<Page>
Section 240.14a-101 Schedule 14A.
Information required in proxy statement.
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
OMNICARE, INC.
..................................................................
(Name of Registrant as Specified In Its Charter)
..................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction
applies:
............................................................
(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:
.......................................................
<Page>
[OMNICARE LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 19, 2003
The Annual Meeting of Stockholders of Omnicare, Inc. (the 'Company') will be
held at the Northern Kentucky Convention Center, One West RiverCenter Boulevard,
Covington, Kentucky, on Monday, May 19, 2003 at 10:00 a.m. The purpose of the
Annual Meeting is to consider and act upon:
(1) the election of directors;
(2) the ratification of the selection of PricewaterhouseCoopers LLP as
independent accountants of the Company; and
(3) any other business as may properly be brought before the meeting.
Stockholders of record at the close of business on March 28, 2003 are
entitled to notice of, and to vote at, the meeting and any adjournments thereof.
Whether or not you plan to attend the meeting, please sign and date the
enclosed proxy and mail it in the enclosed envelope at your earliest
convenience. No postage is required if it is mailed in the United States.
By Order of the Board of Directors
CHERYL D. HODGES
Secretary
Covington, Kentucky
April 11, 2003
YOUR VOTE IS IMPORTANT! TO ENSURE THAT YOUR SHARES ARE REPRESENTED AT THE
MEETING, PLEASE TAKE A MOMENT TO SIGN, DATE AND PROMPTLY MAIL YOUR PROXY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
<Page>
OMNICARE, INC.
100 EAST RIVERCENTER BOULEVARD
COVINGTON, KENTUCKY 41011
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished to stockholders in connection with the
solicitation by the Board of Directors of Omnicare, Inc. (the 'Company') of
proxies to be used at the Annual Meeting of Stockholders of the Company to be
held on May 19, 2003, and any adjournment thereof ('Annual Meeting').
Stockholders of record as of the close of business on March 28, 2003 are
entitled to notice of, and to vote at, the Annual Meeting or any adjournment
thereof. As of such date, the Company had outstanding 94,684,778 shares of its
Common Stock, par value $1 per share ('Common Stock'), having one vote per
share.
To constitute a quorum at the Annual Meeting, the presence, in person or by
proxy, of the holders of a majority of the outstanding shares of Common Stock is
necessary. Shares represented by proxies received by the Company will be counted
as present at the Annual Meeting for the purpose of determining the existence of
a quorum, regardless of how or whether such shares are voted on a specific
proposal. Abstentions will be treated as votes cast on a particular proposal as
well as shares present at the Annual Meeting. Where nominee stockholders are not
permitted to vote on a specific issue because they did not receive specified
instructions on the specific issue from the beneficial owners of the shares
('Broker Nonvotes'), such Broker Nonvotes will be treated as not present at the
meeting for purposes of calculating the results of the vote on the specific
issue. Accordingly, abstentions and Broker Nonvotes have the effect of a
negative vote on any proposal where the vote required to pass the proposal is a
percentage of the outstanding shares, but only abstentions have the effect of a
negative vote when the vote required to pass a proposal is a percentage of the
shares present at the Annual Meeting. Shares represented by properly executed
proxies received in the accompanying form will be voted in accordance with the
instructions contained therein. In the absence of contrary instructions, such
shares will be voted (1) to elect as directors the 10 persons named below; and
(2) to ratify the selection of PricewaterhouseCoopers LLP as independent
accountants of the Company for 2003. A proxy may be revoked at any time prior to
its exercise by the execution of a proxy signed at a later date or by the giving
of written notice of revocation to the Secretary of the Company. A revocation
during the Annual Meeting will not affect any vote previously taken.
This Proxy Statement and the accompanying proxy were first mailed to
stockholders on or about April 11, 2003.
ELECTION OF DIRECTORS
Currently the number of directors of the Company is 12. At its March 2003
meeting, the Board of Directors elected to reduce the number of directors
from 12 to 10. Messrs. Timothy E. Bien, Senior Vice President -- Professional
Services and Purchasing of Omnicare, Inc., and Kevin J. McNamara, President and
Chief Executive Officer and a director of Chemed Corporation, both currently
directors, are not standing for re-election. Directors are to be elected to
serve until the following annual meeting of stockholders and until their
respective successors are duly elected and qualified. Set forth below are the
names of the persons to be nominated by the Board of Directors, together with a
description of each person's principal occupation during at least the past five
years and other pertinent information. Each of the nominees for election as a
director is currently a director of the Company.
No person may be nominated for election as a director unless written notice
of intention to nominate such person (which notice shall contain the prospective
nominee's name, address and occupation) has been given to the Chairman, the
President or the Secretary of the Company by a stockholder entitled to notice
of, and to attend, a meeting of stockholders at which directors are to be
elected, not later than 15 business days before such meeting.
Unless authority is withheld for individual nominees or all nominees, it is
intended that the shares represented by each proxy will be voted for the
nominees listed below. The Company anticipates that all nominees listed in this
Proxy Statement will be candidates when the election is held. However, if for
any reason any nominee is not a candidate at that time, proxies will be voted
for a substitute nominee
<Page>
designated by the Board of Directors and for the remaining nominees (except
where a proxy withholds authority with respect to the election of directors).
The ten nominees receiving the greatest number of votes at the Annual Meeting
will be elected directors
NOMINEES
<Table>
EDWARD L. HUTTON .......... Mr. Hutton is Chairman of the Company and has held this
Director since 1981 position since May 1981. Additionally, he is Chairman and
Age: 83 a director of Chemed Corporation, Cincinnati, Ohio (a
diversified public corporation with interests in plumbing
and drain cleaning services, as well as major appliance
and heating and ventilation and air conditioning repair
services) (hereinafter 'Chemed') and has held these
positions since November 1993 and April 1970,
respectively. Previously, he was President and Chief
Executive Officer of Chemed, positions he had held from
April 1970 to November 1993, and was Chairman and Chief
Executive Officer of Chemed from November 1993 until May
2001.
JOEL F. GEMUNDER .......... Mr. Gemunder is President and Chief Executive Officer of the
Director since 1981 Company and has held these positions since May 1981 and
Age: 63 May 2001, respectively. Mr. Gemunder was an Executive Vice
President of Chemed and Group Executive of its Health Care
Group from May 1981 through July 1981 and a Vice President
of Chemed from 1977 until May 1981. Mr. Gemunder is a
director of Chemed and Ultratech Stepper, Inc. (a
manufacturer of photo-lithography equipment for the
computer industry).
CHARLES H. ERHART, JR. .... Mr. Erhart retired as President of W.R. Grace & Co.,
Director since 1981 Columbia, Maryland (international specialty chemicals,
Age: 77 construction and packaging) (hereinafter 'Grace') in
August 1990. He had held this position since July 1989.
From November 1986 to July 1989, he was Chairman of the
Executive Committee of Grace. From May 1981 to November
1986, he served as Vice Chairman and Chief Administrative
Officer of Grace. Mr. Erhart is a director of Chemed.
