1
EXHIBIT 1
EXCERPTS FROM COMPANY
PROXY STATEMENT DATED
JUNE 10, 1994
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following information is given as to the chief executive officer
and the four other most highly paid executive officers of the Company for
services rendered in all capacities during the fiscal year ended December 31,
1991, the one month period ended January 31, 1992, the fiscal year ended
January 31, 1993 ("fiscal '93") and the fiscal year ended January 31, 1994
("fiscal '94").
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------
Restricted Securities
Name and Other Annual Stock Underlying All Other
Principal Position Year Salary Bonus Compensation(2) Award(s)(3) Options/SARs (#) Compensation(4)
- ------------------ ---- ------ ----- --------------- ----------- ---------------- --------------
Burton A. Dole, Jr. 1994 $320,830 $48,123 $ - $ - 30,000 $4,027
Chairman, President 1993 298,750 268,845 - - 30,000 3,801
and Chief Executive Jan 1992 23,750 3,563 - - - 487
Officer 1991 282,083 42,313 5,329 - 25,000 3,263
John R. Morrow 1994 212,054 25,500 - - 15,000 3,846
Executive Vice 1993 199,337 143,507 - - 15,000 3,704
President and Chief Jan 1992 16,000 1,920 - - - 338
Operating Officer 1991 190,000 22,800 1,709 - 15,000 3,143
Robert L. Doyle 1994 182,170 19,128 - - 7,500 3,819
Senior Vice 1993 167,333 108,336 20,888 - 5,000 3,582
President Jan 1992 13,333 1,400 1,741 - - 364
1991 158,333 16,625 2,428 - 7,000 3,143
Thomas E. Jones 1994 170,840 58,748 - - 7,500 3,807
Senior Vice 1993 149,167 105,718 1,661 - 7,000 3,672
President Jan 1992 11,667 2,620 138 - - 253
1991 138,336 33,620 14,230 - 7,000 3,143
Alexander R. Rankin(5) 1994 136,865 47,903 - 34,125 15,000 3,433
Vice President 1993 - - - - - -
Jan 1992 - - - - - -
1991 - - - - - -
____________________
(1) Compensation deferred at election of executive includable in category
and year earned.
(2) Amounts in this column are above-market earnings on deferred compensation
accounts maintained in trust accounts in a bank. Such amounts include
investment earnings and additional amounts to be paid by the Company in
future years based upon earnings and the participants contributions
during the year.
(3) A grant of 1,500 shares of restricted stock was made to Mr. Rankin in
connection with his employment by the Company on April 1, 1993. The
shares have a four-year vesting period with 25% of the stock vesting on
the first, second, third and fourth anniversary dates of the award. Mr.
Rankin has the right to vote and receive dividends on the shares. The
value of the award shown in the table was based on the market value of
the shares as of the date of the grant. The market value as of the close
of the fiscal year was $30,000.
(4) Amounts in this column include Company matching contributions for
fiscal '94 under the Company's 401(k) savings plan as follows: Mr.
Dole, $3,432; Mr. Morrow, $3,336; Mr. Doyle, $3,311; Mr. Jones,
$3,296; and Mr. Rankin, $2,923. The balance shown for fiscal '94
represents insurance premiums for term life insurance for the benefit
of such executive officers.
(5) Mr. Rankin was hired by the Company and became an executive officer of
the Company in April 1993.
2
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
The following table provides information on option grants in fiscal
1994 to the named executive officers.1
Potential Realizable Value at
Assumed Annual Rates of Stock
Individual Grants Price Appreciation for Option Term(1)
- ----------------------------------------------------------------------------- ----------------------------------
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees in Base Price Expiration
Name Granted (#)(2) Fiscal Year (S/Sh) Date 0%(3) 5%(4) 10%(4)
- ---- ------------ ------------ ----------- ---------- ----- ----- ------
Burton A. Dole, Jr. 30,000 14.0 $22.75 4/1/2003 $0 $429,210 $1,087,470
John H. Morrow 15,000 7.0 22.75 4/1/2003 0 214,605 543,870
Robert L. Doyle 7,500 3.5 22.75 4/1/2003 0 107,303 271,935
Thomas E. Jones 7,500 3.5 22.75 4/1/2003 0 107,303 271,935
Alexander R. Rankin 15,000 7.0 22.75 4/1/2003 0 214,605 543,870
____________________
(1) Based on actual term and annual compounding.
