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 No. )
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¨ | Preliminary Proxy Statement |
¨ | Confidential, for Use of the Commission Only (as permitted by Rule14a-6(e)(2)) |
x | Definitive Proxy Statement |
¨ | Definitive Additional Materials |
¨ | Soliciting Material Pursuant to§ 240.14a-12 |
ROPER INDUSTRIES, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
x | No fee required |
¨ | Fee computed on table below per Exchange Act Rules14a-6(i)(4) and0-11. |
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ROPER INDUSTRIES, INC.
6901 Professional Parkway East, Suite 200
Sarasota, Florida 34240
941-556-2601
NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 24, 2013
To Our Stockholders:
Notice is hereby given that the 2013 Annual Meeting (the “Annual Meeting”) of Stockholders of Roper Industries, Inc. (the “Company”) will be held at 6901 Professional Parkway East, Suite 200, Sarasota, Florida 34240 on Friday, May 24, 2013, at noon local time, for the following purposes:
Date and Time | Wednesday,May 21, 2014, at11:00 a.m. local time |
Place |
Agenda | Proposal 1: Election of two directors; |
Proposal 2:To consider, on a non-binding advisory basis, a resolution approving the compensation of our named executive |
Proposal 3:To ratify the appointment of PricewaterhouseCoopers LLP as our independent registered accounting firm for the year ending December 31, |
The Company recommends that you vote: “FOR” all of the director nominees; “FOR” the approval of the compensation to our named executive officers; “FOR” the amendment to the Company’s Certificate of Incorporation; and “FOR” the appointment of PricewaterhouseCoopers as independent accountants.
Only stockholders of record at the close of business on April 12, 2013 will be entitled to vote at the Annual Meeting or any adjourned meeting, and these stockholders will be entitled to vote whether or not they have transferred any of their shares of the Company’s Common Stock since that date.
Record Date Voting Recommendations Proxy Voting David B. Liner Secretary Important Notice Regarding the Availability of Proxy Materials for the This Proxy Statement and the Roper Industries, Inc. to Stockholders are available at: www.roperind.comYOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES OF STOCK YOU OWN. STOCKHOLDERS UNABLE TO ATTEND THE ANNUAL MEETING IN PERSON ARE URGED TO VOTE AS PROMPTLY AS POSSIBLE BY TELEPHONE, VIA THE INTERNET, OR BY MAIL. INSTRUCTIONS FOR EACH OF THESE METHODS AND THE CONTROL NUMBER THAT YOU WILL NEED ARE PROVIDED ON THE PROXY CARD.Only stockholders of record at the close of business on March 31, 2014 will be entitled to vote at the Annual Meeting or any adjourned meeting, and these stockholders will be entitled to vote whether or not they have transferred any of their shares of our common stock since that date. The Company recommends that you vote: • “FOR” all of the director nominees • “FOR” the approval of the compensation to our named executive officers • “FOR” the appointment of PricewaterhouseCoopers Your vote is important regardless of the number of shares of stock you own. Whether or not you plan to attend the annual meeting in person, please promptly vote by telephone, via the internet, or by mail. Instructions for each of these methods and the control number that you will need are provided on the proxy card. April 22, 2014 By Order of the Board of Directors Sarasota, FloridaApril 24, 2013the Stockholder Meeting to be held onTo Be Held On May 24, 2013.21, 2014.20122013 Annual Report
ROPER INDUSTRIES, INC.PROXY STATEMENT SUMMARY
This summary highlights information about our Company and the upcoming 2014 Annual Meeting of Stockholders. This summary does not contain all of the information you should consider. You should read the complete Proxy Statement and our 2013 Annual Report on Form 10-K before voting.
2014 ANNUAL MEETING OF SHAREHOLDERS
Date and Time: May 21, 2014 11:00 a.m. local time | Record Date: March 31, 2014 | Place: Roper Industries, Inc. 6901 Professional Parkway East Suite 200 Sarasota, Florida 34240 |
VOTING MATTERS AND BOARD RECOMMENDATIONS
Proposals | Board Recommendation | Vote Required | ||||
1: | Election of two directors | FOR EACH NOMINEE | Majority of votes cast | |||
2: | Advisory vote to approve the compensation paid to our named executive officers | FOR | Majority of votes | |||
3: | Ratification of the appointment of PricewaterhouseCoopers LLC as our independent registered accounting firm | FOR | Majority of votes |
2014 DIRECTOR NOMINEES
At the 2013 Annual Meeting, our stockholders approved, upon our Board’s unanimous recommendation, to declassify our Board of Directors. The phasing-in of the declassification begins this year with the election for a one-year term of directors whose three-year term expires at this Annual Meeting.
The following individuals are the director nominees for a term expiring at the Annual Meeting in 2015.
Committees | ||||||||||||||
Name | Position | Director Since | Independent | Audit | Compensation | Nominating and Governance | Executive | |||||||
Richard F. Wallman | Former CFO and SVP, Honeywell International Inc. | 2007 | X | Chair | X | |||||||||
Christopher Wright | Chairman, EMAlternatives LLC | 1991 | X | X | X |
CORPORATE GOVERNANCE
We strive to maintain effective corporate governance practices and policies. We believe that the following practices and policies contribute to our strong governance profile:
• | Our declassified Board phase-in begins with directors elected in 2014 to serve one-year terms; |
Roper Industries, Inc. 2014 Proxy Statement | i |
PROXY STATEMENT SUMMARY (CONTINUED)
• | 7 of our 8 directors are independent; |
• | A Lead Independent Director is appointed annually to serve a one-year term; |
• | We require the resignation of an incumbent director who fails to obtain a majority of votes cast in an uncontested election; |
• | All members of the Audit, Compensation, and Nominating and Governance Committees are independent; and |
• | We have an anti-hedging policy. |
BUSINESS HIGHLIGHTS
6901 Professional Parkway East, Suite 200We achieved another year of record net sales and net earnings in 2013, and 2013 also marked the 8th time in the last 10 years that our Annual shareholder return was greater than 20%.
• | Net sales were $3.24 billion, up 8% from 2012; |
• | Net earnings were $538 million, a 11% increase over 2012; |
• | Gross margin rose to 58.1% and our EBITDA margin expanded to 31.9%; |
• | Our free cash flow was $760 million; |
• | Our cash and cash equivalents at year end were approximately $459 million; |
• | Our annual shareholder return for 2013 was 24.9%, improving our compounded annual shareholder return over the past decade of 19.6%; and |
• | We expanded our businesses with the acquisitions of Managed Health Care Associates, Inc., and Advanced Sensors, Ltd. |
Sarasota, Florida 34240COMPENSATION HIGHLIGHTS
The creation of shareholder value is the foundation and driver of our executive compensation program. In 2013, 94% of our Chief Executive Officer’s compensation was subject to performance risk with 82% tied to long-term results and stock price. The compensation of our executive officers is closely aligned with the long-term interests of our investors.
Exemplary practices, including the following, are used in our executive compensation programs:
• | Most compensation is tied to performance and long-term shareholder value creation; |
• | “Double trigger” for accelerated vesting of equity awards upon a change in control; |
• | No excise tax gross-ups for change-in-control payments; |
• | Substantial share ownership and retention guidelines for our executives officers and directors; |
• | Clawback policy to recoup erroneously paid compensation; |
• | Caps on annual bonuses to avoid encouraging a short-term focus; |
• | Repricing of stock options is prohibited; |
• | No defined pension benefit plan; |
• | Compensation Committee retains an independent compensation consultant; and |
• | Few perquisites and other benefits. |
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| Roper Industries, Inc. 2014 Proxy Statement |
941-556-2601ANNUAL MEETING AND VOTING INFORMATION
PROXY STATEMENT
This Proxy Statement is being furnished to stockholdersThe Board of Directors of Roper Industries, Inc. (the “Company” or “Roper”)“we, “us” or “our” in connection withthis Proxy Statement) is soliciting the solicitation of proxies by the Board of Directors of the Company (the “Board of Directors” or “Board”)enclosed proxy for use at the 2014 Annual Meeting of Stockholders, and any adjournments thereof, to be held at the time and place set forth in the accompanying notice (“Annual Meeting”). It is anticipated that the mailing of thisStockholders. This Proxy Statement and the enclosed proxy card will commenceare being mailed or otherwise made available to stockholders on or about April 24, 2013. All22, 2014.
We are concurrently mailing to stockholders are urged to read this Proxy Statement carefully and in its entirety.
a copy of our 2013 Annual Meeting InformationReport, which includes ourForm 10-K
The Annual Meeting will be held on May 24, 2013, at noon local time, at our corporate office located at 6901 Professional Parkway East, Suite 200, Sarasota, Florida 34240.
Solicitation of Proxies
The enclosed proxy is solicited by the Board of Directors. Roper will bear the costs of proxy solicitation. In addition to soliciting proxies by use of the mail, its directors, officers and employees may devote part of their time, without additional compensation, for solicitation by fax, email or telephone calls. Arrangements have also been made with brokerage houses and other custodians, nominees and fiduciaries for the forwarding of solicitation material to beneficial owners and for reimbursement of their out-of-pocket and clerical expenses incurred in that connection. The Company has engaged Georgeson Inc. as the proxy solicitor for the Annual Meeting for a fee of approximately $9,500 plus reasonable expenses.
Where multiple stockholders share the same address, only one copy of this Proxy Statement and Annual Report will be mailed to that address unless Roper has been notified by such stockholders of their desire to receive multiple copies of the Proxy Statement and Annual Report. If you share an address with another stockholder and wish to receive a separate Proxy Statement and Annual Report, you may instruct Roper to provide a separate Proxy Statement and Annual Report by writing to the attention of the Secretary at the address set forth in the following paragraph or by calling 941-556-2601. Stockholders who share the same address and already receive multiple copies of the Proxy Statement and Annual Report but prefer to receive a single copy may contact Roper at the same address and phone number to make such a request.
The mailing address of the Company’s principal executive office is Roper Industries, Inc., 6901 Professional Parkway East, Suite 200, Sarasota, Florida 34240. This Proxy Statement is accompanied by the Company’s 2012 Annual Report to Stockholders, which includes our Annual Report onyear ended December 31, 2013. Our Form 10-K that was filed with the Securities and Exchange Commission (“SEC”) on February 25, 2013. Additional copies of the Annual Report are available upon written request mailed to the attention of the Secretary at the above address. In addition, the Form 10-K andits exhibits are available on the internet at www.sec.gov. The Annual Report isand Form 10-K are not part of these proxy soliciting materials.
This Proxy Statement contains important information for you to consider when deciding how to vote. Please read this information carefully.
Q: | When is the Annual Meeting? |
A: | Date & Time: |
Wednesday, May 21, 2014 at 11:00 A.M.
(and at any adjournments thereof)
Place:
Our corporate office located at:
6901 Professional Parkway East,
Suite 200,
Sarasota, Florida 34240
Q: | What is the purpose of this meeting? |
A: | This is the annual meeting of our stockholders. At this meeting, we will be voting on the following matters: |
1. | The election of two directors, whose current term expires at this meeting; |
2. | Approval of, on a non-binding advisory basis, the compensation of our named executive officers; and |
3. | Ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered accounting firm for 2014. |
We will also transact any other business properly brought before the meeting.
Our Board of Directors strongly encourages you to exercise your right to vote on these matters. Your vote is important. Voting early through the internet, by telephone or by a proxy or voting instruction card helps ensure that we receive a quorum of shares necessary to hold the meeting.
Q: | What happens if additional matters are presented at the Annual Meeting? |
A. | We are not aware of any matters to be acted upon at the Annual Meeting other than the |
proposals described in this Proxy Statement. The Board of Directors has named Brian D. Jellison and David B. Liner as proxy holders for this Annual Meeting. If you submit a properly executed proxy, the proxy holders will have the discretion to vote your shares on any additional matters properly presented for a vote at the Annual Meeting or at any adjournment or postponement of the meeting. If for any reason a director nominee is not available as a candidate, the proxy holders may vote your shares for another candidate who may be nominated by the Board, or the Board may reduce its size. |
All shares of our common stock represented by properly executed and unrevoked proxies will be voted by the person named as proxy holder in accordance with the instruction given. If no instructions are indicated on a proxy, properly executed proxies will be voted as follows:
FOR each director nominee;
FOR the advisory approval of our executive compensation; and
FOR the ratification of the appointment of PricewaterhouseCoopers as our independent registered accounting firm.
Q: | Who may vote at the Annual Meeting? |
A: | Only stockholders of record at the close of business on the record date will be entitled to vote at the Annual Meeting or any adjourned meeting, and these stockholders will be entitled to vote whether or not they have transferred any of their shares of the Company’s common stock since that date. |
Q: | What is the record date? |
A. | Our Board has established the close of business on March 31, 2014 as the record date to |
Roper Industries, Inc. 2014 Proxy Statement | 1 |
ANNUAL MEETING AND VOTING INFORMATION(CONTINUED)
determine the stockholders of record entitled to receive a notice of, and to vote at, our Annual Meeting or any adjournment or postponement of the meeting. On the record date, there were 99,786,390 shares of our common stock, $1 par value, outstanding and entitled to vote. Each share of our common stock is entitled to one vote that may be voted on each matter to be acted upon at this Annual Meeting. |
Record Date; Voting Rights
Q: | What is a stockholder of record? |
Only stockholders
A. | A stockholder of record or a registered stockholder is a stockholder whose ownership of Roper Industries, Inc. common stock is reflected directly on the books and records of our transfer agent, American Stock Transfer & Trust Company. If you are a stockholder of record, we are providing these materials directly to you. |
If you hold your shares of common stock through a bank, broker, or other intermediary, you are considered the “beneficial owner” of those shares held in “street name,” and you are not a stockholder of record. The stockholder of record of the Company’s Common Stockshares is your bank, broker, or other intermediary. If your shares are held in street name, these proxy materials have been forwarded to you by your bank, broker, or other intermediary. As the beneficial owner, you have the right to instruct that institution on how to vote the shares you beneficially own.
Q: | How can I submit my vote? |
A: | There are four ways to vote: by internet, by telephone, by mail or in person. Submitting your proxy by internet, telephone or mail will not affect your right to attend the Annual Meeting and change your vote. Unless you are voting in person, your vote must be received by 11:59 p.m. Eastern Time on May 20, 2014. |
By Internet. Have your proxy card available and log on to www.proxyvote.com.
By Telephone. Have your proxy card available and call 800-690-6903 toll free (US only) from a touchtone telephone
By Mail. Mark, date, sign, and promptly mail the enclosed proxy card in the postage-paid envelope provided for mailing in the United States.
In Person. You may vote by ballot in person at the closeAnnual Meeting. Bring your proxy card if you received one by mail, otherwise we will provide shareholders of business on April 12, 2013 (the “Record Date”)record a ballot at the Annual Meeting.
If your shares are held by a bank, broker, or other intermediary, that institution will be entitledprovide voting instructions with the proxy materials. Please follow the voting instructions that you receive from that institution. Additionally, if you plan to notice of and to vote in person at the Annual Meeting on all matters. We have one classand your shares are held by a bank, broker or other intermediary, you must obtain proof of voting securities outstanding, which is designatedstock ownership as Common Stock, and each share of Common Stock is entitled to one vote upon all matters to be acted upon at the Annual Meeting. At the close of business on the Record Date, the Company had 99,020,034 shares of Common Stock outstanding and entitled to vote. The presence, in person or by proxy, of the holders ofrecord date and have a majority ofvalid legal proxy from the outstanding shares of Common Stock entitled to vote is necessary to constitute a quorum for the transaction of business at the Annual Meeting. For purposes of the quorum and the discussion below regarding the vote necessary to take stockholder action, “broker non-votes” and stockholders of record who are present at the meeting in person or by proxy and who abstain at the Annual Meeting are considered stockholders who are present and count toward the quorum. If there are not sufficient votes for a quorum or to approve any proposal at the Annual Meeting, the Annual Meeting may be adjourned to permit the further solicitation of proxies.institution that holds your shares.
Q: | What is a broker non-vote? |
A: | If your shares are held in street name through a bank, broker or other intermediary, you must provide voting instructions to that institution. Under the rules of the New York Stock Exchange (the “NYSE”), if you do not provide voting instructions, the institution may vote in its discretion on routine proposals, but not on non-routine proposals, or leave the shares unvoted, which is called a “broker non-vote.” |
The following proposals are not considered routine proposals, so banks, brokers and other nominees who hold shares in “street name” for beneficial ownersintermediaries do not have discretionary authority to vote on routine proposals whenthese matters if they have not received voting instructions from beneficial owners.you: (i) the election of directors, and (ii) the advisory vote on the approval of compensation to our named executive officers. The ratification of the appointment of the independent auditorsregistered accounting firm is considered a routine proposal. Ifproposal, so if you do not provide voting instructions, the institution holding your shares may either leave the shares unvoted (a “broker non-vote”) or vote the shares in its discretion. The following proposals are not considered routine proposals, so banks, brokers and other nominees do not have discretionary authority to vote on these matters when they have not received instructions from beneficial owners: (i) the election of directors, (ii) the advisory vote on the approval of compensation to our named executive officers; and (iii) the amendment to the Company’s Certificate of Incorporation. If your shares are held through a bank, broker, bank, or other nominee,intermediary, please be sure to follow the voting instructions that you receive from that institution. The holderinstitution will not be able to vote your shares on any of the proposals except the appointment of PricewaterhouseCoopers LLP unless you have provided voting instructions.
With regard to the election of directors, each director will be elected by a majority of the votes cast with respect to such director (except in the case of contested elections, in which case directors are elected by a plurality). A “majority of the votes cast” means that the number of votes cast “for” a director exceeds the number of votes cast “against” that director. Broker non-votes and abstentions will have no impact as they are not counted as votes cast for this purpose. If an incumbent director fails to receive a majority of the votes cast, the director will tender his or her resignation to the Board. The Nominating and Governance Committee or another committee will consider the director’s resignation and recommend to the Board whether to accept or reject the resignation. The Board will publicly disclose its decision regarding the resignation within 90 days after the election results are certified.
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| Roper Industries, Inc. 2014 Proxy Statement |
ANNUAL MEETING AND VOTING INFORMATION(CONTINUED)
Q: | How are broker non-votes and abstentions treated? |
A: | Broker non-votes are not treated as votes cast for any of the matters on the agenda, so they will not have any effect on those proposals. Abstentions are treated as present and entitled to vote, so they will have the effect of a vote cast against the approval of the compensation of our named executive officers and against the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered accounting firm. Abstentions are not treated as votes cast, so they will have no effect on the election of directors. |
Q: | What constitutes a quorum? |
A: | To conduct business at our Annual Meeting, we must have a quorum of stockholders present. A quorum is present when a majority of the outstanding shares of stock entitled to vote as of the record date are represented in person or by proxy. Broker non-votes and abstentions will be counted toward the establishment of the quorum. If there is an insufficient number of shares represented for a quorum or to approve any proposal at the Annual Meeting, the Annual Meeting may be adjourned or postponed to permit the further solicitation of proxies. |
Q: | How many votes are needed for each proposal? |
A: | Our By-laws provide that each director will be elected by a majority of the votes cast with respect to such director (except in the case of contested elections, in which case directors are elected by a plurality). A “majority of the votes cast” means that the number of votes cast “for” a director exceeds the number of votes cast “against” that director. Broker non-votes and abstentions will have no impact as they are not counted as votes cast for this proposal. If an incumbent director fails to receive a majority of the votes cast, the director will tender his or her resignation to the Board. The Nominating and Governance Committee or another committee will consider the director’s resignation and recommend to the Board whether to accept or reject the resignation. The Board will publicly disclose its decision regarding the resignation within 90 days after the election results are certified. |
The vote on the approval of compensation to our named executive officers is an advisory vote and non-binding on the Company. If the majority of the shares present in person or represented by proxy and entitled to vote are cast in favor of the approval,proposal, then it will be deemed to be the approval of the stockholders. Abstentions will have the effect of a vote against the proposal. Broker non-votes will be excluded from the calculation and will have no effect on the outcome of the voting.
