UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OFProxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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[X] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14a-6(e)14A-6(E)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
DANAHER CORPORATIONDanaher Corporation
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(Name of Registrant as Specified inIn Its Charter)
DANAHER CORPORATION
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Notes:
DANAHER CORPORATION
1250 24TH STREET,24th Street, N.W.
WASHINGTON,Washington, D.C. 20037
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 5, 19981, 2001
To the Shareholders:
Notice is hereby given that the 19982001 Annual Meeting of Shareholders of
Danaher Corporation, a Delaware corporation (the "Company"), will be held at the
WestinMayflower Hotel, 2350 M Street,1127 Connecticut Avenue, NW, Washington, D.C. 20037, on May 5, 19981,
2001 at 3:00 p.m., local time, for the following purposes:
1. To elect one Directortwo Directors to hold office for a term of three years and
until his successor istheir successors are elected and qualified.
2. To approve the appointment of Arthur Andersen LLP as the Company's
independent auditors for the year ending December 31, 1998.2001.
3. To approve the material terms of the performance goals for incentive
compensation to the Company's executive officers.
4. To amend the Company's 19871998 Stock Option Plan.
5. To approvePlan to increase the
aggregate number of shares that may be issued pursuant to the
exercise of stock option grantsoptions from fifteen million (15,000,000)
shares to twenty-two million five executive officers.
6.hundred thousand (22,500,000)
shares.
4. To approve an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of
capital stock of the Company to a total of threesix hundred fifteen million
(315,000,000)(600,000,000) shares, consisting of threefive hundred million
(300,000,000)(500,000,000) shares of common
stock,Common Stock, $.01 par value per share
("Common Stock") and fifteenone hundred million (15,000,000)(100,000,000) shares
of preferred stock,Preferred Stock, without par value ("Preferred Stock");
7..
5. To consider and act upon such other business as may properly come
before the meeting.
The Board of Directors has fixed the close of business on March 20, 199823, 2001 as
the record date for determination of shareholders entitled to notice of and to
vote at the meeting and any adjournment thereof.
Whether or not you expect to be present, please sign, date and return the
enclosed proxy card as promptly as possible in the enclosed stamped envelope,
the postage on which will be valid if mailed in the United States.
By Order of the Board of Directors
/s/ PatrickBY ORDER OF THE BOARD OF DIRECTORS
PATRICK W. Allender
Patrick W. AllenderALLENDER
Secretary
March 30, 1998--, 2001
EVERY SHAREHOLDER'S VOTE IS IMPORTANT. PLEASE MARK, SIGN, DATE AND MAIL THE
ENCLOSED PROXY CARD AT YOUR EARLIEST CONVENIENCE, WHETHER OR NOT YOU PLAN TO
ATTEND THE DANAHER CORPORATION ANNUAL MEETING.
PROXY STATEMENT
DANAHER CORPORATION
1250 24TH STREET,24th Street, N.W.
WASHINGTON,Washington, D.C. 20037
(202) 828-0850
19982001 ANNUAL MEETING OF SHAREHOLDERS
MAY 5, 19981, 2001
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Danaher Corporation, a Delaware corporation (the
"Company"), of proxies for use at the 19982001 Annual Meeting of Shareholders
("Annual Meeting") to be held at the WestinMayflower Hotel on May 5, 19981, 2001 at 3:00
p.m., local time, and at any and all adjournments thereof. The Company's
principal address is 1250 24th Street, N.W., Washington, D.C. 20037. The date
of mailing of this Proxy Statement is on or about March 30, 1998.29, 2000. The purpose
of the meeting is to elect one directortwo directors of the Company; to approve the
appointment of Arthur Andersen LLP as the Company's independent auditors for the
current year; to approve the performance goals for 1998 incentive compensationan amendment to the Company's executive officers;1998 Stock Option Plan;
to approve an amendment to the Company's 1987
Stock Option Plan;Certificate of Incorporation to
increase the total number of authorized shares of capital stock to six hundred
million; and to transact such other business as may properly come before the
meeting.
OUTSTANDING STOCK AND VOTING RIGHTS
In accordance with the By-laws of the Company, the Board of Directors has
fixed the close of business on March 20, 199823, 2001 as the record date for determining
the shareholders entitled to notice of, and to vote at, the Annual Meeting.
Only shareholders of record on that date will be entitled to vote. A
shareholder who submits a proxy on the accompanying form has the power to revoke
it by notice of revocation directed to the proxy holders of the Company at any
time before it is voted. A subsequently dated proxy, when filed with the
Secretary of the Company, will constitute revocation. Proxies will be voted as
specified on the proxy card and, in the absence of specific instructions, will
be voted for the proposals described in this Proxy Statement and in the
discretion of the proxy holders on any other matter which properly comes before
the meeting. A shareholder who has given a proxy may nevertheless attend the
meeting, revoke the proxy and vote in person. The Board of Directors has
selected Steven M. Rales and Mitchell P. Rales to act as proxies with full power
of substitution.
Solicitation of proxies may be made by mail, personal interview, telephone
and telegraph by officers and other management employees of the Company, who
will receive no additional compensation for their services. The total expense
of the solicitation will be borne by the Company and may include
1
reimbursement paid to brokerage firms and others for their expenses in
forwarding material regarding the Annual Meeting to beneficial owners.
The only outstanding securities of the Company entitled to vote at the
Annual Meeting are shares of Common Stock. As of the close of business on March
20, 1998,23, 2001, the record date for determining the shareholders of the Company
entitled to vote at the Annual Meeting, 58,537,110------------ shares of the Common Stock
of the Company, $.01 par value ("Company Common Stock"), were issued and
outstanding. Each outstanding share of Company Common Stock entitles the holder
to one vote on all matters brought before the Annual Meeting. The quorum
necessary to conduct business at the Annual Meeting consists of a majority of
the outstanding shares of Company Common Stock as of the record date.
The election of a directordirectors nominated will require a plurality of the votes
cast in person or by proxy at the Annual Meeting by holders of shares of the
Company's Common Stock. In the election of directors, each stockholder is
entitled to cast one vote for each director to be elected; cumulative voting is
not permitted. Approval of the appointment of the Company's auditors will
require the affirmative vote of the holders of a majority of the shares of the
Company's Common Stock cast at the Annual Meeting in person or by proxy.
Approval of (i) performance goals for 1998 incentive compensationthe amendment to the Company's executive officers1998 Stock Option Plan, and
(ii) the amendment to the Company's 1987
Stock Option PlanCertificate of Incorporation to increase the
number of authorized shares of capital stock to a total of six hundred million
shares, requires the affirmative vote of the holders of a majority of the shares
of the Company's Common Stock present, or represented, and entitled to vote at
the annual meeting.
Abstentions and "broker non-votes" are counted as present in determining
whether the quorum requirement is satisfied. For purpose of the election of
directors, abstentions and broker non-votes are not considered to be votes cast
and do not affect the plurality vote required for elections of directors. For
purposes of the appointment of the Company's auditors, abstentions and broker
non-votes will not be considered votes cast for the foregoing purposes. For
purposes of (i) approval of the performance goals for 1998 incentive
compensation to the Company's executive officers and (ii) the amendment to the Company's 19871998 Stock Option Plan,
abstentions are treated as present and entitled to vote on the matter and have
the effect of a vote against the proposal and broker non-votes will not be
considered entitled to vote and will have no effect on the vote required for
approval.
2
BENEFICIAL OWNERSHIP OF COMPANY COMMON STOCK BY
DIRECTORS, OFFICERS AND PRINCIPAL SHAREHOLDERS
As of March 20, 1998,23, 2001, the beneficial ownership of Company Common Stock by
directors and the nominees for director, by each of the executive officers named
in the Summary Compensation Table, by any principal shareholders beneficially
owning more than five percent of the Company's Common Stock and by all present
executive officers and directors of the Company as a group, was as follows:
NUMBER OF SHARES PERCENT
NAME BENEFICIALLY OWNED OF CLASS
---- ------------------ --------Number of Shares Percent
Name Beneficially Owned** Of Class
- ---------------------------- ------------------------ ---------
Mortimer M. Caplin............................. 115,874 (9)Caplin.......... 157,874 (8) *
George M. Sherman.............................. 1,104,000 (4) 1.9%
Donald J. Ehrlich.............................. 28,000 (7)Ehrlich........... 62,000 (6) *
Walter G. Lohr, Jr............................. 82,000 (8)Jr.......... 170,000 (7) *
Mitchell P. Rales.............................. 23,213,459Rales........... 39,398,277 (1) 39.7%27.5%
Steven M. Rales................................ 23,213,459Rales............. 41,074,638 (1) 39.7%
Dennis D. Claramunt............................ 59,200 (5) *
Patrick W. Allender............................ 246,000 (6) *
John P. Watson................................. 87,60028.7%
George M. Sherman........... 3,306,114 (3) 2.3%
Alan G. Spoon............... 6,000 (12) *
A. Emmet Stephenson, Jr........................ 116,060Jr..... 190,120 (2) *
H. Lawrence Culp, Jr........ 132,937 (4) *
Patrick W. Allender......... 566,236 (5) *
Philip W. Knisely........... 2,500 *
Steven E. Simms................................ 21,400 (10)Simms............. 98,435 (9) *
FMR Corp....................................... 4,028,400 (11) 6.9%
T. Rowe Price Associates....................... 3,336,600 (12) 5.7%Corp.................... 12,861,724 (10) 9.0%
All executive officers and
directors as a group
(includes 1521 persons)......................... 25,384,153..... 48,588,012 (1)(2) 43.4%(11) 33.2%
- --------
(1) The aggregate holdings for Steven and Mitchell Rales include (i) all of the
20,032,44437,064,888 shares of Company Common Stock owned by Equity Group Holdings
LLC, Equity Group Holdings II LLC, and Equity Group Holdings IIIII LLC, of
which Steven Rales and Mitchell Rales are the only members, and
(ii) 1,597,3664,009,750 and 1,583,6492,333,389 shares of Company Common Stock owned directly
or through the Danaher 401(k) Plan by Steven Rales and Mitchell Rales,
respectively. Steven and Mitchell Rales each disclaim beneficial ownership
of those shares of Company Common Stock that are owned directly or through
the Danaher 401(k) Plan by the other. Combined, Steven and Mitchell Rales
beneficially own 43,408,027 shares, or 30.3% of common shares outstanding.
Their business address, and that of Equity Group Holdings LLC, Equity Group
Holdings II LLC, and Equity Group Holdings IIIII LLC, is 1250 24th Street,
N.W., Washington, D.C. 20037.
(2) Includes 68,060 shares of Company Common Stock held in the names of Stephenson
Ventures, a limited partnership of which the sole general partner is A.
Emmet Stephenson, Jr., and 40,000 shares held in the name
of Tessa Fund, a general partnership beneficially owned by trusts for the
benefit of the daughter of Mr. Stephenson, who is the general partner for
control purposes only. Mr. Stephenson has the option to acquire 8,00018,000
shares of Company stock.
(3) Mr. Watson has the option to acquire 87,600 shares of Company Common
Stock.
2
(4) Mr. Sherman has the option to acquire 920,0002,600,000 shares of Company Common
Stock. Includes 3,000 shares held by Sherman Investors Limited Partnership, a
partnership for the benefit of his family. Mr. Sherman controls the general
partner.
(5)(4) Mr. ClaramuntCulp has the option to acquire 59,200132,000 shares of Company Common Stock.
(6)3
(5) Mr. Allender has the option to acquire 153,000344,400 shares of Company Common
Stock. Includes shares held by family members and a family limited
partnership of which Mr. Allender disclaims beneficial ownership.
