SCHEDULE 14A
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(RULE 14A-101)
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INFORMATION REQUIRED IN PROXY STATEMENT
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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
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STRYKER CORPORATION
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(Name of Registrant As Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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STRYKER CORPORATION
2725 FAIRFIELD ROAD
KALAMAZOO, MICHIGAN 49002
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 20, 2004
------------------------
The Annual Meeting of Stockholders of Stryker Corporation will be held on
Tuesday, April 20, 2004, at 2:00 p.m., at the Radisson Plaza Hotel at The
Kalamazoo Center, Kalamazoo, Michigan, for the following purposes:
1. To elect seven directors;
2. To consider and act upon an amendment to the Company's Restated Articles
of Incorporation, as amended, to increase the authorized Common Stock to
one billion shares; and
3. To transact such other business as may properly come before the meeting.
All stockholders are cordially invited to attend the meeting. Only holders
of record of Common Stock at the close of business on February 27, 2004 are
entitled to notice of and to vote at the meeting. If you attend the meeting, you
may vote in person if you wish, even though you previously have returned your
proxy.
A copy of the Company's 2003 Annual Report is enclosed.
STOCKHOLDERS ARE URGED TO COMPLETE,
DATE AND SIGN THE ENCLOSED PROXY AND
RETURN IT IN THE ACCOMPANYING ENVELOPE
Dean H. Bergy
Secretary
March 12, 2004
STRYKER CORPORATION
2725 FAIRFIELD ROAD
KALAMAZOO, MICHIGAN 49002
------------------------
PROXY STATEMENT
------------------------
This proxy statement is furnished in connection with the solicitation by
the Board of Directors of Stryker Corporation of proxies to be used at the
Annual Meeting of Stockholders of the Company to be held on Tuesday, April 20,
2004, and at all adjournments thereof. The solicitation will begin on or about
March 12, 2004.
All shares represented by a properly executed proxy will be voted unless it
is revoked and, if a choice is specified, will be voted in accordance with such
specification. If no choice is specified, a proxy will be voted FOR the election
of the seven nominees named under "Election of Directors," unless authority to
do so is withheld with respect to one or more of such nominees, and FOR the
proposed amendment to the Restated Articles of Incorporation, as amended (the
"Restated Articles"), to increase the authorized Common Stock. In addition, a
proxy may be voted in the discretion of the proxyholders with respect to such
other business as may properly come before the meeting. A stockholder may revoke
a proxy at any time prior to the voting thereof.
Brokers holding shares of Common Stock for beneficial owners must vote
those shares according to specific instructions they receive from the owners. If
instructions are not received, brokers may vote those shares in their
discretion. Directors will be elected by a plurality of the votes cast at the
meeting. Votes that are withheld with respect to the election of directors will
be excluded entirely from the calculation and will have no effect on the
outcome. Approval of the proposed amendment to the Restated Articles will
require a majority of the outstanding shares of Common Stock entitled to vote at
the Annual Meeting. Abstentions will have the same effect as a vote against the
proposal to increase the authorized Common Stock.
There were outstanding as of the close of business on February 27, 2004,
the record date for the determination of stockholders entitled to notice of and
to vote at the meeting, shares of Common Stock of the Company. Each
share is entitled to one vote on each matter brought before the meeting.
Any proposal that a stockholder may desire to present to the 2005 Annual
Meeting must be received by the Company at the above address on or prior to
November 11, 2004 in order for such proposal to be considered for inclusion in
the proxy statement and form of proxy for such meeting.
1
BENEFICIAL OWNERSHIP OF MORE THAN 5%
OF THE OUTSTANDING COMMON STOCK
As used in this proxy statement, "beneficial ownership" means the sole or
shared power to direct the voting and/or disposition of shares of Common Stock.
In addition, a person is deemed to have beneficial ownership of any shares of
Common Stock that such person has the right to acquire within 60 days.
The following table sets forth certain information, as of December 31, 2003
unless otherwise indicated, with respect to the beneficial ownership of Common
Stock by the only person known to the Company to be the beneficial owner of more
than 5% of the outstanding shares of Common Stock.
NAME AND ADDRESS PERCENT OF
OF BENEFICIAL OWNER NUMBER OF SHARES CLASS
------------------- ---------------- ----------
Advisory Committee for the Stryker Trusts(1)................ 57,712,092 28.9%
490 West South Street
Kalamazoo, Michigan 49007
---------------
(1) Based solely upon information as of December 31, 2003 contained in a
Schedule 13G amendment filed with the Securities and Exchange Commission on
February 13, 2004. Under the terms of the trust agreement establishing
certain trusts for the benefit of members of the Stryker family (the
"Stryker Trusts"), an Advisory Committee, consisting of Jon L. Stryker, Pat
Stryker, Ronda E. Stryker, Gerard Thomas and Elizabeth S. Upjohn-Mason, has
full voting and disposition power with respect to 42,906,370 shares of
Common Stock owned by the Stryker Trusts. Ronda E. Stryker is currently a
director of the Company. A majority vote of the Advisory Committee is
necessary with respect to matters regarding the shares of Common Stock held
in the Stryker Trusts, including voting and disposition. Members of the
Advisory Committee beneficially own in the aggregate an additional
14,805,722 shares of Common Stock in their individual or other capacities,
as to which they have sole voting and disposition power except for 902,440
shares as to which Mrs. Upjohn-Mason has shared voting and disposition
power.
2
BENEFICIAL OWNERSHIP OF MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of shares of Common Stock as of January 31, 2004 by the
current directors of the Company, all of whom are standing for reelection, the
Named Executives referred to under the caption "Executive Compensation" and all
executive officers and directors of the Company as a group.
PERCENTAGE OF
NUMBER OF SHARES RIGHT TO OUTSTANDING
NAME OWNED(1) ACQUIRE(2) TOTAL(3) SHARES(%)
---- ---------------- ---------- ---------- -------------
John W. Brown............................. 9,197,756 730,000 9,927,756 4.95%
Howard E. Cox, Jr......................... 267,366 45,000 312,366 *
Donald M. Engelman, Ph.D.................. 30,642 45,000 75,642 *
Jerome H. Grossman, M.D................... 109,500 45,000 154,500 *
Stephen Si Johnson........................ 255,000 218,000 473,000 *
James R. Lawson........................... 0 138,000 138,000 *
John S. Lillard........................... 176,821 17,000 193,821 *
Edward B. Lipes........................... 249,508 30,000 279,508 *
Stephen P. MacMillan...................... 0 0 0 *
William U. Parfet......................... 40,000 45,000 85,000 *
Ronda E. Stryker.......................... 46,816,695 17,000 46,833,695 23.44%(4)
Executive officers and directors as a
group (14 persons)...................... 57,356,393 1,626,400 58,982,793 29.28%(4)
---------------
* Less than one percent.
