cause
prior to the date that such shares otherwise would have
become fully vested.
In addition to receiving 25% of the annual fee in Restricted
Shares, a non-employee director may elect prior to the start
of each fiscal year to receive all or additional portions of
his or her annual retainer and other fees (except to the
extent that such fees are the subject of Restricted Shares)
in shares of Common Stock in lieu of cash therefor, which
will be determined by dividing the amount of such fees by
the fair market value of one share of Common Stock on the
first business day of such fiscal year.
8
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Beneficial Ownership of Securities
Principal The following table lists the beneficial ownership of each
Shareowners 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 November 1,
2000.
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Name and Amount and
Address of Nature of Percent of
Beneficial Title of Beneficial Outstanding
Owners Class Ownership(/1/) Shares
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AXA Financial, Inc.(/2/) Common Stock 14,290,009(/3/) 10.6%
1290 Avenue of the
Americas
New York, New York 10104
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Capital Research and Common Stock 8,175,000(/4/) 6.1%
Management Co.
333 South Hope Street
Los Angeles, CA 90071
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(/1/) Based on disclosures made by the beneficial owners or
their agents in reports on Schedule 13D or 13G filed with
the Securities and Exchange Commission (the "Commission").
(/2/) According to the Schedule 13G, dated November 13,
2000, filed with the Commission, the filing was made jointly
on behalf of AXA Financial, Inc.; four French mutual
insurance companies, AXA Assurances I.A.R.D. Mutuelle, AXA
Assurances Vie Mutuelle, AXA Conseil Vie Assurance Mutuelle
and AXA Courtage Assurance Mutuelle, as a group
(collectively, the "Mutuelles AXA"); AXA, which beneficially
owns a majority interest in AXA Financial, Inc. and is
controlled by the Mutuelles AXA; and their subsidiaries.
(/3/) According to the Schedule 13G, dated February 8, 2000,
filed with the Commission by Sanford C. Bernstein & Co.,
Inc., an investment advisor/broker dealer ("Bernstein"),
Bernstein was the beneficial owner of 16,469,331 shares of
Common Stock, with sole voting power over 8,424,944 shares,
shared voting power over 1,604,630 shares and sole
dispositive power over 16,469,331 shares. However, the AXA
filing indicates that a majority of the shares of Common
Stock held by Bernstein were acquired by a subsidiary of AXA
Financial, Inc. Specifically, the filing indicates that on
October 2, 2000, Alliance Capital Management L.P.
("Alliance"), an investment advisor and subsidiary of AXA
Financial, Inc., acquired beneficial ownership of 13,903,227
shares of Common Stock through its acquisition of the
investment advisory assets of Bernstein. Alliance is deemed
to have sole voting power over 8,127,955 shares, shared
voting power over 1,352,558 shares and sole dispositive
power over 14,288,332 shares.
(/4/) According to the Schedule 13G, dated February 11,
2000, filed with the Commission by Capital Research and
Management Company, an investment advisor ("Capital"),
Capital had no voting power and sole dispositive power over
8,175,000 shares.
9
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Voting The following table sets forth certain information regarding
Securities the ownership of the Company's Common Stock as of November
Owned by 1, 2000, by: (a) each director and nominee; (b) each of the
Directors and Named Executive Officers who are subject to Section 16 of
Executive the Securities Exchange Act; and, (c) all directors and
Officers executive officers as a group.
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Aggregate Number
of Shares Percent
Beneficially of
Owned(/1/)(/2/) Outstanding Shares
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Jose E. Blanco, Sr. 15,724 *
Rodney H. Brady(/3/) 130,869 *
Charles J. Carpenter 244,700 *
Steven Collis 109,555 *
Neil F. Dimick 354,603 *
Dr. Charles C. Edwards 59,771 *
Charles J. Lee 48,761 *
George R. Liddle(/5/) 94,767 *
Brent R. Martini(/6/) 817,010 *
Robert E. Martini(/7/) 5,226,630 3.9
James R. Mellor 55,727 *
George E. Reinhardt, Jr. 237,067 *
Francis G. Rodgers 59,007 *
All directors and executive
officers as a group including
those above (16 persons) 7,454,191 5.6
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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/) Includes the number of shares that could be purchased
by exercise of options exercisable as of November 1, 2000,
or within 60 days thereafter under the Company's stock
option or stock incentive plans, as follows: Jose E. Blanco,
Sr.-14,333 shares; Rodney H. Brady-35,746 shares; Charles J.
Carpenter-203,446 shares; Steven Collis-106,991 shares; Neil
F. Dimick-333,297 shares; Dr. Charles C. Edwards-45,592
shares; Charles J. Lee-35,746 shares; George R. Liddle-
34,146 shares; Brent R. Martini-252,998 shares; Robert E.
Martini-373,085 shares; James R. Mellor-35,746 shares;
George E. Reinhardt, Jr.-37,712 shares; Francis G. Rodgers-
35,746 shares; and all directors and executive officers as a
group, including those above (16 persons)-1,200,836 shares.
(/3/) Includes 4,626 shares held by two sons living at home
and 90,497 shares held by Mr. Brady and his wife together as
tenants in common.
(/5/) Includes 60,621 shares held by Mr. Liddle as co-
trustee for the benefit of him and his wife.
(/6/) Includes 486,012 shares held in trust for Brent R.
Martini's benefit and 32,000 shares for which he does not
have voting or dispositive power.
(/7/) Includes 94,812 shares beneficially owned by Mr.
Martini for which he does not have voting or dispositive
power.
10
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Section 16(a) Section 16(a) of the Securities Exchange Act (the "Exchange
Beneficial Act") requires the Company's directors, officers and persons
Ownership who own more than ten percent of a registered class of the
Reporting Company's equity securities to file reports of ownership and
Compliance changes in ownership of such securities with the Securities
and Exchange Commission and the New York Stock Exchange.
Directors, officers and greater than 10 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 or
information furnished to the Company, the Company believes
that during the 2000 fiscal year all filing requirements
applicable to its directors and officers were satisfied.
However, reports disclosing an option grant for shares of
Common Stock in November 1999 and February 2000 by Linda M.
Burkett, Charles J. Carpenter, Steven Collis, Neil F.
Dimick, Brent R. Martini and Milan A. Sawdei (each an
executive officer of the Company), and a report disclosing
an exercise of an option to acquire shares of Common Stock
in December 1999 by Mr. Sawdei, were filed past the date
required for filing. The required filings were made promptly
after the inadvertent delay in filing was noted.
11
-------------------------------------------------------------
Compensation of Executive Officers
The following table sets forth information for the fiscal
years ended September 30, 2000, 1999 and 1998, 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 during each such
fiscal year (collectively, the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
---------------------------------------------------------------------------------------------------------
Long-Term
Compensation
------------------------
Annual Compensation Awards
-------------------------- ----------
Other Securities
Annual Underlying All Other
Compen- Restricted Options/ Compen-
Name and Salary Bonus(/1/) sation Stock SARs sation(/2/)
Principal Position Year ($) ($) ($) Awards ($) (#) ($)
---------------------------------------------------------------------------------------------------------
Robert E. Martini 2000 675,000 245,900 105,475(/3/) 10,316(/4/) 56,000 --
Chief Executive Officer 1999 -- -- -- 10,311(/4/) -- --
1998 -- -- -- -- -- --
Donald R. Roden(/5/) 2000 207,693 -- 692,137(/6/) -- -- 5,228,930(/7/)
Former President and Former 1999 675,000 264,900 63,217(/6/) -- 50,000 10,000
Chief Executive Officer 1998 568,750 718,400 52,413(/6/) -- 300,000 5,000
Neil F. Dimick 2000 425,000 191,300 57,290(/8/) -- 180,000 4,509
Executive Vice President, 1999 425,000 178,150 51,411(/8/) -- 35,000 10,000
Chief Financial Officer 1998 366,250 462,900 51,073(/8/) -- 180,000 5,000
Brent R. Martini(/9/) 2000 325,000 124,400 -- -- 175,000 4,509
Executive Vice President 1999 325,000 170,300 -- -- 25,000 10,000
1998 270,833 327,100 -- -- 150,000 5,000
Charles J. Carpenter(/10/) 2000 300,000 135,100 -- -- 175,000 3,733
Executive Vice President 1999 300,000 119,675 -- -- 25,000 10,000
1998 257,083 312,200 -- -- 150,000 5,000
Steven Collis(/11/) 2000 275,000 94,100 -- -- 176,300 8,400
Executive Vice President 1999 220,000 64,600 -- -- 29,600 7,941
1998 173,500 260,500 -- -- 60,000 5,545
---------------------------------------------------------------------------------------------------------
(/1/) Amounts in this column reflect the aggregate annual
bonuses which were earned for such fiscal year.
(/2/) Reflects Company contributions under the Company's
Pre-Tax Investment Retirement Account Employer Contributions
Plus Plan, unless otherwise indicated in the following
notes.
(/3/) Includes $87,360 of imputed compensation reflecting
the difference between the average market interest rate for
the Company and the interest free loan to Mr. Martini for
fiscal year 2000, described under "Certain Transactions"
commencing on page 24.
(/4/) Restricted shares of Common Stock were granted
pursuant to the Company's 1999 Non-Employee Directors' Stock
Plan. As of September 30, 2000, Mr. Martini held 1,593
shares of Common Stock that had been awarded as restricted
stock. The value of such shares as of such date was $18,618.
On November 12, 1999, 1,179 shares were granted and on
October 1, 1998, 422 shares were granted, in each case with
full vesting one year from the grant date. Dividends are
paid prior to vesting.
