1
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-12
Carter-Wallace, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
2
CARTER-WALLACE, INC.
1345 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10105
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JULY 17, 2001
The Annual Meeting of Stockholders of Carter-Wallace, Inc. will be held at
the Hotel du Pont, 11th and Market Streets, Wilmington, Delaware 19801, on
Tuesday, July 17, 2001, at 1:00 P.M., Eastern Daylight Saving Time, for the
following purposes:
1. To elect directors;
2. To consider and take action upon the ratification of the appointment by
the Board of Directors of KPMG LLP as independent auditors for the
Company for the current fiscal year; and
3. To transact any other business that may properly come before the
meeting.
Only holders of record of Common Stock and Class B Common Stock at the
close of business on June 4, 2001 will be entitled to vote at the meeting.
To assure your representation at the meeting, please date, sign and mail
promptly the accompanying proxy, for which a postpaid return envelope is
provided. Please return the proxy in a timely fashion to save the Company the
expense of an additional mailing of the proxy materials.
STEPHEN R. LANG
Secretary
New York, New York
June 20, 2001
3
CARTER-WALLACE, INC.
1345 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10105
ANNUAL MEETING OF STOCKHOLDERS
JULY 17, 2001
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Carter-Wallace, Inc. (the "Company") of proxies for
use at the Company's 2001 Annual Meeting of Stockholders (the "Meeting") to be
held at the Hotel du Pont, 11th and Market Streets, Wilmington, Delaware 19801,
on Tuesday, July 17, 2001, at 1:00 P.M., Eastern Daylight Saving Time, and at
any adjournment thereof. The date of mailing of this Proxy Statement and the
accompanying proxy is on or about June 20, 2001.
At the Meeting, all shares represented by a properly executed proxy in the
accompanying form (which has not been revoked) will be voted and, where
instructions are specified, will be voted in accordance with such
specifications. Where instructions are not specified, the shares represented by
such proxy will be voted (a) FOR the election of each of the nominees for
director named in this Proxy Statement and (b) FOR the ratification of the
appointment of KPMG LLP as independent auditors for the Company. If any nominee
for election as a director should be unable to serve, which is not presently
anticipated, proxies will be voted for a nominee designated by the Board of
Directors. In addition, proxies will be voted in the discretion of the proxy
holders with respect to such other business as may properly come before the
Meeting.
Any proxy may be revoked by a stockholder by a written communication to the
Secretary of the Company delivered prior to or at the Meeting, to the extent the
proxy has not theretofore been voted. Sending in a signed proxy will not affect
a stockholder's right to attend the Meeting and to vote in person.
RECENT DEVELOPMENTS
In May 2001, the Company announced it had entered into agreements for the
sale of the Company in a two-step transaction in which stockholders will receive
$20.30 per share, subject to certain closing adjustments (the "Proposed Sale
Transactions"). The Proposed Sale Transactions are pending at this time and are
subject to approval by stockholders and other conditions. Full details regarding
the Proposed Sale Transactions will be included in a separate proxy statement
that will be sent to all stockholders in connection with a special meeting of
stockholders that will be called to vote on these matters.
VOTING RIGHTS
On each matter submitted to a vote at the Meeting, (i) each holder of
Common Stock, par value $1.00 per share, of the Company ("Common Stock") is
entitled to one (1) vote for each such share registered in his name at the close
of business on June 4, 2001, the record date stated in the Notice of Annual
Meeting of Stockholders (the "Record Date"), and (ii) each holder of Class B
Common Stock, par value $1.00 per share, of the Company ("Class B Common Stock")
is entitled to ten (10) votes for each such share registered in his name at the
close of business on the Record Date. As of the Record Date, the Company had
33,468,339 shares of Common Stock outstanding and entitled to vote and
12,222,207 shares of Class B Common Stock outstanding and entitled to vote. On
all actions to be taken at the Meeting, holders of Common Stock and holders of
Class B Common Stock vote together as a single class. On the Record Date,
officers and directors of the Company and members of their immediate families
owned an aggregate of 12,394,617 shares of Common Stock, representing 37.03% of
the outstanding shares of Common Stock, and an aggregate of 11,799,600 shares of
Class B Common Stock, representing 96.54% of the outstanding shares of Class B
Common Stock; such holdings represent 83.75%, in the aggregate, of the voting
power of the shares entitled to vote at the Meeting. See "STOCK OWNERSHIP."
4
STOCK OWNERSHIP
As used in this Proxy Statement, "beneficial ownership" means the sole or
shared power to vote, or to direct the voting of, a security, or the sole or
shared investment power with respect to a security (that is, the power to
dispose of, or to direct the disposition of, a security). In addition, for
purposes of this Proxy Statement, a person is deemed as of any date to have
"beneficial ownership" of any security that such person has the right to acquire
within 60 days after such date through the exercise of an option or similar
right or otherwise and of any security held in the name of such person's spouse
or minor children.
As of the Record Date, the only persons known to the Company who
beneficially owned more than 5% of either the outstanding shares of Common Stock
or the outstanding shares of Class B Common Stock were The CPI Development
Corporation ("CPI") and its directors and stockholders and Mario J. Gabelli and
Marc J. Gabelli and various entities directly or indirectly controlled by them
or for which one of them acts as chief investment officer. As discussed below,
certain parties have entered into a voting agreement with CPI that provides them
with limited voting rights in respect of the Common Stock and Class B Common
Stock held by CPI in connection with the Proposed Sale Transactions.
CPI is a personal holding company, the assets of which consist of
11,754,000 shares of Common Stock, which represent 35.12% of the outstanding
shares of Common Stock, and 11,754,000 shares of Class B Common Stock, which
represent 96.17% of the outstanding shares of Class B Common Stock. The
directors of CPI are Henry H. Hoyt, Jr., Richard L. Cruess, M.D. and Suzanne H.
