Filed by the
Registrant ☒
Filed by a party other than the Registrant ☐
You are cordially invited to attend the
Annual Meeting of Stockholders of IDEX Corporation (the Company) which will be held on Wednesday, April 26, 2017, at 9:00 a.m. Central Time, at the Westin Chicago North Shore, 601 North Milwaukee Avenue, Wheeling, Illinois 60090.
The following pages contain our notice of annual meeting and proxy statement. Please review this material for information concerning the business to be
conducted at the 2017 Annual Meeting, including the nominees for election as directors.
This year, in accordance with the Securities and Exchange
Commissions rules for the electronic distribution of proxy materials, we have elected to provide access to our proxy materials and 2016 Annual Report on the Internet instead of mailing a full set of printed proxy materials. We believe that
this process will provide you with prompt access to our proxy materials, lower our costs of printing and delivering proxy materials, and minimize the environmental impact of printing paper copies. You should have already received the Notice of
Internet Availability of Proxy Materials with instructions on how to access the proxy materials and vote. If you would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials set forth
on the Notice of Internet Availability of Proxy Materials. For further details, please refer to the section entitled Summary beginning on page 1 of the proxy statement.
Whether or not you plan to attend the 2017 Annual Meeting, it is important that your shares be represented. Please vote via telephone, the Internet or proxy
card. If you own shares through a bank, broker or other nominee, please execute your vote by following the instructions provided by such nominee.
On
behalf of the Board of Directors, I would like to express our appreciation for your continued interest in the Company.
ANDREW K. SILVERNAIL
EXECUTIVE COMPENSATION
Risk Assessment
The Compensation Committee periodically reviews the potential risks arising from our compensation policies, practices and programs to determine whether any
potential risks are material to the Company. In approving the 2016 compensation program design, the Compensation Committee engaged in discussions with its independent compensation consultant and management regarding any potential risks and concluded
that the Companys compensation policies and practices are designed with the appropriate balance of risk and reward in relation to the Companys overall business strategy, do not incentivize employees, including executive officers, to take
unnecessary or excessive risks, and that any risks arising from the Companys policies and practices are not reasonably likely to have a material adverse effect on the Company.
In this review, the Compensation Committee considered the attributes of the Companys policies and practices, including:
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the mix of fixed and variable compensation opportunities;
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the balance between annual cash and long-term, stock-based performance opportunities;
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multiple performance factors tied to key measures of short-term and long-term performance that motivate sustained performance and are based on quantitative measures;
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caps on the maximum payout for cash incentives;
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stock ownership requirements for executives that encourage a long-term focus on performance;
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an insider trading policy that prohibits hedging and pledging;
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a claw-back policy that applies to performance-based compensation, including stock-based awards, for directors and officers; and
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oversight by an independent compensation committee.
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Compensation Committee
Report
The Compensation Committee has reviewed the following Compensation Discussion and Analysis and discussed its contents with management. Based
on this review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.
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Livingston L. Satterthwaite, Chairman
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Compensation Discussion and Analysis
Executive Summary
This
Compensation Discussion and Analysis describes our executive compensation philosophy and programs, and compensation decisions made under those programs for our named executive officers (NEOs) for fiscal year 2016, who are listed below.
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Name
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Title
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Andrew K. Silvernail
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Chairman, President and Chief Executive Officer
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Michael J. Yates(1)
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Vice President, Interim Chief Financial Officer and Chief
Accounting Officer
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Heath A. Mitts(2)
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Former Senior Vice President and Chief Financial Officer
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Eric D. Ashleman
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Senior Vice President and Chief Operating Officer
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Denise R. Cade
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Senior Vice President, General Counsel and Corporate Secretary
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Daniel J. Salliotte
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Senior Vice President, Mergers & Acquisitions and Treasury
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(1)
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Mr. Yates served as our Interim Chief Financial Officer from September 9, 2016 to December 31, 2016.
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(2)
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Mr. Mitts employment with the Company terminated on September 9, 2016.
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Principles of Our Compensation Programs
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Pay-for-Performance
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The key principle of our compensation philosophy is
pay-for-performance.
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Alignment with Stockholders
Interests
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We reward performance that meets or exceeds the performance
goals that the Compensation Committee establishes with
the
objective of increasing stockholder value.
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Variation Based on
Performance
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We favor variable pay opportunities that are based on
performance over fixed pay. The total compensation received by
our named
executive officers varies based on corporate and
individual performance measured against annual and long-term
goals.
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Highlights of our Compensation Programs
WHAT WE DO
Ö
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Pay-for-Performance:
A significant portion of each named executive
officers target annual compensation is tied to corporate and individual performance.
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Ö
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Annual
Say-on-Pay
Vote:
We conduct an annual
say-on-pay
advisory vote. At our 2016 Annual Meeting of Stockholders, more than 98% of the votes cast on the
say-on-pay
proposal were in favor of the fiscal year 2015 compensation of our named executive officers.
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Ö
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Clawback Policy:
Our Clawback Policy allows the Board of Directors to recoup any excess incentive compensation paid to our executive officers if the
financial results on which the awards were based are materially restated due to fraud, intentional misconduct or gross negligence of the executive officer.
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Ö
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Short-Term and Long-Term Incentives/Measures:
Our annual and long-term plans provide a balance of incentives and include different measures of performance.
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Ö
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Independent Compensation Consultant:
The Compensation Committee engages an independent compensation consultant, who does not also provide services to
management.
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Ö
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Stock Ownership Guidelines:
To further align the interests of management and our directors with our stockholders, we have significant stock ownership
guidelines, which require our executive officers and directors to hold a multiple of their annual compensation in equity.
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Ö
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Limited Perquisites and Related Tax
Gross-Ups:
We provide limited perquisites and tax
gross-ups.
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Ö
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Mitigate Inappropriate Risk Taking:
In addition to our clawback policy, stock ownership guidelines and prohibition of hedging and pledging, we structure our
compensation programs so that they minimize inappropriate risk taking by our executive officers and other employees, including using multiple performance metrics and multi-year performance periods and capping our annual incentive awards and
performance share awards.
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WHAT WE DONT DO
×
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Gross-ups
for Excise Taxes:
Our executive severance agreements do not contain a
gross-up
for excise taxes that may be imposed as a result of severance or other payments deemed made in connection with a change in control.
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×
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Reprice Stock Options:
Our equity incentive plan prohibits the repricing of stock options and stock appreciation rights without prior stockholder approval.
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×
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Fixed Term Employment Agreements:
Employment of our executive officers (other than our CEO) is at will and may be terminated by either the
Company or the employee at any time.
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×
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Hedging and Pledging:
Our insider trading policy prohibits all employees and directors from hedging their economic interest in the Company shares they hold.
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Fiscal Year 2016 Financial Highlights
Despite the challenging market conditions in 2016, orders and sales were up 6% and 5%, respectively, compared to the prior year, while gross margin of 44% was
down 80 basis points. The following are 2016 financial highlights:
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Sales of $2.1 billion were up 5 percent compared to the prior year, down 1 percent organically.
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Adjusted earnings per share (EPS) of $3.75 was 20 cents, or 6 percent, higher than the prior year.*
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Free cash flow of $362 million was 125 percent of net income.*
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Adjusted net income of $288 million increased 4 percent compared to the prior year.*
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We increased the quarterly dividend by six percent in April 2016.
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We divested four non-strategic businesses and deployed over $500 million on three acquisitions:
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○
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Akron Brass, a leader in engineered life-safety products for the safety and emergency response markets;
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AWG Fittings, a European leader in the manufacturing of safety and emergency response equipment; and
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SFC Koenig, a leader in the production of highly engineered expanders and check valves for critical applications across the transportation, hydraulic, aviation and medical markets.
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*
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A reconciliation from GAAP to non-GAAP financial measures and other related information is included in Item 6 of the Companys Annual Report on Form 10-K for the fiscal year-ended December 31, 2016. In addition to
the adjustments noted in the Form 10-K, additional adjustments are used to determine the short-term incentive payouts, including adjustments related to acquisitions and divestitures, actual capital expenditures and actual share count compared to the
annual plan.
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These financial highlights and significant recent accomplishments are closely related to performance metrics
under our executive compensation plans. For 2016, the executive compensation programs were designed to directly link compensation opportunities to the financial performance metrics that we believe are the best measures of success in our business:
earnings per share (EPS), cash flow conversion, organic sales growth and relative total shareholder return (TSR).
The 2016 bonus payouts were 126% of
target reflecting the higher than expected adjusted EPS and adjusted cash flow conversion, and lower than expected organic sales growth performance. Our TSR for the 2014-2016 period was 35%, which ranked as the 58
th
percentile versus the companies in the S&P Midcap 400 Industrials index and resulted in a 141% payout of performance stock units.
How Fiscal Year 2016 Named Executive Officer Compensation is Tied to Company Performance
The compensation opportunities of our executives are directly tied to the performance of the Company. Our
pay-for-performance
philosophy is demonstrated by the following elements of our executive compensation program for 2016:
Approximately 83% of our CEOs 2016 total targeted pay was performance-based, and an average of approximately 67% of our other named executives
officers total targeted pay in 2016 was performance-based. The charts below show the allocation of 2016 targeted pay across base salary, the annual cash incentive award, and the long-term incentive award for our CEO and other named executive
officers.
In 2016, our long-term incentives continued to represent the single largest component of our CEOs and other named
executive officers targeted pay, representing approximately 66% and 45% of total targeted pay, respectively.
Our 2016 incentive awards are directly
tied to the performance metrics that we believe are the best measures of our financial success and that will represent value created for our stockholders: EPS, cash flow conversion, organic sales growth, and TSR (measured on a relative basis).
Our performance metrics are largely focused on absolute performance goals. We balance these absolute goals with a relative performance goal that measures our
long-term total shareholder return as compared to companies in the Russell Midcap Index. This structure reinforces a focus on our financial performance compared to a group of industrial companies.
The value of our 2016 long-term incentive awards is tied to our stock price performance, which links executive pay directly to the creation of value for our
stockholders.
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Setting Executive Compensation
Role of Compensation Committee
The Compensation Committee establishes the Companys compensation philosophy, structures the Companys compensation programs to be consistent with
that philosophy, and approves each element of named executive officer compensation. In the case of the CEO, the Board of Directors reviews, ratifies and approves compensation recommendations made by the Compensation Committee.
The Compensation Committee performs periodic reviews of executive pay tally sheets. The tally sheets outline each executives annual target and actual
pay, unvested equity holdings and termination payments under various scenarios. Data from the tally sheets is considered by the Compensation Committee when setting target total compensation. Generally, the Compensation Committee reviews and adjusts
target total compensation levels annually. Actual total compensation may vary from target based on performance and changes in stock price over time.
Generally, the amount of compensation realized historically, or potentially realizable in the future, from past equity awards does not directly impact the
level at which future pay opportunities are set. When granting equity awards, the Compensation Committee considers market data and individual performance.
Role of Compensation Consultant
Our Compensation Committee has the sole authority to retain and replace, as
necessary, compensation consultants to provide it with independent advice. The Compensation Committee has engaged F.W. Cook as its independent consultant to advise it on executive and
non-employee
director
compensation matters. This selection was made without the input or influence of management.
Under the terms of its agreement with the Compensation Committee, F.W. Cook will not provide any other services
to the Company, unless directed to do so by the Compensation Committee. During fiscal year 2016, F.W. Cook provided no services to the Company other than to advise the Compensation Committee on executive and
non-employee
director compensation issues. The Compensation Committee has not identified any conflict of interest raised by the work F.W. Cook performed in fiscal year 2016.
Setting Individual Executive Pay
The Compensation Committee formulates a recommendation of CEO pay based on the financial and operating performance of the Company, the Committees
assessment of the CEO and a thorough review of the market benchmarking data discussed below. The CEO pay recommendations put forth by the Compensation Committee are then reviewed and subject to approval by the Board.
The pay packages for the other NEOs are set by the Compensation Committee after taking into consideration the recommendations of the CEO. Individual pay
decisions are based on an assessment of the individual executive, utilizing the following criteria:
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Value to IDEX; short and long-term
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Individual contribution and impact to team performance
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Experience, background, track record
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3.
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Replacement difficulty
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Challenge of replacing the role with equivalent capability
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Overall experience in current or similar role
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The Compensation Committee reviews pay data from various
sources as one input in determining appropriate target compensation levels. The Compensation Committee utilizes the expertise of its independent compensation consultant, F.W. Cook, in developing compensation recommendations for the NEOs, including
the CEO. The Committee believes that to attract and retain qualified management, total direct compensation should be competitively targeted within a range that includes market median for comparable positions at comparable companies, with market
compensation data being only one of many factors considered by the Compensation Committee when setting the compensation levels for any particular executive. While an individual executives target compensation is positioned within the
competitive range based on the individual factors listed above, actual compensation in any given year should and does vary from target based on Company and individual performance.
The Compensation Committee undertook a review and analysis to ensure that the 2016 executive compensation programs appropriately reflected the market for
talent. The Committee considered relevant market pay practices to ensure the Companys ability to recruit and retain high performing talent across its diversified markets and global footprint. Two surveys and a peer group analysis were utilized
for the 2016 executive compensation market analysis for the NEOs.
