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
OWENS & MINOR, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
( ) $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
( ) 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:
[OWENS & MINOR LOGO]
NOTICE OF
1996
ANNUAL MEETING
AND
PROXY STATEMENT
WHETHER OR NOT YOU PRESENTLY PLAN TO ATTEND THE MEETING
IN PERSON, THE BOARD OF DIRECTORS URGES YOU TO SIGN AND
RETURN THE PROXY IN THE ENCLOSED ENVELOPE.
OWENS & MINOR, INC.
4800 COX ROAD
GLEN ALLEN, VIRGINIA 23060-6292
[Owens & Minor logo]
4800 Cox Road, Post Office Box
27626
Glen Allen, Virginia
23060-6292
(804) 747-9794 FAX (804)
270-7281
March 19, 1996
Dear Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of
Owens & Minor, Inc. The meeting will be held on Tuesday, April 30, 1996 at 10:00
a.m. in the Auditorium of the Crestar Bank Building, 919 E. Main Street,
Richmond, Virginia. Parking will be available in the Crestar parking deck on
Cary Street beyond 9th Street. Directions are on the back of the proxy
statement.
The primary business of the meeting will be to elect four directors and to
ratify the appointment of KPMG Peat Marwick LLP as independent auditors. During
the meeting I will also report to you on the condition and performance of Owens
& Minor during 1995 and the first quarter of 1996. It has been a challenging
year for the Company and it's time to move forward. My remarks will focus on the
1996 business plan and our Vision for the year 2000. You will have the
opportunity to meet members of the Board of Directors as well as management and
to ask questions on matters of importance to you and all shareholders.
I hope to see you on April 30, 1996. Whether you plan to attend or not,
please complete, sign, date and return the enclosed proxy card as soon as
possible in the postage-paid envelope provided. Your vote is important. All of
us at Owens & Minor appreciate your continued interest in and support of the
Company.
Warm Regards,
/s/G. GILMER MINOR, III
G. GILMER MINOR, III
Chairman, President and
Chief Executive Officer
[Owens & Minor logo]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD TUESDAY, APRIL 30, 1996
TO THE SHAREHOLDERS OF OWENS & MINOR, INC.:
You are hereby notified that the Annual Meeting of Shareholders of Owens &
Minor, Inc., a Virginia corporation (the "Company"), will be held in the
Auditorium of the Crestar Bank Building, 919 E. Main Street, Richmond, Virginia,
on Tuesday, April 30, 1996 at 10:00 a.m.
The purposes of the meeting are:
1. To elect three directors to serve until the Annual Meeting of
Shareholders in 1999 and one director to serve until the Annual Meeting
of Shareholders in 1997 (Proposal 1);
2. To ratify the appointment of KPMG Peat Marwick LLP as independent
auditors (Proposal 2); and
3. To transact such other business as may properly be brought before the
meeting.
The Board of Directors has fixed the close of business on March 5, 1996 as
the record date for the determination of shareholders entitled to receive notice
of and to vote at the meeting and any adjournment(s) or postponement(s) thereof.
Your attention is directed to the attached Proxy Statement.
BY ORDER OF THE BOARD OF DIRECTORS
DREW ST. J. CARNEAL,
Secretary
Richmond, Virginia
March 19, 1996
WHETHER OR NOT YOU PRESENTLY PLAN TO ATTEND THE MEETING IN PERSON, THE BOARD OF
DIRECTORS URGES YOU TO SIGN AND RETURN THE PROXY IN THE ENCLOSED ENVELOPE.
[Owens & Minor logo]
STREET ADDRESS MAILING ADDRESS
4800 Cox Road P.O. Box 27626
Glen Allen, Virginia 23060-6292 Richmond, Virginia 23261-7626
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 30, 1996
March 19, 1996
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Owens & Minor, Inc., a Virginia corporation
(the "Company"), for use at the Annual Meeting of Shareholders of the Company,
to be held in the Auditorium of the Crestar Bank Building, 919 E. Main Street,
Richmond, Virginia, on April 30, 1996 at 10:00 a.m., and at any adjournment(s)
or postponement(s) thereof, for the purposes set forth herein and in the
accompanying Notice of Annual Meeting.
The expense of this solicitation will be borne by the Company. The Company
will reimburse brokers and other persons holding stock in their name as nominees
for their expenses in obtaining authorization to execute proxies from their
principals. Corporate Investor Communications, Inc. has been retained to aid in
such solicitation of proxies by telephone or telegraph or by personal calls at
an anticipated cost to the Company of $4,000 plus expenses.
All proxies received pursuant to this solicitation will be voted FOR the
election of directors as set forth below and in favor of Proposal 2 unless
contrary instructions are given. Any person who has returned a proxy to the
Company has the power to revoke it at any time before its exercise by submitting
a subsequently dated proxy, by giving notice in writing to the Secretary of the
Company prior to the commencement of the meeting or by voting in person at the
meeting.