Garcia, each of whom is currently a director of the Company. Henry H. Hoyt, Jr.,
Richard L. Cruess and Suzanne H. Garcia are the beneficial owners of
substantially all the outstanding voting securities of CPI. In connection with
the Proposed Sale Transactions, CPI has entered into a voting agreement (the
"Voting Agreement") with Armkel, LLC, the prospective purchaser of the assets of
the Company's consumer products business ("Armkel"), and MCC Acquisition
Holdings Corporation, the parent corporation of the corporations into which CPI
and the Company will be merged following the sale of the consumer products
business to Armkel ("MCC Acquisition Holdings"). Armkel is jointly owned by
Church & Dwight Co., Inc. and two private investment funds formed by Kelso &
Company L.P. MedPointe Capital Partners, L.L.C., The Carlyle Group and The
Cypress Group L.L.C. have agreed to provide equity funding to MCC Acquisition
Holdings to facilitate its portion of the Proposed Sale Transactions. Pursuant
to the Voting Agreement, CPI has agreed to vote the shares of Common Stock and
Class B Common Stock held by CPI in favor (or cause their shares to be voted in
favor) of the approval of the Proposed Sale Transactions, except in certain
circumstances. The Voting Agreement is limited solely to voting on matters in
connection with the Proposed Sale Transactions and does not entitle any party
other than CPI to vote or direct the vote of such shares on any other matter,
including the matters to be voted on at the Meeting. The information set forth
herein with respect to the Voting Agreement is based solely upon information
contained in Schedules 13D filed with the Securities and Exchange Commission by
Armkel and MCC Acquisition Holdings on May 16 and May 17, 2001, respectively.
Except as described above, the table below sets forth certain information
as to shares of Common Stock and Class B Common Stock beneficially owned as of
the Record Date (unless otherwise noted) by persons who beneficially own more
than 5% of either class, each director named under "ELECTION OF DIRECTORS," each
executive officer named in the Summary Compensation Table under "EXECUTIVE
COMPENSATION AND OTHER INFORMATION" and the directors and executive officers of
the Company as a group. Such ownership information is based upon information
furnished by such persons. Except as otherwise indicated, such persons have sole
voting and investment power with respect to such shares.
CLASS B
COMMON PERCENT OF COMMON PERCENT OF
NAME AND ADDRESS STOCK CLASS(1) STOCK CLASS(1)
- ---------------- ---------- ---------- ---------- ----------
THE CPI DEVELOPMENT CORPORATION............. 11,754,000(2) 35.12% 11,754,000(2) 96.17%
103 Springer Building
3411 Silverside Road
Wilmington, Delaware 19810
2
5
CLASS B
COMMON PERCENT OF COMMON PERCENT OF
NAME AND ADDRESS STOCK CLASS(1) STOCK CLASS(1)
- ---------------- ---------- ---------- ---------- ----------
MARIO J. GABELLI and MARC J. GABELLI........ 8,088,911(3) 24.17%
One Corporate Center
Rye, New York 10580-1434
HENRY H. HOYT, JR. ......................... 13,236,759(4)(5) 38.34% 11,785,500(4) 96.43%
1345 Avenue of the Americas
New York, New York 10105
RICHARD L. CRUESS, M.D...................... 11,763,300(4) 35.15% 11,763,300(4) 96.25%
1110 Pine Avenue West
Montreal, H3A 1A3
Quebec, Canada
SUZANNE H. GARCIA........................... 11,773,800(4) 35.18% 11,776,800(4) 96.36%
P.O. Box 5040
Santa Fe, New Mexico 87502
T. ROSIE ALBRIGHT........................... 186,538(5)
DAVID M. BALDWIN............................ 3,000
THOMAS G. GERSTMYER......................... 58,355(5)
SCOTT C. HOYT............................... 324
STEPHEN R. LANG............................. 135,258(5)
RALPH LEVINE................................ 535,977(5) 1.58%
HERBERT M. RINALDI.......................... 9,000
DONALD J. STACK............................. --
PAUL A. VETERI.............................. 498,412(5) 1.47%
All directors and executive officers of the
Company as a group (22 persons)........... 15,512,329(4)(5) 42.40% 11,799,600(4) 96.54%
- ---------------
(1) Ownership percentages representing less than one percent of the class
outstanding have been omitted.
(2) Subject to the Voting Agreement.
(3) Based solely upon information contained in Amendment No. 23 to Schedule 13D
filed with the Securities and Exchange Commission on May 17, 2001. The
shares are beneficially owned by Mario J. Gabelli and Marc J. Gabelli and
various entities that they directly or indirectly control or for which one
of them acts as chief investment officer.
(4) Includes the number of shares of Common Stock and of Class B Common Stock,
as the case may be, owned of record by CPI as to which Henry H. Hoyt, Jr.,
Richard L. Cruess, M.D. and Suzanne H. Garcia are deemed to have shared
beneficial ownership by virtue of their relationships with CPI. Also
includes 9,000 shares of Common Stock and 9,000 shares of Class B Common
Stock held in trust under the will of Kate Good Orcutt; Henry H. Hoyt, Jr.
and Suzanne H. Garcia are trustees and beneficiaries of the trust and
Richard L. Cruess, M.D. is a trustee of the trust and, as such, are deemed
to have shared beneficial ownership of such shares. Henry H. Hoyt, Jr.,
Richard L. Cruess, M.D. and Suzanne H. Garcia each disclaims beneficial
ownership of the shares of Common Stock and Class B Common Stock owned by
CPI and such trust.
(5) Includes 1,059,625 shares of Common Stock for Henry H. Hoyt, Jr., 163,819
shares for T. Rosie Albright, 58,355 shares for Thomas G. Gerstmyer, 126,436
shares for Stephen R. Lang, 489,833 shares for Ralph Levine, 450,279 shares
for Paul A. Veteri, respectively, and 3,117,710 shares for all directors and
executive officers as a group, including the persons named above, that may
be acquired within 60 days of the Record Date upon exercise of options
granted to such persons under the Company's 1996 Long-Term Incentive Plan
(the "LTIP"). Does not include 33,132 shares in the case of T. Rosie
Albright, 35,710 shares in the case of Thomas G. Gerstmyer, 35,956 shares in
the case of Stephen R. Lang, 243,442 shares in the case of Ralph Levine,
214,801 shares in the case of Paul A. Veteri,
3
6
respectively, and 758,427 shares in the case of all directors and executive
officers as a group, including the persons named above, awarded under the
LTIP that are subject to forfeiture under certain conditions.
ELECTION OF DIRECTORS
Nine directors will be elected to serve until the next Annual Meeting of
Stockholders or until their successors are elected. Shares represented by
proxies solicited by the Board of Directors will, unless otherwise specified
thereon, be voted for the election of the nominees named below, each of whom is
presently a director. All nominees for director were elected at the last annual
meeting of stockholders except Donald J. Stack, who was elected a director on
May 24, 2001.
