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
WARNER-LAMBERT COMPANY
.................................................................
(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:
.......................................................
NOTICE OF ANNUAL
MEETING AND PROXY
STATEMENT
-----------------
1997
[LOGO]
Notice of Annual Meeting of Stockholders 201 Tabor Road
April 22, 1997 Morris Plains
New Jersey 07950
The Annual Meeting of Stockholders of Warner-Lambert Company
('Warner-Lambert') will be held at the Parsippany Hilton Hotel, One Hilton
Court, Parsippany, New Jersey on Tuesday, April 22, 1997, at 10:30 a.m., Eastern
Daylight Saving Time, for the following purposes:
1 to elect a Board of twelve directors of Warner-Lambert to hold office for the
ensuing year;
2 to approve the appointment of independent accountants for 1997; and
3 to transact such other business as may properly come before the meeting or any
adjournment or adjournments thereof.
The Board of Directors of Warner-Lambert has fixed the close of business on
February 21, 1997 as the record date for the determination of stockholders
entitled to receive notice of and to vote at the meeting. A list of the
stockholders entitled to vote will be open to the examination of stockholders at
Warner-Lambert Company, 35 Waterview Boulevard, Parsippany, New Jersey during
ordinary business hours from April 8, 1997 to the date of the meeting.
Whether or not you plan to attend the meeting in person, please vote, sign
and date the enclosed proxy and return it in the enclosed envelope, which
requires no postage if mailed in the United States, as soon as possible in order
that you may be represented at the meeting. If you attend the meeting and wish
to vote in person, your Proxy will not be used.
Admittance Cards are required for attendance at the meeting. If you plan to
attend the meeting, please mark the box provided on the Proxy, and an Admittance
Card will be sent to you. If you do not wish to send the Proxy, you may enclose
your own request in the envelope and receive an Admittance Card.
Warner-Lambert has approximately 40,000 holders of Common Stock, many of
whom own less than 100 shares. To ensure proper representation at the meeting,
it is important, however small your holdings, that you vote, sign, date and
return your Proxy promptly. Prompt return of your Proxy will help to reduce
expenses.
By Order of the Board of Directors
Rae G. Paltiel
Secretary
March 7, 1997
[LOGO]
1
Proxy Statement for Annual Meeting of Stockholders of 201 Tabor Road
Warner-Lambert Company Morris Plains
New Jersey 07950
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Warner-Lambert Company ('Warner-Lambert' or the 'Company')
of Proxies to be voted at the Annual Meeting of Stockholders to be held on
Tuesday, April 22, 1997, and any adjournment or adjournments thereof, for the
purposes set forth in the accompanying Notice of Meeting. The mailing of this
Proxy Statement and accompanying form of Proxy to stockholders will commence on
March 7, 1997.
General
The Board of Directors knows of no business which will be presented to the
meeting other than the matters referred to in the accompanying Notice of
Meeting. However, if any other matters are properly presented to the meeting, it
is intended that the persons named in the Proxy will vote the same and act in
accordance with their judgment. Shares represented by properly executed Proxies
received on behalf of Warner-Lambert will be voted at the meeting in the manner
specified therein. If no instructions are specified in a signed Proxy returned
to Warner-Lambert, the shares represented thereby will be voted in favor of the
election of the directors listed in the enclosed Proxy, and in favor of the
appointment of Price Waterhouse LLP as independent accountants for 1997. Any
Proxy may be revoked by the person giving it at any time prior to being voted.
Only holders of Common Stock, $1 par value, whose names appear of record on
the books of Warner-Lambert at the close of business on February 21, 1997, are
entitled to vote at the meeting. At the close of business on that date there
were 271,597,188 shares of Common Stock outstanding. Each share of Common Stock
is entitled to one vote on each matter to be presented at the meeting.
For purposes of determining the number of votes cast on any matter, only
those cast for or withheld from a nominee for director or those cast for or
against the appointment of Price Waterhouse LLP are included. Abstentions and
broker non-votes are counted only for purposes of determining whether a quorum
is present.
Election of Directors
Pursuant to authority contained in the By-Laws, the Board of Directors has
established the number of directors to be elected at the 1997 Annual Meeting of
Stockholders at twelve. Accordingly, a slate of twelve directors, consisting of
the persons named below, is to be elected at the meeting to serve for the
ensuing year. Each nominee is a director at the present time. No nominee for
director is related to any other nominee or officer of Warner-Lambert or its
subsidiaries or other affiliates. All nominees were recommended to the
stockholders for election at the Annual Meeting by the Board of Directors, based
upon a prior recommendation to the Board by the Nominating and Organization
Committee. Each nominee will be elected a director by a majority of the votes
cast for such nominee.
[LOGO]
2
Nominees for Election as Directors
[PHOTO OF ROBERT N. BURT]
ROBERT N. BURT
Age 59 First Elected Director: 1995
Chairman of the Board and Chief Executive Officer, FMC
Corporation
(Chemical and machinery manufacturing)
Mr. Burt joined FMC Corporation in 1973 as Director of
Corporate Planning. He took over FMC's agricultural
products in 1976 and was elected Vice President in 1978.
He served as General Manager of FMC's Defense Systems
Group from 1983 to 1988 when he was named Executive Vice
President. He served as President of FMC from 1990 to 1993
and was appointed Chairman of the Board and Chief
Executive Officer in 1991. Mr. Burt has served on FMC's
Board of Directors since 1989. Mr. Burt received a B.S.
degree in chemical engineering from Princeton University
and an M.B.A. from Harvard Business School. He is a
director of Phelps Dodge Corporation, the World Resources
Institute, the Rehabilitation Institute of Chicago and
Evanston Hospital. Mr. Burt is a member of the Business
Roundtable's Policy and Planning Committee, the Illinois
Business Roundtable and the Defense Policy Advisory
Committee on Trade. He is also Vice Chairman and Trustee
of the Chicago Symphony Orchestra.
[PHOTO OF DONALD C. CLARK]
DONALD C. CLARK
Age 65 First Elected Director: 1984
Retired Chairman of the Board and Chief Executive Officer
of Household International, Inc. (Financial services)
Mr. Clark joined Household International, Inc. in 1955 and
held various executive positions before serving as
President from 1977 to 1988, Chief Executive Officer from
1982 to 1994 and Chairman of the Board from 1984 to 1996,
when he retired. Mr. Clark received a degree in business
administration from Clarkson University and an M.B.A. from
Northwestern University. He is a director of Ameritech
Corporation, Armstrong World Industries, Inc., PMI Group,
Inc., Ripplewood Holdings, L.L.C. and Scotsman Industries
Inc. He also serves as Life Trustee of Northwestern
University and as a Trustee of Clarkson University.
[LOGO]
3
[PHOTO OF LODEWIJK J. R. DE VINK]
LODEWIJK J. R. DE VINK
Age 52 First Elected Director: 1991
President and Chief Operating Officer of Warner-Lambert
Mr. de Vink joined Warner-Lambert in 1988 as Vice
President and President, International Operations. In
1990, he was appointed Executive Vice President and
President, U.S. Operations, and in 1991, he was elected to
his present position as President and Chief Operating
Officer. Previously, he was employed by Schering-Plough
Corporation in various management and executive positions,
advancing to Senior Vice President, Schering
International, in 1984 and President, Schering
International, in 1986. Mr. de Vink graduated from
Nijenrode, The Netherlands School of Business. He holds a
B.B.A. from Washburn University and an M.B.A. from
American University. Mr. de Vink is a director of NYNEX
Corporation and the United Negro College Fund. He is also
a director of the National Actors' Theater, a Trustee of
the National Foundation for Infectious Diseases and a
member of the International Advisory Board of Nijenrode
University.
[PHOTO OF JOHN A. GEORGES]
JOHN A. GEORGES
Age 66 First Elected Director: 1983
Retired Chairman of the Board and Chief Executive Officer
of International Paper (Packaging, paper and forest
products)
Mr. Georges joined International Paper in 1979 as
Executive Vice President. He was named Vice Chairman in
1980, President and Chief Operating Officer in 1981,
President and Chief Executive Officer in 1984, and
Chairman of the Board and Chief Executive Officer in 1985,
which position he held until his retirement in 1996. Mr.