The affirmative vote of the majority of the shares outstanding is required to approve the amendment to the Company’s Certificate of Incorporation. Abstentions and broker non-votes will have the effect of votes against the proposal.
The affirmative vote of a majority of the shares present in person or represented by proxy and entitled to vote is required to approve the ratification of the appointment of PricewaterhouseCoopers LLP as the independent registered accounting firm of the Company. Abstentions will have the effect of a vote against this proposal. Broker non-votes will be excluded from the calculation and will have no effect on the outcome of the voting.
The Board of Directors knows of no additional matters that will be presented for consideration at the Annual Meeting. Return of a valid proxy, however, confers on the designated proxy holders discretionary authority to vote the shares in accordance with their best judgment on such other business, if any, that may properly come before the Annual Meeting or any adjournment or postponement thereof. Proxies solicited hereby will be tabulated by an inspector of election designated by the Board of Directors.
You are urged to promptly vote by internet or by telephone, or by completing, signing, dating and returning your proxy card in the envelope enclosed for that purpose. Proxies will be voted in accordance with your directions. If a proxy is signed but no directions are given, it will be voted as follows:
A. |
Q: | What is “householding” and how does it affect me? |
A. |
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ANNUAL MEETING AND VOTING INFORMATION(CONTINUED)
Where multiple stockholders share the same address, only one copy of proxy material will be mailed to that address unless we have been notified by such stockholders of their desire to receive multiple copies of proxy materials. If you share an address with another stockholder and wish to receive a separate set of materials, you may instruct us to provide a separate Proxy Statement and Annual Report by calling 941-556-2601 or by writing to the attention of the Secretary, Roper Industries, Inc., 6901 Professional Parkway East, Suite 200, Sarasota, Florida 34240. If you share the same address with another stockholder and already receive multiple copies of the Proxy Statement and Annual Report but prefer to receive a single set of materials, you may contact us at the same address and phone number to request a single set of material.
How can I find the |
A. |
Q: |
Revocation of Proxies
A: | We are paying the expenses involved in preparing, assembling and mailing these proxy material and all costs of soliciting proxies. Our directors, executive officers and other employees may solicit proxies, without additional compensation, personally or by telephone, email or other means of communication. We have also engaged Georgeson Inc. as the proxy solicitor for the Annual Meeting for a fee of approximately $10,000 plus reasonable expenses. We will reimburse banks, brokers and other intermediaries, such as custodians, nominees and fiduciaries, that hold our common stock in their names or in the names of their nominees for their reasonable expenses in forwarding proxy materials to beneficial owners. |
You may revoke your proxy at any time prior to its exercise by filing a written notice of revocation with the Secretary of the Company or by delivering to the Company a duly executed proxy bearing a later date, or by attending the Annual Meeting and voting in person. However, if you are a stockholder whose shares are not registered in your own name, you will need documentation from your record holder stating your ownership to vote personally at the Annual Meeting.
Q: | What is your website for additional information? |
A: | We maintain a website at www.roperind.com. The information on our website is not part of this Proxy Statement, and it is not incorporated into any other filings we make with the SEC. |
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| Roper Industries, Inc. 2014 Proxy Statement |
ELECTIONBOARD OF DIRECTORS
Roper’sOur Certificate of Incorporation provides that the Board of Directors shall consist of such number of members as may be fixed, from time to time, by the Board of Directors, but not less than the minimum number required under Delaware law. TheOur Board of Directors has currently fixed the number of directors at eight. The Certificate of Incorporation currently provides thatAt the 2013 Annual Meeting, stockholders approved, upon our Board’s unanimous recommendation, to declassify the Board of Directors shall be divided into three classesDirectors. The phasing-in of directors, as nearly equal in number as possible,declassification commences this year with the election of those directors whose three-year term of one class expiringexpires at each annualthis Annual Meeting. Directors elected at this meeting of stockholders and each class servingwill serve for a three-year term.one-year period.
The terms of office for Brian D. Jellison, David W. DevonshireRichard Wallman and John F. Fort IIIChristopher Wright expire at this Annual Meeting. Upon recommendation of the Company’s independent Nominating and Governance Committee, theour Board of Directors has nominated Messrs. Jellison, DevonshireWallman and FortWright to stand for electionre-election as directors for one-year terms expiring at the 20162015 Annual Meeting of Stockholders.Stockholders or when their respective successors are elected and qualified.
InIf prior to the event anymeeting a director nominee is unable to serve, (which iswhich the Board of Directors does not anticipated),anticipate, the proxy will be voted for a substitute nominee selected by the Board of Directors, or the Board may choose to reduce its size.
Certain information about the director nominees whose current terms will expire in 2013, and about the directors whose terms continue,are continuing is set forth below. SuchThis information includes the business experience, qualifications, attributes and skills that each individual brings to theour Board.
Roper Industries, Inc. 2014 Proxy Statement | 5 |
BOARD OF DIRECTORS(CONTINUED)
Nominees For Re-election
For a term towhose terms expire at the 2014 Annual Meeting in 2016
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Incumbent Directors
whose terms expire at the 2014 Annual Meeting
Richard F. Wallman Director since 2007 Independent Age: 63
Committees:
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Professional Experience
Mr. Wallman served as the Chief Financial Officer and Senior Vice President of Honeywell International Inc., a diversified industrial technology and manufacturing company, and its predecessor AlliedSignal, from March 1995 to July 2003. Mr. Wallman has also served in senior financial positions with IBM and Chrysler Corporation.
Other Boards and Appointments
Mr. Wallman currently serves as a director of Convergys Corporation, Extended Stay America, Inc., Tornier N.V., and Charles River Laboratories International, Inc. and has formerly served as a director of Ariba, Inc., from 2002 to 2012, Dana Holding Corp. from 2010 to 2013, and both Hayes-Lemmerz International and Lear Corporation from 2003 to 2009.
Director Qualifications
Mr. Wallman’s extensive leadership and financial background brings to our Board a significant understanding of the financial issues and risks that affect the Company. Mr. Wallman also serves on the boards of other diverse publicly held companies, which gives him a multi-industry perspective and exposure to developments and issues that impact the management and operations of a global business.
Christopher Wright Director since 1991 Independent Age: 56
Committees:
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Professional Experience
Mr. Wright is the Chairman of EMAlternatives LLC, a Washington, DC based private equity asset management firm focused on emerging markets, and a director of Merifin Capital Group, a private European investment firm. Until mid-2003 he served as Head of Global Private Equity for Dresdner Kleinwort Capital and was a Group Board Member of Dresdner Kleinwort Benson overseeing alternative assets in developed and emerging markets. He acted as Chairman of various investment funds prior to and following the latter’s integration with Allianz A.G., and as Global Head of Private Equity at Standard Bank Group from 2006 to 2007.
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BOARD OF DIRECTORS(CONTINUED)
Other Boards and Appointments
Mr. Wright currently serves as a director of Yatra Capital Ltd (EuroNext), and sits on the advisory boards of various investment funds. Mr. Wright is a Foundation Fellow of Corpus Christi College, Oxford.
Director Qualifications
Mr. Wright offers a global perspective to our Board gained from his extensive international, private equity and banking experience. He is able to provide a valuable historical perspective on the development of the Company. He also provides our Board with knowledge of current financial issues and risks affecting international business operations, especially in Europe and across emerging markets.
Incumbent Directors
whose terms expire at the 2015 Annual Meeting
Robert D. Johnson Director since 2005 Independent Age: 66
Committees:
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Professional Experience
Mr. Johnson 65, was Chief Executive Officer of Dubai Aerospace Enterprise Ltd., a global aviation corporation, from August 2006 to December 2008. Mr. Johnson served as Chairman of Honeywell Aerospace, the aviation segment of Honeywell International Inc., from January 2005 to January 2006, and as its President and Chief Executive Officer from 1999 to 2005. Mr. Johnson worked at Honeywell’s predecessor, AlliedSignal, rising to the position of President and Chief Executive Officer of AlliedSignal Aerospace. Mr. Johnson has held management positions with AAR Corporation and GE Aircraft Engines.
Other Boards and Appointments
Mr. Johnson currently serves as the Chairman of the Board of Spirit AeroSystems, Inc. and Beechcraft Corp., and as a director of Spirit Airlines, Inc. He previously served as a director of Ariba, Inc. from 2005 to 2012.
Director Qualifications
Mr. Johnson brings valuable knowledge in marketing, sales and production from his diverse career experiences. His management leadership skills and his general business knowledge provide our Board with guidance in compensation and management issues.
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BOARD OF DIRECTORS(CONTINUED)
Robert E. Knowling, Jr. Director since 2008 Independent Age: 58
Committees:
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Professional Experience
Mr. Knowling is the Chairman of Eagles Landing Partners, a strategic management consulting company. From June 2005 to May 2009, Mr. Knowling served as Chief Executive Officer and director of Telwares, a leading provider of telecommunication spend management solutions. Mr. Knowling has served as the CEO of the NYC Leadership Academy, and in various executive capacities with SimDesk Technologies, Inc. and Covad Communications Company.
Other Boards and Appointments
Mr. Knowling currently serves as a director of The Bartech Group and Heidrick & Struggles International. He previously served as a director of Aprimo, Inc. from 2008 to 2011 and as Lead Director of Ariba, Inc. from 2000 to 2012.
Director Qualifications
Mr. Knowling brings a unique perspective to our Board based on his involvement in telecommunications and high-growth technology companies. He also has significant operational and management skills, and insight with respect to technology matters. His experience as a director of several other public companies enables him to provide guidance on corporate governance and executive compensation issues.
Wilbur J. Prezzano Director since 1997 Independent Age: 73
Committees:
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Professional Experience
Mr. Prezzano retired in January 1997 from Eastman Kodak Company, a supplier of imaging material and services, as its board Vice-Chairman and as Chairman and President of its greater China region businesses. During his 32-year career with Eastman Kodak Company, Mr. Prezzano served in various executive capacities and also served as a director from 1992 to 1997.
Other Boards and Appointments
Mr. Prezzano currently serves as the Lead Independent Director of Snyder’s-Lance, Inc., and as a director of TD Bank Financial Group and TD Ameritrade Holding Corporation, and formerly served as a director of EnPro Industries, Inc. and TD Banknorth, Inc. Mr. Prezzano recently served as a Board Trustee and Treasurer of Charleston Day School.
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| Roper Industries, Inc. 2014 Proxy Statement |
BOARD OF DIRECTORS(CONTINUED)
Director Qualifications
Mr. Prezzano has a strong background in management and experience in other international operations. Through his service on the boards of directors of several other companies in diverse industries, Mr. Prezzano provides our Board with a broad-based understanding important to the Company’s growth and operations.
Incumbent Directors
whose terms expire at the 2016 Annual Meeting
Director since 2002 Lead Independent Director for 2014 Age: 68 Committees: Audit (Chair) Executive |
Professional Experience
Mr. Devonshire served as an Executive Vice President and Chief Financial Officer of Motorola, Inc., a telecommunications company, from April 2002 until his retirement in December 2007. Prior to Motorola, Mr. Devonshire served as Executive Vice President and Chief Financial Officer of Ingersoll-Rand Company, a global diversified industrial company, and as Senior Vice President and Chief Financial Officer of Owens Corning, an innovator of glass fiber technology.
Other Boards and Appointments
Mr. Devonshire currently serves as Lead Director of Meritor, Inc., as the Non-Executive Chairman of Career Education Corporation and on the Advisory Boards of CFO Magazine. He previously served as a director of Arbitron Inc. from 2007 to 2013 and on the Advisory Board of L.E.K. Consulting. Mr. Devonshire is the Principal Financial Advisor to Harrison Street Capital, a private investment company.
Director Qualifications
Mr. Devonshire’s strong background in finance and accounting and his substantial experience as chief financial officer of diverse companies provide our Board with in-depth financial expertise and insight in the analysis and evaluation of financial statements, financial reporting, internal controls and strategy. He also brings to our Board knowledge related to IT, Strategic Planning, and mergers and acquisitions.
Roper Industries, Inc. 2014 Proxy Statement | 9 |
BOARD OF DIRECTORS(CONTINUED)
Director since 1995 Independent Age: 72 Committees: Audit Nominating and |
Professional Experience
Mr. Fort has been self-employed since 1993. Mr. Fort served as Chairman and Chief Executive Officer at Tyco International Ltd., a provider of diversified industrial products and services, from 1982 until his retirement from the company in January 1993, and served as an advisor to Tyco’s Board of Directors from March 2003 to March 2004.
Other Boards and Appointments
Mr. Fort served as a trustee of the Brown Foundation, a charitable organization primarily focused on advancing education and the arts in Texas, from 2000 to 2009.
Director Qualifications
Mr. Fort’s leadership experience as the CEO of a diversified industrial company and in-depth knowledge of the Company gives our Board perspective on important issues, including business strategy and acquisitions.
Chairman since 2003 President and Chief Executive Officer since 2001 Age: 68 Committees: Executive |
Professional Experience
Mr. Jellison is our President and CEO. He previously served as Corporate Executive Vice President at Ingersoll-Rand, a global diversified industrial company from January 1998 to July 2001. During his 26-year career with Ingersoll-Rand, Mr. Jellison served in a variety of senior level positions and assumed the principal responsibility for completing and integrating a variety of public and private new business acquisitions.
Other Boards and Appointments
Mr. Jellison served as a director of Champion Enterprises, Inc. from 1999 to 2009.
Director Qualifications
Mr. Jellison’s active involvement in Roper’s operations provides our Board with specific knowledge of the business and its challenges and prospects. As the Chairman of the Board, his deep understanding of the organization and its strategic focus has provided key leadership and guidance for the Company’s growth.
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| Roper Industries, Inc. 2014 Proxy Statement |
Corporate Governance Guidelines
Roper’sOur Board is committed to maintaining high standards of ethical business conduct and sound corporate governance principles and practices. Our Corporate Governance Guidelines reflect theour Board of Directors’ commitment to monitormonitoring the effectiveness of the Board of Directors’ and its Committees’Committees in exercising their responsibilities.
Business Code of Ethics and Standard of Conduct
Roper has aOur Business Code of Ethics and Standards of Conduct (the “Code of Ethics”). The Code of Ethics addresses the professional, honest and candid conduct of each director, officer and employee; conflicts of interest, disclosure process, compliance with laws, rules and regulations (including insider trading laws); and corporate opportunities, confidentiality, fair dealing, protection and proper use of Company assets;assets, and our Code of Ethics also encourages the reporting of any illegal or unethical behavior. Any amendments to, or waivers of, the Code of Ethics will be disclosed on Roper’sour website promptly following the date of such amendment or waiver as required by law.
Director Independence
The Board of Directors hasOur Corporate Governance Guidelines require that a majority of independentour directors qualify as “independent,” as defined by the listing standards of the NYSE. As required by the director independence standards, theour Board of Directors reviewed and analyzed the independence of each director in March 2013. The purpose of the review was2014 to determine whether any particular relationshipsrelationship or transactionstransaction involving directorsany director, or theirany of that director’s affiliates or immediate family members, werewas inconsistent with a determination that the director is independent for purposes of serving on theour Board of Directors and its committees. During this review, theour Board of Directors examined transactions and relationships between directors or their affiliates and family members and Roper or Roper’s management. As a result of this review, on March 14, 2013, the12, 2014, our Board of Directors affirmatively determined that all directors are independent, except for Mr. Jellison, and that each member of the Audit, Compensation, and Nominating and Governance Committees is independent for purposes of serving on such committees. In addition, although Mr. Devonshire serves on the audit committees of three or more publicly traded companies, the Board of Directors determined that such simultaneous service does not impair his ability to serve on Roper’s Audit Committee.
Nominating Process
The threeOur Board unanimously recommended the two directors standing for election at thethis Annual Meeting were unanimously nominated by the Board of Directors. Roper’s independentMeeting. The Nominating and Governance Committee, acting under its charter, determines the desired skills, ability,
judgment, diversity (including gender and ethnicity as well as background and experience) and other criteria deemed appropriate for service as a director and is responsible for recommending new director candidates and re-nomination of existing directors based on those criteria, which includes, but is not limited to:
high personal and professional ethics, ethics;
integrity and values;
knowledge of Company’sour business environment;
sound judgment and analytical ability;
skills and experience in the context of the needs of the Board of Directors; our Board;
breadth of business experience; and
whether the candidate meets the independence requirements of the NYSE. The Company frequently engages
Our Board’s process for identifying and evaluating potential nominees includes soliciting recommendations from our directors, and engaging a third party to assist in identifying potential nominees. Thenominees when a Board of Directors’ process for identifying and evaluating potential nominees also includes soliciting recommendations from directors of the Company. Theposition becomes available. Our Board has no formal policy with respect to diversity.diversity, but considers racial and gender diversity when creating the pool of candidates from which it considers possible new board candidates.
Neither the Board of Directors nor the Nominating and Governance Committee has a specific policy regarding consideration of stockholder director nominees. Stockholder nominees submitted pursuant to the procedures set forth in the By-laws will be considered under the same criteria that are applied to other candidates. Under Roper’s By-laws, nominations for director may be made by aA stockholder of record entitled to vote. In order forwho nominates a stockholder to make a nomination, the stockholderdirector candidate must provide a notice along with the additional information and materials required by theour By-laws. See “Information Regarding the 20142015 Annual Meeting of Stockholders” for additional information regarding nominating director candidates.
Review and Approval of Related Person Transactions
The Audit Committee is responsible for reviewing and approving, as appropriate, all transactions with related persons. Although we have not adopted written procedures for reviewing related person transactions, we will review any relationship or transaction in which the Company and our directors, executive officers or their immediate family members are participants to determine whether such persons have a direct or indirect material interest. There were no related person transactions during 2013.