(6) Mr. Ehrlich has the option to acquire 18,000 shares of Company Common
Stock.
(7) Mr. EhrlichLohr has the option to acquire 8,00018,000 shares of Company Common Stock.
(8) Mr. LohrCaplin has the option to acquire 8,00014,000 shares of Company Common Stock.
(9) Mr. CaplinSimms has the option to acquire 95,200 shares of Company Common Stock.
(10) FMR Corp.'s address is 82 Devonshire Street, Boston, MA 02109.
(11) Includes 3,474,310 shares underlying options exercisable within 60 days.
(12) Mr. Spoon has the option to acquire 4,000 shares of Company
Common Stock.
(10) Mr. Simms has the option to acquire 21,400 shares of Company Common
Stock.
(11) FMR Corp.'s address is 82 Devonshire Street, Boston, MA 02109.
(12) T. Rowe Price Associates' address is 100 E. Pratt Street, Baltimore, MD
21202.
* Represents less than 1% of the outstanding Company Common Stock.
** All options are exercisable within 60 days and shares underlying
such options are included in the table.
Apart from Steven M. Rales, Mitchell P. Rales and FMR Corp. and T. Rowe Price
Associates,, the Company knows
of no other person that beneficially owns 5% or more of its Common Stock.
PROPOSAL 1.
ELECTION OF DIRECTORS OF THE COMPANY
The Company's Certificate of Incorporation provides that the Board of
Directors shall be divided into three classes with the number of directors in
each class to be as equal as possible. The Board has fixed the number of
directors of the Company at seven.eight. At the 19982001 Annual Meeting of Shareholders,
shareholders will elect one directortwo directors to serve until the 20012004 Annual Meeting of
Shareholders and until his successor istheir successors are duly elected and
4
qualified. The Board of Directors has nominated Mr.Messrs. Alan G. Spoon and
Steven M. Rales to serve as a director until
his term expires in 2001. Messrs. Mitchell P. Rales, George M. Sherman and A.
Emmet Stephenson, Jr. will continue to serve as directors in the class whose term expires in 1999.2004.
Messrs. Mortimer M. Caplin, Donald J. Ehrlich, and Walter G. Lohr, Jr. will
continue to serve as directors in the class whose term expires in 2000.2003.
Messrs. Mitchell P. Rales and A. Emmet Stephenson will continue to serve as
directors until their terms expire in 2002. As previously announced on January
8, 2001, Mr. George M. Sherman will retire from the Company and resign his
position as director effective May 1, 2001. At the May 1, 2001 meeting, the
Board of Directors plans to elect Mr. H. Lawrence Culp, Jr. to replace Mr.
Sherman as director and serve until that term expires in 2002.
The names of the nomineenominees and the directors continuing in office, their
principal occupations, the years in which they became directors and the years in
which their terms expire are set forth below. In the event thea nominee shall
decline or be unable to serve, it is intended that the proxies will be voted in
the discretion of the proxy holders. The Company knows of no reason to
anticipate that this will occur.
5
NOMINEES FOR ELECTION AT THIS YEAR'S ANNUAL MEETING
TO SERVE IN THE CLASS WHOSE TERM EXPIRES IN 20012004
DIRECTOR TERM
NAME AGE PRINCIPAL OCCUPATION SINCE EXPIRES
----Director Term
Name Age Principal Occupation Since Expires
- -------------------------------- --- -------------------------- ------------------------------------ ------- -------
Alan G. Spoon (a) 49 General Partner of Polaris 1999 2004
Venture Partners; Director of
American Management Systems,
Inc., Human Genome Sciences,
Inc. and Ticketmaster Online-
CitySearch, Inc.
Steven M. Rales (b,d)......... 46d,e) 49 Chairman of the Board of the 1983 2001
the2004
Company since 1984; during
the past five years he has
been a principal in a number
of private business entities
with interests in manufacturing
companies, media operations and
publicly traded securities;
Director of Imo Industries Inc.
3
CURRENT DIRECTORS WHOSE TERM WILL CONTINUE AFTER THIS MEETING
DIRECTOR TERM
NAME AGE PRINCIPAL OCCUPATION SINCE EXPIRES
----Director Term
Name Age Principal Occupation Since Expires
- ------------------------------- --- ----------------------------------------------- -------- -------
--------
Mortimer M. Caplin(a,M.Caplin(a,c)...... 81 84 Senior Member of Caplin & 1990 20002003
& Drysdale, a law firm in
Washington, D.C., for over
five years; Director of
Fairchild Corporation and
Presidential Realty
Corporation.
Donald J. Ehrlich(a,c)....... 60 63 President, Chairman and 1985 20002003
Chief Executive Officer of
Wabash National Corp. for
over five years; Director
of Indiana Secondary Market
for Educational Loans,
Inc. and INB National Bank,
N.W.
Walter G. Lohr, Jr.(c)....... 54(c,e) 57 Partner of Hogan & Hartson, 1983 2000
Hartson,2003
a law firm in Baltimore,
Maryland, for over five years.
Mitchell P. Rales(b,d)....... 41Rales (b,d,e) 44 Chairman of the Executive 1983 19992002
6
Director Term
Name Age Principal Occupation Since Expires
- ------------------------------- --- --------------------------- -------- --------
Committee of the Company
since 1990; during the past
five years he has been a
principal in a number of
private business entities with
interests in manufacturing
companies, media operations
and publicly traded securities;
Director of Imo Industries Inc.
George M. Sherman(d)......... 56Sherman (d,e,f) 59 President and Chief Executive 1990 1999
Executive2002
Officer of the Company since
1990; Director of Campbell
Soup Company.
A. EmmetA.Emmet Stephenson,Jr.(a).. 52 55 Chairman of StarTek, Inc. 1986 2002
for more than five years;
President of Stephenson 1986 1999
and Co., a private
investment firm in Denver,
Colorado for more than five
years; Chairman
of StarTek, Inc. for more
than five years.
- --------
(a) Member of the Compensation and Organization Committee of the Board of
Directors.
(b) Mitchell P. Rales and Steven M. Rales are brothers.
(c) Member of the Audit Committee of the Board of Directors.
(d) Member of the Executive Committee of the Board of Directors.
4
(e) Member of the Finance Committee of the Board of Directors.
(f) As previously announced, George M. Sherman will resign his board position
effective May 1, 2001 and the Board of Directors plans to elect H. Lawrence
Culp, Jr. to fill that position.
THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Board of Directors had a total of foursix meetings during 1997.2000. All
directors attended at least 75% of the meetings of the Board of Directors and of
the Committees of the Board of Directors on which they served during 1997.2000.
The Executive Committee acts on behalf of the Board of Directors of the
Company between meetings of the Board of Directors. The Executive Committee
comprised of Messrs. George M. Sherman, Steven M. Rales and Mitchell P. Rales
met twothree times in 1997.2000.
The Audit Committee reviews the financial statements of the Company to
confirm that they reflect fairly the financial condition of the Company and to
appraise the soundness, adequacy and application of accounting and operating
controls. The Audit Committee recommends independent
7
auditors to the Board of Directors, reviews the scope of the audit function of
the independent auditors and reviews audit reports rendered by the independent
auditors. The members of the Audit Committee are independent as defined in the
New York Stock Exchange's listing standards. The Audit Committee met twosix times
during 1997.2000.
The Compensation and Organization Committee reviews the Company's
Compensationcompensation philosophy and programs, and exercises authority with respect to
the payment of direct salaries and incentive compensation to Company officers.
The Compensation Committee is also responsible for the oversight of the stock
option plans of the Company. The Compensation committeeand Organization
Committee met twofour times in 1997.2000.
The Finance Committee was formed in December, 1999 to oversee the financial
affairs and policies of the Company including matters relating to the Company's
capital structure and the policies and practices relating to the Company's
retirement and pension plans. The Finance Committee met once in 2000.
The Company has no Nominating Committee of its Board of Directors.
8
EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------
Executive Officers of the Company are:
OFFICER
NAME AGE POSITION SINCE
----Officer
Name Age Position Since
- -------------------------- --- ------------------------------ -------- -------
Steven M. Rales......... 46Rales 49 Chairman of the Board 1984
Mitchell P. Rales....... 41Rales 44 Chairman of the Executive
Committee 1984
George M. Sherman....... 56Sherman 59 Chief Executive Officer,
President and Director 1990
H. Lawrence Culp, Jr. 38 Executive Vice President
Chief Operating Officer 1995
Patrick W. Allender..... 51 SeniorAllender 54 Executive Vice President,
Chief Financial Officer
and Secretary 1987
James H. Ditkoff........ 52Philip W. Knisely 46 Executive Vice President--Finance and Tax 1991
Dennis D. Claramunt..... 52President 2000
Steven E. Simms 45 Executive Vice President 1996
William J. Butler 45 Vice President and Group
Executive 1994
C. Scott Brannan........ 39 Vice President--Administration and Controller 1987
John P. Watson.......... 541999
Thomas S. Gross 46 Vice President and Group
Executive 1993
H. Lawrence Culp, Jr. .. 34 Vice President and Group Executive 19951999
Daniel L. Comas.........Comas 37 Vice President-Corporate
Development 1996
W. Bruce Graham 46 Vice President-Danaher
Business System 2000
James H. Ditkoff 54 Vice President-Finance and
Tax 1991
Dennis A. Longo 44 Vice President-Human
Resources 1997
Christpher C. McMahon 38 Vice President-Controller 1999
Daniel A. Pryor 33 Vice President--CorporatePresident- Strategic
Development 1996
Steven E. Simms......... 422000
Uldis K. Sipols 50 Vice President and Group Executive 1996
Mark C. DeLuzio......... 40 Vice President--Danaher Business System 1996
Dennis A. Longo......... 41 Vice President--Human Resources 1997President- Procurement 1999
Steven M. Rales has served as Chairman of the Board since January 1984.
In addition, during the past five years he has been a principal in a number
of private business entities with interests in manufacturing companies, media
operations and publicly traded securities. He is also a director of Imo
Industries, Inc.
Mitchell P. Rales has served as a director of the Company since January
1984. In addition, during the past five years he has been a principal in a
number of private business entities with interests in manufacturing companies,
media operations and publicly traded securities. He is also a director of Imo
Industries, Inc.
59
George M. Sherman has served as President and Chief Executive Officer and a
director of the Company since February 1990. He is also a director of Campbell
Soup Company. Mr. Sherman will retire from the Company effective May 1, 2001.
H. Lawrence Culp, Jr. was appointed Chief Operating Officer in 2000 and
Executive Vice President in 1999. He has served in general management positions
within the Company for more than the past five years. Mr. Culp will be
appointed President and Chief Executive Officer upon Mr. Sherman's retirement
effective May 1, 2001.
Patrick W. Allender has served as Chief Financial Officer of the Company
since March, 1987.
James H. Ditkoff has1987 and was appointed Executive Vice President in 1999.
Philip W. Knisely was appointed Executive Vice President in 2000. He had
previously served Colfax Corporation (a diversified industrial manufacturing
company) as President and Chief Executive Officer. Colfax Corporation is
majority-owned by Steven and Mitchell Rales.
Steven E. Simms was appointed Executive Vice President in 1999. He joined
the Company in 1996 as Vice President-FinancePresident and Tax since January,
1991.
Dennis D. ClaramuntGroup Executive, and had previously
served Black & Decker, most recently as President - Worldwide Accessories
Business.
William J. Butler was appointed Vice President and Group Executive in 1994.1999.