DIRECTOR
NAME, AGE, PRINCIPAL OCCUPATION AND OTHER INFORMATION SINCE
- ----------------------------------------------------- --------
DAVID M. BALDWIN; 72........................................ 1990
Chairman of the Board, David M. Baldwin Realty Co., Inc.
since prior to June 1996
RICHARD L. CRUESS, M.D.; 71................................. 1977
Professor of Surgery, Center for Medical Education, McGill
University, Montreal, Quebec, Canada since June 1996
SUZANNE H. GARCIA; 66....................................... 1997
Owner, La Tierra Beneficiaries (real estate development)
and Santa Fe Ranch since prior to June 1996(2)
HENRY H. HOYT, JR.; 73...................................... 1955
Chairman Emeritus; Retired, effective December 31, 2000,
as Chairman of the Board of Directors and Chief
Executive Officer of the Company, a position he held
since prior to June 1996(2)
SCOTT C. HOYT; 48........................................... 1988
Vice President, New Products, Carter Products Division
since prior to June 1996(2)
RALPH LEVINE; 65............................................ 1990
Chairman of the Board of Directors and Chief Executive
Officer of the Company since January 1, 2001; President
and Chief Operating Officer of the Company from April
1, 1997 to December 31, 2000; Vice President, Secretary
and General Counsel of the Company for more than five
years prior to April 1, 1997(1)
HERBERT M. RINALDI; 72...................................... 1977
Of Counsel to the firm of Carella, Byrne, Bain, Gilfillan,
Cecchi, Stewart & Olstein (attorneys), of which he was
a Partner for more than five years prior to December
31, 1996(3)
DONALD J. STACK; 63......................................... 2001
Private investor; Retired as Vice President, Taxes of the
Company on September 1, 1996
PAUL A. VETERI; 59.......................................... 1990
President and Chief Operating Officer of the Company since
January 1, 2001; Executive Vice President and Chief
Financial Officer of the Company from April 1, 1997 to
December 31, 2000; Vice President, Finance and Chief
Financial Officer of the Company for more than five
years prior to April 1, 1997(1)
- ---------------
(1) Member of the Executive Committee.
(2) Henry H. Hoyt, Jr. and Suzanne H. Garcia are siblings. Scott C. Hoyt is the
nephew of Henry H. Hoyt, Jr. and Suzanne H. Garcia. There are no other
family relationships among the directors and officers of the Company.
(3) The firm of Carella, Byrne, Bain, Gilfillan, Cecchi, Stewart & Olstein
performed legal services for the Company in the fiscal year ended March 31,
2001 ("fiscal 2001").
Directors will be elected by the vote of a majority of the votes of the
outstanding shares of Common Stock and Class B Common Stock voting as one class.
Votes that are withheld and broker non-votes will have the same effect as
negative votes in the election.
4
7
BOARD OF DIRECTORS AND COMMITTEES
In fiscal 2001, the Board of Directors held eleven meetings. The Board of
Directors has appointed an Audit Committee, an Executive Committee, a Nominating
Committee and a Compensation Committee.
The Audit Committee, composed of Herbert M. Rinaldi, Chairman, and David M.
Baldwin, held four meetings in fiscal 2001. See "Audit Committee." Donald J.
Stack became a member of the Audit Committee upon his election as a director on
May 24, 2001.
The Nominating Committee, composed of David M. Baldwin, Chairman, Richard
L. Cruess, M.D. and Herbert M. Rinaldi, met once in fiscal 2001. The Nominating
Committee identifies and recommends candidates for election to the Board of
Directors. The Nominating Committee will consider nominees recommended by
stockholders. Such nominations for directors to be elected at the 2002 Annual
Meeting of Stockholders should be furnished in writing to the Secretary of the
Company by February 15, 2002 and should indicate the nominee's name, age and
business experience.
The Compensation Committee, composed of Richard L. Cruess, M.D., Chairman,
David M. Baldwin, Suzanne H. Garcia and Herbert M. Rinaldi, met twice in fiscal
2001. The Compensation Committee is empowered to make recommendations to the
Board with respect to the base salary of the two senior officers of the Company.
All of the Company's directors attended at least 75% of the meetings of the
Board of Directors and of the committees on which they served.
5
8
EXECUTIVE COMPENSATION AND OTHER INFORMATION
EXECUTIVE COMPENSATION
The Summary Compensation Table shows certain information for the persons
who served as the Company's Chief Executive Officer during fiscal 2001 and each
of the four other most highly compensated executive officers of the Company
during fiscal 2001 (the "Named Executives") for services rendered in all
capacities during the last three fiscal years.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION -----------------------------------------
-------------------------------------------------- DEFERRED SECURITIES
FISCAL OTHER ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1) AWARDS(2) OPTIONS(#) COMPENSATION(3)
- --------------------------- ------ ---------- ---------- --------------- ---------- ---------- ---------------
Henry H. Hoyt, Jr......... 2001 $1,039,500 $1,039,500 $ 66,933 $ -- -- $320,163
Chairman of the Board 2000 1,332,700 1,332,700 69,698 3,913,494 144,443 30,435
and Chief Executive 1999 1,281,400 794,500 60,942 1,236,971 277,774 31,548
Officer(4)
Ralph Levine.............. 2001 $1,054,650 $1,350,000 $100,784 $ -- -- $ 21,871
Chairman of the Board 2000 919,400 919,400 241,538 2,699,802 99,647 19,681
and Chief Executive 1999 884,000 548,100 68,905 853,343 191,628 18,886
Officer(5)
Paul A. Veteri............ 2001 $ 870,200 $ 950,000 $106,342 $ -- -- $ 17,926
President and Chief 2000 811,200 811,200 67,686 2,382,173 87,924 16,553
Operating Officer(6) 1999 780,000 483,600 55,113 752,952 169,084 16,764
T. Rosie Albright......... 2001 $ 483,767 $ 372,400 $ 51,935 $ -- -- $ 10,303
Vice President, 2000 468,133 358,100 183,900 291,673 37,678 9,912
Consumer Products, U.S. 1999 454,500 268,400 104,262 186,176 41,806 8,282
Thomas G. Gerstmyer....... 2001 $ 475,833 $ 361,500 $ 69,990 $ -- -- $ 10,194
Vice President, 2000 459,000 347,600 63,544 283,166 36,581 9,777
Pharmaceuticals, U.S.(7) 1999 391,833 260,600 19,509 320,255 80,129 7,822
Stephen R. Lang........... 2001 $ 464,842 $ 337,300 $ 49,708 $ -- -- $ 7,982
Vice President, Secretary 2000 450,925 291,900 52,288 283,039 36,565 6,903
and General Counsel 1999 437,792 234,300 44,970 366,416 81,141 5,614
- ---------------
(1) Included in this amount in fiscal 2001 was $26,115, $41,691, $46,673,
$22,630, $28,421 and $23,346 for Mr. Hoyt, Mr. Levine, Mr. Veteri, Ms.