Roper Industries, Inc. 2014 Proxy Statement | 11 |
CORPORATE GOVERNANCE(CONTINUED)
Stockholder Communications
Stockholders or other interested parties may send written communications to theour Board of Directors or the non-management members of theour Board of Directors in care of the Company to the address set forth below. This process is also set forth on Roper’sour website (www.roperind.com).at www.roperind.com. All communications will be kept confidential and promptly forwarded to the appropriate director. Such items as are unrelated to a director’s duties and responsibilities as a Board member may be excluded by the Secretary, including, without limitation, solicitations and advertisements; junk mail; product-related communications; job referral materials such as resumes; surveys; and material that is determined to be illegal or otherwise inappropriate. The director to whom such information is addressed is
informed that the information has been removed, and that it will be made available to such director upon request.
Roper’sOur Corporate Governance Guidelines, Code of Ethics, director independence standards,Director Independence Standards, and By-Laws are available on our website atwww.roperind.com. www.roperind.com. Requests for copies of these documents or of the full text of the By-Law provision regarding nominating director candidatescandidate nominations and communications to our entire Board of Directors or non-management members of the Board of Directorsmembers should be addressed to:
Roper Industries, Inc.
6901 Professional Parkway East
Suite 200
Sarasota, Florida 34240
Attention: Secretary
Information on Roper’s website is not part of this proxy statement, and it is not incorporated into any filing we make with the SEC.
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| Roper Industries, Inc. 2014 Proxy Statement |
Review and Approval of Related Person Transactions
There were no related person transactions during 2012. The Audit Committee is responsible for reviewing and approving, as appropriate, all transactions with related persons. The Company has not adopted written procedures for reviewing related person transactions. The Company will review any relationship or transaction in which the Company and its directors and executive officers or their immediate family members are participants to determine whether such persons have a direct or indirect material interest.
The
Our Board of Directors held seven meetings during the fiscal year ended December 31, 2012.met five times in 2013. Each director participated in at least 75 percent of all Board meetings and applicable Committee meetings held during the period for which hewhile such director was a member. The Board has not implemented a formal policy regarding director attendance at the annual meeting.Annual Meeting, but encourages all directors to attend in person. All but one of our continuing members of the Boarddirectors attended the 20122013 Annual Meeting of Stockholders either in person or telephonically.
Board Leadership Structure
Mr. Jellison has served as Roper’sour Chairman of the Board since 2003 and as its President and Chief Executive Officer since 2001. Mr. Jellison’s in-depth knowledge of theour Company allows him to effectively identify strategic priorities, lead board discussions, and execute theour Company’s strategy and business plans. TheOur Board of Directors believes that Mr. Jellison’s combined role is in the best interest of the Company and promotes decisive leadership, clear accountability, and enhanced communication internally and externally.
In light of the combined roles, the non-management directors select a Lead Independent Director, is selected by the non-management directors. Primarywhose primary responsibilities of the Lead Independent Director include initiating and chairing meetings of the independent directors, soliciting input from independent directors on issues and areas of focus, and providing feedback to the Chief Executive Officer. Pursuant to our corporate governance guidelines,Corporate Governance Guidelines, the Lead Independent Director responsibilities are assigned on a rotational basis with each term covering a nine-monthtwelve-month period. The non-management directors appointed David Devonshire to serve as the Lead Independent Director for 2014.
Risk Oversight
TheOur Board has overall responsibility for the oversight of risk management at Roper,the Company, which it generally carries out through Board
committees. Our General Counsel informs each committee and the Board of relevant legal and compliance issues, and each committee also has access to the Company’s outside counsel when they deem it advisable. Each of these committees along with our management, which is responsible for the implementation of the process to identify, manage and monitor risks, keeps the entire Board regularly apprised regularly of the different risks associated with our Company.
The Audit Committee oversees financial risk, including such factors as liquidity, credit, currency exchange and market conditions, through review and discussion with management, and monitors the Company’s risk management practices. It meets regularly with our independent auditors and the Vice President of our internal audit staff,department who reports directly to the Audit Committee. In addition to financial risk, the Audit Committee also reviews and discusses other risks that relate to our business activities and operations.
The Compensation Committee, in overseeing risk associated with compensation programs and practices, has directly retained its own compensation consultant and meets periodically with management to discuss current issues.
The Nominating and Governance Committee monitors the compliance of our corporate governance practices with applicable requirements and evolving developments.
Board Committees
TheOur Board has four standing committees: Audit, Compensation, Nominating and Governance, and Executive. The Audit, Compensation, and Nominating and Governance Committees operate under written charters, copies of which can be viewed on Roper’s website (www.roperind.com) or obtained upon request from the Secretary.
Set forth below are the current committee memberships.
Audit | Compensation | Nominating and | Executive | |||
David W. Devonshire (C) | Robert D. Johnson (C) | Richard F. Wallman (C) | Brian D. Jellison (C) | |||
John F. Fort | Robert E. Knowling | John F. Fort | David W. Devonshire | |||
Christopher Wright | Wilbur J. Prezzano | Wilbur J. Prezzano | Robert | |||
Christopher Wright | Richard F. Wallman |
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BOARD COMMITTEES AND MEETINGS(CONTINUED)
Audit Committee: 910 Meetings Held in 20122013
The Audit Committee assists theour Board in its oversight of the quality and integrity of the Company’sour financial statements, the Company’sour structure for compliance with legal and regulatory requirements, the performance and independence of the Company’s independent auditors, and the performance of the Company’sour internal audit functions. In addition, the Audit Committee prepares the “Audit Committee Report” that is also included in this Proxy Statement. The Board has determined that based on his extensive background and expertise, particularly as the chief financial officer of various other public companies, Mr. Devonshire meets the criteria of an “audit committee financial expert” under SEC rules. The Board has determined that all Audit Committee members meet the NYSE standard of financial literacy and have accounting and related financial management expertise.
Pursuant to its charter, the Audit Committee has the authority and responsibility to:
Appoint, compensate, retain and oversee the registered public accounting firm engaged by the Company;us; approve all audit engagement fees and terms, as well as pre-approve all non-audit engagements; and ensure that the independent auditors remain independent and objective;
Review the appointment and replacement of the Company’sour Vice President of the internal auditing department, whichwho provides the Audit Committee with such department’s significant reports to management and management’s responses thereto;
Consider any reports or communications submitted to the Audit Committee by the independent auditors relating to the Company’sour financial statements, policies, processes or determinations;
Meet with management, the independent auditors and others to discuss matters relating to the scope and results of any audit, the financial statements, and changes to any auditing or accounting principles, policies, controls procedures or practices;
Review any major issues regarding accounting principles and financial statement presentations, including significant changes in the selection or application of accounting principles, and major issues as to the adequacy of the Company’sour internal controls, analyses regarding significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including analyses of the effects of alternative GAAP methods, and the effects of regulatory and accounting initiatives;
Review significant risks and exposures and the steps taken to monitor and minimize such risks;
Establish procedures for the receipt, investigation and resolution of complaints received by the Companyus regarding accounting, internal accounting controls or auditing matters, and for the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters;
Prepare reports and disclosures required to be included in this Proxy Statement;
Review its charter annually; and
Report its activities to the full Board on a regular basis.
Compensation Committee:6 Meetings Held in 20122013
The Compensation Committee administers Roper’sour executive incentive compensation programs and determines, either as a committee or together with the other independent members of the Board (as directed by the Board), annual salary levels and incentive compensation awards for the Company’sour executive officers. The Compensation Committee also, at the direction of the Board, periodically reviews and determines the form and amounts of director compensation and reviews and makes recommendations to the Board with respect to director compensation and benefits.compensation. The Compensation Committee may delegate its duties and responsibilities to a subcommittee of the Committee. Additional information regarding the Compensation Committee’s processes and procedures for the consideration and determination of executive compensation is set forth below in this Proxy Statement under “Compensation Discussion and Analysis.”
Pursuant to its charter, the Compensation Committee has the authority and responsibility to:
Annually review and approve corporate goals and objectives relevant to theour Chief Executive Officer’s compensation and based on that evaluation, determine and approve the compensation of theour Chief Executive Officer,Officer’s compensation, including salary, bonus, incentive and equity compensation;
Annually review performance and approve compensation, including salary, bonus, and incentive and equity compensation for the Company’sour executive officers;
Grant awards and otherwise make determinations under the Company’sour equity, incentive, retirement, and deferred compensation plans, to the extent provided in such plans;
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| Roper Industries, Inc. 2014 Proxy Statement |
BOARD COMMITTEES AND MEETINGS(CONTINUED)
Determine performance goals and certify whether performance goals have been satisfied for incentive plans complying or intended to comply with Section 162(m) of the Internal Revenue Code;
Periodically review and make recommendations to the Board concerning the Company’sour equity and incentive compensation plans;
Review risks associated with compensation and assess potential material adverse effect;
Periodically review and determine the form and amounts of director compensation as delegated by the Board;
Review and discuss with management the annual Compensation Discussion and Analysis disclosure regarding named executive officer compensation included in the Company’sour annual proxy statement;Proxy Statement;
Review its charter annually; and
Report its activities to the full Board on a regular basis.
Nominating and Governance Committee:
54 Meetings Held in 20122013
The Nominating and Governance Committee assists theour Board in identifying individuals qualified to become directors, determining the size and composition of theour Board and its committees, developing and implementing corporate governance guidelines, evaluating the qualifications and independence of members of the Boarddirectors on a periodic basis and evaluating the overall effectiveness of theour Board and its committees.
Pursuant to its charter, the Nominating and Governance Committee has the authority and responsibility to:
Evaluate a candidate’s qualification based on a variety of factors, including such candidate’s integrity, reputation, judgment, knowledge, and diversity (including gender and ethnicity as well as background and experience) as well as the Board’s needs;
integrity, reputation, judgment, knowledge, and diversity (including gender and ethnicity as well as background and experience) as well as our Board’s needs; |
Recommend qualified individuals for board membership, including individuals suggested by directors and/or stockholders;
Periodically review the size and responsibilities of theour Board and its committees and recommend proposed changes to theour Board;
Annually review and recommend committee slates and additional committee members to theour Board as needed;
Develop and recommend to theour Board a set of corporate governance guidelines and periodically review such guidelines and propose changes to theour Board;
Annually review and approve theour Chief Executive Officer’s management succession plan to ensure continuity of management;
Develop and recommend to theour Board an annual self-evaluation process for theour Board and its committees, and administer and oversee the evaluation process;
Review its charter annually; and
Report its activities to the full Board on a regular basis.
Executive Committee:No Meeting Held in 20122013
The Executive Committee has the authority to exercise all powers of the Board between regularly scheduled Board meetings.
Roper Industries, Inc. 2014 Proxy Statement | 15 |
Compensation for our non-employee directors is governed by the Company’sour Director Compensation Plan, which is a sub-plan of the Company’s 2006 Stock Incentive Plan. The Director Compensation Plan provides for an annual grant of 4,000 restricted stock units (“RSUs”), which are issued the day after the Company’sour Annual Meeting of Stockholders. Unless the non-employee director has made a timely deferral election as provided in the Plan, each RSU represents the right to receive one share of Company Common Stockour common stock on the vesting date and the right to receive a dividend equivalent in the same amount and at the same time as any dividend or other cash distribution is paid on a share of Company Common Stock.our common stock. RSUs do not have voting rights. One half of the RSUs granted vest six months after the grant date and the remaining RSUs vest the day before the next Annual Meeting. During 2012,2013, each non-employee director received a grant of 4,000 RSUs the day after the 2012 Annual Meeting of Stockholders.on May 25, 2013.
Under the Company’sour Director Compensation Plan, each non-employee director also receives an annual cash retainer and fees for board and committee meetings as shown in the table below. The cash retainer and the number of RSUs granted will be prorated for any new director based on the number of full months such director serves as a non-employee director during the year. No changes have been made to the program since 2004.
Annual Cash Retainer | ||||
Annual Cash Retainer | $ | 42,500 | ||
Supplemental Annual Cash Retainers | ||||
Chair of Audit Committee | $ | 5,000 | ||
Chair of Compensation Committee | $ | 5,000 | ||
Chair of Nominating and Governance Committee | $ | 5,000 | ||
Board Meeting Compensation(1) | ||||
In-Person Attendance | $ | 2,000 | ||
Telephonic Attendance | $ | 1,000 | ||
Committee Meeting Compensation(2) | ||||
In-Person Attendance | $ | 1,000 | ||
Telephonic Attendance | $ | 500 |
(1) | An extended board meeting over multiple days is treated as a single board meeting for payment purposes. |
(2) | Directors attending a board and a committee meeting on the same day will only receive a fee for the board meeting. |
The CompanyWe also reimburses itsreimburse our directors for reasonable travel expenses incurred in connection with attendance at board, committee and stockholder meetings and other Company business.
Mr. Jellison is an employee of the Company and did not receive any compensation for his service as a director of the Company.director. His compensation is set forth in the “Executive Compensation” section below.
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| Roper Industries, Inc. 2014 Proxy Statement |
DIRECTOR COMPENSATION (CONTINUED)
The table below shows the compensation of the Company’sour non-employee directors (other than Mr. Jellison) during fiscal year 2012.for 2013.
20122013 Director Compensation
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1)(2)(3) | All Other Compensation ($) | Total ($) | ||||||||||
David W. Devonshire | 61,500 | 387,360 | - | 448,860 | ||||||||||
John F. Fort III | 54,500 | 387,360 | - | 441,860 | ||||||||||
Robert D. Johnson | 60,500 | 387,360 | - | 447,860 | ||||||||||
Robert E. Knowling, Jr | 57,500 | 387,360 | - | 444,860 | ||||||||||
Wilbur J. Prezzano | 56,333 | 387,360 | - | 443,693 | ||||||||||
Richard F. Wallman | 59,667 | 387,360 | - | 447,027 | ||||||||||
Christopher Wright | 56,500 | 387,360 | - | 443,860 |
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1)(2)(3) | All Other Compensation ($) | Total ($) | ||||||||||||
David W. Devonshire | 63,000 | 492,240 | - | 555,240 | ||||||||||||
John F. Fort III | 54,500 | 492,240 | - | 546,740 | ||||||||||||
Robert D. Johnson | 58,500 | 492,240 | - | 550,740 | ||||||||||||
Robert E. Knowling, Jr | 54,000 | 492,240 | - | 546,240 | ||||||||||||
Wilbur J. Prezzano | 55,500 | 492,240 | - | 547,740 | ||||||||||||
Richard F. Wallman | 58,500 | 492,240 | - | 550,740 | ||||||||||||
Christopher Wright | 58,000 | 492,240 | - | 550,240 |
(1) | The dollar values shown represent the grant date fair values for RSUs granted to these directors during |
(2) | As of December 31, |
(3) | There were no stock option awards outstanding at December 31, |
Our stockholder ownership and retention guidelines for our non-employee directors requires them to own 4,000 shares of Company Common Stock.our common stock. Until the share ownership guidelines are met, non-employee directors are required to retain 100% of any shares they receive (on a net after tax basis) under the Company’sour Director Compensation Plan. All of theour directors are in compliance with the ownership and retention guidelines.
Roper Industries, Inc. 2014 Proxy Statement | 17 |
The following table sets forth certain information concerning Roper’sour current executive officers. The executive officers are elected by the Board of Directors and serve at the discretion of the Board of Directors.its discretion.
Brian D. Jellison | Professional Experience | |
Chairman since 2003 President and | Mr. Jellison’s professional experience is discussed under | |
Chairman since 2003 Age: 68 | ||
John Humphrey | Professional Experience | |
Executive Vice President since 2011 Chief Financial Officer since 2006 Vice President from 2006 to 2011 Age: 48 | Prior to joining Roper, Mr. Humphrey | |
David B. Liner | Professional Experience | |
Vice President since 2005 General Counsel since 2005 Secretary since 2005 Age: 58 | Prior to joining Roper, Mr. Liner | |
Paul J. Soni | Professional Experience | |
Vice President since 2006 Controller since 2006 Age: 55 | Prior to joining Roper, Mr. Soni |
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| Roper Industries, Inc. 2014 Proxy Statement |
Beneficial ownership is determined in accordance with the rules of the SEC.SEC rules. Under the rules, the number of shares beneficially owned by a person and the percentage of ownership held by that person includes shares of Common Stockcommon stock that could be acquired upon exercise of an option within sixty days, although such shares are not deemed exercised and outstanding for computing percentage ownership of any other person. Unless otherwise indicated in the footnotes below, the persons and entities named in the table have sole voting and investment power with respect to all shares beneficially owned, subject to community property laws where applicable.
The following table shows the beneficial ownership of Roper Common Stockcommon stock as of March 31, 20132014 by (i) each of theour directors, (ii) each named executive officer in the “2012“2013 Summary Compensation Table,” (iii) all of our directors and executive officers as a group, and (iv) all persons who we know are the beneficial owners of five percent or more of Roper Common Stock.common stock. Except as noted below, the address of each of the personsperson in the table is c/o Roper Industries, Inc., 6901 Professional Parkway East, Suite 200, Sarasota, FL 34240.
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Name of Beneficial Owner | Beneficial Ownership of Common Stock(1)(2) | Percent of Class | ||||||
T. Rowe Price Associates, Inc | 13,339,593 | (3) | 13.4 | % | ||||
The Vanguard Group, Inc | 7,401,627 | (4) | 7.5 | % | ||||
Blackrock, Inc. | 6,398,592 | (5) | 6.5 | % | ||||
Franklin Resources, Inc. | 5,210,025 | (6) | 5.2 | % | ||||
David W. Devonshire | 14,000 | * | * | |||||
John F. Fort III | 32,900 | (7) | * | * | ||||
Brian D. Jellison | 1,691,884 | 1.7 | % | |||||
Robert D. Johnson | 8,500 | * | * | |||||
Robert E. Knowling, Jr. | 6,038 | * | * | |||||
Wilbur J. Prezzano | 20,000 | * | * | |||||
Richard F. Wallman | 31,965 | * | * | |||||
Christopher Wright | 88,884 | * | * | |||||
John Humphrey | 305,336 | * | * | |||||
David B. Liner | 128,087 | * | * | |||||
Paul J. Soni | 121,247 | (8) | * | * | ||||
All directors and current executive officers as a group (11 individuals) | 2,448,843 | 2.4 | % |
** | Less than 1%. |
(1) | Includes shares that may be acquired on or before May 30, 2013 upon exercise of stock options issued under Company plans as follows: Mr. Jellison |
(2) | Includes the following shares of unvested restricted stock held by named executives officers over which they have sole voting power but no investment power: Mr. Jellison (350,000), Mr. Humphrey |
(3) | Based on information as of December 31, |
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Roper Industries, Inc. 2014 Proxy Statement | 19 |
BENEFICIAL OWNERSHIP(CONTINUED)
Based on a Schedule 13G filed with the SEC on February |
(5) | Based on information reported on Schedule 13G filed with the SEC on January 30, 2014, as of December 31, 2013, BlackRock, Inc. (and certain subsidiaries as a group) beneficially owned 6,398,592 shares of Roper common stock with the sole voting power over 5,269,349 and sole dispositive power over all of the shares. |
(6) | Based on information reported on Schedule 13G filed with the SEC on |
(7) | Includes 500 shares held by a trust |
(8) | Includes |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires Roper’s directors, officers and persons who own more than 10% of Roper Common Stockcommon stock to file with the SEC initial reports of ownership and reports of changes in ownership. Officers, directors and greater than 10% stockholders are required by SEC regulation to furnish Roper with copies of all Section 16(a) forms they file.