(2) Mr. Dole's option is exercisable 15,000 shares on 4/1/94, 10,605
shares on 4/1/95 and 4,395 shares on 1/1/03. Mr. Morrow's option is
exercisable 7,500 shares on 4/1/94, 3,105 shares on 4/1/95 and 4,395
shares on 1/1/03. Mr. Doyle's option is exercisable 1,134 shares on
1/1/97 and 4,395 shares on 1/1/98 and 1,971 shares on 1/1/99. Mr.
Jones' option is exercisable 1,519 shares on 1/1/96, 4,395 shares on
1/1/97 and 1,586 shares on 1/1/98. Mr. Rankin's option is exercisable
4,395 shares on 4/1/94, 4,395 shares on 4/1/95, 4,395 shares on 1/1/96
and 1,815 shares on 1/1/97. However, options may only be exercised as
to shares exercisable during employment (except for death, total
disability or retirement pursuant to Company retirement plans) and
must be exercised within 90 days after termination of employment. All
options become immediately exercisable for a period of 30 days
preceding certain events that may result in a change of control or
liquidation or sale of substantially all of the assets of the Company.
The exercise price may be paid by delivery of already-owned shares and
tax withholding obligations may be paid by offset of the underlying
shares, subject to certain conditions.
(3) No gain to the optionees is possible without an increase in stock
appreciation, which will benefit all stockholders.
(4) These amounts represent certain assumed rates of appreciation only and
have no correlation to current or future market conditions.
3
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES
The following table provides information on options exercised
in fiscal '94 by the named executive officers and the value of such officers'
unexercised options at January 31, 1994.
Number of Securities Value of Unexercised
Shares Acquired Value Underlying Unexercised In-the-Money Options/
Name on Exercise (#) Realized(1) Options/SARs at FY-End (#) SARs at FY-End(*)
- ---- ---------------- ----------- -------------------------- -------------------------
Exercisable/Unexercisable Exercisable/Unexercisable
-------------------------- -------------------------
Burton A. Dole, Jr. None None 104,848/79,052 $131,096/None
John H. Morrow 4,947 $62,755 59,133/46,367 236,795/None
Robert L. Doyle None None 18,615/17,885 None/None
Thomas E. Jones 1,000 10,690 23,900/14,500 None/None
Alexander R. Rankin None None None/15,000 None/None
______________
(1) Market value of underlying securities at exercise, minus the exercise
or base price.
(*) Based on the closing stock price on January 31, 1994 of $20.00 per
share, minus the exercise or base price.
4
DIRECTOR COMPENSATION
Directors who are not employees of the Company are compensated
with a retainer fee of $13,000 per annum plus $3,000 per annum for serving as a
member on each committee, plus an additional $1,000 per committee membership if
the director serves as chairman. Separate fees for attendance at meetings of
the Board and committees are not paid. Directors are eligible for group term
life insurance of $50,000 paid for by the Company.
The Company also maintains a retirement plan for non-employee
directors that provides for payments to a retiring director who has completed a
minimum of five years of continuous service and attained the age of 60. Such
payments will equal the larger of the annual retainer currently in effect at
the time of retirement or the highest average annual retainer and committee
fees paid to such director during the three immediately preceding years. The
payment will be reduced by 10% per year for each year of service less than ten
years.
During fiscal '94, the Company also paid Dr. Larson $3,000 for
his services as a member of the Company's Medical Advisory Board and $25,737
for consulting services relating to the Company's continuous blood gas analyzer
products.
