Section 240.14a-101 Schedule 14A.
Information required in proxy statement.
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
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240.14a-12
Becton, Dickinson and Company
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[BECTON, DICKINSON LOGO]
BECTON, DICKINSON AND COMPANY
1 Becton Drive
Franklin Lakes, New Jersey 07417-1880
www.bd.com
December 26, 2002
Dear Fellow Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of
Becton, Dickinson and Company to be held at 2:00 P.M. on Tuesday, February 11,
2003 at The Woodcliff Lake Hilton, 200 Tice Boulevard, Woodcliff Lake, New
Jersey. You will find directions to the meeting on the back cover of the
accompanying Proxy Statement.
The Notice of Meeting and Proxy Statement describe the matters to be acted
upon at the meeting. We will also report on matters of interest to BD
shareholders.
Your vote is important. Whether or not you plan to attend the Annual Meeting
in person, we encourage you to vote so that your shares will be represented and
voted at the meeting. You may vote on the internet or by telephone, or by
completing and mailing the enclosed proxy/voting instruction card in the return
envelope that has been provided. If you do not vote by internet, telephone or
mail, you still may attend the Annual Meeting and vote in person.
Thank you for your continued support of BD.
Sincerely,
/s/ Edward J. Ludwig
_______________________________
Edward J. Ludwig
Chairman, President and
Chief Executive Officer
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
BECTON, DICKINSON AND COMPANY
1 BECTON DRIVE
FRANKLIN LAKES, NEW JERSEY 07417-1880
The Annual Meeting of Shareholders of BECTON, DICKINSON AND COMPANY will be
held at 2:00 P.M., local time, on Tuesday, February 11, 2003 at The Woodcliff
Lake Hilton, 200 Tice Boulevard, Woodcliff Lake, New Jersey, to consider and act
upon the following proposals:
1. The election of five directors;
2. The approval of the selection of independent auditors;
3. A shareholder proposal relating to cumulative voting; and
4. Such other business as may properly come before the meeting.
Shares represented by properly executed proxies that are hereby solicited by
the Board of Directors of Becton, Dickinson and Company will be voted in
accordance with instructions specified therein. Shares represented by proxies
that are not limited to the contrary will be voted in favor of the election as
directors of the persons nominated in the accompanying Proxy Statement, for
proposal 2, and against proposal 3.
Only shareholders of record at the close of business on December 16, 2002
will be entitled to vote at this meeting.
By order of the Board of Directors,
/s/ Bridget M. Healy
__________________________________________
Bridget M. Healy
Vice President, General Counsel and
Secretary
Dated: December 26, 2002
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AND VOTED WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING. YOU MAY REGISTER YOUR VOTE ON THE INTERNET OR BY
TELEPHONE BY FOLLOWING THE INSTRUCTIONS ON YOUR PROXY/VOTING INSTRUCTION CARD,
OR BY PROMPTLY RETURNING YOUR SIGNED AND DATED PROXY/VOTING INSTRUCTION CARD IN
THE ENCLOSED ENVELOPE.
PROXY STATEMENT
-------------------
2003 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 11, 2003
-------------------
BECTON, DICKINSON AND COMPANY
1 BECTON DRIVE
FRANKLIN LAKES, NEW JERSEY 07417-1880
-------------------
GENERAL INFORMATION
The enclosed proxy/voting instruction card ('proxy') is solicited by the
Board of Directors (the 'Board') of Becton, Dickinson and Company, a New Jersey
corporation (the 'Company' or 'BD'), for use at the Annual Meeting of
Shareholders to be held at 2:00 P.M., local time, on Tuesday, February 11, 2003
at The Woodcliff Lake Hilton, 200 Tice Boulevard, Woodcliff Lake, New Jersey. A
proxy may be revoked at any time before it is voted by sending written notice of
revocation to the Secretary of the Company, by delivering a duly executed proxy
bearing a later date or by voting in person at the meeting. If you vote by
telephone or internet, you may also revoke your proxy with a timely and valid
later telephone or internet vote, as the case may be. This proxy statement and
the proxy/voting instruction card are being mailed to shareholders of the
Company on or about December 26, 2002.
At the close of business on December 16, 2002, the record date fixed by the
Board for determining the shareholders entitled to notice of and to vote at the
meeting, there were 254,547,502 shares of the Company's Common Stock (the
'Common Stock') outstanding, each entitled to one vote.
In addition, on December 16, 2002, there were 627,751 shares of the
Company's Series B ESOP Convertible Preferred Stock (the 'ESOP Preferred Stock')
outstanding, all of which are held by State Street Bank and Trust Company, as
Trustee of the Company's Savings Incentive Plan ('SIP'). The shares of ESOP
Preferred Stock are entitled to vote on all matters submitted to a vote of the
Company's shareholders and also carry one vote per share. Participants in SIP
are entitled to instruct the Trustee how to vote all shares of Common Stock and
ESOP Preferred Stock allocated to their SIP accounts, as well as how
to vote a proportionate number of such shares held in SIP for which voting
instructions are not received by the Trustee from other SIP participants or
which are not allocated to participants' accounts (the 'unvoted and/or
unallocated shares'). Unless otherwise instructed by a SIP participant, the
enclosed proxy will serve as voting instructions to the Trustee with respect to
both the allocated and the unvoted and/or unallocated SIP shares. SIP shares for
which no voting instructions are received from any SIP participants will be
voted by the Trustee in the same proportion as it votes the SIP shares for which
it has received voting instructions.
The shares of Common Stock held by the Savings Incentive Plan of Med-Safe
Systems, Inc., a wholly-owned subsidiary of the Company (the 'Med-Safe Plan'),
also are entitled to vote on all matters submitted to a vote of the Company's
shareholders and carry one vote per share. Each participant in the Med-Safe Plan
is entitled to instruct the Trustee of the Med-Safe Plan how to vote all shares
of Common Stock allocated to that participant's account, as well as how to vote
a proportionate number of shares held in the Med-Safe Plan for which voting
instructions are not received by the Trustee from other participants. Shares for
which no voting instructions are received from any Med-Safe Plan participants
will be voted by the Med-Safe Plan's Trustee in the same proportion as the
Trustee votes the shares for which the Trustee has received voting instructions.
The shares of Common Stock held by Wachovia Bank, N.A., as Trustee of both
the Company's Deferred Compensation Plan ('DCP') and the Company's 1996
Directors' Deferral Plan ('DDP'), as well as the shares of Common Stock held by
Banque Internationale a Luxembourg ('BIL') in connection with the Company's
Global Share Investment Program ('GSIP'), also are entitled to vote on all
matters submitted to a vote of the Company's shareholders and carry one vote per
share. Each director participating in DDP and each employee participating in DCP
and, if so provided under the terms of the local country GSIP plan, in GSIP, is
entitled to instruct the Trustee or BIL, as the case may be, how to vote all
shares of Common Stock allocated to that person's account, as well as how to
vote a proportionate number of shares held in the relevant plan for which voting
instructions are not received.
When returned properly dated and signed, the enclosed proxy will serve as
voting instructions by a Med-Safe Plan participant, a DDP participant, a DCP
participant and a GSIP participant with respect to both the allocated and the
unvoted Med-Safe Plan shares, DDP shares, DCP shares and GSIP shares, as the
case may be.
Proxies representing shares of Common Stock held of record also will serve
as proxies for shares held under the Direct Stock Purchase Plan sponsored and
administered by EquiServe Trust Company, N.A. and any shares of Common Stock and
ESOP Preferred Stock allocated to participants' accounts under DDP, SIP, DCP,
the Med-Safe Plan and GSIP, if the registrations are the same. Separate mailings
will be made for shares not held under the same registrations.
Shareowners of record and participants in SIP, DDP, DCP, the Med-Safe Plan,
or, if so provided under the terms of the local country GSIP plan, GSIP, may
cast their votes by:
(1) using the internet and voting at the website listed on the enclosed
proxy/voting instruction card;
(2) using the toll-free telephone number listed on the enclosed
proxy/voting instruction card; or
(3) signing, completing and returning the enclosed proxy/voting
instruction card in the enclosed postage-paid addressed envelope.
The internet and telephone voting procedures are designed to authenticate
votes cast by use of a personal identification number. The procedure allows
shareowners to appoint a proxy and the various plan participants to instruct the
plan fiduciaries or BIL, as the case may be, to vote their shares and to confirm
that their instructions have been properly recorded. Specific instructions to be
followed are set forth on the enclosed proxy/voting instruction card.
The presence, in person or by proxy, of the holders of shares representing a
majority of the votes entitled to be cast at the meeting shall constitute a
quorum.
Directors are elected by a plurality of the votes cast at the meeting.
Abstentions with respect to one or more of the nominees will be treated as
present at the meeting for purposes of determining a quorum, but will not be
counted as votes cast and, accordingly, will have no effect on the outcome of
the vote. Similarly, shares which brokers do not have the authority to vote in
the absence of timely instructions from the beneficial owners ('broker
non-votes'), if any, will not be counted and, accordingly, will have no effect
on the outcome of the vote.
Approval of Proposals 2 and 3 requires the affirmative vote of a majority of
the votes cast on such proposal. Under New Jersey law, in determining whether
the proposal has received the requisite number of affirmative votes, abstentions
and broker non-votes will not be counted as votes cast and, accordingly, will
have no effect on the outcome of the vote.
The Board of Directors is not aware of any matters to be presented at the
meeting other than those set forth in the accompanying notice. If any other
matters properly come before the meeting, the persons named in the proxy will
vote in accordance with their best judgment.
In addition to solicitation by mail, directors, officers and other employees
of the Company may solicit proxies personally, by telephone or by telegram.
Brokers and other nominees will be requested to solicit proxies or
authorizations from beneficial owners and will be reimbursed for their
reasonable expenses in doing so. The Company has retained MacKenzie Partners,
Inc., to assist in soliciting proxies for a fee not to exceed $12,500 plus
expenses. The cost of soliciting proxies will be borne by the Company.
2
SHARE OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth as of September 30, 2002, information
concerning those persons known to the Company to be the beneficial owner of more
than 5% of the Company's outstanding Common Stock. The information below is as
reported by such persons in their filings with the Securities and Exchange
Commission. No changes in these holdings have come to the Company's attention
since September 30, 2002. The Company is not aware of any other beneficial owner
of more than 5% of its Common Stock.
AMOUNT AND
NATURE OF PERCENTAGE OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
------------------------------------ -------------------- -----
Wellington Management Company LLP
75 State Street
Boston, MA 02109.......................................... 28,919,262(1) 11.3%
FMR Corp.
One Federal Street
Boston, MA 02110.......................................... 14,202,769(2) 5.6%
Capital Research and Management Company
333 South Hope Street
Los Angeles, CA 90071..................................... 14,317,000(3) 5.6%
Barclays Global Investors NA
45 Fremont Street, 17th Floor
San Francisco, CA 94105................................... 13,973,889(4) 5.5%
- ---------
(1) Wellington Management Company LLP has sole voting power with respect to
13,799,312 shares, shared voting power with respect to 799,850 shares, sole
investment power with respect to 27,903,312 shares, and shared investment
power with respect to 1,015,950 shares.
(2) FMR Corp. has sole voting power with respect to 675,934 shares, and shared
investment power with respect to 14,202,769 shares.
(3) Capital Research and Management Company has shared investment power with
respect to these shares.
(4) Barclays Global Investors NA has sole voting power with respect to
13,387,995 shares, sole investment power with respect to 181,003 shares, and
shared investment power with respect to 13,792,886 shares.
-------------------
The following table sets forth as of October 31, 2002, information
concerning the beneficial ownership of Common Stock by each director and nominee
for director, the persons named in the Summary Compensation Table on page 19
(the 'Named Executives'), and by all directors and executive officers as a
group. In general, 'beneficial ownership' includes those shares a director or
executive officer has the power to vote or transfer, including shares which may
be acquired under stock options that are exercisable currently or within 60
days. Current and retired executive officers listed in the table below also have
interests in a total of 48,032 restricted shares previously granted but
undistributed under the Company's Stock Award Plan. While these shares may not
be voted or transferred, we have included them in the table below as they
represent an economic interest in Company Common Stock.
3
COMMON STOCK
TOTAL
SHARES WHICH BENEFICIAL
SHARES OWNED MAY BE ACQUIRED OWNERSHIP AS
DIRECTLY AND WITHIN 60 PERCENTAGE OF
NAME INDIRECTLY(1) DAYS(2) CLASS
- ---- ------------- --------------- -------------
Harry N. Beaty....................................... 30,201 1,467 *
Henry P. Becton, Jr.................................. 222,406(3) 1,467 *
Clateo Castellini.................................... 207,539 1,518,817 *
Gary M. Cohen........................................ 33,417 368,037 *
John R. Considine.................................... 52,383(4) 226,249 *
Vincent A. Forlenza.................................. 30,505 430,845 *
William A. Kozy...................................... 37,632 403,417 *
Edward J. Ludwig..................................... 71,329(4)(5) 994,155 *
Frank A. Olson....................................... 72,114 1,467 *
James F. Orr......................................... 3,872 1,467 *
Willard J. Overlock, Jr. ............................ 7,942 1,467 *
James E. Perrella.................................... 28,449 1,467 *
Bertram L. Scott..................................... 0(6) 0 *
Alfred Sommer........................................ 7,354 1,467 *
Margaretha af Ugglas................................. 13,756 1,467 *
All Directors and Executive Officers as a group (18
persons), including those named above.............. 845,276(4) 4,534,770 2.1%
- ---------
* Represents less than 1% of the outstanding Common Stock.