Survey Data
The Willis Towers Watson Executive Compensation Database survey and the Equilar Top 25 Survey were used because they include a broad range of manufacturing
companies that are comparable to the Company in size, geography and industry.
Peer Companies
The peer group of companies identified below consists of companies that are similar to the Company in terms of their size (i.e., revenue, net income, and
market capitalization), diversified industry profile (ranging from customized manufacturing solutions to emerging markets in highly specialized health science technology), investment in research and development, global presence, and have executive
officer positions that are comparable to the Companys in terms of breadth, complexity and scope of responsibilities. The companies listed below are the same group of companies used to benchmark pay in 2015.
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Actuant
Corporation
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AMETEK, Inc.
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Bruker Corporation
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CIRCOR International Inc.
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Colfax Corporation
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Crane Co.
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Donaldson Company, Inc.
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Dover Corporation
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Dresser-Rand Group Inc.
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Flowserve Corporation
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Graco Inc.
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ITT Corporation
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KLA-Tencor
Corporation
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Nordson Corporation
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Pall Corporation
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Pentair Ltd.
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PerkinElmer, Inc.
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Roper Industries, Inc.
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SPX Corporation
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Viavi Solutions Inc.
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Watts Water Technologies, Inc.
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Xylem Inc.
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The Compensation Committee believes that multiple data sources provide for a clearer perspective of the market.
As such, with the assistance of management and F.W. Cook, the Compensation Committee developed an aggregate composite of the market data to establish target compensation levels for the executives weighted as follows:
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Position(s)
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Survey Weighting
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Peer Group Weighting
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Rationale
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President and Chief Executive Officer; and Senior Vice President and Chief Financial Officer
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20%
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80%
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Positions are required to be represented in all of the proxy peer group companies; closest representation of the corporate profile;
balance of peer and survey data.
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Senior Vice President and Chief Operating Officer; and Senior Vice President, General Counsel and Corporate
Secretary
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70%
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30%
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Limited number of position matches in the proxy group; pool for talent would include the broader industry representation in the
survey data.
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Senior Vice President,
Mergers & Acquisitions and Treasury; and Vice President,
Interim Chief Financial
Officer and Chief Accounting
Officer
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100%
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0%
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No position matches in the proxy group; pool for talent would include the broader industry representation in the survey data.
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Role of
Say-on-Pay
The Company held an advisory vote on executive compensation
(say-on-pay)
at the Companys 2016 Annual Meeting of Stockholders. The
say-on-pay
advisory vote received support from over 98% of the shares voted at the 2016 Annual Meeting. The Compensation Committee believes this affirms stockholders support of the Companys approach to executive compensation. Accordingly, the
Compensation Committee did not make any material changes to the underlying structure of our executive compensation program for fiscal year 2016. The Compensation Committee will continue to review and consider the outcome of the Companys
say-on-pay
votes when making future compensation decisions for the named executive officers.
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Compensation Philosophy and Objectives
As more fully discussed below, the Companys executive compensation philosophy is that its compensation program should: (1) align the interests of
management and stockholders, (2) motivate and retain the management team with a focus on
pay-for-performance,
and (3) result in executives holding meaningful
amounts of the Companys Common Stock.
Our 2016 executive compensation program elements were aligned with the interests of our stockholders by
linking our incentive compensation performance metrics to the following key indicators of the Companys overall financial performance: EPS, cash flow conversion, organic sales growth, and TSR relative to companies in the Russell Midcap Index.
We believe that our executives should have a financial stake in our long-term success. As described in greater detail below, the Board of Directors established stock ownership guidelines in 2006 that require covered executive officers, including the
NEOs, to maintain a stake in the long-term success of our business.
In addition, the Companys insider trading policy prohibits speculative and
derivative trading and short selling by all employees and directors. The policy further prohibits pledging Company securities and hedging transactions with respect to Company securities. We believe these requirements along with our incentive
programs effectively align the interests of management and stockholders and motivate the creation of long-term stockholder value.
We believe that the mix
of base salary, short-term and long-term incentives with appropriate performance metrics and targets provide a motivational element whereby executives are paid according to how the Company performs, and that they have direct line of sight to what it
takes to outperform and thus achieve pay above market median. We seek to retain our executives primarily by setting our compensation and benefits at competitive levels relative to companies of similar size, scope and
complexity. We believe that our executives have skills that are transferrable across industries and are sought after by
similar-sized
as well as larger
diversified manufacturing companies. As a result, we do include companies in our peer group that are more than two times the Companys revenue level.
Our long-term incentive program consists of performance-based stock units, restricted stock and stock options. Our long-term incentive award grants are
targeted to be competitive with the market and, depending upon Company performance, can result in significant share ownership opportunities for our executives. As stated above and detailed below, our stock ownership guidelines require our executives
to maintain specified stock ownership levels.
When combining the long-term incentive grant levels that are paid out in the Companys common stock
and the required ownership levels, the result is that our executives hold meaningful amounts of the Companys Common Stock.
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2016 Executive Compensation Program
The following discussion describes our 2016 compensation elements and 2016 compensation decisions related to our NEOs. Our NEOs consist of our Chief Executive
Officer, Chief Financial Officers and three other most highly compensated executive officers. For 2016, our named executive officers were Andrew K. Silvernail, our Chairman of the Board, President and Chief Executive Officer; Michael J. Yates,
our Vice President, Interim Chief Financial Officer and Chief Accounting Officer; Heath A. Mitts, our former Senior Vice President and Chief Financial Officer; Eric D. Ashleman, our Senior Vice
President and Chief Operating Officer; Denise R. Cade, our Senior Vice President, General Counsel and Corporate Secretary; and Daniel J. Salliotte, our Senior Vice President, Mergers & Acquisitions and Treasury.
2016 Key
Compensation Elements
The material elements of 2016 compensation for
the NEOs are outlined below:
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Element
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Type of Pay
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Purpose
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General Characteristics
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Base Salary
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Fixed
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Provides a fixed level of current cash compensation consonant with the executives primary duties and responsibilities and necessary to attract, retain and
reward named executive officers.
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Reviewed annually and adjusted as necessary to reflect market changes, salary budgets and individual performance.
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Short-Term Incentives Annual Bonus
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Performance-
Based
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Focuses named executive officers on annual performance by rewarding corporate and individual performance and achievement of
pre-determined
goals.
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Variable cash payments. Annual awards based on performance against
pre-determined
individual and
corporate performance goals.
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Long-Term Incentives Stock Options
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Performance-
Based
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Provides retention through vesting schedules, and aligns each named executive officers interests with long-term stockholder interests by linking a
substantial portion of each executives compensation to increases in the price of the Companys Common Stock.
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Variable compensation based on stock value. Options are granted with exercise prices not less than fair market value and vest ratably over
four years.
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Long-Term Incentives Restricted Stock Awards
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Provides retention through vesting schedules.
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Restricted stock cliff vests in three years.
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Long-Term Incentives Performance Stock Units
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Ties long-term compensation to relative performance, further aligning the interests of named executive officers with stockholders.
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Performance stock units vest based on relative total shareholder return compared to companies in the Russell Midcap Index over a cumulative
three-year period.
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Retirement/Other
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Fixed/
Voluntary
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Provides overall wealth accumulation and retention.
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Various market-based retirement and welfare benefits and perquisites.
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A Balanced Perspective
Maintaining a balanced perspective is a core part of the Companys business strategy. While short-term performance is vital to the financial well-being of
the Company, the long-term health of the Company requires the appropriate emphasis on new products, technologies and investments that will enable future growth and deliver long-term stockholder value. The latter requires that employees take
calculated risks to capitalize on anticipated changes in the Companys numerous businesses.
The Compensation Committee believes that balancing the proportion of cash and
non-cash
awards, as well as short-term versus long-term awards, is important to motivate performance while mitigating risk. Cash-based awards are important in motivating executives for the short-term, while
long-term incentives focus executives who have the greatest ability to impact business results on managing the business for the long-term, and reinforce the link between their earnings opportunity and the long-term growth of the Company.
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Base Salary
Base salaries are reviewed annually and may be adjusted to reflect market data, as well as individual responsibility, experience and performance. The table
below highlights the change in 2016 base salary for each NEO, reflecting an annual merit increase for each NEO.
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NEO
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2016
Base
Salary
Rate
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2015
Base
Salary
Rate
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Percentage
Increase
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Andrew K. Silvernail
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$954,800
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$
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927,000
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3%
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Michael J. Yates
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$365,000
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$
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354,400
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3%
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Heath A. Mitts
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$502,500
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$
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487,900
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3%
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Eric D. Ashleman
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$515,000
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$
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500,000
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3%
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Denise R. Cade
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$432,600
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$
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420,000
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3%
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Daniel J. Salliotte
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$324,500
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$
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315,000
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3%
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Short-Term Incentives Incentive Award Plan
Messrs. Silvernail and Ashlemans and Ms. Cades 2016 annual incentive bonus took the form of a cash performance award under the
stockholder-approved Incentive Award Plan in order to allow their bonuses to be deductible under IRC Section 162(m). In 2016, the Compensation Committee granted Messrs. Silvernail and Ashleman and Ms. Cade cash performance awards with a maximum
aggregate payment amount equal to 2% of the Companys 2016 operating income contingent on the Company achieving a minimum adjusted EPS of $3.09.
Adjusted EPS excludes from earnings per share the impact of acquisition and divestiture-related income and charges, and restructuring charges. Under the terms
of the awards, no bonus would be paid if the Company did not achieve adjusted EPS of $3.09. The Compensation Committee set Mr. Silvernails actual performance award for 2016 at $1,203,048, Mr. Ashlemans actual performance award at
$486,675 and Ms. Cades actual performance award at $327,046.
In setting the actual awards, the Compensation Committee considered the actual
performance of the Company using the metrics in the Business Performance Factor described below, individual performance and the amounts that the NEOs
would have earned as an annual cash bonus if they participated in the Management Incentive Compensation Plan (MICPdescribed below) on substantially the same terms as other company
executives. Similar to the awards under the MICP, the Compensation Committee limits maximum payouts to 200% of target payout for each executive.
Short-Term Incentives Management Incentive Compensation Plan
Mr. Yates, as Interim Chief Financial Officer,
was not subject to the deduction limitations under IRC Section 162(m), and therefore he participated in the Companys MICP, as did Mr. Salliotte. Mr. Mitts resigned from the Company effective September 9, 2016, and therefore did not
earn a cash bonus under the MICP. The MICP provides participants with the opportunity to earn annual cash bonuses.
The amount of the annual cash bonus
paid to each participant under the MICP is determined under the following formula:
Annual Bonus = Base Salary x Individual Target Bonus Percentage x
Business Performance Factor
Individual Target Bonus Percentage for the year is a percentage of the participants base salary and is based on the
participants position and market data.
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The Business Performance Factor (discussed in more detail below) is calculated based on measurable corporate
quantitative objectives, which are given a combined 70% weighting, and one strategic measure with a 30% weighting.
For 2016, the measurable quantitative
objectives within the Business Performance Factor were adjusted EPS and adjusted cash flow conversion. Adjusted EPS excludes from reported earnings per share the impact of acquisition and divestiture-related income and charges, and restructuring
charges (EPS Adjustments). Adjusted cash flow conversion is cash flow as a percent of net income excluding the impact of the EPS Adjustments. The payout of each quantitative objective is a function of the amount by which actual performance exceeds
or falls short of goal, with a maximum payout of
200% of target for each objective. For 2016, no bonus was payable unless a minimum threshold for adjusted EPS was met. The adjusted EPS threshold for 2016 was $3.09.
For 2016, the 30% strategic measure was organic sales growth. Organic sales growth is a critical business metric and helps identify the underlying health of
the businesses and managements ability to increase sales through innovation and customer focus. Organic sales is defined as net sales of the Company adjusted to exclude the impact of foreign currency translation and sales from acquired
businesses during the first twelve months of ownership. The goal for organic sales growth is established relative to expected growth in key markets, such as industrial, health and science instrumentation, energy and fire and rescue.
For 2016, the relative weightings and the
performance against the quantitative and strategic measure resulted in a recommended Business Performance Factor of 126%, as shown in the table below.