(/5/) Mr. Roden's employment with the Company was
terminated as of November 3, 1999. Other monies were paid
during the fiscal year to Mr. Roden in connection with his
termination of employment and are described in Note 5 and
Note 6, below.
(/6/) Includes forgiveness of executive loans in the amount
of $625,000 described under "Certain Transactions"
commencing on page 24; $35,188, $41,990 and $58,435 of
imputed compensation reflecting the difference between the
average market interest rate for the Company and the
interest free loans to Mr. Roden for fiscal years 1998, 1999
and 2000, respectively and $19,890 of incremental costs to
the Company in providing leased vehicles to Mr. Roden for
fiscal year 1999.
(/7/) Of this amount, $1,880,697 represents a payout under
the Company's non-qualified Supplemental Executive
Retirement Plan. The balance of this amount represents
payments in connection with a resolution of Mr. Roden's
status under the Employment and Severance Agreements
described below under "Employment and Severance Agreements".
12
(/8/) Includes $22,872, $27,067 and $38,610 of imputed
compensation reflecting the difference between the average
market interest rate for the Company and the interest free
loans to Mr. Dimick for fiscal years, 1998 1999 and 2000,
respectively, described under "Certain Transactions"
commencing on page 24; and $17,700 of incremental costs to
the Company in providing leased vehicles to Mr. Dimick for
fiscal year 1999.
(/9/) Mr. Martini also serves as President of Bergen
Brunswig Drug Company, a subsidiary of the Company.
(/10/) Mr. Carpenter also serves as President and CEO of
PharMerica, Inc., a subsidiary of the Company.
(/11/) Mr. Collis also serves as President of ASD Specialty
Healthcare, Inc., a subsidiary of the Company.
13
-------------------------------------------------------------
Employment and Severance Agreements
In April 1994, the Board authorized the Company to enter
into written employment agreements (the "Employment
Agreements") and severance agreements (the "Severance
Agreements") with certain executive officers of the Company,
including Mr. Dimick. Similar agreements were entered into
in October 1995 with Mr. Roden and in September 1996 with
Mr. Carpenter and Brent R. Martini.
Each of the Employment Agreements is for a term of three
years. The Employment Agreements automatically extend on a
monthly basis so that the outstanding term is always three
years, subject to the option of either party to terminate
the automatic extension provision at any time. Pursuant to
each Employment Agreement, each Named Executive Officer is
to receive his then effective annual base compensation, a
bonus that shall be equal to that paid to other executive
officers at the same level, but, regardless of what may be
paid to other executives, in any event no less than fifty
percent of the average of the Named Executive Officer's
previous three annual bonuses, and other benefits and
allowances. In the event of death or disability, each Named
Executive Officer or their beneficiary, as the case may be,
will receive the compensation provided for under his
Employment Agreement for the term of the Agreement,
calculated as if notice to terminate had been given 30 days
prior to such event. Mr. Roden's employment with the Company
was terminated as of November 3, 1999, his Employment
Agreement and Severance Agreement are terminated, and (with
the exception of certain continuing indemnity obligations of
the Company regarding the performance of his duties) the
Company does not have any further obligation to Mr. Roden
under such agreements.
Pursuant to the Employment Agreements, the Company will
indemnify each Named Executive Officer with respect to any
actions, claims or settlements arising out of the
performance of his duties, including the payment of all
reasonable attorneys' fees and necessary costs and expenses.
Pursuant to the Employment Agreements, a Named Executive
Officer's employment may be terminated (1) upon notice by
the Named Executive Officer, except for "good reason"; (2)
by mutual agreement between the Named Executive Officer and
the Company; or (3) by the Company for cause. If the
Employment Agreement is terminated by the Company for any
other reason, or if the Named Executive Officer terminates
the Employment Agreement for good reason (including, but not
limited to, an adverse change in such officer's position
from that held by the Executive that existed at the time the
Executive entered into the Employment Agreement), he will be
entitled to damages.
The Severance Agreements with the Named Executive Officers,
which provide for benefits additional to the Employment
Agreements, require payment of cash and other benefits in
the event of a voluntary or involuntary termination of
employment within three years following, but only upon, a
Change in Control (as hereinafter defined) of the Company.
Payment under the Severance Agreements would consist of 2.99
times the average annual W-2 compensation paid by the
Company for the most recent five taxable years of the Named
Executive Officer ending before the date of the Change in
Control if, following a Change in Control, such Named
Executive Officer is terminated without cause, such Named
Executive Officer terminates for any reason within 180 days
after a Change in Control, or if such Named Executive
Officer terminates
14
for good reason (including, but not limited to, an adverse
change in such officer's position from his position at the
time of the Change in Control). The Severance Agreements
continue until three years and one day after a Change in
Control or until the Named Executive Officer receives the
severance payment and other benefits under the Severance
Agreements.
Under the Severance Agreements, a Change in Control with
respect to the Company is deemed to occur 90 days prior to
(i) the acquisition by any person, entity or group, within
the meaning of Section 13(d) and 14(d) of the Securities
Exchange Act of 1934 (the "Exchange Act") (excluding for
this purpose (A) the Company or (B) any employee benefit
plan of the Company which acquires beneficial ownership of
voting securities of the Company) of 50% or more of
beneficial ownership (within the meaning of Rule 13(d)-3
promulgated under the Exchange Act) of the combined voting
power of the Company's then outstanding securities; (ii) any
rolling period of two consecutive years in which individuals
who at the beginning of such period constitute the Board of
Directors of the Company (and any new director whose
election or nomination for election was approved by a vote
of at least 2/3 of the directors then still in office who
either were directors at the beginning of the period or
whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of
the Board of Directors; provided, however, no director shall
be considered to have been so approved if such director
initially assumed office as a result of either an actual or
threatened "election contest" (as described in Rule 14(a)-11
under the Exchange Act) or other actual or threatened
solicitation of proxies or consent by or on behalf of any
person other than the Board of Directors, including as a
result of any agreement intended to avoid or settle any such
election contest or proxy contest; (iii) the approval by the
Company's shareowners of a dissolution or liquidation of the
Company; (iv) the sale (or similar transaction) of all or
substantially all of the Company's operating assets; or (v)
a merger or consolidation, or a transaction having a similar
effect, where (A) the Company is not the survivor, (B) the
majority of the Common Stock of the Company is no longer
held by the holders of Common Stock of the Company
immediately prior to the transaction, or (C) the Company's
Common Stock is converted into cash, securities or other
property.
If any payment or acceleration of any benefits extended from
the Company to any Named Executive Officer upon a Change in
Control would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as
amended ("Code"), then the Named Executive Officer shall be
entitled to receive an additional "gross up bonus" in an
amount necessary to provide the Named Executive Officer with
sufficient after income tax funds to fully pay all such
excise taxes on both the payment and the gross up bonus.
15
-------------------------------------------------------------
Consulting Agreement
The Company and Robert E. Martini entered into a consulting
agreement as of June 1, 1997 (the "Consulting Agreement")
pursuant to which Mr. Martini agreed to serve the Company in
exchange for a fee of $300,000 per year and certain
continued benefits. The Consulting Agreement provides for a
three-year evergreen term. The benefits provided to Mr.
Martini consist of continued participation in the Company's
Retired Officers' Medical Plan and other benefits that are
made available to executive officers of the Company. In
November 1999, the Board approved increasing the amount of
fees payable to Mr. Martini to $675,000 per year in
recognition of his having assumed additional
responsibilities as Chief Executive Officer of the Company.
Mr. Martini will also continue to be eligible for awards
under the Company's management bonus and stock incentive
plans.
-------------------------------------------------------------
Retired Officers' Medical Plan
In addition to the above arrangements, the Company has an
unfunded, non-qualified Retired Officers' Medical Plan (the
"ROM Plan") available to certain named officers of the
Company and their spouses, including executive officers now
retired from the Company. The ROM Plan provides for payment
of the participant's medical, dental, vision and
prescription expenses at a level commensurate with the
Company's medical benefit plans that are in effect upon the
executive officer's retirement (as defined in the ROM Plan),
but limited to the difference between benefits received from
other insurance sources (including governmental programs),
if any, and the total expense actually incurred. The
duration of the benefit is for the lifetime of the executive
officer and the executive officer's spouse at the time of
such officer's retirement. Based upon the various
eligibility criteria under the ROM Plan, three of the Named
Executive Officers (Mr. Robert E. Martini, Mr. Carpenter and
Mr. Brent R. Martini) presently are eligible to receive
benefits upon their retirement from the Company. Two of the
other Named Executive Officers (Mr. Dimick and Mr. Collis)
may become eligible in the future to receive benefits under
the ROM Plan, but the remaining Named Executive Officer (Mr.
Roden) will not at anytime be eligible to receive benefits
under the ROM Plan.