(1) Includes Common Stock allocated to individual accounts under the BD Savings
Incentive Plan ('SIP') and the Global Share Investment Program ('GSIP'),
where applicable, as follows: Mr. Ludwig -- 17,629 shares; Mr.
Cohen -- 9,810 shares; Mr. Considine -- 492 shares; Mr. Forlenza -- 4,610
shares; Mr. Kozy -- 4,688 shares; and all Executive Officers as a
group -- 46,423 shares. Also includes Common Stock allocated to individual
accounts under the Deferred Compensation Plan as follows: Mr.
Ludwig -- 16,475 shares; Mr. Cohen -- 2,257 shares; Mr. Considine -- 24,581
shares; and all Executive Officers as a group (including Messrs. Ludwig,
Cohen and Considine) -- 51,505 shares. Also includes Common Stock allocated
to individual accounts under the 1996 Directors' Deferral Plan as follows:
Dr. Beaty -- 22,201 shares; Mr. Becton -- 21,069 shares; Mr.
Castellini -- 7,025 shares; Mr. Olson -- 52,114 shares; Mr. Orr -- 2,872
shares; Mr. Overlock -- 5,942 shares; Mr. Perrella -- 15,849 shares; Dr.
Sommer -- 7,354 shares; Mrs. af Ugglas -- 7,756 shares; and all Directors as
a group (including those already named) -- 142,182 shares. Includes shares
held under the Stock Award Plan as follows: Mr. Castellini -- 23,928 shares;
Mr. Forlenza -- 4,904 shares; Mr. Ludwig -- 9,840 shares; and Mr.
Kozy -- 9,360 shares.
(2) Consists of stock options available for exercise.
(3) Includes 196,125 shares held by trusts of which Mr. Becton is a co-trustee
with shared investment and voting power or held by a limited liability
company owned by one of such trusts. Does not include 32,440 shares owned by
Mr. Becton's spouse, 1,600 shares owned by a daughter, 104,840 shares held
in trusts for the benefit of his children or 77,400 shares held in a
charitable trust of which he is one of eight trustees, and as to each of
which he disclaims beneficial ownership.
(4) In addition to the share ownership indicated, the following Named Executives
and all of BD's executive officers as a group, have elected, on a
discretionary basis, to defer under BD's Deferred Compensation Plan ('DCP')
the following amounts of their 2002 bonuses into a BD Common Stock account,
which investment will be made under the DCP in January 2003: Mr.
Ludwig -- $300,000; Mr. Considine -- $205,000; and all Executive Officers as
a group -- $515,900. At an estimated share price of $30, this investment
would represent an aggregate additional ownership interest by BD's executive
officers in 17,197 shares.
In addition, the following Named Executives and all of BD's executive
officers as a group, have elected, on a discretionary basis, to defer under
the DCP during fiscal 2003 the following portions of their monthly salaries
into a BD Common Stock account: Mr. Ludwig -- $7,769; Mr.
Considine -- $5,763; and all Executive Officers as a group -- $15,751. At an
estimated share price of $30, this would represent an aggregate monthly
investment by BD's executive officers in 525 shares.
(5) Does not include 1,748 shares owned by Mr. Ludwig's son, as to which he
disclaims beneficial ownership.
(6) Mr. Scott was elected to the Board of Directors on September 24, 2002.
4
The following table sets forth as of October 31, 2002, information
concerning the beneficial ownership of ESOP Preferred Stock held through the BD
Savings Incentive Plan by the Named Executives, by all executive officers as a
group, and by the beneficial owner of more than 5% of the outstanding ESOP
Preferred Stock.
ESOP PREFERRED STOCK
SHARES OWNED
DIRECTLY AND
INDIRECTLY
----------
Edward J. Ludwig............................................ 521(1)
Gary M. Cohen............................................... 433(1)
John R. Considine........................................... 84(1)
Vincent A. Forlenza......................................... 482(1)
William A. Kozy............................................. 533(1)
All Executive Officers as a group (8 persons)............... 2,600(1)
State Street Bank and Trust Company......................... 635,126(2)
225 Franklin Street
Boston, Massachusetts 02110
(as Trustee of the Savings Incentive Plan)
- ---------
(1) Shares allocated to individual accounts under the ESOP component of the SIP.
Such shares constitute less than 1% of the total beneficial ownership of the
ESOP Preferred Stock.
(2) As trustee, holding 100% of the outstanding shares of ESOP Preferred Stock.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors to file initial reports of their ownership of
the Company's equity securities and reports of changes in such ownership with
the Securities and Exchange Commission (the 'SEC') and the New York Stock
Exchange. Executive officers and directors are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file. Based
solely on a review of copies of such forms and written representations from the
Company's executive officers and directors, the Company believes that for the
period from October 1, 2001 through September 30, 2002, all of its executive
officers and directors were in compliance with the disclosure requirements of
Section 16(a), except that a sale of 630 shares (adjusted for splits) by Deborah
Neff was inadvertently omitted from a report filed by her in 1998. An amended
report was subsequently filed to include this sale.
BOARD OF DIRECTORS
BOARD MEETINGS; COMMITTEES OF THE BOARD
The Company is governed by a Board of Directors and various Committees of
the Board which meet regularly throughout the year. The Board of Directors,
which held eight meetings during the fiscal year ended September 30, 2002, has
six principal standing Committees, including the Executive Committee, the Audit
Committee, the Compensation and Benefits Committee, the Corporate Affairs
Committee, the Corporate Governance and Nominating Committee (formerly the
Corporate Governance Committee), and the Finance and Investment Committee. All
directors attended at least 81% of Board and Committee meetings during the year.
The Board of Directors has adopted a written charter for each of the Committees
(other than the Executive Committee). Copies of these charters are posted on the
Company's website at www.BD.com/investors.
The Audit Committee reviews the Company's financial statements and
accounting principles, the scope and results of the annual audit by the
independent auditors, and the Company's internal audit process, including the
Company's internal controls and accounting systems. The Audit Committee also
reviews the independence and performance of the Company's independent auditors,
and makes recommendations to the Board concerning the selection of independent
auditors. The Audit Committee met four times during the year and also
participated in quarterly conference calls with management and the Company's
independent auditors to review the Company's Quarterly Reports on Form 10-Q
prior to their filing. The current members of this Committee are James F. Orr
-- Chair, Harry N. Beaty, Willard J. Overlock, Jr., Bertram L. Scott and
Margaretha af Ugglas. The Board has
5
considered and concluded that each of the members of the Audit Committee
satisfies the independence, financial literacy and expertise requirements of the
New York Stock Exchange.
The Compensation and Benefits Committee reviews annually the overall
compensation program for the Company's corporate officers and approves the
compensation of the Chief Executive Officer and all persons reporting to the
Chief Executive Officer, which includes all the executive officers (the Chief
Executive Officer and such persons are collectively referred to as the 'BD
Leadership Team'). This Committee also approves all employment and consulting
contracts of the Company or any subsidiary with corporate officers who are not
also directors. In addition, this Committee serves as the granting and
administrative committee for the Company's stock option plans. This Committee
also oversees the administration of employee benefits and benefit plans for the
Company. This Committee is composed entirely of independent directors. The
current members of this Committee, which met seven times during the year, are
Henry P. Becton, Jr. -- Chair, Frank A. Olson, Willard J. Overlock, Jr. and
James E. Perrella.
The Corporate Affairs Committee oversees the Company's policies, practices
and procedures as a responsible corporate citizen, in the general areas of
ethical conduct and legal compliance, including, without limitation, issues
relating to communications, employment practices, community relations, customer
relations and business practices and ethics. The current members of this
Committee, which met four times during the year, are Margaretha af
Ugglas -- Chair, Henry P. Becton, Jr., Bertram L. Scott and Alfred Sommer.
The Corporate Governance and Nominating Committee recommends candidates for
election as directors to the Board. It also reviews and makes recommendations
concerning the composition, organization, structure and function of the Board
and its Committees, as well as the performance and compensation of directors. It
monitors and considers the Company's corporate governance and Board practices,
recommends matters for consideration by the Board, and periodically reviews the
Company's by-laws, certificate of incorporation and shareholder rights plan. The
Committee's charter states that any director who is, or at any time in the prior
two years was, an officer or employee of the Company or of any of its
subsidiaries, however, must recuse him or herself from all determinations
regarding the nomination of candidates for election to the Board and the
compensation of directors. The current members of this Committee, which met
seven times during the year, are Clateo Castellini -- Chair, Henry P. Becton,
Jr., Harry N. Beaty, and James F. Orr.
Any shareholder may recommend nominees for director for consideration by the
Corporate Governance and Nominating Committee by writing to the Secretary of the
Company. Submissions should include the full name and address and a statement of
the qualifications of the proposed nominee.
The Finance and Investment Committee reviews the financial and accounting
affairs of the Company, including the Company's financial structure, dividend
policy, financial plans and capital expenditure budgets. The Committee also
reviews and recommends appropriate Board action with respect to acquisitions and
divestitures of assets meeting specified thresholds and oversees various
matters related to certain of the Company's employee benefit plans which require
funding. The current members of this Committee, which met six times during the
year, are Willard J. Overlock, Jr. -- Chair, Frank A. Olson, James E. Perrella
and Alfred Sommer.
6
REPORT OF THE AUDIT COMMITTEE
NOVEMBER 25, 2002
The Audit Committee reviews the Company's financial reporting process on
behalf of the Board of Directors. Management has the primary responsibility for
the financial statements and the reporting process, including the system of
internal controls. The independent auditors are responsible for performing an
independent audit of the Company's consolidated financial statements in
accordance with generally accepted auditing standards and to issue a report
thereon. The Committee monitors these processes.
In this context, the Committee met and held discussions with management and
the independent auditors. Management represented to the Committee that the
Company's consolidated financial statements were prepared in accordance with
accounting principles generally accepted in the United States, and the Committee
reviewed and discussed the consolidated financial statements with management and
the independent auditors. The Committee also discussed with the independent
auditors the matters required to be discussed by Statement on Auditing Standards
No. 61 (Codification of Statements on Auditing Standards, AU 380), as amended.
In addition, the Committee discussed with the independent auditors the
auditors' independence from the Company and its management, and the independent
auditors provided to the Committee the written disclosures and letter required
by the Independence Standards Board Standard No. 1 (Independence Discussions
With Audit Committees).
The Committee discussed with the Company's internal and independent auditors
the overall scope and plans for their respective audits. The Committee met with
the internal and independent auditors, with and without management present, to
discuss the results of their examinations, the evaluations of the Company's
internal controls, and the overall quality of the Company's financial reporting.
Based on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors, and the Board has approved, that the
audited financial statements be included in the Company's Annual Report on Form
10-K for the fiscal year ended September 30, 2002, for filing with the
Securities and Exchange Commission. The Committee and the Board also have
recommended, subject to shareholder approval, the selection of the Company's
independent auditors for fiscal year 2003.
AUDIT COMMITTEE
JAMES F. ORR, CHAIR
HARRY N. BEATY
WILLARD J. OVERLOCK, JR.
BERTRAM L. SCOTT
MARGARETHA AF UGGLAS
7
DIRECTORS' COMPENSATION
Each director who is not employed by the Company is compensated for services
as a director by an annual retainer of $34,000. In addition, an annual fee of
$5,000 is paid to each committee chair. Each non-management director elected at,
or continuing as a director after, last year's annual meeting of shareholders
also was granted 400 deferred shares of Common Stock. These shares were
allocated to a Common Stock account under the 1996 Directors' Deferral Plan and
will be distributed no earlier than retirement from the Board, in installments
or as a lump-sum.
Directors may defer, in an unfunded cash account or a Common Stock account,
all or part of their annual retainer and chair fees, until up to 10 years after
retirement from the Board pursuant to the provisions of the 1996 Directors'
Deferral Plan. The number of shares credited to the accounts of directors is
adjusted periodically to reflect the payment and reinvestment of dividends on
the Common Stock.
The Company reimburses all directors for travel and other necessary business
expenses incurred in the performance of their services for the Company.
Each non-management director elected at, or continuing as a director after,
each annual meeting of shareholders is granted stock options to purchase shares
of Company Common Stock at the fair market value of the Common Stock on the date
of grant. The options granted have a value of $35,000 (based on the Black-
Scholes option pricing model).