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MICP Objective
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Goal
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Actual*
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Payout
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MICP
Weighting
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Business
Performance
Factor
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Adjusted EPS
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$3.55
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$
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3.74
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148%
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50%
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|
|
|
74%
|
|
Adjusted Cash Flow Conversion
|
|
|
115%
|
|
|
|
119%
|
|
|
|
120%
|
|
|
|
20%
|
|
|
|
24%
|
|
Organic Sales Growth
|
|
|
-1.0%
|
|
|
|
-1.2%
|
|
|
|
95%
|
|
|
|
30%
|
|
|
|
28%
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100%
|
|
|
|
126%
|
|
*
|
A reconciliation from GAAP to non-GAAP financial measures and other related information is included in Item 6 of the Companys Annual Report on Form 10-K for the fiscal year-ended December 31, 2016. In addition to
the adjustments noted in the Form 10-K, additional adjustments are used to determine the short-term incentive payouts, including adjustments related to acquisitions and divestitures, actual capital expenditures and actual share count compared to the
annual plan.
|
The payments under the MICP to Messrs. Yates and Salliotte are included in the 2016 Summary Compensation Table under the
Non-Equity
Incentive Plan Compensation column and summarized in the table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEO
|
|
Base Salary Rate
|
|
Target Incentive
|
|
|
Business
Performance
Factor
|
|
|
2016 Short-
Term
Incentive
Award
|
|
Michael J. Yates
|
|
$365,000
|
|
|
55%
|
|
|
|
126%
|
|
|
$
|
252,945
|
|
Daniel J. Salliotte
|
|
$324,500
|
|
|
65%
|
|
|
|
126%
|
|
|
$
|
265,766
|
|
33
Sign-On Bonus
In certain circumstances, we may offer cash sign-on bonuses to attract executive talent as determined on a case-by-case basis after taking into account the
specific circumstances involving hiring the executive. Pursuant to Ms. Cades employment offer letter and in order to attract and retain Ms. Cade, the Company paid Ms. Cade a sign-on bonus of $228,000 in March 2016.
2016 Long-Term Incentive Awards
In 2016, NEOs received annual long-term incentive awards consisting of performance stock units (PSUs) and stock options. The Company eliminated restricted
stock awards from the 2016 annual long-term incentive grant to the NEOs in order to emphasize the link between pay and performance. Restricted stock awards represented approximately 15% of the long-term incentive grants to NEOs in 2014 and 2015.
TSR Measure
The PSUs
have a three-year performance period and utilize a relative TSR measure. The Companys relative TSR will be measured against the TSR of companies in the Russell Midcap Index at the end of the three-year performance period. If the Company
achieves 50th percentile TSR performance as compared to the group of companies, each NEO will receive the target number of performance units paid out in shares of the Companys Common Stock. Threshold performance is at the 33
rd
percentile, which will result in a payout equal to 33% of target and performance below this level will result in zero payout. Maximum payout is 250% of target number of shares for 80
th
percentile achievement or higher. Payouts are interpolated between the 33
rd
percentile and
50
th
percentile and between the 50
th
percentile and 80
th
percentile performance.
Cumulative dividend equivalent payments will be made at the end of the performance period based on the number of shares of common stock received by each executive.
In selecting relative TSR as the measure, the Compensation Committee noted that TSR is highly correlated with a
combination of other metrics that are important to the Company and to investors, notably: return on invested capital, operating profit margin and compound annual sales growth rate (CAGR).
Comparator Group
For the 2016
PSU grant, the Committee selected the Russell Midcap Index companies as the comparator group for relative TSR. In selecting the Russell Midcap Index companies, the Committees objective was to have a sizeable group of companies similar in
revenue and market capitalization to the Company. In addition, the Committee seeks to align with the mutual funds within our top shareholder firms as they generally hold a broad range of investments covering multiple industries. The current
outstanding, unvested 2015 PSU grant continues to be measured on TSR compared to companies in the S&P Midcap 400 Industrials Index.
Difference between Long-Term Incentive Components
The Compensation Committee believes that PSUs, stock options and restricted stock all incent management actions that drive the creation of stockholder value
and promote executive stock ownership. However, each long-term incentive component has different characteristics. The value of the PSUs after the three-year performance period is directly linked to the relative TSR as described above as well as the
stock price movement during the performance period. Stock options provide value only to the extent that the Companys stock price appreciates above the stock price on the date of grant. Restricted stock awards provide value regardless of
whether the Companys stock price appreciates, and help retain executives over the course of business and market cycles that may negatively impact the Companys operations and stock price in the short term. While the Company did not
include restricted stock awards in the annual grant to the
34
NEOs, the Company continues to provide restricted stock awards for special equity awards and for annual grants below the executive leadership level. In 2016, Mssrs. Yates and Salliotte each
received off-cycle restricted stock awards at the time of Mr. Mitts departure to aid in retention and reward them for their additional efforts during the CFO transition period.
Long-term incentive awards are generally made on an annual basis, or at the time of a special event (such as upon hiring or promotion). We typically grant
awards on the date of the first Board of Directors meeting of a year, or the date of the annual meeting of stockholders. We attempt to make awards during periods when we do not have
non-public
information
which could impact our stock price. Working with its independent compensation consultant, the Compensation Committee granted long-term incentive awards to the NEOs in early 2016. Other than the CEO, each NEO has a long-term incentive target stated
as a percentage of base salary. The long-term incentive targets are established on an individual basis taking into consideration market median practice for each role, and individual impact and performance.
The Compensation Committee may grant awards above or below target based on individual and Company performance and did grant awards above target in 2016 based
on individual performance and Company performance, including top quartile
one-year
cumulative TSR in 2015 as compared to the peer group of companies used to benchmark executive pay listed above. The
Companys three-year cumulative TSR was ranked at the 92nd percentile as compared to the same group of peer companies.
For the CEO, the Compensation
Committee recommended a long-term incentive award based on an assessment of the CEOs performance and pay position as described under Setting Executive Compensation.
Our PSU grant for the 2014-2016 performance period resulted in a 141% payout based on a
35% TSR, which ranked as the 58th percentile when compared to companies in the S&P 400 Midcap Industrials Index.
Other Compensation Components
Employee Benefits
The NEOs participate in group health, welfare and qualified retirement programs available to all
of the Companys employees. The NEOs also participate in nonqualified supplemental retirement plans, deferred compensation arrangements and supplemental disability benefits. Participation in these nonqualified plans is intended to provide the
NEOs with the opportunity to accumulate retirement benefits at levels above the limitations imposed by tax qualified plans. For a more complete explanation of these plans, see the narrative following the 2016 Summary Compensation Table, the Pension
Benefits at 2016 Fiscal Year End table below, the Nonqualified Deferred Compensation at 2016 Fiscal Year End table, and the discussion under Potential Payments upon Termination or Change in Control.
Severance and Change in Control Benefits
Each of the NEOs are entitled to severance benefits under the terms of written agreements in the event that their employment is actually or constructively
terminated without cause. The amount of the benefit, which varies with the individual, depends on whether or not the termination is in connection with a change in control. The level of each NEOs severance benefits reflects the Companys
perception of the market for their positions at the time the agreements were put in place. For additional information, see the section below entitled Potential Payments upon Termination or Change in Control.
Perquisites
The Compensation
Committee believes in providing limited perquisites in line with market practice. The NEOs are provided with a car allowance. The CEO is entitled to limited use of
35
the Companys leased aircraft for
non-business
purposes. For further details on these perquisites, see the Narrative to Summary Compensation
Table below.
Other Executive Compensation Matters
Stock Grant Practices
For all
newly issued stock option awards, the exercise price of the stock option award will be the closing price of our Common Stock on the NYSE on the date of the grant. If the grant date for the annual awards falls on a weekend, the exercise price of
stock option awards will be the closing price of our Common Stock on the NYSE on the last trading day preceding the date of grant.
Stock Ownership
Consistent
with its executive pay philosophy, the Company requires that executive officers maintain minimum ownership levels of the Companys Common Stock. The following stock ownership guidelines for NEOs were established by the Board of Directors in
2006 and modified in 2015.
|
|
|
|
|
Executive
|
|
Ownership as a Multiple
of Base Salary
|
|
CEO
|
|
|
5x
|
|
CFO, COO
|
|
|
3x
|
|
Other NEOs
|
|
|
2x
|
|
NEOs must comply with these ownership requirements within five years of date of hire or promotion. Counted for purposes of
satisfying ownership requirements are shares directly owned and unvested restricted shares and performance stock units at target. As of December 31, 2016, all NEOs had met or were proceeding towards meeting the ownership guidelines within the
applicable five-year period.
Hedging and Pledging
All directors and officers of the Company are prohibited from (i) pledging Company securities (including through holding Company securities in margin
accounts) and (ii) engaging in any transaction in which they may profit from short-term speculative swings in the value of the Companys securities (hedging). For this purpose, hedging includes short-sales
(selling borrowed securities that the seller hopes can be purchased at a lower price in the future) or short sales against the box (selling, but not delivering, owned securities), put and call options (publicly
available rights to sell or buy securities within a certain period of time at a specified price or the like), and other hedging transactions designed to minimize the risk inherent in owning the Companys stock, such as
zero-cost
collars and forward sales contracts.
Clawbacks
To the extent not in violation of applicable law, the Company reserves the right to recover, or clawback, from current or former directors and officers any
wrongfully earned performance-based compensation, including stock-based awards, upon the determination by the Compensation Committee that:
|
|
|
the Companys financial statements have been restated due to material noncompliance with any financial reporting requirement;
|
|
|
|
the cash incentive or equity compensation to be recouped was calculated on, or its realized value was affected by, the financial results that were subsequently restated;
|
|
|
|
the cash incentive or equity compensation would have been less valuable than that actually awarded or paid based upon the application of the correct financial results; and
|
36
|
|
|
the pay affected by the calculation was earned or awarded within three years of the restatement.
|
Tax
Gross-Up
Provisions
In February 2011, the Compensation Committee adopted a policy that the Company will not enter into any new agreements that include excise tax
gross-up
provisions with respect to payments contingent upon a change in control of the Company. No executives are eligible for an excise tax
gross-up.
The Compensation Committee has exclusive authority to modify, interpret and enforce this provision in compliance with applicable law.
Accounting and Tax Implications Deductibility of Executive Compensation
In developing compensation programs, the Compensation Committee reviews the estimated accounting and tax impact of all elements of the executive compensation
program. Generally, an accounting expense is accrued over the requisite service period of the particular pay element (generally equal to the performance period) and the Company realizes a tax deduction upon payment to, or realization by, the
executive. Cash awards, performance stock units and stock options granted under the Incentive Award Plan
are intended to satisfy the requirements for performance-based compensation under Internal Revenue Code (IRC) Section 162(m). Restricted stock awards (which vest based on continued employment
with the Company) do not qualify as performance-based compensation and, therefore, may not be
tax-deductible
as a result of the limitations of IRC Section 162(m).
IRC Section 162(m) limits the tax deductibility by the Company of annual compensation in excess of $1 million paid to the CEO and any of the three other
most highly compensated executive officers, other than the CFO. While the tax impact of any compensation arrangement is one factor to be considered, that impact is evaluated in light of the Compensation Committees overall compensation
philosophy and objectives. While it is a goal of the Compensation Committee to maximize the deductibility of executive compensation, the Committee retains the discretion to compensate officers in a manner commensurate with performance and the
competitive environment for executive talent. Accordingly, the Compensation Committee may award compensation to the executive officers that is not fully deductible if it determines the compensation is consistent with its philosophy and is in the
Companys and its stockholders best interests.
