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. )
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by Rule 14a-6(e)(2))
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[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Becton, Dickinson and Company
.................................................................
(Name of Registrant as Specified In Its Charter)
.................................................................
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[Logo]
BECTON, DICKINSON AND COMPANY
1 Becton Drive
Franklin Lakes, New Jersey 07417-1880
www.bd.com
January 2, 2002
Dear Fellow Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of
Becton, Dickinson and Company to be held at 2:00 P.M. on Wednesday, February 13,
2002, at The Woodcliff Lake Hilton, 200 Tice Boulevard, Woodcliff Lake, New
Jersey. Directions to the meeting site are on the back cover of the accompanying
Proxy Statement.
Details of the matters expected to be acted upon at the meeting are listed
in the Notice of Meeting and described in detail in the Proxy Statement.
Your vote is important. We encourage you to vote on the internet, by
telephone or by completing and mailing the enclosed proxy/voting instruction
card in the return envelope provided, so that your shares will be represented
and voted at the meeting even if you cannot attend. If you do not vote by
internet, telephone or mail, you still may attend the Annual Meeting and vote in
person.
Thank you for your continued support of BD.
Sincerely,
CLATEO CASTELLINI EDWARD J. LUDWIG
CLATEO CASTELLINI EDWARD J. LUDWIG
Chairman of the Board President and Chief Executive Officer
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
BECTON, DICKINSON AND COMPANY
1 BECTON DRIVE
FRANKLIN LAKES, NEW JERSEY 07417-1880
The Annual Meeting of Shareholders of BECTON, DICKINSON AND COMPANY will be
held at 2:00 P.M. on Wednesday, February 13, 2002, at The Woodcliff Lake Hilton,
200 Tice Boulevard, Woodcliff Lake, New Jersey, to consider and act upon the
following proposals:
1. The election of three directors;
2. The approval of the selection of independent auditors;
3. The adoption of the 2002 Stock Option Plan;
4. A shareholder proposal relating to cumulative voting; and
5. Such other business as may properly come before the meeting.
Shares represented by properly executed proxies that are hereby solicited by
the Board of Directors of Becton, Dickinson and Company will be voted in
accordance with instructions specified therein. Shares represented by proxies
that are not limited to the contrary will be voted in favor of the election as
directors of the persons nominated in the accompanying Proxy Statement, for
proposals 2 and 3, and against proposal 4.
Only shareholders of record at the close of business on December 18, 2001
will be entitled to vote at this meeting.
By order of the Board of Directors,
BRIDGET M. HEALY
BRIDGET M. HEALY
Vice President, General Counsel and
Secretary
Dated: January 2, 2002
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AND VOTED WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING. YOU MAY REGISTER YOUR VOTE ON THE INTERNET OR BY
TELEPHONE BY FOLLOWING THE INSTRUCTIONS ON YOUR PROXY/VOTING INSTRUCTION CARD,
OR BY PROMPTLY RETURNING YOUR SIGNED AND DATED PROXY/VOTING INSTRUCTION CARD IN
THE ENCLOSED ENVELOPE.
PROXY STATEMENT
-------------------
2002 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 13, 2002
-------------------
BECTON, DICKINSON AND COMPANY
1 BECTON DRIVE
FRANKLIN LAKES, NEW JERSEY 07417-1880
-------------------
GENERAL INFORMATION
The enclosed proxy/voting instruction card ('proxy') is solicited by the
Board of Directors (the 'Board') of Becton, Dickinson and Company, a New Jersey
corporation (the 'Company' or 'BD'), for use at the Annual Meeting of
Shareholders to be held at 2:00 P.M. on Wednesday, February 13, 2002, at The
Woodcliff Lake Hilton, 200 Tice Boulevard, Woodcliff Lake, New Jersey. A proxy
may be revoked at any time before it is voted by sending written notice of
revocation to the Secretary of the Company, by delivering a duly executed proxy
bearing a later date or by voting in person at the meeting. If you vote by
telephone or internet, you may also revoke your proxy with a timely and valid
later telephone or internet vote, as the case may be. This proxy statement and
the proxy/voting instruction card are being mailed to shareholders of the
Company on or about January 3, 2002.
At the close of business on December 18, 2001, the record date fixed by the
Board for determining the shareholders entitled to notice of and to vote at the
meeting, there were 258,503,285 shares of the Company's Common Stock (the
'Common Stock') outstanding, each entitled to one vote. In addition, on
December 18, 2001, there were 679,018 shares of the Company's Series B ESOP
Convertible Preferred Stock (the 'ESOP Preferred Stock') outstanding, all of
which are held by State Street Bank and Trust Company, as Trustee of the
Company's Savings Incentive Plan ('SIP'). The shares of ESOP Preferred Stock are
entitled to vote on all matters submitted to a vote of the Company's
shareholders and also carry one vote per share. Each employee participating in
SIP is entitled to instruct the Trustee how to vote all shares of Common Stock
and ESOP Preferred Stock allocated to that employee's SIP accounts, as well as
how to vote a proportionate number of such shares held in SIP for which voting
instructions are not received by the Trustee from other SIP participants or
which are not allocated to participants' accounts (the 'unvoted and/or
unallocated shares'). Unless otherwise instructed by a SIP participant, the
enclosed proxy will serve as voting instructions to the Trustee with respect to
both the allocated and the unvoted and/or unallocated SIP shares. SIP shares for
which no voting instructions are received from any SIP participants will be
voted by the Trustee in the same proportion as it votes the SIP shares for which
it has received voting instructions.
The shares of Common Stock held by the 401(k) Profit Sharing Plan of
Med-Safe Systems, Inc., a wholly-owned subsidiary of the Company, (the 'Med-Safe
Plan') also are entitled to vote on all matters submitted to a vote of the
Company's shareholders and carry one vote per share. Shares for which no voting
instructions are received from any Med-Safe Plan participants will be voted by
the Med-Safe Plan's Trustee in the same proportion as it votes the shares for
which it has received voting instructions.
The shares of Common Stock held by Wachovia Bank, N.A., as Trustee of the
Company's Deferred Compensation Plan ('DCP'), and the Company's 1996 Directors'
Deferral Plan ('DDP'), as well as the shares of Common Stock held by Banque
Internationale a Luxembourg ('BIL') in connection with the Company's Global
Share Investment Program ('GSIP'), also are entitled to vote on all matters
submitted to a vote of the Company's shareholders and carry one vote per share.
Each
director participating in DDP and each employee participating in DCP and, if so
provided under the terms of the local country GSIP plan, in GSIP, is entitled to
instruct the Trustee or BIL, as the case may be, how to vote all shares of
Common Stock allocated to that person's account, as well as how to vote a
proportionate number of shares held in the relevant plan for which voting
instructions are not received.
When returned properly dated and signed, the enclosed proxy card will serve
as voting instructions by a DDP participant, a DCP participant and a GSIP
participant with respect to both the allocated and the unvoted DDP shares, DCP
shares and GSIP shares, as the case may be. Proxies representing shares of
Common Stock held of record also will represent shares held under the Direct
Stock Purchase Plan for shareholders of the Company administered by EquiServe
Trust Company, N.A. and, in addition, shares of Common Stock and ESOP Preferred
Stock, if any, allocated to directors' accounts under DDP or to employees'
accounts under SIP, DCP, the Med-Safe Plan and GSIP, if the registrations are
the same. Separate mailings will be made for shares not held under the same
registrations.
Shareowners of record and participants in SIP, DDP, DCP, the Med-Safe Plan,
or, if so provided under the terms of the local country GSIP plan, GSIP, may
cast their votes by:
(1) using the internet and voting at the website listed on the enclosed
proxy/voting instruction card;
(2) using the toll-free telephone number listed on the enclosed
proxy/voting instruction card; or
(3) signing, completing and returning the enclosed proxy/voting instruction
card in the enclosed postage-paid addressed envelope.
The internet and telephone voting procedures are designed to authenticate
votes cast by use of a personal identification number. The procedure allows
shareowners to appoint a proxy and the various plan participants to instruct the
plan fiduciaries or BIL, as the case may be, to vote their shares and to confirm
their instructions have been properly recorded. Specific instructions to be
followed are set forth on the enclosed proxy/voting instruction card.
The presence, in person or by proxy, of the holders of shares representing a
majority of the votes entitled to be cast at a meeting shall constitute a
quorum.
Directors are elected by a plurality of the votes cast at the meeting.
Abstentions with respect to one or more of the nominees will be treated as
present at the meeting for purposes of determining a quorum, but will not be
counted as votes cast and, accordingly, will have no effect on the outcome of
the vote. Similarly, shares which brokers do not have the authority to vote in
the absence of timely instructions from the beneficial owners ('broker
non-votes'), if any, will not be counted and, accordingly, will have no effect
on the outcome of the vote.
Approval of Proposals 2, 3 and 4 requires the affirmative vote of a majority
of the votes cast on such proposal. Under New Jersey law, in determining whether
the proposal has received the requisite number of affirmative votes, abstentions
and broker non-votes will not be counted as votes cast and, accordingly, will
have no effect on the outcome of the vote.
The Board of Directors is not aware of any matters to be presented at the
meeting other than those set forth in the accompanying notice. If any other
matters properly come before the meeting, the persons named in the proxy will
vote in accordance with their best judgment.
In addition to solicitation by mail, directors, officers and other employees
of the Company may solicit proxies personally, by telephone or by telegram.
Brokers and other nominees will be requested to solicit proxies or
authorizations from beneficial owners and will be reimbursed for their
reasonable expenses in doing so. The Company has retained MacKenzie Partners,
Inc., to assist in soliciting proxies for a fee not to exceed $12,500 plus
expenses. The cost of soliciting proxies will be borne by the Company.
2
SHARE OWNERSHIP OF
MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
According to Thomson Financial/Carson, a firm that monitors institutional
share ownership, as of September 30, 2001: Wellington Management Company, 75
State Street, Boston, Massachusetts 02109, was the beneficial owner of
29,342,962 shares of Common Stock, representing shares as to which it has shared
investment power and constituting 11.32% of the then outstanding common stock;
and Fidelity Management Research, One Federal Street, Boston, Massachusetts
02110, was the beneficial owner of 15,021,651 shares of Common Stock,
representing shares as to which it has shared investment power and constituting
5.80% of the then outstanding Common Stock. No changes in these holdings have
come to the Company's attention since then. The Company is not aware of any
other beneficial owner of more than 5% of its Common Stock.
The following tables set forth as of October 31, 2001 information concerning
the beneficial ownership of Common Stock and ESOP Preferred Stock by each
director and nominee for director, by all directors and executive officers as a
group, and by the beneficial owner of more than 5% of the outstanding ESOP
Preferred Stock. In general, 'beneficial ownership' includes those shares a
director or executive officer has the power to vote or transfer, and stock
options that are exercisable currently or within 60 days. Current and retired
executive officers listed in the table below also have interests in a total of
56,024 restricted shares previously granted but undistributed under the
Company's Stock Award Plan. While these shares may not be voted or transferred,
we have included them in the table below as they represent an economic interest
in Company Common Stock.
COMMON STOCK
SHARES WHICH
SHARES OWNED MAY BE ACQUIRED
DIRECTLY AND WITHIN 60
NAME INDIRECTLY(1) DAYS(2)
---- ------------- -------
Harry N. Beaty........................................... 29,541 0
Henry P. Becton, Jr...................................... 221,393(3) 0
Clateo Castellini........................................ 205,058 2,117,350
Gary M. Cohen............................................ 32,806 277,788
John R. Considine........................................ 39,419 0
Albert J. Costello....................................... 13,648 0
Gerald M. Edelman........................................ 11,414 0
Vincent A. Forlenza...................................... 30,598 361,596
William A. Kozy.......................................... 37,492 342,168
Edward J. Ludwig......................................... 52,105 728,656
Frank A. Olson........................................... 71,101 0
James F. Orr............................................. 2,395 0
Willard J. Overlock, Jr.................................. 5,428 0
James E. Perrella........................................ 26,818 0
Alfred Sommer............................................ 5,824 0
Margaretha af Ugglas..................................... 12,082 0
All Directors and Executive Officers as a group (24
persons), including those named above.................. 881,631 4,756,860
---------
(1) Includes Common Stock allocated to individual accounts under the Savings
Incentive Plan ('SIP') and the Global Share Investment Program ('GSIP'),
where applicable, as follows: Mr. Ludwig, 16,687 shares, Mr. Cohen, 9,315
shares, Mr. Considine, 321 shares, Mr. Forlenza, 4,553 shares, Mr. Kozy,
4,548 shares, and all Directors and Executive Officers as a group, 57,674
shares. Also includes Common Stock allocated to individual accounts under
the Deferred Compensation Plan as follows: Mr. Cohen, 2,231 shares,
Mr. Considine, 15,598 shares, and all Executive Officers as a group, 28,020
shares, and Common Stock allocated to individual accounts under the 1996
Directors' Deferral Plan as
(footnotes continued on next page)
3
(footnotes continued from previous page)
follows: Dr. Beaty, 21,541 shares, Mr. Becton, 18,956 shares,
Mr. Castellini, 6,544 shares, Mr. Costello, 9,648 shares, Dr. Edelman, 4,338
shares, Mr. Olson, 51,101 shares, Mr. Orr, 1,395 shares, Mr. Overlock, 4,428
shares, Mr. Perrella, 14,218 shares, Dr. Sommer, 5,824 shares,
Mrs. af Ugglas, 6,082 shares, and all Directors as a group, 144,075 shares.
Includes shares held under the Stock Award Plan as follows: Mr. Castellini,
31,920 shares, Mr. Forlenza, 4,904 shares, Mr. Ludwig, 9,840 shares and Mr.
Kozy, 9,360 shares.
(2) Consists of stock options available for exercise.