In November 2002, the Board determined to amend the overall amount and
components of the compensation of non-management directors. As a result, the
Board discontinued, effective November 2002, the annual share grant to
non-management directors elected at, or continuing as a director after, each
annual meeting of shareholders. The Board also increased the annual retainer fee
to $55,500 and the annual fee for committee chairs to $5,500. The Board also
approved additional directors' fees of $1,500 for each half-day spent by a non-
management director outside of regularly scheduled board meetings, or in
meetings of any particular committee of the Board in excess of five hours in any
year. Additional directors' fees of $1,500 per half-day were also approved for
time spent by a non-management director visiting the Company's businesses or
meeting with representatives or officers of the Company.
The amendments affecting the cash compensation of non-management directors
become effective following the Annual Meeting. The annual option grant described
above was not affected by the amendments to non-management director
compensation.
Directors' fees are the only form of compensation received by non-management
directors from the Company.
DIRECTORS' SHARE OWNERSHIP GUIDELINES
Under the Board's formal share ownership guidelines for non-management
directors, each non-management director is currently required to own shares of
Common Stock valued at 70% of the amount obtained by multiplying the annual
retainer fee by the number of years such person has served as a director. Based
upon the closing price of the Company's Common Stock on September 30, 2002, all
of the directors owned sufficient shares to comply with these guidelines.
In connection with the amendments to non-management director compensation
discussed above, the Board also determined to change the director share
ownership guidelines. Following the Annual Meeting, non-management directors
will be required to own shares of Common Stock valued at 50% of the amount
obtained by multiplying the annual retainer fee by the number of years such
person has served as a director. The effect of this change is to increase from
$23,800 to $27,750 the dollar value of shares each non-management director is
required to own for each year of service as a director. Based upon the closing
price of the Company's Common Stock on September 30, 2002, all of the directors
owned sufficient shares to comply with the revised guidelines.
8
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE PRINCIPLES
In November 2001, the Board adopted a set of Corporate Governance
Principles. The Corporate Governance Principles address a number of topics,
including director independence, mandatory retirement, evaluation of the CEO,
composition of the Board and succession planning. The Corporate Governance
Principles are reviewed by the Corporate Governance and Nominating Committee on
a regular basis and any proposed additions or amendments to the Corporate
Governance Principles are reviewed and approved by the Board.
In order to provide shareholders with greater knowledge regarding the
Board's processes, the Mission Statement and Corporate Governance Principles
adopted by the Board of Directors are attached as Appendix A to this proxy
statement. The Corporate Governance Principles also are posted on BD's website
at www.BD.com/investors.
The New York Stock Exchange ('NYSE') recently proposed rules that would
require listed companies to adopt governance guidelines covering certain
matters. The Company has carefully reviewed its Corporate Governance Principles
and believes that they substantially comply with these proposed rules.
EXECUTIVE SESSIONS AND LEAD DIRECTOR
In September 2002, the Board amended the Company's Corporate Governance
Principles to increase to not less than three, the number of times per year the
non-management directors are to meet in executive session. One of these sessions
is dedicated to the review of the Chief Executive Officer and the
recommendations of the Compensation and Benefits Committee regarding the Chief
Executive Officer's compensation.
Also in September 2002, the Board amended the Corporate Governance
Principles to provide for the appointment by the independent directors of a
presiding director (the 'Lead Director') to serve, on a rotating basis, for a
term of twelve months. The Lead Director presides over any executive session of
the non-management directors. The Lead Director also serves as a liaison between
the non-management members of the Board and the Chairman, and discusses with the
Chairman, to the extent appropriate, matters discussed by the non-management
directors in executive session. Consistent with the recommendations of the NYSE,
the Lead Director also is to serve as a contact person to facilitate
communications by BD's employees and shareholders with the non-management
members of the Board.
Mr. Frank A. Olson has been designated as the initial Lead Director based on
his many years of service as a director of the Company, and will serve as Lead
Director through September 2003.
DIRECTOR INDEPENDENCE
The Board assesses each director's independence annually in accordance with
the Company's Corporate Governance Principles. A director's independence is
determined by the Board pursuant to the Corporate Governance Principles, which
define an independent director as one who has not been employed by the Company
or any of its subsidiaries within the previous five years and has no significant
financial or personal relationship to the Company or to its management that
would interfere with the exercise of independent judgment by such director. The
Board has determined, after careful review, that each member of the Board is
independent as defined in the Company's Corporate Governance Principles, with
the exception of Messrs. Castellini and Ludwig, who are or have been employed by
the Company within the past five years, and of Dr. Alfred Sommer, Dean, The
Johns Hopkins University ('JHU') Bloomberg School of Public Health, as Mr.
Ludwig currently serves as a member of the JHU Board of Trustees. Accordingly,
eight out of the eleven current members of the Board are independent directors.
ANNUAL REPORT OF CHARITABLE CONTRIBUTIONS
Pursuant to the Company's Corporate Governance Principles, any charitable
contributions, or pledges of charitable contributions, by the Company in any
given fiscal year in an aggregate amount of $50,000 or more to an entity for
which a BD director or a member of his or her immediate family serves as a
director, officer or employee, or as a member of such entity's fund-raising
organization or committee, is subject to the prior consideration and approval of
the Corporate Governance and Nominating Committee. The Corporate
9
Governance and Nominating Committee of the Board is provided annually with a
report by management of charitable contributions or pledges made by the Company
during the fiscal year in an amount of $10,000 or more, to any entity for which
a BD director or executive officer, or a member of his or her immediate family,
serves as a director, officer or employee, or as a member of such entity's
fund-raising organization or committee. The report for fiscal 2002 is attached
as Appendix B to this proxy statement.
BOARD EVALUATION
As in the past six years, in fiscal 2002 the Board's Corporate Governance
and Nominating Committee undertook the process of evaluating Board performance
and effectiveness. This process commences with each director completing a Board
Evaluation Questionnaire. This questionnaire was developed by the Corporate
Governance and Nominating Committee and provides for a range of grades and trend
indicators to be completed by each director, as well as space for written
comments, with respect to each of the following seventeen criteria:
1. The Board understands and approves the Company's mission statement,
values and objectives, as well as its strategic and operating plans.
2. The Board understands the industries in which the Company operates and
the implications of current general economic and political trends to
those businesses.
3. The Board evaluates the Company's research and development performance
and level of commitment.
4. The Board considers the financial performance of peer companies when
assessing Company performance.
5. The Board evaluates and reviews the performance and values of the Chief
Executive Officer.
6. The Board reviews senior management development and compensation and
considers the correlation between compensation levels and Company
performance.
7. Board meetings foster open communication and timely resolution of issues
presented.
8. The Corporate Governance and Nominating Committee reviews and
communicates the Board's expectations concerning director
responsibilities and monitors the productivity of Board and Committee
meetings.
9. The Board assesses and modifies, as necessary, the structure of the
Board and its Committees, as well as the frequency of the Board and
Committee meetings.
10. The Board establishes criteria and policies to ensure the representation
of characteristics and expertise among its membership necessary to its
effectiveness.
11. The Board seeks to optimally and appropriately utilize each Board
member's experiences in terms of Committee appointments.
12. The Board reviews the availability, content and timeliness of
information provided to it, prepares appropriately for Board meetings
and requests additions or changes to the material provided, when
appropriate.
13. The Board verifies the independence of each non-management director and
considers the impact, if any, of changes in the principal employment of
non-management directors.
14. The Board monitors and understands current issues and trends in
corporate governance.
15. The Board reviews and adopts annual capital and operating budgets and
monitors Company performance against them during the year.
16. The Board reviews the adequacy of existing accounting and financial
controls and oversees ethical conduct and legal compliance by the
Company.
17. The Board reviews succession plans for the Chief Executive Officer and
senior management.
In some instances, the above criteria related to Board functions, such as
senior management compensation, that are largely performed by a committee of the
Board.
The collective ratings and comments of the directors were compiled and
presented by the Chairman of the Corporate Governance and Nominating Committee
to the full Board for discussion, for the assessment of
10
progress in the areas targeted for improvement a year earlier, and for the
development of recommendations to enhance the Board's effectiveness over the
next year.
In addition, each Board committee conducted a self-evaluation of its
performance during fiscal 2002, with performance criteria for each committee
developed on the basis of its purposes and mission, as set forth in its charter.
EVALUATION OF INDIVIDUAL DIRECTORS
The Board also assessed the performance of the individual directors standing
for re-election to the Board at the Annual Meeting of Shareholders, and, to the
extent applicable, considered the impact of any change in the principal
occupations of all directors during the last year.
The Corporate Governance and Nominating Committee conducted the individual
evaluations against criteria designed to measure performance in five critical
areas:
1. Personal Characteristics
2. Core Competencies
3. Independence
4. Level of Commitment
5. Board and Company Considerations
Upon completion of the individual director evaluation process, the Corporate
Governance and Nominating Committee reported to the full Board its conclusions
and recommendations for nominations to the Board.
BUSINESS CONDUCT AND COMPLIANCE GUIDE
In 1995, the Board adopted the BD Business Conduct and Compliance Guide (the
'Guide'). The Guide is a code of conduct applicable to all directors, officers
and employees of the Company, including its Chief Financial Officer, Controller
and other senior financial officers. The Guide sets forth BD policies and
expectations on a number of topics, including without limitation, conflicts of
interests, confidentiality, compliance with laws (including insider trading
laws), preservation and use of company assets, and business ethics. The Guide
also sets forth procedures for communicating and handling any potential conflict
of interests (or the appearance of any conflict of interests) involving
directors or executive officers, and for communicating and handling issues
regarding accounting, internal controls and auditing matters.
In 1995, the Company instituted an Ethics Help Line for BD associates as a
means of raising concerns or seeking advice. The Help Line is serviced by an
independent contractor and is available to all associates worldwide, 7 days a
week, 24 hours a day. Translation services are also available to associates.
Associates using the Help Line may choose to remain anonymous and all inquiries
are kept strictly confidential. All Help Line inquiries are forwarded to the
Director of Business Ethics and Conduct for investigation. The Director of
Business Ethics and Conduct leads the BD Ethics Office, an independent unit
within the Company that administers the Company's ethics program. In addition to
the Help Line, the ethics program provides for broad communication of the
Company's core values, associate education regarding the Guide and its
requirements, and ethics training sessions.
The Company regularly reviews the Guide and proposed additions or amendments
to the Guide are considered and subject to approval by the Board. The Guide is
posted on BD's website at www.BD.com/investors.
The NYSE recently proposed rules that would require listed companies to
adopt a code of business conduct and ethics covering certain matters. The
Company has carefully reviewed the Guide and believes that it complies with
these proposed rules.
11
PROPOSAL 1.
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes, the terms of which
expire alternately over a three-year period. Five directors are proposed for
election. The Board, however, proposes the election of Harry N. Beaty and Frank
A. Olson for two years only until the 2005 Annual Meeting and until their
successors have been duly elected and qualified, in consideration of the
Company's policy establishing the mandatory retirement date of each director as
the date of the Annual Meeting next following his or her 72nd birthday. Dr.
Beaty and Mr. Olson will be 72 in June and July, 2004, respectively.
The Board also proposes the election of Edward J. Ludwig, Willard J.
Overlock, Jr., and Bertram L. Scott to serve for three years until the 2006
Annual Meeting and until their successors have been duly elected and qualified.
Mr. Scott was elected to his present term by the Board effective September 24,
2002. Messrs. Ludwig and Overlock are incumbent directors who were elected to
their present terms by the shareholders. Clateo Castellini, whose term expires
following the Annual Meeting, has announced his intention to retire from the
Board and, therefore, is not standing for re-election.
All of the nominees for election have consented to being named in this proxy
statement and to serve if elected.
Biographical information concerning each of the nominees and directors
continuing in office following the Annual Meeting is presented on this and the
following pages.
NOMINEES FOR DIRECTOR
NOMINEES FOR DIRECTOR -- TERM TO EXPIRE 2005
[Photo] Harry N. Beaty, M.D., 70, has been a director since 1985. He
is Emeritus Dean of the Northwestern University Medical
School and serves on the Board of the Northwestern Medical
Faculty Foundation. Dr. Beaty is a specialist in internal
medicine and a subspecialist in infectious diseases. He also
is a director of Banner Health, Arizona.
[Photo] Frank A. Olson, 70, has been a director since 1985. He is
Chairman of the Board of The Hertz Corporation, a
transportation company. Mr. Olson also is a director of
Amerada Hess Corporation and White Mountains Insurance
Group, Ltd.
12
NOMINEES FOR DIRECTOR -- TERM TO EXPIRE 2006
[Photo] Edward J. Ludwig, 51, has been a director since 1999. He was
elected President of the Company in May 1999, and President
and Chief Executive Officer effective January 2000. In
November 2001, he was elected to the additional role of
Chairman, effective February 2002. Mr. Ludwig served as
Executive Vice President from July 1998 to May 1999 and
prior thereto was Senior Vice President-Finance and Chief
Financial Officer. Mr. Ludwig is a director of the U.S. Fund
for UNICEF and a member of the Board of Trustees of The
Johns Hopkins University.