37
2016 Summary Compensation Table
The table below and related footnotes summarize the total compensation earned or paid in 2016, 2015 and 2014 for the Companys CEO, CFO, and each of the
three most highly compensated executive officers other than the CEO and CFO.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal Position
|
|
Year
|
|
|
Salary
|
|
|
Bonus
|
|
|
Stock
Awards (1)
|
|
|
Option
Awards (2)
|
|
|
Non-Equity
Incentive
Compensation
Plan (3)
|
|
|
Change in
Pension Value
and Non-
Qualified
Deferred
Compensation
Earnings (4)
|
|
|
All Other
Compensation (5)
|
|
|
Total
|
|
Andrew K. Silvernail,
Chairman, President and
Chief Executive Officer
|
|
|
2016
|
|
|
|
$949,347
|
|
|
|
|
|
|
|
$3,726,999
|
|
|
|
$2,500,008
|
|
|
|
$1,203,048
|
|
|
|
|
|
|
|
$268,444
|
|
|
|
$8,647,846
|
|
|
|
2015
|
|
|
|
921,808
|
|
|
|
|
|
|
|
3,781,015
|
|
|
|
1,750,014
|
|
|
|
593,280
|
|
|
|
|
|
|
|
368,274
|
|
|
|
7,414,391
|
|
|
|
2014
|
|
|
|
895,385
|
|
|
|
|
|
|
|
3,614,094
|
|
|
|
1,584,274
|
|
|
|
1,350,000
|
|
|
|
|
|
|
|
340,046
|
|
|
|
7,783,799
|
|
Michael J. Yates, Vice
President, Interim Chief
Financial Officer and Chief
Accounting Officer (6) (7)
|
|
|
2016
|
|
|
|
$362,921
|
|
|
|
|
|
|
|
$704,827
|
|
|
|
$136,988
|
|
|
|
$252,945
|
|
|
|
|
|
|
|
$70,104
|
|
|
|
$1,527,785
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Heath A. Mitts, Former Senior
Vice President and Chief
Financial Officer (8)
|
|
|
2016
|
|
|
|
$364,348
|
|
|
|
|
|
|
|
$693,032
|
|
|
|
$464,876
|
|
|
|
$-
|
|
|
|
|
|
|
|
$78,212
|
|
|
|
$1,600,468
|
|
|
|
2015
|
|
|
|
485,169
|
|
|
|
|
|
|
|
832,011
|
|
|
|
385,050
|
|
|
|
234,192
|
|
|
|
|
|
|
|
123,611
|
|
|
|
2,060,033
|
|
|
|
2014
|
|
|
|
471,592
|
|
|
|
|
|
|
|
862,913
|
|
|
|
378,198
|
|
|
|
533,000
|
|
|
|
|
|
|
|
118,256
|
|
|
|
2,363,959
|
|
Eric D. Ashleman, Senior Vice
President, Chief Operating
Officer
|
|
|
2016
|
|
|
|
$512,058
|
|
|
|
|
|
|
|
$768,241
|
|
|
|
$515,016
|
|
|
|
$486,675
|
|
|
|
|
|
|
|
$129,653
|
|
|
|
$2,411,643
|
|
|
|
2015
|
|
|
|
453,704
|
|
|
|
|
|
|
|
1,018,365
|
|
|
|
672,774
|
|
|
|
213,071
|
|
|
|
|
|
|
|
113,576
|
|
|
|
2,471,490
|
|
|
|
2014
|
|
|
|
404,138
|
|
|
|
|
|
|
|
735,379
|
|
|
|
322,245
|
|
|
|
430,500
|
|
|
|
|
|
|
|
90,191
|
|
|
|
1,982,454
|
|
Denise R. Cade, Senior Vice
President, General Counsel
and Corporate Secretary (7)
|
|
|
2016
|
|
|
|
$430,128
|
|
|
|
$228,000 (9)
|
|
|
|
$354,873
|
|
|
|
$238,004
|
|
|
|
$327,046
|
|
|
|
|
|
|
|
$72,659
|
|
|
|
$1,650,710
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel J. Salliotte, Senior
Vice
President, Mergers &
Acquisitions and Treasury
(7)
|
|
|
2016
|
|
|
|
$322,637
|
|
|
|
|
|
|
|
$549,025
|
|
|
|
$200,008
|
|
|
|
$265,766
|
|
|
|
$3,604
|
|
|
|
$66,589
|
|
|
|
$1,407,629
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Reflects the aggregate grant date fair value of restricted stock awards and PSUs for the year indicated in accordance with FASB ASC Topic 718. For a discussion of the assumptions made in the valuation of those awards
granted in 2016, see note 13 Share-Based Compensation of the financial statements in the Companys Annual Report on Form 10-K for the year ended December 31, 2016. For PSUs granted in 2016, the grant date fair value is based on
the probable outcome of the related performance conditions which reflects the target level of performance. The grant date fair value of the PSUs granted in 2016 based on the maximum level of performance is as follows: Mr. Silvernail, $9,317,498; Mr.
Yates, $511,195; Mr. Mitts, $1,732,581; Mr. Ashleman, $1,920,658; Ms. Cade, $887,237; and Mr. Salliotte, $746,514. Mr. Mitts forfeited his 2016 grant of PSUs upon his termination of employment with the Company. All shares of restricted stock
are eligible for dividend equivalent payments when paid on the Companys Common Stock and, with respect to performance stock units, cumulative dividend equivalents are paid based on actual number of shares delivered at the end of the
performance period.
|
(2)
|
Reflects the aggregate grant date fair value for the year indicated in accordance with FASB ASC Topic 718. For a discussion of assumptions made in the valuation of stock options granted in 2016, see note 13
Share-Based Compensation of the financial statements in the Companys Annual Report on Form
10-K
for the year ended December 31, 2016.
|
(3)
|
Reflects Messrs. Silvernails and Ashlemans and Ms. Cades annual cash performance award under the Incentive Award Plan and the annual cash bonus under the MICP for Messrs. Mitts, Yates and
Salliotte, in each case, earned in the year reported.
|
(4)
|
Represents the aggregate increase/decrease in actuarial value under the Pension Plan (see the narrative to this table below for further details and the narrative to the Pension Benefits at 2016 Fiscal Year End table for
descriptions of the Pension Plan).
|
(5)
|
Consists of the following for 2016:
|
38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Contribution to
401(k)
Plan,
Defined
Contribution
Plan and
Accrued
SERP Benefits
|
|
|
Automotive,
Supplemental
Disability (a)
|
|
|
Aircraft (b)
|
|
|
Other
Payments (c)
|
|
|
Total
|
|
Andrew K. Silvernail
|
|
|
$151,998
|
|
|
|
$27,411
|
|
|
|
$86,509
|
|
|
|
$2,526
|
|
|
|
$268,444
|
|
|
|
|
|
|
|
Michael J. Yates
|
|
|
49,817
|
|
|
|
19,990
|
|
|
|
-
|
|
|
|
297
|
|
|
|
70,104
|
|
|
|
|
|
|
|
Heath A. Mitts
|
|
|
60,753
|
|
|
|
16,752
|
|
|
|
-
|
|
|
|
707
|
|
|
|
78,212
|
|
|
|
|
|
|
|
Eric D. Ashleman
|
|
|
74,326
|
|
|
|
21,689
|
|
|
|
-
|
|
|
|
33,638
|
|
|
|
129,653
|
|
|
|
|
|
|
|
Denise R. Cade
|
|
|
50,299
|
|
|
|
22,360
|
|
|
|
-
|
|
|
|
-
|
|
|
|
72,659
|
|
|
|
|
|
|
|
Daniel J. Salliotte
|
|
|
47,613
|
|
|
|
18,714
|
|
|
|
-
|
|
|
|
262
|
|
|
|
66,589
|
|
|
(a)
|
Consists of auto allowance and gas and supplemental disability premiums.
|
|
(b)
|
The Companys methodology for calculating the value of the personal use of the Company aircraft is to calculate the incremental costs of such usage to the Company, which includes fuel, landing fees, hangar fees,
catering, additional expenses related to the crew and other expenses, which would not have otherwise been incurred by the Company if the aircraft had not been used for personal travel.
|
|
(c)
|
Represents one-time reimbursement for taxes withheld in connection with FICA on SERP contributions for Messrs. Silvernail, Yates, Ashleman and Salliotte, one-time reimbursement for taxes withheld in connection with
automotive allowance and supplemental disability for Mr. Mitts, and relocation expenses for Mr. Ashleman of $32,603.
|
(6)
|
Mr. Yates served as our Interim Chief Financial Officer from September 9, 2016 to December 31, 2016.
|
(7)
|
None of Messrs. Yates or Salliotte or Ms. Cade were named executive officers in 2015 or 2014.
|
(8)
|
Mr. Mitts employment with the Company terminated on September 9, 2016.
|
(9)
|
Represents the signing bonus paid to Ms. Cade in March 2016 pursuant to the terms of her employment offer letter.
|
39
Narrative to Summary Compensation Table
Perquisites and Supplemental Disability
In addition to benefits generally available to all other U.S.-based
non-union
employees, the CEO and
other NEOs receive an auto allowance and participate in a supplemental long-term disability program. The supplemental disability benefit is in addition to the group long-term disability benefit generally available to all U.S.-based
non-union
employees. The group long-term disability plan provides an annual benefit of 60% of the first $300,000 of base salary, or an annual maximum benefit of $180,000 per year. For the NEOs, the supplemental
program provides an annual benefit of 60% of their base salary above $300,000, with a maximum supplemental benefit of $60,000 per year. The CEO is also offered the personal use of the Company leased aircraft (limited to 25 hours per year).
Retirement Benefits
The Company maintains two
tax-qualified
retirement plans for all employees in which the CEO and other
NEOs participate: the IDEX Corporation Savings Plan, which consists of a 401(k) with a prescribed matching contribution (401(k)) and a defined contribution portion (Defined Contribution), and the IDEX Corporation Retirement Plan, which is a defined
benefit plan (Pension Plan). Mr. Salliotte is the only NEO who has accrued benefits under the Pension Plan. None of the NEOs actively accrued any benefits under the Pension Plan in 2016.
Defined Contribution
The Defined Contribution portion of the IDEX Corporation Savings Plan is an ongoing
tax-qualified
defined contribution plan that provides contributions based on a participants compensation and a combination of the participants age and years of service as shown below:
|
|
|
Age + Years of
Service
|
|
Company
Contribution
|
Less than 40
|
|
3.5% of Eligible
Compensation
|
40 but less than 55
|
|
4.0% of Eligible
Compensation
|
55 but less than 70
|
|
4.5% of Eligible
Compensation
|
70 or more
|
|
5.0% of Eligible
Compensation
|
Under the plan, participants are entitled to receive the
lump-sum
value of their vested account at termination of
employment subject to distribution rules under the law. Account balances are 100% vested after three years of service.
401(k)
The 401(k) is an
on-going
tax-qualified
401(k)
plan that provides a matching contribution based on the employees contribution up to 8% of eligible compensation. The maximum matching contribution by the Company is 4% of eligible compensation. The matching contribution vests 20% for each
year of service and is 100% vested after 5 years of service.
Pension Plan
During 2005, the Company redesigned its retirement plans to eliminate the Pension Plan for employees hired after 2004. Employees who participated in the
Pension Plan as of December 31, 2005 who met certain age and service requirements were given the
one-time
opportunity to choose to stay in the Pension Plan with the then current match in the 401(k)
40
Plan (maximum match of 2.8% of eligible pay); or to begin participating in the Defined Contribution Plan as of January 1, 2006, with an enhanced match in the 401(k) (maximum match of 4% of
eligible pay). Employees who chose this option retain, by law, a frozen benefit in the Pension Plan as of December 31, 2005. Mr. Salliotte chose to begin participation in the Defined Contribution Plan. He has a frozen
benefit under the Pension Plan as of December 31, 2005. The monthly accrued benefit for Mr. Salliotte under the Pension Plan upon retirement at age 65 will not change, although the
present value of such benefit will change from year to year. The other NEOS are not Pension Plan participants and were never eligible for the Pension Plan.
41
2016 Grants of Plan-Based Awards
The following table provides information on plan-based awards for all NEOs for 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts Under Non-
Equity Incentive Plan Awards (1)
|
|
Estimated Future Payouts Under
Equity Incentive Plan Awards (2)
|
|
|
All Other
Stock
Awards:
Number of
Shares of
Stock (3)
|
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options
|
|
|
Exercise or
Base Price of
Option
Awards
($ per Share)
(4)
|
|
|
Grant Date
Fair Value of
Stock and
Option
Awards (5)
|
|
Name
|
|
Grant Date
|
|
|
Threshold
|
|
Target
|
|
|
Maximum
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
|
|
|
Andrew K. Silvernail
|
|
|
02/19/2016
|
|
|
$0
|
|
|
$954,800
|
|
|
N/A
|
|
|
11,150
|
|
|
|
33,450
|
|
|
|
83,625
|
|
|
|
-
|
|
|
|
135,870
|
|
|
|
74.74
|
|
|
|
$6,227,007
|
|
Michael J. Yates
|
|
|
02/19/2016
|
|
|
0
|
|
|
200,750
|
|
|
401,500
|
|
|
612
|
|
|
|
1,835
|
|
|
|
4,588
|
|
|
|
-
|
|
|
|
7,445
|
|
|
|
74.74
|
|
|
|
$341,444
|
|
|
|
|
08/31/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,355
|
|
|
|
-
|
|
|
|
-
|
|
|
|
$500,371
|
|
Heath A. Mitts
|
|
|
02/19/2016
|
|
|
0
|
|
|
376,875
|
|
|
753,750
|
|
|
2,073
|
|
|
|
6,220
|
|
|
|
15,550
|
|
|
|
-
|
|
|
|
25,265
|
|
|
|
74.74
|
|
|
|
$1,157,908
|
|
Eric D. Ashleman
|
|
|
02/19/2016
|
|
|
0
|
|
|
386,250
|
|
|
N/A
|
|
|
2,298
|
|
|
|
6,895
|
|
|
|
17,238
|
|
|
|
-
|
|
|
|
27,990
|
|
|
|
74.74
|
|
|
|
$1,283,257
|
|
Denise R. Cade
|
|
|
02/19/2016
|
|
|
0
|
|
|
259,560
|
|
|
N/A
|
|
|
1,062
|
|
|
|
3,185
|
|
|
|
7,963
|
|
|
|
-
|
|
|
|
12,935
|
|
|
|
74.74
|
|
|
|
$592,877
|
|
Daniel J. Salliotte
|
|
|
02/19/2016
|
|
|
0
|
|
|
210,925
|
|
|
421,850
|
|
|
893
|
|
|
|
2,680
|
|
|
|
6,700
|
|
|
|
-
|
|
|
|
10,870
|
|
|
|
74.74
|
|
|
|
$498,614
|
|
|
|
|
08/31/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,680
|
|
|
|
-
|
|
|
|
-
|
|
|
|
$250,419
|
|
(1)
|
For Messrs. Silvernail and Ashleman and Ms. Cade, target amount reflects payment level under the Incentive Award Plan at 100%, 75% and 60% respectively, of base salary. The Incentive Award Plan has no individual
maximum payment amount; however the Compensation Committee limits payout to 200% of target. See Short-Term Incentives Annual Bonus under COMPENSATION DISCUSSION AND ANALYSIS. For Messrs. Yates, Mitts and Salliotte, the
amounts reflect payment levels under the MICP based upon 2016 salary levels, applicable individual target bonus, and a Business Performance Factor of 0% for threshold, 100% for target and 200% for maximum. The amounts actually earned by the NEOs are
reflected in the
Non-Equity
Incentive Plan Compensation column in the 2016 Summary Compensation Table.
