UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934 (Amendment
(Amendment No. )
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Filed by a Partyparty other than the Registranto¨
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IDEX Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than theOther Than The Registrant)
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Lake Forest, IL 60045
March 7, 2011
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of IDEX Corporation (the Company) which will be held on Tuesday, April 5, 2011,8, 2014, at 9:00 a.m. Central Time, at the Lake Forest Graduate School of Business, 1945 West Field Court, Lake Forest,The Westin Chicago North Shore, 601 North Milwaukee Avenue, Wheeling, Illinois 60045.
Details of the business to be conducted at the Annual Meeting are given in the attached Notice of Annual Meeting and Proxy Statement. Included with the Proxy Statement is a copy of the Company’s 20102013 Annual Report. We encourage you to read the Annual Report. It includes information on the Company’s operations, markets, products and services, as well as the Company’s audited financial statements.
Whether or not you attend the Annual Meeting, it is important that your shares be represented and voted. Therefore, we urge you to sign, date, and promptly return the accompanying proxy card in the enclosed envelope. Alternatively, you can vote over the telephone or the Internet as described on the proxy card. If you decide to attend the Annual Meeting, you will be able to vote in person, even if you have previously submitted your proxy card, or voted by telephone or over the Internet.
On behalf of the Board of Directors, I would like to express our appreciation for your continued interest in the affairs of the Company. We look forward to seeing you at the Annual Meeting.
Sincerely,
ANDREW K. SILVERNAIL
Chairman of the Board, President and
Chief Executive Officer
To the Stockholders:
The Annual Meeting of Stockholders of IDEX Corporation (the “Company”)Company) will be held on Tuesday, April 5, 2011,8, 2014, at 9:00 a.m. Central Time, at the Lake Forest Graduate School of Business, 1945 West Field Court, Lake Forest,The Westin Chicago North Shore, 601 North Milwaukee Avenue, Wheeling, Illinois 60045,60090, for the following purposes:
1. | To elect three directors, each for a term of three years. | |
2. | To vote on a non-binding resolution to approve the compensation of the Company’s named executive officers. | |
3. | ||
To ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for | ||
To transact such other business as may properly come before the meeting. |
The Board of Directors fixed the close of business on February 23, 2011,14, 2014, 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.
By Order of the Board of Directors
FrankFRANK J. Notaro
NOTARO
Vice President -— General Counsel
and Secretary
March 7, 2011
Lake Forest, Illinois
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 5, 2011
8, 2014
The Proxy Statement and 20102013 Annual Report of IDEX Corporation are available at:
http://phx.corporate-ir.net/phoenix.zhtml?c=83305&p=irol-reportsAnnual
IDEX Corporation (the Company or IDEX) has prepared this Proxy Statement in connection with the solicitation by the Company’s Board of Directors of proxies for the Annual Meeting of Stockholders to be held on Tuesday, April 5, 2011,8, 2014, at 9:00 a.m. Central Time, at the Lake Forest Graduate School of Business, 1945 West Field Court, Lake Forest,The Westin Chicago North Shore, 601 North Milwaukee Avenue, Wheeling, Illinois 60045.60090. The Company commenced distribution of this Proxy Statement and the accompanying materials on March 7, 2011.
The Company will bear the costs of preparing and mailing this Proxy Statement and other costs of the proxy solicitation made by the Company’s Board of Directors. Certain of the Company’s officers and employees may solicit the submission of proxies authorizing the voting of shares in accordance with the Board of Directors’ recommendations, but no additional remuneration will be paid by the Company for the solicitation of those proxies. These solicitations may be made by personal interview, telephone, email or facsimile transmission. The Company has made arrangements with brokerage firms and other record holders of the Company’sits Common Stock for the forwarding of proxy solicitation materials to the beneficial owners of that stock. The Company will reimburse those brokerage firms and others for their reasonableout-of-pocket expenses in connection with this work. In addition, the Company has engaged Morrow & Co., LLC, 470 West Ave., Stamford, Connecticut to assist in proxy solicitation and collection at a cost of $6000,$6,000, plusout-of-pocket expenses.
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The record of stockholders entitled to notice of, and to vote at, the Annual Meeting was taken as of the close of business on February 23, 2011,14, 2014, and each stockholder will be entitled to vote at the meeting any shares of the Company’s Common Stock held of record on that date. 82,467,90380,851,529 shares of the Company’s Common Stock were outstanding at the close of business on February 23, 2011.14, 2014. Each share entitles its holder of record to one vote on each matter upon which votes are taken at the Annual Meeting. No other securities are entitled to be voted at the Annual Meeting.
A quorum of stockholders is necessary to take action at the Annual Meeting. A majority of outstanding shares of the Company’s Common Stock present in person or represented by proxy will constitute a quorum. The Company will appoint election inspectors for the meeting to determine whether or not a quorum is present, and to tabulate votes cast by proxy or in person at the Annual Meeting.person. Under certain circumstances, a broker or other nominee may have discretionary authority to vote certain shares of Common Stock if instructions have not been received from the beneficial owner or other person entitled to vote. The election inspectors will treat directions to withhold authority, abstentions and broker non-votes (which occur when a broker or other nominee holding shares for a beneficial owner does not vote on a particular proposal because such broker or other nominee does not have discretionary voting power with respect to that item and has not received instructions from the beneficial owner) as present and entitled to vote for purposes of determining the presence of a quorum for the transaction of business at the Annual Meeting. The following sets forth the voting procedures for each proposal at the Annual Meeting:
Proposal 1 — Election of Directors. Directors are elected by a plurality of the votes cast at the Annual Meeting. DirectionsMeeting; provided however, that the Company’s Corporate Governance Guidelines provide for a “plurality plus” standard with respect to the election of directors, under which any nominee who receives a greater number of withhold authority, abstentionsvotes than affirmative votes in an uncontested election is required to submit an offer of resignation for consideration by the Nominating and Corporate Governance Committee of the Board of Directors, as more fully described under Proposal 1 — Election of Directors. Abstentions and broker non-votes will have no effect on the election of directors.
Proposal 2 — Advisory Vote on Executive Compensation. Approval of the compensation of the Company’s named executive officers will require the affirmative vote of a majority of shares present in person or represented by proxy and entitled to vote on the matter. Abstentions will have the effect of a vote against approval and broker non-votes will have no effect on the vote.
Proposal 3 — Advisory Vote on Frequency of Advisory Votes on Executive Compensation. Approval of a frequency will require the affirmative vote of a majority of shares present in person or represented by proxy and entitled to vote on the matter. Abstentions will have the effect of a vote against approval and broker non-votes will have no effect on the vote.
The Company requests that you mark the accompanying proxy card to indicate your votes, sign and date it, and return it to the Company in the enclosed envelope, or vote by telephone or over the Internet as described on the proxy card. If you vote by telephone or over the Internet, you should not mail your proxy card. If your completed proxy card or telephone or Internet voting instructions are received prior to the meeting, your shares will be voted in accordance with your voting instructions. If you sign and return your proxy card but do not give voting instructions, your shares will be voted FOR the election of the Company’s nominees as directors, FOR approval of the compensation of the Company’s named executive officers, FOR the approval of a triennial frequency (i.e., every three years) for advisory votes on the compensation of the Company’s named executive officers, FOR approval of the ratification of the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for 2011,2014, and in the discretion of the proxy holders as to any other business which may properly come before the meeting. Any proxy solicited hereby may be revoked by the person or persons giving it at any time before it has been exercised at the Annual Meeting by giving notice of revocation to the Company in writing prior to the meeting. If you decide to attend the Annual Meeting, you will be able to vote in person, even if you have previously submitted your proxy card, or voted by telephone or over the Internet. The Company requests that all such written notices of revocation to the Company be addressed to Frank J. Notaro, Vice President —- General Counsel and Secretary, IDEX Corporation, 1925 West Field Court, Suite 200, Lake Forest, IL 60045.
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The Company’s Restated Certificate of Incorporation, as amended, provides for a three-class Board, with one class being elected each year for a term of three years. The Board of Directors currently consists of nine members, three of whom are Class I directors whose terms will expire at this year’s Annual Meeting, three of whom are Class II directors whose terms will expire at the Annual Meeting to be held in 2012,2015, and three of whom are Class III directors whose terms subject to the next sentence, will expire at the Annual Meeting to be held in 2013. Neil A. Springer, a Class III director, will retire and resign from the Board on the date of the Annual Meeting. On February 22, 2011, the Board of Directors appointed Livingston Satterthwaite, effective on Mr. Springer’s resignation on the date of the Annual Meeting, to fill the vacancy created by Mr. Springer’s retirement.
The Company’s Board of Directors has nominated three individuals for election as Class I directors to serve for a three-year term expiring at the Annual Meeting to be held in 2014,2017, or upon the election and qualification of their successors. The nominees of the Board of Directors are Bradley J. Bell, Lawrence D. Kingsley and Gregory F. Milzcik. Messrs. Bell, KingsleyMilzcik and Milzcik areAndrew K. Silvernail, each of whom is currently serving as directorsa director of the Company. The nominees and the directors serving in Class II and Class III whose terms expire in future years and who will serve or continue to serve after the Annual Meeting are listed below with brief statements setting forth their present principal occupations and other information, including any directorships in other public companies, and their particular experiences, qualifications, attributes and skills possessed by the nominees and directors that lead to the conclusion they should serve as a director.
If for any reason any of the nominees for a Class I directorship are unavailable to serve, proxies solicited hereby may be voted for a substitute. The Board, however, expects the nominees to be available.
Under the Company’s Corporate Governance Guidelines, any director nominee who receives a greater number of withhold votes than affirmative votes in an uncontested election is required to submit an offer of resignation for consideration by the Nominating and Corporate Governance Committee of the Board of Directors within 90 days from the date of election. The Nominating and Corporate Governance Committee must then consider all of the relevant facts and circumstances and recommend to the Board of Directors the action to be taken with respect to the offer of resignation.
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the Nominees in Class I Identified Below.
Nominees for Election
Class I: Nominees for Three-Year Term
BRADLEY J. BELL | Director since June 2001 |
Retired Executive Vice President and Chief Financial Officer | Age | |
Nalco Company |
Mr. Bell served as Executive Vice President and Chief Financial Officer of Nalco Company from prior to 20062008 until his retirement in 2010. Mr. Bell is a director of Compass Minerals International, Inc.
Mr. Bell’s business leadership skills, his knowledge of technology and manufacturing industries, his financial reporting expertise and his corporate governance and executive compensation experience led to the conclusion that he should serve on IDEX’sthe Board of Directors. For over seven years, Mr. Bell served as executive vice president and chief financial officer of Nalco Company.Nalco. In addition, Mr. Bell has over thirty30 years combined experience as an executive in the technology and manufacturing industries, including positions at Rohm and Haas Company, Whirlpool Corporation and Bundy Corporation. Through his experience, Mr. Bell has developed valuable financial expertise and experience in mergers and acquisitions, private equity and capital markets transactions. Mr. Bell has a long career in corporate finance, including more than 12 years of experience as chief financial officer of a publicly traded company, during which he obtained significant financial management and reporting expertise. He has held directorships at publicly traded companies for over 20 years, including positions as chairs ofduring which he chaired governance, audit and compensation committees. Through his executive experience and board memberships, Mr. Bell has acquired substantial training and experience in corporate governance and executive compensation. Mr. Bell received a bachelor of science degree in finance with high honors from the University of Illinois and a master of business administration degree with distinction from Harvard University.
Mr. Bell is the Chairman of the Nominating and Corporate Governance Committee and a member of the AuditCompensation Committee of the Board of Directors. Effective April 5, 2011, Mr. Bell will become a member of the Compensation Committee, and will cease to be a member of the Audit Committee, of the Board of Directors.
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GREGORY F. MILZCIK | Director since April 2008 |
Retired President and Chief Executive Officer | Age | |
Barnes Group Inc. |
Mr. Milzcik has beenserved as President and Chief Executive Officer of Barnes Group Inc. since October 2006. In 2006,from prior to 2008 until his appointment as President, Mr. Milzcik served as Executive Vice President and Chief Operating Officer of Barnes Group Inc.retirement in 2013. Mr. Milzcik is a director of Barnes GroupKulicke & Soffa Industries Inc.
Mr. Milzcik’s business leadership skills, his relevant experience in industrial manufacturing, his corporate governance and executive compensation training and his extensive technical and management education led to the conclusion that he should serve on IDEX’sthe Board of Directors. Through his executive experience at Barnes Group, Inc., Mr. Milzcik obtained a unique understanding of the industrial manufacturing business environment and gained exposure to and familiarity with IDEX’s customer base. In addition, Mr. Milzcik gained experience with international commerce, government contracting, complex project management, intellectual property management and industry cyclicality, which enrich his perspective as a director of the Company. Mr. Milzcik has acquired substantial training in corporate governance and executive compensation through his executive experience, board memberships and attendance at the Harvard Directors College, Stanford Directors College and ODX/Columbia Director Education Program.Program, and has been named a Board Leadership Fellow by the National Association of Corporate Directors. Mr. Milzcik received a bachelor of science degree in applied science and technology from Thomas Edison State College, a master’s degree in management and administration from Cambridge College, a certificate of graduate studies in administration and management from Harvard University and a doctorate from Case Western Reserve University, with
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research focusing on management systems in cyclical markets. Mr. Milzcik is a Certified Manufacturing Engineer through the Society of Manufacturing Engineers, and has aan FAA Airframe and Power Plant License.
Mr. Milzcik is a member of the Compensation Committee of the Board of Directors.
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ANDREW K. SILVERNAIL | Director since August 2011 | |
Chairman, President and Chief Executive Officer | Age 42 | |
IDEX Corporation |
Mr. Silvernail was appointed Chairman of the Board effective January 1, 2012. Mr. Silvernail has served as President and Chief Executive Officer and a director of the Company since August 10, 2011. Prior to his appointment as President and Chief Executive Officer, Mr. Silvernail served since January 2011 as Vice President Group Executive of the Company’s Health & Science Technologies, Global Dispensing and Fire & Safety/Diversified Products business segments. From February 2010 to December 2010, Mr. Silvernail was Vice President Group Executive of the Company’s Health & Sciences Technologies and Global Dispensing business segments. Mr. Silvernail joined IDEX in January 2009 as Vice President Group Executive of Health & Science Technologies. Mr. Silvernail is a director of Stryker Corporation.
Mr. Silvernail’s relevant experience with engineering and technology industries in general, together with his extensive management experience led to the conclusion that he should serve on the Board of Directors. Mr. Silvernail received his bachelor of science degree in government from Dartmouth College and his masters of business administration degree from Harvard University.
Class II: Three-Year Term Expires in 20122015
WILLIAM M. COOK | Director since April 2008 |
Chairman, President and Chief Executive Officer | Age | |
Donaldson Company, Inc. |
Mr. Cook has beenserved as Chairman, President and Chief Executive Officer of Donaldson Company, IncorporatedInc. since prior to 2006.2008. Mr. Cook is a director of Donaldson Company Incorporated and Valspar Corporation.
Mr. Cook’s strong business and organizational leadership skills and his relevant experience in technological industries led to the conclusion that he should serve on IDEX’sthe Board of Directors. Mr. Cook is a30-year 33-year veteran of Donaldson Company, Incorporated, a technology-driven global company that manufactures filtration systems designed to remove contaminants from air and liquids. Throughout his career at Donaldson Company, Mr. Cook has served in several senior executive positions, and was elected as a director in 2004. Mr. Cook received a bachelor of science degree in business administration and a master of business administration degree from Virginia Polytechnic Institute and State University.
Mr. Cook is the Chairmana member of the Audit Committee of the Board of Directors.
