-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QxzuSKO4ow0PXc+Kw7nwsvbkGdvIk7nx4+tOo+lQ3aT7f3ltzdboRA6VIwVXvpe4 xKxU3rXVvYegauWjUwYk2w== 0000892569-96-000189.txt : 19960229 0000892569-96-000189.hdr.sgml : 19960229 ACCESSION NUMBER: 0000892569-96-000189 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960404 FILED AS OF DATE: 19960228 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: BECKMAN INSTRUMENTS INC CENTRAL INDEX KEY: 0000840467 STANDARD INDUSTRIAL CLASSIFICATION: LABORATORY ANALYTICAL INSTRUMENTS [3826] IRS NUMBER: 951040600 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-10109 FILM NUMBER: 96526714 BUSINESS ADDRESS: STREET 1: 2500 HARBOR BLVD CITY: FULLERTON STATE: CA ZIP: 92634 BUSINESS PHONE: 7148714848 DEF 14A 1 BECKMAN INSTRUMENTS, INC. - DEFINITIVE PROXY 1 SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 Filed by the Registrant /X/ Filed by a Party other than the Registrant / / Check the appropriate box: / / Preliminary Proxy Statement / / Confidential, for Use of the Commission /X/ Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2)) / / Definitive Additional Materials / / Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
BECKMAN INSTRUMENTS, INC. - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) BECKMAN INSTRUMENTS, INC. - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): /X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2) or Item 22(a)(2) of Schedule 14A. / / $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3). / / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (1) Title of each class of securities to which transaction applies: ---------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: ---------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): ---------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: ---------------------------------------------------------------------- (5) Total fee paid: ---------------------------------------------------------------------- / / Fee paid previously with preliminary materials. / / Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: ---------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: ---------------------------------------------------------------------- (3) Filing Party: ---------------------------------------------------------------------- (4) Date Filed: ---------------------------------------------------------------------- 2 2500 Harbor Boulevard, Box 3100, Fullerton, CA 92634-3100 --------------------------------------------------------- [LOGO] February 28, 1996 Dear Stockholder: You are cordially invited to attend the 1996 Annual Meeting of Stockholders of Beckman Instruments, Inc. to be held at 10:00 a.m., Thursday, April 4, 1996, at the Company's headquarters, 2500 Harbor Boulevard, Fullerton, California. The attached Notice of Annual Meeting of Stockholders and Proxy Statement describe the matters to be acted upon. If you plan to attend the meeting in person, please mark the designated box on the proxy card. Whether or not you plan to attend personally, and regardless of the number of shares you own, it is important that your shares be represented at the meeting. Accordingly, WE URGE YOU TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY IN THE ENVELOPE PROVIDED. If you attend the Annual Meeting and wish to vote in person, you may withdraw your proxy at that time. Sincerely, [SIG] LOUIS T. ROSSO Chairman of the Board and Chief Executive Officer 3 2500 Harbor Boulevard, Box 3100, Fullerton, CA 92634-3100 --------------------------------------------------------- [LOGO] NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 4, 1996 TO OUR STOCKHOLDERS: The 1996 Annual Meeting of Stockholders of Beckman Instruments, Inc., a Delaware corporation, will be held at the Company's headquarters, 2500 Harbor Boulevard, Fullerton, California, on Thursday, April 4, 1996, at 10:00 a.m. for the following purposes: 1. To elect a class of directors to serve until the expiration of their term in 1999 and until their successors are elected and qualified; and 2. To transact such other business as may properly come before the meeting or any adjournment thereof. Only stockholders of record at the close of business on February 6, 1996 will be entitled to notice of and to vote at the meeting and any adjournment thereof. You are cordially invited to attend the meeting. Whether or not you expect to attend, PLEASE PROMPTLY VOTE, SIGN, DATE AND RETURN THE ENCLOSED PROXY/INSTRUCTION CARD IN THE ENCLOSED U.S. POSTAGE-PAID ENVELOPE. This will ensure that your shares are voted in accordance with your wishes and that a quorum will be present. Even though you have returned your proxy card, you may withdraw your proxy at any time prior to its use and vote in person at the meeting should you so desire. By Order of the Board of Directors [SIG] WILLIAM H. MAY Secretary Fullerton, California February 28, 1996 4 BECKMAN INSTRUMENTS, INC. 2500 HARBOR BOULEVARD FULLERTON, CALIFORNIA 92634-3100 ------------------------ PROXY STATEMENT ------------------------ INTRODUCTION This Proxy Statement is furnished to holders of shares of common stock, par value $.10 per share ("Common Stock"), of Beckman Instruments, Inc., a Delaware corporation ("Beckman" or the "Company"), in connection with the solicitation by the Company's Board of Directors ("Board") of the accompanying proxy to be used at the 1996 Annual Meeting of Stockholders to be held at the Company's headquarters, 2500 Harbor Boulevard, Fullerton, California, at 10:00 a.m. on Thursday, April 4, 1996, and any adjournment or postponement thereof (the "Annual Meeting"). Copies of this Proxy Statement and the accompanying proxy are being mailed on or about February 28, 1996 to stockholders of record on February 6, 1996. The expense of this solicitation will be paid by the Company. In addition to solicitation by mail, officers and employees of the Company may solicit proxies by telephone, by telex, or in person. The Company has engaged the firm of D. F. King & Co., Inc., as proxy solicitors, to whom the fee payable for such services is estimated to be $10,000 plus reimbursement of out-of-pocket expenses. The Company will also reimburse brokers, nominees, fiduciaries and other custodians for reasonable expenses incurred by them in forwarding proxy materials to the beneficial owners of the stock. Only holders of record of Common Stock at the close of business on February 6, 1996 ("Record Date") are entitled to vote at the Annual Meeting. On the Record Date, there were outstanding for voting purposes 29,060,973 shares of Common Stock. Each stockholder shall have one vote per share on all business of the Annual Meeting. The Company's Benefit Equity Trust, established to assist the Company in meeting its stock-related obligations for benefit programs, holds 696,823 of the shares outstanding for voting purposes. These are voted by the trustee in the same proportion as instructions received from employees recently participating in the Company's Employees' Stock Purchase Plan. The shares represented by properly executed proxies received in time for the Annual Meeting will be voted. The proxy may be revoked by a stockholder at any time prior to its use by giving written notice of such revocation to the Secretary of the Company, by submitting a later dated proxy, or by voting in person at the Annual Meeting. The presence, in person or by proxy, of the holders of a majority of the outstanding shares of Common Stock will constitute a quorum at the Annual Meeting. Outstanding shares of Common Stock represented by a properly signed and returned proxy will be treated as being present at the Annual Meeting for purposes of determining a quorum, without regard to whether the proxy is marked as casting a vote, abstaining, withholding a vote for the election of one or more nominees for director or constituting a broker non-vote. The accompanying proxy card provides space to vote for or to withhold voting for any or all nominees for the Board. Directors are elected by the affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on the subject matter. Proxies marked as abstaining or withholding a vote in connection with the election of one or more nominees for director will not be counted as casting votes for such nominees, although the shares covered by such proxies will be included in determining the number of shares present at the meeting and entitled to vote on the subject matter. The Company does not presently know of any business other than the election of directors that may properly come before the stockholders for a vote at the Annual Meeting. As to any such other matters, unless a greater or different vote were required by applicable law, the certificate of incorporation or the by-laws, the 5 affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on the subject matter would be required to approve such matter, and abstentions would be treated as described above. Under the rules of the New York Stock Exchange, Inc., brokers who hold shares in street name for customers have the authority to vote on the election of directors and certain other matters when they have not received instructions from beneficial owners, but lack such authority on other matters. Proxies subject to such broker non-votes would not be counted as casting