Only shareholders of record at the close of business on March 5, 1996 will
be entitled to vote at the meeting or any adjournment(s) or postponement(s)
thereof. As of such record date, the Company had outstanding and entitled to
vote 30,872,293 shares of Common Stock, $2.00 par value per share (the "Common
Stock"), each of which is entitled to one vote, and 1,150,000 shares of Series B
Cumulative Preferred Stock, $100 par value per share (the "Series B Preferred
Stock"), each of which is entitled to 6.06 votes. The holder of the Series B
Preferred Stock has agreed to vote its shares of Series B Preferred Stock with
respect to each matter to be voted upon at the Annual Meeting in the same
proportion as the votes cast on such matter by holders of the Common Stock
(excluding certain holders of 5% or more of the Common Stock).
This Proxy Statement and form of proxy is first being mailed to
shareholders of the Company on or about March 19, 1996.
1
PROPOSAL 1. ELECTION OF DIRECTORS
In October 1995, the Board of Directors adopted an amendment to the
Company's bylaws increasing the number of Directors from nine to ten. The
members remain divided into three classes, with one class being elected every
year for a term of three years. Also in October 1995, the Board of Directors
elected Josiah Bunting, III to fill the vacancy created by the increase in the
number of Directors, to serve until this Annual Meeting. General Bunting has
been nominated for election at this Annual Meeting to serve for a term of one
year, and three other nominees are expected to be elected at this Annual Meeting
to serve for a term of three years. All nominees are to serve until their
successors are elected and have qualified. The remaining six directors will
continue to serve as set forth below. Each of the nominees is currently a
director of the Company and has agreed to serve if elected. Unless otherwise
directed, a proxy will be voted for the four nominees shown below. If some
unexpected occurrence should, in the judgment of the Board of Directors, make
necessary the substitution of some other person for any of the nominees, the
shares represented by proxies will be voted for such other person as the Board
of Directors may select, or the Board of Directors may amend the Bylaws to
reduce the number of directors to the total of the remaining nominees and any
such substitute nominee or nominees in which case the shares represented by
proxies shall be voted for the remaining nominees and any such substitute
nominee or nominees. No proxy can be voted for more than four persons.
The election of each nominee for director requires the affirmative vote of
a plurality of the votes cast in the election of directors by the holders of the
Common Stock and Series B Preferred Stock, voting together as a single class.
Votes that are withheld and Broker Shares that are not voted in the election of
directors will not be included in determining the number of votes cast.
The names and ages of the nominees and continuing directors, their
principal occupation or employment during the past five years and other relevant
data regarding them as of March 5, 1996, based on information received from the
respective nominees and continuing directors, are set forth below. Each of the
nominees and the directors has served continuously since the year he or she
joined the Board of Directors.
2
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
For the Three-Year Term Expiring April 1999:
[photo] VERNARD W. HENLEY Vernard W. Henley, 66, is Chairman of the Board and Chief
Executive Officer of Consolidated Bank and Trust Company,
Richmond, Virginia. Mr. Henley has been a director since 1993
and is a member of the Audit and Compensation & Benefits
Committees.
[photo] G. GILMER MINOR, III G. Gilmer Minor, III, 55, is Chairman, President and Chief
Executive Officer of the Company. Mr. Minor has been a director
since 1980 and is Chairman of the Executive Committee and a
member of the Strategic Planning Committee. Mr. Minor also
serves as a member of the Boards of Directors of Crestar
Financial Corporation and Richfood Holdings, Inc.
[photo] R.E. CABELL, JR., R.E. Cabell, Jr., Esq., 72, is retired (Of Counsel) from the
ESQ., law firm of Williams, Mullen, Christian & Dobbins. Mr. Cabell
has been a director since 1962 and is Chairman of the Audit
Committee and a member of the Executive Committee. Mr. Cabell
also serves on the Board of Directors of the C.F. Sauer Company
and is a Trustee of Hampden-Sydney College.
For the One-Year Term Expiring April 1997:
[photo] JOSIAH BUNTING, III Josiah Bunting, III, 55, is Superintendent of the Virginia
Military Institute, Lexington, Virginia. From 1987 to 1995, he
served as Headmaster of The Lawrenceville School. General
Bunting has been a director since 1995 and is a member of the
Audit and Strategic Planning Committees.
3
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
Terms Expiring April 1998:
[photo] E. MORGAN MASSEY E. Morgan Massey, 69, is Chairman of Inter-American
Coal, N.V. and Chairman Emeritus of A.T. Massey Coal Company,
Inc., both coal companies. Mr. Massey served A.T. Massey Coal
Company, Inc. as Chairman and Chief Executive Officer in 1991,
and as President and Chief Executive Officer from 1972 to 1990.
Mr. Massey has been a director since 1988 and is a member of
the Compensation & Benefits and Strategic Planning Committees.
Mr. Massey also serves on the Massey Cancer Center Advisory
Board, Richmond, Virginia, as Vice Chairman of the U.S. Energy
Association, Washington, D.C. and as a member of the Board of
the University of Virginia Engineering Foundation. He is also
Vice Chairman of the Marine Advisory Council of the Virginia
Institute for Marine Science.
[photo] JAMES B. FARINHOLT, James B. Farinholt, Jr., 61, is Special Assistant to the
JR. President for Business Development at Virginia Commonwealth
University, including advising on commercialization of
scientific discoveries. Additionally, he is Executive Vice
President and Executive Director of the Virginia Biotechnology
Research Park, which is affiliated with the University. From
1978 to 1995, Mr. Farinholt served as President of Galleher &
Company, Inc., an investment company. Mr. Farinholt has been a
director since 1974 and is Chairman of the Strategic Planning
Committee and a member of the Audit and Executive Committees.