Georges received a B.S. in chemical engineering from the
University of Illinois and holds an M.S. in business
administration from Drexel University. Mr. Georges is a
director of International Paper, AK Steel Corporation and
Ryder System, Inc. He is a Board member and Trustee of the
Public Policy Institute of The Business Council of New
York State, a member of The Business Council, The Business
Roundtable, the Trilateral Commission, Bankers Trust
European Advisory Board and President and a member of the
Board of the University of Illinois Foundation.
[LOGO]
4
[PHOTO OF MELVIN R. GOODES]
MELVIN R. GOODES
Age 61 First Elected Director: 1985
Chairman of the Board and Chief Executive Officer of
Warner-Lambert
Mr. Goodes joined Warner-Lambert in 1965 and held various
managerial and executive positions, serving as President,
Warner-Lambert Mexico from 1970 to 1976, President,
Pan-American Zone, from 1976 to 1977, President,
Pan-American/Asian Zone, from 1977 to 1979 and President,
Consumer Products Division, from 1979 to 1983. Mr. Goodes
was elected Vice President in 1977, Senior Vice President
in 1980, Executive Vice President and President, U.S.
Operations, in 1984 and President and Chief Operating
Officer in 1985. In 1991, he was elected to his current
position as Chairman of the Board and Chief Executive
Officer. Mr. Goodes is a graduate of Queen's University,
Kingston, Ontario, Canada, of which he is currently a
Trustee, and received an M.B.A. from the University of
Chicago. He is a director of Ameritech Corporation, The
Chase Manhattan Corporation and Unisys Corporation. He is
also a director of the International Executive Service
Corps and the New Jersey Performing Arts Center. Mr.
Goodes is a member of the Industry Policy Advisory
Committee, The Conference Board, the Advisory Board of the
American Paralysis Association and the University of
Chicago Advisory Council of the Graduate School of
Business. He is a director and a member of the Executive
Committee of the National Council on Economic Education
and a Trustee of the University of Chicago Council of the
Division of Biological Sciences.
[PHOTO OF WILLIAM H. GRAY III]
WILLIAM H. GRAY III
Age 55 First Elected Director: 1991
President and Chief Executive Officer of the United Negro
College Fund
Mr. Gray was appointed President and Chief Executive
Officer of the United Negro College Fund in 1991. He has
also served as the Senior Minister of the Bright Hope
Baptist Church since 1963. From 1968 through 1972, Mr.
Gray was a lecturer at Jersey City State College, Rutgers
University and Montclair State College. He was an
Assistant Professor and a director of St. Peter's College
from 1970 to 1974. Mr. Gray served as a Congressman from
the Second District of Pennsylvania from 1979 to 1991.
During his tenure, he was Chairman of the House Budget
Committee, a member of the Appropriations Committee,
Chairman of the House Democratic Caucus and Majority Whip.
Mr. Gray received a B.A. from Franklin and Marshall
College, a Master of Theology from Drew Theological
Seminary and a Master of Theology from Princeton
Theological Seminary. He is a director of Electronic Data
Systems Corporation, The Chase Manhattan Corporation,
Municipal Bond Investors Assurance Corporation, The
Prudential Insurance Company of America, Rockwell
International Corp., Union Pacific Corporation and
Westinghouse Electric Corporation.
[LOGO]
5
[PHOTO OF WILLIAM R. HOWELL]
WILLIAM R. HOWELL
Age 61 First Elected Director: 1983
Chairman Emeritus, J.C. Penney Company, Inc. (Retailing)
Mr. Howell joined J.C. Penney Company, Inc. in 1958. After
holding various management positions, he became Western
Regional Vice President in 1976 and a Senior Vice
President and Director of Merchandising and Marketing in
1979. Mr. Howell served as Executive Vice President from
1981 to 1983 and Chairman of the Board and Chief Executive
Officer from 1983 until 1997, when he retired. In
February, 1997, Mr. Howell was elected Chairman Emeritus.
Mr. Howell holds a degree in business management from the
University of Oklahoma. Mr. Howell is a director of
Bankers Trust New York Corporation, Bankers Trust Company,
Exxon Corporation, Halliburton Company and The Williams
Companies, Inc. He is currently Chairman of the Southern
Methodist University's Board of Trustees, a past Trustee
of the National Urban League and a past member of the
Board of Governors of United Way of America.
[PHOTO OF LASALLE D. LEFFALL, JR., M.D.]
LASALLE D. LEFFALL, JR., M.D.
Age 66 First Elected Director: 1988
Charles R. Drew Professor of Surgery, Howard University
College of Medicine; Professorial Lecturer in Surgery,
Georgetown University
Dr. Leffall has served as Professor of Surgery at Howard
University College of Medicine since 1970. In 1992, he was
named the Charles R. Drew Professor of Surgery. Dr.
Leffall also served as Chairman of the Department of
Surgery at Howard University College of Medicine from 1970
to 1995. He is also a Professorial Lecturer in Surgery at
Georgetown University. He received a B.S. from Florida A&M
and an M.D. from Howard University. Dr. Leffall is a
director of Mutual of America and Tyco Toys, Inc. He is
President and a Fellow of the American College of
Surgeons, a consultant to the National Cancer Institute
and a Diplomate of the American Board of Surgery. Dr.
Leffall is also a member of the National Urban League, the
National Association for Advancement of Colored People,
the Young Men's Christian Association, Cosmos Club and
Greater Washington Research Center.
[LOGO]
6
[PHOTO OF PATRICIA SHONTZ LONGE, Ph.D.]
PATRICIA SHONTZ LONGE, Ph.D.
Age 63 First Elected Director: 1975
Economist; Senior Partner of The Longe Company
(Economic consulting and investments)
Dr. Longe received a B.S. and an M.B.A. from the
University of Detroit and a Ph.D. in economics from Wayne
State University. Dr. Longe has been an economist since
1963. She served as Professor of Business Administration
at the University of Michigan from 1973 to 1986 and as
Adjunct Professor of Business Administration from 1986 to
1988. Dr. Longe has been a Senior Partner of The Longe
Company, an economic consulting and investment firm, since
1981. She is a director of Comerica Incorporated, Comerica
Bank & Trust, F.S.B., The Detroit Edison Company, Jacobson
Stores, Inc., The Kroger Co. and The Immokalee Foundation,
Inc.
[PHOTO OF ALEX J. MANDL]
ALEX J. MANDL
Age 53 First Elected Director: 1995
Chairman and Chief Executive Officer, Associated
Communications, L.L.C. (Telecommunications)
Mr. Mandl joined Associated Communications in August, 1996
as Chairman and Chief Executive Officer. Previously, he
held several executive positions at AT&T Corp., including
Chief Financial Officer from 1991 to 1993 and Executive
Vice President -- AT&T and Chief Executive Officer and
President of AT&T's Communications Services Group from
1993 to 1996. Prior to joining AT&T, Mr. Mandl was
Chairman of the Board and Chief Executive Officer of
Sea-Land Service, Inc., which position he held from 1988
to 1991. From 1980 to 1988, Mr. Mandl held various
executive positions with Seaboard Coast Line Industries.
He is a director of Forstmann Little & Co. and General
Instrument Corp. He is also director of the Walter A. Haas
School of Business at the University of California at
Berkeley, Willamette University, Carnegie Hall, the Museum
of Television and Radio and WETA Public Television and
Radio. Mr. Mandl is also a member of the Young Presidents'
Organization (alumnus), the American Enterprise Institute
for Public Policy Research and the Management Policy
Council. Mr. Mandl received a B.A. in economics from
Willamette University and an M.B.A. from the University of
California at Berkeley.
[LOGO]
7
[PHOTO OF LAWRENCE G. RAWL]
LAWRENCE G. RAWL
Age 68 First Elected Director: 1986
Retired Chairman of the Board and Chief Executive Officer
of Exxon Corporation (Crude oil, natural gas and petroleum
products)
Mr. Rawl joined Exxon Corporation in 1952 and held various
positions in domestic operations and corporate
headquarters activities. In 1973, he became Senior Vice
President of Exxon Company, U.S.A. and in 1976, he became
Executive Vice President. He was elected Executive Vice
President of Esso Europe Inc. in 1978, Senior Vice
President of Exxon Corporation in 1980, President in 1985
and Chairman of the Board and Chief Executive Officer in
1987, which position he held until his retirement in 1993.