We believe that during 20122013 all of our directors and executive officers complied with all Section 16(a) filing requirements, with the following exception:exception of one late Form 54 due to an administrative oversight in the reporting of a gift of stockpurchase by Mr. Humphrey.
Wallman. In making this statement, we have relied upon examination of the copies of Forms 3, 4 and 5, and amendments to these forms, provided to us and the written representations of our directors and executive officers.
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| Roper Industries, Inc. 2014 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis (“CD&A”) provides information about our compensation objectives and policies for our Chief Executive Officer and our other executive officers (who are included in the 20122013 Summary Compensation Table and referred to in this CD&A as “executive officers”) that will place in perspective the information set forth in the “Executive Compensation” section that follows in this proxy statement.
Our CD&A is organized as follows:
• |
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• | Objectives of Our Compensation Program. The objectives of our executive compensation program are based on our differentiated business model and the competitive pressures for executive talent. We structured our executive compensation program to reflect our compensation philosophy and related operating principles. |
• | Elements of Compensation. |
• | Compensation Process. We regularly review our compensation programs to assure |
• | Analysis of |
• | Additional Information. Information regarding other aspects of our compensation program for our executive officers is also presented. |
Business Overview and ResultsCREATING STOCKHOLDER VALUE
Roper is a diversified growthtechnology company. Our goal is to create superior long-term value for our investors through a strategy of building high-performance businesses united by common metrics and governance systems. Two key elements are critical to successfullySuccessfully executing our strategy and driving sustained value creation:creation requires:
operational excellence and reinvestment in our existing businesses to generate attractive cash returns, and
wisely deployingdeployment of the cash generated from operations primarily by making acquisitions that can be successfully integrated into our portfolio of companies.
companies or create a platform for future growth and diversification. |
To achieve these objectives, we take a minimalist approach to corporate structure to foster an entrepreneurial organization. By doing so, we maintain the agility associated with smaller companies while realizing the scale benefits of larger organizations. Among other challenges, our business model requires leaders with operational and portfolio expertise capable of taking on high levels of personal responsibility without the infrastructure support typically provided in companies of similar size. We consistently focus on high-margin businesses, differentiated technology, and nimble execution in an effort to deliver exceptional results.
Roper’s Evolution and Transformation
In 2001 when Brian Jellison, our Chief Executive Officer, joined the Company as President and Chief Executive Officer, Roper was in theS&P Small Cap 600with approximately $100 million in annual operating cash flow. From 2003-2008, Roper grew rapidly, generating $1.6 billion in operating cash flow while investing $2.6 billion in acquisitions and being added to theS&P Mid Cap 400. Building on its diverse end-markets and broad customer base, from 2009-2013 Roper’s growth accelerated, generating $2.9 billion in operating cash flow and investing $3.7 billion in acquisitions while being added to theS&P 500.
Over the past decade, Roper’s business portfolio has undergone an almost complete transformation as we continue to expand into software and software-as-a-service-based information networks while adding to our medical and technology businesses. Of the $3.6 billion in total capital deployed since November 2009, almost all was used to acquire medical and software technology businesses. This has created a further challenge in attracting and retaining talented leaders who can effectively build investor value in broad end markets and niche businesses. It also profoundly affects the relevance of external data points for benchmarking compensation as we compete with private equity and technology companies for talented leaders.
Outstanding Business Results for 2013
Performance for 20122013 was outstanding across the enterprise and throughout the year with record levels of revenue, income, and cash flow:
operating margins expanded in each of our segments in every quarter ofrevenue increased 8% over 2012 reflecting the strength of our business leaders and disciplined operating model, with gross margins expanding to 56% for the year;$3.24 billion
Roper Industries, Inc. 2014 Proxy Statement | 21 |
diluted earnings per share for 2012 were up 12% over the prior year, with revenues up 7% from 2011; and
COMPENSATION DISCUSSION AND ANALYSIS(CONTINUED)
gross margin increased to 58.1%, while operating margin increased to 26.0%
operating cash flow was a record $678$803 million for 2012, while free cash flow increased 14% representing 21%2013, an increase of revenue.18% over 2012
We continued our diversification into software and technology businesses during 20122013 by investing $1.5$1.0 billion in acquisitions, including our acquisition of Sunquest Information Systems, Inc., a diagnostic laboratory software solutions company. Over the past four years, $2.6 billion has been invested in new businesses, of which 95% was used to acquire medicalManaged Health Care Associates, Inc (MHA). The leading services and software technology businesses. company to the expanding alternate site health care
market, MHA offers a growing portfolio of services and solutions to support the diverse and complex needs of those caring for patients outside of the hospital—such as in nursing homes, home infusion, and complex rehab facilities.
Also in 2012,2013, we successfully issued $900$800 million of senior notes and ended the year with a strong balance sheet, including over $1.5$1.6 billion in cash and available liquidity.
Superior Returns to our stockholders totaled 29% in 2012, almost twice the S&P 500.Investors
Roper is proud of its history of providing sustained superior returns to investors. Over the last fourfive years, Roper’s market capitalization has increased by over $9 billion; over the last decade, market capitalization has increased by $12 billion. Over the last five years Roper’s cumulative total stockholder return (“TSR”) has more thanalmost doubled that of the S&P 500 and has exceeded the S&P 500 by more than five times over the last decade as shown inRoper’s TSR was 497% versus 104% for the graph below. Over the last three years, Roper has delivered over $6 billion of incremental value to investors, as shown in the table below.S&P 500.
Roper Incremental Value for Investors Since 2009 (Dollars in Millions) | ||||||||||||
Year | Market Capitaliza- tion (Year- End) | Cumulative Increase in Market Capitalization Since 2009 | ||||||||||
2009 | $ | 4,899 | - | |||||||||
2010 | $ | 7,236 | $ | 2,337 | ||||||||
2011 | $ | 8,381 | $ | 3,482 | ||||||||
2012 | $ | 10,969 | $ | 6,070 | ||||||||
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| Roper Industries, Inc. 2014 Proxy Statement |
Objectives of Our Compensation ProgramCOMPENSATION DISCUSSION AND ANALYSIS(CONTINUED)
OBJECTIVES OF OUR COMPENSATION PROGRAM
Our compensation program for executives is based on our business needs and challenges in creating stockholder value. To support the achievement of our business strategies and goals, we:
tie compensation to performance;
emphasize equity compensation to align executives’ financial interests with those of stockholders;
maintain compensation and reward levels that are competitive inwith both publicly traded and privately held enterprises that enable us to recruit and retain seasoned leadership capable of driving and managing a diversified growth company;
simplify compensation design to facilitate ease of administration and communication;
maintain flexibility to adjust to changing business needs in a fast-paced business environment; and
solicit and consider the views of our investors; and
adhere to the highest legal, governance, and ethical standards.
The Compensation Committee oversees our executive compensation programs to ensure that we appropriately compensate executives, to motivate executives to achieve our business objectives, and to align our executive’s interests with long-term interests of our stockholders. The Compensation Committee also reviews and discusses with management the potential for risks associated with the compensation policies and practices for executive officers as well as all employees to ensure that our practices are aligned with sound risk management.
Positive Compensation Practices
Consistent with investor interests and market “best practices,” positive features of our executive compensation program include the following:
ElementsPay-for-performance. A substantial portion of total compensation for executives is tied to performance.
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COMPENSATION DISCUSSION AND ANALYSIS(CONTINUED)
Performance vesting requirement for stock awards. In addition to continued service with the Company, performance vesting requirements apply to all restricted stock awards that must be met for executives to receive the shares.
Incentive caps. Annual cash bonuses for executives are capped to avoid encouraging a short-term focus. Performance-based restricted stock awards are also limited to only 100% of the target amount.
Limited perquisites and other benefits for executives. Our focus is on pay for performance, not on pensions, entitlements, or perquisites.
No repricing of underwater stock options. The repricing or exchange of underwater stock options is expressly prohibited under the stock incentive plans submitted to and approved by stockholders.
No defined-benefit pension plan. Our executives may participate in our 401(k) Plan on the same terms as other eligible employees and they may also defer cash compensation (and receive tax-deferred returns on those amounts) under our Non-Qualified Retirement Plan.
“Double trigger” equity vesting upon change-in-control. Under our equity incentive plan upon a change-in-control, the vesting of equity awards for all participants, including executives, may be accelerated only if the awards are not assumed by
the acquiring company or if they are assumed and the participant’s employment is terminated under certain circumstances. |
Limited severance compensation to executives.
“Clawback” policy in place. A policy providing for recoupment of erroneously paid compensation was implemented to mitigate risk.
No excise tax gross-ups. We do not provide gross-ups for potential excise taxes related to a change-in-control.
Robust share ownership and retention guidelines. Our executive officers and non-employee directors are required to hold a substantial amount of Roper stock. At 12/31/13, our CEO was required to hold an amount that equated to 11x salary with other executive officers required to hold amounts that approximated 5x salary; non-employee directors were required to hold stock that equaled 13x the annual cash retainer. In addition, all shares received from equity awards (net of taxes) must be retained until the stock ownership guideline is met.
Anti-hedging policy.We have a policy that prohibits the hedging of Roper stock to assure that our executive’s interests are aligned with those of our stockholders.
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| Roper Industries, Inc. 2014 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS(CONTINUED)
Consideration of 2013 Say-on-Pay Vote
The views of our investors are an important consideration in structuring our program. The Committee reviews input from stockholders as directly obtained by management from on-going stockholders communications as well as from the results of the annual Say-on-Pay vote. At the 2013 annual meeting, the Company’s executive compensation program was approved by 78% of the votes cast on Say-on-Pay, lower than the 99% and 96% “FOR” support received the prior two years. The Compensation Committee believes the decrease in the percentage of votes cast in favor of the executive compensation was the result of a negative say-on-pay voting recommendation issued by a proxy advisory firm. The Company did not agree with the recommendation by that firm for many reasons but particularly because it was based on a peer group that included companies with revenues similar to Roper but which otherwise were not comparable to Roper. Almost all the peers selected by the proxy advisor were capital-intensive industrial companies which are not reflective of Roper’s expansion into healthcare, software, and technology. In addition, the proxy advisor’s peers were much smaller than Roper as Roper’s market value was more than twice that of the proxy advisor median, as shown below. As such, it is to be expected that compensation for Roper’s executives would be more than that of smaller, industrially focused companies.
Over the last year, a detailed presentation on Roper’s sustained performance, business transformation, and peer selection process was provided to the leading proxy advisory firms. Through direct conversations with stockholders, we have gained further insight into investor views on our executive compensation program. In addition, a change in our Global Industry Classification System (GICS) assignment has been
requested with Standard & Poor’s as it can be one factor leading to inappropriate peer selection. Further, we have reviewed our pay and performance against our self-selected peer group under the pay-for-performance analyses of the leading proxy advisors using the most recent information available and none of the quantitative results raise concerns under the respective policies.
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COMPENSATION DISCUSSION AND ANALYSIS(CONTINUED)
Recent Changes to Our Program
We regularly review our compensation program to ensure it supports our business needs and also reflects investors’ views. As a result, several key changes were made to our program:
Enhanced performance requirements apply to all restricted stock awards that must be met before the shares may vest.
A “clawback” policy designed to recoup potential erroneous compensation payments has been adopted.
The “peer group” of publicly traded companies used for benchmarking compensation has been substantially changed to reflect our expansion into medical, software, and technology. We also requested a change in our Global Industry Classification System (GICS) from Standards & Poor’s to appropriately reflect Roper’s business mix.
Our executive compensation program consists of several different elements, each with an objective that fits into our overall compensation program. Although there is no specific formula for allocating among the components, we emphasize the link between performance and compensation and consider our equity programsequity-based components to be a significant vehicle for achieving that objective. While long-term stock isincentives are a major component of executive compensation, other elements are used to provide an integrated and competitive total pay package.
Long-Term Stock Incentives
Equity compensation is the key element of the total compensation program for our executive officers, and receives the heaviest weighting of all elements. It is intended to be a key element in driving the creation of long-term value for investors, attracting and retaining executives capable of effectively executing our business strategies, and structuring compensation to account for the time horizons of risks. We emphasize equity compensation because it supports the achievement of many of our key compensation objectives:
tie pay to performance by linking compensation to stockholder value creation;creation and achievement of pre-determined and objective performance criteria;
align executives’ interests with those of stockholders;
attract executives, particularly those interested in building long-term value for stockholders, as equity compensation is the key element of competitive pay packages for executives; and
retain executives and reward future service, by providing for forfeiture of awards prior to satisfaction of multi-year service requirements.
Our long-term stock incentive program currently consistsincentives consist of two types of equity awards, both tied to stock price, sinceawards. Because the value that an executive officer may ultimately receive depends on the value of our stock. Thesestock, these awards align our executive officers’ interests with those of our stockholders.
Stock Options—The exercise price of stock options is set at the market closing price of our stock on the date of grant, with options generally vesting in installments over three years. This design gives executives an incentive to increase share price and requires continued service over several years to realize any potential gains.
Performance-Based Restricted Stock—As with stock options, restricted shares generally vest in installments over three years but may fully vest at the end of three years or other periods without annual vesting. Generally,years. In addition to continued service, the vesting of installmentsrestricted shares is contingent on the Company attaining a specific, level ofpre-determined and objective performance primarily to preserve tax deductibility undergoals, as certified by the Code.Committee. Dividends arehave been paid currently on restricted shares during the vesting period. Restrictedperiod to align executives with total returns to investors, although this practice is subject to review. Performance-based restricted stock is intended to encourage the retention of executives, while providingprovide a continuing incentive to increase stockholder value.value, and further align executives’ interests with investors.
Tying the vesting of stock awards to achievement of goals (beyond ensuring tax-deductibility) is authorized in our 2006 Incentive Plan and is regularly considered but has not been used to date. Considerations that have discouraged us from using broader performance contingencies are the difficulty in setting multi-year financial goals in uncertain economic times, risk abatement, simplicity, and implications of acquisitions on trailing performance.
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| Roper Industries, Inc. 2014 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS(CONTINUED)
To strengthen the alignment with stockholders, the size of awards has been generally expressed as a constant number of shares, which fluctuates in value from year to year with changes in the stock price. We believe that this approach provides additional incentive for increasing the value of our shares, and exposes the executive to the risks of share ownership, while reinforcingand reinforces the linkage between stockholder returns and executive pay. The constancy of share-denominated awards also allows our executives to truly focus on long-term results which we believe is a key factor driving our sustained, superior returns for investors. Consistent with the “constant share” approach to equity award denomination, changes in total compensation for our executive officers closely align with our total stockholder return. The total compensation of our Chief Executive Officer, for example, has increased by 43% from 2011 to 2013 compared to a cumulative return to stockholders of 61% over the same period, as shown below.
Base Salary
Base salary is an important part of an executive’s compensation, and the Compensation Committee reviews each executive officer’s base salary annually as well as at the time of a promotion or other change in responsibility. Any salarySalary adjustments are usually approved early in the year, effective as of January 1. The
specific amount for each executive officer depends on the executive’s role in the Company, scope of responsibilities, experience and skills. Market practices are also considered in settingdetermining salaries. Base salaries are intended to assist us in attracting executives and recognizing differing levels of responsibility and contribution among executives. For our more senior executives, particularly our Chief Executive Officer, fixed base salary represents a smaller percentage of the aggregate potential compensation (consisting of base salary, cash bonus and equity incentives), since we link a greater percentage of their potential compensation to performance and value creation.
Annual Incentive Bonus
In addition to equity compensation and salary, annualAnnual cash bonuses are another important piece of total compensation for our executives. Annual bonus opportunities are intended to support the achievement of our business strategies by tying a meaningful portion of compensation to the achievement of established financial objectives for the year. These targets are discussed below in the section captioned “Analysis of 20122013 Compensation—Annual Incentive Bonus.” Annual bonus opportunities also are a key tool in attracting executives due to their market prevalence, and they add a variable component to our overall compensation structure. Bonuses are capped to avoid encouraging an excessive short-term focus at the expense of long-term soundness.
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COMPENSATION DISCUSSION AND ANALYSIS(CONTINUED)
Retirement Benefits
We do not have a traditional defined benefit pension program at this time, although ourprogram. Our executives are eligible to participate in a 401(k) program, which is the same as for other eligible employees. This program provides for matching contributions capped at 7.5% of base salary, subject to limitations imposed by the Code. We periodically review the retirement benefit component of our total compensation program for executives.
ToCode.To provide financial planning flexibility, we maintain a Non-Qualified RetirementDeferred Compensation Plan, pursuant to which our executive officers may elect to defer cash compensation and receive tax-deferred returns on those deferrals. This plan also providesis intended to provide deferred compensation benefits that would have been earned under the tax-qualified 401(k) program but for certain compensation and benefits limitations imposed by the Code. For more information on this plan, see the “Executive Compensation—2013 Non-Qualified Deferred Compensation” section below.
Perquisites and Other Benefits
We have generally avoided the use of perquisites and other types of non-cash benefits, and our executive officers participate in our other employee benefit programs on the same terms as other employees. We have, however, established a Medical Reimbursement Plan that covers certain medical and dental expenses of our executive officers, and we provide an automobile allowance and club memberships when they have a business purpose. All of the executive officers currently participate in these programs, and they are also eligible for reimbursement for financial planning.planning expenses.
Severance Arrangements and Change in ControlChange-in-Control Provisions
To assist in the recruitment of executives, we entered into severance and change-in-control arrangements with Messrs. Jellison, Humphrey and Liner when they joined the Company. These arrangements provide severance benefits in the event of termination of employment under certain circumstances, including a change in control.change-in-control. Any amounts or benefits payable under these arrangements would be either exempt from or compliant with the requirements of Section 409A of the Code. For a description of these agreements and the payments that would be due under various termination scenarios, see the “Potential Payments upon Termination or Change in Control” section below.
Our stock award program provides for acceleratedUnder our 2006 Incentive Plan, vesting of awards granted to all participants including our executive officers, in certain circumstances. Under our 2006 Incentive Plan, vesting will not be accelerated for
outstanding awards upon a “change in control”“change-in-control” (as defined in the 2006 Incentive Plan) ifunless the awards are not assumed or otherwise equitably converted into comparable awards by the acquiring company. If the awards are assumed by the acquirer and within two years after the change in control a participant’s employment is terminated without “cause” or a participant resigns for “good reason,” the participant’s awards will become vested (“double trigger” approach). We adopted this approach, rather than providing for vesting solely upon a change in control (“single trigger” approach) because we believe that the double trigger provides adequate employment protection and reduces potential costs associated with the agreements to an acquirer of the Company.
No Tax Gross-Ups
Under Section 280G of the Code, an executive may be subject to excise taxes on benefits received in relation to a change in control of the Company. While many companiesWe do not provide excise-tax gross-ups to executives to place the executive in the same tax position as if the excise tax did not apply, we do not provide this protection to any executive.apply.