votes for or against any matter as to which authority was so withheld, and the shares covered by such proxies would not be included in determining the number of shares present at the meeting and entitled to vote on the subject matter in question. UNLESS OTHERWISE DIRECTED IN THE PROXY, THE PERSONS NAMED IN THE PROXY CARD WILL VOTE FOR THE DIRECTOR NOMINEES PRESENTED IN THE PROPOSAL BELOW. AS TO ANY OTHER BUSINESS WHICH MAY PROPERLY COME BEFORE THE MEETING, THE PERSONS NAMED IN THE PROXY CARD WILL VOTE IN ACCORDANCE WITH THEIR BEST JUDGMENT, ALTHOUGH THE COMPANY DOES NOT PRESENTLY KNOW OF ANY OTHER BUSINESS. PROPOSAL ELECTION OF DIRECTORS Four members of the Board are proposed to be elected for a term expiring at the 1999 annual meeting of stockholders. The Board currently consists of twelve persons and is divided into three classes, with the term of office of one class expiring each year. All director nominees are currently directors of the Company with terms expiring at this Annual Meeting, with the exception of Hugh K. Coble who is proposed to fill the position currently held by David S. Tappan, Jr. Mr. Tappan will complete his term at the Annual Meeting. He is not standing for reelection in 1996 because he has completed the maximum number of terms allowed for a charter member of the Board beyond the age of 70 years. Henry Wendt resigned from the Board in February of this year due to time constraints resulting from his involvement in current and new ventures. Charles A. Haggerty was elected by the Board in February to fill Mr. Wendt's position among the class of directors with terms expiring in 1998. Both Mr. Tappan and Mr. Wendt have served on the Company's Board of Directors since it became publicly held in 1988. The Board expresses its appreciation for their contributions to the Company. The persons named in the accompanying proxy intend to vote the shares represented by the proxy for the election of these director nominees, unless authority to vote for one or more of such nominees is withheld in the proxy. The proxies cannot be voted for a greater number of persons than the number of nominees named. The Board is informed that all of the nominees are willing to serve as directors, but if any of them should decline or be unable to act as a director, the persons named in the proxy will vote for such substitute nominee or nominees as may be designated by the Board unless the Board reduces the number of directors accordingly. DIRECTOR NOMINEES FOR TERM EXPIRING IN 1999 HUGH K. COBLE, 61, has served as Vice Chairman since 1994 and as a member of the Board of Directors of Fluor Corporation, a global engineering and construction company with an investment in low-sulfur coal, since 1984. He joined Fluor Corporation in 1966 where he has held various executive positions in marketing and operations with over ten years of international assignments. He is a member of the American Institute of Chemical Engineers, the National Society of Professional Engineers, the American Petroleum Institute, the World Affairs Council of Orange County (California), and the World Business Advisory Counsel. He also serves on the board of directors of Fluor Daniel's major subsidiaries in England and The Netherlands and is a director of Duriron Company, Inc. FRANCIS P. LUCIER, 68, is now a partner and formerly served as Chairman of the Board of Hartland & Company, consultants for management of pension finance planning policy and communication, since 1989. He served 21 years with the Black & Decker Corporation, international manufacturer of power tools and home appliances, holding the posts of President, Chief Executive Officer and Chairman of the Board. He served thereafter as Chairman of the Board and Chief Executive Officer of Mohawk Data Sciences Corporation, 2 6 producers of electronic data processing equipment, and Chairman of the Board of Micon Systems, Inc., a producer of data communications products. Mr. Lucier has been a management consultant since 1985. He is a director of PHH Corporation and Miami Subs Corporation. He has been a director of Beckman since 1988. JOHN P. WAREHAM, 54, has served as President and Chief Operating Officer of the Company since October 1993. He served as the Company's Vice President, Diagnostic Systems Group, from 1984 to 1993. Prior thereto, he had been President of Norden Laboratories, Inc., a wholly owned subsidiary of SmithKline Beckman Corporation engaged in developing, manufacturing and marketing veterinary pharmaceuticals and vaccines. Mr. Wareham first joined SmithKline Corporation, a predecessor of SmithKline Beckman Corporation, in 1968. He is a director of the Little Rapids Corporation and the Health Industry Manufacturers Association. He has been a director of Beckman since 1993. BETTY WOODS, 57, has served as President since 1992 and Chief Executive Officer since 1993 of Blue Cross of Washington and Alaska, one of that area's largest health care contractors. She became Chief Executive Officer of PREMERA, holding company of Blue Cross of Washington and Alaska and Medical Service Corporation of Eastern Washington, in 1994. She joined Blue Cross of Washington and Alaska in 1976. Ms. Woods serves on the Board of Trustees of the Greater Seattle Chamber of Commerce and is Vice Chair of the Snohomish County Economic Development Council. She has been a director of Beckman since 1994. Vote Required. The affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote on the subject matter is required. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ABOVE NOMINEES. BOARD OF DIRECTORS INFORMATION CONTINUING DIRECTORS -- TERM EXPIRING IN 1998 CAROLYNE K. DAVIS, PH.D., 64, has been a national and international health care advisor to Ernst & Young, certified public accountants, since 1985, and a consultant and advisor to the Board of Beverly Enterprises, Inc., operator of nursing facilities, retirement and congregate living projects, pharmacies and home health care entities, since 1989. Dr. Davis served as Administrator of the Health Care Financing Administration of the U.S. Department of Health and Human Services from 1981 to 1985. She is a member of the Institute of Medicine and the National Academy of Science. Dr. Davis is a trustee for the National Rehabilitation Hospital, Washington DC and for the University of Pennsylvania Medical Center and is a member of the Board of Directors for Georgetown University in Washington, D.C. She is a director of Merck & Co., Inc., The Prudential Insurance Company of America, Pharmaceutical Marketing Services, Inc. and Science Applications International Corporation. Dr. Davis has been a director of Beckman since 1989. DENNIS C. FILL, 66, is Chairman and Chief Executive Officer of Advanced Technology Laboratories, Inc., a worldwide leader in the development, manufacturing and distribution of medical ultrasound systems, formerly known as Westmark International. He was Chairman of the Board, Chief Executive Officer and President of Westmark from 1986 to 1992. From 1978 to 1987, he served as President and Chief Operating Officer of Squibb Corporation. He is also a director of SpaceLabs, Morton International, and Cytran, Inc. Mr. Fill has been a director of Beckman since 1994. WILLIAM N. KELLEY, M.D., 56, has served in his current role as Chief Executive Officer of the University of Pennsylvania Medical Center and Health System, Dean of the School of Medicine and Executive Vice President of the University since 1989. He was the John G. Searle Professor and Chairman of the Department of Internal Medicine and Professor of Biological Chemistry at the University of Michigan in Ann Arbor from 1975 to 1989. He currently serves on the Board of Directors of the Greater Philadelphia First Corporation, on the Board of Managers of the Wistar Institute, the Governing Board of the Leonard Davis Institute of Health Economics, the Board of Directors of the Philadelphia Orchestra Association, and on the Board of Trustees of Emory University. He is a member of the Institute of Medicine and serves on the 3 7 Institute of Medicine Council and is a Fellow of the American Academy of Arts and Sciences. Dr. Kelly is a director of Merck & Co., Inc. He has been a director of Beckman since 1994. CHARLES A. HAGGERTY, 54, joined Western Digital Corporation, a manufacturer of hard disk drives, as its President and Chief Operations Officer in June 1992 and has served as its Chairman, President and Chief Executive Officer since July 1993. Prior thereto, he served IBM Corporation in various positions for 28 years, holding the posts of Vice President of IBM's Worldwide OEM Storage Marketing from 1991 to May 1992 and of Vice President/General Manager, Low-End Mass-Storage Products from 1989 to 1991. He is a member of the Board of Trustees of the University of St. Thomas, St. Paul, Minnesota. Mr. Haggerty also serves as a director of Pentair, Inc. and Sync Research. He has been a director of Beckman since February 1996. CONTINUING DIRECTORS -- TERM EXPIRING IN 1997 EARNEST H. CLARK, JR., 69, has been Chairman and Chief Executive Officer of The Friendship Group, an investment partnership, since 1989. He served as Chairman of Baker Hughes Incorporated, which manufactures and services equipment for drilling and completing oil wells and equipment for surface and underground