DAVID W. FROESEL, JR. ..... Mr. Froesel is Senior Vice President and Chief Financial
Director since 2000 Officer of the Company and has held these positions since
Age: 51 March 1996. From May 1993 to February 1996, Mr. Froesel
was Vice President of Finance and Administration at
Mallinckrodt Veterinary, Inc., a subsidiary of
Mallinckrodt, Inc. From July 1989 to April 1993 he was
worldwide Corporate Controller of Mallinckrodt Medical,
Inc., a subsidiary of Mallinckrodt, Inc.
CHERYL D. HODGES .......... Ms. Hodges is Senior Vice President and Secretary of the
Director since 1992 Company and has held these positions since February 1994.
Age: 51 From August 1986 to February 1994, she was Vice President
and Secretary of the Company. From August 1982 to August
1986, she served as Vice President -- Corporate and
Investor Relations. Ms. Hodges has also served as a
director of the Company for four prior terms: 1984 - 85;
1986 - 87; 1988 - 89; and 1990 - 91.
</Table>
2
<Page>
<Table>
PATRICK E. KEEFE .......... Mr. Keefe is Executive Vice President -- Operations of the
Director since 1993 Company and has held this position since February 1997.
Age: 57 Previously, he was Senior Vice President -- Operations
since February 1994. From April 1993 to February 1994, he
was Vice President -- Operations of the Company. From
April 1992 to April 1993, he served as Vice
President -- Pharmacy Management Programs of Diagnostek,
Inc., Albuquerque, New Mexico (mail-service pharmacy and
health care services) (hereinafter 'Diagnostek'). From
September 1990 to April 1992, Mr. Keefe served as
President of HPI Health Care Services, Inc. (hereinafter
'HPI'), a subsidiary of Diagnostek that was acquired from
the Company in August 1989. From August 1984 to September
1990, he served as Executive Vice President of HPI.
SANDRA E. LANEY ........... Ms. Laney is Chairman and Chief Executive Officer of Cadre
Director since 1987 Computer Resources Co., Cincinnati, Ohio (network security
Age: 59 services), positions she has held since September 2001.
Previously she served as Executive Vice President and
Chief Administrative Officer of Chemed from May 2001 and
May 1991, respectively, until March 2003. From November
1993 until May 2001 she held the position of Senior Vice
President of Chemed. From May 1984 to November 1993, she
was a Vice President of Chemed. Ms. Laney is a director of
Chemed.
ANDREA R. LINDELL, ........ Dr. Lindell is Dean and Professor in the College of Nursing
DNSc, RN at the University of Cincinnati, a position she has held
Director since 1992 since December 1990. Dr. Lindell is also Associate Senior
Age: 59 Vice President and Vice-Provost for the Medical Center at
the University of Cincinnati, positions she has held since
July 1998 and May 2002, respectively. From September 1994
to June 2002 she also held an additional position as
Interim Dean of the College of Allied Health Sciences at
the University of Cincinnati. From August 1981 to August
1990, Dr. Lindell served as Dean and a Professor in the
School of Nursing at Oakland University, Rochester,
Michigan. In addition, from September 1977 until August
1981 Dr. Lindell also held the position of Chair,
Department of Nursing with the University of New
Hampshire, Durham, New Hampshire.
SHELDON MARGEN, M.D. ...... Dr. Margen is a Professor Emeritus in the School of Public
Director since 1983 Health, University of California, Berkeley, a position he
Age: 83 has held since May 1989. He had served as a Professor of
Public Health at the University of California, Berkeley,
since 1979.
JOHN H. TIMONEY ........... Mr. Timoney is a retired executive of Applied Bioscience
Director since 2000 International Inc. (research organization serving the
Age: 69 pharmaceutical and biotechnology industries) ('Applied
Bioscience'), at which he held a number of positions from
1986 through 1996. From December 1995 through September
1996, he was Chief Executive Officer of Clinix
International, Inc., a wholly owned subsidiary of Applied
Bioscience. From June 1992 to September 1996, Mr. Timoney
was Senior Vice President of Applied Bioscience. From
September 1986 through June 1992, he was Vice President,
Chief Financial Officer, Secretary and Treasurer of
Applied Bioscience. In addition, from September 1986
through June 1995 he was a director of Applied Bioscience.
Mr. Timoney has also held financial and executive
positions with IMS Health Incorporated (market research
firm serving the pharmaceutical and health care
industries), Chemed and Grace.
</Table>
3
<Page>
COMMITTEES AND MEETINGS OF THE BOARD
The Board of Directors of the Company has a Compensation and Incentive
Committee, an Audit Committee, a Nominating Committee and an Executive
Committee.
The Compensation and Incentive Committee makes recommendations to the Board
of Directors concerning (a) salary and incentive compensation payable to
officers and certain other key employees of the Company, (b) establishment of
incentive compensation plans and programs generally, (c) additional year-end
contributions by the Company under the Company's Employees' Savings and
Investment Plan and (d) adoption and administration of certain employee benefit
plans and programs. In addition, the Compensation and Incentive Committee
administers the Company's stock-based incentive plans under which it makes
determinations concerning the grant of stock options and stock awards to key
employees of the Company. The Compensation and Incentive Committee consists of
Doctors Margen (Chairman) and Lindell and Mr. Erhart. The Compensation and
Incentive Committee met on six occasions during 2002.
The Audit Committee (a) recommends to the Board of Directors a firm of
independent accountants to audit the Company's consolidated financial
statements, (b) reviews and reports to the Board of Directors on the Company's
annual financial statements and the independent accountants' report on such
financial statements, (c) meets with the Company's senior financial officers,
internal auditors and independent accountants to review audit plans and other
matters regarding the Company's accounting, financial reporting and internal
control systems and (d) assists the Board of Directors in monitoring compliance
by the Company with legal and regulatory requirements. The Audit Committee
Charter, adopted by the Board and included as Appendix A to the Company's 2001
Proxy Statement, more specifically sets forth the duties and responsibilities of
the Audit Committee. The Audit Committee consists of Messrs. Erhart (Chairman)
and Timoney, Ms. Laney and Dr. Lindell. The Audit Committee met on six occasions
during 2002.
The Nominating Committee (a) recommends to the Board of Directors the
candidates for election to the Board of Directors to fill newly created
directorships and to replace directors who are not standing for election at each
Annual Meeting of Stockholders of the Company, (b) recommends to the Board of
Directors candidates for election by the Board of Directors to fill director
vacancies and (c) considers director candidates submitted by directors, officers
and stockholders. The Nominating Committee consists of Messrs. Erhart (Chairman)
and Timoney and Dr. Margen. The Nominating Committee met on one occasion during
2002.
The Executive Committee is empowered to act for the full Board in intervals
between Board meetings, with the exception of certain matters that by law or the
Company's By-Laws may not be delegated. The Committee meets as necessary, and
all actions by the committee are reported at the next Board of Directors
meeting. The Executive Committee consists of Messrs. Hutton (Chairman), Erhart,
Gemunder and Keefe. The Executive Committee met on four occasions during 2002.