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| Roper Industries, Inc. 2014 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS(CONTINUED)
Mix of Total Compensation
We emphasize long-term incentives that are tied to stock price over cash and other forms of compensation, although we do not use any formula or specific weightings or relationship for allocating the various compensation elements within our total compensation program. The annual performance-based cash bonus opportunity for our executive officers further emphasizes pay for performance. Base salary isAs shown below, 94% of total direct compensation for our CEO in 2013 was tied to performance with 82% in the form of equity compensation. For our other significant pay element but is generally less emphasized than annual and long-term incentive opportunities. As noted above, we offer perquisites and other types of non-cash benefits on a limited basis, and these represent a small portionexecutive officers, 84% of total compensation for executives. Our policies and practices are subjectwas tied to periodic review and possible revision.performance, on average.
2013 Total Direct Compensation ProcessMix
The Compensation Committee oversees our compensation programs. It reviews each element of compensation for each of our executive officers at least once each yearannually and makes athe final determination regarding any adjustments to their current compensation structure and levels after considering a number of factors. The Compensation Committee generally takes into account the scope of the executive officer’s responsibilities, performance and experience as well as competitive compensation levels. During the annual review process, the Compensation Committee also considers our full-year financial results against financial performance in prior periods and the structure of our compensation programs relative to sound risk management.
The Committee also reviews the results of the advisory stockholder vote on executive compensation. At last year’s annual meeting, 96% of the votes cast with respect to the advisory vote approved the compensation of our executive officers as described in the CD&A and accompanying compensation tables included in our 2012 proxy statement. The Compensation Committee did not make any changes as a direct result of the vote.officers.
Consulting Assistance
Under its charter, the Compensation Committee has the authority to retain its own compensation consultants. For 2012,2013, the Compensation Committee retained Frederic W. Cook & Co., Inc. (the “Consultant”) to provide the Compensation Committee with independent, objective analysis and professional opinions on executive compensation matters. The Consultant is independent, reports directly to the Chair of the Compensation Committee and performs nohas never performed other work for the Company. The Committee determined that its engagement of the Consultant did not raise any conflicts of interest. The Consultant generally attends all meetings of the Compensation Committee where evaluations of the effectiveness of overall executive compensation programs are conducted or where compensation for
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COMPENSATION DISCUSSION AND ANALYSIS(CONTINUED)
executive officers is analyzed or approved. The Consultant assists in gathering and analyzing market data for compensation paid for similar positions at companies with which we compete for executive talent. In addition, the Consultant provides expert knowledge of marketplace trends and best practices relating to competitive pay levels as well as developments in regulatory and technical matters.
Role of Our Chief Executive Officer
While the Compensation Committee is ultimately responsible for making all compensation decisions affecting our executive officers, our Chief Executive Officer participates in the underlying process because of his close day-to-day association with the other executive officers and his knowledge of all of the Company’s diverse business operations. Our Chief Executive Officer periodically discusses with the Compensation Committee the performance of the Company and of each executive officer, including himself. Although the Compensation Committee values the input of our Chief Executive Officer, he does not participate in the portion of the Compensation Committee meeting regarding the review of his own performance or the determination of the actual amounts of his compensation.
Market Benchmarking
Benchmarking pay levels for Roper’s executive officers is challenging given our portfolio transformation, high market valuation relative to revenues, and differentiated business model. We have no formal policies or practices on specific relationships between compensation for our executives and statistics on market pay levels. Our goal is to provide compensation, consistent with good governance practices, that allows us to attract and retain executives capable of effectively leading a diversified growthtechnology company. We operate in an intensely competitive business environment. Given our diverse portfolio of businesses and end-markets, we compete with a wide array of organizations for customers, potential acquisitions, and senior leadership capable of executing our business strategies and successfully deploying capital. The continuing transformation of our portfolio of businesses creates additional challenges in ensuring we are able to effectively compete for talent.
The evolution and complexity of our business complicates the peer selection process and can result in inappropriate and irrelevant groups comprised of much smaller companies, reflective of where Roper has been instead of where it is today in terms of business focus and mix.
Market pay levels are only one factor consideredthe Compensation Committee considers in evaluating the supply of and demand for executives, with the decision ultimately reflecting an evaluation of individual contribution and value to our Company. To provide an external frame of reference on range and reasonableness, we obtain information on market pay levels from various sources, including published compensation surveys and publicly available information for selected benchmark companies as well as for other publicly traded companies. Given the capital deployment responsibilities of executives at the enterprise level and the private equity-like nature of our business, we consider the compensation levels and practices used by private equity companies that offer comprehensive programs, which often include co-investment and leveraged carried-interest opportunities. We do not allow our executives to co-invest in Company investments, nor do they benefit from carried-interest tax treatment.
Information on pay levels and practices for a group of publicly traded benchmark companies is collected on a regular basis. The companies included in the benchmarking group are jointly selected by our Consultant and management and approved by the Compensation Committee. The group is reviewed at least annually in light of our development and growth but historically has not been changed every year (other than to remove acquired companies) to simplify the benchmarking process and provide continuity. Given our history of out-growing the selected benchmark companies,growth. Roper has been positioned in the middle of the group in terms of size, and ishistorically has been in the upper quartile of the benchmark companies based on performance. Size comparisons have been based on a balanced blend of multiple factors including enterprise value, market capitalization, and market valuation compared to revenues as usingrevenues. Using only revenues in measuring size understates Roper’s overall value and disregardsis a poor indicator of Roper’s relative value. Roper’s market capitalization is more than 4x its proven growth history. Following an extended review over multiple years,annual revenues. The revenues of the peer companies selected by the proxy advisors in 2013 were about equal to Roper but had a median market valuation of approximately 1.7x revenue. To be compared to companies of similar revenue size but with less than half the market valuation relative to revenues can be confusing and misleading.
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| Roper Industries, Inc. 2014 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS(CONTINUED)
Changes were made to the benchmark group was reconfigured for 2012, as listed below,2013 to better reflect our continued strong growth and sustained value creation, our expansion into medical, software, and technology driven businesses, (which included 95% of the $2.6 billion invested in new businesses over the last four years), and high market valuation relative to revenues and gross investment. In light of our changing business mix, we also requested a change in our GICS assignment which does not reflect our current business and can lead to inappropriate peer selection for purposes of benchmarking performance or compensation. The benchmark peer companies are listed below along with various size indicators. Danaher, the largest company and the only industrial conglomerate in the group, is included as many of our investors have told us they see Danaher as our closest peer.
Company | Ticker | Enterprise Value(1) ($ millions) | Market Capitalization(1) ($ millions) | Revenue(2) ($ millions) | Net Income(2) ($millions) | Type of Company | ||||||||||||||||
Danaher Corp | DHR | $ | 55,396 | $ | 53,824 | $ | 19,118 | $ | 2,695 | Industrial Conglomerate | ||||||||||||
Boston Scientific | BSX | $ | 19,727 | $ | 16,049 | $ | 7,143 | $ | (121 | ) | Health Care Equipment | |||||||||||
CareFusion Corp | CFN | $ | 8,094 | $ | 8,416 | $ | 3,556 | $ | 368 | Health Care Equipment | ||||||||||||
Quest Diagnostics | DGX | $ | 11,051 | $ | 7,786 | $ | 7,146 | $ | 849 | Health Care Services | ||||||||||||
Laboratory Corp | LH | $ | 10,496 | $ | 7,986 | $ | 5,808 | $ | 574 | Health Care Services | ||||||||||||
Agilent Technologies | A | $ | 19,003 | $ | 18,976 | $ | 6,782 | $ | 724 | Life Sciences Tools & Services | ||||||||||||
PerkinElmer | PKI | $ | 5,438 | $ | 4,634 | $ | 2,166 | $ | 167 | Life Sciences Tools & Services | ||||||||||||
American Capital | ACAS | $ | 4,587 | $ | 4,418 | $ | 487 | $ | 184 | Private Equity / Asset Management | ||||||||||||
salesforce.com | CRM | $ | 35,034 | $ | 33,280 | $ | 3,760 | $ | (136 | ) | Software—Application | |||||||||||
Adobe Systems Inc | ADBE | $ | 28,273 | $ | 29,933 | $ | 4,055 | $ | 290 | Software—Application | ||||||||||||
Intuit | INTU | $ | 21,127 | $ | 21,744 | $ | 4,231 | $ | 866 | Software—Application | ||||||||||||
Citrix Systems | CTXS | $ | 11,095 | $ | 11,790 | $ | 2,918 | $ | 340 | Software—Application | ||||||||||||
Autodesk | ADSK | $ | 10,038 | $ | 11,352 | $ | 2,294 | $ | 249 | Software—Application | ||||||||||||
Nuance Communications | NUAN | $ | 6,325 | $ | 4,817 | $ | 1,863 | $ | (149 | ) | Software—Application | |||||||||||
Solera Holdings | SLH | $ | 5,610 | $ | 4,872 | $ | 890 | $ | 3 | Software—Application | ||||||||||||
Median | $ | 11,051 | $ | 11,352 | $ | 3,760 | $ | 290 | ||||||||||||||
Roper | ROP | $ | 15,918 | $ | 13,772 | $ | 3,238 | $ | 538 | Diversified Technology |
Source: | Standard & Poor’s Compustat |
(1) | As of 12/31/13 |
(2) | Last four quarters available as of 12/31/13 |
Roper Industries, Inc. 2014 Proxy Statement | 31 |
COMPENSATION DISCUSSION AND ANALYSIS(CONTINUED)
A summary business description for each peer is provided below to demonstrate the closest peer to Roper. Given the evolutionbreadth and complexity of our business as well as external developments generally, more frequent changes may be required to the composition of the peer group than has been our historical practice.businesses.
Company | Business Description | |
Danaher | Industrial conglomerate that designs, manufactures, and markets professional, medical, industrial, and commercial products and services worldwide | |
Boston Scientific | Health care equipment company that develops, manufactures, and markets medical devices used in various interventional medical specialties worldwide | |
CareFusion | Medical technology company that provides various healthcare products and services | |
Quest Diagnostics | Provider of diagnostic testing, information and services, offering insights and interpretive consultation that enable patients and physicians to make healthcare decisions | |
Laboratory Corp. | Testing services company used by the medical profession in routine and specialized testing, patient diagnosis, and in the monitoring and treatment of disease | |
Agilent Technologies | Life sciences company that provides bio-analytical and electronic measurement solutions and services to the life sciences, chemical analysis, diagnostics and genomics, communications, and electronics industries worldwide | |
PerkinElmer | Provider of products, services and solutions to the diagnostics, research, environmental, industrial and laboratory services markets, addressing issues related to the health and safety of people and their environment | |
American Capital | Equity firm and global asset manager that invests in private equity, private debt, technology investments, special situation investments, and alternative asset funds | |
salesforce.com | Application software company that provides enterprise cloud computing (internet-based computing) and enterprise solutions (customer and collaboration relationship management (CRM)) including professional services to facilitate the adoption of its solutions | |
Adobe Systems | Diversified software company offering software and services used by professionals, marketers, knowledge workers, application developers, enterprises and consumers for creating, managing, delivering, measuring and engaging with content across multiple operating systems, devices and media | |
Intuit | Software company that provides business and financial management solutions for small businesses, consumers, and accounting professionals | |
Citrix Systems | Business software and service company that designs, develops and markets technology solutions that enable information technology (IT) services | |
Autodesk | Design software and services company offering business solutions, through technology products and services, to global customers in the architecture, engineering and construction; manufacturing, and digital media and entertainment industries | |
Nuance Communications | Global provider to businesses and consumers of voice and language solutions used in healthcare, mobile, consumer, enterprise customer service, and imaging markets | |
Solera Holdings | Global provider of software, products and services to the automobile insurance claims processing industry, including products and services for used vehicle validation, electronic titling, property claims management, fraud detection, etc. | |
Roper | Global provider of customer solutions through application software, SaaS, healthcare technology, healthcare equipment, energy systems, electronic instruments, and other asset-light niche technologies |
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| 2014 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS(CONTINUED)
For each benchmark company, we gatherthe Compensation Committee reviews information regarding the total compensation levels for their named executive officers, specifically noting base salary, annual bonus, long-term equity incentives and other compensation, including retirement benefits and perquisites. In addition, for each company we compile information on dilution from stock incentives, share usage under stock incentive plans (including the number of shares historically granted annually as a percentage of total shares outstanding and the expense of all stock awards granted as a percentage of market capitalization), retirement practices and other related items. This information is summarized and reviewed with the Compensation Committee. We also periodically gather information from leading published compensation surveys for industrial companies generally and review information related to compensation among private equity firms.
CEO Compensation Relative to Other Executives
In addition to market pay information, the Compensation Committee considers our executive officers’ scope of responsibilities, nature of duties, and experience in an effort to ensure that compensation levels are reasonable and equitable from an internal perspective. A fundamental principle underlying the structure of our compensation program is that the relative proportion of incentive and equity compensation as a percentage of total compensation should increase commensurately with responsibility level. The role of our CEO has, by definition, the highest level of responsibility and requires the broadest complement of skills. In addition to fundamental functional skills, CEO operational acuity is essential for effective management across all our businesses and segments, particularly since we do not have a Chief Operating Officer. Our CEO must also be skilled at asset allocation and investments to ensure that the cash generated by operations is effectively deployed. We believe our strong performance and growth under the leadership of our CEO, coupled with his broad range of experience, are highly desired in the marketplace and make him very valuable to other potential employers. Further, fromFrom an internal perspective the CEO is more seasoned and experienced than our other executive officers, and also serves as our President and Chairman of the Board. Further, our CEO has been instrumental in building the sustainable high-performance and entrepreneurial culture at Roper which has created superior returns for investors for more than a decade. In light of these considerations, the Compensation Committee has set the compensation for our CEO at a level the Compensation Committee believes is appropriate and equitable relative to compensation for our other executive officers.
Analysis of 2012 CompensationANALYSIS OF 2013 COMPENSATION
Consistent with our philosophy of linking compensation to performance, compensation for our executive officers in 20122013 was linked to our business results (see “Business Overview and Results”“Outstanding Business Results for 2013” above for a summary of 20122013 results). This section discusses the compensation actions that were taken in 20122013 for our executive officers, as reported in the “Executive Compensation” section below.
Base Salary
In January 20122013 the Compensation Committee approved the following increases effective at the start of the year: Mr. Jellison (4.5%(4.3%), Mr. Humphrey (3.6%(3.4%), Mr. Liner (3.6%(2.3%) and Mr. Soni (5.5%(3.9%). The increases reflect the evaluation of the Compensation Committee and Mr. Jellison (except in regard to himself) of the responsibilities and performance of each executive officer.
Annual Incentive Bonus
Annual incentive bonus opportunities for our executive officers are based on achieving financial performance targets that are established at the start of the year. Additional factors related to the creation of value for stockholders are also considered when deemed appropriate by the Compensation Committee. Under our program, each executive officer is assigned an incentive opportunity expressed as a percentage of base salary. The percentages for 2012 were 225% of base salary for 2013 were 225% for our Chief Executive Officer, 150% of base salary for our Chief Financial Officer, 100% of base salary for Mr. Linerour General Counsel and 80% of base salary for Mr. Soni.our Controller. The percentages are consistent with our philosophy that the “at-risk” portion of total compensation should increase with position level and reflect market practice. Our annual incentive bonuses are capped at the foregoing respective percentages for our executive officers.officers in the interest of risk mitigation and avoidance of a short-term focus to decision-making.
For determining the 20122013 annual incentive bonus amount, the Compensation Committee retained the approach used in the prior year and set the base amount at the amount of 2011years. 2013 adjusted net earnings. The minimum performance levelearnings were required to reach at least $494 million (2012 adjusted net earnings) for any bonus was set at 100%to be earned. At $494 million of the base amount and the level at which the full bonus amount would be earned was set at 115% of the base amount. At the 100% minimum performance level,adjusted net earnings, 35% of the full bonus opportunity would be earned. If adjusted net earnings increased by 15% to $568 million, then 100% of the full bonus amount would be earned. To the extent adjusted net earnings was were
Roper Industries, Inc. 2014 Proxy Statement | 33 |
COMPENSATION DISCUSSION AND ANALYSIS(CONTINUED)
between 100%$494 million and 115% of the base amount,$568 million, the percentage of the bonus opportunity earned would be determined through straight-line interpolation.interpolation, as shown in the chart below. For 20122013 the adjusted net earnings for the Company exceeded 115%were $562 million, an increase of the base amount, and13.8%; accordingly, the Compensation Committee approved payment of 100%94.5% of the bonus opportunity. The performance bonuses to our executive officers for 20122013 are shown in the 20122013 Summary Compensation Table below under the “Non-Equity Incentive Plan Compensation.”
Adjusted net earnings is net earnings increased or reduced to eliminate the effects of extraordinary items, accounting and tax law changes, discontinued operations, restructuring of debt obligations, asset dispositions, asset write-downs or impairment charges, acquisition-related expenses, litigation expenses and settlements, reorganization and restructuring programs, and non-recurring or special items (as discussed in management’s discussion and analysis in the Company’s 10-K for that year).
Long-Term Stock Incentives
In 2012,2013, we continuedawarded performance-based restricted stock to our practice of awarding either a combination ofChief Executive Officer and we awarded stock options and restricted shares or onlyperformance-based restricted shares to our other executive officers. Consistent with our constant-share approach, the number of shares awarded in 20122013 to Mr. Jellison, Mr. Liner,our CEO and Mr. Soni wereother executive offices was the same as each received in the prior year. The change in the value of their restricted stock awards for 20122013 compared to 20112012 as reported in the Stock Awards column of the Summary Compensation Table below exactly equals the increase in the stock price from the prior year at the time of the awards and thus reflects increased stockholder value. (The change in reported stock option values varies slightly due to inputs to the option valuation formula as required
under accounting rules.) For Mr. Humphrey, our Chief Financial Officer, the Compensation Committee decided to rebalance the weighting between stock options and restricted shares and granted Mr. Humphrey an equal number of stock options and restricted shares in 2012, reducing the number of stock options and increasing the number of restricted shares compared to prior awards in a manner such that the total value of the combined award was similar. These awards are shown in the 20122013 Grants of Plan-Based Awards Table below. For the 2013 restricted stock awards to vest, a minimum of $575 million in adjusted EBITDA (as defined above for adjusted net earnings with the exclusion of interest, taxes, depreciation, and amortization) must be achieved over each applicable four-quarter period, as certified by the Committee. Adjusted EBITDA related to the initial portion of the 2013 award was $1,035 million and was certified by the Committee.
Substantially enhanced performance requirements were applied to the 2014 performance-based restricted stock awards. For 50% of the award to vest, adjusted EBITDA of $863 million must be achieved. For context, this level of performance as measured against 2013 revenue, represents an EBITDA margin of more than 26%. To receive the full amount of the remaining half of the award, operating cash flow must be at least 20% of revenue.
Additional Information on Our ProgramADDITIONAL INFORMATION ABOUT OUR PROGRAM
Other arrangements and considerations that are important to a stockholder’s understanding of our overall executive compensation program are described below.