16
-------------------------------------------------------------
Stock Option Grants and Exercises
The following tables provide information with respect to
stock options granted to and exercised by the Named
Executive Officers during the fiscal year ended
September 30, 2000 and with respect to stock options 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/) 1999 ($/Share) Date Value ($)
------------------------------------------------------------------------------------------------
Robert E. Martini 50,000(/2/) 1.83 8.5313 11/10/09 263,533(/3/)
6,000 0.22 5.3017 2/14/10 20,104(/4/)
Neil F. Dimick 30,000(/5/) 1.11 8.5313 11/10/09 158,100(/3/)
150,000(/6/) 5.48 5.3017 2/14/10 494,904(/4/)
Brent R. Martini 25,000(/7/) 0.91 8.5313 11/10/09 131,750(/3/)
150,000(/8/) 5.48 5.3017 2/14/10 494,904(/4/)
Charles J. Carpenter 25,000(/9/) 0.91 8.5313 11/10/09 131,750(/3/)
150,000(/10/) 5.48 5.3017 2/14/10 494,904(/4/)
Steven Collis 27,000(/11/) 0.99 8.5313 11/10/09 138,601(/3/)
150,000(/12/) 5.48 5.3017 2/14/10 494,904(/4/)
------------------------------------------------------------------------------------------------
(/1/) All options were granted as nonstatutory stock
options to purchase shares of the Company's Class A Common
Stock (the "Common Stock") at 100% of fair market value on
the date of grant, unless otherwise noted, and vest 33 1/3%
one year after the date of grant and then 33 1/3% per year
thereafter.
(/2/) Of this amount, options covering 23,442 shares were
granted as incentive stock options, which vest 100% three
years after the date of grant.
(/3/) The grant date present value is based on a Black-
Scholes model and assumes a risk-free rate of return of
6.30%, an option term of ten years, a dividend yield of
1.36% and a stock volatility of 62.97%. The Black-Scholes
value has been adjusted for vesting by applying a 3% annual
discount for risk of forfeiture.
(/4/) The grant date present value is based on a Black-
Scholes model and assumes a risk-free rate of return of
6.77%, an option term of ten years, a dividend yield of
1.44% and a stock volatility of 66.07%.
(/5/) Of this amount, options covering 4 shares were
granted as incentive stock options, which vest 100% three
years after the date of grant.
(/6/) Of this amount, options covering 18,285 shares were
granted as incentive stock options, which vest 100% three
years after the date of grant.
(/7/) Of this amount, options covering 2 shares were
granted as incentive stock options, which vest 100% three
years after the date of grant.
(/8/) Of this amount, options covering 18,285 shares were
granted as incentive stock options, which vest 100% three
years after the date of grant.
(/9/) Of this amount, options covering 2 shares were
granted as incentive stock options, which vest 100% three
years after the date of grant.
(/10/) Of this amount, options covering 18,285 shares were
granted as incentive stock options, which vest 100% three
years after the date of grant.
(/11/) Of this amount, options covering 1 share was granted
as an incentive stock option, which vests 100% three years
after the date of grant.
(/12/) Of this amount, options covering 18,285 shares were
granted as incentive stock options, which vest 100% three
years after the date of grant.
17
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
Number of Securities
Underlying Unexercised Value of Unexercised(/1/)
Shares Options/SARs at In-the-Money Options/
Acquired on FY End (#) SARs at FY End ($)
Exercise Value ------------------------- -------------------------
Name (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
--------------------------------------------------------------------------------------------------
Donald R. Roden 0 0 301,040 348,962 185,559 62,191
Robert E. Martini 0 0 325,168 101,916 673,041 194,747
Neil F. Dimick 0 0 308,297 273,333 526,573 1,018,116
Brent R. Martini 0 0 232,164 249,998 237,152 1,002,335
Charles J. Carpenter 0 0 182,612 249,998 80,177 1,002,332
Steven Collis 0 0 86,974 225,614 86,974 1,006,438
--------------------------------------------------------------------------------------------------
(/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 ($11.6875 on September
30, 2000) and the exercise price of the options.
-------------------------------------------------------------
Pension Table
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 Estimated Annual Retirement Benefits for
Compensation Years of Credited Service Shown Below
During Highest of Final -------------------------------------------
Five Years Before Retirement 10 20 30 40
--------------------------------------------------------------------------
$ 200,000 $ 55,400 $ 95,400 $ 95,400 $ 95,400
400,000 134,500 214,500 214,500 214,500
600,000 213,700 333,700 333,700 333,700
800,000 292,900 452,900 452,900 452,900
1,000,000 372,000 572,000 572,000 572,000
--------------------------------------------------------------------------
As of September 30, 2000, full years of actual credited
service in these plans are: Mr. Robert E. Martini--42 years;
Mr. Dimick--9 years; Brent R. Martini--13 years;
Mr. Carpenter--20 years; Mr. Collis--6 years; and Mr.
Roden--7 years. Under the SERP, no benefits are earned or
accrued until the participant has been employed continuously
for five full years with the Company.
Compensation for a particular year as used for the
calculation of retirement benefits under the SERP includes
base salary and the amount of bonuses received during the
year (including salary deferred under a salary reduction
arrangement) and excludes all other compensation. Benefits,
which are designed to be a certain percentage of the
participant's average monthly compensation over the three
calendar years in which the participant received his or her
highest earnings during the participant's last five years of
service, are reduced by the following approximate 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 of the employer's contribution towards the Company's
PIRA Plus Plan; and (4) any
18
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 monthly payments to each
participant for his or her life and, upon his or her death,
a specified percentage of his or her monthly benefit to his
or her surviving beneficiary for the beneficiary's remaining
life. In the alternative, a participant may elect to receive
his or her benefit in a lump sum. The Company may direct
that any vested benefit of a participant be paid in a lump
sum upon the death of the participant. A $5,000 funeral
benefit is available to a participant's estate. 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 (the assets of
which are subject to the claims of the Company's general
creditors) for certain executive officer deferral plans has
been established to preserve these and certain other
executive benefits.
-------------------------------------------------------------
Compensation Committee Interlocks and Insider Participation
The following persons served on the Company's
Compensation/Stock Option Committee during the fiscal year
ended September 30, 2000: James R. Mellor, Dr. Charles C.
Edwards and Rodney H. Brady. None of the persons named was
an officer or employee of the Company or any of its
subsidiaries during the current fiscal year or during the
fiscal year ended September 30, 2000. With the exception of
Mr. Brady, none of the persons named is a former officer of
the Company or any of its subsidiaries; Mr. Brady was an
officer of the Company and its subsidiaries more than ten
years ago.
For information regarding indemnification arrangements
applicable to the Company's directors, see "Other Matters"
on page 32.
-------------------------------------------------------------
Compensation Committee Report on Executive Compensation
Report of the Notwithstanding anything to the contrary set forth in any of
Compensation/ the Company's previous filings under the Securities Act of
Stock Option 1933, as amended, or the Exchange Act that might incorporate
Committee future filings, including this Proxy Statement, in whole or
in part, the following report and the Performance Graph on
page 23 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 four (4) non-employee directors.
19
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 compensation
program for executive officers is based on the following two
policies of the Company:
. The Company pays compensation 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 [increases 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.
Components of Compensation
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 components 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 certain individual performance criteria.
The financial
20
measures for the 2000 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
Executive Officer, Chief Operating Officer and Chief
Financial Officer may earn up to 100% of base salary, and
other executive officers may qualify for a maximum award
generally of between 50% to 100% of base salary. In
addition, an over-achievement bonus award may be made
available in an amount up to an additional 25% of the
aggregate bonus amount awarded. In practice, salary and
bonus combined have typically placed the Company at the
midpoint in the wholesale pharmaceutical industry.
. 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 three
percent of the total employee pool.
CEO Compensation
Actions recommended by the Committee (and approved by the
Board) specific to Robert E. Martini, the Chief Executive
Officer since November 1999, relative to his service during
fiscal 2000 as Chief Executive Officer were as follows:
. Salary Adjustment, Grant of Bonus and Stock Option in
fiscal 2000.
As described above under the caption "Consulting
Agreement", Mr. Martini's base pay was increased to
$675,000 per annum for fiscal 2000. This adjustment made
his base compensation commensurate with that of his
immediate predecessor as Chief Executive Officer.
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
and other predetermined objectives. These criteria are
separated into four categories which allow the Chief
Executive Officer to earn up to 25% of his base salary for
each category, with a potential aggregate of 100% of base
salary. A discretionary award of up to 50% of his 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. Based upon the foregoing
criteria, the Committee awarded Mr. Martini a bonus of
$245,900 for fiscal 2000.
Options granted in fiscal 2000 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.
21
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 1999 Management Stock
Incentive Plan as "performance-based," the Company sought
and obtained shareowner approval at the 1999 annual meeting.
The Plan establishes a maximum annual grant of option shares
to an employee. Similarly, the Board approved and the
shareowners approved the Company's 1999 Stock Accumulation
Plan, which is intended to qualify as "performance-based".
For information regarding such plan, see "Certain
Transactions" commencing on page 24.
Compensation/Stock Option Committee
of the Board of Directors
Dr. Charles C. Edwards, Chairman
Rodney H. Brady, Vice Chairman
George E. Reinhardt, Jr.
Francis G. Rodgers
22
--------------------------------------------------------------
Performance Graph
The following graph compares the cumulative total shareowner
return (stock price appreciation plus dividends) for the five
and one-quarter years ended December 31, 2000, 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.;
Cardinal Health, Inc.; D & K Healthcare Resources, Inc;
Herbalife International, Inc.; Mark Solutions, Inc.; McKesson
HBOC, Inc.; Moore Medical Corporation and Tristar
Corporation. Cumulative total shareowner return (on an
assumed initial investment of $100 at September 30, 1995), as
determined at the end of the Company's fiscal year, reflects
the change in stock price, assuming reinvestment of dividends
for the five and one-quarter years ended December 31, 2000.
