SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
ALPHARMA INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than Registrant)
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[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
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previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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[ALPHARMA LOGO]
ALPHARMA INC.
ONE EXECUTIVE DRIVE
FORT LEE, NEW JERSEY 07024
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 25, 2004
------------------------
To the Stockholders of ALPHARMA INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Alpharma
Inc., a Delaware corporation (the "Company"), will be held at The Hilton Fort
Lee, 2117 Route 4 Eastbound, Fort Lee, New Jersey on Tuesday, May 25, 2004, at
9:00 a.m., local time, to consider and act upon the following matters:
1. The election of nine directors to the Company's Board of Directors, each
to hold office until the 2005 Annual Meeting of Stockholders and until
their successors shall be elected and shall qualify; and
2. Transaction of such other business as may properly come before the
meeting or any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on April 2, 2004 as
the record date for determining the Stockholders entitled to notice of, and to
vote at, the meeting or any adjournment thereof.
YOUR REPRESENTATION AT THIS MEETING IS IMPORTANT. Whether or not you
expect to attend the Annual Meeting in person, please complete, date, sign and
return the enclosed proxy. An envelope is enclosed for your convenience which,
if mailed in the United States, requires no additional postage. If you attend
the Annual Meeting, you may then withdraw your proxy and vote in person.
A copy of the Company's Annual Report to Stockholders for the year ended
December 31, 2003 and a Proxy Statement accompany this notice.
By order of the Board of Directors,
Robert F. Wrobel
Secretary
April 20, 2004
[ALPHARMA LOGO]
ALPHARMA INC.
ONE EXECUTIVE DRIVE
FORT LEE, NEW JERSEY 07024
MAILING DATE
APRIL 20, 2004
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PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 25, 2004
------------------------
This proxy statement (the "Proxy Statement") is furnished in connection
with the solicitation of proxies by the Board of Directors of Alpharma Inc., a
Delaware corporation (the "Company"), for use at the Annual Meeting of
Stockholders (the "Annual Meeting") to be held on Tuesday, May 25, 2004 at The
Hilton Fort Lee, 2117 Route 4 Eastbound, Fort Lee, New Jersey at 9:00 a.m.,
local time, and at any adjournment or postponement thereof. The cost of
solicitation of the Company's stockholders (the "Stockholders") will be paid by
the Company. Such cost will include the reimbursement of banks, brokerage firms,
nominees, fiduciaries and other custodians for expenses of forwarding
solicitation materials to beneficial owners of shares. In addition to the
solicitation of proxies by use of mail, the directors, officers and employees of
the Company may solicit proxies personally or by telephone, telegraph, e-mail or
facsimile transmission. Such directors, officers and employees will not be
additionally compensated for such solicitation but may be reimbursed for
out-of-pocket expenses incurred in connection therewith.
It is anticipated that this Proxy Statement and form of proxy will first be
sent to the Company's Stockholders on or about April 20, 2004.
THE ANNUAL MEETING
PURPOSE OF MEETING
At the Annual Meeting, the Company's Stockholders will consider and act
upon the following matters:
1. The election of nine directors to the Company's Board of Directors,
each to hold office until the 2005 Annual Meeting of Stockholders
and until their successors shall be elected and shall qualify; and
2. Transaction of such other business as may properly come before the
meeting or any adjournments or postponements thereof.
RECORD DATE
The close of business on April 2, 2004 (the "Record Date") has been fixed
as the record date for determining holders of outstanding shares of the
Company's Class A Common Stock, par value $.20 per share (the "Class A Stock"),
and Class B Common Stock, par value $.20 per share (the "Class B Stock"),
entitled to notice of, and to vote at, the Annual Meeting. As of the Record
Date, 40,479,335.85 shares of Class A Stock and 11,872,897 shares of Class B
Stock were outstanding and entitled to vote.
QUORUM
For each matter to be voted upon at the Annual Meeting, the presence in
person or by proxy of holders of stock entitled to be voted with respect to such
matter, representing a majority of the aggregate voting power of all shares of
stock entitled to be voted with respect to such matter, is necessary to
constitute a quorum with respect to such matter and to transact business with
respect to such matter at the Annual Meeting. For purposes of determining
whether a quorum exists with respect to the election of directors, shares as to
which authority to vote in the election of directors has been withheld and
broker non-votes (where a broker submits a proxy but does not have authority to
vote a customer's shares on one or more matters) with respect thereto will be
considered present at the Annual Meeting. For the purpose of determining whether
a quorum exists with respect to any other matter which may properly come before
the Annual Meeting, shares abstaining on such matter and all broker non-votes
with respect to such matter will be considered present at the Annual Meeting.
REQUIRED VOTE
Votes Entitled to be Cast by Each Class of Stock. Except for the election
of directors (described below) and certain matters that require a class vote,
the holders of the Class A Stock and the holders of the Class B Stock vote
together, with each share of Class A Stock entitling the holder thereof to one
vote and each share of Class B Stock entitling the holder thereof to four votes.
Election of Directors. Nine directors will be elected at the Annual
Meeting. Under the Company's Certificate of Incorporation, as amended, the
holders of the Class A Stock are entitled, voting as a separate class, to elect
at least 33 1/3% of the Company's Board of Directors (rounded to the nearest
whole number, but in no event less than two members of the Company's Board of
Directors), and the holders of the Class B Stock are entitled, voting separately
as a class, to elect the remaining directors. Therefore, the holders of the
Class A Stock will elect three directors (directors to be elected by the holders
of Class A Stock being referred to as the "Class A Directors") and the holders
of the Class B Stock will elect six directors (directors elected by the holders
of Class B Stock being referred to as the "Class B Directors"). The affirmative
vote of a plurality of the votes cast at the Annual Meeting by the holders of
the Class A Stock, voting as a single class, is necessary to elect the three
Class A Directors, and the affirmative vote of a plurality of the votes cast at
the Annual Meeting by the holders of the Class B Stock, voting as a single
class, is necessary to elect the six Class B Directors. (A plurality of the
votes cast means the greatest number of votes cast for a director.)
PROXIES
The enclosed proxy provides space for holders of Class A Stock to vote for,
or withhold authority to vote for, all or any one of the Company's three
nominees for Class A Directors and to vote for, against, or abstain from voting
on all other proposals set forth in this Proxy Statement.
Shares of Class A Stock represented by properly executed proxies received
at or prior to the Annual Meeting, which have not been revoked, will be voted in
accordance with the instructions indicated therein. If no instructions are
indicated, such proxies will be voted FOR (i) the election as directors of the
three nominees for Class A Directors nominated by the Company's Board of
Directors (see "Election of Directors; Nominees for Directors; Nominees for
Class A Directors" below), and (ii) in the discretion of the proxy holder, as to
any other matter which may properly come before the Annual Meeting. With respect
to the election of directors, neither shares as to which authority to vote has
been withheld (to the extent withheld) nor broker non-votes will be considered
affirmative votes. With respect to any other matter which may
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properly come before the meeting, abstentions and broker non-votes will be
considered present and entitled to vote but will not have been cast and
therefore will not be counted in determining whether any matter received the
requisite votes.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING, PLEASE COMPLETE, DATE AND SIGN YOUR PROXY IN ORDER TO ENSURE THAT YOUR
SHARES WILL BE REPRESENTED AT THE ANNUAL MEETING. THE GIVING OF SUCH PROXY DOES
NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IN THE EVENT YOU ATTEND THE ANNUAL
MEETING.
A holder of Class A Stock who has given a proxy may revoke such proxy at
any time prior to its exercise at the Annual Meeting by (i) giving written
notice of revocation to the Secretary of the Company, (ii) properly submitting
to the Company a duly executed proxy bearing a later date, or (iii) attending
the Annual Meeting and voting in person. Attendance at the Annual Meeting will
not automatically revoke a proxy. All written notices of revocation and other
communications with respect to revocation of proxies should be sent to the
attention of the Secretary of the Company at the Company's United States
executive offices, located at One Executive Drive, Fort Lee, New Jersey 07024.
If a quorum is not obtained, the Annual Meeting may be adjourned for the
purpose of obtaining additional proxies or for any other purpose, and, at any
subsequent reconvening of the Annual Meeting, all proxies will be voted in the
same manner as such proxies would have been voted at the original convening of
the meeting (except for any proxies which have been effectively revoked or
withdrawn), notwithstanding that they may have been effectively voted on the
same or any other matter at a previous meeting.
ELECTRONIC AND TELEPHONIC VOTING
You may vote your proxies by touch-tone telephone from the U.S., using the
toll-free telephone number on the proxy card, or via the Internet using the
procedures and instructions described on the proxy card. Stockholders who own
their common stock through a broker, also known as "street name" holders, may
vote by telephone or via the Internet if their bank or broker makes those
methods available, in which case the bank or broker will enclose instructions
with the Proxy Statement. The telephone and Internet voting procedures,
including the use of control numbers found on the proxy card, are designed to
authenticate Stockholder identities, to allow Stockholders to vote their shares
of common stock, and to confirm that their instructions have been properly
recorded. Stockholders voting via the Internet should understand that there may
be costs associated with electronic access, such as usage charges from Internet
access providers and telephone companies, which must be paid by the Stockholder.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
OWNERSHIP OF COMMON STOCK
The following table sets forth, as of February 19, 2004 (unless otherwise
noted), certain information regarding the beneficial ownership of the Class A
Stock and the Class B Stock of (a) each person who is known to the Company to be
the beneficial owner of more than 5% of the outstanding shares of either of such
classes, (b) each director and each nominee for director of the Company, (c) the
Chief Executive Officer and the four other most highly compensated executive
officers, (d) two former executive officers who would have been included in the
list of the four most highly compensated executive officers if not for the fact
that they were not executive officers at the end of the fiscal year ended
December 31, 2003, and (e) all directors and executive officers of the Company
as a group. Unless otherwise indicated, each beneficial owner possesses sole
voting and dispositive power with respect to the shares listed for such
beneficial owner in this table.
AMOUNT AND PERCENT OF
NATURE OF PERCENT OF COMMON STOCK
BENEFICIAL CLASS (BOTH CLASSES)
TITLE OF CLASS OF STOCK NAME OF BENEFICIAL OWNER OWNERSHIP OUTSTANDING OUTSTANDING
----------------------- ------------------------ ---------- ----------- --------------
Class B Common Stock A. L. Industrier ASA(1)(2) 11,872,897 100.00% 22.81%
Class A Common Stock A. L. Industrier ASA(1)(2) 0 -- --
Class B Common Stock Einar W. Sissener(3) 11,872,897 100.00 22.81
Class A Common Stock Einar W. Sissener(3)(4)(5) 391,167 * *
Class A Common Stock FMR Corp.(6) 3,352,610 8.34 6.44
Class A Common Stock LSV Asset Management(7) 2,404,290 5.98 4.62
Class A Common Stock Dimensional Fund Advisors Inc.(8) 2,366,200 5.89 4.55
Class A Common Stock Barclays Global Investors NA(9) 2,340,816 5.83 4.50
Class A Common Stock Heartland Advisors Inc.(10) 2,197,850 5.47 4.22
Class A Common Stock Ingrid Wiik(4)(11) 285,159 * *
Class A Common Stock Robert F. Wrobel(4) 113,283 * *
Class A Common Stock Carol A. Wrenn(4) 78,432 * *
Class A Common Stock Matthew T. Farrell(4) 67,881 * *
Class A Common Stock Michael J. Nestor(4) 48,684 * *
Class A Common Stock Glen E. Hess(4)(12) 32,342 * *
Class A Common Stock Peter G. Tombros(4) 28,318 * *
Class A Common Stock Kurt J. Orlofski(4) 24,486 * *
Class A Common Stock Ronald N. Warner(4) 10,702 * *
Class A Common Stock William I. Jacobs(4) 8,500 * *
Class A Common Stock Jill Kanin-Lovers 0 -- --
Class A Common Stock Einar Kloster 0 -- --
Class A Common Stock Ramon M. Perez 0 -- --
Class A Common Stock Robert Thong 0 -- --
Class A Common Stock Farah M. Walters 0 -- --
Class A Common Stock All directors and executive officers
as a group (16 persons)(4) 1,149,495 2.86 2.21
Class B Common Stock All directors and executive officers
as a group (16 persons)(3) 11,872,897 100.00 22.81
---------------
* Indicates ownership of less than 1%.
4
(1) The source of this information is Amendment No. 11 to Schedule 13D, dated
June 12, 2003, filed with the Securities and Exchange Commission (the
"Commission") by A. L. Industrier ASA (formerly known as Apothekernes
Laboratorium AS), a corporation organized and existing under the laws of
the Kingdom of Norway ("A. L. Industrier"). The shares reflected in the
table are held of record by A/S Wangs Fabrik, a wholly owned subsidiary of
A. L. Industrier, although A. L. Industrier retains full beneficial
ownership and sole power to direct voting and disposition of these shares.