(1) Excludes shares that may be acquired through stock option exercises.
(2) Pursuant to Rule 13d-3(c)(1) of the Securities Exchange Act of 1934 (the
"Exchange Act"), includes shares that may be acquired within 60 days after
January 31, 2004 upon exercise of options.
(3) Except for the shared beneficial ownership of shares of Common Stock
attributed to Ms. Stryker as a member of the Advisory Committee for the
Stryker Trusts, all as more fully set forth above under "Beneficial
Ownership of More Than 5% of the Outstanding Common Stock," such persons
hold sole voting and disposition power with respect to the shares shown in
this column. Does not include 804,091 shares of Common Stock owned by the
Company's Savings and Retirement Plans that are voted as directed by the
Company, except in the case of certain non-routine matters, which do not
include the election of directors or the proposal to increase the authorized
Common Stock, as to which the individual participants, including executive
officers, may give voting instructions. Such number of shares does not
exceed 5,000 in the case of any executive officer.
(4) Includes the shared beneficial ownership of shares of Common Stock held in
the Stryker Trusts and attributed to Ms. Stryker as a member of the Advisory
Committee for the Stryker Trusts, all as more fully set forth above under
"Beneficial Ownership of More Than 5% of the Outstanding Common Stock."
15,233,400 of the shares in the Stryker Trusts are held for the benefit of
Ms. Stryker.
3
ELECTION OF DIRECTORS
Seven directors are to be elected to serve until the next Annual Meeting of
Stockholders and until their successors shall have been duly elected and
qualified. All of the nominees listed below are currently members of the Board
of Directors. The nominees for directors have consented to serve if elected and
the Company has no reason to believe that any of the nominees will be unable to
serve. Should any nominee become unavailable for any reason, proxies will be
voted for the alternate candidate, if any, chosen by the Board of Directors.
Should additional persons be nominated for election as directors, the seven
persons receiving the greatest number of votes shall be elected.
The following information respecting the nominees has been furnished by
them.
NAME, AGE, PRINCIPAL OCCUPATION DIRECTOR
AND OTHER INFORMATION SINCE
------------------------------- --------
JOHN W. BROWN, age 69....................................... 1977
Chairman of the Board, since January 1981, and President
and Chief Executive Officer, from February 1977 to June
2003, and Chief Executive Officer, since June 2003, of the
Company. Also a director of National City Corporation, a
bank, the American Business Conference, an association of
mid-size growth companies, and the Advanced Medical
Technology Association.
HOWARD E. COX, JR., age 60.................................. 1974
Partner of Greylock and its affiliated venture capital
partnerships, since August 1971. Also a director of
Landacorp, Inc., a developer of medical software for
managed care organizations and hospitals.
DONALD M. ENGELMAN, PH.D., age 63........................... 1989
Eugene Higgins Professor of Molecular Biophysics and
Biochemistry, Yale University, since 1979, with assignment
to Yale College, the Graduate School and the Medical
School. Chair of the Science and Technology Steering
Committee of the Brookhaven National Laboratory, since
2000. Member, National Academy of Science, since April
1997.
JEROME H. GROSSMAN, M.D., age 64............................ 1982
Director of the Harvard/Kennedy School Health Care
Delivery Policy Program at Harvard University, since 2001.
Chairman and Chief Executive Officer of Lion Gate
Management Corporation, the holding company for a group of
endeavors to advance the health care delivery system,
since 1999. Also, Chairman Emeritus of New England Medical
Center, Inc., where he served as Chairman and CEO from
1979 to 1995, honorary physician at the Massachusetts
General Hospital and Adjunct Professor of Medicine at
Tufts University School of Medicine. Also a director of
Landacorp, Inc., a developer of medical software for
managed care organizations and hospitals, and a trustee of
the Mayo Clinic.
JOHN S. LILLARD, age 73..................................... 1978
Chairman of Wintrust Financial Corporation, a bank holding
company, since May 1998. Prior thereto, Corporate Director
and Consultant from January 1996 to April 1998 and
Chairman-Founder of JMB Institutional Realty Corp., a
registered real estate investment advisory firm, from
January 1992 to December 1995, and President thereof from
April 1979 to January 1992. Also a director of Lake Forest
Bank & Trust Company, a bank, and Wayne Hummer Asset
Management, an investment advisory firm.
4
NAME, AGE, PRINCIPAL OCCUPATION DIRECTOR
AND OTHER INFORMATION SINCE
------------------------------- --------
WILLIAM U. PARFET, age 57................................... 1993
Chairman and Chief Executive Officer of MPI Research,
Inc., a drug safety and pharmaceutical development
company, since May 1999; Co-Chairman between October 1995
and May 1999. Prior thereto, President and Chief Executive
Officer of Richard-Allan Medical Industries, Inc., a
manufacturer of medical products, from October 1993. Prior
thereto, Vice Chairman of the Board of The Upjohn Company,
a manufacturer of pharmaceutical, chemical and
agricultural products, April 1992 to September 1993,
President thereof from January 1991 to April 1992 and
Executive Vice President from January 1989 to January
1991. Also a director of CMS Energy Corporation, a global
utility and energy company, Monsanto Company, a provider
of agricultural products that improve farm productivity,
and PAREXEL International Corporation, a provider of
contract research, medical marketing and consulting
services to the pharmaceutical, biotechnology and medical
device industries.
RONDA E. STRYKER, age 49.................................... 1984
Granddaughter of the founder of the Company and daughter
of the former President of the Company. Also Vice Chairman
and a director of Greenleaf Trust, a bank, Vice Chairman
and a trustee of Kalamazoo College, and a trustee of the
Kalamazoo Institute of Arts, the Kalamazoo Community
Foundation and Spelman College.