He has served as President of Jacobs Chuck Manufacturingin general management positions within the Company for more than
the past five years.
C. Scott Brannan was appointed Vice President-Administration and Controller
of the Company in November, 1987.
John P. WatsonThomas S. Gross was appointed Vice President and Group Executive in 1993.1999.
He hashad previously served the Company in an executive capacity since September, 1990.
H. Lawrence Culp, Jr. was appointed ViceXycom Automation Inc. (a provider of automation
hardware and software) as President, and Group Executiveprior to joining Xycom in 1995. He has1998, he
served the CompanyAllen-Bradley/Rockwell Automation (a provider of industrial control and
automation products) in an executive capacity (including President
since 1993 at Veeder-Root Company)various management positions for more than the past five years.
Daniel L. Comas was appointed Vice President-Corporate Development in 1996.
He has served the Company in an executive capacity in the corporate development
area for more than the past five years.
Steven E. Simms was appointed Vice President and Group Executive in 1996. He
had previously served Black & Decker, most recently as President--Worldwide
Accessories Business.
Mark C. DeLuzioW. Bruce Graham was appointed Vice President-Danaher Business Systems (DBS)
in 1996.2000. He haspreviously served in general management positions within the
Company as Director-DBS and in financial and
operating positions with Jacobs Vehicle Systems, Inc.Company's Hand Tool Group for more than the past five years.
James H. Ditkoff has served as Vice President-Finance and Tax since
January, 1991.
Dennis A. Longo was appointed Vice President-Human Resources in 1997. He
has served the Company as a human resources executive for more than the past
five years.
610
Christopher C. McMahon was appointed Vice President-Controller in 1999. He
has served in financial management positions within the Company for more than
the past five years.
Daniel A. Pryor was appointed Vice President- Strategic Development in
2000. He has served in general management positions within the Company for more
than the past five years.
Uldis K. Sipols was appointed Vice President- Procurement in 1999. He had
previously served AMP, Inc. (an electronic products manufacturer) as Vice
President, Global Procurement, and before joining AMP in 1997 held various
procurement management positions with Ford Motor Company for more than five
years.
11
COMPENSATION OF DIRECTORS
AND EXECUTIVE OFFICERS
The following table sets forth certain information concerning the
compensation for the last three completed fiscal years of the Chief Executive
Officer and the executive officers of the Company who, in addition to the Chief
Executive Officer, received the highest compensation during 1997.2000.
SUMMARY COMPENSATION TABLE
LONG-TERM====================================================================================================================
LONG TERM
COMPENSATION
---------------------------
ANNUAL COMPENSATION AWARDS
----------------------------------------------------------- ---------------------
(E) (F) (G)
(A) OTHER RESTRICTED SECURITIES (H)
NAME AND- --------------------------------------------------------------------- ---------------------------
(a) (b) (C) (D) ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL (B) SALARY BONUS COMPENSATION AWARDS (1) OPTION COMPENSATION (2)
POSITION YEAR(d) (e) (f) (g) (h)
Other Restricted Securities All Other
Name and Annual Stock Underlying Compensation(2)
Principal Salary Bonus Compensation Awards(1) Options ($)
Position Year ($) ($) ($) ($) (#)
($)
---------- -------------------------- ---- ------- ----------------- ---------- ------------ ---------- ---------- ------------------------------ ----------- ---------------
George M. Sherman....... 1997Sherman 2000 675,000 1,282,500 -- 600,000 $61,0001,691,000 - - - 80,000
President and CEO 19961999 675,000 859,000 -- -- -- 63,000
19951,550,000 - - - 69,000
1998 675,000 921,000 -- -- 300,000 36,0001,625,000 - - - 87,000
- --------------------------------------------------------------------------------------------------------------------
H. Lawrence Culp, Jr. 2000 480,000 830,000 - - 1,000,000 25,000
Executive Vice President 1999 315,000 340,000 - - 20,000 14,000
and COO 1998 264,000 232,000 - - - 22,000
- --------------------------------------------------------------------------------------------------------------------
Patrick W. Allender..... 1997 296,000 325,000 -- -- 100,000 22,000
SeniorAllender 2000 370,000 525,000 - - 300,000 45,000
Executive Vice President 1999 352,500 441,000 - - 22,000 29,000
and 1996 270,833 260,000 -- -- 25,000 14,000
CFO 1995 243,333 250,000 -- -- 15,000 14,0001998 317,000 380,000 - - - 22,000
- --------------------------------------------------------------------------------------------------------------------
Steven E. Simms......... 1997 280,000 200,000 -- -- 85,000 22,000Simms 2000 378,000 400,000 - - 500,000 26,000
Executive Vice President and 1996 210,000 160,000 -- -- 107,000 --
Group1999 324,000 340,000 - - 20,000 17,000
1998 298,000 240,000 - - - 22,000
- --------------------------------------------------------------------------------------------------------------------
Philip W. Knisely 2000 191,000 350,000 - - 500,000 11,000
Executive
John P. Watson.......... 1997 247,000 180,000 -- -- 85,000 22,000 Vice President and 1996 236,000 100,000 -- -- 10,000 14,000
Group Executive 1995 213,000 120,000 -- -- 7,000 14,000
Dennis D. Claramunt..... 1997 228,000 170,000 -- -- 85,000 22,000
Vice President and
Group 1996 211,000 130,000 -- -- 12,000 14,000
Executive 1995 196,000 150,000 -- -- 7,000 14,0001999 - - - - - -
1998 - - - - - -
====================================================================================================================
- --------
(1) Mr. Sherman received a grant of 400,000800,000 shares in 1990; 200,0001990 ; 400,000 have been
issued and 200,000400,000 are deferred until retirement. Issued shares
participate in dividends ( $20,000($26,000 in 1997, $18,0002000, $24,000 in 19961999 and $16,000$22,000 in
1995)1998) on a non-preferential basis. The value of the 400,000800,000 shares at
December 31, 19972000 was $25,250,000.$54,700,000.
(2) Includes contributions to the Company's 401(k) and executive retirement
plans and financial consulting fees for all individuals; in the case of
Mr. Sherman, it also includes supplemental term life insurance ($17,000 25,000
for 1997)2000) and financial consulting fees ($22,00041,000 for 1997)2000).
712
GRANTS IN LAST FISCAL YEARGrants in Last Fiscal Year
--------------------------
The following table sets forth certain information relating to options granted
to purchase shares of the Company Common Stock.
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM==================================================================================================================================
Potential Realizable Value at
Individual Grants Assumed Annual Rates of
Stock Price Appreciation for
Option Term (3)
--------------------------------------------------------- -------------------------------
(B)- --------------------------------------------------------------------------------- -----------------------------------------------
(a) (b) (C) NO. OF SECURITIES(d) (e) (f) (g) (h)
No. of % OF TOTAL (D)
UNDERLYING OPTIONS EXERCISE
OPTIONS/SARS GRANTED TO OR BASE (E)
GRANTED EMPLOYEES IN PRICE EXPIRATION (F) (G) (H)
(#) (1) FISCAL YEARof Total
Securities Options Exercise
underlying Granted to or Base
Options/SAR Employees Price Expiration
Name S in ($/SH)Sh)(2) DATEDate 0%($) 5%($) 10%($)
NAME ----------------- ------------ --------- ---------- ----- ------------ ------------Granted Fiscal
(#) (1) Year
- ----------------------------------------------------------------------------------------------------------------------------------
George M. Sherman....... 600,000 37.5% 44.25 3/13/07H. Lawrence Culp, Jr. 1,000,000 30.6% 46.625 7-18-10 0 16,700,000 42,300,00029,322,000 133,027,000
Patrick W.Allender 300,000 9.2% 46.625 7-18-10 0 8,797,000 39,908,000
Philip W. Allender..... 100,000(4) 6.2% 47.75 5/14/07Knisely 500,000 15.3% 48.0625 4-14-10 0 3,000,000 7,600,000
John P. Watson.......... 85,000(4) 5.3% 47.75 5/14/07 0 2,550,000 6,470,000
Dennis D. Claramunt..... 85,000(4) 5.3% 47.75 5/14/07 0 2,550,000 6,470,00015,113,000 68,564,000
Steven E. Simms......... 85,000(4) 5.3% 47.75 5/14/07Simms 500,000 15.3% 46.625 7-18-10 0 2,550,000 6,470,00014,661,000 66,513,000
==================================================================================================================================
- --------
(1) Options become exercisableMr. Culp's, Mr. Allender's, Mr. Knisely's and 400,000 of Mr. Simms' options
are exerciseable 50% on the fourth anniversary and 50% on the fifth
anniversary of the dategrant date. 100,000 of Mr. Simms' options are
exerciseable on the second anniversary of the grant except for Mr. Sherman's options, of which half become exercisable in
three years, and half become exercisable in four years.date
(2) Options were granted at fair market value on the date of grant.
(3) The dollar amounts set forth under these columns are the result of
calculations of assumed annual rates of stock price appreciation from the
date of the grant to the date of expiration of such options of 0%, 5%, and
10%. These assumptions are not intended to forecast future price
appreciation of the Company's stock price. The Company's stock price may
increase or decrease in value over the time period set forth above.
(4) Subject to shareholder approval.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES13
Aggregated Option Exercises in Last Fiscal Year and FY-End Option Values
------------------------------------------------------------------------
The following table sets forth certain information concerning the number of
unexercised options and the value of unexercised options at the end of 19972000 for
the executive officers whose compensation is reported in the Summary
Compensation Table. Value is considered to be, in the case of unexercised
options, the difference between the exercise price and the market price at
December 31, 1996.2000.
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
ACQUIRED VALUE OPTION AT FY-END================================================================================================================
Number of Securities
Shares Underlying Unexercised Value of Unexercised
Acquired on Value Options at FY-End (#) MONEY OPTIONS AT FY-
ON EXERCISE REALIZED EXERCISABLE/ END($In-the-
Name Exercise Realized Exercisable/ Money Options at FY-End($) EXERCISABLE/
# $ UNEXERCISABLE UNEXERCISABLE
----------- -------- ----------------------- -----------------------------Unexercisable Exercisable/
Unexercisable
- ----------------------------------------------------------------------------------------------------------------
George M. Sherman.......Sherman 1,200,000 47,925,000 2,000,000 /(1)/ 600,000 /(1)/ 109,413,000 27,750,000
- ----------------------------------------------------------------------------------------------------------------
H. Lawrence Culp, Jr. -0- -0- 920,000 980,000(1) $ 49,930,000 $ 48,270,000
Dennis D. Claramunt.....132,000 1,192,000 7,108,000 29,898,000
- ----------------------------------------------------------------------------------------------------------------
Patrick W. Allender 24,000 1,121,000 344,400 /(2)/ 527,600 /(2)/ 19,583,000 16,223,000
- ----------------------------------------------------------------------------------------------------------------
Philip W. Knisely -0- -0- 59,200 110,800 $ 2,782,000 $ 2,164,000
Patrick W. Allender.....-0- 500,000 -0- 10,156,000
- ----------------------------------------------------------------------------------------------------------------
Steven E. Simms -0- -0- 153,000 157,000 $ 7,174,000 $ 3,369,000
John P. Watson.......... -0- -0- 87,600 114,400 $ 4,185,000 $ 2,350,000
Steven E. Simms......... -0- -0- 21,400 170,600 $ 573,400 $ 3,600,00095,200 688,800 4,633,000 18,876,000
================================================================================================================
- --------
(1) Includes options to acquire 40,00080,000 shares transferred in trust to
family members. Mr. Sherman disclaims beneficial ownership of these
options.