34 |
| Roper Industries, Inc. 2014 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS(CONTINUED)
Share Ownership and Retention Guidelines
We believe that our executives should have a significant equity interest in the Company. To promote such equity ownership and further align the interests of our executives with our stockholders, we adopted share retention and ownership guidelines for our executive officers. The stock ownership requirements vary based upon the executive’s level and are expressed as a number of shares, ranging from a minimum of 100,000as shown below. All our executive officers hold shares for the Chief Executive Officer to 15,000 shares for Group Vice Presidents. substantially above these guidelines.
Position | Guideline Number of Shares | Market Value at Year-End Close* | Salary | Guideline Multiple of Salary | ||||||||||||
CEO | 100,000 | $ | 13,868,000 | $ | 1,200,000 | 11.6x | ||||||||||
Average Other Executive Officers | 18,333 | $ | 2,542,000 | $ | 530,000 | 4.8x |
* | Based on closing market price of our Common Stock on December 31, 2013 of $138.68 |
Until the stock ownership guidelines are met, an executive is required to retain 100% of any applicable shares received (on a net after tax basis) under our equity compensation program. Our key executives all meet the share ownership requirements. Our key executives will have a substantial portion of their incentive compensation paid in the form of our Common Stock. The program is subject to periodic review by the Compensation Committee.
HedgingAnti-Hedging Policy
Our insider trading policy prohibitsWe prohibit our executive officers from engaging in transactions involving derivative instruments with respect to Company securities, and other securities that are immediately convertible or exchangeable into such securities.
Compensation Recoupment Policy
We are committed to full compliance with mandated policies regardingIn the recoupment of erroneously paid compensation. Given the status of governmental guidance in regard to legislative requirements, we have independently initiated the developmentevent of a clawback policymaterial restatement of the Company’s financial results, other than a restatement due to changes in accounting principles or applicable law or interpretations thereof, the Board will review the facts and circumstance that led to the requirement for ourthe restatement and will take such actions as it deems necessary or appropriate. The Board will consider whether any executive officers.officer received compensation based on the original financial statements because it appeared he or she achieved financial performance targets which in fact were not achieved based on the restatement. The Board will also consider the accountability of any executive officer whose acts or omissions were responsible in whole or in part for the events that led to the restatement and whether such acts or omissions constituted misconduct.
Regulatory Considerations
The Code contains a provision that limits the tax deductibility of certain compensation paid to our executive officers. This provision disallows the deductibility of certain compensation unless it is considered performance-based compensation under the Code. Our stock options are designed to be performance based and
fully deductible. The restricted stock awards granted to our executive officers in 2012 are performance-based in a manner that is intended to preserve their full deductibility.be performance-based and fully deductible. We have adopted policies and practices that should ensureintended to maximize the full deductibility of our annual incentive bonuses. However, we may forgo any or all of the tax deduction if we believe it to be in the best long-term interests of our stockholders.
In making decisions about executive compensation, we also consider the impact of other regulatory provisions, including the provisions of Section 409A of the Code regarding non-qualified deferred compensation and the change-in-control provisions of Section 280G of the Code. In making decisions about executive compensation, we also consider how various elements of compensation will impact our financial results. For example, ASC Topic 718, the accounting standard that determines the cost to be recognized for equity awards, is considered in reviewing the relative weighting between stock options and restricted shares.
Roper Industries, Inc. 2014 Proxy Statement | 35 |
We have reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on our review and discussion with management, we have recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.
Submitted by:
Robert D. Johnson, Chairman
Robert E. Knowling, Jr.
Wilbur J. Prezzano
36 |
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The following table sets forth certain information with respect to compensation paid to our principal executive officer, our principal financial officer, and our other executive officers for the fiscal year ended December 31, 2012.
20122013. In this section, we refer to the individuals in the 2013 Summary Compensation Table as our “named executive officers.”
2013 Summary Compensation Table
Name and Principal Position | Year | Salary (1) | Bonus | Stock Awards (2) | Option Awards (2) | Non-Equity Incentive Plan Compensation (1)(3) | Change in Pension Value & Nonqualified Deferred Compensation Earnings(4) | All Other Compensation (5) | Total Compensation | |||||||||||||||||||||||||||
Brian D. Jellison | 2012 | $ | 1,150,000 | - | $ | 14,043,000 | - | $ | 2,587,500 | - | $ | 305,205 | $ | 18,085,705 | ||||||||||||||||||||||
Chairman of the Board, President and Chief Executive Officer | | 2011 2010 | | | 1,100,000 1,050,000 | |
| - - |
|
| 11,034,000 - |
|
| - - |
| | 2,475,000 2,362,500 | |
| - - |
| | 292,446 260,214 | | | 14,901,446 3,672,714 | | |||||||||
John Humphrey | 2012 | 725,000 | - | 2,808,600 | $ | 893,100 | 1,087,500 | - | 168,169 | 5,682,369 | ||||||||||||||||||||||||||
Executive Vice President and Chief Financial Officer | | 2011 2010 | | | 700,000 625,000 | |
| - - |
| | 2,320,200 1,022,200 | | | 1,462,356 1,009,200 | | | 1,050,000 937,500 | |
| - - |
| | 159,496 133,200 | | | 5,692,052 3,727,100 | | |||||||||
David B. Liner | 2012 | 430,000 | - | 561,720 | 357,240 | 430,000 | - | 99,022 | 1,877,982 | |||||||||||||||||||||||||||
Vice President, General Counsel and Secretary | | 2011 2010 | | | 415,000 400,000 | |
| - - |
| | 441,360 306,660 | | | 292,471 201,840 | | | 415,000 400,000 | |
| - - |
| | 94,081 83,506 | | | 1,657,912 1,392,006 | | |||||||||
Paul J. Soni | 2012 | 385,000 | - | 561,720 | 357,240 | 308,000 | - | 88,829 | 1,700,789 | |||||||||||||||||||||||||||
Vice President and Corporate Controller | | 2011 2010 | | | 365,000 350,000 | |
| - - |
| | 441,360 306,660 | | | 292,471 201,840 | | | 292,000 262,500 | |
| - - |
| | 84,453 71,038 | | | 1,475,284 1,192,038 | |
Name and Principal Position | Year | Salary(1) ($) | Stock Awards(2) ($) | Option Awards(2) ($) | Non-Equity Plan | Change in Pension Value & Nonqualified Deferred Compensation Earnings(4) ($) | All Other Compensation(5) ($) | Total Compensation ($) | ||||||||||||||||||||||||
Brian D. Jellison | 2013 | 1,200,000 | 17,283,000 | - | 2,551,500 | - | 334,296 | 21,368,796 | ||||||||||||||||||||||||
Chairman of the Board, President and Chief Executive Officer | 2012 | 1,150,000 | 14,043,000 | - | 2,587,500 | - | 305,205 | 18,085,705 | ||||||||||||||||||||||||
2011 | 1,100,000 | 11,034,000 | - | 2,475,000 | - | 292,446 | 14,901,446 | |||||||||||||||||||||||||
John Humphrey | 2013 | 750,000 | 3,456,600 | 1,088,235 | 1,063,125 | - | 170,972 | 6,528,932 | ||||||||||||||||||||||||
Executive Vice President and Chief Financial Officer | 2012 | 725,000 | 2,808,600 | 893,100 | 1,087,500 | - | 168,169 | 5,682,369 | ||||||||||||||||||||||||
2011 | 700,000 | 2,320,200 | 1,462,356 | 1,050,000 | - | 159,496 | 5,692,052 | |||||||||||||||||||||||||
David B. Liner | 2013 | 440,000 | 691,320 | 435,294 | 415,800 | - | 96,642 | 2,079,056 | ||||||||||||||||||||||||
Vice President, General Counsel and Secretary | | 2012 2011 | | | 430,000 415,000 | | | 561,720 441,360 | | | 357,240 292,471 | | | 430,000 415,000 | | | - - | | | 99,022 94,081 | | | 1,877,982 1,657,912 | | ||||||||
Paul J. Soni | 2013 | 400,000 | 691,320 | 435,294 | 302,400 | - | 86,646 | 1,915,660 | ||||||||||||||||||||||||
Vice President and Corporate Controller | | 2012 2011 | | | 385,000 365,000 | | | 561,720 441,360 | | | 357,240 292,471 | | | 308,000 292,000 | | | - - | | | 88,829 84,453 | | | 1,700,789 1,475,284 | |
(1) | Amounts shown include, as applicable, deferrals to the 401(k) Plan and the Non-Qualified Retirement Plan. |
(2) | The dollar values shown represent the grant date fair values for restricted stock and option awards |
(3) | The amounts in this column reflect payments made pursuant to |
(4) | The Non-Qualified Retirement Plan does not provide for “above-market” or preferential earnings as defined in applicable SEC rules. |
(5) | Amounts reported in the “All Other Compensation” column for |
Name | Club Memberships ($) | Company Car ($) | Additional Medical Benefits ($) | Contributions to Defined Contribution Plans ($)(a) | Club Memberships ($) | Company Car ($) | Additional Medical Benefits ($) | Company Contributions | Financial Planning ($) | |||||||||||||||||||||||||||
Brian D. Jellison | 1,375 | 24,000 | 7,365 | 272,465 | 1,446 | 24,000 | 10,030 | 284,062 | 14,758 | |||||||||||||||||||||||||||
John Humphrey | 7,506 | 24,000 | 3,141 | 133,522 | 7,694 | 24,000 | 1,465 | 137,813 | - | |||||||||||||||||||||||||||
David B. Liner | 2,751 | 19,000 | 13,671 | 63,600 | 2,824 | 19,000 | 9,568 | 65,250 | - | |||||||||||||||||||||||||||
Paul J. Soni | 7,506 | 19,000 | 11,352 | 50,971 | 7,694 | 19,000 | 6,852 | 53,100 | - |
(a) | Reflects contributions to the Non-Qualified Retirement Plan and Employee’s Retirement Savings 003 Plan. |
Roper Industries, Inc. 2014 Proxy Statement | 37 |
2012EXECUTIVE COMPENSATION(CONTINUED)
2013 Grants of Plan-Based Awards
The following table sets forth certain information with respect to grants of plan-based awards for the fiscal year ended December 31, 20122013 to the named executive officers.
Estimated Future Payout Under Non-Equity Incentive Plan Awards(1) | All Other Stock Awards: # of Shares of Stock /Units(2) | All Other Option Awards: # of Securities Underlying Options(3) | Exercise / Base Price of Option Awards ($/Sh) | Grant Date Fair Value ($)(4) | ||||||||||||||||||||||||||||
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | ||||||||||||||||||||||||||||
Brian D. Jellison | 1/18/2012 | 150,000 | 14,043,000 | |||||||||||||||||||||||||||||
905,625 | 2,587,500 | 2,587,500 | ||||||||||||||||||||||||||||||
John Humphrey | 1/18/2012 | 30,000 | 2,808,600 | |||||||||||||||||||||||||||||
1/18/2012 | 30,000 | 93.62 | 893,100 | |||||||||||||||||||||||||||||
380,625 | 1,087,500 | 1,087,500 | ||||||||||||||||||||||||||||||
David B. Liner | 1/18/2012 | 6,000 | 561,720 | |||||||||||||||||||||||||||||
1/18/2012 | 12,000 | 93.62 | 357,240 | |||||||||||||||||||||||||||||
150,500 | 430,000 | 430,000 | ||||||||||||||||||||||||||||||
Paul J. Soni | 1/18/2012 | 6,000 | 561,720 | |||||||||||||||||||||||||||||
1/18/2012 | 12,000 | 93.62 | 357,240 | |||||||||||||||||||||||||||||
107,800 | 308,000 | 308,000 |
Estimated Future Payout Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Option Awards: # of Securities Underlying Options(3) | Exercise / Base Price of Option Awards ($/Sh) | Grant Date Fair Value(4) | ||||||||||||||||||||||||||||
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Target (#) | |||||||||||||||||||||||||||
Brian D. Jellison | 1/17/2013 | 150,000 | 17,283,000 | |||||||||||||||||||||||||||||
945,000 | 2,700,000 | 2,700,000 | ||||||||||||||||||||||||||||||
John Humphrey | 1/17/2013 | 30,000 | 3,456,600 | |||||||||||||||||||||||||||||
1/17/2013 | 30,000 | 115.22 | 1,088,235 | |||||||||||||||||||||||||||||
393,750 | 1,125,000 | 1,125,000 | ||||||||||||||||||||||||||||||
David B. Liner | 1/17/2013 | 6,000 | 691,320 | |||||||||||||||||||||||||||||
1/17/2013 | 12,000 | 115.22 | 435,294 | |||||||||||||||||||||||||||||
154,000 | 440,000 | 440,000 | ||||||||||||||||||||||||||||||
Paul J. Soni | 1/17/2013 | 6,000 | 691,320 | |||||||||||||||||||||||||||||
1/17/2013 | 12,000 | 115.22 | 435,294 | |||||||||||||||||||||||||||||
112,000 | 320,000 | 320,000 |
(1) | For an explanation of the material terms, refer to the CD&A section above captioned |
(2) | The performance restricted shares |
(3) | The stock options |
(4) | The dollar values reflect the grant date fair value of the awards as calculated in accordance with ASC Topic 718. |
38 |
| Roper Industries, Inc. 2014 Proxy Statement |
EXECUTIVE COMPENSATION(CONTINUED)
20122013 Outstanding Equity Awards at Fiscal Year End
The following table sets forth certain information with respect to outstanding equity awards at December 31, 20122013 for the named executive officers.
Option Awards | Stock Awards | |||||||||||||||||||||||||||
Name | # of Securities Underlying Unexercised Options Exercisable | # of Securities Underlying Unexercised Options Unexercisable | Option Exercise Price ($) | Option Expiration Date | # of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: # of Unearned Shares, Units or Other Rights That Have Not Vested | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested ($)(1) | ||||||||||||||||||||
Brian D. Jellison | 110,000 | 24.2000 | 02/25/14 | |||||||||||||||||||||||||
108,084 | 52.1900 | 02/16/17 | ||||||||||||||||||||||||||
330,000 | 110,000 | (2) | 55.2200 | 02/18/18 | ||||||||||||||||||||||||
200,000 | (6)(9) | 22,296,000 | ||||||||||||||||||||||||||
John Humphrey | 6,057 | 49.5150 | 04/24/13 | |||||||||||||||||||||||||
40,000 | 52.1900 | 02/16/17 | ||||||||||||||||||||||||||
40,000 | 55.2200 | 02/18/18 | ||||||||||||||||||||||||||
20,000 | (3) | 51.1100 | 01/22/20 | |||||||||||||||||||||||||
20,000 | 40,000 | (4) | 73.5600 | 01/20/21 | ||||||||||||||||||||||||
30,000 | (5) | 93.6200 | 01/18/22 | |||||||||||||||||||||||||
42,667 | (7)(9) | 4,756,517 | ||||||||||||||||||||||||||
David B. Liner | 12,000 | 52.1900 | 02/16/17 | |||||||||||||||||||||||||
12,000 | 55.2200 | 02/18/18 | ||||||||||||||||||||||||||
12,000 | 41.9500 | 02/12/19 | ||||||||||||||||||||||||||
8,000 | 4,000 | (3) | 51.1100 | 01/22/20 | ||||||||||||||||||||||||
4,000 | 8,000 | (4) | 73.5600 | 01/20/21 | ||||||||||||||||||||||||
12,000 | (5) | 93.6200 | 01/18/22 | |||||||||||||||||||||||||
7,800 | (8)(9) | 869,544 | ||||||||||||||||||||||||||
Paul J. Soni | 6,144 | 22.5550 | 03/24/14 | |||||||||||||||||||||||||
12,000 | 52.1900 | 02/16/17 | ||||||||||||||||||||||||||
12,000 | 55.2200 | 02/18/18 | ||||||||||||||||||||||||||
12,000 | 41.9500 | 02/12/19 | ||||||||||||||||||||||||||
8,000 | 4,000 | (3) | 51.1100 | 01/22/20 | ||||||||||||||||||||||||
4,000 | 8,000 | (4) | 73.5600 | 01/20/21 | ||||||||||||||||||||||||
12,000 | (5) | 93.6200 | 01/18/22 | |||||||||||||||||||||||||
7,800 | (8)(9) | 869,544 |
Name | Option Awards | Stock Awards | ||||||||||||||||||||||||||
# of Securities Underlying Unexercised Options Exercisable | # of Securities Underlying Unexercised Options Unexercisable | Option Exercise Price ($) | Option Expiration Date | # of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: # of Unearned Shares, Units or Other Rights That Have Not Vested | Equity of Unearned | |||||||||||||||||||||
Brian D. Jellison | 110,000 | 24.2000 | 02/25/14 | |||||||||||||||||||||||||
108,084 | 52.1900 | 02/16/17 | ||||||||||||||||||||||||||
440,000 | 55.2200 | 02/18/18 | ||||||||||||||||||||||||||
200,000 | (5)(8) | 27,736,000 | ||||||||||||||||||||||||||
John Humphrey | 40,000 | 52.1900 | 02/16/17 | |||||||||||||||||||||||||
40,000 | 55.2200 | 02/18/18 | ||||||||||||||||||||||||||
20,000 | 51.1100 | 01/22/20 | ||||||||||||||||||||||||||
40,000 | 20,000 | (2) | 73.5600 | 01/20/21 | ||||||||||||||||||||||||
10,000 | 20,000 | (3) | 93.6200 | 01/18/22 | ||||||||||||||||||||||||
30,000 | (4) | 115.2200 | 01/17/23 | |||||||||||||||||||||||||
40,000 | (6)(8) | 5,547,200 | ||||||||||||||||||||||||||
David B. Liner | 12,000 | 52.1900 | 02/16/17 | |||||||||||||||||||||||||
12,000 | 55.2200 | 02/18/18 | ||||||||||||||||||||||||||
12,000 | 41.9500 | 02/12/19 | ||||||||||||||||||||||||||
12,000 | 51.1100 | 01/22/20 | ||||||||||||||||||||||||||
8,000 | 4,000 | (2) | 73.5600 | 01/20/21 | ||||||||||||||||||||||||
4,000 | 8,000 | (3) | 93.6200 | 01/18/22 | ||||||||||||||||||||||||
12,000 | (4) | 115.2200 | 01/17/23 | |||||||||||||||||||||||||
6,000 | (7)(8) | 832,080 | ||||||||||||||||||||||||||
Paul J. Soni | 6,144 | 22.5550 | 03/24/14 | |||||||||||||||||||||||||
12,000 | 52.1900 | 02/16/17 | ||||||||||||||||||||||||||
12,000 | 55.2200 | 02/18/18 | ||||||||||||||||||||||||||
12,000 | 41.9500 | 02/12/19 | ||||||||||||||||||||||||||
12,000 | 51.1100 | 01/22/20 | ||||||||||||||||||||||||||
8,000 | 4,000 | (2) | 73.5600 | 01/20/21 | ||||||||||||||||||||||||
4,000 | 8,000 | (3) | 93.6200 | 01/18/22 | ||||||||||||||||||||||||
12,000 | (4) | 115.2200 | 01/17/23 | |||||||||||||||||||||||||
6,000 | (7)(8) | 832,080 |
(1) | Calculated by multiplying |
(2) | These stock options were granted |
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These stock options were granted on January 18, 2012 with unexercisable shares vesting ratably in January of |
(4) | These stock options were granted on January 17, 2013 with unexercisable shares vesting ratably in January of 2014, 2015 and 2016. |
(5) | This represents multiple restricted stock awards with the remaining shares of each grant vesting, subject to applicable Company performance conditions, as follows: |
(I) | 50,000 shares remaining from 150,000 shares granted January 20, 2011 and vesting in 2014; |
(II) | 50,000 shares remaining from 150,000 shares granted January 18, 2012 and vesting in 2014; and |
(III) | 100,000 shares remaining from 150,000 shares granted January 17, 2013 and vesting ratably in 2014 and 2015. |
Roper Industries, Inc. 2014 Proxy Statement | 39 |
EXECUTIVE COMPENSATION(CONTINUED)
(6) | This represents multiple restricted stock awards with the remaining shares of each grant vesting, subject to |
(I) |
|
(II) |
|
(III) | 20,000 shares remaining from 30,000 shares granted on January 17, 2013 and vesting ratably in |
(7) | This represents multiple restricted stock awards with the remaining shares of each grant vesting, subject to |
(I) |
|
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|
|
|
|
(II) |
|
4,000 shares remaining from 6,000 shares granted January |
For restricted stock granted in January |
20122013 Option Exercises and Stock Vested
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||
Name | # of Shares Acquired on Exercise | Value Realized Upon Exercise ($) | # of Shares Acquired on Vesting | Value Realized on Vesting ($) | Option Awards | Stock Awards | ||||||||||||||||||||||||||
Name | # of Shares Acquired on Exercise | Value Realized Upon Exercise ($) | # of Shares Acquired on Vesting | Value Realized on Vesting ($) | ||||||||||||||||||||||||||||
411,261 | 31,012,403 | 320,000 | 33,749,200 | - | | - | | 150,000 | 19,455,000 | |||||||||||||||||||||||
John Humphrey | 153,943 | 8,457,482 | 29,333 | 3,040,530 | 6,057 | 450,853 | 32,667 | 4,163,410 | ||||||||||||||||||||||||
David B. Liner | 24,000 | 1,481,835 | 7,800 | 800,642 | | - | | - | 7,800 | 989,610 | ||||||||||||||||||||||
Paul J. Soni | 25,656 | 1,776,340 | 7,800 | 800,642 | | - | | - | 7,800 | 989,610 |
Pension Benefits
None of our named executive officers participate in a Company-sponsored defined-benefit pension plan.