[Photo] Willard J. Overlock, Jr., 56, has been a director since
1999. He retired in 1996 as a partner in Goldman, Sachs &
Co., where he served as a member of its management
committee, and currently serves as a senior advisor to The
Goldman Sachs Group, Inc. Mr. Overlock also is an advisor to
the Parthenon Group and is a director of Select Reinsurance
Ltd.
[Photo] Bertram L. Scott, 51, has been a director since September
2002. He is the President of TIAA-CREF Life Insurance
Company and Executive Vice President of TIAA-CREF. Prior to
joining TIAA-CREF in November 2000, Mr. Scott served as
President and Chief Executive Officer of Horizon/Mercy, a
joint Medicaid managed care program between Mercy Health
Plan of Pennsylvania and Blue Cross/Blue Shield of New
Jersey.
CONTINUING DIRECTORS
TERM TO EXPIRE 2004
[Photo] Henry P. Becton, Jr., 59, has been a director since 1987. He
is President and General Manager of WGBH Educational
Foundation, a producer and broadcaster of public television
and radio programs and books and other educational
materials. Mr. Becton is a director of Belo Corporation,
various Zurich Scudder mutual funds and Public Radio
International.
[Photo] James F. Orr, 57, has been a director since 2000. Mr. Orr is
the Chairman, President and Chief Executive Officer of
Convergys Corporation, a provider of outsourced billing and
customer management services. Prior thereto, he served as
Chief Operating Officer and a director of Cincinnati Bell,
Inc. At Cincinnati Bell, he was Chairman and President of
Cincinnati Bell Information Systems and MATRIXX Marketing,
the businesses which now make up Convergys. In addition, Mr.
Orr is a director of Ohio National Financial Services, Inc.
13
[Photo] Margaretha af Ugglas, 63, has been a director since 1997.
She is the former Minister of Foreign Affairs of Sweden. Ms.
af Ugglas is a director of the Karolinska Institute and of
the Jarl Hjalmarson Foundation.
TERM TO EXPIRE 2005
[Photo] James E. Perrella, 67, has been a director since 1995. In
2000, he retired as Chairman of the Board of Ingersoll-Rand
Company, a manufacturer of industrial machinery and related
products. Mr. Perrella also is a director of Milacron Inc.,
Bombardier Inc. and Arvin Meritor, Inc.
[Photo] Alfred Sommer, M.D., M.H.S., 60, has been a director since
1998. He is Dean of The Johns Hopkins University Bloomberg
School of Public Health, and Professor of Ophthalmology,
Epidemiology and International Health. Dr. Sommer was
founding Director of the Dana Center for Preventive
Ophthalmology at Johns Hopkins, which focuses on clinical
epidemiology and public health aspects of blindness
prevention and child health.
14
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION AND BENEFITS COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation and Benefits Committee of the Board (the 'Committee')
reviews the overall compensation program for the Company's corporate officers,
determines and administers the compensation of the BD Leadership Team, including
the individuals named in the Summary Compensation Table (the 'Named
Executives'), and oversees the administration of employee benefits and benefit
plans for the Company and its subsidiaries. The Committee is composed
exclusively of non-employee directors, as defined in applicable rules and
regulations of the Securities and Exchange Commission, and none of the members
of the Committee is an employee or former employee of the Company or eligible to
participate in any of the Company's executive compensation programs. Each of the
members of this Committee also satisfies the criteria necessary to be considered
an 'outside director' for purposes of Section 162(m) of the Internal Revenue
Code of 1986, as amended (the 'Code').
OVERVIEW
BD's focus is to help all people live healthy lives while generating
superior total shareholder return. With this focus in mind, the Committee has
developed and implemented a compensation philosophy designed to reward and
support superior performance and to attract and retain top talent. This
objective is achieved through a variety of compensation measures, described
below, that are designed to support the current and long-term performance of the
Company.
The Committee believes that the structure of the Company's compensation
program, with its emphasis on long-term compensation, serves to focus Company
executives on attaining a sustained, high level of Company performance and
creating long-term shareholder value.
CHALLENGING TARGETS
BD's management compensation program emphasizes the establishment of
challenging goals through a number of factors, including: the Committee's active
assessment of management's proposed performance goals and the link between goal
attainment and short-term and long-term management incentives; a significant
proportion of total compensation being contingent on achievement of
predetermined goals; and long-term compensation and performance being measured
and determined relative to that of a group of high quality healthcare
institutions with which BD competes for management talent, as well as the
selected peer group of companies (the 'Peer Group') used in preparing the
Performance Graph set forth on page 23 (collectively, the 'Comparison Group').
Management short-term and long-term incentive payments are based on performance
measures designed to build shareholder value, including net income and total
shareholder return.
EXECUTIVE AND SHAREHOLDER ALIGNMENT
Each of the executives identified below is required to own within a
prescribed period of time a significant ownership stake in the Company,
representing varying multiples of the executive's base salary, depending on the
executive's position. The Company can extend the period of time within which the
guidelines are to be complied with when circumstances, such as a promotion,
significantly increase the target level of share ownership. The current
ownership guidelines are as follows:
Chairman, President and Chief Executive Officer............. 5 times salary
Other BD Leadership Team Members (16 persons)............... 3 times salary
All Other Corporate Officers................................ 2 times salary
The Company periodically monitors individuals' compliance with these
ownership guidelines. Stock options, including vested options, are not included
in determining whether an individual has met his or her ownership guidelines.
The Company does not, and has not, provided any loans to management for the
purpose of assisting them in complying with these ownership guidelines. 16 of
the 17 current members of the BD Leadership Team either are in substantial
compliance with the ownership guidelines or have plans in place to become
compliant in a timely manner.
15
PRINCIPAL COMPENSATION ELEMENTS
The key elements of executive compensation are base salary, annual incentive
awards, and stock options. These components are administered with the goal of
providing total compensation that is competitive, motivates the highest
individual performance, rewards sustained performance, and provides
above-average rewards when merited by individual, business unit and Company
results.
In assessing the effectiveness and competitiveness of BD's executive
compensation structure, the Committee reviews compensation practices of other
highly-regarded companies with the assistance of independent outside
consultants. The Comparison Group includes not only firms that compete in the
Company's primary lines of business, but also those with which the Company
competes for talent.
BASE SALARY
The Committee annually reviews and determines the base salaries of the BD
Leadership Team members. The Committee evaluates management's salary
recommendations based on the results achieved by each executive, his or
her future potential, scope of responsibilities and experience, as well as
competitive salary practices. The Company generally targets executive officer
salaries to approximate the median levels expected to be paid by companies in
the Comparison Group to persons holding equivalent positions.
ANNUAL INCENTIVE AWARDS
The Company's Performance Incentive Plan is structured to reward executives
based on the overall performance of the Company, as well as the performance of
each executive and that of his or her area of responsibility or operating
group. The Committee sets target incentives for each participating
executive officer at the beginning of each year. These targets are established
as a percentage of the executive's salary and are calculated to deliver
compensation to the executive at the median range for the Comparison Group
companies.
The Committee adopted performance measures for fiscal 2002 to determine the
amount of incentive to be paid at different levels of performance. Funding for
award pools for all executive officers (and other members of the BD Leadership
Team) and corporate functions is based primarily on achieving a total Company
earnings per share target and net income target, respectively, set at the
beginning of the year. Funding for award pools for business units and
regions/countries is also based primarily on achieving targets established at
the beginning of the year for operating income (with an additional measure for
working capital performance).
In addition to these financial targets, each business unit, region/country
and function has established certain objectives based on key Company initiatives
and desired improvements to competitive positions. Key Company initiatives for
fiscal 2002 included, among other things, sales of safety-engineered products
and implementation of the Company's Genesis (enterprise resource planning
system) and operational effectiveness improvement initiatives. These objectives
were required to have been met in order for full payouts to be made under this
plan.
Under the Performance Incentive Plan, the range of performance in fiscal
year 2002 for which awards are funded is between 90% (threshold) and 105%
(maximum) of the target goal. At the threshold level of performance, the pool is
funded at 50%. Below the threshold, the pool is 0%. For every 1% increase in
performance between 90% and 100% of goal, the pool is increased by 5%. For every
1% increase in performance above 100% of goal, the pool is increased by 10%, to
a maximum of 150% of target.
For fiscal year 2003, the range of performance under the Performance
Incentive Plan for which awards are funded will be between 80% (threshold) and
110% (maximum) of the target goal. At the threshold level of performance, the
pool is funded at 50%. Below the threshold, the pool is 0%. It is anticipated
that for every 1% increase in performance between 80% and 100% of goal, the pool
will be increased by 2.5%, and for every 1% increase in performance above 100%
of goal, the pool will be increased by 5%, to a maximum of 150% of target.
The Company relies heavily, but not exclusively, on these criteria. The
Committee does not use any fixed formula in determining incentive awards.
Instead, it exercises discretion in light of these measures and in view of the
Company's compensation objectives to determine overall incentive funds and
individual incentive amounts.
For fiscal 2002, the Company achieved 93% of its stretch earnings per share
target established by the Committee, and 100% of its net income target, under
the Performance Incentive Plan. The level of achievement
16
of applicable targets for individual business units and regions varied. Awards
to the Chief Executive Officer and the other Named Executives are set forth in
the Summary Compensation Table. These awards were based on the performance of
the individual, as well as the performance of the Company and the relevant
business or function.
DEFERRED COMPENSATION PLAN
The Company maintains a Deferred Compensation Plan that allows employees,
including executive officers, with a base salary of $100,000 or more, to defer
receipt of salary and annual incentive awards in either common stock of the
Company or in cash accounts that mirror the gains and/or losses of a number of
different investment funds selected by the Company. Under the Deferred
Compensation Plan, participants may defer up to 75% of their base salary and up
to 100% of their annual incentive awards, until the date or dates specified by
the participant.
The Company is not required to make any contributions to the Deferred
Compensation Plan, other than to the extent a participant who is also a
participant in the Company's Savings Incentive Plan ('SIP') would be entitled to
a lower matching contribution from the Company under SIP as a result of his or
her deferral of salary under the Deferred Compensation Plan.
Prior to January 1, 2002, participants in the plan were only able to defer
compensation into either common stock of the Company or into a cash account that
provided a return equal to the Moody's Seasoned AAA Corporate Bond Rate. The
Deferred Compensation Plan was amended in November 2001 to eliminate the fixed
rate of return investment option for any compensation deferred after January 1,
2002. Neither the Chief Executive Officer nor any of the other Named Executives
has any deferred compensation in a fixed return account.
The Deferred Compensation Plan is not funded by the Company, and
participants have an unsecured contractual commitment of the Company to pay the
amounts due under the plan. When such payments are due, the cash and/or stock
will be distributed from the Company's general assets.
STOCK OPTIONS
The Committee grants stock options broadly and deeply throughout the
organization, and thus provides additional incentives to employees to maximize
shareholder value. Grants are based on individual performance and long-term
contribution potential. It has been the Company's practice over the past five
years to grant on average approximately 82% of all option grants to associates
who are not members of the BD Leadership Team.
Stock option grant levels and terms are established to provide executives
with the opportunity for overall compensation levels targeted at the median of
the competitive range for comparable positions in the market place, provided
management is successful in achieving competitive growth in total shareholder
value relative to the Comparison Group.
The Committee has approved an indexed stock option program, intended to
compensate senior executives, including executive officers, for relative growth
in shareholder value, as well as the achievement of certain internal financial
and strategic goals. The program is intended to focus management on the
long-term creation of shareholder value by linking incentive compensation to
quantifiable measures that drive shareholder value creation over time. The
number of shares available for grant to members of the BD Leadership Team,
including the executive officers, may be increased or decreased by as much as
25% from the executive's target grant based on BD's annual total shareholder
return compared to the Peer Group.
On November 27, 2001, the Committee approved a grant to executive officers
based on performance results for the 2001 fiscal year. Based on relative
performance, the total executive stock option grant level was at 125% of target.
These option grants for the Chief Executive Officer and the other Named
Executives are set forth in the Summary Compensation Table.
On November 25, 2002, the Committee approved a grant to executive officers
based on performance results for the 2002 fiscal year. Based on relative
performance, the total executive stock option grant level was at 85.7% of
target.
The Company has not re-priced options or issued additional options in
response to any decline in the Company's stock price. Vesting of stock option
awards made prior to November 2001 generally occurred over a three-year period
beginning from the date of grant (with 50% becoming vested two years, and the
remainder
17
becoming vested three years, from the date of grant), while vesting of stock
option awards granted in November 2001 and thereafter generally occurs over a
four-year period (with 25% becoming vested on each anniversary of the date of
grant).
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Each year, the non-management directors meet in executive session to
evaluate the performance of the Chief Executive Officer. The results of this
evaluation are then used by the Compensation and Benefits Committee in
determining the compensation of the Chief Executive Officer.
On October 1, 2001, the Committee approved a base salary increase for Mr.
Ludwig from $730,000 to $850,000. The Summary Compensation Table sets forth the
details regarding all compensation of the Chief Executive Officer for fiscal
2002. The determination of the Chief Executive Officer's salary, annual
incentive award and stock option grant was made by the Committee based on the
same policies and calculations described above applicable to all executive
officers.