The Board of Directors has adopted Corporate Governance Guidelines that are
available on the "Corporate Governance" page of the Company's website at
www.stryker.com. Pursuant to the Guidelines, William U. Parfet has been
designated the lead independent director, with responsibility of coordinating
the activities of the other independent directors (which, for this purpose
includes all of the directors except Mr. Brown) and chairing the executive
session held in connection with each meeting of the Board of Directors in order
to provide the opportunity for the independent directors to discuss topics of
concern without any member of management being present.
The Board of Directors held seven meetings during 2003. All of the
directors attended more than 75% of the total meetings of the Board and all
committees of which they were members in 2003. A meeting of the Board of
Directors is typically scheduled in conjunction with the annual meeting of
stockholders and it is expected that directors will attend absent a schedule
conflict or other valid reason. All seven directors attended the 2003 Annual
Meeting.
The Board of Directors has designated from among its members an Audit
Committee that currently consists of Mr. Parfet (Chairman), Mr. Cox, Dr.
Grossman and Mr. Lillard. The Audit Committee met five times during 2003. See
"Audit Committee." The Board of Directors has also designated a Compensation
Committee, which currently consists of Ms. Stryker (Chairman), Mr. Cox and Mr.
Parfet, and a Stock Option Committee, which currently consists of Ms. Stryker
(Chairman) and Mr. Lillard. The duties of these committees are described below
under "Executive Compensation -- Report of Compensation and Stock Option
Committees on Executive Compensation."
The Board of Directors has designated a Governance and Nominating
Committee, which currently consists of Ms. Stryker (Chairman), Mr. Cox, Dr.
Engelman, Dr. Grossman, Mr. Lillard and Mr. Parfet. The Governance and
Nominating Committee, which met twice during 2003, makes recommendations to the
Board of Directors regarding individuals for nomination as director and, in
addition, may consider other matters relating to corporate governance. When
seeking to identify an individual to become a director to fill a new position or
vacancy, the Governance and Nominating Committee will consult with incumbent
directors, management and others. The Governance and Nominating Committee will
consider, among other factors, the background and reputation of potential
candidates in terms of character, personal and professional integrity, business
and financial experience and acumen, how a person would complement the other
directors in providing a diversity of expertise and experience and a person's
availability to devote sufficient time to Board duties. Stockholders may
recommend director candidates for consideration by the Governance and Nominating
Committee by writing to the Secretary of the Company at 2725 Fairfield Road,
Kalamazoo, Michigan
5
49002, giving the candidate's name, relationship, if any, to the stockholder
making the recommendation, biographical data and qualifications. The submission
should also include a statement from the candidate consenting to being
considered and, if nominated and elected, to serving as a director.
The charter of each of the Audit Committee, the Compensation Committee, the
Stock Option Committee and the Governance and Nominating Committee is available
on the "Corporate Governance" page of the Company's website at www.stryker.com.
The Audit Committee charter is also attached as Appendix A to this Proxy
Statement. None of the members of any of the committees is or ever has been an
employee of the Company and each of them is "independent" within the meaning of
the New York Stock Exchange corporate governance listing standards and of the
provisions of the Exchange Act applicable to the committees on which he or she
serves. The Board of Directors based its determination with respect to
independence for purposes of Board and committee membership on a review of the
responses of the directors to questions regarding employment history,
affiliations and family and other relationships and on discussions with the
directors.
DIRECTOR COMPENSATION
Directors who are not employees received directors' fees of $5,000 for each
Board meeting attended, $2,500 for each meeting attended via conference call and
a fixed annual fee of $50,000. Directors who are also members of committees of
the Board received a fee of $2,500 per day for committee meetings attended if
such meetings were held on the same day as a Board meeting and $3,500 per day if
such meetings were held on a day on which there was not a Board meeting. During
2003, each outside director was granted an option under the Company's 1998 Stock
Option Plan (the "Plan") to purchase 5,000 shares of the Company's Common Stock.
The Company also makes $50,000 of group life insurance available to its outside
directors. Also, $86,275 was paid to Dr. Engelman in 2003 as a consultant to the
Company. Dr. Engelman continues to serve as a consultant.
6
EXECUTIVE COMPENSATION
GENERAL
Set forth below is certain summary information with respect to the
compensation of the Company's Chief Executive Officer and the four most highly
compensated executive officers other than the Chief Executive Officer (based on
amounts reported as salary and bonus for 2003) who were serving as executive
officers at December 31, 2003 (the "Named Executives").
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION AWARDS
-----------------------
SHARES OF
COMMON
ANNUAL COMPENSATION RESTRICTED STOCK ALL OTHER
--------------------- STOCK UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) AWARDS($) OPTIONS(#) ($)(4)
--------------------------- ---- --------- --------- ---------- ---------- ------------
John W. Brown......................... 2003 925,000 1,000,000 40,000 203,500
Chairman of the Board and 2002 875,000 925,000 50,000 187,000
Chief Executive Officer 2001 825,000 825,000 50,000 178,750
Stephen Si Johnson.................... 2003 416,250 325,000 40,000 80,438
Vice President; 2002 383,750 315,000 50,000 69,713
Group President, Stryker MedSurg 2001 330,000 250,000 50,000 62,150
James R. Lawson....................... 2003 475,000 385,000 40,000 85,250
Vice President; 2002 450,000 300,000 50,000 77,000
Group President, Stryker
International 2001 385,000 250,000 50,000 69,850
Edward B. Lipes....................... 2003 510,000 490,000 -- 107,250
Vice President; 2002 475,000 465,000 50,000 99,550
Group President, Stryker Howmedica 2001 450,000 430,000 50,000 93,500
Osteonics
Stephen P. MacMillan(1)............... 2003 320,833 650,000(2) (3) 100,000 9,625
President and Chief Operating
Officer
---------------
(1) Mr. MacMillan joined the Company as President and Chief Operating Officer on
June 1, 2003. See "Employment Agreement with Stephen P. MacMillan."
(2) Mr. MacMillan's bonus for 2003 consisted of an inducement bonus of $300,000
pursuant to his employment agreement and a bonus of $350,000 pursuant to a
bonus arrangement similar to the arrangements with other executive officers.
(3) Pursuant to his Employment Agreement, Mr. MacMillan received a restricted
stock award of 50,000 shares of common stock of the Company. The shares of
restricted stock will vest in equal annual installments of 10,000 shares
beginning on May 31, 2004. Mr. MacMillan has the right to receive dividends
on and to vote the restricted shares.
(4) Represents the Company's contributions, including matching of voluntary
contributions by such person, under its 401(k) plan and its supplemental
deferred compensation plan.