20122013 Non-Qualified Deferred Compensation
Pursuant to the Company’s Non-Qualified Retirement Plan, named executive officers may defer base salary and payments earned under the annual incentive bonus plan. Deferral elections are made by eligible executives before the beginning of each year for amounts to be earned in the following year. The executive may invest such amounts in funds that are substantially similar to those available under the 401(k) Plan.
The following table sets forth certain information with respect to the Non-Qualified Retirement Plan for our named executive officers during the fiscal year ended December 31, 2012.2013.
Name | Executive Contributions in Last FY ($)(1) | Registrant Contributions in Last FY ($)(2) | Aggregate Earnings in Last FY ($)(3) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($) | |||||||||||||||
Brian D. Jellison | 217,500 | 253,124 | 414 | 456,219 | 322,425 | |||||||||||||||
John Humphrey | 177,501 | 114,375 | 50,769 | 149,296 | 505,233 | |||||||||||||||
David B. Liner | 50,700 | 44,625 | 38,126 | - | 478,115 | |||||||||||||||
Paul J. Soni | 40,620 | 32,024 | 20,164 | - | 203,005 |
Name | Executive Contributions in Last FY(1) ($) | Registrant Contributions in Last FY(2) ($) | Aggregate Earnings in Last FY(3) ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($) | |||||||||||||||
Brian D. Jellison | 227,250 | 264,937 | 177 | 669,618 | 145,171 | |||||||||||||||
John Humphrey | 773,314 | 118,688 | (20,114 | ) | 307,747 | 1,069,374 | ||||||||||||||
David B. Liner | 52,200 | 46,125 | 87,437 | - | 663,877 | |||||||||||||||
Paul J. Soni | 42,480 | 33,975 | 68,521 | - | 347,980 |
(1) | Amounts reflect participant deferrals under the Non-Qualified Retirement Plan during the fiscal year and all of these amounts are included in the Summary Compensation Table above in the “Salary” or “Non-Equity Incentive Plan Compensation” column as applicable. |
(2) | The amounts are included in the Summary Compensation Table in the “All Other Compensation” column. |
(3) | No portion of these earnings was included in the Summary Compensation Table because the Non-Qualified Retirement Plan does not provide for “above-market” or preferential earnings as defined in applicable SEC rules. |
40 |
| Roper Industries, Inc. 2014 Proxy Statement |
EXECUTIVE COMPENSATION(CONTINUED)
Potential Payments upon Termination or Change in Control
As described above in the CD&A, theThe employment agreement with Mr. Jellison and offer letters or separation agreements with other named executive officers provide for certain benefits in the event of the termination of the officer’s employment under certain conditions. The amount of the benefits varies depending on the reason for termination, as explained below. In no event will excise tax gross-ups be paid in regard to a termination of employment related to a change in control.
Employment Agreement with Mr. Jellison
Termination for Cause; Resignation Without Good Reason. If Mr. Jellison werewas terminated for cause or if he werewas to resign without good reason (as such terms are defined in his agreement), he would receive the salary and vested benefits that are accrued through the date of termination, plus a pro-rata portion of his annual bonus earned through the date of termination, assuming the Company achieved the level of performance for which a bonus is paid for that year. No special severance benefits would be payable.
Termination Due to Death or Disability. If Mr. Jellison werewas to die or terminate employment due to disability, he (or his estate) would receive salary and vested benefits accrued through the date of termination, plus a pro-rata portion of his annual bonus earned through the date of termination, assuming the Company achieved the level of performance for which a bonus is paid for that year. No special severance benefits would be payable.
Termination Without Cause; Resignation for Good Reason.If Mr. Jellison werewas terminated without cause or resigned for good reason, either before a change of control of the Company occurs or more than one year after a change of control, he would receive a severance payment, in addition to accrued salary, earned and unpaid bonus from the prior fiscal year and vested benefits, of two times his annual base salary. He would also receive a pro-rated target bonus for the year and continuation of health and welfare benefits for a period of two years. Any stock option that would have vested during the one-year period following termination would also become immediately exercisable.
In Connection with a Change of Control. If Mr. Jellison werewas terminated without cause or resigned for good reason within one year following a change of control of the Company, then in addition to accrued salary, prorated bonus and vested benefits, he would be entitled to:
a severance payment equal to two times the sum of (i) his then current base salary and (ii) the greater of the average of his last two years’ annual bonuses or his target bonus for the year of termination,
accelerated vesting of all of his outstanding equity awards, and
continuation of health and welfare benefits for a period of two years.
Restrictive Covenants. Mr. Jellison has also agreed not to compete with the Company for a period of one year after his termination of employment for any reason.
Offer Letters to Messrs. Humphrey and Liner
Mr. Humphrey. Pursuant to an offer letter dated April 24, 2006, as amended December 30, 2008, if Mr. Humphrey’s employment is terminated without cause, he would be entitled to receive one year of medical benefit coverage and a severance payment equal to his then-current annual base salary.
Mr. Liner. Pursuant to an offer letter dated July 21, 2005, as amended December 30, 2008, if Mr. Liner’s employment is terminated without cause, he would be entitled to receive one year of medical benefit coverage and a severance payment equal to the sum of his then-current annual base salary and annual bonus earned with respect to the last year before the termination occurred.
Roper Industries, Inc. 2014 Proxy Statement | 41 |
EXECUTIVE COMPENSATION(CONTINUED)
Summary of Termination Payments and Benefits
The following tables summarize the value of the termination payments and benefits that each of our named executive officers would receive if he had terminated employment on December 31, 20122013 under the circumstances shown. Scenarios for termination due to involuntarily for cause, voluntary resignation, and retirement have not been included because, in those circumstances, no severance or other additional payments will be made to named executive officers. Scenarios for termination due to death or disability have not been included because they do not discriminate in scope, terms or operation in favor of named executive officers compared to the benefits offered to all salaried employees.
BRIAN D. JELLISON
Termination Scenario | Termination Scenario | |||||||||||||||||||||||
Potential Payments Upon Termination or Change-in-Control | By Employee For Good Reason | By Company Without Cause | Change-in- Control(1) | |||||||||||||||||||||
Potential Payments Upon Termination or Following aChange-in-Control | By Employee For Good Reason ($) | By Company Without Cause ($) | Following Change-in- | |||||||||||||||||||||
Cash payments | $ | 4,887,500 | $ | 4,887,500 | $ | 7,475,000 | 4,951,500 | 4,951,500 | 7,503,000 | |||||||||||||||
Accelerated Equity Awards(2) | ||||||||||||||||||||||||
2008 Stock Option Grant | - | - | 6,188,600 | |||||||||||||||||||||
Accelerated Equity Awards(2)(3) | ||||||||||||||||||||||||
2011 Restricted Stock Grant | - | - | 11,148,000 | - | - | 6,934,000 | ||||||||||||||||||
2012 Restricted Stock Grant | - | - | 11,148,000 | - | - | 6,934,000 | ||||||||||||||||||
2013 Restricted Stock Grant | - | - | 13,868,000 | |||||||||||||||||||||
Continued Medical Benefits | 21,731 | 21,731 | 21,731 | 24,466 | 24,466 | 24,466 | ||||||||||||||||||
|
|
| ||||||||||||||||||||||
Total | $ | 4,909,231 | $ | 4,909,231 | $ | 35,981,331 | 4,975,966 | 4,975,966 | 35,263,466 | |||||||||||||||
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JOHN HUMPHREY
Termination Scenario | Termination Scenario | |||||||||||||||||||||||
Potential Payments Upon Termination or Change-in-Control | By Employee For Good Reason | By Company Without Cause | Change-in- Control(1) | |||||||||||||||||||||
Potential Payments Upon Termination or Following a Change-in-Control | By Employee For Good Reason ($) | By Company Without Cause ($) | Following Change-in- | |||||||||||||||||||||
Cash payments | - | $ | 725,000 | $ | 725,000 | - | 750,000 | 750,000 | ||||||||||||||||
Accelerated Equity Awards(2)(3) | ||||||||||||||||||||||||
2010 Stock Option Grant | - | - | 1,207,400 | |||||||||||||||||||||
2011 Stock Option Grant | - | - | 1,516,800 | - | - | 1,302,400 | ||||||||||||||||||
2012 Stock Option Grant | - | - | 535,800 | - | - | 901,200 | ||||||||||||||||||
2010 Restricted Stock Grant | - | - | 668,880 | |||||||||||||||||||||
2011 Restricted Stock Grant | - | - | 1,858,037 | |||||||||||||||||||||
2012 Restricted Stock Grant | - | - | 2,229,600 | |||||||||||||||||||||
2013 Stock Option Grant | - | - | 703,800 | |||||||||||||||||||||
2011 Restricted Stock Grants | - | - | 1,386,800 | |||||||||||||||||||||
2012 Restricted Stock Grants | - | - | 1,386,800 | |||||||||||||||||||||
2013 Restricted Stock Grants | - | - | 2,773,600 | |||||||||||||||||||||
Continued Medical Benefits | - | 32,565 | 32,565 | - | 17,069 | 17,069 | ||||||||||||||||||
|
|
| ||||||||||||||||||||||
Total | - | $ | 757,565 | $ | 8,774,083 | - | 767,069 | 9,221,669 | ||||||||||||||||
|
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42 |
| Roper Industries, Inc. 2014 Proxy Statement |
EXECUTIVE COMPENSATION(CONTINUED)
DAVID B. LINER
Termination Scenario | Termination Scenario | |||||||||||||||||||||||
Potential Payments Upon Termination or Change-in-Control | By Employee For Good Reason | By Company Without Cause | Change-in- Control(1) | |||||||||||||||||||||
Potential Payments Upon Termination or Following a Change-in-Control | By Employee For Good Reason ($) | By Company Without Cause ($) | Following Change-in- | |||||||||||||||||||||
Cash payments | - | $860,000 | $860,000 | - | 855,800 | 855,800 | ||||||||||||||||||
Accelerated Equity Awards(2)(3) | ||||||||||||||||||||||||
2010 Stock Option Grant | - | - | 241,480 | |||||||||||||||||||||
2011 Stock Option Grant | - | - | 303,360 | - | - | 260,480 | ||||||||||||||||||
2012 Stock Option Grant | - | - | 214,320 | - | - | 360,480 | ||||||||||||||||||
2010 Restricted Stock Grant | - | - | 200,664 | |||||||||||||||||||||
2011 Restricted Stock Grant | - | - | 222,960 | |||||||||||||||||||||
2013 Stock Option Grant | - | - | 281,520 | |||||||||||||||||||||
2012 Restricted Stock Grant | - | - | 445,920 | - | - | 277,360 | ||||||||||||||||||
2013 Restricted Stock Grant | - | - | 554,720 | |||||||||||||||||||||
Continued Medical Benefits | - | 16,519 | 16,519 | - | 12,233 | 12,233 | ||||||||||||||||||
|
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| ||||||||||||||||||||||
Total | - | $876,519 | $2,505,223 | - | 868,033 | 2,602,593 | ||||||||||||||||||
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PAUL J. SONI
Termination Scenario | ||||||||||||
Potential Payments Upon Termination or Following a Change-in-Control | By Employee For Good Reason ($) | By Company Without Cause ($) | Following Change-in- | |||||||||
Cash payments | - | - | - | |||||||||
Accelerated Equity Awards(2)(3) | ||||||||||||
| ||||||||||||
2011 Stock Option Grant | - | - | ||||||||||
2012 Stock Option Grant | - | - | ||||||||||
| - | - | ||||||||||
| ||||||||||||
2012 Restricted Stock Grant | - | - | ||||||||||
2013 Restricted Stock Grant | - | - | 554,720 | |||||||||
Continued Medical Benefits | - | - | - | |||||||||
Total | - | - | ||||||||||
1,734,560 |
(1) | Assumes employment is terminated involuntarily without |
(2) | Based on |
(3) |
|
ADVISORY VOTE ON THE COMPENSATION OF
THE COMPANY’S NAMED EXECUTIVE OFFICERS
The Company seeks your advisory vote approving the compensation of our named executive officers as disclosed in this Proxy Statement. We believe that our executive compensation programs are structured in the best manner possible to support our business objectives, evidenced by the superior returns Roper has delivered to its stockholders. Over the past 10 years, Roper’s total return to stockholders was 20.6% compounded annually, compared to 7.1% annually for the S&P 500. Over the past five years, Roper’s return was 13.0% annually, compared to 1.7% for the S&P 500.
Our executive compensation programs are designed to provide competitive total compensation that is tied to the achievement of Company performance objectives and to attract, motivate and retain individuals who will build long-term value for our stockholders. See “Compensation Discussion and Analysis” above. Key characteristics of our executive compensation programs include the following:
A significant portion of our executive officer’s potential cash compensation is tied to Company performance. Cash bonuses under our non-equity incentive plan for our executive officers are only paid if the Company attains its annual financial target.
Roper Industries, Inc. 2014 Proxy Statement | 43 |
The number of shares awarded as restricted stock and stock options under our equity incentive programs are generally consistent from year to year, so that the value actually received by executives ultimately depends on the Company’s future long-term performance. These grants comprise a significant portion of an executive’s potential compensation.
Fixed base salary for our executive officers represents a smaller percentage of the aggregate potential compensation (consisting of base salary, incentive cash bonus and equity incentives) and is reviewed annually and along with the total compensation.
We cap non-equity incentive (cash) bonuses for our named executive officers to avoid encouraging a short-term focus.
We have few perquisites and other benefits for our named executive officers.
Our stock incentive plan expressly prohibits the repricing of stock options.
We do not have a defined pension benefit plan. Our executives may participate in our 401(k) Plan on the same terms as other eligible employees and they may also defer cash compensation (and receive tax-deferred returns on those amounts) under our Non-Qualified Retirement Plan.
We use a “double trigger” approach for vesting under our equity incentive plan upon a change in control. This means that the vesting for all participants, including our named executive officers, may be accelerated if the awards are not assumed by the acquiring company or if they are assumed and the participant’s employment is terminated under certain circumstances.
We do not provide excise tax gross-ups for change-in-control payments.
We have share ownership and retention guidelines for our executives to assure that our executive’s interests are aligned with those of our stockholders.
We are seeking stockholder approval of the following resolution:
RESOLVED, that the compensation paid to the Company’s named executive officers as disclosed pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the compensation tables and the related material disclosed in this Proxy Statement is hereby APPROVED.
The vote on this proposal is advisory and non-binding; however, the Compensation Committee and the Board will review the results of the vote and consider them when making future determinations regarding our executive compensation programs.
The Board of Directors recommends a vote “FOR” the resolution providing an advisory approval of the Company’s compensation of executive officers.
AMENDMENT TO THE COMPANY’S CERTIFICATE OF INCORPORATION
TO PROVIDE FOR ANNUAL ELECTION OF DIRECTORS
The Company’s Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) provides that the Board of Directors shall be divided into three classes of directors, as nearly equal in number as possible, with the term of one class expiring at each annual meeting of stockholders and each class serving three-year terms.
The Board of Directors believes that the classified board structure has encouraged directors to take a long term-perspective and has provided stability to the Board of Directors and the Company along with continuity and protection against certain coercive takeover tactics. Despite these benefits, the Board of Directors recognizes that there is a growing corporate governance trend in favor of declassified boards and the annual election of all directors. After careful consideration, the Board of Directors has unanimously approved an amendment to Article 8 of the Certificate of Incorporation to declassify the Board of Directors and make certain related changes (this “Amendment”). A copy of Article 8 of the Certificate of Incorporation, as it would be implemented upon stockholder approval of this proposal to declassify the Board of Directors, is attached as Appendix A to this Proxy Statement.
The Board of Directors believes that a declassified board structure should be phased-in so that directors serving immediately following the 2013 Annual Meeting of Stockholders can serve out the terms to which they have been elected. Pursuant to this Amendment, the Board of Directors would be declassified, and all directors elected on an annual basis, starting with the 2016 Annual Meeting of Stockholders. If approved by stockholders, this proposal would be effected as follows:
The directors belonging to the class of directors elected at this 2013 Annual Meeting of Stockholders will be elected for a three-year term expiring at the 2016 Annual Meeting of Stockholders and will serve out their terms in full. They or their successors would stand for election at the 2016 Annual Meeting of Stockholders, and subsequent annual meetings of stockholders, for a one-year term.
The directors belonging to the class of directors whose terms expire at the 2014 Annual Meeting of Stockholders would serve out their current terms, and they or their successors would stand for election at the 2014 Annual Meeting of Stockholders, and subsequent annual meetings of stockholders, for a one-year term.