[photo] ANNE MARIE WHITTEMORE Anne Marie Whittemore, 50, is a partner in the law firm of
McGuire, Woods, Battle & Boothe, L.L.P. Mrs. Whittemore has
been a director since 1991 and is a member of the Executive and
Compensation & Benefits Committees. Mrs. Whittemore also serves
on the Boards of Directors of USF&G Corporation, James River
Corporation, T. Rowe Price Associates, Inc. and Albemarle
Corporation.
4
Terms Expiring April 1997:
[photo] WILLIAM F. FIFE William F. Fife, 74, served as Executive Vice President of the
Company from 1987 until his retirement in 1991. Mr. Fife has
been a director of the Company since 1962 and is a member of
the Audit and Executive Committees.
[photo] JAMES E. UKROP James E. Ukrop, 58, is Vice Chairman and Chief Executive
Officer of Ukrop's Super Markets, Inc., a retail grocery chain.
Mr. Ukrop has been a director since 1987 and is a member of the
Compensation & Benefits and Strategic Planning Committees. Mr.
Ukrop also serves as a member of the Boards of Directors of
Richfood Holdings, Inc. and Legg Mason, Inc.
[photo] JAMES E. ROGERS James E. Rogers, 50, is a Partner of SCI Investors Inc. and
Chairman of Custom Papers Group Inc., a paper manufacturing
company. From 1991 to 1992, Mr. Rogers served as President and
Chief Executive Officer of Specialty Coatings International
Inc. Prior to joining Specialty Coatings International in 1991,
Mr. Rogers served as Senior Vice President and Group Executive
of James River Corporation. Mr. Rogers has been a director
since 1991 and is Chairman of the Compensation & Benefits
Committee and a member of the Executive and Strategic Planning
Committees. Mr. Rogers also serves on the Boards of Directors
of Wellman, Inc. and Caraustar Industries, Inc.
SERIES B PREFERRED STOCK DIRECTOR
Pursuant to the Company's Articles of Incorporation, the holders of the Series
B Preferred Stock are entitled to elect one member of the Board of Directors of
the Company for so long as any share of Series B Preferred Stock remains
outstanding. Such director (the "Series B Director") is in addition to the
number of Directors of the Company elected by the holders of the Common Stock
and Series B Preferred Stock,
voting together as a single class. On May 2, 1995, the holders of the Series B
Preferred Stock elected C.G. Grefenstette as the Series B Director, to serve
until the next annual meeting of the holders of Series B Preferred Stock. It is
anticipated that the holders of the Series B Preferred Stock will re-elect Mr.
Grefenstette in 1996.
5
[photo] C.G. GREFENSTETTE C.G. Grefenstette, 68, is Chairman and Chief Executive Officer
of The Hillman Company, diversified investments and operations.
From 1989 to 1993, Mr. Grefenstette served as President & Chief
Executive Officer of The Hillman Company. Mr. Grefenstette also
serves on the Boards of Directors of The Hillman Company, The
Hillman Foundation, The Polk Foundation, Inc., Duquesne
University and PNC Bank Corp. Mr. Grefenstette has been a
director of the Company since 1994 and is a member of the Audit
and Strategic Planning Committees.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held six meetings during 1995. All directors
attended at least 75% of the total meetings of the Board of Directors and any
Committees on which they serve. The Board has Executive, Audit, Compensation &
Benefits and Strategic Planning Committees. The Board does not have a Nominating
Committee.
None of the members of the Audit Committee are employees of the Company
or its subsidiaries. The function of the Audit Committee is to oversee the
Company's financial reporting and internal control structure and to serve as a
direct line of communication among the Company's independent auditors, the
Company's Internal Audit Department and the Board of Directors. The Audit
Committee met four times during the past year.
None of the members of the Compensation & Benefits Committee are
employees of the Company or its subsidiaries. The function of the Compensation &
Benefits Committee is to recommend to the Board of Directors the salaries and
compensation of the executive officers of the Company, and to make such other
studies and recommendations concerning compensation and compensation policies as
may be brought to their attention for consideration. The Compensation & Benefits
Committee administers the Savings & Protection Plan, the Employee Stock Purchase
Plan, the 1985 and 1993 Stock Option Plans, the Supplemental Executive
Retirement Plan and the Annual Incentive Plan for employees who are subject to
Section 16 of the Securities Exchange Act of 1934 (the "Exchange Act"). The
Compensation & Benefits Committee met four times during the past year.
6
COMPENSATION OF DIRECTORS
CASH COMPENSATION. In 1995, each non-employee director was paid an
annual retainer of $10,000 ($13,000 for committee chairmen), plus $1,000 for
each Board meeting attended, $800 for each meeting of the Board's committees and
$500 for telephone conference meetings.
DIRECTORS COMPENSATION PLAN. The Directors Compensation Plan (the
"Directors Plan") provides for automatic, annual grants of options to purchase
Common Stock. During 1995, each eligible director was granted options to
purchase 2,532 shares of Common Stock at a per share exercise price of $13.50.