During 2002, there were nine meetings of the Board of Directors and each
director attended at least 75% of the aggregate of (a) the total number of
meetings held by the Board of Directors during the period for which he or she
has been a director and (b) the total number of meetings held by all Committees
of the Board of Directors during the period for which he or she served.
REMUNERATION OF DIRECTORS
Each non-employee director is paid a $20,000 annual retainer fee (payable at
the director's election in cash or restricted stock). Each non-employee director
is also granted an annual restricted stock award having a value of $20,000 that
vests in one installment on the third anniversary of the date of grant. In
addition, non-employee directors who are the Chairman of one or more Committees
of the Board (except for the Executive Committee) receive an additional $15,000
retainer fee, and directors who are members of one or more Committees of the
Board, but not the Chairman of any, receive an additional $10,000 retainer fee
(in each case payable at the director's election in cash or restricted stock
that vests as described above). During 2002, each member of the Board of
Directors was granted an annual unrestricted stock award covering 400 shares of
Common Stock. During 2002, Mr. Erhart received an additional annual fee of
$8,000. Such fee was paid in lieu of stock options granted to directors in
previous years. Mr. Erhart was a member of the Compensation and Incentive
Committee of either the Company or an affiliated company on the dates of such
grants and thus was ineligible to participate.
4
<Page>
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation of
the Company's most highly compensated executive officers (the 'named
executives') for services to the Company and its subsidiaries during 2002, 2001
and 2000.
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------- ------------------------
AWARDS
------------------------
# OF SHARES
RESTRICTED UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITIONS YEAR SALARY BONUS OTHER(1) STOCK(2) OPTIONS COMPENSATION
---------------------------- ---- ------ ----- -------- -------- ------- ------------
E.L. Hutton..................... 2002 $ 318,500 $ 231,125 $38,152 $ 392,612 200,000 $1,831,571(3)
Chairman 2001 389,958 316,125 38,038 1,693,998 210,000 1,154,575
2000 475,000 441,125 38,807 2,244,225 255,000 2,070,115
J.F. Gemunder................... 2002 1,133,333 2,289,407 81,991 5,500,006 555,682 97,167(4)
President and Chief 2001 950,000 1,289,216 68,828 3,629,998 395,366 80,617
Executive Officer 2000 900,000 588,800 69,913 2,947,529 328,430 878,179
P.E. Keefe...................... 2002 363,500 354,067 13,050 1,314,263 120,000 32,316(4)
Executive Vice President -- 2001 325,000 274,012 12,960 1,001,009 105,000 30,443
Operations 2000 287,500 173,913 13,129 861,129 100,000 178,452
D.W. Froesel, Jr. .............. 2002 348,500 408,114 7,527 1,177,685 120,000 91,070(4)
Senior Vice President and 2001 310,000 283,092 7,485 858,002 105,000 69,799
Chief Financial Officer 2000 285,000 143,042 7,589 720,929 85,000 222,944
C.D. Hodges..................... 2002 282,083 265,265 4,884 1,026,791 101,192 24,172(4)
Senior Vice President and 2001 250,000 180,252 4,858 769,131 86,188 20,127
Secretary 2000 226,000 85,222 4,928 657,114 70,674 272,641
</Table>
- ---------
(1) These amounts represent payments made to the executive
officer as required to offset the tax liability associated
with premiums paid by the Company on behalf of the officer
under split dollar life insurance policies.
(2) Under the Company's stock award program, restricted shares
of Common Stock were issued as incentive compensation for
services rendered during 2002 to the named executives and
other key employees. Restricted shares vest generally in
seven annual installments as determined by the Compensation
and Incentive Committee with a greater proportion vesting in
the latter years. If the recipient's employment terminates
due to death, disability, or retirement under a retirement
plan of the Company, or change in control of the Company
occurs, the restrictions terminate. Otherwise, in the event
of termination of employment, unvested shares are generally
forfeited. Recipients receive dividends on the awarded
shares. Restricted stock awards were granted in March 2003
for services rendered during 2002 as incentive compensation
having a grant date value in the amount shown on the table.
The numbers of restricted shares granted in March 2003 to
the named executives are as follows: Mr. Hutton -- 15,549
shares; Mr. Gemunder -- 217,822 shares; Mr. Keefe -- 52,050
shares; Mr. Froesel -- 46,641 shares; and Ms.
Hodges -- 40,665 shares. As of December 31, 2002, the number
and value of the aggregate restricted stock holdings of the
named executives were: Mr. Hutton -- 470,705 shares or
$11,216,900; Mr. Gemunder -- 716,293 shares or $17,069,262;
Mr. Keefe -- 211,061 shares or $5,029,584; Mr.
Froesel -- 168,430 shares or $4,013,687; and Ms.
Hodges -- 158,459 shares or $3,776,078.
(3) Mr. Hutton does not participate in the Company's
tax-qualified pension plans. Of this amount, $1,500,000
represents the Company's contribution under a deferred
compensation arrangement, which is designed to provide him
retirement benefits comparable to other executives. Such
deferred amounts accrue interest at market rates and are
paid in future years. This amount also includes $331,571
paid to Mr. Hutton, which payment reflects the economic
value of the benefit that would have vested in 2002 for his
account if he had been eligible to participate in the
Company's 2002 Supplemental Benefit Plan described at
page 8.
(footnotes continued on next page)
5
<Page>
(footnotes continued from previous page)
(4) This amount includes the dollar value of shares of Common
Stock allocated to the named executives' accounts in the
Company's Employee Stock Ownership Plan (the 'ESOP') which
are attributable to the Company's contributions to the ESOP.
Participants are entitled to receive the fully vested shares
allocated to their accounts upon death, disability,
retirement or termination of employment. To the extent
benefits under the ESOP are otherwise limited by provisions
of the Internal Revenue Code, the Company's Excess Benefits
Plan provides that the Company will provide from its general
funds a benefit to an employee equal to the benefit which
would have been provided but for the limitations of the
Internal Revenue Code. The benefits shown include those
provided under the Excess Benefits Plan. For 2002, the
numbers of shares attributable to these plans and the dollar
values thereof included in the table for each named
executive are as follows: Mr. Gemunder -- 3,134 shares or
$77,160; Mr. Keefe -- 789 shares or $18,958; Mr.
Froesel -- 734 shares or $17,086; and Ms. Hodges -- 643
shares or $15,297. This column also includes (a) life
insurance premiums paid by the Company (Mr.
Gemunder -- $2,190; Mr. Keefe -- $1,200; Mr.