(2) Includes options to acquire 250,000 shares held by family limited
partnerships.
COMPENSATION OF DIRECTORS
Directors who are not officers of the Company receive meeting attendance fees of
$750$1,000 per meeting (excluding($500 for telephonic meetings), together with quarterly fees
of $3,000.$6,250. A grant of an option to acquire 2,000 shares of Company Common Stock
at $60.1875$68.3125 (fair market value at date of grant) per share was made to these
directors.
8
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
Pursuant to the terms of termination agreements between the Company and
Messrs.Mr. Sherman, and Watson, if the Company were to terminate theirhis employment without cause, as
defined therein, Mr. Sherman's salary and benefits would continue for an
additional 24 months, and Mr. Watson's salary and benefits
would continue for an additional 12 months. See "Report of the Compensation and Organization
Committee of the Board of Directors on Executive Compensation" for further
discussion of Mr. Sherman's contract.
In July 2000, the Company appointed H. Lawrence Culp, Jr. Chief Operating
Officer, and in October 2000, the Company and Mr. Culp executed an employment
agreement. The major provisions of the agreement are: (i) the term of employment
continues until October 13, 2003, unless sooner terminated or extended; (ii)
annual base salary for the first year of the agreement is $600,000, plus a
target bonus of 100% of base salary; (iii) an interest-free loan in the amount
of $500,000 that is forgiven ratably through October 13, 2003; (iv)
reimbursement for taxes incurred as a result of the terms of the $500,000 loan;
(v) a non-competition provision that extends for three years after Mr. Culp's
termination of employment; and (vi) continuation of salary and bonus payments
for 24 months upon a termination of employment without cause or in the event of
a change in control of the Company.
14
COMPENSATION AND ORGANIZATION COMMITTEE
Messrs. Steven M. Rales, Mitchell P. Rales and George M. Sherman receive a
salary set by the Compensation and Organization Committee of the Board of
Directors and also serve as directors. However, they do not participate in
deliberations regarding their own compensation. The members of the Compensation
and Organization Committee are A. Emmet Stephenson, Jr., Mortimer M. Caplin,
Alan G. Spoon and Donald J. Ehrlich.
REPORT OF THE COMPENSATION AND ORGANIZATION COMMITTEE
OF THE BOARD OF DIRECTORS ON
EXECUTIVE COMPENSATION
The report is not deemed to be "soliciting material" or to be "filed" with the
Securities and Exchange Commission (the "SEC") or subject to the SEC's proxy
rules or to the liabilities of Section 18 of the Securities Exchange Act of the 1934
(the "1934 Act"), and the report shall not be deemed to be incorporated by
reference into any prior or subsequent filing by the Corporation under the
Securities Act of 1933 or the Securities Exchange Act of 1934.
Total executive officer compensation is comprised of three principal components:
annual salary, annual incentive compensation, and grants of options to purchase
Company Common Stock. In the case of Mr. Sherman, this included a restricted
stock grant at the time of his hire. The Committee endeavors to establish total
compensation packages for each executive officer equal to the value of that
executive's services determined by both what other companies have or might pay
the executive for his services and his relationship to other executive positions
within the Company, as negotiated at the date of hire. This base is then
adjusted annually based on the Committee's assessment of individual performance.
A fundamental element of the Company's compensation policy is that a substantial
portion of each executive's compensation be directly related to the success of
the Company. This is accomplished in two ways. First, the annual incentive
compensation program requires that the Company, or the Company's businesses for
which the executive is directly responsible, achieve certain minimum targets in
earnings level (earnings per share which has a majority weighting), working
capital management (working capital turnover) and economic value added. If
performance for the year is below minimum targeted levels (generally
approximately three-quarters of the earnings target must be achieved and working
capital management must exceed target levels) there would be no payment. If the
minimum targets are met or exceeded, each executive receives a formula-based
payout taking into account the Company's performance and his or her personal
contribution thereto.
Second, executives and other key employees who, in the opinion of the Committee,
contribute to the growth, development and financial success of the Company are
eligible to be awarded options to purchase Company Common Stock. These grants
are normally made at the fair market value on the date of grant with vesting
over a five year period. In addition to the factors discussed above, the amount
of options granted is impacted both by the level of the employee within the
Company's management and the amount of options previously granted to the
employee. Thus the compensation value of this element is directly related to
the performance of the Company as measured by its returns to shareholders over
at least a five year period.
9
Mr. Sherman's compensation is governed by a written contract dated January 2,
15
1990, whereby he agreed to serve as President and Chief Executive Officer. The
contract provides for Mr. Sherman to be paid a base salary of $675,000 per year
and an annual formula-based incentive compensation award, if earned, as
determined by the Compensation Committee. The Committee and subsequently the
Board of Directors recommended, and Mr. Sherman agreed, that his base salary,
which has not increased since he joined the Company, would not be increased
during the remainder of the term of his contract. Therefore, during the
remaining term of his contract with the Company, any increases in Mr.
Sherman's compensation will be tied directly to the financial performance of
the Company and the Company's stock price. He also received 400,000800,000
shares of restricted stock (see Summary Compensation Table) and an option to
acquire 1,000,0002,000,000 shares (see Year End Option Value Table) of the Company Common
Stock, and has received, or will receive, tax gross-up payments related to these
items. Mr. Sherman's contract requires the Company to provide supplemental term
life insurance and financial consulting services to him (see Summary
Compensation Table) and to provide severance benefits discussed previously.
The Committee evaluated each executive's annual incentive compensation awards
for 1997.2000. The Committee assessed their performance in light of the targets
referenced above, which were substantially exceeded, and awarded to executives
(other than the operating level Executive Vice Presidents and Group Executives)
total incentive compensation payments to executives other than Group Executives of $2,297,500$4,058,000 for 1997.2000. For the years
1998-2002,2000-2002, the Committee has established a maximum bonus payment of up to
$2,500,000 per executive, subject to approval
by theexecutive. The Company's shareholders ofapproved the performance
goals for these periods, which are applicable to all of the Company's executive
officers other(other than the operating level Executive Vice Presidents and Group
Executives.Executives) at the 1998 annual meeting.
The Committee has considered the impact of provisions of the federal income tax
laws that in certain circumstances disallow compensation deductions in excess of
$1 million for any year with respect to the executive officers named in proxy
statements of publicly traded companies. The Securities and Exchange Commission
requires compensation committees of public companies to state their compensation
policies relative to this $1 million deduction limit.
With respect to the Company's Chief Executive Officer, a portion of his
compensation is determined pursuant to a binding contract dated January 2, 1990
and, accordingly, is not subject to the deduction limit. In addition, the
Committee has designed the program for awarding 1998-2002 incentive compensation
to executive officers other(other than the operating level Group ExecutivesExecutives) so that
such bonuses will comply with an exception to the $1 million deduction limit for
performance-based compensation. Accordingly, the full amount of any such bonus
payments for 1998-2002 should be deductible. One of the requirements of this
exception is that shareholders approve certain material terms under which the
bonus is to be paid. In this regard, the Company's shareholders are being
asked to approveapproved the
material terms used for calculating the 1998-2002 bonus awards for the Company's
executive officers, other than Group Executives, as
discussed in Proposal 3 hereto.at the 1998 annual meeting.
COMPENSATION AND ORGANIZATION COMMITTEE OF THE BOARD OF DIRECTORS
A. EMMET STEPHENSON, JR.
MORTIMEREmmet Stephenson, Jr.
Mortimer M. CAPLIN
DONALDCaplin
Donald J. EHRLICH
10Ehrlich
Alan G. Spoon
16
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The report is not deemed to be "soliciting material" or to be "filed" with the
Securities and Exchange Commission (the "SEC") or subject to the SEC's proxy
rules or to the liabilities of Section 18 of the Securities Exchange Act of 1934
(the "1934 Act"), and the report shall not be deemed to be incorporated by
reference into any prior or subsequent filing by the Corporation under the
Securities Act of 1933 or the Securities Exchange Act of 1934.
The Audit Committee (the "Committee") comprises three independent
directors and operates under a written charter, which is attached as Exhibit B.
The Committee recommends to the Board of Directors the selection of the
Company's independent auditors.
In fulfilling its responsibilities, the Committee has reviewed and discussed the
audited consolidated financial statements of the Company for the fiscal year
ended December 31, 2000 with the Company's management and Arthur Andersen LLP
("Arthur Andersen"), the Company's independent auditors.
The Committee has discussed with Arthur Andersen the matters required to be
discussed by Statement on Auditing Standards No. 61, "Communication with Audit
Committees." In addition, the Committee has received the written disclosures
and the letter from Arthur Andersen required by Independence Standards Board
Standard No. 1, "Indepdendence Discussions with Audit Committees" and has
discussed with Arthur Andersen its independence from the Company and its
management.
In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors that the audited consolidated financial
statements for the Company for the fiscal year ended December 31, 2000 be
included in the 2000 Annual Report to Stockholders which will be included in the
Annual Report on Form 10-K for the year ended December 31, 2000 for filing with
the Securities and Exchange Commission.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
Walter G. Lohr, Jr.
Mortimer M. Caplin
Donald J. Ehrlich
STOCK PERFORMANCE CHART
As part of proxy statement disclosure requirements mandated by the Securities
and Exchange Commission, the Company is required to provide a five-
yearfive-year
comparison of the cumulative total shareholder return on its Common Stock with
that of a broad equity market index and either a published industry index or a
Company constructed peer group index. This graph is not deemed to be
"soliciting material" or to be "filed" with the SEC or subject to the SEC's
proxy rules or to the liabilities of Section 18 of the 1934 Act, and the graph
shall not be deemed to be incorporated by reference into any prior or subsequent
filing by the Corporation under the Securities Act of 1933 or the 1934 Act.
The following chart compares the yearly percentage change in the cumulative
total shareholder return in the Company's Common Stock during the five years
ended December 31, 19972000 with the cumulative total return on the S & P 500 Index
(the equity index) and the S&P Manufacturing Index (the peer index). The
comparison assumes $100 was invested on December 31, 19921995 in the Company's
Common Stock and in each of the above indices with reinvestment of dividends.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG DANAHER CORPORATION
S&P 500 INDEX AND S&P MANUFACTURING INDEX
PERFORMANCE GRAPH APPEARS HERE17
Danaher S&P
Measurement Period DANAHERCorporation S&P MANUFACTURING
(Fiscal Year Covered) CORPORATION 500 INDEX INDEX
- --------------------- --------------- --------- ----------Manufacturing
Index Index
Measurement Pt-12/31/1992 $100.00 $100.00 $100.00
FYE 12/31/1993 $146.98 $109.99 $121.40
FYE95 100 100 100
12/31/1994 $201.90 $111.41 $125.66
FYE96 147 123 133
12/31/1995 $245.99 $153.27 $176.96
FYE97 199 164 183
12/31/1996 $361.93 $188.62 $235.42
FYE98 343 211 225
12/31/1997 $490.79 $251.19 $324.2099 305 255 252
12/31/00 433 232 281
11
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On July 5, 2000 the Company purchased the motion control businesses of Warner
Electric Group, Inc. for $144 million in cash. Steven M. Rales and Mitchell P.