MICHAEL T. TOKARZ | Director since September 1987 |
Member | Age 64 | |
The Tokarz Group L.L.C. | ||
Mr. Tokarz has been a member of The Tokarz Group L.L.C. since prior to 2006.2008. Mr. Tokarz is a director of Conseco, Inc.,CNO Financial Group, MVC Capital, Inc., Walter Investment Management Corp., Walter Energy, Inc., and Mueller Water Products, Inc., and Walter Industries, Inc.
Mr. Tokarz’s knowledge and experience in banking and finance, his entrepreneurial and business leadership skills, his extensive board experience, his corporate governance training and his prominent position in the business community led to the conclusion that he should serve on IDEX’sthe Board of Directors. Mr. Tokarz is a senior investment professional with over 30 years of lending and investment
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experience. He has extensive experience in leveraged buyouts, financings, restructurings and
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Mr. Tokarz is Lead Director of the Board of Directors, Chairman of the Compensation Committee of the Board of Directors. Effective April 5, 2011, Mr. Tokarz will becomeand a member of the Nominating and Corporate Governance Committee of the Board of Directors.
CYNTHIA J. WARNER | Director since |
Chairman and Chief Executive Officer | Age 55 | |
Sapphire Energy, Inc. | ||
Ms. ChandyWarner has been Chairman and Chief MarketingExecutive Officer of The Dow Chemical CompanySapphire Energy, Inc. since 2010.2012. From 2009 to 2011, Ms. Chandy served as Chief Marketing Officer for RohmWarner was Chairman and Hass Company from 2007President of Sapphire Energy. From prior to 2009, and as2008, Ms. Warner was Group Vice President, of MarketingGlobal Refining, BP plc.
Ms. Warner’s operating leadership skills, international experience and Commercial Excellence, and in various operating roles, at Thermo Fisher Scientific, from prior to 2006 to 2007.
Ms. ChandyWarner is a member of the Audit Committee and Nominating and Corporate Governance Committee of the Board of Directors.
Class III: Three-Year Term Expires in 2016
ERNEST J. MROZEK | Director since July 2010 |
Retired Vice Chairman and Chief Financial Officer | Age | |
The ServiceMaster Company |
Mr. Mrozek served as Vice Chairman and Chief Financial Officer of The ServiceMaster Company from November 2006prior to 2008 until his retirement in March 2008 and was President and Chief Financial Officer of ServiceMaster from January 2004 to November 2006.2008. Mr. Mrozek is a director of G&K Services, Inc.
Mr. Mrozek’s strategic and operating leadership skills, his extensive experience and expertise in the business services industry and his financial reporting expertise led to the conclusion that he should serve on IDEX’sthe Board of Directors. Through over 20 years of executive experience in various senior positions in general management, operations and finance at ServiceMaster, a residential and commercial service company, Mr. Mrozek developed extensive knowledge of the business services industry and gained valuable financial expertise and experience in mergers and acquisitions. Prior to joining ServiceMaster in 1987, Mr. Mrozek spent 12 years in public accounting with Arthur Andersen & Co. Mr. Mrozek has also acquired substantial experience in corporate governance as a director on the boards of several public and private companies. Mr. Mrozek received a bachelor of science degree in accountancy with honors from the University of Illinois and is a certified public accountant.
Mr. Mrozek also servesis Chairman of the Audit Committee of the Board of Directors.
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DAVID C. PARRY | Director since December 2012 | |
Vice Chairman | Age 60 | |
Illinois Tool Works Inc. |
Mr. Parry has served as Vice Chairman of Illinois Tool Works Inc. (ITW) since 2010. From prior to 2008 until 2010, Mr. Parry was Executive Vice President of ITW with responsibility for the Polymers and Fluids Group.
Mr. Parry’s strategic and operating leadership skills and global commercial perspective gained from over 30 years of international business leadership experience, his significant acquisition experience and his extensive expertise in the industrial products manufacturing industry led to the conclusion that he should serve on the boardsBoard of variousnot-for-profit organizationsDirectors. During 18 years of executive and charitable causes.
Mr. Parry is a member of the Audit Committee of the Board of Directors.
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LIVINGSTON L. SATTERTHWAITE | Director |
President | Age 53 | |
Cummins Power Generation Division | ||
Mr. Satterthwaite has beenserved as President of Cummins Power Generation, a unit of Cummins, Inc., since June 2008. From 2003prior to 2008, Mr. Satterthwaite held the position ofwas Vice President, Generator Set Business at Cummins Power Generation.
Mr. Satterthwaite’s business leadership and sales skills, international experience and extensive experience in industrial manufacturing led to the conclusion that he should serve on IDEX’sthe Board of Directors. Since joining Cummins Inc. in 1988, Mr. Satterthwaite has held various positions at Cummins Power Generation and other divisions of Cummins, Inc., including having spent fourteen14 years in managerial and sales positions in the United Kingdom and Singapore. Prior to joining Cummins, Inc., Mr. Satterthwaite spent four years at SchlumburgerSchlumberger Limited, an oilfield services provider, as a General Field Engineer. Mr. Satterthwaite received a bachelor of science degree in civil engineering from Cornell University and a masters in business administration degree from Stanford University.
Mr. Satterthwaite will becomeis a member of the Audit Committee of the Board of Directors.
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Information Regarding the Board of Directors and Committees
The Board of Directors has the ultimate authority for the management of the Company’s business. In February 2011,November 2013, the Board affirmedamended the Company’s Corporate Governance Guidelines to add the plurality plus voting standard described in Proposal 1 and otherwise affirmed the Guidelines which, along with the charters of the Board committees, the Company’s Code of Business Conduct and Ethics, and the Standards for Director Independence, provide the framework for the governance of the Company. The Company’s Corporate Governance Guidelines address matters such as composition, election of directors, size and retirement age offor the Board, Board membership criteria, the role and responsibilities of the Board, director compensation, share ownership guidelines, and the frequency of Board meetings (including meetings to be held without the presence of management). The Company’s Code of Business Conduct and Ethics sets forth the guiding principles of business ethics and certain legal requirements applicable to all of the Company’s employees and directors. Copies of the current Corporate Governance Guidelines, the charters of the Board committees, the Code of Business Conduct and Ethics, and the Standards for Director Independence are available under the Investor Relations links on the Company’s website at www.idexcorp.com.
The Board selects the Company’s executive officers, delegates responsibilities for the conduct of the Company’s operations to those officers, and monitors their performance. Without limiting the generality of the foregoing, the Board of Directors oversees an annual assessment of enterprise risk exposure, and the management of such risk, conducted by the Company’s executives. When assessing enterprise risk, the Board focuses on the achievement of organizational objectives, including strategic objectives, to improve long-term organizational performance and enhance stockholder value. Direct oversight allows the Board to assess management’s inclination for risk, to determine what constitutes an appropriate level of risk for the Company and to discuss with management the means by which to control risk. In addition, while the Board of Directors has the ultimate oversight responsibility for the risk management process, the Audit Committee focuses on financial risk management and exposure.exposure, and legal compliance. The Audit Committee receives an annual risk assessment report from the Company’s internal auditors and reviews and discusses the Company’s financial risk exposures and the steps management has taken to monitor, control and report those exposures.
The Company’s By-laws permit the Board to select its Chairman in the manner it determines to be most appropriate. The Corporate Governance Guidelines provide that, if the Chairman of the Board is not the Chief Executive Officer, and is an independent director, there shall be no Lead Director. If the Chairman of the Board is the Chief Executive Officer or is not an independent director, the independent directors shall elect an independent Lead Director. In connection with Mr. Silvernail’s appointment as Chairman, the Board appointed Michael T. Tokarz as Lead Director. The responsibilities of the Lead Director include:
Coordinating the activities of the independent directors;
Reviewing the Board meeting agendas and providing the Chairman with input on the agendas;
Preparing the agendas for executive session of the independent directors and chairing those sessions;
Facilitating communications between the Chairman and other members of the Board; and
Coordinating the performance evaluation of the Chief Executive Officer.
The independent non-management directors of the Board meet separately as a group at every regularly scheduled Board meeting. The Lead Director generally presides at these non-management executive sessions. During 2010,2013, the Board held six meetings. The independent (non-management) directors met in regular executive sessions without management at each in-person meeting of the Board. Generally, the Chairman of the Nominating and Corporate Governance Committee presides at the non-management executive sessions.
The Board believes that its current leadership structure provides independent board leadership and engagement while deriving the benefit of having the CEO also serve as Chairman of the Board. Although there is no independent lead director, all of the non-management directors are actively engaged in shaping the Board’s agenda and the Company’s strategy. OurThe Chief Executive Officer, as the individual with primary responsibility for managing the Company’s
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day-to-day operations, is best positioned to chair regular Board meetings and to oversee discussion on business and strategic issues. Coupled with the existence of a Lead Director and regular executive sessions of the non-management directors, this structure provides independent oversight, including risk oversight, while facilitating the exercise of the Board’s responsibilities.
The Board has adopted standards for determining whether a director is independent. These standards are based upon the listing standards of the New York Stock Exchange and applicable laws and regulations, and are available on the Company’s website as described above. The Board has affirmatively determined, based on these standards, that the following directors, threetwo of whom are standing for election to the Board, are independent: Mr.Messrs. Bell, Ms. Chandy, and Messrs. Cook, Hermance, Milzcik, Mrozek, Parry, Satterthwaite and Tokarz.Tokarz, and Ms. Warner. The Board has also determined that Mr. Kingsley,Silvernail, who is standing for election to the Board, is not independent. Mr. KingsleySilvernail is the Chairman of the Board, President and Chief Executive Officer of the Company. The Board has also determined that all Board standing committees are composed entirely of independent directors.
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The Nominating and Corporate Governance Committee’s primary purpose and responsibilities are to: develop and recommend to the Board corporate governance principles and a code of business conduct and ethics; develop and recommend criteria for selecting new directors; identify individuals qualified to become directors consistent with criteria approved by the Board, and recommend to the Board such individuals as nominees to the Board for its approval; make recommendations to the Board regarding any director who submits an offer of resignation by reason of the plurality plus voting standard under the Company’s Corporate Governance Guidelines; screen and recommend to the Board individuals qualified to become Chief Executive Officer and any other senior officer whom the committee may wish to approve; and oversee evaluations of the Board, individual Board members and Board committees. The members of the Nominating and Corporate Governance Committee are Mr.Messrs. Bell and Tokarz, and Ms. Chandy and Mr. Springer. Mr. Springer will retire and resign from the Board and Mr. Tokarz will become a member of the Nominating and Corporate Governance Committee on the date of the Annual Meeting.Warner. During 2010,2013, the Nominating and Corporate Governance Committee held one meeting.
It is the policy of the Nominating and Corporate Governance Committee to consider nominees for the Board recommended by the Company’s stockholders in accordance with the procedures described under STOCKHOLDER“STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS FOR 20122015 ANNUAL MEETING.MEETING” below. Stockholder nominees who are nominated in accordance with these procedures will be given the same consideration as nominees for director from other sources.
The Nominating and Corporate Governance Committee selects nominees for the Board who demonstrate the following qualities:
Experience(in one or more of the following):
high-level leadership experience in business or administrative activities;
specialized expertise in the industries in which the Company competes;
financial expertise;
breadth of knowledge about issues affecting the Company; and
ability and willingness to contribute special competencies to Board activities.
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Personal attributes:
personal integrity;
loyalty to the Company and concern for its success and welfare, and willingness to apply sound independent business judgment;
awareness of a director’s vital part in the Company’s good corporate citizenship and corporate image;
time available for meetings and consultation on Company matters; and
willingness to assume fiduciary responsibilities.
Qualified candidates for membership on the Board are identified and considered based on the qualities described above, without regard to race, color, religion, sex, ancestry, national origin or disability. In the past, the Company has engaged executive search firms to help identify and facilitate the screening and interviewing of director candidates. After conducting an initial evaluation of a candidate, the Nominating and Corporate Governance Committee will interview that candidate if it believes the
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The Audit Committee’s primary duties and responsibilities are to: monitor the integrity of the Company’s financial reporting process and systems of internal control regarding finance, accounting and legal compliance; monitor the independence and performance of the Company’s independent registered public accounting firm and monitor the performance of the Company’s internal audit function;and compliance functions; hire and fire the Company’s independent registered public accounting firm and approve any audit and non-audit work performed by the independent registered public accounting firm; provide an avenue of communication among the independent registered public accounting firm, management and the Board of Directors;Board; prepare the report that the rules of the Securities and Exchange Commission (SEC) require to be included in the Company’s annual proxy statement; and administer the Company’s Related Person Transactions Policy (see Transactions“Transactions With Related Persons)Persons” below). The members of the Audit Committee are Mr. Bell, Ms. Chandy, and Messrs. Cook, Mrozek, Parry and Mrozek.Satterthwaite. Effective April 5, 2011,8, 2014, Mr. BellSatterthwaite will cease to be a member, and Mr. SatterthwaiteMilzcik will become a member of the Audit Committee. The Board of Directors has determined that each of Messrs. Bell, Cook and Mrozek is an “audit committee financial expert,” as defined by the rules of the Securities and Exchange Commission.SEC. During 2010,2013, the Audit Committee held 1210 meetings.
The Compensation Committee’s primary duties and responsibilities are to: establish the Company’s compensation philosophy and structure the Company’s compensation programs to be consistent with that philosophy; establish the compensation of the Chief Executive Officer and other senior officers of the Company;officers; develop and recommend to the Board of Directors compensation for the Board;directors; and prepare the compensation committee report the rules of the Securities and Exchange CommissionSEC require to be included in the Company’s annual proxy statement. The members of the Compensation Committee are Messrs. Hermance,Bell, Milzcik and Tokarz. Effective April 5, 2011,8, 2014, Mr. BellMilzcik will cease to be a member, and Mr. Satterthwaite and Ms. Warner will become a membermembers of the Compensation Committee. During 2010,2013, the Compensation Committee held seventhree meetings.
To assist the Compensation Committee in discharging its responsibilities, the Compensation Committee retained Towers Watson to act as an outside consultant. Towers Watson is engaged by, and reports directly to, the Compensation Committee. The Compensation Committee has reviewed the nature of the Boardrelationship between itself and Towers Watson, including all personal and business relationships between the committee members, Towers Watson and the individual compensation consultants who provide advice to the Compensation Committee. Based on its review the Compensation Committee did not identify any actual or potential conflicts of Directorsinterest in Towers Watson’s engagement as an independent consultant. Towers Watson works with the Compensation Committee and management to structure the Company’s compensation programs and evaluate the
10
competitiveness of its executive compensation levels. Towers Watson’s primary areas of assistance to the Compensation Committee are:
Analyzing market compensation data for all executive positions;
Advising on the structure of the Company’s compensation programs;
Advising on the terms of equity awards;
Reviewing the risk associated with the Company’s compensation programs; and
Reviewing materials to be used in the Company’s proxy statement.
Towers Watson periodically provides the Compensation Committee and management market data on a variety of compensation-related topics. The Compensation Committee authorized Towers Watson to interact with the Company’s management, as needed, on behalf of the Compensation Committee, to obtain or confirm information.
During 2013, each director attended more than 75% of the aggregate number of meetings of the Board of Directors and of committees of the Board of which he or she was a member. The Company encourages its directors to attend the Annual Meetingannual meeting of Stockholdersstockholders but has no formal policy with respect to that attendance. All of the directors attended the 20102013 Annual Meeting of Stockholders.