mining, from 1987 to 1989. From 1969 to 1987, he served its predecessor, Baker International Corporation, as its Chairman of the Board. He also served as Chief Executive Officer of Baker International Corporation from 1965 to 1987 and as its President from 1962 to 1985, respectively. He is a director of CBI Industries, Honeywell Inc., Kerr McGee Corporation, Regenesis, and The American Mutual Fund. Mr. Clark is a member of the Board of the YMCA of the USA and a member of the Board of Trustees of Harvey Mudd College. He has been a director of Beckman since 1988. GAVIN S. HERBERT, 63, is Chairman Emeritus and a current director of Allergan, Inc., a global provider of specialty therapeutic products. Mr. Herbert, who helped found that company in 1950, had served as its Chairman from 1977 to 1995 and as its Chief Executive Officer from 1961 to 1991. He was Executive Vice President of SmithKline Beckman Corporation, predecessor of SmithKline Beecham Corporation, from 1986 to July 1989 and President of SmithKline Beckman Corporation's Eye and Skin Care Products Operations from 1981 to July 1989. Mr. Herbert is a trustee of the University of Southern California and on the Board of Directors of Research to Prevent Blindness and the California Healthcare Institute. He has been a director of Beckman since 1988. C. RODERICK O'NEIL, 65, has been Chairman of O'Neil Associates, an investment management consulting firm, since 1987. He was a partner in Greenspan O'Neil Associates from 1984 to 1987 and Chairman of the Finance Committee of Travelers Companies from 1977 to 1984. Mr. O'Neil is a director of AMBAC Inc., AMBAC Treasurers Trust and Fort Dearborn Income Securities, Inc. He is a trustee of Memorial Drive Trust, a member of the Fiduciary Committee of ASARCO and serves on the Advisory Committee of Princeton-Montrose Partners. He has been a director of Beckman since 1994. LOUIS T. ROSSO, 62, has been Chief Executive Officer of the Company since 1988 and Chairman of the Board since 1989. He served as the Company's President from 1982 to October 1993. He also served as a Vice President of SmithKline Beckman Corporation from 1982 to 1989. Mr. Rosso first joined Beckman in 1959 and was named Corporate Vice President in 1974. He is a director of Allergan, Inc. and American Health Properties, Inc. He is a member of the St. Jude Heritage Health Foundation and the Board of Trustees of Harvey Mudd College. Mr. Rosso has been a director of Beckman since 1988. BOARD COMPENSATION AND BENEFITS Of the Board's current twelve members, two are officers of the Company who do not receive additional compensation for Board or committee service. The remaining non-employee directors receive an annual $22,000 retainer and $1,000 for each Board and each committee meeting attended. These directors receive an additional business fee equal to the Board meeting fee for each day or significant portion of a day spent on Company business, but are not paid an additional business fee if receiving consulting fees from the Company. Directors who chair major committees of the Board receive an additional fee of $500 per committee meeting. 4 8 In 1994, the Company adopted a Deferred Directors Fee Program that permits directors to defer all or a portion of their retainers and fees until termination of their status as a director. Deferred amounts are treated as having been invested in Common Stock and thus are valued according to fluctuations in the market price of the Common Stock. Distributions will be made in cash only. Dr. Kelley elected to participate in the program in 1995 (see note 4 to the table shown under "Ownership of Certain Beneficial Owners and Management -- By Directors and Executive Officers" below). Non-employee directors of the Company who have not been an employee of the Company or any of its subsidiaries for at least one year prior to the date of grant automatically receive a non-qualified option to purchase 1,000 shares of Common Stock (subject to adjustments occurring after the grant) on the date of each annual meeting of stockholders, pursuant to the Company's Stock Option Plan for Non-Employee Directors approved by stockholders in May 1989 and amended with stockholder approval in 1992. The option price for each option granted is the fair market value on the date of grant. Options are generally exercisable six months from the date of grant (subject to the individual serving as director for the duration of those six months) and expire ten years after the date of grant (subject to earlier termination if the director ceases to serve as a director). The amount of shares pursuant to outstanding options under this plan which are exercisable or which will become exercisable within 60 days of February 28, 1996, are included in the table shown under "Security Ownership of Certain Beneficial Owners and Management -- By Directors and Executive Officers" below. MEETINGS OF BOARD AND COMMITTEES The Company's Board held seven meetings during 1995. A total of seventeen committee meetings also were held as follows: Finance Committee, four; Organization and Compensation Committee, three; Audit Committee, five; and Nominating Committee, five. The average aggregate Board and committee meeting attendance for all current directors was approximately 92%. Each director attended at least 75% of the meetings of the Board and the committees on which he or she served, except Ms. Woods who attended 69% of such meetings. COMMITTEES OF THE BOARD Audit Committee. This committee meets with the independent public accountants and internal audit services staff to discuss the annual audit plan and the results of their audit examinations. It also meets with the Company's internal auditors to review the audit services department's activities and to discuss the adequacy of the Company's accounting and control systems. This committee also considers any issues raised by its members, the independent public accountants, the internal audit staff, the legal staff or management. Each year it recommends to the full Board an accounting firm to audit the consolidated financial statements of the Company. This committee currently consists of Mr. Lucier, Chairman, Mr. Herbert, Dr. Kelley, and Ms. Woods. Organization and Compensation Committee. This committee reviews and approves major corporate organization structure, reviews performance of corporate officers and establishes overall executive compensation policies and programs. It reviews and approves compensation elements such as base salary, bonus awards, stock option grants and other forms of long-term incentives. No member of the committee may be a member of management or eligible for compensation other than as a director or consultant. This committee currently consists of Mr. Tappan, Chairman, Mr. Clark, Mr. Fill and Mr. Lucier. Finance Committee. This committee reviews, approves or modifies management recommendations on corporate financial strategy and policy and, where appropriate, makes recommendations to the Board. This committee currently consists of Mr. O'Neil, Chairman, Dr. Davis, and Mr. Herbert. Nominating Committee. This committee reviews the qualifications of nominees for directors and makes recommendations to the Board to fill vacancies and newly created directorships. It develops criteria to determine the qualifications of directors and the appropriate retirement and tenure of directors. Stockholders may submit recommendations for Board nominees to the committee for its consideration by addressing them to the Secretary of the Company at its headquarters in Fullerton, California. The committee may or may not 5 9 act or provide reasons related to its actions or inactions on any such recommendations. This committee currently consists of Mr. Clark, Chairman, Dr. Davis, and Mr. Tappan. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION No member of the Company's Organization and Compensation Committee is a current or former officer or employee of the Company. In addition, there are no compensation committee interlocks between Beckman and other entities involving Beckman executive officers and Beckman Board members who serve as executive officers of such other entities. The Company employs the consulting services of Hartland & Company relating to pension finance planning policy and communications for Beckman's Pension Plan and Savings and Investment Plan. Beckman paid Hartland & Company $138,772 for such consulting services in 1995. During 1995 and presently, Mr. Lucier is a member of the Company's Organization and Compensation Committee. Mr. Lucier is a partner and formerly Chairman of the Board of Hartland & Company, receives a fee from Hartland & Company for his services, and owns 20% equity interest therein. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT BY DIRECTORS AND EXECUTIVE OFFICERS The following table sets forth the amount of shares of Common Stock beneficially owned (as of February 1, 1996, unless otherwise indicated) by directors of the Company, the Chief Executive Officer and the four highest paid executive officers reported in the "Executive Compensation -- Summary Compensation Table" below, and all directors and executive officers as a group. Percentage of ownership is calculated using the number of outstanding shares as of February 6, 1996, the Record Date.