Rales, the Company's Chairman of the Board and Chairman of the Executive
Committee, respectively, own a majority share of Warner Electric Group, Inc.,
and Philip W. Knisely, an Executive Vice President of the Company, owns 5% of
Warner Electric Group, Inc. This transaction was unanimously recommended by an
independent committee of the Company's Board of Directors, who received an
opinion from UBS Warburg, an independent financial advisor, as to the fairness
of the transaction. The members of the independent committee included Mortimer
M. Caplin, Donald J. Ehrlich, Alan G. Spoon, and A. Emmet Stephenson, Jr.
The Company, from time to time, has been involved in transactions with Equity
Group Holdings LLP and its affiliates. The Company has received legal services
from the firm of Caplin & Drysdale, of which Mr. Caplin, a Director, is a
principal, and from the firm of Hogan & Hartson, of which Mr. Lohr, a Director,
is a partner. The amount of such fees for 19972000 was less than five-
percentfive-percent of
each firm's gross revenues. These transactions, which are conducted on an arms
length basis, are not material, either individually or in the aggregate. The
Company has provided H. Lawrence Culp, Jr. with a $500,000 loan, as discussed in
the "Employment Contracts and Termination of Employment" section of this proxy
statement.
PROPOSAL 2.
APPROVAL OF APPOINTMENT OF AUDITORS
The Board of Directors has appointed Arthur Andersen LLP, an international
accounting firm of independent certified public accountants, to act as
independent accountants for the Company and its consolidated subsidiaries for
1998.2001. Arthur Andersen LLP has been the Company's auditors since 1976 and has
advised the Company that the firm does not have any direct or indirect financial
interest in the Company or any of its subsidiaries, nor has such firm had any
such interest in connection with the Company during the past five years other
than its capacity as the Company's independent certified public accountants. A
representative of Arthur Andersen LLP is expected to be present at the Annual
Meeting and will have an opportunity to make a statement if he desires to do so
and to be available to answer questions from shareholders.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE FOR RATIFICATION AND APPROVAL FOR THE SELECTION OF ARTHUR ANDERSEN LLP TO
SERVE AS INDEPENDENT AUDITORS FOR THE COMPANY FOR 1998.2001.
18
PROPOSAL 3.
APPROVAL OF PERFORMANCE GOALS
Beginning in 1994, federal income tax laws limit deductions for publicly
held corporations with respect to compensation in excess of $1 million paid to
an executive officer who is named in its proxy statement. However,
compensation payable solely on account of attainment of one or more
performance goals is not subject to the deduction limit if the performance
goals are objective, pre-established and determined by a compensation
committee comprised solely of two or more outside directors, the material
terms under which the compensation is paid are disclosed to shareholders and
approved by a majority vote, and the compensation committee certifies that the
performance goals and other material terms were in fact satisfied before
amounts were paid.
In order to ensure that the full amount of the bonus payment that may be
made to the executive officers other then Group Executives for each of the
five years beginning with 1998 is deductible for federal income tax purposes,
the material terms of the performance goals under which that bonus is to be
paid are described below and the shareholders will be asked to approve those
material terms. Payment of the bonus based on these performance goals is
conditioned upon and subject to approval by the shareholders of the Company of
the material terms of these performance goals.
The maximum bonus payable to any executive officer other than Group
Executives will be determined under a formula and will not exceed $2.5
million. The maximum bonus payable to each executive officer other than Group
Executives is computed under a formula approved by the Compensation Committee
on March 5, 1998, that is based on the Company's reported earnings per share
from continuing operations. The Compensation Committee reserves the right, in
its sole and absolute discretion, not to award any bonus to the executive
officers other than Group Executives or to award any of them a bonus of less
than the maximum amount determined in accordance with the formula described
above.
12
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS APPROVE THE MATERIAL
TERMS OF THE PERFORMANCE GOALS ESTABLISHED FOR THE PAYMENT OF BONUSES TO THE
EXECUTIVE OFFICERS OTHER THAN GROUP EXECUTIVES. APPROVAL REQUIRES THE
AFFIRMATIVE VOTE OF A MAJORITY OF THE HOLDERS OF COMMON STOCK VOTED AT THE
MEETING ON THIS PROPOSAL.
PROPOSAL 4.
AMEND THE COMPANY'S 19871998 STOCK OPTION PLAN
The Company's 19871998 Stock Option Plan (the "Plan") was approved by the
shareholders at the 19871998 Annual Meeting. On March 5, 1998,1, 2001, the Board of
Directors approved a comprehensive set of amendmentsan amendment to the Plan, which would (1) designateincrease the Compensation Committee asaggregate
number of shares of common stock that may be issued under the administratoroptions from
15,000,000 to 22,500,000.
The Plan has been important in the Company's efforts to attract and retain
qualified employees. As of March 23, 2001, a total of 403,000 shares were
available for issuance. In order to provide sufficient shares for the future
issuance of shares to our current and prospective employees, the Board of
Directors seeks shareholder approval to amend the Plan (2)to increase the maximum
number of stockshares that may be issued under the options from 5,000,000by 7,500,000 shares to 7,500,000, (3)
increase thean
aggregate maximum number of shares of 22,500,000.
All employees and non-employee directors of the Company and eligible
subsidiaries are eligible for option grants under the Plan. The Plan is subject
to approval by the Compensation and Organization Committee of the Board of
Directors, which approves the recipients of option grants and the terms of the
options. The shares of common stock used under the plan may come from treasury
shares, authorized but unissued shares, or previously issued shares that the
Company reacquires, including shares it purchases on the open market. If any
option expires, is canceled, or terminates for any other reason, the shares
available under that option will again be available for the granting of new
options. The Plan will terminate on May 4, 2008. Options granted under the Plan
are non-qualified stock options that canfor federal income tax purposes. This is only a
summary of the terms of the Plan. A copy of the entire Plan may be grantedobtained by
writing to any
individual from 1,300,000 to 2,500,000, (4) prohibitDanaher Corporation, Attn: Vice President and Controller, 1250 24th
Street, N.W., Washington, D.C. 20037.
The closing price of the issuance of incentiveCompany's stock options, stock appreciation rights, or stock option grants at less than
the stock's fair market value on the dateNew York Stock Exchange on March
22, 2001 was $54.77. All eligible participants, including the Company's
executive officers and directors, will be eligible for grants of grant, and (5) make certain other
changes inoptions for the
time for vesting and exercising stock options. The complete
textadditional authorized shares.
Approval requires the affirmative vote of the Plan, as amended, is attached as Exhibit A.holders of a majority of the
shares of common stock of the Company present, or represented, and entitled to
vote at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS APPROVE THE AMENDMENTSAMENDMENT TO
THE 19871998 STOCK OPTION PLAN.
APPROVAL REQUIRESPROPOSAL 4.
AMEND THE AFFIRMATIVE
VOTE OF THE HOLDERS OF A MAJORITY OF THE SHARES OF COMMON STOCK OF THE COMPANY
PRESENT, OR REPRESENTED, AND ENTITLED TO VOTE AT THE ANNUAL MEETING.
PROPOSAL 5.
APPROVE STOCK OPTION GRANTS
On May 14, 1997, the Compensation Committee approved the following grants of
non-qualified stock options under the 1987 Stock Option Plan: 100,000 options
to Patrick W. Allender, the Company's Senior Vice President and Chief
Financial Officer, and 85,000 options to each of the Company's four Group
Executives--Dennis D. Claramunt, H. Lawrence Culp, Jr., Steven E. Simms, and
John P. Watson. The exercise price on all five option grants is $47.75 per
share, which was the fair market value of Danaher's stock on the date of these
grants, and all of the options become exercisable on May 14, 2002, unless an
optionee dies or becomes totally disabled prior to May 14, 2002, in which case
his options vest in five equal annual installments beginning on May 14, 1998.
All five option grants were made subject to approval by the Company's
shareholders at their 1998 annual meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS APPROVE THE OPTION
GRANTS TO THE CHIEF FINANCIAL OFFICER AND FOUR GROUP EXECUTIVES. APPROVAL
REQUIRES THE AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES OF COMMON STOCK OF
THE COMPANY PRESENT, OR REPRESENTED, AND ENTITLED TO VOTE AT THE ANNUAL
MEETING.
PROPOSAL NO. 6
APPROVAL OF AMENDMENT TO THECOMPANY'S CERTIFICATE OF INCORPORATION
TO INCREASE THE AUTHORIZED CAPITAL STOCK
The Board of Directors has adopted, subject to stockholder approval, an
amendment to the Company's Certificate of Incorporation to increase the number
of authorized shares of capital stock of the Company to a 13
total of threesix hundred
fifteen million (315,000,000)(600,000,000) shares, consisting of threefive hundred million (300,000,000)(500,000,000)
shares of Common Stock, $.01 par value per share ("Common Stock") and fifteenone hundred
million (15,000,000)(100,000,000) shares of preferred stock, without par value ("Preferred
Stock"). The capital stock of the Company, prior to the approval of the
amendment, consists of 140,000,000315,000,000 shares, consisting of onethree hundred twenty five million
(125,000,000)(300,000,000) shares of Common Stock, $.01 par value per share and fifteen
million (15,000,000) shares of preferred stock, without par value.
The Board of Directors believes that it is in the Company's best interests to
have additional shares of Common Stock authorized to meet the Company's future
business needs as they arise. In particular, a portion of the shares of Common
Stock that would become available for issuance if the proposal were adopted
maycould be used by the Company in connection with the previously announced
recommendationfollowing possible future
events: (i) a split of the outstanding Common Stock; (ii) stock option
exercises; (iii) share-for-share acquisitions; or (iv) conversion of outstanding
and future debt securities into Common Stock.
The Company's management and the Board of Directors of a two-for-one split of its
outstanding Common Stock. If approved, the distribution of the split shares
would be made to stockholders on approximately May 29, 1998.
Other than as disclosed, the Company's management hashave no present arrangements,arrangement,
agreements, understandings or plans for the additional shares proposed to be
authorized.
If the proposal is adopted, it will become effective upon filing of a
Certificate of Amendment to the Company's Certificate of Incorporation. The
text of the proposed amendment is set forth in Exhibit BA hereto.
The affirmative vote of the majority of the votes entitled to be cast by all
holders of outstanding Common Stock of the Company is required for approval of
this amendment to the Certificate of Incorporation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOREGOING PROPOSAL AND SIGNED
PROXIES WHICH ARE RETURNED WILL BE SO VOTED UNLESS A CONTRARY VOTE IS DESIGNATED
ON THE PROXYPORXY CARD.
19
OTHER MATTERS
The management of the Company is not aware of any other business that may come
before the meeting. However, if additional matters properly come before the
meeting, proxies will be voted at the discretion of the proxy holders.
FEES PAID TO INDEPENDENT AUDITORS
Audit Fees: The aggregate fees billed for professional services rendered by
Arthur Andersen LLP, the Company's independent auditors, in connection with the
audit and review of the 2000 financial statements, including quarterly reviews,
was $465,000.
Financial Information Systems Design and Implementation Fees: The aggregate fees
billed for professional services rendered in connection with financial
information systems design and implementation by Arthur Andersen LLP was
$100,000.
All Other Fees: The aggregate of all other fees billed for professional services
during 2000 by Arthur Andersen LLP, including statutory audits of foreign
subsidiaries, was $576,000.
The Audit Committee has considered whether the services rendered by the
independent auditors with respect to the foregoing fees are compatible with
maintaining their independence.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the 19992002 Annual Meeting of
Shareholders of the Company must be received by the Company at its principal
executive offices, Danaher Corporation, 1250 24th Street, N.W., Washington, D.C.
20037, no later than November 26, 199830, 2001 for inclusion in the Proxy Statement and
Proxy relating to the 19992002 Annual Meeting of Shareholders. By Order ofShareholder proposals
submitted other than pursuant to Rule 14(a)-8 under the Board of Directors
/s/ PatrickSecurities Exchange Act
are considered untimely if received after February 13, 2002.