The directors belonging to the class of directors whose terms expire at the 2015 Annual Meeting of Stockholders would serve out their current terms, and they or their successors would stand for election at the 2015 Annual Meeting of Stockholders, and subsequent annual meetings of stockholders, for a one-year term.
Beginning with the 2016 Annual Meeting of Stockholders, and at each annual meeting thereafter, our entire Board of Directors would stand for election for a one-year term and the Board of Directors would no longer be classified.
Consistent with Delaware Law, because the Board of Directors is classified, the Certificate of Incorporation currently provides that the directors are removable by stockholders only “for cause.” Upon the declassification of the Board of Directors as of the 2016 Annual Meeting of Stockholders, all directors would be removable “with or without cause” upon the requisite vote of stockholders.
If this Amendment is approved it will become effective upon the filing of the Certificate of Amendment with the Delaware Secretary of State, which we intend to do promptly following this 2013 Annual Meeting of Stockholders.
The Board of Directors recommends a vote “FOR” the approval of the amendment to the Certificate of Incorporation.
The Audit Committee of the Board of Directors is comprised of three non-employee directors, each of whom has been determined by the Board of Directors to be independent under the rules of the NYSE and the SEC. The Audit Committee’s responsibilities are set forth in its charter.
The Audit Committee oversees and reviews with the full Board of Directors any issues with respect to the Company’s financial statements, the structure of the Company’s legal and regulatory compliance, the performance and independence of the Company’s independent auditorsIndependent Certified Public Accountants and the performance of the Company’s internal audit function. The Committee retains the Company’s independent auditorsIndependent Certified Public Accountants to undertake appropriate reviews and audits of the Company’s financial statements, determines the compensation of the independent auditors,Independent Certified Public Accountants, and pre-approves all of their services. The Company’s management is primarily responsible for the Company’s financial reporting process and for the preparation of the Company’s financial statements in accordance with accounting principles generally accepted in the United States. The Audit Committee maintains oversight of the independent public accountantsIndependent Certified Public Accountants by discussing the overall scope and specific plans for their audits, the results of their examinations, their evaluations of the Company’s internal accounting controls and the overall quality of the Company’s financial reporting. The Audit Committee may delegate its duties and responsibilities to a subcommittee of the Committee.
The Audit Committee maintains oversight of the Company’s internal audit function by evaluating the appointment and performance of the Company’s Vice President of internal auditingInternal Auditing and periodically meeting with the Vice President of internal auditingInternal Auditing to receive and review reports of the work of the Company’s internal audit department. The Audit Committee meets with management on a regular basis to discuss any significant matters, internal audit recommendations, policy or procedural changes and risks or exposures, if any, that may have a material effect on the Company’s financial statements.
The Audit Committee has: (i) appointed and retained PricewaterhouseCoopers LLP (“PwC”) as the Company’s independent auditorsaccounting firm for the fiscal year ended December 31, 2012;2013; (ii) reviewed and discussed with the Company’s management the Company’s audited financial statements for the fiscal year ended December 31, 2012;2013; (iii) discussed with PwC the matters required to be discussed by the statements on 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; (iv) received the written disclosures and the letter from the independent accountantIndependent Certified Public Accountants required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’sIndependent Certified Public Accountants’ communications with the audit committee concerning independence, and has discussed with the independent accountantsIndependent Certified Public Accountants its independence; (v) discussed matters with PwC outside the presence of management; (vi) reviewed internal audit recommendations; (vii) discussed with PwC the quality of the Company’s financial reporting; and (viii) reviewed and discussed with PwC the results of the audit of the effectiveness of internal control over financial reporting in accordance with § 404 of the Sarbanes-Oxley Act.
In reliance on the reviews, reports and discussions referred to above, the Audit Committee recommended to the Company’s Board of Directors, and the Board of Directors has approved, that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012,2013, for filing with the Securities and Exchange Commission.
AUDIT COMMITTEE:
David W. Devonshire, Chairman
John F. Fort III
Christopher Wright
The foregoing report and other information provided above regarding the Audit Committee should not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended (the “Securities Act”) or Securities Exchange Act of 1934, as amended, (the “Exchange Act”), except to the extent that Roper specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.
44 |
| Roper Industries, Inc. 2014 Proxy Statement |
INDEPENDENT PUBLIC ACCOUNTANTS FEES
Set forth below are the professional fees billed by PwC for the fiscal years ended December 31, 20122013 and 2011.2012. It is the Audit Committee’s policy that all services performed by and all fees paid to the independent auditor require the Audit Committee’s prior approval. As such, all audit, audit-related tax and other fees were pre-approved by the Audit Committee.
Dollars in Thousands | ||||||||
Fees | FY 2012 | FY 2011 | ||||||
Audit Fees(1) | $4,166 | $3,729 | ||||||
Audit-Related Fees(2) | 487 | 232 | ||||||
Tax Fees(3) | 1,078 | 754 | ||||||
All Other Fees | 6 | 24 | ||||||
|
|
|
| |||||
Total Fees | $5,737 | $4,739 | ||||||
|
|
|
|
Dollars in Thousands | ||||||||
Fees | FY 2013 | FY 2012 | ||||||
Audit Fees(1) | 4,346 | 4,166 | ||||||
Audit-Related Fees(2) | 438 | 487 | ||||||
Tax Fees(3) | 843 | 1,078 | ||||||
All Other Fees | 6 | 6 | ||||||
Total Fees | 5,633 | 5,737 |
(1) | Aggregate fees from PwC for audit or review services in accordance with the standards of the Public Company Accounting Oversight Board (United States) and fees for services, such as statutory audits and review of documents filed with SEC. Audit fees also include fees paid in connection with services required for compliance with Section 404 of the Sarbanes-Oxley Act. |
(2) | Aggregate fees from PwC for assurance and related services which primarily include due diligence on acquisition targets. |
(3) | Tax fees include tax compliance, assistance with tax audits, tax advice and tax planning. |
Roper Industries, Inc. 2014 Proxy Statement | 45 |
PROPOSAL 41: ELECTION OF DIRECTORS
The terms of office for Richard Wallman and Christopher Wright expire at this Annual Meeting. Upon recommendation of the Nominating and Governance Committee, our Board of Directors has nominated Messrs. Wallman and Wright to stand for re-election as directors for one-year terms expiring at the 2015 Annual Meeting of Stockholders or when their respective successors are elected and qualified.
If prior to the meeting a director nominee is unable to serve, which the Board of Directors does not anticipate, the proxy will be voted for a substitute nominee selected by the Board of Directors, or the Board may choose to reduce its size.
Information regarding each of our director nominees is set forth above under the heading “Board of Directors.”
The Board of Directors recommends a vote “FOR” the election to the Board of Directors of each of the following director nominees:
Name | Age | Director Since | Independent | Occupation | ||||
Richard F. Wallman | 63 | 2007 | Yes | Former CFO and SVP, Honeywell International Inc. | ||||
Christopher Wright | 56 | 1991 | Yes | Chairman, EMAlternatives LLC |
46 |
| Roper Industries, Inc. 2014 Proxy Statement |
PROPOSAL 2: ADVISORY VOTE ON THE COMPENSATION OF
THE COMPANY’S NAMED EXECUTIVE OFFICERS
We are seeking your advisory vote approving the compensation of our named executive officers as disclosed in this Proxy Statement. We believe that our executive compensation programs are structured in the best manner possible to support our business objectives, evidenced by the superior returns we have delivered to our stockholders. Over the past 10 years, our total return to stockholders was 19.6% compounded annually, compared to 7.4% annually for the S&P 500. Over the past five years, our return was 26.9% annually, compared to 17.9% for the S&P 500.
Our executive compensation programs are designed to provide competitive total compensation that is tied to the achievement of Company performance objectives and to attract, motivate and retain individuals who will build long-term value for our stockholders. See the “Proxy Statement Summary” and “Compensation Discussion and Analysis” above for key characteristics of our executive compensation programs.
We are seeking stockholder approval of the following resolution:
RESOLVED, that the compensation paid to the Company’s named executive officers as disclosed pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the compensation tables and the related material disclosed in this Proxy Statement is hereby APPROVED.
The vote on this proposal is advisory and non-binding; however, the Compensation Committee and our Board will review the results of the vote and consider them when making future determinations regarding our executive compensation programs.
The Board of Directors recommends a vote “FOR” the resolution providing an advisory approval of the Company’s compensation of executive officers.
Roper Industries, Inc. 2014 Proxy Statement | 47 |
PROPOSAL 3: RATIFICATION OF THE APPOINTMENT
OF PRICEWATERHOUSECOOPERS LLP AS
OUR INDEPENDENT REGISTERED ACCOUNTING FIRM
FOR THE YEAR ENDING DECEMBER 31, 20132014
The Audit Committee has appointed PricewaterhouseCoopers LLP (“PwC”) as our independent registered accounting firm for the year ending December 31, 2013. The2014. Our Board of Directors recommends that the stockholders ratify this appointment. PwC has been the Company’s independent auditor since May 2002. One or more representatives of PwC are expected to be present at the Annual Meeting and will be given the opportunity to make a statement if they so desire, and to respond to appropriate questions of stockholders in attendance. If this proposal does not pass, the selection of our independent registered accounting firm will be reconsidered by the Audit Committee and the Board of Directors. Even if the proposal passes, the Audit Committee may decide to select another firm at any time.
The Board of Directors recommends a vote “FOR” approval of the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered accounting firm for the year ending December 31, 2013.2014.
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| Roper Industries, Inc. 2014 Proxy Statement |
2014 2015 ANNUAL MEETING OF STOCKHOLDERS
If you wish to submit a stockholder wishesmatter to presentbe considered at the 2015 Annual Meeting, you must comply with the following procedures:
If you intend to submit a proposal for consideration for inclusionto be included in the Proxy Statement for the 20142015 Annual Meeting of Stockholders, thewe must receive your proposal must be received at Roper’s corporate offices at 6901 Professional Parkway East, Suite 200, Sarasota, Florida 34240, Attn: Secretary, no later than December 26, 2013.23, 2014. All proposals must conformcomply with the SEC regulations under Rule 14a-8 for including stockholder proposals in a company’s proxy material.
If you wish to the rules and regulations of the SEC.
A stockholder may also nominate directorsa director candidate or have other business brought before the 20142015 Annual Meeting of Stockholders, by submittingyou must submit the nomination or proposal between January 24, 201421, 2015 and February 23, 2014,20, 2015, in accordance with Roper’sour By-laws. The nomination or proposal must be delivered to Roper’s corporate offices at 6901 Professional Parkway East, Suite 200, Sarasota, Florida 34240, Attention: Secretary.
For any stockholder proposal not submitted for inclusion in the Proxy Statement for Roper’s 2014 Annual Meeting of Stockholders but intended to be presented directly at that annual meeting (other than the nomination of a director candidate), the notice must include the text of the proposal; a brief statement of the reasons why the stockholder favors the proposal; the stockholder’s name and address; the number and class of all shares of each class of Company stock owned of record and beneficially by the stockholder (and any beneficial owner on whose behalf the proposal is made); a description of any agreement, arrangement or understanding (including any derivative or short positions, profit interests, options, warrants, stock appreciation or similar rights, hedging transactions and borrowed or loaned shares) that has been entered into by or on behalf of, or any other agreement, arrangement or understanding that has been made, the effect or intent of which is to mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of, such stockholder (and any beneficial owner on whose behalf the proposal is made) with respect to the corporation’s securities; and if applicable, any material interest of such stockholder and such beneficial owner in the matter proposed (other than as a stockholder).
(a) | The notice to nominate a person for election as a Company director, notice must include a written statement setting forth (i) the name of the person to be nominated; (ii) the number and class of all shares of each class of Company stock owned of record and beneficially by such person, as reported by such person to you; (iii) such other information regarding each nominee proposed by you as would have been required to be included in a Proxy Statement filed pursuant to the proxy rules of the SEC if the nominee had been nominated by the Board of Directors; (iv) such person’s signed consent to serve as a director of the Company if elected; (v) your name and address; (vi) the number and class of all shares of each class of Company stock owned of record and beneficially by such stockholder (and any beneficial owner on whose behalf the nomination is made); and (vii) a description of any agreement, arrangement or understanding (including any derivative or short positions, profit interests, options, warrants, stock appreciation or similar rights, hedging transactions and borrowed or loaned shares) that has been entered into by or on behalf of, or any other agreement, arrangement or understanding that has been made, the effect or intent of which is to mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of, you (and any beneficial owner on whose behalf the proposal is made) with respect to Roper’s securities. |
The notice to nominate any person for election as a director of the Company must include a written statement setting forth (i) the name of the person to be nominated; (ii) the number and class of all shares of each class of Company stock owned of record and beneficially by such person, as reported by such person to the stockholder; (iii) such other information regarding each nominee proposed by the stockholder as would have been required to be included in a proxy statement filed pursuant to the proxy rules of the SEC if the nominee had been nominated by the Board of Directors; (iv) such person’s signed consent to serve as a director of the Company if elected; (v) such stockholder’s name and address; (vi) the number and class of all shares of each class of Company stock owned of record and beneficially by such stockholder (and any beneficial owner on whose behalf the nomination is made); and (vii) a description of any agreement, arrangement or understanding (including any derivative or short positions, profit interests, options, warrants, stock appreciation or similar rights, hedging transactions and borrowed or loaned shares) that has been entered into by or on behalf of, or any other agreement, arrangement or understanding that has been made, the effect or intent of which is to mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of, such stockholder (and any beneficial owner on whose behalf the proposal is made) with respect to the corporation’s securities.
(b) | If you intend to present a matter (other than the nomination of a director candidate) directly at the 2015 Annual Meeting of Stockholders, the notice must include the text of the proposal; a brief statement of the reasons why you favor the proposal; your name and address; the number and class of all shares of each class of Company stock owned of record and beneficially by you (and any beneficial owner on whose behalf the proposal is made); a description of any agreement, arrangement or understanding (including any derivative or short positions, profit interests, options, warrants, stock appreciation or similar rights, hedging transactions and borrowed or loaned shares) that has been entered into by or on behalf of, or any other agreement, arrangement or understanding that has been made, the effect or intent of which is to mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of, you (and any beneficial owner on whose behalf the proposal is made) with respect to the Roper’s securities; and if applicable, any material interest of you and such beneficial owner in the matter proposed (other than as a stockholder). |
With respect to matters not included in the Proxy Statement but properly presented at the Annual Meeting of Stockholders, management generally will be able to vote proxies in its discretion if it receives notice of the proposal during the period specified above and advises stockholders in the Proxy Statement for the 20142015 Annual Meeting of Stockholders about the nature of the matter and how management intends to vote on the matter, unless the proponent of the stockholder proposal (a) provides Roperus with a timely written statement that the proponent intends to deliver a proxy statementProxy Statement to at least the percentage of Roper’sour voting shares required to carry the proposal, (b) includes the same statement in the proponent’s own proxy materials, and (c) provides Roperus with a statement from a solicitor confirming that the necessary steps have been taken to deliver the proxy statementProxy Statement to at least the percentage of Roper’sour voting shares required to carry the proposal.
Roper Industries, Inc. 2014 Proxy Statement | 49 |
As of the date of this Proxy Statement, the Board of Directors knows of no other business which will be or is intended to be presented at the Annual Meeting. ShouldIf any furtherother business comeproperly comes before the Annual Meeting or any adjourned Annual Meeting, it is the intention of the proxiesproxy holders named in the enclosed proxy will have discretionary authority to vote according tothe shares represented by the proxy in their best judgment.discretion.
By the Order of the Board of Directors
Brian D. Jellison
Chairman, President and Chief Executive Officer
Dated: April 22, 2014
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Annex A
Article 8 of the Certificate of Incorporation
As Proposed to be Amended
8.(i) Except as otherwise provided in this Certificate of Incorporation or the General Corporation Law of the State of Delaware, the business and affairs of the corporation shall be managed by or under the direction of a Board of Directors consisting of such number of members as may be fixed, subject to the rights of the holders of any series of preferred stock then outstanding, from time to time, by the affirmative vote of the majority of the members of the Board of Directors of the corporation, but not less than the minimum number authorized by the State of Delaware.
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ROPER INDUSTRIES, INC. 6901 PROFESSIONAL PKWY EAST SARASOTA, FL 34240 ATTN: LEGAL DEPT | VOTE BY INTERNET -www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time on May
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time on May
VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | ||||||||
M68602-P49160 | KEEP THIS PORTION FOR YOUR RECORDS | |||||||
DETACH AND RETURN THIS PORTION ONLY |
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DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
ROPER INDUSTRIES, INC. | The Board of Directors recommends you vote FOR the following: | For All | Withhold All | For All Except | | To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. | ||||||||||||||||||||||||||||||||
1. | Election of Directors | ¨ | ¨ | ¨ |
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Nominees: | ||||||||||||||||||||||||||||||||||||||
01) Richard F. Wallman | ||||||||||||||||||||||||||||||||||||||
02) Christopher Wright | ||||||||||||||||||||||||||||||||||||||
The Board of Directors recommends you vote FOR the following proposals: | For | Against | Abstain | |||||||||||||||||||||||||||||||||||||||||
2. | To consider, on a non-binding, advisory basis, a resolution approving the compensation of our named executive officers. | ¨ | ¨ | ¨ | ||||||||||||||||||||||||||||||||||||||||
3. |
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NOTE:The shares represented by this proxy, when properly executed, will be voted in the manner directed herein by the undersigned Stockholder(s).If no direction is made, this proxy will be voted FOR all nominees listed and FOR Proposals 2 | ||||||||||||||||||||||||||||||||||||||||||||
For address changes and/or comments, please check this box and write them on the back where indicated. | ¨ | |||||||||||||||||||||||||||||||||||||||||||
Please indicate if you plan to attend this meeting. | ¨ | ¨ | ||||||||||||||||||||||||||||||||||||||||||
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Please sign your name exactly as it appears hereon. When signing as attorney, executor, administrator, trustee or guardian, please add your title as such. When signing as joint tenants, all parties in the joint tenancy must sign. If a signer is a corporation, please sign in full corporate name by duly authorized officer. |
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Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
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Important Notice Regarding Internet Availability of Proxy Materials for the Annual Meeting to be
Held on May 24, 2013:21, 2014:
The Notice and Proxy Statement and Annual Report to Stockholders are available at www.proxyvote.com.
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M58385-P37913 M68603-P49160
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS
MAY 21, 2014
The undersigned hereby authorize(s) BRIAN D. JELLISON and DAVID B. LINER, or either of them, as proxies, and each with full power of substitution and revocation, to represent and vote the shares of common stock the undersigned would be entitled to vote if personally present at the Annual Meeting of Stockholders to be held on May 21, 2014, at 6901 Professional Parkway East, Suite 200, Sarasota, Florida 34240 at 11:00 a.m. (local time) and at any adjournments or postponements thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE STOCKHOLDER. IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED ON THE REVERSE SIDE AND FOR PROPOSALS 2 AND 3.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE.
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(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
CONTINUED AND TO BE SIGNED ON REVERSE SIDE