In addition, the Directors Plan allows eligible directors to defer the receipt
of all or part of their director fees. Amounts deferred are "invested" in
bookkeeping accounts that measure earnings and losses based on the performance
of a particular investment. Subject to certain restrictions, a director will be
permitted to take cash distributions in whole or in part from a deferred fee
account either prior to or following the termination of his or her service as a
director. The Directors Plan also allows eligible directors to receive payment
of all or part of their director fees in Common Stock rather than cash.
7
CAPITAL STOCK OWNED BY
PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth as of March 5, 1996 the number of shares
of Common Stock and Series B Preferred Stock beneficially owned by each director
and nominee, the named executive officers in the Summary Compensation Table, all
current executive officers and directors of the Company as a group, and all
persons (including any "group" as that term is used in Section 13(d)(3) of the
Exchange Act who, to the knowledge of the Company, is the beneficial owner of
more than 5% of Common Stock or Series B Preferred Stock.
Sole Voting
and Aggregate
Title Name of Investment Percentage
of Class Beneficial Owner Power(1) Other(2) Owned
COMMON G. Gilmer Minor, III................... 509,159 15,976 1.7%
Josiah Bunting, III.................... 500 0 *
R. E. Cabell, Jr....................... 90,113 8,655 *
James B. Farinholt, Jr................. 13,128 0 *
William F. Fife........................ 326,421 174 1.1%
C. G. Grefenstette..................... 3,532 6,969,000(3) 18.4%
Vernard W. Henley...................... 5,064 750 *
E. Morgan Massey....................... 202,461 0 *
James E. Rogers........................ 12,658 0 *
James E. Ukrop......................... 40,940 0 *
Anne Marie Whittemore.................. 12,378 225 *
Robert E. Anderson, III................ 127,336 2,046 *
Henry A. Berling....................... 381,870 10,443 1.3%
Craig R. Smith......................... 78,477 2,962 *
Drew St. J. Carneal.................... 78,061 5,467 *
All Executive Officers and Directors
as a group (27 persons).............. 2,193,071 7,075,179 24.1%
Wilmington Securities, Inc.
824 Market Street, Suite 900
Wilmington, DE 19801................. 6,969,000(3) -- 18.4%
IDS Life Capital Resource Fund
IDS Tower 10
Minneapolis, MN 55440................ 2,400,000(4) -- 7.8%
The Burridge Group, Inc.
115 South LaSalle Street
Chicago, IL 60603.................... 1,661,190(5) 7,050 5.4%
SERIES B
PREFERRED
STOCK(6)(7) Wilmington Securities, Inc.
824 Market Street, Suite 900
Wilmington, DE 19801................... 1,150,000(3) -- 100.0%
*Represents less than 1% of the total number of shares outstanding.
8
(1) Includes 684,842 shares which certain officers and directors of the
Company have the right to acquire through the exercise of stock options within
60 days following March 5, 1996.
(2) Includes: (a) shares held by certain relatives; (b) shares held in
various fiduciary capacities; (c) shares held by the Company's Employee Stock
Purchase Plan and 401(k) Plan; (d) grants of restricted stock through the
Company's Annual Incentive Plan; and (e) shares that the shareholder has shared
power to dispose of or to direct disposition of. These shares may be deemed to
be beneficially owned under the rules and regulations of the Securities and
Exchange Commission ("SEC"), but the inclusion of such shares in the table does
not constitute an admission of beneficial ownership.
(3) Wilmington Securities, Inc. ("Wilmington") owns 1,150,000 shares of
Series B Preferred Stock which are convertible into approximately 6,969,000
shares of Common Stock. Wilmington acquired the 1,150,000 shares of Series B
Preferred Stock in January 1996 from the former shareholders of Stuart Medical,
Inc. Wilmington is a private investment company and an indirect wholly-owned
subsidiary of The Hillman Company ("Hillman"), a firm engaged in diversified
investments and operations which is controlled by the Henry L. Hillman Trust
U/A/T dated November 18, 1985 (the "Trust"). The trustees of the Trust are Henry
L. Hillman, Elsie Hilliard Hillman and C.G. Grefenstette (the "Trustees"). The
Trustees share voting and investment power with respect to the shares held of
record by Wilmington and may be deemed to be the beneficial owners of such
shares.
(4) The number of shares owned is as of December 31, 1995, as reported in
the Schedule 13G filed by IDS Life Capital Resource Fund ("IDS"), American
Express Company and American Express Financial Corporation and received by the
Company on or about February 16, 1996. Each of American Express Company and
American Express Financial Corporation shares dispositive power with IDS with
respect to the 2,400,000 shares.
(5) The number of shares owned is as of February 12, 1996, as reported in
the Schedule 13G filed by The Burridge Group, Inc. and received by the Company
on or about February 16, 1996.
(6) The 1,150,000 shares of outstanding Series B Preferred Stock are
convertible into approximately 6,969,000 shares of Common Stock and are owned by
Wilmington. Wilmington has agreed that so long as it owns any shares of Series B
Preferred Stock or owns at least 5% of the outstanding shares of Common Stock,
it will vote such shares, with respect to each matter to be voted upon by the
holder(s) of such shares, in the same proportion as the votes cast on such
matter by all other holders of Common Stock (excluding certain holders of 5% or
more of the Common Stock). Such voting agreement does not apply to certain
matters including amendments to the Company's articles of incorporation or
bylaws, the election of the Series B Director and certain matters specified by
Virginia law.