BY ORDER OF THE BOARD OF DIRECTORS
PATRICK W. Allender
Patrick W. AllenderALLENDER
Secretary
Dated: March 30, 1998--, 2001
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER
31, 19972000 MAY BE OBTAINED, WITHOUT CHARGE, BY WRITING TO THE COMPANY.
1420
EXHIBIT A
DANAHER CORPORATION
1998 STOCK OPTION PLAN
PURPOSE
Danaher Corporation, a Delaware corporation ("Danaher" or the "Company"),
wishes to recruit, reward, and retain key employees and outside directors. To
further these objectives, the Company hereby sets forth the Danaher
Corporation 1998 Stock Option Plan (the "Plan"), effective as of May 5, 1998,
to provide options ("Options") to employees to purchase shares of the
Company's common stock (the "Common Stock"). The Plan constitutes an amendment
to, and substitution for, the Danaher Corporation 1987 Stock Option Plan (the
"1987 Plan").
OPTIONEES
All Employees and non-Employee directors ("Eligible Directors") of Danaher
and Eligible Subsidiaries are eligible for option grants under this Plan.
Eligible employees and directors become "optionees" when the Administrator
grants them an option under this Plan. The term optionee also includes, where
appropriate, a person authorized to exercise an Option in place of the
original recipient.
Employee means any person employed as a common law employee of the Company
or an Eligible Subsidiary.
ADMINISTRATOR
The Administrator will be the Compensation Committee of the Board of
Directors of Danaher (the "Compensation Committee"), unless the Board
specifies another committee. The Board may also act under the Plan as though
it were the Compensation Committee.
The Administrator is responsible for the general operation and
administration of the Plan and for carrying out its provisions and has full
discretion in interpreting and administering the provisions of the Plan.
Subject to the express provisions of the Plan, the Administrator may exercise
such powers and authority of the Board as the Administrator may find necessary
or appropriate to carry out its functions. The Administrator may delegate its
functions (other than those described in the GRANTING OF OPTIONS section) to
officers or employees.
The Administrator's powers will include, but not be limited to, the power to
amend, waive, or extend any provision or limitation of any Option. The
Administrator may act through meetings of a majority of its members or by
unanimous consent.
GRANTING OF OPTIONS
Subject to the terms of the Plan, the Administrator will, in its sole
discretion, determine
the recipients of option grants,
the terms of such grants,
the schedule for exercisability (including any requirements that the
optionee or the Company satisfy performance criteria),
the time and conditions for expiration of the Option, and
the form of payment due upon exercise.
The Administrator's determinations under the Plan need not be uniform and
need not consider whether possible optionees are similarly situated.
1
Options granted to employees are not intended to qualify as "incentive stock
options" ("ISOs") within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended from time to time (the "Code"), or the corresponding
provision of any subsequently enacted tax statute.
The Administrator may not reduce the Exercise Price of any outstanding
Option, other than as provided under Adjustments upon Changes in Capital
Stock.
Substitutions
The Administrator may also grant Options in substitution for options or
other equity interests held by individuals who become Employees of the Company
or of an Eligible Subsidiary as a result of the Company's acquiring or merging
with the individual's employer. If necessary to conform the Options to the
options for which they are substitutes, the Administrator may grant substitute
Options under terms and conditions that vary from those the Plan otherwise
requires.
DATE OF GRANT
The Date of Grant will be the date as of which the Administrator awards an
Option to an optionee, as specified in the Administrator's minutes.
EXERCISE PRICE
The Exercise Price is the value of the consideration that an optionee must
provide in exchange for one share of Common Stock. The Administrator will
determine the Exercise Price under each Option and may set the Exercise Price
without regard to the Exercise Price of any other Options granted at the same
or any other time. The Company may use the consideration it receives from the
optionee for general corporate purposes.
The Exercise Price per share for the Options may not be less than 100% of
the Fair Market Value of a share on the Date of Grant.
Fair Market Value
Fair Market Value of a share of Common Stock for purposes of the Plan will
be determined as follows:
if the Common Stock is traded on a national securities exchange, the
closing sale price on that date;
if the Common Stock is not traded on any such exchange, the closing sale
price as reported by the National Association of Securities Dealers, Inc.
Automated Quotation System ("Nasdaq") for such date;
if no such closing sale price information is available, the average of
the closing bid and asked prices as reported by Nasdaq for such date; or
if there are no such closing bid and asked prices, the average of the
closing bid and asked prices as reported by any other commercial service
for such date.
For any date that is not a trading day, the Fair Market Value of a share of
Common Stock for such date shall be determined by using the closing sale price
or the average of the closing bid and asked prices, as appropriate, for the
immediately preceding trading day.
EXERCISABILITY
The Administrator will determine the times and conditions for exercise of
each Option but may not extend the period for exercise beyond the tenth
anniversary of its Date of Grant.
Options will become exercisable at such times and in such manner as the
Administrator determines and the Option Certificate indicates; provided,
however, that the Administrator may, on such terms and conditions as it
determines appropriate, accelerate the time at which the optionee may exercise
any portion of an Option.
2
If the Administrator does not specify otherwise, Options for Employees will
become exercisable as to one-fifth of the covered shares on each of the first
five anniversaries of the Date of Grant, and Options for Eligible Directors
will become exercisable in full as of the Date of Grant. Unless the
Administrator provides otherwise, the passage of time after an optionee's
Retirement will continue to count for purposes of determining the extent to
which an Option is exercisable.
No portion of an Option that is unexercisable at an optionee's termination
of employment for any reason other than Retirement (as defined below) will
thereafter become exercisable, unless the Option Certificate provides
otherwise, either initially or by amendment. All unexpired Options become
fully exercisable at age 65 irrespective of whether the person then retires.
METHOD OF EXERCISE
To exercise any exercisable portion of an Option, the optionee must:
Deliver a written notice of exercise to the Secretary of the Company (or
to whomever the Administrator designates), in a form complying with any
rules the Administrator may issue, signed by the optionee, and specifying
the number of shares of Common Stock underlying the portion of the Option
the optionee is exercising;
Pay the full Exercise Price by cashier's or certified check for the
shares of Common Stock with respect to which the Option is being exercised,
unless the Administrator consents to another form of payment (which could
include the use of Common Stock); and
Deliver to the Administrator such representations and documents as the
Administrator, in its sole discretion, may consider necessary or advisable.
Payment in full of the Exercise Price need not accompany the written notice
of exercise provided the notice directs that the stock certificates for the
shares issued upon the exercise be delivered to a licensed broker acceptable
to the Company as the agent for the individual exercising the option and at
the time the stock certificates are delivered to the broker, the broker will
tender to the Company cash or cash equivalents acceptable to the Company and
equal to the Exercise Price.
If the Administrator agrees to payment through the tender to the Company of
shares of Common Stock, the individual must have held the stock being tendered
for at least six months at the time of surrender. Shares of stock offered as
payment will be valued, for purposes of determining the extent to which the
optionee has paid the Exercise Price, at their Fair Market Value on the date
of exercise. The Administrator may also, in its discretion, accept attestation
of ownership of Common Stock and issue a net number of shares upon Option
exercise.
OPTION EXPIRATION
No one may exercise an Option more than ten years after its Date of Grant.
Unless the Option Certificate provides otherwise, either initially or by
amendment, no one may exercise an Option after the first to occur of:
Employment Termination
The 30th day after the date of termination of employment (other than for
death, Disability, or Retirement), where termination of employment means the
time when the employer-employee or other service-providing relationship
between the employee and the Company ends for any reason, including
retirement. Unless the Option Certificate provides otherwise, termination of
employment does not include instances in which the Company immediately rehires
a common law employee as an independent contractor. The Administrator, in its
sole discretion, will determine all questions of whether particular
terminations or leaves of absence are terminations of employment;
3
Retirement
For either Early or Normal Retirement (both as defined below and both
collectively referred to as "Retirement"), the fifth anniversary of
Retirement. Solely for purposes of this Plan, "Normal Retirement" occurs on
the date an employee voluntarily ceases to be an Employee at or after reaching
age 65, and "Early Retirement" occurs on the date an employee voluntarily
ceases to be an Employee if both (i) the employment termination occurs before
the Employee reaches age 65 and (ii) the Administrator determines that the
cessation constituted "retirement" for purposes of this Plan. In deciding
whether a termination of employment of employment is an Early Retirement, the
Administrator need not consider the definition under any other Company Plan;
Gross Misconduct
For the Company's termination of the optionee's employment as a result of
the optionee's Gross Misconduct, the time of such termination. For purposes of
this Plan, "Gross Misconduct" means the optionee has
committed fraud, misappropriation, embezzlement, or willful
misconduct that has resulted or is likely to result in
material harm to the Company;
committed or been indicted for or convicted of, or pleaded
guilty or no contest to, any misdemeanor (other than for minor
infractions or traffic violations) involving fraud, breach of
trust, misappropriation, or other similar activity, or any
felony; or
committed an act of gross negligence or otherwise acted with
willful disregard for the Company's best interests in a manner
that has resulted or is likely to result in material harm to
the Company.
Disability
For disability, the earlier of (i) the first anniversary of the optionee's
termination of employment for disability and (ii) 60 days after the optionee
no longer has a disability, where "disability" means the inability to engage
in any substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in death or that
has lasted or can be expected to last for a continuous period of not less than
twelve months; or
Death
The date 12 months after the optionee's death.
If exercise is permitted after termination of employment, the Option will
nevertheless expire as of the date that the former employee violates any
covenant not to compete or other post--employment covenant in effect between
the Company and the former employee.
Nothing in this Plan extends the term of an Option beyond the tenth
anniversary of its Date of Grant, nor does anything in this OPTION EXPIRATION
section make an Option exercisable that has not otherwise become exercisable.
OPTION CERTIFICATES
Option Certificates will set forth the terms of each Option and will include
such terms and conditions, consistent with the Plan, as the Administrator may
determine are necessary or advisable. To the extent the certificate is
inconsistent with the Plan, the Plan will govern. The Option Certificates may
contain special rules. The Administrator may, in its discretion, require
Option agreements rather than certificates.
STOCK SUBJECT TO PLAN
Except as adjusted below under CORPORATE CHANGES, the aggregate number of
shares of Common Stock that may be issued under the Options may not exceed 7.5
million shares and the maximum number of shares that may be subject to Options
for a single individual may not exceed 2.5 million shares. The Common Stock
may come from treasury shares, authorized but unissued shares, or previously
issued shares that the Company reacquires, including shares it purchases on
the open market. If any Option expires, is canceled, or terminates for any
other reason, the shares of Common Stock available under that Option will
again be available for the granting of new Options.
No adjustment will be made for a dividend or other right for which the
record date precedes the date of exercise.
4
The optionee will have no rights of a stockholder with respect to the shares
of stock subject to an Option except to the extent that the Company has issued
certificates for, or otherwise confirmed ownership of, such shares upon the
exercise of the Option.
The Company will not issue fractional shares pursuant to the exercise of an
Option, but the Administrator may, in its discretion, direct the Company to
make a cash payment in lieu of fractional shares.
PERSON WHO MAY EXERCISE
During the optionee's lifetime and except as provided under TRANSFERS,
ASSIGNMENTS, AND PLEDGES, only the optionee or his duly appointed guardian or
personal representative may exercise the Options. After his death, his
personal representative or any other person authorized under a will or under
the laws of descent and distribution may exercise any then exercisable portion
of an Option. If someone other than the original recipient seeks to exercise
any portion of an Option, the Administrator may request such proof as it may
consider necessary or appropriate of the person's right to exercise the
Option.