Albright, Mr. Gerstmyer and Mr. Lang, respectively, relating to withholding
taxes paid by the Company on the employee's behalf in respect of certain
perquisites and other taxable benefits. Also included is $17,791, $19,146,
$18,729, $13,750, $16,103 and $17,838 for Mr. Hoyt, Mr. Levine, Mr. Veteri,
Ms. Albright, Mr. Gerstmyer and Mr. Lang, respectively, representing the
imputed annual income related to Company provided automobiles, $14,800,
$7,983 and $7,050 for Mr. Levine, Ms. Albright and Mr. Lang, respectively,
for financial planning services, $25,496 for Mr. Veteri for country club
membership fees and dues and $12,977 for Mr. Hoyt for personal use of the
corporate aircraft.
(2) On March 31, 2001, Mr. Levine held 243,442 shares of deferred stock awarded
under the LTIP, the market value of which was $6,064,140, Mr. Veteri held
214,801 shares, the market value of which was $5,350,693, Ms. Albright held
33,132 shares, the market value of which was $825,318, Mr. Gerstmyer held
35,710 shares, the market value of which was $889,536, and Mr. Lang held
50,316 shares, the market value of which was $1,253,372. Dividends
accumulated since the date of grant are paid to the recipient of the award
at vesting. Upon his retirement on December 31, 2000, all shares of deferred
stock that had previously been awarded to Mr. Hoyt vested. Such shares had a
market value at such date of $12,958,784. The Company repurchased 154,775 of
such shares for $5,166,389, their market value at such date. Such amount,
together with the accumulated dividends on the deferred stock from the date
of
6
9
grant, was applied to the withholding taxes required to be paid by Mr. Hoyt
in connection with the vesting of the deferred stock.
(3) Includes Company contributions vested pursuant to the Supplemental
Retirement and Savings Plan and the Executive Savings Plan and premiums paid
by the Company with respect to the term life portion of split-dollar life
insurance policies with respect to the Named Executives. The Named
Executives do not have any interest in the cash surrender value under such
policies. The vested contributions to the Supplemental Retirement Savings
Plan and the Executive Pension Benefits Plans for each Named Executive for
fiscal 2001 are as follows: Mr. Hoyt -- $20,790, Mr. Levine -- $19,993, Mr.
Veteri -- $16,846, Ms. Albright -- $9,495, Mr. Gerstmyer -- $9,441 and Mr.
Lang -- $3,342. The premiums paid with respect to the term life portion of
the split-dollar insurance for each Named Executive for fiscal 2001 are as
follows: Mr. Hoyt -- $6,181, Mr. Levine -- $1,878, Mr. Veteri -- $1,080, Ms.
Albright -- $808, Mr. Gerstmyer -- $753 and Mr. Lang -- $1,589. Also
includes $293,192 in the case of Mr. Hoyt, representing amounts paid to him
at the time of his retirement for accrued vacation pay.
(4) Mr. Hoyt retired on December 31, 2000. Mr. Hoyt continues to provide
consulting services to the Company, for which he received $207,900 for the
period from January 1, 2001 through March 31, 2001. See "Compensation of
Directors."
(5) Mr. Levine was appointed Chairman of the Board and Chief Executive Officer
effective January 1, 2001. Prior to that time, he served as President and
Chief Operating Officer.
(6) Mr. Veteri was appointed President and Chief Operating Officer effective
January 1, 2001. Prior to that time, he served as Executive Vice President
and Chief Financial Officer.
(7) Mr. Gerstmyer was appointed Vice President, Pharmaceuticals, U.S. in January
1999.
No options to purchase shares of the Company's Common Stock were granted to
the Named Executives pursuant to the LTIP during fiscal 2001.
No options were exercised by the Named Executives during fiscal 2001. The
following table sets forth information with respect to the unexercised options
held by them at March 31, 2001.
FISCAL YEAR-END OPTION VALUES
NUMBER OF SHARES OF
COMMON STOCK UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT MARCH 31, 2001(#) AT MARCH 31, 2001($)(1)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
Henry H. Hoyt, Jr......................... 1,059,625 -- $9,291,431 $ --
Ralph Levine.............................. 464,921 216,614 $4,290,297 $1,564,801
Paul A. Veteri............................ 428,298 191,130 $3,988,275 $1,380,704
T. Rosie Albright......................... 154,399 55,694 $1,547,401 $ 394,754
Thomas G. Gerstmyer....................... 49,210 67,500 $ 420,141 $ 545,385
Stephen R. Lang........................... 92,792 82,354 $ 821,174 $ 625,848
- ---------------
(1) Calculated by determining the difference between the exercise price and the
closing price of the Company's Common Stock on the New York Stock Exchange
on March 31, 2001.
The Employees' Retirement Plan of Carter-Wallace, Inc. (the "Retirement
Plan") is a noncontributory defined benefit plan. The Retirement Plan provides
for a pension payable upon retirement at age 65 in an amount calculated on the
basis of the number of years of credited service and the individual's average
covered compensation during the five consecutive highest paid years in the
ten-year period immediately preceding the individual's retirement date. Covered
compensation does not include deferred compensation or other incentive
compensation. The Retirement Plan permits early retirement and deferred
retirement under specified conditions.
7
10
Amounts payable under the Retirement Plan may not exceed the limitation
imposed by Section 415 of the Internal Revenue Code of 1986, as amended (the
"Code") (currently $140,000, but subject to periodic cost-of-living adjustments,
or the individual's average covered compensation for his three highest paid
years, whichever is less) and the amount of credited compensation which may be
taken into account in the computation of pension benefits may not exceed the
amount permitted under Section 401(a)(17) of the Code (currently $170,000,
subject to cost-of-living adjustments). Amounts shown in the table below include
benefits in excess of such limitations that are payable under the Executive
Pension Benefits Plan and the Executive Pension Benefits Core Plan
(collectively, the "Executive Pension Benefits Plans") described below.