|
(2)
|
Reflects the range of the number of shares of Common Stock that could be issued pertaining to the performance stock units awarded in 2016 under the Incentive Award Plan. The target number of performance stock units is
used to determine the grant date fair value for this award.
|
(3)
|
Reflects the number of shares of restricted stock awarded in 2016 under the Incentive Award Plan.
|
(4)
|
Reflects closing price of the Companys Common Stock on the grant date, which is the fair market value of the stock under the terms of the Incentive Award Plan.
|
(5)
|
Represents the grant date fair value of restricted stock awards, PSUs and stock options granted to each NEO in accordance with FASB ASC Topic 718. For a discussion of the assumptions made in the valuation of those
awards, see note 13 Share-Based Compensation of the financial statements in the Companys Annual Report on Form 10-K for the year ended December 31, 2016. For PSUs, the grant date fair value is based on the probable outcome of
the related performance conditions which reflects the target level of performance. The grant date fair value of the PSUs granted in 2016 based on the maximum level of performance is as follows: Mr. Silvernail, $9,317,498; Mr. Yates, $511,195;
Mr. Mitts, $1,732,581; Mr. Ashleman, $1,920,658; Ms. Cade, $887,237; and Mr. Salliotte, $746,514. All shares of restricted stock are eligible for dividend equivalent payments when paid on the Companys Common Stock and, with respect to
PSUs, cumulative dividend equivalents are paid based on actual number of shares delivered at the end of the performance period.
|
Narrative to 2016 Grants of Plan-Based Awards Table
Stock options awarded to the NEOs in 2016 had the following characteristics:
|
|
|
all are nonqualified stock options;
|
|
|
|
all have an exercise price equal to the closing price of the Companys Common Stock on the grant date;
|
|
|
|
all vest annually in equal amounts over a four-year period based on the NEOs continued service;
|
42
|
|
|
all vest upon retirement if retirement eligible (NEO is at least age 50, with a minimum of five years of service, and the NEOs age plus years of service equals 70); and
|
|
|
|
all expire 10 years after the date of grant.
|
Performance stock units awarded to the NEOs in 2016 had the
following characteristics:
|
|
|
all have a three-year performance period with vesting based on relative total shareholder return;
|
|
|
|
all shares vest upon retirement if the NEO is retirement eligible (NEO is at least age 50, with a minimum of five years of service, and the NEOs age plus years of service equals 70); but are paid out only based on
actual achievement of the Company against the relative TSR goal determined as if the last day of the year in which the individual retires is the last day of the performance period; and
|
|
|
|
cumulative dividend equivalents are paid based on actual number of shares delivered at the end of the performance period.
|
Restricted stock awards granted to Messrs.Yates and Salliotte in 2016 had the following characteristics:
|
|
|
all awards cliff-vest three years after the grant date based on the NEOs continued service;
|
|
|
|
all shares vest upon retirement if the NEO is retirement eligible (NEO is at least age 50, with a minimum of five years of service, and the NEOs age plus years of service equals 70);
|
|
|
|
all shares receive dividend equivalent payments in the same amount as dividends paid on the Companys Common Stock at the time such dividends are paid; and
|
|
|
|
for Mr. Yates restricted stock grant, shares will vest if he is terminated by the Company without cause.
|
43
Outstanding Equity Awards at 2016 Fiscal Year End
The following table provides information on all performance stock unit, restricted stock and stock option awards held by the NEOs as of December 31,
2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of Securities Underlying
Unexercised Options
|
|
|
Option
Exercise
Price
($)
|
|
|
Option
Expiration
Date
|
|
|
Number of
Shares of Stock
that Have Not
Vested (2)
|
|
|
Market Value of
Shares of Stock
that Have Not
Vested (3)
|
|
|
Equity Incentive
Plan Awards:
Number of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested (4)
|
|
|
Equity Incentive
Plan Awards:
Market or
Payout Value of
Unearned
Shares, Units or
Other Rights
That Have
Not
Vested (4)
|
|
Name
|
|
Exercisable (1)
|
|
|
Unexercisable (1)
|
|
|
|
|
|
|
|
Andrew K. Silvernail
|
|
|
71,520
|
|
|
|
-
|
|
|
|
42.86
|
|
|
|
02/21/2022
|
|
|
|
18,885
|
|
|
|
$1,700,783
|
|
|
|
99,077
|
|
|
|
$8,922,875
|
|
|
|
|
54,393
|
|
|
|
18,132
|
|
|
|
50.45
|
|
|
|
02/15/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,560
|
|
|
|
40,560
|
|
|
|
72.73
|
|
|
|
02/13/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,446
|
|
|
|
64,339
|
|
|
|
78.43
|
|
|
|
02/20/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
135,870
|
|
|
|
74.74
|
|
|
|
02/19/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. Yates
|
|
|
8,947
|
|
|
|
-
|
|
|
|
31.77
|
|
|
|
03/02/2020
|
|
|
|
6,400
|
|
|
|
576,384
|
|
|
|
5,358
|
|
|
|
482,541
|
|
|
|
|
10,533
|
|
|
|
-
|
|
|
|
31.77
|
|
|
|
03/02/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,740
|
|
|
|
-
|
|
|
|
40.89
|
|
|
|
02/22/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,230
|
|
|
|
-
|
|
|
|
40.89
|
|
|
|
02/22/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,410
|
|
|
|
-
|
|
|
|
42.86
|
|
|
|
02/21/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,665
|
|
|
|
1,555
|
|
|
|
50.45
|
|
|
|
02/15/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,317
|
|
|
|
2,318
|
|
|
|
72.73
|
|
|
|
02/13/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,141
|
|
|
|
3,424
|
|
|
|
78.43
|
|
|
|
02/20/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
7,445
|
|
|
|
74.74
|
|
|
|
02/19/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric
D. Ashleman
|
|
|
5,058
|
|
|
|
1,687
|
|
|
|
50.45
|
|
|
|
02/15/2023
|
|
|
|
13,318
|
|
|
|
1,199,419
|
|
|
|
18,754
|
|
|
|
1,688,986
|
|
|
|
|
8,250
|
|
|
|
8,250
|
|
|
|
72.73
|
|
|
|
02/13/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,646
|
|
|
|
10,939
|
|
|
|
78.43
|
|
|
|
02/20/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
17,700
|
|
|
|
77.61
|
|
|
|
07/15/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
27,990
|
|
|
|
74.74
|
|
|
|
02/19/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denise R. Cade
|
|
|
2,091
|
|
|
|
6,274
|
|
|
|
76.79
|
|
|
|
10/26/2025
|
|
|
|
2,120
|
|
|
|
190,927
|
|
|
|
5,033
|
|
|
|
453,272
|
|
|
|
|
-
|
|
|
|
12,935
|
|
|
|
74.74
|
|
|
|
02/19/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel J. Salliotte
|
|
|
4,240
|
|
|
|
-
|
|
|
|
40.89
|
|
|
|
02/22/2021
|
|
|
|
3,700
|
|
|
|
333,222
|
|
|
|
6,642
|
|
|
|
598,178
|
|
|
|
|
11,410
|
|
|
|
-
|
|
|
|
42.86
|
|
|
|
02/21/2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,343
|
|
|
|
1,782
|
|
|
|
50.45
|
|
|
|
02/15/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,245
|
|
|
|
2,245
|
|
|
|
72.73
|
|
|
|
02/13/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,116
|
|
|
|
3,349
|
|
|
|
78.43
|
|
|
|
02/20/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
10,870
|
|
|
|
74.74
|
|
|
|
02/19/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
All options expire on the 10th anniversary of the grant date. Except as provided in the following sentence, all options vest 25% per year on the anniversary of the grant date. Mr. Ashlemans July 15, 2015
grant will vest 50% on July 15, 2018 and 50% on July 15, 2019. Except with respect to Mr. Silvernails stock option grants (as discussed in Potential Payments upon Termination or Change in Control), all stock options
granted prior to 2015 will vest 100% upon a change in control. Stock options granted in 2015 and 2016 vest 100% upon a qualifying termination of employment following a change in control.
|
(2)
|
The following table sets forth grant and vesting information for the outstanding restricted stock awards for all NEOs. Except with respect to Mr. Silvernails restricted stock grants (as discussed in
Potential Payments upon Termination or Change in Control), all shares granted prior to 2015 vest 100% upon a change in control of the Company. Shares granted in 2015 and 2016 vest 100% upon a qualifying termination of employment
following a change in control.
|
44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant Date
|
|
|
# Shares
|
|
|
Market
Value Per
Share at
Grant ($)
|
|
|
Number of
Shares of
Stock that
Have Not
Vested
|
|
|
Market Value
of Shares of
Stock that
Have Not
Vested ($)
|
|
|
Vesting
|
Andrew K. Silvernail
|
|
|
02/13/2014
|
|
|
|
9,320
|
|
|
|
72.73
|
|
|
|
9,320
|
|
|
|
839,359
|
|
|
100% vest on 02/13/2017
|
|
|
|
|
|
|
|
|
|
|
02/20/2015
|
|
|
|
9,565
|
|
|
|
78.43
|
|
|
|
9,565
|
|
|
|
861,424
|
|
|
100% vest on 02/20/2018
|
Michael J. Yates
|
|
|
02/13/2014
|
|
|
|
535
|
|
|
|
72.73
|
|
|
|
535
|
|
|
|
48,182
|
|
|
100% vest on 02/13/2017
|
|
|
|
|
|
|
|
|
|
|
02/20/2015
|
|
|
|
510
|
|
|
|
78.43
|
|
|
|
510
|
|
|
|
45,931
|
|
|
100% vest on 02/20/2018
|
|
|
|
|
|
|
|
|
|
|
08/31/2016
|
|
|
|
5,355
|
|
|
|
93.44
|
|
|
|
5,355
|
|
|
|
482,271
|
|
|
100% vest on 08/31/2019
|
Eric D. Ashleman
|
|
|
02/15/2013
|
|
|
|
9,915
|
|
|
|
50.45
|
|
|
|
4,958
|
|
|
|
446,517
|
|
|
100% vest on 02/15/2017
|
|
|
|
|
|
|
|
|
|
|
02/13/2014
|
|
|
|
1,895
|
|
|
|
72.73
|
|
|
|
1,895
|
|
|
|
170,664
|
|
|
100% vest on 02/13/2017
|
|
|
|
|
|
|
|
|
|
|
02/20/2015
|
|
|
|
1,630
|
|
|
|
78.43
|
|
|
|
1,630
|
|
|
|
146,798
|
|
|
100% vest on 02/20/2018
|
|
|
|
|
|
|
|
|
|
|
07/15/2015
|
|
|
|
4,835
|
|
|
|
77.61
|
|
|
|
4,835
|
|
|
|
435,440
|
|
|
100% vest on 07/15/2018
|
Denise R. Cade
|
|
|
10/26/2015
|
|
|
|
2,120
|
|
|
|
76.79
|
|
|
|
2,120
|
|
|
|
190,927
|
|
|
100% vest on 10/26/2018
|
Daniel J. Salliotte
|
|
|
02/13/2014
|
|
|
|
520
|
|
|
|
72.73
|
|
|
|
520
|
|
|
|
46,831
|
|
|
100% vest on 02/13/2017
|
|
|
|
|
|
|
|
|
|
|
02/20/2015
|
|
|
|
500
|
|
|
|
78.43
|
|
|
|
500
|
|
|
|
45,030
|
|
|
100% vest on 02/20/2018
|
|
|
|
|
|
|
|
|
|
|
08/31/2016
|
|
|
|
2,680
|
|
|
|
93.44
|
|
|
|
2,680
|
|
|
|
241,361
|
|
|
100% vest on 08/31/2019
|
(3)
|
Determined based upon the closing price of the Companys Common Stock on December 31, 2016 of $90.06.