(3) Includes 141,225 shares held by trusts of which Mr. Becton is a co-trustee
with shared investment and voting power or held by a limited liability
company owned by one of such trusts. Does not include 32,240 shares owned by
Mr. Becton's spouse, 1,600 shares owned by a daughter, 103,190 shares held
in trusts for the benefit of his children or 80,000 shares held in a
charitable trust of which he is one of eight trustees, and as to each of
which he disclaims beneficial ownership.
ESOP PREFERRED STOCK
SHARES OWNED
DIRECTLY AND
INDIRECTLY
----------
Edward J. Ludwig............................................ 484(1)
Gary M. Cohen............................................... 397(1)
John R. Considine........................................... 55(1)
Vincent A. Forlenza......................................... 445(1)
William A. Kozy............................................. 496(1)
All Directors and Executive Officers as a group (24
persons).................................................. 3,137(1)
State Street Bank and Trust Company......................... 683,698(2)
225 Franklin Street
Boston, Massachusetts 02110
(as Trustee of the Savings Incentive Plan)
---------
(1) Shares allocated to individual accounts under the ESOP component of the SIP.
Such shares constitute less than 1% of the total beneficial ownership of the
ESOP Preferred Stock.
(2) As trustee, holding 100% of the outstanding shares of ESOP Preferred Stock.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors to file initial reports of their ownership of
the Company's equity securities and reports of changes in such ownership with
the Securities and Exchange Commission (the 'SEC') and the New York Stock
Exchange. Executive officers and directors are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file. Based
solely on a review of copies of such forms and written representations from the
Company's executive officers and directors, the Company believes that for the
period from October 1, 2000 through September 30, 2001, all of its executive
officers and directors were in compliance with the disclosure requirements of
Section 16(a), except that an initial report on Form 3 for James F. Orr, a
director, was filed six days late. Mr. Orr had no transactions or holdings to
report on such Form 3.
BOARD OF DIRECTORS
BOARD MEETINGS; COMMITTEES OF THE BOARD
The Company is governed by a Board of Directors and various committees of
the Board which meet regularly throughout the year. The Board of Directors,
which held six meetings during the fiscal year ended September 30, 2001, has six
principal standing committees, including the Audit Committee, the Compensation
and Benefits Committee, the Corporate Affairs Committee, the Corporate
Governance Committee (which serves as a nominating committee), and the Finance
and Investment Committee. The average aggregate attendance of the Directors at
Board and Committee meetings was 96%.
4
The Audit Committee reviews the Company's financial statements and
accounting principles, the scope and results of the annual audit of the
independent auditors, and the Company's internal audit process, including the
Company's internal controls and accounting systems. The Audit Committee also
reviews the independence and performance of the Company's independent auditors,
and makes recommendations to the Board concerning the selection of independent
auditors. The Audit Committee met four times during the year and also
participated in quarterly conference calls with management and the Company's
independent auditors to review the Company's Quarterly Report on Form 10-Q prior
to its filing. The members of this Committee are Harry N. Beaty, Chairman,
Albert J. Costello, James F. Orr, Alfred Sommer, and Margaretha af Ugglas. Each
of the members of the Audit Committee satisfies the independence, financial
literacy and expertise requirements of the New York Stock Exchange. The Board of
Directors has adopted a written charter for the Audit Committee.
The Compensation and Benefits Committee reviews annually the overall
compensation program for the Company's corporate officers, approves the
compensation of the executive officers and approves all employment and
consulting contracts of the Company or any subsidiary with corporate officers
who are not also directors. In addition, this Committee serves as the granting
and administrative committee for the Company's stock option plans. This
Committee also oversees the administration of employee benefits and benefit
plans for the Company. The members of this Committee, which met six times during
the year, are Henry P. Becton, Jr., Chairman, Frank A. Olson, Willard J.
Overlock, Jr., and James E. Perrella.
The Corporate Affairs Committee oversees the Company's policies, practices
and procedures, as a responsible corporate citizen, in the general areas of
ethical conduct and legal compliance, including, without limitation, issues
relating to communications, employment practices, community relations, customer
relations and business practices and ethics. The members of this Committee,
which met four times during the year, are Margaretha af Ugglas, Chairman, Harry
N. Beaty, Henry P. Becton, Jr., Gerald M. Edelman, and James F. Orr.
The Corporate Governance Committee recommends candidates for election as
directors to the Board. It also reviews and makes recommendations concerning the
composition, organization, structure and function of the Board and its
committees, as well as the performance and compensation of directors. It
monitors and considers the Company's corporate governance and Board practices,
recommends matters for consideration by the Board, and periodically reviews the
Company's by-laws, certificate of incorporation and shareholder rights plan. The
Committee's charter states that any director who is, or at anytime in the prior
two years was, an officer or employee of the Company or of any of its
subsidiaries, however, must recuse him or herself from all determinations
regarding the nomination of candidates for election to the Board and the
compensation of directors. The members of this Committee, which met five times
during the year, are Clateo Castellini, Chairman, Henry P. Becton, Jr., James E.
Perrella, and Alfred Sommer.
Any shareholder may recommend nominees for director for consideration by the
Corporate Governance Committee by writing to the Secretary of the Company.
Submissions should include the full name and address and a statement of the
qualifications of the proposed nominee.
The Finance and Investment Committee reviews the financial and accounting
affairs of the Company, including the Company's financial structure, dividend
policy, financial plans and capital expenditure budgets. The Committee also
reviews and recommends appropriate Board action with respect to acquisitions and
divestitures of assets meeting specified threshholds and oversees various
matters related to certain of the Company's employee benefit plans which require
funding. The members of this Committee, which met five times in 2001, are Albert
J. Costello, Chairman, Gerald M. Edelman, Frank A. Olson and William J.
Overlock, Jr.
5
REPORT OF THE AUDIT COMMITTEE
NOVEMBER 27, 2001
The Audit Committee reviews the Company's financial reporting process on
behalf of the Board of Directors. Management has the primary responsibility for
the financial statements and the reporting process, including the system of
internal controls. The independent auditors are responsible for performing an
independent audit of the Company's consolidated financial statements in
accordance with generally accepted accounting principles and to issue a report
thereon. The Committee monitors these processes.
In this context, the Committee met and held discussions with management and
the independent auditors. Management represented to the Committee that the
Company's consolidated financial statements were prepared in accordance with
accounting principles generally accepted in the United States, and the Committee
reviewed and discussed the consolidated financial statements with management and
the independent auditors. The Committee also discussed with the independent
auditors the matters required to be discussed by Statement on Auditing Standards
No. 61 (Codification of Statements on Auditing Standards, AU 380), as amended.
In addition, the Committee discussed with the independent auditors the
auditors' independence from the Company and its management, and the independent
auditors provided to the Committee the written disclosures and letter required
by the Independence Standards Board Standard No. 1 (Independence Discussions
With Audit Committees).
The Committee discussed with the Company's internal and independent auditors
the overall scope and plans for their respective audits. The Committee met with
the internal and independent auditors, with and without management present, to
discuss the results of their examinations, the evaluations of the Company's
internal controls, and the overall quality of the Company's financial reporting.
Based on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors, and the Board has approved, that the
audited financial statements be included in the Company's Annual Report on
Form 10-K for the year ended September 30, 2001, for filing with the Securities
and Exchange Commission. The Committee and the Board also have recommended,
subject to shareholder approval, the selection of the Company's independent
auditors for fiscal year 2002.
AUDIT COMMITTEE
HARRY N. BEATY, CHAIRMAN
ALBERT J. COSTELLO
JAMES F. ORR
ALFRED SOMMER
MARGARETHA AF UGGLAS
6
DIRECTORS' COMPENSATION
Each director who is not employed by the Company is compensated for services
as a director by an annual retainer of $34,000. In addition, an annual fee of
$5,000 is paid to each committee chair. Directors may defer, in an unfunded cash
account or in shares of Common Stock, all or part of their annual retainers and
chair fees, until up to ten years after retirement from the Board pursuant to
the provisions of the 1996 Directors' Deferral Plan. The Company reimburses all
directors for travel and other necessary business expenses incurred in the
performance of their services for the Company.
Each non-employee director elected at, or continuing as a director after,
each annual meeting of shareholders is granted stock options to purchase shares
of Company Common Stock at the fair market value of the Common Stock on the date
of grant. The options granted have a value of $35,000 (based on the
Black-Scholes option pricing model). In addition, each such non-employee
director is granted 400 deferred shares of Common Stock. These shares are
allocated to a Common Stock account under the 1996 Directors' Deferral Plan and
distributed no earlier than retirement, in installments or as a lump-sum. Prior
to the distribution of shares of Common Stock credited to the accounts of
directors under the 1996 Directors' Deferral Plan, the number of shares credited
will be increased to reflect the payment and reinvestment of dividends on the
Common Stock.
Under the Board's formal stock ownership guidelines for non-employee
directors, each non-employee director, with limited exceptions, is required to
own shares of Common Stock valued at 70% of the amount obtained by multiplying
the annual retainer fee by the number of years such person has served as a
director. Based upon the closing price of the Company's Common Stock on
September 28, 2001, all of the nominees for director and all of the continuing
directors owned sufficient shares to comply with these guidelines.
BOARD EVALUATION
As in prior years, in fiscal 2001 the Board's Corporate Governance Committee
undertook the process of evaluating Board performance and effectiveness, whereby
each director completed a Board Evaluation Questionnaire. The questionnaire was
developed by the Corporate Governance Committee and provided a range of grades
and trend indicators to be completed by each director, as well as space for
written comments, with respect to each of the following seventeen criteria:
1. The Board understands and approves the Company's mission statement,
values and objectives, as well as its strategic and operating plans.
2. The Board understands the industries in which the Company operates and
the implications of current general economic and political trends to
those businesses.
3. The Board evaluates the Company's research and development performance
and level of commitment.
4. The Board considers the financial performance of peer companies when
assessing Company performance.
5. The Board evaluates and reviews the performance and values of the chief
executive officer.
6. The Board reviews senior management development and compensation and
considers the correlation between compensation levels and Company
performance.
7. Board meetings foster open communication and timely resolution of issues
presented.
8. The Corporate Governance Committee reviews and communicates the Board's
expectations concerning director responsibilities and monitors the
productivity of Board and Committee meetings.
7
9. The Board assesses and modifies, as necessary, the structure of the
Board and its Committees, as well as the frequency of the Board and
Committee meetings.
10. The Board establishes criteria and policies to ensure the representation
of characteristics and expertise among its membership necessary to its
effectiveness.
11. The Board seeks to optimally and appropriately utilize each Board
member's experiences in terms of Committee appointments.
12. The Board reviews the availability, content and timeliness of
information provided to it, prepares appropriately for Board meetings
and requests additions or changes to the material provided, when
appropriate.
13. The Board verifies the independence of each non-employee director and
considers the impact, if any, of changes in the principal employment of
non-employee directors.
14. The Board monitors and understands current issues and trends in
corporate governance.
15. The Board reviews and adopts annual capital and operating budgets and
monitors Company performance against them during the year.
16. The Board reviews the adequacy of existing accounting and financial
controls and oversees ethical conduct and legal compliance by the
Company.
17. The Board reviews succession plans for the chief executive officer and
senior management.
The collective ratings and comments of the directors were compiled and
presented by the Chairman of the Corporate Governance Committee to the full
Board for discussion, for the assessment of progress in the areas targeted for
improvement a year earlier, and for the development of recommendations to
enhance the Board's effectiveness.
As an expansion of the Board evaluation process, each Board committee
conducted a self-evaluation of its performance during fiscal 2001 with
performance criteria for each committee established on the basis of its charter.
The Board also assessed the performance of the individual directors standing
for re-election to the Board at the next annual meeting of shareholders, and, if
applicable, considered the impact of any change in the principal occupations of
these directors during their prior terms of service.
The Corporate Governance Committee conducted the individual evaluations
against criteria designed to measure performance in five critical areas:
1. Personal Characteristics
2. Core Competencies
3. Independence
4. Level of Commitment
5. Board and Company Considerations
Upon completion of the individual director evaluation process, the Corporate
Governance Committee reported to the full Board its conclusions and
recommendations for nominations to the Board.
CORPORATE GOVERNANCE PRINCIPLES
In order to provide shareholders with greater knowledge regarding the
Board's processes, the Mission Statement and Corporate Governance Principles
adopted by the Board of Directors are attached as Appendix B to this proxy
statement.
8
PROPOSAL 1.
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes, the terms of which
expire alternately over a three-year period. Three directors are proposed for
election. Dr. Gerald M. Edelman will retire from the Board on February 13, 2002,
pursuant to the Board's policy on tenure of directors.
All of the nominees for election have consented to being named in this proxy
statement and to serve if elected.
Biographical information concerning each of the nominees and directors
continuing in office is presented on this and the following pages.
NOMINEES FOR DIRECTORS
NOMINEES FOR DIRECTOR -- TERM TO EXPIRE 2005
[Photo] Albert J. Costello, 66, has been a director since 1996. In
1999, he retired as Chairman of the Board, President and
Chief Executive Officer of W.R. Grace & Co., a global
supplier of packaging and specialty chemicals. Prior to
joining W.R. Grace & Co., Mr. Costello was Chairman of the
Board and Chief Executive Officer and President of American
Cyanamid Company, a technology-based life sciences company
in agriculture, pharmaceuticals and medical devices. Mr.
Costello also is a director of FMC Corporation.
[Photo] James E. Perrella, 66, has been a director since 1995. In
2000, he retired as Chairman of the Board of Ingersoll-Rand
Company, a manufacturer of industrial machinery and related
products. He is also a director of Milacron Inc., Bombardier
and Arvin Meritor, Inc.
[Photo] Alfred Sommer, 59, has been a director since 1998. He is
Dean of The Johns Hopkins Bloomberg School of Public Health,
and Professor of Ophthalmology, Epidemiology and
International Health. Dr. Sommer was founding Director of
the Dana Center for Preventive Ophthalmology at Johns
Hopkins, which focuses on clinical epidemiology and public
health aspects of blindness prevention and child health.