Compensation Committee Interlocks and Insider Participation
During 2010,2013, Messrs. Hermance,Bell, Milzcik and Tokarz served as the members of the Compensation Committee. Neither Mr. Hermance,Bell, Mr. Milzcik nor Mr. Tokarz (i) was an officer or employee of the Company or any of its subsidiaries during 2010,2013, (ii) was formerly an officer of the Company or any of its subsidiaries, or (iii) had any relationship requiring disclosure by the Company under Item 404 ofRegulation S-K under the Securities Act of 1933, as amended. There were no relationships between the Company’s executive officers and the members of the Compensation Committee that require disclosure under Item 407(e)(4) ofRegulation S-K.
Transactions with Related Persons
The Board of Directors has adopted a written Related Person Transactions Policy regarding the review, approval and ratification of transactions with related persons. All related person transactions are approved by the Audit Committee. If the transaction involves a related person who is a director or immediate family member of a director, that director will not be included in the deliberations.deliberations regarding approval. In approving
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Compensation of Directors
The objectives forof our non-management director compensation program are to attract highly-qualified individuals to serve on our boardBoard of directorsDirectors and align our directors’ interests with the interests of our stockholders. OurThe Compensation Committee reviews the program at least annually to ensure that it continues to meet these objectives.
The Company believes that to attract and retain qualified directors, pay levels should be targeted at the 50th percentile (or median) of pay levels for directors at comparable companies. From time to time, the Compensation Committee, with the assistance of Towers Watson, evaluates the competitiveness of director compensation. The primary reference point for the determination of market pay practices are pay levels for organizations with revenues, business activitiesis the peer group of companies used to benchmark the Company’s executive compensation. For further details on this topic, refer to “Market Benchmarking” under “Compensation Process and complexities similar to those ofOversight” in the Company.Compensation Discussion and Analysis below. Market composite data is derived from pay surveys available to Towers Watson and directly to the Company. The Compensation Committee evaluated director compensation in 2010, and director compensation was adjusted accordingly.
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Our non-management director compensation for 20102013 was based on the following:
Annual Retainer and Meeting Fees | $ | 60,000 | ||
Committee Chair Retainer | ||||
Audit Committee | 10,000 | |||
Compensation Committee | 7,000 | |||
Nominating and Corporate Governance Committee | 7,000 | |||
Value of Equity Grants Upon Initial Election to the Board | 112,500 | |||
Value of Annual Equity Grants | 75,000 |
Annual Retainer and Meeting Fees | $ | 65,000 | ||
Committee Chair Retainer | ||||
Audit Committee | $ | 15,000 | ||
Compensation Committee | $ | 10,000 | ||
Nominating and Corporate Governance Committee | $ | 8,000 | ||
Lead Director Fees | ||||
Annual Retainer | $ | 15,000 | ||
Annual Equity Grant | $ | 15,000 | ||
Stock Options | 50% of Value | |||
Restricted Stock | 50% of Value | |||
Value of Equity Grants Upon Initial Election to the Board | $ | 127,500 | ||
Stock Options | 50% of Value | |||
Restricted Stock | 50% of Value | |||
Value of Annual Equity Grants | $ | 85,000 | ||
Stock Options | 50% of Value | |||
Restricted Stock | 50% of Value |
Equity grants upon initial election to the Board of Directors are made on the date of appointment. Annual equity grants are made on the first regularly scheduled meeting of the Board of Directors held each year. All grants are structured to provide approximately 50% of the expected value in the form of stock options and 50% of the expected value in the form of restricted stock awards, and are made under the IDEX Corporation Incentive Award Plan (Incentive Award Plan). The exercise price of each option is equal to the closing price of the Company’s Common Stock on the trading day the option is granted. The options become exercisable one year following their date of grant. The restricted stock vests in full on the earliest of the third anniversary of the grant, failure of the director to be re-elected to the Board, or a change in control of the Company. The restricted stock is non-transferable until the recipient is no longer serving as a director, and is subject to forfeiture if the director terminates service as a director for reasons other than death, disability or retirement prior to vesting. The restricted stock vests in full onretirement.
Under the earlier of the third anniversary of the grant, failure of the director to be re-elected to the Board, or a change in control.
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The following table summarizes the total compensation earned in 20102013 for the Company’snon-management directors. Ruby Chandy served as a director from January 1, 2013 until her retirement on April 9, 2013. She earned $16,250 for her services as a director. Mr. KingsleySilvernail receives no additional compensation for his service as a director.
20102013 Director Compensation
Fees Earned | ||||||||||||||||
or Paid in | Stock | Option | ||||||||||||||
Name | Cash | Awards(1)(2) | Awards(1)(2) | Total | ||||||||||||
Bradley J. Bell | $ | 67,750 | $ | 37,600 | $ | 32,984 | $ | 138,334 | ||||||||
Ruby R. Chandy | 60,000 | 37,600 | 32,984 | 130,584 | ||||||||||||
William M. Cook | 67,500 | 37,600 | 32,984 | 138,084 | ||||||||||||
Frank S. Hermance | 60,000 | 37,600 | 32,984 | 130,584 | ||||||||||||
Gregory F. Milzcik | 60,000 | 37,600 | 32,984 | 130,584 | ||||||||||||
Ernest J. Mrozek | 30,000 | 56,400 | 51,285 | 137,685 | ||||||||||||
Neil A. Springer | 61,750 | 37,600 | 32,984 | 132,334 | ||||||||||||
Michael T. Tokarz | 67,000 | 37,600 | 32,984 | 137,584 |
Name | Fees Earned or Paid in Cash | Stock Awards(1)(2) | Option Awards(1)(2) | Total | ||||||||||||
Bradley J. Bell | $ | 73,000 | $ | 42,630 | $ | 40,710 | $ | 156,340 | ||||||||
William M. Cook | 68,750 | 42,630 | 40,710 | 152,090 | ||||||||||||
Gregory F. Milzcik | 65,000 | 42,630 | 40,710 | 148,340 | ||||||||||||
Ernest J. Mrozek | 76,250 | 42,630 | 40,710 | 159,590 | ||||||||||||
David C. Parry | 65,000 | 42,630 | 40,710 | 148,340 | ||||||||||||
Livingston L. Satterthwaite | 65,000 | 42,630 | 40,710 | 148,340 | ||||||||||||
Michael T. Tokarz | 90,000 | 50,198 | 47,925 | 188,123 | ||||||||||||
Cynthia J. Warner | 56,875 | 63,819 | 61,031 | 181,725 |
(1) | Reflects the aggregate grant date fair value in accordance with FASB ASC Topic 718 using the assumptions set forth in the footnotes to financial statements in the Company’s Annual Report onForm 10-K for the year ended December 31, |
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(2) | The following table provides information on the restricted stock and stock option awards held by the Company’s non-management directors and the value of those awards as of December 31, |
Option Awards | Stock Awards | |||||||||||||||||||||||
Number of Securities | Number of | Market Value of | ||||||||||||||||||||||
Underlying Unexercised | Option | Option | Shares or Units of | Shares or Units of | ||||||||||||||||||||
Options | Exercise | Expiration | Stock that Have | Stock that Have | ||||||||||||||||||||
Name | Exercisable(a) | Unexercisable(a) | Price | Date | Not Vested(b) | Not Vested(c) | ||||||||||||||||||
Bradley J. Bell | 10,125 | 0 | 15.15 | 01/01/2012 | 2,570 | $ | 100,538 | |||||||||||||||||
10,125 | 0 | 12.59 | 01/29/2013 | |||||||||||||||||||||
10,125 | 0 | 18.78 | 01/30/2014 | |||||||||||||||||||||
6,750 | 0 | 25.70 | 02/02/2015 | |||||||||||||||||||||
3,375 | 0 | 30.67 | 02/02/2016 | |||||||||||||||||||||
3,375 | 0 | 33.99 | 02/12/2017 | |||||||||||||||||||||
2,250 | 0 | 30.85 | 02/20/2018 | |||||||||||||||||||||
2,250 | 0 | 19.98 | 02/24/2019 | |||||||||||||||||||||
0 | 4,080 | 30.82 | 02/23/2020 | |||||||||||||||||||||
Ruby R. Chandy | 5,063 | 0 | 34.18 | 04/04/2016 | 2,570 | 100,538 | ||||||||||||||||||
3,375 | 0 | 33.99 | 02/12/2017 | |||||||||||||||||||||
2,250 | 0 | 30.85 | 02/20/2018 | |||||||||||||||||||||
2,250 | 0 | 19.98 | 02/24/2019 | |||||||||||||||||||||
0 | 4,080 | 30.82 | 02/23/2020 | |||||||||||||||||||||
William M. Cook | 3,375 | 0 | 32.95 | 04/08/2018 | 2,910 | 113,839 | ||||||||||||||||||
2,250 | 0 | 19.98 | 02/24/2019 | |||||||||||||||||||||
0 | 4,080 | 30.82 | 02/23/2020 | |||||||||||||||||||||
Frank S. Hermance | 15,188 | 0 | 18.39 | 01/02/2014 | 2,570 | 100,538 | ||||||||||||||||||
10,125 | 0 | 18.78 | 01/30/2014 | |||||||||||||||||||||
6,750 | 0 | 25.70 | 02/02/2015 | |||||||||||||||||||||
3,375 | 0 | 30.67 | 02/02/2016 | |||||||||||||||||||||
3,375 | 0 | 33.99 | 02/12/2017 | |||||||||||||||||||||
2,250 | 0 | 30.85 | 02/20/2018 | |||||||||||||||||||||
2,250 | 0 | 19.98 | 02/24/2019 | |||||||||||||||||||||
0 | 4,080 | 30.82 | 02/23/2020 | |||||||||||||||||||||
Gregory F. Milzcik | 3,375 | 0 | 32.95 | 04/08/2018 | 2,910 | 113,839 | ||||||||||||||||||
2,250 | 0 | 19.98 | 02/24/2019 | |||||||||||||||||||||
0 | 4,080 | 30.82 | 02/23/2020 | |||||||||||||||||||||
Ernest J. Mrozek | 0 | 6,650 | 28.20 | 07/01/2020 | 2,000 | 78,240 | ||||||||||||||||||
Neil A. Springer | 10,125 | 0 | 12.59 | 01/29/2013 | 2,570 | 100,538 | ||||||||||||||||||
10,125 | 0 | 18.78 | 01/30/2014 | |||||||||||||||||||||
6,750 | 0 | 25.70 | 02/02/2015 | |||||||||||||||||||||
3,375 | 0 | 30.67 | 02/02/2016 | |||||||||||||||||||||
3,375 | 0 | 33.99 | 02/12/2017 | |||||||||||||||||||||
2,250 | 0 | 30.85 | 02/20/2018 | |||||||||||||||||||||
2,250 | 0 | 19.98 | 02/24/2019 | |||||||||||||||||||||
0 | 4,080 | 30.82 | 02/23/2020 | |||||||||||||||||||||
Michael T. Tokarz | 10,125 | 0 | 18.78 | 01/30/2014 | 2,570 | 100,538 | ||||||||||||||||||
6,750 | 0 | 25.70 | 02/02/2015 | |||||||||||||||||||||
3,375 | 0 | 30.67 | 02/02/2016 | |||||||||||||||||||||
3,375 | 0 | 33.99 | 02/12/2017 | |||||||||||||||||||||
2,250 | 0 | 30.85 | 02/20/2018 | |||||||||||||||||||||
2,250 | 0 | 19.98 | 02/24/2019 | |||||||||||||||||||||
0 | 4,080 | 30.82 | 02/23/2020 |
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Option Awards | Stock Awards | |||||||||||||||||||||||
Number of Securities Underlying Unexercised Options | Option Exercise Price | Option Expiration Date | Number of Shares or Units of Stock that Have Not Vested(b) | Market Value of Shares or Units of Stock that Have Not Vested(c) | ||||||||||||||||||||
Name | Exercisable(a) | Unexercisable(a) | ||||||||||||||||||||||
Bradley J. Bell | 6,750 | 0 | $ | 25.70 | 02/02/2015 | 2,765 | $ | 204,195 | ||||||||||||||||
3,375 | 0 | 30.67 | 02/02/2016 | |||||||||||||||||||||
3,375 | 0 | 33.99 | 02/12/2017 | |||||||||||||||||||||
2,250 | 0 | 30.85 | 02/20/2018 | |||||||||||||||||||||
2,250 | 0 | 19.98 | 02/24/2019 | |||||||||||||||||||||
4,080 | 0 | 30.82 | 02/23/2020 | |||||||||||||||||||||
3,190 | 0 | 40.89 | 02/22/2021 | |||||||||||||||||||||
3,530 | 0 | 42.86 | 02/21/2022 | |||||||||||||||||||||
0 | 3,075 | 50.45 | 02/15/2023 | |||||||||||||||||||||
William M. Cook | 3,375 | 0 | 32.95 | 04/08/2018 | 2,765 | 204,195 | ||||||||||||||||||
2,250 | 0 | 19.98 | 02/24/2019 | |||||||||||||||||||||
4,080 | 0 | 30.82 | 02/23/2020 | |||||||||||||||||||||
3,190 | 0 | 40.89 | 02/22/2021 | |||||||||||||||||||||
3,530 | 0 | 42.86 | 02/21/2022 | |||||||||||||||||||||
0 | 3,075 | 50.45 | 02/15/2023 | |||||||||||||||||||||
Gregory F. Milzcik | 3,375 | 0 | 32.95 | 04/08/2018 | 2,765 | 204,195 | ||||||||||||||||||
2,250 | 0 | 19.98 | 02/24/2019 | |||||||||||||||||||||
4,080 | 0 | 30.82 | 02/23/2020 | |||||||||||||||||||||
3,190 | 0 | 40.89 | 02/22/2021 | |||||||||||||||||||||
3,530 | 0 | 42.86 | 02/21/2022 | |||||||||||||||||||||
0 | 3,075 | 50.45 | 02/15/2023 | |||||||||||||||||||||
Ernest J. Mrozek | 6,650 | 0 | 28.20 | 07/01/2020 | 2,765 | 204,195 | ||||||||||||||||||
3,190 | 0 | 40.89 | 02/22/2021 | |||||||||||||||||||||
3,530 | 0 | 42.86 | 02/21/2022 | |||||||||||||||||||||
0 | 3,075 | 50.45 | 02/15/2023 | |||||||||||||||||||||
David C. Parry | 4,930 | 0 | 45.08 | 12/06/2022 | 2,260 | 166,901 | ||||||||||||||||||
0 | 3,075 | 50.45 | 02/15/2023 | |||||||||||||||||||||
Livingston L. Satterthwaite | 4,800 | 0 | 45.16 | 04/05/2021 | 3,095 | 228,566 | ||||||||||||||||||
3,530 | 0 | 42.86 | 02/21/2022 | |||||||||||||||||||||
0 | 3,075 | 50.45 | 02/15/2023 | |||||||||||||||||||||
Michael T. Tokarz | 10,125 | 0 | 18.78 | 01/30/2014 | 3,085 | 227,827 | ||||||||||||||||||
6,750 | 0 | 25.70 | 02/02/2015 | |||||||||||||||||||||
3,375 | 0 | 30.67 | 02/02/2016 | |||||||||||||||||||||
3,375 | 0 | 33.99 | 02/12/2017 | |||||||||||||||||||||
2,250 | 0 | 30.85 | 02/20/2018 | |||||||||||||||||||||
2,250 | 0 | 19.98 | 02/24/2019 | |||||||||||||||||||||
4,080 | 0 | 30.82 | 02/23/2020 | |||||||||||||||||||||
3,190 | 0 | 40.89 | 02/22/2021 | |||||||||||||||||||||
4,160 | 0 | 42.86 | 02/21/2022 | |||||||||||||||||||||
0 | 3,620 | 50.45 | 02/15/2023 | |||||||||||||||||||||
Cynthia J. Warner | 0 | 4,610 | 50.45 | 02/15/2023 | 1,265 | 93,420 |
(a) | All options expire on the 10th anniversary of the grant date. Options granted prior to 2006 (with expiration dates prior to 2016) vest 100% on the second anniversary of the grant date. Options granted during and after 2006 (with expiration dates during and after 2016) vest 100% on the first anniversary of the grant date. All options vest 100% upon a change in | |
(b) | See footnote | |
(c) | Determined based upon the closing price of the Company’s Common Stock on December 31, |
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For 2014, the annual cash retainer was increased from $65,000 to $75,000, the annual equity award was increased from $85,000 to $110,000, and the initial equity award was reduced from 150% of the annual award to pro-ration of the annual award. Additionally, the equity awards are now granted 100% in restricted stock and the equity ownership guidelines were increased to five times the annual cash retainer (achievable in five years).