Mr. Rawl received a B.S. in petroleum engineering from the
University of Oklahoma. He is a director of Champion
International Corporation, Texas Commerce Bancshares, Inc.
and the Texas Medical Center.
[PHOTO OF MICHAEL I. SOVERN]
MICHAEL I. SOVERN
Age 65 First Elected Director: 1993
President Emeritus and Chancellor Kent Professor of Law,
Columbia University; President, Shubert Foundation
Mr. Sovern became President of the Shubert Foundation in
September, 1996. He is also President Emeritus and
Chancellor Kent Professor of Law of Columbia University.
Mr. Sovern joined the faculty of Columbia University in
1957, became a full professor in 1960 and Chancellor Kent
Professor of Law in 1977. He served as Columbia Law
School's seventh Dean from 1970 to 1979 and as Executive
Vice President and Provost of the University from 1979 to
1980. Mr. Sovern served as President of Columbia
University from 1980 to 1993. He received his A.B. degree
from Columbia College and LL.B. from Columbia University
Law School. Mr. Sovern is a director of AT&T Corp., the
Greater New York Insurance Group and Sequa Corporation. He
is also Chairman of the Japan Society and of the American
Academy in Rome, and serves on the boards of the Shubert
Foundation and Organization, the Asian Cultural Council,
Channel Thirteen, the NAACP Legal Defense and Education
Fund and the Henry J. Kaiser Family Foundation and the
Atlantic Philanthropic Foundation. Mr. Sovern is Trustee
of Freedom Forum Newseum, Inc. and Chairman of the
Advisory Committee of Freedom Forum Media Studies Center.
[LOGO]
8
Security Ownership of Officers and Directors
The following table sets forth information, as of February 7, 1997, regarding
beneficial ownership of Warner-Lambert Common Stock by each director and
nominee, each of the executive officers named in the Summary Compensation Table
and all directors and executive officers as a group:
Number of Common
Shares and
Name Share Equivalents(1), (2)
---- -------------------------
6,869
Robert N. Burt
41,970
Donald C. Clark
116,659(3)
Ronald M. Cresswell
488,136(3)
Lodewijk J.R. de Vink
12,227
John A. Georges
637,752(3)
Melvin R. Goodes
8,679
William H. Gray III
7,304
William R. Howell
15,139
LaSalle D. Leffall, Jr.
13,757
Patricia Shontz Longe
6,346
Alex J. Mandl
40,291
Lawrence G. Rawl
6,310
Michael I. Sovern
284,061(3)
John F. Walsh
58,902(3)
Anthony H. Wild
46,705
Joseph D. Williams
(Retiring 4/97)
3,438,193(3)
All executive officers and directors as a group (30)
- --------------------------------------------------------------------------------
(1) As of February 7, 1997, all executive officers and directors as a group
owned approximately 1.3% of the outstanding shares of Common Stock.
(2) Each of the above persons has (or will have upon the exercise of options
exercisable within sixty days) sole voting and investment power with respect to
all shares shown as beneficially owned by such person, except for an aggregate
of 44,000 shares granted to the non-employee directors named above, pursuant to
the Restricted Stock Plan for Directors of Warner-Lambert Company, as to which
each director has the power to direct the vote of the shares granted to such
person. The shareholdings listed above also include shares of Common Stock
equivalents held pursuant to Warner-Lambert's deferred compensation arrangements
for non-employee directors, as follows: Mr. Burt 769, Mr. Clark 33,020, Mr.
Georges 4,227, Mr. Gray 4,234, Mr. Howell 2,904, Dr. Leffall 10,249, Dr. Longe
3,757, Mr. Mandl 2,346, Mr. Rawl 27,816 and Mr. Sovern 2,310. The shareholdings
listed above for Mr. de Vink, Mr. Goodes, Mr. Walsh, Dr. Wild and Dr. Cresswell
include shares of Common Stock and Common Stock equivalents in the amounts of
704, 134,000, 7,788, 8 and 183, respectively, held pursuant to Warner-Lambert's
benefit plans.
(3) Includes shares subject to options or rights granted pursuant to the
Company's stock plans exercisable within sixty days after February 7, 1997, held
by Mr. de Vink, Mr. Goodes, Mr. Walsh, Dr. Wild, Dr. Cresswell and all executive
officers and directors as a group, in the amounts of 475,170 shares, 467,866
shares, 254,075 shares, 45,562 shares, 115,662 shares and 2,913,745 shares,
respectively.
Warner-Lambert believes that stock ownership by its executive officers is
important to promote an identification of the interests of Management with
Warner-Lambert's stockholders. Accordingly, the Compensation Committee has
established stock ownership goals for its key members of Management with the
intent that each individual invest a certain dollar amount in shares of
Warner-Lambert Common Stock equal to a multiple (by position level) of the
salary for such individual. For purposes of this program, the amount of shares
of Common Stock held by the officer includes shares held directly and
indirectly, shares and share equivalents held under Warner-Lambert's benefit
plans, 50% of vested, unexercised stock options and 50% of restricted stock.
[LOGO]
9
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires Warner-Lambert's
officers and directors, and persons who own more than ten percent of a
registered class of Warner-Lambert's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and the New York Stock Exchange. Warner-Lambert believes that during 1996 all
Section 16(a) filing requirements applicable to its officers and directors were
complied with, except that three Form 5 reports were filed late, reflecting
shares acquired by Mr. Joseph D. Williams, a director, through the reinvestment
of dividends under the Company's Dividend Reinvestment Plan.
Security Ownership of Warner-Lambert
No person known to Warner-Lambert owns beneficially more than 5% of
Warner-Lambert's Common Stock, as of December 31, 1996.
Committees of the Board
Warner-Lambert has an Executive Committee, an Audit Committee, a Compensation
Committee, a Nominating and Organization Committee, a Retirement and Savings
Plan Committee (U.S.) and a Corporate Public Policy Committee of the Board of
Directors.
The members of the Executive Committee are Mr. Joseph D. Williams
(Chairman), Mr. Lodewijk J. R. de Vink, Mr. John A. Georges, Mr. Melvin R.
Goodes, Dr. Patricia Shontz Longe and Mr. Lawrence G. Rawl. This Committee,
which did not meet during 1996, has the authority to exercise all of the powers
of the Board of Directors except that this Committee may not (1) approve
acquisitions, capital expenditure requests or divestitures involving more than
$20,000,000, (2) amend Warner-Lambert's Certificate of Incorporation or By-Laws,
(3) declare a dividend or (4) authorize the issuance of stock of Warner-Lambert.
The Executive Committee also has the authority to review Warner-Lambert's
financial policies and procedures and make recommendations to the Board of
Directors with respect to dividend policy, corporate financing and related
matters.
The members of the Audit Committee are Mr. Lawrence G. Rawl (Chairman), Mr.
Robert N. Burt, Mr. John A. Georges, Mr. William H. Gray III, Mr. Alex J. Mandl
and Mr. Michael I. Sovern. This Committee, which met three times during 1996, is
responsible generally for recommending to the Board of Directors the independent
accountants to be nominated to audit the financial statements of Warner-Lambert;
approving the discharge and compensation of the independent accountants; meeting
with Warner-Lambert's independent accountants to review the proposed scope of
the annual audit of Warner-Lambert's financial statements; reviewing the
findings of the independent accountants with respect to the annual audit; and
supervising the implementation of Warner-Lambert's management integrity policies
and reporting annually to the Board of Directors with respect thereto.
The members of the Compensation Committee are Mr. Donald C. Clark
(Chairman), Mr. John A. Georges, Mr. William R. Howell, Mr. Alex J. Mandl and
Mr. Lawrence G. Rawl. This Committee, which met three times during 1996, is
responsible for administering the Warner-Lambert Incentive Compensation Plan,
the Warner-Lambert Supplemental Pension Income Plan and Warner-Lambert's stock
plans, and has limited authority to adopt amendments to the foregoing plans.