The Executive Pension Benefits Plans are unfunded plans that provide for
the payment of vested pension benefits that would otherwise be payable under the
Retirement Plan but for the limitations of Sections 415 and 401(a)(17) of the
Code and the exclusion from covered compensation of amounts deferred under the
Executive Savings Plan and that mitigate the reduction in retirement benefits of
corporate officers who elect early retirement. Corporate officers' covered
compensation used in calculating benefits under the Executive Pension Benefits
Plans includes accrued bonuses.
PENSION PLAN TABLE
COVERED 10 YEARS 20 YEARS 30 YEARS 40 YEARS
COMPENSATION SERVICE SERVICE SERVICE SERVICE
- ------------ -------- ---------- ---------- ----------
$ 800,000 $156,314 $ 312,627 $ 470,784 $ 630,784
$1,200,000 $236,314 $ 472,627 $ 710,784 $ 950,784
$1,600,000 $316,314 $ 632,627 $ 950,784 $1,270,784
$2,000,000 $396,314 $ 792,627 $1,190,784 $1,590,784
$2,400,000 $476,314 $ 952,627 $1,430,784 $1,910,784
$2,800,000 $556,314 $1,112,627 $1,670,784 $2,230,784
$3,200,000 $636,314 $1,272,627 $1,910,784 $2,550,784
The above table shows the estimated annual benefits payable on retirement
to eligible employees, including officers and directors, under the Retirement
Plan and the Executive Pension Benefits Plans as in effect on March 31, 2001.
Amounts shown are based on the assumptions that the Retirement Plan and the
Executive Pension Benefits Plans remain in effect without change and that the
individual receives a straight life benefit with no reduction to allow for
payment to a surviving spouse, as is permitted by the Retirement Plan and the
Executive Pension Benefits Plans.
The above computation of benefits assumes continued employment to at least
age 65 and covered compensation as described above. Amounts shown are before
applicable federal and state income taxes payable by the recipient and are net
of a portion of applicable Social Security benefits received. The portion of the
benefits accrued as of September 30, 1980 is subject to annual cost-of-living
adjustments.
Covered remuneration for fiscal 2001 and credited years of service for
purposes of the Retirement Plan and the Executive Pension Benefits Plans at
March 31, 2001 for each Named Executive were $2,404,650 and 39 years for Mr.
Levine; $1,820,200 and 25 years for Mr. Veteri; $856,157 and five years for Ms.
Albright, $837,333 and 19 years for Mr. Gerstmyer, and $802,142 and four years
for Mr. Lang. Mr. Hoyt retired on December 31, 2000 and received a lump sum
payment in respect of his benefits under the Retirement Plan and the Executive
Pension Benefits Plans of $19,401,840.
EMPLOYMENT AGREEMENTS AND TERMINATION AND CHANGE IN CONTROL ARRANGEMENTS
The Company has entered into employment agreements with Messrs. Levine and
Veteri and Ms. Albright.
The employment agreements with Mr. Levine and Mr. Veteri provide for their
employment at base salaries of not less than $1,350,000 and $950,000,
respectively. Pursuant to these agreements, each of Mr. Levine and Mr. Veteri
will be entitled to certain additional payments if his employment is terminated
by
8
11
the Company for any reason other than for cause or is terminated by him as a
result of a diminution in his position, authority, duties or responsibilities or
in certain other circumstances. In such event, Mr. Levine or Mr. Veteri, as the
case may be, shall receive a lump sum payment equal to three times the sum of
his annual base salary at the time of termination and the greater of 100% of the
target bonus for the year of termination or the highest bonus earned by him in
any of the three preceding years. In addition, he shall receive an increased
benefit under the Company's Executive Pension Benefits Plan based on his final
salary and bonus as determined above and credit for five additional years of
service and, in the case of Mr. Veteri, five additional years of age, and he and
his family will be eligible to continue to participate in certain benefit
programs, including medical and life insurance, for three years following
termination or such longer period as an applicable plan or program provides. Mr.
Levine and Mr. Veteri will be made whole on an after-tax basis in the event any
excise tax becomes payable on such payments and other amounts they are entitled
to receive from the Company.
Ms. Albright's employment agreement provides for her employment at a base
salary of at least $477,400 per year through December 3, 2003.
In addition to the base salary provided for under the employment
agreements, such persons are entitled to annually determined bonus payments
pursuant to the Company's Profit Sharing Plan. The actual cash compensation paid
to such persons with respect to fiscal 2001 is disclosed in the Summary
Compensation Table.
The Company has also entered into agreements with certain executive
officers, including Ms. Albright, Mr. Gerstmyer and Mr. Lang, that provide for
continuation of their employment for two years in the event of a Change in
Control of the Company. During such two-year period, they will be entitled to
receive a salary equal to the highest annual base salary for any of the three
fiscal years immediately preceding the Change in Control and an annual bonus
equal to the greater of 100% of the target bonus for the year in which the
Change in Control occurs or the highest bonus earned during the three-year
period preceding the Change in Control and to receive benefits at least equal to
those in effect at the time the Change in Control occurs. If employment is
terminated by the Company for any reason other than for cause or is terminated
by the officer as a result of a diminution in position, authority, duties or
responsibilities or in certain other circumstances, the Company shall be
obligated to pay such officer a lump sum payment equal to two times the annual
salary and bonus determined in the manner described above and an increased
benefit under the Company's Executive Pension Benefits Plan based on final
salary and bonus as determined above and credit for three additional years of
service and treating such benefit as fully vested. In addition, the Company will
continue the benefits specified above for a two-year period following
termination of employment or such longer period as an applicable plan or program
provides. The executive officers will be made whole on an after-tax basis in the
event any excise tax becomes payable on such payments and other amounts they are
entitled to receive from the Company.
Pursuant to the LTIP, outstanding awards of deferred stock become fully
vested and outstanding options become immediately exercisable upon the
occurrence of a Change in Control of the Company. Upon termination of employment
following a Change in Control in which the outstanding shares of Common Stock of
the Company remain outstanding or are exchanged for securities of another
corporation in a merger or consolidation, options will remain exercisable for
the balance of their term and, upon exercise of an option within one year after
the occurrence of a Change in Control, the optionee will be entitled to receive,
in addition to the shares of Common Stock or securities of such other
corporation thereby purchased, a cash payment in respect of each such share
equal to the excess, if any, of the highest price paid or offered for the Common
Stock during the six-month period preceding the Change in Control over the
market price of the Common Stock on the date of exercise. Upon consummation of a
Change in Control in which the outstanding shares of Common Stock are cancelled
or retired in connection with a merger or consolidation in exchange for cash,
each outstanding option shall be cancelled and the holder thereof shall be
entitled to receive a cash payment equal to the excess of the cash consideration
paid to holders of Common Stock in such merger or consolidation over the option
exercise price.