9
CONTINUING DIRECTORS
TERMS TO EXPIRE 2003
[Photo] Harry N. Beaty, M.D., 69, has been a director since 1985. He
is Emeritus Dean of the Northwestern University Medical
School and serves on the Board of the Northwestern Medical
Faculty Foundation. Dr. Beaty is a specialist in internal
medicine and a subspecialist in infectious diseases. He also
is a director of Banner Health, Arizona.
[Photo] Clateo Castellini, 66, has been a director and Chairman of
the Board of the Company since 1994. He will retire as
Chairman of the Board immediately following the Annual
Meeting of Shareholders on February 13, 2002, but will
continue as a director. Mr. Castellini also served as
President and Chief Executive Officer of the Company from
1994 to May 1999, and as Chief Executive Officer from May
1999 to January 2000.
[Photo] Edward J. Ludwig, 50, has been a director since 1999. He was
elected President of the Company in May 1999, and President
and Chief Executive Officer in January 2000. In November
2001, he was elected to assume the additional role of
Chairman of the Board effective immediately following the
Annual Meeting of Shareholders on February 13, 2002. Mr.
Ludwig served as Executive Vice President from July 1998 to
May 1999 and prior thereto was Senior Vice President-Finance
and Chief Financial Officer. He is a director of the U.S.
Fund for UNICEF and a member of the Board of Trustees of
Johns Hopkins University.
[Photo] Frank A. Olson, 69, has been a director since 1985. He is
Chairman of the Board of The Hertz Corporation, a
transportation company. Mr. Olson also is a director of
Amerada Hess and White Mountains Insurance Group.
[Photo] Willard J. Overlock, Jr., 55, has been a director since
1999. He retired in 1996 as a partner in Goldman, Sachs &
Co., where he served as a member of its management
committee, and currently serves as a senior advisor. Mr.
Overlock also is an advisor to the Parthenon Group and is a
director of Select Reinsurance Ltd.
10
TERMS TO EXPIRE 2004
[Photo] Henry P. Becton, Jr., 58, has been a director since 1987. He
is President and General Manager of WGBH Educational
Foundation, a producer and broadcaster of public television
and radio programs and books and other educational
materials. Mr. Becton is a director of various Zurich
Scudder mutual funds, and the Belo Company.
[Photo] James F. Orr, 56, has been a director since November, 2000.
Mr. Orr is the Chairman, President and Chief Executive
Officer of Convergys Corporation, a provider of outsourced
billing and customer management services. Prior thereto, he
served as Chief Operating Officer and a director of
Cincinnati Bell, Inc. At Cincinnati Bell, he was Chairman
and President of Cincinnati Bell Information Systems and
MATRIXX Marketing, the businesses which now make up
Convergys. In addition, he is a director of Ohio National
Financial Services, Inc.
[Photo] Margaretha af Ugglas, 62, has been a director since 1997.
She is the former Minister of Foreign Affairs of Sweden. She
is a director of the Karolinska Institute and of the Jarl
Hjalmarson Foundation.
11
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION AND BENEFITS COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation and Benefits Committee of the Board (the 'Committee')
reviews the overall compensation program for the Company's corporate officers,
determines and administers the compensation of the executive officers of the
Company, including the individuals named in the Summary Compensation Table, and
oversees the administration of employee benefits and benefit plans for the
Company and its subsidiaries. The Committee is composed exclusively of
non-employee directors, as defined in applicable rules and regulations of the
Securities and Exchange Commission, and none of the members of the Committee is
an employee or former employee of the Company or eligible to participate in any
of the Company's executive compensation programs. Each of the members of this
Committee also satisfies the criteria necessary for purposes of Section 162(m)
of the Internal Revenue Code of 1986, as amended (the 'Code').
OVERVIEW
BD's focus is to help all people live healthy lives while generating
superior total shareholder return. With this focus in mind, the Committee has
developed and implemented a compensation philosophy designed to reward and
support superior performance and retain top talent.
PERFORMANCE-BASED PAY
Management short-term and long-term incentive payments are based on
performance measures designed to build shareholder value, including net income
and total shareholder return.
CHALLENGING TARGETS
BD's management compensation program emphasizes the establishment of
challenging goals through a number of factors, including: the Committee's active
assessment of management's proposed performance goals and the link between goal
attainment and short-term and long-term management incentives; a significant
proportion of total compensation being contingent on achievement of
predetermined goals; highly-leveraged compensation plans; and long-term
compensation and performance measured and determined relative to that of a group
of high quality healthcare institutions with which BD competes for management
talent, as well as the selected peer group of companies used in preparing the
Performance Graph set forth on page 21 (collectively, the 'Comparison Group').
EXECUTIVE AND SHAREHOLDER ALIGNMENT
Each of the executives identified below is required, with limited
exceptions, to own within a prescribed period of time a significant ownership
stake in the Company, representing varying multiples of the executive's base
salary, depending on the executive's position. The Company can extend the period
of time within which the guidelines are to be satisfied when circumstances, such
as a promotion, significantly increase the target level of share ownership. The
current ownership guidelines are as follows:
President and Chief Executive Officer................ 5 times salary
Other Leadership Team Members (15 persons)........... 3 times salary
All Other Corporate Officers......................... 2 times salary
12
The Company periodically monitors individuals' satisfaction of these
ownership guidelines. Stock options, including vested options, are not included
in determining whether an individual has met his or her ownership guidelines.
The Company does not, and has not, provided any loans to management for the
purpose of assisting them in satisfying these ownership guidelines.
PRINCIPAL COMPENSATION ELEMENTS
The key elements of executive compensation are base salary, annual incentive
awards, and long-term equity participation. These components are administered
with the goal of providing total compensation that is competitive, motivates the
highest individual performance, rewards sustained performance, and provides
above-average rewards when merited by individual, business unit and Company
results.
In assessing the effectiveness and competitiveness of BD's executive
compensation structure, the Committee reviews compensation practices of other
highly-regarded companies with the assistance of independent outside
consultants. The Comparison Group includes not only firms that compete in the
Company's primary lines of business, but also those with which the Company
competes for talent.
BASE SALARY
The Committee annually reviews and determines the base salaries of executive
officers. The Committee evaluates management's salary recommendations based on
the results achieved by each executive officer, his or her future potential,
scope of responsibilities and experience, as well as competitive salary
practices. The Company generally targets executive officer salaries to
approximate the median levels expected to be paid by companies in the Comparison
Group to persons holding equivalent positions.
ANNUAL INCENTIVE AWARDS
The Company's Performance Incentive Plan, which was redesigned in fiscal
2001, is structured to reward executives based on the overall performance of the
Company, as well as the performance of each executive officer and that of his or
her area of responsibility or operating group. The Committee sets target
incentives for each participating executive officer at the beginning of each
year. These targets are established as a percentage of the executive's salary
and are calculated to deliver compensation to the executive at the median range
for the Comparison Group companies.
The Committee adopted performance measures to determine the amount of
incentive to be paid at different levels of performance. Funding for award pools
for all executive officers and corporate functions is based primarily on
achieving a total Company net income target set at the beginning of the year.
Funding for award pools for business units and regions/countries is also based
primarily on achieving targets established at the beginning of the year for
operating income (with an additional measure for working capital performance).
In addition to these financial targets, each business unit, region/country
and function has established certain objectives based on key Company initiatives
and desired improvements to competitive positions. Key Company initiatives for
fiscal 2001 included, among other things, sales of safety products and
implementation of the Company's Genesis and E-business initiatives. These
objectives must be met in order for full payouts to be made under this plan.
Under the Performance Incentive Plan, the range of performance for which
awards are funded is between 90% (threshold) and 105% (maximum) of the target
goal. At the threshold level of performance, the pool is funded at 50%. Below
the threshold, the pool is 0%. For every 1% increase in performance between 90%
and 100% of goal, the pool is increased by 5%. For every 1% increase
13
in performance above 100% of goal, the pool would be increased by 10%, to a
maximum of 150% of target.
The Company relies heavily, but not exclusively, on these criteria. It
exercises discretion in light of these measures and in view of the Company's
compensation objectives to determine overall incentive funds and individual
incentive amounts.
For fiscal 2001, the Company achieved its net income target under the
Performance Incentive Plan. The level of achievement of applicable targets for
individual business units and regions varied. Awards to the Chief Executive
Officer and the executives named in the Summary Compensation Table (the 'Named
Executives') are set forth in the Summary Compensation Table. These awards were
based on the performance of the individual, as well as the performance of the
Company and the relevant business or function.
STOCK OPTIONS
The Committee grants stock options broadly and deeply throughout the
organization, and thus provides additional incentives to employees to maximize
shareholder value. Grants are based on individual performance and long-term
contribution potential.
Stock option grant levels and terms are established to provide executives
with the opportunity for overall compensation levels targeted within the third
quartile of the competitive range for comparable positions in the market place,
provided management is successful in achieving competitive growth in total
shareholder value relative to the Comparison Group.
The Committee approved an indexed stock option program, intended to
compensate senior executives, including executive officers, for relative growth
in shareholder value, as well as the achievement of certain internal financial
and strategic goals. The program is intended to focus management on the
long-term creation of shareholder value by linking incentive compensation to
quantifiable measures that drive shareholder value creation over time.
On November 27, 2000, the Committee approved a grant under the indexed stock
option program to executive officers based on performance results as of
September 30, 2000. The option grants for the Chief Executive Officer and the
Named Executives are set forth in the Summary Compensation Table. The number of
stock options targeted for grant was determined based (1) three-fourths on the
Company's annualized, cumulative total shareholder return over a three-year
period commencing October 1, 1997 relative to that of the peer group companies
listed on page 20 (the 'Peer Group') over the same three-year period, and (2)
one fourth on the Company's EVA'r' and revenue growth over such three-year
period. Based on the respective weightings and yields of each of the applicable
measures, the resulting total senior executive stock option grant level was at
86.4% of target.
During fiscal 2001, the Committee simplified the formula for determining
option grants under the indexed stock option program beginning with grants to be
made in fiscal 2002. Under the revised formula, the number of shares available
for grant to members of the BD Leadership Team, including the executive
officers, may be increased or decreased by as much as 25% from the executive's
target grant based on BD's annual total shareholder return compared to the Peer
Group.
On November 27, 2001, the Committee approved a grant under the revised
formula to executive officers based on performance results as of September 30,
2001. Based on relative performance, the total executive stock option grant
level was at 125% of target.
---------
EVA'r' is a registered trademark of Stern Stewart and Co.
14
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
The determination of the Chief Executive Officer's salary, annual incentive
and stock option grant was made by the Committee based on the same policies and
calculations applicable to all executive officers.
The non-employee directors meet in executive session to evaluate the
performance of the Chief Executive Officer. The results of this evaluation are
then used by the Compensation and Benefits Committee in determining the
compensation of the Chief Executive Officer.
The details regarding the compensation of the Chief Executive officer for
fiscal 2001 are set forth in the Summary Compensation table. On October 1, 2000,
the Committee approved a base salary increase for Mr. Ludwig from $600,000 to
$730,000. The amount of the increase was based on performance and was designed
to move his base salary over time to the median range of the Comparison Group.
The Committee believes that the structure of the Company's compensation
program, with its emphasis on long-term compensation, serves to focus Company
executives on attaining a sustained, high level of Company performance and
creating long-term shareholder value.
2001 COMPENSATION ACTIONS: OTHER EXECUTIVE OFFICERS
The other executive officers, including the Named Executives, received
salary increases that averaged 6.5%, which included merit increases of 3.9%, as
well as a number of promotion and market adjustments.
INTERNAL REVENUE CODE SECTION 162(m)
Section 162(m) of the Code precludes a public corporation from taking a
deduction for compensation in excess of $1 million for its chief executive
officer or any of its four other highest paid executive officers, unless certain
specific and detailed criteria are satisfied.
The Committee considers the anticipated tax treatment to the Company and to
the executive officers in its review and establishment of compensation programs
and payments. The deductibility of some types of compensation payments can
depend upon the timing of an executive's vesting or exercise of previously
granted rights. Interpretations of and changes in applicable tax laws and
regulations as well as other factors beyond the control of the Committee also
can affect deductibility of compensation. For these and other reasons, the
Committee has determined that it will not necessarily seek to limit executive
compensation to that deductible under Section 162(m) of the Code. The Committee
will continue to monitor developments and assess alternatives for preserving the
deductibility of compensation payments and benefits to the extent reasonably
practicable, consistent with its compensation policies and as determined to be
in the best interests of the Company and its shareholders.
COMPENSATION AND BENEFITS COMMITTEE
HENRY P. BECTON, JR., CHAIRMAN
FRANK A. OLSON
WILLARD J. OVERLOCK, JR.
JAMES E. PERRELLA
15
COMPENSATION DATA
The tables and graph following this report set forth information on the
compensation for those persons who served as the Company's chief executive
officer during fiscal 2001 and the four most highly compensated officers other
than the chief executive officer (the 'named executives').
COMPENSATION OF NAMED EXECUTIVES
GENERAL
The following table shows, for the fiscal years ended September 30, 2001,
2000, and 1999, respectively, compensation provided by the Company to each of
the named executives in all capacities in which they served.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM
AWARDS COMPENSATION
----------------------------- -----------------------
SECURITIES
RESTRICTED UNDERLYING
NAME AND FISCAL STOCK OPTIONS/ ALL OTHER
PRINCIPAL POSITION YEAR SALARY(1) BONUS(1) AWARDS(2) SARS COMPENSATION(3)
------------------ ---- --------- -------- --------- ---- ---------------
Edward J. Ludwig ...... 2001 $730,000 $723,000 0 250,000 $89,771
President and Chief 2000 562,500 425,000 0 110,000 5,321
Executive Officer 1999 407,500 0 0 51,000 6,780
Gary M. Cohen ......... 2001 418,000 290,000 0 50,000 33,176
President -- Worldwide 2000 400,542 195,000 0 37,000 5,629
Medical Systems 1999 387,083 0 0 51,000 7,677
John R. Considine ..... 2001 508,356 410,000 0 90,000 8,499
Executive Vice 2000 155,449 350,000 0 300,000 2,813
President
and Chief Financial
Officer (4)
Vincent A. Forlenza ... 2001 360,000 235,000 0 43,000 44,867
Senior Vice 2000 335,000 150,000 0 27,000 5,777
President -- 1999 303,333 0 0 36,000 7,812
Technology, Strategy
and Development
William A. Kozy ....... 2001 345,000 230,000 0 43,000 44,693
Senior Vice 2000 305,000 150,000 0 25,000 5,796
President -- 1999 290,000 0 0 22,000 7,301
Company Operations
---------
(1) Amounts shown reflect salary and bonuses earned by the named executives for
the applicable fiscal year. Bonuses are paid in the fiscal year following
the fiscal year for which they are earned, unless deferred at the election
of the executive.