This Committee is also responsible for recommending to the Board of Directors
the salaries to be paid to the Chief Executive Officer and the
[LOGO]
10
President of Warner-Lambert, and reviewing and approving the Chief Executive
Officer's and the President's other annual cash compensation and long-term
incentives and the total compensation to be paid to certain other officers of
Warner-Lambert.
The members of the Nominating and Organization Committee are Dr. LaSalle D.
Leffall, Jr. (Chairman), Mr. Robert N. Burt, Mr. Donald C. Clark, Mr. William H.
Gray III and Mr. Joseph D. Williams. This Committee, which met four times in
1996, is responsible for recommending to the Board of Directors the names of
qualified persons to be nominated for election or re-election as directors of
Warner-Lambert, the membership and Chairman of each Board Committee and the
persons to be elected or re-elected Chairman of the Board, Chief Executive
Officer, President and Chief Operating Officer of Warner-Lambert. The Committee
will consider suggestions for Board membership submitted by stockholders in
accordance with the notice provisions and procedures set forth in
Warner-Lambert's By-Laws. Proposals for the nomination of directors must include
the biographical information required by Warner-Lambert's By-Laws, together with
the written consent of the proposed nominee to so serve, if elected. This
Committee is also responsible for administering the Restricted Stock Plan for
Directors of Warner-Lambert Company.
The members of the Retirement and Savings Plan Committee (U.S.) are Dr.
Patricia Shontz Longe (Chairman), Mr. Donald C. Clark, Mr. John A. Georges, Mr.
William R. Howell and Mr. Michael I. Sovern. This Committee, which met two times
during 1996, has limited authority to adopt amendments to the domestic
retirement and savings plans of Warner-Lambert and its domestic subsidiaries
(collectively, the 'Plans'), including the Warner-Lambert Retirement Plan, the
Warner-Lambert Savings and Stock Plan, the Warner-Lambert Excess Savings Plan
and the Warner-Lambert Long Term Disability Benefits Plan, and has
responsibility with respect to such Plans to monitor and report on the selection
and termination of trustees and investment managers and on their individual
investment activity and performance, to review the reports of the independent
accountants with respect to the Plans, to approve pensions for individual
employees which are separate from any benefit plan and to implement the overall
asset allocation guidelines, as established by the Board of Directors.
The members of the Corporate Public Policy Committee are Mr. William R.
Howell (Chairman), Mr. Donald C. Clark, Dr. LaSalle D. Leffall, Jr., Dr.
Patricia Shontz Longe and Mr. Joseph D. Williams. This Committee, which met
three times in 1996, is responsible for reviewing periodic reports on the
contribution activities of Warner-Lambert, reports on equal employment
opportunity and related matters and reports on public affairs programs of
Warner-Lambert and issues of social concern, and for making recommendations to
the Board of Directors in such areas.
The Warner-Lambert Board of Directors met seven times during 1996. Each
director of Warner-Lambert standing for re-election who was a director during
1996 attended at least 92% of the total meetings of the Board of Directors and
the Committees of the Board on which he or she served. The average attendance
rate for 1996 for all directors standing for re-election was approximately 97%.
Directors' Compensation
All non-employee directors of Warner-Lambert receive an annual fee of $40,000
and a fee of $1,000 for attendance at each meeting of the Board or Committee of
the Board of Directors, as well as for attendance at or participation in special
meetings and other Board-related
[LOGO]
11
activities, and are reimbursed for expenses incurred in connection therewith. In
addition, each director who chairs a Committee receives an annual fee of $3,000;
and each member of the Executive Committee who is not an employee receives an
annual fee of $4,000 in lieu of a fee for attendance at meetings of the
Executive Committee (if more than four meetings are held, a regular attendance
fee is payable for the additional meetings). Directors may elect to defer
receipt of their fees.
The provisions of the Company stock plans relating to deferred compensation
for directors permit non-employee directors to elect to defer their directors'
annual fees, meeting attendance fees and consulting fees, and such deferred
amounts are credited to an account which accrues interest annually or to a
Warner-Lambert Common Stock equivalent account which is credited as of the day
the deferred fees would have been payable with stock credits equal to the number
of shares of Common Stock that could have been purchased with the amount of such
deferred fees. Directors may not make withdrawals from their deferred accounts
until they are no longer members of the Board. The provisions relating to
directors' deferred compensation provide that all amounts which participating
directors had previously elected to defer are payable immediately following a
change in control of Warner-Lambert (as defined in such plan).
Effective January 1, 1996, in order to further align the interests of the
Directors with the Company's stockholders, an amount equal to one-half of the
retainer in effect on January 1 of each year, for a maximum period of ten years,
is made available to the directors for crediting to their Warner-Lambert Common
Stock equivalent accounts.
Pursuant to the Restricted Stock Plan for Directors of Warner-Lambert
Company, each non-employee director of Warner-Lambert receives a grant of 4,000
shares of Common Stock, subject to certain restrictions. The director is not
entitled to delivery of the share certificate and the shares are subject to
transfer restrictions for a period from the date of grant until the earliest to
occur of certain specified events. If the director remains a member of the Board
for the entire period during which the restrictions apply, the restrictions will
lapse with respect to one-tenth of the shares of Common Stock for each full year
of service as a director. In the event of a change in control of Warner-Lambert
(as defined in such plan), the Restricted Stock Plan provides that the directors
will receive the full value of the shares previously granted by delivery of a
cash payment in lieu thereof. Subject to the foregoing, the director has the
rights and privileges of a stockholder as to such Common Stock, including the
right to receive dividends and the right to vote the shares of Common Stock.
Non-employee directors are also eligible to participate in Warner-Lambert's
Group Life Insurance, Medical, Dental and Accidental Death and Dismemberment
Plans.
[LOGO]
12
Summary Compensation Table
The following table provides a summary of cash and non-cash compensation for
each of the last three completed fiscal years ended December 31, 1996, 1995 and
1994 with respect to Warner-Lambert's Chief Executive Officer and the other four
most highly compensated executive officers of the Company:
Summary Compensation Table
Long - Term Compensation
--------------------------------------
Annual Compensation Awards Payouts
---------------------------------- ---------------------- --------------
a b c d e f g h i
- -------------------------------------------------------------------------------------------------------------------------
Securities
Restricted Underlying
Other Annual Stock Options/ LTIP All Other
Name and Principal Salary Bonus Compensation Awards(5) SARs Payouts(6) Compensation(7)
Position Year ($) ($) ($) ($) (#) ($) ($)
- -------------------------------------------------------------------------------------------------------------------------
Melvin R. Goodes
Chairman of the Board 1996 $992,750 $1,300,000 $ 69,614(4) 0 236,000 0 $ 3,020,924
and Chief Executive 1995 943,333 778,300 0 0 150,000 $169,994 177,846
Officer 1994 866,250 820,000 0 0 90,000 176,375 58,493
Lodewijk J.R. de Vink(1) 1996 653,333 714,100 0 0 118,000 0 79,256
President and Chief 1995 620,917 511,000 0 0 90,000 131,359 58,865
Operating Officer 1994 573,500 543,000 0 0 53,500 124,500 17,866
John F. Walsh(2)
Executive Vice
President; 1996 431,417 354,900 0 0 40,000 0 102,687
President, Consumer 1995 418,333 214,000 0 0 32,000 92,724 84,319
Healthcare Sector 1994 398,333 320,000 0 0 42,200 103,750 20,180
Anthony H. Wild(3)
Vice President; 1996 379,617 410,500 0 0 47,400 0 4,196
President, 1995 297,500 162,000 0 $783,125 98,400 0 0
Pharmaceutical Sector 1994 0 0 0 0 0 0 0
Ronald M. Cresswell
Vice President; 1996 388,667 317,300 0 0 35,000 0 53,546
Chairman, Parke-Davis 1995 371,500 196,000 0 0 57,700 61,816 40,639
Research 1994 358,333 129,000 0 0 24,500 83,000 17,305
- -------------------------------------------------------------------------------------------------------------------------
(1) From 1994 to May, 1996 Mr. de Vink also had responsibility for
Warner-Lambert's Pharmaceutical Sector.