(7) None of the directors or named executive officers in the Summary
Compensation Table, other than Mr. Grefenstette, owns any Series B Preferred
Stock.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT. The Company's
directors, its executive officers, and any persons holding more than 10% of
outstanding shares of Common Stock are required to file reports with the SEC
concerning their initial ownership of Common Stock and any subsequent changes in
that ownership. The Company believes that the filing requirements were satisfied
in 1995. In making this disclosure, the Company has relied solely on written
representations of its directors, executive officers and beneficial owners of
more than 10% of the Common Stock and copies of the reports that they have filed
with the SEC.
9
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION & BENEFITS COMMITTEE
The Compensation & Benefits Committee (the "Committee") of the Board of
Directors is comprised of five outside directors who are not current or past
employees of the Company. The principal functions of the Committee are to
oversee the design and competitiveness of the Company's total compensation
program, to evaluate the performance of the Company's senior executives and
approve related compensation actions and to administer the Company's 1993 Stock
Option Plan, Supplemental Executive Retirement Plan, Savings & Protection Plan,
and Annual Incentive Plan for employees who are subject to Section 16 of the
Exchange Act, in accordance with the terms of each respective plan. The
Committee met four times during calendar year 1995.
EXECUTIVE COMPENSATION PHILOSOPHY
With respect to executive compensation, the objective of the Committee is
to establish and maintain programs and practices that reflect the Company's
performance. The maximum compensation for executives is therefore dependent on
the Company's financial performance measures that help determine shareowner
value. The Company also regularly evaluates executive compensation levels
through competitive comparisons against its peer company group, which consists
of the group reflected in the Performance Graph of this proxy statement, and
other companies of similar size and operating characteristics. Base salary
levels generally are maintained somewhat below competitive market averages for
like experienced executives.
The Committee views all elements of executive compensation as linked to
performance. Consistent with this perspective and the Company's financial
results during 1995, the Committee reduced the base salary levels of corporate
officers for the period June 26, 1995 to December 31, 1995. The base salary for
the CEO was decreased 12.5% and an average base salary decrease of 6.9% occurred
for the other named executives.
Base salaries are combined with incentive compensation opportunities to
fully reach competitive average total compensation levels when warranted by the
Company's and the individual officer's performance. This combination is intended
to focus management on the annual and longer-term success of the Company. The
Committee recognizes it may sometimes be necessary to sacrifice short-term
financial performance to obtain longer-term business success. This belief leads
the Committee to regularly monitor the balance between annual and longer-term
rewards, and act as needed to encourage meaningful levels of share ownership
among executives.
COMMITTEE PROCESS AND ANNUAL INCENTIVE PLAN
Early each year the Committee meets to review key aspects of the upcoming
year's business plan and establish Annual Incentive Plan goals for each
corporate officer, including the Chief Executive Officer, executive and senior
vice presidents, and vice presidents. Goals under this plan are weighted to
reflect their importance and contribution to desired Company and shareowner
outcomes. The 1995 Annual Incentive Plan goals for named executives are based on
earnings per share and SG&A expense expressed as a percentage of sales which are
combined to comprise approximately three-fourths of total award potential, with
the balance of award potential based on results of an officer effectiveness
survey ("OES"). The OES obtains feedback from supervisors, peers and
subordinates on four dimensions of officer performance: leadership, teamwork,
quality, and communications. Numeric results are collected and tabulated, then
linked to Annual Incentive
10
Plan awards through a predetermined performance schedule. The Committee receives
periodic updates during the year on business performance in relation to
incentive plan goals, particularly with respect to senior executives.
Discussions of management contribution and performance are the norm, not the
exception, in Committee meetings.
At the close of each year, the Committee meets to discuss financial and
other performance compared to Annual Incentive Plan goals and longer-term
business goals. These longer-term business goals center around the Company's
strategic objectives to remain customer oriented in everything it does and to
actively evolve its business consistent with the service needs of customers and
the Company's markets. In deciding the level of annual salary increases,
incentive payments and granting of stock options, the Committee looks to the
Chief Executive Officer for recommendations on senior executives and then meets
privately (without the presence of management, including the Chief Executive
Officer in relation to his own compensation) to determine compensation actions
for the Chief Executive Officer. The Committee's decision-making process is
benefited by input from the Company's Human Resources Department, and
periodically from outside advisors, to maintain the desired level of
competitiveness and technically sound compensation and benefit programs.
Company performance from continuing operations in 1995 saw sales increase
24.2% to $3.0 billion and income (prior to nonrecurring restructuring expenses)
decline, resulting in a net loss of $1.0 million. On financial measures used to
determine annual incentive awards, earnings per common share (prior to
nonrecurring restructuring expenses) reflected a loss of $0.20 versus positive
earnings of $0.72 per share in 1994, and SG&A expense expressed as a percentage
of sales was 7.6% versus 6.9% in 1994.
The maximum award payable under the Company's Annual Incentive Plan to the
Chief Executive Officer for full attainment of all established goals would be
65% of his base salary. Despite acceptable OES results for the year, the
Committee did not award an incentive payment to the Chief Executive Officer, and
other named executives, due to the Company's financial results in 1995.