Communications with the Board of Directors
Stockholders and other interested parties may contact the Board, the non-management directors as a group or any of the individual directors, including the presiding director,Lead Director, by writing to Frank J. Notaro, Vice President —- General Counsel and Secretary, IDEX Corporation, 1925 West Field Court, Suite 200, Lake Forest, Illinois 60045. Inquiries sent by mail will be reviewed, sorted and summarized by Mr. Notaro before they are forwarded to any director.
14
15
The following table furnishes information as of February 23, 2011,14, 2014, except as otherwise noted, with respect to shares of the Company’s Common Stock beneficially owned by (i) each director and nominee for director, (ii) each officer named in the Summary Compensation Table, (iii) directors, nominees and executive officers of the Company as a group, and (iv) any person who is known by the Company to be a beneficial owner of more than five percent of the outstanding shares of Common Stock. Except as indicated by the notes to the following table, and with respect to DCUs issued under the Directors Deferred Compensation Plan and the IDEX Corporation Deferred Compensation Plan for Officers (Officers Deferred Compensation Plan), the holders listed below have sole voting power and investment power over the shares beneficially held by them. Under Securities and Exchange CommissionSEC rules, the number of shares shown as beneficially owned includes shares of Common Stock subject to options that are exercisable currently or will be exercisable within 60 days of February 23, 2011.14, 2014. Shares of Common Stock subject to options that are exercisable within 60 days of February 23, 2011,14, 2014, are considered to be outstanding for the purpose of determining the percentage of the shares held by a holder, but not for the purpose of computing the percentage held by others. An * indicates ownership of less than one percent of the outstanding Common Stock.
Deferred | ||||||||||||
Shares Beneficially | Compensation | Percent of | ||||||||||
Name and Address of Beneficial Owner | Owned | Units(1) | Class | |||||||||
Directors and Nominees (other than Executive Officers): | ||||||||||||
Bradley J. Bell(2) | 62,471 | * | ||||||||||
Ruby R. Chandy(2) | 23,044 | * | ||||||||||
William M. Cook(2) | 15,535 | * | ||||||||||
Frank S. Hermance(2) | 52,909 | 10,536 | * | |||||||||
Gregory F. Milzcik(2) | 13,535 | * | ||||||||||
Ernest J. Mrozek(2) | 2,920 | * | ||||||||||
Neil A. Springer(2) | 67,176 | * | ||||||||||
Michael T. Tokarz(2) | 355,532 | 29,368 | * | |||||||||
Named Executive Officers: | ||||||||||||
Lawrence D. Kingsley(3)(4) | 1,209,752 | 1.5 | ||||||||||
Dominic A. Romeo | 20,765 | * | ||||||||||
Andrew K. Silvernail(3)(4) | 63,619 | * | ||||||||||
Kevin G. Hostetler(3)(4) | 139,440 | * | ||||||||||
Frank J. Notaro(3)(4) | 122,128 | * | ||||||||||
Directors, Nominees and All Executive Officers as a Group: (18 persons)(5) | 2,667,313 | 43,966 | 3.2 | |||||||||
Other Beneficial Owners: | ||||||||||||
T. Rowe Price Associates, Inc.(6) | 7,908,580 | 9.6 | ||||||||||
100 East Pratt Street Baltimore, Maryland 21202 | ||||||||||||
BlackRock Inc.(7) | 4,965,235 | 6.0 | ||||||||||
40 East 52nd Street New York, New York 10022 | ||||||||||||
Capital World Investors(8) | 4,235,000 | 5.2 | ||||||||||
333 South Hope Street Los Angeles, California 90071 |
Name and Address of Beneficial Owner | Shares Beneficially Owned | Percent of Class | ||||||
Directors and Nominees (other than Named Executive Officers): | ||||||||
Bradley J. Bell(1) | 75,626 | * | ||||||
William M. Cook(1) | 28,690 | * | ||||||
Gregory F. Milzcik(1) | 26,690 | * | ||||||
Ernest J. Mrozek(1) | 21,725 | * | ||||||
David C. Parry(1) | 11,780 | * | ||||||
Livingston L. Satterthwaite(1) | 16,102 | * | ||||||
Michael T. Tokarz(1) | 367,801 | * | ||||||
Cynthia J. Warner(1) | 7,390 | * | ||||||
Named Executive Officers: | ||||||||
Andrew K. Silvernail(2)(3) | 217,817 | * | ||||||
Heath A. Mitts(2)(3) | 134,074 | * | ||||||
Frank J. Notaro(2)(3) | 96,749 | * | ||||||
Jeffrey D. Bucklew(2)(3) | 11,134 | * | ||||||
Daniel J. Salliotte(2)(3) | 56,084 | * | ||||||
Directors, Nominees and All Executive Officers as a Group: (14 persons)(4) | 1,187,215 | 1.5 | ||||||
Other Beneficial Owners: | ||||||||
T. Rowe Price Associates, Inc.(5) | 7,838,430 | 9.6 | ||||||
100 East Pratt Street Baltimore, Maryland 21202 | ||||||||
BlackRock Inc.(6) | 5,110,673 | 6.3 | ||||||
40 East 52nd Street New York, New York 10022 | ||||||||
The Vanguard Group(7) | 4,763,224 | 5.9 | ||||||
100 Vanguard Blvd. Malvern, Pennsylvania 19355 | ||||||||
Prudential Financial(8) | 4,257,509 | 5.3 | ||||||
751 Broad Street Newark, New Jersey 07102 | ||||||||
JPMorgan Chase & Co.(9) | 4,115,988 | 5.0 | ||||||
270 Park Ave. New York, New York 10017 |
(1) | Includes 31,875, 19,500, 19,500, 16,445, 8,005, 11,405, 33,050 and | |
15
16
Cook, |
(2) | Includes |
(3) | Includes shares of restricted stock |
Mr. Silvernail was awarded 4,540 shares of restricted stock under the Incentive Award Plan on February 22, 2011, which vest on February 22, 2014; 43,441 shares of restricted stock under the Incentive Award Plan on August 10, 2011, which vest on August 10, 2014; 18,670 shares of restricted stock under the Incentive Award Plan on February 21, 2012, which vest on February 21, 2015; 18,505 shares of restricted stock under the Incentive Award Plan on February 15, 2013, which vest on February 15, 2016; and 9,320 shares of restricted stock under the Incentive Award Plan on February 13, 2014, which vest on February 13, 2017; provided he is employed by the Company on such vesting dates.
Mr. Mitts was awarded 17,130 shares of restricted stock under the Incentive Award Plan on February 22, 2011, which vest on February 22, 2014; 5,840 shares of restricted stock under the Incentive Award Plan on February 21, 2012, which vest on February 21, 2015; 4,560 shares of restricted stock under the Incentive Award Plan on February 15, 2013, which vest on February 15, 2016; and 2,225 shares of restricted stock under the Incentive Award Plan on February 13, 2014, which vest on February 13, 2017; provided he is employed by the Company on such vesting dates.
Mr. Notaro was awarded 9,340 shares of restricted stock under the Incentive Award Plan on February 22, 2011, which vest on February 22, 2014; 5,840 shares of restricted stock under the Incentive Award Plan on February 21, 2012, which vest on February 21, 2015; 2,600 shares of restricted stock under the Incentive Award Plan on February 15, 2013, which vest on February 15, 2016; and 930 shares of restricted stock under the Incentive Award Plan on February 13, 2014, which vest on February 13, 2017; provided he is employed by the Company on such vesting dates.
Mr. Bucklew was awarded 3,220 shares of restricted stock under the Incentive Award Plan on March 5, 2012, which vest on March 5, 2015; 1,985 shares of restricted stock under the Incentive Award Plan on February 15, 2013, which vest on February 15, 2016; and 1,235 shares of restricted stock under the Incentive Award Plan on February 13, 2014, which vest on February 13, 2017; provided he is employed by the Company on such vesting dates.
Mr. Salliotte was awarded 2,380 shares of restricted stock under the Incentive Award Plan on February 22, 2011, which vest on February 22, 2014; 3,500 shares of restricted stock under the Incentive Award Plan on February 21, 2012, which vest on February 21, 2015; 1,820 shares of restricted stock under the Incentive Award Plan on February 15, 2013, which vest on February 15, 2016; and 520 shares of restricted stock under the Incentive Award Plan on February 13, 2014, which vest on February 13, 2017; provided he is employed by the Company on such vesting dates.
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The restricted shares held by Messrs. Silvernail, Mitts, Notaro, Bucklew and Salliotte may vest earlier than the dates indicated above upon a change in control of the Company and certain other events. See “Outstanding Equity Awards at 2013 Fiscal Year End” under “EXECUTIVE COMPENSATION.”
All shares of restricted stock are eligible for dividends.
(4) | Includes |
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(5) | Based solely on information in Schedule 13G, as of December 31, |
(6) | Based solely on information in Schedule 13G, as of December 31, |
(7) | Based solely on information in Schedule 13G, as of December 31, |
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(8) | Based solely on information in Schedule 13G, as of December 31, 2013, filed by Prudential Financial, Inc. (Prudential) with respect to Common Stock owned by Prudential and certain other entities which Prudential directly or indirectly controls or for which Prudential is an investment advisor on a discretionary basis. |
(9) | Based solely on information in Schedule 13G, as of December 31, 2013, filed by JPMorgan Chase & Co. (JPMorgan) with respect to Common Stock owned by JPMorgan and certain other entities which JPMorgan directly or indirectly controls or for which JPMorgan is an investment advisor on a discretionary basis. |
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Risk Assessment
The Compensation Committee periodically reviews the Compensation Committee’s direction, management conducted a risk assessment of the Company’spotential risks arising from our compensation policies, practices and practices for its executiveprograms to determine whether any potential risks are material to the Company. In approving the 2013 compensation program design, for 2010the Compensation Committee engaged in discussions with its independent compensation consultant and beyond. The Committee reviewed and discussed the findings of the assessmentmanagement regarding any potential risks and concluded that the Company’s compensation policies and practices are designed with the appropriate balance of risk and reward in relation to the Company’s overall business strategy, do not incent executivesincentivize employees, including executive officers, to take unnecessary or excessive risks, and that any risks arising from the Company’s policies and practices are not reasonably likely to have a material adverse effect on the Company. In the review, managementthe Compensation Committee considered the attributes of the Company’s policies and practices, including:
The mix of fixed and variable compensation opportunities;
The balance between annual cash and long-term, stock-based performance opportunities;
Multiple performance factors tied to key measures of short-term and long-term performance that motivate sustained performance and are based on quantitative measures;
Caps on the maximum payout for cash incentives;
Stock ownership requirements for executives that encourage a long-term focus on performance;
An insider trading policy that prohibits hedging and pledging;
A clawback policy that applies to performance-based compensation, including stock-based awards, for directors and officers; and
Oversight by an independent compensation committee.
Compensation Committee Report
The Compensation Committee has reviewed the following Compensation Discussion and Analysis and discussed its contents with the Company’s 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.
Michael T. Tokarz, ChairmanFrank S. Hermance
Bradley J. Bell
Gregory F. Milzcik
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Executive Summary
We started 2013 with the objective of market dataexecuting against our strategic priorities and we are proud of the results. The following are 2013 financial highlights:
Sales of $2.0 billion increased 4 percent compared to the prior year.
Earnings per share (EPS) of $3.09 was conducted41 cents, or 15 percent, higher than the prior year adjusted EPS of $2.68.
Free cash flow of $379 million was 28 percent higher than the prior year, and was 148 percent of net income.
Net income of $255 million increased 14 percent compared to the adjusted prior year.
We repurchased 2.9 million shares of common stock for $166 million.
We increased the quarterly dividend by 15 percent in 2010April 2013.
We acquired FTL Seals Technology, Ltd., a leader in the design and application of high integrity rotary seals, specialty bearings, and other custom products for the oil & gas, mining, power generation and marine markets.
A number of these financial highlights and significant recent accomplishments are directly tied to ensure IDEX’sperformance metrics under our executive compensation plans. For 2013, 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, cash flow conversion, organic sales growth and total shareholder return. The changes we made in the 2013 executive compensation programs were designed to meet all objectivesthe goals defined by the Compensation Committee at the beginning of the programs, especially market competitive positioningreview process: tighten the linkage between performance and rewardspay, and minimize subjectivity. To meet these goals, for performance. Adjustments2013, the Compensation Committee:
Eliminated the qualitative objectives and the personal performance modifier from the short-term incentive program thereby focusing solely on measureable quantitative performance objectives, and
Introduced performance stock units (PSUs) into the long-term incentive mix with a three-year relative total shareholder return metric.
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Linkage Between Performance and Executive Pay
The compensation opportunities of our executives are directly tied to target and actualthe performance of the Company. Our pay-for-performance philosophy is demonstrated by the following elements of our executive compensation were madeprogram for 2013:
Approximately 81% of our CEO’s 2013 total targeted pay was tied to Company performance, and an average of approximately 63% of our other named executives officers’ total targeted pay in 2013 was composed of incentives tied to Company performance. The charts below show the allocation of 2013 targeted pay across base salary, the annual cash incentive award, and the long-term incentive award for our CEO and for our other named executive officers in the 2013 Summary Compensation Table.
In 2013, our long-term incentives continued to represent the single largest component of our CEO’s targeted pay, representing approximately 62% of total targeted pay for our CEO; long-term incentives represent an average of approximately 38% of total targeted pay for our other named executive officers.
Our 2013 awards are directly tied to the performance metrics that we believe are the best measures of our financial success and that will lead to value created for our stockholders: earnings per share, cash flow conversion, organic sales growth, and total shareholder return (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 S&P Midcap 400 Industrials Index. This structure reinforces a focus on performance versus our financial plan and as compared to a group of industrial companies.
The value of all three components of our 2013 long-term incentive awards is tied to our stock price performance, which links executive pay directly to the creation of value for our stockholders.
Our Executive Compensation Governance Practices
Our executive compensation policies and practices include the following features, which illustrate our commitment to the principles stated above:
Pay for performance is the foundation of our executive compensation program, with the majority of executive pay tied to Company performance.
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We assess the market competitiveness of our programs by assessing the practices of our peer group and through review of market survey data.
We target base salary, annual cash incentives and long-term incentives at median of competitive market for each position, while allowing high performers to exceed median based uponon performance.
We utilize multiple performance metrics to motivate and reward achievements that we believe are complementary of one another and that contribute to the long-term creation of stockholder value.
We utilize performance metrics that emphasize absolute performance goals, which provide the primary links between incentive compensation and the Company’s business strategy and financial results, while providing balance through one relative performance goal.
Our annual cash incentive awards and performance stock unit awards include a limit on the maximum payout opportunities.
We have executive stock ownership guidelines ranging from two to five times base salary.