ADJUSTMENTS UPON CHANGES IN CAPITAL STOCK
Subject to any required action by the Company (which it shall promptly take)
or its stockholders, and subject to the provisions of applicable corporate
law, if, after the Date of Grant of an Option,
the outstanding shares of Common Stock increase or decrease or change
into or are exchanged for a different number or kind of security by reason
of any recapitalization, reclassification, stock split, reverse stock
split, combination of shares, exchange of shares, stock dividend, or other
distribution payable in capital stock, or
some other increase or decrease in such Common Stock occurs without the
Company's receiving consideration,
the Administrator will make a proportionate and appropriate adjustment in the
number of shares of Common Stock underlying each Option, so that the
proportionate interest of the optionee immediately following such event will,
to the extent practicable, be the same as immediately before such event.
Unless the Administrator determines another method would be appropriate, any
such adjustment to an Option will not change the total price with respect to
shares of Common Stock underlying the unexercised portion of the Option but
will include a corresponding proportionate adjustment in the Option's Exercise
Price.
The Administrator will make a commensurate change to the maximum number and
kind of shares provided in the STOCK SUBJECT TO PLAN section.
Any issue by the Company of any class of preferred stock, or securities
convertible into shares of common or preferred stock of any class, will not
affect, and no adjustment by reason thereof will be made with respect to, the
number of shares of Common Stock subject to any Option or the Exercise Price
except as this ADJUSTMENTS section specifically provides. The grant of an
option under the Plan will not affect in any way the right or power of the
Company to make adjustments, reclassifications, reorganizations or changes of
its capital or business structure, or to merge or to consolidate, or to
dissolve, liquidate, sell, or transfer all or any part of its business or
assets.
Substantial Corporate Change
Upon a Substantial Corporate Change, the Plan and the Options will terminate
unless provision is made in writing in connection with such transaction for
the assumption or continuation of outstanding Options, or
the substitution for such options or grants of any options or grants
covering the stock or securities of a successor employer corporation, or a
parent or subsidiary of such successor, with appropriate adjustments as to
the number and kind of shares of stock and prices, in which event the
Options will continue in the manner and under the terms so provided.
Unless the Board determines otherwise, if an Option would otherwise
terminate pursuant to the preceding sentence, optionees will have the right,
at such time before the consummation of the transaction causing such
termination as the Board reasonably designates, to exercise any unexercised
portions of the Option, whether or not they had previously become exercisable.
However, unless the Board determines otherwise, the acceleration
5
will not occur if it would render unavailable "pooling of interest" accounting
for any reorganization, merger, or consolidation of the Company.
A Substantial Corporate Change means the
dissolution or liquidation of the Company,
merger, consolidation, or reorganization of the Company with one or more
corporations in which the Company is not the surviving corporation,
the sale of substantially all of the assets of the Company to another
corporation, or
any transaction (including a merger or reorganization in which the
Company survives) approved by the Board that results in any person or
entity (other than any affiliate of the Company as defined in Rule
144(a)(1) under the Securities Act) owning 100% of the combined voting
power of all classes of stock of the Company.
SUBSIDIARY EMPLOYEES
Employees of Company Subsidiaries will be entitled to participate in the
Plan, except as otherwise designated by the Board of Directors or the
Committee.
Eligible Subsidiary means each of the Company's Subsidiaries, except as the
Board otherwise specifies. Subsidiary means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company if,
at the time an Option is granted to a Participant under the Plan, each of the
corporations (other than the last corporation in the unbroken chain) owns
stock possessing 20% or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.
LEGAL COMPLIANCE
The Company will not issue any shares of Common Stock under an Option until
all applicable requirements imposed by Federal and state securities and other
laws, rules, and regulations, and by any applicable regulatory agencies or
stock exchanges, have been fully met. To that end, the Company may require the
optionee to take any reasonable action to comply with such requirements before
issuing such shares. No provision in the Plan or action taken under it
authorizes any action that is otherwise prohibited by Federal or state laws.
The Plan is intended to conform to the extent necessary with all provisions
of the Securities Act of 1933 ("Securities Act") and the Securities Exchange
Act of 1934 ("Exchange Act") and all regulations and rules the Securities and
Exchange Commission issues under those laws. Notwithstanding anything in the
Plan to the contrary, the Administrator must administer the Plan, and Options
may be granted and exercised, only in a way that conforms to such laws, rules,
and regulations. To the extent permitted by applicable law, the Plan and any
Options will be deemed amended to the extent necessary to conform to such
laws, rules, and regulations.
PURCHASE FOR INVESTMENT AND OTHER RESTRICTIONS
Unless a registration statement under the Securities Act covers the shares
of Common Stock an optionee receives upon exercise of his Option, the
Administrator may require, at the time of such exercise, that the optionee
agree in writing to acquire such shares for investment and not for public
resale or distribution, unless and until the shares subject to the Option are
registered under the Securities Act. Unless the shares are registered under
the Securities Act, the optionee must acknowledge:
that the shares purchased on exercise of the Option are not so
registered,
that the optionee may not sell or otherwise transfer the shares unless
the shares have been registered under the Securities Act in
connection with the sale or transfer thereof, or
6
counsel satisfactory to the Company has issued an opinion
satisfactory to the Company that the sale or other transfer of such
shares is exempt from registration under the Securities Act, and
such sale or transfer complies with all other applicable laws,
rules, and regulations, including all applicable Federal and state
securities laws, rules, and regulations.
Additionally, the Common Stock, when issued upon the exercise of an Option,
will be subject to any other transfer restrictions, rights of first refusal,
and rights of repurchase set forth in or incorporated by reference into other
applicable documents, including the Company's articles or certificate of
incorporation, by-laws, or generally applicable stockholders' agreements.
The Administrator may, in its sole discretion, take whatever additional
actions it deems appropriate to comply with such restrictions and applicable
laws, including placing legends on certificates and issuing stop- transfer
orders to transfer agents and registrars.
TAX WITHHOLDING
The optionee must satisfy all applicable Federal, state, and local income
and employment tax withholding requirements before the Company will deliver
stock certificates upon the exercise of an Option. The Company may decide to
satisfy the withholding obligations through additional withholding on salary
or wages. If the Company does not or cannot withhold from other compensation,
the optionee must pay the Company, with a cashier's check or certified check,
the full amounts required for withholding. Payment of withholding obligations
is due at the same time as is payment of the Exercise Price. If the Committee
so determines, the optionee may instead satisfy the withholding obligations by
directing the Company to retain shares from the Option exercise, by tendering
previously owned shares, or by attesting to his ownership of shares (with the
distribution of net shares), or by having a broker tender to the Company cash
equal to the withholding taxes.
TRANSFERS, ASSIGNMENTS, AND PLEDGES
Unless the Administrator otherwise approves in advance in writing or as set
forth below, an Option may not be assigned, pledged, or otherwise transferred
in any way, whether by operation of law or otherwise or through any legal or
equitable proceedings (including bankruptcy), by the optionee to any person,
except by will or by operation of applicable laws of descent and distribution.
If Rule 16b-3 under the Exchange Act then applies to an Option, the optionee
may not transfer or pledge shares of Common Stock acquired upon exercise of an
Option until at least six months have elapsed from (but excluding) the Date of
Grant, unless the Administrator approves otherwise in advance in writing. The
Administrator may, in its discretion, expressly provide that an optionee may
transfer his Option, without receiving consideration, to (i) members of the
optionee's immediate family (children, grandchildren, or spouse), (ii) trusts
for the benefit of such family members, or (iii) partnerships whose only
partners are such family members.
AMENDMENT OR TERMINATION OF PLAN AND OPTIONS
The Board may amend, suspend, or terminate the Plan at any time, without the
consent of the optionees or their beneficiaries; provided, however, that no
amendment will deprive any optionee or beneficiary of any previously declared
Option. Except as required by law or by the CORPORATE CHANGES section, the
Administrator may not, without the optionee's or beneficiary's consent, modify
the terms and conditions of an Option so as to adversely affect the optionee.
No amendment, suspension, or termination of the Plan will, without the
optionee's or beneficiary's consent, terminate or adversely affect any right
or obligations under any outstanding Options.
PRIVILEGES OF STOCK OWNERSHIP
No optionee and no beneficiary or other person claiming under or through
such optionee will have any right, title, or interest in or to any shares of
Common Stock allocated or reserved under the Plan or subject to any Option
except as to such shares of Common Stock, if any, that have been issued to
such optionee.
7
EFFECT ON OUTSTANDING OPTIONS
All options outstanding under the 1987 Plan will remain subject to the terms
of the 1987 Plan before its amendment into this Plan; provided, however, that
limitations imposed on such options by Rule 16b-3 will continue to apply only
to the extent Rule 16b-3 so requires.
EFFECT ON OTHER PLANS
Whether exercising an Option causes the optionee to accrue or receive
additional benefits under any pension or other plan is governed solely by the
terms of such other plan.
LIMITATIONS ON LIABILITY
Notwithstanding any other provisions of the Plan, no individual acting as a
director, employee, or agent of the Company shall be liable to any optionee,
former optionee, spouse, beneficiary, or any other person for any claim, loss,
liability, or expense incurred in connection with the Plan, nor shall such
individual be personally liable because of any contract or other instrument he
executes in such other capacity. The Company will indemnify and hold harmless
each director, employee, or agent of the Company to whom any duty or power
relating to the administration or interpretation of the Plan has been or will
be delegated, against any cost or expense (including attorneys' fees) or
liability (including any sum paid in settlement of a claim with the Board's
approval) arising out of any act or omission to act concerning this Plan
unless arising out of such person's own fraud or bad faith.
NO EMPLOYMENT CONTRACT
Nothing contained in this Plan constitutes an employment contract between
the Company and the optionee. The Plan does not give the optionee any right to
be retained in the Company's employ, nor does it enlarge or diminish the
Company's right to terminate the optionee's employment.
APPLICABLE LAW
The laws of the State of Delaware (other than its choice of law provisions)
govern this Plan and its interpretation.
DURATION OF PLAN
Unless the Board extends the Plan's term, the Administrator may not grant
Options after May 4, 2008. The Plan will then terminate but will continue to
govern unexercised and unexpired Options.
APPROVAL OF SHAREHOLDERS
The Plan must be submitted to the shareholders of the Company for their
approval within 12 months after the Board of Directors of the Company adopts
the Plan. The adoption of the Plan is conditioned upon the approval of the
shareholders of the Company, and failure to receive their approval will render
the Plan and any outstanding options thereunder void and of no effect.
8
EXHIBIT B
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF DANAHER CORPORATION
- -------------------------------------------------------------------------------
PURSUANT TO SECTION--------------------------------------------------------------------------------
Pursuant to Secton 242 OF THE GENERAL
CORPORATION LAWS OF THE STATE OF DELAWAREof the General
Corporation Laws of the State of Delaware
- ---------------------------------------------------------------------------------------------------------------------------------------------------------------
Danaher Corporation, a corporation organized and existing under the laws of
the State of Delaware (the "Corporation"), does hereby certify:
FIRST: That Paragraph I. ofOf Article FOURTH of the Certificate of
Incorporation of the Corporation be amended and read in its entirety as follows:
FOURTH: I. The total number of shares of stock which the Corporation shall
have authority to issue is 315,000,000600,000,000 shares of which 300,000,000500,000,000 shares,
$.01 par value per share, shall be of a class designated "Common Stock" and of
which 15,000,000100,000,000 shares, without par value, shall be designated "Preferred
Stock".