EMPLOYMENT AGREEMENT WITH STEPHEN P. MACMILLAN
The Company entered into an employment agreement with Mr. MacMillan in
connection with his employment by the Company as President and Chief Operating
Officer. The term of the agreement commenced on June 1, 2003 and continues until
May 31, 2008. As an inducement to Mr. MacMillan accepting employment with the
Company, the Company paid Mr. MacMillan $300,000 and granted him the restricted
stock award of 50,000 shares of common stock of the Company discussed in
footnote (3) to the Summary Compensation Table. Pursuant to the agreement, Mr.
MacMillan is entitled to receive a base salary of not less than $550,000 per
year and a bonus based on a potential of $500,000 per year ($291,667 for the
7
seven months of 2003), with the amount of the bonus for any period being based
on the Company's performance against established goals and objectives. If Mr.
MacMillan's employment is terminated by the Company without cause or voluntarily
by him with good reason, he shall be entitled to receive, in addition to accrued
amounts and a pro-rated bonus for the year of termination, a lump sum payment of
$3,150,000 if such termination occurs prior to May 31, 2006, $2,100,000 if such
termination occurs between June 1, 2006 and May 31, 2007 and $1,050,000 if such
termination occurs between June 1, 2007 and May 31, 2008. In addition, Mr.
MacMillan and his family will be entitled to continue to receive benefits under
any benefit plan, program, practice or policy of the Company for 36 months if
such termination occurs prior to May 31, 2006, 24 months if such termination
occurs during the 12 months ending May 31, 2007 and 12 months if such
termination occurs during the 12 months ending May 31, 2008 or for a longer
period as the plan, program, practice or policy may provide.
STOCK OPTIONS
The following table contains information covering options to purchase
shares of the Company's Common Stock granted to the Named Executives in 2003
pursuant to the Company's 1998 Stock Option Plan.
OPTION GRANTS IN LAST FISCAL YEAR
NUMBER OF
SHARES OF PERCENT OF
COMMON TOTAL
STOCK OPTIONS
UNDERLYING GRANTED
OPTIONS TO EXERCISE GRANT DATE
GRANTED EMPLOYEES PRICE PRESENT VALUE
NAME (#)(1) IN 2003 ($/SH) EXPIRATION DATE ($)(2)
---- ---------- ---------- -------- ---------------- -------------
John W. Brown.................... 40,000 2.1 77.65 October 13, 2013 1,215,200
Stephen Si Johnson............... 40,000 2.1 77.65 October 13, 2013 1,215,200
James R. Lawson.................. 40,000 2.1 77.65 October 13, 2013 1,215,200
Edward B. Lipes.................. -- -- -- -- --
Stephen P. MacMillan............. 100,000 5.3 77.65 October 13, 2013 3,038,000
---------------
(1) Such options were granted at 100% of fair market value on the date of grant
and become exercisable as to 20% of the shares covered thereby on each of
the first five anniversary dates of the date of grant.
(2) The Grant Date Present Value has been calculated using the Black-Scholes
option pricing model and assumes a risk-free rate of return of 2.27%, an
expected option life of 6.5 years, a dividend yield of approximately 0.18%
and a stock volatility of 35.8%. No adjustment was made for
nontransferability or forfeitures. Such assumptions are based upon
historical experience and are not a forecast of future stock price
performance or volatility or of future dividend policy. Such information,
which is presented in accordance with the requirements of the Securities and
Exchange Commission, is not necessarily indicative of the actual value that
such options will have to the Named Executives, which will be dependent upon
market prices for the Common Stock.
8
The following table sets forth information with respect to option exercises
during 2003 by the Named Executives and as to the unexercised options held by
them at December 31, 2003.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
NUMBER OF SHARES
UNDERLYING
UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED FISCAL YEAR-END(#) FISCAL YEAR-END($)(1)
ON VALUE ------------------ -----------------------
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($)(1) UNEXERCISABLE UNEXERCISABLE
---- ----------- ---------- ------------------ -----------------------
John W. Brown................... -- -- 730,000/170,000 48,188,300/6,054,000
Stephen Si Johnson.............. 120,000 8,251,600 218,000/162,000 12,694,640/5,568,160
James R. Lawson................. -- -- 138,000/162,000 7,161,540/5,568,160
Edward B. Lipes................. 316,000 16,738,040 30,000/130,000 1,090,500/5,759,600
Stephen P. MacMillan............ -- -- 0/100,000 0/736,000
---------------
(1) Calculated by determining the difference between the exercise price and the
closing price of the Company's Common Stock as reported by The New York
Stock Exchange-Composite Transactions for the exercise date or December 31,
2003, as the case may be.
9
REPORT OF COMPENSATION AND STOCK OPTION COMMITTEES ON EXECUTIVE COMPENSATION
There are three basic elements in the Company's executive compensation
program -- base salary, bonus and stock options. The Compensation Committee,
which reviews executive compensation on an annual basis and is responsible for
determinations regarding base salary and bonuses, formally met in November 2002
and November 2003. The members of the Compensation Committee, each of whom is an
independent outside director, are Ms. Stryker (Chairman), Mr. Cox and Mr.
Parfet. Stock option awards are made by the Stock Option Committee, the members
of which are Ms. Stryker (Chairman) and Mr. Lillard.
The salaries of the Company's executive officers for 2003 were determined
at the meeting of the Compensation Committee held in November 2002. Prior to
such meeting, the members of the Committee were provided with a broad-based
survey report on executive compensation for U.S. corporations generally,
prepared by The Conference Board, and publicly available compensation
information for other companies in the health care industry. The Chief Executive
Officer reviewed the overall performance of each of the other executive officers
during the year with the Committee at its November 2002 meeting. Based on a
subjective evaluation of such performance and the Company's overall performance
during the prior year and, in the case of division officers, that of the
respective divisions, as well as general consideration of the information
contained in the survey reports reviewed, the base salaries of the Company's
executive officers, including Mr. Brown, were established by the Committee.