(2) The following table contains information relating to the outstanding
holdings of restricted stock of the named executives, which all relate to
undistributed portions of awards previously granted under the Stock Award
Plan.
CURRENT MARKET
NUMBER OF VALUE OF
UNDISTRIBUTED UNDISTRIBUTED
RESTRICTED RESTRICTED
NAME SHARES HELD SHARES HELD
---- ----------- -----------
Edward J. Ludwig............................................ 9,840 $364,080
Vincent A. Forlenza......................................... 4,904 $181,448
William A. Kozy............................................. 9,360 $346,320
Under the terms of the Stock Award Plan, none of the holdings reflected may
be distributed prior to retirement or termination of employment.
(footnotes continued on next page)
16
(footnotes continued from previous page)
Current market values are determined by multiplying the number of
undistributed shares by $37, the September 28, 2001 closing price for the
Company's Common Stock. No discount has been taken to reflect (1) the
continuing restrictions on distribution and transferability, or (2) the fact
that undistributed shares are not dividend-bearing.
(3) Amounts shown represent the Company's matching contributions to the
Company's Savings Incentive Plan ('SIP'), a qualified defined contribution
plan available to U.S. employees at all levels, and the dollar value of
split-dollar life insurance policies provided for certain of the named
executives.
During fiscal 2001, the Company made contributions to SIP of $5,100 for each
of Messrs. Ludwig, Cohen, Forlenza and Kozy, and $7,387 for Mr. Considine.
These amounts represent Company matching contributions at a 50% rate of the
first 6% of base pay contributed to SIP by each of the named executives, in
accordance with applicable SIP rules and subject to limits imposed by the
IRS upon maximum contributions to such tax-qualified plans. In addition, for
the plan year ended June 30, 2001, as a result of the accumulation of shares
of ESOP Preferred Stock in the SIP trust in excess of the Company's matching
obligation, the Company matched up to an additional .1% of each eligible
participant's salary. This additional Company contribution amounted to $556
for Messrs. Ludwig and Cohen, $655 for Mr. Forlenza, $703 for Mr. Kozy, and
$1,112 for Mr. Considine.
The Company has made split-dollar life insurance policies available to the
named executives in lieu of full participation in the Company's group life
insurance program. The death benefit payable to the beneficiary of an
insured named executive is two times that executive's base salary. Under
collateral assignment arrangements, the premiums are paid by the Company for
a fixed time period during the initial years in which the policies are in
effect. If assumptions about mortality, dividends, and other factors are
realized, the Company will recover all of its premium payments from the cash
value of the policies at the later of a designated date or retirement of the
executive. At that time, full ownership of the policy will be transferred to
the named executive. The compensatory portion of this arrangement is the
premium payment made on behalf of the named executives during the fiscal
year. Payments made for fiscal 2001 were $84,115 for Mr. Ludwig, $27,520 for
Mr. Cohen, $39,112 for Mr. Forlenza and $38,890 for Mr. Kozy.
(4) Mr. Considine joined the Company in fiscal year 2000. Accordingly, no
information is provided for Mr. Considine for fiscal year 1999.
STOCK OPTION GRANTS
The following table contains information relating to stock option and tandem
stock appreciation right ('SAR') grants made in fiscal 2001.
OPTION/SAR GRANTS IN FISCAL YEAR 2001
INDIVIDUAL GRANTS
----------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO GRANT DATE
OPTIONS/SARS EMPLOYEES IN EXERCISE EXPIRATION PRESENT
NAME GRANTED(1) FISCAL YEAR PRICE DATE VALUE(2)
---- ---------- ----------- ----- ---- --------
Edward J. Ludwig........... 250,000 5.42% $31.8450 11/27/10 $ 3,020,000
Gary M. Cohen.............. 50,000 1.08% $31.8450 11/27/10 604,000
John R. Considine.......... 90,000 1.95% $31.8450 11/27/10 1,087,200
Vincent A. Forlenza........ 43,000 0.93% $31.8450 11/27/10 519,440
William A. Kozy............ 43,000 0.93% $31.8450 11/27/10 519,440
--------- ------- -------- -------- -----------
TOTAL 476,000 10.32% $31.8450 11/27/10 $ 5,750,080
All Employee Optionees..... 4,612,561 100.00% Various Various $55,719,736
(1) All option grants to the named executives are for a ten-year term. Except as
described below, they are exercisable 50% after two years from date of grant
and 100% after three years from date of grant. The option grants to the
named executive officers were issued in tandem with limited SARs, which are
exercisable only in the event of a tender offer for the Company's Common
Stock or a change in control of the Company, as defined in the 1998 Stock
Option Plan.
(2) This estimate of value has been developed solely for purposes of comparative
disclosure in accordance with the rules and regulations of the Securities
and Exchange Commission ('SEC') and is consistent with the assumptions the
Company is using for Statement of Financial Accounting Standards ('SFAS')
123 reporting. The estimated value has been determined by application of the
Black-Scholes option pricing model, based upon the terms of the option grant
(footnotes on next page)
17
(footnotes from previous page)
and the Company's stock price performance history as of the date of the
grant. The key assumptions are as follows: dividend yield: 1.09%;
volatility: 32.8%; risk-free rate of return: 5.57%; and expected exercise
period: 6 years.
The assumptions used in the valuation are based upon experience, and are not
a forecast of future stock price or volatility, or of future dividend
policy. No adjustments have been made for the risk of forfeitures or for
limitations on transferability.
STOCK OPTION EXERCISES
The following table contains information relating to the exercise of stock
options by the named executives in fiscal 2001, as well as the number and value
of their unexercised options as of September 30, 2001.
AGGREGATED OPTION/SAR EXERCISES IN FISCAL YEAR 2001 AND
FISCAL YEAR-END OPTION/SAR VALUES
VALUE NUMBER OF
REALIZED SECURITIES UNDERLYING VALUE OF UNEXERCISED
(MARKET UNEXERCISED IN-THE-MONEY
SHARES VALUE LESS OPTIONS/SARS AT OPTIONS/SARS AT FISCAL
ACQUIRED EXERCISE FISCAL YEAR-END YEAR-END EXERCISABLE/
NAME ON EXERCISE PRICE) EXERCISABLE/UNEXERCISABLE(2) UNEXERCISABLE(1)(2)
---- ----------- ------ ---------------------------- -------------------
Edward J. Ludwig........ 21,772 $ 534,946 678,656/385,500 $11,396,142/$2,232,213
Gary M. Cohen........... 72,000 1,712,630 277,788/112,500 3,365,933/ 643,622
John R. Considine....... 0 0 0/390,000 0/ 3,229,560
Vincent A. Forlenza..... 46,122 1,117,880 361,596/ 88,000 5,570,386/ 502,069
William A. Kozy......... 70,428 1,737,500 342,168/ 79,000 5,204,365/ 470,320
---------
(1) The value of unexercised options represents the difference between the
closing price of the Company's Common Stock on September 28, 2001 ($37) and
the exercise price of each unexercised option held by the named executives.
(2) All option grants to the named executives are for a ten-year term. Options
are exercisable 50% after two years from date of grant and 100% after three
years from date of grant. All options issued to the named executives prior
to 1997 were exercisable immediately, subject to applicable rules and
regulations of the SEC. These option grants were issued in tandem with
limited SARs, which are exercisable only in the event of a tender offer for
the Company's Common Stock or a change in control of the Company, as defined
under the Company's stock option plans.
RETIREMENT PLAN
The Company's Retirement Plan (the 'Retirement Plan') is a non-contributory
defined benefit plan. It provides for normal retirement at age 65 and permits
earlier retirement in certain cases. Benefits are based upon years of service
and compensation (comprised of salary, commissions, bonuses and stock award
distributions ('Covered Compensation')) for the five consecutive calendar years
which produce the highest average compensation. The Retirement Plan is
integrated with Social Security.
The Code limits the maximum annual benefit which may be paid to any
individual from the Retirement Plan's trust fund and the amount of compensation
that may be recognized. Under the Company's Retirement Benefit Restoration Plan
(the 'Restoration Plan'), the Company will make supplemental, unfunded payments
to offset any reductions in benefits which may result from such limitations. The
Company's obligations to pay retirement benefits under the Restoration Plan, as
well as deferred amounts under the Company's Deferred Compensation Plan, are
secured by a trust. The trust is currently secured by a letter of credit. The
trustee is required to draw on the letter of credit, up to specified limits,
following a change in control of the Company (as defined in the trust
agreement).
18
The table below shows the estimated annual retirement benefits payable under
the Retirement Plan and the Restoration Plan at normal retirement date to all
eligible employees, including the named executives, in specified remuneration
and years of service classifications.
ESTIMATED ANNUAL RETIREMENT BENEFITS
YEARS OF CREDITED SERVICE
MAXIMUM --------------------------------------------------------------------------
AVERAGE
COMPENSATION 10 15 20 25 30 35 40
------------ -------- -------- -------- -------- -------- -------- --------
$ 200,000 $ 28,245 $ 42,367 $ 56,490 $ 70,612 $ 84,735 $ 98,857 $112,980
300,000 43,245 64,867 86,490 108,112 129,735 151,357 172,980
400,000 58,245 87,367 116,490 145,612 174,735 203,857 232,980
500,000 73,245 109,867 146,490 183,112 219,735 256,357 292,980
600,000 88,245 132,367 176,490 220,612 264,735 308,857 352,980
700,000 103,245 154,867 206,490 258,112 309,735 361,357 412,980
800,000 118,245 177,367 236,490 295,612 354,735 413,857 472,980
900,000 133,245 199,867 266,490 333,112 399,735 466,357 532,980
1,000,000 148,245 222,367 296,490 370,612 444,735 518,857 592,980
1,100,000 163,245 244,867 326,490 408,112 489,735 571,357 652,980
1,200,000 178,245 267,367 356,490 445,612 534,735 623,857 712,980
1,300,000 193,245 289,867 386,490 483,112 579,735 676,357 772,980
1,400,000 208,245 312,367 416,490 520,612 624,735 728,857 832,980
1,500,000 223,245 334,867 446,490 558,112 669,735 781,357 892,980
Covered Compensation includes all components of each named executive's
Annual Compensation as set forth in the Summary Compensation Table on page 16
hereof. Amounts shown are calculated on a straight-life annuity basis, and are
not subject to any further deduction for Social Security benefits or other
offsets. Employees may elect to receive the actuarial value of their retirement
benefits in a lump sum in lieu of a lifetime pension.
Under the Retirement Plan, years of credited service as of December 31,
2001, and Covered Compensation for the calendar year ending December 31, 2001,
are 22 years and $1,483,000 for Mr. Ludwig, 18 years and $713,500 for
Mr. Cohen, 2 years and $927,083 for Mr. Considine, 21 years and $601,250 for
Mr. Forlenza, and 27 years $581,250 for Mr. Kozy.
In addition, Mr. Considine has an agreement with the Company under which
Mr. Considine is entitled to receive an annual supplemental pension benefit of
$86,900 in the event his employment is terminated before the age of 55. In the
event Mr. Considine remains with the Company beyond his 55th birthday, he will
be entitled to receive an actuarially increased annual supplemental pension
benefit. In addition, under a separate agreement, if Mr. Considine's employment
is terminated prior to age 55 other than for cause or as a result of a voluntary
termination, he will be entitled to participate in the Company's retiree medical
plan upon the attainment of age 55. If Mr. Considine remains employed by the
Company beyond his 55th birthday, he will be entitled to participate in the
retiree medical plan following termination of his employment for any reason.
CONTRACTUAL OBLIGATIONS
Messrs. Ludwig, Cohen, Forlenza, Considine and Kozy, have agreements with
the Company which provide for the continued employment of the named executives
for a period of three years following a change of control of the Company. In the
event of a termination by the Company other than for cause, or by the named
executive for good reason, at any time during the three years following a change
in control of the Company, the named executive would receive a payment equal to
19
three times the executive's annual compensation (salary and bonus), and certain
of his or her fringe benefits (reduced to the extent provided by any subsequent
employer) would be continued for not less than three years. In addition, in the
event of termination by the Company other than for cause, or by the named
executive for good reason, within three years following a change in control, the
named executive would be entitled to receive the actuarial equivalent of the
additional pension benefits which the named executive would have earned had he
or she remained an employee for an additional three years following termination.
The terms 'cause,' 'good reason' and 'change in control' are defined in the
agreements.
If any termination payments to a named executive pursuant to his or her
agreement should be subject to the excise tax imposed by Section 4999 of the
Code, the Company would reimburse the named executive in an amount such that the
named executive would retain the same amount, net of all taxes, that he or she
would have retained had the excise tax not been in effect.
PERFORMANCE COMPARISON
The following graph presents a comparison of cumulative total return to
shareholders for the five-year period ended September 30, 2001 for the Company,
the S&P 500 Index, and for a peer group of fourteen companies, selected on a
line-of-business basis (the 'Peer Group'). The comparison period presented is
required by applicable rules and regulations of the SEC. Cumulative total return
to shareholders is measured by dividing total dividends (assuming dividend
reinvestment) plus per share price change for the period by the share price at
the beginning of the measurement period. The Company's cumulative shareholder
return is based on an investment of $100 on September 30, 1996 and is compared
to the cumulative total return of the S&P 500 Index and the weighted, average
performance of the Peer Group over the same period with a like amount invested.