(2) Mr. Walsh served as President, Consumer Products Sector, through November,
1994. Effective December 1, 1994, Mr. Walsh was named President, Consumer
Healthcare Sector.
(3) Dr. Wild joined Warner-Lambert in February, 1995 as President, Parke-Davis,
North America. In May, 1996, Dr. Wild was appointed President, Pharmaceutical
Sector.
(4) Consists of transportation in an amount of $53,288 and financial and tax
planning services.
(5) Dr. Wild received a restricted stock award upon joining the Company in 1995.
His aggregate restricted stockholdings as of December 31, 1996, valued at the
market price at year-end, were 13,332 shares with a value of $999,900. These
shares will vest in equal installments in 1997 and 1998. Dividends on restricted
shares are paid quarterly in conjunction with, and at the same rate as,
dividends on the Company's Common Stock.
(6) Long-term cash performance bonuses provide for cash dollar awards contingent
on the attainment of certain earnings per share performance levels during the
three-year period subsequent to the grant. The amounts shown in column (h) above
represent the long-term bonuses paid in 1996, 1995 and 1994, respectively, to
the executive officers named in the Summary Compensation Table for each of the
three-year performance periods ending prior to such years.
(7) All Other Compensation consists of the following: (i) annual Company
contributions to the Savings and Stock Plan and the Excess Savings Plan for
1996, 1995 and 1994, as follows: Mr. Goodes $111,753, $67,226 and $47,760; Mr.
de Vink $23,955, $19,293 and $14,849; Mr. Walsh $23,875, $17,992 and $13,280;
Dr. Wild $697, $0 and $0; and Dr.
[LOGO]
13
Cresswell $26,264, $20,033 and $15,322; respectively; and (ii) the above-market
interest on deferred annual bonuses for 1996, 1995 and 1994, as follows: Mr.
Goodes $140,546, $110,620 and $10,733; Mr. de Vink $55,301, $39,572 and $3,017;
Mr. Walsh $78,812, $66,327 and $6,900; Dr. Wild $3,499, $0 and $0; and Dr.
Cresswell $27,282, $20,606 and $1,983; respectively. The annual bonus was
payable for such years, but deferred at the election of the named executive
officer, in accordance with the provisions of the Warner-Lambert Incentive
Compensation Plan. According to the terms of such Plan, deferred bonuses accrue
interest that is automatically credited to the officer's account and is not
currently paid or payable.
The amount stated for Mr. Goodes for 1996 includes a payment of $2,768,625 for a
cash award based on the Company's stock price performance, granted in 1986.
Chief Executive Officer's and President's Employment Agreements
In 1985, Warner-Lambert entered into an employment agreement with Mr. Goodes. In
1991, Warner-Lambert entered into an employment agreement with Mr. de Vink. The
agreement with Mr. Goodes, which was amended in 1991, terminates May 1, 2000,
and the agreement with Mr. de Vink provides for an initial term of five years,
which term will be automatically extended for an additional year at the end of
each year of the term until Mr. de Vink's retirement. The agreements provide for
minimum annual salaries which may be increased annually based upon the average
salary increase of those officers of Warner-Lambert whose names appear in the
Annual Report. Mr. Goodes' and Mr. de Vink's respective salaries are generally
reviewed by the Compensation Committee in January of each year. Pursuant to the
terms of the agreements, Mr. Goodes and Mr. de Vink are also entitled to
participate in the Incentive Compensation Plan as well as the other compensation
and benefit programs available to officers of Warner-Lambert at their respective
levels.
[LOGO]
14
Option/SAR Grant Table
The following table sets forth information concerning grants of stock options
and stock appreciation rights during 1996 to the Company's Chief Executive
Officer and the other four most highly compensated executive officers:
Option/SAR Grants in 1996(1)
Individual Grants
------------------------------------------------------------
a b c d e f
- ----------------------------------------------------------------------------------------------------------
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise or Grant Date
Options/SARs Employees in Base Price Expiration Present Value
Name Granted (#)(2) 1996 ($/Sh) Date ($)(3)
- ----------------------------------------------------------------------------------------------------------
Melvin R. Goodes 59,000 1.46% $49.75 02/26/06 $659,620
59,000 1.46% 55.3125 05/27/06 787,650
59,000 1.46% 61.21875 08/26/06 857,860
59,000 1.46% 72.375 11/25/06 954,030
Lodewijk J.R. de Vink 29,500 .73% $49.75 02/26/06 329,810
29,500 .73% 55.3125 05/27/06 393,825
29,500 .73% 61.21875 08/26/06 428,930
29,500 .73% 72.375 11/25/06 477,015
John F. Walsh 10,000 .25% $49.75 02/26/06 111,800
10,000 .25% 55.3125 05/27/06 133,500
10,000 .25% 61.21875 08/26/06 145,400
10,000 .25% 72.375 11/25/06 161,700
Anthony H. Wild 11,850 .29% $49.75 02/26/06 132,483
11,850 .29% 55.3125 05/27/06 158,198
11,850 .29% 61.21875 08/26/06 172,299
11,850 .29% 72.375 11/25/06 191,615
Ronald M. Cresswell 8,750 .22% $49.75 02/26/06 97,825
8,750 .22% 55.3125 05/27/06 116,813
8,750 .22% 61.21875 08/26/06 127,225
8,750 .22% 72.375 11/25/06 141,488
- ----------------------------------------------------------------------------------------------------------
(1) In order to enhance the alignment between pay and performance, decisions
regarding annual stock option grants for Company colleagues were moved to a
common review date following the close of the Company's fiscal year. Since 1996
served as a transition year, stock options were granted in four quarterly
installments. Each installment is exercisable ratably over four years from the
date of grant, and its exercise price is equal to the fair market value on the
date of such installment.
(2) Stock options entitle the holder to purchase shares of Common Stock at a
price which is equal to the fair market value per share for such stock on the
date the stock option was granted. Payment of this price is made in cash or,
with the consent of the Compensation Committee, in whole or in part, in Common
Stock or other consideration. Stock options become exercisable over a four-year
period (beginning one year after the date of grant) in four equal
installments. No stock option may be exercised after the expiration of ten years
from the date of grant. In the event of a change in control of Warner-Lambert
(as defined in the stock option plans), (i) the ability to exercise stock
options is accelerated, ii) amounts payable upon exercise of stock
appreciation rights will be determined by reference, among other things, to
the price pursuant to which the change in control was effected, (iii) amounts
payable upon the exercise of stock appreciation rights will be in the form
of cash and (iv) limited stock appreciation rights are provided to the
grantees of stock options.
(3) Present value determinations were made using a Black-Scholes option pricing
model based on the following assumptions: the holding period is based on a
five-year average of all option holders' exercises; the risk-free rate of return
is the interest rate on a zero coupon bond with a maturity equivalent to the
holding period; the volatility is based on weekly stock prices for the holding
period; and the dividend yield is based on the dividends paid on
Warner-Lambert's Common Stock for the five-year period 1992-1996. The actual
value an executive officer receives is dependent on future stock market
conditions, and there can be no assurance that the amounts reflected in column
(f) of the Option/SAR Grants Table will actually be realized. No gain to the
executive officer is possible without an appreciation in stock value which will
benefit all stockholders commensurately.