BECKMAN PERCENTAGE BENEFICIAL OWNER COMMON STOCK OF OWNERSHIP ---------------- ------------ ------------ Directors: L. T. Rosso....................................... 362,150(1)(2) 1.2% E. H. Clark, Jr. ................................. 7,100(1) * H. K. Coble....................................... -- -- C. K. Davis....................................... 7,127(1) * D. C. Fill........................................ 3,000(1) * C. A. Haggerty.................................... -- -- G. S. Herbert..................................... 11,529(1)(3) * W. N. Kelley...................................... 3,000(1)(4) * F. P. Lucier...................................... 8,586(1)(3) * C. R. O'Neil...................................... 4,000(1) * D. S. Tappan, Jr. ................................ 8,000(1) * J. P. Wareham..................................... 143,901(1)(2) * B. Woods.......................................... 2,500(1) * Other Named Executive Officers: A. Torrellas...................................... 57,681(1)(2)(3) * D. Wilson......................................... 65,314(1)(2)(3) * A. Ziegler........................................ 58,650(1)(2) * All Directors, Nominees, and Officers as a group (21 persons)...................................... 868,902(1)(2)(3) 3.0%
- --------------- * Less than 1% of outstanding shares. 6 10 (1) Included are the following shares which directors and executive officers had the current right to acquire, or will have the right to acquire within 60 days of February 28, 1996, upon the exercise of options under the Company's Stock Option Plan for Non-Employee Directors and under the Company's Incentive Compensation Plans for employees, as applicable: Messrs. Clark, Lucier, and Tappan, and Dr. Davis, 7,000 shares each; Mr. Herbert, 5,000 shares; Messrs. Fill and O'Neil and Dr. Kelley, 2,000 shares each; Ms. Woods, 1,000 shares; Mr. Rosso, 268,240 shares; Mr. Wareham, 125,925 shares; Mr. Torrellas, 51,845 shares; Mr. Wilson, 45,350 shares; Mr. Ziegler, 53,825 shares; and all directors and executive officers as a group, 691,742 shares. (2) Included are shares held in trust for the benefit of the named executive officers and employee directors under the Company's Savings and Investment Plan, as follows: Mr. Rosso, 43,923 shares; Mr. Wareham, 1,281 shares; Mr. Torrellas, 702 shares; Mr. Wilson, 8,227 shares; Mr. Ziegler, 674 shares; and all executive officers as a group, 60,367 shares. Also included in the above table are shares of restricted stock which will be issued within 60 days of February 28, 1996, in addition to previously issued shares of restricted stock as to which restrictions have not yet lapsed, as follows: Mr. Rosso, 2,878 shares; Mr. Wareham, 1,850 shares; Mr. Wilson, 870 shares; Mr. Ziegler, 844 shares; and all executive officers as a group, 6,442 shares. (3) Included are shares of Common Stock for the named individuals as follows: Mr. Herbert, 6,529 shares held as trustee of a family trust; Mr. Lucier, 1,458 shares held by his pension plan; Mr. Torrellas, 2,366 shares held as co-trustee of a family trust; and Mr. Wilson, 100 shares held as co-trustee of a family trust. Also included are shares of Common Stock for other executive officers totalling 3,857 shares held as trustees or co-trustees in family trusts, in their spouse's name, or as custodian for children. (4) In addition to the foregoing beneficial ownership amounts, Dr. Kelley elected to defer all of his annual retainer and meeting fees, with such amounts treated as having been invested in Common Stock of the Company. As of December 31, 1995, such amounts constitute the economic equivalent of 1,246 shares of Common Stock. BY OTHERS Management of the Company knows of no person, except as set forth below, who is the beneficial owner of more than 5% of the Company's issued and outstanding Common Stock. The table sets forth information reported to the Company as of February 14, 1996, with percentage of ownership calculated using the number of outstanding shares on February 6, 1996.
SHARES PERCENT NAME OF BENEFICIAL OWNERS BENEFICIALLY OWNED OF CLASS ------------------------- ------------------ -------- Quantum Partners LDC and related entities......... 2,679,600(1) 9.2% Brinson Partners, Inc. and related entities....... 2,065,004(2) 7.1%
- --------------- (1) Based on a joint Schedule 13D amendment dated November 8, 1995, wherein the following reporting persons reported that an aggregate total of 2,679,600 shares may be deemed to be beneficially owned as of such date, as follows: Quantum Industrial Partners LDC ("QI Partners") reported aggregate beneficial ownership of 1,004,085 shares (3.5% of outstanding shares) with no voting or dispositive powers. QIH Management Investor, L.P. ("QIHMI"), reports investment discretion in the assets of QI Partners. George Soros is sole shareholder of QIH Management, Inc., which is the sole general partner of QIHMI. QIHMI, QIH Management, Inc. and Mr. Soros each reports that it may be deemed the aggregate beneficial owner of 1,004,085 shares, over which each shares voting and dispositive powers. Mr. Soros reported aggregate beneficial ownership of 1,994,070 shares (6.9% of outstanding shares), of which he reported sole voting and dispositive powers with respect to 989,985 shares (3.4% of outstanding shares, held directly by Mr. Soros) and shared voting and dispositive powers with respect to 1,004,085 shares (held by QI Partners), as described above. 7 11 Prunendu Chatterjee, in his capacity as Sub-Advisor to QI Partners and in his capacity as sole general partner of Chatterjee Fund Management, L.P., which is the sole general partner of Winston Partners, L.P. ("Winston"), reported aggregate beneficial ownership of 1,689,615 shares (5.8% of outstanding shares), of which he reported sole voting and dispositive powers with respect to 685,530 shares (2.4% of outstanding shares, held by Winston) and shared voting and dispositive powers with respect to the 1,004,085 shares owned by QI Partners. The address of QI Partners principal office is Kaya Flamboyan 9, Curacao, Netherlands Antilles. The business address for QIHMI, QIH Management, Inc., Mr. Soros, Chatterjee Fund Management, L.P., Winston, and Mr. Chatterjee is 888 Seventh Avenue, New York, New York 10106. (2) Based on information provided by Brinson Partners, Inc. ("BPI"), Brinson Trust Company ("BTC"), Brinson Holdings, Inc. ("BHI"), SBC Holding (USA), Inc. ("SBCUSA"), and Swiss Bank Corporation ("SBC") included in their joint Schedule 13G amendment dated February 9, 1996, wherein they reported the beneficial ownership of 2,065,004 shares at December 31, 1995. BTC, a wholly owned subsidiary of BPI, reports an aggregate beneficial ownership of 533,345 shares (1.8% of outstanding shares) with shared voting and dispositive powers. BPI is a wholly owned subsidiary of BHI. BHI is a wholly owned subsidiary of SBCUSA. SBCUSA is a wholly owned subsidiary of SBC. By virtue of their corporate relationship, they report that they may be deemed to beneficially own and have the power to dispose and vote or direct the disposition or voting of the shares held by BTC and BPI. Accordingly, BPI, BHI, SBCUSA, and SBC each reports beneficial ownership with respect to 2,065,004 shares, over which each shares voting and dispositive powers. The address for BPI, BTC and BHI is 209 South LaSalle, Chicago, Illinois 60604-1295. The principal business office of SBCUSA is located at 222 Broadway, New York, New York 10038. The principal business office of SBC is located at Aeschenplatz 6 CH-4002, Basel, Switzerland. COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934 Section 16(a) of the Securities Exchange Act of 1934 requires the directors and officers of the Company and persons who own more than ten percent of a registered class of the Company's equity securities ("Reporting Persons") to file with the Securities and Exchange Commission and the New York Stock Exchange initial reports of ownership and reports of changes in ownership of Common Stock. In addition, under Section 16(a), trusts for which a Reporting Person is a trustee and a beneficiary (or a member of his immediate family is a beneficiary), may have a separate reporting obligation with regard to holdings and transactions in Common Stock. Specific due dates for these reports have been established and the Company is required to disclose in this proxy statement any failure to file by these dates during 1995. To the Company's knowledge, all of these requirements were satisfied. 8 12 EXECUTIVE COMPENSATION The following table sets forth information for the last three fiscal years, as to the Chief Executive Officer and the four highest paid executive officers of the Company in 1995: SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION ------------------------------------------ AWARDS ----------------------------- ANNUAL SECURITIES PAYOUTS COMPENSATION(1) RESTRICTED UNDERLYING ---------- -------------------- STOCK OPTIONS/ LTIP ALL OTHER NAME AND PRINCIPAL SALARY(2) BONUS(3) AWARD(S)(4)(5) SARS(6) PAYOUTS(7) COMPENSATION(8) POSITION YEAR ($) ($) ($) (#) ($) ($) - -------------------------- ---- --------- -------- -------------- ------------- ---------- --------------- Louis T. Rosso 1995 478,836 291,000 101,841 50,000 shares -- 4,500 Chairman of the Board 1994 462,375 215,500 105,707 84,000 shares -- 4,500 and Chief Executive Officer 1993 449,167 -- -- 50,000 shares -- 7,075 John P. Wareham 1995 335,840 184,300 65,450 26,000 shares -- 4,500 President, and 1994 325,008 138,500 67,583 45,000 shares -- 4,500 Chief Operating Officer 1993 273,008 -- -- 17,000 shares -- 7,075 Arthur A. Torrellas 1995 210,744 88,300 -- 8,500 shares 23,600 4,500 Vice President, 1994 203,392 73,800 -- 12,000 shares 27,100 4,500 North American and 1993 197,526 -- -- 7,000 shares -- 7,075 European Field Operations Dennis K. Wilson 1995 206,668 83,200 30,792 11,000 shares -- 4,500 Vice President, Finance 1994 200,004 60,000 31,992 20,000 shares -- 4,500 and Chief Financial Officer 1993 164,250 -- -- 5,500 shares -- 7,075 Albert R. Ziegler 1995 203,328 80,500 29,859 8,500 shares -- 4,500 Vice President, 1994 202,834 66,100 -- 16,000 shares 24,400 4,500 Diagnostic Development 1993 196,625 -- -- 7,000 shares -- 7,075 Center