2002 COMPENSATION ACTIONS: OTHER EXECUTIVE OFFICERS
The other executive officers, including the other Named Executives, received
salary increases that averaged 5.4%, which included merit increases of 4.6%, as
well as a single market adjustment of 6.6% to one executive officer.
INTERNAL REVENUE CODE SECTION 162(m)
Section 162(m) of the Code precludes a public corporation from taking a
deduction for compensation in excess of $1 million for its chief executive
officer or any of its four other highest paid executive officers, unless certain
specific and detailed criteria are satisfied.
The Committee considers the anticipated tax treatment to the Company and to
the executive officers in its review and establishment of compensation programs
and payments. The deductibility of some types of compensation payments can
depend upon the timing of an executive's vesting or exercise of previously
granted rights. Interpretations of and changes in applicable tax laws and
regulations as well as other factors beyond the control of the Committee also
can affect deductibility of compensation. For these and other reasons, the
Committee has determined that it will not necessarily seek to limit executive
compensation to that deductible under Section 162(m) of the Code. The Committee
will continue to monitor developments and assess alternatives for preserving the
deductibility of compensation payments and benefits to the extent reasonably
practicable, consistent with its compensation policies and as determined to be
in the best interests of the Company and its shareholders.
COMPENSATION AND BENEFITS COMMITTEE
HENRY P. BECTON, JR., CHAIR
FRANK A. OLSON
WILLARD J. OVERLOCK, JR.
JAMES E. PERRELLA
18
COMPENSATION DATA
The following tables and graph set forth information on the compensation
of the Company's Chief Executive Officer and the four most highly compensated
officers other than the Chief Executive Officer (the 'named executives').
COMPENSATION OF NAMED EXECUTIVES
GENERAL
The following table shows, for the fiscal years ended September 30, 2002,
2001 and 2000, respectively, compensation provided by the Company to each of the
named executives in all capacities in which they served.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM
AWARDS COMPENSATION
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SECURITIES
RESTRICTED UNDERLYING
NAME AND FISCAL STOCK OPTIONS/ ALL OTHER
PRINCIPAL POSITION YEAR SALARY(1) BONUS(1) AWARDS(2) SARS COMPENSATION(3)
- ------------------ ---- --------- -------- --------- ---------- ---------------
Edward J. Ludwig ......................... 2002 $850,000 $750,000 0 300,000 $87,456
Chairman, President and Chief Executive 2001 730,000 723,000 0 250,000 89,771
Officer 2000 562,500 425,000 0 110,000 5,321
Gary M. Cohen ............................ 2002 440,000 310,000 0 85,000 37,396
President -- BD Medical Systems 2001 418,000 290,000 0 50,000 33,176
2000 400,542 195,000 0 37,000 5,629
John R. Considine ........................ 2002 535,000 410,000 0 125,000 6,411
Executive Vice President and Chief 2001 508,356 410,000 0 90,000 8,499
Financial Officer 2000 155,449 350,000 0 300,000 2,813
Vincent A. Forlenza ...................... 2002 385,000 245,000 0 65,000 27,429
Senior Vice President -- Technology, 2001 360,000 235,000 0 43,000 44,867
Strategy and Development 2000 335,000 150,000 0 27,000 5,777
William A. Kozy .......................... 2002 378,164 245,000 0 65,000 51,647
President -- BD Clinical Laboratory 2001 345,000 230,000 0 43,000 44,693
Solutions and Company Operations 2000 305,000 150,000 0 25,000 5,796
- ---------
(1) Amounts shown reflect salary and bonuses earned by the named executives for
the applicable fiscal year. Bonuses are paid in the fiscal year following
the fiscal year for which they are earned, unless deferred at the election
of the executive. The following named executives elected to defer, on a
discretionary basis, with respect to the years covered in the Summary
Compensation Table the following amounts of salary and bonus into a BD
Common Stock account under the Deferred Compensation Plan: Mr. Ludwig -- for
2002, $300,000 of bonus and $74,539 of salary, and for 2001, $448,260 of
bonus; and Mr. Considine -- for 2002, $205,000 of bonus and $84,832 of
salary, for 2001, $205,000 of bonus and $124,559 of salary, and for 2000,
$350,000 of bonus and $38,862 of salary.
(2) The following table contains information relating to the undistributed
portions of restricted stock awards previously granted to the named
executives under the Stock Award Plan.
CURRENT MARKET
NUMBER OF VALUE OF
UNDISTRIBUTED UNDISTRIBUTED
RESTRICTED RESTRICTED
NAME SHARES HELD SHARES HELD
---- ----------- -----------
Edward J. Ludwig......................................... 9,840 $279,456
Vincent A. Forlenza...................................... 4,904 $139,273
William A. Kozy.......................................... 9,360 $265,824
Under the terms of the Stock Award Plan, none of the holdings reflected may
be distributed prior to retirement or termination of employment.
Current market values are determined by multiplying the number of
undistributed shares by $28.40, the September 30, 2002 closing price for the
Company's Common Stock. No discount has been taken to reflect (1) the
continuing restrictions on distribution and transferability, or (2) the fact
that undistributed shares are not dividend-bearing.
(3) Amounts shown represent the Company's matching contributions to the
Company's Savings Incentive Plan ('SIP'), a qualified defined contribution
plan available to U.S. employees at all levels, and the dollar value of
split-dollar life insurance policies that had been provided up until July
2002 for certain of the named executives (see discussion below).
(footnotes continued on next page)
19
(footnotes continued from previous page)
During fiscal 2002, the Company made contributions to SIP of $6,000 for each
of Messrs. Ludwig, Considine, Cohen, Forlenza and Kozy. These amounts
represent Company matching contributions at a 50% rate of the first 6% of
base pay contributed to SIP by each of the named executives, in accordance
with applicable SIP rules and subject to limits imposed by the IRS upon
maximum contributions to such tax-qualified plans. In addition, for the plan
year ended June 30, 2002, as a result of the accumulation of shares of ESOP
Preferred Stock in the SIP trust in excess of the Company's matching
obligation, the Company matched up to an additional .2% of each eligible
participant's salary. This additional Company contribution amounted to $411
for Messrs. Ludwig and Considine, $356 for Mr. Forlenza, $347 for Mr. Kozy,
and $316 for Mr. Cohen.
Until the adoption of the Sarbanes-Oxley Act of 2002, the Company had made
split-dollar life insurance policies available to the named executives in
lieu of full participation in the Company's group life insurance program.
The death benefit payable to the beneficiary of an insured named executive
is two times that executive's base salary. Under collateral assignment
arrangements, the premiums are paid by the Company for a fixed time period
during the initial years in which the policies are in effect. If assumptions
about mortality, dividends, and other factors are realized, the Company will
recover all of its premium payments from the cash value of the policies at
the later of a designated date or retirement of the executive. At that time,
full ownership of the policy will be transferred to the named executive. The
compensatory portion of this arrangement is the premium payment made on
behalf of the named executives during the fiscal year. Payments made for
fiscal 2002 were $81,045 for Mr. Ludwig, $31,080 for Mr. Cohen, $21,073 for
Mr. Forlenza and $45,300 for Mr. Kozy. The Company has discontinued making
any further payments under these policies and is exploring alternatives for
these policies.
STOCK OPTION GRANTS
The following table contains information relating to stock option and tandem
limited stock appreciation right ('SAR') grants made in fiscal 2002.
OPTION/SAR GRANTS IN FISCAL YEAR 2002
INDIVIDUAL GRANTS
---------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO GRANT DATE
OPTIONS/SARS EMPLOYEES IN EXERCISE EXPIRATION PRESENT
NAME GRANTED(1) FISCAL YEAR PRICE DATE VALUE(2)
- ---- ------------ ------------ -------- ---------- -----------
Edward J. Ludwig..................... 300,000 5.59% $ 32.49 11/27/11 $ 3,477,000
Gary M. Cohen........................ 85,000 1.58% $ 32.49 11/27/11 985,150
John R. Considine.................... 125,000 2.33% $ 32.49 11/27/11 1,448,750
Vincent A. Forlenza.................. 65,000 1.21% $ 32.49 11/27/11 753,350
William A. Kozy...................... 65,000 1.21% $ 32.49 11/27/11 753,350
--------- ------- ------- -------- -----------
TOTAL................................ 640,000 11.92% $ 32.49 11/27/11 $ 7,417,600
All Employee Optionees............... 5,370,932 100.00% Various Various $62,249,101
- ---------
(1) All option grants to the named executives are for a ten-year term. They
become exercisable in four equal annual installments beginning one year from
the date of grant. The option grants to the named executive officers were
issued in tandem with limited SARs, which are exercisable only in the event
of a tender offer for the Company's Common Stock or a change in control of
the Company, each as defined in the 1998 Stock Option Plan.
(2) This estimate of value has been developed solely for purposes of comparative
disclosure in accordance with the rules and regulations of the Securities
and Exchange Commission ('SEC') and is consistent with the assumptions the
Company is using for Statement of Financial Accounting Standards ('SFAS')
123 reporting. The estimated value has been determined by application of the
Black-Scholes option pricing model, based upon the terms of the option grant
and the Company's stock price performance history as of the date of the
grant. The key assumptions are as follows: dividend yield: 1.16%;
volatility: 33.0%; risk-free rate of return: 4.50%; and expected exercise
period: 6 years.
The assumptions used in the valuation are based upon experience, and are not
a forecast of future stock price or volatility, or of future dividend
policy. No adjustments have been made for the risk of forfeitures or for
limitations on transferability.
STOCK OPTION EXERCISES
The following table contains information relating to the exercise of stock
options by the named executives in fiscal 2002, as well as the number and value
of their unexercised options as of September 30, 2002.
20
AGGREGATED OPTION/SAR EXERCISES IN FISCAL YEAR 2002 AND
FISCAL YEAR-END OPTION/SAR VALUES
VALUE
REALIZED NUMBER OF
(MARKET SECURITIES UNDERLYING VALUE OF UNEXERCISED
VALUE UNEXERCISED IN-THE-MONEY
SHARES LESS OPTIONS/SARS AT OPTIONS/SARS AT
ACQUIRED EXERCISE FISCAL YEAR-END FISCAL YEAR-END
NAME ON EXERCISE PRICE) EXERCISABLE/UNEXERCISABLE(2) EXERCISABLE/UNEXERCISABLE(1)(2)
- ---- ----------- -------- ---------------------------- -------------------------------
Edward J. Ludwig................ 15,000 $407,882 744,156/605,000 $5,498,097/$ 2,469
Gary M. Cohen................... 0 0 321,788/153,500 1,203,173/ 9,134
John R. Considine............... 0 0 150,000/365,000 92,804/ 92,806
Vincent A. Forlenza............. 0 0 393,096/121,500 2,634,440/ 6,665
William A. Kozy................. 0 0 365,668/120,500 2,388,369/ 6,172
- ---------
(1) The value of unexercised options represents the difference between the
closing price of the Company's Common Stock on September 30, 2002 ($28.40)
and the exercise price of each unexercised in-the-money option held by the
named executives.
(2) All option grants to the named executives are for a ten-year term. Options
that were issued in November 2001 become exercisable over a four year period
(with 25% becoming vested on each anniversary of the date of grant). Options
issued after 1996 and prior to November 2001 are exercisable 50% after two
years from the date of grant and 100% after three years from the date of
grant. All options issued to the named executives prior to 1997 were
exercisable immediately. The above option grants were issued in tandem with
limited SARs, which are exercisable only in the event of a tender offer for
the Company's Common Stock or a change in control of the Company, as defined
under the Company's stock option plans.
RETIREMENT PLAN
The Company's Retirement Plan (the 'Retirement Plan') is a non-contributory
defined benefit plan. It provides for normal retirement at age 65 and permits
earlier retirement in certain cases. Benefits are based upon years of service
and compensation (comprised of salary, commissions, bonuses and stock award
distributions ('Covered Compensation')) for the five consecutive calendar years
which produce the highest average compensation. The Retirement Plan is
integrated with Social Security.
The Code limits the maximum annual benefit which may be paid to any
individual from the Retirement Plan's trust fund and the amount of compensation
that may be recognized. Under the Company's Retirement Benefit Restoration Plan
(the 'Restoration Plan'), the Company will make supplemental, unfunded payments
to offset any reductions in benefits which may result from such limitations. The
Company's obligations to pay retirement benefits under the Restoration Plan, as
well as deferred amounts under the Company's Deferred Compensation Plan, are
secured by a trust. The trust is currently secured by a letter of credit. The
trustee is required to draw on the letter of credit, up to specified limits,
following a change in control of the Company (as defined in the trust
agreement).
The table below shows the estimated annual retirement benefits payable under
the Retirement Plan and the Restoration Plan at normal retirement date to all
eligible employees, including the named executives, in specified remuneration
and years of service classifications.