The address of A. L. Industrier is Harbitzalleen 3, 0275 Oslo, Norway.
(2) Shares of Class B Stock are convertible into an equal number of shares of
Class A Stock. If all shares of Class B Stock beneficially owned by A. L.
Industrier were converted as of February 19, 2004, A. L. Industrier would
own approximately 22.81% of the then outstanding shares of Class A Stock
(assuming conversion of the Class B Stock and the issuance of no shares of
Common Stock pursuant to any outstanding options of convertible securities
of the Company).
(3) Mr. Sissener is Chairman of the Board of A. L. Industrier and together with
A/S Swekk (Mr. Sissener's family-controlled private holding company)
("Swekk"), EWS Stiftelsen, a trust established for the benefit of members
of the family of Mr. Sissener ("EWS Stiftelsen"), and certain of his
relatives, beneficially owns approximately 51% of A. L. Industrier's
outstanding ordinary shares entitled to vote and, accordingly, may be
deemed a controlling person of A. L. Industrier. As a controlling person of
A. L. Industrier, the 11,872,897 shares of the Class B Stock of the Company
held by A. L. Industrier are also considered to be beneficially owned by
Mr. Sissener.
(4) The shares reflected in the table include shares that the executive
officer, former executive officer or director has the right to acquire upon
the exercise of stock options granted under the 1997 Incentive Stock Option
and Appreciation Right Plan or the Non-Employee Director Option Plan which
are exercisable as of February 19, 2004 or within 60 days thereafter as
follows: Ms. Wiik -- 207,750 shares, Mr. Wrobel -- 109,334 shares, Mr.
Nestor -- 45,750 shares, Mr. Farrell -- 43,750 shares, Ms. Wrenn -- 42,834
shares, each of Messrs. Hess and Tombros -- 27,500 shares, Mr. Orlofski --
21,938 shares, Mr. Sissener -- 17,500 shares, Dr. Warner -- 10,000 shares,
and Mr. Jacobs -- 7,500 shares. All directors and executive officers as a
group -- 621,835 shares.
(5) Includes 129,861 shares held by Mr. Sissener, 22,847 shares held by the
estate of Mr. Sissener's wife, 186,689 shares held by Swekk, and 34,270
shares held by EWS Stiftelsen.
(6) The source of this information is Amendment No. 6 to Schedule 13G dated
February 17, 2004, filed with the Commission by FMR Corp. ("FMR"). Such
Schedule 13G reports that FMR holds sole voting power as to 29,200 shares
and sole dispositive power as to all shares. FMR declared in its filing
that various persons have the right to receive, or the power to direct the
receipt of, dividends from, or the proceeds from the sale of, the shares.
The Schedule 13G reports that Fidelity Management & Research Company, a
wholly-owned subsidiary of FMR and an investment adviser registered under
Section 203 of the Investment Advisers Act of 1940, is the beneficial owner
of 3,323,410 shares or 8.299% of the Company's Class A Stock as a result of
acting as investment adviser to various investment companies registered
under Section 8 of the Investment Company Act of 1940. The ownership of one
investment company, Fidelity Low Priced Stock Fund, amounted to 3,115,800
shares or 7.780% of the Company's Class A Stock outstanding. The address of
FMR is 82 Devonshire Street, Boston, Massachusetts 02109.
(7) The source of this information is Schedule 13G dated February 12, 2004,
filed with the Commission by LSV Asset Management ("LSV"). Such Schedule
13G reports that LSV holds sole voting power as to 1,658,690 shares and
sole dispositive power as to 2,339,390 shares. The address of LSV is 1
North Wacker Drive, Suite 4000, Chicago, Illinois 60606.
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(8) The source of this information is Schedule 13G dated February 6, 2004,
filed with the Commission by Dimensional Fund Advisors Inc.
("Dimensional"). Such Schedule 13G reports that Dimensional, an investment
adviser registered under Section 203 of the Investment Advisers Act of
1940, furnishes investment advice to four investment companies registered
under the Investment Company Act of 1940, and serves as investment manager
to certain other commingled group trusts and separate accounts (the
"Funds"). In its role as investment adviser or manager, Dimensional
possesses voting and/or investment power over the Company shares that are
owned by the Funds, and may be deemed to be the beneficial owner of these
shares. No one Fund owns more than 5% of the outstanding Class A Stock of
the Company. Dimensional disclaims beneficial ownership of the shares owned
by the Funds. The address of Dimensional is 1299 Ocean Ave., 11(th) Floor,
Santa Monica, California 90401.
(9) The source of this information is Schedule 13G dated February 17, 2004,
filed with the Commission by Barclay's Global Investors, NA ("Barclay's").
Such Schedule 13G reports that Barclay's holds sole voting and dispositive
power as to 2,145,321 shares. The Schedule 13G further reports that an
affiliate of Barclay's, Barclays Private Bank Limited, with an address at
59/60 Grosvenor Street, London, WIX 9DA England, is the beneficial owner of
3,295,351 shares of the Company's Class A Stock, with sole voting and
dispositive power as to 3,099,856 shares, with such shares held in trust
accounts for the economic benefit of the beneficiaries of these accounts.
The address of Barclay's is 45 Fremont Street, San Francisco, California
94105.
(10) The source of this information is Schedule 13G dated February 12, 2004,
filed with the Commission by Heartland Advisors Inc. ("Heartland"). Such
Schedule 13G reports that all of the reported shares are held in investment
advisory accounts of Heartland (no one of which owns more than 5% of the
outstanding Class A Stock of the Company) and may be deemed beneficially
owned by: (1) Heartland, by virtue of its investment discretion and voting
authority granted by certain clients, which may be revoked at any time; and
(2) William J. Nasgovitz, as a result of his ownership interest in
Heartland. The Schedule 13G reports that various clients have the right to
receive, or the power to direct the receipt of, dividends and proceeds from
the sale of the reported shares. Heartland and Mr. Nasgovitz each disclaim
beneficial ownership of the shares. The address of Heartland is 789 North
Water Street, Milwaukee, Wisconsin 53202.
(11) Ms. Wiik also owns 580 shares of A. L. Industrier.
(12) Includes 3,750 shares held by a private foundation of which Mr. Hess is
President; however he has no economic interest in these shares.
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ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
The current terms of all of the Company's directors expire at the Annual
Meeting. Mr. Einar Kloster, a Class B Director, has informed the Board of
Directors that he will not stand for re-election at the Annual Meeting.
The Company's Board of Directors intends to cause the nomination of the
nominees listed below under "Nominees for Directors; Nominees for Class A
Directors" and all proxies received from holders of the Class A Stock will be
voted FOR the election of such nominees as Class A Directors, except to the
extent that persons giving such proxies withhold authority to vote for such
nominees.
A. L. Industrier, which beneficially owns 100% of the outstanding shares of
Class B Stock, has advised the Company that it intends to vote its shares in
favor of the nominees listed below under "Nominees for Directors; Nominees for
Class B Directors," which would assure their election as Class B Directors.
Each director is to be elected to hold office until the next Annual Meeting
of Stockholders and until his or her successor is elected and qualified.
NOMINEES FOR DIRECTORS
The Company believes that each of the nominees for director will be able to
serve. If any of the nominees for Class A Directors would be unable to serve,
the enclosed proxy confers authority to vote in favor of such other person or
persons as the Company's Class A Directors at the time recommend to serve in
place of the person or persons unable to serve. Similarly, if any of the
nominees for Class B Directors would be unable to serve, the proxy provided to
Class B Stockholders confers authority to vote in favor of such other person or
persons as the Company's Class B Directors at the time recommend to serve in
place of the person or persons unable to serve.
Nominees for Class A Directors. The name, age, principal business
experience during the last five years, and certain other information regarding
each of the persons proposed to be nominated for election as a Class A Director,
are listed below.
NAME AGE PRINCIPAL BUSINESS EXPERIENCE
---- --- -----------------------------
William I. Jacobs.............. 62 Director of the Company since May 2002. Former Managing
Director and Chief Financial Officer of NewPower Holdings,
Inc., a retail energy company that filed a Chapter 11
bankruptcy petition in June 2002 and is currently
liquidating, from 2000 to 2002. Senior Executive Vice
President of MasterCard International, the credit card
company, from 1995 to 2000. Director of Investment
Technology Group, an electronic trading resources company,
Global Payments, a payment processing services company,
Exide Technologies, a battery manufacturer that filed a
Chapter 11 bankruptcy petition in 2002 and is currently
reorganizing, and NewPower Holdings, Inc. Chairman of the
Company's Audit and Corporate Governance Committee and
Member of the Company's Compensation Committee.
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NAME AGE PRINCIPAL BUSINESS EXPERIENCE
---- --- -----------------------------
Peter G. Tombros............... 61 Director of the Company since August 1994. Chief Executive
Officer of VivoQuest, Inc., a private biopharmaceutical
company, since 2001. Former Director, President and Chief
Executive Officer of Enzon, Inc., a developer and marketer
of bio-pharmaceutical products, from April 1994 to June
2001. Served in a variety of senior management positions at
Pfizer, Inc., the pharmaceutical company, for 25 years,
including Vice President of Marketing, Senior Vice
President and General Manager of the Roerig Pharmaceuticals
Division, Executive Vice President of Pfizer
Pharmaceuticals Division, Director, Pfizer Pharmaceuticals
Division, Vice President-Corporate Strategic Planning, and
Vice President-Corporate Officer of Pfizer, Inc. Director
of NPS Pharmaceuticals, Inc., a biotechnology company, and
Cambrex Corp., a supplier of human health and bioscience
products to the life sciences industry. Chairman of the
Company's Compensation Committee and Member of the
Company's Audit and Corporate Governance Committee.
Farah M. Walters............... 59 Director of the Company since February 2003. President and
Chief Executive Officer of University Hospitals Health
System, Inc. and University Hospitals of Cleveland from
1992 to 2002. Served as Executive Director, Senior
Executive Vice President and Member of three person "Office
of the President" of University Hospitals Health System,
Inc. and University Hospitals of Cleveland from 1986 to
2002. Director of LTV Corporation, a manufacturer of
engineered metal building systems and processing services
that filed a bankruptcy petition in 2000, Kerr-McGee
Corporation, an oil and gas exploration and production and
chemical company, and PolyOne Corporation, a specialty
plastics and chemical company. Member of the Company's
Audit and Corporate Governance Committee.
Nominees for Class B Directors. The name, age, principal business
experience during the last five years, and certain other information regarding
each of the persons proposed to be nominated for election as a Class B Director
are listed below. Mr. Ramon M. Perez is not presently a director of the Company.
NAME AGE PRINCIPAL BUSINESS EXPERIENCE
---- --- -----------------------------
Glen E. Hess................... 62 Director of the Company since October 1983. Partner in the
law firm of Kirkland & Ellis LLP since 1973. Member of the
Company's Executive and Finance Committee.
8
NAME AGE PRINCIPAL BUSINESS EXPERIENCE
---- --- -----------------------------
Jill Kanin-Lovers.............. 52 Director of the Company since February 2003. Since 1998,
Senior Vice President, Human Resources of Avon Products,
Inc., the cosmetics and gifts company, and member of Avon
Products, Inc.'s Chairman's Council, Avon's internal
executive committee, and a member of the Board of Directors
for the Avon Foundation. Vice-President, Human Resources,
Global Operations from 1997 to 1998 and Vice President,
Human Resources, U.S. from 1995 to 1997 at IBM Corp., the
computer company. Senior Vice President, Worldwide
Compensation and Benefits at American Express, the credit
card company, from 1991 to 1995. From 1974 to 1991, held a
series of senior positions, including managing the Seattle
office and serving as the functional head for all global
consulting and support activities, for the total
compensation practice of Towers Perrin, a global management
consulting firm. Member of the Company's Compensation
Committee.
Ramon M. Perez................. 51 Nominee for Director. Formerly served in executive and
senior management positions at Cardinal Health Inc., a
global provider of products and services to healthcare
providers and manufacturers, including President, Specialty
Pharmaceutical Products & Services from 2000 to 2003,
Executive Vice President, Supply Chain Services from 1996
to 1999, and Senior Vice President, Purchasing from 1994 to
1995. Formerly served in senior management positions at
Baxter International, Inc., a global developer,
manufacturer and distributor of products and services for
healthcare and related fields, including Vice President,
Reengineering Team from 1993 to 1994, Vice President,
Corporate Alliances from 1991 to 1993, Vice President,
Purchasing, Hospital Supply Division from 1990 to 1991,
Vice President, Marketing, Hospital Supply Division from
1987 to 1990, and various other positions in its Dietary
Products Division from 1978 to 1987, including Director of
Marketing.