The companies composing the Peer Group consist of Abbott Laboratories,
Allergan Inc., American Home Products Corp., Bausch & Lomb, Inc., Baxter
International Inc., Beckman Coulter Inc., Boston Scientific Corp., Bristol-Myers
Squibb Company, C.R. Bard, Inc., Guidant Corp., Johnson & Johnson, Medtronic,
Inc., Pfizer, Inc. and St. Jude Medical, Inc.
20
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
AMONG BECTON, DICKINSON AND COMPANY, THE S&P 500 INDEX
AND A SELECTED PEER GROUP
[PERFORMANCE GRAPH]
9/96 12/96 3/97
----------------------------------------------------------------
BECTON, DICKINSON & COMPANY $100 $ 98.72 $105.69
----------------------------------------------------------------
PEER GROUP 100 104.49 115.66
----------------------------------------------------------------
S&P 500 100 108.38 113.62
----------------------------------------------------------------
6/97 9/97 12/97
------------------------------------------------------------------
BECTON, DICKINSON & COMPANY 115.28 110.62 115.41
------------------------------------------------------------------
PEER GROUP 138.27 138.91 152.72
------------------------------------------------------------------
S&P 500 127.37 136 137.72
------------------------------------------------------------------
3/98 6/98 9/98
---------------------------------------------------------------------
BECTON, DICKINSON & COMPANY 150.92 162.57 159.16
---------------------------------------------------------------------
PEER GROUP 173.20 186.94 176.68
---------------------------------------------------------------------
S&P 500 151.98 154.27 140.51
---------------------------------------------------------------------
12/98 3/99 6/99
----------------------------------------------------------------------
BECTON, DICKINSON & COMPANY 163.13 151.30 121.52
----------------------------------------------------------------------
PEER GROUP 194.50 208.00 198.74
----------------------------------------------------------------------
S&P 500 160.09 165.9 170.4
----------------------------------------------------------------------
9/99 12/99 3/00
----------------------------------------------------------------------
BECTON, DICKINSON & COMPANY 116.00 115.33 114.66
----------------------------------------------------------------------
PEER GROUP 191.71 191.28 201.00
----------------------------------------------------------------------
S&P 500 163.40 178.6 183.6
----------------------------------------------------------------------
6/00 9/00 12/00
-----------------------------------------------------------------------
BECTON, DICKINSON & COMPANY 121.23 123.28 158.78
-----------------------------------------------------------------------
PEER GROUP 227.95 227.6 233.29
-----------------------------------------------------------------------
S&P 500 180 179.6 171.5
-----------------------------------------------------------------------
3/01 6/01 9/01
-----------------------------------------------------------------------
BECTON, DICKINSON & COMPANY 159.31 165.41 165.60
-----------------------------------------------------------------------
PEER GROUP 220.00 220.20 220.60
-----------------------------------------------------------------------
S&P 500 160 164.8 146.9
-----------------------------------------------------------------------
PROPOSAL 2.
SELECTION OF INDEPENDENT AUDITORS
The Board of Directors, pursuant to the recommendation of the Audit
Committee, has selected Ernst & Young LLP to audit the accounts of the Company
and its subsidiaries for the fiscal year ending September 30, 2002. A
representative of Ernst & Young LLP will attend the Annual Meeting to respond to
appropriate questions and will have the opportunity to make a statement.
Fees billed to the Company by Ernst & Young LLP for services rendered during
fiscal year 2001 were as follows:
Audit Fees: $1,478,400
Financial Information Systems Design and Implementation Fees: $0
All Other Fees*: $2,824,300
*The Audit Committee considered, in reliance on management and the independent
auditors, whether the provision of these services is compatible with
maintaining the independence of Ernst & Young LLP. All Other Fees includes fees
primarily related to statutory filings in certain international jurisdictions,
audits of employee benefit plans, accounting and reporting advice on specific
matters, tax compliance and tax consulting, and transnational services for
employees.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE SELECTION OF
ERNST & YOUNG LLP. IF APPROVAL IS WITHHELD, THE BOARD WILL RECONSIDER ITS
SELECTION.
21
PROPOSAL 3.
APPROVAL OF 2002 STOCK OPTION PLAN
In November 2001, the Board of Directors adopted the 2002 Stock Option Plan
(the '2002 Plan'), subject to shareholder approval. The Board of Directors
continues to believe that stock-based incentives are important factors in
attracting, retaining, and rewarding employees and closely aligning their
interests with those of the shareholders. If approved by the shareholders, the
Board of Directors has authorized for issuance under the 2002 Plan 12,500,000
shares of the Company's Common Stock for the granting of options, which
represents approximately 4.8% of the shares of Common Stock outstanding on
December 18, 2001. The closing price of a share of Common Stock on the New York
Stock Exchange on December 18, 2001 was $32.90.
A brief description of the material provisions of the 2002 Plan follows:
1. Administration. The 2002 Plan will be administered by a committee of
directors, presently the Compensation and Benefits Committee (the
'Committee'). In administering the 2002 Plan, the Committee has the power to
interpret its provisions and to promulgate, amend, and rescind rules and
regulations for its administration, and to select individuals to receive
grants.
2. Option Grants. The 2002 Plan provides for the granting of both
incentive and nonqualified stock options. Options may be granted to officers
and other employees of the Company and its subsidiaries, as determined by
the Committee. Approximately 3,200 employees were granted stock options in
fiscal 2001 and it is anticipated that a similar number of employees will be
eligible to receive stock options in fiscal 2002. The Committee also
determines the times at which options become exercisable, their
transferability and the dates, not more than ten years after the date of
grant, on which options will expire. In the event of a 'change in control'
(as defined in the 2002 Plan) of the Company, all outstanding options
granted under the 2002 Plan become immediately exercisable. The fair market
value of the stock with respect to which incentive stock options under the
2002 Plan or any other plan of the Company first become exercisable may not
exceed $100,000 in any year. The option price of the stock options granted
under the 2002 Plan is to be at least 100% of the fair market value of the
Common Stock on the date of grant.
It is not possible at this time to determine who may be selected to
receive options under the 2002 Plan or the number of options to be granted
to any individual. Such selections and determinations will be made by the
Committee on the basis of the duties, responsibilities, and present and
future contributions of individuals to the success of the Company. The 2002
Plan does, however, establish a maximum number of 500,000 shares that may be
granted to an individual in any calendar year.
3. Stock Appreciation Rights. The 2002 Plan permits the Committee to
grant stock appreciation rights in connection with any stock options. These
rights enable an optionee to surrender an option and to receive cash or
Common Stock, as determined by the Committee, equal to the difference
between the option price and the fair market value of the Common Stock on
the date of surrender.
4. Termination of Employment. Unless otherwise provided by the
Committee, the following rules will apply to all options granted under the
2002 Plan. Options granted under the 2002 Plan expire immediately if an
employee is terminated for cause. In the event of a voluntary or involuntary
termination without cause, options may be exercised for a period of three
months following the date of termination. In the event of an employee's
death within such three-month period, the employee's estate may exercise the
options for the number of shares exercisable at the date of termination
within one year after death but in no event beyond the expiration dates of
the
22
options. Options outstanding at the time an employee retires under any
Company retirement plan or becomes disabled shall be exercisable for the
total number of shares subject to the options (regardless of the number of
shares for which the options were exercisable at the date of termination)
and otherwise remain in full force and effect, except that in the case of
disability, the options are only exercisable for a period of three years
after the date of termination (but in no event after the expiration dates of
the options). If an employee dies, whether before or after such retirement
or disability, the employee's estate may exercise the options for the total
number of shares subject to the options (regardless of the number of shares
for which the options were exercisable at the time of death) for up to three
years after death, but in no event beyond the expiration date of the
options.
5. Forfeiture. The Committee has the authority to include in the terms
of any stock options granted under the 2002 Plan provisions for the
forfeiture of the stock options if following termination of employment, the
optionee violates any agreement of non-competition or confidentiality with
the Company or if the Committee determines that the optionee committed acts
and/or omissions which would have been discovered prior to the termination
of the optionee's employment.
6. Income Tax Consequences. Under present law, the federal income tax
treatment of stock options under the 2002 Plan is generally as follows:
Incentive Stock Options. For regular U.S. income tax purposes, an
optionee will not realize taxable income upon either the grant of an
incentive stock option or its exercise if the optionee has been an
employee of the Company or a subsidiary at all times from the date of
grant to a date not more than three months before the date of exercise.
An optionee may instead, under certain circumstances, have an alternative
minimum tax to pay as a result of an exercise of an incentive stock
option.
If the shares acquired upon exercise of an incentive stock option are
not disposed of by the optionee within two years from the date of grant
or within one year from the date of exercise, any gain realized upon a
subsequent sale of the shares will be taxable as a capital gain. In that
case, the Company will not be entitled to a deduction in connection with
the grant or exercise of the option or the subsequent disposition of the
shares by the optionee.
If the optionee disposes of the shares within two years from the date
of grant or within one year from the date of exercise, the optionee will
realize ordinary income in an amount equal to the excess of the fair
market value of the shares at the date of exercise (or the amount
realized at disposition, if less) over the option price, and the Company
will be allowed a corresponding deduction. If the amount realized on the
disposition exceeds the fair market value of the shares at the date of
exercise, the gain on disposition in excess of the amount treated as
ordinary income will be taxable as a capital gain.
Nonqualified Stock Options. An optionee will not realize U.S. income
upon the grant of a nonqualified stock option. Upon the exercise of a
nonqualified stock option, an optionee will be required to recognize
ordinary income in an amount equal to the excess of the fair market value
at the date of exercise over the option price, and the Company will be
entitled to a corresponding deduction. Upon a subsequent sale of the
stock, any amount realized in excess of such fair market value will be
taxable as a capital gain. The Committee is authorized under the 2002
Plan to establish procedures to permit optionees to defer the receipt of
shares upon exercise of a nonqualified stock option for a specified
period of time or until a specified future event.
Stock Appreciation Rights. Stock appreciation rights will not result
in U.S. taxable income upon grant. Upon exercise, the optionee will
realize ordinary income in the amount
23
equal to the cash and/or fair market value of any shares received and the
Company is entitled to a corresponding deduction.
Individual states and foreign and local tax authorities also may tax
stock options granted under the 2002 Plan.
7. Amendments. The Board of Directors may amend the 2002 Plan at any
time, but may not, without prior shareholder approval amend the requirement
that the exercise price of options granted under the Plan must be at least
equal to 100% of the fair market value of the Common Stock on the date of
grant, eliminate the prohibition in the Plan on repricing or change the
maximum number of options to purchase shares that may be awarded to an
individual during any calendar year under the Plan. In addition, pursuant to
the terms of the 2002 Plan, officers of the Company are authorized to amend
the 2002 Plan to the extent necessary to comply with, and/or to qualify the
2002 Plan under, the applicable securities, tax and employee benefit laws of
any foreign jurisdiction.
THE FOREGOING SUMMARY OF THE 2002 PLAN IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE PROVISIONS OF THE 2002 PLAN, A COPY OF WHICH IS ATTACHED AS
APPENDIX A TO THIS PROXY STATEMENT.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 3.
SHAREHOLDER PROPOSAL
PROPOSAL 4.
PROPOSAL ON CUMULATIVE VOTING
Mrs. Evelyn Y. Davis, Watergate Office Building, 2600 Virginia Avenue N.W.,
Suite 215, Washington, D.C. 20037, owner of 800 shares of Common Stock, has
informed the Company that she plans to introduce the following proposal at the
meeting:
RESOLVED: 'That the stockholders of Becton Dickinson, assembled in
Annual Meeting in person and by proxy, hereby request the Board of Directors
to take the necessary steps to provide for cumulative voting in the election
of directors, which means each stockholder shall be entitled to as many
votes as shall equal the number of shares he or she owns multiplied by the
number of directors to be elected, and he or she may cast all of such votes
for a single candidate, or any two or more of them as he or she may see
fit.'
REASONS: 'Many states have mandatory cumulative voting, so do National
Banks. In addition, many corporations have adopted cumulative voting. Last
year the owners of 78,655,787 shares, representing 42.8% of shares voting
voted FOR this proposal.'
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL 4.
Like most major corporations, BD provides that each share of common stock is
entitled to one vote for each nominee for Director. The Board of Directors
believes that the current voting system is most likely to produce an effective
Board of Directors which will represent the interests of all of the Company's
stockholders. Each of your directors shares the common objective of advancing
the best interests of all shareholders rather than those of any particular
group. In contrast to this approach, cumulative voting could permit stockholders
representing less than a majority of all shares to elect a director to represent
their particular interests and views. This could result in a Board of Directors
on which each director advocates the positions of the group responsible for his
or her election rather than the positions that are in the best interest of the
Company and of all of the stockholders.
24
Our shareholders have rejected this proposal at each of our last five annual
meetings and have rejected similar proposals each time they have been presented.
Your Board of Directors continues to believe that changing the current voting
procedure would not be in the best interests of all of our shareholders or of
the Company.
Accordingly, the Board recommends a vote AGAINST this proposal.
SHAREHOLDER PROPOSALS FOR 2003 ANNUAL MEETING
Any proposal that a shareholder wishes to submit for inclusion in the
Company's Proxy Statement and proxy card/voting instruction form for the 2003
Annual Meeting of Shareholders ('2002-2003 Proxy Statement') pursuant to SEC
Rule 14a-8 must be received by the Company no later than September 4, 2002.
In addition, notice of any proposal that a shareholder wishes to propose for
consideration at the 2003 Annual Meeting of Shareholders, but does not seek to
include in the Company's 2002-2003 Proxy Statement pursuant to Rule 14a-8, must
be delivered to the Company no earlier than October 16, 2002 and no later than
November 15, 2002, if the proposing shareholder wishes for the Company to
describe the nature of the proposal in the 2002-2003 Proxy Statement as a
condition to exercising its discretionary authority to vote proxies on the
proposal. Any shareholder proposals or notices submitted to the Company in
connection with the 2003 Annual Meeting of Shareholders should be addressed to:
Secretary, Becton, Dickinson and Company, 1 Becton Drive, Franklin Lakes, New
Jersey 07417.