21
ESTIMATED ANNUAL RETIREMENT BENEFITS
YEARS OF CREDITED SERVICE
MAXIMUM --------------------------------------------------------------------------
AVERAGE
COMPENSATION 10 15 20 25 30 35 40
- ------------ -------- -------- -------- -------- -------- -------- --------
$ 200,000 $ 28,139 $ 42,208 $ 56,278 $ 70,347 $ 84,417 $ 98,486 $112,556
300,000 43,139 64,708 86,278 107,847 129,417 150,986 172,556
400,000 58,139 87,208 116,278 145,347 174,417 203,486 232,556
500,000 73,139 109,708 146,278 182,847 219,417 255,986 292,556
600,000 88,139 132,208 176,278 220,347 264,417 308,486 352,556
700,000 103,139 154,708 206,278 257,847 309,417 360,986 412,556
800,000 118,139 177,208 236,278 295,347 354,417 413,486 472,556
900,000 133,139 199,708 266,278 332,847 399,417 465,986 532,556
1,000,000 148,139 222,208 296,278 370,347 444,417 518,486 592,556
1,100,000 163,139 244,708 326,278 407,847 489,417 570,986 652,556
1,200,000 178,139 267,208 356,278 445,347 534,417 623,486 712,556
1,300,000 193,139 289,708 386,278 482,847 579,417 675,986 772,556
1,400,000 208,139 312,208 416,278 520,347 624,417 728,486 832,556
1,500,000 223,139 334,708 446,278 557,847 669,417 780,986 892,556
1,600,000 238,139 357,208 476,278 595,347 714,417 833,486 952,556
Covered Compensation includes all components of each named executive's
Annual Compensation as set forth in the Summary Compensation Table on page 19
hereof. Amounts shown are calculated on a straight-life annuity basis, and are
not subject to any further deduction for Social Security benefits or other
offsets. Employees may elect to receive the actuarial value of their retirement
benefits in a lump sum in lieu of a lifetime pension.
Under the Retirement Plan, years of credited service as of December 31,
2002, and Covered Compensation for the calendar year ending December 31, 2002,
will be 23 years and $1,600,000 for Mr. Ludwig, 19 years and $750,000 for Mr.
Cohen, 3 years and $945,000 for Mr. Considine, 22 years and $630,000 for Mr.
Forlenza, and 28 years and $628,077 for Mr. Kozy.
In addition, Mr. Considine has an agreement with the Company under which Mr.
Considine is entitled to receive an annual supplemental pension benefit of
$86,900 in the event his employment is terminated before the age of 55. In the
event Mr. Considine remains with the Company beyond his 55th birthday, he will
be entitled to receive an actuarially increased annual supplemental pension
benefit. In addition, under a separate agreement, if Mr. Considine's employment
is terminated prior to age 55 other than for cause or as a result of a voluntary
termination, he will be entitled to participate in the Company's retiree medical
plan upon the attainment of age 55. If Mr. Considine remains employed by the
Company beyond his 55th birthday, he will be entitled to participate in the
retiree medical plan following termination of his employment for any reason.
CONTRACTUAL OBLIGATIONS
Messrs. Ludwig, Cohen, Forlenza, Considine and Kozy have agreements with the
Company which provide for the continued employment of the named executives for a
period of three years following a change of control of the Company. In the event
of a termination by the Company other than for cause, or by the named executive
for good reason, at any time during the three years following a change in
control of the Company, the named executive would receive a payment equal to
three times the executive's annual compensation (salary and bonus), and certain
of his fringe benefits (reduced to the extent provided by any subsequent
employer) would be continued for not less than three years. In addition, in the
event of termination by the Company other than for cause, or by the named
executive for good reason, within three years following a change in control, the
named executive would be entitled to receive the actuarial equivalent of the
additional pension benefits which the named executive would have earned had he
remained an employee for an additional three years following termination. The
terms 'cause,' 'good reason' and 'change in control' are defined in the
agreements.
If any termination payments to a named executive pursuant to his agreement
should be subject to the excise tax imposed by Section 4999 of the Code, the
Company would reimburse the named executive in an amount such that the named
executive would retain the same amount, net of all taxes, that he would have
retained had the excise tax not been in effect.
22
PERFORMANCE COMPARISON
The following graph presents a comparison of cumulative total return to
shareholders for the five-year period ended September 30, 2002 for the Company,
the S&P 500 Index, and for a peer group of companies, selected on a
line-of-business basis (the 'Peer Group'). The following graph also presents
the cumulative total return to shareholders during the same period for
the peer group of companies (the 'Former Peer Group') that was used in the
five-year performance graph included in last year's proxy statement.
The comparison period presented is required by applicable rules and
regulations of the SEC. Cumulative total return to shareholders is measured by
dividing total dividends (assuming dividend reinvestment) plus per share price
change for the period by the share price at the beginning of the measurement
period. The Company's cumulative shareholder return is based on an investment of
$100 on September 30, 1997 and is compared to the cumulative total return of the
S&P 500 Index and the weighted, average performance of both the Peer Group and
the Former Peer Group over the same period with a like amount invested.
The companies composing the Peer Group consist of Abbott Laboratories,
Bausch & Lomb Inc., Baxter International Inc., Beckman Coulter, Inc., Boston
Scientific Corporation, Guidant Corporation, Johnson & Johnson, Medtronic, Inc.,
St. Jude Medical, Inc. and Stryker Corporation.
The companies composing the Former Peer Group consist of the foregoing
companies (excluding Stryker), in addition to Allergan, Inc., C. R. Bard, Inc.,
Pfizer, Inc. and Wyeth. The Company believes that comparisons to the current
Peer Group, which consists solely of medical technology and device companies,
present a more accurate measure of the Company's performance. C.R. Bard was
removed from the peer group index because it had entered an agreement to be
acquired by another company at the time the Company was reviewing changes to the
index.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
AMONG BECTON, DICKINSON AND COMPANY, THE S&P 500 INDEX,
THE PEER GROUP AND THE FORMER PEER GROUP
BECTON, DICKINSON FORMER
AND COMPANY PEER GROUP PEER GROUP S&P 500
----------------- ---------- ---------- -------
09/97 100 100 100 100
12/97 107.4 108.5 114 103.7
03/98 147.4 122.3 132.9 117.4
06/98 166.1 130 146.2 121.8
09/98 177.6 131.9 143.8 109.7
12/98 185.5 146.0 166.1 133.4
03/99 172.4 159.3 181.2 141.5
06/99 130.4 162.5 170.6 149.1
09/99 122.3 145.0 155.7 140.5
12/99 117.9 146.8 151.3 160.4
03/00 116.3 136.4 151.3 163
06/00 126.3 170.8 183.5 159.7
09/00 116.8 172 179.8 158.3
12/00 153.4 185.4 198.7 145
03/01 156.9 165.1 174.1 129.3
06/01 159.4 179.8 176.5 136.3
09/01 165.2 193.8 182.3 116.5
12/01 150.7 212.7 190.9 129.8
03/02 169.4 216.6 187.4 128.6
06/02 155.1 174.9 151.3 111.5
09/02 128.3 176.1 136.7 92.5
23
PROPOSAL 2.
SELECTION OF INDEPENDENT AUDITORS
The Board of Directors, pursuant to the recommendation of the Audit
Committee, has selected Ernst & Young LLP to audit the accounts of the Company
and its subsidiaries for the fiscal year ending September 30, 2003. A
representative of Ernst & Young LLP will attend the Annual Meeting to respond to
appropriate questions and will have the opportunity to make a statement.
Fees billed to the Company by Ernst & Young LLP for services rendered during
fiscal year 2002 were as follows:
Audit Fees: $1,880,600
Financial Information Systems Design and Implementation Fees: $0
All Other Fees: $2,846,000
All Other Fees consists of:
Audit Related Fees -- $838,200
Other Fees -- $2,007,800
The Audit Committee considered, in reliance on management and the
independent auditors, whether the provision of the services designated as 'All
Other Fees' above is compatible with maintaining the independence of Ernst &
Young LLP. 'Audit Related Fees' includes fees related to statutory filings in
certain international jurisdictions, audits of employee benefit plans, and
accounting and reporting advice on specific matters. 'Other Fees' includes fees
related to tax compliance and tax consulting, and transnational services for
employees.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE SELECTION OF
ERNST & YOUNG LLP. IF APPROVAL IS WITHHELD, THE BOARD WILL RECONSIDER ITS
SELECTION.
SHAREHOLDER PROPOSAL
PROPOSAL 3.
PROPOSAL ON CUMULATIVE VOTING
Mrs. Evelyn Y. Davis, Watergate Office Building, 2600 Virginia Avenue N.W.,
Suite 215, Washington, D.C. 20037, owner of 800 shares of Common Stock, has
informed the Company that she plans to introduce the following proposal at the
meeting:
RESOLVED: 'That the stockholders of Becton Dickinson, assembled in Annual
Meeting in person and by proxy, hereby request the Board of Directors to take
the necessary steps to provide for cumulative voting in the election of
directors, which means each stockholder shall be entitled to as many votes as
shall equal the number of shares he or she owns multiplied by the number of
directors to be elected, and he or she may cast all of such votes for a
single candidate, or any two or more of them as he or she may see fit.'
REASONS: 'Many states have mandatory cumulative voting, so do National
Banks. In addition, many corporations have adopted cumulative voting. Last
year the owners of 74,217,231 shares, representing approximately 38.5% of
shares voting voted FOR this proposal.'
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL 3.
Your Board believes that directors should be elected based on their
abilities, and should represent the interests of all shareholders, not just
those of particular groups. Cumulative voting enables individual shareholders or
groups of shareholders with less than a majority of the shares to elect
directors primarily concerned with advancing their particular interests. This
could result in the election of directors who advocate the positions of the
group responsible for their election rather than the positions that are in the
best interests of BD and of all of our shareholders. In addition, the support by
directors of the special interests of the constituencies that elected them could
create partisanship and divisiveness among Board members and impair the Board's
ability to operate effectively as a governing body, to the detriment of all BD
shareholders.
24
BD's current system of electing directors, with each share entitled to one
vote for each nominee, results in a more effective board whose members are
accountable to all of BD shareholders, rather than to a particular group.
This proposal has been submitted at the past six annual meetings and has
been rejected by our shareholders each time. Your Board of Directors continues
to oppose this proposal because it believes it is contrary to the best interests
of BD and its shareholders.
Accordingly, the Board recommends a vote AGAINST this proposal.
SHAREHOLDER PROPOSALS FOR 2004 ANNUAL MEETING
Any proposal that a shareholder wishes to submit for inclusion in the
Company's Proxy Statement and proxy/voting instruction card for the 2004 Annual
Meeting of Shareholders ('2003-2004 Proxy Statement') pursuant to SEC Rule 14a-8
must be received by the Company no later than August 28, 2003.
In addition, notice of any proposal that a shareholder wishes to propose for
consideration at the 2004 Annual Meeting of Shareholders, but does not seek to
include in the Company's 2003-2004 Proxy Statement pursuant to Rule 14a-8, must
be delivered to the Company no earlier than October 14, 2003 and no later than
November 13, 2003, if the proposing shareholder wishes for the Company to
describe the nature of the proposal in the 2003-2004 Proxy Statement as a
condition to exercising its discretionary authority to vote proxies on the
proposal. Any shareholder proposals or notices submitted to the Company in
connection with the 2004 Annual Meeting of Shareholders should be addressed to:
Secretary, Becton, Dickinson and Company, 1 Becton Drive, Franklin Lakes, New
Jersey 07417-1880.
25
APPENDIX A
THE MISSION OF THE BOARD OF DIRECTORS
The Board of Directors of BD believes that in keeping with its duties and
its goal of achieving high standards of corporate governance, and in order to
further the Core Values and Envisioned Future of BD, it must:
-- Represent the owners' interest in perpetuating a successful
business, including optimizing long-term financial returns;
-- Ensure that the corporation is managed in such a way as to achieve
this result;
-- Serve in an active and not a passive fashion;
-- Regularly monitor the effectiveness of management policies and
decisions, including the execution of strategies; and
-- Consider the needs of BD's customers, employees, suppliers, and the
communities in which BD conducts business, in addition to
fulfilling its obligations for increased shareholder value.
To achieve the foregoing, the Board believes that certain oversight
responsibilities should be given priority on its agenda, including a periodic
review of: BD's strategy and results, management structure, performance and
succession planning, Board effectiveness, ethical conduct and legal compliance,
accounting and financial control, and the financial structure and preservation
of assets.
To assist it in discharging these responsibilities, the Board, from time to
time, has established standing Committees. The Board delegates to these
Committees the authority to consider matters within each Committee's area of
responsibility and to report to the Board with appropriate recommendations.
A-1
BECTON, DICKINSON AND COMPANY (BD)
STATEMENT OF CORPORATE GOVERNANCE PRINCIPLES
ADOPTED NOVEMBER 27, 2001
1) BOARD COMMITTEES, THEIR NUMBER, STRUCTURE, AND CHARTERS
The Board has the following standing committees: Audit, Compensation and
Benefits, Finance and Investment, Corporate Governance, Executive and Corporate
Affairs. The structure and charter of each committee is reviewed on an annual
basis, first by the committee, and then by the Corporate Governance Committee,
who recommends any changes it deems necessary or appropriate to the Board for
consideration. The Board has the flexibility to form a new committee, disband a
current committee or establish ad hoc committees to address particular issues or
circumstances, as the need may arise.