Froesel -- $1,205; and Ms. Hodges -- $1,021); (b) the
present value to the recipient of future benefits derived
from premium payments made by the Company for the benefit of
the recipient under a split dollar life insurance policy,
which provides for the refund of premiums to the Company
upon termination of the policy (unrelated to term life
insurance coverage) (Mr. Gemunder -- $17,817; Mr. Keefe --
$12,158; Mr. Froesel -- $10,861; and Ms. Hodges -- $7,854);
and (c) as to Mr. Froesel, also includes $61,918 which the
Company credited to a deferred account established for him
in lieu of his participation in the Company's pension plan.
STOCK OPTIONS
The following table sets forth information regarding stock options granted
to the named executives during 2002.
OPTION GRANTS IN 2002
<Table>
<Caption>
INDIVIDUAL GRANTS
------------------------------------------------
PERCENT OF
TOTAL POTENTIAL REALIZABLE VALUE
NUMBER OF OPTIONS AT ASSUMED ANNUAL RATES
SHARES GRANTED TO OF STOCK PRICE APPRECIATION
UNDERLYING EMPLOYEES EXERCISE FOR OPTION TERM ($)
OPTIONS IN FISCAL PRICE EXPIRATION ----------------------------
NAME GRANTED YEAR ($/SHARE) DATE 5% 10%
---- ------- ---- --------- ---- -- ---
E.L. Hutton................. 200,000(1) 9.6% $27.02 05/20/12 $3,398,547 $ 8,612,584
J.F. Gemunder............... 550,000(1) 26.5 27.02 05/20/12 9,346,003 23,684,607
1,362(2) -- 20.75 02/07/12 17,774 45,042
1,238(2) -- 27.80 05/07/12 21,644 54,851
1,568(2) -- 21.98 08/08/12 21,675 54,928
1,514(2) -- 22.08 11/06/12 21,023 53,277
P.E. Keefe.................. 120,000(1) 5.8 27.02 05/20/12 2,039,128 5,167,551
D.W. Froesel, Jr. .......... 120,000(1) 5.8 27.02 05/20/12 2,039,128 5,167,551
C.D. Hodges................. 100,000(1) 4.8 27.02 05/20/12 1,699,273 4,306,292
300(2) -- 20.75 02/07/12 3,915 9,921
254(2) -- 27.80 05/07/12 4,441 11,254
326(2) -- 21.98 08/08/12 4,506 11,420
312(2) -- 22.08 11/06/12 4,332 10,979
</Table>
- ---------
(1) All such options were granted on May 20, 2002, provide for
the purchase of shares of Common Stock at a price equal to
the fair market value on the date of grant, become
exercisable in four equal annual installments commencing one
year from the date of grant, and expire 10 years after date
of grant unless previously exercised.
(footnotes continued on next page)
6
<Page>
(footnotes continued from previous page)
(2) Such options were granted on February 7, May 7, August 8 and
November 6, 2002, respectively, and were granted in
connection with the Company's broad-based employee stock
purchase program. These options provide for the purchase of
shares of Common Stock at a price equal to the fair market
value on the date of grant, become exercisable in full four
years from the date of grant (provided the optionee has held
certain related shares of Common Stock purchased under the
program for a minimum of two years), and expire 10 years
from the date of grant unless previously exercised.
-------------------
The following table sets forth information regarding stock options exercised
by the named executives during 2002 and the value of unexercised options held by
the named executives as of December 31, 2002.
AGGREGATED OPTION EXERCISES IN 2002 AND
FISCAL YEAR-END OPTION VALUES
<Table>
<Caption>
NUMBER OF SHARES
UNDERLYING VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES FISCAL YEAR-END FISCAL YEAR-END ($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- ------------ ----------- ------------- ----------- -------------
E.L. Hutton.......... 20,285 $195,876 493,465 642,500 $ 1,864,857 $2,981,158
J.F. Gemunder........ -- -- 1,968,000 1,369,478 15,364,501 5,468,381
P.E. Keefe........... -- -- 274,250 294,250 1,321,357 1,104,866
D.W. Froesel, Jr. ... -- -- 215,500 279,500 999,895 978,620
C.D. Hodges.......... -- -- 280,013 238,804 1,708,771 861,810
</Table>
PENSION PLAN
The Company has a non-qualified pension plan in which the named executives,
other than Messrs. Hutton and Froesel, participate. Retirement benefits under
the pension plan are calculated on the basis of the executive's earnings during
the highest consecutive 60-month period during the executive's last 120 months
of employment ('Final Average Compensation') and years of service. Benefits
payable under the pension plan are reduced for payments under a prior Company
pension plan and are partially reduced for social security benefits. The
following table shows the estimated maximum annual retirement benefits payable
at normal retirement (age 65) under the pension plan at selected compensation
levels after various years of service. Amounts are shown on a 10-year certain
and life form, after the applicable reduction for social security benefits.
PENSION PLAN TABLE
<Table>
<Caption>
YEARS OF SERVICE(2)
FINAL AVERAGE --------------------------------------------------------------------------
COMPENSATION(1) 20 25 30 35 40
--------------- -- -- -- -- --
$1,000,000.................... $ 291,739 $ 364,674 $ 437,609 $ 512,609 $ 587,609
1,500,000.................... 441,739 552,174 662,609 775,109 887,609
2,000,000.................... 591,739 739,674 887,609 1,037,609 1,187,609
2,500,000.................... 741,739 927,174 1,112,609 1,300,109 1,487,609
3,000,000.................... 891,739 1,114,674 1,337,609 1,562,609 1,787,609
3,500,000.................... 1,041,739 1,302,174 1,562,609 1,825,109 2,087,609
4,000,000.................... 1,191,739 1,489,674 1,787,609 2,087,609 2,387,609
4,500,000.................... 1,341,739 1,677,174 2,012,609 2,350,109 2,687,609
5,000,000.................... 1,491,739 1,864,674 2,237,609 2,612,609 2,987,609
5,500,000.................... 1,641,739 2,052,174 2,462,609 2,875,109 3,287,609
</Table>
(footnotes on next page)
7
<Page>
(footnotes from previous page)
(1) For purposes of the pension plan, such compensation
generally includes base salary and incentive compensation,
which for the named executives are set forth in the 'Salary'
and 'Bonus' columns of the Summary Compensation Table, as
well as the value of stock awards vesting during the year.
Covered compensation for 2002 for Messrs. Gemunder and Keefe
and Ms. Hodges was $4,471,453, $1,266,125 and $951,647
respectively.
(2) As of December 31, 2002, Messrs. Gemunder and Keefe and Ms.
Hodges had 39, 22 and 23 years of service, respectively.
SUPPLEMENTAL BENEFIT PLAN
The Company's 2002 Supplemental Benefit Plan provides for a fixed annual
benefit, payable in the form of a straight life annuity, to each of the named
executives, commencing at the later of the participant's 65th birthday or seven
years of credited service after January 1, 2001. The annual benefit for each
named executive, assuming seven years of credited service, is: Mr.
Gemunder -- $287,298; Mr. Keefe -- $91,415; Mr. Froesel -- $160,113; and Ms.