Under the Company's Annual Incentive Plan, executives are also eligible to
receive a bonus of Common Stock equivalent to 25% of the cash incentive payment
which becomes vested provided the officer maintains a continuous employment
relationship with the Company for the following three years. The restricted
stock bonus for named executives is dependent on performance against the same
goals and weights as described earlier for the Annual Incentive Plan. The Chief
Executive Officer and other named executives did not receive shares of stock for
1995 because no incentive award was made.
LONG-TERM INCENTIVE PLAN
Each year the Committee considers the desirability of granting senior
executives awards under the Company's Stock Option Plan. The plan provides for
the use of nonqualified stock options, incentive stock options, and stock
appreciation rights. The Committee's decision to grant stock options is
discretionary and largely determined by key financial performance measures
including return on average equity and earnings-per-share achievement, though no
specific performance targets are applied for this purpose. Option grant
decisions may also be based upon outstanding individual performance, job
promotions, and greater responsibility within the Company. Stock option levels
are a component of competitive total compensation and include such
considerations as salary grade levels, responsibility levels, and expectations
of future impact on
11
overall Company performance. The Committee believes stock option grants have
historically been effective in helping to focus executives on enhancing
long-term profitability and shareholder value. The Committee did not grant any
stock options to the Chief Executive Officer in 1995.
CORPORATE TAX CONSIDERATIONS
Congress passed a law effective in 1994, covered in Internal Revenue
Service Code Section 162(m), that disallows corporate tax deductions for
executive compensation in excess of $1 million for "proxy table" executives.
This law does allow for certain exemptions to the deduction cap, including pay
plans that depend on formulas rather than discretion and therefore are
"performance-based."
All current executive compensation is fully deductible. The Committee
intends for the Company's pay plans and actions to be performance-based and
therefore fully eligible for compensation expense deductions. However, no
specific policy has been adopted by the Committee that would dictate future
decisions in this matter.
The foregoing report has been furnished by Mrs. Whittemore and Messrs.
Henley, Massey, Rogers (Chairman), and Ukrop.
12
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
The following performance graph compares the performance of the Common
Stock to the S&P 500 Index and a Peer Group, which includes the Company and the
companies listed below, for the Company's last five fiscal years. The graph
assumes that the value of the investment in the Common Stock and each index was
$100 on December 31, 1990 and that all dividends were reinvested.
[graph goes here]
1990 1991 1992 1993 1994 1995
Owens & Minor, Inc. 100 205 227 358 336 305
S&P 500 Index 100 107 122 138 140 177
Peer Group 100 142 259 407 380 509
The Peer Group selected for purposes of the above graph consists of
companies engaged in the business of distribution, and includes Owens & Minor,
Inc., Arrow Electronics Inc., Bergen Brunswig Corp., Bindley Western Industries,
Cardinal Health, Inc., Hughes Supply Inc., Moore Medical Corp., Nash Finch
Company, Richfood Holdings, Inc., Rykoff-Sexton Inc., Super Food Services Inc.,
United Stationers Inc. and VWR Scientific Products.
13
SUMMARY COMPENSATION TABLE
The following table shows, for the fiscal years ended December 31, 1995,
1994 and 1993, the cash compensation paid by the Company, as well as certain
other compensation paid or accrued, to the Company's Chief Executive Officer and
its four other most highly compensated executive officers (the "Named Executive
Officers").
Annual Compensation Long-Term Compensation(1)
(a) (b) (c) (d) (e) (f) (g) (h)
Awards
Other Restricted All
Name and Annual Stock Other
Principal Salary Bonus Compensation Awards Options Compensation
Position Year ($)(2) ($) ($)(3) ($)(4) (#)(5) ($)(6)
G. Gilmer Minor, III 1995 $375,000 $ 0 -- $ 0 0 $ 35,611
Chairman, President 1994 372,654 172,800 -- 43,206 90,000 29,670
& Chief Executive 1993 314,538 163,389 -- 40,848 30,000 28,996
Officer
Henry A. Berling 1995 206,938 0 -- 0 0 16,700
Executive Vice President 1994 202,210 73,745 -- 18,440 37,500 18,941
Partnership Development 1993 170,883 72,391 -- 18,101 15,000 13,999
Craig R. Smith 1995 203,091 0 -- 0 30,000 15,366
Executive Vice President 1994 178,654 70,110 -- 17,528 33,750 13,666
Chief Operating Officer 1993 127,307 65,760 -- 16,445 22,500 1,699
Robert E. Anderson, III 1995 192,500 0 -- 0 0 25,996
Executive Vice 1994 187,649 53,000 -- 13,253 33,750 16,473
President 1993 162,375 68,357 -- 17,112 15,000 21,149
Planning & Business
Development
Drew St. J. Carneal 1995 164,175 0 -- 0 0 3,370
Senior Vice President 1994 159,820 58,740 -- 14,498 30,000 3,009
General Counsel & 1993 139,156 60,150 -- 15,042 15,000 2,710
Secretary
(1) The Company has no Long-Term Incentive Plans as defined by Item
402(a)(7)(iii) of Regulation S-K.
(2) The salary of each of the Named Executive Officers was decreased for the
period June 26, 1995 through December 31, 1995, as follows: Mr. Minor,
12.5% decrease; Messrs. Berling, Smith, and Anderson, 7.5% decrease; and
Mr. Carneal, 5.0% decrease.