[LOGO]
15
Option/SAR Exercises and Year-End Value Table
The following table sets forth individual exercises of stock options and stock
appreciation rights ('SARs') during 1996 by the Company's Chief Executive
Officer and the other four most highly compensated executive officers and
provides information related to stock option and SAR values:
Aggregated Option/SAR Exercises in 1996 and Year-end Option/SAR Values
a b c d e
- -----------------------------------------------------------------------------------------------
Number of Value of
Securities Unexercised
Underlying In-the-Money
Unexercised Options/SARs
Options/ at Year-End ($)
Shares SARs at ($75.00 Per
Acquired on Year-End (#) Share)
Exercise Value Exercisable/ Exercisable/
Name (#) Realized ($) Unexercisable Unexercisable
- -----------------------------------------------------------------------------------------------
Melvin R. Goodes 0 $ 0 385,916/ $14,985,638/
718,400 19,261,976
Lodewijk J.R. de Vink 25,000 1,153,672 432,515/ 19,975,444/
384,385 10,467,680
John F. Walsh 79,504 2,949,092 226,375/ 9,741,888/
208,125 6,123,153
Anthony H. Wild 0 0 24,600/ 850,613/
121,200 3,278,761
Ronald M. Cresswell 60,000 2,436,138 190,700/ 3,809,288/
94,050 2,797,810
- -----------------------------------------------------------------------------------------------
[LOGO]
16
Retirement Benefits
The following table sets forth the estimated aggregate annual benefits payable
in the form of a straight life annuity by Warner-Lambert upon retirement at age
65 (exclusive of retirement benefits from Social Security) after a specified
number of years of service, pursuant to the Warner-Lambert Company Retirement
Plan (the 'Retirement Plan') and the Warner-Lambert Supplemental Pension Income
Plan (the 'Supplemental Plan'). In the event of early retirement, the following
amounts will be reduced by the annual retirement credits that would otherwise
have been earned to normal retirement and further reduced in accordance with the
early retirement reduction factors then in effect under the Retirement Plan and,
where applicable, the Supplemental Plan. The aggregate of amounts shown in
columns (c) and (d) of the Summary Compensation Table approximate the amount of
creditable earnings under the pension plans.
Pension Plan Table
Years of Service
-------------------------------------------------------------------------------------
Remuneration 15 20 25 30 35 40
- -------------- ---------- ---------- ---------- ---------- ---------- ----------
$ 500,000 $ 209,528 $ 266,008 $ 266,488 $ 266,968 $ 271,375 $ 309,738
600,000 254,328 322,008 322,488 322,968 325,775 371,738
700,000 299,128 378,008 378,488 378,968 380,175 433,738
800,000 343,928 434,008 434,488 434,968 435,448 495,738
900,000 388,728 490,008 490,488 490,968 491,448 557,738
1,000,000 433,528 546,008 546,488 546,968 547,448 619,738
1,100,000 478,328 602,008 602,488 602,968 603,448 681,738
1,200,000 523,128 658,008 658,488 658,968 659,448 743,738
1,300,000 567,928 714,008 714,488 714,968 715,448 805,738
1,400,000 612,728 770,008 770,488 770,968 771,448 867,738
1,500,000 657,528 826,008 826,488 826,968 827,448 929,738
1,600,000 702,328 882,008 882,488 882,968 883,448 991,738
1,700,000 747,128 938,008 938,488 938,968 939,448 1,053,738
1,800,000 791,928 994,008 994,488 994,968 995,448 1,115,738
1,900,000 836,728 1,050,008 1,050,488 1,050,968 1,051,448 1,177,738
2,000,000 881,528 1,106,008 1,106,488 1,106,968 1,107,448 1,239,738
2,100,000 926,328 1,162,008 1,162,488 1,162,968 1,163,448 1,301,738
2,200,000 971,128 1,218,008 1,218,488 1,218,968 1,219,448 1,363,738
2,300,000 1,015,928 1,274,008 1,274,488 1,274,968 1,275,448 1,425,738
2,400,000 1,060,728 1,330,008 1,330,488 1,330,968 1,331,448 1,487,738
2,500,000 1,105,528 1,386,008 1,386,488 1,386,968 1,387,448 1,549,738
- --------------------------------------------------------------------------------------------------------
The Retirement Plan is a defined benefit, career average plan which is
periodically updated in order to provide pension benefits which are more
reflective of current creditable earnings. The most recent such update was
effective January 1, 1995. The Retirement Plan provides that annual creditable
earnings are determined by an employee's January 1st base salary plus overtime
and awards paid under the Warner-Lambert Incentive Compensation Plan.
Compensation for purposes of the 1995 pension update was limited to average
annual creditable earnings for the three consecutive years during which such
compensation was
[LOGO]
17
highest. The Retirement Plan provides that, in the event of a change in control
of Warner-Lambert (as defined in such plan), (i) the benefits of participants
will be afforded certain additional protection for a limited period of time and
(ii) if certain actions are taken with respect to the Retirement Plan, any
surplus assets then held in the trust will inure to the benefit of participants
and their beneficiaries. Credited years of service under the Retirement Plan, as
of December 31, 1996, for each of the executive officers named in the Summary
Compensation Table are: Melvin R. Goodes-30.4 years; Lodewijk J. R. de Vink-8.0
years; John F. Walsh-28.3 years; Anthony H. Wild-1.0 year; and Ronald M.
Cresswell-8.0 years.
The Supplemental Plan was established to attract and retain employees in
senior managerial positions by providing supplemental pension income in amounts
reasonably related to their compensation and length of service with
Warner-Lambert. Benefits under the Supplemental Plan are based upon average
final compensation (the total amount of an employee's compensation for the three
calendar years during which such employee's compensation was the highest of the
five-year period of service ending with such employee's early or normal
retirement date, divided by three). Compensation for this purpose is the sum of
the employee's January 1st base salary plus allocated incentive compensation
under the Warner-Lambert Incentive Compensation Plan. The benefit under the
Supplemental Plan is reduced by the benefit payable under the Retirement Plan
and certain other retirement benefits including Social Security. The
Supplemental Plan also provides for payment to eligible employees of amounts
they would have received under the Retirement Plan in the absence of certain
limitations imposed by the Employee Retirement Income Security Act of 1974 and
subsequent legislation, and provides for payment to eligible employees of
amounts they would have received under the Retirement Plan if deferred incentive
awards had been included in creditable earnings under such plan. The
Supplemental Plan provides that, in the event of a change in control of
Warner-Lambert (as defined in such plan), (i) employees 55 years of age and
older who meet certain salary level requirements and who would have become
eligible to receive Supplemental Plan benefits upon retirement will receive such
benefits upon retirement and (ii) post-employment consulting requirements set
forth in the Supplemental Plan would no longer be applicable. Credited years of
service under the Supplemental Plan, as of December 31, 1996, for each of the
executive officers named in the Summary Compensation Table are: Melvin R.
Goodes-16.7 years; Lodewijk J. R. de Vink-6.8 years; John F. Walsh-9.5 years;
Anthony H. Wild-1.8 years; and Ronald M. Cresswell-8.6 years.
Termination of Employment and Change in Control Arrangements and Other Matters
Warner-Lambert has severance policies which provide for payments of up to
twenty-four months' salary depending upon several factors, including age and
length of service, subject to modifications made by the Warner-Lambert Executive
Severance Plan (the 'Executive Severance Plan').
The Executive Severance Plan provides benefits in the event of a change in
control of Warner-Lambert (as defined in such plan) to those employees,
essentially officers, who are subject to the reporting requirements of Section
16(a) of the Securities Exchange Act of 1934, as amended. A change in control is
deemed to generally have occurred upon the acquisition of the voting power of
20% or more of Warner-Lambert's outstanding securities, a merger,
[LOGO]
18
consolidation, sale or disposition of substantially all of Warner-Lambert's
assets or a change in more than half of Warner-Lambert's Board of Directors. The
Executive Severance Plan provides for severance benefits, which are payable only
if a participant leaves the employ of Warner-Lambert for any reason other than
termination for just cause (as defined in such plan) within three years after a
change in control, of thirty-six months' salary and bonus. The Executive
Severance Plan also provides for limited rights ('Limited Rights') to
participants in connection with outstanding stock options under Warner-Lambert's
stock option plans which do not presently have stock appreciation rights. The
Limited Rights provide for a cash payment to the holder upon a change in control
equal to the amount by which the fair market value (as defined in such option
plans) of a share of Common Stock exceeds the fair market value of such a share
on the date the stock option was granted, multiplied by the number of shares
with respect to which the Limited Right applies. The Executive Severance Plan
also provides special payments to participants in amounts sufficient to
reimburse such participants for any federal excise tax or similar state or local
tax which may be imposed with respect to payments received following a change in
control. Warner-Lambert has also established an Enhanced Severance Plan, which
is similar to the Executive Severance Plan, for all United States non-hourly
employees who are not eligible to participate in the Executive Severance Plan.