Hodges -- $100,940. The annual benefit would be reduced by approximately 14.96%
for each year of service less than seven. At December 31, 2002, each named
executive had two years of credited service under the plan.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with certain of its
executive officers. Mr. Gemunder's employment agreement provides for his
continued employment as President of the Company through August 3, 2008, subject
to earlier termination under certain circumstances, at his base salary as last
set by the Board of Directors, as well as participation in incentive
compensation plans, stock incentive plans and other employee benefit plans. The
agreement also provides for his continued nomination as a director of the
Company. In the event of termination without cause or a material reduction in
authority or responsibility, the agreement provides that Mr. Gemunder will
receive severance payments equal to 150% of his then-current base salary, the
amount of incentive compensation most recently paid or approved in respect of
the previous year and the fair market value of all stock awards which have
vested during the 12 months prior to termination ('Covered Compensation') for
the balance of the term of the agreement. The provisions of Ms. Hodges'
employment agreement are essentially identical to those of Mr. Gemunder, except
that her agreement provides for her nomination as a director no less frequently
than bi-annually. Mr. Keefe is employed under an agreement that is also
essentially identical to that of Mr. Gemunder, except that director nomination
is not stipulated and severance payments resulting from the conditions described
above would equal 100% of Covered Compensation. Mr. Froesel is employed under an
agreement with a term expiring on March 3, 2005, except that the agreement
automatically renews at that time for a three-year period unless advance notice
of termination is given by either party. In the event the Company were to
terminate Mr. Froesel's employment on account of a change of control of the
Company, he would be entitled to be paid his then-current base salary and cash
bonus compensation for the then-remaining term of the agreement, plus an
additional two-year period, subject to certain limitations specified in the
agreement.
REPORT OF THE COMPENSATION AND INCENTIVE
COMMITTEE ON EXECUTIVE COMPENSATION
The Company believes that executive compensation should be directly and
materially linked to the financial and operating performance of the Company and
increases in stockholder value. The Company's executive compensation program
includes base salary, annual incentive compensation, and long-term incentive
compensation (in the form of stock options and restricted stock awards) and
various benefit plans (including pension plans, savings plans and medical
benefits generally available to salaried employees of the Company).
8
<Page>
The executive compensation program is administered by the Compensation and
Incentive Committee of the Board of Directors. The Committee is comprised solely
of outside directors (i.e., individuals who are not employees of the Company).
The Committee is responsible for the review, approval and recommendation to the
Board of Directors of matters concerning base salary, annual cash incentive
compensation and benefits for key executives of the Company. Recommendations
made by the Committee must be approved by the full Board of Directors. The
Committee also administers the Company's stock incentive plans under which it
reviews and makes grants of stock options and restricted stock awards. The
Committee may use, subject to the provisions of the Company's compensation
plans, its discretion to set executive compensation where, in its judgment,
external, internal or individual circumstances warrant.
BASE SALARY AND ANNUAL INCENTIVE OPPORTUNITY
In determining base salary levels, the Committee considers the executive's
responsibilities, experience, performance and specific issues particular to the
Company. The Committee also considers the compensation practices and
performances of other companies that are likely to compete with the Company for
executive talent. In general, base salaries are set at levels believed by the
Committee to be sufficient to attract and retain qualified executives when
considered with other components of the Company's compensation program.
Annual incentive compensation provides a direct financial incentive to
executives, in the form of an annual bonus, to achieve their business unit's and
the Company's annual goals. The Committee believes that bonuses as a percent of
an executive's salary should be sufficiently high to provide a major incentive
for achieving annual performance targets.
At the beginning of each fiscal year, financial and operational goals are
established, which generally take into account such measures of performance as
sales and earnings growth, profitability, cash flow and return on investment.
Non-financial measures of performance used by the Committee in determining the
annual cash bonus award include organizational development, product or service
expansion and strategic positioning of the Company's assets. Specific relative
weights are not assigned to each performance factor, since the relative
importance of each factor varies depending upon the executive's specific job
responsibilities. Instead, each individual compensation decision is made on a
case-by-case basis and will ultimately depend upon the judgment of the
Committee. However, when determining the annual bonus of the executive officers
listed in the Summary Compensation Table (the 'named executives'), the Committee
acts within the parameters provided for in the Annual Incentive Plan for Senior
Executives, approved by stockholders on May 20, 1996 and re-approved on May 21,
2001. Under that plan, the amount of the annual cash bonus for 2002 was
dependent on the Company's pretax income for 2002, before adjustments for the
cumulative effect of accounting changes and special charges, reaching certain
target levels established at the beginning of the year.
LONG-TERM INCENTIVE COMPENSATION
The stock option and restricted stock program forms the basis of the
Company's long-term incentive plan for executives. This program seeks to align
executive and long-term stockholder interests by creating a strong and direct
link between executive compensation and stockholder return.
Stock options and restricted stock awards are granted annually and are
generally the primary incentive for long-term performance as they are granted at
or above fair market value and have vesting restrictions which generally lapse
over four to seven-year periods. The Committee considers each grantee's current
stock option and award holdings in making such grants. Both the amounts of
restricted stock awards and the proportion of stock options increase as a
function of higher salary and position of responsibility within the Company.
For the named executives, the restricted share awards for 2002 under the
1992 Long-Term Stock Incentive Plan were dependent upon the growth of the
Company's earnings per share, before the cumulative effect of accounting changes
and special charges, for fiscal year 2002 meeting certain thresholds established
at the beginning of the year.
9
<Page>
POLICY ON DEDUCTIBILITY OF COMPENSATION
Section 162(m) limits to $1,000,000 the amount that may be deducted by a
publicly held company for compensation paid each year to each of its five most
highly paid executive officers. Federal law excludes compensation from the
$1,000,000 limit if it is paid under specified conditions, including that the
compensation is based on performance goals determined by a committee of
'outside' directors and approved by the Company's stockholders. The Annual
Incentive Plan for Senior Executive Officers, approved by stockholders on May
20, 1996 (and re-approved on May 21, 2001), and amendments to the 1992 Long-Term
Stock Incentive Plan, approved by stockholders on May 19, 1997 (and re-approved
on May 20, 2002), brought the plans into compliance with Section 162(m) relating
to performance-based compensation. The Committee's present intention is to
comply in the future with Section 162(m) unless the Committee believes that such
compliance would not be in the best interests of the Company and its
stockholders.
STOCK OWNERSHIP GUIDELINES
Historically, the Company has encouraged the ownership of Company stock in a
number of ways. For example, a broad group of employees, including all members
of senior management, are paid a significant portion of their annual incentive
compensation in the form of restricted stock. In addition, periodic stock option
grants are made to key employees, including senior management. Non-employee
directors of the Company are paid 50 percent of their annual retainer fees in
the form of restricted stock with the option to receive all such fees in such
stock, and all directors receive annual unrestricted stock awards. All employees
of the Company are provided the opportunity to own Company stock through various
benefit programs, such as the Company's 401(k) Plan and the Omnicare StockPlus
Program, a broad-based employee stock purchase and stock option program.