25
APPENDIX A
2002 STOCK OPTION PLAN
SECTION 1. PURPOSE
The purpose of this Plan is to provide an additional incentive to employees
of Becton, Dickinson and Company and its subsidiaries to achieve long-range
goals, to aid in attracting and retaining employees of outstanding ability, and
to closely align their interests with those of shareholders.
SECTION 2. DEFINITIONS
Unless the context clearly indicates otherwise, the following terms, when
used in this Plan, shall have the meanings set forth in this Section 2.
(a) 'Board' shall mean the Board of Directors of Becton, Dickinson and
Company.
(b) 'Broker' shall mean a registered broker-dealer designated by the
Company.
(c) 'Cashless Exercise' shall mean a method of exercising a Nonqualified
Stock Option under which a Grantee, in lieu of payment of the option price
in cash, by check or by delivery of shares of Stock, delivers to the Broker
irrevocable instructions to sell the shares of Stock acquired upon such
exercise and, immediately upon receipt of the proceeds from this sale, to
deliver to the Company the option price and any withholding taxes.
(d) 'Change in Control' means:
(1) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the 'Exchange Act')) (a 'Person') of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 25% or more of either (A) the then-outstanding shares of
common stock of the Company (the 'Outstanding Company Common Stock') or
(B) the combined voting power of the then-outstanding voting securities
of the Company entitled to vote generally in the election of directors
(the 'Outstanding Company Voting Securities'); provided, however, that,
for purposes of this Section 2(d), the following acquisitions shall not
constitute a Change of Control: (i) any acquisition directly from the
Company, (ii) any acquisition by the Company, or (iii) any acquisition by
any employee benefit plan (or related trust) sponsored or maintained by
the Company or any affiliated company, (iv) any acquisition by any
corporation pursuant to a transaction that complies with
Sections 2(d)(3)(A), 2(d)(3)(B) and 2(d)(3)(C), or (v) any acquisition
that the Board determines, in good faith, was inadvertent, if the
acquiring Person divests as promptly as practicable a sufficient amount
of the Outstanding Company Common Stock and/or the Outstanding Company
Voting Securities, as applicable, to reverse such acquisition of 25% or
more thereof.
(2) Individuals who, as of April 24, 2000, constitute the Board (the
'Incumbent Board') cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to April 24, 2000 whose election, or nomination for election
as a director by the Company's shareholders, was approved by a vote of at
least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the
A-1
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other
than the Board.
(3) Consummation of a reorganization, merger, consolidation or sale
or other disposition of all or substantially all of the assets of the
Company (a 'Business Combination'), in each case, unless, following such
Business Combination, (A) all or substantially all of the individuals and
entities that were the beneficial owners of the Outstanding Company
Common Stock and the Outstanding Company Voting Securities immediately
prior to such Business Combination beneficially own, directly or
indirectly, more than 60% of the then-outstanding shares of common stock
and the combined voting power of the then-outstanding voting securities
entitled to vote generally in the election of directors, as the case may
be, substantially all of the Company's assets either directly or through
one or more subsidiaries) in substantially the same proportions as their
ownership immediately prior to such Business Combination of the
Outstanding Company Common Stock and the Outstanding Company Voting
Securities, as the case may be, (B) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 25% or
more of, respectively, the then-outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined
voting power of the then-outstanding voting securities of such
corporation, except to the extent that such ownership existed prior to
the Business Combination, and (C) at least a majority of the members of
the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the
execution of the initial agreement or of the action of the Board
providing for such Business Combination; or
(4) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
(e) 'Code' shall mean the Internal Revenue Code of 1986 as it may be
amended from time to time.
(f) 'Committee' shall mean the Compensation and Benefits Committee of
the Board or such other committee as may be designated by the Board.
(g) 'Company' shall mean Becton, Dickinson and Company.
(h) 'Date of Exercise' shall mean the earlier of the date on which
written notice of exercise, together with payment in full, if applicable, is
received at the office of the Secretary of the Company (or its designee) or
the date on which such notice and payment are mailed to the Secretary of the
Company (or its designee) at its principal office by certified or registered
mail, or, in the case of the Cashless Exercise of a Nonqualified Stock
Option, the Date of Exercise shall mean the date the Broker executes the
Grantee's sell order with respect to the underlying shares of Stock.
(i) 'Employee' shall mean any employee, including any officer, of the
Company or any of its Subsidiaries.
(j) 'Fair Market Value' shall mean for any day the mean of the highest
and lowest selling prices of the Stock as reported on the Composite Tape for
securities traded on the New York Stock Exchange.
(k) 'Grantee' shall mean an Employee granted a Stock Option and shall
also mean, to the extent contemplated and permitted by the Plan, executors,
administrators, successors and transferees of the Grantee.
A-2
(l) 'Granting Date' shall mean the date on which the Committee
authorizes the issuance of a Stock Option for a specified number of shares
of Stock to a specified Employee.
(m) 'Plan' shall mean the Becton, Dickinson and Company 2002 Stock
Option Plan as set forth herein and amended from time to time.
(n) 'Retirement' shall mean (i) termination of full-time employment by
reason of retirement when the Grantee is entitled to the current receipt of
benefits under any retirement plan maintained by the Company or any of its
subsidiaries, or (ii) as otherwise determined by the Committee.
(o) 'Stock' shall mean the Common Stock, par value $1.00 per share, of
the Company.
(p) 'Stock Appreciation Right' shall mean a right granted pursuant to
the Plan to receive Stock, cash, or a combination thereof, upon the
surrender of the right to purchase all or part of the shares of Stock
covered by a Stock Option.
(q) 'Stock Option' shall mean an Incentive or Nonqualified Stock Option
granted pursuant to the Plan to purchase shares of Stock.
(r) 'Subsidiary' shall mean any subsidiary corporation as defined in
Section 424 of the Code.
SECTION 3. SHARES OF STOCK SUBJECT TO THE PLAN
Subject to adjustment pursuant to Section 9, 12,500,000 shares of Stock
shall be reserved for issuance upon the exercise of Stock Options granted
pursuant to this Plan. Shares delivered under the Plan may be authorized and
unissued shares or issued shares held by the Company in its treasury. If any
Stock Options expire or terminate without having been exercised, the shares of
Stock covered by such Stock Options shall become available again for the grant
of Stock Options hereunder. Similarly, if any Stock Options are surrendered for
cash pursuant to the provisions of Section 7, the shares of Stock covered by
such Stock Options shall also become available again for the grant of Stock
Options hereunder. Shares of Stock covered by Stock Options surrendered for
Stock pursuant to Section 7, however, shall not become available again for the
grant of Stock Options hereunder.
SECTION 4. ADMINISTRATION OF THE PLAN
(a) The Plan shall be administered by the Committee. Subject to the
express provisions of the Plan, the Committee shall have authority to
interpret the Plan, to prescribe, amend and rescind rules and regulations
relating to it, to grant Stock Options and determine the terms and
provisions of such grants, to approve amendments of such terms and
provisions otherwise consistent with the terms of this Plan, and to make all
other determinations necessary or advisable for the administration of the
Plan.
(b) It is intended that the Plan and any transaction hereunder meet all
of the requirements of Rule 16b-3 promulgated by the Securities and Exchange
Commission, as such rule is currently in effect or as hereafter modified or
amended, and all other applicable laws. If any provision of the Plan or any
transaction would disqualify the Plan or such transaction under, or would
not comply with, Rule 16b-3 or other applicable laws, such provision or
transaction shall be construed or deemed amended to conform to Rule 16b-3 or
such other applicable laws or otherwise shall be deemed to be null and void,
in each case to the extent permitted by law and deemed advisable by the
Committee.
(c) Any controversy or claim arising out of or related to this Plan
shall be determined unilaterally by and at the sole discretion of the
Committee.
A-3
SECTION 5. GRANTING OF STOCK OPTIONS
(a) Only Employees shall be eligible to receive Stock Options under the
Plan. Directors of the Company who are not also Employees shall not be
eligible for Stock Options.
(b) The purchase price of each share of Stock subject to an Incentive
Stock Option or a Nonqualified Stock Option shall be at least 100% of the
Fair Market Value of a share of the Stock on the Granting Date.
(c) The Committee shall determine and designate from time to time those
Employees who are to be granted Stock Options and whether the particular
Stock Options are to be Incentive Stock Options or Nonqualified Stock
Options, and shall also specify the number of shares covered by and the
exercise price per share of each Stock Option.
(d) The aggregate fair market value (determined at the time the option
is granted) of the Stock with respect to which Incentive Stock Options are
exercisable for the first time by any individual during any calendar year
(under all such plans of the individual's employer corporation and its
parent and subsidiary corporations) shall not exceed $100,000.
(e) A Stock Option shall be exercisable during such period or periods
and in such installments as shall be fixed by the Committee at the time the
Stock Option is granted or in any amendment thereto; but each Stock Option
shall expire not later than ten years from the Granting Date.
(f) The Committee shall have the authority to grant both transferable
Stock Options and nontransferable Stock Options, and to amend outstanding
nontransferable Stock Options to provide for transferability. Each
nontransferable Stock Option shall provide by its terms that it is not
transferable otherwise than by will or the laws of descent and distribution
and is exercisable, during the Grantee's lifetime, only by the Grantee. Each
transferable Stock Option may provide for such limitations on
transferability and exercisability as the Committee may designate at the
time a Stock Option is granted or is otherwise amended to provide for
transferability. Subject to the foregoing, a permitted transferee shall be
entitled to exercise a Stock Option at such times and to the extent that the
Stock Option would otherwise be exercisable by the Grantee, or by the
Grantee's executors, administrators and successors pursuant to Section 8.
(g) The Committee may establish procedures whereby Employees may elect
to defer the receipt of shares upon exercise of any Nonqualified Stock
Option, for a specified period of time or until a specified future event.
(h) Stock Options may be granted to an Employee who has previously
received Stock Options or other options whether such prior Stock Options or
other options are still outstanding, have previously been exercised or
surrendered in whole or in part.
(i) Subject to adjustment pursuant to Section 9, the aggregate number of
shares of Stock subject to Stock Options granted to an Employee under the
Plan during any calendar year shall not exceed 500,000.
(j) Notwithstanding any other provisions in the Plan to the contrary, in
no event shall the Committee, or its designee, re-price or re-grant options
at a price below the original option issue price.
SECTION 6. EXERCISE OF STOCK OPTIONS
Except as otherwise provided with respect to the Cashless Exercise of a
Nonqualified Stock Option, the Grantee shall pay the option price in full on the
Date of Exercise of a Stock Option in cash, by check, or by delivery of full
shares of Stock of the Company that have been owned by the
A-4
Grantee for at least six (6) months, duly endorsed for transfer to the Company
with signature guaranteed, or by any combination thereof. Stock will be accepted
at its Fair Market Value on the Date of Exercise.
SECTION 7. STOCK APPRECIATION RIGHTS
(a) The Committee may grant Stock Appreciation Rights in connection with
any Stock Option.
(b) Stock Appreciation Rights shall be exercisable at such times and to
the extent that the related Stock Option shall be exercisable, unless the
Committee specifies a more restrictive period.
(c) Upon the exercise of a Stock Appreciation Right, the Grantee shall
surrender the related Stock Option or a portion thereof and shall be
entitled to receive payment of an amount determined by multiplying the
number of shares as to which option rights are surrendered by the difference
obtained by subtracting the exercise price per share of the related Stock
Option from the Fair Market Value of a share of Stock on the Date of
Exercise of the Stock Appreciation Right.
(d) Payment of the amount determined under Section 7(c) shall be made in
Stock (based on its Fair Market Value on the date of exercise of the Stock
Appreciation Right), in cash, or partly in cash and partly in Stock as the
Committee shall determine in its sole discretion.
SECTION 8. TERMINATION OF EMPLOYMENT
Except as otherwise provided by the Committee at the time the option is
granted or in any amendment thereto, if a Grantee ceases to be an Employee,
then:
(a) if termination is for cause, all Stock Options held by the Grantee
shall be canceled as of the date of termination;
(b) if termination of employment is voluntary or involuntary without
cause, the Grantee may exercise each Stock Option held by him within three
months after such termination (but not after the expiration date of the
option) to the extent of the number of shares subject to the Stock Option
which were purchasable pursuant to its terms at the date of termination;
provided, however, if the Grantee should die within three months after such
termination, each Stock Option held by the Grantee may be exercised by the
Grantee's estate, or by any person who acquires the right to exercise by
reason of the Grantee's death, at any time within a period of one year after
death (but not after the expiration date of the option) to the extent of the
number of shares subject to the Stock Option which were purchasable pursuant
to its terms at the date of termination;
(c) subject to the provisions of Section 8(d), if termination is by
reason of Retirement, or by reason of disability, each Stock Option held by
the Grantee shall, at the date of Retirement or disability, become
exercisable to the extent of the total number of shares subject to the Stock
Option, irrespective of the number of shares which would otherwise have been
purchasable pursuant to the terms of the Stock Option at the date of
Retirement or disability, and shall otherwise remain in full force and
effect in accordance with its terms; provided, however, that in the case of
termination by reason of disability, each Stock Option shall only be
exercisable within a period of three years after the date of disability (but
not after the expiration date of the option);
(d) if termination is by reason of the death of the Grantee, or if the
Grantee dies after Retirement or disability as referred to in Section 8(c),
each Stock Option held by the Grantee
A-5
may be exercised by the Grantee's estate, or by any person who acquires the
right to exercise the option by reason of the Grantee's death, at any time
within a period of three years after death (but not after the expiration
date of the option) to the extent of the total number of shares subject to
the Stock Option, irrespective of the number of shares which would have
otherwise been purchasable pursuant to the terms of the Stock Option at the
date of death;
(e) pursuant to its general administrative authority under the Plan, the
Committee may, in its sole discretion, accelerate the vesting of Stock
Options or provide that Stock Options may remain exercisable for a period of
up to three (3) years beyond the date of the Grantee's termination of
employment in the event of the sale of a business, a reduction in force or
otherwise for the convenience of the Company.