A substantial portion of the annual compensation of each of the Named
Executives consists of the bonus element. In determining the amount of the bonus
to be paid to each Named Executive, the results of mathematical computations in
which the performance of the Company, in the case of Mr. Brown (the Chief
Executive Officer) and Mr. MacMillan (the Chief Operating Officer), whose
responsibilities are at the corporate level, and of the operations for which
such person had direct management responsibility, in the case of the other Named
Executives, is compared to goals and objectives established at the beginning of
the year (upon his employment in the case of Mr. MacMillan) and a percentage so
determined is applied to the dollar bonus potential established for each person
at the beginning of the year. The bonus potential is established in the same
general manner as salaries, with the view that, if the full potential is
attained, the Named Executive's total cash compensation should be in the mid to
upper end of the range for companies of a comparable size taking into account
the individual's time in the position and overall level of performance in the
role. The primary elements in such calculation for the Named Executives in 2003
were earnings growth and cash flow. The final determination of the actual
bonuses paid included a subjective evaluation of individual performance in light
of the competitive environment in the operations for which they have
responsibility and other challenges faced by such persons and achievements by
them during the year.
The Company has had stock option plans in effect since it became a
publicly-held company in 1979. The purpose of these plans has been to provide
executive officers and other employees with a personal and financial interest in
the success of the Company through stock ownership, thereby aligning the
long-range interests of such persons with those of stockholders by providing
them with the opportunity to build a meaningful stake in the Company.
Historically, stock options have had significant value to optionees, reflecting
the appreciation in the market value of the Common Stock. The determination with
respect to the number of options to be granted to any particular executive
officer is subjective in nature. While no specific performance measures are
applied, factors considered in determining the number of options awarded include
the individual's level of responsibility, demonstrated performance over time and
value to the future success of the Company. The number and status of options
previously granted to an individual are not accorded significant weight in the
determination. Current option grants are intended to encourage performance that
will result in continued appreciation. Outstanding option grants, all of which
have a ten-year term, become exercisable as to 20% on the first anniversary of
the date of grant and as to an additional 20% on each successive anniversary.
Accordingly, to realize the full value thereof, an executive officer must remain
in the Company's employ for five years from the date of grant. Management of the
Company believes that the stock option plans have been helpful in attracting and
retaining skilled executive personnel.
Section 162(m) of the Internal Revenue Code limits the deductibility by a
publicly-held corporation of compensation paid in a taxable year to the Chief
Executive Officer and any other Named Executive to
10
$1 million. Qualified performance-based compensation will not be subject to the
deduction limit if certain conditions are met. The 1998 Stock Option Plan limits
the number of options that may be granted to any employee or director in any
calendar year to 500,000, thereby ensuring that gain recognized on the exercise
of options will be treated as performance-based compensation. It is the
Committee's intent that executive compensation generally be deductible. However,
the Committee will authorize compensation that is not entirely deductible when
doing so is consistent with its other compensation objectives and overall
compensation philosophy.
Compensation Committee
Ronda E. Stryker, Chairman
Howard E. Cox, Jr.
William U. Parfet
Stock Option Committee
Ronda E. Stryker, Chairman
John S. Lillard
TRANSACTION WITH EXECUTIVE OFFICER
The Company leases a facility from a limited liability company owned by
James R. Lawson, a Vice President of the Company, pursuant to a lease that
expires on March 13, 2006. The annual rent was approximately $105,450 in 2003
and increases by 3% each year. Under the terms of the lease, the Company is
responsible for all taxes, insurance and maintenance expenses that arise from
its use of the facility. The Board of Directors has reviewed the transaction and
concluded that the lease terms are comparable to those that could have been
obtained in an arms-length transaction with an unaffiliated third party based on
a report from a national real estate services firm that compared the rent to
similar properties in the area and an analysis by management that found the
other lease terms to be reasonable.
11
PERFORMANCE GRAPH
Set forth below is a graph comparing the total returns (assuming
reinvestment of dividends) of the Company, the Standard & Poor's 500 Composite
Stock Price Index and the Standard & Poor's Health Care (Medical Products and
Supplies) 500 Index. The graph assumes $100 invested on December 31, 1998 in the
Company's Common Stock and each of the indices.
[PERFORMANCE GRAPH]
STRYKER CORPORATION S&P 500 INDEX S&P HEALTH CARE 500 INDEX
------------------- ------------- -------------------------
1998 100.00 100.00 100.00
1999 126.68 121.04 89.34
2000 184.39 110.02 122.44
2001 213.11 96.95 107.81
2002 245.49 75.52 87.52
2003 311.44 97.18 100.69
--------------------------------------------------------------------------------------------------------------
1998 1999 2000 2001 2002 2003
--------------------------------------------------------------------------------------------------------------
Stryker Corporation $100.00 $126.68 $184.39 $213.11 $245.49 $311.44
--------------------------------------------------------------------------------------------------------------
S&P 500 Index $100.00 $121.04 $110.02 $ 96.95 $ 75.52 $ 97.18
--------------------------------------------------------------------------------------------------------------
S&P Health Care 500 Index $100.00 $ 89.34 $122.44 $107.81 $ 87.52 $100.69
--------------------------------------------------------------------------------------------------------------
12
AUDIT COMMITTEE
The Audit Committee acts under a written charter adopted and approved by
the Board of Directors, a copy of which is attached hereto as Appendix A and is
also available on the "Corporate Governance" page of the Company's website at
www.stryker.com. The Audit Committee reviews and reassesses the adequacy of the
charter at least annually. The Board of Directors has determined that William U.
Parfet, the Chairman of the Audit Committee, is an "audit committee financial
expert" as that term is defined in the rules promulgated by the Securities and
Exchange Commission. Mr. Parfet serves on the audit committees of three other
publicly-held companies. The Board of Directors reviewed Mr. Parfet's other time
commitments and has determined that such service does not impair his ability to
serve on the Company's Audit Committee.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors oversees the Company's
financial reporting process on behalf of the Board of Directors. It meets with
management and the Company's independent public accountants throughout the year
and reports the results of its activities to the Board of Directors. In this
connection, the Audit Committee has done the following:
- Reviewed and discussed the audited financial statements for the fiscal
year ended December 31, 2003 with the Company's management;
- Discussed with Ernst & Young LLP, the Company's independent accountants,
the matters required to be discussed by SAS 61 (Codification of
Statements on Auditing Standards), as amended; and
- Received written disclosure regarding independence from Ernst & Young LLP
as required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees) and discussed with Ernst & Young LLP
its independence.
Based on the foregoing, the Audit Committee recommended to the Board of
Directors that the audited financial statements be included in the Company's
Annual Report on Form 10-K for the year ended December 31, 2003.
Audit Committee
William U. Parfet, Chairman
Howard E. Cox, Jr.