We have adopted an annual policy for our say-on-pay vote as recommended by shareholders at our 2011 annual meeting.
We reduce the risk of improper or short-sighted compensation decisions by maintaining programs that vest over multiple years, actively engaging the Compensation Committee in executive and senior management compensation, and aligning programs with business-supporting measures.
We incorporate “clawback” provisions into our annual and long-term incentive awards to protect the Company and stockholders.
We do not enter into new agreements that include excise tax gross-up provisions.
The Company has an insider trading policy under which we prohibit transactions in which executives may profit from short-term speculative swings in the value of the Company’s share price (hedging), pledging and holding Company shares in margin accounts.
With the exception of the Chief Executive Officer, we do not enter into employment contracts with executive officers.
We maintain a consistent severance policy for our executive officers, with no payments for termination for cause.
We work to reduce earnings dilution by limiting participation in our equity-based programs.
The Compensation Committee is comprised solely of independent directors and approves all compensation for our senior officers; the Compensation Committee develops and recommends to the Board for approval the compensation of the Chief Executive Officer.
The Compensation Committee has retained an independent compensation consultant, who provides services directly to the Compensation Committee.
Our peer group for compensation benchmarking purposes was carefully selected to include well-run companies with a primary focus on manufacturing of highly-engineered products, similar to those produced by the Company and primarily within a range of 0.5 to 2.0 times the Company’s annual revenue.
The Company held an advisory vote on executive compensation (say-on-pay) at the Company’s 2013 Annual Meeting of Stockholders. The say-on-pay advisory vote received support from over 94% of the shares voted at the Annual Meeting. The Compensation Committee believes this analysis, as discussed in greater detail below.
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Philosophy and OverviewObjectives of Our Executive Compensation Program
The Company’s executive compensation philosophy is to have athat its compensation program thatshould: (1) alignsalign the interests of management and stockholders, (2) motivatesmotivate and retainsretain the management team, and (3) resultsresult in executives holding meaningful amounts of the Company’s Common Stock.
Aligning the interests of management and stockholders. Our 2013 executive compensation philosophy by:
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Motivate and retain the management team. We believe that the mix of annualbase 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 forand 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 CEO and other NEOs:Company’s revenue level.
Percent Total of Direct Compensation at Target | ||||||||||||
Target Annual | Target Long-Term | |||||||||||
Executive | Base Salary | Incentives | Incentives | |||||||||
CEO | 20 | % | 20 | % | 60 | % | ||||||
Other NEOs | 40 | % | 25 | % | 35 | % |
Result in executives holding meaningful amounts of the Company’s business strategy. Whileshort-termcommon stock. 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, is vitalcan result in significant share ownership opportunities for our executives. As stated above and detailed below, our stock ownership guidelines require our executives to the financial well-being of the Company,maintain certain stock ownership levels. When combining the long-term health of the Company requires the appropriate emphasis on new products, technologies and investmentsincentive grant levels that will enable future growth and deliver long-term stockholder value. The latter requires that employees take calculated risks to capitalize on anticipated changesare paid out in the Company’s numerous businesses. The Company believes targeting total direct compensation to within a range of +/- 20% of 50th percentile of market competitively positions the pay of its executives. The Company believes that balancing the proportion of cash andnon-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 with the greatest ability to impact business
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Compensation Process and length of tenure in a particular position.
Role of Compensation Committee and Data UsedUsed.
The Compensation Committee performs periodic reviews of executive pay tally sheets. The tally sheets outline each executive’s annual pay — target and actual —pay, unvested equity holdings and total accumulated wealthtermination payments under various performance and employment 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 Company and individual performance and changes in stock price over time.
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Generally, the amount of compensation realized historically, or potentially realizable in the future, from past compensationequity awards does not directly impact the level at which future pay opportunities are set. When granting equity awards, the Compensation Committee reviews both individual performance and the positioning of previously granted equity awards within established grant ranges.
Market BenchmarkingBenchmarking.
The Compensation Committee undertook a review of its data sources and analysis to ensure that its 2010the 2013 executive compensation programs appropriately reflected itsthe market for talent. The Committee considered relevant market pay practices to ensure the Company’s ability to recruit and retain high
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Companies that participate in the Towers Watson executive compensation database survey (excluding energy and financial service companies) as well as the Equilar Top 25 Survey, both matched by job content. Two surveys were used because they include a broad range of manufacturing companies that are comparable to the Company in size, geography and industry; and
The peer group of companies identified below, which 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), research and development investment, global presence, and have executive officer positions that are comparable to the Company’s in terms of breadth, complexity and scope of responsibilities. Prior to conducting the benchmarking review for 2013 compensation decisions, Towers Watson reviewed the composition of the peer group listed in last year’s proxy statement with the Compensation Committee. Based on that review, the Committee removed Millipore Corporation, and added Bruker Corporation, JDS Uniphase Corporation and KLA-Tencor Corporation. Millipore was removed as it was acquired by Merck KGaA. Bruker, JDS Uniphase and KLA-Tencor were added based on their status as well-respected companies having operations that involve the photonics and life sciences industries, and their annual revenues which are within a reasonable range of the Company’s annual revenue.
A.O. Smith Corporation | Dover Corporation | Pentair Ltd. | ||
Actuant Corporation | Flowserve Corporation | PerkinElmer, Inc. | ||
AMETEK, Inc. | Gardner Denver, Inc. | Robbins & Myers, Inc. | ||
Barnes Group Inc. | JDS Uniphase Corporation | Roper Industries, Inc. | ||
Bruker Corporation | KLA-Tencor Corporation | SPX Corporation | ||
CIRCOR International Inc. | Nordson Corporation | Waters Corporation | ||
Colfax Corporation | Pall Corporation | Watts Water | ||
Donaldson Company, |
2009 Fiscal Year | ||||||||||||
Year-End | ||||||||||||
Market | ||||||||||||
Company | Revenue ($M) | Net Income ($M) | Capitalization ($M) | |||||||||
Actuant | $ | 1,663.9 | $ | 122.5 | $ | 1,772.4 | ||||||
Ametek | 2,531.1 | 247.0 | 3,225.1 | |||||||||
Barnes Group | 1,362.1 | 97.1 | 758.5 | |||||||||
Circor International | 793.8 | −59.0 | 464.8 | |||||||||
Colfax | 604.9 | −0.6 | 449.0 | |||||||||
Dionex | 385.0 | 55.5 | 1,080.5 | |||||||||
Donaldson Co | 1,868.6 | 131.9 | 2,937.4 | |||||||||
Dover | 7,568.9 | 694.8 | 6,123.6 | |||||||||
Flowserve | 4,473.5 | 442.4 | 2,879.8 | |||||||||
Gardner Denver | 2,018.3 | 166.0 | 1,209.3 | |||||||||
Millipore | 1,602.1 | 145.8 | 2,854.0 | |||||||||
Nordson | 1,124.8 | 117.5 | 1,237.5 | |||||||||
Pall | 2,571.6 | 217.3 | 4,824.4 | |||||||||
Pentair | 3,352.0 | 256.4 | 2,326.2 | |||||||||
PerkinElmer | 1,937.5 | 126.1 | 1,616.0 | |||||||||
Robbins & Myers | 787.2 | 87.4 | 1,556.6 | |||||||||
Roper Industries | 2,306.4 | 286.5 | 3,896.7 | |||||||||
Smith A O | 2,304.9 | 81.9 | 891.2 | |||||||||
SPX | 5,855.7 | 253.2 | 2,011.8 | |||||||||
Varian | 1,012.5 | 66.4 | 1,242.3 | |||||||||
Waters | 1,575.1 | 322.5 | 3,556.8 | |||||||||
Watts Water Technologies | 1,459.4 | 47.3 | 913.9 | |||||||||
25th Percentile | 1,184.1 | 83.3 | 1,112.7 | |||||||||
50th Percentile | 1,766.3 | 129.0 | 1,694.2 | |||||||||
75th Percentile | 2,474.9 | 251.6 | 2,923.0 | |||||||||
IDEX | 1,489.5 | 131.4 | 1,940.1 | |||||||||
PERCENT RANK | 34.5 | % | 51.9 | % | 55.7 | % | ||||||
RANK | 15 out of 23 | 12 out of 23 | 11 out of 23 |
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Towers Watson | ||||||||||
Peer Group | Data Base | |||||||||
Position(s) | Weighting | Weighting | Rationale | |||||||
CEO and CFO | 80 | % | 20 | % | 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. | |||||
Segment Leaders | 60 | % | 40 | % | Positions require skills and experience found in narrowly defined markets and/or a wider range of organizations than simply the peer group; balance of peer and survey data. | |||||
General Counsel | 30 | % | 70 | % | Limited number of position matches in the proxy group; pool for talent would include the broader industry representation in the survey data. |
Position(s) | Survey Weighting | Peer Group Weighting | Rationale | |||||||
CEO and CFO | 20 | % | 80 | % | 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. | |||||
General Counsel and Chief Human Resources Officer |
|
70 |
% |
|
30 |
% |
Limited number of position matches in the proxy group; pool for talent would include the broader industry representation in the survey data. | |||
VP Mergers, Acquisitions and Treasury |
|
100 |
% |
|
0 |
% |
Very limited number of position matches in the proxy group; pool for talent would include the broader industry representation in the survey data. |
Process of Setting CompensationCompensation.
In settingdeveloping 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. The Compensation Committee has been advised that based on current interpretations,cash awards, performance stock units and stock options awardedgranted under the Incentive Award Plan should satisfy the requirements for performance-based compensation under Internal Revenue Code Section 162(m). In addition, the Compensation Committee has been advised that Mr. Kingsley’s annual incentive compensation under the Incentive Award Plan should satisfy the requirements forperformance-based compensation under(IRC) Section 162(m). The Compensation Committee has been made awareadvised that 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 underas 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 $1,000,000 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 Committee’s overall compensation philosophy and objectives. TheWhile it is a goal of the Compensation Committee considers ways to maximize the deductibility of executive compensation, while retainingthe Committee retains the discretion it deems necessary to compensate officers in
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a manner commensurate with performance and the competitive environment for executive talent. From time to time,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 Company’s and its stockholders’ best interests.
23Our 2013 Executive Compensation Program
The following discussion describes our 2013 compensation elements and 2013 compensation decisions related to our NEOs. Our NEOs consist of our Chief Executive Officer, our Chief Financial Officer and our three other most highly compensated executive officers. For 2013, our named executive officers are Andrew K. Silvernail, our Chairman of the Board, President and Chief Executive Officer; Heath A. Mitts, our Vice President and Chief Financial Officer; Frank J. Notaro, our Vice President – General Counsel and Secretary; Jeffrey D. Bucklew, our Chief Human Resources Officer; and Daniel J. Salliotte, our Vice President Mergers, Acquisitions and Treasury.
2013 Key Compensation Elements. The material elements of 2013 compensation for the NEOs are outlined below:
Element | Purpose | Characteristics | ||
Base Salary | Provide a fixed level of current cash compensation consonant with the executive’s primary duties and responsibilities. | Adjusted annually to reflect market changes, salary budgets and individual performance. | ||
Short-Term Incentives — Annual Bonus | Provide annual performance-based cash compensation in excess of base salary. | Reflects Company performance. | ||
Long-Term Incentives — Stock Options | Provide long-term compensation tied to increases in the price of the Company’s stock, and retention. | Priced on grant date, and vested ratably over four years. | ||
Long-Term Incentives — Restricted Stock Awards | Provide long-term compensation tied to the value of the Company’s stock, and retention. | Cliff vested in three years. | ||
Long-Term Incentives — Performance Stock Units | Provide performance-based long-term compensation tied to shareholder return and value of the Company’s stock, and retention. | Based on relative total shareholder return compared to companies in the S&P Midcap 400 Industrials index, and cliff vested in three years. | ||
Retirement Benefits | Provide overall wealth accumulation and retention. | Various market-based retirement and welfare benefits and perquisites. |
Maintaining a balanced perspective is a core part of the Company’s 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 Company’s 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 with 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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Short-Term Incentives — Annual BonusManagement Incentive Compensation Plan.
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 x Personal
Individual Target Bonus Percentage for the year is a percentage of the participant’s base salary and is based on the participant’s position and market data. For the NEOs eligible to receive a bonus under the MICP for 2013, the Individual Target Bonus Percentages were as follows: Mr. Mitts — 75%; Mr. Bucklew — 60%; and Mr. Salliotte — 65%.
The Business Performance MultiplierFactor (discussed in more detail below) is calculated based on measurable corporate quantitative objectives, which are given a combined 75% weighting, and one strategic measure with a 25% weighting.
For 2010,2013, the measurable quantitative objectives within the Business Performance Factor were adjusted earnings per share (EPS)EPS and adjusted cash flow conversion. Adjusted EPS excludes from reported earnings per share the impact of acquisition-related income and charges, and restructuring charges and fair value adjustments to inventory related to acquisitions.(EPS Adjustments). Adjusted cash flow conversion (cashis cash flow as a percent of net income) excludes forward starting interest rate swap settlement charges incurred byincome excluding the Company in connection with its 2010 registered debt offering.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. The MICP provides thatFor 2013, no bonus iswas payable under the Plan unless thea minimum threshold for adjusted EPS iswas met. The threshold adjusted EPS threshold for 20102013 was established$2.55.
For 2013, the 25% strategic measure was organic sales growth. Organic sales growth is a critical business metric and helps identify the underlying health of the businesses and management’s ability to be $1.41 for NEOs. 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.
For 2010,2013, the relative weightings and actual performance against the quantitative objectives for all NEOs (other than the CEO) are shown in the table below.
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Business | ||||||||||||||||||||
MICP | Performance | |||||||||||||||||||
MICP Objective | Goal | Actual | Payout | Weighting | Factor | |||||||||||||||
Adjusted EPS | $ | 1.76 | $ | 1.99 | 200.0 | % | 50 | % | 100.00 | % | ||||||||||
Adjusted Cash Flow Conversion | 100 | % | 119 | % | 131.7 | % | 15 | % | 19.75 | % | ||||||||||
Subjective Measures | N/A | 105 | % | 105.0 | % | 35 | % | 36.75 | % | |||||||||||
Total | 100 | % | 156.50 | % |
MICP Objective | Goal | Actual | Payout | MICP Weighting | Business Performance Factor | |||||||||||||||
Adjusted EPS | $ | 2.85 | $ | 3.10 | 165.6 | % | 50 | % | 82.8 | % | ||||||||||
Adjusted Cash Flow Conversion | 115 | % | 147 | % | 171.1 | % | 25 | % | 42.8 | % | ||||||||||
Organic Sales Growth | 2.5 | % | 1.5 | % | 66.7 | % | 25 | % | 16.7 | % | ||||||||||
|
|
|
| |||||||||||||||||
Total | 100 | % | 142 | % |
As indicated, above adjusted EPS and adjusted cash flow conversion far exceeded goals. Organic sales growth results did not meet the targeted level and the MICP calculation reflects those results. Payments under the MICP are included in the 2013 Summary Compensation Table under the “Non-Equity Incentive Plan Compensation” column.