A Change in Control also results in the immediate vesting and payment of
benefits under the Executive Pension Benefits Plans and, in the case of certain
officers (including certain of the Named Executives), the
9
12
elimination of early retirement reductions. Participants will be made whole on
an after-tax basis in the event any excise tax becomes payable as a result of
the payment of benefits under the Executive Pension Benefits Plan.
Change in Control is defined for purposes of the LTIP, the Executive
Pension Benefits Plans and the agreements described above with certain executive
officers as the acquisition by any person, other than a member of the Hoyt
family or trusts for the benefit of or parties controlled by them, of (i) more
than 25% of the voting power of the Company's outstanding securities, (ii)
certain changes in the composition of the Company's Board of Directors, (iii)
certain business combination transactions or (iv) any other event that the Board
of Directors determines, in its discretion, would materially alter the structure
of the Company or its ownership.
LOANS TO EXECUTIVE OFFICERS
During fiscal 2000, the Company loaned four of the Named Executives and two
other executive officers the amount of the withholding taxes required to be paid
by them in connection with the vesting of deferred stock awards granted in
fiscal 1996 as follows: Mr. Hoyt -- $423,515; Mr. Levine -- $220,636; Mr.
Veteri -- $197,466; Ms. Albright -- $107,384; Adrian J.L. Huns -- $68,459; and
Peter J. Griffin -- $53,832. With the exception of the loan to Mr. Huns, all of
such loans were made on February 1, 2000 and bore interest at 6.11%, the
short-term Treasury Bill rate at such date. The loan to Mr. Huns was made on
March 1, 2000 and bore interest at 6.35%, the then short-term Treasury Bill
rate. All of such loans were repaid in full, with interest, on or before May 15,
2000.
COMPENSATION OF DIRECTORS
Directors, other than those who are salaried employees of the Company,
receive an annual fee of $45,000 for serving on the Board of Directors and a fee
of $500 for each meeting of the Audit Committee that they attend. Directors who
are salaried employees of the Company receive a fee of $250 for each meeting of
the Board of Directors that they attend.
The Company has entered into a consulting agreement with Henry H. Hoyt, Jr.
pursuant to which Mr. Hoyt is providing consulting services to the Company for
up to five days per month during a consulting term that commenced with his
retirement and will end on December 31, 2005 or, earlier, upon his death or
disability, termination of such services by the Company for cause or by him as a
result of a diminution in his position, authority, duty or responsibilities or
in certain other circumstances or a Change in Control of the Company or, if he
has agreed to a continuation period following a Change in Control during which
he will continue to render consulting services, the end of such period. The
Company has agreed to use its best efforts to cause Mr. Hoyt to be nominated as
a director during the consulting term. The Company has agreed to pay Mr. Hoyt a
monthly consulting fee during the consulting term equal to $69,300. He will also
be entitled to the fees otherwise payable to a non-employee director and he and
his family will be eligible to continue to participate in certain benefit
programs, including medical and life insurance, during the consulting term. In
the event the consulting term ends following a Change in Control, Mr. Hoyt shall
receive a lump sum payment equal to 60 times the monthly consulting fee less any
monthly consulting fees previously paid. Pursuant to the consulting agreement,
all options and deferred stock held by Mr. Hoyt at the time of his retirement
fully vested and such options remain exercisable for the remainder of the
ten-year stated term. Mr. Hoyt will be made whole on an after-tax basis in the
event that any excise tax becomes payable on the payments and other amounts
received from the Company pursuant to the terms of his consulting agreement.
REPORT ON EXECUTIVE COMPENSATION
General
The Company's Compensation Committee, consisting of Messrs. Baldwin, Cruess
(Chairman) and Rinaldi and Mrs. Garcia, non-employee Directors of the Company,
makes recommendations to the Board of Directors with respect to the base
salaries of the Company's Chief Executive Officer and its President and Chief
Operating Officer. The base salaries of the Company's Chief Executive Officer
and its President are
10
13
determined by the entire Board of Directors after consideration of the
recommendation of the Compensation Committee. The compensation of all other
executive officers is recommended to the Board for its determination by the
Company's Executive Committee.
The Company's compensation program for its executive officers consists of
the following significant components: annually determined salary; annually
determined bonus payments pursuant to the Company's Profit Sharing Plan; and
periodic grants of deferred stock and stock options. The elements of the
Company's compensation are designed with different purposes in mind. Salary and
bonus payments are primarily intended to compensate for current and past
performance. Deferred stock and stock options are awarded in an effort to
provide a strong incentive for outstanding long-term performance. The deferred
stock is forfeitable generally if the executive leaves the Company prior to four
years from the date on which the deferred stock was awarded or if such executive
is terminated for cause. Awards of deferred stock and stock options are directly
tied to the interests of the Company's shareholders, inasmuch as the value of
the deferred stock will increase or decrease based upon the future price of the
Company's stock and the options will be of value to the holder only if the
future price of the Company's stock exceeds the price at which the options are
exercisable.
In determining the amount and the form of the executive compensation
package for fiscal 2001, the Compensation Committee and the Board considered the
Company's overall performance over a number of years rather than considering any
single year. The Compensation Committee also considered the objectives the
Company desires to achieve in the future as well as the challenges with which
the Company would be confronted. Given this overall view, the Compensation
Committee considered several specific factors. They included continued efforts
to acquire and market new drugs, continued efforts to license the Company's
products to others and continued efforts to upgrade the Company's management of
its inventory and thus improve the Company's working capital and cash flow.
However, in making the compensation determination, no specific weight was given
to any one factor. In December 1995, the Company adopted the LTIP, under which
certain key employees of the Company have been granted awards of deferred stock
and options to purchase the Company's Common Stock, as indicated above.
Chief Executive Officer Compensation
The compensation of Henry H. Hoyt, Jr. and Ralph Levine, each of whom
served as the Company's Chief Executive Officer for a portion of fiscal 2001,
consisted of salary and bonus payments. In determining Mr. Hoyt's fiscal 2001
base salary, the Compensation Committee granted a merit increase of 4%. Upon his
election as Chief Executive Officer effective January 1, 2001, Mr. Levine's
salary was increased from $956,200 to $1,350,000.