(3) None of the Named Executive Officers received Other Annual Compensation in
excess of the lesser of $50,000 or 10% of combined salary and bonus for
fiscal years 1995, 1994 or 1993.
(4) Aggregate restricted stock holdings and values at December 31, 1995 for the
Named Executive Officers are as follows: (i) Mr. Minor: 10,349 shares,
$128,716; (ii) Mr. Berling: 4,341 shares, $53,991; (iii)
14
Mr. Smith: 3,013 shares, $37,474; (iv) Mr. Anderson: 3,973 shares, $49,414;
and (v) Mr. Carneal: 3,539 shares, $44,016. Dividends are paid on
restricted stock at the same rate as all shareholders of record.
(5) No SARs were granted in 1995, 1994 or 1993.
(6) Includes in 1995 for (i) Mr. Minor: $4,416 company contributions to defined
contribution plans, $31,195 benefit attributable to company-owned life
insurance policy; (ii) Mr. Berling: $16,700 benefit attributable to
company-owned life insurance policy; (iii) Mr. Smith: $3,323 company
contributions to defined contribution plans, $12,043 benefit attributable
to company-owned life insurance policy; (iv) Mr. Anderson: $3,097 company
contributions to defined contribution plans, $22,899 benefit attributable
to company-owned life insurance policy; and (v) Mr. Carneal: $3,370 company
contributions to defined benefit plans.
EXECUTIVE SEVERANCE AGREEMENTS: In 1989, the Board authorized the Company
to enter into Severance Agreements (the "Severance Agreements") with certain
officers of the Company in order to encourage key management personnel to remain
with the Company and to avoid distractions regarding potential or actual changes
in control of the Company.
The Severance Agreements include senior vice presidents and higher
ranking corporate officers, including the Named Executive Officers, who have
been employed by the Company for a period of at least one year and also vice
presidents who have been employed by the Company for at least ten years and are
approved for participation by the Compensation & Benefits Committee.
The Severance Agreements provide for the payment of a severance benefit
if such participant's employment with the Company is terminated for any reason,
other than as a consequence of death, disability, or normal retirement, within
two years after a Change in Control of the Company (as defined in the Severance
Agreements). The severance benefit is equal to 2.99 times the average of the
participant's total annual compensation from the Company, including all bonuses,
which was included in gross income for income tax purposes for the five calendar
years preceding the Change in Control of the Company, provided, however, no
payments will be made to participants which would be treated as an "excess
parachute payment" under Section 280G of the Internal Revenue Code.
Each Severance Agreement continues in effect through December 31, 1996,
and unless notice is given to the contrary, the term is automatically extended
for an additional year at the end of each year.
15
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning the grant of options
made during 1995 under the Company's 1993 Stock Option Plan to the Named
Executive Officers. The Company granted no SARs during 1995.
Grant
Date
Individual Grants(1) Value(2)
Number of
Securities % of Total Grant
Underlying Options Granted Exercise or Date
Options to Employees Base Price Expiration Present
Name Granted in Fiscal Year ($/Share) Date Value($)
G. Gilmer Minor, III 0 -- -- -- --
Henry A. Berling 0 -- -- -- --
Robert E. Anderson, III 0 -- -- -- --
Craig R. Smith 30,000 15.13 $ 13.5625 2/27/05 $233,825
Drew St. J. Carneal 0 -- -- -- --
(1) Options are exercisable beginning on the first anniversary of grant
date, with 40% being exercisable at that time and an additional 30% and 30%
becoming exercisable on the second and third anniversary of grant date,
respectively.
(2) Based upon Black Scholes option valuation model. Volatility is based
on the variance of the rate of return as measured over the most recent 180
trading days prior to the grant. Other assumptions include a riskless rate of
return of 7.47%, annual dividend yield of 1.157% and option maturity of ten
years.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information with respect to the Named
Executive Officers concerning the exercise of options during 1995 and
unexercised options held by them on December 31, 1995. There were no SARs
exercised during 1995 or outstanding on December 31, 1995.
Number of Value of
Securities Unexercised
Underlying In-the-Money
Unexercised Options at
Options at FY End FY End
Shares Acquired Value Exercisable/ Exercisable/
Name Upon Exercise Realized Unexercisable Unexercisable
G. Gilmer Minor, III 0 -- 103,500/67,500 $255,679/$52,036
Henry A. Berling 0 -- 64,500/29,250 176,735/ 26,017
Robert E. Anderson, III 0 -- 63,000/27,000 176,735/ 26,017
Craig R. Smith 2,700 $ 28,030 55,088/57,000 153,421/ 26,017
Drew St. J. Carneal 0 -- 61,500/24,750 176,735/ 26,017
16
RETIREMENT PLANS
PENSION PLAN. The Company provides retirement benefits under a defined
benefit pension plan (the "Pension Plan") pursuant to which benefits are based
upon both length of service and compensation. All full-time employees of the
Company become participants in the Pension Plan after one year of service and
the attainment of the age of 21 years. Pension Plan benefits are determined
under a formula based on an individual's earnings and years of credited service.
Funding is determined on an actuarial basis.
The following table shows estimated annual benefits payable at
normal retirement age of 65 years to persons with specified remuneration and
years of service under the Pension Plan:
Average Straight Life Annuity Benefits Based
Average on Years of Credited Service
Compensation(1) 15 yrs. 20 yrs. 25 yrs. 30 yrs. 35 yrs.