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CEO
In 2010,2013, the Compensation Committee granted Mr. Kingsley aMessrs. Silvernail and Notaro cash performance awardawards with a maximum aggregate payment amount of 1%equal to 2% of the Company’s 20102013 operating income. Mr. Kingsleyincome contingent on the Company achieving the same minimum $2.55 adjusted EPS as for other named executive officers under the MICP. Adjusted EPS excludes from earnings per share the impact of acquisition-related income and charges, and restructuring charges. Under the terms of the awards, no bonus would receive no bonusbe paid if the Company did not achieve operating incomeadjusted EPS of $184.0 million.$2.55. The Compensation Committee set Mr. Kingsley’sMessrs. Silvernail’s and Notaro’s actual performance awardawards for 20102013 at $1,663,000.$1,235,400 and $441,000, respectively. In setting the actual award,awards, the Compensation Committee considered the actual performance of the Company based onusing the same factors described above undermetrics in the Business Performance Factor for corporate participants,described above, its subjective assessment of Mr. Kingsley’sMessrs. Silvernail’s and Notaro’s individual performance and the amountamounts that Mr. KingsleyMessrs. Silvernail and Notaro would have earned as an annual cash bonus if hethey participated in the MICP on substantially the same terms as the other NEOs.
2013 Long-Term IncentivesIncentive Awards.
The performance stock units (PSUs) have a three-year performance period and utilize a relative TSR measure. The Company’s relative TSR will be measured against the TSR of companies in the S&P Midcap 400 Industrials Index at the end of the expected valuethree-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 Company’s common stock. Performance below or above the 50th percentile will result in shares delivered below or above target, respectively. 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 growth rate (CAGR).
In selecting the S&P Midcap 400 Industrials Index companies as a comparator group for relative TSR, the Compensation Committee’s objective was to have a group of 50-100 manufacturing companies which was broader than the peer group of companies used for benchmarking compensation of the named executive officers, but that was not too broad or not representative of the Company’s business. Towers Watson helped the Compensation Committee select from the S&P Midcap 400 Industrials Index a group of 60-70 companies that are similar to the Company. The Company is included in the form of restricted stock awards. index.
The Compensation Committee believes that performance stock units, stock options and restricted stock all incent management actions that drive the creation of stockholder value and promote executive stock ownership. However, stock options and restricted stock haveeach long-term incentive component has different characteristics. The value of the performance stock units after the three-year performance period is directly linked to the
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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 Company’s stock price appreciates above the stock price on the date of grant. Restricted stock awards provide value regardless of whether the Company’s stock price appreciates, and help retain executives over the course of business and market cycles that may negatively impact the
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Other Compensation Components
Employee Benefits. The NEOs participate in group health, welfare and qualified retirement programs available to the Compensation Committee, which is based on his subjective assessment of the individual’s performance and, to a lesser extent, his subjective assessmentall of the Company’s performance. Mr. Kingsley’s awardemployees. 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 2013 Summary Compensation Table, the Pension Benefits at 2013 Fiscal Year End table, the Nonqualified Deferred Compensation at 2013 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 NEO’s severance benefits reflects the Company’s perception of the market for their positions at the time the agreements were put in place.
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 determined by the Compensation Committee’s subjective determination of his performance and,entitled to a lesser extent, its subjective viewlimited use of the Company’s performance. The actual value delivered may vary above or belowaircraft for non-business purposes. For further details on these perquisites, see the target value based on“Narrative to the performance of the Company’s stock over time, and the timing of the executive’s decision to realize such value.
Other Executive Compensation Matters
Stock OwnershipOwnership.
Executive | Ownership as a Multiple of Base Salary | |||
CEO | 5x | |||
CFO | 3x | |||
Other NEOs | ||||
The CEO, CFO and the other NEOs must comply with these ownership requirements within five years of date of hire. Shares that are countedhire or promotion. Counted for purposes of satisfying ownership requirements are shares directly owned and unvested restricted shares, and shares underlying restricted stock units and DCUs.shares. As of December 31, 2010,2013, the CEO, CFO and the other NEOs had met or were proceeding towards meeting the ownership guidelines within the specifiedapplicable five-year period.
HedgingHedging.
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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 Company’s stock, such as zero-cost collars and forward sales contracts.
ClawbacksClawbacks.
The Company’s 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 following:
26correct financial results; and
TaxGross-Up Provisions Provisions.
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grossing-up of NEO year-end allowances for premiums paid for supplemental disability benefits.
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Change in | ||||||||||||||||||||||||||||||||
Pension Value | ||||||||||||||||||||||||||||||||
and Non- | ||||||||||||||||||||||||||||||||
Non-Equity | Qualified | |||||||||||||||||||||||||||||||
Incentive | Deferred | All Other | ||||||||||||||||||||||||||||||
Name and Principal | Stock | Option | Compensation | Compensation | Compensation | |||||||||||||||||||||||||||
Position | Year | Salary | Awards(1) | Awards(2) | Plan(3) | Earnings(4) | (5) | Total | ||||||||||||||||||||||||
Lawrence D. Kingsley, | 2010 | $ | 845,673 | $ | 1,250,150 | $ | 1,262,642 | $ | 1,663,000 | $ | 19,515 | $ | 204,601 | $ | 5,245,581 | |||||||||||||||||
Chairman, President and | 2009 | 825,000 | 806,193 | 762,848 | 1,000,000 | 25,114 | 217,788 | 3,636,943 | ||||||||||||||||||||||||
Chief Executive Officer | 2008 | 825,000 | 9,208,438 | 1,085,349 | 876,600 | 224,764 | 12,220,151 | |||||||||||||||||||||||||
Dominic A. Romeo, | 2010 | 445,673 | 350,105 | 353,613 | 567,000 | 19,991 | 318,741 | 2,055,123 | ||||||||||||||||||||||||
Vice President and Chief | 2009 | 425,000 | 249,350 | 214,430 | 321,600 | 27,388 | 77,781 | 1,315,549 | ||||||||||||||||||||||||
Financial Officer | 2008 | 425,000 | 2,784,275 | 310,800 | 281,800 | 73,647 | 3,875,522 | |||||||||||||||||||||||||
Andrew K. Silvernail, | 2010 | 383,558 | 180,136 | 424,335 | 548,000 | 0 | 68,099 | 1,604,128 | ||||||||||||||||||||||||
Vice President, Group Executive, Health & Science Technologies and Dispensing | ||||||||||||||||||||||||||||||||
Kevin G. Hostetler, | 2010 | 383,558 | 180,136 | 424,335 | 417,000 | 0 | 70,720 | 1,475,748 | ||||||||||||||||||||||||
Vice President, Group Executive, Fluid Metering Technologies | ||||||||||||||||||||||||||||||||
Frank J. Notaro, | 2010 | 335,690 | 200,151 | 202,092 | 450,000 | 39,934 | 67,217 | 1,295,084 | ||||||||||||||||||||||||
Vice President, General | 2009 | 315,100 | 202,597 | 206,167 | 209,100 | 50,398 | 64,345 | 1,047,707 | ||||||||||||||||||||||||
Counsel and Secretary | 2008 | 315,100 | 155,689 | 139,949 | 183,200 | 60,911 | 854,849 |
Name and Principal | Year | Salary | 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, | 2013 | $ | 856,808 | $ | 2,036,105 | $ | 931,221 | $ | 1,235,400 | $ | 298,296 | $ | 5,357,830 | |||||||||||||||||||
Chairman, President and Chief Executive Officer | | 2012 2011 | | | 790,769 538,615 | | | 800,196 1,685,658 | | | 818,174 192,466 | | | 732,500 767,000 | | | 261,083 190,945 | | | 3,402,723 3,374,684 | | |||||||||||
Heath A. Mitts, | 2013 | 455,289 | $ | 501,737 | $ | 229,515 | $ | 489,900 | $ | 98,514 | $ | 1,774,954 | ||||||||||||||||||||
Vice President and Chief Financial Officer | | 2012 2011 | | | 431,308 392,000 | | | 250,302 700,446 | | | 255,680 768,226 | | | 298,700 461,895 | | | 109,508 82,921 | | | 1,345,497 2,405,489 | | |||||||||||
Frank J. Notaro, | 2013 | 411,362 | $ | 286,078 | $ | 130,840 | $ | 441,000 | -69,565 | $ | 92,519 | $ | 1,292,233 | |||||||||||||||||||
Vice President, General Counsel and Secretary | | 2012 2011 | | | 391,692 352,346 | | | 250,302 381,913 | | | 255,680 416,781 | | | 269,700 395,115 | | | 77,377 68,118 | | | 103,196 102,731 | | | 1,347,947 1,717,003 | | ||||||||
Jeffrey D. Bucklew, | 2013 | 331,231 | $ | 218,410 | $ | 99,831 | $ | 285,500 | $ | 70,454 | $ | 1,005,425 | ||||||||||||||||||||
Chief Human Resources Officer | ||||||||||||||||||||||||||||||||
Daniel J. Salliotte, | 2013 | 284,362 | $ | 200,255 | $ | 91,485 | $ | 265,000 | -6,985 | $ | 63,207 | 897,324 | ||||||||||||||||||||
Vice President Mergers, Acquisitions and Treasury | 2012 | 270,600 | 150,010 | 153,408 | 147,300 | 8,495 | 69,754 | $ | 799,567 |
(1) | Reflects the aggregate grant date fair value of restricted stock awards and the target number of performance stock units in accordance with FASB ASC Topic 718 using the assumptions set forth in the footnotes to financial statements in the Company’s annual report on theForm 10-K for the year ended December 31, | |
(2) | Reflects the aggregate grant date fair value for the year indicated in accordance with FASB ASC Topic 718 using the assumptions set forth in the footnotes to financial statements in the Company’s Annual Report on theForm 10-K for the year ended December 31, | |
(3) | Reflects | |
(4) | Represents the aggregate |
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(5) |
Contribution to | ||||||||||||||||||||||||||||
401(k) Plan, | ||||||||||||||||||||||||||||
Defined | Supplemental | |||||||||||||||||||||||||||
Contribution | Disability | |||||||||||||||||||||||||||
Plan and | Benefit | |||||||||||||||||||||||||||
Accrued SERP | Premiums & | Other | ||||||||||||||||||||||||||
Name | Year | Benefits | Automotive(a) | Tax Gross-Up | Aircraft(b) | Payments(c) | Total | |||||||||||||||||||||
Lawrence D. Kingsley | 2010 | $ | 147,654 | $ | 25,048 | $ | 10,233 | $ | 21,667 | $ | 0 | $ | 204,601 | |||||||||||||||
Dominic A. Romeo | 2010 | 78,982 | 16,836 | 2,923 | 0 | 220,000 | 318,741 | |||||||||||||||||||||
Andrew K. Silvernail | 2010 | 49,109 | 18,990 | 0 | 0 | 0 | 68,099 | |||||||||||||||||||||
Kevin G. Hostetler | 2010 | 50,085 | 20,635 | 0 | 0 | 0 | 70,720 | |||||||||||||||||||||
Frank J. Notaro | 2010 | 46,307 | 19,039 | 1,871 | 0 | 0 | 67,217 |
Name | Year | Contribution to 401(k) Plan, Defined Contribution Plan and Accrued SERP Benefits | Automotive(a) | Aircraft(b) | Other Payments | Total | ||||||||||||||||||
Andrew K. Silvernail | 2013 | $ | 159,946 | $ | 26,786 | $ | 111,564 | $ | 0 | $ | 298,296 | |||||||||||||
Heath A. Mitts | 2013 | 77,322 | 21,192 | 0 | 0 | 98,514 | ||||||||||||||||||
Frank J. Notaro | 2013 | 73,377 | 19,142 | 0 | 0 | 92,519 | ||||||||||||||||||
Jeffrey D. Bucklew | 2013 | 53,648 | 16,806 | 0 | 0 | 70,454 | ||||||||||||||||||
Daniel J. Salliotte | 2013 | 46,514 | 16,694 | 0 | 0 | 63,207 |
(a) | ||
(b) | The Company’s 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. | |
Narrative to Summary Compensation Table
Perquisites and Supplemental Disability
In addition to benefits generally available to all otherU.S.-based non-union employees, the CEO and other NEOs receive a caran auto allowance and except as set forth below, 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 allU.S.-based non-union employees. The group long-term disability plan provides an annual benefit of 60% of the first $200,000$300,000 of base salary, or an annual maximum benefit of $120,000$180,000 per year. For the NEOs, other than the CEO, the supplemental program provides an annual benefit of 60% of their base salary above $200,000,$300,000, with a maximum supplemental benefit of $36,000$60,000 per year. For the CEO, the supplemental program provides an annual benefit of 60% of base salary above $200,000, with a maximum supplemental benefit of $240,000 per year. The NEOs pay the premiums on all such insurance, but the Company provides a year-end allowance to the executives equal to the supplemental program premium costs together with agross-up on the taxes associated with such year-end allowance (as noted above, the grossing-up of allowances was discontinued in 2011). Messrs. Silvernail and Hostetler did not participate in the supplemental long-term disability program in 2010. The CEO is also offered the personal use of Company aircraft (limited to 25 hours per year).
Retirement Benefits
The Company maintains three tax-qualified retirement plans for all U.S-based non-union employees in which the CE0CEO and other NEOs participate: the IDEX Corporation Defined Contribution Plan (Defined Contribution Plan), the IDEX Corporation Savings Plan, which is a 401(k) plan with a prescribed matching contribution (401(k) Plan), and the IDEX Corporation Retirement Plan, which is a defined benefit plan
29
Defined Contribution Plan
The Defined Contribution Plan is an ongoing tax-qualified “defined contribution” plan that provides an annual contribution based on a participant’s compensation for that year and a combination of the participant’s age and years of service as shown below:
Age + Years of Service | Company Contribution | |||
Less than 40 | 3.5% of Eligible Annual Compensation | |||
40 but less than 55 | 4.0% of Eligible Annual Compensation | |||
55 but less than 70 | 4.5% of Eligible Annual Compensation | |||
70 or more | 5.0% of Eligible Annual Compensation |
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Under the Defined Contribution Plan, participants are entitled to receive the lump sumlump-sum value of their vested account at termination of employment subject to distribution rules under the law.
401(k) Plan
The 401(k) Plan is an on-going tax-qualified “401(k)” plan that provides a matching contribution based on the employee’s contribution up to 8% of eligible compensation. The maximum matching contribution by the Company is either 2.8%4% of eligible compensation, if the employee is currently accruing benefits under the compensation.
Pension Plan or 4.0% of eligible compensation, if the employee participates in the Defined Contribution Plan.
During 2005, the Company redesigned its retirement plans to eliminate the Pension Plan for employees hired after 2004 and provide them only the Defined Contribution Plan.2004. Employees who participated in the Pension Plan as of December 31, 2005 and 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) 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) Plan (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.
Messrs. Kingsley, RomeoNotaro and NotaroSalliotte chose to begin participation in the Defined Contribution Plan and not to accrue benefit credits after December 31, 2005 under the Pension Plan. Each of them still has a frozen benefit under the Pension Plan as of December 31, 2005. Therefore, theThe monthly accrued benefit for Messrs. Kingsley, RomeoNotaro and NotaroSalliotte 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. Messrs. Silvernail, Mitts and Hostetler were hired after December 31, 2005, and therefore neither is eligible forBucklew never participated in the Pension Plan.
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The following table provides information on plan-based awards for all NEOs for 2010.