Comparison of Five and One-Quarter Years Cumulative Total Return
Among Bergen Brunswig Corporation,
The NYSE Composite Index and a Peer Group
[PERFORMANCE GRAPH APPEARS HERE]
------------------------------------------------------------------------------------
09/1995 09/1996 09/1997 09/1998 09/1999 09/2000 12/2000
------------------------------------------------------------------------------------
Bergen Brunswig Corporation 100.0 151.31 244.34 309.11 128.70 148.78 201.65
----------------------------
NYSE Composite 100.0 117.26 158.73 161.04 189.23 211.66 209.69
----------------------------
Self Determined Peer Group 100.0 128.90 198.18 294.39 184.42 262.63 299.46
------------------------------------------------------------------------------------
23
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Certain Transactions
In April 1990, the Board approved an unfunded deferred
compensation loan program available to the executive
officers of the Company (the "Executive Loan Program") for
the purpose of providing them with an incentive to remain
with the Company. Under this program, loans are available to
certain executive officers of the Company, except those who
are also members of the Board. Under the original terms of
the program, (A) each outstanding loan matures upon the
officer's termination of employment unless extended by the
Board and is evidenced by a secured promissory note in the
principal amount of the loan which bears no interest, (B) an
executive officer may borrow up to 125% of his or her annual
salary in effect upon the date of any request, and (C) the
value of collateral securing the loan must equal at least
125% of the principal loan amount. Although no interest is
charged by the Company to the employee, the employee is
deemed by the Internal Revenue Service to have compensation
in the amount of interest calculated according to a formula
prescribed by the Internal Revenue Service. The employee is
also deemed to have paid interest in a like amount to the
Company.
In addition to the above loans, the Board has approved
making loans to other key employees under terms similar to
the Executive Loan Program. The principal amount outstanding
as of November 1, 2000 of these loans to Robert E. Martini
(executive officer and director of the Company) was
$1,400,000. The loans to Donald R. Roden (a former executive
officer and former director of the Company), Neil F. Dimick,
Brent R. Martini (executive officers and directors of the
Company), and Charles J. Carpenter (executive officer of the
Company) were made pursuant to the Executive Loan Program
and were in the amounts of $625,000, $406,250, $281,250 and
$281,250, respectively, as of November 1, 2000. In addition,
Steven Collis (executive officer of the Company) received a
relocation loan in the amount of $125,000 prior to fiscal
2000, of which $104,167 is outstanding as of November 1,
2000. Such amounts, together with the loan amounts
outstanding described hereinafter on page 26, represent the
largest aggregate amount of each executive officer's
indebtedness during the Company's last fiscal year.
In 1998 the Company and the Named Executive Officers (except
for Mr. Collis) and certain other executive officers entered
into separate agreements which have the effect of amending
(without any conditions or further actions required on the
part of such officers) the above-mentioned executive loans
made under the Executive Loan Program, as evidenced by their
respective promissory notes and related loan documentation,
such that if either (A) the applicable executive officer
remains in continuous employment with the Company until
August 1, 2001, or (B) such executive officer's employment
with the Company is terminated before such date by the
Company without cause or by such executive officer with good
reason (as such term is defined in the Employment
Agreements) or as a result of such executive officer's death
or disability, then upon such date or the date of such
termination, as applicable, the entire unpaid principal
balance of the loan will be unconditionally and
automatically (meaning no action required on the part of
such officer) forgiven and canceled with no interest due. As
previously stated, Mr. Roden's employment with the Company
was terminated as of November 3, 1999, and the outstanding
principal amount of his loan under the Executive Loan
Program has been forgiven.
24
In September 1998, the Board adopted the Company's 1999
Management Stock Accumulation Plan (the "Management Stock
Accumulation Plan"), which was approved by the shareowners
at the 1999 annual meeting. This plan is also for the
purpose of providing an incentive for key executive officers
to remain with the Company and to encourage ownership by
them of Common Stock.
Loans granted under the Management Stock Accumulation Plan
may be for a term of between one and five years and in an
amount not in excess of three times the executive's annual
base salary in effect at the time the loan is granted;
provided, however, that the aggregate amount of loans issued
to any participant under the Plan may not exceed $1,000,000.
No loan may be issued under the Management Stock
Accumulation Plan after September 30, 2004. Loans will bear
a rate of interest determined by the Compensation/Stock
Option Committee of the Board (but not less than the
"applicable federal rate" set forth under Section 1274(d) of
the Code in the case of any executive who is deemed a
"covered employee" under section 162(m)), and will be
payable on the expiration date of the loan term.
Loans issued under the Management Stock Accumulation Plan
are conditioned on the recipient's application of the
proceeds thereof towards the purchase of Common Stock on the
open market. Bergen Common Stock so acquired by a
participant will be held by the Company as collateral for
the participant's loan. During the term of a loan, the
Compensation/Stock Option Committee may award credits to
participants based upon the attainment for the applicable
performance period of specified performance targets for the
Company related to designated performance goals for such
period selected by the Committee. A participant's
accumulated credits, if any, shall be applied to the
repayment of the loan on the loan expiration date provided
that the participant is either employed by the Company or a
subsidiary of the Company on the expiration date or ceases
to be so employed due to the participant's death,
disability, retirement after age 65 or involuntary
termination of employment other than for cause. In general,
in the event of a Change in Control (as defined in the plan)
each participant who is in the employ of the Company or any
subsidiary of the Company at such time will continue to be
awarded credits for the remainder of the term of the loan(s)
in an amount, or at a rate, which is not less than the
greater of the highest amount, or rate, of credits earned by
such participant during any year of the loan preceding the
Change in Control or earned by an other participant in any
year following the Change in Control. As of November 1,
2000, there were no loan amounts outstanding under the
Management Stock Accumulation Plan.
In November 1998, the Board adopted an additional loan
program available to the Chief Executive Officer of the
Company and those executive officers directly reporting to
him. Such officers may borrow an amount up to 50% of their
annual base salary in effect at the time the loan is
granted; provided, however, that 50% of the loan proceeds
must be applied by the participant towards the purchase of
Common Stock. Although no interest is charged by the Company
to the participant, the participant is deemed by the
Internal Revenue Service to have compensation in the amount
of interest calculated according to a formula prescribed by
the Internal Revenue Service. The participant is also deemed
to have paid interest in a like amount to the Company. Such
loan amounts become due and payable upon termination of the
participant's employment with the Company. Although Mr.
Roden's employment with the Company was terminated as of
November 3, 1999, he has not repaid his loan to the
25
Company and is contesting his obligation to do so. As of
November 1, 2000, the principal amounts of loans outstanding
under the this loan program to the Named Executive Officers
were $337,500, $212,500, $162,500 and $150,000 for Mr.
Roden, Mr. Dimick, Mr. Brent R. Martini and Mr. Carpenter,
respectively.
The Company entered into a life insurance plan for Robert E.
Martini in 1985. Under this insurance plan, the Company pays
the premiums on certain life insurance policies which
provide him (or his assignees) with a death benefit of
$1,400,000 and which may provide certain alternative
benefits in the event of a lifetime surrender of the policy.
The Company expects to maintain this policy in full force
until Mr. Martini's seventy-fifth birthday, whether he is
employed by the Company or has retired.
On October 2, 2000, the Board approved a consulting
agreement between the Company and James R. Mellor, a member
of the Board. Under the consulting agreement, Mr. Mellor
agreed to provide certain consulting services to the Company
in exchange for an annual fee of $300,000. The consulting
agreement is for a term of one year and provides for an
option grant of 50,000 shares of Common Stock pursuant to
the Company's 1999 Non-Employee Directors' Stock Plan. In
approving such consulting agreement, the Board determined in
its business judgment that this financial arrangement
between the Company and Mr. Mellor was not material enough
to Mr. Mellor nor to the Company so as to prevent Mr.
Mellor's exercise of his independent judgment in carrying
out any of his duties as a member of the Board or any
committee thereof.
26
-------------------------------------------------------------
Approval of the 2001 Employee Stock Purchase Plan
(Item 2 on Proxy Card)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
The Board proposes that the Company's shareowners approve
the adoption of the Company's 2001 Employee Stock Purchase
Plan (the "Employee Stock Purchase Plan" or the "ESP Plan")
described below. On December 27, 2000, the Board adopted
(subject to shareowner approval at the annual meeting of
shareowners) the Employee Stock Purchase Plan covering
2,000,000 shares of the Company's Common Stock. At the 1999
annual meeting of shareowners, the shareowners had
previously approved the Company's 1999 Employee Stock
Purchase Plan, which terminated in 2000 in accordance with
its terms when all 500,000 shares of Common Stock available
for issuance under such plan had been sold pursuant to
purchase rights exercised under the plan.
The following is a summary of certain terms of the Employee
Stock Purchase Plan, the full text of which is set forth in
Appendix B to this Proxy Statement. Although the major
features of the Employee Stock Purchase Plan are summarized
below, this is only a summary and is qualified in its
entirety by reference to the complete text of the ESP Plan.
Capitalized terms not otherwise defined herein have the
meanings ascribed to them in the Employee Stock Purchase
Plan.
Description Purpose. The purpose of the ESP Plan is to provide employees
of the ESP of the Company with an opportunity to purchase shares of
Plan Bergen Common Stock through payroll deductions and to foster
interest in the Company's success, growth and development.
Plan Periods; Investment Limitations. Employee purchases
will be made on a semi-annual basis, beginning with the
semi-annual period commencing on July 1, 2001 (each semi-
annual period, a "Purchase Period"). Employees who
participate in the ESP Plan will authorize the Company to
withhold from each paycheck a specific percentage of their
"Base Salary", (as defined in the ESP Plan) subject to the
following limitations: (i) no more than 25% of Base Salary
may be withheld; and (ii) no more than $25,000 may be
invested by any participant in any calendar year.