|
(4)
|
Represents the number and value of outstanding PSU grants based on performance as of December 31, 2016 as set forth in the following table. Actual number of shares delivered upon vesting will be based on
performance through December 31, 2017 for the 2015 PSU grant and performance through December 31, 2018 for the 2016 PSU grant.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant Date
|
|
|
Number of
PSUs
|
|
|
Market or
Payout Value of
Unearned
Shares, Units or
Other Rights
That Have
Not
Vested ($)
|
|
|
Vesting
|
Andrew K. Silvernail
|
|
|
02/20/2015
|
|
|
|
31,880
|
|
|
|
4,163,114
|
|
|
Award vests on 12/31/2017
|
|
|
|
|
|
|
|
|
02/19/2016
|
|
|
|
33,450
|
|
|
|
4,759,761
|
|
|
Award vests on 12/31/2018
|
Michael J. Yates
|
|
|
02/20/2015
|
|
|
|
1,695
|
|
|
|
221,367
|
|
|
Award vests on 12/31/2017
|
|
|
|
|
|
|
|
|
02/19/2016
|
|
|
|
1,835
|
|
|
|
261,174
|
|
|
Award vests on 12/31/2018
|
Eric D. Ashleman
|
|
|
02/20/2015
|
|
|
|
5,420
|
|
|
|
707,782
|
|
|
Award vests on 12/31/2017
|
|
|
|
|
|
|
|
|
02/19/2016
|
|
|
|
6,895
|
|
|
|
981,204
|
|
|
Award vests on 12/31/2018
|
Denise R. Cade
|
|
|
02/19/2016
|
|
|
|
3,185
|
|
|
|
453,272
|
|
|
Award vests on 12/31/2018
|
Daniel J. Salliotte
|
|
|
02/20/2015
|
|
|
|
1,660
|
|
|
|
216,774
|
|
|
Award vests on 12/31/2017
|
|
|
|
|
|
|
|
|
02/19/2016
|
|
|
|
2,680
|
|
|
|
381,404
|
|
|
Award vests on 12/31/2018
|
45
2016 Option Exercises and Stock Vested
The following table provides information on stock option exercises and stock vesting for all NEOs in 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of Shares
Acquired on
Exercise
|
|
|
Value Realized
Upon Exercise (1)
|
|
|
Number of Shares
Acquired on
Vesting
|
|
|
Value Realized
Upon Vesting (2)
|
|
Andrew K. Silvernail
|
|
|
-
|
|
|
|
$-
|
|
|
|
62,293
|
|
|
|
$5,271,466
|
|
Michael J. Yates
|
|
|
8,000
|
|
|
|
508,771
|
|
|
|
4,093
|
|
|
|
339,519
|
|
Heath A. Mitts
|
|
|
98,816
|
|
|
|
4,026,666
|
|
|
|
4,560
|
|
|
|
327,226
|
|
Eric D. Ashleman
|
|
|
15,650
|
|
|
|
638,583
|
|
|
|
15,594
|
|
|
|
1,282,115
|
|
Denise R. Cade
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Daniel J. Salliotte
|
|
|
4,000
|
|
|
|
165,594
|
|
|
|
4,246
|
|
|
|
349,089
|
|
(1)
|
Calculated based on the difference between the closing price of the Companys Common Stock on the date of exercise and the exercise price.
|
(2)
|
Calculated based on the closing price of the Companys Common Stock on the vesting date or, if the vesting occurred on a day the NYSE was closed for trading, the previous trading day. For shares vesting on
February 15, 2016 with a Friday, February 12, 2016 closing price of $71.76, Mr. Silvernail had 18,505 shares vest, Mr. Yates had 1,590 shares vest, Mr. Mitts had 4,560 shares vest, Mr. Ashleman had 6,682 shares vest and
Mr. Salliotte had 1,820 shares vest. For 2014 performance stock units vesting on December 31, 2016 after the end of the three-year performance period with a closing price of $90.06 and a multiplier of 141% due to IDEXs
3-year
relative TSR performance at the 58
th
percentile as compared to companies in the S&P Midcap 400 Industrials Index, Mr. Silvernail had 43,788 shares
vest, Mr. Yates had 2,503 shares vest, Mr. Ashleman had 8,912 shares vest and Mr.
Salliotte had 2,426 shares vest.
|
Pension Benefits at 2016 Fiscal Year End
The following table provides information related to the potential pension benefits payable to each NEO determined as described in the footnotes below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Plan Name
|
|
|
Number of
Years
Credited
Service (1)
|
|
|
Present Value
of
Accumulated
Benefits (2)
|
|
Andrew K. Silvernail
|
|
|
Pension Plan
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Michael J. Yates
|
|
|
Pension Plan
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Heath A. Mitts
|
|
|
Pension Plan
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Eric D. Ashleman
|
|
|
Pension Plan
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Denise R. Cade
|
|
|
Pension Plan
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Daniel J. Salliotte
|
|
|
Pension Plan
|
|
|
|
1.17
|
|
|
$
|
37,566
|
|
(1)
|
Credited service is determined under the Pension Plan as of December 31, 2016.
|
(2)
|
The present value of accumulated benefits as of December 31, 2016 is determined using an assumed retirement
age of 65 and an assumed 100%
lump-sum
payment. For valuing lump sums, interest and mortality assumptions are as required by the Pension Protection Act of 2009 (PPA) for funding valuations.
|
46
|
The interest and mortality assumptions are the
PPA-required
three-segment interest rates (for December 31, 2016, interest rates of 1.79% for payments
in the first five years, 3.80% for payments in the 6th through 20th years, and 4.71% for payments beyond 20 years), and combined mortality as required by the PPA. The discount rate used for determining present value was 3.92%.
|
Narrative to Pension Benefits at 2016 Fiscal Year End Table
The Pension Plan is an
on-going
tax-qualified
career average retirement plan that provides a level of benefit based on a participants compensation for a year with periodic updates to average compensation over a fixed
five-year period. Under the Pension Plan, participants are entitled to receive an annual benefit on retirement equal to the sum of the benefit earned through 1995 using the five-year average compensation of a participant through 1995, plus the
benefit earned under the then current formula for each year of employment after 1995. For each year of participation through 1995, a participant earned a benefit equal to 1.25% of the first $16,800 of such average compensation through 1995, and
1.65% of such compensation in excess of $16,800.
Beginning January 1, 1996, the benefit earned equals the sum of 1.6% of the first $16,800 of each
years total compensation, and 2.0% for such compensation in excess of $16,800, for each full year of service credited after 1995. As required by law, compensation counted for purposes of determining this benefit is limited.
The normal form of retirement benefit is payable in the form of a life annuity with five years of payments guaranteed. Other optional forms of payment are
available.
Only Mr. Salliotte has accrued benefits under the Pension Plan. None of the other NEOs have accrued any benefits under the Pension Plan in
2016.
Nonqualified Deferred Compensation at 2016 Fiscal Year End
The Supplemental Executive Retirement and Deferred Compensation Plan (SERP) is an unfunded, nonqualified plan designed to provide supplemental executive
retirement benefits. The following table provides information related to the benefits payable to each NEO under the defined contribution portion of the SERP, which is the Companys only defined contribution nonqualified deferred compensation
plan:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Executive
Contributions in
Last
Fiscal Year (1)
|
|
|
Registrant
Contributions
in Last Fiscal
Year (2)
|
|
|
Aggregate
Earnings in
Last Fiscal
Year
|
|
|
Aggregate
Withdrawals /
Distributions
|
|
|
Aggregate
Balance at Last
Fiscal Year End
(3)
|
|
Andrew K. Silvernail
|
|
|
$-
|
|
|
|
$134,663
|
|
|
|
$109,152
|
|
|
|
$3,165
|
|
|
|
$1,166,760
|
|
Michael J. Yates
|
|
|
-
|
|
|
|
30,280
|
|
|
|
8,311
|
|
|
|
712
|
|
|
|
294,795
|
|
Heath A. Mitts
|
|
|
-
|
|
|
|
41,922
|
|
|
|
14,344
|
|
|
|
-
|
|
|
|
501,816
|
|
Eric D. Ashleman
|
|
|
-
|
|
|
|
55,214
|
|
|
|
26,465
|
|
|
|
1,298
|
|
|
|
355,381
|
|
Denise R. Cade
|
|
|
-
|
|
|
|
37,087
|
|
|
|
1,316
|
|
|
|
-
|
|
|
|
36,202
|
|
Daniel J. Salliotte
|
|
|
-
|
|
|
|
26,711
|
|
|
|
21,072
|
|
|
|
628
|
|
|
|
308,835
|
|
(1)
|
None of the NEOs contributed to the SERP in 2016.
|
(2)
|
Amounts are reflected in All Other Compensation column of the Summary Compensation Table.
|
(3)
|
The following amounts have been previously reported as All Other Compensation in the Summary Compensation Table for prior years: Mr. Silvernail $795,949; Mr. Mitts $337,886; and
Mr. Ashleman $119,629.
|
47
Narrative to Nonqualified Deferred Compensation at 2016 Fiscal Year End Table
Supplemental Executive Retirement and Deferred Compensation Plan
Eligible employees may defer until a future date payment of all or any portion of their annual salary or bonus under the defined contribution portion of the
SERP. Deferral elections may be made annually. These amounts are fully vested. The Company also contributes to an eligible employees account additional amounts, as described below, that are fully vested after the employee has completed three
years of service.
The Company contributes an amount equal to 4% of the eligible employees compensation up to the IRS limit on compensation reduced
by the amount of any Company matching contribution that is made to the 401(k) Plan. Additionally, the Company makes annual contributions to the accounts of eligible employees who are not actively accruing benefits under the Pension Plan. The
contribution is based on the employees compensation above the IRS limit on compensation in the Defined Contribution Plan, and is determined based on the following table:
|
|
|
|
|
Sum of Participants
Age Plus Years of Service
|
|
Contribution
Percentage
|
|
Less than 40
|
|
|
7.5
|
|
40 but less than 55
|
|
|
8.0
|
|
55 but less than 70
|
|
|
8.5
|
|
70 or more
|
|
|
9.0
|
|
Certain eligible employees designated by the Compensation Committee including the NEOs also will receive an additional
contribution equal to 2% of the employees compensation.
Deferred Compensation Account
All amounts deferred are recorded in a memorandum account for each employee and are credited or debited with earnings or losses as if such amounts had been
invested in either an interest-bearing account or receive an investment return as if the funds were invested
in certain mutual funds, as selected by the employee. The deferred compensation credited to the interest-bearing account is adjusted on at least a quarterly basis with hypothetical earnings equal
to the lesser of the Barclays Capital Long Term Bond AAA Corporate Bond Index as of the first business day in November of the calendar year preceding the year for which the earnings are to be credited or 120% of the long-term applicable
Federal rate as of the first business day in November. The memorandum accounts are not funded, and the right to receive future payments of amounts recorded in these accounts is an unsecured claim against the Companys general assets.
The deferred compensation account amounts are payable upon separation of service within the meaning of Internal Revenue Code Section 409A; however, no
benefits are payable prior to the date that is six months after the date of separation of service, or the date of death of the employee, if earlier. Account balances will be paid either in a single lump sum or in up to ten substantially equal annual
installments, as elected by the employee at the time they first become eligible for the Deferred Compensation Plan.
Prior to separation from service,
amounts may be paid only on the occurrence of an unforeseeable emergency, within the meaning of Internal Revenue Code Section 409A. On the happening of a change in control event within the meaning of Internal Revenue Code Section 409A, all amounts
become vested and are distributed at that time in a single
lump-sum
payment.
Potential Payments upon Termination or Change in Control
Mr. Silvernail
The
Company entered into an employment agreement with Mr. Silvernail on February 19, 2016, effective as of November 8, 2015. The employment agreement provides for a term of
48
approximately three years (expiring February 28, 2019) and is substantially similar to Mr. Silvernails prior employment agreement. If Mr. Silvernails employment is
terminated by the Company other than for cause and not in connection with a change in control (each as defined in the employment agreement), then, subject to his execution and non-revocation of a general release of claims and
his continued compliance with applicable restrictive covenants, he will receive (i) continuing salary payments and health benefits for 24 months following termination, (ii) a pro rata portion of his annual bonus for the year in which his termination
occurs (based on the portion of the year he was employed), (iii) a payment equal to 200% of his base salary payable over 24 months commencing approximately 60 days after his termination, (iv) fully accelerated vesting and immediate exercisability of
all unvested time-based equity awards (the time-based acceleration), and (v) vesting of all unvested performance-based equity awards on the December 31 next following his termination of employment with respect to that number of shares of
the Companys Common Stock (or performance units or dividend equivalents, as applicable) based on the performance level achieved with respect to the performance goal(s) under each such award from the beginning date of the performance period
applicable thereto through such December 31 (the performance-based acceleration).
If Mr. Silvernails employment is terminated due to
his disability or death, he or his estate, as applicable, will receive a pro rata portion of his annual bonus for the year in which his termination occurs (based on the portion of the year he was employed), time-based acceleration and
performance-based acceleration.
If Mr. Silvernails employment is terminated by the Company without cause or by him for good reason (as
defined in the employment agreement), in either case, in contemplation of or within the 24 month period following a change in control, then, subject to his execution
and non-revocation of a general release of claims and his continued compliance with applicable restrictive covenants, he will receive (i) continuing salary payments and health benefits for 36
months following termination, (ii) a pro rata portion of his annual bonus for the year in which his termination occurs (based on the portion of the year he was employed), (iii) a payment equal to 300% of his base salary, payable over
36 months commencing approximately 60 days after his termination, (iv) time-based acceleration and (v) in lieu of performance-based acceleration, a cash payment in respect of all performance-based equity awards with respect to which he has
not yet received payment, based on the performance level achieved with respect to the performance goal(s) under each such award from the beginning date of the performance period applicable thereto through such change in control, with such cash
payment adjusted to reflect hypothetical earnings (equal to the lesser of the Barclays Long Aaa US Corporate Index or 120% of the applicable federal long-term rate, in each case, determined as of the first business day of November of the calendar
year preceding the change in control and compounded) for the period between such change in control and the date of payment.