2) INDEPENDENCE OF COMMITTEES
It is the policy of the Board that only independent directors serve on the
Audit and Compensation and Benefits Committees and, subject to the terms of its
charter, the Corporate Governance Committee.
3) ASSIGNMENT AND ROTATION OF COMMITTEE MEMBERS AND CHAIRS
The Board, after consultation with the Chairman, designates the members of
the committees, taking into account their particular expertise, experience and
preferences.
The Board does not believe in mandating the fixed rotation of committee
members and/or Committee chairs, since there may be reasons at a given point in
time for maintaining continuity. Ideally, however, the Board will seek to rotate
committee members and chairs, on a staggered basis within each committee, on an
average of every five years. The Board seeks thereby to avoid director
entrenchment while ensuring continuity and the availability of experience
derived through longevity.
4) SEPARATION OF CHAIRMAN AND CHIEF EXECUTIVE ROLES
The Board believes it important to retain its flexibility to allocate the
responsibilities of the offices of the Chairman and the Chief Executive Officer
in any way that seems best for the Company at a given point in time.
5) LEAD DIRECTOR (AMENDED SEPTEMBER 24, 2002)
The Board notes that all BD directors are elected by the shareholders and
all have an equal voice.
The Chairman and CEO is free, as is the Board as a whole should a special
need arise, to call upon any one or more directors to provide leadership in a
given situation. The Board understands that leadership in certain subject areas
falls to the committee chair(s) responsible for the subject matter giving rise
to the need, and that the chairs function as the committee liaisons to the
Chairman and the rest of the Board.
The Board also believes it is appropriate and necessary for the independent
directors to designate a Lead Director, on a rotating basis, to serve for a term
of twelve months. In circumstances in which the non-management directors meet
without any management present, the director designated by the independent
directors as the Lead Director shall preside over such meeting. The Lead
Director also shall serve as a liaison between the non-management members of the
Board and the Chairman, and as a contact person to facilitate communications by
BD's employees and shareholders with the non-management members of the Board.
6) MIX OF INSIDE AND OUTSIDE DIRECTORS
It is BD's policy that the Board be composed predominantly of independent
directors who do not hold management responsibilities within the Company,
thereby ensuring their availability to serve on the Audit, Compensation and
Benefits, and Corporate Governance committees and that no more than two persons
with Company management responsibilities shall be members of the Board at any
given point in time.
A-2
7) BOARD DEFINITION OF INDEPENDENCE
The Board assesses each director's independence on an annual basis, and for
purposes of membership on the Audit and Compensation and Benefits Committees,
determines its directors' independence based on applicable regulatory
requirements of the Securities and Exchange Commission and the New York Stock
Exchange.
For all other purposes, including determining whether the Board is comprised
of a predominant majority of independent directors, 'independence' shall be
defined to mean a director who has not been employed by the Company or any of
its subsidiaries within the previous five years and has no significant financial
or personal relationship to BD or to its management that would interfere with
the exercise of independent judgment by such director, provided, however that
the Board believes all directors should hold meaningful equity ownership
positions in the Company and provided further, that a director serving on the
Corporate Governance Committee shall not be disqualified from participating in
the nomination of candidates for election to the Board and the determination of
director compensation as long as he or she is not, and at no time in the prior
two years was, an employee of the Company or any of its subsidiaries.
The Board, in its business judgment, will determine, based on the relevant
facts and circumstances, whether a director has a relationship to BD or to its
management that would interfere with such director's exercise of independent
judgment.
8) BOARD SIZE
The Board periodically reviews its size to consider that most effective for
its operation. In general, the Board believes that its appropriate size consists
of between ten and thirteen members, recognizing that retirements, resignations
and recruiting delays, as well as the availability of one or more outstanding
candidates, may result periodically in the Board consisting, for some
transitional period, of a slightly greater or lesser number of directors than
the Board may have targeted.
9) DIRECTOR RETIREMENT POLICY
It is BD's policy that directors retire from the Board effective at the
Annual Meeting of Shareholders following their seventy-second birthday. Under
special circumstances, with the approval of the Board, exceptions can be made to
this policy. The Board believes, however, that any exceptions should be rare.
10) TERM LIMITS
It is the policy of the Company to avoid term limits which have the
disadvantage of discontinuing the availability and contributions of directors
who have developed experience with and insight into, the Company and its needs
over a period of time.
11) CHANGES IN DIRECTORS' PRIMARY RESPONSIBILITIES AND OUTSIDE COMMITMENTS
It is BD's policy that every director, including the Chief Executive Officer
and any other inside directors, must notify the Chairman of the Board of his or
her retirement, of any change in employer, and of any other significant change
in professional roles and responsibilities. The Board, upon recommendation from
the Corporate Governance Committee, then considers the continued appropriateness
of Board membership under the new circumstances.
As a corollary, it is the policy of the Board that every director should
seek the consent of the Chairman of the Board and the Corporate Governance
Committee and confirm the absence of any actual or potential conflict, prior to
accepting any invitation to serve on another corporate or not-for-profit board
or with a government or advisory group.
12) EVALUATION BY OUTSIDE DIRECTORS OF THE CHIEF EXECUTIVE OFFICER
It is BD's policy that the outside directors meet privately no less than
once a year to evaluate the performance of the Chief Executive Officer. The
evaluation is based on objective and subjective criteria, including an
assessment of the performance of the businesses, accomplishment of long-term
strategic objectives,
A-3
and management development. A clear understanding between the outside directors
and the Chief Executive Officer regarding the Company's expected performance and
how that performance is to be measured is critical to the process.
The Compensation and Benefits Committee uses the results of the evaluation
when considering the Chief Executive Officer's compensation, and the Chairman of
the Compensation and Benefits Committee communicates the results of this
evaluation to the Chief Executive.
13) MEETINGS OF NON-MANAGEMENT DIRECTORS (AMENDED SEPTEMBER 24, 2002)
The non-management directors shall meet privately as a matter of course,
without any management present, not less than three times a year, with one of
these sessions dedicated to the review of the Chief Executive Officer and the
recommendations of the Compensation and Benefits Committee regarding Chief
Executive Officer compensation. These meetings should be scheduled as a matter
of course for each fiscal year by the Corporate Secretary.
The non-management directors also may meet in executive session at other
times during the year to consider issues they deem important to address without
management present.
Following each meeting of the non-management directors, the director then
designated by the independent directors as the Lead Director will discuss with
the Chairman, to the extent appropriate, matters addressed in or arising from
the private meeting.
14) EVALUATION OF THE BOARD AND BOARD COMMITTEES
It is the policy of the Board to review on an annual basis its performance
and effectiveness as a whole, with each Director completing a questionnaire
developed by the Corporate Governance Committee with respect to seventeen
criteria. The collective ratings and comments are compiled in advance of the
review session and are presented by the Chairman of the Corporate Governance
Committee to the full Board for discussion.
Beginning in 2001, this practice has been expanded to include annual
self-assessments by each Board committee, relying on a review process similar to
that used by the Board, with performance criteria for each committee established
on the basis of their charters.
15) EVALUATION OF INDIVIDUAL DIRECTOR PERFORMANCE
It is BD's policy to have the Corporate Governance Committee assess, at
least once every three years, on the basis of pre-established criteria, the
performance of each individual director standing for re-election at the next
shareholders' meeting. The pre-established criteria address each director's core
competencies, independence and level of commitment.
The Corporate Governance Committee considers not only an individual's
qualities, performance and professional responsibilities, but also the then
composition of the Board and the challenges and needs of the Board as a whole at
that time. If applicable, the Committee also considers the impact of any change
in the principal occupation of the directors during their prior terms of
service. This evaluation process allows each director the opportunity to
conveniently confirm his or her interest to continue as a member of the Board.
Upon completion of the individual director evaluation process, the Committee
reports to the full Board its conclusions and recommendations for nominations to
the Board.
It is BD's policy that the Corporate Governance Committee also should review
and consider the performance of any individual director if a situation were to
arise that interfered with the proper performance of his or her duties as a
member of the Board.
16) COMPANY PERFORMANCE AND CORPORATE STRATEGY
The Board reviews the Company's financial performance on a regular basis at
Board meetings and through periodic updates, with a particular focus on peer and
competitive comparisons. These reviews include the views of management as well
as those of key investors and securities analysts.
A-4
The Board also conducts an annual off-site meeting, normally in November of
each year, to review and approve the Company's long-term strategy, and assess
its strategic, competitive and financial performance, on both an absolute basis
and in relation to the performance, practices and policies of its peers and
competitors.
Each Committee of the Board in addition should assess the Company's
performance on an annual basis from the perspective of its charter's mission and
purpose, and report the assessment results to the full Board.
17) COMPOSITION OF THE BOARD AND BOARD MEMBERSHIP CRITERIA
The Corporate Governance Committee is responsible for reviewing with the
Board the appropriate skills and characteristics required of Board members in
the context of the composition of the Board at any given point in time. The
assessment of the overall composition of the Board considers issues of judgment,
diversity, age, skills, international background, and experience in areas such
as technology, change management and finance.
On an annual basis the Corporate Governance Committee considers the
composition, challenges and needs of the Board as a whole, both in connection
with recommending candidates for election to the Board and in analyzing the
composition of the Board committees.
18) SELECTION AND INVITATION OF NEW DIRECTORS
The Corporate Governance Committee is responsible for recommending for Board
consideration candidates for election to the Board. On behalf of the Board, the
Chairman and Chief Executive Officer generally extend the invitation to a
candidate to join the Board.
19) ORIENTATION OF DIRECTORS
It is BD's policy that an orientation and training process should be
developed and made available to new members of the Board and to new members of
each Board committee. Orientation of a new director or new committee member is
coordinated by the Corporate Secretary and the Chief Financial Officer and is
tailored to the requirements of the individual.
In addition, BD directors are encouraged to visit the Company and its
subsidiaries each year, to locations selected in consultation with the Chief
Executive Officer, to familiarize him/herself with the business of the Company
and its subsidiaries. These visits should be set up through the Office of the
Corporate Secretary, and directors are requested to report to the full Board
following any such visit.
20) DIRECTOR COMPENSATION
The Corporate Governance Committee and the Board receive and review periodic
reports from management on trends in director compensation. In addition, the
Corporate Governance Committee conducts a thorough analysis of director
compensation and stock ownership at least every three years and makes
recommendations to the Board for any adjustments deemed appropriate.
Beginning in 1996, BD director compensation was redesigned to focus
increasingly on equity compensation for directors. This redesign included
eliminating both the director retirement plan and the payment of meeting fees,
reducing the cash retainer amount and establishing an equity-based director
deferral plan and a director stock option plan.
21) DIRECTOR EQUITY OWNERSHIP
The Board believes that directors should hold meaningful equity ownership
positions in the Company. In 1996 the Company adopted director share ownership
guidelines. In 2000 the director share ownership guidelines were adjusted to
reflect a director's tenure on the Board, requiring each outside director to own
shares of BD common stock valued at seventy percent of the amount obtained by
multiplying the annual retainer fee in effect from time to time by the number of
years a person has served as a director.
A-5
22) CLASSIFIED BOARD
Since 1984, the BD Board comprises three classes of directors, with
approximately one-third of the directors assigned to each class. The members of
each class are elected to terms of three years.
The Board reviews its classified board structure no less than once every two
years.
After careful review and consideration, in 2001 the BD Board concluded that
a classified board provides continuity, stability and experience in the
composition of the Board, while still providing for the election of a portion of
the Board each year. It also enables the Board to represent more effectively the
interests of all shareholders in a wide variety of circumstances.
23) WELL-INFORMED DIRECTORS
In order for the Board to exercise fully its oversight functions, management
provides the Board access to information regarding the Company and the markets
in which the Company operates. This information comes from a variety of sources,
including management reports, security analysts' reports, information regarding
peer performance, direct interaction with senior management and visits to
Company facilities.
24) BOARD MATERIALS AND PRESENTATIONS
As a general rule, presentations on specific subjects are sent to the Board
members in advance so that Board meeting time may be conserved and discussion
time focused on questions and discussion of key issues.
25) BOARD AGENDA
The Chairman and Chief Executive Officer, together with the Corporate
Governance Committee, establishes on an annual basis an agenda of topics for
consideration and review by the Board during the following year. This annual
schedule of topics is then provided to the full Board for review and comment and
is adjusted, as appropriate, during the year.
The Chairman and Chief Executive Officer establish the agenda and schedule
for each Board meeting, allowing for an appropriate mix of presentation and
discussion.
26) SUCCESSION PLANNING AND MANAGEMENT DEVELOPMENT
The Board, with the input of the Chief Executive Officer, conducts an annual
assessment of the performance and development of senior management. The Board
also conducts periodic discussions, no less than once a year, regarding
succession of the Chief Executive Officer and other members of senior management
and, with the recommendations of the Chief Executive Officer, identifies
potential successor candidates for these roles.