SECOND: That the foregoing amendment has been duly adopted in accordance
with the provisions of Section 242 of the General Corporation Law of the State
of Delaware.
121
EXHIBIT B
DANAHER CORPORATION
AUDIT COMMITTEE CHARTER
A. Policy Statement
The Charter of the Audit Committee is to assist the board of directors in
monitoring:
1. The reliability and integrity of the financial information which is
provided to the shareholders and other.
2. The Company's system of internal control.
3. A system to provide an open avenue of communication between management,
internal audit, the external auditors, and the board of directors.
4. Compliance by the Company with all applicable laws, regulations, and
company policy.
5. Independence and performance of the Company's external auditors.
B. Organization
The Audit Committee is a committee within the board of directors.
The members of the committee shall meet the independence and experience
requirements of the New York Stock Exchange and the Securities and Exchange
Commission. Initially the committee shall consist of at least three and no
more than six independent, nonexecutive board members.
All members shall have working familiarity with basic finance and accounting
practices, including internal controls and regulatory requirements. The
committee chairperson shall be selected by the committee members.
The committee shall meet at least four times annually and shall meet and
consult with the members of management, counsel, internal audit, and/or
external auditors as necessary to carry out the committee responsibilities.
It is understood that either the internal or external auditors, or counsel,
may, at any time, request a meeting with the audit committee or committee
chairperson with or without management attendance. In any case, the committee
shall meet in executive session separately with the CFO, internal auditors,
and external auditors at least annually.
The committee shall have the authority to obtain special legal, accounting,
or other consultants to advise the committee.
The committee shall make regular reports to the full board of directors.
C. Relationship with External and Internal Auditors
The committee shall annually recommend to the board the appointment of
independent external auditors, who in their capacity as independent public
accountants, shall be accountable to the board of directors and the audit
committee. The committee shall review the planning and staffing of the annual
audit and shall discuss with the external auditors matters required to be
discussed relating to the conduct of the audit.
The committee shall meet with the external auditors who shall report all
relevant issues identified during their review of financial information to
the committee. The committee shall review any management letter form the
external auditors and the company's response thereto.
22
The committee shall annually review the performance (effectiveness,
objectivity, and independence) of the external and internal auditors. The
committee shall insure the receipt of a formal written statement from the
external auditors consistent with the standards set by the Independence
Standards Board. In addition, the committee shall discuss with the external
auditor any relationship(s) or services that may affect auditor objectivity
or independence. If the committee is not satisfied with e external auditors'
assurances of independence, it shall take or recommend to the full board
appropriate action to ensure the independence of the external auditor.
The committee shall evaluate the performance of the external auditors and, if
necessary, recommend to the full Board the replacement of the external
auditors.
The internal audit function shall be responsible to the board of directors
through the committee.
The committee shall establish a policy whereby if either the internal or
external auditors identify significant issues relative to the items
enumerated under Paragraph A above, whether or not communicated to
management, they should communicate these issues to the committee. A change
in the director of internal audit shall be subject to committee approval.
D. Other Primary Committee Responsibilities
The committee should monitor matters related to financial reporting and risk
control through review and assessment of:
1. The company's business and financial risk management process.
2. All major financial reports in advance of filings and distribution.
3. SEC inquiries and the results of examinations by other regulatory
authorities in terms of important findings, recommendations, and
management's response.
4. The company's system of internal controls for detecting accounting and
reporting financial errors, fraud and defalcations, legal violations, and
noncompliance with the corporate code of conduct.
5. The annual internal audit plan and the process used to develop the plan.
The status of activities, significant findings, recommendations, and
management's responses.
6. The independence of the external auditor. The overall scope and focus of
the annual/interim audit which includes the scope and level of their
involvement with unaudited quarterly or other interim-period information.
7. Significant internal and external auditor recommendations on financial
reporting, controls, other matters, and management's responses. Views of
management and auditors on the overall quality of annual and interim
financial reporting.
8. Key financial issues and risks and their impact or potential effect on
reported financial information. The processes used by management to
address these matters and related auditor views including the basis for
their conclusions. Important conclusions on interim and/or year-end audit
work in advance of the public release of financial information.
In addition, the committee should review, assess, and approve:
1. The code of ethical conduct.
2. The internal audit scope and responsibilities.
23
3. Changes in important accounting principles and their application in
interim and annual financial reports.
4. Significant conflicts of interest and related-party transactions.
5. Changes in key financial management.
The committee shall regularly review with counsel legal matter that may have
a material impact on financial statements, the Company's compliance law and
material reports or inquiries from regulators or government agencies.
The committee shall review this Charter at least every three years to
determine the need for changes, if any, to fulfill their role.
While the Audit Committee has the responsibilities and powers set forth in
this Charter, it is not the duty of the Audit Committee to plan or conduct
audits or to determine that the Company's financial statements are complete
and accurate and are in accordance with generally accepted accounting
principles. This is the responsibility of management and the independent
auditor. Nor is it the duty of the Audit Committee to conduct investigations,
to resolve disagreements, if any, between management and the independent
auditor or to assure compliance with laws and regulations and the Company's
Code of Conduct.
24
DANAHER CORPORATION
PROXY FOR 19982001
ANNUAL MEETING OF SHAREHOLDERS--MAY 5, 19981, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF DANAHER
CORPORATION
The undersigned acknowledges receipt of the Proxy Statement and Notice, dated
March 30, 1998,2001, of the Annual Meeting of Shareholders and hereby appoints
Steven M. Rales and Mitchell P. Rales, and each of them, with full power of
substitution, the attorneys, agents and proxies of the undersigned, to act for
and in the name of the undersigned and to vote all the shares of Common Stock
of the undersigned which the undersigned is entitled to vote at the Annual
Meeting of Shareholders of Danaher Corporation (the "Company") to be held May
5, 1998,1, 2001, and at any adjournment or adjournments thereof, for the following
matters:
Proxies will be voted in the manner directed herein by the undersigned. IF NO
DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3, 4 5, 6 and
7.AND 5.
PLEASE SIGN AND DATE ON THE REVERSE SIDE.
1. ELECTION OF DIRECTORS Nominee Mr.Messrs. Steven M. Rales and Alan G. Spoon to
serve as director
WITHHOLDdirectors with a term expiring in 2001.2004.
WITHHOLD
AUTHORITY To withhold authority to vote for an individual
FOR all for all Nominee, write that Nominee's name on the line below.
FOR all Nominees FOR ALL NOMINEESNominees
[_] [_]
___________________________________________------------------------------------------------------
2. APPROVAL OF APPOINTMENT OF AUDITORS
[_] FORFor [_] AGAINSTAgainst [_] ABSTAINAbstain
LOGO
3. APPROVAL OF PERFORMANCE GOALS FORAMEND THE COMPANY'S 1998 BONUS TO COMPANY EXECUTIVE OFFICERS
[_] FOR [_] AGAINST [_] ABSTAIN
4. AMENDMENT TO THE 1987 STOCK OPTION PLAN
[_] FORFor [_] AGAINSTAgainst [_] ABSTAIN
5. APPROVAL OF OPTION GRANT TO FIVE EXECUTIVE OFFICERS
[_] FOR [_] AGAINST [_] ABSTAIN
6. APPROVAL OF AMENDMENT TOAbstain
4. AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION.INCORPORATION
[_] FORFor [_] AGAINSTAgainst [_] ABSTAIN
7.Abstain
5. IN THEIR DISCRETION on any other matter which may properly come before the
meeting, including any adjournment thereof.
Dated: __________________ , 19982001
________________________________
________________________________
Signature of Shareholder(s)
Please sign, date and promptly return this proxy in the enclosed envelope. No
postage is required if mailed in the United States. Please sign exactly as your
name appears in the space on the left. If stock is registered in more than one
name, each holder should sign. When signing as an attorney, administrator,
executor, guardian or trustee, please add your title as such. If executed by a
corporation, the proxy must be signed by a duly authorized officer, and his
title should appear next to his signature.)
PLEASE MARK YOUR CHOICE LIKE THIS [SOLID BLOCK] IN[X] BLUE OR BLACK INK
- --------------------------------------------------------------------------------
DANAHER CORPORATION
PROXY FOR 19982001
ANNUAL MEETING OF SHAREHOLDERS--MAY 5, 1998SHAREHOLDERS -- MAY 1, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
DANAHER CORPORATION
The undersigned acknowledges receipt of the Proxy Statement and Notice, dated
March 30, 1998,2001, of the Annual Meeting of Shareholders and hereby appoints
Steven M. Rales and Mitchell P. Rales, and each of them, with full power of
substitution, the attorneys, agents and proxies of the undersigned, to act for
and in the name of the undersigned and to vote all the shares of Common Stock
of the undersigned which the undersigned is entitled to vote at the Annual
Meeting of Shareholders of Danaher Corporation (the "Company") to be held May
5, 1998,1, 2001, and at any adjournment or adjournments thereof, for the following
matters:
Proxies will be voted in the manner directed herein by the undersigned. IF NO
DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3, 4 5, 6
and 7.AND 5.
PLEASE SIGN AND DATE ON THE REVERSE SIDE.
- -------------------------------------------------------------------------------
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE
(Continued and to be signed on other side)
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
Please mark
[X ] your votes
as this
WITHHOLD
FOR all AUTHORITY
NOMINEES FOR ALL NOMINEES
1. ELECTION OF DIRECTORS
Nominees Mr.Election of directors
Nominee Messrs. Steven M. Rales and Alan G. Spoon to serve as Directordirectors with
a term expiring in 2001 [ ] [ ]
- -2004.
[_] FOR all nominees
[_] WITHHOLD AUTHORITY for all nominees
To withhold authority to vote for an individual Nominee,nominee, write that Nominee'snominee's
name on the line below.
- ----------------------------------------
FOR AGAINST ABSTAIN--------------------------------------------------------------------------------
2. Approval of Appointmentappointment of Auditors [ ] [ ] [ ]
- - -auditors
[_] FOR [_] AGAINST [_] ABSTAIN
3. Approval of Performance Goals forAmend the Company's 1998 [ ] [ ] [ ]
Bonus to Company Executive Officers - - -
4. Amendment to the 1987 Stock [ ] [ ] [ ] Option Plan
- - -[_] FOR [_] AGAINST [_] ABSTAIN
4 . Amend the Company's Certificate Of Incorporation
[_] FOR [_] AGAINST [_] ABSTAIN
5. Approval of Option Grant to Five [ ] [ ] [ ]
Executive Officers - - -
6. Approval of Amendment to Company's FOR AGAINST ABSTAIN
Certificate of Incorporation [ ] [ ] [ ]
- - -
7. IN THEIR DISCRETION on any other matter withwhich may properly come before the
meeting, including any adjournment thereof.
Dated: , 2001
-------------------------------------
-------------------------------------
Signature of Shareholder(s)
Please sign, date and promptly
return this proxy in the enclosed
envelope. No postage is required if
mailed in the United States. Please
sign exactly as your name appears in
the space on the left. If stock is
registered in more than one name,
each holder should sign. When
signing as an attorney,
administrator, executor, guardian or
trustee, please add your title as
such. If executed by a corporation,
the proxy must be signed by a duly
authorized officer, and his title
should appear next to his signature.)
Signature(s) ___________________________ Date _______________________________
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
PLEASE MARK YOUR CHOICE LIKE THIS [_] IN BLUE OR BLACK INK