Quest Diagnostics 2004 Annual Report Download

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Quest Diagnostics Incorporated
One Malcolm Avenue
Teterboro, New Jersey 07608
(201) 393-5000
Notice of Annual Meeting of Stockholders to be Held on May 4, 2004
To the Stockholders of Quest Diagnostics Incorporated:
The 2004 Annual Meeting of Stockholders of Quest Diagnostics Incorporated will be held on
Tuesday, May 4, 2004 at 10:30 A.M., local time, at the Short Hills Hilton, 41 John F. Kennedy
Parkway, Short Hills, New Jersey, for the following purposes:
1. To elect three directors for a three-year term.
2. To ratify the selection of PricewaterhouseCoopers LLP as the independent auditor to audit
the financial statements of Quest Diagnostics for the year ending December 31, 2004.
3. To transact such other business as may properly come before the Annual Meeting or any
adjournment thereof.
These matters are more fully described in the proxy statement accompanying this Notice.
Your Board of Directors has fixed the close of business on March 8, 2004, as the record date
for the determination of stockholders entitled to notice of, and to vote at, the annual meeting,
and any notice of adjournments or postponements of the annual meeting.
By Order of the Board of Directors
Sirisha Gummaregula
Secretary
April 12, 2004

Table of contents

  • Page 1
    ... three directors for a three-year term. 2. To ratify the selection of PricewaterhouseCoopers LLP as the independent auditor to audit the financial statements of Quest Diagnostics for the year ending December 31, 2004. 3. To transact such other business as may properly come before the Annual Meeting...

  • Page 2
    ... be affixed if mailed in the United States. Alternatively, stockholders of record may vote by telephone by calling 1-800-542-1160 or on the Internet at www.votefast.com. Each proxy is revocable and will not affect your right to vote in person in the event you attend the Annual Meeting. This notice...

  • Page 3
    ... than February 15 of the year in which the annual meeting is held, at its principal executive office. Quest Diagnostics has not received notice of a proposal from any stockholder. Officers and employees of Quest Diagnostics may solicit proxies by mail, telephone, facsimile transmission or telegraph...

  • Page 4
    ... by the Board of Directors, upon the recommendation of the Governance Committee, for election to the Board of Directors at the annual meeting of stockholders. Nominees for the Board with Terms Expiring at the 2007 Annual Meeting Name Position with Quest Diagnostics Age John C. Baldwin ...William...

  • Page 5
    ... in sales, marketing and general management positions. Mr. Buehler is a director of A.O. Smith. Mr. Buehler has been a director of Quest Diagnostics since July 1998. Mary A. Cirillo is Chairman of OPCENTER, which provides help desk and network operations services. She was Chief Executive Officer of...

  • Page 6
    ... business unit, in 1996 and was appointed Chief Operating Officer of Lucent in 1997. Dr. Stanzione is a director of Avaya Inc. Dr. Stanzione has been a director of Quest Diagnostics since January 1997. Gail R. Wilensky, Ph.D. is a Senior Fellow at Project HOPE, an international non-profit health...

  • Page 7
    ... by the Board. • Prior experience as a director or executive officer of a public company. • Number of current board positions and other time commitments. • Overall range of skills, experiences and seniority represented by the Board as a whole. Quest Diagnostics Incorporated ? 2004 Proxy...

  • Page 8
    ...the non-management directors of the Company. Director Independence The Board of Directors assesses the independence of each director annually in accordance with the Company's corporate governance guidelines, the currently applicable NYSE listing standards and with respect to members of the Audit and...

  • Page 9
    ...as a member of the Executive Committee; (d) coordinate providing timely feedback from the directors to the Chairman of the Board and Chief Executive Officer; (e) be identified on the Company's website and in the Company's annual proxy statement as the principal contact for stockholder communications...

  • Page 10
    ... Company's website at www.questdiagnostics.com. The Board of Directors has determined that all current members of the Audit and Finance Committee, the Compensation Committee, the Governance Committee and the Quality Safety & Compliance Committee are independent under the currently applicable listing...

  • Page 11
    ... May 2001, to each non-employee director. However, the Board of Directors subsequently amended the option plan to reduce the number of options issued in connection with the annual meeting of stockholders. In the event that a person is elected as a director of Quest Diagnostics other than on the date...

  • Page 12
    ... appointment at any time during the year if it determines that such a change would be in the best interests of Quest Diagnostics and its stockholders. It is expected that representatives of PricewaterhouseCoopers LLP will attend the annual meeting of stockholders, will have the opportunity to make...

  • Page 13
    ... to employee benefit plan audits; due diligence related to mergers and acquisitions; and internal control reviews. Tax Fees as of the years ended December 31, 2003 and 2002, respectively, were for services related to tax compliance, including preparation of tax returns and claims for refund; tax...