Einar W. Sissener.............. 75 Chairman of the Board since 1975. Consultant to the Company
since July 1999. Chief Executive Officer of the Company
from June 1994 to June 1999. Member of the Office of the
Chief Executive of the Company from July 1991 to June 1994.
Chairman of the Office of the Chief Executive from June
1999 to December 1999. President, Alpharma AS, from October
1994 to March 2000. President, Apothekernes Laboratorium AS
(now A. L. Industrier ASA), from 1972 to 1994. Chairman of
A. L. Industrier ASA since November 1994. Chairman of the
Company's Executive and Finance Committee.
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NAME AGE PRINCIPAL BUSINESS EXPERIENCE
---- --- -----------------------------
Robert Thong................... 43 Director of the Company since February 2003. Co-Founder,
Director and Officer of NovaSecta, a management advisory
and executive coaching group, since 2002. Since 1999,
Managing Director of Phizz Rx Limited, a provider of
executive advice and consulting to the life sciences,
medical technology and fine chemicals sectors in the U.K.
and the U.S. Vice President of Renaissance Worldwide
Strategy Limited, a global consulting company, and its
subsidiary COBA Consulting Limited and leader of the
European Biosciences Consulting Team, from 1997 to 1999.
Vice President of Gemini Consulting (now Cap Gemini Ernst &
Young), providers of information technology consulting
services, from 1990 to 1997. Member of the Company's
Executive and Finance Committee.
Ingrid Wiik.................... 59 President, Chief Executive Officer and Director of the
Company since January 2000. President of Alpharma's
International Pharmaceuticals Division from 1994 to January
2000. President, Pharmaceutical Division of Apothekernes
Laboratorium A.S. (now A. L. Industrier ASA) from 1986 to
1994.
10
BOARD OF DIRECTORS AND COMMITTEES
BOARD MEETINGS, ANNUAL MEETING AND ATTENDANCE OF DIRECTORS
The Company's Board of Directors (the "Board") held 8 meetings in 2003.
Each person who served as a director in 2003 attended at least 75% of the
aggregate of (i) the total number of meetings of the Company's Board of
Directors held while such person was a member, and (ii) the total number of
meetings held by all committees of the Company's Board of Directors on which
such person served while such person was a member of such committee, with the
exception of Mr. Einar Kloster, who is not standing for re-election. The Company
does not have a policy requiring directors to attend its annual meetings of
stockholders, however, the Company encourages such attendance and all of the
current directors attended the 2003 Annual Meeting of Stockholders held on May
19, 2003, with the exception of Mr. Kloster.
BOARD AND COMMITTEE INDEPENDENCE
The Company complies with the corporate governance rules set forth in the
New York Stock Exchange ("NYSE") listing standards, as approved by the
Securities and Exchange Commission. Under these corporate governance rules, the
Company is a "controlled company," whose voting power is more than 50% held by
A. L. Industrier ASA. As a "controlled company", the Company is entitled to
exemptions from the following three corporate governance requirements: (1) to
have a majority of independent directors, (2) to have a nominating/corporate
governance committee composed entirely of independent directors, and (3) to have
a compensation committee composed entirely of independent directors.
Notwithstanding its exempt status, the Company has chosen to comply voluntarily
with the requirements to have a majority of independent directors on its Board,
and to have a fully independent Compensation Committee. Consistent with the NYSE
requirements, the Company also has an audit committee (its Audit and Corporate
Governance Committee) composed entirely of independent directors, and this
committee performs the corporate governance functions required of a
nominating/corporate governance committee.
In determining Board independence in compliance with the NYSE rules, the
Board considers whether directors or director nominees have a material
relationship with the Company. When assessing materiality, the Board weighs all
relevant facts and circumstances, using the following categorical standards to
determine director independence: (1) whether the director or nominee, or his or
her immediate family member, is currently (or has in the past been): (a)
receiving more than $100,000 per year in direct compensation from the Company
(other than director and committee fees and pension or other forms of deferred
compensation for prior service -- unless such compensation is contingent in any
way on continued service); (b) affiliated with or employed by a present or
former internal or external auditor of the Company; (c) employed as an executive
officer of another company where any of the Company's present executive officers
serves as a member of such other company's compensation committee; or (d) an
executive officer or an employee of another company: (i) that accounts for at
least 2% or $1 million, whichever is greater, of the Company's consolidated
gross revenues, or (ii) for which the Company accounts for at least 2% or $1
million, whichever is greater, of such other company's consolidated gross
revenues; and (2) whether certain other factors or circumstances external to the
Company exist that would materially interfere with the director or nominee
making decisions without regard to such factors or circumstances. Applying these
standards, the Board determined in May 2003 that the following directors,
constituting a majority of the Board, qualify as "independent" members of the
Board: Messrs. Glen E. Hess and William I. Jacobs, Ms. Jill Kanin-Lovers,
Messrs. Einar Kloster, Robert Thong and Peter G. Tombros, and Ms. Farah M.
Walters.
11
In determining Audit and Corporate Governance Committee independence, the
Board first considers whether directors or director nominees qualify as
"independent" to serve on the Board (as set forth above), and, if answered
affirmatively, whether they satisfy two additional independence requirements:
(1) whether the director or nominee currently receives (or in the past has
received), directly or indirectly, compensation of any kind (including salary,
legal fees, consulting fees and auditing fees) from the Company, other than
director's compensation for prior service that is not contingent in any way on
continued service, and (2) whether the director or nominee is an "affiliated
person" of the company, in that he or she is either (a) an executive officer or
(b) a stockholder holding 10% or more of any class of Company securities.
Applying these standards, the Board determined in May 2003 that the following
directors, constituting the entire Audit and Corporate Governance Committee,
qualify as "independent" to serve on the Board's Audit and Corporate Governance
Committee: Messrs. William I. Jacobs (Chairman) and Peter G. Tombros, and Ms.
Farah M. Walters.
In determining Compensation Committee independence, the Board first
considers whether directors or director nominees qualify as "independent" to
serve on the Board (as set forth above), and, if answered affirmatively, whether
they satisfy two additional independence requirements (these are not NYSE
requirements, rather Company requirements): (1) whether the director or nominee
is a "Non-Employee Director" under Rule 16b-3 of the Securities Exchange Act of
1934, which means a director or nominee who: (a) is not currently an officer or
employee of the Company or its subsidiaries; (b) does not receive more than
$60,000 in compensation annually from the Company or its subsidiaries for
services rendered as a consultant; (c) does not possess a direct or indirect
material interest in any transaction with the Company or its subsidiaries where
the amount involved exceeds $60,000; and (d) is not engaged in a business
relationship with the Company or its subsidiaries where the amount involved
exceeds greater than 5% of the consolidated gross revenue of either company; and
(2) whether the director or nominee is an "Outside Director" under Internal
Revenue Service Code Section 162(m), in that he or she: (a) is not currently an
officer or employee of the Company or its subsidiaries; (b) is not a former
employee of the Company or its subsidiaries who is currently receiving
remuneration from the Company or its subsidiaries for prior services; (c) has
not been an officer of the Company or its subsidiaries; and (d) is not currently
receiving, directly or indirectly, compensation of any kind from the Company
other than director's compensation. Applying these standards, the Board
determined in May 2003 that the following directors, constituting the entire
Compensation Committee, qualify as "independent" to serve on the Board's
Compensation Committee: Messrs. Peter G. Tombros (Chairman), William I. Jacobs,
and Ms. Jill Kanin-Lovers.
COMMITTEES OF THE BOARD
Pursuant to its by-laws, as amended, the Company has established standing
Audit and Corporate Governance, Executive and Finance and Compensation
Committees (the Compensation Committee assumed the duties of the Company's
former Stock Option Committee in May 2003).
The Audit and Corporate Governance Committee provides assistance to the
Company's Board of Directors in fulfilling the Board's oversight responsibility
to the stockholders, potential stockholders, the investment community, and
others relating to the Company's financial statements and the financial
reporting process, the systems of internal accounting and financial controls,
the annual independent audit of the Company's financial statements, and the
Company's Corporate Governance Principles (available on the Company's website at
www.Alpharma.com by clicking on the "About Alpharma" tab). In so doing, it is
the responsibility of the committee to maintain free and open communications
between the committee, independent auditors, and management of the Company. In
discharging its oversight role, the committee is empowered to investigate any
matter brought to its attention with full access to all books, records,
facilities, and personnel of the Company and the power to retain outside
counsel, or other experts for this purpose. The
12
Company shall provide funding necessary for the committee to retain outside
counsel and experts. The committee is charged with taking the appropriate
actions to set the overall corporate "tone" for quality financial reporting,
sound business risk and corporate governance practices, and ethical behavior. In
furtherance of this mission, the Audit and Corporate Governance Committee
administered the Board's completion of an annual performance evaluation at its
March 2004 meeting, to evaluate the effectiveness of the Board and its
committees. In addition, the Company's Board of Directors has adopted a
resolution requiring the Audit and Corporate Governance Committee to review
transactions between the Company and A. L. Industrier (the beneficial owner of
all the outstanding Class B Stock) (or their respective subsidiaries) involving
more than $50,000 and to report to the Company's Board of Directors regarding
whether such transactions are fair to the Company. Such resolution also requires
prior approval of the Audit and Corporate Governance Committee for any
transaction with A. L. Industrier which involves $500,000 or more, and prior
approval of the Audit and Corporate Governance Committee is required for any
sale or transfer of assets to or from A. L. Industrier other than inventory sold
or transferred in the ordinary course of business. The Audit and Corporate
Governance Committee also monitors the Company's Business Conduct Guidelines.
The committee charter, (attached as Appendix I to this Proxy Statement and also
available on the Company's website at www.Alpharma.com by clicking on the "About
Alpharma" tab), governs the operations of the Audit and Corporate Governance
Committee, and requires that the committee be comprised of at least three
directors, each of whom are "independent" directors. (See "Board of Directors
and Committees; Board and Committee Independence" for a description of such
independence criteria). All committee members shall be financially literate, or
shall become financially literate within a reasonable period of time after
appointment to the committee, and at least one member shall have accounting or
related financial management expertise necessary to be considered a "financial
expert" under Section 407 of the Sarbanes-Oxley Act of 2002 and the associated
rules of the Securities and Exchange Commission. The Board determined that Mr.
William I. Jacobs, Chairman of the Audit and Corporate Governance Committee,
qualifies as an "Audit Committee Financial Expert" pursuant to these rules,
based on his attributes, education and experience. In addition, the Board also
determined that all of the members of the Audit and Corporate Governance
Committee qualify as "financially literate." The current members of the Audit
and Corporate Governance Committee are Messrs. William I. Jacobs (Chairman) and
Peter G. Tombros and Ms. Farah M. Walters. The Audit and Corporate Governance
Committee held 14 meetings in 2003.
The Executive and Finance Committee is generally empowered, to the fullest
extent permitted by Delaware law, to exercise all power and authority vested in
the Company's Board of Directors. By resolution, the Company's Board of
Directors has specifically authorized and requested the Executive and Finance
Committee to act on behalf of the Board in situations when the full Board is
unable to meet, to discuss and consult with the Chief Executive Officer of the
Company as requested by such officer and to act with respect to such matters as
the Board may from time to time designate. Additionally, the Executive and
Finance Committee reviews and has the authority to make recommendations to the
Board of Directors with respect to raising funds required in the operation of
the Company. The charter of the Executive and Finance Committee is available on
the Company's website at www.Alpharma.com by clicking on the "About Alpharma"
tab. The current members of the Executive and Finance Committee are Messrs.
Einar W. Sissener (Chairman), Glen E. Hess, and Robert Thong. The Executive and
Finance Committee held 12 meetings in 2003.
The Compensation Committee has the authority of the Company's Board of
Directors with respect to the compensation, benefit and employment policies and
arrangements for directors, the CEO, executive officers and other key employees
of the Company. The Committee also has authority with respect to the
compensation and benefit plans generally applicable to the Company's employees.