Jerome H. Grossman
John S. Lillard
13
AMENDMENT OF THE RESTATED ARTICLES TO
INCREASE THE AUTHORIZED COMMON STOCK
The Board of Directors has recommended that action be taken by the
stockholders to amend Article III of the Restated Articles to increase the
authorized shares of Common Stock, $.10 par value, that the Company shall have
authority to issue from 500 million to one billion shares.
The increase in the number of authorized shares of Common Stock is believed
by the Board of Directors to be desirable in order to provide flexibility of
action in the future and to enable the Company to act promptly in connection
with stock splits, stock dividends, acquisitions, financings and such other
corporate matters involving the issuance of Common Stock as the Board of
Directors may deem advisable. Although it is advantageous to have the additional
shares available, there are no present plans for the use of such additional
shares.
The additional shares of Common Stock, together with the currently
authorized but unissued shares that are not reserved for issuance upon exercise
of options granted under the Company's Stock Option Plans, may be issued at such
times, to such persons and for such consideration as the Board of Directors may
determine to be in the Company's best interest without (except as otherwise
required by law or applicable stock exchange rule) further authority from the
stockholders. The additional shares of Common Stock would have the same voting,
dividend and other rights as the presently authorized Common Stock. Stockholders
presently have no preemptive rights and would have none in respect of the
proposed additional shares of Common Stock.
Adoption of the proposed amendment requires the affirmative vote of the
holders of a majority of the outstanding shares of Common Stock entitled to vote
at the Annual Meeting. The Board of Directors recommends that stockholders vote
FOR the proposed amendment.
14
MISCELLANEOUS
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The Audit Committee has appointed Ernst & Young LLP, independent
accountants, to audit the accounts of the Company and its subsidiaries for the
year 2004, subject to approval of the scope of the audit engagement and the
estimated audit fees, which are to be presented to the Committee at its July
meeting. Ernst & Young LLP has acted in this capacity for many years. Ernst &
Young LLP has advised the Company that neither the firm nor any of its members
or associates has any direct financial interest or any material indirect
financial interest in the Company or any of its affiliates other than as
accountants. Representatives of Ernst & Young LLP are expected to be present at
the Annual Meeting with the opportunity to make a statement if they desire to do
so and are expected to be available to respond to appropriate questions.
The fees billed to the Company by Ernst & Young LLP with respect to the
years ended December 31, 2003 and 2002 were as follows:
2003 2002
---------- ----------
Audit Fees.................................................. $2,567,000 $2,036,000
Audit-Related Fees.......................................... 84,000 59,000
Tax Fees.................................................... 1,028,000 633,000
All Other Fees.............................................. -- --
Audit Fees include amounts billed for the audit of the Company's annual
consolidated financial statements, the timely review of the financial statements
included in the Forms 10-Q filed by the Company during each year, the completion
of statutory audits required in certain foreign jurisdictions and consultations
concerning accounting matters associated with the annual audit. Audit-Related
Fees include amounts billed for audits of the Company's employee benefit plans
and general accounting consultations and services that are unrelated to the
annual audit. Tax Fees include fees for tax compliance services and consultation
on other tax matters. It is expected that Ernst & Young LLP will provide similar
non-audit services during the year 2004. In connection with its review and
evaluation of non-audit services, the Audit Committee is required to and does
consider and conclude that the provision of the non-audit services is compatible
with maintaining the independence of Ernst & Young LLP.
Under its charter, the Audit Committee must pre-approve all audit and
non-audit services to be performed by the independent accountant retained to
audit the Company's financial statements other than non-audit services that
satisfy a de minimus exception provided by applicable law. Each year, the
retention of the independent auditor is approved at the Audit Committee's
meeting in February, subject to approval of the scope of the audit and
associated fees at the July meeting. At the February meeting, certain recurring
non-audit services and the proposed fees therefor are reviewed and evaluated by
the Audit Committee. At subsequent meetings, the Audit Committee receives
updates regarding the services actually provided and management may present
additional services for approval. The Audit Committee has delegated to the
Chairman or, in his absence, any other member the authority to evaluate and
approve projects and related fees if circumstances require approval between
meetings of the Committee. Any such approval is reported to the full Committee
at its next meeting.
CONTACTING THE BOARD OF DIRECTORS
Stockholders may communicate directly with the Board of Directors on a
confidential basis by mail at: Stryker Board of Directors, 2725 Fairfield Road,
Kalamazoo, Michigan 49002. All such communications will be received directly by
the Chairman of the Governance and Nominating Committee and will not be screened
or reviewed by any Company personnel.
15
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors, among
others, to file reports with respect to changes in their ownership of Common
Stock. Jerome H. Grossman and William U. Parfet, directors of the Company, were
each late (three days and one day, respectively), in filing Statements of
Changes of Beneficial Ownership of Securities on Form 4 with respect to one
transaction in October 2003 as a result of issues related to passwords utilized
in connection with the electronic filing of such forms.
OTHER ACTION
Management has at this time no knowledge of any matters to be brought
before the meeting other than those referred to above. If any additional matter
should properly come before the meeting, it is the intention of the persons
named in the enclosed proxy to vote said proxy in accordance with their judgment
on such matter.
EXPENSES OF SOLICITATION
The cost of this solicitation will be borne by the Company. In addition to
solicitation by mail, proxies may be solicited by officers, directors and
regular employees of the Company personally or by telephone or other means of
communication. The Company will, upon request, reimburse brokers and other
nominees for their reasonable expenses in forwarding proxy material to the
beneficial owners of the stock held of record by such persons.
By Order of the Board of Directors
Dean H. Bergy
Secretary
March 12, 2004
16
APPENDIX A
AUDIT COMMITTEE CHARTER
STRYKER CORPORATION
This Charter governs the operations of the Audit Committee of the Board of
Directors of Stryker Corporation (the "Committee"). The Committee shall review
and reassess the adequacy of this Charter at least annually and recommend any
proposed changes to the Board of Directors for approval. This Charter may be
amended only by the affirmative vote of the Board of Directors.