Participants may not dispose of any share of Common Stock
purchased under the ESP Plan prior to the later of one-and-
one-half (1 1/2) years from the date of grant of a purchase
right or one (1) year after the transfer of the share to the
participant.
Eligibility. In order to be eligible to participate in the
ESP Plan for any Purchase Period, a participant (i) must
have been employed by the Company or its subsidiaries for at
least thirty days preceding the commencement of the Purchase
Period and (ii) must not own five percent or more of the
Company's voting stock. For purposes of the ESP Plan, a
participant will be deemed to be eligible if he or she works
at least 20 hours per week, subject to certain limitations
for employees who work less than 30 hours per week. Non-
employee directors and non-employee officers of the Company
are not eligible to participate.
Purchase Price; Payment. For any Purchase Period, shares of
Common Stock will be purchased under the ESP Plan at a price
equal to 85% of the lesser of (i) the "Closing Price" (as
defined) of Common Stock on the first trading day of the
Purchase Period (the "Base Option Price") and (ii) the
Closing Price of the Common Stock on the last trading day of
the Purchase Period. In general, the term "Closing Price"
means the
27
closing sale price of a share of Common Stock on the New
York Stock Exchange as quoted in The Wall Street Journal.
The Company will utilize participants' accumulated payroll
deductions to purchase Common Stock at the purchase price
determined in accordance with the formula described above,
subject in all instances to the purchase limitations
described above. Fractional shares will not be purchased.
The extent that a participant's payroll deductions cannot be
utilized to purchase Common Stock due to such purchase
limitations, such amounts will be promptly refunded.
Accumulated payroll deductions shall be commingled with
general assets of the Company and shall not accrue interest.
Enrollment. In order to participate in the ESP Plan with
respect to a Purchase Period, an employee must enroll in the
ESP Plan prior to, and must satisfy all eligibility
requirements as of, the first day of the Purchase Period.
Withdrawals and Reductions. A participant that has enrolled
in the ESP Plan for any Purchase Period may withdraw from
the ESP Plan by delivering a withdrawal form to the Plan
Administrator prior to the last day of such Purchase Period.
An employee shall automatically be deemed to have withdrawn
from the ESP Plan upon termination of employment for any
reason. Upon withdrawal, the Company will return to the
participant all of his or her payroll deductions during the
current Purchase Period. An employee who withdraws from the
ESP Plan during a purchase Period may not re-enter the ESP
Plan until the following Purchase Period.
Participants may reduce, but may not increase, the amount of
their payroll deductions (expressed as a percentage of Base
Salary) during the Purchase Period. To ease the
administrative burden upon the Company, a participant may
only reduce his or her payroll deductions once during each
Purchase Period.
Shares Covered by the Plan. A total of 2,000,000 shares of
the Company Common Stock may be purchased pursuant to the
ESP Plan. Such shares may either be treasury shares
purchased on the market by the Company or shares originally
issued by the Company.
Administration. The ESP Plan will be administered by the
Compensation Committee of the Company's Board of Directors.
The Compensation Committee is authorized to make, administer
and interpret rules and regulations determined by the
Compensation Committee to be necessary to administer the ESP
Plan. Any determination, decision or action of the Committee
in connection with the interpretation, administration or
application of the ESP Plan will be binding upon all
participants.
Amendment or Termination. The Company Board of Directors may
amend or terminate the ESP Plan at any time. In the event
that the ESP Plan is terminated prior to the last day of a
Purchase Period, such Purchase Period shall be deemed to
have ended on the effective date of such termination.
Federal Income Tax Consequences.
Because of the complexity of the federal income tax laws and
the application of various state income tax laws, the
following discussion of tax consequences is general in
nature and relates solely to federal income tax matters.
Participants in the Employee Stock Purchase Plan are advised
to consult their own personal tax advisors. In addition, the
following summary is based upon an analysis of the Internal
revenue Code as currently in effect, existing laws, judicial
decisions,
28
administrative rulings, regulations and proposed
regulations, all of which are subject to change.
The ESP Plan is not subject to the requirements of the
Employee Retirement Income Security Act of 1974, but is
intended to qualify as an "employee stock purchase plan", as
defined in Section 423 of the Code. Under such a plan, an
employee must report as compensation in the year of
disposition of shares purchased under the ESP Plan (or at
the employee's death) the lesser of (a) the excess of the
fair market value at the time of disposition (or death) over
the purchase price or (b) the excess of the fair market of
the shares at the time the option was granted over the
initial Base Option Price. Any excess of appreciated value
is considered a capital gain. In order to qualify for
capital gains tax treatment, the employee must hold the
stock to a date this is more than two years from the date of
option grant and one year from the date of purchase. If
these holding requirements are met, the Company is not
entitled to any deduction for tax purposes. On the other
hand, if the employee does not meet the holding period
requirements, the employee realizes at the time of
disposition ordinary income to the extent of the difference
between the price paid for the shares and the fair market
value on the purchase date, irrespective of the price at
which the employee disposes of the shares, and an amount
equal to such ordinary income is deductible by the Company
in the year of the disposition.
Administrative Matters. The amounts received by the Company
upon the purchase of shares of Common Stock pursuant to the
ESP Plan will be used for general corporate purposes.
No current directors who are not employees will receive any
benefit as a result of the adoption of the ESP Plan. The
benefits that will be received as a result of the adoption
of the ESP Plan by the current executive officers of the
Company and by all eligible employees are not currently
determinable. If the ESP Plan had been effective on July 1,
2000, approximately 13,000 employees of the Company and its
subsidiaries would have been eligible to participate in the
ESP Plan.
29
-------------------------------------------------------------
Shareowner Proposal
(Item 3 on Proxy Card)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Kenneth Steiner, 14 Stoner Avenue, Apt. #2M, Great Neck, New
York 11021, the beneficial owner of 2,316 shares of Common
Stock, has notified the Company of his intention to
introduce the following proposal at the Annual Meeting. Mr.
Steiner's proposed resolution and supporting statement, for
which the Board of Directors and the Company accept no
responsibility, are set forth below:
Shareowner "Resolved that the shareholders of Bergen Brunswig
Proposal and Corporation urge the Bergen Brunswig Corporation Board of
Statement Directors to arrange for the prompt sale of Bergen Brunswig
Corporation to the highest bidder."
SUPPORTING STATEMENT
"The purpose of the Maximize Value Resolution is to give all
Bergen Brunswig Corporation shareholders the opportunity to
send a message to the Bergen Brunswig Corporation Board that
they support the prompt sale of Bergen Brunswig Corporation
to the highest bidder. A strong and or majority vote by the
shareholders would indicate to the board the displeasure
felt by the shareholders of the shareholder returns over
many years and the drastic action that should be taken. Even
if it is approved by the majority of the Bergen Brunswig
Corporation shares represented and entitled to vote at the
annual meeting, the Maximize Value Resolution will not be
binding on the Bergen Brunswig Corporation Board. The
proponent however believes that if this resolution receives
substantial support from the shareholders, the board may
choose to carry out the request set forth in the resolution;
The prompt auction of Bergen Brunswig Corporation should be
accomplished by any appropriate process the board chooses to
adopt including a sale to the highest bidder whether in
cash, stock, or a combination of both. It is expected that
the board will uphold its fiduciary duties to the utmost
during the process.
The proponent further believes that if the resolution is
adopted, the management and the board will interpret such
adoption as a message from the company's stockholders that
it is no longer acceptable for the board to continue with
its current management plan and strategies.
I URGE YOUR SUPPORT, VOTE FOR THIS RESOLUTION"
----------------------------------------------
30
The Company's THE BOARD OF DIRECTORS' STATEMENT IN OPPOSITION TO THE
Statement SHAREOWNER PROPOSAL
For the reasons set forth below, the Board of Directors of
the Company believes that the approval of the proposed
resolution would not be in the best interests of the Company
or its shareowners.
The proposed resolution calls for the prompt sale of the
Company to the highest bidder without regard to the adequacy
of the consideration, without regard to the relative
benefits to shareowners of other alternatives and without
regard to the recent improvements made by the Board of
Directors and management of the Company. The implementation
of the proposed resolution would be totally inconsistent
with the Board's duty to maximize shareowner value and
protect the interests of all of the Company's shareowners.
Consistent with its fiduciary duty, the Board of Directors
seeks to manage the Company's affairs in a manner it
believes to be in the best interests of the Company and its
shareowners. To this end, the Board will carefully consider
any bona fide proposal which it believes has the potential
to increase shareowner value, including a bona fide proposal
for the acquisition of the Company. However, the fiduciary
duty of the Board will not permit it to facilitate a bid
that does not reflect the intrinsic value of the Company.
The initiation of an "auction" in the manner contemplated by
the proposed resolution would, in the opinion of the Board,
be inconsistent with the shareowners' interests. In the
Board's opinion, the initiation of such an auction could
create a "forced sale" atmosphere which could have the
effect of reducing the perceived value of the Company to a
"fire sale" level, thus forcing the Company to negotiate
with bidders from a position of weakness. Moreover, the
uncertainty created by a publicly announced auction could
adversely affect the Company's relationships with its
lenders, customers, suppliers, employees and other
constituencies, thus potentially lowering rather than
raising the value of the Company.
Boards of Directors continuously analyze their strategic
alternatives consistent with their fiduciary duties. That
analysis requires a review of a broad range of information
regarding the Company's business, prospects, industry,
competition and products, as well as countless other factors
that a Board must consider in performing its oversight
responsibilities. Decisions to sell a business do not, as
the proponent suggests, arise in a vacuum. Rather, a
determination to sell a business is typically only one
potential outcome a Board may reach after it thoroughly
analyzes all of its strategic alternatives and concludes
that a sale of the Company is the optimal decision.