The committee charter (available on the Company's website at www.Alpharma.com by
clicking on the "About Alpharma" tab) governs the operations
13
of the Compensation Committee and requires that the committee be comprised of at
least three directors, each of whom are "independent" directors. (See "Board of
Directors and Committees; Board and Committee Independence" for a description of
such independence criteria.) The current members of the Compensation Committee
are Messrs. Peter G. Tombros (Chairman) and William I. Jacobs, and Ms. Jill
Kanin-Lovers. The Compensation Committee held 12 meetings in 2003.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal year 2003, Messrs. I. Roy Cohen (a former director of the
Company until May 2003), Hess, Jacobs, Sissener and Tombros and Ms. Kanin-Lovers
served on the Compensation Committee. Mr. Cohen is a former executive officer of
the Company, having served as President and Chief Executive Officer from 1976 to
January 1991 and as a member of the Office of the Chief Executive from July 1991
through June 1994. Mr. Hess' professional corporation is a partner of Kirkland &
Ellis LLP, a law firm which, since 1978, has performed and continues to perform
significant legal services for the Company. (See "Certain Relationships and
Related Transactions" for further information). Mr. Sissener currently serves as
Chairman of the Board of the Company and as a consultant to the Company and,
from June 1994 to June 1999, was the Company's Chief Executive Officer. (See
"Nominee for Class B Directors" and "Certain Relationships and Related
Transactions" for further information). Each of Messrs. Cohen, Hess and Sissener
resigned from the Compensation Committee in March 2003.
DIRECTORS' COMPENSATION
Pursuant to an agreement between the Company and Mr. Sissener dated July 1,
1999, in 2003 Mr. Sissener received $150,000 for serving as Chairman of the
Company's Board of Directors (and as a director of certain of the Company's
subsidiaries). In March 2004, the Board took action to increase this payment to
$200,000, beginning with the 2004 payment. Pursuant to an agreement between the
Company and Mr. Cohen, Mr. Cohen receives an honorarium in the amount of $12,500
per year in recognition of his service to the Company, payable on December 1st
of each year from 2003 through 2007. (See "Certain Relationships and Related
Transactions" for a description of Mr. Sissener's and Mr. Cohen's agreements).
During 2003, each director (except Mr. Sissener and Ms. Wiik) received
directors' fees of $22,500. Each director also received a grant of an option to
acquire 10,000 shares of Class A Stock pursuant to the 2003 Omnibus Incentive
Compensation Plan, with a grant date of May 20, 2003, an exercise price of
$19.00 per share, a general term of ten years from the date of grant, and
vesting at the rate of 100% on the date of the first Annual Meeting of
Stockholders following the date of grant, subject to certain conditions. The
options received by Ms. Kanin-Lovers, Mr. Thong and Ms. Walters each included
the right to acquire an additional 1,800 shares of the Company's Class A Stock
(for a total of 11,800 shares each), upon the same terms, in recognition of each
such director's service on the Board from February 2003 through the 2003 Annual
Meeting of Stockholders in May 2003. In addition, each director (other than Mr.
Sissener and Ms. Wiik) received $1,200 for each Board meeting attended in
person, $600 for each Committee meeting attended in person and one-half of the
applicable fee for each meeting attended by telephone (with certain exceptions).
The Chairman of each of the Audit and Corporate Governance and Compensation
Committees received an additional payment of $7,500. In March 2004, the Board
increased, with immediate effect, the annual director fee to $30,000 and the
Board and Committee meeting fees to $1,200 per meeting.
Directors have the ability to participate in the Company's Amended and
Restated Deferred Compensation Plan, dated October 12, 1994, through which they
may defer receipt of cash compensation, and earn
14
interest quarterly on such deferred amounts, at the rate of two percentage
points below the prime rate (as published in the Wall Street Journal), provided
such amount shall not exceed 12% or be less than 4%.
CORPORATE GOVERNANCE PRINCIPLES
The Board has adopted Corporate Governance Principles (which are available
on the Company's website at www.Alpharma.com by clicking on the "About Alpharma"
tab) to provide the general framework for the governance of the Company. The
Corporate Governance Principles specifically address the role of the Board and
management, the functions of the Board, qualifications of directors,
independence of directors and committees, the making of loans, size of the Board
and selection process, Board committees, meetings of non-employee directors,
setting the Board agenda, ethics and conflicts of interest, reporting of
concerns to the Audit and Corporate Governance Committee, Board compensation,
access to senior management and independent advisors, director orientation and
continuing education, succession planning and the Board's annual performance
evaluation.
DIRECTOR IDENTIFICATION AND SELECTION
As set forth in "Board and Committee Independence" above, the Company is
exempt from the NYSE requirement to have a nominating committee. The Company's
process for director selection and director qualifications are as set forth in
the Company's Corporate Governance Principles (which are available on the
Company's website at www.Alpharma.com by clicking on the "About Alpharma" tab).
In summary, the Chairman of the Board, Mr. Einar W. Sissener, proposes a slate
of nominees to the Board for election by the stockholders in accordance with the
procedures and rules established in the Company's Certificate of Incorporation.
Between annual stockholder meetings, the Board may elect directors to serve
until the next annual meeting. In order to be selected, directors shall possess
the highest personal and professional ethics, integrity and values, and be
committed to representing the interests of the stockholders. They must also have
an inquisitive and objective perspective, practical wisdom and mature judgment.
The Company endeavors to have a Board representing diverse experience at
policy-making levels in business, government, education and technology, and in
other areas that are relevant to the Company's global activities. The Board does
not believe that arbitrary term limits on directors' service are appropriate,
nor does it believe that directors should expect to be routinely re-nominated on
an annual basis.
COMMUNICATIONS FROM STOCKHOLDERS
Stockholders may send communications to the Board (and to individual
directors) through the Secretary of the Company, Mr. Robert F. Wrobel. The
Secretary will forward to the directors all communications that, in his
judgment, are appropriate for consideration by the directors. The Secretary will
consider most commercial solicitations and other matters not relevant to the
Company's stockholders, its Board of Directors, or to the Company in general, to
be inappropriate for consideration by the directors. You may communicate
directly with the Chairman of the Company's Audit and Corporate Governance
Committee by sending an e-mail to auditchair@alpharma.com. You may communicate
with outside (non-management) directors, individually or as a group, by sending
an e-mail to outsidedirectors@alpharma.com.
15
AUDITORS
It is expected that the Audit and Corporate Governance Committee of the
Board of Directors will select PricewaterhouseCoopers LLP to audit the financial
statements of the Company for the fiscal year ending December 31, 2004.
PricewaterhouseCoopers LLP served as the Company's independent accountants in
2003. A representative of PricewaterhouseCoopers LLP will be present at the
Annual Meeting to respond to any appropriate questions, and he or she will be
given the opportunity to make a statement to the stockholders.
Pursuant to its charter (attached as Appendix I to this Proxy Statement and
also available on the Company's website at www.Alpharma.com by clicking on the
"About Alpharma" tab), the Audit and Corporate Governance Committee adopted its
"Audit & Non-Audit Services Pre-Approval Policy" in May 2003 to establish
procedures by which it pre-approves all audit and non-audit services provided by
its independent auditor. Through this policy, the Audit and Corporate Governance
Committee ensures that the audit and non-audit services provided by its
independent auditor are compatible with maintaining the independence of such
auditor and maximizing efficiency overall. The Company's policy sets forth a
list of those types of audit, audit-related and tax services that its
independent auditor is permitted to provide, and therefore have the general
pre-approval of the Audit and Corporate Governance Committee. If a type of
service has not received such "general" pre-approval, it will require "specific"
pre-approval by the Audit and Corporate Governance Committee, based on a review
of facts and circumstances, before such service may be provided by the
independent auditor. Any proposed services exceeding pre-approved cost levels or
budgeted amounts will also require specific pre-approval by the committee. The
policy also sets forth those non-audit services that the Company's independent
auditor is prohibited from providing, based upon legal requirements.
PRINCIPAL ACCOUNTING FEES AND SERVICES
The following table sets forth the aggregate fees billed or expected to be
billed by PricewaterhouseCoopers LLP, the Company's independent accountants for
fiscal year ending December 31, 2003, for professional services rendered in
connection with the Company's financial statements and reports for fiscal year
2003 and for other services rendered during fiscal year 2003 on behalf of the
Company and its subsidiaries, as well as all "out-of-pocket" costs incurred in
connection with these services, which have been or will be billed to the
Company:
2003 2002
---------- ----------
Audit Fees(1)............................................... 1,982,000 1,592,000
Audit-Related Fees(2)....................................... 389,000 151,000
Tax Fees(3)................................................. 477,000 440,000
All Other Fees.............................................. 0 0
Total(4).................................................... 2,848,000 2,183,000
---------------
(1) Audit Fees for fiscal years 2003 and 2002 were for professional services
rendered by the auditor for the audit of the Company's annual and quarterly
financial statements and services provided in connection with statutory and
regulatory filings or engagements.
(2) Audit-Related Fees for fiscal years 2003 and 2002 were for assurance and
related services rendered by the auditor that were reasonably related to the
performance of the audit or review of the Company's financial statements,
but not included in Audit Fees above. These services related primarily to
providing assistance with the Company's debt placement filings, auditing of
employee benefit plans, providing due diligence assistance and providing
advisory services relating to the Sarbanes-Oxley Act of 2002.
16
(3) Tax Fees for fiscal years 2003 and 2002 were for professional services
rendered by the auditor primarily for tax compliance, and also for tax
advice and tax planning.
(4) With the adoption of its Audit & Non-Audit Services Pre-Approval Policy in
May 2003, the Audit and Corporate Governance Committee commenced
pre-approval of fees and services included within the scope of its policy.
(See "Auditors" above for further information). During 2003, the Audit and
Corporate Governance Committee did not utilize the de minimus exception to
pre-approval offered by the Securities and Exchange Commission.
17
EXECUTIVE COMPENSATION
SUMMARY OF EXECUTIVE COMPENSATION
The following table (the "Summary Compensation Table") sets forth annual
and long-term compensation paid to, or accrued for, the executive officers named
below (the "named executive officers") by the Company or its subsidiaries during
2003, 2002 and 2001:
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
AWARDS
-------------------------
ANNUAL COMPENSATION RESTRICTED
-------------------------- OTHER ANNUAL STOCK ALL OTHER
SALARY BONUS COMPENSATION AWARD(S) OPTION/SARS COMPENSATION
NAME AND PRINCIPAL POSITION DURING 2003(1) YEAR ($) ($) ($)(2) ($)(3) (#)(4) ($)(5)
------------------------------------------ ---- -------- -------- ------------ ---------- ------------ ------------
Ingrid Wiik............................ 2003 754,609 213,000 * 965,000 100,000 38,702
President and Chief 2002 705,000 290,000 * -- 100,000 37,915
Executive Officer 2001 690,000 -- * -- 40,000 36,522
Carol A. Wrenn......................... 2003 368,250 215,000 * 674,188 -- 16,774
President, Animal Health 2002 325,000 80,000 * -- 69,668 7,960
2001 26,239 65,000 * -- 30,000 --
Matthew T. Farrell..................... 2003 467,308 115,000 * 216,353 75,000 18,747
Executive Vice President 2002 305,888 175,000 * -- 100,000 12,136
& Chief Financial Officer 2001 -- -- * -- -- --
Robert F. Wrobel....................... 2003 425,769 61,500 * -- -- 26,037
Executive Vice President, 2002 407,310 90,200 * -- 67,334 22,472
Chief Legal Officer 2001 400,000 -- * -- 20,000 23,403
& Secretary
Ronald N. Warner....................... 2003 300,000 100,000 60,600 -- -- 8,991
Senior Vice President, 2002 19,615 75,000 * -- 40,000 24
Compliance and Human 2001 -- -- * -- -- --
Pharmaceuticals Scientific Affairs
Michael J. Nestor...................... 2003 417,500 466,800 * -- -- 15,738
President, U.S. Branded 2002 450,000 80,000 * -- 65,000 9,401
Human Pharmaceuticals 2001 106,875 467,862 * -- 20,000 14,314
Kurt J. Orlofski....................... 2003 296,515 390,000 * -- 10,000 12,071
Senior Vice President, 2002 265,438 44,100 * -- 33,438 3,884
Human Pharmaceuticals 2001 228,958 441,934 * -- 10,000 --
Business Development
---------------
(1) Includes those persons who, in fiscal year 2003, were the Chief Executive
Officer or one of the four most highly compensated officers, as measured by
salary and bonus. Also includes two former executive officers, Mr. Nestor
and Mr. Orlofski, who would have been two of the four most highly
compensated executive officers if not for the fact that they were not
executive officers at the end of the fiscal year ended December 31, 2003. A
modest amount of Ms. Wiik's compensation is nondeductible compensation under
Section 162(m) of the Internal Revenue Code, as amended. Dr. Warner joined
the Company on December 4, 2002 as Vice President, Global Scientific
Affairs, and assumed his current position in February 2003. Mr. Nestor
served as Executive Vice President & President, U.S. Human Pharmaceuticals
Division until February 4, 2003, when he assumed the position listed above.