SECTION 9. ADJUSTMENTS
In the event of any merger, consolidation, reorganization, recapitalization,
stock dividend (including without limitation, stock dividends consisting of
securities other than the Stock), distribution (other than regular cash
dividends), stock split, reverse stock split, separation, spin-off, split-off or
other distribution of stock or property of the Company, or other change in the
corporate structure or capitalization, there shall be appropriate adjustment
made by the Board in the number and kind of shares or other property that may be
granted in the aggregate and to individual Employees under the Plan, the number
and the kind of shares or other property subject to each outstanding Stock
Option and Stock Appreciation Right, and the option prices.
No exercise of conversion rights with respect to the shares of the Company's
Series B ESOP Convertible Preferred Stock shall call for any adjustment under
this Section 9.
SECTION 10. CHANGE IN CONTROL
A Stock Option shall become immediately exercisable to the extent of the
total number of shares subject to the option in the event of a Change in Control
of the Company.
SECTION 11. FORFEITURE
The Committee shall have the authority to include in the terms of any Stock
Option grant provisions for the forfeiture of the Stock Option (a) if the
Grantee violates any agreement of non-competition with the Company or any
Subsidiary or non-disclosure of confidential information of the Company or any
Subsidiary, or (b) if the Committee determines that the Grantee committed acts
and omissions which would have been the basis for a termination of the Grantee's
employment for cause had such acts or omissions been discovered prior to
termination of the Grantee's employment.
SECTION 12. GENERAL PROVISIONS
(a) Each Stock Option shall be evidenced by a written instrument
containing such terms and conditions, not inconsistent with this Plan, as
the Committee shall approve.
(b) The granting of a Stock Option in any year shall not give the
Grantee any right to similar grants in future years or any right to be
retained in the employ of the Company or any Subsidiary or interfere in any
way with the right of the Company or such Subsidiary to terminate an
Employee's employment at any time.
(c) Notwithstanding any other provision of the Plan, the Company shall
not be required to issue or deliver any certificate or certificates for
shares of Stock under the Plan prior to fulfillment of all of the following
conditions:
A-6
(i) The listing, or approval for listing upon notice of issuance, of
such shares on the New York Stock Exchange;
(ii) Any registration or other qualification of such shares under any
state or federal law or regulation, or the maintaining in effect of any
such registration or other qualification which the Committee may, in its
discretion upon the advice of counsel, deem necessary or advisable; and
(iii) The obtaining of any other consent, approval or permit from any
state or federal governmental agency which the Committee may, in its
discretion upon the advice of counsel, determine to be necessary or
advisable.
(d) The Company shall have the right to deduct from any payment or
distribution under the Plan any federal, state or local taxes of any kind
required by law to be withheld with respect to such payments or to take such
other action as may be necessary to satisfy all obligations for the payment
of such taxes. In case distributions are made in shares of Stock, the
Company shall have the right to retain shares of stock having a Fair Market
Value equal to the amount of tax to be withheld for such distributions or to
require a Grantee to pay the Company for any such taxes required to be
withheld on such terms and conditions prescribed by the Committee.
SECTION 13. AMENDMENT AND TERMINATION
(a) The Plan shall terminate on February 1, 2012 and no Stock Option
shall be granted hereunder after that date, provided that the Board may
terminate the Plan at any time prior thereto.
(b) The Board may amend the Plan at any time without notice, provided
however, that the Board may not, without prior approval by the shareholders,
amend Sections 5(b), 5(i) or 5(j).
(c) The proper officers of the Company shall have the authority to amend
the Plan at any time without notice to the extent necessary to comply with
all applicable laws and regulations of any jurisdiction outside of the
United States of America and/or qualify the Plan under applicable
securities, tax or employee benefit laws and regulations of any such
jurisdiction.
(d) Subject to Section 13 (c), no termination or amendment of the Plan
may, without the consent of a Grantee to whom a Stock Option shall
theretofore have been granted, adversely affect the rights of such Grantee
under such Stock Option.
SECTION 14. GOVERNING LAW
The Plan shall be governed by, and construed and interpreted in accordance
with, the laws of the United States of America and applicable state law.
SECTION 15. EFFECTIVE DATE AND SHAREHOLDERS' APPROVAL
The Plan shall become effective February 1, 2002, subject to approval or
ratification by the affirmative votes of the holders of a majority of the votes
cast on such proposal at the next Annual Meeting of Shareholders of the Company
or any adjournment or postponement thereof. The Committee may grant Stock
Options, the exercise of which shall be expressly subject to the condition that
the Plan shall have been approved or ratified by the shareholders of the
Company.
A-7
APPENDIX B
THE MISSION OF THE BOARD OF DIRECTORS
The Board of Directors of BD believes that in keeping with its duties and
its goal of achieving high standards of corporate governance, and in order to
further the Core Values and Envisioned Future of BD, it must:
-- Represent the owners' interest in perpetuating a successful business,
including optimizing long-term financial returns;
-- Ensure that the corporation is managed in such a way as to achieve this
result;
-- Serve in an active and not a passive fashion;
-- Regularly monitor the effectiveness of management policies and
decisions, including the execution of strategies; and
-- Consider the needs of BD's customers, employees, suppliers, and the
communities in which BD conducts business, in addition to fulfilling
its obligations for increased shareholder value.
To achieve the foregoing, the Board believes that certain oversight
responsibilities should be given priority on its agenda, including a periodic
review of: BD's strategy and results, management structure, performance and
succession planning, Board effectiveness, ethical conduct and legal compliance,
accounting and financial control, and the financial structure and preservation
of assets.
To assist it in discharging these responsibilities, the Board, from time to
time, has established standing Committees. The Board delegates to these
Committees the authority to consider matters within each Committee's area of
responsibility and to report to the Board with appropriate recommendations.
B-1
BECTON, DICKINSON AND COMPANY (BD)
STATEMENT OF CORPORATE GOVERNANCE PRINCIPLES
ADOPTED NOVEMBER 27, 2001
(1) BOARD COMMITTEES, THEIR NUMBER, STRUCTURE, AND CHARTERS
The Board has the following standing committees: Audit, Compensation and
Benefits, Finance and Investment, Corporate Governance, Executive and Corporate
Affairs. The structure and charter of each committee is reviewed on an annual
basis, first by the committee, and then by the Corporate Governance Committee,
who recommends any changes it deems necessary or appropriate to the Board for
consideration. The Board has the flexibility to form a new committee, disband a
current committee or establish ad hoc committees to address particular issues or
circumstances, as the need may arise.
(2) INDEPENDENCE OF COMMITTEES
It is the policy of the Board that only independent directors serve on the
Audit and Compensation and Benefits Committees and, subject to the terms of its
charter, the Corporate Governance Committee.
(3) ASSIGNMENT AND ROTATION OF COMMITTEE MEMBERS AND CHAIRS
The Board, after consultation with the Chairman, designates the members of
the committees, taking into account their particular expertise, experience and
preferences.
The Board does not believe in mandating the fixed rotation of committee
members and/or committee chairs, since there may be reasons at a given point in
time for maintaining continuity. Ideally, however, the Board will seek to rotate
committee members and chairs, on a staggered basis within each committee, on an
average of every five years. The Board seeks thereby to avoid director
entrenchment while ensuring continuity and the availability of experience
derived through longevity.
(4) SEPARATION OF CHAIRMAN AND CHIEF EXECUTIVE ROLES
The Board believes it important to retain its flexibility to allocate the
responsibilities of the offices of the Chairman and the Chief Executive Officer
in any way that seems best for the Company at a given point in time.
(5) LEAD DIRECTOR
The Board notes that all BD directors are elected by the shareholders and
all have an equal voice. The Board, therefore, does not believe it appropriate
or necessary for serving the best interests of the Company's shareholders to
designate a lead director.
The Chairman and Chief Executive Officer are free, as is the Board as a
whole should a special need arise, to call upon any one or more directors to
provide leadership in a given situation. The Board understands that leadership
in certain subject areas falls to the committee chair(s) responsible for the
subject matter giving rise to the need, and that the chairs function as the
committee liaisons to the Chairman and the rest of the Board. In circumstances
in which the outside directors meet without the Chairman, a director designated
by the outside directors to lead the discussion of a particular matter will be
designated.
B-2
(6) MIX OF INSIDE AND OUTSIDE DIRECTORS
It is BD's policy that the Board be composed predominantly of independent
directors who do not hold management responsibilities within the Company,
thereby ensuring their availability to serve on the Audit, Compensation and
Benefits, and Corporate Governance committees and that no more than two persons
with Company management responsibilities shall be members of the Board at any
given point in time.
(7) BOARD DEFINITION OF INDEPENDENCE
The Board assesses each director's independence on an annual basis, and for
purposes of membership on the Audit and Compensation and Benefits Committees,
determines its directors' independence based on applicable regulatory
requirements of the Securities and Exchange Commission and the New York Stock
Exchange.
For all other purposes, including determining whether the Board is comprised
of a predominant majority of independent directors, 'independence' shall be
defined to mean a director who has not been employed by the Company or any of
its subsidiaries within the previous five years and has no significant financial
or personal relationship to BD or to its management that would interfere with
the exercise of independent judgment by such director, provided, however that
the Board believes all directors should hold meaningful equity ownership
positions in the Company and provided further, that a director serving on the
Corporate Governance Committee shall not be disqualified from participating in
the nomination of candidates for election to the Board and the determination of
director compensation as long as he or she is not, and at no time in the prior
two years was, an employee of the Company or any of its subsidiaries.
The Board, in its business judgment, will determine, based on the relevant
facts and circumstances, whether a director has a relationship to BD or to its
management that would interfere with such director's exercise of independent
judgment
(8) BOARD SIZE
The Board periodically reviews its size to consider that most effective for
its operation. In general, the Board believes that its appropriate size consists
of between ten and thirteen members, recognizing that retirements, resignations
and recruiting delays, as well as the availability of one or more outstanding
candidates, may result periodically in the Board consisting, for some
transitional period, of a slightly greater or lesser number of directors than
the Board may have targeted.
(9) DIRECTOR RETIREMENT POLICY
It is BD's policy that directors retire from the Board effective at the
Annual Meeting of Shareholders following their seventy-second birthday. Under
special circumstances, with the approval of the Board, exceptions can be made to
this policy. The Board believes, however, that any exceptions should be rare.
(10) TERM LIMITS
It is the policy of the Company to avoid term limits which have the
disadvantage of discontinuing the availability and contributions of directors
who have developed experience with and insight into, the Company and its needs
over a period of time.
B-3
(11) CHANGES IN DIRECTORS' PRIMARY RESPONSIBILITIES AND OUTSIDE COMMITMENTS
It is BD's policy that every director, including the Chief Executive Officer
and any other inside directors, must notify the Chairman of the Board of his or
her retirement, of any change in employer, and of any other significant change
in professional roles and responsibilities. The Board, upon recommendation from
the Corporate Governance Committee, then considers the continued appropriateness
of Board membership under the new circumstances.
As a corollary, it is the policy of the Board that every director should
seek the consent of the Chairman of the Board and the Corporate Governance
Committee and confirm the absence of any actual or potential conflict, prior to
accepting any invitation to serve on another corporate or not-for-profit board
or with a government or advisory group.
(12) EVALUATION BY OUTSIDE DIRECTORS OF THE CHIEF EXECUTIVE OFFICER
It is BD's policy that the outside directors meet privately no less than
once a year to evaluate the performance of the Chief Executive Officer. The
evaluation is based on objective and subjective criteria, including an
assessment of the performance of the businesses, accomplishment of long-term
strategic objectives, and management development. A clear understanding between
the outside directors and the Chief Executive Officer regarding the Company's
expected performance and how that performance is to be measured is critical to
the process.
The Compensation and Benefits Committee uses the results of the evaluation
when considering the Chief Executive Officer's compensation, and the Chairman of
the Compensation and Benefits Committee communicates the results of this
evaluation to the Chief Executive.
(13) EXECUTIVE SESSIONS OF THE BOARD
The outside directors meet privately as a matter of course without any
management present twice a year, with one of these two executive sessions
dedicated to the review of the Chief Executive Officer, and the recommendations
of the Compensation and Benefits Committee regarding Chief Executive Officer
compensation. These meetings should be scheduled as a matter of course for each
fiscal year by the Corporate Secretary.
The outside directors also may meet in executive session at other times
during the year to consider issues they deem important to address without
management present, following which a designated director will discuss with the
Chairman, to the extent appropriate, matters addressed in or arising from the
private meeting.
(14) EVALUATION OF THE BOARD AND BOARD COMMITTEES
It is the policy of the Board to review on an annual basis its performance
and effectiveness as a whole, with each Director completing a questionnaire
developed by the Corporate Governance Committee with respect to seventeen
criteria. The collective ratings and comments are compiled in advance of the
review session and are presented by the Chairman of the Corporate Governance
Committee to the full Board for discussion.
Beginning in 2001, this practice has been expanded to include annual
self-assessments by each Board committee, relying on a review process similar to
that used by the Board, with performance criteria for each committee established
on the basis of its charter.
B-4
(15) EVALUATION OF INDIVIDUAL DIRECTOR PERFORMANCE
It is BD's policy to have the Corporate Governance Committee assess, at
least once every three years, on the basis of pre-established criteria, the
performance of each individual director standing for re-election at the next
shareholders' meeting. The pre-established criteria address each director's core
competencies, independence and level of commitment.
The Corporate Governance Committee considers not only an individual's
qualities, performance and professional responsibilities, but also the then
composition of the Board and the challenges and needs of the Board as a whole at
that time. If applicable, the Committee also considers the impact of any change
in the principal occupation of the directors during their prior terms of
service. This evaluation process allows each director the opportunity to
conveniently confirm his or her interest to continue as a member of the Board.