  • Page 14
    ... executive officers''). Summary Compensation Table Annual Compensation Other Annual Comp.(1) Long-Term Compensation Awards Restricted Securities Stock Underlying LTIP Awards(2) Options Payouts Name and Principal Position Year Salary Bonus All Other Comp.(3) Kenneth W. Freeman Chairman & CEO...

  • Page 15
    ... plans. No stock appreciation rights (SARs) were granted in 2003. Option/SAR Grants in 2003 Individual Grants % of Total Options Granted to All Employees in Fiscal Exercise Year Price Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term Executive Number...

  • Page 16
    ...named executive officers during 2003 and the number of shares of Quest Diagnostics' common stock covered by both exercisable and unexercisable stock options as of December 31, 2003, for the named executive officers. Aggregate Option/SAR Exercises in Fiscal Year 2003 & 2003 Fiscal Year-End Option/SAR...

  • Page 17
    ... and Chief Executive Officer of such parent, (3) the acquisition by any third party of at least 51% of the outstanding shares of capital of Quest Diagnostics in a transaction not covered by clause (2) following which Quest Diagnostics ceases to be an independent public company or (4) a change in the...

  • Page 18
    ...annual base salary in effect at the time performance goals are established; • a grant of 170,000 stock options for 2004 subject to the same terms and conditions as options granted to other executive officers; • upon a "change of control'', a termination by death or disability, outstanding equity...

  • Page 19
    ... independent public company or there is material diminution of Dr. Mohapatra's position, duties or responsibilities or (4) a change in the membership of the Quest Diagnostics Board of Directors as a result of a contested election such that a majority of the Board members at any particular time were...

  • Page 20
    ... peer group represents the same companies in the Standard & Poors 500 Healthcare Equipment & Services Index used for total stockholder return comparison purposes in the Performance Graph shown on page 21. Base Salary Quest Diagnostics sets salaries for most executive officers to approximate median...

  • Page 21
    ... of compensation. Quest Diagnostics' general policy is to preserve the tax deductibility of compensation paid to its executive officers, including annual incentive awards paid under the Incentive Plan and grants of stock options and shares of incentive stock under the terms of the Employee Equity...

  • Page 22
    ... to the Board on financing activities and other financial matters. The Audit and Finance Committee meets with management periodically to consider the adequacy of Quest Diagnostics' internal controls and the objectivity of its financial reporting. The Committee also regularly meets privately with the...

  • Page 23
    ...(Communication with Audit Committees). Based on these reviews and discussions, the Committee recommended to the Board of Directors that Quest Diagnostics' audited financial statements be included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2003 and the Board of Directors...

  • Page 24
    ... on the information contained on a Schedule 13D filed by GlaxoSmithKline plc with the SEC in May 2002. SmithKline Beecham Corporation, a wholly owned subsidiary of GlaxoSmithKline plc, holds the shares of record. (2) Includes options issued under the Stock Option Plan for Non-Employee Directors that...

  • Page 25
    ... closing of the acquisition of SBCL, SmithKline Beecham and Quest Diagnostics entered into a stockholders agreement. During the ten-year term of the stockholders agreement, SmithKline Beecham has the right to designate two nominees to the Quest Diagnostics' Board of Directors (or, if required by UK...

  • Page 26
    ... class of the Company's equity securities, to file reports of ownership of, and transactions in, our equity securities with the SEC. Such directors, executive officers and 10% stockholders are also required to furnish us with copies of all Section 16(a) reports they file. Based solely on a review...

  • Page 27
    ...-K for the year ended December 31, 2003. Upon request, the Company will provide without charge a copy of its annual report on Form 10-K for the year ended December 31, 2003 to each record or beneficial owner of its common stock. Such requests should be directed to: Quest Diagnostics Incorporated One...

  • Page 28
    ... and Exchange Commission. 3. Limitation on Number of Boards. No director may serve as a member of the Committee if such director serves on the audit committees of more than three other public companies unless the Board of Directors determines that such simultaneous service would not impair the...

  • Page 29
    ... pre-approve the hiring of any employee or former employee of the independent auditor (within the preceding three fiscal years) for senior positions within the Company, regardless of whether that person was a member of the Company's audit team. Quest Diagnostics Incorporated ? 2004 Proxy Statement...

  • Page 30
    ... to be included in the Company's annual proxy statement. (g) Consider any reports or communications (and management's and/or the internal audit department's responses thereto) submitted to the Committee by the independent auditors 28 ? Quest Diagnostics Incorporated ? 2004 Proxy Statement

  • Page 31
    ... submission by employees of the Company of concerns regarding questionable accounting or auditing matters. • Finance Responsibilities Give advice and make recommendations with regard to investments, debt financings, stock issuances, stock repurchases, dividend payments and other significant...

  • Page 32
    MI1339