Management welcomes input from the Company's shareowners and
will carefully consider meaningful suggestions it receives
to increase or maximize shareowner value. However, for the
reasons set forth above, the Board of Directors unanimously
urges a vote against the foregoing proposal.
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.
31
-------------------------------------------------------------
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.
-------------------------------------------------------------
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.
-------------------------------------------------------------
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.
-------------------------------------------------------------
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 next
Annual Meeting must be received by the Company before
September 13, 2001. In addition, the Company's bylaws
specify procedures (in addition to those set forth in the
Exchange Act) which must be followed to notify the Company
of business to be properly brought before any meeting of the
shareowners.
32
-------------------------------------------------------------
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 Morrow & 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. The
Company anticipates that the fees it will incur for this
service will be approximately $10,000, 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,
/s/ MILAN A. SAWDEI
Milan A. Sawdei
Executive Vice President,
Chief Legal Officer and
Secretary
A copy of the Annual Report for the fiscal year ended
September 30, 2000, accompanies this proxy statement. 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, 2000, 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 which
accompanies this proxy statement, and also may be obtained
without charge by submitting a written request addressed to
Bergen Brunswig Corporation, to the attention of the
Investor Relations Department, 4000 Metropolitan Drive,
Orange, California 92868.
33
APPENDIX A
BERGEN BRUNSWIG CORPORATION
AUDIT COMMITTEE CHARTER
This Audit Committee Charter (Charter) has been adopted by
the Board of Directors (the Board) of Bergen Brunswig
Corporation (the Company). The Audit Committee of the Board
(the Committee) shall review and reassess this Charter
annually and recommend any proposed changes to the Board for
approval.
Role and Independence: Organization
The Committee assists the Board in fulfilling its
responsibility for oversight of the quality and integrity of
the accounting, auditing, internal control and financial
reporting practices of the Company. It may also have such
other duties as may from time to time be assigned to it by
the Board. The membership of the Committee shall consist of
at least three directors, who are each free of any
relationship that, in the opinion of the Board, may interfere
with such member's individual exercise of independent
judgment. Each Committee member shall also meet the
independence and financial literacy requirements for serving
on audit committees, and at least one member shall have
accounting or related financial management expertise, all as
set forth in the applicable rules of the New York Stock
Exchange (copy attached). The Committee shall maintain free
and open communication with the independent auditors, the
internal auditors and Company management. In discharging its
oversight role, the Committee is empowered to investigate any
matter relating to the Company's accounting, auditing,
internal control or financial reporting practices brought to
its attention, with full access to all Company books,
records, facilities and personnel. The Committee may retain
outside auditors or other advisors.
One member of the Committee shall be appointed as chair. The
chair shall be responsible for leadership of the Committee,
including scheduling and presiding over meetings, preparing
agendas, and making regular reports to the Board. The chair
will also maintain regular liaison with the CEO, CFO, the
lead independent audit partner and the director of internal
audit.
The Committee shall meet at least four times a year, or more
frequently as the Committee considers necessary. At least
once each year the Committee shall have separate private
meetings with the independent auditors, management and the
internal auditors.
Responsibilities
Although the Committee may wish to consider other duties from
time to time, the general recurring activities of the
Committee in carrying out its oversight role are described
below. The Committee shall be responsible for:
1. Recommending to the Board the independent auditors to be
retained (or nominated for shareholder approval) to audit
the financial statements of the Company. Such auditors
are ultimately accountable to the Board and the
Committee, as representatives of the shareholders.
2. Evaluating, together with the Board and management, the
performance of the independent auditors and, where
appropriate, replacing such auditors.
A-1
3. Obtaining annually from the independent auditors a formal
written statement describing all relationships between the
auditors and the Company, consistent with Independence
Standards Board Standard Number 1. The Committee shall
actively engage in a dialogue with the independent auditors
with respect to any relationships that may impact the
objectivity and independence of the auditors and shall take,
or recommend that the Board take, appropriate actions to
oversee and satisfy itself as to the auditors' independence.
4. Reviewing the audited financial statements and discussing
them with management and the independent auditors. These
discussions shall include the matters required to be
discussed under Statement of Auditing Standards No 61 and
consideration of the quality of the Company's accounting
principles as applied in its financial reporting, including
a review of particularly sensitive accounting estimates,
reserves and accruals, judgmental areas, audit adjustments
(whether or not recorded) and other such inquiries as the
Committee or the independent auditors shall deem
appropriate. Based on such review, the Committee shall make
its recommendation to the Board as to the inclusion of the
Company's audited financial statements in the Company's
Annual Report on Form 10-K or the Annual Report to
Shareholders, if distributed prior to the filing of the Form
10-K.
5. Issuing annually a report to be included in the Company's
proxy statement as required by the rules of the Securities
and Exchange Commission.
6. Overseeing the relationship with the independent auditors,
including discussing with the auditors the nature and rigor
of the audit process, receiving and reviewing audit reports,
and providing the auditors full access to the Committee (and
the Board) to report on any and all appropriate matters.
7. Discussing with a representative of management and the
independent auditors: (1) the interim financial information
contained in the Company's Quarterly Report on Form 10-Q
prior to its filing, (2) if requested by the independent
auditors, the Committee or by the management, the earnings
announcement prior to its release, and (3) the results of
the review of such information by the independent auditors.
(These discussions may be held with the Committee as a whole
or with the Committee chair in person or by telephone.)
8. Overseeing internal audit activities, including discussing
with management and the internal auditors the internal audit
function's organization, objectivity, responsibilities,
plans, results, budget and staffing.
9. Discussing with management, the internal auditors and the
independent auditors the quality and adequacy of and
compliance with the Company's internal controls.
10. Discussing with the Company's general counsel any legal
matters (including the status of pending litigation) that
may have a material impact on the Company's financial
statements.
The Committee's job is one of oversight. Management is
responsible for the preparation of the Company's financial
statements and the independent auditors are responsible for
auditing those financial statements. The Committee and the Board
recognize that management (including the internal audit staff)
and the independent
A-2
auditors have more resources and time, and more detailed
knowledge and information regarding the Company's accounting,
auditing, internal control and financial reporting practices
than the Committee does; accordingly the Committee's oversight
role does not provide any expert or special assurance as to the
financial statements and other financial information provided by
the Company to its shareholders and others.
Bergen Brunswig Corporation
By Order of the Audit Committee of the Board of Directors
/s/ MILAN A. SAWDEI
By: __________________________
Milan A. Sawdei
Secretary
Dated: November 16, 2000
A-3
APPENDIX B
BERGEN BRUNSWIG CORPORATION
2001 EMPLOYEE STOCK PURCHASE PLAN
I. PURPOSE OF THE PLAN
This 2001 Employee Stock Purchase Plan is intended to
promote the interests of Bergen Brunswig Corporation ("the
Company") by providing eligible employees with the
opportunity to acquire a proprietary interest in the Company
through participation in a payroll-deduction based employee
stock purchase plan designed to qualify under Section 423 of
the Code.
Capitalized terms herein shall have the meanings assigned
to such terms in the ARTICLE XII. DEFINITIONS.
II. ADMINISTRATION OF THE PLAN
The Plan Administrator shall have full authority to
interpret and construe any provision of the Plan and to adopt
such rules and regulations for administering the Plan as it
may deem necessary or appropriate in order to implement the
Plan or to comply with the requirements of Code Section 423.
Decisions of the Plan Administrator shall be final and
binding on all parties having an interest in the Plan.
III. STOCK SUBJECT TO PLAN
A. The stock purchasable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock, including
shares of Common Stock purchased on the open market. The
maximum number of shares of Common Stock which may be issued
over the term of the Plan shall not exceed 2,000,000 shares.
B. Should any change be made to the Common Stock by reason
of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the
Company's receipt of consideration, appropriate adjustments
shall be made to (i) the maximum number and class of
securities issuable under the Plan, (ii) the maximum number
and class of securities purchasable per Participant on any
one Purchase Date and (iii) the number and class of
securities and the price per share in effect under each
outstanding purchase right in order to prevent the dilution
or enlargement of benefits thereunder.
IV. PURCHASE/HOLDING PERIODS
A. Shares of Common Stock shall be offered for purchase
under the Plan through a series of successive purchase
periods until such time as (i) the maximum number of shares
of Common Stock available for issuance under the Plan shall
have been purchased or (ii) the Plan shall have been sooner
terminated.
B. Each purchase period shall have a duration of six (6)
months. Purchase periods shall run from the first business
day in January to the last business day in June and from the
first business day in July to the last business day in
December.
C. In no event may a participant dispose of any share of
Common Stock purchased under the Plan prior to the later of
one-and-one-half (1) years from the date of grant of a
purchase right or one (1) year after the transfer of the
share to the participant.
B-1
V. ELIGIBILITY
A. Each individual who (i) is an Eligible Employee on the
start date of any purchase period and (ii) has completed
thirty (30) days of service with the Company or any Corporate
Affiliate prior to such start date shall be eligible to
participate in the Plan for that purchase period on such
start date.
B. To participate in the Plan for a particular purchase
period, the Eligible Employee must complete the enrollment
forms prescribed by the Plan Administrator (including a stock
purchase agreement and a payroll deduction authorization
form) and file such forms with the Plan Administrator (or its
designate) on or before the start date of the purchase
period.