- --------------- (1) The aggregate amount of other annual compensation for each named individual did not equal or exceed the threshold for reporting herein (i.e., the lesser of either $50,000 or 10% of the total of such individual's annual salary and bonus) for each of the fiscal years reported and, therefore, is not shown. (2) Amounts shown include salary reductions under the Company's Flexible Benefits Plan and compensation deferred under the Savings and Investment Plan, pursuant, respectively, to Sections 125 and 401(k) of the Internal Revenue Code of 1986, as amended. (3) These amounts were paid pursuant to annual Executive Bonus and Executive Incentive Plans and were contingent upon the attainment of certain organizational and individual goals prescribed by the Board's Organization and Compensation Committee. No bonus amount was earned for the year 1993. Awards for services performed in 1994 and 1995 were paid in cash. The plans did not provide for deferrals. (4) The amounts shown represent the values of restricted stock to be issued under the Incentive Compensation Plan of 1990 as elected by the individuals shown in lieu of a cash payment of awards under the long-term incentive plan, the Two-Year Economic Value Added Incentive Plan ("LTIP") (see also note 7 below). For purposes of this table, values were calculated using the 1995 year-end closing price per share and do not include any diminution effect attributable to restrictions on such stock. The number of whole shares of restricted stock per individual is determined by adding 33 1/3% to the amount which would have been paid in cash under the LTIP cycle two and dividing this amount by the year-end closing price per share of Common Stock ($35.375 as reported on the New York Stock Exchange). The number of shares of restricted stock per named individual (to be issued on the date in 1996 that cash awards are paid to other LTIP participants) is as follows: Mr. Rosso, 2,878 shares; Mr. Wareham, 1,850 shares; Mr. Wilson, 870 shares; and Mr. Ziegler, 844 shares. Restrictions lapse 24 months from the date of issuance, but can lapse sooner in the event of death, total disability, normal or late retirement pursuant to the Company's Pension Plan, and a change of control of the Company (as defined in the Restricted Stock Agreement). Non-preferential dividends are paid. 9 13 (5) The aggregate restricted stock holdings at 1995 year-end for the named individuals and their values (calculated by multiplying the number held by the year-end per share closing price of $35.375, and not including any diminution effect attributable to the restrictions on such stock) are as follows: Mr. Rosso, 5,448 shares, $192,723; Mr. Wareham, 3,178 shares, $112,422; Mr. Torrellas, 332 shares, $11,745; Mr. Wilson, 1,403 shares, $49,631; and Mr. Ziegler, 332 shares, $11,745. The foregoing number of shares of restricted stock represent the remaining 20% of the number issued in 1991 for which restrictions have not lapsed and shares of restricted stock received in 1995 in lieu of cash payment of the LTIP cycle one. Pursuant to the terms of the 1991 grant, restrictions lapse annually as to 20% of the total number of shares which were awarded. Pursuant to the 1995 grant, restrictions as to 100% of the grant lapse two years from the date of grant. For both grants, restrictions may lapse sooner in the event of termination of employment due to death or total disability, retirement occurring at least six months after the award, or a change of control (as defined in the Restricted Stock Agreement). Non-preferential dividends are paid. (6) No Stock Appreciation Rights (SARs) have been granted and none are outstanding. Options are for shares of Common Stock. One-half of the number of shares shown for 1994 relate to options with a performance vesting feature (see "Option Exercises and Year-End Option Values" below for description of performance vesting feature). (7) Consists of cash payout under the LTIP cycle two (for the two-year cycle ended fiscal year 1995). See note 4 above regarding the restricted stock in lieu of cash payout alternative. See also "Long-Term Incentive Awards" below for information about this plan. (8) Amounts shown reflect Company matching contributions to the defined contribution plan, wherein eligible employees of the Company and certain subsidiaries may invest in various funds generally up to 15% of their compensation through payroll deductions. The Company makes contributions to the plan equal to 50% or 60%, depending upon investment of Company matching contributions, of up to the first 5% of each employee's contribution (subject to certain limitations). FISCAL YEAR OPTION GRANTS The following table sets forth the number of options granted and the estimated grant date present value for the named executive officers during the fiscal year ended December 31, 1995: OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS - --------------------------------------------------------------------------------------- PERCENT OF NUMBER OF TOTAL SECURITIES OPTIONS/SARS GRANT DATE VALUE UNDERLYING GRANTED TO EXERCISE OR ---------------- OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION GRANT DATE NAME GRANTED(#) FISCAL YEAR ($/SH) DATE PRESENT VALUE($) - ------------------------- ------------ ------------ ----------- ---------- ---------------- L. Rosso................. 50,000(1) 12.0% $ 29.25 4/5/05 $564,500(2)(3) J. Wareham............... 26,000(1) 6.2% 29.25 4/5/05 293,540(2)(3) A. Torrellas............. 8,500(1) 2.0% 29.25 4/5/05 95,965(2)(3) D. Wilson................ 11,000(1) 2.6% 29.25 4/5/05 124,190(2)(3) A. Ziegler............... 8,500(1) 2.0% 29.25 4/5/05 95,965(2)(3)
- --------------- (1) No free-standing or tandem Stock Appreciation Rights (SARs) were granted in 1995. Non-qualified stock options were granted in 1995 pursuant to the Company's Incentive Compensation Plan of 1990 at an option price equal to the fair market value of the stock at the date of grant. The option price may be paid by delivery of already owned shares, subject to certain conditions. The number of options exercisable increases in 33% increments after each successive anniversary of the date of grant. Options may become exercisable sooner in the event of death, disability, or retirement occurring after six months from the date of grant or in the event of a change of control. The options have a term of ten years, subject to sooner 10 14 expiration in the event of termination of employment. The Organization and Compensation Committee of the Board retains discretion, subject to plan limits, to modify the terms of outstanding options, to reprice options, and to adjust the number, price and kind of shares in the event of certain changes affecting Company stock. No adjustment or repricing of any options has occurred. (2) Grant date present value estimates were made using a variation of the Black-Scholes pricing model. The following factors and assumptions were used: option price ($29.25, the fair market value on the date of grant); term of option (10 years); risk of forfeiture due to termination (adjusted by 3% for each year of the three-year vesting period); risk free rate of return (7.20%); dividend yield (1.47%); volatility (.206); and market price ($29.25). (3) Although the Black-Scholes pricing model is widely used, the value of stock options cannot be guaranteed because of the wide range of assumptions and variations which may occur from time to time. No assumptions made, nor any performance vesting criteria presented, in connection with this table are intended to represent a forecast of possible future appreciation of Common Stock, stockholder return, or performance of the Company. OPTION EXERCISES AND YEAR-END OPTION VALUES None of the named executive officers exercised stock options during the fiscal year ended December 31, 1995. No free-standing or tandem Stock Appreciation Rights (SARs) have been granted. The table below shows the number of exercisable and unexercisable in-the-money stock options and their values at fiscal year-end. An option is in-the-money if the fair market value of the underlying securities exceeds the exercise price of the option. AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