Mr. Nestor's employment with the Company terminated on March 12, 2004, and
his bonus includes a $366,800 bonus he received pursuant to his employment
agreement upon his 2-year anniversary with the Company in
18
September 2003. Mr. Orlofski's position ceased to be an executive officer
position in June 2003, and his employment with the Company terminated on
March 16, 2004. Mr. Orlofski's bonus was received pursuant to his employment
agreement, upon his 2-year anniversary with the Company in November 2003.
(2) Reflects Dr. Warner's 2003 Executive Allowance in the amount of $28,600 and
the value of re-location benefits he received from the Company in 2003 in
the amount of approximately $32,000.
(3) Reflects the dollar value on the date of grant of restricted stock issued
under the 2003 Omnibus Incentive Compensation Plan. On December 31, 2003,
the named executive officers held an aggregate of 94,735 shares of
restricted stock valued at $1,904,174, based upon the closing market price
of the Company's Class A Stock at the end of the fiscal year ended December
31, 2003. Ms. Wiik and Mr. Farrell's restricted stock will 100% vest on the
five-year anniversary of grant; Ms. Wrenn's restricted stock will vest at
the rate of 25%, 25% and 50% on July 15, 2004, 2005 and 2006, respectively,
and shall immediately vest in the event of a closing of a sale of all, or
substantially all, of the assets of the Company's Animal Health business.
All shares of restricted stock listed above are subject to accelerated
vesting upon the executive officer's death or disability (but not upon his
or her retirement). Quarterly dividends are paid on all of the restricted
stock holdings for the named executive officers.
(4) Reflects the number of options granted under the 1997 Incentive Stock Option
and Stock Appreciation Right Plan. The Company has not granted any stock
appreciation rights ("SARs") to any of the named executive officers in 2001,
2002 or 2003.
(5) Includes contributions by the Company to various employee profit-sharing,
stock purchase and savings plans. The amounts shown for 2003 include: (a)
matching contributions under the Employee Stock Purchase Plan (Ms.
Wiik -- $14,746, Ms. Wrenn -- $7,365, Mr. Farrell -- $9,346, Mr.
Wrobel -- $8,515, Dr. Warner -- $4,615, Mr. Nestor -- $6,263, and Mr.
Orlofski -- $5,871); (b) matching contributions to the Company's Savings
Plan (Ms. Wiik -- $16,385, Ms. Wrenn -- $8,151, Mr. Farrell -- $7,892, Mr.
Wrobel -- $11,165, Dr. Warner -- $2,492, Mr. Nestor -- $7,643, and Mr.
Orlofski -- $5,780); and (c) taxable life insurance premiums (Ms.
Wiik -- $7,571, Ms. Wrenn -- $1,258, Mr. Farrell -- $1,509, Mr.
Wrobel -- $6,357, Dr. Warner -- $1,884, Mr. Nestor -- $1,832, and Mr.
Orlofski -- $420).
* The incremental cost of the perquisites for each named executive in each of
2003, 2002, and 2001 (unless indicated otherwise) was not in excess of the
lesser of (a) $50,000 or (b) 10% of the amounts reported as Salary and Bonus
for such year in the Summary Compensation Table. In 2003, the Company
provided an Executive Allowance for each of its named executive officers,
with the exception of Ms. Wiik, in the amount of $28,600.
EMPLOYMENT AGREEMENTS
The named executive officers are each employed by the Company on an
"at-will" basis, and are parties to the following employment agreements:
Ms. Wiik is a party to an employment agreement with the Company dated
October 26, 2000. This agreement provides that the Company shall provide Ms.
Wiik with, or reimburse her for, the use of an automobile in the United States
and in Norway, plus reimbursement for garaging, insurance and auto maintenance.
Ms. Wiik also receives reimbursement for tax and financial services planning and
she participates in all of the employee benefits available to executives of the
Company (except as set forth below) including eligibility for participation in
the Company's Savings Plans, Employee Stock Purchase Plan, group health, dental,
life and accidental death and dismemberment insurance programs, short-term
disability program, tuition reimbursement program and the Severance and Change
in Control Plans. (See below for a description of the Severance and Change in
Control Plans.) Ms. Wiik does not receive an Executive Allowance separate from
the reimbursements set forth above. Ms. Wiik also does not participate in the
19
Company's Pension Plans (defined below). Upon retirement, Ms. Wiik is entitled
to receive a defined retirement benefit that is primarily based on a percentage
of her base salary for the twelve months prior to her retirement. (See
"Retirement Plans" for further information.)
Ms. Wrenn is a party to an employment agreement with the Company dated
October 19, 2001, which is supplemented by agreements dated July 15, 2003 and
February 11, 2004. Pursuant to these agreements, Ms. Wrenn received a sign-on
bonus of $65,000 in October 2001. Ms. Wrenn was also granted 33,525 shares of
restricted stock in July 2003 under the 2003 Omnibus Incentive Compensation
Plan. These restricted shares shall vest at the rate of 25%, 25% and 50% on each
of July 15, 2004, 2005 and 2006, respectively; however, the shares shall vest
immediately in the event of a closing of a sale of all, or substantially all, of
the assets of the Company's Animal Health business. Furthermore, if such sale
occurs at a purchase price of at least a specified minimum amount, Ms. Wrenn
shall receive a lump-sum payment of $100,000. Ms. Wrenn is required to provide
the Company with 90 days' notice in the event of her resignation. Ms. Wrenn
participates in all of the employee benefits available to executives of the
Company, including the receipt of an Executive Allowance in the amount of
$28,600 per year, and eligibility for participation in the Company's Pension
Plans, Savings Plans, Employee Stock Purchase Plan, group health, dental, life
and accidental death and dismemberment insurance programs, short-term disability
program, tuition reimbursement program and the Severance and Change in Control
Plans. (See below for a description of the Severance and Change in Control
Plans.) In addition, if Ms. Wrenn is terminated as a result of a sale of all, or
substantially all, of the assets of the Company's Animal Health business, she
shall receive her base salary and certain benefits for thirty months, subject to
certain tax limitations, even though such a sale would not otherwise qualify as
a "change in control" of the Company under the Change in Control Plan.
Mr. Farrell is a party to an employment agreement with the Company dated
April 12, 2002, which, upon joining the Company, provided him with 100,000
options under the Company's 1997 Incentive Stock Option and Stock Appreciation
Right Plan and a minimum bonus guarantee of $150,000 for the 2002 performance
year. The agreement also specifies that Mr. Farrell will be provided, in
addition to his normal annual stock option grants, an additional 20,000 options
in 2003 and 2004. Mr. Farrell participates in all of the employee benefits
available to executives of the Company, including the receipt of an Executive
Allowance in the amount of $28,600 per year, and eligibility for participation
in the Company's Pension Plans, Savings Plans, Employee Stock Purchase Plan,
group health, dental, life and accidental death and dismemberment insurance
programs, short-term disability program, tuition reimbursement program and the
Severance and Change in Control Plans. (See below for a description of the
Severance and Change in Control Plans.)
Mr. Wrobel is a party to an employment agreement with the Company dated
October 8, 1997, pursuant to which he received a sign-on bonus in October 1997
of $25,000 and 5,000 stock options under the Company's 1997 Incentive Stock
Option and Stock Appreciation Right Plan. Mr. Wrobel participates in all of the
employee benefits available to executives of the Company, including the receipt
of an Executive Allowance in the amount of $28,600 per year, and eligibility for
participation in the Company's Pension Plans, Savings Plans, Employee Stock
Purchase Plan, group health, dental, life and accidental death and dismemberment
insurance programs, short-term disability program, tuition reimbursement program
and the Severance and Change in Control Plans. (See below for a description of
the Severance and Change in Control Plans.)
Dr. Warner is a party to an employment agreement with the Company dated
November 6, 2002, which is supplemented by an agreement dated February 26, 2003.
These agreements provided him with a one-time sign-on bonus of $150,000, to be
paid 50% immediately upon his start date in December 2002 and 50% upon his
completion of 18 months of employment. Dr. Warner was also granted, upon his
start date, 40,000 stock options under the Company's 1997 Incentive Stock Option
and Stock Appreciation Right Plan. Dr. Warner participates in all of the
employee benefits available to executives of the Company, including the receipt
of an Executive Allowance in the amount of $28,600 per year, and eligibility for
participation in the Company's Pension Plans, Savings Plans, Employee Stock
Purchase Plan, group health, dental, life and accidental death
20
and dismemberment insurance programs, short-term disability program, tuition
reimbursement program and the Severance and Change in Control Plans. (See below
for a description of the Severance and Change in Control Plans.)
Mr. Nestor was a party to an employment agreement with the Company dated
September 17, 2001, which was supplemented by an employment agreement dated
February 26, 2003. Pursuant to these agreements, Mr. Nestor received a sign-on
bonus of $366,800 upon joining the Company in September 2001, and an equal bonus
amount in September 2003 upon his 2-year anniversary with the Company. These
bonuses were influenced by obligations owing to Mr. Nestor prior to the
Company's acquisition in 2001 of the F.H. Faulding business (Mr. Nestor's prior
employer). Mr. Nestor also received a grant of 20,000 stock options in September
2001 pursuant to the Company's 1997 Incentive Stock Option and Stock
Appreciation Right Plan. Mr. Nestor is a party to a separation agreement with
the Company dated March 12, 2004, pursuant to which his employment with the
Company terminated effective March 12, 2004. Subject to the terms of the
separation agreement, Mr. Nestor shall receive severance benefits in the form of
salary continuation for eighteen months, until September 12, 2005. In addition,
for the full eighteen months, Mr. Nestor shall receive a bonus award, at the
annual rate of 75% of his base salary in effect immediately preceding his
separation, and he shall continue to receive his executive allowance at the
annual rate of $28,600. Mr. Nestor is bound by certain restrictive covenants,
including confidentiality, non-disparagement and non-solicitation restrictions.
Mr. Orlofski was a party to an employment agreement with the Company dated
November 15, 2001, which was supplemented by an employment agreement dated
February 26, 2003. Pursuant to these agreements, Mr. Orlofski received a sign-on
bonus of $390,000 upon joining the Company in November 2001 and an equal bonus
amount in November 2003 upon his 2-year anniversary with the Company. These
bonuses were influenced by obligations owing to Mr. Orlofski prior to the
Company's acquisition in 2001 of the F.H. Faulding business (Mr. Orlofski's
prior employer). He also received a grant of 10,000 stock options in November
2001 and a grant of 10,000 stock options in February 2003, both pursuant to the
Company's 1997 Incentive Stock Option and Stock Appreciation Right Plan. Mr.
Orlofski is a party to a separation agreement with the Company dated January 20,
2004, as amended effective March 18, 2004, pursuant to which his employment with
the Company terminated effective March 16, 2004. Subject to the terms of the
separation agreement, Mr. Orlofski shall receive severance benefits in the form
of salary continuation for eighteen months, until September 17, 2005. In
addition, for the full eighteen months, Mr. Orlofski shall receive a bonus
award, at the annual rate of 50% of his base salary in effect immediately
preceding his separation, and he shall continue to receive his executive
allowance at the annual rate of $28,600. Mr. Orlofski is bound by certain
restrictive covenants, including confidentiality, non-disparagement and
non-solicitation restrictions.
SEVERANCE AND CHANGE IN CONTROL PLANS
Ms. Wiik, Ms. Wrenn, Messrs. Farrell and Wrobel and Dr. Warner receive
additional benefits pursuant to the Company's Severance Plan and Change in
Control Plan, both of which were adopted by the Board of Directors in 2002 and
amended in February and April 2004 (the "Severance Plan" and "Change In Control
Plan", respectively).
Pursuant to the terms of the Severance Plan, in the event Ms. Wiik is
terminated for any reason other than for cause, she is entitled to receive her
base salary, bonus and certain benefits for twenty-four months, subject to
certain tax limitations. Pursuant to the Change in Control Plan, if Ms. Wiik is
terminated as a result of a change in control of the Company, she is entitled to
receive her salary and certain benefits for thirty-six months, subject to
certain tax limitations, and her outstanding stock options shall immediately
vest. Furthermore, pursuant to the Change in Control Plan, upon certain
conditions following a "change in control",
21
Ms. Wiik's outstanding shares of Restricted Stock and Performance Units, granted
pursuant to the Company's 2003 Omnibus Incentive Compensation Plan, shall also
immediately vest.
Additionally, the Severance Plan provides that in the event that an
executive officer, including Ms. Wrenn, Messrs. Farrell and Wrobel and Dr.