In addition, to the extent
that any payment or benefit received in connection with a change in control would be subject to an excise tax under Section 4999 of the Internal Revenue Code, such payments and/or benefits will be subject to a best pay cap reduction if
such reduction would result in a greater net after-tax benefit to Mr. Silvernail than receiving the full amount of such payments.
The employment
agreement contains confidentiality covenants by Mr. Silvernail which apply indefinitely and non-competition and employee and business non-solicitation covenants by Mr. Silvernail which apply during the term of his employment and for a two-year
period thereafter.
49
Messrs. Yates, Ashleman and Salliotte and Ms. Cade
The Company has entered into letter agreements with Messrs. Yates, Ashleman and Salliotte and Ms. Cade providing for (a) severance pay in an amount
equal to two times the sum of the executives annual base salary and target MICP bonus in the event of an involuntary termination within two years following a change in control, payable over the 24 month period following termination and
(b) severance pay in an amount equal to the sum of one year (or up to one year, in the case of Mr. Ashleman and Ms. Cade) of salary and target MICP bonus in the event of an involuntary termination without cause other than in
connection with a change in control, in exchange for a signed release.
Equity Awards
Occurrence of a Change in Control for Awards Granted Prior to February 20, 2015
For awards granted prior to February 20, 2015, the Incentive Award Plan provides that if a change in control occurs, then immediately prior to such change in
control, all awards will become fully exercisable and all forfeiture restrictions on such awards will lapse.
Occurrence of a Change in
Control for Awards Granted On or After February 20, 2015
For awards granted on or after February 20, 2015, the Incentive Award
Plan provides that if a change in control occurs, then each outstanding award will continue in effect, or be assumed or an equivalent award substituted by the Companys successor; provided, that if the grantee incurs a termination of service
without cause or for good reason (each as defined in the Incentive Award Plan) within 24 months following such change in control, the awards will become fully exercisable and all forfeiture restrictions will lapse. If an outstanding award is not
assumed or substituted upon a change in control or if, following a change in control, neither the Company nor its successor has equity
securities that are readily tradable on a regulated securities exchange, then the awards will vest in full.
2015 and 2016 PSU Grants
Notwithstanding the foregoing, the award agreements for PSUs granted in 2015 and 2016
provide that if a change in control occurs, the grantee will receive a cash payment in respect of such PSUs valued based on the actual level of achievement of the performance goals against target measured as of the date of the change in control,
including dividend equivalents earned up to the change in control, with such value adjusted to the date of payment to reflect hypothetical earnings (equal to the lesser of the Barclays Long Aaa U.S. Corporate Index or 120% of the applicable federal
long-term rate, in each case, determined as of the first business day of November of the calendar year preceding the change in control and compounded) for the period between such change in control and the date of payment. The cash payment will be
paid as soon as practicable following the earliest to occur of the following events: (i) if, as of the time of the change in control, the grantee is eligible for retirement, as of the date of the change in control, (ii) as of the date the grantee
first becomes eligible for retirement following the change in control if that date occurs prior to the end of the performance period, (iii) if the grantees service is terminated by the Company without cause or by the grantee for good reason
and the date of termination occurs (or the event giving rise to good reason occurs), in each case, within 24 months following the change in control, on the date of such termination, (iv) if the grantee remains employed through the end of the
applicable performance period, as of the end of the applicable performance period, or (v) if the grantees employment is terminated due to death or disability prior to the end of the performance period, as of the date of death or
disability.
50
Termination due to Death, Disability or Retirement
The award agreements for stock options and restricted stock awards provide that if the grantees service is terminated by reason of death, disability or
retirement, the award will become fully vested and exercisable. The award agreements for the 2015 and 2016 PSU grants provide that if the grantees service is terminated by reason of death, disability or retirement, the PSUs and any dividend
equivalents thereon will become fully vested and earned based on the actual level of achievement of the performance goals against target measured through the December 31 following the date of termination.
SERP
Pursuant to the SERP, if a change in control
occurs then not later than the closing date for the change in control event the amount credited to each participants deferred compensation account shall be distributed in one lump sum in cash and/or Common Stock.
Quantification of Termination Payments and Benefits Mr. Mitts
Mr. Mitts resigned from the Company effective September 9, 2016. Mr. Mitts exercised his vested stock options per the terms of those awards, and did not
receive any termination payments or benefits or any other special payments connected to his resignation.
Quantification of Termination Payments and Benefits Change in Control
The following tables set forth the amount each NEO would receive upon a change in control or, in the event of a termination of employment,
as severance or as a result of accelerated vesting if his or her employment was terminated without cause or for good reason, or for disability or death (in the case of Mr. Silvernail), in connection with or absent a change in control, using the
following assumptions:
|
|
|
change in control and/or termination of employment on December 31, 2016;
|
|
|
|
accelerated vesting of options and restricted stock, and exercise of all accelerated vested options based on the closing market price of $90.06 per share of the Companys Common Stock on December 31, 2016;
|
|
|
|
accelerated vesting of PSUs and payment of cumulative dividend equivalents as valued based on performance as of December 31, 2016; and
|
|
|
|
accelerated vesting of benefits under the SERP, paid in a lump sum.
|
51
Change in Control and Termination Payments and Benefits for Andrew K. Silvernail
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incremental Benefits Due to
Termination Event
|
|
Involuntary
Not for Cause
Termination
|
|
|
Disability or Death
|
|
|
Change in Control
|
|
|
Involuntary Not for
Cause Termination
or
Voluntary
Good Reason
Termination
Following
Change in Control
|
|
Cash
Severance (incl. Incentives)
|
|
$
|
3,819,200
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
5,728,800
|
|
Unvested
Restricted Stock
|
|
|
1,700,783
|
|
|
|
1,700,783
|
|
|
|
-
|
|
|
|
1,700,783
|
|
Unvested
Options
|
|
|
4,250,904
|
|
|
|
4,250,904
|
|
|
|
-
|
|
|
|
4,250,904
|
|
Unvested
Performance Shares
|
|
|
9,114,940
|
|
|
|
9,114,940
|
|
|
|
-
|
|
|
|
9,114,940
|
|
SERP
|
|
|
1,166,760
|
|
|
|
1,166,760
|
|
|
|
1,166,760
|
|
|
|
1,166,760
|
|
Health and
Welfare Benefits
|
|
|
40,098
|
|
|
|
-
|
|
|
|
-
|
|
|
|
60,147
|
|
Tax Cut
Back
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,825,244
|
)
|
Total
|
|
$
|
20,092,685
|
|
|
$
|
16,233,387
|
|
|
$
|
1,166,760
|
|
|
$
|
18,197,090
|
|
Change in Control and Termination Payments and Benefits for Michael J. Yates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incremental Benefits Due to
Termination Event
|
|
Involuntary
Not for Cause
Termination
|
|
|
Disability or Death
|
|
|
Change in Control
|
|
|
Involuntary Not for
Cause Termination
or
Voluntary
Good Reason
Termination
Following
Change in Control
|
|
Cash
Severance (incl. Incentives)
|
|
$
|
565,750
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,131,500
|
|
Unvested
Restricted Stock
|
|
|
482,271
|
|
|
|
576,384
|
|
|
|
48,182
|
|
|
|
576,384
|
|
Unvested
Options
|
|
|
-
|
|
|
|
255,643
|
|
|
|
101,764
|
|
|
|
255,643
|
|
Unvested
Performance Shares
|
|
|
-
|
|
|
|
492,876
|
|
|
|
-
|
|
|
|
492,876
|
|
SERP
|
|
|
294,795
|
|
|
|
294,795
|
|
|
|
294,795
|
|
|
|
294,795
|
|
Total
|
|
$
|
1,342,816
|
|
|
$
|
1,619,698
|
|
|
$
|
444,741
|
|
|
$
|
2,751,198
|
|
Change in Control and Termination Payments and Benefits for Eric D. Ashleman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incremental Benefits Due to
Termination Event
|
|
Involuntary
Not for Cause
Termination
|
|
|
Disability or Death
|
|
|
Change in Control
|
|
|
Involuntary Not for
Cause Termination
or
Voluntary
Good Reason
Termination
Following
Change in Control
|
|
Cash
Severance (incl. Incentives)
|
|
$
|
901,250
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,802,500
|
|
Unvested
Restricted Stock
|
|
|
-
|
|
|
|
1,199,419
|
|
|
|
617,181
|
|
|
|
1,199,419
|
|
Unvested
Options
|
|
|
-
|
|
|
|
986,187
|
|
|
|
209,795
|
|
|
|
986,187
|
|
Unvested
Performance Shares
|
|
|
-
|
|
|
|
1,724,236
|
|
|
|
-
|
|
|
|
1,724,236
|
|
SERP
|
|
|
355,381
|
|
|
|
355,381
|
|
|
|
355,381
|
|
|
|
355,381
|
|
Total
|
|
$
|
1,256,631
|
|
|
$
|
4,265,223
|
|
|
$
|
1,182,357
|
|
|
$
|
6,067,723
|
|
52
Change in Control and Termination Payments and Benefits for Denise R. Cade
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incremental Benefits Due to
Termination Event
|
|
Involuntary
Not for Cause
Termination
|
|
|
Disability or Death
|
|
|
Change in Control
|
|
|
Involuntary Not for
Cause Termination
or
Voluntary
Good Reason
Termination
Following
Change in Control
|
|
Cash
Severance (incl. Incentives)
|
|
$
|
692,160
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,384,320
|
|
Unvested
Restricted Stock
|
|
|
-
|
|
|
|
190,927
|
|
|
|
-
|
|
|
|
190,927
|
|
Unvested
Options
|
|
|
-
|
|
|
|
281,420
|
|
|
|
-
|
|
|
|
281,420
|
|
Unvested
Performance Shares
|
|
|
-
|
|
|
|
460,117
|
|
|
|
-
|
|
|
|
460,117
|
|
SERP
|
|
|
-
|
|
|
|
36,202
|
|
|
|
36,202
|
|
|
|
36,202
|
|
Total
|
|
$
|
692,160
|
|
|
$
|
968,666
|
|
|
$
|
36,202
|
|
|
$
|
2,352,986
|
|
Change in Control and Termination Payments and Benefits for Daniel J. Salliotte
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incremental Benefits Due to
Termination Event
|
|
Involuntary
Not for Cause
Termination
|
|
|
Disability or Death
|
|
|
Change in Control
|
|
|
Involuntary Not for
Cause Termination
or
Voluntary
Good Reason
Termination
Following
Change in Control
|
|
Cash
Severance (incl. Incentives)
|
|
$
|
535,425
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,070,850
|
|
Unvested
Restricted Stock
|
|
|
-
|
|
|
|
333,222
|
|
|
|
46,831
|
|
|
|
333,222
|
|
Unvested
Options
|
|
|
-
|
|
|
|
314,968
|
|
|
|
109,491
|
|
|
|
314,968
|
|
Unvested
Performance Shares
|
|
|
-
|
|
|
|
610,196
|
|
|
|
-
|
|
|
|
610,196
|
|
SERP
|
|
|
308,835
|
|
|
|
308,835
|
|
|
|
308,835
|
|
|
|
308,835
|
|
Total
|
|
$
|
844,260
|
|
|
$
|
1,567,221
|
|
|
$
|
465,157
|
|
|
$
|
2,638,071
|
|
Events After End of Fiscal Year
On December 30, 2016, the Company appointed William K. Grogan to serve as the Companys Senior Vice President and Chief Financial Officer, effective
January 1, 2017. The Company entered into an offer letter with Mr. Grogan on December 30, 2016 in connection with his promotion to Chief Financial Officer, as described in the Companys Current Report on Form 8-K filed on January 4, 2017.
Mr. Grogan succeeded Mr. Yates, who had been serving as the Companys interim Chief Financial Officer and Vice President and Chief Accounting Officer through December 31, 2016. Mr. Yates has continued in his role as Vice President and
Chief Accounting Officer.
53
|
Our
Board of Directors recommends that you vote
FOR the approval of the Companys
executive compensation
|
PROPOSAL 2 ADVISORY VOTE ON EXECUTIVE COMPENSATION
We are soliciting a
non-binding
advisory vote
(say-on-pay)
on the compensation of the Companys NEOs, as described in the Compensation Discussion and Analysis section, the compensation tables, and the accompanying narrative disclosure set forth in
this Proxy Statement, as required under Section 14A of the Securities Exchange Act of 1934, as amended.
The Company maintains a balanced approach to
executive compensation with a mix of both cash and
non-cash
awards and short and long-term incentives, with total direct compensation targeted within a range that includes market median for comparable
positions at comparable companies. Where an individual executives target compensation is positioned within the competitive range is based on the individual factors listed in the Compensation Discussion and Analysis. Actual compensation in
any given year should and does vary from target based on Company and individual performance. In this way, the Company motivates and rewards both vital short-term performance and long-term value creation. The Board of Directors strongly endorses the
Companys executive compensation program and recommends that the stockholders vote in favor of the following resolution:
RESOLVED, that the
stockholders approve, on an advisory basis, the compensation paid to the Companys named executive officers as disclosed in this Proxy Statement pursuant to Item 402 of Regulation
S-K,
including the
Compensation Discussion and Analysis, compensation tables and narrative discussion contained in this Proxy Statement.