In addition, in the event of a change in control of Warner-Lambert (as
defined), participants in the Warner-Lambert Savings and Stock Plan and the
Warner-Lambert Incentive Compensation Plan are afforded certain additional
protections and the benefits of participation in Warner-Lambert's Excess Savings
Plan are payable immediately.
In connection with the relocation of Mr. Joseph E. Smith, Vice President of
Warner-Lambert, from Pennsylvania to New Jersey an interest-free loan was
granted in 1990. The loan was secured by the real property owned by the
executive officer. The current outstanding balance of the loan is $250,000.
Compensation Committee Report on Executive Compensation
Warner-Lambert's executive compensation programs are designed to attract, retain
and motivate the broad based executive talent required to achieve its business
objectives and increase stockholder value. The Company's executive compensation
programs are administered by the Compensation Committee of the Board of
Directors (the 'Committee') which is comprised of the individuals listed below.
The Committee members are outside directors of the Company with responsibility
for all compensation matters for Warner-Lambert's executive officers.
General
Total compensation for Warner-Lambert's executive officers consists of a base
salary, annual cash bonus and long-term incentives, which consist of stock
options and restricted stock. The annual bonus and long-term incentives
introduce risk to the total executive compensation package. These compensation
components are variable, may fluctuate significantly from year to year and are
directly tied to Company and individual performance.
[LOGO]
19
To ensure that Management's interest in the Company is aligned with those
of its stockholders, a significant portion of executive compensation is
delivered through the equity component. Stock options are tied to the long-term
performance of Warner-Lambert and are used to provide an incentive that focuses
attention on managing the Company from an owner's perspective. Restricted stock
grants are used selectively to build stock ownership and to promote a long-term
focus by restricting the holder's ability to sell, transfer or assign the shares
until the end of the specified vesting period when the restrictions lapse. The
combination of stock options and restricted stock grants provides a level of
risk and upside opportunity that encourages Management performance in the
achievement of the Company's long-term goals and objectives. To further align
Management's interests with Warner-Lambert's stockholders, the Committee has
established formal stock ownership goals for key members of Management with the
intent that each individual invest a certain dollar amount in shares of
Warner-Lambert Common Stock.
The Committee annually reviews the competitiveness of the Company's
executive compensation programs within the industries in which it
competes -- Pharmaceutical, Consumer Health Care and Confectionery. The
companies in this compensation comparator group include the companies that are
in the industry peer group index in the Five-Year Cumulative Total Shareholder
Return graph on page 24. In addition, this compensation comparator group also
includes several leading consumer products companies which, in conjunction with
the industry peer group, represent the broader marketplace for the Company's
executive talent.
Warner-Lambert targets a level of total compensation (base salary, annual
bonus and stock awards) above the median total compensation of its comparator
group for like jobs, adjusted for company size. Since stock awards represent a
significant portion of the executives' total compensation, the overall
compensation package provides both downside risk and upside opportunity that
encourages the executives' performance in the achievement of the Company's
long-term goals and objectives.
The Committee continues to review executive compensation in light of
Section 162(m) of the Internal Revenue Code ('Section 162(m)'), which
establishes a limit on the deductibility of annual compensation for certain
executive officers that exceeds $1,000,000. It is the general intention of the
Committee to meet the requirements for deductibility under Section 162(m);
however, the Committee reserves the right, where merited by changing business
conditions or an executive's individual performance, to authorize compensation
payments which may not be fully deductible by the Company. The Committee will
re-examine this policy on an on-going basis.
Executive Officers' Compensation
In determining increases to executive officer compensation, the Committee
considered Company performance, including both financial and nonfinancial
indicators, individual performance, the business environment in which the
Company operated and competitive compensation trends.
[LOGO]
20
Base salary increases were determined based upon individual performance,
competitive compensation trends and a review of salaries for like jobs at the
companies comprising Warner-Lambert's compensation comparator group.
With respect to annual cash bonuses, the maximum annual amount which may be
set aside for payment of such bonuses is first derived from a formula approved
by stockholders which takes into account the Company's net profit for the year
and the amount of capital employed in the Company. The annual cash bonus that is
actually paid to an individual executive officer is then determined by reviewing
the performance of the business unit which the executive officer manages,
including sales, profit and return on assets managed, and the executive
officer's individual performance and position level within the Company. As a
result of such review of business and individual performance for the year 1996,
total annual bonus awards to the Company's executive officers as a group
increased by approximately 45% from the prior year. A majority of each
individual award was based on Company and business unit performance, with the
remainder based on individual performance.
The Committee has established annual stock option award guidelines for each
position level within the Company providing for a range of options to be granted
from zero shares up to a maximum number of shares. Competitive data from the
compensation comparator group and the estimated value of the Company's stock
options were used to develop these guidelines, which are reviewed annually by
the Committee. The actual stock option award granted to a Company executive is
based upon the individual's overall job performance as well as specific
contributions to Company performance for the prior year. While factors such as
Company performance are considered in determining the number of stock options to
be granted, the individual's current performance and contributions to Company
performance are the primary determinants in these deliberations. In 1996, in
accordance with the above criteria, the executive officers received stock
options which are exercisable ratably over the next four years.
Effective in 1996, in an effort to further align the interests of executive
officers with that of the stockholders, the Committee approved a program whereby
stock option awards replace the Company's long-term bonus program. As a result,
in years beginning in 1996, the Company's executive officers who previously
received long-term cash awards instead received stock options on the same terms
and conditions as the annual stock option grant.
CEO Compensation
The following is a description of the decisions with regard to Mr. Goodes' 1996
compensation.
Effective March, 1996, Mr. Goodes received a base salary increase of
approximately 5.4%, based on review of prior year job performance as well as his
compensation relative to his peers at Warner-Lambert's compensation comparator
companies. Mr. Goodes' employment agreement, which expires May 1, 2000, and is
discussed on page 14, provides for a minimum annual salary that may be increased
annually at the discretion of the Committee, based upon the average salary
increase of other Company officers. The salary for Mr. Goodes reported in the
Summary Compensation Table on page 13 reflects the salary
[LOGO]
21
actually paid to Mr. Goodes in 1996. Effective March, 1997, the Committee
increased Mr. Goodes' salary by 9.9%, thus establishing a new minimum annual
salary under the terms of his employment agreement. Mr. Goodes' salary increase
does not affect the other elements of his compensation. In addition, in 1997,
Mr. Goodes received an annual cash bonus of $1,300,000.
In 1996, in order to enhance the alignment between pay and performance, the
Committee determined to move its decision regarding the annual stock option
grant for Company colleagues from October to February after the close of the
fiscal year. Since 1996 served as a transition year in this move to a common
review date for all Company colleagues, stock options granted in 1996 were
granted in four quarterly installments. As a result, Mr. Goodes received an
annual stock option grant of 236,000 shares in February, 1996, to be divided
into four installments, with each installment exercisable ratably over the four
years from date of each installment and with the exercise price of each
installment being equal to the fair market value on the date of each
installment. The options are exercisable for a ten-year term. In 1997, Mr.
Goodes received a stock option grant of 259,000 shares. These ten-year options
were also issued at the fair market value on the date of grant and are
exercisable ratably over the next four years.
In considering Mr. Goodes' stock option grant, annual bonus and base salary
increase, each effective in 1997, the Committee considered several Company
financial performance measures for 1996, as well as Mr. Goodes' individual
performance during the year. In determining Mr. Goodes' compensation, the
Committee did not attach specific weights or values to the various factors
considered.
The Committee considered the Company's sales, profits, earnings per share
and return on assets managed, which measures met expectations. The Committee
also noted that the annual increase in the stock value of Warner-Lambert's
Common Stock exceeded the growth of the Standard & Poor's 500 Stock Index, the
Dow Jones Industrial Average and the average stock price growth of
Warner-Lambert's industry peer group. In addition, the Company's market
capitalization of $20.3 billion at year-end 1996 was 54% higher than prior year,
a $7.1 billion increase.