As a matter of policy, the Chief Executive Officer should provide to the
Board, on an ongoing basis, his or her recommendation as to a successor in the
event of an unexpected disability.
27) ATTENDANCE OF NON-DIRECTORS AT BOARD MEETINGS/BOARD ACCESS TO SENIOR
MANAGEMENT
A limited number of members of the BD leadership team attend Board meetings
and Board dinners on a regular basis. In addition, other BD leaders attend Board
and Committee meetings when appropriate to provide additional expertise and to
expose the Board to a broader pool of management.
The Board has open access to senior management.
28) BOARD'S INTERACTION WITH INSTITUTIONAL INVESTORS, PRESS AND CUSTOMERS
In general, BD management speaks for the Company. Individual Board members
may, from time to time at the request of management, meet or otherwise
communicate with various constituencies that are involved with BD.
A-6
29) CONFLICTS OF INTEREST
If an actual or potential conflict of interest develops because of a change
in the business operations of the Company or a subsidiary, or in a director's
circumstances (for example, significant and ongoing competition between the
Company and a business with which the director is affiliated), the director
should report the matter immediately to the Chairman of the Board and the
Corporate Governance Committee for evaluation and appropriate resolution.
If a director has a personal interest in a matter before the Board, the
director shall disclose the interest to the full Board, excuse himself or
herself from participation in the discussion, and shall not vote on the matter.
30) DISCLOSURE REGARDING CORPORATE GOVERNANCE, DIRECTOR COMPENSATION AND BOARD
EVALUATION
BD provides disclosure in its annual Proxy Statement concerning stock
ownership guidelines for directors and senior management, a comprehensive
description of the board's self-evaluation processes and the composition of
director compensation.
So that shareholders may gain greater knowledge of the Board's processes,
beginning in 2001 the Company's annual proxy statement disclosure will be
expanded to also include the publication of this Statement of Corporate
Governance Principles once adopted by the Board.
31) CHARITABLE CONTRIBUTIONS (ADOPTED JULY 23, 2002)
Proposed charitable contributions, or pledges of charitable contributions,
by the Company within any given fiscal year in an aggregate amount of $50,000 or
more, to an entity for which a BD director or a member of any of their immediate
families serves as a director, officer, employee, or member of such entity's
fund-raising organization or committee, shall be subject to prior review and
approval by the Corporate Governance Committee; and
The Corporate Governance Committee of the Board shall be provided on an
annual basis with a report from management of the charitable contributions or
pledges made by the Company during the fiscal year in an amount of $10,000 or
more, to an entity for which a BD director or executive officer, or a member of
any of their immediate families, serves as a director, officer, employee, or
member of such entity's fund-raising organization or committee and such report
of contributions made shall be included and disclosed in the Company's annual
proxy statement;
provided, however, that for purposes of determining whether the $50,000
approval threshold or $10,000 disclosure threshold is reached, no contributions
by the Company under its established Matching Gift Program shall be included or
reported.
32) EXECUTIVE OFFICER MEMBERSHIP ON PUBLIC COMPANY BOARDS (ADOPTED NOVEMBER 26,
2002)
It is BD's policy that prior to an executive officer agreeing to join any
board of another publicly-traded company, the executive officer first must seek
the agreement of BD's Chief Financial Officer and of its General Counsel that
any such proposed service would not present undue conflict of interest or
financial risk, to either BD or to the executive officer. Once such agreement is
secured, the executive officer then shall seek the approval of the Corporate
Governance and Nominating Committee.
As a general rule, the Board believes that executive officers should be
limited at any given time to serving on the board of not more than one
publicly-traded company. Any exceptions to this general rule require the prior
approval of the Corporate Governance and Nominating Committee.
A-7
APPENDIX B
BECTON, DICKINSON AND COMPANY
2002 ANNUAL REPORT OF CHARITABLE CONTRIBUTIONS
NOVEMBER 26, 2002
The following report lists charitable contributions or pledges made by BD
during the 2002 fiscal year in an amount of $10,000 or more, to an entity for
which a BD director or executive officer, or a member of any of their immediate
families, serves as a director, officer or employee, or as a member of such
entity's fund-raising organization or committee.
NAME OF DIRECTOR OR NAME OF AFFILIATION WITH AMOUNT OF AMOUNT OF
OFFICER ORGANIZATION ORGANIZATION PLEDGES CONTRIBUTIONS
- ------------------------- ------------ ------------ ------------ -------------
Gary M. Cohen, Rutgers Business School; Mr. Cohen is on the Board -- $30,000
President -- BD Medical Newark and New Brunswick of Advisors.
Systems
Vincent A Forlenza, American Diabetes Mr. Forlenza is on the $500,000 $125,000 (including
Senior Vice Association Corporate Advisory Board. over 5 years $100,000 pursuant
President -- Technology, to FY02 pledge)
Strategy and Development
The Valley Hospital, Mr. Forlenza is a member -- $60,000
Ridgewood, NJ of the Board of
Directors.
William A. Kozy, Morristown Memorial Mr. Kozy is on the -- $150,000
President -- Clinical Hospital Executive Advisory Board.
Laboratory Solutions and
Company Operations
Edward J. Ludwig, Inter-Religious Mr. Ludwig is a member of $50,000 $35,000 (including
Chairman, President and Fellowship for the the Development $25,000 pursuant to
Chief Executive Officer Homeless Committee. FY02 pledge)
UNICEF Mr. Ludwig is a member of $1,000,000 $210,000 (including
the Board of Directors of over 5 years $200,000 pursuant
the U.S. Fund for UNICEF. to FY02 pledge)
Frank A. Olson, Director Save The Children Mr. Olson is on the Board $200,000 $50,000 (pursuant
of Trustees. to FY02 pledge)
Willard J. Overlock, Jr., Juvenile Diabetes Mr. Overlock's wife is a $500,000 $47,000
Director Research Foundation member of the Board of over 2 years
Directors.
Columbia University Mr. Overlock is on the -- $251,000
Graduate School of Board of Overseers.
Business
Alfred Sommer, Director The Johns Hopkins Dr. Sommer is Dean of the -- $25,500
University ('JHU') JHU Bloomberg School of
Public Health, and Mr.
Ludwig is member of the
JHU Board of Trustees.
B-1
DIRECTIONS TO
THE WOODCLIFF LAKE HILTON
FROM WESTERN NJ
Route 80 East to Garden State Parkway North. Take Garden State Parkway to Exit
171 (Woodcliff Lake). Turn left onto Glen Road. Turn right onto Chestnut Ridge
Road. Proceed approximately one-half mile and turn left onto Tice Boulevard.
Proceed to hotel on the left.
FROM NEWARK AIRPORT
Route 78 West to Garden State Parkway North. Take Garden State Parkway to Exit
171 (Woodcliff Lake). Turn left onto Glen Road. Turn right onto Chestnut Ridge
Road. Proceed approximately one-half mile and turn left onto Tice Boulevard.
Proceed to hotel on the left.
FROM TAPPAN ZEE BRIDGE
Over Tappan Zee onto New York Thruway (287 West). Take Thruway to Exit 14A to
Garden State Parkway. Take first exit (School House Road-Pearl River). Turn left
onto School House Road, and turn right at light onto Summit Avenue. Turn left at
light onto Chestnut Ridge Road. Proceed 1.5 miles and turn right onto Tice
Boulevard. Proceed to hotel on the left.
FROM LAGUARDIA AIRPORT
Grand Central Parkway West (follow signs for George Washington Bridge) to
Tri-Boro bridge. Over bridge onto Major Deegan Expressway to Interstate 95 West.
Proceed over the GW Bridge, onto Route 80 West, to Garden State Parkway North.
Take Garden State Parkway to Exit 171 (Woodcliff Lake). Turn left onto Glen
Road. Turn right onto Chestnut Ridge Road. Proceed approximately one-half mile
and turn left onto Tice Boulevard. Proceed to hotel on the left.
PARKING WILL BE AVAILABLE
[RECYCLE LOGO]
Appendix 1
PROXY/VOTING INSTRUCTION CARD
BECTON, DICKINSON AND COMPANY
Proxy Solicited on Behalf of the Board of Directors for
Annual Meeting on February 11, 2003
The undersigned hereby appoints Edward J. Ludwig, John R. Considine, and Bridget
M. Healy, and any of them, with full power of substitution, proxies to attend
the annual meeting of shareholders of the Company to be held at 2:00 PM, on
Tuesday February 11, 2003 at The Woodcliff Lake Hilton, 200 Tice Boulevard,
Woodcliff Lake, New Jersey, and any adjournment thereof, and to vote all shares
of the Common Stock of the Company which the undersigned is entitled to vote
upon each of the matters referred to in this proxy and, in their discretion,
upon such other matters as may properly come before the meeting.
This card constitutes voting instructions to the Trustee and the Custodian,
respectively, for any shares of Common Stock allocated to the undersigned under
the Company's 1996 Directors' Deferral Plan ("DDP"), the Company's Deferred
Compensation Plan ("DCP"), the Med-Safe Systems, Inc. Savings Incentive Plan
(the "Med-Safe Plan") and, when so provided, under the Company's Global Share
Investment Program ("GSIP"), and also constitutes voting instructions to the
Trustee and the Custodian for a proportionate number of shares of Common Stock
in the DDP, DCP, the Med-Safe Plan and GSIP, respectively, for which no
instruction card has been received from other participants.
This card also constitutes voting instructions to the Trustee for any shares of
Common Stock and Series B ESOP Convertible Preferred Stock allocated to the
undersigned under the Company's Savings Incentive Plan ("SIP"). In addition,
unless the box on the reverse side of this card is checked, this card also
constitutes voting instructions to the Trustee for a proportionate number of
shares of Common Stock and Series B ESOP Convertible Preferred Stock in the SIP
that have not been allocated to participants or for which no instruction card
has been received from other participants ("unallocated/unvoted SIP shares").
Election of Directors, Nominees:
Term to Expire 2005 Term to Expire 2006
01 - Harry N. Beaty 03 - Edward J. Ludwig
02 - Frank A. Olson 04 - Willard J. Overlock, Jr.
05 - Bertram L. Scott
You are encouraged to specify your choices by marking the appropriate boxes, SEE
REVERSE SIDE, but you need not mark any boxes if you wish to vote in accordance
with the Board of Directors' recommendations. If you do not vote by telephone or
over the internet, please sign and return this card using the enclosed envelope.
continued and to be signed, on reverse side
Detach Card
X Please mark your
votes as in this
example. 1508
This proxy when properly executed will be voted in the manner directed herein.
If no direction is made, this proxy will be voted FOR Election of Directors, FOR
Proposal 2 and AGAINST Proposal 3.
The Board of Directors recommends a vote FOR Proposals 1 and 2.
FOR WITHHELD
1. Election of Directors [ ] [ ]
(see reverse)
For, except vote withheld from the following nominee(s):
- --------------------------------------------------------
FOR AGAINST ABSTAIN
2. Approval of independent auditors. [ ] [ ] [ ]
The Board of Directors recommends a vote AGAINST Proposal 3.
FOR AGAINST ABSTAIN
3. Cumulative voting. [ ] [ ] [ ]
If this box is checked, this card [ ]
does NOT constitute voting
instructions to the
Trustee with respect to
unallocated/unvoted SIP
shares.
NOTE: Please sign exactly
as name appears hereon.
Joint owners should each
sign. When signing as
attorney, executor,
administrator, trustee or
guardian, please give full
title as such.
Signature for all shares (OTHER THAN
unallocated/unvoted SIP shares if
the box immediately above is
checked):
----------------------------------------
----------------------------------------
SIGNATURE(S) DATE
FOLD AND DETACH HERE IF YOU ARE RETURNING YOUR VOTED PROXY/VOTINGINSTRUCTION
CARD BY MAIL
Dear Shareholder:
Becton, Dickinson and Company (BD) encourages you to take advantage of
convenient ways by which you can vote your shares. You can vote your shares 24
hours a day, 7 days a week, using either a touch-tone telephone or through the
internet. If you choose to vote your shares by telephone or through the
internet, there is no need to mail back your proxy/voting instruction card.
To vote your shares electronically you must use the control number printed in
the box above, just below the perforation. The series of numbers that appear in
the box above must be used to access the system. YOUR INTERNET OR TELEPHONE VOTE
MUST BE RECEIVED BY 12:01 A.M., NEW YORK CITY TIME, ON FEBRUARY 10, 2003.
1. To vote over the internet, log on to the internet and go to the Web Site
http://www.eproxyvote.com/bdx.
2. To vote over the telephone, on a touch-tone telephone dial 1-877-PRXVOTE
(1-877-779-8683). If calling from outside of the U.S. or from Canada,
shareholders should call 1-201-536-8073.
Your telephone or internet vote authorizes the proxies named on the above
proxy/voting instruction card in the same manner as if you marked, signed, dated
and returned the proxy/voting instruction card. If you choose to vote
telephonically or through the internet, there is no need to mail back your
proxy/voting instruction card.
Your vote is important. Thank you for voting.