In order to further encourage executive stock ownership, the Company adopted
stock ownership guidelines in February 2002 to encourage each executive to
achieve and maintain an appropriate ownership stake in the Company. The
ownership levels are based on a multiple of base salary, ranging from a goal of
five times base salary for the President and Chief Executive Officer and from
one to three and one-half times for other officers. Mr. Gemunder has met the
established guidelines. Until an executive has reached his or her target
ownership, he or she will be required to hold 50%, in the case of officers other
than vice presidents, and 20% in the case of vice presidents, of the after-tax
number of shares acquired by the executive upon the exercise of stock options or
the vesting of restricted stock awards.
COMPENSATION OF THE COMPANY'S PRESIDENT AND CHIEF EXECUTIVE OFFICER
In determining Mr. Gemunder's overall compensation and each component
thereof, the Committee took into consideration the report of Compensation
Strategies, Inc., independent professional compensation consultants, and the
financial measures cited above. Mr. Gemunder's salary was increased to
$1,150,000 on February 1, 2002 from the $950,000 that had been his base salary
since July 1, 2000. This increase was based on a survey performed by The Hay
Group, then outside compensation consultants to the Company.
In determining incentive compensation for the Company's executives,
including Mr. Gemunder, the Committee reviewed the reports and recommendations
of Compensation Strategies, Inc., as well as the Company's performance,
particularly in view of the challenging business environment in 2002. In
addition, after a nearly three-year hiatus in making acquisitions, the Company
completed the acquisition of American Pharmaceutical Services, Inc. ('APS') and
successfully integrated APS into Omnicare's institutional pharmacy business,
realizing anticipated economies of scale and cost savings on time and at
targeted levels. The Company experienced strong earnings growth in 2002, the
product of solid sales growth leveraged by the cost reduction and productivity
enhancement initiatives implemented during the 1999-2000 and 2001-2002 periods
and the successful integration of APS. Additionally, the Company continued to
strengthen its balance sheet in 2002 and enhance its cash flow from operations,
which reached a record level in 2002. Based on the strength of its cash flow, in
2002 the Company was able to pay down $120 million of bank debt, which amount
exceeded the amount paid for APS in January 2002.
10
<Page>
Moreover, in January 2003, Omnicare completed the acquisition of NCS HealthCare,
Inc. ('NCS'), the fourth largest institutional pharmacy in the United States. A
long and hard-fought legal battle for NCS was won owing to the disciplined yet
determined efforts led by Mr. Gemunder to successfully complete this
acquisition, which is expected to be accretive to Omnicare in 2003 and beyond.
In determining Mr. Gemunder's compensation, the Committee also considered the
Company's performance versus its competitors, the fact that stock-based awards
in particular should provide substantial incentive to Mr. Gemunder to achieve
the long-term goals of the Company, and the advice of its consultants.
Compensation Strategies, Inc. has concluded that Mr. Gemunder's overall
compensation in 2002 was representative of the Company's current marketplace,
and reflects the Company's strong financial performance and position,
particularly in view of the operating environment.
Annual performance not only drives the payout of the Annual Incentive Plan
but it also is used in determining the size of the long-term incentive grant of
restricted stock awards. Acknowledging the success the Company has achieved in
2002 over the financial results for 2001, as well as the successes achieved in
its acquisition efforts, the Committee recommended a significant overall
increase in incentive compensation versus the prior year. The Committee
recommended that both the cash portion of incentive compensation and stock-based
incentives be increased. In March 2003 the Committee awarded Mr. Gemunder a base
cash bonus of $2,200,000 and granted him 217,822 shares of restricted stock for
2002. Such shares vest over a seven-year period with a greater proportion
vesting in the later years. In addition, in May 2002, as long-term compensation,
Mr. Gemunder was granted options to purchase 550,000 shares of Common Stock at
option prices equal to the fair market value at the date of grant.
The Committee believes that it is key to the Company's success that it
primarily motivate and reward Mr. Gemunder for increasing top and bottom line
results and for implementing a financial and business strategy that will promote
growth and enhance stockholder value. Accordingly, the Committee believes that
in granting 2002 incentive compensation it has put in place substantial
incentives that most directly align the interest of management with those of the
stockholders.
Compensation and Incentive Committee:
Sheldon Margen, M.D., Chairman
Andrea R. Lindell, DNSc, RN
Charles H. Erhart, Jr.
COMPENSATION AND INCENTIVE COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. E.L. Hutton and J.F. Gemunder, executive officers of the Company,
are directors of Chemed. In addition, Mr. Erhart, a member of the Compensation
and Incentive Committee, is a director of Chemed.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company subleased offices from Chemed for part of 2002, and during 2002
was also charged for the occasional use of Chemed's corporate aviation
department, rent and other incidental expenses based on Chemed's cost. The
Company reimburses Chemed for all such services at rates that are essentially
equal to those which would have been incurred if the Company had obtained such
services from other parties. During 2002, such reimbursements totaled $327,874.
Sandra E. Laney is a director of the Company and a member of the Company's
Audit Committee. Ms. Laney's spouse, D. Michael Laney, is Vice
President -- Management Information Systems of the Company. For services
rendered in 2002, the Company paid Mr. Laney $187,913 as salary and $25,595 in
bonus and, under the Company's stock award program, awarded him 12,355 shares of
restricted common stock with a dollar value of $311,964, which shares vest over
seven years with the greater portion vesting in the later years. Mr. Laney
receives dividends on the awarded restricted shares. In addition, in 2002, the
Company granted Mr. Laney options to purchase 27,964 shares of common stock of
the Company at an average option price of $26.88 per share under the Company's
1998 Long-Term Employee Incentive Plan. The options are for a term of 10 years
and become exercisable ratably over
11
<Page>
four years, in the case of 27,000 of such options, and become exercisable in
full after four years, in the case of 964 of such options. Mr. Laney is also a
participant in the Company's 401(k) Plan and, as such, was credited a Company
contribution of 192 shares of Company stock with a dollar value of $4,321 for
2002. Mr. Laney participates in the Company's split dollar insurance program.
For 2002, the present value of future benefits derived from premium payments
made by the Company for the benefit of Mr. Laney under the split dollar program,
which provides for refund of premiums to the Company upon termination of the
policy, was $3,981. The Company paid life insurance premiums of $639 for Mr.
Laney in 2002. Mr. Laney also participates in the Company's 2002 Supplemental
Benefit Plan described at page 8. His annual benefit under the plan, assuming
seven years of credited service, is $12,545.
COMPARATIVE STOCK PERFORMANCE
The following graph compares the cumulative total return for the last five
years on a $100 investment (assuming dividend reinvestment) on December 31, 1997
in each of the Company's Common Stock, the Standard & Poor's 500 Stock Index and
the OCR Peer Group Index.