Warner, is terminated for any reason other than for cause, such executive
officer is entitled to receive his or her base salary, bonus and certain
benefits for eighteen months, subject to certain tax limitations. The Change in
Control Plan provides that if such an executive officer is terminated as a
result of a change in control of the Company, such executive officer is entitled
to receive his or her base salary and certain benefits for thirty months,
subject to certain tax limitations, and his or her outstanding stock options
shall immediately vest. Furthermore, pursuant to the Change in Control Plan,
upon certain conditions following a "change in control", such executive
officer's outstanding shares of Restricted Stock and Performance Units, granted
pursuant to the Company's 2003 Omnibus Incentive Compensation Plan, shall also
immediately vest.
The Severance Plan also provides for payments to be made to certain other
key employees of the Company in the event of termination for any reason other
than for cause or as a result of a change in control of the Company. The Change
in Control Plan provides for payments to be made to such key employees upon a
change in control of the Company, in addition to the potential acceleration of
vesting of certain stock options, shares of Restricted Stock and Performance
Units granted pursuant to the Company's 2003 Omnibus Incentive Compensation
Plan.
PERFORMANCE CASH BONUS INCENTIVE PLAN
The Company has approved the goals underlying the Company's Executive Bonus
Plan which shall apply to the 2004 fiscal year. This Plan provides that all
executive officers and key employees performing services for the Company will be
entitled to receive a cash bonus within a target range, assuming achievement of
certain operating division and Company financial levels relative to respective
budgets, and certain individual performance factors. Higher cash bonuses than
the target level may be paid if budgeted financial levels and individual
performance expectations are exceeded, and it is possible that no cash bonuses
may be paid if such levels are not met. Ms. Wiik has a target bonus for 2004 of
100% of base salary. Ms. Wrenn, Messrs. Farrell and Wrobel and Dr. Warner have
target bonuses for 2004 of 50% of base salary.
OPTION GRANTS IN LAST FISCAL YEAR
The following table discloses, for the named executive officers, certain
information with respect to options granted during 2003. All grants are options
under the Company's 1997 Incentive Stock Option and Stock Appreciation Right
Plan.
NUMBER OF
SHARES OF % OF TOTAL POTENTIAL REALIZABLE VALUE
CLASS A SHARES AT ASSUMED ANNUAL RATES OF
COMMON STOCK GRANTED TO STOCK PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES OPTION TERM
OPTIONS IN FISCAL EXERCISE -----------------------------
NAME GRANTED YEAR PRICE EXPIRATION DATE(1) 5% 10%
---- ------------ ---------- -------- ------------------ ------------- -------------
Ingrid Wiik.......... 100,000 29.20% $16.46 February 27, 2013 $1,035,161 $2,623,300
Matthew T. Farrell... 75,000 21.90% $16.46 February 27, 2013 $ 776,370 $1,967,475
Kurt J. Orlofski..... 10,000 2.92% $16.46 February 27, 2013 $ 103,516 $ 262,330
---------------
(1) Options vest at the rate of 25% on each of the first four anniversaries of
the date of grant, and become 100% vested on February 27, 2007.
22
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table discloses, for the named executive officers, (a) the
number of shares acquired upon the exercise of options or with respect to which
such options were exercised, and the aggregate dollar value realized upon such
exercise, and (b) the number and value of unexercised options, in each case as
of December 31, 2003.
NUMBER OF SHARES VALUE OF UNEXERCISED
NUMBER OF UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT 12/31/03 OPTIONS AT 12/31/03(1)
ACQUIRED ON --------------------------- ---------------------------------
NAME EXERCISE VALUE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE(2) UNEXERCISABLE(2)
---- ----------- -------------- ----------- ------------- -------------- ----------------
Ingrid Wiik........... 0 $ 0 135,375 189,625 $ 91,316 $637,948
Carol A. Wrenn........ 10,834 $114,472 37,834 51,000 $102,655 $307,965
Matthew T. Farrell.... 0 $ 0 25,000 150,000 $101,250 $576,750
Robert F. Wrobel...... 0 $ 0 93,084 46,250 $226,559 $244,245
Ronald N. Warner...... 0 $ 0 10,000 30,000 $ 73,400 $220,200
Michael J. Nestor..... 8,000 $ 82,560 40,750 36,250 $142,480 $204,420
Kurt J. Orlofski...... 6,000 $ 65,520 16,688 30,750 $ 44,449 $162,770
---------------
(1) All grants are options under the Company's 1997 Incentive Stock Option and
Appreciation Right Plan.
(2) Value is based on the closing price of a share of Class A Stock on December
31, 2003 ($20.10) minus the exercise price.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers and directors, and persons who own more than
10% of a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership of the Company's stock on Forms 3, 4 and 5
with the Securities and Exchange Commission (the "Commission") and the New York
Stock Exchange. Executive officers, directors and greater than 10% beneficial
stockholders are required by Commission regulation to furnish the Company with
copies of all Forms 3, 4 and 5 that they file. The Company believes that during
the 2003 fiscal year, its executive officers, directors and greater than 10%
beneficial stockholders each complied with all Section 16(a) filing
requirements.
RETIREMENT PLANS
Ms. Wiik is not a participant in the Company's Pension Plan (as defined
below) pursuant to the terms of her employment agreement. (See "Employment
Agreements" for further information.) If Ms. Wiik retires after age 60 (or
before age 60 in limited circumstances), she is entitled to receive from the
Company an annual retirement benefit for each calendar year following retirement
equal to (i) 30% of her Base Compensation (defined below) plus (ii) inflationary
adjustments (which shall be the same as the adjustment for inflation provided in
the retirement plan for Alpharma AS for Norwegian employees) minus (iii) "Other
Retirement Benefits" (defined below). "Base Compensation" means her annual base
salary during the twelve month period ending on the last day of the month
preceding retirement or disability (provided that, if base salary shall have
changed during such twelve month period, Base Compensation shall mean the
average annual base salary weighted to reflect the number of days during which
each varying base salary was in effect). "Other Retirement Benefits" means
amounts Ms. Wiik is entitled to receive as retirement benefits under Norwegian
pension plans, but does not include (i) payments received under the Company
Savings Plans or the deferred compensation plan maintained by the Company, or
(ii) retirement benefits received under any
23
governmental program or under any insurance program funded by the Company or any
of its subsidiaries or their predecessors.
Ms. Wrenn, Messrs. Farrell and Wrobel and Dr. Warner are participants in
the Alpharma Inc. Pension Plan (a qualified defined benefit plan) (the "Pension
Plan"). Mr. Nestor's employment with the Company terminated before he vested in
his benefits. Mr. Orlofski is vested in his benefits. Under the Pension Plan,
both salaried and hourly employees are eligible for benefits. Participants are
entitled to receive their specified annual benefit, in the form of a life
annuity or, at the election of participants, its actuarial equivalent in certain
other forms, commencing within one month of their 65th birthday. The specified
annual benefit is equal to (x) the sum of (i) 0.8% of the participant's highest
five-year Final Average Compensation (as defined below) up to "covered
compensation" ($40,000 for 2003) plus (ii) 1.45% of the participant's highest
five-year Final Average Compensation in excess of "covered compensation",
multiplied by (y) the number of years of benefit service (up to a maximum of 30
years). The Pension Plan also provides for an early retirement benefit which is
equal to the specified annual benefit described above, reduced actuarially for
each year by which the early retirement date precedes the normal retirement
date.
The following table sets forth the approximate annual retirement benefit
under the Pension Plan based on years of service and Final Average Compensation.
PENSION PLAN TABLE
YEARS OF SERVICE
-----------------------------------------
REMUNERATION(1) 15 20 25 30(2)
--------------- -------- -------- -------- --------
$250,000 50,475 67,300 84,125 100,950
$275,000 55,913 74,550 93,188 111,825
$300,000 61,350 81,800 102,250 122,700
$325,000 66,788 89,050 111,313 133,575
$350,000 72,225 96,300 120,375 144,450
$375,000 77,663 103,550 129,438 155,325
$400,000 83,100 110,800 138,500 166,200
$425,000 88,538 118,050 147,563 177,075
$450,000 93,975 125,300 156,625 187,950
$475,000 99,413 132,550 165,688 198,825
$500,000 104,850 139,800 174,750 209,700
$525,000 110,288 147,050 183,813 220,575
$550,000 115,725 154,300 192,875 231,450
$575,000 121,163 161,550 201,938 242,325
$600,000 126,600 168,800 211,000 253,200
$625,000 132,038 176,050 220,063 264,075
$650,000 137,475 183,300 229,125 274,950
$675,000 142,913 190,550 238,188 285,825
$700,000 148,350 197,800 247,250 296,700
---------------
(1) Final average compensation. Current Federal pension law limits average
annual compensation considered for benefit purposes to $200,000 for 2002 and
2003.
(2) The Plan provides that there is a maximum of 30 years of service for
computation of benefits.
For purposes of the Pension Plan, an employee's "Final Average
Compensation" generally is his or her regular cash salary (excluding bonuses)
for the five consecutive years of service in which his or her compensation was
highest during the ten years of service immediately preceding his or her
retirement. In 2003, the amounts of the compensation of Ms. Wrenn, Messrs.
Farrell and Wrobel, Dr. Warner and Messrs.
24
Nestor and Orlofski would have been $346,625 $386,598, $367,203, $300,000,
$433,750 and $227,678, respectively, under the Pension Plan if there were no
limitations under Federal pension law. However, due to the Federal pension law,
the respective amounts of compensation of Ms. Wrenn, Messrs. Farrell and Wrobel,
Dr. Warner and Messrs. Nestor and Orlofski under the Pension Plan in 2003 were
limited to $200,000. Pursuant to the Company's Supplemental Pension Plan, Ms.
Wrenn, Messrs. Farrell, Wrobel and Orlofski and Dr. Warner are each entitled to
receive a supplemental benefit, calculated above such $200,000 Federal limit,
based upon a maximum base compensation of $235,000 per annum. The years of
service credited under the Pension Plan as of December 31, 2003 to the named
executive officers were as follows: Ms. Wrenn -- 2 years, Mr. Farrell -- 2
years, Mr. Wrobel -- 6 years, Dr. Warner -- 1 year, Mr. Nestor -- 3 years, and
Mr. Orlofski -- 8 years.
Under the Pension Plan, in the event of the termination of employment prior
to retirement, part of the employee's benefit may be forfeited. A retirement
benefit, payable in the form of a life annuity following the employee's 55th
birthday, is equal to an accrued percentage of the normal retirement benefit,
actuarially reduced to reflect commencement of payments prior to the normal
retirement date. As to employees hired on or after January 1, 1989, pension
benefits under the Pension Plan vest after five years of credited service with
the Company. Pension benefits under the Pension Plan of employees hired prior to
January 1, 1989 are currently 100% vested.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Company's Board of Directors has
consisted of Mr. Peter G. Tombros, as Chairman, Mr. William I. Jacobs and Ms.
Jill Kanin-Lovers, since March 2003. Messrs. Einar W. Sissener, I. Roy Cohen and
Glen E. Hess each resigned from the Compensation Committee in March 2003.
Furthermore, the Compensation Committee assumed the duties of the Stock Option
Committee in May 2003.
Pursuant to its charter, the Compensation Committee is responsible for
reviewing the performance and total compensation of the Company's Chief
Executive Officer (the "CEO"), reviewing and approving the compensation and
benefits of other executive officers and highly paid personnel, reviewing the
general compensation and employment benefits policies for management personnel,
reviewing management development and succession matters, and approving any
material new benefit plan or material amendment to such plan.
In general, the Compensation Committee has sought to meet the following
objectives by making compensation decisions and recommendations for executive
officers and other key personnel in a manner which: (1) provides overall
compensation that is competitive in its ability to attract and retain highly
qualified personnel; (2) relates compensation to the degree to which the Company
(and/or the specific business unit in which an executive has responsibility)
attains its annual financial performance targets; (3) rewards excellent
individual performance and teamwork, with special consideration for specific
projects completed or adverse conditions overcome; and (4) provides an incentive
to contribute to the long-term growth of the Company's businesses and
stockholder value. In making compensation recommendations, the Committee is
mindful of Section 162(m) of the Internal Revenue Code of 1986, as amended, and
consults with tax advisors as necessary to minimize any nondeductible
compensation under Section 162(m).
During 2003, the Compensation Committee (1) developed and received
stockholder approval for the Alpharma Inc. 2003 Omnibus Incentive Compensation
Plan (the "Omnibus Plan"); (2) instituted a more rigorous methodology for
analyzing and benchmarking executive pay; (3) developed under the Omnibus Plan a
new, more contemporary and stockholder-friendly Long-Term Incentive Plan (LTIP)
composed of a more limited stock option component, use of restricted stock and a
multi-year cash performance plan based on relative total stockholder return and
the achievement of a minimum free cash flow target; (4) approved compensation
arrangements for various new executives; and (5) continued efforts to implement
a new
25
compensation philosophy that places more emphasis on Company and individual
performance and decreases reliance on salary and other fixed elements of pay.