$ 125,000 $21,835 $27,922 $34,008 $40,095 $46,181
150,000 25,548 32,912 40,276 47,640 55,004
175,000 29,261 37,903 46,544 55,185 63,826
200,000 32,958 42,877 52,795 62,714 72,632
(1) Average compensation represents compensation based upon a benefit
formula applied to an employee's career average earnings, which approximates the
amount of salary set forth in the Summary Compensation Table. The maximum amount
of covered compensation is $150,000, or some other amount as may be determined
by the Secretary of Treasury pursuant to IRC Section 401(a)(17).
Benefits are computed on a straight-life annuity basis, and are not
subject to offset for Social Security benefits or other amounts. The years of
service credited for the Named Executive Officers under the Pension Plan are
presently as follows: Mr. Minor, 32 years; Mr. Berling, 29 years; Mr. Smith, 6
years; Mr. Anderson, 27 years; and Mr. Carneal, 7 years.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. The Company provides
supplemental retirement benefits to certain employees selected by the
Compensation & Benefits Committee under the Supplemental Executive Retirement
Plan (the "SERP"). The SERP entitles participants to receive a specified
percentage of the participant's average base monthly salary during the five
years preceding his retirement (in the case of the Named Executive Officers,
65%) reduced by the benefit payable under the Pension Plan and Social Security.
The estimated annual benefits payable under the SERP upon retirement at normal
retirement age for the Named Executive Officers are: Mr. Minor, $160,911; Mr.
Berling, $62,663; Mr. Smith, $61,186; Mr. Anderson, $69,543; and Mr. Carneal,
$65,835.
PROPOSAL 2. SELECTION OF INDEPENDENT AUDITORS
Action will be taken at the meeting to ratify the appointment by the
Board of Directors of KPMG Peat Marwick LLP as the independent auditors of the
Company. The Audit Committee and the Board of Directors recommend that the
shareholders ratify their appointment. Unless otherwise directed, the persons
named in the enclosed form of proxy intend to vote such proxy for the
ratification of the appointment by the Board of Directors of KPMG Peat Marwick
LLP as independent auditors of the Company.
17
Representatives of KPMG Peat Marwick LLP are expected to be present at
the Annual Meeting of Shareholders. They will have the opportunity to make a
statement, if they desire to do so, and will be available to respond to
appropriate questions from shareholders.
PROPOSALS OF SHAREHOLDERS
Shareholders wishing to present proposals for action at the Company's
Annual Meeting of Shareholders in 1997 must submit the proposals to the Company
for inclusion in the Company's 1997 Proxy Statement not later than November 20,
1996 in writing at the address shown in the heading of this Proxy Statement.
MISCELLANEOUS
The Company does not know of any other matter to be presented for action
by the shareholders at the meeting. If any other matter properly comes before
the meeting, it is intended that the persons named in the accompanying form of
proxy will vote thereon in their discretion.
March 19, 1996
BY ORDER OF THE BOARD OF DIRECTORS
DREW ST. J. CARNEAL,
Secretary
18
[MAP OF CRESTAR CENTER]
PROXY
OWENS & MINOR, INC.
Solicited by the Board of Directors for the Annual Meeting of Shareholders
The undersigned hereby appoints Mrs. Anne Marie Whitemore and Messrs.
James B. Farinholt, Jr. and E. Morgan Massey, and each of them with power of
substitution, the proxy (and if the undersigned is a proxy, the substitute
proxy) of the undersigned to vote all shares held of record on March 5, 1996
by the undersigned as directed below and in their discretion on all other
matters which may properly come before the Annual Meeting of Shareholders
of Owens & Minor, Inc., to be held on April 30, 1996 at 10:00 A.M. in the
Auditorium of the Crestar Bank Building, 919 E. Main Street, Richmond,
Virginia, and any ajournments or postponements thereof.
THE UNDERSIGNED DIRECTS SAID PROXIES TO VOTE AS SPECIFIED UPON THE ITEMS
SHOWN HEREIN WHICH ARE REFERRED TO IN THE NOTICE OF ANNUAL MEETING AND AS SET
FORTH IN THE PROXY STATEMENT.
The Board of Directors recommends a vote FOR Proposals 1 and 2.
1. Election of Directors:
For a term of three years: Messrs. R. E. Cabell, Jr., Vernard W. Henley,
and G. Gilmer Minor, III.
For a term of one year: Josiah Bunting III
( ) FOR all nominees listed ( ) WITHHOLD AUTHORITY ( ) WITHHELD for the
(except as marked to to vote for all following only:
contrary) nominees listed (Write the
nominee's name in
space below)
_______________________________________________________________________________
2. Ratification of appointment of KPMG Peat Marwick LLP as independent auditors.
( ) FOR ( ) AGAINST ( ) ABSTAIN
(Continued and to be signed on back)
3. In their discretion the proxies are authorized to vote upon such other
matters as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2.
-----------------------------------------
Signature
-----------------------------------------
Signature
Date_______________________________, 1996
Please sign exactly as your name appears
herein.
Attorneys-in-fact, executors,
administrators, trustees and guardians
should give full title as such. 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. Shareholders who are
present at the meeting may withdraw their
proxy and vote in person if they so
desire.