NUMBER OF SECURITIES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS AT FY-END(#)(1) AT FY-END($)(2) ----------------------------- ----------------------------- NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE ---------------------------------- ----------- ------------- ----------- ------------- L. Rosso.......................... 220,880 123,280 $3,355,725 $1,031,645 J. Wareham........................ 104,140 61,930 1,588,754 505,018 A. Torrellas...................... 44,680 18,920 703,510 155,065 D. Wilson......................... 36,550 26,270 553,951 212,051 A. Ziegler........................ 46,000 21,600 715,390 179,185
- --------------- (1) All options granted have a term of ten years, subject to earlier termination. Options become exercisable in general over periods of two, three or four years from dates of grant, with the exception of a 1994 grant of options which included a performance vesting feature. See note 1 to the preceding table entitled "Option/SAR Grants in Last Fiscal Year" for additional information on general terms which apply to stock option awards made. Under the 1994 grant with the performance vesting feature, vesting will occur 9.5 years after the date of grant, or earlier, if the Common Stock meets certain targeted stock appreciation levels during the first four years from the date of grant. For accelerated vesting to occur, the average Common Stock per share price must be as follows: 1) $30.46 by September 29, 1995 for 33% vesting; 2) $35.11 by March 29, 1997 for 66% vesting; and 3) $38.62 by March 29, 1998 for 100% vesting. For purposes of this grant, each price shown is an average of closing prices (on the exchange on which Common Stock is then trading) during any thirty consecutive trading day period ending no later than the fifteenth trading day following the designated dates. (2) Values were calculated by multiplying the closing market price of the Common Stock at December 31, 1995 ($35.375 per share) by the respective number of shares and subtracting the option price, without any adjustment for any vesting or termination contingencies or other variables. 11 15 LONG-TERM INCENTIVE AWARDS The following table displays target long-term incentive awards for the named executive officers for the two-year performance cycle ending in 1996 under the Company's long-term incentive plan ("LTIP"), the Two-Year Economic Value Added Incentive Plan. Awards are based on total company performance in maintaining and improving the efficiency of capital as measured by certain financial objectives. For purposes of this table, the opportunity to participate in the plan and to achieve an eventual payout is considered an award; however, no payouts will be made if the threshold performance level established by the Organization and Compensation Committee is not met. LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
ESTIMATED FUTURE PAYOUTS NUMBER OF PERFORMANCE OR UNDER NON-STOCK SHARES, UNITS OTHER PERIOD PRICE-BASED PLANS(1) OR OTHER UNTIL -------------------------------- RIGHTS MATURATION OR THRESHOLD TARGET MAXIMUM NAME (#) PAYOUT ($) ($) ($) ----------------------------- ------------- -------------- --------- ------- -------- L. Rosso..................... -- 1/95-12/96 $43,800 $87,600 $175,100 J. Wareham................... -- 1/95-12/96 28,200 56,300 112,600 A. Torrellas................. -- 1/95-12/96 13,500 27,000 54,000 D. Wilson.................... -- 1/95-12/96 13,200 26,500 52,900 A. Ziegler................... -- 1/95-12/96 12,800 25,600 51,200
- --------------- (1) Assuming the minimum or threshold performance level is met, the percentage of the target award eventually paid to participants depends upon the overall results achieved for this two-year performance period compared to target. Amounts shown are based upon base rates of pay at 1995 year-end; however, actual payouts will be based on the individual's base rate of pay at year-end 1996 which is not presently known. Payouts, if any, are made in cash under the LTIP; however, the Committee may grant an award of restricted stock under the Incentive Compensation Plan of 1990 in lieu of cash payout under the LTIP Plan. TERMINATION AND MANAGEMENT CHANGE IN CONTROL AGREEMENTS All senior management who are Vice Presidents or above of the Company, including the named executives, have entered into agreements with the Company that are effective if, within two years after the occurrence of a change in control of the Company (as defined in the agreements), any of these individuals is terminated without cause or has a material change to compensation or responsibilities. Under these agreements, the Company will pay up to three times the individual's annual compensation as specified in the agreements, as well as a limited continuance of certain Company benefits. DEFINED BENEFIT PENSION PLANS The Company's defined benefit qualified and non-qualified supplemental pension plans provide pension benefits to employees, including officers of the Company, based upon the average of the highest 60 consecutive months of eligible compensation and years of eligible service. Eligible compensation includes basic salary, bonuses earned during the year and the LTIP cash payouts. Benefit amounts are offset generally by a portion of the employee's Social Security Covered Compensation and, if applicable, amounts from any other similar Company or subsidiary sponsored plan. If an employee elects a form of payment providing a benefit for his or her beneficiary, the benefit amount for the employee is reduced. Normal retirement age generally is 65, but employees may continue employment beyond age 65 and earn additional retirement benefits. Credited years of eligible service at late retirement for Mr. Torrellas and at normal retirement for the other named executive officers would be as follows: Mr. Rosso, 40 years; Mr. Wareham, 38 years; Mr. Torrellas, 19 years; Mr. Wilson, 30 years; and Mr. Ziegler, 30 years. 12 16 The Company has entered into agreements with Mr. Torrellas and Mr. Ziegler under the non-qualified supplemental pension plan. Under certain stipulations on employment tenure, the agreement with Mr. Torrellas provides for additional retirement benefits from the non-qualified plan as if he had a 38% increase in the single life annuity amount under the Company's qualified pension plan. The agreement with Mr. Ziegler provides a benefit from the non-qualified plan equal to the amount, with offsets for a certain Swiss retirement plan benefit and adjustments for differentials in Swiss and United States social security systems, he would have received if all service with SmithKline and SmithKline Beckman (the Company's former parent) had been included in the Company's qualified plan benefit. The following table illustrates the annual pension benefits, before any offsets, calculated as a single life annuity, payable at normal retirement. PENSION PLAN TABLE
YEARS OF SERVICE -------------------------------------------------------------------------------------- REMUNERATION* 15 20 25 30 35 40 45 - ------------- -------- -------- -------- -------- -------- -------- -------- $300,000 $ 76,500 $102,000 $127,500 $153,000 $178,500 $186,000 $193,500 350,000 89,250 119,000 148,750 178,500 208,250 217,000 255,750 400,000 102,000 136,000 170,000 204,000 238,000 248,000 258,000 450,000 114,750 153,000 191,250 229,500 267,750 279,000 290,250 500,000 127,500 170,000 212,500 255,000 297,500 310,000 322,500 550,000 140,250 187,000 233,750 280,500 327,250 341,000 354,750 600,000 153,000 204,000 255,000 306,000 357,000 372,000 387,000 650,000 165,750 221,000 276,250 331,500 386,750 403,000 419,250 700,000 178,000 238,000 297,500 357,000 416,500 434,000 451,500 750,000 191,250 255,000 318,750 382,500 446,250 465,000 483,750