The Committee also considered key decisions and actions taken by Mr. Goodes
in 1996. The Committee noted that Mr. Goodes continued to invest in long-term
growth opportunities for the Company. As a result of Mr. Goodes' strategic
vision, several significant events occurred with respect to drugs in the
Company's pharmaceutical pipeline. The Company received marketing approval from
the United States Food and Drug Administration ('FDA') for its
cholesterol-lowering drug Lipitor'tm' and finalized a collaborative agreement
with Pfizer Inc. to co-promote and continue the drug's development in the U.S.
and on a broad basis in the international marketplace. The Company received
marketing approval from the FDA for Rezulin'tm', a diabetes drug for non-insulin
dependent diabetes mellitus patients currently on insulin who are inadequately
controlled by insulin. In addition, the National Institutes of Health selected
Rezulin'tm' to be part of a long-term diabetes study, and the Company
established a joint venture partnership in the U.S. with Sankyo Company, Ltd.,
from whom the Company licensed the drug, to co-promote the drug, as well as the
Company's cardiovascular agent Accupril'r'. The Company also submitted a New
Drug Application to the FDA for the antibiotic cefdinir. In addition, the FDA
approved
[LOGO]
22
the marketing of Cerebyx'tm', an antiepileptic agent, Estrostep'r', an oral
contraceptive, FemPatch'tm', a low dose transdermal estrogen patch for the
treatment of menopausal symptoms, and Procanbid'r', a drug for the treatment of
life-threatening ventricular arrhythmias.
At the same time, Mr. Goodes enhanced the Company's consumer healthcare
business by the purchase of Glaxo Wellcome plc's U.S. and European interests in
the Warner Wellcome over-the-counter joint venture operations, the restructuring
of the joint venture agreement with Glaxo Wellcome to market Glaxo Wellcome's Rx
to over-the-counter switch products and the launch of Zantac'r' 75 for the
treatment of heartburn. In addition, Mr. Goodes expanded the Company's
international confectionery business through the development of a manufacturing
facility in China and the establishment of a confectionery business in India.
Compensation Committee Members
Donald C. Clark, Chairman
John A. Georges
William R. Howell
Alex J. Mandl
Lawrence G. Rawl
[LOGO]
23
Performance Graph
The graph set forth below compares the yearly percentage change in
Warner-Lambert's cumulative total shareholder return on its Common Stock to the
cumulative total return of the Standard & Poor's 500 Stock Index (the 'S&P 500')
and of a peer group index comprised of Abbott Laboratories, American Home
Products Corporation, Bristol-Myers Squibb Company, Eli Lilly and Company,
Johnson & Johnson, Merck & Co., Inc., Pfizer Inc. and Schering-Plough
Corporation.
WARNER-LAMBERT COMPANY
Cumulative Total Shareholder Return for
Five-Year Period Ending December 31, 1996*
[PERFORMANCE GRAPH]
- ---------------------------------------------------------------------------------------
December 31... 1991 1992 1993 1994 1995 1996
Warner-Lambert 100.00 91.88 92.77 109.45 142.30 224.90
S&P 500 100.00 107.61 118.41 120.01 164.95 202.73
Peer Group 100.00 83.86 78.43 88.68 142.72 179.55
- ---------------------------------------------------------------------------------------
* Assumes that the value of the investment in Warner-Lambert Common Stock and
each index was $100 on December 31, 1991 and that all dividends were reinvested.
[LOGO]
24
Board of Directors' Proposal Relating to
Appointment of Independent Accountants
The firm of Price Waterhouse LLP has audited the consolidated financial
statements of Warner-Lambert for many years and the Audit Committee has
recommended, and the Board of Directors has approved, the appointment of this
firm to continue such services for the year 1997. Accordingly, the Board of
Directors recommends that the appointment of the firm of Price Waterhouse LLP to
audit the consolidated financial statements of Warner-Lambert and its
subsidiaries for the year 1997 be approved.
A representative of Price Waterhouse LLP will be present at the meeting to
answer any questions by stockholders relating to its audit of the consolidated
financial statements of Warner-Lambert for 1996 and other appropriate questions.
The aggregate fees for worldwide audit services in connection with the 1996
audit performed by Price Waterhouse LLP for Warner-Lambert were approximately
$3,985,000.
Approval of the foregoing will require the affirmative vote of a majority
of the votes cast. The persons named in the enclosed form of Proxy have advised
that it is their intention to vote each Proxy for such proposal, unless a
contrary decision is indicated on the Proxy.
Stockholder Proposals
From time to time stockholders present proposals which may be proper subjects
for inclusion in the Proxy Statement and for consideration at the annual
meeting. In order to be considered, such proposals must be submitted on a timely
basis. Proposals for the 1998 annual stockholders' meeting must be received at
Warner-Lambert's principal executive offices no later than November 7, 1997. Any
such proposals, as well as any questions relating thereto, should be directed to
the Secretary of Warner-Lambert.
Other Information
The cost of the solicitation of Proxies by the Board of Directors, other than
from participants in the Company's Savings and Stock Plan, will be borne by
Warner-Lambert. The cost of solicitation of Proxies from participants in the
Savings and Stock Plan will be borne by such Plan. Solicitation of proxies will
be made by mail, and, in addition, may be made by officers and employees of
Warner-Lambert, personally or by telephone or telegram. Forms of Proxies and
proxy materials may also be distributed, through brokers, custodians and other
like parties to the beneficial owners of Common Stock of Warner-Lambert.
Warner-Lambert has also retained Kissel-Blake Inc. to aid in solicitation of
Proxies at an anticipated cost not in excess of $14,500.
[LOGO]
25
[LOGO]
WARNER-LAMBERT COMPANY
MORRIS PLAINS, NEW JERSEY 07950
(201) 540-2000
['RECYCLED' LOGO] Printed on Recycled Paper
APPENDIX 1
FC PROXY CARD
WARNER-LAMBERT COMPANY
PROXY FOR THE ANNUAL MEETING TO BE HELD AT 10:30 O'CLOCK, EASTERN DAYLIGHT
SAVING TIME, TUESDAY MORNING, APRIL 22, 1997.
THE PARSIPPANY HILTON HOTEL, ONE HILTON COURT, PARSIPPANY, NEW JERSEY
P
R Melvin R. Goodes, Lodewijk J. R. de Vink and Ernest J. Larini and each
O of them, with full power of substitution, are hereby authorized to
X represent and to vote and act with respect to all stock of the undersigned
Y at the Annual Meeting of Stockholders of Warner-Lambert Company on April
22, 1997, and any adjournment or adjournments thereof, as designated
herein upon the proposals set forth herein and, in their discretion, upon
such other matters as may properly be brought before the meeting.
Nominees for election to the Board of Directors: Change of Address
R. N. Burt, D. C. Clark, L.J.R. de Vink, J. A. Georges, M. R. Goodes, W. ------------------------------------------
H. Gray III, W. R. Howell, L. D. Leffall, Jr., P. S. Longe, A. J. Mandl, ------------------------------------------
L. G. Rawl and M. I. Sovern ------------------------------------------
------------------------------------------
(If you have written in the above space,
please mark the corresponding box on the
reverse side of this card)
FOLD AND DETACH HERE
PLEASE VOTE, SIGN AND DATE THIS PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
SEE REVERSE SIDE
[x] Please mark your votes as in this example. 0110
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE CORPORATION. When
properly executed it will be voted as directed by the stockholder but, unless
otherwise specified, it will be voted FOR the election of Directors and
FOR proposal (2).
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS, FOR PROPOSAL (2).
1.Election of FOR WITHHELD 2.Price Waterhouse LLP FOR AGAINST ABSTAIN
Directors [ ] [ ] as independent [ ] [ ] [ ]
(see reverse) accountants
For, except vote withheld from the following nominee(s):
- ----------------------------------------------------------
PLEASE SEND AN ADMITTANCE CARD. [ ]
CHANGE OF ADDRESS ON REVERSE SIDE. [ ]
SIGNATURE(S)___________________________________________________ DATE__________
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
FOLD AND DETACH HERE
If you plan to attend the meeting, please check the box above
and an admittance card will be mailed to you.
STATEMENT OF DIFFERENCES
The trademark symbol shall be expressed as 'tm'
The registered trademark symbol shall be expressed as 'r'