VI. PAYROLL DEDUCTIONS
A. The payroll deduction authorized by the Participant for
purposes of acquiring shares of Common Stock under the Plan
may be any multiple of one percent (1%) of the Base Salary
paid to the Participant during each purchase period, up to a
maximum of twenty-five percent (25%). The deduction rate so
authorized shall continue in effect for the entire purchase
period. However, the Participant may, at any time during the
purchase period, reduce his or her rate of payroll deduction
to become effective as soon as possible after filing the
appropriate form with the Plan Administrator. The Participant
may not, however, effect more than one (1) such reduction per
purchase period.
B. Payroll deductions shall begin on the first pay day
following the start date of the purchase period and shall
(unless sooner terminated by the Participant) continue
through the pay day ending with or immediately prior to the
last day of the purchase period. The amounts so collected
shall be credited to the Participant's book account under the
Plan, but no interest shall be paid on the balance from time
to time outstanding in such account. The amounts collected
from the Participant shall not be held in any segregated
account or trust fund and may be commingled with the general
assets of the Company and used for general corporate
purposes.
C. Payroll deductions shall automatically cease upon the
termination of the Participant's purchase right in accordance
with the provisions of the Plan.
VII. PURCHASE RIGHTS
A. Grant of Purchase Right. A Participant shall be granted
a separate purchase right on the start date of each purchase
period in which he or she participates. The purchase right
shall provide the Participant with the right to purchase
shares of Common Stock on the Purchase Date upon the terms
set forth below. The Participant shall execute a stock
purchase agreement embodying such terms and such other
provisions (not inconsistent with the Plan) as the Plan
Administrator may deem advisable.
Under no circumstances shall purchase rights be granted
under the Plan to any Eligible Employee if such individual
would, immediately after the grant, own (within the meaning
of Code Section 424(d) or hold outstanding options or other
rights to purchase, stock possessing five percent (5%) or
more of the total combined voting power or value of all
classes of stock of the Company or any Corporate Affiliate.
B-2
B. Exercise of the Purchase Right. Each purchase right
shall be automatically exercised on the Purchase Date, and
shares of Common Stock shall accordingly be purchased on
behalf of each Participant (other than any Participant whose
payroll deductions have previously been refunded in
accordance with the Termination of Purchase Right provisions
below) on such date. The purchase shall be effected by
applying the Participant's payroll deductions for the
purchase period ending on such Purchase Date (together with
any carryover deductions from the preceding purchase period)
to the purchase of shares of Common Stock (subject to the
limitation on the maximum number of shares purchasable per
Participant on any one Purchase Date) at the purchase price
in effect for that purchase period.
C. Purchase Price. The purchase price per share at which
Common Stock will be purchased on the Participant's behalf on
each Purchase Date shall be equal to eighty-five percent
(85%) of the lower of (i) the Fair Market Value per share of
Common Stock on the start date of the purchase period or (ii)
the Fair Market Value per share of Common Stock on that
Purchase Date.
D. Number of Purchasable Shares. The number of shares of
Common Stock purchasable by a Participant on each Purchase
Date shall be the number of shares obtained by dividing the
amount collected from the Participant through payroll
deductions during the purchase period ending with that
Purchase Date (together with any carryover deductions from
the preceding purchase period) by the purchase price in
effect for that Purchase Date. In no event shall fractional
shares be purchased under the Plan.
E. Excess Payroll Deductions. Any payroll deductions not
applied to the purchase of Common Stock by reason of the
limitation on the maximum number of shares purchasable by the
Participant on the Purchase Date shall be promptly refunded.
F. Termination of Purchase Right. The following provisions
shall govern the termination of outstanding purchase rights:
(i) A Participant may, at any time prior to the last day of
the purchase period, terminate his or her outstanding
purchase right by filing the appropriate form with the Plan
Administrator (or its designate), and no further payroll
deductions shall be collected from the Participant with
respect to the terminated purchase right. Any payroll
deductions collected during the purchase period in which such
termination occurs shall, at the Participant's election, be
immediately refunded or held for the purchase of shares on
the next Purchase Date. If no such election is made at the
time such purchase right is terminated, then the payroll
deductions collected with respect to the terminated right
shall be refunded as soon as possible.
(ii) The termination of such purchase right shall be
irrevocable, and the Participant may not subsequently rejoin
the purchase period for which the terminated purchase right
was granted. In order to resume participation in any
subsequent purchase period, such individual must re-enroll in
the Plan (by making a timely filing of the prescribed
enrollment forms) on or before the start date of the new
purchase period.
B-3
(iii) Should the Participant cease to remain an Eligible
Employee for any reason (including death, disability or
change in status) while his or her purchase right remains
outstanding, then that purchase right shall immediately
terminate, and all of the Participant's payroll deductions
for the purchase period in which the purchase right so
terminates shall be immediately refunded. However, should the
Participant cease to remain in active service by reason of an
approved unpaid leave of absence, then the Participant shall
have the election, exercisable up until the last business day
of the purchase period in which such leave commences, to (a)
withdraw all the funds in the Participant's payroll account
at the time of the commencement of such leave or (b) have
such funds held for the purchase of shares at the end of such
purchase period. In no event, however, shall any further
payment deductions be added to the Participant's account
during such leave. Upon the Participant's return to active
service, his or her payroll deductions under the Plan shall
automatically resume at the rate in effect at the time the
leave began, provided the Participant returns to service
prior to the expiration date of the purchase period in which
such leave began.
G. Corporate Transaction. Each outstanding purchase right
shall automatically be exercised immediately prior to the
effective date of any Corporate Transaction by applying the
payroll deductions of each Participant for the purchase
period in which such Corporate Transaction occurs to the
purchase of shares of Common Stock at a purchase price per
share equal to eighty-five percent (85%) of the lower of (i)
the Fair Market Value per share of Common Stock on the start
date of the purchase period in which such Corporate
Transaction occurs or (ii) the Fair Market Value per share of
Common Stock immediately prior to the effective date of such
Corporate Transaction. However, the applicable share
limitation on the number of shares of Common Stock
purchasable per Participant shall continue to apply to any
such purchase.
The Company shall use its best efforts to provide at least
ten (10) days prior written notice of the occurrence of any
Corporate Transaction, and Participants shall, following the
receipt of such notice, have the right to terminate their
outstanding purchase rights prior to the effective date of
the Corporate Transaction.
H. Proration of Purchase Rights. Should the total number of
shares of Common Stock which are to be purchased pursuant to
outstanding purchase rights on any particular date exceed the
number of shares then available for issuance under the Plan,
the Plan Administrator shall make a pro-rata allocation of
the available shares on a uniform and nondiscriminatory
basis, and the payroll deductions of each Participant, to the
extent in excess of the aggregate purchase price payable for
the Common Stock pro-rated to such individual, shall be
refunded.
I. Assignability. During the Participant's lifetime, the
purchase right shall be exercisable only by the Participant
and shall not be assignable or transferable by the
Participant (other than by will or the laws of descent).
J. Stockholder Rights. A Participant shall have no
stockholder rights with respect to the shares subject to his
or her outstanding purchase right until the shares are
purchased on the Participant's behalf in accordance with the
provisions of the Plan and the Participant has become a
holder of record of the purchased shares.
B-4
VIII. ACCRUAL LIMITATIONS
A. No participant shall be entitled to accrue rights to
acquire Common Stock pursuant to any purchase right
outstanding under this Plan if and to the extent such
accrual, when aggregated with (i) rights to purchase Common
Stock accrued under any other purchase right granted under
this Plan and (ii) similar rights accrued under other
employee stock purchase plans (within the meaning of Code
Section 423) of the Company or any Corporate Affiliate, would
otherwise permit such Participant to purchase more than
Twenty-Five Thousand Dollars ($25,000) worth of stock of the
Company or any Corporate Affiliate (determined on the basis
of the Fair Market Value of such stock on the date or dates
such rights are granted) for each calendar year such rights
are at any time outstanding.
B. For purposes of applying such accrual limitations, the
following provisions shall be in effect:
(i) The right to acquire Common Stock under each
outstanding purchase right shall accrue on the Purchase Date
in effect for the purchase period for which such right is
granted.
(ii) No right to acquire Common Stock under any outstanding
purchase right shall accrue to the extent the Participant has
already accrued in the same calendar year the right to
acquire Common Stock under one (1) or more other purchase
rights at a rate equal to Twenty-Five Thousand Dollars
($25,000) worth of Common Stock (determined on the basis of
the Fair Market Value of such stock on the date or dates of
grant) for each calendar year such rights were at any time
outstanding.
C. If by reason of such accrual limitations, any purchase
right of a Participant does not accrue for a particular
purchase period, then the payroll deductions which the
Participant made during that purchase period with respect to
such purchase right shall be promptly refunded.
D. In the event there is any conflict between the
provisions of this Article and one or more provisions of the
Plan or any instrument issued thereunder, the provisions of
this Article shall be controlling.
IX. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan was adopted by the Board on December 27, 2000,
and shall become effective on the Effective Date, provided no
purchase rights granted under the Plan shall be exercised,
and no shares of Common Stock shall be issued hereunder,
until (i) the Plan shall have been approved by the
shareowners of the Company and (ii) the Company shall have
complied with all applicable requirements of the 1933 Act
(including the registration of the shares of Common Stock
issuable under the Plan on a Form S-8 registration statement
filed with the Securities and Exchange Commission), all
applicable listing requirements of any stock exchange on
which the Common Stock is listed for trading and all other
applicable requirements established by law or regulation. In
the event such stockholder approval is not obtained, or such
compliance is not effected, within twelve (12) months after
the date on which the Plan is adopted by the Board, the Plan
shall terminate and have no further force or effect and all
sums collected from Participants during the initial purchase
period hereunder shall be refunded.