CUMULATIVE TOTAL STOCKHOLDER RETURN FOR
FIVE-YEAR PERIOD ENDED DECEMBER 31, 2002
[PERFORMANCE GRAPH]
<Table>
<Caption>
DECEMBER 31,
-----------------------------------------------------
1997 1998 1999 2000 2001 2002
---- ---- ---- ---- ---- ----
Omnicare, Inc............................. $100 $112.37 $ 39.03 $ 70.82 $ 81.82 $78.67
S&P 500................................... 100 128.58 155.63 141.46 124.65 97.10
OCR Peer Group............................ 100 86.62 38.35 64.92 79.50 64.98
</Table>
The OCR Peer Group Index includes the following companies: Alterra
Healthcare Corp., AmerisourceBergen Corporation, Beverly Enterprises Inc.,
Genesis Health Ventures Inc., Manor Care, Inc., NCS HealthCare Inc., Parexel
International Corp., Pharmaceutical Product Development Inc., PSS World Medical
Inc., and Sunrise Assisted Living Inc. The total return calculations reflected
in the foregoing graph were performed by Standard & Poor's Compustat Services,
Inc.
12
<Page>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of December 31, 2002, with
respect to the only person known to the Company to beneficially own more than 5%
of the shares of its Common Stock:
<Table>
<Caption>
NUMBER OF SHARES
NAME AND AND NATURE
ADDRESS OF OF BENEFICIAL PERCENT OF
BENEFICIAL OWNER OWNERSHIP(a) CLASS(a)
---------------- ------------ --------
T. Rowe Price Associates, Inc. ............................ 13,050,716(b) 13.8%
100 E. Pratt Street
Baltimore, MD 21202
</Table>
- ---------
(a) Under applicable Securities and Exchange Commission
regulations, shares are treated as 'beneficially owned' if a
person has or shares voting or dispositive power with
respect to the shares or has a right to acquire the shares
within 60 days of December 31, 2002. Unless otherwise
indicated, sole voting power and sole dispositive power are
exercised by the named person. In calculating 'Percent of
Class' for a person, shares which may be acquired by the
person within such 60-day period are treated as owned by the
person and as outstanding shares.
(b) T. Rowe Price Associates, Inc. ('Price Associates') is an
investment adviser that has sole dispositive power with
respect to 13,000,210 of the listed shares and sole voting
power with respect to 2,016,846 of the shares and neither
shared voting nor shared dispositive power with respect to
any of the shares. These securities are owned by various
individual and institutional investors including T. Rowe
Price Mid-Cap Growth Fund, Inc. (which owns 5,100,000
shares, representing 5.4% of the shares outstanding), for
which Price Associates serves as investment adviser with
power to direct investments and/or sole power to vote the
securities. For purposes of the reporting requirements of
the Securities Exchange Act of 1934, Price Associates is
deemed to be a beneficial owner of such securities; however,
Price Associates expressly disclaims that it is, in fact,
the beneficial owner of such securities.
--------------
The following table sets forth information as of March 28, 2003, with
respect to the shares of Common Stock beneficially owned by each of the nominees
and directors, each of the named executives, and all directors and executive
officers of the Company as a group:
<Table>
<Caption>
NUMBER OF SHARES
AND NATURE OF PERCENT OF
INDIVIDUAL OR GROUP OWNERSHIP CLASS(a)(b)
------------------- --------- -----------
E.L. Hutton................................................. 433,601(c) 1.1%
607,215(d)
3,408(e)
J.F. Gemunder............................................... 1,053,020(c) 3.4%
2,186,750(d)
14,913(f)
T.E. Bien................................................... 131,004(c)
145,250(d)
C.H. Erhart, Jr............................................. 31,443(c)
D.W. Froesel, Jr............................................ 204,596(c)
266,750(d)
C.D. Hodges................................................. 247,926(c)
322,513(d)
P.E. Keefe.................................................. 237,506(c)
329,250(d)
S.E. Laney.................................................. 84,973(c)
113,510(d)
A.R. Lindell, DNSc, RN...................................... 5,732(c)
S. Margen, M.D.............................................. 24,356(c)
K.J. McNamara............................................... 5,158(c)
</Table>
(table continued on next page)
13
<Page>
(table continued from previous page)
<Table>
<Caption>
NUMBER OF SHARES
AND NATURE OF PERCENT OF
INDIVIDUAL OR GROUP OWNERSHIP CLASS(a)(b)
------------------- --------- -----------
J.H. Timoney................................................ 12,309(c)
All directors, nominees, and executive officers as a group 2,481,854(c) 6.6%
(14 persons).............................................. 4,010,488(d)
3,408(e)
14,913(f)
</Table>
- ---------
(a) Under applicable Securities and Exchange Commission
regulations, shares are treated as 'beneficially owned' if a
person has or shares voting or dispositive power with
respect to those shares or has a right to acquire the shares
within 60 days of March 28, 2003. Unless otherwise
indicated, sole voting power and sole dispositive power are
exercised by the named person. In calculating 'Percent of
Class' for a person, shares which may be acquired within
such 60-day period are treated as owned by the person and as
outstanding shares.
(b) Percent of Class is not shown if less than 1%.
(c) Shares held in individual capacity (or together with a
member of his or her household) as to which such person has
voting and dispositive powers (and includes shares allocated
as of December 31, 2002 to the account of each named person
or member of the group under the Company's Employees'
Savings and Investment Plan and its Employee Stock Ownership
Plan).
(d) Shares subject to outstanding options exercisable within 60
days from March 28, 2003.
(e) Mr. E.L. Hutton is a trustee of the E.L. Hutton Foundation,
which holds 3,408 shares of Common Stock over which he holds
both voting and dispositive powers.
(f) Mr. Gemunder is a trustee of the Joel F. Gemunder
Foundation, which holds 14,913 shares of Common Stock over
which he holds both voting and dispositive powers.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) of the Securities Exchange Act of 1934, as amended,
persons deemed to be executive officers of the Company, directors of the
Company, and beneficial owners of more than 10% of the Common Stock are required
to file with the Securities and Exchange Commission initial reports of ownership
and reports of changes in ownership of Common Stock and other equity securities
of the Company. The Company believes that, during 2002, all such persons
complied with these filing requirements. In making these statements, the Company
has relied upon the facts of which it is specifically aware and, in the case of
its directors and officers, upon their written representations.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD
The Audit Committee is comprised of four members of the Company's Board of
Directors. Each member of the Audit Committee is independent as 'independence'
is defined at Sections 303.01(B)(2)(a) and (B)(3) of the New York Stock
Exchange's listing standards. The duties and responsibilities of the Audit
Committee are set forth in the Audit Committee Charter, which the Board of
Directors adopted on May 15, 2000 and was included as Appendix A to the
Company's 2001 Proxy Statement. The Audit Committee, among other things,
recommends to the Board of Directors (i) that the audited financial statements
be included in the Company's Annual Report on Form 10-K and (ii) the selection
of the independent accountants to audit the books and records of the Company.