Because the vote is advisory, it
will not be binding on the Company. However, the Compensation Committee will consider the outcome of the vote in determining future compensation policies and decisions.
54
|
Our Board of Directors recommends
that you vote
FOR the approval to conduct an advisory vote on executive
compensation every year
|
PROPOSAL 3 ADVISORY VOTE ON FREQUENCY OF ADVISORY
VOTES ON
EXECUTIVE COMPENSATION
As required under Section 14A of the Securities Exchange Act of 1934, as amended, we are also soliciting a
non-binding
advisory vote on whether the
say-on-pay
vote should occur every one, two or three years. You have the option to vote for any one of the three options, or to abstain on
the matter.
The Company implemented annual
say-on-pay
voting following
the preference expressed by stockholders in 2011, and the Board has determined that annual
say-on-pay
voting continues to be the best approach for the Company. Annual
say-on-pay
voting provides the Company with direct and timely stockholder input regarding our executive compensation practices, which are disclosed annually. Notwithstanding
the Boards recommendation, the Board may in the future determine that less frequent
say-on-pay
voting is more appropriate for the Company based on the relevant
considerations at the time.
Stockholders are being asked to vote on the following resolution:
RESOLVED, that the stockholders of the Company approve, on an advisory basis, that the frequency with which the stockholders of the Company shall have an
advisory vote on the compensation of the Companys named executive officers as disclosed in the Companys Proxy Statement is:
|
|
|
Choice 2 every two years;
|
|
|
|
Choice 3 every three years; or
|
|
|
|
Choice 4 abstain from voting.
|
This advisory vote on the frequency of the
say-on-pay
vote is not binding on the Company. However, the Board of Directors will take into account the result of the vote when determining the frequency of future
say-on-pay
votes.
Stockholders are not voting to approve or disapprove the
Board of Directors recommendation. Stockholders may choose among the four choices included in the resolution set forth above.
55
AUDIT COMMITTEE REPORT
For the year ended December 31, 2016, the Audit Committee has reviewed and discussed the audited financial statements with management and the
Companys independent registered public accounting firm, Deloitte & Touche LLP. The Committee discussed with Deloitte & Touche LLP the matters required to be discussed by the Auditing Standard No. 16, as adopted by the
Public Company Accounting Oversight Board in PCAOB Release
No. 2012-004
and approved by the SEC in Release
No. 34-68453,
and reviewed the results of the
independent registered public accounting firms examination of the financial statements.
The Committee also received the written disclosures and the
letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding Deloitte & Touche LLPs communications with the Audit Committee concerning
independence, discussed with the auditors their independence, and satisfied itself as to the auditors independence.
Based on the above reviews and
discussions, the Audit Committee recommends to the Board of Directors that the financial statements be included in the Annual Report on Form
10-K
for the year ended December 31, 2016, for filing with the
SEC.
Notwithstanding anything to the contrary set forth in any of the Companys previous filings under the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934, as amended, that might incorporate future filings made by the Company under those statutes, in whole or in part, this report shall not be deemed to be incorporated by reference into any such filings, nor will
this report be incorporated by reference into any future filings made by the Company under those statutes.
Ernest J. Mrozek, Chairman
Mark A. Buthman
William M. Cook
Gregory F. Milzcik
56
PRINCIPAL ACCOUNTANT FEES AND SERVICES
The aggregate fees billed to the Company for each of the last two fiscal years for professional services rendered by the Companys principal accounting
firm, Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates (collectively, the Deloitte Entities), are set forth in the table below. All such fees were
pre-approved
by the Audit Committee in accordance with the
pre-approval
policy discussed below.
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
Audit
fees(1)
|
|
|
$3,131,000
|
|
|
$2,953,000
|
|
|
Audit-related fees(2)
|
|
|
-
|
|
|
-
|
|
|
Tax
fees(3)
|
|
|
1,068,000
|
|
|
775,000
|
|
|
All
other fees(4)
|
|
|
-
|
|
|
-
|
|
|
Total
|
|
|
$4,199,000
|
|
|
$3,728,000
|
|
|
(1)
|
Audit fees represent the aggregate fees billed for the audit of the Companys financial statements, review of the financial statements included in the Companys quarterly reports, and services in connection
with statutory and regulatory filings or engagements.
|
(2)
|
Audit-related fees represent the aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Companys financial statements and are not
reported under audit fees.
|
(3)
|
Tax fees represent the aggregate fees billed for professional services for tax compliance, tax advice and tax planning.
|
(4)
|
All other fees represent the aggregate fees billed for products and services that are not included in the audit fees, audit-related fees, and tax fees. The Audit Committee has determined that the provision of these
services is not incompatible with maintaining the Deloitte Entities independence.
|
Pre-Approval
Policies and Procedures
The Audit Committee has adopted a policy that requires the
pre-approval
of audit and
non-audit
services rendered by the Deloitte Entities. For audit services, the accounting firm provides the Audit Committee with an audit services
plan during the second quarter of each fiscal year outlining the scope of the audit services proposed to be performed for the fiscal year and the associated fees. This audit services plan must be formally accepted by the Audit Committee.
For
non-audit
services, management submits to the Audit Committee for approval during the second quarter of each
fiscal year and from
time-to-time
during the fiscal year a list of
non-audit
services that it recommends the Audit Committee
engage the accounting firm to provide for the current year, along with the associated fees. Company management and the accounting firm each confirm to the Audit Committee that any
non-audit
service on the list
is permissible under all applicable legal requirements.
The Audit Committee approves both the list of permissible
non-audit
services and the budget for such services. The Audit Committee delegates to its Chairman the authority to amend or modify the list of approved permissible
non-audit
services and fees. The Chairman reports any such actions taken to the Audit Committee at a subsequent Committee meeting.
57
|
Our Board of Directors recommends that you
vote
FOR the ratification of the appointment of Deloitte & Touche LLP
|
PROPOSAL 4 APPROVAL OF AUDITORS
The Audit Committee has appointed Deloitte & Touche LLP as the Companys independent registered public accounting firm for 2017. Representatives
of Deloitte & Touche LLP will attend the Annual Meeting and will have the opportunity to make a statement if they desire to do so. They will also be available to respond to appropriate questions.
Although the rules of the U.S. Securities and Exchange Commission and the corporate governance listing standards of the New York Stock Exchange require that
the Audit Committee be directly responsible for selecting and retaining the independent registered public accounting firm, we are providing shareholders with the opportunity to express their views on this issue. While this vote cannot be binding, if
the shareholders do not ratify the appointment of Deloitte & Touche LLP, the Audit Committee will take the vote into account in making future appointments.
58
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Companys officers, directors and persons who own more
than 10% of the Companys Common Stock to file reports of ownership and changes in ownership with the SEC. Officers, directors and greater than 10% stockholders are required by SEC regulations to furnish the Company with copies of all Section
16(a) forms that they file.
Based solely on its review of the copies of the forms it received, or written representations from reporting persons, the
Company believes that all filing requirements applicable to its officers, directors and greater than 10% stockholders were met during the year ended December 31, 2016.
STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
FOR 2018 ANNUAL MEETING
A stockholder desiring to submit a proposal for inclusion in the Companys Proxy Statement for the 2018 Annual Meeting must deliver the proposal so that
it is received by the Company no later than November 16, 2017. The Company requests that all such proposals be addressed to Denise R. Cade, Senior Vice President, General Counsel and Corporate Secretary, IDEX Corporation, 1925 West Field Court,
Suite 200, Lake Forest, Illinois 60045, and mailed by certified mail, return receipt requested.
In addition, the Companys Bylaws require that any
stockholder desiring to nominate a director for election or propose other business for consideration at the 2018 Annual Meeting must provide written notice. Such notice must contain the information required by the Bylaws and must be received by the
Corporate Secretary not less than 90 nor more than 120 days before the first anniversary of the preceding years annual meeting of stockholders. To be timely for the 2018 Annual Meeting, any such notice must be received by the Corporate
Secretary, at the address above, on any date beginning on December 27, 2017 and ending on January
26, 2018.
OTHER BUSINESS
The Board of Directors does not know of any business to be brought before the Annual Meeting other than the matters described in the Notice of Annual Meeting.
However, if any other matters are properly presented for action, it is the intention of each person named in the accompanying proxy to vote said proxy in accordance with his judgment on those matters.
By Order of the Board of Directors,
DENISE R. CADE
Senior Vice
President, General Counsel
and Corporate Secretary
March 17, 2017
Lake Forest, Illinois
A copy of the Companys Annual Report on Form
10-K
for the year ended December 31, 2016, including the
financial statement schedules, as filed with the Securities and Exchange Commission, may be obtained by stockholders without charge by sending a written request to Chief Financial Officer, IDEX Corporation, 1925 West Field Court, Suite 200, Lake
Forest, Illinois 60045.
59
|
|
|
|
|
|
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|
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IDEX CORPORATION
1925 W. FIELD CT, SUITE 200
LAKE FOREST, IL
60045
|
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|
VOTE BY INTERNET -
www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the cut-off
date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
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ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards
and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials
electronically in future years.
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VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your
proxy card in hand when you call and then follow the instructions.
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VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes
Way, Edgewood, NY 11717.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
E21290-P85113
KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 4 AND ONE YEAR ON
PROPOSAL 3. IF ANY OTHER MATTERS PROPERLY COME BEFORE THE MEETING, THE PERSONS NAMED IN THIS PROXY WILL VOTE IN THEIR DISCRETION.
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For
All
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Withhold
All
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For All
Except
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To withhold authority to vote for any individual nominee(s), mark For All Except and write the name(s) of the
nominee(s) on the line below.
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1.
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To elect two directors each for a term of three
years
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Nominees:
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☐
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☐
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☐
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01)
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ANDREW K. SILVERNAIL
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02)
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KATRINA L. HELMKAMP
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Vote on Proposals
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For
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Against
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Abstain
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2.
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Advisory vote to approve named executive officer compensation.
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☐
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☐
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☐
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1 Year
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2 Years
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3 Years
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Abstain
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3.
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Advisory vote to approve the frequency (whether annual, biennial or triennial) with which stockholders of IDEX shall be entitled to have an advisory vote to approve named executive officer
compensation.
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☐
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☐
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☐
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☐
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For
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Against
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Abstain
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4.
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Ratification of the appointment of Deloitte & Touche LLP as our independent registered accounting firm for 2017.
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☐
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☐
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☐
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For address changes and/or comments, please check this box and write them on the back where indicated.
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☐
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Yes
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No
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Please indicate if you plan to attend this meeting.
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☐
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☐
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Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signed as attorney, 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.
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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Signature (Joint Owners)
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Date
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V.1.1
IDEX CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 26, 2017
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The Annual Meeting of Stockholders of IDEX Corporation (the Company) will be held on Wednesday,
April 26, 2017, at 9:00 a.m., Central Time, at the Westin Chicago North Shore, 601 North Milwaukee Avenue, Wheeling, Illinois 60090, for the purposes listed on the reverse side.
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The Board of Directors fixed the close of business on March 1, 2017, as the record date for the determination of
Stockholders entitled to notice of, and to vote at, the Annual Meeting. You may obtain directions to the location of the Annual Meeting by visiting our website at www.idexcorp.com.
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YOUR VOTE IS IMPORTANT
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Regardless of whether you plan to attend the Annual Meeting of Stockholders, you can be sure these shares are represented at the meeting by promptly returning your proxy in the enclosed envelope.
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Important Notice Regarding the Availability of Proxy Materials for the 2017 Annual Meeting
The Proxy Statement and 2016 Annual Report of IDEX Corporation are available at:
http://phx.corporate-ir.net/phoenix.zhtml?c=83305&p=irol-reportsAnnual
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Proxy card must be signed and dated on the reverse side.
ê
Please
fold and detach card at perforation before mailing.
ê
E21291-P85113
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IDEX CORPORATION
1925 West Field Court, Suite 200
Lake Forest, Illinois 60045-4824
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
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The undersigned hereby appoints William M. Cook, Eric D.
Ashleman and Denise R. Cade, and each of them, as Proxies, with full power of substitution, and hereby authorizes them to represent and to vote, as designated on the reverse side, all the shares of common stock of IDEX Corporation held of record by
the undersigned on March 1, 2017, at the Annual Meeting of Stockholders to be held on April 26, 2017, at 9:00 a.m. Central Time, at the Westin Chicago North Shore, 601 North Milwaukee Avenue, Wheeling, Illinois 60090, or at any adjournment
thereof.
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Address Changes/Comments:
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(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
Continued and to be signed on reverse side
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V.1.1
IDEX (NYSE:IEX)
Historical Stock Chart
From Apr 2024 to May 2024
IDEX (NYSE:IEX)
Historical Stock Chart
From May 2023 to May 2024