B-5
B. Unless sooner terminated by the Board, the Plan shall
terminate upon the earliest of (i) January 1, 2011, (ii) the
date on which all shares available for issuance under the
Plan have been sold pursuant to purchase rights exercised
under the Plan or (iii) the date on which all purchase rights
are exercised in connection with a Corporate Transaction. No
further purchase rights shall be granted or exercised, and no
further payroll deductions shall be collected, under the Plan
following its termination.
X. AMENDMENT OF THE PLAN
The Board may alter, amend, suspend or discontinue the Plan
at any time. However, the Board may not, without the approval
of the Company's shareowners, (i) materially increase the
number of shares of Common Stock issuable under the Plan or
the maximum number of shares purchasable per Participant on
any one Purchase Date, except for permissible adjustments in
the event of certain changes in the Company's capitalization,
(ii) alter the purchase price formula so as to reduce the
purchase price payable for the shares of Common Stock
purchasable under the Plan, or (iii) materially increase the
benefits accruing to Participants under the Plan or
materially modify the requirements for eligibility to
participate in the Plan. In the event that the Plan is
terminated prior to the last day of a purchase period, such
purchase period shall be deemed to have ended on the
effective date of such termination and there shall be no
subsequent purchase periods thereafter.
XI. GENERAL PROVISIONS
A. All costs and expenses incurred in the administration of
the Plan shall be paid by the Company.
B. Nothing in the Plan shall confer upon the Participant
any right to continue in the employ of the Company or any
Corporate Affiliate for any period of specific duration or
interfere with or otherwise restrict in any way the rights of
the Company (or any Corporate Affiliate employing such
person) or of the Participant, which rights are hereby
expressly reserved by each, to terminate such person's
employment at any time for any reason, with or without cause.
C. The provisions of the Plan shall be governed by the laws
of the State of New Jersey, without resort to that State's
conflict-of-laws rules.
XII. DEFINITIONS
The following definitions shall be in effect under the
Plan:
A. Base Salary shall mean the regular base salary paid to a
Participant by one or more Participating Companies during
such individual's period of participation in the Plan, plus
any pre-tax contributions made by the Participant to any Code
Section 401(k) salary deferral plan or any Code Section 125
cafeteria benefit program now or hereafter established by the
Company or any Corporate Affiliate. The following items of
compensation shall not be included in Base Salary: (i) all
overtime payments, bonuses, commissions (other than those
functioning as base salary equivalents), profit-sharing
distributions and other incentive-type payments and (ii) any
and all contributions (other than Code Section 401(k) or Code
Section 125 contributions) made on the Participant's behalf
by the Company or any Corporate Affiliate under any employee
benefit or welfare plan now or hereafter established.
B-6
B. Board shall mean the Company's Board of Directors.
C. Code shall mean the Internal Revenue Code of 1986, as
amended.
D. Common Stock shall mean the Company's common stock.
E. Corporate Affiliate shall mean any parent or subsidiary
corporation of the Company (as determined in accordance with
Code Section 424, whether now existing or subsequently
established).
F. Corporate Transaction shall mean either of the following
stockholder-approved transactions to which the Company is a
party:
(i) a merger or consolidation in which securities
possessing more than fifty percent (50%) of the total
combined voting power of the Corporation's outstanding
securities are transferred to a person or persons different
from the persons holding those securities immediately prior
to such transaction, or
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company in complete
liquidation or dissolution of the Corporation.
G. Company shall mean Bergen Brunswig Corporation, a New
Jersey corporation, and any corporate successor to all or
substantially all of the assets or voting stock of Bergen
Brunswig Corporation, which shall, by appropriate action,
adopt the Plan.
H. Effective Date shall mean July 1, 2001. Any Corporate
Affiliate which becomes a Participating Company after such
Effective Date shall designate a subsequent Effective Date
with respect to its employee-Participants.
I. Eligible Employee shall mean any person who is engaged,
on a regularly-scheduled basis of: (i) more than twenty (20)
but less than thirty (30) hours per week for more than five
(5) months per calendar year or (ii) more than thirty (30)
hours per week, in the rendition of personal services to any
Participating Company as an employee for earnings considered
wages under Code Section 3401(a).
J. Fair Market Value per share of Common Stock on any
relevant date shall be the closing selling price per share of
Common Stock on the date in question on the Stock Exchange
determined by the Plan Administrator to be the primary market
for the Common Stock, as such price is officially quoted in
the composite tape of transactions on such exchange. If there
is no closing selling price for the Common Stock on the date
in question, then the Fair Market Value shall be the closing
selling price on the last preceding date for which such
quotation exists.
K. 1933 Act shall mean the Securities Act of 1933, as
amended.
L. Participant shall mean any Eligible Employee of a
Participating Company who is actively participating in the
Plan.
M. Participating Company shall mean the Company and such
Corporate Affiliate or Affiliates as may be authorized from
time to time by the Board to extend the benefits of the Plan
to their Eligible Employees.
B-7
N. Plan shall mean the Corporation's 2001 Employee Stock
Purchase Plan, as set forth in this document.
O. Plan Administrator shall mean a committee of two (2) or
more Board members appointed by the Board to administer the
Plan. Unless otherwise designated by the Board, the Plan
Administrator shall be the Compensation Committee of the
Board as constituted by the Board from time to time.
P. Purchase Date shall mean the last business day of each
purchase period.
Q. Stock Exchange shall mean the New York Stock Exchange.
B-8
Bergen Brunswig Corporation
4000 Metropolitan Drive
Orange, California
[MAP OF ANNUAL MEETING LOCATION APPEARS HERE]
Directions to Annual Meeting
Los Angeles Airport Los Angeles Downtown John Wayne Airport
. Century Boulevard east . Santa Ana Fwy. (5) . Take Costa Mesa Fwy.
to San Diego Fwy. (405) south (55) north
south . Exit at State College . Change to Garden
. Continue south and Boulevard/ The City Grove Fwy. (22) west
change to Garden Grove Drive . Exit at The City
Fwy. (22) east . Turn right onto The Drive
. Exit at The City Drive City Drive . Turn left at light
. Turn left at light . Turn right onto . Turn left onto
. Turn left onto Metropolitan Drive Metropolitan Drive
Metropolitan Drive . Follow to #4000 on the . Follow to #4000 on
. Follow to #4000 on the left the left
left
[LOGO OF BERGEN BRUNSWIG CORPORATION]
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR
THE ANNUAL MEETING OF SHAREOWNERS FEBRUARY 13, 2001
The undersigned hereby appoints Brent R. Martini and George E. Reinhardt, Jr.
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 February 13, 2001, 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 WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN,
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2 AND
AGAINST PROPOSAL 3 ON THE REVERSE SIDE AND WITH DISCRETIONARY AUTHORITY ON ALL
OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY
POSTPONEMENT OR ADJOURNMENT THEREOF.
(THIS PROXY CARD CONTINUES AND MUST BE SIGNED ON THE REVERSE SIDE.)
- --------------------------------------------------------------------------
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE
v FOLD AND DETACH HERE v
This proxy when properly executed will be voted in the manner directed herein. Please mark
If no direction is made, this proxy will be voted FOR the election of directors, your votes as [X]
FOR item 2 and AGAINST item 3 below. indicated in
this example
1. Election of three directors to Class 1 THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS BELOW.
NOMINEES: 01 Robert E. Martini, 02 Nell F. Dimick and 03 Charles C. Edwards, M.D.
FOR all nominees WITHHOLD
listed to the right AUTHORITY (INSTRUCTION: To withhold authority for any particular nominee, write such nominee(s)
(except as marked to vote for the name on the line below.)
to the contrary) nominees listed
[_] [_] ______________________________________________________________________________________
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 2. THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ITEM 3.
2. Adoption of the 2001 Employee Stock Purchase Plan 3. Shareowner Proposal
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
[_] [_] [_] [_] [_] [_]
Dated:________________________________, 20__
____________________________________________
(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.
v FOLD AND DETACH HERE v
---------------------------------------
VOTE BY TELEPHONE
QUICK *** EASY *** IMMEDIATE
---------------------------------------
YOUR VOTE IS IMPORTANT! - YOU CAN VOTE IN ONE OF TWO WAYS:
1. TO VOTE BY PHONE: Call toll-free 1-800-840-1208 on a touch tone telephone
24 hours a day-7 days a week
There is NO CHARGE to you for this call. - Have your proxy card in hand.
You will be asked to enter a Control Number, which is located in the box in
the lower right hand corner of this form
________________________________________________________________________________
OPTION #1: To vote as the Board of Directors recommends on ALL proposals:
Press 1
________________________________________________________________________________
When asked, please confirm your vote by Pressing 1.
________________________________________________________________________________
OPTION #2: If you choose to vote on each proposal separately, press 0. You will
hear these instructions:
________________________________________________________________________________
Proposal 1: To vote FOR ALL nominees, press 1; to WITHHOLD FOR ALL
nominees, press 9
To WITHHOLD FOR AN INDIVIDUAL nominee, press 0 and listen to the
instructions.
Proposal 2: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0
Proposal 3: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0
When asked, please confirm your vote by Pressing 1.
or
--
2. TO VOTE BY PROXY: Mark, sign and date you proxy card and return promptly in
the enclosed envelope.
NOTE: If you vote by telephone, THERE IS NO NEED TO MAIL BACK your Proxy Card.
THANK YOU FOR VOTING.