5
RETIREMENT BENEFITS
The Company maintains a qualified defined benefit pension
plan, the Restated Puritan-Bennett Pension Plan (the "Retirement Plan"), in
which Mr. Dole, Mr. Morrow, Mr. Doyle, Mr. Jones and Mr. Rankin are
participants. The Company also maintains a nonqualified supplemental pension
plan for designated executive officers, the Puritan-Bennett Corporation
Supplemental Retirement Benefit Plan (the "Supplemental Retirement Plan"),
which provides benefits that would otherwise be denied participants in the
Retirement Plan by reason of certain Internal Revenue Code limitations on
qualified plan benefits. Messrs. Dole, Morrow, Doyle and Jones are
participants in the Supplemental Retirement Plan.
The following table shows the estimated maximum annual pension
benefits payable to employees, including executive officers, upon retirement at
age 65, in various remuneration and years-of-service classifications assuming
the election of a retirement benefit payable as a straight life annuity and
assuming they are covered by both the Retirement Plan and the Supplemental
Retirement Plan.
YEARS OF SERVICE
Remuneration 10 Years 15 Years 20 Years 25 Years 30 or More Years
- ------------ -------- -------- -------- -------- ----------------
$100,000 $14,670 $22,005 $29,340 $36,675 $44,010
200,000 120,000 120,000 120,000 120,000 120,000
300,000 180,000 180,000 180,000 180,000 180,000
400,000 240,000 240,000 240,000 240,000 240,000
500,000 300,000 300,000 300,000 300,000 300,000
Covered compensation includes salary, bonus (both as reported
in the Summary Compensation Table) and other amounts reported on Treasury Form
W-2 plus elective contributions under 401(k) and 125 plans and excludes all
reimbursements or other expense allowances, fringe benefits, moving expenses
and deferred compensation. The calculation of retirement benefits under the
Plans generally is based upon average earnings for the highest five consecutive
years. Sections 401(a)(17) and 415 of the Internal Revenue Code limit the
amount of compensation that may be considered in computing benefits under a
qualified retirement plan. For 1993, the maximum amount of compensation
allowed for use in calculating an individual's pension benefits under the
Retirement Plan was $235,840. For 1994, such maximum amount is $150,000.
The compensation for the 12 months ended December 31, 1993,
covered by the plans for the persons named in the Compensation Table was: Mr.
Dole, $416,291; Mr. Morrow, $263,436; Mr. Doyle, $222,522; Mr. Jones, $204,888
and Mr. Rankin, $184,987.
Those executive officers named in the Summary Compensation
Table have years of credited service under the Plans as follows: Mr. Dole
(14), Mr. Doyle (10), Mr. Jones (20), Mr. Morrow (15) and Mr. Rankin (1). The
above annual pension benefits are not subject to any deduction for Social
Security or other offset amounts.
6
EMPLOYMENT CONTRACT AND TERMINATION OF
EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
The Company has a five-year employment agreement with its
President, Burton A. Dole, Jr., which is automatically extended for an
additional one-year period on each anniversary date of his employment. In the
discretion of the Board of Directors, the minimum annual compensation may be
increased during the term of the agreement. The minimum annual compensation
under this agreement is currently $340,000. In addition, Mr. Dole participates
in the Company's Management Incentive Bonus Plan, and the Company will be
obligated to pay Mr. Dole upon his termination without cause, or upon his
election to terminate the agreement in the event that the Company participates
in a merger or consolidation wherein it is not the surviving corporation or in
the event that the Company liquidates, dissolves or disposes of substantially
all of its assets, the amount of compensation at his minimum annual rate then
in effect for five years. Further, Mr. Dole has the option to terminate the
agreement if any other corporation, person, entity or group thereof acting in
concert shall acquire control of 50% or more of the capital stock of the
Company, in which event, or in the event of Mr. Dole's death, the Company will
be obligated to pay Mr. Dole or his estate, an amount equal to three years'
compensation at the minimum annual rate then in effect. The amounts paid to
Mr. Dole under this agreement for fiscal '94 are included in the Compensation
Table above.
7
INDEBTEDNESS OF MANAGEMENT
During fiscal '94, the Company had outstanding to Robert
Doyle, an executive officer of the Company, a 17-year mortgage loan in an
amount of $178,995, bearing contingent interest equal to 19.16% of the net
appreciated value of the mortgaged property, that is due and owing to the
Company upon the occurrence of any one of certain events described in the loan
note, including the sale or transfer of the property encumbered. This loan
enabled Mr. Doyle to purchase a personal residence necessitated by his
relocation, at the Company's request, during 1989 to an area of the country
that was experiencing at the time unusually high real estate values. In
addition, Mr. Doyle had an outstanding demand loan during fiscal '94 of
$30,000, bearing interest at 7% per year, for personal purposes.