ORGANIZATION
The Committee shall be appointed annually by the Board of Directors upon
the recommendation of the Governance and Nominating Committee and shall comprise
at least three directors, each of whom has been affirmatively determined by the
Board to be independent of the Company. A director shall not be considered
independent if he or she (i) accepts, directly or indirectly, any consulting,
advisory or other compensatory fee from the Company or any of its subsidiaries
other than in his or her capacity as a member of the Committee, the Board of
Directors or any other committee of the Board, (ii) is an affiliate of the
Company or any of its subsidiaries, (iii) has a material relationship with the
Company or any of its subsidiaries (either directly or as a partner, shareholder
or officer of an organization that has a relationship with the Company or a
subsidiary and determined not merely from the standpoint of the director but
also from that of any person or organization with which the director is
affiliated) that may interfere with the exercise of his or her independence from
management and the Company or (iv) does not meet any other independence
requirement under applicable laws, rules or stock exchange listing standards,
each as in effect from time to time.
All Committee members shall be financially literate, as determined by the
Board in its business judgment, and at least one member shall qualify as an
"audit committee financial expert" as defined in rules promulgated by the
Securities and Exchange Commission ("SEC").
The Board of Directors must determine, when applicable, that simultaneous
service by a Board member on more than three public company audit committees
does not impair the ability of such person to serve on the Audit Committee. Such
determination will be disclosed in the Company's annual proxy statement.
MEETINGS
The Committee shall meet as often as it deems necessary to fulfill its
responsibilities, but not less frequently than quarterly. Periodically during
the year, the Committee shall meet separately with management, the internal
auditors and the independent auditors to discuss issues and concerns warranting
Committee attention. The Committee shall report regularly to the Board of
Directors.
STATEMENT OF POLICY
The Committee shall provide assistance to the Board of Directors in
fulfilling its oversight responsibility to the shareholders, potential
shareholders, the investment community and others relating to the integrity of
the Company's financial statements and its financial reporting process, the
Company's compliance with legal and regulatory requirements, the independent
auditors' qualifications, independence and performance and the performance of
the Company's internal audit function. In so doing, it is the responsibility of
the Committee to maintain free and open communication among the Committee, the
Board of Directors, the independent auditors, the Company's internal auditors
and management of the Company.
In discharging its oversight role, the Committee is empowered to
investigate any matter brought to its attention, with full access to all books,
records, facilities and personnel of the Company and the independent auditor and
the power to retain, at the Company's expense, independent legal, accounting and
other advisers to provide advice and assistance as the Committee deems necessary
or appropriate to carry out its duties.
A-1
RESPONSIBILITIES AND PROCESSES
The primary responsibility of the Committee is to oversee the accounting
and financial reporting processes of the Company and the audits and reviews of
the financial statements of the Company and to report to the Board with respect
thereto. While the Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Committee to plan or conduct audits or
to determine that the Company's financial statements are complete and accurate
and are in accordance with generally accepted accounting principles. Management
is responsible for preparing the Company's financial statements and the
independent auditors are responsible for auditing the Company's annual financial
statements and for reviewing the Company's interim unaudited financial
statements. The Committee shall take appropriate action to set the overall
corporate "tone" for quality financial reporting, sound business risk practices
and ethical behavior.
The Committee in carrying out its responsibilities believes its policies
and procedures should remain flexible, in order to best react to changing
conditions and circumstances. The following shall be the principal duties and
responsibilities of the Committee and are set forth as a guide, with the
understanding that the Committee may supplement them as appropriate:
RELATIONSHIP WITH THE COMPANY'S INDEPENDENT AUDITORS.
- The Committee shall be directly responsible for the appointment,
retention and oversight of the work of the firm engaged for the purpose
of preparing or issuing an audit report or performing other audit, review
or attest services, which firm or firms shall report directly to the
Committee, and for the determination of the compensation to be paid by
the Company for such services.
- The Committee shall evaluate the qualifications, performance and
independence of the independent auditors (after receipt of the written
disclosures and letter required by Independence Standards Board Standard
No. 1 from the independent auditors confirming the professional judgment
of the independent auditors that the firm is independent of the Company).
- The Committee shall pre-approve all audit and non-audit services to be
provided by the independent auditors (other than non-audit services that
satisfy an exception provided by applicable law) and, in the case of
non-audit services, provide for the disclosure of such approval as
required by SEC regulations. The independent auditors shall not be
engaged to perform any non-audit service proscribed by law or regulation.
The independent auditors shall not be engaged to provide any permitted
non-audit service unless it is affirmatively determined that performing
such service is compatible with maintaining the independent auditors'
independence. The Committee may delegate pre-approval authority to a
member of the Committee. The decisions of any Committee member to whom
pre-approval authority is delegated must be presented to the full
Committee at its next scheduled meeting.
- At least annually, the Committee shall obtain and review a report by the
independent auditors that describes:
- The independent auditors' internal quality control procedures;
- Any material issues raised by the most recent internal quality
control review, or peer review, of the independent auditor, or by
any inquiry or investigation by governmental or professional
authorities, within the preceding five years, with respect to one or
more audits carried out by the independent auditor and the steps
taken to deal with any such issues; and
- All relationships between the independent auditors and the Company
(in order to assess independence).
- The Committee shall evaluate the partner of the independent auditors who
has primary responsibility for the audit, taking into account the
opinions of the Company's management and its internal auditors, and shall
ensure that such lead partner and the reviewing partner are rotated at
least every five years.
- The Committee shall set clear hiring policies for employees or former
employees of the independent auditors that meet applicable SEC
regulations and stock exchange listing standards.
A-2
OVERSIGHT RESPONSIBILITIES.
- The Committee shall discuss with the independent auditors the overall
scope and plans for the audit, including the adequacy of staffing, and
the estimated fees.
- The Committee shall discuss with the Vice President, Internal Audit the
responsibilities, budget and staffing of the internal audit function and
the planned scope of internal audits and any significant changes therein
and review summaries of the reports issued by the internal audit
function, together with management's responses and follow-up to such
reports.
- The Committee shall discuss with management, the Vice President, Internal
Audit and the independent auditors the adequacy and effectiveness of the
accounting and financial controls, and special audit steps adopted in
light of any material control deficiencies that could significantly
affect the Company's financial statements.
- The Committee shall review with the independent auditors any audit
problem or difficulty encountered in the course of the audit work,
including any restriction on the scope of activities or access to
required information, and any significant disagreement with management.
- The Committee shall resolve disagreements between management and the
independent auditor regarding financial reporting.
- The Committee shall receive regular reports from the independent auditors
regarding the critical accounting policies and practices used by the
Company and the alternative treatments of financial information within
generally accepted accounting principles that have been discussed with
management, the ramifications of the use of such alternative treatments
and the treatment preferred by the independent auditors.