The Audit Committee has (i) reviewed and discussed the Company's audited
financial statements for the year ended December 31, 2002 with the Company's
management and with the Company's independent auditors; (ii) discussed with the
Company's independent auditors the matters required to be discussed by SAS 61
(Codification for Statements on Auditing Standards); and (iii) received and
discussed the written disclosures and the letter from the Company's independent
auditors required by Independence Standards Board Statement No. 1 (Independence
Discussions with Audit Committees). Based on such review and discussions with
management and the independent auditors, the Committee
14
<Page>
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 year ended
December 31, 2002 for filing with the U.S. Securities and Exchange Commission.
The Audit Committee:
Charles H. Erhart, Jr., Chairman
Sandra E. Laney
Andrea R. Lindell, DNSc, RN
John H. Timoney
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected the firm of PricewaterhouseCoopers LLP
as independent accountants for the Company and its consolidated subsidiaries for
the year 2003. The Board engaged PricewaterhouseCoopers LLP
('PricewaterhouseCoopers') to audit Omnicare's consolidated financial statements
and to perform certain other non-audit services.
Aggregate fees for professional services rendered for the Company by
PricewaterhouseCoopers for the years ended December 31, 2002 and 2001, were (in
thousands):
<Table>
<Caption>
FEES 2002 2001
---- ---- ----
Audit.................................................... $ 872.0 $ 738.0
Audit-Related............................................ 2,137.0 1,765.0
Tax...................................................... 42.0 28.0
All Other................................................ 0.0 0.0
-------- --------
Total................................................ $3,051.0 $2,531.0
-------- --------
-------- --------
</Table>
Audit fees for the years ended December 31, 2002 and 2001, respectively,
were for professional services rendered for the audits of the consolidated
financial statements of the Company, as well as statutory audits, issuance of
consents, income tax provision procedures and assistance with review of
documents filed with the Securities and Exchange Commission.
Audit-related fees for the years ended December 31, 2002 and 2001,
respectively, were for assurance and related services primarily attributable to
acquisition-related financial due diligence and agreed-upon procedures
(including those for deferred payments and the Company's restructuring
programs), as well as employee benefit plan audits and consultations concerning
financial accounting and reporting standards.
Tax fees for the years ended December 31, 2002 and 2001, respectively, were
for services related to review of certain of the Company's benefit plans.
There were no other fees incurred for the years ended December 31, 2002 and
2001.
AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES
The Company's Audit Committee has not yet adopted or enacted pre-approval
policies and procedures for audit, audit-related, tax and other services.
Therefore, the proxy disclosure does not include pre-approval policies and
procedures and related information. The Company is early-adopting components of
the proxy fee disclosure requirements. These disclosure requirements do not
become effective until periodic annual filings for the first fiscal year ending
after December 15, 2003.
In engaging PricewaterhouseCoopers for these services, management considered
whether the provision of these services was compatible with maintaining
PricewaterhouseCoopers' independence.
PricewaterhouseCoopers (and its predecessor) has acted as independent
accountants for the Company and its consolidated subsidiaries since 1981.
Although the submission of this matter to the stockholders is not required by
law or the By-Laws of the Company, the selection of PricewaterhouseCoopers will
be submitted for ratification at the Annual Meeting. The affirmative vote
15
<Page>
of a majority of the shares represented at the meeting is necessary to ratify
the selection of PricewaterhouseCoopers. If the selection is not ratified at the
meeting, the Board of Directors will reconsider its selection of independent
accountants.
It is expected that a representative of PricewaterhouseCoopers will be
present at the Annual Meeting. Such representative will have the opportunity to
make a statement if he or she desires to do so and will be available to respond
to questions raised at the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION.
STOCKHOLDER PROPOSALS
Any stockholder proposal intended to be considered for inclusion in the
proxy materials for presentation at the 2004 Annual Meeting of Stockholders must
be in writing and received by the Secretary of the Company not later than
December 11, 2003. If any stockholder who intends to propose any other matter to
be acted on at the 2004 Annual Meeting of Stockholders does not inform the
Company of such matter by February 24, 2004, the persons named as proxies for
the 2004 Annual Meeting of Stockholders will be permitted to exercise
discretionary authority to vote on such matter even if the matter is not
discussed in the proxy statement for that meeting.
OTHER MATTERS
As of February 24, 2003, the Company did not know of any other matter which
will be presented for consideration at the Annual Meeting. However, if any other
matter should come before the meeting, the persons named in the enclosed proxy
(or their substitutes) will have discretionary authority to vote on the matter.
EXPENSES OF SOLICITATION
The expense of soliciting proxies in the accompanying form will be borne by
the Company. The Company will request banks, brokers and other persons holding
shares beneficially owned by others to send proxy materials to the beneficial
owners and to secure their voting instructions, if any. The Company will
reimburse such persons for their expenses in so doing. In addition to
solicitation by mail, officers and regular employees of the Company may, without
extra remuneration, solicit proxies personally, by telephone or by telegram from
some stockholders, if such proxies are not promptly received. The Company also
expects to retain D. F. King & Co., Inc., a proxy-soliciting firm, to assist in
the solicitation of such proxies at a cost that will not exceed $8,000 plus
reasonable expenses.
By Order of the Board of Directors
Cheryl D. Hodges
Secretary
April 11, 2003
16
Appendix 1
PROXY
OMNICARE, INC.
100 E. RiverCenter Boulevard
Covington, Kentucky 41011
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
STOCKHOLDERS, MAY 19, 2003
The undersigned hereby appoints E. L. Hutton, J. F. Gemunder and C.D. Hodges as
Proxies, each with the power to appoint a substitute, and hereby authorizes them
to represent and to vote, as designated below, all the shares of common stock of
Omnicare, Inc. held of record by the undersigned as of March 28, 2003 at the
Annual Meeting of Stockholders to be held on May 19, 2003, or at any adjournment
thereof.
Election of Directors
Nominees:
Edward L. Hutton David W. Froesel, Jr. Cheryl D. Hodges
Joel F. Gemunder Sandra E. Laney Patrick E. Keefe
Charles H. Erhart, Jr Andrea R. Lindell, DNSc Sheldon Margen, M.D
John H. Timoney
(Continued and to be signed on other side)
- --------------------------------------------------------------------------------
X Please mark your votes as in this example.
- ---
1. Election of Directors
(Please see reverse)
FOR ALL NOMINEES
-----
WITHHELD FROM ALL NOMINEES
-----
-----------------------------------------------
For all nominees, except as written above
---
2. To ratify the selection of independent accountants.
FOR AGAINST ABSTAIN
----- ----- -----
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSALS (1) AND (2).
When signed on behalf of a corporation, partnership, estate, trust, or other
stockholder, state your title or capacity or otherwise indicate that you are
authorized to sign. (Please sign exactly as name(s) appear at left) PLEASE MARK,
SIGN, DATE AND RETURN PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
Please sign this proxy exactly as name appears hereon. When shares are held by
joint tenants, both should sign. When signing as attorney, administrator,
trustee or guardian, please give full title as such.
Signature: Date: Signature: Date:
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