In March 2003, the Compensation Committee set various company-wide and
divisional financial targets for 2003 under the Company's Executive Bonus Plan
(applicable to employees at the Vice President level and above) and Performance
Incentive Plan (applicable to employees below the Vice President level). In
December 2003, the Board of Directors amended the Executive Bonus Plan to
reflect the integration of the Company's businesses by emphasizing for 2004 and
beyond, overall Company performance in the calculation of bonus payments.
In February 2003, the Compensation Committee approved a grant to the CEO of
100,000 options, in partial recognition of past shortfalls in terms of
competitive compensation. These options have an exercise price equal to the
market price of the Company's Class A Stock on the date of grant, vest over four
years, and have a term of ten years.
In May 2003, the Compensation Committee acted to award 50,000 shares of
Restricted Stock to the CEO to fully compensate her for past shortfalls in
equity-based compensation. These shares of Restricted Stock vest after five
years of continued service (and vest immediately upon death, disability or
retirement). This use of Restricted Stock was determined to be less dilutive and
more effective in promoting retention than stock options.
In March 2004, the Compensation Committee reviewed the CEO's performance
during 2003 and recommended several compensation actions with respect to Ms.
Wiik. The Committee's review of Ms. Wiik's performance in 2003 focused on
Company financial and operating performance, strategic planning, internal and
external leadership, management succession, and her relationship with the Board
of Directors. The Committee discussed the significant developments affecting the
Company, the strategic value of restructuring the Company, increased cash flow
and debt repayment under the deleveraging initiative, and the CEO's energy and
work habits. In recommending compensation for the CEO, the Committee was guided
by her employment contract and the performance matters discussed by the
Committee, as well as the Company's overall compensation philosophy and
competitive data. For 2004, the Committee determined not to increase Ms. Wiik's
salary, in line with the ongoing effort to rebalance executive pay consistent
with the Company's compensation philosophy. The Committee also acted to pay Ms.
Wiik a bonus of $213,000 for 2003, based on the calculated performance
achievement applicable to corporate employees generally. Ms. Wiik's bonus for
2003 was roughly 30% of her target for 2003, reflects the Committee's assessment
of overall achievement of the Company's and the CEO's objectives, and is
consistent with bonuses received by Alpharma corporate executives generally.
Also in March 2004, the CEO received awards under the new LTIP consisting
of 75,000 stock options, 45,000 shares of restricted stock, and 10,000
performance units. The options have an exercise price equal to the market price
of the Company's common stock on the date of grant, vest over four years and
have a term of ten years. The shares of restricted stock vest on the fifth
anniversary of the date of grant (and shall vest immediately upon Ms. Wiik's
death, disability or retirement). The performance units have a face value of
$100 per unit at target performance, as measured by relative total stockholder
return over a 3-year performance period (with pro-rated vesting upon Ms. Wiik's
death, disability or retirement), and the achievement of a minimum free cash
flow target.
By the Compensation Committee:
Peter G. Tombros (Chairman)
Jill Kanin-Lovers
William I. Jacobs
26
AUDIT AND CORPORATE GOVERNANCE COMMITTEE REPORT
The Audit and Corporate Governance Committee reviews and makes
recommendations to the Board of Directors regarding internal accounting and
financial controls and accounting principles, auditing practices, the engagement
of independent public accountants, the scope of the audit to be undertaken by
such accountants, all transactions with the Company's affiliates, internal
auditing, and corporate governance activities, including the internal process
for monitoring compliance with the Company's Business Conduct Guidelines and
Corporate Governance Principles. (See "Committees of the Board" for further
information.) Each of the Audit and Corporate Governance Committee members
satisfies the definition of an independent director as established in the New
York Stock Exchange listing standards on corporate governance, as approved by
the Securities and Exchange Commission. The Board amended and restated its
written charter for the Audit and Corporate Governance Committee effective
December 2, 2003 and such charter is attached to this Proxy Statement as
Appendix I (and is also available on the Company's website at www.Alpharma.com
by clicking on the "About Alpharma" tab). The Company operates with a January 1
to December 31 fiscal year. The Audit and Corporate Governance Committee met 14
times during the 2003 fiscal year.
The Audit and Corporate Governance Committee has reviewed the Company's
audited consolidated financial statements and discussed such statements with
management. The Audit and Corporate Governance Committee has discussed with
PricewaterhouseCoopers LLP, the Company's independent accountants, during the
2003 fiscal year, the matters required to be discussed by Statement of Auditing
Standards No. 61 (Codification of Statements on Auditing Standards AU Section
380), as amended.
PricewaterhouseCoopers LLP also provided the Audit and Corporate Governance
Committee with the written disclosures and a letter required by Independence
Standards Board Standard No. 1 (Independence Standards Board Standard No. 1,
Independence Discussions with Audit and Corporate Governance Committees), and
the Audit and Corporate Governance Committee discussed with the independent
accountants that firm's independence. The Committee considered various non-audit
services provided by the independent accountants and the fees and costs billed
and expected to be billed by the independent accountants for those services (as
shown on page 16 of this Proxy Statement). The Committee has fully considered
whether those services provided by the independent accountants are compatible
with maintaining auditor independence.
Based upon the review and discussions noted above, the Audit and Corporate
Governance Committee recommended to the Board of Directors that the Company's
audited consolidated financial statements be included in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 2003, and be filed
with the U.S. Securities and Exchange Commission.
This report of the Audit and Corporate Governance Committee shall not be
deemed incorporated by reference into any filing under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended, except to
the extent that the Company specifically incorporates this information by
reference.
By the Audit and Corporate Governance
Committee:
William I. Jacobs (Chairman)
Peter G. Tombros
Farah M. Walters
27
PERFORMANCE GRAPH
The following graph compares the Company's cumulative total Stockholder
return during the last five calendar years with the composite of the Media
General Financial Services Index for Drug Manufacturers -- Other, Drug-Generic
and Drug Delivery Industry Groups (which index includes 150 corporations that
describe themselves as drug manufacturers and are publicly traded) and The New
York Stock Exchange Market Index. The graph assumes $100 invested on January 1,
1999 in the Company's Class A Stock and $100 invested at that time in each of
the selected indices. The comparison assumes that all dividends are reinvested.
ALPHARMA INC.
5-YEAR CUMULATIVE RETURNS
VERSUS PEER GROUP AND NYSE INDEX
[LINE GRAPH]
FISCAL YEAR ENDED
---------------------------------------------------------------------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 29, DECEMBER 31, DECEMBER 31, DECEMBER 31,
COMPANY, INDEX, MARKET 1998 1999 2000 2001 2002 2003
---------------------- ------------ ------------ ------------ ------------ ------------ ------------
Alpharma Inc. .......... 100.00 87.52 125.39 76.07 34.71 59.19
Peer Group Index........ 100.00 122.06 200.21 186.41 122.77 173.63
NYSE Market Index....... 100.00 109.50 112.11 102.12 83.42 108.07
28
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Sissener is Chairman of the Board of A. L. Industrier ASA, commonly
known as A. L. Industrier. Together with certain family-controlled private
holding companies and certain of his relatives, Mr. Sissener beneficially owns
approximately 51% of A. L. Industrier's outstanding ordinary shares entitled to
vote and, accordingly, may be deemed a controlling person of A. L. Industrier.
In January 2003, pursuant to a sale agreement, the Company divested its
vitamin business to Nopal AS, a subsidiary of A. L. Industrier ("Nopal"), for a
purchase price of NOK 23.0 million, or approximately $3.3 million. The Company
also sold its inventory of finished, packaged vitamin products and bulk tablets
to Nopal. In connection with this sale, the Company entered into two
distribution agreements with Nopal pursuant to which Nopal will continue to sell
the Company's medical plaster and tape products to the grocery sector and the
Company will sell Nopal's acquired vitamin products to the pharmacy and health
care sectors as well as a supply agreement pursuant to which the Company will
manufacture one, and package substantially all, of Nopal's vitamin products. A.
L. Industrier sold its interest in Nopal on June 11, 2003. Prior to this sale,
substantially pursuant to the contractual arrangements set forth above, the
Company paid Nopal $9,000, and Nopal paid the Company $506,000. These
transactions were made on an arm's length basis, on terms as favorable as could
have been obtained from unrelated third parties, and received the required pre-
approval of the Company's Audit and Corporate Governance Committee.
A. L. Industrier and Alpharma AS, one of the Company's Norwegian
subsidiaries, are parties to two leases pursuant to which A. L. Industrier
leases to Alpharma AS the land and facility in Oslo, Norway where Alpharma AS'
principal administrative offices and fermentation plant for its bulk antibiotics
are located, and adjoining land for a parking facility for employees. Both
leases have terms ending in 2014. The terms are renewable, at the option of
Alpharma AS, for up to four additional consecutive five year terms. Basic rent
during the initial terms are $1.00 per year under the office lease and NOK
2,400,000, approximately $340,000, per year under the parking facility lease
and, during any renewal term thereafter, basic rent under the office lease will
be the then prevailing fair rental value of the premises and basic rent for the
parking facility will remain at NOK 2,400,000. In addition to basic rent,
Alpharma AS pays documented expenses of ownership and operation of such
facilities, such as taxes and maintenance expenses. Alpharma AS has the right to
terminate the office lease at any time during its term upon twelve months'
written notice to A. L. Industrier and the parking lease at any time during its
term upon twenty-four months' written notice to A. L. Industrier. These leases
were entered into on an arm's length basis, and on terms as favorable as could
have been obtained from unrelated third parties.
Alpharma AS is a party to an administrative services agreement with A. L.
Industrier, dated October 3, 1994, pursuant to which Alpharma AS provided
certain administrative services to A. L. Industrier. Such services were provided
on a full cost basis, except that such full cost basis billing failed to meet a
prescribed minimum level and therefore A. L. Industrier paid Alpharma AS a
minimum fee for services rendered during calendar year 2003 equal to NOK
3,000,000, or approximately $423,000. This agreement expired in January 1997 and
has been automatically extended for successive one year terms. It is expected
that this agreement will be superceded by a new administrative services
agreement, effective as of January 1, 2004. Under this new agreement, A. L.
Industrier shall pay Alpharma a fixed yearly fee of NOK 1,000,000, or
approximately $146,000, for certain, more limited, administrative services. Both
of the administrative service agreements described above were/shall be made on
an arm's length basis, and were/are on terms as favorable as could have been
obtained from unrelated third parties.
29
All transactions with A. L. Industrier are subject to review by, and in
some circumstances prior approval of, the Company's Audit and Corporate
Governance Committee. (See "Board of Directors and Committees -- Committees of
the Board" above.)
CERTAIN OTHER TRANSACTIONS AND RELATIONSHIPS
Mr. Einar W. Sissener, who as of June 30, 1999, ceased acting as President
and Chief Executive Officer of the Company, is party to an agreement with the
Company, effective July 1, 1999, pursuant to which he receives an annual fee of
$150,000 for serving as Chairman of the Board of Directors of the Company (and
director of certain of the Company's subsidiaries). This annual fee was
increased to $200,000 in March 2004 by action of the Company's Board. Mr.
Sissener is reimbursed for expenses while in the New York metropolitan area and
receives other fringe benefits substantially equal to those received by
executive officers of the Company, in the form of automobile reimbursements and
tax and financial planning and tax preparation reimbursements. In addition, Mr.
Sissener has agreed to provide consulting services to the Company's management
for a ten year term for $12,000 per month plus payment of reasonable expenses
incurred in connection with the performance of such consulting services. The
consulting fee is adjusted annually for inflation. In addition to the amounts
described above, Mr. Sissener is entitled to all benefits available under
applicable plans and policies in Norway arising from retirement from employment
by Alpharma AS and is entitled to receive from Alpharma AS an amount which, when
added to amounts he is entitled to receive under Norwegian Social Security,
Alpharma AS's pension plan and his individual retirement benefits, equals
900,000 NOK (approximately $132,000). Such latter amount is estimated at 344,000
NOK (approximately $50,000).
Mr. I. Roy Cohen, who as of January 15, 1991 retired as President and Chief
Executive Officer of the Company and who served as a director of the Company
from 1975 to May 2003, receives from the Company an honorarium in the amount of
$12,500 per year, payable on December 1(st) of each year from December 2003
through December 2007.