Upon completion of the individual director evaluation process, the Committee
reports to the full Board its conclusions and recommendations for nominations to
the Board.
It is BD's policy that the Corporate Governance Committee also should review
and consider the performance of any individual director if a situation were to
arise that interfered with the proper performance of his or her duties as a
member of the Board.
(16) COMPANY PERFORMANCE AND CORPORATE STRATEGY
The Board reviews the Company's financial performance on a regular basis at
Board meetings and through periodic updates, with a particular focus on peer and
competitive comparisons. These reviews include the views of management as well
as those of key investors and securities analysts.
The Board also conducts an annual off-site meeting, normally in November of
each year, to review and approve the Company's long-term strategy, and assess
its strategic, competitive and financial performance, on both an absolute basis
and in relation to the performance, practices and policies of its peers and
competitors.
Each Committee of the Board in addition should assess the Company's
performance on an annual basis from the perspective of its charter's mission and
purpose, and report the assessment results to the full Board.
(17) COMPOSITION OF THE BOARD AND BOARD MEMBERSHIP CRITERIA
The Corporate Governance Committee is responsible for reviewing with the
Board the appropriate skills and characteristics required of Board members in
the context of the composition of the Board at any given point in time. The
assessment of the overall composition of the Board considers issues of judgment,
diversity, age, skills, international background, and experience in areas such
as technology, change management and finance.
On an annual basis the Corporate Governance Committee considers the
composition, challenges and needs of the Board as a whole, both in connection
with recommending candidates for election to the Board and in analyzing the
composition of the Board committees.
(18) SELECTION AND INVITATION OF NEW DIRECTORS
The Corporate Governance Committee is responsible for recommending for Board
consideration candidates for election to the Board. On behalf of the Board, the
Chairman and Chief Executive Officer generally extend the invitation to a
candidate to join the Board.
B-5
(19) ORIENTATION OF DIRECTORS
It is BD's policy that an orientation and training process should be
developed and made available to new members of the Board and to new members of
each Board committee. Orientation of a new director or new committee member is
coordinated by the Corporate Secretary and the Chief Financial Officer and is
tailored to the requirements of the individual.
In addition, BD directors are encouraged to visit the Company and its
subsidiaries each year, to locations selected in consultation with the Chief
Executive Officer, to familiarize him/herself with the business of the Company
and its subsidiaries. These visits should be set up through the Office of the
Corporate Secretary, and directors are requested to report to the full Board
following any such visit.
(20) DIRECTOR COMPENSATION
The Corporate Governance Committee and the Board receive and review periodic
reports from management on trends in director compensation. In addition, the
Corporate Governance Committee conducts a thorough analysis of director
compensation and stock ownership at least every three years and makes
recommendations to the Board for any adjustments deemed appropriate.
Beginning in 1996, BD director compensation was redesigned to focus
increasingly on equity compensation for directors. This redesign included
eliminating both the director retirement plan and the payment of meeting fees,
reducing the cash retainer amount and establishing an equity-based director
deferral plan and a director stock option plan.
(21) DIRECTOR EQUITY OWNERSHIP
The Board believes that directors should hold meaningful equity ownership
positions in the Company. In 1996 the Company adopted director share ownership
guidelines. In 2000 the director share ownership guidelines were adjusted to
reflect a director's tenure on the Board, requiring each outside director to own
shares of BD common stock valued at seventy percent of the amount obtained by
multiplying the annual retainer fee in effect from time to time by the number of
years a person has served as a director.
(22) CLASSIFIED BOARD
Since 1984, the BD Board comprises three classes of directors, with
approximately one-third of the directors assigned to each class. The members of
each class are elected to terms of three years.
The Board reviews its classified board structure no less than once every two
years.
After careful review and consideration, in 2001 the BD Board concluded that
a classified board provides continuity, stability and experience in the
composition of the Board, while still providing for the election of a portion of
the Board each year. It also enables the Board to represent more effectively the
interests of all shareholders in a wide variety of circumstances.
(23) WELL-INFORMED DIRECTORS
In order for the Board to exercise fully its oversight functions, management
provides the Board access to information regarding the Company and the markets
in which the Company operates. This information comes from a variety of sources,
including management reports, security analysts' reports, information regarding
peer performance, direct interaction with senior management and visits to
Company facilities.
B-6
(24) BOARD MATERIALS AND PRESENTATIONS
As a general rule, presentations on specific subjects are sent to the Board
members in advance so that Board meeting time may be conserved and discussion
time focused on questions and discussion of key issues.
(25) BOARD AGENDA
The Chairman and Chief Executive Officer, together with the Corporate
Governance Committee, establishes on an annual basis an agenda of topics for
consideration and review by the Board during the following year. This annual
schedule of topics is then provided to the full Board for review and comment and
is adjusted, as appropriate, during the year.
The Chairman and Chief Executive Officer establish the agenda and schedule
for each Board meeting, allowing for an appropriate mix of presentation and
discussion.
(26) SUCCESSION PLANNING AND MANAGEMENT DEVELOPMENT
The Board, with the input of the Chief Executive Officer, conducts an annual
assessment of the performance and development of senior management. The Board
also conducts periodic discussions, no less than once a year, regarding
succession of the Chief Executive Officer and other members of senior management
and, with the recommendations of the Chief Executive Officer, identifies
potential successor candidates for these roles.
As a matter of policy, the Chief Executive Officer should provide to the
Board, on an ongoing basis, his or her recommendation as to a successor in the
event of an unexpected disability.
(27) ATTENDANCE OF NON-DIRECTORS AT BOARD MEETINGS/BOARD ACCESS TO SENIOR
MANAGEMENT
A limited number of members of the BD leadership team attend Board meetings
and Board dinners on a regular basis. In addition, other BD leaders attend Board
and Committee meetings when appropriate to provide additional expertise and to
expose the Board to a broader pool of management.
The Board has open access to senior management.
(28) BOARD'S INTERACTION WITH INSTITUTIONAL INVESTORS, PRESS AND CUSTOMERS
In general, BD management speaks for the Company. Individual Board members
may, from time to time at the request of management, meet or otherwise
communicate with various constituencies that are involved with BD.
(29) CONFLICTS OF INTEREST
If an actual or potential conflict of interest develops because of a change
in the business operations of the Company or a subsidiary, or in a director's
circumstances (for example, significant and ongoing competition between the
Company and a business with which the director is affiliated), the director
should report the matter immediately to the Chairman of the Board and the
Corporate Governance Committee for evaluation and appropriate resolution.
If a director has a personal interest in a matter before the Board, the
director shall disclose the interest to the full Board, excuse himself or
herself from participation in the discussion, and shall not vote on the matter.
B-7
(30) DISCLOSURE REGARDING CORPORATE GOVERNANCE, DIRECTOR COMPENSATION AND BOARD
EVALUATION
BD provides disclosure in its annual Proxy Statement concerning stock
ownership guidelines for directors and senior management, a comprehensive
description of the board's self-evaluation processes and the composition of
director compensation.
So that shareholders may gain greater knowledge of the Board's processes,
beginning in 2001 the Company's annual proxy statement disclosure will be
expanded to also include the publication of this Statement of Corporate
Governance Principles once adopted by the Board.
B-8
DIRECTIONS TO
THE WOODCLIFF LAKE HILTON
FROM WESTERN NJ
Route 80 East to Garden State Parkway North. Take Garden State Parkway to
Exit 171 (Woodcliff Lake). Turn left onto Glen Road. Turn right onto Chestnut
Ridge Road. Proceed approximately one-half mile and turn left onto Tice
Boulevard. Proceed to hotel on the left.
FROM NEWARK AIRPORT
Route 78 West to Garden State Parkway North. Take Garden State Parkway to
Exit 171 (Woodcliff Lake). Turn left onto Glen Road. Turn right onto Chestnut
Ridge Road. Proceed approximately one-half mile and turn left onto Tice
Boulevard. Proceed to hotel on the left.
FROM TAPPAN ZEE BRIDGE
Over Tappan Zee onto New York Thruway (287 West). Take Thruway to Exit 14A to
Garden State Parkway. Take first exit (School House Road-Pearl River). Turn left
onto School House Road, and turn right at light onto Summit Avenue. Turn left at
light onto Chestnut Ridge Road. Proceed 1.5 miles and turn right onto Tice
Boulevard. Proceed to hotel on the left.
FROM LAGUARDIA AIRPORT
Grand Central Parkway West (follow signs for George Washington Bridge) to
Tri-Boro bridge. Over bridge onto Major Deegan Expressway to Interstate 95 West.
Proceed over the GW Bridge, onto Route 80 West, to Garden State Parkway North.
Take Garden State Parkway to Exit 171 (Woodcliff Lake). Turn left onto Glen
Road. Turn right onto Chestnut Ridge Road. Proceed approximately one-half mile
and turn left onto Tice Boulevard. Proceed to hotel on the left.
PARKING WILL BE AVAILABLE
[RECYCLE LOGO]
Appendix 1
P
R
O
X
Y
PROXY/VOTING INSTRUCTION CARD
BECTON, DICKINSON AND COMPANY
Proxy Solicited on Behalf of the Board of Directors for
Annual Meeting on February 13, 2002
The undersigned hereby appoints Clateo Castellini, Edward J. Ludwig and Bridget
M. Healy, and any of them, with full power of substitution, proxies to attend
the annual meeting of the shareholders of the Company to be held at 2:00 PM, on
Wednesday, February 13, 2002 at The Woodcliff Lake Hilton, 200 Tice Boulevard,
Woodcliff Lake, New Jersey, and any adjournment thereof, and to vote all shares
of the Common Stock of the Company which the undersigned is entitled to vote
upon each of the matters referred to in this proxy and, in their discretion,
upon such other matters as may properly come before the meeting.
This card constitutes voting instructions to the Trustee and the Custodian,
respectively, for any shares of Common Stock allocated to the undersigned under
the Company's 1996 Directors' Deferral Plan ("DDP"), the Company's Deferred
Compensation Plan ("DCP") the Med-Safe Systems, Inc. 401(K) Profit Sharing Plan
(the "Med-Safe Plan") and, when so provided, under the Company's Global Share
Investment Program ("GSIP"), and also constitutes voting instructions to the
Trustee and the Custodian for a proportionate number of shares of Common Stock
in the DDP, DCP the Med-Safe Plan and GSIP, respectively, for which no
instruction card has been received from other participants.
This card also constitutes voting instructions to the Trustee for any shares of
Common Stock and Series B ESOP Convertible Preferred Stock allocated to the
undersigned under the Company's Savings Incentive Plan ("SIP"). In addition,
unless the box provided below is checked, this card also constitutes voting
instructions to the Trustee for a proportionate number of shares of Common Stock
and Series B ESOP Convertible Preferred Stock in the SIP that have not been
allocated to participants or for which no instruction card has been received
from other participants ("unallocated/unvoted SIP shares").
Election of Directors, Nominees:
Term to Expire 2005
01 - Albert J. Costello
02 - James E. Perrella
03 - Alfred Sommer
--------------
You are encouraged to specify your choices by marking the CONTINUED
appropriate boxes, SEE REVERSE SIDE, but you need not mark AND TO BE
any boxes if you wish to vote in accordance with the Board SIGNED, ON
of Directors' recommendations. If you do not vote by REVERSE SIDE
telephone or over the internet, please sign and return this --------------
card using the enclosed envelope.
--------------------------------------------------------------------------------
Detach Card
----- Please mark your 1508
X vote as in this
----- example.
This proxy when properly executed will be voted in the manner directed herein.
If no direction is made, this proxy will be voted FOR election of Directors, FOR
Proposals 2 and 3 and AGAINST Proposal 4.
The Board of Directors recommends a vote FOR Proposals 1, 2 and 3.
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of [ ] [ ] 2. Approval of [ ] [ ] [ ]
Directors independent auditors.
(see reverse)
3. Adoption of 2002 [ ] [ ] [ ]
For, except vote withheld from the following nominee(s): Stock Option Plan.
The Board of Directors recommends a vote AGAINST Proposal 4.
FOR AGAINST ABSTAIN
4. Cumulative voting. [ ] [ ] [ ]
If this box is checked, this card [ ]
does NOT constitute voting
instructions to the Trustee with respect to
unallocated/unvoted SIP shares.
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.
Signature for all shares (OTHER THAN unallocated/unvoted SIP
shares if the box immediately above is checked):
---------------------------------------------------------------
---------------------------------------------------------------
SIGNATURE (S) DATE
................................................................................
FOLD AND DETACH HERE IF YOU ARE RETURNING YOUR VOTED PROXY/VOTING
INSTRUCTION CARD BY MAIL
[LOGO]
Dear Shareholder:
Becton, Dickinson and Company (BD) encourages you to take advantage of
convenient ways by which you can vote your shares. You can vote your shares 24
hours a day, 7 days a week, using either a touch-tone telephone or through the
internet. If you choose to vote your shares by telephone or through the
internet, there is no need to mail back your proxy/voting instruction card.
To vote your shares electronically you must use the control number printed in
the box above, just below the perforation. The series of numbers that appear in
the box above must be used to access the system. Your internet or telephone vote
must be received by 12:01 a.m., new york city time, on february 12, 2002.
1. To vote over the internet, log on to the internet and go to the Web Site
http://www.eproxyvote.com/bdx.
2. To vote over the telephone, on a touch-tone telephone dial 1-877-PRXVOTE
(1-877-779-8683). Outside of the U.S. and in Canada, shareholders should call
1-201-536-8073.
Your telephone or internet vote authorizes the proxies named on the above
proxy/voting instruction card in the same manner as if you marked, signed, dated
and returned the proxy/voting instruction card. If you choose to vote
telephonically or through the internet, there is no need to mail back your
proxy/voting instruction card.
Your vote is important. Thank you for voting.
STATEMENT OF DIFFERENCES
The registered trademark symbol shall be epxressed as........................'r'