All Other | All Other | |||||||||||||||||||||||||||||||
Stock | Option | Exercise | ||||||||||||||||||||||||||||||
Awards: | Awards: | or Base | Grant Date | |||||||||||||||||||||||||||||
Estimated Future Payouts | Number of | Number of | Price of | Fair Value of | ||||||||||||||||||||||||||||
Under Non-Equity Incentive Plan | Shares of | Securities | Option | Stock and | ||||||||||||||||||||||||||||
Grant | Awards(1) | Stock or | Underlying | Awards | Option | |||||||||||||||||||||||||||
Name | Date | Threshold | Target | Maximum | Units(2) | Options(2) | ($ per Share)(3) | Awards | ||||||||||||||||||||||||
Lawrence D. Kingsley | 03/02/2010 | $ | 0 | $ | 850,000 | $ | 2,600,000 | 39,350 | 131,580 | $ | 31.77 | $ | 2,512,791 | |||||||||||||||||||
Dominic A. Romeo | 03/02/2010 | 118,100 | 315,000 | 819,000 | 11,020 | 36,850 | 31.77 | 703,718 | ||||||||||||||||||||||||
Andrew K. Silvernail | 03/02/2010 | 105,000 | 280,000 | 728,000 | 5,670 | 44,220 | 31.77 | 604,471 | ||||||||||||||||||||||||
Kevin G. Hostetler | 03/02/2010 | 105,000 | 280,000 | 728,000 | 5,670 | 44,220 | 31.77 | 604,471 | ||||||||||||||||||||||||
Frank J. Notaro | 03/02/2010 | 82,900 | 221,000 | 574,600 | 6,300 | 21,060 | 31.77 | 402,243 |
Grant Date | 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 | ||||||||||||||||||||||||||||||||||||||
Name | Threshold | Target | Maximum | Threshold | Target | Maximum | ||||||||||||||||||||||||||||||||||||||
Andrew K. Silvernail | 02/15/2013 | $ | 0 | $ | 870,000 | $ | N/A | 6,168 | 18,505 | 37,010 | 18,505 | 72,525 | $ | 50.45 | $ | 2,967,326 | ||||||||||||||||||||||||||||
Heath A. Mitts | 02/15/2013 | 0 | 345,000 | 690,000 | 1,520 | 4,560 | 9,120 | 4,560 | 17,875 | $ | 50.45 | $ | 731,252 | |||||||||||||||||||||||||||||||
Frank J. Notaro | 02/15/2013 | 0 | 310,500 | N/A | 867 | 2,600 | 5,200 | 2,600 | 10,190 | $ | 50.45 | $ | 416,918 | |||||||||||||||||||||||||||||||
Jeffrey D. Bucklew | 02/15/2013 | 0 | 201,000 | 402,000 | 662 | 1,985 | 3,970 | 1,985 | 7,775 | $ | 50.45 | $ | 318,241 | |||||||||||||||||||||||||||||||
Daniel J. Salliotte | 02/15/2013 | 0 | 186,550 | 373,100 | 607 | 1,820 | 3,640 | 1,820 | 7,125 | $ | 50.45 | $ | 291,740 |
(1) | For | |
(2) | ||
33
(3) | Reflects the number of restricted shares awarded in 2013 under the Incentive Award Plan. |
(4) | Reflects closing price of the Company’s Common Stock on the grant date, which is the fair market value of the stock under the terms of the Incentive Award Plan. |
Narrative to 20102013 Grants of Plan-Based Awards Table
Stock options awarded to the NEOs in 20102013 had the following characteristics:
All are nonqualified stock options;
All have an exercise price equal to the closing price of the Company’s stock on the grant date;
All vest annually in equal amounts over a four-year period;
All vest upon retirement if retirement eligible (NEO is at least age 50, with a minimum of five years of service, and the NEO’s age plus years of service equals 70); and
All expire 10 years after the date of grant.
Restricted stock awards to the NEOs in 20102013 had the following characteristics:
All annual awards cliff-vest three years after the grant date;
All shares vest upon retirement if retirement eligible (NEO is at least age 50, with a minimum of five years of service, and the NEO’s age plus years of service equals 70); and
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All shares receive dividend equivalent payments in the same amount as dividends paid on the Company’s Common Stock at the time such dividends are paid.
Performance stock units awarded to the NEOs in 2013 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 retirement eligible (NEO is at least age 50, with a minimum of five years of service, and the NEO’s 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.
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Outstanding Equity Awards at 20102013 Fiscal Year End
The following table provides information on all performance stock unit, restricted stock and stock option awards held by the NEOs and the value of those awards as of December 31, 2010.2013. All outstanding equity awards are in or exercisable for shares of the Company’s Common Stock.
Option Awards | Stock Awards | |||||||||||||||||||||||
Number of | Number of | |||||||||||||||||||||||
Securities | Securities | |||||||||||||||||||||||
Underlying | Underlying | Number of | Market Value of | |||||||||||||||||||||
Unexercised | Unexercised | Option | Option | Shares or Units of | Shares or Units of | |||||||||||||||||||
Options | Options | Exercise | Expiration | Stock that Have | Stock that Have | |||||||||||||||||||
Name | Exercisable(1) | Unexercisable(1) | Price | Date | Not Vested(2) | Not Vested(3) | ||||||||||||||||||
Lawrence D. Kingsley | 217,500 | 0 | $ | 20.58 | 08/23/2014 | 388,395 | $ | 15,194,012 | ||||||||||||||||
82,590 | 0 | 26.90 | 03/22/2015 | |||||||||||||||||||||
105,060 | 0 | 34.18 | 04/04/2016 | |||||||||||||||||||||
84,712 | 28,238 | 34.03 | 04/03/2017 | |||||||||||||||||||||
61,112 | 61,112 | 32.95 | 04/08/2018 | |||||||||||||||||||||
36,456 | 109,404 | 19.98 | 02/24/2019 | |||||||||||||||||||||
0 | 131,580 | 31.77 | 03/02/2020 | |||||||||||||||||||||
Dominic A. Romeo(4) | 18,750 | 0 | 26.90 | 05/29/2011 | ||||||||||||||||||||
15,000 | 0 | 28.31 | 05/29/2011 | |||||||||||||||||||||
22,500 | 0 | 34.18 | 05/29/2011 | |||||||||||||||||||||
25,020 | 0 | 34.03 | 05/29/2011 | |||||||||||||||||||||
35,000 | 0 | 32.95 | 05/29/2011 | |||||||||||||||||||||
30,750 | 0 | 19.98 | 05/29/2011 | |||||||||||||||||||||
Andrew K. Silvernail | 9,190 | 27,570 | 25.14 | 01/05/2019 | 20,924 | 818,547 | ||||||||||||||||||
4,360 | 13,080 | 19.98 | 02/24/2019 | |||||||||||||||||||||
0 | 18,947 | 31.77 | 03/02/2020 | |||||||||||||||||||||
0 | 25,273 | 31.77 | 03/02/2020 | |||||||||||||||||||||
Kevin G. Hostetler | 15,000 | 0 | 28.31 | 09/27/2015 | 38,448 | 1,504,086 | ||||||||||||||||||
9,000 | 0 | 35.18 | 04/04/2016 | |||||||||||||||||||||
7,875 | 2,625 | 34.03 | 04/03/2017 | |||||||||||||||||||||
11,250 | 3,750 | 38.40 | 09/25/2017 | |||||||||||||||||||||
6,260 | 6,260 | 32.95 | 04/08/2018 | |||||||||||||||||||||
14,360 | 43,080 | 19.98 | 02/24/2019 | |||||||||||||||||||||
0 | 18,947 | 31.77 | 03/02/2020 | |||||||||||||||||||||
0 | 25,273 | 31.77 | 03/02/2020 | |||||||||||||||||||||
Frank J. Notaro | 42,750 | 0 | 18.22 | 03/23/2014 | 19,838 | 776,063 | ||||||||||||||||||
3,060 | 0 | 26.90 | 03/22/2015 | |||||||||||||||||||||
12,375 | 0 | 34.18 | 04/04/2016 | |||||||||||||||||||||
9,846 | 3,282 | 34.03 | 04/03/2017 | |||||||||||||||||||||
9,855 | 29,565 | 19.98 | 02/24/2019 | |||||||||||||||||||||
0 | 21,060 | 31.77 | 03/02/2020 |
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 | 33,165 | 11,055 | 31.77 | 03/02/2020 | 85,156 | $ | 6,288,771 | 36,640 | $ | 2,705,857 | ||||||||||||||||||||||
7,880 | 7,880 | 40.89 | 02/22/2021 | |||||||||||||||||||||||||||||
17,880 | 53,640 | 42.86 | 02/21/2022 | |||||||||||||||||||||||||||||
0 | 72,525 | 50.45 | 02/15/2023 | |||||||||||||||||||||||||||||
Heath A. Mitts | 9,750 | 0 | 34.03 | 04/03/2017 | 27,530 | 2,033,091 | 9,029 | $ | 666,777 | |||||||||||||||||||||||
9,000 | 0 | 32.95 | 04/08/2018 | |||||||||||||||||||||||||||||
16,388 | 5,462 | 31.77 | 03/02/2020 | |||||||||||||||||||||||||||||
8,495 | 8,495 | 40.89 | 02/22/2021 | |||||||||||||||||||||||||||||
0 | 42,460 | 40.89 | 02/22/2021 | |||||||||||||||||||||||||||||
5,587 | 16,763 | 42.86 | 02/21/2022 | |||||||||||||||||||||||||||||
0 | 17,875 | 50.45 | 02/15/2023 | |||||||||||||||||||||||||||||
Frank J. Notaro | 15,795 | 5,265 | 31.77 | 03/02/2020 | 17,780 | 1,313,053 | 5,148 | $ | 380,180 | |||||||||||||||||||||||
5,585 | 5,585 | 40.89 | 02/22/2021 | |||||||||||||||||||||||||||||
0 | 21,230 | 40.89 | 02/22/2021 | |||||||||||||||||||||||||||||
5,587 | 16,763 | 42.86 | 02/21/2022 | |||||||||||||||||||||||||||||
0 | 10,190 | 50.45 | 02/15/2023 | |||||||||||||||||||||||||||||
Jeffrey D. Bucklew | 0 | 8,250 | 40.79 | 03/05/2022 | 5,205 | 384,389 | 3,930 | $ | 290,253 | |||||||||||||||||||||||
0 | 7,775 | 50.45 | 02/15/2023 | |||||||||||||||||||||||||||||
Daniel J. Salliotte | 10,665 | 3,555 | 31.77 | 03/02/2020 | 7,700 | 568,645 | 3,604 | $ | 266,126 | |||||||||||||||||||||||
4,120 | 4,120 | 40.89 | 02/22/2021 | |||||||||||||||||||||||||||||
3,352 | 10,058 | 42.86 | 02/21/2022 | |||||||||||||||||||||||||||||
0 | 7,125 | 50.45 | 02/15/2023 |
(1) | All options expire on the 10th anniversary of the grant date. |
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(2) | The following table sets forth grant and vesting information for the outstanding restricted stock awards for all NEOs. All shares vest 100% upon a change in |
Grant Date | Number of 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 | 02/22/2011 | 4,540 | 40.89 | 4,540 | $ | 335,279 | 100% vest on 02/22/2014 | |||||||||||||||||
08/10/2011 | 43,441 | 34.53 | 43,441 | 3,208,118 | 100% vest on 08/10/2014 | |||||||||||||||||||
02/21/2012 | 18,670 | 42.86 | 18,670 | 1,378,780 | 100% vest on 02/21/2015 | |||||||||||||||||||
02/15/2013 | 18,505 | 50.45 | 18,505 | 1,366,594 | 100% vest on 02/15/2016 | |||||||||||||||||||
Heath A. Mitts | 02/22/2011 | 17,130 | 40.89 | 17,130 | 1,265,051 | 100% vest on 02/22/2014 | ||||||||||||||||||
02/21/2012 | 5,840 | 42.86 | 5,840 | 431,284 | 100% vest on 02/21/2015 | |||||||||||||||||||
02/15/2013 | 4,560 | 50.45 | 4,560 | 336,756 | 100% vest on 02/15/2016 | |||||||||||||||||||
Frank J. Notaro | 02/22/2011 | 9,340 | 40.89 | 9,340 | 689,759 | 100% vest on 02/22/2014 | ||||||||||||||||||
02/21/2012 | 5,840 | 42.86 | 5,840 | 431,284 | 100% vest on 02/21/2015 | |||||||||||||||||||
02/15/2013 | 2,600 | 50.45 | 2,600 | 192,010 | 100% vest on 02/15/2016 | |||||||||||||||||||
Jeffrey D. Bucklew | 03/05/2012 | 3,220 | 40.79 | 3,220 | 237,797 | 100% vest on 03/05/2015 | ||||||||||||||||||
02/15/2013 | 1,985 | 50.45 | 1,985 | 146,592 | 100% vest on 02/15/2016 | |||||||||||||||||||
Daniel J. Salliotte | 02/22/2011 | 2,380 | 40.89 | 2,380 | 175,763 | 100% vest on 02/22/2014 | ||||||||||||||||||
02/21/2012 | 3,500 | 42.86 | 3,500 | 258,475 | 100% vest on 02/21/2015 | |||||||||||||||||||
02/15/2013 | 1,820 | 50.45 | 1,820 | 134,407 | 100% vest on 02/15/2016 |
Number of | ||||||||||||||||||||
Shares or | Market Value | |||||||||||||||||||
Market | Units of | of Shares or | ||||||||||||||||||
Value Per | Stock that | Units of Stock | ||||||||||||||||||
Share at | Have Not | that Have Not | ||||||||||||||||||
Name | Grant Date | # Shares | Grant | Vested | Vested | Vesting | ||||||||||||||
Lawrence D. Kingsley | 04/03/2007 | 29,228 | $ | 34.03 | 29,228 | $ | 1,143,399 | 100% vest on 04/03/11 | ||||||||||||
04/08/2008 | 36,667 | 32.95 | 36,667 | 1,434,413 | 100% vest on 04/08/11 | |||||||||||||||
04/08/2008 | 242,800 | 32.95 | 242,800 | 9,498,336 | 121,400 vest on 04/08/11 and 04/08/13, but vesting may be accelerated if the Company’s share price for any five consecutive trading days equals or exceeds $65.90 (twice the closing price of the shares on date of grant) | |||||||||||||||
02/24/2009 | 40,350 | 19.98 | 40,350 | 1,578,492 | 100% vest on 02/24/12 | |||||||||||||||
03/02/2010 | 39,350 | 31.77 | 39,350 | 1,539,372 | 100% vest on 03/02/13 | |||||||||||||||
Andrew K. Silvernail | 01/05/2009 | 9,944 | 25.14 | 9,944 | 389,009 | 100% vest on 01/05/12 | ||||||||||||||
02/24/2009 | 5,310 | 19.98 | 5,310 | 207,727 | 100% vest on 02/24/12 | |||||||||||||||
03/02/2010 | 5,670 | 31.77 | 5,670 | 221,810 | 100% vest on 03/02/13 | |||||||||||||||
Kevin G. Hostetler | 04/03/2007 | 2,718 | 34.03 | 2,718 | 106,328 | 100% vest on 04/03/11 | ||||||||||||||
09/25/2007 | 4,000 | 38.40 | 4,000 | 156,480 | 100% vest on 09/25/11 | |||||||||||||||
04/08/2008 | 3,750 | 32.95 | 3,750 | 146,700 | 100% vest on 04/08/11 | |||||||||||||||
04/08/2008 | 17,000 | 32.95 | 17,000 | 665,040 | 100% vest on 04/08/11 | |||||||||||||||
02/24/2009 | 5,310 | 19.98 | 5,310 | 207,727 | 100% vest on 02/24/12 | |||||||||||||||
03/02/2010 | 5,670 | 31.77 | 5,670 | 221,810 | 100% vest on 03/02/13 | |||||||||||||||
Frank J. Notaro | 04/03/2007 | 3,398 | 34.03 | 3,398 | 132,930 | 100% vest on 04/03/11 | ||||||||||||||
02/24/2009 | 10,140 | 19.98 | 10,140 | 396,677 | 100% vest on 02/24/12 | |||||||||||||||
03/02/2010 | 6,300 | 31.77 | 6,300 | 246,456 | 100% vest on 03/02/13 |
(3) | Determined based upon the closing price of the Company’s | |
(4) |
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20102013 Option Exercises and Stock Vested
The following table provides information on stock option exercises and stock vesting for all NEOs in 2010.