- The Committee shall review any management or internal control letter or
schedule of unadjusted differences and other material written
communications between the independent auditors and management.
- The Committee shall review and discuss with management the Company's
policies and practices with respect to risk assessment and risk
management, including the guidelines and policies that govern the
assessment and management of the Company's exposure to risk, including
with regard to foreign exchange, interest rates, investments and
derivatives, and discuss with management the Company's major risk
exposures and the steps management has taken to assess, monitor and
control such exposures.
- The Committee shall review matters that have come to the attention of the
Committee, through reports of management, legal counsel and others, that
relate to the status of compliance and anticipated future compliance with
laws and regulations, internal policies and controls and that could be
material to the Company's financial statements.
- The Committee shall review with management and the independent auditors
the potential effect of regulatory and accounting initiatives on the
Company's financial statements.
REVIEW OF PERIODIC STATEMENTS AND DISCLOSURES.
- The Committee shall review management's certifications of disclosure
controls and procedures and internal control over financial reporting as
of the end of each fiscal quarter and at year end and, in the case of the
report of management as of year end, the required report of management
and attestation of the independent auditors regarding management's
evaluation of the internal control over financial reporting.
- The Committee shall review analyses prepared by management and the
independent auditors of significant accounting and financial reporting
issues and judgments made in connection with the preparation of the
Company's financial statements and its financial reporting generally,
including an analysis of any significant changes in the Company's
selection or application of accounting principles,
A-3
the critical accounting policies and practices used, off-balance sheet
financial structures and the use of non-GAAP financial measures.
- The Committee shall review and discuss with management the policies with
respect to earnings press releases, as well as the financial information
and earnings guidance to be provided to analysts and rating agencies.
Such review may be done generally (consisting of reviewing the types of
information to be disclosed and the types of presentations to be made)
and need not be in connection with each earnings release or each instance
in which the Company provides earnings guidance.
- The Committee shall discuss the results of the annual audit and any other
matters required to be communicated to the Committee by the independent
auditors under generally accepted auditing standards, including the
matters required to be discussed by Statement on Auditing Standards No.
61, as amended by Statement on Auditing Standards Nos. 89 and 90,
relating to the conduct of the audit.
- The Committee shall review and discuss with management and the
independent auditors the audited financial statements and the disclosures
under Management's Discussion and Analysis of Financial Condition and
Results of Operations, and recommend to the Board of Directors that such
financial statements and disclosures be included in the Company's Annual
Report on Form 10-K (or the annual report to shareholders if distributed
prior to the filing of Form 10-K).
- The Committee shall prepare its report to be included in the Company's
annual proxy statement, as required by SEC regulations.
- The Committee shall discuss the results of the quarterly review and any
other matters required to be communicated to the Committee by the
independent auditors under generally accepted auditing standards.
- The Committee shall review and discuss the interim financial statements
and the disclosures under Management's Discussion and Analysis of
Financial Condition and Results of Operations with management and the
independent auditors prior to the filing of the Company's Quarterly
Report on Form 10-Q.
OTHER ACTIVITIES.
- The Committee shall review reports from management, including the General
Counsel and the Company's Vice President, Internal Audit, regarding
compliance with the Company's policies and procedures to assess and
monitor its legal and ethical compliance programs. The Committee shall
advise the Board with respect to the Company's policies and procedures
regarding compliance with applicable laws and regulations and with the
Company's Code of Conduct and Code of Ethics.
- The Committee shall establish procedures for the receipt, retention and
treatment of complaints received by the Company regarding accounting,
internal accounting controls or auditing matters and the confidential,
anonymous submission by employees of the Company of concerns regarding
questionable accounting or auditing matters that provide protection to an
employee who reports such information.
- The Committee shall perform an evaluation of its performance at least
annually to determine whether it is functioning effectively.
This Charter was approved by the Board of Directors on February 10, 2004.
A-4
STRYKER CORPORATION
2725 FAIRFIELD ROAD
KALAMAZOO, MI 49002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, having received the Notice of Annual Meeting of
Stockholders and Proxy Statement, each dated March 12, 2004, hereby appoints
JOHN S. LILLARD and RONDA E. STRYKER, and each of them, as Proxies with full
power of substitution, and hereby authorize(s) them to represent and to vote all
shares of Common Stock of Stryker Corporation that the undersigned is entitled
to vote, at the Annual Meeting of Stockholders to be held on April 20, 2004, or
at any adjournment thereof, as set forth on the reverse side hereof.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
P R O X Y
DETACH HERE
--------------------------------------------------------------------------------
(Continued from the other side)
THE BOARD OF DIRECTORS RECOMMENDS a vote FOR all nominees and FOR the approval
of the amendment to increase the authorized common stock to one billion shares.
(1) Election of Directors -- John W. Brown, Howard E. Cox, Jr., Donald M.
Engelman, Ph.D., Jerome H. Grossman, M.D., John S. Lillard, William U.
Parfet, Ronda E. Stryker
[ ] FOR, except nominee(s) written below: [ ] WITHHOLD authority to vote
for all nominees
--------------------------------------------------------------------------------
(2) Approval of the amendment to increase the authorized common stock to one
billion shares
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) In their discretion, the Proxies are authorized to vote upon such other
matters as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ALL NOMINEES NAMED
IN ITEM (1), FOR APPROVAL OF THE AMENDMENT TO INCREASE THE AUTHORIZED COMMON
STOCK TO ONE BILLION SHARES.
DATED: , 2004
-----------------------------
SIGNATURE
-----------------------------
SIGNATURE IF HELD JOINTLY
PLEASE SIGN EXACTLY AS NAME
APPEARS ABOVE. WHEN SHARES
ARE HELD BY JOINT TENANTS,
BOTH SHOULD SIGN. WHEN SIGNED
AS ATTORNEY, AS EXECUTOR,
ADMINISTRATOR, TRUSTEE OR
GUARDIAN, PLEASE GIVE FULL
TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN
FULL CORPORATE NAME BY
PRESIDENT OR OTHER AUTHORIZED
OFFICER. IF A PARTNERSHIP,
PLEASE SIGN IN PARTNERSHIP
NAME BY AUTHORIZED PERSON.
YOUR VOTE IS IMPORTANT
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
DETACH HERE
--------------------------------------------------------------------------------