Mr. Glen E. Hess' professional corporation is a partner of Kirkland &
Ellis, a law firm that, since 1978, has performed and continues to perform
significant legal services for the Company. In addition, Mr. Hess received, in
2003, a distribution from the Company's Amended and Restated Deferred
Compensation Plan, dated October 14, 1994 (the "Deferred Compensation Plan"), in
an amount of approximately $200,000. This distribution represented previous
years' payments of directors' cash compensation to Mr. Hess that he had deferred
pursuant to the plan. Mr. Hess shall receive additional distributions from the
plan in similar amounts in 2004 and 2005.
Mr. Peter G. Tombros received, in January 2004, a distribution from the
Company's Deferred Compensation Plan in an amount of approximately $432,000.
This distribution represented a total distribution of previous years' payments
of directors' cash compensation to Mr. Tombros that he had deferred pursuant to
the plan.
Mr. Robert Thong is Managing Director of Phizz Rx Limited, a management
consulting company located in the United Kingdom. In April and May of 2003, the
Company paid consulting fees and reimbursed expenses of $79,200 to Phizz Rx
Limited for management and strategy development process consulting services.
30
STOCKHOLDERS' PROPOSALS FOR THE 2005 ANNUAL MEETING
In order to be considered for inclusion in the proxy statement for the 2005
Annual Meeting of Stockholders, Stockholder proposals must be submitted to the
Company on or before December 17, 2004. Such proposals will need to comply with
Securities and Exchange regulations regarding the inclusion of Stockholder
proposals in Company-sponsored proxy materials. Similarly, in order for a
Stockholder proposal to be raised from the floor during next year's annual
meeting, written notice must be received by the Company no later than December
17, 2004.
OTHER BUSINESS
As of the date hereof, the foregoing is the only business which management
intends to present, or is aware that others will present, at the Annual Meeting.
If any other proper business should be presented at the Annual Meeting, the
proxies will be voted in respect thereof in accordance with the discretion and
judgment of the person or persons voting the proxies.
By order of the Board of Directors,
ROBERT F. WROBEL
Secretary
ALPHARMA INC.
YOUR VOTE IS IMPORTANT
PLEASE PROMPTLY COMPLETE AND SIGN THE ENCLOSED
FORM OF PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE
31
APPENDIX I
ALPHARMA INC.
AUDIT AND CORPORATE GOVERNANCE COMMITTEE CHARTER
ORGANIZATION
This charter governs the operations of the Audit and Corporate Governance
Committee. The committee shall be nominated by the Chairman of the Board and
appointed by the Board of Directors and shall comprise at least three directors,
each of whom are independent directors as that term is defined in the Alpharma
Corporate Governance Principles. All committee members shall be financially
literate, or shall become financially literate within a reasonable period of
time after appointment to the committee, and at least one member shall have
accounting or related financial management expertise necessary to be considered
a "financial expert" under the rules of the Securities and Exchange Commission.
STATEMENT OF POLICY
The committee shall provide assistance to the Board of Directors in
fulfilling the Board's oversight responsibility to the stockholders, potential
stockholders, the investment community, and others relating to the Company's
financial statements and the financial reporting process, the systems of
internal accounting and financial controls, the annual independent audit of the
Company's financial statements, and Corporate Governance Principles. In so
doing, it is the responsibility of the committee to maintain free and open
communications between the committee, independent auditors, and management of
the Company.
In discharging its oversight role, the committee is empowered to
investigate any matter brought to its attention with full access to all books,
records, facilities, and personnel of the Company and the power to retain
outside counsel, or other experts for this purpose. The Company shall provide
funding necessary for the committee to retain outside counsel and experts.
The committee should take the appropriate actions to set the overall
corporate "tone" for quality financial reporting, sound business risk and
corporate governance practices, and ethical behavior.
RESPONSIBILITIES AND PROCESSES
The following is a general expression of the responsibilities and processes
to be employed by the committee. However, the committee believes its policies
and procedures should remain flexible in carrying out these responsibilities, in
order to react to changing conditions and circumstances.
THE FINANCIAL REPORTING PROCESS
It is the responsibility of the committee to oversee the Company's
financial reporting process on behalf of the Board and report the results of its
activities to the Board. Management is responsible for preparing the Company's
financial statements, and the independent auditors are responsible for auditing
those financial statements.
I-1
The following shall be the principal recurring processes of the committee
in carrying out its oversight responsibilities:
- The committee shall have a clear understanding with management and the
independent auditors that the independent auditors are directly
accountable to the committee, as representatives of the Company's
stockholders. The committee shall be responsible for the oversight of
work of the independent auditors, including the resolution of any
disagreement between management and the auditors and shall have the
direct authority and to appoint, approve the compensation for and, where
appropriate, replace the independent auditors. The Company shall provide
funding to the committee for the purpose of engaging and compensating the
independent auditors. The committee shall discuss with the auditors their
independence from management and the Company and the matters included in
the written disclosures required by the Independence Standards Board.
Annually, the committee shall review and recommend to the Board the
selection of the Company's independent auditors.
- The committee shall discuss with the independent auditors the overall
scope and plans for their respective audits, including the level of fees
paid. Also, the committee shall discuss with management and the
independent auditors the adequacy and effectiveness of the accounting and
financial controls, including the Company's system to monitor and manage
business conduct guidelines. Further the committee shall meet separately
with the independent auditors, with and without management present, to
discuss the results of their examinations.
- The committee shall review the year-end financial statements and Form
10-K with management and the independent auditors and recommend the
signing of the Form 10-K by the entire Board of Directors. Also, the
committee shall discuss the results of the review and any other matters
required to be communicated to the committee by the independent auditors
under generally accepted auditing standards.
- The committee shall review the interim financial statements with
management and the independent auditors prior to the filing of the
Company's Quarterly Report on Form 10-Q. Also, the committee shall
discuss the results of the quarterly review and any other matters
required to be communicated to the committee by the independent auditors
under generally accepted auditing standards. The chair of the committee
may represent the entire committee for the purposes of this review.
- The Company's Board of Directors has adopted a resolution requiring the
committee to review transactions between the Company and A. L. Industrier
(or their respective subsidiaries) involving more than $50,000 and to
report to the Company's Board of Directors regarding whether such
transactions are fair to the Company. Such resolution also requires prior
approval of the committee for any transaction with A. L. Industrier which
involves $500,000 or more, except that prior approval of the committee is
required for any sale or transfer of assets other than inventory sold or
transferred in the ordinary course of business.
- The Committee shall adopt procedures by which it will pre-approve all
audit and non-audit services provided by the independent auditors.
I-2
CORPORATE GOVERNANCE
It is the responsibility of the committee to oversee corporate governance
issues relating to the Company. The following shall be the principal
responsibilities of the committee in carrying out these oversight
responsibilities:
- To develop and recommend to the Board of Directors for its approval a set
of Corporate Governance Principles. The committee shall review the
principles on an annual basis, or more frequently if appropriate, and
recommend changes as necessary.
- The development of corporate policies and procedures necessary or
appropriate to carry out the intent of the Corporate Governance
Principles.
- To develop and institute a procedure for the general oversight of the
Company's Business Conduct Guidelines and the receipt, retention and
treatment of complaints received by the Company concerning its Business
Conduct Guidelines, accounting, internal accounting controls or auditing
matters, including a procedure allowing employees to make such complaints
on an anonymous basis.
- To review and react to any complaints or other matters relating to
corporate governance that come to its attention and to make appropriate
reports to the Board of Directors.
COMMITTEE OPERATING PROCESSES
MEETINGS
Meetings may be called by the Chairman of the Audit and Corporate
Governance Committee by oral or written notice, and communicated to each member
not less than twenty-four hours before such meeting.
Action may be taken without a meeting if all members of the committee
consent to such action and confirm such unanimous consent in writing either
prior or subsequent to the taking of such action.
REPORTS
The Audit and Corporate Governance Committee shall report to the Board at
its next regularly scheduled meeting on any material actions taken by the
committee. Minutes of all meetings of the committee shall be kept in the
ordinary course of business and shall be open for inspection at all times upon
the request of any member of the Board of Directors.
QUORUM
A majority of the committee shall constitute a quorum for the transaction
of business and an affirmative vote of the majority of the members who attend
the meeting shall be required for approval of any action.
USE OF THIRD PARTY PROVIDERS
The committee shall have the authority to use third party service providers
in executing its duties. The committee shall have the sole authority to approve,
retain, terminate and approve the fees and other retention terms of any such
third party service providers.
I-3
[ALPHARMA LOGO]
Dear Stockholder: April 20, 2004
You are cordially invited to attend the Annual Meeting of Stockholders to be
held at 9:00 a.m. on Tuesday, May 25, 2004 at The Hilton Fort Lee, 2117 Route 4
East, Fort Lee, New Jersey. Detailed information is contained in the
accompanying Notice of Annual Meeting and Proxy Statement.
Regardless of whether you plan to attend the meeting, it is important that your
shares be voted. Accordingly, we ask that you sign and return your proxy as
soon as possible in the envelope provided. If you do plan to attend the
meeting, please mark the appropriate box on the proxy.
Best regards,
/s/ Robert F. Wrobel
Robert F. Wrobel
Secretary
[3480-ALPHARMA] [FILE NAME: ZALP52.ELX]
[VERSION (3)] [04/12/04] [orig. 04/08/04]
DETACH HERE ZALP52
[ALPHARMA LOGO]
PROXY
ALPHARMA INC.
ONE EXECUTIVE DRIVE, FORT LEE, NEW JERSEY 07024
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS ON MAY 25, 2004
Matthew T. Farrell, Executive Vice President and Chief Financial Officer
and Robert F. Wrobel, Executive Vice President, Chief Legal Officer and
Secretary, or either one of them, with full power or substitution, are hereby
authorized to vote the shares of Class A Common Stock of Alpharma Inc. (the
"Company"), which the undersigned is entitled to vote at the 2004 Annual
Meeting of Stockholders to be held at The Hilton Fort Lee, 2117 Route 4 East,
Fort Lee, New Jersey on Tuesday, May 25, 2004 at 9:00 a.m., local time, and at
all adjournments thereof, as follows on the reverse side.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
NOMINEES SET FORTH IN ITEM 1. SHARES REPRESENTED BY THIS PROXY, WHEN PROPERLY
EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED STOCKHOLDER
AND IN THE DISCRETION OF THE PROXY HOLDERS AS TO ANY OTHER MATTER THAT MAY
PROPERLY COME BEFORE THE ANNUAL MEETING OF STOCKHOLDERS OR, IF NO DIRECTION IS
INDICATED, WILL BE VOTED FOR THE NOMINEES SET FORTH IN ITEM 1, AND IN THE
DISCRETION OF THE PROXY HOLDERS AS TO ANY OTHER MATTER THAT MAY PROPERLY COME
BEFORE THE ANNUAL MEETING OF STOCKHOLDERS.
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
ALPHARMA INC.
C/O EQUISERVE TRUST COMPANY, N.A.
P.O. BOX 8694
EDISON, NJ 08818-8694
YOUR VOTE IS IMPORTANT. PLEASE VOTE IMMEDIATELY.
VOTE-BY-INTERNET [Computer VOTE-BY-TELEPHONE [Telephone
LOG ON TO THE INTERNET AND GO TO logo] OR CALL TOLL-FREE logo]
HTTP://WWW.EPROXYVOTE.COM/ALO 1-877-PRX-VOTE
(1-877-779-8683)
IF YOU VOTE OVER THE INTERNET OR BY TELEPHONE, PLEASE DO NOT MAIL YOUR CARD.
[3480-ALPHARMA] [FILE NAME:ZALP51.ELX] [VERSION (1)] [04/08/04] [orig. 04/08/04]
DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL ZALP51
3480
PLEASE MARK
[X] VOTES AS IN
THIS EXAMPLE.
1. ELECTION OF CLASS A DIRECTORS
NOMINEES: (01) William I. Jacobs, 2. As such persons may, in their
(02) Peter G. Tombros discretion, determine upon
and (03) Farah M. Walters such matters as may come
before the meeting.
FOR WITHHELD
ALL [ ] [ ] FROM ALL
NOMINEES NOMINEES
[ ]
------------------------------------------
For all nominee(s) except as written above
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
PLEASE MARK, SIGN AND MAIL THIS PROXY PROMPTLY IN
THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE
IF MAILED IN THE UNITED STATES.
NOTE: The signature should correspond exactly
with the name of the stockholder as it appears
hereon. Where stock is registered in Joint
Tenancy, all tenants should sign. Persons
signing as Executors, Administrators, Trustees,
etc. should so indicate.
Signature: Date: Signature: Date:
------------------ ------ ------------------ -----