Option Awards | Stock Awards | |||||||||||||||
Number of Shares | Value | Number of Shares | Value | |||||||||||||
Acquired | Realized Upon | Acquired on | Realized Upon | |||||||||||||
Name | on Exercise | Exercise(1) | Vesting | Vesting(2) | ||||||||||||
Lawrence D. Kingsley | 27,188 | $ | 901,554 | |||||||||||||
Dominic A. Romeo | 160,250 | $ | 2,742,568 | 96,940 | 3,751,543 | |||||||||||
Kevin G. Hostetler | 2,340 | 77,594 | ||||||||||||||
Frank J. Notaro | 3,210 | 106,444 |
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 | 54,200 | $ | 1,725,490 | 5,670 | $ | 287,923 | ||||||||||
Heath A. Mitts | 83,100 | 2,788,388 | 2,920 | 148,278 | ||||||||||||
Frank J. Notaro | 67,983 | 1,986,120 | 6,300 | 319,914 | ||||||||||||
Jeffrey D. Bucklew | 2,750 | 40,934 | 0 | 0 | ||||||||||||
Daniel J. Salliotte | 75,880 | 2,504,868 | 4,250 | 215,815 |
(1) | Calculated as the difference between the closing price of the Company’s Common Stock on the date of exercise and the exercise price. | |
(2) | Calculated based upon the closing price of the Company’s Common Stock on the vesting date. For Mr. |
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The following table provides information related to the potential pension benefits payable to each NEO determined as described in the footnotes below.
Number of | Present Value | |||||||||
Years Credited | of Accumulated | |||||||||
Name | Plan Name | Service(1) | Benefits(2) | |||||||
Lawrence D. Kingsley | Pension Plan | 1.33 | $ | 28,390 | ||||||
SERP | 1.33 | 81,950 | ||||||||
Dominic A. Romeo | Pension Plan | 1.92 | 47,270 | |||||||
SERP | 1.92 | 75,603 | ||||||||
Andrew K. Silvernail | Pension Plan | N/A | N/A | |||||||
SERP | ||||||||||
Kevin G. Hostetler | Pension Plan | N/A | N/A | |||||||
SERP | ||||||||||
Frank J. Notaro | Pension Plan | 7.75 | 148,867 | |||||||
SERP | 7.75 | 71,114 |
Name | Plan Name | Number of Years Credited Service(1) | Present Value of Accumulated Benefits(2) | |||||||||
Andrew K. Silvernail | Pension Plan | N/A | N/A | |||||||||
SERP | ||||||||||||
Heath A. Mitts | Pension Plan | N/A | N/A | |||||||||
SERP | ||||||||||||
Frank J. Notaro | Pension Plan | 7.75 | $ | 194,586 | ||||||||
SERP | 7.75 | 101,323 | ||||||||||
Jeffrey D. Bucklew | Pension Plan | N/A | N/A | |||||||||
SERP | ||||||||||||
Daniel J. Salliotte | Pension Plan | 1.17 | 27,738 | |||||||||
SERP |
(1) | Credited service is determined under the Pension Plan as of December 31, | |
(2) | The present value of accumulated benefits as of December 31, |
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Narrative to Pension Benefits at 20102013 Fiscal Year End Table
Pension Plan
The Pension Plan is an on-going tax-qualified “career average” retirement plan that provides a level of benefit based on a participant’s 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 year’s 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. For all participants in the Pension Plan, theThe 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.
SERPSupplemental Executive Retirement and Deferred Compensation Plan
The SERPSupplemental Executive Retirement and Deferred Compensation Plan (SERP) is an unfunded, nonqualified supplemental employee retirement plan designed to provide supplemental executive retirement benefits to employees who participate or have participated in the Pension Plan, and deferred compensation forbenefits to certain officers and other key employees designated by the Compensation Committee (see “Narrative to compensate them forthe Nonqualified Deferred Compensation at 2013 Fiscal Year End Table” below). The supplemental executive retirement portion of the SERP provides that if the employee participates or had participated in the Pension Plan, then the employee will receive an excess benefit (SERP Benefit) under a formula equivalent to the tax-qualified Pension Plan formula. This formula will only consider eligible compensation above the Internal Revenue Code limits and will restore any benefits lost under the Company’s tax-qualified retirement programs due to limits on compensationthe maximum amount of benefits that may be accrued under a qualified retirement plan. A SERP Benefit will only be accrued for the appropriate period of service during which the employee was an active participant in the Pension Plan. SERP Benefits are paid as an actuarially equivalent single lump-sum amount and benefits under these tax-qualified plans. Benefits are payable upon separation of service within the meaning of Internal
34Nonqualified Deferred Compensation at 2013 Fiscal Year End
The following table provides information related to the benefits payable to each NEO under the defined contribution portion of the SERP, which is the Company’s 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 Withdrawls / Distributions | Aggregate Balance at Last Fiscal Year End(3) | |||||||||||
Andrew K. Silvernail | $ | 143,308 | $ | 77,867 | $ | 490,387 | ||||||||||
Heath A. Mitts | 58,372 | 6,407 | 258,475 | |||||||||||||
Frank J. Notaro | 53,152 | 8,453 | 328,994 | |||||||||||||
Jeffrey D. Bucklew | 35,305 | 789 | 47,915 | |||||||||||||
Daniel J. Salliotte | 26,289 | 18,975 | 171,595 |
(1) | None of the NEOs contributed to the SERP in 2013. |
(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: Silvernail — $250,632; Mitts — $119,798; Notaro — $236,718 and Salliotte — $34,350. |
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Narrative to the Nonqualified Deferred Compensation at 2013 Fiscal Year End Table
Supplemental Executive Retirement and Deferred Compensation Plan
The Company contributes an amount equal to 4% of the eligible employee’s 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 employee’s compensation above the IRS limit on compensation in the Defined Contribution Plan, and is determined based on the following table:
Sum of Participant’s 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 employee’s compensation.
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 Company’s 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. The SERP has three parts, one of which provides that ifAccount balances will be paid either in a single lump sum or in up to ten substantially equal annual installments, as elected by the employee participates or had participated inat the Pension Plan, thentime they first become eligible for the employee will receiveDeferred Compensation Plan. Prior to separation from service, amounts may be paid only on the occurrence of an excess benefit (DB Excess Benefit) under a formula equivalent tounforeseeable emergency, within thetax-qualified Pension Plan formula. Such formula will only consider eligible compensation above the meaning of Internal Revenue Code limits and will restore any limits onSection 409A. On the maximum amounthappening of benefits which may be accrued under a qualified retirement plan. A DB Excess Benefit will only be accrued forchange of control event within the appropriate periodmeaning of service that the employee was an active participant in the Pension Plan. For the period of service that the employee accrues a DB Excess Benefit, the employee is not eligible to accrue benefits under the other two parts of the SERP, a Deferred Contribution Excess Benefit or a 401(k) Restoration Benefit, which are more fully described in the narrative to the Nonqualified Deferred Compensation at 2009 Fiscal Year End table below.
Registrant | ||||||||||||||
Contributions in | Aggregate Earnings | Aggregate Balance | ||||||||||||
Name | Plan Name | Last Fiscal Year(1)(2) | in Last Fiscal Year | at Last Fiscal Year End(3) | ||||||||||
Lawrence D. Kingsley | SERP | $ | 112,047 | $ | 27,851 | $ | 660,593 | |||||||
Dominic A. Romeo | SERP | 39,170 | 8,773 | 211,699 | ||||||||||
Andrew K. Silvernail | SERP | 25,820 | 718 | 35,108 | ||||||||||
Kevin G. Hostetler | SERP | 26,674 | 3,579 | 94,566 | ||||||||||
Frank J. Notaro | SERP | 22,484 | 5,366 | 128,299 |
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The Company entered into an employment agreement with Mr. Kingsley when he was employed as Chief Operating Officer. This agreement was amended effective March 22, 2005 to reflect his promotion to President and Chief Executive Officer. His agreement was further amended in 2008 to comply with the requirements of Section 409A.Silvernail on November 8, 2013. The employment agreement provides for an initiala term of fivetwo years and successive twelve-month terms thereafter.is substantially similar to Mr. Silvernail’s initial two-year employment agreement. If Mr. Kingsley’sSilvernail’s employment is terminated by
39
the Company other than for cause, he will receive continuing salary payments and health benefits for 24 months, a bonus equal to a pro-rata portion of 100% of his base salary (based on the portion of the year he was employed), and a payment equal to 200% of his base salary payable over 24 months commencing six months60 days after his termination. If Mr. Kingsley’sSilvernail’s employment is terminated because of disability, he will receive a bonus payment equal to a pro-rata portion of 100% of his base salary (based on the portion of the year he was employed). Additionally, if Mr. KingsleySilvernail should die during the term of the agreement, Mr. Kingsley’s wifeSilvernail’s spouse or estate will receive a bonus payment equal to a pro-rata portion of 100% of his base salary (based on the portion of the year he was employed). If his employment is terminated without cause or he terminates it for certain specified reasons following a change in control, Mr. KingsleySilvernail will receive his full salary and health insurance for a period of 36 months following termination, a pro-rata portion of his bonus for the year of his termination, and a payment equal to 300% of his base salary, payable over 36 months all commencing six months after his termination.
The Company has entered into letter agreements with Messrs. SilvernailMitts, Bucklew and HostetlerSalliotte providing for (a) two years of salary and target MICP bonus in the event of termination without cause within two years following a change ofin control, and (2)(b) one year of salary and target MICP bonus in the event of termination without cause other than in connection with a change in control.
The Company has entered into a letter agreementsagreement with Mr. Notaro providing for (1)(a) three years of salary and bonus and two years of fringe benefits in the event he is terminated without cause within two years following a change in control, and (2)(b) one year of salary and target MICP bonus if he is terminated without cause other than in connection with a change in control.
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Termination in | ||||||||
Involuntary | Connection with | |||||||
Termination Not for | Change in | |||||||
Name | Cause/Good Reason | Control | ||||||
Lawrence D. Kingsley | $ | 4,302,740 | $ | 24,724,804 | ||||
Dominic A. Romeo | 0 | 0 | ||||||
Andrew K. Silvernail | 680,000 | 3,419,344 | ||||||
Kevin G. Hostetler | 680,000 | 4,348,026 | ||||||
Frank J. Notaro | 561,000 | 3,502,695 |
Termination of employment on December 31, 2013.
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Acceleration of vesting in options and restricted stock, and exercise of all accelerated vested options based on the closing market price of $73.85 per share of the Company’s Common Stock on December 31, 2013.
Accelerated vesting of benefits under the Deferred Compensation Plan, paid in a lump sum.
Name | Involuntary Termination Not for Cause/Good Reason | Termination in Connection with Change in Control | ||||||
Andrew K. Silvernail | $ | 13,888,509 | $ | 17,029,288 | ||||
Heath A. Mitts | 805,000 | 6,830,983 | ||||||
Frank J. Notaro | 724,500 | 5,638,401 | ||||||
Jeffrey D. Bucklew | 536,000 | 2,059,428 | ||||||
Daniel J. Salliotte | 473,550 | 2,415,584 |
40
We are required pursuant to Section 14A of the Exchange Act to providesoliciting a non-binding stockholder vote on our executive compensation as described in this proxy statement (commonly referred to as“Say-on-Pay”) and a non-binding stockholder vote to advise on whether theSay-on-Pay vote should occur every one, two or three years.
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 of +/- 20% of 50th percentile of the market. 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 Company’s 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 Company’s named executive officers as disclosed in this proxy statementProxy Statement pursuant to Item 402 ofRegulation 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 uponon the Company. TheHowever, the Compensation Committee will carefully consider the outcome of the vote in determining future compensation policies and decisions.
The Board of Directors Recommends a Vote FOR the approval of the Company’s executive compensation.
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For the year ended December 31, 2010,2013, the Audit Committee has reviewed and discussed the audited financial statements with management and the Company’s independent registered public accounting firm, Deloitte & Touche LLP. The Committee discussed with Deloitte & Touche LLP the matters required to be discussed by the Statement ofon Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1, AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T, and reviewed the results of the independent registered public accounting firm’s 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 LLP’s 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 onForm 10-K for the year ended December 31, 2010,2013, for filing with the Securities and Exchange Commission.
Notwithstanding anything to the contrary set forth in any of the Company’s 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
William M. Cook Chairman
40David C. Parry
Livingston L. Satterthwaite
42
The aggregate fees billed to the Company for each of the last two fiscal years for professional services rendered by the Company’s 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.
2010 | 2009 | |||||||
Audit fees(1) | $ | 3,024,000 | $ | 2,726,000 | ||||
Audit-related fees(2) | 755,000 | 100,000 | ||||||
Tax fees(3) | 201,000 | 259,000 | ||||||
All other fees(4) | 0 | 0 | ||||||
Total | $ | 3,980,000 | $ | 3,085,000 | ||||
2013 | 2012 | |||||||
Audit fees(1) | $ | 2,861,000 | $ | 3,019,000 | ||||
Audit-related fees(2) | 0 | 192,000 | ||||||
Tax fees(3) | 770,000 | 620,000 | ||||||
All other fees(4) | 0 | 0 | ||||||
|
|
|
| |||||
Total | $ | 3,631,000 | $ | 3,831,000 | ||||
|
|
|
|
(1) | Audit fees represent the aggregate fees billed for the audit of the Company’s financial statements, review of the financial statements included in the Company’s 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 Company’s 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 |
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 firstsecond 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 firstsecond quarter of each fiscal year and fromtime-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 permissiblenon-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 Audit Committee meeting.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s officers, directors and persons who own more than 10% of the Company’s Common Stock to file reports of ownership and changes in ownership with the Securities and Exchange Commission and the New York Stock Exchange.SEC. Officers, directors and greater than 10% stockholders are required by Securities and Exchange CommissionSEC 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, 2010.
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The Audit Committee has appointed Deloitte & Touche LLP as the Company’s independent registered public accounting firm for 2011.2014. Representatives of Deloitte & Touche LLP will attend the Annual Meeting of Stockholders 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.
The Company’s Board of Directors Recommends a Vote FOR the ratification of the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for 2011.
STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
FOR 20122015 ANNUAL MEETING
A stockholder desiring to submit a proposal for inclusion in the Company’s Proxy Statement for the 20122015 Annual Meeting must deliver the proposal so that it is received by the Company no later than November 7, 2011.5, 2014. The Company requests that all such proposals be addressed to Frank J. Notaro, Vice President —- General Counsel and Secretary, IDEX Corporation, 1925 West Field Court, Suite 200, Lake Forest, Illinois 60045, and mailed by certified mail, return receipt requested. In addition, the Company’sBy-Laws By-laws require that any stockholder desiring to nominate a director for election or propose other business for consideration at the 2015 Annual Meeting must provide written notice. Such notice of stockholder nominations for directorsmust contain the information required by the By-laws and related informationmust be received by the Secretary not laterless than 6090 nor more than 120 days before the first anniversary of the 2011preceding year’s annual meeting. To be timely for the 2015 Annual Meeting, which, forany such notice must be received by the 2012 Annual Meeting, will be February 4, 2012.
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 suchthose matters.
By Order of the Board of Directors,
FRANK J. Notaro
Vice President -— General Counsel
and Secretary
March 7, 2011
Lake Forest, Illinois
A copy of the Company’s Annual Report onForm 10-K for the year ended December 31, 2010,2013, 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 Heath A. Mitts, Chief Financial Officer, IDEX Corporation, 1925 West Field Court, Suite 200, Lake Forest, Illinois 60045.
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Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date