- --------------- * The average of the highest sixty consecutive months of eligible compensation. BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION(1) The Organization and Compensation Committee is comprised entirely of nonemployee, independent members of the Board of Directors. Principal duties include the determination of compensation for all executive officers, including the Chief Executive Officer ("CEO"). CURRENT PROGRAM In 1994 a long-term incentive plan ("LTIP"), Two-Year Economic Value Incentive Plan, was introduced to reward participants for increasing and sustaining the efficiency of capital. The second cycle under the plan ended December 31, 1995. This long-term measure in combination with an annual incentive plan which focuses on the level of achievement of Earnings per Share (EPS) represents the variable cash compensation component of executive pay for the CEO and other executive officers. The stock option program constitutes the second element of executive compensation while base compensation represents the third element of executive compensation; all three will be discussed in this report. COMPETITIVE ASSESSMENT The primary resource for base compensation analysis in May 1995 was the 1994 Towers Perrin Compensation Data Bank ("Data Bank") which included 393 companies from all business sectors and 251 CEO positions. Data was aged for its application in terms of the component of cash compensation under - --------------- (1) This Section is not "soliciting material," is not deemed filed with the SEC and is not to be incorporated by reference in any filing of the Company under the Securities Act of 1933 ("Securities Act") or the Securities Exchange Act of 1934 ("Exchange Act"), whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. 13 17 review. This data base was utilized as a representative group inasmuch as specific competitor group aggregate data is unavailable due to the Company's direct competitors being either privately held foreign corporations or divisions of substantially larger corporations. For the same reason, the industry comparison in the Stock Performance Graph is the S&P Medical Products Index rather than a composite of direct competitors. Compensation targets in the competitive assessments were derived using a single-regression analysis to predict the compensation of benchmark executive positions based on the magnitude of company sales. The 1995 Towers Perrin Data Bank was used to calibrate total cash compensation earned in fiscal year 1995 by the CEO and the executive staff. The analysis for determining the Company's 1995 stock option grant was based on option values from Towers Perrin 1994 Long-Term Incentive Plan Survey which covered 304 employers, 13,800 individuals and 495 long-term incentive plans. CEO BASE SALARY The CEO base salary determination by the committee, approved by the other outside members of the Board, was to increase Mr. Rosso's base pay from $463,500 to $486,500, a 5% increase, effective May 1, 1995. In making its decision on base salary, the committee applied the same process used in 1995 for other members of the Company's executive staff, including a review of the predicted survey median base compensation for CEO incumbents in the survey data base adjusted for company size, salary range penetration and projected total cash compensation compared to the survey reference group. CEO CASH INCENTIVES Mr. Rosso's targeted variable cash compensation was based 70% on the annual incentive plan and 30% on the economic value added under the LTIP. For the fiscal year ending December 31, 1995, the CEO earned an annual incentive award of $291,000. This represented 59.8% of base salary, with 42.8% of base salary attributable to the level of EPS achievement, 4.3% of base salary attributable to meeting or exceeding both EPS and Company sales revenue targets, and the remaining percentage reflecting the committee's evaluation of Mr. Rosso's performance against pre-established work outcomes. For the two-year cycle under the LTIP ending December 31, 1995, Mr. Rosso earned an award of $76,400 (15.7% of base salary) which was below the incentive opportunity achievable for increasing financial results to the targeted level. Below plan operating profit combined with a higher than planned capital charge caused a shortfall in the economic value added and a lower incentive award for all participants. In lieu of cash payment under the LTIP, Mr. Rosso elected to receive restricted stock issued from the Incentive Compensation Plan of 1990 (as discussed in note 4 of the "Summary Cash Compensation" table). The CEO's total cash compensation opportunity for 1995, including base salary and incentive awards for individual and financial results at target, was $813,536 (before any election of restricted stock in lieu of cash under the LTIP). The combined incentive awards plus Mr. Rosso's base salary earnings of $478,836 in 1995, resulted in actual earned total cash compensation of $846,236, approximately two percent above the 50th percentile total cash compensation of $826,792 for his position applying the compensation analysis methodology described above. STOCK OPTIONS The Company's stock option program is considered to be a significant element of compensation at the executive level and is the primary link with the creation of shareholder value. In April 1995 there was a non-qualified stock option grant with a ten year term, three year time based vesting period, and a non-discounted strike price. Grant levels for executive officers, including the CEO, approximated the 50th percentile of option grant values calculated from data reported in the Towers Perrin Long-Term Incentive Plan Survey (discussed above). 14 18 OTHER MATTERS The committee has not completed its assessment of program modifications which may be necessitated by provisions of the Omnibus Budget Reconciliation Act of 1993. This legislation amended Section 162 of the Internal Revenue Code by generally limiting to one million dollars the deductibility of compensation paid to certain executives. No member of the committee is a former or current officer of the Company. Organization and Compensation Committee David S. Tappan, Jr. Earnest H. Clark, Jr. Dennis C. Fill Francis P. Lucier 15 19 PERFORMANCE GRAPH(1) The line graph below compares the cumulative total stockholder return on Beckman's Common Stock (based on its market price and assuming reinvestment of dividends) with the S&P 500 Composite Index and the S&P 500 Medical Products Index for the last five fiscal years. Stock price performance shown on the graph is not necessarily indicative of future price performance and in no way reflects the Company's forecast of future financial performance. COMPARISON OF FIVE-YEAR CUMULATIVE RETURN
MEASUREMENT PERIOD S&P 500 MED. (FISCAL YEAR COVERED) BECKMAN S&P 500 PROD. --------------------- ------- ------- ------------ 12/90* 100 100 100 12/91 124 131 164 12/92 164 141 140 12/93 191 155 107 12/94 197 157 127 12/95 254 216 214
- --------------- * Assumes $100 invested on December 31, 1990. INDEPENDENT PUBLIC ACCOUNTANTS The Board has appointed the Audit Committee, whose members and functions are described under "Board of Directors Information -- Committees of the Board" above. Upon recommendation of the Audit Committee, the Board has appointed the firm of KPMG Peat Marwick LLP as the Company's independent accountants for the current year. KPMG Peat Marwick LLP has served as auditor of the Company since it was selected on March 29, 1990 to serve as the Company's independent accountant for the year ended December 31, 1990. Representatives of KPMG Peat Marwick LLP are expected to be present at the Annual Meeting, will have the opportunity to make a statement if they desire to do so, and will be available to respond to appropriate questions. - --------------- (1) This Section is not "soliciting material," is not deemed filed with the SEC and is not to be incorporated by reference in any filing of the Company under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. 16 20 ADDITIONAL INFORMATION ANNUAL REPORT A copy of the 1995 Annual Report to stockholders which includes the financial statements, but excludes Form 10-K exhibits, is being mailed to each stockholder of record as of February 6, 1996, together with the proxy materials. DEADLINE FOR STOCKHOLDER PROPOSALS Any proposal of an eligible stockholder intended to be presented at the Company's 1997 annual meeting must be received in writing by the Secretary of the Company on or before October 30, 1996, if the proposal is to be considered by the Board for inclusion in the Company's proxy materials for that meeting. OTHER BUSINESS The Board does not intend to present any business at the Annual Meeting other than as stated above. If any other matters properly come before the Annual Meeting, the persons named in the accompanying proxy will have discretionary authority to vote all proxies in accordance with their best judgment. By Order of the Board of Directors [SIG] WILLIAM H. MAY Secretary February 28, 1996 17 21 TRUSTEE VOTING INSTRUCTION CARD BECKMAN INSTRUMENTS, INC. ("BECKMAN") BENEFIT EQUITY TRUST The Board of Directors of Beckman has solicited a proxy from First Chicago NBD Corp., as Trustee for the Beckman Benefit Equity Trust, on matters presented at the Beckman Annual Meeting of Stockholders, April 4, 1996, and any adjournments or postponements thereof. The undersigned directs the Trustee, on the reverse side hereof, on the vote upon the nominees for Director for the term expiring in 1999: Hugh K. Coble, Francis P. Lucier, John P. Wareham, Betty Woods This card constitutes voting instructions to the Trustee only. Completion of this card does not imply, create or bestow on the undersigned any ownership or other rights to assets in the Beckman Benefit Equity Trust. All shares of Beckman Common Stock held in the Trust on the Record Date will be voted as directed in proportion to the number of responses received by the Trustee. You may receive more than one set of proxy materials if you hold Beckman Common Stock of record, in street name, in the Beckman Dividend Reinvestment Plan, in a First Chicago book entry account for certain employee purchases, or such stock is held on your behalf in the Beckman Savings and Investment Plan. PLEASE SIGN, DATE AND RETURN ALL CARDS THAT YOU RECEIVE. YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. ----------- SEE REVERSE SIDE ----------- - -------------------------------------------------------------------------------- FOLD AND DETACH HERE 22 PLEASE MARK YOUR [X] VOTES AS IN THIS EXAMPLE. THE INSTRUCTION CARD MUST BE PROPERLY EXECUTED IN ORDER FOR SHARES TO BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED. IF PROPERLY EXECUTED, BUT NO DIRECTION IS INDICATED, IT WILL BE COUNTED AS A VOTE FOR PROPOSAL 1. - -------------------------------------------------------------------------------- THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR: - -------------------------------------------------------------------------------- FOR WITHHELD 1. Election of [ ] [ ] Directors (see reverse) For, except vote withheld from the following nominee(s) - --------------------------- - -------------------------------------------------------------------------------- NOTE: Please date and sign your name exactly as it appears hereon. --------------------------------------- SIGNATURE DATE - -------------------------------------------------------------------------------- FOLD AND DETACH HERE Mall Suite [LOGO] FIRST CHICAGO One First National Plaza The First National Bank of Chicago Chicago, Illinois 60670 Telephone: (312) 732-4000 A T T E N T I O N TRUSTEE VOTING INSTRUCTION INFORMATION BENEFIT EQUITY TRUST PLEASE COMPLETE AND RETURN THE "TRUSTEE VOTING INSTRUCTION CARD," ABOVE. IT MUST BE RECEIVED BY APRIL 2, 1996 TO ENABLE TABULATION IN TIME FOR THE 1996 ANNUAL MEETING. A RETURN ENVELOPE (U.S. POSTAGE PAID) IS PROVIDED. The Benefit Equity Trust was established to assist Beckman in meeting its stock-based obligations. You do not have any interests, entitlements, claims, ownership or beneficial ownership in any stock or other assets of the Beckman Benefit Equity Trust. However, pursuant to the terms of this trust, we as trustee hereby request your assistance as a recent participant in the Beckman Employees' Stock Purchase Plan by directing the vote of the trust's holding of Beckman Common Stock. Your individual voting instructions are held in confidence and will not be disclosed to Beckman or others, unless otherwise required by law, regulation, or court order. ALL BECKMAN COMMON STOCK SHARES HELD IN THE TRUST WILL BE VOTED BY FIRST CHICAGO NBD CORP., AS TRUSTEE, AND THE VOTE WILL BE IN THE SAME PROPORTIONS AS THE NUMBER OF INSTRUCTIONS RECEIVED BY US. ACCORDINGLY, WE ARE LOOKING FORWARD TO YOUR ASSISTANCE IN PROVIDING US WITH YOUR VOTING PREFERENCES AND ENCOURAGE YOU TO COMPLETE AND RETURN THE ABOVE TRUSTEE VOTING INSTRUCTION CARD. FIRST CHICAGO NBD CORP, TRUSTEE Beckman Instruments, Inc. Benefit Equity Trust February 1996 * A "PROXY/VOTING INSTRUCTION CARD" MAY ALSO BE ENCLOSED OR YOU MAY HAVE RECEIVED MORE THAN ONE PACKAGE OF PROXY MATERIALS DEPENDING ON DIFFERENCES IN THE RECORDING OF YOUR NAME ON EMPLOYEE AND STOCK REGISTRATION RECORDS. PLEASE COMPLETE AND RETURN ALL CARDS RECEIVED. YOU MAY USE THE SAME RETURN ENVELOPE FOR ALL CARDS. 23 BECKMAN INSTRUMENTS, INC. PROXY/VOTING INSTRUCTION CARD PROXY SOLICITED BY BOARD OF DIRECTORS FOR ANNUAL MEETING OF STOCKHOLDERS BECKMAN INSTRUMENTS, INC. HEADQUARTERS, FULLERTON, CALIFORNIA THURSDAY, APRIL 4, 1996, 10:00 A.M. The undersigned hereby authorizes and appoints Louis T. Rosso and Earnest H. Clark, Jr. and each of them, as true and lawful agents and proxies with full power of substitution in each, to represent the undersigned as indicated on the reverse side hereof and in their discretion on all matters as may come before the 1996 Annual Meeting of Stockholders or any adjournments or postponements thereof. Nominees for Director for Term Expiring in 1999: Hugh K. Coble, Francis P. Lucier, John P. Wareham, Betty Woods This card provides voting instructions, as applicable, to (1) the appointed proxies for shares held of record by the undersigned including those held under the Company's Dividend Reinvestment Plan and for shares held in First Chicago book entry accounts for certain employee purchases and (2) the Trustee for shares held on behalf of the undersigned in the Company's Savings and Investment Plan (See "Savings and Investment Plan Voting Information" sheet, enclosed if applicable). IF REGISTRATIONS ARE NOT IDENTICAL, YOU MAY RECEIVE MORE THAN ONE SET OF PROXY MATERIALS. PLEASE SIGN, DATE AND RETURN ALL CARDS YOU RECEIVE. YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES (SEE REVERSE SIDE) BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. SHARES CANNOT BE VOTED ON YOUR BEHALF UNLESS YOU SIGN AND RETURN THIS CARD. ----------- SEE REVERSE SIDE ----------- - -------------------------------------------------------------------------------- FOLD AND DETACH HERE Parking will be available at the corner of Harbor Blvd. and Lambert Road. To [MAP] enter the parking area continue north on Harbor Blvd., turn right on Lambert Road and then immediately turn right into first parking entrance. 24 PLEASE MARK YOUR [X] VOTES AS IN THIS EXAMPLE. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1. - -------------------------------------------------------------------------------- THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR: - -------------------------------------------------------------------------------- FOR WITHHELD 1. Election of [ ] [ ] Directors (see reverse) For, except vote withheld from the following nominee(s) - --------------------------- - -------------------------------------------------------------------------------- Please check this box if you plan to attend the Annual Meeting. [ ] The signer hereby revokes all instructions heretofore given by the signer to vote at said meeting or any adjournment thereof. NOTE: Please date and 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(S) DATE - -------------------------------------------------------------------------------- FOLD AND DETACH HERE Dear Stockholder: The annual meeting of stockholders of Beckman Instruments, Inc. will be held on Thursday, April 4, 1996, at 10:00 am. We urge you to promptly sign, date and return the attached proxy card in the envelope provided. If you plan to attend the meeting, please indicate so in the box provided on the proxy card. The meeting is being held at Beckman's headquarters located at 2500 Harbor Boulevard, Fullerton, California. On the reverse side of this letter is a map of the area. Reserved parking will be in our northwest parking area located at the corner of Imperial and Lambert. To enter the parking area continue north on Harbor Blvd. turning right on Lambert Road and then immediately turn right into the first parking entrance. If you have any questions concerning the meeting, please contact Cynthia Skoglund at (714) 773-8213. 25 [LOGO] Mellon Trust A T T E N T I O N SAVINGS AND INVESTMENT PLAN VOTING INFORMATION PLEASE COMPLETE AND RETURN THE "PROXY/VOTING INSTRUCTION CARD," ENCLOSED WITH THE PROXY MATERIALS*, IN ORDER TO DIRECT US IN THE VOTING OF THE SHARES OF BECKMAN COMMON STOCK HELD BY US, AS TRUSTEE FOR THE BECKMAN SAVINGS AND INVESTMENT PLAN. A RETURN ENVELOPE (U.S. POSTAGE PAID) IS PROVIDED. YOUR INSTRUCTIONS MUST BE RECEIVED BY APRIL 2, 1996, IN ORDER TO BE INCLUDED IN THE TABULATION; OTHERWISE, THE SHARES HELD FOR YOUR BECKMAN STOCK FUND ACCOUNT(S) WILL NOT BE VOTED AT THE 1996 ANNUAL MEETING. Your individual voting instructions are held in confidence and will not be disclosed to Beckman or others, unless otherwise required by law, regulation, or court order. This applies to all shares held in your name, not just to those held on your behalf by the Savings and Investment Plan Trust. WE LOOK FORWARD TO RECEIVING YOUR INSTRUCTIONS AND ENCOURAGE YOU TO COMPLETE AND RETURN THE ENCLOSED "PROXY/VOTING INSTRUCTION CARD" TO ENABLE THE SHARES TO BE VOTED. MELLON BANK, N.A., TRUSTEE Beckman Instruments, Inc. Savings and Investment Plan February 1996 * A "TRUSTEE VOTING INSTRUCTION CARD" MAY ALSO BE ENCLOSED IN THE ENVELOPE AND YOU MAY RECEIVE MORE THAN ONE PACKAGE OF PROXY MATERIALS DEPENDING ON DIFFERENCES IN THE RECORDING OF YOUR NAME ON EMPLOYEE OR STOCK REGISTRATION RECORDS. PLEASE COMPLETE AND RETURN ALL CARDS RECEIVED. YOU MAY USE THE SAME RETURN ENVELOPE FOR ALL CARDS. -----END PRIVACY-ENHANCED MESSAGE-----