Mr. Rankin, an executive officer of the Company, had an
outstanding swing loan of $325,000, bearing interest at 7% per year, for the
purchase of his residence. This loan was repaid by the end of the year.
Beginning fiscal '94, the Company had outstanding to David
Niles, an executive officer of the Company, a 17-year mortgage loan in an
amount of $130,047, bearing contingent interest equal to 47.4% of the net
appreciated value of the mortgaged property, that is due and owing to the
Company upon the occurrence of any one of certain events described in the loan
note, including the sale or transfer of the property encumbered. This loan
enabled Mr. Niles to purchase a personal residence necessitated by his
relocation, at the Company's request, during 1990 to an area of the country
that was experiencing at the time unusually high real estate values. Mr. Niles
made principal payments of $26,010 during fiscal '94 on this loan and the
remaining balance of this loan was forgiven in connection with another
relocation at the request of the Company during fiscal '94.
8
SECURITY OWNERSHIP OF MANAGEMENT
The following information is given as to the beneficial
ownership of shares of Common Stock of the Company by the above-named executive
officers, by all the directors and by all of the executive officers and
directors as a group as of April 26, 1994.
Name No. of Shares Percent of Class(*)
- ---- ------------- -------------------
Burton A. Dole, Jr.(1),(2). . . . . . . . . . . . . . . . . . . 238,200 1 .9
John H. Marrow(1),(3) . . . . . . . . . . . . . . . . . . . . . . 92,070
Robert L. Doyle, Jr.(1),(4) . . . . . . . . . . . . . . . . . . . 28,018
Thomas E. Jones(1),(5) . . . . . . . . . . . . . . . . . . . . . 45,543
Alexander R. Rankin(1),(6) . . . . . . . . . . . . . . . . . . . 8,595
Andre F. Marion(1) . . . . . . . . . . . . . . . . . . . . . . . . 200
C. Philip Larson, Jr. M.D.(1) . . . . . . . . . . . . . . . . . . 1,400
Charles A. Dubec(1) . . . . . . . . . . . . . . . . . . . . . . . 4,000
Frank P. Wilton(1) . . . . . . . . . . . . . . . . . . . . . . . 1,100
Daniel C. Weary(1) . . . . . . . . . . . . . . . . . . . . . . . 21,000
Thomas A. McDonnell(1) . . . . . . . . . . . . . . . . . . . . . 2,500
All Directors and Executive Officers as a Group(7) . . . . . . 498,320 4 .0
__________________________________
(*) Percentages are omitted for persons who have less than 1% of the shares
outstanding.
(1) Beneficial owner indicated has sole voting and investment power except that
C. Philip Larson, Jr. M.D. shares voting and investment power with respect
to his shares. In addition, shares credited to officers in the Retirement
Savings & Stock Ownership Plan are included in the table as of March 31,
1994. Additional shares may have been accumulated since that date and
participants in that Plan do not have investment power over all of the
shares credited to their accounts. Beneficial ownership of shares held by
the immediate families or family trusts of the executive officers and
directors has been, or is being, specifically disclaimed by certain
nominees, directors and officers in ownership reports filed with the SEC.
(2) Includes 130,927 shares held under options exercisable within 60 days and
15,000 shares of restricted stock.
(3) Includes 66,633 shares held under options exercisable within 60 days and
7,500 shares of restricted stock.
(4) Includes 18,615 shares held under options exercisable within 60 days and
3,750 shares of restricted stock.
(5) Includes 24,476 shares held under options exercisable within 60 days and
4,000 shares of restricted stock.
(6) Includes 4,395 shares held under options exercisable within 60 days and
3,625 shares of restricted stock.
(7) Includes 290,432 shares issuable upon exercise of stock options exercisable
within 60 days and 37,625 shares of restricted stock.