Submitted by the Company's Board of Directors:
David M. Baldwin Ralph Levine
Richard L. Cruess, M.D. Herbert M. Rinaldi
Suzanne H. Garcia Donald J. Stack
Henry H. Hoyt, Jr. Paul A. Veteri
Scott C. Hoyt
TAX DEDUCTION CONSIDERATIONS
Section 162(m) of the Internal Revenue Code of 1986 (the "Code") limits to
$1 million the Company's deduction for compensation paid in any taxable year to
the Company's Chief Executive Officer and the Named Executives, subject to an
exception for "performance-based compensation." While compensation paid by the
Company to such individuals will be subject to this deduction limit, income
realized from the exercise of stock options granted under the LTIP will qualify
as performance-based compensation and will be exempt from the limit.
11
14
PERFORMANCE GRAPH
The following graph compares the yearly change in the cumulative total
shareholder return on the Company's Common Stock for each of the Company's last
five fiscal years with the cumulative total return (assuming reinvestment of
dividends) of (i) the Wilshire 5000 Index and (ii) a peer group of five
companies within the Company's Standard Industry Codes (SIC) and with market
capitalization similar to that of the Company consisting of the following
companies: Alpharma Inc., Block Drug Company, Inc., Ivax Corporation,
Alberto-Culver Corporation and Del Laboratories. The graph assumes $100 invested
on March 31, 1996 in the Company's Common Stock and each of the indices.
[PERFORMANCE CHART]
-------------------------------------------------------------------------------------------
1996 1997 1998 1999 2000 2001
-------------------------------------------------------------------------------------------
Carter-Wallace $100.0 $ 84.3 $112.9 $112.4 $118.4 $157.6
Peer Group $100.0 $ 81.7 $ 91.8 $109.0 $283.3 $359.7
Wilshire 5000 $100.0 $115.5 $170.7 $193.0 $238.6 $179.9
AUDIT COMMITTEE
The Board of Directors has adopted a written charter for the Audit
Committee, a copy of which is attached to this Proxy Statement as Appendix A.
The Board of Directors has determined that the members of the Audit Committee
are "independent," as defined in the corporate governance listing standards of
the New York Stock Exchange relating to audit committees, meaning that they have
no relationship to the Company that may interfere with the exercise of their
independence from management and the Company.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors oversees the Company's
financial reporting process on behalf of the Board of Directors. It meets with
management and the Company's independent public
12
15
accountants throughout the year and reports the results of its activities to the
Board of Directors. In this connection, the Audit Committee has done the
following:
- Reviewed and discussed the audited financial statements for the fiscal
year ended March 31, 2001 with the Company's management;
- Discussed with KPMG LLP, the Company's independent auditors, the matters
required to be discussed by SAS 61 (Codification of Statements on
Auditing Standards), as amended; and
- Received written disclosure regarding independence from KPMG LLP as
required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees) and discussed with KPMG LLP its
independence.
Based on the foregoing, the Audit Committee recommended to the Board of
Directors that the audited financial statements be included in the Company's
Annual Report on Form 10-K for the year ended March 31, 2001.
Audit Committee
Herbert M. Rinaldi, Chairman
David M. Baldwin
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors will recommend at the Meeting that a resolution be
adopted ratifying the appointment by the Board of Directors of the firm of KPMG
LLP to audit the financial statements of the Company and its subsidiaries for
the current fiscal year. If the stockholders do not ratify the appointment of
KPMG LLP as independent auditors, the Board of Directors will consider the
selection of another accounting firm. A representative of KPMG LLP is expected
to be present at the Meeting, to have an opportunity to make a statement if he
desires to do so and to be available to answer any questions relating to their
audit of the financial statements of the Company for fiscal 2001.
The fees billed to the Company by KPMG LLP during fiscal 2001 were as
follows:
Annual Audit Fees................................. $835,000
Other Audit Related Fees.......................... 301,500
All Other Fees.................................... 517,800
The Annual Audit Fees include amounts billed for the audit of the Company's
annual consolidated financial statements for the fiscal year ended March 31,
2001 and the review of the financial statements included in the Forms 10-Q filed
by the Company during the year. Other Audit Related Fees relate primarily to
audits of the Company's business segments in connection with the Proposed Sale
Transactions. There were no Financial Information System Design and
Implementation Fees. Fees billed for other non-audit services primarily include
tax related services, including services related to the Proposed Sale
Transactions. It is expected that KPMG LLP will provide similar non-audit
services during fiscal 2002. The Audit Committee has considered and concluded
that the provision of the non-audit services is compatible with maintaining the
independence of KPMG LLP.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS RESOLUTION. PROXIES
SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS STOCKHOLDERS SPECIFY
A CONTRARY VOTE.
OTHER BUSINESS
The Board of Directors is not aware of any matter other than those referred
to above that may be presented for action at the Meeting. If any other matter
should be presented, the persons named as proxies will vote on such matter in
accordance with their best judgment.
13
16
SUBMISSION OF STOCKHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
Stockholder proposals for presentation at the Company's 2002 Annual Meeting
of Stockholders must be received in writing by the Secretary of the Company at
the Company's executive offices, 1345 Avenue of the Americas, New York, New York
10105, not later than February 20, 2002 in order to be considered for inclusion
in the Company's Proxy Statement and form of proxy.
MISCELLANEOUS
The solicitation of proxies will be by mail and the cost will be borne by
the Company. The Company will request banks, brokers and other nominees,
custodians and fiduciaries to forward proxy material to beneficial owners and to
seek authorization for the execution of proxies, and the Company will reimburse
them for their expense in this connection.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED MARCH 31, 2001 (WITHOUT EXHIBITS) AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION WILL BE MADE AVAILABLE WITHOUT CHARGE TO ANY STOCKHOLDER
UPON WRITTEN REQUEST ADDRESSED TO STEPHEN R. LANG, SECRETARY, AT THE COMPANY'S
PRINCIPAL EXECUTIVE OFFICES, CARTER-WALLACE, INC., 1345 AVENUE OF THE AMERICAS,
NEW YORK, NEW YORK 10105.
By Order of the Board of Directors
STEPHEN R. LANG
Secretary
New York, New York
June 20, 2001
14
17
APPENDIX A
CARTER-WALLACE, INC.
CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
I. AUDIT COMMITTEE PURPOSE
The Audit Committee is appointed by the Board of Directors to assist the
Board in fulfilling its oversight responsibilities. The Audit Committee's
primary duties and responsibilities are to:
- Monitor the integrity of the Company's financial reporting process and
systems of internal controls regarding finance, accounting, and legal
compliance.
- Monitor the independence and performance of the Company's independent
auditors and internal auditing department.
- Provide an avenue of communication among the independent auditors,
management, the internal auditing department, and the Board of Directors.
While the Audit Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Audit Committee to plan or conduct audits or
to determine that the Company's financial statements are complete and accurate
and are in accordance with generally accepted accounting principles. This is the
responsibility of management and the Company's independent auditors. The Audit
Committee has the ability to retain, at the Company's expense, special legal,
accounting, or other consultants or experts it deems necessary in the
performance of its duties.
II. AUDIT COMMITTEE COMPOSITION AND MEETINGS
Audit Committee members shall meet the requirements of the New York Stock
Exchange. Initially, the Audit Committee shall be comprised of two or more
directors as determined by the Board, each of whom shall be independent
nonexecutive directors, free from any relationship that would interfere with the
exercise of his or her independent judgment. All members of the Committee shall
have a basic understanding of finance and accounting and be able to read and
understand fundamental financial statements. On or before May 31, 2001, the
Audit Committee shall be comprised of three or more directors, and at least one
member of the Committee shall have accounting or related financial management
expertise. Audit Committee members shall be appointed by the Board and the
Committee Chair shall be designated by the Board. If the Audit Committee Chair
is not present, the Committee may designate a Chair.
The Committee shall meet at least four times annually, or more frequently
as circumstances dictate. The Audit Committee Chair shall prepare and/or approve
an agenda in advance of each meeting. The Committee should meet privately in
executive session at least annually with management, the director of the
internal auditing department and the independent auditors, and as a committee to
discuss any matters that the Committee or each of these groups believes should
be discussed. The Committee shall also meet with management, as the Committee
deems necessary.
III. AUDIT COMMITTEE RESPONSIBILITIES AND DUTIES
Review Procedures
1. Review and reassess the adequacy of this Charter at least annually.
Submit the Charter to the Board of Directors for approval and have the document
published at least every three years in accordance with SEC regulations.
2. Review the Company's annual audited financial statements prior to
filing or distribution. Review should include discussion with management and
independent auditors of significant issues regarding accounting principles,
practices and judgments.
A-1
18
3. In consultation with the management, the independent auditors, and the
internal auditors, consider the integrity of the Company's financial reporting
processes and controls. Discuss significant financial risk exposures and the
steps management has taken to monitor, control, and report such exposures.
Review significant findings prepared by the independent auditors and the
internal auditing department together with management's responses.
Independent Auditors
1. The independent auditors are ultimately accountable to the Audit
Committee and the Board of Directors. The Audit Committee shall review the
independence and performance of the auditors and annually recommend to the Board
of Directors the appointment of the independent auditors or approve any
discharge of auditors when circumstances warrant.
2. Approve the fees and other significant compensation to be paid to the
independent auditors.
3. On an annual basis, the Committee should review and discuss with the
independent auditors all significant relationships they have with the Company
that could impair the auditors' independence.
4. Review the independent auditors' audit plan -- discuss scope, staffing,
locations, reliance upon management, and internal audit and general audit
approach.
5. Discuss the results of the audit with the independent auditors. Discuss
certain matters required to be communicated to audit committees in accordance
with AICPA SAS 61.
6. Consider the independent auditors' judgments about the quality and
appropriateness of the Company's accounting principles as applied in its
financial reporting.
Internal Audit Department and Legal Compliance
1. Review the budget, plan, changes in plan, activities, organizational
structure, and qualifications of the internal audit department, as needed.
2. Review the appointment, performance, and replacement of the senior
internal audit executive.
3. Review significant reports prepared by the internal audit department
together with management's response and follow-up to these reports.
Other Audit Committee Responsibilities
1. Annually prepare a report to shareholders as required by the Securities
and Exchange Commission. The report should be included in the Company's annual
proxy statement.
2. Perform any other activities consistent with this Charter, the
Company's by-laws, and governing law, as the Committee or the Board deems
necessary or appropriate.
3. Maintain minutes of meetings and periodically report to the Board of
Directors on significant results of the foregoing activities.
A-2
19
P R O X Y CARTER-WALLACE, INC.
ANNUAL MEETING OF STOCKHOLDERS, JULY 17, 2001
HOTEL DUPONT, 11TH AND MARKET STREETS, WILMINGTON, DELAWARE 19801
This Proxy is solicited on behalf of the Board of Directors
The undersigned hereby appoints RALPH LEVINE and PAUL A. VETERI and either
of them, as proxies with full power of substitution, to represent and to vote
all shares of stock of Carter-Wallace, Inc. that the undersigned is entitled to
vote at the Annual Meeting of Stockholders to be held on July 17, 2001, and all
adjournments thereof, as designated on the reverse side of this Proxy.
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Shares represented by this Proxy will be voted as specified. If no
specification is made, this Proxy will be voted FOR Proposals (1) and (2).
(Continued and to be dated and signed on the reverse side)
CARTER-WALLACE, INC.
P.O. BOX 11068
NEW YORK, NY 10203-0068
20
--------
| |
--------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS (1) AND (2).
(1) Election of Directors: FOR all nominees
listed below / /
WITHHOLD AUTHORITY to vote
for all nominees listed
below / /
*EXCEPTIONS / /
Nominees: D.M. Baldwin, R.L. Craess, M.D., S.H. Garcia, H.H. Hoyt, Jr., S.C.
Hoyt, R. Levine, H.M. Rinaldi, D.J. Stack, P.A. Veteri
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write than nominee's name in the space provided below.)
*Exceptions,
------------------------------------------------------------------
(2) Proposal to ratify the appointment of KPMG LLP
as independent auditors for the Company for the
current fiscal year. FOR / /
AGAINST / /
ABSTAIN / /
Change of Address and
or Comments Mark Here / /
{Please sign exactly as name appears. If stock
is registered in two names, both should sign.}
DATED: , 2001
--------------------------------
| SIGNED:
| --------------------------------------
|
------- --------------------------------------
Votes must be indicated
(x) in Black or Blue ink. / X /
Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope.